Execution Copy

Exhibit 10.45

PURCHASE AND SALE AGREEMENT

by and among

KIM TOPCO INC.,

 

BRANDYWINE OPERATING PARTNERSHIP, L.P.

and

BDN INVESTMENT TRUST

 

Dated as of December 23, 2015

 

 

719028938

--------------------------------------------------------------------------------

 

EXHIBITS

Exhibit A Definitions
Exhibit B List of Target Company Group Members

Exhibit B-1Pre-Closing Restructuring of Target Company
Exhibit C Legal Description of the Land
Exhibit D List of Licenses
Exhibit E Form of Escrow Agreement
Exhibit F Form of Assignment and Assumption of Beneficial Ownership Interests
Exhibit G Form of FIRPTA Certificate
Exhibit H-1 Form of GSA-IRS SNDA
Exhibit H-2 Form of GSA Statement of Lease
Exhibit I Permitted Encumbrances – Additional Title Matters
Exhibit J Purchaser Closing Certificate
Exhibit K Seller Closing Certificate
Exhibit L Mutual Release

Exhibit MForm of Cira License Agreement

Exhibit NForm of GSA-IRS Parking Area Lease

Exhibit OForm of Amended and Restated GSA-IRS Rent Allocation Agreement

Exhibit PForm of BDN Property Management Agreement

Exhibit QMonetary Liens to be Satisfied by Seller

Exhibit RTitle Affidavits and Undertakings to be Executed by Seller

Exhibit SApproved Press Release

Exhibit TPenn ROFO Waiver and Modification

Exhibit UForm of BDN Garage Owner Estoppel

 

SCHEDULES

Disclosure Schedule

Schedule 1.2Excluded Assets

Schedule 3.5Due Diligence Material Made Available to Purchaser

Schedule 11.19Notice Addresses

 

 

719028938

--------------------------------------------------------------------------------

 

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT, dated as of December 23, 2015 (the “Agreement
Date”), is by and among (i) KIM TopCo Inc., a Delaware corporation
(“Purchaser”), and (ii) Brandywine Operating Partnership, L.P., a Delaware
limited partnership (“Seller”), and BDN Investment Trust, a Maryland real estate
investment trust (the “Target Company”).  Purchaser, Seller and the Target
Company are also sometimes herein referred to individually as a “Party” and
collectively as the “Parties.”  Capitalized terms used in this Agreement are
defined in Exhibit A.

Preliminary statements:

A.Seller owns and will own as of Closing all (100%) of the issued and
outstanding shares of beneficial ownership interest in the Target Company (the
“Purchased Shares”), and the Target Company owns, directly or indirectly through
one or more Subsidiaries, all of the ownership interests in each of the Target
Company Subsidiaries identified on Exhibit B hereto, including, without
limitation, all of the ownership interests in each of (i) Brandywine Cira Post
Office, LP, a Delaware limited liability company (the “Property Owner
Subsidiary”) and (ii) Brandywine Cira PO Master Tenant, LLC, a Delaware limited
liability company (the “Master Tenant”).

B.The Property Owner Subsidiary owns the Property and has leased the Property to
the Master Tenant pursuant to that certain Master Lease Agreement, dated as of
November 14, 2008, by and between the Property Owner Subsidiary, as landlord,
and Master Tenant, as tenant (the “Master Lease”).

C.The Master Tenant has leased the Property to the United States of America,
acting by, through and under the Administrator of General Services (the “GSA”)
pursuant to a Memorandum of Understanding for the Lease of Real Property dated
August 27, 2007, U.S. Government Lease for Real Property No. GS-03B-07358 (as
amended through the Agreement Date, the “GSA-IRS Lease”), initially between the
United States Postal Service (“USPS”), as lessor, and the GSA, as tenant, as the
same has been assigned by the USPS to the Master Tenant.

D.Seller desires to sell and Purchaser desires to purchase all of the Purchased
Shares, all upon the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, the Parties, intending to be legally bound, hereby agree as
follows:

1

 

--------------------------------------------------------------------------------

 

ARTICLE I
PROPERTY; EXCLUDED ASSETS

Section 1.1Property.

The term “Property” shall mean, collectively, the following (but expressly
excluding the Excluded Assets):

(a)Land.  Property Owner Subsidiary’s fee simple interest in and to all of that
certain tract of land located in the City of Philadelphia, Commonwealth of
Pennsylvania described more particularly in Exhibit C attached hereto and
incorporated herein by reference, being known and referred to as “2970 Market
Street”, together with all rights and appurtenances pertaining to such land,
including, without limitation, all of Property Owner Subsidiary’s right, title
and interest in and to: (i) all adjacent strips, streets, roads, alleys and
rights-of-way, public or private, open or proposed; (ii) all development rights,
covenants, easements, privileges, and hereditaments, whether or not of record
which are appurtenant thereto; (iii) all access, air, water, riparian,
development, utility, and solar rights which are appurtenant thereto; and (iv)
any unpaid award for any taking by condemnation or similar proceeding or any
damage to the Land or any of the Improvements by reason of change of grade or
closing of any street, road or avenue (collectively, the “Land”).

(b)Improvements.  The building situated on the Land consisting of approximately
870,262 rentable square feet of office space and commonly known as the “Main
Post Office”, and all other improvements and structures constructed on the Land
(collectively, the “Improvements”).

(c)Cira Garage Subleasehold.  All of Master Tenant’s right, title and interest
in and to the subleasehold interest in the Cira Garage Property under and
pursuant to the GSA-IRS Parking Area Lease.  

(d)Personal Property.  All of Property Owner Subsidiary’s right, title and
interest in and to (specifically excluding any property owned by tenants under
leases) the following (collectively, the “Personal Property”):

(i)mechanical systems, fixtures, machinery and equipment comprising a part of or
attached to or located upon the Land or Improvements;

(ii)maintenance equipment and tools, if any, owned by Property Owner Subsidiary
and used exclusively in connection with, and located in or on, the Land or
Improvements;

(iii)site plans, surveys, plans and specifications, manuals and instruction
materials, and floor plans in Property Owner Subsidiary’s possession or control
which relate to the Land or Improvements;

(iv)pylons and other signs situated on or at the Land or Improvements; and

2

 

--------------------------------------------------------------------------------

 

(v)other tangible personal property owned by Property Owner Subsidiary and used
exclusively in connection with, and located in or on, the Land or Improvements
as of the Agreement Date and as of the Closing. 

(e)Licenses.  Property Owner Subsidiary’s right, title and interest in all
licenses, license agreements and other similar agreements with licensees or
other persons or entities using any portion of the Improvements (collectively,
the “Licenses”), a current list of which is attached hereto as Exhibit D.

(f)Leases.  All right, title and interest of the Target Company Group in (i) the
Master Lease, (ii) the GSA-IRS Lease and (iii) the GSA-IRS Parking Area Lease
(collectively, the “MPO Leases”).

(g)Contracts.  Property Owner Subsidiary’s right, title and interest in all
contract rights related to the Land, Improvements, Personal Property, Licenses
or MPO Leases, including, without limitation, Property Owner Subsidiary’s
interest in the following:  parking, maintenance, construction, leasing,
brokerage commission, architectural, supply or service contracts, plans and
specifications, surveys, warranties, guarantees and bonds and other agreements
related to the Land, Improvements, Personal Property, Licenses or MPO Leases
(collectively, the “Contracts”).

(h)Permits.  Property Owner Subsidiary’s right, title and interest in all
permits, licenses, certificates of occupancy, entitlements and governmental
approvals which relate to the Land, Improvements, Personal Property, MPO Leases,
Licenses or Contracts (collectively, the “Permits”).

(i)Intangibles.  Property Owner Subsidiary’s right, title and interest, if any,
in all names, trade names, street numbers, telephone numbers, e-mail addresses,
marks, other symbols and general intangibles, which relate to the Land or the
Improvements (collectively, the “Intangibles”).

For the avoidance of doubt, by virtue of Purchaser’s indirect acquisition of the
Master Tenant, Purchaser shall also indirectly acquire Master Tenant’s leasehold
interest in and to the Land and Improvements and Master Tenant’s right, title
and interest in and to the following (except for any of the following that
constitutes Excluded Assets): (i) all personal property owned by Master Tenant;
(ii) the Licenses; (iii) the MPO Lease; (iv) the Contracts; (v) the Permits; and
(vi) the Intangibles.

Section 1.2Excluded Assets.

The term “Excluded Assets” shall mean (i) any interests, rights or other
property which, pursuant to the transactions described on Exhibit B-1 attached
hereto, are to be transferred or assigned by the Target Company to Seller or its
affiliates prior to Closing, (ii) any interest in or right to use the name
“Cira” or any related names or marks, other than pursuant to the Cira License
Agreement, (iii) the personal property described on Schedule 1.2 attached hereto
and made a part hereof, and all cash, cash equivalents, deposits with third
parties (but not security

3

 

--------------------------------------------------------------------------------

 

deposits), bank accounts, accounts, certificates of deposit, investments, notes,
accounts receivable or other financial instruments and any right to a refund or
other payment relating to a period prior to Closing (subject to the prorations
set forth in this Agreement), claims or other rights against any present or
prior beneficiary, stockholder, member or partner of any Target Company Group
Member, and any proprietary or privileged materials, and any right to any
reserves and/or escrow accounts held by the Existing CTL Financing Lender
pursuant to the Existing CTL Financing Documents.

ARTICLE II
PURCHASE Price and Payment; Release OF EXISTING CTL FINANCING

Section 2.1Purchase Price.

Purchaser agrees to pay the total sum of THREE HUNDRED FIFTY-FOUR MILLION
DOLLARS ($354,000,000.00) (“Purchase Price”) for the Purchased Shares, subject
to adjustment as provided in this Agreement.  The Purchase Price shall be paid
in the following manner:

(a)Purchaser shall deliver the Deposit to the Escrow Agent in accordance with
Section 2.2.

(b)Purchaser shall, by no later than the Closing Date, deliver to the Escrow
Agent the balance of the Purchase Price (net of the Deposit and any prorations
and adjustments as set forth herein) by bank cashier’s, certified check, or wire
transfer, subject to adjustment as herein provided.

(c)At Closing, the Purchase Price (net of any prorations and adjustments as set
forth herein) shall be paid in cash to Seller in accordance with this Agreement
by wire transfer of immediately available funds.

Purchaser’s obligations under this Agreement are not and shall not be subject to
or conditioned upon the availability of any financing of the Purchase Price or
any portion thereof or upon Purchaser’s ability to obtain any such financing.

Section 2.2Deposit.

(a)Not later than 5:00 p.m. Eastern Standard Time (“EST”) on the Agreement Date,
the Purchaser, for the benefit of Seller, shall deposit with the Escrow Agent by
bank wire transfer the sum of Thirty Million Dollars ($30,000,000.00), as an
earnest money deposit to assure Purchaser’s performance hereunder (together with
all interest thereon, if any, the “Initial Deposit”).  If the Purchaser fails to
timely deliver the Initial Deposit within the time period specified in this
Section 2.2, then this Agreement shall automatically terminate (except for those
matters which are indicated herein as surviving termination), whereupon neither
party shall have any further rights, duties or obligations hereunder other than
the obligations and rights set forth herein that expressly survive the
termination of this Agreement.  Notwithstanding the foregoing, if there is any
delay in the delivery of the Initial Deposit within the time period specified in
this Section 2.2 for reasons beyond Purchaser’s reasonable control, so long as
the Initial Deposit is

4

 

--------------------------------------------------------------------------------

 

actually received by Escrow Agent on or before 12 noon EST on December 24, 2015
(it being understood and agreed that Escrow Agent shall, pursuant to Section 1
of the Escrow Agreement, notify Purchaser and Seller by e-mail upon receipt of
the Initial Deposit), Purchaser shall be deemed to have satisfied its obligation
to deliver the Initial Deposit within the time period specified in this Section
2.2 by providing Seller with the wire confirmation and ABA routing number or
SWIFT Code evidencing the wire transfer of the Initial Deposit to the Escrow
Agent on or before 5:00 pm EST on December 23, 2015.  Simultaneously with the
execution and delivery of this Agreement and prior to the delivery of the
Initial Deposit, Seller, the Purchaser and Fidelity National Title Insurance
Company (“Escrow Agent”) shall enter into an escrow agreement substantially in
the form of Exhibit E attached hereto (the “Escrow Agreement”).  The Initial
Deposit and the Extension Deposit (if applicable pursuant to Section 3.1) are
collectively referred to herein as the “Deposit.”  The Deposit shall be
non-refundable except as otherwise provided herein.     

(b)Escrow Agent shall place the Deposit in an interest-bearing escrow account at
a federally insured commercial bank or other financial institution reasonably
acceptable to both Seller and Purchaser.  Escrow Agent shall hold the Deposit in
accordance with the terms of this Agreement and the Escrow Agreement.  At
Closing, Escrow Agent shall deliver the Deposit to Seller and credit the Deposit
against the Purchase Price.

Section 2.3Existing CTL Financing; Rent Allocation Agreement.

(a)Seller shall be obligated at its own cost and expense, on or before Closing,
to defease or prepay the Existing CTL Financing and obtain a full release of all
Encumbrances on the Property securing the Existing CTL Financing.

(b)At or before Closing, the GSA-IRS Rent Allocation Agreement, which presently
secures and affects both the Existing CTL Financing and the CTL Garage Loan,
will be amended and restated or replaced with an agreement (the “Amended and
Restated GSA-IRS Rent Allocation Agreement”) which will provide for (i) the
collection of rental payments made by the tenant under the GSA-IRS Lease
(including Operating Rent, as defined therein), (ii) the allocation of such
rental payments between (A) an amount equal to the rent and other payments due
and payable by the lessee under the GSA-IRS Parking Area Lease, and (B) all
other amounts paid by the tenant under the GSA-IRS Lease, (iii) the payment of
all amounts under clause (ii)(A) directly to or as directed by the BDN Garage
Owner (or its successor), subject to the rights, liens and approval of the
lender under any loan that is secured in whole or in part by the Cira Garage,
(iv) the payment of all amounts under clause (ii)(B) directly to or as directed
by the Master Tenant (or its successor), subject to the rights, liens and
approval of the lender under any loan that is secured in whole or in part by the
Property.  The Amended and Restated GSA-IRS Rent Allocation Agreement shall be
substantially in the form of Exhibit O attached hereto or as otherwise agreed by
Seller and Purchaser, provided that neither Party nor any of its Affiliates will
unreasonably withhold, delay or condition its consent or approval of any
modifications to Exhibit O attached hereto which is reasonably requested by the
other Party.  The Seller Parties shall consider in good faith and reasonably
cooperate with Purchaser in obtaining, during the Contract Period or after
Closing, such modifications to the Amended and Restated GSA-IRS Rent Allocation
Agreement that Purchaser’s lender may reasonably request (including, without

5

 

--------------------------------------------------------------------------------

 

limitation, the designation of a replacement depository bank after the Closing)
so long as such modifications do not have a material adverse effect on BDN
Garage Owner or the lender under any loan that is secured by the Cira Garage;
and Purchaser shall consider in good faith and reasonably cooperate with Seller
and the BDN Garage Owner in obtaining, during the Contract Period or after
Closing, such modifications to the Amended and Restated GSA-IRS Rent Allocation
Agreement that BDN Garage Owner’s lender may reasonably request (including,
without limitation, the designation of a replacement depository bank after the
Closing) so long as such modifications do not have a material adverse effect on
any Target Company Group Member or the lender under any loan that is secured by
the Property.  The covenants set forth in the immediately preceding sentence
shall survive the Closing. 

Section 2.4Prorations.

(a)Prorations.  The following shall be prorated as of 11:59 p.m. Eastern time on
the day immediately preceding the Closing Date and be adjusted against the
Purchase Price due at Closing:  (i) rents and any other amounts accrued under
the GSA-IRS Lease and allocable to the Property under the GSA-IRS Rent
Allocation Agreement; (ii) personal property Taxes, installment payments of
special assessment liens, sewer charges, water and other utility charges
(utility charges shall be prorated based on the last reading of meters prior to
Closing, which reading shall be requested by Seller no more than thirty (30)
days prior to the Closing Date, if possible) and Property Expenses accrued as of
the Closing Date, subject to Section 4.2(b) hereof; and (iii) amounts owed by
the Property Owner Subsidiary under any Contracts as of the Closing Date (other
than management fees under the existing property management agreement).  All
other items ordinarily and customarily prorated between buyers and seller in
transactions similar to the Transactions shall be prorated in accordance with
the manner in which such items are customarily apportioned in the City of
Philadelphia in such transactions.  Notwithstanding anything to the contrary
contained herein, all apportionments and prorations made hereunder shall be
based on the number of days of ownership of the Property in the period
applicable to the apportionment, with Purchaser entitled to rents and other
income (and responsible for expenses accruing) from and after the Closing
Date.  Prorations of annual payments will be made based on the number of days of
ownership in the applicable annual period.  If any of the foregoing items to be
adjusted and/or distributed are not available at Closing, then the adjustment
shall be made subsequent to Closing when the charge is determined.  Any monies
collected by Purchaser or Seller after Closing which are the property of the
other party pursuant to this Section (but taking account of any credits given to
either Party at Closing) shall be held in trust by the Party receiving same and
be paid over to the other Party within two (2) Business Days.  Such monies shall
be paid over and applied in the following priority:  (A) first, on account of
rents due to Seller and Purchaser (and pro-rated between them as of the date of
Closing Date) for the month in which Closing occurs; (B) then, on account of
rents due to Seller for any month prior to the month of Closing less the
reasonable costs of collection; provided, however, that Purchaser shall not be
obligated to take any steps to recover any rent arrearages (other than billing
tenants in the ordinary course); and (C) then, on account of rents due to
Purchaser for periods on and after Closing.  The provisions of this Section
shall survive Closing.  

(b)Tenant Reconciliations.

6

 

--------------------------------------------------------------------------------

 

(i)Five (5) Business Days prior to the scheduled Closing Date, Seller shall be
responsible for computing and delivering to Purchaser a written statement
(together with reasonable supporting documentation) setting forth (A) the amount
of operating expenses and reimbursable expenses (“Property Expenses”) incurred
and actually paid by the Target Company Group with respect to the current annual
reimbursement period provided for in the GSA-IRS Lease (the “Reconciliation
Period”); and (B) the amount of any such expenses actually paid or reimbursed by
the GSA-IRS with respect to such period (“Pre-Closing Property Expense
Reconciliation”).  Within sixty (60) calendar days after the Closing Date,
Seller shall compute the actual Property Expenses incurred and paid by the
Target Company Group and the actual Property Expenses reimbursed (or not
reimbursed) by the GSA-IRS with respect to the Reconciliation Period (“Property
Expense Reconciliation”), and shall deliver to Purchaser a written statement
(together with reasonable supporting documentation) setting forth Seller’s
computation.  

(ii)Following the completion of the Property Expense Reconciliation, if the
Property Expenses incurred and paid by the Target Company Group for that portion
of the Reconciliation Period preceding the Closing exceed the reimbursed
Property Expenses actually received by the Target Company Group under the
GSA-IRS Lease with respect to the same portion of the Reconciliation Period
(“Property Expense Reimbursement Shortfall”), Purchaser shall pay to Seller,
within ten (10) Business Days after Purchaser’s receipt and approval of the
Property Expense Reconciliation, an amount equal to such Property Expense
Reimbursement Shortfall to the extent that Purchaser shall have collected and
received such identifiable amounts.  If the reimbursed Property Expenses
received by Target Company Group under the GSA-IRS Lease with respect to the
portion of the Reconciliation Period preceding the Closing exceed the Property
Expenses incurred and paid by Target Company Group with respect to the same
portion of the Reconciliation Period (“Property Expense Reimbursement Surplus”),
then Seller shall pay an amount equal to such Property Expense Reimbursement
Surplus to Purchaser within ten (10) Business Days after Purchaser’s receipt and
approval of the Property Expense Reconciliation.

(iii)Seller and Purchaser hereby agree to reasonably cooperate with each other
in connection with any pending or required annual statements or other requests
for payment under the GSA-IRS Lease and any disputes or claims by or against the
GSA-IRS under the GSA-IRS Lease concerning the calculation of Property Expenses
during the Reconciliation Period.

(iv)Any and all unapplied security deposits and advance rentals in the nature of
security deposits made by the GSA-IRS under the GSA-IRS Lease which are in the
possession or control of Seller on the Closing Date shall be turned over to
Purchaser at the Closing.

(c)Real Estate Taxes.  The Parties acknowledge that the Property is currently
exempt from real estate Taxes.  Accordingly, there shall be no proration of real
estate Taxes.

Section 2.5Closing Costs.

7

 

--------------------------------------------------------------------------------

 

(a)Purchaser’s Costs. Purchaser shall pay (i) 50% of all escrow or closing fees
charged by Escrow Agent; (ii) 50% of all Transfer Taxes (including transfer,
revenue and recording Taxes, stamps, clerks and indexing fees); (iii) all costs
incurred by Purchaser in preparing and performing its due diligence
investigations; (iv) the fees and expenses of Purchaser’s attorneys; (v) the
cost of any survey ordered by Purchaser, title examination fees and title
insurance premium and endorsements; (vi) all costs and expenses incurred by
Purchaser or Purchaser’s lender in connection with any financing obtained by
Purchaser, and (vii) recording charges due in connection with any mortgages or
other financing documents. 

(b)Seller’s Costs.  Seller shall pay (i) 50% of all escrow or closing fees
charged by Escrow Agent; (ii) 50% of all Transfer Taxes (including transfer,
revenue and recording Taxes, stamps, clerks and indexing fees); (iii) the fees
and expenses of Seller’s attorneys; (iv) the satisfaction of any mortgages and
other Encumbrances created by or on behalf of Seller affecting the Property
which are not assumed by Purchaser; (v) all costs and expenses of the Seller
Group and the BDN Garage Owner (including, without limitation, the fees and
other charges of the lender under the CTL Garage Loan; provided, however, that
if Purchaser elects to obtain financing from CTL Capital, LLC or an Affiliate
thereof (the lender under the CTL Garage Loan and CTL Capital, LLC or such
Affiliate, collectively, the “CTL Parties”) in connection with the transaction
contemplated by this Agreement, then Seller and Purchaser shall each be
responsible for the payment of fifty percent (50%) of such fees and charges of
the CTL Parties) relating to the preparation and execution of the Amended and
Restated GSA-IRS Rent Allocation Agreement; (vi) all costs and expenses to
defease or prepay the Existing CTL Financing; and (vii) the brokers’ fees and
commissions payable to Eastdil Secured.

(c)Other Costs.  Any other costs not specifically provided for herein shall be
paid by the party who incurred those costs, or if neither party is charged with
incurring any such costs, then by the party customarily assessed for such costs
in the City of Philadelphia in transactions similar to the Transactions
contemplated by this Agreement.

(d)Specific Credits.  At Closing, Purchaser shall be entitled to the following
additional credits and adjustments: (i) a credit in the amount of Three Hundred
Fifty Thousand Dollars ($350,000.00) in respect of certain property conditions
identified by Purchaser prior to the execution of this Agreement, and (ii) a
credit in the amount of the unpaid “5th Year Contribution” as defined in and
arising under Section 5.1(b) of the Sodexo Management Agreement.

(e)Withholding.  If Seller fails to provide the certificate described in Section
3.2(h), then Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable to Seller pursuant to this Agreement such
amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of federal, state, local or foreign law.

