SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported):
October 7, 1997.
HOME PROPERTIES OF NEW YORK, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-13136 16-1455126
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
850 Clinton Square, Rochester, New York 14604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716)246-4150
Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Home Properties of New York, L.P. (the "Operating Partnership"),
a New York limited partnership, of which Home Properties of New York, Inc.
("Home Properties" or "Registrant") is the sole general partner, has
entered into an agreement to acquire 11 multifamily residential communities
in suburban communities surrounding Detroit, Michigan.
On October 7, 1997, Home Properties entered into a contribution
agreement with nine Michigan limited partnerships affiliated with the
Lewiston-Smith Realty Corporation to acquire 3,106 apartment units located
in eleven communities in suburban markets in the area surrounding Detroit,
Michigan. The aggregate consideration of $105,000,000, plus closing costs
and adjustments, will be paid by issuance of approximately $70 million of
units of limited partnership interest in the Operating Partnership and the
assumption of a mortgage in the principal amount of approximately
$35,000,000. Home Properties expects to modify the amount and terms of the
assumed mortgage effective upon the closing. Consummation of the purchase
is subject to various conditions precedent, including consent of the lender
to the assumption of the mortgage and other customary conditions. In
connection with the acquisition, the Operating Partnership will agree to
hold and operate the properties and make certain allocations in the future
to preserve the tax-deferred nature of the acquisition to the selling
partnerships for a period of ten years. The selling partnerships will
agree to hold their limited partnership units for three years after the
closing of the transactions. A copy of the Contribution Agreement is filed
as an exhibit to this Report.
Closing of the acquisition is expected to occur in the fourth
quarter of 1997. None of the sellers of the Detroit properties are
affiliated with Home Properties, the Operating Partnership or their
directors, officers or affiliates.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statements of Businesses Acquired.
None
b. Pro Forma Financial Information.
None.
c. Exhibits
99 Additional Exhibits
.1 Contribution Agreement, dated October __, 1997
between Home Properties of New York, L.P. and
Berger/Lewiston Associates Limited Partnership;
Stephenson-Madison Heights Company Limited
Partnership; Kingsley-Moravian Company Limited
Partnership; Woodland Garden Apartments Limited
Partnership; B&L Realty Investments Limited
Partnership; Southpointe Square Apartments Limited
Partnership; Greentrees Apartments Limited
Partnership; Big Beaver-Rochester Properties
Limited Partnership; Century Realty Investment
Company Limited Partnership
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: October 7, 1997
Home Properties of New York, Inc.
By:/s/ Amy L. Tait
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Amy L. Tait,
Executive Vice President
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AGREEMENT FOR CONTRIBUTION OF
REAL ESTATE AND RELATED PROPERTY
THIS AGREEMENT FOR CONTRIBUTION OF REAL ESTATE AND RELATED PROPERTY
("THIS AGREEMENT") made as of the _____ day of __________, 1997, by and
between the nine Michigan limited partnerships listed and described on
Schedule 1 attached hereto (collectively, the "AFFILIATED PARTNERSHIPS"),
each having its principal office at 21790 Coolidge Highway, Oak Park,
Michigan 48237, and Home Properties of New York, L.P., a New York limited
partnership (the "OPERATING PARTNERSHIP"), having its principal office at
850 Clinton Square, Rochester, New York 14604.
W I T N E S S E T H:
This Agreement is made with reference to the following facts and
objectives:
(A) Each Partnership owns a 100% fee simple interest in one, or more,
of the fourteen (14) Michigan apartment properties (the "BERGER/LEWISTON
PORTFOLIO") listed on Schedule 2 attached hereto.
(B) The Berger/Lewiston Portfolio comprises 3,106 dwelling units, in
the aggregate, and, in the case of each Property, is situated upon land
owned in fee simple by the relevant Partnership.
(C) The Property, or Properties, owned by each Partnership is/are
listed on Schedule 3 attached hereto.
(D) Upon the terms and conditions set forth in this Agreement, each
of the Partnerships desires to exchange, transfer and convey to the
Operating Partnership a 100% fee simple interest in the Property, or
Properties, owned by such Partnership, together with the related Personal
Property, Service Contracts and Trade Names, in exchange for limited
partnership interests (the "OP UNITS") in the Operating Partnership.
(E) Upon the terms and conditions set forth in this Agreement, the
Operating Partnership desires to acquire the Berger/Lewiston Portfolio in
exchange for OP Units.
(F) The OP Units are to be allocated among the Affiliated
Partnerships in accordance with Schedule 4 attached hereto.
(G) It is expected that the transfer of the Berger/ Lewiston
Portfolio by the Affiliated Partnerships to the Operating Partnership will
qualify, in its entirety, for Federal income tax purposes, as a tax free
transfer, pursuant to Section 721 of the Code.
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(H) 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 Michigan 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;
"MORGAN" shall mean and refer to Morgan Guaranty Trust Company of New
York;
"MORGAN LOAN" shall mean and refer to the Mortgage Note dated May 13,
1993, in the original face amount of $42,000,000, made and delivered
by the Affiliated Partnerships to Morgan, and which is secured by a
separate mortgage upon each Property;
"NEGATIVE BASIS" shall mean and refer to the deficit cost basis of any
Partnership in the Property or Properties, or the OP Units, owned by
such Partnership, for Federal income tax purposes, as at the relevant
date;
"OPERATING PARTNERSHIP" 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);
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"OP UNITS" shall mean and refer to limited partnership interests in
the Operating Partnership, which are, subject to restrictions,
exchangeable, on a one-to-one basis, for HME Common Shares;
"PARTNERSHIP" shall mean and refer to any one of the
Michigan limited partnerships comprising the Affiliated
Partnerships; and
"PROPERTY or "PROPERTIES" shall mean and refer to any one, or more, or
all, of the apartment projects comprising the Berger/Lewiston
Portfolio, as the context may require, including, in the case of each
apartment project (i) the land occupied by such apartment project (the
"Land"), as more particularly described on Exhibit "A" attached
hereto, together, in each instance, 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
Partnership 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 Partnership 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 Affiliated Partnerships and Operating Partnership agree
as follows:
1. CONTRIBUTION. (a) Upon and subject to the terms and conditions
set forth in this Agreement, each Partnership agrees to transfer, exchange
and contribute the Property or Properties owned by such Partnership to the
Operating Partnership, and the Operating Partnership agrees to acquire such
Property or Properties from each Partnership.
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(b) In the case of each Property, the transfer, exchange,
conveyance and acquisition shall, in addition, include all of the right,
title and interest of the relevant Partnership 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 Partnership,
and used or useful in connection with such 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, computers and
other office equipment, stationery and other office
supplies, and maintenance vehicles and accessories, and
all replacement of, and/or substitutions for, any of
the foregoing;
(2) all present and subsequent leases with tenants,
and/or other occupancy agreements, together with all
pending applications for tenancy (in each instance, the
"LEASES");
(3) all service and maintenance contracts, and
equipment leases, used or useful in connection with the
Property, and which are not to be terminated under this
Agreement (in each instance, the "SERVICE CONTRACTS"),
including, without limitation, natural gas purchase
contracts, vehicle, communication and other equipment
leases (the "EQUIPMENT LEASES", and the vehicles and
equipment covered thereby being herein called the
"LEASED EQUIPMENT"), coin-operated laundry concession
leases, and pending purchase orders, all of which are
listed on Schedule 5 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 Property (in each
instance, the "TRADE NAMES"), except that the
Partnership makes no representation or warranty of
title with respect to such Trade Names.
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2. CONTRIBUTION VALUE. (a) The agreed aggregate value of the
Properties shall be $105,000,000, including the Morgan Loan (the "AGGREGATE
CONTRIBUTION VALUE"), together with, and in addition to, the usual and
customary closing adjustments (the "CLOSING ADJUSTMENTS"). For purposes of
this Agreement, Closing Adjustments shall include, in addition, and without
limitation, tenant security deposits (the "SECURITY DEPOSITS"), and
reserves for replacement, and escrows for real estate taxes and insurance,
held in connection with the Morgan Loan (the "RESERVES AND ESCROWS"). The
Aggregate Contribution Value, and Closing Adjustments, will be allocated
among the Properties in accordance with Schedule 4 attached hereto.
