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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
December 23, 1996
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13136 16-1455126
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation or organization Identification
Number)
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(Address of principal executive offices)
Registrant's telephone number, including area code: (716) 546-4900
Not applicable
(Former name or former address, if changed since last report)
Consecutive No. Page 1 of 4
Exhibit Index at Page 4
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ITEM 5. OTHER EVENTS.
On December 23, 1996, Home Properties of New York, L.P.
(the "Operating Partnership") and Home Properties of New
York, Inc. ("Home Properties") entered into agreements
with the State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees'
Retirement System, State Employees' Retirement System,
Michigan State Police Retirement System, and Michigan Judges'
Retirement System ("SMRS") to sell a $35 million Class A
Limited Partnership Interest in the Operating Partnership to
SMRS. The Class A Limited Partnership Interest was issued to
SMRS and payment by SMRS to the Operating Partnership occurred
on December 30, 1996. The transaction is summarized in a
press release which is filed as an exhibit to this report.
Copies of the documents executed by the
Operating Partnership, Home Properties and SMRS in connection
with this transaction are filed as exhibits to this report as
is a copy of the Amended and Restated By-Laws of Home
Properties, revised as of December 30, 1996 to add a
provision relating to the transaction with SMRS.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
3.1 Amended and Restated By-Laws, revised December 30, 1996
10.1 Amendment No. 9 to Amended and Restated Agreement of Limited
Partnership among the Operating Partnership, Home
Properties and SMRS.
10.2 Partnership Interest Purchase Agreement among the Operating
Partnership, Home Properties and SMRS.
10.3 Registration Rights Agreement between Home Properties and
SMRS.
10.4 Letter Agreement relating to restriction on re-sale of common
stock between SMRS and Home Properties.
99.1 Press Release of Home Properties, dated December 23, 1996.
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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.
HOME PROPERTIES OF NEW YORK, INC.
(Registrant)
Date: January 6, 1997
By: /s/ David P. Gardner
David P. Gardner, Vice President,
Chief Financial Officer and Treasurer
Date: January 6, 1997
By: /s/ Norman Leenhouts
Norman Leenhouts, Chairman
and Co-Chief Executive Officer
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HOME PROPERTIES OF NEW YORK, INC.
EXHIBIT INDEX
Location
Exhibit 3.1
Amended and Restated By-Laws, revised
December 30, 1996 Pages ___ to ___
Exhibit 10.1
Amendment No. 9 to Amended and Restated
Agreement of Limited Partnership among
the Operating Partnership, Home Properties
and SMRS Pages ___ to ___
Exhibit 10.2
Partnership Interest Purchase Agreement
among the Operating Partnership,
Home Properties and SMRS Pages ___ to ___
Exhibit 10.3
Registration Rights Agreement between
Home Properties and SMRS Pages ___ to ___
Exhibit 10.4
Letter Agreement relating to restriction
on re-sale of common stock between SMRS
and Home Properties Pages ___ to ___
Exhibit 99.1
Press Release of Home Properties, dated
December 23, 1996 Pages ___ to ___
Omitted schedules and exhibits to the above will be supplied
upon request.
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Exhibit 3.1
HOME PROPERTIES OF NEW YORK, INC.
AMENDED AND RESTATED BYLAWS
Revised 12/30/96
ARTICLE I
STOCKHOLDERS
SECTION 1.01. Annual Meeting. The
Corporation shall hold an annual meeting of its stockholders to
elect directors and transact any other business within its powers
on such day and at such time in the month of May as shall be set
by the Board of Directors or on such other date as may be set by
the Board of Directors. Except as otherwise provided by the
Articles of Incorporation of the Corporation, as amended (the
"Charter"), or the Maryland General Corporation Law (the "Act"),
any business may be considered at an annual meeting without the
purpose of the meeting having been specified in the notice of
such meeting given pursuant to Section 1.04 hereof. Failure to
hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts.
SECTION 1.02. Special Meeting. At any time
in the interval between annual meetings, a special meeting of the
stockholders may be called by the Chairman, President or the
Board of Directors. The Secretary may call a Special Meeting if
stockholders entitled to cast at least 25% of all the votes
entitled to be cast at the meeting (A) provide a written request
for such meeting which states the purpose of the meeting and
matters to be acted on at it and (B) pay to the Corporation the
cost of preparing and mailing a notice of the meeting as
reasonably estimated by the Secretary.
SECTION 1.03. Place of Meetings. Meetings
of stockholders shall be held at such place in the United States
as is set from time to time by the Board of Directors.
SECTION 1.04. Notice of Meetings. Not fewer
than ten nor more than ninety days before each stockholders'
meeting, the Secretary shall give written notice of the meeting
to each stockholder entitled to vote at the meeting and each
other stockholder entitled to notice of the meeting. The notice
shall state the time and place of the meeting and, if the meeting
is a special meeting or notice of the purpose of the meeting is
required by the Act, the purpose of the meeting. Notice is given
to a stockholder when it is personally delivered to him, left at
his residence or usual place of business, or mailed to him at his
address as it appears on the records of the Corporation.
Notwithstanding the foregoing provisions, each person who is
entitled to notice waives notice if he (A) signs a waiver of the
notice before or after the meeting which is filed with the
records of stockholders' meetings or (B) is present at the
meeting in person or by proxy.
SECTION 1.05. Conduct of Meetings. The
Chairman, or, in the absence of the Chairman, the President or
the Executive Vice President or another Vice President authorized
to perform the duties of the President in the President's
absence, or, in the absence of all such officers, any person
elected by the stockholders present at the meeting, shall preside
at each meeting of stockholders (such person being referred to
hereinafter as the
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"Presiding Officer"). The Secretary or an
Assistant Secretary shall act as secretary of the meeting. The
order of the meeting shall be determined by the Presiding
Officer.
SECTION 1.06. Business Brought Before
Meeting; Nomination of Directors. Business may be properly
brought before any annual or special meeting of stockholders and
an individual may be nominated for election as a director of the
Corporation at any annual meeting of stockholders by, or at the
direction of, a majority of the Board of Directors. Except as
otherwise required by the Act or any other applicable statute or
regulation and except for routine matters relating to the conduct
of the meeting, only business proposed in accordance with the
procedures set forth in this Section 1.06 may be transacted at a
stockholders meeting.
SECTION 1.07. Quorum; Voting. Unless
otherwise provided by the Charter or the Act, at a meeting of
stockholders the presence in person or by proxy of stockholders
entitled to cast a majority of all the votes entitled to be cast
at the meeting constitutes a quorum, and a majority of all the
votes cast at a meeting at which a quorum is present is
sufficient to approve any matter which properly comes before the
meeting, except that a plurality of all the votes cast at a
meeting at which a quorum is present is sufficient to elect a
director. Except as otherwise provided in the Act, an abstention
shall not constitute a vote cast.
SECTION 1.08. Adjournments. Whether or not
a quorum is present, a meeting of stockholders convened on the
date for which it was called may be adjourned from time to time
by the stockholders present in person or by proxy by a majority
vote. Any business which might have been transacted at the
meeting as originally notified may be deferred and transacted at
any such adjourned meeting at which a quorum shall be present.
No further notice of an adjourned meeting other than by
announcement shall be necessary if held on a date not more than
120 days after the original record date.
SECTION 1.09. General Right to Vote;
Proxies. Unless the Charter provides for a greater or lesser
number of votes per share or limits or denies voting rights, each
outstanding share of stock, regardless of class, is entitled to
one vote on each matter submitted to a vote at a meeting of
stockholders. In all elections for directors, each share of
stock may be voted for as many individuals as there are directors
to be elected and for whose election the share is entitled to be
voted. A stockholder may vote the stock he owns of record either
in person or by written proxy signed by the stockholder or by his
duly authorized attorney in fact. Unless a proxy provides
otherwise, it is not valid more than 11 months after its date.
SECTION 1.10. Conduct of Voting. If
demanded by stockholders, present in person or by proxy, entitled
to cast 10% in number of votes entitled to be cast, or if ordered
by the Presiding Officer, the vote upon any election or question
at a stockholders meeting shall be taken by ballot, and, upon
like demand or order, the voting shall be conducted by two
inspectors. Unless so demanded or ordered, no vote need be by
ballot and
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voting need not be conducted by inspectors. The
inspectors, or the Presiding Officer if inspectors are not
demanded or ordered, shall determine the legality and sufficiency
of all votes cast and proxies delivered at the meeting. The
inspectors may be elected by the stockholders at the meeting, and
in default of such election shall be appointed by the Presiding
Officer. No candidate for election as a director at a meeting
shall serve as an inspector thereat.
SECTION 1.11. Informal Action by
Stockholders. Any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting if there
is filed with the records of stockholders' meetings (A) a
unanimous written consent which sets forth the action so taken
and is signed by each stockholder entitled to vote on the matter
and (B) a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to
vote thereat.
SECTION 1.12. Control Shares; Contractual
Section; Amendment; Repeal. Pursuant to Section 3-702(b) of the
Maryland General Corporation Law (the "Act"), the acquisition of
shares of the Corporation's capital stock (whether upon
conversion of the Class A Interest in Home Properties of New
York, L.P. or otherwise) by State Treasurer of the State of
Michigan, Custodian of Michigan Public School Employees'
Retirement System, State Employees' Retirement System, Michigan
State Police Retirement System, and Michigan Judges' Retirement
System ("SMRS") and the present and future affiliates or
associates of SMRS or any other person acting in concert or as a
group with any of the foregoing are irrevocably exempted from the
control shares provisions of Section 3-701 et seq. of the Act.
In addition to any other rights or remedies SMRS may have with
respect to the subject matter herein, this Section shall be
deemed to constitute a contract between the Corporation and SMRS
(with all future affiliates or associates of SMRS or any other
person acting in concert or as a group with any of the foregoing
being treated as an intended third-party beneficiary thereof).
No repeal or amendment of this Section, insofar as it reduces the
scope of the exemption provided hereunder, shall be effective.
This Section shall be binding on any successor to the
Corporation, including any corporation or other entity which
acquires all or substantially all of the Corporation's assets.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors. The
business and affairs of the Corporation shall be managed under
the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board
of Directors, except as conferred on or reserved to the
stockholders by the Act or by the Charter or Bylaws. As used in
these Bylaws, an "Independent Director" is a director who is not
an officer of the Corporation.
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SECTION 2.02. Number of Directors. The
Corporation shall have at least three directors; provided that,
if there is no stock outstanding the number of Directors may be
fewer than three but not fewer than one, and, if there is stock
outstanding and so long as there are fewer than three
stockholders, the number of Directors may be fewer than three but
not fewer than the number of stockholders. The Corporation shall
have the number of directors provided in the Charter until
changed as herein provided. A majority of the entire Board of
Directors may change the number of directors set by the Charter
or previously fixed by the Board of Directors to not more than
twelve and not fewer than the minimum number then permitted by
this Section 2.02. No adjustment to the number of directors may
affect the tenure of office of any director.
SECTION 2.03. Election and Tenure of
Directors. Directors shall be elected at the annual meeting of
stockholders and shall hold office until the next annual meeting
and until their respective successors have been elected and
qualified.
SECTION 2.04. Removal of Director. Any
director may be removed only for cause and only by the
affirmative vote of stockholders holding at a majority of all the
votes entitled to be cast for the election of directors;
provided, however, that in the case of any directors elected
separately by holders of a class or series of capital stock other
than Common Stock and except as otherwise provided by the terms
of such capital stock, such directors may be removed without
cause, but solely by the affirmative vote of a majority of the
votes of that class or series.
SECTION 2.05. Vacancy on Board. Except in
the case of a vacancy on the Board of Directors among the
directors elected separately by a class or series of capital
stock other than Common Stock, any vacancy on the Board of
Directors, including a vacancy which results from an increase in
the number of Directors, may be filled by the affirmative vote of
a majority of the remaining directors and, in the case of a
vacancy resulting from the removal of a director, by the
stockholders. Any vacancy on the Board of Directors among the
directors elected separately by a class or series of capital
stock other than Common Stock may be filled by a majority of the
remaining directors elected by that class or series or the sole
remaining director elected by that class or series, or by the
stockholders of that class or series. Each director elected to
fill a vacancy shall serve until the next annual meeting of
stockholders and until his successor is elected and has
qualified.
SECTION 2.06. Annual and Regular Meetings.
An annual meeting of the Board of Directors may be held
immediately after and at the same place as the annual meeting of
stockholders, or at such other time and place, either within or
without the State of Maryland, as is selected by resolution of
the Board of Directors, and no notice other than this Bylaw or
such resolution shall be necessary. The Board of Directors may
provide, by resolution, the time and place, either within or
without the State of Maryland, for the holding of regular
meetings of the Board of Directors without other notice than such
resolutions.
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SECTION 2.07. Special Meetings. Special
meetings of the Board of Directors may be called at any time by
the Chairman, the President or a majority of the Board of
Directors. A special meeting of the Board of Directors shall be
held on such date and at such time as is designated in the call,
and shall be held at such place as may be designated from time to
time by the Board of Directors. In the absence of designation
such meeting shall be held at such place as may be designated in
the call.
SECTION 2.08. Notice of Meeting. Except as
provided in Section 2.06 hereof, the Secretary shall give notice
to each director of each regular and special meeting of the Board
of Directors. The notice shall state the date, time and place of
the meeting. Notice is given to a director when it is delivered
personally, left at such director's residence or usual place of
business, sent by telephone, facsimile or other form of
electronic communication, at least 24 hours before the time of
the meeting, or sent by mail to such director's address as it
shall appear on the records of the Corporation at least 72 hours
before the time of the meeting. Unless a resolution of the Board
of Directors provides otherwise, the notice need not state the
business to be transacted at or the purposes of any regular or
special meeting of the Board of Directors. No notice of any
meeting of the Board of Directors need be given to any director
who attends the meeting or waives such notice in a writing which
is executed and filed with the records of the meeting, either
before or after the holding thereof. Any meeting of the Board of
Directors, regular or special, may adjourn from time to time and
reconvene at the same or some other place, and no notice need be
given of any such adjourned meeting other than by announcement.
SECTION 2.09. Action by Directors. Unless
the Act, the Charter or these Bylaws requires a greater
proportion, the action of a majority of the directors present at
a meeting at which a quorum is present is action of the Board of
Directors. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. In the
absence of a quorum, the directors present by majority vote and
without notice other than by announcement may adjourn the meeting
from time to time until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at
the meeting as originally notified. Any action required or
permitted to be taken at a meeting of the Board of Directors may
be taken without a meeting, if a unanimous written consent which
sets forth the action so taken is signed by each member of the
Board and filed with the minutes of proceedings of the Board.
SECTION 2.10. Meeting by Conference
Telephone. Members of the Board of Directors may participate in
a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a
meeting by these means constitutes presence in person at a
meeting.
SECTION 2.11. Compensation. The Corporation
shall reimburse directors for reasonable expenses incurred by
them in connection with their attendance at each regular or
special meeting of the Board of Directors or any committee
thereof upon submission of
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documentation of such expenses to the
Corporation. In addition, the directors may be paid compensation
for their services as members of the Board of Directors or a
committee thereof pursuant to a resolution of the Board of
Directors. Directors who are also officers of the Corporation
shall not receive additional compensation for their services as
directors.
ARTICLE III
COMMITTEES
SECTION 3.01. Committees. The Corporation
shall have the following committees of directors, the specific
authority of which shall be as designated herein or by resolution
of the Board of Directors:
(A) An audit committee, which shall consist of not
fewer than two Independent Directors appointed by a majority of
the entire Board of Directors, shall (1) make recommendations
concerning the engagement of independent public accountants, (2)
review with the independent public accountants the plans and
results of the audit engagement, (3) approve professional
services rendered by the independent public accountants, (4)
review the independence of the independent public accountants,
(5) consider the range of audit and non-audit fees and (6) review
the adequacy of the Corporation's internal accounting controls;
and
(B) A compensation committee, which shall consist of
not fewer than two Independent Directors appointed by a majority
of the entire Board of Directors, shall determine the
compensation of the Corporation's executive officers and
administer employee benefit plans adopted by the Board of
Directors.
SECTION 3.02. Additional Committees. A
majority of the entire Board of Directors may appoint from among
its members an executive committee or other committees composed
of two or more directors and delegate to such committees any of
the powers of the Board of Directors, subject to Section 3.03
hereof.
SECTION 3.03. Authority of Committees.
Committees shall have the authority provided herein or delegated
thereto by the Board of Directors, except that no committee shall
have the power to (A) declare dividends or other distributions on
stock, (B) elect directors, (C) recommend to the stockholders any
action which requires stockholder approval, (D) amend the Bylaws,
(E) approve any merger or share exchange which does not require
stockholder approval, or (F) issue stock unless the Board of
Directors has given general authorization for the issuance of
stock, in which case a committee may, in accordance with a
general formula or method specified by the Board of Directors by
resolution or by adoption of a stock option or other plan, fix
the terms of stock subject to classification or reclassification
and the terms on which any stock may be issued, including all
terms and conditions required or permitted to be established or
authorized by the Board of Directors.
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SECTION 3.04. Committee Procedure. Each
committee may fix rules of procedure for the transaction of its
business which are not inconsistent with this Section 3.04. A
majority of the members of a committee shall constitute a quorum
for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be
the act of the committee. The members of a committee present at
any meeting, whether or not they constitute a quorum, may appoint
a director who is eligible to serve on such committee to act in
the place of an absent member. Any action required or permitted
to be taken at a meeting of a committee may be taken without a
meeting, if an unanimous written consent which sets forth the
action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may
conduct any meeting thereof by conference telephone in accordance
with the provisions of Section 2.10 hereof.
ARTICLE IV
OFFICERS
SECTION 4.01. Executive and Other Officers.
The Corporation shall have a Chairman, a President, an Executive
Vice President, a Secretary and a Treasurer who shall be the
executive officers of the Corporation. It may also have one or
more Vice Presidents, assistant officers and subordinate officers
as may be established by the Board of Directors. A person may
hold more than one office in the Corporation but may not serve
concurrently as both President and Vice President of the
Corporation. The Board of Directors may designate a chief
executive officer, having general supervision of the business and
affairs of the Corporation, or a chief operating officer, having
supervision of the operations of the Corporation; in the absence
of designation the President shall serve as chief executive
officer and chief operating officer. The Board of Directors may
designate two persons to serve as co-chief executive officers, in
which case each person so designated shall individually have
general supervision of the business and affairs of the
Corporation. The Board of Directors may also designate a chief
financial officer, having general supervision of the finances of
the Corporation; in the absence of such designation the Treasurer
shall serve as the chief financial officer.
SECTION 4.02. Chairman. The Chairman shall
preside at all meetings of the Board of Directors and of the
stockholders at which the Chairman shall be present; and, in
general, shall perform all such duties as are from time to time
assigned by the Board of Directors.
SECTION 4.03. President. The President
shall perform all duties usually performed by a president of a
corporation and such other duties as are from time to time
assigned by the Board of Directors. In the absence of the
Chairman, the President shall preside at all meetings of the
Board of Directors and of the stockholders at which the President
shall be present.
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SECTION 4.04. Executive Vice President. The
Executive Vice President shall, at the request of the chief
executive officer or the President or during the President's
absence or inability to act, perform the duties and exercise the
functions of the President, and when so acting shall have the
powers of the President. The Executive Vice President shall also
perform all such duties as are from time to time assigned by the
Board of Directors or the chief executive officer of the
Corporation.
SECTION 4.05. Other Vice Presidents. The
Vice President or Vice Presidents shall have such powers and
perform such duties, and have such additional descriptive
designations in their titles (if any), as are from time to time
assigned by the Board of Directors, the chief executive officer
or the chief operating officer.
SECTION 4.06. Secretary. The Secretary
(A) shall keep the minutes of the meetings of the stockholders,
of the Board of Directors and of any committees, in books
provided for the purpose, (B) shall see that all notices are duly
given in accordance with the provisions of the Bylaws or as
required by law, (C) shall be the custodian of the records of the
Corporation, (D) may witness any document on behalf of the
Corporation, the execution of which is duly authorized, cause the
corporation seal to by affixed where such document is required or
desired to be under the Corporation's seal, and, when so affixed,
may attest the same and (E) shall perform all duties incident to
the office of a secretary of a corporation, and such other duties
as are from time to time assigned by the Board of Directors, the
chief executive officer or the chief operating officer.
SECTION 4.07. Treasurer. The Treasurer
shall (A) have charge of and be responsible for all funds,
securities, receipts and disbursements of the Corporation,
(B) deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks,
trust companies or other depositories as shall, from time to
time, be selected by the Board of Directors, (C) render to the
President and to the Board of Directors, whenever requested, an
account of the financial condition of the Corporation and
(D) perform all the duties incident to the office of a treasurer
of a corporation, and such other duties as are from time to time
assigned by the Board of Directors, the chief executive officer
or the chief operating officer.
SECTION 4.08. Assistant and Subordinate
Officers. The Board of Directors of the Corporation may create
assistant and subordinate officers of the Corporation as may be
appropriate from time to time. The assistant or subordinate
officers shall have such duties as are from time to time assigned
by the Board of Directors, the chief executive officer, the chief
operating officer or the committee or officer authorized by the
Board of Directors to appoint such assistant or subordinate
officer.
SECTION 4.09. Election, Tenure and Removal
of Officers. The Board of Directors shall elect the officers and
may, from time to time, authorize any committee or officer to
appoint assistant and subordinate officers. Each officer shall
hold office until a successor is elected and has qualified or
until such officer's earlier resignation or removal.
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The Board
of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the Board to appoint such
officer) may remove an officer at any time, either with or
without cause. The removal of an officer does not prejudice any
of such officer's contract rights. The Board of Directors (or,
as to any assistant or subordinate officer, any committee or
officer authorized by the Board) may fill a vacancy which occurs
in any office.
SECTION 4.10. Compensation. The Board of
Directors shall have power to fix the salaries and other
compensation and remuneration, of whatever kind, of all officers
of the Corporation except the executive officers whose salaries,
compensation and remuneration shall be fixed by the compensation
committee. The Board of Directors may authorize any committee or
officer, upon whom the power of appointing assistant and
subordinate officers may have been conferred, to fix the
salaries, compensation and remuneration of such assistant and
subordinate officers.
ARTICLE V
STOCK
SECTION 5.01. Certificates for Stock. Each
stockholder is entitled to certificates which represent and
certify the shares of stock he holds in the Corporation. A
certificate may not be issued until the stock represented by it
is fully paid. Each stock certificate shall be in such form, not
inconsistent with law or with the Charter, as shall be approved
by the Board of Directors or any officer or officers designated
for such power by resolution of the Board of Directors. Each
stock certificate shall be signed by the Chairman, the President,
or a Vice President, and countersigned by the Secretary, an
Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Any or each of the signatures on a stock certificate, including
that of any transfer agent or registrar, may be a facsimile. A
certificate is valid and may be issued whether or not an officer,
transfer agent or registrar, having executed such certificate in
such capacity, no longer serves in such capacity when the
certificate is issued.
SECTION 5.02. Transfers. Subject to the
restrictions provided in the Charter, shares of stock shall be
transferable on the books of the Corporation only by the holder
of record thereof, in person or by duly authorized attorney, upon
surrender and cancellation of a certificate or certificates for
such shares, with an assignment or power of transfer endorsed
thereon or delivered therewith, duly executed, and with such
proof of the authenticity of the signature and of authority to
transfer, and of payment of transfer taxes, as the Corporation or
its agents may require.
SECTION 5.03. Record Date and Closing of
Transfer Books. The Board of Directors may set a record date or
direct that the stock transfer books be closed for a stated
period for the purpose of making any proper determination with
respect to stockholders, including which stockholders are
entitled to (A) notice of a meeting, (B) vote at a meeting,
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(C) receive a dividend, or (D) be allotted other rights. The
record date may not be prior to the close of business on the day
the record date is fixed and, except as may be necessary as a
result of Section 1.08 hereof, may not be more than 90 days
before the date on which the action requiring the determination
will be taken. The transfer books may not be closed for a period
longer than 20 days, and, in the case of a meeting of
stockholders, the record date or the closing of the transfer
books shall be at least ten days before the date of the meeting.
SECTION 5.04. Stock Ledger. The Corporation
shall maintain a stock ledger which contains the name and address
of each stockholder and the number of shares of stock of each
class which the stockholder holds. The stock ledger may be in
written form or in any other form which can be converted within a
reasonable time into written form for visual inspection. The
original or a duplicate of the stock ledger shall be kept at the
offices of a transfer agent for the particular class of stock,
or, if none, at the principal office of the Corporation.
SECTION 5.05. Certification of Beneficial
Owners. The Board of Directors may adopt by resolution a
procedure by which a stockholder of the Corporation may certify
in writing to the Corporation that any shares of stock registered
in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution
shall set forth the class of stockholders who may certify; the
purpose for which the certification may be made; the form of
certification and the information to be contained in it; if the
certification is with respect to a record date or closing of the
stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must
be received by the Corporation; and any other provisions with
respect to the procedure which the Board considers necessary or
desirable. On receipt of a certification which complies with the
procedure adopted by the Board in accordance with this Section,
the person specified in the certification is, for the purpose set
forth in the certification, the holder of record of the specified
stock in place of the stockholder who makes the certification.
SECTION 5.06. Lost Stock Certificates. The
Board of Directors of the Corporation may determine the
conditions for issuing a new stock certificate in place of one
which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or
officers of the Corporation. In their discretion, the Board of
Directors or such officer or officers may refuse to issue such
new certificate save upon the order of some court having
jurisdiction in the premises.
ARTICLE VI
FINANCE
SECTION 6.01. Annual Statement of Affairs.
