Exhibit 10-2
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made this 26th day
of June, 1998, by and between ▇▇▇▇▇▇ REAL ESTATE DEVELOPMENT COMPANY
("SREDC"), a Pennsylvania General Partnership, and SZELES INVESTMENT COMPANY
("SIC"), a Pennsylvania General Partnership, both having an address of ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively "Seller") and
AMERICAN REAL ESTATE INVESTMENT, L.P., a Delaware Limited Partnership, having
an address of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ Meeting,
Pennsylvania ("Buyer").
W I T N E S S E T H
1. SALE OF PROPERTIES. Seller agrees to sell and Buyer agrees to
purchase, subject to the terms and conditions stated herein, the
following (collectively the "Properties"):
1.1 Real Property. Those tracts of land known as (a) Winchester
Plaza Corporate Center, Allentown, Township of South
Whitehall, Lehigh County, PA ("Winchester Plaza Corporate
Center"); (b) Treeview Corporate Center, Wyomissing, Spring
Township, Berks County PA ("Treeview Corporate Center");
(c) Executive Park, Wyomissing, Berks County, PA
("Executive Park"); (d) Hillside Corporate Center,
Mechanicsburg, Lower ▇▇▇▇▇ Township, Cumberland County PA
("Hillside Corporate Center"); and (e) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ("Corporate Center
15"), the individual descriptions of which are set forth on
Exhibit "A" , together with all buildings and improvements
located thereon, and all fixtures located thereon and owned
by Seller, and all rights, privileges and appurtenances
pertaining thereto including all of Seller's right, title
and interest in and to all rights-of-way, open or proposed
streets, alleys, easements, sidewalks and utility lines
(collectively the "Real Property" and individually a
"Building").
1.2 Personal Property. All tangible personal property owned by
Seller which is both situated on and used in connection
with the Real Property as set forth on Exhibit "A-l" (the
"Personal Property"); and
1.3 Permits and Approvals. To the extent they may be sold or
transferred, all of Seller's rights, title and interest in
and to all approvals, permits and licenses granted by the
municipal, state and federal governments or their
instrumentalities in conjunction with the construction and
operation of the
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Real Property (collectively the "Operating Approvals"). 1.4
Intangibles. All (i) tenant leases; (ii) rents and profits;
(iii) security and/or tenant deposits, including any
interest thereon; and (iv) (A) all of Seller's right, title
and interest in and to all licenses, franchises, permits
and contract rights relating to the operation of the
Properties, to the extent assignable; (B) the trade names
of the Real Property; (C) the service contracts for the
Properties; and (D) all guarantees and warranties listed on
Exhibit "Q" attached hereto (items (A), (B), (C) and (D)
are herein collectively, the "Intangible Property").
The purchase of the Properties at the Closing (as
hereinafter defined), the satisfaction or waiver of all
conditions set forth herein and the delivery of all
instruments and other documents required for Closing
hereunder are sometimes collectively herein referred to as
the "Transaction".
2. PURCHASE PRICE. The total purchase price to be paid by Buyer for
the purchase of the Properties is FORTY MILLION AND N0/100 DOLLARS
($40,000,000.00) cash in lawful money of the United States of
America ("Purchase Price") subject to an additional payment of up to
$1,500,000 in accordance with Section 2.4. The Purchase Price shall
be paid in the following manner:
2.1 ▇▇▇▇▇▇▇ Money. Upon the execution of this Agreement by
both Seller and Buyer, Buyer shall deposit FOUR HUNDRED
THOUSAND AND N0/100 DOLLARS ($400,000.00) in cash as
▇▇▇▇▇▇▇ money (the "▇▇▇▇▇▇▇ Money Deposit") with First
American Title Insurance Company having an address at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Escrow Agent" and the "Title Company"). The ▇▇▇▇▇▇▇
Money Deposit shall be invested by the Escrow Agent in one
or more interest-bearing accounts at the direction of
Buyer, and any interest earned thereon shall be considered
a part of the ▇▇▇▇▇▇▇ Money Deposit. Except as otherwise
set forth herein, the ▇▇▇▇▇▇▇ Money Deposit shall be
applied against the Purchase Price at Closing.
2.2 Cash at Closing. At the Closing, Buyer shall pay to Seller
in cash an amount equal to the Purchase Price (subject to
the adjustments and prorations set forth in Section 5.3
below or as otherwise provided under this Agreement) in
immediately available U.S. funds by wire transfer as more
particularly set forth in Section 5.2 of this Agreement.
2.3 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Buildings in the amounts set forth in
Exhibit "A-2".
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2.4 Purchase Price Supplement .
(a) In the event the principal tenant of Winchester Plaza
Corporate Center, Aetna Life Insurance Company ("Aetna")
timely exercises its option ("Renewal Option") to renew the
term of its Existing Lease dated June 1, 1987 ("Aetna
Existing Lease") for a term of 5 years (pursuant to the
renewal option set forth in Section __ of the Aetna
Existing Lease), Buyer shall pay to Seller, upon the
commencement of the renewal term under the Aetna Existing
Lease), the sum of $1,500,000 in immediately available U.S.
funds by wire transfer ("Purchase Price Supplement").
(b) If Aetna does not timely exercise the Renewal Option
and if Buyer and Aetna enter into a written agreement
("Aetna Lease Extension Agreement") pursuant to which,
inter alia, Aetna and Buyer agree that Aetna shall continue
in continuous possession of the demised premises it now
occupies in Winchester Plaza after the expiration date of
the current term of the Aetna Existing Lease, then Buyer
shall pay to Seller, on the date on which Aetna commences
to pay rent to Seller pursuant to the Aetna Lease Extension
Agreement, a supplement to the Purchase Price ("Alternate
Purchase Price Supplement").
(c) The Alternate Purchase Price Supplement shall be an
amount equal to (i) the product of $300,000 times the
lesser of (I) the number of years (full or fractional) in
the fixed term of the Aetna Lease Extension Agreement and
(II) five (5) less (ii) Seller's Share of Landlord
Expenses. For the purpose of the calculation of the
Alternate Purchase Price Supplement pursuant to the
provisions of this subparagraph (c), if the premises
demised to Aetna pursuant to the Aetna Lease Extension
Agreement contains an area which is greater than or lesser
than the premises demised to Aetna pursuant to the Aetna
Existing Lease, then the figure of "$300,000" shall be
adjusted to be the product of $300,000 multiplied by a
fraction, the numerator of which fraction is the number of
square feet demised to Aetna pursuant to the Aetna Lease
Extension
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Agreement, and the denominator of which is the number of
square feet leased to Aetna pursuant to the Aetna Existing
Lease. If the Aetna Lease Extension Agreement provides for
a fixed term of less than 5 years and grants to Aetna the
option to renew the term of the Aetna Lease Extension
Agreement and if Aetna exercises the renewal option, then
on the date on which Aetna commences to pay rent for the
option term, the Alternate Purchase Price Supplement shall
be recomputed as if the renewal term had been included in
the initial fixed term of the Aetna Lease Extension
Agreement and any additional Alternate Purchase Price
Supplements due by reason of such recomputation shall be
paid by Buyer to Seller.
(d) The term "Landlord Expenses" shall mean the aggregate
of all costs and expenses incurred by Buyer in connection
with the Aetna Lease Extension Agreement for: brokerage
fees and commissions; renovations and improvements to the
premises demised to Aetna; and sums and contributions paid
by Buyer to Aetna for leasehold improvements.
(e) The term "Seller's Share of Landlord Expenses" shall
mean 50% of the amount by which the Landlord Expenses
exceed an amount equal to the product of $1.00 times the
area of the premises demised to Aetna pursuant to the Aetna
Lease Extension Agreement, times the number of full and
fractional years in the fixed term of the Aetna Lease
Extension Agreement.
