Exhibit 2.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT ("this Agreement") made as of the 16th day of
April, 1999, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual, ▇▇▇▇▇▇ ▇▇▇▇▇
Associates, a Pennsylvania limited partnership, Greenacres Associates, a
Pennsylvania limited partnership, all having an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "Contributors") and
Home Properties of New York, L.P., a New York limited partnership ("Home
Properties"), and Home Properties of New York, Inc., a Maryland Corporation
("HME"), both 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 of the Contributors owns a 100% fee simple interest in one or
more of four Pennsylvania apartment properties, one of which includes a 3,000
square foot commercial building (collectively, the "Portfolio") listed on
SCHEDULE 1 hereto.
(b) The Portfolio comprises 825 dwelling units and the commercial
building described above.
(c) Upon the terms and conditions set forth in this Agreement, each of
the Contributors desires to exchange, transfer and convey to Home Properties a
100% fee simple interest in the Property or Properties owned by such
Contributor, together with the related Personal Property, Service Contracts and
Trade Names (all as hereinafter defined), in exchange for limited partnership
interests (the "OP Units") in Home Properties, cash and financing provided by
the Contributors.
(d) Upon the terms and conditions set forth in this Agreement, Home
Properties desires to acquire the Portfolio.
(e) It is expected that the exchange of the Portfolio for OP Units (but
not the cash or debt portion of the Consideration) will qualify for Federal
income tax purposes, as a tax free transfer, pursuant to Section 721 of the
Code.
(f) As used in this Agreement with initial capital letters, the
following terms, in each instance, shall have the meaning ascribed thereto:
"Code" shall mean and refer to the Internal Revenue Code of 1986, as
amended;
"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;
"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 Pennsylvania 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 of New York, Inc., a
Maryland corporation (which operates as a self-administered, and self-managed,
equity real estate investment trust);
"HME Common Shares" shall mean and refer to the shares of common stock in
HME, which are traded on the New York Stock Exchange;
"Home Properties" shall mean and refer to Home Properties of New York,
L.P., a New York limited partnership (in which HME is the sole general partner,
and through which HME conducts its operational, management and investing
activities);
"Mortgage" shall mean and refer to the Mortgage to be given by Home
Properties to secure the Note and to be in substantially the form attached
hereto as EXHIBIT C;
"Note" shall mean and refer to the Note given by Home Properties to the
Contributors in partial payment of the Consideration as described in Section
2(b) and to be in substantially the form attached hereto as EXHIBIT B;
"OP Units" shall mean and refer to limited partnership interests in Home
Properties, which are, subject to restrictions, exchangeable, on a one-to-one
basis, for HME Common Shares; and
"Property" or "Properties" shall mean and refer to any one or more of the
apartment projects and the commercial property comprising the Portfolio, as the
context may require, including in the case of each Property: (i) the land
occupied by such Property (the "Land"), as more particularly described on
EXHIBIT A attached hereto, together with (a) all and singular the 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 Contributor 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 Contributor 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 at the date of this Agreement as a result of condemnation, or in lieu
thereof; and (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 (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.
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,
the Contributors and Home Properties agree as follows:
1. CONTRIBUTION.
(a) Upon and subject to the terms and conditions set forth in this
Agreement, each of the Contributors agrees to transfer, exchange and contribute
the Property or Properties owed by such Contributor to Home Properties and Home
Properties agrees to acquire such Property or Properties from such Contributor.
(b) The transfer, exchange, conveyance and acquisition of the Portfolio
shall, in addition, include all of the right, title and interest of the
Contributors in and to the following:
(1) all furniture, furnishings, equipment, machinery and other
tangible personal property and fixtures of every kind and description owned by
the Contributors, and used in connection with the Properties (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, computers and other office equipment, stationery
and other office supplies, maintenance vehicles and accessories, normal levels
of inventory, and all replacements of, and/or substitutions for, any of the
foregoing;
(2) all present and subsequent leases with tenants, and/or other
occupancy agreements, (in each instance, the "Leases");
(3) to the extent assignable, all service and maintenance contracts
used or useful in connection with the Properties (in each instance, the
"Service Contracts"), including, without limitation, natural gas purchase
contracts, coin-operated laundry concession leases, and pending purchase
orders, all of which are listed on SCHEDULE 2 attached hereto; and
(4) all trademarks, service marks, logos, trade, assumed or
business names and telephone numbers related to the use and operation of the
Properties (in each instance, the "Trade Names"), except that the Contributors
make no representation or warranty of title or usage with respect to such
Trade Names.
2. CONSIDERATION.
(a) The aggregate consideration (the "Consideration") payable by Home
Properties for the Portfolio shall be Thirty-One Million Five Hundred Thousand
and 00/100 Dollars ($31,500,000), subject to adjustments at Closing pursuant to
Section 16. The Consideration shall be allocated among the Properties in
accordance with SCHEDULE 3 attached hereto.
(b) The Consideration shall be payable as follows:
(i) $7,875,000 in cash at Closing by certified check or wire
transfer at the direction of the Contributors;
(ii) the issuance of 328,125 OP Units; and
(iii) by the delivery of a Note in the amount of $15,750,000
to be secured by a Mortgage on the Properties and to be
allocated among the Properties as described on Schedule 3.
(c) The Mortgage shall be filed against and shall be a lien on each
and all of the Properties constituting the Portfolio.
3. OP UNITS.
(a) Distributions with respect to the OP Units will be identical in
amount and timing to the dividends on HME Common Shares, except that the
initial distribution payable with respect to the OP Units issued shall be made
on the date on which HME shall pay the dividend to holders of HME Common Shares
that relates to the earnings for the calendar quarter in which the OP Units
were issued to the Contributors, and shall be prorated such that the
Contributors will receive a pro-rata distribution for the period from the date
on which the OP Units were issued to the Contributors to, and including, the
last day of the calendar quarter in which the OP Units were so issued.
(b) Subject to the terms of a Lock-Up Agreement, in the form of EXHIBIT
D attached hereto, to be dated the Closing Date, and to the terms of the Second
Amended and Restated Agreement of Limited Partnership of Home Properties, as
amended (the "Operating Partnership Agreement"), the OP Units will be
convertible into HME Common Shares, on a one-to-one basis, after the elapse of
one (1) year from and after the Closing Date (the "Lock-Up Period"), during
which the Contributors will be restricted from converting, or transferring, any
of the OP Units.
