SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6856
ANDAL CORP.
(Exact name of registrant as specified in its charter)
New York 13-2571394
(State or other jurisdiction of incorporation
or organization) (I. R. S. Employer ID no.)
909 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 376-5545
Not Applicable
(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check (X) whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares outstanding of the registrant's common stock as of
July 19, 1996 was 329,859.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANDAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
ASSETS
June 30, September 30,
1996 1995
(Unaudited)
Current assets:
Cash $ 405 $ 850
Accounts receivable 5,056 4,998
Inventories 1,615 1,073
Other current assets 4,348 1,213
----------- ----------
Total current assets 11,424 8,134
Investments in joint ventures 1,315 1,268
Property and equipment 11,929 10,789
Loans due from Multi-Arc Inc. management 1,000 1,000
Other assets 2,112 2,434
--------- --------
$ 27,780 $23,625
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Short-term borrowings, including
current portion of long-term debt $ 1,198 $ 1,206
Current portion of debt due shareholders 10,664 1,250
Accounts payable 1,695 1,606
Other accrued expenses 5,049 5,106
---------- ---------
Total current liabilities 18,606 9,168
Long-term debt 8,487 7,886
Debt due shareholders 0 6,364
Other deferred income 1,173 1,430
Convertible subordinated debentures 3,335 3,335
Minority interest in Multi-Arc Inc. 679 540
Shareholders' equity:
Common shares, par value $20 per share,
1,500,000 authorized and 370,496 issued 7,410 7,410
Paid-in-capital 31,625 31,625
Deficit (37,874) (38,472)
Less 40,637 common shares held in treasury,
at cost (5,661) (5,661)
Total shareholders' equity (deficit) (4,500) (5,098)
--------- --------
$ 27,780 $23,625
See accompanying notes to consolidated financial statements.
<PAGE>
ANDAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited and in thousands of dollars,
except per share amounts)
Three Months Nine Months
Ended Ended
June 30, June 30,
1996 1995 1996 1995
Operating revenues:
Trade sales $7,779 $7,679 $22,790 $22,400
Royalties and commissions 137 74 336 264
Equity in net income of
foreign joint venture 6 0 96 0
------- ------- ------- --------
7,952 7,753 23,222 22,664
Operating costs and expenses:
Cost of revenues 3,881 4,122 11,374 11,673
Depreciation expense 546 472 1,586 1,450
Selling, general, and
administrative expenses 2,854 2,617 8,473 7,653
------- ------- -------- --------
7,281 7,211 21,433 20,776
Income from operations 671 542 1,789 1,888
Other income (expense):
Gain on sale of minority interest
in Multi-Arc Inc. 0 188 0 188
Minority interest in net income
of Multi-Arc Inc. (51) (31) (139) (59)
Gain from initial public offering
of Multi-Arc India Ltd. 0 0 0 85
Investment and other income, net 60 3 152 21
Interest expense (477) (445) (1,394) (1,335)
----- ----- ------- -------
(468) (285) (1,381) (1,100)
Income from continuing operations
before income taxes 203 257 408 788
Provision for income taxes (39) (16) (48) (33)
Income from continuing operations 164 241 360 755
Income from discontinued operations 0 1,032 238 1,022
------ ------- ------- ---------
Net income $ 164 $1,273 $ 598 $ 1,777
Income per common share:
Income from continuing operations $.50 $ .73 $1.09 $2.29
Income from discontinued operations 0 3.13 .72 3.10
Net income $.50 $3.86 $1.81 $5.39
See accompanying notes to consolidated financial statements.
<PAGE>
ANDAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited and in thousands of dollars)
Nine Months Ended
June 30,
1996 1995
Cash provided by operating activities:
Income from continuing operations
before income taxes $ 408 $ 788
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities:
Depreciation 1,586 1,450
Gain on sale of minority interest in
Multi-Arc Inc. 0 (188)
Minority interest in net income of
Multi-Arc Inc. 139 59
Amortization of patents, trademarks,
and license rights 132 152
Deferred income accrued 62 0
Amortization of deferred income (156) (63)
Equity in net (income) of
foreign joint ventures (96) 0
Gain from initial public offering of
Multi-Arc India Ltd. 0 (85)
Cash provided (used) by discontinued
operations 170 (32)
Income taxes paid (41) (116)
Other, net 97 49
Change in operating assets and liabilities:
(Increase) in accounts receivable (68) (306)
(Increase) in inventories (602) (253)
(Increase) in other current assets (77) (225)
Increase (decrease) in accounts payable
and accrued liabilities 93 (704)
Net cash provided by operating activities 1,647 526
Cash flows from financing activities:
Proceeds from long-term debt 4,800 1,500
Loans to Multi-Arc management 0 (1,000)
Proceeds from sale of common stock in
and debentures of Multi-Arc Inc. 375 1,500
Deferred financing costs 0 (107)
Reductions of long-term debt (1,149) (1,552)
Decrease in debt due within one year (8) (102)
Net cash provided by financing activities 4,018 239
Cash flows from investing activities:
Gross additions to property and equipment (2,786) (1,312)
Purchase of 61st Street Property (3,227) 0
Reductions of (investment in) joint ventures 49 (168)
Other, net (146) (35)
Net cash (used) by investing activities (6,110) (1,515)
(Decrease) in cash (445) (750)
Cash at beginning of period 850 1,143
Cash at end of period $ 405 $ 393
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and include all adjustments which, in the
opinion of management, are necessary to present fairly the results for such
periods. These interim financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in Andal Corp.'s
("Andal" or the "Company") annual report on Form 10-K for the year ended
September 30, 1995.
The accompanying consolidated financial statements have been prepared on
a going concern basis which contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business. The Company's
only significant source of cash flow is Multi-Arc. Pursuant to the terms of
the 1994 restructuring of Multi-Arc and of Multi-Arc's term loan and revolving
credit facility with First Union National Bank, Multi-Arc is not permitted to
pay dividends or make loans to Andal, except that Multi-Arc is permitted to
pay cash to Andal to the extent that it utilizes any of Andal's federal,
state, and local net operating loss carryforwards for income tax purposes.
However, such payments cannot exceed $1 million for fiscal 1996, after which
no further payments are permitted. Andal could raise additional cash by
making sales of the remaining stock it owns of Integrated Brands Inc., as
market conditions permit (approximately $375,000 at the current market value)
and, in fiscal 1996, the Company expects to receive approximately $750,000 for
the 1995 sales of Multi-Arc stock and debentures (see Note 3).
The Company's fiscal 1996 cash requirements are estimated to be $1.2
million for operating expenses, $400,000 for interest expense, and $1 million
for principal payments on shareholder debt. In addition, the Company may also
require cash to make payments to creditors who have yet to make payment
demands. After completion of the sale of the 61st Street Property to FAM (see
Note 2), the Company will continue to be indebted to affiliates of FAM in the
amount of approximately $1.8 million, which indebtedness is in default.
Unless the Company can accomplish a restructuring of this indebtedness which
will allow it to meet its fiscal 1996 cash needs, there may be no alternative
to the Company other than to enter into bankruptcy proceedings. The
accompanying consolidated financial statements do not include any adjustments
relating to the possible effect on the recoverability and classification of
assets or the amounts and classification of liabilities that may be necessary
should the Company be unable to continue as a going concern.
(2) Prior to May 8, 1996 the Company, directly or through a wholly-owned
subsidiary, UBC Virginia Corp. ("UBC Corp."), had owned an option (the
"Option") to purchase a parcel of real estate (the "Property") located on 61st
Street and First Avenue in New York City, which Option had been carried on the
books of the Company at nil value for many years. UBC Corp. was merged into
the Company in March 1996, after which time the Option became directly owned
by the Company.
In 1990, the Option was pledged as security for a $5 million loan,
hereafter referred to as the "Option Loan," made to the Company by Alan N.
Cohen, President and a Director of the Company, Paul Milstein, who was then a
Director of the Company, and Frankhill Associates, a limited partnership of
which Andrew J. Frankel, Chairman of the Board and a Director of the Company,
is a general partner (collectively, in such capacity, the "Option Lenders").
As of June 30, 1996, the principal balance of the Option Loan, after
adjustment for a restructuring which occurred in 1992, was $5,571,285, which
is due and payable on the earlier of March 31, 1997, or the day after certain
other indebtedness to shareholders of the Company, including the individuals
mentioned above, has been paid in full.
The Option granted the Company the right to purchase the Property for
approximately $3 million in cash and was exercisable only after the death of
the later to die of two of the principals of the corporation that granted the
Option. Such death occurred in 1995. The Company did not have the cash
required to exercise the Option, and it could not raise it through borrowing
from unrelated parties or through the sale of assets other than the Option.
However, under the terms of the Option Loan, the Company was obligated to
exercise the Option. Accordingly, the Option was exercised in October 1995;
and the Company purchased the Property on May 8, 1996. In order to make the
purchase, on May 7, 1996, the Company borrowed $3.3 million (the "Demand
Loan") from the Option Lenders evidenced by a demand note and secured by a
mortgage on the Property. The Demand Loan bears interest at 10% per annum.
The Company's failure to pay the purchase price for the Property would
have resulted in an event of default under the Option Loan, which would have
given the Option Lenders the right to exercise the Option on the Company's
behalf and to declare the Option Loan immediately due and payable, including
all sums advanced by the Option Lenders in exercising the Option. In
addition, the Option Lenders would have had all of the remedies available to
them under applicable law for secured lenders, including, without limitation,
the public or private sale of the Property acquired by exercise of the Option.
Until January 1995, the Company had been under contract to sell the
Option to an unrelated real estate developer, who had contracted to purchase
the Option in 1984. The developer was unable to obtain financing to
consummate the purchase; and, as a result, the Company terminated the
contract. Upon termination of the contract, the Company attempted to sell
the option to various other parties. In addition, after the Company received
the Option Notice from the Optionor, the Company made contact with several
brokers who were not able to identify a buyer. The Company's attempts to sell
the Option did not result in any bona fide offer from a third party to
purchase the Option.
Once it was learned that the Option had become exercisable, the Option
Lenders expressed an interest in acquiring the Property in satisfaction of the
amount outstanding on the Option Loan. In that event, the Company would no
longer have been obligated with respect to the $3 million purchase price
obligation due on the Option exercise.
The Board of Directors of the Company met on October 5, 1995 to discuss
the difficulties entailed in the Company's exercise of the Option, including
the Company's lack of cash flow, diminished borrowing power, debt structure,
and difficulties in raising funds through a private placement of Multi-Arc's
common stock and subordinated debentures. After discussion, the Board members
who are not Lenders (Messrs. Flood and Glickman) authorized the officers of
the Company to engage an independent appraiser to conduct an appraisal of the
Property, following which such Board members would seek to negotiate a
transaction with the Option Lenders taking into account, in addition to the
appraisal, all material circumstances relating to the Property, including,
without limitation, the inability of the Company to raise sufficient funds
required to exercise the Option, the time constraints within which the Company
must exercise the Option, and the consequent probability that, without a sale
to a related party, the Option would expire worthless.
