<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 27, 1998
AMERICAN REAL ESTATE INVESTMENT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
Maryland 1-12514 84-1246585
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
- --------------------------------------------------------------------------------
620 W. Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
(Address of Principal Executive Offices)(Zip Code)
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code:
(610) 834-7950
- --------------------------------------------------------------------------------
1
<PAGE>
The purpose of this filing is to file the Item 7 information for the
acquisitions of the GATX Properties and the Double M Development Properties
which were consummated on March 27, 1998 and were originally reported in a
Current Report on Form 8-K filed on April 10, 1998.
ITEM 5. OTHER EVENTS
On May 29, 1998 the Registrant announced in a press release
attached hereto as Exhibit 99.1 and incorporated herein by reference
the signing of definitive agreements to acquire a fifteen building
office portfolio located in New York State for approximately
$130,000,000 and eight industrial buildings located in Ohio,
Rochester, New York and the suburbs of Albany, New York for an
aggregate of approximately $27,400,000. These transactions are subject
to the completion of the Company's due diligence.
In addition, the Company reported that it has entered into an
agreement, which is subject to the receipt of approval from the U. S.
Department of Housing and Urban Development, to sell its only
remaining multi-family property (Quadrangles Village apartments) for
approximately $26,800,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The audited statement of revenue and certain operating expenses of the
Double M Development Properties for the year ended December 31, 1997
are included on pages F-17 to F-19.
The audited statement of revenue and certain operating expenses of the
GATX Properties for the year ended December 31, 1997 are included on
pages F-20 to F-22.
(b) PRO FORMA FINANCIAL INFORMATION.
Pro forma financial information which reflects the Registrant's
acquisition of the Double M Development Properties and the GATX
Properties as of and for the three month period ended March 31, 1998
and the year ended December 31, 1997 are included on pages F-1
to F-16.
(c) EXHIBITS
10.1 Agreements of Sale and Purchase- Double M Development
Properties and First Amendment dated March 9, 1998.
10.2 Agreement of Sale and Purchase- GATX Properties and Assignment
dated March 16, 1998.
10.3 Promissory Note for $8,430,000 dated March 27, 1998 between
Virginia Street Associates and Column Financial, Inc.
10.4 Promissory Note for $5,725,000 dated March 27, 1998 between
Virginia Street Associates and Column Financial, Inc.
10.5 Promissory Note for $3,630,000 dated March 27, 1998 between
McBride Properties and Column Financial, Inc.
99.1 Press release dated May 29, 1998
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
Date: June 10, 1998 By /s/ Jeffrey E. Kelter
---------------------
Jeffrey E. Kelter
President
Date: June 10, 1998 By: /s/ Timothy E. McKenna
----------------------
Timothy E. McKenna
Treasurer
(Principal Financial and Accounting Officer)
3
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL STATEMENTS
- Pro Forma Condensed Consolidating Statement of Operations for the
three month period ended March 31, 1998.................................. F-2
- Pro Forma Condensed Consolidating Statement of Operations for the
year ended December 31, 1997............................................. F-4
- Notes and Management's Assumptions to Unaudited Pro Forma
Condensed Consolidating Financial Information............................ F-6
II. DOUBLE M DEVELOPMENT PROPERTIES
- Report of Independent Public Accountants................................. F-17
- Statement of Revenue and Certain Expenses for the three month period
ended March 31, 1998 (unaudited) and year ended December 31,
1997 (audited)........................................................... F-18
- Notes to Statement of Revenue and Certain Expenses....................... F-19
III. GATX PROPERTIES
- Report of Independent Public Accountants................................. F-20
- Statement of Revenue and Certain Expenses for the three month period
ended March 31, 1998 (unaudited) and year ended December 31, 1997
(audited)................................................................ F-21
- Notes to Statement of Revenue and Certain Expenses....................... F-22
</TABLE>
4
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
The following sets forth the unaudited pro forma condensed consolidating
statements of operations for American Real Estate Investment Corporation (the
"Company") as of March 31, 1998 and December 31, 1997.
The pro forma condensed consolidating financial information should be read in
conjunction with the historical financial statements of the Company and those
acquisitions deemed significant pursuant to the rules and regulations of the
Securities and Exchange Commission.
The unaudited pro forma consolidating financial information is presented as if
the following events occurred on January 1, 1997 for purposes of the statements
of operations:
- - The Company acquired the properties described in Note 1 to these pro forma
financial statements
- - On January 9, 1998, the Company consummated the sale of a 300 unit
multi-family residential property known as Americana Lakewood Apartments
located in the metropolitan Denver area for a gross sales price of
$15,066,000. In addition, during 1997, the Company sold three other
directly owned and one indirectly owned multi-family residential properties
(Timberleaf, Sedona, International and Emerald Point).
- - DOUBLE M DEVELOPMENT PROPERTIES AND GATX PROPERTIES TRANSACTIONS. On March
27, 1998, the Company acquired, from Double M Development Properties,
approximately 285,500 and 182,800 square foot of industrial warehouse
facilities located in Middletown and Camp Hill Pennsylvania, respectively.
These properties consist of five buildings. Additionally, the Company
acquired the GATX Properties from TriNet Corporate Realty Trust, Inc.,
these properties consisted of four industrial buildings aggregating 650,000
square feet located in Liverpool, New York.
All of the above acquisition transactions were accounted for using the purchase
method of accounting.
This unaudited pro forma condensed consolidating financial information should
be read in conjunction with the historical financial statements of the
Company for the year ended December 31, 1997 and the Company's Quarterly
Report on Form 10-Q, for the three months ended March 31, 1998, which are
incorporated by reference.
The pro forma condensed consolidating financial information is unaudited and is
not necessarily indicative of what the actual financial position or results of
operations of the Company would have been had the transactions discussed above
been consummated as of the dates indicated, nor does it purport to represent the
future financial position and the results of operations of the Company. In
management's opinion, all adjustments consisting of normal recurring
adjustments necessary to reflect the effects of the
transactions have been made.
F-1
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
(Unaudited--in thousands, except Share and Per Share Data)
<TABLE>
<CAPTION>
One Philips Double M
Drive and Development
The 101 Commerce Properties and Other The
Company Drive GATX Properties Property Pro Forma Company
Historical Acquisitions(A) Acquisitions(B) Dispositions(C) Adjustments Pro Forma
---------- --------------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 5,263 $ 87 $ 773 $ (48) $ 6,075
Tenant reimbursements and
other income 478 3 78 559
--------- --------- --------- --------- --------- ---------
Total revenue 5,741 90 851 (48) 6,634
OPERATING EXPENSES:
Repairs and maintenance 121 37 (1) 157
Property taxes 290 3 47 (3) 337
Property management fees 168 (2) 166
Utilities 191 25 (2) 214
Payroll 118 (5) 113
Other property operations 54 (6) 48
General and administrative 160 160
Interest 1,915 38 327 (20) 2,260
Depreciation and amortization 932 19 150 (5) 1,096
--------- --------- --------- --------- --------- ---------
Total operating expenses 3,949 60 586 (44) 4,551
</TABLE>
(continued)
F-2
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
(Unaudited--in thousands, except Share and Per Share Data)
<TABLE>
<CAPTION>
Double M
One Philips Drive Development
The and 101 Properties and Other The
Company Commerce Drive GATX Properties Property Pro Forma Company
Historical Acquisitions (A) Acquisitions (B) Dispositions (C) Adjustments Pro Forma
---------- ---------------- ---------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
EQUITY IN EARNINGS (LOSSES) FROM
INVESTMENT IN PARTNERSHIP AND
MANAGEMENT COMPANY $ (162) $ $ $ $ $ (162)
MINORITY INTEREST (3,617) 2,810(D) (807)
GAINS ON SALE OF PROPERTY 6,880 (6,880)
---------- --------------- ---------------- ------------- ----------- ---------
NET INCOME (LOSS) $ 4,893 $ 30 $ 265 $ (4) (4,070) $ 1,114
---------- --------------- ---------------- ------------- ----------- ---------
---------- --------------- ---------------- ------------- ----------- ---------
BASIC EARNINGS PER SHARE $ .90 $ .20
---------- ---------
---------- ---------
DILUTED EARNINGS PER SHARE $ .87 $ .20
---------- ---------
---------- ---------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 5,446,278 5,446,278
---------- ---------
---------- ---------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 9,802,235 9,802,235
---------- ---------
---------- ---------
</TABLE>
The accompanying notes and management's assumptions are an integral part
of this statement.
F-3
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1997
(Unaudited--in thousands, except Share and Per Share Data)
<TABLE>
<CAPTION>
1997 EVENTS
---------------------------------------------------------------------------
The 1997
Company Property McBride Penn Square Acquisition 1997
Historical Dispositions(a) Portfolio(b) Properties(c) Properties(d) Subtotal
---------- --------------- ------------ ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 7,732 $ (1,457) $ 9,310 $ 3,189 $ 18,774
Tenant reimbursements and
other income 465 1,098 400 1,963
---------- ---------- ---------- ---------- ---------- ----------
Total revenue 8,197 (1,457) 10,408 3,589 20,737
OPERATING EXPENSES:
Repairs and maintenance 427 (116) 647 248 1,206
Property taxes 376 (57) 516 314 1,149
Property management fees 252 (47) 205
Utilities 637 (279) 507 865
Payroll 551 (193) 358
Other property operations 869 (203) 66 82 814
General and administrative 732 732
Buyout of employment
agreements, warrants and
options expense 3,203 3,203
Interest 3,134 (845) 3,348 1,234 6,871
Depreciation and amortization 909 (158) 1,946 673 3,370
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 11,090 (1,898) 7,030 2,551 18,773
<CAPTION>
1998 EVENTS
----------------------------------------------------
One Philips Double M
Drive and Development
101 Commerce Properties and Other The
Drive GATX Properties Property Pro Forma Company
Acquisitions(e) Acquisitions(f) Dispositions (g) Adjustments Pro Forma
--------------- --------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 3,976 $ 3,375 $ (2,200) $ 23,925
Tenant reimbursements and 149 330 2,442
other income ---------- ---------- ---------- ---------- ----------
Total revenue 4,125 3,705 (2,200) 26,367
OPERATING EXPENSES:
Repairs and maintenance 59 (56) 1,209
Property taxes 145 196 (118) 1,372
Property management fees (87) 118
Utilities 104 (107) 862
Payroll (233) 125
Other property operations (288) 526
General and administrative 732
Buyout of employment (3,203)(h)
agreements, warrants and
options expense
Interest 1,722 1,369 (891) 9,071
Depreciation and amortization 857 626 (233) 4,620
---------- ---------- ---------- ---------- ----------
Total operating expenses 2,724 2,354 (2,013) (3,203) 18,635
</TABLE>
(continued)
F-4
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited--in thousands, except Share and Per Share Data)
<TABLE>
<CAPTION>
1997 EVENTS
---------------------------------------------------------------------------
The 1997
Company Property McBride Penn Square Acquisition 1997
Historical Dispositions(a) Portfolio(b) Properties(c) Properties(d) Subtotal
---------- --------------- ------------ ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
EQUITY IN EARNINGS (LOSSES) FROM
INVESTMENT IN PARTNERSHIP
AND MANAGEMENT COMPANY $ 404 $ ( 436) $ $ (392) $ $ (424)
MINORITY INTEREST (876) (876)
GAINS ON SALE OF PROPERTY 4,608 (4,608)
--------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 1,243 $ (4,603) $ 3,378 $ (392) $ 1,038 $ 664
--------- ---------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ---------- ----------
BASIC EARNINGS PER SHARE $ .92
---------
---------
DILUTED EARNINGS PER SHARE $ .88
---------
---------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 1,347,297
---------
---------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 2,404,004
---------
---------
<CAPTION>
1998 EVENTS
-----------------------------------------------------------
One Philips Double M
Drive and 101 Development
Commerce Properties and Other The
Drive GATX Properties Property Pro Forma Company
Acquisitions(e) Acquisitions(f) Dispositions(g) Adjustments Pro Forma
--------------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
EQUITY IN EARNINGS (LOSSES) FROM
INVESTMENT IN PARTNERSHIP
AND MANAGEMENT COMPANY $ $ $ $ $ (424)
MINORITY INTEREST (2,266)(i) (3,142)
GAINS ON SALE OF PROPERTY
---------- ---------- ---------- --------- -----------
NET INCOME (LOSS) $ 1,401 $ 1,351 $ (187) 937 $ 4,166
---------- ---------- ---------- --------- -----------
---------- ---------- ---------- --------- -----------
BASIC EARNINGS PER SHARE $ .78
-----------
-----------
DILUTED EARNINGS PER SHARE $ .77
-----------
-----------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 5,363,281
-----------
-----------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 9,461,426
-----------
-----------
</TABLE>
The accompanying notes and management's assumptions are an integral part
of this statement.
F-5
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
1. BASIS OF PRESENTATION:
American Real Estate Investment Corporation (the "Company") is a
self-administered and self-managed equity real estate investment trust
which was organized in the state of Maryland. As of June 6, 1998, the
Company owned 43 properties. All but five of the properties are owned
directly or indirectly by American Real Estate Investment, L.P. (the
"Operating Partnership"). The Company is the sole general partner of the
Operating Partnership and as of March 31, 1998 and June 6, 1998, owned
approximately 58% and 51% of the Operating Partnership, respectively.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes thereto of the Company, the
McBride Portfolio, Penn Square Properties, Inc., the Moran Acquisition
Properties, the Northfield Acquisition Properties, the Loew Acquisition
Properties, 101 Commerce Drive, the GATX Properties and the Double M
Development Properties. In management's opinion, all adjustments necessary
to reflect the acquisitions of the McBride Portfolio, Penn Square
Properties, Inc., the Moran Acquisition Properties, the Northfield
Acquisition Properties, the Loew Acquisition Properties, 101 Commerce
Drive, the GATX Properties and the Double M Development Properties by the
Company have been made. The operating results reflected herein include the
historical results and related pro forma adjustments to reflect the period
January 1, 1997, through the earlier of the respective acquisition date or
March 31, 1998 or December 31, 1997. Operating results from those dates
forward are included in the historical results of the Company.
F-6
<PAGE>
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENT
OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
(A) ONE PHILIPS DRIVE AND 101 COMMERCE DRIVE ACQUISITIONS
FOR THE THREE MONTHS ENDED MARCH 31,1998:
<TABLE>
<CAPTION>
101 Commerce Pro Forma
Drive One Philips Drive Adjustments Pro Forma
----- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 61 $ 26 $ $ 87
Tenant reimbursements and other income 3 3
------- ------- ------- -------
Total revenue 61 29 90
OPERATING EXPENSES:
Maintenance and other operating
expenses
Real estate taxes 3 3
Insurance
Depreciation and amortization 19(1) 19
Mortgage and bank
loan interest 38(2) 38
------- ------- ------- -------
Total operating expenses 3 57 60
------- ------- ------- -------
Net income $ 61 $ 26 $ (57) $ 30
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
- --------------------------------------------------------------------------------
Footnotes:
(1) To record depreciation on assets acquired and transaction costs capitalized
over a useful life of 35 years.
(2) To record interest expense on mortgage indebtedness as follows:
<TABLE>
<CAPTION>
Mortgage Interest
Amount Rate (%)
------ --------
<S> <C> <C>
One Philips Drive $ 7,500 7.03
101 Commerce Drive 17,000 7.03
--------
$ 24,500
--------
--------
</TABLE>
F-7
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(B) GATX PROPERTIES AND DOUBLE M DEVELOPMENT PROPERTIES
FOR THE THREE MONTHS ENDED MARCH 31,1998:
<TABLE>
<CAPTION>
Double M
Development Pro Forma
Properties GATX Properties Adjustments Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 350 $ 423 $ $ 773
Tenant reimbursements and other income 78 78
------- ------- ------- -------
Total revenue 428 423 851
OPERATING
EXPENSES:
Maintenance and
other operating expenses 37 37
Utilities 25 25
Real estate taxes 47 47
Depreciation and amortization 150(1) 150
Mortgage and bank loan interest 327(2) 327
------- ------- ------- -------
Total operating expenses 109 477 586
------- ------- ------- -------
Net income $ 319 $ 423 $ (477) $ 265
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
- --------------------------------------------------------------------------------
Footnotes:
(1) To record depreciation on assets acquired and transaction costs capitalized
over a useful life of 35 years.
(2) To record interest expense on mortgage indebtedness as follows:
<TABLE>
<CAPTION>
Mortgage Interest
Amount Rate (%)
------ --------
<S> <C> <C>
GATX Properties $ 8,433 7.71
Double M Development Properties 9,357 7.71
---------
$ 17,790
---------
---------
</TABLE>
F-8
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(C) SALE OF AMERICANA LAKEWOOD
On January 9, 1998, the Company sold a 300-unit multi-family residential
property known as Americana Lakewood Apartments, located in the
metropolitan Denver area, for a gross sales price of $15,066,000. This
adjustment affects the elimination of the impact on the statement of
operations for this property for the three months ended March 31, 1998.
(D) To adjust the minority interest's share of income in the Operating
Partnership. The Company owned 58% of the Operating Partnership at March
31, 1998. The adjustment to record the income effect of the minority
interest share for the three months ended March 31, 1998 in the pro forma
income statement was computed as follows:
<TABLE>
<S> <C>
Proforma Revenue $ 6,634
Proforma Operating Expenses 4,551
Proforma Equity in Loss from Penn Square (162)
--------
Proforma Income before Minority Interest $ 1,921
--------
Minority Interest (42%) $807
Minority Interest at March 31, 1998 (3,617)
--------
Adjustment Required $ (2,810)
--------
--------
</TABLE>
F-9
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(a) To reflect the elimination of the statement of operations impact for
the year ended December 31, 1997 for the multi-family residential
properties which were sold during 1997. The combined results for
these properties are shown as follows:
FOR THE YEAR ENDED DECEMBER 31, 1997:
<TABLE>
<CAPTION>
Emerald
Timberleaf Sedona Pointe Total
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $ 364 $ 1,093 $ $ 1,457
Operating expenses:
Repairs and maintenance 29 87 116
Property taxes 9 48 57
Property management fees 12 35 47
Utilities 98 181 279
Payroll 39 154 193
Other property operations 87 116 203
Interest 91 307 447 845
Depreciation 45 162 (49) 158
-------- -------- -------- --------
Total operating expenses 410 1,090 398 1,898
Equity in earnings from investment
in partnership 436 436
Minority interest
Gains on sales of property 403 3,453 752 4,608
-------- -------- -------- --------
Net income $ 357 $ 3,456 $ 790 $ 4,603
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
On February 28, 1997, the Company sold the 450-unit apartment complex known as
the Timberleaf Apartments, which was constructed in 1972 and is located in
Aurora, Colorado. The gross selling price for this property was approximately
$9.1 million. On August 29, 1997, the Company sold the Sedona Apartments, a
276-unit apartment complex constructed in 1971 and located in Denver, Colorado.
The property had been acquired by the Company upon its organization as a REIT in
1993. The selling price for the property was $9.2 million.
On September 26, 1997, the Company sold its 50% general partner interest in
Emerald Vista Associates, L.P., which owns the 456-unit apartment complex known
as the Emerald Pointe Apartments located in San Diego County, California. The
selling price for the general partnership interest was $2 million.
The pro forma effects of these property sales are shown above for the year ended
December 31, 1997.
F-10
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(b) MCBRIDE PORTFOLIO
FOR THE YEAR ENDED DECEMBER 31, 1997:
<TABLE>
<CAPTION>
McBride
McBride Pro Forma Portfolio
Portfolio Adjustments Pro Forma
--------- ----------- ---------
<S> <C> <C> <C>
Revenue:
Minimum rent $ 9,310 $ $ 9,310
Tenant reimbursements and
other income 1,098 1,098
--------- --------- ---------
Total revenue 10,408 10,408
Operating expenses:
Maintenance, administrative and
other operating expenses 2,419 (1,199)(1) 1,220
Real estate taxes 516 516
Depreciation and amortization 1,946 (2) 1,946
Mortgage and bank loan interest 3,348 (3) 3,348
--------- --------- ---------
Total operating expenses 2,935 4,095 7,030
--------- --------- ---------
Net income $ 7,473 $ (4,095) $ 3,378
--------- --------- ---------
--------- --------- ---------
</TABLE>
- --------------------------------------------------------------------------------
Footnotes:
<TABLE>
<S> <C>
(1) To eliminate non-recurring McBride general and
administrative costs which will not be incurred as a
result of the future operations of the McBride Portfolio
by the Company
- Property management fees $ 136,000
- General and administrative expenses 1,063,000
-----------
$ 1,199,000
-----------
-----------
(2) To record depreciation expense related to the McBride $ 1,946,000
Portfolio real estate assets over a useful life of 35
years.
(3) To record amortization of $500,000 of deferred financing
costs related to the refinancing of the McBride
Portfolio debt with Nomura over a ten-year period. $ 48,000
To record interest expense on the $45,000,000 of assumed
McBride Portfolio debt at 7.71%. 3,300,000
-----------
$ 3,348,000
-----------
-----------
</TABLE>
F-11
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(c) PENN SQUARE PROPERTIES
FOR THE YEAR ENDED DECEMBER 31, 1997:
<TABLE>
<CAPTION>
Penn Square Penn Square
Properties Pro Forma Properties
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Revenue: $ 2,271 $ $ 2,271
--------- --------- ---------
Operating expenses:
Compensation and benefits 2,047 280(1) 2,327
Other 187 187
--------- --------- ---------
Total operating expenses 2,234 280 2,514
--------- --------- ---------
Pre-tax income (loss) 37 (280) (243)
--------- --------- ---------
Provision for income taxes
Net income (loss) 37 (280) (243)
--------- --------- ---------
--------- --------- ---------
Amortization of excess purchase
price over net assets acquired
recorded in consolidation (2) 170
---------
Net loss, as adjusted $(413)
---------
---------
Operating Partnership's share of
net loss of Penn Square (95%) $(392)
---------
---------
</TABLE>
- --------------------------------------------------------------------------------
Footnotes:
(1) To reflect additional payroll costs associated with operating the
combined Company after the December 12, 1997 transactions to acquire
the McBride Portfolio.
(2) Excess purchase price over net assets acquired of $4,250,000 is amortized
over 25 years.
F-12
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(d) ACQUISITION PROPERTIES
FOR THE YEAR ENDED DECEMBER 31,1997:
<TABLE>
<CAPTION>
Dana Loew Northfield Pro Forma
Building Properties Properties Adjustments Pro Forma
-------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 365 $ 1,704 $ 1,120 $ $ 3,189
Tenant reimbursements
and other income 7 245 148 400
-------- -------- -------- -------- --------
Total revenue 372 1,949 1,268 3,589
OPERATING
EXPENSES:
Maintenance and
other operating
expenses 75 173 248
Real estate taxes 1 187 126 314
Insurance 6 16 60 82
Depreciation and
amortization 673(1) 673
Mortgage and bank
loan interest 1,234(2) 1,234
-------- -------- -------- -------- --------
Total operating
expenses 7 278 359 1,907 2,551
-------- -------- -------- -------- --------
Net income $ 365 $ 1,671 $ 909 $ (1,907) $ 1,038
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
- --------------------------------------------------------------------------------
Footnotes:
(1) To record depreciation on assets acquired and transaction costs capitalized
over a useful life of 35 years.
(2) To record interest expense on mortgage indebtedness as follows:
<TABLE>
<CAPTION>
Mortgage Interest
Amount Rate (%)
------ --------
<S> <C> <C>
Dana Building $ 1,155 7.38
Loew Properties 2,875 8.25
4,385 8.50
3,358 8.50
Northfield Properties 3,500 7.25
--------
$ 15,273
--------
--------
</TABLE>
F-13
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(e) ONE PHILIPS DRIVE AND 101 COMMERCE DRIVE ACQUISITIONS
FOR THE YEAR ENDED DECEMBER 31,1997:
<TABLE>
<CAPTION>
101 Commerce Pro Forma
Drive One Philips Drive Adjustments Pro Forma
------------ ------------------ ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 2,788 $ 1,188 $ $ 3,976
Tenant reimbursements and other income 4 145 149
------- ------- -------- -------
Total revenue 2,792 1,333 4,125
OPERATING EXPENSES:
Maintenance and other operating
expenses
Real estate taxes 145 145
Insurance
Depreciation and amortization 857 (1) 857
Mortgage and bank
loan interest 1,722 (2) 1,722
------- ------- -------- -------
Total operating expenses 145 2,579 2,724
------- ------- -------- -------
Net income $ 2,792 $ 1,188 $(2,579) $ 1,401
------- ------- -------- -------
------- ------- -------- -------
</TABLE>
Footnotes:
(1) To record depreciation on assets acquired and transaction costs capitalized
over a useful life of 35 years.
(2) To record interest expense on mortgage indebtedness as follows:
<TABLE>
<CAPTION>
Mortgage Interest
Amount Rate (%)
-------- --------
<S> <C> <C>
One Philips Drive $ 7,500 7.03
101 Commerce Drive 17,000 7.03
--------
$ 24,500
--------
--------
</TABLE>
F-14
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(f) GATX PROPERTIES AND DOUBLE M DEVELOPMENT PROPERTIES
FOR THE YEAR ENDED DECEMBER 31,1997:
<TABLE>
<CAPTION>
Double M
Development Pro Forma
Properties GATX Properties Adjustments Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Minimum rent $ 1,605 $ 1,770 $ $ 3,375
Tenant reimbursements and other income 330 330
-------- ------- -------- --------
Total revenue 1,935 1,770 3,705
OPERATING
EXPENSES:
Maintenance and
other operating expenses 59 59
Utilities 104 104
Real estate taxes 196 196
Depreciation and amortization 626 (1) 626
Mortgage and bank loan interest 1,369 (2) 1,369
-------- ------- -------- --------
Total operating expenses 359 1,995 2,354
-------- ------- -------- --------
Net income $ 1,576 $ 1,770 $ (1,995) $ 1,351
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
Footnotes:
(1) To record depreciation on assets acquired and transaction costs capitalized
over a useful life of 35 years.
(2) To record interest expense on mortgage indebtedness as follows:
<TABLE>
<CAPTION>
Mortgage Interest
Amount Rate (%)
------ --------
<S> <C> <C>
GATX Properties $ 8,433 7.71
Double M Development Properties 9,357 7.71
--------
$ 17,790
--------
--------
</TABLE>
F-15
<PAGE>
AMERICAN REAL ESTATE INVESTMENT CORPORATION
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
(g) SALE OF AMERICANA LAKEWOOD
On January 9, 1998, the Company sold a 300-unit multi-family residential
property known as Americana Lakewood Apartments, located in the
metropolitan Denver area, for a gross sales price of $15,066,000. This
adjustment affects the elimination of the impact on the statement of
operations for this property for the year ended December 31, 1997.
(h) To eliminate the pro forma effect of the non-recurring costs associated
with the buyout of certain executive management employment agreements and
outstanding options and warrants in conjunction with the transactions which
occurred on December 12, 1997, related to the Company's reorganization into
an office and industrial real estate investment trust.
(i) To adjust the minority interest's share of income in the Operating
Partnership. The Company owned 57% of the Operating Partnership at
December 31, 1997. The adjustment to record the income effect of the
minority interest share for the year ended December 31, 1997 in the pro
forma income statement was computed as follows:
<TABLE>
<S> <C>
Proforma Revenue $ 26,367
Proforma Operating Expenses 18,635
Proforma Equity in Loss from Penn Square (424)
---------
Proforma Income before Minority Interest $ 7,308
---------
Minority Interest (43%) $ 3,142
Minority Interest at December 31, 1997
(876)
---------
Adjustment Required $ 2,266
---------
---------
</TABLE>
F-16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Real Estate Investment Corporation:
We have audited the statement of revenue and certain expenses of Double M
Development Properties for the year ended December 31, 1997. This financial
statement is the responsibility of the Properties' management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The statement of revenue and certain expenses was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in a Current Report on Form 8-K/A of American Real
Estate Investment Corporation, as described in Note 1, and is not intended to be
a complete presentation of the Properties' revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of Double M Development
Properties for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
June 5, 1998
F-17
<PAGE>
DOUBLE M DEVELOPMENT PROPERTIES
STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
For the
Three Months Ended For the Year Ended
March 31, 1998 December 31, 1997
-------------- -----------------
(unaudited)
<S> <C> <C>
REVENUE:
Minimum rent (Note 2) $ 349,831 $ 1,605,358
Tenant reimbursements 78,206 327,565
Other income -- 1,761
----------- ------------
Total revenue 428,037 1,934,684
CERTAIN EXPENSES:
Maintenance and other operating
expenses 37,207 58,727
Utilities 24,809 103,915
Real estate taxes 46,920 196,524
----------- ------------
Total certain expenses 108,936 359,166
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 319,101 $ 1,575,518
----------- ------------
----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
DOUBLE M DEVELOPMENT PROPERTIES
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1997
1. BASIS OF PRESENTATION:
The statement of revenue and certain expenses reflects the operations of Double
M Development Properties ("the Properties"), located in the suburban Harrisburg,
Pennsylvania area. American Real Estate Investment Corporation ("the Company")
acquired the Properties from Double M Development Company on March 27, 1998.
