AGREEMENT FOR PURCHASE AND SALE OF INTERESTS
SOUTHEAST MICHIGAN PORTFOLIO
THIS AGREEMENT FOR PURCHASE AND SALE OF INTERESTS (this "Agreement"), is made as
of the 26th day of April, 2006 (the "Effective Date"), by and between THE
LIGHTSTONE GROUP, LLC, a New Jersey limited liability company (as "Buyer"),
having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; and
HOME PROPERTIES, L.P., a New York limited partnership ("Home Properties") and
HOME PROPERTIES WMF I, LLC, a New York limited liability company ("Home
Properties WMF"; and together with Home Properties, as "Sellers"), for
themselves and on behalf of each of the limited liability companies listed on
Schedule 1 attached hereto (each a "Company" and collectively the "Companies"),
each having their principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
W I T N E S S E T H:
This Agreement is made with reference to the following facts and objectives:
(a) Each Company owns or will own, on or prior to Closing, a 100% fee
simple interest in the corresponding Property listed next to its name
on Schedule 1 attached hereto.
(b) Home Properties owns or will own, on or prior to Closing, 100% of the
membership interest in Canterbury Square, LLC, Carriage Hill Venture,
L.L.C., Carriage Park Associates, L.L.C., Charter Square, LLC, Cherry
Hill Village Venture, L.L.C., Deerfield ▇▇▇▇▇ Home Properties LLC,
Fordham Green, LLC, Greentrees, LLC, Home Properties Hampton Court,
LLC, ▇▇▇▇▇▇▇▇, LLC, Macomb Apartments Home Properties LLC, Oak Park
Manor, LLC, Southpoint Square, LLC, Home Properties Springwells, LLC,
▇▇▇▇▇▇▇▇▇▇ House, LLC, Lakes, LLC and Woodland Gardens, LLC, each a
Michigan or New York limited liability company (collectively, the "HP
Companies"); and Home Properties WMF owns or will own, on or prior to
Closing, 100% of the membership interest in Cherry Hill Club, LLC and
Scotsdale, LLC, each a Michigan limited liability company
(collectively, the "HP WMF Companies"); Home Properties desires to
sell 100% of the membership interests in each HP Company to Buyer in
exchange for cash and Home Properties WMF desires to sell 100% of the
membership interest in each HP WMF Company to Buyer in exchange for
cash.
(c) Home Properties intends to sell the interests in several of the
Companies in tax deferred exchanges pursuant to Section 1031 of the
Code (defined below).
(d) Buyer desires to acquire 100% of the interests in the HP Companies and
the HP WMF Companies upon the happening of certain events.
(e) Buyer is willing to accommodate Home Properties' need to complete a
portion of the transaction as tax deferred exchanges, at no cost or
expense to Buyer.
(f) As used in this Agreement with initial capital letters, the following
terms, in each instance, shall have the meaning ascribed thereto:
"Closing" and "Closing Date" shall have the meanings given to
them in Section 13.
"Code" shall mean and refer to the Internal Revenue Code of 1986,
as amended;
"Company" shall mean and refer to each Company listed on Schedule
1 individually, and "Companies" shall mean and refer to all of
them collectively;
"Due Diligence Period" shall have the meaning given to it in
Section 11.
"▇▇▇▇▇▇▇ Money Deposit" shall have the meaning given to it in
Section 19.
"Environmental Law" shall mean and refer to any federal, state,
county or municipal environmental, health, chemical use, safety
or sanitation law, statute, ordinance or code relating to the
protection of the environment, and/or governing the use, storage,
treatment, generation, transportation, processing, handling,
production or disposal of any Hazardous Materials, and the rules,
regulations and orders promulgated and/or issued thereunder;
"Escrow Agent" shall mean and refer to the Title Company.
"Escrow Agreement" shall mean that Escrow Agreement between
Escrow Agent and Buyer, a form of which is attached hereto as
Exhibit B.
"Existing Loan" shall mean and refer to each loan secured by a
Property as identified on Schedule 4 attached hereto and
"Existing Loans" shall refer to all of the loans secured by the
Properties collectively.
"Hazardous Materials" shall mean and refer to any hazardous
substances described or defined in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended; (ii) the Hazardous Materials Transportation Act, as
amended; (iii) the Resource Conservation and Recovery Act, as
amended; (iv) the Toxic Substances Control Act, as amended; and
(v) any applicable state Environmental Laws, and the regulations
promulgated thereunder, in each case, as at the date of this
Agreement;
"HME" shall mean and refer to Home Properties, Inc., a Maryland
corporation and general partner of Home Properties;
"Interests" shall have the meaning given to it in Section 1;
"Property" shall mean and refer individually and "Properties"
shall mean and refer collectively to the: (i) the land owned by
each Company (collectively, the "Land"), as more particularly
described on Exhibit A attached hereto and made a part hereof,
together with (a) all easements, rights-of-way, rights,
privileges, benefits, tenements, hereditaments and appurtenances
thereunto belonging or in anywise appertaining, and (b) all
right, title and interest of the relevant Company in and to any
land lying in the bed of any street, road, avenue or alley, open
or proposed, public or private, in front of, behind, or otherwise
adjoining the Land, or any part of the Land, including, without
limitation, all right, title and interest of the relevant Company
in and to (1) any award made after the date of this Agreement as
a result of condemnation, or in lieu thereof, and (2) any unpaid
award as of the date of this Agreement as a result of
condemnation, or in lieu thereof; (ii) all buildings, structures,
fixtures, facilities, installations and other improvements of
every kind and description now or hereafter in, on, over and
under the Land (collectively, the "Improvements"), including,
without limitation, any and all plumbing, air conditioning,
heating, ventilating, mechanical, electrical and other utility
systems, and fixtures, parking lots and facilities, landscaping,
roadways, fences, mail boxes, sidewalks, maintenance buildings,
swimming pools and other recreational facilities, security
devices, signs and light fixtures; and (iii) in each apartment
unit of each Property, one refrigerator, one stove, one
dishwasher and any other fixture, equipment or personal property
required to be provided to residential tenants pursuant to
applicable law or regulation;
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, income, excise,
property, sale, gross receipts, employment and franchise taxes
imposed by the United States, or any state, county, local or
foreign government, or subdivision or agency thereof with respect
to the assets or the business of each Company, and including any
interest, penalties or additions attributable thereto; and
"Title Company" shall mean and refer to Land America/Lawyers
Title Insurance Corporation;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants,
agreements and undertakings herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Home Properties agree as follows:
1. TRANSFER.
(a) Subject to the terms and conditions of this Agreement, Sellers hereby
agree that, at Closing, they will transfer 100% of the membership
interests in the Companies (collectively, the "Interests") to Buyer in
exchange for cash.
(b) Each Company owns or will own on or prior to Closing all right, title
and interest in and to the following, which shall remain the property
of each Company on and after the Closing Date:
(i) all furniture, furnishings, equipment, machinery and other
tangible personal property and fixtures of every kind and
description owned by the relevant Company, and used in connection
with its respective Property (in each instance, the "Personal
Property"), including, without limitation, all ranges,
refrigerators, disposals, dishwashers, water heaters, furnaces,
air conditioning units and equipment, carpeting, traverse rods,
drapes and other window treatments, exhaust fans, range hoods,
screens, model unit furniture, tools, parts, motors, supplies,
pool and other recreational equipment, cabinets, mirrors,
shelving, office equipment, stationery and other office supplies,
normal levels of inventory, vehicles (schedule of vehicles
included in Schedule 7) and all replacements of, and/or
substitutions for, any of the foregoing (including any computer
equipment and peripherals (including but not limited to monitors,
printers, modems, keyboards, firewall equipment; but excluding
computer software and certain peripherals to be identified by
Home Properties prior to expiration of the Due Diligence Period)
including without limitation the items described on Schedule 7
attached hereto;
(ii) all present and subsequent leases with tenants, and/or other
occupancy agreements, together with all pending applications for
tenancy pursuant to which any person or entity has a right to use
and/or occupy any portion of any of the Properties (in each
instance, the "Leases");
(iii) all service and maintenance contracts and equipment leases, used
or useful in connection with the Property, which are not required
to be terminated by Seller, including, without limitation,
natural gas purchase contracts and coin-operated laundry
concession leases, all of which are listed on Schedule 3 attached
hereto (in each instance, the "Service Contracts");
(iv) all trademarks, service marks, logos, trade, assumed or business
names and telephone numbers related to the use and operation of
the Property, but excluding the name "Home Properties" and the
Home Properties' logo and trademark, whether used alone or in
combination with other words, (in each instance, the "Trade
Names"), except that Home Properties makes no representation or
warranty of title or usage with respect to such Trade Names;
(v) all other contract rights and intangible property of any kind and
nature whatsoever belonging or pertaining to or used in
connection with all or any part of the Properties and/or the
development, construction, ownership, use or operation thereof,
excluding the Service Contracts (collectively, "Other Contract
Rights and Intangibles"), including, without limitation: (1) all
guaranties and warranties, (2) all designs, plans,
specifications, engineering drawings and prints, and surveys, (3)
all development rights, entitlements, licenses, approvals and
agreements belonging, benefiting or pertaining to the Land or the
Improvements and the development, construction, ownership, use
and operating thereof, (4) all comfort letters, reliance letters,
estoppels, certificates, authorizations and other approvals
pertaining to all or any portion of the Properties by any
governmental authority and all applications for any of the
foregoing; and
(vi) the Properties.
(c) Notwithstanding anything to the contrary contained in this Agreement,
Sellers shall take all steps necessary to assure that, at each
Closing, the applicable Company shall not be obligated or liable for
the following (each, an "Excluded Liability"):
(i) all Taxes arising out of, relating to or in respect of the
Properties or the Company imposed upon any Company or the Buyer
for all taxable periods before the Closing Date;
(ii) the Required Exceptions; and
(iii) any undisclosed liabilities not listed on Schedule 4 which have
accrued prior to the Closing Date.
2. PURCHASE PRICE; DEPOSIT.
(a) The aggregate purchase price ("Purchase Price") payable by Buyer
for the Interests is Two Hundred Thirty-Eight Million Seven
Hundred Thirty-Eight Thousand Five Hundred and No/100 Dollars
($238,738,500), subject to such apportionments, adjustments and
credits as are provided in this Agreement.
(b) Buyer shall make an ▇▇▇▇▇▇▇ money deposit in the amount of Ten
Million and 00/100 Dollars ($10,000,000) (the "▇▇▇▇▇▇▇ Money
Deposit"), within one (1) business day after the Effective Date,
to Escrow Agent to be held in escrow in an interest-bearing
account in a lending institution acceptable to Buyer in its sole
discretion and otherwise in accordance with the Escrow Agreement.
