-----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, PG+u9qwqXsMkXcgpaeRabYR1EiQ+e0y/UJm+Fwf+NXXp1Yyxy0GSu4cZ0k7OK99X Upq9SdxEJc+dKUYL5UwEPg== 0001047469-98-002205.txt : 19980128 0001047469-98-002205.hdr.sgml : 19980128 ACCESSION NUMBER: 0001047469-98-002205 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980120 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980127 SROS: NYSE 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: SEC FILE NUMBER: 001-09106 FILM NUMBER: 98514604 BUSINESS ADDRESS: STREET 1: 16 CAMPUS BOULEVARD STREET 2: STE 100 CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 1-610-325-5600 MAIL ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: SUITE 100 CITY: MARLTON STATE: NJ ZIP: 08053 FORMER COMPANY: FORMER CONFORMED NAME: LINPRO SPECIFIED PROPERTIES DATE OF NAME CHANGE: 19920703 8-K 1 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) January 20, 1998 BRANDYWINE REALTY TRUST ----------------------- (Exact name of registrant as specified in its charter) MARYLAND (1-9106) (23-2413352) - -------- ------ ---------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) file number) Identification Number)
16 Campus Boulevard, Newtown Square, Pennsylvania 19073 (Address of principal executive offices) (610) 325-5600 (Registrant's telephone number, including area code) Page 1 of 8 pages Item 5. Other Events I. RREEF Portfolio As of the date of this filing, the Company has determined that it is probable that it will acquire, through Brandywine Operating Partnership, L.P. (the "Operating Partnership"), a portfolio of 14 properties containing approximately 941,471 net rentable square feet (collectively, the "RREEF Properties"). Thirteen of these properties are located in King of Prussia, PA and one is located in Middletown, PA. As part of this acquisition, the Company will also acquire through the Operating Partnership approximately 19 acres of undeveloped land in King of Prussia, PA. As of January 23, 1998, the RREEF Properties were fully leased to 20 tenants. Telespectrum Worldwide, Inc. and Lockheed Martin Corporation each individually occupies more than 10% of the total net rentable area of the portfolio under leases covering 178,635 and 158,000 net rentable square feet, respectively. The Company anticipates closing the purchase of the RREEF Properties on or about February 6, 1998. The purchase price for the RREEF Properties (including the undeveloped land) is anticipated to total approximately $55.5 million. The Operating Partnership expects to pay the purchase price and closing expenses using borrowings under its existing revolving credit facility. The sellers of the RREEF Properties, RREEF MidAmerica/East Fund, RREEF USA Fund-I and RREEF MidAmerica East-V Six, Inc., each are parties unaffiliated with the Company and the Operating Partnership. The Company based its determination of the purchase price of the RREEF Properties on the expected cash flow, physical condition, location, competitive advantages, existing tenancies and opportunities to retain and attract additional tenants. The purchase price was determined by arm's-length negotiation between the Company and the sellers. The table set forth below shows certain information regarding rental rates and lease expirations for the RREEF Properties. 2 SCHEDULED LEASE EXPIRATIONS (RREEF Portfolio)
YEAR OF NUMBER OF LEASES RENTABLE SQUARE FINAL ANNUALIZED PERCENTAGE OF TOTAL LEASE EXPIRING WITHIN FOOTAGE SUBJECT BASE RENT UNDER FINAL ANNUALIZED BASE RENT EXPIRATION THE YEAR AT (1) TO EXPIRING LEASES EXPIRING LEASES (2) UNDER EXPIRING LEASES - ----------------------- ----------------------- --------------------- ------------------ ------------------------- 1998 8 107,439 $ 916,533 17.4% 1999 1 25,000 75,000 1.4% 2000 7 256,141 1,262,667 23.9% 2001 3 72,072 367,839 7.0% 2002 4 353,635 1,767,771 33.5% 2003 -- -- -- -- 2004 -- -- -- -- 2005 1 77,184 540,288 10.2% 2006 -- -- -- -- 2007 and Thereafter 1 50,000 350,000 6.6% ------ ------- ------------- ----- Total 25 941,471 $ 5,280,098 100.0% ------ ------- ------------- ----- ------ ------- ------------- -----
(1) A lease is considered to expire if, and at any time, it is terminable by the tenant without payment of penalty or premium. (2) "Final Annualized Base Rent" for each lease scheduled to expire represents the cash rental rate in the final month prior to expiration multiplied by twelve. 3 II. Financial Statements Financial statements for the RREEF Properties are included in this Current Report under Item 7. After reasonable inquiry, the Company is not aware of any material factors relating to the above mentioned properties that would cause the reported financial information relating to such properties not to be necessarily indicative of future operating results. 4 III. Four Tower Bridge Partnership On January 20, 1998, Four Tower Bridge Associates ("Four Tower Bridge Partnership"), a limited partnership in which a wholly-owned subsidiary of the Operating Partnership is a general partner, obtained a $16.75 million construction loan (the "Construction Loan") from PNC Bank, National Association (the "Bank") to finance construction of an approximately 85,000 square foot office building (the "Four Tower Bridge Building") in West Conshohocken, Montgomery County, Pennsylvania. Additional information relating to this development project is contained in Item 5 of a Current Report on Form 8-K filed with the Securities and Exchange Commission on November 17, 1997. In connection with the Construction Loan, the Operating Partnership agreed to provide an equity contribution of $6.75 million to the Four Tower Bridge Partnership upon the earlier of: (i) one year from the Construction Loan closing; (ii) receipt of a certificate of occupancy for the Four Tower Bridge Building; and (iii) a default under the Construction Loan. In addition, the Operating Partnership agreed to provide a $10.0 million forward commitment for the benefit of the Bank pursuant to which it would loan $10.0 million to Four Tower Bridge Partnership under certain circumstances to provide Four Tower Bridge Partnership funds that would (together with the $6.75 million equity contribution) enable it to repay the entire principal amount of the Construction Loan. Four Tower Bridge Partnership expects, however, that an unaffiliated third party, such as an insurance company or pension fund, will provide the permanent loan to refinance the Construction Loan upon completion of the Four Tower Bridge Building. The Operating Partnership's equity contribution will be entitled to a 10% preferential return, and advances, if any, made by the Operating Partnership under its forward commitment would accrue interest at LIBOR plus 250 basis points, would be repayable over ten years and would be secured by a first priority mortgage on the Four Tower Bridge Building. A copy of the forward commitment is attached as an exhibit under Item 7. IV. Other In a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on January 9, 1998, the Company reported under Item 2 its January 5, 1998 consummation of the acquisition of a portfolio of properties. Management of the Company 5 expects that the Company will make approximately $2.0 million in capital expenditures during 1998 with respect to the Park 80 West facility in Saddle Brook, New Jersey acquired as part of this transaction. These expenditures will be primarily to replace and upgrade the electrical and HVAC systems and to make structural repairs to the parking garage and certain common areas. 6 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements. The audited statement of revenue and certain operating expenses of the RREEF Properties for the year ended December 31, 1996 and the unaudited statement of revenue and certain operating expenses for the nine months ended September 30, 1997 are included on pages F-17 to F-20. (b) Pro Forma Financial Information. Pro forma financial information which reflects the Company's acquisition of the RREEF Properties as of and for the nine months ended September 30, 1997 and for the year ended December 31, 1996 are included on pages F-1 to F-16. (c) Exhibits. 10.1--Forward Commitment. 10.2--Agreement of Purchase and Sale between Brandywine Operating Partnership, L.P. and RREEF MidAmerica/East Fund-IV. 10.3--Agreement of Purchase and Sale between Brandywine Operating Partnership, L.P. and RREEF MidAmerica East-V Six, Inc. 10.4--Agreement of Purchase and Sale between Brandywine Operating Partnership, L.P. and RREEF USA Fund-I. 23.1--Consent of Arthur Andersen LLP 7 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 thereunto duly authorized. BRANDYWINE REALTY TRUST Date: January 27, 1998 By: /s/ Gerard H. Sweeney ------------------------ Gerard H. Sweeney, President and Chief Executive Officer (Principal Executive Officer) Date: January 27, 1998 By: /s/ Mark S. Kripke ------------------------ Mark S. Kripke, Chief Financial Officer (Principal Financial and Accounting Officer) 8 BRANDYWINE REALTY TRUST INDEX TO FINANCIAL STATEMENTS I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION - - Pro Forma Condensed Consolidating Balance Sheet as of September 30, 1997...... F-4 - - Pro Forma Condensed Consolidating Statement of Operations for the Year Ended December 31, 1996............................................................. F-5 - - Pro Forma Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 1997...................................................... F-6 - - Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating Financial Information........................................... F-7 II. RREEF PROPERTIES - - Report of Independent Public Accountants...................................... F-17 - - Combined Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996 (audited) and for the Nine Month Period Ended September 30, 1997 (unaudited)................................................ F-18 - - Notes to Statements of Revenue and Certain Expenses........................... F-19
F-1 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following sets forth the pro forma condensed consolidating balance sheet of Brandywine Realty Trust ("the Company") as of September 30, 1997 and the pro forma condensed consolidating statements of operations for the nine months ended September 30, 1997 and for the year ended December 31, 1996. The pro forma condensed consolidating financial information should be read in conjunction with the historical financial statements of the Company and those acquisitions deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The unaudited pro forma condensed consolidating financial information is presented as if the following events occurred on September 30, 1997 for balance sheet purposes, and at the beginning of the period presented for purposes of the statements of operations: - - The Company acquired the properties described in Note 1 to these pro forma financial statements. - - The Company acquired its partnership interests in Brandywine Operating Partnership, L.P. (the "Operating Partnership"). - - The Company issued 4,600,000 Common Shares at $16.50 per share, of which 600,000 shares related to the underwriter's exercise of the over-allotment option (the "1996 Offering"). - - The Company issued 636,363 Common Shares at $16.50 per share to a voting trust established for the benefit of the Pennsylvania State Employees Retirement System ("SERS"), in exchange for $10.5 million (the "SERS Offering") and contributed such proceeds to the Operating Partnership in exchange for 636,363 units of general partnership interest ("GP Units") in the Operating Partnership. - - The Company issued 709,090 Common Shares at $16.50 per share to two investment funds managed by Morgan Stanley Asset Management Inc. (the "Morgan Stanley Offering") and contributed the proceeds to the Operating Partnership in exchange for 709,090 GP Units. - - The Operating Partnership repaid $49,805,000 of mortgage indebtedness and $764,000 of loans made by Safeguard Scientifics, Inc. and paid a $500,000 prepayment penalty with a portion of the proceeds of the 1996 Offering, the SERS Offering and the Morgan Stanley Offering. - - The Company issued 2,375,500 Common Shares at $20.625 per share, of which 175,500 shares related to the underwriter's exercise of the over-allotment option (the "March 1997 Offering"). - - The Company issued 11,500,000 Common Shares at $20.75 per share, of which 1,500,000 shares related to the underwriter's exercise of the over-allotment option (the "July 1997 Offering"). The net proceeds from the July 1997 Offering were contributed to the Operating Partnership in exchange for 11,500,000 GP Units. - - The Operating Partnership repaid $160,775,000 of indebtedness under the Company's revolving credit facility using proceeds from the July 1997 Offering. - - The Company issued 786,840 Common Shares at $22.31 per share (the "September 1997 Offering"). The net proceeds from the September 1997 Offering were contributed to the Operating Partnership in exchange for 786,840 GP Units. - - The Company issued 751,269 Common Shares at $24.63 per share (the "December 1997 Offering"). The net proceeds from the December 1997 Offering were contributed to the Operating Partnership in exchange for 751,269 GP Units. F-2 The pro forma condensed consolidating financial information does not give effect to the Company's pending underwritten equity offering of Common Shares, as more fully described in a Prospectus Supplement and Prospectus filed with the Securities and Exchange Commission on January 9, 1998. The pro forma condensed consolidating financial information is unaudited and is not necessarily indicative of what the actual financial position would have been at September 30, 1997, nor does it purport to represent the future financial position and the results of operations of the Company. F-3 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 1997 (NOTES 1 AND 2) (UNAUDITED) (IN THOUSANDS)
BRANDYWINE REALTY TRUST HISTORICAL OTHER RECENT CONSOLIDATED DECEMBER 1997 ACQUISITIONS RREEF PRO FORMA (A) OFFERING (B) (C) PROPERTIES (D) CONSOLIDATED ------------ ------------- ----------- -------------- ------------- ASSETS: Real estate investments, net... $ 462,772 $ -- $ 330,356 $ 56,680 $ 849,808 Cash and cash equivalents...... 19,965 -- -- -- 19,965 Escrowed cash.................. 348 -- -- -- 348 Accounts receivable............ 2,465 -- -- -- 2,465 Due from affiliates............ -- -- -- -- -- Investment in management company...................... 318 -- -- -- 318 Deferred costs and other assets....................... 8,470 -- -- -- 8,470 ------------ ------------- ----------- -------------- ------------ Total assets................. 494,338 -- 330,356 56,680 881,374 ------------ ------------- ----------- -------------- ------------ ------------ ------------- ----------- -------------- ------------ LIABILITIES: Mortgage notes payable......... 47,984 -- -- -- 47,984 Notes payable, Credit Facility. 14,000 (17,593) 320,848 56,680 373,935 Accrued interest............... 303 -- -- -- 303 Accounts payable and accrued expenses..................... 4,128 -- -- -- 4,128 Distributions payable.......... 8,338 -- -- -- 8,338 Tenant security deposits and deferred rents........... 3,960 -- -- -- 3,960 Tenant security deposits and deferred rents........... 387 -- -- -- 387 ------------ ------------- ----------- -------------- ------------ Total liabilities............ 79,100 (17,593) 320,848 56,680 439,035 ------------ ------------- ----------- -------------- ------------ MINORITY INTEREST................ 4,894 -- 9,508 -- 14,402 ------------ ------------- ----------- -------------- ------------ BENEFICIARIES' EQUITY: Common shares of beneficial interest.......... 234 8 -- -- 242 Additional paid-in capital..... 428,787 17,585 -- -- 446,372 Share warrants................. 962 -- -- -- 962 Cumulative earnings............ 5,209 -- -- -- 5,209 Cumulative distributions....... (24,848) -- -- -- (24,848) ------------ ------------- ----------- -------------- ------------ Total beneficiaries' equity.. 410,344 17,593 -- -- 427,937 ------------ ------------- ----------- -------------- ------------ Total liabilities and beneficiaries' equity...... $ 494,338 $ -- $ 330,356 $ 56,680 $ 881,374 ------------ ------------- ----------- -------------- ------------ ------------ ------------- ----------- -------------- ------------
F-4 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (NOTES 1 AND 3) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
BRANDYWINE 1997 EVENTS REALTY ----------------------------- TRUST 1997 TOTAL HISTORICAL 1996 OTHER RREEF PRO FORMA CONSOLIDATED (A) EVENTS (B) SUBTOTAL EVENTS (C) PROPERTIES (E) CONSOLIDATED ---------------- ---------- -------- ---------- ---------------- ------------ REVENUE: Base rents............................ $ 8,462 $12,646 $21,108 $75,395 $4,051 $ 100,554 Tenant reimbursements................. 1,372 2,838 4,210 9,754 643 14,607 Other................................. 196 100 296 683 -- 979 ---------------- ---------- -------- ---------- ------ ------------ Total Revenue....................... 10,030 15,584 25,614 85,832 4,694 116,140 ---------------- ---------- -------- ---------- ------ ------------ OPERATING EXPENSES: Interest.............................. 2,751 513 3,264 25,478 4,251 32,993 Depreciation and amortization......... 2,836 4,687 7,523 20,447 1,814 29,784 Property expenses..................... 3,709 6,830 10,539 36,189 1,288 48,016 General and administrative............ 825 148 973 -- -- 973 ---------------- ---------- -------- ---------- ------ ------------ Total operating expenses............ 10,121 12,178 22,299 82,114 7,353 111,766 ---------------- ---------- -------- ---------- ------ ------------ Income (loss) before minority interest and equity in income (loss) of management company.................. (91) 3,406 3,315 3,718 (2,659) 4,374 Equity in income (loss) of management company............................... (26) 66 40 1,194 97 1,331 ---------------- ---------- -------- ---------- ------ ------------ Income (loss) before minority interest.............................. (117) 3,472 3,355 4,912 (2,562) 5,705 Minority interest in (income) loss...... (45) (429) (474) 361 75 (38) ---------------- ---------- -------- ---------- ------ ------------ Net income (loss)....................... (162) 3,043 2,881 5,273 (2,487) 5,667 (Income) loss allocated to Preferred Shares................................ (401) (1,847) (2,248) -- -- (2,248) ---------------- ---------- -------- ---------- ------ ------------ Income (loss) allocated to Common Shares................................ $ (563) $ 1,196 $ 633 $ 5,273 $(2,487) $ 3,419 ---------------- ---------- -------- ---------- ------ ------------ ---------------- ---------- -------- ---------- ------ ------------ Earnings (loss) per Common Share........ $ (0.43) $ 0.15 ---------------- ------------ ---------------- ------------ Weighted average number of shares outstanding including share equivalents........................... 1,302,648 22,329,515 ---------------- ------------
F-5 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (NOTES 1 AND 3) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1997 EVENTS ----------------------------- BRANDYWINE REALTY TRUST 1997 RREEF TOTAL HISTORICAL OTHER PROPERTIES PRO FORMA CONSOLIDATED (A) EVENTS (D) (E) CONSOLIDATED -------------------- ------------ --------------- ---------------- REVENUE: Base rents............................. $ 32,290 $ 46,128 $ 3,120 $ 81,538 Tenant reimbursements.................. 5,731 5,272 529 11,532 Other.................................. 818 402 -- 1,220 ---------- ------------ ------ ---------------- Total Revenue........................ 38,839 51,802 3,649 94,290 ---------- ------------ ------ ---------------- OPERATING EXPENSES: Interest............................... 4,899 16,531 3,180 24,610 Depreciation and amortization.......... 10,051 12,119 1,357 23,527 Property operating expenses............ 14,805 20,385 939 36,129 Other expenses......................... 705 -- -- 705 ---------- ------------ ------ ---------------- Total operating expenses............. 30,460 49,035 5,476 84,971 ---------- ------------ ------ ---------------- ---------- ------------ ------ ---------------- Income (loss) before equity income of management company and minority interest............................... 8,379 2,767 (1,827) 9,319 Equity in income (loss) of management company................................ 332 798 73 1,203 ---------- ------------ ------ ---------------- Income (loss) before minority interest... 8,711 3,565 (1,754) 10,522 Minority interest in (income) loss....... (256) (105) 52 (309) ---------- ------------ ------ ---------------- Net income (loss)........................ 8,455 3,460 (1,702) 10,213 (Income) loss allocated to Preferred Shares................................. (499) -- -- (499) ---------- ------------ ------ ---------------- Income (loss) allocated to Common Shares................................. $ 7,956 $ 3,460 $ (1,702) $ 9,714 ---------- ------------ ------ ---------------- ---------- ------------ ------ ---------------- Earnings (loss) per Common Share......... $ 0.90 $ 0.40 ---------- ---------------- ---------- ---------------- Weighted average number of shares outstanding including share equivalents............................ 8,809,379 24,134,025 ---------- ----------------
F-6 BRANDYWINE REALTY TRUST NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) BRANDYWINE REALTY TRUST 1. BASIS OF PRESENTATION: Brandywine Realty Trust (the "Company") is a Maryland real estate investment trust. As of January 27, 1998, the Company owned 139 properties. The Company's interest in all of the Properties is held through Brandywine Operating Partnership, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership and as of January 27, 1998, the Company held a 98.2% interest in the Operating Partnership. These pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company, the SSI/TNC Properties, the LibertyView Building, the nine properties (the "SERS Properties") acquired in November 1996 from SERS and its subsidiaries, Delaware Corporate Center I, 700/800 Business Center Drive, the Columbia Acquisition Properties, the Main Street Acquisition Properties, the TA Properties, the Emmes Properties, the Greentree Executive Campus Acquisition Properties, 748 & 855 Springdale Drive, the Green Hills Properties, the Berwyn Park Properties, 500 & 501 Office Center Drive, Metropolitan Industrial Center, Atrium 1, Bala Pointe Office Centre, the Scarborough Properties, the GMH Properties and the RREEF Properties. In management's opinion, all adjustments necessary to reflect the effects of the 1996 Offering, the SERS Offering, the Morgan Stanley Offering, the March 1997 Offering, the July 1997 Offering, the September 1997 Offering, the December 1997 Offering, the acquisitions of the SSI/TNC Properties, the LibertyView Building, the 1996 Additional Acquisition Properties (consisting of the SERS Properties, Delaware Corporate Center I, 700/800 Business Center Drive and 8000 Lincoln Drive), the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, the Greentree Executive Campus, Five Eves Drive, Kings Manor, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Green Hills Properties, the Berwyn Park Properties, 500 & 501 Office Center Drive, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe Office Centre, the Scarborough Properties, the GMH Properties and the RREEF Properties by the Company have been made. 2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET: (A) Reflects the Company's historical consolidated balance sheet as of September 30, 1997. (B) Reflects the December 1997 Offering and the use of the net proceeds to repay $17.6 million of indebtedness under the Credit Facility. F-7 (C) Reflects the Company's acquisiton of several property acquisitions as follows:
Property Purchase Price Closing Costs Total - ----------------------------------------------------------------------- -------------- ------------- ---------- Atrium I............................................................... $ 10,250 $ 45 $ 10,295 5 & 6 Cherry Hill Executive Campus..................................... 3,484 20 3,504 220 Commerce Drive..................................................... 5,300 129 5,429 Provident Place........................................................ 6,300 152 6,452 PECO Building.......................................................... 9,500 146 9,646 Bala Pointe Office Center.............................................. 26,750 403 27,153 Scarborough Properties................................................. 37,075 122 37,197 GMH Properties......................................................... 229,015 1,665 230,680 -------------- ------ ---------- Total................................................................ $ 327,674 $ 2,682 $ 330,356 -------------- ------ ---------- -------------- ------ ----------
(D) Reflects the Company's acquisition of the RREEF Properties as follows: Purchase Price..................................................................... $ 55,500 Closing Costs...................................................................... 1,180 --------- $ 56,680 --------- ---------
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS: (A) Reflects the historical consolidated operations of the Company. (B) Reflects the historical operations of the SSI/TNC Properties, LibertyView Building and the 1996 Additional Acquisition Properties from January 1, 1996 through the respective dates of acquisition, plus the pro forma 1996 Offering adjustments. The table below reflects the adjustments: F-8
SSI/TNC Properties and Delaware 700/800 LibertyView SERS Corporate Business Center Building Properties Center Drive -------------- ---------- --------- --------------- Revenue: Base rents................... $ 5,714 $4,008 $2,036 $651 Tenant reimbursements........ 2,511 249 -- 76 Other........................ 100 -- -- -- ------- ---------- --------- ----- Total revenue.............. 8,325 4,257 2,036 727 Operating Expenses: Interest..................... 3,783 194 -- -- Depreciation and amortization............... 2,819 818 374 212 Property expenses............ 2,831 2,217 552 270 General and administrative... 715 -- -- -- ------- ---------- --------- ----- Total operating expenses... 10,148 3,229 926 482 Income (loss) before management company and minority interest..................... (1,823) 1,028 1,110 245 Equity in income (loss) of management company........... 75 -- -- -- ------- ---------- --------- ----- Income (loss) before minority interest..................... (1,748) 1,028 1,110 245 Minority interest in (income) loss......................... 513 -- -- -- ------- ---------- --------- ----- Net income (loss).............. (1,235) 1,028 1,110 245 Income allocated to Preferred Shares....................... -- -- -- -- ------- ---------- --------- ----- Income (loss) allocated to Common Shares................ $(1,235) $1,028 $1,110 $245 ------- ---------- --------- ----- 1996 Pro Forma Total Pro & Other Forma 8000 Lincoln Offering 1996 Drive Adjustments Events ------------ ----------- --------- Revenue: Base rents................... $237 $-- $12,646 Tenant reimbursements........ 2 -- 2,838 Other........................ -- -- 100 ----- ----------- --------- Total revenue.............. 239 -- 15,584 Operating Expenses: Interest..................... -- (3,464) 513 Depreciation and amortization................. 89 375 4,687 Property expenses............ 231 729 6,830 General and administrative... -- (567) 148 ----- ----------- --------- Total operating expenses... 320 (2,927) 12,178 Income (loss) before management company and minority interest..................... (81) 2,927 3,406 Equity in income (loss) of management company........... -- (9) 66 ----- ----------- --------- Income (loss) before minority interest..................... (81) 2,918 3,472 Minority interest in (income) loss......................... -- (942) (429) ----- ----------- --------- Net income (loss).............. (81) 1,976 3,043 Income allocated to Preferred Shares....................... -- (1,847) (1,847) ----- ----------- --------- Income (loss) allocated to Common Shares................ $(81) $ 129 $ 1,196 ----- ----------- ---------
F-9 (C) Reflects the pro forma statements of operations of the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Berwyn Park Properties, the Green Hills Properties, 500/501 Office Center Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe Office Centre, the Scarborough Properties and the GMH Properties for the year ended December 31, 1996 and other pro forma adjustments to reflect the March 1997 Offering, the July 1997 Offering, the September 1997 Offering and the December 1997 Offering for the year ended December 31, 1996. The operating results reflected below include the historical results and related pro forma adjustments to reflect the period January 1, 1996 through the earlier of the respective acquisition dates or December 31, 1996. Operating results from those dates forward are included in the historical results of the Company.
Columbia Main Street 1336 Greentree Acquisition Acquisition Enterprise Executive Five Eves Properties Properties Drive Kings Manor Campus Drive ----------- ----------- ------------- --------------- ----------- ----------- Revenue: Base rents................................... $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862 $ 348 Tenant reimbursements........................ 359 347 75 107 175 39 Other........................................ 376 -- -- -- -- 1 ----------- ----------- ----- ----- ----------- ----- Total revenue.............................. 5,881 3,488 512 518 2,037 388 ----------- ----------- ----- ----- ----------- ----- Operating Expenses: Interest (i)................................. 1,680 -- -- -- 841 254 Depreciation and amortization (ii)........... 1,007 629 117 114 359 108 Property expenses............................ 1,979 2,194 107 170 1,018 151 General and administrative................... -- -- -- -- -- -- ----------- ----------- ----- ----- ----------- ----- Total operating expenses................... 4,666 2,823 224 284 2,218 513 ----------- ----------- ----- ----- ----------- ----- Income (loss) before equity in income of management company and minority interest..... 1,215 665 288 234 (181) (125) Equity in income (loss) of management company (iii)........................................ -- -- -- -- -- -- ----------- ----------- ----- ----- ----------- ----- Income (loss) before minority interest......... 1,215 665 288 234 (181) (125) Minority interest in (income) loss............. (36) (20) (8) (7) 5 4 Net income..................................... $ 1,179 $ 645 $ 280 $ 227 $ (176) $ (121) ----------- ----------- ----- ----- ----------- ----- ----------- ----------- ----- ----- ----------- -----
748 & 855 Emmes Springdale 1974 Sproul MARCH 1997 JULY 1997 Ta Properties Properties Drive Road Offering Offering ------------- ----------- ------------- ----------- ------------- ----------- Revenue: Base rents.................................. $ 5,102 $ 6,214 $ 940 $ 774 $ -- $ -- Tenant reimbursements....................... 735 2,681 -- 118 -- -- Other....................................... 9 10 -- -- -- -- ------ ----------- ----- ----------- --- ----------- Total revenue............................. 5,846 8,905 940 892 -- -- ------ ----------- ----- ----------- --- ----------- Operating Expenses: Interest (i)................................ 3,168 4,987 400 -- (525) (12,058) Depreciation and amortization (ii).......... 1,352 2,128 171 134 -- -- Property expenses........................... 1,962 3,482 250 492 -- -- General and administrative.................. -- -- -- -- -- -- ------ ----------- ----- ----------- --- ----------- Total operating expenses.................. 6,482 10,597 821 626 (525) (12,058) ------ ----------- ----- ----------- --- ----------- Income (loss) before equity in income of management company and minority interest.... (636) (1,692) 119 266 525 12,058 Equity in income (loss) of management company (iii)....................................... 105 65 23 22 -- -- ------ ----------- ----- ----------- --- ----------- Income (loss) before minority interest........ (531) (1,627) 142 288 525 12,058 Minority interest in (income) loss............ 16 48 (4) (8) 342 (293) ------ ----------- ----- ----------- --- ----------- Net income.................................... $ (515) $ (1,579) $ 138 $ 280 $ 867 $ 11,765 ------ ----------- ----- ----------- --- ----------- ------ ----------- ----- ----------- --- -----------
F-10
Green Hills 500/501 Christiana Metropolitan Berwyn Park Properties Office Corporate Industrial Properties (IV) Center Drive Center Center Atrium 1 ------------- ------------- ------------- ------------- ------------- ----------- Revenue: Base rents............................. $ 3,815 $ 7,700 $ 1,754 $ 768 $ 1,811 $ 1,226 Tenant reimbursements.................. 720 -- 1,358 61 406 33 Other.................................. 108 -- 43 2 9 26 ------ ------ ------ ----- ------ ----------- Total revenue........................ 4,643 7,700 3,155 831 2,226 1,285 ------ ------ ------ ----- ------ ----------- Operating Expenses: Interest (i)........................... -- 1,200 1,125 430 1,238 772 Depreciation and amortization (ii)..... 1,205 1,294 547 183 528 329 Property expenses...................... 1,991 3,419 1,561 337 678 755 General and administrative............. -- -- -- -- -- -- ------ ------ ------ ----- ------ ----------- Total operating expenses............. 3,196 5,913 3,233 950 2,444 1,856 ------ ------ ------ ----- ------ ----------- Income (loss) before equity in income of management company and minority interest............................... 1,447 1,787 (78) (119) (218) (571) Equity in income (loss) of management company (iii).......................... 166 (115) 76 5 53 31 ------ ------ ------ ----- ------ ----------- Income (loss) before minority interest... 1,613 1,672 (2) (114) (165) (540) Minority interest in (income) loss....... (47) (49) -- 3 5 16 ------ ------ ------ ----- ------ ----------- Net income............................... $ 1,566 $ 1,623 $ (2) $ (111) $ (160) $ (524) ------ ------ ------ ----- ------ ----------- ------ ------ ------ ----- ------ -----------
5 & 6 Cherry Peco September Hill Executive 220 Commerce Provident Building 1997 Offering Campus Drive Place (V) ----------------- --------------- --------------- ----------- ----------- Revenue: Base rents............................... $ -- $ 152 $ 572 $ 756 $ 1,017 Tenant reimbursements.................... -- -- -- 105 -- Other.................................... -- -- -- 8 -- ------- ------- ------- ----- ----------- Total revenue.......................... -- 152 572 869 1,017 ------- ------- ------- ----- ----------- Operating Expenses: Interest (i)............................. -- 263 407 484 723 Depreciation and amortization (ii)....... -- 112 174 206 309 Property expenses........................ -- 169 194 333 -- General and administrative............... -- -- -- -- -- ------- ------- ------- ----- ----------- Total operating expenses............... -- 544 775 1,023 1,032 ------- ------- ------- ----- ----------- Income (loss) before equity in income of management company and minority interest................................. -- (392) (203) (154) (15) Equity in income (loss) of management company (iii)............................ -- -- 12 18 -- ------- ------- ------- ----- ----------- Income (loss) before minority interest..... -- (392) (191) (136) (15) Minority interest in (income) loss......... 33 12 6 4 -- ------- ------- ------- ----- ----------- Net income................................. $ 33 $ (380) $ (185) $ (132) $ (15) ------- ------- ------- ----- ----------- ------- ------- ------- ----- -----------
F-11
December Bala Pointe Scarborough GMH Total Other 1997 Offering Office Centre Properties Properties 1997 Events ------------- ------------- ------------- ----------- ----------- Revenue: Base rents................................. $ -- $ 3,572 $ 4,971 $ 22,906 $ 75,395 Tenant reimbursements...................... -- 21 239 2,175 9,754 Other...................................... -- 35 -- 56 683 ------ ------ ------ ----------- ----------- Total revenue............................ -- 3,628 5,210 25,137 85,832 ------ ------ ------ ----------- ----------- Operating Expenses: Interest (i)............................... (1,319) 2,036 2,071 17,301 25,478 Depreciation and amortization (ii)......... -- 869 1,190 7,382 20,447 Property expenses.......................... -- 1,559 2,424 10,964 36,189 General and administrative................. -- -- -- -- -- ------ ------ ------ ----------- ----------- Total operating expenses................. (1,319) 4,464 5,685 35,647 82,114 ------ ------ ------ ----------- ----------- Income (loss) before equity in income of management company and minority interest... 1,319 (836) (475) (10,510) 3,718 Equity in income (loss) of management company (iii)...................................... -- 64 119 550 1,194 ------ ------ ------ ----------- ----------- Income (loss) before minority interest....... 1,319 (772) (356) (9,960) 4,912 Minority interest in (income) loss........... (39) 23 10 293 361 ------ ------ ------ ----------- ----------- Net income................................... $ 1,280 $ (749) $ (346) $ (9,667) $ 5,273 ------ ------ ------ ----------- ----------- ------ ------ ------ ----------- -----------
- ------------------------ (i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. The adjustment for the Columbia Acquisition Properties also reflects an effective interest rate of 9.5% on assumed debt. The adjustments for the March 1997 Offering, the July 1997 Offering and the December 1997 Offering represent interest savings related to the payoff of $7 million and $160.8 million, respectively, of credit facility borrowings at an effective rate of 7.5%. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. (iv) Pro forma property expenses of the Green Hill Properties exclude $666,000 from historical amounts. Such amount represents expected salary savings. (v) Pro forma base rents for the Peco Building are based on the lease in place as of November 25, 1997 as historically the property was owner occupied and was not an operating property. All property expenses are paid directly by the tenant. (D) Reflects the pro forma adjustments relating to the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Berwyn Park Properties, the Green Hills Properties, 500/501 Office Center Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe Office Centre, the Scarborough Properties and the GMH Properties for the nine months ended September 30, 1997 and other pro forma adjustments to reflect the March 1997 Offering, the July 1997 Offering, the September 1997 Offering and the December 1997 Offering for the nine months ended September 30, 1997. The operating results reflected below include the historical results and related pro forma adjustments to reflect the period January 1, 1997 through the earlier of the respective acquisition date or September 30, 1997. F-12
COLUMBIA MAIN STREET 1336 GREENTREE ACQUISITION ACQUISITION ENTERPRISE EXECUTIVE PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS ----------- ----------- ---------- ----------- --------- Revenue: Base rents............................................. $338 $542 $78 $105 $602 Tenant reimbursements.................................. 24 60 13 27 17 Other.................................................. 25 -- -- -- -- ----- ----- --- ----- --------- Total revenue...................................... 387 602 91 132 619 ----- ----- --- ----- --------- Operating Expenses: Interest (i)........................................... 110 -- -- -- 249 Depreciation and amortization (ii)..................... 66 109 21 29 106 Property expenses...................................... 130 379 19 43 272 General and administrative............................. -- -- -- -- -- ----- ----- --- ----- --------- Total operating expenses........................... 306 488 40 72 627 ----- ----- --- ----- --------- Income (loss) before equity in income of management company and minority interest.................................... 81 114 51 60 (8) Equity in income (loss) of management company (iii)........ -- -- -- -- -- ----- ----- --- ----- --------- Income (loss) before minority interest..................... 81 114 51 60 (8) Minority interest in (income) loss......................... (2) (3) (1) (2) -- ----- ----- --- ----- --------- Net income................................................. $ 79 $111 $50 $ 58 $ (8) ----- ----- --- ----- --------- ----- ----- --- ----- --------- FIVE EVES DRIVE --------- Revenue: Base rents............................................. $103 Tenant reimbursements.................................. 12 Other.................................................. -- --------- Total revenue...................................... 115 --------- Operating Expenses: Interest (i)........................................... 75 Depreciation and amortization (ii)..................... 32 Property expenses...................................... 45 General and administrative............................. -- --------- Total operating expenses........................... 152 --------- Income (loss) before equity in income of management company and minority interest.................................... (37) Equity in income (loss) of management company (iii)........ -- --------- Income (loss) before minority interest..................... (37) Minority interest in (income) loss......................... 1 --------- Net income................................................. $(36) --------- ---------
748 & 855 TA EMMES SPRINGDALE 1974 SPROUL MARCH 1997 PROPERTIES PROPERTIES DRIVE ROAD OFFERING --------- ---------- ---------- ----------- ---------- Revenue: Base rents............................................ $2,053 $2,570 $414 $ 354 $-- Tenant reimbursements................................. 299 1,130 -- 54 -- Other................................................. 6 2 -- -- -- --------- ---------- ----- ----------- --- Total revenue..................................... 2,358 3,702 414 408 -- --------- ---------- ----- ----------- --- Operating Expenses: Interest (i).......................................... 1,241 2,049 171 -- (91) Depreciation and amortization (ii).................... 530 875 73 61 -- Property expenses..................................... 698 1,332 99 225 -- General and administrative............................ -- -- -- -- -- --------- ---------- ----- ----------- --- Total operating expenses.......................... 2,469 4,256 343 286 (91) --------- ---------- ----- ----------- --- Income (loss) before equity in income of management company and minority interest........................... (111) (554) 71 122 91 Equity in income (loss) of management company (iii)....... 41 27 10 10 -- --------- ---------- ----- ----------- --- Income (loss) before minority interest.................... (70) (527) 81 132 91 Minority interest in (income) loss........................ 2 15 (2) (4) (52) --------- ---------- ----- ----------- --- Net income................................................ $(68) $ (512) $ 79 $ 128 $39 --------- ---------- ----- ----------- --- --------- ---------- ----- ----------- --- JULY 1997 OFFERING --------- Revenue: Base rents............................................ $ -- Tenant reimbursements................................. -- Other................................................. -- --------- Total revenue..................................... -- --------- Operating Expenses: Interest (i).......................................... (6,904) Depreciation and amortization (ii).................... -- Property expenses..................................... -- General and administrative............................ -- --------- Total operating expenses.......................... (6,904) --------- Income (loss) before equity in income of management company and minority interest........................... 6,904 Equity in income (loss) of management company (iii)....... -- --------- Income (loss) before minority interest.................... 6,904 Minority interest in (income) loss........................ (42) --------- Net income................................................ $6,862 --------- ---------
F-13
CHRISTIANA METROPOLITAN BERWYN PARK GREEN HILLS 500/501 OFFICE CORPORATE INDUSTRIAL PROPERTIES PROPERTIES (IV) CENTER DRIVE CENTER CENTER ----------- --------------- -------------- ---------- ------------ Revenue: Base rents....................................... $2,492 $4,567 $1,106 $615 $1,395 Tenant reimbursements............................ 376 -- 919 22 306 Other............................................ 36 -- 48 45 33 ----------- ------ ------ ----- ------ Total revenue................................ 2,904 4,567 2,073 682 1,734 ----------- ------ ------ ----- ------ Operating Expenses: Interest (i)..................................... -- 690 700 309 926 Depreciation and amortization (ii)............... 700 745 340 131 395 Property expenses................................ 1,073 2,059 971 218 472 General and administrative....................... -- -- -- -- -- ----------- ------ ------ ----- ------ Total operating expenses..................... 1,773 3,494 2,011 658 1,793 ----------- ------ ------ ----- ------ Income (loss) before equity in income of management company and minority interest...................... 1,131 1,073 62 24 (59) Equity in income (loss) of management company (iii).............................................. 95 (66) 44 4 40 ----------- ------ ------ ----- ------ Income (loss) before minority interest............... 1,226 1,007 106 28 (19) Minority interest in (income) loss................... (36) (30) (3) (1) 1 ----------- ------ ------ ----- ------ Net income........................................... $1,190 $ 977 $ 103 $ 27 $ (18) ----------- ------ ------ ----- ------ ----------- ------ ------ ----- ------ ATRIUM 1 -------- Revenue: Base rents....................................... $ 962 Tenant reimbursements............................ 33 Other............................................ 26 -------- Total revenue................................ 1,021 -------- Operating Expenses: Interest (i)..................................... 577 Depreciation and amortization (ii)............... 246 Property expenses................................ 555 General and administrative....................... -- -------- Total operating expenses..................... 1,378 -------- Income (loss) before equity in income of management company and minority interest...................... (357) Equity in income (loss) of management company (iii).............................................. 23 -------- Income (loss) before minority interest............... (334) Minority interest in (income) loss................... 10 -------- Net income........................................... $(324) -------- --------
5 & 6 CHERRY HILL 220 SEPTEMBER EXECUTIVE COMMERCE PROVIDENT PECO 1997 OFFERING CAMPUS DRIVE PLACE BUILDING (V) ------------- ---------- -------- --------- ------------ Revenue: Base rents..................................... $-- $114 52$5 $567 $762 Tenant reimbursements.......................... -- -- -- 79 -- Other.......................................... -- -- -- 6 -- --- ---------- -------- --------- ----- Total revenue.............................. -- 114 525 652 762 --- ---------- -------- --------- ----- Operating Expenses: Interest (i)................................... -- 197 304 362 541 Depreciation and amortization (ii)............. -- 84 130 154 231 Property expenses.............................. -- 126 164 249 -- General and administrative..................... -- -- -- -- -- --- ---------- -------- --------- ----- Total operating expenses................... -- 407 598 765 772 --- ---------- -------- --------- ----- Income (loss) before equity in income of management company and minority interest.................... -- (293 ) (73 ) (113) (10) Equity in income (loss) of management company (iii)............................................ -- -- 9 13 -- --- ---------- -------- --------- ----- Income (loss) before minority interest............. -- (293 ) (64 ) (100) (10) Minority interest in (income) loss................. 26 9 2 3 -- --- ---------- -------- --------- ----- Net income......................................... $26 $(284 ) (6$2 ) $(97) $(10) --- ---------- -------- --------- ----- --- ---------- -------- --------- -----
F-14
DECEMBER 1997 BALA POINTE SCARBOROUGH GMH TOTAL OTHER OFFERING OFFICE CENTRE PROPERTIES PROPERTIES 1997 EVENTS ------------- ------------- ----------- ---------- ----------- Revenue: Base rents.......................................... $ -- $2,837 $4,292 $18,735 $46,128 Tenant reimbursements............................... -- 27 425 1,449 5,272 Other............................................... -- 28 17 130 402 --- ------ ----------- ---------- ----------- Total revenue................................... -- 2,892 4,734 20,314 51,802 --- ------ ----------- ---------- ----------- Operating Expenses: Interest (i)........................................ (987) 1,523 1,549 12,940 16,531 Depreciation and amortization (ii).................. -- 650 890 5,521 12,119 Property expenses................................... -- 1,243 1,834 8,179 20,385 General and administrative.......................... -- -- -- -- -- --- ------ ----------- ---------- ----------- Total operating expenses........................ (987) 3,416 4,273 26,640 49,035 --- ------ ----------- ---------- ----------- Income (loss) before equity in income of management company and minority interest......................... 987 (524) 461 (6,326) 2,767 Equity in income (loss) of management company (iii)..... -- 48 89 411 798 --- ------ ----------- ---------- ----------- Income (loss) before minority interest.................. 987 (476) 550 (5,915) 3,565 Minority interest in (income) loss...................... (29) 14 (155) 174 (105) --- ------ ----------- ---------- ----------- Net income.............................................. $958 $ (462) $ 395 $(5,741) $ 3,460 --- ------ ----------- ---------- ----------- --- ------ ----------- ---------- -----------
- ------------------------ (i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. The adjustment for the Columbia Acquisition Properties also reflects an effective interest rate of 9.5% on assumed debt. The adjustments for the March 1997 Offering, the July 1997 Offering and the December 1997 Offering represent interest savings related to the payoff of $7 million and $160.8 million, respectively, of credit facility borrowings at an effective rate of 7.5%. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. (iv) Pro forma property expenses for the Green Hill Properties exclude $333,000 from historical amounts. Such amount represents expected salary savings. (v) Pro forma base rents for the Peco Building are based on the lease in place as of November 25, 1997 as historically the property was owner occupied and was not an operating property. All property expenses are paid directly by the tenant. F-15 (E) Reflects the pro forma statements of operations of the RREEF Properties for the nine months ended September 30, 1997 and for the year ended December 31, 1996. All amounts represent historical operations except for the pro forma adjustments noted: - For the nine months ended September 30, 1997:
RREEF Properties ----------- Revenue: Base rents............................................................ $ 3,120 Tenant reimbursements................................................. 529 Other................................................................. -- ----------- Total revenue....................................................... 3,649 ----------- Operating Expenses: Interest (i).......................................................... 3,180 Depreciation and amortization (ii).................................... 1,357 Property expenses..................................................... 939 General and administrative............................................ -- ----------- Total operating expenses............................................ 5,476 ----------- Income (loss) before equity in income of management company and minority interest.............................................................. (1,827) Equity in income (loss) of management company (iii)..................... 73 ----------- Income (loss) before minority interest.................................. (1,754) Minority interest in (income) loss...................................... 52 ----------- Net income $ (1,702) ----------- -----------
-For the year ended December 31, 1996:
RREEF PROPERTIES ----------- Revenue: Base rents............................................................ $ 4,051 Tenant reimbursements................................................. 643 Other................................................................. -- ----------- Total revenue....................................................... 4,694 ----------- Operating Expenses: Interest (i).......................................................... 4,251 Depreciation and amortization (ii).................................... 1,814 Property expenses..................................................... 1,288 General and administrative............................................ -- ----------- Total operating expenses............................................ 7,353 ----------- Income (loss) before equity in income of management company and minority interest.............................................................. (2,659) Equity in income (loss) of management company (iii)..................... 97 ----------- Income (loss) before minority interest.................................. (2,562) Minority interest in (income) loss...................................... 75 ----------- Net income $ (2,487) ----------- -----------
- ------------------------ (i) Pro forma a interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. F-16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Brandywine Realty Trust: We have audited the combined statement of revenue and certain expenses of The RREEF Properties described in Note 1, for the year ended December 31, 1996. This financial statement is the responsibility of the Properties' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a current report on Form 8-K of Brandywine Realty Trust, as described in Note 1, and is not intended to be a complete presentation of the The RREEF Properties' revenue and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of The RREEF Properties for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., January 22, 1998 F-17 THE RREEF PROPERTIES COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
For the For the Nine Year Ended Months Ended December 31, September 30, 1996 1997 ------------ ------------- (Unaudited) REVENUE: Minimum rent (Note 2)............................................................. $ 4,051,000 $ 3,120,000 Tenant reimbursements............................................................. 643,000 529,000 ------------ ------------- Total revenue................................................................... 4,694,000 3,649,000 ------------ ------------- CERTAIN EXPENSES: Maintenance and other operating expenses.......................................... 625,000 403,000 Utilities......................................................................... 182,000 161,000 Real estate taxes................................................................. 481,000 375,000 ------------ ------------- Total certain expenses.......................................................... 1,288,000 939,000 ------------ ------------- REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $ 3,406,000 $ 2,710,000 ------------ ------------- ------------ -------------
The accompanying notes are an integral part of this financial statement. F-18 THE RREEF PROPERTIES NOTES TO THE COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 1996 1. BASIS OF PRESENTATION: The combined statement of revenue and certain expenses reflects the combined operations of The RREEF Properties (the "Properties"). The Properties are expected to be acquired in February 1998 by Brandywine Realty Trust (the "Company") under related sales agreement with RREEF USA Fund--I, RREEF MidAmerica East-IV, and RREEF MidAmerica East-V (collectively the "RREEF Funds"). The properties consist of the King of Prussia Industrial Park (12 buildings and one plot of land behind 600 Allendale Road), King of Prussia, PA, 741 First Avenue, King of Prussia, PA, and 180 Wheeler Court, Middletown, PA. The Properties have an aggregate net rentable area of approximately 940,213 square feet (90% leased as of December 31, 1996). The expected purchase price is approximately $55.5 million. This combined statement of revenue and certain expenses is to be included in the Company's current report on Form 8-K, as the above described transaction has been deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The accounting records of the Property are maintained on an accrual basis. Adjusting entries have been made to present the accompanying financial statements in accordance with generally accepted accounting principles. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, and other costs not directly related to the future operations of the Properties. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The ultimate results could differ from those estimates. The statement of revenue and certain expenses for the nine months ended September 30, 1997 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of the statement of revenue and certain expenses for the interim period have been included. The results of the interim periods are not necessarily indicative of the results for the full year. F-19 2. OPERATING LEASES: Base rents presented for the year ended December 31, 1996, include straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue decreases resulting from the straight-line adjustment for the year ended December 31, 1996 and the nine months ended September 30, 1997 were $(52,000) and $(95,000) (unaudited), respectively. The following tenants had minimum rental payments greater than 10% of the total minimum rent in 1996: Smithkline Beecham Corporation............... $ 470,000 Tozour-Trane, Inc............................ $ 540,000
The Properties are leased to tenants under operating leases with expiration dates extending to the year 2005. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses as of December 31, 1996, are as follows: 1997................................... $4,088,000 1998................................... 3,308,000 1999................................... 3,141,000 2000................................... 3,016,000 2001................................... 2,665,000 Thereafter............................. 3,026,000 ----------- $19,244,000 ----------- -----------
Certain leases also include provisions requiring tenants to reimburse the Property for management costs and other operating expenses up to stipulated amounts. 3. RELATED PARTY TRANSACTIONS: The Properties paid management fees of $205,000 to RREEF Management Company, a related party, based on percentages as defined in the management agreement. These management fees are included within maintenance and other operating expenses in the statement of revenue and certain expenses. RREEF Management Company leases 3,344 square feet at a minimal annual base rental of $24,000 and receives 1,530 square feet of free rental space at one of the Properties. Per the lease agreement, the lease terminates on the earlier of (1) one year after RREEF USA Fund-I sells its interest in the building or (2) 30 days after RREEF Management Company notifies the landlord of its election to terminate. F-20 EX-10.1 2 EX-10.1 January 20, 1998 Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner One Tower Bridge 100 West Front Street West Conshohocken, Pennsylvania 19428 Attention: Donald W. Pulver Dear Mr. Pulver: Brandywine Operating Partnership, L.P., a Delaware limited partnership, or its affiliate ("Lender"), hereby offers to make a loan ("Loan") to Four Tower Bridge Associates, a Pennsylvania limited partnership ("Borrower"), for term financing for Four Tower Bridge, West Conshohocken Borough, Montgomery County, Pennsylvania (the "Real Property"), inclusive of the 82,000+- square foot mid-rise office building to be constructed thereon (the building, parking and related improvements being collectively referred to as "Improvements"), all on the terms and conditions set forth herein: 1. Amount; Purpose. (a) The Loan shall be in the principal amount of up to $10,000,000, or such lesser amount as shall actually be necessary to fund costs for development of the Improvements in excess of funds to be advanced under Section 3.07 of that certain Agreement of Limited Partnership of Borrower, and shall be evidenced by a promissory note in such aggregate principal amount executed by Borrower and made payable to the order of Lender ("Note"). (b) The Loan shall be used by Borrower solely to partially refinance the cost of acquisition of the Real Property and construction of the Improvements. 2. Interest Rate. The Loan shall provide for interest to be paid on the unpaid principal balance outstanding from time to time, at a per annum rate equal to a 30, 60 or 90 day (as determined by Lender) LIBOR + 250 basis points. The Loan shall mature ten (10) years from its funding. Interest only shall be paid in advance for the month in which the loan closing ("Closing") shall occur, followed by 35 payments of interest only, payable in arrears, commencing on the fifteenth (15th) day of the second month following the date of the Closing and each succeeding month thereafter, followed by 84 payments of interest and principal, also payable in arrears, with all unpaid interest and principal due on the maturity date. Amortization of the Loan is based upon a thirty (30) year schedule. Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner Attention: Donald W. Pulver January 20, 1998 Page 2 3. Payment Terms. (a) Borrower shall have the right, prior to the Maturity Date, to prepay the unpaid principal balance of the Note without premium or penalty, subject to and upon the terms and conditions governing the prepayment of indebtedness to be set forth in definitive loan documents. (b) Any prepayment, whether voluntary or involuntary, shall be applied first to any accrued and unpaid interest under the Note up to the date of such prepayment, and then to any other sums which may be payable to Lender under the Loan Documents up to the date of such prepayment, and then to the outstanding principal balance of the Note, any such prepayment applied to principal shall be applied to the principal portions of installments due under the Note in the inverse order of their maturity, and the acceptance of any such prepayment when there is an event of default in existence under any of the Loan Documents shall not constitute a waiver, release or accord and satisfaction thereof or of any rights with respect thereto by Lender. (c) The Note shall provide for a late payment charge of four (4%) percent of any principal, interest or other amount not paid when due, and a rate of interest after the occurrence of an event of default under the Loan Documents ("Default Rate") of four (4%) percent in excess of the interest rate then payable under the Note pursuant to paragraph 2 above. (d) Borrower shall reimburse Lender for any and all fees, costs and expenses Lender may incur in connection with making, disbursing, administering and enforcing the Loan contemplated hereby. Without limitation of any provisions set forth herein or in the Loan Documents, Borrower shall indemnify, defend and save and hold harmless Lender of, from and against any and all loss, cost, expense, damage and liability which Lender or Lender's affiliates may suffer, sustain or incur by reason of, or arising out of Borrower's breach, violation or default under, or other failure to timely and fully pay and perform its obligations under the Loan. 4. Loan Documents; Security. The Loan evidenced by the Note shall be governed and secured, inter alia, as follows: (a) a first, insured Open-End Mortgage and Security Agreement covering the Real Property and Improvements from Borrower to Lender ("Mortgage"); (b) a first Assignment of Leases and Rents from Borrower to Lender relating to all leases affecting all or any portion of the Real Property ("Assignment of Leases and Rents"); Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner Attention: Donald W. Pulver January 20, 1998 Page 3 (c) a first Assignment of Borrower's interests under contracts, licenses and permits, documents and rights relating to the property as specified by Lender ("Assignments of Contracts"); (d) Uniform Commercial Code financing statements executed by Borrower in favor of Lender, perfecting Lender's first security interests granted by Borrower pursuant to the Mortgage in all tangible and intangible personal property which at the time of the Loan Closing or thereafter is located on or used in connection with the Real Property ("UCC's"); (e) an Environmental Indemnification Agreement furnished by Borrower with which Borrower shall indemnify and hold Lender harmless of and from any and all loss, cost, expense, damage or liability relating to the environmental condition of the Real Property or the presence of hazardous wastes thereon. 5. Loan Closing Date. Lender's obligation to fund under this Commitment shall terminate on the earlier of (i) the date which is eighteen (18) months after the date hereof and (ii) the date on which any alternate financing contemplated by Section 18 below is funded and the Construction Loan from PNC Bank, National Association made to Borrower on the date hereof is repaid from the proceeds thereof. 6. Composition of Borrower. During the term of the Loan, Borrower shall be and remain a Pennsylvania limited partnership, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania, in which Four Oliver Tower Associates and Brandywine TB I, L.P., or its affiliate, shall be and remain its sole partners. 7. General and Special Conditions. The General Conditions attached hereto are an integral part of this Commitment and are incorporated herein by this reference. The General Conditions shall not in any way diminish any of the terms, conditions or requirements set forth herein, and such General Conditions shall be interpreted to augment, supplement and complement such terms, conditions and requirements. In addition to the General Conditions and any other conditions that may be set forth in the Loan Documents, Lender's obligation to make the Loan shall be specifically subject to the following conditions: (a) Intentionally Omitted. (b) Intentionally Omitted. (c) Intentionally Omitted. Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner Attention: Donald W. Pulver January 20, 1998 Page 4 (d) Certificate of Occupancy: Borrower shall deliver to Lender a current, final certificate of occupancy for the building issued by the Commonwealth of Pennsylvania Department of Labor and Industry and by Montgomery County (or by other appropriate governmental authorities) and evidence satisfactory to Lender demonstrating compliance with all zoning, building, health, fire, traffic, safety, environmental, wetlands and such other rules, regulations, ordinances, statutes and requirements applicable to the property and the improvements relating thereto. 8. Fees and Costs. Acceptance of this Commitment shall constitute Borrower's unconditional agreement, if and when the Loan Closing occurs, to pay all fees, including a closing fee equal to one (1%) percent of the Loan, expenses, taxes, costs and charges in respect to the Loan, or in any way connected therewith, including but not limited to Lender's reasonable counsel fees and costs, title insurance premiums and search fees, survey costs, environmental audit costs, appraisal costs, recording and filing fees and site inspection fees of Lender. 9. Tax and Insurance Escrows. Real estate taxes and insurance premiums shall be paid or caused to be paid by Borrower timely, and Borrower shall be required to furnish Lender with paid receipts therefor. The Mortgage shall reserve to Lender upon an event of default the option to collect monthly from Borrower and hold in escrow amounts sufficient to pay real estate taxes, water and sewer charges and assessments, other lienable assessments and insurance premiums, irrespective of whether such items are paid by the tenants under any executed leases relating to space on the Real Property. Lender shall release such amounts to Borrower from time to time upon proof of the payment of such items by Borrower. 10. Accuracy of Information. Borrower represents to Lender that all documents and/or information provided to Lender by Borrower in connection with the issuance of this Commitment are true and correct in all material respects and Borrower further acknowledges that the issuance of this Commitment by Lender is in reliance upon the accuracy and truth of such documents and/or information. 11. Waiver of Trial by Jury. Borrower hereby knowingly, voluntarily and intentionally waives the right it may have to a trial by jury in respect of any litigation based hereon, arising out of, under or in connection with this Commitment or the Loan and any document contemplated to be executed in conjunction herewith or therewith, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of Borrower or Lender. This provision is a material inducement for Lender entering into this Commitment. Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner Attention: Donald W. Pulver January 20, 1998 Page 5 12. Brokerage and Other Fees. Borrower agrees to indemnify and hold Lender harmless against the claims of any and all brokers or agents and from claims for any commissions, fees or other amounts owned or claimed to be owed regarding the Loan and/or the Real Property and Improvements. 13. Non-Recourse. The Loan shall be non-recourse to the Borrower, subject to specific "carve-outs" to be set forth in the definitive loan documents, including, without limitation, (a) fraud or intentional misrepresentation, (b) environmental liabilities and (c) misapplication of loan proceeds, rental or other income, security deposits, insurance proceeds or condemnation awards. 14. Lender's Review. Lender and its agents may inspect the plans and specifications, the Project Budget, the course of construction and other matters pertaining to construction of the Building and Improvements. Lender will accept Valcon as its inspector. Borrower acknowledges and agrees that such inspections are made solely for the protection of the Lender in its capacity as Lender, and Borrower confirms that the Lender is not making and will not be deemed to be making any representations or warranties as to any matters pertaining to the Building or Improvements by reason of such inspections or by reason of advances made by the Lender under the Loan Documents. Without limitation of any of the foregoing, Borrower has selected the general contractor, all major subcontractors, the project architect and engineer, and all other consultants providing professional services with respect to the Project, and Lender, in its capacity as such, has not and shall not have any responsibility for their selection nor for the quality of their materials, their services, or workmanship. Neither the Borrower nor any other person shall have any right to rely on any procedures required by the Lender herein, such procedures being solely for the protection of the Lender, in its capacity as lender. Following acceptance of this Commitment and prior to the Closing, Borrower shall provide to Lender a copy of all periodic architect's reports by the architect of record and by the construction lender's architect/engineer within thirty (30) days of submission during the entire period of construction. In addition to the foregoing, Borrower shall provide to Lender a lease schedule provided during each calendar quarter of the initial lease-up period of the property containing not less than the following information: tenant name, lease term, lease commencement, date of occupancy, monthly rent, concessions, unit size and unit leased. 15. No Off-set. Anything herein contained to the contrary notwithstanding, the Borrower and Lender specifically acknowledge and agree that Lender shall not have the right to offset its commitment to lend hereunder against distributions or other sums paid or to be paid to Brandywine TB I, L.P., in its capacity as a partner of Borrower, and Borrower shall not have the Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner Attention: Donald W. Pulver January 20, 1998 Page 6 right to offset distributions or other sums due Brandywine TB I, L.P. as a partner of Borrower, against Lender's commitment to lend hereunder. 16. Borrower and Lender. Lender and Borrower acknowledge and agree that their respective obligations to one another hereunder and under the Loan Documents are in addition to, and shall be independent of, any obligations of Borrower to its partners, and the obligations of Borrower's partners, each to the other. Borrower, Four Oliver Tower Corporation and Four Oliver Tower Associates expressly acknowledge and agree that Lender has no fiduciary duty or fiduciary obligation of any kind to them by reason of this Commitment or the Loan, or any of them, and Lender is and shall be free to exercise any and all rights and remedies reserved to Lender hereunder and under the Loan Documents, notwithstanding that Brandywine TB I, L.P., an affiliate of Brandywine Operating Partnership, is a partner in Borrower. 17. Exculpation. No recourse shall be had for any obligation of Brandywine Realty Trust under this Commitment 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 the Borrower and all parties claiming by, through or under Borrower. 18. Alternate Financing. Lender acknowledges and agrees that nothing herein prevents Borrower from obtaining alternate financing in lieu of the Loan, and that by executing the acceptance attached hereto Borrower is not obligated to accept the Loan from Lender, but only to accept the terms set forth herein if Borrower elects to accept the Loan. Lender's commitment to make the Loan hereunder will remain in effect and available to Borrower until such time as any such alternate financing is funded. [remainder of this page left intentionally blank] Four Tower Bridge Associates c/o Four Oliver Tower Associates, Managing General Partner Attention: Donald W. Pulver January 20, 1998 Page 7 19. Acceptance; Termination. The acceptance of this Commitment shall be evidenced by the return of the enclosed copy hereof executed by Borrower, within three (3) days from the date hereof. Unless this Commitment is so accepted, it shall become null and void. Very truly yours, Brandywine Operating Partnership, L. P. , a Delaware limited partnership By: Brandywine Realty Trust, a Maryland real estate investment trust, its General Partner By: /s/ Anthony A. Nichols, Sr. --------------------------- Name: Anthony A. Nichols, Sr. Title: Chairman of the Board ACCEPTANCE Intending to be legally bound, the undersigned hereby accept the foregoing Commitment and agree to the terms and conditions thereof. FOUR TOWER BRIDGE ASSOCIATES, a Pennsylvania limited partnership By: FOUR OLIVER TOWER ASSOCIATES, a Pennsylvania limited partnership By: FOUR OLIVER TOWER CORPORATION, a Pennsylvania corporation, its duly authorized general partner By: /s/ Donald W. Pulver -------------------- Donald W. Pulver, President By: BRANDYWINE TB I, L.P., a Pennsylvania limited partnership By: BRANDYWINE TB I, L.L.C., a Pennsylvania limited liability company By:/s/ Anthony A. Nichols, Sr. --------------------------- Name: Anthony A. Nichols, Sr. Title: Chairman GENERAL CONDITIONS The following General Conditions are an integral part of this commitment: 1. Documents and Information to be Furnished to Lender Before Loan Closing. At least ten (10) business days prior to the scheduled date of the Loan Closing, Borrower must obtain at its expense and submit to Lender the documents and information set forth below. Such documentation and information shall be subject to Lender's review and approval, both as to form and substance, and shall be updated and effective at the time of Loan Closing. None of the materials provided by Borrower shall vary in any material respect from the information and materials previously provided to Lender in order to induce Lender to underwrite and approve the Loan. (a) A currently dated title report, in form and substance satisfactory to Lender, issued by Lawyers Title Insurance Corporation, covering the Real Property, which contains copies of all identified documents referred to therein. The title report shall stipulate that title insurance, in a form approved by Lender, shall be issued to Lender at time of the Loan Closing which shall insure Lender as the holder of a valid first mortgage lien for the full amount of the Mortgage, free and clear of all liens (including mechanic's liens filed or unfiled), encumbrances and exceptions other than those which may be approved by Lender. (b) A current ALTA/ASCM as-built survey of the Real Property, certified to and acceptable to Lender and to Lawyers Title Insurance Corporation, issuing the title insurance, showing such items as Lender shall specify, together with a metes and bounds description of the Real Property corresponding to such survey. (c) Any and all lease agreements relating to any portion of the Real Property, and any form of proposed lease agreement to be used by Borrower in connection with the Real Property during the term of the Loan. (d) Borrower's Agreement of Limited Partnership, Certificate of Limited Partnership, pertinent incumbency and signature certificates, and resolutions authorizing the transaction. (e) A written opinion of Borrower's 's counsel, who shall be acceptable to Lender, stating that, inter alia: (i) Borrower is duly organized, validly existing and in good standing in the Commonwealth of Pennsylvania, authorized to do business in the Commonwealth of Pennsylvania, (ii) Borrower has full authority and legal right to carry out the terms of this Commitment and any other documentation required hereunder or in connection with the Loan, (iii) Borrower has taken all necessary and appropriate action to authorize the execution and delivery of this Commitment and all other documents required to be executed by it in connection with the Loan, (iv) this Commitment and all other documents required to be executed by Borrower in connection with the Loan have been duly executed and acknowledged or witnessed, as appropriate, by Borrower, (v) none of the aforesaid actions, undertakings and agreements contravene or shall contravene Borrower's Partnership Agreement or Certificate of Limited Partnership, the provisions of this Commitment, or the provisions of any contract or agreement to which Borrower is a party or by which Borrower is bound or any applicable law, (vi) the Note, Mortgage and all other loan documents are valid and binding and enforceable according to their respective terms in the state where the Real Property is located, and (vii) the Loan is not civilly usurious. (f) Fully paid fire and casualty insurance policies with extended coverage, covering risk of loss or damage to the Real Property due to fire and such other casualties as Lender may require, with limits equal to one hundred percent of the full replacement cost with such company or companies approved by Lender (but such company must have an A or better rating by Best's Rating Service) and containing mortgagee clauses in favor of Lender in form and content satisfactory to Lender; fully paid flood insurance policy, if determined to be necessary by Lender; and fully paid liability insurance and workmen's compensation insurance in such amounts as may be required by Lender or, as to workmen's compensation, mandated by statute. (g) The final as-built plans and specifications for the Building and Improvements, which shall have been approved in writing by all necessary and appropriate governmental authorities, the general contractor, the primary subcontractors, and the architect, engineer and bonding company, as appropriate. (h) Appraisals of the Real Property in accordance with the requirements of Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") based upon its fair market value currently and upon its projected fair market value following completion of the construction of the Building as shown in the plans and specifications, which appraisals shall be paid for by Borrower, performed by an MAI appraiser selected by or acceptable to Lender and acceptable in form and substance to Lender having a value of at least Sixteen Million Seven Hundred Fifty Thousand Dollars ($16,750,000.00). (i) A Phase I Environmental Report (and the report of such further investigations, if any, as shall be deemed appropriate by Lender), prepared by an independent environmental engineering firm acceptable to Lender, which may be McLarer Hart, indicating that there are no hazardous substances or wastes in, on or around the Real Property, that the Real Property does not contain any wetlands, that the Real Property is not located in a flood hazard area or 100-year flood plain, and otherwise in form and substance satisfactory to Lender. (j) Intentionally Omitted. 2. Lender's Approval of Documents and Title. The need for and the adequacy as to form and substance of each and every document relating to the Loan and all questions relating to the validity, status and priority of the security for the Loan shall be determined by and must be satisfactory to Lender. 3. Condemnation. Lender shall have the right to terminate this Commitment in the event there occurs, between the date of this Commitment and the date of the Loan Closing, any loss or damage to the Real Property due to any taking of all or any portion of the Real Property -2- by exercise of the power of condemnation or eminent domain, which precludes or substantially delays completion of the Project. 4. Maximum Rate of Interest on Loan. Notwithstanding anything to the contrary contained herein or in any other document executed in connection with the Loan, the effective rate of interest on the Loan shall not exceed the maximum effective rate of interest permitted by applicable law or regulation. Borrower hereby agrees to give Lender prior written notice in the event any interest payment made to Lender with respect to this Loan will cause the total interest payments collected in any one year to be usurious under applicable law, and Lender hereby agrees not to collect knowingly any interest from Borrower in the form of fees or otherwise which will render this Loan usurious. In the event that such interest would be usurious in Lender's opinion, Lender reserves the right to reduce the interest payable by Borrower or, if the Loan Closing has not yet occurred and at its option, to terminate this Commitment. This provision shall survive the Loan Closing and the repayment of the Loan. 5. No Other Liens on Real Property. Borrower hereby agrees that during the term of the Loan and any extension thereof, there shall be no other financing secured by the Real Property and no lien or encumbrance other than those contemplated by this Commitment shall be created or permitted to exist against the Real Property without the written consent of Lender. In the event such consent is given, any and all such financing and liens shall be absolutely and unconditionally subordinated to the lien of the Mortgage contemplated by this Commitment. 6. No Transfer of Real Property. Borrower hereby agrees that during the term of the Loan and any extension thereof, there shall be no transfer of legal or equitable ownership of the Real Property. 7. No Waiver of Rights. Neither the failure of Lender nor the delay of Lender to exercise any right, power or privilege under this Commitment shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise of any other right, power or privilege. 8. Assignment. (a) Neither this Commitment nor the Loan proceeds shall be assignable by Borrower without the prior written consent of Lender, and any attempt at such assignment without such consent shall be void. (b) This Commitment, the Loan and any and all documents pertaining thereto may be placed, assigned, serviced or participated (either in whole or in part) by Lender, its successors and assigns. 9. Modification; Entire Commitment; No Reliance by Third Parties. No change or modification of this Commitment shall be valid unless the same is in writing and signed by the parties hereto. This Commitment contains the entire agreement between the parties hereto and there are no promises, agreements, conditions, undertakings, warranties and representations, either written or oral, expressed or implied between the parties hereto other than as herein set -3- forth. It is expressly understood and agreed that this Commitment represents an integration of any and all prior and contemporaneous promises, agreements, conditions, undertakings, warranties and representation between the parties hereto. This Commitment is directed solely and exclusively to Borrower and shall not inure to the benefit of or be relied upon by any third party. 10. Commitment to Survive Closing. This Commitment shall survive the Loan Closing and each and every one of the obligations and undertakings of Borrower named herein shall be continuing obligations and undertakings and shall not cease and determine until the entire Loan, together with all interest and fees due hereon and any other amounts which may accrue pursuant hereto or to the Loan, shall have been paid in full, and until all obligations and undertakings of Borrower shall have been fully completed and discharged. To the extent the Loan Documents conflict with this Commitment, the Loan Documents shall prevail. * * * * -4- EX-10.2 3 EXHIBIT 10.2 AGREEMENT OF PURCHASE AND SALE between Brandywine Operating Partnership, L.P., Purchaser, and RREEF MidAmerica/East Fund-IV, Seller 741 First Avenue King of Prussia, Upper Merion Township, Montgomery County, Pennsylvania Table of Contents 1. Purchase Price.. . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Review of the Property.. . . . . . . . . . . . . . . . . . . . . . 2 4. Title and Survey.. . . . . . . . . . . . . . . . . . . . . . . . . 3 5. Representations and Warranties.. . . . . . . . . . . . . . . . . . 4 5.1 Representations and Warranties of Seller.. . . . . . . . 4 5.2 Representations and Warranties of Purchaser. . . . . . . 7 5.3 Limitations. . . . . . . . . . . . . . . . . . . . . . 7 5.4 Condition of Property. . . . . . . . . . . . . . . . . . 8 6. Closing Conditions.. . . . . . . . . . . . . . . . . . . . . . . . 8 6.1 Title Insurance. . . . . . . . . . . . . . . . . . . . . 8 6.2 Estoppel Letters . . . . . . . . . . . . . . . . . . . . 8 6.3 Representations and Warranties . . . . . . . . . . . . . 9 6.4 Seller Performance . . . . . . . . . . . . . . . . . . . 9 7. Other Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . 9 8. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8.1 Closing of Sale. . . . . . . . . . . . . . . . . . . . . 10 8.2 Prorations; Adjustments. . . . . . . . . . . . . . . . . 10 8.3 Proration of Service Charges.. . . . . . . . . . . . . . 11 8.4 Closing Costs. . . . . . . . . . . . . . . . . . . . . . 12 8.5 Possession.. . . . . . . . . . . . . . . . . . . . . . . 12 8.6 Seller's Closing Documents.. . . . . . . . . . . . . . . 12 8.7 Purchaser's Closing Documents. . . . . . . . . . . . . . 13 8.8 Joint Deliveries.. . . . . . . . . . . . . . . . . . . . 14 9. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 14 9.1 Modifications. . . . . . . . . . . . . . . . . . . . . . 14 9.2 Casualty and Condemnation. . . . . . . . . . . . . . . . 14 9.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . 14 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 14 9.5 Parties Bound. . . . . . . . . . . . . . . . . . . . . . 16 9.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 16 i 9.7 Continuation Until Closing; Leasing. . . . . . . . . . . 16 9.8 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 16 9.9 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . 17 9.10 Remedies for Non-Performance.. . . . . . . . . . . . . . 17 9.11 Brokers Commission.. . . . . . . . . . . . . . . . . . . 17 9.12 Survival of Covenants. . . . . . . . . . . . . . . . . . 17 9.13 Seller's Investment Committee Approval.. . . . . . . . . 17 9.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 17 9.15 Entry and Indemnity. . . . . . . . . . . . . . . . . . . 18 9.16 Release. . . . . . . . . . . . . . . . . . . . . . . . . 18 9.17 Confidential Information. . . . . . . . . . . . . . . . 19 9.18 Calculation of Time Periods. . . . . . . . . . . . . . . 19 9.19 Entire Agreement.. . . . . . . . . . . . . . . . . . . . 19 9.20 Severability.. . . . . . . . . . . . . . . . . . . . . . 20 9.21 Facsimile Signatures.. . . . . . . . . . . . . . . . . . 20 9.22 Further Assurances.. . . . . . . . . . . . . . . . . . . 20 9.23 Offer. . . . . . . . . . . . . . . . . . . . . . . . . . 20 9.24 Seller Exculpation Clause. . . . . . . . . . . . . . . . 20 9.25 Purchaser Exculpation Clause.. . . . . . . . . . . . . . 21 9.26 SEC Reporting (8-K) Requirements.. . . . . . . . . . . . 21 List of Schedules and Exhibits. . . . . . . . . . . . . . . . . . . . . 23 ii AGREEMENT OF PURCHASE AND SALE BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("Purchaser") agrees to purchase, and RREEF MIDAMERICA/EAST FUND-IV, a California group trust ("Seller") agrees to sell, that certain improved real property, hereinafter referred to as the "Property", situated in the City of King of Prussia, Upper Merion Township, Montgomery County, Commonwealth of Pennsylvania, legally described on Exhibit A attached hereto and made a part hereof, consisting of a single parcel of real estate improved with a building commonly known as 741 First Avenue, King of Prussia, Pennsylvania, together with all rights, privileges, easements and appurtenances thereto, including any and all mineral rights, development rights, air rights, and the like; all personal property owned by the Seller and located on or used in conjunction with the Property (specifically excluding furniture, fixtures and equipment owned by RREEF Management Company and located in the RREEF Management Company office); any and all intangible personal property owned by Seller and used in the operation of the Property, including the right to use the name of the property (but not the name "RREEF"), to the extent assignable, but excluding computer software and related licenses; contract rights, "Leases" of all or any part of the Property, all licenses, permits and other written authorizations necessary for the use, operation and ownership of the Property, records, security deposits and prepaid rent, if any, and the benefit of any guaranties of the Leases. 1. Purchase Price. The purchase price for the Property ("Purchase Price") is Six Million Three Hundred Forty Thousand Dollars ($6,340,000.00), payable by wire transfer of immediately available funds at Closing as defined in Paragraph 8.1. 2. Deposit. 2.1 Purchaser has previously deposited, pursuant to this Agreement and pursuant to the Other Agreements (defined in Paragraph 7 below), the amount of Five Hundred Fifty Thousand Dollars ($550,000.00) (the "Deposit") with Commonwealth Land Title Insurance Company ("Escrow Holder") as earnest money to secure Purchaser's performance hereunder and under the Other Agreements. The Deposit may be invested at the direction of Purchaser with the approval of Seller. All investment income earned from the investment of the Deposit, less investment fees, if any, will be added to and become a part of the Deposit and will be applied toward the Purchase Price under the KOP Agreement (defined in Paragraph 7) if Closing is completed in accordance with this Agreement; otherwise all interest will be paid to the party entitled to the Deposit. The escrow instructions to Escrow Holder will be in the form of Schedule 2.1 attached hereto (the "Escrow Instructions"). If Purchaser does not elect to terminate this Agreement pursuant to Section 3 below, prior to the end of the Review Period (defined in Section 3.4), on or before one business day after last day of the Review Period Purchaser shall deposit an additional $500,000 with Escrow Holder, which shall be added to and become a part of the Deposit for all purposes hereunder. 2.2 Of the total Deposit, the sum of $150,000 is agreed to be non-refundable, and shall be refunded to Purchaser only (i) if Purchaser terminates this Agreement under Section 3.4, under the circumstances set forth in Section 3.4.1, or (ii) if the Agreement is terminated or if the Closing fails to occur by reason of Seller's default. Under all other circumstances, wherever under this Agreement and the Other Agreements the Deposit is to be returned to Purchaser, $150,000 out of the Deposit shall be paid to Seller, to be retained by Seller as fully earned. 3. Review of the Property. 3.1 From and after the "Effective Date" (as defined in Paragraph 9.23), Seller agrees to provide Purchaser and its agents or consultants with access to the Property to inspect each and every part thereof to determine its present condition and to conduct such physical and environmental studies (including a mechanical and roof study and Phase I environmental assessment) as it deems appropriate. 3.2 Within three (3) business days after the Effective Date Seller will make available to Purchaser for inspection and copying, all to the extent in the possession of Seller or its managing agent, a copy of each existing Lease and equipment lease, service contract and maintenance or other contract pertaining to the operations of the Property that will survive Closing, a copy of each real estate tax bills for 1994-1996, both inclusive, and unaudited financial statements for the Property for the years 1994-1996, both inclusive. 3.3 Within three (3) business days after the Effective Date Seller will make available to Purchaser for inspection and copying at the office of Seller's managing agent, all to the extent in the possession of Seller or its managing agent: 3.3.1 a copy of each environmental reports relating to the Property prepared by third party consultants since January 1, 1995. 3.3.2 a copy of each current franchises, business or other licenses, bonds, permits, certificates, authorizations and other evidences of consent, approval, authorization or permission relating to or affecting the Project of or from any person, including any governmental authority, held by Seller, including any pending applications. 3.3.3 a copy of each material third party warranties and guaranties, if any, which are in effect with respect to the Property. 3.4 Purchaser has until 5:00 p.m. CST on February 2, 1998 (the "Review Period"), to determine in its sole discretion whether all matters relating to the Property (except title and survey, which are governed by Paragraph 4), are acceptable, and to obtain the approval of the transaction contemplated herein by Seller's Board of Directors. If Purchaser concludes that any matter relating to the Property is not acceptable or that its Board has disapproved the 2 transaction, Purchaser will so notify Seller (the "Termination Notice") prior to the expiration of the Review Period (which notice shall contain a copy of Purchaser's roof/structural report and other reports or studies, other than environmental reports, obtained in connection with Purchaser's due diligence). Upon timely delivery of the Termination Notice, this Agreement will terminate without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 9.15 hereof and the obligation to deliver to Seller a copy of any environmental report obtained by Purchaser if requested by Seller within ten (10) days after receipt of the Termination Notice. In the event that Purchaser does not timely so notify Seller, Purchaser will be deemed to have concluded that all matters relating to the Property are acceptable and to have elected to proceed with the transaction upon the terms and conditions contained in this Agreement (including the obligation to increase the amount of the Deposit by an additional $500,000) without regard to this Paragraph 3.4. 3.4.1 If this Agreement is terminated pursuant to Paragraph 3.4, the Deposit, less $150,000, will be returned to Purchaser as provided in the Escrow Instructions. This $150,000 shall be paid to Seller, unless Purchaser's termination resulted from (i) Seller's default, (ii) a material deviation from the economics of the Property as presented in Seller's offering memorandum (it being understood and agreed that Seller makes no warranty or representation as to said offering memorandum), or (iii) any material structural or environmental defect in the Property not known or disclosed to Purchaser before December 22, 1997. 3.5 Purchaser agrees that any information obtained by Purchaser or its authorized agents in the conduct of its due diligence will be treated as confidential pursuant to Paragraph 9.17. 4. Title and Survey. Purchaser has ordered, at its expense (and upon receipt, Purchaser shall promptly deliver copies to Seller): (i) a commitment for a 1992 form ALTA Owner's title insurance policy with respect to the Property from Commonwealth Land Title Insurance Company (the "Title Insurer") in the amount of the Purchase Price, and (ii) copies of all documents relating to title exceptions referred to therein. Seller has already ordered, and Purchaser has received, at Purchaser's sole expense, a plat of survey of the Property made in accordance with Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (1992) pursuant to the accuracy standards of an Urban Survey. On or before January 30, 1998, Purchaser agrees to notify Seller of any objection Purchaser may have to any exceptions reported in the commitment or any matter shown on the plat of survey (the "Unacceptable Exceptions"). Seller will be responsible for satisfaction of the Title Insurer's Schedule B-1 seller requirements. All other exceptions and survey matters will be deemed acceptable to Purchaser. If Purchaser fails to give such notice to Seller, the survey and all of the exceptions in the title commitment will be deemed acceptable to Purchaser. Seller will have ten (10) days after receipt of Purchaser's notice within which to notify Purchaser whether Seller elects to either (a) eliminate or induce the Title Insurer to insure over (subject to Purchaser's consent, not to be unreasonably withheld) the Unacceptable Exceptions or (b) terminate this Agreement. If Seller agrees to eliminate or induce to the Title Insurer to insure over (with Purchaser's consent) the 3 Unacceptable Exceptions, Seller will be obligated to do so at its cost on or prior to Closing. If Seller elects to terminate this Agreement, neither party will have any further rights or obligations hereunder, except as provided in Paragraph 9.15. If Seller fails to give any timely notice, Seller will be deemed to have elected to terminate this Agreement. If any other recorded exception to title is discovered after the commitment is delivered to Purchaser, and Purchaser does not elect to waive such exception upon the first to occur of (a) the Closing or (b) seven (7) days after being notified of such exception and to proceed with the consummation of the Closing, Seller will have fifteen (15) days after the expiration of said seven (7) day period (and Closing will be delayed if necessary, so that it occurs not earlier than twenty-two (22) days after Purchaser is notified of such exception) after notifying Purchaser of such discovery in which to use commercially reasonable efforts to eliminate or to induce the Title Insurer to insure over (subject to Purchaser's approval, not to be unreasonably withheld) such exception, and if such exception is not eliminated or insured over as aforesaid within said 15-day period, Purchaser may terminate this Agreement, in which event the Deposit will be returned to Purchaser and neither party will have any further rights or obligations hereunder except as provided in Paragraph 9.15, or close the sale subject to such exception. Seller agrees that it will pay off at Closing (and not induce the Title Insurer to insure over) title exceptions representing monetary liens of a definite or ascertainable amount voluntarily granted by Seller. In using commercially reasonable efforts to eliminate or to induce the Title Insurer to insure over Unacceptable Exceptions, Seller will not be required to litigate or to expend more than $10,000 in the aggregate. Ad valorem real estate taxes not yet due and payable and all title and survey matters which are not Unacceptable Exceptions are hereinafter referred to as Acceptable Exceptions. 5. Representations and Warranties. 5.1 Representations and Warranties of Seller. As used in this Paragraph 5.1 and elsewhere in this Agreement, the phrase "to the knowledge of Seller" or phrases of similar import mean and are limited to the actual current knowledge, without duty to investigate or inquire, of Seller's portfolio manager (Pamela Boneham) and Seller's local manager having ongoing management responsibility with respect to the Property (Barbara Gillentine), and not to any constructive knowledge of any of the foregoing individuals or of Seller or any investment advisor to Seller, any entity that is a partner in such investment advisor, or any affiliates of any thereof, or to any officer, agent, representative, or employee of Seller or such investment advisor, any such constituent partner, or any such affiliate. Seller hereby warrants and represents to Purchaser (with such representations and warranties to be re-made as of Closing pursuant to Paragraph 8.6.10) as follows: 5.1.1 Pending Proceedings. With the exception of the items set forth in Schedule 5.1 (the "Disclosure Schedule") to the knowledge of Seller, Seller has received no written notice of special assessments, condemnation, environmental, zoning or other land use regulation proceedings, either pending or planned to be instituted, with respect to the Property or any part thereof. 4 5.1.2 Status of Seller and Closing Documents. Subject to Paragraph 9.13, this Agreement has been, and all the closing documents to be delivered by Seller to Purchaser at Closing are or will be, duly authorized, executed, and delivered by Seller, will be sufficient to convey insurable title, are legal, valid, and binding obligations of Seller, are enforceable in accordance with their respective terms, and do not violate any provisions of any agreement to which Seller or the Property is subject or bound. Seller is duly organized and validly existing and, if required, duly qualified to transact business in the State in which the Property is located. 5.1.3 Non-Foreign Status. Seller is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended. 5.1.4 Compliance with Laws. With the exception of the items set forth in the Disclosure Schedule, Seller has received no governmental notice, not heretofore corrected, alleging that the Property or its current uses are in violation of any zoning, building, health, traffic, environmental, flood control or all other applicable rules, regulations, codes, ordinances, or statutes of any local, state and federal authorities or any other governmental authority (collectively, the "Laws") asserting jurisdiction over the Property. 5.1.5 Service Contracts. With the exception of the items set forth in the Disclosure Schedule, to Seller's knowledge, there are no agreements or contracts affecting the Property (including, without limitation, any management, leasing, services or maintenance agreements) which are not terminable at will by Seller without further liability, upon not more than 30 days' prior written notice. The contracts and agreements to be assigned to Purchaser pursuant to Paragraph 8.6.5 are listed on Schedule 5.1.5 attached hereto. Seller agrees to terminate the existing management agreement covering the Property on or before Closing. 5.1.6 No Default. The execution and delivery of this Agreement, and consummation of the transaction described in this Agreement, does not and will not constitute a default under any contract, lease, or agreement to which Seller is a party or by which Seller is bound. 5.1.7 No Suits. Except as set forth in the Disclosure Schedule and except for personal injury or property damage actions for which there is adequate insurance coverage and where the insurance carrier has accepted the tender of the defense without reservation, to Seller's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Property or any portion thereof, or relating to or arising out of the ownership, management or operation of the Property, in any court or before or by any federal, state, or municipal department, commission, board, bureau or agency or other governmental instrumentality. 5.1.8 Environmental Condition. Each of the following representations contained in this Paragraph 5.1.8 is wholly qualified and limited by (a) any matters disclosed in 5 any materials made available or delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b) any matters disclosed in any environmental reports or studies obtained by Purchaser, and (c) any other matters of which Purchaser has actual knowledge. Subject to the foregoing, Seller represents: 5.1.8.1 With the exception of items listed in the Disclosure Schedule, and except (i) in amounts customarily found in office uses and in the other uses for which the Property is suited and used and (ii) in compliance with applicable law, to Seller's knowledge, Seller has not released, generated or handled Hazardous Materials on the Property, and Seller has no knowledge of any release, generation or handling of Hazardous Materials on the Property by any tenants or the incorporation of Hazardous Materials by the tenants in any improvements on the Property during the time Seller owned the Property. For the purposes hereof, "Hazardous Material" means any substance, chemical, waste or other material which is listed, defined or otherwise identified as "hazardous" or "toxic" under any federal, state, local or administrative agency ordinance or law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., or any regulation, order, rule or requirement adopted hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, asbestos, and "source," "special nuclear" and "by-product" material as defined in the Atomic Energy Act of 1985, 42 U.S.C. Sections 3011 et seq. 5.1.8.2 With the exception of items listed in the Disclosure Schedule, to Seller's knowledge, Seller has not received any summons, citation, directive, letter or other communication, written or oral, from the United States Environmental Protection Agency or the State environmental protection agency having jurisdiction over the Property. 5.1.9 Options. Seller has granted no options or rights of first refusal to acquire any interest in the Property not set forth in the Leases delivered to Purchaser or in documents of record disclosed in the title commitment. 5.1.10 Rent Roll. To Seller's knowledge, the information set forth on the rent roll attached hereto as Schedule 5.1.10 is true and accurate in all material respects. 5.1.11 Tenant Rights. There are no termination, extension, cancellation, or expansion rights under any occupancy arrangements with respect to the Property except as contained in the Leases. 5.1.12 Leasing Commissions. All leasing commissions, free rent and tenant improvement allowances due and payable as of the date hereof by Seller have been paid or will have been paid on or before Closing. To Seller's knowledge, the only current leases as to 6 which commissions, free rent and tenant improvement allowances may become due in the future are listed on Schedule 5.1.12, which future obligations shall be expressly assumed by Purchaser. 5.1.13 There are no employees of the Property or Seller who will become employees of Purchaser or for which Purchaser shall be responsible in any way. 5.2 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller that this Agreement has been, and all the documents to be delivered by Purchaser to Seller will be, duly authorized, executed, and are or will be legal, valid, and binding obligations of Purchaser, are or will be enforceable in accordance with their respective terms, and do not and will not at Closing violate any provisions of any agreement to which Purchaser is subject. 5.3 Limitations. Each of the representations and warranties of Seller contained in Paragraph 5.1: (i) is made as of the date of this Agreement; (ii) will be deemed to be remade by Seller, and to be true in all material respects, as of Closing, subject to other matters expressly permitted in this Agreement or otherwise specifically approved in writing by Purchaser; and (iii) will survive for a period of one (1) year after the Closing Date, as defined in Paragraph 8.1. Any claim that Purchaser may have at any time against Seller for a breach of any such representation or warranty, whether known or unknown, which is not asserted by notice from Purchaser to Seller within such six (6) month period will not be valid or effective, and Seller will have no liability with respect thereto. Nor will Seller have any liability to Purchaser for a breach of any representation or warranty unless the valid claims for all such breaches collectively aggregate more than One Hundred Thousand Dollars ($100,000.00), in which event the full amount of such valid claims shall be actionable, subject to the limitation in Section 9.10. The continued accuracy in all material respects of the aforesaid representations and warranties is a condition precedent to Purchaser's obligation to close. If any of said representations and warranties is not correct in all material respects at the time the same is made or as of Closing, and Seller had no knowledge of such inaccuracy when the representation or warranty was made, or when remade at Closing, or if such warranty or representation becomes inaccurate on or prior to Closing other than by reason of Seller's default hereunder, Purchaser may, upon being notified of such occurrence on or prior to Closing either (a) terminate this Agreement without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 9.15 and the Deposit will be returned to Purchaser, or (b) waive such matter and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. If any of said representations and warranties are not correct in all material respects at the time the same is made or as of Closing, and Seller had knowledge of such inaccuracy when the representation or warranty was made, or, by its default hereunder caused the representation or warranty to be inaccurate when remade at Closing, Purchaser may either (x) terminate this Agreement subject to its obligations under Paragraph 9.15, receive a return of the Deposit and recover from Seller all of Purchaser's actual, reasonable out-of-pocket costs incurred in connection with its review of 7 the Property or (y) waive the breach and its rights under clause (x) and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. 5.4 Condition of Property. Except as expressly set forth in this Agreement, Seller has not made and does not hereby make any representations, warranties or other statements as to the condition of the Property and Purchaser acknowledges that at Closing it is purchasing the Property on an "AS IS, WHERE IS" basis and without relying on any representations and warranties of any kind whatsoever, express or implied, from Seller, its agents or brokers as to any matters concerning the Property. Except as expressly set forth in this Agreement, no representations or warranties have been made or are made and no responsibility has been or is assumed by Seller or by any partner, officer, person, firm, agent or representative acting or purporting to act on behalf of Seller as to the condition or repair of the Property or the value, expense of operation, or income potential thereof or as to any other fact or condition which has or might affect the Property or the condition, repair, value, expense of operation or income potential of the Property or any portion thereof. The parties agree that all understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Schedules and Exhibits hereto annexed, which alone fully and completely express their agreement, and that this Agreement has been entered into after full investigation, or with the parties satisfied with the opportunity afforded for investigation, neither party relying upon any statement or representation by the other unless such statement or representation is specifically embodied in this Agreement or the Exhibits annexed hereto. Purchaser acknowledges that Seller has requested Purchaser to inspect fully the Property and investigate all matters relevant thereto and, with respect to the condition of the Property, to rely solely upon the results of Purchaser's own inspections or other information obtained or otherwise available to Purchaser, rather than any information that may have been provided by Seller to Purchaser. 6. Closing Conditions. Purchaser's obligation to proceed to Closing is conditioned upon Seller's performance of the following obligations and satisfaction of the following conditions, in addition to all of its other obligations and conditions contained in this Agreement, provided that Purchaser may in its sole discretion elect to waive failure by Seller to perform any particular obligation. 6.1 Title Insurance. The Title Insurer is prepared to issue a policy of title insurance insuring Purchaser's interest in the Property being conveyed, subject only to Acceptable Exceptions. 6.2 Estoppel Letters. Seller has delivered to Purchaser not later than the date of Closing, estoppel letters substantially in the form of Schedule 6.2 ("Required Estoppel Form") or in form otherwise reasonably acceptable to Purchaser, prepared by Seller and 8 addressed to Purchaser, from tenants occupying in the aggregate at least 75% of the Property, measured by square footage. All estoppel letters must be dated not more than forty-five (45) days prior to the date of Closing. An estoppel letter form, even though not in the Required Estoppel Form, will be deemed reasonably acceptable to Purchaser if said letter contains the following information: confirming rent, security deposit, square footage and termination date; that no rent has been paid more than one month in advance; that the lease is in full force and effect and that a true and correct copy of the lease with all amendments and modifications is attached; and that all work to be performed by Landlord has been performed and that the tenant has no knowledge of any Landlord default. 6.2.1 If Seller is unable to obtain the requisite estoppel letters as described above, Seller may (but is not required to) substitute for any unsigned estoppel letter from a tenant other than a Major Tenant an estoppel letter in the Required Estoppel Form, which may be completed, executed and delivered by Seller and warranted and represented by Seller, provided that such substituted estoppel letters will not collectively represent in excess of 10% of all of the tenants, measured by square footage. Seller's representations and warranties in the certificates will survive the Closing subject to the limitations of Paragraph 5.3. In the event that, following the Closing Date, Seller or Purchaser obtains an estoppel letter complying with the requirements of Paragraph 6.2 with respect to any lease for which Seller delivered a substituted estoppel letter, Seller will deliver such estoppel letter to Purchaser and, upon such delivery, Seller will be automatically released from any liability or obligation under the substituted estoppel letter previously delivered by Seller with respect to such lease. Purchaser may (but shall not be required to) accept a substituted estoppel letter as to a Major Tenant as well. 6.2.2 If Seller is unable to obtain and deliver sufficient tenant estoppel certificates as required under Paragraph 6.2, or if the letters received under Paragraph 6.2 or substituted estoppels permitted under Paragraph 6.2.1 contain information or omissions unacceptable to Purchaser in its reasonable discretion, then Seller will not be in default by reason thereof, but Purchaser may, by notice given to Seller before the Closing, elect (i) to waive said conditions and proceed with the Closing or (ii) to terminate this Agreement, and receive a refund of the Deposit. If Purchaser elects to terminate this Agreement, neither party will have any further rights or obligations hereunder except as provided in Paragraph 9.15. 6.3 Representations and Warranties. All of Seller's representations and warranties made pursuant to Paragraph 5.1 remain true and correct in all material respects. 6.4 Seller Performance. Seller has delivered all of the documents and other items required pursuant to Paragraph 8.6 and has performed all other covenants, undertakings and obligations required by this Agreement, to be performed or complied with by Seller at or prior to Closing. 7. Other Agreements. The obligations of Purchaser and Seller to close hereunder shall also be conditioned upon the simultaneous closing of (a) the purchase by Purchaser or an 9 affiliate of Purchaser, of twelve industrial and office buildings and a parcel of vacant land in King of Prussia Business Park, King of Prussia, Pennsylvania, pursuant to that certain Agreement of Purchase and Sale of even date herewith ("KOP Agreement") between Purchaser, as purchaser, and RREEF USA Fund-I ("KOP Owner"), as seller, and (b) the purchase by Purchaser or an affiliate of Purchaser, of the industrial building commonly known as 180 Wheeler Court, Bucks County, Pennsylvania, pursuant to that certain Agreement of Purchase and Sale of even date herewith (the "Wheeler Court Agreement"; the KOP Agreement and the Wheeler Court Agreement collectively the "Other Agreements") between Purchaser, as purchaser, and RREEF MidAmerica East-V Six, Inc. ("Wheeler Court Owner"; the KOP Owner and the Wheeler Court Owner are collectively referred to as the "Other Owners"), as seller. This condition may be waived by the parties. Without limiting the generality of the foregoing, if Purchaser terminates this Agreement pursuant to Section 3 or Section 4, the Other Owners shall have the right to terminate the Other Agreements as well; or, if Purchaser terminates one or more of the Other Agreements pursuant to Section 3 or Section 4 of the Other Agreements, Seller shall have the right to terminate this Agreement as well. A default by Purchaser under one or more of the Other Agreements shall be deemed a Purchaser default hereunder, and a default by an Other Owner under one or more of the Other Agreements shall be deemed a Seller default hereunder. 8. Closing. 8.1 Closing of Sale. The purchase and sale contemplated herein shall close (herein referred to as the "Closing") at the office of the Title Insurer, or as otherwise mutually agreed, on a date selected by Seller, which date (the "Closing Date") shall not be earlier than the date which is fifteen (15) days after the expiration of the Review Period nor more than thirty (30) days after expiration of the Review Period, time being of the essence. At Closing, Seller will deliver to Purchaser a Special Warranty Deed ("Deed") in the form of Schedule 8.6.1 and other closing documents required hereunder and Purchaser will cause payment of the Purchase Price to be made to Seller by wire transfer. The sale (payment of the Purchase Price and delivery of the Deed) may, at Purchaser's option to be exercised by notice to Seller at least five (5) days prior to the Closing Date, be closed through escrow with the Title Insurer in accordance with the general provisions of the usual form of escrow agreement used in similar transactions by such Title Insurer with special provisions inserted (i) as may be required to conform with this Agreement and (ii) to close on a so-called "New York Style" basis. 8.2 Prorations; Adjustments. The parties will prorate taxes, rental, and other income, and operating or other expenses of the Property as of 12:01 a.m. on the date after Closing (i.e., Seller is entitled to the income and responsible for the expenses of the day of Closing). All income will be prorated on the basis of income actually received by Seller, as opposed to income which is due or for which Seller has rendered invoices but which has not been paid (i.e., Seller will not be entitled to any credit for receivables, and there will be no proration as to such receivables). Any taxes or other expenses of the Property for any period prior to Closing which are payable by tenants of the Property subsequent to Closing (e.g., real estate taxes paid in arrears and not yet billed to tenants), will reduce the credit to Purchaser for such items (i.e., no 10 credit from Seller for pass-through items for which Purchaser will later collect from the tenants). To the extent that the taxes to be prorated are not known with certainty, such proration will be based upon the most recent tax bill or county estimate, to be re-prorated upon issuance of final bills. Seller also agrees to give Purchaser a credit against the Purchase Price for all cash security deposits required to be held pursuant to the Leases (less portions thereof applied by Seller to tenant defaults and not subsequently restored by the tenant in question) and all interest due thereon and shall assign to Purchaser any other tenant deposits held by Seller. Purchaser will pay amounts subsequently received by it from tenants constituting base rent, capital reimbursements or other income due from tenants and attributable to Seller's period of ownership, but not collected as of the date of Closing, to Seller promptly upon receipt; provided that amounts received from tenants by Purchaser will be first applied to current charges, and the balance will be applied to payments due to Seller. Notwithstanding the foregoing, Seller shall expressly reserve the right to seek to collect, directly from the tenants after Closing and with Purchaser's cooperation, any delinquencies and other amounts attributable to Seller's period of ownership, but not collected as of the date of Closing. To the extent Seller has received amounts from tenants for real estate taxes and 1997 and 1998 operating expenses in excess of amounts paid by Seller with respect to such expenses, Seller will credit such excess to Purchaser at Closing, and Seller will provide adequate backup information in connection with such credit. On or after the Closing, Seller will have no further obligations with respect to any Leases or other agreements affecting the Property, including, without limitation, tenant improvement work, leasing commissions and free rent. 8.2.1 Seller and Purchaser hereby agree to use their reasonable efforts to calculate prorations (including real estate tax prorations) so as to permit settlement thereof on the Closing Date, provided, however, that if any of such prorations cannot be calculated accurately on the Closing Date, then the same will be calculated as soon as reasonably practicable after the Closing Date, but in no event later than the later to occur of (i) thirty (30) days after Seller receives its final cost certification for the year in which Closing occurs, or (ii) March 31 of the year following the year in which Closing occurs, and either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party, together with interest thereon at the rate of two percent (2%) per annum over the "prime rate" (as announced from time to time in the Wall Street Journal) from the Closing Date to the date of payment if payment is not made within thirty (30) days after delivery of a bill therefor together with reasonable back-up documentation. This obligation of the parties will survive Closing. 8.3 Proration of Service Charges. To the extent Seller, as opposed to tenants, is responsible for payment of utility charges, Seller will attempt to have utility meters read as of the Closing Date. To the extent that this is not possible and to the extent that any other obligation for continuing services is incurred, and statements are rendered for such services covering periods both before and after the Closing Date, the amount will be adjusted between the parties as of the Closing Date on a per-diem basis. Seller will forward any such statements which it receives to Purchaser and Purchaser will pay the same. Seller will remit to Purchaser its proportionate share immediately upon demand. 11 8.4 Closing Costs. Purchaser agrees to pay (i) the Title Insurer's escrow and/or closing fees (including any payment to the closing officer of the Title Insurer as may be the local custom at the Closing), (ii) the cost of the title commitment and basic policy and endorsements, if any, required to meet Seller's obligations hereunder and the cost of any endorsements to the title policy required by Purchaser, including extended coverage, (iii) all recording fees and taxes with respect to the Deed, (iv) all costs of Purchaser's physical inspections of the Property (environmental, engineering) and other due diligence activities; (v) all costs of survey, including fees and charges of Gannett Fleming Associates (originally engaged by Seller); (vi) cancellation charges, if applicable, to Coventry Abstract (originally engaged by Seller); and (vii) one-half (1/2) of applicable transfer taxes. Seller agrees to pay (i) all recording fees with respect to clearing Seller's title, and (ii) one-half (1/2) of applicable transfer taxes. Except as otherwise provided in Paragraph 9.9, each party is responsible for its own attorneys' and other professional fees. All other closing costs shall be allocated in accordance with the prevailing local custom. 8.5 Possession. Subject to the rights of tenants pursuant to Leases delivered to Purchaser, Seller will deliver possession of the Property and of any conveyed personal property to the Purchaser on the date of Closing and Seller will thereupon deliver to Purchaser the originals of all Leases, all correspondence with tenants, tenant/lease files, operating statements, plans and specifications, supplies and advertising materials, booklets, keys, and other items used in connection with operation of the Property. 8.6 Seller's Closing Documents. As part of the Closing, Seller will deliver to Purchaser: 8.6.1 the Deed, in the form of Schedule 8.6.1 8.6.2 an affidavit in customary form that Seller is not a foreign person within the meaning of Section 1445(e) of the Internal Revenue Code of 1986, in the form of Schedule 8.6.2; 8.6.3 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's basic title insurance policy, including a mechanics' lien and judgment affidavit; 8.6.4 an assignment of the Leases in the form of Schedule 8.6.4 ("Lease Assignment"); 8.6.5 an assignment of contracts and warranties in the form of Schedule 8.6.5 ("Contracts Assignment"), assigning to Purchaser all contracts listed on Schedule 5.1.5, other than those designated by Purchaser for termination by notice to Seller not less than thirty (30) days prior to Closing; 12 8.6.6 an assignment of intangibles in the form of Schedule 8.6.6 ("Intangibles Assignment"); 8.6.7 letters, in form to be supplied by Purchaser, to the tenants at the Property, instructing the tenants to pay rent to Purchaser and to recognize Purchaser as landlord under their Leases; 8.6.8 a bill of sale conveying all personal property of Seller, if any, located at the Property and used in connection with the maintenance or operation thereof (specifically excluding furniture, fixtures and equipment owned by RREEF Management Company and located in the RREEF Management Company office), in the form of Schedule 8.6.8; 8.6.9 a rent roll, certified by Seller as being true and correct, to Seller's knowledge, as of the Closing Date, in the form previously delivered to Purchaser; 8.6.10 a "bring down certificate" stating that Seller's representations and warranties are true and correct as of the Closing Date, in the form of Schedule 8.6.10; 8.6.11 estoppel certificates as required by Paragraph 6.2 herein; and 8.6.12 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 8.7 Purchaser's Closing Documents. As part of the Closing, Purchaser will deliver to Seller: 8.7.1 good federal funds in an amount equal to the Purchase Price, less the Deposit and interest thereon and plus or minus prorations as provided herein and plus funds sufficient to pay Purchaser's closing costs hereunder; 8.7.2 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's title insurance policy; 8.7.3 executed counterpart of the Lease Assignment; 8.7.4 executed counterpart of the Contracts Assignment; 8.7.5 executed counterpart of the Intangibles Assignment; 8.7.6 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 13 8.8 Joint Deliveries. At the Closing, Seller and Purchaser will execute and deliver to each other the following documents in proper form: 8.8.1 Closing Statement; 8.8.2 City, county and state transfer tax declarations or similar instruments; and 8.8.3 All other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 9. Miscellaneous. 9.1 Modifications. This Agreement can be amended only in writing signed by both of the parties. 9.2 Casualty and Condemnation. Seller agrees to keep its customary replacement cost insurance covering the Property in effect until the Closing. If between the Effective Date and the Closing the improvements on the Property are destroyed or damaged to the extent that repairs cost in excess of $250,000 in the estimate of an architect or contractor selected by Seller and reasonably acceptable to Purchaser, or if condemnation proceedings are commenced against the Property, Purchaser may (i) terminate this Agreement or (ii) elect to accept the Property in its then condition, in which event Seller will pay or assign to Purchase at Closing all proceeds of insurance (plus the applicable deductible) or condemnation awards payable to Seller by reason of such damage or condemnation. In the event Purchaser makes neither election by the earlier of (a) Closing or (b) ten (10) days after being advised of such casualty or condemnation, Purchaser will be deemed to have elected to accept the Property in its then condition. In the event of any other damage to the Property, Seller may either repair the damage or give Purchaser a reduction in the Purchase Price equal to the cost of repairing such damage, as certified by an architect or contractor selected by Seller and reasonably acceptable to Purchaser. In the event of any damage where Purchaser does not have the right to terminate and Seller elects to repair such damage, the Closing Date shall be delayed for the number of days required to repair the damage, which Seller agrees to do in accordance with all Laws and in a good and workmanlike manner. 9.3 Time of Essence. Time (including, without limitation, the date specified as the Closing Date) is of the essence of this Agreement. 9.4 Notices. All notices required or permitted hereunder must be in writing and shall be served on the parties at the following address: If to Purchaser: Brandywine Realty Trust 14 Newtown Square Corporate Campus 16 Campus Blvd. Suite 150 Newtown Square, PA 19073 Attn: Gerard H. Sweeney, President & CEO Brad A. Molotsky, General Counsel Facsimile: (610-325-5622) If to Seller: RREEF MidAmerica/East Fund-IV c/o The RREEF Funds 875 N. Michigan Avenue Suite 4100 Chicago, IL 60611 Attn: Mr. John Turney & Ms. Pamela Boneham Facsimile: (312) 266-9346 with a copy to: RREEF MidAmerica/East Fund-IV c/o The RREEF Funds 650 Park Avenue Suite 210 King of Prussia, PA 19406 Attn: Ms. Barbara Gillentine Facsimile: (610) 337-2308 and a copy to: D'Ancona & Pflaum 30 North LaSalle Street Suite 2900 Chicago, Illinois 60602 Attn: Lawrence J. Moss Facsimile: (312) 580-0923 Any such notices may be sent by (a) certified mail, return receipt requested, in which case notice will be deemed delivered three (3) business days after deposit, postage prepaid in the U.S. mail or (b) a nationally recognized overnight courier, in which case notice will be deemed delivered one business day after deposit with such courier or (c) facsimile transmission, in which case notice will be deemed delivered upon electronic verification that transmission to recipient was completed, provided that notices sent by facsimile transmission on a day other than a business day, or before 9:00 a.m. or after 5:00 p.m. recipient's time on a business day, shall be deemed given on the first business day following the date of transmission or (d) personal delivery. The above addresses and facsimile numbers may be changed by notice to the other party; provided that no notice of a change of address or facsimile number will be effective until actual receipt of such notice. 15 9.5 Parties Bound. Neither party may assign this Agreement without the prior written consent of the other, and any such prohibited assignment shall be void; provided that Purchaser may assign this Agreement without Seller's consent to an Affiliate; provided that the assignee is not a party-in-interest as described in Paragraph 9.14. Subject to the foregoing, this Agreement is binding upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. For the purposes of this Paragraph, the term "Affiliate" means (a) an entity that directly or indirectly controls, is controlled by or is under common control with the Purchaser or (b) an entity at least a majority of whose economic interest is owned by Purchaser; and the term "control" means the power to direct the management of such entity through voting rights, ownership or contractual obligations. 9.6 Governing Law. The performance and interpretation of this Agreement is controlled by the law of the Commonwealth of Pennsylvania. 9.7 Continuation Until Closing; Leasing. 9.7.1 Between the Effective Date and the Closing, Seller agrees to keep and perform all of the obligations to be performed by landlord under any Leases and Laws. Seller agrees to operate the Property in the same manner as before the making of this Agreement, the same as though Seller were retaining the Property. Seller agrees not to convey the Property, nor to grant any liens or easements with respect thereto. 9.7.2 Seller shall not permit or consent to any new leases, amendments, extensions, renewals (other than pursuant to tenant renewal options, if any) or subleases without first submitting them to Purchaser for Purchaser's approval on an approval form in the form attached hereto as Schedule 9.7.2, which approval shall not be unreasonably withheld. Purchaser shall have three (3) business days to notify Seller of its approval of such leases, amendments, extensions, renewals or subleases, and in the event that Purchaser does not so notify Seller, the leases, amendments, extensions, renewals or subleases, as the case may be, shall be deemed approved. 9.7.3 With respect to any new lease or lease modification entered into by Seller after December 18, 1997 and approved by Purchaser, by the terms of which Seller obligates itself to perform or performs or pays or contracts for any tenant improvement work or additional landlord work required pursuant to such lease, or pays or contracts for any leasing commissions or grants any free rent period or other financial concessions, then such expenses and/or free rent or other concessions, and all other third-party costs incurred (including attorneys' fees) in connection with such lease, will be a credit to Seller at Closing to the extent Seller paid such amounts prior to Closing; otherwise Purchaser agrees to assume liability for the payment and performance of such obligations in accordance with the terms thereof. 9.8 Brokers. Seller and Purchaser each (i) represents and warrants to the other that it has not dealt with any broker or finder in connection with the transaction contemplated by 16 this Agreement other than the parties, if any, to be paid a commission as specified in Paragraph 9.11, and (ii) agrees to defend, indemnify and hold the other harmless from and against any losses, damages, costs, or expenses (including attorneys' fees) incurred by such other party due to a breach of the foregoing warranty by the indemnifying party. 9.9 Attorneys' Fees. Notwithstanding any limitation on remedies or amounts recoverable set forth elsewhere herein, if any action is brought by either party against the other party, the party in whose favor final judgment is entered will be entitled to recover court costs incurred and reasonable attorneys' fees at trial, upon appeal and on any petition for review. 9.10 Remedies for Non-Performance. Purchaser's remedies regarding breach of warranty or representation by Seller are governed by Paragraph 5.3. In the event of any other default by Seller hereunder, Purchaser may, as its sole and exclusive remedy, either (i) terminate this Agreement and seek damages, subject to performance of Purchaser's indemnities set forth in Paragraph 9.15, and receive back the Deposit or (ii) seek specific performance. If said sale is not consummated because of a default under this Agreement on the part of Purchaser, the Deposit will be paid to and retained by Seller as Seller's sole and exclusive remedy. Seller and Purchaser acknowledge that the Deposit is a reasonable forecast of just compensation for the harm that could be caused by Purchaser's default and that the harm suffered by Seller is difficult or impossible to accurately ascertain or predict. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, SELLER'S TOTAL LIABILITY FOR DAMAGES FOR BREACH OF THE COVENANTS, AGREEMENTS, WARRANTIES AND REPRESENTATIONS UNDER THIS AGREEMENT AND THE OTHER AGREEMENTS, COLLECTIVELY, SHALL NEVER EXCEED TWO MILLION DOLLARS ($2,000,000.00), AND IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES. 9.11 Brokers Commission. Seller agrees to pay the brokerage commission due The Flynn Company pursuant to a separate agreement. 9.12 Survival of Covenants. All covenants hereunder which, by their terms, are intended to survive Closing will survive Closing hereunder. 9.13 Seller's Investment Committee Approval. This condition has been satisfied. 9.14 ERISA. Purchaser represents and warrants to Seller that none of Purchaser's assets are "plan assets," (as that term is defined by 29 CFR Section 2510.3-101) because all plans that are subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and which have invested in Purchaser hold only "equity interests," (as that term is defined by 29 CFR Section 2510.3-101(b)(1)) that are "publicly-offered securities," (as that term is defined by 29 CFR Section 2510.3-101(b)(2)). Purchaser further represents and warrants to Seller that 17 it is not any one of the types of entities listed in 29 CFR Section 2510.3-101(h), the character of which would identify its assets as "plan assets." 9.15 Entry and Indemnity. In connection with any entry by Purchaser, or its agents, employees or contractors onto the Property, Purchaser shall give Seller reasonable advance notice of such entry and shall conduct such entry and any inspections in connection therewith so as to minimize, to the greatest extent possible, interference with Seller's business and the business of Seller's tenants and otherwise in a manner reasonably acceptable to Seller. Without limiting the foregoing, prior to any entry to perform any on-site testing, Purchaser shall give Seller notice thereof, including the identity of the company or persons who will perform such testing and the proposed scope of the testing. Seller shall approve or disapprove the scope and methodology of such proposed testing within three (3) business days after receipt of such notice, such approval to be within the sole and unfettered discretion of Seller; Seller's failure to notify Purchaser of its approval or disapproval shall be deemed to be Seller's disapproval thereof. If Purchaser or its agents, employees or contractors take any sample from the Property in connection with any such approved testing, upon Seller's request, Purchaser shall provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing. Seller or its representative may be present to observe any testing or other inspection performed on the Property. Upon Seller's request, Purchaser shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Property performed by Purchaser or its agents, employees or contractors. Purchaser shall maintain, and shall assure that its contractors maintain, public liability and property damage insurance in amounts and in form and substance adequate to insure against all liability of Purchaser, its agents, employees or contractors, arising out of any entry or inspections of the Property pursuant to the provisions hereof, and Purchaser shall provide Seller with evidence of such insurance coverage upon request by Seller. Purchaser shall indemnify, defend and hold Seller harmless from and against any costs, damages, liabilities, losses, expenses, liens or claims (including, without limitation, reasonable attorney's fees) arising out of or relating to any entry on the Property by Purchaser, its agents, employees or contractors in the course of performing the inspections, testings or inquiries provided for in this Agreement, including without limitation damage to the Property or release of hazardous substances or materials onto the Property, excluding, however, any costs incurred by Seller in supervising Purchaser's testing. The foregoing indemnity shall survive beyond the Closing, or if the sale is not consummated, beyond the termination of this Agreement. 9.16 Release. Except to the extent of the representations and warranties of Seller expressly set forth in this Agreement, and except to the extent of a breach by Seller of applicable laws, but otherwise notwithstanding any other provision of this Agreement to the contrary, Purchaser, on behalf of itself and its successors and assigns, waives its right to recover from, and forever releases and discharges, Seller, Seller's affiliates, Seller's investment manager, the partners, trustees, shareholders, directors, officers, employees and agents of each of them, and their respective heirs, successors, personal representatives and assigns (collectively, the "Seller Related Parties"), from any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, 18 without limitation, attorneys' fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, which may arise on account of or in any way be connected with the physical condition of the Property or any law or regulation applicable thereto, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U.S.C. Sections 1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), and the Toxic Substance Control Act (15 U.S.C. Sections 2601-2629) 9.17 Confidential Information. The parties acknowledge that the transaction described herein is of a confidential nature and shall not be disclosed except to consultants, investors, advisors, and affiliates, or as required by law. No party will make any public disclosure of the specific terms of this Agreement, except as required by law. Without limiting the generality of the foregoing, any press release or other public disclosure regarding this Agreement or the transactions contemplated herein, and the wording of same, must be approved in advance by both parties. In connection with the negotiation of this Agreement and the preparation for the consummation of the transactions contemplated hereby, each party acknowledges that it will have access to confidential information relating to the other party. Each party shall treat such information as confidential, preserve the confidentiality thereof, and not duplicate or use such information, except to advisors, consultants, investors and affiliates in connection with the transactions contemplated hereby. In the event of the termination of this Agreement for any reason whatsoever, Purchaser will return to Seller, at Seller's request, all documents, work papers, and other material (including all copies thereof) obtained from Seller in connection with the transactions contemplated hereby, and each party shall use its best efforts, including instructing its employees and others who have had access to such information, to keep confidential and not to use any such information. The provisions of this Paragraph 9.17 will survive the Closing or, if the purchase and sale is not consummated, any termination of this Agreement. 9.18 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event, after which the designated period of time begins to run, is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday (i.e., a day on which federally chartered banks are not open for business in Chicago, Illinois). The last day of any period of time described herein shall be deemed to end at 5 p.m. Chicago, Illinois time on the last day of such period of time. All days other than Saturdays, Sundays and legal holidays in which national banks are closed in Chicago, Illinois are business days hereunder. 9.19 Entire Agreement. This Agreement and any other document to be furnished pursuant to the provisions hereof embody the entire agreement and understanding of the parties hereto as to the subject matter contained herein. There are no restrictions, promises, 19 representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in such documents. This Agreement and such documents supersede all prior agreements and understandings among the parties with respect to the subject matter hereof 9.20 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the terms or provisions of this Agreement. 9.21 Facsimile Signatures. Executed facsimile copies of this Agreement or any amendments hereto shall be binding upon the parties, and facsimile signatures appearing hereon or on any amendments hereto shall be deemed to be original signatures. 9.22 Further Assurances. In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by Seller to Purchaser at Closing, Seller agrees to perform, execute and deliver, but without any obligation to incur any additional liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate the transactions contemplated hereby or to further perfect the conveyance, transfer and assignment of the Property to Purchaser. 9.23 Offer. Execution and delivery of this Agreement by Purchaser constitutes an offer to purchase the Property on the terms contained herein. Delivery by Seller of a copy of the fully executed Agreement by facsimile transmission on or before the Expiration Date, followed by a manually signed copy thereof delivered the next business day after transmission of such copy, shall constitute acceptance by Seller as of the date of the facsimile transmission. The date on which Seller delivers a fully executed copy of this Agreement to Purchaser, or delivers a copy by facsimile transmission followed by a manually signed copy as provided in the preceding sentence is referred to herein as the "Effective Date." 9.24 Seller Exculpation Clause. The obligations of Seller contained herein are intended to be binding only on the property of the trust party to this Agreement of Purchase and Sale and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the trustees, investment managers, any general partners thereof, or any employees or agents of the trustees or investment managers. All documents to be executed by Seller shall also contain the foregoing exculpation. 20 9.25 Purchaser Exculpation Clause. No recourse shall be had for any obligation of Brandywine Operating Partnership, L.P. and 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 Operating Partnership, L.P. or 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 the Seller and all parties claiming by, through or under Seller. 9.26 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 Purchaser, provide Purchaser and its representatives, with (a) access to all financial 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 Purchaser's outside, third party accountants (the "Accountants"), to enable Purchaser and its Accountants to prepare financial statements in compliance with any or all of (i) Rule 3-05 or 3-15 of Regulation S-X of the Securities and Exchange Commission (the "Commission"), as applicable; (ii) any other rule issued by the Commission and applicable to Purchaser; and (iii) any registration statement, report or disclosure statement filed with the Commission, by, or on behalf of Purchaser; and (b) a representation letter, signed by the 21 individual(s) responsible for Seller's financial reporting, substantially in the form of Schedule 9.26 attached hereto, which representation letter may be required by the Accountants in order to render an opinion concerning Seller's financial statements. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below. SELLER: PURCHASER: RREEF MIDAMERICA/EAST FUND-IV BRANDYWINE OPERATING PARTNERSHIP, L.P. By: RREEF America L.L.C., its By: Brandywine Realty Trust, investment advisor its authorized general partner By:________________________________ By:____________________________ Authorized Representative Gerard H. Sweeney President and Chief Dated: ____________________________ Executive Officer Dated:_________________________ 22 List of Schedules and Exhibits Schedules 2.1 Escrow Instructions 5.1 Disclosure Schedule 5.1.5 Service Contracts 5.1.10 Rent Roll 5.1.12 Future Leasing Commissions, Tenant Improvements and Free Rent 6.2 Form of Estoppel Letter 8.6.1 Form of Deed 8.6.2 FIRPTA Certificate 8.6.4 Assignment and Assumption of Leases 8.6.5 Assignment and Assumption of Contracts and Warranties 8.6.6 Assignment of Intangibles 8.6.8 Bill of Sale 8.6.10 Bring-Down Certificate 9.26 SEC Compliance Representation Letter Exhibits A Legal Description of Property A-1 Descriptive List of the Property 23 Schedule 2.1 EARNEST MONEY ESCROW INSTRUCTIONS (earnest money escrow instructions previously executed) Schedule 5.1 DISCLOSURE SCHEDULE A 1996 Environmental Audits was prepared by ATC Environmental, Inc. for the Property. This Audit has been made available to Purchaser for inspection and copying, and, each of the Seller warranties of Section 5.1.8 and its subparagraphs are qualified and limited by any matters disclosed in such Audit. Schedule 5.1.5 Service Contracts A.T. BUILDERS BFI BERWYN GLASS BOYLE ELECTRICAL CONTRACTORS BURHANS GLASS COMPANY, INC. CONTROLLED ENVIRONMENTS CROWN CONTRACTORS, INC. JOSEPH W. DAVIS, INC. DIROCCO BROTHERS COMPANY DURASEAL, INC. ELDREDGE FIDELITY ALARM COMPANY GALLAGHER EXCAVATING, INC. (GEI) GUARDIAN ALARM SYSTEMS HONEYWELL MOON LANDSCAPING OLIVER SPRINKLER PENNTEX CONSTRUCTION COMPANY PHOENIX MECHANICAL, INC. RHETT HAMILTON JONES ASSOCIATES SANTANGELO HAULING CO. SECURITY ELEVATOR COMPANY SYSTEMATIC ROOFING ANALYSIS TELEPHONE DIAGNOSTIC SERVICES, INC. TERMINIX INTERNATIONAL CO. VECTORDYNE DAVID WHITE PLUMBING Schedule 5.1.10 Rent Roll Schedule 5.1.12 Future Leasing Commissions, Tenant Improvements and Free Rent 1. If Tozour Trane, the tenant of 741 First Avenue, does not exercise certain termination options, commissions may become due to The Flynn Company in the amounts of $20,260.50 and $16,109.00 on May 1, 2000 and May 1, 2003, respectively. Schedule 6.2 TENANT ESTOPPEL LETTER __________ __, 1998 Brandywine Realty Trust Newtown Square Corporate Campus 16 Campus Boulevard Newtown Square, PA 19073 Attention: Gerard H. Sweeney, President and Chief Executive Officer NationsBank, N.A., Real Estate Banking 8300 Greensboro Drive, Suite 300 McLean, VA 22102 Attention: Gary P.F. Carr Re: Lease from ________, for Suite ____, located at [BUILDING ADDRESS] [CITY/TOWNSHIP], Pennsylvania (the "Property") To Whom it May Concern: The undersigned is the holder of the tenant's interest under the lease described on Exhibit A attached hereto (the "Lease") demising a portion of the Property (the "Leased Premises"). We understand that Brandywine Realty Trust, its assignee or nominee ("Brandywine") intends to acquire the Property, and that NationsBank, N.A., as Agent for the parties listed on Schedule 1 attached hereto ("Lender") may be the holder of a first mortgage on the Property, and that Brandywine and Lender require this certification from us. Accordingly, we hereby certify to Brandywine and Lender as follows: 1. The Lease is in full force and effect and has not been modified, amended or supplemented in any way, except as follows (Insert dates of all modifications, amendments, or supplements; if none, write "None"):____________ ______________________________________________________________________________. 2. There are no other representations, warranties, agreements, concessions, commitments, or other understandings between the undersigned and the Landlord regarding the Property other than as set forth in the Lease or paragraph 1 above. 3. The landlord under the Lease has completed and delivered, and the undersigned has accepted, the Leased Premises in the condition required by the Lease and the term of the Lease commenced on _________. The Leased Premises consists of approximately ___________ square feet. The undersigned has taken possession of and is occupying the Leased Premises on a rent-paying basis and the monthly base rent payable thereunder is $_________, payable in advance. All improvements and work required under the Lease to be made by the landlord thereunder and all facilities required under the Lease to be furnished to the Leased Premises have been completed to the satisfaction of the undersigned, except as follows (Insert description of any improvements and work to be completed by the landlord under the Lease; if none, write "None"): _____________________________. 4. The fixed expiration date set forth in the Lease, excluding renewals and extensions, is ________________. The undersigned neither has any option or right to purchase the Property or any portion thereof nor does the undersigned have any right or option to terminate the Lease or any of its obligations thereunder in advance of the scheduled termination date of the Lease as noted above, except as follows (Insert description of any purchase rights or options, and/or any early termination rights; if none, write "None"): _______________________________. 5. All rents, additional rents and other sums due and payable under the Lease have been paid in full and no rents, additional rents or other sums payable under the Lease have been paid for more than one (1) month in advance of the due dates thereof. 6. The landlord under the Lease is not in default under any of the requirements, provisions, terms, conditions or covenants of the Lease to be performed or complied with by the landlord under the Lease, and no event has occurred or situation exists which would, with the passage of time and/or the giving of notice, constitute a default or an event of default by the landlord under the Lease. 7. The undersigned is not in default under any of the requirements, provisions, terms, conditions, or covenants of the Lease to be performed or complied with by the undersigned, and no event has occurred or situation exists which would, with the passage of time and/or the giving of notice, constitute a default or an event of default by the undersigned under the Lease. 2 8. The undersigned has received no notice from any governmental authority or other person or party claiming a violation of, or requiring compliance with, any Federal, State or local statute, ordinance, rule, regulation or other requirement of law, for environmental contamination at the Leased Premises, to the best knowledge of the undersigned no hazardous, toxic or polluting substances or wastes have been generated, treated, manufactured, stored, refined, used, handled, transported, released, spilled, disposed of or deposited by Tenant on, in or under the Leased Premises. 9. Neither the undersigned nor the landlord under the Lease has commenced any action or given or received any notice for the purpose of terminating the Lease. 10. There are no existing defenses, offsets, claims, or credits against the payment of rent or the performance of the undersigned's obligations under the Lease. 11. The undersigned has paid to the landlord under the Lease a security deposit of $____________. Very truly yours, By: --------------------------------- Name: Title: 3 Exhibit A (Description of Lease) 4 Schedule 8.6.1 Form of Deed SPECIAL WARRANTY DEED: THIS INDENTURE made this ____ day of ____________, 1998, BETWEEN RREEF MIDAMERICA/EAST FUND-IV, A CALIFORNIA GROUP TRUST (hereinafter called the Grantor/s), of the one part and _____________________ (hereinafter called the Grantee/s), of the second part, WITNESSETH That in consideration of Ten and No/100 Dollars ($10.00) in hand paid, the receipt whereof is hereby acknowledged, the said Grantor/s do/does hereby grant, bargain, sell and convey unto the said Grantee/s, his/her/their successors and /or assigns, ALL THAT CERTAIN real estate, situated in the County of Montgomery and Commonwealth of Pennsylvania known and described on the attached Exhibit A "Legal Description," attached hereto an hereby made a part hereof. TOGETHER with all and singular the buildings, improvements, ways, streets, alleys, driveways, passages, waters, water-courses, rights, liberties, privileges, hereditaments and appurtenances whatsoever unto the hereby granted premises belonging, or in anywise appertaining, and the reversions and remainders, rents, issues and profits thereof; and all the estate, right, title, interest, use, trust, property, possession, claim and demand whatsoever of Grantor as well at law as in equity, of, in, and to the same. TO HAVE AND TO HOLD the said lot or piece of ground described with the buildings and improvements thereon erected, hereditaments and premises hereby granted, or mentioned and intended so to be, with the appurtenances unto the said Grantee, and its successors and assigns to and for the only proper use and behoof of the said Grantee, and its successors and assigns, forever. AND the said Grantor/s do/does hereby covenant to and with the said Grantee/s that he/she/they, the said Grantor/s, his/her/their successors and/or assigns, SHALL AND WILL warrant specially and forever defend the herein above described premises, with the hereditaments and appurtenances, unto the said Grantor/s and against every other person lawfully claiming or who shall hereafter claim the same or any part thereof, by, from and under his/her/their successors and/or assigns or any of them, subject to validly and legally existing encumbrances of record. IN WITNESS WHEREOF, the said Grantor/s has/have caused these presents to be duly executed, the day and year first above written. ATTEST: RREEF MIDAMERICA/EAST FUND-IV, a California group trust By:___________________________ By: RREEF America L.L.C., a Delaware limited liability company, its investment advisor By:_______________________ Authorized Representative [Add Pennsylvania address certification] 2 STATE OF _____________________) ) SS. COUNTY OF ____________________) I,_______________________________________________, a notary public in and for said County, in the State aforesaid, DO HEREBY CERTIFY that ______________ __________________ and ___________________________, personally known to me to be the ______________________ and ______________ of RREEF MIDAMERICA/EAST FUND-IV, a California group trust, and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such __________________________ and _________________, they signed and delivered the said instrument as their free and voluntary act, and as the free and voluntary act and deed of said trust, for the uses and purposes therein set forth. GIVEN under my hand and official seal this ____ day of _________________, 1998. ---------------------------------- Notary Public Commission expires ------------------------------------------------------------ 3 EXHIBIT A Legal Description Schedule 8.6.2 FIRPTA CERTIFICATE Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by __________________________ __________________________________________, a _______________________ ("Seller") hereby certifies the following: 1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); 2. Seller's U.S. employer identification number is 94-6566801; and 3. Seller's principal place of business is 101 California Street, 26th floor, San Francisco, CA 94111-5853 Seller understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Seller. ________________________________________ ________________________________________ By: ____________________________________ Authorized Representative Subscribed and sworn to before me this ____ day of ______, 1998. ______________________________ Notary Public Schedule 8.6.4 ASSIGNMENT AND ASSUMPTION OF LEASES THIS ASSIGNMENT AND ASSUMPTION OF LEASES (the "Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between _________________________________________, a Delaware corporation, ("Assignor") and ________________, a _______________ ("Assignee"). A. Assignor is the lessor under certain leases executed with respect to that certain real property and improvements thereon known as ____________________, _______________________, and more particularly described in Exhibit "A" attached hereto (the "Property"), which leases are described in Exhibit B attached hereto (the "Leases"). B. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase the Property from Assignor and Assignor agreed to sell the Property to Assignee, on the terms and conditions contained therein. C. Assignor desires to assign its interest as lessor in the Leases to Assignee, and Assignee desires to accept the assignment thereof, on the terms and conditions below. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date") [SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the Leases except rents and other sums due Assignor first accruing on or prior to the Conveyance Date, and, effective as of the day following the Conveyance Date, Assignee hereby accepts such assignment. 2. Assignor hereby assumes full responsibility for all obligations and defaults of landlord under the Leases accruing prior to and including the Conveyance Date. Assignor also agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 3. Assignee hereby assumes full responsibility for all obligations of landlord under the Leases accruing after the Conveyance Date and Assignee hereby agrees to defend, indemnify and hold Assignor harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignee's failure to perform said obligations. Without limiting the generality of the foregoing, Assignee assumes full responsibility for the free rent, unpaid tenant improvement allowances and leasing commissions under the Leases as listed on Exhibit C. 4. This Assignment shall be governed by the laws of the Commonwealth of Pennsylvania. 5. This Assignment may be executed in counterparts. 6. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Leases. ASSIGNOR: ASSIGNEE: _______________________________ _______________________________ _______________________________ _______________________________ By:____________________________ By:____________________________ Authorized Representative Title:_________________________ Dated:_________________________ Dated:_________________________ 2 EXHIBIT A Legal Description 3 EXHIBIT B Existing Leases (rent roll to be attached) 4 EXHIBIT C Free Rent, Tenant Improvement Allowances and Leasing Commissions 5 Schedule 8.6.5 ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND WARRANTIES THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND WARRANTIES (the "Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between _____________________________ ___________________________________, ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase Assignor's interest in the real property legally described on Exhibit A attached hereto (the "Property"), on the terms and conditions contained therein. B. Whereas the execution and delivery of this Assignment is a condition precedent to the purchase of the Property by the Assignee. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date")[SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the following: 2. Assignor hereby grants, transfers and assigns to Assignee all the right, title and interest of Assignor in and to the following: (a) All contracts listed on Exhibit B attached hereto. (b) All presently effective and assignable warranties, guaranties, representations or covenants given to or made in favor of Assignor or Assignor's affiliates in connection with the acquisition, development, construction, maintenance, repair, renovation or inspection of the Property. The foregoing are collectively referred to herein as the "Contracts." 3. Assignor hereby assumes full responsibility for all obligations and defaults of Assignor under the Contracts accruing to and including the Conveyance Date. Assignor also agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 4. Assignee hereby assumes full responsibility for all obligations of owner of the Property under the Contracts accruing after the Conveyance Date and Assignee hereby agrees to defend, indemnify and hold Assignor harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignee's failure to perform said obligations. 5. This Assignment shall be governed by the laws of the Commonwealth of Pennsylvania. 6. This Assignment may be executed in counterparts. 7. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Contracts and Warranties. ASSIGNOR: ASSIGNEE: _______________________________ _______________________________ _______________________________ _______________________________ By:____________________________ By:____________________________ Authorized Representative Title:_________________________ Dated:_________________________ Dated:_________________________ 2 EXHIBIT A Legal Description 3 EXHIBIT B Contracts A.T. BUILDERS BFI BERWYN GLASS BOYLE ELECTRICAL CONTRACTORS BURHANS GLASS COMPANY, INC. CONTROLLED ENVIRONMENTS CROWN CONTRACTORS, INC. JOSEPH W. DAVIS, INC. DIROCCO BROTHERS COMPANY DURASEAL, INC. ELDREDGE FIDELITY ALARM COMPANY GALLAGHER EXCAVATING, INC. (GEI) GUARDIAN ALARM SYSTEMS HONEYWELL MOON LANDSCAPING OLIVER SPRINKLER PENNTEX CONSTRUCTION COMPANY PHOENIX MECHANICAL, INC. RHETT HAMILTON JONES ASSOCIATES SANTANGELO HAULING CO. SECURITY ELEVATOR COMPANY SYSTEMATIC ROOFING ANALYSIS TELEPHONE DIAGNOSTIC SERVICES, INC. TERMINIX INTERNATIONAL CO. VECTORDYNE DAVID WHITE PLUMBING 4 Schedule 8.6.6 ASSIGNMENT OF INTANGIBLES THIS ASSIGNMENT AND ASSUMPTION OF INTANGIBLES ("Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between ______________________________________, ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase Assignor's interest in the real property legally described on Exhibit A attached hereto (the "Property"), on the terms and conditions contained therein. B. Whereas the execution and delivery of this Assignment is a condition precedent to the purchase of the Property by the Assignee. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date")[SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the following: (i) All licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps or plats and entitlements issued, approved or granted by federal, state or municipal authorities or otherwise in connection with the Property and its renovation, construction, use, maintenance, repair, leasing and operation; and all licenses, consents, easements, rights of way and approvals required from private parties to make use of utilities, to insure pedestrian ingress and egress to the Property and to insure continued use of any vaults under public rights-of- way presently used in the operation of the Property. (ii) any trade style or trade name used in connection with the Property; and, (iii) all correspondence with the tenants under tenant leases, all booklets and manuals relating to the maintenance and operation of the Property. The foregoing are collectively referred to herein as the "Intangibles". 2. Assignor agrees to assume full responsibility for its obligations under the Intangibles accruing on or prior to the Conveyance Date and Assignor agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 3. Assignee assumes full responsibility for all obligations of the owner of the property accruing under the Intangibles from the day after the Conveyance Date and Assignee agrees to defend, indemnify and hold Assignor and its predecessors in title harmless from all claims, liabilities or costs arising from Assignee's failure to perform said obligations. 4. This instrument may be executed in counterparts. 5. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, the parties have executed this Assignment of Intangibles. ASSIGNOR: ASSIGNEE: _______________________ ______________________________ _____________________________, ______________________________ By: By: Authorized Representative Title: Dated: Dated: 2 EXHIBIT A Legal Description 3 Schedule 8.6.8 BILL OF SALE ________________________________________________________________________ ("Seller"), in consideration of Ten and No/100 Dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby sells, transfers, assigns and sets over unto __________________ ("Purchaser"), all of its right, title and interest in and to any and all personal property, which personal property is owned by Seller and located on the real estate legally described on Exhibit A attached hereto (the "Personal Property"), including, but not limited to, the Personal Property listed on Exhibit B. Seller hereby represents and warrants to Purchaser that Seller is the absolute owner of the Personal Property free and clear of all liens, charges and encumbrances, and that Seller has full right, power and authority to sell the Personal Property and to make this Bill of Sale. All warranties of quality, fitness and merchantability are hereby excluded. The obligations of Seller contained herein are intended to be binding only on the property of the Seller and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Seller, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the ___ day of _______, 1998, but effective on the date on which the Property is conveyed by Seller to Purchaser. ______________________________ ______________________________ By:___________________________ Authorized Representative STATE OF _________ ) ) SS COUNTY OF ________ ) The undersigned, a Notary Public in and for said County in the State aforesaid, DOES HEREBY CERTIFY that ________________, authorized representative of _________________________________________________________________, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such authorized representative, appeared before me this day in person and acknowledged that __he, being duly authorized, signed, sealed and delivered the said instrument as h___ free and voluntary act, and as the free and voluntary acts of said corporation, for the uses and purposes therein set forth. GIVEN under my hand and Notarial Seal this _____ day of ______________, 1998. _______________________ Notary Public My Commission Expires: ____________________, 19___ 2 EXHIBIT A Legal Description 3 EXHIBIT B Personal Property (none) Schedule 8.6.10 SELLER'S CLOSING CERTIFICATE THIS CLOSING CERTIFICATE is made as of the ___ day of ________________, 1998, by and between ______________________________________________________ ("Seller"), to and in favor of ____________________________________________, a __________ ("Purchaser"), under and pursuant to that certain Agreement of Purchase and Sale by and between Seller and __________, with an Effective Date as defined therein (the "Agreement"), for the purchase and sale of that certain Property situated in the _________, _______ County, ____________ (as defined in the Agreement). Pursuant to Paragraphs 5.3 and 8.6.10 of the Agreement and except as disclosed on Exhibit A attached hereto and made a part hereof, Seller hereby reconfirms, remakes and rewarrants to Purchaser as of the date hereof each of the representations, warranties and covenants given by Seller contained in Paragraph 5.1 of the Agreement in the same manner as such representations, warranties and covenants were given in the Agreement, each of which is incorporated herein and made a part hereof by this reference. Except as modified hereby, Seller hereby confirms that each of said representations, warranties and covenants are true and accurate in all material respect as of the date hereof. Seller's reconfirming, remaking and rewarranting of its representations, warranties and covenants is subject to the limitations set forth in Paragraph 5.3 of the Agreement. The obligations of Seller contained herein are intended to be binding only on the property of the Seller and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Seller, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, Seller has executed this Closing Certificate on the day and year first above written, but effective upon the date on which the Property is conveyed by Seller to Purchaser. SELLER: _____________________________ _____________________________ By: _____________________________ Authorized Signatory EXHIBIT A Disclosure Schedule 9.7.2 New Lease Approval Form Property: ___________________________________________________________________ Tenant: _____________________________________________________________________ Square Feet: ________________________________________________________________ Location: ___________________________ Anticipated Lease Commencement: _____________________________________________ Anticipated Rent Commencement: ______________________________________________ Term: _______________________________________________________________________ FREE RENT: __________________________________________________________________ Rental Rate: Period PSF Rate Annual Income ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ Note: Above rental rates do not include Tenant Electric Tenant Improvement Allowance: PSF ______________ Amount ___________________ T.I. Mechanism: ___________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ OPTIONS: ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________ Initial Commission: BROKER % Amount __________________ _______________ _________________________________________ __________________ _______________ _________________________________________ Broker Future Entitlements: __________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Other Comments: ______________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Approved By: ________________ Schedule 9.26 SEC COMPLIANCE REPRESENTATION LETTER (Accountant Name & Address) Dear Sirs: In connection with your audit of the statement of revenues and certain expenses of the Property situated in the City of King of Prussia, Montgomery County, Pennsylvania, commonly known as 741 First Avenue (the "Property") for the year ended December 31, 199__ (the "Operating Statement"), prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, the undersigned ("Seller") makes the following limited, qualified and specific representations, which are true to Seller's knowledge (as such phrase is hereinafter defined): 1. Seller has made available or caused its property manager to make available to Brandywine Operating Partnership, L.P. ("Buyer"), or its representatives, Seller's financial records and files in Seller's actual possession pertaining to the operation of the Property (such records and files being collectively referred to herein as the "Files"). 2. Except as disclosed in the Files, Seller is not aware of any events or transactions which have occurred since December 31, 199_ and prior to the date hereof that would have a material effect on the Operating Statement for the period then ended. 3. We recognize that, as the Owner of the Property, we are responsible for directing the fair presentation of the Operating Statement. We believe the Operating Statement is fairly presented in conformity with generally accepted accounting principals. As used in this letter, the words "Seller's knowledge" shall be deemed to mean, and shall be limited to, the actual (as distinguished from implied, imputed or constructive) knowledge of Joseph S. Cappelletti and Barbara Gillentine without such person having any obligation to make an independent inquiry or investigation. Notwithstanding any provision in this letter to the contrary, Seller is executing this letter solely as an accommodation to and at the request of Buyer and, except to the extent Seller is liable to Buyer for representations and warranties expressly set forth in that certain Agreement of Purchase and Sale, dated _________ 1998, by and between Seller and Buyer (the "Sale Agreement"), this letter is subject to the condition that Seller shall not be liable or responsible to Buyer, any parent, subsidiary or other affiliate of Buyer, or any officer, director, employee, agent, representative, shareholder, partner or principal of Buyer or any such parent, subsidiary or other affiliate thereof or any accountant or other professionals engaged by or on behalf of any of the foregoing, including, without limitation, [accountant] (all of the foregoing being collectively referred to herein as the "Buyer Parties"), as a result of the fact that any of the statements made herein are in any way inaccurate, untrue or incorrect. By the acceptance of this letter, except for rights and remedies that Buyer may have under the Sale Agreement with respect to representations and warranties expressly set forth in the Sale Agreement, each of the Buyer Parties shall be deemed to have waived any and all rights and remedies that any of them may have against Seller, whether at law or in equity, as a result of the fact that any of the statements made herein are in any way inaccurate, untrue or incorrect. 4 Seller has executed this letter for the limited purposes set forth herein, and for the use of [accountant] only. No other parties may rely on the statements set forth herein. Very truly yours, RREEF MIDAMERICA/EAST FUND-IV, a California group trust By: RREEF America L.L.C., a Delaware limited liability company By:_______________________________ Name: Joseph S. Cappelletti Title: Its Authorized Representative By: __________________________________ Name: Barbara J. Gillentine Title: Its Authorized Representative 5 EXHIBIT A Legal Description of Property EX-10.3 4 EXHIBIT 10.3 Exhibit 10.3 AGREEMENT OF PURCHASE AND SALE between Brandywine Operating Partnership, L.P., Purchaser, and RREEF MidAmerica East-V Six, Inc., Seller 180 Wheeler Court, Bucks County, Pennsylvania Table of Contents 1. Purchase Price.. . . . . . . . . . . . . . . . . . . . . . . . . . .1 2. Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 3. Review of the Property.. . . . . . . . . . . . . . . . . . . . . . .2 4. Title and Survey.. . . . . . . . . . . . . . . . . . . . . . . . . .3 5. Representations and Warranties.. . . . . . . . . . . . . . . . . . .4 5.1 Representations and Warranties of Seller.. . . . . . . . .4 5.2 Representations and Warranties of Purchaser. . . . . . . .7 5.3 Limitations. . . . . . . . . . . . . . . . . . . . . . .7 5.4 Condition of Property. . . . . . . . . . . . . . . . . . .8 6. Closing Conditions.. . . . . . . . . . . . . . . . . . . . . . . . .8 6.1 Title Insurance. . . . . . . . . . . . . . . . . . . . . .8 6.2 Estoppel Letters . . . . . . . . . . . . . . . . . . . . .8 6.3 Representations and Warranties . . . . . . . . . . . . . .9 6.4 Seller Performance . . . . . . . . . . . . . . . . . . . .9 7. Other Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . .9 8. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8.1 Closing of Sale. . . . . . . . . . . . . . . . . . . . . 10 8.2 Prorations; Adjustments. . . . . . . . . . . . . . . . . 10 8.3 Proration of Service Charges.. . . . . . . . . . . . . . 11 8.4 Closing Costs. . . . . . . . . . . . . . . . . . . . . . 12 8.5 Possession.. . . . . . . . . . . . . . . . . . . . . . . 12 8.6 Seller's Closing Documents.. . . . . . . . . . . . . . . 12 8.7 Purchaser's Closing Documents. . . . . . . . . . . . . . 13 8.8 Joint Deliveries.. . . . . . . . . . . . . . . . . . . . 14 9. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 14 9.1 Modifications. . . . . . . . . . . . . . . . . . . . . . 14 9.2 Casualty and Condemnation. . . . . . . . . . . . . . . . 14 9.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . 14 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 14 9.5 Parties Bound. . . . . . . . . . . . . . . . . . . . . . 16 9.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 16 i 9.7 Continuation Until Closing; Leasing. . . . . . . . . . . 16 9.8 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 16 9.9 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . 17 9.10 Remedies for Non-Performance.. . . . . . . . . . . . . . 17 9.11 Brokers Commission.. . . . . . . . . . . . . . . . . . . 17 9.12 Survival of Covenants. . . . . . . . . . . . . . . . . . 17 9.13 Seller's Investment Committee Approval.. . . . . . . . . 17 9.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 17 9.15 Entry and Indemnity. . . . . . . . . . . . . . . . . . . 18 9.16 Release. . . . . . . . . . . . . . . . . . . . . . . . . 18 9.17 Confidential Information. . . . . . . . . . . . . . . . 19 9.18 Calculation of Time Periods. . . . . . . . . . . . . . . 19 9.19 Entire Agreement.. . . . . . . . . . . . . . . . . . . . 19 9.20 Severability.. . . . . . . . . . . . . . . . . . . . . . 20 9.21 Facsimile Signatures.. . . . . . . . . . . . . . . . . . 20 9.22 Further Assurances.. . . . . . . . . . . . . . . . . . . 20 9.23 Offer. . . . . . . . . . . . . . . . . . . . . . . . . . 20 9.24 Seller Exculpation Clause. . . . . . . . . . . . . . . . 20 9.25 Purchaser Exculpation Clause.. . . . . . . . . . . . . . 21 9.26 SEC Reporting (8-K) Requirements.. . . . . . . . . . . . 21 List of Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . 23 ii AGREEMENT OF PURCHASE AND SALE BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("Purchaser") agrees to purchase, and RREEF MIDAMERICA EAST-V SIX, INC., a Delaware Corporation ("Seller") agrees to sell, that certain improved real property, hereinafter referred to as the "Property", situated in Bucks County, Commonwealth of Pennsylvania, legally described on Exhibit A attached hereto and made a part hereof, consisting of a single parcel of real estate improved with a building commonly known as 180 Wheeler Court, Bucks County, Pennsylvania, together with all rights, privileges, easements and appurtenances thereto, including any and all mineral rights, development rights, air rights, and the like; all personal property owned by the Seller and located on or used in conjunction with the Property (specifically excluding furniture, fixtures and equipment owned by RREEF Management Company and located in the RREEF Management Company office); any and all intangible personal property owned by Seller and used in the operation of the Property, including the right to use the name of the property (but not the name "RREEF"), to the extent assignable, but excluding computer software and related licenses; contract rights, "Leases" of all or any part of the Property, all licenses, permits and other written authorizations necessary for the use, operation and ownership of the Property, records, security deposits and prepaid rent, if any, and the benefit of any guaranties of the Leases. 1. Purchase Price. The purchase price for the Property ("Purchase Price") is Two Million Eight Hundred Thousand Dollars ($2,800,000.00), payable by wire transfer of immediately available funds at Closing as defined in Paragraph 8.1. 2. Deposit. 2.1 Purchaser has previously deposited, pursuant to this Agreement and pursuant to the Other Agreements (defined in Paragraph 7 below) the amount of Five Hundred Fifty Thousand Dollars ($550,000.00) (the "Deposit") with Commonwealth Land Title Insurance Company ("Escrow Holder") as earnest money to secure Purchaser's performance hereunder and under the Other Agreements. The Deposit may be invested at the direction of Purchaser with the approval of Seller. All investment income earned from the investment of the Deposit, less investment fees, if any, will be added to and become a part of the Deposit and will be applied toward the Purchase Price under the KOP Agreement (defined in Paragraph 7) if Closing is completed in accordance with this Agreement; otherwise all interest will be paid to the party entitled to the Deposit. The escrow instructions to Escrow Holder will be in the form of Schedule 2.1 attached hereto (the "Escrow Instructions"). If Purchaser does not elect to terminate this Agreement pursuant to Section 3 below, prior to the end of the Review Period (defined in Section 3.4), on or before one business day after last day of the Review Period Purchaser shall deposit an additional $500,000 with Escrow Holder, which shall be added to and become a part of the Deposit for all purposes hereunder. 2.2 Of the total Deposit, the sum of $150,000 is agreed to be non-refundable, and shall be refunded to Purchaser only (i) if Purchaser terminates this Agreement under Section 3.4, under the circumstances set forth in Section 3.4.1, or (ii) if the Agreement is terminated or if the Closing fails to occur by reason of Seller's default. Under all other circumstances, wherever under this Agreement and the Other Agreements the Deposit is to be returned to Purchaser, $150,000 out of the Deposit shall be paid to Seller, to be retained by Seller as fully earned. 3. Review of the Property. 3.1 From and after the "Effective Date" (as defined in Paragraph 9.23), Seller agrees to provide Purchaser and its agents or consultants with access to the Property to inspect each and every part thereof to determine its present condition and to conduct such physical and environmental studies (including a mechanical and roof study and Phase I environmental assessment) as it deems appropriate. 3.2 Within three (3) business days after the Effective Date Seller will make available to Purchaser for inspection and copying, all to the extent in the possession of Seller or its managing agent, a copy of each existing Lease and equipment lease, service contract and maintenance or other contract pertaining to the operations of the Property that will survive Closing, a copy of each real estate tax bills for 1994-1996, both inclusive, and unaudited financial statements for the Property for the years 1994-1996, both inclusive. 3.3 Within three (3) business days after the Effective Date Seller will make available to Purchaser for inspection and copying at the office of Seller's managing agent, all to the extent in the possession of Seller or its managing agent: 3.3.1 a copy of each environmental reports relating to the Property prepared by third party consultants since January 1, 1995. 3.3.2 a copy of each current franchises, business or other licenses, bonds, permits, certificates, authorizations and other evidences of consent, approval, authorization or permission relating to or affecting the Project of or from any person, including any governmental authority, held by Seller, including any pending applications. 3.3.3 a copy of each material third party warranties and guaranties, if any, which are in effect with respect to the Property. 3.4 Purchaser has until 5:00 p.m. CST on February 2, 1998 (the "Review Period"), to determine in its sole discretion whether all matters relating to the Property (except title and survey, which are governed by Paragraph 4), are acceptable, and to obtain the approval of the transaction contemplated herein by Seller's Board of Directors. If Purchaser concludes that any matter relating to the Property is not acceptable or that its Board has disapproved the 2 transaction, Purchaser will so notify Seller (the "Termination Notice") prior to the expiration of the Review Period (which notice shall contain a copy of Purchaser's roof/structural report and other reports or studies, other than environmental reports, obtained in connection with Purchaser's due diligence). Upon timely delivery of the Termination Notice, this Agreement will terminate without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 9.15 hereof and the obligation to deliver to Seller a copy of any environmental report obtained by Purchaser if requested by Seller within ten (10) days after receipt of the Termination Notice. In the event that Purchaser does not timely so notify Seller, Purchaser will be deemed to have concluded that all matters relating to the Property are acceptable and to have elected to proceed with the transaction upon the terms and conditions contained in this Agreement (including the obligation to increase the amount of the Deposit by an additional $500,000) without regard to this Paragraph 3.4. 3.4.1 If this Agreement is terminated pursuant to Paragraph 3.4, the Deposit, less $150,000, will be returned to Purchaser as provided in the Escrow Instructions. This $150,000 shall be paid to Seller, unless Purchaser's termination resulted from (i) Seller's default, (ii) a material deviation from the economics of the Property as presented in Seller's offering memorandum (it being understood and agreed that Seller makes no warranty or representation as to said offering memorandum), or (iii) any material structural or environmental defect in the Property not known or disclosed to Purchaser before December 22, 1997. 3.5 Purchaser agrees that any information obtained by Purchaser or its authorized agents in the conduct of its due diligence will be treated as confidential pursuant to Paragraph 9.17. 4. Title and Survey. Purchaser has ordered, at its expense (and upon receipt, Purchaser shall promptly deliver copies to Seller): (i) a commitment for a 1992 form ALTA Owner's title insurance policy with respect to the Property from Commonwealth Land Title Insurance Company (the "Title Insurer") in the amount of the Purchase Price, and (ii) copies of all documents relating to title exceptions referred to therein. Seller has already ordered, and Purchaser has received, at Purchaser's sole expense, a plat of survey of the Property made in accordance with Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (1992) pursuant to the accuracy standards of an Urban Survey. On or before January 30, 1998, Purchaser agrees to notify Seller of any objection Purchaser may have to any exceptions reported in the commitment or any matter shown on the plat of survey (the "Unacceptable Exceptions"). Seller will be responsible for satisfaction of the Title Insurer's Schedule B-1 seller requirements. All other exceptions and survey matters will be deemed acceptable to Purchaser. If Purchaser fails to give such notice to Seller, the survey and all of the exceptions in the title commitment will be deemed acceptable to Purchaser. Seller will have ten (10) days after receipt of Purchaser's notice within which to notify Purchaser whether Seller elects to either (a) eliminate or induce the Title Insurer to insure over (subject to Purchaser's consent, not to be unreasonably withheld) the Unacceptable Exceptions or (b) terminate this Agreement. If Seller agrees to eliminate or induce to the Title Insurer to insure over (with Purchaser's consent) the 3 Unacceptable Exceptions, Seller will be obligated to do so at its cost on or prior to Closing. If Seller elects to terminate this Agreement, neither party will have any further rights or obligations hereunder, except as provided in Paragraph 9.15. If Seller fails to give any timely notice, Seller will be deemed to have elected to terminate this Agreement. If any other recorded exception to title is discovered after the commitment is delivered to Purchaser, and Purchaser does not elect to waive such exception upon the first to occur of (a) the Closing or (b) seven (7) days after being notified of such exception and to proceed with the consummation of the Closing, Seller will have fifteen (15) days after the expiration of said seven (7) day period (and Closing will be delayed if necessary, so that it occurs not earlier than twenty-two (22) days after Purchaser is notified of such exception) after notifying Purchaser of such discovery in which to use commercially reasonable efforts to eliminate or to induce the Title Insurer to insure over (subject to Purchaser's approval, not to be unreasonably withheld) such exception, and if such exception is not eliminated or insured over as aforesaid within said 15-day period, Purchaser may terminate this Agreement, in which event the Deposit will be returned to Purchaser and neither party will have any further rights or obligations hereunder except as provided in Paragraph 9.15, or close the sale subject to such exception. Seller agrees that it will pay off at Closing (and not induce the Title Insurer to insure over) title exceptions representing monetary liens of a definite or ascertainable amount voluntarily granted by Seller. In using commercially reasonable efforts to eliminate or to induce the Title Insurer to insure over Unacceptable Exceptions, Seller will not be required to litigate or to expend more than $10,000 in the aggregate. Ad valorem real estate taxes not yet due and payable and all title and survey matters which are not Unacceptable Exceptions are hereinafter referred to as Acceptable Exceptions. 5. Representations and Warranties. 5.1 Representations and Warranties of Seller. As used in this Paragraph 5.1 and elsewhere in this Agreement, the phrase "to the knowledge of Seller" or phrases of similar import mean and are limited to the actual current knowledge, without duty to investigate or inquire, of Seller's portfolio manager (Pamela Boneham) and Seller's local manager having ongoing management responsibility with respect to the Property (Barbara Gillentine), and not to any constructive knowledge of any of the foregoing individuals or of Seller or any investment advisor to Seller, any entity that is a partner in such investment advisor, or any affiliates of any thereof, or to any officer, agent, representative, or employee of Seller or such investment advisor, any such constituent partner, or any such affiliate. Seller hereby warrants and represents to Purchaser (with such representations and warranties to be re-made as of Closing pursuant to Paragraph 8.6.10) as follows: 5.1.1 Pending Proceedings. With the exception of the items set forth in Schedule 5.1 (the "Disclosure Schedule") to the knowledge of Seller, Seller has received no written notice of special assessments, condemnation, environmental, zoning or other land use regulation proceedings, either pending or planned to be instituted, with respect to the Property or any part thereof. 4 5.1.2 Status of Seller and Closing Documents. Subject to Paragraph 9.13, this Agreement has been, and all the closing documents to be delivered by Seller to Purchaser at Closing are or will be, duly authorized, executed, and delivered by Seller, will be sufficient to convey insurable title, are legal, valid, and binding obligations of Seller, are enforceable in accordance with their respective terms, and do not violate any provisions of any agreement to which Seller or the Property is subject or bound. Seller is duly organized and validly existing and, if required, duly qualified to transact business in the State in which the Property is located. 5.1.3 Non-Foreign Status. Seller is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended. 5.1.4 Compliance with Laws. With the exception of the items set forth in the Disclosure Schedule, Seller has received no governmental notice, not heretofore corrected, alleging that the Property or its current uses are in violation of any zoning, building, health, traffic, environmental, flood control or all other applicable rules, regulations, codes, ordinances, or statutes of any local, state and federal authorities or any other governmental authority (collectively, the "Laws") asserting jurisdiction over the Property. 5.1.5 Service Contracts. With the exception of the items set forth in the Disclosure Schedule, to Seller's knowledge, there are no agreements or contracts affecting the Property (including, without limitation, any management, leasing, services or maintenance agreements) which are not terminable at will by Seller without further liability, upon not more than 30 days' prior written notice. The contracts and agreements to be assigned to Purchaser pursuant to Paragraph 8.6.5 are listed on Schedule 5.1.5 attached hereto. Seller agrees to terminate the existing management agreement covering the Property on or before Closing. 5.1.6 No Default. The execution and delivery of this Agreement, and consummation of the transaction described in this Agreement, does not and will not constitute a default under any contract, lease, or agreement to which Seller is a party or by which Seller is bound. 5.1.7 No Suits. Except as set forth in the Disclosure Schedule and except for personal injury or property damage actions for which there is adequate insurance coverage and where the insurance carrier has accepted the tender of the defense without reservation, to Seller's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Property or any portion thereof, or relating to or arising out of the ownership, management or operation of the Property, in any court or before or by any federal, state, or municipal department, commission, board, bureau or agency or other governmental instrumentality. 5.1.8 Environmental Condition. Each of the following representations contained in this Paragraph 5.1.8 is wholly qualified and limited by (a) any matters disclosed in 5 any materials made available or delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b) any matters disclosed in any environmental reports or studies obtained by Purchaser, and (c) any other matters of which Purchaser has actual knowledge. Subject to the foregoing, Seller represents: 5.1.8.1 With the exception of items listed in the Disclosure Schedule, and except (i) in amounts customarily found in office uses and in the other uses for which the Property is suited and used and (ii) in compliance with applicable law, to Seller's knowledge, Seller has not released, generated or handled Hazardous Materials on the Property, and Seller has no knowledge of any release, generation or handling of Hazardous Materials on the Property by any tenants or the incorporation of Hazardous Materials by the tenants in any improvements on the Property during the time Seller owned the Property. For the purposes hereof, "Hazardous Material" means any substance, chemical, waste or other material which is listed, defined or otherwise identified as "hazardous" or "toxic" under any federal, state, local or administrative agency ordinance or law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., or any regulation, order, rule or requirement adopted hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, asbestos, and "source," "special nuclear" and "by-product" material as defined in the Atomic Energy Act of 1985, 42 U.S.C. Sections 3011 et seq. 5.1.8.2 With the exception of items listed in the Disclosure Schedule, to Seller's knowledge, Seller has not received any summons, citation, directive, letter or other communication, written or oral, from the United States Environmental Protection Agency or the State environmental protection agency having jurisdiction over the Property. 5.1.9 Options. Seller has granted no options or rights of first refusal to acquire any interest in the Property not set forth in the Leases delivered to Purchaser or in documents of record disclosed in the title commitment. 5.1.10 Rent Roll. To Seller's knowledge, the information set forth on the rent roll attached hereto as Schedule 5.1.10 is true and accurate in all material respects. 5.1.11 Tenant Rights. There are no termination, extension, cancellation, or expansion rights under any occupancy arrangements with respect to the Property except as contained in the Leases. 5.1.12 Leasing Commissions. All leasing commissions, free rent and tenant improvement allowances due and payable as of the date hereof by Seller have been paid or will have been paid on or before Closing. To Seller's knowledge, the only current leases as to 6 which commissions, free rent and tenant improvement allowances may become due in the future are listed on Schedule 5.1.12, which future obligations shall be expressly assumed by Purchaser. 5.1.13 There are no employees of the Property or Seller who will become employees of Purchaser or for which Purchaser shall be responsible in any way. 5.2 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller that this Agreement has been, and all the documents to be delivered by Purchaser to Seller will be, duly authorized, executed, and are or will be legal, valid, and binding obligations of Purchaser, are or will be enforceable in accordance with their respective terms, and do not and will not at Closing violate any provisions of any agreement to which Purchaser is subject. 5.3 Limitations. Each of the representations and warranties of Seller contained in Paragraph 5.1: (i) is made as of the date of this Agreement; (ii) will be deemed to be remade by Seller, and to be true in all material respects, as of Closing, subject to other matters expressly permitted in this Agreement or otherwise specifically approved in writing by Purchaser; and (iii) will survive for a period of one (1) year after the Closing Date, as defined in Paragraph 8.1. Any claim that Purchaser may have at any time against Seller for a breach of any such representation or warranty, whether known or unknown, which is not asserted by notice from Purchaser to Seller within such six (6) month period will not be valid or effective, and Seller will have no liability with respect thereto. Nor will Seller have any liability to Purchaser for a breach of any representation or warranty unless the valid claims for all such breaches collectively aggregate more than One Hundred Thousand Dollars ($100,000.00), in which event the full amount of such valid claims shall be actionable, subject to the limitation in Section 9.10. The continued accuracy in all material respects of the aforesaid representations and warranties is a condition precedent to Purchaser's obligation to close. If any of said representations and warranties is not correct in all material respects at the time the same is made or as of Closing, and Seller had no knowledge of such inaccuracy when the representation or warranty was made, or when remade at Closing, or if such warranty or representation becomes inaccurate on or prior to Closing other than by reason of Seller's default hereunder, Purchaser may, upon being notified of such occurrence on or prior to Closing either (a) terminate this Agreement without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 9.15 and the Deposit will be returned to Purchaser, or (b) waive such matter and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. If any of said representations and warranties are not correct in all material respects at the time the same is made or as of Closing, and Seller had knowledge of such inaccuracy when the representation or warranty was made, or, by its default hereunder caused the representation or warranty to be inaccurate when remade at Closing, Purchaser may either (x) terminate this Agreement subject to its obligations under Paragraph 9.15, receive a return of the Deposit and recover from Seller all of Purchaser's actual, reasonable out-of-pocket costs incurred in connection with its review of 7 the Property or (y) waive the breach and its rights under clause (x) and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. 5.4 Condition of Property. Except as expressly set forth in this Agreement, Seller has not made and does not hereby make any representations, warranties or other statements as to the condition of the Property and Purchaser acknowledges that at Closing it is purchasing the Property on an "AS IS, WHERE IS" basis and without relying on any representations and warranties of any kind whatsoever, express or implied, from Seller, its agents or brokers as to any matters concerning the Property. Except as expressly set forth in this Agreement, no representations or warranties have been made or are made and no responsibility has been or is assumed by Seller or by any partner, officer, person, firm, agent or representative acting or purporting to act on behalf of Seller as to the condition or repair of the Property or the value, expense of operation, or income potential thereof or as to any other fact or condition which has or might affect the Property or the condition, repair, value, expense of operation or income potential of the Property or any portion thereof. The parties agree that all understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Schedules and Exhibits hereto annexed, which alone fully and completely express their agreement, and that this Agreement has been entered into after full investigation, or with the parties satisfied with the opportunity afforded for investigation, neither party relying upon any statement or representation by the other unless such statement or representation is specifically embodied in this Agreement or the Exhibits annexed hereto. Purchaser acknowledges that Seller has requested Purchaser to inspect fully the Property and investigate all matters relevant thereto and, with respect to the condition of the Property, to rely solely upon the results of Purchaser's own inspections or other information obtained or otherwise available to Purchaser, rather than any information that may have been provided by Seller to Purchaser. 6. Closing Conditions. Purchaser's obligation to proceed to Closing is conditioned upon Seller's performance of the following obligations and satisfaction of the following conditions, in addition to all of its other obligations and conditions contained in this Agreement, provided that Purchaser may in its sole discretion elect to waive failure by Seller to perform any particular obligation. 6.1 Title Insurance. The Title Insurer is prepared to issue a policy of title insurance insuring Purchaser's interest in the Property being conveyed, subject only to Acceptable Exceptions. 6.2 Estoppel Letters. Seller has delivered to Purchaser not later than the date of Closing, estoppel letters substantially in the form of Schedule 6.2 ("Required Estoppel Form") or in form otherwise reasonably acceptable to Purchaser, prepared by Seller and 8 addressed to Purchaser, from tenants occupying in the aggregate at least 75% of the Property, measured by square footage. All estoppel letters must be dated not more than forty-five (45) days prior to the date of Closing. An estoppel letter form, even though not in the Required Estoppel Form, will be deemed reasonably acceptable to Purchaser if said letter contains the following information: confirming rent, security deposit, square footage and termination date; that no rent has been paid more than one month in advance; that the lease is in full force and effect and that a true and correct copy of the lease with all amendments and modifications is attached; and that all work to be performed by Landlord has been performed and that the tenant has no knowledge of any Landlord default. 6.2.1 If Seller is unable to obtain the requisite estoppel letters as described above, Seller may (but is not required to) substitute for any unsigned estoppel letter from a tenant other than a Major Tenant an estoppel letter in the Required Estoppel Form, which may be completed, executed and delivered by Seller and warranted and represented by Seller, provided that such substituted estoppel letters will not collectively represent in excess of 10% of all of the tenants, measured by square footage. Seller's representations and warranties in the certificates will survive the Closing subject to the limitations of Paragraph 5.3. In the event that, following the Closing Date, Seller or Purchaser obtains an estoppel letter complying with the requirements of Paragraph 6.2 with respect to any lease for which Seller delivered a substituted estoppel letter, Seller will deliver such estoppel letter to Purchaser and, upon such delivery, Seller will be automatically released from any liability or obligation under the substituted estoppel letter previously delivered by Seller with respect to such lease. Purchaser may (but shall not be required to) accept a substituted estoppel letter as to a Major Tenant as well. 6.2.2 If Seller is unable to obtain and deliver sufficient tenant estoppel certificates as required under Paragraph 6.2, or if the letters received under Paragraph 6.2 or substituted estoppels permitted under Paragraph 6.2.1 contain information or omissions unacceptable to Purchaser in its reasonable discretion, then Seller will not be in default by reason thereof, but Purchaser may, by notice given to Seller before the Closing, elect (i) to waive said conditions and proceed with the Closing or (ii) to terminate this Agreement, and receive a refund of the Deposit. If Purchaser elects to terminate this Agreement, neither party will have any further rights or obligations hereunder except as provided in Paragraph 9.15. 6.3 Representations and Warranties. All of Seller's representations and warranties made pursuant to Paragraph 5.1 remain true and correct in all material respects. 6.4 Seller Performance. Seller has delivered all of the documents and other items required pursuant to Paragraph 8.6 and has performed all other covenants, undertakings and obligations required by this Agreement, to be performed or complied with by Seller at or prior to Closing. 7. Other Agreements. The obligations of Purchaser and Seller to close hereunder shall also be conditioned upon the simultaneous closing of (a) the purchase by Purchaser or an 9 affiliate of Purchaser, of twelve industrial and office buildings and a parcel of vacant land in King of Prussia Business Park, King of Prussia, Pennsylvania, pursuant to that certain Agreement of Purchase and Sale of even date herewith ("KOP Agreement") between Purchaser, as purchaser, and RREEF USA Fund-I ("KOP Owner"), as seller, and (b) the purchase by Purchaser or an affiliate of Purchaser, of the industrial building commonly known as 741 First Avenue, King of Prussia, Pennsylvania, pursuant to that certain Agreement of Purchase and Sale of even date herewith (the "741 Agreement"; the KOP Agreement and the 741Agreement collectively the "Other Agreements") between Purchaser, as purchaser, and RREEF MidAmerica/East Fund-IV ("741 Owner"; the KOP Owner and the 741 Owner are collectively referred to as the "Other Owners"), as seller. This condition may be waived by the parties. Without limiting the generality of the foregoing, if Purchaser terminates this Agreement pursuant to Section 3 or Section 4, the Other Owners shall have the right to terminate the Other Agreements as well; or, if Purchaser terminates one or more of the Other Agreements pursuant to Section 3 or Section 4 of the Other Agreements, Seller shall have the right to terminate this Agreement as well. A default by Purchaser under one or more of the Other Agreements shall be deemed a Purchaser default hereunder, and a default by an Other Owner under one or more of the Other Agreements shall be deemed a Seller default hereunder. 8. Closing. 8.1 Closing of Sale. The purchase and sale contemplated herein shall close (herein referred to as the "Closing") at the office of the Title Insurer, or as otherwise mutually agreed, on a date selected by Seller, which date (the "Closing Date") shall not be earlier than the date which is fifteen (15) days after the expiration of the Review Period nor more than thirty (30) days after expiration of the Review Period, time being of the essence. At Closing, Seller will deliver to Purchaser a Special Warranty Deed ("Deed") in the form of Schedule 8.6.1 and other closing documents required hereunder and Purchaser will cause payment of the Purchase Price to be made to Seller by wire transfer. The sale (payment of the Purchase Price and delivery of the Deed) may, at Purchaser's option to be exercised by notice to Seller at least five (5) days prior to the Closing Date, be closed through escrow with the Title Insurer in accordance with the general provisions of the usual form of escrow agreement used in similar transactions by such Title Insurer with special provisions inserted (i) as may be required to conform with this Agreement and (ii) to close on a so-called "New York Style" basis. 8.2 Prorations; Adjustments. The parties will prorate taxes, rental, and other income, and operating or other expenses of the Property as of 12:01 a.m. on the date after Closing (i.e., Seller is entitled to the income and responsible for the expenses of the day of Closing). All income will be prorated on the basis of income actually received by Seller, as opposed to income which is due or for which Seller has rendered invoices but which has not been paid (i.e., Seller will not be entitled to any credit for receivables, and there will be no proration as to such receivables). Any taxes or other expenses of the Property for any period prior to Closing which are payable by tenants of the Property subsequent to Closing (e.g., real estate taxes paid in arrears and not yet billed to tenants), will reduce the credit to Purchaser for such items (i.e., no 10 credit from Seller for pass-through items for which Purchaser will later collect from the tenants). To the extent that the taxes to be prorated are not known with certainty, such proration will be based upon the most recent tax bill or county estimate, to be re-prorated upon issuance of final bills. Seller also agrees to give Purchaser a credit against the Purchase Price for all cash security deposits required to be held pursuant to the Leases (less portions thereof applied by Seller to tenant defaults and not subsequently restored by the tenant in question) and all interest due thereon and shall assign to Purchaser any other tenant deposits held by Seller. Purchaser will pay amounts subsequently received by it from tenants constituting base rent, capital reimbursements or other income due from tenants and attributable to Seller's period of ownership, but not collected as of the date of Closing, to Seller promptly upon receipt; provided that amounts received from tenants by Purchaser will be first applied to current charges, and the balance will be applied to payments due to Seller. Notwithstanding the foregoing, Seller shall expressly reserve the right to seek to collect, directly from the tenants after Closing and with Purchaser's cooperation, any delinquencies and other amounts attributable to Seller's period of ownership, but not collected as of the date of Closing. To the extent Seller has received amounts from tenants for real estate taxes and 1997 and 1998 operating expenses in excess of amounts paid by Seller with respect to such expenses, Seller will credit such excess to Purchaser at Closing, and Seller will provide adequate backup information in connection with such credit. On or after the Closing, Seller will have no further obligations with respect to any Leases or other agreements affecting the Property, including, without limitation, tenant improvement work, leasing commissions and free rent. 8.2.1 Seller and Purchaser hereby agree to use their reasonable efforts to calculate prorations (including real estate tax prorations) so as to permit settlement thereof on the Closing Date, provided, however, that if any of such prorations cannot be calculated accurately on the Closing Date, then the same will be calculated as soon as reasonably practicable after the Closing Date, but in no event later than the later to occur of (i) thirty (30) days after Seller receives its final cost certification for the year in which Closing occurs, or (ii) March 31 of the year following the year in which Closing occurs, and either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party, together with interest thereon at the rate of two percent (2%) per annum over the "prime rate" (as announced from time to time in the Wall Street Journal) from the Closing Date to the date of payment if payment is not made within thirty (30) days after delivery of a bill therefor together with reasonable back-up documentation. This obligation of the parties will survive Closing. 8.3 Proration of Service Charges. To the extent Seller, as opposed to tenants, is responsible for payment of utility charges, Seller will attempt to have utility meters read as of the Closing Date. To the extent that this is not possible and to the extent that any other obligation for continuing services is incurred, and statements are rendered for such services covering periods both before and after the Closing Date, the amount will be adjusted between the parties as of the Closing Date on a per-diem basis. Seller will forward any such statements which it receives to Purchaser and Purchaser will pay the same. Seller will remit to Purchaser its proportionate share immediately upon demand. 11 8.4 Closing Costs. Purchaser agrees to pay (i) the Title Insurer's escrow and/or closing fees (including any payment to the closing officer of the Title Insurer as may be the local custom at the Closing), (ii) the cost of the title commitment and basic policy and endorsements, if any, required to meet Seller's obligations hereunder and the cost of any endorsements to the title policy required by Purchaser, including extended coverage, (iii) all recording fees and taxes with respect to the Deed, (iv) all costs of Purchaser's physical inspections of the Property (environmental, engineering) and other due diligence activities; (v) all costs of survey, including fees and charges of Gannett Fleming Associates (originally engaged by Seller); (vi) cancellation charges, if applicable, to Coventry Abstract (originally engaged by Seller); and (vii) one-half (1/2) of applicable transfer taxes. Seller agrees to pay (i) all recording fees with respect to clearing Seller's title, and (ii) one-half (1/2) of applicable transfer taxes. Except as otherwise provided in Paragraph 9.9, each party is responsible for its own attorneys' and other professional fees. All other closing costs shall be allocated in accordance with the prevailing local custom. 8.5 Possession. Subject to the rights of tenants pursuant to Leases delivered to Purchaser, Seller will deliver possession of the Property and of any conveyed personal property to the Purchaser on the date of Closing and Seller will thereupon deliver to Purchaser the originals of all Leases, all correspondence with tenants, tenant/lease files, operating statements, plans and specifications, supplies and advertising materials, booklets, keys, and other items used in connection with operation of the Property. 8.6 Seller's Closing Documents. As part of the Closing, Seller will deliver to Purchaser: 8.6.1 the Deed, in the form of Schedule 8.6.1 8.6.2 an affidavit in customary form that Seller is not a foreign person within the meaning of Section 1445(e) of the Internal Revenue Code of 1986, in the form of Schedule 8.6.2; 8.6.3 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's basic title insurance policy, including a mechanics' lien and judgment affidavit; 8.6.4 an assignment of the Leases in the form of Schedule 8.6.4 ("Lease Assignment"); 8.6.5 an assignment of contracts and warranties in the form of Schedule 8.6.5 ("Contracts Assignment"), assigning to Purchaser all contracts listed on Schedule 5.1.5, other than those designated by Purchaser for termination by notice to Seller not less than thirty (30) days prior to Closing; 12 8.6.6 an assignment of intangibles in the form of Schedule 8.6.6 ("Intangibles Assignment"); 8.6.7 letters, in form to be supplied by Purchaser, to the tenants at the Property, instructing the tenants to pay rent to Purchaser and to recognize Purchaser as landlord under their Leases; 8.6.8 a bill of sale conveying all personal property of Seller, if any, located at the Property and used in connection with the maintenance or operation thereof (specifically excluding furniture, fixtures and equipment owned by RREEF Management Company and located in the RREEF Management Company office), in the form of Schedule 8.6.8; 8.6.9 a rent roll, certified by Seller as being true and correct, to Seller's knowledge, as of the Closing Date, in the form previously delivered to Purchaser; 8.6.10 a "bring down certificate" stating that Seller's representations and warranties are true and correct as of the Closing Date, in the form of Schedule 8.6.10; 8.6.11 estoppel certificates as required by Paragraph 6.2 herein; and 8.6.12 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 8.7 Purchaser's Closing Documents. As part of the Closing, Purchaser will deliver to Seller: 8.7.1 good federal funds in an amount equal to the Purchase Price, less the Deposit and interest thereon and plus or minus prorations as provided herein and plus funds sufficient to pay Purchaser's closing costs hereunder; 8.7.2 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's title insurance policy; 8.7.3 executed counterpart of the Lease Assignment; 8.7.4 executed counterpart of the Contracts Assignment; 8.7.5 executed counterpart of the Intangibles Assignment; 8.7.6 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 13 8.8 Joint Deliveries. At the Closing, Seller and Purchaser will execute and deliver to each other the following documents in proper form: 8.8.1 Closing Statement; 8.8.2 City, county and state transfer tax declarations or similar instruments; and 8.8.3 All other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 9. Miscellaneous. 9.1 Modifications. This Agreement can be amended only in writing signed by both of the parties. 9.2 Casualty and Condemnation. Seller agrees to keep its customary replacement cost insurance covering the Property in effect until the Closing. If between the Effective Date and the Closing the improvements on the Property are destroyed or damaged to the extent that repairs cost in excess of $250,000 in the estimate of an architect or contractor selected by Seller and reasonably acceptable to Purchaser, or if condemnation proceedings are commenced against the Property, Purchaser may (i) terminate this Agreement or (ii) elect to accept the Property in its then condition, in which event Seller will pay or assign to Purchase at Closing all proceeds of insurance (plus the applicable deductible) or condemnation awards payable to Seller by reason of such damage or condemnation. In the event Purchaser makes neither election by the earlier of (a) Closing or (b) ten (10) days after being advised of such casualty or condemnation, Purchaser will be deemed to have elected to accept the Property in its then condition. In the event of any other damage to the Property, Seller may either repair the damage or give Purchaser a reduction in the Purchase Price equal to the cost of repairing such damage, as certified by an architect or contractor selected by Seller and reasonably acceptable to Purchaser. In the event of any damage where Purchaser does not have the right to terminate and Seller elects to repair such damage, the Closing Date shall be delayed for the number of days required to repair the damage, which Seller agrees to do in accordance with all Laws and in a good and workmanlike manner. 9.3 Time of Essence. Time (including, without limitation, the date specified as the Closing Date) is of the essence of this Agreement. 9.4 Notices. All notices required or permitted hereunder must be in writing and shall be served on the parties at the following address: If to Purchaser: Brandywine Realty Trust 14 Newtown Square Corporate Campus 16 Campus Blvd. Suite 150 Newtown Square, PA 19073 Attn: Gerard H. Sweeney, President & CEO Brad A. Molotsky, General Counsel Facsimile: (610-325-5622) If to Seller: RREEF MidAmerica East-V Six, Inc. c/o The RREEF Funds 875 N. Michigan Avenue Suite 4100 Chicago, IL 60611 Attn: Mr. John Turney & Ms. Pamela Boneham Facsimile: (312) 266-9346 with a copy to: RREEF MidAmerica East-V Six, Inc. c/o The RREEF Funds 650 Park Avenue Suite 210 King of Prussia, PA 19406 Attn: Ms. Barbara Gillentine Facsimile: (610) 337-2308 and a copy to: D'Ancona & Pflaum 30 North LaSalle Street Suite 2900 Chicago, Illinois 60602 Attn: Lawrence J. Moss Facsimile: (312) 580-0923 Any such notices may be sent by (a) certified mail, return receipt requested, in which case notice will be deemed delivered three (3) business days after deposit, postage prepaid in the U.S. mail or (b) a nationally recognized overnight courier, in which case notice will be deemed delivered one business day after deposit with such courier or (c) facsimile transmission, in which case notice will be deemed delivered upon electronic verification that transmission to recipient was completed, provided that notices sent by facsimile transmission on a day other than a business day, or before 9:00 a.m. or after 5:00 p.m. recipient's time on a business day, shall be deemed given on the first business day following the date of transmission or (d) personal delivery. The above addresses and facsimile numbers may be changed by notice to the other party; provided that no notice of a change of address or facsimile number will be effective until actual receipt of such notice. 15 9.5 Parties Bound. Neither party may assign this Agreement without the prior written consent of the other, and any such prohibited assignment shall be void; provided that Purchaser may assign this Agreement without Seller's consent to an Affiliate; provided that the assignee is not a party-in-interest as described in Paragraph 9.14. Subject to the foregoing, this Agreement is binding upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. For the purposes of this Paragraph, the term "Affiliate" means (a) an entity that directly or indirectly controls, is controlled by or is under common control with the Purchaser or (b) an entity at least a majority of whose economic interest is owned by Purchaser; and the term "control" means the power to direct the management of such entity through voting rights, ownership or contractual obligations. 9.6 Governing Law. The performance and interpretation of this Agreement is controlled by the law of the Commonwealth of Pennsylvania. 9.7 Continuation Until Closing; Leasing. 9.7.1 Between the Effective Date and the Closing, Seller agrees to keep and perform all of the obligations to be performed by landlord under any Leases and Laws. Seller agrees to operate the Property in the same manner as before the making of this Agreement, the same as though Seller were retaining the Property. Seller agrees not to convey the Property, nor to grant any liens or easements with respect thereto. 9.7.2 Seller shall not permit or consent to any new leases, amendments, extensions, renewals (other than pursuant to tenant renewal options, if any) or subleases without first submitting them to Purchaser for Purchaser's approval on an approval form in the form attached hereto as Schedule 9.7.2, which approval shall not be unreasonably withheld. Purchaser shall have three (3) business days to notify Seller of its approval of such leases, amendments, extensions, renewals or subleases, and in the event that Purchaser does not so notify Seller, the leases, amendments, extensions, renewals or subleases, as the case may be, shall be deemed approved. 9.7.3 With respect to any new lease or lease modification entered into by Seller after December 18, 1997 and approved by Purchaser, by the terms of which Seller obligates itself to perform or performs or pays or contracts for any tenant improvement work or additional landlord work required pursuant to such lease, or pays or contracts for any leasing commissions or grants any free rent period or other financial concessions, then such expenses and/or free rent or other concessions, and all other third-party costs incurred (including attorneys' fees) in connection with such lease, will be a credit to Seller at Closing to the extent Seller paid such amounts prior to Closing; otherwise Purchaser agrees to assume liability for the payment and performance of such obligations in accordance with the terms thereof. 9.8 Brokers. Seller and Purchaser each (i) represents and warrants to the other that it has not dealt with any broker or finder in connection with the transaction contemplated by 16 this Agreement other than the parties, if any, to be paid a commission as specified in Paragraph 9.11, and (ii) agrees to defend, indemnify and hold the other harmless from and against any losses, damages, costs, or expenses (including attorneys' fees) incurred by such other party due to a breach of the foregoing warranty by the indemnifying party. 9.9 Attorneys' Fees. Notwithstanding any limitation on remedies or amounts recoverable set forth elsewhere herein, if any action is brought by either party against the other party, the party in whose favor final judgment is entered will be entitled to recover court costs incurred and reasonable attorneys' fees at trial, upon appeal and on any petition for review. 9.10 Remedies for Non-Performance. Purchaser's remedies regarding breach of warranty or representation by Seller are governed by Paragraph 5.3. In the event of any other default by Seller hereunder, Purchaser may, as its sole and exclusive remedy, either (i) terminate this Agreement and seek damages, subject to performance of Purchaser's indemnities set forth in Paragraph 9.15, and receive back the Deposit or (ii) seek specific performance. If said sale is not consummated because of a default under this Agreement on the part of Purchaser, the Deposit will be paid to and retained by Seller as Seller's sole and exclusive remedy. Seller and Purchaser acknowledge that the Deposit is a reasonable forecast of just compensation for the harm that could be caused by Purchaser's default and that the harm suffered by Seller is difficult or impossible to accurately ascertain or predict. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, SELLER'S TOTAL LIABILITY FOR DAMAGES FOR BREACH OF THE COVENANTS, AGREEMENTS, WARRANTIES AND REPRESENTATIONS UNDER THIS AGREEMENT AND THE OTHER AGREEMENTS, COLLECTIVELY, SHALL NEVER EXCEED TWO MILLION DOLLARS ($2,000,000.00), AND IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES. 9.11 Brokers Commission. Seller agrees to pay the brokerage commission due The Flynn Company pursuant to a separate agreement. 9.12 Survival of Covenants. All covenants hereunder which, by their terms, are intended to survive Closing will survive Closing hereunder. 9.13 Seller's Investment Committee Approval. This condition has been satisfied. 9.14 ERISA. Purchaser represents and warrants to Seller that none of Purchaser's assets are "plan assets," (as that term is defined by 29 CFR Section 2510.3-101) because all plans that are subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and which have invested in Purchaser hold only "equity interests," (as that term is defined by 29 CFR Section 2510.3-101(b)(1)) that are "publicly-offered securities," (as that term is defined by 29 CFR Section 2510.3-101(b)(2)). Purchaser further represents and warrants to Seller that 17 it is not any one of the types of entities listed in 29 CFR Section 2510.3-101(h), the character of which would identify its assets as "plan assets." 9.15 Entry and Indemnity. In connection with any entry by Purchaser, or its agents, employees or contractors onto the Property, Purchaser shall give Seller reasonable advance notice of such entry and shall conduct such entry and any inspections in connection therewith so as to minimize, to the greatest extent possible, interference with Seller's business and the business of Seller's tenants and otherwise in a manner reasonably acceptable to Seller. Without limiting the foregoing, prior to any entry to perform any on-site testing, Purchaser shall give Seller notice thereof, including the identity of the company or persons who will perform such testing and the proposed scope of the testing. Seller shall approve or disapprove the scope and methodology of such proposed testing within three (3) business days after receipt of such notice, such approval to be within the sole and unfettered discretion of Seller; Seller's failure to notify Purchaser of its approval or disapproval shall be deemed to be Seller's disapproval thereof. If Purchaser or its agents, employees or contractors take any sample from the Property in connection with any such approved testing, upon Seller's request, Purchaser shall provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing. Seller or its representative may be present to observe any testing or other inspection performed on the Property. Upon Seller's request, Purchaser shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Property performed by Purchaser or its agents, employees or contractors. Purchaser shall maintain, and shall assure that its contractors maintain, public liability and property damage insurance in amounts and in form and substance adequate to insure against all liability of Purchaser, its agents, employees or contractors, arising out of any entry or inspections of the Property pursuant to the provisions hereof, and Purchaser shall provide Seller with evidence of such insurance coverage upon request by Seller. Purchaser shall indemnify, defend and hold Seller harmless from and against any costs, damages, liabilities, losses, expenses, liens or claims (including, without limitation, reasonable attorney's fees) arising out of or relating to any entry on the Property by Purchaser, its agents, employees or contractors in the course of performing the inspections, testings or inquiries provided for in this Agreement, including without limitation damage to the Property or release of hazardous substances or materials onto the Property, excluding, however, any costs incurred by Seller in supervising Purchaser's testing. The foregoing indemnity shall survive beyond the Closing, or if the sale is not consummated, beyond the termination of this Agreement. 9.16 Release. Except to the extent of the representations and warranties of Seller expressly set forth in this Agreement, and except to the extent of a breach by Seller of applicable laws, but otherwise notwithstanding any other provision of this Agreement to the contrary, Purchaser, on behalf of itself and its successors and assigns, waives its right to recover from, and forever releases and discharges, Seller, Seller's affiliates, Seller's investment manager, the partners, trustees, shareholders, directors, officers, employees and agents of each of them, and their respective heirs, successors, personal representatives and assigns (collectively, the "Seller Related Parties"), from any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, 18 without limitation, attorneys' fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, which may arise on account of or in any way be connected with the physical condition of the Property or any law or regulation applicable thereto, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U.S.C. Sections 1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), and the Toxic Substance Control Act (15 U.S.C. Sections 2601-2629) 9.17 Confidential Information. The parties acknowledge that the transaction described herein is of a confidential nature and shall not be disclosed except to consultants, investors, advisors, and affiliates, or as required by law. No party will make any public disclosure of the specific terms of this Agreement, except as required by law. Without limiting the generality of the foregoing, any press release or other public disclosure regarding this Agreement or the transactions contemplated herein, and the wording of same, must be approved in advance by both parties. In connection with the negotiation of this Agreement and the preparation for the consummation of the transactions contemplated hereby, each party acknowledges that it will have access to confidential information relating to the other party. Each party shall treat such information as confidential, preserve the confidentiality thereof, and not duplicate or use such information, except to advisors, consultants, investors and affiliates in connection with the transactions contemplated hereby. In the event of the termination of this Agreement for any reason whatsoever, Purchaser will return to Seller, at Seller's request, all documents, work papers, and other material (including all copies thereof) obtained from Seller in connection with the transactions contemplated hereby, and each party shall use its best efforts, including instructing its employees and others who have had access to such information, to keep confidential and not to use any such information. The provisions of this Paragraph 9.17 will survive the Closing or, if the purchase and sale is not consummated, any termination of this Agreement. 9.18 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event, after which the designated period of time begins to run, is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday (i.e., a day on which federally chartered banks are not open for business in Chicago, Illinois). The last day of any period of time described herein shall be deemed to end at 5 p.m. Chicago, Illinois time on the last day of such period of time. All days other than Saturdays, Sundays and legal holidays in which national banks are closed in Chicago, Illinois are business days hereunder. 9.19 Entire Agreement. This Agreement and any other document to be furnished pursuant to the provisions hereof embody the entire agreement and understanding of the parties hereto as to the subject matter contained herein. There are no restrictions, promises, 19 representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in such documents. This Agreement and such documents supersede all prior agreements and understandings among the parties with respect to the subject matter hereof 9.20 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the terms or provisions of this Agreement. 9.21 Facsimile Signatures. Executed facsimile copies of this Agreement or any amendments hereto shall be binding upon the parties, and facsimile signatures appearing hereon or on any amendments hereto shall be deemed to be original signatures. 9.22 Further Assurances. In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by Seller to Purchaser at Closing, Seller agrees to perform, execute and deliver, but without any obligation to incur any additional liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate the transactions contemplated hereby or to further perfect the conveyance, transfer and assignment of the Property to Purchaser. 9.23 Offer. Execution and delivery of this Agreement by Purchaser constitutes an offer to purchase the Property on the terms contained herein. Delivery by Seller of a copy of the fully executed Agreement by facsimile transmission on or before the Expiration Date, followed by a manually signed copy thereof delivered the next business day after transmission of such copy, shall constitute acceptance by Seller as of the date of the facsimile transmission. The date on which Seller delivers a fully executed copy of this Agreement to Purchaser, or delivers a copy by facsimile transmission followed by a manually signed copy as provided in the preceding sentence is referred to herein as the "Effective Date." 9.24 Seller Exculpation Clause. The obligations of Seller contained herein are intended to be binding only on the property of the trust party to this Agreement of Purchase and Sale and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the trustees, investment managers, any general partners thereof, or any employees or agents of the trustees or investment managers. All documents to be executed by Seller shall also contain the foregoing exculpation. 20 9.25 Purchaser Exculpation Clause. No recourse shall be had for any obligation of Brandywine Operating Partnership, L.P. and 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 Operating Partnership, L.P. or 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 the Seller and all parties claiming by, through or under Seller. 9.26 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 Purchaser, provide Purchaser and its representatives, with (a) access to all financial 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 Purchaser's outside, third party accountants (the "Accountants"), to enable Purchaser and its Accountants to prepare financial statements in compliance with any or all of (i) Rule 3-05 or 3-15 of Regulation S-X of the Securities and Exchange Commission (the "Commission"), as applicable; (ii) any other rule issued by the Commission and applicable to Purchaser; and (iii) any registration statement, report or disclosure statement filed with the Commission, by, or on behalf of Purchaser; and (b) a representation letter, signed by the 21 individual(s) responsible for Seller's financial reporting, substantially in the form of Schedule 9.26 attached hereto, which representation letter may be required by the Accountants in order to render an opinion concerning Seller's financial statements. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below. SELLER: PURCHASER: RREEF MIDAMERICA EAST-V SIX, INC. BRANDYWINE OPERATING PARTNERSHIP, L.P. By: RREEF America L.L.C., its investment advisor By: Brandywine Realty Trust, its authorized general partner By: --------------------------- By: --------------------------- Authorized Representative Gerard H. Sweeney President and Chief Executive Officer Dated:-------------------------- Dated:--------------------------- 22 List of Schedules and Exhibits Schedules 2.1 Escrow Instructions 5.1 Disclosure Schedule 5.1.5 Service Contracts 5.1.10 Rent Roll 5.1.12 Future Leasing Commissions, Tenant Improvements and Free Rent 6.2 Form of Estoppel Letter 8.6.1 Form of Deed 8.6.2 FIRPTA Certificate 8.6.4 Assignment and Assumption of Leases 8.6.5 Assignment and Assumption of Contracts and Warranties 8.6.6 Assignment of Intangibles 8.6.8 Bill of Sale 8.6.10 Bring-Down Certificate 9.26 SEC Compliance Representation Letter Exhibits A Legal Description of Property A-1 Descriptive List of the Property 23 Schedule 2.1 EARNEST MONEY ESCROW INSTRUCTIONS (earnest money escrow instructions previously executed) Schedule 5.1 DISCLOSURE SCHEDULE 1. A 1996 Environmental Audits was prepared by ATC Environmental, Inc. for the Property. This Audit has been made available to Purchaser for inspection and copying, and, each of the Seller warranties of Section 5.1.8 and its subparagraphs are qualified and limited by any matters disclosed in such Audit. 2. Possible building code violations disclosed by Seller to Purchaser by letter dated January 21, 1997 from Lawrence J. Moss to Brad A. Molotsky. 3. Bell Atlantic has requested an easement for laying underground telephone lines, as disclosed by Seller to Purchaser by letter dated January 21, 1997 from Lawrence J. Moss to Brad A. Molotsky. Schedule 5.1.5 Service Contracts A.T. BUILDERS CROWN CONTRACTORS, INC ELDREDGE, INC. OLIVER SPRINKLER CO. DOUGLAS SCOTT LANDSCAPING PHOENIX MECHANICAL INC. WAYMAN FIRE PROTECTION Schedule 5.1.10 Rent Roll Schedule 5.1.12 Future Leasing Commissions, Tenant Improvements and Free Rent (none) Schedule 6.2 TENANT ESTOPPEL LETTER ________ __, 1998 Brandywine Realty Trust Newtown Square Corporate Campus 16 Campus Boulevard Newtown Square, PA 19073 Attention: Gerard H. Sweeney, President and Chief Executive Officer NationsBank, N.A., Real Estate Banking 8300 Greensboro Drive, Suite 300 McLean, VA 22102 Attention: Gary P.F. Carr Re: Lease from ________, for Suite ____, located at [BUILDING ADDRESS] [CITY/TOWNSHIP], Pennsylvania (the "Property") To Whom it May Concern: The undersigned is the holder of the tenant's interest under the lease described on Exhibit A attached hereto (the "Lease") demising a portion of the Property (the "Leased Premises"). We understand that Brandywine Realty Trust, its assignee or nominee ("Brandywine") intends to acquire the Property, and that NationsBank, N.A., as Agent for the parties listed on Schedule 1 attached hereto ("Lender") may be the holder of a first mortgage on the Property, and that Brandywine and Lender require this certification from us. Accordingly, we hereby certify to Brandywine and Lender as follows: 1. The Lease is in full force and effect and has not been modified, amended or supplemented in any way, except as follows (Insert dates of all modifications, amendments, or supplements; if none, write "None"): - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 2. There are no other representations, warranties, agreements, concessions, commitments, or other understandings between the undersigned and the Landlord regarding the Property other than as set forth in the Lease or paragraph 1 above. 3. The landlord under the Lease has completed and delivered, and the undersigned has accepted, the Leased Premises in the condition required by the Lease and the term of the Lease commenced on _________. The Leased Premises consists of approximately ___________ square feet. The undersigned has taken possession of and is occupying the Leased Premises on a rent-paying basis and the monthly base rent payable thereunder is $_________, payable in advance. All improvements and work required under the Lease to be made by the landlord thereunder and all facilities required under the Lease to be furnished to the Leased Premises have been completed to the satisfaction of the undersigned, except as follows (Insert description of any improvements and work to be completed by the landlord under the Lease; if none, write "None"): --------------------------------------------------------------------- 4. The fixed expiration date set forth in the Lease, excluding renewals and extensions, is ________________. The undersigned neither has any option or right to purchase the Property or any portion thereof nor does the undersigned have any right or option to terminate the Lease or any of its obligations thereunder in advance of the scheduled termination date of the Lease as noted above, except as follows (Insert description of any purchase rights or options, and/or any early termination rights; if none, write "None"): --------------------------------------------------------------------- 5. All rents, additional rents and other sums due and payable under the Lease have been paid in full and no rents, additional rents or other sums payable under the Lease have been paid for more than one (1) month in advance of the due dates thereof. 6. The landlord under the Lease is not in default under any of the requirements, provisions, terms, conditions or covenants of the Lease to be performed or complied with by the landlord under the Lease, and no event has occurred or situation exists which would, with the passage of time and/or the giving of notice, constitute a default or an event of default by the landlord under the Lease. 7. The undersigned is not in default under any of the requirements, provisions, terms, conditions, or covenants of the Lease to be performed or complied with by the undersigned, and no event has occurred or situation exists which would, with the passage of time and/or the giving of notice, constitute a default or an event of default by the undersigned under the Lease. 2 8. The undersigned has received no notice from any governmental authority or other person or party claiming a violation of, or requiring compliance with, any Federal, State or local statute, ordinance, rule, regulation or other requirement of law, for environmental contamination at the Leased Premises, to the best knowledge of the undersigned no hazardous, toxic or polluting substances or wastes have been generated, treated, manufactured, stored, refined, used, handled, transported, released, spilled, disposed of or deposited by Tenant on, in or under the Leased Premises. 9. Neither the undersigned nor the landlord under the Lease has commenced any action or given or received any notice for the purpose of terminating the Lease. 10. There are no existing defenses, offsets, claims, or credits against the payment of rent or the performance of the undersigned's obligations under the Lease. 11. The undersigned has paid to the landlord under the Lease a security deposit of $____________. Very truly yours, By: -------------------------------- Name: Title: 3 Exhibit A (Description of Lease) 4 Schedule 8.6.1 Form of Deed SPECIAL WARRANTY DEED: THIS INDENTURE made this ____ day of ___________, 1998, BETWEEN RREEF MIDAMERICA EAST-V SIX, INC., A Delaware corporation (hereinafter called the Grantor/s), of the one part and --------------------- (hereinafter called the Grantee/s), of the second part, WITNESSETH That in consideration of Ten and No/100 Dollars ($10.00) in hand paid, the receipt whereof is hereby acknowledged, the said Grantor/s do/does hereby grant, bargain, sell and convey unto the said Grantee/s, his/her/their successors and /or assigns, ALL THAT CERTAIN real estate, situated in the County of Montgomery and Commonwealth of Pennsylvania known and described on the attached Exhibit A "Legal Description," attached hereto an hereby made a part hereof. TOGETHER with all and singular the buildings, improvements, ways, streets, alleys, driveways, passages, waters, water-courses, rights, liberties, privileges, hereditaments and appurtenances whatsoever unto the hereby granted premises belonging, or in anywise appertaining, and the reversions and remainders, rents, issues and profits thereof; and all the estate, right, title, interest, use, trust, property, possession, claim and demand whatsoever of Grantor as well at law as in equity, of, in, and to the same. TO HAVE AND TO HOLD the said lot or piece of ground described with the buildings and improvements thereon erected, hereditaments and premises hereby granted, or mentioned and intended so to be, with the appurtenances unto the said Grantee, and its successors and assigns to and for the only proper use and behoof of the said Grantee, and its successors and assigns, forever. AND the said Grantor/s do/does hereby covenant to and with the said Grantee/s that he/she/they, the said Grantor/s, his/her/their successors and/or assigns, SHALL AND WILL warrant specially and forever defend the herein above described premises, with the hereditaments and appurtenances, unto the said Grantor/s and against every other person lawfully claiming or who shall hereafter claim the same or any part thereof, by, from and under his/her/their successors and/or assigns or any of them, subject to validly and legally existing encumbrances of record. IN WITNESS WHEREOF, the said Grantor/s has/have caused these presents to be duly executed, the day and year first above written. ATTEST: RREEF MIDAMERICA EAST-V SIX, INC., a Delaware corporation By: By: RREEF America L.L.C., a Delaware -------------------------------- limited liability company, its investment advisor By: -------------------------- Authorized Representative [Add Pennsylvania address certification] 2 STATE OF----------------------) ) SS. COUNTY OF---------------------) I, _________________________________________, a notary public in and for said County, in the State aforesaid, DO HEREBY CERTIFY that _________________ and _________________, personally known to me to be the _________________ and _________________ of RREEF MidAmerica East-V Six, Inc., a Delaware corporation, and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such _________________ and _________________, they signed and delivered the said instrument as their free and voluntary act, and as the free and voluntary act and deed of said trust, for the uses and purposes therein set forth. GIVEN under my hand and official seal this ____ day of _________, 1998. ----------------------------------- Notary Public Commission expires -------------------------------------------------------- 3 EXHIBIT A Legal Description Schedule 8.6.2 FIRPTA CERTIFICATE Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by __________________________________________, a _______________________ ("Seller") hereby certifies the following: 1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); 2. Seller's U.S. employer identification number is 94-3082895; and 3. Seller's principal place of business is 101 California Street, 26th floor, San Francisco, CA 94111-5853 Seller understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Seller. ------------------------------------ ------------------------------------ By: --------------------------------- Authorized Representative Subscribed and sworn to before me this ____ day of __________, 1998. - ------------------------------------ Notary Public Schedule 8.6.4 ASSIGNMENT AND ASSUMPTION OF LEASES THIS ASSIGNMENT AND ASSUMPTION OF LEASES (the "Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between ___________________________, a Delaware corporation, ("Assignor") and ________________, a ______________ ("Assignee"). A. Assignor is the lessor under certain leases executed with respect to that certain real property and improvements thereon known as ______________________, _______________________, and more particularly described in Exhibit "A" attached hereto (the "Property"), which leases are described in Exhibit B attached hereto (the "Leases"). B. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase the Property from Assignor and Assignor agreed to sell the Property to Assignee, on the terms and conditions contained therein. C. Assignor desires to assign its interest as lessor in the Leases to Assignee, and Assignee desires to accept the assignment thereof, on the terms and conditions below. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date") [SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the Leases except rents and other sums due Assignor first accruing on or prior to the Conveyance Date, and, effective as of the day following the Conveyance Date, Assignee hereby accepts such assignment. 2. Assignor hereby assumes full responsibility for all obligations and defaults of landlord under the Leases accruing prior to and including the Conveyance Date. Assignor also agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 3. Assignee hereby assumes full responsibility for all obligations of landlord under the Leases accruing after the Conveyance Date and Assignee hereby agrees to defend, indemnify and hold Assignor harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignee's failure to perform said obligations. Without limiting the generality of the foregoing, Assignee assumes full responsibility for the free rent, unpaid tenant improvement allowances and leasing commissions under the Leases as listed on Exhibit C. 4. This Assignment shall be governed by the laws of the Commonwealth of Pennsylvania. 5. This Assignment may be executed in counterparts. 6. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Leases. ASSIGNOR: ASSIGNEE: - ------------------------------- ------------------------------- - ------------------------------- ------------------------------- By: By: ---------------------------- ---------------------------- Authorized Representative Title: ------------------------- Dated: Dated: ------------------------- ------------------------- 2 EXHIBIT A Legal Description 3 EXHIBIT B Existing Leases (rent roll to be attached) 4 EXHIBIT C Free Rent, Tenant Improvement Allowances and Leasing Commissions 5 Schedule 8.6.5 ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND WARRANTIES THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND WARRANTIES (the "Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between ____________________ _____________________, ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase Assignor's interest in the real property legally described on Exhibit A attached hereto (the "Property"), on the terms and conditions contained therein. B. Whereas the execution and delivery of this Assignment is a condition precedent to the purchase of the Property by the Assignee. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date")[SHOULD BE THE DAY FOLLOWING CLOSING] , Assignor hereby assigns to Assignee all of its right, title, and interest in and to the following: 2. Assignor hereby grants, transfers and assigns to Assignee all the right, title and interest of Assignor in and to the following: (a) All contracts listed on Exhibit B attached hereto. (b) All presently effective and assignable warranties, guaranties, representations or covenants given to or made in favor of Assignor or Assignor's affiliates in connection with the acquisition, development, construction, maintenance, repair, renovation or inspection of the Property. The foregoing are collectively referred to herein as the "Contracts." 3. Assignor hereby assumes full responsibility for all obligations and defaults of Assignor under the Contracts accruing to and including the Conveyance Date. Assignor also agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 4. Assignee hereby assumes full responsibility for all obligations of owner of the Property under the Contracts accruing after the Conveyance Date and Assignee hereby agrees to defend, indemnify and hold Assignor harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignee's failure to perform said obligations. 5. This Assignment shall be governed by the laws of the Commonwealth of Pennsylvania. 6. This Assignment may be executed in counterparts. 7. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Contracts and Warranties. ASSIGNOR: ASSIGNEE: - ------------------------------- ------------------------------- - ------------------------------- ------------------------------- By: By: ---------------------------- ---------------------------- Authorized Representative Title: ------------------------- Dated: Dated: ------------------------- ------------------------- 2 EXHIBIT A Legal Description 3 EXHIBIT B Contracts A.T. BUILDERS CROWN CONTRACTORS, INC ELDREDGE, INC. OLIVER SPRINKLER CO. DOUGLAS SCOTT LANDSCAPING PHOENIX MECHANICAL INC. WAYMAN FIRE PROTECTION 4 Schedule 8.6.6 ASSIGNMENT OF INTANGIBLES THIS ASSIGNMENT AND ASSUMPTION OF INTANGIBLES ("Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between ____________________________________________________________________ ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase Assignor's interest in the real property legally described on Exhibit A attached hereto (the "Property"), on the terms and conditions contained therein. B. Whereas the execution and delivery of this Assignment is a condition precedent to the purchase of the Property by the Assignee. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date")[SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the following: (i) All licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps or plats and entitlements issued, approved or granted by federal, state or municipal authorities or otherwise in connection with the Property and its renovation, construction, use, maintenance, repair, leasing and operation; and all licenses, consents, easements, rights of way and approvals required from private parties to make use of utilities, to insure pedestrian ingress and egress to the Property and to insure continued use of any vaults under public rights-of-way presently used in the operation of the Property. (ii) any trade style or trade name used in connection with the Property; and, (iii) all correspondence with the tenants under tenant leases, all booklets and manuals relating to the maintenance and operation of the Property. The foregoing are collectively referred to herein as the "Intangibles". 2. Assignor agrees to assume full responsibility for its obligations under the Intangibles accruing on or prior to the Conveyance Date and Assignor agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 3. Assignee assumes full responsibility for all obligations of the owner of the property accruing under the Intangibles from the day after the Conveyance Date and Assignee agrees to defend, indemnify and hold Assignor and its predecessors in title harmless from all claims, liabilities or costs arising from Assignee's failure to perform said obligations. 4. This instrument may be executed in counterparts. 5. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, the parties have executed this Assignment of Intangibles. ASSIGNOR: ASSIGNEE: - ------------------------------- ------------------------------- - ------------------------------- ------------------------------- By: By: ---------------------------- ---------------------------- Authorized Representative Title: ------------------------- Dated: Dated: ------------------------- ------------------------- 2 EXHIBIT A Legal Description 3 Schedule 8.6.8 BILL OF SALE __________________________________________________________ ("Seller"), in consideration of Ten and No/100 Dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby sells, transfers, assigns and sets over unto __________________ ("Purchaser"), all of its right, title and interest in and to any and all personal property, which personal property is owned by Seller and located on the real estate legally described on Exhibit A attached hereto (the "Personal Property"), including, but not limited to, the Personal Property listed on Exhibit B. Seller hereby represents and warrants to Purchaser that Seller is the absolute owner of the Personal Property free and clear of all liens, charges and encumbrances, and that Seller has full right, power and authority to sell the Personal Property and to make this Bill of Sale. ALL WARRANTIES OF QUALITY, FITNESS AND MERCHANTABILITY ARE HEREBY EXCLUDED. The obligations of Seller contained herein are intended to be binding only on the property of the Seller and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Seller, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the ___ day of _______, 1998, but effective on the date on which the Property is conveyed by Seller to Purchaser. ------------------------------- ------------------------------- By: ---------------------------- Authorized Representative STATE OF _________ ) ) SS COUNTY OF _______ ) The undersigned, a Notary Public in and for said County in the State aforesaid, DOES HEREBY CERTIFY that ________________, authorized representative of ____________________________________________________________, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such authorized representative, appeared before me this day in person and acknowledged that __he, being duly authorized, signed, sealed and delivered the said instrument as h___ free and voluntary act, and as the free and voluntary acts of said corporation, for the uses and purposes therein set forth. GIVEN under my hand and Notarial Seal this ___ day of _________, 1998. ------------------------------- Notary Public My Commission Expires: __________________, 19___ 2 EXHIBIT A Legal Description 3 EXHIBIT B Personal Property (none) 4 Schedule 8.6.10 SELLER'S CLOSING CERTIFICATE THIS CLOSING CERTIFICATE is made as of the ________ day of _______________, 1998, by and between ___________________________ ("Seller"), to and in favor of ______________________, a _________________ ("Purchaser"), under and pursuant to that certain Agreement of Purchase and Sale by and between Seller and _________________, with an Effective Date as defined therein (the "Agreement"), for the purchase and sale of that certain Property situated in the _________________, _________________ County,_________________ (as defined in the Agreement). Pursuant to Paragraphs 5.3 and 8.6.10 of the Agreement and except as disclosed on Exhibit A attached hereto and made a part hereof, Seller hereby reconfirms, remakes and rewarrants to Purchaser as of the date hereof each of the representations, warranties and covenants given by Seller contained in Paragraph 5.1 of the Agreement in the same manner as such representations, warranties and covenants were given in the Agreement, each of which is incorporated herein and made a part hereof by this reference. Except as modified hereby, Seller hereby confirms that each of said representations, warranties and covenants are true and accurate in all material respect as of the date hereof. Seller's reconfirming, remaking and rewarranting of its representations, warranties and covenants is subject to the limitations set forth in Paragraph 5.3 of the Agreement. The obligations of Seller contained herein are intended to be binding only on the property of the Seller and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Seller, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, Seller has executed this Closing Certificate on the day and year first above written, but effective upon the date on which the Property is conveyed by Seller to Purchaser. SELLER: - ----------------------------- - ----------------------------- By: -------------------------- Authorized Signatory EXHIBIT A Disclosure Schedule 9.7.2 New Lease Approval Form Property: --------------------------------------------------------------------- Tenant: ----------------------------------------------------------------------- Square Feet: ------------------------------------------------------------------ Location: --------------------------------------------------------------------- Anticipated Lease Commencement: ----------------------------------------------- Anticipated Rent Commencement: ----------------------------------------------- Term: ------------------------------------------------------------------------- FREE RENT: -------------------------------------------------------------------- Rental Rate: Period PSF Rate Annual Income ------------------- --------------- ------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ Note: Above rental rates do not include Tenant Electric Tenant Improvement Allowance: PSF Amount --------------------- ---------------- T.I. Mechanism: --------------------------------------------------------------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ OPTIONS: -------------------------------------------------------------------- --------------------------------------------------------------------- - ----------------------------------------------------------------------------- Initial Commission: BROKER % Amount - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Broker Future Entitlements: --------------------------------------------------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Other Comments: --------------------------------------------------------------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Approved By: ----------------- Schedule 9.26 SEC COMPLIANCE REPRESENTATION LETTER (Accountant Name & Address) Dear Sirs: In connection with your audit of the statement of revenues and certain expenses of the Property situated in the Bucks County, Pennsylvania, commonly known as 180 Wheeler Court (the "Property") for the year ended December 31, 199__ (the "Operating Statement"), prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, the undersigned ("Seller") makes the following limited, qualified and specific representations, which are true to Seller's knowledge (as such phrase is hereinafter defined): 1. Seller has made available or caused its property manager to make available to Brandywine Operating Partnership, L.P. ("Buyer"), or its representatives, Seller's financial records and files in Seller's actual possession pertaining to the operation of the Property (such records and files being collectively referred to herein as the "Files"). 2. Except as disclosed in the Files, Seller is not aware of any events or transactions which have occurred since December 31, 199_ and prior to the date hereof that would have a material effect on the Operating Statement for the period then ended. 3. We recognize that, as the Owner of the Property, we are responsible for directing the fair presentation of the Operating Statement. We believe the Operating Statement is fairly presented in conformity with generally accepted accounting principals. As used in this letter, the words "Seller's knowledge" shall be deemed to mean, and shall be limited to, the actual (as distinguished from implied, imputed or constructive) knowledge of Joseph S. Cappelletti and Barbara Gillentine without such person having any obligation to make an independent inquiry or investigation. Notwithstanding any provision in this letter to the contrary, Seller is executing this letter solely as an accommodation to and at the request of Buyer and, except to the extent Seller is liable to Buyer for representations and warranties expressly set forth in that certain Agreement of Purchase and Sale, dated _________ 1998, by and between Seller and Buyer (the "Sale Agreement'), this letter is subject to the condition that Seller shall not be liable or responsible to Buyer, any parent, subsidiary or other affiliate of Buyer, or any officer, director, employee, agent, representative, shareholder, partner or principal of Buyer or any such parent, subsidiary or other affiliate thereof or any accountant or other professionals engaged by or on behalf of any of the foregoing, including, without limitation, [accountant] (all of the foregoing being collectively referred to herein as the "Buyer Parties"), as a result of the fact that any of the statements made herein are in any way inaccurate, untrue or incorrect. By the acceptance of this letter, except for rights and remedies that Buyer may have under the Sale Agreement with respect to representations and warranties expressly set forth in the Sale Agreement, each of the Buyer Parties shall be deemed to have waived any and all rights and remedies that any of them may have against Seller, whether at law or in equity, as a result of the fact that any of the statements made herein are in any way inaccurate, untrue or incorrect. 4 Seller has executed this letter for the limited purposes set forth herein, and for the use of [accountant] only. No other parties may rely on the statements set forth herein. Very truly yours, RREEF MIDAMERICA EAST-V SIX, INC., a Delaware corporation By: RREEF America L.L.C., a Delaware limited liability company By: -------------------------------- Name: Joseph S. Cappelletti Title: Its Authorized Representative By: -------------------------------- Name: Barbara J. Gillentine Title: Its Authorized Representative 5 EXHIBIT A Legal Description of Property EX-10.4 5 EXHIBIT 10.4 AGREEMENT OF PURCHASE AND SALE between Brandywine Operating Partnership, L.P., Purchaser, and RREEF USA Fund-I, Seller King of Prussia Business Park King of Prussia, Upper Merion Township, Montgomery County, Pennsylvania Table of Contents 1. Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Deposit.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Review of the Property. . . . . . . . . . . . . . . . . . . . . . . . 2 4. Title and Survey. . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5. Representations and Warranties. . . . . . . . . . . . . . . . . . . . 4 5.1 Representations and Warranties of Seller.. . . . . . . . . 4 5.2 Representations and Warranties of Purchaser. . . . . . . . 7 5.3 Limitations. . . . . . . . . . . . . . . . . . . . . . . 7 5.4 Condition of Property. . . . . . . . . . . . . . . . . . . 8 6. Closing Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . 8 6.1 Title Insurance. . . . . . . . . . . . . . . . . . . . . . 9 6.2 Estoppel Letters . . . . . . . . . . . . . . . . . . . . . 9 6.3 Representations and Warranties . . . . . . . . . . . . . . 10 6.4 Seller Performance . . . . . . . . . . . . . . . . . . . . 10 7. Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8.1 Closing of Sale. . . . . . . . . . . . . . . . . . . . . . 10 8.2 Prorations; Adjustments. . . . . . . . . . . . . . . . . . 11 8.3 Proration of Service Charges.. . . . . . . . . . . . . . . 12 8.4 Closing Costs. . . . . . . . . . . . . . . . . . . . . . . 12 8.5 Possession.. . . . . . . . . . . . . . . . . . . . . . . . 12 8.6 Seller's Closing Documents.. . . . . . . . . . . . . . . . 12 8.7 Purchaser's Closing Documents. . . . . . . . . . . . . . . 13 8.8 Joint Deliveries.. . . . . . . . . . . . . . . . . . . . . 14 9. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 9.1 Modifications. . . . . . . . . . . . . . . . . . . . . . . 14 9.2 Casualty and Condemnation. . . . . . . . . . . . . . . . . 14 9.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . . 15 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 15 9.5 Parties Bound. . . . . . . . . . . . . . . . . . . . . . . 16 i 9.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 16 9.7 Continuation Until Closing; Leasing. . . . . . . . . . . . 16 9.8 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 17 9.9 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . 17 9.10 Remedies for Non-Performance.. . . . . . . . . . . . . . . 17 9.11 Brokers Commission.. . . . . . . . . . . . . . . . . . . . 17 9.12 Survival of Covenants. . . . . . . . . . . . . . . . . . . 18 9.13 Seller's Investment Committee Approval.. . . . . . . . . . 18 9.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . 18 9.15 Entry and Indemnity. . . . . . . . . . . . . . . . . . . . 18 9.16 Release. . . . . . . . . . . . . . . . . . . . . . . . . . 19 9.17 Confidential Information. . . . . . . . . . . . . . . . . 19 9.18 Calculation of Time Periods. . . . . . . . . . . . . . . . 20 9.19 Entire Agreement.. . . . . . . . . . . . . . . . . . . . . 20 9.20 Severability.. . . . . . . . . . . . . . . . . . . . . . . 20 9.21 Facsimile Signatures.. . . . . . . . . . . . . . . . . . . 20 9.22 Further Assurances.. . . . . . . . . . . . . . . . . . . . 20 9.23 Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . 20 9.24 Seller Exculpation Clause. . . . . . . . . . . . . . . . . 21 9.25 Purchaser Exculpation Clause.. . . . . . . . . . . . . . . 21 9.26 SEC Reporting (8-K) Requirements.. . . . . . . . . . . . . 21 List of Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . 23 ii AGREEMENT OF PURCHASE AND SALE BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("Purchaser") agrees to purchase, and RREEF USA FUND-I, a California group trust ("Seller") agrees to sell, that certain improved real property, hereinafter referred to as the "Property", situated in the City of King of Prussia, Upper Merion Township, Montgomery County, Commonwealth of Pennsylvania, legally described on Exhibit A attached hereto and made a part hereof, consisting of twelve (12) buildings and one vacant parcel, all as listed on Exhibit A-1 attached hereto and hereby made a part hereof, together with all rights, privileges, easements and appurtenances thereto, including any and all mineral rights, development rights, air rights, and the like; all personal property owned by the Seller and located on or used in conjunction with the Property (specifically excluding furniture, fixtures and equipment owned by RREEF Management Company and located in the RREEF Management Company office, as well as the 650 Park Avenue canopy and canopy structure); any and all intangible personal property owned by Seller and used in the operation of the Property, including the right to use the name of the property (but not the name "RREEF"), to the extent assignable, but excluding computer software and related licenses; contract rights, "Leases" of all or any part of the Property, all licenses, permits and other written authorizations necessary for the use, operation and ownership of the Property, records, security deposits and prepaid rent, if any, and the benefit of any guaranties of the Leases. 1. Purchase Price. The purchase price for the Property ("Purchase Price") is Forty-Six Million Three Hundred Sixty Thousand Dollars ($46,360,000.00), payable by wire transfer of immediately available funds at Closing as defined in Paragraph 8.1. 2. Deposit. 2.1 Purchaser has previously deposited, pursuant to this Agreement and pursuant to the Other Agreements (defined in Paragraph 7 below), the amount of Five Hundred Fifty Thousand Dollars ($550,000.00) (the "Deposit") with Commonwealth Land Title Insurance Company ("Escrow Holder") as earnest money to secure Purchaser's performance hereunder and under the Other Agreements. The Deposit may be invested at the direction of Purchaser with the approval of Seller. All investment income earned from the investment of the Deposit, less investment fees, if any, will be added to and become a part of the Deposit and will be applied toward the Purchase Price if Closing is completed in accordance with this Agreement; otherwise all interest will be paid to the party entitled to the Deposit. The escrow instructions to Escrow Holder will be in the form of Schedule 2.1 attached hereto (the "Escrow Instructions"). If Purchaser does not elect to terminate this Agreement pursuant to Section 3 below, prior to the end of the Review Period (defined in Section 3.4), on or before one business day after last day of the Review Period Purchaser shall deposit an additional $500,000 with Escrow Holder, which shall be added to and become a part of the Deposit for all purposes hereunder. 2.2 Of the total Deposit, the sum of $150,000 is agreed to be non-refundable, and shall be refunded to Purchaser only (i) if Purchaser terminates this Agreement under Section 3.4, under the circumstances set forth in Section 3.4.1, or (ii) if the Agreement is terminated or if the Closing fails to occur by reason of Seller's default. Under all other circumstances, wherever under this Agreement and the Other Agreements the Deposit is to be returned to Purchaser, $150,000 out of the Deposit shall be paid to Seller, to be retained by Seller as fully earned. 3. Review of the Property. 3.1 From and after the "Effective Date" (as defined in Paragraph 9.23), Seller agrees to provide Purchaser and its agents or consultants with access to the Property to inspect each and every part thereof to determine its present condition and to conduct such physical and environmental studies (including a mechanical and roof study and Phase I environmental assessment) as it deems appropriate. 3.2 Within three (3) business days after the Effective Date Seller will make available to Purchaser for inspection and copying, all to the extent in the possession of Seller or its managing agent, a copy of each existing Lease and equipment lease, service contract and maintenance or other contract pertaining to the operations of the Property that will survive Closing, a copy of each real estate tax bills for 1994-1996, both inclusive, and unaudited financial statements for the Property for the years 1994-1996, both inclusive. 3.3 Within three (3) business days after the Effective Date Seller will make available to Purchaser for inspection and copying at the office of Seller's managing agent, all to the extent in the possession of Seller or its managing agent: 3.3.1 a copy of each environmental reports relating to the Property prepared by third party consultants since January 1, 1995. 3.3.2 a copy of each current franchises, business or other licenses, bonds, permits, certificates, authorizations and other evidences of consent, approval, authorization or permission relating to or affecting the Project of or from any person, including any governmental authority, held by Seller, including any pending applications. 3.3.3 a copy of each material third party warranties and guaranties, if any, which are in effect with respect to the Property. 3.4 Purchaser has until 5:00 p.m. CST on February 2, 1998 (the "Review Period"), to determine in its sole discretion whether all matters relating to the Property (except title and survey, which are governed by Paragraph 4), are acceptable, and to obtain the approval of the transaction contemplated herein by Seller's Board of Directors. If Purchaser concludes that any matter relating to the Property is not acceptable or that its Board has disapproved the 2 transaction, Purchaser will so notify Seller (the "Termination Notice") prior to the expiration of the Review Period (which notice shall contain a copy of Purchaser's roof/structural report and other reports or studies, other than environmental reports, obtained in connection with Purchaser's due diligence). Upon timely delivery of the Termination Notice, this Agreement will terminate without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 9.15 hereof and the obligation to deliver to Seller a copy of any environmental report obtained by Purchaser if requested by Seller within ten (10) days after receipt of the Termination Notice. In the event that Purchaser does not timely so notify Seller, Purchaser will be deemed to have concluded that all matters relating to the Property are acceptable and to have elected to proceed with the transaction upon the terms and conditions contained in this Agreement (including the obligation to increase the amount of the Deposit by an additional $500,000) without regard to this Paragraph 3.4. 3.4.1 If this Agreement is terminated pursuant to Paragraph 3.4, the Deposit, less $150,000, will be returned to Purchaser as provided in the Escrow Instructions. This $150,000 shall be paid to Seller, unless Purchaser's termination resulted from (i) Seller's default, (ii) a material deviation from the economics of the Property as presented in Seller's offering memorandum (it being understood and agreed that Seller makes no warranty or representation as to said offering memorandum), or (iii) any material structural or environmental defect in the Property not known or disclosed to Purchaser before December 22, 1997. 3.5 Purchaser agrees that any information obtained by Purchaser or its authorized agents in the conduct of its due diligence will be treated as confidential pursuant to Paragraph 9.17. 4. Title and Survey. Purchaser has ordered, at its expense (and upon receipt, Purchaser shall promptly deliver copies to Seller): (i) a commitment for a 1992 form ALTA Owner's title insurance policy with respect to the Property from Commonwealth Land Title Insurance Company (the "Title Insurer") in the amount of the Purchase Price, and (ii) copies of all documents relating to title exceptions referred to therein. Seller has already ordered, and Purchaser has received, at Purchaser's sole expense, a plat of survey of the Property made in accordance with Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (1992) pursuant to the accuracy standards of an Urban Survey. On or before January 30, 1998, Purchaser agrees to notify Seller of any objection Purchaser may have to any exceptions reported in the commitment or any matter shown on the plat of survey (the "Unacceptable Exceptions"). Seller will be responsible for satisfaction of the Title Insurer's Schedule B-1 seller requirements. All other exceptions and survey matters will be deemed acceptable to Purchaser. If Purchaser fails to give such notice to Seller, the survey and all of the exceptions in the title commitment will be deemed acceptable to Purchaser. Seller will have ten (10) days after receipt of Purchaser's notice within which to notify Purchaser whether Seller elects to either (a) eliminate or induce the Title Insurer to insure over (subject to Purchaser's consent, not to be unreasonably withheld) the Unacceptable Exceptions or (b) terminate this Agreement. If Seller agrees to eliminate or induce to the Title Insurer to insure over (with Purchaser's consent) the 3 Unacceptable Exceptions, Seller will be obligated to do so at its cost on or prior to Closing. If Seller elects to terminate this Agreement, neither party will have any further rights or obligations hereunder, except as provided in Paragraph 9.15. If Seller fails to give any timely notice, Seller will be deemed to have elected to terminate this Agreement. If any other recorded exception to title is discovered after the commitment is delivered to Purchaser, and Purchaser does not elect to waive such exception upon the first to occur of (a) the Closing or (b) seven (7) days after being notified of such exception and to proceed with the consummation of the Closing, Seller will have fifteen (15) days after the expiration of said seven (7) day period (and Closing will be delayed if necessary, so that it occurs not earlier than twenty-two (22) days after Purchaser is notified of such exception) after notifying Purchaser of such discovery in which to use commercially reasonable efforts to eliminate or to induce the Title Insurer to insure over (subject to Purchaser's approval, not to be unreasonably withheld) such exception, and if such exception is not eliminated or insured over as aforesaid within said 15-day period, Purchaser may terminate this Agreement, in which event the Deposit will be returned to Purchaser and neither party will have any further rights or obligations hereunder except as provided in Paragraph 9.15, or close the sale subject to such exception. Seller agrees that it will pay off at Closing (and not induce the Title Insurer to insure over) title exceptions representing monetary liens of a definite or ascertainable amount voluntarily granted by Seller. In using commercially reasonable efforts to eliminate or to induce the Title Insurer to insure over Unacceptable Exceptions, Seller will not be required to litigate or to expend more than $10,000 in the aggregate. Ad valorem real estate taxes not yet due and payable and all title and survey matters which are not Unacceptable Exceptions are hereinafter referred to as Acceptable Exceptions. 5. Representations and Warranties. 5.1 Representations and Warranties of Seller. As used in this Paragraph 5.1 and elsewhere in this Agreement, the phrase "to the knowledge of Seller" or phrases of similar import mean and are limited to the actual current knowledge, without duty to investigate or inquire, of Seller's portfolio manager (Pamela Boneham) and Seller's local manager having ongoing management responsibility with respect to the Property (Barbara Gillentine), and not to any constructive knowledge of any of the foregoing individuals or of Seller or any investment advisor to Seller, any entity that is a partner in such investment advisor, or any affiliates of any thereof, or to any officer, agent, representative, or employee of Seller or such investment advisor, any such constituent partner, or any such affiliate. Seller hereby warrants and represents to Purchaser (with such representations and warranties to be re-made as of Closing pursuant to Paragraph 8.6.10) as follows: 5.1.1 Pending Proceedings. With the exception of the items set forth in Schedule 5.1 (the "Disclosure Schedule") to the knowledge of Seller, Seller has received no written notice of special assessments, condemnation, environmental, zoning or other land use regulation proceedings, either pending or planned to be instituted, with respect to the Property or any part thereof. 4 5.1.2 Status of Seller and Closing Documents. Subject to Paragraph 9.13, this Agreement has been, and all the closing documents to be delivered by Seller to Purchaser at Closing are or will be, duly authorized, executed, and delivered by Seller, will be sufficient to convey insurable title, are legal, valid, and binding obligations of Seller, are enforceable in accordance with their respective terms, and do not violate any provisions of any agreement to which Seller or the Property is subject or bound. Seller is duly organized and validly existing and, if required, duly qualified to transact business in the State in which the Property is located. 5.1.3 Non-Foreign Status. Seller is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended. 5.1.4 Compliance with Laws. With the exception of the items set forth in the Disclosure Schedule, Seller has received no governmental notice, not heretofore corrected, alleging that the Property or its current uses are in violation of any zoning, building, health, traffic, environmental, flood control or all other applicable rules, regulations, codes, ordinances, or statutes of any local, state and federal authorities or any other governmental authority (collectively, the "Laws") asserting jurisdiction over the Property. 5.1.5 Service Contracts. With the exception of the items set forth in the Disclosure Schedule, to Seller's knowledge, there are no agreements or contracts affecting the Property (including, without limitation, any management, leasing, services or maintenance agreements) which are not terminable at will by Seller without further liability, upon not more than 30 days' prior written notice. The contracts and agreements to be assigned to Purchaser pursuant to Paragraph 8.6.5 are listed on Schedule 5.1.5 attached hereto. Seller agrees to terminate the existing management agreement covering the Property on or before Closing. 5.1.6 No Default. The execution and delivery of this Agreement, and consummation of the transaction described in this Agreement, does not and will not constitute a default under any contract, lease, or agreement to which Seller is a party or by which Seller is bound. 5.1.7 No Suits. Except as set forth in the Disclosure Schedule and except for personal injury or property damage actions for which there is adequate insurance coverage and where the insurance carrier has accepted the tender of the defense without reservation, to Seller's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Property or any portion thereof, or relating to or arising out of the ownership, management or operation of the Property, in any court or before or by any federal, state, or municipal department, commission, board, bureau or agency or other governmental instrumentality. 5.1.8 Environmental Condition. Each of the following representations contained in this Paragraph 5.1.8 is wholly qualified and limited by (a) any matters disclosed in 5 any materials made available or delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b) any matters disclosed in any environmental reports or studies obtained by Purchaser, and (c) any other matters of which Purchaser has actual knowledge. Subject to the foregoing, Seller represents: 5.1.8.1 With the exception of items listed in the Disclosure Schedule, and except (i) in amounts customarily found in office uses and in the other uses for which the Property is suited and used and (ii) in compliance with applicable law, to Seller's knowledge, Seller has not released, generated or handled Hazardous Materials on the Property, and Seller has no knowledge of any release, generation or handling of Hazardous Materials on the Property by any tenants or the incorporation of Hazardous Materials by the tenants in any improvements on the Property during the time Seller owned the Property. For the purposes hereof, "Hazardous Material" means any substance, chemical, waste or other material which is listed, defined or otherwise identified as "hazardous" or "toxic" under any federal, state, local or administrative agency ordinance or law, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq. and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., or any regulation, order, rule or requirement adopted hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, asbestos, and "source," "special nuclear" and "by-product" material as defined in the Atomic Energy Act of 1985, 42 U.S.C. Sections 3011 et seq. 5.1.8.2 With the exception of items listed in the Disclosure Schedule, to Seller's knowledge, Seller has not received any summons, citation, directive, letter or other communication, written or oral, from the United States Environmental Protection Agency or the State environmental protection agency having jurisdiction over the Property. 5.1.9 Options. Seller has granted no options or rights of first refusal to acquire any interest in the Property not set forth in the Leases delivered to Purchaser or in documents of record disclosed in the title commitment. The purchase rights of the U.S. Postal Service under its lease have expired without exercise. 5.1.10 Rent Roll. To Seller's knowledge, the information set forth on the rent roll attached hereto as Schedule 5.1.10 is true and accurate in all material respects. 5.1.11 Tenant Rights. There are no termination, extension, cancellation, or expansion rights under any occupancy arrangements with respect to the Property except as contained in the Leases. 5.1.12 Leasing Commissions. All leasing commissions, free rent and tenant improvement allowances due and payable as of the date hereof by Seller have been paid or will have been paid on or before Closing. To Seller's knowledge, the only current leases as to 6 which commissions, free rent and tenant improvement allowances may become due in the future are listed on Schedule 5.1.12, which future obligations shall be expressly assumed by Purchaser. 5.1.13 There are no employees of the Property or Seller who will become employees of Purchaser or for which Purchaser shall be responsible in any way. 5.2 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller that this Agreement has been, and all the documents to be delivered by Purchaser to Seller will be, duly authorized, executed, and are or will be legal, valid, and binding obligations of Purchaser, are or will be enforceable in accordance with their respective terms, and do not and will not at Closing violate any provisions of any agreement to which Purchaser is subject. 5.3 Limitations. Each of the representations and warranties of Seller contained in Paragraph 5.1: (i) is made as of the date of this Agreement; (ii) will be deemed to be remade by Seller, and to be true in all material respects, as of Closing, subject to other matters expressly permitted in this Agreement or otherwise specifically approved in writing by Purchaser; and (iii) will survive for a period of one (1) year after the Closing Date, as defined in Paragraph 8.1. Any claim that Purchaser may have at any time against Seller for a breach of any such representation or warranty, whether known or unknown, which is not asserted by notice from Purchaser to Seller within such six (6) month period will not be valid or effective, and Seller will have no liability with respect thereto. Nor will Seller have any liability to Purchaser for a breach of any representation or warranty unless the valid claims for all such breaches collectively aggregate more than One Hundred Thousand Dollars ($100,000.00), in which event the full amount of such valid claims shall be actionable, subject to the limitation in Section 9.10. The continued accuracy in all material respects of the aforesaid representations and warranties is a condition precedent to Purchaser's obligation to close. If any of said representations and warranties is not correct in all material respects at the time the same is made or as of Closing, and Seller had no knowledge of such inaccuracy when the representation or warranty was made, or when remade at Closing, or if such warranty or representation becomes inaccurate on or prior to Closing other than by reason of Seller's default hereunder, Purchaser may, upon being notified of such occurrence on or prior to Closing either (a) terminate this Agreement without liability on the part of Seller or Purchaser, other than Purchaser's indemnity contained in Paragraph 9.15 and the Deposit will be returned to Purchaser, or (b) waive such matter and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. If any of said representations and warranties are not correct in all material respects at the time the same is made or as of Closing, and Seller had knowledge of such inaccuracy when the representation or warranty was made, or, by its default hereunder caused the representation or warranty to be inaccurate when remade at Closing, Purchaser may either (x) terminate this Agreement subject to its obligations under Paragraph 9.15, receive a return of the Deposit and recover from Seller all of Purchaser's actual, reasonable out-of-pocket costs incurred in connection with its review of 7 the Property or (y) waive the breach and its rights under clause (x) and proceed to Closing, by notice to Seller given within ten (10) days after Purchaser is notified of such occurrence, but in no event later than Closing. If Purchaser fails to give any notice within the required time period, Purchaser will be deemed to have elected to waive such matter and to proceed to Closing. 5.4 Condition of Property. Except as expressly set forth in this Agreement, Seller has not made and does not hereby make any representations, warranties or other statements as to the condition of the Property and Purchaser acknowledges that at Closing it is purchasing the Property on an "AS IS, WHERE IS" basis and without relying on any representations and warranties of any kind whatsoever, express or implied, from Seller, its agents or brokers as to any matters concerning the Property. Except as expressly set forth in this Agreement, no representations or warranties have been made or are made and no responsibility has been or is assumed by Seller or by any partner, officer, person, firm, agent or representative acting or purporting to act on behalf of Seller as to the condition or repair of the Property or the value, expense of operation, or income potential thereof or as to any other fact or condition which has or might affect the Property or the condition, repair, value, expense of operation or income potential of the Property or any portion thereof. The parties agree that all understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Schedules and Exhibits hereto annexed, which alone fully and completely express their agreement, and that this Agreement has been entered into after full investigation, or with the parties satisfied with the opportunity afforded for investigation, neither party relying upon any statement or representation by the other unless such statement or representation is specifically embodied in this Agreement or the Exhibits annexed hereto. Purchaser acknowledges that Seller has requested Purchaser to inspect fully the Property and investigate all matters relevant thereto and, with respect to the condition of the Property, to rely solely upon the results of Purchaser's own inspections or other information obtained or otherwise available to Purchaser, rather than any information that may have been provided by Seller to Purchaser. 6. Closing Conditions. Purchaser's obligation to proceed to Closing is conditioned upon Seller's performance of the following obligations and satisfaction of the following conditions, in addition to all of its other obligations and conditions contained in this Agreement, provided that Purchaser may in its sole discretion elect to waive failure by Seller to perform any particular obligation. 6.1 Title Insurance. The Title Insurer is prepared to issue a policy of title insurance insuring Purchaser's interest in the Property being conveyed, subject only to Acceptable Exceptions. 6.2 Estoppel Letters. Seller has delivered to Purchaser not later than the date of Closing, estoppel letters substantially in the form of Schedule 6.2 ("Required Estoppel Form") or in form otherwise reasonably acceptable to Purchaser, prepared by Seller and 8 addressed to Purchaser, from tenants occupying in the aggregate at least 75% of the Property, measured by square footage. All estoppel letters must be dated not more than forty-five (45) days prior to the date of Closing. An estoppel letter form, even though not in the Required Estoppel Form, will be deemed reasonably acceptable to Purchaser if said letter contains the following information: confirming rent, security deposit, square footage and termination date; that no rent has been paid more than one month in advance; that the lease is in full force and effect and that a true and correct copy of the lease with all amendments and modifications is attached; and that all work to be performed by Landlord has been performed and that the tenant has no knowledge of any Landlord default. 6.2.1 If Seller is unable to obtain the requisite estoppel letters as described above, Seller may (but is not required to) substitute for any unsigned estoppel letter from a tenant other than a Major Tenant an estoppel letter in the Required Estoppel Form, which may be completed, executed and delivered by Seller and warranted and represented by Seller, provided that such substituted estoppel letters will not collectively represent in excess of 10% of all of the tenants, measured by square footage. Seller's representations and warranties in the certificates will survive the Closing subject to the limitations of Paragraph 5.3. In the event that, following the Closing Date, Seller or Purchaser obtains an estoppel letter complying with the requirements of Paragraph 6.2 with respect to any lease for which Seller delivered a substituted estoppel letter, Seller will deliver such estoppel letter to Purchaser and, upon such delivery, Seller will be automatically released from any liability or obligation under the substituted estoppel letter previously delivered by Seller with respect to such lease. Purchaser may (but shall not be required to) accept a substituted estoppel letter as to a Major Tenant as well. 6.2.2 If Seller is unable to obtain and deliver sufficient tenant estoppel certificates as required under Paragraph 6.2, or if the letters received under Paragraph 6.2 or substituted estoppels permitted under Paragraph 6.2.1 contain information or omissions unacceptable to Purchaser in its reasonable discretion, then Seller will not be in default by reason thereof, but Purchaser may, by notice given to Seller before the Closing, elect (i) to waive said conditions and proceed with the Closing or (ii) to terminate this Agreement, and receive a refund of the Deposit. If Purchaser elects to terminate this Agreement. neither party will have any further rights or obligations hereunder except as provided in Paragraph 9.15. 6.3 Representations and Warranties. All of Seller's representations and warranties made pursuant to Paragraph 5.1 remain true and correct in all material respects. 6.4 Seller Performance. Seller has delivered all of the documents and other items required pursuant to Paragraph 8.6 and has performed all other covenants, undertakings and obligations required by this Agreement, to be performed or complied with by Seller at or prior to Closing. 7. Other Agreements. The obligations of Purchaser and Seller to close hereunder shall also be conditioned upon the simultaneous closing of (a) the purchase by Purchaser or an 9 affiliate of Purchaser, of the industrial building commonly known as 741 First Avenue, King of Prussia, Pennsylvania, pursuant to that certain Agreement of Purchase and Sale of even date herewith (the "741 First Avenue Agreement") between Purchaser, as purchaser, and RREEF MidAmerica/East Fund-IV ("741 First Avenue Owner"), as seller, and (b) the purchase by Purchaser or an affiliate of Purchaser, of the industrial building commonly known as 180 Wheeler Court, Bucks County, Pennsylvania, pursuant to that certain Agreement of Purchase and Sale of even date herewith (the "Wheeler Court Agreement"; the 741 First Avenue Agreement and the Wheeler Court Agreement collectively the "Other Agreements") between Purchaser, as purchaser, and RREEF MidAmerica East-V Six, Inc. ("Wheeler Court Owner"; the 741 First Avenue Owner and the Wheeler Court Owner are collectively referred to as the "Other Owners"), as seller. This condition may be waived by the parties. Without limiting the generality of the foregoing, if Purchaser terminates this Agreement pursuant to Section 3 or Section 4, the Other Owners shall have the right to terminate the Other Agreements as well; or, if Purchaser terminates one or more of the Other Agreements pursuant to Section 3 or Section 4 of the Other Agreements, Seller shall have the right to terminate this Agreement as well. A default by Purchaser under one or more of the Other Agreements shall be deemed a Purchaser default hereunder, and a default by an Other Owner under one or more of the Other Agreements shall be deemed a Seller default hereunder. 8. Closing. 8.1 Closing of Sale. The purchase and sale contemplated herein shall close (herein referred to as the "Closing") at the office of the Title Insurer, or as otherwise mutually agreed, on a date selected by Seller, which date (the "Closing Date") shall not be earlier than the date which is fifteen (15) days after the expiration of the Review Period nor more than thirty (30) days after expiration of the Review Period, time being of the essence. At Closing, Seller will deliver to Purchaser a Special Warranty Deed ("Deed") in the form of Schedule 8.6.1 and other closing documents required hereunder and Purchaser will cause payment of the Purchase Price to be made to Seller by wire transfer. The sale (payment of the Purchase Price and delivery of the Deed) may, at Purchaser's option to be exercised by notice to Seller at least five (5) days prior to the Closing Date, be closed through escrow with the Title Insurer in accordance with the general provisions of the usual form of escrow agreement used in similar transactions by such Title Insurer with special provisions inserted (i) as may be required to conform with this Agreement and (ii) to close on a so-called "New York Style" basis. 8.2 Prorations; Adjustments. The parties will prorate taxes, rental, and other income, and operating or other expenses of the Property as of 12:01 a.m. on the date after Closing (i.e., Seller is entitled to the income and responsible for the expenses of the day of Closing). All income will be prorated on the basis of income actually received by Seller, as opposed to income which is due or for which Seller has rendered invoices but which has not been paid (i.e., Seller will not be entitled to any credit for receivables, and there will be no proration as to such receivables). Any taxes or other expenses of the Property for any period prior to Closing which are payable by tenants of the Property subsequent to Closing (e.g., real estate taxes paid in 10 arrears and not yet billed to tenants), will reduce the credit to Purchaser for such items (i.e., no credit from Seller for pass-through items for which Purchaser will later collect from the tenants). To the extent that the taxes to be prorated are not known with certainty, such proration will be based upon the most recent tax bill or county estimate, to be re-prorated upon issuance of final bills. Seller also agrees to give Purchaser a credit against the Purchase Price for all cash security deposits required to be held pursuant to the Leases (less portions thereof applied by Seller to tenant defaults and not subsequently restored by the tenant in question) and all interest due thereon and shall assign to Purchaser any other tenant deposits held by Seller. Purchaser will pay amounts subsequently received by it from tenants constituting base rent, capital reimbursements or other income due from tenants and attributable to Seller's period of ownership, but not collected as of the date of Closing, to Seller promptly upon receipt; provided that amounts received from tenants by Purchaser will be first applied to current charges, and the balance will be applied to payments due to Seller. Notwithstanding the foregoing, Seller shall expressly reserve the right to seek to collect, directly from the tenants after Closing and with Purchaser's cooperation, any delinquencies and other amounts attributable to Seller's period of ownership, but not collected as of the date of Closing. To the extent Seller has received amounts from tenants for real estate taxes and 1997 and 1998 operating expenses in excess of amounts paid by Seller with respect to such expenses, Seller will credit such excess to Purchaser at Closing, and Seller will provide adequate backup information in connection with such credit. On or after the Closing, Seller will have no further obligations with respect to any Leases or other agreements affecting the Property, including, without limitation, tenant improvement work, leasing commissions and free rent. 8.2.1 Seller and Purchaser hereby agree to use their reasonable efforts to calculate prorations (including real estate tax prorations) so as to permit settlement thereof on the Closing Date, provided, however, that if any of such prorations cannot be calculated accurately on the Closing Date, then the same will be calculated as soon as reasonably practicable after the Closing Date, but in no event later than the later to occur of (i) thirty (30) days after Seller receives its final cost certification for the year in which Closing occurs, or (ii) March 31 of the year following the year in which Closing occurs, and either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party, together with interest thereon at the rate of two percent (2%) per annum over the "prime rate" (as announced from time to time in the Wall Street Journal) from the Closing Date to the date of payment if payment is not made within thirty (30) days after delivery of a bill therefor together with reasonable back-up documentation. This obligation of the parties will survive Closing. 8.3 Proration of Service Charges. To the extent Seller, as opposed to tenants, is responsible for payment of utility charges, Seller will attempt to have utility meters read as of the Closing Date. To the extent that this is not possible and to the extent that any other obligation for continuing services is incurred, and statements are rendered for such services covering periods both before and after the Closing Date, the amount will be adjusted between the parties as of the Closing Date on a per-diem basis. Seller will forward any such statements 11 which it receives to Purchaser and Purchaser will pay the same. Seller will remit to Purchaser its proportionate share immediately upon demand. 8.4 Closing Costs. Purchaser agrees to pay (i) the Title Insurer's escrow and/or closing fees (including any payment to the closing officer of the Title Insurer as may be the local custom at the Closing), (ii) the cost of the title commitment and basic policy and endorsements, if any, required to meet Seller's obligations hereunder and the cost of any endorsements to the title policy required by Purchaser, including extended coverage, (iii) all recording fees and taxes with respect to the Deed, (iv) all costs of Purchaser's physical inspections of the Property (environmental, engineering) and other due diligence activities; (v) all costs of survey, including fees and charges of Gannett Fleming Associates (originally engaged by Seller); (vi) cancellation charges, if applicable, to Coventry Abstract (originally engaged by Seller); and (vii) one-half (1/2) of applicable transfer taxes. Seller agrees to pay (i) all recording fees with respect to clearing Seller's title, and (ii) one-half (1/2) of applicable transfer taxes. Except as otherwise provided in Paragraph 9.9, each party is responsible for its own attorneys' and other professional fees. All other closing costs shall be allocated in accordance with the prevailing local custom. 8.5 Possession. Subject to the rights of tenants pursuant to Leases delivered to Purchaser, Seller will deliver possession of the Property and of any conveyed personal property to the Purchaser on the date of Closing and Seller will thereupon deliver to Purchaser the originals of all Leases, all correspondence with tenants, tenant/lease files, operating statements, plans and specifications, supplies and advertising materials, booklets, keys, and other items used in connection with operation of the Property. 8.6 Seller's Closing Documents. As part of the Closing, Seller will deliver to Purchaser: 8.6.1 the Deed, in the form of Schedule 8.6.1 8.6.2 an affidavit in customary form that Seller is not a foreign person within the meaning of Section 1445(e) of the Internal Revenue Code of 1986, in the form of Schedule 8.6.2; 8.6.3 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's basic title insurance policy, including a mechanics' lien and judgment affidavit; 8.6.4 an assignment of the Leases in the form of Schedule 8.6.4 ("Lease Assignment"); 8.6.5 an assignment of contracts and warranties in the form of Schedule 8.6.5 ("Contracts Assignment"), assigning to Purchaser all contracts listed on Schedule 5.1.5, 12 other than those designated by Purchaser for termination by notice to Seller not less than thirty (30) days prior to Closing; 8.6.6 an assignment of intangibles in the form of Schedule 8.6.6 ("Intangibles Assignment"); 8.6.7 letters, in form to be supplied by Purchaser, to the tenants at the Property, instructing the tenants to pay rent to Purchaser and to recognize Purchaser as landlord under their Leases; 8.6.8 a bill of sale conveying all personal property of Seller, if any, located at the Property and used in connection with the maintenance or operation thereof (specifically excluding furniture, fixtures and equipment owned by RREEF Management Company and located in the RREEF Management Company office), in the form of Schedule 8.6.8; 8.6.9 a rent roll, certified by Seller as being true and correct, to Seller's knowledge, as of the Closing Date, in the form previously delivered to Purchaser; 8.6.10 a "bring down certificate" stating that Seller's representations and warranties are true and correct as of the Closing Date, in the form of Schedule 8.6.10; 8.6.11 estoppel certificates as required by Paragraph 6.2 herein; and 8.6.12 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 8.7 Purchaser's Closing Documents. As part of the Closing, Purchaser will deliver to Seller: 8.7.1 good federal funds in an amount equal to the Purchase Price, less the Deposit and interest thereon and plus or minus prorations as provided herein and plus funds sufficient to pay Purchaser's closing costs hereunder; 8.7.2 such affidavits as are customarily required by Title Insurer in connection with issuance of the owner's title insurance policy; 8.7.3 executed counterpart of the Lease Assignment; 8.7.4 executed counterpart of the Contracts Assignment; 8.7.5 executed counterpart of the Intangibles Assignment; 13 8.7.6 all other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 8.8 Joint Deliveries. At the Closing, Seller and Purchaser will execute and deliver to each other the following documents in proper form: 8.8.1 Closing Statement; 8.8.2 City, county and state transfer tax declarations or similar instruments; and 8.8.3 All other documents, instruments or writings which may be reasonably required to consummate the transactions contemplated herein. 9. Miscellaneous. 9.1 Modifications. This Agreement can be amended only in writing signed by both of the parties. 9.2 Casualty and Condemnation. Seller agrees to keep its customary replacement cost insurance covering the Property in effect until the Closing. If between the Effective Date and the Closing the improvements on the Property are destroyed or damaged to the extent that repairs cost in excess of $1,000,000 in the estimate of an architect or contractor selected by Seller and reasonably acceptable to Purchaser, or if condemnation proceedings are commenced against the Property, Purchaser may (i) terminate this Agreement or (ii) elect to accept the Property in its then condition, in which event Seller will pay or assign to Purchase at Closing all proceeds of insurance (plus the applicable deductible) or condemnation awards payable to Seller by reason of such damage or condemnation. In the event Purchaser makes neither election by the earlier of (a) Closing or (b) ten (10) days after being advised of such casualty or condemnation, Purchaser will be deemed to have elected to accept the Property in its then condition. In the event of any other damage to the Property, Seller may either repair the damage or give Purchaser a reduction in the Purchase Price equal to the cost of repairing such damage, as certified by an architect or contractor selected by Seller and reasonably acceptable to Purchaser. In the event of any damage where Purchaser does not have the right to terminate and Seller elects to repair such damage, the Closing Date shall be delayed for the number of days required to repair the damage, which Seller agrees to do in accordance with all Laws and in a good and workmanlike manner. 9.3 Time of Essence. Time (including, without limitation, the date specified as the Closing Date) is of the essence of this Agreement. 9.4 Notices. All notices required or permitted hereunder must be in writing and shall be served on the parties at the following address: 14 If to Purchaser: Brandywine Realty Trust Newtown Square Corporate Campus 16 Campus Blvd. Suite 150 Newtown Square, PA 19073 Attn: Gerard H. Sweeney, President & CEO Brad A. Molotsky, General Counsel Facsimile: (610-325-5622) If to Seller: RREEF USA FUND-I c/o The RREEF Funds 875 N. Michigan Avenue Suite 4100 Chicago, IL 60611 Attn: Mr. John Turney & Ms. Pamela Boneham Facsimile: (312) 266-9346 with a copy to: RREEF USA FUND-I c/o The RREEF Funds 650 Park Avenue Suite 210 King of Prussia, PA 19406 Attn: Ms. Barbara Gillentine Facsimile: (610) 337-2308 and a copy to: D'Ancona & Pflaum 30 North LaSalle Street Suite 2900 Chicago, Illinois 60602 Attn: Lawrence J. Moss Facsimile: (312) 580-0923 Any such notices may be sent by (a) certified mail, return receipt requested, in which case notice will be deemed delivered three (3) business days after deposit, postage prepaid in the U.S. mail or (b) a nationally recognized overnight courier, in which case notice will be deemed delivered one business day after deposit with such courier or (c) facsimile transmission, in which case notice will be deemed delivered upon electronic verification that transmission to recipient was completed, provided that notices sent by facsimile transmission on a day other than a business day, or before 9:00 a.m. or after 5:00 p.m. recipient's time on a business day, shall be deemed given on the first business day following the date of transmission or (d) personal delivery. The above addresses and facsimile numbers may be changed by notice to the other party; provided 15 that no notice of a change of address or facsimile number will be effective until actual receipt of such notice. 9.5 Parties Bound. Neither party may assign this Agreement without the prior written consent of the other, and any such prohibited assignment shall be void; provided that Purchaser may assign this Agreement without Seller's consent to an Affiliate; provided that the assignee is not a party-in-interest as described in Paragraph 9.14. Subject to the foregoing, this Agreement is binding upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. For the purposes of this Paragraph, the term "Affiliate" means (a) an entity that directly or indirectly controls, is controlled by or is under common control with the Purchaser or (b) an entity at least a majority of whose economic interest is owned by Purchaser; and the term "control" means the power to direct the management of such entity through voting rights, ownership or contractual obligations. 9.6 Governing Law. The performance and interpretation of this Agreement is controlled by the law of the Commonwealth of Pennsylvania. 9.7 Continuation Until Closing; Leasing. 9.7.1 Between the Effective Date and the Closing, Seller agrees to keep and perform all of the obligations to be performed by landlord under any Leases and Laws. Seller agrees to operate the Property in the same manner as before the making of this Agreement, the same as though Seller were retaining the Property. Seller agrees not to convey the Property, nor to grant any liens or easements with respect thereto. 9.7.2 Seller shall not permit or consent to any new leases, amendments, extensions, renewals (other than pursuant to tenant renewal options, if any) or subleases without first submitting them to Purchaser for Purchaser's approval on an approval form in the form attached hereto as Schedule 9.7.2, which approval shall not be unreasonably withheld. Purchaser shall have three (3) business days to notify Seller of its approval of such leases, amendments, extensions, renewals or subleases, and in the event that Purchaser does not so notify Seller, the leases, amendments, extensions, renewals or subleases, as the case may be, shall be deemed approved. 9.7.3 With respect to any new lease or lease modification entered into by Seller after December 18, 1997 and approved by Purchaser, by the terms of which Seller obligates itself to perform or performs or pays or contracts for any tenant improvement work or additional landlord work required pursuant to such lease, or pays or contracts for any leasing commissions or grants any free rent period or other financial concessions, then such expenses and/or free rent or other concessions, and all other third-party costs incurred (including attorneys' fees) in connection with such lease, will be a credit to Seller at Closing to the extent Seller paid such amounts prior to Closing; otherwise Purchaser agrees to assume liability for the payment and performance of such obligations in accordance with the terms thereof. 16 9.8 Brokers. Seller and Purchaser each (i) represents and warrants to the other that it has not dealt with any broker or finder in connection with the transaction contemplated by this Agreement other than the parties, if any, to be paid a commission as specified in Paragraph 9.11, and (ii) agrees to defend, indemnify and hold the other harmless from and against any losses, damages, costs, or expenses (including attorneys' fees) incurred by such other party due to a breach of the foregoing warranty by the indemnifying party. 9.9 Attorneys' Fees. Notwithstanding any limitation on remedies or amounts recoverable set forth elsewhere herein, if any action is brought by either party against the other party, the party in whose favor final judgment is entered will be entitled to recover court costs incurred and reasonable attorneys' fees at trial, upon appeal and on any petition for review. 9.10 Remedies for Non-Performance. Purchaser's remedies regarding breach of warranty or representation by Seller are governed by Paragraph 5.3. In the event of any other default by Seller hereunder, Purchaser may, as its sole and exclusive remedy, either (i) terminate this Agreement and seek damages, subject to performance of Purchaser's indemnities set forth in Paragraph 9.15, and receive back the Deposit or (ii) seek specific performance. If said sale is not consummated because of a default under this Agreement on the part of Purchaser, the Deposit will be paid to and retained by Seller as Seller's sole and exclusive remedy. Seller and Purchaser acknowledge that the Deposit is a reasonable forecast of just compensation for the harm that could be caused by Purchaser's default and that the harm suffered by Seller is difficult or impossible to accurately ascertain or predict. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, SELLER'S TOTAL LIABILITY FOR DAMAGES FOR BREACH OF THE COVENANTS, AGREEMENTS, WARRANTIES AND REPRESENTATIONS UNDER THIS AGREEMENT AND THE OTHER AGREEMENTS, COLLECTIVELY, SHALL NEVER EXCEED TWO MILLION DOLLARS ($2,000,000.00), AND IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES. 9.11 Brokers Commission. Seller agrees to pay the brokerage commission due The Flynn Company pursuant to a separate agreement. 9.12 Survival of Covenants. All covenants hereunder which, by their terms, are intended to survive Closing will survive Closing hereunder. 9.13 Seller's Investment Committee Approval. This condition has been satisfied. 9.14 ERISA. Purchaser represents and warrants to Seller that none of Purchaser's assets are "plan assets," (as that term is defined by 29 CFR Section 2510.3-101) because all plans that are subject to the provisions of the Employee Retirement Income Security Act of 1974, 17 as amended, and which have invested in Purchaser hold only "equity interests," (as that term is defined by 29 CFR Section 2510.3-101(b)(1)) that are "publicly-offered securities," (as that term is defined by 29 CFR Section 2510.3-101(b)(2)). Purchaser further represents and warrants to Seller that it is not any one of the types of entities listed in 29 CFR Section 2510.3-101(h), the character of which would identify its assets as "plan assets." 9.15 Entry and Indemnity. In connection with any entry by Purchaser, or its agents, employees or contractors onto the Property, Purchaser shall give Seller reasonable advance notice of such entry and shall conduct such entry and any inspections in connection therewith so as to minimize, to the greatest extent possible, interference with Seller's business and the business of Seller's tenants and otherwise in a manner reasonably acceptable to Seller. Without limiting the foregoing, prior to any entry to perform any on-site testing, Purchaser shall give Seller notice thereof, including the identity of the company or persons who will perform such testing and the proposed scope of the testing. Seller shall approve or disapprove the scope and methodology of such proposed testing within three (3) business days after receipt of such notice, such approval to be within the sole and unfettered discretion of Seller; Seller's failure to notify Purchaser of its approval or disapproval shall be deemed to be Seller's disapproval thereof. If Purchaser or its agents, employees or contractors take any sample from the Property in connection with any such approved testing, upon Seller's request, Purchaser shall provide to Seller a portion of such sample being tested to allow Seller, if it so chooses, to perform its own testing. Seller or its representative may be present to observe any testing or other inspection performed on the Property. Upon Seller's request, Purchaser shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Property performed by Purchaser or its agents, employees or contractors. Purchaser shall maintain, and shall assure that its contractors maintain, public liability and property damage insurance in amounts and in form and substance adequate to insure against all liability of Purchaser, its agents, employees or contractors, arising out of any entry or inspections of the Property pursuant to the provisions hereof, and Purchaser shall provide Seller with evidence of such insurance coverage upon request by Seller. Purchaser shall indemnify, defend and hold Seller harmless from and against any costs, damages, liabilities, losses, expenses, liens or claims (including, without limitation, reasonable attorney's fees) arising out of or relating to any entry on the Property by Purchaser, its agents, employees or contractors in the course of performing the inspections, testings or inquiries provided for in this Agreement, including without limitation damage to the Property or release of hazardous substances or materials onto the Property, excluding, however, any costs incurred by Seller in supervising Purchaser's testing. The foregoing indemnity shall survive beyond the Closing, or if the sale is not consummated, beyond the termination of this Agreement. 9.16 Release. Except to the extent of the representations and warranties of Seller expressly set forth in this Agreement, and except to the extent of a breach by Seller of applicable laws, but otherwise notwithstanding any other provision of this Agreement to the contrary, Purchaser, on behalf of itself and its successors and assigns, waives its right to recover from, and forever releases and discharges, Seller, Seller's affiliates, Seller's investment manager, the partners, trustees, shareholders, directors, officers, employees and agents of each of them, 18 and their respective heirs, successors, personal representatives and assigns (collectively, the "Seller Related Parties"), from any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, attorneys' fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, which may arise on account of or in any way be connected with the physical condition of the Property or any law or regulation applicable thereto, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U.S.C. Sections 1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), and the Toxic Substance Control Act (15 U.S.C. Sections 2601-2629) 9.17 Confidential Information. The parties acknowledge that the transaction described herein is of a confidential nature and shall not be disclosed except to consultants, investors, advisors, and affiliates, or as required by law. No party will make any public disclosure of the specific terms of this Agreement, except as required by law. Without limiting the generality of the foregoing, any press release or other public disclosure regarding this Agreement or the transactions contemplated herein, and the wording of same, must be approved in advance by both parties. In connection with the negotiation of this Agreement and the preparation for the consummation of the transactions contemplated hereby, each party acknowledges that it will have access to confidential information relating to the other party. Each party shall treat such information as confidential, preserve the confidentiality thereof, and not duplicate or use such information, except to advisors, consultants, investors and affiliates in connection with the transactions contemplated hereby. In the event of the termination of this Agreement for any reason whatsoever, Purchaser will return to Seller, at Seller's request, all documents, work papers, and other material (including all copies thereof) obtained from Seller in connection with the transactions contemplated hereby, and each party shall use its best efforts, including instructing its employees and others who have had access to such information, to keep confidential and not to use any such information. The provisions of this Paragraph 9.17 will survive the Closing or, if the purchase and sale is not consummated, any termination of this Agreement. 9.18 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event, after which the designated period of time begins to run, is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday (i.e., a day on which federally chartered banks are not open for business in Chicago, Illinois). The last day of any period of time described herein shall be deemed to end at 5 p.m. Chicago, Illinois time on the last day of such period of time. All days other than Saturdays, Sundays and legal holidays in which national banks are closed in Chicago, Illinois are business days hereunder. 19 9.19 Entire Agreement. This Agreement and any other document to be furnished pursuant to the provisions hereof embody the entire agreement and understanding of the parties hereto as to the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in such documents. This Agreement and such documents supersede all prior agreements and understandings among the parties with respect to the subject matter hereof 9.20 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the terms or provisions of this Agreement. 9.21 Facsimile Signatures. Executed facsimile copies of this Agreement or any amendments hereto shall be binding upon the parties, and facsimile signatures appearing hereon or on any amendments hereto shall be deemed to be original signatures. 9.22 Further Assurances. In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by Seller to Purchaser at Closing, Seller agrees to perform, execute and deliver, but without any obligation to incur any additional liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate the transactions contemplated hereby or to further perfect the conveyance, transfer and assignment of the Property to Purchaser. 9.23 Offer. Execution and delivery of this Agreement by Purchaser constitutes an offer to purchase the Property on the terms contained herein. Delivery by Seller of a copy of the fully executed Agreement by facsimile transmission on or before the Expiration Date, followed by a manually signed copy thereof delivered the next business day after transmission of such copy, shall constitute acceptance by Seller as of the date of the facsimile transmission. The date on which Seller delivers a fully executed copy of this Agreement to Purchaser, or delivers a copy by facsimile transmission followed by a manually signed copy as provided in the preceding sentence is referred to herein as the "Effective Date." 9.24 Seller Exculpation Clause. The obligations of Seller contained herein are intended to be binding only on the property of the trust party to this Agreement of Purchase and Sale and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the trustees, investment managers, any general partners thereof, or any employees or agents of the trustees or investment managers. All documents to be executed by Seller shall also contain the foregoing exculpation. 20 9.25 Purchaser Exculpation Clause. No recourse shall be had for any obligation of Brandywine Operating Partnership, L.P. and 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 Operating Partnership, L.P. or 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 the Seller and all parties claiming by, through or under Seller. 9.26 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 Purchaser, provide Purchaser and its representatives, with (a) access to all financial 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 Purchaser's outside, third party accountants (the "Accountants"), to enable Purchaser and its Accountants to prepare financial statements in compliance with any or all of (i) Rule 3-05 or 3-15 of Regulation S-X of the Securities and Exchange Commission (the "Commission"), as applicable; (ii) any other rule issued by the Commission and applicable to Purchaser; and (iii) any registration statement, report or disclosure statement filed with the Commission, by, or on behalf of Purchaser; and (b) a representation letter, signed by the 21 individual(s) responsible for Seller's financial reporting, substantially in the form of Schedule 9.26 attached hereto, which representation letter may be required by the Accountants in order to render an opinion concerning Seller's financial statements. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below. SELLER: PURCHASER: RREEF USA FUND-I BRANDYWINE OPERATING PARTNERSHIP, L.P. By: RREEF America L.L.C., its By: Brandywine Realty Trust, its investment advisor authorized general partner By: By: ---------------------------- ------------------------------- Authorized Representative Gerard H. Sweeney President and Chief Executive Dated: Officer ------------------------- Dated: ---------------------------- 22 List of Schedules and Exhibits Schedules - ------------ 2.1 Escrow Instructions 5.1 Disclosure Schedule 5.1.5 Service Contracts 5.1.10 Rent Roll 5.1.12 Future Leasing Commissions, Tenant Improvements and Free Rent 6.2 Form of Estoppel Letter 8.6.1 Form of Deed 8.6.2 FIRPTA Certificate 8.6.4 Assignment and Assumption of Leases 8.6.5 Assignment and Assumption of Contracts and Warranties 8.6.6 Assignment of Intangibles 8.6.8 Bill of Sale 8.6.10 Bring-Down Certificate 9.26 SEC Compliance Representation Letter Exhibits - -------------- A Legal Description of Property A-1 Descriptive List of the Property 23 Schedule 2.1 EARNEST MONEY ESCROW INSTRUCTIONS (earnest money escrow instructions previously executed) Schedule 5.1 DISCLOSURE SCHEDULE 1. The Upper Merion Area school district has filed real estate tax assessment appeals, seeking to increase the assessments against the 660 Allendale Road and 680 Allendale Road properties for tax years beginning on and after January 1, 1996. Counsel for Seller has negotiated a tentative settlement, whereby the School District would dismiss its appeals, and the 1998 reassessment for 660 Allendale would be increased from $3,566,070 to $4,200,000. Purchaser hereby concurs with this settlement, and authorizes Seller to authorize its counsel to proceed to attempt to put this proposed settlement into effect. 2. 1996 Environmental Audits were prepared by ATC Environmental, Inc. for the following properties: 1. 600 Park Avenue 2. 650 Park Avenue 3. 875 First Avenue 4. 630 Clark Avenue 5. 650 Clark Avenue 6. 620 Allendale Road 7. 640-660 Allendale Road 8. 680 Allendale Road 9. 741 Third Avenue 10. 820 Third Avenue 11. 780 Third Avenue 12. 751-761 Fifth Avenue These Audits have been made available to Purchaser for inspection and copying, and, each of the Seller warranties of Section 5.1.8 and its subparagraphs are qualified and limited by any matters disclosed in such Audits. Schedule 5.1.5 Service Contracts A.T. BUILDERS BFI BERWYN GLASS BOYLE ELECTRICAL CONTRACTORS BURHANS GLASS COMPANY, INC. CONTROLLED ENVIRONMENTS CROWN CONTRACTORS, INC. JOSEPH W. DAVIS, INC. DIROCCO BROTHERS COMPANY DURASEAL, INC. ELDREDGE FIDELITY ALARM COMPANY GALLAGHER EXCAVATING, INC. (GEI) GUARDIAN ALARM SYSTEMS HONEYWELL MOON LANDSCAPING OLIVER SPRINKLER PENNTEX CONSTRUCTION COMPANY PHOENIX MECHANICAL, INC. RHETT HAMILTON JONES ASSOCIATES SANTANGELO HAULING CO. SECURITY ELEVATOR COMPANY SYSTEMATIC ROOFING ANALYSIS TELEPHONE DIAGNOSTIC SERVICES, INC. TERMINIX INTERNATIONAL CO. VECTORDYNE DAVID WHITE PLUMBING Schedule 5.1.10 Rent Roll Schedule 5.1.12 Future Leasing Commissions, Tenant Improvements and Free Rent 1. If Lockheed Martin, the tenant of 751-761 Fifth Avenue, does not exercise its termination option, a commission may become due to The Flynn Company and GMH in the aggregate amount of $44,388.00 on October 1, 2000. 2. Seller and Gannett Fleming (650 Park Avenue) have signed a letter of intent to extend its lease for seven years and expand to approximately 35,000 square feet. The extended lease would commence July 1, 1998 or sooner. Base rent is $16.00 gross plus electric, with escalation over 1997 base year and 3% annual increases in base rent. Tenant will be entitled to a tenant improvement allowance of $15.00 per square foot, and a leasing commission in the amount of $____________ will be payable to _____________. 3. Wacker Siltronic Corp. (650 Park Avenue, 1,072 square feet) is extending its lease. A commission in the amount of $1,326 will be payable to The Flynn Company. 4. The landlord has agreed to pay Metropolitan Fiber Systems of Philadelphia, Inc. (MFS) (630 Clark Avenue) up to $450,000 for tenant improvements and roof repairs/replacements. The work has been performed but the landlord has not yet been billed. This remains a Seller obligation, and Seller agrees to hold Purchaser from and against any liability for these amounts, such obligation to survive Closing. Schedule 6.2 TENANT ESTOPPEL LETTER __________ __, 1998 Brandywine Realty Trust Newtown Square Corporate Campus 16 Campus Boulevard Newtown Square, PA 19073 Attention: Gerard H. Sweeney, President and Chief Executive Officer NationsBank, N.A., Real Estate Banking 8300 Greensboro Drive, Suite 300 McLean, VA 22102 Attention: Gary P.F. Carr Re: Lease from ________, for Suite ____, located at [BUILDING ADDRESS] [CITY/TOWNSHIP], Pennsylvania (the "Property") To Whom it May Concern: The undersigned is the holder of the tenant's interest under the lease described on Exhibit A attached hereto (the "Lease") demising a portion of the Property (the "Leased Premises"). We understand that Brandywine Realty Trust, its assignee or nominee ("Brandywine") intends to acquire the Property, and that NationsBank, N.A., as Agent for the parties listed on Schedule 1 attached hereto ("Lender") may be the holder of a first mortgage on the Property, and that Brandywine and Lender require this certification from us. Accordingly, we hereby certify to Brandywine and Lender as follows: 1. The Lease is in full force and effect and has not been modified, amended or supplemented in any way, except as follows (Insert dates of all modifications, amendments, or supplements; if none, write "None"): ___________________________________________________________________________ __________________________________. 2. There are no other representations, warranties, agreements, concessions, commitments, or other understandings between the undersigned and the Landlord regarding the Property other than as set forth in the Lease or paragraph 1 above. 3. The landlord under the Lease has completed and delivered, and the undersigned has accepted, the Leased Premises in the condition required by the Lease and the term of the Lease commenced on _________. The Leased Premises consists of approximately ___________ square feet. The undersigned has taken possession of and is occupying the Leased Premises on a rent-paying basis and the monthly base rent payable thereunder is $_________, payable in advance. All improvements and work required under the Lease to be made by the landlord thereunder and all facilities required under the Lease to be furnished to the Leased Premises have been completed to the satisfaction of the undersigned, except as follows (Insert description of any improvements and work to be completed by the landlord under the Lease; if none, write "None"): _____________________________. 4. The fixed expiration date set forth in the Lease, excluding renewals and extensions, is ________________. The undersigned neither has any option or right to purchase the Property or any portion thereof nor does the undersigned have any right or option to terminate the Lease or any of its obligations thereunder in advance of the scheduled termination date of the Lease as noted above, except as follows (Insert description of any purchase rights or options, and/or any early termination rights; if none, write "None"): _______________________________. 5. All rents, additional rents and other sums due and payable under the Lease have been paid in full and no rents, additional rents or other sums payable under the Lease have been paid for more than one (1) month in advance of the due dates thereof. 6. The landlord under the Lease is not in default under any of the requirements, provisions, terms, conditions or covenants of the Lease to be performed or complied with by the landlord under the Lease, and no event has occurred or situation exists which would, with the passage of time and/or the giving of notice, constitute a default or an event of default by the landlord under the Lease. 7. The undersigned is not in default under any of the requirements, provisions, terms, conditions, or covenants of the Lease to be performed or complied with by the undersigned, and no event has occurred or situation exists which would, with the passage of time and/or the giving of notice, constitute a default or an event of default by the undersigned under the Lease. 2 8. The undersigned has received no notice from any governmental authority or other person or party claiming a violation of, or requiring compliance with, any Federal, State or local statute, ordinance, rule, regulation or other requirement of law, for environmental contamination at the Leased Premises, to the best knowledge of the undersigned no hazardous, toxic or polluting substances or wastes have been generated, treated, manufactured, stored, refined, used, handled, transported, released, spilled, disposed of or deposited by Tenant on, in or under the Leased Premises. 9. Neither the undersigned nor the landlord under the Lease has commenced any action or given or received any notice for the purpose of terminating the Lease. 10. There are no existing defenses, offsets, claims, or credits against the payment of rent or the performance of the undersigned's obligations under the Lease. 11. The undersigned has paid to the landlord under the Lease a security deposit of $____________. Very truly yours, By: -------------------------------------- Name: Title: 3 Exhibit A (Description of Lease) 4 Schedule 8.6.1 Form of Deed SPECIAL WARRANTY DEED: THIS INDENTURE made this ____ day of ____________ , 1998, BETWEEN RREEF USA FUND-I, A CALIFORNIA GROUP TRUST (hereinafter called the Grantor/s), of the one part and _____________________ (hereinafter called the Grantee/s), of the second part, WITNESSETH That in consideration of Ten and No/100 Dollars ($10.00) in hand paid, the receipt whereof is hereby acknowledged, the said Grantor/s do/does hereby grant, bargain, sell and convey unto the said Grantee/s, his/her/their successors and /or assigns, ALL THAT CERTAIN real estate, situated in the County of Montgomery and Commonwealth of Pennsylvania known and described on the attached Exhibit A "Legal Description," attached hereto an hereby made a part hereof. TOGETHER with all and singular the buildings, improvements, ways, streets, alleys, driveways, passages, waters, water-courses, rights, liberties, privileges, hereditaments and appurtenances whatsoever unto the hereby granted premises belonging, or in anywise appertaining, and the reversions and remainders, rents, issues and profits thereof; and all the estate, right, title, interest, use, trust, property, possession, claim and demand whatsoever of Grantor as well at law as in equity, of, in, and to the same. TO HAVE AND TO HOLD the said lot or piece of ground described with the buildings and improvements thereon erected, hereditaments and premises hereby granted, or mentioned and intended so to be, with the appurtenances unto the said Grantee, and its successors and assigns to and for the only proper use and behoof of the said Grantee, and its successors and assigns, forever. AND the said Grantor/s do/does hereby covenant to and with the said Grantee/s that he/she/they, the said Grantor/s, his/her/their successors and/or assigns, SHALL AND WILL warrant specially and forever defend the herein above described premises, with the hereditaments and appurtenances, unto the said Grantor/s and against every other person lawfully claiming or who shall hereafter claim the same or any part thereof, by, from and under his/her/their successors and/or assigns or any of them, subject to validly and legally existing encumbrances of record. IN WITNESS WHEREOF, the said Grantor/s has/have caused these presents to be duly executed, the day and year first above written. ATTEST: RREEF USA FUND-I, a California group trust By: ------------------------------- By: RREEF America L.L.C., a Delaware limited liability company, its investment advisor By: ------------------------- Authorized Representative [Add Pennsylvania address certification] 2 STATE OF ) ---------------- ) SS. COUNTY OF ) ---------------- I, ____________________________________________________________, a notary public in and for said County, in the State aforesaid, DO HEREBY CERTIFY that _______________________ and _______________________________, personally known to me to be the __________________________ and __________ of RREEF USA FUND-I, a California group trust, and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such _____________________________ and __________, they signed and delivered the said instrument as their free and voluntary act, and as the free and voluntary act and deed of said trust, for the uses and purposes therein set forth. GIVEN under my hand and official seal this ____ day of ___________, 1998. ------------------------------------------- Notary Public Commission expires ------------------------------------------------------------ 3 EXHIBIT A Legal Description Schedule 8.6.2 FIRPTA CERTIFICATE Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by __________________________________________, a _______________________ ("Seller") hereby certifies the following: 1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); 2. Seller's U.S. employer identification number is 94-2624868; and 3. Seller's principal place of business is 101 California Street, 26th floor, San Francisco, CA 94111-5853 Seller understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Seller. _______________________________________ _______________________________________ By: ------------------------------------ Authorized Representative Subscribed and sworn to before me this ____ day of ______, 1998. - ------------------------------ Notary Public Schedule 8.6.4 ASSIGNMENT AND ASSUMPTION OF LEASES THIS ASSIGNMENT AND ASSUMPTION OF LEASES (the "Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between _________________________________________, a Delaware corporation, ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor is the lessor under certain leases executed with respect to that certain real property and improvements thereon known as_________________________________, _______________________, and more particularly described in Exhibit "A" attached hereto (the "Property"), which leases are described in Exhibit B attached hereto (the "Leases"). B. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase the Property from Assignor and Assignor agreed to sell the Property to Assignee, on the terms and conditions contained therein. C. Assignor desires to assign its interest as lessor in the Leases to Assignee, and Assignee desires to accept the assignment thereof, on the terms and conditions below. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date") [SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the Leases except rents and other sums due Assignor first accruing on or prior to the Conveyance Date, and, effective as of the day following the Conveyance Date, Assignee hereby accepts such assignment. 2. Assignor hereby assumes full responsibility for all obligations and defaults of landlord under the Leases accruing prior to and including the Conveyance Date. Assignor also agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 3. Assignee hereby assumes full responsibility for all obligations of landlord under the Leases accruing after the Conveyance Date and Assignee hereby agrees to defend, indemnify and hold Assignor harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignee's failure to perform said obligations. Without limiting the generality of the foregoing, Assignee assumes full responsibility for the free rent, unpaid tenant improvement allowances and leasing commissions under the Leases as listed on Exhibit C. 4. This Assignment shall be governed by the laws of the Commonwealth of Pennsylvania. 5. This Assignment may be executed in counterparts. 6. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Leases. ASSIGNOR: ASSIGNEE: __________________________________ __________________________________ __________________________________ __________________________________ By: By: ------------------------------- ------------------------------- Authorized Representative Title: ---------------------------- Dated: Dated: ---------------------------- ---------------------------- 2 EXHIBIT A Legal Description 3 EXHIBIT B Existing Leases (rent roll to be attached) 4 EXHIBIT C Free Rent, Tenant Improvement Allowances and Leasing Commissions 5 Schedule 8.6.5 ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND WARRANTIES THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND WARRANTIES (the "Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between ____________________ ___________________________________, ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase Assignor's interest in the real property legally described on Exhibit A attached hereto (the "Property"), on the terms and conditions contained therein. B. Whereas the execution and delivery of this Assignment is a condition precedent to the purchase of the Property by the Assignee. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date")[SHOULD BE THE DAY FOLLOWING CLOSING] , Assignor hereby assigns to Assignee all of its right, title, and interest in and to the following: 2. Assignor hereby grants, transfers and assigns to Assignee all the right, title and interest of Assignor in and to the following: (a) All contracts listed on Exhibit B attached hereto. (b) All presently effective and assignable warranties, guaranties, representations or covenants given to or made in favor of Assignor or Assignor's affiliates in connection with the acquisition, development, construction, maintenance, repair, renovation or inspection of the Property. The foregoing are collectively referred to herein as the "Contracts." 3. Assignor hereby assumes full responsibility for all obligations and defaults of Assignor under the Contracts accruing to and including the Conveyance Date. Assignor also agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 4. Assignee hereby assumes full responsibility for all obligations of owner of the Property under the Contracts accruing after the Conveyance Date and Assignee hereby agrees to defend, indemnify and hold Assignor harmless from any claims, liabilities or costs (including reasonable attorneys' fees) arising from Assignee's failure to perform said obligations. 5. This Assignment shall be governed by the laws of the Commonwealth of Pennsylvania. 6. This Assignment may be executed in counterparts. 7. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers. IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Contracts and Warranties. ASSIGNOR: ASSIGNEE: _____________________________ ______________________________ _____________________________ ______________________________ By: By: --------------------------------- -------------------------------- Authorized Representative Title: -------------------------------- Dated: Dated: ------------------------------ -------------------------------- 2 EXHIBIT A Legal Description 3 EXHIBIT B ----------- Contracts A.T. BUILDERS BFI BERWYN GLASS BOYLE ELECTRICAL CONTRACTORS BURHANS GLASS COMPANY, INC. CONTROLLED ENVIRONMENTS CROWN CONTRACTORS, INC. JOSEPH W. DAVIS, INC. DIROCCO BROTHERS COMPANY DURASEAL, INC. ELDREDGE FIDELITY ALARM COMPANY GALLAGHER EXCAVATING, INC. (GEI) GUARDIAN ALARM SYSTEMS HONEYWELL MOON LANDSCAPING OLIVER SPRINKLER PENNTEX CONSTRUCTION COMPANY PHOENIX MECHANICAL, INC. RHETT HAMILTON JONES ASSOCIATES SANTANGELO HAULING CO. SECURITY ELEVATOR COMPANY SYSTEMATIC ROOFING ANALYSIS TELEPHONE DIAGNOSTIC SERVICES, INC. TERMINIX INTERNATIONAL CO. VECTORDYNE DAVID WHITE PLUMBING 4 Schedule 8.6.6 ASSIGNMENT OF INTANGIBLES THIS ASSIGNMENT AND ASSUMPTION OF INTANGIBLES ("Assignment") dated as the dates of execution set forth below, but effective as of the Conveyance Date (as herein defined), is between____________________________________________________________, ("Assignor") and ________________, a ___________________ ("Assignee"). A. Assignor and Assignee have entered into an Agreement of Purchase and Sale with an Effective Date of ______________, 1998 (the "Agreement"), pursuant to which Assignee agreed to purchase Assignor's interest in the real property legally described on Exhibit A attached hereto (the "Property"), on the terms and conditions contained therein. B. Whereas the execution and delivery of this Assignment is a condition precedent to the purchase of the Property by the Assignee. ACCORDINGLY, the parties hereby agree as follows: 1. As of the date on which the Property is conveyed to Assignee pursuant to the Agreement (the "Conveyance Date")[SHOULD BE THE DAY FOLLOWING CLOSING], Assignor hereby assigns to Assignee all of its right, title, and interest in and to the following: (i) All licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps or plats and entitlements issued, approved or granted by federal, state or municipal authorities or otherwise in connection with the Property and its renovation, construction, use, maintenance, repair, leasing and operation; and all licenses, consents, easements, rights of way and approvals required from private parties to make use of utilities, to insure pedestrian ingress and egress to the Property and to insure continued use of any vaults under public rights-of-way presently used in the operation of the Property. (ii) any trade style or trade name used in connection with the Property; and, (iii) all correspondence with the tenants under tenant leases, all booklets and manuals relating to the maintenance and operation of the Property. The foregoing are collectively referred to herein as the "Intangibles". 2. Assignor agrees to assume full responsibility for its obligations under the Intangibles accruing on or prior to the Conveyance Date and Assignor agrees to defend, indemnify and hold Assignee harmless from any claims, liabilities or costs arising from Assignor's failure to perform said obligations, provided that Assignee makes a claim hereunder on or before one (1) year following the Conveyance Date. 3. Assignee assumes full responsibility for all obligations of the owner of the property accruing under the Intangibles from the day after the Conveyance Date and Assignee agrees to defend, indemnify and hold Assignor and its predecessors in title harmless from all claims, liabilities or costs arising from Assignee's failure to perform said obligations. 4. This instrument may be executed in counterparts. 5. The obligations of Assignor contained herein are intended to be binding only on the property of the Assignor and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Assignor, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, the parties have executed this Assignment of Intangibles. ASSIGNOR: ASSIGNEE: _____________________________ ________________________________ _________________________________, ________________________________ By: By: -------------------------------- -------------------------------- Authorized Representative Title: -------------------------------- Dated: Dated: -------------------------------- -------------------------------- 2 EXHIBIT A Legal Description 3 Schedule 8.6.8 BILL OF SALE _________________________________________________________________ ("Seller"), in consideration of Ten and No/100 Dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby sells, transfers, assigns and sets over unto __________________ ("Purchaser"), all of its right, title and interest in and to any and all personal property, which personal property is owned by Seller and located on the real estate legally described on Exhibit A attached hereto (the "Personal Property"), including, but not limited to, the Personal Property listed on Exhibit B. Seller hereby represents and warrants to Purchaser that Seller is the absolute owner of the Personal Property free and clear of all liens, charges and encumbrances, and that Seller has full right, power and authority to sell the Personal Property and to make this Bill of Sale. All warranties of quality, fitness and merchantability are hereby excluded. The obligations of Seller contained herein are intended to be binding only on the property of the Seller and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Seller, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the ___ day of _______, 1998, but effective on the date on which the Property is conveyed by Seller to Purchaser. _______________________________ _______________________________ By:___________________________ Authorized Representative STATE OF _________ ) ) SS COUNTY OF _______ ) The undersigned, a Notary Public in and for said County in the State aforesaid, DOES HEREBY CERTIFY that ________________, authorized representative of _________________________________________________________________, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such authorized representative, appeared before me this day in person and acknowledged that __he, being duly authorized, signed, sealed and delivered the said instrument as h___ free and voluntary act, and as the free and voluntary acts of said corporation, for the uses and purposes therein set forth. GIVEN under my hand and Notarial Seal this _____ day of ______________, 1998. _______________________ Notary Public My Commission Expires: ____________________, 19___ 2 EXHIBIT A Legal Description 3 EXHIBIT B ------------- Personal Property NUMBER ITEM DESCRIPTION - ------ -------------------------- ---------------------------------- 2 METAL CABINETS ASSORTED PAINT & SUPPLIES, DROP CLOTHES 1 METAL FILE CABINET ELECTRICAL SUPPLIES 1 LARGE METAL SHELF ASSORTED PLUMBING SUPPLIES 2 SMALL METAL SHELVES ASSORTED DOOR CLOSURES & BALLAST ASSORTED DROP CLOTHES & COVE BASE 1 WOODEN SHELF AT WORK BENCH ASSORTED NUTS & BOLTS, WASHERS, COFFEE CANS & SUPPLIES 2 4 FT. STEP LADDERS WOOD & ALUMINUM 2 PUSH BROOMS 1 WORK BENCH & VISE UNDER WORK BENCH-ASSORTED EMPTY PAINT BUCKETS & DOOR KNOBS & OTHER SUPPLIES. HAND SOAP DISPENSER PARTS. 2 WET MOPS & BUCKETS 2 CASES F40CW LIGHT BULBS - 4 FT. 1 CASES 8 FT. LIGHT BULBS 1 24 FT. EXTENSION LADDER FIBERGLASS 1 6 FT. STEP LADDER WOOD 2 10 FT. STEP LADDER 1-WOOD, 1-FIBERGLASS 1 8 FT. STEP LADDER 2 SECTIONS OF RUBBER HOSE ASSORTED BELTS FOR AIR HANDLERS 1 CASE FILTERS FOR WALL FAN UNITS 1 PAINT SPRAYER 2 RAKES 1 POST HOLE DIGGER 4 NUMBER ITEM DESCRIPTION - ------ -------------------------- ---------------------------------- 1 ICE CHOPPER ASSORTED P.V.C. PIPE 1 SET OF WOODEN TRUSSES 6 5 GALLON CANS ASSORTED PAINTS 6 ELECTRIC MOTORS (UNDER AIR HANDLER #3) 1 WEED WACKER 1 SCAFFOLD RUBBER CONES PAINT THINNERS 1 KEYSCAN LOCK SYSTEM COMPUTERIZED SYSTEM TO MONITOR LOCKING AND UNLOCKING OF DOORS. KEYS ISSUED TO SELECTED TENANTS 5 Schedule 8.6.10 SELLER'S CLOSING CERTIFICATE THIS CLOSING CERTIFICATE is made as of the ___________ day of _______________________, 1998, by and between ________________________________ ______________________ ("Seller"), to and in favor _____________________________________________________________, a __________ ("Purchaser"), under and pursuant to that certain Agreement of Purchase and Sale by and between Seller and __________, with an Effective Date as defined therein (the "Agreement"), for the purchase and sale of that certain Property situated in the _________, _______ County, ____________ (as defined in the Agreement). Pursuant to Paragraphs 5.3 and 8.6.10 of the Agreement and except as disclosed on Exhibit A attached hereto and made a part hereof, Seller hereby reconfirms, remakes and rewarrants to Purchaser as of the date hereof each of the representations, warranties and covenants given by Seller contained in Paragraph 5.1 of the Agreement in the same manner as such representations, warranties and covenants were given in the Agreement, each of which is incorporated herein and made a part hereof by this reference. Except as modified hereby, Seller hereby confirms that each of said representations, warranties and covenants are true and accurate in all material respect as of the date hereof. Seller's reconfirming, remaking and rewarranting of its representations, warranties and covenants is subject to the limitations set forth in Paragraph 5.3 of the Agreement. The obligations of Seller contained herein are intended to be binding only on the property of the Seller and shall not be personally binding upon, nor shall any resort be had to the private properties of, any of the investment managers of Seller, or any general partners thereof, or any employees or agents of the investment managers IN WITNESS WHEREOF, Seller has executed this Closing Certificate on the day and year first above written, but effective upon the date on which the Property is conveyed by Seller to Purchaser. SELLER: _____________________________ _____________________________ By: ----------------------------- Authorized Signatory EXHIBIT A Disclosure Schedule 9.7.2 NEW LEASE APPROVAL FORM Property: ________________________________________________________________ Tenant: ________________________________________________________________ Square Feet:______________________________________________________________ Location: _________________________________ Anticipated Lease Commencement: __________________________________________ Anticipated Rent Commencement: __________________________________________ Term: ___________________________________________________________________ FREE RENT: _______________________________________________________________ Rental Rate: ___________Period _____________ PSF Rate __________Annual Income _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Note: Above rental rates do not include Tenant Electric Tenant Improvement Allowance: PSF _________ Amount ___________T.I. Mechanism: ______________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ OPTIONS: _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ Initial Commission: ________ BROKER___________________% ______________________Amount ______________________________________________________________________ ______________________________________________________________________ Broker Future Entitlements:___________________________________________ ______________________________________________________________________ ______________________________________________________________________ Other Comments:_______________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Approved By: ____________________________ Schedule 9.26 SEC COMPLIANCE REPRESENTATION LETTER (Accountant Name & Address) Dear Sirs: In connection with your audit of the statement of revenues and certain expenses of the Properties situated in the City of King of Prussia, Montgomery County, Pennsylvania, commonly known as a portion of the King of Prussia Business Center (the "Property") for the year ended December 31, 199__ (the "Operating Statement"), prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, the undersigned ("Seller") makes the following limited, qualified and specific representations, which are true to Seller's knowledge (as such phrase is hereinafter defined): 1. Seller has made available or caused its property manager to make available to Brandywine Operating Partnership, L.P. ("Buyer"), or its representatives, Seller's financial records and files in Seller's actual possession pertaining to the operation of the Property (such records and files being collectively referred to herein as the "Files"). 2. Except as disclosed in the Files, Seller is not aware of any events or transactions which have occurred since December 31, 199_ and prior to the date hereof that would have a material effect on the Operating Statement for the period then ended. 3. We recognize that, as the Owner of the Property, we are responsible for directing the fair presentation of the Operating Statement. We believe the Operating Statement is fairly presented in conformity with generally accepted accounting principals. As used in this letter, the words "Seller's knowledge" shall be deemed to mean, and shall be limited to, the actual (as distinguished from implied, imputed or constructive) knowledge of Joseph S. Cappelletti and Barbara Gillentine without such person having any obligation to make an independent inquiry or investigation. Notwithstanding any provision in this letter to the contrary, Seller is executing this letter solely as an accommodation to and at the request of Buyer and, except to the extent Seller is liable to Buyer for representations and warranties expressly set forth in that certain Agreement of Purchase and Sale, dated _________ 1998, by and between Seller and Buyer (the "Sale Agreement'), this letter is subject to the condition that Seller shall not be liable or responsible to Buyer, any parent, subsidiary or other affiliate of Buyer, or any officer, director, employee, agent, representative, shareholder, partner or principal of Buyer or any such parent, subsidiary or other affiliate thereof or any accountant or other professionals engaged by or on behalf of any of the foregoing, including, without limitation, [accountant](all of the foregoing being collectively referred to herein as the "Buyer Parties"), as a result of the fact that any of the statements made herein are in any way inaccurate, untrue or incorrect. By the acceptance of this letter, except for rights and remedies that Buyer may have under the Sale Agreement with respect to representations and warranties expressly set forth in the Sale Agreement, each of the Buyer Parties shall be deemed to have waived any and all rights and remedies that any of them may have against Seller, whether at law or in equity, as a 4 result of the fact that any of the statements made herein are in any way inaccurate, untrue or incorrect. Seller has executed this letter for the limited purposes set forth herein, and for the use of [accountant] only. No other parties may rely on the statements set forth herein. Very truly yours, RREEF USA FUND-I, a California group trust By: RREEF America L.L.C., a Delaware limited liability company By:_______________________________ Name: Joseph S. Cappelletti Title: Its Authorized Representative By: __________________________________ Name: Barbara J. Gillentine Title: Its Authorized Representative 5 EXHIBIT A Legal Description of Property EXHIBIT A-1 Descriptive List of the Property King of Prussia Industrial Park, King of Prussia, Pennsylvania 1. 600 Park Avenue 2. 650 Park Avenue 3. 875 First Avenue 4. 630 Clark Avenue 5. 650 Clark Avenue 6. 620 Allendale Road 7. 640-660 Allendale Road 8. 680 Allendale Road 9. 741 Third Avenue 10. 820 Third Avenue 11. 780 Third Avenue 12. 751-761 Fifth Avenue 13. Allendale Road Development Site EX-23.1 6 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated January 22, 1998 in this Form 8-K on the combined statement of revenue and certain expenses of the RREEF Properties into the Company's previously filed Registration Statements on Forms S-3 (File No. 333-20999 and 333-39155) and Forms S-8 (File No. 333-14243 and File No. 333-28427). ARTHUR ANDERSEN LLP Philadelphia, Pa., January 27, 1998 -----END PRIVACY-ENHANCED MESSAGE-----