AGREEMENT OF SALE

 

 

                                AGREEMENT OF SALE

 

      AGREEMENT   made   this   14th day of   November,   2003 by and   between   ARROW

ELECTRONICS, INC., a New York corporation,   having an office at 50 Marcus Drive,

Melville,   New York 11747 ("Seller") and Interpharm   Holdings,   Inc., a Delaware

corporation,   having   an   office   at 69 Mall   Drive,   Commack,   New   York   11725

("Purchaser").

 

                                   WITNESSETH:

 

      WHEREAS,   Seller is the fee owner of that certain   parcel of land ("Land")

located   at   and   known   as 50   Horseblock   Road,   Yaphank,   NY and   being   more

particularly   described in Exhibit A annexed hereto and made a part hereof,   and

all easements,   rights of way,   privileges,   appurtenances   and other rights and

benefits,   if any,   belonging or in any way related to such land   (collectively,

"Easements"),   together with all buildings, structures and improvements thereon,

if any (collectively, "Improvements"; the Land, Easements and Improvements being

hereinafter   collectively   referred   to as the   "Premises");   and   all   fixtures

attached to the Land or the Improvements   listed on Exhibit B (collectively   the

"Fixtures");

 

      WHEREAS,   Seller   desires   to sell and   convey,   and   Purchaser   agrees to

purchase,   all of Seller's right,   title and interest in and to the Premises and

the Fixtures;

 

      NOW,   THEREFORE,   in   consideration of the mutual covenants and agreements

hereinafter   set   forth,   the   receipt   and   sufficiency   of   which   are   hereby

acknowledged, it is hereby agreed as follows:

 

      1. Sale of Premises and Fixtures.

 

            (a) Seller   hereby agrees to sell and convey,   and Purchaser   hereby

agrees to purchase,   all of the Seller's right, title and interest in and to the

Premises and the Fixtures.

 

            (b) With   respect to the   Premises,   this sale   includes   all right,

title and interest, if any, of Seller in and to any land lying in the bed of any

street, road or avenue, opened or proposed, in front of or adjoining the Land to

the center line   thereof and all right,   title and   interest of Seller in and to

any award made or to be made in lieu   thereof and in and to any unpaid award for

damage to the Premises by reason of change of grade of any street.   With respect

to the Fixtures,   the sale includes all of Seller's   assignable   contract rights

with respect thereto,   including   warranties,   warranty claims,   maintenance and

service   contracts   listed and   described in Exhibit C.

 

      2.   Purchase   Price.   The   purchase   price is Nine Million Two Hundred and

Fifty Thousand Dollars ($9,250,000) ("Purchase Price"), payable as follows:

 

            (a) Nine Hundred Twenty Five Thousand Dollars ($925,000) ("Deposit")

upon the signing of this Agreement,   by Purchaser's   delivering to Richard Cahn,

as "Escrow Agent", a check, subject to collection (non-payment of which check in

due course   will give Seller the option of   canceling   this   Agreement)   in that

amount,   the   receipt of which is hereby   acknowledged,   to be held in escrow in

accordance with the terms of the Escrow Agreement annexed as Exhibit D; and

 

 

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            (b)   Eight   Million   Three   Hundred   Twenty   Five   Thousand   Dollars

($8,325,000),   on the Closing Date (as   hereinafter   defined),   by official bank

check(s)   or good   certified   check(s)   of   Purchaser   or   Purchaser's   mortgage

lender(s),   drawn on a bank   which is a   member   of the New York   Clearinghouse,

payable   directly   to the   order of Seller or by wire   transfer   of   immediately

available   federal   funds to an account or   accounts   of Seller as   directed   by

Seller, payable directly to the order of Seller.

 

            (c) Seller shall satisfy,   or at its option, use or direct Purchaser

to apply the necessary   portion of the balance of the Purchase   Price to satisfy

any mortgages,   mechanics' liens, liens for judgments and taxes, and other liens

or encumbrances   other than Permitted   Encumbrances that were placed against the

Premises or the   Fixtures as a direct   result of actions or   omissions of Seller

and that can be satisfied and discharged by payment of a fixed" and   determinate

sum of money.

