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1 11870334.1.BUSINESS 3/30/2009 3:25 PM PHIL1 675077-2 Copyright © 2005, Gregory G. Gosfield, Eric L. Stern. All Rights Reserved.

Options and Rights of First Refusal and Rights of First Offer

2005 Real Estate Institute

GREGORY G. GOSFIELD, ESQ.

ERIC L. STERN, ESQ. Morgan Lewis & Bockius LLP

1701 Market Street Philadelphia, PA 19103

215-963-5178 estern@morganlewis.com

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I. Option: An unilateral contract, meaning one in which only one side has an obligation. Consideration is frequently less important than promissory estoppel to enforce either the sale (put) or purchase (call), at any time during an agreed period for an agreed price.

A. The issues:

1. Notice of Election:

• proper parties (agents, brokers, assignees, joint venturers, parent companies),

• proper information (term sheet vs. full agreement),

• time period to provide notice and provide answer, response or silence, time period after termination of lease?

• time period for closing (exclusion of diligence period) time period after termination of lease?

2. Exact acceptance: time, price, qualification of purchaser, continuation of presumption (no frustration of purpose)

3. Property:

• smaller portion of larger tract

• subdivision/condominium may be required

4. Consideration:

• fixed

• calculable (fixed and adjusted by Consumer Price Index)

• FMV based on appraisal - instructions

• as is

• highest best use

• with or without tenancy

• with or without non-conforming use

• Opt out of election if too expensive

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5. Assignment:

• personal

• circumvent restriction by “ministerial” compulsion

• splitting the assignment of the Option/ROFR from the assignment of the leasehold

6. Bankruptcy:

• pre contract offer

• equitable interest

• executory contract or conditional obligation

7. Restrictions on change in property during pendency of option:

• no priming to the exception

• no material adverse change in use or consequential costs

8. Survival or Termination:

• perpetual, life of holder, life of lease, or other relationship between optionor and optionee

• termination for improper exercise

• termination for failure of pre-conditions

• termination for assignment

9. Deterrents:

• Buyout (fixed or difference compared to appraised value)

• “put” at an appraised value

10. Unenforceability: Rules Against Inalienation, Unconscionable:

• excessive time duration

• unconscionably low price

11. Priority with respect to mortgages and judgments:

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• relation back as to grantor’s imposition, recorded in real estate records

• relation back as to grantee’s benefit filed in UCC records

• chilling of foreclosure by uncertainty of the effect

12. Realty or Personalty/Offer or Contract

13. Insurable Interest: Does the Option holder have an insurable interest?

II. Right of First Refusal:

To provide the opportunity to purchase or lease, only after someone else initiates the action, whether under a ROFO where the seller decides to ask for offers to see if they are acceptable, or under a ROFR where a third party makes an offer which the Seller decides to accept.

A. A ROFO is a power to completely absorb a seller’s interest in selling for some specific period of time. A ROFO is frequently the preemptive right preferred by the seller or landlord. The third party may not want to put in the time, money and effort to evaluate the deal if the right holder can “steal” the deal.

B. A ROFR is a power to take over someone else’s business opportunity. The essential peculiarity of the ROFR is that it cannot come into existence until someone else shows an interest. Some reasons are:

1. The owner does not want to be forced to sell prematurely, even though the holder wants to buy.

2. The holder does not want to miss the opportunity to purchase if the owner ever decides to sell.

3. The owner is not troubled by any difference in selling to the ROFR holder or any future buyer, regardless of the difference in qualifications.

C. Leases, Fee Expansion, Partnerships

III. The Issues:

1. Matching offers:

• asset or entity sales

• unique, non-replicable, non-cash deal provisions

• portions of larger parcels or portfolios

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• third party valuations

• credit quality and other qualifications of prospective buyer

2. Triggers:

• types of parties who should be exempt (pre-existing interested parties, affiliates, charities, trusts for principals, co-owners)

• types of transactions which should be exempt (stock, gift, merger, foreclosure, financings, sale-leaseback, sales with purchase money financing, sales for non-cash consideration, contributions, swaps)

3. Deterrents:

• terminations (exercise or terminate)

• damages (for violation holder shares in upside)

• Holders tagalong: Holder does not want to buy Seller’s interest, Holder can compel Buyer to buy Holder’s interest along with Seller’s or none at all

• Seller’s drag along: Holder does not want to buy Seller’s interest, Seller can compel Holder to sell to Buyer

4. Survival and expiration:

• first time as only time,

• circumstances which might trigger revival of right previously waived, change of circumstance, expiration upon change in quality of ROFR holder (creditworthiness, reputation, competitor), without re-offering within 5% cushion

• merger with option

5. Brokers’ commission:

• discounts

• liabilities for seller to pay broker under contract

• liabilities for buyer to pay broker under unjust enrichment for reduced purchase price

• broker as procuring but not inducing cause

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6. Recapture by Landlord:

• Assignment of real estate

• Assignment of option

7. Timing:

• What happens if the right of first refusal closing is after the termination of the lease?