3. CONDITION OF TITLE.
3.1 Marketable Title. Title to the Real Property shall be (i)
good and marketable and free and clear of all liens,
restrictions, easements, claims or liens by contractors,
subcontractors, mechanics and materialmen, leases and
tenancies and other title objections except for (a) the
leases set forth on Exhibit "C" (the "Existing Leases"),(b)
the lien of real estate taxes for 1998 not yet due and
payable, and (c) such exceptions as are agreed to by Buyer
in writing (the "Permitted Exceptions"); and (ii) insurable
as aforesaid at
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ordinary rates by the Title Company pursuant to an ALTA
Owner's Policy of Title Insurance (Form B -1970).
3.2 Failure of Title. Prior to the expiration of the
Inspection Period, Buyer shall notify Seller as to the
existence and nature of any matters which Buyer asserts
constitute a failure of title as described in Section 3.1
of this Agreement. Any covenant, agreement, restriction,
easement or other matter of record as of the date of this
Agreement which is not the subject of a notice from Buyer
to Seller pursuant to the preceding sentence shall be a
Permitted Exception. If title to the Real Property cannot
be conveyed to Buyer at Closing in accordance with the
requirements of this Agreement, then Buyer shall have the
option of (i) taking such title as Seller can convey, the
unfulfilled condition shall be deemed waived and there
shall be no abatement of the Purchase Price, except that
Buyer may apply so much of the Purchase Price as is
necessary to the payment of monetary liens against the Real
Property in an ascertainable amount which Seller has not
otherwise paid or provided for; or (ii) terminating Buyer's
obligations under this Agreement, at which ▇▇▇▇ ▇▇▇▇▇▇
shall cause Escrow Agent to return the ▇▇▇▇▇▇▇ Money
Deposit to Buyer. In the event Buyer terminates its
obligations pursuant to subsection (ii) above, there shall
be no further liability or obligation on the part of either
of the parties hereto except for Seller's obligation to
cause the ▇▇▇▇▇▇▇ Money Deposit to be returned to Buyer
whereupon this Agreement shall become null and void.
3.3 Seller is aware of an existing cross-easement agreement, as
amended ("Cross-Easement"), which benefits and burdens
Corporate Center 15 and the real property adjoining it at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ("Shelley's Point") owned by Szeles
Building and Leasing Company. Notwithstanding Section 3.1
and so long as doing so does not cause a violation of any
land development ordinance or regulation at Corporate
Center 15, Seller shall have the right to modify the
provisions of the Cross-Easement prior to Closing so that
(i) the total number of existing parking spaces available
to Shelley's Point on the property of Corporate Center 15
shall be reduced from twenty-three (23) to fourteen (14) to
be chosen by Seller from among the existing parking spaces
under the Cross-Easement and (ii) such parking spaces shall
be dedicated to the exclusive use of Shelley's Point.
4. INSPECTION MATTERS.
4.1 Seller's Documents. To the extent Seller has not
previously done so, Seller shall, within five (5) days
following the execution of this Agreement by both parties,
make available to Buyer for inspection, true, correct and
complete copies in all material respects of the documents
relating to the
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operation and approvals of the Properties in Seller's
possession as set forth in Exhibit "E" (the "Seller's
Documents"). Buyer acknowledges that, as of the date of
Buyer's execution of this Agreement, Seller has complied
with the requirements of this Section 4.1 except for those
Seller's Documents set forth in Exhibit "E-1".
4.2 Inspection of the Properties.
4.2.1 Buyer, its representatives, agents, and consultants
shall have the right to conduct such engineering,
environmental and other studies and inspections of
the physical condition of the Properties as Buyer, in
its absolute discretion, deems necessary or
appropriate through July 7, 1998, or such earlier
date as selected by the Buyer (the "Inspection
Period"). Such studies and inspections shall be at
Buyer's sole cost and expense. Buyer's investigations
during the Inspection Period are subject to the
provisions of Section 4.2.3 hereof.
4.2.2 During the Inspection Period, Buyer, at its sole cost
and expense, shall have the right to inspect, at the
address of Seller, all of Seller's books and records
which pertain to the maintenance and operation of the
Properties for calendar years 1997 and 1998,
provided, however, Buyer shall not have access to
books and records of Seller which are of a
proprietary nature and which do not pertain in a
material way to the maintenance or operation of the
Properties.
4.2.3 In conducting its inspections and studies of the
Properties as authorized by this Agreement, Buyer
shall (i) not materially disturb or interfere with
the operation, management or use of the Properties by
Seller, Seller's agents, any tenant of the Properties
or by any of such tenant's customers, invitees or
guests and (ii) not materially damage or affect the
physical structure of the Properties. Buyer covenants
and agrees to return the Properties to the same
condition as existed prior to such inspections and
studies.
4.2.4 At any time at or prior to the expiration of the
Inspection Period, Buyer may terminate this Agreement
by giving written notice to Seller at or prior to the
expiration of the Inspection Period if Buyer
determines that one or more of the Buildings
comprising the Real Property is, in Buyer's sole
discretion, unsuitable for purchase by Buyer. Upon
such termination, Seller shall cause Escrow Agent to
return the ▇▇▇▇▇▇▇ Money Deposit to Buyer, and
thereafter Seller
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and Buyer shall have no further obligations or
liabilities one to the other hereunder.
4.3 Access to the Properties. Buyer or representatives of
Buyer shall have access to the Buildings prior to the
Closing (as hereinafter defined) during normal business
hours if Buyer delivers written notice to Seller at least
forty-eight(48) hours in advance of the time Buyer desires
access to the Buildings.
4.4 Operation and Maintenance Prior to Closing.
4.4.1 Through Closing, Seller shall: (i) operate the
Properties in the ordinary course of business and
shall maintain the Properties in the same manner as
they are currently being maintained; (ii) not change,
amend or modify any agreements, approvals or
contracts related to the Properties or any part
thereof or other rights, obligations or agreements
related to the use, ownership or operation of the
Properties or any part thereof without Buyer's prior
written approval; (iii) not mortgage, pledge,
hypothecate, transfer or dispose of all or any part
of the Properties or any interest therein; (iv) not
make any alterations or changes to the Properties, or
any part thereof other than ordinary and necessary
maintenance and repairs, without Buyer's written
approval; (v) not remove any Personal Property,
except as may be required for repair and replacement
in which event, all replacements shall be free and
clear of liens and shall be of quality at least equal
to the replaced items; (vi) maintain in effect all
policies of property, casualty and liability
insurance or similar policies of insurance, with no
less than the limits of coverage now carried with
respect to the Properties or required by any of
Seller's lenders; (vii) not enter into any new
service contracts not terminable without penalty upon
Closing, or modify any existing service contract,
without Buyer's written approval; and (viii) operate
the Properties in accordance with all applicable
federal, state and local laws, ordinances and
requirements.
4.4.2 Until Closing, Seller shall not enter into any new
leases or lease renewals, and shall not modify or
amend any Existing Leases, without Buyer's prior
written consent. In the event Seller does enter into
any new leases or lease renewals with the written
consent of Buyer, Buyer shall be responsible for the
payment of (i) the cost of tenant improvements
required thereunder, if any, and (ii) leasing
commissions.
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4.5 Hazardous Materials.