On November 21, 1995, the Company received a report from the independent
appraiser it had retained which concluded that the range for the market value
of the Property was between $9.9 million and $11.9 million (before deducting
the $3 million that would have to be paid to exercise the Option), depending
on the ultimate cost of complying with zoning restrictions and other costs
that would be incurred in the development of the Property. The appraiser's
conclusion was based on a number of assumptions, including the assumption that
a sale would occur after a reasonable exposure in a competitive market under
all conditions requisite for a fair sale, with the buyer and seller acting
prudently, knowledgeably, for self-interest, and not under undue duress.
On March 4, 1996, at a special meeting of the Board of Directors of the
Company appropriate officers of the Company were authorized and empowered to
engage in negotiations with the Option Lenders to reach a definite agreement
to sell the Option to them under terms and conditions that were outlined by
the Board. Although the parties were unable to reach a definitive agreement
prior to May 8, 1996, the Company continued to negotiate with affiliates of
the Option Lenders for the sale of the Property to them; and on July 10, 1996,
the Company entered into a contract to sell the Property located at 61st
Street and First Avenue in New York City to FAM, LLC ("FAM"), a Delaware
limited liability company owned by Frankhill Associates, the Alan N. Cohen
Family Company, LLC, a Delaware limited liability company of which Alan N.
Cohen is manager, and Builtland Associates, a New York general partnership of
which Paul Milstein is a general partner. Builtland Associates is the
managing director of FAM and as such controls its activities. The sale is
expected to close in August 1996.
The contract specifies a sales price of $9,100,000 to be paid as
follows:
a) Cancellation of indebtedness in the amount of $5,571,285 due
to Frankhill Associates, the Alan N. Cohen Family Company,
LLC, and Paul Milstein pursuant to a loan agreement dated as
of July 5, 1990, and at closing to be held by FAM.
b) Cancellation of indebtedness of $3,300,000 evidenced by
loans due Frankhill Associates, the Alan N. Cohen Family
Company, LLC, and Paul Milstein, pursuant to a demand note
given on May 8, 1996, and at closing to be held by FAM.
c) Cash payment to the Company of $228,715.
In addition to the consideration outlined above, the Company will not
be required to pay unpaid interest on the indebtedness and will be entitled to
additional consideration if, within one year from the date of sale to FAM, all
or any portion of the real estate is further transferred to a bona fide third-
party, or if FAM enters into an agreement to transfer all or any portion of
the real estate to a bona fide third-party and such transfer ultimately
occurs. In either of such events the Company will be entitled to fifty
percent of the amount by which the "Net Proceeds" of the sale of all or any
portion of the real estate exceeds $10,000,000. In no event can such
additional consideration exceed $3,000,000. "Net Proceeds" is defined to mean
the gross sales price attributable to the sale of all or any portion of the
real estate plus the then fair market value of any of the real estate retained
by FAM in connection with a partial sale, less any and all transaction costs,
taxes and all other expenses of FAM including, without limitation, brokerage
commissions, reasonable attorney's fees and transfer taxes.
The Company estimates that it will report a gain of approximately $5.8
million from the sale, including the reversal of interest accruals.
(3) In June and September 1995, Andal sold, for $1,010,000, approximately
4.9% of the common stock of Multi-Arc to certain foreign licensees and other
investors; and Multi-Arc sold to such licensees and other investors $1,010,000
of convertible subordinated debentures (convertible into approximately 3.8% of
Multi-Arc common stock), the cash proceeds of which were remitted to Andal as
a return of capital. These debentures bear interest at 6% and are payable on
December 15, 2004. Approximately $450,000 of the common stock sold, and
$450,000 principal amount of the debentures sold are evidenced by a promissory
note which requires monthly principal payments over three years plus interest
at 6% per annum. An additional $153,000 of common stock and $153,000
principal amount of the debentures were sold on open account. The gain on
these sales of Multi-Arc common stock was $800,000, of which $452,000 was
deferred and is being recognized as the amounts are collected.
(4) Inventories are summarized as follows:
June 30, September 30,
1996 1995
(In thousands of dollars)
Raw materials and supplies $1,309 $820
Work-in-process 306 253
$1,615 $1,073
(5) Andal and its subsidiaries file a consolidated federal income tax
return, and state and local tax returns are generally filed on a combined
basis.
At September 30, 1995, the Company had net operating loss carryforwards
("NOL's") for federal income tax purposes of approximately $31.5 million which
expire in varying amounts in calendar years 1995 through 2008. In addition,
the Company's subsidiary in the United Kingdom had unrelieved corporation tax
losses of approximately $2.8 million.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
The Company has provided a valuation allowance against net deferred tax assets
because it is more likely than not that the net deferred tax assets will not
be realized.
(6) The Company is aware of certain lawsuits and claims which are pending
involving it and its subsidiaries. In the opinion of the Company's
management, these matters will not result in any material adverse effect on
the Company's consolidated financial position, results of operations, or
liquidity.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company, through its subsidiary, Multi-Arc Inc. ("Multi-Arc"), is
engaged in surface enhancement, the business of coating materials, primarily
metals. Multi-Arc is also engaged in the design, manufacture, assembly, and
sale of proprietary coating equipment systems.
Consolidated operating revenues of $8.0 million and $23.2 million,
respectively, for the three months and nine months ended June 30, 1996 were
$199,000 and $558,000 higher than the revenues for the comparable periods of
the prior year. Of the nine month increase, $2.0 million represents growth of
10% in the Company's coating services business due to continued penetration of
the Company's served markets with particular strength in the United Kingdom.
Equipment sales declined $1.6 million, as the prior year included one major
and two smaller systems deliveries. For the three months ended June 30, 1996,
equipment sales were $718,000 lower than the prior year. Royalties and
commissions have increased $72,000 in the nine month period due to higher fees
from the Ion Bond network and commissions on equipment sales in Japan.
Equity in net income of foreign joint ventures has increased due to higher
earnings from Multi-Arc India Ltd.
Income from continuing operations before income taxes was $203,000 and
$408,000, respectively, for the three months and nine months ended June 30,
1996 compared with $257,000 and $788,000 in the comparable periods of the
prior year. Income from operations for the nine months ended June 30, 1996
declined to $1.8 million from $1.9 million in the prior year, principally as a
result of higher selling, general, and administrative costs which reflect the
continuing effect of the augmentation of Multi-Arc's field sales force and
sales management personnel.
Income from continuing operations for the nine months ended June 30,
1996 also included $83,000 from the recognition of deferred income related to
the collection of notes receivable from the sale of minority interest in
Multi-Arc Inc. and related interest income of $33,000. The prior year
included a gain of $85,000 from the initial public offering of Multi-Arc India
Ltd. The prior year also included $188,000 of gain related to the sale of
minority interest in Multi-Arc Inc. (see Note 3).
Interest expense for the nine months ended June 30, 1996 increased over
the prior year principally due to higher levels of debt.
Income from discontinued operations for the three and nine months ended
June 30, 1996 reflects $97,000 from collection of a note from Salem Tube, Inc.
and $152,000 from settlements of old real estate claims offset by certain
legal expenses.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended June 30, 1996, cash decreased by $445,000,
principally because of cash used by investing activities of $6.1 million.
Financing activities provided cash of $4 million and operating activities
provided $1.6 million.
Cash used by investing activities includes $3.2 million to exercise the
Option to purchase a parcel of real estate at 61st Street and First Avenue in
New York City (see Note 2). In addition, investing activities include capital
expenditures of $2.8 million, offset by $49,000 of dividends received from the
Company's investment in Multi-Arc India Ltd.
Cash provided by financing activities reflects $1.5 million of new debt
borrowed by Multi-Arc under its revolving credit facility to finance working
capital needs and $375,000 received on the collection of notes related to the
Company's sale of common stock in and debentures of Multi-Arc (see Note 3).
During the six months, the Company repaid $1,149,000 of long term debt. Cash
provided by operating activities reflects the high level of non-cash
depreciation and amortization charges and an increase in current payables and
accrued liabilities to partly finance higher inventory levels in anticipation
of equipment construction demands.
The Company's only source of cash flow, other than from the sale of
capital assets, is Multi-Arc. Pursuant to the terms of the 1994 restructuring
of Multi-Arc and of Multi-Arc's term loan and revolving credit facility with
First Union National Bank, Multi-Arc is not permitted to pay dividends or make
loans to Andal, except that Multi-Arc is permitted to pay cash to Andal to the
extent that it utilizes any of Andal's federal, state, and local net operating
loss carry forwards for income tax purposes. However, such payments cannot
exceed $1 million per year for fiscal 1996, after which no further payments
are permitted. Andal could also raise cash by making sales of the remaining
Integrated stock it owns, as market conditions permit (approximately $375,000
at the current market value); and, in fiscal 1996, Andal expects to receive
approximately $750,000 from the 1995 sales of Multi-Arc stock and debentures
(see Note 3).
The Company's fiscal 1996 cash requirements are estimated to be $1.2
million for operating expenses, $400,000 for interest expense, and $1 million
for principal payments on shareholder debt. In addition, the Company may also
require cash to make payments to creditors who have yet to make payment
demands. After completion of the sale of the 61st Street Property to FAM (see
Note 2), the Company will continue to be indebted to affiliates of FAM in the
amount of approximately $1.8 million, which indebtedness is in default.
Unless the Company can accomplish a restructuring of this indebtedness which
will allow it to meet its fiscal 1996 cash needs, there may be no alternative
to the Company other than to enter into bankruptcy proceedings. The
accompanying consolidated financial statements do not include any adjustments
relating to the possible effect on the recoverability and classification of
assets or the amounts and classification of liabilities that may be necessary
should the Company be unable to continue as a going concern.
<PAGE>
PART II. OTHER INFORMATION
ITEM 3. EXHIBITS AND REPORT ON FORM 8-K
Exhibit 10(v) Contract of Sale of 61st Street Property dated July 10, 1996
Exhibit 27 Financial Data Schedule
No reports on Form 8-K were filed by the Company during the quarter
ended June 30, 1996.
<PAGE>
S I G N A T U R E
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.
ANDAL CORP.
DATE: July 25, 1996 By: /s/ Michael S. Huber
Michael S. Huber
Senior Vice President,
Chief Financial Officer,
and Treasurer
DATE: July 25, 1996 By: /s/ Walter N. Kreil, Jr.
Walter N. Kreil, Jr.