(c) All payments hereunder shall be paid by wire transfer of
immediately available federal funds in accordance with the wiring
instructions set forth in Exhibit E attached hereto and made a
part hereof, or in accordance with other or additional
instructions given to Buyer by written notice not less than one
(1) Business Day (as hereinafter defined) prior to a Closing. As
used in this Agreement, "Business Day" shall refer to any date on
which commercial banks are authorized to do business and are not
required by law or executive order to close in New York City.
(d) Buyer acknowledges that a portion of the Purchase Price is being
paid to Sellers as reimbursement for the anticipated prepayment
penalties in connection with the Existing Loans, which will be
paid off at the applicable Closing. The amount of the prepayment
penalties are currently estimated to be $3,550,000; however the
actual amount of the prepayment penalties shall be determined by
the payoff statements issued by the lenders at the applicable
Closing; provided further, however, that the Purchase Price shall
in no event be increased or decreased on account of the amount of
such prepayment penalties.
3. CLOSING COSTS.
Buyer shall pay all recording fees in connection with its financing, its
attorneys' fees, the costs of any non-standard endorsements to owners' title
policies (except the cost of a non-imputation endorsement which shall be
Sellers' sole cost and expense), all costs related to any new financing
including loan title policies, the costs for updating surveys and environmental
reports (by reimbursement to Sellers if Sellers have already paid survey and/or
environmental costs) and all other costs and expenses incidental to or in
connection with closing this transaction customarily paid for by the purchaser
of similar property. Home Properties shall pay the costs of obtaining a binder
or commitment for owners' policies of title insurance with respect to the
Properties from the Title Company, the premium for each such owner's title
insurance policy including standard exceptions and standard endorsements
(including a non-imputation endorsement which shall be Sellers' sole cost and
expense), its attorneys' fees, all transfer taxes, if any, and all other costs
and expenses incidental to or in connection with closing this transaction
customarily paid for by the seller of similar property.
4. PERMITTED EXCEPTIONS & REQUIRED EXCEPTIONS.
Each Property at Closing shall be subject only to the following (the "Permitted
Exceptions"):
(a) the lien of real estate taxes not yet due and payable;
(b) the Leases;
(c) the Service Contracts; and
(d) easements, rights-of-way, covenants, restrictions and other
matters of record (other than the Existing Loans which shall be
paid off on or prior to the Closing).
Notwithstanding the foregoing, (a) Buyer shall be entitled to review and object
to the Permitted Exceptions in accordance with Section 12 below; and (b) Sellers
shall be obligated to take all actions, bring any proceeding, make any payments
or otherwise incur any expenses or liability in order to eliminate the
following: (i) satisfy any mortgages and other liens affecting the Properties
that were created by instruments of record created by either Seller or any
Company, or consented by either Seller or any Company, or assumed by either
Seller or any Company and which can be satisfied by payment of a liquidated
amount, including, without limitation, the Existing Loans; (ii) remove any
encumbrances and easements placed of record against the Properties by either
Seller or any Company subsequent to the effective date of the applicable title
commitment furnished to the Buyer except those identified on Schedule 12; (iii)
pay, discharge or bond any mechanic's or materialman's liens or judgment liens
asserted against the Properties if same were caused by either Seller or any
Company; and (iv) any other monetary lien against any Property resulting from
any act or omission of either Seller or any Company (the items referred to in
clauses (i), (ii), (iii) and (iv) above are hereinafter referred to as the
"Required Exceptions").
5. OBLIGATIONS AND COVENANTS OF SELLERS AND THE COMPANIES.
(a) From the Effective Date to the applicable Closing, Sellers shall cause
each Company, with respect to the Property owned by it, to:
(i) Maintain, manage and operate the Property in substantially the
same condition and manner as such Property is now maintained,
managed and operated.
(ii) Promptly provide Buyer with a copy of any notice of violation of
any Environmental Law.
(iii) Maintain in full force and effect all of the existing insurance
policies regarding the Properties.
(iv) Promptly deliver written notice to Buyer of, and, defend, at
Sellers' and each of the Company's expense, all actions, suits,
claims, demands and other proceedings affecting any Property, or
the use, possession or occupancy thereof.
(v) Promptly deliver written notice to Buyer of any notice of
condemnation of any Property, or any portion thereof received by
Sellers.
(vi) Maintain all Service Contracts in full force and effect according
to their terms; timely make all payments, and observe and perform
all obligations to be paid, observed or performed by the Company
thereunder; and promptly notify Buyer of any receipt or delivery
of any notice (including any notice of default) thereunder.
(vii) Provide all services, repairs and other work required to be
provided by the landlord under the Leases.
(viii) Promptly deliver to Buyer a copy of any notice of required work
from any company insuring any Property against casualty.
(ix) Terminate all management agreements pertaining to any Property,
effective as of the completion of the Closing.
(x) Promptly deliver to Buyer a copy of any notice of any violation
(or alleged violation) of any law, ordinance, order, requirement
or regulation of any Federal, state, county, municipal or other
governmental department, agency or authority relating to any
Property or portion thereof.
(xi) Promptly give written notice to Buyer of the occurrence of any
condition or event which materially and adversely affects the
truth or accuracy of any representation or warranty made (or to
be made) by any Company or either Seller under or pursuant to
this Agreement.
(xii) Provide weekly to Buyer copies of BRAT reports showing market
rents for apartment units and concession reports; and, from and
after expiration of the Due Diligence Period (provided this
Agreement has not been terminated by either party) until the
Closing, Sellers shall accommodate Buyer's reasonable requests
with respect to asking rents and concessions and other rent
matters.
(b) From the expiration of the Due Diligence Period (provided this
Agreement has not been terminated by either party) until the Closing,
Sellers shall cause each Company, with respect to the Property owned
by it the Company, to not (and shall provide written notice of any of
the following to Buyer):
(i) Except in the ordinary course of business, increase any wage or
fringe benefit payable to any employee at any Property, without
the prior written consent of Buyer in each instance.
(ii) Without Buyer's prior written consent (i) enter into any new
lease for an apartment unit with a first-time tenant unless the
lease is for a period of no more than one year; or (ii) enter
into, amend, renew or extend any Lease for an apartment unit with
an existing tenant unless the Lease is for a period of not more
than one year;
(iii) Except in the ordinary course of business, terminate any Lease.
Ordinary course of business shall be deemed to include, without
limitation, non-renewals of problem tenants, commencement of
summary ejectment proceeding where a tenant is more than ten (10)
days delinquent in the payment of rent, cases of any Lease where
the tenant is more than thirty (30) days delinquent in the
payment of rent, or in which there has been a material violation
of the obligations of tenant.
(iv) Modify or amend the present form of lease in use in connection
with the leasing of apartments units at the Properties without
the prior written consent of Buyer.
(v) Except in the ordinary course of business of a Company, apply any
Security Deposits against rent delinquencies or other Lease
defaults, other than in the case of tenants who have vacated
their apartments or are currently involved in litigation with
such Company.
(vi) Enter into any new license, franchise, concession or easement
agreement affecting any Property, without the prior written
consent of Buyer in each instance.
(vii) Modify, amend, renew, extend, terminate or otherwise alter any
of the Service Contracts, or enter into any new service or
maintenance contract, equipment lease or, except in the ordinary
course of business, any purchase order affecting any Property,
and extending beyond, or for any work or improvement which will
not be completed and paid for prior to, the Closing, without the
prior written consent of Buyer, in each instance, which consent
shall not be unreasonably withheld, conditioned or delayed;
notwithstanding the foregoing, Sellers may enter into a service
or maintenance contract, or equipment lease which is terminable
without penalty upon not more than thirty (30) days' notice.
(viii) Remove from any Property any article of Personal Property,
except as may be necessary for repairs, or the discarding of worn
out or useless items, provided, however, that any such article
removed for repairs shall be returned to such Property promptly
upon its repair, and shall remain a part of the Personal
Property, whether or not such article shall be located on any
Property at the time of the Closing, and any such article so
discarded shall be replaced with a new or replacement article of
similar quality and utility prior to the Closing.
(ix) Undertake or commence any material (having the same definition as
set forth in Section 17(f) below) renovations or alterations at
any Property, except those necessary to comply with any of the
provisions of this Agreement, without the prior written consent
of Buyer, in each instance.
(x) Initiate, consent to, approve or otherwise take any action with
respect to the zoning, or any other governmental rule or
regulation, presently applicable to all or any part of any
Property.
(xi) Withdraw, settle or otherwise compromise any protest or reduction
proceeding affecting real estate taxes assessed against any
Property for any fiscal period in which the Closing is to occur
or any subsequent fiscal period without the prior written consent
of Buyer. Real estate tax refunds and credits received after the
Closing for any Property which are attributable (a) to any fiscal
period prior to the fiscal tax year during which such Closing
occurs shall be paid to Sellers and (b) to the fiscal tax year
during which such Closing occurs shall be apportioned between
Sellers and Buyer, after deducting the expenses of collection
thereof, based upon the relative time periods each owns the
relevant Property, which obligation shall survive the Closing.
(xii) Market the Interests and/or the Properties to any third party,
and, in that regard, each Company will refrain from soliciting or
accepting any offer from any third party, or, engaging in any
discussions with any third party concerning the sale, refinance
or recapitalization of the Interests and/or the Properties.
(c) From the Effective Date until the Closing, Sellers shall cause each
Company, with respect to the Property owned by it the Company, to not
sell, mortgage, pledge, hypothecate or otherwise transfer or dispose
of all or any part of any Property, the Interests, the Personal
Property, the Leases, the Service Contracts, the Trade Names, the
Other Contract Rights and Intangibles or any interest therein, except
in the case of the sale or other disposition of items of Personal
Property to be replaced hereunder.
6. REPRESENTATIONS AND WARRANTIES OF SELLERS.
(a) Each Seller represents and warrants that each of the following is
true, complete and accurate in all material respects as of the date of
this Agreement (and, except as designated in writing by Sellers at or
before Closing and approved in writing by Buyer, will be true,
complete and accurate in all material respects as of the Closing Date)
with regard to each Company and its respective Property:
(i) Each Company is or will be prior to Closing a limited liability
company duly organized, validly existing and in good standing
under the laws of the State of Michigan or New York, as the case
may be, has full power and authority to enter into, and to fully
perform and comply with the terms of this Agreement and to own,
lease and operate the Property and to carry on its business as it
is now being conducted.
(ii) Each Company owns legal and beneficial title to its applicable
Property, Personal Property and Trade Names, free and clear of
all liens, charges and encumbrances, except security interests in
connection with the Existing Loan, as applicable, which will be
paid off at Closing.
