-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A79PK/5RHQN4lFrGuNn4M1JYSrekaIF4XZaSjOO8BIFf5Fp1gHn2DnIED+IAfZdz ub5CPn6dIpl0imErt7c1Pw== 0000893220-97-000314.txt : 19970211 0000893220-97-000314.hdr.sgml : 19970211 ACCESSION NUMBER: 0000893220-97-000314 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19970124 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970207 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRANDYWINE REALTY TRUST CENTRAL INDEX KEY: 0000790816 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 232413352 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09106 FILM NUMBER: 97521134 BUSINESS ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: STE 100 CITY: MARLTON STATE: NJ ZIP: 08053 BUSINESS PHONE: 2152519111 MAIL ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: SUITE 100 CITY: MARLTON STATE: NJ ZIP: 08053 FORMER COMPANY: FORMER CONFORMED NAME: LINPRO SPECIFIED PROPERTIES DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K, BRANDYWINE REALTY TRUST 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 24, 1997 BRANDYWINE REALTY TRUST (Exact name of registrant as specified in its charter) MARYLAND 1-9106 23-2413352 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) file number) Identification Number) 10 CAMPUS BOULEVARD, NEWTOWN SQUARE, PENNSYLVANIA 19073 (Address of principal executive offices) (610) 325-5600 (Registrant's telephone number, including area code) Page 1 of 6 pages 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On January 24, 1997, Brandywine Operating Partnership, L.P. (the "Operating Partnership"), a limited partnership of which Brandywine Realty Trust (the "Company") is the sole general partner, acquired a portfolio of five office buildings (collectively, the "Acquired Properties") containing an aggregate of approximately 290,000 net rentable square feet, as more fully described below: 1. 1120 Executive Plaza, Mt. Laurel, New Jersey, containing approximately 95,124 net rentable square feet. As of January 24, 1997, this property was 95.44% leased to seven (7) tenants at an average annual rental per leased square foot of $16.38. 2. 1000 Howard Boulevard, Mt. Laurel Corporate Park, Mt. Laurel, New Jersey, containing approximately 105,312 net rentable square feet. As of January 24, 1997, this property was 99.56% leased to four (4) tenants at an average annual rental per leased square foot of $20.56. 3. Building 2, Executive Court Business Park, Evesham Township, New Jersey, containing approximately 37,517 net rentable square feet. As of January 24, 1997, this property was 95.07% leased to twelve (12) tenants at an average annual rental per leased square foot of $14.59. 4. Building 4A, Executive Court Business Campus, Evesham Township, New Jersey, containing approximately 24,687 net rentable square feet. As of January 24, 1997, this property was 90.61% leased to six (6) tenants at an average annual rental per leased square foot of $11.30. 5. Building 4(B), Executive Court Business Campus, Evesham, New Jersey, containing approximately 26,982 net rentable square feet. As of January 24, 1997, this property was 82.84% leased to two (2) tenants at an average annual rental per leased square foot of $10.59. The net purchase price for the Acquired Properties totaled $31,299,721. The Operating Partnership paid the purchase price as follows: (i) $7,000,000 was paid through a borrowing under the revolving credit facility previously established with Smith Barney Mortgage Capital Group, Inc., and NationsBank, N.A., (ii) $12,156,557.72 was paid through an assumption by the Operating Partnership of mortgage indebtedness encumbering 1120 Executive Plaza and 1000 Howard Boulevard, Mt. Laurel Corporate Park, held by Sun Life Assurance Company of Canada (U.S.) ("Sun Life"), and (iii) the balance, including closing expenses, was paid with existing cash reserves. The debt held by Sun Life encumbering 1120 Executive Plaza carried an outstanding principal balance of $6,137,968 as of January 24, 1997, with principal and accrued interest paid through December 31, 1996; the next installment of principal and interest being due -2- 3 February 1, 1997. Interest is payable at the contract rate of 9.875% per annum, with monthly installments of principal and interest payable in the amount of $69,353 each. The loan matures on March 1, 2002, and requires the payment of a specified premium for prepayment. The debt held by Sun Life encumbering 1000 Howard Boulevard, Mt. Laurel Corporate Park carried an outstanding principal balance of $6,018,589 as of January 24, 1997, with principal and accrued interest paid through December 31, 1996, the next installment of principal and interest being due February 1, 1997. Interest is payable at the contract rate of 9.25% per annum, with monthly installments of principal and interest payable in the amount of $66,897 each. The loan matures on November 1, 2004 and requires the payment of a specified premium for prepayment. The Operating Partnership's assumption of the aforesaid debt was specifically approved by Sun Life. In consideration for purchasing the Acquired Properties, the Company also acquired from MLCP Associates Limited Partnership an option to acquire a parcel of land containing approximately 8 acres, located in the Mt. Laurel Corporate Park, Mt. Laurel, New Jersey, immediately adjacent to the 1000 Howard Boulevard property described above. The purchase price for the option property is $1,000,000, and the option may be exercised at any time during the Initial Option Period which expires July 23, 1999. The Operating Partnership has the right to extend the Option Period until June 30, 2000, by paying an extension fee of $100,000, and upon such other terms and conditions as are set forth in the Option Agreement dated as of January 24, 1997. The Option Property is currently unimproved. The sellers of the Acquired Properties, 1120 Associates Limited Partnership, a Delaware limited partnership, by Palomino Corporation, its general partner, MLCP Associates Limited Partnership, a Delaware limited partnership, by MLCP General Corporation, its general partner, and Executive Court Associates Limited Partnership, a Delaware limited partnership, by Palomino Corporation, its general partner, are parties unaffiliated with the Company and the Operating Partnership. The purchase price for the Acquired Properties was determined by arm's-length negotiation between the Company and the sellers. -3- 4 The table set forth below shows certain information regarding rental rates and lease expirations for the Acquired Properties. Scheduled Lease Expirations (The Acquired Properties)
Number of Leases Rentable Square Expiring Within Footage Subject to Final Annualized Base Percentage of Total Final Year of the Year at Expiring Rent From Acquired Annualized Base Rent From Lease Acquired Leases at Acquired Properties Acquired Properties Expiration Properties(1) Properties Under Expiring Leases(2) Under Expiring Leases - ---------- ------------- ---------- ------------------------ --------------------- 1997 6 54,007 998,887 21.06% 1998 5 7,919 90,949 1.92% 1999 5 14,493 160,401 3.38% 2000 6 137,021 2,432,347 51.27% 2001 7 23,209 288,133 6.07% 2002 2 13,306 268,110 5.65% 2003 2004 2005 2006 and 1 26,070 504,976 10.65% thereafter Total 32 276,025 4,743,803 100.00% =========== ============== ============ =================
- --------------------- (1) A lease is considered to expire if, and at any time, it is terminable by the tenant without payment of penalty or premium. (2) "Final Annualized Base Rent" for each lease scheduled to expire represents the cash rental rate in the final month prior to expiration multiplied by twelve. -4- 5 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired. The Financial Statements of the Acquired Properties will be included in an amendment to this Form 8-K by no later than March 30, 1997. (b) Pro Forma Financial Information. Pro Forma financial information will be included in an amendment to this Form 8-K by no later than March 30, 1997. (c) Exhibits. 10.1 Agreement of Sale - 1120 Executive Plaza, Mount Laurel Corporate Park, Executive Court and Option Parcel. 10.2 Assumption, Modification and Release Agreement - 1120 Executive Plaza. 10.3 Assumption, Modification and Release Agreement - 1000 Howard Boulevard, Mt. Laurel, New Jersey. 10.4 Option Agreement - Lot 8, Block 1104, Mount Laurel, New Jersey. 10.5 Sun Life Mortgage Note - 1120 Associates Limited Partnership. 10.6 Sun Life Mortgage and Security Agreement - 1120 Associates Limited Partnership. 10.7 Sun Life Letter - 1120 Associates Limited Partnership. 10.8 Sun Life Mortgage Note - MLCP Associates Limited Partnership. 10.9 Sun Life Mortgage and Security Agreement - MLCP Associates Limited Partnership. 10.10 Sun Life Letter - MLCP Associates Limited Partnership.
-5- 6 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BRANDYWINE REALTY TRUST Date: February 7, 1997 By: /s/ Gerard H. Sweeney ---------------------------------- Title: President and Chief Executive Officer -6- EX-10.1 2 AGREEMENT OF SALE 1 EXHIBIT 10.1 AGREEMENT OF SALE 1120 Executive Plaza, Mt. Laurel Corporate Park, Executive Court and Option Parcel AGREEMENT OF SALE made this 20th day of January, 1997, between BRANDYWINE REALTY TRUST, a Maryland Real Estate Investment Trust, its assignee or nominee, having its principal office at 16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania 19073 ("Buyer"), and 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, having its principal office at 4A Eves Drive, Marlton, New Jersey 08053 ("1120"), MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, having its principal office at 4A Eves Drive, Marlton, New Jersey 08053 ("MLCP"), and EXECUTIVE COURT ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, having its principal office at 4A Eves Drive, Marlton, New Jersey 08053 ("ECA") (collectively, but specifically not jointly and severally, 1120, MLCP and ECA shall be referred to hereunder as "Seller"). BACKGROUND The Background of this Agreement is as follows: A. 1120 is the owner of a certain parcel of land comprising approximately 7.86 acres, together with the building and improvements thereon, including a four story office building containing approximately 95,124 net rentable square feet, commonly known as 1120 Executive Plaza, Mount Laurel, New Jersey, being Lot 3 of Block 1301 and Lots 1, 2 and 3 of Block 1306.01; and B. MLCP is the owner of a certain parcel of land comprising approximately 6.34 acres, together with the building and improvements thereon, including a four story office building containing approximately 105,312 net rentable square feet, commonly known as the Mt. Laurel Corporate Park, Mt. Laurel, New Jersey being Lot 1.01 of Block 1104, and a certain undeveloped parcel of land comprising approximately 8 acres, being Lot 8 of Block 1104 (the "Option Parcel") as more fully described on Exhibit A-2-B; and C. ECA is the owner of a certain parcel of land comprising approximately 9.88 acres, together with three buildings and improvements thereon, including a two story office building containing approximately 37,857 net rentable square feet commonly known as Building 2, a one story office building containing approximately 24,687 net rentable square feet commonly known as Building 4A, and a one story office building containing approximately 27,031 net rentable square feet commonly known as Building 4B, all such buildings being commonly known as the Executive Court, Evesham Township, New Jersey, being Lots 1 and 2 of Block 2.05; and D. Seller desires to sell to Buyer and Buyer desires to purchase from Seller the property referred to in this Agreement, upon the terms and conditions set forth herein. 2 TERMS AND CONDITIONS NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and with the preceding Background paragraphs incorporated by reference, the parties hereto, intending to he legally bound hereby, covenant and agrees as follows: 1. PROPERTY BEING SOLD. Each of 1120, MLCP and ECA, as the case may be, with respect to their particular assets, shall sell, transfer and convey to Buyer on the Closing Date (as hereinafter defined), 1.1 Real Property. 1.1.1. 1120's fee simple interest in the approximately 7.86 acre parcel of land, all as more fully described on Exhibit "A-1", with the building and improvements thereon, including the four story, approximately 95,124 net rentable square foot office building, commonly known as 1120 Executive Plaza, Mount Laurel, New Jersey, being Lot 3 of Block 1301 and Lots 1, 2 and 3 of Block 1306.01, and all of 1120's right, title, and interest, if any, in all easements, licenses, rights of way, privileges, hereditaments, appurtenances, and rights to any land lying in the beds of any street, road or avenue, open or proposed, adjoining thereto, and inuring to the benefit of said land (hereinafter collectively referred to as the "1120 Premises"); and 1.1.2. MLCP's fee simple interest in (a) the approximately 6.34 acre parcel of land, all as more fully described on Exhibit "A-2-A", with the building and improvements thereon, including the four story, approximately 105,312 net rentable square foot office building, commonly known as Mt. Laurel Corporate Park, Mount Laurel, New Jersey, being Lot 3 of Block 1104, together with all of MLCP"s right, title and interest, if any, in all easements, licenses, rights of way, privileges, hereditaments, appurtenances, and rights to any land lying in the beds of any street, road or avenue, open or proposed, adjoining thereto, and inuring to the benefit of said land described above, together with a perpetual easement for the use of Howard Boulevard as a means of ingress, egress and regress to and from the foregoing, and a perpetual easement for the use of such portion of MLCP"s remaining property as shall be necessary to utilize all of the parking spaces depicted on the survey prepared by Abbington and Associates heretofore delivered by Seller to Buyer, to the extent that such parking spaces are located outside of the perimeter description of record of the MLCP Premises (hereinafter collectively referred to as the "MLCP Premises"). Buyer shall assume responsibility to maintain Howard Boulevard until such time as either Seller or any other persons or parties shall commence development or otherwise utilize Howard Boulevard, or any portion thereof, as a means of access to any other property, at which time Buyer, Seller and such third party (if any) shall amend and restate the existing covenant(s) of record allocating among Buyer, Seller and such other third parties the responsibilities to repair and maintain Howard Boulevard and addressing other issues including without limitation, approval rights (re: architectural review, landscaping, common areas and other matters), use restrictions, insurance, cost allocation issues, 2 3 and other matters. Any such amendatory documentation or new covenant(s) of record shall be in form satisfactory to Buyer and Seller. The covenants set forth in this Section shall survive delivery of the Deeds and Closing hereunder. 1.1.3. ECA"s fee simple interest in the parcel of land comprising approximately 9.88 acres, all as more fully described on Exhibit "A-3", together with three buildings and improvements thereon, including a two story office building containing approximately 37,857 net rentable square feet commonly known as Building 2, a one story office building containing approximately 24,687 net rentable square feet commonly known as Building 4A, and a one story office building containing approximately 27,031 net rentable square feet commonly known as Building 4B, all such buildings being commonly known as the Executive Court, Evesham Township, New Jersey, being Lots 1 and 2 of Block 2.05, and all of ECA"s right, title and interest, if any, in all of the easements, licenses, rights of way, privileges, hereditaments, appurtenances, and rights to any land lying in the beds of any street, road or avenue, open or proposed, adjoining thereto, and inuring to the benefit of said land (hereinafter collectively referred to as the "ECA Premises"); and 1.2 Personal Property. All of 1120's, MLCP's and ECA's, as the case may be, with respect to their particular assets, equipment, fixtures, machinery and personalty of every description attached to or used in connection with the 1120 Premises (and not owned by tenants under leases of the 1120 Premises), the MLCP Premises (and not owned by tenants under leases of the MLCP Premises) and the ECA Premises (and not owned by tenants under leases of the ECA Premises), including, without limitation, those listed on, the Schedule of Inventory attached hereto as Exhibit "B-1" as to 1120, Exhibit "B-2, as to MLCP, "Exhibit "B-3" as to ECA, and all renderings, flags, and to the extent assignable and in such Seller"s possession, intangible personal property owned by such Seller and used in connection with the ownership, operation and maintenance of the Property (as defined below), including without limitation, all contract rights, guaranties and warranties of any nature, all architects", engineers", surveyors" and other real estate professionals" plans, specifications, certifications, contracts, reports, data or other technical descriptions, reports or audits (including, without limitation, all environmental, structural and mechanical inspection reports), and all marketing materials ("Contract Documents"), all governmental permits, licenses, certificates, and approvals in connection with the ownership of the 1120 Premises, the MLCP Premises and the ECA Premises, as the case may be ("Licenses"), all escrow accounts, deposits (excluding, ratably, any escrows and deposits held by Mt. Laurel Township in connection with the portion of the land owned by MLCP not being sold hereunder), instruments, documents of title, general intangibles, data and business records pertaining to the 1120 Premises, the MLCP Premises and the ECA Premises, as the case may be and all of each Seller's rights, claims, and causes of action if any, to the extent they are assignable, under any warranties and/or guarantees of manufacturers, contractors or installers, all rights against tenants and others relating to the 1120 Premises, the MLCP Premises and the ECA Premises and the operation or maintenance thereof, including to the extent applicable, any warranties from any previous owners of the 1120 Premises, the MLCP Premises and the ECA Premises (hereinafter referred to as "1120 Personal Property", the "MLCP Personal Property" and the "ECA Personal Property", as the case may be); and 3 4 1.3 Leases. All leases, licenses and other occupancy agreements for all of the 1120 Premises, the MLCP Premises and the ECA Premises and, except as otherwise set forth herein, all prepaid rent and unapplied security deposits (the "1120 Leases", the "MLCP Leases" and the "ECA Leases" as the case may be); and 1.4 Right to Names. Any and all right, title and interest of Seller, if any, and without representation or warranty, in and to the name "1120 Executive Plaza", "Mt. Laurel Corporate Park", "Executive Court" and each Seller"s right, if any, without representation or warranty, to all printing styles, trademarks and logos regarding the foregoing (collectively, the "1120 Names", the "MLCP Names" and the "ECA Names" as the case may be). The 1120 Premises, 1120 Personal Property, 1120 Leases and 1120 Names are sometimes hereinafter referred to as "1120 Property." The MLCP Premises, the MLCP Personal Property, MLCP Leases and the MLCP Names are sometimes hereinafter referred to as "MLCP Property." The ECA Premises, the ECA Personal Property, ECA Leases and the ECA Names are sometimes hereinafter referred to as "ECA Property." The 1120 Property, the MLCP Property and the ECA Property are sometimes referred to herein collectively as the "Property". 2. PURCHASE PRICE AND MANNER OF PAYMENT. 2.1 Purchase Price. Buyer shall pay the total sum of Thirty Two Million, One Hundred Fifty Thousand Dollars ($32,150,000) (hereinafter referred to as the "Purchase Price") subject to adjustments as set forth herein. 2.2 Manner of Payment. The Purchase Price shall be paid in the following manner: 2.2.1 Deposit. By delivery, upon Seller's execution and delivery of this Agreement, of Buyer's wire transfer of immediately available funds in the amount of One Million Dollars $1,000,000 to Sherman, Silverstein, Kohl, Rose & Podolsky (hereinafter referred to as "Escrow Agent" or "Escrowee"). This sum, and all other sums paid by Buyer to the Escrow Agent under this Agreement (hereinafter referred to as the "Deposit") shall be non-refundable, except as specified under Section 13.1 and 13.3 hereof, and shall be held by Escrow Agent in a federally-insured, segregated money market account at an institution to be designated by Buyer and Seller until termination or consummation of this Agreement. Interest on the Deposit shall be credited to Buyer at Closing, or paid to the party otherwise entitled to the Deposit in the event of the termination of this Agreement prior to Closing. 2.2.2 Assumption of Sun Loan; Cash Balance. The balance by assumption of outstanding debt owed to Sun Life Assurance Company of Canada (U.S.) ("Sun") by (i) 1120 pursuant to that certain Note and security therefor dated March 17, 1995 in the original principal amount of $6,500,000 (the "1120 Debt") and (ii) MLCP pursuant to that certain Note and security therefor dated October 19, 1994 in the original principal amount of $6,500,000 (the "MLCP Debt") (the 1120 Debt and the MLCP Debt are collectively, but specifically not 4 5 jointly and severally, referred to as the "Sun Loans"), and the remainder to be delivered to the Seller on the Closing Date, by wire transfer of immediately available funds, in the amount by which the Purchase Price exceeds the sum of (i) the Deposit, and (ii) the outstanding principal balance and accrued and unpaid interest, if any, on the Sun Loans as of the Closing Date, subject to adjustments and apportionments as set forth in the Agreement. 3. TITLE. On the Closing Date, each of 1120, MLCP and ECA with respect to its assets, shall convey to Buyer good and marketable fee simple title to the 1120 Premises, the MLCP Premises and the ECA Premises, as the case may be, subject only to those rights of way, easements, covenants restrictions, and objections to title (hereinafter "1120 Permitted Exceptions" with respect to the 1120 Premises, the "MLCP Permitted Exceptions" with respect to the MLCP Premises and the "ECA Permitted Exceptions" with respect to the ECA Premises) listed on Exhibit "C-1" hereto regarding the 1120 Premises, Exhibit "C-2" hereto regarding the MLCP Premises and Exhibit "C-3" hereto regarding the ECA Premises and subject to the rights of tenants listed on the rent roll attached hereto as Exhibit "D-1" regarding the 1120 Premises, Exhibit "D-2" hereto regarding the MLCP Premises and Exhibit "D-3" hereto regarding the ECA Premises, all of which title shall be insurable at regular rates by Commonwealth Land Title Insurance Company ("Title Company") under an ALTA 1970 Form B (Revised 10/17/70 and 3/30/84) title insurance policy ("Title Policy"), with the endorsements and affirmative insurance specified in Section 12.2.1.10 below. 4. COVENANTS. In addition to the covenants contained in the other Sections of this Agreement, between the date hereof and Closing, each of 1120, MLCP and ECA with respect to its assets, covenants that it shall: 4.1 Maintenance. At all times prior to the Closing Date, maintain the 1120 Property, the MLCP Property and the ECA Property, as the case may be, in good condition and repair, reasonable wear and tear and damage by casualty excepted, operate the 1120 Property, the MLCP Property and the ECA Property, as the case may be, in the same manner as it is currently being operated, and pay except as specifically set forth herein in the normal course of business prior to Closing, all sums due for work, materials or service furnished or otherwise incurred in the ownership and operation prior to Closing. 4.2 Alterations. Not make or permit to be made any alterations, improvements or additions to the 1120 Property, the MLCP Property and the ECA Property, as the case may be, without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed, except those made by or for tenants pursuant to the right to do so under their Leases, or by such Seller if required by applicable law or ordinance, or as required under any Lease, subject to the provisions of Section 4.7 below.. 4.3 Lease. Except as specifically set forth in Section 14.5 below, not enter into any new Lease, nor amend, modify or terminate any existing Lease without Buyer's consent, such consent not to be unreasonably withheld. 5 6 4.4 Security Deposits. Not apply any Tenant's security deposit to the discharge of such Tenant's obligations, without Buyer's consent, such consent not to be unreasonably withheld. 4.5 Bill Tenants. Timely bill all Tenants for all rent billable under Leases, and use its commercially reasonable efforts consistent with Seller"s existing practices to collect any rent in arrears. 4.6 Notice to Buyer. Notify Buyer promptly of the occurrence of any of the following: (i) a fire or other casualty causing damage to the 1120 Property, the MLCP Property and the ECA Property, as the case may be, or any portion of the foregoing; (ii) receipt of written notice of eminent domain proceedings or condemnation of or affecting the 1120 Property, the MLCP Property or the ECA Property, as the case may be or any portion thereof; (iii) receipt of notice from any governmental authority or insurance underwriter relating to the condition, use or occupancy of the 1120 Property, the MLCP Property and the ECA Property, as the case may be, or any portion of the foregoing, or any real property adjacent to any of the foregoing, or setting forth any requirements with respect thereto; (iv) receipt or delivery of any written default or termination notice or claim of offset or defense to the payment of rent from any tenant; (v) receipt of any written notice of default from the holder of any lien or security interest in or encumbering the 1120 Property, the MLCP Property or the ECA Property, as the case may be, or any portion thereof; or (vi) written notice of any actual or threatened litigation against 1120, MLCP or ECA or affecting or relating to the 1120 Property, the MLCP Property or the ECA Property, as the case may be or any portion thereof. 4.7 Comply with Leases. Perform all material obligations of the landlord as required by the 1120 Leases, the MLCP Leases and the ECA Leases, as the case may be, or by any order or direction of any governmental authority having jurisdiction thereof, provided that if the cost to perform any such governmental obligations (the "Seller Compliance Costs") exceeds $90,000 in the aggregate, Seller shall have the right to terminate this Agreement if Buyer is unwilling to pay for the costs of such obligations in excess of $90,000, in which event the Deposit and Buyer's reasonably documented Transaction Costs (as hereinafter defined) shall be returned to Buyer and neither party shall owe any further obligation hereunder to the other; provided, however, if the Seller Compliance Costs exceed $90,000 in the aggregate, and Buyer agrees to pay for the second $90,000 of such costs, the remaining cost of such Seller Compliance Costs above $180,000, if any, shall be evenly shared by Buyer and Seller, provided that in no event shall Seller be obligated to pay more than $180,000.00 in the aggregate in connection with the Seller Compliance Costs (e.g., if the total Seller Compliance Costs equal $200,000 and Buyer agrees to pay for the second $90,000, the additional $20,000 above the $180,000 shall be shared by Buyer and Seller, so that Seller shall be responsible for $100,000 and Buyer shall be responsible for $100,000). The parties acknowledge and agree that Buyer is under no obligation to agree to pay for any Seller Compliance Costs, but that the aforesaid cost allocation mechanism is an agreed upon compromise in order to permit Buyer to avoid Seller"s termination of this Agreement. Seller"s obligation to incur Seller Compliance Costs and the limitations thereto hereinabove specified shall expressly not apply to any tenant improvement costs or expenses, and 6 7 any other costs or expenses incurred by Seller in discharging any lease obligations (except to the extent such lease obligations relate to governmental compliance issues noted above). 4.8 No New Agreements. Except for agreements which can be terminated on not more than thirty (30) days' notice, not enter into any other agreements which affect the 1120 Property, the MLCP Property and the ECA Property or the transactions contemplated by this Agreement, without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed; and, except for the Sun Loans and the Permitted Exceptions, not permit the creation of any liability which shall bind Buyer or the 1120 Property, the MLCP Property or the ECA Property after Closing. 4.9 Tax Disputes. Notify Buyer of any tax assessment disputes (pending or threatened) with respect to the 1120 Property, the MLCP Property and the ECA Property, as the case may be, prior to Closing, and not agree to any changes in the real estate tax assessment, nor settle, withdraw or otherwise compromise any pending claims with respect to prior tax assessments, without Buyer's prior written consent. If any proceedings shall result in any reduction of assessment and/or tax for the tax year in which the Closing occurs, it is agreed that the amount of tax savings or refund for such tax year, less the reasonable fees and disbursements in connection with such proceedings, shall be apportioned between the parties as of the date real estate taxes are apportioned under this Agreement. Any reduction relating to tax years prior to 1997 shall be payable to 1120, MLCP or ECA, as appropriate. 4.10 No Removal of Personalty. Not remove any non-consumable Personal Property from the 1120 Property, the MLCP Property and the ECA Property without replacing it with similar personal property which is new or of equal or better quality. 5. REPRESENTATIONS AND WARRANTIES. In order to induce Buyer to enter into this Agreement, each of 1120, MLCP and ECA, solely with respect to itself, and not with respect to the other entities constituting the Seller, hereby represents and warrants to Buyer that the following representations and warranties are true now, and where the representation specifically provides, will be true at Closing: 5.1 Seller's Authority For Binding Agreement. 5.1.1. 1120 represents and warrants that: (i) 1120 is a duly authorized and validly existing partnership formed under the laws of the State of Delaware and is duly qualified to do business in the State of New Jersey, (ii) 1120 has full power, right and authority to own its properties, to carry on its business as now conducted, and to enter into and fulfill its obligations under this Agreement, (iii) each of the persons executing this Agreement on behalf of 1120 is authorized to do so, (iv) this Agreement is the valid and legally binding obligation of 1120, enforceable against 1120 in accordance with its terms, (v) the execution and delivery of this Agreement and compliance with its terms will not conflict with or result in the breach of any law, judgement, order, writ, injunction, decree, rule or regulation, or conflict with or result in the 7 8 breach of any other agreement, document or instrument to which 1120 is a party or by which it or the 1120 Property is bound or affected. 5.1.2. MLCP represents and warrants that: (i) MLCP is a duly authorized and validly existing partnership formed under the laws of the State of Delaware and is duly qualified to do business in the State of New Jersey, (ii) MLCP has full power, right and authority to own its properties, to carry on its business as now conducted, and to enter into and fulfill its obligations under this Agreement, (iii) each of the persons executing this Agreement on behalf of MLCP is authorized to do so, (iv) this Agreement is the valid and legally binding obligation of MLCP, enforceable against MLCP in accordance with its terms, (v) the execution and delivery of this Agreement and compliance with its terms will not conflict with or result in the breach of any law, judgement, order, writ, injunction, decree, rule or regulation, or conflict with or result in the breach of any other agreement, document or instrument to which MLCP is a party or by which it or the MLCP Property is bound or affected. 5.1.3. ECA represents and warrants that: (i) ECA is a duly authorized and validly existing partnership formed under the laws of the State of Delaware and is duly qualified to do business in the State of New Jersey, (ii) ECA has full power, right and authority to own its properties, to carry on its business as now conducted, and to enter into and fulfill its obligations under this Agreement, (iii) each of the persons executing this Agreement on behalf of ECA is authorized to do so, (iv) this Agreement is the valid and legally binding obligation of ECA, enforceable against ECA in accordance with its terms, (v) the execution and delivery of this Agreement and compliance with its terms will not conflict with or result in the breach of any law, judgement, order, writ, injunction, decree, rule or regulation, or conflict with or result in the breach of any other agreement, document or instrument to which ECA is a party or by which it or the ECA Property is bound or affected. The representations contained in this Section 5.1 shall be true at and as of Closing. 5.2 Employment on "At-Will" Basis. There are no employees of 1120, MLCP or ECA and Buyer assumes no obligations or responsibilities whatsoever for any employees of 1120, MLCP or ECA. The representation contained in this Section 5.2 shall be true at and as of Closing. 5.3 Service Contracts. 5.3.1. 1120 represents and warrants that, to the best of its knowledge, Exhibit "E-1" attached hereto is a complete list of all existing service, equipment, supply and maintenance contracts with respect to or affecting the 1120 Property, (the "1120 Service Contracts"). 1120 has not received any written notice of default or breach by 1120 in the terms of any of such Service Contracts. To 1120's knowledge, 1120 has performed, and at Closing shall have performed, all obligations which it has under said 1120 Service Contracts. 8 9 5.3.2. MLCP represents and warrants that, to the best of its knowledge Exhibit "E-2" attached hereto is a complete list of all existing service, equipment, supply and maintenance contracts with respect to or affecting the MLCP Property, (the "MLCP Service Contracts"). MLCP has not received any written notice of default or breach by MLCP in the terms of any of such Service Contracts. To MLCP"s knowledge, MLCP has performed, and at Closing shall have performed, all obligations which it has under said MLCP Service Contracts. 5.3.3. ECA represents and warrants that, to the best of its knowledge, Exhibit "E-3" attached hereto is a complete list of all existing service, equipment, supply and maintenance contracts with respect to or affecting the ECA Property, (the "ECA Service Contracts"). ECA has not received written notice of default or breach by ECA in the terms of any of such Service Contracts. To ECA"s knowledge, ECA has performed, and at Closing shall have performed, all obligations which it has under said ECA Service Contracts. The 1120 Service Contracts, the MLCP Service Contracts and the ECA Service Contracts shall be referred to collectively as the "Service Contracts". Anything herein contained to the contrary notwithstanding, except with respect to the CSC (as hereinafter defined) premises which shall be governed by Section 14 hereof, each of 1120, MLCP and ECA represent, warrant, covenant and agree that all existing management agreements and exclusive leasing agreements shall be terminated as of Closing, Seller having fully paid and discharged any and all obligations accruing thereunder, and Buyer shall assume no liability under or in respect of any such agreements. Other than the representations regarding receipt of written notices of default, which, to the extent not true and correct at Closing shall be noted in writing by Seller to Buyer before Closing, the representations contained in this Section 5.3 shall be true at and as of Closing. 5.4 Condemnation. None of 1120, MLCP, or ECA, with respect to its particular assets has received any written notice of any pending condemnation or eminent domain proceeding pending with regard to any part of the 1120 Property, the MLCP Property and the ECA Property, and to the best of each of 1120's, MLCP"s and ECA"s knowledge with respect to its particular asset, no such proceedings are proposed. 5.5 No Lawsuits. 5.5.1. Except as set forth on Exhibit F-1, 1120 has received no written notice of any claims, lawsuits or proceedings (collectively, "Suits") pending, and to the best of 1120's knowledge, there are no Suits threatened against or relating to 1120 or the 1120 Property, or which could affect them, or either of them, in any court or before any governmental agency, except for actions for possession, damages and or rent, if any, against defaulted tenants as disclosed in Exhibit "F-1". 5.5.2. Except as set forth on Exhibit F-2, MLCP has received no written notice of any Suits pending, and to the best of MLCP's knowledge, there are no Suits threatened 9 10 against or relating to MLCP or the MLCP Property, or which could affect them, or either of them, in any court or before any governmental agency, except for actions for possession, damages and or rent, if any, against defaulted tenants as disclosed in Exhibit "F-2". 5.5.3. Except as set forth on Exhibit F-3, ECA has received no written notice of any Suits pending, and to the best of ECA"s knowledge, there are no Suits threatened against or relating to ECA or the ECA Property, or which could affect them, or either of them, in any court or before any governmental agency, except for actions for possession, damages and or rent, if any, against defaulted tenants as disclosed in Exhibit "F-3". The representations contained in this Section 5.5 shall be true at and as of Closing. 5.6 No Tax Assessments. Each of 1120, MLCP and ECA have not received written notice of any public improvements in the nature of off-site improvements, or otherwise, which have been ordered to be made and/or which have not heretofore been assessed, and, to 1120's, MLCP"s and ECA"s knowledge, there are no special or general assessments currently affecting or pending against the 1120 Property, the MLCP Property and the ECA Property, as the case may be, except as set forth in the Title Binder. The representations contained in this Section 5.6 shall be true at and as of Closing. 5.7 Leases. 5.7.1. 1120 represents and warrants that there are no oral or written leases or rights of occupancy or grants or claims of right, title or interest in any portion of the Premises other than the leases (the "1120 Leases") listed on the rent roll attached hereto as Exhibit "D-1". Exhibit "D-1" identifies (i) each tenant of the 1120 Premises, (ii) the date of that tenant's lease, (iii) the expiration date of that tenant's lease, (iv) the annual and monthly minimum rental charge, the tenant's share of building operating costs (including, without limitation, taxes) and any and all costs, expenses and other charges payable by the tenant under the 1120 Lease, (v) arrearages, if any, and whether the latest rent due has been paid, (vi) the amount of prepaid rent, if any, (vii) the amount or description of any concessions, allowances, rebates, refunds, escrow or security deposits made by the tenant under said tenant's Lease; (vii) any options to renew, extend, purchase, cancel or terminate; (viii) any defaults, outstanding notices of defaults of any kind or nature whatsoever, claims of defaults or similar claim under Leases, and (ix) all unpaid tenant improvement allowances and/or unpaid leasing commissions. No tenant has advised 1120 in writing that 1120 is in default under any of the 1120 Leases, or asserted any written claim or basis for any claim for free or reduced rent or right of setoff against the landlord or the rent under the 1120 Leases, and 1120 and its agent have no actual knowledge of any default or any event which has taken place which, with the passage of time, or the delivery of notice, or both, could become an event of default. 1120 has the sole right to collect rents under the Leases, and except with respect to the Sun Loan, neither such right nor any of the Leases has been assigned, pledged, hypothecated or otherwise encumbered by 1120. To the best of 1120's knowledge, each of the 1120 Leases is valid and subsisting and in full force and effect, the tenant is in actual possession in the normal course, and the rents set forth in Exhibit "D-1" are the actual rents, income and charges being collected by 1120 under the 1120 Leases. Any tenant improvements which 1120 is 10 11 obligated to complete pursuant to any Lease (or any unsigned lease proposal or lease amendment), all as set forth on the attached Schedule of Tenant Improvements, has been completed as of this date or shall be assumed by Buyer at and as of Closing, and all costs for completed work have been or shall be paid by 1120. Buyer shall assume the responsibility for all tenant improvement work required to be completed by the landlord under any 1120 which has not been completed by 1120 prior to Closing and which is specifically set forth on the Schedule of Tenant Improvements. At Closing, Buyer shall receive a credit against the Purchase Price in the amount of the Tenant Improvements shown on the Schedule of Tenant Improvements as such relates to the completion of unfinished tenant work at the 1120 Property. No tenant or other person has any right or option to acquire the 1120 Property, or any part thereof, or to 1120 knowledge to terminate any of the rights currently appurtenant to the 1120 Premises. No tenant of the 1120 Premises under any of the 1120 Leases has, and shall not at Closing have, prepaid any rent under any of the 1120 Leases for more than one (1) month. Except as otherwise set forth on Exhibit "D-1", no security deposits by tenants have heretofore been returned or applied to charges against the tenants. 5.7.2. MLCP represents and warrants that there are no oral or written leases or rights of occupancy or grants or claims of right, title or interest in any portion of the Premises other than the leases (the "MLCP Leases") listed on the rent roll attached hereto as Exhibit "D-2". Exhibit "D-2" identifies (i) each tenant of the MLCP Premises, (ii) the date of that tenant's lease, (iii) the expiration date of that tenant's lease, (iv) the annual and monthly minimum rental charge, the tenant's share of building operating costs (including, without limitation, taxes) and any and all costs, expenses and other charges payable by the tenant under the MLCP Lease, (v) arrearages, if any, and whether the latest rent due has been paid, (vi) the amount of prepaid rent, if any, (vii) the amount or description of any concessions, allowances, rebates, refunds, escrow or security deposits made by the tenant under said tenant's Lease; (vii) any options to renew, extend, purchase, cancel or terminate; (viii) any defaults, outstanding notices of defaults of any kind or nature whatsoever, claims of defaults or similar claim under Leases, and (ix) all unpaid tenant improvement allowances and/or unpaid leasing commissions. No tenant has advised MLCP in writing that MLCP is in default under any of the MLCP Leases, or asserted any written claim or basis for any claim for free or reduced rent or right of setoff against the landlord or the rent under the MLCP Leases, and MLCP and its agent have no actual knowledge of any default or any event which has taken place which, with the passage of time, or the delivery of notice, or both, could become an event of default. MLCP has the sole right to collect rents under the MLCP Leases, and except with respect to the Sun Loan, neither such right nor any of the MLCP Leases has been assigned, pledged, hypothecated or otherwise encumbered by MLCP. To the best of MLCP's knowledge, each of the MLCP Leases is valid and subsisting and in full force and effect, the tenant is in actual possession in the normal course, and the rents set forth in Exhibit "D- 2" are the actual rents, income and charges being collected by MLCP under the MLCP Leases. Any tenant improvements which MLCP is obligated to complete pursuant to any Lease (or any unsigned lease proposal or lease amendment), all as set forth on the attached Schedule of Tenant Improvements, has been completed as of this date or shall be assumed by Buyer at and as of Closing, and all costs for completed work have been or shall be paid by MLCP. Buyer shall assume the responsibility for all tenant improvement work required to be completed by the landlord under any MLCP which has not been completed by MLCP prior 11 12 to Closing and which is specifically set forth on the Schedule of Tenant Improvements. At Closing, Buyer shall receive a credit against the Purchase Price in the amount of the Tenant Improvements shown on the Schedule of Tenant Improvements as such relates to the completion of unfinished tenant work at the MLCP Property. No tenant or other person has any right or option to acquire the MLCP Property, or any part thereof, or to MLCP' s knowledge to terminate any of the rights currently appurtenant to the MLCP Premises. No tenant of the MLCP Premises under any of the MLCP Leases has, and shall not at Closing have, prepaid any rent under any of the MLCP Leases for more than one (1) month. 