<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 22, 1997
BRT REALTY TRUST
(Exact name of registrant as specified in charter)
Massachusetts I-7172 13-2755856
(State or other (Commission file No.) (IRS Employer
jurisdiction of I.D. No.)
incorporation)
60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 516-466-3100
<PAGE>
Item 2. - Acquisition or Disposition of Assets.
On August 22, 1997 (adjourned closing date), in an ordinary course of
business transaction, registrant and a wholly-owned subsidiary of
registrant,(collectively "Registrant") sold their general and limited
partnership interests in the limited partnership which owns fee title to parcels
of land and 88 residential condominium units, together with the improvements
thereon, located at 2nd and South Streets, in Philadelphia, Pennsylvania. The
property, known as Abbotts Square, is a mixed use property. A description of the
property is contained in Registrant's Form 10-K for the fiscal year ended
September 30, 1996 and such description is incorporated herein by reference. The
sale by Registrant of its partnership interests had the effect of conveying
Registrant's interest in the property (commercial space, garage and 88
residential condominium units)to the purchaser. As part of the transaction,
Registrant assigned to purchaser an unsecured note, having a principal balance
of $6,008,448 (plus accrued and unpaid interest).
The partnership interests and note were sold by Registrant to the Lubert
Adler Real Estate Opportunity Fund L.P., an entity unaffiliated with the
Registrant or with any trustee or officer of Registrant, at a price of
$12,500,000. The purchase price was negotiated at arms-length.
Registrant applied $9,648,300 of the purchase price to repay in full a
first mortgage secured by its interest in the Abbotts Square property.
The Registrant will recognize a gain of approximately $175,000 on the
disposition of its interest in this property.
Item 7. Financial Statements, Proforma Financial Information and Exhibits
(a) and (b) - any required financial information will be filed by amendment.
(c) Agreement dated as of May 30, 1997 between TRB Abbotts Corp., BRT
Realty Trust and purchaser.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRT REALTY TRUST
By:(s)
-------------------------------
Simeon Brinberg,
Senior Vice President,
Secretary
Date: November 28, 1997
CONTRACT OF SALE
TRB ABBOTTS CORP.
- TRB -
BRT REALTY TRUST
- BRT -
and
LUBERT ADLER REAL ESTATE OPPORTUNITY FUND, L.P.
- Purchaser -
as of May 30, 1997
Partnership Interests
Stobba Associates
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TABLE OF CONTENTS
1. Purchase Price .............................................
2. Escrow ......................................................
3. Sale is "As Is" .............................................
4. Leases ......................................................
5. Title .......................................................
6. Effect of the Closing . ......................................
7. Inspections..................................................
8. Financing...................................................
9. Authorization of Purchaser, TRB and BRT.......................
10. Included Property ...........................................
11. Closing Costs ...............................................
12. Closing Date ................................................
13. Closing Documents ...........................................
14. Preclosing Obligations of TRB ..............................
15. Condemnation ................................................
16. Casualty ....................................................
17. Assignment ..................................................
18. Brokers .....................................................
19. Management/Control...........................................
20. Miscellaneous................................................
<PAGE>
CONTRACT OF SALE
This CONTRACT OF SALE (this "Contract") is made and entered into as of the
30th day of May, 1997 by and between TRB Abbotts Corp., a Pennsylvania
corporation having an office at Suite 303, 60 Cutter Mill Road, Great Neck, New
York 11021 ("TRB"), BRT Realty Trust, a Massachusetts business trust having an
office at Suite 303, 60 Cutter Mill Road, Great Neck, New York 11021 ("BRT") and
Lubert Adler Real Estate Opportunity Fund, L.P., a Delaware limited partnership
or its permitted assignee having an office at 101 West Main Street, Moorestown,
New Jersey 08057 ("Purchaser").
W I T N E S S E T H :
WHEREAS, TRB is the owner of a 1% general partnership interest and BRT is
the owner of a 49% limited partnership interest (collectively, the "Partnership
Interests") in Stobba Associates, a Pennsylvania limited partnership ("Stobba");
WHEREAS, BRT is the owner of an unsecured loan (the "BRT Loan") in the
current principal balance of approximately $6,008,448.79 and approximately
$4,901,499.58 in accrued interest as of May 31, 1997, and
WHEREAS, TRB and BRT wish to sell and Purchaser wishes to acquire the
Partnership Interests and the BRT Loan in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the sufficiency of which being hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Purchase Price. TRB and BRT agree to sell and Purchaser agrees to buy
the Partnership Interests and the BRT Loan for a sum equal to the difference
(the "Net Price") between $12,500,000 and the outstanding principal balance due
under the Dime Mortgage (hereafter defined) as of the Closing Date (hereafter
defined) payable as follows:
$250,000.00 upon the execution and delivery of this Contract of Sale as the
Downpayment herein referenced, by check(s) made payable to the order of
Commonwealth Land Title Insurance Company ("Escrow Agent"), which sum shall be
held in escrow pursuant to the terms hereof; and
The balance of the Net Price at the Closing, by wire transfer to an account
designated by BRT, or by unendorsed certified or bank check made payable to the
order of BRT and drawn on a bank that is reasonably acceptable to BRT.
<PAGE>
TRB and BRT have agreed on an allocation of the purchase price between the
Partnership Interests and the BRT Loan pursuant to a separate agreement.