4.5.1 Except as has been disclosed by Seller to Buyer in
Exhibit "F", Seller represents the following: (i) to
the best of Seller's knowledge, at present there do
not exist, and at no time since Seller has acquired
the Property have there existed any Environmental
Defects (defined as a condition or conditions which
would require remediation under any federal or state
environmental law); (ii) Seller has no knowledge that
any Environmental Defects existed prior to its
purchase of the Property; (iii) there are no
aboveground or underground storage tanks located on
the Properties or any part thereof; (iv) Seller, its
agents and tenants have at all times during Seller's
ownership of the Properties disposed of all wastes,
hazardous or otherwise, generated by the use of the
Properties in accordance with applicable laws; (v)
Seller has not received any letter or other
communication, written or oral, from the Pennsylvania
Department of Environmental Protection, the United
States Environmental Protection Agency, or any other
local, state or federal regulatory agencies, relating
to the existence of Environmental Defects at the
Properties or any part thereof; (vi) to the best of
Seller's knowledge, the Properties are in compliance
with all environmental laws, rules, regulations and
ordinances; (vii) to the best of Seller's knowledge,
there are no Hazardous Substances or Hazardous Waste
on, under or about the Properties or any part
thereof; (viii) to the best of Seller's knowledge, no
Hazardous Substances or Hazardous Waste have ever
been used, disposed, transported, manufactured,
refined, handled, treated, stored, or generated at
the Properties or any part thereof by Seller, its
agents or tenants; and (ix) to the best of Seller's
knowledge, there have never been nor are there
presently any storage vessels, surface impoundments,
landfills or other types of storage facilities
containing Hazardous Substances or Hazardous Waste on
the Property. For purposes hereof, Hazardous
Substances or Hazardous Waste are defined as any
pollutant, contaminant, chemical or industrial or
toxic substance, or waste, petroleum products,
asbestos, urea formaldehyde, radon, polychlorinated
biphenyls, flammable explosives, nuclear radioactive
fuel or waste, or any other substance, waste,
material, substance, pollutant or contaminant that
may cause damage to human health or the environment,
safety or real property and/or any substance for
which the generation, manufacture, storage,
treatment, or release is prohibited or regulated
under any environmental law.
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4.5.2 In the event that prior acts or omissions of the
Seller have caused Environmental Defects at the
Properties or any part thereof, the Seller shall
indemnify and hold the Buyer harmless against any and
all suits and claims, whether governmental or
private, arising therefrom under any theory of law;
provided, however, that Buyer shall give Seller
written notice within thirty (30) days of Buyer's
receipt of notice of such suit or claim. This
indemnification shall include the Buyer's reasonable
attorneys' fees, payable as incurred in defending
such suits and claims. This provision shall survive
the Closing and shall be enforceable at any time.
5. CLOSING. Buyer and Seller hereby agree that the Transaction shall be
consummated ("Closing") as follows:
5.1 Closing Date. The Transaction shall close on July 31, 1998
("Closing Date") in the offices of the Wolf, Bock, ▇▇▇▇▇▇
and ▇▇▇▇▇-▇▇▇▇▇ LLP, Twelfth Floor Packard Building, ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with title
transfer and payment of the Purchase Price to be completed
on the Closing Date as set forth in Section 5.2 hereof.
5.2 Title Transfer and Payment of Purchase Price. Seller shall
convey title to the Real Property to Buyer by special
warranty deeds upon confirmation of receipt of the Purchase
Price by the Title Company. Effective upon the delivery of
such deeds, possession shall pass from Seller to Buyer.
Buyer agrees that at the conclusion of the Closing, the
Title Company shall wire all funds due Seller to Seller in
accordance with Seller's wiring instructions.
5.3 Adjustments and Prorations. The following adjustments and
prorations shall be made at Closing:
5.3.1 Lease Rentals and Security Deposits. Seller shall be
entitled to all rents (including any accrued tax and
operating expense escalations, to the extent
applicable), charges and other revenue of any kind
attributable to any period under the Existing Leases
up to (but not including) the Closing Date. Buyer
shall be entitled to all rents (including any accrued
tax and operating expense escalations, to the extent
applicable), charges and other revenue of any kind
attributable to any period under the Existing Leases
from (and including) the Closing Date. Rents and
expense escalations or other reimbursements due
landlord under the Existing Leases
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collected prior to the Closing Date and attributable
to both Seller's and Buyer's period of ownership
shall be prorated as of the Closing Date. Uncollected
rents and expense escalations or other reimbursements
due landlord under the Existing Leases shall not be
prorated at the time of Closing, but Buyer shall
collect the same on Seller's behalf and tender the
same to Seller upon receipt. Notwithstanding the
foregoing, if the Closing Date occurs after the tenth
day of a calendar month and if as of the Closing Date
any of the tenants has not paid the monthly
installment of minimum rent ("Delinquent
Installment") due under its Existing Lease with
respect to the month in which Closing occurs, then at
Closing Buyer shall receive a credit against the
Purchase Price in an amount equal to the portion of
the Delinquent Installment applicable to the period
of time from and after the Closing Date and through
the balance of the applicable month; and upon Buyer's
receipt of the Delinquent Installment from the
Tenant, Buyer shall pay the full amount thereof to
Seller and Buyer shall use its best efforts to
collect the Delinquent Installment from the Tenant.
All base rents, all additional rents, operating
expense escalations and other amounts due landlord
under the Existing Leases collected by Buyer after
the Closing Date shall be retained by Buyer and
applied first on account of sums then currently due
and payable, and the balance shall be divided between
Seller and Buyer on a prorated basis reflecting the
respective periods of ownership of the Properties by
Seller and Buyer. Notwithstanding the foregoing,
operating expense escalations collected by Buyer
after the Closing Date which are applicable to
operating expenses incurred by Seller prior to the
Closing Date, shall be applied by Buyer on account of
such operating expenses and reimbursed to Seller upon
receipt by Buyer. In the event any Existing Lease has
been terminated, or the tenant thereunder has vacated
and abandoned the demised premises and sums remain
payable to Seller under the Existing Lease for
periods up to and including the Closing Date, Seller
shall have the right to pursue such tenant for any
sums due Seller by all lawful means. Seller shall
transfer to Buyer at Closing all tenant security
deposits and all interest accrued thereon and all
pre-paid rentals held by Seller under the Existing
Leases.
5.3.2 Real Estate Taxes. Real Estate Taxes shall be
prorated as of the Closing Date in accordance with
the fiscal year of the taxing authority. Seller
shall pay all real estate taxes attributable to the
Properties to (but not including) the Closing Date.
If the real estate tax rate and assessments have not
been set for the year in which the
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Closing occurs, then the proration of such taxes
shall be based upon the rate and assessments for the
preceding tax year, and such proration shall be
adjusted in cash between Seller and Buyer upon
presentation of written evidence that the actual
taxes paid for the year in which the Closing occurs
differ from the amounts used at Closing and in
accordance with the provisions of Section 5.3.9
hereof.
5.3.3 Operating Expenses of Properties. The charge for
municipal utility services for the Properties shall
be prorated as of the Closing Date. Seller shall pay
all sewer, water and other utility charges and other
operating expenses attributable to the Properties to,
but not including the Closing Date, and Buyer shall
pay all utility charges and other operating expenses
attributable to the Properties from and after the
Closing Date. Seller shall obtain readings of the
water, electric, gas and other utility meters
servicing the Property (other than meters which
exclusively measure utility consumption which is to
be paid in full by any of the tenants under Existing
Leases) to a date no more than five (5) days prior to
the Closing Date. At or prior to Closing, Seller
shall pay all charges based upon such meter readings,
adjusted to include a reasonable estimate of the
additional charges due for the period from the dates
of the respective readings until the Closing Date. If
Seller is unable to obtain readings of any meters
prior to the Closing Date, Closing shall be completed
without such readings and upon the obtaining thereof,
Seller shall pay the charges incurred prior to the
Closing Date as reasonably determined by Buyer based
upon such readings. Seller shall not assign to Buyer
any deposits which Seller has with any of the utility
services or companies servicing the Properties. Buyer
shall arrange with such services and companies to
have accounts opened in Buyer's name beginning at
12:01 a.m. on the Closing Date. The term "operating
expenses" shall only include charges for utility
services that are lienable against the Real Property,
payments due under the service contracts, and
property owners' association dues.
5.3.4 Assessments. Seller shall be responsible to pay for
all assessments levied against the Real Property
prior to the completion of Closing, by reason of work
or improvements physically commenced on the ground or
completed prior thereto.
5.3.5. Escrow Agent Fee. The Buyer shall pay any fee charged
by the Escrow Agent.
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5.3.6 Excise, Transfer, and Sales Taxes. Seller and Buyer
shall equally share all realty transfer taxes. Buyer
shall pay all recording fees imposed with respect to
the Transaction.