5.7.3. ECA represents and warrants that there are no oral or written leases or rights of occupancy or grants or claims of right, title or interest in any portion of the Premises other than the leases (the "ECA Leases") listed on the rent roll attached hereto as Exhibit "D-3". Exhibit "D-3" identifies (i) each tenant of the ECA Premises, (ii) the date of that tenant's lease, (iii) the expiration date of that tenant's lease, (iv) the annual and monthly minimum rental charge, the tenant's share of building operating costs (including, without limitation, taxes) and any and all costs, expenses and other charges payable by the tenant under the ECA Lease, (v) arrearages, if any, and whether the latest rent due has been paid, (vi) the amount of prepaid rent, if any, (vii) the amount or description of any concessions, allowances, rebates, refunds, escrow or security deposits made by the tenant under said tenant's Lease; (vii) any options to renew, extend, purchase, cancel or terminate; (viii) any defaults, outstanding notices of defaults of any kind or nature whatsoever, claims of defaults or similar claim under Leases, and (ix) all unpaid tenant improvement allowances and/or unpaid leasing commissions. No tenant has advised ECA in writing that ECA is in default under any of the ECA Leases, or asserted any written claim or basis for any claim for free or reduced rent or right of setoff against the landlord or the rent under the ECA Leases, and ECA and its agent have no actual knowledge of any default or any event which has taken place which, with the passage of time, or the delivery of notice, or both, could become an event of default. ECA has the sole right to collect rents under the Leases neither such right nor any of the ECA Leases has been assigned, pledged, hypothecated or otherwise encumbered by ECA except as additional collateral for the existing mortgage upon the ECA Premises which shall be satisfied at Closing. To the best of ECA's knowledge, each of the ECA Leases is valid and subsisting and in full force and effect, the tenant is in actual possession in the normal course, and the rents set forth in Exhibit "D-3" are the actual rents, income and charges being collected by ECA under the ECA Leases. Any tenant improvements which ECA is obligated to complete pursuant to any Lease (or any unsigned lease proposal or lease amendment), all as set forth on the attached Schedule of Tenant Improvements, has been completed as of this date or shall be assumed by Buyer at and as of Closing, and all costs for completed work have been or shall be paid by ECA. Buyer shall assume the responsibility for all tenant improvement work required to be completed by the landlord under any ECA which has not been completed by ECA prior to Closing and which is specifically set forth on the Schedule of Tenant Improvements. At Closing, Buyer shall receive a credit against the Purchase Price in the amount of the Tenant Improvements shown on the Schedule of Tenant Improvements as such relates to the completion of unfinished tenant work at the ECA Property. No tenant or other person has any right or option to acquire the ECA Property, or any part thereof, or to ECA's knowledge to terminate any of the rights currently appurtenant to the ECA Premises. No tenant of the ECA Premises under any of the ECA Leases has, and shall not at Closing have, prepaid 12 13 any rent under any of the ECA Leases for more than one (1) month. Except as otherwise set forth on Exhibit "D-3", no security deposits by tenants have heretofore been returned or applied to charges against the tenants. The parties acknowledge and agree that Buyer hereby grants Columbia Investment Builders, Inc. ("CIB") the right, on ECA"s standard form lease, to lease the 2,368 square foot space where CIB is currently located in the ECA Property for a two year term commencing February 1, 1997, with two, one year renewal options exercisable on 3 months prior written notice, for a Base Rent of $12 per square foot on a full service basis excluding tenant electric charges which will be billed separately during the initial term and the two, one (1) year renewal terms. The representations contained in this Section 5.7 shall be true at and as of Closing. 5.8 Compliance with Law. 5.8.1 None of 1120, MLCP nor ECA have received any outstanding written notices of any violations issued by governmental authority having jurisdiction over the 1120 Property, the MLCP Property and the ECA Property, as the case may be. 5.8.2 To the best of 1120's knowledge and except as otherwise shown on that certain Environmental Report prepared by Lippincott, Jacobs & Gouda dated March, 1995 (the "1120 Report"), no Hazardous Substances (defined below) and no Hazardous Wastes (defined below) are present on the Property including, without limitation, asbestos, flammable substances, explosives, radioactive materials, hazardous wastes, toxic substances, pollutants, pollution, contaminant, polychlorinated byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive, irritant, biologically infectious materials, petroleum product, garbage, refuse, sludge, hazardous or waste materials, except to the extent such substances or materials are used in the ordinary course of 1120's business or that of any Tenant in accordance with all applicable laws, and there has, to the best of 1120"s knowledge, been no use of the 1120 Property that may, under any federal, state or local environmental statute, ordinance or regulation, require, at any time, any closure or cessation of the use or occupancy of the 1120 Property and/or impose, at any time, upon the owner of the 1120 Property any clean-up or other monetary obligation. 1120 has received no written notice that it has been identified in any litigation, administrative proceeding or investigation as a responsible party or potentially responsible party for any liability for clean-up costs, natural resource damages or other damages or liability for prior disposal or release of Hazardous Substances, Hazardous Wastes or other environmental pollutants or contaminants, and no lien or superlien has been recorded, filed or otherwise asserted against any real or personal property of 1120 for any clean-up costs or other responses costs incurred in connection with any environmental contamination that is attributable, in whole or in part, to 1120. For purposes of this Agreement, "Hazardous Substances" means those elements and compounds which are designated as such in Section 101(14) of the Comprehensive Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601 (14), as amended, all petroleum products and by-products, and any other hazardous substances as that term may be further defined in all applicable federal, state and local laws including the New Jersey Industrial Site Recovery Act, as amended ("ISRA"); and "Hazardous Wastes" means any hazardous waste, residential or household waste, solid waste, or other waste as defined in applicable federal, state and local laws 13 14 including the New Jersey Industrial Site Recovery Act, as amended ("ISRA"). 1120 has not received any summons, citation, directive, letter or other communication, written or oral, from any governmental or quasi-governmental authority concerning any intentional or unintentional action or omission on 1120's part which (a) resulted in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes, or (b) related in any way to the generation, storage, transport, treatment or disposal of Hazardous Substances or Hazardous Wastes. To the best of 1120's knowledge, there are no underground or above-ground storage tanks located on the 1120 Property. 5.8.3 To the best of MLCP's knowledge and except as otherwise shown on that certain Environmental Report prepared by GHR Consulting Services, Inc. dated September 13, 1994 (the "MLCP Report"), no Hazardous Substances and no Hazardous Wastes are present on the Property including, without limitation, asbestos, flammable substances, explosives, radioactive materials, hazardous wastes, toxic substances, pollutants, pollution, contaminant, polychlorinated byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive, irritant, biologically infectious materials, petroleum product, garbage, refuse, sludge, hazardous or waste materials, except to the extent such substances or materials are used in the ordinary course of MLCP's business or that of any Tenant in accordance with all applicable laws, and there has, to the best of MLCP"s knowledge, been no use of the MLCP Property that may, under any federal, state or local environmental statute, ordinance or regulation, require, at any time, any closure or cessation of the use or occupancy of the MLCP Property and/or impose, at any time, upon the owner of the MLCP Property any clean-up or other monetary obligation. MLCP has received no written notice that it has been identified in any litigation, administrative proceeding or investigation as a responsible party or potentially responsible party for any liability for clean-up costs, natural resource damages or other damages or liability for prior disposal or release of Hazardous Substances, Hazardous Wastes or other environmental pollutants or contaminants, and no lien or superlien has been recorded, filed or otherwise asserted against any real or personal property of MLCP for any clean-up costs or other responses costs incurred in connection with any environmental contamination that is attributable, in whole or in part, to MLCP. MLCP has not received any summons, citation, directive, letter or other communication, written or oral, from any governmental or quasi-governmental authority concerning any intentional or unintentional action or omission on MLCP's part which (a) resulted in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes, or (b) related in any way to the generation, storage, transport, treatment or disposal of Hazardous Substances or Hazardous Wastes. To the best of MLCP's knowledge, other than that certain above ground storage tank servicing Conrail with respect to which MLCP has not received written notice of any violations of applicable laws, there are no underground or above-ground storage tanks located on the MLCP Property. 5.8.4 To the best of ECA's knowledge and except as otherwise shown on that certain Environmental Report prepared by Environ Corp. dated October 2, 1992 (the "ECA Report"), no Hazardous Substances and no Hazardous Wastes are present on the Property including, without limitation, asbestos, flammable substances, explosives, radioactive materials, hazardous wastes, toxic substances, pollutants, pollution, contaminant, polychlorinated byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive, irritant, biologically 14 15 infectious materials, petroleum product, garbage, refuse, sludge, hazardous or waste materials, except to the extent such substances or materials are used int he ordinary course of ECA's business or that of any Tenant in accordance with all applicable laws, and there has, to the best of ECA"s knowledge, been no use of the ECA Property that may, under any federal, state or local environmental statute, ordinance or regulation, require, at any time, any closure or cessation of the use or occupancy of the ECA Property and/or impose, at any time, upon the owner of the ECA Property any clean-up or other monetary obligation. ECA has received no written notice that it has been identified in any litigation, administrative proceeding or investigation as a responsible party or potentially responsible party for any liability for clean-up costs, natural resource damages or other damages or liability for prior disposal or release of Hazardous Substances, Hazardous Wastes or other environmental pollutants or contaminants, and no lien or superlien has been recorded, filed or otherwise asserted against any real or personal property of ECA for any clean-up costs or other responses costs incurred in connection with any environmental contamination that is attributable, in whole or in part, to ECA. ECA has not received any summons, citation, directive, letter or other communication, written or oral, from any governmental or quasi-governmental authority concerning any intentional or unintentional action or omission on ECA's part which (a) resulted in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes, or (b) related in any way to the generation, storage, transport, treatment or disposal of Hazardous Substances or Hazardous Wastes. To the best of ECA's knowledge, there are no underground or above-ground storage tanks located on the ECA Property. Subject to the provisions of Section 4.7 above, the representations contained in Section 5.8.1 shall be true at and as of Closing. The representations contained in Sections 5.8.2, 5.8.3 and 5.8.4 shall be true at and as of Closing. 5.9 Insurance. Exhibits "G-1", "G-2", and "G-3" attached hereto contain a true and correct description of all insurance policies affecting the 1120 Property, the MLCP Property and the ECA Property respectively, and the operation thereon. All of said insurance policies shall remain in full force and effect until the completion of Closing hereunder. None of 1120, MLCP nor ECA have received any written notice from any insurance company board of fire underwriters or rating organization (or other body exercising similar functions) (i) claiming any defects or deficiencies which have not been addressed and fully cured or corrected, or (ii) requesting the performance of any repairs, alterations or other work which have not been performed, or (iii) claiming any default which, if not corrected, would result in a cancellation of insurance coverage. The representations contained in this Section 5.9 shall be true at and as of Closing. 5.10 Intentionally Omitted. 5.11 No Brokers. Except as set forth on Exhibit "D", no brokerage or leasing commission or other compensation is now, or will at Closing be, due or payable to any person, firm, corporation, or other entity with respect to or on account of any of the Leases, or any extensions or renewals thereof. The representations contained in this Section 5.11 shall be true at and as of Closing. 15 16 5.12 Utilities. To the best of 1120's, MLCP"s and ECA"s knowledge, all installation, connection and "tap-in" charges for utilities servicing their respective properties have been paid for in full. The representations contained in this Section 5.12 shall be true at and as of Closing. 5.13 Permits, Approvals and Certificates. To the best of 1120's, MLCP"s and ECA"s knowledge with respect to their particular assets, all required certificates of occupancy for the 1120 Property, the MLCP Property and the ECA Property and for separately demised spaces at the aforesaid, and all other licenses, permits, authorizations and approvals necessary for the operation of the aforesaid, have been validly issued and are in good standing as of the Closing Date. All charges and fees for all of the foregoing have been paid in full. Subject to the provisions of Section 4.7 above, the representations contained in this Section 5.13 shall be true at and as of Closing. 5.14 Good Title to Property. 1120 represents and warrants that to the best of its knowledge, it holds good and marketable, indefeasible fee simple title to the 1120 Property, free and clear of liens and encumbrances, other than the 1120 Debt and the 1120 Permitted Exceptions. MLCP represents and warrants that, to the best of its knowledge it holds good and marketable, indefeasible fee simple title to the MLCP Property, free and clear of liens and encumbrances, other than the MLCP Debt and the MLCP Permitted Exceptions. ECA represents and warrants that to the best of its knowledge it holds good and marketable, indefeasible fee simple title to the ECA Property, free and clear of liens and encumbrances, other than the ECA Permitted Exceptions. The representations contained in this Section 5.14 shall be true at and as of Closing. 5.15 All Taxes and Assessments Paid. Each of 1120, MLCP and ECA, with respect to its assets, will have paid prior to Closing, all taxes and assessments, including assessments payable in installments, which are to become due and payable prior to Closing and/or a lien on the 1120 Property, the MLCP Property and the ECA Property, except for taxes for the current year which shall be prorated at Closing and except for installments of current assessments which become due and payable after Closing which shall be the sole responsibility of Buyer. The representations contained in this Section 5.15 shall be true at and as of Closing. 5.16 FIRPTA. None of 1120, MLCP nor ECA are a "foreign person" as such term is defined in Section 1445(f)(3) of the Internal Revenue Code of 1954, as amended (the "Code"). The representations contained in this Section 5.16 shall be true at and as of Closing. 5.17 Intentionally Omitted. 5.18 Construction Liens. To the best of 1120's, MLCP"s and ECA"s knowledge, except as set forth on the Tenant Improvement Schedule no work has been performed or is in progress at, and no materials have been furnished to the 1120 Property, the MLCP Property and the ECA Property, as the case may be, which, though not presently the subject of, might give rise to construction, mechanic's, materialmen's, or other liens against the 1120 Property, the MLCP Property or the ECA Property or any portion thereof, except that for 16 17 which full and complete payment has been or will be made prior to Closing or for which releases have been obtained. If any lien for any such work is filed before or after Closing, Seller shall promptly discharge the same. The representations contained in this Section 5.17 shall be true at and as of Closing. 5.19 Inventory Schedule. The Schedule of Inventory contains a correct and complete list of personal property owned by each of 1120, MLCP and ECA and located at or used in connection with the operation of the 1120 Property, the MLCP Property and the ECA Property. The representations contained in this Section 5.19 shall be true at and as of Closing. 5.20 Charges, Fees and Assessments. To the best of 1120's, MLCP's and ECA's as the case may be, any and all applicable charges, fees and assessments and any and all other sums due under declarations, cross-easements and like agreements to which the 1120 Property, the MLCP Property and the ECA Property or any portion thereof may be subject, have been paid, and, to the best of 1120's, MLCP"s and ECA"s knowledge, no special assessments thereunder are pending, and all consents and approvals required to be obtained under any such declarations, cross-easements and like agreements (other than the Sun Loan) have been obtained pursuant to the requirements of such documentation. The representations contained in this Section 5.20 shall be true at and as of Closing. 5.21 Rights to Purchase. There are no outstanding agreements, options, rights of first refusal, conditional sales agreements or other agreements or arrangements, whether oral or written, regarding the purchase and sale of the 1120 Property, the MLCP Property and the ECA Property, or which otherwise affect any portion of or all the foregoing. Without limiting the generality of the foregoing, any and all option rights of Clinton Corporation granted or referred to in that certain lease between 1120 and Computer Sciences Corporation, have since expired by their terms and are no longer valid or enforceable. The representations contained in this Section 5.21 shall be true at and as of Closing. 5.22 No Outstanding Obligations. To the best of 1120's, MLCP's and ECA"s knowledge, as the case may be, except as set forth on the Tenant Improvement Schedule, all debts, liabilities, and obligations of each of 1120, MLCP and ECA arising out of the construction, ownership, and operation of the 1120 Property, the MLCP Property and the ECA Property, as the case may be, including, but not limited to, construction costs, taxes, accounts payable and the like, have been paid as they became due and payable and shall continue to be so paid from the date hereof until the Closing Date. To the best of 1120's, MLCP's and ECA's knowledge, as the case may be, no debts, liabilities, claims, or obligations (whether known or unknown, accrued, absolute, contingent, or otherwise) affecting the 1120 Property, the MLCP Property and the ECA Property, other than the Sun Loans which is currently being paid and is not subject to any defaults, shall be outstanding as of the Closing Date. The representations contained in this Section 5.22 shall be true at and as of Closing. 5.23 Access. To the best of 1120's, MLCP's and ECA's knowledge, all curb cut and street opening permits or licenses required for vehicular access to and from the 1120 Property, the MLCP Property and the ECA Property to any adjoining public street have been 17 18 obtained and paid for by 1120, MLCP or ECA, as the case may be, and all of the foregoing shall be in full force and effect at the Closing. Seller will provide Buyer with an opportunity to review its files containing all conditional and permanent zoning, site plan, subdivision, building, housing, safety, fire and health approvals, including, without limitation, the local governmental applications, resolutions and approvals supporting the same, if any, relating to the 1120 Property, the MLCP Property and the ECA Property. The representations contained in this Section 5.23 shall be true at and as of Closing. 5.24 Abatement Programs. To the best of 1120's, MLCP's and ECA's knowledge, as the case may be, none of the 1120 Property, the MLCP Property and the ECA Property are subject to an written tax abatement program or reduction of assessment agreements, which provides for an increase in assessment at the expiration of the applicable abatement period. The representations contained in this Section 5.24 shall be true at and as of Closing. 5.25 Development Agreements. To the best of 1120's, MLCP's and ECA's knowledge, as the case may be, each of 1120, MLCP and ECA are in material compliance with and each of them have fully paid and discharged all obligations arising under any and all development, tri-party and like agreements, and any and all other agreements with county, municipal and other governmental and quasi-governmental agencies and authorities respecting the ownership, development and operation of the 1120 Property, the MLCP Property and the ECA Property, as the case may be, and all portions thereof. The representations contained in this Section 5.25 shall be true at and as of Closing. 5.26 Structural Representation. 5.26.1. To the best of 1120"s knowledge, except as otherwise set forth on that a certain structural engineering report prepared by Architecture/Design Alliance, Inc. ("AAI") and dated December 2, 1994 (the "1120 Structural Report"), all building and improvements situate on the 1120 Premises, and all appurtenant systems, including, without limitation, the roof, the HVAC, plumbing, electrical and mechanical systems and equipment are in good working order and condition, and there are no material patent or latent defects therein. 1120 is aware of no material repairs, alterations or other work other than ordinary maintenance, which is required to be performed in order to maintain the structural integrity of the building and improvements, and the efficient operation and good operating condition of the appurtenant systems and equipment. 5.26.2. To the best of MLCP"s knowledge, except as otherwise set forth on that a certain structural engineering report prepared by AAI and dated October 13, 1994 (the "MLCP Structural Report"), all building and improvements situate on the MLCP Premises, and all appurtenant systems, including, without limitation, the roof, the HVAC, plumbing, electrical and mechanical systems and equipment are in good working order and condition, and there are no material patent or latent defects therein. MLCP is aware of no material repairs, alterations or other work other than ordinary maintenance, which is required to be performed in order to maintain the structural integrity of the building and improvements, and the efficient operation and good operating condition of the appurtenant systems and equipment. 18 19 5.26.3. To the best of ECA"s knowledge, except as otherwise set forth on that a certain structural engineering report prepared by Edward Kuljian Associates and dated October 12, 1992 (the "ECA Structural Report"), all building and improvements situate on the ECA Premises, and all appurtenant systems, including, without limitation, the roof, the HVAC, plumbing, electrical and mechanical systems and equipment are in good working order and condition, and there are no material patent or latent defects therein. ECA is aware of no material repairs, alterations or other work other than ordinary maintenance which is required to be performed in order to maintain the structural integrity of the building and improvements, and the efficient operation and good operating condition of the appurtenant systems and equipment. The representations contained in this Section 5.26 shall be true at and as of Closing. 5.27 Correct Copies of Documents. Where copies of any documents have been delivered by Seller to Buyer, whether prior to or pursuant to this Agreement, such copies: (i) are exact copies of the originals of said documents, as executed and delivered by all of the parties thereto; (ii) to the best of each of 1120's, MLCP"s and ECA"s knowledge, constitute, in each case, the entire agreement between the parties thereto with respect to the subject matter thereof, and the original instruments in the form delivered to Buyer, are now in full force and effect, and valid and enforceable in accordance with their respective terms, and no party thereto is in default, and no claim of default by any party has been made or is now pending and there does not now exist any default which, after either the giving of notice or the passing of time, or both, will or may constitute a default, or would excuse performance by any party thereto; and (iii) have not been changed or amended except for amendments, if any, specifically referred to therein. The representations contained in this Section 5.27 shall be true at and as of Closing. When used throughout this Section 5, the phrase "knowledge" and "to the best knowledge" as used herein shall be deemed to mean the actual knowledge of Joseph D. Gonnelli and R. Brian Jackson. 6. POSSESSION. Possession of each of the 1120 Premises, the MLCP Premises and the ECA Premises is to be given to Buyer, subject to the right of tenants under the Leases on the Closing Date, by delivery of the Deeds, and all keys, combinations and security codes at Closing. 7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY. 7.1 Title Binder. On or before the execution of this Agreement Seller made available to Buyer, Seller"s most recently dated title commitment for the 1120 Property, the MLCP Property and the ECA Property (complete with copies of all exceptions to title), and Buyer shall secure a current title commitment (the "Title Binder") from the Commonwealth Land Title Insurance Company. At Closing, Seller, so long as such amount does not exceed $500,000.00 in the aggregate, shall pay all monetary liens (other than the Sun Loans), which are not 1120 Permitted Exceptions, MLCP Permitted Exceptions or ECA Permitted Exceptions. If such amount does exceed $500,000, and Buyer is unwilling to pay such excess to discharge such 19 20 liens in excess of $500,000, then either party may terminate this Agreement, whereupon, the Deposit and Buyer"s reasonably documented Transaction Costs (as defined below) shall be immediately refunded to Buyer. 7.2 Survey. Seller has provided Buyer with a copy of Seller"s most recent 1120 Property, MLCP Property and ECA Property surveys. 7.3 Physical Inspection. Buyer shall have the right to continue its physical and mechanical inspection, measurement and audit of the 1120 Property, the MLCP Property and the ECA Property and an inspection of all books and records and financial information pertaining thereto, and Seller shall cooperate with Buyer and shall furnish to Buyer such information, materials and documents as Buyer may reasonably request and shall have its accountant available throughout such period to assist in Buyer's inspection and review. The inspection, audit and measurement of the 1120 Property"s, MLCP Property"s and ECA Property's operation, condition and maintenance shall include, without limitation, such title, survey, environmental and engineering inspections, reviews and assessments that Buyer deems appropriate. Buyer agrees that it shall not unreasonably interfere with tenants in performing its inspection. If Buyer exercises its rights under the provisions of this subsection, it shall (i) provide Seller with prior verbal notice of Buyer"s entry, (ii) keep the 1120 Property, the MLCP Property and the ECA Property free of any liens or third-party claims resulting therefrom except as may be required by applicable law; (iii) maintain adequate liability insurance in an amount of not less than $1,000,000.00 for a single occurrence and $50,000.00 for property damage which insurance shall name 1120, MLCP and ECA as an additional insured; (iv) indemnify 1120, MLCP and ECA against any liability or expense for injuries to or death of persons or damage to property arising from the exercise of the rights hereunder that are not the result of any act or omission of 1120, MLCP or ECA or their respective agents, employees or contractors and (v) if Closing does not occur for any reason other than 1120's, MLCP"s or ECA"s breach or default, restore as nearly as practicable the Property substantially to its condition immediately before such exercise. The indemnification and restoration provisions of this subsection shall survive the termination of this Agreement. 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer shall survive Closing and the delivery of the Deeds for the statute of limitations pertaining thereto. The representations and warranties of Seller set forth in Sections 5.1, 5.2, 5.6, 5.8.1, 5.11, 5.16, 5.21 and 5.24 shall survive Closing and delivery of the Deed for the applicable period of the statute of limitations pertaining thereto. The representations and warranties of Seller set forth in Sections 5.3, 5.5, 5.7 (except as set forth below), 5.8.2, 5.8.3, 5.8.4, 5.18, 5.19, 5.20, 5.22, 5.23, 5.25, 5.26 and 5.27 shall survive Closing and delivery of the Deed for six (6) months from Closing. The representations and warranties of Seller set forth in Sections 5.12 and 5.13 shall survive Closing and delivery of the Deed for a three (3) month period from Closing. Notwithstanding anything contained in this Agreement to the contrary, except as expressly set forth in this Agreement, none of 1120, MLCP and ECA makes any representation, either prior to or at the Closing, with respect to the condition or character of the 1120 Property, the MLCP Property or the ECA Property or the use or uses to which the foregoing may be put. Buyer acknowledges that Buyer has or will carefully and 20 21 thoroughly examine, inspect and investigate the 1120 Property, the MLCP Property and the ECA Property, and 1120's, MLCP"s and ECA"s operations (as to manner, income and expenses); and Buyer is purchasing the same on the basis of such examination, inspection and investigation and not in reliance on any representation or warranty of 1120, MLCP or ECA or any agent, employee or representative of any of them of any kind or nature whatsoever, except as specifically set forth herein. Accordingly, subject to the representations and warranties contained herein and in Seller"s Documents, if Buyer closes hereunder, Buyer hereby agrees to accept all of the assets being acquired by Buyer hereunder, whether realty, personalty or mixed, on an absolutely and unconditionally "as is" basis at the time of Closing. Notwithstanding the time period for survival with respect to Section 5.7, if prior to the expiration of such period, Seller delivers to Buyer an estoppel certificate on Buyer"s prescribed form, which certificate confirms Seller"s representations under Section 5 of this Agreement, Seller shall be released from all liability with respect to its representations as they pertain to such tenancy. 9. FIRE OR OTHER CASUALTY. 9.1 Maintain Insurance. Seller shall maintain in effect until the Closing Date the insurance policies (or like policies) now in effect with respect to the Premises and Personal Property as set forth in Exhibits "G-1", "G-2" and "G-3". 9.2 Minimal Damage. If prior to the Closing Date any portion of the Property is damaged or destroyed by fire or other casualty, and the cost of repair or restoration thereof shall be $250,000 or less (as established by good faith estimates obtained by Buyer), this Agreement shall remain in force. 9.3 Substantial Damage. If prior to the Closing Date any portion of the Property is damaged or destroyed by fire or other casualty, and the cost of repair or restoration thereof shall be more than $250,000 (as established by good faith estimates obtained by Buyer), Buyer may terminate this Agreement by giving written notice thereof to Seller, and if this Agreement is so terminated, then the Deposit shall be immediately refunded to Buyer, and thereafter neither party shall have any further liability hereunder thereafter. If Buyer does not so terminate this Agreement, it shall remain in full force and effect, and the provisions of Section 9.4 below shall apply. 9.4 Closing After Substantial Damage. So long as this Agreement shall remain in force under Section 9.2 or 9.3, then (i) all proceeds of insurance plus the amount of deductible under Seller's insurance policy, shall be credited to Buyer against the Purchase Price payable by Buyer at Closing, and (ii) all unpaid claims and rights in connection with losses shall be assigned to Buyer at Closing, including the right to adjust any such loss. 9.5 Rent Insurance. All rental loss insurance and the proceeds thereof allocable to any period subsequent to Closing shall be paid or assigned to Buyer at Closing. 10. CONDEMNATION. If, prior to the Closing Date, all or any material portion of the 1120 Premises, the MLCP Premises or the ECA Premises (being any taking affecting any 21 22 building or any other taking involving 10% or more of the 1120 Premises, the MLCP Premises or the ECA Premises or their respective parking areas) is taken by eminent domain or a notice of any eminent domain proceedings with respect to the aforesaid or any part thereof is received by the Seller, then Seller shall within five (5) days thereafter give notice thereof to Buyer and Buyer shall have the option to (a) complete the purchase hereunder or (b) if such taking, in Buyer's sole and absolute discretion, adversely affects the Premises or its current economic viability, terminate this Agreement, in which event the Deposit shall be immediately refunded to Buyer, and this Agreement shall be null and void. Buyer shall deliver written notice of its election to the Seller within two (2) days after the date upon which the Buyer receives written notice of such eminent domain proceedings. If notice of condemnation is received by Buyer and it fails to deliver said written notice of its election within said time period, such failure shall constitute a waiver by Buyer of its right to terminate this Agreement. If this Agreement is not so terminated, Buyer shall be entitled to all awards or damages by reason of any exercise of the power of eminent domain or condemnation with respect to or for the taking of the Premises or any portion thereof, and until such time as closing has occurred, or this Agreement terminates. Any negotiation for, or agreement to, and all contests of any offers and awards relating to eminent domain proceedings shall be conducted with the joint approval and consent of the Seller and the Buyer. 11. Expense Allocations. 11.1 Seller shall pay for all applicable realty transfer taxes related to the execution, delivery and recording of the Deeds, Bills of Sale, and other Closing Documents, and all related recording charges. 11.2 Subject to Section 13.3, Buyer shall pay for Buyer's title examination for Buyer's title examination and premiums and for Buyer"s due diligence expenses, including survey, structural analysis and environmental analysis. 11.3 Buyer and Seller shall be responsible for paying their own attorney's fees in connection with this transaction. 11.4 Buyer and Seller shall equally bear the cost and expense incurred in connection with the assumption of the Sun Loan, including but not limited to, any assumption fees, Sun"s attorney"s fees, recording costs and other costs related thereto. 12. CLOSING. 12.1 Time and Date and Place. The Closing on the sale of the Property (herein referred to as the "Closing") shall take place on January 24, 1997 at 9:00 a.m. at the offices of Pepper, Hamilton & Scheetz, Suite 500, 457 Haddonfield Road, Cherry Hill, New Jersey. Notwithstanding the foregoing, Buyer may extend the outside date for Closing to January 29, 1997 upon prior written notice to Seller on or before January 23, 1997. Time is of the essence in this Agreement. Notwithstanding the foregoing, either party shall have the option to extend the 22 23 Closing three times, each for a period of ten (10) days, solely in the event that the Seller has not obtained the consent of Sun as required in this Agreement. 12.2 Documents. At Closing, the parties indicated shall simultaneously execute and deliver the following: 12.2.1 Seller's Documents and Other Items. Each of 1120, MLCP and ECA with respect to its assets shall execute and deliver or cause to be executed and delivered to Buyer in proper form for recording: 12.2.1.1 Deeds. A bargain and sale deed with covenants against grantor"s acts prepared by Buyer's counsel in form acceptable to Seller (the "Deed"), conveying the 1120 Premises, the MLCP Premises and the ECA Premises to Buyer, duly executed by Seller for recording. The Deed description shall be based upon the metes and bounds description attached as Exhibit "A-1" for the 1120 Premises, as Exhibit "A-2" for the MLCP Premises and as Exhibit "A-3" for the ECA Premises, in addition, if Buyer requests that Seller convey the 1120 Premises, the MLCP Premises or the ECA Premises by the metes and bounds description shown on the new survey, if any, obtained by Buyer, Seller covenants to execute a Quit Claim Deed for such new description. 12.2.1.2 Special Warranty Bills of Sale. A special warranty bill of sale prepared by Buyer"s counsel in form acceptable to Seller, assigning, conveying and transferring to Buyer, all of the Personal Property. 12.2.1.3 Original Leases. All original Leases, tenant files, tenant correspondence and repair records. 12.2.1.4 Original Licenses, Contract Documents and Other Personal Property. All original Licenses, Contract Documents, and other Personal Property described in Section 1.2 of this Agreement to the extent in Seller"s possession. 12.2.1.5 Assignment of Leases. An assignment and assumption agreement with indemnities consistent with this Agreement, prepared by Buyer"s counsel in form acceptable to Seller (the "Assignment"), duly executed by Seller and Buyer, assigning, conveying and transferring to Buyer the Leases. 12.2.1.6 Assignment of Licenses, Contract Documents and Other Personal Property. An assignment agreement with indemnities consistent with this Agreement prepared by Buyer"s counsel, in form acceptable to Seller, assigning, conveying and transferring to Buyer, to the extent they are assignable, the Licenses, Contracts Documents and Other Personal Property, including, specifically, the Names, without representation or warranty. 12.2.1.7 FIRPTA Certificates. All certificate(s) required under Section 1445 of the Code. 23 24 12.2.1.8 Tenant Letter. Letters to each tenant advising of the change in ownership and directing the payment of rent to such party as the Buyer shall designate, said letter to be in form acceptable to Buyer. 12.2.1.9 Intentionally Omitted. 12.2.1.10 Title Insurance Certificates. Such affidavits of title or other certifications as shall be required by the Title Company to insure Buyer's title to the Premises as set forth in Section 3, and to provide affirmative endorsements (a) against construction liens and (b) parties in possession other than tenants under the Leases. 12.2.1.11 Certified Rent Roll. A certified schedule of Tenant Leases, containing all information required to be set forth in Exhibit "D", which schedule is correct and complete as of the date of Closing. 12.2.1.12 Seller Certificate. A written certification confirming that as of Closing confirming that the representations and warranties which are required to be true at and as of Closing, are true at and as of Closing. 12.2.1.13 Organization Certifications. Confirmation of the good standing and existence of Seller and its general partner and the due authority of those executing for them, including, without limitation, the following documents issued no earlier than 30 days prior to Closing: (a) good standing certificate in state of organization and in the State in which the Property are located, (b) partnership agreement, (c) a certificate from the secretary of the corporation or managing general partner of the partnership confirming the incumbency of the signatories and the current force and effect of the resolution authorizing their execution of the documents required under this Agreement. 12.2.1.14 Keys. All keys, combinations and security codes for all locks and security devices on the Property; 12.2.1.15 Intentionally Omitted. 12.2.1.16 Intentionally Omitted. 12.2.1.17 Mortgagee Estoppel. Seller shall deliver to Buyer a Mortgagee Estoppel in the form reasonably specified by Buyer as executed by Sun, confirming, among other items, (i) the list of Sun Loan documents, (ii) the interest rate payable thereon and the maturity date thereof, (iii) the outstanding principal balance and accrued and unpaid interest thereon, and the status and amount of all tax, insurance and other applicable escrows (if any) as of the Closing Date (iv) that no default or event of default exists by the Borrower thereunder and that there exists no facts or circumstances, which with the delivery of notice and the passage of time, or either, would constitute a default or event of default, (v) that Sun has not sold, assigned, participated or transferred the debt or any interest therein, and (vi) that the assumption of the Sun 24 25 Loan by Brandywine Operating Partnership, L.P., as nominee of Buyer, has been approved by all requisite boards, committees and other authorities at Sun. 12.2.1.18 ISRA Non-Applicability Letter. A written non- applicability letter issued within 30 days prior to Closing by the New Jersey Department of Environmental Protection stating that the transaction and the Property is not subject to ISRA. Collectively, the documents set forth in Section 12.2.1 shall be referred to as "Seller"s Documents". 12.2.2 Buyer's Documents. Buyer shall deliver or cause to be delivered to Seller: 12.2.2.1 The amounts required to be paid to Seller pursuant to this Agreement; 12.2.2.2 Confirmation of the existence and subsistence of Buyer, and the authority of those executing for Buyer, including, without limitation, the following documents issued no earlier than thirty (30) days prior to Closing: (a) good standing certificate in State of Maryland, (b) Buyer"s Amendment and Restatement of Declaration of Trust filed on August 27, 1996, as amended, (c) a certificate from any officer of Buyer confirming the incumbency of the signatories and the current force and effect of the resolution authorizing their execution of the documents required under this Agreement. 12.2.3 Title Insurance. As a condition to Buyer's obligations at Closing, Title Company or a substitute title insurance company licensed to do business in New Jersey shall furnish Buyer at Closing with the Title Policy, in the form approved by Buyer pursuant to Section 3, in the full amount of the Purchase Price, wherein the Title Company shall insure fee simple title to the Property in Buyer as of the Closing Date containing no exceptions to title other than the Sun Loan and the Permitted Exceptions. 12.2.4 Necessary Documents. Buyer and Seller shall execute and deliver such other documents and instruments as may be reasonably necessary to complete the transaction contemplated by this Agreement. 13. DEFAULT; REMEDIES 13.1.1 Prior to title passing and the completion of Closing, in the event of 1120's, MLCP"s or ECA"s default hereunder, Buyer"s sole remedies shall be that of (i) specific performance with abatement of the Purchase Price to the extent of liens of a fixed or ascertainable amount (subject to the dollar limitation contained in Section 7.1), or (ii) termination of this Agreement and return of the Deposit, in no event shall Buyer be entitled to damages of any kind or nature; 25 26 13.1.2 Prior to title passing and completion of Closing, with respect to any representations or warranties of 1120, MLCP and ECA contained in this Agreement, Buyer"s obligations hereunder are contingent upon such representations and/or warranties contained in this Agreement being true and correct as of the date hereof and where the context indicates, as of the date of Closing, but recision of this Agreement and return of the Deposit, shall be Buyer"s exclusive remedy for any breach of any representation and/or warranty by 1120, MLCP, and ECA. 13.1.3 Notwithstanding the foregoing, in the event of a willful or intentional breach of a covenant, obligation or warranty by 1120, MLCP or ECA under this Agreement or if 1120, MLCP or ECA makes a willful or intentional material misrepresentation in this Agreement, Buyer shall be entitled to terminate this Agreement and to the return of the Deposit and Buyer"s reasonably documented Transaction Costs sustained by Buyer in connection with this Agreement; and the foregoing shall be Buyer"s sole remedies under this subparagraph. 