(f)Survival.  The provisions of this Section shall survive Closing.

8

 

--------------------------------------------------------------------------------

 

ARTICLE III
THE CLOSING; CLOSING DELIVERIES; TITLE AND SURVEY MATTERS

Section 3.1Closing; Closing Date.

Subject to the satisfaction or waiver of the Closing Conditions, the closing of
the Transactions (the “Closing”) shall take place remotely through the Escrow
Agent via the exchange of documents and signatures on January 29, 2016 (with
time being of the essence with respect thereto), or such earlier date as Seller
and Purchaser may mutually agree upon in writing (subject to extension as
provided below, the “Closing Date”).  Purchaser and Seller agree to finalize and
execute all documents necessary for the consummation of the Transactions,
including but not limited to the Settlement Statement, and to deliver all such
documents to the Escrow Agent in escrow not later than the end of the Business
Day immediately preceding the Closing Date in order to ensure the orderly and
timely transfer of all funds necessary for Closing on the Closing Date.

Purchaser shall the one-time right to extend the Closing Date, to not later than
February 19, 2016 (with time being of the essence with respect thereto),
provided that Purchaser satisfies the following conditions: (i) Purchaser shall
notify Seller of such extension on or before January 26, 2016, (ii) at the time
of such notice, Purchaser shall not be in default of its obligations hereunder
in any material respect, beyond applicable notice and cure periods, and (iii)
Purchaser shall deposit with the Escrow Agent by bank wire transfer the sum of
Twenty Million Dollars ($20,000,000.00), as additional earnest money to assure
Purchaser’s performance hereunder (together with all interest thereon, if any,
the “Extension Deposit”) not later than January 29, 2016.  Purchaser’s failure
to satisfy any one or more of the foregoing conditions (with time being of the
essence with respect thereto) shall be deemed a waiver of Purchaser’s right to
extend the Closing Date.

Section 3.2Deliveries by Seller.

At the Closing, in addition to the delivery of items required by Section 7,
Seller shall deliver, or cause to be delivered, to Purchaser the following
items:

(a)An Assignment and Assumption of Beneficial Ownership Interests assigning the
Purchased Shares to Purchaser, in the form attached hereto as Exhibit F (the
“Assignment and Assumption”), together with original certificates evidencing the
Purchased Shares and any Equity Interests in any Target Company Group Member,
including (if applicable) the Property Owner Subsidiary or the Master Tenant,
and written confirmation that the transfer conditions set forth in such
certificates have been satisfied or waived;

(b)Resignations of each individual then serving as a trustee, director or
officer of any Target Company Group Member (and any such individual who has
previously served in such capacity but is now employed by Seller or its
Affiliate), together with a waiver by such Persons of any rights to
indemnification or other recourse in favor of each such Target Company Group
Member, in each case in reasonable and customary form and substance;

9

 

--------------------------------------------------------------------------------

 

(c)the following documents, in each case, executed by each Seller Group Member
that is a signatory thereto: (i) the Seller Closing Certificate, (ii) the Mutual
Release, (iii) the BDN Property Management Agreement, (iv) the Cira License
Agreement, and (v) if not executed prior to Closing, the Amended and Restated
GSA-IRS Rent Allocation Agreement; 

(d)any document required to be executed by Seller for Purchaser to make the Name
Change Filings in accordance with Section 6.9(b), provided that Purchaser
provides a draft of each such document to Seller for (and subject to) Seller’s
review and approval (which shall not be unreasonably withheld, delayed or
conditioned) at least five (5) Business Days prior to Closing;

(e)for each Target Company Group Member, a reasonably current good standing
certificate (or equivalent document) issued by the secretary of state of (i) its
jurisdiction of formation, and (ii) each state where such Person is qualified to
do business as a foreign entity.

(f)for each Target Company Group Member, copies of its Organizational Documents
as in effect on the Closing Date certified as being true, correct and complete
by an officer of Seller;

(g)copies of the Target Company Consents, in reasonable and customary form(s);

(h)a certification from each Seller Party as to its non-foreign status in the
form attached hereto as Exhibit G (a “FIRPTA Certificate”);

(i)the GSA Statement of Lease (as defined in Section 6.5), and, if obtained
pursuant to Section 6.3(e), the GSA-IRS SNDA (as defined in Section 6.3(e)),
each executed by an authorized representative of the GSA;

(j)all transfer tax forms as may be required in connection with the consummation
of the Transactions;

(k)the affidavits, certificates or other documents required by the Title Company
to issue a new owner’s and leasehold policy of title insurance on the 2006 ALTA
Form covering the Property, the form(s) of which are attached hereto as Exhibit
R;

(l)a notice to the GSA-IRS informing the GSA-IRS of the change in ownership (the
“Tenant Notice”) in the form prepared by Purchaser and provided to Seller for
(and subject to) Seller’s review and approval (which shall not be unreasonably
withheld, delayed or conditioned) at least five (5) Business Days prior to
Closing;

(m)a notice to the counterparties to all Contracts (other than the existing
property management agreement which shall be terminated by Seller at Closing
pursuant to Section 6.2(d) hereof), reciprocal easement agreements and other
applicable documents related to the Property, informing such counterparties of
the change in ownership, in the form prepared by Purchaser and provided to
Seller for (and subject to) Seller’s review and approval (which

10

 

--------------------------------------------------------------------------------

 

shall not be unreasonably withheld, delayed or conditioned) at least five (5)
Business Days prior to Closing (the “Counterparty Notice”); 

(n)if not recorded prior to the Closing Date, a memorandum of the GSA-IRS
Parking Area Lease, in the form required thereunder, duly executed and
acknowledged by the BDN Garage Owner and the Master Tenant and in recordable
form;

(o)an estoppel certificate duly executed by the BDN Garage Owner in the form
attached hereto as Exhibit U, which shall be dated no more than thirty (30) days
prior to the Closing Date and confirm in all material respects the matters set
forth therein;

(p)reasonable and customary evidence that the CTL Garage Loan has been (or is
being) repaid or defeased at or prior to Closing;

(q)all keys and access codes to any portion of the Property, to the extent in
Seller’s possession or control;

(r)all leasing and other files relating to the Property and all Permits, books,
records and reports and other intangibles relating to the Property, to the
extent such items are in Seller’s possession or control;

(s)if and to the extent obtained pursuant to Section 6.3(f), such
acknowledgments and consents as Purchaser’s lender may reasonably require from
the BDN Garage Owner in connection with the assignment of the GSA-IRS Parking
Area Lease and any similar documents provided as security for the loan made by
such lender;

(t)documentation, in reasonable and customary form, setting forth any updates to
the amount of the unpaid “5th Year Contribution” as defined in and arising under
Section 5.1(b) of the Sodexo Management Agreement which occur during the
Contract Period (Purchaser acknowledges that Seller has previously Made
Available to Purchaser satisfactory documentation regarding the amount of the
unpaid “5th Year Contribution” as of the Effective Date);

(u)a settlement statement, in reasonable and customary form, setting forth the
Purchase Price and  the prorations and adjustments contemplated hereunder (the
“Settlement Statement”);

(v)the Penn ROFO Waiver and Modification, duly executed and acknowledged by
Property Owner Subsidiary and UPenn and in recordable form (it being understood
and agreed that the Penn ROFO Waiver and Modification has been executed and
acknowledged prior to the Agreement Date and will be submitted for recording by
the Title Company upon the Closing); and

(w)possession of the Property subject to all of the MPO Leases in full force and
effect (subject to Section 6.2(b) hereof).

11

 

--------------------------------------------------------------------------------

 

Section 3.3Deliveries by Purchaser. 

At the Closing, in addition to the delivery of items required by Section 8,
Purchaser shall deliver, or cause to be delivered, to Seller or the Target
Company, as applicable, the following items:

(a)the balance of the Purchase Price;

(b)the following documents, duly executed by Purchaser: (i) the Assignment and
Assumption; (ii) the Tenant Notice; (iii) the Counterparty Notice; (iv) the
Purchaser Closing Certificate, (v) the Mutual Release, (vi) the BDN Property
Management Agreement, (vii) the Cira License Agreement and (vii) the Amended and
Restated GSA-IRS Rent Allocation Agreement;

(c)all transfer tax forms required as may be required in connection with the
consummation of the Transactions;

(d)the Settlement Statement; and

(e)if and to the extent required under applicable Law to acquire and hold the
Purchased Shares and other Equity Interests to be transferred (directly or
indirectly) to Purchaser, reasonable documentary evidence confirming that
Purchaser has qualified to transact business in the Commonwealth of
Pennsylvania.

Section 3.4Title and Survey Matters.

(a)Purchaser acknowledges that, prior to the Agreement Date, Seller has Made
Available to Purchaser: (i) the Existing Owner’s Title Insurance Policy, (ii)
copies of all recorded documents referred to on Schedule B-II of the Existing
Owner’s Title Insurance Policy and (iii) the Existing Survey.  Purchaser shall
obtain a current commitment to insure title (“Commitment”) for the
Land.  Purchaser (at Purchaser sole cost and expense) may obtain an update of
the Existing Survey from Seller’s surveyor or Purchaser’s own current ALTA
survey of the Property (“Updated Survey”; the Updated Survey or, if Purchaser
does not elect to update the Existing Survey, the Existing Survey is referred to
as the “Survey”).  Seller shall deliver, or cause to be delivered, to the Title
Company at or prior to Closing all documents and instruments (together with all
related recording and/or filing fees) reasonably required by the Title Company
to remove and discharge all Monetary Liens.  For the avoidance of doubt, the
Encumbrances securing the Existing CTL Financing shall not constitute Permitted
Encumbrances.  

(b)With respect to any title or survey matters (other than Permitted
Encumbrances) first arising after the Agreement Date and prior to Closing (“New
Title Objection”), Purchaser shall have until the earlier of: (i) five (5)
Business Days after Purchaser’s receipt of the document with the New Title
Objection; or (ii) the Closing Date to notify Seller in writing of Purchaser’s
objection thereto. In the event Purchaser shall timely notify Seller of the New
Title Objection, Seller shall have the right, but not the obligation, to cure
such objection(s) (other than Monetary Liens, which shall be paid by Seller at
Closing). Within three (3) Business Days after receipt of Purchaser’s notice of
objection(s), with the Closing Date automatically

12

 

--------------------------------------------------------------------------------

 

extended, if necessary, to allow for such response period, Seller shall notify
Purchaser in writing whether Seller elects to attempt to cure such objection(s).
Failure of Seller to give such notice within such three (3)-Business Day period
shall be deemed an election by Seller not to cure such objection(s). If Seller
elects or is deemed to have elected not to cure any objection(s) specified in
Purchaser’s notice, Purchaser shall have the following options, to be given by
written notice to Seller within three (3) Business Days after Purchaser’s
receipt of Seller’s notice electing not to cure such objection(s) (or, if Seller
fails to deliver such notice, within three (3) Business Days after the day on
which Seller was required to deliver such notice): (A) to accept a conveyance of
the Property subject to the Permitted Encumbrances, specifically including any
New Title Objections objected to by Purchaser which Seller has elected, or is
deemed to have elected, not to cure (which matter(s) shall thereafter be deemed
to be a Permitted Encumbrances) and any Monetary Liens shall be paid by Seller
at Closing from the Purchase Price; or (B) to terminate this Agreement by
sending written notice thereof to Seller and Escrow Agent, and upon delivery of
such notice of termination, this Agreement shall terminate and the Deposit shall
be returned to Purchaser. Nothing contained herein shall be construed as
releasing Seller from liability or waiving any of Purchaser’s remedies with
respect to any default of its obligations hereunder or breach of its
representations, warranties or covenants under this Agreement in connection with
any New Title Objection. 

(c)State of Title. On the Closing Date, title to the Real Property shall be
subject only to the Permitted Encumbrances and be insurable as such at regular
rates by Escrow Agent (for such purposes “Title Company”) under a standard ALTA
title insurance policy (“Title Policy”). Seller and Purchaser consent to the use
of Fidelity National Title Insurance Company as Title Company.

(d)Permitted Encumbrances. For purposes hereof, “Permitted Encumbrances” shall
mean: (i) any easement, right of way, encroachment, conflict, discrepancy,
overlapping of improvements, defect, protrusion, lien, encumbrance, restriction,
condition, covenant, exception, or other matter with respect to the Real
Property that is disclosed by or shown on the Commitment or Survey, and is not
identified as a Title Objection in Purchaser’s Title Objection Notice; (ii) any
Title Objection or New Title Objection that Buyer waives or is deemed a
Permitted Encumbrance pursuant to Section 3.4(a) or Section 3.4(b); (iii) real
estate Taxes, sewer rents and Taxes, water rates and charges, business
improvement district Taxes and assessments, and any other governmental Taxes,
charges, or assessments levied or assessed against the Property, including any
so-called payments in lieu of Taxes, in each case which are a lien but not yet
due and payable (subject to the prorations provided herein); (iv) applicable
Laws, including zoning and land use statutes, ordinances and regulations; (v)
the MPO Leases and the rights and interests of tenants as parties in possession
under the MPO Leases, as tenants only without option to purchase or rights of
first offer or refusal, (vi) matters set forth on Schedule 4.14(g) of the
Disclosure Schedule, and (vii) matters arising by, through, under or with the
consent or approval of Purchaser.  Purchaser has been advised of the Penn ROFO,
which Penn ROFO shall not be applicable to the Transactions contemplated hereby
but shall remain a Permitted Encumbrance to the Property for future transactions
pertaining to the direct or indirect Sale (as such term is defined in the Penn
ROFO) of the Property.

Section 3.5Due Diligence Materials; Physical Inspections; Access.

13

 

--------------------------------------------------------------------------------

 

(a)Seller has provided or otherwise caused to be Made Available to Purchaser all
material information in the possession or control of the Seller Group concerning
the Property and the Target Company Group including, but not limited to, copies
of all permits, environmental reports, engineering and architectural reports,
current surveys, real estate Tax information, leases and tenant information,
site plans and building plans, title insurance and all underlying documents
noted thereon, operating statements for the Property for the prior 60 months,
certificates of occupancy for the Property and all other related materials in
the possession or control of the Seller Group (collectively, “Due Diligence
Materials”).  Schedule 3.5 attached hereto identifies the Due Diligence
Materials that have been Made Available to Purchaser on or before December 15,
2015.   If this Agreement is terminated for any reason, Purchaser shall either
return to Seller or destroy all of the Due Diligence Materials and any updates
thereto and, upon receipt of Seller’s request (but subject to Seller’s written
acknowledgement that Seller shall have no right to rely thereon), deliver to
Seller copies of all title, survey, environmental, and other third party reports
and materials that Purchaser has received prior to Closing in connection with
the Property.  Purchaser further acknowledges that, except as otherwise provided
in this Agreement, the Due Diligence Materials and any other information of
whatever type or kind provided by Seller to Purchaser were and are furnished
without warranty of any kind and on the express condition that Purchaser has
made its own independent verification of the accuracy, reliability and
completeness of such information and that Purchaser will not rely thereon. 

(b)On at least three (3) Business Days’ prior notice to Seller, Purchaser and
Purchaser Representatives shall be provided with physical access to the Property
during business hours to conduct, at Purchaser’s sole cost and expense, physical
inspections of the Property, provided (i) Purchaser’s right of access hereunder
shall in all events be subject to then-current security and access protocols of
the GSA-IRS applicable to the Property and (ii) Purchaser shall in no event make
any intrusive testing (environmental, structural or otherwise) of the Property,
without Seller’s prior consent, which consent may be withheld in Seller’s sole
but reasonable discretion.  In exercising its rights to enter the Property
hereunder, Purchaser shall permit a representative of Seller, at Seller’s sole
cost and expense, to accompany Purchaser’s entrants to the Property (but in no
event shall Seller’s representative cause a rescheduling or delay of any tests,
studies or inspections).  Purchaser shall conduct any entries and inspections of
the Property so as to minimize, to the greatest extent possible, interference
with Seller’s business and the business of the GSA-IRS (as tenant), and
otherwise in a manner reasonably acceptable to Seller and in compliance with all
applicable Laws. Without limiting the foregoing, prior to any entry to perform
any on-site inspections, Purchaser shall provide to Seller the identity of the
company or persons who will perform any inspections and the proposed scope of
the inspections.  Purchaser shall restore the Property to its condition existing
immediately prior to Purchaser’s inspection, and Purchaser shall be liable for
all damage or injury to any person or property resulting from, relating to or
arising out of any such inspection, whether occasioned by the acts of Purchaser
or any of its employees, agents, representatives, consultants and contractors
(each a “Purchaser Representative”).  Purchaser agrees to indemnify, defend and
hold Seller harmless from and against any liabilities, actual losses, claims,
demands, costs, expenses (including reasonable attorneys’ fees and costs) and
judgments of any nature arising or alleged to arise from or in connection with
any injury to, or death of, any person or loss or damage to property in
connection with entry onto the Property or any activities conducted by Purchaser
or its

14

 

--------------------------------------------------------------------------------

 

representatives on the Property, including without limitation damage to the
Property or release of hazardous substances or materials onto the Property;
provided, however, that notwithstanding any contrary provision hereof, Purchaser
shall have no liability for, nor be obligated to indemnify, defend of hold
Seller harmless from or with respect to, (1) any matters that arise from the
sole discovery by Purchaser of a condition or matter affecting the Property or
(2) any matters that arise from the gross negligence or willful misconduct of
Seller or any of its agents or representatives. Prior to any entry by Purchaser
or any Purchaser Representative, Purchaser or the Purchaser Representative shall
maintain, at Purchaser’s expense or such Purchaser Representative’s expense, a
policy of commercial general liability insurance, with a broad form contractual
liability endorsement and with a combined single limit of $1,000,000 per
occurrence for bodily injury and property damage, automobile liability coverage
including owned and hired vehicles with a combined single limit of $1,000,000
per occurrence for bodily injury and property damage, and an excess umbrella
liability policy for bodily injury and property damage in the amount of
$2,000,000, insuring Purchaser or the applicable Purchaser Representative and
naming Seller as an additional insured.  All insurance required herein shall be
on an “occurrence form” from an insurance company licensed to do business in the
Commonwealth of Pennsylvania. Seller shall be provided a copy of the insurance
certificate(s) required by Purchaser prior to any entry of the Property by
Purchaser or any Purchaser Representative. 

(c)Prior to Closing, Purchaser shall not contact the GSA-IRS (including the GSA
Contracting Officer responsible for the GSA-IRS Lease) with respect to any
matters relating to the Property or the GSA-IRS Lease without providing Seller
with at least one (1) Business Day prior written notice.  Seller shall be
afforded the opportunity to participate in any meetings (in person or
telephonically) between Seller and the GSA-IRS (including the GSA Contracting
Officer responsible for the GSA-IRS Lease).  Purchaser shall use commercially
reasonable efforts to provide to the GSA-IRS any documents or information which
is reasonably requested by the GSA-IRS as a condition to providing the GSA
Statement of Lease and/or the GSA-IRS SNDA.  Without in any way limiting the
foregoing, Seller and Purchaser shall reasonably cooperate with each other to
provide the GSA-IRS with such documents and information as the GSA-IRS may
reasonably require in connection with the transactions contemplated hereby.  

(d)The provisions of this Section shall survive the termination of this
Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE Seller PARTIES

In order to induce Purchaser to enter into this Agreement, except as disclosed
in the disclosure schedule attached to this Agreement (the “Disclosure
Schedule”), Seller hereby represents and warrants to Purchaser as follows:

Section 4.1Organization and Good Standing.

Each Seller Group Member is a statutory trust, limited liability company,
limited partnership or corporation, in each case duly formed or organized (as
applicable), validly

15

 

--------------------------------------------------------------------------------

 

existing and in good standing under the laws of the jurisdiction of its
organization, and each Seller Group Member has all necessary power and authority
to conduct its business as presently conducted and to own and operate the
properties and assets used in connection therewith and to perform all of its
obligations under each agreement and instrument by which it is bound.  Each
Seller Group Member is (x) qualified to do business and is in good standing in
each jurisdiction where the nature or character of the property owned or
operated by it or the nature of the business transacted by it makes such
qualification necessary except, in each case, where the failure to be so
qualified or in good standing would not reasonably be expected have a material
adverse effect, and (y) in compliance with its Organizational Documents.

Section 4.2Power and Authorization.

Each Seller Group Member has all requisite organizational power and authority to
enter into and perform its obligations under each Transaction Document to which
it is (and at the Closing will be) a party.  The execution, delivery and
performance by each Seller Group Member of each Transaction Document to which it
is (and at the Closing will be) a party have been duly authorized by all
necessary organizational or other action.  This Agreement has been duly and
validly executed and delivered by each Seller Group Member party hereto and
constitutes the legal, valid and binding obligation of it, enforceable against
it in accordance with its terms and, when executed and delivered at the Closing,
each Transaction Document to which each Seller Group Member is a party will
constitute the legal, valid and binding obligation of it, enforceable against it
in accordance with its terms, in each case subject to the General Enforceability
Exceptions.

Section 4.3Capitalization.

(a)Section 4.3(a) of the Disclosure Schedule sets forth as to the Target
Company: (i) a complete and accurate list of each of its Organizational
Documents and (ii) the jurisdiction of its formation.  The Purchased Shares
represent all of the issued and outstanding Equity Interests of the Target
Company.  There are: (1) no outstanding agreements or commitments of any kind
(contingent or otherwise), relating to the registration, voting, sale,
repurchase or transfer of any Purchased Shares or other Equity Interests in the
Target Company or obligating the Target Company or any other Person to purchase
or redeem any Purchased Shares, and (2) no outstanding contractual obligations
of the Target Company to repurchase, redeem or otherwise acquire any Purchased
Shares or other Equity Interests or of Seller to make any investment (in the
form of a loan, capital contribution or otherwise) in the Target Company.  All
of the Purchased Shares are validly issued and outstanding, are fully paid, and
have been issued and are held in compliance with all applicable securities and
other Laws.  No Equity Interests (including the Purchased Shares) issued by the
Target Company since the date of its formation were issued in violation of any
statutory or common law preemptive rights.  The Seller Parties have Made
Available to Purchaser complete and correct copies of all Organizational
Documents of the Target Company.

(b)No Person, other than the Target Company and/or a Target Company Subsidiary
owns any Equity Interests in the Target Company Subsidiaries.  Section 4.3(b) of
the Disclosure Schedule sets forth a complete and accurate list as to each
Target Company

16

 

--------------------------------------------------------------------------------

 

Subsidiary of the following: (i) a list of each of its Organizational Documents;
(ii) the jurisdiction of its formation; (iii) the name, designation and, if
applicable, amount of each class or series of its authorized Equity Interests;
(iv) the amount or percentage of the issued and outstanding Equity Interests of
it owned by each of the Target Company and/or a Target Company Subsidiary and
(v) all changes that will be made to any of the foregoing between the Agreement
Date and the Closing Date.  In addition, Section 4.3(b) of the Disclosure
Schedule includes accurate organizational charts that depict the ownership
structure of the Target Company Group existing as of the Agreement Date and as
will be in place on the Closing Date.  There are (A) no outstanding agreements
or commitments of any kind (contingent or otherwise) relating to registration,
voting, sale, repurchase or transfer of any Equity Interests of any Target
Company Subsidiary or obligating any Target Company Subsidiary or any other
Person to purchase or redeem any such Equity Interests and (B) no outstanding
contractual obligations of any Target Company Subsidiary or any of its
Equityholders to repurchase, redeem or otherwise acquire any Equity Interest of
such Target Company Subsidiary, or make any investment (in the form of a loan,
capital contribution or otherwise) in any Target Company Subsidiary.  All of the
issued and outstanding Equity Interests of each Target Company Subsidiary (1)
have been validly issued and are held by the Target Company and/or a Target
Company Subsidiary in compliance with all applicable securities and other Laws
and (2) are free and clear of all Encumbrances.  No Equity Interests issued by
any Target Company Subsidiary since the date of its formation or organization
were issued in violation of any statutory or common law preemptive rights.  The
Seller Parties have Made Available to Purchaser complete and correct copies of
all of the Organizational Documents of each of the Target Company Subsidiaries. 