5.3.7 Closing Costs. Seller shall pay all charges and fees
specified herein to be paid by Seller plus attorney's
fees incurred by Seller in connection with the
Closing. Buyer shall pay all charges and fees
specified herein to be paid by Buyer plus attorney's
fees incurred by Buyer in connection with the
Closing, the title insurance premium, including all
charges for special endorsements or exclusions from
the title policy issued to Buyer (other than those
monetary encumbrances which Seller is required to
satisfy prior to closing pursuant to Section 3
hereof), and (except as provided in Section 5.3.6)
any fees or charges incurred as a result of recording
any documents pertaining to the Transaction. All
other fees or charges shall be paid in accordance
with local custom.
5.3.8 Risk of Loss. Risk of loss prior to the Closing Date
shall be borne by Seller.
5.3.9 Delayed Adjustment. If at any time following the
Closing Date the amount of an item listed in any
subparagraph of Section 5.3 hereof shall prove to
be incorrect, the party in whose favor the error
was made shall promptly pay to the other party the
sum necessary to correct such error upon receipt of
proof of such error, provided that such proof is
delivered to the party from whom payment is
requested on or before one (1) year after Closing.
5.3.10 Closing Date Adjustment. The provision set forth
above that Buyer is entitled to rent apportionments
from and after the Closing Date and that Buyer is
obligated to pay real estate taxes from and after
the Closing Date is conditioned upon Seller's
receipt of the Purchase Price by 3:00 p.m. on the
Closing Date. If the Purchase Price is not received
by Seller by the time specified in the preceding
sentence, then the apportionments set forth above
shall be made so that Seller shall be entitled to
rents for the Closing Date and Seller shall be
obligated to pay real estate taxes for the Closing
Date.
5.4 Sale Commissions.
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5.4.1 Fee. Seller shall have the sole obligation to pay to
▇▇▇▇▇ ▇▇▇▇ & Company, Inc. ("Agent") all fees,
commissions and other charges of Agent ("Fee"), as
payment in full for services rendered in connection
with the Transaction in accordance with the agreement
entered into between Seller and Agent.
5.4.2 Reciprocal Indemnities. Seller agrees to indemnify
Buyer and hold Buyer harmless from any loss,
liability, damage, cost or expense (including,
without limitation, court costs and reasonable
attorney's fees) paid or incurred by Buyer by
reason of any claim to (i) any broker's, finder's,
or other fee in connection with the Transaction by
any party claiming by, through or under Seller,
and (ii) any commission in connection with the
Existing Leases except as provided for in Section
6.1 hereof. Buyer agrees to indemnify Seller and
hold Seller harmless from any loss, liability,
damage, cost or expense (including, without
limitation, court costs and reasonable attorney's
fees) paid or incurred by Seller by reason of any
claim to any broker's, finder's, or other fee in
connection with the Transaction by any party
(other than Agent) claiming by, through or under
Buyer.
5.5 Closing Documents. At the Closing, Seller shall deliver or
cause to be delivered to Buyer the following documents for
each of Winchester Plaza Corporate Center, Treeview
Corporate Center, Executive Park, Hillside Corporate Center
and Corporate Center 15, as required:
5.5.1 Special Warranty Deeds. Special warranty deeds
conveying to Buyer all of Seller's right, title
and interest in and to the Real Property together
with an affidavit of title substantially in the
form of Exhibit "G" attached hereto. If Buyer
shall obtain current as-built surveys for any of
the Buildings, and if such surveys, inter alia,
are certified to Seller, the deed(s) for such
Building(s) shall describe the Real Property in
accordance with such survey(s).
5.5.2 ▇▇▇▇ of Sale. A ▇▇▇▇ of sale in the form attached
hereto as Exhibit "I" conveying all of the Seller's
right, title and interest in and to the Personal
Property (the "▇▇▇▇ of Sale").
5.5.3 Assignment of Permits, Approvals and Licenses. An
assignment by Seller of all Operating Approvals in
the form attached hereto as Exhibit "I-1" (the
"Assignment of Operating Approvals") with physical
delivery of all Operating Approvals within Seller's
possession.
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5.5.4 Assignment of Leases, Service Contracts, and Other
Items. An assignment by Seller of the Existing
Leases, Service Contracts, and other items in the
form attached hereto as Exhibit "J" (the "Assignment
of Leases, Service Contracts, and Other Items").
5.5.5 Non-Foreign Status Affidavit. Non- foreign status
affidavits in the forms attached hereto as Exhibit
"K".
5.5.6 Notice to Tenants. Letters to each tenant under the
Existing Leases in the form attached hereto as
Exhibit "L".
5.5.7 Closing Certificate. A Seller's Closing Certificate
in the form attached hereto as Exhibit "M", with only
such exceptions as shall be satisfactory to Buyer.
5.5.8 Omitted intentionally.
5.5.9 Current Rent Roll. Rent Roll attached hereto as
Exhibit "B-1", updated as of no more than two (2)
days prior to the Closing Date and including, without
limitation, a schedule of all unpaid rents.
5.5.10 Tax Bills. Real estate tax bills for the Buildings
for 1998 as issued.
5.5.11 Certificates of Occupancy. The existing Certificates
of Occupancy, and all other governmental permits,
certificates and approvals for the Real Property.
5.5.12 Title Company Indemnities. Such resolutions
and certificates as the Title Company shall require
to evidence the due authorization of the execution
and performance of this Agreement and the documents
to be delivered pursuant hereto; and all customary
affidavits required by the Title Company to permit it
to issue to Buyer the Owner's Policy of Title
Insurance required pursuant to Section 3.1.
5.5.13 Calculation Information. For a period of one year
after the Closing Date, Seller will provide to
Buyer any information in Seller's possession
necessary or required to permit Buyer to calculate
and collect after Closing all payments of
additional rent and other charges due under the
Existing Leases. For a period of one year after
Closing, Buyer shall provide to Seller all
information necessary or required to permit Seller
to determine if Buyer has
14
paid to Seller sums due and payable by Buyer to
Seller pursuant to the provisions of Sections 5.3.1
and 5.3.3 above.
The foregoing documents shall be duly executed and
acknowledged by Seller (as applicable) at the time of
Closing.
5.6 Other Deliveries. At the Closing, the following shall occur:
5.6.1 Keys and Original Documents. Seller shall deliver
at Closing to such persons as Buyer shall specify
keys to all locks for the Buildings (in Seller's
possession) and original copies of Existing
Leases, warranties, guarantees, commission
agreements and service contracts (unless
terminated as set forth herein).
5.6.2 Evidence of Authority. Seller and Buyer shall
deliver to the Title Company and each other such
documents and certificates as may be required by
the Title Company or as may be reasonably required
by the other party to evidence the capacity of the
parties hereto and the authority of the persons
executing any documents on behalf of the parties
hereto.
5.6.3 Buyer's Closing Certificate. Buyer shall deliver
to Seller at Closing a Buyer's Certificate in the
form attached hereto as Exhibit "N".
5.6.4 Other Documents. Such other documents or
deliveries as may be reasonably required by the
Title Company or as may be agreed upon by Seller
and Buyer to consummate the Transaction.
5.7 Other Conditions to Closing. Buyer's obligation to
purchase the Properties is expressly conditioned upon the
following being satisfied as of the Closing Date (or at
such earlier date as set forth herein), unless waived in
writing by Buyer, and absent satisfaction of the same Buyer
shall have the right to terminate this Agreement as
provided in Section 9.1 hereof:
5.7.1 Seller shall have delivered the documents set
forth in Section 5.5 hereof, fully executed by
Seller and made the other deliveries set forth in
Section 5.6 hereof.
5.7.2 There shall have been no material adverse change
with respect to any Existing Lease or with respect
to the physical condition of the Properties or any
part thereof, except as has been approved by Buyer
in writing, and no tenant except for ▇▇▇▇▇ ▇▇▇▇▇▇,
M.D.,
15
shall (i) have filed for bankruptcy, (ii)
indicated an intention to file for bankruptcy or
(iii) be in monetary default under its Existing
Lease after notice and grace periods, if required
by the applicable Existing Lease, and Seller shall
have confirmed the foregoing in the Closing
Certificate set forth as Exhibit "M" hereto.