13.1.4 Subsequent to title passing and completion of Closing, Buyer shall have recourse against 1120, MLCP and ECA for its reasonably documented actual damages, sustained solely for 1120's, MLCP"s and ECA"s breach of representations and warranties which survive Closing, which breach is discovered by Buyer after Closing; the right to pursue said recourse shall expire and terminate, as to any right on which action has not then been initiated, at the expiration of the survival periods set forth herein. 13.2 Buyer recognizes that the 1120 Property, the MLCP Property and the ECA Property will be removed by Seller from the market during the existence of this Agreement and that if this purchase and sale is not consummated because of Buyer's default Seller shall be entitled to compensation for such detriment. Seller and Buyer acknowledge that it is extremely difficult and impracticable ascertain the extent of the detriment, and to avoid this problem, Seller and Buyer agree that if the purchase and sale contemplated in this Agreement is not consummated because of Buyer's default under this Agreement, Seller shall be entitled to retain the Deposit as its sole and liquidated damages. The parties agree that the sum stated above as liquidated damages shall be in lieu of any other relief to which Seller might otherwise be entitled, Seller hereby specifically waiving any and all rights which it may have to damages or specific performance as a result of Buyer's default under this Agreement. 13.3 Buyer"s Out-of-Pocket Costs. In the event of Seller"s breach or default in accordance with Section 13.1.3 then, in any such event, upon termination by Buyer hereunder, in addition to receiving the immediate return of the Deposit, anything in the Agreement contained to the contrary notwithstanding, Buyer shall also receive from Seller, upon demand, Buyer"s actual, documented out-of-pocket costs and expenses associated with this Agreement and Buyer"s anticipated acquisition of the Property including, without limitation, Buyer"s reasonable counsel fees and costs, title expenses, survey costs, financial and accounting due diligence, Buyer"s structural inspection of the Property and Buyer"s environmental assessment of the Property, and other costs and expenses associated with Buyer"s due diligence, (collectively, "Transaction Costs"). The foregoing list is not intended to be exclusive, but representative of the costs and expenses that the parties anticipate that Buyer will incur in anticipation of this 26 27 transaction. Seller"s maximum reimbursement liability under this Section 13 shall not exceed $60,000 in the aggregate. 14. CONDITIONS PRECEDENT TO CLOSING. The obligations of Buyer hereunder are subject to the fulfillment of the following conditions prior to or on the Closing Date (any one of which may be waived in whole or in part by Buyer at or prior to the Closing) and in the event any of the conditions are not complied with, Buyer may terminate this Agreement by notifying the Seller and Escrow Agent and thereupon shall be refunded the Deposit and thereafter this Agreement shall be null and void: 14.1 Correctness of Warranties and Representations. The warranties and representations made by Seller which are specifically required to be true and correct at and as of Closing shall be true and correct on the Closing Date in all material respects as though such representations and warranties were made on the Closing Date, except (i) immaterial variations which occur in the ordinary course of Seller"s business which do not materially affect Buyer"s valuation of the 1120 Property, MLCP Property or the ECA Property or (ii) provided Buyer closes, any matter or occurrence within Buyer"s actual knowledge prior to Closing shall not be construed as a failure of the condition set forth in this Section 14.1. 14.2 Compliance with Terms and Conditions. Each of 1120, MLCP and ECA shall have performed and complied in all material respects with all of the terms and conditions required by this Agreement to be performed and complied with by it prior to or on the Closing Date, including delivery of all of the Seller Documents. 14.3 Buyer's Review of Structural and Environmental Status, Fleer Corp. and ECA Title. Buyer shall be satisfied by 5:00 p.m. on Thursday, January 23, 1997, time being of the essence, with Buyer"s review of Buyer"s structural engineering, environmental investigations, the status of Fleer Corp."s outstanding lease obligations (including the possible implications of Fleer Corp."s bankruptcy), and the state of title to the ECA Property, which review shall not reveal any fact, circumstance or information which in Buyer"s sole judgment may materially and adversely affect the Property or Buyer"s valuation of the 1120 Property, the MLCP Property and the ECA Property. 14.4 Estoppel Certificate from Evesham Township and Mt. Laurel Township. Subject to the provisions of Section 4.7 above, Buyer shall have received an estoppel certificate from the zoning code enforcement (or other appropriate) officer of Evesham Township and Mt. Laurel Township, confirming that no portion of the 1120 Property, the MLCP and the ECA Property is in violation of any applicable codes, and that each of the foregoing is in compliance with applicable zoning restrictions. 14.5 Consent of Sun. Seller shall have obtained the written consent of Sun to the transaction, contemplated by this Agreement in form and substance reasonably satisfactory to Buyer, and a release of 1120 and MLCP under the Sun Loans with respect to matters which accrue from and after Closing. The Buyer shall, at or prior to Closing, execute and deliver such 27 28 assumption agreements and other documents, reasonably acceptable in form and content to Buyer, required by Sun to effectuate the assumption of the Sun Loan on the same non-recourse basis as is applicable on the date hereof. At Closing, Abdelwahabb Sallam ("AS") shall retain all of his obligations under the Master Lease dated March 15, 1995 (the "Master Lease"), which Master Lease shall be assigned to Buyer as Master Landlord, provided that the Master Lease shall be terminated and of no further effect upon the consent of Sun to such termination and the satisfaction of the conditions to the termination of the Master Lease as set forth in the 1120 Debt. Buyer hereby appoints 1120 as Buyer's sole and exclusive agent, without fee, commission or other compensation, for the purpose of procuring the lease renewal of Computer Sciences Corporation ("CSC"). Buyer shall execute any lease renewal with CSC procured by 1120 so long as the basic form thereof is consistent with the present CSC lease, and the new business terms thereof are sufficient to terminate the Master Lease pursuant to the provisions of the 1120 Debt. Buyer shall not unreasonably withhold its consent to any other lease renewal with CSC procured by 1120, provided that the Master Lease remains effective. In the event that CSC does not renew its lease, if requested by Seller, the Buyer hereby appoints 1120 as the Buyer's sole and exclusive agent to procure a substitute tenant for such space without fee, compensation or commission. Buyer shall execute any lease with any such substitute tenant(s) procured by 1120 or any other party so long as the provisions thereof are sufficient to terminate the Master Lease pursuant to the provisions of the 1120 Debt and so long as such new tenant does not create a conflict with any exclusive use clauses contained in existing leases at such time. Buyer shall not unreasonably withhold its consent to any other lease procured by 1120 or any other party, so long as the Master Lease remains effective. Notwithstanding anything contained herein to the contrary, the Buyer shall be solely responsible for any tenant improvement costs related to the lease renewal with CSC or any substitute tenant(s), provided that the per share foot cost thereof shall have been approved by Buyer in advance, such approval not to be unreasonably withheld or delayed. The provisions of this Section 14.5 shall survive Closing. 14.6 Tenant Estoppels and Discussions. Seller shall use its best efforts to deliver to Buyer estoppel certificates in the form specified by Buyer from Conrail, Lincoln Technical Institute and ISO Commercial Risk Services, which estoppel certificates shall affirm Seller"s representations and warranties with respect to such leases as contained in Section 5 above. Buyer, with R. Brian Jackson or Joseph Gonnelli, prior to Closing, shall have had the opportunity to discuss with Fleer Corp., Conrail, Lincoln Technical Institute and ISO Commercial Risk Services the standard information to be contained in the above-referenced estoppel certificates and be reasonably satisfied that the responses confirm that such information comports with the representations set forth in Section 5 of this Agreement. 15. PRORATIONS. 15.1 Operating Expenses. The following items shall be prorated at Closing, as of close of business of the day immediately preceding Closing "Adjustment Date": 15.1.1 Rents. All current collected rent, additional rent, percentage rent (if any) and all other charges collected under the Leases shall be apportioned on the Closing Date pro rata on a per diem basis. If any tenant is in arrears in the payment of rent or additional rent 28 29 on the Closing Date, rents received from such tenant ninety (90) days after the Closing Date shall be applied in the following order of priority: (a) to the Buyer, so long as such tenant is in arrears for current or prior rent arising after Closing, then (b) to Seller for all rent in arrears prior to the Closing Date; and then (c) to Buyer with no further claim by Seller thereto. Except as herein provided, Buyer is not under any obligation to collect rents in arrears for the benefit of Seller. Any rents which are delinquent or otherwise not paid at the time of Closing, and collected by Buyer within ninety (90) days after Closing shall be apportioned as aforesaid and the portion to which Seller is entitled shall be promptly remitted by Buyer to Seller. Seller shall have no claim to rents collected ninety (90) days after the Closing Date. 15.1.2 Taxes. Real estate and personal property taxes, if any, on the basis of the fiscal year for which assessed. If the Closing shall occur before the tax rate or assessment is fixed, the apportionment of such real estate and personal property taxes at the Closing shall be upon the basis of the tax rate for the next preceding year applied to the latest assessed valuation. Final adjustment will be made upon the actual tax amount, when determined. 15.1.3 Deposits. Tax and utility company deposits, if any. 15.1.4 Water and Sewer Charges. Water and sewer charges and fire protection and inspection services based upon meter readings to be obtained by Seller effective as of the Adjustment Date, or if not so obtainable, a date not more than ten (10) days prior to the Adjustment Date, and the unfixed meter charges based thereon for the intervening period shall be apportioned on the basis of such last reading. Upon the taking of a subsequent actual reading, such apportionment shall be readjusted and Seller or Buyer, as the case may be, will promptly deliver to the other the amount determined to be so due upon such readjustment. If Seller is unable to furnish such prior reading, any reading subsequent to the Closing will be apportioned on a per diem basis from the date of such reading immediately prior thereto and Seller shall pay the proportionate charges due up to the date of Closing. 15.1.5 Assigned Contracts. Amounts paid or payable in respect of any service and maintenance contracts assigned to Buyer in accordance herewith. 15.1.6 Electricity, gas, steam and fuel. Electricity, gas and steam and fuel oil, if any, based on meter readings or a fuel company letter showing measurement on the day immediately preceding Closing, and valued at current prices. 15.1.7 Security Deposits. Buyer shall receive a check from Seller for the full amount of any security deposits, with accrued interest, or a credit against the Purchase Price in said amount. 15.2 Future Installments of Taxes. If at Closing, the Property or any part thereof shall be or shall have been affected by an assessment or assessments which are or may become payable in installments, then for purposes of this Agreement, all unpaid installments of any such assessment shall be paid and discharged by Seller at Closing; provided, however, that 29 30 installments which are not due or payable until after the Closing shall be assumed by Buyer from and after Closing. 15.3 Application of Prorations. If such prorations result in a payment due Buyer, the cash payable at Closing shall be reduced by such sum. If such prorations result in a payment due Seller, the same shall be paid by wire transfer of immediately available funds at Closing. 15.4 Schedule of Prorations. The parties shall endeavor to jointly prepare a schedule of prorations for the Property no less than two (2) days prior to Closing. 15.5 Escalations. With respect to any sums due under leases for operating expenses incurred by 1120, MLCP or ECA, as the case may be, and collected by Seller for the calendar year 1996 (the "1996 Expense Escalations"), Seller shall provide to each tenant a statement of the amount of the 1996 Expense Escalation due from such tenant, if any, and Seller shall be entitled to bill such tenants for any amounts owed to such tenants; provided, that, if Seller, in fact, owes any such tenants amounts based on actual costs for calendar year 1996, Seller shall promptly pay such amounts to the applicable tenants upon Seller"s determination of such actual costs. Any 1996 Expense Escalations paid to the Buyer after Closing shall be immediately remitted to Seller. Seller shall not be entitled to any expense escalations for the calendar year 1997, and Seller shall credit the Purchase Price with any such amounts for calendar year 1997 collected as of the Closing. 15.6 Readjustments. The parties shall correct any errors in prorations as soon after the Closing as amounts are finally determined. 16. BROKERS. Each party hereby represents and warrants to the other that it has not employed or retained any broker or finder in connection with the transactions contemplated by this Agreement other than Jackson Cross Company (the "Broker"), to whom Seller alone shall be responsible to pay any fee or commission that may be due, and that neither has had any dealings with any other person or party which may entitle that person or party to a fee or commission. Each party shall indemnify the other of and from any claims for commissions by any person or party claiming such commission by or through the indemnifying party, other than Broker, as to whom Seller alone shall be responsible. 17. ESCROW AGENT. The parties hereto have requested that the Deposit be held in escrow by the Escrow Agent to be applied at the Closing or prior thereto in accordance with this Agreement. The Escrow Agent will deliver the Deposit to Seller or to Buyer, as the case may be under the following conditions: 17.1 Payment to Seller. To Seller on the Closing Date upon the consummation of Closing or if Buyer breaches this Agreement and fails to close in accordance with the terms and conditions stated herein. 30 31 17.2 Notice of Dispute. If either Seller or Buyer believes that it is entitled to the Deposit or any part thereof, it shall make written demand therefor upon the Escrow Agent. The Escrow Agent shall promptly mail a copy thereof to the other party in the manner specified in Section 18.1 below. The other party shall have the right to object to the delivery of the Deposit, by filing written notice of such objections with the Escrow Agent at any time within three (3) days after the mailing of such copy to it in the manner specified in Section 18.1 below, but not thereafter. Such notice shall set forth the basis for objection to the delivery of the Deposit. Upon receipt of such notice, the Escrow Agent shall promptly deliver a copy thereof to the party who filed the written demand. 17.3 Escrow Subject to Dispute. In the event the Escrow Agent shall have received the notice of objection provided for in 17.2 above of this Section, in the manner and within the time therein prescribed, the Escrow Agent shall continue to hold the Deposit until (i) the Escrow Agent receives written notice from both Seller and Buyer directing the disbursement of the Deposit in which case the Escrow Agent shall then disburse said Deposit in accordance with said direction, or (ii) litigation arises between Seller and Buyer, in which event the Escrow Agent shall deposit the Deposit with the Clerk of the Court in which said litigation is pending, or (iii) the Escrow Agent takes such affirmative steps as the Escrow Agent may, at the Escrow Agent's option elect in order to terminate the Escrow Agent's duties including, but not limited to, deposit in Court and an action for interpleader. 17.4 Escrow Agent's Rights and Liabilities. Escrow Agent shall not be required to determine questions of fact or law, and may act upon any instrument or other writing believed by it in good faith to be genuine and to be signed and presented by the proper person, and shall not be liable in connection with the performance of any duties imposed upon Escrow Agent by the provisions of this Agreement, except for Escrow Agent's own willful default or gross negligence. Escrow Agent shall have no duties or responsibilities except those set forth herein. Escrow Agent shall not be bound by any modification of this Agreement, unless the same is in writing and signed by Buyer and Seller, and, if Escrow Agent's duties hereunder are affected, unless Escrow Agent shall have given prior written consent thereto. In the event that Escrow Agent shall be uncertain as to Escrow Agent's duties or rights hereunder, or shall receive instructions from Buyer or Seller which, in Escrow Agent's opinion, are in conflict with any of the provisions hereof, Escrow Agent shall be entitled to hold and apply the Deposit, pursuant to Section 17.3, and may decline to take any other action. 18. GENERAL PROVISIONS. 18.1 Notices. All notices or other communications required or permitted to be given under the terms of this Agreement shall be in writing, and shall be deemed effective when (i) sent by nationally-recognized overnight courier, (ii) facsimile with original following by regular mail, (iii) deposited in the United States mail and sent by certified mail, postage prepaid, addressed, or (iv) personally delivered, as follows: 18.1.1 If to Buyer, addressed to: 31 32 Brandywine Realty Trust Newtown Square Corporate Campus 16 Campus Boulevard Suite 150 Newtown Square, PA 19073 Attn: Gerard H. Sweeney, President and Chief Executive Officer with a copy in each instance to: Eric L. Stern, Esquire and Brad A. Molotsky, Esquire Pepper, Hamilton & Scheetz 3000 Two Logan Square Eighteenth & Arch Streets Philadelphia, PA 19103 18.1.2 If to Seller, addressed to: 1120 Associates Limited Partnership 4A Eves Drive Marlton, New Jersey 08053 with a copy in each instance to: Robert Schwartz, Esquire Sherman, Silverstein, Kohl, Rose & Podolsky 4300 Haddonfield Road Suite 311 Pennsauken, New Jersey 08109 or to such-other address or addresses and to the attention of such other person or persons as any of the parties may notify the other in accordance with the provisions of this Agreement. 18.2 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 18.3 Entire Agreement. All Exhibits attached to this Agreement are incorporated herein and made a part hereof. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior negotiations, understandings and agreements of any nature whatsoever with respect to the subject matter hereof. This Agreement may not be modified or amended other than by an agreement in writing. The captions included in this Agreement are for convenience only and in no way define, describe or limit the scope or intent of the terms of this Agreement. 32 33 18.4 Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of New Jersey. 18.5 No Recording. This Agreement shall not be recorded in the Clerk"s Office for Burlington County or in any other office or place of public record. 18.6 Tender. Tender of Deed by Seller and of the Purchase Price by Buyer, are hereby mutually waived. 18.7 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. 18.8 Further Instruments. Seller will, whenever and as often as it shall be reasonably request so to do by Buyer, and Buyer will, whenever and as often as it shall be reasonably requested so to do by Seller, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all conveyances, assignments, correction instruments and all other instruments and documents as may be reasonably necessary in order to complete the transaction provided for in this Agreement and to carry out the intent and purposes of this Agreement. All such instruments and documents shall be satisfactory to the respective attorneys for Buyer and Seller. The provisions of this Article shall survive the Closing. 18.9 Time. Time is of the essence. In the event the last day permitted for the performance of any act required or permitted under this Agreement falls on a Saturday, Sunday, or legal holiday of the United States or the State of New Jersey, the time for such performance will be extended to the next succeeding business day. Time periods under this Agreement will exclude the first day and include the last day of such time period. 18.10 Designation of Nominee; Assignment of Agreement. Buyer shall have the right to designate Brandywine Operating Partnership, L.P. to acquire title to the Premises hereunder. 18.11 Effective Date. Whenever the term or phrase "effective date hereof" or "date hereof" or other similar phrases describing the date this Agreement becomes binding on Seller and Buyer are used in this Agreement, such terms or phrases shall mean and refer to the date on which a counterpart or counterparts of this Agreement executed by Seller and Buyer are deposited with the Escrow Agent. 18.12 Prevailing Party. To the extent an action, law suit, hearing or mediation (an "Action") is instituted to enforce a provision of this Agreement or to obtain the Deposit hereunder, the prevailing party in such action shall be entitled to reimbursement of its counsel costs and fees in connection with such Action. 33 34 18.13 Confidentiality. Each of the parties hereto covenants and agrees to hold the nature, content and the Purchase Price contained herein in strict confidence, and other than disclosure required by the SEC and except as may be necessary to comply with this Agreement, neither party shall disclose the nature, content and the Purchase Price of this Agreement without the express written consent of the other party. 19. SEC REPORTING (8-K) REQUIREMENTS. For the period of time commencing on the date hereof and continuing through the first anniversary of the Closing Date, and without limitation of other document production otherwise required of Seller hereunder, Seller shall, from time to time, upon reasonable advance written notice from Buyer, provide Buyer and its representatives, with access to all financial and other information pertaining to the period of Seller"s ownership and operation of the Property, which information is relevant and reasonably necessary, in the opinion of Buyer"s outside, third party accountants (the "Accountants"), to enable Buyer and its Accountants to prepare financial statements in compliance with any or all of (a) Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission (the "Commission"), as applicable; (b) any other rule issued by the Commission and applicable to Buyer; and (c) any registration statement, report or disclosure statement filed with the Commission by, or on behalf of Buyer; provided, however, that in any such event(s), Buyer shall reimburse Seller for those reasonably documented third party, out-of-pocket costs and expenses that Seller incurs to comply with the requirements of this Section 19. Seller acknowledges and agrees that the following is a representative (but incomplete) description of the information and documentation that Buyer and the Accountants may require in order to comply with (a), (b) and (c) above. 20. TAX DEFERRED EXCHANGE. MLCP intends to effectuate a "like-kind exchange" pursuant to Section 1031 of the Internal Revenue Code, and to utilize the MLCP Property as "Relinquished Property" and the sale thereof in connection with such like-kind exchange. The Buyer shall fully cooperate, at no additional cost to Buyer, with MLCP in effectuating any like-kind exchange, including Replacement Property or other real property ("Replacement Parcel") identified by MLCP provided that nothing herein shall require the Buyer to close on or take title to any Replacement Parcel. MLCP"s effectuation of the like-kind exchange prior to any closing shall not be a condition or contingency to the MLCP"s obligations hereunder. MLCP shall be responsible for all costs and expenses incurred in connection with the effectuation of a like-kind exchange over and above those Buyer would incur in a straight purchase/sale. MLCP shall indemnify and hold harmless Buyer form any and all losses, costs, expenses and damages associated with Buyer"s participation in the exchange transaction. The MLCP Property subject to this Agreement constitute Relinquished Property in the Internal Revenue Code Section 1031 exchange. 21. OPTION. MLCP grants Buyer the exclusive right and option to buy the Option Parcel for a period of 18 months from the Closing Date (the "Initial Option Termination Date") for a purchase price of $1,000,000. On or before 30 business days prior to the Initial Option Termination Date, Buyer shall have the one time right, upon payment of a $100,000 non- refundable option fee, to extend the Option closing date to June 30, 2000. The Option shall be 34 35 memorialized in an Option Agreement, the form of which Option Agreement to be mutually agreed upon by the parties prior to Closing. If the Buyer exercises the option to buy the Option Parcel, the Buyer shall close such transaction within 15 days after notice of the exercise of such option. The transfer of the title to the Option Parcel shall be by Bargain and Sale Deed with Covenants Against Grantor's Acts and quit claim assignment of licenses, permits and approvals and all other Seller rights and interests in and to the Option Parcel, but shall otherwise be without representation, warranty or recourse of any kind whatsoever. 22. EXCULPATION. No recourse shall be had for any obligation of Brandywine Realty Trust under this Agreement or under any document executed in connection herewith or pursuant hereto, or for any claim based thereon or otherwise in respect thereof, against any past, present or future trustee, shareholder, 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 such liability being expressly waived and released by 1120, MLCP and ECA and all parties claiming by, through or under 1120, MLCP, ECA, and each of them. 23. ALL OR NOTHING. Each of 1120, MLCP and ECA's respective obligations hereunder are expressly subject to and conditioned upon completion of closing under this Agreement of all, but not less than all of the 1120 Property, the MLCP Property and the ECA Property. Notwithstanding the foregoing, the obligations of each of the entities constituting the Seller hereunder are independent of the other's obligations, and such obligations shall not be joint or several. 35 36 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed the day and year first above written.
1120 ASSOCIATES LIMITED BRANDYWINE REALTY TRUST, PARTNERSHIP a Maryland Real Estate Investment Trust By: Palomino Corporation, its authorized general partner By: /s/ Joseph D. Gonnelli By: /s/ Gerard H. Sweeney -------------------------------------- ---------------------------------------- Joseph D. Gonnelli, Vice President Gerard H. Sweeney, President and Chief Executive Officer MLCP ASSOCIATES LIMITED EXECUTIVE COURT ASSOCIATES PARTNERSHIP LIMITED PARTNERSHIP By: MLCP General Corporation, its authorized By: Palomino Corporation, its authorized general partner general partner By: /s/ Joseph D. Gonnelli By: /s/ Joseph D. Gonnelli -------------------------------- ---------------------------------------- Joseph D. Gonnelli, President Joseph D. Gonnelli, Vice President
Agreed to by Escrow Agent with regard to the obligations, terms, covenants and conditions contained in this Agreement relating to Escrow Agent. Sherman, Silverstein, Kohl, Rose & Podolsky, P.A. By: /s/ Robert Schwartz ---------------------------------- Robert Schwartz, a Shareholder 36 37 AGREEMENT OF SALE INDEX
Section Page ---- 1. PROPERTY BEING SOLD......................................................................................2 1.1 Real Property...................................................................................2 1.2 Personal Property...............................................................................3 1.3 Leases..........................................................................................4 1.4 Right to Names..................................................................................4 2. PURCHASE PRICE AND MANNER OF PAYMENT.....................................................................4 2.1 Purchase Price..................................................................................4 2.2 Manner of Payment...............................................................................4 2.2.1 Deposit................................................................................4 2.2.2 Assumption of Sun Loan; Cash Balance...................................................4 3. TITLE....................................................................................................5 4. COVENANTS................................................................................................5 4.1 Maintenance.....................................................................................5 4.2 Alterations.....................................................................................5 4.3 Lease...........................................................................................5 4.4 Security Deposits...............................................................................6 4.5 Bill Tenants....................................................................................6 4.6 Notice to Buyer.................................................................................6 4.7 Comply with Leases..............................................................................6 4.8 No New Agreements...............................................................................7 4.9 Tax Disputes....................................................................................7 4.10 No Removal of Personalty........................................................................7 5. REPRESENTATIONS AND WARRANTIES...........................................................................7 5.1 Seller's Authority For Binding Agreement........................................................7 5.2 Employment on "At-Will" Basis...................................................................8 5.3 Service Contracts...............................................................................8 5.4 Condemnation....................................................................................9 5.5 No Lawsuits.....................................................................................9 5.6 No Tax Assessments.............................................................................10 5.7 Leases.........................................................................................10 5.8 Compliance with Law............................................................................13 5.9 Insurance......................................................................................15 5.10 Intentionally Omitted..........................................................................15 5.11 No Brokers.....................................................................................15
i 38 5.12 Utilities......................................................................................16 5.13 Permits, Approvals and Certificates............................................................16 5.14 Good Title to Property.........................................................................16 5.15 All Taxes and Assessments Paid.................................................................16 5.16 FIRPTA.........................................................................................16 5.17 Intentionally Omitted..........................................................................16 5.18 Construction Liens.............................................................................16 5.19 Inventory Schedule.............................................................................17 5.20 Charges, Fees and Assessments..................................................................17 5.21 Rights to Purchase.............................................................................17 5.22 No Outstanding Obligations.....................................................................17 5.23 Access.........................................................................................17 5.24 Abatement Programs.............................................................................18 5.25 Development Agreements.........................................................................18 5.26 Structural Representation......................................................................18 5.27 Correct Copies of Documents....................................................................19 6. POSSESSION..............................................................................................19 7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY.........................................................19 7.1 Title Binder...................................................................................19 7.2 Survey.........................................................................................20 7.3 Physical Inspection............................................................................20 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............................................................20 9. FIRE OR OTHER CASUALTY..................................................................................21 9.1 Maintain Insurance.............................................................................21 9.2 Minimal Damage.................................................................................21 9.3 Substantial Damage.............................................................................21 9.4 Closing After Substantial Damage...............................................................21 9.5 Rent Insurance.................................................................................21 10. CONDEMNATION............................................................................................21 11. EXPENSE ALLOCATIONS.....................................................................................22 12. CLOSING.................................................................................................22 12.1 Time and Date and Place........................................................................22 12.2 Documents......................................................................................23 12.2.1 Seller's Documents and Other Items....................................................23 12.2.1.1 Deeds................................................................23 12.2.1.2 Special Warranty Bills of Sale.......................................23 12.2.1.3 Original Leases......................................................23
ii 39 12.2.1.4 Original Licenses, Contract Documents and Other Personal Property.............................................................23 12.2.1.5 Assignment of Leases.................................................23 12.2.1.6 Assignment of Licenses, Contract Documents and Other Personal Property....................................................23 12.2.1.7 FIRPTA Certificates..................................................23 12.2.1.8 Tenant Letter........................................................24 12.2.1.9 .....................................................................24 12.2.1.10 Title Insurance Certificates.........................................24 12.2.1.11 Certified Rent Roll..................................................24 12.2.1.12 Seller Certificate...................................................24 12.2.1.13 Organization Certifications..........................................24 12.2.1.14 Keys.................................................................24 12.2.1.15 Intentionally Omitted................................................24 12.2.1.16 Intentionally Omitted................................................24 12.2.1.17 Mortgagee Estoppel...................................................24 12.2.1.18 ISRA Non-Applicability Letter........................................25 12.2.2 Buyer's Documents....................................................25 12.2.2.1 .............................................................................25 12.2.2.2 .............................................................................25 12.2.3 Title Insurance......................................................25 12.2.4 Necessary Documents..................................................25 13. DEFAULT; REMEDIES.......................................................................................25 13.2....................................................................................................26 13.3 Buyer's Out-of-Pocket Costs.....................................................................26 14. CONDITIONS PRECEDENT TO CLOSING.........................................................................27 14.1 Correctness of Warranties and Representations. ...............................................27 14.2 Compliance with Terms and Conditions...........................................................27 14.3 Buyer's Review of Structural and Environmental Status, Fleer Corp. and ECA Title..........................................................................................27 14.4 Estoppel Certificate from Evesham Township and Mt. Laurel Township. ...........................27 14.5 Consent of Sun.................................................................................27 15. PRORATIONS..............................................................................................28 15.1 Operating Expenses.............................................................................28 15.1.1 Rents.................................................................................28 15.1.2 Taxes.................................................................................29 15.1.3 Deposits..............................................................................29 15.1.4 Water and Sewer Charges...............................................................29 15.1.5 Assigned Contracts....................................................................29 15.1.6 Electricity, gas, steam and fuel......................................................29 15.1.7 Security Deposits.....................................................................29 15.2 Future Installments of Taxes...................................................................29
iii 40 15.3 Application of Prorations......................................................................30 15.4 Schedule of Prorations.........................................................................30 15.5 Escalations....................................................................................30 15.6 Readjustments..................................................................................30 16. BROKERS.................................................................................................30 17. ESCROW AGENT............................................................................................30 17.1 Payment to Seller..............................................................................30 17.2 Notice of Dispute..............................................................................31 17.3 Escrow Subject to Dispute......................................................................31 17.4 Escrow Agent's Rights and Liabilities..........................................................31 18. GENERAL PROVISIONS......................................................................................31 18.1 Notices........................................................................................31 18.1.1.........................................................................................31 18.1.2.........................................................................................32 18.2 Binding Effect.................................................................................32 18.3 Entire Agreement...............................................................................32 18.4 Governing Law..................................................................................33 18.5 No Recording...................................................................................33 18.6 Tender.........................................................................................33 18.7 Execution in Counterparts......................................................................33 18.8 Further Instruments............................................................................33 18.9 Time...........................................................................................33 18.10 Designation of Nominee; Assignment of Agreement................................................33 18.11 Effective Date.................................................................................33 18.12 Prevailing Party...............................................................................33 18.13 Confidentiality................................................................................34 19. SEC REPORTING (8-K) REQUIREMENTS.........................................................................34 20. ........................................................................................................34 22. EXCULPATION.............................................................................................35 23. ALL OR NOTHING..........................................................................................35
iv 41 Exhibits to Agreement of Sale "A-1" - Legal Description - 1120 "A-2-A" - Legal Description - MLCP "A-2-B" - Legal Description - Option Parcel "A-3" - Legal Description - ECA Premises "B-1" - Schedule of Inventory - 1120 "B-2" - Schedule of Inventory - MLCP "B-3" - Schedule of Inventory - ECA "C-1" - Permitted Exceptions - 1120 "C-2" - Permitted Exceptions - MLCP "C-3" - Permitted Exceptions - ECA "D-1" - Rent Roll - 1120 "D-2" - Rent Roll - MLCP "D-3" - Rent Roll - ECA "E-1" - Service Contracts - 1120 "E-2" - Service Contracts - MLCP "E-3" - Service Contracts - ECA "F-1" - Litigation - 11120 "F-2" - Litigation - MLCP "F-3" - Litigation - ECA "G-1" - Insurance - 1120 "G-2" - Insurance - MLCP "G-3" - Insurance - ECA