The President shall prepare annually a full and correct statement
of the affairs of the Corporation, to include a balance sheet and
a financial statement of operations for the preceding fiscal
year. The statement of
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affairs shall be submitted at the annual
meeting of the stockholders, and, within 20 days after the
meeting, shall be placed on file at the Corporation's principal
office.
SECTION 6.02. Fiscal Year. The fiscal year
of the Corporation shall be the calendar year, unless otherwise
provided by the Board of Directors.
SECTION 6.03. Dividends. If declared by the
Board of Directors at any meeting thereof, the Corporation may
pay dividends on its shares in cash, property, or in shares of
the capital stock of the Corporation, unless such dividend is
contrary to law or to a restriction contained in the Charter.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Indemnification. To the full
extent authorized or permitted by the Act or any other governing
statute, law, rule or regulation, the Corporation shall indemnify
any person ("Indemnified Person") made, or threatened to be made,
a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative,
investigative or otherwise ("Proceeding"), by reason of the fact
that he, his testator, intestate, spouse or parent (a
"Responsible Person"), (A) is or was a director, officer,
employee or agent of the Corporation, or (B) is serving or
served, in any capacity, another corporation or any partnership,
joint venture, trust, employee benefit plan, or other enterprise
at the request of the Corporation. The Corporation shall
indemnify each such Indemnified Person against all judgments,
fines, penalties, amounts paid in settlement (provided the
Corporation shall have consented to such settlement, which
consent shall not be unreasonably withheld by it) and reasonable
expenses, including attorneys' fees and costs of investigation
(collectively, "Reimbursable Expenses"), incurred by such
Indemnified Person with respect to any Proceeding.
SECTION 7.02. Advancement of Expenses. The
Corporation shall advance to each Indemnified Person any
Reimbursable Expenses incurred by such Indemnified Person within
ten days of receiving (A) a written affirmation of the
Indemnified Person that (1) the act or omission giving rise to
the Proceeding was not committed in bad faith or the result of
active and deliberate dishonesty, (2) the Indemnified Person did
not receive an improper personal benefit in money, property or
services and (3) in the case of a criminal proceeding, the
Indemnified Person did not have reasonable cause to believe the
act or omission giving rise to the Proceeding was unlawful, and
(B) a written undertaking by or on behalf of the Indemnified
Person to repay the amount advanced if it is ultimately
determined that the Indemnified Person has not met the standard
of conduct necessary for indemnification.
SECTION 7.03. Contractual Article;
Amendment; Repeal. This Article shall be deemed to constitute a
contract between the Corporation and each Responsible Person
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(with each Indemnified Person who is not a Responsible Person
being treated as an intended third-party beneficiary thereof).
No repeal or amendment of this Article, insofar as it reduces the
scope of the indemnification available hereunder, shall be
effective with respect to any event, act or omission occurring or
allegedly occurring prior to the date of such repeal or
amendment. This Article shall be binding on any successor to the
Corporation, including any corporation or other entity which
acquires all or substantially all of the Corporation's assets.
SECTION 7.04. Insurance. The Corporation
shall have the power to purchase and maintain insurance on behalf
of any Indemnified Person against any liability, whether or not
the Corporation would have power to indemnify such person against
such liability.
SECTION 7.05. No Limitation; Indemnification
Agreements. In addition to any indemnification provided by these
Bylaws, the Board of Directors shall, in its own discretion, have
the power to grant such indemnification as it deems in the
interest of the Corporation to the full extent permitted by law
and to enter into additional agreements relating to such
indemnification.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Books and Records. The
Corporation shall keep correct and complete books and records of
its accounts and transactions and minutes of the proceedings of
its stockholders, of the Board of Directors and of any committee
when exercising any of the powers of the Board of Directors. The
books and records of the Corporation may be in written form or in
any other form which can be converted within a reasonable time
into written form for visual inspection. Minutes shall be
recorded in written form but may be maintained in the form of a
reproduction. The original or a certified copy of the Bylaws
shall be kept at the principal office of the Corporation.
SECTION 8.02. Corporate Seal. The Board of
Directors shall provide a suitable seal, bearing the name of the
Corporation, which shall be in the charge of the Secretary. The
Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof. If the Corporation is required
to place its corporate seal to a document, it is sufficient to
meet the requirement of any law, rule, or regulation relating to
a corporate seal to place the word "Seal" adjacent to the
signature of the person authorized to sign the document on behalf
of the Corporation.
SECTION 8.03. Voting of Shares in Other
Corporations. Stock of other corporations or associations or
ownership interests in any entity which have voting rights,
registered in the name of the Corporation, may be voted by the
Chairman, the President, or the Executive Vice President, or a
proxy appointed by any of them. The Board of Directors, however,
may by resolution appoint some other person to vote such shares
or interests, in
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which case such person shall be entitled to vote
such shares or interests upon the production of a certified copy
of such resolution.
SECTION 8.04. Mail. Any notice or other
document which is required by these Bylaws to be mailed shall be
deposited in the United States mail, postage prepaid.
SECTION 8.05. Execution of Documents. A
person who holds more than one office in the Corporation may not
act in more than one capacity to execute, acknowledge, or verify
an instrument required by law to be executed, acknowledged, or
verified by more than one officer.
SECTION 8.06. Amendments. Unless otherwise
provided by Act, the Board of Directors shall have the exclusive
power, at any regular or special meeting thereof, to make and
adopt new Bylaws, or to amend, alter or repeal any of the Bylaws
of the Corporation.
Adopted by Written Consent of the Board
of Directors dated as of July 16, 1994
Section 1.12 Added by Action of the Board
of Directors on December 30, 1996
<PAGE>
Exhibit 10.1
HOME PROPERTIES OF NEW YORK, L.P.
AMENDMENT NO. 9
TO
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
WHEREAS, the Amended and Restated Agreement of Limited
Partnership (as subsequently amended, the "Partnership
Agreement") of Home Properties of New York, L.P. (the
"Partnership") was entered into as of August 4, 1994;
WHEREAS, Section 3.03 of the Partnership Agreement authorizes the
General Partner to issue additional Partnership Interests
consisting of such classes and having such rights and powers as
shall be determined by the General Partner;
WHEREAS, Section 9.10 of the Partnership Agreement empowers the
General Partner to amend the Agreement without the consent of the
Limited Partners to set forth the rights, powers, duties and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 3.03 of the Partnership
Agreement;
WHEREAS, the General Partner has determined that it will cause
the Partnership to issue an additional class of Partnership
Interest (the "Class A Interest") and does hereby amend the
Partnership Agreement to set forth the rights, powers, duties and
preferences of the holder(s) of the Interest (the "Class A
Interest Holders"); and
WHEREAS, the State Treasurer of the State of Michigan, Custodian
of Michigan Public School Employees' Retirement System, State
Employees' Retirement System, Michigan State Police Retirement
System, and Michigan Judges' Retirement System ("SMRS") wishes to
purchase, on the terms and subject to the conditions set forth in
that certain Partnership Interest Purchase Agreement by and
between the Partnership, the General Partner and SMRS, the
entire Class A Interest described in this Amendment No. 9 and to
execute this Amendment to reflect its admission to the
Partnership as a limited partner and holder of the entire Class A
Interest.
NOW THEREFORE, the Partnership Agreement is hereby amended as
follows:
1. Defined Terms. All capitalized terms used herein and not
defined shall have the meaning given them in the Partnership
Agreement.
2. Allocation of Income or Loss.
(a) Section 4.01 of the Agreement is hereby amended and
restated in its entirety as follows:
"Section 4.01 Allocations of Income or Loss.
(a) Except as provided in Sections 4.02, 4.03 and
4.04, Income shall be allocated as follows: (i) first, to
each Class A Interest Holder to the extent of, and in
proportion to, the excess of the cumulative Losses allocated
to such Class A Interest Holder pursuant to Section
4.01(b)(ii) hereof over the cumulative amount of Income
allocated to such Class A Interest Holders pursuant to this
Section 4.01(a)(i); and (ii) thereafter, to the Partners who
hold Units, pro rata in accordance with their respective
Percentage Interests.
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(b) Except as provided in Sections 4.02, 4.03 and
4.04, Loss shall be allocated as follows: (i) first, to
the Partners who hold Units, pro rata in accordance with
their respective Percentage Interests, until each such
Partner has a zero Capital Account; (ii) second, to the
Class A Interest Holders to the extent of, and in proportion
to, the positive balance in their Capital Accounts and
(iii) thereafter, to the Partners pro rata in accordance
with their respective Percentage Interest.
(b) The following shall be added to the Partnership
Agreement as Section 4.02(h):
"(h) Preferred Return. For each Fiscal Year or other
applicable period, Income, and if necessary gross income, (after
taking into account any adjustments allocated to each Class A
Interest Holder to the extent not included in the computation of
Income) shall be allocated to each Class A Interest Holder to the
extent of, and in proportion to, the excess of the cumulative
Preferred Return, Accrued Return or other distributions paid to
such Class A Interest Holder pursuant to Section 10.04 hereof
over the cumulative amount of Income allocated to such Class A
Interest Holder pursuant to this Section 4.02(h)."
3. Article X. The following shall be added to the Partnership
Agreement as Article X.
ARTICLE X
CLASS A LIMITED PARTNERSHIP INTERESTS
Section 10.01 Name. Pursuant to Section 3.03 of this
Partnership Agreement there is hereby created and issued a new
class of Partnership Interest to be known as the Class A Limited
Partnership Interest (the "Class A Interest").
Section 10.02 Capital Contribution. State Treasurer of the
State of Michigan, Custodian of Michigan Public School
Employees' Retirement System, State Employees' Retirement System,
Michigan State Police Retirement System and Michigan Judges'
Retirement System ("SMRS") shall contribute $35,000,000 (the
"Original Investment") to the Partnership in consideration for
the issuance to it by the Partnership of the Class A Interest.
The Original Investment shall be deemed to be the Capital
Contribution of the Class A Interest Holder(s).
Section 10.03 Status of Holders. Holder(s) of all or any
portion of the Class A Interest shall be Limited Partners of the
Partnership and, except as otherwise provided herein, shall be
entitled to all of the rights and privileges of the other Limited
Partners, as well as the additional rights and privileges
described below. For purposes of voting on matters that must be
approved by the Limited Partners, the Class A Interest Holder(s)
shall be deemed to hold the number of Units equal to $35,000,000
divided by the Conversion Price times the percentage of the Class
A Interest originally issued hereby that has not been converted
into HP Shares (as defined in, and subject to adjustment in
accordance with, Section 10.06(b) below).
Section 10.04 Preferred Return.
(a) The Partnership shall pay the Class A Interest
Holder(s) on a quarterly basis in accordance with Section
10.04(c), prior to payment of any Distributions to the
holders of any Units, including but not limited to the
General Partner, a distribution equal to the preferred
return described below (the "Preferred Return"). Except as
described in this Section 10.04, the Partnership shall not
be obligated to pay to the Class A Interest Holder(s) any
Distributions pursuant to Section 4.05 of this Partnership
Agreement.
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(i) Commencing on the date that the Class A Interest
is originally issued (the "Closing Date") and continuing to
the second anniversary of the Closing Date (the "9.25%
Preferred Return Period"), the holders of the Class A
Interest shall receive, on a quarterly basis in accordance
with Section 10.04(c), a distribution equal to the greater
of: (a) $809,375; or (b) an amount equal to the dividends
and other distributions that would have been paid on the
number of HP Shares equal to $35,000,000 divided by the
Conversion Price (the "9.25% Preferred Return").
(ii) Commencing on the date following the end of the
9.25% Preferred Return Period and, except as provided below
in this subparagraph (ii), continuing to the seventh
anniversary of the Closing Date (the "9.0% Preferred Return
Period"), the holders of the Class A Interest shall
receive, on a quarterly basis in accordance with Section
10.04(c), a distribution equal to the greater of: (x)
$787,500 or (y) an amount equal to the dividends and other
distributions that would have been paid on the number of HP
Shares equal to $35,000,000 divided by the Conversion Price
(the "9.0% Preferred Return"). Notwithstanding the above,
if on the seventh anniversary of the Closing Date the Class
A Interest Holder(s) have not been paid actual distributions
of at least $809,375 on each of the prior eight (8)
consecutive Preferred Return Payment Dates (defined below)
or any distribution of a Preferred Return from any prior
period remains unpaid, the 9.0% Preferred Return Period
shall continue until the Preferred Return Payment Date which
shall be the eighth (8th) consecutive Preferred Return
Payment Date thereafter occurring on which the Class A
Interest Holder(s) have been paid actual distributions of
at least $809,375 and until there remains outstanding no
unpaid distribution of a Preferred Return.
(b) After the end of the periods described in (i) and (ii)
above, the holders of the Class A Interest shall continue to
receive, on a quarterly basis in accordance with Section
10.04(c), a distribution equal to the dividends and other
distributions that would have been paid on the number of HP
Shares equal to $35,000,000 divided by the Conversion Price times
the percentage of the Class A Interest originally issued hereby
that has not been converted into HP Shares.
(c) The distributions required by this Section 10.04 shall
be payable to the holders of the Class A Interest on a quarterly
basis on the same date that the General Partner pays a quarterly
dividend or other distribution to the holders of HP Shares. If
the General Partner does not pay a distribution to the holders of
HP Shares, the distributions required by this Section 10.04 shall
be payable on the fourth Tuesday of each of February, May, August
and November or on the next Business Day thereafter if such day
shall not be a Business Day. Each of the dates on which such a
distribution shall be so payable shall be a "Preferred Return
Payment Date." The first Preferred Return Payment Date shall be
determined in accordance with this paragraph (c) and shall occur
in the first calendar quarter following the Closing Date. The
first distribution payable to the holders of the Class A Interest
shall be pro-rated for the number of days occurring from the
Closing Date to and including the last day of the calendar
quarter in which the Closing Date occurs. To the extent that the
Closing Date is not the last day of a calendar quarter, the
following rules shall apply to the proration of any distribution
of a Preferred Return in those calendar quarters in which the
rate of payment of such distribution is adjusted pursuant to
Section 10.04(a) and (b); (i) the distribution payable with
respect to the quarter in which the second anniversary of the
Closing Date occurs shall be pro-rated such that the 9.25%
Preferred Return shall be payable for the number of days
occurring between the first day of that quarter to and including
the second anniversary of the Closing Date and the 9.0% Preferred
Return shall be payable for the number of days occurring from the
day after the second anniversary of the Closing Date to and
including the last day of quarter in which the second anniversary
of the Closing Date occurs; and (ii) the distribution payable
with respect to the quarter in which the 9.0% Preferred Return
Period terminates shall be pro-rated such that the
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9.0% Preferred
Return shall be payable for the number of days occurring from the
first day of that quarter to and including the day on which the
9.0% Preferred Return Period terminates and the distribution
described in paragraph (b) of this Section 10.04 shall be payable
for the number of days occurring from the day after the day on
which the 9.0% Preferred Return Period terminates to and
including the last day of the quarter in which the 9.0% Preferred
Return Period terminates.
(d) To the extent that the Class A Interest Holder(s)
convert any portion of the Class A Interest held by them to HP
Shares as permitted by Section 10.06 below, the distributions
described in subparagraphs (i) and (ii) of paragraph (a) above
shall terminate with respect to the portion of the Class A
Interest so converted.
(e) To the extent that a distribution required by this
Section 10.04 is not paid on any Preferred Return Payment Date,
the amount not paid shall accrue interest at the rate of 9.25%
per annum during the 9.25% Preferred Return Period and at the
rate of 9.0% per annum during the 9.0% Preferred Return Period,
compounded quarterly on each Preferred Return Payment Date that
it remains unpaid (the "Accrued Return"). Thereafter, any
distributions paid by the Partnership shall first be applied to
pay any Accrued Return previously due, but not paid. While any
distribution owing to the holders of the Class A Interest remains
unpaid, no distributions shall be paid to the holders of any
Units, including but not limited to the General Partner.
Section 10.05 Transfer Rights. The Class A Interest may be
transferred at any time providing that: (a) no transfer of all
or a portion of the Class A Interest may be made to a person if,
in the written opinion of legal counsel to the Partnership, it
would result in the Partnership being treated as an association
taxable as a corporation; (b) such transfer is effectuated
through an "established securities market" or a "secondary
market" (or substantial equivalent thereof) within the meaning of
Section 7704 of the Code; and (c) no transfer of all or a portion
of the Class A Interest shall be valid and effective and the
Partnership shall not recognize the same for the purpose of
payment of the Preferred Return, allocation of Income or Loss or
Approval Rights (as hereafter defined) until an Assignment of
Class A Interest is delivered to the General Partner. The
Assignment of Class A Interest shall be in substantially the form
attached to this Partnership Agreement as Exhibit B. With
respect to the transfer of all or any portion of the Class A
Interest, the provisions of this Section 10.05 shall apply in
substitution for the provisions of Sections 6.05 and 6.06 of the
Partnership Agreement. Upon receipt of a duly executed
Assignment of Class A Interest, and the furnishing of the
additional documents described in Section 3.05 of the Partnership
Agreement, the General Partner shall execute an amendment to this
Partnership Agreement adding the name or names of such Persons to
Schedule A and the assignee shall be admitted to the Partnership
as an Additional Limited Partner.
Section 10.06 Conversion Rights.
(a) Any Class A Interest Holder shall have the right to
convert all or any portion of its Class A Interest into HP
Shares (the "Conversion Right"). In the event that any Class A
Interest Holder wishes to exercise its Conversion Right, it shall
so notify the General Partner in writing (the "Conversion
Notice"), specifying the percentage of the Class A Interest that
it wishes to convert. Within ten (10) days after the receipt of
a Conversion Notice (the "Conversion Date"), the General Partner
will issue and deliver to the holder, on the holder's written
order, a certificate or certificates representing the number of
full HP Shares issuable upon the conversion of the specified
portion of the Class A Interest. Any fractional HP Shares
arising upon a conversion will be settled as provided in
paragraph (e) of this Section 10.06. Each conversion will be
deemed to have been effected on the Conversion Date and the
person in whose name a certificate for HP Shares is to be issued
upon a conversion will be deemed to
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have become the holder of
record of the HP Shares represented by that certificate at such
effective time. All HP Shares delivered upon conversion of all
or any portion of the Class A Interest will, upon delivery, be
duly and validly issued and fully paid and nonassessable, free of
all liens and charges and not subject to any preemptive rights.
The portion of the Class A Interest so converted will no longer
be deemed to be outstanding and all rights of the holder with
respect to that portion so converted will immediately terminate,
except the right to receive the HP Shares and any Accrued Return.
(b) Upon conversion, the holder of the Class A Interest so
converted will receive that number of HP Shares as shall equal
the percentage of the Class A Interest originally issued hereby
represented by such Class A Interest so converted times
$35,000,000 divided by the conversion price, which will initially
be $21.00 and will be adjusted as follows from time to time if
any of the events described below occurs (the "Conversion
Price"):
(i) If the General Partner: (x) pays a dividend or
makes a distribution on HP Shares in HP Shares; (y) subdivides
the outstanding HP Shares into a greater number of HP Shares; or
(z) combines the outstanding HP Shares into a smaller number of
HP Shares, the Conversion Price in effect immediately prior to
that event will be adjusted so that the holder of all or a
portion of the Class A Interest to be converted after that event
will receive the number of HP Shares which such holder would have
received as a result of the event if the portion of the Class A
Interest to be converted had been converted immediately before
the happening of such event (or, if there is more than one such
event, if the portion of the Class A Interest to be converted had
been converted immediately before the first of those events and
the holder had retained all the HP Shares or other securities or
assets received after the conversion). An adjustment made
pursuant to this Section 10.6(b)(i) will become effective
immediately after the record date in the case of a dividend or
distribution, and will become effective immediately after the
effective date in the case of a subdivision or combination. If
such dividend or distribution is declared but is not paid or
made, the Conversion Price then in effect will be appropriately
readjusted. However, a readjustment of the Conversion Price will
not affect any conversion which takes place before the
readjustment.
(ii) If the General Partner issues rights or warrants
to the holders of the HP Shares as a class entitling them to
subscribe for or purchase HP Shares at a price per share less
than the Conversion Price in effect on the record date for the
determination of shareholders entitled to receive the rights or
warrants, the Conversion Price in effect immediately before the
issuance of the rights or warrants will be reduced in accordance
with the equation set forth on Exhibit C hereto, which is hereby
incorporated by reference herein. The adjustment provided for in
this Section 10.6(b)(ii) will be made successively whenever any
rights or warrants are issued, and will become effective
immediately after each record date. In determining whether any
rights or warrants entitle the holders of HP Shares to subscribe
for or purchase HP Shares at less than the Conversion Price, and
in determining the aggregate sale price of the HP Shares issuable
on the exercise of rights or warrants, there will be taken into
account any consideration received by the General Partner for the
rights or warrants, with the value of that consideration, if
other than cash, to be determined by the Board of Directors of
the General Partner (whose determination, if made in good faith,
will be conclusive). If any rights or warrants which lead to an
adjustment of the Conversion Price expire or terminate without
having been exercised, the Conversion Price than in effect will
be appropriately readjusted. However, a readjustment of the
Conversion Price will not affect any conversions which take place
before the readjustment.
(iii) If the General Partner distributes to the
holders of the HP Shares as a class any shares of stock of the
General Partner (other than HP Shares) or evidences of
indebtedness or assets (other than cash dividends or
distributions) or rights or warrants (other than those referred
to in Section 10.6(b)(ii)) to subscribe for or purchase any of
its securities,
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then, in each such case, the Conversion Price
will be reduced so that it will equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the record date for the distribution by a fraction of which the
numerator is the Market Value of the HP Shares on the record date
for the distribution less the then fair market value (as
determined by the Board of Directors, whose determination, if
made in good faith, will be conclusive) of the stock, evidences
of indebtedness, assets, rights or warrants which are distributed
with respect to one HP Share, and of which the denominator is the
Market Value of the HP Shares on that record date. Each
adjustment will become effective immediately after the record
date for the determination of the shareholders entitled to
receive the distribution. If any distribution is declared but
not made, or if any rights or warrants expire or terminate
without having been exercised, effective immediately after the
decision is made not to make the distribution or the rights or
warrants expire or terminate, the Conversion Price then in effect
will be appropriately readjusted. However, a readjustment will
not affect any conversions which take place before the
readjustment.
(iv) If the General Partner issues or sells (or the
Partnership issues or sells) any equity or debt securities which
are convertible, directly or indirectly, into or exchangeable for
HP Shares ("Convertible Securities") or any rights, options
(other than the issuance or exercise after the date hereof of
stock options covering no more than 699,778 HP Shares, the
exercise price of which will be no less than the Market Value of
the HP Shares on the date of grant as determined in good faith by
the Board of Directors, which number of HP Shares shall be
subject to appropriate adjustment to the extent that the
Corporation: (x) pays a dividend or makes a distribution on the
HP Shares in HP Shares; (y) subdivides the outstanding HP Shares
into a greater number of shares; or (z) combines the outstanding
HP Shares into a smaller number of shares, issued to employees or
directors of the General Partner and its subsidiaries under the
General Partner's existing employee stock incentive plans) or
warrants to purchase HP Shares at a conversion, exchange or
exercise price per share which is less than the Conversion Price,
unless the provisions of Section 10.6(b)(ii) or (iii) are
applicable, the General Partner will be deemed to have issued or
sold, on the later of the date on which the Convertible
Securities, rights, options or warrants are issued or the date on
which they first may be converted, exchanged or exercised, the
maximum number of HP Shares into or for which the Convertible
Securities may then be converted or exchanged or which are then
issuable upon the exercise of the rights, options or warrants
immediately prior to the close of business on the later of the
date on which the Convertible Securities, rights, options or
warrants are issued or the date on which they may first be
converted, exchanged or exercised, and the Conversion Price shall
be adjusted downward as if it were an event covered by Section
10.6(b)(v). However, no further adjustment of the Conversion
Price will be made as a result of the actual issuance of HP
Shares upon conversion, exchange or exercise of the Convertible
Securities, rights, options or warrants. If any Convertible
Securities, rights, options or warrants to which this Section
applies are redeemed, retired or otherwise extinguished or expire
without any HP Shares having been issued upon conversion,
exchange or exercise thereof, effective immediately after the
Convertible Securities, rights, options or warrants expire, the
Conversion Price then in effect will be readjusted to what it
would have been if those Convertible Securities, rights, options
or warrants had not been issued. However, a readjustment will
not affect any conversion which takes place before the
readjustment. For the purposes of this Section 10.6(b)(iv), (x)
the price of HP Shares issued or sold upon conversion or exchange
of Convertible Securities or upon exercise of rights, options or
warrants will be: (A) the consideration paid to the General
Partner for the Convertible Securities, rights, options or
warrants, plus; (B) the consideration contemplated to be paid to
the General Partner upon conversion, exchange or exercise of the
Convertible Securities, rights, options or warrants, with the
value of the consideration, if other than cash, to be determined
by the Board of Directors of the General Partner (whose
determination, if made in good faith, will be conclusive) and (y)
any change in the conversion or exchange price of Convertible
Securities or the exercise price of rights, options or warrants
will be treated as an extinguishment, when the change becomes
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effective, of the Convertible Securities, rights, options or
warrants which had the old conversion, exchange or exercise price
and an immediate issuance of new Convertible Securities, rights,
options or warrants with the new conversion, exchange or exercise
price.
(v) If the General Partner issues or sells any HP
Shares (other than on conversion or exchange of Convertible
Securities or exercise of rights, options or warrants to which
Section 10.6(b)(ii), (iii) or (iv) applies) for a consideration
per share less than the Conversion Price on the date of the
issuance or sale (or on exercise of options or warrants, for less
than the Conversion Price on the day the options or warrants are
issued), upon consummation of the issuance or sale, the
Conversion Price in effect immediately prior to the issuance or
sale will be reduced in accordance with the equation set forth on
Exhibit C hereto, which is hereby incorporated by reference
herein.