(b) The net contribution value for the Properties (the "NET
CONTRIBUTION VALUE") shall be an amount equal to the Aggregate Contribution
Value, less the principal balance and accrued interest outstanding upon the
Morgan Loan as at the completion of the Closing under this Agreement (prior
to giving effect to any increase in the amount of the Morgan Loan
occasioned by any restructuring thereof contemplated and/or permitted under
this Agreement), together with, and in addition to, the net balance of
Closing Adjustments in favor of the Affiliated Partnerships (the "NET
CLOSING ADJUSTMENTS").
(c) The Net Contribution Value (including the Net Closing
Adjustments) shall be paid to the Affiliated Partnerships in OP Units upon
completion of the Closing. The number of OP Units to be issued and
delivered to the Affiliated Partnerships shall be calculated by using a
twenty (20) day trailing average of the closing price of HME Common Shares
on the New York Stock Exchange for the twenty (20) business days next prior
to the date of execution of this Agreement by both the Operating
Partnership and the Affiliated Partnerships (the "CLOSING PRICE"), provided
that, in any event, the Closing Price, for such purpose, shall not exceed
$24.00 per share, or be less than $22.00 per share. In the event that the
Closing Price exceeds $24.00 per share, then the Net Contribution Value
shall be divided by 24 to determine the number of OP Units to be issued and
delivered. In the event that the Closing Price is less than $22.00 per
share, then the Net Contribution Value shall be divided by 22 to determine
the number of OP Units to be issued and delivered. The Net Contribution
Value (including the Net Closing Adjustments, and the OP Units) shall be
allocated among the Affiliated Partnerships in accordance with Schedule 4
attached hereto.
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 to the Affiliated Partnerships 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 Affiliated Partnerships, and shall be prorated such that the
Affiliated Partnerships will receive a pro-rata
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distribution for the period from the date on which the OP Units were issued
to the Affiliated Partnerships 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 "B" attached hereto, to be dated the Closing Date, and to
the terms of the Second Amended and Restated Agreement of Limited
Partnership of the operating Partnership, as amended (the "0PERATING
PARTNERSHIP AGREEMENT"), in the form of Exhibit "C" attached hereto, the OP
Units will be convertible into HME Common Shares, on a one-to-one basis,
after the elapse of three (3) years from and after the Closing Date (the
"LOCK-UP PERIOD"), during which the Affiliated Partnerships will be
restricted from converting, or transferring, any of the OP Units.
(c) From and after the expiration of the Lock-Up Period,
the Affiliated Partnerships 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) Upon the terms and conditions of a Registration Rights
Agreement, in the form of Exhibit "D" attached hereto, to be dated the
Closing Date, the Affiliated Partnerships shall have registration rights
and a listing commitment with regard to the OP Units (the "REGISTRATION
RIGHTS"), including demand and piggy back rights. The exercise of
Registration Rights shall be without cost to the Affiliated Partnerships.
(e) The OP Units will be subject to a Voting Rights
Agreement, in the form of Exhibit "E" attached hereto, to be dated the
Closing Date.
(f) At the Closing, each Partnership will enter into the
Operating Partnership Agreement by the execution of an amendment to the
Operating Partnership Agreement (the "AMENDMENT"), in each case reflecting
the admission of such Partnership as a limited partner in the Operating
Partnership.
4. GROSS ASSET VALUE. For purposes of the Operating
Partnership Agreement, and the initial capital accounts of the Affiliated
Partnerships in the Operating Partnership, the Gross Asset Value of the
Properties shall be equal to the Aggregate Contribution Value, and shall be
allocated according to Schedule 4 attached hereto.
5. MORGAN LOAN. Subject to the consent of Morgan (the
"LENDER'S CONSENT"), the Properties shall be transferred and conveyed to
the Operating Partnership subject to the Morgan Loan (the "ASSUMPTION").
The Affiliated Partnerships and the Operating Partnership agree to work
together, with Morgan, in good faith, to restructure the terms of the
Morgan Loan (including, without limitation, the interest rate, amount,
manner
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of payment, required reserves and escrows) in a manner which is acceptable
to the Operating Partnership. The costs involved in connection with
obtaining the Lender's Consent to the Assumption, including, without
limitation, any restructuring of the Morgan Loan acceptable to Morgan, the
Operating Partnership and the Affiliated Partnerships (collectively, the
"LENDER'S COSTS"), shall be allocated between the Operating Partnership and
the Affiliated Partnerships in accordance with Schedule 6 attached hereto.
The documents evidencing and comprising the Morgan Loan (the "MORGAN LOAN
DOCUMENTS") are summarized on Schedule 7 attached hereto.
6. PERMITTED EXCEPTIONS. Each Property shall be transferred
and conveyed by the relevant Partnership to the Operating Partnership
subject only to the following (the "PERMITTED EXCEPTIONS"):
(a) the Morgan Loan;
(b) the lien of real estate taxes not yet due and payable;
(c) the Leases;
(d) the Service Contracts; and
(e) easements, rights-of-way, covenants, restrictions and
other matters of record which do not materially adversely
affect the use and operation of the Property.
7. OBLIGATIONS AND COVENANTS OF THE AFFILIATED
PARTNERSHIPS. (a) From the date of this Agreement to the Closing
Date, each Partnership, with respect to the Property, or each
Property, owned by such Partnership (or the Affiliated
Partnerships, as the context may require) shall:
(1) Maintain, manage and operate the Property in
substantially the same condition and manner as such
Property is now maintained, managed and operated by the
Partnership, and keep such Property, including, without
limitation, the Improvements and Personal Property, in
good condition and repair, ordinary wear and tear
excepted;
(2) Maintain the Morgan Loan in full force and effect,
timely make all payments, and observe and perform all
covenants to be paid, observed or performed by the
Mortgagor thereunder, and promptly deliver to the
Operating Partnership notice of any receipt
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or delivery of any notice (including any notice of
default) thereunder;
(3) Promptly provide the Operating Partnership with a
copy of any notice, citation, complaint or other
directive from any person, entity or governmental
authority whereby compliance with any Environmental Law
is called into question;
(4) maintain in full force and effect all of the
existing insurance policies regarding the Property;
(5) Promptly deliver to the Operating Partnership a
copy of any notice of default under any Lease, and
promptly cure any such default;
(6) Promptly deliver notice to the Operating
Partnership of, and, if the same may adversely affect
the Operating Partnership, or the Property, defend, at
the Partnership's expense, all actions, suits, claims
and other proceedings affecting the Property, or the
use, possession or occupancy thereof;
(7) Promptly deliver notice to the Operating
Partnership of any actual or threatened condemnation of
the Property, or any portion thereof;
(8) Maintain all Licenses in full force and effect;
(9) Maintain all Service Contracts in full force and
effect; timely make all payments, and observe and
perform all obligations to be paid, observed or
performed by the Partnership thereunder; and promptly
notify the operating Partnership of any receipt or
delivery of any notice (including any notice of
default) thereunder;
(10) Provide all services, repairs and other work
required to be provided by the landlord under the
Leases;
(11) Cooperate with the Operating Partnership in
connection with (i) the consummation of the transaction
contemplated by this Agreement, and (ii) the
preparation of the Closing documents and apportionments
hereunder;
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(12) Promptly deliver to the Operating Partnership a
copy of any notice of required work from any company
insuring the Property against casualty loss;
(13) Terminate all management agreements pertaining to
the Properties, effective as of the completion of the
Closing on the Closing Date;
(14) Promptly deliver to the Operating Partnership 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
(15) Promptly give written notice to the Operating
Partnership of the occurrence of any condition or event
which affects the truth or accuracy of any
representation or warranty made (or to be made) by any
Partnership, or the Affiliated Partnerships, under or
pursuant to this Agreement.