Vice President,
Chief Accounting Officer,
and Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 405
<SECURITIES> 0
<RECEIVABLES> 5164
<ALLOWANCES> 108
<INVENTORY> 1615
<CURRENT-ASSETS> 11424
<PP&E> 29267
<DEPRECIATION> 17338
<TOTAL-ASSETS> 27780
<CURRENT-LIABILITIES> 18606
<BONDS> 11822
0
0
<COMMON> 7410
<OTHER-SE> (11910)
<TOTAL-LIABILITY-AND-EQUITY> 27780
<SALES> 22790
<TOTAL-REVENUES> 23222
<CGS> 11374
<TOTAL-COSTS> 21433
<OTHER-EXPENSES> (13)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1394
<INCOME-PRETAX> 408
<INCOME-TAX> 48
<INCOME-CONTINUING> 360
<DISCONTINUED> 238
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 598
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.81
</TABLE>
154 Contract of sale for New York Distributed by Julius Blumberg, Inc.
office, commercial and multi-family NYC 10013
residential premises.
2-95
Prepared by the Real Property Committee of the Association of the Bar of the
City of New York
NOTE: This form is intended to cover matters common to most transactions.
Provisions should be added, altered or deleted to suit the circumstances of a
particular transaction.
Contract of Sale--Office, Commercial and Multi-Family Residential Premises
Table of Contents
Section 1. Sale of premises and acceptable title
Section 2. Purchase price, acceptable funds, existing mortgages, purchase
money mortgage, escrow of downpayment and foreign persons
Section 3. The closing
Section 4. Representations and warranties of seller
Section 5. Acknowledgments of purchaser
Section 6. Seller's obligations as to leases
Section 7. Responsibility for violations
Section 8. Destruction, damage or condemnation
Section 9. Covenants of seller
Section 10. Seller's closing obligations
Section 11. Purchaser's closing obligations
Section 12. Apportionments
Section 13. Objections to title, failure of seller or purchaser to perform
and vendee's lien
Section 14. Broker
Section 15. Notices
Section 16. Limitations on survival of representations, warranties, covenants
and other obligations
Section 17. Gains tax and miscellaneous provisions
Signatures and receipt by escrowee
Schedule A. Description of premises (to be attached)
Schedule B. Permitted exceptions
Schedule C. Purchase price
Schedule D. Miscellaneous
Schedule E. Rent schedule (to be attached)
CONTRACT dated July 10, 1996, between
ANDAL CORP., a New York corporation, having an address at 909 Third Avenue,
New York, New York
("Seller") and
FAM, LLC, a Delaware limited liability company, having an address at c/o
Milstein Properties, 1271 Avenue of the Americas, New York, New York 10020,
Attn .: Edwin V , Petz , Esq .
("Purchaser").
Seller and Purchaser hereby covenant and agree as follows:
Section 1. Sale of Premises and Acceptable Title
Subsection 1.01. Seller shall sell to Purchaser, and Purchaser shall
purchase from Seller, at the price and upon the terms and conditions set forth
in this contract: (a) the parcel of land more particularly described in
Schedule A attached hereto ("Land"); (b) all buildings and improvements
situated on the Land (collectively, "Building"); (c) all right, title and
interest of Seller, if any, in and to the land lying in the bed of any street
or highway in front of or adjoining the Land to the center line thereof and to
any unpaid award for any taking by condemnation or any damage to the Land by
reason of a change of grade of any street or highway; (d) the appurtenances
and all the estate and rights of Seller in and to the Land and Building; and
(e) all right, title and interest of Seller, if any, in and to the fixtures,
equipment and other personal property attached or appurtenant to the Building
(collectively, "Premises"). The Premises are located at or known as
1110-1112 First Avenue, New York, New York
Tax Lot 46, Block 1455.
Subsection 1.02. Seller shall convey and Purchaser shall accept fee
simple title to the Premises in accordance with the terms of this contract,
subject only to: (a) the matters set forth in Schedule B attached hereto
(collectively, "permitted Exceptions"); and
and as First American Title is willing to ensure as provided ln Schedule D
hereto.
Section 2. Purchase Price, Acceptable Funds, Existing Mortgages, Purchase
Money Mortgage, Escrow of Downpayment and Foreign Persons
Subsection 2.01. [Deleted]
SEE RIDER
Subsection 2.02. All monies payable under this contract, unless
otherwise specified in this contract, shall be paid by (a) certified checks of
Purchaser or any person making a purchase money loan to Purchaser drawn on any
bank, savings bank, trust company or savings and loan association having a
banking office in the State of New York; (b) official bank checks drawn by any
such banking institution, payable to the order of Seller, or (c) Federal Funds
wire transfer, except that uncertified checks of Purchaser payable to the
order of Seller up to the amount of one-half of one percent of the purchase
price shall be acceptable for sums payable to Seller at the Closing.
Subsection 2.05. (a) If the sum paid under paragraph (a) of Schedule
C or any other sums paid on account of the Purchase Price prior to the Closing
(collectively, "Downpayment") are paid by check or checks drawn to the order
of and delivered to Seller's attorney or another escrow agent ("Escrowee"),
the Escrowee shall hold the proceeds thereof in escrow in a special bank
account (or as otherwise agreed in writing by Seller, Purchaser and Escrowee)
until the Closing or sooner termination of this contract and shall pay over or
apply such proceeds in accordance with the terms of this section. Escrowee
need not hold such proceeds in an interest-bearing account, but if any
interest is earned thereon, such interest shall be paid to the same party
entitled to the escrowed proceeds, and the party receiving such interest shall
pay any income taxes thereon. The tax identification numbers of the parties
are either set forth in Schedule D or shall be furnished to Escrowee upon
request. At the Closing, such proceeds and the interest thereon, if any, shall
be paid by Escrowee to Seller. If for any reason the Closing does not occur
and either party makes a written demand upon Escrowee for payment of such
amount, Escrowee shall give written notice to the other party of such demand.
If Escrowee does not receive a written objection from the other party to the
proposed payment within 10 business days after the giving of such notice,
Escrowee is hereby authorized to make such payment. If Escrowee does receive
such written objection within such 10 day period or if for any other reason
Escrowee in good faith shall elect not to make such payment, Escrowee shall
continue to hold such amount until otherwise directed by written instructions
from the parties to this contract or a final judgment of a court. However,
Escrowee shall have the right at any time to deposit the escrowed proceeds and
interest thereon, if any, with the clerk of the Supreme Court of the county in
which the Land is located. Escrowee shall give written notice of such deposit
to Seller and Purchaser. Upon such deposit Escrowee shall be relieved and
discharged of all further obligations and responsibilities here under.
(b) The parties acknowledge that Escrowee is acting
solely as a stakeholder at their request and for their convenience, that
Escrowee shall not be deemed to be the agent of either of the parties, and
that Escrowee shall not be liable to either of the parties for any act or
omission on its part unless taken or suffered in bad faith, in willful
disregard of this contract or involving gross negligence. Seller and
Purchaser shall jointly and severally indemnify and hold Escrowee harmless
from and against all costs, claims and expenses, including reasonable
attorneys' fees, incurred in connection with the performance of Escrowee's
duties hereunder, except with respect to actions or omissions taken or
suffered by Escrowee in bad faith, in willful disregard of this contract or
involving gross negligence on the part of Escrowee.
(c) Escrowee has acknowledged agreement to
these provisions by signing in the place indicated on the signature page of
this contract.
Subsection 2.06. In the event that Seller is a "foreign person" as
defined in Internal Revenue Code Section 1445 and regulations issued
thereunder (collectively, the "Code Withholding Section"), or in the event
that Seller fails to deliver the certification of non-foreign status required
under Subsection 10.12(c), or in the event that Purchaser is not entitled
under the Code Withholding Section to rely on such certification, Purchaser
shall deduct and withhold from the Purchase Price a sum equal to ten percent
(10% ) thereof and shall at Closing remit the withheld amount with Forms 8288
and 8288A (or any successors thereto) to the Internal Revenue Service; and if
the cash balance of the Purchase Price payable to Seller at the Closing after
deduction of net adjustments, apportionments and credits (if any) to be made
or allowed in favor of Seller at the Closing as herein provided is less than
ten percent (10%) of the Purchase Price, Purchaser shall have the right to
terminate this contract, in which event Seller shall refund the Downpayment to
Purchaser and shall reimburse Purchaser for title examination and survey costs
as if this contract were terminated pursuant to Subsection 13.02. The right
of termination provided for in this Subsection 2.06 shall be in addition to
and not in limitation of any other rights or remedies available to Purchaser
under applicable law.
Section 3. The Closing
Subsection 3.01. Except as otherwise provided in this contract, the
closing of title pursuant to this contract ("Closing") shall take place on the
scheduled date and time of closing specified in Schedule D (the actual date of
the Closing being herein referred to as "Closing Date") at the place specified
in Schedule D.
Section 4. Representations and Warranties of Seller
Seller represents and warrants to Purchaser as follows:
Subsection 4.01. Unless otherwise provided in this contract, Seller is
the sole owner of the Premises.
Subsection 4.10. The assessed valuation and real estate taxes set forth
in Schedule D, if any, are the assessed valuation of the Premises and the
taxes paid or payable with respect thereto for the fiscal year indicated in
such schedule. Except as otherwise set forth in Schedule D, there are no tax
abatements or exemptions affecting the Premises.
Subsection 4.13. Except as otherwise set forth in Schedule D, Seller
has no actual knowledge of any assessment payable in annual installments, or
any part thereof, which has become a lien on the Premises.
Subsection 4.14. Seller is not a "foreign person" as defined in the
Code Withholding Section.
Section 5. Acknowledgments of Purchaser
Purchaser acknowledges that:
Subsection 5.01. Purchaser has inspected the Premises, is fully
familiar with the physical condition and state of repair thereof, and, subject
to the provisions of Subsection 7.01, Subsection 8.01, and Subsection 9.04,
shall accept the Premises "as is" and in their present condition, subject to
reasonable use, wear, tear and natural deterioration between now and the
Closing Date, without any reduction in the Purchase Price for any change in
such condition by reason thereof subsequent to the date of this contract.
Subsection 5.02. Before entering into this contract, Purchaser has made
such examination of the Premises, the operation, income and expenses thereof
and all other matters affecting or relating to this transaction as Purchaser
deemed necessary. In entering into this contract, Purchaser has not been
induced by and has not relied upon any representations, warranties or
statements whether express or implied, made by Seller or any agent, employee
or other representative of Seller or by any broker or any other person
representing or purporting to represent Seller which are nol expressly set
forth in this contract, whether or not any such representations, warranties or
statements were made in writing or orally.
Section 6. Seller's Obligations as to Leases
Subsection 6.01. Unless otherwise provided in a schedule attached to
this contract, between the date of this contract and the Closing, Seller shall
not, without Purchaser's prior written consent, which consent shall not be
unreasonably withheld: (a) amend, renew or extend any Lease in any respect,
unless required by law; (b) grant a written lease to any tenant occupying
space pursuant to a Tenancy; or (c) terminate any lease or Tenancy except by
reason of a default by the tenant thereunder.