(c) From and after the expiration of the Lock-Up Period, the
Contributors shall have all of the transfer, exchange and conversion rights
with regard to the OP Units as are set forth in the Operating Partnership
Agreement.
(d) Within nine months of the Closing Date, HME agrees to file at its
sole cost and expense, a registration statement (the "Registration Statement")
with the Securities and Exchange Commission ("SEC") registering the resale of
the shares of common stock of HME into which the OP Units may be converted and
to use reasonable commercial efforts to: (i) have the registration promptly
declared effective by the SEC; and (ii) keep such Registration Statement
current until all OP Units issued pursuant to this Agreement have been
converted into shares of HME Common Shares and sold. In addition, within nine
months of the Closing Date, HME agrees to file at its sole cost and expense a
listing application with the New York Stock Exchange ("NYSE") listing on the
NYSE the shares of common stock of HME into which the OP Units may be
converted.
4. OBLIGATIONS AND COVENANTS OF THE CONTRIBUTORS.
(a) From the date of this Agreement to the Closing Date, each
of the Contributors, with respect to the Property or Properties owned by such
Contributor shall:
(1) Maintain, manage and operate the Property in substantially
the same condition and manner as such Property is now
maintained, managed and operated, and keep the Property,
including, without limitation, the Improvements and
Personal Property, in substantially the same good condition
and repair as such Property is now maintained, ordinary wear
and tear and damage by fire or other casualty excepted;
(2) maintain in full force and effect the current level of
insurance coverages regarding the Property;
(3) Promptly deliver notice to Home Properties of, and, defend, at
the Contributor's expense, all actions, suits, claims and
other proceedings affecting the Property, or the use,
possession or occupancy thereof;
(4) Promptly deliver notice to Home Properties of any actual or
threatened condemnation of the Property, or any portion
thereof;
(5) Maintain all Licenses in full force and effect;
(6) Timely make all payments, and observe and perform all
obligations to be paid, observed or performed by the
Contributor under all Service Contracts; and promptly
notify Home Properties of any receipt or
delivery of any notice (including any notice of default)
thereunder;
(7) Provide all services, repairs and other work required to be
provided by the landlord under the Leases;
(8) Reasonably cooperate with Home Properties (but without
obligation to incur expenses in connection therewith)
in connection with (i) the consummation of the transaction
contemplated by this Agreement, and (ii) the preparation of
the Closing documents and apportionments hereunder;
(9) Promptly deliver to Home Properties a copy of any notice of
required work from any company insuring the Property against
casualty loss;
(10) Promptly deliver to Home Properties 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 the Property; and
(11) Promptly give written notice to Home Properties 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 the Partnership under or
pursuant to this Agreement.
(12) Complete the installation of smoke detectors in the bedrooms
of the apartment units at the ▇▇▇▇ ▇▇▇▇▇ Apartments as
required by the relevant municipality or provide Home
Properties with a credit at Closing in the amount reasonably
necessary to complete that installation.
(b) From the date of this Agreement to the end of the Due Diligence
Period, each Contributor, with respect to the Property or Properties owned by
such Contributor, agrees that it will promptly, and in any event prior to the
end of the Due Diligence Period, notify Home Properties in writing if it
engages in any of the following listed activities. If this Agreement has not
been terminated as permitted herein, from and after the Due Diligence Period to
the Closing Date each Contributor, with respect to the Property or Properties
owned by such Contributor, agrees that it shall not engage in any of the
following listed activities without first receiving the written consent of Home
Properties, which consent shall not be unreasonably withheld, conditioned or
delayed:
(1) Increase any wage or fringe benefit payable to any employee at
the Property; except for annual, scheduled or customary
increases
(2) Remove from the Property any article of Personal Property,
except as may be necessary for repairs, provided, however,
that any such article removed for repairs shall be returned
to the Property promptly upon its repair, and shall
remain a part of the Personal Property, whether or not such
article shall be located on the Property at the time of the
Closing;
(3) Discard any article of Personal Property, except for
discarding of warn out or useless items, provided, however,
that any such article so discarded shall be
replaced with a new or replacement article of similar quality
and utility prior to Closing;
(4) Modify, amend, renew, extend, terminate or otherwise alter any
of the Service Contracts, or enter into any new service or
maintenance contract, equipment lease that will be binding on
Home Properties or, except in the ordinary course of business,
any purchase order affecting the Property, which shall extend
beyond, or relate to any work or improvement which will not
be completed and paid for prior to, the Closing Date;
(5) 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;
(6) Except in the ordinary course of business, enter into any new
Lease, or renew or extend any existing Lease, for a term in
excess of twelve months, or at a monthly rental less than the
relevant rental rate set forth in the rental schedule for the
Property provided to Home Properties;
(7) Modify or amend the present form of lease in use by the
Contributor;
(8) Enter into any new license giving the right to occupy space,
franchise, concession or easement agreement affecting the
Property;
(9) Except in the ordinary course of business of the Partnership,
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 the Contributor;
(10) Sell or otherwise dispose of all or any part of the Property,
or the Personal Property, except in the case of the sale or
other disposition of items of Personal Property to be replaced
hereunder; and
(11) 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 the
Property.
5. OBLIGATIONS AND COVENANTS OF HOME PROPERTIES AND HME. Home
Properties and HME covenant and agree with the Contributors, both before and
after Closing:
(a) The Contributors may retain copies of any and all books and records
pertaining to the Contributors and the operation of the Properties so that the
Contributors may wind up the affairs of the previously conducted business.
(b) At the Closing, Home Properties shall deliver to each Contributor
good and marketable title to the OP Units allocated to such Contributor, free
and clear of all liens, charges, encumbrances and restrictions, except as
contained in the Operating Partnership Agreement and the Lock-Up Agreement, and
shall, by execution of the Amendment, admit each Contributor as a limited
partner in Home Properties.
(c) For a period of ten (10) years from and after the Closing Date, Home
Properties shall not sell, exchange, transfer or otherwise dispose of the
Property, or any replacement of the Property (in any event, a "Property
Transfer"), unless such Property Transfer occurs in such manner as to be tax
free to the relevant Contributor.
(d) Future transactions involving HME, or Home Properties, including,
without limitation, merger(s), sale(s) of assets or similar transactions, shall
be structured in such manner as to (i) not result in an amendment to the
definition of Conversion Factor as it is currently included in the Operating
Partnership Agreement; (ii) prevent, in the context of such a transaction, a
different per unit value being assigned to the OP Units issued to the
Contributors than the value assigned per share to the then outstanding HME
Common Shares; and (iii) for a period of ten (10) years from and after the
Closing Date, not interfere with the tax deferred nature of the transaction
contemplated by this Agreement with respect to the OP Units issued to the
Contributors.
