EXHIBIT 10.5
THIS CONTRACT OF SALE (the "Agreement") made as of November 7, 2005 by and
between DPPR Realty Corp., a New York corporation, having an office at c/o Peter
Rettaliata, Air Industries Machining, Corp., 1479 North Clinton Avenue, Bay
Shore New York 11706 (the "Seller") and Gales Industries, Incorporated, a
Delaware corporation, having an office at 333 East 66th Street, New York, New
York 10021 (the "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the owner of that certain plot, piece or parcel of land
described in Exhibit A annexed hereto (the "Land") and all improvements thereon
erected, known as 1480 North Clinton Avenue, Bay Shore, New York (collectively
the "Improvements") (the Land and the Improvements are hereinafter collectively
called the "Premises"); and
WHEREAS, Seller desires to sell and convey and Purchaser desires to
purchase the Premises;
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
Purchaser and Seller hereby agree as follows:
1. Sale of Premises.
1.1. On the terms and conditions contained in this Agreement, Seller
agrees to sell and Purchaser agrees to purchase the Premises.
1.2. The sale also includes all right, title and interest, if any,
of Seller in and to all easements, rights of way, privileges, licenses,
appurtenances and other rights and benefits, if any, running with the Premises.
1.3. All of Seller's right, title and interest, if any in fixtures,
equipment, furniture, furnishings, fitting or articles of personal property
located on and used or employed in connection with the Premises (collectively,
the "Fixtures") are included in this sale.
2. Purchase Price.
2.1. The purchase price of the Premises is One Million Five Hundred
Thousand Dollars ($1,500,000) (the "Purchase Price") payable upon delivery of
the Deed (as hereinafter defined) on the Closing Date (as hereinafter defined)
by, at Seller's option, Purchaser's unendorsed certified check, drawn on a bank
which is a member of the New York City Clearinghouse Association ("Acceptable
Check") payable to the order of Seller (or as otherwise directed by Seller)
without intervening endorsement, or by wire transfer of immediately available
federal funds to an account in a bank in accordance with wire transfer
instructions furnished by Seller prior to the Closing Date, or by (at Seller's
option) a combination of both.
3. State of Title.
3.1. The Premises are to be sold and conveyed subject to those
exceptions to title set forth on Exhibit B ("Permitted Exceptions") and the
leases on Exhibit C which shall be assigned to Purchaser. The leases on Exhibit
C are referred to herein as the Leases (the "Leases"). Any exceptions to title
set forth in Exhibit B and the Leases may be omitted from the Deed but shall
nevertheless survive the delivery of the Deed.
3.2. On the Closing, Seller shall deliver to Purchaser fee simple
title and Purchaser shall accept such title as a reputable title company
licensed to do business in the State of New York (the "Title Company") is
willing to approve and insure, subject only to the Permitted Exceptions set
forth in Exhibit B annexed hereto and to the standard printed exceptions in an
ALTA form of policy and to the Leases.
3.3. The amount of unpaid taxes, assessments, water charges and
sewer rents, prorated through the Closing Date, which Seller is obligated to pay
and discharge, with the interest and penalties thereon to a date not less than
two (2) business days after the Closing Date, may at the option of Seller be
allowed to Purchaser out of the Purchase Price. If on the Closing Date there are
any other liens or encumbrances which Seller is obligated to pay or discharge in
order to convey to Purchaser such title as is herein provided to be conveyed,
Seller may use any portion of the Purchase Price to satisfy the same, provided:
(a) Seller shall deliver to Purchaser at the closing of title,
instruments in recordable form and sufficient to satisfy such liens and
encumbrances of record together with the monies sufficient, as determined
by the Title Company, for the cost of recording or filing said
instruments; or
(b) Seller, having made arrangements with the Title Company,
shall deposit with said company sufficient monies acceptable to the Title
Company to ensure the obtaining and the recording of such satisfactions.
Purchaser, if request is made within a reasonable time prior to the
Closing Date, agrees to provide at Closing separate wire transfer and/or
Acceptable Checks as requested, aggregating the amount of the Purchase
Price set forth in Article 2.1 hereof, to facilitate the satisfaction of
any such liens or encumbrances. The existence of any such liens or
encumbrances shall not be deemed objections to title if Seller shall
comply with the foregoing requirements and the Title Company shall agree
to insure the Purchaser against collection of such liens and/or
encumbrances, without additional cost to Purchaser.
3.4. Purchaser agrees to make an application to Title Company
promptly after the execution of this Agreement for a full title search and
examination upon the Premises, and Purchaser further agrees that Purchaser will
cause to be delivered to Seller's counsel a copy of the title report and
examination of such Title Company. At least ten (10) days prior to the scheduled
Closing Date, Purchaser shall have the title re-examined by the Title Company
and shall deliver to Seller's counsel a copy of the Title Company's updated
title report with a notice of liens, encumbrances or other defects of title
subject to which Purchase is unwilling to accept title.