Schedule of Tenant Improvements v 42 AGREEMENT OF SALE 1120 EXECUTIVE PLAZA, MT. LAUREL CORPORATE CENTER, AND EXECUTIVE CENTER BETWEEN BRANDYWINE REALTY TRUST AND 1120 ASSOCIATES LIMITED PARTNERSHIP, MLCP ASSOCIATES LIMITED PARTNERSHIP, AND EXECUTIVE COURT ASSOCIATES LIMITED PARTNERSHIP DATED: JANUARY 20, 1997 vi EX-10.2 3 ASSUMPTION, MODIFICATION AND RELEASE AGREEMENT 1 EXHIBIT 10.2 ASSUMPTION, MODIFICATION AND RELEASE AGREEMENT (1120 Executive Plaza) THIS ASSUMPTION, MODIFICATION AND RELEASE AGREEMENT is executed this 24th day of January, 1997, by and among 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("1120"), BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("BOP") and SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) ("Mortgagee"). A. BOP has purchased, or is about to purchase, those certain premises and the buildings and improvements erected thereon, known as 1120 Executive Plaza, Mt. Laurel, New Jersey, being Lot 3 of Block 1301, and Lots 1, 2 and 3 of Block 1306.01, all as more fully described on Exhibit "A" attached hereto and made a part hereof ("Premises"). B. On or about March 14, 1995, 1120 executed that certain Mortgage and Security Agreement secured upon the Premises in the original principal amount of $6,500,000 (the "Mortgage") for the purpose of securing the payment of certain indebtedness, together with interest thereon, evidenced by that certain Mortgage Note executed by Borrower on March 14, 1995, in the principal amount of $6,500,000 (the "Note"). The loan to 1120 evidenced by the Note and secured by the Mortgage is sometimes hereinafter referred to as the "Loan". The Note and the Mortgage, together with any and all other documents executed by 1120 in connection with the Loan, are sometimes hereinafter collectively referred to as the "Loan Documents." C. In connection with the proposed purchase of the Premises by BOP, BOP has agreed to assume the indebtedness evidenced by the Note on the terms and conditions stated therein, except as may be modified by the terms of this Agreement, and Mortgagee has agreed to grant its consent to the transfer of title to the Premises to BOP, and to offer certain assurances to BOP with respect to the status of the Loan and the Loan Documents. NOW, THEREFORE, for Ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, BOP, 1120 and Mortgagee, each intending to be legally bound, hereby covenant and agree as follows: 1. BOP hereby assumes and agrees to pay the indebtedness evidenced by the Note, and to be bound by and perform all the covenants of the Note and Mortgage, at the time and in the manner stated therein. In connection therewith, BOP shall pay or cause to be paid when due, the principal of, and interest on, the indebtedness evidenced by the Note, and the principal of, and interest on, all sums secured by the Mortgage, and shall pay or cause to be paid when due the charges, fees and all other sums as provided in the Mortgage. 2 2. Mortgagee hereby consents to the transfer of title to the Premises to BOP, and agrees that such transfer shall not constitute a default or an Event of Default under the Note or Mortgage or under any of the Loan Documents. 3. Mortgagee hereby releases 1120 of and from any and all liability hereafter accruing as Maker under the Note and as Mortgagor under the Mortgage. Nothing herein shall be deemed to release Abdelwahabb Sallam ("Sallam") from any obligations arising under that certain Master Lease dated March 15, 1995 (the "Master Lease"), the Landlord"s interest in which Master Lease shall be assigned by 1120 to BOP contemporaneously with BOP"s acquisition of the Property. 4. Mortgagee hereby certifies that (i) it is the holder and owner of the Note and Mortgage and each of the Loan Documents, and has not sold, assigned, participated or transferred the Note or Mortgage, or any interest in the Loan or in any of the Loan Documents, (ii) except for this Agreement, there has been no amendment, modification or supplement of any kind or nature in the Note or Mortgage or in any of the Loan Documents from the date of execution thereof, and Exhibit "B" hereto sets forth a true, correct and complete list of all of the Loan Documents, (iii) as of the date hereof, the unpaid principal balance due under the Note is $6,137,968.58 and all interest required to be paid under the Note through and including December 31, 1996 has been paid in full to Mortgagee, (iv) there are no charges or other sums due or owing under the Note and Mortgage or any of the Loan Documents, until the next regularly scheduled mortgage payment date, being February 1, 1997, (v) interest is payable on the Loan at the rate of 9.875% per annum, principal and interest is payable in consecutive monthly installments of $69,353.11 each, and the maturity date of the Loan is March 1, 2002, (vi) as of January 24, 1997, the following escrow is maintained by Mortgagee or by its servicing agent: real estate tax: $15,526.96, and 1120's obligations with respect to funding such escrow(s) is/are current as of this date, and the Note, the Mortgage and each of the Loan Documents are in full force and effect in accordance with their respective terms and, to the best of Mortgagee's knowledge, no default or Event of Default exists under the Note, the Mortgage or under any of the Loan Documents, and no event exists which, but for the giving of notice and/or the passage of time, would constitute a default or Event of Default thereunder. 5. Anything contained in the Note, the Mortgage or in any of the Loan Documents to the contrary notwithstanding, nothing contained in any of such documents shall be deemed or construed to restrict in any manner whatsoever the ability of Brandywine Realty Trust ("BRT") to issue any common stock or shares of beneficial interest in BRT, or to restrict in any manner the transferability of shares in BRT or limited partnership units in BOP, or BOP"s ability to issue additional limited partnership units in accordance with the provisions of its Agreement of Limited Partnership, as amended from time to time. Paragraph 3(i) of the Letter Agreement referenced in Exhibit "B" hereto is agreed to be of no further force or effect. 6. Mortgagee hereby approves Brandywine Realty Services Corp., as manager of the Property effective as of this date. -2- 3 7. Paragraph 25 of the Mortgage is hereby modified by restating the notice addresses for Mortgagor as follows: Brandywine Operating Partnership, L.P. c/o Brandywine Realty Trust 16 Campus Boulevard, Suite 150 Newtown Square, PA 19073 Attention: Gerard H. Sweeney, President and Chief Executive Officer with a copy to: Michael H. Friedman, Esquire Pepper, Hamilton and Scheetz 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 8. Except as otherwise expressly amended hereby, all of the terms, conditions and obligations of the Note and Mortgage remain in full force and effect and unmodified hereby. 9. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors and assigns. 10. No recourse shall be had for any obligation of Brandywine Realty Trust under this Agreement, the Note, the Mortgage or under any of the Loan Documents, 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 such liability, if there be any, against any past, present or future trustee, shareholder, officer or employee, being expressly waived and released by MLCP and by Sun, and by all parties claiming by, through or under them, or either of them. The foregoing shall not otherwise limit the liability of Brandywine Realty Trust, to the extent it has such liability, under the said Loan Documents. -3- 4 IN WITNESS WHEREOF, the parties hereto have executed this Assumption, Modification and Release Agreement, the date first written above. 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware Limited Partnership By: Palomino Corporation, its authorized General Partner By: /s/ Joseph D. Gonnelli ---------------------------------------- Joseph D. Gonnelli, Vice President BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware Limited Partnership By: Brandywine Realty Trust, a Maryland Real Estate Investment Trust, General Partner By: /s/ Gerard H. Sweeney -------------------------------------- Gerard H. Sweeney, President and and Chief Executive Officer SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) By: /s/ Jeffrey S. Skerry ------------------------------ Name: Jeffrey S. Skerry Title: Senior Associate Counsel -4- 5 STATE OF : : SS. COUNTY OF : On this day _____of _____________, 1997, before me, a Notary Public, personally appeared Joseph D. Gonnelli, who acknowledged himself to be the Vice President of Palomino Corporation, the authorized General Partner of 1120 Associates Limited Partnership, a Delaware limited partnership, and that he, as such officer, being authorized to do so, executed the foregoing instrument in the name of the said limited partnership for the purposes therein con tained, by signing the name of the limited partnership by himself as President of its authorized General Partner, and desired that the same might be recorded as such. WITNESS my hand and seal the day and year aforesaid. ------------------------------ Notary Public My Commission Expires: STATE OF : : SS. COUNTY OF : On this _____ day of _____________, 1997, before me, a Notary Public, personally appeared Gerard H. Sweeney, who acknowledged himself to be the President and Chief Executive Officer of Brandywine Realty Trust, a Maryland Real Estate Investment Trust, the authorized General Partner of Brandywine Operating Partnership, L.P., a Delaware limited partnership, and that he, as such officer, being authorized to do so, executed the foregoing instrument in the name of the said limited partnership for the purposes therein contained, by signing the name of the limited partnership by himself as President of its authorized General Partner, and desired that the same might be recorded as such. WITNESS my hand and seal the day and year aforesaid. ------------------------------ Notary Public My Commission Expires: 6 STATE OF : : SS. COUNTY : On this _____ day of _________________, 1997, before me, a Notary Public, personally appeared _____________________ who acknowledged himself to be the ________________ of Sun Life Assurance Company of Canada (U.S.), a ____________________, and that he, as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer, and desired that the same might be recorded as such. WITNESS my hand and seal the day and year aforesaid. ------------------------------ Notary Public My Commission Expires: 7 EXHIBIT "A" Legal Description of Property 8 EXHIBIT "B" 1120 Executive Plaza 1. Commitment Letter dated January 13, 1995 - 1120 Associates/Sun Life Loan No. 790128. 2. Mortgage Note dated March 14, 1995, in the original principal amount of $6,500,000, from 1120 Associates Limited Partnership ("Maker") to Sun Life Assurance Company of Canada (U.S.) ("Holder"). 3. Mortgage and Security Agreement made as of March 14, 1995, between 1120 Associates Limited Partnership ("Mortgagor") and Sun Life Assurance Company of Canada (U.S.) ("Mortgagee") recorded in the Burlington County Clerk"s Office on March 17, 1995, in Mortgage Book 5910, Page 3, to secure the sum of $6,500,000. 4. Assignment of Leases and Agreement between 1120 Associates Limited Partnership and Sun Life Assurance Company of Canada, a Delaware Corporation dated March 14, 1995, recorded in the Burlington County Clerk"s Office on March 17, 1995, in Deed Book 4931, Page 42. 5. Financing Statement "76911, filed March 21, 1995. Filed with the Secretary of State March 21, 1995, file "1625215. Debtor: 1120 Associates, L.P., 2 Eves Drive Marlton, NJ 08053 Secured Party: Sun Life Assurance Co., of Canada, U.S., One Sun Life Executive Park, Wellesley Hills, MA 02181 6. Letter Agreement dated March 14, 1995, to 1120 Associates Limited Partnership from Sun Life Assurance Company of Canada (U.S.) EX-10.3 4 ASSUMPTION, MODIFICATION AND RELEASE AGREEMENT 1 EXHIBIT 10.3 ASSUMPTION, MODIFICATION AND RELEASE AGREEMENT (1000 Howard Boulevard, Mt. Laurel, New Jersey) THIS ASSUMPTION, MODIFICATION AND RELEASE AGREEMENT is executed this 24th day of January, 1997, by and among MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("MLCP"), BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("BOP") and SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) ("Mortgagee"). A. BOP has purchased, or is about to purchase, those certain premises and the buildings and improvements erected thereon, known as 1000 Howard Boulevard, Mt. Laurel, New Jersey, being Lot 1.01 of Block 1104, all as more fully described on Exhibit "A" attached hereto and made a part hereof ("Premises"). B. On or about October 19, 1994, MLCP executed that certain Mortgage and Security Agreement secured upon the Premises in the original principal amount of $6,500,000 (the "Mortgage") for the purpose of securing the payment of certain indebtedness, together with interest thereon, evidenced by that certain Mortgage Note executed by Borrower on October 19, 1994, in the principal amount of $6,500,000 (the "Note"). The loan to MLCP evidenced by the Note and secured by the Mortgage is sometimes hereinafter referred to as the "Loan". The Note and the Mortgage, together with any and all other documents executed by MLCP in connection with the Loan, are sometimes hereinafter collectively referred to as the "Loan Documents." C. In connection with the proposed purchase of the Premises by BOP, BOP has agreed to assume the indebtedness evidenced by the Note on the terms and conditions stated therein, except as may be modified by the terms of this Agreement, and Mortgagee has agreed to grant its consent to the transfer of title to the Premises to BOP, and to offer certain assurances to BOP with respect to the status of the Loan and the Loan Documents. NOW, THEREFORE, for Ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, BOP, MLCP and Mortgagee, each intending to be legally bound, hereby covenant and agree as follows: 1. BOP hereby assumes and agrees to pay the indebtedness evidenced by the Note, and to be bound by and perform all the covenants of the Note and Mortgage, at the time and in the manner stated therein. In connection therewith, BOP shall pay or cause to be paid when due, the principal of, and interest on, the indebtedness evidenced by the Note, and the principal of, and interest on, all sums secured by the Mortgage, and shall pay or cause to be paid when due the charges, fees and all other sums as provided in the Mortgage. 2 2. Mortgagee hereby consents to the transfer of title to the Premises to BOP, and agrees that such transfer shall not constitute a default or an Event of Default under the Note or Mortgage or under any of the Loan Documents. 3. Mortgagee hereby releases MLCP of and from any and all liability hereafter accruing as Maker under the Note and as Mortgagor under the Mortgage. 4. Mortgagee hereby certifies that (i) it is the holder and owner of the Note and Mortgage and each of the Loan Documents, and has not sold, assigned, participated or transferred the Note or Mortgage, or any interest in the Loan or in any of the Loan Documents, (ii) except for this Agreement, there has been no amendment, modification or supplement of any kind or nature in the Note or Mortgage or in any of the Loan Documents from the date of execution thereof, and Exhibit "B" hereto sets forth a true, correct and complete list of all of the Loan Documents, (iii) as of the date hereof, the unpaid principal balance due under the Note is $6,018,589.14, and all interest required to be paid under the Note through and including December 31, 1996 has been paid in full to Mortgagee, (iv) there are no charges or other sums due or owing under the Note and Mortgage or any of the Loan Documents, until the next regularly scheduled mortgage payment date, being February 1, 1997, (v) interest is payable on the Loan at the rate of 9.25% per annum, principal and interest is payable in consecutive monthly installments of $66,897.50 each, and the maturity date of the Loan is November 1, 2004, (vi) as of January 24, 1997, the following escrows are maintained by Mortgagee or by its servicing agent: real estate tax: $20,910.48, and MLCP's obligations with respect to funding such escrow(s) is/are current as of this date, and the Note, the Mortgage and each of the Loan Documents are in full force and effect in accordance with their respective terms and, to the best of Mortgagee's knowledge, no default or Event of Default exists under the Note, the Mortgage or under any of the Loan Documents, and no event exists which, but for the giving of notice and/or the passage of time, would constitute a default or Event of Default thereunder. 5. Anything contained in the Note, the Mortgage or in any of the Loan Documents to the contrary notwithstanding, nothing contained in any of such documents shall be deemed or construed to restrict in any manner whatsoever the ability of Brandywine Realty Trust ("BRT") to issue any common stock or shares of beneficial interest in BRT, or to restrict in any manner the transferability of shares in BRT or limited partnership units in BOP, or BOP's ability to issue additional limited partnership units in accordance with the provisions of its Agreement of Limited Partnership, as amended from time to time. 6. Mortgagee hereby approves Brandywine Realty Services Corp., as manager of the Property effective as of this date. 7. Paragraph 25 of the Mortgage is hereby modified by restating the notice addresses for Mortgagor as follows: -2- 3 Brandywine Operating Partnership, L.P. c/o Brandywine Realty Trust 16 Campus Boulevard, Suite 150 Newtown Square, PA 19073 Attention: Gerard H. Sweeney, President and Chief Executive Officer with a copy to: Michael H. Friedman, Esquire Pepper, Hamilton and Scheetz 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 8. Except as otherwise expressly amended hereby, all of the terms, conditions and obligations of the Note and Mortgage remain in full force and effect and unmodified hereby. 9. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors and assigns. 10. No recourse shall be had for any obligation of Brandywine Realty Trust under this Agreement, the Note, the Mortgage or under any of the Loan Documents, 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 such liability, if there be any, against any past, present or future trustee, shareholder, officer or employee, being expressly waived and released by MLCP and by Sun, and by all parties claiming by, through or under them, or either of them. The foregoing shall not otherwise limit the liability of Brandywine Realty Trust, to the extent it has such liability, under the said Loan Documents. -3- 4 IN WITNESS WHEREOF, the parties hereto have executed this Assumption, Modification and Release Agreement, the date first written above. MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware Limited Partnership By: MLCP General Corporation, its authorized General Partner By: /s/ Joseph D. Gonnelli ------------------------------------- Joseph D. Gonnelli, President Attest: /s/ R. Brian Jackson ---------------------------------- R. Brian Jackson, Secretary BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware Limited Partnership By: Brandywine Realty Trust, a Maryland Real Estate Investment Trust, General Partner By: /s/ Gerard H. Sweeney ------------------------------------- Gerard H. Sweeney, President and and Chief Executive Officer SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) By: /s/ Jeffrey J. Skerry ------------------------------------- Name: Jeffrey J. Skerry Title: Associate General -4- 5 STATE OF : : SS. COUNTY OF : On this day _____of _____________, 1997, before me, a Notary Public, personally appeared Joseph D. Gonnelli, who acknowledged himself to be the President of MLCP General Corporation, the authorized General Partner of MLCP Associates Limited Partnership, a Delaware limited partnership, and that he, as such officer, being authorized to do so, executed the foregoing instrument in the name of the said limited partnership for the purposes therein con tained, by signing the name of the limited partnership by himself as President of its authorized General Partner, and desired that the same might be recorded as such. WITNESS my hand and seal the day and year aforesaid. ------------------------------ Notary Public My Commission Expires: STATE OF : : SS. COUNTY OF : On this _____ day of _____________, 1997, before me, a Notary Public, personally appeared Gerard H. Sweeney, who acknowledged himself to be the President and Chief Executive Officer of Brandywine Realty Trust, a Maryland Real Estate Investment Trust, the authorized General Partner of Brandywine Operating Partnership, L.P., a Delaware limited partnership, and that he, as such officer, being authorized to do so, executed the foregoing instrument in the name of the said limited partnership for the purposes therein contained, by signing the name of the limited partnership by himself as President of its authorized General Partner, and desired that the same might be recorded as such. WITNESS my hand and seal the day and year aforesaid. ------------------------------- Notary Public My Commission Expires: 6 STATE OF : : SS. COUNTY : On this _____ day of _________________, 1997, before me, a Notary Public, personally appeared _____________________ who acknowledged himself to be the ________________ of Sun Life Assurance Company of Canada (U.S.), a ____________________, and that he, as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself as such officer, and desired that the same might be recorded as such. WITNESS my hand and seal the day and year aforesaid. ------------------------------- Notary Public My Commission Expires: 7 EXHIBIT "A" Legal Description of Property 8 EXHIBIT "B" 1000 Howard Boulevard 1. Commitment Letter dated August 9, 1994 - MLCP Associates, L.P./Sun Life Loan No. 790094, as amended by letter of Sun Life of Canada (U.S.) dated August 23, 1994 to MLCP Associates Limited Partnership. 2. Mortgage Note dated October 19, 1994, in the original principal amount of $6,500,000, from MLCP Associates Limited Partnership ("Maker") to Sun Life Assurance Company of Canada (U.S.) ("Holder"). 3. Mortgage and Security Agreement made as of October 19, 1994, between MLCP Associates, Limited Partnership ("Mortgagor") and Sun Life Assurance Company of Canada (U.S.) ("Mortgagee") recorded in Burlington County Clerk's Office on October 28, 1994, in Mortgage Book 5775, Page 281. 4. Assignment of Leases and Agreement between MLCP Associates Limited Partnership, a Delaware Limited Partnership to Sun Life Assurance Company of Canada, (U.S.), a Delaware Corporation dated October 19, 1994, recorded in the Burlington County Clerk's Office on October 28, 1994, in Deed Book 4852, Page 321. 5. Financing Statement #76006, filed October 28, 1994. Filed with Secretary of State, #1600819, filed November 1, 1994. Debtor: MLCP Associates Limited Partnership, 2 Eves Drive, Marlton, NJ 08053. Secured Party: Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, MA. 6. Letter Agreement dated October 19, 1994 to MLCP Associates, Limited Partnership from Sun Life Assurance Company of Canada (U.S.). EX-10.4 5 OPTION AGREEMENT 1 EXHIBIT 10.4 OPTION AGREEMENT (Lot 8, Block 1104, Mt. Laurel, NJ) THIS OPTION AGREEMENT (the "Agreement") is made as of this 31st day of January, 1997, by and between MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, having an address at 4 Eves Drive, Marlton, New Jersey 08053 (hereinafter, "Optionor"), and BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, having an address c/o Brandywine Realty Trust, 16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania 19073 (hereinafter, "Optionee"). Background A. Optionor is the owner of that certain tract of ground, comprising approximately 8 acres, located in the Mt. Laurel Corporate Park, Mt. Laurel, New Jersey, and being identified as Lot 8 of Block 1104, all as more fully described on Exhibit "A" (the "Property"). B. Optionor desires to grant to Optionee and Optionee desires to acquire from Optionor an option to purchase the Property upon the terms and conditions contained herein. Agreement The parties hereto, in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, covenant and agree as follows: 1. Grant of Option. Optionor does hereby grant to Optionee the right and option (the "Option") to acquire the Property for the Purchase Price (as defined below) and otherwise upon the terms and conditions set forth herein. The Optionee may exercise the Option by delivering written notice to the Optionor in accordance with Section 16 of this Agreement at any time during the Option Period (as defined below) or during any extension thereof. 2. Term of Option. The Option may be exercised by Optionee at any time during the term commencing on the date hereof, and continuing thereafter until June 30, 1998 (the "Option Period"). Time is of the essence. Optionor and Optionee understand and agree that the price of the Option is Ten Dollars ($10.00), which sum, together with the execution of that certain Agreement of Sale by and among Optionor, certain affiliates of Optionor and Optionee dated January 21, 1997 (the "Agreement of Sale") and all related documentation, constitute full and adequate consideration for the Option. 2 3. Extension of Option Period. Optionee may extend the Option Period from the expiration thereof through June 30, 2000, by delivering to Optionor written notice of such extension not later than thirty (30) business days prior to the expiration of the Option Period, and delivering an option extension fee of $100,000 (the "Extension Fee") to Optionor, which Extension Fee shall be the consideration for the extension of the Option and shall be non- refundable to Optionee except as expressly provided in Section 15 below, but shall nevertheless be applied in reduction of the Purchase Price. 4. Purchase Price. The Purchase Price for the Property shall be One Million ($1,000,000) Dollars ("Purchase Price"), payable by wire transfer of immediately available funds at the time of Closing. Optionee shall be credited at Closing with the Extension Fee if theretofore paid, and the Purchase Price shall be subject to proration for real estate taxes and water and sewer rents in the same manner that the purchase price under the Agreement of Sale was subject to adjustment thereunder. 5. Exclusive Option. At no time during the term of the Option shall Optionor convey, transfer, sell, lease, option or otherwise dispose of the Property or any part thereof. No such sale, transfer or other disposition shall be effective unless this Option shall have first expired or been terminated. 6. Title. Optionor shall convey title to the Property to Optionee at Closing by Bargain and Sale Deed with Covenants against Grantor's Acts (the "Deed"), free and clear of all liens, restrictions, easements and other encumbrances, except for those set forth on the attached Exhibit "B" (the "Permitted Encumbrances"). At Closing (as defined below), the title conveyed by Optionor shall be good and marketable and insurable as such by any reputable title insurance company licensed to do business in New Jersey and selected by the Optionor, at such company's regular rates, pursuant to a standard ALTA owner's form of policy, free of all exceptions, other than the Permitted Encumbrances. 7. Closing. The closing of the transaction contemplated herein ("Closing") shall take place at 10:00 a.m. on the fifteenth (15th) day following the date Optionee gives notice of its exercise of the Option, or sooner by mutual agreement of the parties hereto (the "Closing Date"). Time is of the essence. If said fifteenth (15th) day shall not be a business day, then the Closing shall occur on the first business day thereafter. For purposes hereof, a "business day" shall mean any day other than a day on which commercial banks in the State of New Jersey are required or permitted by law to close. The Closing shall occur at the offices of Pepper, Hamilton & Scheetz, Suite 500, LibertyView Building, 457 Haddonfield Road, Cherry Hill, New Jersey 08002, or at such other location as the parties may mutually agree. 8. Deliveries at Closing. At Closing, Optionor and Optionee shall execute and deliver the documents and agreements enumerated on Exhibit "C" hereto. -2- 3 9. Transfer Taxes. Seller shall pay for all applicable realty transfer taxes related to the execution, delivery and recording of the Deed and other closing documents, and all related recording charges. 10. Representations and Warranties of Optionor. In order to induce Optionee to enter into this Agreement, Optionor hereby represents and warrants to Optionee that the following representations and warranties are true now, and to the extent specifically set forth herein, will be true at Closing (except that immaterial changes which occur in the ordinary course of Seller's business which do not materially affect Optionee's valuation of the Property or, provided Optionee closes, any matter or occurrence within Optionee's actual knowledge prior to Closing, shall not be considered to render such representation untrue at and as of Closing): 10.1 Authorization. Optionor is a duly authorized and validly existing partnership formed under the laws of the State of Delaware and is duly qualified to do business in the State of New Jersey, (ii) Optionor has full power, right and authority to own its properties, to carry on its business as now conducted, and to enter into and fulfill its obligations under this Agreement, (iii) each of the persons executing this Agreement on behalf of Optionor is authorized to do so, (iv) this Agreement is the valid and legally binding obligation of Optionor, enforceable against Optionor in accordance with its terms, (v) the execution and delivery of this Agreement and compliance with its terms will not conflict with or result in the breach of any law, judgement, order, writ, injunction, decree, rule or regulation, or conflict with or result in the breach of any other agreement, document or instrument to which Optionor is a party or by which it or the Property is bound or affected. The representation and warranty contained herein shall be true and correct at and as of Closing. 10.2 Employment. There are no employees of Optionor, and Optionee assumes no obligations or responsibilities whatsoever for any employees. The representation and warranty contained herein shall be true and correct at and as of Closing. 10.3 Contracts. Except as disclosed in the Agreement of Sale, there are no service, equipment, supply or maintenance contracts with or affecting the Property. The representation and warranty contained herein shall be true and correct at and as of Closing. 10.4 No Lawsuits. Except as disclosed in the Agreement of Sale, Optionor has received no written notice of any claims, lawsuits or proceedings pending, and to the best of Optionor's knowledge, there are no claims, lawsuits or proceedings threatened against or relating to Optionor or the Property, or which could affect them, or either of them, in any court or before any governmental agency. 10.5 Leases. There are no oral or written leases, licenses or rights of occupancy or, to the best of Optionor's knowledge, any grants or claims of right, title or interest in any portion of the Property. -3- 4 10.6 Good Title to Property. To the best of Optionor's knowledge, Optionor holds good and marketable, indefeasible fee simple title to the Property, free and clear of liens and encumbrances, other than the Permitted Exceptions. 10.7 FIRPTA. Optionor is not a "foreign person" as such term is defined in Section 1445(f)(3) of the Internal Revenue Code of 1954, as amended (the "Code"). 10.8 Rights to Purchase. There are no outstanding agreements, options, rights of first refusal, conditional sales agreements or other agreements or arrangements, whether oral or written, regarding the purchase and sale of the Property. When used in this Section 10, the phrase "knowledge" and "to the best knowledge", shall be deemed to mean the actual knowledge of Joseph D. Gonnelli and R. Brian Jackson. 11. Representations of Optionee. Optionee represents and warrants as of the date of this Agreement as follows: (a) Optionee has full power and authority to enter into this Agreement and to perform all obligations hereunder. (b) The performance by Optionee of Optionee's obligations under this Agreement will not violate any law, result in any breach, constitute a default under, or require any consent pursuant to any contract or other agreement, lease, license or permit to which optionee is a party, or require Optionee to obtain the consent of any person, entity or governmental authority. 12. Representations Limited. All representations and warranties made by the parties in this Agreement shall survive the execution of this Agreement and the consummation of the transactions contemplated hereunder for a period of six (6) months from the Closing Date, and claims made prior to the expiration of such six (6) month period shall survive if not resolved within such six (6) month period. 13. Condition of Premises. Except as expressly set forth herein, Optionor makes no representations with respect to the condition or character of the Property or the use or uses to which the foregoing may be put. Optionee shall be afforded the opportunity to examine, inspect and test the Property and Optionee, if it exercises the Option, shall automatically and without further action, and except as herein otherwise provided, be deemed to have released Optionor from all responsibility and liability regarding the condition or utility of the Property. Except for Optionor's representations, warranties, covenants and agreements as are herein expressly provided, OPTIONEE SHALL PURCHASE THE PROPERTY IN "AS IS - WHERE IS" CONDITION AT CLOSING. If Optionee intends to exercise its rights to inspect and examine the physical condition of the Property, it shall (i) provide Optionor with prior verbal notice of Optionee's entry, (ii) keep the Property free of any liens or third-party claims resulting therefrom except as may be required by applicable law; (iii) maintain adequate liability insurance in an -4- 5 amount of not less than $1,000,000.00 for a single occurrence and $50,000 for property damage, which insurance shall name Optionor as an additional insured; (iv) indemnify Optionor against any liability or expense for injuries to or death of persons or damage to property arising from the exercise of the rights hereunder that are not the result of any act or omission of the Optionee or its agents, employees or contractors and (v) if Closing does not occur for any reason other than Optionor's breach or default, restore as nearly as practicable the Property substantially to its condition immediately before such exercise. The indemnification and restoration provisions of this subsection shall survive the termination of this Agreement. 14. Brokers. Optionor and Optionee each represent and affirm to the other that neither has made any agreement or taken any action which may cause any broker or finder to become entitled to a commission as a result of the transaction contemplated by this Agreement. Each of the parties hereto agrees to indemnify, defend and hold the other harmless against any claims, demands, suits, judgments or liabilities which arise by reason of a breach of the foregoing representation. The provisions of this Section shall survive the Closing or other termination of this Agreement. 15. DEFAULT; REMEDIES 15.1 Prior to title passing and the completion of Closing, in the event of Optionor's default hereunder, Optionee's sole remedies shall be that of (i) specific performance, with abatement of the Purchase Price to the extent of liens of a fixed or ascertainable amount, or (ii) termination of this Agreement and return of the Extension Fee, if theretofore paid; in no event shall Optionee be entitled to damages of any kind or nature; 15.2 Prior to title passing and completion of Closing, with respect to any representations or warranties of Optionor contained in this Agreement, Optionee's obligations hereunder are contingent upon such representations and/or warranties contained in this Agreement being true and correct as of the date hereof and, where the context specifically provides, as of the date of Closing, but recision of this Agreement and return of the Extension Fee, if theretofore paid, shall be Optionee's exclusive remedy for any breach of any representation and/or warranty by Optionor. 15.3 Notwithstanding the foregoing, in the event of a willful or intentional breach of a covenant, obligation or warranty by Optionor under this Agreement, or if Optionor makes a willful or intentional material misrepresentation in this Agreement, Optionee shall be entitled to terminate this Agreement and to the return of the Extension Fee, if theretofore paid, and Optionee's reasonably documented Transaction Costs (as hereinafter defined) sustained by Optionee in connection with this Agreement; and the foregoing shall be Optionee's sole remedies under this subparagraph. 15.4 Subsequent to title passing and completion of Closing, Optionee shall have recourse against Optionor for its reasonably documented actual damages, sustained solely -5- 6 for Optionor's breach of representations and warranties which survive Closing, which breach is discovered by Optionee after Closing; the right to pursue said recourse shall expire and terminate, as to any right on which action has not then been initiated, at the expiration of the survival periods set forth herein. 15.5 Optionee recognizes that the Property will be removed by Optionor from the market during the existence of this Agreement and that if after the Initial Option Term, the term hereof shall have been extended by Optionee as hereinabove provided, and thereafter, the option hereby granted shall not be exercised by Optionee, or the option shall be exercised but Closing is not consummated because of Optionee's default, then, in either such event, Optionor shall be entitled to retain the Extension Fee as its sole and liquidated damages. The parties agree that the sum stated above as liquidated damages shall be in lieu of any other relief to which Optionor might otherwise be entitled, Optionor hereby specifically waiving any and all rights which it may have to damages or specific performance as a result of Optionee's default under this Agreement. 15.6 Optionee's Out-of-Pocket Costs. In the event of Optionor's breach or default in accordance with Section 15.3 then, in any such event, upon termination by Optionee hereunder, in addition to receiving the immediate return of the Extension Fee, anything in the Agreement contained to the contrary notwithstanding, Optionee shall also receive from Optionor, upon demand, Optionee's actual, documented out-of-pocket costs and expenses associated with this Agreement and Optionee's anticipated acquisition of the Property including, without limitation, Optionee's reasonable counsel fees and costs, title expenses, survey costs, financial and accounting due diligence, Optionee's environmental assessment of the Property, and other costs and expenses associated with Optionee's due diligence (collectively, "Transaction Costs"). The foregoing list is not intended to be exclusive, but representative of the costs and expenses that the parties anticipate that Optionee will incur in anticipation of this transaction. Optionor's maximum reimbursement liability under this Section 15 shall not exceed $10,000 in the aggregate. 16. Notices. All notices, requests and other communications under this Agreement, to be effective, shall be in writing and shall be sent by certified mail, return receipt requested, or by overnight delivery by recognized courier, addressed as follows: If to Optionor: MLCP Associates Limited Partnership 4 Eves Drive Marlton, New Jersey 08053 -6- 7 With a copy to: Robert E. Schwartz, Esquire Sherman, Silverstein, Kohl, Rose & Podolsky 4300 Haddonfield Road Suite 311 Pennsauken, New Jersey 08109 If to Optionee: Brandywine Operating Partnership, L.P. c/o Brandywine Realty Trust 16 Campus Boulevard Suite 150 Newtown Square, Pennsylvania 19073 Attn: Gerard H. Sweeney, President and Chief Executive Officer With a copy to: Eric L. Stern, Esquire and Brad A. Molotsky, Esquire Pepper, Hamilton & Scheetz 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103-2799 17. Recording. At the request of either party, this Agreement or a memorandum thereof may be recorded in the Office of the Clerk in and for Burlington County, New Jersey. In such instance, a termination of Memorandum of Option Agreement (the "Termination") shall be delivered by Optionee to Optionor's legal counsel Sherman, Silverstein, Kohl, Rose & Podolsky, ATTN: Robert E. Schwartz, Esquire, as Escrow Agent, to be held in escrow. Upon the expiration or sooner termination of the term of this Agreement (including any extension(s) thereto), Escrow Agent is hereby authorized to release the Termination for recording in the said Clerk's Office, but only after Escrow Agent shall have first delivered to Optionee notice of its intention to do so, and the failure of Optionee, or its agent, to object to such recording within ten (10) days next following the receipt of such notice by Optionee, by return notice in writing to Optionor and Escrow Agent, in the manner specified in this Agreement. -7- 8 18. Miscellaneous. (a) Entire Agreement; Merger. This Agreement together with the Exhibits attached hereto embodies and constitutes the entire understanding between the parties with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument in writing signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument. (b) Time of the Essence. Time is of the essence as to the performance of all terms and conditions of this Agreement. (c) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey. (d) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. (e) Headings. All headings are for convenience only, and shall not be used in construing any of the provisions of this Agreement. (f) Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. (g) Non-Recourse. No recourse shall be had for any obligation of Brandywine Realty Trust ("BRT") hereunder or under any document executed in connection herewith or pursuant hereto, or for any claim based thereon or otherwise in respect thereof, against any past, present or future trustee, shareholder, officer or employee of BRT, whether by virtue of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being expressly waived and released by Optionor and all parties claiming by, through or under Optionor. -8- 9 IN WITNESS WHEREOF, the parties hereto have executed, sealed and delivered this Agreement the day and year first above written. OPTIONOR: -------- MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: MLCP General Corporation, its authorized general partner By: /s/ Joseph D. Gonnelli ------------------------------------------- Name: Joseph D. Gonnelli Title: President [Corporate Seal] OPTIONEE: -------- BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership By: BRANDYWINE REALTY TRUST, a Maryland Real Estate Investment Trust, its general partner By: /s/ Gerard H. Sweeney ------------------------------------------- Gerard H. Sweeney, President and Chief Executive Officer -9- 10 The address of the above named Optionee is: c/o Brandywine Realty Trust 16 Campus Boulevard Suite 150 Newtown Square, Pennsylvania 19073 By: /s/ Gerard H. Sweeney ---------------------------------- On behalf of the Optionee -10- 11 EXHIBIT "A" Legal Description 12 EXHIBIT "B" Permitted Exceptions 13 EXHIBIT "C" Documents I. Documents. At Closing, the parties indicated shall simultaneously execute and deliver the following: A. Optionor's Documents and Other Items. Optionor shall execute and deliver or cause to be executed and delivered to Optionee, in proper form for recording: (i) Deed. A Bargain and Sale Deed with Covenants Against Grantor's Acts prepared by Optionee's counsel in form acceptable to Optionor (the "Deed"), conveying the Property, duly executed by Optionor for recording. The Deed description shall be based upon the metes and bounds description attached as Exhibit "A". In addition, if Optionee requests that Optionor convey the Premises by the metes and bounds description shown on the new survey, if any, obtained by Optionee, Optionor covenants to execute a Quit Claim Deed for such new description. (ii) Original Licenses, Contract Documents and Other Personal Property. All original Licenses, Contract Documents, and other Personal Property (of the type described in Section 1.2, of the Agreement of Sale) if any, and to the extent in Optionor's possession and as applicable to the Property, and any assignment thereof, without representation or warranty. (iii) FIRPTA Certificates. All certificate(s) required under Section 1445 of the Code. (iv) Title Insurance Certificates. Such affidavits of title or other certifications as shall be required by the Title Company to insure Optionee's title to the Property as set forth in Section 6 of the within Agreement, and to provide affirmative endorsements against construction liens. (v) Optionor Certificate. A written certification confirming that as of Closing that the representations and warranties which are required to be true at and as of Closing, are true at and as of Closing. (vi) Organization Certifications. Confirmation of the good standing and existence of Optionor and its general partner and the due authority of those executing for them, including, without limitation, the following documents issued no earlier than 30 days prior to Closing: (a) good standing certificate in state of organization and in the State in which the Property are located, (b) partnership agreement, (c) a certificate from the secretary of the corporation or managing general partner of the partnership confirming the incumbency of the signatories and the current force and effect of the resolution authorizing their execution of the documents required under this Agreement. 14 B. Optionee's Documents. Optionee shall deliver or cause to be delivered to Optionor: (i) The amounts required to be paid to Optionor pursuant to this Agreement; (ii) Confirmation of the existence and subsistence of Optionee, and the authority of those executing for Optionee, including, without limitation, the following documents issued no earlier than thirty (30) days prior to Closing: (a) good standing certificate in State of Maryland, (b) Optionee's Amendment and Restatement of Declaration of Trust filed on August 27, 1996, as amended, (c) a certificate from any officer of Optionee confirming the incumbency of the signatories and the current force and effect of the resolution authorizing their execution of the documents required under this Agreement. C. Necessary Documents. Optionee and Optionor shall execute and deliver such other documents and instruments as may be reasonably necessary to complete the transaction contemplated by this Agreement. 