• What happens if it is before the termination of the lease?

• Is rent still due after the right of first refusal is exercised?

• Are timings postponed to account for ROFR exercise after original offer?

• take-over by partner

IV. A Classic Tale:

The Aramark Tower, a Philadelphia landmark, had two partnerships as its Owner. The Alaska Permanent Fund was a partner in each partnership. The Owner entered into a Consent Agreement granting Alaska ROFRs to buy partnership interests in the Owner upon Owner’s receipt of a bona fide offer to buy the Tower. The Owner, through Heitman, its agent, received a bona fide offer from the City of Philadelphia as Trustee for the Girard Trust to buy the Tower for about $80,000,000. Alaska tried to exercise its ROFR. The Trust successfully enjoined Alaska’s exercise of the ROFR.

The Consent Agreement granting the ROFR diverged from a standard ROFR in three ways: (1) the drafter failed to provide when Alaska had to be told of an acceptable bona fide offer, (2) the purchase price to Alaska would be at a 1% discount from the bona fide offer, and (3) realty transfer tax would probably be avoided by Alaska because it had more than an 11% interest in the Owner. Heitman prepared an Agreement of Sale on behalf of the Seller which described the ROFR as the right to “match the offer,” a misstatement both as to price and as to the asset being sold. The Agreement of Sale granted the Trust the remedy of specific performance. It is not clear if the Consent had specific performance as a remedy. But the court concluded Alaska was bound by the agreement with the Trust because it authorized Heitman to proceed, and Alaska’s professionals, including its attorneys, reviewed and approved Heitman’s form (uh-oh).

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PUT OPTION

I. In the event that Contractor fails or would be unable to achieve Final Completion of the Work in accordance with the Schematic Design (as the same may have been changed with Owner’s written approval) by the Completion Date, unless primarily due to the Owner’s default under this Agreement, then Owner shall have the irrevocable right to cause the Contractor to purchase Owner’s entire interest in the Property (the “Owner Put Right”) for a price (“Put Price”) equal to (A) the purchase price paid by Owner to [________] (“Seller”) for the purchase of the Property, (B) any additional funds paid by Owner for the costs of ownership of the Property, including without limitation, payments to Contractor, to Architect, to taxing authorities, to utility providers, to insurance companies or brokers, and (C) Owner’s actual, reasonable, out-of-pocket costs and expenses evidenced by invoices (including attorneys’, accountants’ and brokers’ fees, costs and expenses in examination of title, negotiating title insurance endorsement, surveyor charges, environmental audits, governmental permits or approvals, recording charges, transfer taxes, and other closing costs) in connection with (1) the preparation and negotiation of this Agreement and all other Transaction Documents, (2) inspections and investigations of the Property, (3) investigation of the feasibility and compliance of the transactions contemplated by this Agreement and the other Transaction Documents, (4) the consummation of the closing with the Seller, (5) consummation of the Put Closing, and (6) all other matters relating to the foregoing.

II. Owner may exercise the Owner Put Right by sending a written notice to that effect to the Contractor. The closing under the Owner Put Right (“Put Closing”) shall occur on the Business Day specified in such written notice, which shall be not less than fifteen (15) Business Days or more than forty-five (45) Business Days after the delivery of such written notice to the Contractor. At the Put Closing, Contractor shall deliver to Owner the funds required under Section I by electronic transfer of immediately available funds, and Owner shall deliver to Contractor (1) a special warranty deed to the Property, (2) any assignment of the other Transaction Documents (reserving rights of indemnifications and covenants applicable to Owner for the period prior to the Put Closing), (3) ordinary title company affidavit with appropriate exceptions for the applicable circumstances (including without limitation, exceptions for ongoing construction and improvements), and (4) FIRPTA certificates. Owner shall deliver title to the Property in the same condition as granted to Owner with such additional exceptions as approved by Contractor, otherwise the Property, including the physical condition, shall be conveyed “as is” and “where is” as of Closing. No loss or damage shall modify or impair Contractor’s obligation to complete the Put Closing. In the event of an insured casualty or taking by eminent domain, Owner shall assign to Contractor all of Owner’s rights to proceeds or condemnation awards. Contractor may not assign its rights or obligations under the Owner Put Right without Owner’s prior written consent.