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3.5. (a) Seller agrees to satisfy all mortgages on the Premises. Any
judgement, lien, encumbrance or objection to which Seller's title to the
Premises is subject on the Closing Date or any other valid ground which
Purchaser may then have for refusing to close this transaction other than (i)
mortgages (which Seller is obligated to satisfy), (ii) those Permitted
Exceptions subject to which Purchaser is obligated to accept title hereunder and
(iii) the Leases, are referred to herein as "Objectionable Liens." If on the
Closing Date Seller's title to the Premises is subject to any Objectionable
Liens and Purchaser shall be unwilling to waive the same and close Seller shall
have the right, at Seller's sole election to either: (a) take such action as
Seller shall deem advisable to remove, remedy or comply with such Objectionable
Liens and Seller is obligated to spend up to two hundred fifty thousand
($250,000) dollars (the "Maximum Expense") to remove, remedy or comply with such
Objectionable Liens except Seller shall not be obligated to commence any action
or proceeding to cure any such defect or to expend more than the Maximum Expense
to remove any Objectionable Liens, or (b) to cancel this Agreement, provided
that if Seller notifies Purchaser of its election to cancel this Agreement,
Purchaser shall have the right to waive such Objectionable Liens and to close
this transaction, in which event Purchaser shall be given a credit equal to the
reasonably estimated cost of removing, remedying or complying with such
Objectionable Liens, not to exceed $250,000, less such amount as Seller may have
spent in attempting to remove, remedy or comply with such Objectionable Liens.
In the event of Seller's election to take action to remove, remedy or comply
with such Objectionable Liens, Seller shall be entitled to one or more
adjournments of the Closing Date for one or more periods to a date not later
than the closing date of the transactions contemplated by the Stock Purchase
Agreement, dated as of July 25, 2005, by and among Gales Industries,
Incorporated, Air Industries Machining, Corp., Luis Peragallo, Jorge Peragallo,
Peter Rettaliata and Dario Peragallo (the "Stock Purchase Agreement") as amended
or may be amended. If for any reason whatsoever Seller shall not have succeeded
in removing, remedying or complying with such Objectionable Liens at the
expiration of such adjournments, or at such time prior thereto as Seller
determines that it will not be able to satisfy same, Seller shall give Purchaser
notice thereof and Purchaser shall have five (5) business days from the delivery
of such notice in accordance with the terms hereof to elect by notice to Seller
to purchase the Premises subject to such Objectionable Liens with a credit as
provided above. If Purchaser shall still be unwilling to waive the same and to
close this transaction without abatement of the Purchase Price or allowance of
any kind other than as provided above, this Agreement shall be deemed to be
canceled. In the event of the cancellation of this Agreement under any of the
circumstances referred to and as provided in this Article 3.5, this Agreement
shall cease, terminate and come to an end, and (except as otherwise expressly
provided in this Agreement), neither party hereto shall have any rights,
obligations or liabilities against or to the other, except that Purchaser shall
be entitled to reimbursement for the net amount charged Purchaser by the Title
Company for a title examination without issuance of a policy and the net cost to
Purchaser of a survey for the Premises (said reimbursable items are herein
referred to as "Purchaser's Title and Survey Costs"). In no event shall Seller
be required to, and nothing herein contained shall obligate Seller to, expend
any money in excess of two hundred fifty thousand ($250,000) dollars in the
aggregate or to bring any action or proceeding or otherwise incur any costs or
expenses to cure any purported defect or objection or to fulfill any condition
or to render or deliver title to the Premises to Purchaser as herein provided,
except as set forth in this Section.
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(b) Other than as set forth in Schedule 4.27 to the Stock Purchase
Agreement, all notes or notices of violation of law or governmental advances,
orders or requirements which were noted or issued prior to the date of this
Agreement by any governmental department, agency or bureau having jurisdiction
as to conditions affecting the Premises and all liens which have attached to the
Premises prior to the date hereof shall be the obligations of Seller to remove.
Notwithstanding the foregoing, if the reasonable cost of the removal of the
Objectionable Liens and violations, in the aggregate, exceeds two hundred fifty
thousand ($250,000) dollars less such amount as Seller may expend or credit to
Purchaser in respect of Objectionable Liens as provided in Section 3.5(a) (such
amount being referred to as the "Remainder"), then Seller shall have the right
to cancel this Agreement, provided that if Seller notifies Purchaser of its
election to cancel this Agreement, Purchaser shall have the right to waive such
violations and liens, and to close this transaction, in which event Purchaser
shall be given a credit equal to the Remainder.
In no event shall the aggregate amount which Seller is obligated to expend
or credit to Purchaser in respect of Objectionable Liens pursuant to Section
3.5(a) and violations pursuant to this Section 3.5(b) exceed two hundred fifty
thousand ($250,000) dollars.