(e) Home Properties shall utilize the "traditional"
method" for making allocations under Section 704(c) of the Code with respect to
the Properties.
The obligations of Home Properties as set forth above in sub-paragraphs
(c), (d) and (e) of this Paragraph 5 shall be continuing obligations of Home
Properties for the time periods, if any, as specified above and shall survive
Closing and shall not be deemed to have merged into any document delivered at
Closing.
6. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.
(a) Except as reasonable construction may require that the relevant
representation and warranty is made by the Contributors collectively, or that
the relevant representation and warranty is made by some of the Contributors
and not others, or applies to some of the Properties and not others, each
Contributor represents and warrants that each of the following is true,
complete and accurate as of the date of this Agreement (and will be true,
complete and accurate as of the Closing Date) with regard to such Contributor,
and the Property or Properties, owned by such Contributor.
(1) The Contributor owns legal and beneficial title to the Personal
Property free and clear of all liens, charges and
encumbrances.
(2) The Contributor, to the extent not an individual, is a limited
partnership, duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Pennsylvania,
and 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 its properties and to carry on
its business as it is now being conducted.
(3) The execution and delivery of this Agreement, and its
performance by the Contributor, will not conflict with, or
result in the breach of, any contract, agreement, law, rule
or regulation to which the Contributor is a party, or by
which the Contributor is bound.
(4) This Agreement is valid and enforceable against the
Contributor in accordance with its terms, and each instrument
to be executed by the Contributor pursuant to this Agreement,
or in connection herewith, will, when executed and delivered,
be valid and enforceable against the Contributor in
accordance with its terms, except as such enforcement may be
limited by bankruptcy and other laws affecting creditors,
rights generally.
(5) No written notice has been received by the Contributor from any
insurer with respect to any defect which affects the Property,
or the use or operation thereof, which remains uncured or
uncorrected.
(6) There is no action, proceeding or investigation pending, or, to
the best knowledge of the Contributor, threatened, against the
Contributor, or the Property, by or before any court or
governmental department, commission, board, agency or
instrumentality, except as disclosed on Schedule 4.
(7) All financial information about the Property heretofore or
hereafter furnished by the Contributor to Home Properties is,
and shall be, true, complete and correct in all material
respects as of the date therein specified.
(8) The Contributor has not (i) made a general assignment for the
benefit of its creditors; (ii) admitted in writing an inability
to pay debts as they mature; (iii) had an attachment, execution
or other judicial seizure of any property interest which
remains in effect; or (iv) become generally unable
to meet financial obligations as they mature.
(9) There is not pending any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation,
dissolution or ecomposition of the Contributor, or the debts
of the Contributor, 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 the Contributor or the Property.
(10) The summaries of Leases affecting the Property attached as
EXHIBIT E to this Agreement (the "Rent Roll") are, in all
material ways true, complete and accurate as at the date
set forth therein.
(11) True and complete copies of all Leases have been made
available to Home Properties at the principal office of the
Contributor.
(12) Except as indicated on the Rent Roll, to the best knowledge of
Contributor each Lease is in full force and effect.
(13) Except as indicated on the Rent Roll, all rents are being paid
and are current (within 15 days of their due date).
(14) Except as indicated on the Rent Roll, no tenant has paid any
rent for more than one month in advance.
(15) Except as indicated on the Rent Roll, no tenant is entitled to
any free rent, abatement of rent or similar concession.
(16) As of the date of this Agreement, the security deposits paid by
tenants under the Leases (collectively, the "Security
Deposits") are as set forth in the Rent Roll.
(17) 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.
(18) Except for the Service Contracts listed on SCHEDULE 2 attached
hereto, there are no Service Contracts pertaining to the
Property.
(19) True and complete copies of the Service Contracts have been
made available to Home Properties at the principal office of
the Contributor.
(20) To best of knowledge of the Contributor, each of the Service
Contracts is in full force and effect; none of the parties
thereto is 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 thereunder.
(21) Except for no more than five refrigerators, all of the ranges
and refrigerators in the Property are the property of the
Contributor and not of the tenants.
(b) All of the representations and warranties of the Contributors, set
forth in this Agreement shall be true and correct in all material respects at
the date of this Agreement, shall be deemed to be repeated at, and as of the
Closing Date, and shall be true and correct in all material respects as at the
Closing Date.
(c) All of the representations and warranties of the Contributors set
forth in this Agreement shall survive the Closing for a period of twelve (12)
months following closing, and shall not be deemed to have merged in any
document delivered at the Closing. Any claim for any breach of any
representation or warranty of the Contributors shall be brought, if at all,
within twelve (12) months from the date of Closing or thereafter be forever
barred except for any claim relating to an intentional and material
misrepresentation or fraud, which claim shall not be subject to such time
limit.
(d) The Contributors agree to indemnify Home Properties, and hold
harmless and defend Home Properties, from and against any and all losses,
costs, claims, liabilities, damages and expenses, including, without
limitation, reasonable attorneys, fees, arising as the result of a material
breach of any of the representations and warranties of the Contributors, set
forth in this Agreement.
(e) Except as expressly provided in this Agreement, the Contributor has
made no representations and/or warranties regarding the Properties, and, except
as expressly set forth in this Agreement, Home Properties shall, at Closing,
accept each Property 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.
7. REPRESENTATIONS AND WARRANTIES OF HOME PROPERTIES AND HME.
(a) Home Properties and HME represent and warrant that each of the
following is true, complete and accurate as of the date of this Agreement, and
will be true, complete and accurate as of the Closing Date, and, as the context
may require, thereafter:
(1) Home Properties and HME are duly organized, validly existing
and in good standing (under the laws of the State of New York and the State of
Maryland, respectively), and each 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.
(2) Neither the execution and delivery of this Agreement, nor the
performance of this Agreement by Home Properties, nor the execution, delivery
and performance of all other agreements contemplated by this Agreement, nor the
issuance and delivery of the OP Units by Home Properties, will conflict with,
or result in any breach of, any contract, agreement, law, rule or regulation to
which either HME or Home Properties is a party, or by which either HME or Home
Properties is bound.