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TITLE ENDORSEMENT FOR PURCHASE OPTION

A. With respect to the option to purchase described in Schedule B, the option to purchase is hereby incorporated into Schedule A of the policy as an interest insured thereby, vested in the Insured, and the Company insures against loss or damage sustained or incurred by the Insured by reason of:

(1) The unenforceability of the right to exercise, or the invalidity of, the Option Agreement referred to in item (4) of Schedule B whether such unenforceability or invalidity is by application [of the doctrine of “clogging the equity of redemption,” of ____________, which is the Maker and Mortgagor under a Note and Mortgage dated as of _____________ with __________, or by application or] of the doctrine concerning unreasonable restraint on the right of alienation of __________ or its successors or assigns, except to the extent such unenforceability or invalidity or claim thereof is based on the failure of the Insured to have fulfilled the terms and conditions of the option.

(2) The priority over the option to purchase of any conveyance made of the fee simple estate in the land or of any liens or encumbrances created thereon after the Date of Policy, excepting those liens or encumbrances created or consented to by the Insured or created by statute in favor of or for the benefit of governmental bodies or public utilities (including without limitation real estate taxes, special assessments, demolition liens, drainage liens and water liens).

B. Nothing contained in this endorsement shall be construed as insuring the Insured against loss or damage sustained or incurred by reason of:

(1) Disaffirmance of the option under the provisions of the Bankruptcy Act.

(2) The effect of any condemnation proceeding including the failure of the optionee or receive all or part of an award entered in a condemnation proceeding unless failure to share in said award stems solely from a court order or judgment which constitutes a final determination and adjudges the option to be invalid.

(3) Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law.

C. Other than the expenses necessary to a judicial determination or defense of the validity and priority of the option as described in (1) and (2) above, loss under this endorsement does not include:

(1) Expenses required to enforce the option and to obtain a transfer of title from the party or entity in whom title to any interest in the land is vested at the time of exercising the option, or

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(2) Expenses required to obtain valid conveyances or releases of any rights, interests or liens related to the land which appear of record or are known to the Insured at the time of exercising the option.

D. The measure of the loss or damage sustained by the Insured under this policy shall be:

(1) The excess of the fair market value of the property at the later of (i) the time the Insured attempts to exercise the option or (ii) when a final judgment in an action concerning the validity or enforceability of the option is entered and is no longer subject to appeal if filed in connection with the attempted exercise of the option, above the price at which the Insured could acquire the property by exercise of the option, and

(2) The unreimbursed portion of the consideration given by the Insured to obtain the option.

[OPTIONAL LANGUAGE RE FAIR MARKET VALUE]

I. “Fair market value of the property” shall be determined by the following method of appraisal:

(i) The fair market value of the property shall be determined by an appraisal made as hereinafter provided by a board of three reputable real estate appraisers who shall be appointed in the manner provided herein and each of whom shall be a member of the American Institute of Real Estate Appraisers or a successor body hereinafter constituted exercising a similar function, shall have experience in appraising [office warehouse buildings] similar to the property, and shall have no substantial direct or indirect financial or other business interests in the Company, its partners, or its or their affiliates, or the Insured or its affiliates. The appraisal of the property will be conducted by a board of three reputable real estate appraisers, one appointed by the Company, one appointed by the Insured and the third appointed by the first two appraisers. The costs and expenses of each appraiser appointed separately by the Company and the Insured will be borne by the party who appointed the appraisers. The costs and expenses of the third appraiser will be shared equally by the parties. Any appraisal process required herein may be commenced by the Company or the Insured (the “Initiating Party”) by notice to the other (the “Other Party”) in which the Initiating Party appoints its appraiser. The Other Party shall appoint its appraiser by notice given to the Initiating Party within 30 days after the Initiating Party’s notice. The appraisers appointed by the Initiating Party and the Other Party shall select a third appraiser within 30 days of the appointment of the appraiser appointed by the Other Party. If the first two appraisers are unable to agree on a third appraiser, such third appraiser shall be appointed pursuant to the provisions of the _________ Arbitration Code and, to the extent not inconsistent therewith the rules of the [American Arbitration Association].

(ii) The appraisers shall appraise the property, and notify the Company and the Insured by written notice of the amount of their determinations of the fair market value of the property, which notices shall be accompanied by copies of the appraisal

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report. If the determination of the fair market value of the property, of any two or all three of the appraisers shall be identical in amount, such amount shall be deemed to be the fair market value of the property, but if such determinations of all three appraisers shall be different in amount, the arithmetic mean of the two numerically closest appraisals so submitted shall be binding and conclusive on the parties as the fair market value of the property.