3.6. Corporate franchise or business taxes owing to municipal,
county or state governments by any corporation in the chain of title of the
Premises, or any transfer, inheritance, estate, dissolution, license or similar
taxes, charges or liens not excepted in this Agreement, shall not constitute an
objection to title, and Purchaser shall take title subject to the same provided
that the Title Company will agree to affirmatively insure at no additional cost
to Purchaser that said taxes or other items will not be collected out of the
Premises.
4. Adjustments.
4.1. Except as otherwise expressly provided herein, all
apportionments shall be made in accordance with the "Customs in Respect to Title
Closings" adopted by the Real Estate Board of New York, Inc. The following are
to be apportioned as of midnight of the day immediately prior to the Closing
Date:
(a) real estate taxes, on the basis of the fiscal tax year for
which assessed;
(b) water and sewer rents and/or charges on the basis of the
fiscal year for which assessed;
(c) water meter and sewer rent meter charges in accordance
with the amounts fixed with respect thereto in a meter reading made as of
a date not more than thirty (30) days prior to the Closing Date, except
that if such reading cannot with reasonable efforts be obtained by such
date, then the unfixed water meter and sewer charges, if any, for any
intervening period shall be apportioned on the basis of the last reading
therefor;
(d) rents and additional rents under the Leases and interest,
if any, payable in respect of the deposits under the Leases which are
delivered to Purchaser;
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(e) utilities;
(f) charges payable under transferable Service Contracts, if
any; and
(g) fuel, if any, to the extent not payable by tenants under
the Leases.
4.2. If the Closing shall occur before a tax rate is fixed, the
apportionment of taxes shall be upon the basis of the tax rate for the next
preceding year applied to the latest assessed valuation and the parties shall
adjust post-closing upon receipt of the tax bill.
4.3. If, on the Closing Date, the Premises or any part thereof shall
be or shall have been affected by an assessment or assessments which are or may
become payable in annual installments, of which the first installment is then a
charge or lien, or has been paid, then for the purpose of this Agreement all the
unpaid installments of any such assessment, including those which are to become
due and payable after the Closing Date, shall be payable by Seller. If the first
installment shall be due following the Closing then Purchaser shall assume the
entire obligation without abatement.
4.4. In the event the apportionments as provided in this Article,
when computed result in a payment due Seller, then such payment shall be made at
the Closing by Acceptable Check. If such apportionment results in a credit to
Purchaser, the cash portion of the Purchase Price due at Closing shall be
reduced by the amount of such credit.
4.5. As to any rent arrears for periods preceding the Closing, and
any amounts paid by the Tenants under the Leases in respect of water and sewer
rents and charges, water meter and sewer rent meter charges, utilities and real
estate and vault taxes, accruing prior to the Closing, provided the applicable
Tenant is otherwise current in respect of all amounts due under its Lease,
Purchaser shall receive the same as a trust fund for remission to Seller in
payment of the Tenants' arrears, provided Purchaser shall have no obligation to
seek to collect the same on behalf of Seller. The provisions of this Article
shall survive the Closing.
5. The Deed - Deliveries at Closing
5.1. The deed to be delivered by Seller shall be the usual statutory
bargain and sale deed with covenants against grantor's acts (herein called the
"Deed") in proper statutory short form for recording and shall be duly executed
and acknowledged so as to convey to Purchaser the fee simple title of the
Premises free of all encumbrances except as stated in this Agreement, which Deed
shall contain the covenant required by subdivision 5, Section 13 of the New York
State Lien Law.
5.2. At the Closing, Seller shall deliver to Purchaser the following
documentation:
(a) a certification of non-foreign status, in form required by
the Internal Revenue Code Section 1445 and regulations issued thereunder,
signed under penalty of perjury. Seller understands that such
certifications will be retained by Purchaser and will be made available to
the Internal Revenue Service on request;
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(b) Seller shall deliver the original copy of the Leases if
available or if the original copy of any Lease is not available, then
Seller shall deliver a true copy of such Lease and certify that it is a
true copy of such Lease. Together with each of the Leases Seller shall
deliver an assignment thereof, which assignment shall contain (i) an
indemnification of Purchaser by Seller for all acts of Seller as landlord
prior to the Closing and (ii) an indemnification of Seller by Purchaser
for all acts of Purchaser as landlord from and after the Closing;
(c) possession of the Premises, together with the keys,
subject to the Leases, as required by this Agreement;
(d) a New York State transfer tax and credit line mortgage
form TP 584 duly executed.
(e) discharge of all mortgages, if any, on the Premises.
(f) a duly executed Bill of Sale in form reasonably
satisfactory to Purchaser;
(g) originals or, if unavailable, copies, of plans and
specifications, technical manuals and similar materials for the Premises
to the extent same are in Seller's possession;
(h) originals or, if unavailable, copies, of all books and
records relating to the Premises and maintained by Seller during Seller's
ownership thereof; and
(i) such additional documentation as may be reasonably
required to consummate the transaction contemplated by this contract.