(iii) The performance by each Company of the obligations hereunder
will not conflict with, or result in the breach of, any contract,
agreement, law, rule or regulation to which any Company is a
party, or by which any Company is bound.
(iv) This Agreement is valid and enforceable against each Company in
accordance with its terms, and each instrument to be executed by
each Company pursuant to this Agreement, or in connection
herewith, will, when executed and delivered, be valid and
enforceable against each Company in accordance with its terms,
except as such enforcement may be limited by bankruptcy and other
laws affecting creditors', rights generally.
(v) No written notice has been received by either Seller or any
Company from any insurer, or from any Existing Lender, with
respect to any defect which materially and adversely affects the
Property, or the use or operation thereof, which remains uncured
or uncorrected.
(vi) Except as set forth on Schedule 6, neither any Company nor any
Seller has received any notice that any Property, or the current
use, occupation or condition thereof, violate(s) any applicable
laws, orders, ordinances, and/or regulations from any
governmental authority, including without limitation any
Environmental Law, or any order of any governmental agency
relating to any Property and/or the use and/or legal occupancy
thereof, or any applicable deed restrictions or other covenant,
easement or agreement pertaining to any Property (including,
without limitation, any of the Permitted Exceptions).
(vii) Other than the Service Contracts set forth in Schedule 3
attached hereto, there are no other agreements with respect to
services or materials being provided or to be provided to any of
the Properties; and true and complete copies of all Service
Contracts have been delivered to Buyer prior to the Effective
Date.
(viii) Each of the Service Contracts is in full force and effect; to
Seller's knowledge Seller is not in default of any of its
obligations thereunder; and no event has occurred that, with the
giving of notice, or the passage of time, or both, would
constitute a default by either Seller thereunder.
(ix) Except as set forth on Schedule 6, neither any Company nor any
Seller has received any notice that the current use, operation or
occupancy of any part, or all, of any Property violates any
applicable certificate of occupancy, operating permit or licenses
required by any relevant governmental authority for the lawful
use, operation and occupancy of such Property.
(x) Except as set forth on Schedule 5, there is no action or
proceeding pending, or, to the knowledge of each Company and each
Seller, threatened, against a Company, or a Property, by or
before any court or governmental department, commission, board,
agency or instrumentality; and any litigation in connection with
the actions, proceeding or investigations set forth in Schedule 5
is covered by insurance currently in place by the Sellers.
(xi) All financial information about each Property, each Seller and
each Company heretofore or hereafter furnished by any Company
and/or any Seller to Buyer is, and shall be, true, complete and
correct in all material respects as of the date therein
specified.
(xii) Neither any Company nor any Seller has received notice of any
Federal, state, county or municipal plan to change the highway or
road system in the vicinity of any Property, or to restrict or
change access from any such highway or road to any Property, or
notice of any pending condemnation or eminent domain proceedings
relating to or affecting any Property.
(xiii) To the knowledge of each Company and each Seller, there are no
trade or assumed names affecting or identifying any Property
other than the Trade Names.
(xiv) No Company has (1) made a general assignment for the benefit of
its creditors; (2) admitted in writing its inability to pay its
debts as they mature; (3) had an attachment, execution or other
judicial seizure of any property interest which remains in
effect; or (4) become generally unable to meet its financial
obligations as they mature.
(xv) There is not pending any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution
or recomposition of any Company, or the debts of any Company,
under any law relating to bankruptcy, insolvency, reorganization
or the relief of debtors, or seeking the appointment of a
receiver, trustee, custodian or other similar official for any
Company or any Property.
(xvi) The rent roll delivered to the Buyer ("Rent Roll") for each
Property is true, correct and complete in all material respects
as of the date set forth thereon.
(xvii) True and complete copies of all Leases have been made available
to Buyer. (xviii) Except in connection with the Existing Loans
and related security interests, if applicable, which will be
satisfied at the Closings, the Company has not assigned,
mortgaged, pledged, hypothecated or otherwise encumbered any of
its rights or interests under any of the Leases.
(xix) The Rent Roll accurately includes each tenant's name, a
description of the dwelling unit leased by such tenant, the
amount of rent due monthly from such tenant, the amount of the
security deposit, if any, paid by such tenant (collectively, the
"Security Deposits"), and the expiration date of the term of such
Lease.
(xx) Except as indicated on the Rent Roll: (1) each Lease is in full
force and effect; (2) all rents are being paid and are current
(within 15 days of their due date); and (3) no tenant has paid
any rent for more than one month in advance; (4) no tenant is
entitled to any free rent, abatement of rent or similar
concession.
(xxi) As of the Effective Date, the Security Deposits under the Leases
are as set forth in the Rent Roll.
(xxii) No brokerage commission or other compensation is payable (or
will, with the passage of time, or occurrence of any event, or
both, be payable) with respect to any Lease.
(xxiii) To the knowledge of each Company, such Company has complied in
all material respects with all of the requirements of the
relevant laws regarding the holding of tenant security deposits.
(xxiv) Except: (i) for liabilities and obligations incurred in the
normal course of business of each Company as disclosed in
Schedule 4 attached hereto; and (ii) as otherwise disclosed in
this Agreement, each Company has no material liability or
obligation of any nature which in any way materially affects or
is related to any Property or Personal Property whether now due
or to become due, absolute, contingent or otherwise, including
liabilities for taxes (or any interest or penalties thereto).
(xxv) Each Seller has caused or will cause all notices, reports and
returns of Taxes, if any, of each Seller and each Company with
respect to pre-Closing Date periods to be timely filed, and all
income and other tax liability for pre-Closing Date periods has
been satisfied by the Company or, with respect to pre-Closing
Date tax returns not yet prepared and/or filed, will be satisfied
by each Seller. All such income and other tax returns were and
will be true, correct and complete in all material respects. No
Seller has received written notice of, and has no knowledge of, a
pending or threatened appeal in connection with any tax returns
of any Company and to each of Seller's knowledge there are no
pending or threatened audits, examinations or other
administrative proceedings in connection with any tax returns of
any Company.
(xxvi) Except as set forth on tax bills for each Property, which will
be provided to Buyer in connection with its due diligence, there
are no special or other assessments for public improvements or
otherwise now affecting any Property, nor, to the best knowledge
of each Seller and each Company, does such Company know of (i)
any threatened special assessments which would affect any
Property, or (ii) any contemplated improvements affecting any
Property that may result in a special assessment against any
Property.
(xxvii) The insurance certificates listed in Schedule 9 attached
hereto are the full and complete list of the insurance policies
regarding each Property and such insurance policies are currently
in full force and effect and have not been modified,
supplemented, or amended, except as indicated in such Schedule 9;
and Seller shall keep and maintain same in full force and effect
until the Closing Date.
(xxviii) The insurance loss run history reports on each Property
listed in Schedule 10 attached hereto are the full and complete
lists of claims made during the past three (3) years in
connection with each Property.
(xxix) Attached hereto as Schedule 11 is a true, complete and accurate
copy of the ▇▇▇▇▇ Lease (as defined in Section 34 below).
(b) Each Seller represents and warrants that each of the following is
true, complete and accurate as of the Effective Date, and will be
true, complete and accurate as of the Closing Date:
(i) Home Properties is the legal and beneficial owner of all
Interests in the HP Companies. Home Properties has not sold,
transferred, or encumbered any or all of the Interests in the HP
Companies and there does not currently exist any subscription
agreement or other rights to obtain, control, or otherwise
encumber such Interests. Home Properties holds, and has the
complete and unrestricted power and authority, and the
unqualified right and legal capacity, to sell, assign, transfer
and deliver to Buyer, good and marketable title to the Interests
in the HP Companies, free and clear of any and all liens, claims,
encumbrances, voting rights, agreements and restrictions on
transfer.
(ii) Home Properties WMF is the legal and beneficial owner of all
Interests in the HP WMF Companies. Home Properties WMF has not
sold, transferred, or encumbered any or all of the Interests in
the HP WMF Companies and there does not currently exist any
subscription agreement or other rights to obtain, control, or
otherwise encumber such Interests. Home Properties WMF holds, and
has the complete and unrestricted power and authority, and the
unqualified right and legal capacity, to sell, assign, transfer
and deliver to Buyer, good and marketable title to the Interests
in the HP WMF Companies, free and clear of any and all liens,
claims, encumbrances, voting rights, agreements and restrictions
on transfer.
(iii) The Interests are not represented by a certificate and are not
subject to Article 8 of the Michigan Uniform Commercial Code. No
Seller has received written notice of any litigation, arbitration
or similar proceeding that is pending or threatened with respect
to the Interests.
(iv) Home Properties is duly organized, validly existing and in good
standing under the laws of the State of New York, is qualified
and in good standing in the State of Michigan and has all the
requisite power and authority to enter into and carry out and
perform this Agreement, according to its terms, and to own, lease
and carry on its business as it is now being conducted.
(v) Home Properties WMF is duly organized, validly existing and in
good standing under the laws of the State of New York, is
qualified and in good standing in the State of Michigan and has
all the requisite power and authority to enter into and carry out
and perform this Agreement, according to its terms, and to own,
lease and carry on its business as it is now being conducted.
(vi) Neither the execution and delivery of this Agreement, nor the
performance of this Agreement by either Seller will conflict
with, or result in any breach of, any contract, agreement, law,
rule or regulation to which either Seller is a party, or by which
either Seller is bound.
(vii) This Agreement has been duly authorized, executed and delivered,
and constitutes a legal and binding obligation of each Seller,
enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy and other laws affecting
creditors rights generally.
(viii) Each instrument to be executed and delivered by either Seller
pursuant to this Agreement, or in connection herewith, will, when
executed and delivered, be valid and enforceable against each
Seller in accordance with its terms, except as such enforcement
may be limited by bankruptcy and other laws affecting creditors'
rights generally.
(ix) There is no litigation, proceeding or investigation pending, or,
to the best knowledge of each Seller, threatened, against or
affecting either Seller, that might affect the validity of this
Agreement, or any action taken, or to be taken, by either Seller,
pursuant to this Agreement, or that might have a material adverse
effect on the business of either Seller.
(x) Home Properties, and not any Company or Home Properties WMF, is
the sole employer of each of the employees at each Property.
Neither Home Properties WMF nor any Company employs or has in the
past employed any employees.
(xi) Schedule 8 of this Agreement sets forth the title, base salary
and guaranteed bonus of each individual (each, an "Employee")
working at the Properties as of the Effective Date; except as set
forth on Schedule 8 of this Agreement, neither Seller nor any
Company is a party to any written employment contract with any of
the Employees.
