<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
-------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13136
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HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 16-1455126
(State or other jurisdiction (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
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of each class Which Registered
- ---------------------------- ------------------------
Common Stock, $.01 par value New York Stock Exchange
Indicate by check mark whether registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES x No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the shares of common stock held by
non-affiliates (based upon the closing sale price on the New York
Stock Exchange) on February 24, 1997 was approximately
$150,465,527. As of February 24, 1997, there were 6,228,236.418
shares of common stock, $.01 par value outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
TABLE OF CONTENTS
PART I.
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item X. Executive Officers and Key Employees
PART II.
Item 5. Market of the Registrant's Common Equity
and Related Shareholder Matters
Item 6. Selected Financial and Operating Information
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
PART III.
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
<PAGE>
PART I
Item 1. Business
The Company
Home Properties of New York, Inc. ("Home Properties" or the
"Company") is a self-administered and self-managed real
estate investment trust ("REIT") that specializes in the
ownership, management, acquisition, and development of
apartment communities in the Northeast. It was formed to
continue and expand the operations of Home Leasing
Corporation ("Home Leasing"). The Company completed an
initial public offering of 5,408,000 shares of common stock
(the "IPO") on August 4, 1994.
The Company conducts its business through Home Properties of
New York, L.P. (the "Operating Partnership"), a New York
limited partnership in which the Company held a 68.2%
general partnership interest as of December 31, 1996
(89.8% at December 31, 1995) and two management companies (the
"Management Companies") - Home Properties Management, Inc.
("HP Management") and Conifer Realty Corporation ("Conifer
Realty"), both of which are Maryland corporations.
Effective January 1, 1996, the Company combined its
operations (the "Conifer Transaction") with those of Conifer
Realty, Inc. and Conifer Development, Inc. (collectively,
"Conifer"). Conifer was another large owner and operator of
multifamily properties throughout New York State with whom
the Company has previously participated in several joint
venture development projects.
Home Properties, through its affiliates described above, and
as of December 31, 1996, owned and managed 28 communities
with 7,176 apartment units and one community containing 202
manufactured home sites (the "Owned Properties"). The
Operating Partnership also holds general partnership
interests in an additional 3,738 apartment units and it and
the Management Companies manage 662 apartment units for
affiliates, 992 apartment units for third parties and
approximately 1.6 million square feet of commercial space
for other owners (primarily affiliates) (collectively, the
"Managed Properties"). The Management Companies are also
involved in the development and redevelopment of government-
assisted apartment communities and certain other
development activities.
The Owned Properties and the Managed Properties
(collectively, the "Properties") are concentrated in the
following market areas:
<TABLE>
<CAPTION>
MANAGING FEE MANAGED
GENERAL FOR FEE MANAGED
MARKET AREA TOTAL OWNED PARTNER AFFILIATES FOR OTHERS
<S> <C> <C> <C> <C> <C>
Buffalo, NY 2,223 2,067 156 - -
Rochester, NY 4,064 1,953 1,339 439 333
Syracuse, NY 3,115 1,584 1,271 199 61
Hudson Valley, NY 726 584 142 - -
Albany, NY 764 - 254 - 510
Watertown, NY 688 - 576 24 88
Columbus, OH 604 604 - - -
Bethlehem, PA 384 384 - - -
TOTAL 12,568 Units 7,176 Units 3,738 Units 662 Units 992 Units
</TABLE>
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The Company's mission is to provide investors with
dependable, above average returns and to be the first choice
of renters in its chosen markets. The Company's strategy
for accomplishing its mission is to: (i) acquire,
reposition and operate multi-family apartment properties in
the Company's target markets; (ii) continue the development
and redevelopment of apartment communities utilizing various
forms of government assistance programs; and (iii) maintain
its focus on customer satisfaction by serving the Company's
residents with integrity and respect and providing value and
service that exceeds expectations.
Structure
The Company was formed in November 1993 as a Maryland
corporation and is the general partner of the Operating
Partnership. On December 31, 1996, it owned a 68.2%
general partner interest in the Operating Partnership. The
limited partner interests (the "Units") in the Operating
Partnership are owned by the officers of the Company and
certain individuals who acquired Units in the Operating
Partnership as partial consideration for their interests in
entities purchased by the Operating Partnership. In
addition, on December 30, 1996, the State of Michigan
Retirement Systems acquired an 18.5% Class A limited
partnership interest in the Operating Partnership.
The Operating Partnership is a New York limited partnership
formed in December, 1993. Holders of Units in the Operating
Partnership may redeem a Unit for one share of the Company's
common stock or cash equal to the fair market value at the
time of the redemption, at the option of the Company. The
Company currently anticipates that it will issue shares of
common stock rather than pay cash in connection with such
redemptions. The Class A limited partnership interest issued
to the State of Michigan Retirement Systems has some
features, such as a preferred return and anti-dilution
rights, that are distinct from the features of the other
Units. Management plans to aggressively pursue the use of
Units as consideration for acquisition properties.
Both of the Management Companies were formed to comply with
the technical requirements of the federal income tax laws.
Both are Maryland corporations. HP Management was formed in
January, 1994 and Conifer Realty was formed in December,
1995. The Operating Partnership holds 99% of the economic
interest in both Management Companies, with Nelson and
Norman Leenhouts (the "Leenhoutses") holding the remaining
one percent interest in HP Management and the Leenhoutses
and Richard J. Crossed, the former President of Conifer,
holding the remaining one percent interest in Conifer
Realty. The Management Companies manage, for a fee, certain
of the residential, commercial and development activities of
the Company and provide construction, development and
redevelopment services for the Company.
Including the former employees of Conifer and certain
contract employees, the Company currently has approximately
700 employees and its executive offices are located at 850
Clinton Square, Rochester, New York 14604. Its telephone
number is (716) 546-4900.
Operating Strategies
The Company will continue to focus on enhancing the
investment returns of its Properties by: (i) continuing to
utilize its written "Pledge" of customer satisfaction that
is the foundation on which the Company is building its name-
brand recognition; (ii) reinforcing its decentralized
company orientation by encouraging employees' personal
improvement and by providing extensive training; (iii)
readily adopting new technology so that the time spent on
administration can be decreased and the time spent
attracting and serving residents
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can be increased; (iv) enhancing the quality of living for
the Company's residents by improving the quality of service
and physical amenities available at each community every
year; and (v) engaging in aggressive cost controls and
taking advantage of volume discounts, thus benefiting from
economies of scale while constantly improving the level of
customer service.
Acquisition and Development Strategies
The Company's strategy is to make acquisitions in geographic
regions that have similar climates, easy access to the
Company's headquarters, enough apartments available for acquisition
to achieve a critical mass and minimal investment ownership by
other apartment REITs. Targeted markets also possess other
characteristics similar to the Company's existing markets,
including a limited amount of new construction, acquisition
opportunities below replacement costs, a mature housing
stock and a stable or growing job market. The Company
expects that its growth will be primarily in select
metropolitan areas within the Northeastern United States.
The Company may also acquire equity ownership in other public or
private entities that own portfolios of apartment communities.
Those acquisitions may be part of a strategy to acquire all
of the equity ownership in those other entities or some or all
of their apartment portfolio.
In addition, the Company intends to continue to develop and
re-develop apartment communities utilizing various
government programs. These activities are expected to
generate development fees, ongoing management and incentive
management fees and participation in residual value for the
Company. They also increase the Company's volume purchasing
abilities and provide a pipeline for future acquisitions and
re-development opportunities.
Financing and Capital Strategies
The Company intends to adhere to the following financing
policies: (i) maintaining a ratio of debt-to-total market
capitalization (total debt of the Company as a percentage of
the market value of outstanding common stock and Units plus
total debt) of approximately 50% or less; (ii) utilizing
primarily fixed rate debt; (iii) varying debt maturities to
avoid significant exposure to interest rate changes upon
refinancing; and (iv) maintaining a line of credit so that
it can respond quickly to acquisition opportunities.
On December 31, 1996, the Company's debt was $105.2 million
and the debt to total capitalization ratio was 34% based on
the year-end closing price of the Company's stock at $22.50.
The weighted average interest rate on the Company's mortgage
debt as of December 31, 1996 was 7.7% and the weighted
average maturity was 8 years. Debt maturities are
staggered. As of December 31, 1996, the Company had an
unsecured line of credit of $25 million for acquisition and
other corporate purposes with an interest rate of LIBOR plus
1.75%. As of December 31, 1996, there were no borrowings
under the line of credit. As of March 5, 1997, the line of
credit had been increased to $35 million with $11.7 million
available. The major use of the line of credit since
December 31, 1996 was to acquire the Lake Grove Apartments.
The Company also intends to continue to structure creative
private equity transactions to raise capital with limited
transaction costs. On December 30, 1996, $35 million was
raised through the private sale of a Class A limited
partnership interest to the State of Michigan Retirement
Systems.