(3) Subject to the approval of the Board of Directors of HME (the
"Board"), which Home Properties agrees to use all good faith reasonable efforts
to obtain within the Due Diligence Period, this Agreement has been duly
authorized, executed and delivered, and constitutes a legal and binding
obligation of Home Properties and HME, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy and other laws
affecting creditors rights generally.
(4) Subject to the approval of the Board, which Home Properties
agrees to use all good faith reasonable efforts to obtain within the Due
Diligence Period, each instrument to be executed and delivered by Home
Properties and/or HME pursuant to this Agreement, or in connection herewith,
will, when executed and delivered, be valid and enforceable against Home
Properties and/or HME in accordance with its terms, except as such enforcement
may be limited by bankruptcy and other laws affecting creditors, rights
generally.
(5) To the best knowledge of Home Properties, there is no
litigation, proceeding or investigation pending, or threatened, against or
affecting Home Properties, or HME, that might affect the validity of this
Agreement, or any action taken, or to be taken, by Home Properties, or HME,
pursuant to this Agreement, or that might have a material adverse effect on the
business of Home Properties.
(6) At the Closing, Home Properties shall deliver to each
Contributor ood and marketable title to the OP Units allocated to such
Contributor, free and clear of all liens, charges, encumbrances and
restrictions, except as contained in the Operating Partnership Agreement
and the Lock-Up Agreement, and shall, by execution of the Amendment,
admit each Contributor as a limited partner in Home Properties.
(7) The Operating Partnership Agreement attached as EXHIBIT F, to
this Agreement is true, complete and accurate as at the date of this Agreement.
(8) All financial information heretofore or hereafter furnished
by HME or Home Properties concerning such entities is, and shall be, true,
complete and correct in all material respects as of the date therein specified.
All of the information furnished and statements made by HME or Home Properties
to the Contributor with respect to this Agreement, and in the periodic filings
(as updated) by HME or Home Properties with the Securities and Exchange
Commission, are true and correct in all material respects and do not misstate
or fail to state any material fact.
(9) HME or Home Properties has not (i) made a general assignment
for the benefit of creditors; (ii) admitted in writing its inability to pay its
debts as they mature; (iii) had an attachment, execution or other judicial
seizure of any property interest which remains in effect; or (iv) become
generally unable to meet its financial obligations as they mature.
(10) There is not pending any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
recomposition of HME or Home Properties, or the debts of HME or Home
Properties, 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 HME or Home Properties.
(11) Except: (i) as disclosed in writing to the Partnership; (ii)
for liabilities and obligations incurred in the normal course of business of
HME or Home Properties; and (iii) as otherwise disclosed in this Agreement or
in periodic filings (as updated) by HME or Home Properties, HME and Home
Properties have no material liability or obligation of any nature which is any
way materially affects their financial statements, whether now due or to become
due, absolute, contingent or otherwise, including liabilities for taxes (or any
interest or penalties thereto).
(b) All of the representations and warranties of Home Properties, and
HME, 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) Home Properties and HME agree to indemnify each Contributor, and
hold harmless and defend each Contributor, 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 Home Properties and/or HME set
forth in this Agreement.
8. CONDITIONS TO THE OBLIGATIONS OF HOME PROPERTIES.
(a) Without limiting any of the rights of Home Properties elsewhere set
forth in this Agreement, it is agreed that the obligations of Home Properties
under this Agreement shall be subject to the satisfaction of the conditions set
forth following ("Home Properties' Conditions"):
(1) All of the representations and warranties of the Contributors 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), except as
otherwise disclosed to or discovered by Home Properties on or prior to the
expiration of the Due Diligence Period.
(2) Prior to the expiration of the Due Diligence Period, the Board shall
have approved the acquisition of the Portfolio by Home Properties on the terms
and conditions set forth in this Agreement.
(3) On or before the Closing Date, all of the management agreements
pertaining to the Properties shall have been terminated (effective as at the
completion of the Closing on the Closing Date), without cost or expense to Home
Properties.
(4) The Contributors shall have obtained from the relevant
municipalities any Certificates of Occupancy or similar proof of right to
occupy the Properties as may be required as a matter of law to be delivered by
the seller of real property as a condition to transfer of title to the
Properties by those municipalities and shall have paid all costs, fees, charges
and expenses in connection therewith.
(5) The Contributors shall have delivered to Home Properties all of the
documents and other items required to be delivered by the Contributors to Home
Properties under the terms of this Agreement.
(6) The Contributors shall have fulfilled such other
conditions to Closing as are set forth in this Agreement, including, without
limitation, the performance by each Contributor of the obligations and
covenants of such Contributor set forth in this Agreement.
(b) Each of Home Properties' Conditions is for the benefit of Home
Properties, and, accordingly, except for the condition specified in sub-
paragraph (a)(2) above, any such condition may be waived by Home Properties at
any time.
(c) If any Home Properties' Conditions shall not have been satisfied or
(except for the condition specified in sub-paragraph (a)(2) above) waived by
Home Properties, Home Properties shall have the right to terminate this
Agreement by written notice to the Contributors, in which event the ▇▇▇▇▇▇▇
Money Deposit shall be returned to Home Properties, and this Agreement shall,
thereafter, be deemed to be null, void and of no further force or effect, and
neither party shall have any further rights or obligations under this
Agreement, except for the indemnity provisions of Section 10 below, and subject
to the provisions of Section 20 of this Agreement.
9. CONDITIONS TO THE OBLIGATIONS OF THE CONTRIBUTORS.
(a) Without limiting any of the rights of the Contributors elsewhere set
forth in this Agreement, it is agreed that the obligations of the Contributors
under this Agreement shall be subject to the satisfaction of the conditions set
forth following (the "Contributors' Conditions"):
(1) All of the representations and warranties of Home Properties, and
HME, set forth in this Agreement shall be true, accurate and correct as of the
Closing Date (as if made on the Closing Date).
(2) Prior to the expiration of the Due Diligence
Period, the Board shall have approved the acquisition of the Portfolio by Home
Properties on the terms and conditions set forth in this Agreement
(3) Home Properties shall have delivered to the Contributors all of
the documents and other items required to be delivered by Home Properties under
the terms of this Agreement.
(4) Home Properties shall have fulfilled such other
conditions to Closing as are set forth in this Agreement.
(b) Each of the Contributors' Conditions is for the benefit of the
Contributors, and, accordingly, any such condition may be waived by the
Contributors at any time.