Section 4.4Title to Purchased Shares.

Upon the consummation of the Transactions, Purchaser will acquire good and valid
title to the Purchased Shares, free and clear of all Encumbrances.

Section 4.5No Conflicts and Consents.

If the Consents listed on Section 4.5 of the Disclosure Schedule, including
without limitation a waiver of the Penn ROFO (collectively, the “Target Company
Consents”), are obtained and/or filed on or before Closing (but without in any
way affecting or extending the applicable time periods set forth herein), then
the execution, delivery and performance by each Seller Group Member of the
Transaction Documents to which it is a party do not and will not (with or
without the passage of time or the giving of notice): (i) violate or conflict
with the Organizational Documents of any Seller Group Member; (ii) violate or
conflict with any Law or Order binding upon any Seller Group Member; (iii)
violate or conflict with, result in a breach of, constitute a default or
otherwise cause any loss of benefit under any Contract to which any Seller Group
Member is a party, or by which any of them or any of their assets is otherwise
bound; (iv) result in the creation of any Encumbrance, other than a Permitted
Encumbrance, give rise to any penalty, acceleration of remedies, right of
termination or otherwise cause any alteration of any rights or obligations of
any party under any Contract to which any Seller Group Member is a party or by
which any of them or any of their assets are otherwise bound; or (v) require any
Consent of or with any Governmental Entity or other Person.  Other than the
Target Company Consents, no Consent of or with any Governmental Entity or other
Person is required in

17

 

--------------------------------------------------------------------------------

 

connection with the execution, delivery and performance by any Seller Group
Member of any Transaction Document to which such Seller Group Member is (or at
Closing will be) a party or otherwise bound or the consummation by any Seller
Group Member of the Transactions.

Section 4.6Limited Operations, No Undisclosed Liabilities; Financial Statements.

(a)Except as set forth on Section 4.6(a) of the Disclosure Schedule, each Target
Company Group Member (i) was formed or organized exclusively for the purpose of
engaging in, and (ii) has since its formation or organization engaged
exclusively in, the business of investing in, owning, developing and leasing the
Property, and has never owned any other interest in real property.  Each of
Master Tenant and Property Owner Subsidiary has complied in all material
respects with the “single purpose entity” requirements and related covenants
that are applicable to it under its Organizational Documents and the Existing
CTL Financing Documents.

(b)The unaudited balance sheets and unaudited income and operating statements of
the Property Owner Subsidiary as of December 31, 2014 and for the twelve months
ending December 31, 2014 and as of September 30, 2015 and for the nine months
ending September 30, 2015 (the “Balance Sheets and Operating Statements”)
present fairly in all material respects the financial position of the Property
Owner Subsidiary as at such dates and the financial results of the operation of
the Property for the period(s) ending on such dates (as the case may be), and
have been prepared in accordance with GAAP, but excluding any notes.  The Seller
Parties have Made Available to Purchaser a complete and correct copy of each of
the Balance Sheets and Operating Statements.

(c)No Target Company Group Member shall have, as of the Closing Date, any
Indebtedness or any other liabilities of a type required to be reflected on a
balance sheet prepared in accordance with GAAP, other than in the case of the
Property Owner Subsidiary (i) Indebtedness reflected in the Balance Sheets and
Operating Statements, and (ii) liabilities incurred in the ordinary course of
business of the Property Owner Subsidiary consistent with past practice since
September 30, 2015.

(d)No Target Company Group Member has or has ever had (i) any employees or (ii)
any employee benefits plans of any kind or nature.

(e)No Target Company Group Member is the subject of a Bankruptcy Event.

Section 4.7Assets of Target Company Group.

(a)The Target Company directly owns no asset or property of any kind or nature
other than (x) Equity Interests in other Target Company Group Members, which, in
each case, the Target Company owns free and clear of all Encumbrances, and (y)
the Excluded Assets.

(b)Each Target Company Subsidiary, other than the Property Owner Subsidiary and
Master Tenant, owns no asset or property of any kind or nature other than (x)
Equity Interests in other Target Company Subsidiaries, which each Target Company
Subsidiary owns free and clear of all Encumbrances, and (y) the Excluded Assets.

18

 

--------------------------------------------------------------------------------

 

(c)The Property Owner Subsidiary owns no material property or asset of any kind
or nature other than the Property and the Excluded Assets.  The Property Owner
Subsidiary owns fee simple title to the Property.  To the Knowledge of Seller,
the Property is free and clear of all Encumbrances, other than (x) Permitted
Encumbrances, and (y) Monetary Liens to be satisfied or released at or before
Closing. 

(d)The Master Tenant owns no material property or asset of any kind or nature
other than its leasehold interest in the Property and Equity Interests in the
Property Owner Subsidiary and Excluded Assets.  To the Knowledge of Seller, the
leasehold interest of the Master Tenant in the Property is free and clear of all
Encumbrances, other than (x) Permitted Encumbrances, and (y) Monetary Liens to
be satisfied or released at or before Closing.

(e)Neither Seller nor any Affiliate of Seller, other than the Property Owner
Subsidiary and the Master Tenant, owns any right, title or interest in any
property or other assets (including any Contract right), except for the Excluded
Assets, which are used or held for use primarily in connection with the
Property.

Section 4.8Taxes.

(a)Each Target Company Group Member is and has been since the date of its
formation or organization classified as a corporation, partnership or
disregarded as an entity separate from its owner, in each case within the
meaning of Treasury Regulation section 301.7701-3(b)(1), as reflected on
Exhibit B.  No Target Company Group Member which is or has been classified as a
partnership is or has been a publicly traded partnership within the meaning of
Section 7704(b) of the Code that is treated as a corporation for federal income
tax purposes under Section 7704(a) of the Code.

(b)Each Target Company Group Member has timely filed (after giving effect to any
filing extensions) all material Tax Returns required to be filed by it for any
period ending on or prior to the Closing Date and all such Tax Returns are true,
correct, and complete in all material respects, and each Target Company Group
Member has paid all Taxes required to be paid by it (whether or not shown as due
on such Tax Returns).  True, correct and complete copies of the following have
been Made Available to Purchaser by the Seller Parties: (i) all state, local and
federal Tax Returns that have been filed by Target Company Group Members and
(ii) all material written communications from any Tax authority relative to the
Target Company Group.

(c)Each Target Company Group Member has withheld and paid all material
withholding Taxes required to be withheld or paid by it and timely made all
required Tax reporting of payments made.

(d)All deficiencies asserted or assessments made with respect to any Target
Company Group Member as a result of any examinations by the IRS or any other Tax
authority of the Tax Returns of the Target Company Group Member have been fully
paid.  There is no Proceeding, investigation, audit or claim by any Tax
authority now pending against or to the Knowledge of Seller threatened with
respect to any Target Company Group Member in respect of any Tax or assessment,
nor has any claim for additional Tax or assessment been asserted or to

19

 

--------------------------------------------------------------------------------

 

the Knowledge of Seller threatened in writing against or with respect to any
Target Company Group Member by any Tax authority. 

(e)No claim has been made in writing by any Tax authority in a jurisdiction
where any Target Company Group Member has not filed a Tax Return that it is or
may be subject to Tax by such jurisdiction, nor, to the Knowledge of Seller, is
any such assertion threatened.

(f)Except as set forth on Section 4.8(f) of the Disclosure Schedule, with
respect to each Target Company Group Member, (i) there is no outstanding request
for any extension of time within which to pay any Taxes or file any Tax Returns,
(ii) there has been no waiver or extension of any applicable statute of
limitations for the assessment or collection of any Taxes, (iii) no ruling with
respect to Taxes has been requested by or on behalf of any Target Company Group
Member, and (iv) no power of attorney with respect to any material Tax matter is
currently in force.

(g)No Target Company Group Member is a party to or bound by any Tax allocation,
indemnity or sharing or similar agreement covering any potential assumption of
Tax Liability of any other Person.

(h)No Target Company Group Member (i) is or has been at any time a member of an
affiliated group filing a consolidated federal income Tax Return and (ii) has
any liability for the Taxes of another person other than the Target Company
Group Members under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.

(i)No Target Company Group Member has entered into any “closing agreement” as
described in Section 7121 of the Code (or any corresponding or similar provision
of state, local or foreign law).

(j)No Target Company Group Member (i) has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code, other than Brandywine Cira
PO Master Tenants LLC’s Form 3115 filing for the year ended December 31, 2012,
or any similar provision of Law, (ii) has had any Governmental Authority propose
any such adjustment, (iii) has any application pending with any Governmental
Authority requesting permission for any changes in accounting methods, (iv) has
participated in an installment sale or open transaction disposition for which
any amount has not been included in income on a federal or state income Tax
Return, (v) has received any prepayment, other than in the ordinary course of
business, the full amount of which has not been included in income on one or
more applicable income Tax Returns, or (vi) has entered into any intercompany
transaction or created any excess loss account described in the Treasury
Regulations under Section 1502 of the Code (or any corresponding or similar
provision of state, local or foreign Law).

(k)No Target Company Group Member is a party to any understanding or arrangement
described in Section 6662(d)(2)(C)(ii) or Treasury Regulations Section
1.6011-4(b) or is a material advisor as defined in Section 6111(b) of the Code.

20

 

--------------------------------------------------------------------------------

 

(l)The Target Company Group Members have adequately disclosed to the IRS all
positions taken on their federal income Tax Returns which could give rise to a
substantial understatement under Section 6662 of the Code. 

(m)No Seller Group Member is (or will be on or before the Closing) a foreign
person (as defined in Section 1445 of Code and Treasury Regulations).

(n)Except as set forth on Section 4.8(n) of the Disclosure Schedule, no Target
Company Group Member has distributed stock of another Person or had their stock
distributed by another Person in a transaction that was purported or intended to
be governed in whole or in part by Section 354, 355, or 361 of the Code.

(o)Immediately prior to Closing, there will be no limitation on the utilization
of the net operating losses of any Target Company Group Member (including any
such losses that were carried over to the Company under Section 381 of the Code)
under Sections 382 or 1502 of the Code or the Treasury Regulations thereunder or
otherwise (including any comparable provisions of state, local or foreign law).

(p)No Target Company Group Member has ever had a permanent establishment  in a
jurisdiction other than the State of its formation and the Commonwealth of
Pennsylvania.  

(q)Target Company and Brandywine Cira PO, LLC shall each have, as of the Closing
Date, no accumulated earnings and profits.

(r)As of the Closing Date, no Target Company Group Member directly or indirectly
holds any asset the disposition of which would constitute a “prohibited
transaction” within the meaning of Section 857(b)(6) of the Code.

(s)No Target Company Group Member has filed any election to be treated as a REIT
or revoked or had any REIT election revoked within the past five years.

(t)The Target Company and each Target Company Group Member has (i) satisfied its
respective obligations to tax credit investors arising from the syndication of
federal historic tax credits under Section 47 of the Code attributable to the
redevelopment and historic rehabilitation of the Improvements (i.e., the Main
Post Office) and (ii) no outstanding obligation to any Person with respect to
any issue or claim arising out of or related to (A) any federal historic tax
credit structure or (B) any federal historic tax credit investor, other than
obligations to federal historic tax credit investor for contingencies which, to
the Knowledge of Seller, are unlikely to occur.  No state historic tax credits
have been or are expected to be taken with respect to the redevelopment and
historic rehabilitation of the Improvements.    

(u)No Target Company Group Member, nor any Property, is currently the
beneficiary or subject of any Tax holiday, abatement or similar arrangement with
any Tax or other authority, except with respect to the Keystone Opportunity
Improvement Zone Act (commonly referred to as the “KOIZ”), which currently
applies to the Property.  To the Knowledge of Seller each Target Company Group
Member has complied in all material respects

21

 

--------------------------------------------------------------------------------

 

with the terms of the KOIZ, and the consummation of the transactions
contemplated hereby will not have an adverse effect on the validity,
effectiveness and/or continuing viability and application of such
arrangement.  To the Knowledge of Seller, the KOIZ designation for the Property
expires in 2018.  

(v)Neither Seller nor any Target Company Group Member has filed any Tax Return
or taken any other action which would preclude Target Company from satisfying
the requirements for qualification and taxation as a REIT under the Code for the
period commencing January 1, 2016 or any subsequent period, and no Target
Company Group Member has taken or omitted to take any action which could
reasonably be expected to result in a challenge by the IRS to the Target
Company’s status as a REIT for any such period and no such challenge is pending
or, to the Knowledge or Seller, has been threatened.

(w)Except as set forth on Section 4.8(w) of the Disclosure Schedule, there is no
built-in gain with respect to any property held directly or indirectly by the
Target Company that is subject to the tax on built-in gain as of the Closing
Date pursuant to IRS Notice 88-19, Section 1.337(d)-7 of the Treasury
Regulations, or any other temporary or final regulations issued under Section
337(d) of the Code or any elections made thereunder, including the tax basis and
fair market value of such property at the time the property became subject to
the tax on built-in gain.

(x)No Target Company Group Member is (i) responsible for the payment of any
“roll-back” or similar taxes or (ii) a party to any payment in lieu of taxes
(PILOT) program.

Section 4.9Litigation.

Except as set forth on Section 4.9 of the Disclosure Schedule, there are no
Proceedings instituted by or against or served upon any Target Company Group
Member or any of its managers (or persons in similar positions), officers, or
Equityholders, in their capacities as such, pending or, to the Knowledge of
Seller, threatened against any such Persons.

Section 4.10Contracts and Licenses.

(a)Property Owner Subsidiary’s interest in the Property is not subject to any
outstanding agreement of sale, purchase option, right of first refusal (except
for the Penn ROFO) or any other right or use, and there are no Persons in
possession of the Property other than the GSA-IRS under the GSA-IRS Lease and
Persons claiming through or under the GSA-IRS.  Section 4.10(a) of the
Disclosure Schedule sets forth a true and complete list of each Contract (other
than any Organizational Document, Transaction Document, Existing CTL Financing
Document, the MPO Leases or other agreement contemplated to be delivered in
connection with the Closing) to which any Target Company Group Member is a
party, or by which it or any of its assets is otherwise bound (collectively,
“Relevant Target Company Group Contracts”).  The Seller Parties have Made
Available to Purchaser true, complete and accurate copies of each Relevant
Target Company Group Contract.  No Target Company Group Member is in breach or
default of any Relevant Target Company Group Contract and, to the Knowledge of
Seller, no other party thereto is in breach or default of any Relevant Target
Company Group Contract, and, provided

22

 

--------------------------------------------------------------------------------

 

the Target Company Consents are obtained and/or filed on or before the Closing
Date, no event has occurred which, with due notice or lapse of time or both,
would constitute such a default.  No Seller Group Member has received any
written notice of any breach or default (which is outstanding) of, or
termination of, any Relevant Target Company Group Contract.  Each Relevant
Target Company Group Contract is in full force and effect.  Except for the
existing property management agreement for the Property, there are no Relevant
Target Company Group Contracts between a Target Company Group Member and
Brandywine Realty Trust or any of its Affiliates.  Except as set forth in
Section 4.10(a)(1) of the Disclosure Schedule, no Target Company Group Member
will have any liability to Seller or any Affiliate of Seller after Closing under
any Relevant Target Company Group Contract. 

(b)Section 4.10(b) of the Disclosure Schedule sets forth a true and complete
list of each License to which any Target Company Group Member is a party, or by
which it or any of its assets is otherwise bound (collectively, “Relevant Target
Company Group Licenses”).  The Seller Parties have Made Available to Purchaser
true, complete and accurate copies of each Relevant Target Company Group
License.  No Target Company Group Member is in breach or default of any Relevant
Target Company Group License and, to the Knowledge of Seller, no other party
thereto is in breach or default of any Relevant Target Company Group License,
and, provided the Target Company Consents are obtained and/or filed on or before
the Closing Date, no event has occurred which, with due notice or lapse of time
or both, would constitute such a default.  No Seller Group Member has received
any written notice of any breach or default (which is outstanding) of, or
termination of, any Relevant Target Company Group License.  Each Relevant Target
Company Group License is in full force and effect.

(c)The Target Company Group Members have, in accordance with the applicable
Relevant Target Company Group Contracts completed and paid for (or will, as of
the Closing Date, have completed and paid for) the work relating to the
esplanade area adjacent to the Property (as described in Section 4.10(c) of the
Disclosure Schedule) which is required to be performed by any Target Company
Group Member.  No Seller Group Member has received written notice that any such
work does not comply with applicable Law.

Section 4.11Compliance with Laws.

To the Knowledge of Seller, each Target Company Group Member is in compliance in
all material respects with applicable Laws, except Environmental Laws (which is
covered in Section 4.12).  No Seller Group Member has received any written
notice of a violation of any applicable Laws which has not been previously cured
(i) by a Target Company Group Member or (ii) relative to the Property.  To the
Knowledge of Seller, no Target Company Group Member (x) has been a defendant in
any unsealed qui tam/False Claims Act litigation within the past three years or
(y) has been served with or received, within the past three (3) years, any
search warrant, subpoena, civil investigative demand or contact letter from any
Governmental Entity alleging fraud or malfeasance by Seller Group in connection
with the GSA-IRS Lease.  To the Knowledge of Seller, each Target Group Member
has received all Permits required to own, operate, use and/or maintain (as
applicable) the assets of such Target Group Member and each of the Permits is in
full force and effect.  No Seller Group Member has received any notice of any
violation of any applicable Permits which has not been previously cured (I) by a
Target

23

 

--------------------------------------------------------------------------------

 

Company Group Member or (II) relative to the Property.  No Seller Group Member
has received any notice of any pending or threatened revocation, suspension,
non-renewal, termination, modification or impairment of any applicable
Permits.  The Seller Parties have Made Available to Purchaser true and accurate
copies of each Permit, a true and complete list of which is set forth on Section
4.10(b) of the Disclosure Schedule.  

Section 4.12Environmental Matters.

Except as set forth in Section 4.12 of the Disclosure Schedule or in any
Environmental Report:

(i)To the Knowledge of Seller, (A) since the acquisition of the Property by the
Target Company Group, the Target Company Group is and has been and the Property
is and has been in material compliance with all applicable Environmental Laws,
(B) since the acquisition of the Cira Garage by the BDN Garage Owner, the BDN
Garage Owner is and has been and the Cira Garage is and has been in material
compliance with all applicable Environmental Laws and (C) no Target Company
Group Member nor BDN Garage Owner is the subject of any unresolved Proceedings
initiated by any Governmental Entity or any other Person for past violations of
applicable Environmental Laws.

(ii)Neither BDN Garage Owner nor any Target Company Group Member has received
any written notice, claim, complaint, request for information, demand letter or
other written communication from any Governmental Entity or other Person
relating to the Property, the Cira Garage or any real property adjoining the
Property or the Cira Garage, alleging that the Property or the Cira Garage has
suffered, or that BDN Garage Owner or a Target Company Group Member is liable
for, any investigation, clean-up cost, remedial work, damage to natural
resources, property damage, Release, personal injury, or other liability arising
under any applicable Environmental Law.  Neither BDN Garage Owner nor any Target
Company Group Member is a named party to any Order or settlement agreement with
any Governmental Entity pursuant to which BDN Garage Owner or any Target Company
Group Member is liable under any Environmental Law for any investigation, clean
up, remedial work, damage to natural resources, property damage, Release,
personal injury or other liability arising under any applicable Environmental
Law.  There are no Proceedings pending, or to the Knowledge of Seller,
threatened against BDN Garage Owner, any Target Company Group Member, the Cira
Garage or the Property under any Environmental Law.

(iii)To the Knowledge of Seller, none of the following exists at the Property or
the Cira Garage:  (A) underground storage tanks; (B) landfills, surface
impoundments, or disposal areas; or (C) groundwater monitoring wells, potable
drinking water wells, petroleum wells or production water wells.

(iv)To the Knowledge of Seller, (A) since the acquisition of the Property by the
Target Company Group, there has been no Release of any Hazardous  Material on,
upon, into, to or from the Property in violation of any Environmental Laws or
which has

24

 

--------------------------------------------------------------------------------

 

given rise to any liabilities or investigatory, reporting, corrective or
remedial obligations pursuant to Environmental Laws, (B) since the acquisition
of the Cira Garage by the BDN Garage Owner, there has been no Release of any
Hazardous  Material on, upon, into, to or from the Cira Garage in violation of
any Environmental Laws or which has given rise to any liabilities or
investigatory, reporting, corrective or remedial obligations pursuant to
Environmental Laws and (C) neither BDN Garage Owner nor any member of the Seller
Group has received written notice of any exposure of any Person or property to
any Hazardous Materials in connection with the Property or the Cira Garage that
could reasonably be expected to form the basis of a material claim for damages
or compensation. 

(v)The Seller Parties have Made Available to Purchaser copies, which copies are
true and complete in all material respects, of all written information in their
possession or under their control pertaining to compliance with, violations of,
or liabilities pursuant to, Environmental Laws by one or more Target Company
Group Members relative to the Property or the Cira Garage (the “Environmental
Assessments”).  A true and complete list of the Environmental Assessments is set
forth on Section 4.12 of the Disclosure Schedule.

(vi)Neither BDN Garage Owner nor any Seller Group Member has received notice of
any violation of any Environmental Law or Release of any Hazardous Substance
that would interfere with the ability of the BDN Garage Owner to provide to
Master Tenant the parking spaces required under the GSA-IRS Lease.  

Section 4.13Insurance.

Section 4.13 of the Disclosure Schedule sets forth a true and complete list of
each property, casualty, liability or other insurance policy, other than the
Existing Owner’s Title Insurance Policy and the Existing Leasehold Title
Insurance Policy, maintained by any Target Company Group Member (each, an
“Insurance Policy”), including the type and amount of coverage, whether such
coverage is “claims made” or “claims incurred” and the expiration dates of the
Insurance Policies.  Each Target Company Group Member has complied in all
material respects with all terms and conditions of such policies, including
premium payments, and such policies are in full force and effect.  No Seller
Group Member has received: (a) any written notice of cancellation of any policy
or binder of insurance required to be identified in Section 4.13 of the
Disclosure Schedule or refusal of coverage thereunder; (b) any written notice
that any issuer of such policy or binder is subject to any Bankruptcy Event or
is otherwise in the process of liquidating or has been liquidated; or (c) any
written notice that any such policy or binder may no longer be in full force or
effect or that the issuer of any such policy or binder may be unwilling or
unable to perform its obligations thereunder.  There is no claim pending by or
on behalf of any Target Company Group Member against any of the insurance
carriers under any of such policies for denial of coverage by any such insurance
carriers.  Except as set forth on Section 4.13 of the Disclosure Schedule, no
Target Company Group Member has made any claims under any Insurance Policy which
is currently pending, and Seller has not received written notice under any
Insurance Policy that the applicable insurance company has denied  

25

 

--------------------------------------------------------------------------------

 

coverage or is unwilling to defend such claim.  To the Knowledge of Seller, the
Insurance Policies comply with the respective terms of the MPO Leases, if and to
the extent applicable.