5.3. At the Closing, Seller shall also deliver to Purchaser the
following:
(a) If required pursuant to New York State Business
Corporation Law, Section 909, Seller shall deliver to Purchaser: (i) a
resolution of its board of directors authorizing the delivery of the Deed
and (ii) a certificate executed by an officer of such corporation
certifying as to the adoption of such resolution and setting forth facts
demonstrating that the delivery of the Deed is in conformity with the
requirements of said Section 909. The Deed shall also contain a recital
sufficient to establish compliance with such law.
(b) Such affidavits and/or other evidence of
non-applicability, if appropriate, as the Title Company shall reasonably
require in order to omit from its title insurance policy all exceptions
for judgments, bankruptcies or other returns against Seller and person or
entities whose names are the same as or are similar to Seller's name.
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5.4. At the Closing, Purchaser shall:
(a) deliver to Seller the Purchase Price, as adjusted for
apportionments;
(b) deliver to Seller an assumption of the Leases assigned by
Seller to Purchaser together with an agreement indemnifying and agreeing
to defend Seller against any claims made by Tenants with respect to the
Leases and the Tenant's security deposits to the extent paid, credited or
assigned to Purchaser;
(c) cause the Deed to be recorded, duly complete all required
real property transfer tax returns and cause all such returns and checks
in payment of such taxes to be delivered to the appropriate officers
promptly after Closing; and
(d) deliver any other documents required by this Agreement to
be delivered by Purchaser.
6. Time and Place of Closing.
6.1. The Closing of the purchase and sale of the Premises (the
"Closing"), at which the Deed shall be delivered upon the receipt of the
Purchase Price, and all other payments and any documents required to be
delivered hereunder shall be exchanged, shall take place simultaneously with the
closing of the transactions contemplated by the Stock Purchase Agreement at the
office of Purchaser's counsel, Eaton & Van Winkle LLP, 3 Park Avenue, New York,
New York (the "Closing Date").
7. Conditions to Closing.
7.1. The Seller's obligations to sell, assign and convey, and the
Purchaser's obligation to purchase and assume, the Premises as herein provided
shall be conditioned upon the fulfillment on or prior to the Closing Date of the
following conditions (any of which may be waived in writing, in whole or in
part, by the Purchaser or Seller, as the case may be):
(i) The representations and warranties of the Seller set forth in this
Agreement shall be true, correct and complete in all material respects as of the
Closing Date as though such representations and warranties were made anew as of
such date (or if an earlier date is specified in such representation and
warranty, as of such earlier date), and the Seller shall have duly performed in
all material respects all agreements and covenants herein required to be
performed by it on or before the Closing Date;
(ii) The representations and warranties of the Purchaser set forth in this
Agreement shall be true, correct and complete in all material respects as of the
Closing Date as though such representations and warranties were made anew as of
such date (or if an earlier date is specified in such representation and
warranty, as of such earlier date), and the Purchaser shall have duly performed
in all material respects all agreements and covenants herein required to be
performed by it on or before the Closing Date; and
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(iii) The parties shall have consummated the transactions contemplated by
the Stock Purchase Agreement.
8. Brokerage.
8.1. Each party represents and warrants that there is no broker with
whom it has had any dealings or conversations in connection with the Premises or
this Agreement. Each party agrees to indemnify and hold the other harmless from
all damages, liabilities, expenses and claims, including reasonable attorneys'
fees and disbursements, arising from any breach of the foregoing representation
by the indemnifying party. The provision of this Article shall survive the
closing and delivery of the Deed or any cancellation or termination of this
Agreement.
9. Notice.
9.1. Any notice, request, demand or other communication permitted or
required to be given under this Agreement shall be in writing, shall be sent by
one of the following means to the addressee at the address set forth below (or
at such other address as shall be designated hereunder by notice to the other
parties and persons receiving copies, effective upon actual receipt) and shall
be deemed conclusively to have been given: (i) on the first business day
following the business day timely deposited for overnight delivery with Federal
Express (or other equivalent national overnight courier) or United States
Express Mail, with the cost of delivery prepaid or for the account of the
sender; or (ii) when otherwise actually received by the addressee on a business
day (or on the next business day if received after 5:00 P.M. New York City time
or on any non-business day). If a certificate, signed notice, or other signed
item is expressly required by another provision of this Agreement, a manually
signed original must be delivered by the party giving it; any other notice,
request, demand or other communication also may be sent by telecopy, with the
cost of transmission prepaid or for the account of the sender and shall (except
as otherwise specified in this Agreement) be deemed conclusively to have been
given on the first business day following the day duly sent with receipt
confirmed. Copies shall be sent to the persons, if any, set forth below. The
addresses of the parties and those persons receiving copies are as follows:
(a) If to the Seller, at the following address:
DPPR Realty Corp.
c/o Mr. Peter Rettaliata
Air Industries Machining, Corp.,
1479 North Clinton Avenue,
Bay Shore, NewYork 11706
Attention: Mr. Peter Rettaliata, President
Tel.: (212)752-4884
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With a copy to:
Arnold & Porter, LLP
399 Park Avenue
New York, New York 10022
Attention: Robert P. Wessely, Esq.