15 [OPTIONOR'S ACKNOWLEDGMENT] STATE OF : : SS. COUNTY OF : On this, the _____ day of __________, 1997, before me, a Notary Public in and for the State and County aforesaid, the undersigned officer, personally appeared __________________, who acknowledged himself to be the __________________ of MLCP General Corporation, the authorized General Partner of MLCP Associates Limited Partnership, a Delaware limited partnership, and that he as such ___________________, of the authorized General Partner, being authorized to do so, executed the foregoing instrument on behalf of the said limited partnership for the purposes therein contained. ------------------------------------ NOTARY PUBLIC My Commission Expires: =============================================== [OPTIONEE'S ACKNOWLEDGMENT] STATE OF : : SS. COUNTY OF : On the _______ day of _____________, 1997, before me a Notary Public in and for the State and County aforesaid, the undersigned officer, personally appeared Gerard H. Sweeney, who acknowledged himself to be the President of Brandywine Realty Trust, the authorized managing general partner of Brandywine Operating Partnership, L.P., a Delaware limited partnership, and that he, as President of the authorized General Partner, being authorized as to do, executed the foregoing instrument on behalf of the said limited partnership for the purposes therein contained. IN WITNESS WHEREOF, I have hereunto set my hand and official seal. ------------------------------------ NOTARY PUBLIC My Commission Expires: EX-10.5 6 SUN LIFE MORTGAGE NOTE/1120 ASSOCIATES 1 EXHIBIT 10.5 MORTGAGE NOTE $6,500,000.00 Dated: March 14, 1995 1120 ASSOCIATES LIMITED PARTNERSHIP (hereinafter called "Maker") to SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) (hereinafter called "Holder") FOR VALUE RECEIVED, 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (the "Maker"), promises to pay to the order of SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), a Delaware corporation, its successors and assigns (the "Holder"), in lawful money of the United States of America, the sum of SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($6,500,000.00) (the "Loan") as follows: 1. The principal balance of the Loan shall bear interest at the rate of nine and seven-eighths percent (9.875%) per annum (the "Accrual Rate"). The principal balance and interest thereon shall be payable in consecutive monthly installments of $69,353.11 (based on amortization of the principal balance of the Loan over a hypothetical fifteen year term) commencing on the first day of the second calendar month after disbursement of the Loan, and continuing on the first day of each month thereafter, such amount being first applied to interest and then to the reduction of principal. Interest for the period from the date the Loan is funded until the first day of the following calendar month shall be payable on the date hereof. Interest will be computed according to the Bankers Rule, i.e., the actual amount of days x rate of interest x principal/360. The entire balance of principal and all interest outstanding hereunder shall be due and payable on March 1, 2002 ("Maturity Date"). 2 2. Prepayment of the Loan shall not be permitted during the first forty-eight (48) months of the Loan term. Prepayment in full only of the principal of the Loan will be permitted at any time during the last thirty-six (36) months of the Loan term upon thirty (30) days' prior written notice to Holder. Such prepayment shall be accompanied by additional interest ("Additional Interest") equal to the greater of (i) one percent (1%) of the unpaid principal balance of the Loan on the date of prepayment, or (ii) that amount which is calculated as of the date of the prepayment as follows: (A) the Prepayment Treasury Yield (as defined below) is subtracted from 9.875%, and the difference (but not less than 0) is (B) divided by twelve, and the quotient thereof is then (C) multiplied by the then outstanding balance of the Loan to determine the monthly payment differential, and (D) the present value of the series of monthly payment differentials for the number of whole and partial months from the prepayment date to the maturity date is determined using the Prepayment Treasury Yield as the discount rate and compounding monthly, and (E) the present values of such monthly payment differentials are added together. The term "Prepayment Treasury Yield" means the yield which would be available if the proceeds of the prepayment were invested on the date of the prepayment in a debt obligation of the United States Treasury (other than a Flower Bond) having a maturity most closely equivalent to that of the Loan (and if more than one Treasury obligation has the same maturity, then the obligation offering the highest yield), as determined by quotations published in The Wall Street Journal on the date five (5) business days before the prepayment. If the difference between 9.875% and the Prepayment Treasury Yield is less than 0, the Additional Interest shall equal one percent (1%) of the unpaid principal balance of the Loan. For purposes of calculating Additional Interest, the first month of the Loan term shall begin on the first day of the first calendar month after the date -2- 3 hereof. Notwithstanding the foregoing, prepayment in full only of the principal of the Loan will be permitted during the last three (3) months of the Loan term upon five (5) days' prior written notice to Holder without Additional Interest. Partial prepayment shall not be permitted at any time. 3. All payments due hereunder shall be made at the offices of Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, or elsewhere, as shall be directed by written notice by any holder hereof. 4. Maker acknowledges that the failure of Maker to make any payment within five (5) days after the payment is due and payable will cause Holder to incur additional expense in servicing the indebtedness evidenced by this Note, the precise measure of which expense is not susceptible to exact determination. Accordingly, it is further agreed that Holder may collect a late charge of four percent (4%) of each payment more than five (5) days in arrears, which Maker agrees is a reasonable basis on which to cover the extra expense involved in handling delinquent payments. This shall not be construed to obligate Holder to accept any overdue installment nor to limit Holder's rights and remedies for Maker's default, as hereinafter set forth. 5. This Note accompanies and is secured, inter alia, by a Mortgage and Security Agreement of even date herewith (the "Mortgage"), made and executed by Maker upon real estate and the building and improvements thereon known as 1120 State Route 73, situate on approximately 7.835 acres of land located in Mount Laurel Township, Burlington County, New Jersey, as more particularly identified in the Mortgage (the "Mortgaged Property"), and by an Assignment of Leases and Agreement of even date herewith (the "Assignment of Leases"), made and executed by Maker with respect to the Mortgaged Property. (This Note, the Mortgage, the -3- 4 Assignment of Leases and any other documents executed by Maker to Holder in connection herewith are hereinafter referred to collectively as the "Loan Documents"). All of the terms of the Loan Documents are incorporated herein by reference and Maker does hereby covenant and agree to comply with all of the terms, conditions and provisions of the Loan Documents. Any Event of Default under any of the Loan Documents shall constitute an Event of Default under this Note. 6. Maker agrees that if Maker shall, without in each instance obtaining the prior written consent of Holder, sell, transfer, or convey (herein all called "transfer") the Mortgaged Property or any interest therein (other than leases of portions of the Mortgaged Property in the ordinary course of Maker's business made in accordance with the terms of the Assignment of Leases, and otherwise as expressly permitted in any written agreement between Holder and Maker) whether voluntarily or by operation of law, then, at the option of Holder, the maturity of this Note shall be advanced to the date of such transfer, whereupon the obligations of Maker evidenced by this Note shall immediately be due and payable. For purposes of this paragraph, any transfer of partnership interests in Maker, other than as expressly permitted in any written agreement between Holder and Maker, shall constitute a transfer of the Mortgaged Property. 7. This Note, the Mortgage, the Assignment of Leases and the other Loan Documents shall evidence and secure any future loans or advances that may be made to or on behalf of Maker by Holder, at any time or times hereafter intended by Maker and Holder to be so evidenced and secured, as well as any sums paid by Holder pursuant to the terms of the Mortgage, and any such loans, advances or payments shall be added to and shall bear interest at the Default Rate (as hereinafter defined). The parties expressly agree that this Note shall have the -4- 5 full force, effect and benefits of a note to secure advances of money, the lien of which advances relate to the date of this Note. 8. The occurrence of any of the following shall constitute an Event of Default hereunder: Maker's failure to make payment of any installment of principal or interest or any other sum within five (5) business days of the date on which such installment or sum is due under this Note (provided that Holder will only grant such 5-day grace period twice in any twelve-month period, and any failure thereafter to make a payment on the due date shall constitute an Event of Default without any grace period); or Maker's nonperformance of, or noncompliance with, any of the other agreements, conditions, covenants, provisions or stipulations contained in this Note, for a period of twenty (20) days after written notice thereof to Maker (provided that if such nonperformance or noncompliance cannot reasonably be cured within twenty (20) days, an Event of Default shall not occur hereunder if Maker initiates curing the nonperformance or noncompliance within such 20-day period and diligently pursues such cure to completion within a reasonable time thereafter, not to exceed ninety (90) days after such written notice); or the occurrence of an Event of Default under the Mortgage, the Assignment of Leases or any of the other Loan Documents. Upon the occurrence of an Event of Default hereunder, (a) the interest rate payable hereunder during the continuance of the Event of Default shall be at a rate (the "Default Rate") three (3%) percent in excess of the Accrual Rate. (b) The entire unpaid balance of the principal debt, additional loans or advances and all other sums paid by Holder to or on behalf of Maker pursuant to the terms of this Note or the Mortgage, together with unpaid interest thereon and the Acceleration Premium (as defined below), shall at the option of the Holder and without notice become immediately due and -5- 6 payable. The term "Acceleration Premium" shall refer to an amount equal to the greater of (i) three percent (3%) of the unpaid principal balance of the Loan on the date of acceleration, or (ii) that amount which is calculated as of the date of the acceleration as follows: (A) the Acceleration Treasury Yield (as defined below) is subtracted from 9.875%, and the difference (but not less than 0) is (B) divided by twelve, and the quotient thereof then (C) multiplied by the then outstanding balance of the Loan to determine the monthly payment differential, and (D) the present value of the series of monthly payment differentials for the number of whole and partial months from the prepayment date to the maturity date is determined using the Acceleration Treasury Yield as the discount rate and compounding monthly, and (E) the present values of such monthly payment differentials are added together. The term "Acceleration Treasury Yield" means the yield which would be available if the proceeds of the acceleration were invested on the date of the acceleration in a debt obligation of the United States Treasury (other than a Flower Bond) having a coupon interest rate and maturity most closely equivalent to that of the Loan, as determined by quotations published in The Wall Street Journal on the date five (5) business days before the acceleration. If the difference between 9.875% and the Acceleration Treasury Yield is less than 0, the Acceleration Premium shall equal three percent (3%) of the unpaid principal balance of the Loan. 9. Maker waives the benefit of any laws which now or hereafter might authorize the stay of any execution to be issued on any judgment recovered on this Note or the exemption of any property from levy or sale thereunder. Maker also waives and releases unto Holder and its attorney, all errors, defects and imperfections whatsoever in the entering of any judgment or any process or proceedings relating thereto. -6- 7 10. Maker hereby waives presentment for payment, demand, protest, notice of protest, and of dishonor and nonpayment of this Note, and consents that Holder may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note, at the request of any person holding title to the Mortgaged Property described in the Mortgage, and such consent shall not alter or diminish the liability of any person hereunder. 11. The remedies of this Note, the Mortgage, the Assignment of Leases and the other Loan Documents providing for the enforcement of the payment of the principal sum thereby secured, together with interest thereon, and for the performance of the covenants, conditions, and agreements herein and therein contained, are cumulative and concurrent and may be pursued singly or successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall occur. The waiver by Holder or failure to enforce any covenant or condition of this Note, the Mortgage, the Assignment of Leases or any of the other Loan Documents, or to declare any Event of Default thereunder or hereunder, shall not operate as a waiver of any subsequent Event of Default or affect the right of Holder to exercise any right or remedy not expressly waived in writing. 12. Maker shall pay the cost of any revenue, tax or other stamps now or hereafter required by law, at any time to be affixed to this Note or the Mortgage (other than Holder's income taxes), and if any taxes hereafter be imposed with respect to debts secured, Maker agrees to pay to Holder upon demand the amount of such taxes, and hereby waives any contrary provisions of any laws or rules of court now or hereafter in effect. -7- 8 13. Notwithstanding anything to the contrary herein contained, the liability of Maker hereunder shall be limited to and enforceable only out of the Mortgaged Property and the rents, issues and profits therefrom, and the lien of any judgment shall be restricted thereto and shall not extend to Maker, Holder waiving any right Holder may have to claim a deficiency judgment against Maker; provided, however, that Maker and its general partner shall not be exonerated or exculpated from, and shall be liable for, any deficiency, loss or damage suffered by Holder as a result of any security deposits received or held by Maker, any rent received or held by Maker after an Event of Default, or any rent prepaid more than one month in advance; or from failure by Maker to properly account to Holder as mortgagee for any proceeds of insurance or condemnation proceeds as required by the Mortgage; or from repairs required by the Mortgaged Property following a casualty for which insurance proceeds are not available due to a violation of Section 10 of the Mortgage; or from fraud, material misrepresentation or bad faith by Maker; or from waste of the Mortgaged Property; or from delinquent taxes or assessments; or from Maker's violation of, or failure to perform its obligations under, Section 4(b)-(j) or Section 20 of the Mortgage. Nothing in this paragraph, however, shall limit Holder's right against any tenants under leases assigned to Holder as additional security, or against any other collateral securing Maker's obligations hereunder, now or hereafter mortgaged, pledged or assigned by Maker or anyone else to Holder. (a) Notwithstanding any provision contained in this Note, Maker's liability for payment of interest shall not exceed the limits imposed by applicable usury law. If any provision contained herein requires interest payments for any period in excess of the then legally permitted maximum rate, such provision shall automatically be deemed to require interest payments for such period at the then legally permitted maximum rate. -8- 9 14. Maker represents and warrants that the Loan evidenced by this Note and secured by the Mortgage, the Assignment of Leases and the other Loan Documents was obtained solely for the purpose of carrying on or acquiring a business or commercial transaction. 15. The unenforceability or invalidity of any one or more of the provisions, clauses, sentences and/or paragraphs hereof shall not render any other provisions, clauses, sentences and/or paragraphs herein contained unenforceable or invalid. 16. This obligation shall bind Maker and Maker's heirs, representatives, successors and assigns, and the benefit hereof shall inure to Holder and its successors and assigns. The word "Holder" whenever occurring herein shall be deemed and taken to include each successive Holder hereof, and the word "Maker" whenever occurring herein shall be deemed and taken to include the plural, and all the covenants, waivers, warrants, promises and releases by, and obligations or liabilities imposed upon, Maker shall bind them jointly and severally and their, and each of their, heirs, personal representatives, successors and assigns. 17. The parties intend that this Note shall be construed in accordance with and governed by the laws, including the conflict of law rules, of the State of New Jersey. 19. MAKER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS. -9- 10 IN WITNESS WHEREOF, and intending to be legally bound hereby, Maker has caused this instrument to be duly executed the day and year first above written. 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: Palomino Corporation, a Pennsylvania corporation, general partner By: /s/ Joseph D. Gonnelli ---------------------------------------------- Joseph D. Gonnelli, Vice President Attest: /s/ R. Brian Jackson ----------------------------------------- R. Brian Jackson, Secretary -10- EX-10.6 7 SUN LIFE MORTGAGE AND SECURITY AGREE/1120 ASSOC. 1 EXHIBIT 10.6 MORTGAGE AND SECURITY AGREEMENT THIS MORTGAGE AND SECURITY AGREEMENT IS MADE as of the 14th day of March, 1995, BETWEEN 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter called "Mortgagor"), AND SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) a Delaware corporation (hereinafter called "Mortgagee"). Mortgagor has executed and delivered to Mortgagee a certain Mortgage Note (hereinafter called the "Note") of even date herewith, payable to the order of Mortgagee in the principal sum of Six Million Five Hundred Thousand Dollars ($6,500,000.00), lawful money of the United States of America, and has provided therein for payment of additional moneys loaned or advanced thereunder by Mortgagee, together with interest thereon (including Additional Interest and the Acceleration Premium, as defined in the Note) at the rate provided in the Note, in the manner and at the times therein set forth, containing certain other terms and conditions, all of which are specifically incorporated herein by reference. NOW, THEREFORE, in consideration of such debt or principal sum and as security for the payment of the same and interest as aforesaid, together with all other sums payable hereunder or under the terms of the Note, and for performance of the agreements, conditions, covenants, provisions and stipulations contained herein, Mortgagor does grant, bargain, sell, release, mortgage and convey unto Mortgagee, its successors and assigns: ALL THAT CERTAIN tract or piece of ground, situate at and known as 1120 State Route 73, Mount Laurel Township, Burlington County, New Jersey, as more particularly described in Exhibit "A" attached hereto, and TOGETHER WITH: (1) any and all buildings and improvements erected or hereafter erected thereon; (2) any and all fixtures, appliances, machinery and equipment, and other articles of personal property, belonging to Mortgagor, at any time now or hereafter installed in, attached to or situated in or upon the above described real estate or the buildings and improvements to be erected thereon, or used or intended to be used in connection with the real estate, or in the operation of the buildings and improvements, plant, business or dwelling situate thereon, whether or not the personal property is or shall be affixed thereto; including, without limitation of the foregoing, all furniture, furnishings, floor coverings, household appliances, office equipment, and articles of interior decoration; all screens, awnings, venetian blinds, shutters, shades, storm windows and storm doors; all kitchen cabinets, mirrors, mantles; all office, restaurant, bar, kitchen and laundry fixtures, utensils, appliances, and equipment; all cleaning, venti lation, refrigerating, vending, incinerating, waste disposal, communications, alarms, fire prevention and fire extinguishing systems, apparatus and equipment; all television, radio and other musical equipment; all passenger and freight elevators, escalators and machinery and equipment pertaining thereto; all building materials, equipment and machinery; all pipes, conduits, pumps, boilers, tanks, motors, engines and furnaces; all heating, lighting, sprinkling, plumbing, air conditioning, gas-burning, oil-burning, and electric fixtures, machinery and equipment of whatsoever kind and nature; 2 (3) all building materials, fixtures, building machinery and building equipment delivered on site to the real estate during the course of, or in connection with, construction of any repairs of or renovations to the buildings and improvements; (4) any and all tenements, hereditaments and appurtenances belonging to the real estate or any part thereof hereby mortgaged or intended so to be, or in any way appertaining thereto, and all streets, alleys, passages, ways, water courses and all easements and covenants now existing or hereafter created for the benefit of the Mortgagor or any subsequent owner or tenant of the mortgaged real estate over ground adjoining the mortgaged real estate and all rights to enforce the maintenance thereof, and all other rights, liberties and privileges of whatsoever kind or character, and the reversions and remainders, income, rents, issues and profits arising therefrom, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law or in equity, of the Mortgagor in and to the real estate or any part thereof; and (5) all right, title and interest of Mortgagor in and to: (A) all present and future leases between Mortgagor, as landlord, and any occupant of the Mortgaged Property, as tenant (which present and future leases, and Mortgagor's interest thereunder, are herein referred to as the "Leases"); and (B) all rents, issues and profits payable under the Leases and under any future renewals, amendments or modifications thereof. (All of the above-mentioned real estate, buildings, improvements, fixtures, machinery, equipment, tenements, hereditaments appurtenances, Leases and other property interests are sometimes collectively referred to herein as the "Mortgaged Property"). TO HAVE AND TO HOLD the Mortgaged Property hereby conveyed or mentioned and intended so to be, unto Mortgagee, its successors and assigns, to its own use forever. PROVIDED, HOWEVER, that if Mortgagor shall pay to Mortgagee the aforesaid debt or principal sum, including additional loans or advances and all other sums payable by Mortgagor to Mortgagee hereunder and under the terms of the Note, together with interest thereon (including Additional Interest and/or Acceleration Premium), and shall keep and perform each of the covenants, conditions and agreements hereinafter set forth until such sums have been paid, then this Mortgage and the estate hereby granted and conveyed shall become void. THIS MORTGAGE is executed and delivered subject to the following covenants, conditions and agreements: 1. WARRANTIES OF MORTGAGOR Mortgagor warrants and agrees: (a) that Mortgagor presently possesses an unencumbered fee simple title to the real estate described in Exhibit "A" hereto (the "Land"), except for those title objections not removed from Title Policy No. F-38350 issued by First American Title Insurance Company to Mortgagee insuring the lien of this Mortgage; that this Mortgage is a valid and enforceable first lien on the Land, subject only to the aforesaid title objections; and that Mortgagee shall, subject to Mortgagor's right of possession prior to default, quietly enjoy and possess the Mortgaged Property. Mortgagor shall preserve such title and the validity and priority of the lien hereof and shall forever warrant and defend the same to Mortgagee against the claims of all parties and persons whomsoever; and (b) that Mortgagor is, and will hereafter be, the sole owner of the landlord's interest in the Leases; and that the Leases are and will be valid and subsisting leases of the real property demised thereby for the terms therein set forth and subject to the provisions set forth therein; and (c) that Mortgagor shall make, execute, acknowledge and deliver in form reasonably satisfactory to Mortgagee all such further or other instruments or assurances as may at any time hereafter be reasonably desired or -2- 3 required by Mortgagee for more fully and effectually granting, assigning, transferring and setting over the Mortgaged Property and Mortgagor's interest in the Leases hereby mortgaged, or intended so to be, unto Mortgagee for the purpose aforesaid, and Mortgagor will pay all costs of recording or filing any such statements or documents in such public offices as Mortgagee may reasonably require. 2. PAYMENT AND PERFORMANCE (a) Mortgagor shall pay to Mortgagee, in accordance with the terms of the Note and this Mortgage, the principal and interest (including Additional Interest and Acceleration Premium, if any), and other sums therein set forth; and shall perform and comply with all the agreements, conditions, covenants, provisions and stipulations of the Note and this Mortgage. THE AMOUNT SECURED BY THIS MORTGAGE SHALL EXPRESSLY INCLUDE ALL ADVANCES MADE HEREUNDER OR COSTS OTHERWISE INCURRED HEREUNDER OR IN CONNECTION WITH THE LOAN BY MORTGAGEE TO PROTECT THE SECURITY FOR THE LOAN, INCLUDING, WITHOUT LIMITATION, ADVANCES MADE AND COSTS INCURRED BY MORTGAGEE FOR TAXES, INSURANCE PREMIUMS, AND ENVIRONMENTAL INSPECTIONS (WHETHER UNDERTAKEN BEFORE OR AFTER AN EVENT OF DEFAULT OR A FORECLOSURE HEREUNDER, PROVIDED THAT ENVIRONMENTAL INSPECTIONS WILL ONLY BE UNDERTAKEN BY MORTGAGEE BEFORE AN EVENT OF DEFAULT IF MORTGAGEE HAS REASONABLE GROUNDS TO SUSPECT THE EXISTENCE OF A POTENTIAL ENVIRONMENTAL PROBLEM). The parties expressly agree that this Mortgage shall have the full force, effect, and benefits of a mortgage to secure such advances of money, the lien of which advances shall relate to the date of this Mortgage. This Mortgage shall secure not only existing indebtedness, but also all Additional Interest, all Acceleration Premium and all future advances, whether such advances are obligatory or to be made at the option of Mortgagee, or otherwise, to the same extent as if such future advances were made on the date hereof. (b) Mortgagor will not violate any term or covenant contained in the Assignment of Leases and Agreement of even date herewith (hereinafter called the "Assignment of Leases"), delivered to Mortgagee as additional security with respect to the Leases. 3. PAYMENT OF CHARGES From time to time until the debt and interest are fully paid, Mortgagor shall: (a) Pay and discharge, when and as the same shall become due and payable, all real estate and other taxes, assessments, sewer and water rents, and other charges and claims assessed or levied from time to time by any lawful authority upon any part of the Mortgaged Property and which shall or might have priority in lien or payment to the debt secured hereby; (b) Pay all ground rents reserved from the Mortgaged Property and pay and discharge, or bond, all mechanics' liens or judgments which may be filed against the Mortgaged Property; (c) Pay and discharge any documentary stamp or other tax, including interest and penalties thereon, if any, now or hereafter becoming payable on the Note evidencing the debt secured hereby, or on this Mortgage, or on the underlying indebtedness; (d) Provide, renew and maintain in effect by paying the necessary premiums and charges thereon, such policies of hazard and liability insurance with such companies as Mortgagee may from time to time require pursuant to Section 10; and (e) Promptly submit to Mortgagee evidence of the due and punctual payment of all the foregoing charges. 4. MAINTENANCE OF MORTGAGED PROPERTY (a) Mortgagor shall abstain from and shall not permit the commission of waste in or about the Mortgaged Property; shall not remove or demolish, or alter the structural character of, any building erected at any time on the Mortgaged Property, without the prior written consent of Mortgagee; and shall not permit the Mortgaged Property to become deserted or unguarded, and shall maintain the Mortgaged Property in good condition and repair, reasonable wear and tear and damage by fire or other casualty excepted. Mortgagee, or its agent, shall have the right to enter upon -3- 4 the Mortgaged Property upon reasonable prior notice for the purpose of inspecting the order, condition and repair of the buildings and improvements erected thereon. Mortgagor represents and warrants that, to the best of Mortgagor's knowledge, the Mortgaged Property complies with all applicable laws, ordinances, regulations and orders relating to the Mortgaged Property, including, without limitation, all environmental and wetlands laws, issued by all Federal, state, municipal and other governmental authorities. Mortgagor shall promptly comply with all future laws, ordinances, regulations and orders relating to the Mortgaged Property by all federal, state, municipal and other governmental authorities. (b) Mortgagor warrants and represents that, to the best of Mortgagor's knowledge: (i) no hazardous substances (as "hazardous substances" is defined in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601(14), as amended by the Superfund Amendments and Re-authorization Act of 1986 (Pub. L. No. 99-499, 100 Stat. 1613 (1986) (SARA)) or hazardous waste or solid waste (as defined in 40 CFR Section 261) are present on the Mortgaged Property in quantities in excess of those permitted by applicable law; (ii) no polychlorinated biphenyls (PCBs) or substances containing PCBs, no asbestos or materials containing asbestos, no gasoline, kerosene or other hydrocarbons, no pesticides, herbicides or radioactive materials and no urea formaldehyde foam insulation has been stored, used or installed or is otherwise present on the Mortgaged Property in quantities in excess of those permitted by applicable law; (iii) no portion of the Mortgaged Property lies in or constitutes a wetland or floodplain; (iv) no radon gas or radioactive decay products of radon gas, in a concentration above 4 picocuries/liter, are present on the Mortgaged Property; (v) no underground or above-ground storage tanks are present on the Mortgaged Property; (vi) Mortgagor has not received any notice that Mortgagor has been identified in any litigation, administrative proceeding or investigation as a responsible party for any liability under CERCLA, SARA, or any other Federal, state or municipal law, ordinance or regulation; (vii) The Mortgaged Property has never been used by previous owners and/or operators to refine, produce, store, handle, transfer, process or transport "Hazardous substances," as such term is defined in N.J.S.A. 58:10-23.11b(k), and Mortgagor has not used in the past, nor does Mortgagor intend to use in the future, the Mortgaged Property for the purpose of refining, producing, storing, handling, transferring, processing or transporting "Hazardous substances" (as above defined). Mortgagor has retained Lippincott Engineering Associates ("Consultant") to conduct a complete and thorough on-site inspection of the Mortgaged Property, to determine the presence of "Hazardous substances" (as defined above), and the Consultant found no evidence of the presence of such "Hazardous substances" on or in the Mortgaged Property. (c) Mortgagor shall not commit or allow to occur, and has not received a summons, citation, directive, letter or other communication, written or oral, from the New Jersey Department of Environmental Protection and Energy concerning, any intentional or unintentional action or omission on Mortgagor's part resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous substances" (as above defined) into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey, resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey. (d) Should Mortgagor commit or allow to occur any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous substances" (as above defined) into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey, resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air or other resources owned, managed or held in trust or otherwise controlled by the State of New Jersey, without having obtained a -4- 5 permit issued by the appropriate governmental authorities, Mortgagor shall promptly clean up such spill, leak, etc. in accordance with the provisions of the New Jersey Spill Compensation and Control Act. (e) The Mortgaged Property is not and has not been used as a "Major facility," as such term is defined in N.J.S.A. 58:10-23.11b(l), and the Mortgaged Property will not be used as a "Major facility" after completion of any construction, renovation, restoration and other developmental work which Mortgagor intends to undertake thereon. If Mortgagor hereafter becomes an owner or operator of a "Major facility", then Mortgagor shall furnish the New Jersey Department of Environment Protection and Energy with all the information required by N.J.S.A.58:10-23.11d2, and Mortgagor shall duly file or cause to be duly filed with the Director of the Division of Taxation in the New Jersey Department of the Treasury a tax report or return and shall pay or make provision for the payment of all taxes due therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h. (f) No lien has been attached to any revenues or to the Mortgaged Property as a result of the chief executive of the New Jersey Spill Compensation Fund expending monies from such fund pursuant to N.J.S.A. 58:10-23.11(g) and/or to pay for "Cleanup and removal costs," as such term is defined in N.J.S.A. 58:10-23.11b(d). In the event that there shall be filed a lien against the Mortgaged Property by the New Jersey Department of Environmental Protection and Energy, pursuant to the provisions of N.J.S.A. 58:10-23.11f(f), as a result of the chief executive of the New Jersey Spill Compensation Fund having expended monies from such fund pursuant to N.J.S.A. 58:10-23.11g, and/or to pay for "Cleanup and removal costs" (as defined above), then Mortgagor shall, within sixty (60) days from the date that Mortgagor is given notice that the lien has been placed against the Mortgaged Property or within such shorter period of time in the event that the State of New Jersey has commenced steps to cause the Mortgaged Property to be sold pursuant to the lien, either (i) pay the claim and remove the lien from the Mortgaged Property, or (ii) furnish (A) a bond satisfactory to Mortgagee in the amount of the claim out of which the lien arises, (B) a cash deposit in the amount of the claim out of which the lien arises, or (C) other security satisfactory to Mortgagee in an amount sufficient to discharge the claim out of which the lien arises. (g) Mortgagor is not required to furnish the New Jersey Department of Environmental Protection and Energy with the information required by N.J.S.A. 58:10-23.11d2, with respect to the Mortgaged Property or any other real property owned and/or operated by Mortgagor and located in New Jersey. (h) In connection with the purchase of the Mortgaged Property and any other real property acquired by Mortgagor on or after January 1, 1984, Mortgagor required that the seller of the real property, including the Mortgaged Property, comply with the provisions of the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.) and the seller did comply therewith. A copy of a Nonapplicability Letter received by Mortgagor from such seller has been supplied to Mortgagee. (i) Mortgagor hereby agrees that in the event the provisions of the New Jersey Industrial Site Recovery Act, become applicable to the Mortgaged Property subsequent to the date hereof, Mortgagor shall give prompt written notice thereof to the Mortgagee and shall take immediate requisite action to insure full compliance with such Act. (j) Mortgagor shall not permit or allow the Mortgaged Property to be used in a manner so as to be considered an "Industrial establishment," as such term is defined in N.J.S.A. 13:1K-8(f), without the prior express written consent of the Mortgagee. 5. PAYMENTS BY MORTGAGEE In the event Mortgagor neglects or refuses to pay the charges mentioned in Section 3 above, or fails to maintain the buildings and improvements and to comply with applicable regulations, as aforesaid, Mortgagee may do so, at its sole option, and add the cost thereof to the principal debt secured hereby, and collect the same as a part of the principal debt, together with interest thereon at the Default Rate, as provided in the Note secured hereby. In addition to any other debt or obligation secured hereby, this Mortgage shall secure unpaid balances of advances made with respect -5- 6 to the Mortgaged Property for the payment of taxes, assessments, insurance premiums, or costs incurred for the protection of the Mortgaged Property (including, without limitation, inspection costs). 6. SECONDARY FINANCING Except as expressly set forth herein or in any other written agreement between Mortgagor and Mortgagee, Mortgagor covenants and agrees not to create, nor permit to accrue, upon all or any part of the Mortgaged Property, any debt, lien or charge other than the lien of this Mortgage, without the prior written consent of Mortgagee, which consent may be withheld in Mortgagee's sole and absolute discretion. 7. TRANSFER OF TITLE Except as expressly set forth herein or in any other written agreement between Mortgagor and Mortgagee, without the prior written consent of Mortgagee (which consent, except as expressly set forth hereafter, may be withheld in Mortgagee's sole and absolute discretion), Mortgagor shall not voluntarily, or involuntarily, or by operation of law, sell, transfer, convey, lease, or in any other manner change the ownership of, or title to, all or any portion of the Mortgaged Property, or of any interest therein, legal or equitable, or any shares or interests in any partnership or corporation having an ownership interest in the Mortgaged Property, except for individual leases of space in the Mortgaged Property upon terms as set forth in the Assignment of Leases. 8. CONDEMNATION In the event of any condemnation or taking of any part of the Mortgaged Property by eminent domain, alteration of the grade of any street, or other injury to, or decrease in value of, the Mortgaged Property by any public or quasi-public authority or corporation, all proceeds (that is, the award or agreed compensation for the damages sustained) shall be applicable first to payment of the indebtedness secured hereby. No settlement for the damages sustained shall be made by Mortgagor without Mortgagee's prior written approval. Mortgagor shall continue to pay the installments of principal, interest and other charges until payment of the proceeds shall have been received by the Mortgagee. All of the proceeds shall be applied in the order and in the amounts that Mortgagee, in Mortgagee's sole discretion, may elect, to the payment of principal (whether or not then due and payable), interest on any sums secured by this Mortgage, or toward payment to the Mortgagor, on such terms as the Mortgagee may specify, to be used for the sole purpose of altering, restoring or rebuilding any part of the Mortgaged Property which may have been altered, damaged or destroyed as a result of the taking, alteration of grade or other injury to the Mortgaged Property. 9. TAXES, ASSESSMENTS AND CHARGES (a) Mortgagor shall, in addition to and concurrently with the monthly installments of interest, pay to the Mortgagee installments of casualty insurance premiums and taxes and assessments assessed or levied upon the Mortgaged Property, as well as all taxes for which any party in whom title to the Mortgaged Property shall or may hereafter vest, may be or become liable under any present or future law of the United States of America or of the State of New Jersey and which, under the provisions of such laws, may be or become a lien upon the Mortgaged Property or have priority in payment of the mortgage debt out of the proceeds of any judicial sale of the Mortgaged Property. Such installments shall be equal respectively to 1/12 of the annual amount of such premiums, taxes and assessments as are estimated by Mortgagee and shall be held by Mortgagee to pay premiums, assessments and taxes when due. No amount so paid shall be deemed to be trust funds but may be commingled with general funds of Mortgagee, and no interest shall be payable thereon. If, pursuant to any provision of this Mortgage, the whole amount of the unpaid principal debt becomes due and payable, Mortgagee shall have the right, at its election, to apply any amount so held against the entire indebtedness secured hereby. Notwithstanding the foregoing, Mortgagee waives the right to collect installments of insurance premiums prior to an Event of Default hereunder. (b) Mortgagor hereby assigns to Mortgagee, as further collateral for the full prompt payment and performance of all of Mortgagor's obligations hereunder, all of Mortgagor's right, title and interest in any and all proceeds of or claims to rebates, refunds, and abatements of real estate and personal property taxes pertaining to the -6- 7 Mortgaged Property, or any portion thereof, with respect to tax periods arising at any time prior to the discharge hereof, even though such taxes may relate to periods before the execution hereof. 10. INSURANCE Mortgagor shall keep the Mortgaged Property continuously insured against loss or damage by fire, with extended coverage, and against other hazards as Mortgagee may reasonably require, with insurance companies (having a Best's rating of A-:VIII) reasonably satisfactory to Mortgagee, and in such total amount as Mortgagee may require from time to time, but not exceeding the full replacement value thereof. Without limiting the foregoing, such policies of insurance shall be All Risk Replacement Cost Insurance, with Agreed Amount Endorsement or similar affirmative endorsement that the coverage limits will prevent Mortgagor or Mortgagee from becoming a co-insurer in the event of a partial loss. Mortgagor shall also maintain rental insurance in an amount equal to one year's gross income, boiler insurance (if any building has a boiler), and commercial general liability insurance with limits and coverages acceptable to Mortgagee. All policies, including policies for any amounts carried in excess of the required minimum and policies not specifically required by Mortgagee, shall be in form reasonably satisfactory to Mortgagee, shall be maintained in full force and effect, shall be assigned and delivered to Mortgagee, with premiums prepaid, as collateral security for payment of the indebtedness secured hereby, shall be endorsed with a standard mortgagee clause in favor of Mortgagee, not subject to contribution, and shall provide for at least ten (10) days' prior written notice of cancellation to Mortgagee. If the insurance, or any part thereof, shall expire or be withdrawn, or become void by reason of Mortgagor's breach of any condition thereof, or become void or unsafe by reason of the failure or impairment of the capital of any company in which the insurance may then be carried, or if for any reason whatever the insurance shall be unsatisfactory to Mortgagee, Mortgagor shall place new insurance on the Mortgaged Property satisfactory to Mortgagee. All renewal policies, with premiums paid, shall be delivered to Mortgagee at least thirty (30) days before expiration of the old policies. In the event of loss, Mortgagor will give immediate written notice thereof to Mortgagee, and Mortgagee may make proof of loss if not made promptly by Mortgagor. Each insurance company concerned is hereby authorized and directed to make payment under such insurance, including return of the unearned premiums, directly to Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee, irrevocably, as Mortgagor's attorney-in-fact to endorse any draft therefor. Mortgagee shall have the right to retain and apply the proceeds of any such insurance, including any unearned premiums, at its election, to reduction of the indebtedness secured hereby, or to restoration or repair of the property damaged. If Mortgagee becomes the owner of the Mortgaged Property or any part thereof by foreclosure or otherwise, such policies, including all right, title and interest of the Mortgagor thereunder, shall become the absolute property of Mortgagee. 