2. Escrow. Concurrently with the execution of this Contract of Sale,
Purchaser has delivered to Escrow Agent, a check(s) (subject to collection) in
the amount of $250,000.00 as the downpayment (the "Downpayment"). Escrow Agent
shall deposit the Downpayment into an interest-bearing account(s) maintained at
a federally insured financial institution(s). Escrow Agent shall deliver the
Downpayment in accordance with this Contract of Sale, or a joint instruction
signed by TRB, BRT and Purchaser, or separate instructions of like tenor signed
by TRB, BRT and Purchaser, or a final judgment of a court of competent
jurisdiction. Escrow Agent hereby is authorized and directed to deliver the
Downpayment to BRT if, as and when title closes. Escrow Agent at any time may
deposit the Downpayment with a court of competent jurisdiction, and upon notice
to TRB, BRT and Purchaser of such deposit, Escrow Agent shall have no further
responsibility or liability hereunder. Escrow Agent may act upon any instruction
or other writing believed by Escrow Agent in good faith to be genuine and to be
signed or presented by the proper persons. Except as otherwise noted herein, any
interest or income thereon shall be paid to the party entitled to receive the
Downpayment; provided that if BRT shall receive the interest at Closing, such
interest shall serve as a credit against the purchase price. It is understood
and agreed that if a check for any portion of the Downpayment shall fail to
clear then Escrow Agent shall deliver the portion, if any, of the Downpayment
that shall have cleared (together with any interest earned thereon) to BRT and
this Contract shall terminate and neither party shall have any further
obligations hereunder to the other except that BRT shall be permitted to attempt
to collect from Purchaser on the check that shall have failed to clear by
commencing litigation or otherwise as provided for by law.
TRB, BRT and Purchaser acknowledge that Escrow Agent is merely a
stakeholder, and that Escrow Agent shall not be liable for any act or omission
unless taken or suffered in bad faith, in willful disregard of this Contract of
Sale or involving gross negligence. Escrow Agent shall not be liable for the
failure of the institution(s) in which the Downpayment has been deposited or for
establishing accounts in excess of applicable guaranty limits. TRB and Purchaser
agree to indemnify and hold Escrow Agent harmless from and against any
reasonable costs, claims or expenses incurred in connection with the performance
of the Escrow Agent's duties hereunder, unless such costs, claims or expenses
were occasioned by Escrow Agent's bad faith or its willful disregard of this
Contract of Sale.
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Escrow Agent shall not be bound by any agreement between TRB, BRT and
Purchaser, whether or not Escrow Agent has knowledge thereof, and Escrow Agent's
only duties and responsibilities shall be to hold, and to dispose of, the
Downpayment and interest earned thereon in accordance with this Contract of
Sale. Escrow Agent may consult with counsel, and any opinion of counsel shall be
full and complete authorization and protection in respect to any action taken or
omitted by Escrow Agent hereunder in good faith and in reliance upon such
opinion.
All instructions or notices given to the Escrow Agent shall be in writing
and delivered in accordance with the requirements of this Contract of Sale. For
purposes of this paragraph, such instructions and notices shall be deemed
delivered on the date of delivery, if by hand, or on the date of mailing if
mailed, except that no instruction or notice to Escrow Agent shall be deemed
effectively delivered to Escrow Agent until actual receipt thereof by Escrow
Agent.
3. Sale is "AS IS". A. Stobba is the owner of fee title to the parcels of
land, and the 88 residential condominium units (together with an undivided
interest in related common elements, which includes 3 air rights parcels,
relating to such condominium units) together with the improvements thereon
located at 2nd and South Streets, Philadelphia, Pennsylvania and more
particularly described on Exhibit A attached hereto (the "Premises").
<PAGE>
B. It is understood that the Partnership Interests and the BRT Loan shall
be delivered "AS IS" without warranty or representation except solely as set
forth in this Contract of Sale. TRB represents and warrants that it has not
pledged the Partnership Interests. BRT represents and warrants that it has not
assigned or pledged the BRT Loan. Purchaser acknowledges that, except as herein
specifically set forth, neither TRB, BRT nor any of their representatives,
employees, officers, attorneys or agents has made any representations or
warranties as to the physical condition, state of repair, tenancy, income,
expenses or operation of the Premises, the building within which they are
located or the financial condition, income or expenses of Stobba or the
condominium association or the enforceability of the BRT Loan. Neither TRB nor
BRT shall be liable for any latent or patent defects in the Premises. Purchaser
acknowledges that it has not relied on any representations (except those
specifically set forth herein), warranties or "broker set-ups" in its decision
to acquire the Premises in accordance with the terms hereof. In particular,
except as herein specifically set forth, TRB and BRT are unwilling to make any
representations or warranties in respect of (i) the physical condition of the
Premises or the building in which it is a part, (ii) the compliance or
non-compliance of the Premises with applicable laws (including, without
limitation, those relating to the protection of the environment), (iii) the
revenues, income or expenses of Stobba, the condominium association or the
Premises, (iv) the adequacy or inadequacy of the utilities, if any, provided to
the Premises, (v) the zoning of the Premises, (vi) the enforceability of the BRT
Loan or (vi) any other matter concerning the Premises, the condominium
association, the BRT Loan, the Partnership Interests or Stobba.
C. Purchaser acknowledges that TRB has informed Purchaser of certain
physical problems that have existed in respect of the Premises and the building
in which the Premises is contained. TRB states that it has caused repairs to the
physical elements of the Premises to be made at a cost in excess of
$2,000,000.00 in order to remedy the physical problems. It is expressly
understood and agreed that TRB makes no representation or warranty that such
repairs have been fully successful in correcting all physical problems at the
Premises. Purchaser further acknowledges that TRB has advised Purchaser that in
connection with such physical problems TRB commenced litigation (the
"Litigations") against Strescon Industries, Inc. ("Strescon"), Abbotts Building
Corp., Bernard Schwartz and Associates and Irving Shapiro. TRB has settled the
Litigation with Strescon. Notwithstanding anything to the contrary set forth
herein, Purchaser acknowledges and agrees that the sale contemplated hereby
shall not include Stobba's rights in respect of the remaining Litigations, which
rights shall be assigned to TRB on or before the Closing Date and that TRB shall
retain the right to proceed with the remaining Litigations and to retain any and
all proceeds from the remaining Litigations. In connection with the required
work, Stobba lent the condo association certain sums pursuant to an Agreement
dated May 2, 1995 between Stobba and Abbotts Square Condominium Association (the
"Condo Note"). Purchaser acknowledges and agrees that the sale contemplated
hereby shall not include Stobba's rights in respect of the Condo Note, which
rights shall be assigned to TRB on or before the Closing Date; provided that
simultaneously with the Closing TRB shall grant to Purchaser a pari passu
participation interest in the Condo Note in a percentage amount equal to the
percentage of the overall condominium association that is attributable to the
Premises. The participation agreement shall provide that (i) TRB shall be the
party solely able to make decisions in respect of the enforcement of the Condo
Note, without liability of any sort except for its bad faith acts, (ii)
amendments to the Condo Note shall require the consent of both TRB and
Purchaser, (iii) Purchaser's participation interest shall serve as collateral
security to TRB if Purchaser shall default in making its assessments or other
payments toward its portion of the Condo Note as the owner of the Premises and
(iv) shall otherwise be reasonably acceptable to TRB and Purchaser.
