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EXHIBIT 10.40
AGREEMENT OF SALE
AGREEMENT OF SALE (this "Agreement"), dated as of April 16, 1998
between Richard D. Krause, having an address of 26 Fawn Drive, Flemington, NJ
08822 and William P. Krause, having an address of 713 Rosedale Road, Princeton,
NJ 08540 ("Seller") and Blue Fish Clothing, Inc., a Pennsylvania corporation
having an office at 3 Sixth Street, Frenchtown, NJ 08825 ("Purchaser").
ARTICLE 1
1.1 Sale of Premises. Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase and acquire from Seller, fee
simple title to the property described in Schedule A annexed
hereto (the "Premises").
1.2 Title to Premises. Title to the Premises shall be good, marketable
and insurable at regular rates by a title insurer licensed in the
State of New Jersey ("Title Insurer") subject to the existing
tenancies, easements and restrictions of record listed in Schedule
A and such state of facts as the survey attached as Schedule B may
disclose ("Permitted Exceptions").
1.3 Title Defects. Purchaser shall furnish to Seller within thirty
(30) days from the date hereof, a copy of a title commitment
issued by the Title Insurer with respect to the Premises together
with a statement specifying any defects in title which are not
Permitted Exceptions ("Purchaser's Statement"). Seller shall
proceed in good faith and with due diligence to remove any such
defects. If Seller cannot or will not remove such defects within
sixty (60) days of receipt of Purchaser's Statement, Purchaser
shall have the right, upon notice to Seller and the Escrow Agent,
as defined herein, given within ten (10) days after expiration of
such sixty (60) day period, either to (a) waive the defect(s) and
close title without abatement or reduction in the purchase price,
or (b) terminate this Agreement and obtain a refund of the
Deposit, as defined
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herein, and upon such refund, this Agreement and all rights and
obligations of the respective parties hereunder shall be null and
void. If Purchaser does not advise Seller and the Escrow Agent of
its election to terminate this Agreement within such period,
Purchaser shall conclusively be deemed to have waived such right
of termination on account of such defect(s).
ARTICLE 2
2.1 Purchase Price. The purchase price for the Premises shall be Three
Hundred Seventy Five Thousand ($375,000) Dollars (the "Purchase
Price").
2.2 Payment of Purchase Price. The Purchase Price shall be payable as
follows:
(a) upon execution of this Agreement by both parties, the sum
of Thirty Seven Thousand Five Hundred ($37,500) Dollars
shall be paid by Purchaser to the Escrow Agent, as defined
herein, by check (subject to collection) to be held
pursuant to the provisions of Section 2.3 hereof (the
"Deposit");.
(b) upon closing of title (i) the Deposit and any interest
earned thereon and (ii) the balance of the purchase price,
Three Hundred Thirty Seven Thousand Five Hundred
($337,500) Dollars, plus or minus any net closing
adjustments provided herein, payable by certified,
cashier's or attorneys' trust account check or by wire
transfer of immediately available federal funds (the
"Purchase Price Balance").