 

      3. Title to the Premises.

 

            (a) Seller shall sell and deliver good and   marketable   title to the

Premises   and the   Fixtures,   subject to the   following   (which are   hereinafter

collectively referred to as the "Permitted Encumbrances"):

 

                  (i)    All    liens,    encumbrances,     covenants,     easements,

restrictions,   claims,   reversions or other agreements or matters which are more

particularly set forth on Exhibits A-2 annexed hereto and made a part hereof;

 

                  (ii) Rights now of record of any utility company to construct,

maintain and operate existing lines,   wires, poles,   cables,   distribution boxes

and appurtenances thereto, on, under or across the Premises,   provided that they

do not interfere with the use or occupancy of the Premises as currently   allowed

of right under applicable zoning;

 

                  (iii) Rights   contained in instruments   of record,   if any, so

far as the same may be of   present   force or   effect,   in favor of any public or

quasi-public   utility,   provided   that   they   do   not   (i)   cause   title   to   be

unmarketable or (ii) prohibit or materially restrict the use or occupancy of the

Premises   or the   existing   Improvements   as   currently   allowed of right   under

applicable zoning;

 

                  (iv)   Building   and   zoning    restrictions,    ordinances    and

regulations affecting the Premises heretofore or hereafter adopted by the state,

county, city, town or village in which any portion of the Premises lie or by any

other governmental   authority having jurisdiction thereof, and all amendments or

additions   thereto   now in   effect or which   will be in force and   effect on the

Closing   Date   provided   that   they do not   cause   title to be   unmarketable   or

restrict the use or occupancy   of the Premises or the existing   Improvements   as

currently used and occupied;

 

                  (v) Real estate taxes,   ad valorem   personal   property   taxes,

water rates, water frontage charges and storm sewer and sanitary sewer taxes (if

any), and water meter and sewer rent (if any) charges based thereon and interest

and penalties thereon for the fiscal tax period or real estate tax year in which

the Closing occurs, subject to adjustment as hereinafter set forth;

 

 

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                  (vi) Unpaid franchise or other taxes of any corporation in the

chain of title,   provided,   that on the   Closing   of title,   Seller   makes   such

deposit or guarantee as might be required by Purchaser's title insurance company

and that   Purchaser's   title   insurance   company   issues   to   Purchaser   and any

institution   providing or facilitating   financing to Purchaser a policy of title

insurance, insuring against the collection thereof out of the Premises; and

 

                  (vii) Any state of facts which an accurate   survey or personal

inspection   of the   Premises   would show,   provided   the same does not (i) cause

title to be   unmarketable   or (ii)   prohibit or   materially   restrict the use or

occupancy of the Premises or the existing   Improvements as currently   allowed of

right under applicable zoning.

 

      4. Apportionments.

 

             (a) The following   items are to be   apportioned   between   Seller and

Purchaser as of midnight preceding the Closing Date:

 

                  (i) Real estate   taxes are to be   apportioned   on the basis of

the fiscal year for which   assessed.   If the Closing Date shall occur before the

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

shall be   readjusted   on the basis of the   actual tax bill,   promptly   after the

receipt thereof; which obligation shall survive the Closing.

 

                  (ii) Water rates,   water frontage   charges and storm sewer and

sanitary   sewer taxes.   If there are water meters on the   Premises,   any unfixed

water charges shall be   apportioned   on the basis of the water meter bills based

upon a reading taken not more than 30 days prior to the Closing Date.

 

            (b) In the event that the   apportionments   hereinabove   provided for

result in a credit balance to Purchaser,   the same shall   constitute a credit to

the cash   balance of the   Purchase   Price due at Closing.   In the event that the

apportionments   hereinabove   provided for result in a credit   balance to Seller,

Purchaser   shall pay the amount   thereof to Seller at Closing as part of, and in

addition to, the Purchase Price, by check for any amount less than $10,000 or by

official bank check or certified check for amounts greater than $10,000.

 

            (c) Any items which cannot be   apportioned   at the Closing   shall be

apportioned as soon as practicable after the Closing Date.

 

            (d) The   provisions   of this   Paragraph 4. shall survive the Closing

Date, but no later than one (1) year after the Closing Date.