(b) From the date of this Agreement to the Closing Date,
each Partnership, with respect to the Property, or each Property, owned by
such Partnership (or the Affiliated Partnerships, as the context may
require) shall not:
(1) Except in conjunction with the operating
Partnership, modify, amend, renew, extend, terminate or
otherwise alter the Morgan Loan, or any document or
documents relating thereto;
(2) Increase any wage or fringe benefit payable to any
employee at the Property, without the prior written
consent of the Operating Partnership, in each instance,
which consent shall not be unreasonably withheld,
conditioned or delayed;
(3) Remove from the 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 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, and any
such article
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so discarded shall be replaced with a new 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 or purchase order affecting the Property, and
extending beyond, or for any work or improvement which
will not be completed and paid for prior to, the
Closing Date, without the prior written consent of the
Operating Partnership, in each instance, which consent
shall not be unreasonably withheld, conditioned or
delayed;
(5) Terminate any Lease, except in the case 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 the
tenant which has remained uncured for thirty (30) days
after the delivery of notice of such default to the
tenant;
(6) 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
approved by the Operating Partnership;
(7) Modify or amend the present form of lease in use by
the Partnership, without the prior written consent of
the Operating Partnership;
(8) Enter into any new license, franchise, concession
or easement agreement affecting the Property, without
the prior written consent of the Operating Partnership,
in each instance;
(9) 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
Partnership;
(10) Undertake or commence any renovations or
alterations at the Property, except those necessary to
comply with any of the provisions of this Agreement,
without the
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prior written consent of the Operating Partnership, in
each instance, which consent shall not be unreasonably
withheld, conditioned or delayed;
(11) Sell, mortgage, pledge, hypothecate or otherwise
transfer or dispose of all or any part of the Property,
or the Personal Property, or any interest therein,
except in the case of the sale or other disposition of
items of Personal Property to be replaced hereunder;
(12) 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; and
(13) Issue any press release or other media publicity
of any kind whatever with respect to this Agreement, or
the transaction contemplated hereby, without the prior
written consent of the Operating Partnership.
8. REPRESENTATIONS AND WARRANTIES OF THE AFFILIATED
PARTNERSHIPS. (a) Except as reasonable construction may require that the
relevant representation and warranty is made by the Affiliated Partnerships
collectively, or that the relevant representation and warranty is made by
some of the Partnerships and not others, or applies to some of the
Properties and not others, each Partnership 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 Partnership, and the Property, or each Property, owned
by such Partnership:
(1) The Partnership is the sole owner of, and has good,
marketable and insurable fee simple title to the
Property, free and clear of all liens, charges and
encumbrances, except the Permitted Exceptions.
(2) The Partnership owns legal and beneficial title to
the Personal Property, other than the Leased Equipment,
free and clear of all liens, charges and encumbrances,
except the Permitted Exceptions.
(3) There are no agreements with regard to the Leased
Equipment other than the Equipment Leases set forth in
Schedule 5 attached hereto, and true and complete
copies of all
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Equipment Leases have been delivered to the Operating
Partnership.
(4) Each of the Equipment Leases 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.
(5) The Morgan Loan is in full force and effect; there
exists no default thereunder; and no event has occurred
that with the giving of notice, or the passage of time,
or both, would constitute a default thereunder.
(6) True, complete and accurate copies of the Morgan
Loan Documents have been made available to the
Operating Partnership.
(7) The Partnership is a limited partnership, duly
organized, validly existing, and in good standing under
the laws of the State of Michigan, and has full power
and authority to enter into, and to fully perform and
comply with the terms of this Agreement.
(8) The execution and delivery of this Agreement, and
its performance by the Partnership, will not conflict
with, or result in the breach of, any contract,
agreement, law, rule or regulation to which the
Partnership is a party, or by which the Partnership is
bound.
(9) Prior to Closing, the Partnership shall have taken
all partnership action required for the consummation of
the transaction contemplated by this Agreement.
(10) Except for the Lender's Consent, no approvals or
consents by third parties, or governmental authorities,
are required or necessary for the Partnership to
lawfully consummate the transaction contemplated by
this Agreement.
(11) This Agreement is valid and enforceable against
the Partnership in accordance with its terms, and each
instrument to be executed by the Partnership pursuant
to this Agreement, or in connection herewith, will,
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when executed and delivered, be valid and enforceable
against the Partnership in accordance with its terms,
except as such enforcement may be limited by bankruptcy
and other laws affecting creditors, rights generally.
(12) The Property abuts a public right-of-way, and the
rights of ingress and egress with respect thereto are
not restricted or limited in any material manner.
(13) No written notice has been received by the
Partnership from any insurer, or from Morgan, with
respect to any defect in the Property, or the use or
operation thereof, which remains uncured or
uncorrected.
(14) Except as described on Schedule 8 attached
hereto, there are no special or other assessments for
public improvements or otherwise now affecting the
Property, nor does the Partnership know of (i) any
pending or threatened special assessments affecting the
Property, or (ii) any contemplated improvements
affecting the Property that may result in a special
assessment against the Property.
(15) The Partnership has not received any notice from
any party that the Property, or the current use,
occupation or condition thereof, violate(s) any
governmental statute, law ordinance, rule or regulation
applicable (or allegedly applicable) to the Property,
or any order of any governmental agency relating to the
Property and/or the use and/or legal occupancy thereof,
or any applicable deed restrictions or other covenant,
easement or agreement pertaining to the Property
(including, without limitation, any of the Permitted
Exceptions), or any approval pertaining to the
Property, and to the best knowledge of the Partnership,
the Property, and the current use, occupation and
condition thereof, do not violate any such statute,
law, ordinance, rule, regulation, order, restriction,
covenant, easement, agreement or approval.
(16) All certificates of occupancy, operating permits
and licenses (the "LICENSES"), required by any relevant
governmental authority for the lawful use, operation
and
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occupancy of the Property have been issued, and are in
full force and effect.
(17) The Partnership has received no notice that the
current use, operation or occupancy of any part, or
all, of the Property violates any of the Licenses, and
all of the Licenses are transferable with the Property
to the Operating Partnership without charge by any
relevant governmental authority.
(18) There is no action, proceeding or investigation
pending, or, to the best knowledge of the Partnership,
threatened, against the Partnership, or the Property,
by or before any court or governmental department,
commission, board, agency or instrumentality, and the
Partnership does not know of any basis for any such
action, proceeding or investigation.
(19) The Partnership is not in default in respect of
any of its obligations or liabilities pertaining to the
Property, and there is not any present state of facts
or circumstances, or condition or event, which, after
the giving of notice, or the lapse of time, or both,
would constitute or result in any such default.
(20) All financial information about the Property
heretofore or hereafter furnished by the Partnership to
the Operating Partnership is, and shall be, true,
complete and correct in all material respects as of the
date therein specified, and shall present fairly the
financial condition of the Property, and with respect
to projections, shall be based upon commercially
reasonable information available to the Partnership at
the time when first delivered to the Operating
Partnership.
(21) The Partnership, and each partner in the
Partnership (both general and limited), is an
"ACCREDITED INVESTOR", as that term is defined in
Rule 501 of the General Rules and Regulations
promulgated under the Securities Act of 1933, as
amended.
(22) The Partnership is acquiring the OP Units for
investment purposes only, without the intention of
making a distribution thereof.
<PAGE>
-15
(23) Except as set forth on Schedule 8 attached hereto,
the Partnership has no knowledge of any Federal, state,
county or municipal plan to change the highway or road
system in the vicinity of the Property, or to restrict
or change access from any such highway or road to the
Property, or of any pending or threatened condemnation
or eminent domain proceedings relating to or affecting
the Property.
(24) There are no trade or assumed names affecting or
identifying the Property other than the Trade Names,
and the use of such Trade Names is freely transferable
to the Operating Partnership.
(25) The Partnership has not (i) made a general
assignment for the benefit of its 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.
(26) There is not pending any case, proceeding or other
action seeking reorganization, arrangement, adjustment,
liquidation, dissolution or recomposition of the
Partnership, or the debts of the Partnership, 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 Partnership, or the Property.
(27) To the best knowledge of the Partnership, there
are no Hazardous Materials on, in or under the
Property, and the Property has never been used by the
Partnership, or any other person, to generate, treat,
store, dump, release, emit, use, transport or in any
manner deal with Hazardous Materials.