11. SECURITY AGREEMENT (a) This Mortgage constitutes a security agreement under the New Jersey Uniform Commercial Code and creates a security interest in the personal property included in the Mortgaged Property and the proceeds thereof. Mortgagor represents and warrants that all such personal property (other than personal property of individual tenants) is owned by Mortgagor free and clear of all security interests, and all such personal property and replacements of, substitutions for and additions to such personal property shall be owned (and not leased) by Mortgagor free and clear of all security interests. Mortgagor shall execute, deliver, file and refile any financing statements or other security agreements Mortgagee may require from time to time to confirm the lien of this Mortgage with respect to such property. Without limiting the foregoing, Mortgagor hereby irrevocably appoints Mortgagee attorney-in-fact for Mortgagor to execute, deliver and file such instruments for and on behalf of Mortgagor. Mortgagee, pursuant to the appropriate provisions of the Code, shall have an option to proceed with respect to both the real property and personal property included in the Mortgaged Property in accordance with its rights, powers and remedies with respect to the real property, in which event the default provisions of the Code shall not apply. The parties agree that if Mortgagee shall elect to proceed with respect to the personal property separately from the real property, fifteen (15) days' notice of the sale of the personal property shall constitute reasonable notice. The expenses of retaking, holding, preparing the sale, selling and the like incurred by Mortgagee shall include, but not be limited to, attorneys' fees and legal expenses incurred by Mortgagee. Mortgagor agrees that, without the prior written consent of Mortgagee, Mortgagor will not remove or permit to be removed from the Mortgaged Property any of the personal property, except that so long as no Event of Default has occurred hereunder, Mortgagor shall be permitted to sell or otherwise dispose of the personal property when obsolete, worn out, inadequate, unserviceable or unnecessary for use in the operation of the Mortgaged Property, but only upon replacing the same or substituting for the same other personal property at least equal in value and utility to the initial value and utility of that disposed of and in such a manner that such replacement or substituted personal property -7- 8 shall be subject to the security interest created hereby and that the security interest of Mortgagee shall be perfected and first in priority, it being expressly understood and agreed that all replacements, substitutions and additions to the per sonal property shall be and become immediately subject to the security interest of this Mortgage and covered hereby. (b) The Mortgaged Property includes goods which are or are to become fixtures and this Mortgage is intended to serve as a fixture filing under Section 9-313 of the New Jersey Uniform Commercial Code. 12. FINANCIAL STATEMENTS No later than June 1 each year, Mortgagor shall, at its sole cost and expense, furnish to Mortgagee an annual financial statement of Mortgagor, covering only the Mortgaged Property, prepared and certified by an independent certified public accountant acceptable to Mortgagee. Mortgagor shall also furnish to Mortgagee in addition to and simultaneous with the financial statements, a statement reflecting the complete rental status of the Mortgaged Property, which shall include the name of each tenant, the area in square feet occupied by such tenant and the rental being paid, and, at any time upon request therefor, such other information regarding occupancy and current rentals as Mortgagee may require. 13. DECLARATION OF NO SET-OFF Within five (5) business days after a written request to do so by Mortgagee, Mortgagor shall certify to Mortgagee or to any proposed assignee of this Mortgage, in a writing duly acknowledged, the amount of principal, interest and other charges then owing on the obligation secured by this Mortgage and whether there are any set-offs or defenses against it. 14. EVENTS OF DEFAULT Each of the following shall constitute an event of default hereunder ("Event of Default"): (a) Failure of Mortgagor to pay any installment of principal or interest or any other sum within five (5) business days of the date on which such installment or sum is due under the Note, this Mortgage or the Assignment of Leases (provided that Mortgagee will only grant such 5-day grace period twice in any twelve-month period, and any failure thereafter to make a payment on the due date shall constitute an Event of Default without any grace period). (b) Mortgagor's nonperformance of or noncompliance with, for a period of twenty (20) days after written notice shall have been given to Mortgagor, any of the other agreements, conditions, covenants, representations, provisions or stipulations contained in the Note, this Mortgage or the Assignment of Leases (provided that if such nonperformance or noncompliance cannot reasonably be cured within twenty (20) days, an Event of Default shall not occur hereunder if Mortgagor initiates curing the nonperformance or noncompliance within such 20-day period and diligently pursues such cure to completion within a reasonable time thereafter, not to exceed ninety (90) days after such written notice). (c) Any assignment for the benefit of creditors made by Mortgagor. (d) Appointment of a receiver, liquidator or trustee of the Mortgagor or of any of the property of Mortgagor, insolvency of the Mortgagor or the adjudication of Mortgagor as a bankrupt or the filing by the Mortgagor (or against the Mortgagor if the same shall not be discharged within 60 days) of any case or petition for the bankruptcy, reorganization or arrangement of Mortgagor pursuant to the Federal Bankruptcy Code or any similar statute, or the institution of any proceeding for the dissolution or liquidation of Mortgagor. (e) Any material default by Mortgagor under any of the Leases affecting the Mortgaged Property; (f) Any dissolution, merger or change in legal form or status of Borrower under applicable Delaware or New Jersey law. -8- 9 (g) Any warranty, representation or other statement made by or on behalf of Mortgagor in or pursuant to this Mortgage (including, without limitation, any financial statement delivered pursuant to Section 12) proves to be false, incorrect or misleading in any material and adverse respect. (h) Entry of a final judgment not covered by insurance in excess of $25,000 against Mortgagor or any person constituting Mortgagor, and if, within thirty (30) days after entry thereof, such judgment shall not have been discharged or execution thereof stayed pending appeal, or if, within thirty (30) days after the expiration of any such stay, such judgment shall not have been discharged. (i) For purposes of this subsection, the word "Mortgagor" shall include the persons named as Mortgagor herein, and any subsequent owner of the Mortgaged Property; and for purposes of subsections (c), (d), (g) and (h) hereof, the word "Mortgagor" shall include the general partners of Mortgagor. All grace periods contained herein and in the Note or any of the other documents evidencing or securing the Note shall run concurrently and not consecutively. 15. REMEDIES (a) Upon the happening of any Event of Default, the entire unpaid balance of the principal, the accrued interest, the Acceleration Premium (determined as set forth in the Note), and all other sums secured by this Mortgage shall become immediately due and payable, at the option of Mortgagee, without notice or demand. (b) When the entire indebtedness shall become due and payable, either because of maturity or because of the occurrence of any Event of Default, or otherwise, then forthwith: (i) Foreclosure: Mortgagee may institute an action of mortgage foreclosure against the Mortgaged Property, or take such other action, at law or in equity, for the enforcement of this Mortgage and realization on the mortgage security or any other security herein or elsewhere provided for, as the law may allow, and may proceed therein to final judgment and execution for the entire unpaid balance of the principal debt, with interest at the Default Rate stipulated in the Note to the date of such judgment, and thereafter at the same rate (but if not permissible, then at the highest judgment rate permitted by law), together with all other sums due by Mortgagor in accordance with the provisions of the Note and this Mortgage, including all sums which may have been loaned by Mortgagee to Mortgagor after the date of this Mortgage, and all sums which may have been advanced by Mortgagee for taxes, water or sewer rents, charges or claims, insurance, inspection fees or repairs to the Mortgaged Property, all costs of suit, and a reasonable attorney's commission for collection; and (ii) Possession: Mortgagee may enter into possession of the Mortgaged Property, with or without legal action; collect therefrom all rentals (which term shall also include sums payable for use and occupation), and, after deducting all costs of collection and administration expense, apply the net rentals to the payment of taxes, water and sewer rents, charges and claims, insurance premiums and all other carrying charges, and to the inspection (including, without limitation, environmental inspection), maintenance, repair or restoration of the Mortgaged Property, or on account and in reduction of the principal or interest, or both, hereby secured, in such order and amounts as Mortgagee, in Mortgagee's sole discretion, may elect; and for that purpose, Mortgagor hereby assigns to Mortgagee all rentals due and to become due under any Lease or rights to use and occupation of the Mortgaged Property hereafter created, as well as all rights and remedies provided in such Lease or at law or in equity for the collection of the rentals, and agrees to confirm the aforesaid assignment by such collateral document or documents as Mortgagee may require. (c) Upon a foreclosure sale, the Mortgaged Property may be sold as a single parcel or as any number of separate parcels, at Mortgagee's option, and Mortgagor for itself and anyone claiming by, through or under it, further hereby agrees that Mortgagee shall in no manner, in law or in equity, be limited, except as herein provided, in the exercise of its rights in the Mortgaged Property or in any other security hereunder or otherwise appertaining to the Note or any other obligation secured by this Mortgage, whether by any statute, rule or precedent which may otherwise require such security to be marshalled in any manner, and Mortgagor, for itself and others as aforesaid, hereby expressly waives and releases any right to or benefit thereof. (d) Mortgagor hereby expressly waives and releases: (i) all benefit that might accrue to Mortgagor by virtue of any present or future law exempting the Mortgaged Property, or any part of the proceeds arising -9- 10 from any sale thereof, from attachment, levy or sale on execution, or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment, and (ii) unless specifically required herein, all notices of Mortgagor's default or of Mortgagee's election to exercise, or Mortgagee's actual exercise of, any option or remedy under the Note or any security documents. Neither Mortgagor nor any other person now or hereafter obligated for payment of all or any part of the indebtedness secured hereby shall be relieved of such obligations by reason of the failure of Mortgagee to comply with any request of Mortgagor or of any other person so obligated to take action to foreclose on this Mortgage or otherwise enforce any provisions of any security documents or the Note, or by reason of the release, regardless of consideration, of all or any part of the security held for the debt secured hereby, or by reason of any agreement or stipulation between any subsequent owner of the Mortgaged Property and Mortgagee extending the time of payment or modifying the terms of this Mortgage or the Note without first having obtained the consent of Mortgagor or such other persons; and in the latter event, Mortgagor and all other such persons shall continue to be liable to make payment according to the terms of any such extension or modification agreement, unless expressly released and discharged in writing by Mortgagee. Mortgagee may release, regardless of consideration, any part of the security held for the debt secured hereby without, as to the remainder of the security, in any way impairing or affecting the lien of this Mortgage or its priority over any subordinate lien. For payment of the debt secured hereby, Mortgagee may resort to any other security therefor held by Mortgagee in such order and manner as Mortgagee may elect. (e) Mortgagor expressly waives the equity of redemption, statutory right of redemption, dower and homestead and all other rights and exemptions of every kind in and to the Mortgaged Property, and agrees that the purchaser or purchasers of the Mortgaged Property shall have an absolute title in fee simple. (f) Mortgagee shall have, in addition to other rights and remedies available at law or in equity, the rights and remedies of a Secured Party under the New Jersey Uniform Commercial Code. Mortgagee may elect to foreclose such of the property subject to the lien hereof as then comprise fixtures pursuant either to the laws applicable to foreclosure of an interest in real estate or to that applicable to personal property under the Uniform Commercial Code. (g) In addition to the foregoing, Mortgagee shall be entitled to apply for the appointment of a receiver. Mortgagee shall not be required to give any notice of application for the appointment of a receiver and shall be entitled to such appointment without regard to the adequacy of any security for the mortgaged debt or the solvency or insolvency of any person obligated for the payment thereof, and such receiver shall be entitled to take possession of the Mortgaged Property from the owner, tenants and/or occupants of the whole or any part thereof and to collect and receive the rents and profits and the value of the use and occupation of the Mortgaged Property or any part thereof from the then owner, tenants and/or occupants thereof for the benefit of the Mortgagee. (h) Mortgagee shall have the right, from time to time, after an Event of Default, to bring an appropriate action to recover any sums required to be paid by Mortgagor under the terms of this Mortgage, as they become due, without regard to whether or not the principal indebtedness or any other sums secured by the Note and this Mortgage shall be due, and without prejudice to the right of Mortgagee thereafter to bring an action of mortgage foreclosure, or any other action, for any default by Mortgagor existing at the time the earlier action was commenced. (i) All rights and remedies granted or otherwise available to Mortgagee shall be cumulative and concurrent and may be pursued singly, successively or together at Mortgagee's sole option, and may be exercised from time to time and as often as occasion therefor shall occur until the indebtedness hereby secured with all interest thereon is paid in full. 16. OTHER MORTGAGES OR DEEDS OF TRUST If Mortgagor shall fail to pay any installment of principal or interest required under any other mortgage or deed of trust on the Mortgaged Property (if permitted by Mortgagee), whether subordinate or prior to the lien of this Mortgage, or shall fail to pay any tax, governmental levy or charge or insurance premium, or to make any other payment required to be paid by Mortgagor under such mortgage or deed of trust, at the time and in the manner provided therein; or if Mortgagor shall fail to perform or observe any other term, covenant, condition or obligation required to be performed or observed by Mortgagor therein, then without limiting the generality of any other provision of this Mortgage, and without waiving or releasing Mortgagor from any of its obligations hereunder, Mortgagee shall have the right, but shall be under no obligation, to pay any such installment of principal or interest and/or any such tax, levy, premium, charge, or other payment, and may perform any other act or take such action as may be appropriate to cause -10- 11 such other term, covenant, condition or obligation to be promptly performed or observed on behalf of Mortgagor, to the end that Mortgagor's right in, to and under such mortgage or deed of trust shall be kept unimpaired and free from default. Mortgagee and any person designated by Mortgagee shall have, and is hereby granted, the right to enter upon the Mortgaged Property at any time and from time to time for the purpose of taking any such action, and all monies expended by Mortgagee in connection therewith (including but not limited to, legal expenses and disbursements), together with interest thereon at the Default Rate provided for in the Note secured hereby from the date of each expenditure, shall be paid by Mortgagor to Mortgagee forth with upon demand by Mortgagee, and shall be secured by this Mortgage. Mortgagee shall have, in addition to any other right or remedy, the same rights and remedies in the event of default or nonpayment under any such mortgage or deed of trust as in the case of a default by Mortgagor in the payment of any installment of principal or interest due and payable hereunder. 17. PREPAYMENT Mortgagor may prepay this Mortgage only on the terms and conditions set forth in the Note. 18. LEASES; ESCROWS FOR LEASE TERMINATION (a) Mortgagor covenants and agrees that Mortgagor will not, without the prior written consent of Mortgagee (which consent may be withheld in Mortgagee's sole discretion): (i) receive or collect rents (other than the customary security deposit) from any tenant, subtenant, undersubtenant or other occupant of the Mortgaged Property for a period of more than one month in advance; or (ii) assign the rents, or any part thereof, of the Mortgaged Property to any person or entity other than Mortgagee; or (iii) enter into any lease for minimum rentals less than those approved in writing by Mortgagee or for length of term less than that approved in writing by Mortgagee; or (iv) enter into any lease other than that which is in form and content substantially the same as the form of lease approved in writing by Mortgagee. (b) Mortgagor covenants and agrees to perform and to observe all the material agreements imposed upon Mortgagor under any leases of or occupancy agreements for the Mortgaged Property or any portions thereof, and not to do, or to permit to be done, anything to impair the security thereof; if any of such leases shall require security deposits, to establish if required by law an interest-bearing security deposit account in accordance with such law, and to deposit all security deposits therein, and to maintain true and accurate records of all security deposits received, and to pay interest thereon, if the same be required by law or by the terms of the leases; and to comply with all requirements of law concerning security deposits received. (c) (i) In the event that any Lease is terminated hereafter and payments or damages of any kind are received by Mortgagor in connection with such termination (collectively, "Termination Proceeds"), such Termination Proceeds shall immediately be paid over to GMAC Mortgage Corporation, or such other agent as Mortgagee shall designate in writing, to be held in escrow and released for tenant improvement work upon receipt by Mortgagee of an executed replacement Lease acceptable to Mortgagee with a term of at least five (5) years and with a rent acceptable to Mortgagee based on then-current market conditions. Termination Proceeds shall be held in an interest bearing account, with interest to follow principal. If no tenant improvement work is required under such approved replacement Lease, the escrowed payments shall be released to Mortgagor upon occupancy of the leased space by the tenant under the approved replacement Lease. (ii) Notwithstanding the provisions of subsection (c)(i) above, if Computer Sciences Corporation ("CSC") terminates its current lease ("CSC Lease"), Mortgagor shall pay into escrow with GMAC Mortgage Corporation the sum of $75,000 per month for each of the three consecutive calendar months beginning sixty (60) days after receipt of the termination notice ("CSC Proceeds"). If CSC subsequently resumes or extends the CSC Lease, the CSC Proceeds shall be returned to Mortgagor. The CSC Proceeds shall be held in an interest bearing -11- 12 account, with interest to follow principal. The CSC Proceeds shall be released for tenant improvement work, in amount equal to the lesser of $10.00 per square foot or the actual cost thereof, upon receipt by Mortgagee of an executed replacement Lease acceptable to Mortgagee with a term of at least five (5) years and with a gross rent of at least $18.00 per square foot, or with such other terms as shall be acceptable to Mortgagee based on then-current market conditions. The provisions of this subsection (c)(ii) shall terminate and expire upon renewal by Computer Sciences Corporation of the CSC Lease for a renewal term of at least five (5) years on financial terms at least as favorable to Mortgagor as those in the CSC Lease. (iii) Upon the occurrence of an Event of Default hereunder, and notwithstanding the provisions of Section 28, all Termination Proceeds and CSC Proceeds then being held by GMAC Mortgage Corporation or any other agent designated by Mortgagee shall immediately be released to Mortgagee and applied to any amounts due the Mortgagee following such an Event of Default. 19. MANAGEMENT OF MORTGAGED PROPERTY During the term of this Mortgage, the Mortgaged Property shall be managed, at all times, by a manager (the "Manager") reasonably satisfactory to Mortgagee, which Manager shall be controlled by Mortgagor. Any substitute Manager or change in arrangements for leasing and management must be approved in writing by Mortgagee prior to such substitution or change being effected. Mortgagor covenants and agrees that this Section 19 is of the essence of this Mortgage and that Mortgagee will be prejudiced by a violation hereof in that Mortgagee is relying upon the expertise and business acumen of the Manager. 20. INDEMNIFICATION OF MORTGAGEE Mortgagor hereby agrees to and does hereby indemnify, protect, defend and save harmless Mortgagee and its officers, directors, employees, agents, attorneys and shareholders from and against any and all losses, damages, expenses or liabilities of any kind or nature and from any suits, claims or demands, including reasonable counsel fees incurred in investigating or defending such claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with this Mortgage and the transactions contemplated herein, including, but not limited to, (a) disputes between any architect, general contractor, subcontractor, materialman or supplier, or on account of any act or failure to act by Mortgagee in connection with this Mortgage, or (b) losses, damages, expenses or liabilities sustained by Mortgagee pursuant to any provisions contained in any federal, state or local environmental law, ordinance, rule or regulation, or (c) any violation of the covenants and representations contained in Section 4(b)-(j) hereof. THE INDEMNIFICATION OBLIGATIONS OF MORTGAGOR UNDER THIS SECTION 20(b) AND (c) SHALL NOT BE SUBJECT TO THE LIMITATIONS OF LIABILITY SET FORTH IN SECTION 28 HEREOF OR IN THE NOTE. In case any action shall be brought against Mortgagee based upon any of the above and in respect to which indemnity may be sought against Mortgagor, Mortgagee shall promptly notify Mortgagor in writing, and Mortgagor shall assume the defense thereof, including the employment of counsel selected by Mortgagor and satisfactory to Mortgagee, the payment of all costs and expenses and the right to negotiate and consent to settlement. Upon determination made by Mortgagee, Mortgagee shall have the right to employ separate counsel in any such action and to participate in the defense thereof. Mortgagor shall not be liable for any settlement of any such action effected without its consent, but if settled with Mortgagor's consent, or if there be a final judgment for the claimant in any such action, Mortgagor agrees to indemnify and save harmless Mortgagee from and against any loss or liability by reason of such settlement or judgment. 21. IMPOSITION OF TAX Mortgagor covenants and agrees to pay and discharge when due any taxes, fees or other charges imposed by any Federal, State or local authority, including interest and penalties thereon, if any, or thereafter becoming payable on this Mortgage or the Note secured hereby (excluding any Federal or state income taxes of Mortgagee). Mortgagor further covenants and agrees to pay upon demand all fees, charges or taxes (excluding any Federal or state income taxes of Mortgagee), if any, and interest and penalties thereon, if any, imposed on Mortgagee as a condition or as a result of the making of this loan in the State of New Jersey. -12- 13 22. MISCELLANEOUS (a) No delay or failure of Mortgagee to exercise any right or option herein given or reserved shall constitute a waiver of such right or estop Mortgagee from afterwards exercising such option, and contracting to pay by Mortgagee of anything Mortgagor has herein agreed to pay shall not constitute a waiver of the default of Mortgagor in failing to make such payments and shall not estop Mortgagee from foreclosing this Mortgage on account of such failure of Mortgagor. The rights, options, powers and remedies herein provided shall be cumulative and no one or more of them shall be exclusive of the other or others, or of any right or remedy now or hereafter given or allowed by law. (b) Mortgagor waives the benefit of any appraisement laws of the State of New Jersey. 23. EXTENSIONS AND MODIFICATIONS No extension or indulgence granted to Mortgagor, and no alteration, change or modification of the Note consented or agreed to by Mortgagee, and no other act or omission of Mortgagee, including the taking of additional security or the release or subordination of any security, shall constitute a release of the lien and obligation of this Mortgage or be interposed as a defense against the enforcement of this Mortgage, except a writing signed by Mortgagee which constitutes an express, effective release and satisfaction of the Note. 24. NO THIRD PARTY BENEFICIARIES The parties do not intend the benefits of this Mortgage to inure to any third party, except for the successors and assigns of Mortgagee. Notwithstanding anything contained herein or in the Note, or any other document executed in connection herewith, or any conduct or course of conduct by either or both of the parties hereto, or their respective affiliated companies, agents or employees, before or after the execution hereof, this Mortgage shall not be construed as creating any rights, claims or causes of action in favor of any person or entity other than Mortgagor and Mortgagee. 25. NOTICES All notices, requests and demands upon the respective parties hereto shall be effective when hand delivered to such party at the address set forth below, or if sent by overnight delivery service, on the next business day, or if sent by United States mail, postage prepaid, registered or certified mail, on the second business day after the day on which mailed or sent, addressed to such party as follows: To Mortgagee: Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02181 Attention: Virginia M. Ayers, Sr. Property Investments Officer With copies to: John Cannon, Assistant Vice President GMAC Mortgage Corporation 8360 Old York Road Elkins Park, PA 19117 Gregory Kleiber, Esquire Fox, Rothschild, O'Brien & Frankel 2000 Market Street Philadelphia, PA 19103 -13- 14 To Mortgagor: 1120 Associates Limited Partnership 2 Eves Drive Marlton, New Jersey 08053 With a copy to: Robert E. Schwartz, Esquire Sherman, Silverstein, Kohl, Rose & Podolsky 4300 Haddonfield Road, Suite 311 Pennsauken, NJ 08109 or to such other address as may be furnished in writing for such purpose. 26. COMMERCIAL LOAN Mortgagor represents and warrants that the loan secured by this Mortgage was obtained solely for the purpose of carrying on or acquiring a business or commercial investment. 27. NO AGENCY, JOINT VENTURE OR PARTNERSHIP BETWEEN MORTGAGOR AND MORTGAGEE This Mortgage shall not be construed as a partnership, joint venture, other business entity formation, lease or sale. Mortgagee is not now a partner or joint venturer with Mortgagor in any respect or for any purpose in the conduct of Mortgagor's business. Mortgagor is not the agent, representative, partner of, or joint venturer with Mortgagee and will act accordingly. This Mortgage shall not be construed to make Mortgagee liable to any person or persons for goods or services furnished to the Mortgaged Property, or for debts or claims accruing therefrom against Mortgagor. There shall be no contractual relation, either express or implied, between Mortgagee and any person or per sons supplying any work or materials to the Mortgaged Property. 28. LIMITED LIABILITY The liability of Mortgagor hereunder shall be limited to and enforceable only out of the Mortgaged Property and the rents, issues and profits therefrom, and the lien of any judgment shall be restricted thereto and shall not extend to Mortgagor, Mortgagee waving any right Mortgagee may have to claim a deficiency judgment against Mortgagor; provided, however, that Mortgagor and Mortgagor's general partner shall not be exonerated or exculpated from, and shall be liable for, any deficiency, loss or damage suffered by Mortgagee as a result of any security deposits received or held by Mortgagor, any rent received or held by Mortgagor after an Event of Default, or any rent prepaid more than one month in advance; or from Mortgagor's failure to properly account to Mortgagee for any proceeds of insurance or condemnation proceeds as required by this Mortgage; or from repairs required by the Mortgaged Property following a casualty for which insurance proceeds are not available due to a violation of Section 10 hereof; or from fraud, material misrepresentation or bad faith by Mortgagor; or from waste of the Mortgaged Property; or from delinquent taxes or assessments; or from Mortgagor's violation of, or failure to perform its obligations under, Section 4(b)-(j) or Section 20(b) or (c) of this Mortgage. Nothing in this subsection, however, shall limit Mortgagee's rights against any tenants under leases assigned to Mortgagee as additional security or against any other collateral securing Mortgagor's obligations, now or hereafter mortgaged, pledged or assigned by Mortgagor or anyone else to Mortgagee. 29. COUNSEL FEES (a) If Mortgagee becomes a party to any suit or proceeding affecting the Mortgaged Property or title thereto, the lien created by this Mortgage or Mortgagee's interest therein, or if Mortgagee engages counsel to collect any of the indebtedness or to enforce performance of the agreements, conditions, covenants, provisions or stipulations of this Mortgage or the Note, Mortgagee's costs, expenses and reasonable counsel fees, whether or not suit is instituted, shall be paid to Mortgagee by Mortgagor, on demand, with interest at the Default Rate set forth in the Note, and until paid, they shall be deemed to be part of the indebtedness evidenced by the Note and secured by this Mortgage. (b) Regardless of whether any proceeds of the loan evidenced by the Note have been disbursed, this Mortgage also secures the payment of all loan commissions, service charges, reasonable attorney's fees, liquidated damages, expenses and advances due to or incurred by Mortgagee in connection with the loan transaction intended to be -14- 15 secured hereby, all in accordance with the application of, and the Loan Commitment issued to and accepted by, Mortgagor in connection with the loan. 30. PARTIAL INVALIDITY The unenforceability or invalidity of any one or more provisions, clauses, sentences, and/or paragraphs hereof shall not render any other provisions, clauses, sentences and/or paragraphs herein contained unenforceable or invalid. 31. BINDING EFFECT The covenants, conditions and agreements contained in this Mortgage shall bind, and the benefits thereof shall inure to, the respective parties hereto and their respective heirs, personal representatives, successors and assigns. If Mortgagor is at any time constituted by more than one person, the obligations of each such person shall be joint and several. 32. SURVIVAL OF COMMITMENT The covenants, conditions and agreements contained in Mortgagee's Loan Commitment to Mortgagor dated January 13, 1995, shall survive the execution hereof, and any breach or violation thereof by Mortgagor shall con stitute an Event of Default hereunder. 33. GOVERNING LAW This Mortgage shall be construed in accordance with and governed by the laws of the State of New Jersey. 34. AMENDMENT This Mortgage cannot be changed, modified or amended except by agreement in writing signed by the party against whom enforcement of the change, modification or amendment is sought. 35. CAPTIONS The captions preceding the text of the sections of this Agreement are used solely for convenience of reference and shall not affect the meaning or construction of this Mortgage. 36. WAIVER Mortgagor hereby waives the right to trial by jury in any action by Mortgagee to enforce Mortgagee's rights under the Note, this Mortgage or any other document evidencing or securing the Note. 37. ACKNOWLEDGMENT MORTGAGOR ACKNOWLEDGES THAT THIS MORTGAGE CONTAINS A WAIVER OF TRIAL BY JURY IN SECTION 36. -15- 16 WITNESS the due execution hereof the day and year first above written. 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: Palomino Corporation, a Pennsylvania corporation, general partner By: /s/ Joseph D. Gonnelli -------------------------------------------- Joseph D. Gonnelli, Vice President Attest: /s/ R. Brian Jackson ---------------------------------------- R. Brian Jackson, Secretary -16- 17 State of New Jersey, County of __________ I am an officer authorized to take acknowledgments and proofs in this state. On March __, 1995, __________________________ ("Witness") appeared before me in person. The Witness was duly sworn by me according to law under oath and stated and proved to my satisfaction that: 1. The Witness is the (Assistant) Secretary of the corporation that executed this document ("Corporation"). 2. _______________, the officer who signed this document, is the President of the corporation ("Corporate Officer"). 3. The making, signing, sealing, and delivery of this document have been duly authorized by a proper resolution of the Board of Directors of the Corporation. 4. The Witness knows the corporate seal of the Corporation. The seal affixed to this document is the corporate seal of the Corporation. The seal was affixed to this document by the Corporate Officer. The Corporate Officer signed and delivered this document as and for the voluntary act and deed of the Corporation. All of this was done in the presence of the Witness who signed this document as attesting witness. The Witness signs this proof to attest to the truth of these facts. Sworn to and signed before me on the date written above. Witness: ----------------------- Name: -------------------------- Notary: ----------------------- Name: ------------------------- -17- EX-10.7 8 SUN LIFE LETTER/1120 ASSOCIATES 1 EXHIBIT 10.7 March 14, 1995 1120 Associates Limited Partnership 2 Eves Drive Marlton, New Jersey 08053 Re: $6,500,000 Loan from Sun Life Assurance Company of Canada (U.S.) ("Loan") Dear Sir: This letter sets forth certain agreements between Sun Life Assurance Company of Canada (U.S.) ("Mortgagee") and 1120 Associates Limited Partnership ("Mortgagor"), regarding (i) the release by Mortgagee of condemnation award proceeds following a taking or condemnation and insurance proceeds following a casualty, (ii) transfers of partnerships interests and the property encumbered by the Mortgage ("Mortgaged Property"), and (iii) subordinate indebtedness. Capitalized terms used herein have the same meaning as set forth in the Mortgage and Security Agreement of even date herewith from 1120 Associates Limited Partnership to us (the "Mortgage"). 1. (a) Notwithstanding anything to the contrary set forth in Section 8 of the Mortgage, Mortgagee agrees that (provided no Event of Default has occurred under the Mortgage or under the Note or any other document given as collateral security for the Note, and subject to the provisions of subsection (c) below) in the event of a con demnation or taking, Mortgagee will make available to Mortgagor the proceeds received by it for purposes of restoration of the Mortgaged Property on the following terms and conditions: (i) prior to the commencement of restoration, the contracts, contractors, and plans and specifications for the restoration shall have been approved by Mortgagee, and Mortgagee, at its option, shall be provided with a surety bond insuring satisfactory completion of the restoration, such insurance and bond to be in form acceptable to Mortgagee; (ii) at the time of any disbursement Mortgagor shall not be in default hereunder, no mechanics' or materialmen's liens shall have been filed and remain undischarged (or unbonded if contested in good faith) and a satisfactory bringdown of title insurance shall be delivered to Mortgagee; (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement, upon approval by Mortgagee's engineer and receipt of satisfactory evidence of the stage of completion and of performance of the work in good and workmanlike manner in accordance with the contracts, plans and specifications; (iv) the restoration fund shall be deposited in an escrow account with Mortgagee; and (v) such restoration and the disbursement of the restoration fund shall be otherwise effected in accordance with the provisions of Mortgagee's standard building loan agreement. (b) Prior to the commencement of restoration, or at any time thereafter, if the estimated cost of restoration, as reasonably determined by Mortgagee, exceeds the amount of proceeds paid on account of the cost of such restoration, the amount of such excess shall be paid by Mortgagor to Mortgagee in cash or by means of other security satisfactory to Mortgagee, and shall be added to the restoration fund. (c) If no restoration is necessary, or if the Mortgaged Property cannot be restored to a condition functionally similar to its condition prior to the taking within one hundred eighty (180) days, or if any material Lease is terminated by the tenant as a result of such condemnation, Mortgagee, at its sole option, shall apply all or part of the proceeds to reduce the outstanding principal indebtedness secured hereby, and shall pay over to Mortgagor the balance not so applied (if any). 2 (d) If, prior to the receipt of the proceeds by Mortgagee, the Mortgaged Property shall have been sold on foreclosure of the Mortgage, Mortgagee shall have the right to receive the proceeds to the extent of: (i) any deficiency found to be due to Mortgagee in connection with the foreclosure sale, with interest thereon, at the Default Rate set forth in the Note, and (ii) reasonable counsel fees, costs and disbursements incurred by Mortgagee in connection with the collection of the proceeds. (e) If the amount of the initial award of damages for the total condemnation is insufficient to pay in full the indebtedness secured hereby with interest and other appropriate charges, Mortgagee shall have the right to prosecute to final determination or settlement an appeal or other appropriate proceedings in the name of Mortgagee or Mortgagor, for which Mortgagee is hereby appointed irrevocably as attorney-in-fact for Mortgagor. In that event, the reasonable expenses of the proceedings, including reasonable counsel fees, shall be paid first out of the proceeds, and only the excess, if any, paid to the Mortgagee shall be credited against the amounts due under this Mortgage. (f) Nothing herein shall limit the rights otherwise available to Mortgagee, at law or in equity, including the right to intervene as a party to any condemnation proceedings. 2. (a) Notwithstanding anything to the contrary set forth in Section 10 of the Mortgage, Mortgagee agrees that (provided that no Event of Default has occurred under the Mortgage or under the Note or any other document given as collateral security for the Note, and provided that the Mortgaged Property can, in Mortgagee's opinion, be restored to its condition on the date hereof within 180 days following the casualty) in the event of such loss or damage or casualty, Mortgagee will make available the proceeds received by it for purposes of restoration of the Mortgaged Property on the following terms and conditions: (i) prior to the commencement of restoration, the contracts, contractors, and plans and specifications for the restoration shall have been approved by Mortgagee, and Mortgagee, at its option, shall be provided with a surety bond insuring satisfactory completion of the restoration, such insurance and bond to be in form reasonably acceptable to Mortgagee; (ii) at the time of any disbursement Mortgagor shall not be in default under the Mortgage, no mechanics' or materialmen's liens shall have been filed and remain undischarged (or unbonded if contested in good faith) and a satisfactory bringdown of title insurance shall be delivered to Mortgagee; (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement, upon approval by Mortgagee's engineer and receipt of satisfactory evidence of the stage of completion and of performance of the work in good and workmanlike manner in accordance with the contracts, plans and specifications; (iv) the restoration fund shall be deposited in an escrow account with Mortgagee; and (v) such restoration and the disbursement of the restoration fund shall be otherwise effected in accordance with the provisions of Mortgagee's standard building loan agreement. (b) Prior to the commencement of restoration, or at any time thereafter, if the estimated cost of restoration, as reasonably determined by Mortgagee, exceeds the amount of proceeds paid on account of the cost of such restoration, the amount of such excess shall be paid by Mortgagor to Mortgagee in cash or by means of other security satisfactory to Mortgagee, and shall be added to the restoration fund. (c) If no restoration is necessary, Mortgagee, at its sole option, shall apply all or part of the insurance proceeds to reduce the outstanding principal indebtedness secured hereby, and shall pay over to Mortgagor the balance not so applied (if any). 3. Notwithstanding anything to the contrary set forth in Section 7 of the Mortgage, (i) limited partnership interests in Mortgagor, and shares or partnership interests in the entities composing Mortgagor, may be transferred by 2 3 the existing partners without Mortgagee's consent, but with prior written notice to Mortgagee, so long as Dr. A.M.H.M. Sallam and Lulua Sallam remaining controlling shareholders of Palomino Corporation, which shall at all times remain the general partner of Mortgagor, and (ii) Mortgagee shall not unreasonably withhold its consent to a one-time transfer of the Mortgaged Property to a purchaser approved by Mortgagee, in its sole discretion, as to financial strength, reputation and experience in owning and operating commercial real estate; provided, however, that any such consent shall be conditioned upon (A) receipt by Mortgagee from Mortgagor of a transfer fee equal to one and one-half percent (1.5%) of the then-outstanding principal balance, and (B) Mortgagor's payment of all costs and expenses, including without limitation Mortgagee's legal fees, incurred in connection with such transfer. 