(c) If any of the Contributors' Conditions shall not have been
satisfied or waived by the Contributors, the Contributors shall have the right
to terminate this Agreement by written notice to Home Properties, in which
event the ▇▇▇▇▇▇▇ Money Deposit shall be returned to Home Properties, and this
Agreement shall, thereafter, be deemed to be null, void and of no further force
or effect, and neither party shall have any further rights or obligations under
this Agreement, except for the indemnity provisions of Section 10 below, and
subject to the provisions of Section 20 of this Agreement.
10. INSPECTION PERIOD. Subject to the rights of existing tenants at the
Properties, Home Properties shall have a period of forty-five (45) days from
and after the date of this Agreement (the "Due Diligence Period") within which
to examine title to the Properties and to cause one or more surveyors,
attorneys, engineers, auditors, architects, and/or other experts of its choice
(i) to inspect any document related to any Properties, 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 inspection and environmental reports with respect to the
Properties, and otherwise to do all that, which, in the opinion of HME, is
necessary to determine the condition and value of the Properties for the uses
intended by Home Properties, provided, however, that Home Properties shall not
conduct any environmental study of any Property beyond a Phase 1 level without
the consent of the relevant Contributor, which consent shall not be
unreasonably withheld. Home Properties shall conduct itself and its
examinations in a manner to minimize disruption to the staff and tenants of the
Contributors and Properties. Home Properties acknowledges that the
Contributors have advised it of the prior ground settlement condition at the
Arbor Crossing property, which has been remediated. The Contributors shall
provide Home Properties with a copy of the engineer's report on this matter,
which Home Properties shall have the right to review during the Due Diligence
Period. If Home Properties is not satisfied with the condition or remediation,
it may terminate this Agreement as hereinafter provided. Home Properties may
declare the Due Diligence Period ended at any earlier time provided that the
approval of the Board has been previously obtained. Home Properties must be
satisfied in all respects (in the sole and absolute discretion of Home
Properties) with the results of all reviews, inspections and investigations
conducted by, or under, Home Properties during the Due Diligence Period. If
Home Properties shall not be so satisfied, Home Properties may, within the Due
Diligence Period, terminate this Agreement, in which event Home Properties
shall have no obligation or liability under this Agreement, or with regard to
the Contributors or the Properties, and Home Properties shall be entitled to
the immediate return of the ▇▇▇▇▇▇▇ Money Deposit, and this Agreement shall,
thereafter, be null, void and of no further force or effect. If not so
terminated by Home Properties, this Agreement shall continue in full force and
effect according to its terms and Home Properties shall be deemed to have
approved the state of title (subject, however, to paragraph 12(b) below) and
physical and financial condition of the Properties (including without
limitation, environmental condition) in all respects as of the date of
expiration of the Due Diligence Period. Home Properties shall be responsible
for payment of all of the costs of its due diligence activities, including,
without limitation, all engineering and environmental reports, and all
financial and Lease audits. Home Properties and HME shall indemnify and hold
the Contributors harmless from and against any and all loss, claims, damage and
expense arising out of entry by Home Properties and its agents onto the
Properties and any testing performed thereon. Home Properties and HME shall
repair any damage which they may cause as a result of any such entry and
testing. Such indemnity shall survive any termination of this Agreement,
notwithstanding any provision to the contrary. Home Properties and HME shall
cause their entry, inspections and testing (if any) to be conducted in a manner
so as to minimize disruption to tenants at the Properties.
11. COOPERATION. At all times during the term and pendency of this
Agreement, the Contributors will cooperate fully with Home Properties (but with
no obligation to incur cost or expense in connection therewith) in all
reasonable manner in providing the following to the extent that they are in the
Contributors' possession or reasonably available to the Contributors: 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, copies of tax returns
filed by the Contributors (excluding personal tax returns of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇),
and annual and monthly operating statements relating to the Properties. The
Contributors will provide access by the representatives of Home Properties to
all financial and other information relating to the Properties as is available
to Contributors.
12. TITLE.
(a) At Closing, each Contributor will transfer and convey to Home
Properties title to the Property or Properties owned by such Contributor in
the same state as exists at the end of the Due Diligence Period.
(b) Notwithstanding anything to the contrary contained herein, the
Contributors shall be obligated to remove (or to cause the title company to
affirmatively insure over) at the expense of the Contributors (a) any mortgages
or deeds of trust to secure debt regarding any financing obtained by any
Contributor; (b) any mechanic's or materialman's lien for work done on any of
the Properties on behalf of the Contributors; and (c) any other monetary lien
against any of the Properties.
13. CLOSING DATE. If this Agreement shall not have been terminated by
Home Properties, or the Contributors, for any of the reasons set forth in this
Agreement, and within the time(s) herein limited, the closing of the
transaction contemplated by this Agreement (the "Closing") shall occur within
sixty (60) days after the date of this Agreement (any such day upon which the
Closing occurs being herein referred to as the "Closing Date"). The Closing
shall be held at the Contributors' office, 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, each Contributor, with respect to the
Property or Properties owned by such Contributor shall deliver to Home
Properties the following, each of which shall be in form and substance
satisfactory to Home Properties:
(1) a special warranty deed (the "Deed"), conveying to Home
Properties title to the Property in the same state as exists at the end
of the Due Diligence Period, which Deed shall be in recordable form,
duly executed and acknowledged by the relevant Contributor;
(2) an assignment of all of the Contributor's right, title and
interest in and to the Leases and Security Deposits, together with an
indemnity by the Contributor in favor of Home Properties from and against
any and all claims, liabilities, damages and expenses (including, without
limitation, reasonable attorney's fees) arising or accruing under any of
the Leases prior to the Closing Date, and with similar indemnity of Home
Properties in favor of the Contributor with respect to matters arising
after the Closing Date;
(3) an assignment of all of the Contributor's right, title and
interest in and to the Service Contracts, together with an indemnity by the
Contributor, in favor of Home Properties, from and against any and all
claims, liabilities, damages and expenses (including, without limitation,
reasonable attorneys' fees) arising or accruing under any of the Service
Contracts assigned prior to the Closing Date, and with a similar indemnity
of Home Properties, in favor of the Contributor, with respect to matters
arising after the Closing Date;
(4) a ▇▇▇▇ of sale conveying and transferring to the Home
Properties all right, title and interest of the Contributor in and to all of
the Personal Property, which ▇▇▇▇ of sale shall contain a warranty that such
property is free and clear of all liens, charges, encumbrances, security
interests and adverse claims other than the Permitted Exceptions;
(5) the Affidavit of the Contributor, stating, under penalty of
perjury, the United States taxpayer identification number of the Contributor,
and that the Contributor is not a foreign person within the meaning of Section
1445 of the Code;
(6) any and all affidavits, certificates or other documents
reasonably and customarily required by the title company in order to cause it
to issue the title policy regarding the Property in the form and condition
required by this Agreement;
(7) an update of the Rent Roll pertaining to the Property
(including a listing of all delinquent and prepaid rents, and all security
deposits, dated as of or as close as reasonably practicable to the Closing
Date), and represented and certified by the Contributor to be true, accurate,
complete and correct in all material respects;
(8) all keys to the Property in the possession of the Contributor,
which shall be remain at the rental office and need not be brought to closing;
(9) the "as-built" plans and specifications for the
Property, if in the Contributor's possession;
(10) a quit claim assignment to Home Properties of any contractors'
or subcontractors' guarantees or warranties relating to the Improvements or
Personal Property;
(11) a certified copy of the Certificate of Limited Partnership
of any of the Contributors that is a partnership, and such other evidence of
their power and authority as the title company may reasonably request;
(12) a letter addressed to all of the tenants in the
Property advising them of the change of ownership of the Property, and the
transfer of the Security Deposits, and directing that rentals or other
payments thereafter be paid to a payee designated by Home Properties, the
form of the letter to be approved by Home Properties;
(13) such existing maintenance records in regard to the
Property and in the Contributor's possession which Home Properties may
request not later than five (5) days prior to the Closing Date (which
shall be delivered at the Property);
(14) the currently effective Licenses regarding the
Property, or other reasonably acceptable evidence of the right to use and
occupy the Property that are in the Contributor's possession;
(15) a signed counterpart of the Lock-Up Agreement;
(16) a signed counterpart of the Amendment to the Operating
Partnership Agreement admitting the Contributors as limited partners of Home
Properties (the "Amendment");
(17) such additional documentation as Home Properties, or
the title company, may reasonably deem necessary in order to effectuate the
transaction contemplated by this Agreement.