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In addition, in 1996 approximately $14.7 million was raised
through the sale of newly issued stock under the Company's
Dividend Reinvestment, Stock Purchase, Resident Stock
Purchase and Employee Stock Purchase Plan (the "Stock
Purchase Plan"). This $14.7 million includes approximately
$4 million from the sale of stock to the Company's officers
and directors in transactions where the Company loaned 50%
of the stock purchase price. The Stock Purchase Plan
provides a 3% discount from the current market price for
existing shareholders and has provided a steady source of
capital to fund the Company's continued growth.
In addition, management expects to continue to fund a
significant portion of its continued growth by taking
advantage of its UPREIT structure and using Units as
currency in acquisition transactions. The Company utilized
approximately $10 million worth of Units as partial
consideration in acquisition transactions during 1996.
Competition
The Company competes with other multifamily developers and
other real estate companies in seeking properties for
acquisition, potential residents and land for development.
The Company's Properties are primarily in developed areas
where there are other properties of the same type which
directly compete for residents. The Company, however,
believes that its focus on service and resident satisfaction
and its focus on attracting senior residents will enable it
to maintain its historic occupancy levels. The Company also
believes that the minimal increase in new construction of
multifamily properties in its markets in 1996 will not have
a material adverse effect on its turnover rates or ability
to increase rents and minimize operating expenses. To date,
the Company has faced little competition in acquiring
properties from other REIT's or other operators from outside
the region, although the Company may encounter competition
from others as it seeks attractive properties in New York
State and other states within the Northeastern quadrant.
Regulation
Many laws and governmental regulations are applicable to the
Properties and changes in the laws and regulations, or their
interpretation by agencies and the courts, occur frequently.
Under the Americans with Disabilities Act of 1990 (the
"ADA"), all places of public accommodation are required to
meet certain federal requirements related to access and use
by disabled persons. In addition, the Fair Housing
Amendments Act of 1988 (the "FHAA") requires apartment
communities first occupied after March 13, 1990 to be
accessible to the handicapped. Non-compliance with the ADA
or the FHAA could result in the imposition of fines or an
award of damages to private litigants. Management
believes that the owned Properties are substantially in compliance
with present ADA and FHAA requirements.
Under various laws and regulations relating to the
protection of the environment, an owner of real estate may
be held liable for the costs of removal or remediation of
certain hazardous or toxic substances located on or in its
property. These laws often impose
liability without regard to whether the owner was
responsible for, or even knew of, the presence of such
substances. The presence of such substances may adversely
affect the owner's ability to rent or sell the property or
use the property as collateral. Independent environmental
consultants have conducted "Phase I" environmental audits
(which involve visual inspection but not soil or groundwater
analysis) on substantially all of the Owned Properties.
Phase I audit reports did not reveal any environmental
liability that would have an
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adverse effect on the Company.
In addition, the Company is not aware of any environmental
liability that management believes would have a material
adverse effect on the Company. There is no assurance that
Phase I reports would reveal all environmental liabilities
or that environmental conditions not known to the Company
may exist now or in the future which would result in
liability to the Company for remediation or fines, either
under existing laws and regulations or future changes to
such requirements.
Under the Federal Fair Housing Act and state fair housing
laws, discrimination on the basis of certain protected
classes is prohibited. Violation of these laws can result
in the award of significant damage award to victims. The
Company has a strong policy against any kind of
discriminatory behavior and trains its employees to avoid
discrimination or the appearance of discrimination. There
is no assurance, however, that an employee will not violate
the Company's policy against discrimination and thus violate
fair housing laws. This could subject the Company to legal
actions and the possible imposition of damage awards.
Item 2. Properties
As of December 31, 1996, the Owned Properties consisted of
28 multifamily residential properties containing 7,176
apartment units, one manufactured home community containing
202 home sites and a 35,000 square foot ancillary shopping
center located adjacent to a multifamily property. At the
time of the IPO, Home Properties owned 11 multifamily
properties containing 3,065 apartment units. Simultaneous
with the closing of the IPO, it acquired an additional four
properties containing 926 units. In 1994, Home Properties
purchased two additional communities having 472 units, in
1995 it purchased three communities having 1,061 apartment
units and in 1996 purchased ten additional communities
having 1,652 apartment units. From the time of the IPO to
December 31, 1996, this represents a 234% increase in the
number of apartment units owned by Home Properties. In
addition, on February 3, 1997, the Operating Partnership
acquired Lake Grove Apartments, a 368 unit apartment
community located in Lake Grove, Long Island, New York.
The Owned Properties are located in established markets and
are well-maintained and well-leased. Average economic
occupancy at the Owned Properties held throughout 1995 and
1996 was 94.3% for 1996. The Owned Properties are generally
two and three story garden style apartment buildings in
landscaped settings and a majority are of brick or other
masonry construction. The Company believes that its
strategic focus on appealing to mature residents and the
quality of the services it provides to such residents result
in low turnover. The turnover at the Owned Properties owned
as of December 31, 1996 was approximately 37.9% for 1996,
which is significantly below the national average for garden
apartments.
Management believes the Company was able to increase
occupancies and achieve rental rate growth in excess of
inflationary levels in 1996 due to physical upgrades made to
the Owned Properties, increased marketing efforts and
repositioning activities undertaken at its recent
acquisitions.
Resident leases are generally for one year terms and
security deposits equal to one month's rent are generally
required.
The table on the next page illustrates certain of the
important characteristics of the Owned Properties as of
December 31, 1996.
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Community Characteristics
(Communities Wholly Owned and Managed by Home Properties)
<TABLE>
<CAPTION>
December
Average (1) (2) (3) Average Mthly
Age Apt % Mature Average % % Resident Rent Rate/
# of in Year Size Residents Occupancy Turnover Occup Apt
Community Regional Area Apts Years Acq (Sq Ft) 1996 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C><C> <C> <C> <C> <C> <C> <C> <C> <C>
CORE PORTFOLIO (4)
Garden Village Buffalo, NY 315 25 1994 850 73% 96.2% 98.0% 28.6% 17.1% $574 $554
Raintree Island Buffalo, NY 504 25 1985 704 40% 94.1% 95.1% 37.7% 33.3% 572 557
Williamstowne Buffalo, NY 528 25 1985 708 99% 97.3% 96.9% 15.7% 16.5% 585 567
Retirement Village
1600 Elmwood Rochester, NY 210 37 1983 891 19% 93.0% 93.9% 51.9% 38.1% 739 705
Brook Hill Rochester, NY 192 25 1994 999 20% 94.8% 96.5% 44.3% 35.9% 731 697
Finger Lakes Manor Rochester, NY 153 26 1983 924 65% 92.4% 89.3% 35.9% 36.6% 665 659
Newcastle Rochester, NY 197 22 1982 873 40% 92.8% 87.6% 46.7% 44.2% 651 611
Apartments
Northgate Manor Rochester, NY 224 34 1994 800 42% 92.6% 89.3% 26.8% 33.9% 568 554
Perinton Manor Rochester, NY 224 27 1982 928 66% 94.2% 93.6% 24.6% 29.9% 690 677
Riverton Knolls Rochester, NY 240 23 1983 911 11% 93.2% 88.0% 75.0% 61.3% 678 651
Spanish Gardens Rochester, NY 220 23 1994 1030 34% 92.8% 88.0% 25.5% 40.9% 582 585
Springcreek Rochester, NY 82 24 1984 913 95% 94.4% 96.8% 39.0% 35.4% 527 515
The Meadows Rochester, NY 113 26 1984 890 52% 93.0% 95.8% 28.3% 30.0% 587 572
Conifer Village Syracuse, NY 199 18 1994 499 97% 99.9% 100.0% 17.6% 17.1% 563 547
Fairview Heights Syracuse, NY 210 33 1985 798 13% 92.0% 92.7% 51.4% 57.0% 705 676
Village Green Syracuse, NY 248 8 1994 908 16% 90.6% 87.8% 52.4% 70.0% 598 575
Wedgewood Village Columbus, OH 604 39 1986 710 51% 95.5% 94.7% 44.7% 43.3% 417 406
Total/Weighted
Average 4,463 27 811 51% 94.3% 93.5% 37.2% 36.6% 593 574
1995 Acquisitions
Idylwood Buffalo, NY 720 27 1995 700 13% 93.5% 88.5% 45.7% 45.0% 524 513
Harborside Manor Syracuse, NY 281 24 1994 823 17% 92.6% 90.3% 38.8% 40.0% 540 527
Pearl Street (5) Syracuse, NY 60 26 1995 855 21% 93.5% 95.1% 5.0% N/A 449 425
Total/Weighted
Average 1,061 26 741 15% 93.3% 89.3% 41.6% 43.6% 524 512
1996 Acquisitions
Valley Park South Bethlehem, PA 384 24 1996 987 28% 92.6% N/A N/A N/A 701 N/A
Carriage Hill Hudson Valley, NY 140 24 1996 845 20% 92.6% N/A N/A N/A 719 N/A
Cornwall Park Hudson Valley, NY 75 30 1996 1320 26% 92.0% N/A N/A N/A 821 N/A
Lakeshore Villas Hudson Valley, NY 152 22 1996 956 13% 90.8% N/A N/A N/A 603 N/A
Sunset Gardens Hudson Valley, NY 217 26 1996 662 53% 87.2% N/A N/A N/A 562 N/A
Hamlet Court Rochester, NY 98 26 1996 696 64% 95.9% N/A 13.3% N/A 589 N/A
Candlewood Gardens Syracuse, NY 126 26 1995 855 39% 96.0% N/A 43.7% N/A 446 N/A
Conifer Court Syracuse, NY 20 34 1996 720 6% 90.6% N/A 35.0% N/A 531 N/A
The Fairways at Syracuse, NY 200 11 1996 908 15% 78.7% N/A N/A N/A 589 N/A
Village Green (6)
Westminster Place Syracuse, NY 240 25 1996 913 12% 93.3% N/A 41.7% N/A 575 N/A
Total/Weighted
Average 1,652 23 894 28% 90.4% N/A 36.2% N/A 621 N/A
TOTAL/WEIGHTED
AVERAGE 7,176 26 819 40% 93.7% 92.8% 37.9% 37.9% $589 $562
</TABLE>
(1)"% Mature Residents" is the percentage of residents 55 years
or older as of December 31, 1996.