The Properties consist of five industrial buildings that have an aggregate net
rentable area of approximately 466,000 square feet (100% leased as of
December 31, 1997). This statement of revenue and certain expenses is to be
included in the Company's Current Report on Form 8-K/A, as the above described
transaction has been deemed significant pursuant to the rules and regulations of
the Securities and Exchange Commission.
The accounting records of the Properties are maintained on an accrual basis.
Adjusting entries have been made to present the accompanying financial
statements in accordance with generally accepted accounting principles. The
accompanying financial statements exclude certain expenses such as interest,
depreciation and amortization, and other costs not directly related to the
future operations of the Properties.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period.
The ultimate results could differ from those estimates.
The statement of revenue and certain expenses for the three months ended
March 31, 1998 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for
the fair presentation of the statement of revenue and certain expenses for the
interim period have been included. The results of the interim periods are not
necessarily indicative of the results for the full year.
2. OPERATING LEASES:
Minimum rent presented of the year ended December 31, 1997 includes
straight-line adjustments which decrease rental revenue by $20,879 in accordance
with generally accepted accounting principles.
The following tenants account for greater than 10% of minimum rent as of
December 31, 1997:
<TABLE>
<CAPTION>
Tenant Minimum Rent
------ ------------
<S> <C>
Bayard Sales Corporation $302,787
FDA Packaging, Inc. 208,500
Excel Logistics, Inc. 334,281
Ezon, Inc. 269,578
</TABLE>
Properties are leased to tenants under operating leases with expiration dates
extending to the year 2002. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses as of
December 31, 1997, are as follows:
<TABLE>
<S> <C>
1998 $1,433,774
1999 1,050,940
2000 1,041,840
2001 654,169
2002 280,676
</TABLE>
Certain leases also include provisions requiring tenants to reimburse the
Properties for management costs and other operating expenses up to stipulated
amounts.
3. SUBSEQUENT EVENT
On March 27, 1998, the Company consummated the acquisition of these properties
from Double M Development Company for a gross selling price of $14,400,000.
F-19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Real Estate Investment Corporation:
We have audited the statement of revenue and certain expenses of the GATX
Properties for the year ended December 31, 1997. This financial statement is
the responsibility of the Properties' management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The statement of revenue and certain expenses was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in a Current Report on Form 8-K/A of American Real
Estate Investment Corporation, as described in Note 1, and is not intended to be
a complete presentation of the Properties' revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of the GATX Properties
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
April 1, 1998
F-20
<PAGE>
GATX PROPERTIES
STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
For the
Three Months Ended For the Year Ended
March 31, 1998 December 31, 1997
-------------- ------------------
(unaudited)
<S> <C> <C>
REVENUE:
Minimum rent (Note 2) $ 422,516 $ 1,769,700
--------- -----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 422,516 $ 1,769,700
--------- -----------
--------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
GATX PROPERTIES
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1997
1. BASIS OF PRESENTATION:
The statement of revenue and certain expenses reflects the operations of the
GATX Properties ("the Properties"), located in Liverpool, New York. American
Real Estate Investment Corporation (the "Company) acquired the Properties from
TriNet Corporate Realty Trust, Inc. ("TriNet") on March 27, 1998. The
Properties consists of four industrial buildings with an aggregate net rentable
area of approximately 650,000 square feet (100% leased as of December 31, 1997).
This statement of revenue and certain expenses is to be included in the
Company's Current Report on Form 8-K/A, as the above described transaction has
been deemed significant pursuant to the rules and regulations of the Securities
and Exchange Commission.
The accounting records of the Properties are maintained on an accrual basis.
Adjusting entries have been made to present the accompanying financial
statements in accordance with generally accepted accounting principles. The
accompanying financial statement excludes certain expenses such as interest,
depreciation and amortization, and other costs not directly related to the
future operations of the Properties.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period.
The ultimate results could differ from those estimates.
The statement of revenue and certain expenses for the three months ended
March 31, 1998 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for
the fair presentation of the statement of revenue and certain expenses for
the interim period have been included. The results of the interim periods are
not necessarily indicative of the results for the full year.
2. OPERATING LEASES:
GATX, Inc. ("GATX") occupies 100% of the Properties and pays all operating
expenses directly under the terms of it's leases. As a result, no operating
expenses are reflected in the accompanying financial statement.
The Properties are leased to GATX under operating leases with expiration dates
extending to the year 2001. Future minimum rentals under noncancelable
operating leases as of December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998 $ 1,769,700
1999 1,769,700
2000 1,769,700
2001 737,375
</TABLE>
3. SUBSEQUENT EVENT:
In February, 1998, the Company entered into an agreement to acquire these
Properties from TriNet for a gross selling price of $13,000,000. The
acquisition of these Properties was consummated on March 27, 1998.
F-22
<PAGE>
EXHIBIT 10.1
AGREEMENT OF SALE AND PURCHASE
LOWER ALLEN DISTRIBUTION CENTER LAND
THIS AGREEMENT is made as of the 31st day of January, 1998 by and
between MARK G. CALDWELL and MARTIN L. GRASS, trading as DOUBLE M DEVELOPMENT
COMPANY, a Partnership, having an address at 434 North Front Street,
Wormleysburg, Pennsylvania 17403 ("Seller") and AMERICAN REAL ESTATE INVESTMENT,
L.P., a Delaware Limited Partnership, having an address at Plymouth Meeting
Executive Campus, 620 West Germantown Pike, Suite 200, Plymouth Meeting, PA
19462 ("Buyer").
W I T N E S S E T H :
1. AGREEMENT TO SELL AND PURCHASE. Seller agrees to sell to Buyer, and
Buyer agrees to purchase from Seller, subject to the terms and conditions of
this Agreement, certain property consisting of the following:
(a) REAL PROPERTY. All that certain tract of land containing
15.5115 acres ("Lower Allen Distribution Center Land") which is described by
metes and bounds on the ALTA/ACSM Land Title Survey for 2400, 2404 and 2410
Gettysburg Road prepared by Hartman and Associates, Inc., dated 12/10/97,
situate in the Township of Lower Allen, Cumberland County, Commonwealth of
Pennsylvania (the Lower Allen Distribution Center Land is sometimes herein
referred to as the "Land"); together with all improvements on the Land,
including, without limitation, three buildings located on the Lower Allen
Distribution Center Land containing 24,311 square feet, 33,600 square feet and
124,092 square feet; together with all appurtenances thereto (including, without
limitation, all easements, rights-of-way, and other rights and benefits
belonging to, running with the owner of, or relating to the Land); and together
with all rights, title and interest of Seller in and to all land lying in the
bed of any street, opened or proposed, abutting the Land and all right, title
and interest of Seller in an to any unpaid award for the taking by eminent
domain of any part of the Land or for damages to the Land by reason of a change
of grade of any street (all of the property, rights and privileges described in
this Section 1(a) herein being collectively called the "Real Property").
<PAGE>
(b) PERSONAL PROPERTY. All fixtures, equipment and other
personal property attached or appurtenant to the Real Property; all furniture,
supplies, and other unattached items of personal property located in or on, or
used in connection with, the Real Property which are owned by Seller; and all
intangible personal property used in the ownership, operation or maintenance of
the Real Property, which is owned by Seller (all of the foregoing items of
property being herein collectively called "Personal Property").
(c) PROPERTY. The Real Property and the Personal Property are
sometimes herein collectively called "Property".
2. PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Property, subject to adjustments as provided in this Agreement, shall be Six
Million Five Hundred Fifty Thousand Dollars ($6,550,000), and shall be paid as
follows:
(a) Fifty Thousand Dollars ($50,000) (such sum, plus all
interest which accrues thereon, being herein called "the Deposit") shall be paid
by Buyer to First American Title Insurance Company ("Title Company") on the date
of the execution of this Agreement. The Deposit shall be held by the Title
Company in one or more federally-insured money market accounts acceptable to
both Seller and Buyer, or in short-term United States Government obligations
having a maturity date which is not later than the Closing Date (as defined
below).
(b) The balance of the Purchase Price shall be paid at Closing
by wire transfer of immediately available funds.
3. DISPOSITION OF DEPOSIT; DEFAULTS.
(a) The Deposit shall be held in escrow and disbursed by the
Title Company in accordance with the terms of this Agreement. Seller and Buyer
each agrees, upon request, to execute the Title Company's customary form of
escrow agreement with respect to the Deposit.
-2-
<PAGE>
(b) If Buyer, without the right to do so and in default of its
obligations under this Agreement fails to complete Closing, Seller shall have
the right to be paid the Deposit as liquidated damages and not as a penalty.
Buyer and Seller acknowledge that the damages which may be incurred by Seller in
the event of Buyer's default are difficult to quantify as of the date of this
Agreement; the Deposit represents the parties' reasonable estimate of Seller's
probable future damages in the event of Buyer's default; and that the Deposit
represents fair and reasonable compensation to Seller in the event of Buyer's
default. The right of Seller to be paid the Deposit shall be Seller's exclusive
and sole remedy, and Seller waives any right to recover the balance of the
Purchase Price, or any part thereof, and the right to pursue any other remedy
permitted by law or in equity against Buyer.
(c) If Closing is completed hereunder, the Title Company shall
pay the Deposit to Seller on account of the Purchase Price.
4. CLOSING. The closing of this transaction ("Closing") shall take place
at the offices of Wolf, Block, Schorr and Solis-Cohen, Twelfth Floor Packard
Building, 15th and Chestnut Streets, Philadelphia, Pennsylvania 19102. Closing
shall commence at 10:00 a.m. on February 18, 1998 ("Closing Date").
5. CONDITION OF TITLE.
(a) Title to the Property shall be good and marketable and free
and clear of all liens, restrictions, easements, encumbrances, leases, tenancies
and other title objections, except for the Permitted Encumbrances (as defined
below) and the Tenant Leases (as defined below), and shall be insurable as such
and as provided in this Agreement at ordinary rates by the Title Company
pursuant to an ALTA Owner's Policy of Title Insurance, 1970 Form B, amended
October 17, 1970 and October 17, 1984 (the "Owner's Policy of Title Insurance").
The premium (at ordinary rates) for the Owner's Policy of Title Insurance will
be paid by Buyer.
(b) If Seller is unable to convey title to the Property to Buyer
at Closing in accordance with the requirements of Section 5(a), Buyer shall have
the right (i) of taking such title as Seller is able to convey with abatement of
the Purchase Price in the amount (fixed or ascertainable) of any Monetary
-3-
<PAGE>
Liens (as defined below) on the Property, or (ii) of terminating this Agreement.
(c) Promptly after the execution of this Agreement, Buyer shall
order from the Title Company a Commitment for Title Insurance ("Title
Commitment") with respect to the Real Property. Prior to the expiration of the
Inspection Period, Buyer shall give to Seller Notice ("Exception Notice") of any
exceptions to title set forth in the Title Commitment which are not acceptable
to Buyer ("Unacceptable Exceptions"). Seller shall, within ten business (10)
days from the date of Seller's receipt of the Exception Notice, deliver to Buyer
an endorsement to the Title Commitment issued by the Title Company stating
which, if any, of the Unacceptable Exceptions the Title Company has or will
commit to remove from the Title Commitment; and if the Title Company has not
issued an endorsement to the Title Commitment removing (or committing to remove)
all of the Unacceptable Exceptions from the Title Commitment within ten (10)
business days from the date of Seller's receipt of the Exception Notice, Buyer
shall have the right to terminate this Agreement. If Buyer does not terminate
this Agreement pursuant to the provisions of this Section 5(c), then the
exceptions remaining on Schedule B, Section 2 of the Title Commitment which are
not liens securing payment of monetary sums ("Monetary Liens") shall be the
"Permitted Encumbrances". Seller agrees to pay all Monetary Liens and cause all
Monetary Liens to be released and satisfied of record prior to the completion of
Closing.
(d) If Seller, without the right to do so and in the default of
its obligations under this Agreement fails to complete Closing, or otherwise
defaults under or breaches this Agreement, Buyer shall have the right, at
Buyer's sole election, either (A) to be returned the Deposit plus Buyer's
reimbursable costs as hereinafter defined, up to a maximum amount of $25,000.00
as liquidated damages for Seller's breach, or (B) to specific performance and
injunctive relief without monetary damages against Seller. Reimbursable
expenses are defined to include the cost of all charges incurred by Buyer for
securing title, the cost of any plans, surveys and environmental studies ordered
by Buyer, all loan commitment fees paid by Buyer and all the fees, costs and
expenses reasonably incurred by Buyer in connection with the property and
Buyer's intended acquisition thereof.
-4-
<PAGE>
6. POSSESSION. Possession of the Property shall be given to Buyer at
Closing, subject only to the rights of occupancy of the Tenants (as defined
below) under the Tenant Leases by delivery of Seller's special warranty deeds
(the "Deeds") and bills of sale (the "Bills of Sale"), duly executed and
acknowledged by Seller and in proper form for recording. If Buyer causes
surveys of the Real Property to be made, then at Buyer's option the descriptions
of the Real Property contained in the Deeds shall be based upon those survey.
7. APPORTIONMENTS; TRANSFER TAXES; SECURITY DEPOSITS.
(a) (i) Real estate taxes on the Real Property; personal
property taxes (if any) on the Personal Property; minimum water and sewer
rentals; base, minimum and/or fixed rental, additional rental and other sums
paid by the Tenants to the Seller prior to Closing under the Tenant Leases;
payments due under the Service Agreements (as defined below) which are to be
assigned to Buyer, if any, shall be apportioned pro rata between Seller and
Buyer on a per diem basis as of the Closing Date; provided, however, that there
shall be no apportionment between Buyer and Seller at Closing with respect to
utility charges paid by the Tenants directly to utility companies pursuant to
the Tenant Leases.
(ii) If the Closing Date is not the first day of a
calendar month and if as of the Closing Date and of the Tenants has not paid the
monthly installment of base, minimum and/or fixed rental ("Delinquent
Installment") due under its Tenant Lease with respect to the month in which
Closing occurs, then at Closing Buyer shall receive a credit against the
Purchase Price in an amount equal to the portion of the Delinquent Installment
applicable to the period of time from and after the Closing Date and through the
balance of the applicable month; and upon Buyer's receipt of the Delinquent
Installment from such Tenant, Buyer shall pay the full amount thereof to Seller.
For the purpose of this subparagraph, "Delinquent Installment" shall mean only
one that has not been paid by the applicable Tenant within the applicable grace
period, if any, in its Tenant Lease.
(b) At Closing, each of Buyer and Seller shall pay one-half
(1/2) of all realty transfer taxes imposed by the Commonwealth of Pennsylvania
and all other governmental
-5-
<PAGE>
authorities upon the Deeds and the conveyance of the Real Property from Seller
to Buyer.
(c) At Closing, Seller shall deliver to Buyer a certified check
in the amount of all Security Deposits paid under the Tenant Leases, and all
interest which has (or was required to) accrued thereon.
8. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller makes the following
representations and warranties to Buyer, which representations and warranties
are true and correct as of the date of this Agreement, and shall be true and
correct at and as of the Closing Date in all respects as though such
representations and warranties were made both at and as of the date of this
Agreement, and at and as of the Closing Date:
(a) The only leases or other agreements (herein collectively
called the "Tenant Leases"; and each respective tenant under each of the
Tenant Leases is herein sometimes individually called "Tenant" and
collectively "Tenants") with respect to rights of use and occupancy of the
Property in effect are as set forth on the Charts attached hereto as Schedule 1.
(b) The Tenant Leases are valid and existing and in full force
and effect; the Tenants are in actual possession of the Property; and neither
the Tenants nor the Seller are in default of their respective obligations under
the Tenant Leases.
(c) The copies of the Tenant Leases previously delivered by
Seller to Buyer are true and complete copies of the Tenant Leases; the Tenant
Leases have not been amended, modified, or supplemented; and the Tenants do not
have any right to extend or renew the terms of their respective Tenant Leases
except as expressly set forth in the Tenant Leases.
(d) None of the Tenants has asserted any claim which could
adversely affect the right of the landlord to collect base, minimum or fixed
rental or additional rental from the Tenants; and no notice of default or breach
on the part of landlord under the Tenant Leases has been received by Seller from
any of the Tenants which has not been cured.
-6-
<PAGE>
(e) All construction, painting, repairs, alterations,
improvements and other work required to be performed by the landlord under the
Tenant Leases, and all of the other obligations of the landlord required to be
performed under the Tenant Leases as of the Closing Date, have been completed
fully performed and paid for in full by Seller.
(f) The terms of the Tenant Leases commenced and will end on the
dates specified in the Charts attached hereto as Schedule 1.
(g) The rents and other payments set forth in the Tenant Leases
are the actual rents, income and charges presently being collected by Seller
under the Tenant Leases; all minimum rent payable under the Tenant Leases is
payable monthly in advance of rent control laws, ordinances, or regulations, or
by virtue of existing agreements or regulations.
(h) Except as set forth in the Tenant Leases, none of the
Tenants is entitled to any concession, allowance, rebate or refund.
(i) None of the Tenants has prepaid any base rental, minimum
rental, fixed rental or additional rental or other charges for more than the
current month under its Tenant Lease.
(j) Neither the Tenant Leases nor the rental or other amounts
payable under the Tenant Leases have been assigned, pledged or encumbered other
than to the holder of any existing mortgage as collateral security, which
assignment shall be terminated at Closing; and the Tenant Leases may be assigned
by Seller to Buyer at Closing.
(k) No security deposit has been paid by any of the Tenants
under the Tenant Leases, except as set forth on the Charts attached hereto as
Schedule 1.
(l) The Chart attached hereto as Schedule 2 sets forth the only
brokerage or leasing commissions or other compensation which are or will be due
and payable to any party ("Lease Broker") with respect to or on account of the
Tenant Leases or any extensions or renewals thereof or any other actions by the
Tenants thereunder; the copies of the agreements between Seller and each Lease
Broker delivered by Seller to Buyer are
-7-
<PAGE>
true and complete and there are no other such agreements; Seller shall fully pay
(and shall provide to Buyer at Closing evidence of such payment) all
installments on account of the existing leasing commissions due or payable with
respect to any rental due or payable in connection with any period prior to the
Closing Date and/or otherwise due and payable prior to the Closing Date; and
Buyer shall, at Closing, accept the assignment of the Tenant Leases subject to
the obligation to pay all of the existing leasing commissions to the Lease
Brokers with respect to periods occurring from and after the Closing Date.
Pursuant to the preceding sentence, there shall be an apportionment at Closing
of prepaid or accrued leasing commissions.
(m) Except as expressly set forth in the Tenant Leases, the
Tenants do not have any right or option to acquire to the Property or any
portion thereof.
(n) Seller has not received any written notice ("Defect Notice")
from any insurance company which has issued a policy with respect to the
Property or from any board of fire underwriters (or other body exercising
similar functions) claiming any defects or deficiencies in the Property or
suggesting or requesting the performance of any repairs, alterations or other
work to the Property.
(o) There are no management, service, equipment, supply,
security, maintenance, construction, concession or other agreements with respect
to or affecting the Property, except for any agreements under which only a
Tenant is bound and except for the agreements listed on Exhibit B to this
Agreement (collectively, the "Service Agreements"); Seller is not in default
under the Service Agreements; the copies of the Service Agreements previously
delivered by Seller to Buyer are true and complete copies of such Service
Agreements and the same have not been amended, modified or supplemented; and
each of the Service Agreements designated on Exhibit B to be terminated shall be
terminated by Seller at or prior to Closing and all sums due thereunder paid in
full by Seller.
(p) No employee of Seller who performs services at or in
connection with the Property is covered by an employment agreement or union
contract; no demand has been made upon Seller for recognition of a union or
collective bargaining agent for the employees of Seller at the Property; and
none of the employment
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arrangements with respect to Seller's employees will be binding upon Buyer or
any subsequent owner of the Property after Closing.
(q) There are no outstanding uncured written notices received by
Seller of any violation ("Violation") of any applicable law, ordinance, code,
rule, order, regulation or requirement of any governmental authority with
respect to the Property.
(r) Exhibit C to this Agreement sets forth the only fire and
extended coverage insurance policies ("Policy") maintained by Seller with
respect to the Property; the Policy is in full force and effect and all premiums
due thereunder has been paid; and neither Seller nor (to Seller's knowledge) any
of the Tenants have received any notice from the insurance companies which
issued the Policy, indicating that the Policy will not be renewed or will be
renewed at a higher premium than is presently payable therefor.
(s) There is no action, suit or proceeding pending or, to the
knowledge of Seller, threatened against or affecting Seller or the Property or
any portion thereof or the Tenant Leases or relating to or arising out of the
ownership, management or operation of the Property, in any court or before or by
any federal, state, county or municipal department, commission, board, bureau or
agency or other governmental instrumentality.
(t) Seller has not received any notice of any condemnation
proceeding or other proceedings in the nature of eminent domain ("Taking") in
connection with the Property, and to Seller's knowledge no Taking has been
threatened.
(u) All of the books, records, information, data and other items
supplied by Seller to Buyer are true, complete and correct in all material
respects, and fairly and accurately presented the results of operations of the
Property.
(v) To the best of Seller's actual knowledge, there is no
presently existing Violation at the Property of any environmental law or
reputation; no contamination is present at the Property; and no underground
storage tanks, asbestos or PCBs are present at the Property.
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9. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement and
Closing:
(a) Seller shall, at its expense: perform all of its
obligations under the Tenant Leases; and cure all notices of any Violations
and/or Defect Notices issued prior to Closing. Notwithstanding the foregoing
provisions of this Section 9(a), if all such notices of Violation or Defect
Notices require the expenditure by Seller of more than $50,000 in the aggregate,
Seller shall have the right to give to Buyer written notice that Seller has
elected not to cure such notices; and in such event, Buyer shall have the right,
by written notice to Seller, at Buyer's sole option, to terminate this
Agreement.
(b) Seller shall not enter into any agreement to modify, amend
or otherwise alter any of the terms or provisions of the Tenant Leases or any of
the Service Agreements; Seller shall not enter into a new lease ("New Lease") or
other agreement with respect to the use or occupancy of the Real Property and/or
the maintenance thereof, without prior written approval of Buyer. Seller agrees
to execute any New Lease designated by Buyer which is approved by Seller. Each
of Seller and Buyer agrees not unreasonably to untimely withhold or delay its
approval of a New Lease. If Seller shall enter into a New Lease for a portion
of the Real Property after the date of this Agreement and prior to the Closing
Date pursuant to the request or prior written approval of Buyer, then Buyer
shall, at Closing, reimburse to Seller all hard costs paid by Seller pursuant to
a written budget previously approved by Seller and Buyer for capital
improvements to the premises demised under the New Lease; and Buyer shall assume
the obligations of the Seller, as landlord under the New Lease, to perform
capital improvements to the premises demised under the New Lease required by the
terms of the New Lease. Any New Lease entered into by Seller after the date of
this Agreement and prior to the Closing Date pursuant to the request or prior
written approval of Buyer shall be included within the definition of "Tenant
Leases".
(c) Seller shall perform all acts, and shall make all payments,
necessary to cause the representations and warranties of Seller in this
Agreement to be true and correct.
(d) (i) Buyer, its attorneys, accountants, architects,
engineers and other representatives shall be afforded access to the Property and
to all books, records and files
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relating thereto from time to time prior to Closing for the purposes of
inspections, preparation of plans, taking of measurements, making of surveys,
making of appraisals, and generally for the ascertainment of the condition of
the Property, including but not limited to the physical and financial condition
of the Property; and there shall be furnished to Buyer all plans and
specifications, engineering reports, feasibility studies, operating statements,
governmental permits and approvals, contracts, leases, surveys, title
information and other documentation concerning the Property in the possession of
Seller and/or Seller's management agent for the Property.
(ii) Buyer, its attorneys, accountants and other
representatives, shall be permitted to make and are authorized to make any
searches of governmental records as they deem necessary with respect to the
Property; and Seller agrees fully to cooperate with Buyer and its attorneys and
other representatives in this regard and to issue any consents or authorizations
required therefor.
(iii) Buyer agrees to indemnify, defend and reimburse
Seller for all costs, expenses (including, without limitation, attorney's fees,
consultant and expert fees and court costs) loss and liabilities suffered or
incurred by Seller as the result of any injuries to persons or properties caused
by Buyer's entry upon the Property prior to Closing pursuant to the provisions
of this Section 9(d) and Section 14.
(e) Promptly after receipt thereof by Seller, Seller shall
deliver to Buyer the following:
(i) a copy of any notice of default given or received
under the Tenant Leases or the Service Agreements;
(ii) a copy of any tax bill, notice or statement of
value, or notice of change in a tax rate affecting or relating to the Property;
(iii) a copy of any notice of an actual or alleged
Violation; and
(iv) a copy of any notice of Taking.
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(f) Seller shall deliver for execution by each of the Tenants a
written certification which shall be prepared by Buyer's counsel (utilizing the
form attached to this Agreement as Exhibit D, but modified and supplemented by
Buyer's counsel to reflect the terms and provisions of each of the respective
Tenant Leases) (each such certification being herein called a "Tenant Estoppel
Certificate"); and Seller shall obtain an executed Tenant Estoppel Certificate
(dated no more than fifteen (15) days prior to the Closing Date) from each of
the Tenants. Seller shall deliver to Buyer a copy of each of the executed
Tenant Estoppel Certificates obtained by Seller, promptly after Seller's receipt
thereof.
(g) Seller shall deliver for execution by each of the Tenants a
Subordination, Non-Disturbance and Attornment agreement in the form required by
Buyer's lender ("SNDA"); and Seller shall use its best efforts to obtain an
executed SNDA from each of the Tenants. Seller shall deliver to Buyer a copy of
each of the executed SNDAs delivered to Seller promptly after receiving such
SNDA.
10. TAX FREE EXCHANGE. Buyer shall cooperate with Seller in effecting an
exchange described in Section 1031 of the internal Revenue Code ("Tax Free
Exchange"), provided, that: (a) the Tax Free Exchange shall not impose upon
Buyer additional financial or legal obligations in addition to those set forth
elsewhere in this Agreement; (b) Buyer shall have no obligation to take title to
any exchange property; (c) Seller shall indemnify, defend and save and hold
Buyer harmless of an from all expenses, liabilities, claims, losses or actions
as a result of Buyer's participation in the Tax Free Exchange; (d) Buyer shall
have no obligation to modify any of the provisions of this Agreement to effect
the Tax Free Exchange; (e) any Agreement of Sale to be entered into by Buyer for
an exchange property shall provide that any liability of Buyer thereunder shall
be limited and restricted in enforcement to any deposit monies paid by Buyer;
and (f) Seller shall provide to Buyer any deposit monies required under any
Agreement of Sale for an exchange property.
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11. CASUALTY.
(a) Seller shall maintain the Policy in effect until the time of
Closing, and shall deliver to Buyer, within ten (10 ) days after the date of
this Agreement, an endorsement to the Policy issued by each insurance company
issuing the Policy evidencing that the Policy is in effect, and that the Policy
will not be canceled or materially modified without at least thirty (30) days
prior written notice to Buyer. If Closing is not completed under this
Agreement, Buyer agrees to deliver to Seller, upon request, a written direction
to each insurance company which has issued the Policy, directing that Buyer's
name as an additional insured party be deleted therefrom. If Closing is
completed under this Agreement, Seller shall be entitled to all rebates and
refunds of any prepaid premiums under the Policy.