5.7.3 All of the representations and warranties by
Seller set forth in this Agreement shall be true
and correct in all material respects.
5.7.4 Seller shall have performed all of its covenants
and agreements set forth in this Agreement which
are required to be performed by Seller prior to or
as of the Closing Date.
5.7.5 Buyer shall have obtained from each of the tenants
under the Existing Leases an estoppel letter
pursuant to Section 7.1 below and an SNDA pursuant
to Section 7.2 below.
6. LEASE EXPENSES.
6.1 Leasing Commissions. Seller shall indemnify and hold Buyer
harmless from any claims for leasing commissions due and
payable with respect to the current terms of the Existing
Leases through the date of Closing subject, however, to the
Buyer's obligation for payment of leasing commissions as
set forth in Section 4.4.2 of this Agreement. Seller
represents and warrants to Buyer that the only leasing
commissions payable on account of any renewals, extensions,
modifications or re-leasings of the Existing Leases are
those listed on Exhibit R hereto. In reliance on the
foregoing representation and warranty by Seller, Buyer
shall indemnify and hold Seller harmless from any claims
for leasing commissions payable on account of (i) any
renewals, extensions, modifications or re-leasings of the
Existing Leases and (ii) Buyer's obligation for payment of
leasing commissions under Section 4.4.2 of this Agreement.
7. ESTOPPEL LETTERS AND SNDAs.
7.1 Buyer shall deliver for execution by each of the tenants
under the Existing Leases tenant estoppel letters (dated no
earlier than thirty (30) days before the Closing Date) in
the form attached hereto as Exhibit "O" with such
modifications as shall be designated by Buyer to reflect
the terms of the Existing Leases, or in such other form
that is reasonably acceptable to Buyer from each tenant
under the Existing Leases.
16
7.2 Buyer shall deliver for execution by each of the
tenants under the Existing Leases a Subordination,
Non-Disturbance and Attornment agreement in the
form required by Buyer's lender ("SNDA"); and
Buyer shall use diligent efforts to obtain an
executed SNDA from each of the tenants under the
Existing Leases. Buyer shall deliver to Seller a
copy of each of the executed SNDAs delivered to
Buyer promptly after receiving each such SNDA.
8. REPRESENTATIONS AND WARRANTIES.
8.1 Buyer. Buyer represents and warrants to Seller the
following:
8.1.1 Buyer has full power and authority to enter
into this Agreement and to assume and
perform all of Buyer's obligations under
this Agreement.
8.1.2 The person executing this Agreement on
behalf of Buyer has been duly authorized and
is empowered to bind Buyer to this
Agreement.
8.2 Seller. Seller represents and warrants to Buyer, the
following:
8.2.1 To the best of Seller's knowledge, there is
no present plan, study or effort by any
governmental authority or agency or any
private party or entity which in any way
affects or would affect the continued
authorization of the current use and
operation of the Properties or any part
thereof.
8.2.2 Except as disclosed herein, there is no
pending or threatened litigation involving
Seller which does or would materially affect
the ownership, use, maintenance or operation
of the Properties or any part thereof or
Seller's ability to fulfill all of its
obligations under this Agreement.
8.2.3 Except as disclosed in Exhibit "P" attached
hereto, and to the best of Seller's
knowledge, the current use and occupancy of
the Properties does not violate any
applicable zoning or land use laws. Seller
has not received any written notice of a
claim of non-compliance with respect to the
Properties or any part thereof as to any
laws, ordinances, rules and regulations,
including, but not limited to, those
relating to environmental, zoning, land use
and subdivision, building, fire, health and
safety matters of any governmental or any
agency, body or subdivision thereof relating
17
to the operation, ownership or use of the
Properties or any part thereof. Certificates
of occupancy and, to the best of Seller's
knowledge, any and all other permits or
licenses required by applicable government
or quasi-government agencies for occupancy
and use of all of the Properties have been
obtained and are in effect and good
standing.
8.2.4 Seller is the sole owner and holder of the
landlord's interest under the Existing
Leases and Seller has not assigned, pledged
or granted any security interest with
respect to any of the Existing Leases, the
rents payable thereunder or any security
deposit given in connection with any
Existing Lease except for assignments,
pledges or security interests which will be
terminated or released at Closing.
8.2.5 Except for the Existing Leases, Seller has
not entered into any, and there are no
other, presently effective leases relating
to any portion of the Properties, and no
person, other than the tenants under the
Existing Leases, has any right of possession
to the Properties or any part thereof.
Except as set forth in the Rent Roll, no
rent concessions to tenants are currently in
effect, no rent has been paid more than
thirty (30) days in advance by any tenant,
no rent due and owing under the Existing
Leases is unpaid and no tenant has any claim
against Seller for any security deposit or
other deposits. To the extent any Existing
Lease grants any tenant a right or option to
purchase all or any portion of the
Properties, Seller shall obtain from such
tenant, prior to Closing, a written release
and termination of such right or option in
form acceptable to Buyer and to the Title
Company (to induce the Title Company to
remove such option to purchase as an
exception to title). To the extent any
Existing Lease grants any tenant a right of
first offer, right of first refusal or
similar right to purchase all or any portion
of the Properties, Seller shall obtain from
such tenant, prior to Closing, a waiver and
release of such right or option with respect
to the conveyance of the Properties by
Seller pursuant to this Agreement (to induce
the Title Company affirmatively to insure
Buyer that such tenant's right of first
offer, right of first refusal or similar
right is not applicable to the conveyance of
the Properties by Seller pursuant to this
Agreement) and a written agreement by such
tenant that its right of first offer, right
of first refusal or similar right does not
apply in the event of a foreclosure of the
Properties or the delivery of a Deed in lieu
of foreclosure. Each of the Existing Leases
has been executed, is in full force and
effect and
18
no notice has been given by or to Seller of
a default existing on the part of Seller or
any tenant thereunder except as set forth in
the Rent Roll. All construction, painting,
repairs, alterations, improvements and other
work required to be performed by the
landlord under the Existing Leases, and all
of the other obligations of the landlord
required to be performed under the Existing
Leases as of the Closing Date, have been
fully performed and paid for in full by
Seller.
8.2.6 The execution, delivery and performance of
this Agreement by Seller (i) does not and
will not conflict with or result in a breach
of or default under the organizational
documents of Seller, (ii) does not and will
not conflict with or result in a breach of
any condition or provision of, or constitute
a default under, or result in the
acceleration, creation or imposition of any
lien, charge or encumbrance upon the
Properties or any part thereof by reason of
the terms of any contract, mortgage, lien ,
agreement, indenture, instrument, decree or
judgment to which the Seller is a party or
which is or purports to be binding upon
Seller or which affects or purports to
affect the Properties or any part thereof,
and (iii) to the best of Seller's knowledge,
does not and will not breach any statute or
regulation of any governmental authority,
including, but not limited to, applicable
zoning laws and regulations, or any judicial
or administrative order relating to the
Properties or any part thereof or to Seller.
8.2.7 Seller is a duly formed and validly existing
general partnership under the laws of the
Commonwealth of Pennsylvania and has the
full right and authority to enter into this
Agreement and consummate the sale, transfers
and assignments contemplated for it herein,
and each of the persons signing this
Agreement and any other document or
instrument contemplated hereby on behalf of
Seller is or will be authorized to do so.
This Agreement has been duly authorized,
executed and delivered by Seller, and is a
legal, valid and binding obligation of
Seller enforceable in accordance with its
terms. All the documents executed by Seller
which are to be delivered to Buyer at the
Closing will be duly authorized, executed
and delivered by Seller and will be legal,
valid and binding obligations of Seller,
enforceable against Seller in accordance
with their respective terms.