(iii) Notwithstanding the foregoing, if the Other Party shall fail to appoint the appraiser to be appointed by such Other Party within 30 days after the Initiating Party’s notice requiring the Other Party to do so, the Initiating Party may serve a second notice on the Other Party requiring the Other Party to appoint its appraiser and stating that the Other Party’s failure to do so will allow the Initiating Party to have its appraiser act as the sole appraiser of the property; then, if the Other Party fails to appoint its appraiser within 30 days after such second notice, the appraisal of the property shall be conducted only by the appraiser appointed by the Initiating Party, and the fair market value of the property as determined by the appraiser appointed by the Initiating Party shall be binding and conclusive upon the Company and the Insured.

II. For purposes of this Endorsement, “the price at which the Insured could acquire the property by exercise of the option” is set forth at Section _____ of the Option Agreement. The Insured shall notify the Company in writing of its determination of the option exercise price. If the Insured and the Company are unable to agree upon one or more components of the Option exercise price, then either party may submit the dispute to arbitration pursuant to the procedures described in Section ______ of the Option Agreement. The board of arbitrators selected in accordance with Section ______ of the Option Agreement shall resolve the dispute in accordance with the terms of Section ______ of the Option Agreement. If the determination of the amount of a component of the Option exercise price, of any two or all three of the appraisers shall be identical, said determination shall be deemed correct, or if such determination of all three appraisers shall be different in amount, the arithmetic mean of the two numerically closest determinations shall be binding and conclusive on the parties, unless such determinations shall be equidistant (e.g., 8, 9, 10), in which case the middle determination (e.g., 9) shall be binding and conclusive on the parties. The conclusion of the board of arbitration shall be binding and conclusive on the parties.]

Nothing herein contained shall be construed as extending or changing the effective date of said policy, unless otherwise expressly stated.

This endorsement, when countersigned below by a Validating Signatory, is made part of said policy and is subject to the Exclusions from Coverage, schedules, conditions and stipulations therein, except as modified by the provisions hereof.

IN WITNESS WHEREOF, the company has caused its corporate name and seal to be hereunto affixed by its duly authorized officers.

Dated:

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DECLARATION OF RIGHT OF FIRST OFFER

THIS DECLARATION (the “Declaration”) made this ____ day of February 1, 20___ by BAD ACTOR MANAGEMENT, INC., a Pennsylvania corporation (the “Declarant”).

WITNESSETH

A. By Agreement of Sale (the “Agreement”) dated November 1, 19___ between BENEFACTORS OF THE RICH AND FAMOUS, as seller (the “Seller”), and BAD ACTOR SYSTEMS, INC., as buyer (the “Buyer”), Seller agreed to sell and Buyer agreed to purchase all that certain lot or piece of ground described on Exhibit A hereto, containing [bunches of] acres of land, more or less, which is improved with buildings currently used as a theatre and related purposes (collectively the “Site”); and

B. The Buyer assigned its right to purchase the Site to the Declarant by Assignment Agreement dated ____________; and

C. Seller conveyed the Site to Buyer on ________________ pursuant to the Agreement; and

D. Pursuant to the Agreement, at closing, the Buyer was required to deliver to Seller a Right of First Offer Agreement relating to all of the Site, except for that approximately five (5) acre portion thereof described on Exhibit B hereto, together with any improvements thereon, if any (the “Excluded Portion of the Site”) (the portion of the Site remaining after the Excluded Portion of the Site has been removed therefrom is hereinafter referred to as the “Real Estate”).

NOW THEREFORE, the Declarant, intending to be legally bound hereby and incorporating the foregoing recitals by reference, declares that the Real Estate is and shall be subject to the covenants and rights hereinafter set forth.

1. Grant of Right of First Offer. The Declarant hereby irrevocably grants to Seller the following right (hereinafter the “Right of First Offer”) with respect to the Real Estate, which Right of First Offer hereby created shall constitute a covenant running with the land and shall be binding upon the Declarant, its successors and assigns and the future owners of the Real Estate:

(a) At any time or times during the first ten (10) years after the date hereof (i.e. on or before February ____, 2010) that Declarant desires to sell the Real Estate, or any portion thereof, to any person or entity (other than as provided below), Declarant shall first offer the Real Estate , or the relevant portion thereof , as the case may be, by written notice to Seller. Declarant’s notice shall include the proposed sale price and other economic terms of the proposed sale (collectively the “Notice of Sale Terms”). Seller shall then have thirty (30) days (time being of the essence) after