(xii) There are no contracts with any labor union or association
representing any employees of any Company or any employees
employed in connection with the Properties.
(xiii) Each Seller has delivered or will deliver to Buyer, within five
(5) days after the Effective Date, true, correct and complete
copies of the organizational documents (operating agreement and
articles of organization and all amendments thereto) for each
Company existing as of the Effective Date, as well as the form of
Articles of Organization and Operating Agreement for each Company
not existing as of the date hereof, with remaining Company
organizational documents to be delivered to Buyer within five (5)
days after expiration of the Due Diligence Period, provided this
Agreement has not been terminated.
(xiv) Each Seller will transfer its respective Interests to Buyer at
the Closing, free and clear of any liens, charges, encumbrances
or adverse claims of any kind.
(xv) At the Closing, each Company shall own its respective Property,
subject only to the Permitted Exceptions.
(xvi) Other than as set forth on the balance sheet to be delivered at
the Closing, as of the Closing Date, each Company will not have
any unpaid liabilities (actual or contingent, monetary or
non-monetary, direct or indirect, matured or unmatured) or
obligations, whether due or to become due, other than those to be
paid at the time of settlement, and real estate taxes and current
trade payables or similar operating expenses to be prorated in
accordance with the terms of this Agreement.
(c) All of the representations and warranties of each Seller and each
Company set forth in this Agreement shall be true and correct in all
material respects at the Effective Date, and (except as disclosed in
writing by Sellers at or before the Closing and approved in writing by
Buyer, in Buyer's sole discretion), all shall be deemed to be repeated
at, and as of the Closing Date, and shall be true and correct in all
material respects as of the Closing Date. In the event Buyer learns of
any facts that render any part of any representations or warranties of
either Seller or any Company untrue, and Buyer fails to exercise its
rights under Section 9 and 21(a) below then Buyer shall be deemed to
have waived any right to object thereto and Seller shall have no
indemnification obligation pursuant to Section 7 with respect thereto.
(d) As used in this Agreement, the phrase "to the knowledge of the Company
or a Seller" or phrases of similar import mean and are limited to the
actual current knowledge, without duty of investigation except for
inquiry of the regional property managers in charge of each of the
Properties, of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Vice President, Dispositions) and ▇▇▇
▇▇▇▇▇ (Regional Vice President) (collectively, the "Representing
Parties") and not to any constructive knowledge of any of the
foregoing individuals or of any Company, Home Properties, or any
affiliates thereof, or to any officer, agent, representative, or
employee of Home Properties or HME.
(e) Except as expressly provided in this Agreement, Home Properties has
not made any representations and/or warranties regarding the
Properties or the Interests, and, except as expressly set forth in
this Agreement, Buyer shall, at the Closing, accept the Properties and
the Interests in "AS IS" condition, with all faults, and without any
other representations or warranties of any kind, whether as to
merchantability, or fitness for a particular purpose, or otherwise.
Except as expressly set forth in this Agreement, no representations or
warranties have been made or are made and no responsibility has been
or is assumed by any Company or Home Properties or by any partner,
officer, person, firm, agent or representative acting or purporting to
act on behalf of any Company, Home Properties as to the condition or
repair of any Property or the value, expense of operation, or income
potential thereof or as to any other fact or condition which has or
might affect any Property or the condition, repair, value, expense of
operation or income potential of any Property or any portion thereof.
The parties agree that all understandings and agreements heretofore
made between them or their respective agents or representatives are
merged in this Agreement and the schedules and exhibits hereto
annexed, which alone fully and completely express their agreement, and
neither party is relying upon any statement or representation by the
other unless such statement or representation is specifically embodied
in this Agreement or the exhibits annexed hereto. Buyer acknowledges
that with respect to the condition of the Properties, and except as
expressly set forth in this Agreement, will rely solely upon the
results of Buyer's own inspections or other information obtained or
otherwise available to Buyer, rather than any information that may
have been provided by any Company or Home Properties to Buyer. Buyer
acknowledges that it and its representatives (including environmental
consultants, architects and engineers) are to be afforded the right
and opportunity to enter upon the Properties and to make such
inspections of the Properties and matters related thereto, including
the conduct of soil, environmental and engineering tests, as Buyer and
its representatives desire, subject to the provisions of Section 11 of
this Agreement. Buyer represents that it is knowledgeable in real
estate matters and that upon completion of the inspections
contemplated or permitted by this Agreement, Buyer will have made all
of the investigations and inspections Buyer deems necessary in
connection with its purchase of the Properties, and that, except as
expressly set forth in this Agreement, approval by Buyer of such
inspections or failure to terminate this Agreement pursuant to the
terms hereof will be deemed to be approval of Buyer without
reservation of all aspects of this transaction, including but not
limited to the physical condition of the Properties.
7. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION; FUTURE LIABILITIES.
(a) All of the representations and warranties of each Seller and each
Company set forth in this Agreement, including, without limitation,
the indemnities set forth in subparagraph (b) below, shall survive the
Closing for a period equal to six (6) months following the Closing,
and shall not be deemed to have merged in any document delivered at
the Closing. Any Claim (as defined subparagraph (b) below) shall be
brought, if at all, within six (6) months from the Closing Date or
thereafter be forever barred. Neither Seller shall have any liability
to Buyer for any Claim (as defined in subparagraph (b) below) unless
the valid Claims collectively aggregate more than Twenty-Five Thousand
and No/100 Dollars ($25,000), in which event the full amount of
Buyer's actual damages shall be actionable, up to an aggregate amount
not to in any event exceed Two Million and No/100 Dollars
($2,000,000). In no event shall Buyer be entitled to seek or obtain
any other damages of any kind, including without limitation
consequential, indirect or punitive damages.
(b) Subject to the limitations set forth in subparagraph (a) above, each
Seller, jointly and severally, indemnify, shall hold harmless and
defend the Buyer and the Companies and their respective successors and
assigns from and against any and all demands, obligations,
assessments, losses, costs, claims, liabilities, judgments, and
damages (including, without limitation, reasonable attorneys' and
accountants' fees and any costs reasonably incurred in investigating,
preparing or defending against or prosecuting any litigation or claim)
(referred to hereinafter individually as a "Claim" or collectively as
"Claims"), relating or attributable to:
(i) a material breach of any of the representations and/or warranties
of either Seller set forth in this Agreement;
(ii) any Excluded Liabilities; and
(iii) the litigation identified on Schedule 5; and
(iv) any matter that occurred or any liability or obligation that
accrued with respect to any Property or any Company prior to the
Closing Date.
Subject to the limitations set forth above, the Sellers shall pay any
Claim promptly upon demand for payment by Buyer, together with
evidence reasonably documenting the amount and nature of the Claim and
the date of accrual. The foregoing indemnification shall terminate and
be of no further force and effect as of six (6) months following the
Closing Date, except to the extent that there are any pending Claims,
in which event this indemnification shall continue with respect to
such pending Claims until the same are fully settled.
(c) Notwithstanding anything to the contrary set forth herein, Buyer shall
be responsible for all activities, operations, debts, liabilities and
claims against each Property and each Company which arise and result
from occurrences from and after the Closing.
8. REPRESENTATIONS AND WARRANTIES OF BUYER.
(a) Buyer represents and warrants that each of the following is true,
complete and accurate in all material respects as of the Effective
Date, and shall be true, complete and accurate in all material
respects as of the Closing:
(i) Buyer has all the requisite power and authority to enter into and
carry out and perform this Agreement, according to its terms, and
to acquire and own the Interests, and manage each Property after
Closing.
(ii) Neither the execution and delivery of this Agreement, nor the
performance of this Agreement by Buyer, nor the execution,
delivery and performance of all other agreements contemplated by
this Agreement, shall conflict with, or result in any breach of,
any contract, agreement, law, rule or regulation to which Buyer
is a party, or by which Buyer is bound.
(iii) This Agreement, once duly executed and delivered, shall
constitute a legal and binding obligation of Buyer, enforceable
in accordance with its terms, except as such enforcement may be
limited by bankruptcy and other laws affecting creditors rights
generally.
(iv) Each instrument to be executed and delivered by Buyer pursuant to
this Agreement, or in connection herewith, shall, when executed
and delivered, be valid and enforceable against Buyer in
accordance with its terms, except as such enforcement may be
limited by bankruptcy and other laws affecting creditors, rights
generally.
(v) There is no litigation, proceeding or investigation pending, or,
to the best knowledge of Buyer, threatened, against or affecting
Buyer that might affect the validity of this Agreement, or any
action taken, or to be taken, by Buyer pursuant to this
Agreement, or that might have a material adverse effect on the
business of Buyer.
(b) All of the representations and warranties of Buyer set forth in this
Agreement, including, without limitation, the following indemnity,
shall survive the Closing, and shall not be deemed to have merged in
any document delivered at the Closing.
(c) Buyer agrees to indemnify Sellers, and hold harmless and defend them,
from and against any and all losses, costs, claims, liabilities, taxes
(including taxes on any indemnification amount), damages and expenses,
including, without limitation, reasonable attorneys' fees, arising as
the result of a breach of any of the obligations, covenants,
representations and/or warranties of Buyer set forth in this
Agreement. In no event shall any Seller be entitled to seek or obtain
any consequential, indirect or punitive damages.
9. CONDITIONS TO THE OBLIGATIONS OF BUYER.
a. Without limiting any of the rights of Buyer elsewhere set forth in
this Agreement, it is agreed that the obligations of Buyer under this
Agreement to purchase and pay for the Interests shall be subject to
the satisfaction on or prior to the Closing of the following
conditions ("Buyer's Conditions"):
(i) All of the representations and warranties of each Seller and each
Company set forth in this Agreement shall be true, accurate and
correct in all material respects as of the Closing Date (as if
made on the Closing Date).
(ii) Each Seller shall have delivered all of the documents and other
items required to be delivered by each Seller under the terms of
this Agreement.
(iii) Each Seller shall have fulfilled such other conditions to the
Closing as are set forth in this Agreement.
b. Each of the Buyer's Conditions is for the benefit of Buyer, and,
accordingly, any such condition may be waived by Buyer at any time.
c. Buyer may not rely on the failure of any condition set forth in this
Section 9 to be satisfied if such failure was caused by Buyer's
failure to act in good faith or otherwise in accordance with this
Agreement.
10. CONDITIONS TO THE OBLIGATIONS OF SELLERS.
(a) Without limiting any of the rights of Sellers elsewhere set forth in
this Agreement, it is agreed that the obligations of Sellers under
this Agreement to sell, transfer, assign and deliver the Interests
shall be subject to the satisfaction on or prior to the Closing of the
following conditions (the "Sellers' Conditions"):
(i) All of the representations and warranties of Buyer set forth in
this Agreement shall be true, accurate and correct in all
material respects as of the Closing Date (as if made on the
Closing Date).