8.2.8 Except as set forth on Exhibit "D", there
are no contracts or other agreements for
services, supplies or materials affecting
the use, operation or management of the
Properties or any part thereof. All of the
contracts and other agreements set forth on
Exhibit "D" are
19
in full force and effect and Seller has
neither given nor received a notice of
default thereunder.
8.2.9 All information set forth in the Exhibits
hereto and in the Seller's Documents
furnished to Buyer with respect to the
Properties is true, correct and complete in
all material respects.
8.2.10 Exhibit "Q" attached hereto accurately sets
forth all guarantees and warranties in
existence as to any features of the
Properties. Seller has received no notice
that such guarantees and warranties are not
in full force and effect or that Seller is
in violation of the terms of any of them.
8.2.11 Except for assignments or pledges that will
be terminated or released as of the Closing
Date, Seller has not previously sold,
assigned or pledged the Properties or any
part thereof to any other person, party or
entity. Seller holds good and marketable
title to the Real Property, is the sole
owner of the Personal Property, and legally
and validly holds the Operating Approvals.
Except for security interests that will be
terminated or released as of the Closing
Date, no person, party or entity holds a
security interest in the Personal Property.
8.2.12 Seller does not have and has no knowledge of
any, and Seller is not a party to any,
understanding or agreement with any taxing
or assessing authority respecting the
imposition or deferment of any taxes or
assessments respecting the Properties or any
part thereof. Seller is aware of general
plans for the construction of a new access
ramp to the Pennsylvania Turnpike which will
serve the development in which Hillside
Corporate Center and Corporate Center 15 are
located and for which an assessment is to be
made against all owners of property in the
development. Except for the foregoing and
the property owners' association assessments
as set forth in Exhibit "H", there are no
improvement district or other assessments,
special or otherwise, burdening the
Properties or any part thereof, whether or
not a lien thereon, nor has Seller received
notice of the establishment of any such
district or assessment. Seller has received
no notice and has no knowledge of any
proposed increase in the assessed valuation
of the Properties or any part thereof.
8.2.13 To the best of Seller's knowledge, there is
no existing condemnation action with respect
to the Properties or any part
20
thereof or any proposed or threatened
eminent domain or similar proceeding, or
private purchase in lieu of such proceeding,
which would affect the Properties or any
part thereof in any way whatsoever.
8.2.14 Consistent with its current use, the Real
Property is served by all necessary public
and/or private utilities, sewer and water
lines and all necessary easements and
agreements are in full force and effect.
Seller has received no notice or claim
contesting the validity of these easements.
8.2.15 All security deposits are fully funded as to
the principal amount and any interest due on
such deposits as provided for in accordance
with Pennsylvania law. 8.2.16 Insurance
policies covering the Properties to full
replacement value thereof are in force and
effect.
8.2.17 Except for one person employed by Seller at
Winchester Plaza Corporate Center, there are
no employees of Seller employed at the
Properties or any part thereof. Said person
is an "at-will" employee and there is no
employment agreement between Seller and said
employee.
8.2.18 To the best of Seller's knowledge, Seller is
not in default with respect to any liability
or obligations pertaining to the Properties.
8.2.19 To the best of Seller's knowledge, no
portion of the Property is located within an
area designated as a flood hazard area or an
area which will require the purchase of
flood insurance for the obtaining of any
federally insured or federally related loan.
9. DEFAULT AND REMEDIES.
9.1 Buyer. If Seller, in default of its obligations
under this Agreement fails to complete Closing or
otherwise defaults under or breaches this
Agreement, Buyer shall have the right to be paid
the ▇▇▇▇▇▇▇ Money Deposit. If Seller's default or
breach was not within Seller's control and was not
willful and intentional, then Buyer shall have no
further right against Seller except the right to
be reimbursed for Buyer's costs and expenses
incurred in connection with this Agreement, which
costs and expenses shall not exceed $50,000.
Otherwise, the right of Buyer to paid the ▇▇▇▇▇▇▇
Money Deposit shall be in addition to all other
rights and remedies
21
of Buyer under this Agreement, at law or in equity,
including, without limitation, the right to specific
performance and injunctive relief.
9.2 Seller. If Buyer, in default of its obligations under
this Agreement fails to consummate the Transaction
pursuant to the terms and conditions of this
Agreement, then Seller may elect as Seller's sole
option hereunder to terminate this Agreement and to
receive the ▇▇▇▇▇▇▇ Money Deposit as liquidated
damages and thereafter Seller and Buyer shall have no
further obligations or liabilities one to the other
hereunder. Seller's election to receive the ▇▇▇▇▇▇▇
Money Deposit as "liquidated damages" is agreed to,
due to the difficulty, inconvenience and uncertainty
of ascertaining actual damages for such breach by
Buyer and the parties agree that the same is a
reasonable and fair estimate of damages. Seller and
Buyer agree that the liquidated damages clause
contained herein is reasonable and enforceable and
neither party shall challenge the liquidated damages
provision hereof as unenforceable.
10. RISK OF LOSS.
10.1 Casualty. If any Building or any part thereof is
damaged by any casualty prior to Closing, Seller
shall immediately notify Buyer in writing of the same
("Casualty Notice") and if the cost of repairing such
damage is:
(i) equal to or less than ONE HUNDRED
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS
($125,000.00), then Seller shall notify
Buyer as to such damage, and Buyer shall
elect whether the Seller shall repair such
damage, and if so, Seller shall restore the
damaged Building as promptly as is
reasonably possible to as good condition as
existed immediately prior to such casualty
and in such event Closing shall be deferred
until such repair and restoration is
substantially completed (but in no event
longer than 120 days); or, Buyer may elect
to proceed with Closing as set forth herein
without repair of the casualty damage and
Buyer shall receive an assignment of
Seller's rights in any insurance proceeds
which remain unpaid to Seller in connection
with such casualty and a credit against the
Purchase Price in the amount of the
deductible under Seller's property casualty
insurance coverage for the Building plus any
amounts previously paid to Seller as
insurance proceeds in connection with such
casualty.
(ii) greater than ONE HUNDRED TWENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($125,000.00),
then Buyer may elect to terminate this
Agreement by giving notice to such effect to
Seller
22
not later than the earlier to occur of the
last business day prior to Closing or ten
(10) business days after receipt of the
Casualty Notice (in which event the ▇▇▇▇▇▇▇
Money Deposit shall be returned to Buyer and
neither Seller nor Buyer shall have any
further obligations or liabilities one to
the other hereunder). If Buyer does not
elect to terminate this Agreement as set
forth in the preceding sentence, the parties
shall proceed with Closing as set forth
herein without repair of the casualty damage
and Buyer shall receive an assignment of
Seller's rights in any insurance proceeds
which remain unpaid to Seller in connection
with such casualty and a credit against the
Purchase Price in the amount of the
deductible under Seller's property casualty
insurance coverage for the Building plus any
amounts previously paid to Seller as
insurance proceeds in connection with such
casualty. Notwithstanding the foregoing, in
the event any Building, or any portion
thereof, is damaged by any casualty, Buyer
may terminate this Agreement as to that
portion only, subject to renegotiation of
the Purchase Price and other relevant terms
of this Agreement.
The Casualty Notice shall include a description of
the damage to the Building and Seller's best estimate
of the cost and time required to repair such damage.
10.2 Eminent Domain. In the event, after the execution
of this Agreement, all or a portion of the
Properties is taken by eminent domain or becomes
subject to a taking by eminent domain or a deed in
lieu of condemnation prior to Closing, Seller shall
immediately notify Buyer in writing of the same
("Eminent Domain Notice") and Buyer must elect (as
its sole and exclusive remedy) to either (i)
terminate this Agreement by giving notice to such
effect (in which event neither Seller nor Buyer shall
have any further obligations or liabilities one to
the other, and the ▇▇▇▇▇▇▇ Money Deposit shall be
returned to Buyer) or (ii) proceed with Closing as
set forth herein and accept title to the Properties
subject to such taking or proceeding together with an
assignment of all of Seller's rights and interest in
and to any proceeds or compensation which remain
unpaid to Seller in connection with such taking and a
credit against the Purchase Price for any amounts
previously paid to Seller as condemnation proceeds or
compensation in connection with such taking.