Subsection 16.02. Unless otherwise provided in a schedule attached to
this contract, between the date of this contract and the Closing, Seller shall
not permit occupancy of, or enter into any new lease for, space in the
Building which is presently vacant or which may hereafter become vacant
without first giving Purchaser written notice of the identity of the proposed
tenant, together with (a) either a copy of the proposed lease or a summary of
the terms thereof in reasonable detail and (b) a statement of the amount of
the brokerage commission, if any, payable in connection therewith and the
terms of payment thereof. If Purchaser objects to such proposed lease,
Purchaser shall so notify Seller within 4 business days after receipt of
Seller's notice if such notice was personally delivered to Purchaser, or
within 7 business days after the mailing of such notice by Seller to
Purchaser, in which case Seller shall not enter into the proposed lease.
Unless otherwise provided in a schedule attached to this contract, Purchaser
shall pay to Seller at the Closing, in the manner specified in Subsection
2.02, the rent and additional rent that would have been payable under the
proposed lease from the date on which the tenant's obligation to pay rent
would have commenced if Purchaser had not so objected until the Closing Date,
less the amount of the brokerage commission specified in Seller's notice and
the reasonable cost of decoration or other work required to be performed by
the landlord under the terms of the proposed lease to suit the premises to the
tenant's occupancy ("Reletting Expenses"), prorated in each case over the term
of the proposed lease and apportioned as of the Closing Date. If Purchaser
does not so notify Seller of its objection, Seller shall have the right to
enter into the proposed lease with the tenant identified in Seller's notice
and Purchaser shall pay to Seller, in the manner specified in Subsection 2.02,
the Reletting Expenses, prorated in each case over the term of the lease and
apportioned as of the later of the Closing Date or the rent commencement date.
Such payment shall be made by Purchaser to Seller at the Closing. In no event
shall the amount so payable to Seller exceed the sums actually paid by Seller
on account thereof.
Subsection 6.03. If any space is vacant on the Closing Date, Purchaser
shall accept the Premises subject to such vacancy, provided that the vacancy
was not permitted or created by Seller in violation of any restrictions
contained in this contract. Seller shall not grant any concessions or rent
abatements for any period following the Closing without Purchaser's prior
written consent. Seller shall not apply all or any part of the security
deposit of any tenant unless such tenant has vacated the Premises.
Subsection 6.04. Seller does not warrant that any particular Lease or
Tenancy will be in force or effect at the Closing or that the tenants will
have performed their obligations thereunder. The termination of any Lease or
Tenancy prior to the Closing by reason of the tenant's default shall not
affect the obligations of Purchaser under this contract in any manner or
entitle Purchaser to an abatement of or credit against the Purchase Price or
give rise to any other claim on the part of Purchaser.
Section 7. Responsibility for Violations
Section 8. Destruction, Damage or Condemnation
Subsection 8.01. The provisions of Section 5-1311 of the General
Obligations Law shall not apply to the sale and purchase provided for in this
contract.
Section 9. Covenants of Seller
Seller covenants that between the date of this contract and the Closing:
Subsection 9.02. Seller shall not modify or amend any Service Contract
or enter into any new service contract unless the same is terminable without
penalty by the then owner of the Premises upon not more than 30 days' notice.
Subsection 9.05. Seller shall not withdraw settle or otherwise
compromise any protest or reduction proceeding affecting real estate taxes
assessed against the Premises for any fiscal period in which the Closing is to
occur or any subsequent fiscal period without the prior written consent of
Purchaser which consent shall not be unreasonably withheld. Real estate tax
refunds and credits received after the Closing Date which are attributable to
the fiscal tax year during which the Closing Date occurs shall be apportioned
between Seller and Purchaser, after deducting the expenses of collection
thereof which obligation shall survive the Closing
Subsection 9.06. Seller shall allow Purchaser or Purchaser's
representatives access to the Premises, the Leases and other documents
required to be delivered under this contract upon reasonable prior notice at
reasonable times.
Section 10. Sellers Closing Obligations
At the Closing, Seller shall deliver the following to Purchaser:
Subsection 10.01. A statutory form of bargain and sale deed without
covenant against grantor's acts, containing the covenant required by Section
13 of the Lien Law and properly executed in proper form for recording so as to
convey the title required by this contract.
Subsection 10.02. All Leases in Seller's possession.
Subsection 10.04. A schedule updating the Rent Schedule and setting
forth all arrears in rents and all prepayments of rents.
Subsection 10.11. Such affidavits as Purchaser's title company shall
reasonably require in order to omit from its title insurance policy all
exceptions for judgments, bankruptcies or other returns against persons or
entities whose names are the same as or similar to Seller's name.
Subsection 10.12 (a) Checks to the order of the appropriate officers
in payment of all applicable real properly transfer taxes and copies of any
required tax returns therefor executed by Seller which checks shall be
certified or official bank checks if required by the taxing authority unless
Seller elects to have Purchaser pay any of such taxes and credit Purchaser
with the amount thereof, (b) the Tentative Assessment and Return or Statement
of No Tax Due or affidavit (whichever is applicable) and the checks and other
items (if any) required under Subsection 17-09(a), and (c) a certification of
non-foreign status in form required by the Code Withholding Section signed
under penalty of perjury. Seller understands that such certification will be
retained by Purchaser and will be made available to the Internal Revenue
Service on request.
Subsection 10.14. An original letter executed by Seller or by his agent
advising the tenants of the sale of the Premises to Purchaser and directing
that rents and other payments thereafter be sent to Purchaser or as Purchaser
may direct.
Subsection 10.16. If Seller is a corporation and if required by Section
909 of the Business Corporation Law, a resolution of Seller's board of
directors authorizing the sale and delivery of the deed and a certificate
executed by the secretary or assistant secretary of Seller certifying as to
the adoption of such resolution and setting forth facts showing that the
transfer complies with the requirements of such law. The deed referred to in
Subsection 10.01 shall also contain a recital sufficient to establish
compliance with such law.
Subsection 10.17. Possession of the Premises in the condition required
by this contract, subject to the Leases and Tenancies.
Subsection 10.18. Any other documents required by this contract to be
delivered by Seller.
Section 11. Purchaser's Closing Obligations
At the Closing, Purchaser shall:
Subsection 11.01. Deliver to Seller checks in payment of the portion of
the Purchase Price payable at the Closing, as adjusted for apportionments
under Section 12.
Subsection 11.03. Deliver to Seller an agreement indemnifying and
agreeing to defend Seller against any claims made by tenants with respect to
tenants' security deposits to the extent paid, credited or assigned to
Purchaser under Subsection 10.03.
Subsection 11.04. Cause the deed to be recorded, duly complete all
required real property transfer tax returns and cause all such returns and
checks in payment of such taxes to be delivered to the appropriate officers
promptly after the Closing.
Subsection 11.05 Deliver any other documents required by this contract
to be delivered by Purchaser.
Section 12. Apportionments
Subsection 12.01. The following apportionments shall be made between the
parties al the Closing as of the close of business on the day prior to the
Closing Date pursuant to the Customs and Practices of the Real Estate Board of
New York in effect on the date hereof:
(a) prepaid rents and Additional Rents (as defined in Subsection
12.03).
Subsection 12.02. If any tenant is in arrears in the payment of rent on
the Closing Date rents received from such tenant after the Closing shall be
applied in the following order of priority: (a) first to the month preceding
the month in which the Closing occurred; (b) then to the month in which the
Closing occurred; (c) then to any month or months following the month in
which the Closing occurred; and (d) then to the period prior to the month
preceding the month in which the Closing occurred. If rents or any portion
thereof received by Seller or Purchaser after the Closing are payable to the
other party by reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees, costs and expenses of
collection thereof shall be promptly paid to the other party, which obligation
shall survive the Closing.
Subsection 12.03. If any tenants are required to pay percentage rent,
escalation charges for real estate taxes, operating expenses, cost-of-living
adjustments or other charges of a similar nature ("Additional Rents") and any
Additional Rents are collected by Purchaser after the Closing which are
attributable in whole or in part to any period prior to the Closing, then
Purchaser shall promptly pay to Seller's proportionate share thereof, less a
proportionate share of any reasonable al attorneys' fees, costs and expenses
of collection thereof, if and when the tenant paying the same has made all
payments of rent and Additional Rent then due to Purchaser pursuant to the
tenant's Lease, which obligation shall survive the Closing.
Section 13. Objections to title, Failure of Seller or Purchaser to Perform
and Vendee's Lien
Subsection 13.01. Purchaser shall promptly order an examination of title
and shall cause a copy of the title report to be forwarded to Seller's
attorney upon receipt. Seller shall be entitled to a reasonable adjournment or
adjournments of the Closing for up lo 60 days or until the expiration date of
any written commitment of Purchaser's lender delivered lo Purchaser prior to
the scheduled date of Closing, whichever occurs first, to remove any defects
in or objections to title noted in such title report and any other defects or
objections which may be disclosed on or prior to the Closing Date.
Subsection 13.02. If Seller shall be unable to convey title to the
Premises at the Closing in accordance with the provisions of this contract or
if Purchaser shall have any other grounds under this contract for refusing to
consummate the purchase provided for herein, Purchaser, nevertheless, may
elect to accept such title as Seller may be able to convey with a credit
against the monies payable at the Closing equal to the reasonably estimated
cost to cure the same (up to the Maximum Expense described below), but
without any other credit or liability on the part of Seller. If Purchaser
shall not so elect, Purchaser may terminate this contract and the sole
liability of Seller shall be to refund the Downpayment to Purchaser and to
reimburse Purchaser for the net cost of title examination, but not to exceed
the net amount charged by Purchaser's title company therefor without issuance
of a policy, and the net cost of updating the existing survey of the Premises
or the net cost of a new survey of the Premises if there was no existing
survey or the existing survey was not capable of being updated and a new
survey was required by Purchaser's lender. Upon such refund and
reimbursement, this contract shall be null and void and the parties hereto
shall be relieved of all further obligations and liability other than any
arising under Section 14. Seller shall not be required to bring any action or
proceeding or to incur any expense in excess of the Maximum Expense specified
in Schedule D (or if none is so specified, the Maximum Expense shall be
one-half of one percent of the Purchase Price) to cure any title defect or to
enable Seller otherwise to comply with the provisions of this contract, but
the foregoing shall not permit Seller to refuse to pay off at the Closing, to
the extent of the monies payable at the Closing, mortgages on the Premises,
other than Exiling Mortgages, of which Seller has actual knowledge.