<PAGE>
D. Purchaser acknowledges that it (or its principal if Purchaser shall be
other than a real person) is sophisticated in real estate transactions and that
it has been advised by counsel and others of its choosing. Purchaser further
acknowledges that it is being advised in this transaction by Eric Blumenfeld
("Eric") who (i) is a current partner in Stobba, (ii) along with his brother
David Blumenfeld ("David") and their father Jack Blumenfeld ("Jack") was the
developer of the entire development, (iii) is familiar with the construction and
operations of the Premises, (iv) is intended to be the principal of the managing
agent that Purchaser has determined to manage the Premises upon Purchaser's
acquisition of the Premises, and (v) is a principal in the Friday's restaurant
and the Laugh Club which are tenants at the Premises. Purchaser acknowledges
that Eric is acting on his own behalf in this transaction and not on behalf of
TRB or BRT. Purchaser agrees that (i) it will not enter into any agreement to
acquire the partnership interests of any other partner in Stobba other than TRB
and BRT or actually acquire same prior to or on the Closing Date and (ii) it
will not enter into any agreement to amend the provisions of the partnership
agreement of Stobba prior to the Closing Date or enter into such an amendment on
the Closing Date (other than a ministerial amendment to refer to the change in
general partners). Purchaser hereby agrees to indemnify, defend and hold
harmless Seller from and against any all costs, claims, losses, liabilities,
taxes or other detriments that Seller may incur as a result of Purchaser's
breach of the foregoing sentence. The preceding two sentences shall survive the
Closing Date.
E. Purchaser acknowledges that it and its advisors will be afforded
sufficient opportunity to investigate the financial condition of the Premises
and Stobba and the physical condition of the Premises and Purchaser acknowledges
that it will rely on its review, and not any representations or warranties of
TRB or BRT except as specifically set forth in this Contract of Sale, in making
its determination to enter into this Contract of Sale to acquire the Partnership
Interests and/or the BRT Loan.
F. TRB warrants and represents that set forth on Exhibit B attached hereto
is a list of all employees of Stobba and all service and maintenance contracts
for the Premises that are not terminable on thirty (30) days' notice. TRB makes
no representation regarding the employees and service and maintenance contracts
for the condominium association or the Premises. TRB agrees not to cause Stobba
to enter into any new service contracts following the date hereof which are not
terminable on thirty (30) days' notice.
G. TRB warrants and represents that it has paid all brokerage commissions
due through the date hereof and that, except as noted on Exhibit C, and that to
TRB's knowledge there are no brokerage fees to be due upon the extension and/or
expansion of existing commercial leases at the Premises. Purchaser agrees to pay
such brokerage commissions as and when due following Closing.
H. Except for actions or claims which TRB believes will be adequately
covered for by insurance, TRB has no knowledge of any litigation pending or any
material litigation threatened against Stobba or the Premises other than as set
forth on Exhibit D.
<PAGE>
I. TRB represents and warrants that to its knowledge, it has not receive
any written notices of violations of applicable law affecting the Premises.
J. Each of TRB and BRT represent and warrant that it is not a "foreign
person" as such term is used in Section 1445 of the Internal Revenue Code of
1986, as amended.
K. Except as may be set forth in residential lease files or in the
partnership agreement for Stobba, TRB warrants and represents that there are no
outstanding agreements, options, rights of first refusal, conditional sales
agreements or other similar arranges currently in effect regarding the sale of
the Partnership Interests and/or the Premises.
4. Leases and Other Agreements. A. TRB agrees to provide to Purchaser
access during normal business hours through the Due Diligence Period to review
and examine all of Stobba's lease and other files regarding the occupancy of the
Premises.
B. On or after the Due Diligence Period, TRB agrees that if any rentable
space at the Premises is or shall become vacant, the same shall not be relet
(nor shall any extension, amendment or modification to any existing lease be
made) without the prior approval of Purchaser, which approval shall not be
unreasonably withheld (and which approval shall be deemed given in respect of
new leases or amendments entered into during the Due Diligence Period for which
TRB has provided Purchaser knowledge). If Purchaser shall agree to a new lease
or extension, amendment or modification to an existing lease, Purchaser shall
reimburse TRB at Closing (or pay directly, if not yet paid) for all reasonable
third party costs incurred by TRB and/or Stobba in connection with such new
lease or extension, amendment or modification to an existing lease including,
without limitation, brokerage fees and renovation costs; provided that such
reimbursement shall be equitably prorated to offset the benefits, if any, that
are attributable to the pre-Closing period. TRB agrees to give to Purchaser an
estimate of amount of the items to be reimbursed in TRB's request for approval
under this Subparagraph. TRB shall give Purchaser prompt notice of new leases or
amendments to existing leases made during the Due Diligence Period.