 

      5. Liens.

 

            (a) All taxes, water rates or charges,   sewer rents and assessments,

plus   interest   and   penalties   which on the   Closing   Date are   liens   upon the

Premises,   and which Seller is obligated   to pay and   discharge,   and all unpaid

balances,   together   with   accrued   interest   thereon,   on   contracts,    chattel

mortgages or   conditional   bills of sale (on file on the Closing   Date),   or any

other   property   constituting   part of the   Premises   or the   Fixtures,   will be

allowed to Purchaser out of the Purchase   Price, to be deducted from the balance

of the   Purchase   Price   due at   the   Closing   (subject   to   the   provision   for

apportionment of taxes, water rates and sewer rents herein contained).

 

 

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            (b) If, on the Closing   Date,   the   Premises   shall be affected by a

lien or   encumbrance   which,   pursuant to the provisions of this   Agreement,   is

required to be   discharged   or   satisfied   by Seller,   Seller   shall (i) deliver

proper   instruments   of   satisfaction   or   discharge to Purchaser on the Closing

Date, (ii) make proper allowance to Purchaser for recording charges thereon, and

(iii) direct   Purchaser to pay at the Closing Date by Bank or certified   checks,

any amount,   not exceeding the cash balance of the Purchase   Price,   required to

discharge any such lien or liens,   and the amount so advanced   shall be credited

against the balance of the Purchase Price due at the Closing.   Purchaser   agrees

that not less than two days prior notice from Seller shall be sufficient for the

purpose   of   Purchaser's   compliance   with   clause   (iii).  

 

      6.   Representations,   Warranties and Covenants of the Parties. In order to

induce the parties to enter into this   Agreement   and to perform its   respective

obligations   hereunder,   each party   represents   warrants   and   covenants to and

agrees with the other that:

 

            (a)   Each   party   (i)   is a   corporation,   duly   organized,   validly

existing and in good standing   under the laws of the state of its   incorporation

and is in good standing and, where   applicable,   qualified to do business in the

State of New York,   (ii) has the full power and   authority to purchase and sell,

as   appropriate,   the Premises   and the   Fixtures,   and to execute,   deliver and

perform this   Agreement and all   documents   contemplated   hereby,   and (iii) has

taken all actions and   obtained   all   consents   and   approvals   required for the

consummation of the transactions   contemplated by this Agreement,   including all

such   actions   and   consents   required   pursuant   to any   law and   said   party's

corporate by-laws in connection with this Agreement.

 

            (b) Neither the execution,   nor the delivery of, nor the performance

under this   Agreement or any other   document   executed and delivered by it (both

contemporaneously herewith or at the Closing) in connection with the transaction

is   precluded   by, will   conflict   with,   result in a breach of or violate,   any

provision of (iv) any existing federal,   state,   local or other   governmental or

quasi-governmental law, statute, ordinance,   restriction, rule or regulation, or

(v) any judgment,   order decree, writ or injunction of any court or governmental

department,   commission,   board, bureau, agency or instrumentality applicable to

Purchaser.

 

            (c)   There   is no   action,   arbitration,   or   other   proceeding,   or

investigation   (zoning   or   otherwise)   pending,   or to a   representing   party's

knowledge,   threatened   against or relating to the parties which would impact on

or   interfere   with a party's   ability   to   execute,   deliver   and   perform   its

respective obligations hereunder and consummate the transactions contemplated by

this Agreement.

 

      7. Closing. The closing ("Closing") shall be held at the offices of Seller

at 50 Marcus Drive,   Melville, New York 11747, or in the offices of the attorney

for Purchaser's   lender if Purchaser's   lender so requires,   at 10:00 A.M. on or

about March 31, 2004 ("Closing Date").

 

 

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       8.   Seller's   Responsibilities.   (a) Seller shall   deliver the Premises in

broom clean condition,   free of debris,   vacant and not subject to any tenancies

or other rights of occupancy.   Prior to said delivery, Seller shall have removed

all   non-structural   racking   (that is, all   racking   not   presently   within the

automated storage and retrieval area, as identified by the cross hatched area on

Exhibit E annexed hereto,   and all shelving which supports mezzanine floors) and

all trade equipment. The parties agree that the ten robot cranes, bin boxes, and

all shelving,   rack, rail and post structures   which are and have been a part of

the automated   storage and retrieval   system in the area shown on Exhibit E may,

together   with all existing   mezzanines   and shelves   supporting   them,   may, at

Seller's   option be left in place,   in whole or in part, by Seller upon delivery

of the   Premises,   Between the date hereof and the Closing   Date,   Seller   shall

maintain the Premises and the Fixtures in their existing   condition,   consistent

with past practice.