Section 4.14Property Matters.

(a)Section 4.14(a) of the Disclosure Schedule sets forth a true and complete
list of the policy of title insurance for insuring the Property Owner
Subsidiary’s fee simple title in and to the Property (the “Existing Owner’s
Title Insurance Policy”), the Master Tenant’s leasehold interest in and to the
Property (the “Existing Leasehold Title Insurance Policy”) and the most recent
survey for the Property, in each instance that is in the possession or control
of the Seller Group (the “Existing Survey”).  A true, complete and correct copy
of each of the Existing Owner’s Title Insurance Policy, the Existing Leasehold
Title Insurance Policy and the Existing Survey has been Made Available to
Purchaser by Seller.  Each of the Existing Owner’s Title Insurance Policy and
the Existing Leasehold Title Insurance Policy is in full force and effect and
there is no claim pending by or on behalf of the Property Owner Subsidiary
against the title insurer under the Existing Owner’s Title Insurance Company or
by or on behalf of the Master Tenant against the title insurer under the
Existing Leasehold Title Insurance Policy.

(b)No Seller Group Member or Affiliate thereof (including, without limitation,
the BDN Garage Owner) has received any written notice that any condemnation or
rezoning Proceedings are pending with respect to the Property or the property on
which the Cira Garage is located (the “Cira Garage Property”) or any portion
thereof nor, to the Knowledge of Seller, have any condemnation or rezoning (or
any other land use) Proceedings been threatened with respect to the Property,
the Cira Garage Property or any portion thereof.  Except as set forth on
Section 4.14(b) of the Disclosure Schedule, none of the Seller Group Members or
their Affiliates (including, without limitation, the BDN Garage Owner) has
received any written notice of a violation (which remains outstanding) of the
Americans with Disabilities Act (or any similar state or local Law) or any
zoning, building or similar legal requirement, with respect to the Property, the
Cira Garage Property or any portion thereof.

(c)No Seller Group Member or Affiliate thereof (including, without limitation,
the BDN Garage Owner) has entered into any written Contract (including a binding
letter of intent but expressly excluding the Penn ROFO) which has not expired
for the (i) sale of the Property or any portion thereof to a third Person, (ii)
the sale of the BDN Garage Owner’s leasehold interest in the Cira Garage
Property or any portion thereof, or (iii) granting an option to purchase or
ground lease the Property or any portion thereof to a third Person, (iv)
granting an option to purchase the Master Tenant’s subleasehold interest in the
Cira Garage Property or any portion thereof to a third Person, (v) granting a
right of first offer, right of first refusal, or right of first negotiation to a
third Person with respect to the sale of the Property or any portion thereof, or
(vi) granting a right of first offer, right of first refusal, or right of first
negotiation to a third Person with respect to the sale of the Master Tenant’s
leasehold interest in the Cira Garage Property or any portion thereof.  

(d)No Seller Group Member has entered into any written Contract with any third
Person that (i) provides for a right of such Person to participate in the
profits, sale proceeds or revenues of the Property or (ii) constitutes a ground
lease, lease, license or other occupancy

26

 

--------------------------------------------------------------------------------

 

arrangement for any portion of the Property or any improvement contemplated to
be constructed thereon. 

(e)There are no property management contracts, leasing agreements, brokerage
commission agreements or asset management contracts to which any Seller Group
Member is a party or that affect the Property and that will be binding on any
Target Company Group Member or the Property after Closing.

(f)No Seller Group Member has received notice of, nor has Knowledge of, (i) any
real estate Tax assessment increase for the Property, (ii) any municipal
assessments against the Property, or (ii) any planned municipal improvements
which could reasonably be expected to result in any municipal assessment against
the Property.  No Target Company Group Member has retained anyone to file
notices of protest against, or to commence actions to review, real property tax
assessments against the Property which are currently pending.  

(g)Except as set forth in Section 4.14(g) of the Disclosure Schedule, with
respect to any declarations or similar instruments affecting the Property:  (i)
they have not been amended except as evidenced by written amendments, true,
complete and accurate copies of which have been Made Available to Purchaser as
required hereunder; (ii) there are no monetary obligations of any Target Company
Group Member thereunder except as set forth therein; (iii) no Target Company
Group Member has received written notice of any breach or default (which is
outstanding) of any obligation thereunder, nor, to the Knowledge of Seller, is
there any fact or circumstance which, with due notice or lapse of time or both,
would constitute a material default by any Target Company Group Member of any
such obligation thereunder; and (iv) there are no pending claims, defenses or
offsets which have been asserted in writing against any Target Company Group
Member by any party to any declaration or similar instrument.

(h)The Seller Parties have Made Available to Purchaser a true, complete and
accurate copy of that certain Indemnification dated December 17, 2009 between
the Property Owner Subsidiary and the Department of Transportation, Commonwealth
of Pennsylvania (the “PennDOT Indemnification”).  The PennDOT Indemnification is
in full force and effect.  No Seller Group Member has received any written
notice that the Property Owner Subsidiary is in breach or default under the
PennDOT Indemnification Agreement and, to the Knowledge of Seller, no event had
occurred which, with due notice or lapse of time or both, would constitute a
material default by the Property Owner Subsidiary under the PennDOT
Indemnification.  No Seller Group Member has received written notice of any
outstanding claim by PennDOT for indemnification under the PennDOT
Indemnification.

(i)To the Knowledge of Seller, the Property is not, nor at Closing will be,
subject to any understanding or unfulfilled written commitment with, or to any
unsatisfied conditions imposed by, the Pennsylvania Department of
Transportation, the Pennsylvania Department of Environmental Protection, the
City of Philadelphia and/or any local governmental agency or authority.

(j)No Seller Group Member has received written notice of any outstanding
violations of Law with respect to the life safety systems and related equipment
in and to the

27

 

--------------------------------------------------------------------------------

 

Property, including, without limitation, fire alarms and other fire suppression
systems.  To the Knowledge of Seller, any and all notices of violation received
by any Seller Group Member from any and all Governmental Entities with respect
such life safety systems and equipment have been remedied to the satisfaction of
such Governmental Entities.  Section 4.14(j) of the Disclosure Schedule contains
a current status report regarding such life safety systems and equipment, and no
Seller Group Member has received written notice of any other outstanding issues
with respect to such life safety systems and equipment.  Without limitation, no
Seller Group Member has received any written notice of violation issued by the
City of Philadelphia, Department of Licenses and Inspections with respect to
life safety systems and equipment, which remains uncured.  

Section 4.15MPO Leases.

(a)The Seller Parties have Made Available to Purchaser true, complete and
accurate copies of each of the MPO Leases.  Each MPO Lease is valid and in full
force and effect.  Except as set forth in the Due Diligence Materials, no Seller
Group Member has received or given written notice of any alleged breach or
default by either party under the MPO Lease and to the Knowledge of the Seller
no Target Company Group Member is in material default or material violation of
any applicable MPO Lease.  No MPO Lease has been revoked, suspended, terminated
or impaired in any material respect.  No Target Company Group Member is subject
to any pending or, to the Knowledge of Seller, threatened Proceeding seeking the
revocation, suspension, non-renewal, termination, modification or impairment of
any MPO Lease.  No Seller Group Member has received or given any written notice
of any actual or threatened revocation, limitation, modification, termination,
suspension, non-renewal or impairment of any MPO Lease.  There are no agreements
to pay any broker or other Person any leasing commissions or similar payments or
obligations with respect to the MPO Leases, and any broker or any other leasing
commissions or similar payments or obligations due under such agreements have
been paid as of the Agreement Date.  Except for the MPO Leases, the Licenses and
Permitted Encumbrances, no Target Company Group Member is a party to any lease,
license or other occupancy agreement.

(b)Except as set forth in Section 4.15(b) of the Disclosure Schedule, with
respect to the GSA-IRA Lease: (i) the rentals and other sums due or to become
due under the GSA-IRS Lease have not been and will not be assigned, encumbered,
or subject to any liens as of the Closing, other than pursuant to the Amended
and Restated GSA-IRS Rent Allocation Agreement; (ii) there are no pending
negotiations to surrender or modify the GSA-IRS Lease or, to the Knowledge of
Seller, to assign the GSA-IRS’ interest under the GSA-IRS Lease or to sublet (or
permit any third Person to occupy) all or any portion of the Property; (iii)
except as expressly set forth in the GSA-IRS Lease, there are no outstanding
rental or other concessions of any nature granted under the GSA-IRS Lease, or
any outstanding obligation to pay any tenant improvement allowances or perform
any tenant improvement work under the GSA-IRS Lease; (iv) there are no pending
disputes (written or, to the Knowledge of Seller, oral) between the GSA-IRS and
any Target Company Group Member regarding access to, or the availability of, the
parking spaces at the Cira Parking Garage required to be furnished pursuant to
the GSA-IRS Lease; (v) no Seller Group Member has received written notice of any
outstanding disputes between the GSA-IRS and any Target Company Group Member
regarding operating services (including, without limitation, heating,
ventilation and air conditioning, extermination and

28

 

--------------------------------------------------------------------------------

 

elevators), maintenance or repairs at the Property, Operating Rent or Property
Expenses; and (vi) the GSA-IRS has not made any rent payments under the GSA-IRS
Lease in advance for more than one (1) month.  The respective amount of
Operating Rent and Property Expenses (as defined in the GSA-IRS Lease) most
recently billed by Master Tenant to GSA-IRS are as set forth on Section 4.15(b)
of the Disclosure Schedule, and to the Knowledge of Seller, there is no dispute
between the parties to the GSA-IRS Lease concerning the Operating Rent or
Property Expenses. 

(c)Section 4.15(c) of the Disclosure Schedule sets forth a true and complete
list of all Existing Cira Garage Financing Documents. The Existing Cira Garage
Financing Documents are in full force and effect as of the Agreement Date.  The
CTL Garage Loan shall be repaid or defeased at or prior to Closing.  The Seller
Parties have Made Available to Purchaser true, complete and accurate copies of
all Existing Cira Garage Financing Documents listed in Section 4.15(c) of the
Disclosure Schedule.  Except for the CTL Garage Loan, neither BDN Garage Owner
nor any member of BDN Garage Owner has incurred any Indebtedness which is
outstanding.

(d)The Amended and Restated Ground Lease Agreement effective as of November 12,
2012 between UPenn, as landlord, and the BDN Garage Owner, as tenant, for the
Cira Garage Property (as amended from time to time, the “Cira Garage Ground
Lease”) is in full force and effect.  The BDN Garage Owner has not received or
given any written notice that the BDN Garage Owner or UPenn (as applicable) is
in breach or default under the Cira Garage Ground Lease and, to the Knowledge of
Seller, no event has occurred which, with due notice or lapse of time or both,
would constitute a material default under the Cira Garage Ground Lease.

(e)The Master Tenant and BDN Garage Owner have obtained (or will obtain, prior
to Closing) all Consents required for the execution and delivery of the GSA-IRS
Parking Area Lease.

Section 4.16CTL Financing.

Section 4.16 of the Disclosure Schedule sets forth a true and complete list of
all Existing CTL Financing Documents.  Except for the Existing CTL Financing
Documents (which will be released or defeased at or prior to Closing in
accordance with Section 2.3(a)), the Existing Cira Garage Financing Documents to
which Master Tenant is party (which will be released or defeased at or prior to
Closing in accordance with Section 2.3(a)) and the Amended and Restated GSA-IRS
Rent Allocation Agreement (which will be entered into at or before Closing and
will continue to apply from and after Closing), neither the Property Owner
Subsidiary or any of its partners nor the Master Tenant or any of its members is
a party to any other financing documents.

Section 4.17Brokers.

No Person acting on behalf of any Seller Group Member or any Affiliate thereof
or under the authority of any of the foregoing is or will be entitled to any
brokers’ or finders’ fee or any other commission or similar fee with respect to
which Purchaser or any Target Company Group

29

 

--------------------------------------------------------------------------------

 

Member will be liable in connection with any of the Transactions except that
Seller shall be solely responsible for the brokers’ fees or commission to
Eastdil Secured pursuant to a separate agreement with Seller.  

Section 4.18ERISA.

No Seller Group Member is:  (i) a plan which is subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as
defined in Section 3(3) of ERISA that is subject to Title I of ERISA, nor a plan
as defined in and subject to Section 4975 of the Code (each of the foregoing
hereinafter referred to collectively as a “Plan”); or (ii) a “governmental plan”
as defined in Section 3(32) of ERISA.  The assets of the Seller Group Members do
not constitute “plan assets” within the meaning of Department of Labor
Regulations located as 29 C.F.R. Section 2510.3-101, as modified by Section
3(42) of ERISA.  Each Seller Group Member is acting on its own behalf and not on
account of or for the benefit of any Plan.

Section 4.19OFAC; No Embargoed Person.

(a)None of any Seller Group Member, to the Knowledge of Seller any Affiliate of
any Seller Group Member or to the Knowledge of Seller any Equityholder of such
Persons owning a 10% or greater interest in it, and to the Knowledge of Seller
none of their respective employees, officers, directors, representatives or
agents is, nor will they become, a Person with whom U.S.  Persons are restricted
from doing business under regulations of the Office of Foreign Asset Control
(“OFAC”) of the Department of the Treasury (including those named on OFAC’s
Specially Designated and Blocked Persons List) or under any statute, executive
order (including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and has not and shall not assign or
otherwise transfer this Agreement, or any interest herein to, contract with or
otherwise engage in any dealings or transactions or be otherwise associated with
such persons or entities, (b) neither any Seller Group Member nor to the
Knowledge of Seller any Affiliate thereof is knowingly engaged in, and shall not
knowingly engage in, any dealings or transactions or knowingly be otherwise
associated with such persons or entities described in (a) above, (c) neither any
Seller Group Member nor to the Knowledge of Seller any Affiliate thereof is a
Person whose activities violate the International Money Laundering Abatement and
Financial Anti-Terrorism Act of 2001 or the regulations or orders thereunder,
(d) none of the funds or other assets of any Seller Group Member constitute
property of, or to the Knowledge of Seller are beneficially owned, directly or
indirectly, by any “Embargoed Person” (as defined below), (e) to the Knowledge
of Seller no Embargoed Person has any interest of any nature whatsoever in any
Seller Group Member (whether directly or indirectly), and (f) none of the funds
of any Seller Group Member have been derived from any unlawful activity with the
result that this Agreement is in violation of Law.

Section 4.20Penn ROFO.  The Seller Parties have Made Available to Purchaser a
true, complete and accurate copy of the Penn ROFO.  To the Knowledge of Seller,
the Penn ROFO is valid and in full force and effect.  No Seller Group Member has
received or given written notice of any alleged breach or default by either
party under the Penn ROFO and, to the Knowledge of the Seller, Property Owner
Subsidiary is not in default or violation of the Penn ROFO.  Pursuant

30

 

--------------------------------------------------------------------------------

 

to the Penn ROFO Waiver and Modification, UPenn has waived in writing its right
to first offer to purchase the Property in respect of the Transactions
contemplated hereby.   

Section 4.21Due Diligence Materials.  To the Knowledge of Seller, all of the Due
Diligence Material Made Available to Purchaser in connection with the Property
and the Target Group Members are true, complete and accurate copies of such
items in Seller’s possession or control.  Seller has not deliberately and
intentionally withheld from Purchaser any information with respect to the
Property or the Target Company Group Members which would be materially relevant
to any reasonable purchaser’s decision to consummate the Transactions.  To
Seller’s Knowledge, no officer of Seller has materially greater familiarity with
the matters addressed in this Section 4, in the aggregate, than Thomas Wirth,
Regina Sitler, Ron Pluto and Brad Molotsky.

Section 4.22Mechanic’s/Materialmen Liens.  Except as disclosed in the Title
Evidence (and except for liens, if any, which have been released or bonded over
without further liability of any Target Company Group Member), Seller has not
permitted any mechanic’s or materialmen liens in excess of $50,000 to attach to
any portion of the Property.  Section 4.22 of the Disclosure Schedule discloses
all ongoing capital improvements and capital repairs to the Property which have
been undertaken by or on behalf of any Seller Group Member for an amount in
excess of $50,000.  

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE Purchaser

In order to induce each Seller Party to enter into this Agreement, Purchaser
hereby represents and warrants to each Seller Party as follows:

Section 5.1Existence and Good Standing.

Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.  Purchaser has all necessary power and
authority to conduct its business as presently conducted and to own and operate
the properties and assets used in connection therewith and to perform all of its
obligations under this Agreement.  Purchaser is (a) qualified to do business and
is in good standing in each jurisdiction where the nature or character of the
property owned or operated by it or the nature of the business transacted by it
makes such qualification necessary except, in each case, where the failure to be
so qualified or in good standing would not reasonably be expected have a
material adverse effect, and (b) in compliance with the Organizational
Documents.  KIM Private Placement Philadelphia Real Estate Investment Trust 1
(the “Fund”) is a collective investment vehicle duly established and validly
existing under the laws of the  Republic of Korea (“Korea”) and is the sole
shareholder of Purchaser.

Section 5.2Power and Authorization.

Purchaser has the company power and authority to execute, deliver and perform
fully its obligations under each Transaction Document to which it is (and at the
Closing will be) a party,

31

 

--------------------------------------------------------------------------------

 

and the execution, delivery and performance by Purchaser of each Transaction
Document to which it is (and at the Closing will be) a party have been (and will
be) duly instructed by Korea Investment Management Co. Ltd., acting in its
capacity as the collective investment company of the Fund (together with its
successors and assigns in such capacity, “Fund Manager”), pursuant to the
applicable laws of Korea.

Section 5.3Validity and Enforceability.

Each Transaction Document to which Purchaser is a party has been (or as to
documents not yet executed, will be) duly executed and delivered by Purchaser
and constitutes (or will constitute) the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, subject to the General Enforceability Exceptions.  

Section 5.4No Conflict.

Neither the execution of any Transaction Document, nor the performance by
Purchaser of its obligations hereunder or thereunder, will violate or conflict
with its Organizational Documents or any Law or Order applicable to Purchaser.

Section 5.5Consents; Capitalization.

Except for the Consents that Purchaser will obtain on or before Closing
(including the acceptance by the applicable Governmental Entity in Korea of a
foreign direct investment report), no Consent of any Person is required in
connection with the execution and delivery by Purchaser of any Transaction
Document to which it is a party or Purchaser’s consummation of the Transactions
(it being understood that Purchaser makes no representation or warranty with
respect to any Consent required on the part of any Seller Group
Member).  Without limiting the foregoing, the performance by Purchaser of its
obligations under this Agreement, including payment of the Deposit in accordance
with Section 2.2 and consummation by Purchaser of the Closing hereunder, will
not require the Consent of any Person (including, without limitation, any Korean
governmental authority or agency, or any investor in the Fund) that has not been
obtained prior to the date hereof.

Section 5.6Litigation.

There are no Proceedings instituted against or served upon Purchaser or any of
its managers (or persons in similar positions), officers, or Equityholders, in
their capacities as such, pending or, to the Knowledge of Purchaser, threatened
against any such Persons in connection with the Fund that would be reasonably
likely to prevent or delay the consummation by Purchaser of the Transactions.

32

 

--------------------------------------------------------------------------------

 

Section 5.7Investment Intent; Brokers. 

Purchaser is acquiring the Purchased Shares for the account of the Fund and not
with a view to their distribution within the meaning of Section 2(11) of the
Securities Act of 1933.  No Person acting on behalf of Purchaser or any
Affiliate thereof or under the authority of any of the foregoing is or will be
entitled to any brokers’ or finders’ fee or any other commission or similar fee
with respect to which Seller or any Target Company Group Member will be liable
in connection with any of the Transactions.

Section 5.8ERISA.

(i) Purchaser is not, and is not acting on behalf of, a Plan or a “governmental
plan” as defined in Section 3(32) of ERISA; and (ii) the assets of Purchaser do
not constitute “plan assets” of one or more of such Plans within the meaning of
Department of Labor Regulations located at 29 C.F.R. Section 2510.3-101, as
modified by Section 3(42) of ERISA.  

Section 5.9OFAC; No Embargoed Person.

(a)Neither Purchaser nor any Affiliate thereof or, to the Knowledge of
Purchaser, any Equityholder of such Persons owning a 10% or greater interest in
it, and to the Knowledge of Purchaser, none of its employees, officers,
directors, representatives or agents is, nor will they become, a Person with
whom U.S.  Persons are restricted from doing business under regulations of OFAC
of the Department of the Treasury (including those named on OFAC’s Specially
Designated and Blocked Persons List) or under any statute, executive order
(including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and has not and shall not assign or
otherwise transfer this Agreement, or any interest herein to, contract with or
otherwise engage in any dealings or transactions or be otherwise associated with
such persons or entities, (b) neither Purchaser nor, to the Knowledge of
Purchaser, any Affiliate thereof is knowingly engaged in, and shall not
knowingly engage in, any dealings or transactions or knowingly be otherwise
associated with such persons or entities described in (a) above, (c) neither
Purchaser nor, to the Knowledge of Purchaser, any Affiliate thereof is a Person
whose activities violate the International Money Laundering Abatement and
Financial Anti-Terrorism Act of 2001 or the regulations or orders thereunder,
(d) none of the funds or other assets of Purchaser constitute property of, or to
the Knowledge of Purchaser, are beneficially owned, directly or indirectly, by
any Embargoed Person, (e) to the Knowledge of Purchaser, no Embargoed Person has
any interest of any nature whatsoever in Purchaser (whether directly or
indirectly), and (f) none of the funds of Purchaser have been derived from any
unlawful activity with the result that this Agreement is in violation of Law.

33

 

--------------------------------------------------------------------------------

 

ARTICLE VI
COVENANTS AND AGREEMENTS

Section 6.1Access to Information.

During the Contract Period, the Seller Parties shall and shall cause the other
Seller Group Members and their other Associated Persons to (i) afford Purchaser
and its counsel and other Associated Persons reasonable access to (and, as
applicable, the right to make copies of) the Property and the Contracts, books
and records of the Target Company Group or relating to the Property (provided
that, for the avoidance of doubt, the foregoing shall not extend to books and
records of Seller or Seller’s internal analyses with respect to the Property),
and (ii) afford Purchaser and such Associated Persons access to the appropriate
personnel of the Seller Group, as may be reasonably requested, for the purposes
of facilitating the consummation of the Transactions.

Section 6.2Conduct of Business Pending Closing.