<PAGE>
C. TRB agrees to use its reasonable efforts (but in no event shall TRB be
required to commence or threaten litigation) to attempt to obtain estoppel
certificates from each commercial tenant prior to the Closing Date. If TRB shall
have been unable to obtain by the Closing Date estoppel certificates from
sufficient commercial tenants to represent 60% of the scheduled rent to be paid
by all commercial tenants (which must include Boston Chicken, Thrift Drugs,
Chef's Market and Wawa), then Purchaser shall have the option of (i) terminating
this Contract of Sale and receiving its Downpayment with the interest thereon
back in which case the parties shall have no further rights or obligations
against each other or (ii) to close on its acquisition of the Partnership
Interests and pay in full the purchase price without claim against TRB.
5. Title. A. During the Due Diligence Period Purchaser shall be free, at
its cost and expense to review the status of title to the Premises. TRB agrees
that it will not and it will not cause Stobba to further encumber title
following the date hereof. If, prior to the Closing Date, Purchaser shall notify
TRB in writing of any title encumbrance not intentionally placed on the Premises
by TRB or Stobba, then Purchaser shall have the option of either terminating
this Contract of Sale (in which event the Downpayment with interest thereon
shall be returned to Purchaser and the parties shall have no other liability to
each other) or to allow TRB to attempt to cure such defect(s). TRB shall be
entitled, at its option, to extensions of the Closing Date (hereafter defined)
for up to ninety (90) days in the aggregate to attempt to cure such defect(s).
If Purchaser shall have elected to allow TRB to attempt to cure such defects and
should TRB not cure such defect(s) regardless of the reason, then Purchaser
shall have the option (exercisable within ten (10) days of TRB's notification
thereof to Purchaser), to close on its purchase of the Partnership Interests in
accordance with the terms hereof with no abatement or offset. If Purchaser shall
not have timely exercised its option set forth in the preceding sentence, then
this Contract of Sale shall terminate, the Downpayment together with interest
thereon shall be returned to Purchaser and the parties shall have no other
liability to each other.
B. At the Closing, BRT shall assign the BRT Loan to Purchaser or its
designee on a completely non-recourse basis and without any representation or
warranty whatsoever except solely that (i) BRT is the then sole owner of the BRT
Loan and (ii) that BRT has not pledged or sold a participation interest in the
BRT Loan.
6. Effect of the Closing. The acceptance of an assignment of the
Partnership Interests and an assignment of the BRT Loan by Purchaser shall
constitute and be deemed and considered full compliance by TRB and BRT of all
the terms and conditions of this Contract of Sale on the part of TRB or BRT to
be performed. It is further expressly agreed that none of the provisions of this
Contract of Sale shall survive the delivery and acceptance of such assignment,
except insofar as may herein otherwise be expressly and specifically provided.
<PAGE>
7. Inspection. A. At Purchaser's cost and expense, Purchaser and its
advisors shall be permitted to inspect the Premises for structural integrity,
compliance with applicable laws, to perform an environmental audit of the
Premises, to review the historical and projected financial information relative
to the operations of the Premises, to review the enforceability of the BRT Loan,
and any such other matters as Purchaser shall deem significant (the
"Inspections"). As part of the Inspections, TRB agrees to provide access to
Purchaser during normal business hours through the Due Diligence Period to all
of TRB's records regarding the Premises and Stobba except solely for those
files, if any, related to the remaining Litigations and upon advice of
litigation counsel should remain confidential. TRB also agrees to promptly upon
request provide copies of such documentation that are not located at the
Premises as Purchaser shall reasonably request. Purchaser agrees to indemnify
and hold harmless TRB from any damage to person or property that may be caused
by the Inspections. Purchaser shall have until June 30, 1997 with time being of
the essence (the "Due Diligence Period") to notify TRB of any defects or issues
raised by the Inspections that Purchaser is not satisfied with. Purchaser shall
not conduct borings or other invasive tests without the prior written consent of
TRB and if TRB shall deny such request then Purchaser shall have the option of
terminating this Contract of Sale (in which event the Downpayment with interest
thereon shall be returned to Purchaser and the parties shall have no other
liability to each other) by sending notice thereof within ten (10) days of TRB's
denial. BRT agrees to reasonably cooperate with Purchaser in connection with
Purchaser's investigation of the BRT Loan.
B. Purchaser is hereby notified that residential dwellings built prior to
1978 may present exposure to lead from lead-based paint that may place young
children at risk of developing lead poisoning. Lead poisoning in young children
may produce permanent neurological damage, including learning disabilities,
reduced intelligence quotient, behavioral problems and impaired memory. Lead
poisoning also poses a particular risk to pregnant women. The seller of any
interest in residential real property is required to provide the buyer with any
information on lead-based paint hazards from risk assessments or inspections in
the seller's possession and notify the buyer of any known lead-based paint
hazards. A risk assessment or inspection for possible lead-based paint hazards
is recommended prior to purchase of the Premises (the "Lead-Based Paint
Inspection"; the Inspections together with the Lead-Based Paint Inspection being
hereby collectively referred to as the "Inspections"). Purchaser acknowledges
that it has read and understood the lead warning statement above and has
received the Lead Hazard Information Pamphlet Protect your Family From Lead in
Your Home. Purchaser shall have the Due Diligence Period to notify TRB of any
defects or issues raised by the Lead-Based Paint Inspection that Purchaser is
not satisfied with.
<PAGE>
C. If Purchaser is dissatisfied in its sole discretion with the results of
the Inspections, then Purchaser shall have the option (exercisable by sending
written notice thereof during the Due Diligence Period) of terminating this
Contract of Sale in which event the Downpayment with interest thereon shall be
returned to Purchaser and the parties shall have no other liability to each
other. If Purchaser shall fail to timely give notice of its desire to terminate
this Contract of Sale pursuant to the previous sentence, with time being of the
essence, then: (i) the conditions set forth in Subparagraphs 7A and 7B shall be
deemed satisfied and waived by Purchaser, (ii) Purchaser shall be deemed
satisfied with the Inspections, and (iii) Purchaser shall close as otherwise
required under this Contract of Sale.