(b) If at any time prior to the Closing Date any portion of the
Property is destroyed or damaged as a result of fire or any other casualty
("Casualty"), Seller shall promptly give written notice ("Casualty Notice")
thereof to Buyer. If the Property is the subject of a Casualty, Buyer shall
have the right, at its sole option, of terminating this Agreement (by notice
given within thirty (30) days after receipt of the Casualty Notice from Seller)
unless, (i) the cost fully to repair or restore such damage is less than One
Hundred Thousand Dollars ($100,000) and sufficient insurance proceeds are
available fully to restore such damage, and (ii) the insurance company issuing
the Policy has confirmed in writing prior to the end of such thirty (30) day
period that such Casualty is covered by the Policy and that no defense to
payment of the claim exists, and (iii) such Casualty will not result in any of
the Tenants terminating any of the Tenant Leases or asserting a right to
terminate any of the Tenant Leases, and (iv) any loan commitment obtained by
Buyer for financing to acquire the Property is not canceled or suspended as a
result of such Casualty. If a Casualty Notice is given to Buyer less than
thirty (30) days prior to Closing, at Buyer's option Closing shall be postponed
to a date not later than thirty (30) days after Buyer's receipt of the Casualty
Notice. If Buyer does not terminate this Agreement, the proceeds of any
insurance with respect to the Property paid between the date of this Agreement
and the Closing Date shall be paid to Buyer at the time of Closing and all
unpaid claims and rights in connection with losses to the Property shall be
assigned to Buyer at Closing without in any manner affecting the Purchase Price.
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(c) If the Property is the subject of a Casualty, but Buyer does
not have the right to terminate this Agreement pursuant to the provisions of
Section 11(b) above (or Buyer does not exercise such right), then Seller shall
promptly cause all temporary repairs to be made to the Property as shall be
required to prevent further deterioration and damage to the Property; provided,
however, that any such repairs shall first be approved by Buyer, which approval
shall not be unreasonably or untimely withheld. Seller shall have the right to
be reimbursed from the proceeds of any insurance with respect to the Property
paid between the date of this Agreement and the Closing Date for the cost of all
such repairs made pursuant to this Section 11(c). Except for the obligation of
Seller to repair the Property set forth in this Section 11(c), Seller shall have
no other obligation to repair any Casualty damage in the event Buyer does not
elect to terminate this Agreement pursuant to the provisions of Section 11(b),
and in such event, Buyer shall accept the Property at Closing as damaged or
destroyed by the Casualty and Buyer shall have the right to enter the Real
Property prior to Closing for the purpose of performing such repairs thereto as
are reasonably necessary to protect the Property against further damage prior to
the Closing Date.
12. EMINENT DOMAIN. If at any time prior to the Closing Date: a Taking
affects all or any part of the Property, or if any proceeding for a Taking is
commenced, or if notice of the contemplated commencement of a Taking is given,
Seller shall promptly give written notice ("Taking Notice") thereof to Buyer.
Buyer shall have the right, at its sole option, of terminating this Agreement by
written notice to Seller within thirty (30) days after receipt by Buyer of the
Taking Notice. If a Taking Notice is given to Buyer less than thirty (30) days
prior to Closing, at Buyer's option Closing shall be postponed to a date not
later than thirty (30) days after Buyer's receipt of the Taking Notice. If
Buyer does not terminate this Agreement, the Purchase Price shall be reduced by
the total of any awards or damages received by Seller and Seller shall, at
Closing, assign to Buyer all of Seller's right, title and interest in and to any
awards or damages to which Seller may have become entitled or may thereafter be
entitled by reason of any exercise of the power of eminent domain or
condemnation with respect to or for the Taking of the Property or any portion
thereof.
13. CONDITIONS OF BUYER'S OBLIGATIONS.
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(a) The obligations of Buyer under this Agreement are subject to
the satisfaction at the time of Closing of each of the following conditions (any
one of which may be waived in whole or in part in writing by Buyer at or prior
to Closing):
(i) all of the representations and warranties by Seller
set forth in this Agreement shall be true and correct in all material respects;
(ii) no representation or warranty by Seller contained in
this Agreement shall contain any materially untrue statement or shall omit a
material fact necessary to make the statement of fact therein recited not
misleading;
(iii) Seller shall have performed all covenants,
agreements and conditions required by this Agreement (and by any other Agreement
between Seller and Buyer) to be performed by Seller prior to or as of the
Closing Date; and
(iv) Buyer shall have received the executed Tenant
Estoppel Certificates and SNDAs from the Tenants under the Tenant Leases. .
(b) In the event any of the conditions set forth in Section
13(a) are not satisfied as of the Closing Date, Buyer shall have the right (in
addition to all other rights and remedies available to Buyer under this
Agreement, at law or equity), at Buyer's sole option to (i) terminate this
Agreement, or (ii) complete Closing notwithstanding the unsatisfied condition.
14. INSPECTION PERIOD.
(a) Buyer shall, during the period ("Inspection Period") which
shall commence as of the date of this Agreement and shall end on January 30,
1998, have the opportunity to examine the Property, the Tenant Leases, the
Service Agreements, the Policy, the Permitted Encumbrances and any items to be
delivered by Seller to Buyer, and to conduct such other inspections of the
Property as Buyer, in its discretion, may elect.
(b) (i) Seller acknowledges that Buyer may commission, prior
to Closing, at Buyer's sole cost and
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expense, an investigation of (without limitation): compliance with
environmental laws, the presence of contaminants on, over, under, migrating from
or affecting the Property including without limitation in connection with the
use and operation of any Personal Property, and the presence of conditions that
may affect Buyer's intended use.
(ii) Seller will cooperate with Buyer and Buyer's agents
in Buyer's investigation, including without limitation: (A) complying with
requests for information and records; (B) assisting Buyer in obtaining
governmental agency or other records and upon Buyer's request communicating
directly with any governmental agencies; (C) granting Buyer access to the
Property including, without limitation, access for collecting surface or
subsurface samples of soil, vegetation or water, or samples from buildings and
other improvements and Personal Property located on the Property, including
samples from walls, floors, ceilings, plenums, paved areas and other areas the
taking of which samples may necessitate some damage to the buildings, other
improvements or the Personal Property, and installing groundwater monitoring
wells; and (D) delivery to Buyer any communications, letters, inquiries or
notices received by Seller from any regulatory body dealing with environmental
matters, water quality, air quality, life safety and OSHA and with all reports
which may have been prepared within the past five years addressing the presence
of PCB emissions, asbestos or other hazardous materials or waste. If Buyer does
not complete Closing, Buyer will repair any invasive testing to the condition
of the Property which had reasonably existed prior to such testing or sampling
(c) Buyer shall have the right, at Buyer's sole option, to
terminate this Agreement (for any reason whatsoever) on or prior to the second
business day to occur after the date on which the Inspection Period ends.
15. ITEMS TO BE DELIVERED AT CLOSING.
(a) At Closing, Seller shall deliver to Buyer the following:
(i) The Deeds.
(ii) The Bills of Sale.
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(iii) Assignments in the form of Exhibits E and F,
respectively, of the Tenant Leases and the Service Agreements designated on
Exhibit B to be assigned to Buyer, duly executed and acknowledged by Seller and
in proper form for recording, assigning to Buyer all of the lessor's and
Seller's rights, title and interest in the Tenant Leases and such Service
Agreements, together with all correspondence between Seller and the Tenants, an
original executed copy of each of the Tenant Leases and each such Service
Agreement and letters, duly executed by Seller, in form satisfactory to Buyer
addressed to each of the Tenants and other parties under the Service Agreements
informing it of the assignments. Seller shall also deliver to Buyer at Closing
evidence of Seller's termination of those Service Agreements not assigned to
Buyer and payment of all sums owing to the parties to such Service Agreements.
(iv) An assignment, duly executed and acknowledged by
Seller, of (and delivery to Buyer of originals or copies of): all certificates
of occupancy and all other licenses, permits, authorizations, consents,
certificates and approvals with respect to the Property; all fees, escrow and/or
security funds, deposits and other sums heretofore paid by Seller to any
governmental authority in connection with the Property; all certificates issued
by the local Board of Fire Underwriters (or other body exercising similar
functions); all plans, specifications and project manuals for the Property in
Seller's possession; and all guarantees, bonds and warranties with respect to
the Property in Seller's possession (together with original counterparts of such
instruments).
(v) An original counterpart of the Tenant Estoppel
Certificates and the SNDAs.
(vi) Such resolutions and certificates as the Title
Company shall require to evidence the due authorization of the execution and
performance of this Agreement and the documents to be delivered pursuant hereto;
and all affidavits, indemnities and other agreements required by the Title
Company to permit it to issue to Buyer the Owner's Policy of Title Insurance
required pursuant to Section 5(a).
(vii) A statement, certified by Seller (and accompanied
with all relevant back-up documentation) setting forth all information necessary
or required to permit Buyer to
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calculate and collect after Closing all payments of additional rent and other
charges due under the Tenant Leases.
(viii) All proper instruments for the conveyance of the
awards referred to in Sections 1(a) and 12.
(ix) Duplicate copies of all books, records and operating
reports in Seller's possession which are necessary to insure continuity of
operation of the Property.
(x) An original executed and acknowledged copy of the
Right of First Refusal Agreement in recordable form as provided in Paragraph 23,
below.
(xi) Any other documents required to be delivered by
Seller pursuant to any other provisions of this Agreement.
(b) At Closing, Buyer shall deliver to Seller the following:
(i) The portion of the Purchase Price payable pursuant
to Section 2(b).
(ii) Assumption agreements, in the form of Exhibits E and
F respectively, of the Tenant Leases and of the Service Agreements designated on
Exhibit B to be assigned to Buyer, duly executed and acknowledged by Buyer and
in proper form for recording.
(iii) Any other document required to be delivered by Buyer
pursuant to any other provisions of this Agreement.
16. TIME. Time is of the essence of this Agreement. In computing the
number of days for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and holidays; provided, however, that if the final
day of any time period provided in this Agreement shall end on a Saturday,
Sunday or legal holiday, then the final day shall extend to the next full
business day. For the purposes of this Section 16, the term "holiday" shall
mean a day other than a Saturday or Sunday on which banks in the Commonwealth of
Pennsylvania are or may elect to be closed.
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17. BROKERAGE. Each of Seller and Buyer represents and warrants to the
other that it has dealt with no broker, finder or other intermediary in
connection with this sale, except for Commercial/Industrial Realty Company
("CIR"). Seller agrees to pay all commissions and any other sums due to CIR by
reason of this transaction.
18. NO OTHER REPRESENTATIONS. Buyer acknowledges that neither Seller nor
anyone acting, or purporting to act, on behalf of Seller, has, except as
expressly set forth in this Agreement, made any representation or warranty with
respect to the Property.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
20. FIRPTA.
(a) Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code") provides that a transferee of a United States real property
interest must withhold tax if the transferor is a foreign person. To inform
Buyer that withholding of tax is not required upon the disposition by Seller of
a United States real property interest, the undersigned parties executing this
Agreement on behalf of Seller hereby certify the following on behalf of Seller:
(i) Seller is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Code and Income Tax Regulations);
(ii) Seller's U.S. employer identification number
is ________________; and
(iii) Seller's office address is:
434 North Front Street
Wormleysburg, PA 17403
Seller, and the parties executing this Agreement on behalf of Seller, understand
that this certification may be disclosed to the Internal Revenue Service by
Buyer and that any false statement made here could be punished by fine,
imprisonment, or
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both. Under penalties of perjury, the undersigned parties executing this
Agreement on behalf of Seller declare that they have examined this certification
and to the best of their knowledge and belief, it is true, correct and complete;
and they further declare that they have authority to sign this document on
behalf of Seller.
(b) Seller, and the parties executing this Agreement on behalf
of Seller, shall deliver to Buyer at Closing, a restatement of the above
certifications of Seller and of the parties executing this Agreement on behalf
of Seller.
21. NOTICES.
(a) All notices, demands, requests or other communications from
each party to the other required or permitted under the terms of this Agreement
shall be in writing and, unless and until otherwise specified in a written
notice by the party to whom notice is intended to be given, shall be sent to the
parties at the following respective addresses:
if intended for Buyer:
Plymouth Meeting Executive Campus
620 West Germantown Pike, Suite 200
Plymouth Meeting, PA 19462
Attention: Jeffrey E. Kelter
Fax: 610-834-9560
if intended for Seller:
434 North Front Street
Wormleysburg, PA 17403
FAX: 717-731-0979
Notices may be given on behalf of any party by its legal counsel.
(b) Each such notice, demand, request or other communication
shall be given (i) against a written receipt of delivery, or (ii) by registered
or certified mail of the United States Postal Service, return receipt requested,
postage prepaid, or (iii) by a nationally recognized overnight courier service
for next business day delivery, or (iv) via telecopier or facsimile
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transmission to the facsimile number listed above, provided, however, that if
such communication is given via telecopier or facsimile transmission, an
original counterpart of such communication shall concurrently be sent in either
the manner specified in clause (i) or (iii) above.
(c) Each such notice, demand, request or other communication
shall be deemed to have been given upon the earliest of (i) actual receipt or
refusal by the addressee if sent pursuant to Section (b)(i) or (b)(iv), or (ii)
deposit thereof at any main or branch United States post office if sent in
accordance with section (b)(ii) above or (iii) deposit thereof with the courier
if sent pursuant to section (b)(iii) above.
22. MISCELLANEOUS.
(a) CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only; they form no part of this Agreement and shall not
affect its interpretation.
(b) ENTIRE AGREEMENT; GOVERNING LAW. This Agreement contains
the entire understanding of the parties with respect to the subject matter
hereof, supersedes all prior or other negotiations, representations,
understandings and agreements (including, without limitation, the letter of
intent between Seller and Buyer dated September 18, 1997) of, by or among the
parties, express or implied, oral or written, which are fully merged herein.
The express terms of this Agreement control and supersede any course of
performance and/or customary practice inconsistent with any such terms. Any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of this Agreement unless such agreement is in writing and
signed by the party against whom enforcement of such change, modification,
discharge or abandonment is sought. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania.
(c) PROVISIONS SEPARABLE. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other provision may be invalid or unenforceable in whole or in part.
(d) WAIVER OF TENDER OF DEED AND PURCHASE MONIES. The tender of
executed Deeds by Seller and the tender by Buyer
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of the Purchase Price are mutually waived, but nothing in this Agreement shall
be construed as a waiver of Seller's obligation to deliver the Deeds and/or of
the concurrent obligation of Buyer to pay the Purchase Price at Closing.
(e) GENDER, ETC. Words used in this Agreement, regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context indicates is appropriate.
(f) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall be binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected on this Agreement as the signatories.
(g) EXHIBITS. All Exhibits and Schedules attached to this
Agreement are incorporated by reference into and made a part of this Agreement.
(h) NO WAIVER. Neither the failure nor any delay on the part of
either party to this Agreement to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of any such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
(i) INTERPRETATION. No provision of this Agreement is to be
interpreted for or against either party because that party or that party's legal
representative or counsel drafted such provision.
(j) ATTORNEY'S FEES. In connection with any litigation arising
out of this Agreement, the prevailing party shall be entitled to recover all
costs incurred, including
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reasonable attorney's fees. However, the provisions of this Section are
expressly subject to the limitation on Buyer's liability specified in Section 3.
(k) BUYER'S EXERCISE OF RIGHT TO TERMINATE. If Buyer desires to
terminate this Agreement pursuant to any of the provisions of this Agreement,
Buyer shall do so by giving written notice of termination to Seller. Upon any
such termination, the Deposit shall be paid to Buyer (and each of Seller and
Buyer shall deliver written instructions to the Title Company to pay the Deposit
to Buyer); and except as otherwise expressly provided in this Agreement, this
Agreement shall be and become null and void and neither party shall have any
further rights or obligations under this Agreement.
(l) SURVIVAL. The representations, warranties and agreements of
Seller set forth in Sections 8 and 9 of this Agreement shall survive a
termination of this Agreement, or Closing for a period of 24 months, and
thereafter shall survive to the extent that Buyer shall have given to Seller
written notice of breach thereof. The obligations of Seller and Buyer pursuant
to Sections 7, 10, 17, 20, 21 and 22(j) this Agreement shall survive Closing.
Except as otherwise provided in the preceding two sentences of this Section
22(l), the agreements of Seller and Buyer set forth in this Agreement shall not
survive Closing and shall merge into the delivery of the Deed at Closing.
23. RIGHT OF FIRST REFUSAL.
(a) For the purpose of this Paragraph 23: the term "Sears
Parcel" shall mean all that certain tract of land which is described by metes
and bounds on Exhibit H hereto, situate in the township of Lower Swatara,
Dauphin County, Commonwealth of Pennsylvania containing 32.82 acres, and the
building located on the rear containing 507,000 square feet; and the term "Right
of First Refusal Term" shall mean the period of time commencing as of the
Closing Date, and terminating two years after the Closing Date.
(b) At Closing, Seller shall execute, acknowledge and deliver to
Buyer for recording, a separate right of first refusal agreement, prepared by
Buyer, acceptable to Seller (and Seller agrees that the right of first refusal
agreement shall be acceptable to it to the extent that its provisions are
substantially the same as those set forth below; and Seller
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<PAGE>
further agrees to be reasonable in granting or withholding is acceptance to the
right of first refusal agreement), setting forth the following terms and
provisions:
(i) Seller shall not at any time
during the Right of First Refusal Term sell
or convey or agree to sell or convey all or
any portion of the Sears Parcel without first
having complied with the requirements of this
Agreement.
(ii) If Seller shall during the Right
of First Refusal Term desire to sell or convey
the Sears Parcel, Seller shall obtain from a
third party a bona fide, arms-length written
offer (the "Offer") acceptable to Seller, to
purchase the Sears Parcel, and Seller shall
submit a written copy of the Offer to Buyer.
Buyer shall have fifteen (15) days from receipt
of said Offer in which to elect to meet the
monetary and all other purchase terms of the
Offer, except the time of Closing, and purchase
the Sears Parcel pursuant to the monetary and
all other purchase terms of the Offer and this
paragraph. If Buyer elects to meet the Offer
and purchase the Sears Parcel pursuant to the
terms of the Offer, Buyer shall give to Seller
written notice thereof ("Acceptance Notice")
within said fifteen (15) day period and closing
shall be held within 90 days after the date of
the Acceptance Notice, whereupon Seller shall
convey the Sears Parcel to Buyer. At closing,
Seller shall deliver to Buyer a special warranty
deed, sufficient to convey to Buyer fee simple title
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<PAGE>
to the Sears Parcel free and clear of all
liens, restrictions and encumbrances, except for
those subject to which the Sears Parcel was to
have been conveyed to the party making the Offer
in accordance with the terms of the Offer. Realty
transfer tax shall be paid by Buyer and Seller in
the manner prescribed in the Offer.
(iii) This right of first refusal shall
continue until such time as the Sears Parcel shall
have been sold by Seller to a party making the Offer
or the expiration of the term of this right of first
refusal. In the event Buyer shall elect not to meet
any Offer, Seller may thereafter sell the Sears
Parcel only to the party making the Offer and only
strictly in accordance with the terms of the Offer.
(iv) To prevent Seller from defeating the
rights of Buyer pursuant to this Agreement, Seller
agrees that Seller will not during the term of this
right of first refusal accept an offer to purchase
less than all of the Sears Parcel or all or any
portion of the Sears Parcel together with any
other property.
(v) The rights and obligations of Seller
and Buyer pursuant to this Agreement, shall be
binding upon Seller, and its successors and assigns,
and shall inure to the benefit of, Buyer, and Buyer's
successors and assigns.
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<PAGE>
24. REPORTS. For the period of time commencing on the date of this
Agreement and continuing through the first anniversary of the Closing Date, and
without limitation of the other document production otherwise required of Seller
hereunder, Seller shall, from time to time, upon reasonable advance written
notice from Buyer, provide to Buyer and its representatives: (i) access to all
financial and other information pertaining to the period of Seller's ownership
and operation of the Property, which information is relevant and reasonably
necessary, in the opinion of Buyer's outside, third party accountants
("Accountants") to enable Buyer and its Accountants to prepare financial
statements in compliance with any and all of (a) Rule 3-05 or Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission (the "Commission"), as
applicable to Buyer; (b) any other rule issued by the Commission and applicable
to Buyer; and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of Buyer; and (ii) a representation
letter, in form specified by, or otherwise satisfactory to the Accountants,
signed by the individual(s) responsible for Seller's financial reporting, as
prescribed by generally accepted auditing standards promulgated by the Auditing
Standards Division of the American Institute of Certified Public Accountants,
which representation letter may be required by the Accountants in order to
render an opinion concerning Seller's financial statements.
IN WITNESS WHEREOF, intending to be legally bound, the parties have
executed this Agreement as a sealed instrument as of the day and year first
above written.
Witness: DOUBLE M DEVELOPMENT
a/k/a DOUBLE M DEVELOPMENT COMPANY
- -------------------
By: /s/ Mark G. Caldwell
- ------------------- Mark G. Caldwell, Managing Partner
BUYER:
AMERICAN REAL ESTATE INVESTMENT,
L.P.
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<PAGE>
By: AMERICAN REAL ESTATE INVESTMENT
CORPORATION - Its General Partner
By: /s/ Jeffrey E. Kelter
Jeffrey E. Kelter
President
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<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE
LOWER ALLEN DISTRIBUTION CENTER LAND
THIS FIRST AMENDMENT is made as of the 9th day of March, 1998, by and
between MARK G. CALDWELL and MARTIN L. GRASS, trading as DOUBLE M DEVELOPMENT
COMPANY, a partnership ("Seller") and AMERICAN REAL ESTATE INVESTMENT, L.P., a
Delaware limited partnership ("Buyer").
W I T N E S S E T H:
Seller and Buyer have entered into a certain Agreement of Sale and
Purchase dated as of the 31st day of January, 1998 (the "Agreement of Sale") for
the Lower Allen Distribution Center Land (as defined in the Agreement of Sale)
together with the buildings and other improvements thereon.
Seller and Buyer desire to amend the Agreement of Sale to provide for
a deferral of the Closing Date.
Terms which have a defined meaning in the Agreement of Sale shall have
the same meaning when used in this First Amendment.
NOW, THEREFORE, Seller and Buyer, each intending legally to bound
hereby, agree as follows:
1. The second sentence of Section 4 of the Agreement of Sale is modified
to provide as follows:
Closing shall commence at 10:00 A.M. on Tuesday, March 31, 1998,
or on such prior date as shall be designated by at least three
(3) business days' prior written notice from Buyer to Seller
("Closing Date").
Except as modified by the terms and provisions of this First Amendment, the
Agreement of Sale shall remain in full force and effect in accordance with its
terms and provisions.
IN WITNESS WHEREOF, intending legally to be bound hereby, the parties have
executed this Agreement as a sealed instrument as of the day and year first
above written.
SELLER:
DOUBLE M DEVELOPMENT
<PAGE>
a/k/a DOUBLE M DEVELOPMENT COMPANY
By:/S/ Mark G. Caldwell
Mark G. Caldwell, Managing Partner
BUYER:
AMERICAN REAL ESTATE INVESTMENT,
L.P.
By: AMERICAN REAL ESTATE INVESTMENT
CORPORATION - Its General Partner
By: /s/ Jeffrey E. Kelter
Jeffrey E. Kelter
President
<PAGE>
AGREEMENT OF SALE AND PURCHASE
AIRPORT INDUSTRIAL PARK-I LAND
THIS AGREEMENT is made as of the 31st day of January, 1998 by and
between MARK G. CALDWELL and MARTIN L. GRASS, trading as DOUBLE M DEVELOPMENT
COMPANY, a Partnership, having an address at 434 North Front Street,
Wormleysburg, Pennsylvania 17403 ("Seller") and AMERICAN REAL ESTATE INVESTMENT,
L.P., a Delaware Limited Partnership, having an address at Plymouth Meeting
Executive Campus, 620 West Germantown Pike, Suite 200, Plymouth Meeting, PA
19462 ("Buyer").
W I T N E S S E T H :
2. AGREEMENT TO SELL AND PURCHASE. Seller agrees to sell to Buyer, and
Buyer agrees to purchase from Seller, subject to the terms and conditions of
this Agreement, certain property consisting of the following:
(a) REAL PROPERTY. All that certain tract of land containing
18.49 acres being Lot No. 1 as shown on the Plan of Airport Industrial Park,
Recorded in Plan Book C, Volume 5, page 7 ("Plan") and Lot No. 3 on the Plan
containing 2.737 acres and containing an existing Retention Pond (both, "Airport
Industrial Park-I Land"), which are described by metes and bounds on the Plan,
situate in the Township of Lower Swatara, Dauphin County, Commonwealth of
Pennsylvania (the Airport Industrial Park-I Land is sometimes herein referred to
as the "Land"); together with all improvements on the Land, including, without
limitation, two buildings located on the Airport Industrial Park-I Land
containing 132,558 square feet and 152,908 square feet; together with all
appurtenances thereto (including, without limitation, all easements,
rights-of-way, and other rights and benefits belonging to, running with the
owner of, or relating to the Land); and together with all rights, title and
interest of Seller in and to all land lying in the bed of any street, opened or
proposed, abutting the Land and all right, title and interest of Seller in an to
any unpaid award for the taking by eminent domain of any part of the Land or for
damages
<PAGE>
to the Land by reason of a change of grade of any street (all of the property,
rights and privileges described in this Section 1(a) herein being collectively
called the "Real Property").
(b) PERSONAL PROPERTY. All fixtures, equipment and other
personal property attached or appurtenant to the Real Property; all furniture,
supplies, and other unattached items of personal property located in or on, or
used in connection with, the Real Property which are owned by Seller; and all
intangible personal property used in the ownership, operation or maintenance of
the Real Property, which is owned by Seller (all of the foregoing items of
property being herein collectively called "Personal Property").
(c) PROPERTY. The Real Property and the Personal Property are
sometimes herein collectively called "Property".
3. PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Property, subject to adjustments as provided in this Agreement, shall be Seven
Million Five Hundred Thousand Dollars ($7,500,000), and shall be paid as
follows:
(a) Fifty Thousand Dollars ($50,000) (such sum, plus all
interest which accrues thereon, being herein called "the Deposit") shall be paid
by Buyer to First American Title Insurance Company ("Title Company") on the date
of the execution of this Agreement. The Deposit shall be held by the Title
Company in one or more federally-insured money market accounts acceptable to
both Seller and Buyer, or in short-term United States Government obligations
having a maturity date which is not later than the Closing Date (as defined
below).
(b) The balance of the Purchase Price shall be paid at Closing
by wire transfer of immediately available funds.
4. DISPOSITION OF DEPOSIT; DEFAULTS.
(a) The Deposit shall be held in escrow and disbursed by the
Title Company in accordance with the terms of this Agreement. Seller and Buyer
each agrees, upon request, to execute the Title Company's customary form of
escrow agreement with respect to the Deposit.
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<PAGE>
(b) If Buyer, without the right to do so and in default of its
obligations under this Agreement fails to complete Closing, Seller shall have
the right to be paid the Deposit as liquidated damages and not as a penalty.
Buyer and Seller acknowledge that the damages which may be incurred by Seller in
the event of Buyer's default are difficult to quantify as of the date of this
Agreement; the Deposit represents the parties' reasonable estimate of Seller's
probable future damages in the event of Buyer's default; and that the Deposit
represents fair and reasonable compensation to Seller in the event of Buyer's
default. The right of Seller to be paid the Deposit shall be Seller's exclusive
and sole remedy, and Seller waives any right to recover the balance of the
Purchase Price, or any part thereof, and the right to pursue any other remedy
permitted by law or in equity against Buyer.
(c) If Closing is completed hereunder, the Title Company shall
pay the Deposit to Seller on account of the Purchase Price.
5. CLOSING. The closing of this transaction ("Closing") shall take place
at the offices of Wolf, Block, Schorr and Solis-Cohen, Twelfth Floor Packard
Building, 15th and Chestnut Streets, Philadelphia, Pennsylvania 19102. Closing
shall commence at 10:00 a.m. on February 18, 1998 ("Closing Date").