Subsection 13.03. Any unpaid taxes, assessments, water charges and sewer
rents, together with the interest and penalties thereon to a date not less
than two days following the Closing Date, and any other liens and encumbrances
which Seller is obligated to pay and discharge or which are against
corporations, estates or other persons in the chain of title, together with
the cost of recording or filing any instruments necessary to discharge such
liens and encumbrances of record, may be paid out of the proceeds of the
monies payable at the Closing if Seller delivers to Purchaser on the Closing
Date official bills for such taxes, assessments, water charges, sewer rents,
interest and penalties and instruments in recordable form sufficient to
discharge any other liens and encumbrances of record. Upon request made a
reasonable time before the Closing, Purchaser shall provide at the Closing
separate checks for the foregoing payable to the order of the holder of any
such lien, charge or encumbrance and otherwise complying with Subsection 2.02.
If Purchaser's title insurance company is willing to insure both Purchaser and
Purchaser's lender, if any, that such charges, liens and encumbrances will not
be collected out of or enforced against the Premises, then, unless Purchaser's
lender reasonably refuses to accept such insurance in lieu of actual payment
and discharge, Seller shall have the right in lieu of payment and discharge to
deposit with the title insurance company such funds or assurances or to pay
such special or additional premiums as the title insurance company may require
in order to so insure. In such case the charges, liens and encumbrances with
respect to which the title insurance company has agreed so to insure shall not
be considered objections to title.
Subsection 13.04. If Purchaser shall default in the performance of its
obligation under this contract to purchase the Premises, the sole remedy of
Seller shall be to retain the Downpayment as liquidated damages for all loss,
damage and expense suffered by Seller, including without limitation the loss
of its bargain.
Subsection 13.05. Purchaser shall have a vendee's lien against the
Premises for the amount of the Downpayment, but such lien shall not continue
after default by Purchaser under this contract.
Section 14. Broker
Subsection 14.01. If a broker is specified in Schedule D, Seller and
Purchaser mutually represent and warrant that such broker is the only broker
with whom they have dealt in connection with this contract and that neither
Seller nor Purchaser knows of any other broker who has claimed or may have the
right to claim a commission in connection with this transaction, unless
otherwise indicated in Schedule D. The commission of such broker shall be
paid pursuant to separate agreement by the party specified in Schedule D. If
no broker is specified in Schedule D, the parties acknowledge that this
contract was brought about by direct negotiation between Seller and Purchaser
and that neither Seller nor Purchaser knows of any broker entitled to a
commission in connection with this transaction. Unless otherwise provided in
Schedule D, Seller and Purchaser shall indemnify and defend each other against
any costs, claims or expenses, including attorneys' fees, arising out of the
breach on their respective parts of any representations, warranties or
agreements contained in this paragraph. The representations and obligations
under this paragraph shall survive the Closing or, if the Closing does not
occur, the termination of this contract.
Section 15. Notices
Section 16. Limitations on Survival of Representations, Warranties, Covenants
and other Obligations
Subsection 16.01. Except as otherwise provided in this contract, no
representations, warranties, covenants or other obligations of Seller set
forth in this contract shall survive the Closing, and no action based thereon
shall be commenced after the Closing. The representations, warranties,
covenants and other obligations of Seller set forth in Subsection 4.03,
Subsection 6.01 and Subsection 6.02 shall survive until the Limitation Date
specified in Schedule D (or if none is so specified, the Limitation Date shall
be the date which is six months after the Closing Date), and no action based
thereon shall be commenced after the Limitation Date.
Subsection 16.02. The delivery of the deed by Seller, and the acceptance
thereof by Purchaser, shall be deemed the full performance and discharge of
every obligation on the part of Seller to be performed hereunder, except those
obligations of Seller which are expressly stated in this contract to survive
the Closing.
Section 17. Gains Tax and Miscellaneous Provisions
Subsection 17.01. Purchaser shall not assign this contract or its rights
hereunder without the prior written consent of Seller. No permitted
assignment of Purchaser's rights under this contract shall be effective
against Seller unless and until an executed counterpart of the instrument of
assignment shall have been delivered to Seller and Seller shall have been
furnished with the name and address of the assignee. The term "Purchaser"
shall be deemed to include the assignee under any such effective assignment.
Subsection 17.02. This contract embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior agreements, understandings, representations and
statements, oral or written, are merged into this contract. Neither this
contract nor any provision hereof may be waived, modified, amended, discharged
or terminated except by an instrument signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or termination
is sought, and then only to the extent set forth in such instrument.
Subsection 17.03. This contract shall be governed by, and construed in
accordance with, the law of the State of New York.
Subsection 17.04. The captions in this contract are inserted for
convenience of reference only and in no way define, describe or limit the
scope or intent of this contract or any of the provisions hereof.
Subsection 17.05. This contract shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs or successors and
permitted assigns.
Subsection 17.06. This contract shall not be binding or effective until
properly executed and delivered by Seller and Purchaser.
Subsection 17.07. As used in this contract, the masculine shall include
the feminine and neuter, the singular shall include the plural and the plural
shall include the singular, as the context may require.
Subsection 17.08. If the provisions of any schedule or rider to this
contract are inconsistent with the provisions of this contract, the provisions
of such schedule or rider shall prevail. Set forth in Schedule D is a list of
any and all schedules and riders which are attached hereto but which are not
listed in the Table of Contents.
Subsection 17.09. (a) Seller and Purchaser agree to comply in a timely
manner with the requirements of Article 31-B of the Tax Law of the State of
New York and the regulations applicable thereto, as the same from time to time
may be amended (collectively, the "Gains Tax Law"). Purchaser agrees to
deliver to Seller a duly executed and acknowledged Transferee Questionnaire
simultaneously with the execution of this contract or within five (5) business
days after subsequent written request from Seller or Seller's attorney. At the
Closing, Seller shall deliver (I) an official Statement of No Tax Due or (ii)
an official Tentative Assessment and Return accompanied by a certified check
or official bank check drawn on any banking institution described in
Subsection 2.02(a), payable to the order of the State Tax Commission in the
amount of the tax shown to be due thereon (it being understood, however, that
if Seller has duly elected to pay such tax in installments, the amount so
required to be paid
shall be the minimum installment of such tax then permitted to be paid), or
(iii) if applicable, a duly executed and acknowledged affidavit in form
permitted under the Gains Tax Law claiming exemption therefrom.
(b) Seller agrees (I) to pay promptly any
installment(s) or additional tax due under the Gains Tax Law, and interest and
penalties thereon, if any, which may be assessed or due after the Closing,
(ii) to indemnify and save the Purchaser harmless from and against any of the
foregoing and any damage, liability, cost or expense (including reasonable
attorneys' fees) which may be suffered or incurred by Purchaser by reason of
the non-payment thereof, and (iii) to make any other payments and execute,
acknowledge and deliver such further documents as may be necessary to comply
with the Gains Tax Law.
(c) If this contract is assignable by Purchaser, no
assignment of any rights hereunder shall be effective unless every assignor
and assignee complies in a timely manner with the requirements of the Gains
Tax Law applicable to the assignment transaction and unless an assignor or
assignee delivers to Seller at or before the Closing the applicable items
referred to in subparagraph (a) of this Section, all as may be required as a
prerequisite to the recording of the deed. In addition to making the payments
and delivering the instruments and documents referred to above, Purchaser and
any assignor or assignee of this contract shall promptly (I) make any other
payments and (ii) execute, acknowledge and deliver such further documents and
instruments as may be necessary to comply with the Gains Tax Law.
(d) Purchaser, if request is made within a
reasonable time prior to the Closing Date, shall provide at the Closing a
separate certified or official bank check drawn on any banking institution
described in Subsection 2.02(a) in the amount of the tax shown to be due on
the official Tentative Assessment and Return, which amount shall be credited
against the balance of the Purchase Price payable at the Closing.
(e) The provisions of this Subsection 17.09 shall
survive the delivery of the deed.
See Rider attached hereto.
IN WITNESS WHEREOF, the parties hereto have executed this contract as of the
date first above
written.
Seller:
ANDAL CORP.
By: /s/ Michael S. Huber
Michael S. Huber
Senior Vice President
Purchaser:
FAM, LLC
By: Builtland Associates, Member
By: /s/ Paul Milstein
Paul Milstein
General Partner
Receipt by Escrowee
The undersigned Escrowee hereby acknowledges receipt of $100.00, by check
subject to collection, to be held in escrow pursuant to Subsection 2.05.
ESANU KATSKY KORINS & SIGER
By: /s/ Randolph Amengual
Randolph Amengual, Partner
Schedule A
DESCRIPTION OF PREMISES
(to be attached separately and to Include tax map designation)
Schedule B
PERMITTED EXCEPTIONS
1. Zoning regulations and ordinances which are not violated by the
existing structures or present use thereof and which do not render title
uninsurable.
2. Consents by the Seller or any former owner of the Premises for the
erection of any structure or structures on, under or above any street or
streets on which the Premises may abut.
4. Leases and Tenancies specified in the Rent Schedule and any new
leases or tenancies not prohibited by this contract.
5. Unpaid Installments of assessments not due and payable on or
before the Closing Date.
6. Financing statements, chattel mortgages and liens on personally
filed more than 5 years parlor to the Closing Date and not renewed, or filed
against property or equipment no longer located on the Premises or owned by
Tenants
7. (a) Rights of utility companies to lay, maintain, install and
repair pipes, lines, poles, conduits, cable boxes and related equipment on,
over and under the Premises, provided that none of such rights imposes any
monetary obligation on the owner or the Premises.
(b) Encroachments of stoops, areas, cellar steps, tram cornices,
lintels, window sills, awnings, canopies, ledges, fences, hedges, coping and
retaining walls projecting from the Premises over any street or highway or
over any adjoining property and encroachments of similar elements projecting
from adjoining properly over the Premises
(c) Revocability or lack of right to maintain vaults, coal
chutes, excavations or sub-surface equipment beyond the line of the Premises
(d) Any state of facts that an accurate survey would disclose,
provided that such facts do not render title unmarketable. For the purposes
of this contract, none of the facts shown on the survey, if any, identified
below shall be deemed to render title unmarketable, and Purchaser shall accept
title subject thereto:
(e) Matters set forth in Schedule B of the Title Report issued
by First American Title Insurance Company of New York related May 29, 1996
bearing title number 135-NYNY-16334-3.
Schedule C
PURCHASE PRICE
Schedule D
MISCELLANEOUS
1. Title Insurer designed by the parties (Subsection 1.02)
First American Title Insurance Company of New York
5. Seller's tax identification number (Subsection 2.05):
13-2571394
6. Purchaser's tax identification number (Subsection 2.05):
7. Scheduled time and date of Closing (Subsection 3.01)
July 15, 1996 at 10:00 a.m.