(2)"Average % Occupancy" is the economic occupancy. For the
core portfolio this is a twelve month average. For
communities acquired during 1995 or 1996, this is the average
occupancy from the date of acquisition.
(3)"% Resident Turnover" reflects, on an annual basis, the
number of move-outs divided by the total number of apartment
units.
(4)Core Portfolio = Properties owned prior to 1995.
(5)For most other reporting purposes, Pearl Street is included
within the description of Harborside Manor, which is located
immediately adjacent to it and with which it is jointly
operated.
(6)For most other reporting purposes, The Fairways at Village
Green is included within the description of Village Green
Apartments, which is located immediately adjacent to it and
with which it is jointly operated.
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Property Development
Management believes that new construction of market-rate
multi-family apartments is not economically feasible in most
of its markets. Therefore, Home Properties' development and
redevelopment activities are expected to be focused on
government-assisted multifamily residential housing.
Management believes that the Company's expertise in the full
continuum of government-assisted and market rate housing
provides the Company with the flexibility to react to
changing economic conditions and the opportunity to flourish
through all phases of economic cycles.
In 1980, traditional government-assisted housing programs
which provided direct rental subsidies (Section 8) began to
be phased out. In 1986, however, the Low-Income Housing Tax
Credit Program (LIHTC) was introduced. It provides an
indirect federal subsidy for the production of low-income
housing. The program is administered by each state. The
LIHTC offsets income tax liabilities dollar for dollar
because it is a tax credit and not a tax deduction.
In exchange for receiving the credit, the project owner must
agree to rent to income qualified individuals at reduced
rental rates. Theoretically, the credit is designed to
provide the additional return that is necessary to
compensate project owners for the reduced rental income.
Since the Company does not directly benefit from tax
credits, its transactions are structured with the Operating
Partnership serving as a one percent managing general
partner. Limited partners contribute substantial equity in
exchange for tax credits. The key benefits that Home
Properties receives are: (i) development fee income; (ii)
receipt of 75% to 90% of the project cash flow as incentive
management fees; (iii) control of the real estate as the
managing general partner; (iv) property management fees; and
(v) participation in future equity build-up. With respect to
existing projects, none of these benefits would be impacted
retroactively if the LIHTC program were modified or eliminated.
Through it predecessors, the Company has been developing
affordable housing for over 20 years. Management
anticipates that this experience, coupled with the financial
and property management strengths of the Company, will
enable the Company to remain a regional leader in the
affordable housing arena. As the only public REIT that
serves as a sponsor for LIHTC partnerships, management plans
to continue to focus on this very important sector of the
housing market.
In 1996, Home Properties developed or re-developed 775 units
in seven apartment communities financed in part through the
LIHTC Program. The Company also previously purchased 3
vacant sites for development of government-assisted housing
and has a number of other sites and developed properties
under option pending allocation of LIHTC funds or the
provision of other assistance through government programs.
Property Management
As of December 31, 1996, the Managed Properties consist of:
(i) 3,738 apartment units where Home Properties is the
general partner of the entity that owns the property; (ii)
1,654 apartment units, 662 of which are owned by entities
that Home Leasing, Conifer or their affiliates serve as
general partner; (iii) commercial properties which contain
approximately 1.6 million square feet of gross leasable
area; (iv) a master planned community known as Gananda,
including an 18-hole private golf course and country club;
(v) a 140 lot Planned Unit Development known as College
Greene; (vi) a 202 lot Planned
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Unit Development known as
Riverton; (vii) a homeowners' association for a 58 unit
condominium development; (viii) a nursing home which is
leased to a hospital for which the Company provides limited
management services; and (ix) 153 acres of vacant land in
Old Brookside, the development of which, if it occurs, will
be managed by HP Management. All of the Managed Properties
other than 992 of the apartment units are owned or
controlled by an affiliate of Home Properties, Home Leasing
or Conifer. Management fees are based on a percentage of
rental revenues or costs and, in certain cases, revenues
from sales. The Company may pursue the management of
additional properties not owned by the Company, but will
only do so when such additional properties can be
effectively and efficiently managed in conjunction with
other properties owned or managed by Home Properties.
The commercial properties consist of: (i) approximately
950,000 square feet of office space; (ii) approximately
400,000 square feet of retail space; (iii) approximately
75,000 square feet of industrial space; and (iv)
approximately 164,000 square feet of warehouse space.
Supplemental Property Information
At December 31, 1996, none of the Properties have an
individual net book value equal to or greater than ten
percent of the total assets of the Company or would have
accounted for ten percent or more of the Company's
aggregate gross revenues for 1996.
Item 3. Legal Proceedings
The Company is a party to a variety of legal proceedings
arising in the ordinary course of business. All such
proceedings, taken together, are not expected to have a
material adverse effect on the Company. Most of such
proceedings are covered by liability insurance. To
management's knowledge, no material litigation is
threatened against the Company.
Item 4. Submission of Matters to Vote of Security Holders
None.
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Item X. Executive Officers and Key Employees
The following table sets forth the six executive officers
and certain of the key employees of the Company, together
with their respective ages (as of February 28, 1997),
positions and offices.
Name Age Position
Norman P. Leenhouts 61 Chairman, Co-Chief Executive
Officer and Director of Home
Properties, Chairman and
Director of HP Management and
Director of Conifer Realty
Nelson B. Leenhouts 61 President, Co-Chief Executive
Officer and Director of Home
Properties, President, Chief
Executive Officer and Director
of HP Management and Director of
Conifer Realty.
Richard J. Crossed 57 Executive Vice President and
Director of Home Properties and
President, Chief Executive
Officer and Director of Conifer
Realty
Amy L. Tait 38 Executive Vice President and
Director of Home Properties and
Director of HP Management
David P. Gardner 41 Vice President, Chief Financial
Officer and Treasurer of Home
Properties, Conifer Realty and
HP Management
Ann M. McCormick 40 Vice President, General Counsel
and Secretary of Home Properties
and HP Management
William E. Beach 50 Vice President, Commercial
Property Management of Home
Properties and HP Management
Lawrence R. Brattain 45 Vice President, Residential
Property Management of Home
Properties and Conifer Realty
C. Terence Butwid 52 Vice President, Development of
Home Properties and Executive
Vice President of Conifer Realty
Kathleen M. Dunham 51 Vice President, Residential
Property Management of Home
Properties and Conifer Realty
Johanna A. Falk 32 Vice President, Marketing of
Home Properties
John H. Fennessey 58 Vice President, Development of
Home Properties and Conifer
Realty
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Name Age Position
Timothy A. Florczak 41 Vice President, Residential
Property Management of Home
Properties
Thomas L. Fountain 38 Vice President, Commercial
Property Management of Home
Properties and Conifer Realty
Timothy Fournier 36 Vice President, Development of
Home Properties and Executive
Vice President of Conifer Realty
Robert J. Luken 32 Vice President and Controller of
Home Properties
Paul O'Leary 44 Vice President, Residential
Property Management of Home
Properties
John Oster 47 Vice President, Development of
Home Properties and Conifer
Realty
Dale C. Prunoske 45 Vice President, Development of
Home Properties and Conifer
Realty
Richard J. Struzzi 43 Vice President, Development of
Home Properties and HP
Management
Robert C. Tait 39 Vice President, Commercial
Property Management of Home
Properties and HP Management
Laurie L. Willard 40 Vice President, Residential
Property Marketing of Home
Properties
Information regarding Richard Crossed, Nelson and Norman
Leenhouts and Amy Tait is set forth below under "Board of
Directors" in Item 10.