6. CONDITION OF TITLE.
(a) Title to the Property shall be good and marketable and free
and clear of all liens, restrictions, easements, encumbrances, leases, tenancies
and other title objections, except for the Permitted Encumbrances (as defined
below) and the Tenant Leases (as defined below), and shall be insurable as such
and as provided in this Agreement at ordinary rates by the Title Company
pursuant to an ALTA Owner's Policy of Title Insurance, 1970 Form B, amended
October 17, 1970 and October 17, 1984 (the "Owner's Policy of Title Insurance").
The premium (at ordinary rates) for the Owner's Policy of Title Insurance will
be paid by Buyer.
(b) If Seller is unable to convey title to the Property to Buyer
at Closing in accordance with the requirements of Section 5(a), Buyer shall have
the right (i) of taking such title as Seller is able to convey with abatement of
the Purchase Price in the amount (fixed or ascertainable) of any Monetary
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<PAGE>
Liens (as defined below) on the Property, or (ii) of terminating this Agreement.
(c) Promptly after the execution of this Agreement, Buyer shall
order from the Title Company a Commitment for Title Insurance ("Title
Commitment") with respect to the Real Property. Prior to the expiration of the
Inspection Period, Buyer shall give to Seller Notice ("Exception Notice") of any
exceptions to title set forth in the Title Commitment which are not acceptable
to Buyer ("Unacceptable Exceptions"). Seller shall, within ten business (10)
days from the date of Seller's receipt of the Exception Notice, deliver to Buyer
an endorsement to the Title Commitment issued by the Title Company stating
which, if any, of the Unacceptable Exceptions the Title Company has or will
commit to remove from the Title Commitment; and if the Title Company has not
issued an endorsement to the Title Commitment removing (or committing to remove)
all of the Unacceptable Exceptions from the Title Commitment within ten (10)
business days from the date of Seller's receipt of the Exception Notice, Buyer
shall have the right to terminate this Agreement. If Buyer does not terminate
this Agreement pursuant to the provisions of this Section 5(c), then the
exceptions remaining on Schedule B, Section 2 of the Title Commitment which are
not liens securing payment of monetary sums ("Monetary Liens") shall be the
"Permitted Encumbrances". Seller agrees to pay all Monetary Liens and cause all
Monetary Liens to be released and satisfied of record prior to the completion of
Closing.
(d) If Seller, without the right to do so and in the default of
its obligations under this Agreement fails to complete Closing, or otherwise
defaults under or breaches this Agreement, Buyer shall have the right, at
Buyer's sole election, either (A) to be returned the Deposit plus Buyer's
reimbursable costs as hereinafter defined, up to a maximum amount of $25,000.00
as liquidated damages for Seller's breach, or (B) to specific performance and
injunctive relief without monetary damages against Seller. Reimbursable
expenses are defined to include the cost of all charges incurred by Buyer for
securing title, the cost of any plans, surveys and environmental studies ordered
by Buyer, all loan commitment fees paid by Buyer and all the fees, costs and
expenses reasonably incurred by Buyer in connection with the property and
Buyer's intended acquisition thereof.
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<PAGE>
7. POSSESSION. Possession of the Property shall be given to Buyer at
Closing, subject only to the rights of occupancy of the Tenants (as defined
below) under the Tenant Leases by delivery of Seller's special warranty deeds
(the "Deeds") and bills of sale (the "Bills of Sale"), duly executed and
acknowledged by Seller and in proper form for recording. If Buyer causes
surveys of the Real Property to be made, then at Buyer's option the descriptions
of the Real Property contained in the Deeds shall be based upon those survey.
8. APPORTIONMENTS; TRANSFER TAXES; SECURITY DEPOSITS.
(a) (i) Real estate taxes on the Real Property; personal
property taxes (if any) on the Personal Property; minimum water and sewer
rentals; base, minimum and/or fixed rental, additional rental and other sums
paid by the Tenants to the Seller prior to Closing under the Tenant Leases;
payments due under the Service Agreements (as defined below) which are to be
assigned to Buyer, if any, shall be apportioned pro rata between Seller and
Buyer on a per diem basis as of the Closing Date; provided, however, that there
shall be no apportionment between Buyer and Seller at Closing with respect to
utility charges paid by the Tenants directly to utility companies pursuant to
the Tenant Leases.
(ii) If the Closing Date is not the first day of a
calendar month and if as of the Closing Date and of the Tenants has not paid the
monthly installment of base, minimum and/or fixed rental ("Delinquent
Installment") due under its Tenant Lease with respect to the month in which
Closing occurs, then at Closing Buyer shall receive a credit against the
Purchase Price in an amount equal to the portion of the Delinquent Installment
applicable to the period of time from and after the Closing Date and through the
balance of the applicable month; and upon Buyer's receipt of the Delinquent
Installment from such Tenant, Buyer shall pay the full amount thereof to Seller.
For the purpose of this subparagraph, "Delinquent Installment" shall mean only
one that has not been paid by the applicable Tenant within the applicable grace
period, if any, in its Tenant Lease.
(b) At Closing, each of Buyer and Seller shall pay one-half
(1/2) of all realty transfer taxes imposed by the Commonwealth of Pennsylvania
and all other governmental
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<PAGE>
authorities upon the Deeds and the conveyance of the Real Property from Seller
to Buyer.
(c) At Closing, Seller shall deliver to Buyer a certified check
in the amount of all Security Deposits paid under the Tenant Leases, and all
interest which has (or was required to) accrued thereon.
9. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller makes the following
representations and warranties to Buyer, which representations and warranties
are true and correct as of the date of this Agreement, and shall be true and
correct at and as of the Closing Date in all respects as though such
representations and warranties were made both at and as of the date of this
Agreement, and at and as of the Closing Date:
(a) The only leases or other agreements (herein collectively
called the "Tenant Leases"; and each respective tenant under each of the Tenant
Leases is herein sometimes individually called "Tenant" and collectively
"Tenants") with respect to rights of use and occupancy of the Property in effect
are as set forth on the Charts attached hereto as Schedule 1.
(b) The Tenant Leases are valid and existing and in full force
and effect; the Tenants are in actual possession of the Property; and neither
the Tenants nor the Seller are in default of their respective obligations under
the Tenant Leases.
(c) The copies of the Tenant Leases previously delivered by
Seller to Buyer are true and complete copies of the Tenant Leases; the Tenant
Leases have not been amended, modified, or supplemented; and the Tenants do not
have any right to extend or renew the terms of their respective Tenant Leases
except as expressly set forth in the Tenant Leases.
(d) None of the Tenants has asserted any claim which could
adversely affect the right of the landlord to collect base, minimum or fixed
rental or additional rental from the Tenants; and no notice of default or breach
on the part of landlord under the Tenant Leases has been received by Seller from
any of the Tenants which has not been cured.
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<PAGE>
(e) All construction, painting, repairs, alterations,
improvements and other work required to be performed by the landlord under the
Tenant Leases, and all of the other obligations of the landlord required to be
performed under the Tenant Leases as of the Closing Date, have been completed
fully performed and paid for in full by Seller.
(f) The terms of the Tenant Leases commenced and will end on the
dates specified in the Charts attached hereto as Schedule 1.
(g) The rents and other payments set forth in the Tenant Leases
are the actual rents, income and charges presently being collected by Seller
under the Tenant Leases; all minimum rent payable under the Tenant Leases is
payable monthly in advance of rent control laws, ordinances, or regulations, or
by virtue of existing agreements or regulations.
(h) Except as set forth in the Tenant Leases, none of the
Tenants is entitled to any concession, allowance, rebate or refund.
(i) None of the Tenants has prepaid any base rental, minimum
rental, fixed rental or additional rental or other charges for more than the
current month under its Tenant Lease.
(j) Neither the Tenant Leases nor the rental or other amounts
payable under the Tenant Leases have been assigned, pledged or encumbered other
than to the holder of any existing mortgage as collateral security, which
assignment shall be terminated at Closing; and the Tenant Leases may be assigned
by Seller to Buyer at Closing.
(k) No security deposit has been paid by any of the Tenants
under the Tenant Leases, except as set forth on the Charts attached hereto as
Schedule 1.
(l) The Chart attached hereto as Schedule 2 sets forth the only
brokerage or leasing commissions or other compensation which are or will be due
and payable to any party ("Lease Broker") with respect to or on account of the
Tenant Leases or any extensions or renewals thereof or any other actions by the
Tenants thereunder; the copies of the agreements between Seller and each Lease
Broker delivered by Seller to Buyer are
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<PAGE>
true and complete and there are no other such agreements; Seller shall fully pay
(and shall provide to Buyer at Closing evidence of such payment) all
installments on account of the existing leasing commissions due or payable with
respect to any rental due or payable in connection with any period prior to the
Closing Date and/or otherwise due and payable prior to the Closing Date; and
Buyer shall, at Closing, accept the assignment of the Tenant Leases subject to
the obligation to pay all of the existing leasing commissions to the Lease
Brokers with respect to periods occurring from and after the Closing Date.
Pursuant to the preceding sentence, there shall be an apportionment at Closing
of prepaid or accrued leasing commissions.
(m) Except as expressly set forth in the Tenant Leases, the
Tenants do not have any right or option to acquire to the Property or any
portion thereof.
(n) Seller has not received any written notice ("Defect Notice")
from any insurance company which has issued a policy with respect to the
Property or from any board of fire underwriters (or other body exercising
similar functions) claiming any defects or deficiencies in the Property or
suggesting or requesting the performance of any repairs, alterations or other
work to the Property.
(o) There are no management, service, equipment, supply,
security, maintenance, construction, concession or other agreements with respect
to or affecting the Property, except for any agreements under which only a
Tenant is bound and except for the agreements listed on Exhibit B to this
Agreement (collectively, the "Service Agreements"); Seller is not in default
under the Service Agreements; the copies of the Service Agreements previously
delivered by Seller to Buyer are true and complete copies of such Service
Agreements and the same have not been amended, modified or supplemented; and
each of the Service Agreements designated on Exhibit B to be terminated shall be
terminated by Seller at or prior to Closing and all sums due thereunder paid in
full by Seller.
(p) No employee of Seller who performs services at or in
connection with the Property is covered by an employment agreement or union
contract; no demand has been made upon Seller for recognition of a union or
collective bargaining agent for the employees of Seller at the Property; and
none of the employment
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<PAGE>
arrangements with respect to Seller's employees will be binding upon Buyer or
any subsequent owner of the Property after Closing.
(q) There are no outstanding uncured written notices received by
Seller of any violation ("Violation") of any applicable law, ordinance, code,
rule, order, regulation or requirement of any governmental authority with
respect to the Property.
(r) Exhibit C to this Agreement sets forth the only fire and
extended coverage insurance policies ("Policy") maintained by Seller with
respect to the Property; the Policy is in full force and effect and all premiums
due thereunder has been paid; and neither Seller nor (to Seller's knowledge) any
of the Tenants have received any notice from the insurance companies which
issued the Policy, indicating that the Policy will not be renewed or will be
renewed at a higher premium than is presently payable therefor.
(s) There is no action, suit or proceeding pending or, to the
knowledge of Seller, threatened against or affecting Seller or the Property or
any portion thereof or the Tenant Leases or relating to or arising out of the
ownership, management or operation of the Property, in any court or before or by
any federal, state, county or municipal department, commission, board, bureau or
agency or other governmental instrumentality.
(t) Seller has not received any notice of any condemnation
proceeding or other proceedings in the nature of eminent domain ("Taking") in
connection with the Property, and to Seller's knowledge no Taking has been
threatened.
(u) All of the books, records, information, data and other items
supplied by Seller to Buyer are true, complete and correct in all material
respects, and fairly and accurately presented the results of operations of the
Property.
(v) To the best of Seller's actual knowledge, there is no
presently existing Violation at the Property of any environmental law or
reputation; no contamination is present at the Property; and no underground
storage tanks, asbestos or PCBs are present at the Property.
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<PAGE>
10. OPERATIONS PRIOR TO CLOSING. Between the date of this Agreement and
Closing:
(a) Seller shall, at its expense: perform all of its
obligations under the Tenant Leases; and cure all notices of any Violations
and/or Defect Notices issued prior to Closing. Notwithstanding the foregoing
provisions of this Section 9(a), if all such notices of Violation or Defect
Notices require the expenditure by Seller of more than $50,000 in the aggregate,
Seller shall have the right to give to Buyer written notice that Seller has
elected not to cure such notices; and in such event, Buyer shall have the right,
by written notice to Seller, at Buyer's sole option, to terminate this
Agreement.
(b) Seller shall not enter into any agreement to modify, amend
or otherwise alter any of the terms or provisions of the Tenant Leases or any of
the Service Agreements; Seller shall not enter into a new lease ("New Lease") or
other agreement with respect to the use or occupancy of the Real Property and/or
the maintenance thereof, without prior written approval of Buyer. Seller agrees
to execute any New Lease designated by Buyer which is approved by Seller. Each
of Seller and Buyer agrees not unreasonably to untimely withhold or delay its
approval of a New Lease. If Seller shall enter into a New Lease for a portion
of the Real Property after the date of this Agreement and prior to the Closing
Date pursuant to the request or prior written approval of Buyer, then Buyer
shall, at Closing, reimburse to Seller all hard costs paid by Seller pursuant to
a written budget previously approved by Seller and Buyer for capital
improvements to the premises demised under the New Lease; and Buyer shall assume
the obligations of the Seller, as landlord under the New Lease, to perform
capital improvements to the premises demised under the New Lease required by the
terms of the New Lease. Any New Lease entered into by Seller after the date of
this Agreement and prior to the Closing Date pursuant to the request or prior
written approval of Buyer shall be included within the definition of "Tenant
Leases".
(c) Seller shall perform all acts, and shall make all payments,
necessary to cause the representations and warranties of Seller in this
Agreement to be true and correct.
(d) (i) Buyer, its attorneys, accountants, architects,
engineers and other representatives shall be afforded access to the Property and
to all books, records and files
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<PAGE>
relating thereto from time to time prior to Closing for the purposes of
inspections, preparation of plans, taking of measurements, making of surveys,
making of appraisals, and generally for the ascertainment of the condition of
the Property, including but not limited to the physical and financial condition
of the Property; and there shall be furnished to Buyer all plans and
specifications, engineering reports, feasibility studies, operating statements,
governmental permits and approvals, contracts, leases, surveys, title
information and other documentation concerning the Property in the possession of
Seller and/or Seller's management agent for the Property.
(ii) Buyer, its attorneys, accountants and other
representatives, shall be permitted to make and are authorized to make any
searches of governmental records as they deem necessary with respect to the
Property; and Seller agrees fully to cooperate with Buyer and its attorneys and
other representatives in this regard and to issue any consents or authorizations
required therefor.
(iii) Buyer agrees to indemnify, defend and reimburse Seller
for all costs, expenses (including, without limitation, attorney's fees,
consultant and expert fees and court costs) loss and liabilities suffered or
incurred by Seller as the result of any injuries to persons or properties caused
by Buyer's entry upon the Property prior to Closing pursuant to the provisions
of this Section 9(d) and Section 14.
(e) Promptly after receipt thereof by Seller, Seller shall
deliver to Buyer the following:
(i) a copy of any notice of default given or
received under the Tenant Leases or the Service Agreements;
(ii) a copy of any tax bill, notice or statement of
value, or notice of change in a tax rate affecting or relating to the Property;
(iii) a copy of any notice of an actual or alleged
Violation; and
(iv) a copy of any notice of Taking.
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(f) Seller shall deliver for execution by each of the Tenants a
written certification which shall be prepared by Buyer's counsel (utilizing the
form attached to this Agreement as Exhibit D, but modified and supplemented by
Buyer's counsel to reflect the terms and provisions of each of the respective
Tenant Leases) (each such certification being herein called a "Tenant Estoppel
Certificate"); and Seller shall obtain an executed Tenant Estoppel Certificate
(dated no more than fifteen (15) days prior to the Closing Date) from each of
the Tenants. Seller shall deliver to Buyer a copy of each of the executed
Tenant Estoppel Certificates obtained by Seller, promptly after Seller's receipt
thereof.
(g) Seller shall deliver for execution by each of the Tenants a
Subordination, Non-Disturbance and Attornment agreement in the form required by
Buyer's lender ("SNDA"); and Seller shall use its best efforts to obtain an
executed SNDA from each of the Tenants. Seller shall deliver to Buyer a copy of
each of the executed SNDAs delivered to Seller promptly after receiving such
SNDA.
11. TAX FREE EXCHANGE. Buyer shall cooperate with Seller in effecting an
exchange described in Section 1031 of the internal Revenue Code ("Tax Free
Exchange"), provided, that: (a) the Tax Free Exchange shall not impose upon
Buyer additional financial or legal obligations in addition to those set forth
elsewhere in this Agreement; (b) Buyer shall have no obligation to take title to
any exchange property; (c) Seller shall indemnify, defend and save and hold
Buyer harmless of an from all expenses, liabilities, claims, losses or actions
as a result of Buyer's participation in the Tax Free Exchange; (d) Buyer shall
have no obligation to modify any of the provisions of this Agreement to effect
the Tax Free Exchange; (e) any Agreement of Sale to be entered into by Buyer for
an exchange property shall provide that any liability of Buyer thereunder shall
be limited and restricted in enforcement to any deposit monies paid by Buyer;
and (f) Seller shall provide to Buyer any deposit monies required under any
Agreement of Sale for an exchange property.
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12. CASUALTY.
(a) Seller shall maintain the Policy in effect until the time of
Closing, and shall deliver to Buyer, within ten (10 ) days after the date of
this Agreement, an endorsement to the Policy issued by each insurance company
issuing the Policy evidencing that the Policy is in effect, and that the Policy
will not be canceled or materially modified without at least thirty (30) days
prior written notice to Buyer. If Closing is not completed under this
Agreement, Buyer agrees to deliver to Seller, upon request, a written direction
to each insurance company which has issued the Policy, directing that Buyer's
name as an additional insured party be deleted therefrom. If Closing is
completed under this Agreement, Seller shall be entitled to all rebates and
refunds of any prepaid premiums under the Policy.
(b) If at any time prior to the Closing Date any portion of the
Property is destroyed or damaged as a result of fire or any other casualty
("Casualty"), Seller shall promptly give written notice ("Casualty Notice")
thereof to Buyer. If the Property is the subject of a Casualty, Buyer shall
have the right, at its sole option, of terminating this Agreement (by notice
given within thirty (30) days after receipt of the Casualty Notice from Seller)
unless, (i) the cost fully to repair or restore such damage is less than One
Hundred Thousand Dollars ($100,000) and sufficient insurance proceeds are
available fully to restore such damage, and (ii) the insurance company issuing
the Policy has confirmed in writing prior to the end of such thirty (30) day
period that such Casualty is covered by the Policy and that no defense to
payment of the claim exists, and (iii) such Casualty will not result in any of
the Tenants terminating any of the Tenant Leases or asserting a right to
terminate any of the Tenant Leases, and (iv) any loan commitment obtained by
Buyer for financing to acquire the Property is not canceled or suspended as a
result of such Casualty. If a Casualty Notice is given to Buyer less than
thirty (30) days prior to Closing, at Buyer's option Closing shall be postponed
to a date not later than thirty (30) days after Buyer's receipt of the Casualty
Notice. If Buyer does not terminate this Agreement, the proceeds of any
insurance with respect to the Property paid between the date of this Agreement
and the Closing Date shall be paid to Buyer at the time of Closing and all
unpaid claims and rights in connection with losses to the Property shall be
assigned to Buyer at Closing without in any manner affecting the Purchase Price.
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(c) If the Property is the subject of a Casualty, but Buyer does
not have the right to terminate this Agreement pursuant to the provisions of
Section 11(b) above (or Buyer does not exercise such right), then Seller shall
promptly cause all temporary repairs to be made to the Property as shall be
required to prevent further deterioration and damage to the Property; provided,
however, that any such repairs shall first be approved by Buyer, which approval
shall not be unreasonably or untimely withheld. Seller shall have the right to
be reimbursed from the proceeds of any insurance with respect to the Property
paid between the date of this Agreement and the Closing Date for the cost of all
such repairs made pursuant to this Section 11(c). Except for the obligation of
Seller to repair the Property set forth in this Section 11(c), Seller shall have
no other obligation to repair any Casualty damage in the event Buyer does not
elect to terminate this Agreement pursuant to the provisions of Section 11(b),
and in such event, Buyer shall accept the Property at Closing as damaged or
destroyed by the Casualty and Buyer shall have the right to enter the Real
Property prior to Closing for the purpose of performing such repairs thereto as
are reasonably necessary to protect the Property against further damage prior to
the Closing Date.
13. EMINENT DOMAIN. If at any time prior to the Closing Date: a Taking
affects all or any part of the Property, or if any proceeding for a Taking is
commenced, or if notice of the contemplated commencement of a Taking is given,
Seller shall promptly give written notice ("Taking Notice") thereof to Buyer.
Buyer shall have the right, at its sole option, of terminating this Agreement by
written notice to Seller within thirty (30) days after receipt by Buyer of the
Taking Notice. If a Taking Notice is given to Buyer less than thirty (30) days
prior to Closing, at Buyer's option Closing shall be postponed to a date not
later than thirty (30) days after Buyer's receipt of the Taking Notice. If
Buyer does not terminate this Agreement, the Purchase Price shall be reduced by
the total of any awards or damages received by Seller and Seller shall, at
Closing, assign to Buyer all of Seller's right, title and interest in and to any
awards or damages to which Seller may have become entitled or may thereafter be
entitled by reason of any exercise of the power of eminent domain or
condemnation with respect to or for the Taking of the Property or any portion
thereof.
14. CONDITIONS OF BUYER'S OBLIGATIONS.
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(a) The obligations of Buyer under this Agreement are subject to
the satisfaction at the time of Closing of each of the following conditions (any
one of which may be waived in whole or in part in writing by Buyer at or prior
to Closing):
(i) all of the representations and warranties by
Seller set forth in this Agreement shall be true and correct in all material
respects;
(ii) no representation or warranty by Seller
contained in this Agreement shall contain any materially untrue statement or
shall omit a material fact necessary to make the statement of fact therein
recited not misleading;
(iii) Seller shall have performed all covenants,
agreements and conditions required by this Agreement (and by any other Agreement
between Seller and Buyer) to be performed by Seller prior to or as of the
Closing Date; and
(iv) Buyer shall have received the executed Tenant
Estoppel Certificates and SNDAs from the Tenants under the Tenant Leases. .
(b) In the event any of the conditions set forth in Section
13(a) are not satisfied as of the Closing Date, Buyer shall have the right (in
addition to all other rights and remedies available to Buyer under this
Agreement, at law or equity), at Buyer's sole option to (i) terminate this
Agreement, or (ii) complete Closing notwithstanding the unsatisfied condition.
15. INSPECTION PERIOD.
(a) Buyer shall, during the period ("Inspection Period") which
shall commence as of the date of this Agreement and shall end on January 30,
1998, have the opportunity to examine the Property, the Tenant Leases, the
Service Agreements, the Policy, the Permitted Encumbrances and any items to be
delivered by Seller to Buyer, and to conduct such other inspections of the
Property as Buyer, in its discretion, may elect.
(b) (i) Seller acknowledges that Buyer may commission,
prior to Closing, at Buyer's sole cost and
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expense, an investigation of (without limitation): compliance with
environmental laws, the presence of contaminants on, over, under, migrating from
or affecting the Property including without limitation in connection with the
use and operation of any Personal Property, and the presence of conditions that
may affect Buyer's intended use.
(ii) Seller will cooperate with Buyer and Buyer's
agents in Buyer's investigation, including without limitation: (A) complying
with requests for information and records; (B) assisting Buyer in obtaining
governmental agency or other records and upon Buyer's request communicating
directly with any governmental agencies; (C) granting Buyer access to the
Property including, without limitation, access for collecting surface or
subsurface samples of soil, vegetation or water, or samples from buildings and
other improvements and Personal Property located on the Property, including
samples from walls, floors, ceilings, plenums, paved areas and other areas the
taking of which samples may necessitate some damage to the buildings, other
improvements or the Personal Property, and installing groundwater monitoring
wells; and (D) delivery to Buyer any communications, letters, inquiries or
notices received by Seller from any regulatory body dealing with environmental
matters, water quality, air quality, life safety and OSHA and with all reports
which may have been prepared within the past five years addressing the presence
of PCB emissions, asbestos or other hazardous materials or waste. If Buyer does
not complete Closing, Buyer will repair any invasive testing to the condition
of the Property which had reasonably existed prior to such testing or sampling
(c) Buyer shall have the right, at Buyer's sole option, to
terminate this Agreement (for any reason whatsoever) on or prior to the second
business day to occur after the date on which the Inspection Period ends.
16. ITEMS TO BE DELIVERED AT CLOSING.
(a) At Closing, Seller shall deliver to Buyer the following:
(i) The Deeds.
(ii) The Bills of Sale.
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(iii) Assignments in the form of Exhibits E and F,
respectively, of the Tenant Leases and the Service Agreements designated on
Exhibit B to be assigned to Buyer, duly executed and acknowledged by Seller and
in proper form for recording, assigning to Buyer all of the lessor's and
Seller's rights, title and interest in the Tenant Leases and such Service
Agreements, together with all correspondence between Seller and the Tenants, an
original executed copy of each of the Tenant Leases and each such Service
Agreement and letters, duly executed by Seller, in form satisfactory to Buyer
addressed to each of the Tenants and other parties under the Service Agreements
informing it of the assignments. Seller shall also deliver to Buyer at Closing
evidence of Seller's termination of those Service Agreements not assigned to
Buyer and payment of all sums owing to the parties to such Service Agreements.
(iv) An assignment, duly executed and acknowledged by
Seller, of (and delivery to Buyer of originals or copies of): all certificates
of occupancy and all other licenses, permits, authorizations, consents,
certificates and approvals with respect to the Property; all fees, escrow and/or
security funds, deposits and other sums heretofore paid by Seller to any
governmental authority in connection with the Property; all certificates issued
by the local Board of Fire Underwriters (or other body exercising similar
functions); all plans, specifications and project manuals for the Property in
Seller's possession; and all guarantees, bonds and warranties with respect to
the Property in Seller's possession (together with original counterparts of such
instruments).
(v) An original counterpart of the Tenant Estoppel
Certificates and the SNDAs.
(vi) Such resolutions and certificates as the Title
Company shall require to evidence the due authorization of the execution and
performance of this Agreement and the documents to be delivered pursuant hereto;
and all affidavits, indemnities and other agreements required by the Title
Company to permit it to issue to Buyer the Owner's Policy of Title Insurance
required pursuant to Section 5(a).
(vii) A statement, certified by Seller (and
accompanied with all relevant back-up documentation) setting forth all
information necessary or required to permit Buyer to
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calculate and collect after Closing all payments of additional rent and other
charges due under the Tenant Leases.
(viii) All proper instruments for the conveyance of the
awards referred to in Sections 1(a) and 12.
(ix) Duplicate copies of all books, records and
operating reports in Seller's possession which are necessary to insure
continuity of operation of the Property.
(x) An original executed and acknowledged copy of
the Right of First Refusal Agreement in recordable form as provided in Paragraph
23, below.
(xi) Any other documents required to be delivered by
Seller pursuant to any other provisions of this Agreement.
(b) At Closing, Buyer shall deliver to Seller the following:
(i) The portion of the Purchase Price payable
pursuant to Section 2(b).
(ii) Assumption agreements, in the form of Exhibits E
and F respectively, of the Tenant Leases and of the Service Agreements
designated on Exhibit B to be assigned to Buyer, duly executed and acknowledged
by Buyer and in proper form for recording.
(iii) Any other document required to be delivered by
Buyer pursuant to any other provisions of this Agreement.
17. TIME. Time is of the essence of this Agreement. In computing the
number of days for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and holidays; provided, however, that if the final
day of any time period provided in this Agreement shall end on a Saturday,
Sunday or legal holiday, then the final day shall extend to the next full
business day. For the purposes of this Section 16, the term "holiday" shall
mean a day other than a Saturday or Sunday on which banks in the Commonwealth of
Pennsylvania are or may elect to be closed.