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receiving Notice of Sales Terms to notify Declarant in writing of Seller’s irrevocable and unconditional election to purchase the Real Estate, or the relevant portion thereof, as the case may be, in accordance with the conditions of the Notice of Sale Terms, such writing to be accompanied by a bank or certified check in an amount equal to five percent (5%) of the purchase price (the “Deposit”). If Seller does so elect to exercise its right to purchase the Real Estate, or the relevant portion thereof, as the case may be, Seller shall: (i) proceed to and complete closing no later than sixty (60) days after the exercise of its right to purchase (time being of the essence); and (ii) promptly cooperate with Declarant to proceed to negotiate and execute an Agreement of Sale relating to the sale, although the failure of the parties to agree on any terms or to actually execute an Agreement of Sale shall have no effect on the Declarant’s obligation to sell or the Seller’s obligation to purchase the Real Estate, or the relevant portion thereof, as the case may be. Seller’s notice of its election to exercise its right to purchase hereunder shall be ineffective unless it meets the requirements set forth above and is accompanied by the Deposit. If Seller shall fail to close the purchase as required above, Declarant shall be entitled to retain the Deposit as liquidated damages, as Declarant’s sole remedy, and Declarant shall thereafter be free to sell the Real Estate in accordance with Section 1(b) below.

(b) If Seller shall fail to validly and timely exercise such right to purchase, after notice by Defendant, as provided herein, such right shall be deemed to have lapsed and expired with respect to the Real Estate or the relevant portion thereof, as the case may be, offered to Seller, and the Declarant may thereafter freely sell the Real Estate or the relevant portion thereof, as the case may be (such a sale is hereinafter referred to as a “Permitted Sale”), at any time provided that Declarant shall not be permitted to sell the Real Estate or the relevant portion thereof, as the case may be, at a price lower than 95% of that offered to Seller or on terms less favorable than the Quoted Sale Terms and further provided that, if Declarant shall not have entered into a binding Agreement to sell the Real Estate or relevant portion thereof, as the case may be, to another party within six (6) months (closing under such Agreement is not required within such six (6) month period for the purposes of this sentence) following Seller’s failure to so exercise its Right of First Offer, such right shall be reinstated and Declarant shall be required to follow the procedure provided herein once again before selling the Real Estate or relevant portion thereof, as the case may be, to a third party.

(c) Seller’s Right of First Offer is personal to Seller and cannot be transferred or assigned. The foregoing notwithstanding, however, once Seller has elected to exercise its Right of First Offer, Seller have the right to appoint a nominee to assume Seller’s rights and obligations with respect to the exercised right, provided that Seller documents such nomination to the reasonable satisfaction of Declarant and Seller shall not be released from its obligations.

2. Right of First Offer Expires on Tenth Anniversary. The Right of First Offer shall automatically expire ten (10) years after the date hereof (i.e. on February ____, 2010) and, thereafter, this document shall be deemed be terminated without further force or effect

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without the need for any further action by Seller. The foregoing notwithstanding, if requested by Declarant after February ____, 2010, Seller shall execute a document for recording reasonably satisfactory to both Declarant and Seller, memorializing the termination of the Right of First Offer.

3. Seller To Cooperate With Declarant In Connection With Sales. Seller shall cooperate with Declarant in connection with any sale of the Real Estate or any portion thereof to a third party which has either cleared the Seller’s Right of First Offer or is an Exempt Sale (as that term is defined in the following Section 4) in order to demonstrate to the purchaser and/or the insurer of its title to the Real Estate, or any portion thereof, that it is a Permitted Sale or an Exempt Sale, as the case may be. This obligation to cooperate shall include the Seller’s obligation to execute such documents, in recordable form if requested, as are reasonably requested by the Declarant, its purchaser or the insurer of such purchasers’ title to document the Seller’s waiver of its Right of First Refusal with respect to the subject sale or the fact that the subject sale is an Exempt Sale.

4. Sales By Declarant Which Are Not Subject to Seller’s Right of First Offer. The following sales of the Real Estate or any portion thereof (hereinafter referred to singularly as an “Exempt Sale” and collectively as “Exempt Sales”) shall not be subject to Seller’s Right of First Offer and may be freely sold by the Declarant without following the procedure set forth in Section 1 of this Declaration:

(a) A sale or sales to an affiliate or a development partner of Buyer provides that they are an affiliate or partner during the development of the Real Estate; and

(b) A transfer or transfers made as part of the financing of the acquisition or development of the Real Estate; and

(c) A transfer or transfers made pursuant to a bona fide deed in lieu of foreclosure made to the secured mortgagee of the Real Estate or a portion thereof and/or a transfer made pursuant to a sheriff’s sale in a mortgage foreclosure or other action.