David P. Gardner has served as Vice President and Chief
Financial Officer of the Company, HP Management and Conifer
Realty since their inception. Mr. Gardner joined Home
Leasing Corporation in 1984 as Vice President and
Controller. In 1989, he was named Treasurer of Home
Leasing and Chief Financial Officer in December, 1993.
From 1977 until joining Home Leasing, Mr. Gardner was an
accountant at Cortland L. Brovitz & Co. Mr. Gardner is a
graduate of the Rochester Institute of Technology and is a
Certified Public Accountant.
Ann M. McCormick has served as Vice President, General
Counsel and Secretary of the Company and HP Management
since their inception. Mrs. McCormick joined Home Leasing
in 1987 and was named Vice President, Secretary and General
Counsel in 1991. Prior to joining Home Leasing, she was an
associate with the law firm of Nixon, Hargrave, Devans &
Doyle. Mrs. McCormick is a graduate of Colgate University
and holds a Juris Doctor from Cornell University.
Page 10
<PAGE>
William E. Beach has served as Vice President of the
Company and HP Management since their inception. He joined
Home Leasing in 1972 as a Vice President. Mr. Beach is a
graduate of Syracuse University and is a Certified Property
Manager (CPM) as designated by the Institute of Real Estate
Management.
Lawrence R. Brattain has served as Vice President of the
Company and Conifer Realty since 1996. He joined Conifer
in 1990 as a Vice President. Mr. Brattain is a graduate of
Assumption College and is a Certified Property Manager as
designated by the Institute of Real Estate Management.
C. Terence Butwid has served as Vice President of the
Company and Executive Vice President of Conifer Realty
since 1996. He joined Conifer in 1990 as a Vice President.
Prior to joining Conifer, Mr. Butwid was employed by Chase
Lincoln First Bank as Vice President and Manager of
Corporate Banking National Accounts. He was also President
of Ontario Capital Management. Mr. Butwid is a graduate of
Bowling Greene State University. He has an MBA from
American University and graduated from The National School
of Credit and Financial Management at Dartmouth College.
Kathleen M. Dunham has served as Vice President of the
Company and Conifer Realty since 1996. She joined Conifer
in 1980 and was named Vice President in 1990. Ms. Dunham
is a Certified Property Manager (CPM) candidate with the
Institute of Real Estate Management.
Johanna A. Falk has served as a Vice President of the
Company since 1997. She joined the Company in 1995 as an
investor relations specialist. Prior to joining the
Company, Mrs. Falk was employed as a marketing manager at
Bausch & Lomb Incorporated and Champion Products, Inc. and as
a financial analyst at Kidder Peabody. She is a graduate
of Cornell University and holds a Masters Degree in
Business Administration from the Wharton School of The
University of Pennsylvania.
John H. Fennessey has served as Vice President of the
Company and Conifer Realty since 1996. He joined Conifer
in 1975 as a founder and Vice President, responsible for
the operation of Conifer's Syracuse office. Prior to
joining Conifer, he was a Project Director with the New
York State Urban Development Corporation. Mr. Fennessey is
a graduate of Harpur College and holds a Masters Degree in
regional planning from the Maxwell School, Syracuse
University. He is a Charter Member of the American
Institute of Certified Planners (AICP).
Timothy A. Florczak has served as a Vice President of the
Company since its inception. He joined Home Leasing in
1985 as a Vice President. Prior to joining Home Leasing,
Mr. Florczak was Vice President of Accounting of Marc
Equity Corporation. Mr. Florczak is a graduate of the
State University of New York at Buffalo.
Thomas L. Fountain, Jr. has served as a Vice President of
the Company and Conifer Realty since 1996. He joined
Conifer in 1994 as the Director of Commercial Properties.
Prior to joining Conifer, Mr. Fountain was the Leasing
Manager for Faber Management Services, Inc. and Vice
President of Asset Management for Realty Diversified
Services, Inc. Mr. Fountain is a graduate of West Virginia
University.
Page 11
<PAGE>
Timothy Fournier has served as Vice President of Home
Properties and Executive Vice President of Conifer Realty
since 1996. He joined Conifer in 1986 as Vice President of
Finance. Prior to joining Conifer, Mr. Fournier was an
accountant at Coopers & Lybrand. Mr. Fournier is a graduate
of New Hampshire College and is a Certified Public Accountant.
Robert J. Luken has served as Controller of the Company
since 1996 and as a Vice President since 1997. Prior to
joining the Company, he was the Controller of Bell Corp. of
Rochester and an Audit Supervisor for Coopers & Lybrand.
Mr. Luken is a graduate of St. John Fisher College and is a
Certified Public Accountant.
Paul O'Leary has served as a Vice President of the Company
since its inception. He joined Home Leasing in 1974 and
has served as Vice President of Home Leasing since 1978.
Mr. O'Leary is a graduate of Syracuse University and is a
Certified Property Manager (CPM) as designated by the
Institute of Real Estate Management.
John Oster has served as Vice President of the Company and
Conifer Realty since 1996. He joined Conifer as a Vice
President in 1988. Before joining Conifer, Mr. Oster was
Director of Operations for the New York State Division of
Housing and Community Renewal. He is a graduate of
Hamilton College.
Dale C. Prunoske has served as a Vice President of the
Company and Conifer Realty since 1996. He joined Conifer
in 1994 as a Vice President. Prior to joining Conifer, he
worked for Continuing Development Services. He is a
graduate of and holds a Master of Public Administration
Degree from the State University of New York at Brockport.
Richard J. Struzzi has served as a Vice President of the
Company and HP Management since their inception. He joined
Home Leasing in 1983 as a Vice President. Mr. Struzzi is a
graduate of the State University of New York at Potsdam and
holds a Masters Degree in Public School Administration from
St. Lawrence University. He is the son-in-law of Nelson
Leenhouts.
Robert C. Tait has served as a Vice President of the
Company and HP Management since their inception. He joined
Home Leasing in 1989 and served as a Vice President of Home
Leasing since 1992. Prior to joining Home Leasing, he was
a manufacturing/industrial engineer with Moscom Corp. Mr.
Tait is a graduate of Princeton University and holds a
Masters Degree in Business Administration from Boston
University. Married to Amy L. Tait, he is the son-in-law of
Norman Leenhouts.
Laurie L. Willard has served as a Vice President of the
Company since its inception. She joined Home Leasing in
1987 and has served as a Vice President since 1992. Mrs.
Willard is a graduate of the University of Rochester. She
is the daughter of Norman Leenhouts.
Page 12
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The Common Stock has been traded on the New York Stock
Exchange ("NYSE") under the symbol "HME" since July 28,
1994. The following table sets forth for the previous
two years the quarterly high
and low sales prices per share reported on the NYSE, as
well as all distributions paid.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995
First Quarter $20 $17 $.4125
Second Quarter $19 $16-3/4 $.4125
Third Quarter $18-1/2 $16-7/8 $.4125
Fourth Quarter $17-3/4 $16-1/2 $.42
1996
First Quarter $20-5/8 $17-1/8 $.42
Second Quarter $21 $19-1/4 $.42
Third Quarter $20-5/8 $19-3/8 $.42
Fourth Quarter $22-5/8 $19-7/8 $.43
1997
January 1, 1997
to February 24, 1997 $25-1/4 $22 $.43
</TABLE>
Page 13
<PAGE>
Item 6. Selected Financial Data
The following table sets forth selected financial and
operating data on a historical basis for the Company and the
Original Properties and should be read in conjunction with
the financial statements appearing elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
COMPANY ORIGINAL PROPERTIES
--------------------------- ---------------------------
8/4/94 1/1/94
Through Through
1996 1995 12/31/94 8/3/94 1993 1992
(in thousands, except per share and property data)
Revenues:
<S> <C> <C> <C> <C> <C> <C>
Rental Income $42,214 $31,705 $10,995 $11,526 $19,189 $18,748
Other Income 3,456 2,596 948 494 783 743
Property management income (1) - 834 1,448 1,358
------- ------- ------- ------- ------- -------
TOTAL REVENUES 45,670 34,301 11,943 12,854 21,420 20,849
------- ------- ------- ------- ------- -------
Expenses:
Operating and maintenance 21,859 15,911 5,267 6,329 10,035 9,886
Property management (1) - - - 625 1,139 1,047
General & administrative 1,482 1,200 400 407 680 663
Interest 9,208 6,432 1,444 3,126 5,113 5,300
Depreciation & amortization 8,077 6,258 2,191 1,584 2,656 2,729
------- ------- ------- ------- ------- -------
TOTAL EXPENSES 40,626 29,801 9,302 12,071 19,623 19,625
------- ------- ------- ------- ------- -------
Income before minority interest and
extraordinary item 5,044 4,500 2,641 783 1,797 1,224
Minority interest 897 455 256 - - -
------- ------- ------- ------- ------- -------
Income before extraordinary item 4,147 4,045 2,385 783 1,797 1,224
Extraordinary item, prepayment
penalties, net of allocation to - (1,249) (2,498) - - -
minority interest ------- ------- ------- ------- ------- -------
Net income (loss) $4,147 $2,796 $(113) $783 $1,797 $1,224
======= ======= ======= ======= ======= =======
Net income (loss) per common share $ .74 $ .52 $ (.02) N/A N/A N/A
======= ======= =======
Cash dividends declared per common
share $ 1.69 $ 1.66 $ .26 N/A N/A N/A
======= ======= =======
Balance Sheet Data:
Real estate, before accumulated $261,773 $198,203 $162,991 $77,371 $76,646 $75,296
depreciation
Total assets 248,631 181,462 148,709 60,014 59,490 60,732
Total debt 105,176 91,119 52,816 57,952 58,583 59,622
Stockholders' equity/Owners' 83,030 75,780 81,941 (2,741) (2,591) (2,546)
(deficit)
Other Data:
Funds from Operations (2) $13,384 $11,025 $4,822 $2,348 $4,402 $3,892
Cash available for distribution (3) $11,022 $ 9,348 $4,369 $1,885 $3,608 $3,098
Net cash provided by (used in)
operating activities $14,241 $9,811 $3,151 $2,527 $4,188 $4,153
Net cash provided by (used in)
investing activities $(25,641) $(21,348) $(71,110) $(1,168) $(1,350) $(690)
Net cash provided by (used in)
financing activities $12,111 $10,714 $68,315 $(1,689) $(2,881) $(2,819)
Weighted average number of shares
outstanding 5,601,027 5,408,474 5,408,230 N/A N/A N/A
Total communities
owned, at end of period 28 20 19 12 12 12
Total apartment units owned,
at end of period 7,176 5,650 4,744 3,065 3,065 3,065
</TABLE>
Page 14
<PAGE>
Item 6. Selected Financial Data (continued)
(1) Property management income and expense represents the
management activities of Home Leasing Corporation prior to
the formation of HP Management.