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18. BROKERAGE. Each of Seller and Buyer represents and warrants to the
other that it has dealt with no broker, finder or other intermediary in
connection with this sale, except for Commercial/Industrial Realty Company
("CIR"). Seller agrees to pay all commissions and any other sums due to CIR by
reason of this transaction.
19. NO OTHER REPRESENTATIONS. Buyer acknowledges that neither Seller nor
anyone acting, or purporting to act, on behalf of Seller, has, except as
expressly set forth in this Agreement, made any representation or warranty with
respect to the Property.
20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
21. FIRPTA.
(a) Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code") provides that a transferee of a United States real property
interest must withhold tax if the transferor is a foreign person. To inform
Buyer that withholding of tax is not required upon the disposition by Seller of
a United States real property interest, the undersigned parties executing this
Agreement on behalf of Seller hereby certify the following on behalf of Seller:
(i) Seller is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Code and Income Tax Regulations);
(ii) Seller's U.S. employer identification number
is ________________; and
(iii) Seller's office address is:
434 North Front Street
Wormleysburg, PA 17403
Seller, and the parties executing this Agreement on behalf of Seller, understand
that this certification may be disclosed to the Internal Revenue Service by
Buyer and that any false statement made here could be punished by fine,
imprisonment, or
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both. Under penalties of perjury, the undersigned parties executing this
Agreement on behalf of Seller declare that they have examined this certification
and to the best of their knowledge and belief, it is true, correct and complete;
and they further declare that they have authority to sign this document on
behalf of Seller.
(b) Seller, and the parties executing this Agreement on behalf
of Seller, shall deliver to Buyer at Closing, a restatement of the above
certifications of Seller and of the parties executing this Agreement on behalf
of Seller.
21. NOTICES.
(a) All notices, demands, requests or other communications from
each party to the other required or permitted under the terms of this Agreement
shall be in writing and, unless and until otherwise specified in a written
notice by the party to whom notice is intended to be given, shall be sent to the
parties at the following respective addresses:
if intended for Buyer:
Plymouth Meeting Executive Campus
620 West Germantown Pike, Suite 200
Plymouth Meeting, PA 19462
Attention: Jeffrey E. Kelter
Fax: 610-834-9560
if intended for Seller:
434 North Front Street
Wormleysburg, PA 17403
FAX: 717-731-0979
Notices may be given on behalf of any party by its legal counsel.
(b) Each such notice, demand, request or other communication
shall be given (i) against a written receipt of delivery, or (ii) by registered
or certified mail of the United States Postal Service, return receipt requested,
postage prepaid, or (iii) by a nationally recognized overnight courier service
for next business day delivery, or (iv) via telecopier or facsimile
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transmission to the facsimile number listed above, provided, however, that if
such communication is given via telecopier or facsimile transmission, an
original counterpart of such communication shall concurrently be sent in either
the manner specified in clause (i) or (iii) above.
(c) Each such notice, demand, request or other communication
shall be deemed to have been given upon the earliest of (i) actual receipt or
refusal by the addressee if sent pursuant to Section (b)(i) or (b)(iv), or (ii)
deposit thereof at any main or branch United States post office if sent in
accordance with section (b)(ii) above or (iii) deposit thereof with the courier
if sent pursuant to section (b)(iii) above.
22. MISCELLANEOUS.
(a) CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only; they form no part of this Agreement and shall not
affect its interpretation.
(b) ENTIRE AGREEMENT; GOVERNING LAW. This Agreement contains
the entire understanding of the parties with respect to the subject matter
hereof, supersedes all prior or other negotiations, representations,
understandings and agreements (including, without limitation, the letter of
intent between Seller and Buyer dated September 18, 1997) of, by or among the
parties, express or implied, oral or written, which are fully merged herein.
The express terms of this Agreement control and supersede any course of
performance and/or customary practice inconsistent with any such terms. Any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of this Agreement unless such agreement is in writing and
signed by the party against whom enforcement of such change, modification,
discharge or abandonment is sought. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania.
(c) PROVISIONS SEPARABLE. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other provision may be invalid or unenforceable in whole or in part.
(d) WAIVER OF TENDER OF DEED AND PURCHASE MONIES. The tender of
executed Deeds by Seller and the tender by Buyer
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of the Purchase Price are mutually waived, but nothing in this Agreement shall
be construed as a waiver of Seller's obligation to deliver the Deeds and/or of
the concurrent obligation of Buyer to pay the Purchase Price at Closing.
(e) GENDER, ETC. Words used in this Agreement, regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context indicates is appropriate.
(f) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall be binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected on this Agreement as the signatories.
(g) EXHIBITS. All Exhibits and Schedules attached to this
Agreement are incorporated by reference into and made a part of this Agreement.
(h) NO WAIVER. Neither the failure nor any delay on the part of
either party to this Agreement to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of any such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
(i) INTERPRETATION. No provision of this Agreement is to be
interpreted for or against either party because that party or that party's legal
representative or counsel drafted such provision.
(j) ATTORNEY'S FEES. In connection with any litigation arising
out of this Agreement, the prevailing party shall be entitled to recover all
costs incurred, including
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reasonable attorney's fees. However, the provisions of this Section are
expressly subject to the limitation on Buyer's liability specified in Section 3.
(k) BUYER'S EXERCISE OF RIGHT TO TERMINATE. If Buyer desires to
terminate this Agreement pursuant to any of the provisions of this Agreement,
Buyer shall do so by giving written notice of termination to Seller. Upon any
such termination, the Deposit shall be paid to Buyer (and each of Seller and
Buyer shall deliver written instructions to the Title Company to pay the Deposit
to Buyer); and except as otherwise expressly provided in this Agreement, this
Agreement shall be and become null and void and neither party shall have any
further rights or obligations under this Agreement.
(l) SURVIVAL. The representations, warranties and agreements of
Seller set forth in Sections 8 and 9 of this Agreement shall survive a
termination of this Agreement, or Closing for a period of 24 months, and
thereafter shall survive to the extent that Buyer shall have given to Seller
written notice of breach thereof. The obligations of Seller and Buyer pursuant
to Sections 7, 10, 17, 20, 21 and 22(j) this Agreement shall survive Closing.
Except as otherwise provided in the preceding two sentences of this Section
22(l), the agreements of Seller and Buyer set forth in this Agreement shall not
survive Closing and shall merge into the delivery of the Deed at Closing.
23. RIGHT OF FIRST REFUSAL.
(a) For the purpose of this Paragraph 23: the term "Sears
Parcel" shall mean all that certain tract of land which is described by metes
and bounds on Exhibit H hereto, situate in the township of Lower Swatara,
Dauphin County, Commonwealth of Pennsylvania containing 32.82 acres, and the
building located on the rear containing 507,000 square feet; and the term "Right
of First Refusal Term" shall mean the period of time commencing as of the
Closing Date, and terminating two years after the Closing Date.
(b) At Closing, Seller shall execute, acknowledge and deliver to
Buyer for recording, a separate right of first refusal agreement, prepared by
Buyer, acceptable to Seller (and Seller agrees that the right of first refusal
agreement shall be acceptable to it to the extent that its provisions are
substantially the same as those set forth below; and Seller
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further agrees to be reasonable in granting or withholding is acceptance to the
right of first refusal agreement), setting forth the following terms and
provisions:
(i) Seller shall not at any
time during the Right of First Refusal Term
sell or convey or agree to sell or convey
all or any portion of the Sears Parcel
without first having complied with the
requirements of this Agreement.
(ii) If Seller shall during the
Right of First Refusal Term desire to sell
or convey the Sears Parcel, Seller shall
obtain from a third party a bona fide,
arms-length written offer (the "Offer")
acceptable to Seller, to purchase the
Sears Parcel, and Seller shall submit a
written copy of the Offer to Buyer. Buyer
shall have fifteen (15) days from receipt
of said Offer in which to elect to meet
the monetary and all other purchase terms
of the Offer, except the time of Closing,
and purchase the Sears Parcel pursuant to
the monetary and all other purchase terms
of the Offer and this paragraph. If Buyer
elects to meet the Offer and purchase the
Sears Parcel pursuant to the terms of the
Offer, Buyer shall give to Seller written
notice thereof ("Acceptance Notice") within
said fifteen (15) day period and closing
shall be held within 90 days after the date
of the Acceptance Notice, whereupon Seller
shall convey the Sears Parcel to Buyer. At
closing, Seller shall deliver to Buyer a
special warranty deed, sufficient to convey
to Buyer fee simple title
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to the Sears Parcel free and clear of all
liens, restrictions and encumbrances, except
for those subject to which the Sears Parcel
was to have been conveyed to the party making
the Offer in accordance with the terms of the
Offer. Realty transfer tax shall be paid by
Buyer and Seller in the manner prescribed in
the Offer.
(iii) This right of first refusal
shall continue until such time as the Sears
Parcel shall have been sold by Seller to a
party making the Offer or the expiration of
the term of this right of first refusal.
In the event Buyer shall elect not to meet
any Offer, Seller may thereafter sell the
Sears Parcel only to the party making the
Offer and only strictly in accordance with
the terms of the Offer.
(iv) To prevent Seller from
defeating the rights of Buyer pursuant to
this Agreement, Seller agrees that Seller
will not during the term of this right of
first refusal accept an offer to purchase
less than all of the Sears Parcel or all or
any portion of the Sears Parcel together
with any other property.
(v) The rights and obligations
of Seller and Buyer pursuant to this
Agreement, shall be binding upon Seller,
and its successors and assigns, and shall
inure to the benefit of, Buyer, and Buyer's
successors and assigns.
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24. REPORTS. For the period of time commencing on the date of this
Agreement and continuing through the first anniversary of the Closing Date, and
without limitation of the other document production otherwise required of Seller
hereunder, Seller shall, from time to time, upon reasonable advance written
notice from Buyer, provide to Buyer and its representatives: (i) access to all
financial and other information pertaining to the period of Seller's ownership
and operation of the Property, which information is relevant and reasonably
necessary, in the opinion of Buyer's outside, third party accountants
("Accountants") to enable Buyer and its Accountants to prepare financial
statements in compliance with any and all of (a) Rule 3-05 or Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission (the "Commission"), as
applicable to Buyer; (b) any other rule issued by the Commission and applicable
to Buyer; and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of Buyer; and (ii) a representation
letter, in form specified by, or otherwise satisfactory to the Accountants,
signed by the individual(s) responsible for Seller's financial reporting, as
prescribed by generally accepted auditing standards promulgated by the Auditing
Standards Division of the American Institute of Certified Public Accountants,
which representation letter may be required by the Accountants in order to
render an opinion concerning Seller's financial statements.
IN WITNESS WHEREOF, intending to be legally bound, the parties have
executed this Agreement as a sealed instrument as of the day and year first
above written.
Witness: DOUBLE M DEVELOPMENT
a/k/a DOUBLE M DEVELOPMENT COMPANY
- -------------------
By: /s/ Mark G. Caldwell
- ------------------- Mark G. Caldwell, Managing Partner
BUYER:
AMERICAN REAL ESTATE INVESTMENT,
L.P.
By: AMERICAN REAL ESTATE INVESTMENT
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CORPORATION - Its General Partner
By /s/ Jeffrey E. Kelter
Jeffrey E. Kelter
President
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FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE
AIRPORT INDUSTRIAL PARK - I LAND
THIS FIRST AMENDMENT is made as of the 9th day of March, 1998, by and
between MARK G. CALDWELL and MARTIN L. GRASS, trading as DOUBLE M DEVELOPMENT
COMPANY, a partnership ("Seller") and AMERICAN REAL ESTATE INVESTMENT, L.P., a
Delaware limited partnership ("Buyer").
W I T N E S S E T H:
Seller and Buyer have entered into a certain Agreement of Sale and
Purchase dated as of the 31st day of January, 1998 (the "Agreement of Sale") for
the Airport Industrial Park - I Land (as defined in the Agreement of Sale)
together with the buildings and other improvements thereon.
Seller and Buyer desire to amend the Agreement of Sale to provide for
a deferral of the Closing Date.
Terms which have a defined meaning in the Agreement of Sale shall have
the same meaning when used in this First Amendment.
NOW, THEREFORE, Seller and Buyer, each intending legally to bound
hereby, agree as follows:
22. The second sentence of Section 4 of the Agreement of Sale is modified
to provide as follows:
Closing shall commence at 10:00 A.M. on Tuesday, March 31, 1998,
or on such prior date as shall be designated by at least three
(3) business days' prior written notice from Buyer to Seller
("Closing Date").
23. Except as modified by the terms and provisions of this First
Amendment, the Agreement of Sale shall remain in full force and effect in
accordance with its terms and provisions.
<PAGE>
IN WITNESS WHEREOF, intending legally to be bound hereby, the parties
have executed this Agreement as a sealed instrument as of the day and year first
above written.
SELLER:
DOUBLE M DEVELOPMENT
a/k/a DOUBLE M DEVELOPMENT COMPANY
By: /s/ Mark G. Caldwell
Mark G. Caldwell, Managing Partner
BUYER:
AMERICAN REAL ESTATE INVESTMENT,
L.P.
By: AMERICAN REAL ESTATE INVESTMENT
CORPORATION - Its General Partner
By:/s/ Jeffrey E. Kelter
Jeffrey E. Kelter
President
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EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT (the "Agreement") made as of the 8th day of January,
1998 by and between TRINET ESSENTIAL FACILITIES X, INC., a Maryland
corporation having its principal place of business c/o TRINET CORPORATE
REALTY TRUST, INC., Four Embarcadero Center, Suite 3150, San Francisco,
California 94111 ("Seller") and AMERICAN REAL ESTATE INVESTMENT CORPORATION,
a Maryland corporation having its principal place of business at 620 W.
Germantown Pike, Suite 200, Plymouth Meeting, PA 19462 ("Purchaser").
RECITALS
A. Seller is the owner of a parcel of land located at 4472 Steelway
Boulevard, in the Town of Clay, Onondaga County, New York (S.B.L. Number
105-01-007.01) as shown in red hatching on Exhibit A annexed hereto and more
particularly described as Parcel I in Exhibit B annexed hereto, together with
two (2) buildings located thereon having a total building area of approximately
532,000 square feet and all improvements now or hereafter located or constructed
thereon, and all easements, tenements, hereditaments, rights, licenses,
privileges and appurtenances, whether or not of record; all fixtures, machinery,
heating, lighting, plumbing, water, sewer, ventilating, exhaust, electrical,
gas, refrigeration, air conditioning, communication, fire protection, security
and light safety fixtures, equipment and systems; all hot water heaters,
furnaces, heating controls, motors and boiler pressure systems and equipment;
all right, title and interest in and to any streets, roads, alleys or other
public ways adjoining said parcel, including, without limitation, any land lying
in the bed of any street, road, alley or other public way, opened or closed, and
any strips and
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rights-of-way adjoining said parcel; and all certificates, permits, licenses,
franchises, authorizations and approvals relating to the ownership, use, access,
occupancy, repair, maintenance or operation thereof or any part thereof
(collectively "Parcel I").
B. Seller is also the owner of a parcel of land located at 4580
Steelway Boulevard, in the Town of Clay, Onondaga County, New York (S.B.L.
Number 105-01-005) as shown in green hatching on Exhibit A annexed hereto and
more particularly described as Parcel II in Exhibit B annexed hereto,
together with a building located thereon having an area of approximately
123,000 square feet and all improvements now or hereafter located or
constructed thereon, and all easements, tenements, hereditaments, rights,
licenses, privileges and appurtenances, whether or not of record; all
fixtures, machinery, heating, lighting, plumbing, water, sewer, ventilating,
exhaust, electrical, gas, refrigeration, air conditioning, communication,
fire protection, security and light safety fixtures, equipment and systems;
all hot water heaters, furnaces, heating controls, motors and boiler pressure
systems and equipment; all right, title and interest in and to any streets,
roads, alleys or other public ways adjoining said parcel, including, without
limitation, any land lying in the bed of any street, road, alley or other
public way, opened or closed, and any strips and rights-of-way adjoining said
parcel; and all certificates, permits, licenses, franchises, authorizations
and approvals relating to the ownership, use, access, occupancy, repair,
maintenance or operation thereof or any part thereof (collectively "Parcel
II").
C. Parcel I and Parcel II are hereinafter collectively referred to
as the "Premises".
D. Subject to the terms and conditions set forth herein,
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Seller desires to sell and Purchaser desires to purchase the Premises.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. PURCHASE AND SALE. Seller agrees to sell and Purchaser agrees to
acquire the Premises upon the terms and conditions set forth herein.
2. PURCHASE PRICE. The total price for the Premises shall be TWELVE
MILLON SEVEN HUNDRED FIFTY THOUSAND and 00/100 UNITED STATES DOLLARS
($12,750,000.00) (the "Purchase Price") payable as follows:
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(a) contemporaneously with the execution of this Agreement by
Purchaser, Purchaser shall deliver to First American Title Insurance
Corporation at its main office in Philadelphia, Pennsylvania (the "Escrow
Agent"or "Title Company") the sum of ONE HUNDRED THOUSAND and 00/100 DOLLARS
($100,000.00) (together with all interest thereon referred to hereinafter as
the "Initial Deposit") to be held in escrow in an interest bearing account.
The Initial Deposit shall be applied against the Purchase Price at Closing
(as hereinafter defined), or returned to Purchaser if Closing does not occur
because Seller defaults in its obligation to convey the Premises to Purchaser
in accordance with the terms of this Agreement, or if Purchaser terminates
this Agreement prior to the expiration of the Due Diligence Period pursuant
to Section 7 hereof, or if either party terminates this Agreement pursuant to
Section 10 hereof; and,
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(b) within three (3) business days after the expiration of the Due
Diligence Period, as defined in Section 7(a) of this Agreement, and provided
that Purchaser has not terminated this Agreement prior to the expiration of the
Due Diligence Period pursuant to Section 7 hereof, Purchaser shall deliver to
the Escrow Agent the sum of ONE HUNDRED THOUSAND and 00/100 DOLLARS
($100,000.00) (together with all interest thereon referred to hereinafter as the
"Additional Deposit") to be held in escrow in an interest bearing account. The
Additional Deposit shall be applied against the Purchase Price at Closing or
returned to Purchaser if Closing does not occur because Seller defaults in its
obligation to convey the Premises to Purchaser in accordance with the terms of
this Agreement or if either party terminates this Agreement pursuant to
Section 10 hereof. The Initial Deposit and the Additional Deposit are
collectively referred to hereinafter as the "Deposit"; and,
(c) the balance by wire transfer upon Closing.
3. CLOSING AND REQUIRED DOCUMENTS. The consummation of the
transaction contemplated hereunder (the "Closing") shall take place within
fifteen (15) days after the expiration or waiver by Purchaser of the "Due
Diligence Period" as defined in Section 7 of this Agreement at the offices of
Seller's attorneys, SHULMAN CURTIN GRUNDNER REGAN & SNYDER, P.C., Suite 502,
250 South Clinton Street, Syracuse, New York 13202, or at such other location
as may be agreed to by Seller and Purchaser. At Closing, Seller shall
deliver to Purchaser a bargain and sale deed with covenant against grantor's
acts (the "Deed"), duly executed and acknowledged by Seller and in proper
form for recording, conveying to Purchaser good and marketable fee simple
title to the Premises which is insurable as such by the Title Company at the
statutory rate without charge for extra hazardous risks pursuant to an ALTA
Owners Policy of Title Insurance (4-6-90) with New York Endorsement free and
clear of all liens, tenancies and encumbrances except as set forth in Exhibit
C annexed hereto (the matters set forth on Exhibit C are hereinafter referred
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to as the "Permitted Exceptions"), together with a Combined Real Estate Transfer
Tax Return and Credit Line Mortgage Certificate (Form TP-584), a Real Property
Transfer Report (Form RP-5217), an assignment and assumption of leases in the
form attached hereto as Exhibit D to be executed by both parties hereto,
original leases for all tenants in possession of all or parts of the Premises as
of Closing, notices to all tenants of the conveyance of the Premises to
Purchaser pursuant to Section 248 of the New York Real Property Law, estoppel
certificates in the form attached hereto as Exhibit E from all tenants,
assignments and assumptions of the maintenance and managerial contracts
affecting the Premises of which Seller is a party to which are listed on Exhibit
F hereto to be executed by both parties hereto, a non-foreign affidavit in
compliance with Section 1145 of the Internal Revenue Code, a corporate
resolution of the Board of Directors of Seller authorizing the transaction
contemplated herein and the execution of all closing documents by a corporate
officer of Seller, an assignment of (and delivery to Purchaser of originals or
copies of) any of the following in Seller's possession: all certificates of
occupancy and all other licenses, permits, authorizations, consents,
certificates and approvals for the Premises; all fees, escrow and/or security
funds, deposits and other sums heretofore paid to any governmental authority in
connection with the Premises; all certificates issued by the local Board of Fire
Underwriters (or other body exercising similar functions); all plans,
specifications and project manuals for the Premises; all guarantees, bonds and
warranties with respect to the Premises (together with original counterparts of
such instruments), and all keys to the Premises, and such other documents and
certifications which Purchaser may reasonably request.
4. TITLE DOCUMENTS. Within fifteen (15) days after Seller executes
this Agreement, Seller shall furnish to Purchaser the
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following (collectively, the "Title Documents"): any abstracts of title or
tax searches which are in Seller's possession; and an instrument survey
prepared according to the standards adopted by the Onondaga County Bar
Association showing the Premises and the location of any structures or
improvements affecting it, bearing the surveyor's certificate as to the exact
acreage, and certified to Purchaser and such other parties as Purchaser may
designate.
5. EXAMINATION OF TITLE : TITLE DEFECTS. If, within forty-five
(45) days after the date of this Agreement, Purchaser raises any objection to
title or to any agreement of record affecting the Premises, which is not a
Permitted Exception, Purchaser shall give written notice to Seller of such
objections and Seller shall have fifteen (15) days to cure such objections to
the reasonable satisfaction of the Title Company or to make arrangements to
cure such objections as of the Closing. If Seller does not cure any such
objections within fifteen (15) days following written notice thereof, or make
arrangements to cure such objections as of the Closing, Purchaser may
terminate this Agreement upon written notice to Seller and the Escrow Agent,
in which event neither party shall have any claim against the other because
of the termination and the Deposit shall be returned to Purchaser by the
Escrow Agent. Purchaser shall be conclusively presumed to have waived any
objections to title as of the date of the abstract(s) of title unless any
such objections are made by written notice given to Seller and the Escrow
Agent within forty-five (45) days after the date of this Agreement.
6. INSPECTIONS. While this Agreement remains in effect, Purchaser
and its duly authorized agents and employees shall have the right at
reasonable times and upon reasonable advanced written notice to Seller to
enter upon the Premises and to inspect and make such surveys, tests and
measurements as may be reasonably necessary.
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Purchaser agrees: (x) not to create any potentially dangerous condition on,
in or upon the Premises while conducting such surveys, tests and measurements
or to interfere with the use and occupancy of the Premises by the tenants
currently in possession thereof; (y) that any such surveys, tests and
measurements shall be promptly carried out and concluded; and (z) that
Purchaser, at its sole cost and expense shall return the Premises to its
existing condition once Purchaser has completed the work permitted by this
Section 6. Purchaser further agrees to indemnify and hold Seller harmless
from and against any loss, damage, liability and expense (including
reasonable attorney's fees) paid, suffered or incurred by Seller and arising
from or out of, or in any way related to, any use of the Premises by
Purchaser, its agents or employees pursuant to this Section 6. The
provisions of this section shall survive the expiration (or sooner
termination) of this Agreement and/or the Closing.
7. PURCHASER'S CONDITIONS PRECEDENT TO CLOSING. In addition to any
other conditions set forth herein, this Agreement and the covenants and
obligations contained herein to be observed or performed by Purchaser are
expressly made contingent upon the following conditions which are deemed to
be conditions precedent to the payment by Purchaser of the Purchase Price
and acceptance by Purchaser of the Deed:
(a) Within forty-five (45) days after the date on which Seller
has given Purchaser written notice that the condition specified in Section
8(a) has been satisfied (the "Due Diligence Period"), Purchaser may perform,
or cause to be performed at its sole cost and expense such reviews,
examinations, analysis, tests and audits (collectively the "Investigations")
which it may deem necessary concerning, but not limited to: (i) the presence
of, or
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release from the Premises of any petroleum product or hazardous substance or
material, contaminant or pollutant regulated by any governmental law, rule,
regulation or ordinance; (ii) the structural integrity of all improvements
located upon the Premises; (iii) the terms of all leases affecting the
Premises and the financial condition of each tenant named therein; and (iv)
the status of title to the Premises. Any such Investigations shall be paid
by Purchaser. Purchaser agrees to use diligent efforts to initiate and
conclude such Investigations as soon as possible and to provide to Seller a
copy of the results of such Investigations promptly after receipt of the
same. Purchaser further agrees: (x) not to create any potentially dangerous
condition on, in or upon the Premises while conducting such Investigations;
(y) that Purchaser, at its sole cost and expense shall return the Premises to
its condition as of the date of this Agreement once it has completed its
Investigations; and (z) while conducting such Investigations, not to
interfere with the use and occupancy of the Premises by the tenants currently
in possession thereof. Purchaser also agrees to indemnify and hold Seller
harmless from and against any loss, damage, liability and expense (including
reasonable attorney's fees) paid, suffered or incurred by Seller arising from
or out of, or in any way related to the conduct of the Investigations.
Within three (3) business days following the execution of this Agreement by
Seller, Seller shall provide to Purchaser copies of any of the following
which are in the possession of Seller: (i) any plans and specifications for
the buildings located upon the Premises; (ii) any title insurance policies,
surveys and environmental reports relating to the Premises; (iii) current
year County tax bill and School tax bill; (iv) income and expense statements
for Parcel I and Parcel II for the period of Seller's ownership of the
Premises; and (v) all existing leases affecting the Premises.
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(b) all of the representations and warranties by Seller set
forth in this Agreement shall be true and correct in all material respects
and shall not omit a material fact necessary to make the statement of fact
therein recited not misleading.
(c) Seller shall have performed all covenants, agreements and
conditions required by this Agreement to be performed by Seller prior to or
as of the Closing.
(d) Purchaser shall have received executed estoppel
certificates and SNDAs from all tenants under the leases set forth in Exhibit
G annexed hereto.
In the event Purchaser is not satisfied, in its sole discretion,
with any of the reviews, examinations, analysis, tests and/or audits it may
choose to conduct prior to the expiration of the Due Diligence Period
pursuant to Section 7(a) above, or in the event any of the conditions set
forth in Sections 7(b), 7(c), or 7(d) are not satisfied, Purchaser may
terminate this Agreement by giving written notice to that effect to Seller
and the Escrow Agent and the Deposit shall be immediately returned to
Purchaser by the Escrow Agent. In the event Purchaser does not terminate
this Agreement within the Due Diligence Period by reason of Purchaser's
dissatisfaction with the reviews, examinations, analysis, tests and/or audits
pursuant to Section 7(a), the Deposit shall become non-refundable to
Purchaser except: i) in the event Seller defaults in its obligation to convey
the Premises to Purchaser in accordance with the terms of this Agreement; or,
ii) in the event of failure of a condition set forth in Section 7(b), 7(c) or
7(d).
8. SELLER'S CONDITIONS PRECEDENT TO CLOSING. Seller's obligations
under this Agreement are subject to the following
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conditions precedent:
(a) Within ten (10) days after Seller executes this Agreement,
this Agreement is approved by the Board of Directors of TriNet Corporate
Realty Trust, Inc., the sole shareholder of Seller, and by the President/CEO
of TriNet Corporate Realty Trust, Inc. (collectively the "Corporate
Approvals"). If Seller is unable to obtain such approval, such event shall
not constitute a breach or default by Seller of its obligations hereunder.
Nevertheless, in such event, Purchaser shall be entitled to the return of the
Deposit.
In the event the above condition is not satisfied by Seller,
Seller or Purchaser may terminate this Agreement by giving written notice to
that effect to the other party.