2.3 Escrow Terms.
(a) The Deposit shall be held in escrow by John A. Schaff,
Esquire (the "Escrow Agent") in an interest bearing
account until disbursed as herein provided. Any interest
accrued on the Deposit shall be paid to whichever party is
entitled to the Deposit in accordance with the
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provisions of this Agreement but shall not be credited
against any portion of the Purchase Price. The Deposit
shall be held and disbursed by Escrow Agent in the
following manner:
(i) to Seller at the closing; or
(ii) to Seller upon receipt of written demand
therefor, stating that either (x) this
Agreement has been terminated pursuant to a
provision herein which states that Seller is
entitled to the Deposit upon termination, and
certifying the basis for such termination or
(y) Purchaser has defaulted in the performance
of Purchaser's obligations under this Agreement
and the facts and circumstances underlying such
default; provided however, that the Escrow
Agent shall not honor such demand until at
least ten (10) days after it has sent a copy of
such demand to Purchaser, nor thereafter if
Escrow Agent shall have received written notice
of objection from Purchaser in accordance with
the provisions of clause (b) of this Section
2.3; or
(iii) to Seller upon termination of this Agreement by
Purchaser, pursuant to any provision hereof
which states that Seller is entitled to the
Deposit upon such termination; or
(iv) to Purchaser upon receipt of written demand
therefor, stating that either (x) this
Agreement has been terminated pursuant to a
provision hereof which states that Purchaser is
entitled to the Deposit upon termination, and
certifying the basis for such termination, or
(y) Seller has defaulted in performance of
Seller's obligations under this Agreement and
the facts and circumstances underlying such
default or that Purchaser is otherwise entitled
to the Deposit under the provisions of this
Agreement; provided, however, that Escrow Agent
shall not honor such demand until at least ten
(10) days after it has sent a copy of such
demand to Seller, nor thereafter if Escrow
Agent
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shall have received written notice of objection
from Seller in accordance with the provisions
of clause (b) of this Section 2.3
(b) Upon receipt of written demand for the Deposit by
Purchaser or Seller pursuant to clause (ii), (iii) or (iv)
of Section 2.3, Escrow Agent shall promptly send a copy
thereof to the other party. The other party shall have the
right to object to the delivery of the Deposit by sending
written notice of such objection to Escrow Agent within
the greater of five (5) days or three (3) business days
after Escrow Agent delivers a copy of the written demand
to the objecting party but not thereafter. Such notice
shall set forth the basis for objecting to the delivery of
the Deposit. Upon receipt of such notice, Escrow Agent
shall promptly send a copy thereof to the party who made
the written demand.
(c) In the event of any dispute between the parties regarding
the Deposit, Escrow Agent, at its option, may disregard
all instructions received and either (i) hold the Deposit
until the dispute is mutually resolved and Escrow Agent is
advised of this fact in writing by both Seller and
Purchaser, or Escrow Agent is otherwise instructed by a
final unappealable judgment of a court of competent
jurisdiction, or (ii) deposit the Deposit into a court of
competent jurisdiction (whereupon Escrow Agent shall be
released and relieved of any and all liability and
obligations hereunder from and after the date of such
deposit).
(d) In the event Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive conflicting
instructions, claims or demands from the parties hereto,
or instructions which conflict with any of the provisions
of this Agreement, Escrow Agent shall be entitled (but not
obligated) to refrain from taking any action other than to
keep safely the Deposit until Escrow Agent shall be
instructed otherwise in writing signed by both Seller and
Purchaser, or by final judgment of a court of competent
jurisdiction.
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ARTICLE 3
3.1 Due Diligence Period. Purchaser shall have the right to make such
due diligence analysis and inspection, upon prior written
notification to Seller, to conduct such inspections of the
Premises as Purchaser shall in its sole discretion deem advisable
("Permitted Activities"). All Permitted Activities shall be at the
sole expense of Purchaser and Purchaser shall repair any damage or
disturbance to the Premises. Purchaser shall defend, indemnify,
protect, release, and hold Seller harmless from all actions,
claims, costs, judgments, suits, fines, enforcement actions,
damages or expenses, including, but not limited to, reasonable
attorneys' fees and all litigation and settlement costs, arising
from Purchaser's conduct of Permitted Activities. All such
inspections shall be done within thirty (30) days from the date
this Agreement is executed by all parties (the "Due Diligence
Period"). This Section 3.1 shall survive the Closing, as
hereinafter defined.
3.2 Right of Termination. Purchaser shall have the right to terminate
this Agreement within five (5) days after the expiration of the
Due Diligence Period by written notice to Seller.
3.3 ISRA Non-Applicability. Upon satisfaction of all other
contingencies Seller shall make application to the New Jersey
Department of Environmental Protection for a Letter of
Non-Applicability under the New Jersey Industrial Site Recovery
Act with respect to the transactions contemplated by this
Agreement. In the event Seller is unable to obtain such a letter
either party may elect to terminate this Agreement by written
notice to the other..
3.4 Effect of Termination. In the event this Agreement is terminated
pursuant to Sections 3.2 or 3.3 the Deposit shall be paid to
Purchaser and neither party shall have any further liability to
the other hereunder.
3.5 Representations and Warranties; Release and Indemnification.
Purchaser understands and agrees that Seller makes no
representations or warranties respecting the Premises except as
are set forth herein and that the Premises are being sold "AS IS".