11. ADDITIONAL COVENANTS.
11.1 Notice of meetings. With respect to any meeting
or hearing of any nature of or by any governmental
body or agency or their representatives at which
23
the Properties or any part thereof is expected to be
discussed at such meeting or hearing of which Seller
receives notice after the date of this Agreement and
until the Closing Date, Seller hereby covenants that
it will give prompt notice thereof to Buyer.
12. MISCELLANEOUS.
12.1 Notices. Any notice, request, demand, instruction
or other communication to be given to either party
hereunder (except those required to be delivered
at Closing) shall be in writing, and shall be
deemed to be delivered upon the earlier to occur
of (i) actual receipt if delivered by hand, (ii)
upon delivery to the courier, if sent by
commercial courier (e.g. Airborne, UPS, Federal
Express) to the address indicated, or (iii) if
sent by FAX to the number set forth below, on the
day of receipt if received by 5:00 p.m. local
time, or if received after 5:00 p.m. local time,
on the next following business day; provided,
however, copies of all notices delivered by FAX
shall be forwarded to the recipient thereof by
courier or United States' mail.
IF TO BUYER:
American Real Estate Investment L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Butte
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
Twelfth Floor Packard Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
IF TO SELLER:
▇▇▇▇▇▇ Real Estate Development
Company/Szeles Investment Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
24
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq. (Attorney for Seller)
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
The FAX number, addresses and addressees for the purpose of this Section may be
changed by either party by giving written notice of such change to the other
party in the manner provided herein.
12.2 Attorneys' Fees. Subject to the limitations set
forth in Section 9.2, in the event it becomes
necessary for either Buyer or Seller to file a
suit to enforce this Agreement or any provisions
contained herein, the prevailing party in such
suit shall be entitled to recover, in addition to
all other remedies or damages, reasonable
attorneys' fees and costs of court incurred in
connection with such suit.
12.3 Entire Agreement and Modification. This Agreement
constitutes the entire agreement between Buyer and
Seller and supersedes all prior agreements and
understandings (if any), oral or written, relating
to the subject matter hereof. Notwithstanding the
foregoing, in the event the Transaction is not
consummated for any reason, Buyer and Seller shall
preserve and maintain the confidentiality of the
documents, material, data and information
exchanged by them in accordance with the
provisions contained in a certain Confidentiality
Agreement between them, except as may be required
by law, rule, regulation or order of court. This
Agreement cannot be amended, modified or altered
except by an agreement in writing executed by the
party against whom enforcement is sought.
12.4 Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto,
and their respective successors, permitted assigns
and legal representatives.
12.5 Expiration. This Agreement has been executed by
the parties on the dates set forth below their
respective signatures. It is understood that the
obligations of Buyer under this Agreement will
terminate ten (10) calendar days after the date of
Buyer's execution of this Agreement unless the
Seller has duly executed and returned a copy of
this Agreement to Buyer prior to such time.
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12.6 Assignment. Buyer may assign its rights under this
Agreement (including an assignment to an intermediary
in a tax-free exchange) without the prior consent of
Seller, but such assignment shall not relieve or
release Buyer of its obligations under this
Agreement.
12.7 Headings. Section headings are for convenience of
reference only and shall in no way affect the
interpretation of this Agreement.
12.8 Governing Law. The substantive laws of the
Commonwealth of Pennsylvania and the applicable
federal laws of the United States of America shall
govern the validity, construction, enforcement and
interpretation of this Agreement.
12.8.1 BUYER AND SELLER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED UPON OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS TRANSACTION.
12.8.2 BUYER AND SELLER HEREBY KNOWINGLY AND
VOLUNTARILY AGREE THAT ANY ACTION OR
PROCEEDING AGAINST EITHER PARTY ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS
TRANSACTION SHALL BE BROUGHT IN AND ONLY IN
THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY,
PENNSYLVANIA, AND BUYER EXPRESSLY WAIVES ANY
AND ALL DEFENSES TO THE EXERCISE OF PERSONAL
JURISDICTION BY SUCH COURT.
12.9 References to "Seller". Seller represents that
Winchester Plaza Corporate Center, Treeview Corporate
Center, Hillside Corporate Center and Corporate
Center 15 are owned by SREDC and that Executive Park
is owned by SIC. All references to "Seller", when
made with specific reference to Executive Park, shall
be intended to mean SIC; in all other instances,
"Seller" shall be intended to apply to SREDC or both
SREDC and SIC, as the context may indicate.
Notwithstanding the foregoing, the liability of SREDC
and SIC under this Agreement is intended to be, and
shall be construed to be, joint and several.
12.10 Full Execution. This Agreement shall be deemed fully
executed and binding upon Buyer and Seller if, as and
when both Buyer and Seller have
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executed this Agreement as set forth below and fully
executed copies have been delivered to Buyer and
Seller.
12.11 Counterpart Execution. This Agreement may be executed
in one or more counterpart copies which, taken
together, shall constitute one and the same
instrument.
12.12 Exhibits and Recitals. The Exhibits annexed hereto
and the recitals set forth above are made a part
hereof and incorporated into the body of this
Agreement by reference.
12.13 Time of the Essence; Computing Time. Time is
of the essence of this Agreement. If the final day
of any time period provided in this Agreement shall
end on a Saturday, Sunday or legal holiday, then the
final day shall extend to 5:00 p.m. of the next full
business day. For the purposes of this Section, the
term "holiday" shall mean a day other than a
Saturday or Sunday on which banks in Pennsylvania are
or may elect to be closed.
12.14 Waiver of Tender of Deed and Purchase Monies. The
tender of executed deeds by Seller and the tender by
Buyer of the Purchase Price are mutually waived, but
nothing in this Agreement shall be construed as a
waiver of Seller's obligation to deliver the deeds
and/or of the concurrent obligation of Buyer to pay
the portion of the Purchase Price payable at Closing.
12.15 No Waiver. Neither the failure nor any delay on the
part of either party to this Agreement to exercise
any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or
further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of any such
right, remedy, power or privilege with respect to any
other occurrence. No waiver shall be effective unless
it is in writing and is signed by the party asserted
to have granted such waiver.
12.16 Survival. The representations and warranties of
Seller set forth in Sections 4.5 and 8 of this
Agreement shall survive a termination of this
Agreement or Closing for a period of 12 months, and
thereafter shall survive to the extent that Buyer
shall have given to Seller written notice of a breach
thereof. The obligations of Seller and Buyer pursuant
to Sections 2.4, 4.4, 5.4, 6.1, 13 and 14 of this
Agreement shall survive Closing. Except as otherwise
provided in the preceding two sentences of this
Section 12.16,
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the agreements of Seller and Buyer set forth in this
Agreement shall not survive Closing.
13. TAX FREE EXCHANGE. Each of Seller and Buyer shall cooperate with the
other in effecting an exchange described in Section 1031 of the
Internal Revenue Code ("Tax Free Exchange"), provided, that: (a) the
Tax Free Exchange shall not impose additional financial or legal
obligations in addition to those set forth elsewhere in this Agreement;
(b) neither Seller nor Buyer shall have any obligation to take title
to any exchange property; (c) the exchanging party shall indemnify,
defend and save and hold the other party harmless of and from all
expenses, liabilities, claims, losses or actions as a result of
participation in the Tax Free Exchange; and (d) the other party shall
have no obligation to modify any of the provisions of this Agreement
to effect the Tax Free Exchange.