(vi) If there is a reclassification or change of
outstanding HP Shares (other than a change in par value, or as a
result of a subdivision or combination), or a merger or
consolidation of the General Partner with any other entity that
results in a reclassification, change, conversion, exchange or
cancellation of outstanding HP Shares, or a sale or transfer of
all or substantially all of the assets of the Corporation, upon
any subsequent conversion of any portion of the Class A Interest,
each holder of the Class A Interest so converted will be entitled
to receive the kind and amount of securities, cash and other
property which the holder would have received if the holder had
converted the Class A Interest into HP Shares immediately before
the first of any of the foregoing events and had retained all the
securities, cash and other assets received as a result of such
events. In the event that a transaction may be viewed as causing
this Section 10.6(b)(vi) to be applicable and Section
10.6(b)(iii) is also applicable, then Section 10.6(b)(iii) will
be applied and this Section 10.6(b)(vi) will not be applied.
(vii) Notwithstanding anything to the contrary
above, no adjustment in the Conversion Price will be required in
the following situations: (x) the General Partner issues (or the
Partnership issues) any HP Shares or Partnership Interests or any
equity or debt securities which are convertible, directly or
indirectly, into or exchangeable for HP Shares at a price or
exchange or exercise price per share which is less than the
Conversion Price as consideration for all or a portion of the
purchase price in connection with the acquisition of property or
real estate operating businesses; (y) the General Partner issues
or sells (or the Partnership issues or sells) to the Class A
Interest Holders any HP Shares or Partnership Interests or any
equity or debt securities which are convertible, directly or
indirectly, into or exchangeable for HP Shares at a price or
exchange or exercise price per share which is less than the
Conversion Price; and (z) the General Partner issues HP Shares at
less than the Conversion Price pursuant to the dividend
reinvestment portion of the General Partner's Dividend
Reinvestment, Stock Purchase, Resident Stock Purchase and
Employee Stock Purchase Plan.
(viii) No adjustment in the Conversion Price will be
required unless the adjustment would require a change of at least
1% in the Conversion Price; provided, however, that any
adjustments which are not made because of this Section
10.6(b)(viii) will be carried forward and taken into account in
any subsequent adjustments. All calculations under this Section
10.06 will be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be.
(ix) Whenever the Conversion Price is adjusted, the
Corporation will promptly send each Class A Interest Holder a
notice of the adjustment of the Conversion Price setting forth
the adjusted Conversion Price and the date on which the
adjustment becomes effective and containing a brief description
of the events which caused the adjustment.
(c) If any one of the events in Section 10.6(b)(i) through
10.6(b)(vi) occurs, then the General Partner will mail to each of
the Class A Interest Holders of record, no later than 15
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<PAGE>
Business
Days after the applicable date specified below, a notice stating,
as applicable, one of the following: (i) the date on which a
record was taken for the purpose of the dividend, distribution or
grant of rights or warrants, or, if no record was taken, the date
as of which the holders of HP Shares of record who were entitled
to the dividend, distribution or rights or warrants was
determined; (ii) the date on which the Convertible Securities
were issued or the date on which the change in the conversion,
exchange or exercise price of the Convertible Securities, rights,
options or warrants was effective; (iii) the date on which the
General Partner sold HP Shares for less than the Conversion Price
on the date of the sale; or (iv) the date on which the
reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up became
effective, and the date on which holders of record of HP Shares
were entitled to exchange their HP Shares for securities or other
property deliverable upon the reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation
or winding up. Failure to give any such notice or any defect in
the notice will not affect the legality or validity of the
reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up.
(d) (i) The General Partner will at all times reserve and
keep available, free from preemptive rights, out of the
authorized but unissued HP Shares, for the purpose of effecting
conversion of the Class A Interest, the maximum number of HP
Shares which the General Partner would be required to deliver
upon the conversion of all the outstanding Class A Interest. For
the purpose of this Section 10.6(d)(i), the number of HP Shares
which the General Partner would be required to deliver upon the
conversion of all the outstanding Class A Interests will be
computed as if at the time of the computation all the outstanding
Class A Interests were held by a single holder.
(d) (ii) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value
(if any) of the HP Shares deliverable upon conversion of the
Class A Interest, the General Partner will take all corporate
action which may, in the written opinion of its counsel, be
necessary in order that the General Partner may validly and
legally issue fully paid and non-assessable HP Shares at the
adjusted Conversion Price.
(e) No fractional HP Shares will be issued upon conversion
of the Class A Interest. Any fractional interest in an HP Share
resulting from conversion of the Class A Interest will be paid in
cash (computed to the nearest cent) based on the Market Value of
the HP Shares on the trading day next preceding the Conversion
Date.
(f) As of the Closing Date, the HP Shares to be issued upon
conversion of all or any portion of the Class A Interest will be
approved for listing on the New York Stock Exchange subject to
official notice of issuance. After the Closing Date, the General
Partner will continue the listing of the HP Shares required to be
delivered upon conversion of all or any portion of the Class A
Interest on the New York Stock Exchange or on each national
securities exchange, if any, upon which the outstanding HP Shares
are listed at the time of delivery.
Page 8
<PAGE>
(g) With respect to Conversion Dates occurring on or after
the fifth anniversary of the Issuance Date, the Class A Interest
Holder of the portion of the Class A Interest so converted shall
receive, in addition to the HP Shares to be issued pursuant to
Section 10.6(b), that additional number of HP Shares, if any, as
shall be necessary in order that such holder will receive, on the
next date on which dividends are paid by the General Partner with
respect to HP Shares, dividends equal to $7,875 for each 1% of
the Class A Interest converted, assuming that the dividend paid
per HP Share did not change from that applicable on the dividend
payment date immediately preceding the Conversion Date.
Section 10.07 Voting Rights.
(a) As used in this Section 10.07 and elsewhere in this
Partnership Agreement, the following terms shall have the
indicated meanings:
(i) Affiliate of SMRS. Any Person that controls, is
controlled by or is under common control with SMRS, as evidenced
by contract or agreement.
(ii) Approval Rights. The Right Holders' right to
approve certain matters as described in Section 10.07 of this
Partnership Agreement and pursuant to Section 6 of the
Partnership Interest Agreement.
(iii) Change of Control. The occurrence of any of
the following events: (i) the General Partner takes or fails to
take any action such that it ceases to be required to file
reports under Section 13 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any successor to that
Section; (ii) any "person" (as defined in Sections 13(d) and
14(d) of the Exchange Act) is permitted by the General Partner or
the Subsidiaries, or their respective Boards of Directors, to
become the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of either (a) 30% or more
of the outstanding HP Shares, or (b) 30% or more (by right to
vote or grant or withhold any approval) of the outstanding
securities of any other class or classes which individually or
together have the power to elect a majority of the members of
such Board of Directors; (iii) either of the Boards of Directors
of the General Partner or the Subsidiaries determine to recommend
the acceptance of any proposal set forth in a tender offer
statement or proxy statement filed by any person with the
Securities and Exchange Commission which indicates the intention
on the part of that person to acquire, or acceptance of which
would otherwise have the effect of that person acquiring, control
of the General Partner or the Subsidiaries; (iv) the General
Partner ceases to be the sole general partner of the Partnership
or grants or sells to any third party the power to control or
direct the actions of the Partnership as if such third party were
a general partner of the Partnership; or (v) the Partnership is a
party to any entity conversion or any merger or consolidation in
which the Partnership is not the surviving entity in such merger
or consolidation.
(iv) Equity Capitalization. The aggregate of the Value
of the Interest, the Value of the Units not owned by the General
Partner and the Market Value of all outstanding HP Shares at the
time the determination is made.
(v) HP Conversion Shares. The HP Shares received on
conversion of all or any portion of the Class A Interest that
have not previously been sold or otherwise transferred on a
Public Basis.
(vi) Investor Group Representative. The Person
appointed by the Rights Holders to act as their representative as
described in paragraph (c) of this Section 10.07.
(vii) Market/Offer Price. The product of : (i)
the greater of (a) the highest price (or value of other
consideration) per HP Share agreed upon during such 12-month
period pursuant to any Business Combination Transaction, which
was made during such 12-month period and was not terminated or
withdrawn prior to the end of such period; and (b) the average
closing price per HP Share as shown on the composite tape of the
New York Stock Exchange over such 12-month period; and (ii) the
number of such HP Shares
(viii) Market Value. As defined in Section 1.41 of
this Partnership Agreement, provided that the Rights Holders, by
accepting the issuance or assignment to them of all or a portion
of the Class A Interest or the HP Conversion Shares, covenant and
agree that, during the ten (10) consecutive trading days
immediately preceding the date on which the Market
Page 9
<PAGE>
Value is to be
determined, they will not purchase or sell any HP Shares, cause
the purchase and sale of any HP Shares or take any other actions
that are intended to or that actually affect the market price of
HP Shares.
(ix) Partnership Interest Agreement. The Partnership
Interest Purchase Agreement, dated as of December 20th, 1996 by
and between the Partnership, the General Partner and SMRS.
(x) Public Basis. The sale of any HP Shares by means
of any public stock exchange or in any Public Offering.
(xi) Public Offering. A public offering of HP Shares,
preferred shares of the General Partner or Partnership Interests
(including Units), other than a registration relating solely to
the sale of securities to participants in a dividend reinvestment
plan, a registration on Form S-4 relating to a business
combination or similar transaction permitted to be registered on
such Form S-4, a registration on Form S-8 relating solely to the
sale of securities to participants in a stock or employee benefit
plan, or a registration permitted under Rule 462 under the
Securities Act registering additional securities of the same
class as were included in an earlier registration statement for
the same offering and declared effective.
(xii) Related Entity. The Partnership, the General
Partner or any Person in which the Partnership or the General
Partner has beneficial ownership, whether direct or indirect, of:
(x) 50% or more of the outstanding shares of any class of stock
or any class of other ownership interest or (y) such lower
percentage of the outstanding shares of any class of stock or any
class of such other ownership interest as is sufficient to render
such Person a subsidiary of the Partnership or the General
Partner for purposes of generally accepted accounting principles
as in effect at the time of determination of the status of such
Person for purposes of this definition.
(xiii) Rights Holders. The Class A Interest Holders
and the holders of the HP Conversion Shares.
(xiv) Rights Termination Date. The date on which
the combined Value of the Class A Interest and the Value of the
HP Conversion Shares held by the Rights Holders: (i) shall be
less than $35,000,000; and (ii) cease to exceed 8% of the Equity
Capitalization of the Partnership for a period of 30 consecutive
trading days.
(xv) Total Capitalization. The aggregate of the Equity
Capitalization plus the aggregate outstanding principal amount at
the time the determination is made of all liabilities of the
Partnership and the General Partner arising from the borrowing of
any money or the deferral of any of the purchase price of any
asset or pursuant to any capital lease.
(xvi) Value of the HP Conversion Shares. Market
Value of the equivalent number of HP Shares.
(xvii) Value of the Class A Interest. Market Value
of the HP Shares to which the Class A Interest can be converted.
(xviii) Value of the Units. Market Value of the HP Shares
to which the outstanding Units can be converted.
(b) Prior to the Rights Termination Date, the General
Partner or the Partnership, as the case may be, shall not take
any of the actions described in Section 6.4 of the Partnership
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<PAGE>
Interest Agreement or any of the following actions without
obtaining the prior written approval of the Rights Holders,
voting as a group:
(i) permit the outstanding principal liabilities of
Related Entities arising from the borrowing of any money
(for this purpose, any indebtedness or other liability which
is guaranteed, endorsed or discounted with recourse by a
Related Entity shall be deemed to be a principal liability
of such Related Entity) or the deferral of the purchase
price of any asset or pursuant to any capital lease to
exceed 50% of the Total Capitalization;
(ii) purchase any assets in a single transaction or
series of related transactions (including by way of merger,
consolidation or other combination with any other Person or
the purchase of equity interests in the entity owning such
assets) if the consideration to be paid for those assets
exceeds 25% of Total Capitalization;
(iii) sell, exchange, lease or otherwise dispose of
any assets or securities in a single transaction or a
series of related transactions (including by way of merger,
consolidation or other combination with any other Person or
the sale of equity interests in the entity owning such
assets) if the assets or securities to be sold, exchanged,
leased or otherwise disposed of have a value exceeding 25%
of the Total Capitalization;
(iv) amend any provision of the Articles of
Incorporation or By-laws of the General Partner or this
Partnership Agreement if such amendment would adversely
affect the rights of the Class A Interest Holders;
(v) liquidate or dissolve any Related Entity;
(vi) with respect to any Related Entity, commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent
to the entry of an order for relief in an involuntary case
under any such law;
(vii) terminate the election, or take any action
which would cause termination other than by election, of the
General Partner as a real estate investment trust under the
Code;
(viii) alter any business purpose (as may be stated
in the Articles of Incorporation of the General Partner and
the Subsidiaries, the Partnership Agreement or otherwise)
of, or allow a Change in Control to occur with respect to,
any Related Entity;
(ix) create or issue any security which would be pari
passu or senior in right, either as to distributions or upon
liquidation, to the Class A Interest or reclassify the Class
A Interest or any Units if such creation, issuance or
reclassification would adversely affect the rights or
benefits of the holders of the Class A Interest;
(x) increase the size of the Board of Directors of the
General Partner, except to the extent necessary to add an
Investor Nominee (as defined in the Partnership Interest
Agreement) pursuant to the Partnership Interest Agreement;
and
(xi) except as otherwise provided in this Amendment No.
9, require the exchange of the Class A Interest for other
securities.
(c) The General Partner shall provide the Investor Group
Representative with a written request for the approval of any
matter described in paragraph (b) of this Section 10.07. Such
written notice shall include a reasonable description of the
matter for which approval is sought and shall be made in
accordance with the provisions of Section 10.11. If the Investor
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<PAGE>
Group Representative does not respond within fifteen (15)
Business Days after the date of receipt of such a written
request the Rights Holders shall be deemed to have approved the
matter as to which their approval was sought.
(d) With respect to their approval rights pursuant to
paragraph (b) of this Section 10.07, the Rights Holders shall
only be permitted to act as a group. In the event that there is
more than one Rights Holder, the Rights Holder shall select one
Person to act as their Investor Group Representative and shall so
notify the General Partner. SMRS shall be the initial Investor
Group Representative. Upon failure of the Rights Holders to
select an Investor Group Representative, the largest single
holder of Class A Interests shall be designated by the General
Partner as the Investor Group Representative. The General
Partner and the Partnership shall be entitled and obligated to
rely on any and all notifications and directions given to it by
the Investor Group Representative and shall have no obligation to
verify that such notifications and directions constitute the
consensus of the Rights Holders. In addition, upon receipt of
notice from any or all other Rights Holders that such
notifications and directions do not constitute the consensus of
the Rights Holders, the General Partner and the Partnership shall
still be obligated to follow the directions of the Investor Group
Representative.
(e) In addition to their rights under this Section 10.07,
the Rights Holders shall have the right to appoint and nominate
one or more Investor Nominees and to approve the other matters as
described in Section 6 of the Partnership Interest Agreement.
(f) If the General Partner solicits the approval of the
Rights Holders for any of the matters described in paragraph (b)
of Section 6.4 of the Partnership Interest Agreement or this
Section 10.07 of this Agreement and is informed by the Investor
Group Representative that the Rights Holders do not approve of
the matter submitted, then the Partnership shall have the right
to purchase the remaining portion of the Class A Interest from
the holders thereof at a price (the "Interest Purchase Price")
that is equal to 105% of the greater of: (i) the Value of the
Class A Interest as of the date of purchase (the "Purchase
Closing"), including any Accrued Return; and (ii) the Original
Investment, including any Accrued Return, times the percentage of
the Class A Interest originally issued hereby that has not been
converted to HP Shares. Upon full payment of the purchase right
described in this paragraph (f) of Section 10.07 (the "Purchase
Right") the holder of any HP Conversion Shares shall cease to be
a Rights Holder and a Class A Interest Holder for purposes of
this Partnership Agreement and the Partnership Interest
Agreement. If the Partnership intends to exercise its Purchase
Right, it shall so notify the Class A Interest Holders in writing
within five (5)Business Days after receipt of notice that the
Rights Holders have not approved any matter submitted to them for
approval pursuant to Section 10.07 of this Partnership Agreement
or Section 6.4 of the Partnership Interest Agreement. Payment
of the Interest Purchase Price as described above shall be made
in cash within twenty (20) Business Days after receipt of that
notice by the Class A Interest Holders. In the event that the
Partnership exercises its Purchase Right in connection with the
refusal of the Rights Holders to approve any tender or exchange
offer or merger, consolidation, share exchange, business
combination, or similar transaction involving the General Partner
(each, a "Business Combination"), then at the completion of the
12-month period following the Purchase Closing, the General
Partner shall determine the Market/Offer Price for such HP
Shares.. If the Market/Offer Price is higher than the Interest
Purchase Price paid at the Purchase Closing, the Partnership
shall pay over to the holders of record of the Class A Interest
as of the date of the Purchase Closing, an additional amount (the
"Additional Amount") equal to such difference. The payment of
the Additional Amount shall be due on the earlier of: (i) ten
days after the end of such 12-month period; or (ii) the closing
date of any Business Combination Transaction closed during such
period. In the event that the Rights Holders on two occasions do
not approve a matter submitted for their approval pursuant to
paragraph (b) of Section 6.4 of the Partnership Interest Purchase
Agreement or this Section 10.07 and the Partnership does not
exercise its Purchase Right, then the Rights Holders may request
from the General Partner a
Page 12
<PAGE>
waiver of the Volume Limitation, as
defined in the letter agreement from SMRS to the General Partner
whereby SMRS acknowledges certain restrictions on the sale of HP
Shares received on conversion of all or a portion of the Class A
Interest. The General Partner shall not unreasonably withhold
its approval of such a waiver, provided that it shall not be
unreasonable for the General Partner to withhold its approval if
the sale of HP Shares beyond the Volume Limitation is reasonably
anticipated to have a material negative effect on the market for,
and the market price of, HP Shares.
Section 10.08 Calculation of Percentage Interest. The Percentage
Interest of the entire Class A Interest shall initially be
58.07838. That percentage is calculated based on total
Partnership Interests (including Units) deemed to be outstanding,
as of the date hereof, of 2,869,686. To the extent that the
number of Units or other Partnership Interests changes (thus
changing the denominator), or any portion of the Class A Interest
is converted to HP Shares (thus changing the numerator), the
Percentage Interest associated with the Class A Interest shall
be proportionately adjusted.
Section 10.09 Liquidation. Notwithstanding the provisions of
Section 7.02 of this Partnership Agreement, upon liquidation of
the Partnership, the General Partner shall, to the extent of
funds available, pay to the holder(s) of the Class A Interest
prior to making any distribution to any other security holder in
the aggregate the amount of the Original Investment times the
percentage of the Class A Interest originally issued hereby that
has not been converted into HP Shares as described in Section
10.06 above, plus any Accrued Return. Such payment is to be made
to each such holder in proportion to its then current percentage
interest in the remaining Class A Interest and such payment to be
made prior to and in lieu of the payment to Partners described in
sub-paragraph (4) of paragraph (a) of Section 7.02 of this
Partnership Agreement. For purposes of this Section 10.09, a
consolidation or a merger of the Partnership with another entity
wherein the Partnership is not the surviving entity, or a sale of
all or substantially all of the Partnership's assets for cash or
securities, will be considered a liquidation of the Partnership.
Section 10.10 Redemption of the Class A Limited Partnership
Interest. From and after the tenth anniversary of the Issuance
Date, the Partnership shall have the right to redeem the
remaining portion of the Class A Interest for a redemption price
equal to 100% of the amount of Original Investment times the
percentage of the Class A Interest that had not as yet been
converted into HP Shares as described in Section 10.06 above (the
"Redemption Price"), plus any Accrued Return. The Partnership
shall give the Interest Holder(s) no less than thirty-five (35)
Business Days prior written notice of its intention to exercise
the redemption right described above. Within thirty (30)Business
Days after receipt of the above described notice of intention
from the Partnership, the Interest Holder(s) shall notify the
Partnership as to whether they plan to exercise their Conversion
Right with respect to the remaining portion of the Class A
Interest prior to the redemption of the Class A Interest. If the
holder(s) do not so exercise their Conversion Right, then upon
payment of the Redemption Price, all of the rights of the holders
of the Class A Interest, under this Partnership Agreement and the
Partnership Interest Agreement shall terminate.
Section 10.11 Notices. All notices and other communications
under this Article X shall be sufficiently given for all purposes
hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt
is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below.
Notices to the General Partner and the Partnership shall be
addressed to:
Page 13
<PAGE>
Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Attn: Amy L. Tait
(716) 546-4900
Telecopier No.: (716) 546-5433
with a copy to:
Ann M. McCormick, Esq.
c/o Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
(716) 546-4900
Telecopier No.: (716) 546-5433
or at such other address and to the attention of such other
person as the General Partner or the Partnership may designate by
written notice to SMRS. Notices to SMRS shall be addressed to:
Express Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
430 West Allegan
Lansing, Michigan 48922
Attn: Administrator
(517) 373-0702
Telecopier No.: (517) 373-0635
Other Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
P.O. Box 15128
Lansing, Michigan 48901
Attn: Administrator
with a copy to:
Michigan Department of Attorney General
Finance and Development Division
One Michigan Avenue Building
120 North Washington Square
Lansing, Michigan 48933
Attn: Assistant in Charge
(517) 373-1130
Telecopier No.: (517) 335-3088
and an additional copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attn: Jay Bernstein
Page 14
<PAGE>
or at such other address and to the attention of such other
person as SMRS may designate by written notice to the General
Partner.
Notices to other Rights Holders, holders of the Class A Interest
and the Investor Group Representative shall be by the above means
and to such addresses and to the attention of such person as the
Rights Holders, holders of the Class A Interest and the Investor
Group Representative may designate by written notice to the
General Partner.
For purposes of this Agreement, the Investor Group Representative
will only be deemed to have received any notice upon the written
acknowledgment by one individual designated by the Investor Group
Representative with authority to acknowledge such receipt or upon
refusal by any such designee to accept receipt of any notice.
The Investor Group Representative shall at all times provide the
General Partner with a written designation of at least two
individuals or titles of positions that are so designated with
authority to acknowledge receipt of written notice.
In all cases where a failure by the Rights Holders, Class A
Interest Holders and/or the Investor Group Representative to
respond within a specified time frame shall be deemed to be their
approval pursuant to this Partnership Agreement, then the written
notice or request provided by the General Partner shall
specifically state that a failure to respond within the indicated
time frame shall be deemed to be an approval of the matter for
which approval was sought."
4. Effectiveness of this Amendment No. 9. The terms of this
Amendment No. 9 shall not be effective and the Class A Interest
shall not be issued until the Partnership has received the
Original Investment from SMRS. Upon receipt by the Partnership
of the Original Investment, the terms of this Amendment No. 9
shall be immediately and automatically effective and the Class A
Interest shall be issued to SMRS without any further action on
the part of SMRS or the Partnership. The Partnership covenants
and agrees that promptly after receipt of the Original Investment
that it shall forward to SMRS written confirmation of such
receipt. Failure by the Partnership to forward such confirmation
to SMRS upon receipt of the Original Investment shall in no way
be deemed to impair the effectiveness of this Amendment No. 9 or
the issuance of the Class A Interest to SMRS.
5. Miscellaneous. As modified herein, the Partnership
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Amendment No. 9 to the Partnership
Agreement is hereby executed as of the 23rd day of December,
1996.
GENERAL PARTNER
HOME PROPERTIES OF NEW YORK, INC.
/s/ Amy L. Tait
Amy L. Tait
Executive Vice President
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<PAGE>
LIMITED PARTNERS
See Schedule A attached hereto
By: HOME PROPERTIES OF NEW YORK, INC.
under power of attorney
/s/ Amy L. Tait
Amy L. Tait
Executive Vice President
STATE TREASURER OF THE STATE OF MICHIGAN,
CUSTODIAN OF MICHIGAN PUBLIC SCHOOL
EMPLOYEES' RETIREMENT SYSTEM, STATE EMPLOYEES'
RETIREMENT SYSTEM, MICHIGAN STATE POLICE
RETIREMENT SYSTEM, AND MICHIGAN JUDGES'
RETIREMENT SYSTEM
By: /s/ Philip L. Van Syckle
Philip L. Van Syckle
Administrator
Mortgage and Real Estate Division
Page 16
<PAGE>
EXHIBIT C
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP
HOME PROPERTIES OF NEW YORK, L.P.
CLASS A LIMITED PARTNERSHIP INTEREST
Adjustment Formula Pursuant to Section 10.06(b)(ii) and (v)
("Adjustment Formula")
OBJECTIVE: To keep the Class A Interest Holders' relative
ownership percentage constant (as compared to a transaction
consummated at the Conversion Price), upon the issuance of a
"New Dilutive Security" (see definition below), the then
applicable Conversion Price of the Class A Interest will be
adjusted as follows:
<TABLE>
<CAPTION>
PRIOR CONVERSION ANTI-DILUTION ADJUSTED
PRICE ADJUSTMENT CONVERSION PRICE
FORMULA
<S> <C> <C> <C> <C>
PCP x (A+B+C)+EX = ACP
(A+B+C*)+EX*
</TABLE>
. .. must be solved for per
calculation included in example below
DEFINITIONS:
PCP - Conversion Price of Class A Interest prior to
issuance of "New Dilutive Security."
"New Dilutive Security" - A common stock or common stock
equivalent issuance at a price below PCP.
ACP - Conversion Price of Class A Interest adjusted for
issuance of "New Dilutive Security".