(a)Except (x) as required by applicable Law, (y) as expressly permitted in the
Transaction Documents or as required to comply with the MPO Leases or (z) with
the prior written consent of Purchaser, which consent shall not be unreasonably
withheld, delayed or conditioned by Purchaser (except that, in the case of any
proposed amendment, modification, termination, release or waiver of any terms or
provisions of the MPO Leases or any other matter which reasonably would be
expected to have a material adverse effect on any of the Target Company Group
Members, the Property or the transaction contemplated hereby or which reasonably
would be expected to result in environmental liabilities in excess of the
Environmental Cap (as such term is defined in Section 7.8 hereof), Purchaser may
grant or withhold its consent in its sole and absolute discretion), during the
Contract Period, the Target Company shall, and shall cause each Target Company
Subsidiary to:

(i)maintain its respective existence, and subject to the right to contest the
same in good faith: (A) discharge debts, liabilities and obligations as they
become due, and (B) operate in the ordinary course in a manner consistent with
past practice and in compliance in all material respects with all applicable
Laws;

(ii)maintain the Property substantially in its present condition, casualty and
condemnation excepted;

(iii)maintain in full force and effect, and, subject to the right to contest the
same in good faith, perform in all material respects all obligations under all
Contracts to which any Target Company Group Member is a party;

(iv)file, when due or required (after giving effect to any applicable and valid
extension), federal, state, foreign and other Tax Returns and other reports
required to be filed prior to the Closing Date, pay when due all Taxes that are
due with respect to the periods covered by such Tax Returns or otherwise
lawfully levied or assessed against them and withhold or collect and pay to the
proper Tax authorities all Taxes that such

34

 

--------------------------------------------------------------------------------

 

entity is required to so withhold or collect and pay, unless the validity
thereof is contested in good faith and by appropriate proceedings diligently
conducted and, if appropriate, reasonable reserves therefore have been
established; 

(v)in all material respects, (A) maintain its respective financial books and
records in accordance with GAAP and the respective terms of the GSA-IRS Lease
and the Existing CLT Financing Documents, as applicable, and on a basis
consistent with past practices, and (B) maintain in full force and effect the
Insurance Policies currently in effect (or replacements continuing similar
coverage);

(vi)(A) comply in all material respects with (i) all Laws and Recorded Documents
affecting the Property, (ii) the MPO Leases and (iii) the Existing CTL Financing
Documents; (B) cause the BDN Garage Owner to comply in all material respects
with (i) all Laws and Recorded Documents affecting the Cira Garage Property (ii)
the GSA-IRS Parking Area Lease, (iii) the ground lease for the Cira Garage
Property (as amended or otherwise modified from time to time, the “Cira Garage
Property Ground Lease”) and (iv) the loan documents that evidence, secure or
otherwise memorialize the CTL Garage Loan (the “Existing Cira Garage Financing
Documents”); (C) deliver to Purchaser a copy of (i) any notice that any Seller
Group Member receives from any Governmental Entity concerning a material
violation of Law or Order by any Target Company Group Member promptly after the
receipt of the same, (ii) any notice and other documentation relating to any
Proceeding instituted after the Agreement Date that affects Seller or any Target
Group Member or the Transactions contemplated hereby and (iii) any notice of
default given or received under any of the MPO Leases, the Cira Garage Property
Ground Lease, the Existing CTL Financing Documents or the Existing Cira Garage
Financing Documents, promptly after receipt or delivery of the same; and (D) use
commercially reasonable efforts to cure such violations;

(vii)notify Purchaser promptly of (A) any event or occurrence within the
Knowledge of Seller which reasonably would be expected to have a material effect
on the operation, leasing or condition of the Property, including but not
limited to fire or other casualty loss or a Release affecting the Property, or
(B) any document which, to the Knowledge of Seller, is recorded against the
Property and is not disclosed in the Title Evidence;

(viii)notify Purchaser promptly after any Seller Group Member becomes aware of
any circumstance or event that would permit Purchaser to terminate this
Agreement pursuant to Section 10;

(ix)collect invoices and otherwise support any annual statements or payment
requests under the GSA-IRS Lease that are pending or will be become due in the
year in which the Closing occurs; and

(x)address in the ordinary course of business any issues or complaints (if any)
which have been or are raised in writing by the GSA-IRS with respect to that
certain

35

 

--------------------------------------------------------------------------------

 

2015 GSA Tenant Satisfaction Survey dated October 1, 2015 (a copy of which has
been Made Available by Seller to Purchaser). 

(b)During the Contract Period, the Target Company shall not, and shall cause
each Target Company Subsidiary not to, except (x) as required by applicable Law,
(y) with the prior written consent of Purchaser, which consent shall not be
unreasonably withheld, delayed or conditioned by Purchaser (except that, in the
case of any proposed amendment, modification, termination, release or waiver of
any terms or provisions of the MPO Leases or any other matter which reasonably
would be expected to have a material adverse effect on any of the Target Company
Group Members, the Property or the transaction contemplated hereby or which
reasonably would be expected to result in environmental liabilities in excess of
the Environmental Cap, Purchaser may grant or withhold its consent in its sole
and absolute discretion), or (z) as expressly permitted in the Transaction
Documents or as required to comply with Laws and the MPO Leases:

(i)make any change in, or purchase, redeem or retire, or otherwise grant any
option, warrant or other right to purchase or acquire, any authorized, issued or
outstanding equity interests or other securities of any Target Company Group
Member, make any other changes in the capital structure of any Target Company
Group Member, or declare or pay any dividend or other distribution (other than
cash dividends, distributions or interest payments) upon any Equity Interest of
any Target Company Group Member, other than (x) transfers of equity interests in
any Target Company Group Member to be accomplished after the Agreement Date as
described in Exhibit B-1 attached hereto or Schedule 4.3(b) of the Disclosure
Schedule and (y) with the prior written approval of Purchaser, as may be
required for the Target Company to comply with the requirements to qualify as a
REIT;

(ii)amend the Organizational Documents of any Target Company Group Member, other
than amendments to be accomplished after the Agreement Date as described in
Exhibit B-1 attached hereto or Schedule 4.3(b) of the Disclosure Schedule;

(iii)amend, rescind, revoke, or terminate any MPO Lease or take any action that
will or might reasonably be expected to result in the amendment, rescission,
revocation or termination of any MPO Lease (except for the amendment and
restatement of the GSA-IRS Parking Area Lease in accordance with Section
6.4(c)), or consent to an assignment of the GSA-IRS Lease or a subletting by the
GSA-IRS of any portion of the Property;

(iv)fail to pay or discharge when due any material liability or obligation of
the Target Company Group, except any such liability or obligation that shall be
contested in good faith;

(v)enter into, amend or terminate any Insurance Policy (other than renewals and
replacements thereof in the ordinary course of business and providing
substantially the same coverage), any Lease or License, (other than the Key
Closing Deliverables and other documents and agreements expressly contemplated
under this Agreement) that

36

 

--------------------------------------------------------------------------------

 

constitutes a Contract or any other Contract (including the Penn ROFO), other
than any non-material Contract to which the Property Owner Subsidiary is a party
and where (I) payments to or by the Property Owner Subsidiary are less than
$5,000.00 in the aggregate under such Contract, (II) such Contract is terminable
by the Property Owner Subsidiary without liability upon no more than 30 days’
notice, (III) such Contract is not a Lease, License or other occupancy agreement
relative to the Property or any portion thereof, and (IV) each other party to
such Contract is not an Affiliate of any Seller Group Member; 

(vi)make any sale, assignment, transfer, disposition, abandonment or other
conveyance of the Property or any portion thereof, or permit the BDN Garage
Owner to effect any sale, assignment, transfer, disposition, abandonment or
other conveyance of its leasehold interest in the Cira Garage Property or any
portion thereof (or otherwise surrender or terminate its leasehold interest in
the Cira Garage Property);

(vii)acquire or dispose of any property or asset other than any immaterial
property or asset in the normal course of the ownership, leasing and operation
of the Property;

(viii)(A) voluntarily subject the Property to any new Encumbrance, other than a
Permitted Encumbrance or (B) fail to take commercially reasonable efforts to
prevent the Property from becoming on an involuntary basis subject to any new
Encumbrance other than a Permitted Encumbrance;

(ix)(A) make, change, rescind or revoke, or permit to be made, changed or
revoked, any election or method of accounting with respect to Taxes, or (B)
settle or compromise any federal, state, local or foreign income Tax liability,
audit, claim or assessment, (C) enter into any closing agreement related to
Taxes or (D) surrender any right to claim any Tax refund, unless, in each case
described in this clause (ix), the Target Company determines in good faith that
(I) such action is necessary to preserve the qualification as a REIT of
Brandywine Realty Trust or (II) the failure to take such action will or would
reasonably be likely to result in Seller or one of its Affiliates incurring or
suffering material Damages;

(x)settle any condemnation claim or insurance casualty claim;

(xi)undertake any remediation at the Property, other than any remediation
pursuant to a remediation plan existing on the Agreement Date and that has been
Made Available to Purchaser by the Seller Parties;

(xii)incur or otherwise become liable for any Indebtedness (whether as primary
obligor, guarantor or otherwise);

(xiii)hire any employees or enter into or initiate any benefit plan;

(xiv)file or settle any Tax appeal relative to the Property;

37

 

--------------------------------------------------------------------------------

 

(xv)take (or permit to be taken) any voluntary action that will or might
reasonably be expected to result in a failure of the condition set forth in
Section 7.2; 

(xvi)implement or approve any merger, reorganization, recapitalization or
similar transaction involving any Target Company Group Member;

(xvii)form or acquire any Subsidiary;

(xviii)voluntarily agree to any downward adjustment in rent under the GSA-IRS
Lease;

(xix)voluntary permit any Target Company Group Member to become the subject of
or suffer a Bankruptcy Event; or

(xx)agree or commit to do any of the foregoing.

(c)Except (x) as otherwise expressly permitted in the Transaction Documents, (y)
as required by applicable Law or (z) with the prior written consent of Seller,
which consent shall not be unreasonably withheld, delayed or conditioned by
Seller (except that, in the case of any matter which reasonably would be
expected to have a material adverse effect on any of the Seller Parties or the
transaction contemplated hereby or which reasonably would be expected to result
in environmental liabilities in excess of the Environmental Cap, Seller may
grant or withhold its consent in its sole and absolute discretion), during the
Contract Period, Purchaser shall not:

(i)take (or permit to be taken) any voluntary action that will or might
reasonably be expected to result in a failure of the condition set forth in
Section 8.2; or

(ii)agree or commit to do any of the foregoing.

(d)On or prior to the Closing Date, Seller shall, at its sole cost and expense,
terminate, or cause the Property Owner Subsidiary to terminate, the existing
property management agreement for the Property.  At Closing, Seller shall
provide Purchaser with reasonable documentary evidence memorializing the
satisfaction by Seller of the matters described in this Section 6.2(d).

(e)Notwithstanding anything herein to the contrary, prior to Closing Seller
shall be permitted to, and shall, cause the Target Company to complete the
transactions described on Exhibit B-1 attached hereto, including the disposition
(by transfer to Seller or otherwise) of the Excluded Assets described on Exhibit
B-1.

Section 6.3Consents and Cooperation.

(a)Purchaser acknowledges that the Property Owner Subsidiary has granted to
UPenn a right of first offer to purchase the Property pursuant to the Penn
ROFO.  The Parties acknowledge and agree that, prior to the Agreement Date and
as a material inducement for Purchaser to enter into the Transactions
contemplated by this Agreement, UPenn has, pursuant to

38

 

--------------------------------------------------------------------------------

 

the Penn ROFO Waiver and Modification, waived such right of first offer in
respect of such Transactions.   

(b)During the Contract Period, each of the Parties shall use its reasonable
commercial efforts to satisfy each of the Closing Conditions and effect the
Closing as soon as practicable (subject to the terms of Section 3.1
hereof).  Without limiting the generality of the foregoing, the Parties shall
assist and cooperate with each other in negotiating, preparing or filing all
documents required to be prepared, negotiated or filed in connection each Key
Closing Deliverable.  Each of the Parties shall use its reasonable commercial
efforts to resolve objections, if any, as may be asserted by any Person in
relation to any Key Closing Deliverable.  In no event shall non-delivery by a
counterparty (other than any Party or its Affiliate at the time of Closing) to
any of the agreements in Sections 7 and 8 be a breach by any Party if such Party
complied with the other provisions of this Section 6.3 and Section 6.9.

(c)Without limiting or expanding the rights or obligations of the Parties under
Sections 6.2, Seller shall keep Purchaser reasonably well informed of matters
which arise outside the ordinary course of business with respect to the Property
during the Contract Period (provided that such matter is within the Knowledge of
Seller), and will confer in good faith with Purchaser with respect to any
material action to be taken by any Target Group Company Member with respect to
any such matters.

(d)The Seller Parties shall, and shall cause other Seller Group Member to,
reasonably cooperate with Purchaser in connection with Purchaser obtaining
(whether on behalf of itself or the Target Company with respect to the
post-Closing period) title policies (and customary endorsements thereto),
surveys, zoning reports or certificates and any other property-level inquiries
or undertakings sought by Purchaser with respect to the Property.

(e)The Seller Parties shall use commercially reasonable efforts to assist
Purchaser in: (i) obtaining a Subordination, Non-Disturbance and Attornment
Agreement (in the form attached hereto as Exhibit H-1 or in such other form and
substance reasonably required by, or otherwise acceptable to, Purchaser’s
lender) from the GSA-IRS with regard to the GSA-IRS Lease (the “GSA-IRS SNDA”),
provided that Purchaser notifies Seller of the identity of Purchaser’s lender
and the proposed form of the GSA-IRS SNDA, and (ii) obtaining such modifications
to the proposed form of GSA-IRS SNDA that Purchaser’s lender may reasonably
request prior to or after the date on which such form is sent to the
GSA-IRS.  For the avoidance of doubt, the GSA-IRS SNDA shall not be a condition
to Closing.

(f)The Seller Parties shall use commercially reasonable efforts to assist
Purchaser in: (i) obtaining such acknowledgments and consents as Purchaser’s
lender may reasonably require from the BDN Garage Owner in connection with the
assignment of the GSA-IRS Parking Area Lease and any similar documents provided
as security for the loan made by such lender, and (ii) obtaining such
modifications to the proposed forms that Purchaser’s lender may reasonably
request prior to or after the date on which such forms are sent to the BDN
Garage Owner, provided that (i) Purchaser notifies Seller of the identity of
Purchaser’s lender and the proposed forms of such acknowledgments and consents
at least ten (10) Business Days in advance of the Closing Date, and (ii) no such
acknowledgment or consent shall impose any

39

 

--------------------------------------------------------------------------------

 

material liability, obligation, cost or expense on BDN Garage Owner or any
Seller Parties beyond their express obligations set forth in the GSA-IRS Parking
Area Lease. For the avoidance of doubt, the acknowledgments, consents and other
documents contemplated under this Section 6.3(f) shall not be conditions to
Closing. 

Section 6.4Other Transaction Documents.

The following agreements shall be finalized and entered into in accordance with
this Agreement:

(a)The BDN Property Management Agreement in the form of Exhibit P attached
hereto (or as otherwise mutually approved by Seller and Purchaser), pursuant to
which Purchaser will cause the Property Owner Subsidiary to engage an Affiliate
of the Seller as a Property Manager for an initial period of ten (10) years, for
fees equal to 1.5% of gross revenue at the Property. The BDN Property Management
Agreement may be terminated: (i) in the event the property manager fails in any
material respect to fulfill its obligations under the BDN Property Management
Agreement and such failure is not cured in a timely manner; (ii) upon a sale of
the Property at any time, either by deed or a transfer of direct or indirect
controlling ownership interests in the Property Owner Subsidiary and the Master
Tenant (but if the BDN Property Management Agreement is so terminated prior to
the seventh (7th) anniversary of the Closing Date, then the property manager
shall be entitled to a termination fee equal to the management fees that would
be payable between the date of termination and the seventh (7th) anniversary of
the Closing Date); (iii) upon a transfer of the Property or the direct or
indirect ownership interests in the Property Owner Subsidiary following a
foreclosure, deed-in-lieu-of foreclosure or other exercise of remedies by a
lender providing financing to the Property Owner Subsidiary or its Affiliates;
(iv) following a condemnation of, or casualty at, the Property with respect to
which the Property Owner Subsidiary elects not to rebuild or restore the
Property (if applicable); (iv) upon a material default by the BDN Garage Owner
under the GSA-IRS Parking Area Lease which is not timely cured by the BDN Garage
Owner (but only if and so long as the BDN Garage Owner and the manager under the
BDN Property Management Agreement are both Affiliates of Seller); (v) upon the
occurrence of such other events that will be set forth in the BDN Property
Management Agreement.  

(b)The Amended and Restated GSA-IRS Rent Allocation Agreement, as contemplated
under Section 2.3(b).

(c)The GSA-IRS Parking Area Lease, which will be entered into at or before
Closing.

Section 6.5GSA Statement of Lease.

Subject to Purchaser’s obligations under Section 3.5(c), not less than five (5)
Business Days prior to the Closing Date, Seller shall (or shall cause the Target
Company Group to) obtain and deliver to Purchaser a fully completed and executed
“GSA Lease Status Statement” from the GSA-IRS relating to the GSA-IRS Lease (the
“GSA Statement of Lease”), which shall be dated effective no earlier than
December 31, 2015.  The proposed form of the GSA Statement of Lease

40

 

--------------------------------------------------------------------------------

 

is attached hereto and made a part hereof as Exhibit H-2, which form has been
delivered by Seller to the GSA-IRS for its review and approval prior to the
Effective Date.

Section 6.6Notification of Certain Matters.

Each Party agrees to give prompt notice to the other Parties of (a) any event
that causes any of its representations or warranties contained in this Agreement
to be materially untrue or materially inaccurate at any time during the Contract
Period, (b) any material breach by it of any covenant or agreement, and (c) the
occurrence of any event that is reasonably likely to make the satisfaction of
any of the Closing Conditions impossible or unlikely.

Section 6.7Exclusivity.

No Seller Party shall, or cause any Target Company Group Member to, (a) solicit,
initiate or encourage the submission of any proposal or offer (an “Acquisition
Proposal” from any Person (including from any Person’s officers, directors,
employees, agents and other representatives) relating to a (i) liquidation,
dissolution, sale of the Property or other assets or stock, or recapitalization
of any Target Company Group Member, (ii) merger or consolidation of any Target
Company Group Member, (iii) acquisition or purchase of assets or any Equity
Interest of any Target Company Group Member, or (iv) similar transaction or
business combination involving any Target Company Group Member, or (b)
institute, pursue, or engage in any discussions, negotiations, or agreements
with any Person concerning an Acquisition Proposal, or furnish to any Person any
information with respect to or that is intended to lead to an Acquisition
Proposal or otherwise cooperate in any way with, or assist or participate in, or
facilitate or encourage any effort or attempt by any other Person to make an
Acquisition Proposal.  Each Seller Party agrees to immediately notify Purchaser
of their receipt of any transaction inquiry, proposal or offer concerning the
Target Company.

Section 6.8Confidentiality.

Except as permitted under Section 11.3, the Parties shall not, and shall use
commercially reasonable efforts to cause their Affiliates not to, disclose
(except (a) to their representatives, agents, attorneys and other professional
advisors, consultants, title insurance companies or prospective lenders
and/or  investors (including investors of the Fund) on a need-to-know basis or
(b) pursuant to a subpoena, court order or as otherwise required by applicable
Law) the existence of the Transaction Documents or any of the terms and
conditions contained herein or therein without the prior written consent of the
other Party (it being understood and agreed that the Parties shall inform the
persons and entities listed in clause (a) of the foregoing confidentiality
obligation, and shall be responsible for a breach by an unrelated third party of
such confidentiality obligation).  The Parties hereby agree that the provisions
under the heading “Confidentiality” in that certain letter of intent agreed to
and accepted by Brandywine Realty Trust, on behalf of Seller, and Purchaser
Parent, on behalf of Purchaser, dated November 2, 2015, are incorporated herein
by reference; provided that nothing in that letter of intent or this Agreement
shall restrict any Party or its Affiliates from including such information as
may be required or appropriate in any reports or financial statements filed with
the Securities Exchange Commission, New York Stock Exchange, Korean Financial
Supervisory Service, Korean

41

 

--------------------------------------------------------------------------------

 

Financial Services Commission, Korean Financial Investment Association or other
regulatory body, provided that such information does not identify Seller,
Purchaser or any of their respective Affiliates or the Purchase Price.

Section 6.9Filings by Purchaser.

(a)Purchaser shall be solely responsible to prepare and make at its sole cost
and expense any filings with any Governmental Entity that may arise in
connection with the Transactions out of the ownership of the Fund by foreign
persons.

(b)Within five (5) Business Days after the Closing, Purchaser shall cause the
applicable Target Company Group Members to file with appropriate Governmental
Entities such certificates and documents as are necessary to cause the words
“Brandywine” and “Cira” to be removed from the legal names of all Target Company
Group Members (the “Name Change Filings”).  Seller shall cooperate with
Purchaser to complete the Name Change Filings.

(c)After Closing, Seller shall cooperate (at no material cost to Seller)
reasonably with Purchaser in communications and activities required of the
landlord under each lease (including, without limitation, providing any
instruments or documentation required by GSA-IRS in connection with execution
and delivery of any Change-of-Name Agreement required under 48 C.F.R.
42.1205).  “Change-of-Name Agreement” shall mean, with respect to the GSA-IRS
Lease, an agreement by and among the Purchaser and GSA-IRS on substantially in
compliance with 48 C.F.R. 42.1205.

Section 6.10Tax Matters.

(a)Seller and the Target Company Group shall prepare all Tax Returns (which, for
purposes of this Section 6.10, shall be deemed to include any amendments made
after the Closing Date to Tax Returns that were filed prior to the Closing Date
insofar as they relate to any period ending before the Closing Date) required to
be filed by any Target Company Group Member after the Closing Date with respect
to Tax periods ending on or before the Closing Date consistent with past
practices, unless otherwise required by Law.  Seller shall provide drafts of all
such Tax Returns to Purchaser not less than twenty (20) days prior to the
required filing date, and the Parties shall confer and cooperate in good faith
to address any reasonable comments and changes which are suggested by Purchaser
and delivered to Seller not less than five (5) Business Days prior to the
required filing date.  Upon completion of such Tax Returns in accordance with
this Section 6.10, Purchaser will cause the same to be timely filed.

(b)Purchaser will, as to any Taxes in respect of which Seller may be obligated
to indemnify Purchaser pursuant to this Agreement, promptly inform Seller of,
and permit the participation of Seller in, any investigation, audit or other
proceeding by or with the IRS or any other Tax authority empowered to administer
or enforce such a Tax and will not consent to the settlement or final
determination in such proceeding without the prior written consent of Seller
(which consent will not be unreasonably withheld, conditioned or delayed).

42

 

--------------------------------------------------------------------------------

 

(c)Seller and Purchaser shall (i) reasonably assist one another in providing
information necessary for preparing and filing any Tax Returns that Purchaser or
Seller is responsible for preparing and filing with respect to the Target
Company Group and relating to any taxable period beginning before the Closing
Date, (ii) reasonably cooperate in providing information for any audits by, or
disputes or other proceedings with, any Tax authority or with respect to any
matters relating to Taxes for any taxable period beginning before the Closing
Date and (iii) make available to one another and to any Tax authority as
reasonably requested by any such party all information, records and documents
relating to Tax matters (including Tax Returns) of or relating to the Target
Company Group relating to any taxable period beginning before the Closing Date. 

(d)Purchaser covenants and agrees that it shall not file any Tax Return or take
any other action to cause any Target Company Group Member to elect to be treated
as a REIT for any period ending prior to January 1, 2016.  

(e)The provisions of Sections 6.3, 6.8, 6.9 and 6.10 shall survive Closing.

Section 6.11Further Assurances.

Each Party agrees to (a) furnish to any other Party upon request such further
information, (b) execute and deliver or cause to be executed and delivered such
other agreements or instruments, and (c) use its reasonable efforts to do such
other acts and things, in each case as necessary or as the requesting Party may
reasonably request for the purpose of carrying out the intent of the Transaction
Documents (including, without limitation, Sections 2.3(b), 3.5(c), 6.3(e) and
6.3(f) of this Agreement).