(28) To the best knowledge of the Partnership, the
present use and occupation of the Property does not
violate any Environmental Law.
<PAGE>
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(29) The Partnership is not delinquent in any payment
for services, materials and work supplied to the
Property at the request of the Partnership.
(30) The summaries of Leases affecting the Properties
attached as Exhibit "F" to this Agreement (the "RENT
ROLLS") are true, complete and accurate as at the date
set forth therein.
(31) True and complete copies of all Leases have been
made available to the Operating Partnership at the
principal office of the Partnership.
(32) Except for the Morgan Loan, the Partnership has
not assigned, mortgaged, pledged, hypothecated or
otherwise encumbered any of its rights or interests
under any of the Leases.
(33) Each 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.
(34) Except as indicated on the Rent Rolls, each Lease
is in full force and effect.
(35) Except as indicated on the Rent Rolls, all rents
are being paid and are current.
(36) Except as indicated on the Rent Rolls, no tenant
has paid any rent for more than one month in advance.
(37) Except as indicated on the Rent Rolls, no tenant
is entitled to any free rent, abatement of rent or
similar concession.
(38) As of the date of this Agreement, the Security
Deposits under the Leases are as set forth in the Rent
Rolls.
(39) 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.
<PAGE>
-17-
(40) All representations on the part of the landlord
contained in the Leases, if any, are true and correct
in all material aspects.
(41) Each Partnership has complied (and is in
compliance) with all of the requirements of the
relevant Michigan laws regarding the holding of tenant
security deposits.
(42) To the best knowledge of the Partnership, there
has been no reduction of services at the Property that
would entitle any tenant to a reduction or refund in
rent.
(43) Except for the Service Contracts listed on
Schedule 5 attached hereto, there are no service or
maintenance contracts, or pending purchase orders
pertaining to the Property which may not be terminated
upon not more than thirty (30) days, notice, without
payment of any penalty or termination fee.
(44) True and complete copies of the Service Contracts
have been made available to the Operating Partnership
at the principal office of the Affiliated Partnerships.
(45) 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.
(b) All of the representations and warranties of the
Affiliated Partnerships, and each Partnership, set forth in this Agreement
shall be true and correct in all material respects at the date of this
Agreement, and 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
Affiliated Partnerships, and each Partnership, 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.
(d) The Affiliated Partnerships agree to indemnify the
Operating Partnership, and hold harmless and defend the Operating
Partnership, 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 breach of any of the
representations and warranties
<PAGE>
-18-
of the Affiliated Partnerships, or any Partnership, set forth in this
Agreement.
(e) Except as expressly provided in this Agreement, the
Affiliated Partnerships, and each Partnership, have made no representations
and/or warranties regarding the Properties, and, except as expressly set
forth in this Agreement, the operating Partnership 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.
9. REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP
AND HME. (a) The Operating Partnership 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) The Operating Partnership 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.
(2) Neither the execution and delivery of this
Agreement, nor the performance of this Agreement by the
Operating Partnership, nor the execution, delivery and
performance of the Registration Rights Agreement by
HME, nor the execution, delivery and performance of the
Voting Rights Agreement by HME and the Operating
Partnership, nor the execution and delivery of the
Lock-Up Agreement by HME and the Operating Partnership,
nor the execution and delivery of the Amendment by the
Operating Partnership, nor the issuance and delivery of
the OP Units by the Operating Partnership, will
conflict with, or result in any breach of, any
contract, agreement, law, rule or regulation to which
either HME or the Operating Partnership is a party, or
by which either HME or the Operating Partnership is
bound.
(3) This Agreement has been duly authorized, executed
and delivered, and constitutes a legal and binding
obligation of the Operating Partnership, enforceable in
accordance with its terms, except as such enforcement
may be
<PAGE>
-19-
limited by bankruptcy and other laws affecting
creditors, rights generally.
(4) Each instrument to be executed and delivered by the
Operating Partnership and/or HME pursuant to this
Agreement, or in connection herewith, will, when
executed and delivered, be valid and enforceable
against the Operating Partnership 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 the operating Partnership,
there is no litigation, proceeding or investigation
pending, or threatened, against or affecting the
Operating Partnership, or HME, that might affect the
validity of this Agreement, or any action taken, or to
be taken, by the Operating Partnership, or HME,
pursuant to this Agreement, or that might have a
material adverse effect on the business of the
Operating Partnership.
(6) At the Closing, the Operating Partnership shall
deliver to each Partnership good and marketable title
to the OP Units allocated to such Partnership, free and
clear of all liens, charges, encumbrances and
restrictions, except as contained in the Operating
Partnership Agreement, the Registration Rights
Agreement, the Voting Rights Agreement and the Lock-Up
Agreement, and shall, by execution of the Amendment,
admit each Partnership as a limited partner in the
Operating Partnership.
(7) The Operating Partnership Agreement attached as
Exhibit "C", to this Agreement, is true, complete and
accurate as at the date of this Agreement, and shall
not be further amended prior to the Closing Date,
except for (i) amendments in connection with the
issuance of additional shares under HME's Dividend
Reinvestment Stock Purchase, Resident Stock Purchase
and Employee Stock Purchase Plan, and (ii) amendments
in connection with mergers or other transactions
wherein additional OP Units are issued in connection
with the acquisition of real property, or of interests
in entities which own real property.
<PAGE>
-20-
(8) For a period of ten (10) years from and after the
Closing Date, the Operating Partnership shall allocate
to each Partnership, from time to time, for Federal
income tax purposes, pursuant to Section 752 of the
Code, nonrecourse debt of the Operating Partnership in
an aggregate amount not less than the Negative Basis of
such Partnership.
(9) The initial Negative Basis of each Partnership in
the Property, or Properties, owned by such Partnership
shall be determined by reference to the tax basis of
such Property or Properties as at (just prior to) the
contribution thereof to the Operating Partnership on
the Closing Date, and, for a period of ten (10) years
from and after the Closing Date, shall be adjusted
annually to reflect changes occasioned at the level of
the Operating Partnership, including, without
limitation, distributions made by the Operating
Partnership.
(10) The Operating Partnership shall utilize the
"TRADITIONAL METHOD" for making allocations to each
Partnership under Section 704(c) of the Code with
regard to the Property or Properties contributed to the
Operating Partnership by such Partnership under this
Agreement.
(11) For a period of ten (10) years from and after the
Closing Date, the Operating Partnership shall not sell,
exchange, transfer or otherwise dispose of any
Property, or any replacement of any Property (in any
event, a "PORTFOLIO TRANSFER"), unless such Portfolio
Transfer occurs in such manner as to be tax free to the
relevant Partnership.
(12) Future transactions involving HME, or the
Operating Partnership, 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 Affiliated
Partnerships than the value
<PAGE>
-21-
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
Affiliated Partnerships.
(b) All of the representations and warranties of the
Operating Partnership, 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) The Operating Partnership agrees to indemnify each
Partnership, and hold harmless and defend each Partnership, 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 breach of any of the representations and
warranties of the Operating Partnership and/or HME set forth in this
Agreement.
10. CONDITIONS TO THE OBLIGATIONS OF THE OPERATING PARTNERSHIP.
(a) without limiting any of the rights of the Operating Partnership
elsewhere set forth in this Agreement, it is agreed that the obligations of
the Operating Partnership under this Agreement shall be subject to the
satisfaction of the conditions set forth following (the "BUYER'S
CONDITIONS"):
(1) All of the representations and warranties of the
Affiliated Partnerships, and each Partnership 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 of Directors of HME shall have
approved the acquisition of the Properties by the
Operating Partnership 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 the Operating Partnership.
(4) The Operating Partnership shall have received the
Lender's Consent to the Assumption, and the Lender's
Consent shall be
<PAGE>
-22-
in form and substance reasonably satisfactory to the
Operating Partnership.
(5) As at the Closing Date, the Morgan Loan shall be in
full force and effect, with no default or right to
accelerate occurring thereunder by reason of the
consummation of the transaction contemplated under this
Agreement, or otherwise.
(6) Each Partnership shall have delivered to the
operating Partnership all of the documents and other
items required to be delivered by such Partnership to
the Operating Partnership under the terms of this
Agreement.