A - The number of common stock equivalent shares
outstanding which includes: (i) HP Shares issued and outstanding;
(ii) all Dilutive (defined below) convertible securities outstanding,
excluding Units and the number of HP Shares issuable upon conversion
of the Class A Interest;
and (iii) all Dilutive options issued and outstanding
on an as-exercised basis (excluding stock options covering 699,778
shares of Common Stock) prior to issuance of "New Dilutive Security".
For purposes of this definition, a security described under (ii) or
(iii) will be considered "Dilutive"
in all subsequent applications of the Adjustment Formula if it
triggers the Adjustment Formula upon issuance.
B - HP Shares issuable upon conversion of all
Units outstanding prior to issuance of "New Dilutive
Security"
C - HP Shares issuable upon conversion of the entire Class A
Interest, assuming the prior Conversion Price (or PCP).
C* - HP Shares issuable upon conversion of the entire Class A
Interest, assuming the adjusted Conversion Price for
the New Dilutive Security issuance (or ACP).
EX - "New Dilutive Security" equivalent common shares,
assuming the prior Conversion Price (or PCP).
EX* - "New Dilutive Security" equivalent common shares,
based on actual conversion of security.
<PAGE>
EXAMPLE:
Assume a 1.5 million share common stock issuance at
$19.50/share (the "New Dilutive Security") following an
investment of $35 million for the Class A Interest at a
$21.00 Conversion Price:
SOLUTION:
Prior to solving for C*, the following table must be
created:
<TABLE>
<CAPTION>
POST NEW DILUTIVE POST NEW DILUTIVE
SECURITY ISSUANCE AT SECURITY ISSUANCE AT
$19.50/SHARE UNADJUSTED $21.00/SHARE
SHARE # OF SHARES PERCENTAGE # OF SHARES PERCENTAGE
CAPITALIZATION
<S> <C> <C> <C> <C>
HP Shares (A) 5,900,000 58.0328 5,900,000 58.6509
Partnership 1,100,000 10.8197 1,100,000 10.9349
Units (B)
Class A 1,666,667 16.3934 1,666,667 16.5681
Interest
Equivalent
Shares(C)
New Dilutive
Security Shares 1,500,000 14.7541 1,392,857 13.8461
(EX*/EX)
TOTAL 10,166,667 100.00% 10,059,524 100.00%
</TABLE>
C* is the number of HP Shares into which the outstanding
Class A Interest must convert in order to maintain the Class
A Interest Holders' ownership percentage at 16.5681 (i.e.,
as if the issuance were done at the Conversion Price prior
to the issuance (or PCP) given the New Dilutive Security
issuance at $19.50 per common share. To solve for C*, the
following calculations must be made:
<TABLE>
<CAPTION>
# OF COMMON EQUIVALENT SHARES
<S> <C>
Share Capitalization, post 10,166,667
New Dilutive Security
Issuance as issued at $19.50
per share and unadjusted
- - (C) (1,666,667)
= Share Capitalization less 8,500,000
Class A Interest/(100% - .834319
16.5681) or 100% less
ownership percentage holders
of Class A Interest are to
maintain
= Total Share Capitalization 10,187,950
Required for Class A Interest
to maintain ownership
percentage at 16.5681%
x Required ownership 16.5681%
percentage pursuant to above
=C* 1,687,950
</TABLE>
<PAGE>
GIVEN C*, ONE SOLVES FOR ACP AS FOLLOWS:
<TABLE>
<CAPTION>
PRICE ADJUSTMENT FORMULA
CONVERSION
PRICE OR PCP
<S> <C><C>
$21.00 X (5,900,000+1,100,000+1,666,667)+($29,250,000/21)
(5,900,000+1,100,000+1,687,950)+($29,250,000/19.50) =
$21.00 X 98.7394% =
$20.74 = ACP
</TABLE>
PROOF OF CALCULATION:
<TABLE>
<CAPTION>
POST-NEW DILUTIVE SECURITY ISSUANCE AS
ISSUED AT $19.50 PER SHARE AND AS
ADJUSTED
# of Shares %
<S> <C> <C>
Share 5,900,000 57.9115
Capitalization of
HP Shares (A)
Partnership Units 1,100,000 10.7971
(B)
Class A Interest 1,687,950 16.5681
Equivalent Shares
(C*/C)
New Dilutive 1,500,000 14.7233
Security Shares
(EX*/EX)
TOTAL 10,187,950 100.00%
</TABLE>
NOTE: Some of the numbers included in this Exhibit C are
not the actual numbers and are included for illustration
purposes only.
<PAGE>
Exhibit 10.2
PARTNERSHIP INTEREST PURCHASE AGREEMENT
This Partnership Interest Purchase Agreement (the "Agreement"),
dated as of the 23rd day of December, 1996, is by and among Home
Properties of New York, L.P., a New York limited partnership (the
"Partnership"), Home Properties of New York, Inc., a Maryland
corporation and the general partner of the Partnership (the
"General Partner"), and State Treasurer of the State of Michigan,
Custodian of Michigan Public School Employees' Retirement System,
State Employees' Retirement System, Michigan State Police
Retirement System and Michigan Judges' Retirement System ("SMRS").
WITNESSETH:
WHEREAS, the Partnership desires to issue and sell to SMRS the
Class A Limited Partnership Interest in the Partnership (the "Class
A Interest") as such interest is described in Amendment No. 9
("Amendment No. 9") to the Amended and Restated Agreement of
Limited Partnership of the Partnership (together with Amendment No.
9 and prior amendments, the "Partnership Agreement");
WHEREAS, SMRS desires to purchase the Class A Interest from the
Partnership;
WHEREAS, the General Partner is the general partner of the
Partnership and has been asked by SMRS to covenant and agree as to
certain matters in connection with the issuance and sale of the
Class A Interest to SMRS;
WHEREAS, the General Partner as general partner of the Partnership
and the holder of significant interests in the Partnership will
benefit from the issuance and sale of the Class A Interest to SMRS;
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning given them in the Partnership
Agreement. The following capitalized terms shall have the meanings
indicated:
1.1 "Action" shall mean any suit, arbitration, inquiry,
proceeding or injunction by or before any Governmental or
Regulatory Authority, court or arbitrator.
1.2 "Affiliate" shall have the meaning specified in Rule 12b-
2 promulgated under the Securities Exchange Act of 1934, as
amended.
1.3 "Approval Breach" shall mean the taking by the General
Partner of any of the actions described in paragraphs (a) and (b)
of Section 6.4 of this Agreement and
Page 1
<PAGE>
paragraph (b) of Section 10.07
of Amendment No. 9 without obtaining the prior approvals specified
in those sections.
1.4 "Articles of Incorporation" shall mean the Articles of
Amendment and Restatement of the Articles of Incorporation of the
General Partner, as currently in effect.
1.5 "Board" shall mean the Board of Directors of the General
Partner.
1.6 "Business Day" shall mean any day except a Saturday,
Sunday or other day on which commercial banks in the City of New
York are authorized or required by law to close.
1.7 "Class A Interest Holder" shall mean any Person holding
all or any portion of the Class A Interest.
1.8 "Closing" shall mean the consummation of the transactions
contemplated by Section 2 of this Agreement.
1.9 "Closing Date" shall mean December 30, 1996, the date on
which the Closing occurs.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
1.11 "Company Reports" shall mean each registration statement,
report, proxy statement or information statement and all exhibits
thereto prepared by the General Partner or relating to its
properties since the effective date of the Registration Statement,
which are set forth in Schedule 3.5(a) hereto (including exhibits
and any amendments thereto).
1.12 "Equity Capitalization" shall mean the aggregate of the
Value of the Class A Interest, the Value of the Units not owned by
the General Partner and the Market Value of all outstanding HP
Shares at the time that the determination is made.
1.13 "Equity Ownership" shall mean, with respect to each Class
A Interest Holder, the percentage obtained by dividing the sum of
the Value of the Class A Interest and the Value of the HP
Conversion Shares held by that Class A Interest Holder on the date
that the calculation is made by the Equity Capitalization.
1.14 "GAAP" shall mean generally accepted accounting
principles.
1.15 "Governmental or Regulatory Authority" shall mean any
government or state (or any subdivision thereof) of or in the
United States, or any foreign country, or any agency, authority,
bureau, commission, department or similar body or instrumentality
thereof, or any governmental court or tribunal thereof.
Page 2
<PAGE>
1.16 "HP Conversion Shares" shall mean the HP Shares received
on conversion of all or any portion of the Class A Interest that
have not previously been transferred on a Public Basis.
1.17 "HP Shares" shall mean the common stock, par value $.01
per share, of Home Properties of New York, Inc.
1.18 "Investor Group Representative" shall mean the Person
appointed by the Rights Holders to act as their representative as
described in paragraph (d) of Section 6.4 of this Agreement
1.19 "Investor Nominee" shall mean each director that the
Rights Holders shall have the right to have on the Board as
described in Section 6 of this Agreement
1.20 "Key Committee" shall mean, with respect to the Board,
the Audit Committee, the Compensation Committee and any committee
of the Board, special or otherwise, which shall be charged with
exercising substantial authority on behalf of the Board.
1.21 "Law" shall mean all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the
United States, any foreign country or any domestic or foreign
state, country, city or other political subdivision or of any
Governmental or Regulatory Authority.
1.22 "Liabilities" shall mean, as to any person, all debts,
adverse claims, liabilities and obligations, direct, indirect,
absolute or contingent of such person, whether accrued, vested or
otherwise, whether in contract, tort, strict liability or otherwise
and whether or not actually reflected, or required by GAAP to be
reflected, in such person's or entity's balance sheets or other
books and records, including: (i) all indebtedness or liability of
such person for borrowed money, or for the purchase price of
property or services (including trade obligations); (ii)
reimbursement obligations of such person in respect of letters of
credit; (iii) all liabilities of other persons or entities,
directly or indirectly, guaranteed, endorsed (other than for
collection or deposit in the ordinary course of business), or
discounted with recourse by such person or with respect to which
the person in question is otherwise directly or indirectly liable;
(iv) all obligations secured by any lien on property of such
person, whether or not the obligations have been assumed; and (v)
all other items which have been, or in accordance with GAAP would
be, included in determining total liabilities on the liability side
of the balance sheet.
1.23 "Liens" shall mean any mortgage, pledge, assessment,
security interest, lease, lien, adverse claim, levy, charge or
other encumbrance of any kind, or any conditional sale contract,
title retention contract or other contract to give any of the
foregoing.
1.24 "Lock-Up Letter" shall mean the letter agreement, dated
the date of this Agreement, from SMRS to the General Partner
whereby SMRS acknowledges certain
Page 3
<PAGE>
restrictions on the sale of HP
Shares received on conversion of all or a portion of the Class A
Interest.
1.25 "Market Value" shall have the meaning given it in Section
1.41 of the Partnership Agreement, provided that the Rights
Holders, by accepting the issuance or assignment to them of the
Class A Interest or HP Conversion Shares, covenant and agree that,
during the ten (10) consecutive trading days immediately preceding
the date on which the Market Value is to be determined, they will
not purchase or sell any HP Shares, cause the purchase and sale of
any HP Shares or take any other actions that are intended to or
that actually affect the market price of HP Shares.
1.26 "Material Adverse Effect" shall mean a material adverse
effect on the financial condition, result of operations or business
of the General Partner, the Partnership or the Subsidiaries taken
as a whole.
1.27 "Order" shall mean any writ, judgment, decree, injunction
or similar order of any Governmental or Regulatory Authority (in
each such case whether preliminary or final).
1.28 "Original Investment" shall mean the sum of Thirty Five
Million and 00/100 Dollars ($35,000,000).
1.29 "Preferred Return" shall mean the distribution payable to
the Class A Interest Holders as described in Section 10.04 of the
Partnership Agreement.
1.30 "Preferred Return Breach" shall mean the failure to make
a payment of the Preferred Return, in whole or in part, for a
period of thirty (30) Business Days after the payment was due.
1.31 "Private Offering" shall mean all private offerings of
stock (whether common or preferred) made by the General Partner and
all private offerings of Partnership Interests (including Units) by
the Partnership.
1.32 "Proceeding" shall mean any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation
or audit.
1.33 "Properties" shall mean all real property owned or leased
by the Partnership, the General Partner or the Subsidiaries
(collectively, and together with all buildings, structures and
other improvements and fixtures located on or under such land and
all easements, rights and other appurtenances to such land).
1.34 "Public Basis" shall mean the sale of any HP Shares by
means of the facilities of any public stock exchange or in any
Public Offering.
1.35 "Public Offering" shall mean a public offering of HP
Shares, preferred shares of the General Partner or Partnership
Interests (including Units), other than a registration relating
solely to the sale of securities to participants in a dividend
reinvestment plan, a
Page 4
<PAGE>
registration on Form S-4 relating to a
business combination or similar transaction permitted to be
registered on such Form S-4, a registration on Form S-8 relating
solely to the sale of securities to participants in a stock or
employee benefit plan, or a registration permitted under Rule 462
under the Securities Act registering additional securities of the
same class as were included in an earlier registration statement
for the same offering and declared effective.
1.36 "Registration Rights Agreement" shall mean the
Registration Rights Agreement, to be dated the date of this
Agreement, to be entered into between the General Partner and
SMRS..
1.37 "Registration Statement" shall mean the Registration
Statement on Form S-11 filed by the General Partner with the SEC
in connection with its initial public offering of HP Shares.
1.38 "REIT" shall mean a real estate investment trust within
the meaning of the Code.
1.39 "Rights Holders" shall mean the Class A Interest Holders
and the holders of HP Conversion Shares.
1.40 "Rights Termination Date" shall mean the date on which
the combined Value of the Class A Interest and the Value of the HP
Conversion Shares held by the Rights Holders: (i) shall be less
than $35,000,000 and (ii) shall cease to exceed 8% of the Equity
Capitalization for a period of 30 consecutive trading days.
1.41 "SEC" shall mean the Securities and Exchange Commission.
1.42 "Securities Laws" shall mean the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
1.43 "Stock Option Plan" shall mean the Stock Option Plan of
the General Partner whereby certain of the directors and employees
of the General Partner have been and will be granted options to
purchase HP Shares.
1.44 "Subsidiaries" shall mean Home Properties Management,
Inc. and Conifer Realty Corporation, both of which are Maryland
corporations.
1.45 "Units" shall mean each of the fractional, undivided
partnership interests of partners of the Partnership issued
pursuant to Sections 3.01 and 3.02 of the Partnership Agreement.
1.46 "Value of the HP Conversion Shares" shall mean the Market
Value of the equivalent number of HP Shares.
Page 5
<PAGE>
1.47 "Value of the Class A Interest" shall mean the Market
Value of the HP Shares into which the Class A Interest can be
converted.
1.48 "Value of the Units" shall mean the Market Value of the
HP Shares into which the outstanding Units can be converted.
2. Purchase of Class A Interest.
2.1 Purchase. On the terms and subject to the conditions set
forth in this Agreement, the Partnership shall issue and sell to
SMRS and SMRS shall purchase from the Partnership 100% of the Class
A Interest and SMRS shall be admitted as a limited partner to the
Partnership and the sole holder of such Class A Interest. The
aggregate purchase price for the Class A Interest shall be the
Original Investment.
2.2 The Closing. The Closing will take place at the offices
of the General Partner, or at such other place as SMRS and the
Partnership mutually agree, at 10:00 am, local time, on December
30, 1996. At the Closing, SMRS will pay the Original Investment by
wire transfer of immediately available funds to such account as the
Partnership may reasonably direct by written notice delivered to
SMRS. Simultaneously therewith, the Partnership will issue and
sell to the SMRS good and valid title in and to the Class A
Interest, free and clear of all liens, delivering to SMRS Amendment
No. 9, duly executed by the General Partner. At the Closing,
there shall also be delivered to the Partnership and SMRS the
agreements, certificates and opinions to be delivered under Section
2.3 and Section 2.4.
2.3 Conditions to the Obligations of SMRS. The obligations
of SMRS hereunder are subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which
may be waived in whole or in part by SMRS in its sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by the General Partner and the
Partnership (other than those made as of a specified date earlier
than the Closing Date) shall be true and correct in all material
respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date,
and any representation or warranty made as of a specified date
earlier than the Closing Date shall have been true and correct in
all material respects on and as of such earlier date.
(b) Performance. The General Partner and the Partnership
shall have performed and complied with, in all material respects,
each agreement, covenant and obligations required by this Agreement
to be so performed or complied with by the General Partner and the
Partnership at or before the Closing.
(c) Officers' Certificates. The General Partner and the
Partnership shall have delivered to SMRS a certificate, dated the
Closing Date and executed by the President of the General Partner,
in form and substance reasonably satisfactory to SMRS, confirming
the matters specified in Section 2.3(a) and (b) and confirming the
incumbency of the specified officers of the General Partner.
Page 6
<PAGE>
(d) Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the other
transactions contemplated hereby or which could reasonably be
expected to otherwise result in a material diminution of the
benefits of the transactions contemplated by this Agreement to
SMRS, and there shall not be pending or threatened on the Closing
Date any Action or Proceeding or any other action in, before or by
any Governmental or Regulatory Authority which could reasonably be
expected to result in the issuance of any such Order or the
enactment, promulgation or deemed applicability to SMRS, the
General Partner, the Partnership or the Subsidiaries of any such
Law.
(e) Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any
governmental or regulatory authority necessary to permit SMRS, the
General Partner and the Partnership to perform their respective
obligations under this Agreement and to consummate the transactions
contemplated hereby (i) shall have been duly obtained, made or
given, (ii) shall be in form and substance reasonably satisfactory
to SMRS, (iii) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (iv) shall be
in full force and effect.
(f) Opinion of Counsel. SMRS shall have received the opinion
of Nixon, Hargrave, Devans & Doyle, counsel to the General Partner
and the Partnership, dated the Closing Date, substantially in the
form and to the effect of Exhibit A hereto, and to such further
effect as SMRS may reasonably request.
(g) Appointment of Director. The designee of SMRS shall have
been appointed to the Board of Directors of the General Partner and
SMRS shall have received evidence of such appointment reasonably
satisfactory to SMRS.
(h) Other Agreements. The General Partner and the
Partnership shall have executed and delivered to SMRS Amendment No.
9, the Registration Rights Agreement and the Lock-Up Letter.
(i) Proceedings. All proceedings to be taken on the part of
the General Partner and the Partnership in connection with the
transactions contemplated by this Agreement and all documents
incident thereto shall be reasonably satisfactory in form and
substance to SMRS, and SMRS shall have received copies of all such
documents and other evidences as SMRS may reasonably request in
order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
2.4 Conditions to the Obligations of the General Partner and
the Partnership. The obligations of the General Partner and the
Partnership hereunder are subject to the fulfillment, at or before
the Closing, of each of the following conditions (all or any of
which may be waived in whole or in part by the General Partner and
the Partnership in their sole discretion):
Page 7
<PAGE>
(a) Representations and Warranties. Each of the
representations and warranties made by SMRS (other than those made
as of a specified date earlier than the Closing Date) shall be true
and correct in all material respects on and as of the Closing Date
as though such representation or warranty was made on and as of the
Closing Date, and any representation or warranty made as of a
specified date earlier than the Closing Date shall have been true
and correct in all material respects on and as of such earlier
date.
(b) Performance. SMRS shall have performed and complied
with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or
complied with by SMRS at or before the Closing.
(c) Officers' Certificates. SMRS shall have delivered to
the General Partner a certificate, dated the Closing Date and
executed by an authorized representative of SMRS, in form and
substance reasonably satisfactory to SMRS, confirming the matters
specified in Section 2.4(a) and (b) and confirming the incumbency
of the specified representatives.
(d) Purchase Price. SMRS shall have delivered to the General
Partner the Original Investment.
2.5 Use of Proceeds. The Original Investment described in
Section 2.1 of this Agreement shall be used by the Partnership to
fund acquisitions of multi-family apartment communities and for the
repayment of debt.
3. Representations and Warranties of the General Partner and the
Partnership. The General Partner and the Partnership hereby
represent and warrant as follows:
3.1 Organization and Qualification; Subsidiaries.
(a) The General Partner is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Maryland. The General Partner has all requisite corporate power
and authority to enter into this Agreement, Amendment No. 9, the
Registration Rights Agreement and the Lock-Up Letter and to perform
its obligations hereunder and thereunder. The General Partner has
all the requisite governmental licenses, authorizations, consents
and approvals to own, operate, lease and encumber its Properties
and carry on its business as now conducted, except where the
failure to do so could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(b) The Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State
of New York. The Partnership has all requisite partnership power
and authority to enter into this Agreement and Amendment No. 9.
The Partnership has all the requisite governmental licenses,
authorizations, consents and approvals to own, operate, lease and
encumber its Properties and carry on its business as now conducted,
except where the failure to do so could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect.
Page 8
<PAGE>
(c) Each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Maryland. Each of the Subsidiaries has all the requisite
governmental licenses, authorizations, consents and approvals to
own, operate, lease and encumber its Properties and carry on its
business as now conducted, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
(d) Each of the General Partner, the Partnership and the
Subsidiaries is duly qualified to do business and in good standing
in each jurisdiction in which the ownership of its Properties or
the conduct of its business requires such qualification, except for
any failures to be so qualified or to be in good standing as would
not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
(e) The General Partner's Annual Report on Form 10-K for the
year ended December 31, 1995 (together with all information
incorporated by reference therein, the "Annual Report") sets forth
all information regarding the Partnership and the Subsidiaries
required to be stated therein. All of the outstanding shares of
capital stock of, or other equity interest in, each of the
Subsidiaries owned by the Partnership are duly authorized, validly
issued, fully paid and nonassessable, and are owned by the
Partnership free and clear of all Liens. The following information
for each Subsidiary is set forth in Schedule 3.1(e): (i) its name;
and (ii) the type of and percentage interest held by the
Partnership in the Subsidiary and the names of and percentage
interest held by the other interest holders in the Subsidiary.
Except as described in the Company Reports, there are no existing
options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments which obligate the General
Partner, the Partnership or any of the Subsidiaries to issue,
transfer or sell any shares of capital stock or equity interests in
any of the Subsidiaries.
(f) The financial statements to the Annual Report set forth a
description of all allocations among the General Partner, the
Partnership and the Subsidiaries of the material expense incurred
by the General Partner, the Partnership and the Subsidiaries, taken
as a whole, as are required to be stated therein.
3.2 Authority Relative to Agreements; Board Approval.
(a) The execution, delivery and performance of this Agreement,
the Registration Rights Agreement, Amendment No. 9 and the Lock-
Up Letter by the General Partner and the Partnership, as the case
may be, and the issuance and delivery of the Class A Interest in
accordance with the provisions of Amendment No. 9, and the issuance
and delivery of the HP Conversion Shares in accordance with the
provisions of Amendment No. 9, have been duly and validly
authorized by all necessary corporate action on the part of the
General Partner and all necessary partnership action on the part of
the Partnership. Each of this Agreement, the Registration Rights
Agreement, Amendment No. 9 and the Lock-Up Letter has been duly
executed and delivered by the General Partner for itself and as the
general partner of the Partnership and constitutes the valid and
legally binding obligations
Page 9
<PAGE>
of the General Partner and the
Partnership, enforceable against the General Partner and the
Partnership in accordance with its terms.
(b) The Board has, as of the date hereof, approved the
transactions contemplated hereby and in the Registration Rights
Agreement, Amendment No. 9 and the Lock-Up Letter.
(c) The Class A Interest to be acquired pursuant to this
Agreement has been duly authorized for issuance by the Partnership,
and upon issuance will be duly and validly issued, fully paid and
nonassessable. The HP Shares issuable by the General Partner upon
conversion of the Class A Interest, or any portion thereof, have
been duly and validly reserved for such issuance and, when issued
upon such conversion in accordance with Amendment No. 9, will be
duly and validly issued, fully paid and nonassessable.
(d) The Board has authorized the creation and issuance of the
Class A Interest and the conversion by SMRS of all or a portion of
the Class A Interest to HP Shares, provided that on the Conversion
Date (as defined in Amendment No. 9) the representations contained
in Section 4.6 of this Agreement are true and correct.
(e) The issuance of the Class A Interest by the Partnership
does not, and the issuance of HP Shares by the General Partner upon
conversion of the Class A Interest or any portion thereof will not:
(i) require the approval of any partner of the Partnership or any
stockholder of the General Partner; (ii) result in the violation
or a breach of any provision of the Partnership Agreement of the
Partnership, the Articles of Incorporation or By-laws of the
General Partner or the General Corporation Law of the State of
Maryland; or (iii) require the additional approval of any
stockholder of the General Partner under, or result in the
violation or a breach of any provision of, the rules, regulations
or requirements of the New York Stock Exchange.
(f) The conversion of the Class A Interest pursuant to the
provisions of Amendment No. 9 will not give any stockholder of the
General Partner the right to demand the redemption of, or payment
for, its shares under the General Corporation Law of the State of
Maryland.
3.3 Capital Stock and Units.
(a) The authorized capital stock of the General Partner on the
date hereof consists of 30,000,000 shares of common stock, par
value $0.01 per share, 10,000,000 shares of preferred stock, par
value $0.01 per share, and 10,000,000 shares of excess stock, par
value $.01 per share. As of the date hereof, there are
6,144,399.156 HP Shares issued and outstanding, and no shares of
such preferred stock or excess stock issued and outstanding. All
such issued and outstanding HP Shares are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
The General Partner has no outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities the
holders of which have the right to vote) with the shareholders of
the General Partner on any matter. Other than (i) Units which may
be redeemed by the holders thereof for HP Shares or the
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cash
equivalent thereof (at the option of the General Partner); (ii)
options subject to grant under the General Partner's Stock Option
Plan, there are no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements
or commitments which obligate the General Partner to issue,
transfer or sell any shares of capital stock or other equity
interests of the General Partner or which entitle any Person to
acquire from the General Partner any shares of capital stock or
other equity interest in the General Partner.