Purchaser accepts and assumes all risks and liabilities
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associated with the Premises resulting from current and past uses
by Seller and any predecessor owner or user of the Premises
including, but not limited to, risks and liabilities arising under
any and all present, future and contingent laws and regulations
including, but not limited to, the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), the New Jersey
Compensation and Control Act ("Spill Act") and any and all common
law theories including, but not limited to, strict liability
("Common Law"). Purchaser waives all present, future and
contingent rights, claims and actions the Purchaser has or may
have against Seller related in any way to the Premises arising
under any and all present, future and contingent laws and
requirements including, but not limited to, CERCLA, the Spill Act
and Common Law This Section 3.5 shall survive the Closing, as
hereinafter defined
3.6 Buyer's Acceptance. By closing on the sale of the Premises and
accepting title to the Premises from Seller, Purchaser represents
and warrants that Purchaser has had the opportunity to undertake
appropriate due diligence investigation activities regarding all
matters which may materially and adversely affect the Premises
including, but not limited to, any and all environmental matters
that may be identified during the course of appropriate due
diligence investigations conducted prior to the sale of real
property and that Purchaser has either exercised or waived this
opportunity. Purchaser also represents and warrants that Seller
has not made any representations to Purchaser, either verbal or
written, concerning the condition of the Premises and that
Purchaser is relying solely on Purchaser's due diligence
investigation to determine the condition of the Premises. This
Section 3.6 shall survive the Closing, as hereinafter defined.
ARTICLE 4
4.1 Closing Date. The closing of the transaction contemplated hereby
shall occur on or about June 30, 1998 (the "Closing").
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4.2 Deliveries by Seller. On the Closing Seller shall deliver to
Purchaser the following:
(a) duly executed Deed of Bargain and Sale with Covenant
Against Grantor's Acts for the Premises in proper
statutory form for recordation;
(b) duly executed Affidavit of Title;
(c) original tax bill for the Premises; and
(d) such other documents and instruments as Purchaser or its
Title Insurer may reasonably request in order to perfect
title to the Premises in Purchaser in accordance with the
terms of this Agreement or otherwise to carry out the
purposes of this Agreement.
4.3 Deliveries by Purchaser. On the Closing, Purchaser shall pay to
Seller the Purchase Price Balance and shall deliver to Seller the
following:
(a) resolution of the Board of Directors of Purchaser
authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated
hereby, certified as a true copy by the Secretary of
Purchaser; and
(b) an incumbency certificate with respect to the officers of
Purchaser who executed this Agreement on behalf of
Purchaser.
4.4 Form 1099. On the Closing Date the Seller and Purchaser shall
execute and deliver a Form 1099 and shall instruct counsel for
Purchaser to file the same with the Internal Revenue Service.
ARTICLE 5
5.1 Closing Adjustments. The following apportionments and adjustments
shall be made as of 12:00 midnight on the day preceding the
Closing Date:
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(a) real estate taxes assessed against the Premises based on
the calendar year assessed;
(b) the amount of real estate transfer tax payable shall be
allowed as a credit to Purchaser;
(c) if there are any confirmed or unconfirmed special
assessments against the Premises, Purchaser shall be
allowed a credit if the work giving rise to the assessment
was completed prior to the date of this Agreement, but if
the work giving rise to the assessment was completed
subsequent to the date of this Agreement, same shall be
paid or assumed by Purchaser;
(d) rents, and
(e) all charges for utilities (unless such utilities are the
obligation of Purchaser under the present lease to the
Premises).
ARTICLE 6
6.1 Default. Either Seller or Purchaser may terminate this Agreement
by notice to the other party in the event of a material default by
the other party which remains uncured for ten (10) business days
after notice thereof unless such default cannot be cured by the
payment of money and cannot with due diligence be cured within
such ten (10) day period, in which case the defaulting party shall
have such longer period as shall be necessary to cure such
default, so long as the defaulting party proceeds to promptly cure
such default within such ten (10) day period, prosecutes such cure
to completion with due diligence and advises the other party of
the actions which the defaulting party is taking and the progress
being made. If the defaulting party decides to utilize such longer
period to cure such default, such default shall be cured within
thirty (30) days following the aforesaid ten (10) day period. If
such default is
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not cured within such thirty (30) day period, the non-defaulting
party may terminate this Agreement.