(b) At the Closing, Home Properties shall deliver to each Contributor
the following, each of which shall be in form and substance satisfactory to
such Contributor:
(1) proof of the issuance of the OP Units allocated to the
Contributor (by and through the execution and delivery of the Amendment,
which shall evidence and reflect the ownership of the OP Units by such
Contributor);
(2) a receipt for the Security Deposits;
(3) a certificate of the Secretary of HME certifying that
the Board of Directors of HME have duly adopted resolutions authorizing the
transaction contemplated by this Agreement, and the execution of all of the
Closing documents to be executed and delivered by Home Properties pursuant
to this Agreement;
(4) a sworn statement on behalf of HME certifying that the
person signing documents in connection with the transaction contemplated by
this Agreement on behalf of Home Properties is authorized to do so;
(5) a signed counterpart of the Amendment;
(6) a mortgage title insurance policy or policies in the aggregate
amount of $15,750,000 insuring that the Mortgage is a valid first lien against
the Properties;
(7) a duly executed original of the Note (only one original to be
delivered to the Contributors);
(8) six (6) executed original counterparts of the Mortgage in
recordable form;
(9) UCC-1 financing statements evidencing the Contributors'
security interest in the Personal Property, as reasonably required by
Contributors;
(10) signed counterparts of all other documents listed in
Section 14(a) equired to be signed by Home Properties;
(11) a certified copy of the Operating Partnership
Agreement;
(12) on behalf of HME, a certificate of good standing from each
of the Secretary of State of Maryland and the Secretary of State of New York;
(13) a certificate of good standing from the Secretary of State
of New York for Home Properties; and
(14) such additional documentation as the Contributor or the title
company may reasonably deem necessary to effectuate the transaction set forth
in this Agreement.
15. ADJUSTMENTS.
(a) As to each Property, the following items shall be adjusted between
the relevant Contributor and Home Properties as of the date of the Closing Date
(it being understood that Home Properties shall have the benefit of monies
received and expenses incurred on the date of Closing) and shall be paid in
cash at Closing:
(1) real estate and personal property taxes,
(2) rents under the Leases for the relevant month, as and when collected
and as described in subparagraph (b) below;
(3) coin operated laundry concession income;
(4) 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 Closing the Contributor 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 therefor 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;
(5) amounts paid or payable under the Service Contracts to be assigned to
and assumed by Home Properties;
(6) fees paid for assignable current Licenses;
(7) the full amount of Security Deposits then held under the Leases;
(8) any special assessment for public improvements or otherwise which
is or may become payable with respect to the Property in annual installments;
and
(9) such other amounts as are customarily adjusted between parties to
similar transactions in the local jurisdiction.
(b) Rents which are due and payable to the Contributors by any tenant
but uncollected as of the Closing Date shall not be adjusted at the Closing.
All rents collected by Home Properties 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. All rent collected after Closing for any period prior to the
Closing shall belong to the relevant Contributor, and if paid to Home
Properties, Home Properties shall promptly send such rent to the relevant
Contributor, less all reasonable expenses incurred by Home Properties, if any,
in regard to the collection thereof. At the Closing, each Contributor shall
deliver to Home Properties a schedule of all such past due, but uncollected
rents owed by tenants. The Contributors shall retain the right to proceed
against the relevant tenants for such uncollected rents in their own name and
to enforce the terms of the related Lease. All rents collected by any
Contributor, prior to Closing, for rental period(s) subsequent to the Closing
shall be paid by that Contributor to Home Properties at the Closing or deducted
as an adjustment at Closing. All rents collected by Home Properties or a
Contributor for rental periods after the Closing shall belong to Home
Properties, and if paid to a Contributor, that Contributor shall promptly send
such rent to Home Properties.
Notwithstanding the above, in the event that rents which are due and
payable to the Contributors by the tenants but uncollected as of the Closing
Date are less than $5,000 in the aggregate, then such rents shall be adjusted
at Closing and Home Properties shall have the right to any and all rents
subsequently collected from such tenants.
(c) 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) In lieu of the Contributors delivering Security Deposit accounts,
there shall be, at each Contributor's election, an adjustment at Closing of an
amount equal to the aggregate amount of the Security Deposits shown on the
updated Rent Roll provided by the Contributors.
(e) The Contributors shall be responsible for, and shall make
arrangements for payment of, all amounts due to the Closing Date for employees,
salaries, accrued vacation pay, withholding and payroll taxes, and other
benefits, and any management fee affecting the Properties. Home Properties
shall be responsible for all such expenses commencing upon the Closing Date.