(ii) Buyer shall have delivered all of the documents and other items
required to be delivered by Buyer under the terms of this
Agreement. (iii) Buyer shall have fulfilled such other conditions
to Closing as are set forth in this Agreement.
(b) Each of Sellers' Conditions is for the benefit of Sellers and,
accordingly, any such condition may be waived by either Seller at any
time.
(c) Seller may not rely on the failure of any condition set forth in this
Section 10 to be satisfied if such failure was caused by Seller's
failure to act in good faith or otherwise in accordance with this
Agreement.
11. INSPECTION PERIOD.
Subject to the rights of existing tenants at the Property, Buyer shall have a
period commencing on the Effective Date hereof and ending on May 12, 2006 at 3
p.m. Eastern Standard Time (the "Due Diligence Period") within which to cause
one or more surveyors, attorneys, engineers, auditors, architects, and/or other
experts of its choice to undertake the following with respect to each Property:
(i) to inspect any document related to each Property, including, without
limitation, all Leases and related documents, working drawings, plans and
specifications, surveys, appraisals, engineer's reports, environmental reports,
insurance policies, service contracts, real estate tax receipts and annual and
monthly operating statements, and (ii) to inspect, examine, survey, appraise and
obtain engineering and inspection reports with respect to each Property, and
otherwise to do all that, which, in the opinion of Buyer is necessary to
determine the condition and value of each Property for the uses intended by
Buyer; provided, however, that Buyer has received environmental reports from
Home Properties and Buyer shall not conduct any additional environmental study
of any Property without the prior written consent of Home Properties. Buyer may
terminate this Agreement for any reason or no reason by written notice to
Sellers given prior to expiration of the Due Diligence Period, in which event
the ▇▇▇▇▇▇▇ Money Deposit shall be returned immediately to Buyer, and this
Agreement shall, thereafter, be deemed null, void and of no further force or
effect, and neither party shall have any further rights or obligations under
this Agreement, except for those provisions that expressly survive the
termination of this Agreement. If not so terminated by Buyer then this Agreement
shall continue in full force and effect according to its terms and the ▇▇▇▇▇▇▇
Money Deposit shall be nonrefundable except as otherwise expressly set forth
herein. Buyer shall be responsible for payment of all of the costs of its due
diligence activities, including, without limitation, all engineering and
environmental reports and surveys, and all financial and Lease audits. Buyer
shall indemnify and hold Home Properties and the relevant Company harmless from
and against any and all loss, claims, damage and expense arising out of entry by
Buyer and its agents onto any Property and any testing performed thereon. Buyer
shall repair any damage which it may cause as a result of any such entry and
testing. Buyer shall cause its entry, inspections and testing (if any) to be
conducted in a manner so as to minimize disruption to staff and tenants at the
Properties.
12. TITLE.
(a) At the Closing each Company shall hold fee simple title to its
respective Property free and clear of all liens, charges and
encumbrances, except the Permitted Exceptions. Nothing set forth in
this subparagraph shall limit Buyer's right to review and object to
the Permitted Exceptions as set forth in subsection (e) below.
(b) The obligation of Buyer to complete the transaction described in this
Agreement is conditioned upon the delivery to Buyer of an owner's
policy of title insurance with respect to each Property insuring that,
as of the Closing, title to each Property is not subject to any liens
or encumbrances, other than the Permitted Exceptions.
(c) Sellers have delivered to Buyer the current survey of each Property.
(d) Sellers have delivered to Buyer, at Sellers' sole cost and expense,
with respect to each Property, a copy of its owner's title insurance
policy and a commitment for an owner's policy of title insurance from
the Title Company. Sellers shall deliver to Buyer, at Sellers' sole
cost and expense, all UCC and other customary searches of Sellers and
the Companies within 15 days after the Effective Date.
(e) If any title commitment, search or survey discloses exceptions to
title other than the Permitted Exceptions, or any other matter which
does not conform to the requirements of this Agreement, or if any
Permitted Exception, in Buyer's reasonable judgment, renders title to
the Property unmarketable or materially adversely affects the use and
operation of the Property as an apartment complex, then Buyer shall so
notify Sellers in writing, such notice to be furnished to Sellers, if
at all, not later than the end of the Due Diligence Period ("Title
Review Period").
(f) Sellers shall have the right, but not the obligation (except as
otherwise set forth below), within fifteen (15) days from the date of
receipt of such notice from Buyer (the "Correction Period"), to have
each such unpermitted exception to title removed, or to correct each
such other matter, in each case to the reasonable satisfaction of the
Buyer. Buyer shall have no obligation to close within the Correction
Period unless Sellers shall have caused the unpermitted exception to
be removed or corrected to the reasonable satisfaction of Buyer. If,
within the Correction Period, Sellers fail to have each such
unpermitted exception removed, or to correct each such other matter as
aforesaid, Buyer may terminate this Agreement with respect to any
affected Property by notice given to the other within fifteen (15)
days after the expiration of the Correction Period and the provisions
of Section 33 shall apply. In the event no such termination notice is
given within the aforementioned period, then Buyer shall be deemed to
have terminated this Agreement with respect to the affected Property.
Any exception to title (other than a Permitted Exception), or any
other matter which does not conform to the requirements of this
Agreement, to which the Buyer does not object, as aforesaid, shall be
deemed approved by Buyer, and shall be deemed to be an additional
Permitted Exception. Notwithstanding anything to the contrary
contained herein, Sellers shall be obligated to remove the Required
Exceptions.
13. CLOSING.
If this Agreement shall not have been terminated by Sellers or Buyer, for any of
the reasons set forth in this Agreement, and within the time(s) herein limited,
the closing of the conveyance of the Interests of the Companies (the "Closing")
shall occur on June 14, 2006 (such date being hereinafter referred to as the
"Closing Date"). The Closing shall be an escrow-type closing, with documents and
funds delivered to the Title Company, at such time, or at such other place, as
may be mutually agreed upon by the parties.
14. CLOSING DOCUMENTS.
(a) At or prior to the Closing, Sellers shall deliver to Escrow Agent the
following for each Company/Property, each of which shall be in form
and substance reasonably satisfactory to Buyer:
(i) an owner's title affidavit, and all other affidavits,
certificates or other documents reasonably and customarily
required by the Title Company in order to cause it to issue an
owner's title policy for each Property in the form and condition
required by this Agreement, including, without limitation, a
non-imputation endorsement;
(ii) an update of the Rent Roll pertaining to each Property (including
a listing of all delinquent and prepaid rents, and all security
deposits (including all interest due to tenants pursuant to
applicable law), dated as of (or as close as reasonably
practicable to) the Closing Date, and represented and certified
by Sellers to be true, accurate, complete and correct in all
material respects;
(iii) to the extent in the possession of each Company, all of the
original Leases and Service Contracts, such materials to remain
at the rental office and need not be brought to closing;
(iv) all keys to the Property in the possession of each Company, which
shall remain at the rental office and need not be brought to
closing;
(v) duly executed certificates of title, and other transfer
documents, with regard to any vehicle owned by Sellers;
(vi) a certified copy of the organizational documents of each Company
(any Company whose name includes "Home Properties" may be renamed
prior to Closing to omit "Home Properties," and a new name will
be selected by Buyer), good standing certificate and Certificate
of Secretary and Resolutions of HME evidencing the authority of
HME, Home Properties, Home Properties WMF and each Company to
close the transaction as described herein and such other evidence
of Sellers' authority as the Title Company may reasonably
request;
(vii) a letter to each of the tenants in each Property advising them
of the change of beneficial ownership of each Property, and the
transfer of the Security Deposits, and directing that rentals or
other payments thereafter be paid to a payee designated by Buyer;
(viii) such existing maintenance records in regard to the Property
which Buyer may request not later than five (5) days prior to the
Closing Date (which shall be delivered at the Property);
(ix) signed notices to each utility service provider, advising of the
change in beneficial ownership of such Property;
(x) an Assignment and Assumption of the Interests in each Company,
duly executed by the applicable Seller, as the case may be, in
the form attached hereto as Exhibit D ("Assignment of
Interests");
(xi) an executed Post-Settlement Consultation Agreement in the form
attached hereto as Exhibit C ("Consultation Agreement");
(xii) an assignment and assumption of all Service Contracts not in the
name of the Companies, if necessary ("Assignment of Other Service
Contracts"); and
(xiii) a closing statement (the "Closing Statement").
(b) At the Closing, Buyer shall deliver to Escrow Agent the following,
each of which shall be in form and substance reasonably satisfactory
to Sellers:
(i) an executed counterpart of the Assignment of Interests and the
Assignment of Other Service Contracts;
(ii) an executed counterpart of the Consultation Agreement, together
with the consideration specified therein;
(iii) a receipt for the Security Deposits acknowledged by the
deduction described in Section 15(d); and
(iv) an executed counterpart of the Closing Statement.
15. ADJUSTMENTS.
(a) At the Closing, the items set forth below with respect to each
applicable Property/Company shall be adjusted between Buyer and
Sellers as of the date of the Closing Date (it being understood that
Buyer shall have the benefit of monies received and expenses incurred
on the date of Closing) and shall be paid in cash at Closing:
(i) Real estate and personal property taxes on the usual and
customary "due date" basis;
(ii) rents under the Leases for the relevant month, as and when
collected;
(iii) coin operated laundry concession income;
(iv) charges for water, sewer, electricity, fuel, gas, telephone and
other utilities, which are not metered or otherwise charged
directly to tenants under the Leases; provided that if the
consumption of any such utilities is measured by meters, at the
Closing Sellers shall furnish a current reading of each meter,
and provided, further, that if there is not a meter, or if the
meter(s) cannot be read by the relevant utility prior to the
Closing, the charges therefore shall be adjusted at the Closing
on the basis of the charges for the prior period for which bills
were issued, and shall be further adjusted when the bills for the
period including the Closing Date are issued;
(v) amounts paid or payable under the Service Contracts at the
Closing;
(vi) any payments or other monetary consideration or inducements
received by either Seller or any Company for contracts or other
agreements, other than Leases, entered by either Seller or any
Company prior to the Closing with respect to any Property, if
any, which shall be apportioned on the basis of the amortization
of such payments or other monetary consideration or inducements
over the term of such contracts; and
(vii) such other amounts as are customarily adjusted between parties
to similar transactions in the local jurisdiction.