Additionally, it is expressly understood that the transfer of an interest in the Real Estate in a manner other than by a sale (for example, pursuant to a lease or the grant of a Mortgage) shall not trigger the Seller’s Right of First Offer. Nor shall the subdivision or subjection to a condominium regime of the Real Estate or any portion thereof trigger the Seller’s Right of First Offer, although the subsequent sale of any subdivided portion or a condominium unit of the Real Estate shall trigger the Seller’s Right of First Refusal, unless it is an Exempt Sale.

5. Sales After Initial Sale Remain Subject to Seller’s Right of First Offer. It is expressly understood that the Seller’s Right of First Offer shall remain in effect, until its expiration as provided in Sections 1(a) and 2 hereof, and apply to future sales notwithstanding

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the fact that the Real Estate or the relevant portion thereof may have already been sold one or more times either as an Exempt Sale or as a Permitted Sale.

6. No Liability for Obligations Accruing After Ownership. No owner of the Real Estate or any portion thereof shall have any personal liability or responsibility for any obligation which accrues under this Declaration after the time that such party no longer is the owner of the relevant property.

7. Notice. Any notice given pursuant to this Declaration shall be valid only if given in writing and shall be deemed sufficiently given if given by registered or certified mail with sufficient postage attached, by overnight delivery service or hand delivery. Notices to Seller shall be sufficient if addressed to, or delivered to a person in charge at:

[ ] [ ] [ ] [ ]

With a copy to:

[ ] [ ] [ ] [ ]

Notices to Declarant shall be sufficient if addressed to:

[ ] [ ] [ ] [ ]

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With a copy to:

[ ] [ ] [ ] [ ]

The date of delivery of any notice provided for in this Declaration shall be the date of deposit in the U.S. mails with sufficient postage if given by registered or certified mail and whether or not a return receipt is returned the date of deposit to the overnight delivery service, if so given, or the date of actual delivery to the above address of the party to be notified if hand delivered. The person and place to which notice may be given may be changed from time to time by Seller or Declarant respectively upon written notice to the other, effective five (5) days after delivery of such notice.

8. Modifications. Seller shall make modifications to this Declaration reasonably requested by any lender to Declarant, or any successor or assign of Declarant, to enable the Real Estate to be financed, such modification or amendment not to be unreasonably denied, delayed or conditioned, provided that Seller shall not be required to make any modification which materially and adversely affects any right of Seller under this Declaration.

9. Modifications to Delineation of the Excluded Portion of the Site. Seller acknowledges that the actual delineation of the Excluded Portion of the Site may change somewhat. Seller agrees that Declarant shall have the right to modify the Excluded Portion of the Site provided that the modified Excluded Portion of the Site does not differ materially, in either size or nature, from the Excluded Portion of the Site defined herein. Seller agrees to cooperate with Declarant to document, as a matter of public record in form reasonably satisfactory to Declarant, any modification to the Excluded Portion of the Site authorized hereunder.

IN WITNESS WHEREOF, the Declarant has duly executed this Declaration as of the day and year first above written.

DECLARANT ATTEST: CORPORATE SEAL BAD ACTOR MANAGEMENT, INC.

The Seller, The Benefactors of the Rich and Famous, has executed this Declaration for the purpose of acknowledging its agreement to be legally bound by the terms, conditions and covenants relating to the Right of First Offer as set forth herein.

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ATTEST: CORPORATE SEAL THE BENEFACTORS OF THE RICH AND FAMOUS, a non-profit corporation

By: Secretary

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SIMPLE ROFO FOR PHASED DEVELOPMENT

(d) Right of First Offer. At any time during the two years following the Closing under this Agreement, if Seller prepares to market Phases 5 or 6, each in its entirety (the “Residual Property”), for sale to the public, and provided (i) Buyer is not in default under this Agreement, the Purchase Money Mortgage, the Declaration of Easement recorded in book , page of the ______________ Recorder, or any other agreement in which Seller is a party or a beneficiary, and (ii) Buyer has not previously been given notice of Seller’s intent to market, then Seller, for itself but not its successor or assigns or any creditor or mortgagee who may take title to the Residual Property, shall notify Buyer of Seller’s intent to market, including the proposed purchase price and other material terms Seller intends to publish, and shall during the thirty (30) day period after notice to Buyer, refrain from offering, soliciting, or entertaining offers or encouraging or retaining offers or negotiating with any other party for the sale of the Residual Property, and during such 30 day period, Seller will, at Buyer’s request, negotiate exclusively with Buyer for the sale of the Residual Property. However, upon the expiration of such thirty (30) day period, Buyer shall thereafter no longer have or be entitled to an exclusive right to negotiate, regardless of any claim or defense Buyer may assert as to Seller’s obligation to continue to negotiate exclusively with Buyer.