(f) Home Properties shall give the Contributors a credit at Closing in
the amount of $5,060 for 11 new air conditioning units.
16. CLOSING COSTS. Home Properties shall pay its attorneys' fees, the
costs for obtaining binders or commitments from a title insurance company, the
premium for the title insurance policies, the costs of updating any surveys,
the costs of any environmental surveys and studies, one-half of any state and
local transfer tax and all other costs and expenses incidental to or in
connection with closing this transaction customarily paid for by the purchaser
of similar property. The Contributors shall pay the costs of their attorneys'
fees, one-half of any state and local transfer tax, and all other costs and
expenses incidental to or in connection with closing this transaction
customarily paid for by the seller of similar property.
17. CONDEMNATION AND DESTRUCTION.
(a) If, during the Due Diligence Period, any Property, or any part of
any Property is taken by eminent domain (or is the subject of a pending or
contemplated taking which has not been consummated), the Contributors shall
promptly, but in any event prior to the end of the Due Diligence Period, notify
Home Properties of such fact. If, after the end of the Due Diligence Period
and prior to the Closing Date, all or any material part of any Property, is
taken by eminent domain (or is the subject of a pending or contemplated taking
which has not been consummated), the Contributors shall notify Home Properties
of such fact, and Home Properties shall have the option (which option shall be
set forth in a notice from Home Properties to the Contributors given not later
than the earlier of five (5) business days after receipt of the notice from the
Contributors or Closing):
(i) to terminate this Agreement, in which event, the ▇▇▇▇▇▇▇ Money
Deposit shall be returned to Home Properties, and, thereafter, this Agreement
shall be deemed to be null, void and of no further force or effect between the
parties (except for the indemnity provisions of Section 10 above); or
(ii) to accept title to the Property (other than the portion so taken),
without abatement of the Consideration, in which event the Contributors shall
assign and turn over to Home Properties at the Closing, and Home Properties
shall be entitled to receive and keep, all amounts awarded, or to be awarded,
as the result of the taking.
(b) If, during the Due Diligence Period, all or any part of any Property
is damaged or destroyed by fire or other casualty, the Contributors shall
notify Home Properties of such fact. If, after the end of the Due Diligence
Period and prior to the Closing Date, all or any material part of any Property
is damaged or destroyed by fire or other casualty, the Contributors shall
notify Home Properties of such fact, and Home Properties shall have the option
(which option shall be set forth in a notice from Home Properties to the
Contributors given not later than the earlier of five (5) business days after
receipt of the notice from the Contributors or Closing):
(i) to terminate this Agreement, in which event, the ▇▇▇▇▇▇▇ Money
Deposit shall be returned to Home Properties, and, thereafter, this Agreement
shall be deemed to be null, void and of no further force or effect between the
parties (except for the indemnify provisions of Section 10 above); or
(ii) to accept title to the relevant Property without abatement of the
Consideration, in which event the Contributors shall assign to Home Properties,
at the Closing, all of the right, title and interest of the Contributors in and
to the insurance proceeds awarded or to be awarded to the Contributors as the
result of such damage or destruction.
(c) In the event there is damage to or destruction of an immaterial part
of any Property by fire or other casualty Home Properties shall accept title to
the Property without abatement of the Consideration and the Contributors shall
assign to Home Properties, at the Closing, all of the right, title and interest
of the Contributors in and to the insurance proceeds awarded or to be awarded
to the Contributors as the result of such damage or destruction.
(d) 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
$500,000, 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 $500,000.
18. BROKER'S COMMISSION. The Contributors and Home Properties each
represent to the other than 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
(any such broker, firm or salesman, or other person, is herein referred to as a
"Broker"), except Diversified Realty Group of North America, to whom, pursuant
to separate agreement, Home Properties shall pay a real estate brokerage
commission upon and in conjunction with the Closing of the transaction under
this Agreement.
19. ▇▇▇▇▇▇▇ MONEY. Concurrently with the execution of this Agreement by
both Home Properties and the Contributors, Home Properties will deposit
$250,000 in cash (the "▇▇▇▇▇▇▇ Money Deposit") with Commonwealth Land Title
Insurance Company, Philadelphia, Pennsylvania (the "Escrow Agent"), to be held
in an interest bearing account, at an insured institution acceptable to Home
Properties pursuant to the terms of an Escrow Agreement in the form of EXHIBIT
G attached hereto. At Closing, the ▇▇▇▇▇▇▇ Money Deposit, shall be applied to
the Consideration payable for the Portfolio. If this Agreement shall not have
been properly terminated by Home Properties pursuant to the provisions of this
Agreement, the ▇▇▇▇▇▇▇ Money Deposit shall be refundable to Home Properties in
the event only that a Contributor defaults, or is unable to close for any
reason. In the event Home Properties does not close for any reason other than
as a result of the permitted termination of this Agreement by Home Properties,
or the default of a Contributor, or the inability of a Contributor to close,
the ▇▇▇▇▇▇▇ Money Deposit, shall be paid to the Contributors. As used anywhere
in this Agreement, the term "▇▇▇▇▇▇▇ Money Deposit" includes all earnings
thereon, if any.
20. DEFAULTS AND REMEDIES.
(a) If the Contributors fail or refuse to perform in accordance with the
terms of this Agreement, including, without limitation, the failure or refusal
to perform any covenant or obligation on the part of the Contributors to
perform, prior to the Closing, or if any of the representations, warranties and
covenants of the Contributors contained in this Agreement shall not be true,
complete and correct at Closing in any material respect (except as otherwise
disclosed to or discovered by Home Properties prior to the expiration of the
Due Diligence Period), Home Properties may terminate this Agreement, in which
event the ▇▇▇▇▇▇▇ Money Deposit shall be returned to Home Properties, and Home
Properties shall, in addition, be entitled to reimbursement by the Contributors
of the actual out-of-pocket due diligence costs incurred by Home Properties in
connection with proposed acquisition of the Portfolio, up to the sum of $50,000
(after the payment of which, this Agreement shall be deemed null, void, and of
no further force or effect between the parties, except for the indemnity
provisions of paragraph 10 above).