(b) Rents which are due and payable by any tenant under the Leases but
uncollected as of the Closing Date shall not be adjusted at the
Closing. All rents collected by any Company after the Closing Date
shall be applied first to any due but unpaid rentals accruing
subsequent to the Closing Date, and then to any rents past due for the
calendar month in which the Closing Date occurs (subject to
adjustment), and then to any rents due and unpaid prior to the Closing
Date. Subject to the preceding sentence, all rent collected after the
Closing for any period prior to the Closing shall belong to Sellers,
and if paid to Buyer, Buyer shall promptly send such rent to Sellers,
less all reasonable expenses incurred by Buyer, if any, in regard to
the collection thereof. At the Closing, Sellers shall deliver to Buyer
a schedule of all such past due, but uncollected rents owed by
tenants. All rents collected by any Seller or any Company, prior to
the Closing, for rental period(s) subsequent to the Closing shall be
paid by Sellers or such Company to Buyer at the Closing or deducted as
an adjustment at the Closing. All rents collected by Buyer or Sellers
for rental periods after the Closing shall belong to Buyer, and if
paid to any Seller or any Company, Sellers shall promptly send such
rent to Buyer.
(c) Sellers shall provide Buyer, no later than five (5) Business Days
prior to the Closing, with all adjustments applicable for the Closing.
Any adjustment estimated at the Closing shall be finally adjusted as
soon as practicable after the Closing. Any error in the calculation of
apportionments shall be corrected subsequent to the Closing with
appropriate credits to be given based upon corrected adjustments;
provided, however, that all adjustments (except as to errors caused by
misrepresentation) shall be deemed final upon the expiration of ninety
(90) days after the Closing Date.
(d) Buyer shall receive a credit at Closing in an amount equal to the
aggregate amount of the Security Deposits (with interest as required
by applicable law) shown on the updated Rent Roll provided by Sellers.
(e) Sellers shall be responsible for, and shall make arrangements for
payment of, all amounts due up to the Closing Date for employees'
salaries, accrued vacation pay, withholding and payroll taxes, and
other benefits, and any management fee affecting any Property or any
Company (Sellers may utilize one or more payroll periods after the
Closing to finalize these payments). Buyer shall be responsible for
all such expenses for all employees hired by Buyer or its management
company commencing upon the Closing Date.
(f) In the event any reserves or escrows held in connection with any
Existing Loan are refunded after the Closing, such funds shall belong
to Sellers, and, if received by Buyer or any Company, such funds shall
be immediately delivered to Sellers.
16. POSSESSION.
Upon completion of the Closing, each Company shall remain in full and complete
possession of its applicable Property, subject only to the Permitted Exceptions.
17. CONDEMNATION AND DESTRUCTION.
(a) If, prior to the Closing Date, any Property or any major part of any
Property, is taken by eminent domain (or is the subject of a pending
or contemplated taking which has not been consummated), then Sellers
shall notify Buyer of such fact ("Taking Notice"). Buyer may terminate
this Agreement with respect to any affected Property by written notice
to the other given not later than fifteen (15) business days after
receipt of the Taking Notice and the provisions of Section 33 shall
apply. In the event that no such termination notice is given within
the aforementioned period, then Buyer shall be deemed to have agreed
to accept title to any affected Property (other than the portion so
taken), without abatement of the Purchase Price, in which event the
Company shall be entitled to receive and keep, and Sellers shall waive
all rights to, all amounts awarded, or to be awarded, as the result of
the taking.
(b) In the event any minor part of any Property is taken by eminent domain
(or is the subject of a pending or contemplated taking which has not
been consummated), then Sellers shall send a Taking Notice and Buyer
shall accept title to any such affected Property without abatement of
the Purchase Price and the Company shall be entitled to receive and
keep, and Sellers shall waive all rights to, all amounts awarded, or
to be awarded, as the result of the taking.
(c) If, prior to the Closing Date, all or any material part of any
Property is damaged or destroyed by fire or other casualty, then
Sellers shall notify Buyer of such fact ("Damage Notice"). Buyer may
terminate this Agreement with respect to any affected Property by
notice given not later than fifteen (15) business days after receipt
of the Damage Notice and the provisions of Section 33 shall apply. In
the event no such termination notice is given within the
aforementioned period, then Buyer shall be deemed to have agreed to
accept title to any affected Property without abatement of the
Purchase Price, in which event the Company shall receive and keep, and
Sellers shall assign any and all rights to, the insurance proceeds
awarded or to be awarded to Sellers as the result of such damage or
destruction, giving Buyer a credit at the Closing for any deductible
under the insurance policy, less any amounts paid for restoration.
(d) In the event there is damage to or destruction of an immaterial part
of any Property by fire or other casualty, such damage or destruction
shall, subject to receipt of insurance proceeds, be repaired promptly
by the affected Company, and in the event such damage or destruction
cannot be fully repaired by the Closing Date, then Sellers shall have
the right to extend the Closing Date until such repairs shall have
been completed, not in excess of sixty (60) days. Notwithstanding
Sellers' election to delay the Closing, Buyer shall have the right to
close on the original Closing Date provided Buyer accepts title to the
affected Property(ies) without abatement of the Purchase Price, in
which event the Company shall receive and keep, and Sellers shall
assign any and all rights to, the insurance proceeds awarded or to be
awarded to Sellers as the result of such damage or destruction, giving
Buyer a credit at Closing for any deductible under the insurance
policy, less any amounts paid for restoration. In the event Sellers
does not elect to delay Closing, or if the Closing is delayed and
Sellers is unable to repair the damage or destruction by the extended
Closing Date, then Buyer or Home Properties may terminate this
Agreement with respect to any affected Property and the provisions of
Section 33 shall apply. Notwithstanding the foregoing, Buyer waives
any right to terminate this Agreement with respect to Oak Park Manor,
which has a fire damaged unit, as described in Section 32 below.
(e) A "major" part of any Property shall be deemed to have been taken by
eminent domain (or is the subject of a pending or contemplated taking
which has not been consummated) if such taking shall result in the
loss of any apartment units or shall materially interfere with the use
of the Property as an apartment complex, and a "minor" part of any
Property shall be deemed to have been taken if such taking shall not
result in the loss of any apartment units and shall not materially
interfere with the use of the Property as an apartment complex (such
as a road widening).
(f) An "immaterial" part of any Property shall be deemed to have been
damaged or destroyed if the cost of repair or replacement thereof
shall be $1,000,000, or less, and a "material" part thereof shall be
deemed to have been damaged or destroyed if the cost of repair or
replacement thereof shall be greater than $1,000,000. 18. BROKER'S
COMMISSION.
Buyer and Sellers each represent to the other that the transaction described in
this Agreement was not brought about or assisted in any way by any broker, firm
or salesman, or other person or persons acting or functioning as, or in a role
similar to a broker except for CB ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Broker"). At Closing, Sellers
shall pay Broker a commission pursuant to a separate agreement. Buyer agrees
that should any claim be made for a commission or other compensation with regard
to this transaction by any broker claiming through Buyer, other than a broker
engaged in writing by Sellers, Buyer shall have the sole responsibility for
paying any such claim, and shall indemnify and hold harmless Sellers from and
against any such claim of any such broker, and all liabilities and expenses in
connection therewith, including court costs and attorneys, fees and expenses.
Sellers agree that should any claim be made for a commission or other
compensation with regard to this transaction by any broker claiming through
Sellers, other than Broker or a broker engaged in writing by Buyer, Sellers
shall have the sole responsibility for paying any such claim, and shall
indemnify and hold harmless Buyer from and against any such claim of any broker,
and all liabilities and expenses in connection therewith, including court costs
and attorneys, fees and expenses. The provisions of this Section shall survive
Closing and any termination of this Agreement.
19. ▇▇▇▇▇▇▇ MONEY DEPOSIT.
At the Closing, the ▇▇▇▇▇▇▇ Money Deposit shall, at Buyer's option, be returned
to Buyer or applied to the Purchase Price payable for the Interests. As used
anywhere in this Agreement, the term "▇▇▇▇▇▇▇ Money Deposit" shall include any
interest or earnings thereon.
20. COOPERATION.
At all times during the term and pendency of this Agreement, Sellers shall
cooperate fully with Buyer (but with no obligation to incur cost or expense in
connection therewith) in all reasonable manner in providing books, records and
other documentation for review, including, without limitation, all Leases and
related documents, working drawings, plans and specifications, surveys,
appraisals, engineer's reports, environmental reports, insurance policies,
service contracts, real estate tax receipts, and annual and monthly operating
statements relating to each Property, and in the possession of, or reasonably
available to Sellers. Subject to existing tenant leases, each Company shall
provide access to its Property for all physical inspections required by Buyer.
Buyer shall conduct itself and its examinations in a manner to minimize
disruption to the staff and tenants of each Property.
21. DEFAULTS AND REMEDIES.
(a) If Sellers fail or refuse to perform in accordance with the terms of
this Agreement, including, without limitation, the failure to satisfy
any of Buyer's Conditions set forth in Section 9, other than due to a
default by Buyer under this Agreement or termination of this Agreement
by Buyer or Seller pursuant to a right to do so in accordance with the
provisions of this Agreement, then Buyer shall have the right to
either: (i) ▇▇▇ ▇▇▇▇▇▇▇ and the Companies and seek enforcement of this
Agreement by decree of specific performance, in which event Sellers
shall reimburse Buyer for its costs and expenses (including without
limitation reasonable attorneys' fees and disbursements); or (ii)
terminate this Agreement, in which event the ▇▇▇▇▇▇▇ Money Deposit
shall be returned to Buyer, and Buyer shall, in addition, be entitled
to reimbursement by Sellers of all actual out-of-pocket due diligence
and financing costs (including, without limitation, attorney's fees
and disbursements) incurred by Buyer in connection with the proposed
acquisition and financing of the Interests up to an aggregate amount
not to in any event exceed One Million and No/100 Dollars
($1,000,000), after the payment of which this Agreement shall be
deemed null, void, and of no further force or effect between the
parties, except for such provisions that, pursuant to the terms of
this Agreement, are expressly made to survive the termination of this
Agreement.