6.2 Remedies.
(a) By Seller. If Seller fulfills its obligations hereunder
but Purchaser materially breaches any agreement contained
herein, Seller shall have the right to terminate this
Agreement and receive the Deposit together with all
interest earned thereon, and such payment when received by
Seller shall constitute and be liquidated and agreed
damages, whereupon this Agreement shall terminate and the
parties shall be relieved of any further liability or
obligation to each other.
(b) By Purchaser. If Purchaser fulfills its obligations
hereunder, but Seller materially defaults under this
Agreement beyond any applicable cure period, Purchaser
shall be entitled, as its sole and exclusive remedies, to
terminate this Agreement and recover the Deposit together
with interest earned thereon, and when received by
Purchaser shall constitute and be liquidated and agreed
damages, whereupon this Agreement shall terminate and the
parties hereto shall be relieved of any further liability
to each other, it being expressly understood that such
remedies shall be the sole and exclusive rights and
remedies of Purchaser, and constitute fair and reasonable
remedies for the damage sustained by Purchaser by reason
of Seller's breach of this Agreement. Under no
circumstances shall Seller be liable to Purchaser for any
damages other than specified above, whether such damages
are direct or consequential. Purchaser may hold over in
the Premises between July 1, 1998 and September 30, 1998
at its current rental rate in the event that Seller is
unable to close on June 30, 1998.
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ARTICLE 7
7.1 Brokerage Commission. The parties agree that they have dealt with
each other and not through any real estate broker, person, firm or
entity who would, by reason of such dealings, be able to claim a
real estate brokerage or finder's fee as the procuring cause of
this transaction. Each of the parties agrees to indemnify the
other and hold the other harmless of and from any and all loss,
cost, damage, injury or expense arising out of, or in any way
related to, assertions, by any other person, firm or entity, of a
claim to real estate brokerage or finder's fee based on the
alleged contacts between the claiming party and the indemnifying
party which have resulted in allegedly providing a broker or
finder with the right to claim such commission or finder's fee.
The provisions of this Section 7.1 shall survive the closing of
title.
7.2 Assignment. Purchaser may assign this Agreement and all its rights
hereunder with prior notice to Seller. An assignee of this
Agreement, in the event of any assignment, shall personally assume
all of Purchaser's obligations hereunder in a writing delivered to
Seller, and Purchaser shall continue to remain liable hereunder as
a principal and not as a surety.
7.3 Notices. All notices or other communications required or permitted
to be given hereunder shall be given in writing and delivered
personally or by a reputable priority delivery service such as
Federal Express, addressed as to the appropriate party to the
address provided at the beginning. with copies to: John A. Schaff,
Esq., 115 Highway 202, Ringoes, NJ, 08551 and. Stanley V.
Ragalevsky, Esq., Warner & Stackpole, LLP, 75 State Street,
Boston, MA 02109.
The forgoing addresses may be changed or supplemented
by written notice given as above provided. Any such notice sent
by priority delivery service shall be deemed to have been
received by the addressee on the day after transmittal, or, if
delivered personally, on the date of such delivery.
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7.4 Attorneys' Fees. In the event any action or proceeding is
commenced to obtain a declaration of rights hereunder, to enforce
any provision hereof, or to seek rescission of this Agreement for
default contemplated herein, whether legal or equitable, the
prevailing party in such action shall be entitled to recover its
reasonable attorneys' fees in addition to all other relief to
which it may be entitled therein. All indemnities provided for
herein shall include, but without limitation, the obligation to
pay costs of defense in the form of court costs and attorneys'
fees and disbursements.
7.5 Heirs, Successors and Assigns. The terms agreements and conditions
herein contained shall be binding upon and inure to the benefit of
the heirs, successors and assigns of the parties hereto.
7.6 Recordation. This Agreement shall not be recorded.
7.7 Governing Law and Venue. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
New Jersey. Any action relating to this Agreement shall be filed
or instituted in the appropriate federal or state court in New
Jersey, which shall be the exclusive venue for resolution of any
dispute under this Agreement.