9. SELLER'S COVENANTS. After the execution of this Agreement and
until the expiration or sooner termination of this Agreement or the Closing,
Seller shall not: (i) grant or consent to any new easements, leases,
licenses, grants or any other interest or estate affecting the Premises or
any part thereof without the prior written consent of Purchaser; (ii) enter
into or agree to any modification or amendment of any existing easement,
lease, license, grant or any other interest or estate affecting the Premises
or any part thereof without the prior written consent of Purchaser; or (iii)
further encumber or permit any liens against the Premises. In the event an
easement or other estate is granted with the consent of Purchaser, and
consideration is paid for it, the parties agree that the proceeds (less any
expenses incurred in connection with the granting of such easement) shall be
credited to Purchaser at the Closing.
10. DAMAGE, DESTRUCTION OR CONDEMNATION. Until the Closing, Seller
shall continue to maintain and repair the Premises in its
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present condition, reasonable wear and tear excepted, and further, agrees to
keep and maintain its present policies of fire insurance on the Premises, or
their equivalent, in full force and effect, from the date hereof, to and
including the date of Closing.
Seller shall immediately notify Purchaser in writing of any
damage or destruction of all or any portion of the Premises or any taking or
notice of taking of all or any portion of the Premises by eminent domain.
If, prior to the Closing all or a "Substantial Part" (as hereinafter defined)
of the Premises is destroyed by fire or the elements or by any other cause,
or all or a Substantial Part of the Premises is taken by eminent domain or
proceedings to effect such a taking are commenced, then within ten (10) days
after it shall receive notice of such occurrence, taking or proceeding,
either party may elect to cancel this Agreement. If Purchaser shall so
elect, this Agreement shall terminate and neither party shall have any
further rights or liability hereunder. If Seller shall elect to cancel this
Agreement, this Agreement shall terminate and neither party shall have any
further rights or liability hereunder, except that Seller shall reimburse
Purchaser up to ONE HUNDRED THOUSAND and 00/100 DOLLARS ($100,000.00) for
Purchaser's actual out-of-pocket expenses reasonably incurred and paid by
Purchaser in connection with its Investigations. Seller shall reimburse
Purchaser for such costs within sixty (60) days of receipt by Seller of paid
invoices for such Investigations. As used in this Section 10, "Substantial
Part" shall mean the destruction or taking of that part of the Premises which
would reduce the gross rental income derived from the Premises (computed as
if all existing leasable space was rented at the then prevailing rates) by
fifteen percent (15%) or more, and: as to which sufficient insurance proceeds
are not available to fully restore such damage; or, as to which Seller's
insurance company has not confirmed in writing that such casualty is covered
by Seller's policy and that
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no defense to payment of the claim exists; or, as to which any loan
commitment obtained by Purchaser for financing to acquire the Premises is
canceled or suspended as a result of such casualty.
If a Substantial Part of the Premises is destroyed or taken by
eminent domain but this Agreement is not so cancelled, or if a Substantial
Part of the Premises is not destroyed or taken, this Agreement shall continue
in full force and effect without any abatement in the Purchase Price and: (i)
Seller at the time of Closing, shall credit Purchaser for any sums of money
less than or equal to the Purchase Price collected by Seller under its
policies of insurance insuring against the loss in question (other than rent
insurance which shall be apportioned to the date of the Closing in accordance
with Section 15 hereof), after deducting therefrom any expenses incurred by
Seller in collecting such insurance and any amount that Seller shall have
agreed or shall have been obligated to pay for repairs or restoration of the
damage, and, in addition, at Closing, Seller shall assign, transfer and set
over to Purchaser all of Seller's right, title and interest in and to said
policies and any sums payable (or the balance of the sums of money collected
by Seller net of collection expenses thereunder in respect of such loss,
except as to rent insurance which shall be apportioned as aforesaid); and
(ii) Seller shall assign, transfer and set over to Purchaser all of Seller's
right, title and interest in and to any awards that may be made for such
taking or Seller shall credit on account of the Purchase Price an amount
equal to all condemnation proceeds received by it prior to the Closing in
respect of any condemnation since the date hereof, less any reasonable and
actual collection expenses.
Seller shall give Purchaser prior written notice of any proposed
repairs or restoration to the Premises to be funded by insurance proceeds.
Seller shall have the right to make any repairs
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or restorations which it is obligated to perform pursuant to the Existing
Leases (the "Essential Repairs") and to pay for Essential Repairs with any
insurance proceeds received by Seller. In the event Purchaser gives Seller
written notice prior to the initiation of such repair or restoration that
Purchaser disputes whether a proposed repair or restoration is an Essential
Repair, Seller shall assign, transfer and set over to Purchaser all of
Seller's right, title and interest in and to any insurance proceeds allocated
to such disputed repair, or in the event Seller has received such proceeds,
deliver the same to Purchaser, and Purchaser shall indemnify, defend and save
and hold harmless Seller of and from any loss, damage, cost or expense,
including reasonable attorney's fees and disbursements whether or not
litigation is commenced, incurred by Seller arising from or as a consequence
of the failure to perform the disputed repair or restoration.
11. COUNTERPARTS. This Agreement may be executed 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.
12. REPRESENTATIONS AND WARRANTIES. Seller makes the following
representations and warranties to Purchaser, which representations and
warranties are true and correct as of the date of this Agreement, and shall
be true and correct at and as of the Closing as though made both at and as of
the date of this Agreement and at and as of the Closing:
(i) Seller is not a "foreign person" as defined in the Foreign
Investment in Real Property Tax Act (Section 1145 of the Internal Revenue
Code, as amended).
(ii) At Closing, no person, firm, corporation or entity
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other than Purchaser will have any right or option to acquire the Premises or
any portion thereof or any interest therein and Seller is the sole owner of
the Premises as of the date of this Agreement.
(iii) At Closing, no default or breach will exist under any of
the covenants, conditions, restrictions, rights-of-way or easements affecting
the Premises or any portion thereof which are to be performed or complied
with by Seller.
(iv) At Closing, there shall be no law suits or litigation
pending against the Premises caused by acts of Seller and there shall be no
claims or offsets of any kind or nature which affect title to the Premises.
(v) Utility and electric service is provided to the Premises by
a regulated utility company and the Premises is not subject to any electric
or gas utility surcharge as set forth in Section 242 of the Real Property Law.
(vi) The only direct or prime leases or other agreements
currently in effect with respect to the rights of use and occupancy of the
Premises (as opposed to subleases) are the leases listed on Exhibit G hereto
(the "Existing Leases").
(vii) The Existing Leases are valid and existing and in full
force and effect; the tenants thereunder are in actual possession of the
Premises; and neither the tenants nor the Seller is in default of their
respective obligations under the Existing Leases.
(viii) The copies of the Existing Leases to be delivered by
Seller to Purchaser are true and complete copies of the Existing Leases; the
Existing Leases have not been amended, modified, or
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supplemented, except by written modifications or amendments, copies of which
are attached to the copies of the Existing Leases to be delivered by Seller
to Purchaser; and the tenants do not have any rights to extend or renew the
terms of the Existing Leases except as expressly set forth in the Existing
Leases.
(ix) Seller has not performed, and is not required by the
Existing Leases, to perform any construction, painting, repairs, alterations,
improvements and other work to the Premises, and all of the other obligations
of the landlord required to be performed under the Existing Leases as of the
Closing, have been completed, fully performed and paid for in full by Seller.
(x) The rents and other payments set forth in the Existing
Leases are the actual rents, income and charges presently being collected by
Seller under the Existing Leases.
(xi) Except as set forth in the Existing Leases, the tenants are
not entitled to any concession, allowance, rebate or refund; and the
allowances, if any, specified in the Existing Leases have been fully
recovered by the tenants thereunder.
(xii) The tenants have not prepaid any base rental, minimum
rental, fixed rental or additional rental or other charges for more than the
current month under their Existing Leases.
(xiii) Neither the Existing Leases nor the rental or other
amounts payable under the Existing Leases have been assigned, pledged or
encumbered other than to the holder of any existing mortgage on the Premises
as collateral security, which collateral assignment and existing mortgage
shall be released and satisfied as of the Closing.
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(xiv) No security deposits have been paid by the tenants under
the Existing Leases except as set forth on Exhibit H hereto.
(xv) Seller represents to Purchaser that there are no
outstanding brokerage or leasing commissions or other compensation which are
or will become due and payable to any party ("Lease Broker") with respect to
or on account of the Existing Leases, or any extension or renewal of the
Existing Leases.
(xvi) Seller has not received any notice ("Defect Notice") from
any insurance company which has issued a policy with respect to the Premises
or from any board of fire underwriters (or other body exercising similar
functions) claiming any defects or deficiencies in the Premises suggesting or
requesting the performance of any repairs, alterations or other work to the
Premises.
(xvii) Seller has no employees located at the Premises.
(xviii) Seller has not received any notice of any condemnation
proceeding or other proceedings in the nature of eminent domain in connection
with the Premises, and to Seller's knowledge no taking has been threatened.
(xix) All of the books, records, information, data and other
items supplied by Seller to Purchaser with respect to Seller or the Premises
are true, complete and correct in all material respects.
(xx) To the best of Seller's actual knowledge, except as set
forth in the environmental reports described in Exhibit I annexed hereto,
there is no presently existing violation at the Premises of any law; no
contamination is present at the Premises; and no underground storage tanks,
asbestos or PCB's are present at the
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Premises.
The representations and warranties contained in this Section 12 shall
not merge with the Deed upon delivery thereof to Purchaser but shall survive
Closing for a period of twelve (12) months.
13. LIKE-KIND EXCHANGE. Seller may determine to exchange the
Premises for a like-kind property to be held either for productive use in
trade or business or for investment pursuant to Section 1031 of the Internal
Revenue Code. Purchaser agrees to fully cooperate with Seller in Seller's
efforts to consummate a transaction in compliance with Section 1031 of the
Internal Revenue Code provided that Purchaser shall not be responsible for
any cost or expense of such an exchange in excess of the cost and expense
Purchaser would incur if the transaction was not part of a like-kind
exchange. Further, Purchaser shall have no obligation to take title to any
exchange property; and Seller shall indemnify, defend and save and hold
Purchaser harmless of and from all expenses, liabilities, claims, losses or
actions as a result of Purchaser's participation in the tax free exchange.
14. REMEDIES. Upon any breach or threatened breach by Seller of any
of the agreements, terms, covenants or conditions contained in this
Agreement, Purchaser may enjoin the breach or threatened breach and may
invoke any right and remedy allowed by law, in equity, by statute, or
otherwise, including the remedy of specific performance. Each right and
remedy available to Purchaser under this Agreement shall be cumulative and
shall be in addition to every other right or remedy provided for in this
Agreement or now or hereafter existing by law, in equity, by statute, or
otherwise, and the exercise by Purchaser of any one or more of those rights
or remedies shall not preclude the simultaneous or later exercise by
Purchaser of any or all other rights or remedies it may have.
Upon any breach or threatened breach by Purchaser of any
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of the agreements, terms, covenants or conditions contained in this
Agreement, as its sole and exclusive right and remedy, Seller shall be
entitled to the Deposit as liquidated damages, and not as a penalty (Seller
and Purchaser hereby acknowledging and agreeing that it is not possible
otherwise to measure Seller's damages from Purchaser's default, including
Seller's costs, expenses and fees in connection therewith), in lieu of any
other remedy that might otherwise be available at law, in equity, by statute,
or otherwise.
15. CLOSING ADJUSTMENTS. Prior to the Closing, Seller shall deliver
to Purchaser real estate tax receipts for all then current taxes and
assessments affecting the Premises. There shall be no adjustment between
Seller and Purchaser for all real estate taxes, special assessments and all
other governmental charges affecting the Premises which, pursuant to the
existing leases affecting the Premises, the tenant or tenant occupying the
Premises are responsible for the payment of. Any real estate taxes, special
assessments and all other governmental charges affecting the Premises that
are not the obligation of tenants of the Premises to pay, and all rents,
utilities, to the extent that they are not the responsibility of tenants, and
all other charges assessed against the Premises and not the responsibility of
tenants shall be prorated and adjusted as of the date of Closing. Purchaser
shall receive a credit against the Purchase Price for any security deposits
held by Seller pursuant to the existing leases.
16. ALLOCATION OF CLOSING EXPENSES. Seller shall be responsible for
payment of one-half of the deed transfer tax, and the costs of the survey to
be provided to Purchaser pursuant to Section 4 of this Agreement. Purchaser
shall be responsible for payment of one-half of the deed transfer tax, all
recording fees, abstract, searches and any title insurance premiums and other
charges arising
<PAGE>
out of this transaction. Each party shall be responsible for its own
attorney's fees.
17. RISK OF LOSS. The risk of loss or damage to the Premises by
fire or other causes until the delivery of the Deed to Purchaser is assumed
by Seller.
18. POSSESSION. Possession of the Premises shall be delivered to
Purchaser at Closing subject only to the Permitted Exceptions.
19. CONFIDENTIALITY. Purchaser shall not, prior to Closing, without
the prior written consent of Seller, which consent shall not unreasonably be
withheld or delayed, disclose to any third party the terms of this Agreement
or the terms of the Letter of Intent between the parties dated November 13,
1997; provided, however, that such terms may be disclosed: (i) subject to a
written direction from Purchaser that such terms are to be held confidential,
to Purchaser's counsel, accountants, environmental engineers, structural
engineers and/or Title Insurance Company, and/or to any other party as
reasonably necessary for Purchaser to complete its reviews, examinations,
analyses, tests and/or audits pursuant to the provisions of Section 7(a)
above; (ii) pursuant to the recordation of the Deeds and other Closing
Documents; (iii) as required by law or by the rules or regulations of any
governmental agency or in response to any inquiry or action by any
governmental agency; (iv) in any action maintained by Purchaser to enforce
its rights under this Agreement; (v) as required for the financial reporting
of the Purchaser; and/or (vi) as otherwise reasonably necessary to effect the
conveyance of the Premises. Nothing in this Section 19 shall restrict or
preclude the right of Purchaser to disclose any of the terms to any party who
had previously obtained knowledge of such terms directly from a party other
than Purchaser. Purchaser agrees to indemnify, defend and save
<PAGE>
and hold harmless Seller of and from any loss, damage, cost or expense,
including reasonable attorney's fees and disbursements incurred whether or
not litigation is commenced, incurred by Seller as the direct result of a
breach by Purchaser of the provisions of this Section 19. The right to be
indemnified, defended and held harmless by the Purchaser pursuant to the
preceding sentence shall be the sole and exclusive right and remedy of Seller
by reason of a breach by Purchaser of the provisions of this Section 19; and
notwithstanding any provision to the contrary set forth in this Agreement or
the applicability of any law, ordinance, regulation or judicial decision, no
breach by Purchaser of the provisions of this Section 19 shall deny, preclude
or adversely affect the right of Purchaser to purchase the Premises pursuant
to the terms of this Agreement.
<PAGE>
20. BROKER. Purchaser represents to Seller and Seller represents to
Purchaser that no broker brought about the transaction between Purchaser and
Seller other than Eagan Real Estate, Inc. and Oxford Realty Services
(collectively the "Brokers") and each party agrees to indemnify and hold
harmless the other party for any claims by any broker other than the Brokers
for commissions or fees in connection with this transaction resulting from or
arising out of the acts or omissions of the indemnifying party. Seller
agrees to pay the Brokers an aggregate commission of FOUR HUNDRED THOUSAND
and 00/100 DOLLARS ($400,000.00) upon Closing. The provisions of this
section shall survive the expiration (or sooner termination) of this
Agreement and/or the Closing.
<PAGE>
21. FORCE MAJEURE. (a) As used in this Agreement, the term "Force
Majeure" means any condition delaying, hindering or preventing either party
from performing as required under this Agreement, by reason of acts of God or
nature, or a public enemy, strikes, lockouts, riots, injunctions or other
interference through legal proceedings, state, federal or local laws or
regulations or requisitions of any governmental authority but not including
financial inability to perform.
(b) If, because of Force Majeure, either party is unable to
carry out its obligations under this Agreement, and if such party promptly
gives the other party written notice of such Force Majeure in detail,
specifying the nature, extent and expected duration of such Force Majeure,
the obligations and liabilities of the party giving such notice and the
corresponding obligations and liabilities of the other party shall be
temporarily suspended to the extent made necessary by and during the
continuance of such Force Majeure.
(c) The party whose performance is prevented shall use its best
efforts to remedy its inability to perform arising out of any event of Force
Majeure; provided, however, nothing in this Section 21 shall be construed to
require the settlement of any strike, walkout, lockout, or other labor
dispute on terms which, in the reasonable judgment of the affected party are
contrary to its interest. It is understood that the settlement of a strike,
without walkout, lockout, or other labor dispute shall be entirely within the
discretion of the affected party.
22. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of each of the parties hereto and their respective
successors and assigns. Purchaser shall not assign its rights or obligations
under this Agreement (except to any party
<PAGE>
controlling, controlled by, or affiliated with Purchaser) without the prior
written consent of Seller, which consent may be withheld for any reason.
23. NOTICES. All notices required or permitted to be given under
this Agreement shall be in writing addressed to the other party at such other
party's address(es) shown at the beginning of this Agreement or to such other
address(es) as the other party shall have designated in the manner herein
provided for the giving of such notice and shall be either: (i) delivered
personally; (ii) sent by certified mail, postage prepaid, return receipt
requested; or (iii) sent by overnight courier service provided such service
obtains a written receipt upon delivery. Such notice shall be deemed to have
been given on the date delivered, or on the date delivery is refused, as the
case may be.
24. ENFORCEMENT. The failure of either party to enforce any
provision of this Agreement shall not constitute a waiver by that party of
its right to later enforce any provision of this Agreement.
25. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between Purchaser and Seller, and no part of this Agreement may be
modified unless the modification is in writing and signed by the parties to
this Agreement.
26. SEVERABILITY. If any term or provision of this Agreement shall,
to any extent, be invalid or unenforceable, the remainder of this Agreement
shall not be affected and each of the remaining terms and provisions shall
remain in full force and effect.
27. DURATION OF OFFER. This Agreement shall automatically terminate
in the event Purchaser does not execute this Agreement and
<PAGE>
deliver the Initial Deposit to the Escrow Agent on or before February 5,
1998. For the limited purposes of this Section 27, an executed counterpart of
this Agreement may be delivered by Purchaser to Seller by facsimile as an
alternative to the methods enumerated in Section 23 above for the delivery of
notices under this Agreement. Any notice to be given pursuant to any other
section of this Agreement shall be given in compliance with Section 23.
28. CAPTIONS. The captions or headings of the sections of this
Agreement are for convenience only, and shall not control or affect the
meaning or construction of any of the terms or provisions of this Agreement.
29. CHOICE OF LAWS. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
30. TIME. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period
provided in this Agreement shall end on a Saturday, Sunday or legal holiday,
then the final day shall extend to 5:00 P.M. of the next full business day.
For the purposes of this Section, the term "holiday" shall mean a day other
than a Saturday or Sunday on which banks in New York State are or may elect
to be closed.
31. SNDA. Seller shall deliver for execution by each of the tenants
under the Existing Leases a Subordination, Non-Disturbance and Attornment
Agreement ("SNDA") for the benefit of any proposed mortgagee to provide
financing to Purchaser in connection with Purchaser's acquisition of the
Premises; and Seller agrees to use diligent efforts to assist Purchaser in
obtaining the executed SNDA's from the tenants under the Existing Leases.
<PAGE>
32. REPORTS. For the period of time commencing on the date of this
Agreement and continuing through the first anniversary of the Closing, and
without limitation of the other document production otherwise required of
Seller hereunder, Seller shall, from time to time, upon reasonable advance
written notice from Purchaser, provide to Purchaser and its representatives:
(i) access to all financing and other information pertaining to the period of
Seller's ownership and operation of the Premises, which information is
relevant and reasonably necessary, in the opinion of Purchaser's outside,
third-party accountants ("Accountants") to enable Purchaser and its
Accountants to prepare financial statements in compliance with any and all of
(a) Rule 3-05 or Rule 3-14 of Regulations S-X of the Securities and Exchange
Commission (the "Commission"), as applicable to Purchaser; (b) any other rule
issued by the Commission and applicable to Purchaser; and (c) any
registration statement, report or disclosure statement filed with the
Commission by, or on behalf of Buyer; and (ii) a representation letter, in
form specified by, or otherwise satisfactory to the Accountants, signed by
the individual(s) responsible for Seller's financial reporting, as prescribed
by generally accepted auditing standards promulgated by the Auditing
Standards Division of the American Institute of Certified Public Accountants,
which representation letter may be required by the Accountants in order to
render an opinion concerning Seller's financial statements.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
as of the day and year first above written.
SELLER:
TRINET ESSENTIAL FACILITIES X, INC.
<PAGE>
By: /s/ Mark Whiting
Mark Whiting
President
PURCHASER:
AMERICAN REAL ESTATE INVESTMENT CORPORATION
By /s/ Stephen J. Butte
Stephen J. Butte
Vice President
<PAGE>
ASSIGNMENT OF AGREEMENT OF SALE
THIS ASSIGNMENT is made as of the 16th day of March, 1998 by and
between AMERICAN REAL ESTATE INVESTMENT CORPORATION, a Maryland corporation
("Assignor") to VIRGINIA STREET ASSOCIATES LIMITED PARTNERSHIP, a Colorado
limited partnership ("Assignee").
W I T N E S S E T H:
Assignor, as Buyer, and Trinet Essential Facilities X, Inc., a
Maryland corporation, as Seller, have entered into a certain Agreement of
Purchase and Sale dated February 3, 1998 (the "Agreement of Sale"), pursuant
to which Assignor agreed to purchase from the Seller certain land located in
the Town of Clay, New York, together with the buildings and improvements
located thereon, and other property incidental thereto.
Assignor desires to assign unto Assignee, and Assignee desires to
accept from Assignor, all of Assignor's rights, title and interest in, to and
under the Agreement of Sale (herein called the "Assigned Interests").
NOW, THEREFORE, Assignor and Assignee, each intending legally to be
bound hereby, agree as follows:
1. Assignor hereby assigns, transfers and sets over under Assignee the
Assigned Interests; and Assignee accepts the assignment of the Assigned
Interests and agrees to be bound thereby.
2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall be binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of
the parties reflected on this Agreement as the signatories.
3. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto, and their respective successors and assigns.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Agreement as of the day and year first above written.
ASSIGNOR:
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
By: /s/ Stephen J. Butte
Vice President
ASSIGNEE:
VIRGINIA STREET ASSOCIATES LIMITED
PARTNERSHIP
By: American Real Estate Investment, L.P. --
its general partner
By: American Real Estate Investment
Corporation -- its general partner
By: /s/Stephen J. Butte
Vice President
<PAGE>
PROMISSORY NOTE
$8,430,000.00 EXHIBIT 10.3
March 27, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, VIRGINIA STREET ASSOCIATES, L.P.,
a Colorado limited partnership ("Borrower"), promises to pay to the order of
COLUMN FINANCIAL, INC., a Delaware Corporation ("Lender"), at the office of
Lender at 3414 Peachtree Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113, or
at such other place as Lender may designate to Borrower in writing from time to
time, the principal sum of EIGHT MILLION FOUR HUNDRED THIRTY THOUSAND AND 00/100
DOLLARS ($8,430,000.00), together with interest on so much thereof as is from
time to time outstanding and unpaid, from the date of the advance of the
principal evidenced hereby, at a fluctuating rate equal to the sum, from time to
time, of (a) the LIBOR Rate as in effect from time to time plus (b) two percent
(2.0%) per annum (the "Note Rate"), in lawful money of the United States of
America, which shall at the time of payment be legal tender in payment of all
debts and dues, public and private.
ARTICLE I
TERMS AND CONDITIONS
1.01 PAYMENT OF PRINCIPAL AND INTEREST. (a) Said interest shall
be computed hereunder based on a 360-day year and based on twelve (12) 30-day
months for each full calendar month and on the actual number of days elapsed for
any partial month in which interest is being calculated. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall be included unless
repayment is credited prior to close of business. Payments in federal funds
immediately available in the place designated for payment received by Lender
prior to 2:00 p.m. local time at said place of payment shall be credited prior
to close of business, while other payments may, at the option of Lender, not be
credited until immediately available to Lender in federal funds in the place
designated for payment prior to 2:00 p.m. local time at said place of payment on
a day on which Lender is open for business. An installment of interest only
shall be payable on May 1, 1998. On May __ , 1998 (the "Maturity Date"), the
entire outstanding principal balance hereof, together with all accrued but
unpaid interest thereon, shall be due and payable in full. Each such monthly
installment shall equal the amount of interest accrued during the preceding
month as calculated by Lender, which calculation shall be final in the absence
of manifest error reported in writing within fifteen days. Each such payment
shall be applied first to the payment of accrued interest and then to reduction
of principal. Borrower shall pay to Lender contemporaneously with the execution
hereof interest at the foregoing interest rate for a period from the date hereof
through and including the last day of the calendar month in which funding
occurs.
(b) For all purposes of this Note, "Libor Rate" shall mean the
U.S. Dollar rate (rounded upward to the nearest one-sixteenth of one percent)
listed on page 3750 (I.E., the Libor page) of the Telerate News Services titled
"British Banker Association Interest Settlement Rates"
<PAGE>
for a designated maturity of one (1) month determined as of 11:00 a.m. London
Time on the second (2nd) full Eurodollar Business Day next preceding the first
day of each month with respect to which interest is payable hereunder (unless
such date is not a business day (as defined in the Security Instrument (as
hereinafter defined)) in which event the next succeeding Eurodollar Business Day
which is also a business day will be used). If the Telerate News Services (a)
publishes more than one (1) such Libor Rate, the average of such rates shall
apply, or (b) ceases to publish the Libor Rate, then the Libor Rate shall be
determined from such substitute financial reporting service as Lender in its
discretion shall determine. The term "Eurodollar Business Day", shall mean any
day on which banks in the City of London are generally open for interbank or
foreign exchange transactions.
1.02 PREPAYMENT. (a) This Note may be prepaid in whole but not in
part at any time, provided (i) written notice of such prepayment is received by
Lender not more than thirty (30) days and not less than ten (10) days prior to
the date of such prepayment, and (ii) such prepayment is received on the first
day of a calendar month (or, if such prepayment is not received on the first day
of a calendar month, interest is paid through the last day of such calendar
month) and is accompanied by all interest accrued hereunder and all other sums
due hereunder or under the other Loan Documents.
(b) Partial prepayments of this Note shall not be permitted,
except partial prepayments resulting from Lender applying insurance or
condemnation proceeds to reduce the outstanding principal balance of this Note
as provided in the Security Instrument, in which event no prepayment fee or
premium shall be due. No notice of prepayment shall be required under the
circumstance specified in the preceding sentence. No principal amount repaid
may be reborrowed. Partial payments of principal shall be applied to the unpaid
principal balance evidenced hereby but such application shall not reduce the
amount of the monthly installments required to be paid pursuant to Section 1.01
above.
1.03 SECURITY. The indebtedness evidenced by this Note and the
obligations created hereby are secured by that certain Mortgage and Security
Agreement (the "Security Instrument") from Borrower to Lender, dated as of even
date herewith, concerning property located in Onondonga County, New York. The
Security Instrument together with this Note and all other documents to or of
which Lender is a party or beneficiary now or hereafter evidencing, securing,
guarantying, modifying or otherwise relating to the indebtedness evidenced
hereby, are herein referred to collectively as the "Loan Documents". All of the
terms and provisions of the Loan Documents are incorporated herein by reference.
Some of the Loan Documents are to be filed for record on or about the date
hereof in the appropriate public records.
1.04 DEFAULT. It is hereby expressly agreed that should any
default occur in the payment of principal or interest as stipulated above and
such payment is not made within five (5) days of the date such payment is due
(provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents which is not cured within any applicable grace or cure
period, including without limitation, any sale, transfer, conveyance or other
violation of the terms of Section 1.13 of the Security Instrument, then a
default shall exist hereunder, and in such event the indebtedness evidenced
hereby, including all sums advanced or accrued hereunder or under any other Loan
Document, and all unpaid interest accrued thereon, shall, at the option of
Lender and without notice to Borrower, at once become due and payable and may be
collected forthwith,
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<PAGE>
whether or not there has been a prior demand for payment and regardless of the
stipulated date of maturity. In the event that any payment is not received by
Lender on the date when due (subject to the applicable grace period), then in
addition to any default interest payments due hereunder, Borrower shall also pay
to Lender a late charge in an amount equal to five percent (5.0%) of the amount
of such overdue payment. So long as any default exists hereunder, regardless of
whether or not there has been an acceleration of the indebtedness evidenced
hereby, and at all times after maturity of the indebtedness evidenced hereby
(whether by acceleration or otherwise), interest shall accrue on the outstanding
principal balance of this Note at a rate per annum equal to four percent (4.0%)
plus the interest rate which would be in effect hereunder absent such default or
maturity, or if such increased rate of interest may not be collected under
applicable law, then at the maximum rate of interest, if any, which may be
collected from Borrower under applicable law (the "Default Interest Rate"), and
such default interest shall be immediately due and payable. Borrower
acknowledges that it would be extremely difficult or impracticable to determine
Lender's actual damages resulting from any late payment or default, and such
late charges and default interest are reasonable estimates of those damages and
do not constitute a penalty. The remedies of Lender in this Note or in the Loan
Documents, or at law or in equity, shall be cumulative and concurrent, and may
be pursued singly, successively or together in Lender's discretion. Time is of
the essence of this Note. In the event this Note, or any part hereof, is
collected by or through an attorney-at-law, Borrower agrees to pay all costs of
collection including, but not limited to, reasonable attorney's fees.
1.05 EXCULPATION. Notwithstanding anything in the Loan Documents
to the contrary, but subject to the qualifications hereinbelow set forth, Lender
agrees that (i) Borrower shall be liable upon the indebtedness evidenced hereby
and for the other obligations arising under the Loan Documents to the full
extent (but only to the extent) of the security therefor, the same being all
properties (whether real or personal), rights, estates and interests now or at
any time hereafter securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents (collectively, the "Security
Property"), (ii) if default occurs in the timely and proper payment of all or
any part of such indebtedness evidenced hereby or in the timely and proper
performance of the other obligations of Borrower under the Loan Documents, any
judicial proceedings brought by Lender against Borrower shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the liens,
security titles, estates, assignments, rights and security interests now or at
any time hereafter securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents, and confirmation of any sale
under power of sale, and no attachment, execution or other writ of process shall
be sought, issued or levied upon any assets, properties or funds of Borrower
other than the Security Property except with respect to the liability described
below in this section, and (iii) in the event of a foreclosure of such liens,
security titles, estates, assignments, rights or security interests securing the
payment of this Note and/or the other obligations of Borrower under the Loan
Documents, whether by judicial proceedings or exercise of power of sale, no
judgment for any deficiency upon the indebtedness evidenced hereby shall be
sought or obtained by Lender against Borrower, except with respect to the
liability described below in this section; provided, however, that,
notwithstanding the foregoing provisions of this section, Borrower shall be
fully and personally liable and subject to legal action (a) for proceeds paid
under any insurance policies (or paid as a result of any other claim or cause of
action against any person or entity) by reason of damage, loss or destruction to
all or any portion of the Security Property, to the full extent of such proceeds
not previously delivered to Lender, but which, under the terms of the Loan
Documents, should have been delivered to Lender, (b) for proceeds or awards
resulting from the
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<PAGE>
condemnation or other taking in lieu of condemnation of all or any portion of
the Security Property, to the full extent of such proceeds or awards not
previously delivered to Lender, but which, under the terms of the Loan
Documents, should have been delivered to Lender, (c) for all tenant security
deposits or other refundable deposits paid to or held by Borrower or any other
person or entity in connection with leases of all or any portion of the Security
Property which are not applied in accordance with the terms of the applicable
lease or other agreement, (d) for rent and other payments received from tenants
under leases of all or any portion of the Security Property paid more than one
month in advance, (e) for rents, issues, profits and revenues of all or any
portion of the Security Property received or applicable to a period after any
notice of default from Lender hereunder or under the Loan Documents in the event
of any default by Borrower hereunder or thereunder which are not either applied
to the ordinary and necessary expenses of owning and operating the Security
Property or paid to Lender, (f) for damage to the Security Property as a result
of the intentional misconduct or gross negligence of Borrower or any of
principals, officers or general partners, or any agent or employee of any such
persons, or any removal of the Security Property in violation of the terms of
the Loan Documents, to the full extent of the losses or damages incurred by
Lender on account of such failure, (g) for Borrower's failure to pay any valid
taxes, assessments, mechanic's liens, materialmen's liens or other liens which
could create liens on any portion of the Security Property which would be
superior to the lien or security title of the Security Instrument or the other
Loan Documents, to the full extent of the amount claimed by any such lien
claimant, (h) for all obligations and indemnities of Borrower under the Loan
Documents relating to hazardous or toxic substances or compliance with
environmental laws and regulations to the full extent of any losses or damages
(including those resulting from diminution in value of any Security Property)
incurred by Lender as a result of the existence of such hazardous or toxic
substances or failure to comply with environmental laws or regulations, (i) for
fraud or material misrepresentation by Borrower or any of its principals,
officers, or general partners, any guarantor, any indemnitor or any agent,
employee or other person authorized or apparently authorized to make statements
or representations on behalf of Borrower, any principal, officer or partner of
Borrower, any guarantor or any indemnitor, to the full extent of any losses,
damages and expenses of Lender on account thereof, and (j) for any breach of the
covenants in the Security Instrument relating to further assurances and delivery
of additional security documentation, in each case to the full extent of any
losses, damages and expenses of Lender on account thereof. References herein to
particular sections of the Loan Documents shall be deemed references to such
sections as affected by other provisions of the Loan Documents relating thereto.
Nothing contained in this section shall (i) be deemed to be a release or
impairment of the indebtedness evidenced by this Note or the other obligations
of Borrower under the Loan Documents or the lien of the Loan Documents upon the
Security Property, or (ii) preclude Lender from foreclosing the Loan Documents
in case of any default or from enforcing any of the other rights of Lender
except as stated in this section, or (iii) limit or impair in any way whatsoever
the Hazardous Substances Indemnity Agreement or the Indemnity and Guaranty
Agreement each dated as of even date herewith, or release, relieve, reduce,
waive or impair in any way whatsoever, any obligation of Borrower or American
Real Estate Investment Corporation under such Hazardous Substances Indemnity
Agreement or Indemnity and Guaranty Agreement.
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<PAGE>
ARTICLE II
GENERAL CONDITIONS
2.01 NO WAIVER; AMENDMENT. No failure to accelerate the debt
evidenced hereby by reason of default hereunder, acceptance of a partial or past
due payment, or indulgences granted from time to time shall be construed (i) as
a novation of this Note or as a reinstatement of the indebtedness evidenced
hereby or as a waiver of such right of acceleration or of the right of Lender
thereafter to insist upon strict compliance with the terms of this Note, or (ii)
to prevent the exercise of such right of acceleration or any other right granted
hereunder or by any applicable laws; and Borrower hereby expressly waives the
benefit of any statute or rule of law or equity now provided, or which may
hereafter be provided, which would produce a result contrary to or in conflict
with the foregoing. No extension of the time for the payment of this Note or
any installment due hereunder, made by agreement with any person now or
hereafter liable for the payment of this Note shall operate to release,
discharge, modify, change or affect the original liability of Borrower under
this Note, either in whole or in part unless Lender agrees otherwise in writing.
This Note may not be changed orally, but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
2.02 WAIVERS. Presentment for payment, demand, protest and notice
of demand, protest and nonpayment and all other notices are hereby waived by
Borrower. Borrower hereby further waives and renounces, to the fullest extent
permitted by law, all rights to the benefits of any statute of limitations and
any moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption and homestead now or hereafter
provided by the Constitution and laws of the United States of America and of
each state thereof, both as to itself and in and to all of its property, real
and personal, against the enforcement and collection of the obligations
evidenced by this Note or the other Loan Documents.
2.03 LIMIT OF VALIDITY. The provisions of this Note and of all
agreements between Borrower and Lender, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Lender for the use, forbearance or retention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Borrower and Lender shall, at the
time performance or fulfillment of such provision shall be due, exceed the limit
for Interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then IPSO FACTO the obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the payment
of Interest. All Interest (including any amounts or payments deemed to be
Interest) contracted for, charged, taken, reserved, paid or agreed to be paid to
Lender shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of this Note, including any
extensions or renewals hereof, until payment in full of the principal balance of
this Note so
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<PAGE>
that the Interest thereof for such full period will not exceed the maximum
amount permitted by applicable law. This Section 2.03 will control all
agreements between Borrower and Lender pursuant to the Loan Documents.
2.04 USE OF FUNDS. Borrower hereby warrants, represents and
covenants that no funds disbursed hereunder shall be used for personal, family
or household purposes.
2.05 UNCONDITIONAL PAYMENT. Borrower is and shall be obligated to
pay principal, interest and any and all other amounts which become payable
hereunder or under the other Loan Documents absolutely and unconditionally and
without any abatement, postponement, diminution or deduction and without any
reduction for counterclaim or setoff. In the event that at any time any payment
received by Lender hereunder shall be deemed by a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
any bankruptcy, insolvency or other debtor relief law, then the obligation to
make such payment shall survive any cancellation or satisfaction of this Note or
return thereof to Borrower and shall not be discharged or satisfied with any
prior payment thereof or cancellation of this Note, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions
hereof, and such payment shall be immediately due and payable upon demand.
2.06 FURTHER ASSURANCES. Borrower shall execute and acknowledge
(or cause to be executed and acknowledged) and deliver to Lender all documents,
and take all actions, reasonably required by Lender from time to time to confirm
the rights created or now or hereafter intended to be created under this Note
and the other Loan Documents, to protect the validity, priority and
enforceability of this Note and the other Loan Documents, to subject to the Loan
Documents any property of Borrower intended by the terms of any one or more of
the Loan Documents to be encumbered by the Loan Documents, or otherwise carry
out the purposes of the Loan Documents and the transactions contemplated
thereunder; PROVIDED, HOWEVER, that no such further actions, assurances and
confirmations shall increase, modify or change Borrower's obligations under this
Note or under the other Loan Documents.
2.07 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
(1) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY
SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS NOTE,
(B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, (C)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT
PERMITTED BY LAW, AGREES THAT BORROWER WILL NOT BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM) AND BORROWER
FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED ON THE
FIRST PAGE HEREOF, AND CONSENTS AND AGREES THAT
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SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT
NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN
ANY OTHER MANNER PERMITTED BY LAW).
(2) BORROWER, AND BY ITS ACCEPTANCE HEREOF, LENDER, TO THE FULL
EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH
AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF
LENDER, OR ANY OF ITS DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS
OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER, IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
2.08 MISCELLANEOUS. This Note shall be interpreted, construed and
enforced according to the laws of the State of New York. The terms and
provisions hereof shall be binding upon and inure to the benefit of Borrower and
Lender and their respective heirs, executors, legal representatives, successors,
successors-in-title and assigns, whether by voluntary action of the parties or
by operation of law. As used herein, the terms "Borrower" and "Lender" shall be
deemed to include their respective successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law, subject to
the limitations set forth in SECTION 1.05 above. Subject to the limitations set
forth in SECTION 1.05 above, if Borrower consists of more than one person or
entity, each shall be jointly and severally liable to perform the obligations of
Borrower under this Note. All personal pronouns used herein, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and in no way define, limit, amplify or
describe the scope or intent of any provisions hereof. Capitalized terms used
in this Note and not otherwise defined herein shall have the meaning ascribed to
them in the Security Instrument or in the other Loan Documents. Time is of the
essence with respect to all provisions of this Note, the Security Instrument and
the other Loan Documents. This Note and the other Loan Documents contain the
entire agreements between the parties hereto relating to
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the subject matter hereof and thereof and all prior agreements relative hereto
and thereto which are not contained herein or therein are terminated. This Note
is a sealed instrument.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date
first above written.
BORROWER:
VIRGINIA STREET ASSOCIATES, L.P.
a Colorado limited partnership
By: AMERICAN REAL ESTATE
INVESTMENT, L.P.,
its sole general partner
By: AMERICAN REAL ESTATE
INVESTMENT CORPORATION,
its sole general partner
By: /s/ Stephen J. Butte
Title: Vice-President
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EXHIBIT 10.4
PROMISSORY NOTE
$5,725,000.00
March 27, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, VIRGINIA STREET ASSOCIATES, L.P.,
a Colorado limited partnership ("Borrower"), promises to pay to the order of
COLUMN FINANCIAL, INC., a Delaware Corporation ("Lender"), at the office of
Lender at 3414 Peachtree Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113, or
at such other place as Lender may designate to Borrower in writing from time to
time, the principal sum of FIVE MILLION SEVEN HUNDRED TWENTY FIVE THOUSAND AND
00/100 DOLLARS ($5,725,000.00), together with interest on so much thereof as is
from time to time outstanding and unpaid, from the date of the advance of the
principal evidenced hereby, at a fluctuating rate equal to the sum, from time to
time, of (a) the LIBOR Rate as in effect from time to time plus (b) two percent
(2.0%) per annum (the "Note Rate"), in lawful money of the United States of
America, which shall at the time of payment be legal tender in payment of all
debts and dues, public and private.
ARTICLE I
TERMS AND CONDITIONS
1.01 PAYMENT OF PRINCIPAL AND INTEREST. (a) Said interest shall be
computed hereunder based on a 360-day year and based on twelve (12) 30-day
months for each full calendar month and on the actual number of days elapsed for
any partial month in which interest is being calculated. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall be included unless
repayment is credited prior to close of business. Payments in federal funds
immediately available in the place designated for payment received by Lender
prior to 2:00 p.m. local time at said place of payment shall be credited prior
to close of business, while other payments may, at the option of Lender, not be
credited until immediately available to Lender in federal funds in the place
designated for payment prior to 2:00 p.m. local time at said place of payment on
a day on which Lender is open for business. An installment of interest only
shall be payable on May 1, 1998. On May __ , 1998 (the "Maturity Date"), the
entire outstanding principal balance hereof, together with all accrued but
unpaid interest thereon, shall be due and payable in full. Each such monthly
installment shall equal the amount of interest accrued during the preceding
month as calculated by Lender, which calculation shall be final in the absence
of manifest error reported in writing within fifteen days. Each such payment
shall be applied first to the payment of accrued interest and then to reduction
of principal. Borrower shall pay to Lender contemporaneously with the execution
hereof interest at the foregoing interest rate for a period from the date hereof
through and including the last day of the calendar month in which funding
occurs.
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(b) For all purposes of this Note, "Libor Rate" shall mean the U.S.
Dollar rate (rounded upward to the nearest one-sixteenth of one percent) listed
on page 3750 (I.E., the Libor page) of the Telerate News Services titled
"British Banker Association Interest Settlement Rates" for a designated maturity
of one (1) month determined as of 11:00 a.m. London Time on the second (2nd)
full Eurodollar Business Day next preceding the first day of each month with
respect to which interest is payable hereunder (unless such date is not a
business day (as defined in the Security Instrument (as hereinafter defined)) in
which event the next succeeding Eurodollar Business Day which is also a business
day will be used). If the Telerate News Services (a) publishes more than one
(1) such Libor Rate, the average of such rates shall apply, or (b) ceases to
publish the Libor Rate, then the Libor Rate shall be determined from such
substitute financial reporting service as Lender in its discretion shall
determine. The term "Eurodollar Business Day", shall mean any day on which
banks in the City of London are generally open for interbank or foreign exchange
transactions.
1.02 PREPAYMENT. (a) This Note may be prepaid in whole but not in
part at any time, provided (i) written notice of such prepayment is received by
Lender not more than thirty (30) days and not less than ten (10) days prior to
the date of such prepayment, and (ii) such prepayment is received on the first
day of a calendar month (or, if such prepayment is not received on the first day
of a calendar month, interest is paid through the last day of such calendar
month) and is accompanied by all interest accrued hereunder and all other sums
due hereunder or under the other Loan Documents.
(b) Partial prepayments of this Note shall not be permitted, except
partial prepayments resulting from Lender applying insurance or condemnation
proceeds to reduce the outstanding principal balance of this Note as provided in
the Security Instrument, in which event no prepayment fee or premium shall be
due. No notice of prepayment shall be required under the circumstance specified
in the preceding sentence. No principal amount repaid may be reborrowed.
Partial payments of principal shall be applied to the unpaid principal balance
evidenced hereby but such application shall not reduce the amount of the monthly
installments required to be paid pursuant to Section 1.01 above.
1.03 SECURITY. The indebtedness evidenced by this Note and the
obligations created hereby are secured by that certain Open-End Mortgage and
Security Agreement (the "Security Instrument") from Borrower to Lender, dated as
of even date herewith, concerning property located in Dauphin County,
Pennsylvania. The Security Instrument together with this Note and all other
documents to or of which Lender is a party or beneficiary now or hereafter
evidencing, securing, guarantying, modifying or otherwise relating to the
indebtedness evidenced hereby, are herein referred to collectively as the "Loan
Documents". All of the terms and provisions of the Loan Documents are
incorporated herein by reference. Some of the Loan Documents are to be filed
for record on or about the date hereof in the appropriate public records.
1.04 DEFAULT. It is hereby expressly agreed that should any default
occur in the payment of principal or interest as stipulated above and such
payment is not made within five (5) days of the date such payment is due
(provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents which is not cured within any applicable grace or cure
period, including without limitation, any sale, transfer, conveyance or other
violation of the terms of Section 1.13 of the Security Instrument, then a
default shall exist hereunder, and in such event the
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indebtedness evidenced hereby, including all sums advanced or accrued
hereunder or under any other Loan Document, and all unpaid interest accrued
thereon, shall, at the option of Lender and without notice to Borrower, at
once become due and payable and may be collected forthwith, whether or not
there has been a prior demand for payment and regardless of the stipulated
date of maturity. In the event that any payment is not received by Lender on
the date when due (subject to the applicable grace period), then in addition
to any default interest payments due hereunder, Borrower shall also pay to
Lender a late charge in an amount equal to five percent (5.0%) of the amount
of such overdue payment. So long as any default exists hereunder, regardless
of whether or not there has been an acceleration of the indebtedness
evidenced hereby, and at all times after maturity of the indebtedness
evidenced hereby (whether by acceleration or otherwise), interest shall
accrue on the outstanding principal balance of this Note at a rate per annum
equal to four percent (4.0%) plus the interest rate which would be in effect
hereunder absent such default or maturity, or if such increased rate of
interest may not be collected under applicable law, then at the maximum rate
of interest, if any, which may be collected from Borrower under applicable
law (the "Default Interest Rate"), and such default interest shall be
immediately due and payable. Borrower acknowledges that it would be
extremely difficult or impracticable to determine Lender's actual damages
resulting from any late payment or default, and such late charges and default
interest are reasonable estimates of those damages and do not constitute a
penalty. The remedies of Lender in this Note or in the Loan Documents, or at
law or in equity, shall be cumulative and concurrent, and may be pursued
singly, successively or together in Lender's discretion. Time is of the
essence of this Note. In the event this Note, or any part hereof, is
collected by or through an attorney-at-law, Borrower agrees to pay all costs
of collection including, but not limited to, reasonable attorney's fees.
1.05 EXCULPATION. Notwithstanding anything in the Loan Documents to
the contrary, but subject to the qualifications hereinbelow set forth, Lender
agrees that (i) Borrower shall be liable upon the indebtedness evidenced hereby
and for the other obligations arising under the Loan Documents to the full
extent (but only to the extent) of the security therefor, the same being all
properties (whether real or personal), rights, estates and interests now or at
any time hereafter securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents (collectively, the "Security
Property"), (ii) if default occurs in the timely and proper payment of all or
any part of such indebtedness evidenced hereby or in the timely and proper
performance of the other obligations of Borrower under the Loan Documents, any
judicial proceedings brought by Lender against Borrower shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the liens,
security titles, estates, assignments, rights and security interests now or at
any time hereafter securing the payment of this Note and/or the other
obligations of Borrower under the Loan Documents, and confirmation of any sale
under power of sale, and no attachment, execution or other writ of process shall
be sought, issued or levied upon any assets, properties or funds of Borrower
other than the Security Property except with respect to the liability described
below in this section, and (iii) in the event of a foreclosure of such liens,
security titles, estates, assignments, rights or security interests securing the
payment of this Note and/or the other obligations of Borrower under the Loan
Documents, whether by judicial proceedings or exercise of power of sale, no
judgment for any deficiency upon the indebtedness evidenced hereby shall be
sought or obtained by Lender against Borrower, except with respect to the
liability described below in this section; provided, however, that,
notwithstanding the foregoing provisions of this section, Borrower shall be
fully and personally liable and subject to legal action (a) for proceeds paid
under any insurance policies (or paid as a result of any other claim or cause of
action against any person or entity) by reason of damage,
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loss or destruction to all or any portion of the Security Property, to the full
extent of such proceeds not previously delivered to Lender, but which, under the
terms of the Loan Documents, should have been delivered to Lender, (b) for
proceeds or awards resulting from the condemnation or other taking in lieu of
condemnation of all or any portion of the Security Property, to the full extent
of such proceeds or awards not previously delivered to Lender, but which, under
the terms of the Loan Documents, should have been delivered to Lender, (c) for
all tenant security deposits or other refundable deposits paid to or held by
Borrower or any other person or entity in connection with leases of all or any
portion of the Security Property which are not applied in accordance with the
terms of the applicable lease or other agreement, (d) for rent and other
payments received from tenants under leases of all or any portion of the
Security Property paid more than one month in advance, (e) for rents, issues,
profits and revenues of all or any portion of the Security Property received or
applicable to a period after any notice of default from Lender hereunder or
under the Loan Documents in the event of any default by Borrower hereunder or
thereunder which are not either applied to the ordinary and necessary expenses
of owning and operating the Security Property or paid to Lender, (f) for damage
to the Security Property as a result of the intentional misconduct or gross
negligence of Borrower or any of principals, officers or general partners, or
any agent or employee of any such persons, or any removal of the Security
Property in violation of the terms of the Loan Documents, to the full extent of
the losses or damages incurred by Lender on account of such failure, (g) for
Borrower's failure to pay any valid taxes, assessments, mechanic's liens,
materialmen's liens or other liens which could create liens on any portion of
the Security Property which would be superior to the lien or security title of
the Security Instrument or the other Loan Documents, to the full extent of the
amount claimed by any such lien claimant, (h) for all obligations and
indemnities of Borrower under the Loan Documents relating to hazardous or toxic
substances or compliance with environmental laws and regulations to the full
extent of any losses or damages (including those resulting from diminution in
value of any Security Property) incurred by Lender as a result of the existence
of such hazardous or toxic substances or failure to comply with environmental
laws or regulations, (i) for fraud or material misrepresentation by Borrower or
any of its principals, officers, or general partners, any guarantor, any
indemnitor or any agent, employee or other person authorized or apparently
authorized to make statements or representations on behalf of Borrower, any
principal, officer or partner of Borrower, any guarantor or any indemnitor, to
the full extent of any losses, damages and expenses of Lender on account
thereof, and (j) for any breach of the covenants in the Security Instrument
relating to further assurances and delivery of additional security
documentation, in each case to the full extent of any losses, damages and
expenses of Lender on account thereof. References herein to particular sections
of the Loan Documents shall be deemed references to such sections as affected by
other provisions of the Loan Documents relating thereto. Nothing contained in
this section shall (i) be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the other obligations of Borrower under
the Loan Documents or the lien of the Loan Documents upon the Security Property,
or (ii) preclude Lender from foreclosing the Loan Documents in case of any
default or from enforcing any of the other rights of Lender except as stated in
this section, or (iii) limit or impair in any way whatsoever the Hazardous
Substances Indemnity Agreement or the Indemnity and Guaranty Agreement each
dated as of even date herewith, or release, relieve, reduce, waive or impair in
any way whatsoever, any obligation of Borrower or American Real Estate
Investment Corporation under such Hazardous Substances Indemnity Agreement or
Indemnity and Guaranty Agreement.
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ARTICLE II
GENERAL CONDITIONS
2.01 NO WAIVER; AMENDMENT. No failure to accelerate the debt
evidenced hereby by reason of default hereunder, acceptance of a partial or
past due payment, or indulgences granted from time to time shall be construed
(i) as a novation of this Note or as a reinstatement of the indebtedness
evidenced hereby or as a waiver of such right of acceleration or of the right
of Lender thereafter to insist upon strict compliance with the terms of this
Note, or (ii) to prevent the exercise of such right of acceleration or any
other right granted hereunder or by any applicable laws; and Borrower hereby
expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing. No extension of the time for
the payment of this Note or any installment due hereunder, made by agreement
with any person now or hereafter liable for the payment of this Note shall
operate to release, discharge, modify, change or affect the original
liability of Borrower under this Note, either in whole or in part unless
Lender agrees otherwise in writing. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
2.02 WAIVERS. Presentment for payment, demand, protest and notice of
demand, protest and nonpayment and all other notices are hereby waived by
Borrower. Borrower hereby further waives and renounces, to the fullest extent
permitted by law, all rights to the benefits of any statute of limitations and
any moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption and homestead now or hereafter
provided by the Constitution and laws of the United States of America and of
each state thereof, both as to itself and in and to all of its property, real
and personal, against the enforcement and collection of the obligations
evidenced by this Note or the other Loan Documents.
2.03 LIMIT OF VALIDITY. The provisions of this Note and of all
agreements between Borrower and Lender, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Lender for the use, forbearance or retention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Borrower and Lender shall, at the
time performance or fulfillment of such provision shall be due, exceed the limit
for Interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then IPSO FACTO the obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the payment
of Interest. All Interest (including any amounts or payments deemed to be
Interest) contracted for, charged, taken, reserved, paid or agreed to be paid to
Lender shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of this Note, including any
extensions or renewals hereof, until payment in full of the principal balance of
this Note so
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that the Interest thereof for such full period will not exceed the maximum
amount permitted by applicable law. This Section 2.03 will control all
agreements between Borrower and Lender pursuant to the Loan Documents.
2.04 USE OF FUNDS. Borrower hereby warrants, represents and covenants
that no funds disbursed hereunder shall be used for personal, family or
household purposes.
2.05 UNCONDITIONAL PAYMENT. Borrower is and shall be obligated to pay
principal, interest and any and all other amounts which become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without any
abatement, postponement, diminution or deduction and without any reduction for
counterclaim or setoff. In the event that at any time any payment received by
Lender hereunder shall be deemed by a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under any bankruptcy,
insolvency or other debtor relief law, then the obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof to
Borrower and shall not be discharged or satisfied with any prior payment thereof
or cancellation of this Note, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.
2.06 FURTHER ASSURANCES. Borrower shall execute and acknowledge (or
cause to be executed and acknowledged) and deliver to Lender all documents, and
take all actions, reasonably required by Lender from time to time to confirm the
rights created or now or hereafter intended to be created under this Note and
the other Loan Documents, to protect the validity, priority and enforceability
of this Note and the other Loan Documents, to subject to the Loan Documents any
property of Borrower intended by the terms of any one or more of the Loan
Documents to be encumbered by the Loan Documents, or otherwise carry out the
purposes of the Loan Documents and the transactions contemplated thereunder;
PROVIDED, HOWEVER, that no such further actions, assurances and confirmations
shall increase, modify or change Borrower's obligations under this Note or under
the other Loan Documents.
2.07 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
(1) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(A) SUBMITS TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA OVER
ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS
NOTE, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF
PENNSYLVANIA, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE
FULLEST EXTENT PERMITTED BY LAW, AGREES THAT BORROWER WILL NOT BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT
OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM) AND
BORROWER FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR
CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO BORROWER AT THE ADDRESS FOR NOTICES
DESCRIBED ON THE FIRST PAGE
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HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).