Tel: (212) 715-1125
Fax: (212) 715-1399
(b) If to Purchaser, at the following address:
Michael Gales
Gales Industries, Incorporated
333 East 66th Street
New York, New York 10021
Tel: (212) 249-2614
With a copy to:
Eaton & Van Winkle LLP
3 Park Avenue
New York, New York 10016
Attention: Vincent J. McGill, Esq.
Tel.: (212) 561-3604
Fax: (212) 779-9928
The attorneys for Seller and Purchaser shall have the right to deliver notices
under this Agreement and to adjourn or reschedule the Closing Date in writing
only.
10. Damages.
10.1. In the event of a default by Purchaser in performing any
material obligation on Purchaser's part to be performed hereunder, including
without limitation, to pay the Purchase Price as provided in this Agreement or
in any other provision hereof which would entitle Seller to cancel this
Agreement, this Agreement shall be deemed null and void and neither party hereto
shall have any obligations to or rights against the other hereunder, except that
Seller shall be entitled to reasonable legal fees and expenses incurred in
connection with the negotiation and execution of this Agreement and the
enforcement of its rights hereunder, and any agreements or provisions hereof
which are specifically provided herein to survive shall survive any cancellation
or termination of this Agreement. In the event Seller materially defaults under
this Contract, Purchaser may seek specific performance as its sole remedy.
11. Access.
11.1. Purchaser shall have reasonable access to the Premises upon
two (2) days' prior written or oral notice to Seller for the purpose of
conducting surveys, architectural, engineering, geotechnical and environmental
inspections and tests (including intrusive inspection and sampling which do not
materially interfere with the operation of the business conducted at the
Premises) and any other inspections, studies, or tests reasonably required by
Purchaser. Purchaser shall keep the Premises free and clear of any liens and
will indemnify, defend and hold Seller harmless from all claims and liabilities
asserted against Seller as a result of any such entry by Purchaser, its agents,
employees or representatives. If any inspection or test disturbs the Premises,
Purchaser will restore the Premises to substantially the same condition as
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existed prior to any such inspection or test. Purchaser and its agents,
employees and representatives shall have a continuing right of reasonable access
to the Premises during the pendency of this Agreement for the purpose of
examining and making copies of all books and records and other materials
relating to the Premises in Seller's, or its property manger's, possession and
Purchaser shall have the right to conduct a "walk-through" of the Premises prior
to the Closing upon appropriate notice to tenant as permitted under the lease.
In the course of its investigations, Purchaser may make inquiries to third
parties, including, without limitation, the tenant or tenants, the property
manager, if any, and municipal, local and other government officials and
representatives, and Seller consents to such inquiries. The obligations of the
Purchaser under this paragraph shall survive the termination of the Agreement.
12. Representations. Warranties and Covenants.
12.1. Except as set forth in Section 12.2 hereof (a) Seller has not
made and does not make any representations or warranties as to the physical
condition, rents, leases, income, expenses, financing and/or tax status,
operations, zoning or legality of occupancy of the Premises, status of title or
any other matter or thing affecting or relating to the Premises, except as
herein specifically set forth, and Purchaser hereby expressly acknowledges and
represents that no such representations or warranties have been made and (b)
Purchaser further agrees to take the Premises "as is" in its present physical
condition and subject to reasonable use, wear, tear and normal depreciation
between the date hereof and the Closing Date. Seller shall not be liable or
bound in any way for any verbal or written statements, representations, or
information pertaining to the Premises furnished by any real estate broker or
agent thereof or any agent or employee of Seller, or any other person. It is
understood and agreed that all prior and contemporaneous representations,
statements, understandings and agreements, oral or written, between the parties
are merged in this Agreement, which alone fully and completely expresses their
Agreement, and that the same is entered into after full investigation, neither
party relying on any statement or representation or warranty not embodied in
this Agreement made by the other.
12.2. Seller represents and warrants to Purchaser that, currently or
at the Closing Date:
(a) Seller has been duly organized, is validly existing, and
is in good standing as a New York corporation. Seller has the full right
and authority and has obtained any and all consents required to enter into
this Agreement and to consummate or cause to be consummated the
transactions contemplated hereby. This Agreement has been, and all of the
documents to be delivered by Seller at the Closing will be, duly
authorized and properly executed and constitutes, or will constitute, as
appropriate, the valid and binding obligation of Seller, enforceable in
accordance with their terms;
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(b) To the best of Seller's knowledge, there is no agreement
to which Seller is a party which would prohibit the execution of this
Agreement and the performance of Seller's obligations. There is no action
or proceeding pending or, to Seller's knowledge, threatened against Seller
or relating to the Premises, including, without limitation, any
condemnation proceedings, which challenges or impairs Seller's ability to
execute or perform its obligations under this Agreement or which may
adversely affect Purchaser upon its purchase of the Premises;
(c) All of Seller's contractors, subcontractors, suppliers,
architects, engineers, brokers and others who have performed services or
labor or have supplied materials in connection with Seller's development,
ownership, or management of the Premises have been paid in full and all
liens arising therefrom (or claims which with the passage of time or the
giving of notice, or both, could mature into liens) have been satisfied
and released;
(d) The Leases delivered to Purchaser are true, correct and
complete copies of the Leases and all amendments and guarantees. There are
no other Leases or other parties in occupancy at the Premises except for
the tenant under the Leases and anyone taking by, through or under tenant.