8. Place of Closing (Subsection 3.01):
Esanu Katsky Korlns & Siger
14. Maximum Expense of Seller to cure title defects, etc. (Subsection
13.02):
$10,000.00
15. Broker, if any (Subsection 14.01)
None
18. Limitation Date for actions based on Seller's surviving representations
and other obligations (Subsection 16.01):
one (1) year
19. Additional Schedules or Riders (Subsection 17.08):
Schedule E
RENT SCHEDULE
(to be attached separately)
<PAGE>
SCHEDULE A
ALL that certain plot, piece or parcel of land, situate, lying and being in
the Borough of Manhattan, City, County and State of New York, bounded and
described as follows:
BEGINNING at the corner formed by the intersection of the southerly side of
Sixty-First Street and the easterly side of First Avenue;
RUNNING THENCE easterly along the southerly side of Sixty-First Street, 300
feet;
THENCE southerly parallel with First Avenue, 100 feet 5 inches to the center
line of the block;
THENCE westerly along the centre line of the block and parallel with Sixty-First
Street, 300 feet to the easterly side of First Avenue; and
THENCE northerly along the easterly side of First Avenue, 10 feet 5 inches to
the point or place of BEGINNING.
<PAGE>
RENT SCHEDULE
SCHEDULE E
1. Agreement of Lease by and between Schnurmacher Corp.
("Schnurmacher") and Kinney System, Inc. ("KSI") dated June 19, 1979, as
amended by that certain Amendment of Lease between Schnurmacher and KSI dated
October 24, 1979 and by those certain letter agreements between Schnurmacher
and KSI respectively dated August 1, 1979, October 24, 1979, November 21, 1980
and March 11, 1982, as assigned by KSI to Andal Corp. (formerly known as
National Kinney Corp.) by Assignment of Lease dated as of August 1, 1982, and
as further amended by Amendment of Lease dated as of August 1, 1982 between
Schnurmacher and Andal Corp., a Memorandum of which Lease was recorded in the
Office of the City Register, New York County, on November 22, 1982 in Reel
651, Page 203, which Lease has heretofore been further assigned by Andal Corp.
to Drivensnow, Inc. by Lease Assignment and Assumption Agreement dated
December 27, 1984, recorded in the Office of the City Register, New York
County, on January 4, 1985 in Reel 862, Page 1655, reconveyed by operation of
law to Andal Corp. on August 30, 1988 upon the merger of Drivensnow, Inc. into
Andal Corp., further assigned by Andal Corp. to UBC Virginia Corporation
("UBC") by Assignment of Lease dated as of July 3, 1990, recorded in the
Office of the City Register, New York County, on July 10, 1990 in Reel 1708,
Page 1932, and reconveyed by operation of law to Andal Corp. on March 15, 1996
upon the merger of UBC into Andal Corp. (hereinafter referred to as the
"Lease").
2. Agreement of Lease by and between Schnurmacher and Atlas Auto
Rental Corp. ("Atlas"), dated May 2, 1969 as amended by an Amendment Renewal
and Extension Agreement, dated October 12, 1978 (the "Atlas Sub-sublease").
The Atlas Sub-sublease was purportedly amended pursuant to amendments dated as
of August 1, 1990 and July 1, 1995, respectively. Seller did not consent to
these amendments.
3. Sublease from Andal Corp. to KSI, dated August 1, 1982 as amended
by agreement dated September 19, 1990, and by First Amendment to Sublease,
dated October 30, 1990, between Andal Corp. and Kinney Parking Inc. ("KPI")
(the "Kinney Sublease"). KSI purportedly assigned the Kinney sublease to KPI,
although certain other documents refer to Kinney Central Park South, Inc.
("KCP") as the sublessee under the Kinney Sublease. KSI, KPI and KCP are
hereinafter sometimes referred to interchangeably as "Kinney".
4. By letter dated July 29, 1994 to Randall T. Sims of KSI, Joseph E.
Browdy, Esq. of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to Seller,
delivered inter alia, in escrow, Seller's consent to the assignment of KSI's
interest in the Kinney Sublease to KCP and to a certain sub-sublease from KCP
to Club Services Management, Inc. ("Club Services"), dated July 28, 1994,
which documents remain in escrow. Seller has heretofore been advised that the
escrowed sub-sublease to Club Services was assigned by Club Services to First
Avenue Nite Club Corp.
<PAGE>
#35608
RIDER TO CONTRACT OF SALE
BETWEEN ANDAL CORP. ("SELLER") AND
FAM, LLC, ("PURCHASER") DATED July 10, 1996
1. PURCHASE PRICE. The Purchase Price for the Premises is
($9,100,000.00) and
consists of the following:
(a) One Hundred and No/100 ($100.00) Dollars paid simultaneously
herewith to Escrowee as a deposit on the purchase of the Premises (the
"Deposit").
(b) a cancellation of a certain indebtedness in the amount of
$5,571,284 together with all accrued interest thereon, originally due Alan N.
Cohen, Paul Milstein and Frankhill Associates pursuant to a loan agreement
dated as of July 5, 1990 (the "July 5, 1990 Loan") and now held by Purchaser.
(c) a cancellation of a certain indebtedness in the amount of
$3,300,000 together with all accrued interest thereon, evidenced by loans due
Alan N. Cohen Family Company LLC, Frankhill Associates and Paul Milstein,
pursuant to a demand note given May 8, 1996 (the "May 8, 1996 Loan") and now
held by Purchaser.
(d) $228,616 by unendorsed certified check payable to Seller, subject
to prorations.
(e) In addition to the consideration set forth in (a), (b) and (c)
above, Seller shall be entitled to the following contingent consideration:
(I) If within the one (1) year period following the date on
which the Premises are conveyed to Purchaser, (I) all or any portion of the
Premises were further transferred to a bona fide third-party or (ii), an
agreement to transfer all or any portion of the Premises to a bona fide
third-party is executed and delivered and such transfer ultimately occurs,
then in either of such events, Purchaser shall pay to Seller fifty (50%)
percent of the amount by which the "Net Proceeds" (hereinafter defined)
attributable to the sale of all or any portion of the Premises exceeds Ten
Million Dollars ($10,000,000) (such payment being hereinafter referred to as
the "Additional Consideration"). "Net Proceeds" shall mean the gross purchase
price attributable to the sale of all or any portion of the Premises plus the
then fair market value of any of the Premises retained by Purchaser in
connection with a partial sale less any and all transaction costs, taxes and
all other expenses of Purchaser relating to the sale of all or any portion of
the Premises, including, without limitation, brokerage commissions, reasonable
attorneys' fees and transfer taxes. In no event shall the Additional
Consideration exceed Three Million Dollars ($3,000,000).
(ii) Any payments required under this Paragraph shall be made
promptly after the transfer giving rise to such obligation. Purchaser shall
notify Seller of any contemplated
transfer of all or any portion of the Premises no later than thirty (30) days
prior to the date of such transfer or the execution and delivery of any
agreement to transfer, whichever occurs first.
(iii) Purchaser shall indemnify, defend and hold Seller harmless
from and against any and all loss, cost, liability and expense which Seller
shall incur as a result of Purchaser's failure to comply with the terms of
this Paragraph including, without limitation, reasonable attorney's fees and
other costs of collection incurred in enforcing the terms of this Agreement.
(iv) The terms of this Paragraph shall survive the transfer of
all or any portion of the Premises to Purchaser, but any action based thereon
must be instituted within one (1) year after the later to occur of (I) the
date of such transfer or (ii) the date on which Seller is notified in writing
that such transfer has occurred.
(v) If the parties are unable to agree on any matter contained
in this Paragraph 1 relevant to the determination of Additional Consideration
to be paid hereunder including, without limitation, (I) the determination of
the fair market value of all or any portion of the Premises in connection with
a sale, (ii) the value of any consideration, other than cash, received by
Purchaser in connection with a sale of all or any portion of the Premises and
(iii) the allocation of values as between the Premises and other assets sold
by Purchaser in connection with a sale, then either party may apply to the
local office of the American Arbitration Association or any organization which
is the successor thereof (the "AAA") for appointment of an arbitrator (the
"Arbitrator") to resolve such matter or make such determination. If the AAA
shall not then exist or shall fail, refuse or be unable to act such that the
Arbitrator is not appointed by the AAA within thirty (30) days after
application therefor, then either party may apply to the presiding Justice of
the Appellate Division of the Supreme Court of the State of New York (First
Department) (the "Court") for the appointment of the Arbitrator and the other
party shall not raise any question as to the Court's full power and
jurisdiction to entertain the application and make the appointment. If any
Arbitrator appointed hereunder shall be unwilling or unable, for any reason,
to serve, or to continue to serve, a replacement arbitrator shall be appointed
in the same manner as the original Arbitrator. The arbitration decision shall
be conclusive and binding on the parties absent manifest error. Each party
shall pay its own fees and expenses relating to the arbitration. Each party
shall pay one-half (1/2) of the fees and expenses of the AAA and of the
Arbitrator.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Purchaser as follows:
(a) Seller is not a party to, or bound by, any agreement,
arrangement, contract commitment or understanding, whether written or oral,
express or implied, other than this Agreement and the Lease and the subleases
referred to in Paragraph 4(e) below, relating to the sale, conveyance,
transfer or encumbrance of the Premises.
(b) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and has full power
and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted.
(c) Neither the execution and delivery of this Agreement by
Seller nor the consummation of the contemplated transactions will (I) violate
any provisions of the articles of incorporation or by-laws of Seller or (ii)
violate, conflict with or result in the breach or termination of or constitute
a default under the terms of, any mortgage, lease, bond, indenture, agreement,
franchise or other instrument or obligation to which Seller is a party or by
which Seller may be bound or by which any of Seller's properties or assets may
be bound.
(d) This Agreement has been duly authorized, executed and
delivered by Seller, and Seller has full, complete and unrestricted power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. All acts required to be taken by
or on the part of Seller to carry out this Agreement and the transactions
contemplated by this Agreement have been duly and properly taken. No consent,
approval or agreement of any person, party, court, government or entity is
required to be obtained by Seller in connection with the execution of this
Agreement or the performance of its terms or if such consent is required, it
has been obtained.
(e) Seller has delivered to Purchaser or its attorneys (or made
available for their review) true and complete copies of all leases and
occupancy agreements (to the extent in Seller's possession) referred to on
Schedule E hereto. Seller shall not renew, modify or extend any of the leases
referred to on Schedule E or enter into any new leases in respect of the
Premises while this Agreement is in full force and effect. Other than the
documents and occupancies referred to on Schedule E, there are no leases,
tenancies or other occupancy agreements to which Seller is a party or by which
Seller may be bound for any portion of the Premises.
(f) All rents and other charges due under the Lease (as defined
in Schedule E) have been paid, there are no arrearages and all obligations to
be performed by Seller under the Lease have been performed.
(g) All rents and other charges under the Kinney Sublease (as
defined in Schedule E) have been paid and there are no arrearages.
(h) Seller has not received any written notices from KSI that
Seller is in default of its obligations under the Kinney Sublease other than
in respect of defaults that have been cured by Seller.
(I) Seller has not given written notice to KSI of any defaults
under the Kinney Sublease, which remain uncured, except for the matters set
forth in the letters described in subsection (k) below.