(b) As of the date hereof, 7,347,418.156 Units of the
Partnership are validly issued and outstanding, fully paid and
nonassessable, of which 6,144,399.156 Units are owned by the
General Partner and the balance by the Limited Partners. Except
for the Class A Interest, there are no other classes of units, or
any other form of limited partnership interest, of the Partnership
issued or outstanding as of the date hereof and the Partnership has
not issued or granted securities convertible into interests in the
Partnership, and is not a party to any outstanding commitments of
any kind relating to, or any presently effective agreements or
understandings with respect to, interests in the Partnership,
whether issued or unissued.
(c) Upon the execution and delivery of Amendment No. 9 by the
General Partner, the Partnership and SMRS and the issuance and
delivery of the Class A Interest in accordance with the provisions
thereof, SMRS will be duly admitted to the Partnership as a limited
partner.
(d) SMRS has been exempted from the "Ownership Limit" set
forth in Article VII of the Articles of Incorporation with respect
to the Class A Interest and the HP Conversion Shares issuable upon
conversion of the Class A Interests with the result that the
issuance of the Class A Interest to SMRS and the conversion of the
Class A Interest to HP Conversion Shares will not violate the
Ownership Limit.
(e) The General Partner has taken all steps that may be
necessary to irrevocably exempt SMRS and the present or future
affiliates or associates of SMRS or any other person acting in
concert or as a group with any of the foregoing from the business
combination provisions of Section 3-601 et seq. and from the
control share provisions of Section 3-701 et seq. of the Maryland
General Corporation Law or any successor statutory provisions.
(f) Except for interests in the Partnership and the
Subsidiaries, none of the General Partner, the Partnership or the
Subsidiaries owns, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than
investments in short-term investment securities), which would have
a material effect on the business prospects and condition
(financial or otherwise) and operations of the General Partner and
the Partnership.
(g) The outstanding HP Shares have been issued in accordance
with the registration and qualification provisions of the
Securities Laws and relevant state securities laws or pursuant to
valid exemptions thereto.
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(h) Except as set forth in the Company Reports and for the
registration rights of certain limited partners of the Partnership,
who in the aggregate hold 1,124,282 Units, neither the General
Partner nor the Partnership is obligated to register under the
Securities Laws any of its currently outstanding securities or any
of its securities that may subsequently be issued.
(i) As of the Closing Date, the HP Conversion Shares will be
approved for listing on the New York Stock Exchange subject to
official notice of issuance. After the Closing Date, the General
Partner will continue the listing of the HP Conversion Shares
required to be delivered upon conversion of all or any portion of
the Class A Interest, on the New York Stock Exchange or on each
national securities exchange, if any, upon which the outstanding HP
Shares are listed as the time of delivery.
3.4 No Conflicts; No Defaults; Required Filings and Consents.
Except as contemplated hereby, neither the execution and delivery
by the General Partner and the Partnership of this Agreement nor
the consummation by the General Partner and the Partnership of the
transactions contemplated hereby in accordance with the terms
hereof will:
(a) conflict with or result in a breach of any provisions of
the articles of incorporation or by-laws of the General Partner or
the Subsidiaries or the Partnership Agreement;
(b) result in a breach or violation of, a default under, or
the triggering of any payment or other obligations pursuant to, or
accelerate vesting under the Stock Option Plan, or similar
compensation plan, or any grant or award made under the foregoing;
(c) violate or conflict with any statute, regulation,
judgment, order, writ, decree or injunction applicable to the
General Partner, the Partnership or the Subsidiaries;
(d) violate or conflict with or result in a breach of any
provision of, or constitute a default (or any event which, with
notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the Properties of
the General Partner, the Partnership or the Subsidiaries under, or
result in being declared void, voidable or without further binding
effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment
or obligation to which the General Partner, the Partnership or the
Subsidiaries is a party, or by which the General Partner, the
Partnership or the Subsidiaries or any of their Properties is
bound or affected; or
(e) require any consent, approval or authorization of, or
declaration, notice to, filing or registration with, any
Governmental or Regulatory Authority, except for the filing of a
Current Report on Form 8-K with the SEC disclosing this Agreement
and the consummation of the transactions contemplated hereby.
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3.5 SEC and Other Documents.
(a) The General Partner has delivered or made available to
SMRS the Registration Statement and each of the Company Reports.
The Company Reports were filed with the SEC in a timely manner and
constitute all forms, reports and documents required to be filed by
the General Partner under the Securities Laws. As of their
respective dates, the Company Reports (i) complied as to form in
all material respects with the applicable requirements of the
Securities Laws; and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading. There is no unresolved violation asserted by any
Governmental or Regulatory Authority with respect to any of the
Company Reports.
(b) Each of the balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and
schedules) fairly presented the financial position of the entity or
entities to which it relates as of its date and each of the
statements or operations, stockholders' equity (deficit) and cash
flows included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly
presented the results of operations, retained earnings or cash
flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein, in each case in
accordance with GAAP consistently applied during the periods
involved, except as may be noted therein and except, in the case of
any unaudited statements, normal recurring year-end adjustments
which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(c) Except as set forth in the Company Reports or on Schedule
3.5(c), none of the General Partner, the Partnership or the
Subsidiaries has any Liabilities (nor do there exist any
circumstances) that would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
3.6 Litigation; Compliance With Law.
(a) Except as described in Schedule 3.6, there are no legal
actions pending or, to the General Partner's knowledge, threatened
against the General Partner, the Partnership or any Subsidiaries
that would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, or to result in
any material change in the equity ownership of the General Partner,
the Partnership or any Subsidiaries, or which question the validity
of this Agreement, the Registration Rights Agreement, Amendment No.
9 or the Lock-Up Letter or any action taken or to be taken in
connection herewith or therewith.
(b) None of the General Partner, the Partnership or any of
the Subsidiaries is in violation of any statute, rule, regulation,
order, writ, decree or injunction of any Governmental or Regulatory
Authority or any body having jurisdiction over them or any of their
respective Properties which, if enforced, could, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect.
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3.7 Investment Company. The General Partner and the
Partnership are not, and after giving effect to the sale and
issuance of the Class A Interest, will not be, an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended.
3.8 Solicitation; Access to Information. No form of general
solicitation or general advertising was used by the General Partner
or the Partnership or any other person acting on their behalf in
respect of or in connection with the offer and sale of the Class A
Interest.
3.9 Absence of Certain Changes or Events. Except as
disclosed in the Company Reports filed with the SEC prior to the
date hereof or in Schedule 3.9, since September 30, 1996, the
General Partner, the Partnership and each of the Subsidiaries has
conducted its business only in the ordinary course of such business
and has not acquired any real estate or entered into any financing
arrangements in connection therewith, and there has not been (a)
any change, circumstance or event that would reasonably be expected
to result in a Material Adverse Effect, (b) any declaration,
setting aside or payment of any dividend or other distribution with
respect to HP Shares or the Units; (c) any commitment, contractual
obligation, borrowing, capital expenditure or transaction entered
into by the General Partner, the Partnership or any of the
Subsidiaries, other than commitments which would not, individually
or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, or (d) any change in the General Partner's
accounting principles, practices or methods which would,
individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
3.10 Tax Matters; REIT and Partnership Status.
(a) The General Partner, the Partnership and each of the
Subsidiaries has timely filed with the appropriate taxing authority
all tax returns required to be filed by it or has timely requested
extensions and any such request has been granted and has not
expired. Each such tax return is true, complete and correct in all
respects. The General Partner, the Partnership and each of the
Subsidiaries have paid within the time and manner prescribed by
law, all taxes that are due and payable. The General Partner, the
Partnership and each of the Subsidiaries have properly accrued all
taxes for such periods subsequent to the periods covered by such
tax returns as required by GAAP. None of the General Partner, the
Partnership or any of the Subsidiaries has executed or filed with
the Internal Revenue Service or any other taxing authority any
agreement now in effect extending the period for assessment or
collection of any tax. None of the General Partner, the
Partnership nor any of the Subsidiaries is a party to any pending
action or proceeding by any taxing authority for assessment or
collection of any tax and no claim for assessment or collection of
any tax has been asserted against any of them and no basis exists
for any such claim or assessment. No claim has been made by any
Governmental or Regulatory Authority in any jurisdiction where the
General Partner, the Partnership or any of the Subsidiaries do not
file Tax Returns that they are or may be subject to taxation by
that jurisdiction. To the General Partner's knowledge, as of the
date hereof: (i) the General Partner is a "domestically-controlled
REIT" within the meaning of Code Section 897(h)(4)(B); and (ii)
the General Partner is not a "pension held REIT" within the meaning
of Code Section 856 (h)(3).
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(b) The General Partner: (i) was eligible and has elected in
its federal income tax return for its taxable year ended December
31, 1994 to be taxed as a REIT and such election has and will
continue to remain in effect for each of the General Partner's
subsequent taxable years and has complied (or will comply) with
all applicable provisions of the Code relating to a REIT, for each
of its taxable years; (ii) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for each of its
taxable years; (iii) has not taken or omitted to take any action
which would reasonably be expected to result in a challenge to its
status as a REIT, and, to the General Partner's knowledge, no such
challenge is pending or threatened; and (iv) assuming the accuracy
of SMRS' representation in Section 4.6, will not be rendered unable
to qualify as a REIT for federal income tax purposes as a
consequence of the transactions contemplated hereby.
(c) The Partnership has been at all times operating and
intends to continue to operate in such a manner as to be
classified as a partnership for federal income tax purposes and not
an association taxable as a corporation or a publicly traded
partnership.
3.11 Agreements, Etc.
(a) Neither the General Partner, the Partnership nor the
Subsidiaries are in default under or in violation of any provision
of the articles of incorporation or by-laws of the General Partner
or the Subsidiaries or the Partnership Agreement (or equivalent
documents) or any agreement filed as an exhibit to the Company
Reports except where such default or violation would not result in
a Material Adverse Effect.
(b) All material agreements, as of the date hereof, entered
into by the General Partner, the Partnership or the Subsidiaries,
except for agreements entered into in the ordinary course of
business, relating to any indebtedness of the General Partner, the
development or construction of, additions or expansions to, or
management or leasing services for real properties which are
currently in effect and under which the General Partner, the
Partnership or the Subsidiaries currently have, or expect to incur,
any material obligation and which are required to be described in
the Company Reports, are described in the Company Reports or in
Schedules 3.5(c) and 3.11. No payments, if any thereunder, are
delinquent and no notice of such delinquency thereunder has been
received by the General Partner, except where such default or
violation would not result in a Material Adverse Effect. True and
complete copies of such agreements with all amendments and
supplements thereto have been made available to SMRS.
3.12 Financial Records; Company Charter and By-laws.
(a) The books of account and other financial records of the
General Partner, the Partnership and each of the Subsidiaries are
in all respects true and complete, have been maintained in
accordance with good business practices, and are accurately
reflected in all material respects, as required by GAAP, in the
financial statements included in the Company Reports.. Except as
set forth in the notes thereto, all such financial statements were
prepared in accordance with GAAP and fairly present the
consolidated financial
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results of operation of the General Partner
and its consolidated subsidiaries as of the respective dates
thereof and for respective periods covered thereby. Except as
described in the Company Reports, the financial conditions of each
of the Subsidiaries and the Partnership are consolidated with those
of the General Partner.
(b) The General Partner has previously delivered or made
available to SMRS true and complete copies of the Articles of
Incorporation and the By-laws of the General Partner and each of
the Subsidiaries, each as amended to date, and the Partnership
Agreement, and all amendments thereto.
(c) The minute books and other records of corporate or
partnership proceedings of the General Partner, the Partnership and
each of the Subsidiaries will be made available to SMRS and contain
in all material respects accurate records of all meetings and
accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the
Board of the General Partner and the Subsidiaries and all actions
of the partners of the Partnership.
3.13 Affiliate Transactions. The Company Reports set forth an
accurate description of all transactions with Affiliates, which are
required to be included therein. A true and complete copy of all
agreements or contracts relating to any such transaction has been
made available to SMRS. Except as set forth in the Company
Reports, all such transactions were conducted on terms that are
substantially the same as those that would have applied in an arm's
length transaction.
3.14 Insurance. The General Partner and the Partnership
maintain insurance policies covering the assets, business,
equipment, Properties, operations, employees, officers and
directors of the General Partner, the Partnership and each of the
Subsidiaries which are of a type and in amounts customarily carried
by persons conducting businesses similar to those of the General
Partner and the Partnership, but in any event in an amount not less
than the replacement cost of the Properties insured. There is no
material claim by the General Partner, the Partnership or any of
the Subsidiaries pending under any of the material insurance
policies as to which coverage has been questioned, denied or
disputed by the underwriters or such policies.
3.15 Brokers or Finders. No agent, broker, investment banker
or other firm or person, is or will be entitled to any broker's or
finder's fee or any other commission or similar fee from the
General Partner or the Partnership in connection with this
Agreement or any of the transactions contemplated hereby for which
SMRS will be responsible.
3.16. Properties.
(a) The General Partner, the Partnership and the Subsidiaries
have the requisite power, right and authority to conduct their
respective businesses as now conducted, or as proposed to be
conducted by them, and to own and operate the Properties consistent
with past practice and in compliance with applicable law and to
enjoy uninterrupted ownership, operation and maintenance of the
Properties, except where any such failure could not,
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individually,
or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(b) Except as described in the Company Reports, each of the
General Partner, the Partnership and the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses
and risks in such amounts as are prudent and customary in the
General Partner's business, and none of the General Partner, the
Partnership or the Subsidiaries has any reason to believe that it
will be unable to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business, at a cost
that could not reasonably be expected to result in a Material
Adverse Effect.
(c) Each of the General Partner, the Partnership and the
Subsidiaries possesses such certificates, authorizations or permits
issued by the appropriate regulatory agencies or bodies necessary
to conduct the business now conducted by it, or proposed to be
conducted by it, and none of the General Partner, the Partnership
or the Subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such certificate,
authority or permit which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could
reasonably be expected to result in a Material Adverse Effect.
3.17 Environmental Matters.
(a) Except as discussed in the environmental reports set
forth on Schedule 3.17 or in the Company Reports, (A) to the
knowledge of the General Partner, the Environment (as defined
below) at each of the Properties is free of any Hazardous Substance
(as defined below) except for any Hazardous Substance that could
not reasonably be expected to have a Material Adverse Effect; (B)
neither the General Partner, the Partnership nor the Subsidiaries
and, to the knowledge of the General Partner, no prior owner of any
Property has caused or suffered to occur any Release (as defined
below) of any Hazardous Substance into the Environment on, in,
under or from any Property in violation of any Environmental Law
(as defined below) applicable to such Property in an amount that
would reasonably be expected to have a Material Adverse Effect and
no condition exists on, in or under any Property or, to the
knowledge of the General Partner, any property adjacent to any
Property that could reasonably be expected to result in the
occurrence of material liabilities under, or any material
violations of, any Environmental Law applicable to such Property,
give rise to the imposition of any material Lien under any
Environmental Law, or cause or constitute a material environmental
hazard to any property, person or entity, except where such
condition or violation could not result in a Material Adverse
Effect; (C) neither the General Partner, the Partnership nor the
Subsidiaries is engaged in or intends to engage in any
manufacturing or any other similar operations at any Property and,
to the knowledge of the General Partner, no prior owner of any
Property engaged in any manufacturing or any similar operations at
any Property that (i) require the use, handling, transportation,
storage, treatment or disposal of any Hazardous Substance (other
than paints, stains, cleaning solvents, insecticides, herbicides,
or other substances that are used in the ordinary course of
operating any Property and in compliance with all applicable
Environmental Laws) or (ii) require permits
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or are otherwise
regulated pursuant to any Environmental Law; (D) neither the
General Partner, the Partnership nor the Subsidiaries and, to the
knowledge of the General Partner, no prior owner of any Property
has received any notice of a claim under or pursuant to any
Environmental Law applicable to a Property or under common law
pertaining to property at which Hazardous Substances generated at
any Property have come to be located; (E) neither the General
Partner, the Partnership nor the Subsidiaries and, to the best
knowledge of the General Partner, no prior owner of any Property
has received any notice from any Governmental or Regulatory
Authority claiming any violation of any Environmental Law that is
uncured or unremediated as of the date hereof; and (F) no Property
(i) is included or proposed for inclusion on the National
Priorities List issued pursuant to CERCLA (as defined below) by the
United States Environmental Protection Agency (the "EPA") or on the
Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA as a potential
CERCLA removal, remedial or response site or (ii) is included or
proposed for inclusion on, any similar list of potentially
contaminated sites pursuant to any other applicable Environmental
Law nor have the General Partner, the Partnership or the
Subsidiaries received any written notice from the EPA or any other
Governmental or Regulatory Authority proposing the inclusion of any
Property on such list.
(b) As used herein, "Hazardous Substance" shall include any
hazardous substance, hazardous waste, toxic or dangerous substance,
pollutant, asbestos-containing materials, PCBs, pesticides,
explosives, radioactive materials, dioxins, urea formaldehyde
insulation, pollutant or waste, including any such substance,
pollutant or waste identified, listed or regulated under any
Environmental Law (including, without limitation, materials listed
in the United States Department of Transportation Optional
Hazardous Material Table, 49 C.F.R. Section 172.101, as the same
may now or hereafter be amended, or in the EPA's list of Hazardous
Substances and Reportable Quantities, 40 C.F.R. Part 2302, as the
same may now or hereafter be amended); "Environment" shall mean any
surface water, drinking water, ground water, land surface,
subsurface strata, river sediment, buildings and structures;
"Environmental Law" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C.
Section 9601, et seq.) ("CERCLA"), the Resource Conservation
Recovery Act, as amended (42 U.S.C. Section 6901, et seq.), the
Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.), the
Clean Water Act, as amended (33 U.S.C. Section 1251, et seq.), the
Toxic Substances Control Act, as amended (15 U.S.C. Section 2601,
et seq.), the Toxic Substances Control Act, as amended (29 U.S.C.
Section 651, et seq.), the Hazardous Materials Transportation Act,
as amended (49 U.S.C. Section 1801, et seq.), together with all
rules, regulations and orders promulgated hereunder and all other
federal, state and local laws, ordinances, rules, regulations and
orders relating to the protection of the environment from
environmental effects; and "Release" shall mean any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, emanating or disposing of
any Hazardous Substance into the Environment, including, without
limitation, the abandonment or discard of barrels, containers,
tanks (including, without limitation, underground storage tanks) or
other receptacles containing or previously containing any Hazardous
Substance or any release, emission, discharge or similar term, as
those terms are defined or used in any Environmental Law.
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3.18 Employee Benefit Plans. The plans listed in Schedule
3.18 hereto are the only employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), and plans, programs, policies,
practices, arrangements or contracts (whether group or individual)
providing for payments, benefits or reimbursements to employees,
former employees and independent contractors, or their
beneficiaries and dependents, under which such employees, former
employees or independent contractors, or their beneficiaries or
dependents, are covered due to an employment or other contractual
relationship with the General Partner, the Partnership, the
Subsidiaries or any entity required to be aggregated in a
controlled group or affiliated service group with the General
Partner for purposes of ERISA or the Code, including without
limitation, under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA, at any relevant time ("Benefit Plans").
With respect to each Benefit Plan, to the extent applicable:
(i) Such Benefit Plan has been maintained and operated in
material compliance with its terms and with the applicable
provisions of ERISA, the Code and all other applicable governmental
laws and regulations; each such Benefit Plan intended to qualify
under Section 401(a) of the Code is the subject of a favorable
unrevoked determination letter issued by the IRS as to its tax-
qualified status under the Code;
(ii) There is no material suit, action, dispute, claim,
arbitration or legal, administrative or other proceeding or
governmental investigation pending, or threatened, alleging any
breach of the terms of any such Benefit Plan or of any fiduciary
duties thereunder or violation of any applicable statute, law, rule
or regulation with respect to any Benefit Plan;
(iii) No Benefit Plan is or has ever been subject to Title
IV of ERISA or Section 412 of the Code; and
(iv) None of the General Partner, the Partnership or any
Subsidiary, or any "party in interest" (as defined in Section 3(14)
of ERISA) or any "disqualified person" (as defined in Section 4975
of the Code) with respect to any such Benefit Plan, has engaged in
a non-exempt "prohibited transaction" within the meaning of Section
4975 of the Code or Section 406 of ERISA.
SMRS nor any plan maintained by SMRS or any of its Affiliates shall
be subject to any tax, fine, penalty or other liability of any kind
whatsoever, that would not have been incurred by SMRS or any of its
Affiliates but for the transactions contemplated hereby.
3.19 Knowledge Defined. As used herein, the phrase "to the
General Partner's knowledge" (or words of similar import) means the
actual knowledge of the executive officers of the General Partner
and includes any facts, matters or circumstances set forth in any
written notice from any government authority or any other material
written notice received by the General Partner, the Partnership or
any of the Subsidiaries and also includes any matter of which SMRS
informs the General Partner in writing.
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4. Representations and Warranties of SMRS. SMRS hereby
represents and warrants to the General Partner and the Partnership
as follows:
4.1 Organization. SMRS is a government sponsored retirement
system, duly created, validly existing and in good standing under
the laws of the State of Michigan. SMRS has all requisite power
and authority to enter into this Agreement, Amendment No. 9, the
Registration Rights Agreement and the Lock-Up Letter and to perform
its obligations hereunder and thereunder.
4.2 Due Authorization. The execution, delivery and
performance of this Agreement, Amendment No. 9, the Registration
Rights Agreement, and the Lock-Up Letter have been duly and validly
authorized by all necessary action on the part of SMRS. This
Agreement, Amendment No. 9, the Registration Rights Agreement and
the Lock-Up Letter have been duly executed and delivered by and
constitute the valid and legally binding obligations of SMRS,
enforceable against SMRS in accordance with their terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights or general principles of equity.
4.3 Conflicting Agreements and Other Matters. Neither the
execution and delivery of this Agreement, Amendment No. 9, the
Registration Rights Agreement, and the Lock-Up Letter nor the
performance by SMRS of its obligations herein or thereunder will
conflict with, result in a breach of the terms, conditions or
provisions of, constitute a default under, result in the creation
of any mortgage, security interest, encumbrance, lien or charge of
any kind upon any of the properties or assets of SMRS, pursuant to,
or require any consent, approval or other action by or any notice
to or filing with any government authority other than those
consents or approvals that have already been obtained or actions
that have already been taken as of the date hereof.
4.4 Acquisition for Investment; Sophistication. SMRS is
acquiring the Class A Interest for its own account for the purpose
of investment and not with a view to or for sale in connection with
any distribution thereof, and SMRS has no present intention or
plan to effect any distribution of the Class A Interest; provided,
however, that the disposition of the Class A Interest and the HP
Shares to which the Class A Interest can be converted shall at all
times be and remain within its control, subject to the provisions
of this Agreement, the Partnership Agreement, the Registration
Rights Agreement and the Lock-Up Letter. SMRS is able to bear the
economic risk of the acquisition of the Class A Interest pursuant
hereto and can afford to sustain a total loss on such investment,
and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
the proposed investment, and therefore has the capacity to protect
its own interests in connection with the acquisition of the Class A
Interest pursuant hereto.
4.5 Brokers or Finders. No agent, broker, investment banker
or other firm or person, is or will be entitled to any broker's or
finder's fee or any other commission or similar fee from SMRS in
connection with this Agreement or any of the transactions
contemplated hereby for which the General Partner or the
Partnership will be responsible.
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4.6 REIT Qualification Matters. SMRS is a "qualified trust"
described in Section 401(a) of the Code and exempt from tax under
Section 501(a) of the Code. Under Section 856(h) of the Code, SMRS
will not be treated as an "individual" for purposes of Section
542(a)(2) of the Code (as modified by Section 856(h) of the Code)
and no "individual" owns or would be considered to own (taking into
account the ownership attribution rules under Section 544 of the
Code, as modified by Section 856(h) of the Code) in excess of 5.0%
of the value of the outstanding equity interests in SMRS.
4.7 Tax Matters. SMRS acknowledges that none of the General
Partner, the Partnership nor its officers, directors, employees or
agents have provided advice to SMRS regarding the tax consequences
of its investment in the Class A Interest or HP Shares and SMRS has
consulted with its tax advisors regarding such consequences.
5. Certain Additional Covenants.
5.1 Resale. SMRS acknowledges and agrees that the Class A
Interest that SMRS will acquire will not be registered under the
Securities Act or the securities laws of any state and that it may
be sold or otherwise disposed of only in one or more transactions
registered under the Securities Act and, where applicable, such
state securities laws or as to which an exemption from the
registration requirements of the Securities Act and, where
applicable, such state securities laws is available.
5.2 Investment of Additional Funds. For a period of one
hundred twenty (120) Business Days following the Closing Date, the
Partnership shall have the right to request that SMRS acquire an
additional interest in the Partnership for an additional investment
of no more than $35,000,000. The purchase of such an additional
interest would be on substantially the same terms and conditions as
the terms and conditions hereunder, with the additional interest to
be so acquired having substantially the same rights and privileges
as the Class A Interest. In the event that the Partnership
determines that it wishes to exercise the above right, the
Partnership shall provide written notice of that determination to
SMRS. Within ten (10) Business Days after receipt of that notice,
SMRS shall notify the Partnership as to whether it wishes to make
the additional investment, which determination shall be in the sole
discretion of SMRS. If SMRS elects to make the additional
investment, the consummation of that transaction shall take place
within thirty (30) Business Days after SMRS has notified the
Partnership of its election.