(7) At the Closing, the Title Company shall have agreed
to issue the Title Policies in the form and amounts
required by this Agreement.
(8) The fulfillment by each Partnership of such other
conditions to Closing as are set forth in this
Agreement, including, without limitation, the
performance by each Partnership of the obligations and
covenants of such Partnership set forth in this
Agreement.
(b) Each of the Buyer's Conditions is for the benefit of
the Operating Partnership, and, accordingly, any such condition may be
waived by the Operating Partnership at any time.
(c) If any of the Buyer's Conditions shall not have been
fulfilled by the Affiliated Partnerships, or otherwise satisfied, or
waived, by the Operating Partnership, the operating Partnership shall have
the right to terminate this Agreement by written notice to the Affiliated
Partnership, in which event the Earnest Money Deposit shall be returned to
the Operating Partnership, 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, but subject to
the provisions of Section 23 of this Agreement.
11. CONDITIONS TO THE OBLIGATIONS OF THE AFFILIATED
PARTNERSHIPS. (a) Without limiting any of the rights of the Affiliated
Partnerships elsewhere set forth in this Agreement, it is agreed that the
obligations of the Affiliated Partnerships under this Agreement shall be
subject to the satisfaction of the conditions set forth following (the
"SELLER'S CONDITIONS"):
<PAGE>
-23-
(1) All of the representations and warranties of the
Operating Partnership, 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) The Affiliated Partnerships shall have received the
Lender's Consent to the Assumption, and the Lender's
Consent shall be in form and substance reasonably
satisfactory to the Affiliated Partnerships.
(3) The Operating Partnership shall have delivered to
each Partnership all of the documents and other items
required to be delivered by the Operating Partnership
under the terms of this Agreement.
(4) The fulfillment by the Operating Partnership of
such other conditions to Closing as are set forth in
this Agreement.
(b) Each of the Seller's Conditions is for the benefit of
the Affiliated Partnerships, and, accordingly, any such condition may be
waived by the Affiliated Partnerships at any time.
(c) If any of the Seller's Conditions shall not have been
fulfilled by the Operating Partnership, or otherwise satisfied, or waived
by the Affiliated Partnerships, the Affiliated Partnerships shall have the
right to terminate this Agreement by written notice to the Operating
Partnership, in which event the Earnest Money Deposit shall be returned to
the Operating Partnership, 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, but subject to
the provisions of Section 23 of this Agreement.
12. INSPECTION PERIOD. The Operating Partnership shall have a
period of thirty (30) days from and after the date of this Agreement (the
"DUE DILIGENCE PERIOD") within which 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 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 inspection and
environmental reports with respect to any Property, or all of 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
<PAGE>
-24-
intended by the Operating Partnership, provided, however, that the
Operating Partnership shall not conduct any environmental study of any
Property beyond a Phase 1 level without the consent of the Affiliated
Partnerships, which consent shall not be unreasonably withheld. The
Operating Partnership may declare the Due Diligence Period ended at any
earlier time. The Operating Partnership must be satisfied in all respects
(in the sole and absolute discretion of the Operating Partnership) with the
results of all reviews, inspections and investigations conducted by, or
under, the Operating Partnership during the Due Diligence Period. If the
Operating Partnership shall not be so satisfied, the Operating Partnership
may, within three (3) days next following the expiration of the Due
Diligence Period, terminate this Agreement, in which event the Operating
Partnership shall have no obligation or liability under this Agreement, or
with regard to the Affiliated Partnerships or the Properties, and the
Operating Partnership shall be entitled to the immediate return of the
Earnest Money Deposit, and this Agreement shall, thereafter, be null, void
and of no further force or effect. If not so terminated by the Operating
Partnership, this Agreement shall continue in full force and effect
according to its terms. The Operating Partnership 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.
13. TITLE. (a) At Closing each Partnership will transfer and
convey to the Operating Partnership good, marketable and insurable fee
simple title to the Property or Properties owned by such Partnership, free
and clear of all liens, charges and encumbrances, except the Permitted
Exceptions.
(b) Each Partnership will provide a separate ALTA Owner's
Policy of Title Insurance (the "TITLE POLICIES"), preceded by a Commitment
(the "TITLE COMMITMENTS"), regarding the Property, or each Property, owned
by such Partnership, in each case, in the amount of the Aggregate
Contribution Value allocated to such Property, and, in each case,
confirming good and marketable title to such Property in the relevant
Partnership, subject only to the Permitted Exceptions. The Title Policies
shall be issued by First American Title Insurance Company (the "TITLE
COMPANY"). The Affiliated Partnerships shall bear all of the expenses in
connection with the Title Policies. The Title Commitments shall be
delivered to the Operating Partnership within twenty (20) days after the
date of this Agreement, and shall be accompanied by copies of all recorded
instruments referred to in any of the Title Commitments. The Title
Policies shall be issued as soon as practicable after the completion of the
Closing on the Closing Date.
(c) Within twenty (20) days after the date of this
Agreement, each Partnership shall furnish to the Operating Partnership
written results of searches (the "UCC SEARCHES") of the records of the
Michigan Secretary of State, and of the County
<PAGE>
-25-
in which the Property, or each Property, owned by such Partnership is
located, conducted by such Partnership's legal counsel, for Uniform
Commercial Code Financing Statements, tax liens, or the like, in either the
name of such Partnership, or the Property, or Properties, effective as of a
date after the date of this Agreement, accompanied by copies of all
documents disclosed by the UCC Searches. The Affiliated Partnerships shall
bear all of the expenses of the UCC Searches.
(d) Within twenty (20) days after the date of this
Agreement, the Affiliated Partnerships shall deliver to the Operating
Partnership a survey pertaining to each of the Properties (the "SURVEYS"),
which, in the case of each Property, shall be the survey used for purposes
of the Morgan Loan, in each case, updated and recertified (upon the same
format) by competent Michigan surveyor(s), to a more current date. The
Affiliated Partnerships shall bear all of the expenses of updating and
recertifying each Survey.
(e) If any Title Commitment, UCC 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, the
Operating Partnership shall so notify the Affiliated Partnerships in
writing, such notice to be furnished to the Affiliated Partnerships, if at
all, within fifteen (15) days following receipt by the Operating
Partnership of the Title Commitments, the UCC Searches and Surveys, and the
Affiliated Partnerships shall have the right, but not the obligation,
within fifteen (15) days from the date of the receipt of such notice by the
Affiliated Partnerships (the "CORRECTION PERIOD"), to have each such
unpermitted exception to title removed, or to correct each such other
matter, in each case to the satisfaction of the Operating Partnership. If,
within the Correction Period, the Affiliated Partnerships fail to have each
such unpermitted exception removed, or to correct each such other matter as
aforesaid, the operating Partnership may, at its option, and as the sole
and exclusive remedy of the Operating Partnership, either (i) terminate
this Agreement, in which event this Agreement, without further action of
the parties, shall become null and void such that neither party shall have
any further rights or obligations under this Agreement, and the Operating
Partnership shall be entitled to the immediate return of the Earnest Money
Deposit, or (ii) elect to take title to each Property as it then is. If
the Operating Partnership fails to make either such election within five
(5) days following the expiration of the Correction Period, the Operating
Partnership shall be deemed to have elected option (ii). 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 Operating
Partnership does not object, as aforesaid, shall be deemed approved by the
Operating Partnership, and shall be deemed to be an additional Permitted
Exception. Notwithstanding anything to the contrary contained herein, the
Affiliated Partnerships shall be obligated to remove (or to cause
<PAGE>
-26-
the Title Company to affirmatively insure over) at the expense of the
Affiliated Partnerships (a) any mortgages or deeds to secure debt regarding
any financing obtained by any Partnership, other than the Morgan Loan;
(b) any mechanic's or materialman's lien for work done on any Property on
behalf of any Partnership; and (c) any other monetary lien against any
Property resulting from any act or omission of any Partnership.