ARTICLE VII
CONDITIONS TO Purchaser’S OBLIGATION TO CLOSE

The obligation of Purchaser to consummate the Transactions is subject to the
satisfaction of each of the following conditions as of the Closing.  The
benefits of these conditions are for the sole benefit of Purchaser and may be
waived by Purchaser in writing at any time in its sole discretion.

Section 7.1Documents to be Delivered at Closing.

Each of the documents set forth in Section 3.2 shall have been delivered to
Purchaser (or to the Escrow Agent, for delivery to Purchaser upon consummation
of the Closing).

Section 7.2Representations and Warranties.

Each representation and warranty of Seller contained in this Agreement (a) shall
have been true and correct in all material respects as of Agreement Date and (b)
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as if made on and as of the Closing Date, except
(in each case under Section 7.2(a) or (b)): (x) for such matters which,
individually or in the aggregate, would not constitute or result in a Purchaser
MAE, and (y) where any representation or warranties is qualified by a
Materiality Qualification

43

 

--------------------------------------------------------------------------------

 

such Materiality Qualification shall be disregarded for this purpose (i.e., such
Materiality Qualification shall continue to apply for all purposes other than
this Section 7.2); and (z) for those representations and warranties that address
matters only as of a particular date, such representations and warranties shall
have been true and correct (subject to clause (x) and (y)) as of such particular
date.  “Materiality Qualification” means any qualification by reference to the
terms “in any material respect”, “material”, “materially”, “material adverse
effect” or any similar term or any term having a similar meaning.  For the
avoidance of doubt, Purchaser may not terminate this Agreement due to a breach
of Seller’s representations or warranties hereunder (and the condition set forth
in this Section 7.2 shall be deemed satisfied notwithstanding such breach),
unless such breach would constitute or result in a Purchaser MAE.

Section 7.3Performance of Obligations by the Seller Parties.

Each Seller Party shall have performed or complied in all material respects with
all material agreements and covenants required by each Transaction Document to
be performed or complied with by each of them at or prior to the Closing Date.

Section 7.4No Material Property Event.

There shall not have occurred a Material Property Event during the Contract
Period.

Section 7.5GSA Statement of Lease.  

Seller shall have obtained and delivered to Purchaser the GSA Statement of
Lease, in accordance with Section 6.5, which shall be in substantially the same
form as Exhibit H-2 attached hereto and shall not contain any adverse statement
or adverse qualification as to any matter set forth therein (other than of a de
minimis nature).

Section 7.6Other Transaction Documents.

Seller shall not be in default in any material respect under the Transaction
Documents.

Section 7.7Title Matters.

At the Closing, the Property shall be free and clear of all Encumbrances, other
than the Permitted Encumbrances, and title to the Property shall be in the
condition required under Section 3.4(c).  

Section 7.8Environmental Matters.

During the Contract Period, (i) no notice of violation of any Environmental Laws
with respect to the Property shall have been received by Seller or any Target
Company Group Member, which violation reasonably could be expected to result in
uninsured costs or liabilities to Purchaser or any Target Company Group Member
in excess of $200,000 (the “Environmental Cap”), and (ii) no notice of violation
of any Environmental Laws with respect to the Cira Garage shall have been
received by Seller, BDN Garage Owner or any Target Company Group Member,

44

 

--------------------------------------------------------------------------------

 

which violation reasonably could be expected to result in the termination of, or
the offset of rent payable under, the GSA-IRS Lease.

Section 7.9Legal Matters.

(a)No Order shall exist that prohibits or restrains the consummation of the
Transactions and no Proceeding shall have been commenced by any Governmental
Entity (and be pending) seeking to prohibit or restrain the consummation of the
Transactions; and (b) there shall not be pending or, to the Knowledge of Seller,
threatened any Proceeding by any Governmental Entity (i) seeking to restrain or
prohibit the consummation of any of the Transactions or seeking to obtain from
any of the Target Company Group Members or Purchaser any material damages, or
(ii) seeking to prohibit or limit the ownership or operation by the Target
Company Group Members or Purchaser of the Property.

Section 7.10Proceedings.

All proceedings taken or required to be taken by each Seller Group Member in
connection with the Transactions at or prior to the Closing shall have been
taken in accordance with this Agreement.

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

If any of the Closing Conditions set forth in this Section 7 have not been
satisfied as of the scheduled Closing Date, then Purchaser may in its sole
discretion (i) subject to the provisions of Section 10.1(d), terminate this
Agreement (in which event the Deposit shall be returned to Purchaser) or (ii)
waive the unsatisfied Closing Conditions and proceed with the Closing; provided,
however, that Purchaser shall not have the right to terminate this Agreement
under this Section 7 unless the applicable Closing Condition (other than the
Closing Condition set forth in Section 7.1, as to which Seller shall not be
entitled to a cure period) is not satisfied within five (5) Business Days after
notice thereof from Purchaser to Seller.  Purchaser’s waiver of any unsatisfied
Closing Condition shall not constitute a waiver of any kind or nature by
Purchaser of (i) any other Closing Condition or (ii) any right or remedy
available to Purchaser hereunder.

ARTICLE VIII
CONDITIONS TO Seller GROUP OBLIGATIONS TO CLOSE

The obligation of the Seller Parties to consummate the Transactions is subject
to the satisfaction of each of the following conditions as of the Closing.  The
benefits of these conditions are for the sole benefit of the Seller Parties and
may be waived by Seller, on behalf of itself or any other Seller Party, in
writing at any time in its sole discretion.

Section 8.1Documents to be Delivered at Closing.

The Purchase Price (as adjusted pursuant to the terms hereof) and each of the
documents set forth in Section 3.3 shall have been delivered to Seller (or to
the Escrow Agent, for delivery to Seller upon consummation of the Closing).

45

 

--------------------------------------------------------------------------------

 

Section 8.2Representations and Warranties. 

Each representation and warranty of Purchaser contained in this Agreement (a)
shall have been true and correct in all material respects as of Agreement Date
and (b) shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date, except (in each case under Section 8.2(a) or (b)): (x) for such matters
which, individually or in the aggregate, would not constitute or result in a
Seller MAE, and (y) where any representation or warranties is qualified by a
Materiality Qualification such Materiality Qualification shall be disregarded
for this purpose (i.e., such Materiality Qualification shall continue to apply
for all purposes other than this Section 8.2); and (z) for those representations
and warranties that address matters only as of a particular date, such
representations and warranties shall have been true and correct (subject to
clause (x) and (y)) as of such particular date.  For the avoidance of doubt,
Seller may not terminate this Agreement due to a breach of Purchaser’s
representations or warranties hereunder (and the condition set forth in this
Section 8.2 shall be deemed satisfied notwithstanding such breach), unless such
breach would constitute or result in a Seller MAE.

Section 8.3Performance of Obligations by Purchaser.

Purchaser shall have performed or complied in all material respects with all
material agreements and covenants required by each Transaction Document to be
performed or complied with by it on the Closing Date.

Section 8.4Legal Matters.

(a)No Order shall exist that prohibits or restrains the consummation of the
Transactions and no Proceeding shall have been commenced by any Governmental
Entity (and be pending) seeking to prohibit or restrain the consummation of the
Transactions; and (b) there shall not be pending or, to the Knowledge of
Purchaser, threatened any Proceeding by any Governmental Entity seeking to
restrain or prohibit the consummation of any of the Transactions or seeking to
obtain from Seller any material damages.

Section 8.5Proceedings.

All proceedings taken or required to be taken by Purchaser in connection with
the Transactions at or prior to the Closing shall have been taken in accordance
with this Agreement.

*  *  *  *  *  *  *  *  *  *  *  *  *  *  *

If any of the Closing Conditions set forth in this Section 8 have not been
satisfied as of the scheduled Closing Date, then, Seller may in its sole
discretion (i) subject to the provisions of Section 10.1(d) and Section 10.4,
terminate this Agreement; or (ii) waive the unsatisfied Closing Conditions and
proceed with the Closing; provided, however, that Seller shall not have the
right to terminate this Agreement under this Section 8 unless the applicable
Closing Condition (other than the Closing Condition set forth in Section 8.1, as
to which Purchaser shall not be entitled to a cure period) is not satisfied on
or before the first to occur of (A) the Outside Time, or (B) five (5) Business
Days after notice thereof from Seller to Purchaser.  Seller’s waiver of any

46

 

--------------------------------------------------------------------------------

 

unsatisfied Closing Condition shall not constitute a waiver of any kind or
nature by Seller of (i) any other Closing Condition or (ii) any right or remedy
available to Seller hereunder.

ARTICLE IX
INDEMNIFICATION; REMEDIES

Section 9.1Survival.

All representations, warranties and certifications contained in this Agreement
and each certificate or other instrument delivered by any Party at the Closing,
including the Seller Closing Certificate and the Purchaser Closing Certificate,
shall be made as of the date or dates thereof as indicated herein and not, for
certainty, any date after Closing, but shall survive the Closing until the
twelve (12) month anniversary of the Closing Date, except that (a) the
representations, warranties and certifications contained in Sections 4.1, 4.2,
4.6(a), 4.17, 4.19, 5.1, 5.2, 5.7 and 5.9 (and the certifications contained in
the Seller Closing Certificate and the Purchaser Closing Certificate to the
extent applicable to such Sections of this Agreement) shall survive the Closing
until the twenty-four (24) month anniversary of the Closing Date and (b) the
representations and warranties contained in Sections 4.3, 4.4 and 4.8 (and to
the extent applicable to such Sections, the certifications contained in the
Seller Closing Certificate) shall survive until the expiration of the applicable
statute of limitations (including extensions thereof) plus 90 days.

Section 9.2Indemnification.

(a)Indemnification for Benefit of Purchaser.  Subject to the provisions of this
Section 9 (including, without limitation Section 9.1 and Section 9.2(c)) from
and after the Closing, Seller shall indemnify and hold Purchaser and its
directors (or Persons in similar positions), officers, employees, Affiliates,
successors and permitted assigns (collectively, the “Purchaser Indemnified
Parties”) harmless from and against any Damages suffered or incurred by or made
against any one or more of them and that arise or result from

(i)any breach of any representation or warranty in Section 4 of this Agreement
and any inaccuracy in any written certification or affidavit made by any Seller
Group Member under this Agreement or required to be delivered by any Seller
Group Member pursuant to this Agreement at the Closing, including the Seller
Closing Certificate (including, for this purpose, the inaccuracy therein that
would result from a non-disclosure of Interim Changes or a failure of a Closing
Condition set forth in Section 7.3),

(ii)the breach by any Seller Party of an agreement, covenant or obligation under
this Agreement to be performed or observed by it pursuant to this Agreement,

(iii)all Pre-Closing Taxes,

(iv)Pre-Closing Indebtedness,

(v)any disallowance or claim of any disallowance by any applicable Governmental
Entity of the tax treatment described in Section 4.8(a), or

47

 

--------------------------------------------------------------------------------

 

(vi)any Proceeding, if any, disclosed or required to be disclosed in the
Disclosure Schedule,  

(vii)any claim, demand or other Proceeding based on any actual or alleged (A)
failure of any Target Company Group Member to comply with Law, (B) breach or
violation of any Contract to which any Target Company Group Member is a party,
or by which any of them or any of their asset is otherwise bound, (C) loss of
life or (D) injury to body or property to the extent, in the case of this clause
(vii), the underlying act or omission by one or more Target Company Group
Members occurred prior to the Agreement Date, or

(viii)any known or unknown obligations of any Target Company Group Member
described in clause (ii)(B) of Section 4.8(t).

For purposes of the definition of “Purchaser Indemnified Parties” under this
Section 9.2(a), each Target Company Group Member shall be (and shall be deemed
to be) an Affiliate of Purchaser.  At all times during the survival periods set
forth in Section 9.1 and thereafter during the pendency of any claim by
Purchaser against Seller under this Agreement and/or the other Transaction
Documents, Seller shall maintain liquid assets (including availability under any
lines of credit of Seller) in the amount of (at least) the Indemnification Cap.

(b)Indemnification for Benefit of Seller.  Subject to the provisions of this
Section 9, from and after the Closing, Purchaser shall indemnify and hold Seller
and its directors (or Persons in similar positions), officers, employees,
Affiliates, successors and assigns (collectively, the “Seller Indemnified
Parties” and, together with Purchaser Indemnified Parties, the “Indemnified
Parties”) harmless from and against any Damages suffered or incurred by or made
against any one or more of them and that arise or result from

(i)any breach of any representation or warranty in Section 5 of this Agreement
and any inaccuracy in any written certification or affidavit made by Purchaser
under this Agreement or required to be delivered by Purchaser pursuant to this
Agreement at the Closing, including the Purchaser Closing Certificate
(including, for this purpose, the inaccuracy therein that would result from a
non-disclosure of Interim Changes or a failure of a Closing Condition set forth
in Section 8.3) and

(ii)the breach by Purchaser of an agreement, covenant or obligation under this
Agreement to be performed or observed by it pursuant to this Agreement.

For the purposes of this Section 9.2(b), each Target Company Group Member shall
be (and shall be deemed to be) an Affiliate of Seller.

(c)Indemnification Basket; Indemnification Cap.  Anything herein to the contrary
notwithstanding, but subject to Section 9.2(d): (i) Seller shall not have any
obligation to any Purchaser Indemnified Party under Section 9.2(a)(i) unless and
until the aggregate amount of all Damages for which all Purchaser Indemnified
Parties are entitled to indemnification exceeds the Indemnification Basket
Amount, in which case the Purchaser Indemnified Parties entitled to

48

 

--------------------------------------------------------------------------------

 

such indemnification shall be entitled to recover all such Damages, including
the Indemnification Basket Amount (subject, however, to the other limitations
set forth in this Section 9.2(c) and elsewhere in this Agreement); (ii)
Purchaser shall have no indemnification obligation to any Seller Indemnified
Party under Section 9.2(b)(i) unless and until the aggregate amount of the
Damages for which the Seller Indemnified Parties are entitled to indemnification
exceeds the Indemnification Basket Amount, in which case the relevant Seller
Indemnified Parties entitled to such indemnification shall be entitled to
recover all such Damages, including the Indemnification Basket Amount (subject,
however, to the other limitations set forth in this Section 9.2(c) and elsewhere
in this Agreement); (iii) the obligations of Seller pursuant to Section
9.2(a)(i) and recourse against Seller pursuant to Section 9.2(a)(i) shall be
limited such that the aggregate obligations of Seller under Section 9.2(a)(i)
shall not exceed in the aggregate an amount equal to the Indemnification Cap;
(iv) the obligations of Purchaser pursuant to Section 9.2(b)(i) and recourse
against Purchaser pursuant to Section 9.2(b)(i) shall be limited such that the
aggregate obligations of Purchaser under Section 9.2(b)(i) shall not exceed in
the aggregate an amount equal to the Indemnification Cap.  

(d)Carve-Outs to Application of Indemnification Basket and Indemnification
Cap.  Anything in this Section 9 to the contrary notwithstanding, the
Indemnification Basket Amount and the Indemnification Cap shall not apply to,
and shall not restrict the obligation of Seller or Purchaser, as the case may be
and as applicable, to indemnify against Damages attributable to, (i) breaches of
the representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.4,
4.8, 4.14, 4.16, 4.17, 4.19, 5.1, 5.2, 5.7 and 5.9 and (ii) the Seller Closing
Certificate or the Purchaser Closing Certificate to the extent applicable to the
representations and warranties referenced in the immediately preceding clause
(i) (collectively, the “Exempted Representations”) or (iii) fraud or any
intentional breach of any representation, warranty or certification.

(e)Indemnification Limitations Based on Recorded Documents,
Etc.  Notwithstanding any provision to the contrary contained in this Section 9
or elsewhere in any Transaction Document, in no event shall Seller be obligated
to indemnify any Purchaser Indemnified Party from and against, and Seller shall
have no liability or obligation to any Purchaser Indemnified Party for, any
Damages  pursuant to Section 9.2(a)(i) for any matters that are disclosed in any
Recorded Document, Environmental Report, Title Evidence or Survey Evidence that
was Made Available to Purchaser by the Seller Parties prior to the Closing Date
or for any other matter which, to the Knowledge of Purchaser at or prior to
Closing, pursuant to documents or other information Made Available to Purchaser,
would constitute a breach of Seller’s representations and warranties in Section
4 of this Agreement; provided that the provisions of this Section 9.2(e) shall
not apply with respect to any breach of any of the Exempted Representations or
any breach that constitutes or results in a Purchaser MAE.

(f)Limitation on Timing to Make Certain Indemnification Claims.  Anything in
this Agreement to the contrary notwithstanding, no Indemnifying Party shall have
any obligation to any Indemnified Party pursuant to Section 9.2(a)(i), Section
9.2(a)(ii), Section 9.2(b)(i) or Section 9.2(b)(ii) with respect to any
representation, warranty or certification unless the Indemnified Party notifies
the Indemnifying Party of its claim for indemnification under Section 9.2(a)(i)
or Section 9.2(b)(i), as the case may be, prior to the expiration of the

49

 

--------------------------------------------------------------------------------

 

applicable survival period corresponding to such representation, warranty or
certification and such notice contains a reasonably detailed description of the
nature of the breach of such representation or warranty or certification (it
being understood and agreed that the Parties’ respective indemnification
obligations under Section 9.2(a)(i) and Section 9.2(b)(i) shall survive the
Closing, subject to the limitation set forth in Section 9.1). 

(g)Net of Insurance Recoveries.  Any calculation of Damages for purposes of this
Section 9 shall be net of any insurance recovery actually received on account of
such issue by any relevant Indemnified Party (whether paid directly to such
Indemnified Party or assigned by the relevant Indemnifying Party to such
Indemnified Party) from any source other than any title insurance or similar
type product (collectively “Title Insurance”); and the Parties each agree to use
commercially reasonable efforts to maximize any available insurance
recovery.  Anything in this Agreement to the contrary notwithstanding, it is the
intention of the Parties that no insurer or any other third party shall be (y)
entitled to a benefit it would not be entitled to receive in the absence of the
foregoing indemnification provisions, or (z) relieved of the responsibility to
pay any claims for which it is obligated.

(h)Procedures Relative to Third-Party Indemnification Claims.  Upon receipt by
any Indemnified Party of written notice from any third party of any Proceeding
initiated by such third party against such Indemnified Party that will or may
give rise to a claim for Damages for which such Indemnified Party has a right to
be indemnified or held harmless under this Section 9 (each a “Third Party
Indemnifiable Claim”), such Indemnified Party shall as promptly as practicable
give written notice thereof to Purchaser or Seller (as applicable, the
“Indemnifying Party”), if indemnification shall be sought therefrom, indicating
the nature of such Third Party Indemnifiable Claim and the basis therefor;
provided, that failure to give such notice shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure.  The Indemnifying Party shall
have the right, at its option and expense (and by its own counsel), to assume
the defense of any Third Party Indemnifiable Claim as to which the Indemnifying
Party shall have acknowledged its obligation to indemnify the Indemnified
Party.  If any Indemnifying Party shall undertake to compromise or defend any
Third Party Indemnifiable Claim, it shall promptly notify the Indemnified Party
in writing of its intention to do so, and the Indemnified Party agrees to
cooperate fully with the Indemnifying Party and its counsel in the compromise
of, or defense against, any such Third Party Indemnifiable Claim; provided that
the Indemnifying Party shall not settle any such asserted Third Party
Indemnifiable Claim without the written consent of the Indemnified Party (which
consent will not be unreasonably withheld, delayed or
conditioned).  Notwithstanding any such election to assume the defense of any
Third Party Indemnifiable Claim, such Indemnified Party shall have the right to
employ separate counsel and to participate in the defense of Third Party
Indemnifiable Claim, and such Indemnifying Party shall bear the reasonable fees,
costs and expenses of such separate counsel (and shall pay such fees, costs and
expenses at least quarterly), if (i) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to such Indemnified Party to represent
such Indemnified Party within a reasonable time after notice of the institution
of such action or proceeding, (ii) the Indemnifying Party shall authorize such
Indemnified Party to employ separate counsel at the Indemnifying Party’s
expense, or (iii) the Indemnified Party reasonably determines that there is a
conflict necessitating separate counsel for the Indemnified Party.  In any
event, the Indemnified Party and

50

 

--------------------------------------------------------------------------------

 

its counsel shall cooperate with the Indemnifying Party and its counsel and
shall not assert any position in any proceeding inconsistent with that asserted
by the Indemnifying Party. 

Section 9.3Sole and Exclusive Remedy Post Closing.

The Parties hereby acknowledge and agree that after the Closing this Section 9
constitutes each Indemnified Party’s sole and exclusive remedy for any and all
Damages or other claims relating to or arising from the Transaction Documents,
and the transactions contemplated thereby; provided that nothing set forth
herein shall be deemed to limit any Person’s rights or remedies in the event
that a Party has committed fraud in connection herewith.  No Indemnified Party
may avoid such limitation by seeking Damages for breach of contract, tort or
pursuant to any other theory other than fraud.

Section 9.4No Other Representations or Warranties.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, THE PARTIES DISCLAIM ANY AND ALL
WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PARTIES, AND THE RELEVANT ASSETS,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL OR ENVIRONMENTAL CONDITION OF THE
PROPERTY, AND MAKE NO WARRANTY OF MERCHANTABILITY OR FITNESS OF ANY OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE, EXPRESS OR IMPLIED.  Other than the
representations and warranties set forth in this Agreement or any other
Transaction Document, the purchase and sale of the Purchased Shares, and
indirectly thereby, of the Target Company Group, shall occur and the implicit,
beneficial interest in the Property shall be transferred in an “AS IS, WHERE IS
AND WITH ALL FAULTS” (subject, however, to Section 7.4 hereof).  To the extent
required to be operative, the disclaimers of warranties contained herein are
“conspicuous” disclaimers for purposes of any applicable Law or Order.

Section 9.5Specific Performance and Injunctive Relief.

The Seller Parties’ obligations under this Agreement are unique.  If a Seller
Party should breach its covenants, agreements or obligations under this
Agreement, it may be extremely impracticable to measure the resulting
damages.  Accordingly, Purchaser, in addition to any other available rights or
remedies, may sue in equity for specific performance and/or injunctive relief,
and each Seller Party expressly waives the defense that a remedy in damages will
be adequate and each other similar defense.

ARTICLE X
TERMINATION

Section 10.1Right to Terminate.