Seller has not received written notice and has no knowledge of any
subletting or assignment by tenant. To Seller's knowledge, except as
herein disclosed, no tenants have asserted nor are there any defenses or
offsets to rent accruing after the Closing Date and no default or breach
exists on the part of any tenant, except for (i) the payment or rent
arrears in the aggregate amount of $20,700 for the months of September
2005 through November 2005 and (ii) the payment of real estate taxes in
the aggregate amount of $58,687.95 plus interest and penalties, if any;
(e) Simultaneously with the closing of the transaction
contemplated by the Stock Purchase Agreement, the parties agree to arrange
that the rent arrears and real estate taxes referenced in Section 12.2(d)
above will be paid in full;
(f) Seller has received no written notice: (i) that the
Premises or the use thereof violates any governmental law or regulation or
any covenants or restrictions encumbering the Premises other than those
set forth in Schedule B hereto; (ii) of any material physical defect in
the Improvements; or (iii) from any insurance company or underwriter of
any defect that would materially adversely affect the insurability of the
Premises or cause an increase in insurance premiums;
(g) Except as set forth on Schedule 4.27 of the Stock Purchase
Agreement, (i) the Seller is in compliance with all applicable
Environmental Laws (capitalized terms used but not defined in this Section
(g) have the meanings ascribed thereto in the Stock Purchase Agreement);
(ii) the Seller has not transported from, stored or disposed of any
Hazardous Materials from or upon the Premises in contravention of
applicable Environmental Laws; (iii) there has not occurred, nor is there
presently occurring, a Release of any Hazardous Materials on, into or
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beneath the surface of the Premises except in compliance with applicable
Environmental Laws; (iv) the Seller has not transported or disposed of, or
allowed or arranged for any third parties to transport or dispose of, any
Hazardous Material to or at a site which, pursuant to CERCLA, has been
placed on the National Priorities List; (v) the Seller has not received
written notice that it is a potentially responsible party for a federal or
state environmental cleanup site or for corrective action under RCRA; and
(vi) the Seller has not undertaken (or been requested to undertake) any
response or remedial actions at the request of any federal, state or local
governmental entity;
(h) Seller has no knowledge of any liens or encumbrances on
the Premises other than the Leases and the matters set forth in Schedule B
hereto;
(i) The certificate of occupancy included in the title report
is the only certificate of occupancy for the Premises of which Seller has
knowledge. Seller has not taken any actions to amend, modify or cancel
such certificate of occupancy, nor has Seller taken any actions which
would require Seller to obtain a certificate of occupancy for the
Premises;
(j) Other than as set forth in Schedule 4.21 to the Stock
Purchase Agreement, Seller is not a party, as of the date hereof, to any
litigation or other action related to the Premises;
(k) There are no commissions owing to brokers in connection
with any of the Leases;
(l) There are no security deposits payable under the Leases;
and
(m) Seller is not a party to any service contract.
12.3. Seller shall not amend, modify or restructure any of the
Leases.
12.4. The representations and warranties of Seller contained herein
shall be deemed to be made at and as of the date hereof and as of the Closing
Date. If any of the material warranties and representations of Seller contained
herein shall on the Closing Date be untrue (other than those rendered inaccurate
by transactions, events or facts contemplated hereby), and if Purchaser shall be
unwilling to waive same and to close this transaction without abatement of the
Purchase Price or allowance of any kind, then Purchaser's sole remedy shall be
to terminate this Agreement within thirty (30) days after discovering that same
was so untrue. In the event of such termination, this Agreement shall cease,
terminate and come to an end, and neither party hereto shall have any rights,
obligations or liabilities against or to the other, except that Purchaser shall
be entitled to the return of the Down Payment and except as set forth in Article
11, and any other provision of this Agreement which explicitly survives the
termination or cancellation hereof.
12.5. In all cases in this Agreement where Seller represents that it
does not have "knowledge" of any thing, occurrence or events, the "knowledge" as
to which such representation is made shall be actual knowledge and not
constructive knowledge.