(2) BORROWER, AND BY ITS ACCEPTANCE HEREOF, LENDER, TO THE FULL
EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH
AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF
LENDER, OR ANY OF ITS DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS
OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER, IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
2.08 MISCELLANEOUS. This Note shall be interpreted, construed and
enforced according to the laws of the State of New York. The terms and
provisions hereof shall be binding upon and inure to the benefit of Borrower and
Lender and their respective heirs, executors, legal representatives, successors,
successors-in-title and assigns, whether by voluntary action of the parties or
by operation of law. As used herein, the terms "Borrower" and "Lender" shall be
deemed to include their respective successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law, subject to
the limitations set forth in SECTION 1.05 above. Subject to the limitations set
forth in SECTION 1.05 above, if Borrower consists of more than one person or
entity, each shall be jointly and severally liable to perform the obligations of
Borrower under this Note. All personal pronouns used herein, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and in no way define, limit, amplify or
describe the scope or intent of any provisions hereof. Capitalized terms used
in this Note and not otherwise defined herein shall have the meaning ascribed to
them in the Security Instrument or in the other Loan Documents. Time is of the
essence with respect to all provisions of this Note, the Security Instrument and
the other Loan Documents. This Note and the other Loan Documents contain the
entire agreements between the parties hereto relating to the subject matter
hereof and thereof and all prior agreements relative hereto and thereto which
are not contained herein or therein are terminated. This Note is a sealed
instrument.
2.09 CONFESSION OF JUDGMENT.
(1) THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR AN
ATTORNEY TO CONFESS JUDGMENT AGAINST BORROWER IN GRANTING THIS WARRANT OF
ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER, THE BORROWER HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE SEPARATE
COUNSEL OF BORROWER, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS BORROWER HAS OR
MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF
PENNSYLVANIA.
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(2) BORROWER IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE
PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR
ELSEWHERE, TO APPEAR FOR BORROWER AT ANY TIME AFTER DEFAULT UNDER THIS NOTE OR
UNDER THE LOAN DOCUMENTS IN ANY ACTIOIN BROUGHT AGAINST BORROWER ON THIS NOTE AT
THE SUIT OF LENDER, AS OF ANY TERM, AND IN THAT ACTION TO CONFESS OR ENTER
JUDGMENT AGAINST BORROWER FOR THE ENTIRE UNPAID PRINCIPAL OF THIS NOTE AND ALL
OTHER SUMS DUE UNDER THIS NOTE OR THE LOAN DOCUMENTS, AND ALL INTEREST ACCRUED
ON THOSE AMOUNTS, TOGETHER WITH COSTS OF SUIT, ATTORNEY'S COMMISSION FOR
COLLECTION OF FIVE PERCENT (5%) OF THE TOTAL AMOUNT THEN DUE BY BORROWER TO
LENDER (BUT IN ANY EVENT NOT LESS THAN TEN THOUSAND DOLLARS ($10,000.00)),
TOGETHER WITH INTEREST ON ANY JUDGMENT OBTAINED BY LENDER AT THE DEFAULT
INTEREST RATE, SPECIFIED IN THE NOTE AFTER DEFAULT, INCLUDING INTEREST AT THAT
RATE FROM AND AFTER THE DATE OF ANY SHERIFF'S OR JUDICIAL SALE UNTIL ACTUAL
PAYMENT IS MADE TO LENDER OF THE FULL AMOUNT DUE LENDER; AND FOR SO DOING THIS
NOTE OR A COPY OF IT VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE
AUTHORITY GRANTED IN THIS NOTE TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY
EXERCISE OF IT BUT SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL
PAYMENT IN FULL OF ALL THE AMOUNTS DUE UNDER THIS NOTE.
IN WITNESS WHEREOF, Borrower has executed this Note under seal as of
the date first above written.
BORROWER:
VIRGINIA STREET ASSOCIATES, L.P.
a Colorado limited partnership
By: AMERICAN REAL ESTATE
INVESTMENT, L.P.,
its sole general partner
By: AMERICAN REAL ESTATE
INVESTMENT CORPORATION,
its sole general partner
By: /s/ Stephen J. Butte
Title: Vice-President
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<PAGE>
EXHIBIT 10.5
PROMISSORY NOTE
$3,630,000.00 March 27, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, McBRIDE PROPERTIES, a New Jersey
general partnership ("Borrower"), promises to pay to the order of COLUMN
FINANCIAL, INC., a Delaware Corporation ("Lender"), at the office of Lender at
3414 Peachtree Road, N.E., Suite 1140, Atlanta, Georgia 30326-1113, or at such
other place as Lender may designate to Borrower in writing from time to time,
the principal sum of THREE MILLION SIX HUNDRED THIRTY THOUSAND AND 00/100
DOLLARS ($3,630,000.00), together with interest on so much thereof as is from
time to time outstanding and unpaid, from the date of the advance of the
principal evidenced hereby, at a fluctuating rate equal to the sum, from time to
time, of (a) the LIBOR Rate as in effect from time to time plus (b) two percent
(2.0%) per annum (the "Note Rate"), in lawful money of the United States of
America, which shall at the time of payment be legal tender in payment of all
debts and dues, public and private.
ARTICLE I
TERMS AND CONDITIONS
1.01 PAYMENT OF PRINCIPAL AND INTEREST. (a) Said interest shall
be computed hereunder based on a 360-day year and based on twelve (12) 30-day
months for each full calendar month and on the actual number of days elapsed for
any partial month in which interest is being calculated. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall be included unless
repayment is credited prior to close of business. Payments in federal funds
immediately available in the place designated for payment received by Lender
prior to 2:00 p.m. local time at said place of payment shall be credited prior
to close of business, while other payments may, at the option of Lender, not be
credited until immediately available to Lender in federal funds in the place
designated for payment prior to 2:00 p.m. local time at said place of payment on
a day on which Lender is open for business. An installment of interest only
shall be payable on May 1, 1998. On May __ , 1998 (the "Maturity Date"), the
entire outstanding principal balance hereof, together with all accrued but
unpaid interest thereon, shall be due and payable in full. Each such monthly
installment shall equal the amount of interest accrued during the preceding
month as calculated by Lender, which calculation shall be final in the absence
of manifest error reported in writing within fifteen days. Each such payment
shall be applied first to the payment of accrued interest and then to reduction
of principal. Borrower shall pay to Lender contemporaneously with the execution
hereof interest at the foregoing interest rate for a period from the date hereof
through and including the last day of the calendar month in which funding
occurs.
(b) For all purposes of this Note, "Libor Rate" shall mean the
U.S. Dollar rate (rounded upward to the nearest one-sixteenth of one percent)
listed on page 3750 (I.E., the Libor page) of the Telerate News Services titled
"British Banker Association Interest Settlement Rates" for a designated maturity
of one (1) month determined as of 11:00 a.m. London Time on the
<PAGE>
second (2nd) full Eurodollar Business Day next preceding the first day of each
month with respect to which interest is payable hereunder (unless such date is
not a business day (as defined in the Security Instrument (as hereinafter
defined)) in which event the next succeeding Eurodollar Business Day which is
also a business day will be used). If the Telerate News Services (a) publishes
more than one (1) such Libor Rate, the average of such rates shall apply, or (b)
ceases to publish the Libor Rate, then the Libor Rate shall be determined from
such substitute financial reporting service as Lender in its discretion shall
determine. The term "Eurodollar Business Day", shall mean any day on which
banks in the City of London are generally open for interbank or foreign exchange
transactions.
1.02 PREPAYMENT. (a) This Note may be prepaid in whole but not in
part at any time, provided (i) written notice of such prepayment is received by
Lender not more than thirty (30) days and not less than ten (10) days prior to
the date of such prepayment, and (ii) such prepayment is received on the first
day of a calendar month (or, if such prepayment is not received on the first day
of a calendar month, interest is paid through the last day of such calendar
month) and is accompanied by all interest accrued hereunder and all other sums
due hereunder or under the other Loan Documents.
(b) Partial prepayments of this Note shall not be permitted,
except partial prepayments resulting from Lender applying insurance or
condemnation proceeds to reduce the outstanding principal balance of this Note
as provided in the Security Instrument, in which event no prepayment fee or
premium shall be due. No notice of prepayment shall be required under the
circumstance specified in the preceding sentence. No principal amount repaid
may be reborrowed. Partial payments of principal shall be applied to the unpaid
principal balance evidenced hereby but such application shall not reduce the
amount of the monthly installments required to be paid pursuant to Section 1.01
above.
1.03 SECURITY. The indebtedness evidenced by this Note and the
obligations created hereby are secured by that certain Open-End Mortgage and
Security Agreement (the "Security Instrument") from Borrower to Lender, dated as
of even date herewith, concerning property located in Dauphin County,
Pennsylvania. The Security Instrument together with this Note and all other
documents to or of which Lender is a party or beneficiary now or hereafter
evidencing, securing, guarantying, modifying or otherwise relating to the
indebtedness evidenced hereby, are herein referred to collectively as the "Loan
Documents". All of the terms and provisions of the Loan Documents are
incorporated herein by reference. Some of the Loan Documents are to be filed
for record on or about the date hereof in the appropriate public records.
1.04 DEFAULT. It is hereby expressly agreed that should any
default occur in the payment of principal or interest as stipulated above and
such payment is not made within five (5) days of the date such payment is due
(provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents which is not cured within any applicable grace or cure
period, including without limitation, any sale, transfer, conveyance or other
violation of the terms of Section 1.13 of the Security Instrument, then a
default shall exist hereunder, and in such event the indebtedness evidenced
hereby, including all sums advanced or accrued hereunder or under any other Loan
Document, and all unpaid interest accrued thereon, shall, at the option of
Lender and without notice to Borrower, at once become due and payable and may be
collected forthwith, whether or not there has been a prior demand for payment
and regardless of the stipulated date of
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maturity. In the event that any payment is not received by Lender on the date
when due (subject to the applicable grace period), then in addition to any
default interest payments due hereunder, Borrower shall also pay to Lender a
late charge in an amount equal to five percent (5.0%) of the amount of such
overdue payment. So long as any default exists hereunder, regardless of whether
or not there has been an acceleration of the indebtedness evidenced hereby, and
at all times after maturity of the indebtedness evidenced hereby (whether by
acceleration or otherwise), interest shall accrue on the outstanding principal
balance of this Note at a rate per annum equal to four percent (4.0%) plus the
interest rate which would be in effect hereunder absent such default or
maturity, or if such increased rate of interest may not be collected under
applicable law, then at the maximum rate of interest, if any, which may be
collected from Borrower under applicable law (the "Default Interest Rate"), and
such default interest shall be immediately due and payable. Borrower
acknowledges that it would be extremely difficult or impracticable to determine
Lender's actual damages resulting from any late payment or default, and such
late charges and default interest are reasonable estimates of those damages and
do not constitute a penalty. The remedies of Lender in this Note or in the Loan
Documents, or at law or in equity, shall be cumulative and concurrent, and may
be pursued singly, successively or together in Lender's discretion. Time is of
the essence of this Note. In the event this Note, or any part hereof, is
collected by or through an attorney-at-law, Borrower agrees to pay all costs of
collection including, but not limited to, reasonable attorney's fees.
1.05 EXCULPATION. Notwithstanding anything in the Loan Documents
to the contrary, but subject to the qualifications hereinbelow set forth,
Lender agrees that (i) Borrower shall be liable upon the indebtedness
evidenced hereby and for the other obligations arising under the Loan
Documents to the full extent (but only to the extent) of the security
therefor, the same being all properties (whether real or personal), rights,
estates and interests now or at any time hereafter securing the payment of
this Note and/or the other obligations of Borrower under the Loan Documents
(collectively, the "Security Property"), (ii) if default occurs in the timely
and proper payment of all or any part of such indebtedness evidenced hereby
or in the timely and proper performance of the other obligations of Borrower
under the Loan Documents, any judicial proceedings brought by Lender against
Borrower shall be limited to the preservation, enforcement and foreclosure,
or any thereof, of the liens, security titles, estates, assignments, rights
and security interests now or at any time hereafter securing the payment of
this Note and/or the other obligations of Borrower under the Loan Documents,
and confirmation of any sale under power of sale, and no attachment,
execution or other writ of process shall be sought, issued or levied upon any
assets, properties or funds of Borrower other than the Security Property
except with respect to the liability described below in this section, and
(iii) in the event of a foreclosure of such liens, security titles, estates,
assignments, rights or security interests securing the payment of this Note
and/or the other obligations of Borrower under the Loan Documents, whether by
judicial proceedings or exercise of power of sale, no judgment for any
deficiency upon the indebtedness evidenced hereby shall be sought or obtained
by Lender against Borrower, except with respect to the liability described
below in this section; provided, however, that, notwithstanding the foregoing
provisions of this section, Borrower shall be fully and personally liable and
subject to legal action (a) for proceeds paid under any insurance policies
(or paid as a result of any other claim or cause of action against any person
or entity) by reason of damage, loss or destruction to all or any portion of
the Security Property, to the full extent of such proceeds not previously
delivered to Lender, but which, under the terms of the Loan Documents, should
have been delivered to Lender, (b) for proceeds or awards resulting from the
condemnation or other taking in lieu of condemnation of all or any portion of
the Security
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Property, to the full extent of such proceeds or awards not previously
delivered to Lender, but which, under the terms of the Loan Documents, should
have been delivered to Lender, (c) for all tenant security deposits or other
refundable deposits paid to or held by Borrower or any other person or entity
in connection with leases of all or any portion of the Security Property
which are not applied in accordance with the terms of the applicable lease or
other agreement, (d) for rent and other payments received from tenants under
leases of all or any portion of the Security Property paid more than one
month in advance, (e) for rents, issues, profits and revenues of all or any
portion of the Security Property received or applicable to a period after any
notice of default from Lender hereunder or under the Loan Documents in the
event of any default by Borrower hereunder or thereunder which are not either
applied to the ordinary and necessary expenses of owning and operating the
Security Property or paid to Lender, (f) for damage to the Security Property
as a result of the intentional misconduct or gross negligence of Borrower or
any of principals, officers or general partners, or any agent or employee of
any such persons, or any removal of the Security Property in violation of the
terms of the Loan Documents, to the full extent of the losses or damages
incurred by Lender on account of such failure, (g) for Borrower's failure to
pay any valid taxes, assessments, mechanic's liens, materialmen's liens or
other liens which could create liens on any portion of the Security Property
which would be superior to the lien or security title of the Security
Instrument or the other Loan Documents, to the full extent of the amount
claimed by any such lien claimant, (h) for all obligations and indemnities of
Borrower under the Loan Documents relating to hazardous or toxic substances
or compliance with environmental laws and regulations to the full extent of
any losses or damages (including those resulting from diminution in value of
any Security Property) incurred by Lender as a result of the existence of
such hazardous or toxic substances or failure to comply with environmental
laws or regulations, (i) for fraud or material misrepresentation by Borrower
or any of its principals, officers, or general partners, any guarantor, any
indemnitor or any agent, employee or other person authorized or apparently
authorized to make statements or representations on behalf of Borrower, any
principal, officer or partner of Borrower, any guarantor or any indemnitor,
to the full extent of any losses, damages and expenses of Lender on account
thereof, and (j) for any breach of the covenants in the Security Instrument
relating to further assurances and delivery of additional security
documentation, in each case to the full extent of any losses, damages and
expenses of Lender on account thereof. References herein to particular
sections of the Loan Documents shall be deemed references to such sections as
affected by other provisions of the Loan Documents relating thereto. Nothing
contained in this section shall (i) be deemed to be a release or impairment
of the indebtedness evidenced by this Note or the other obligations of
Borrower under the Loan Documents or the lien of the Loan Documents upon the
Security Property, or (ii) preclude Lender from foreclosing the Loan
Documents in case of any default or from enforcing any of the other rights of
Lender except as stated in this section, or (iii) limit or impair in any way
whatsoever the Hazardous Substances Indemnity Agreement or the Indemnity and
Guaranty Agreement, each dated as of even date herewith, or release, relieve,
reduce, waive or impair in any way whatsoever, any obligation of Borrower or
American Real Estate Investment Corporation under such Hazardous Substances
Indemnity Agreement or Indemnity and Guaranty Agreement.
ARTICLE II
GENERAL CONDITIONS
2.01 NO WAIVER; AMENDMENT. No failure to accelerate the debt
evidenced hereby by reason of default hereunder, acceptance of a partial or past
due payment, or
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indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Lender thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by any applicable laws; and Borrower hereby expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing. No extension of the time for the payment of this Note or any
installment due hereunder, made by agreement with any person now or hereafter
liable for the payment of this Note shall operate to release, discharge, modify,
change or affect the original liability of Borrower under this Note, either in
whole or in part unless Lender agrees otherwise in writing. This Note may not
be changed orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
2.02 WAIVERS. Presentment for payment, demand, protest and notice
of demand, protest and nonpayment and all other notices are hereby waived by
Borrower. Borrower hereby further waives and renounces, to the fullest extent
permitted by law, all rights to the benefits of any statute of limitations and
any moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption and homestead now or hereafter
provided by the Constitution and laws of the United States of America and of
each state thereof, both as to itself and in and to all of its property, real
and personal, against the enforcement and collection of the obligations
evidenced by this Note or the other Loan Documents.
2.03 LIMIT OF VALIDITY. The provisions of this Note and of all
agreements between Borrower and Lender, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Lender for the use, forbearance or retention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Borrower and Lender shall, at the
time performance or fulfillment of such provision shall be due, exceed the limit
for Interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then IPSO FACTO the obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the payment
of Interest. All Interest (including any amounts or payments deemed to be
Interest) contracted for, charged, taken, reserved, paid or agreed to be paid to
Lender shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of this Note, including any
extensions or renewals hereof, until payment in full of the principal balance of
this Note so that the Interest thereof for such full period will not exceed the
maximum amount permitted by applicable law. This Section 2.03 will control all
agreements between Borrower and Lender pursuant to the Loan Documents.
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2.04 USE OF FUNDS. Borrower hereby warrants, represents and
covenants that no funds disbursed hereunder shall be used for personal, family
or household purposes.
2.05 UNCONDITIONAL PAYMENT. Borrower is and shall be obligated to
pay principal, interest and any and all other amounts which become payable
hereunder or under the other Loan Documents absolutely and unconditionally and
without any abatement, postponement, diminution or deduction and without any
reduction for counterclaim or setoff. In the event that at any time any payment
received by Lender hereunder shall be deemed by a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
any bankruptcy, insolvency or other debtor relief law, then the obligation to
make such payment shall survive any cancellation or satisfaction of this Note or
return thereof to Borrower and shall not be discharged or satisfied with any
prior payment thereof or cancellation of this Note, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions
hereof, and such payment shall be immediately due and payable upon demand.
2.06 FURTHER ASSURANCES. Borrower shall execute and acknowledge
(or cause to be executed and acknowledged) and deliver to Lender all documents,
and take all actions, reasonably required by Lender from time to time to confirm
the rights created or now or hereafter intended to be created under this Note
and the other Loan Documents, to protect the validity, priority and
enforceability of this Note and the other Loan Documents, to subject to the Loan
Documents any property of Borrower intended by the terms of any one or more of
the Loan Documents to be encumbered by the Loan Documents, or otherwise carry
out the purposes of the Loan Documents and the transactions contemplated
thereunder; PROVIDED, HOWEVER, that no such further actions, assurances and
confirmations shall increase, modify or change Borrower's obligations under this
Note or under the other Loan Documents.
2.07 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
(1) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF
PENNSYLVANIA OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THIS NOTE, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF PENNSYLVANIA, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS,
AND (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT BORROWER WILL NOT
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN
SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY
OTHER FORUM) AND BORROWER FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO BORROWER AT THE ADDRESS
FOR NOTICES DESCRIBED ON THE FIRST PAGE HEREOF, AND CONSENTS AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT
NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN
ANY OTHER MANNER PERMITTED BY LAW).
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(2) BORROWER, AND BY ITS ACCEPTANCE HEREOF, LENDER, TO THE FULL
EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH
AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO THIS NOTE OR ANY CONDUCT, ACT OR OMISSION OF
LENDER, OR ANY OF ITS DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS
OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER, IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
2.08 MISCELLANEOUS. This Note shall be interpreted, construed and
enforced according to the laws of the State of New York. The terms and
provisions hereof shall be binding upon and inure to the benefit of Borrower and
Lender and their respective heirs, executors, legal representatives, successors,
successors-in-title and assigns, whether by voluntary action of the parties or
by operation of law. As used herein, the terms "Borrower" and "Lender" shall be
deemed to include their respective successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law, subject to
the limitations set forth in SECTION 1.05 above. Subject to the limitations set
forth in SECTION 1.05 above, if Borrower consists of more than one person or
entity, each shall be jointly and severally liable to perform the obligations of
Borrower under this Note. All personal pronouns used herein, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa. Titles of articles and
sections are for convenience only and in no way define, limit, amplify or
describe the scope or intent of any provisions hereof. Capitalized terms used
in this Note and not otherwise defined herein shall have the meaning ascribed to
them in the Security Instrument or in the other Loan Documents. Time is of the
essence with respect to all provisions of this Note, the Security Instrument and
the other Loan Documents. This Note and the other Loan Documents contain the
entire agreements between the parties hereto relating to the subject matter
hereof and thereof and all prior agreements relative hereto and thereto which
are not contained herein or therein are terminated. This Note is a sealed
instrument.
2.09 CONFESSION OF JUDGMENT.
(1) THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR
AN ATTORNEY TO CONFESS JUDGMENT AGAINST BORROWER IN GRANTING THIS WARRANT OF
ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER, THE BORROWER HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE SEPARATE
COUNSEL OF BORROWER, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS BORROWER HAS OR
MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF
PENNSYLVANIA.
(2) BORROWER IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR
THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR
ELSEWHERE, TO APPEAR FOR BORROWER AT ANY TIME AFTER DEFAULT UNDER THIS NOTE OR
UNDER THE
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LOAN DOCUMENTS IN ANY ACTIOIN BROUGHT AGAINST BORROWER ON THIS NOTE AT THE SUIT
OF LENDER, AS OF ANY TERM, AND IN THAT ACTION TO CONFESS OR ENTER JUDGMENT
AGAINST BORROWER FOR THE ENTIRE UNPAID PRINCIPAL OF THIS NOTE AND ALL OTHER SUMS
DUE UNDER THIS NOTE OR THE LOAN DOCUMENTS, AND ALL INTEREST ACCRUED ON THOSE
AMOUNTS, TOGETHER WITH COSTS OF SUIT, ATTORNEY'S COMMISSION FOR COLLECTION OF
FIVE PERCENT (5%) OF THE TOTAL AMOUNT THEN DUE BY BORROWER TO LENDER (BUT IN
ANY EVENT NOT LESS THAN TEN THOUSAND DOLLARS ($10,000.00)), TOGETHER WITH
INTEREST ON ANY JUDGMENT OBTAINED BY LENDER AT THE DEFAULT INTEREST RATE,
SPECIFIED IN THE NOTE AFTER DEFAULT, INCLUDING INTEREST AT THAT RATE FROM AND
AFTER THE DATE OF ANY SHERIFF'S OR JUDICIAL SALE UNTIL ACTUAL PAYMENT IS MADE TO
LENDER OF THE FULL AMOUNT DUE LENDER; AND FOR SO DOING THIS NOTE OR A COPY OF IT
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE AUTHORITY GRANTED IN
THIS NOTE TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY EXERCISE OF IT BUT
SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL
THE AMOUNTS DUE UNDER THIS NOTE.
IN WITNESS WHEREOF, Borrower has executed this Note under seal as of
the date first above written.
BORROWER:
MCBRIDE PROPERTIES,
a general partnership
By: AMERICAN REAL ESTATE INVESTMENT CORPORATION,
a general partner
By: /s/ Stephen J. Butte
Title: Vice-President
By: AMERICAN REAL ESTATE INVESTMENT,
L.P., a general partner
By: AMERICAN REAL ESTATE INVESTMENT
CORPORATION, a general partner
By: /s/ Stephen J. Butte
Title: Vice-President
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EXHIBIT 99.1
AMERICAN REAL ESTATE INVESTMENT CORPORATION SIGNS DEFINITIVE AGREEMENTS TO
ACQUIRE A FIFTEEN BUILDING OFFICE PORTFOLIO FOR APPROXIMATELY $130 MILLION AND
EIGHT INDUSTRIAL BUILDINGS FOR $27.4 MILLION
PLYMOUTH MEETING, PA, May 29, 1998. American Real Estate Investment Corporation
(AMEX: REA) announced today that it has signed definitive agreements to acquire
a fifteen building office portfolio totaling approximately 1.3 million square
feet located in New York State for a total purchase price of approximately $130
million.
The portfolio includes the premier office park in suburban Syracuse, as well as
seven buildings located within the Syracuse CBD. Additionally, there are two
office buildings in downtown Buffalo, one office building in Greece, NY, a
suburb of Rochester, and one property located in Glenn Falls, NY, a northern
suburb of Albany. Pursuant to the agreement, the Company also has an option to
acquire two additional properties for $30 million, also located in upstate New
York.
The portfolio is to be contributed to the REIT's operating partnership by
Pioneer Development Company, LLC, a prominent Syracuse-based real estate owner
and developer, in exchange for the issuance of 1.35 million Operating
Partnership Units, subject to adjustment. The balance of the purchase price will
be in the form of cash and the assumption/refinancing of related indebtedness.
The Company has entered into an agreement with the principals of Pioneer in
which the Company will have certain rights to pursue acquisition and development
opportunities presented to or initiated by Pioneer. Upon consummation of the
transaction the Company will open a regional office in Syracuse. Michael J.
Falcone, the chairman of Pioneer Development Company, LLC, will join the Board
of Directors as part of the transaction.
"This acquisition continues our strategy of acquiring portfolios of Class A real
estate below replacement cost with high going-in yields in negotiated
transactions. Upon completion of these purchases, we will own in excess of 36%
of the Syracuse Class A CBD and 18% of the Syracuse Class A suburban market. The
addition of Mike Falcone to our Board will provide us with a partner who has
tremendous operating experience, insight and knowledge, while the opening of a
Syracuse office staffed by key Pioneer employees will provide a seamless
transition to our new customers. This transaction aligns the interests of a
premier office development company in New York State with that of our Company
and shareholders," said Jeff Kelter, American's President. The transaction is
expected to close in the third quarter.
In addition to the Pioneer portfolio, the Company has entered into definitive
agreements to purchase an additional 1.1 million square feet of property
comprised of 4 industrial buildings in Ohio, two industrial buildings and one
flex building in suburban Rochester, and one flex building in the suburban
Albany market for a total of approximately $27.4 million.
"The Pioneer acquisition, together with these properties in Ohio and New York,
will bring our total portfolio to over 7.4 million square feet. The Company has
entered into a new phase, whereby our increased size and demonstrated track
record continues to present opportunities for accelerated growth. Further, the
industrial component of our portfolio will grow with these transactions to in
excess of 4.9 million square feet, making the Company one of the significant
players in the acquisition of bulk distribution, logistically driven facilities
in the Mid-Atlantic region," stated Mr. Kelter.
The Company has also entered into an agreement to sell its only remaining
multi-family property for $26.8 million, which will result in net proceeds to
the company of $10.5 million.
American Real Estate Investment Corporation, with headquarters in Plymouth
Meeting, Pennsylvania and regional offices in Franklin Lakes, New Jersey,
Albany, New York and Allentown, Pennsylvania, is a fully-integrated
self-administered and self-managed real estate investment trust (REIT) focusing
on office and industrial properties in the Mid-Atlantic and Northeast States.
The Company currently has 42 properties containing more than 4.9 million square
feet. For more information, contact Jeff Kelter at 610-834-3447, send email to
[email protected], or visit our web site at WWW.AREIC.COM.
THIS PRESS RELEASE MAY CONTAIN STATEMENTS WHICH CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, INCLUDING STATEMENTS REGARDING THE INTENT, BELIEF OF CURRENT EXPECTATIONS
OF THE COMPANY, ITS DIRECTORS, OR ITS OFFICERS WITH RESPECT TO THE FUTURE
OPERATING PERFORMANCE OF THE COMPANY AND THE RESULT AND THE EFFECT OF LEGAL
PROCEEDINGS. INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD LOOKING
<PAGE>
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE
FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. IMPORTANT FACTORS
THAT COULD CAUSE SUCH DIFFERENCES ARE DESCRIBED IN THE COMPANY'S PERIODIC
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S
FORM 10-KSB AND QUARTERLY REPORTS ON FORM 10-QSB AND 10Q.