D. TRB agrees to reasonably cooperate with Purchaser in connection with the
Inspections and to provide reasonable access to the Premises in connection
therewith subject, however, to the provisions of any leases in effect for the
Premises.
E. If Purchaser shall terminate this Contract of Sale pursuant to this
Paragraph 7, Purchaser agrees to promptly thereafter give to TRB and BRT
promptly a copy of any written reports it may have received as a result of the
Inspections.
8. Financing. PURCHASER'S OBLIGATIONS HEREUNDER ARE NOT CONDITIONED ON
PURCHASER BEING ABLE TO SECURE FINANCING FOR ALL OR ANY PORTION OF THE PURCHASE
PRICE; provided that the fact that this Contract of Sale is not conditioned on
financing shall not be deemed to restrict Purchaser's rights to terminate this
Contract of Sale during the Due Diligence Period pursuant to Paragraph 7
hereinabove. Purchaser acknowledges that the Premises is currently encumbered by
a first mortgage (the "Dime Mortgage") in favor of the Dime Savings Bank (the
"Lender"). Purchaser acknowledges that it has received a copy of the note and
other loan documents in connection with the Dime Mortgage. Purchaser shall be
entitled to close on its acquisition of the Partnership Interests with the Dime
Mortgage remaining on the Premises provided that Purchaser delivers to TRB and
BRT on or before the Closing Date an instrument of Lender (in form and substance
satisfactory to TRB and BRT) that Lender has approved the sale of the
Partnership Interests and the BRT Loan and that following the Closing, Lender
shall release TRB, BRT and their affiliates from any and all liability under the
Dime Mortgage or otherwise in respect of the Premises. If such letter is not
obtained, Purchaser shall nonetheless be obligated to close hereunder but shall
be required to pay in cash the full purchase price plus any prepayment or other
costs associated with the repayment of the Dime Mortgage, and TRB will have the
Dime Mortgage satisfied at Closing. The parties agree that Purchaser shall pay
all of the costs to Lender or otherwise associated with the transfer of the
Partnership Interests and the BRT Loan (including, without limitation,
application fees, prepayment fees, assumption fees, third party report fees,
legal fees, title charges, survey fees and any other payment required to be made
on account of the contemplated transfer of the Partnership Interests or BRT Loan
prior to or at the Closing (as required by the Lender)).
<PAGE>
9. Authorization of Purchaser, TRB and BRT. A. If Purchaser shall be a
corporation, partnership or other entity, Purchaser warrants and represents that
it was duly organized and is in good standing in its jurisdiction of
organization and that it is in good standing in the State in which the Premises
is located. Purchaser warrants and represents that it has the authority to enter
into this Contract of Sale and agrees to supply to TRB such information as TRB
may require (such as its certificate of incorporation, by-laws and resolutions
adopted by its board of directors if it shall be a corporation) to establish to
TRB's reasonable satisfaction the accuracy of the warranties and representations
contained in this paragraph. Purchaser represents that its signatory is fully
authorized to execute and deliver this Contract of Sale on its behalf.
B. TRB warrants and represents that it was duly organized and is in good
standing in its jurisdiction of organization and that it is in good standing in
the State in which the Premises is located. TRB warrants and represents that it
has the authority to enter into this Contract of Sale and agrees to supply to
Purchaser such information as Purchaser may require (such as its certificate of
incorporation, by-laws and resolutions adopted by its board of directors) to
establish to Purchaser's reasonable satisfaction the accuracy of the warranties
and representations contained in this paragraph. TRB represents that its
signatory is fully authorized to execute and deliver this Contract of Sale on
its behalf.
C. BRT warrants and represents that it was duly organized and is in good
standing in its jurisdiction of organization. BRT warrants and represents that
it has the authority to enter into this Contract of Sale and agrees to supply to
Purchaser such information as Purchaser may require (such as its declaration of
trust) to establish to Purchaser's reasonable satisfaction the accuracy of the
warranties and representations contained in this paragraph. BRT represents that
its signatory is fully authorized to execute and deliver this Contract of Sale
on its behalf.
10. Included Property. This sale includes only the Partnership Interests
and the rights of TRB in and to Stobba (except as otherwise set forth herein)
including, without limitation, its bank accounts and the rights of BRT in and to
the BRT Loan. Notwithstanding the foregoing, it is understood that this sale
shall not include TRB's rights relating to the Litigations as noted in Paragraph
3C above. It is also understood that this sale shall not include Stobba's rights
in respect of an arbitration proceeding currently pending against the Friday's
Restaurant (the "Arbitration"), which rights shall be assigned to TRB on or
before the Closing Date and that TRB shall retain the right to proceed with the
Arbitration and to retain any and all proceeds from the Arbitration.
<PAGE>
11. Closing Costs. A. Purchaser shall pay for all of the costs of closing
including its and the Lender's attorneys' fees, title insurance premiums (if
any), survey costs and recording charges. The parties anticipate that no state
or local transfer or similar tax shall be due and payable in respect of the
transactions herein contemplated. However, to the extent that any state or local
transfer or similar taxes are due on the transactions contemplated hereby,
Purchaser shall pay same. The preceding sentence shall survive the Closing.
B. Real property taxes for the Premises, escrow accounts with the Lender,
rents actually paid, interest on the Dime Mortgage, condominium maintenance
charges, operating expenses and water/sewer charges shall be equitably adjusted
as of the day before the Closing Date; provided, that for tenants that have not
yet paid their rent for the month including the Closing Date and that are not in
rental arrears for more than the current month, Purchaser shall pay to TRB the
pro-rated portion of rent that is due through the day preceding the Closing
Date. For rent arrears, the right to collect same shall be assigned to Purchaser
at the Closing. All rent received following the Closing Date by Purchaser from
tenants in arrears on the Closing Date shall be applied first to current rent,
and then to delinquent rent in inverse order of maturity. Purchaser will make a
good faith effort after the Closing to collect all rent in the usual course of
Purchaser's operations of the Premises, but Purchaser will not be obligated to
institute any lawsuit or other collection procedures to collect delinquent rent.