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12.6. Purchaser's Representations and Warranties. As a material
inducement to Seller to execute this Agreement and consummate this transaction,
Purchaser represents and warrants to Seller that:
(a) Purchaser has been duly organized and is validly existing
as a corporation in good standing in the State of Delaware, and on the
Closing Date will be qualified to do business in the state in which the
Premises are located. Purchaser has the full right and authority and has
obtained any and all consents required to enter into this Agreement and to
consummate or cause to be consummated the transactions contemplated
hereby. This Agreement has been, and all of the documents to be delivered
by Purchaser at the Closing will be, authorized and properly executed and
constitutes, or will constitute, as appropriate, the valid and binding
obligation of Purchaser, enforceable in accordance with their terms; and
(b) Purchaser hereby represents and warrants to Seller that
this Agreement has been duly authorized and executed on behalf of
Purchaser, and constitutes the valid and binding agreement of Purchaser,
enforceable in accordance with its terms; and that neither the execution
and delivery of this Agreement nor the consummation of the sale provided
for herein will constitute a violation or breach by Purchaser of any
provision of any agreement or other instrument to which Purchaser is a
party or to which Purchaser may be subject although not a party, or will
result in or constitute a violation or breach of any judgment, order,
writ, injunction or decree issued against Purchaser of which Purchaser has
knowledge.
13. Expenses.
13.1. (a) At the Closing, Seller shall deliver a certified or
official bank check to the order of the recording officer of the county in which
the Deed is to be recorded for the amount of the documentary stamps to be
affixed thereto in accordance with Article 31 of the Tax Law of the State of New
York. At Seller's option, Purchaser shall pay all of the same and shall receive
a credit for such amount on account of the cash portion of the Purchaser Price
due at Closing.
(b) At the Closing, Seller shall deliver a certified or
official bank check to the order of the appropriate officers in payment of the
applicable real property transfer taxes together with the NY State TP 584
required by the applicable regulations duly signed and sworn to by Seller.
Purchaser agrees to duly execute said return, have duly sworn, and to cause said
return and check to be delivered to the appropriate official. At Seller's
option, Purchaser shall pay all of the same and receive a credit for such amount
on account of the cash portion of the Purchase Price due at Closing.
(c) Seller and Purchaser each hereby agree to defend and
indemnify the other from all costs and liabilities (including reasonable
attorneys' fees and disbursements) for failure to make the foregoing payments
required pursuant to this Article at or following Closing. Such obligation and
indemnity shall survive the Closing and the delivery of the Deed.
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14. Fire or Other Casualty; Condemnation.
14.1. Seller agrees to maintain the property insurance policy or
policies in respect of the Premises, including fire and extended coverage and to
give Purchaser reasonably prompt notice of any fire or other casualty occurring
at the Premises of which Seller obtains knowledge, between the date hereof and
the date of the Closing, or of any actual or threatened in writing condemnation
of all or any party of the Premises of which Seller obtains knowledge.
14.2. If prior to the Closing there shall occur damage to the
Premises caused by fire or other casualty which would (i) cost two hundred fifty
thousand ($250,000) dollars or more to repair, as reasonably determined by an
engineer selected by Seller and reasonably satisfactory to Purchaser or (ii)
materially interfere with the operation of the Premises, then Purchaser may
elect to terminate this Agreement by written notice given to Seller within ten
(10) days after Seller has given Purchaser the notice referred to in Section
12.1 hereof, or at the Closing, whichever is earlier. If prior to the Closing
there shall be a taking by condemnation of any portion of the Premises then
Purchaser may elect to terminate this Agreement by written notice given to
Seller within ten (10) days after Seller has given Purchaser the notice referred
to in Section 12.1 hereof, or at the Closing, whichever is earlier. If this
Agreement is terminated pursuant to either of the preceding sentences, Seller
shall promptly pay to Purchaser Purchaser's title and survey costs, if any, and
this Agreement shall thereupon be deemed terminated and of no further force or
effect, and neither party hereto shall thereupon have any further obligation to
the other, except that the provisions of Article 7 hereof shall survive such
termination. If Purchaser does not elect to terminate this Agreement, then the
Closing shall take place as herein provided, without abatement of the Purchase
Price: provided, however, Purchaser shall be entitled to receive any insurance
proceeds otherwise due Seller as a result of the damage to the Premises (whether
received before or after Closing) or the proceeds of any condemnation award to
the extent payable before or after the Closing, less any amounts (i) actually
and reasonably expended or incurred by the Seller in adjusting any insurance
claim or negotiating and/or obtaining any condemnation award (including, without
limitation, reasonable attorneys' fees and expenses) and/or (ii) theretofore
actually and reasonably incurred or expended by or for the account of the Seller
for the cost of any restoration or emergency repairs made by or on behalf of
Seller, and Seller shall pay to Purchaser, or allow as a credit against the
Purchase Price, an amount equal to the net proceeds of such insurance proceeds
or condemnation award.
14.3. Termination. If this Agreement is terminated pursuant to this
Article, the parties hereto shall be released from all further obligations and
liabilities hereunder, except with respect to the covenants and indemnities set
forth in Article 11 hereof and as otherwise expressly provided herein.