5.3 Conversion. The Partnership and the General Partner
hereby covenant and agree that they shall take, or refrain from
taking, as the case may be, any and all actions reasonably
necessary or appropriate to allow the Class A Interest Holders to
convert all or a portion of the Class A Interest to HP Shares as
described in Amendment No. 9.
5.4 Taking of Necessary Action. Each party hereto agrees to
use their best-efforts promptly to take or cause to be taken all
action and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, the Registration Rights Agreement, Amendment No. 9 and
the Lock-Up Letter, subject to the terms and conditions hereof and
thereof.
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5.5 Public Announcements; Confidentiality.
(a) Subject to each party's disclosure obligations imposed by
law and any stock exchange or similar rules and the confidentiality
provisions contained in Section 5.5(b), the General Partner, the
Partnership and SMRS will cooperate with each other in the
development and distribution of all news releases and other public
information disclosures with respect to this Agreement, the
Registration Rights Agreement, Amendment No. 9, the Lock-Up Letter
and any of the transactions contemplated hereby or thereby.
(b) The General Partner and the Partnership agree that all
information provided to them or any of their representatives
pursuant to this Agreement shall be kept confidential, and the
General Partner and the Partnership shall not disclose such
information to any persons other than the directors, officers,
employees, financial advisors, legal advisors, accountants,
consultants and affiliates of the General Partner or the
Partnership, as the case may be, who reasonably need to have access
to the confidential information and who are advised of the
confidential nature of such information; provided, however, the
foregoing obligation of the General Partner and the Partnership
shall not: (i) relate to any information that: (1) is or becomes
generally available other than as a result of unauthorized
disclosure by the General Partner and the Partnership or by persons
to whom they have made such information available; or (2) is or
becomes available to the General Partner and the Partnership on a
nonconfidential basis from a third party that is not, to the
knowledge of the General Partner and the Partnership, bound by any
other confidentiality agreement with SMRS; or (ii) prohibit
disclosure of any information if required or requested by law,
rule, regulation, court order or other legal or governmental
process.
(c) SMRS covenants and agrees that all information provided
to them and their representatives pursuant to this Agreement shall
be kept confidential and that SMRS shall not disclose such
information to any persons other than its directors, officers,
employees, financial advisors, legal advisors, accountants,
consultants and affiliates, as the case may be, who reasonably need
to have access to the confidential information and who are advised
of the confidential nature of such information; provided, however,
the foregoing obligation of SMRS shall not: (i) relate to any
information that: (1) is or becomes generally available other than
as a result of unauthorized disclosure by SMRS or by persons to
whom they have made such information available; or (2) is or
becomes available to SMRS on a nonconfidential basis from a third
party that is not, to the knowledge of SMRS, bound by any other
confidentiality agreement with the General Partner and the
Partnership; or (ii) prohibit disclosure of any information if
required or requested by law, rule, regulation, court order or
other legal or governmental process.
5.6 Information and Access. Prior to the Rights Termination
Date, the General Partner, the Partnership and each of the
Subsidiaries shall afford to SMRS and its accountants, counsel and
other representatives full and reasonable access during normal
business hours (and at such other times as the parties may mutually
agree) to its Properties, books, contracts, commitments, records
and personnel and, during such period, shall furnish promptly to
SMRS (i) a copy of each report, schedule, and other
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document filed
or received by it pursuant to the requirements of the Securities
Laws; and (ii) all other information concerning its business,
personnel and properties as SMRS may reasonably request. SMRS and
its accountants, counsel and other representatives shall, in the
exercise of the rights described in this Section, not unduly
interfere with the operation of the business of the General
Partner, the Partnership or the Subsidiaries.
5.7 Revocation of Exemption. The Board has approved the
exemption of SMRS from the Ownership Limit, as defined in the
Articles of Incorporation, with respect to the Class A Interest and
the HP Shares into which the Class A Interest can be converted. In
the event that the exemption is revoked for any reason, other than
the fact that a re-structuring or re-organization of SMRS causes it
to cease to be entitled to "look-through" treatment pursuant to
Section 856(h)(3) of the Code ("SMRS Change"), then, at the request
of SMRS, the General Partner shall purchase all of the HP
Conversion Shares or Class A Interest then held by SMRS that shall
have become Excess Stock, as defined in the Articles of
Incorporation (the "Exemption Right"). Such request by SMRS shall
be made within twenty (20) Business Days of the receipt of written
notice by SMRS from the General Partner that the exemption
described above has been revoked. The purchase price (the
"Exemption Purchase Price") for the HP Conversion Shares or Class A
Interest, as the case may be, to be so purchased pursuant to this
Section 5.7 shall be 110% of the greater of: (i) the Value of the
HP Conversion Shares or the Class A Interest, as the case may be,
as of the date of purchase; and (ii) the Original Investment,
including any Accrued Return, times the percentage of the Class A
Interest originally issued hereby still held by SMRS (with all HP
Conversion Shares held by SMRS being treated for the purposes of
this calculation as if they had not been converted), with the
result multiplied by the percentage of the Class A Interest
originally issued hereby or HP Conversion Shares, as the case may
be, still held by SMRS that have become Excess Stock. Payment of
the Exemption Purchase Price shall be made in cash within twenty
(20) Business Days after receipt by the General Partner of notice
from SMRS that SMRS is requiring the General Partner to purchase
the HP Conversion Shares or the Class A Interest, as the case may
be, that have become Excess Stock. In the event that the exemption
is revoked as a result of a SMRS Change, then SMRS shall still have
the Exemption Right, but the Exemption Purchase Price shall be 100%
of the greater of: (i) Value of the HP Conversion Shares or the
Class A Interest, as the case may be, as of the date of purchase;
and (ii) the Original Investment, including any Accrued Return,
times the percentage of the Class A Interest originally issued
hereby and HP Conversion Shares still held by SMRS (with all HP
Conversion Shares held by SMRS being treated for purposes of this
calculation as if they had not been converted), with the result
multiplied by the percentage of the Class A Interest originally
issued hereby or HP Conversion Shares, as the case may be, still
held by SMRS that have become Excess Stock.
5.8 New York Stock Exchange Listing. On or prior to the
Closing Date, the General Partner will cause the HP Conversion
Shares to be approved for listing on the New York Stock Exchange
subject to official notice of issuance. After the Closing Date,
the General Partner will cause to be continued the listing on the
New York Stock Exchange or on each national securities exchange, if
any, upon which the outstanding HP Shares are listed at the time of
delivery of the HP Conversion Shares required to be delivered upon
conversion of all or any portion of the Class A Interest.
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6. Board of Directors
6.1 Investor Nominees.
(a) (i) The Rights Holders, as a group, shall have the
right to nominate and to have appointed to the Board by the
existing directors of the General Partner one Investor Nominee
prior to the Closing Date to serve until the next following annual
meeting of shareholders. The initial Investor Nominee selected by
SMRS, as the current sole Rights Holder, is Alan L. Gosule.
(ii) The Rights Holders, as a group, shall have the right,
as specified below, to have additional directors (each referred to
also as an "Investor Nominee"):
(A) In the event of an Approval Breach, and in
addition to any other rights or remedies available to the Rights
Holders at law or in equity, the number of directors that the
Rights Holders shall have the right to nominate and to have
appointed to the Board shall be increased to two (2) directors to
be appointed by the other directors of the General Partner as soon
after the Approval Breach as practicable to serve until the next
following annual or special meeting of shareholders.
(B) In the event of a Preferred Return Breach, and
in addition to any other rights or remedies available to the Rights
Holders in law or at equity, the number of directors that the
Rights Holders shall have the right to nominate and to have
appointed to the Board shall be increased as follows, with such
additional Investor Nominees to be appointed by the other directors
of the General Partner as soon after the Preferred Return Breach as
practicable to serve until the next following annual or special
meeting of the shareholders:
(1) Initial Preferred Return Breach: Investor Nominees
increase to 2
(2) Preferred Return Breach that
extends for 4 consecutive quarters: Investor Nominees
increase to 3
(3) Preferred Return Breach that
extends for 6 consecutive quarters: I Investor
Nominees increase to 4
(b) To effectuate the placement of each Investor Nominee on
the Board, the General Partner shall: (i) expand the size of the
Board so that there are at least as many Board seats as there are
current Board members plus the number of permitted Investor
Nominees; and (ii) cause each permitted Investor Nominee to become
a member of the Board through any required action of the then
current Board. After the expiration of the initial term of an
Investor Nominee, at each successive annual or special meeting of
the shareholders of the General Partner at which directors are to
be elected by shareholders, the Rights Holders, as a group, shall
have the right to nominate for election to the Board the applicable
number of Investor Nominees which they are entitled to nominate, as
provided in paragraph (a) above and the General Partner will take
action, or refrain from
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taking action, as the case may be, with
respect to such nominees as provided in Section 6.1(e). The
General Partner agrees that it will not cause to be nominated for
election to the Board more than that number of individuals as shall
equal the size of the Board less the number of permitted Investor
Nominee(s). Notwithstanding anything to the contrary contained
herein, the Rights Holders' rights with respect to Investor
Nominee(s) shall be terminated on and after the Rights Termination
Date.
To the extent that an Investor Nominee that has been elected by the
shareholders is currently serving on the Board upon the occurrence
of the Rights Termination Date, such Investor Nominee may continue
to serve as a director until the end of his or her then current
term.
(c) Each Investor Nominee shall be paid the same compensation
and reimbursements for serving as a director as that paid to other
non-employee directors and shall be indemnified by the General
Partner to the same extent as the other non-employee directors.
(d) The Rights Holders will not name any person as an
Investor Nominee if: (i) such person is not reasonably experienced
in business, financial or real estate matters; (ii) such person has
been convicted of, or has pled nolo contendere to, a felony; (iii)
the election of such person would violate any law; or (iv) any
event required to be disclosed pursuant to Item 401(f) of
Regulation S-K of the 1934 Act has occurred with respect to such
person.
(e) The General Partner will support the nomination of and
the election of each Investor Nominee to the Board, and the General
Partner will exercise all authority under applicable law to cause
each Investor Nominee to be elected to the Board. Without limiting
the generality of the foregoing, with respect to each meeting of
shareholders of the General Partner at which directors are to be
elected, the General Partner shall use its reasonable efforts to
solicit from, and shall refrain from taking any action which may
hinder the solicitation of, the shareholders of the General Partner
eligible to vote in the election of directors proxies in favor of
each Investor Nominee. In addition, the General Partner will take
such further action as may be reasonably requested by the Investor
Group Representative to insure that each Investor Nominee is added
to the Board, provided that such action shall not be prohibited by
Maryland corporate law, federal securities laws or the rules and
regulations promulgated by the New York Stock Exchange. Further,
subject to the requirements of Maryland corporate law, federal
securities laws and the rules and regulations of the New York Stock
Exchange, the General Partner will refrain from taking any action
with respect to, and will make all reasonable efforts to prevent,
the removal of any Investor Nominee serving on the Board. In the
event that an Investor Nominee is not elected to the Board by the
shareholders or is removed from the Board, the Rights Holders shall
have the right to appoint a representative to attend all Board and
committee meetings. In such event, the appointed representative
shall be notified and invited to attend each Board and committee
meeting and shall have access to the minutes of each Board and
committee meeting and to any materials distributed at those
meetings. Unless otherwise notified in writing by the Investor
Group Representative, the General Partner
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shall deem the most
recent Investor Nominee to be the representative so appointed by
the Rights Holders.
6.2 Committee Representation. During such time as the Rights
Holders are entitled pursuant to Section 6.1(a) to have at least
one Investor Nominee on the Board, at least one director who is an
Investor Nominee shall serve on each Key Committee.
Notwithstanding the foregoing, if none of the directors who are
Investor Nominees would be considered "independent" of the General
Partner or "disinterested" (i) for purposes of any applicable rule
of the New York Stock Exchange or any other securities exchange or
other self-regulating organization (such as the National
Association of Securities Dealers) requiring that members of the
Audit Committee of the Board be independent of the General Partner;
(ii) for purposes of any law or regulation that requires, in order
to obtain or maintain favorable tax, securities, corporate law or
other material legal benefits with respect to any plan or
arrangement for employee compensation or benefits, that the members
of the committee of the Board charged with responsibility for such
plan or committee formed in connection with any transaction or
potential transaction involving the General Partner and any of the
Rights Holders or any group of which any of the Rights Holders is a
member or such other transaction or potential transaction which
would involve an actual or potential conflict of interest on the
part of the director who is an Investor Nominee, then the director
who is the Investor Nominee shall not be required to be appointed
to any such committee. The committees of the Board shall be
organized such that, to the extent practicable, the items to be
considered by a Key Committee on which no director who is an
Investor Nominee may serve (for the reasons described in the
preceding sentence) shall be limited to those specific items which
provide the basis for preventing the director who is an Investor
Nominee from serving on such Key Committee. With respect to the
committees on which no Investor Nominee may serve as described
above in this Section 6.2, an Investor Nominee shall be notified
and invited to attend each committee meeting and shall have access
to the minutes of each committee meeting and to any materials
distributed at those meetings.
6.3 Vacancies. In the event that an Investor Nominee
shall cease to serve as a director for any reason other than the
fact that Rights Holders no longer have a right to nominate a
director, as provided in Section 6.1(a), the vacancy resulting
thereby shall be filled by an Investor Nominee designated by the
Rights Holders, as a group; provided, however, that any Investor
Nominee so designated shall satisfy the qualification requirements
set forth in Section 6.1(d). Such replacement Investor Nominee
shall serve until the next following annual meeting of
shareholders. The General Partner will add the replacement
Investor Nominee initially in accordance with the procedures
specified in Section 6.1(b). After the expiration of the initial
term, the General Partner will support the nomination of and the
election of each replacement Investor Nominee to the Board, and the
General Partner will exercise all authority under applicable law to
cause each replacement Investor Nominee to be elected to the Board.
Without limiting the generality of the foregoing, with respect to
each meeting of shareholders of the General Partner at which
directors are to be elected, the General Partner shall use its
reasonable efforts to solicit from, and shall refrain from taking
any action which may hinder the solicitation of, the shareholders
of the General Partner eligible to vote in the election of
directors proxies in favor of each Investor Nominee. In addition,
the General Partner will take such further
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action as may be
reasonably requested by the Investor Group Representative to insure
that each replacement Investor Nominee is added to the Board,
provided that such action shall not be prohibited by Maryland
corporate law, federal securities laws or the rules and regulations
promulgated by the New York Stock Exchange. Further, subject to the
requirements of Maryland corporate law, federal securities laws and
the rules and regulations of the New York Stock Exchange, the
General Partner will take no action with respect to and will make
all reasonable efforts to prevent, the removal of any such
replacement Investor Nominee serving on the Board.
6.4 Rights Approval.
(a) Prior to the Rights Termination Date, the General Partner
agrees that it will not take any of the following actions without
the approval of the majority of the directors:
(i) authorize the issuance of any additional HP Shares,
other than as already provided for with respect to the General
Partner's Stock Option Plan and the General Partner's Dividend
Reinvestment, Stock Purchase, Resident Stock Purchase and
Employee Stock Purchase Plan;
(ii) appoint any new officers of the General Partner or
remove any existing officers; and
(iii) approve the payment of any dividends or
distributions to its shareholders.
(b) Prior to the Rights Termination Date, the General Partner
agrees that it will not take any of the following actions without
obtaining the prior written consent of the Rights Holders, as a
group:
(i) create a new class of stock or re-classify any of
its stock if such creation or re-classification would
adversely affect the rights or benefits of the Class A
Interest Holders;
(ii) amend the General Partner's Articles of
Incorporation or By-laws if such amendment would adversely
affect the rights or benefits of, or impose any obligations
on, the Class A Interest Holders;
(iii) on its own behalf, commence a voluntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law;
and
(iv) reduce the Ownership Limit, as described in Section
7.2.1 of its Articles of Amendment and Restatement of its
Articles of Incorporation to below 8%.
(c) The General Partner shall provide the Investor Group
Representative with a written request for the approval of any
matter described in paragraph (b) of this Section 6.4. Such
written notice shall include a reasonable description of the matter
for which
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approval is sought and shall be made in accordance with
the provisions of Section 8.7. If the Investor Group
Representative does not respond within fifteen (15) Business Days
after the date of receipt of such a written request , the Rights
Holders shall be deemed to have approved the matter as to which
their approval was sought.
(d) With respect to their rights pertaining to Investor
Nominees, as described in Section 6.1 of this Agreement and their
approval rights pursuant to paragraph (b) of Section 6.4, the
Rights Holders shall only be permitted to act as a group. In the
event that there is more than one Rights Holder, the Rights Holders
shall select one Person to act as their Investor Group
Representative and shall so notify the General Partner. SMRS shall
be the initial Investor Group Representative. Upon failure of the
Rights Holders to select an Investor Group Representative, the
largest single holder of Class A Interests shall be designated by
the General Partner as the Investor Group Representative. The
General Partner and the Partnership shall be entitled and obligated
to rely on any and all notifications and directions given to it by
the Investor Group Representative and shall have no obligation to
verify that such notifications and directions constitute the
consensus of the Rights Holders. In addition, upon receipt of
notice from any or all other Rights Holders that such notifications
and directions do not constitute the consensus of the Rights
Holders, the General Partner and the Partnership shall still be
obligated to follow the directions of the Investor Group
Representative.
7. Purchase Rights.
7.1 Private Offering. From and after the date hereof, to and
including the earlier to occur of: (i) the Rights Termination
Date; and (ii) the last day of the 9.0% Preferred Return Period (as
defined in Amendment No. 9), the Class A Interest Holders shall
have the right to purchase securities on the same terms as those
sold by the General Partner or the Partnership in Private
Offerings. Notwithstanding the above, the Class A Interest
Holders' right to purchase securities shall not apply to offerings
of Partnership Interests by the Partnership as consideration for
the purchase of property or real estate operating businesses by the
Partnership. In the event that the General Partner or the
Partnership conducts any Private Offering, it shall inform each of
the Class A Interest Holders in writing of the material terms of
the Private Offering, including but not limited to the anticipated
or actual number of securities, the anticipated or actual price for
the securities and any rights and powers associated with the
securities. The purchase price to be paid by the Class A Interest
Holders for any securities to be purchased in any Private Offering
pursuant to this Section 7.1 shall be the same price as is paid by
the other participants in that Private Offerings provided that the
purchase price to be paid by the Class A Interest Holders shall not
include payment of any underwriting or brokers' mark-up,
commission, or any other fees. Each Class A Interest Holder shall
have ten (10) Business Days after the receipt of the above written
notice to provide written notice to the General Partner or the
Partnership, as applicable, as to whether such Class A Interest
Holder wishes to purchase securities on the same terms as the
Private Offering. If a Class A Interest Holder does wish to
purchase securities on the same terms as the Private Offering, it
shall indicate the number of securities that it wishes to purchase
and it shall purchase that number of those securities on the later
of: (i) the closing date of the Private Offering; and (ii) ten
(10) Business Days following the receipt by the Interest Holder of
the written notice of the
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Private Offering. Each Class A Interest
Holder shall have the right to purchase no more than that amount of
securities as shall be necessary for that Interest Holder to
maintain the same Equity Ownership as it had prior to the
completion of the Private Offering. Failure of any Class A
Interest Holder to respond within ten (10) Business Days after the
date of receipt by that Class A Interest Holder of the written
notice from the General Partner or the Partnership shall be deemed
to mean that such Class A Interest Holder does not wish to purchase
securities on the same terms as the Private Offering. At the
General Partner's or the Partnership's option, if a Class A
Interest Holder exercises its right to purchase securities under
this Section 7.1, the securities to be purchased may be allocated
from the securities sold in the Private Offering or the General
Partner or the Partnership, as applicable, may issue to that Class
A Interest Holder additional securities, having the same terms as
those sold in the Private Offering provided that the same Equity
Ownership is maintained. In the event that the securities being
sold consist of HP Shares, the Class A Interest Holder shall have
the right, at its option, to purchase Units in the Partnership in
lieu of HP Shares.
7.2 Public Offerings. From and after the date hereof to and
including the earlier to occur of: (i) the Rights Termination
Date; or (ii) the last day of the 9.0% Preferred Return Period, the
Class A Interest Holders shall have the right to purchase
securities in Public Offerings on the terms described below. The
General Partner and the Partnership agree that they shall use their
reasonable business efforts to cause the sale to any Class A
Interest Holder of any securities in a Public Offering subject to
this Section 7.2 to be excluded from the terms of any underwriting
or similar agreement entered into by the General Partner or the
Partnership as those terms relate to the payment of fees or
commissions to the underwriter or the entitlement of the
underwriter to a discount from the Public Price (defined below).
The General Partner or the Partnership shall provide each Class A
Interest Holder with a copy of the registration statement, together
with any prospectus supplement thereto, relating to any Public
Offering promptly after such registration statement and prospectus
supplement have been filed with the SEC. No less than two (2)
Business Days prior notice to the date upon which the price (the
"Public Price") of the securities to be sold in any such Public
Offering is anticipated to be set (the "Pricing Date"), the General
Partner or the Partnership shall also provide each Class A Interest
Holder with a written notice of the Pricing Date and a copy of the
draft prospectus or prospectus supplement, as the case may be. In
addition, the General Partner or the Partnership shall promptly
provide each Class A Interest Holder with written notification of
the Public Price after it has been set and of the Pricing Date
after it has occurred. If a Class A Interest Holder does wish to
purchase securities in the Public Offering, it shall indicate in a
written notice to the General Partner or the Partnership the number
of such securities that it wishes to purchase and it shall purchase
that number of those securities as described below. If a Class A
Interest Holder shall provide written notice that it wishes to
purchase securities prior to the time at which the Public Price is
set, then the price to be paid for the securities by such Class A
Interest Holder shall be the per share amount equal to the greater
of: (i) the price per share to be paid by the underwriter in the
related Public Offering; or (ii) ninety-seven percent (97%) of the
per share Public Price and payment at that price shall be made on
the closing of the Public Offering. If the Class A Interest Holder
provides written notice that it wishes to purchase securities prior
to the time at which the Public Price is set, the Class A Interest
Holder may specify a maximum price at
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which it is willing to
purchase shares in the Public Offering. If a Class A Interest
Holder shall provide written notice that it wishes to purchase
securities after the time at which the Public Price is set, then
the price to be paid for the securities by such Class A Interest
Holder shall be the Public Price and payment at that price shall be
made no later than ten (10) Business Days after the Pricing Date in
all events. Each Class A Interest Holder shall have the right to
purchase no more than that amount of securities as shall be
necessary for that Class A Interest Holder to maintain the same
Equity Ownership as it had prior to the completion of the Public
Offering. Failure of the Class A Interest Holder to respond within
ten (10) Business Days after the Pricing Date shall be deemed to
mean that such Class A Interest Holder does not wish to purchase
securities in the Public Offering. At the General Partner's or
the Partnership's option, if a Class A Interest Holder exercises
its right to purchase securities under this Section 7.2, the
securities to be purchased thereunder by that Class A Interest
Holder may be allocated from the securities sold in the Public
Offering or the General Partner or the Partnership, as applicable,
may issue to that Class A Interest Holder additional securities,
having the same terms as those sold in the Public Offering provided
that the same Equity Ownership is maintained. In the event that the
securities being sold consist of HP Shares, the Class A Interest
Holder shall have the right, at its option, to purchase Units in
the Partnership in lieu of HP Shares.
7.3 Exception to Purchase Rights. Notwithstanding the
provisions of Sections 7.1 and 7.2 above, a Class A Interest Holder
shall not have the right to exercise its rights under those
sections if, in the written opinion of legal counsel to the General
Partner, such exercise would render the General Partner unable to
qualify as a REIT for federal income tax purposes or if, in the
written opinion of legal counsel to the Partnership, such exercise
would result in the Partnership being treated as an association
taxable as a corporation.
8. Miscellaneous Provisions.
8.1 Survival. All representations, warranties and covenants
and agreements of the parties contained herein, including indemnity
or indemnification agreements contained herein, or in any Schedule
or Exhibit hereto, or any certificate, documents or other
instrument delivered in connection herewith shall survive the
Closing Date.
8.2 Indemnification by the General Partner and the
Partnership. From and after the Closing Date, the General Partner
and the Partnership shall indemnify and hold harmless SMRS, its
successors and assigns, from and against any and all loss and
expenses (including, without limitation, reasonable attorneys' fees
and expenses), suffered, directly or indirectly, by SMRS by reason
of, or arising out of: (i) any breach as of the date made or
deemed made or required to be true of any representation or
warranty made by the General Partner or the Partnership in or
pursuant to this Agreement and any statements made in any
certificate delivered pursuant to this Agreement; or (ii) any
failure by the General Partner or the Partnership to perform or
fulfill any of their covenants or agreements set forth herein, or
in any other agreement contemplated hereby. Notwithstanding any
other provision of this Agreement to the contrary, in no event
shall loss and expenses include a party's incidental or
consequential damages.
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8.3 Third-Party Claims. If a claim by a third party is made
against an indemnified party and if such indemnified party intends
to seek indemnity with respect thereto under Section 8.2, such
indemnified party shall promptly notify the General Partner and the
Partnership in writing of such claims setting forth such claims in
reasonable detail. The General Partner and the Partnership shall
have 10 days after receipt of such notice to undertake, through
counsel of its own choosing and at its own expense, the settlement
or defense thereof, and the indemnified party shall cooperate with
it in connection therewith. Notwithstanding the above, the
indemnified party may participate in such settlement or defense
through counsel chosen by such indemnified party, provided that the
fees and expenses of such counsel shall be borne by such
indemnified party, unless: (i) the employment of counsel by the
indemnified party has been authorized by the General Partner and
the Partnership; or (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest
between the General Partner and the Partnership on the one hand and
the indemnified party on the other in the conduct of the defense of
such action which would materially hinder the ability of counsel to
the General Partner and the Partnership to represent the
indemnified party. The indemnified party shall not pay or settle
any claim which the General Partner or the Partnership is
contesting. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that
in such event it shall waive any right to indemnity therefor by the
General Partner and the Partnership. If the General Partner or the
Partnership does not promptly notify the indemnified party within
10 days after the receipt of the indemnified party's notice of a
claim of indemnity hereunder that it elects to undertake the
defense thereof, the indemnified party shall have the right to
contest, settle or compromise the claim at the expense of the
General Partner and the Partnership, but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement.