If the actual taxes shall not have been set by the Closing Date, the
apportionment shall be upon the basis of the tax rate for the previous year
applied to the latest assessed valuation. TRB (through Stobba) shall be
responsible to pay the installments of any special assessments that are due and
payable through the Closing Date and the Purchaser (through Stobba) shall be
responsible for the installments for the periods following the Closing Date. In
addition, Purchaser shall pay to TRB the amount of the funds on hand at Stobba
on the Closing Date.
12. Closing Date. A. The parties agree that the closing (the "Closing")
shall occur on a mutually agreeable business day on or before July 29, 1997 (the
"Closing Date"). The Closing shall take place at the offices of Escrow Agent or
Lender or its counsel. If Purchaser shall have failed or been unable to close on
or by the Closing Date, then this Contract shall terminate, neither party shall
have any further obligations to the other and TRB shall be entitled to the
entire Downpayment and any interest earned thereon. Time is of the essence in
respect of all dates set forth in this Paragraph 12A.
<PAGE>
B. Notwithstanding anything contained in this Contract of Sale to the
contrary it is understood and agreed that in the event of any default on the
part of Purchaser, TRB and BRT agree to look solely to the Downpayment in
accordance with the terms hereof as its liquidated damages and waives any claim
for specific performance or any other claim either against the Purchaser or
against any person disclosed or undisclosed. Notwithstanding anything to the
contrary set forth in this Contract of Sale, in the event TRB and/or BRT shall
default hereunder Purchaser's sole right shall be to either recover its
Downpayment with interest thereon (together with Purchaser's reasonable and
actual out of pocket expenses incurred to third parties in connection with this
Contract of Sale) or to seek specific performance of this Contract, with it
being understood that neither TRB or BRT shall not be liable for consequential
damages hereunder. The parties acknowledge that the amount of damages of the
parties occasioned by a default of one of the parties hereunder would be
difficult or impossible to accurately predict and the parties, after
consultation with counsel of their own choosing, agree that the remedies
provided for in this paragraph are reasonable.
13. Closing Documents. A. TRB or BRT, as applicable, agree to execute and
deliver to Purchaser on the Closing Date all documents, in form reasonably
satisfactory to Purchaser, necessary to effectuate the provisions hereof
including, without limitation:
a. An assignment and assumption of the Partnership Interests which shall
include an indemnity by Purchaser to TRB of all liabilities TRB may have due to
it having been the general partner of Stobba through the Closing Date excepting
those items for which TRB would have been liable for if TRB would have caused
Stobba to sell the Premises directly to Purchaser and then caused the
dissolution of Stobba (the "Assignment").
b. A notice of sale to the other partners of Stobba.
c. An amended certificate of limited partnership of Stobba indicating the
substitution of Purchaser for TRB as general partner together with such other
matters as TRB and Purchaser shall deem appropriate.
d. A mutual release between TRB and BRT on the one hand and Eric, David and
Jack, and their related entities on the other, in form reasonably satisfactory
to TRB and BRT (the "Mutual Release"), except that the Mutual Release shall not
contain a release from TRB and BRT in favor of Jack in respect of the remaining
Litigations.
e. Authorizations or other appropriate forms or documents necessary to
change the signatories on Stobba's bank accounts from TRB to Purchaser.
<PAGE>
f. A signed copy of the participation agreement, to be in form reasonably
satisfactory to TRB and Purchaser, relating to the Condo Note.
g. The original loan documents for the BRT Loan, or if the originals are
not located, then a copy certified as being true and correct, together with an
assignment of same, in recordable form and without representation or warrant
except solely that BRT has not sold or pledged the BRT Loan.
h. To the extent in TRB's possession, the books and records of Stobba.
i. Such other documents that shall reasonably be required to consummate the
transactions herein contemplated.
B. Purchaser agrees to execute and deliver to TRB or BRT, as applicable, on
the Closing Date all documents, in form reasonably satisfactory to TRB and BRT,
necessary to effectuate the provisions hereof including, without limitation:
a. The balance of the cash portion of the purchase price referred to
hereinabove.
b. The Assignment.
c. The assumption documents relative to the Dime Mortgage.
d. The Mutual Release.
e. A signed copy of the participation agreement, to be in form reasonably
satisfactory to TRB and Purchaser, relating to the Condo Note.
f. The written consent to the transactions contemplated hereby by all
partners in Stobba other than TRB and BRT.
g. Such other documents that shall reasonably be required to consummate the
transactions herein contemplated.
14. Pre-Closing Obligations of TRB. Between the date hereof and the Closing
Date, TRB shall:
<PAGE>
a. Cause Stobba to keep the Premises and all parts thereof in the same
state of repair and condition as they are currently in (including making
ordinary repairs and replacements) reasonable wear and tear excepted; provided
that nothing in this Contract shall require TRB to expend more than $20,000.00
in the aggregate on repairs and/or replacements to the Premises unless the item
to be repaired is covered by insurance but then subject to the provisions of
Paragraph 16 below.
b. Furnish Purchaser with such information and accounts with respect to the
operation and maintenance of the Premises or Stobba as Purchaser shall
reasonably request.
c. Not withdraw, settle or compromise any reduction proceeding affecting
real estate taxes assessed against the Premises without the prior consent of
Purchaser which consent shall not be unreasonably withheld or delayed. Any
future refunds and fees of third party tax consultants shall be prorated between
Purchaser and TRB as of the Closing Date. This Paragraph 14(d) shall survive the
Closing and the delivery of the deed.
d. Subject to the leases for the Premises, permit Purchaser or its
representatives access to the Premises, upon reasonable prior notice and at
reasonable times.