14. CLOSING DATE. If this Agreement shall not have been
terminated by the Operating Partnership, or the Affiliated Partnerships,
for any of the reasons, and within the time(s) herein limited, the closing
of the transaction contemplated by this Agreement (the "CLOSING") shall
occur within thirty (30) days after the later of (i) the end of the Due
Diligence Period, and (ii) receipt of the Lender's Consent (any such day
upon which the Closing occurs being herein referred to as the "CLOSING
DATE"). The Closing shall be held at the main office of the Title Company,
in Troy, Michigan, at such time, or at such other place, as may be mutually
agreed upon by the parties.
15. CLOSING DOCUMENTS. (a) At or prior to the Closing, each
Partnership, with respect to the Property, or each Property, owned by such
Partnership, shall deliver to the Operating Partnership the following, each
of which shall be in form and substance satisfactory to the Operating
Partnership and the Title Company:
(1) the Lender's Consent;
(2) an estoppel certificate from Morgan confirming that
there is no default under the Morgan Loan, and that
there exists no event that with the passage of time or
the giving of notice, or both, would constitute such a
default;
(3) a warranty deed (the "DEED"), conveying to the
Operating Partnership good, marketable and insurable
fee simple title to the Property, free and clear of all
liens, charges and encumbrances other than the
Permitted Exceptions, which Deed shall be in recordable
form, duly executed and acknowledged by the relevant
Partnership, and shall have affixed thereto, at the
expense of such Partnership, any requisite conveyance,
transfer and/or documentary tax stamps, in proper
amount;
(4) an assignment of all of the Partnership's right,
title and interest in and to the Leases and Security
Deposits, together with an indemnity by the Partnership
in favor of the Operating Partnership from
<PAGE>
-27-
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 a similar
indemnity of the Operating Partnership, in favor of the
Partnership with respect to matters arising after the
Closing Date;
(5) an assignment of all of the Partnership's right,
title and interest in and to the Service Contracts,
together with an indemnity by the Partnership, in favor
of the operating Partnership, 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 so assigned prior to the Closing Date, and
with a similar indemnity of the operating Partnership,
in favor of the Partnership, with respect to matters
arising after the Closing Date;
(6) a bill of sale conveying and transferring to the
Operating Partnership all right, title and interest of
the Partnership in and to all of the Personal Property,
which bill 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;
(7) the Affidavit of the Partnership, stating, under
penalty of perjury, the United States taxpayer
identification number of the Partnership, and that the
Partnership is not a foreign person within the meaning
of Section 1445 of the Code;
(8) an assignment of all of the Partnership's right,
title and interest in and to the Trade Names;
(9) any and all affidavits, certificates or other
documents 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;
(10) the Title Policy (or marked-up Title Commitment)
pertaining to the Property, in the amount of the
Aggregate Contribution
<PAGE>
-28-
Value allocated to the Property, insuring fee simple
title to the Property in the Operating Partnership,
subject only to the Permitted Exceptions, and otherwise
in the form and condition required by this Agreement;
(11) an update of the Rent Roll pertaining to the
Property (including a listing of all delinquent and
prepaid rents), dated the Closing Date, and represented
and certified by the Partnership to be true, accurate,
complete and correct in all material respects;
(12) all of the original Leases, Service Contracts and
Equipment Leases (in the case of the Equipment Leases
or Service Contracts, limited to those Equipment Leases
or Service Contracts which the Operating Partnership is
required, or has elected, to assume under this
Agreement;
(13) all keys to the Property (which shall be delivered
at the office of the Property;
(14) the "AS-BUILT" plans and specifications for the
Property, if available;
(15) an assignment to the Operating Partnership of any
contractors' or subcontractors' guarantees or
warranties relating to the Improvements or Personal
Property;
(16) duly executed certificates of title, and other
transfer documents, with regard to any vehicle owned by
the Partnership;
(17) a certified copy of the Certificate of Limited
Partnership of the Partnership, and such other evidence
of the Partnership's power and authority as the Title
Company may request;
(18) an undertaking by the Partnership to deliver to
the Operating Partnership unaudited operating
statements for the Property for the period July 1,
1997, through the Closing Date, within thirty (30) days
after the Closing Date;
(19) a letter to each of the tenants in the Property
advising them of the change of ownership of the
Property, and the transfer
<PAGE>
-29-
of the Security Deposits, and directing that rentals or
other payments thereafter be paid to a payee designated
by the Operating Partnership;
(20) a sworn statement from a Managing General Partner
in the Partnership certifying that the partner, or
partners, signing documents in connection with the
transaction contemplated by this Agreement is fully
authorized to do so;
(21) such existing maintenance records in regard to the
Property which the Operating Partnership may request
not later than five (5) days prior to the Closing Date
(which shall be delivered at the Property);
(22) the currently effective Licenses regarding the
Property, or other reasonably acceptable evidence of
the right to use and occupy the Property;
(23) signed notices to each utility service provider,
advising of the change in ownership of
the Property;
(24) a signed counterpart of the Lock-Up Agreement;
(25) a signed counterpart of the Voting Rights
Agreement;
(26) a signed counterpart of the Registration Rights
Agreement;
(27) a signed counterpart of the Investor Qualification
Questionnaire and Power of Attorney, dated the Closing
Date, and in the form of Exhibit "H" attached hereto;
(28) a signed counterpart of the Amendment; and
(29) such additional documentation as the Operating
Partnership, or the Title Company, may reasonably deem
necessary or desirable in order to effectuate the
transaction contemplated by this Agreement.
(b) At the Closing, the Operating Partnership shall deliver
to each Partnership the following, each of which shall be in form and
substance satisfactory to such Partnership:
<PAGE>
-30-
(1) the OP Units allocated to such Partnership (by and
through the execution and delivery of the Amendment,
which shall evidence and reflect the ownership of the
OP Units by such Partnership);
(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 the Operating
Partnership pursuant to this Agreement;
(4) a sworn statement on behalf of the general partner
in the Operating Partnership certifying that the person
signing documents in connection with the transaction
contemplated by this Agreement on behalf of the
Operating Partnership is authorized to do so;
(5) a signed counterpart of the Voting Rights
Agreement;
(6) a signed counterpart of the Registration Rights
Agreement;
(7) a signed counterpart of the Lock-Up Agreement;
(8) a signed counterpart of the Amendment;
(9) signed counterparts of all other documents listed
in Section 15(a) required to be signed by the Operating
Partnership;
(10) a certified copy of the Operating Partnership
Agreement;
(11) on behalf of HME, a certificate of good standing
from the Secretary of State of Maryland;
(12) on behalf of the Operating Partnership, a
certificate of good standing from the Secretary of
State of New York; and
(13) such additional documentation as the Partnership
may reasonably deem necessary to
<PAGE>
-31-
effectuate the transaction set forth in this Agreement.
16. APPORTIONMENTS. (a) As to each Property, the following
items shall be apportioned between the relevant Partnership and the
Operating Partnership as of 11:59 p.m. of the day immediately preceding the
Closing Date (it being understood that all such adjustments shall be made
to the quantity of OP Units to be issued and delivered to the Affiliated
Partnerships, and that, for purposes thereof, the Operating Partnership
shall be deemed to be the owner of the Properties on the Closing Date):
(1) interest on the Morgan Loan;
(2) the Reserves and Escrows (which will be held by
Morgan for the benefit of the Operating Partnership
following the Closing);
(3) real estate and personal property taxes, on the
usual and customary "DUE DATE" basis;
(4) rents under the Leases for the relevant month, as
and when collected;
(5) coin operated laundry concession income;
(6) the full amount of all Security Deposits then held
under the Leases;
(7) 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 Partnership 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;
(8) amounts paid or payable under the Service Contracts
to be assigned to and assumed by the Operating
Partnership;
(9) fees paid for assignable current Licenses;
<PAGE>
-32-
(10) premiums on existing transferable insurance
policies, or renewals of those expiring prior to
Closing, if any such policy shall, at the option of the
operating Partnership, be assigned to and assumed by
the operating Partnership at the Closing; and
(11) other expenses of operation.