(j) Seller has received no written notices of offset, defenses
and/or counterclaims raised or asserted by KSI with respect to the Kinney
Sublease.
(k) Seller has not consented in writing to (I) that certain
Second Amendment, Renewal and Extension Agreement by and between KPI (as
defined in Schedule E) and Atlas (as defined in Schedule E), dated as of
August 1, 1990 (the "Second Amendment"); or (ii) that certain Third Amendment,
Renewal and Extension Agreement, by and between KPI and Atlas, dated as of
July 1, 1995 (the "Third Amendment"). By letters of objection, dated May 6,
1996, from Seller's counsel, David L. Katsky, Esq., to both (a) KSI's counsel,
Philip A. Mittleman, Esq. and (b) Edwin Coyner, a principal of Atlas, Mr.
Katsky advised KSI and Atlas that Seller treats the Second Amendment and the
Third Amendment as void for lack of the required consents. Seller has not
consented to the continued occupancy of Atlas on any basis other than that of
a month-to-month tenancy.
(l) Notwithstanding Seller's assertions and representations in
(k) above, Purchaser acknowledges that Atlas claims that it has a valid
written lease of the Premises, until June 30, 2000, pursuant to that certain
Agreement of Lease between the Schnurmacher Corporation ("Landlord") and
Atlas, dated as of May 2, 1969, as amended by that certain Amendment, Renewal
and Extension Agreement of Lease, by and between Schnurmacher and Atlas, dated
as of October 12, 1978 (the "First Amendment"), as purportedly amended and
renewed by the Second Amendment, and as purportedly amended and renewed by the
Third Amendment.
(m) To the best knowledge of Seller, the Premises are not being
used for residential purposes.
(n) Seller has not consented to the purported assignment of the
sub-sublease by Club Services to First Avenue Nite Club Corp. and has not
entered into any written agreements with First Avenue Nite Club Corp.
(o) Seller has no employees working at the Premises.
(p) Seller has not entered into any service contracts in respect
of the Premises.
(q) Attached as Exhibit 1 is a schedule of the insurance that
Seller maintains with respect to the Premises.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
(a) Purchaser acknowledges that, except as expressly provided in
this Agreement, it is not relying upon any warranty or representation made or
alleged to have been made by Seller, or any agent, in respect of the physical
condition of the Premises. Purchaser expressly agrees to accept the Premises
"as is" and agrees to assume all of Seller's obligations under the Kinney
Sublease. Seller shall under no circumstances be deemed to have made, and
Seller hereby disclaims, any representation or warranty, either express or
implied, as to any matter whatsoever, including, without limitation, (I) the
condition of the Premises and each part thereof or the adequacy, suitability
or fitness for any particular purpose of the Premises and any part thereof,
(ii)(l) the compliance of the Premises, in its current or any future state,
with applicable zoning ordinances, (2) the ability to obtain a variance with
respect to the Premises, or (3) the existence of development rights or the
ability to further develop or improve all or any part of the Premises; (iii)
the availability of any financing for the purchase, alteration, rehabilitation
or operation of the Premises from any source, including but not limited to
state, local or Federal governments or any institutional lenders; and (iv) the
present or future condition and operating state of any and all machinery,
equipment or other personal property on the Premises and the present or future
structural and physical condition of the improvements thereon.
(b) This Agreement has been duly authorized, executed and
delivered by Purchaser, and Purchaser has full power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated by
this Agreement. All acts required to be taken by or on the part of Purchaser
to carry out this Agreement and the transactions contemplated by this
Agreement have been duly and property taken.
(c) Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority to own, lease and operate its properties and
to carry on its businesses as now being conducted.
(d) Neither the execution and delivery of this Agreement by
Purchaser nor the consummation of the contemplated transactions will (I)
violate any provisions of the Operating Agreement of Purchaser or (ii)
violate, conflict with or result in the breach or termination of or constitute
a default under the terms of, any mortgage, lease, bond, indenture, agreement,
franchise or other instrument or obligation to which Purchaser is a party or
by which Purchaser may be bound or by which any of Purchaser's properties or
assets may be bound.
(e) No consent of any other party and no consent, license,
approval or authorization of, or exemption by, or registration or declaration
with, any governmental authority, bureau or agency not previously obtained, is
required in connection with the execution, delivery, validity or
enforceability of this Agreement with respect to Purchaser or the consummation
of the contemplated transactions or if such consent is required, it has been
obtained.
4. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligations of
Seller under this Agreement are subject to the satisfaction of the following
conditions unless waived by Seller:
(a) The representations and warranties of Purchaser shall be
true and correct in all material respects as of the Closing Date with the same
force and effect as if made on such date, and Purchaser shall have performed
all of its obligations required to be performed by it under this Agreement at
or prior to the Closing Date.
(b) Purchaser shall have performed all of its obligations
required by this Agreement to have been performed on or before the Closing.
5. CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE. The obligations
of Purchaser under this Agreement are subject to the satisfaction of the
following conditions unless waived by Purchaser:
(a) The representations and warranties of Seller shall be true
and correct in all material respects as of the Closing Date with the same
force and effect as if made on such date, and Seller shall have performed all
of its obligations required to be performed by it under this Agreement on or
prior to the Closing.
(b) Purchaser shall have obtained all required consents to the
consummation of the transactions contemplated by this Agreement.
(c) Seller shall have performed all of its obligations required
by this Agreement to have been performed on or before the Closing.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION. The
representations and warranties of the parties hereto shall survive the Closing
for a period of one (1) year.
7. DELIVERIES AT CLOSING. The following deliveries shall be made at
the
Closing:
(a) Seller and Purchaser shall execute, acknowledge and deliver
an assignment and assumption agreement with respect to the Lease and the
Kinney Sublease pursuant to which Seller shall assign to Purchaser, without
merger, all of its right, title and interest, in and to the Lease as Landlord
and Tenant and the Kinney Sublease, as Sublandlord, and Purchaser shall assume
and agree to perform all of the terms, covenants and conditions of the Lease
and the Kinney Sublease to be performed thereunder by Seller.
(b) Each party shall deliver to the other such evidence as may
be reasonably required of the due authorization, execution and delivery of
this Agreement and the documents executed in connection herewith.
(c) Purchaser shall deliver to Seller a certified or official
bank check to the order of Seller in the amount of $228,616 and payment of the
balance of the Purchase Price.
(d) Purchaser shall cause to be delivered to Seller the original
promissory notes and any other instruments evidencing and/or securing the July
5, 1990 Loan and the May 8, 1996 Loan or, if applicable, an affidavit of lost
notes together with an indemnification in favor of Seller.
(e) Seller and Purchaser shall execute and deliver such other
instruments and documents to which the other party may be entitled pursuant to
any of the other provisions of this Agreement or which may be reasonably
required in connection with the Closing pursuant hereto.
8. MISCELLANEOUS.
(a) All notices, demands, solicitation of consent or approval,
and other communications hereunder shall be in writing and shall be deemed to
have been given when given by hand or overnight courier service or on the
second (2nd) business day after being deposited in the United States mail,
postage prepaid, by registered or certified mail, return receipt requested and
addressed, as the case may be:
To Seller: Andal Corp.
909 Third Avenue
New York, New York 10022
Attention: Michael S. Huber
with a copy to: Esanu Katsky Korins & Siger
605 Third Avenue
New York, New York 10158
Attention: Randolph Amengual, Esq.
To Purchaser: FAM, LLC
c/o Milstein Properties
1271 Avenue of the Americas
New York, New York 10020
Attention: Edwin V. Petz, Esq.
with a copy to Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Gregory P. Pressman, Esq.
Any party may, by like notice, change the address or person to whom notice
shall be given. The attorneys for the parties hereto are authorized to give
any notices hereunder.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
without regard to any otherwise applicable conflict of laws principles. Each
of the parties hereby irrevocably consents and agrees that any legal or
equitable action or proceeding arising under or in connection with this
Agreement shall be brought in any Federal or state court in New York County in
the State of New York and by execution and delivery of this Agreement,
irrevocably submits to and accepts, with respect to its property and assets,
generally and unconditionally, the jurisdiction of the aforesaid courts, and
consents that any action may be commenced by service made in the manner
provided for the giving of notice pursuant to Paragraph 10(c) of this
Agreement.
(c) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall
constitute one and the same instrument.
(d) Headings. The headings in the Paragraphs of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement.
(e) Fire, Casualty, Condemnation. The provisions of Section
S-1311 of the General Obligations Law shall not apply to this Agreement.
Purchaser shall be obligated to close, notwithstanding a fire or casualty or a
taking of all or a portion of the Premises in condemnation. In the event of a
fire or casualty, Purchaser shall be entitled to the proceeds of any fire or
casualty policy which would otherwise have been payable to Seller. In the
event of a taking by reason of condemnation, Purchaser shall be entitled to
any award payable to Seller in respect of such taking.
(f) Violations. Purchaser shall accept title to the Premises
subject to any and all violations affecting the Premises.
(g) Possible Sub-sublease. Purchaser acknowledges that it has
been placed on notice with respect to the possible claim of an extension of
the Atlas Sub-sublease pursuant to the July 1, 1995 amendment and to possible
claims by third-parties to a sub-sublease from Kinney of a portion of the
Premises pursuant to certain documents referred to in item 4 on Schedule E
hereto.
(h) Assignment of Claims. At the Closing, Seller shall assign
to Purchaser any claims for damages, injunctive relief and any legal remedy
that Seller may have against Kinney, Atlas or any other persons or entities
claiming occupancy rights in the Premises, including, without limitation, any
claims against Kinney for extending the Atlas Sub-sublease without Seller's
consent. Seller shall cooperate with Purchaser in its efforts to enforce any
of the claims assigned pursuant to this subsection (h), including, without
limitation, the provision of documents and the giving of testimony, if
necessary, so long as Purchaser reimburses any reasonable expenses incurred by
Seller. The provisions of this subsection (h) shall survive the Closing.
(I) Letter of Credit. KSI has delivered a letter of credit
dated July 1, 1994, in the amount of $175,000 (the "Letter of Credit") to
Seller's predecessor-in-title, Schnurmacher Corporation. The Letter of Credit
and a letter agreement entered into between Seller and Schnurmacher
Corporation, dated May 8, 1996, in respect of the Letter of Credit are annexed
hereto as Exhibit 2. Purchaser agrees to accept title to the Premises subject
to, and to assure, the obligations set forth in the letter agreement. Seller
shall cooperate with Purchaser in its efforts to secure the release of the
Letter of Credit from the obligations contained in the May 8, 1996 letter
agreement.
(j) Conflict. In the event of any inconsistency or conflict
between the terms and provisions of the printed portion of this Agreement and
this Rider, the terms and provisions of this Rider shall govern and be
binding.
(k) Severability. If any paragraph, section, term or provision
of this Agreement shall to any extent be held or determined to be invalid or
unenforceable, the remaining sections, terms and provisions shall nevertheless
continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Rider on the
date first written above.