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TENANT FOR YEARS’ ROFO TO PURCHASE

(a) During the Term for Years, not less than sixty days prior to entering into any agreement with an unrelated third party for the sale of all or any substantial portion of the Demised Premises, Landlord shall advise Tenant for Years in writing of: (i) Landlord’s willingness to sell the Demised Premises, (ii) the purchase price which landlord will accept for the Demised Premises, (iii) the terms of payment of the purchase price (if other than all cash at closing), and (iv) the approximate proposed closing date. If Tenant for Years is desirous of purchasing the Demised Premises on the terms set forth in Landlord’s notice it shall notify Landlord thereof in writing within a sixty day period commencing on the date of Landlord’s notice and Landlord and Tenant for Years shall thereupon commence negotiations toward the preparation and execution of an agreement for sale by Landlord to Tenant for Years of the Demised Premises on said terms. If Tenant for Years fails to so notify Landlord to its desire to purchase the Demised Premises within said sixty day period or Tenant for Years does so notify Landlord but an agreement for sale is not executed between Landlord and Tenant for Years within twenty-one days following Tenant for Years’ notice for any reason whatsoever (other than Landlord’s arbitrary refusal or failure to conduct good faith negotiations with Tenant for Years regarding the proposed agreement for sale), then, in either such event, Landlord may at any time within six months following the expiration of said sixty day or twenty-one day period, respectively, enter into a contract for sale of the Demised Premises subject to this Lease with any third party at any price not less than 90% of that set forth in Landlord’s notice to Tenant for Years and on any other terms and conditions acceptable to Landlord, without any further duty or obligation to Tenant for Years. The foregoing shall not be construed as a grant of right of first refusal to Tenant for Years and Landlord shall have no obligation to submit to Tenant for Years any offers to purchase, notices or other documents which Landlord may receive and Tenant for Years shall have no right to purchase the Demised Premises except as specifically provided herein. Notwithstanding anything contained herein to the contrary, in the event of any breach or alleged breach by Landlord of its obligations under this subparagraph (a), Tenant for Years’ sole remedy on account thereof shall be a claim against Landlord for money damages (including, without limitation, a claim for consequential, incidental, exemplary and other damages, if available) and Tenant for Years hereby waives any claim or right to specific performance, temporary restraining order, injunction or other equitable remedy on account thereof.

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RIGHT OF FIRST REFUSAL AGREEMENT

THIS RIGHT OF FIRST REFUSAL AGREEMENT (the "Agreement") is made this ___ day of _______, 19__, between [___________________] (the "Grantor") and [________________________________________], a [____________________], (the "Grantee").

Background Statement

This Agreement, and the right of first refusal herein contained, is made pursuant to an Agreement for Acquisition of Real Estate between Grantor and Grantee pursuant to a certain agreement dated ____________, 20___ (such agreement, is hereinafter referred to as the "Acquisition Agreement").

Agreements

In consideration of the mutual covenants and agreements contained herein and in the Acquisition Agreement, and intending to be legally bound hereby, the parties hereto agree:

ARTICLE I

The Property

1.1. Description. The property which is the subject of this Agreement (the "Property") is a certain parcel of land located in [______________] Township, [_________] County, State of [___________], containing [_____] acres, more or less, which is the "Retained Parcel" described in the Acquisition Agreement, and which is more particularly described by metes and bounds on Exhibit A attached hereto and made a part hereof.

ARTICLE II

Grant and Exercise of Right of First Refusal

2.1 Grant of Right of First Refusal. If at any time after the date hereof through the date of _____________ Grantor shall receive from a third party, and wish to accept, a bona fide offer (“Purchase Offer”) for the purchase of any or all of the Property (“ROFR Property”), Grantor shall notify Grantee in writing of the name of such third party and the terms of such offer, and in such event Grantor hereby gives and grants unto Grantee the option and right (“Right of First Refusal”) to purchase the Property, at the same price, and on the same terms and conditions as are stated in the ROFR Purchase Offer, except that the dates for performance shall be extended by one day for each day acceptance by Grantee is after the last day Grantor was otherwise entitled to accept the Purchase Offer.