(b) Rents which are due and payable to the Partnership by
any tenant but uncollected as of the Closing Date shall not be adjusted at
the Closing. All rents collected by the operating Partnership after the
Closing Date shall be applied first to 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). All rent collected
after Closing for any period prior to the Closing shall belong to the
relevant Partnership, and if paid to the Operating Partnership, the
Operating Partnership shall promptly send such rent to the relevant
Partnership, less all expenses incurred by the Operating Partnership, if
any, in regard to the collection thereof. At the Closing, each Partnership
shall deliver to the Operating Partnership a schedule of all such past due,
but uncollected rents owed by tenants. All rents collected by any
Partnership, prior to Closing, for rental period(s) subsequent to the
Closing shall be paid by such Partnership to the Operating Partnership at
the Closing. All rents collected by the Operating Partnership or the
Affiliated Partnerships for rental periods after the Closing shall belong
to the Operating Partnership, and if paid to the Affiliated Partnerships,
the Affiliated Partnerships shall promptly send such rent to the Operating
Partnership.
(c) Any apportionment 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) If on the Closing Date, any Property shall be affected
by any special assessment for public improvements or otherwise which is or
may become payable by the relevant Partnership in annual installments, of
which the first installment is then a charge or lien or has been paid,
then, for the purposes of this Agreement, all the unpaid installments of
such assessment, including those which are to become due and payable after
the Closing, shall be deemed to be due and payable and to be liens upon
such Property, and shall be paid and discharged by the relevant Partnership
at the Closing.
<PAGE>
-33-
(e) Each Partnership shall be responsible for, and shall
pay at or prior to Closing, 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 Property, or
Properties, owned by such Partnership.
17. TRANSACTION COSTS. (a) The Affiliated Partnerships shall be
responsible for the following costs in connection with the transaction
contemplated by this Agreement, all of which shall be paid by the
Affiliated Partnerships, in cash:
(1) all of the expenses in connection with updating and
recertifying the Surveys;
(2) all of the expenses in connection with the Title
Policies;
(3) all County and State transfer taxes customarily
borne by sellers of real estate in Michigan;
(4) the Broker's Commission payable to the Dietz
Organization;
(5) that portion of the Lender's Costs allocable to the
Affiliated Partnerships in accordance with Schedule 6
attached hereto; and
(6) the fees and charges of such attorneys, accountants
and other representatives as shall have been engaged by
the Affiliated Partnerships for purposes of
consummating the transaction contemplated by this
Agreement.
(b) The Operating Partnership shall be responsible for the
following costs in connection with the transaction contemplated by this
Agreement:
(1) all of the costs of its due diligence activities,
including, without limitation, all engineering and
environmental reports, and all financial and lease
audits;
(2) recording charges;
(3) that portion of the Lender's Costs allocable to the
Operating Partnership in accordance with Schedule 6
attached hereto; and
<PAGE>
-34-
(4) the fees and charges of such attorneys, accountants
and other representatives as shall have been engaged by
the Operating Partnership for purposes of consummating
the transaction contemplated by this Agreement.
18. POSSESSION. Upon completion of the Closing, each
Partnership shall deliver to the Operating Partnership full and complete
possession of the Property, or Properties, owned by such Partnership, in
each case, subject only to the Permitted Exceptions.
19. CONDEMNATION AND DESTRUCTION. (a) If, prior to the Closing
Date, 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 Affiliated Partnerships shall notify the Operating
Partnership of such fact, and the operating Partnership shall have the
option (which option shall be set forth in a notice from the Operating
Partnership to the Affiliated Partnerships given not later than fifteen
(15) business days after receipt of the notice from the Affiliated
Partnerships):
(i) to terminate this Agreement, in which event, the
Earnest Money Deposit shall be returned to the
Operating Partnership, and, thereafter, this Agreement
shall be deemed to be null, void and of no further
force or effect between the parties; or
(ii) to accept title to the relevant Property (other
than the portion so taken), without abatement of the
Aggregate Contribution Value, in which event the
Affiliated Partnerships shall assign and turn over to
the Operating Partnership at the Closing, and the
Operating Partnership shall be entitled to receive and
keep, all amounts awarded, or to be awarded, as the
result of the taking.
(b) If, prior to the Closing Date, all or any material part
of any Property is damaged or destroyed by fire or other casualty, the
Affiliated Partnerships shall notify the Operating Partnership of such
fact, and the Operating Partnership shall have the option (which option
shall be set forth in a notice from the Operating Partnership to the
Affiliated Partnerships given not later than fifteen (15) business days
after receipt of the notice from the Affiliated Partnerships):
(i) to terminate this Agreement, in which event, the
Earnest Money Deposit shall be returned to the
Operating Partnership, and, thereafter, this Agreement
shall be deemed to
<PAGE>
-35-
be null, void and of no further force or effect between
the parties; or
(ii) to accept title to the relevant Property without
abatement of the Aggregate Contribution Value, in which
event the Affiliated Partnerships shall assign to the
Operating Partnership, at the Closing, all of the
right, title and interest of the Affiliated
Partnerships in and to the insurance proceeds awarded
or to be awarded to the Affiliated Partnerships 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, such damage or
destruction shall be repaired promptly by the Affiliated Partnerships, and
in the event such damage or destruction cannot be fully repaired by the
Closing Date, then at the option of the operating Partnership (i) the
Closing shall be postponed until such repairs shall have been completed, or
(ii) the Closing shall be held as scheduled, and the Operating Partnership
shall accept title to the relevant Property without abatement of the
Aggregate Contribution Value, in which event the Affiliated Partnerships
shall assign to the Operating Partnership, at the Closing, all of the
right, title and interest of the Affiliated Partnerships in and to the
insurance proceeds awarded or to be awarded to the Affiliated Partnerships
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 $250,000, 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 $250,000.
20. BROKER'S COMMISSION. The Affiliated Partnerships and the
Operating Partnership 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 the
Dietz Organization, to whom, pursuant to separate agreement, the Affiliated
Partnerships shall pay a real estate brokerage commission of $605,000, at
the time of, and in conjunction with the Closing of the transaction under
this Agreement. The Affiliated Partnerships agree that should any claim be
made for a commission or other compensation with regard to this transaction
by any broker, other than a broker engaged in writing by the Operating
Partnership, or HME, the Affiliated Partnerships shall have the sole
responsibility for paying any such claim, and shall indemnify and hold
harmless the Operating Partnership, and HME,
<PAGE>
-36-
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.
21. EARNEST MONEY. Concurrently with the execution of this
Agreement by both the Operating Partnership and the Affiliated
Partnerships, the Operating Partnership will deposit $100,000 in cash (the
"EARNEST MONEY DEPOSIT") with the Title Company, as Escrow Trustee, to be
held in an interest bearing account, at an insured institution acceptable
to the Operating Partnership pursuant to the terms of an Escrow Agreement
in the form of Exhibit "G" attached hereto. At Closing, the Earnest Money
Deposit, shall be returned to the Operating Partnership, and shall not be
applied to the Net Contribution Value payable for the Properties. If this
Agreement shall not have been terminated by the Operating Partnership, the
Earnest Money Deposit shall be refundable to the Operating Partnership in
the event only that the Affiliated Partnerships default, or are unable to
close for any reason. In the event the Operating Partnership does not
close for any reason other than as a result of the permitted termination of
this Agreement by the Operating Partnership, or the default of the
Affiliated Partnerships, or the inability of the Affiliated Partnerships to
close, the Earnest Money Deposit, shall be paid to the Affiliated
Partnerships. As used anywhere in this Agreement, the term "EARNEST MONEY
DEPOSIT" includes all earnings thereon, if any.
22. COOPERATION. At all times during the term and pendency of
this Agreement, the Affiliated Partnerships will cooperate fully with the
Operating Partnership 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, copies of tax returns filed by the
Affiliated Partnerships, and annual and monthly operating statements
relating to the Properties, and in the possession of, or reasonably
available to the Affiliated Partnerships. The Affiliated Partnerships will
provide access to each Property for all physical inspections required by
the Operating Partnership. The Affiliated Partnerships will provide access
by the representatives of the Operating Partnership to all financial and
other information relating to the Properties as is sufficient to enable
such representatives to prepare audited financial statements, at the
expense of the Operating Partnership, in conformity with Regulation S-X of
the Securities and Exchange Commission (the "COMMISSION"), and any
registration statement, report or disclosure statement required to be filed
with the Commission.