(2) Management considers Funds from Operations to be an
appropriate measure of the performance of an equity REIT.
Effective January 1, 1996, the Company has adopted NAREIT's
revised White Paper definition of calculating funds from
operations (New FFO). All prior periods presented have been
restated to conform to New FFO. "Funds from Operations" is generally
defined by NAREIT as net income (loss) before gains (losses)
from the sale of property plus real estate depreciation,
including adjustments for unconsolidated partnerships and
joint ventures. Funds from Operations does not represent
cash generated from operating activities in accordance with
GAAP and is not necessarily indicative of cash available to
fund cash needs. Funds from Operations should not be
considered as an alternative to net income as an indication
of the Company's performance or to cash flow as a measure of
liquidity. Funds from Operations does not actually
represent the cash made available to investors in the
periods presented.
Funds from Operations is calculated as follows:
<TABLE>
<CAPTION>
8/4/94 1/1/94
Through Through
1996 1995 12/31/94 8/3/94 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $4,147 $2,796 ($113) $783 $1,797 $1,224
Depreciation - real property* 8,332 6,525 2,181 1,565 2,605 2,668
Loss on sale of property 8 - - - - -
Minority interest 897 455 256 - - -
Extraordinary item (prepayment
penalties) - 1,249 2,498 - - -
------- ------- ------- ------- ------- ------
Funds from Operations $13,384 $11,025 $4,822 $2,348 $4,402 $3,892
======= ======= ======= ======= ======= ======
Weighted average shares/units 6,813.2 6,015.1 5,983.6 N/A N/A N/A
</TABLE>
*Includes amounts passed through from unconsolidated investments.
The FFO presentation above may not be comparable to other
similarly titled measures of FFO of other REITs.
Quarterly information on Funds from Operations for the two most
recent years is as follows:
<TABLE>
<CAPTION>
1995 1st 2nd 3rd 4th Total
<S> <C> <C> <C> <C> <C>
Funds from
Operations before
minority interest $2,326 $2,555 $2,991 $3,153 $11,025
Weighted Average
Shares/Units 5,998.6 6,020.5 6,020.5 6,020.6 6,015.1
1996
Funds from
Operations before
minority interest $2,749 $3,078 $3,647 $3,910 $13,384
Weighted Average
Shares/Units 6,612.8 6,617.6 6,849.4 7,168.4 6,813.2
</TABLE>
(3) Cash Available for Distribution is defined as Funds from
Operations less an annual reserve for anticipated
recurring, non-revenue generating capitalized costs of $350
($300 for 1992-1995) per apartment unit, $94 per
manufactured home site and $.25 per square foot for the
35,000 square foot ancillary convenient shopping area at
Wedgewood. It is the Company's policy to fund its
investing activities and financing activities with the
proceeds of its Line of Credit or new debt.
Page 15
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
The following discussion is based primarily on the
Consolidated and Combined Financial Statements of Home
Properties of New York, Inc. and the Original Properties.
This should be read in conjunction with the financial
statements appearing elsewhere in this report.
The Company is engaged primarily in the ownership,
management, acquisition and development of residential
apartment communities. On August 4, 1994, the Company
completed an initial public offering of 5,408,000 shares of
common stock (the "IPO") and engaged in formation
transactions designed to enable the Company to continue and
expand the multifamily residential operations of Home
Leasing Corporation.
Certain capitalized terms, as used herein, are defined in
the Notes to the Consolidated and Combined Financial
Statements.
Results of Operations
Comparison of year ended December 31, 1996 to year ended
December 31, 1995.
The Company owned 18 properties consisting of 4,463
apartment units acquired prior to January 1, 1995 where
comparable operating results are available for the years
presented (the "Core Properties"). For the year ending
December 31, 1996, the Core Properties showed an increase
in rental revenues of 4.2% and a net operating income
increase of 3.3% over the 1995 year-end period. Property
level operating expense increases were 5.3%, primarily
attributable to significant increased utility costs
associated with severe winter weather during the first two
quarters of 1996. Average economic occupancy for the Core
Properties increased to 94.3% from 93.5%, with average
monthly rental rates increasing 3.3% to $583.
During 1996, the Company acquired a total of 1,652
apartment units in ten new communities (the "1996
Communities"). In addition, the Company experienced full
year results for the 1,061 apartment units in three new
apartment communities (the "1995 Communities") acquired
during 1995. The inclusion of these acquired communities
generally accounted for the significant changes in
operating results for the year ended December 31, 1996.
For the year ended December 31, 1996, operating income
increased by $544,000 when compared to the year ended
December 31, 1995. The increase was primarily attributable
to the following factors: an increase in rental income of
$10,509,000, and an increase in other income of $860,000.
These changes were partially offset by an increase in
operating and maintenance expense of $5,948,000, an
increase in general and administrative expense of $282,000,
an increase in interest expense of $2,776,000 and an
increase in depreciation and amortization of $1,819,000.
Of the $10,509,000 increase in rental income, $4,106,000 is
attributable to the 1995 Communities and $5,176,000 is
attributable to the 1996 Communities. The balance is a
4.2% increase from the Core Properties due primarily to an
increase of 3.3% in weighted average rental rates, plus an
increase in occupancy from 93.5% to 94.3%.
Page 16
<PAGE>
Other income increased in 1996 by $897,000. Of this
increase, $322,000 is from development fee income from
eight apartment communities developed under the Low Income
Housing Tax Credit Program where the Company is a general
partner. In addition, other significant components include
$179,000 from increased interest income, $168,000 from
increased management fees from residential properties and
$107,000 from the increase of the net results from the
Management Companies.
Of the $5,948,000 increase in operating and maintenance
expenses, $2,370,000 is attributable to the 1995
Communities and $2,821,000 is attributable to the 1996
Communities. The balance for the Core Properties, or
$757,000, represents a 5.3% increase over 1995. The major
area of increase in the Core Properties occurred in utilities,
personnel and snow removal costs due to the severe Winter
weather and a cooler Spring experienced in 1996 compared to
an unusually mild 1995.
The operating expense ratio (the ratio of operating and
maintenance expense compared to rental and property other
income) for the Core Properties was 48.6% and 48.2% for
1996 and 1995 respectively. In general, the Company's
operating expense ratio is higher than that experienced in
other parts of the country due to relatively high real
estate taxes in New York State and the practice in its
markets of typically including heating expenses in base
rent.