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2.2 Exercise of Right of First Refusal. In the event that Grantee wishes to exercise the ROFR, it shall notify Grantor of its intent so to do within thirty (30) consecutive days following the receipt of written notice from Grantor of the Purchase Offer. Should the Grantee so exercise the right herein granted, Grantor shall be obligated to sell and convey the ROFR Property and Grantee shall be obligated to purchase the same from Grantor, all for the price and on the other terms and conditions as are stated in the offer.

2.3 Failure to Exercise. Should the Grantee fail so to notify Grantor within the prescribed thirty (30) day period, Grantor shall be free to sell and convey the ROFR Property, free and clear of all restrictions otherwise imposed by this Agreement, but only [to the purchaser identified in, and] on the same terms and conditions and at no less a price than stated in the written notice from Grantor to Grantee.

2.4 Reinstatement; Extinguishment. Notwithstanding that Grantee should fail or refuse to exercise its right to purchase the ROFR Property in the manner herein provided, if the ROFR Property, or any part thereof, is not sold and conveyed to the third party submitting the Purchase Offer within the time-period [and on terms no more favorable to such third party than] established by the Purchase Offer (as the same may be extended by their joint agreement), the ROFR Property, shall thereafter continue to be subject to the terms and conditions imposed by this Article II and the first refusal procedure established hereby shall be reinstated.

2.5 Limitations on Right of First Refusal. This Agreement shall not be deemed to apply in any manner to (a) the taking of all or part of any of the Property in the exercise of a power of eminent domain; (b) the transfer of all or part of the Property (i) to the spouse, parents, siblings, or issue of them or any of them, (ii) by foreclosure, bankruptcy or court ordered liquidation, (iii) by operation of law or by inter vivos transfer, directly or in trust, provided, however, that the Grantee's rights created by this Agreement shall continue in full force and effect with respect to any such transfer, (c) a transfer of all or substantially all of the assets of grantor in one integrated transaction, of which the ROFR Property is a portion.

ARTICLE III

Miscellaneous

3.1 Time of the Essence. All times, wherever specified herein, are of the essence of this Agreement.

3.2 Notices. All notices, demands, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been given if personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, to the following addresses (or to such other address as a party may hereafter designate for itself by notice to the other party):

(a) If to Grantor:

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With a copy to:

(b) If to Grantee:

With a copy to:

3.3 Right of Access. At any reasonable time within thirty (30) days after Grantee is notified of a Purchase Offer, Grantee and Grantee's authorized representatives are hereby granted the free right and privilege, at Grantee's sole risk and expense, to enter upon the ROFR Property from time to time for the purpose of making surveys and conducting such engineering and other tests (including test borings) and inspections as are, in the opinion of Grantee necessary or desirable. Grantee shall repair any damage caused thereby and indemnify Grantor from any and all liability, obligation, claim, costs, expenses and fees resulting therefrom. Grantee shall maintain insurance to cover any liability of Grantee that may arise under this section.

3.4 Recording.. This Agreement may be recorded by Grantee in the Office for the Recording of Deeds or in any other office or place of public record. Grantee agrees that it will notify Grantor of any such recording, and further agrees, upon the termination of all or a portion of its Right of First Refusal as a result of a sale of all or a portion of the Property, and at the request of Grantor, to execute and record an appropriate instrument evidencing such termination of its Right of First Refusal, full or partial as the case may be, under this Agreement.

3.5 Assignment. Grantee may not assign this Agreement without Grantor's prior written consent, except that Grantee may assign this Agreement to any entity which is affiliated with Grantee.

3.6 Governing Laws; Parties at Interest. This Agreement shall be governed by Pennsylvania law and shall bind and inure to the benefit of the parties hereto and, subject to Section 3.05 hereof, their respective heirs, personal representatives, successors and assigns.

3.7 Entire Agreement. This Agreement, and the Exhibit attached hereto, set forth all of the promises, covenants, agreements, conditions and undertakings between the parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, except as contained herein. This Agreement may not be changed orally but only by an agreement in writing, duly executed by or on behalf of the party against whom enforcement of any waiver, change, modification, consent or discharge is sought.

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date and year first above written.

GRANTOR

Witness:

[SEAL] JOINED BY

Witness:

[SEAL] GRANTEE

Attest:

By

[CORPORATE SEAL]

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COMMONWEALTH OF PENNSYLVANIA : : ss: COUNTY OF PHILADELPHIA :

On the day of , 20[__] before me, the subscriber, a Notary Public for the Commonwealth of Pennsylvania, personally appeared , to me personally known, who, being by me duly sworn, did acknowledge that he is [ ] of the corporation described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that he executed the said instrument for the purposes therein contained by signing the name of such corporation by himself as such officer by like authority.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

[Notarial Seal]

Notary Public

My Commission Expires: