located on the Premises (such as heating and air-conditioning systems), as well as all landscaping thereon and all leasehold improvements of tenants, if any, which remain a part of the Premises upon expiration of any Lease (as defined below) and all rights, title and interest of Seller in and to all streets, roads and rights-of-way contiguous to the Premises and Seller’s interest in any strips or gores between the Premises and abutting properties; (b) to the extent assignable, except as provided herein, all utility, service, equipment, maintenance and other contracts relating to the ownership, operation, maintenance or use of the Premises which Purchaser desires to assume or take subject to as more fully provided herein (collectively, “ Service Contracts ”); (c) Seller’s interest in those leases (collectively, “ Leases ”) demising portions of the Premises to tenants (collectively, “ Tenants ”); and (d) all assignable or transferable intangible property, including, but not limited to:  (i) all guaranties and warranties (including guaranties and warranties pertaining to construction and use of the Personalty); (ii) all rights to obtain utility service in connection with the Premises and the Personalty; and (iii) all assignable licenses and other governmental permits and permissions relating to the Premises and the Personalty or the operation thereof, to the extent any of the foregoing are permitted to be assigned under relevant local, state and federal law (all of the foregoing are hereinafter collectively referred to as the “ Intangible Property ”).  The Premises, Personalty, Property Contracts, Leases and Intangible Property are hereinafter collectively referred to as the “ Property ”.

 

THE PURCHASE PRICE THEREOF is the sum of TWELVE MILLION EIGHT HUNDRED TWENTY FIVE THOUSAND ($12,825,000.) DOLLARS, payable in the following manner:

 

A deposit in the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.), paid by cashier’s or certified check at the signing of this Agreement of Sale as a good - faith deposit, to be credited to the Purchase Price hereunder and disbursed in accordance with the

 

 

provisions of this Agreement of Sale, and held by First American Title Insurance Company, Escrow Agent, in an interest - bearing account, the said interest accruing to the benefit of the Purchaser. The Purchaser, by executing this Agreement of Sale, hereby authorizes Escrow Agent to place the said escrow deposit monies in an interest - bearing account. The Purchaser’s Taxpayer Identification Number is 20-2824845.

 

An additional deposit in the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.), paid by cashier’s or certified check, in accordance with the terms and conditions of this agreement of Sale, at the time the Due Diligence Period, as defined herein, expires, and which shall also be credited to the Purchase Price hereunder and disbursed in accordance with the provisions of this Agreement of Sale, and shall also be held by Escrow Agent, in an interest - bearing account, the said interest accruing to the benefit of the Purchaser.

 

The balance of the Purchase Price hereunder, TWELVE MILLION FOUR HUNDRED TWENTY FIVE THOUSAND ($12,425,000.) DOLLARS, shall be paid in cash, certified check, or attorney’s escrow check, at the time of final Settlement as defined herein.

 

DUE DILIGENCE PERIOD. The Purchaser shall have until 5:00 P.M., on that day (the “Delivery Date”) which is THIRTY (30) days after delivery of all of the documents listed in the attached Schedule A (the “Due Diligence Documents”) to complete its tests,  studies, and investigations including zoning, easement agreement review and approval, soils analyses, environmental tests and studies, flood plain analyses, inspection of all improvements, surveying, lease review, analysis, and approval, and any and all other tests and studies it requires to complete the transaction contemplated herein. All said tests, studies, and analyses shall be concluded with results satisfactory to Purchaser at its sole discretion, and its sole cost and expense.

 

 

In the event Purchaser does not as a result of the said tests, studies, and analyses agree to proceed to final Settlement, Purchaser may elect to void this Agreement of Sale in writing in the manner provided for herein, whereupon Escrow Agent shall return to Purchaser all monies paid on account of the Purchase Price hereunder, together with all interest, if any, accrued thereon without deduction or offset. Purchaser agrees to void the Agreement of Sale in writing, and further agrees to convey at no cost to Seller copies of the said tests, studies, and analyses, to the extent same are in Purchaser’s possession or control. In the event Purchaser shall fail to notify Seller of its intention to void this Agreement of Sale within the Due Diligence period, Purchaser shall be deemed to have waived its rights to void this Agreement of Sale.

 

Seller agrees to provide to Purchaser, in a timely fashion after this Agreement of Sale is executed by all parties hereto, copies of any tests, studies, investigations, and analyses pertaining to the Property in Seller’s possession, including copies of all lease agreements encumbering the Property.