15. Items to be Delivered at Closing.
15.1. Seller shall deliver to Purchaser on the Closing Date
instruments, documents and agreements required by this Agreement and customarily
required by the Title Company to be delivered by Seller.
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15.2. Purchaser shall deliver to Seller on the Closing Date all
payments, checks, instruments, documents and agreements required by this
Agreement to be delivered by Purchaser or reasonably required by Seller or
customarily required by the Title Company to effect or confirm the transactions
contemplated herein.
16. Pending Certiorari Proceedings.
16.1. Seller has not instituted any proceedings to reduce taxes or
for the reduction of the assessed valuation of the Premises.
17. Survival.
17.1. The acceptance of the Deed by Purchaser at the Closing shall
be deemed full performance and discharge of each and every agreement and
obligation on the part of Seller hereunder to be performed. Any and all
representations and warranties of Seller and Purchaser contained in this
Agreement shall not survive the Closing Date and the delivery of the Deed, and
shall be merged in the delivery of the Deed, except the representations 12.2(a),
(b) and (c) shall survive for a period of six (6) months and the representations
in Sections 12.2(d) and (g) shall survive for one year, following the Closing.
18. Assignment.
18.1. This Agreement shall apply to and bind the heirs, executors,
administrators, successors and assigns of the respective parties. Purchaser may
not assign this Agreement or any payments made hereunder without the prior
written consent of Seller. This Agreement shall not be recorded by Purchaser and
any recordation or attempted recordation by Purchaser hereof shall be void and
shall constitute a material default of Purchaser hereunder and Seller shall be
entitled to cancel this Agreement in the event thereof. A transfer of any
interest in Purchaser shall constitute an assignment of this Agreement.
Purchaser may assign this contract to an "Affiliate" (defined below) provided
such assignee assumes all of Purchaser's obligations hereunder in writing, in
recordable form, and further provided that an original fully-executed assignment
and assumption agreement is furnished to Seller prior to Closing.
Notwithstanding the foregoing, Purchaser may, at the Closing, assign this
Agreement to an entity which simultaneously consummates the transaction
contemplated hereby; provided, however, that such assignment shall not relieve
Purchaser of any of its obligations under this Agreement.
19. Execution by Seller.
19.1. It is expressly understood and agreed that this Agreement
shall not constitute an offer or create any rights in favor of Purchaser and
shall in no way oblige or be binding upon Seller, and this Agreement shall have
no force or effect, unless and until the same is duly executed by Seller and a
fully-executed counterpart of this Agreement is delivered by Seller to
Purchaser.
20. General Provisions.
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20.1. Gender and Name. Whenever the context so requires, the
singular number shall include the plural and the plural the singular, and the
use of any gender shall include all genders.
20.2. Entire Agreement. This Agreement contains the complete and
entire agreement between the parties respecting the transaction contemplated
herein and supersedes all prior negotiations, agreements, representations and
understandings, if any, between the parties respecting such matters.
20.3. Modifications. This Agreement may not be modified, discharged
or changed in any respect whatsoever, except by a further agreement in writing
duly executed by Purchaser and Seller. However, any consent, waiver, approval or
authorization shall be effective if signed by the party granting or making such
consent, waiver, approval or authorization
20.4. Governing Law. This Agreement shall be construed and enforced
in accordance with the internal laws of the State of New York.
20.5. No Publicity. Neither party shall make any public announcement
in any form whatsoever of the transaction contemplated by this Agreement without
prior written approval from the other.
20.6. Captions. The captions of this Agreement are for convenience
and reference only and in no way define, describe, extend or limit the scope,
meaning or intent of this Agreement.
20.7. Severability. The invalidation or unenforceability in any
particular circumstance of any of the provisions of this Agreement shall in no
way affect any of the other provisions hereof, which shall remain in full force
and effect.
20.8. No Joint Venture. This Agreement shall not be construed as in
any way establishing a partnership, joint venture, express or implied agency or
employer-employee relationship between Purchaser and Seller.
20.9. No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto, the respective successors and permitted assigns,
and no other person or entity shall be entitled to rely upon or receive any
benefit from this Agreement or any term hereof.
20.10. No Personal Liability. No officer or director of Seller, no
disclosed or undisclosed principal of Seller, and no person or entity in any way
affiliated with Seller shall have any personal liability with respect to this
Agreement, any instrument delivered by Seller at Closing, or the transaction
contemplated hereby, nor shall the property of any such person or entity be
subject to attachment, levy, execution or other judicial process.
The remainder of this page is intentionally left blank.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereof as of the date first above written.
SELLER:
DPPR REALTY CORP.
By: /s/ Peter Rettaliata
--------------------------
Name: Peter Rettaliata
Title: President
PURCHASER:
GALES INDUSTRIES, INCORPORATED
By: /s/ Michael A. Gales
--------------------------
Name: Michael A. Gales
Title: Executive Chairman
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