ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") made as of this _____ day of
February, 2003, by and between Caldwell Development, Inc. ("Seller"), having a
principal place of business at 434 North Front Street, Wormleysburg,
Pennsylvania 17043, and Newport Plaza Associates, L.P. ("Buyer"), a Delaware
limited partnership having offices at c/o Brentway Management LLC, 44 South
Bayles Avenue, Port Washington, NY 11050, and Citizens Bank of Pennsylvania,
2001 Market Street, 6th Floor, Philadelphia, Pennsylvania 19103 (with all
notices to be marked "Attention: Real Estate Department) ("Escrow Agent").
RECITALS
A. Seller is concurrently herewith transferring to Buyer fee title to
certain real property commonly known as the Newport Plaza Shopping Center (the
"Property") pursuant to an Agreement of Purchase and Sale amended to the date
hereof (the "Contract").
B. A sewer treatment facility (the "Plant") currently exists at the
Property; the PA Department of Environmental Protection ("PADEP") has extended
for an additional 5 year period the existing permits allowing operation of the
Plant, but is requiring that certain modifications be made to the Plant as a
condition of the extension of such permits (such modifications, the "Required
Modifications");
C. Seller's engineer has estimated that the costs of the Required
Modifications, including related engineering and permit fees, shall be
approximately $145,000;
D. Seller and Buyer acknowledge that based on an existing agreement
concerning the Plant between Seller and Newport Assembly of God (the "Church"),
Buyer had assumed that the Church would pay 41% of the costs of the Required
Modifications;
E. The Church has denied responsibility for payment of 41% of the costs
of Required Modifications, contending that other tenants at the Property are
responsible for creation of the conditions at the Property prompting PADEP to
require such Required Modifications;
F. Seller and Buyer desire to resolve a dispute which has arisen
between them concerning who will bear the actual costs of the Required
Modifications which the Buyer had assumed would be paid by the Church;
G. In order to resolve such dispute, Seller and Buyer agree that there
shall be held back from the purchase price otherwise payable to Seller under the
Contract the sum of $39,000 and deposited into escrow with Escrow Agent, to be
disbursed in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the covenants and conditions set
forth herein, and other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Escrow Fund. There is currently herewith being held back from the
balance of the purchase price otherwise payable by Buyer to Seller at the
Closing and deposited in escrow with Escrow Agent the sum of $39,000 (the
"Escrow Fund"). The Escrow Fund shall be held in escrow by Escrow Agent and
invested in a separate interest bearing savings or money market account in a
bank and shall be disbursed in accordance with the terms and conditions of this
Agreement. All interest accruing on the Escrow Fund shall be added to and
constitute part of the Escrow Fund. Seller hereby represents to Escrow Agent
that its Taxpayer I.D. number is 25-1754335, for Escrow Agent's use in reporting
accrued interest on the Escrow Fund to the Internal Revenue Service.
2. Success in Obtaining PADEP Approval of Lower Cost Alternative. Buyer
agrees to cooperate with the Church in order to endeavor to obtain the approval
of PADEP to amend the conditions of the existing permit so as to allow the
installation of grease traps or other alternative solutions at the Property in
lieu of the Required Modifications, thereby reducing the costs of required
modifications of the Plant. Such cooperation shall not require the appeal of any
decision of PADEP on this issue or the institution of any litigation. If PADEP
should issue its written decision modifying the conditions of the permits so
that in lieu of the Required Modifications, PADEP agrees that grease traps may
be installed (to which the Church has repudiated any obligation to contribute)
or other lower-cost alternatives may be implemented, then Escrow Agent shall
release to Buyer the Escrow Fund, whereupon Seller's liability with regard to
the Required Modifications shall terminate, provided and upon condition that the
cost of the lower cost modifications shall not exceed $20,000.00.