4. Notwithstanding the restrictions in Section 6 of the Mortgage: (a) Mortgagor may grant a subordinate mortgage ("Subordinate Mortgage") to secure a standard amortizing loan ("Subordinate Loan") from a financial institution approved in advance by Mortgagee, provided that the amount of the Subordinate Loan shall not exceed $200,000. The Subordinate Mortgage may not be granted until Mortgagee has approved in writing the identity of the lender as set forth above. Any such lender shall further be required to execute a Subordination Agreement in form reasonably approved by Mortgagee. Mortgagor shall pay all costs and expenses, including without limitation Mortgagee's legal fees, incurred by Mortgagee in connection with such Subordinate Loan. (b) In the event that the Mortgaged Property is transferred in accordance with the requirements of Section 3 above, the purchaser of the Mortgaged Property shall be permitted to grant a subordinated purchase money mortgage ("Subordinate Purchase Mortgage") to secure a purchase money loan from Mortgagor, or from a financial institution approved in advance by Mortgagee, with terms and conditions approved in advance by Mortgagee ("Subordinated Purchase Loan") in an amount which, when added to the unpaid principal balance of the loan secured by this Mortgage, shall not exceed seventy five percent (75%) of the purchase price of the Mortgaged Property. The Subordinate Purchase Mortgage may not be granted until Mortgagee has approved in writing the identity of the lender and the terms and conditions as set forth above. Any such lender shall further be required to execute a Subordination Agreement in form reasonably approved by Mortgagee. Mortgagor shall pay all costs and expenses, including without limitation Mortgagee's legal fees, incurred by Mortgagee in connection with such Subordinate Purchase Loan. 5. Dr. A.M.H.M. Sallam shall execute and deliver to Mortgagee on the date hereof a Master Lease of the Computer Sciences Corporation premises for a term of six (6) years, at the same rent as the CSC Lease but not less than $18.50 per square foot gross, and otherwise on the same terms and conditions as the CSC Lease. Any default by Dr. Sallam under such Master Lease shall be an Event of Default under the Note and Mortgage. The provisions of this subsection 5 shall terminate and expire upon renewal by Computer Sciences Corporation of the CSC Lease for a renewal term of at least five (5) years on financial terms at least as favorable to Mortgagor as those in the CSC Lease. Please acknowledge your agreement to these terms by executing a copy of this letter. SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) By: /s/ Jeffrey J. Skerry ----------------------------------------------- Jeffrey J. Skerry, Associate Counsel 1120 ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: Palomino Corporation, a Pennsylvania corporation, general partner By: /s/ Joseph D. Gonnelli --------------------------------------- Joseph D. Gonnelli, Vice President Attest: /s/ R. Brian Jackson ---------------------------------- R. Brian Jackson 3 EX-10.8 9 SUN LIFE MORTGAGE NOTE/MLCP ASSOCIATES 1 EXHIBIT 10.8 MORTGAGE NOTE $6,500,000.00 Dated: October 19, 1994 MLCP ASSOCIATES LIMITED PARTNERSHIP (hereinafter called "Maker") to SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) (hereinafter called "Holder") FOR VALUE RECEIVED, MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (the "Maker"), promises to pay to the order of SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), a Delaware corporation, its successors and assigns (the "Holder"), in lawful money of the United States of America, the sum of SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($6,500,000.00) (the "Loan") as follows: 1. The principal balance of the Loan shall bear interest at the rate of nine and one-quarter percent (9.25%) per annum (the "Accrual Rate"). The principal balance and interest thereon shall be payable in consecutive monthly installments of $66,897.50 (based on amortization of the principal balance of the Loan over a hypothetical fifteen year term) commencing on the first day of the second calendar month after disbursement of the Loan, and continuing on the first day of each month thereafter, such amount being first applied to interest and then to the reduction of principal. Interest for the period from the date the Loan is funded until the first day of the following calendar month shall be payable on the date hereof. Interest will be computed according to the Bankers Rule, i.e., the actual amount of days x rate of interest x principal/360. The entire balance of principal and all interest outstanding hereunder shall be due and payable on November 1, 2004 ("Maturity Date"). 2. Prepayment of the Loan shall not be permitted during the first sixty (60) months of the Loan term. Prepayment in full only of the principal of the Loan will be permitted at any time during the last sixty (60) months of the Loan term upon thirty (30) days' prior written notice to Holder. Such prepayment shall be accompanied by additional interest ("Additional Interest") equal to the greater of (i) one percent (1%) of the unpaid principal balance of the Loan on the date of prepayment, or (ii) that amount which is calculated as of the date of the prepayment as follows: (A) the Prepayment Treasury Yield (as defined below) is subtracted from 9.25%, and the difference (but not less than 0) 2 is (B) divided by twelve, and the quotient thereof is then (C) multiplied by the then outstanding balance of the Loan to determine the monthly payment differential, and (D) the present value of the series of monthly payment differentials for the number of whole and partial months from the prepayment date to the maturity date is determined using the Prepayment Treasury Yield as the discount rate and compounding monthly, and (E) the present values of such monthly payment differentials are added together. The term "Prepayment Treasury Yield" means the yield which would be available if the proceeds of the prepayment were invested on the date of the prepayment in a debt obligation of the United States Treasury (other than a Flower Bond) having a maturity most closely equivalent to that of the Loan (and if more than one Treasury obligation has the same maturity, then the obligation offering the highest yield), as determined by quotations published in The Wall Street Journal on the date five (5) business days before the prepayment. If the difference between 9.25% and the Prepayment Treasury Yield is less than 0, the Additional Interest shall equal one percent (1%) of the unpaid principal balance of the Loan. For purposes of calculating Additional Interest, the first month of the Loan term shall begin on the first day of the first calendar month after the date hereof. Notwithstanding the foregoing, prepayment in full only of the principal of the Loan will be permitted during the last three (3) months of the Loan term upon five (5) days' prior written notice to Holder without Additional Interest. Partial prepayment shall not be permitted at any time. 3. All payments due hereunder shall be made at the offices of Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, or elsewhere, as shall be directed by written notice by any holder hereof. 4. Maker acknowledges that the failure of Maker to make any payment within five (5) days after the payment is due and payable will cause Holder to incur additional expense in servicing the indebtedness evidenced by this Note, the precise measure of which expense is not susceptible to exact determination. Accordingly, it is further agreed that Holder may collect a late charge of four percent (4%) of each payment more than five (5) days in arrears, which Maker agrees is a reasonable basis on which to cover the extra expense involved in handling delinquent payments. This shall not be construed to obligate Holder to accept any overdue installment nor to limit Holder's rights and remedies for Maker's default, as hereinafter set forth. -2- 3 5. This Note accompanies and is secured, inter alia, by a Mortgage and Security Agreement of even date herewith (the "Mortgage"), made and executed by Maker upon real estate and the building and improvements thereon known as 1000 Howard Boulevard, situate on approximately 6.34 acres of land located in Mount Laurel Township, Burlington County, New Jersey, as more particularly identified in the Mortgage (the "Mortgaged Property"), and by an Assignment of Leases and Agreement of even date herewith (the "Assignment of Leases"), made and executed by Maker with respect to the Mortgaged Property. (This Note, the Mortgage, the Assignment of Leases and any other documents executed by Maker to Holder in connection herewith are hereinafter referred to collectively as the "Loan Documents"). All of the terms of the Loan Documents are incorporated herein by reference and Maker does hereby covenant and agree to comply with all of the terms, conditions and provisions of the Loan Documents. Any Event of Default under any of the Loan Documents shall constitute an Event of Default under this Note. 6. Maker agrees that if Maker shall, without in each instance obtaining the prior written consent of Holder, sell, transfer, or convey (herein all called "transfer") the Mortgaged Property or any interest therein (other than leases of portions of the Mortgaged Property in the ordinary course of Maker's business made in accordance with the terms of the Assignment of Leases, and otherwise as expressly permitted in Section 7 of the Mortgage) whether voluntarily or by operation of law, then, at the option of Holder, the maturity of this Note shall be advanced to the date of such transfer, whereupon the obligations of Maker evidenced by this Note shall immediately be due and payable. For purposes of this paragraph, any transfer of partnership interests in Maker, other than as expressly permitted in Section 7 of the Mortgage, shall constitute a transfer of the Mortgaged Property. 7. This Note, the Mortgage, the Assignment of Leases and the other Loan Documents shall evidence and secure any future loans or advances that may be made to or on behalf of Maker by Holder, at any time or times hereafter intended by Maker and Holder to be so evidenced and secured, as well as any sums paid by Holder pursuant to the terms of the Mortgage, and any such loans, advances or payments shall be added to and shall bear interest at the Default Rate (as hereinafter defined). The parties expressly agree that this Note shall have the full force, effect and benefits of a note to secure advances of money, the lien of which advances relate to the date of this Note. 8. The occurrence of any of the following shall constitute an Event of Default hereunder: Maker's failure to make payment of any installment of principal or interest or any other sum within five (5) business days -3- 4 of the date on which such installment or sum is due under this Note (provided that Holder will only grant such 5-day grace period twice in any twelve-month period, and any failure thereafter to make a payment on the due date shall constitute an Event of Default without any grace period); or Maker's nonperformance of, or noncompliance with, any of the other agreements, conditions, covenants, provisions or stipulations contained in this Note, for a period of twenty (20) days after written notice thereof to Maker (provided that if such nonperformance or noncompliance cannot reasonably be cured within twenty (20) days, an Event of Default shall not occur hereunder if Maker initiates curing the nonperformance or noncompliance within such 20-day period and diligently pursues such cure to completion within a reasonable time thereafter, not to exceed ninety (90) days after such written notice); or the occurrence of an Event of Default under the Mortgage, the Assignment of Leases or any of the other Loan Documents. Upon the occurrence of an Event of Default hereunder, (a) the interest rate payable hereunder during the continuance of the Event of Default shall be at a rate (the "Default Rate") three (3%) percent in excess of the Accrual Rate. (b) The entire unpaid balance of the principal debt, additional loans or advances and all other sums paid by Holder to or on behalf of Maker pursuant to the terms of this Note or the Mortgage, together with unpaid interest thereon and the Acceleration Premium (as defined below), shall at the option of the Holder and without notice become immediately due and payable. The term "Acceleration Premium" shall refer to an amount equal to the greater of (i) three percent (3%) of the unpaid principal balance of the Loan on the date of acceleration, or (ii) that amount which is calculated as of the date of the acceleration as follows: (A) the Acceleration Treasury Yield (as defined below) is subtracted from 9.25%, and the difference (but not less than 0) is (B) divided by twelve, and the quotient thereof then (C) multiplied by the then outstanding balance of the Loan to determine the monthly payment differential, and (D) the present value of the series of monthly payment differentials for the number of whole and partial months from the prepayment date to the maturity date is determined using the Acceleration Treasury Yield as the discount rate and compounding monthly, and (E) the present values of such monthly payment differentials are added together. The term "Acceleration Treasury Yield" means the yield which would be available if the proceeds of the acceleration were invested on the date of the acceleration in a debt obligation of the United States Treasury (other than a Flower Bond) having a coupon interest rate and maturity most closely equivalent to that of the Loan, as determined by quotations -4- 5 published in The Wall Street Journal on the date five (5) business days before the acceleration. If the difference between 9.25% and the Acceleration Treasury Yield is less than 0, the Acceleration Premium shall equal three percent (3%) of the unpaid principal balance of the Loan. 9. Maker waives the benefit of any laws which now or hereafter might authorize the stay of any execution to be issued on any judgment recovered on this Note or the exemption of any property from levy or sale thereunder. Maker also waives and releases unto Holder and its attorney, all errors, defects and imperfections whatsoever in the entering of any judgment or any process or proceedings relating thereto. 10. Maker hereby waives presentment for payment, demand, protest, notice of protest, and of dishonor and nonpayment of this Note, and consents that Holder may extend the time of payment or otherwise modify the terms of payment of any part or the whole of the debt evidenced by this Note, at the request of any person holding title to the Mortgaged Property described in the Mortgage, and such consent shall not alter or diminish the liability of any person hereunder. 11. The remedies of this Note, the Mortgage, the Assignment of Leases and the other Loan Documents providing for the enforcement of the payment of the principal sum thereby secured, together with interest thereon, and for the performance of the covenants, conditions, and agreements herein and therein contained, are cumulative and concurrent and may be pursued singly or successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall occur. The waiver by Holder or failure to enforce any covenant or condition of this Note, the Mortgage, the Assignment of Leases or any of the other Loan Documents, or to declare any Event of Default thereunder or hereunder, shall not operate as a waiver of any subsequent Event of Default or affect the right of Holder to exercise any right or remedy not expressly waived in writing. 12. Maker shall pay the cost of any revenue, tax or other stamps now or hereafter required by law, at any time to be affixed to this Note or the Mortgage (other than Holder's income taxes), and if any taxes hereafter be imposed with respect to debts secured, Maker agrees to pay to Holder upon demand the amount of such taxes, and hereby waives any contrary provisions of any laws or rules of court now or hereafter in effect. 13. Notwithstanding anything to the contrary herein contained, the liability of Maker hereunder shall be limited to and enforceable only out of the Mortgaged Property and the rents, issues and profits therefrom, and -5- 6 the lien of any judgment shall be restricted thereto and shall not extend to Maker, Holder waiving any right Holder may have to claim a deficiency judgment against Maker; provided, however, that Maker and its general partner shall not be exonerated or exculpated from, and shall be liable for, any deficiency, loss or damage suffered by Holder as a result of any security deposits received or held by Maker, any rent received or held by Maker after an Event of Default, or any rent prepaid more than one month in advance; or from failure by Maker to properly account to Holder as mortgagee for any proceeds of insurance or condemnation proceeds as required by the Mortgage; or from repairs required by the Mortgaged Property following a casualty for which insurance proceeds are not available due to a violation of Section 10 of the Mortgage; or from fraud, material misrepresentation or bad faith by Maker; or from waste of the Mortgaged Property; or from delinquent taxes or assessments; or from Maker's violation of, or failure to perform its obligations under, Section 4(b)-(j) or Section 20 of the Mortgage. Nothing in this paragraph, however, shall limit Holder's right against any tenants under leases assigned to Holder as additional security, or against any other collateral securing Maker's obligations hereunder, now or hereafter mortgaged, pledged or assigned by Maker or anyone else to Holder. 14. Notwithstanding any provision contained in this Note, Maker's liability for payment of interest shall not exceed the limits imposed by applicable usury law. If any provision contained herein requires interest payments for any period in excess of the then legally permitted maximum rate, such provision shall automatically be deemed to require interest payments for such period at the then legally permitted maximum rate. 15. Maker represents and warrants that the Loan evidenced by this Note and secured by the Mortgage, the Assignment of Leases and the other Loan Documents was obtained solely for the purpose of carrying on or acquiring a business or commercial transaction. 16. The unenforceability or invalidity of any one or more of the provisions, clauses, sentences and/or paragraphs hereof shall not render any other provisions, clauses, sentences and/or paragraphs herein contained unenforceable or invalid. 17. This obligation shall bind Maker and Maker's heirs, representatives, successors and assigns, and the benefit hereof shall inure to Holder and its successors and assigns. The word "Holder" whenever occurring herein shall be deemed and taken to include each successive Holder hereof, and the word "Maker" whenever occurring herein shall be deemed and taken to include the plural, and all the covenants, waivers, warrants, promises and releases -6- 7 by, and obligations or liabilities imposed upon, Maker shall bind them jointly and severally and their, and each of their, heirs, personal representatives, successors and assigns. 18. The parties intend that this Note shall be construed in accordance with and governed by the laws, including the conflict of law rules, of the State of New Jersey. 19. MAKER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS. IN WITNESS WHEREOF, and intending to be legally bound hereby, Maker has caused this instrument to be duly executed the day and year first above written. MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: MLCP General Corporation, a New Jersey corporation, general partner By: /s/ Joseph D. Gonnelli --------------------------------------- Joseph D. Gonnelli, President Attest: /s/ R. Brian Jackson ---------------------------------- R. Brian Jackson, Secretary -7- EX-10.9 10 SUN LIFE MORTGAGE AND SEC. AGREE./MLCP ASSOCIATES 1 EXHIBIT 10.9 MORTGAGE AND SECURITY AGREEMENT THIS MORTGAGE AND SECURITY AGREEMENT IS MADE as of the 19th day of October, 1994, BETWEEN MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter called "Mortgagor"), AND SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) a Delaware corporation (hereinafter called "Mortgagee"). Mortgagor has executed and delivered to Mortgagee a certain Mortgage Note (hereinafter called the "Note") of even date herewith, payable to the order of Mortgagee in the principal sum of Six Million Five Hundred Thousand Dollars ($6,500,000.00), lawful money of the United States of America, and has provided therein for payment of additional moneys loaned or advanced thereunder by Mortgagee, together with interest thereon (including Additional Interest and the Acceleration Premium, as defined in the Note) at the rate provided in the Note, in the manner and at the times therein set forth, containing certain other terms and conditions, all of which are specifically incorporated herein by reference. NOW, THEREFORE, in consideration of such debt or principal sum and as security for the payment of the same and interest as aforesaid, together with all other sums payable hereunder or under the terms of the Note, and for performance of the agreements, conditions, covenants, provisions and stipulations contained herein, Mortgagor does grant, bargain, sell, release, mortgage and convey unto Mortgagee, its successors and assigns: ALL THAT CERTAIN tract or piece of ground, situate at and known as 1000 Howard Boulevard, Mount Laurel Township, Burlington County, New Jersey, as more particularly described in Exhibit "A" attached hereto, and TOGETHER WITH: (1) any and all buildings and improvements erected or hereafter erected thereon; (2) any and all fixtures, appliances, machinery and equipment, and other articles of personal property, belonging to Mortgagor, at any time now or hereafter installed in, attached to or situated in or upon the above described real estate or the buildings and improvements to be erected thereon, or used or intended to be used in connection with the real estate, or in the operation of the buildings and improvements, plant, business or dwelling situate thereon, whether or not the personal property is or shall be affixed thereto; including, without limitation of the foregoing, all furniture, furnishings, floor coverings, household appliances, office equipment, and articles of interior decoration; all screens, awnings, venetian blinds, shutters, shades, storm windows and storm doors; all kitchen cabinets, mirrors, mantles; all office, restaurant, bar, kitchen and laundry fixtures, utensils, appliances, and equipment; all cleaning, venti lation, refrigerating, vending, incinerating, waste disposal, communications, alarms, fire prevention and fire extinguishing systems, apparatus and equipment; all television, radio and other musical equipment; all passenger and freight elevators, escalators and machinery and equipment pertaining thereto; all building materials, equipment and 2 machinery; all pipes, conduits, pumps, boilers, tanks, motors, engines and furnaces; all heating, lighting, sprinkling, plumbing, air conditioning, gas-burning, oil-burning, and electric fixtures, machinery and equipment of whatsoever kind and nature; (3) all building materials, fixtures, building machinery and building equipment delivered on site to the real estate during the course of, or in connection with, construction of any repairs of or renovations to the buildings and improvements; (4) any and all tenements, hereditaments and appurtenances belonging to the real estate or any part thereof hereby mortgaged or intended so to be, or in any way appertaining thereto, and all streets, alleys, passages, ways, water courses and all easements and covenants now existing or hereafter created for the benefit of the Mortgagor or any subsequent owner or tenant of the mortgaged real estate over ground adjoining the mortgaged real estate and all rights to enforce the maintenance thereof, and all other rights, liberties and privileges of whatsoever kind or character, and the reversions and remainders, income, rents, issues and profits arising therefrom, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law or in equity, of the Mortgagor in and to the real estate or any part thereof; and (5) all right, title and interest of Mortgagor in and to: (A) all present and future leases between Mortgagor, as landlord, and any occupant of the Mortgaged Property, as tenant (which present and future leases, and Mortgagor's interest thereunder, are herein referred to as the "Leases"); and (B) all rents, issues and profits payable under the Leases and under any future renewals, amendments or modifications thereof. (All of the above-mentioned real estate, buildings, improvements, fixtures, machinery, equipment, tenements, hereditaments appurtenances, Leases and other property interests are sometimes collectively referred to herein as the "Mortgaged Property"). TO HAVE AND TO HOLD the Mortgaged Property hereby conveyed or mentioned and intended so to be, unto Mortgagee, its successors and assigns, to its own use forever. PROVIDED, HOWEVER, that if Mortgagor shall pay to Mortgagee the aforesaid debt or principal sum, including additional loans or advances and all other sums payable by Mortgagor to Mortgagee hereunder and under the terms of the Note, together with interest thereon (including Additional Interest and/or Acceleration Premium), and shall keep and perform each of the covenants, conditions and agreements hereinafter set forth until such sums have been paid, then this Mortgage and the estate hereby granted and conveyed shall become void. THIS MORTGAGE is executed and delivered subject to the following covenants, conditions and agreements: 1. WARRANTIES OF MORTGAGOR Mortgagor warrants and agrees: (a) that Mortgagor presently possesses an unencumbered fee simple title to the real estate described in Exhibit "A" hereto (the "Land"), except for those title objections not removed from Title Policy No. F 38238 issued by First American Title Insurance Company to Mortgagee insuring the lien of this Mortgage; that this Mortgage is a valid and enforceable first lien on the Land, subject only to the aforesaid title objections; and that Mortgagee shall, subject to Mortgagor's right of possession prior to default, quietly enjoy and possess the Mortgaged Property. Mortgagor shall preserve such title and the validity and priority of the lien hereof and shall forever warrant and defend the same to Mortgagee against the claims of all parties and persons whomsoever; and -2- 3 (b) that Mortgagor is, and will hereafter be, the sole owner of the landlord's interest in the Leases; and that the Leases are and will be valid and subsisting leases of the real property demised thereby for the terms therein set forth and subject to the provisions set forth therein; and (c) that Mortgagor shall make, execute, acknowledge and deliver in form reasonably satisfactory to Mortgagee all such further or other instruments or assurances as may at any time hereafter be reasonably desired or required by Mortgagee for more fully and effectually granting, assigning, transferring and setting over the Mortgaged Property and Mortgagor's interest in the Leases hereby mortgaged, or intended so to be, unto Mortgagee for the purpose aforesaid, and Mortgagor will pay all costs of recording or filing any such statements or documents in such public offices as Mortgagee may reasonably require. 2. PAYMENT AND PERFORMANCE (a) Mortgagor shall pay to Mortgagee, in accordance with the terms of the Note and this Mortgage, the principal and interest (including Additional Interest and Acceleration Premium, if any), and other sums therein set forth; and shall perform and comply with all the agreements, conditions, covenants, provisions and stipulations of the Note and this Mortgage. THE AMOUNT SECURED BY THIS MORTGAGE SHALL EXPRESSLY INCLUDE ALL ADVANCES MADE HEREUNDER OR COSTS OTHERWISE INCURRED HEREUNDER OR IN CONNECTION WITH THE LOAN BY MORTGAGEE TO PROTECT THE SECURITY FOR THE LOAN, INCLUDING, WITHOUT LIMITATION, ADVANCES MADE AND COSTS INCURRED BY MORTGAGEE FOR TAXES, INSURANCE PREMIUMS, AND ENVIRONMENTAL INSPECTIONS (WHETHER UNDERTAKEN BEFORE OR AFTER AN EVENT OF DEFAULT OR A FORECLOSURE HEREUNDER, PROVIDED THAT ENVIRONMENTAL INSPECTIONS WILL ONLY BE UNDERTAKEN BY MORTGAGEE BEFORE AN EVENT OF DEFAULT IF MORTGAGEE HAS REASONABLE GROUNDS TO SUSPECT THE EXISTENCE OF A POTENTIAL ENVIRONMENTAL PROBLEM). The parties expressly agree that this Mortgage shall have the full force, effect, and benefits of a mortgage to secure such advances of money, the lien of which advances shall relate to the date of this Mortgage. This Mortgage shall secure not only existing indebtedness, but also all Additional Interest, all Acceleration Premium and all future advances, whether such advances are obligatory or to be made at the option of Mortgagee, or otherwise, to the same extent as if such future advances were made on the date hereof. (b) Mortgagor will not violate any term or covenant contained in the Assignment of Leases and Agreement of even date herewith (hereinafter called the "Assignment of Leases"), delivered to Mortgagee as additional security with respect to the Leases. 3. PAYMENT OF CHARGES From time to time until the debt and interest are fully paid, Mortgagor shall: (a) Pay and discharge, when and as the same shall become due and payable, all real estate and other taxes, assessments, sewer and water rents, and other charges and claims assessed or levied from time to time by any lawful authority upon any part of the Mortgaged Property and which shall or might have priority in lien or payment to the debt secured hereby; (b) Pay all ground rents reserved from the Mortgaged Property and pay and discharge, or bond, all mechanics' liens or judgments which may be filed against the Mortgaged Property; (c) Pay and discharge any documentary stamp or other tax, including interest and penalties thereon, if any, now or hereafter becoming payable on the Note evidencing the debt secured hereby, or on this Mortgage, or on the underlying indebtedness; (d) Provide, renew and maintain in effect by paying the necessary premiums and charges thereon, such policies of hazard and liability insurance with such companies as Mortgagee may from time to time require pursuant to Section 10; and (e) Promptly submit to Mortgagee evidence of the due and punctual payment of all the foregoing charges. -3- 4 4. MAINTENANCE OF MORTGAGED PROPERTY (a) Mortgagor shall abstain from and shall not permit the commission of waste in or about the Mortgaged Property; shall not remove or demolish, or alter the structural character of, any building erected at any time on the Mortgaged Property, without the prior written consent of Mortgagee; and shall not permit the Mortgaged Property to become deserted or unguarded, and shall maintain the Mortgaged Property in good condition and repair, reasonable wear and tear and damage by fire or other casualty excepted. Mortgagee, or its agent, shall have the right to enter upon the Mortgaged Property upon reasonable prior notice for the purpose of inspecting the order, condition and repair of the buildings and improvements erected thereon. Mortgagor represents and warrants that, to the best of Mortgagor's knowledge, the Mortgaged Property complies with all applicable laws, ordinances, regulations and orders relating to the Mortgaged Property, including, without limitation, all environmental and wetlands laws, issued by all Federal, state, municipal and other governmental authorities. Mortgagor shall promptly comply with all future laws, ordinances, regulations and orders relating to the Mortgaged Property by all federal, state, municipal and other governmental authorities. (b) Mortgagor warrants and represents that, to the best of Mortgagor's knowledge: (i) no hazardous substances (as "hazardous substances" is defined in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601(14), as amended by the Superfund Amendments and Re-authorization Act of 1986 (Pub. L. No. 99-499, 100 Stat. 1613 (1986) (SARA)) or hazardous waste or solid waste (as defined in 40 CFR Section 261) are present on the Mortgaged Property in quantities in excess of those permitted by applicable law; (ii) no polychlorinated biphenyls (PCBs) or substances containing PCBs, no asbestos or materials containing asbestos, no gasoline, kerosene or other hydrocarbons, no pesticides, herbicides or radioactive materials and no urea formaldehyde foam insulation has been stored, used or installed or is otherwise present on the Mortgaged Property in quantities in excess of those permitted by applicable law; (iii) no portion of the Mortgaged Property lies in or constitutes a wetland or floodplain; (iv) no radon gas or radioactive decay products of radon gas, in a concentration above 4 picocuries/liter, are present on the Mortgaged Property; (v) no underground or above-ground storage tanks are present on the Mortgaged Property; (vi) Mortgagor has not received any notice that Mortgagor has been identified in any litigation, administrative proceeding or investigation as a responsible party for any liability under CERCLA, SARA, or any other Federal, state or municipal law, ordinance or regulation; (vii) The Mortgaged Property has never been used by previous owners and/or operators to refine, produce, store, handle, transfer, process or transport "Hazardous substances," as such term is defined in N.J.S.A. 58:10-23.11b(k), and Mortgagor has not used in the past, nor does Mortgagor intend to use in the future, the Mortgaged Property for the purpose of refining, producing, storing, handling, transferring, processing or transporting "Hazardous substances" (as above defined). Mortgagor has retained GHR Consulting Services, Inc. ("Consultant") to conduct a complete and thorough on-site inspection of the Mortgaged Property, to determine the presence of "Hazardous substances" (as defined above), and the Consultant found no evidence of the presence of such "Hazardous substances" on or in the Mortgaged Property. (c) Mortgagor shall not commit or allow to occur, and has not received a summons, citation, directive, letter or other communication, written or oral, from the New Jersey Department of Environmental Protection and Energy concerning, any intentional or unintentional action or omission on Mortgagor's part resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous substances" (as above defined) into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New -4- 5 Jersey, resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey. (d) Should Mortgagor commit or allow to occur any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous substances" (as above defined) into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey, resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air or other resources owned, managed or held in trust or otherwise controlled by the State of New Jersey, without having obtained a permit issued by the appropriate governmental authorities, Mortgagor shall promptly clean up such spill, leak, etc. in accordance with the provisions of the New Jersey Spill Compensation and Control Act. (e) The Mortgaged Property is not and has not been used as a "Major facility," as such term is defined in N.J.S.A. 58:10-23.11b(l), and the Mortgaged Property will not be used as a "Major facility" after completion of any construction, renovation, restoration and other developmental work which Mortgagor intends to undertake thereon. If Mortgagor hereafter becomes an owner or operator of a "Major facility", then Mortgagor shall furnish the New Jersey Department of Environment Protection and Energy with all the information required by N.J.S.A.58:10-23.11d2, and Mortgagor shall duly file or cause to be duly filed with the Director of the Division of Taxation in the New Jersey Department of the Treasury a tax report or return and shall pay or make provision for the payment of all taxes due therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h. (f) No lien has been attached to any revenues or to the Mortgaged Property as a result of the chief executive of the New Jersey Spill Compensation Fund expending monies from such fund pursuant to N.J.S.A. 58:10-23.11(g) and/or to pay for "Cleanup and removal costs," as such term is defined in N.J.S.A. 58:10-23.11b(d). In the event that there shall be filed a lien against the Mortgaged Property by the New Jersey Department of Environmental Protection and Energy, pursuant to the provisions of N.J.S.A. 58:10-23.11f(f), as a result of the chief executive of the New Jersey Spill Compensation Fund having expended monies from such fund pursuant to N.J.S.A. 58:10-23.11g, and/or to pay for "Cleanup and removal costs" (as defined above), then Mortgagor shall, within sixty (60) days from the date that Mortgagor is given notice that the lien has been placed against the Mortgaged Property or within such shorter period of time in the event that the State of New Jersey has commenced steps to cause the Mortgaged Property to be sold pursuant to the lien, either (i) pay the claim and remove the lien from the Mortgaged Property, or (ii) furnish (A) a bond satisfactory to Mortgagee in the amount of the claim out of which the lien arises, (B) a cash deposit in the amount of the claim out of which the lien arises, or (C) other security satisfactory to Mortgagee in an amount sufficient to discharge the claim out of which the lien arises. (g) Mortgagor is not required to furnish the New Jersey Department of Environmental Protection and Energy with the information required by N.J.S.A. 58:10-23.11d2, with respect to the Mortgaged Property or any other real property owned and/or operated by Mortgagor and located in New Jersey. (h) In connection with the purchase of the Mortgaged Property and any other real property acquired by Mortgagor on or after January 1, 1984, Mortgagor required that the seller of the real property, including the Mortgaged Property, comply with the provisions of the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.) and the seller did comply therewith. A copy of a Nonapplicability Letter received by Mortgagor from such seller has been supplied to Mortgagee. (i) Mortgagor hereby agrees that in the event the provisions of the New Jersey Industrial Site Recovery Act, become applicable to the Mortgaged Property subsequent to the date hereof, Mortgagor shall give prompt written notice thereof to the Mortgagee and shall take immediate requisite action to insure full compliance with such Act. (j) Mortgagor shall not permit or allow the Mortgaged Property to be used in a manner so as to be considered an "Industrial establishment," as such term is defined in N.J.S.A. 13:1K-8(f), without the prior express written consent of the Mortgagee. -5- 6 5. PAYMENTS BY MORTGAGEE In the event Mortgagor neglects or refuses to pay the charges mentioned in Section 3 above, or fails to maintain the buildings and improvements and to comply with applicable regulations, as aforesaid, Mortgagee may do so, at its sole option, and add the cost thereof to the principal debt secured hereby, and collect the same as a part of the principal debt, together with interest thereon at the Default Rate, as provided in the Note secured hereby. In addition to any other debt or obligation secured hereby, this Mortgage shall secure unpaid balances of advances made with respect to the Mortgaged Property for the payment of taxes, assessments, insurance premiums, or costs incurred for the protection of the Mortgaged Property (including, without limitation, inspection costs). 6. SECONDARY FINANCING (a) Mortgagor covenants and agrees not to create, nor permit to accrue, upon all or any part of the Mortgaged Property, any debt, lien or charge other than the lien of this Mortgage, without the prior written consent of Mortgagee, which consent may be withheld in Mortgagee's sole and absolute discretion. (b) Notwithstanding the restrictions in subsection (a) above, Mortgagor may grant a subordinate mortgage ("Subordinate Mortgage") to secure a loan for working capital costs such as commissions and tenant improvements ("Subordinate Loan") from a financial institution approved in advance by Mortgagee, provided that the amount of the Subordinate Loan shall not exceed the lesser of (A) $750,000 or (B) that amount which, when added to the unpaid principal balance of the loan secured by this Mortgage, shall not exceed seventy five percent (75%) of the fair market value of the Mortgaged Property at the time the Subordinate Loan is made, as determined by an MAI appraisal satisfactory to Mortgagee. The Subordinate Mortgage may not be granted until Mortgagee has approved in writing the identity of the lender and the appraisal as set forth above. Any such lender shall further be required to execute a Subordination Agreement in form reasonably approved by Mortgagee. Mortgagor shall pay all costs and expenses, including without limitation Mortgagee's legal fees, incurred by Mortgagee in connection with such Subordinate Loan. (c) Notwithstanding the restrictions in subsection (a) above, in the event that the Mortgaged Property is transferred in accordance with the requirements of Section 7(b)(ii) below, the purchaser of the Mortgaged Property shall be permitted to grant a subordinated purchase money mortgage ("Subordinate Purchase Mortgage") to secure a purchase money loan from Mortgagor, or from a financial institution approved in advance by Mortgagee, with terms and conditions approved in advance by Mortgagee ("Subordinated Purchase Loan") in an amount which, when added to the unpaid principal balance of the loan secured by this Mortgage, shall not exceed seventy five percent (75%) of the purchase price of the Mortgaged Property. The Subordinate Purchase Mortgage may not be granted until Mortgagee has approved in writing the identity of the lender and the terms and conditions as set forth above. Any such lender shall further be required to execute a Subordination Agreement in form reasonably approved by Mortgagee. Mortgagor shall pay all costs and expenses, including without limitation Mortgagee's legal fees, incurred by Mortgagee in connection with such Subordinate Purchase Loan. 7. TRANSFER OF TITLE (a) Without the prior written consent of Mortgagee (which consent, except as expressly set forth hereafter, may be withheld in Mortgagee's sole and absolute discretion), Mortgagor shall not voluntarily, or involuntarily, or by operation of law, sell, transfer, convey, lease, or in any other manner change the ownership of, or title to, all or any portion of the Mortgaged Property, or of any interest therein, legal or equitable, or any shares or interests in any partnership or corporation having an ownership interest in the Mortgaged Property, except for individual leases of space in the Mortgaged Property upon terms as set forth in the Assignment of Leases. (b) Notwithstanding the foregoing, (i) limited partnership interests in Mortgagor may be transferred by the existing partners without Mortgagee's consent, but with prior written notice to Mortgagee, so long as Dr. M.H.M. Sallam and Lulua Sallam remaining controlling shareholders of MLCP General Corporation, the general partner of Mortgagor, and (ii) Mortgagee shall not unreasonably withhold its consent to a one-time transfer of the Mortgaged Property to a purchaser approved by Mortgagee as to financial strength, reputation and experience in owning and operating commercial real estate; provided, however, that any such consent shall be conditioned upon (A) receipt by -6- 7 Mortgagee from Mortgagor of a transfer fee equal to one and one-half percent (1.5%) of the then-outstanding principal balance, and (B) Mortgagor's payment of all costs and expenses, including without limitation Mortgagee's legal fees, incurred in connection with such transfer. 8. CONDEMNATION In the event of any condemnation or taking of any part of the Mortgaged Property by eminent domain, alteration of the grade of any street, or other injury to, or decrease in value of, the Mortgaged Property by any public or quasi-public authority or corporation, all proceeds (that is, the award or agreed compensation for the damages sustained) shall be applicable first to payment of the indebtedness secured hereby. No settlement for the damages sustained shall be made by Mortgagor without Mortgagee's prior written approval. Mortgagor shall continue to pay the installments of principal, interest and other charges until payment of the proceeds shall have been received by the Mortgagee. All of the proceeds shall be applied in the order and in the amounts that Mortgagee, in Mortgagee's sole discretion, may elect, to the payment of principal (whether or not then due and payable), interest on any sums secured by this Mortgage, or toward payment to the Mortgagor, on such terms as the Mortgagee may specify, to be used for the sole purpose of altering, restoring or rebuilding any part of the Mortgaged Property which may have been altered, damaged or destroyed as a result of the taking, alteration of grade or other injury to the Mortgaged Property. 9. TAXES, ASSESSMENTS AND CHARGES (a) Mortgagor shall, in addition to and concurrently with the monthly installments of interest, pay to the Mortgagee installments of casualty insurance premiums and taxes and assessments assessed or levied upon the Mortgaged Property, as well as all taxes for which any party in whom title to the Mortgaged Property shall or may hereafter vest, may be or become liable under any present or future law of the United States of America or of the State of New Jersey and which, under the provisions of such laws, may be or become a lien upon the Mortgaged Property or have priority in payment of the mortgage debt out of the proceeds of any judicial sale of the Mortgaged Property. Such installments shall be equal respectively to 1/12 of the annual amount of such premiums, taxes and assessments as are estimated by Mortgagee and shall be held by Mortgagee to pay premiums, assessments and taxes when due. No amount so paid shall be deemed to be trust funds but may be commingled with general funds of Mortgagee, and no interest shall be payable thereon. If, pursuant to any provision of this Mortgage, the whole amount of the unpaid principal debt becomes due and payable, Mortgagee shall have the right, at its election, to apply any amount so held against the entire indebtedness secured hereby. Notwithstanding the foregoing, Mortgagee waives the right to collect installments of insurance premiums prior to an Event of Default hereunder. (b) Mortgagor hereby assigns to Mortgagee, as further collateral for the full prompt payment and performance of all of Mortgagor's obligations hereunder, all of Mortgagor's right, title and interest in any and all proceeds of or claims to rebates, refunds, and abatements of real estate and personal property taxes pertaining to the Mortgaged Property, or any portion thereof, with respect to tax periods arising at any time prior to the discharge hereof, even though such taxes may relate to periods before the execution hereof. 