General and administrative expenses increased in 1996 by
$282,000, or 24% from $1,200,000 in 1995 to $1,482,000 in
1996. These increases are primarily due to increased
corporate personnel. However, general and administrative
expenses as a percentage of total revenues decreased from
3.5% in 1995 to 3.2% in 1996 as a result of increased
efficiencies from the economies of scale
Interest expense increased in 1996 by $2,776,000 as a
result of the acquisition of the 1996 Communities and full
year interest expense for the 1995 Communities. The 1995
Communities, costing in excess of $25,000,000, were
acquired substantially with assumed or new debt. The 1996
Communities, costing in excess of $54,000,000, were
acquired with $44,000,000 of assumed new debt, in addition
to the use of Operating Partnership Units ("UPREIT" units).
Amortization relating to interest rate reduction agreements
of $335,000 was included in interest expense during 1996
and 1995. In addition, amortization from deferred charges
relating to the financing of properties totaling $255,000
and $321,000 was included in interest expense for 1996 and
1995, respectively.
Comparison of year ended December 31, 1995 to year ended
December 31, 1994.
During 1995, the Company acquired a total of 1,061
apartment units in three new communities (the "1995
Communities"). In addition, the Company experienced full
year results for the 1,398 apartment units in six new
apartment communities (the "1994 Communities") acquired
from August 4, 1994 to December 31, 1994. The inclusion of
these acquired communities generally accounted for the
significant changes in operating results for the year ended
December 31, 1995.
For the year ended December 31, 1995, operating income
increased by $1,076,000 when compared to the year ended
December 31, 1994. The increase was primarily attributable
to the following factors: an increase in rental income of
$9,184,000, and an increase in other income of $1,154,000.
These changes were partially offset by an increase in
operating and maintenance expense of $4,315,000, an
increase in general and administrative expense of $393,000,
an increase in interest expense of $1,862,000 and an
increase in depreciation and amortization of $2,483,000.
Page 17
<PAGE>
For the year ended December 31, 1995 and 1994, the Company
incurred prepayment penalties of $1,390,000 and $2,763,000
on the paydown of certain debt instruments. These
penalties have been accounted for as extraordinary items.
The 1995 paydowns totaled $39,080,000 from six debt
instruments, and were financed by three new borrowings in
excess of $40,000,000. The 1994 paydowns totaled
$29,796,000 from seven debt instruments and were financed
from the proceeds of the IPO.
Of the $9,184,000 increase in rental income, $6,178,000 is
attributable to the 1994 Communities and $2,655,000 is
attributable to the 1995 Communities. The balance of this
increase, which is from the Original Properties, was due
primarily to an increase of 2.9% in weighted average rental
rates, offset by a decrease in occupancy from 94.7% to
93.5%
Other income increased in 1995 by $930,000. Of this
increase, $430,000 is from development fee income from four
apartment communities developed under the Low Income
Housing Tax Credit Program where the Company is a general
partner. In addition, $382,000 is from increased interest
income, $86,000 is from increased management fees from
residential properties and $32,000 is from other
miscellaneous increases. Of the large increase in interest
income, $230,000 is from a construction loan outstanding to
College Greene Rental Associates, L.P. This advance was
repaid in February, 1996.
Of the $4,315,000 increase in operating and maintenance
expenses, $3,101,000 is attributable to the 1994
Communities and $1,529,000 is attributable to the 1995
Communities. The balance for the Original Properties, or
($315,000), represents a 3.0% decrease over 1994. The two
main areas of savings were in real estate taxes ($236,000)
and utilities ($69,000). The tax savings were a result of
management's successful efforts in getting assessments
reduced at various properties. The utility savings were
from a combination of an unusually severe winter
experienced in the first quarter of 1994 compared to an
extraordinarily mild winter in the first quarter of 1995.
General and administrative expenses increased in 1995 by
$393,000, or 49% from $807,000 in 1994 to $1,200,000 in
1995. Of this increase, $131,000 was due primarily to
costs associated with becoming a public company for a full
year versus five months in 1994. The balance, representing
a 32% increase, was due primarily to increased payroll and
payroll expense of $165,000 (mostly from new positions),
increased travel of $29,000 and increased legal and
accounting of $33,000. These increases occurred during a
period when the weighted average portfolio of apartment
units owned (including general partnerships) increased by
61%.
Interest expense increased in 1995 by $1,862,000 as a
result of the acquisition of the 1995 Communities and full
year interest expense for the 1994 Communities. The 1995
Communities, costing in excess of $25,000,000, were
acquired substantially with assumed or new debt.
Amortization relating to interest rate reduction agreements
of $335,000 and $137,000 was included in interest expense
during 1995 and 1994, respectively. In addition,
amortization from deferred charges relating to the
financing of properties totaling $321,000 and $161,000 was
included in interest expense for 1995 and 1994,
respectively.
Page 18
<PAGE>
Liquidity and Capital Resources
The Company's principal liquidity demands are expected to
be distributions to stockholders, capital improvements and
repairs and maintenance for the properties,
acquisition of additional properties, property development
and debt repayments. The Company may also engage in
transactions whereby it acquires equity ownership in other
public or private companies that own portfolios of
apartment communities. Those transactions may be part of a
strategy to acquire all of the equity ownership in those
other companies.
The Company intends to meet its short-term liquidity
requirements through net cash flows provided by operating
activities and the line of credit. The Company considers
its ability to generate cash to continue to be adequate to
meet all operating requirements and make distributions to
its stockholders in accordance with the provisions of the
Internal Revenue Code, as amended, applicable to REITs.
To the extent that the Company does not satisfy its long-
term liquidity requirements through net cash flows provided
by operating activities and the line of credit, it intends
to satisfy such requirements through the issuance of UPREIT
units, proceeds from the Dividend Reinvestment Plan, property
debt financing, or issuing additional common shares or shares
of the Company's preferred stock. As of February 28, 1997,
the Company's Form S-3 Registration Statement has been
declared effective relating to the issuance of up to $100 million
of shares of common stock or other securities.
On December 30, 1996, capital was raised in a private
placement through the sale of a $35,000,000 Class A Limited
Partnership Interest to a state pension fund. The
interest, which can be converted into 1,666,667 shares of
common stock, 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. Any unconverted interest can be redeemed
without premium by the Company after ten years. Proceeds
of the transaction, which are anticipated to be used to
fund future acquisitions, were used to repay floating rate
debt on an interim basis.
Another source of capital results from the issuance of
UPREIT units for property acquisitions. The Company
successfully completed acquisitions during 1996 using
UPREIT units totaling approximately $10,000,000.
In November, 1995, the Company established a Dividend
Reinvestment Plan. The Plan provides the stockholders of
the Company an opportunity to automatically invest their
cash dividends at a discount of 3% from the market price.
In addition, eligible participants may make monthly
payments or other voluntary cash investments in shares of
common stock. During 1996, over $14,700,000 was raised
through this program, including over $4,100,000 from
officers and directors financed by a Company loan of
$2,061,000 and bank loans guaranteed by the Company which
total $1,874,000 at December 31, 1996.
The Company has an unsecured line of credit of $25 million,
all available at December 31, 1996. Borrowings under the
line bear interest at 1.75% over the one-month LIBOR rate.
The line of credit expires on August 22, 1997. The Company
intends to either renew the line for another year or
establish a new or additional line with a different
institution. As of March 5, 1997, the line of credit has
been increased to $35 million, with $11.7 million
available. The major use of the line since December 31, 1996, was
to acquire Lake Grove Apartments.
Page 19
<PAGE>
As of December 31, 1996, the weighted average rate of
interest on the Company's mortgage debt is 7.7% and the
weighted average maturity of such indebtedness is 8 years.
Floating rate debt has been reduced at year end to only 3%
of outstanding debt at December 31, 1996. This limits the
exposure to changes in interest rates, minimizing the
effect on results of operations and financial condition.
Floating rate debt represented 21% of outstanding debt on
March 5, 1997.
The Company's net cash provided by operating activities
increased from $9,811,000 for the year ended December 31,
1995 to $14,241,000 for the year ended December 31, 1996.
The increase was principally due to the acquisition of the
1995 and 1996 Communities, offset by the prepayment
penalties incurred in 1995 accounted for as extraordinary
items.
Net cash used in investing activities increased from
$21,348,000 in 1995 to $25,641,000 in 1996, resulting from
a higher level of acquisitions in 1996 (1,652 apartment
units) than in 1995 (1,061 apartment units).
The Company's net cash provided by financing activities
increased from $10,714,000 in 1995 to $12,111,000 in 1996.
The major source of financing in 1995 was debt related,
with $21,363,000 of net debt proceeds utilized to fund
property acquisitions and additions. In 1996, sales of
shares and UPREIT unit proceeds of $59,795,000 were used to
repay debt by $21,792,000 and fund property acquisitions
and additions.
Capital Improvements.
Total capital improvement expenditures increased from
$8,179,000 in 1995 to $8,843,000 in 1996. Of the
$8,843,000 expenditures, $1,387,000 is attributable to the
1996 Communities and $1,621,000 is attributable to the 1995
Communities. The balance of $5,835,000 is allocated
between the Core Properties of $4,928,000 and $907,000 for
land acquired for development.