8.4 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the
same agreement, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to
the other party. Copies of executed counterparts transmitted by
telecopy, telefax or other electronic transmission service shall be
considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is
confirmed.
8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
without reference to the choice of law principles thereof.
8.6 Entire Agreement. This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto,
Amendment No. 9, the Registration Rights Agreement,the Lock-up
Letter and all other agreements or other instruments executed by
the parties hereto prior to the Closing Date contain the entire
agreement between the parties with respect to the subject matter
hereof and there are no agreements, understandings, representations
or warranties between the parties other than those set forth or
referred to herein. This Agreement is not intended to confer upon
any person not a party hereto (and their successors and assigns)
any rights or remedies hereunder.
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8.7 Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in
writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed, telecopy,
telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the General
Partner and the Partnership shall be addressed to:
Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Attn: Amy L. Tait
(716) 546-4900
Telecopier No.: (716) 546-5433
with a copy to:
Ann M. McCormick, Esq.
c/o Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
(716) 546-4900
Telecopier No.: (716) 546-5433
or at such other address and to the attention of such other person
as the General Partner or the Partnership may designate by written
notice to SMRS. Notices to SMRS shall be addressed to:
Express Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
430 West Allegan
Lansing, Michigan 48922
Attn: Administrator
(517) 373-0702
Telecopy No: (517) 373-0635
Other Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
P.O. Box 15128
Lansing, Michigan 48901
Attn: Administrator
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with a copy to:
Michigan Department of Attorney General
Finance and Development Division
One Michigan Avenue Building
120 North Washington Square
Lansing, Michigan 48933
Attn: Assistant in Charge
(517) 373-1130
Telecopy No: (517) 335-3088
and an additional copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attn: Jay Bernstein
or at such other address and to the attention of such other person
as SMRS may designate by written notice to the General Partner.
Notices to other Rights Holders, Class A Interest Holders and the
Investor Group Representative shall be by the above means and to
such addresses and to the attention of such person as the Rights
Holders, Class A Interest Holders and the Investor Group
Representative may designate by written notice to the General
Partner.
For purposes of this Agreement, the Investor Group Representative
and SMRS will only be deemed to have received any notice upon the
written acknowledgment by one individual designated by the Investor
Group Representative with authority to acknowledge such receipt or
upon refusal by any such designee to accept receipt of any notice.
The Investor Group Representative shall at all times provide the
General Partner with a written designation of at least two
individuals or titles of positions that are so designated with
authority to acknowledge receipt of written notices.
In all cases where a failure by the Rights Holders, Class A
Interest Holders and/or the Investor Group Representative to
respond within a specified time frame shall be deemed to be their
approval pursuant to this Agreement or to mean that they do not
wish to purchase securities pursuant to this Agreement, then the
written notice or request provided by the General Partner as
described in this agreement hereof shall specifically state that a
failure to respond within the indicated time frame shall be deemed
to be an approval of the matter for which approval was sought.
8.8 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors. It is hereby agreed that any internal re-
structuring or re-organization of SMRS shall not be deemed to be an
assignment to a third party.
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8.9 Headings. The Section, Article and other headings
contained in this Agreement are inserted for convenience of
reference only and will not affect the meaning or interpretation of
this Agreement. All references to Sections or Articles contained
herein mean Sections or Articles of this Agreement unless otherwise
stated.
8.10 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in
writing signed by the party against whom enforcement of any such
modification or amendment is sought. Either party hereto may, only
by an instrument in writing, waive compliance by the other party
hereto with any term or provision hereof on the party of such other
party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision hereof shall not
be construed as a waiver of any subsequent breach.
8.11 Interpretation. For the purposes hereof: (i) words in
the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other gender as
the context requires; (ii) terms "hereof", "herein", and "herewith"
and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of
the Schedules and Exhibits hereto) and not to any particular
provision of this Agreement, and Article, Section, paragraph,
Exhibit and Schedule references are to the Articles, Sections,
paragraphs, Exhibits and Schedules to this Agreement unless
otherwise specified; (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including,
without limitation," unless the context otherwise requires or
unless otherwise specified; (iv) the word "or" shall not be
exclusive; and (v) provisions shall apply, when appropriate, to
successive events and transactions.
8.12 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining
provisions hereof.
8.13 Further Assurances. The General Partner, the Partnership
and SMRS agree that, from time to time, each of them will execute
and deliver such further instruments of conveyance and transfer and
take such other action as may be necessary to carry out the
purposes and intents hereof.
8.14 Specific Performance. The General Partner and the
Partnership each acknowledge that, in view of the uniqueness of the
parties hereto, the parties hereto would not have an adequate
remedy at law for money damages in the event that this Agreement
were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to
which the parties hereto may be entitled at law or in equity.
8.15 Schedules. Any matter set forth on any Schedule shall be
deemed to be referred to on all other Schedules to which such
matter logically relates and where such reference would be appropriate
and can reasonably be inferred from the matters disclosed on the first
Schedule as it is set forth on such other Schedules.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto as of the day first above
written.
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Amy L. Tait
Amy L. Tait, Executive Vice President
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: /s/ Amy L. Tait
Amy L. Tait, Executive Vice President
STATE TREASURER OF THE STATE OF MICHIGAN,
CUSTODIAN OF MICHIGAN PUBLIC SCHOOL
EMPLOYEES' RETIREMENT SYSTEM, STATE
EMPLOYEES' RETIREMENT SYSTEM, MICHIGAN
STATE POLICE RETIREMENT SYSTEM AND MICHIGAN
JUDGES' RETIREMENT SYSTEM
By: /s/ Philip L. Van Syckle
Philip L. Van Syckle
Administrator
Mortgage and Real Estate Division
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Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made this
23rd day of December, 1996 between Home Properties of New
York, Inc., a Maryland corporation (the "Company"), and the
State Treasurer of the State of Michigan, Custodian of
Michigan Public School Employees' Retirement System, State
Employees' Retirement System, Michigan State Police
Retirement System and Michigan Judges' Retirement System
(the "Holder").
WHEREAS, the Company, the Holder and Home
Properties of New York, L.P., a New York limited partnership
(the "Operating Partnership"), have entered into a
Partnership Interest Purchase Agreement (the "Acquisition
Agreement"), that provides for the purchase by the Holder
and sale by the Operating Partnership to the Holder of the
Class A Partnership Interest (the "Class A Interest");
WHEREAS, the Holder has the right to convert the
Class A Interest into shares of Common Stock of the Company;
and
WHEREAS, as a condition to the closing of the
transactions contemplated by the Acquisition Agreement, the
Company has agreed to grant the Holder certain registration
rights with respect to the shares of Common Stock of the
Company for which the Class A Interest may be exchanged;
NOW, THEREFORE, the parties hereby agree as
follows:
Section 1. Definitions. As used in this
Agreement, the following terms have the following meanings.
Capitalized terms not otherwise defined herein have the
meaning ascribed to them in the Acquisition Agreement.
1.1 "Acquisition Agreement" shall have the
meaning set forth above.
1.2 "Affiliate" shall have the meaning specified
in Rule 12b-2 promulgated under the Exchange Act.
1.3 "Blackout Period" shall have the meaning set
forth in Section 4.1(b) hereof.
1.4 "Common Stock" shall mean the Company's
Common Stock, par value $.01 per share.
1.5 "Company" shall mean Home Properties of New
York, Inc., a Maryland corporation and general partner of
the Operating Partnership.
1.6 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.7 "Holder" shall have the meaning set forth
above and shall include any assignee thereof in accordance
with Section 11 of this Agreement.
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<PAGE>
1.8 "Operating Partnership" shall have the
meaning set forth above.
1.9 "Register," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act
and the declaration or ordering by the SEC of effectiveness
of such registration statement.
1.10 "Registrable Stock" shall mean any and all
shares of Common Stock issued or issuable to the Holder
pursuant to Amendment No. 9 to the Amended and Restated
Agreement of Limited Partnership of the Operating
Partnership or other securities of the Company issued as (or
issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or
other distribution with respect to, or in exchange for or in
replacement of any of the foregoing securities, which have
not otherwise been registered.
1.11 "SEC" shall mean the Securities and Exchange
Commission.
1.12 "Securities Act" shall mean the Securities
Act of 1933, as amended.
1.13 "Selling Holder" shall mean a Holder
proposing to sell or selling Registrable Stock pursuant to a
registration statement as provided in this Agreement.
Section 2. Obligations of the Company. Whenever
the Company is required by the provisions of this Agreement
to effect promptly a registration or qualification of
shares of Registrable Stock, the Company will keep the
Selling Holder advised in writing as to the initiation of
each registration or qualification and as to the completion
thereof and will use reasonable business efforts to perform
the following covenants:
2.1 The Company will prepare and file with the
SEC a registration statement (including a prospectus
therein), on the appropriate form in light of the intended
method of distribution, to register the shares of
Registrable Stock under the Securities Act and use
reasonable business efforts to cause such registration
statement to become and remain effective as provided in this
Agreement, provided that before filing such registration
statement or any amendments or supplements thereto, the
Company will furnish to the Holder and counsel selected by
the Holder copies of all documents required to be filed,
which documents will be subject to review by such counsel
before such filing is made, and the Company will comply with
any reasonable request made by such counsel to make changes
to any information relating to the Holder contained in such
filing or in such documents.
2.2 The Company will prepare and file with the
SEC such amendments and supplements to a registration
statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement
effective and current and to comply with the provisions of
the Securities Act with respect to the disposition of all
shares covered by such registration statement, including
such amendments and supplements as may be necessary to
reflect the intended method of disposition from time to time
of the Selling Holders of such shares; provided, however,
the Company shall have no obligation to maintain the
effectiveness of
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<PAGE>
any registration statement as to which a
Selling Holder fails to comply with the provisions of
Section 8 hereof.
2.3 The Company shall furnish to each Selling
Holder and to any underwriter of the shares being registered
such number
of copies of the registration statement and the prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act and such other documents
as such Selling Holder or underwriter may reasonably
request.
2.4 The Company will use reasonable business
efforts to register or qualify the shares covered by such
registration statement under such other securities or blue
sky or other applicable laws of such jurisdictions within
the United States as the Selling Holder or any underwriter
shall reasonably request in order to enable such Selling
Holder or underwriter to consummate the public sale or other
disposition of the shares owned by such Selling Holder in
such jurisdictions and keep such registration or
qualification in effect for so long as such registration
statement remains in effect; provided, however, that the
Company shall not be required so to register or qualify if
the result thereof is to require the Company to qualify to
do business or to file a general consent to service of
process in such jurisdiction.
2.5 The Company will enter into a written
underwriting agreement in customary form and substance
reasonably satisfactory to the Company, the Holder and the
managing underwriter or underwriters of the public offering
of such securities, if the offering is to be underwritten,
in whole or in part.
2.6 The Company will notify the Holder, at any
time when a prospectus included in a registration statement
is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading.
2.7 The Company will furnish, at the request of
the Holder, if the Holder is requesting registration of
shares of Registrable Stock pursuant to this Agreement, on
the date that such shares are delivered to any underwriter
for sale in connection with a registration pursuant to this
Agreement, if such shares are being sold through
underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration
statement with respect to such shares becomes effective, (i)
an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an
underwritten public offering and including a statement by
such counsel that in the course of the preparation of the
registration statement registering such shares of
Registrable Stock nothing has come to the attention of such
counsel that would lead such counsel to believe that the
registration statement, as then in effect, or prospectus
related thereto includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, addressed to the underwriters, if any, and to
the Holder and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in
form and
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<PAGE>
substance as is customarily given by independent
certified public accounts to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and
to the Holder.
2.8 The Company will use its reasonable business
efforts to list all shares of Registrable Stock covered by a
registration statement on the New York Stock Exchange or
such other securities exchange as may be mutually agreed
upon by the parties and such securities exchange.
2.9 The Company will provide a transfer agent and
registrar for all Registrable Stock covered by such
registration statement not later than the effective date of
such registration statement.
2.10 The Company will comply or continue to comply
in all material respects with the Securities Act and the
Exchange Act and with all applicable rules and regulations
of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earning statement
covering the period of at least 12 months, but not more than
18 months, beginning with the first full calendar month
after the effective date of such registration statement,
which earning statement shall satisfy the provisions of
Section 11(a) of the Securities Act, and not file any
amendment or supplement to the registration statement or
prospectus to which the Holder shall have reasonably
objected on the grounds that such amendment or supplement to
such registration statement or prospectus to which the
Holder shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act, having
been furnished with a copy thereof at the earliest
practicable date.
2.11 In connection with preparation and filing of
a registration statement under the Securities Act, the
Company shall furnish to the Holder, its underwriters, if
any, and their respective counsel, the opportunity to
participate in the preparation of such registration
statement, each prospectus included therein as filed with
the SEC, and each amendment thereof or supplement thereto,
and shall give each of them access to its books and records
and such opportunities to discuss the business of the
Company with its officers, its counsel and the independent
public accountants who have certified its financial
statements as shall be necessary, in the opinion of the
Holder's and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the
Securities Act.
The parties anticipate that any registration
pursuant to this Agreement shall be a registration on Form S-
3 (or a substantially equivalent registration form under the
Securities Act subsequently adopted by the Commission that
permits inclusion or incorporation by reference to other
documents filed by the Company with the Commission), but
agree that should a registration on Form S-3 be
unavailable to the Company such unavailability will not
alter the rights of the Holder or the obligations of the
Company hereunder, including, without limitation, to have
the Registrable Stock registered on an available
registration form
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<PAGE>
Section 3. Registration at Request of Holder.
3.1 The Holder shall have the right to request
the registration and qualification with respect to the
Registrable Stock, at any time after the date hereof, until
termination of such rights as provided in Section 13 hereof
and subject to the limitations set forth in Section 4 below;
provided, however, that the Company shall not be required to
effect a registration pursuant to this Section 3 unless the
Holder requesting such registration proposes to include
therein at least 25% of the Registrable Stock. . The
Holder shall have the right to specify the type of
registration requested, including, without
limitation, a registration on a continuous or delayed basis
(a "Shelf Registration"). The Company will use its
reasonable business efforts to effect all such registrations
and qualifications within 90 days of such request
(including, without limitation, the execution of an
undertaking to file posteffective amendments, appropriate
qualification under the blue sky or other state securities
laws and appropriate compliance with regulations issued
under the Securities Act and any other governmental
requirements and regulations) as may be so requested and as
would permit or facilitate the sale and distribution of the
Holder's Registrable Stock as are specified in such request;
provided, however, that the Company will not be required to
have an effective registration statement on file with the
SEC or any state securities commission prior to the to the
second anniversary of the issuance date of the Class A
Interest (the "Lock-Up Date"). The Holder's request for
registration shall be in writing and shall indicate (i) the
type of registration requested (ii) the intended method of
distribution of such registered shares, (iii) if applicable,
the portion of the Class A Interest to be converted in
connection with, or prior to, registration, and (iv) if
applicable, the number of shares of Registrable Stock to be
registered.
3.2 The Company may give written notice within
ten days after receipt of any request for registration of
the Registrable Stock (the "Notice") to all other persons
who have the right to require the Company to include their
registrable shares of Common Stock in a registration
statement prepared by the Company (whether pursuant to
existing or future rights or agreements with the Company)
of the receipt of such request for registration and shall
include in such registration statement all such registrable
shares of Common Stock as to which the Company receives
written request for inclusion from such other persons within
ten business days after the giving of the Notice.
3.3 The registration statement relating to any
Shelf Registration and any form of the prospectus included
therein or prospectus supplement relating thereto shall
reflect such plan of distribution or method of sale as the
Holder may from time to time notify the Company, including
the sale of some or all of the Registrable Stock in a public
offering or, if requested by the Holder, subject to receipt
by the Company of such information (including information
relating to purchasers) as the Company reasonably may
require, (i) in a transaction constituting a private
placement under Section 4(2) of the Securities Act in
connection with which the Company undertakes to register
such shares after the conclusion of such placement to permit
such shares freely to be tradable by the purchasers thereof,
or (ii) in a transaction under Rule 144A of the Securities Act
in connection with which the Company undertakes to register
such shares after the conclusion of such transaction to
permit such shares freely to be tradable by the purchasers
thereof, in each case subject to the terms and conditions of
this Agreement. The
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Company shall use its reasonable
business efforts to keep the Shelf Registration continuously
effective for the period beginning on the date of which the
Shelf Registration is declared effective and ending on the
first date that there are no shares of Registrable Stock
that have not been sold (provided that the Company may
terminate the effectiveness of a Shelf Registration
registering: (i) 25% or less of the Registrable Stock on the
second anniversary of the date of effectiveness thereof;
(ii) 50% to 75% of the Registrable Stock on the third
anniversary of the date of effectiveness thereof; and (iii)
75% to 100% of the Registrable Stock on the fourth
anniversary of the date of effectiveness thereof, in each
case plus a number of days equal to the number of days in
all Registration Suspension Periods
relating to such Shelf Registration). During the period
during which the Shelf Registration is effective, the
Company shall supplement or make amendments to the Shelf
Registration, if required by the Securities Act or if
reasonably requested by the Holder or its underwriter,
including to reflect any specific plan of distribution or
method of sale (which request shall be made no more
frequently than once every three months), and shall use its
reasonable business efforts to have such supplements and
amendments declared effective, if required, as soon as
practicable after filing.
Once any registration statement filed pursuant to
this Section 3.3 has been declared effective, any period
during which the Company fails to keep such registration
statement effective and usable for resale of Registrable
Stock for the period required by Section 2.2 shall be
referred to as a "Registration Suspension Period." A
Registration Suspension Period shall commence on and include
the date that the Company gives written notice to the Holder
of its determination that such registration statement is no
longer effective or usable for resale of Registrable Stock
(the "Suspension Notice") to and including the date which
the Company notifies the Holder that the use of the
prospectus included in such registration statement may be
resumed for the disposition of the Registrable Stock.
Section 4. Limitations Regarding Registration at
the Request of Holder.
4.1 The Company shall not be required to effect a
registration pursuant to Section 3 if:
(a) if the Company has already
effected one registration for the Holder
pursuant to Section 3 during the
immediately preceding twelve-month
period;
(b) if at the time of the request
to register the resale of Registrable
Stock the Company gives notice within 30
days of such request that it is engaged,
or has plans to engage within 90 days of
the time of the request, in a registered
public offering pursuant to Section 5 as
to which the Holder may include all of
the shares of Registrable Stock which
the Holder desires to sell at that time
and provided that the Company may not
exercise this right more than once in
any twelve-month period. The Company
shall promptly notify the Holder and
effect the registration requested
pursuant to Section 3 if the Company
determines not to proceed with its
planned offering; or
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(c) the Board of Directors of the
Company reasonably determines in good
faith that effecting such a registration
at such time would have a material
adverse effect upon a proposed sale of
all (or substantially all) the assets of
the Company or a merger, reorganization,
recapitalization or similar transaction
materially affecting the capital
structure or equity ownership of the
Company or that the Company is in
possession of material information which
the Board of Directors of the Company
reasonably determines it is not in the
best interests of
the Company to disclose in a
registration statement at such time;
provided, however, that the Company may
only delay a demand registration
pursuant to this clause (c) for a period
not exceeding 60 days (or until such
earlier time as such transaction is
consummated or no longer proposed or the
material information has been made
public (the "Blackout Period").
4.2 The Company shall promptly notify the Holder
in writing of any decision not to effect any such
registration pursuant to this Section 4, which notice shall
set forth the reason for such decision (but not disclosing
any nonpublic material information) and shall include an
undertaking by the Company promptly to notify the Holder as
soon as a registration pursuant to Section 3 may be
effected. Upon notice to the Holder of a Blackout Period,
Holder covenants that he shall (i) use all reasonable
efforts to prevent disclosure, by such Holder or any person
becoming aware of the notice through them, of the fact that
a Blackout Period notice was given; (ii) promptly halt any
offer, sale, trading or transfer by any such Holder or his
Affiliates for the period set forth in the notice; and
(iii) promptly halt any use, publication, or distribution of
any prospectus with respect to Registrable Securities for
the duration of the Blackout Period.
Section 5. Piggy Back Registration. The Holder
will have no rights under this Section 5 with respect to the
registration of the conversion of the Class A Interest into
shares of Common Stock nor until after the Lock-Up Date.
From time to time thereafter, if the Company proposes to
register any of its Common Stock for sale by the Company or
any of its security holders for cash (other than a
registration effected (a) solely to implement the exchange
of securities, assets or stock of other persons, (b) solely
to implement an employee benefit plan, or (c) on behalf of
any security holder of the Company whose right to request
registration does not require it to accept registration of
additional securities and who objects to such inclusion),
the Company will give written notice of its intention to
file a registration statement to Holders and all other
persons who have rights to require the Company to include
their shares on such a registration statement. If the
Holder desires to include Registrable Stock in such
registration he shall, within 30 days after receipt of such
notice from the Company, deliver to the Company a written
request stating the number of shares of Registrable Stock
proposed to be included in the registration and the intended
method of distribution of such shares. The Company will use
its reasonable business efforts to cause all such
Registrable Stock to be registered under the Securities Act
so as to permit the disposition (in accordance with the
methods in said request) by such Holder of the shares so
registered; subject, however, to the limitations set forth
in Section 6.
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Section 6. Limitations Regarding Piggy Back
Registration.
6.1 If a registration of which the Company gives
notice pursuant to Section 5 or a registration of the resale
of Registrable Stock pursuant to Section 3 in which another
security holder desires to include shares is for an
underwritten offering, only securities which are to be
included in the underwriting may be included in the
registration. Notwithstanding any provision of Section 3 or
Section 5, if the underwriter with respect to the offering,
in its sole discretion, determines that marketing factors
require a limitation of the number or dollar amount of
securities to be underwritten or determines that some other
limitation is advisable, the underwriter may exclude or
otherwise limit the number or dollar amount of securities to
be included in the registration and underwriting and the
Company shall include in the registration:
(a) if the registration is
initiated by the Selling Holder as
provided in Section 3 hereof: (i)
first, all the Registrable Stock
requested to be included by the Selling
Holder hereunder, (ii) second, the
amount of securities proposed to be sold
by the Company up to the maximum
includable in the opinion of the
underwriters, and (iii) third, the
amount of securities proposed to be sold
by any other security holders up to the
maximum includable in the opinion of the
underwriters pro rata as among such
security holders on the basis of the
dollar amount of securities to be
included therein by each such person;
(b) if the registration is
initiated by the Company (i) first,
all securities intended to be included
by the Company, and (ii) second, the
amount of securities proposed to be sold
by the Selling Holder hereunder and any
other security holders up to the maximum
includable in the opinion of the
underwriters pro rata as among the
Selling Holder and the other security
holders on the basis of the dollar
amount of securities to be included
therein by each such person; and
(c) if the registration is
initiated by any security holder other
than a holder of Registrable Stock (i)
first, all the securities of any holder
exercising "demand" registration rights,
(ii) second, the amount of securities
proposed to be sold by the Company up to
the maximum includable in the opinion of
the underwriters, and (iii) third, the
amount of securities proposed to be sold
by the Selling Holder and any other
security holders up to the maximum
includable in the opinion of the
underwriters pro rata among the Selling
Holders and other security holders on
the basis of the dollar amount of
securities to be included therein by
each Selling Holder or other security
holder.
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If the number of shares of Registrable Stock which
may be included by the Selling Holder is limited pursuant to
paragraphs (b) and (c) above, the Company shall advise the
Selling Holder of any exclusion or other limitation, and the
number of shares of Registrable Stock that may be included
in the registration and underwriting or the method by which
such number will be calculated. No Registrable Stock
excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration.
6.2 If the Selling Holder determines not to
participate in the underwriting with respect to any such
registration, such Selling Holder may elect to withdraw
therefrom by giving written notice to the Company and the
underwriter prior to the effective date of the registration
statement. The Registrable Stock and/or other securities so withdrawn from
such underwriting shall also be withdrawn from such
registration; provided, however, that if by the withdrawal
of such shares a greater number of shares of Registrable
Stock held by other Selling Holders and other security
holders described in paragraphs (a)(iii), (b)(ii) or
(c)(iii) of Section 6.1, as appropriate, may be included in
such registration (up to the maximum of any limitation
imposed by the underwriters), then the Selling Holder shall
have the right to include additional Registrable Stock (the
securities so included to be allocated pro rata among the
Selling Holder and other security holders described in
paragraphs (a)(iii), (b)(ii) or (c)(iii) of Section 6.1, as
appropriate).
6.3 Notwithstanding the filing of any
registration statement, the Company may, at any time prior
to the effective date thereof and without liability to any
Holder, determine not to register the securities to which
the registration statement relates and withdraw such
registration statement if such withdrawal is requested by
the person initiating the filing or if the Company is in
possession of material information which the Board of
Directors of the Company reasonably determines it is not in
the best interests of the Company to disclose in a
registration statement at such time.
Section 7. Designation of Underwriter.