15. Condemnation. A. As of the date hereof, TRB has no knowledge of any
pending or contemplated condemnation proceedings affecting the Premises or any
part thereof.
<PAGE>
B. If prior to the Closing, all of the Premises shall be taken by
condemnation, eminent domain or deed in lieu thereof, this Contract of Sale
shall be automatically terminated, the Downpayment together with any interest
thereon shall be returned to Purchaser and thereupon neither party shall have
any further liability or obligation to the other. If prior to the Closing date,
a portion, but less than all, of the Premises shall be taken by condemnation,
eminent domain or deed in lieu thereof, which shall have a material, adverse
financial impact on the value or use of the Premises then Purchaser or TRB may,
at either's option, terminate this Contract of Sale by sending written notice
thereof within thirty (30) days of such condemnation or other taking, in which
event the Downpayment and the interest thereon shall be returned to Purchaser
and thereupon neither party shall have any further liability or obligations to
the other. For purposes hereof, a partial condemnation or other taking shall be
deemed material only if same shall result in cancellation of leases and/or
reductions in rents under leases in the aggregate resulting in the loss of five
percent (5%) or more of the aggregate rents currently provided for in the most
recent rent roll for the Premises. If this Contract of Sale is not terminated
Purchaser shall (a) accept title to the Premises subject to the condemnation or
other taking, and (b) pay in full the purchase price and on the Closing Date the
net proceeds of the award or payment (after payment of all actual collection
costs) shall be assigned by TRB to Purchaser and net monies theretofore received
by TRB in connection with such condemnation or other taking shall be paid over
to Purchaser or allowed as a credit against the purchase price hereunder (unless
previously used by TRB in connection with the repair of the Premises in
connection therewith). This Paragraph shall govern to the extent inconsistent
with any applicable law.
<PAGE>
16. Casualty. A. The risk of loss or damage or destruction to the Premises
by fire or other casualty is assumed by TRB until the Closing, but, except as
specifically set forth in this Paragraph, TRB shall not be obligated to repair
or replace any such loss or damage. In the event of fire or other casualty, TRB
shall have thirty (30) days to notify Purchaser whether it intends to rebuild
the Premises, but if TRB shall fail to notify Purchaser of its election within
such thirty (30) day period TRB shall be deemed to have elected not to rebuild.
If TRB elects (or is deemed to have elected) not to repair or replace any such
loss or damage to the Premises then both TRB and Purchaser shall have the option
of declaring this Contract of Sale terminated within thirty (30) days of TRB's
election not to rebuild, in which event TRB or Purchaser (as the case may be)
shall instruct Escrow Agent to refund to Purchaser, with the interest earned
thereon, the Downpayment whereupon this Contract of Sale and all rights of
Purchaser hereunder and to the Premises shall terminate and neither TRB nor
Purchaser shall have any further claim against the other; provided that if
neither party shall have elected to terminate this Contract as aforesaid then
Purchaser shall close title in accordance with this Contract and pay in full the
Purchase Price, without any abatement thereof or claim against TRB for such loss
or damage, and accepting an assignment, without recourse, of TRB's rights, if
any, to any payments to be made under any applicable hazard insurance policies,
if any, together with any payments under such policies made to TRB prior to the
Closing not expended to repair or replace such loss, damage or destruction. If
TRB elects to repair or replace any such loss or damage, TRB shall be entitled
to reasonable adjournments of the Closing Date in which to perform the work, not
exceeding one hundred twenty (120) days in the aggregate. If TRB elects to
repair or replace any such loss or damage to the Premises and if such loss or
damage is not repaired (substantial completion thereof) prior to the Closing
Date, as adjourned by TRB pursuant to this Paragraph, Purchaser shall have the
option of: (a) declaring this Contract of Sale terminated, in which event TRB or
Purchaser shall instruct Escrow Agent to refund to Purchaser, with the interest
earned thereon, the Downpayment whereupon this Contract of Sale and all rights
of Purchaser hereunder and to the Premises shall terminate and neither TRB nor
Purchaser shall have any further claim against the other or (b) closing title in
accordance with this Contract of Sale and paying in full the Purchase Price,
without any abatement thereof or claim against TRB for such loss or damage, and
accepting an assignment, without recourse, of TRB's rights, if any, to any
payments to be made under any applicable hazard insurance policies for work not
yet completed, together with any payments under such policies made to TRB prior
to the Closing not expended to repair or replace such loss, damage or
destruction. Notwithstanding the foregoing, if the cost of the repairs and
replacements is less than $25,000, as determined by an independent third party
professional chosen by TRB and acting reasonably, Purchaser shall close title
with a credit against the purchase price in such amount which shall not exceed
$25,000 and TRB shall retain the rights to the insurance proceeds, if any, in
respect of such casualty. This Paragraph shall govern to the extent inconsistent
with any applicable law.
B. If TRB receives a notice or request from any insurance company or Board
of Fire Underwriters (or other organization exercising functions similar
thereto) requesting the performance of any work or alteration in respect of the
Premises prior to the Closing Date, it agrees to promptly send same to Purchaser
and to attempt in good faith to comply therewith; provided, however, that in the
event compliance shall cost more than $10,000.00 then TRB shall have the option
not to so comply, in which event Purchaser shall have the option to either close
on its acquisition of the Premises with a $10,000.00 credit against the purchase
price or to rescind this Contract of Sale and in such case the Downpayment with
interest thereon shall be returned to Purchaser and thereafter the parties shall
have no further obligation to each other.
17. Assignment. Purchaser will not, without the prior written consent of
TRB and BRT (which consent may be withheld in TRB's and BRT's absolute
discretion), sell, assign or transfer its interest in this Contract of Sale. The
sale of more than a 50% interest in Purchaser (if Purchaser shall be other than
a natural person) shall be deemed an assignment requiring the consent of TRB as
set forth in the preceding sentence. Notwithstanding the foregoing, (i)
Purchaser shall be permitted to assign its rights under this Contract of Sale to
an entity in which Purchaser (or its principals) shall own at least a 50%
interest in and (ii) the BRT Loan and the Partnership Interests shall be
acquired by two distinct entities although both shall be affiliated with
Purchaser.