(b) If Home Properties fails or refuses to perform in accordance with
the terms of this Agreement or if any of the representations, warranties and
covenants by Home Properties contained in this Agreement shall not be true,
complete and correct at Closing in any material respect, the ▇▇▇▇▇▇▇ Money
Deposit shall be forfeited to the Contributors as liquidated damages (which
shall be the sole and exclusive remedy of the Contributors against Home
Properties), at which time this Agreement shall be deemed to be null, void and
of no further force or effect between the parties. In that regard, the
Contributors acknowledge and agree that (i) the ▇▇▇▇▇▇▇ Money Deposit is a
reasonable estimate of, and bears a reasonable relationship to, the damages
suffered and costs incurred by the Contributors as a result of having subjected
the Portfolio to the terms of this Agreement; (ii) the actual damages suffered
and costs incurred by the Contributors as a result of such failure of Home
Properties to close under this Agreement would be extremely difficult and
impractical to determine; (iii) Home Properties 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 a default of Home Properties under this Agreement; and
(iv) the ▇▇▇▇▇▇▇ Money Deposit shall be and constitute valid liquidated
damages. The foregoing limitation shall apply only in the event that Home
Properties does not close the transaction contemplated by this Agreement, and
such limitation shall not apply in the event that Home Properties closes and
thereafter Home Properties or HME breaches one of its obligations hereunder
after Closing. Home Properties' indemnification of the Contributors as
provided in Paragraph 10 of this Agreement shall be in addition to the
liquidated damages represented by the ▇▇▇▇▇▇▇ Money Deposit.
21. OTHER PROHIBITED ACTIVITIES.
(a) During the term and pendency of this Agreement, the Contributors
will cease to market the Portfolio, or any Property, and, in that regard, the
Contributors will refrain from soliciting or accepting any offer from any third
party, or, engaging in any discussion with any third party concerning the sale,
refinancing or recapitalization of the Portfolio, or any Property.
(b) Both Home Properties and the Contributors agree to keep this
Agreement confidential, and not to disclose its contents to anyone except their
respective lenders, legal counsel and accountants, and except that HME may make
such public announcement regarding the transaction contemplated by this
Agreement, as may, in its judgment, be required by, or appropriate under,
applicable securities laws.
22. RISK OF LOSS. Until the Closing, the risk of loss or damage to all
or any part of any Properties, from fire or other casualty, or from
condemnation, shall be borne by the Contributors, subject to the terms of this
Agreement.
23. 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 (charges prepaid and return receipt requested) or by
telecopy with confirmation of receipt, as follows:
(I) if to the Contributors:
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
Blank, Rome, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(ii) if to Home Properties:
c/o Home Properties of New York, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman and
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any such notice, demand or request shall be deemed to have been
rendered or given when received or if rejected on the date so rejected.
24. ASSIGNMENT. Neither this Agreement nor any interest hereunder shall
be assigned or transferred by any Contributor or by Home Properties.
25. GOVERNING LAW. The corporate laws of the State of Maryland will
govern all questions concerning the relative rights and obligations of the
parties with respect to any HME Common Shares acquired or acquirable by the
holders of OP Units on account of their OP Units. Except as limited by the
Operating Partnership Agreement, the laws of the State of New York will govern
all other questions concerning the relative rights and obligations of the
holders of OP Units as limited partners in Home Properties, or otherwise with
respect to the OP Units. This Agreement shall, otherwise, be governed,
construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania applicable to contracts made and to be performed wholly within the
Commonwealth of Pennsylvania .
26. 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.
27. 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.
28. 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.
29. CONDITION OF APARTMENTS. The Contributors will use commercially
reasonable efforts, in accordance with its existing business practices, to
ensure that at the time of the Closing the vacant apartment units are in
rentable condition in accordance with this Section 29. The parties recognize
that tenants at the Properties 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, each Contributor with respect to the Property or Properties owned
by it 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,
(subject to damage caused by fire or other casualty) in accordance with the
condition apartment units of Contributors have been at the commencement date
of tenancies in the normal course of business. In the event that any apartment
unit vacant 30 or more days prior to Closing is not in such rentable condition,
Home Properties shall receive a closing credit equal to the amount reasonably
necessary to bring that unit to such rentable condition based on such standard
typical for the Property. For units vacated within 30 days prior to Closing,
the Contributors will continue to use commercially reasonable efforts, in
accordance with their existing business practices, 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 Home
Properties.
30. MISCELLANEOUS.
(a) The Contributors acknowledge that audited financial statements
pertaining to the Properties for a minimum of one, and a maximum of three,
prior calendar year(s) of operation, and the portion of the calendar year in
which the Closing occurs, up to the Closing Date, are required to be filed by
Home Properties with the Securities and Exchange Commission after the Closing.
Accordingly, the Contributors agree to provide Home Properties, and its
representatives, with access to the books and records of the Contributors
pertaining to the Properties after the Closing, upon reasonable advance notice,
in order to conduct the required audit, at the expense of Home Properties.
After the Closing, each of the Contributors will provide, or cause to be
provided, a signed Representation Letter, substantially in the form of EXHIBIT
H attached hereto, with respect to the Property or Properties owned by that
Contributor.
(b) Time is of the essence of this Agreement. In the computation of any
period of time provided for in this Agreement, or by law, the day of the act or
event from which the period of time runs shall be excluded, and the last day of
such period shall be included, unless it is a Saturday, Sunday, or legal
holiday, in which case the period shall be deemed to run until the end of the
next day which is not a Saturday, Sunday, or legal holiday.
(c) Within one hundred twenty (120) days of the Closing Date each of the
Contributors shall also provide Home Properties with a schedule showing: (i)
the net book value of the Property or Properties and the Personal Property
owned by that Contributor as of the Closing Date.
(d) This Agreement may be executed in counterparts and by facsimile
signatures.
IN WITNESS WHEREOF, the Partnership and Home Properties have executed this
Agreement as at the day and year first above written.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
GREENACRES ASSOCIATES
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
General Partner
▇▇▇▇▇▇ ▇▇▇▇▇ ASSOCIATES
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
General Partner
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: _/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Date: 4/16/99
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Date: 4/16/99
LIST OF
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Description of Portfolio
Schedule 2 - Schedule of Services Contracts
Schedule 3 - Allocation of Consideration
Schedule 4 - Schedule of Litigation
EXHIBITS
Exhibit A - Description of the Land
Exhibit B - Form of Note
Exhibit C - Form of Mortgage
Exhibit D - Lock-Up Agreement
Exhibit E - Rent Rolls
Exhibit F - Operating Partnership Agreement
Exhibit G - Escrow Agreement - ▇▇▇▇▇▇▇ Money Deposit
Exhibit H - Representation Letter
The Registrant will furnish supplementally a copy of any ommitted schedule
or exhibit to the Commission upon request.