(b) If Buyer fails or refuses to perform in accordance with the terms of
this Agreement, including, without limitation, the failure to satisfy
one or more of Sellers' Conditions set forth in Section 10, other than
due to a default by either Seller under this Agreement or termination
of this Agreement by Buyer or Seller pursuant to a right to do so in
accordance with the provisions of this Agreement, then Sellers shall
have the right to terminate this Agreement, in which event the ▇▇▇▇▇▇▇
Money Deposit shall be forfeited to Sellers and this Agreement shall
be deemed null, void, and of no further force or effect between the
parties, except for such provisions that, pursuant to the terms of
this Agreement, are expressly made to survive the termination of this
Agreement. In that regard, Buyer acknowledges and agrees that (i) the
▇▇▇▇▇▇▇ Money Deposit is a reasonable estimate of, and bears a
reasonable relationship to, the damages suffered and costs incurred by
Sellers as a result of having subjected the Interests to the terms of
this Agreement; (ii) the actual damages suffered and costs incurred by
Sellers as a result of such failure of Buyer to close under this
Agreement would be extremely difficult and impractical to determine;
(iii) Buyer seeks to limit its liability under this Agreement to the
amount of the ▇▇▇▇▇▇▇ Money Deposit in the event this Agreement is
terminated and the transaction contemplated by this Agreement does not
close due to Buyer's failure to close under this Agreement; and (iv)
the ▇▇▇▇▇▇▇ Money Deposit shall be and constitute valid liquidated
damages.
22. CONFIDENTIALITY.
Prior to Closing, both Sellers and the Buyer agree to keep this Agreement
confidential, and not to disclose its contents to anyone except their respective
lenders, legal counsel and accountants, except that Sellers may make such public
announcement regarding the transaction contemplated by this Agreement as may, in
its judgment, be required by or appropriate under securities laws and
regulations. Buyer understands that this Agreement may be filed as an exhibit to
such announcement but only if such action is required by applicable securities
laws and regulations, and then only to the extent that it is required by such
laws and regulations. From and after expiration of the Due Diligence Period
(provided this Agreement has not been terminated by either party) until the
Closing, Sellers shall use reasonable efforts to provide draft press releases
relating to the transaction described herein to Buyer prior to issuance,
provided that Seller shall have no obligation to change the press release or
alter the timing of issuance based on any comments received from Buyer.
23. RISK OF LOSS.
Until the Closing, the risk of loss or damage to all or any part of any
Property, from fire or other casualty, or from condemnation, shall be borne by
each Company and Sellers, subject to the terms of this Agreement.
24. NOTICES.
(a) All notices, demands, or requests made and/or given pursuant to,
under, or by virtue of this Agreement must be in writing and sent to
the party to which the notice, demand or request is being made and/or
given, by postage prepaid, certified or registered mail, return
receipt requested, by nationally recognized courier service, by
telecopy with confirmation of receipt or by personal delivery, as
follows:
(i) if to the Buyer:
THE LIGHTSTONE GROUP, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Sellers or any Company:
c/o Home Properties
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
c/o Home Properties
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any such notice, demand or request shall be deemed to have been
rendered or given on the date of receipt, in the case of delivery by
courier service, telecopy or personal delivery, or three (3) business
days after mailing.
25. ASSIGNMENT.
Neither this Agreement nor any interest hereunder shall be assigned or
transferred by Buyer or Sellers, except: (a) as provided in Section 26 below;
and (b) Buyer may assign its rights hereunder to an affiliate which is owned or
controlled by the original Buyer or Buyer's principals, provided Buyer notifies
Sellers of such assignment not less than ten (10) days prior to the Closing. In
no event may Buyer assign any of its rights hereunder to an unrelated party.
26. TAX DEFERRED EXCHANGE.
(a) Seller has advised Buyer of its intention to effect tax deferred
exchanges pursuant to Section 1031 of the Internal Revenue Code in
connection with the sale of the Interests in one or more of the
Companies. Seller may assign all or part of its rights under this
Agreement to a Qualified Intermediary of Seller's choice for the
purpose of completing such exchanges. Buyer agrees to cooperate with
Seller and Qualified Intermediary with respect to such exchange and
agrees to execute all documentation required to effectuate such
exchange; provided, however, that: (a) Buyer shall not incur
additional liability or costs as a consequence of Seller's exchange
activities; (b) Buyer shall not be obligated to delay, or agree to the
delay of, the Closing as a result of Seller's contemplated exchange
activities; and (c) Seller shall indemnify and hold Buyer harmless
from any and all liability, claims, losses or actions which Buyer
incurs or to which Buyer may be exposed as a result of Buyer's
participation in the contemplated exchange. Buyer makes no warranty
whatsoever with respect to the qualification of the transaction for
tax deferred exchange treatment under Section 1031 and Buyer shall
have no responsibility, obligation or liability with respect to the
tax consequences to Seller. This Agreement is not subject to or
contingent upon Seller's ability to effectuate a contemplated
exchange. In the event any exchange contemplated by Seller should fail
to occur, for whatever reason, the sale of the Interests shall
nonetheless be consummated as otherwise provided in this Agreement.
(b) In the event that Buyer wishes to enter into a Section 1031 tax
deferred exchange in connection with the Interests in one or more of
the Companies, Sellers agree to cooperate with Buyer in connection
with such exchange, including the execution of such documents as may
be reasonably necessary to effectuate the same provided that: (a)
Sellers shall not incur any additional liability or cost as a
consequence of Buyer's exchange activities; (b) Sellers shall not be
obligated to delay, or agree to the delay of, the Closing as a result
of Buyer's contemplated exchange; and (c) Buyer shall indemnify and
hold Sellers harmless from any and all liabilities claims, losses or
actions which Sellers incur or to which Sellers may be exposed as a
result of Sellers' participation in the contemplated exchange. Sellers
makes no warranty whatsoever with respect to the qualification of the
transaction for tax deferred exchange treatment under Section 1031 and
Sellers shall have no responsibility, obligation or liability with
respect to the tax consequences to Buyer. This Agreement is not
subject to or contingent upon Buyer's ability to effectuate a
contemplated exchange. In the event any exchange contemplated by Buyer
should fail to occur, for whatever reason, the sale of the Interests
shall nonetheless be consummated as otherwise provided herein this
Agreement.
27. GOVERNING LAW.
This Agreement shall be governed, construed and interpreted in accordance with
the laws of the State of Michigan applicable to contracts made and to be
performed wholly within the State of Michigan without giving effect to the
conflicts-of-laws principles thereof.
28. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the various documents referred to herein contains, or
incorporates, all of the terms agreed upon between the parties with respect to
the subject matter, and supersedes any and all prior written or oral
understandings. This Agreement may not be modified or amended except in, and by,
a written instrument executed by the parties hereto.
29. WAIVER.
No waiver by either party of any failure or refusal of the other party to comply
with any of the obligations of such party hereunder shall be deemed a waiver of
any other or subsequent failure or refusal so to comply.
30. ARTICLE HEADINGS.
The headings of the various sections of this Agreement have been inserted only
for purposes of convenience, and are not part of this Agreement, and shall not
be deemed in any manner to modify, explain, qualify or restrict any of the
provisions of this Agreement.
31. MISCELLANEOUS.
(a) This Agreement may be executed in several counterparts, each of which,
when taken together, shall be deemed an original and constitute one
and the same document.
(b) This Agreement may be executed by facsimile signature, and delivery by
a party hereto of the facsimile signature of such party shall have the
same force and effect as the delivery of an original signature of such
party.
(c) Sellers will use commercially reasonable efforts, in accordance with
their existing business practices, to ensure that at the time of the
Closing the vast majority of apartment units are in rentable
condition. The parties recognize that tenants move out at various
times and that it may not be possible for all units to be fully
prepared at the time of Closing. Accordingly, Sellers shall be fully
responsible for insuring that all units that have been vacated 30 or
more days prior to Closing shall be in full rentable condition. In the
event that any apartment unit vacant 30 or more days prior to Closing
is not in retable condition, Buyer shall receive a closing credit
equal to $1,000. For units vacated within 30 days prior to Closing,
Sellers continue to use commercially reasonable efforts, in accordance
with existing business practice, to prepare such units for subsequent
tenancy, however, if any such units are not in full rentable condition
at the time of Closing there shall be no credit given to Buyer.
32. CERTIFICATE OF OCCUPANCY/PERMITS.
Sellers have applied for certificates of occupancy for the following Properties
(Carriage Hill, Carriage Park, Cherry Hill Village, Cherry Hill Club, Hampton
Court, Scotsdale, Springwells Park) (collectively, the "Permit Properties").
Notwithstanding anything to the contrary set forth in this subparagraph, in the
event the relevant municipality(ies) will issue a conditional certificate of
occupancy which provides that repairs are to be completed after Closing, then
Buyer agrees to accept a conditional certificate of occupancy and will complete
such repairs after Closing at its cost and sign any documentation requested or
required by the municipality(ies) in connection therewith. Without limiting the
foregoing, the letter requested by the City of Westland regarding Hampton Court
post-closing repairs is attached as Schedule 13 and Buyer hereby agrees to sign
and deliver the same. Sellers shall use their best efforts to obtain any
required certificates of occupancy for each of the Permit Properties on or
before Closing at their cost. In the event a certificate of occupancy has not
been issued by Closing for any of the Permit Properties, then Sellers shall have
the right to extend the Closing Date by up to thirty (30) days. In the event a
certificate of occupancy has not been issued by the extended Closing Date for
any of the Permit Properties, then Buyer shall have the right to terminate this
Agreement with respect to any Permit Property for which certificates of
occupancy are lacking and the provisions of Section 33 shall apply.
Notwithstanding anything to the contrary set forth herein, Buyer agrees that in
the event a certificate of occupancy has not been issued by the extended Closing
Date for the Property known as Springwells Park, then Buyer shall accept the
Springwells Park Property without a certificate of occupancy.
Notwithstanding anything to the contrary set forth herein, Buyer acknowledges
and agrees that the fire unit at Oak Park Manor may not be repaired before
Closing and agrees to accept such fire unit without a certificate of occupancy.
33. TERMINATION WITH RESPECT TO INDIVIDUAL PROPERTIES.
In the event that this Agreement is terminated with respect to individual
affected Properties, pursuant to Sections 12, 17 or 32, then Buyer shall be
entitled to receive the portion of the ▇▇▇▇▇▇▇ Money Deposit allocated to any
such terminated Property, as agreed by Buyer and Sellers, and the Purchase Price
shall be reduced by the amount allocated to any such terminated Property, as
agreed by Buyer and Sellers.
34. ASSUMPTION OF EXISTING OFFICE LEASE.
At Closing, Buyer shall assume Home Properties' obligations as tenant under the
Lease, dated April 12, 1999, between ▇▇▇▇▇-▇▇▇▇▇/Forbes ▇▇▇▇▇ Associates, L.L.C.
and Home Properties, L.P., as amended by First Amendment to Lease, dated
December 8, 2003, for premises known as ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇ Lease"); provided, however, that Sellers (a)
shall obtain any consent from landlord or any other party required under such
lease; and (b) execute an indemnification agreement, in form and substance
reasonably acceptable to Buyer, where Sellers indemnify, hold harmless and
defend Buyer and the Companies and their respective successors and assigns from
and against any and all demands, obligations, assessments, losses, costs,
claims, liabilities, judgments, and damages (including, without limitation,
reasonable attorneys' and accountants' fees and any costs reasonably incurred in
investigating, preparing or defending against or prosecuting any litigation or
claim), relating or attributable to the ▇▇▇▇▇ Lease which occurred prior to the
Closing.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Agreement as at the day and
year first above written.