7.8 Incorporation of Prior Agreements. This Agreement contains the
entire understanding of the parties hereto with respect to the
subject matter hereof, and no prior or other written or oral
agreement or understanding pertaining to any such matter shall be
effective for any purpose.
7.9 Modification of Agreement. This Agreement may not be amended or
modified, nor may any obligation or right hereunder be waived
orally, and no such amendment, modification or waiver shall be
effective for any purpose, unless it is in writing and signed by
the party against whom enforcement thereof is sought.
7.10 Counterparts. This Agreement may be executed and delivered in
several counterparts, each of which, when so executed and
delivered, shall constitute an original, fully enforceable
counterpart for all purposes.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
WITNESS:
/s/ Richard Krause
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Richard Krause
/s/ John A. Schaff
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/s/ William P. Krause
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William P. Krause
ATTEST: Blue Fish Clothing, Inc.
/s/ Richard E. Swarttz By /s/ Jeffrey L. Haims
- ----------------------------------- ----------------------------------
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SCHEDULE A
"KNOW YOUR LAND" 1/23/92
[S. M. NORKEVICH LOGO]
S. M. NORKEVICH
SURVEYOR
P.O. BOX 118 FRENCHTOWN, NEW JERSEY 08825
(908) 996-2020
Description of lands of Frederick A. Krause, being Lot 1 in Block 20,
situated in the Borough of Frenchtown, County of Hunterdon, State of New
Jersey.
Beginning at a corner in Sixth Street, being the Southwesterly corner to
lands of Joseph J. Szwed and also being the termination of course No. 1 as
recorded in Deed Book 1018, Page 976 at the Hunterdon County Clerk's Office.
Said corner is on a reference course of S 84[degree symbol] 26' 30" W a
distance of 284.0 feet from a spike found at the intersection of Sixth Street
and Harrison Street. Thence:
1) S 84[degree symbol] 26' 30" W a distance of 154.94 feet along Sixth Street
to an iron pipe found marking the Northwesterly corner to lands of Susan Stone
and being in line of lands of the State of New Jersey-Department of
Environmental Protection. Thence:
2) N 09[degree symbol] 45' W a distance of 194.02 feet along the lands of the
State of New Jersey to an iron for a corner to a tract of land of Frederick A.
Krause. Thence:
3) N 84[degree symbol] 21' 25" E a distance of 169.13 feet along said lands of
Krause and running along the portion of an alley previously vacated by the
Borough of Frenchtown, then along the middle of the public alley for
approximately 29 feet at the termination of this course, to a spike in said
alley which mark the Northwesterly corner to the above mentioned lands of
Joseph J. Szwed. Thence:
4) S 05[degree symbol] 33' 30" E a distance of 193.75 feet along the lands of
Szwed, and running Easterly of a stone cartway which runs from Sixth Street to
Seventh Street through this parcel, to the point and place of beginning.
Containing 0.72 of a calculated acre, in accordance with a survey performed
by S.M. Norkevich - Surveyor.
Basis of bearing for the foregoing description is referenced to the New
Jersey State Plane Grid System.
Subject to the rights of the public in the use of a 6 foot wide strip of
land, approximately 29 feet in length at the Easterly end of course No. 3 being
one-half the width of a 12 foot wide alley.
Subject to the rights of the public, as the same now exist, in the use of
Sixth Street.
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Subject to the rights of others in the use of the stone cartway along
course No. 4, in accordance with an agreement between Frederick A. Krause and
the Borough of Frenchtown, to allow the passage of fire apparatus and rescue
equipment and to allow useage by adjoining property owners.
Subject to drainage easement reserved by the Borough of Frenchtown through
the vacated alley as recorded in Deed Book 681, Page 1.
Subject to a 20 foot wide sanitary sewer easement of the Borough of
Frenchtown along course No. 2, herein.
Subject to electric company and/or telephone company easements of record.
Subject to Easement Agreement of Access to Loading Dock - Sprinkler System.
Subject to terms of License Agreement for Parking
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SCHEDULE B
Plan of Survey of the lands of Frederick A. Krause dated January 23, 1992.