 

In the event Purchaser does not void this Agreement of Sale prior to the expiration of the Due Diligence Period, (i)  this Agreement shall remain in full force and effect; and ( ii ) subject to any other conditions of this Agreement, Seller and Purchaser shall proceed to Closing.

 

At the time Purchaser waives its rights under this Due Diligence paragraph, all deposit monies paid by Purchaser, totaling Four Hundred Thousand Dollars ($400,000) shall be non-refundable, subject to the other terms and conditions of this Agreement.

 

FINAL SETTLEMENT.  The final Settlement shall be held on or before the sixtieth (60 ^th ) Day following the expiration of the Due Diligence Period, provided such date does not fall on a Saturday or Sunday or other legal holiday, in the office of the Purchaser’s attorney, or at such other place as the Purchaser may elect. Notwithstanding the foregoing, the Settlement may be

 

 

extended through and including the ninetieth (90 ^th ) day following the expiration of the Due Diligence Period, at the option of the Purchaser, upon the Purchaser making an additional deposit in the amount of TWO HUNDRED THOUSAND ($200,000.) DOLLARS on or before the ninetieth (90 ^th ) Day following the expiration of the Due Diligence Period.

 

TRANSFER DOCUMENTS .  At the time and place of Closing, upon payment in full of the Purchase Price and satisfaction of all of Purchaser’s obligations under this Agreement, Seller shall:

 

Convey and transfer title to the Premises to Purchaser by a Special Warranty Deed in a form substantially as set forth in Exhibit D hereto, conveying the Property in fee simple to Purchaser in accordance with the terms hereof, subject to no liens, encumbrances, conditions or restrictions other than the Permitted Exceptions as more fully described herein;

 

Execute and deliver an Assignment of the Leases in a form substantially as set forth in Exhibit E hereto, whereby, inter alia , Purchaser shall assume the obligations of Seller thereunder from and after Settlement.

 

Execute and deliver a Bill of Sale in a form substantially as set forth on Exhibit F hereto, with respect to the Personalty, if any;

 

Execute and deliver an Assignment of Service Contracts, in form substantially as set forth on Exhibit G hereto, whereby, inter alia , Purchaser shall assume the obligations of Seller thereunder from and after Settlement;

 

Execute an Assignment and Assumption of Intangible Property, in form substantially set forth on Exhibit H hereto, whereby, inter alia , Seller shall assign to Purchaser the Intangible Property;

 

Execute tenant notices on a form to be provided by Purchaser and approved by Seller (such approval not to be unreasonably withheld, delayed or conditioned), informing the Tenants of the transfer of the Property and the Leases to Purchaser, and the assumption by Purchaser of Seller’s obligations under the Leases;

 

Deliver the originals of all Leases and Service Contracts;

 

 

Deliver all leasing and property files and records pertaining to day-to-day operation, leasing, and maintenance of the Property, provided that proprietary information of Seller not relevant to the ownership or operation of the Property shall not be included;

 

Deliver all keys to the improvements located on the Premises in Seller’s possession to Purchaser;

 

Execute and deliver a standard title affidavit executed by Seller and such other instruments as may reasonably be required by the Escrow Agent to fulfill its obligations under this Agreement;

 

Deliver any and all information required by the Escrow Agent to comply with the real estate reporting requirements set forth in Section 6045(e) of the Internal Revenue Code of 1986, as amended;

 

Deliver evidence reasonably acceptable to Purchaser and Title Company (as hereinafter defined) as to the authority of the person or persons executing documents on behalf of Seller;

 

Execute and deliver an affidavit of Seller in the form substantially as set forth in Exhibit I attached hereto stating Seller’s taxpayer identification number, certifying that Seller and all persons holding beneficial interests in the Property are not a “foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1990, as amended or otherwise confirming that Purchaser is not required to withhold any part of the Purchase Price pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended;

 

An affidavit of Seller certifying the satisfaction of the closing conditions set forth herein;

 

Deliver a rent roll for the Property, updated to the date and time of Closing and certified to be complete and accurate by Seller and attached hereto as Exhibit J;

 

Execute and deliver a 1099S form, or effective equivalent thereof, describing the “sale of the Property”, together with a designation of the “reporting person” with respect of such sale;

 

Execute and deliver a closing statement reasonably acceptable to Seller and Purchaser; and

 

 

Execute and deliver such other documents as may be reasonably necessary or appropriate to complete Settlement of the transaction contemplated hereby, or otherwise required by the terms of this Agreement.

 

The instruments of transfer referred to above are hereinafter collectively referred to as the “ Transfer Documents ”.