7.1 In the case of any registration effected
pursuant to Section 3, the requesting Holder shall have the
right to designate the managing underwriter or underwriters
to be employed in connection therewith subject to the
approval of the Company, which approval shall not be
unreasonably withheld or delayed. The Company (together with
any other person including securities in such registration
shall enter into any underwriting agreement relating thereto
and shall make appropriate representations and warranties
and other agreements for the benefit of the underwriters and
the Company. If the Selling Holder disapproves of the terms
of any such underwriting, the Selling Holder may elect to
withdraw therefrom by written notice to the Company and the
underwriter.
7.2 In the case of any registration not initiated
by the Selling Holder pursuant to Section 3, the Company or
another group of security holders shall have the right to
designate the managing underwriter to be employed in
connection therewith and, to the extent required by the
underwriters, the Selling Holder shall be a party to any
underwriting agreement relating thereto and shall make
appropriate representations and warranties and other
agreements for the benefit of the underwriters and the
Company. If the Selling Holder disapproves of the terms of
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<PAGE>
any such underwriting, the Selling Holder may elect to
withdraw therefrom by written notice to the Company and the
underwriter.
Section 8. Cooperation by Selling Holder.
8.1 The Selling Holder of Registrable Stock, and
each underwriter designated by each such Selling Holder, if
any, will furnish to the Company such information and
execute such documents as the Company may reasonably require
from such Selling Holder or underwriter in connection with
the registration statement (and the prospectus included
therein) including, without limitation, all information
required by the applicable rules and regulations of the SEC
concerning the proposed method of sale or other disposition
of the Registrable Stock, the identity of and compensation
to be paid to any proposed underwriters to be employed in
connection therewith and such
other information as may be reasonably required by the
Company properly to prepare and file such registration
statement in accordance with applicable provisions of the
Securities Act. The Company's obligations under this
Agreement shall be conditioned on each Selling Holder's
compliance with this Section 8.
8.2 If such Selling Holder desires to sell and
distribute Registrable Stock in a Shelf Registration, then
such Holder shall execute and deliver, and provide to the
Company, such representations, warranties, agreements, and
other documents as the Company and its counsel may
reasonably require in order to assure full compliance with
relevant provisions of the Securities Act, the Exchange Act
and any state securities laws and shall indemnify the
Company from any losses that arise out of or are based upon
any untrue statement contained in the registration
statement, or the prospectus included therein or prospectus
supplement related thereto, or omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the
extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in
reliance upon written information regarding such Holder
furnished to the Company by such Holder expressly for use
therein.
8.3 In the case of an underwritten offering, such
Selling Holder shall agree to sell the Registrable Stock on
the basis of the underwriting arrangements approved by the
person entitled to select the underwriters as provided in
Section 7, shall provide for the benefit of the underwriters
and the Company such representations, warranties,
agreements, and other documents as are required under the
terms of such underwriting arrangements and . shall
indemnify the Company from any losses that arise out of or
are based upon any untrue statement contained in the
registration statement, or the prospectus included therein
or prospectus supplement related thereto, or omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
reliance upon written information regarding such Holder
furnished to the Company by such Holder expressly for use
therein.
8.4 In the case of any registration requested
pursuant to the provisions of Section 6, the offering price
for any shares of Common Stock to be so registered shall be
no less than for any Common Stock then to be registered for
sale for the account of the Company or
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<PAGE>
other security holders of the Company, unless such shares of Common Stock
are to be offered from time to time based on the prevailing market price.
8.5 The Selling Holder included in the
registration statement will not effect sales thereof after
telegraphic or written notice from the Company to suspend
sales to permit the Company to correct or update a
registration statement or prospectus or during any Blackout
Period until such Selling Holder has received notice from
the Company that the required corrections or updates are
effective or the Blackout Period has ended.
At the end of the period during which the Company
is obligated to keep the registration statement current and
effective as described in Section 2.2, the Selling Holder
shall discontinue sales of securities pursuant to such
registration statement upon receipt of notice from the
Company of its intention to remove from registration the
shares covered by such registration statement which remain
unsold, and such Selling
Holder shall notify the Company of the number of securities
registered which remain unsold promptly upon receipt of such
notice from the Company.
Section 9. Expenses of Registration. All
expenses incurred in effecting any registration pursuant to
this Agreement, including, without limitation, all
registration, filing and qualification fees, printing
expenses, expenses of compliance with blue sky laws, fees
and disbursements of counsel for the Company and expenses of
any audits incidental to or required by any such
registration, qualification or other compliance, and the
reasonable fees and disbursements of one counsel to the
Selling Holder shall be borne by the Company; provided that
all underwriting discounts and commissions applicable to the
sale of Registrable Stock being sold shall be borne by the
persons who are offering Registrable Stock, pursuant to any
such registration, pro rata according to the quantity of
their Registrable Stock so sold.
Section 10. Indemnification.
10.1 To the extent permitted by law, the Company
will, and hereby does, indemnify and hold harmless each
Selling Holder requesting or joining in a registration, each
underwriter of the securities so registered and each other
person who controls any such underwriter within the meaning
of Section 15 of the Securities Act and their respective
successors (collectively, "Indemnitees") against all claims,
losses, damages and liabilities (or actions or proceedings,
whether commenced or threatened in respect thereof), joint
or several arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document
incident to any registration, qualification or compliance
(or in any related registration statement, notification or
the like, or any amendment or supplement thereto) or any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances in which they were made, or any violation by
the Company of any rule or regulation promulgated under the
Securities Act or the Exchange Act applicable to the Company
and relating to action or inaction required of the Company
in connection with any such registration, qualification or
compliance, and will reimburse each such Indemnitee for any
legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss,
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<PAGE>
damage, liability or action; provided, however, that
the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability is
caused by any untrue statement or omission so made in
conformity with written information furnished to the Company
by such Indemnitee(s) or any failure of any Indemnitee to
comply with the prospectus delivery requirements as to which
the Company or the underwriters have given the Indemnitees
notice or arising out of or based on any acts or omissions
of any Indemnitee in violation of any federal or state
securities laws or this Agreement. The foregoing indemnity
agreement is also subject to the condition that, insofar as
it relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the
registration statement becomes effective or in the amended
prospectus filed with the SEC pursuant to Rule 424(b) (the
"Final Prospectus"), the foregoing indemnity agreement shall
not inure to the benefit of any underwriter, or any
Indemnitee if there is no underwriter, if a copy of the
Final Prospectus was not furnished by the
Indemnitee or underwriter to the person or entity asserting
the loss, liability, claim or damage at or prior to the time
furnishing the Final Prospectus is required by the
Securities Act.
10.2 To the extent permitted by law, each Selling
Holder requesting or joining in a registration will, and
hereby does, indemnify the Company and its officers and
directors, the underwriter and its officers, directors and
agents and each other security holder of the Company joining
in a registration and its officers, directors and agents,
and each person, if any, who controls any thereof within the
meaning of Section 15 of the Securities Act and their
respective successors against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,
offering circular or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) or any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances in which they were made to the extent that
such untrue statement or omission is contained in any
information with respect to such Selling Holder or with
respect to any underwriting of the Registrable Stock of such
Selling Holder furnished in writing by such Selling Holder
or its representatives to the Company for inclusion in any
of such documents or arising out of or based on any failure
to comply with the prospectus delivery requirements or any
action or omission by any Selling Holder in violation of the
federal or state securities laws or this Agreement and will
reimburse the Company and each other person indemnified
pursuant to this Section 10.2 for any legal and any other
expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action. With respect to each claim pursuant
to this Section 10.02, each Selling Holder's maximum
liability under this Section shall be limited to an amount
equal to the net proceeds actually received by such Selling
Holder (after deducting any underwriting discounts and
expense) from sale of the Registrable Stock being sold
pursuant to such registration statement or prospectus by
such Selling Holder.
10.3 The Company may require, as a condition to
entering into any underwriting or similar placement
agreement with respect thereto, that the Company shall have
received an undertaking reasonably satisfactory to it in
such form as is customary from each agent or underwriter
named in any such agreement, severally and not jointly, to
indemnify the Company from any losses that arise out of or
are based upon an untrue statement or omission to state
therein a material fact required to be stated therein or
necessary to make the statements
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<PAGE>
therein not misleading, but
only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
reliance upon written information regarding such agent or
underwriter furnished to the Company by such agent or
underwriter expressly for use therein.
10.4 Each party entitled to indemnification
hereunder (the "indemnified party") shall give notice to the
party required to provide indemnification (the "indemnifying
party") promptly after such indemnified party has actual
knowledge of any action or proceeding involving a claim as
to which indemnity may be sought, and shall permit the
indemnifying party (at its expense) to assume control of the
defense of any claim or any litigation resulting therefrom,
provided, however, that counsel for the
indemnifying party, who shall conduct the defense of such claim
or litigation, shall be reasonably satisfactory to the
indemnified party, and the indemnified party may participate in
such defense at such indemnified party's expense, provided,
further, that should the indemnified party and the indemnifying
party have conflicting interests such that a single firm may
not represent all such parties, the indemnified party shall be
entitled to retain separate counsel at the indemnifying party's
expense, and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this
Section 10, except to the extent that the indemnifying party is
actually prejudiced as a result of the failure to give notice.
No indemnifying party (i) in the defense of any such claim or
litigation, shall, except with the consent of each indemnified
party, consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to
such claim or litigation, (ii) shall be liable for amounts paid
in any settlement if such settlement is effected without the
consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed, or (iii) shall be liable for
the fees or expenses of more than one separate firm of
attorneys at any time for all indemnified parties.
10.5 If, for any reason, the indemnification provided
for in this Section 10 is unavailable to, or is insufficient to
hold harmless, a party that would have been an indemnified
party under this Section in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each party that would have
been an
indemnifying party thereunder shall, in lieu of indemnifying
such indemnified party, contribute to the extent permitted by
law to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and such indemnified party
on the other hand in connection with the statement or omission
which resulted in such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof). The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the indemnifying party
or such indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company agrees that it
would not be just and equitable if contribution pursuant to
this Section 10.5 were determined by pro rata allocation or by
any other method of allocation which does not take account of
the equitable considerations referred to above in this Section
10.5. The amount paid or payable by an
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<PAGE>
indemnified party as a
result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above in
this Section 10.5 shall include any legal or other expenses
reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim (which
shall be limited as provided in Section 10.4 if the
indemnifying party has assumed the defense of any such action
in accordance with the provisions thereof). No person guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
Indemnification or, if appropriate, contribution,
similar to that specified in the preceding provisions of this
Section 10 (with appropriate modifications) shall be given by
the Company and each Selling Holder with respect to statements
or omissions contained in applications or other written
information filed in any state or other jurisdiction in
connection with the registration or other qualification of
Registrable Stock under applicable state securities or blue sky
laws or regulations.
In the event of any underwritten offering of
Registrable Stock under the Securities Act pursuant to the
provisions of this Section 10, the Company and each Selling
Holder agree, to the extent practicable, to enter into an
underwriting agreement, in customary form, with the
underwriters, which underwriting agreement may contain
additional provisions with respect to indemnification and
contribution.
10.6 To the extent permitted by law, the
reimbursement required by this Section 10 shall be made by
periodic payments of the amounts thereof during the course of
the investigation or defense, as and when bills are received or
expenses incurred; provided, however, that the indemnifying
party shall have received an undertaking by the indemnified
party to repay such amounts in the event it is later determined
that such indemnification is not available.
Section 11. Transfer of Registration Rights. The
rights to cause the Company to register Registrable Stock
pursuant to this Agreement may not be assigned by a Holder to a
transferee or assignee of such securities except to the grantor
of Holder or to another person to whom Holder is transferring
at least 25,000 shares of Registrable Stock or 1.5% of the
Class A Interest, and provided that (i) the Company is, within
a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee
and the securities with respect to which such registration
rights are being assigned, and (ii) the assignee agrees to be
bound by this Agreement. Upon a transfer in accordance with
this Section 11, the transferee shall collectively with the
Holder be deemed the "Holder" under this Agreement.
Section 12. Lock-Up Agreement. Holder agrees, in
connection with the registration of Registrable Stock for sale
to the general public pursuant to Section 5, that, upon written
request of the underwriters managing any such offering, such
Holder will agree in writing not to sell, make short sales of
or otherwise dispose of any or all of the Registrable Stock
(other than that included in the registration) without the
prior consent of such underwriters for such period of time of
not less than 60 days from the effective date of such
registration as the underwriters may specify.
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<PAGE>
Section 13. Termination of Registration Obligations.
The obligations of the Company to any Holder with respect to
its rights of registration provided for in this Agreement:
(a) shall continue until such time as the
Company warrants to the Holder and counsel to
the Company delivers its written opinion to the
Holder that such Holder has no further
obligation to comply with the registration
requirements of the Securities Act or to deliver
a prospectus meeting the requirements of Section
10(a)(3) of the Securities Act in connection
with sales by such Holder of the Registrable
Stock; and
(b) shall not apply to any proposed sales or
other dispositions or offers therefor of any
Registrable Stock with respect to which the
Company warrants to the Holder and counsel to
the Company delivers its written opinion to the
Holder, or counsel for such Holder is of the
opinion provided that the Company's counsel
concurs with such opinion, and such counsel has
advised the Company and such Holder,
respectively, that such Holder has no obligation
to comply with, or the transaction is exempt
from, the registration requirements of the
Securities Act or to deliver a prospectus
meeting the requirements of Section 10(a)(3) of
the Securities Act.
Section 14. Survival of Agreements. All agreements,
representations and warranties contained herein or made in
writing by or on behalf of the Company and the Holder in
connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement. The
indemnification and contribution provisions of Section 10 shall
survive any termination of this Agreement.
Section 15. Miscellaneous Provisions.
15.1 Notices. All notices, demands and other
communications which may or are required to be given hereunder
or with respect hereto shall be in writing, shall be delivered
personally, sent by nationally recognized overnight delivery
service, charges prepaid, or by first class, registered or
certified mail, or by telecopier (fax), and shall be deemed to
have been given or made when personally delivered, the next
business day after delivery to such overnight delivery service,
five (5) days after deposited in the mail, or when received if
sent by telecopier (fax), addressed or sent as follows:
(a) If to the Company:
Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Attention: Ann M. McCormick,
Vice President and General Counsel
(716) 246-4105
Telecopier: (716) 546-5433
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<PAGE>
(b) If to Holder:
Express Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
430 West Allegan
Lansing, Michigan 48922
Attention: Administrator
(517) 373-0702
Telecopier: (517) 373-0635
Other Mail:
Mortgage and Real Estate
Division Michigan Department of
Treasury P.O. Box 15128
Lansing, Michigan 48901
Attn: Administrator
with a copy to:
Michigan Department of Attorney
General Finance and Development
Division
One Michigan Avenue
Building 120 North
Washington Square Lansing,
Michigan 48933
(517) 373-1130
Telecopier: (517) 335-3088
and an additional copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attn: Jay Bernstein
or such other addresses as each of the parties hereto may
designate by written notice to the other party.
For purposes of this Agreement, State Treasurer of the State of
Michigan, Custodian of Michigan Public School Employees'
Retirement System, State Employees' Retirement System, Michigan
State Police Retirement System and Michigan Judges' Retirement
System ("SMRS") will only be deemed to have received any notice
upon the written acknowledgment by one individual designated by
SMRS with authority to acknowledge such receipt or upon refusal
by any designee to accept receipt of any notice. SMRS shall at
all times provide the Company with a written
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<PAGE>
designation of at
least two individuals or titles of positions that are so
designated with authority to acknowledge receipt of written
notices.
In all cases where a failure by the Holder to respond within a
specified time frame shall be deemed to be a response. Any
written notice by the Company to SMRS shall specifically state
that a failure to respond within the indicated time frame shall
be deemed to be a response.
15.2 Amendments. This Agreement may not be amended
or terminated orally or in writing unless executed by all the
parties to this Agreement, except that any provision of this
Agreement may be amended with the written consent of the
Company and any Holder as to any rights or obligations of such
Holder or the Company without affecting any other Holder.
15.3 Entire Agreement. This Agreement and the
Acquisition Agreement contain the entire agreement between the
parties with respect to the matters contained herein, and
supersede all negotiations, agreements, representations,
warranties, commitments, whether in writing or oral, prior to
the date hereof.
15.4 Execution and Counterparts. This Agreement may
be executed in any number of counterparts, each of which when
so executed and delivered shall be deemed an original, and such
counterparts together shall constitute one instrument. Each
party shall receive a duplicate original of the counterpart
copy or copies executed by it and by the Company.
15.5 Governing Law and Severability. This Agreement
shall be governed by the laws of the State of New York as
applied to agreements entered into and to be performed entirely
within the State. If any provision of this Agreement or any
application thereof is held to be unenforceable, the remainder
of the Agreement and any application of such provision shall
not be affected thereby and to the extent permitted by law,
there shall
be substituted for the provisions held unenforceable,
provisions which shall, as nearly as possible, have the same
economic effect as the provisions held unenforceable.
15.6 Headings. The headings of the Sections and
paragraphs of this Agreement are inserted for convenience only
and do not constitute a part of this Agreement.
15.7 Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
to the extent provided in Section 11 with respect to the rights
of Holder hereunder, its successors and permitted transferees.
IN WITNESS WHEREOF, each of the parties have executed
this Agreement on the date first written above.
COMPANY:
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Amy L. Tait
Amy L. Tait, Executive Vice President
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<PAGE>
HOLDER:
STATE TREASURER OF THE STATE OF
MICHIGAN, CUSTODIAN OF MICHIGAN
PUBLIC SCHOOL EMPLOYEES' RETIREMENT
SYSTEM, STATE EMPLOYEES' RETIREMENT
SYSTEM, MICHIGAN STATE POLICE
RETIREMENT SYSTEM AND MICHIGAN
JUDGES' RETIREMENT SYSTEM
By: /s/ Philip L. Van Syckle
Philip L. Van Syckle
Administrator
Mortgage and Real Estate Division
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<PAGE>
Exhibit 10.4
[Letterhead of State of Michigan Retirement Systems]
517/373-0702
December 19, 1996
Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Ladies and Gentlemen:
We are on this date, entering into a Partnership
Interest Purchase Agreement (the "Purchase Agreement")
whereby the undersigned agrees to acquire a Class A
Limited Partnership Interest (the "Class A Interest") in
Home Properties of New York, L.P. (the "Partnership").
Pursuant to Amendment No. 9 (the "Amendment") to the
Amended and Restated Agreement of Limited Partnership of
the Partnership (as amended, the "Partnership
Agreement"), the Class A Interest is convertible into
shares of common stock, par value $.01 per share ("HP
Shares"), of Home Properties of New York, Inc., the
general partner of the Partnership (the "General Partner").
As a condition and in consideration of the issuance of
the Class A Interest to the undersigned, the General Partner
has required that the undersigned agree to certain
restrictions on the sale of HP Shares by the undersigned
(and certain of its successors as described below) in the
event that the undersigned elects to convert all or any
portion of the Class A Interest into HP Shares.
The undersigned hereby acknowledges and agrees that prior
to the second year anniversary of the Closing Date (as
defined in the Purchase Agreement) (the "Lock-Up Date"),
any HP Shares that it may receive upon conversion of the
Class A Interest will not be registered under federal
or state securities laws and will therefore be subject
to certain transfer restrictions. Pursuant to the
Registration Rights Agreement, dated the date of this
letter, by and between the General Partner and the
undersigned, the undersigned has the right to require the
General Partner to register from and after the Lock-Up
Date, the HP Shares received upon conversion of the
Class A Interest.
Furthermore, the undersigned hereby agrees that upon
receipt of registered HP Shares or the registration of any
HP Shares in its possession, it will not sell, through the
means of any public stock exchange, such as the New York
Stock Exchange, more than 416,667 HP Shares during any 90
day period (the "Volume Limitation"). The Volume
Limitation shall expire on the fifth anniversary of the
Closing Date. The undersigned also agrees that it will
provide the General Partner with no less than five (5)
business days prior written notice before selling HP
Shares having a then current market value in excess of
2.5% of the Total Capitalization (as defined in the Purchase
Agreement) (the "Notice Requirement"). The Notice
Requirement shall continue after the expiration of the
Volume Limitation until such time as the then current
market value of the Class A Interest and the HP
Shares received on conversion of the Class A Interest
held by the undersigned shall be less than 2.5% of the
Total Capitalization.
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<PAGE>
The undersigned acknowledges and agrees that the
Volume Limitation shall be binding on any purchaser who
acquires 20% or more of the Class A Interest originally
issued to the undersigned on the Closing Date, whether
such purchaser purchases the Class A Interest from the
undersigned or from a prior purchaser from the undersigned.
It is also understood and agreed that the Volume
Limitation shall be in the aggregate in that the
undersigned and any purchaser of 20% or more of the Class
A Interest shall together not sell more than 416,667 HP
Shares through the means of any public stock exchange in any
90 day period.
Prior to reflecting on its books and records, a transfer
of more than 20% of the Class A Interest to one person
or entity, the Partnership may require the purchaser
to acknowledge that the HP Shares that it may acquire
upon conversion shall be subject to the Volume Limitation.
Very truly yours,
STATE TREASURER OF THE STATE OF
MICHIGAN, CUSTODIAN OF THE MICHIGAN
PUBLIC SCHOOL EMPLOYEES' RETIREMENT
SYSTEM, STATE EMPLOYEES' RETIREMENT
SYSTEM, MICHIGAN STATE POLICE RETIREMENT
SYSTEM AND MICHIGAN JUDGES' RETIREMENT
SYSTEM
By: /s/ Philip L. Van Syckle
Philip L. Van Syckle, Administrator
STATE OF MICHIGAN )
COUNTY OF INGHAM ) SS:
On this 23rd day of December, 1996, before me the
subscriber personally appeared Philip L. Van Syckle, who
being by me duly sworn deposes and says that he
resides at Dowling, Michigan; that he is the
Administrator of the Mortgage and Real Estate Division
of the State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees'
Retirement System, State Employees' Retirement
System, Michigan State Police Retirement System and
Michigan Judges' Retirement System and as such is
authorized to sign the within document on behalf of that
entity.
/s/ Mary Dell Moore
Mary Dell Moore, Notary Public
Eaton County, State of Michigan
My Commission Expires 2/18/97
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<PAGE>
The undersigned hereby acknowledges receipt of and
agrees with the terms of the above letter.
HOME PROPERTIES OF NEW YORK, INC.
/s/ Amy L. Tait
Amy L. Tait
Executive Vice President
STATE OF NEW YORK)
COUNTY OF MONROE ) ss:
On this ____ day of December, 1996, before me the
subscriber personally appeared Amy L. Tait, who being by
me duly sworn deposes and says that she resides in
Brighton, New York; that she is the Executive Vice
President of Home Properties of New York, Inc., the
corporation described in and which executed the above
acknowledgment and agreement and that she did so by order
of the Board of Directors of said corporation.
________________________________
Notary Public
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<PAGE>
Exhibit 99.1
HOME PROPERTIES SELLS
$35 MILLION INTEREST TO PENSION FUND
For Immediate Release:
Monday, December 23, 1996
Rochester, New York/ PR Newswire/ -- Home Properties
(NYSE:HME), a real estate investment trust ("REIT")
specializing in apartment communities in the Northeast,
today announced that it has entered into an agreement to
sell a $35 million Class A Limited Partnership Interest in
Home Properties of New York, L.P. to the State of Michigan
Retirement Systems. The Class A Limited Partnership
Interest can be converted into 1,666,667 shares of common
stock in the Company, which equates to an effective
conversion price of $21.00 per share. Resale of converted
shares will be restricted for the next 24 months.
The Class A Limited Partnership Interest will receive a
preferred return equal to the greater of: (a) 9.25% on the
original investment during the first two years declining to
9.0% thereafter, or (b) the actual dividends paid to common
shareholders on 1,666,667 shares. (The Company's current
dividend equates to $1.72 per share annually.) Any
unconverted interest can be redeemed without premium by the
Company after ten years.
Proceeds of the transaction will be used to repay floating
rate debt incurred to finance recent acquisitions on an
interim basis and to fund anticipated future acquisitions.
Funding is anticipated to occur on December 30, 1996. The
unrated private placement was negotiated directly, with
virtually no transaction costs incurred by the Company.
"We are honored to accept the State of Michigan Retirement
Systems as our partner and are excited about the potential
to expand this strategic alliance as our Company grows,"
said Norman Leenhouts, Chairman and Co-CEO of Home
Properties. "This transaction reflects an emerging trend in
the pension industry away from direct property ownership to
investment in publicly-traded stocks of real estate
operating companies."
Related to this transaction, HME will expand its number of
independent directors from six to seven members, adding Alan
L. Gosule, a partner with the New York law firm of Rogers
and Wells. "We welcome Alan to our board and look forward
to benefiting from his experience, contacts, and insights,"
said Leenhouts.
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<PAGE>
In other news, the Company announced that it raised an
additional $5.35 million in net proceeds on December 10,
1996, through the issuance of 262,000 shares of HME common
stock purchased through its Direct Stock Purchase Plan.
Home Properties is a self-managed real estate investment
trust which owns and manages 28 communities with 7,175
apartment units and one community containing 202
manufactured home sites. The Company is the managing
general partner of an additional 3,741 apartment units and
manages 1,654 apartment units and approximately 1.6 million
square feet of commercial space for other owners (primarily
affiliates). The majority of the 12,570 total apartment
units currently owned and/or managed by Home Properties are
located throughout New York State. Home Properties' common
stock is traded on the New York Stock Exchange under the
symbol "HME".
*****
For further information:
Amy L. Tait, Executive Vice President
Home Properties of New York, Inc.
(716) 246-4108
Copies of other recent Home Properties press releases are
available via fax at no charge by calling Company News on
Call at 1-800-758-5804 and entering the code #371957 or on
the Internet (http://www.prnewswire.com/cnoc/exec/menu?371957).
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