Recurring, non-revenue enhancing capital replacements
typically include carpeting and tile, appliances, HVAC
equipment, new roofs, site improvements and various
exterior building improvements. Funding for these capital
replacements are provided by cash flows from operating
activities. The Company estimates that approximately $350
per unit is spent on capital replacements in a normal year
to maintain the condition of its properties.
In 1996, $3,300,000 in capital expenditures for the Core
Properties was incurred to fund non-recurring, revenue
enhancing upgrades, including the following: construction
of two new community centers; conversion of one property
from radiant to gas heat; continued additions of new windows and
exterior siding to one community; energy conservation
measures; and the modernization of numerous kitchens and
bathrooms. In addition, over $2,300,000 in substantial
rehabilitations was incurred on acquisition properties as
part of management's acquisition and repositioning
strategies. The pace of capital replacements was
accelerated to improve the overall competitive condition of
the properties. Funding for these capital improvements
was provided by the line of credit and other credit
facilities.
During 1997, the Company expects to continue to fund
similar non-recurring, revenue enhancing upgrades as well
as rehabilitations to acquisition properties in addition to
normal capital replacements.
Page 20
<PAGE>
Recent Accounting Developments
The Company will adopt the provisions of Statement of Accounting
Standards No. 128, "Earnings Per Share" for the year ended
December 31, 1997. Management does not anticipate the adoption
of this statement to have a material impact on the financial
statements.
Inflation
Substantially all of the leases at the communities are for
a term of one year or less, which enables the Company to
seek increased rents upon renewal of existing leases or
commencement of new leases. These short-term leases
minimize the potential adverse
effect of inflation on rental income, although residents
may leave without penalty at the end of their lease terms
and may do so if rents are increased significantly.
Item 8. Financial Statements and Supplemental Data
The financial statements and supplementary data are listed
under Item 14(a) and filed as part of this report on the
pages indicated.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Page 21
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
The Board of Directors (the "Board") currently consists of
eleven members. Effective with the consummation of the
transaction with the State of Michigan Retirement System,
the Board increased its number from 10 to 11 and elected
Alan J. Gosule as a director to serve until the 1997
Shareholders' Meeting. The terms for all of the directors
of Home Properties expire at that Shareholders' Meeting.
The information sets forth, as of February 28, 1997, for
each director of the Company such director's name,
experience during the last five years, other directorships
held, age and the year such director was first elected as
director of the Company.
<TABLE>
<CAPTION>
Year First
Name of Director Age Elected Director
<S> <C> <C>
Burton S. August, Sr. 81 1994
William Balderston, III 69 1994
Richard J. Crossed 57 1996
Alan L. Gosule 56 1996
Leonard F. Helbig, III 51 1994
Roger W. Kober 63 1994
Nelson B. Leenhouts 61 1993
Norman Leenhouts 61 1993
Clifford W. Smith, Jr. 50 1994
Paul L. Smith 61 1994
Amy L. Tait 38 1993
</TABLE>
Burton S. August, Sr. has been a director of the Company
since August, 1994. Mr. August is currently a director of
Monro Muffler Brake, Inc., a publicly traded company where
Mr. August served as Vice President from 1969 until he
retired in 1980. Mr. August is also a trustee emeritus of
Rochester Institute of Technology, a trustee of Strong
Museum and a trustee of the Otetiana Council Boy Scouts of
America.
William Balderston, III has been a director of the Company
since August, 1994. From 1991 to the end of 1992, he was an
Executive Vice President of The Chase Manhattan Bank, N.A.
From 1986 to 1991, he was President and Chief Executive
Officer of Chase Lincoln First Bank, N.A., which was merged
into The Chase Manhattan Bank, N.A. He is a director of
Bausch & Lomb Incorporated and Rochester Gas and Electric
Corporation, as well as a Trustee of the University of
Rochester. Mr. Balderston is a graduate of Dartmouth
College.
Richard J. Crossed has served as a director of the Company
and as a director, President and Chief Executive Officer of
Conifer Realty since January 1, 1996. He has served as
President and Chief Executive Officer of Conifer from 1985.
Prior to becoming President of Conifer, he served as
Director of Development for Conifer. Mr. Crossed is a
director of St. Joseph's Villa and is active in many housing
organizations. He has served on the New York State Housing
Turnkey Task Force and New York State Low-Income Housing Tax
Credit Task Force. Mr. Crossed is a graduate of Bellarmine
College.
Page 22
<PAGE>
Alan L. Gosule, 56, has been a director of the Company since
December, 1996. Mr. Gosule has been a partner in the law
firm of Roger & Wells, New York, New York, since August,
1991 and prior to that time was a partner in the law firm of
Gaston & Snow. He serves as Chairman of the Rogers & Wells
Tax Department and Real Estate Securities practice group.
Mr. Gosule is a graduate of Boston University and its Law
School and received a LL.M. from Georgetown University. Mr.
Gosule also serves on the Boards of Directors of 15 funds of
the Northstar Mutual Funds, the Simpson Housing Limited
Partnership and F.C. Putnam Investment Management Company.
Rogers & Wells acted as counsel to Coopers & Lybrand, LLP in
its capacity as advisor to the State Treasurer of the State
of Michigan in connection with its investment of retirement
funds in the Operating Partnership and Mr. Gosule was the
nominee of the State Treasurer under the terms of the
investment agreements described above.
Leonard F. Helbig, III has been a director of the Company
since August, 1994. Mr. Helbig has served as Executive
Managing Director of the Asset Services Group and a Director
of Cushman & Wakefield since 1984. He joined Cushman &
Wakefield in 1980 and is also a member of that firm's
Executive and National Management Committees. Mr. Helbig is
a member of the Urban Land Institute, the Pension Real
Estate Association and the International Council of Shopping
Centers. Mr. Helbig is a graduate of LaSalle University and
holds the MAI designation of the American Institute of Real
Estate Appraisers.
Roger W. Kober has been a director of the Company since
August, 1994. Mr. Kober is the Chairman of the Board and
Chief Executive Officer of Rochester Gas and Electric
Corporation where he has been employed since 1965. He is
also a member of the Board of Trustees of Rochester
Institute of Technology and a director of the Association of
Edison Illuminating Companies, the Chase Upstate Advisory
Council, the Greater Rochester Metro Chamber of Commerce,
the United Way of Greater Rochester, Inc. and other civic
and professional organizations. Mr. Kober is a graduate of
Clarkson College and holds a Masters Degree in Engineering
from Rochester Institute of Technology.
Nelson B. Leenhouts has served as President and a director
of the Company since its inception in 1993. He has also
served as President and Chief Executive Officer of HP
Management since its formation and has been a director of
Conifer Realty since its formation. Nelson Leenhouts was
the founder, and a co-owner, together with Norman Leenhouts,
of Home Leasing, and served as President of Home Leasing
from 1967. He is a director of Hauser Corporation. Nelson
Leenhouts is a graduate of the University of Rochester. He
is the twin brother of Norman Leenhouts.
Norman P. Leenhouts has served as Chairman of the Board of
Directors and a director of the Company since its inception
in 1993. He has also served as Chairman of the Board of HP
Management and as a director of Conifer Realty since their
formation. Norman Leenhouts was a co-owner, together with
Nelson Leenhouts, of Home Leasing and served as Chairman of
Home Leasing from 1971. He is a director of Hauser
Corporation and Rochester Downtown Development Corporation.
He also serves as Chairman of the Board of Trustees
of Roberts Wesleyan College and as a trustee of the
University of Rochester. He is a graduate of the University of
Rochester and is a certified public accountant. He is the
twin brother of Nelson Leenhouts.
Clifford W. Smith, Jr. has been a director of the Company
since August, 1994. Mr. Smith has been the Clarey Professor
of Finance of the William E. Simon Graduate School of
Business Administration of the University of Rochester since
1988. He has written numerous books, monographs, articles
and papers on a variety of financial, capital markets, risk
management and accounting topics and has held a variety of
editorial
Page 23
<PAGE>
positions on a number of journals. Mr. Smith is a graduate
of Emory University and holds a Doctor of Economics from the
University of North Carolina at Chapel Hill.
Paul L. Smith has been a director of the Company since
August, 1994. Mr. Smith was a director, Senior Vice
President and the Chief Financial Officer of the Eastman
Kodak Company from 1983 until he retired in 1993. He is
currently a director of Rochester General Hospital and GeVa
Theatre and is a member of the Board of Trustees of the
George Eastman House. Mr. Smith also serves on the Boards
of Directors of Performance Technologies, Inc. and BioWorks,
Inc. Mr. Smith is a graduate of Ohio Wesleyan University
and holds an MBA Degree in finance from Northwestern
University.