BUYER:
THE LIGHTSTONE GROUP, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and COO
SELLER:
HOME PROPERTIES, L.P.
By: Home Properties, Inc.
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
HOME PROPERTIES WMF I, LLC
By: Home Properties, L.P.
Sole Member
By: Home Properties, Inc.
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
LIST OF
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Properties and Companies
Schedule 2 - Intentionally Deleted
Schedule 3 - Service Contracts
Schedule 4 - Liabilities
Schedule 5 - Litigation
Schedule 6 - Notices of Violation
Schedule 7 - Personal Property
Schedule 8 - Employees
Schedule 9 - Insurance Certificates
Schedule 10 - Insurance Loss Run History Reports
Schedule 11 - ▇▇▇▇▇ Lease
Schedule 12 - Easements
Schedule 13 - Certificates of Occupancy
EXHIBITS
Exhibit A - Description of the Land
Exhibit B - Form of Deposit Escrow Agreement
Exhibit C - Form of Post-Settlement Consultation Agreement
Exhibit D - Form of Assignment and Assumption of Interests
Exhibit E - Wire Transfer Instructions
SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF INTERESTS
----------------------------------------------------------------
THIS SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF INTERESTS (this
"Second Amendment"), is made as of the 16th day of May, 2006, by and between
HOME PROPERTIES, L.P., a New York limited partnership ("Home Properties") and
HOME PROPERTIES WMF I, LLC, a New York limited liability company ("Home
Properties WMF"; and together with Home Properties, as "Sellers"), and THE
LIGHTSTONE GROUP, LLC, a New Jersey limited liability company (as "Buyer").
RECITALS
--------
WHEREAS, Sellers and Buyer have entered into that certain Agreement For Purchase
and Sale of Interests (South Michigan Portfolio), dated as of April 26, 2006, as
amended by that certain First Amendment to Agreement For Purchase and Sale of
Interests, dated as of May 12, 2006 (collectively, the "Contract"), covering the
sale and purchase of certain entities as more particularly described therein;
and
WHEREAS, the parties hereto wish to amend the Contract as set forth in this
Second Amendment.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) each to the other in
hand paid, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
---------
1. Definitions. All capitalized terms used in this Second Amendment shall have
the same meanings ascribed to them in the Contract, unless otherwise herein
defined.
2. Modifications. Effective as of the date hereof, the Contract is hereby
modified and amended by:
(i) Deleting Section 2(a) of the Contract and replacing same with the
following language:
" (a) The aggregate purchase price ("Purchase Price") payable by Buyer
for the Interests is Two Hundred Twenty-Eight Million Seven Hundred
Thirty-Eight Thousand Five Hundred and No/100 Dollars ($228,738,500),
subject to such apportionments, adjustments and credits as are
provided in this Agreement."
(ii) Adding the following at the end of Section 5:
" (d) From May 16, 2006 until the date that is six (6) months after
the Closing, neither Sellers nor any affiliate of Sellers, will
directly or indirectly, solicit (except for job postings by Sellers
available to the general public) or hire for employment any Employee
or any employee from any regional office from which any of the
Properties is being managed (but excluding ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇), without the prior written
consent of the Buyer, which consent may be withheld in Buyer's sole
and absolute discretion."
(iii) Adding the following at the end of Section 7:
" (d) Notwithstanding anything to the contrary set forth herein,
Sellers shall be responsible for all litigation against each Property
and each Company which arises or results from occurrences prior to the
Closing, and each Seller, jointly and severally, shall indemnify, hold
harmless and defend the Buyer and the Companies and their respective
successors and assigns from and against any Claim relating or
attributable thereto. Notwithstanding anything to the contrary set
forth herein, Sellers liability for Claims under this Section 7(d)
shall be unlimited and shall survive the Closing without limitation."
(iv) Deleting the first sentence on Section 13 of the Contract and
replacing same with the following language:
"If this Agreement shall not have been terminated by Sellers or Buyer,
for any of the reasons set forth in this Agreement, and within the
time(s) herein limited, the closing of the conveyance of the Interests
of the New Companies (the "Closing") shall occur on June 23, 2006;
provided, however, that Buyer shall be entitled, upon written notice
to the Sellers given no later than June 23, 2006, to postpone such
original closing date to no later than June 30, 2006, as to which TIME
SHALL BE OF THE ESSENCE (such date, as same may be postponed pursuant
to this Section 13, being hereinafter referred to as the "Closing
Date")."
(v) Deleting Section 15(a)(i) of the Contract and replacing same with the
following language:
" (i) Real estate and personal property taxes based on the
concurrent fiscal year method, whereby taxes for each taxing
jurisdiction are deemed applicable to the fiscal year of such
jurisdiction during which the tax is levied;"
(vi) Adding the following at the end of Section 9:
" (d) Without limiting any of the rights of Buyer elsewhere set forth
in this Agreement and in additional to the Buyer's Conditions
applicable with respect to the Property known as Springwells Park
("Springwells"), it is agreed that the obligations of Buyer under this
Agreement to purchase and pay for the Interests applicable to the New
Company holding fee title to Springwells shall be subject to the
satisfaction on or prior to the Closing of the following conditions
(the "Springwells Buyer's Conditions"): (i) completion of all life and
safety repairs (the "Life/Safety Repairs") required by the applicable
municipality having jurisdiction over Springwells (the "Springwells
Municipality") to such municipality's satisfaction pursuant to a
written notice thereof; and (ii) there being no reasonable risk that
the Springwells Municipality shall take steps to prohibit Buyer's
operation of Springwells as a multi-tenant facility for non-completion
of other repairs being required by such municipality; provided,
however, that if all the Springwells Buyer's Conditions are not
satisfied on or prior to the Closing, then the Closing, with respect
to Springwells only, shall be postponed for up to sixty (60) days
during which time Buyer and Sellers shall work together, at Seller's
sole cost and expense, to satisfy the Springwells Buyer's Conditions.
In such event, the parties shall close the transaction with respect to
the Interests in all New Companies with the exception of Springwells
on the original Closing Date and the Purchase Price shall be reduced
by the amount allocated to Springwells, as agreed by Buyer and
Sellers, and the portion of the ▇▇▇▇▇▇▇ Money Deposit allocated to
Springwells, as agreed by Buyer and Sellers, shall continue to be held
in escrow, to be released at the Springwells closing or returned to
Buyer in the event of termination as described in the next sentence.
If the Springwells Buyer's Conditions are not satisfied within such
additional time period, then either party may terminate this Agreement
with respect to Springwells and the provisions of Section 33 shall
apply."
(vii) Deleting the last sentence of the first paragraph of Section 32 of
the Contract and replacing same with the following:
"Notwithstanding anything to the contrary set forth herein but subject
to Section 9(d) of the Contract, in the event the Springwells
Municipality shall issue a conditional certificate of occupancy which
provides that repairs are to be completed after the Closing (other
than Life/Safety Repairs which shall remain the Seller's obligation),
then Buyer agrees to accept a conditional certificate of occupancy and
will complete such repairs after the Closing at its cost (except with
respect to Life/Safety Repairs which shall continue to be the
responsibility of Sellers) and sign any documentation requested or
required by the Springwells Municipality in connection therewith."
(viii) Adding a new Section 35 as follows:
"35. LITIGATION ASSISTANCE. With regard to any litigation or claims
which relate to periods prior to Closing, including without limitation
the matters described on Schedule 5 and litigation referred to in
Section 7, after Closing, Buyer will cooperate with Sellers and their
agents in assisting Sellers to investigate and defend same, at no cost
to Buyer. Without limiting the foregoing, after Closing, Buyer will
provide Sellers and their agents reasonable access to the Properties,
to documents and to employees for consultation on any such claim or
litigation matter."
(ix) Deleting Schedule 6 of the Contract and replacing same with Schedule 6
attached hereto.
3. Creation of New Companies. Sellers acknowledge and agree that: (i) on or
prior to Closing, the fee ownership of each of the Properties will be
transferred to a newly-created Delaware limited liability company, the name
and formation documentation of which shall be in Buyer's sole and absolute
discretion (except the Operating Agreement which Buyer may amend and
restate at Closing)(the "New Companies"); (ii) all references in the
Contract to Seller's obligation to transfer "Interests" shall refer to the
"Interests" in the New Companies; (iii) all references in the Contract to
"Company" shall refer to "New Company"; and (iv) prior to Closing, Schedule
1 to the Contract will be modified to reflect the names of each New Company
and Recital (b) to the Contract shall be deemed modified in accordance with
the modified Schedule 1.
4. Board Approval. The Contract, as amended by this Second Amendment, shall be
subject to the approval of the board of directors of Home Properties, Inc.,
("Board") to be obtained by Sellers no later than May 18, 2006 at 4 PM
(Eastern Standard Time) ("Board Approval Deadline"). If the Board has not
approved the Contract, as amended by this Second Amendment, prior to the
Board Approval Deadline, as to which TIME SHALL BE OF THE ESSENCE, then
either party may terminate this Contract and the ▇▇▇▇▇▇▇ Money Deposit
shall be returned immediately to Buyer and neither party shall have any
further rights or obligations under the Agreement except for those
provisions that expressly survive the termination of the Agreement.
5. Due Diligence Period Ended. Buyer hereby acknowledges that the Due
Diligence Period described in Section 11 of the Contract has ended.
6. Title/Survey Objections. Sellers acknowledge and agree that Buyer reserves
all rights under the Contract with respect to the title and survey
objections provided to Sellers in the letter and enclosures dated May 12,
2006 from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, submitted via facsimile on May 12, 2006
and supplemented via facsimile on May 16, 2006.
7. No Other Changes. Except as modified by this Second Amendment, the Contract
shall remain in full force and effect.
8. Counterparts. This Second Amendment may be executed in counterparts, all of
which, when taken together, shall constitute one original. Facsimile
signatures shall be deemed originals for all purposes.
[THE SIGNATURE PAGE FOLLOWS ON THE NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of
the date and year first above written.
BUYER:
THE LIGHTSTONE GROUP, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Chairman
SELLER:
HOME PROPERTIES, L.P.
By: Home Properties, Inc.,
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
HOME PROPERTIES WMF I, LLC
By: Home Properties, L.P.,
Sole Member
By: Home Properties, Inc.,
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President