Notwithstanding anything to the contrary set forth in this Agreement, this
Agreement may be terminated and the Transactions contemplated herein abandoned
at any time prior to the Closing:

51

 

--------------------------------------------------------------------------------

 

(a)by mutual written consent of Purchaser and Seller; 

(b)by Purchaser, if any of the Closing Conditions set forth in Section 7 shall
have become incapable of fulfillment (including by reason of any Interim Change
whether or not disclosed in the Seller Closing Certificate) and shall not have
been waived by Purchaser, provided that the right of Purchaser to terminate this
Agreement under this Section 10.1(b) shall not be available to Purchaser if its
breach of its obligations under this Agreement has been the primary cause of the
impossibility of fulfillment of such condition;

(c)by Seller, if any of the Closing Conditions set forth in Section 8 shall have
become incapable of fulfillment (including by reason of any Interim Change
whether or not disclosed in the Purchaser Closing Certificate) and shall not
have been waived by the Seller Parties provided that the right of Seller to
terminate this Agreement under this Section 10.1(c) shall not be available to
Seller if: a breach by any of the Seller Group Member of its (or their)
obligations under this Agreement has been the cause of the impossibility of
fulfillment of such condition; or

(d)by Seller, if the Transactions have not been consummated by 11:59 p.m. on
January 29, 2016 (subject to extension as provided below, the “Outside Time”)
(with time being of the essence with respect thereto); provided that (i) if the
Closing Date is extended by Purchaser in accordance with Section 3.1, then the
Outside Time shall be likewise extended to 11:59 p.m. on February 19, 2016 (with
time being of the essence with respect thereto), and (ii) the right of Seller to
terminate this Agreement under this Section 10.1(d) shall not be available to
Seller if a breach by any of the Seller Group Member of its (or their)
obligations under this Agreement has been the cause of the failure of the
satisfaction of the Closing Conditions by the Outside Time;

(e)by Purchaser or Seller, if a Governmental Entity issues an Order permanently
restraining, enjoining or otherwise prohibiting any of the Transactions; or

(f)by Purchaser, if a Material Property Event occurs during the Closing Period.

Section 10.2Regarding Interim Changes.

For the avoidance of doubt, (i) (A) a Seller Group Closing Certificate that
discloses any Interim Change that indicates or constitutes a failure of a
Closing Condition set forth in any of Section 7 shall not constitute a waiver of
any such failure of any such Closing Condition, and (B) Purchaser shall have no
obligation to consummate any of the Transactions because of such failure of such
Closing Condition and may terminate this Agreement as provided in this
Section 10 unless Purchaser shall have expressly waived any such failure of such
Closing Condition, and (ii) (A) a Purchaser Closing Certificate that discloses
any Interim Change that indicates or constitutes a failure of a Closing
Condition set forth in any of Section 8 shall not constitute a waiver of any
such failure of any such Closing Condition, and (B) the Seller Parties shall
have no obligation to consummate any of the Transactions because of such failure
of

52

 

--------------------------------------------------------------------------------

 

condition and may terminate this Agreement as provided in Section 8 (subject to
Section 10.4) unless Seller shall have expressly waived any such failure of such
Closing Condition.

Section 10.3Effect of Termination.

(a)Each Party’s right of termination under Section 10.1 is in addition to any
other rights it may have (i) under this Agreement, including pursuant to Section
9.5 and Section 10.3(c) or (ii) otherwise at Law or in equity in respect of a
breach described in clause (y) or clause (z) of Section 10.3(b) and the exercise
of a right of termination will not be an election of remedies.  If this
Agreement is terminated pursuant to Section 10.1, written notice thereof must be
given by the terminating Party to the other Parties specifying the provision of
Section 10.1 pursuant to which such termination is made, and this Agreement will
terminate provided that the provisions of Section 9, this Section 10 and Section
11 shall survive any termination of this Agreement.

(b)If this Agreement is terminated for any reason other than (y) on account of a
breach by a Party of any representation or warranty of such Party in any
material respect under this Agreement or (z) on account of the failure by a
Party to perform and comply in all material respects with the material
obligations of such Party under this Agreement, then:  (i) neither Party shall
have any obligation to make a payment or reimbursement to the other Party or its
Affiliates based on this Agreement; and (ii) the rights of Purchaser and its
Affiliates in and to the Property and the Target Company shall terminate
fully.  The foregoing exclusion in each of clauses (y) and (z) of this Section
10.3(b) is solely for the reimbursement payment and liquidated damage provided
for in Section 10.3(c) and Section 10.3(d) and, apart from such reimbursement
payment and liquidated damage, such exclusion has no other purpose.    

(c)If this Agreement is terminated as described in clause (y) and (z) of Section
10.3(b) due to a breach or default by Seller, then as the sole and exclusive
damage remedy of Purchaser Group for such breach or default and the termination
of this Agreement Seller shall reimburse Purchaser an amount (not to exceed
$500,000 unless Seller willfully defaults hereunder by selling (directly or
indirectly) the Property or the Purchased Shares, in which case no cap shall
apply) on account of, and equal to, the aggregate reasonable out-of-pocket costs
and expenses incurred by Purchaser in connection with the pursuit of acquiring
the Target Company.  Any such reimbursement, if payable, shall be paid by Seller
to Purchaser by wire transfer of immediately available funds to an account
designated by Purchaser within 10 calendar days after Seller’s receipt of
documentation from Purchaser supporting the same.  For the avoidance of doubt
and notwithstanding anything to the contrary contained herein, if Purchaser does
not have the right, pursuant to the terms hereof, to terminate this Agreement by
reason of a breach or default by Seller, Seller shall nevertheless be
responsible for the payment to Purchaser of any and all Damages incurred by
Purchaser by reason of such breach or default, subject to the applicable
limitation in Article 9 hereof.

(d)If this Agreement is terminated as described in clause (y) and (z) of
Section 10.3(b) due to a breach or default by Purchaser, then the entire Deposit
shall be immediately paid by Escrow Agent (if previously deposited with Escrow
Agent) or by Purchaser (if and to the extent not previously deposited with
Escrow Agent) to Seller, as liquidated

53

 

--------------------------------------------------------------------------------

 

damages and as Seller’s sole and exclusive damage remedy for such breach or
default and the termination of this Agreement.  The Parties acknowledge and
agree that the amount of Seller’s actual damages arising from such a default by
Purchaser and the termination of this Agreement are presently, and at the time
of such a default would be, impossible or extremely difficult to ascertain with
certainty, and that the amount of the Deposit is a fair and reasonable estimate
of the amount of such damages.  For the avoidance of doubt, this Section 10.3(d)
shall be subject to Purchaser’s rights described in Section 10.4 below. 

________________________________________
Agreed By SellerAgreed by Purchaser

Section 10.4Purchaser’s Special Cure Rights.

Notwithstanding anything herein to the contrary contained in this Agreement
(including, without limitation, Article VIII and Section 10.3(d)), Seller shall
not have the right to receive the Deposit as liquidated damages pursuant to
Section 10.3 upon termination of this Agreement by Seller on account of any
breach by Purchaser of any material representation or warranty of Purchaser
under this Agreement (a “Purchaser Breach”) unless (i) such Purchaser Breach
results in the failure to satisfy the condition in Section 8.1 or the condition
in Section 8.2, and (ii) Purchaser fails to cure such Purchaser Breach in
accordance with this Section 10.4.  In order to cure a Purchaser Breach pursuant
to this Section 10.4, not later than the Outside Time Purchaser must (a) satisfy
all of its Closing Conditions, other than the Closing Condition to which such
Purchaser Breach relates, set forth in Article VIII above and (b) tender full
performance under Section 3.3, including payment of the Purchase Price to
Seller.  If Seller does not accept Purchaser’s tender of performance under
Section 3.3 then Seller shall not be entitled to the Deposit as liquidated
damages under Section 10.3, but in such case Seller shall have all other rights
and remedies available at law or in equity on account of the Purchaser
Breach.  If the Purchaser Breach constitutes or results in a Seller MAE, then
Seller’s acceptance of Purchaser’s cure under this Section 10.4 shall not
constitute a waiver of any rights or remedies available to Seller at law or in
equity as a consequence of the Purchaser Breach (but not any damages other than
Seller’s actual damages), other than the right to receive the Deposit as
liquidated damages.

ARTICLE XI
OTHER PROVISIONS

Section 11.1Entire Agreement.

This Agreement, together with the exhibits, schedules and certificates or other
instruments executed and delivered pursuant to this Agreement, constitutes the
entire agreement among the Parties with respect to the subject matter of this
Agreement and supersedes all prior understandings of the Parties.

Section 11.2Governing Law.

54

 

--------------------------------------------------------------------------------

 

(a)This Agreement shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Pennsylvania without giving effect to principles of
conflicts of law. 

(b)Each Party hereby irrevocably submits to the exclusive jurisdiction of the
state courts of the Commonwealth of Pennsylvania and any United States District
Court located in the Commonwealth of Pennsylvania and in the City of
Philadelphia (“Agreed to Court”) for the sole purpose of any Proceeding between
any two or more Parties relating to in whole or in part this Agreement.  Each
Party hereby agrees not to commence any Proceeding relating to this Agreement
other than before an Agreed to Court except to the extent otherwise set forth in
this Section 11.2.

(c)Each Party hereby waives to the extent not prohibited by applicable Law, and
agrees not to assert by way of defense or otherwise in any Proceeding relating
to this Agreement, any Procedural Claim.  “Procedural Claim” means a claim that
(i) such Party is not subject personally to the jurisdiction of the Agreed to
Courts, (ii) such Party’s property is exempt or immune from attachment or
execution, (iii) any such Proceeding brought in an Agreed to Court should be
dismissed on grounds of forum non conveniens, should be transferred or removed
to any court other than an Agreed to Court, or should be stayed by reason of the
pendency of some other Proceeding in any court other than an Agreed to Court, or
(iv) this Agreement or the subject matter hereof may not be enforced in or by an
Agreed to Court.

(d)EACH PARTY HEREBY WAIVES TRIAL BY JURY WITH RESPECT TO ANY MATTER RELATING TO
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.  This Section 11.2(d) shall
survive the Closing or earlier termination of this Agreement.

Section 11.3Press Release and Announcements.

No Party, nor their representatives, will make any public media disclosure or
press release regarding the Transactions contemplated by this Agreement without
the consent of the other Party, except as required by Law or as otherwise
expressly as provided herein. Without limiting the generality of the foregoing,
any press release or other public media disclosure regarding this Agreement or
the Transactions contemplated herein, and the wording of same, must be approved
in advance by both Parties; provided, however, each Party shall have the right
without any other Party’s consent, to include general information related to the
Transactions in: (a) (i) press releases issued between the Agreement Date and
the Closing Date in the form attached hereto as Exhibit S; and (ii) other
disclosures required to be made by the disclosing Party between the Agreement
Date and the Closing Date by applicable laws, regulations or any requirements of
(x) the Securities and Exchange Commission or other applicable regulatory body
or (y) courts of competent jurisdiction; and (b) (ii) press releases issued from
and after the Closing in form and substance mutually acceptable to the Parties,
which form of press release shall be prepared by the Parties during the Contract
Period.  The provisions of this Section will survive Closing or, if the
Transactions are not consummated, shall survive any termination of this
Agreement. whether before, on and after Closing,

55

 

--------------------------------------------------------------------------------

 

Section 11.4Expenses. 

Except as otherwise provided in this Agreement, each Party shall bear its own
expenses incurred or to be incurred in connection with the execution and
delivery of the Transaction Documents and the consummation of the Transactions.

Section 11.5Disclosure Schedule.

Any matter required to be disclosed in the Disclosure Schedule shall be
disclosed in a section of Disclosure Schedule corresponding to the
representation or warranty corresponding to such matter; it being acknowledged
and agreed any disclosure made in any section of Disclosure Schedule shall be
deemed to have been disclosed in any other section of the Disclosure Schedule.

Section 11.6Amendments; Waivers.

No supplement, modification or amendment of this Agreement will be binding
unless executed in writing by each Party.  No waiver of any provision of this
Agreement will be deemed to be or will constitute a continuing waiver.  No
waiver will be binding unless executed in writing by the Party making the
waiver.

Section 11.7Assignment.

Prior to consummation of the Closing, the rights and obligations of the Seller
Parties under this Agreement may not be assigned without the prior written
consent of Purchaser, and any purported assignment shall be void.  Purchaser
may, without the consent of the Seller Parties, from time to time assign its
rights and/or obligations under this Agreement so long as Fund Manager is, or is
any Affiliate controlled by, Purchaser Parent. For the purpose of this Section
11.7, the term “control” shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or otherwise.

Section 11.8Severability.

If any provision of this Agreement or the application of any provision of this
Agreement to any Party or circumstance is, to any extent, invalid or
unenforceable, the application of the remainder of such provision to such Party
or circumstance, the application of such provision to other Persons or
circumstances, and the application of the remainder of this Agreement will not
be affected thereby.  To the extent any provision of this Agreement is
enforceable in part but not in whole, such provision shall be enforced to the
maximum extent permitted by applicable Law.

Section 11.9Notices.

All notices and other communications required or permitted under this Agreement
(“Notices”) must be in writing.  A Notice will be deemed to have been duly given
(a) when delivered in person, (b) one (1) Business Day after being sent by a
reliable overnight courier service, such as Federal Express with next Business
Day delivery specified and signed for, or (c) upon electronically confirmed
receipt of e-mail Notices (provided that e-mail Notices that are

56

 

--------------------------------------------------------------------------------

 

not received before 5:00 p.m. Eastern time on a Business Day shall be deemed
effective on the next following Business Day).  Notwithstanding the foregoing or
Schedule 11.9, any Notice received by Seller prior to the Closing shall be
deemed to have been received by the Target Company prior to the Closing.  Any
Party may change their address for the purposes of this Section 11.9 by giving
notice as provided in this Agreement.  If any notice is properly addressed but
returned or refused for any reason, then such notice shall be deemed to be
effective notice and to be given on the date of attempted delivery.  Notices may
be given by counsel for each party and each such notice so given by counsel
shall have the same force and effect as if sent by such party.

Section 11.10Third Party Beneficiaries.

Except as set forth in Section 9 and Section 11.14, the provisions of this
Agreement are for the sole benefit of the Parties, and do not create any third
party beneficiary rights in any other Person.  In its sole discretion from time
to time (i) Purchaser may elect to enforce the rights under Section 9 of any one
or more Purchaser Indemnified Parties and (ii) Seller may elect to enforce the
rights under Section 9 of any one or more Seller Indemnified Parties.  Such sole
discretion includes the right to (a) discontinue any enforcement regardless of
the status of any Proceeding and/or (b) waive or release any rights
hereunder.  Except to the extent expressly provided in such release or waiver, a
waiving or releasing Party cannot thereafter exercise any corresponding rights
on behalf of any other Purchaser Indemnified Party or Seller Indemnified Party,
as applicable, with respect to the matters it waived or released.

Section 11.11Successors and Assigns.

This Agreement shall be binding upon, and shall inure to the benefit of, the
Parties and their respective Successors.  “Successors” means their
representatives, estates, heirs, devisees, legatees, distributees, successors
and, with respect to Purchaser, permitted assigns.

Section 11.12Rights and Remedies; No Special Damages.

Except to the extent provided in this Agreement, all rights and remedies of any
Party shall be independent and cumulative and may be exercised concurrently or
separately.  The exercise of any one right or remedy shall not constitute an
election of such right or remedy or preclude or waive the exercise of any other
right or remedy.  Anything in this Agreement to the contrary notwithstanding, no
Party shall be liable to any other Party in connection with this Agreement or
the Transactions for any indirect, consequential, special, incidental or
punitive damages; provided, that the foregoing exclusion shall not include
direct damages of any.  

Section 11.13Counterparts.

This Agreement may be executed in two or more counterparts.  Counterpart
signature pages may be delivered by fax and/or .pdf format.  Each counterpart
will be deemed an original.  All counterparts will constitute one and the same
instrument.

Section 11.14Exculpation For Liability.

57

 

--------------------------------------------------------------------------------

 

(a)Except as expressly set forth in any Transaction Document, no Associated
Person shall have any personal liability or other liability to any Party
relative to or in connection with any Transaction Document or the Transactions. 

(b)Notwithstanding any provisions of this Agreement to the contrary, from and
after the payment of the Deposit to Escrow Agent in accordance with Section 2.2,
the total liabilities and obligations of Purchaser arising in connection with or
out of this Agreement shall be limited to the collective investment assets of
the Fund pursuant to the Financial Investment Services and Capital Markets Act
of Korea (which, for the avoidance of doubt, will be deemed from and after
Closing to include the direct and indirect interests of Purchaser and the Fund
in the Property and their direct and indirect Equity Interests in the Target
Company Group Members).

Section 11.15Attorney’s Fees – Contract Period.

In the event that during the Contract Period or any time after this Agreement is
terminated litigation is commenced by either Party concerning the performance,
meaning or interpretation of any provision of this Agreement, the prevailing
Party in such litigation shall be awarded any and all reasonable costs and
expenses incurred by the prevailing Party in enforcing, defending or
establishing its rights hereunder, including, court costs and expert witnesses’
and attorneys’ fees.  In addition to the foregoing award of costs and fees, the
prevailing Party shall also be entitled to recover its court costs and expert
witnesses’ and attorneys’ fees incurred in any post judgment proceedings to
collect or enforce any judgment.  This provision is separate and several and
shall survive the merger of this Agreement into any judgment on this
Agreement.  For the avoidance of doubt, the Parties acknowledge that the
provisions of Section 9 cover disputes and associated costs, expenses and fees
during any period after the Closing.

Section 11.16Construction.

(a)Unless the context of this Agreement otherwise clearly requires,
(i) references to the plural include the singular, and references to the
singular include the plural, (ii) references to any gender include the other
genders, (iii) the words “include”, “includes” and “including” do not limit the
preceding terms or words and shall be deemed to be followed by the words
“without limitation”, (iv) the term “or” has the inclusive meaning represented
by the phrase “and/or”, (v) the terms “hereof”, “herein”, “hereunder”, “hereto”
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement,  (vi) the terms “day” and “days”
mean and refer to calendar day(s), and (vii) if the required date of any action
to be taken by a Party pursuant to this Agreement falls on a day, other than a
Business Day, such action shall be required to be taken on the first Business
Day following such date.

(b)Unless otherwise set forth herein, references in this Agreement to (i) any
document, instrument or agreement (including this Agreement) (A) includes and
incorporates all exhibits, schedules and other attachments thereto, (B) includes
all documents, instruments or agreements issued or executed in replacement
thereof and (C) means such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified or supplemented from time to time in
accordance with its terms and in effect at any given time, (ii) a particular

58

 

--------------------------------------------------------------------------------

 

Law means such Law as amended, modified, supplemented or succeeded, from time to
time and in effect at any given time, and (iii) a specific section of a Law
shall be deemed to refer also to the corresponding provision(s) of succeeding
Law.  All section and exhibit references herein are to sections and exhibits of
this Agreement, unless otherwise specified.  The headings contained in this
Agreement are included for purposes of convenience only, and do not affect the
meaning or interpretation of this Agreement. 

Section 11.17Jointly Prepared.

The Parties agree that for all purposes of this Agreement they shall be deemed
to have participated jointly in the negotiation and drafting of this
Agreement.  If any ambiguity or question of intent or interpretation arises,
then (a) this Agreement shall be construed as if drafted jointly by the Parties
and (b) no provision shall be construed more severely against any
Party.  Without limiting the generality of the preceding sentence, no
presumption or burden of proof shall arise or apply favoring or disfavoring any
Party by virtue of the authorship of any one or more provisions of this
Agreement.

[Signature Page Follows]

 

 

59

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned Parties have executed this Purchase and Sale
Agreement as of the Agreement Date written above.

SELLER:

BRANDYWINE OPERATING PARTNERSHIP, L.P.,  a Delaware limited partnership

 

By

Brandywine Realty Trust,
a Maryland real estate investment trust,
its general partner

By:
Name:
Title:

BDN INVESTMENT TRUST,
a Maryland real estate investment trust

By:
Name:
Title:

 

KIM TOPCO INC., a Delaware corporation

By:
Name:
Title:

 

 

Signature Page to Purchase and Sale Agreement

719028938

--------------------------------------------------------------------------------

 

EXHIBIT A

DEFINITIONS

“Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls such Person, and (b) each Person that controls, is
controlled by or is under common control with such Person or any Affiliate of
such Person.  For the purpose of this definition, “control” of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.

“Agreement” means this Purchase and Sale Agreement.

“Associated Person” means (i) any current or future direct or indirect
Equityholder of Seller or Purchaser, (ii) any current or future Affiliate of
Purchaser or Seller, other than any Target Company Group Member, and (iii) any
current or future advisor, trustee, director, officer, employee, beneficiary,
participant, representative or agent of any of the Persons referenced in the
immediately preceding clauses (i) and (ii); provided that, for purposes of
Section 6.1 and Section 10.3(b), no Person shall constitute an Associated Person
of Purchaser or Seller, as the case may be, unless Purchaser or Seller, as
applicable, controls such Person or such Person is subject to the direction or
authority of Purchaser or Seller or one of its Affiliates by virtue of an
employment or consultancy relationship.

“Bankruptcy Event” means, with respect to any Person, the occurrence of any of
the following events:  (i) the making by it of an assignment for the benefit of
its creditors, (ii) the filing by it of a voluntary petition in bankruptcy,
(iii) an adjudication that it is bankrupt or insolvent unless such adjudication
is stayed or dismissed within sixty (60) days, or the entry against it of an
order for relief in any bankruptcy or insolvency proceeding unless such order is
stayed or dismissed within ninety (90) days, (iv) the filing by it of a petition
or an answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, (v) the filing by it of an answer or other pleading admitting or
failing to contest the material allegations of the petition filed against it in
any proceeding of the nature described in the preceding clause (iv), (vi) its
seeking, consenting to or acquiescing in the appointment of a trustee, receiver
or liquidator of it or of all or any substantial part of its properties, or
(vii) ninety (90) days after the commencement of any proceeding against it
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, if the
proceeding has not been stayed or dismissed, or if within ninety (90) days after
the appointment without its consent or acquiescence of a trustee, receiver or
liquidator of it or of all or any substantial part of its properties, the
appointment is not vacated or stayed, or within ninety (90) days after the
expiration of any such stay, the appointment is not vacated.

“BDN Garage Owner” means Brandywine Cira Garage I LP, a Delaware limited
partnership and the owner of the Cira Garage.

“BDN Property Management Agreement” means a Property Management Agreement for
the Property to be entered into at Closing in accordance with Section 6.4.

Exhibit A – Page 1

719028938

--------------------------------------------------------------------------------

 

“Business Day” means any day other than a Saturday, Sunday or any day on which
banks are not open for business in the Commonwealth of Pennsylvania or the City
of New York.

“Cira Garage” means the multi-level parking structure located at 2930 Chestnut
Street, Philadelphia, Pennsylvania known as the “Garage at Cira Centre South”.

“Cira License Agreement” means the License Agreement attached hereto as Exhibit
M, to be executed and delivered by Seller and the Purchaser at Closing, pursuant
to which Seller grants to Purchaser the limited right and license to use the
name “Cira” and related names and marks solely in connection with the use and
operation of the Property from the Closing until the expiration or earlier
termination of the BDN Property Management Agreement.

“Closing Conditions” means the provisions of this Agreement set forth in Section
7 and Section 8.

“Code” means the Internal Revenue Code of 1986, as amended.

“Consent” means any consent, approval, authorization, qualification, waiver,
registration or notification which is required to be obtained from, filed with
or delivered to any Person in connection with the consummation of the
Transactions.

“Contracts” means all contracts, agreements and other binding arrangements of
any kind or nature.

“Contract Period” or “Closing Period” means the period commencing on the
Agreement Date and ending at the Closing or the earlier termination of this
Agreement.

“CTL Garage Loan” means the first mortgage financing incurred by the BDN Garage
Owner in the original principal amount of $46,800,000 to fund the construction,
leasing and ownership of the Cira Garage pursuant to that certain Loan Agreement
by and between the BDN Garage Owner, as borrower, and GSA-IRS Lease Trust (as
successor to GSA-IRS Funding Group, LLC), as lender, dated as of June 29, 2009.

“Damages” means any and all actual losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including any Proceeding
brought by any Governmental Entity or other Person), including Taxes, reasonable
attorneys’, experts’ and consultants’ fees and costs of investigation or
defense, but excluding in each case any indirect, consequential, special,
incidental and punitive damages; provided, that the foregoing exclusion shall
not include direct damages of any kind.  

“Embargoed Person” means any Person or government subject to trade restrictions
under U.S. Law, including, without limitation, the International Emergency
Economic Powers Act, 50 U.S.C. §1701 et seq., the Trading with the Enemy Act, 50
U.S.C. §1 et seq., and any Executive Orders or regulations promulgated
thereunder with the result that any investment in any Seller Group Member or
Purchaser, as the case may be, is prohibited by Law or any Seller Group Member
or Purchaser, as the case may be, is in violation of Law.

Exhibit A – Page 2

719028938

--------------------------------------------------------------------------------

 

“Encumbrance” means any mortgage, pledge, security interest, lien, limitation,
restriction, assessment, encroachment, right of way, easement, defect in title
or charge or other encumbrance of any kind, including, any conditional sale or
other title retention agreement, any lease in the nature thereof and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction, and including any lien or charge arising by statute or
other Laws that secures the payment of a debt (including any Tax or
Indebtedness) or the performance of an obligation.

“Environmental Laws” means all Laws (a) related to Releases or threatened
Releases of any Hazardous Materials in the indoor or outdoor environment, (b)
governing the use, generation, treatment, storage, disposal, transport, or
handling of Hazardous Materials or (c) related to pollution, the protection of
the environment, human health or natural resources.  Such Environmental Laws
shall include, but are not limited to, the Resource Conservation and Recovery
Act, and the Comprehensive Environmental Response, Compensation and Liability
Act, the Toxic Substances Control Act, the Occupational Safety and Health Act,
the Clean Water Act, the Clean Air Act, the Safe Drinking Water Act, and the
Emergency Planning and Community Right-to-Know Act, and their respective state,
local or foreign analogs.

“Environmental Reports” means, collectively, the Environmental Assessments and
any updates to the Environmental Assessments or additional environmental
assessments obtained by Purchaser in the course of performing due diligence on
the Property.

“Equityholder” means, with respect to any Person (other than an individual),
another Person that holds an Equity Interest in such Person.

“Equity Interest” means with respect to any Person (other than an individual),
any and all partnership interests, membership interests, shares, stock equity
interest and other equity securities (as such term is most broadly defined)
authorized, granted, issued or issuable by or in such Person, including, (a) any
option, warrants, rights, debt security or agreement exercisable for or
convertible into or otherwise transferrable for any of the foregoing and (b) any
profits interests in such Person.

“E-Room” means the shared access electronic data sites maintained by Eastdil
Secured for this transaction, which can be accessed at the following Uniform
Resource Locator (URL): [removed].

“Existing CTL Financing” means the first mortgage financing secured by the
Property and incurred by the Property Owner Subsidiary in the original principal
amount of $209,700,000 to fund the ownership, redevelopment and construction and
leasing of the Property pursuant to the Existing CTL Financing Loan Agreement.

“Existing CTL Financing Documents” means collectively the Existing CTL Loan
Agreement and other Contracts and documents that evidence, secure or otherwise
memorialize the Existing CTL Financing, including all instruments, security
documents and other ancillary documents related thereto.

“Existing CTL Financing Lender” means the lender party to the Existing CTL
Financing Documents.

Exhibit A – Page 3

719028938

--------------------------------------------------------------------------------

 

“Existing CTL Loan Agreement” means that certain Loan Agreement by and between
the Property Owner Subsidiary, as borrower, and GSA-IRS Lease Trust (as
successor to GSA IRS Funding Group, LLC), as lender, dated as of June 29, 2009,
as the same may have been modified through the Agreement Date.

“GAAP” means generally accepted United States accounting principles and
practices recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods so as to properly
reflect the financial position, the result of operations and operating cash flow
on a consolidated basis of the party, except that any accounting principle or
practice required to be changed by the Accounting Principles Board or Financial
Accounting Standards Board (or other board or committee) in order to continue as
generally accepted accounting principles or practice may be so changed.

“General Enforceability Exceptions” means applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar Laws
affecting creditors’ right and general principals of equity.

“Governmental Entity” means the United States of America, the state, the county,
and city where the Property is located, anybody entitled to exercise any
administrative, executive or regulatory power in relation thereto, any federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof, any governmental agency, authority, board,
bureau, commission, department or instrumentality, any court or administrative
tribunal, any non-governmental agency, tribunal or entity that is vested by a
governmental agency with applicable jurisdiction, any arbitration tribunal or
other non-governmental authority with applicable jurisdiction, and any other
domestic, international, foreign, national, multinational, territorial,
regional, state or local governmental authority, quasi-governmental authority,
instrumentality, court, commission, arbitrator or tribunal or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.

“GSA-IRS Parking Area Lease” means that certain Amended and Restated IRS Parking
Area Master Lease to be entered into by and between the BDN Garage Owner, as
Landlord, and Master Tenant, as Tenant,, pursuant to which the BDN Garage Owner
has leased to Master Tenant, for a lease term that is co-terminous with the
GSA-IRS Lease, a designated area of the Garage at Cira Centre South to
accommodate 1,200 parking spaces available exclusively for possession, use and
occupancy by the tenant under the GSA-IRS Lease.  The GSA-IRS Parking Area Lease
shall be substantially in the form of Exhibit N attached hereto or as otherwise
agreed by Seller and Purchaser, provided that neither Party will unreasonably
withhold, delay or condition its consent or approval of any modifications to
Exhibit N attached hereto which is reasonably requested by the other Party.

“GSA-IRS Rent Allocation Agreement” means the GSA Rent Allocation, Payment and
Collateral Agency Agreement, dated as of August 26, 2010, among the Property
Owner Subsidiary, BDN Garage Owner, the Master Tenant, GSA-IRS Lease Trust and
The Bank of New York Mellon.

Exhibit A – Page 4

719028938

--------------------------------------------------------------------------------

 

“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing or otherwise supporting in whole or
in part the payment of any Indebtedness or other obligation of any other
Person.  Without limiting the generality of the foregoing, a Guarantee includes
any obligation, direct or indirect, contingent or otherwise, of such Person
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (including any
arising by agreement to keep‑well, to purchase assets, goods, securities or
services or to take‑or‑pay) or (b) entered into for the purpose of assuring in
any other manner the obligee of such Indebtedness or other obligations of the
payment of such Indebtedness or other obligation or to protect such obligee
against loss in respect thereof (in whole or in part).  The term “Guarantee” and
similar terms used as verb has a correlative meaning.

“Hazardous Materials” means: (a) any liquid, gaseous or solid material,
substance or waste that (i) requires removal, remediation or reporting under any
Environmental Law, or is listed, classified or regulated as a “hazardous waste”
or “hazardous substance” (or any other similar term) pursuant to any
Environmental Law or (ii) is regulated under Environmental Laws as being toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous; and (b) any petroleum product or by-product,
petroleum-derived substances, asbestos, polychlorinated biphenyls, mold, fungi,
bacteria, toxic growth or urea formaldehyde.

“Indemnification Basket Amount” means $100,000.

“Indemnification Cap” means $12,500,000.00.

“Indebtedness” of any Person means:  (a) any liability of such Person (i) for
borrowed money (including the current portion thereof), (ii) under any
reimbursement obligation relating to a letter of credit, bankers’ acceptance or
similar facility, (iii) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation), (iv) for the payment of
money under any lease that is required to be classified as capitalized lease
obligations in accordance with GAAP, (v) for all or any part of the deferred
purchase price for assets, or services or the undertaking of contractual
prohibitions, (vi) for any bank overdraft, negative cash bank balance or similar
liability or (vii) under interest rate swap, hedging or similar agreements;
(b) any liability of others described in the preceding clause (a) that such
Person has Guaranteed, that is recourse to such Person or any of its assets or
that is otherwise its legal liability or that is secured in whole or in part by
the assets of such Person and (c) any amount owed by the Target Company to any
of its direct or indirect Equityholder.  Indebtedness includes accrued interest
and prepayment premiums or penalties.

“Interim Changes” means changes that have occurred between the Agreement Date
and the Closing the existence of which result in a failure of the satisfaction
of one or more of the Closing Conditions other than the Closing Conditions set
forth in Section 7.1 and Section 8.1.

“IRS” means the Internal Revenue Service.

Exhibit A – Page 5

719028938

--------------------------------------------------------------------------------

 

“Key Closing Deliverable” means the following: (i) the BDN Property Management
Agreement, (ii) the GSA-IRS Parking Area Lease, and (iii) the Amended and
Restated GSA-IRS Rent Allocation Agreement.

“Knowledge of Seller” (or words of similar import) means the current actual
knowledge of Thomas Wirth, Jean Sitler, Ron Pluto or Brad Molotsky.

“Knowledge of Purchaser” (or words of similar import) means the current actual
knowledge of Chris Lee or John Lee.

“Law” means any law, common law, statute (including those relating to zoning,
land use, handicap accessibility and similar laws and regulations), ordinance,
regulation, rule, directive, permit, license, certificate, judgment, order,
award, decree or other decision or requirement of any Governmental Entity.

“Made Available” means, with respect to any document, that a hard copy, digital
or electronic copy was delivered to Purchaser or any one or more of its
Associated Persons with material involvement in the Transactions.  Documents and
other information posted by Seller in the E-room (provided such documents and
other information remain in the E-room as of the Agreement Date) shall be deemed
to have been Made Available to Purchaser in accordance with this Agreement.

“MAE Threshold” means Five Million Dollars ($5,000,000.00).

“Material Property Event” means that: (a) a casualty shall have damaged or
destroyed the Property or portions thereof, or a condemnation or similar
proceeding shall have been instituted against the Property or portions thereof
(or a deed in lieu thereof shall have been delivered), for which the aggregate
estimated cost to repair or restore the Property or applicable portions thereof
(in the case of a casualty) or the aggregate estimated diminution in value of
the Property (in the case of a condemnation or similar proceeding), as
reasonably determined by the Parties, shall (i) equal or exceed $7,000,000
(whether or not insured) or $1,700,000 of uninsured costs, (ii) result in a
material impairment of the use and occupancy of the Property that: (x) continues
(or would reasonably be expected to continue) for a period of more than 90 days
and (y) permits (or would permit, as the case may be) the GSA-IRS to terminate
the GSA-IRS Lease pursuant to the terms thereof; or (iii) otherwise permit the
GSA-IRS to terminate the GSA-IRS Lease pursuant to the terms thereof; provided,
that if the Parties are unable to agree on the estimated cost to repair or
restore the Property or the diminution in value of the Property within three (3)
Business Days after the Parties are all notified of the applicable occurrence,
then, (1) the Seller Parties shall promptly select an independent, third-party
engineer (in the case of a casualty) or M.A.I. appraiser (in the case of a
condemnation or similar proceeding), which shall be reasonably acceptable to
Purchaser, (2) Seller and Purchaser shall instruct such engineer or appraiser to
use commercially reasonable efforts to deliver to the Parties an estimate of the
cost to repair or restore the Property or the diminution of value of the
Property, as applicable, as soon as practicable but not later than ten (10)
Business Days after the commencement of such engineer’s or appraiser’s
engagement, (3) the Parties shall rely upon such estimate for purposes of this
Agreement, and (4) Seller and Purchaser shall share equally in the cost and
expense of such engineer or appraiser; or (b) a casualty, condemnation or
similar proceeding or other event shall

Exhibit A – Page 6

719028938

--------------------------------------------------------------------------------

 

have occurred at the Cira Garage Property that will or is likely to result in a
breach by Master Tenant of its obligations to provide the number of parking
spaces required under the GSA-IRS Parking Area Lease for a period of ninety (90)
days or more.

“Monetary Liens” means (i) the liens and other Encumbrances set forth in Exhibit
Q attached hereto, and (ii) any and all Encumbrances created by Seller during
the Contract Period which evidence or secure payment of a definite and
ascertainable amount, including, without limitation, any and all other
mortgages, UCC-1 Financing Statements, liens and judgments filed in the public
records affecting the Land after the date hereof.

“Mutual Release” means the mutual release in the form attached hereto as
Exhibit L.  

“Organizational Documents” means, with respect to any Person (other than an
individual), its articles of incorporation, declaration of trust, bylaws,
partnership agreement, statement of partnership, certificate of limited
partnership, limited liability company agreement, limited liability company
operating agreement, articles of organization, limited liability certificate, or
other charter or governing or organizational documents, or any other instrument
setting forth the relative rights and obligations of the Equityholders of such
Person (including stockholders’ agreement, shareholder agreements and similar
agreements among Equityholders).

“Order” means any order, judgment, injunction, assessment, award, decree,
ruling, charge or writ of any Governmental Entity.

“Penn ROFO” means that certain Right of First Offer Agreement made as of July
19, 2007 by and between the Property Owner Subsidiary and UPenn, as amended by
the Penn ROFO Waiver and Modification.

“Penn ROFO Waiver and Modification” means that certain letter agreement dated
November 13, 2015 between the Property Owner Subsidiary and UPenn, a true,
correct and complete copy of which is attached hereto as Exhibit T, by which (i)
UPenn waived its right of first offer pursuant to the Penn ROFO and (ii) the
Property Owner Subsidiary and UPenn agreed to certain modifications to that
certain Right of First Offer Agreement made as of July 19, 2007 by and between
the Property Owner Subsidiary and UPenn.  

“Person” means an individual, a partnership (general or limited), a corporation,
a limited liability company, an association, a joint stock company, Governmental
Entity, a business or other trust, a joint venture, any other business entity or
an unincorporated organization.

“Pre-Closing Indebtedness” means all any Indebtedness of any Target Company
Group Member incurred or otherwise existing during the Pre-Closing Period.

“Pre-Closing Period” means any period (or portion thereof) ending as of the
close of business on or prior to the Closing Date.

“Pre-Closing Taxes” means (i) any Taxes of any Target Company Group Member for
any Pre-Closing Period, (ii) any Taxes of Seller or any of their Affiliates
(other than the Target Company Group Members) for any period (whether before or
after the Closing Date), including any Taxes for which the Target Company may be
liable under Section 1.1502-6 of the Treasury

Exhibit A – Page 7

719028938

--------------------------------------------------------------------------------

 

Regulations (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise, and (iii) Transfer Taxes for
which Seller is responsible pursuant to Section 2.5(b).  For purposes of this
Agreement, in the case of any Straddle Period, (i) property Taxes of any Target
Company Group Member allocable to the Pre-Closing Period shall be equal to the
amount of such property Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of days during the Straddle
Period that are in the Pre-Closing Period and the denominator of which is the
number of days in the entire Straddle Period, and (ii) Taxes (other than
property Taxes) of any Target Company Group Member for the Pre-Closing Period
shall be computed as if such taxable period ended as of the close of business on
the Closing Date.

“Proceeding” means any action, suit, proceeding, arbitration, written claim,
complaint, decree, lawsuit or any written notice of violation or investigation.

“Purchaser Closing Certificate” a certificate in the form attached hereto as
Exhibit J.

“Purchaser MAE” means any event, circumstance, fact, change, development,
condition, or effect that, either individually or in the aggregate, has had or
could reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Property, the Purchaser, the
Target Company Group, taken as a whole.  For purposes of this definition, a
“material adverse effect” means any loss, damage or liability equal to or in
excess of the MAE Threshold.

“Purchaser Parent” means Korea Investment Management Co., Ltd.

“Recorded Document” means any document that was identified in any Title Evidence
or was recorded against the Property at least thirty (30) days prior to the
Agreement Date.

“REIT” means a real estate investment trust under the Code.

“Release” means the intentional or unintentional spilling, emitting, leaking,
pumping, pouring, emptying, discharging, injecting, escaping, leaching, dumping
or disposing of any Hazardous Material into the indoor or outdoor environment.

“Seller Closing Certificate” a certificate in the form attached hereto as
Exhibit K.

“Seller Group” means, collectively, Seller, the Target Company and each Target
Company Subsidiary.

“Seller Group Member” means Seller and any Target Company Group Member.

“Seller MAE” means any event, circumstance, fact, change, development,
condition, or effect that, either individually or in the aggregate, has had or
could reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Property or Seller. For
purposes of this definition, a “material adverse effect” means any loss, damage
or liability equal to or in excess of the MAE Threshold.

 

Exhibit A – Page 8

719028938

--------------------------------------------------------------------------------

 

“Seller Parties” means Seller and the Target Company.

“Sodexo Management Agreement” means Management Agreement dated as of ____ 2008
between Property Owner Subsidiary and Sodexo Management, Inc., as heretofore
amended and/or restated, concerning the management and operation of the
cafeteria at the Property.

“Straddle Period” means any taxable period beginning on or prior to and ending
after the Closing Date.

“Subsidiary” means any Person (other than an individual) with respect to which
the Target Company (or any subsidiary thereof) has the power to vote or direct
the voting of sufficient securities or other interests to elect a majority of
the directors (or persons in similar positions, including trustees) thereof.

“Survey Evidence” means, with respect to the Property, any survey issued to the
Property Owner Subsidiary or the Master Tenant that was Made Available to
Purchaser.

“Target Company Group” means the Target Company and each of the Target Company
Subsidiaries.

“Target Company Group Member” means the Target Company and any Target Company
Subsidiary.

“Target Company Subsidiary” means each of the seven (7) Subsidiaries of the
Target Company identified on Exhibit B hereto.

“Tax” or Taxes” means all federal, state local or foreign taxes, charges, fees,
duties or other assessments of any kind, including, without limitation, all
income, gross receipts, net proceeds, ad valorem, value added, transfer, gains,
franchise, profits, inventory, net worth, capital stock, assets, sales, use,
license, estimated, withholding, payroll, premium, capital employment, social
security, workers compensation, unemployment, excise, severance, stamp,
occupation and real and personal property (tangible and intangible) taxes,
together with any interest and penalties, fines, additions to tax or additional
amounts,  (including with respect to information Tax Returns) imposed by any Tax
authority.

“Tax Return” means any return (including information returns), report,
declaration, statement, extension, form or other documents or information filed
with or submitted to, or required to be filed with or submitted to, any Tax
authority or any Person in connection with the determination, assessment,
collection or payment of any Tax.

“Title Company” means Fidelity National Title Insurance Company.

“Title Evidence” means, with respect to the Property, any title policy issued to
the Property Owner Subsidiary or the Master Tenant that was Made Available to
Purchaser.

“Transactions” means, collectively, closing on the purchase and sale of the
Purchased Shares in accordance with the terms of this Agreement and the
execution and delivery of the Transaction Documents.

Exhibit A – Page 9

719028938

--------------------------------------------------------------------------------

 

“Transaction Documents” means (i) this Agreement, (ii) the Seller Closing
Certificate, (iii) the Mutual Release, (iv) the Purchaser Closing Certificate,
(v) each FIRPTA Certificate, (vi) the BDN Property Management Agreement, (vii)
the Amended and Restated GSA-IRS Rent Allocation Agreement, and (viii) each
other agreement, instrument, certificate or other document required by this
Agreement to be executed and delivered by any Party, any Affiliate of any Party,
or the Target Company.

“Transfer Taxes” means all transfer, documentary, sales, use, stamp,
registration, value added and other similar Taxes and fees (including any
penalties and interest) imposed in connection with this Agreement and the
Transactions.

“Treasury Regulations” means the Income Tax Regulations, including any temporary
or proposed regulations, promulgated under the Code, as such Treasury
Regulations may be amended from time to time (it being understood that all
references herein to specific sections of the Treasury Regulations shall be
deemed also to refer to any corresponding provisions of succeeding  Treasury
Regulations).

“UPenn” means the Trustees of the University of Pennsylvania, a Pennsylvania
non-profit corporation.

 

 

Exhibit A – Page 10

719028938

--------------------------------------------------------------------------------

 

DEFINITION CROSS-REFERENCE TABLE

 

Acquisition Proposal

29

 

 

Parties

1

Agreement Date

1

 

 

Party

1

Amended and Restated GSA-IRS Rent Allocation Agreement

6

 

 

Permitted Encumbrances

10

 

 

Personal Property

2

Balance Sheets and Operating Statements

15

 

 

Plan

21

Closing

7

 

 

Pre-Closing Property Expense

 

Closing Date

7

 

 

Reconciliation

6

Commitment

9

 

 

Procedural Claim

40

Contracts

3

 

 

Property

2

Deposit

4

 

 

Property Expense Reconciliation

6

Disclosure Schedule

13

 

 

Property Expense Reimbursement Shortfall

6

Due Diligence Materials

11

 

 

Property Expense Reimbursement Surplus.

6

Environmental Assessments

19

 

 

Property Expenses

6

ERISA

21

 

 

Property Owner Subsidiary

1

Escrow Agent

4

 

 

Purchase Price

3

Escrow Agreement

4

 

 

Purchased Shares

1

Excluded Assets

3

 

 

Purchaser

1

Existing Owner’s Title Insurance Policy

20

 

 

Purchaser Indemnified Parties

34

Existing Survey

20

 

 

Purchaser Representative

12

FIRPTA Certificate

8

 

 

Purchaser’s Title Objection Notice

9

GSA

1

 

 

Reconciliation Period

6

GSA Statement of Lease

28

 

 

Relevant Target Company Group Contracts

18

GSA-IRS Lease

1

 

 

ROFO

11

Improvements

2

 

 

Second Deposit

4

Indemnified Parties

34

 

 

Seller

1

Indemnifying Party

36

 

 

Seller Indemnified Parties

34

Insurance Policy

19

 

 

Seller’s Cure Notice

9

Land

2

 

 

Successors

42

Master Lease

1

 

 

Survey

9

Master Tenant

1

 

 

Target Company

1

Materiality Qualification

31

 

 

Third Party Indemnifiable Claim

36

MPO Leases

2

 

 

Title Company

10

Name Change Filings

29

 

 

Title Insurance

36

New Title Objection

10

 

 

Title Objections

9

Notices

41

 

 

Title Policy

10

Outside Time

38

 

 

Updated Survey

9

 

 

 

 

 

Definition Cross-Reference Table

 

 

719028938

--------------------------------------------------------------------------------

 

 

PURCHASE AND SALE AGREEMENT

Schedule 11.19

Notice Addresses:

 

If to Seller or Target Company:

 

[ Brandywine Operating Partnership, L.P. /
  BDN Investment Trust ]

c/o Brandywine Realty Trust

555 E. Lancaster Avenue, Suite 100

Radnor, PA 19087

Attn: Gerard H. Sweeney, President and CEO

Email: [removed]

 

With copy to: [removed]

 

And a copy to:  

 

DLA Piper LLP (US)

203 North LaSalle Street, Suite 1900

Chicago, Illinois  60601-1293

Attn:  David Sickle

Email: [removed]

 

 

If to Purchaser:

 

KIM TopCo, Inc.

c/o Korea Investment Management Co., Ltd.

88, Uisadang daero

Yeongdeungpo gu

Seoul, 150 745

Republic of Korea

Attn: Suk Woo (Chris) Lee

Email: [removed]

 

With copy to:

 

Mayer Brown LLLP

1221 Avenue of the Americas

New York, New York 10020-1001

Attn: Kwon Lee

Email: [removed]

 

 

 

718490408.2

 

Definition Cross-Reference Table

 

 

EAST\118075717.14