<PAGE>
18. Brokers. The parties each represents and warrants that: (i) it has not
dealt with any broker in respect of the sale of the Premises to Purchaser and
(ii) no broker brought the Premises to the attention of the Purchaser or was
otherwise involved in the Purchaser's interest in the Premises. Each party shall
indemnify, defend and hold harmless the other for any claims which would
constitute a breach of the foregoing representations and warranties. Purchaser
acknowledges that TRB has advised it that Stobba has been negotiating to lease
space for a Hollywood Video store and Purchaser acknowledges that there is in
effect a brokerage agreement with Majestic Affiliates, Inc. (an affiliate of
TRB) concerning this potential transaction, which brokerage agreement with
survive the Closing and remain an obligation of Stobba for which Purchaser
agrees to cause Stobba to fulfill. The provisions of this Paragraph shall
survive the Closing or the other termination of this Contract of Sale.
19. Management/Control. TRB agrees at Closing to deliver a letter from each
employee of TRB indicating their resignation as a director and officer of the
condominium association effective on the Closing Date. The Premises and the
condominium association are currently managed by Majestic Rose Corp.
("Majestic"), which is an affiliate of TRB. TRB shall cause Majestic to resign
as manager of the Premises effective the Closing Date and to resign as manager
of the condominium association at the discretion of Purchaser or the condominium
association. TRB makes no representation or warranty that Purchaser's designee
shall be appointed by the condominium association as its managing agent.
20. Miscellaneous. A. If any party shall be required to employ an attorney
to enforce or defend the rights of such party, the prevailing party shall be
entitled to recover reasonable attorneys' fees.
B. This Contract of Sale contains the complete agreement between the
parties, supersedes all prior agreements (oral or written) and no term hereof
may be waived or amended except by the written agreement of the party to be
charged by such waiver or amendment. This Contract of Sale has been negotiated
and shall not be construed against its drafter. The parties agree that there are
no oral agreements, understandings, representations or warranties which are not
expressly set forth herein.
C. All notices, demands and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been properly
given if delivered by hand or sent by United States registered or certified
mail, return receipt requested, or sent by Federal Express, United Parcel
Service or other reputable overnight delivery service, to TRB (for the attention
of Jeffrey A. Gould) at its address set forth above with a copy to Mark H.
Lundy, Esq., Brinberg & Lundy, Suite 303, 60 Cutter Mill Road, Great Neck, New
York 11021 and a copy to Philip B. Korb, Esq., Ballard Spahr Andrews &
Ingersoll, 1735 Market Street, 51st Floor, Philadelphia, Pennsylvania 19103, or
at such other addresses as it may designate by notice hereunder and to Purchaser
at its address set forth above with a copy to Jack D. Weiner, Esq., Fineman &
Bach, P.C., 1608 Walnut Street, Nineteenth Floor, Philadelphia, Pennsylvania
19103, or at such other addresses as it may designate by notice hereunder.
D. The respective attorneys for TRB and Purchaser are authorized to give
and receive any notices required or permitted to be sent hereunder and are
permitted to agree on adjournments of the Closing Date.
<PAGE>
E. This Contract of Sale shall not be binding until executed and delivered
by TRB and Purchaser. Once fully executed and delivered, this Contract of Sale
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
F. This Contract of Sale shall be governed by and construed in accordance
with the laws of the State in which Stobba was formed.
G. Purchaser agrees to make the checks or wire payments for the Purchase
Price to such parties as TRB and BRT shall direct.
H. If any provision hereof shall be deemed unenforceable, the remaining
terms of this Contract of Sale shall be unaffected thereby and shall remain in
full force and effect.
I. The headings herein are for reference purposes only and shall not be
deemed to affect the interpretation of this Contract of Sale.
J. The parties acknowledge that this Contract of Sale has been negotiated
and that each party has been represented by counsel of its choosing and that
therefor there shall be no presumption against the party that undertook the
drafting of the original version of this Contract of Sale.
K. TRB represents that Stobba has not yet finalized the 1996 federal and
any require state income tax returns. TRB agrees to cause Stobba to finalize and
file same prior to Closing and to promptly thereafter give a copy of such
returns to Purchaser but in any event by June 13, 1997. In the event the Closing
shall occur, Purchaser agrees to cause Stobba to prepare and file the required
returns for 1997 on or before the date due without penalty and to send to TRB
the appropriate K-1 within the required time frames. This paragraph shall
survive the Closing.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Contract of Sale as of the date first hereinabove written.
Tax ID #__________________ TRB ABBOTTS CORP.
By:_______________________________
Name:_____________________________
Title:____________________________
[signatures continue on following page]
<PAGE>
Tax ID #__________________ BRT REALTY TRUST
By:_______________________________
Name:_____________________________
Title:____________________________
Tax ID #__________________ LUBERT ADLER REAL ESTATE OPPORTUNITY FUND, L.P.
By:_______________________________
Name:_____________________________
Title:____________________________
Commonwealth Land Title Insurance Company,
solely in its capacity as Escrow Agent
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
EXHIBIT A
Legal Description
<PAGE>
EXHIBIT B
Employees/Service Contracts
1. Cable/satellite television agreement with Mid-Atlantic Cable
2. Air conditioning service agreement with O'Reilly Servicing Corp.
3. Rubbish removal contract with Santangelo Hauling, Inc.
4. Elevator maintenance contract with Jenkins Elevator Company, Inc.
Copies of each of the foregoing have previously been delivered to Purchaser.
<PAGE>
EXHIBIT C
Future Brokerage Obligations
None.
<PAGE>
EXHIBIT D
Litigation
None.
<PAGE>