 

CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS; CONDITION SUBSEQUENT .  The obligations of Seller hereunder are and shall be subject to satisfaction of each of the following conditions at or prior to Settlement:

 

Purchaser shall have complied in all material respects with all of the terms, covenants and conditions hereof to be complied with on the part of Purchaser;

 

Seller, the Title Company or the Escrow Agent shall have in its possession the Purchase Price in consideration for simultaneous deliverance of the Transfer Documents;

 

This Agreement shall not have been previously terminated pursuant to a right or privilege granted to either Seller or Purchaser hereunder;

 

Where applicable, Purchaser shall have executed the Transfer Documents and delivered such documents to Seller, Title Company or the Escrow Agent; and

 

Purchaser and Seller, where applicable, shall have executed the transfer tax return and paid to the title company such tax.

 

CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS .   The obligations of Purchaser hereunder are and shall be subject to satisfaction of each of the following conditions at or prior to Settlement:

 

The representations and warranties made by Seller in this Agreement shall be true as of the date of this Agreement and as of Settlement, and Seller shall have complied in all material respects with all of the terms, covenants and conditions hereof to be complied with on the part of Seller;

 

 

Seller shall have executed and delivered the Transfer Documents and shall have delivered all documents and items required to be delivered on or before Closing by the terms of this Agreement;

 

This Agreement shall not have been previously terminated pursuant to a right or privilege granted to Seller or Purchaser hereunder;

 

Seller shall have delivered a certificate that Seller is not a “foreign person” within the meaning of §1445 of the Internal Revenue Code of 1986, as amended;

 

Seller shall have delivered to Purchaser acceptable estoppel certificates from Best Buy, Michael’s, and Office Depot (the “Key Tenants) and acceptable estoppel certificates from tenants representing eighty percent (80%) of the rentable area leased pursuant to the Leases (such eighty percent (80%) threshold shall be exclusive of the square feet of rentable area of the Property currently leased to the Key Tenants), each substantially in the form of Exhibit K , except to the extent the lease of the tenant in question requires or authorizes such tenant to execute a different form of estoppel certificate (in which case the estoppel certificate may be in form consistent with the requirements of, or authorization set forth in, such lease).  Notwithstanding the foregoing, Seller agrees to use commercially reasonable efforts to obtain such estoppel certificates from all tenants of the Property. An estoppel certificate shall be deemed “acceptable” if it is complete, and is not materially inconsistent with the representations and warranties of the Seller hereunder.  No estoppel certificate shall be required from Dover Downs, Inc. as its lease becomes effective upon Closing hereunder.

 

Seller shall have delivered to Purchaser Subordination, Non-Disturbance and Attornment Agreements in recordable form designated by the Purchaser prior to the expiration of the Due Diligence Review Period for any leases that are recorded in the public records, and from all other non-residential tenants of the property designated by the Purchaser prior to the expiration of the Due Diligence Review Period

 

SETTLEMENT ADJUSTMENTS.  All items paid in advance by the Seller, including all property taxes, water, sewer, and/or property rent, heating fuel, and any and all other such items shall be pro - rated as of midnight preceding Settlement and Purchaser shall reimburse Seller at

 

 

the time of final Settlement as defined herein (except that no apportionment shall be made for any such items furnished and charged by the applicable utility company to tenants unless such charge is paid by Seller). If Settlement occurs 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, subject to the post-closing adjustment upon the determination of the applicable tax rate and recovery thereof.

 

All property rent, common area maintenance, insurance charges and taxes paid by tenants received by Seller in advance shall be pro - rated as of midnight preceding the Settlement and Seller shall pay the pro - rated amount to Purchaser at the time of final Settlement. Further, any and all security deposits held by Seller on behalf of any tenants located at the Property shall be paid by Seller to Purchaser, together with an accurate listing of each of the tenants and the respective security deposit amounts for each tenant, at the time of final Settlement as defined herein. All rents collected during the month of Settlement shall be deemed applicable to that current month’s rent for purposes of apportionment.

 

All rents received post-Settlement shall be applied for purposes hereof, first to the current month’s rent and then to arrearages collected post-closing and attributable to Seller which shall be paid over by Purchaser to Seller promptly following receipt.  Any delinquent rents or other payments outstanding at the time of Closing that are subsequently received by Purchaser in its capacity as new landlord shall be payable to Seller, provided that Purchaser shall not be legally responsible to Seller for undertaking the collection of any delinquent rents and other payments. After Settlement, Seller shall have the right to collect delinquent rentals and other payments so long as it does not enter the Property or disturb any tenant’s possession or quiet enjoyment of its leased premises.