14. REPORTS. For the period of time commencing on the date of this
Agreement and continuing through the first anniversary of the Closing
Date, and without limitation of the other document production otherwise
required of Seller hereunder, Seller shall, from time to time, upon
reasonable advance written notice from Buyer, provide to Buyer and its
representatives: (i) access to all financial and other information
pertaining to the period of Seller's ownership and operation of the
Property, which information is relevant and reasonably necessary, in
the opinion of Buyer's outside, third party accountants ("Accountants")
to enable Buyer and its Accountants to prepare financial statements in
compliance with any and all of (a) Rule 3-05 or Rule 3- 14 of
Regulation S-X of the Securities and Exchange Commission (the
"Commission"), as applicable to Buyer; (b) any other rule issued by the
Commission and applicable to Buyer; and (c) any registration statement,
report or disclosure statement filed with the Commission by, or on
behalf of Buyer; and (ii) a representation letter, in form specified
by, or otherwise satisfactory to the Accountants, signed by the
individual(s) responsible for Seller's financial reporting, as
prescribed by generally accepted auditing standards promulgated by the
Auditing Standards Division of the American Institute of Certified
Public Accountants, which representation letter may be required by the
Accountants in order to render an opinion concerning Seller's financial
statements.
15. ADDITIONAL OBLIGATIONS OF SELLER AND BUYER. At Closing, Seller and
Buyer shall execute, acknowledge and deliver an Agreement, in
recordable form, providing, inter alia, as follows:
(a) Right of First Offer/Right of First Refusal.
(i) The term "Subject Property" shall mean
that certain parcel of land situate in the Township
of Lower ▇▇▇▇▇, County of
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Cumberland, State of Pennsylvania, which is more
fully described on Exhibit "A-3" attached hereto [a
full metes and bounds legal description will be
attached for the building being constructed by Seller
which is to be the subject of this right of first
refusal]; and the term "Term" shall mean the period
of time commencing as of the date of this Agreement
and ending eighteen months after the date of this
Agreement.
(ii) Seller agrees not to sell the Subject
Property during the Term except in strict compliance
with the terms and provisions of the Agreement
contemplated by this Paragraph 15.
(iii) If, at any time during the Term,
Seller desires to sell the Property, Seller shall
give to Buyer written notice ("Sale Notice")
specifying the terms and conditions pursuant to which
Seller desires to sell the Subject Property. The Sale
Notice shall contain, at a minimum, the purchase
price, the terms on which the purchase price is
payable, the condition pursuant to which title to the
Subject Property is to be conveyed, and the closing
date (which closing date shall be not less than sixty
(60) days after the date on which Seller delivers the
Sale Notice to Buyer). Buyer shall have the right to
purchase the Subject Property pursuant to the terms
and provisions of the Sale Notice by giving to Seller
written notice ("Acceptance Notice") that Buyer
intends to purchase the Subject Property pursuant to
the terms and provisions of the Sale Notice. If Buyer
gives the Acceptance Notice to Seller, Buyer shall
thereafter purchase the Subject Property from Seller
upon the terms set forth in the Sale Notice. If Buyer
has not given to Seller an Acceptance Notice within
ten days after delivery to Buyer of the Sale Notice,
then Seller shall have the right (for a period not
exceeding 180 days) to sell the Subject Property to
any purchaser pursuant to the terms and provisions of
the Sale Notice including a purchase price variance
of up to three percent of the purchase price set
forth in the Sale Notice (or pursuant to terms and
provisions which are, in the aggregate, more
favorable to Seller than the terms and provisions
contained in the Sale Notice). If Seller gives to
Buyer a Sale Notice and Buyer does not timely give to
Seller an Acceptance Notice, and if Seller does not
thereafter (within 180 days) sell the Subject
Property in accordance with the terms and provisions
of the Sale Notice, then the rights of Buyer pursuant
to this Paragraph shall continue in full force and
effect.
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(iv) If, during the Term, Seller receives a
written offer ("Unsolicited Offer") from an unrelated
third party ("Offeror") setting forth the terms and
provisions pursuant to which such Offeror desires to
purchase the Subject Property (such terms and
provisions to contain, at a minimum, the terms and
provisions set forth above to be contained in a Sale
Notice) and if Seller desires to accept the
Unsolicited Offer, Seller shall give to Buyer a copy
of the Unsolicited Offer. Buyer shall have the right
to purchase the Subject Property pursuant to the
terms and provisions of the Unsolicited Offer by
giving to Seller written notice ("Acceptance Notice")
that Buyer intends to purchase the Subject Property
pursuant to the provisions of the Unsolicited Offer.
If Buyer gives the Acceptance Notice to Seller, Buyer
shall thereafter purchase the Subject Property from
Seller upon the terms set forth in the Unsolicited
Offer. If Buyer has not given to Seller an Acceptance
Notice within ten days after delivery to Buyer of the
Unsolicited Offer, then Seller shall have the right
(for a period not exceeding 180 days) to sell the
Subject Property to the Offeror pursuant to the terms
and provisions of the Unsolicited Offer (or pursuant
to the terms and provisions which are, in the
aggregate, more favorable to Seller than the terms
and provisions contained in the Unsolicited Offer).
If Seller gives to Buyer an Unsolicited Offer and
Buyer does not timely give to Seller an Acceptance
Notice, and if Seller does not thereafter (within 180
days) sell the Subject Property to the Offeror in
accordance with the terms and provisions of the Sale
Notice, then the rights of Buyer pursuant to this
Paragraph shall continue in full force and effect.
(v) Anything to the contrary notwithstanding
in this subparagraph 15(a), Seller shall have the
right to grant to any tenant or prospective tenant
(unrelated to Seller) of the Subject Property, as a
material inducement to remain as a tenant at the
Subject Property or to enter into a lease with Seller
for space in the Subject Property a right of first
offer/right of first refusal upon the same terms and
provisions as those granted to Buyer herein ("Tenant
Right"). Such Tenant Right shall be superior to the
Right of First Offer/Right of First Refusal granted
herein to Buyer, but if such Tenant Right is not
exercised by the tenant, Buyer's Right of First
Offer/Right of First Refusal shall not be
extinguished.
(b) Noncompetition.
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(i) For the purposes of this subparagraph
(b), the term "Noncompetition Term" shall mean the
period of time commencing as of the date of this
Agreement and ending on the sooner to occur of (A)
December 1, 2000; or (B) the date on which at least
90% of the rentable floor area of the Subject
Property is occupied by tenants pursuant to
arm's-length leases with Seller.
For the purposes of this subparagraph (b), the term
"Prospect" shall mean any party which is an occupant
of any space within Corporate Center 15 or Hillside
Corporate Center (whether as a tenant or a
subtenant).
(ii) Seller agrees that during the
Noncompetition Term, Seller will not negotiate to
lease, nor enter into any lease, for any space within
the Subject Property with any Prospect.
Notwithstanding the foregoing, during the
Noncompetition Term, Seller shall be able to
negotiate to lease or enter into a lease for space
within the Subject Property with any Prospect if: (1)
the Prospect has given to Buyer written notice of
Prospect's intent not to renew its existing lease
with Buyer; (2) the Buyer has given to the Prospect
written notice of Buyer's intent to terminate or not
to renew its existing lease with the Prospect; or (3)
the Prospect seeks to lease space in addition to that
under an existing lease and such additional space is
unavailable in either Corporate Center 15 or Hillside
Corporate Center.
(c) Binding Effect. The terms and provisions of the
Agreement contemplated by this Paragraph 15 shall be binding
upon and shall inure to the benefit of both Seller and Buyer,
their successors and assigns.
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IN WITNESS WHEREOF, this Agreement has been
executed by the parties hereto in multiple counterparts and
is effective as of the date hereof.
SELLER:
▇▇▇▇▇▇ REAL ESTATE DEVELOPMENT
COMPANY
A Pennsylvania General
Partnership
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Partner
By: /s/ A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Partner
▇▇▇▇▇▇ INVESTMENT COMPANY
A Pennsylvania General Partnership
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Partner
By: /s/ A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Partner
BUYER:
AMERICAN REAL ESTATE
INVESTMENT, L.P.
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By: AMERICAN REAL ESTATE
INVESTMENT CORPORATION, general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. Butte
▇▇▇▇▇▇▇ ▇. Butte, Vice President
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