 

            (b) If Purchaser   requests,   Seller shall make a written   request to

the holder or holders of any existing mortgage to assign the same to Purchaser's

lender for the purposes of consolidating it with   Purchaser's   mortgage.   Seller

shall permit   Purchaser to communicate with such mortgage holders and coordinate

with them in connection with obtaining such assignments.

 

            (c) Seller   shall use its   reasonable   best   efforts to deliver true

copies of all contracts   relating to the use or   maintenance   of the Premises or

the Fixtures,   all of which are listed and described on Exhibit C. If requested,

Seller will request the other party to each such   contract to assign the same to

Purchaser,   or at   Purchaser's   instructions,   Seller   will   terminate   any such

contracts   which   may be   terminated   without   liability   or   financial   penalty

effective at the Closing Date.

 

            (d) Seller shall deliver all permits, approvals, and/or certificates

of occupancy for any   alternations or   improvements   Seller made or performed to

any   buildings   or   Improvements   located on the   Premises,   and shall   close or

otherwise remedy any open building permits.

 

      9. Closing Deliveries.

 

            (a) At the Closing, Seller shall deliver to Purchaser the following:

 

                  (i) Bargain   and Sale Deed with   Covenants   Against   Grantor's

Acts   ("Deed"),   with the   covenant   required by Section 13 of the New York Lien

Law,   which shall   convey the   Premises to   Purchaser   subject to the   Permitted

Encumbrances, in proper form for recording;

 

                  (ii)   Evidence   of   Compliance   with   FIRPTA   as   provided   in

Paragraph 31;

 

                  (iii) Any surveys,   site plans, building plans or blue prints,

specifications   (including   specifications with respect to Fixtures and facility

equipment   maintenance   logs and   reports   and other   documents   relating to the

Premises, to the extent the same are in the possession of Seller and kept in the

normal course of Seller's business; and

 

 

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                  (iv) All keys and security codes to all entrance doors to, and

equipment and utility rooms located in, the Premises,   with keys properly tagged

for identification.

 

            (b) At the   Closing,   Purchaser   shall   deliver   to Seller   the cash

portion of the Purchase Price payable at the Closing.

 

            (c) At the   Closing,   the   parties   shall   deliver to each other the

following:

 

                  (i) The New   York   State   Form   TP-584,   7/03   revision,   with

Seller's   payment   by check in the   amount   of the New York   State   Real   estate

Transfer Tax due in connection therewith;

 

                  (ii) The New York State   Board of   Equalization   &   Assessment

Real Estate Transfer Report;

 

                  (iii)   Evidence of corporate   authority to execute and deliver

this Agreement and to perform the other transactions contemplated hereby; and

 

                  (iv) Such other documents as may be reasonably required by the

title company or any governmental authority or agency, to effectuate the closing

of the transaction contemplated hereby.

 

      10. Default.

 

            (a) If Purchaser   shall default   under the terms of this   Agreement,

Seller shall retain the Deposit as liquidated damages,   whereupon this Agreement

shall be deemed   canceled and neither party shall have any further claims and/or

rights against the other,   except for any claims pursuant to Paragraph 17 hereof

entitled   "Brokerage,"   and the lien, if any, of Purchaser   against the Premises

shall   cease.   Purchaser   also shall   forfeit the Deposit to Seller if Purchaser

elects to terminate   this   Agreement in accordance   with   Paragraph   34(B).   The

parties   agree that   actual   damages in the event of a failure by   Purchaser   to

accomplish   the   Closing   by   reason   of its   default   or by   terminating   under

Paragraph   34(B) would be   impossible   to   ascertain   and that the amount of the

Deposit is a reasonable estimate thereof, was freely negotiated and is otherwise

re