 

Fifty percent (50%) of all state, county, and city transfer taxes shall be paid by the Seller

 

 

at the time of final Settlement; the remaining fifty percent (50%) of all state, county, and city transfer taxes shall be paid by the Purchaser at the time of final Settlement.

 

All settlement expenses normally borne by purchasers of real property in Kent County, Delaware, including but not limited to the cost of title search, title insurance, legal representation, document recording, and any and all other such items shall be paid by Purchaser at the time of final Settlement.

 

In the event that certain Leases require reconciliation of additional rent “pass-throughs” to the landlord for common area maintenance charges, real estate taxes or other operating expenses, Purchaser shall perform all of the obligations of the landlord under the Leases with respect to such reconciliations in a timely and commercially reasonable manner. If such results reflect the underpayment of additional rents by Tenants for the year of Closing, Purchaser shall bill the appropriate amounts to such Tenants in accordance with the terms of their Leases and remit to Seller its prorata share of the amount collected from the Tenants within thirty (30) days of Purchaser’s collection of the same.  If such results reflect the overpayment of additional rent by Tenants for the year of Closing, Purchaser shall deliver to Seller an invoice from Purchaser together with evidence reasonably satisfactory to Seller indicating that such sums are due to such Tenants.  Seller shall pay Purchaser Seller’s prorata share of the amounts due to such tenants within thirty (30) days of Purchaser’s demand.  The provisions of this paragraph shall survive the Closing.

 

All settlement expenses normally borne by Sellers of real property in Kent County, Delaware, including prepayment penalties, deed preparation, release or satisfaction documents, legal representation, brokerage commissions, termite reports if required by the terms of this Agreement of Sale, and any and all other such items shall be paid by the Seller at the time of final Settlement.

 

 

In the event accurate prorations and other adjustments cannot be made at Settlement because current bills or statements or other information is not obtainable, the parties shall prorate on the best available information, subject to adjustment as soon after Settlement as the actual amounts to be prorated are determined.

 

TITLE AND SURVEY

 

The Purchaser shall, promptly following the Delivery Date, obtain (i) a preliminary title insurance commitment (the “ Title Commitment ”) issued by First American Title Insurance Company or its duly authorized agent (the “ Title Company ”) covering the Property and improvements, with such Title Commitment setting forth the status of title to the Property and showing all liens, claims, encumbrances, easements, rights-of-way, encroachments, reservations, restrictions and any other matters of record affecting the Property; and, (ii) a copy of all recorded documents referred to in the title report as exceptions to the title to the Property (the “ Title Documents ”).

 

The Purchaser shall, promptly following the Delivery Date, cause to be prepared and furnished to Purchaser and the Title Company, a current as-built survey satisfactory to the Purchaser’s lender and certified to the Purchaser, its lender, the Title Company and each of their successors and assigns, and meeting the minimum standard detail requirements for an ALTA/ACSM Land Title Survey (the “ Survey ”) of the Property prepared by a duly licensed Delaware land surveyor.

 

The Purchaser shall, within thirty (30) days (the “ Title Approval Date ”), inform the Seller in writing as to any survey or title defects or other objections regarding the Property disclosed by the Survey or Title Commitment that the Purchaser is unwilling to accept.  Within five (5) business days after receipt of any timely written title or survey objections from Purchaser, Seller may either (i) elect to cure such objection(s), or (ii) decline to cure some or all of such objections. If Seller shall notify Purchaser that it declines to cure any such title objections, or if Seller elects to cure such title objections, but then fails or is unable to complete such cure within the time

 

 

allowed, or if during such time period Seller delivers a written notice to Purchaser that such objections are not curable, then in such event, Purchaser may, by written notice to Seller delivered within five (5) business days after the expiration of such time or the delivery of such written notice, either (i) terminate this Agreement by giving the Seller written notice of such termination; (ii) cure such defects or objections at its own expense and proceed to Closing with no reduction in the Purchase Price; or, (iii) waive such defects, with no reduction in the Purchase Price, proceed to Closing and take title subject to such objections, in which case all title matters objected to by Purchaser which were not cured by Seller shall be deemed Permitted Exceptions hereunder.  If the Purchaser so elects to terminate this Agreement, Escrow Agent shall return to Purchaser all monies paid on account of the Purchase Price hereunder, together with all interest, if any, accrued thereon without deduction or offset, in which case, Seller shall reimburse Purchaser for the reasonable out-of-pocket costs actually incurred by Purchaser in anticipation of consumma