ANDAL CORP.
By: /s/ Michael S. Huber
Name: Michael S. Huber
Title: Senior Vice President
FAM, LLC
By: Builtland Associates, Member
By: /s/ Paul Milstein
Name: Paul Milstein
Title: General Partner
<PAGE>
Exhibit 1
Insurance Schedule
<PAGE>
Exhibit 2
Letter of Credit Documents
<PAGE>
May 8, 1996
Andal Corp.
909 Third Avenue
New York, New York 10022
Re: Kinney System. Inc. $175,000 Letter of Credit
Gentlemen:
On this date we are conveying to you title to the property known as 1110
First Avenue, New York, New York, and assigning to you the landlord's interest
in the lease dated June 19, 1979, as amended, covering said property (the
"Lease").
There is a lawsuit pending in the Supreme Court of the State of New
York, County of New York, entitled Arshad Butt v. Alstevlen Realty Corp. Inc.,
Charles Schmurmacker, Atlas Garage and Rental Inc. (Schnurmacher Corp. is the
successor by merger and consolidation of Alstevlen Realty Corp.). Pursuant to
the Lease the tenant is required to maintain liability insurance for our
benefit in connection with the claims asserted in the lawsuit, and to
indemnify us against such claims. To date, the insurance carrier has taken
the position that we are not an additional insured under its policy and we
have no coverage under the policy in effect at the time of the alleged
occurrence (See attached copy of letter dated February 16, 1996 from Kevin A.
Lane, Esq. to Fred Plotkin, Esq.). Further, there has been no response to
either of Fred Plotkin's letters dated February 21, 1996, copies of which are
attached.
We are currently holding as security under the Lease a letter of credit,
a copy of which is attached hereto. You have agreed that we will continue to
hold the letter of credit as security, pursuant to the terms of the lease as
if we remained the landlord thereunder (including the right to draw down the
letter of credit and put the proceeds in an interest-bearing account, or to
apply the proceeds), until both of the following shall occur:
<PAGE>
Andal Corp.
Page 2
(1) The earlier to occur of either: (a) we receive
confirmation, in form reasonably satisfactory to us, that we have insurance
coverage for the full amount of the damages asserted in the lawsuit; or (b)
there is a final disposition of lawsuit without any liability on our part: and
(2) We receive evidence reasonably satisfactory to us that
liability insurance coverage complying with the requirements of the Lease has
been in effect for our benefit during the Lease term, for all matters for
which insurance for our benefit was required under the Lease.
If either (1) or (2), above, has not occurred by the termination or
expiration of the Lease term, we reserve the right to continue to hold the
security and to apply same in any manner the landlord is entitled to apply
same under the Lease.
You agree that so long as we are entitled to retain same pursuant to the
terms of this letter, you will not modify the Lease requirements to relieve
the tenant of its obligation to maintain the letter of credit, and you will
give us prior notice of any action you may take to effect a termination of the
Lease prior to its normal expiration date. The preceding sentence
notwithstanding, you may modify or terminate the Lease provided that you first
substitute cash security or your letter of credit in the amount of $175,000,
to be held by us on the terms set forth above, including but not limited to
our right to draw down the letter of credit and put the proceeds in an
interest-bearing account, or to apply the proceeds, as if we had remained the
landlord and you had remained the tenant under the Lease, and the Lease had
not been modified or terminated.
If the foregoing accurately sets forth our agreement, indicate by
countersigning this letter below.
Very truly yours,
SCHNURMACHER CORP.
By: /s/ Ira J. Weinstein
President
Accepted and agreed:
Andal Corp.
By: /s/ Michael S. Huber
SVP
<PAGE>
LAW OFFICES OF
SLIWA & LANE
700 CATHEDRAL PARK TOWER
37 FRANKLIN STREET
BUFFALO, NEW YORK 14202
KEVIN A. LANE TELEPHONE: (716) 853-2050
STANLEY J. SLIWA FACSIMILE: (716) 842-6205
JOHN A. ZIEGLER
WILLIAM K. KENNEDY Writer's Extension: 208
TIMOTHY J. STEVENS
LYNDA M. STROH
WENDY A SCOTT
ANNE K. KYZMIR
VIA FAX AND MAIL February 16, 1996
Fred Plotkin
Plotkin & Willick
551 Fifth Avenue
New York, New York 10176-1298
RE: Arshad Butt v. Alstevlen Realty, Charles Schnurmacher, Atlas Auto
Rental, and Andal Corp.
Date of Loss : 9/24/91
Mutual Marine Policy # : MMO-00870LP291
MMO File No. : S/71366
Our File No. : C05-044
Dear Mr. Plotkin:
We have received and wish to thank you for your letter of February 13,
1996 together with the accompanying materials. We are following up with
Liberty Mutual at this time.
I would also like to comment on your observations concerning the
Certificates of Insurance that you have provided to me. Please note that those
documents were not produced by my client or its agent, but instead, were
produced by your client's broker. In any event, they, as is always the case
in New York State, do not create or have any impact upon coverage. Put
another way, certificates insurance mean nothing in general and here in
particular. Thus, the mere reference of your client on that document does not
mean, or even support, a finding that it is an additional insured.
Instead, additional insured status on the relevant policy can only come
about pursuant to the additional insured endorsement. As I previously
indicated to you, that endorsement requires a number of different things. It
is not automatic coverage. Furthermore, even where all the conditions for
coverage have been met, there still must be contribution, based upon the other
insurance clauses in each policy, between the MMO policy and the parties own
policy. That is where we are now.
Although I hate to bother you further, I do require the additional
materials that I previously requested, including the relevant leases. Please
forward those materials to me as soon as you can. Once again, thank you for
providing me with the information. Please let me know if you have any
questions at any time.
Very truly yours,
/s/ Kevin A. Lane
Kevin A. Lane
for Sliwa & Lane
Writer's Extension: 208
<PAGE>
PLOTKIN & WlLLICK
ATTORNEYS AT LAW
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176-1298
(212) 972-2300
TELECOPIER: (212) 972-2303
By Hand February 21, 1996
Kinney System Inc.
60 Madison Avenue
New York, New York 10010
Kornreich Insurance Services
919 Third Avenue
New York, New York 10022
Andal Corp.
909 Third Avenue
New York, New York 10022
Re: Arshad Butt v. Alstevlen Realty et al
Gentlemen:
We are general counsel to Schnurmacher Corp., successor by merger to
Alstevlen Realty Corp.
The above-referenced lawsuit pertains to an occurrence at 1110 First
Avenue, New York, New York, dating back to September 24, 1991. Kornreich
Insurance Services issued a certificate of insurance (copy enclosed) on behalf
of Kinney System Inc., the tenant of the property, which designated
Schnurmacher Corp. as an additional insured.
The carrier is now raising questions as to coverage, including a
question as to whether our client was an additional insured under the policy.
Enclosed are copies of correspondence between myself and the attorney for the
carrier, dated January 24, 1996, January 29, 1996, February 4, 1996, February
13, 1996, February 16, 1996 and February 21, 1996, together will all
enclosures referred to therein, other than the lease and lease amendments
referred to in my February 21 letter.
PLOTKIN & WILLICK
Kornreich Insurance Services
Andal Corp.
Kinney System Inc.
Page 2
February 21, 1996
As set forth in the last three paragraphs of my February 21 letter,
Schnurmacher Corp. will look to the party or parties responsible for any
failure by the carrier to defend and indemnify Schnurmacher Corp. with respect
to this matter.
I look forward to a prompt response from each of you.
Very truly yours,
By: /s/ Fred Plotkin
Fred~Plotkin
c.c.: Schnurmacher Corp.
<PAGE>
PLOTKIN & WILLICK
ATTORNEYS AT LAW
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176-1298
(212) 972-2300
TELECOPIER: (212) 972-2303
Federal Express February 21, 1996
Kevin A. Lane, Esq.
Sliwa & Lane
700 Cathedral Park Tower
37 Franklin Street
Buffalo, New York 14202
Re: Arshad Butt v. Alstevlen Realty, Charles
Schnurmacher, Atlas Auto Rental, and
Andal Corp.
Date of Loss: 9/24/91
Mutual Marine Policy MMO-00870LP291
MMO File No.: S/71366
Your File No.: CO5-044
Dear Mr. Lane:
I am in receipt of your February 16, 1996 letter. In response thereto,
I am enclosing herewith copies of the lease dated June 19, 1979 between
Schnurmacher Corp., as landlord, and Kinney System, Inc., as tenant, covering
1110 First Avenue, New York, New York, and Amendment to Lease dated October
24, 1979, and a copy of an Amendment to Lease dated as of August 1, 1982
between Schnurmacher Corp., as landlord, and National Kinney Corp., as tenant.
With respect to the other documentation requested in your January 24,
1996 letter, I have previously advised you to contact Liberty Mutual regarding
other insurance in effect as of September 24, 1991, and I have previously sent
you a copy of the certificate of insurance for the policies furnished by the
tenant.
I call your attention in particular to Section 39.01(vi) of the lease,
beginning on page 7 of the rider, which obligates the tenant to maintain
"comprehensive general liability insurance with contractual liability
endorsement . . .", and to Article 44, beginning on page 22 of the lease
rider, in which the tenant indemnifies the landlord from a broad range of
occurrences
<PAGE>
PLOTKIN & WILLICK
Kevin A. Lane, Esq.
Page 2
February 21, 1996
and liabilities, including work done at the premises and personal injuries
occurring at the premises (This paragraph should not be read as in any way
limiting the lease provisions, but merely to call your attention to certain
provisions I believe to be pertinent. of course, the parties' obligations are
governed by the lease itself).
While I take issue with various assertions in your February 16 letter,
as we have previously discussed, including your inference that your client may
even disclaim coverage at this late date, four and a half years after the
occurrence, the purpose of this letter is merely to forward to you a copy of
the lease, as you have requested. However, I must advise you that the
certificate of insurance was not furnished by my client's broker, as you
assert in the second paragraph of your letter. It was furnished by your
insured. Accordingly, to the extent that the certificate does not evidence
the insurance required under the lease, the tenant was and is in default under
the lease.
Further, it seems that if the certificate does not accurately reflect
the coverage it purports to evidence, then it was wrongfully issued by the
producer, Kornreich Insurance Services, who my client would look to, along
with the tenant, for indemnification. The question also arises as to whether
Kornreich is an authorized agent of your client. Please advise if this is the
case.
By copies of this letter we are putting all parties on notice that
Schnurmacher Corp. will seek indemnification for any liability or damages
resulting from failure of the carrier to defend and indemnify Schnurmacher
Corp. in this matter.
Very truly yours,
PLOTKIN & WILLICK
By: /s/ Fred Plotkin
Fred Plotkin
c.c.: Andal corp.
Kinney System Inc.
Kornreich Insurance Services
Schnurmacher Corp.