<PAGE>
-37-
23. DEFAULTS AND REMEDIES. (a) If the Affiliated Partnerships
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 Affiliated Partnerships to
perform, prior to the Closing, or if any of the representations, warranties
and covenants of the Affiliated Partnerships contained in this Agreement
shall not be true, complete and correct at Closing, the Operating
Partnership may terminate this Agreement, in which event the Earnest Money
Deposit shall be returned to the Operating Partnership, and the Operating
Partnership shall, in addition, be entitled to reimbursement by the
Affiliated Partnerships of the actual out-of-pocket due diligence costs
incurred by the Operating Partnership in connection with proposed
acquisition of the Properties, up to the sum of $100,000 (after the payment
of which, this Agreement shall be deemed null, void, and of no further
force or effect between the parties).
(b) If the Operating Partnership fails or refuses to
perform in accordance with the terms of this Agreement, the Earnest Money
Deposit shall be forfeited to the Affiliated Partnerships as liquidated
damages (which shall be the sole and exclusive remedy of the Affiliated
Partnerships against the Operating Partnership), 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 Affiliated Partnerships
acknowledge and agree that (i) the Earnest Money Deposit is a reasonable
estimate of, and bears a reasonable relationship to, the damages suffered
and costs incurred by the Affiliated Partnerships as a result of having
subjected the Properties to the terms of this Agreement; (ii) the actual
damages suffered and costs incurred by the Affiliated Partnerships as a
result of such failure of the Operating Partnership to close under this
Agreement would be extremely difficult and impractical to determine;
(iii) the Operating Partnership seeks to limit its liability under this
Agreement to the amount of the Earnest Money Deposit in the event this
Agreement is terminated and the transaction contemplated by this Agreement
does not close due to a default of the Operating Partnership under this
Agreement; and (iv) the Earnest Money Deposit shall be and constitute valid
liquidated damages.
24. OTHER PROHIBITED ACTIVITIES. (a) During the term and
pendency of this Agreement, the Affiliated Partnerships will cease to
market the Berger/Lewiston Portfolio, or any Property, and, in that regard,
the Affiliated Partnerships will refrain from soliciting or accepting any
offer from any third party, or, except in the case of the restructuring of
the Morgan Loan, and in conjunction with the Operating Partnership,
engaging in any discussion with any third party concerning the sale,
refinancing or recapitalization of the Berger/Lewiston Portfolio, or any
Property.
<PAGE>
-38-
(b) Both the Operating Partnership and the Affiliated
Partnerships agree to keep this Agreement confidential, and not to disclose
its contents to anyone except their respective lenders, legal counsel and
accountants, 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.
25. 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 the Affiliated Partnerships, subject to the
terms of this Agreement.
26. 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, or by personal
delivery, as follows:
(i) if to the Affiliated Partnerships:
c/o Richard M. Lewiston
21790 Coolidge Highway
Oak Park, Michigan 48237;
and
(ii) if to the Operating Partnership:
c/o Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Attention: Norman P. Leenhouts, Chairman and
Co-Chief Executive Officer
(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 or personal delivery, or three (3) business days after
mailing.
27. ASSIGNMENT. Neither this Agreement nor any interest
hereunder shall be assigned or transferred by any of the Affiliated
Partnerships. Neither this Agreement nor any interest hereunder shall be
assigned or transferred by the Operating Partnership.
28. 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 Voting
<PAGE>
-39-
Agreement, and 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 the
Operating Partnership, or otherwise with respect to the OP Units. This
Agreement shall, otherwise, 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.
29. ENTIRE AGREEMENT. This Agreement 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.
30. AMENDMENT. This Agreement may not be modified or amended
except in, and by, a written instrument executed by the parties hereto.
31. 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.
32. 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.
33. MISCELLANEOUS. (a) Upon reasonable notice and during
business hours between the date of this Agreement and the Closing Date, the
Operating Partnership, and agents and representatives of the Operating
Partnership, shall have the right to enter upon any Property for the
purpose of examining, inspecting and testing such Property.
(b) The Affiliated Partnerships 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 the Operating Partnership with the Securities and
Exchange Commission after the Closing. Accordingly, the Affiliated
Partnerships agree to provide the Operating Partnership, and its
representatives, with access to the books and records of the Affiliated
Partnerships pertaining to the Properties after the Closing, upon
reasonable advance notice, in order to conduct the required audit, at the
expense of the Operating Partnership. Each Partnership will provide a
signed Representation Letter, in the form of Exhibit "I" attached hereto,
with respect to the Property, owned by such Partnership.
<PAGE>
-39-
(c) 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.
(d) Within thirty (30) days of the Closing Date, each
Partnership shall provide the operating Partnership with a schedule showing
(i) that Partnership's share of the principal balance of the Morgan Loan as
of the Closing Date, which allocation will be consistent with the
allocation set forth on Schedule 4 attached hereto, and (ii) the net book
value of the Property or Properties and the Personal Property owned by that
Partnership as of the Closing Date. The information on the schedule shall
be calculated in a manner consistent with the calculations made and to be
made for Federal income tax purposes.
(e) The date upon which this Agreement shall have been
signed by both the Affiliated Partnerships and the operating Partnership
shall be considered to be the date of this Agreement.
IN WITNESS WHEREOF, the Affiliated Partnerships and the Operating
Partnership have executed this Agreement as at the day and year first above
written.
Berger/Lewiston Associates Limited
Partnership, a Michigan limited
partnership
By: /s/ Richard M Lewiston
----------------------------
Richard M. Lewiston,
Managing General Partner
Stephenson-Madison Heights Company
Limited Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
----------------------------
Richard M. Lewiston,
Managing General Partner
Kingsley-Moravian Company Limited
Partnership, a Michigan limited
partnership
<PAGE>
-40-
By: /s/ Richard M. Lewiston
---------------------------
Richard M. Lewiston,
Managing General Partner
Woodland Garden Apartments Limited
Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
----------------------------
Richard M. Lewiston,
Managing General Partner
B&L Realty Investments Limited
Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
-----------------------------
Richard M. Lewiston,
Managing General Partner
Southpointe Square Apartments Limited
Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
-----------------------------
Richard M. Lewiston,
Managing General Partner
Greentrees Apartments Limited
Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
-----------------------------
Richard M. Lewiston,
Managing General Partner
Big Beaver-Rochester Properties Limited
Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
-----------------------------
Richard M. Lewiston,
<PAGE>
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Managing General Partner
Century Realty Investment Company
Limited Partnership, a Michigan limited
partnership
By: /s/ Richard M. Lewiston
-----------------------------
Richard M. Lewiston,
Managing General Partner
the "AFFILIATED PARTNERSHIP"
Home Properties of New York, L.P., a New
York limited partnership
By: Home Properties of New York, Inc.,
a Maryland corporation, General Partner
By: /s/ Norman P. Leenhouts
-----------------------------
Norman P. Leenhouts, Chairman and
Co-Chief Executive Officer
the "OPERATING PARTNERSHIP"
<PAGE>
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LIST
OF
SCHEDULES AND EXHIBITS*
SCHEDULES
Schedule 1 - Schedule of Partnerships
Schedule 2 - Schedule of Apartment Projects
Schedule 3 - Schedule of Ownership of Projects
Schedule 4 - Schedule of Allocations
Schedule 5 - Schedule of Services Contracts and Equipment Leases
Schedule 6 - Schedule of Allocation of Lender's Costs
Schedule 7 - Schedule of Morgan Loan Documents
Schedule 8 - Schedule of Proposed Public Improvements/Special
Assessments
EXHIBITS
Exhibit "A" - Description(s) of the Land
Exhibit "B" - Lock-Up Agreement
Exhibit "C" - Operating Partnership Agreement
Exhibit "D" - Registration Rights Agreement
Exhibit "E" - Voting Rights Agreement
Exhibit "F" - Rent Rolls
Exhibit "G" - Escrow Agreement - Earnest Money Deposit
Exhibit "H" - Investor Qualification Questionnaire and Power of
Attorney
Exhibit "I" - Representation Letter
*Copies will be provided upon request to the Company.