3. Inability to Obtain PADEP Consent to Lower Cost Alternative. If
despite Buyer's reasonable efforts to do so, Buyer is unable to obtain PADEP
consent to a lower-cost alternative to the Required Modifications, then at such
time as the cost of the Required Modifications is determined, Buyer shall use
commercially reasonable efforts (which shall not require the institution of
litigation) to obtain payments from all users of the Property, to include
Church, to pay for such modifications by a long-term increase to the sewer
rental rate charged to all tenants and to the Church. In the event any of the
tenants or Church refuse to pay said portion of the Required Modifications,
Buyer, after no less than 10 days written notice to Seller, advising Seller of
the efforts made by Buyer to collect from the particular tenant and the
calculated reimbursement to be lost, Buyer shall notify the Escrow Agent, in
writing, with copy to Seller, who may release and remit to Buyer a sum equal to
the lost revenue by reason of the refusal of a tenant or tenants to pay their
usage share for the Required Modifications. It is furthermore noted that, by
reason of separate payment/credit from Seller to Buyer, that such right of Buyer
to request withdrawal from the Escrow Fund shall not occur until any lost
reimbursement for Required Modifications exceeds $20,000.00. If, after a period
of six (6) months from Buyer's issuance of increased rate notices to all users,
all users are paying the increased rate without threat of litigation, the
remaining Escrow Fund shall be released to Seller. Likewise, after said six (6)
month period, if any tenants are not paying, and the hereinbefore described
procedure for withdrawal from the Escrow Fund has been accomplished, and there
remains any funds in the Escrow Fund, such shall be promptly remitted to Seller.
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4. Escrow Agent. The execution of this Agreement by Escrow Agent is
solely for the purpose of evidencing the acknowledgment by Escrow Agent of the
receipt of the Escrow Fund and setting forth Escrow Agent's obligations with
respect to the Escrow Fund. Seller and Buyer acknowledge that Escrow Agent has
no duties or responsibilities hereunder other than to hold, invest and disburse
the Escrow Fund in accordance with this Agreement. Escrow Agent shall notify
both Seller and Buyer before releasing any portion of the Escrow Fund. In the
event of any dispute regarding any action taken or proposed to be taken by
Escrow Agent with respect to the Escrow Fund, Escrow Agent may cause the Escrow
Fund to be placed into the registry of a court of competent jurisdiction
pursuant to an action of interpleader commenced by Escrow Agent, and Seller and
Buyer, jointly and severally, shall pay directly or reimburse Escrow Agent for
any and all expenses so incurred by Escrow Agent, including, without limitation,
reasonable attorneys' fees incurred by Escrow Agent in any such action. Seller
and Buyer acknowledge that Escrow Agent is acting hereunder solely as a
convenience to the parties, and except for Escrow Agent's gross negligence or
willful acts of misconduct, Seller and Buyer, jointly and severally, shall
indemnify and hold harmless Escrow Agent of and from any and all liabilities,
costs, expenses and claims (including reasonably attorneys' fee actually
incurred), of any nature whatsoever, by reason of or arising out of its acting
as escrow agent hereunder. Escrow Agent may obtain the advice of counsel and
shall be protected in any action taken in good faith in accordance with such
advice. Escrow Agent shall not be required to defend any legal proceedings that
may be instituted against Escrow Agent in respect of this Agreement or the
Escrow Fund unless requested to do so by the Seller and Buyer and indemnified to
the satisfaction of the Escrow Agent against the cost and expenses of such
defense. Escrow Agent shall not be required to institute legal proceedings of
any kind. Escrow Agent shall have no responsibility for the genuineness or
validity of any document or other item submitted to Escrow Agent, and shall be
protected in acting in accordance with any written instructions given to the
Escrow Agent which have been signed by Seller and Buyer.
5. Notices. Any notice pursuant to this Agreement shall be validly
given, if in writing, sent by recognized national overnight delivery service or
in person, in which event the date of service is the day of delivery, or by
pre-paid registered or certified mail, restricted delivery, return receipt
requested, in which event the date of service shall be the date of acceptance or
refusal. Notices shall be addressed to the parties at their addresses first set
forth hereinabove, or at such other address as the respective party may
designate by notice given to the other parties in accordance with this Section
5.
6. Seller's Responsibility. This Escrow Agreement shall address
Seller's full and final liability with regard to the Required Modifications to
the Plant other than as set forth in that certain agreement titled "Assignment
and Assumption Agreement" executed between the parties contemporaneously
herewith.
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7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of such
counterparts shall constitute one Agreement. To facilitate execution of this
Agreement, the parties may execute and exchange by telephone facsimile
counterparts of the signature pages.
8. Agreement Binding. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, Seller, Buyer and Escrow Agent have executed this
Agreement as of the date first above written.
Caldwell Development, Inc.
By:_______________________________
Mark G. Caldwell
Newport Plaza Associates, L.P.
By: CIF-Newport Plaza Associates, LLC
By: Cedar Income Fund Partnership, L.P.
By: Cedar Income Fund, Lt.
By: _______________________________
Brenda J. Walker, Vice Pres.
Escrow Agent agrees to receive,
hold and disburse the Escrow Fund
in accordance with the terms and
conditions of this Agreement.
Citizens Bank of Pennsylvania
By:_______________________________
52035
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