10. INSURANCE Mortgagor shall keep the Mortgaged Property continuously insured against loss or damage by fire, with extended coverage, and against other hazards as Mortgagee may reasonably require, with insurance companies (having a Best's rating of A-:VIII) reasonably satisfactory to Mortgagee, and in such total amount as Mortgagee may require from time to time, but not exceeding the full replacement value thereof. Without limiting the foregoing, such policies of insurance shall be All Risk Replacement Cost Insurance, with Agreed Amount Endorsement or similar affirmative endorsement that the coverage limits will prevent Mortgagor or Mortgagee from becoming a co-insurer in the event of a partial loss. Mortgagor shall also maintain rental insurance in an amount equal to one year's gross income, boiler insurance (if any building has a boiler), and commercial general liability insurance with limits and coverages acceptable to Mortgagee. All policies, including policies for any amounts carried in excess of the required minimum and policies not specifically required by Mortgagee, shall be in form reasonably satisfactory to Mortgagee, shall be -7- 8 maintained in full force and effect, shall be assigned and delivered to Mortgagee, with premiums prepaid, as collateral security for payment of the indebtedness secured hereby, shall be endorsed with a standard mortgagee clause in favor of Mortgagee, not subject to contribution, and shall provide for at least ten (10) days' prior written notice of cancellation to Mortgagee. If the insurance, or any part thereof, shall expire or be withdrawn, or become void by reason of Mortgagor's breach of any condition thereof, or become void or unsafe by reason of the failure or impairment of the capital of any company in which the insurance may then be carried, or if for any reason whatever the insurance shall be unsatisfactory to Mortgagee, Mortgagor shall place new insurance on the Mortgaged Property satisfactory to Mortgagee. All renewal policies, with premiums paid, shall be delivered to Mortgagee at least thirty (30) days before expiration of the old policies. In the event of loss, Mortgagor will give immediate written notice thereof to Mortgagee, and Mortgagee may make proof of loss if not made promptly by Mortgagor. Each insurance company concerned is hereby authorized and directed to make payment under such insurance, including return of the unearned premiums, directly to Mortgagee instead of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee, irrevocably, as Mortgagor's attorney-in-fact to endorse any draft therefor. Mortgagee shall have the right to retain and apply the proceeds of any such insurance, including any unearned premiums, at its election, to reduction of the indebtedness secured hereby, or to restoration or repair of the property damaged. If Mortgagee becomes the owner of the Mortgaged Property or any part thereof by foreclosure or otherwise, such policies, including all right, title and interest of the Mortgagor thereunder, shall become the absolute property of Mortgagee. 11. SECURITY AGREEMENT (a) This Mortgage constitutes a security agreement under the New Jersey Uniform Commercial Code and creates a security interest in the personal property included in the Mortgaged Property and the proceeds thereof. Mortgagor represents and warrants that all such personal property (other than personal property of individual tenants) is owned by Mortgagor free and clear of all security interests, and all such personal property and replacements of, substitutions for and additions to such personal property shall be owned (and not leased) by Mortgagor free and clear of all security interests. Mortgagor shall execute, deliver, file and refile any financing statements or other security agreements Mortgagee may require from time to time to confirm the lien of this Mortgage with respect to such property. Without limiting the foregoing, Mortgagor hereby irrevocably appoints Mortgagee attorney-in-fact for Mortgagor to execute, deliver and file such instruments for and on behalf of Mortgagor. Mortgagee, pursuant to the appropriate provisions of the Code, shall have an option to proceed with respect to both the real property and personal property included in the Mortgaged Property in accordance with its rights, powers and remedies with respect to the real property, in which event the default provisions of the Code shall not apply. The parties agree that if Mortgagee shall elect to proceed with respect to the personal property separately from the real property, fifteen (15) days' notice of the sale of the personal property shall constitute reasonable notice. The expenses of retaking, holding, preparing the sale, selling and the like incurred by Mortgagee shall include, but not be limited to, attorneys' fees and legal expenses incurred by Mortgagee. Mortgagor agrees that, without the prior written consent of Mortgagee, Mortgagor will not remove or permit to be removed from the Mortgaged Property any of the personal property, except that so long as no Event of Default has occurred hereunder, Mortgagor shall be permitted to sell or otherwise dispose of the personal property when obsolete, worn out, inadequate, unserviceable or unnecessary for use in the operation of the Mortgaged Property, but only upon replacing the same or substituting for the same other personal property at least equal in value and utility to the initial value and utility of that disposed of and in such a manner that such replacement or substituted personal property shall be subject to the security interest created hereby and that the security interest of Mortgagee shall be perfected and first in priority, it being expressly understood and agreed that all replacements, substitutions and additions to the per sonal property shall be and become immediately subject to the security interest of this Mortgage and covered hereby. (b) The Mortgaged Property includes goods which are or are to become fixtures and this Mortgage is intended to serve as a fixture filing under Section 9-313 of the New Jersey Uniform Commercial Code. 12. FINANCIAL STATEMENTS No later than June 1 each year, Mortgagor shall, at its sole cost and expense, furnish to Mortgagee an annual financial statement of Mortgagor, covering only the Mortgaged Property, prepared and certified by an independent certified public accountant acceptable to Mortgagee. Mortgagor shall also furnish to Mortgagee in addition -8- 9 to and simultaneous with the financial statements, a statement reflecting the complete rental status of the Mortgaged Property, which shall include the name of each tenant, the area in square feet occupied by such tenant and the rental being paid, and, at any time upon request therefor, such other information regarding occupancy and current rentals as Mortgagee may require. 13. DECLARATION OF NO SET-OFF Within five (5) business days after a written request to do so by Mortgagee, Mortgagor shall certify to Mortgagee or to any proposed assignee of this Mortgage, in a writing duly acknowledged, the amount of principal, interest and other charges then owing on the obligation secured by this Mortgage and whether there are any set-offs or defenses against it. 14. EVENTS OF DEFAULT Each of the following shall constitute an event of default hereunder ("Event of Default"): (a) Failure of Mortgagor to pay any installment of principal or interest or any other sum within five (5) business days of the date on which such installment or sum is due under the Note, this Mortgage or the Assignment of Leases (provided that Mortgagee will only grant such 5-day grace period twice in any twelve-month period, and any failure thereafter to make a payment on the due date shall constitute an Event of Default without any grace period). (b) Mortgagor's nonperformance of or noncompliance with, for a period of twenty (20) days after written notice shall have been given to Mortgagor, any of the other agreements, conditions, covenants, representations, provisions or stipulations contained in the Note, this Mortgage or the Assignment of Leases (provided that if such nonperformance or noncompliance cannot reasonably be cured within twenty (20) days, an Event of Default shall not occur hereunder if Maker initiates curing the nonperformance or noncompliance within such 20-day period and diligently pursues such cure to completion within a reasonable time thereafter, not to exceed ninety (90) days after such written notice). (c) Any assignment for the benefit of creditors made by Mortgagor. (d) Appointment of a receiver, liquidator or trustee of the Mortgagor or of any of the property of Mortgagor, insolvency of the Mortgagor or the adjudication of Mortgagor as a bankrupt or the filing by the Mortgagor (or against the Mortgagor if the same shall not be discharged within 60 days) of any case or petition for the bankruptcy, reorganization or arrangement of Mortgagor pursuant to the Federal Bankruptcy Code or any similar statute, or the institution of any proceeding for the dissolution or liquidation of Mortgagor. (e) Any material default by Mortgagor under any of the Leases affecting the Mortgaged Property, provided that so long as the Lease with Consolidated Rail Corporation ("Conrail") dated May 25, 1990, as amended ("Conrail Lease") is in effect, this provision shall apply only to the Conrail Lease, but shall apply to all of the Leases if Conrail ceases to be a tenant; (f) Any dissolution, merger or change in legal form or status of Borrower under applicable Delaware or New Jersey law. (g) Any warranty, representation or other statement made by or on behalf of Mortgagor in or pursuant to this Mortgage (including, without limitation, any financial statement delivered pursuant to Section 12) proves to be false, incorrect or misleading in any material and adverse respect. (h) Entry of a final judgment not covered by insurance in excess of $25,000 against Mortgagor or any person constituting Mortgagor, and if, within thirty (30) days after entry thereof, such judgment shall not have been discharged or execution thereof stayed pending appeal, or if, within thirty (30) days after the expiration of any such stay, such judgment shall not have been discharged. -9- 10 (i) For purposes of this subsection, the word "Mortgagor" shall include the persons named as Mortgagor herein, and any subsequent owner of the Mortgaged Property; and for purposes of subsections (c), (d), (g) and (h) hereof, the word "Mortgagor" shall include the general partners of Mortgagor. All grace periods contained herein and in the Note or any of the other documents evidencing or securing the Note shall run concurrently and not consecutively. 15. REMEDIES (a) Upon the happening of any Event of Default, the entire unpaid balance of the principal, the accrued interest, the Acceleration Premium (determined as set forth in the Note), and all other sums secured by this Mortgage shall become immediately due and payable, at the option of Mortgagee, without notice or demand. (b) When the entire indebtedness shall become due and payable, either because of maturity or because of the occurrence of any Event of Default, or otherwise, then forthwith: (i) Foreclosure: Mortgagee may institute an action of mortgage foreclosure against the Mortgaged Property, or take such other action, at law or in equity, for the enforcement of this Mortgage and realization on the mortgage security or any other security herein or elsewhere provided for, as the law may allow, and may proceed therein to final judgment and execution for the entire unpaid balance of the principal debt, with interest at the Default Rate stipulated in the Note to the date of such judgment, and thereafter at the same rate (but if not permissible, then at the highest judgment rate permitted by law), together with all other sums due by Mortgagor in accordance with the provisions of the Note and this Mortgage, including all sums which may have been loaned by Mortgagee to Mortgagor after the date of this Mortgage, and all sums which may have been advanced by Mortgagee for taxes, water or sewer rents, charges or claims, insurance, inspection fees or repairs to the Mortgaged Property, all costs of suit, and a reasonable attorney's commission for collection; and (ii) Possession: Mortgagee may enter into possession of the Mortgaged Property, with or without legal action; collect therefrom all rentals (which term shall also include sums payable for use and occupation), and, after deducting all costs of collection and administration expense, apply the net rentals to the payment of taxes, water and sewer rents, charges and claims, insurance premiums and all other carrying charges, and to the inspection (including, without limitation, environmental inspection), maintenance, repair or restoration of the Mortgaged Property, or on account and in reduction of the principal or interest, or both, hereby secured, in such order and amounts as Mortgagee, in Mortgagee's sole discretion, may elect; and for that purpose, Mortgagor hereby assigns to Mortgagee all rentals due and to become due under any Lease or rights to use and occupation of the Mortgaged Property hereafter created, as well as all rights and remedies provided in such Lease or at law or in equity for the collection of the rentals, and agrees to confirm the aforesaid assignment by such collateral document or documents as Mortgagee may require. (c) Upon a foreclosure sale, the Mortgaged Property may be sold as a single parcel or as any number of separate parcels, at Mortgagee's option, and Mortgagor for itself and anyone claiming by, through or under it, further hereby agrees that Mortgagee shall in no manner, in law or in equity, be limited, except as herein provided, in the exercise of its rights in the Mortgaged Property or in any other security hereunder or otherwise appertaining to the Note or any other obligation secured by this Mortgage, whether by any statute, rule or precedent which may otherwise require such security to be marshalled in any manner, and Mortgagor, for itself and others as aforesaid, hereby expressly waives and releases any right to or benefit thereof. (d) Mortgagor hereby expressly waives and releases: (i) all benefit that might accrue to Mortgagor by virtue of any present or future law exempting the Mortgaged Property, or any part of the proceeds arising from any sale thereof, from attachment, levy or sale on execution, or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment, and (ii) unless specifically required herein, all notices of Mortgagor's default or of Mortgagee's election to exercise, or Mortgagee's actual exercise of, any option or remedy under the Note or any security documents. Neither Mortgagor nor any other person now or hereafter obligated for payment of all or any part of the indebtedness secured hereby shall be relieved of such obligations by reason of the failure of Mortgagee to comply with any request of Mortgagor or of any other person so obligated to take action to foreclose on this Mortgage or otherwise enforce any provisions of any security documents or the Note, or -10- 11 by reason of the release, regardless of consideration, of all or any part of the security held for the debt secured hereby, or by reason of any agreement or stipulation between any subsequent owner of the Mortgaged Property and Mortgagee extending the time of payment or modifying the terms of this Mortgage or the Note without first having obtained the consent of Mortgagor or such other persons; and in the latter event, Mortgagor and all other such persons shall continue to be liable to make payment according to the terms of any such extension or modification agreement, unless expressly released and discharged in writing by Mortgagee. Mortgagee may release, regardless of consideration, any part of the security held for the debt secured hereby without, as to the remainder of the security, in any way impairing or affecting the lien of this Mortgage or its priority over any subordinate lien. For payment of the debt secured hereby, Mortgagee may resort to any other security therefor held by Mortgagee in such order and manner as Mortgagee may elect. (e) Mortgagor expressly waives the equity of redemption, statutory right of redemption, dower and homestead and all other rights and exemptions of every kind in and to the Mortgaged Property, and agrees that the purchaser or purchasers of the Mortgaged Property shall have an absolute title in fee simple. (f) Mortgagee shall have, in addition to other rights and remedies available at law or in equity, the rights and remedies of a Secured Party under the New Jersey Uniform Commercial Code. Mortgagee may elect to foreclose such of the property subject to the lien hereof as then comprise fixtures pursuant either to the laws applicable to foreclosure of an interest in real estate or to that applicable to personal property under the Uniform Commercial Code. (g) In addition to the foregoing, Mortgagee shall be entitled to apply for the appointment of a receiver. Mortgagee shall not be required to give any notice of application for the appointment of a receiver and shall be entitled to such appointment without regard to the adequacy of any security for the mortgaged debt or the solvency or insolvency of any person obligated for the payment thereof, and such receiver shall be entitled to take possession of the Mortgaged Property from the owner, tenants and/or occupants of the whole or any part thereof and to collect and receive the rents and profits and the value of the use and occupation of the Mortgaged Property or any part thereof from the then owner, tenants and/or occupants thereof for the benefit of the Mortgagee. (h) Mortgagee shall have the right, from time to time, after an Event of Default, to bring an appropriate action to recover any sums required to be paid by Mortgagor under the terms of this Mortgage, as they become due, without regard to whether or not the principal indebtedness or any other sums secured by the Note and this Mortgage shall be due, and without prejudice to the right of Mortgagee thereafter to bring an action of mortgage foreclosure, or any other action, for any default by Mortgagor existing at the time the earlier action was commenced. (i) All rights and remedies granted or otherwise available to Mortgagee shall be cumulative and concurrent and may be pursued singly, successively or together at Mortgagee's sole option, and may be exercised from time to time and as often as occasion therefor shall occur until the indebtedness hereby secured with all interest thereon is paid in full. 16. OTHER MORTGAGES OR DEEDS OF TRUST If Mortgagor shall fail to pay any installment of principal or interest required under any other mortgage or deed of trust on the Mortgaged Property (if permitted by Mortgagee), whether subordinate or prior to the lien of this Mortgage, or shall fail to pay any tax, governmental levy or charge or insurance premium, or to make any other payment required to be paid by Mortgagor under such mortgage or deed of trust, at the time and in the manner provided therein; or if Mortgagor shall fail to perform or observe any other term, covenant, condition or obligation required to be performed or observed by Mortgagor therein, then without limiting the generality of any other provision of this Mortgage, and without waiving or releasing Mortgagor from any of its obligations hereunder, Mortgagee shall have the right, but shall be under no obligation, to pay any such installment of principal or interest and/or any such tax, levy, premium, charge, or other payment, and may perform any other act or take such action as may be appropriate to cause such other term, covenant, condition or obligation to be promptly performed or observed on behalf of Mortgagor, to the end that Mortgagor's right in, to and under such mortgage or deed of trust shall be kept unimpaired and free from default. Mortgagee and any person designated by Mortgagee shall have, and is hereby granted, the right to enter upon the Mortgaged Property at any time and from time to time for the purpose of taking any such action, and all monies expended by Mortgagee in connection therewith (including but not limited to, legal expenses and disbursements), -11- 12 together with interest thereon at the Default Rate provided for in the Note secured hereby from the date of each expenditure, shall be paid by Mortgagor to Mortgagee forth with upon demand by Mortgagee, and shall be secured by this Mortgage. Mortgagee shall have, in addition to any other right or remedy, the same rights and remedies in the event of default or nonpayment under any such mortgage or deed of trust as in the case of a default by Mortgagor in the payment of any installment of principal or interest due and payable hereunder. 17. PREPAYMENT Mortgagor may prepay this Mortgage only on the terms and conditions set forth in the Note. 18. LEASES (a) Mortgagor covenants and agrees that Mortgagor will not, without the prior written consent of Mortgagee (which consent may be withheld in Mortgagee's sole discretion): (i) receive or collect rents (other than the customary security deposit) from any tenant, subtenant, undersubtenant or other occupant of the Mortgaged Property for a period of more than one month in advance; or (ii) assign the rents, or any part thereof, of the Mortgaged Property to any person or entity other than Mortgagee; or (iii) enter into any lease for minimum rentals less than those approved in writing by Mortgagee or for length of term less than that approved in writing by Mortgagee, provided that so long as the Lease with Consolidated Rail Corporation ("Conrail") dated May 25, 1990, as amended ("Conrail Lease") is in effect, this restriction shall apply only to the Conrail Lease, but shall apply to all of the Leases if Conrail ceases to be a tenant; or (iv) enter into any lease other than that which is in form and content substantially the same as the form of lease approved in writing by Mortgagee. (b) Mortgagor covenants and agrees to perform and to observe all the material agreements imposed upon Mortgagor under any leases of or occupancy agreements for the Mortgaged Property or any portions thereof, and not to do, or to permit to be done, anything to impair the security thereof; if any of such leases shall require security deposits, to establish if required by law an interest-bearing security deposit account in accordance with such law, and to deposit all security deposits therein, and to maintain true and accurate records of all security deposits received, and to pay interest thereon, if the same be required by law or by the terms of the leases; and to comply with all requirements of law concerning security deposits received. (c) In the event that any Lease is terminated hereafter and payments or damages of any kind are received by Mortgagor in connection with such termination (collectively, "Termination Proceeds"), such Termination Proceeds shall immediately be paid over to GMAC Mortgage Corporation, or such other agent as Mortgagee shall designate in writing, to be held in escrow and released for tenant improvement work upon receipt by Mortgagee of an executed replacement Lease acceptable to Mortgagee with a term of at least three (3) years and with a rent comparable to the terminated Lease. If no tenant improvement work is required under such approved replacement Lease, the escrowed payments shall be released to Mortgagor upon occupancy of the leased space by the tenant under the approved replacement Lease. 19. MANAGEMENT OF MORTGAGED PROPERTY During the term of this Mortgage, the Mortgaged Property shall be managed, at all times, by a manager (the "Manager") reasonably satisfactory to Mortgagee, which Manager shall be controlled by Mortgagor. Any substitute Manager or change in arrangements for leasing and management must be approved in writing by Mortgagee prior to such substitution or change being effected. Mortgagor covenants and agrees that this Section 19 is of the -12- 13 essence of this Mortgage and that Mortgagee will be prejudiced by a violation hereof in that Mortgagee is relying upon the expertise and business acumen of the Manager. 20. INDEMNIFICATION OF MORTGAGEE Mortgagor hereby agrees to and does hereby indemnify, protect, defend and save harmless Mortgagee and its officers, directors, employees, agents, attorneys and shareholders from and against any and all losses, damages, expenses or liabilities of any kind or nature and from any suits, claims or demands, including reasonable counsel fees incurred in investigating or defending such claims, suffered by any of them and caused by, relating to, arising out of, resulting from, or in any way connected with this Mortgage and the transactions contemplated herein, including, but not limited to, (a) disputes between any architect, general contractor, subcontractor, materialman or supplier, or on account of any act or failure to act by Mortgagee in connection with this Mortgage, or (b) losses, damages, expenses or liabilities sustained by Mortgagee pursuant to any provisions contained in any federal, state or local environmental law, ordinance, rule or regulation, or (c) any violation of the covenants and representations contained in Section 4(b)-(j) hereof. THE INDEMNIFICATION OBLIGATIONS OF MORTGAGOR UNDER THIS SECTION 20(b) AND (c) SHALL NOT BE SUBJECT TO THE LIMITATIONS OF LIABILITY SET FORTH IN SECTION 28 HEREOF OR IN THE NOTE. In case any action shall be brought against Mortgagee based upon any of the above and in respect to which indemnity may be sought against Mortgagor, Mortgagee shall promptly notify Mortgagor in writing, and Mortgagor shall assume the defense thereof, including the employment of counsel selected by Mortgagor and satisfactory to Mortgagee, the payment of all costs and expenses and the right to negotiate and consent to settlement. Upon determination made by Mortgagee, Mortgagee shall have the right to employ separate counsel in any such action and to participate in the defense thereof. Mortgagor shall not be liable for any settlement of any such action effected without its consent, but if settled with Mortgagor's consent, or if there be a final judgment for the claimant in any such action, Mortgagor agrees to indemnify and save harmless Mortgagee from and against any loss or liability by reason of such settlement or judgment. 21. IMPOSITION OF TAX Mortgagor covenants and agrees to pay and discharge when due any taxes, fees or other charges imposed by any Federal, State or local authority, including interest and penalties thereon, if any, or thereafter becoming payable on this Mortgage or the Note secured hereby (excluding any Federal or state income taxes of Mortgagee). Mortgagor further covenants and agrees to pay upon demand all fees, charges or taxes (excluding any Federal or state income taxes of Mortgagee), if any, and interest and penalties thereon, if any, imposed on Mortgagee as a condition or as a result of the making of this loan in the State of New Jersey. 22. MISCELLANEOUS (a) No delay or failure of Mortgagee to exercise any right or option herein given or reserved shall constitute a waiver of such right or estop Mortgagee from afterwards exercising such option, and contracting to pay by Mortgagee of anything Mortgagor has herein agreed to pay shall not constitute a waiver of the default of Mortgagor in failing to make such payments and shall not estop Mortgagee from foreclosing this Mortgage on account of such failure of Mortgagor. The rights, options, powers and remedies herein provided shall be cumulative and no one or more of them shall be exclusive of the other or others, or of any right or remedy now or hereafter given or allowed by law. (b) Mortgagor waives the benefit of any appraisement laws of the State of New Jersey. 23. EXTENSIONS AND MODIFICATIONS No extension or indulgence granted to Mortgagor, and no alteration, change or modification of the Note consented or agreed to by Mortgagee, and no other act or omission of Mortgagee, including the taking of additional security or the release or subordination of any security, shall constitute a release of the lien and obligation of this Mortgage or be interposed as a defense against the enforcement of this Mortgage, except a writing signed by Mortgagee which constitutes an express, effective release and satisfaction of the Note. -13- 14 24. NO THIRD PARTY BENEFICIARIES The parties do not intend the benefits of this Mortgage to inure to any third party, except for the successors and assigns of Mortgagee. Notwithstanding anything contained herein or in the Note, or any other document executed in connection herewith, or any conduct or course of conduct by either or both of the parties hereto, or their respective affiliated companies, agents or employees, before or after the execution hereof, this Mortgage shall not be construed as creating any rights, claims or causes of action in favor of any person or entity other than Mortgagor and Mortgagee. 25. NOTICES All notices, requests and demands upon the respective parties hereto shall be effective when hand delivered to such party at the address set forth below, or if sent by overnight delivery service, on the next business day, or if sent by United States mail, postage prepaid, registered or certified mail, on the second business day after the day on which mailed or sent, addressed to such party as follows: To Mortgagee: Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02181 Attention: Virginia M. Ayers, Sr. Property Investments Officer With copies to: John Cannon, Assistant Vice President GMAC Mortgage Corporation 8360 Old York Road Elkins Park, PA 19117 Gregory Kleiber, Esquire Fox, Rothschild, O'Brien & Frankel 2000 Market Street Philadelphia, PA 19103 To Mortgagor: MLCP Associates Limited Partnership 2 Eves Drive Marlton, New Jersey 08053 With a copy to: Robert E. Schwartz, Esquire Sherman, Silverstein, Kohl, Rose & Podolsky 4300 Haddonfield Road, Suite 311 Pennsauken, NJ 08109 or to such other address as may be furnished in writing for such purpose. 26. COMMERCIAL LOAN Mortgagor represents and warrants that the loan secured by this Mortgage was obtained solely for the purpose of carrying on or acquiring a business or commercial investment. 27. NO AGENCY, JOINT VENTURE OR PARTNERSHIP BETWEEN MORTGAGOR AND MORTGAGEE This Mortgage shall not be construed as a partnership, joint venture, other business entity formation, lease or sale. Mortgagee is not now a partner or joint venturer with Mortgagor in any respect or for any purpose in the -14- 15 conduct of Mortgagor's business. Mortgagor is not the agent, representative, partner of, or joint venturer with Mortgagee and will act accordingly. This Mortgage shall not be construed to make Mortgagee liable to any person or persons for goods or services furnished to the Mortgaged Property, or for debts or claims accruing therefrom against Mortgagor. There shall be no contractual relation, either express or implied, between Mortgagee and any person or per sons supplying any work or materials to the Mortgaged Property. 28. LIMITED LIABILITY The liability of Mortgagor hereunder shall be limited to and enforceable only out of the Mortgaged Property and the rents, issues and profits therefrom, and the lien of any judgment shall be restricted thereto and shall not extend to Mortgagor, Mortgagee waving any right Mortgagee may have to claim a deficiency judgment against Mortgagor; provided, however, that Mortgagor and Mortgagor's general partner shall not be exonerated or exculpated from, and shall be liable for, any deficiency, loss or damage suffered by Mortgagee as a result of any security deposits received or held by Mortgagor, any rent received or held by Mortgagor after an Event of Default, or any rent prepaid more than one month in advance; or from Mortgagor's failure to properly account to Mortgagee for any proceeds of insurance or condemnation proceeds as required by this Mortgage; or from repairs required by the Mortgaged Property following a casualty for which insurance proceeds are not available due to a violation of Section 10 hereof; or from fraud, material misrepresentation or bad faith by Mortgagor; or from waste of the Mortgaged Property; or from delinquent taxes or assessments; or from Mortgagor's violation of, or failure to perform its obligations under, Section 4(b)-(j) or Section 20(b) or (c) of this Mortgage. Nothing in this subsection, however, shall limit Mortgagee's rights against any tenants under leases assigned to Mortgagee as additional security or against any other collateral securing Mortgagor's obligations, now or hereafter mortgaged, pledged or assigned by Mortgagor or anyone else to Mortgagee. 29. COUNSEL FEES (a) If Mortgagee becomes a party to any suit or proceeding affecting the Mortgaged Property or title thereto, the lien created by this Mortgage or Mortgagee's interest therein, or if Mortgagee engages counsel to collect any of the indebtedness or to enforce performance of the agreements, conditions, covenants, provisions or stipulations of this Mortgage or the Note, Mortgagee's costs, expenses and reasonable counsel fees, whether or not suit is instituted, shall be paid to Mortgagee by Mortgagor, on demand, with interest at the Default Rate set forth in the Note, and until paid, they shall be deemed to be part of the indebtedness evidenced by the Note and secured by this Mortgage. (b) Regardless of whether any proceeds of the loan evidenced by the Note have been disbursed, this Mortgage also secures the payment of all loan commissions, service charges, reasonable attorney's fees, liquidated damages, expenses and advances due to or incurred by Mortgagee in connection with the loan transaction intended to be secured hereby, all in accordance with the application of, and the Loan Commitment issued to and accepted by, Mortgagor in connection with the loan. 30. PARTIAL INVALIDITY The unenforceability or invalidity of any one or more provisions, clauses, sentences, and/or paragraphs hereof shall not render any other provisions, clauses, sentences and/or paragraphs herein contained unenforceable or invalid. 31. BINDING EFFECT The covenants, conditions and agreements contained in this Mortgage shall bind, and the benefits thereof shall inure to, the respective parties hereto and their respective heirs, personal representatives, successors and assigns. If Mortgagor is at any time constituted by more than one person, the obligations of each such person shall be joint and several. -15- 16 32. SURVIVAL OF COMMITMENT The covenants, conditions and agreements contained in Mortgagee's Loan Commitment to Mortgagor dated August 23, 1994, shall survive the execution hereof, and any breach or violation thereof by Mortgagor shall con stitute an Event of Default hereunder. 33. GOVERNING LAW This Mortgage shall be construed in accordance with and governed by the laws of the State of New Jersey. 34. AMENDMENT This Mortgage cannot be changed, modified or amended except by agreement in writing signed by the party against whom enforcement of the change, modification or amendment is sought. 35. CAPTIONS The captions preceding the text of the sections of this Agreement are used solely for convenience of reference and shall not affect the meaning or construction of this Mortgage. 36. WAIVER Mortgagor hereby waives the right to trial by jury in any action by Mortgagee to enforce Mortgagee's rights under the Note, this Mortgage or any other document evidencing or securing the Note. 37. ACKNOWLEDGEMENT MORTGAGOR ACKNOWLEDGES THAT THIS MORTGAGE CONTAINS A WAIVER OF TRIAL BY JURY IN SECTION 36. WITNESS the due execution hereof the day and year first above written. MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: MLCP General Corporation, a New Jersey corporation, general partner By: /s/ Joseph D. Gonnelli ----------------------------------------- Joseph D. Gonnelli, President Attest: /s/ R. Brian Jackson ------------------------------------ R. Brian Jackson, Secretary -16- 17 State of New Jersey, County of __________ I am an officer authorized to take acknowledgements and proofs in this state. On ____________, 1994, __________________________ ("Witness") appeared before me in person. The Witness was duly sworn by me according to law under oath and stated and proved to my satisfaction that: 1. The Witness is the (Assistant) Secretary of the corporation that executed this document ("Corporation"). 2. _______________, the officer who signed this document, is the President of the corporation ("Corporate Officer"). 3. The making, signing, sealing, and delivery of this document have been duly authorized by a proper resolution of the Board of Directors of the Corporation. 4. The Witness knows the corporate seal of the Corporation. The seal affixed to this document is the corporate seal of the Corporation. The seal was affixed to this document by the Corporate Officer. The Corporate Officer signed and delivered this document as and for the voluntary act and deed of the Corporation. All of this was done in the presence of the Witness who signed this document as attesting witness. The Witness signs this proof to attest to the truth of these facts. Sworn to and signed before me on the date written above. Witness: ----------------------- Name: -------------------------- Notary: ----------------------- Name: ------------------------- -17- EX-10.10 11 SUN LIFE LETTER/MLCP ASSOCIATES 1 EXHIBIT 10.10 October 19, 1994 MLCP Associates Limited Partnership 2 Eves Drive Marlton, New Jersey 08053 Re: $6,500,000 Loan from Sun Life Assurance Company of Canada (U.S.) ("Loan") Dear Sir or Madam: This letter sets forth certain agreements between Sun Life Assurance Company of Canada (U.S.) ("Mortgagee") and MLCP Associates Limited Partnership ("Mortgagor"), regarding the release by Mortgagee of condemnation award proceeds following a taking or condemnation and insurance proceeds following a casualty. Capitalized terms used herein have the same meaning as set forth in the Mortgage and Security Agreement of even date herewith from MLCP Associates Limited Partnership to us (the "Mortgage"). 1. (a) Notwithstanding anything to the contrary set forth in Section 8 of the Mortgage, Mortgagee agrees that (provided no Event of Default has occurred under the Mortgage or under the Note or any other document given as collateral security for the Note, and subject to the provisions of subsection (c) below) in the event of a con demnation or taking, Mortgagee will make available to Mortgagor the proceeds received by it for purposes of restoration of the Mortgaged Property on the following terms and conditions: (i) prior to the commencement of restoration, the contracts, contractors, and plans and specifications for the restoration shall have been approved by Mortgagee, and Mortgagee, at its option, shall be provided with a surety bond insuring satisfactory completion of the restoration, such insurance and bond to be in form acceptable to Mortgagee; (ii) at the time of any disbursement Mortgagor shall not be in default hereunder, no mechanics' or materialmen's liens shall have been filed and remain undischarged (or unbonded if contested in good faith) and a satisfactory bringdown of title insurance shall be delivered to Mortgagee; (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement, upon approval by Mortgagee's engineer and receipt of satisfactory evidence of the stage of completion and of performance of the work in good and workmanlike manner in accordance with the contracts, plans and specifications; (iv) the restoration fund shall be deposited in an escrow account with Mortgagee; and (v) such restoration and the disbursement of the restoration fund shall be otherwise effected in accordance with the provisions of Mortgagee's standard building loan agreement. (b) Prior to the commencement of restoration, or at any time thereafter, if the estimated cost of restoration, as reasonably determined by Mortgagee, exceeds the amount of proceeds paid on account of the cost of such restoration, the amount of such excess shall be paid by Mortgagor to Mortgagee in cash or by means of other security satisfactory to Mortgagee, and shall be added to the restoration fund. (c) If no restoration is necessary, or if the Mortgaged Property cannot be restored to a condition functionally similar to its condition prior to the taking within one hundred eighty (180) days, or if any material Lease is terminated by the tenant as a result of such condemnation, Mortgagee, at its sole option, shall apply all or part of the proceeds to reduce the outstanding principal indebtedness secured hereby, and shall pay over to Mortgagor the balance not so applied (if any). 2 (d) If, prior to the receipt of the proceeds by Mortgagee, the Mortgaged Property shall have been sold on foreclosure of the Mortgage, Mortgagee shall have the right to receive the proceeds to the extent of: (i) any deficiency found to be due to Mortgagee in connection with the foreclosure sale, with interest thereon, at the Default Rate set forth in the Note, and (ii) reasonable counsel fees, costs and disbursements incurred by Mortgagee in connection with the collection of the proceeds. (e) If the amount of the initial award of damages for the total condemnation is insufficient to pay in full the indebtedness secured hereby with interest and other appropriate charges, Mortgagee shall have the right to prosecute to final determination or settlement an appeal or other appropriate proceedings in the name of Mortgagee or Mortgagor, for which Mortgagee is hereby appointed irrevocably as attorney-in-fact for Mortgagor. In that event, the reasonable expenses of the proceedings, including reasonable counsel fees, shall be paid first out of the proceeds, and only the excess, if any, paid to the Mortgagee shall be credited against the amounts due under this Mortgage. (f) Nothing herein shall limit the rights otherwise available to Mortgagee, at law or in equity, including the right to intervene as a party to any condemnation proceedings. 2. (a) Notwithstanding anything to the contrary set forth in Section 10 of the Mortgage, Mortgagee agrees that (provided that no Event of Default has occurred under the Mortgage or under the Note or any other document given as collateral security for the Note, and provided that the Mortgaged Property can, in Mortgagee's opinion, be restored to its condition on the date hereof within 180 days following the casualty) in the event of such loss or damage or casualty, Mortgagee will make available the proceeds received by it for purposes of restoration of the Mortgaged Property on the following terms and conditions: (i) prior to the commencement of restoration, the contracts, contractors, and plans and specifications for the restoration shall have been approved by Mortgagee, and Mortgagee, at its option, shall be provided with a surety bond insuring satisfactory completion of the restoration, such insurance and bond to be in form reasonably acceptable to Mortgagee; (ii) at the time of any disbursement Mortgagor shall not be in default under the Mortgage, no mechanics' or materialmen's liens shall have been filed and remain undischarged (or unbonded if contested in good faith) and a satisfactory bringdown of title insurance shall be delivered to Mortgagee; (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement, upon approval by Mortgagee's engineer and receipt of satisfactory evidence of the stage of completion and of performance of the work in good and workmanlike manner in accordance with the contracts, plans and specifications; (iv) the restoration fund shall be deposited in an escrow account with Mortgagee; and (v) such restoration and the disbursement of the restoration fund shall be otherwise effected in accordance with the provisions of Mortgagee's standard building loan agreement. (b) Prior to the commencement of restoration, or at any time thereafter, if the estimated cost of restoration, as reasonably determined by Mortgagee, exceeds the amount of proceeds paid on account of the cost of such restoration, the amount of such excess shall be paid by Mortgagor to Mortgagee in cash or by means of other security satisfactory to Mortgagee, and shall be added to the restoration fund. -2- 3 (c) If no restoration is necessary, Mortgagee, at its sole option, shall apply all or part of the insurance proceeds to reduce the outstanding principal indebtedness secured hereby, and shall pay over to Mortgagor the balance not so applied (if any). Please acknowledge your agreement to these terms by executing a copy of this letter. SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) By: ----------------------------------------- MLCP ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership By: MLCP General Corporation, a New Jersey corporation, general partner By: /s/ Joseph D. Gonnelli ------------------------------------------ Joseph D. Gonnelli, President Attest: /s/ R. Brian Jackson ------------------------------------- R. Brian Jackson, Secretary -3- -----END PRIVACY-ENHANCED MESSAGE-----