Amy L. Tait has served as Executive Vice President and a
director of the Company since its inception in 1993. She
has also served as a director of HP Management since its
formation. Mrs. Tait joined Home Leasing in 1983 and has
had several positions, including Senior and Executive Vice
President and Chief Operating Officer. She currently serves
on the M & T Bank Advisory Board and the boards of the
United Way of Rochester and GeVa Theatre. Mrs. Tait is a
graduate of Princeton University and holds a Masters Degree
in Business Administration from the William E. Simon
Graduate School of Business Administration of the University
of Rochester. She is the daughter of Norman Leenhouts.
See Item X in Part I hereof for information regarding
executive officers of the Company.
Compliance with Section 16(a) of the Securities Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") requires the Company's
executive officers and directors, and persons who own more
than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and
the New York Stock Exchange. Officers, directors and
greater than 10% shareholders are required to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required during
the fiscal year ended December 31, 1996, all Section 16(a)
filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were
satisfied except as follows. Amy Tait's Form 4 for August,
1996 with respect to her acquisition of shares of Common
Stock and options under the Company's Executive and Director
Stock Purchase Program did not reflect the acquisition of
shares and options under the same Program by her husband,
Robert Tait, a Vice President of the Company. The Form 4
was subsequently amended to reflect this omission. Burton
August's interest in 4,246 Units in the Operating
Partnership received in connection with the Conifer
Transaction were reported in last year's proxy statement and
Report on Form 10-K, but was not reflected on a Form 4 for
January, 1996. A Form 4 reflecting these interests was
subsequently filed.
Page 24
<PAGE>
Item 11. Executive Compensation
The following table sets forth the cash compensation paid
during 1994, 1995 and 1996 to the Company's Co-Chief Executive
Officers and other most highly compensated executive officers.
Except for the Co-Chief Executive Officers, no executive
officer's annual salary and bonus exceeded $100,000 on an
annualized basis during the fiscal years ending December 31,
1994 and 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards Shares
Underlying
Name and Principal Position Year Salary Bonus Options
<S> <C> <C> <C> <C> <S>
Norman P. Leenhouts 1994(1) $ 50,000 $14,556 88,000 sh.
Chairman and Co-Chief Executive Officer 1995 132,000 0 0
1996 145,200 59,702 7,338 sh.(4)
Nelson B. Leenhouts 1994(1) 50,000 14,556 88,000 sh.
President and Co-Chief Executive Officer 1995 132,000 0 0
1996 145,200 59,702 7,338 sh.(4)
Richard J. Crossed 1996(2) 145,200 59,702 88,000 sh.(3)
Executive Vice President 7,338 sh.(4)
Amy L. Tait 1994(1) 33,333 16,495 88,000 sh.
Executive Vice President 1995 87,917 0 0
1996 103,000 42,351 5,206 sh.(4)
</TABLE>
________________
(1) Amounts reported reflect actual
base salary earned during the Company's period of operations
from August 4, 1994 through December 31, 1994. The annual
base salary of each of Norman and Nelson Leenhouts for 1994
was $120,000 and for Amy Tait was $80,000.
(2) Mr. Crossed was not employed by the Company in 1994 and 1995.
(3) Issued in connection with the Conifer Transaction.
(4) These options were granted under
the Company's Stock Benefit Plan in connection with the
purchase of the Company's common stock under the Executive and
Director Stock Purchase and Loan Program described below. The
options are exercisable for ten years at $20.50 per share and
vest over five years.
Option Grants in Fiscal Year 1996
The following table sets forth certain information relating
to the options granted with respect to fiscal year ended
December 31, 1996. The columns labelled "Potential
Realizable Value" are based on hypothetical 5% and 10%
growth assumptions in accordance with the rules of the
Securities and Exchange Commission. The Company cannot
predict the actual growth rate of the Common Stock.
Page 25
<PAGE>
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year*
Individual Grants
-------------------------------------------------
Potential
Realizable Value
Percent of at Assumed Annual
Number of Total Options Rates of Stock
Shares Granted to Price Appreciation
Underlying Employees Exercise or For Option Term
Options in Fiscal Base Price Expiration ------------------
Name Granted Year ($/sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Norman P. 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Leenhouts
Nelson B. 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Leenhouts
Richard J. 88,000 (2) $19.00 1/2/2006 $1,051,600 $2,664,640
Crossed 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Amy L. Tait 5,206 (1) $20.50 1/2/2006 $ 67,105 170,080
</TABLE>
____________
* Stock appreciation rights were not granted in 1996.
(1) These stock options were granted in
connection with the purchase by the named individuals of
shares of Common Stock under the Executive and Director Stock
Purchase and Loan Program described below. An option to
purchase .25 shares of Common Stock was granted, with an
exercise price equal to fair market value on the date of
grant, for each share purchased.
(2) Issued in connection with the Conifer Transaction.
Page 26
<PAGE>
Option Exercises and Year-End Option Values
No options were exercised in 1996. The following table sets
forth the value of options held at the end of 1996 by the
Company's named Executive Officers.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values(1)
Number of
Shares Value of Unexercised in-
Acquired Number of Shares the-
on Value Underlying Money Options at
Name Exercise Realized Unexercised Fiscal-Year-End (2)
Options at Fiscal
Year-End
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <S> <C> <S> <C> <C>
Norman P. Leenhouts 0 0 88,000 sh. 7,338 sh. $308,000 $14,676
Nelson B. Leenhouts 0 0 88,000 sh. 7,338 sh. $308,000 $14,676
Richard J. Crossed 0 0 88,000 sh. 7,338 sh. $308,000 $14,676
Amy L. Tait 0 0 35,200 sh. 58,006 sh. $123,200 $195,212
</TABLE>
(1) Stock appreciation rights were not
granted in 1996.
(2) Based on the last reported sale
price of the Common Stock on the NYSE on December 31, 1996 of
$22.50 less the per Share exercise price of the options.
Employment Agreements
Norman and Nelson Leenhouts entered into employment
agreements with the Company prior to its initial public
offering providing for an initial term of five years
commencing August 4, 1994. The agreements provide for the
employment of Norman P. Leenhouts as Chairman of the Board
and Co-Chief Executive Officer of the Company at an annual
base salary of $120,000 and Nelson B. Leenhouts as President
and Co-Chief Executive Officer of the Company and President
and Chief Executive Officer of HP Management at an annual
base salary of $120,000. The base salaries under each
employment agreement automatically increase by 10% each year
starting January 1, 1995. Although their employment
agreements provide for a specific formula for the payment of
incentive compensation to each of Norman and Nelson
Leenhouts, they have voluntarily agreed to waive application
of that formula and instead receive incentive compensation
pursuant to the Company's Incentive Compensation Plan as it
may be revised by the Compensation Committee from time to
time. The employment agreements also provide that if
employment is terminated by the Company or not renewed
without cause, or terminated by the executive for good
reason at any time, then the executive is entitled to
receive a severance payment equal to the executive's annual
base salary and incentive compensation for the preceding
year multiplied by two or the number of years remaining of
the initial term, whichever is greater.
Pursuant to their respective employment agreements with the
Company, Norman and Nelson Leenhouts are each subject to a
covenant not to compete with the Company during the term of
his employment and, if either is terminated by the Company
for cause or resigns without good reason, for two years
thereafter. The covenants prohibit Norman and Nelson
Leenhouts from participating in the management, operation or
control of any multifamily residential business which is
competitive with the business of the Company,
Page 27
<PAGE>
except that they, individually and through Home Leasing and
its affiliates, may continue to own and develop the
properties managed by HP Management. The Leenhoutses have
also agreed that any commercial property which may be
developed by them will be managed by HP Management subject
to the approval of the outside members of the Board of
Directors.
Richard J. Crossed also entered into and Employment
Agreement with the Company, effective January 1, 1996. The
terms of that agreement are substantially the same as the
employment agreements entered into by Norman and Nelson
Leenhouts as described above. The initial term is for five
years and identical termination provisions are provided. In
his employment agreement, Mr. Crossed has agreed not to
compete with the Company during the term of his employment
and, if he is terminated by the Company for cause or resigns
without good reason, for three years thereafter.
Incentive Compensation Plan
The Company's incentive compensation plan (the "Incentive
Plan") for officers and key employees of the Company was
amended for 1996 to provide that eligible officer and key
employees may earn a cash bonus ranging from 5% to 50% of
base salary based on increases in the Company's Funds from
Operations per Share ("FFO"). The 1996 Incentive Plan
provides for a bonus pool to be established as follows:
<TABLE>
<CAPTION>
Growth in FFO/Share Percent of Growth
Contributed to Bonus Pool
<S> <C>
First 2% 0%
Next 1% 20%
Next 1% 30%
Next 1% 40%
Growth Over 5% 50%
</TABLE>
A factor is applied to each eligible participant's salary,
ranging from 1% to 10%, to determine the split of the bonus
pool. The factor applied to the salaries of Norman and
Nelson Leenhouts, Richard Crossed and Amy Tait is 10%, with
the maximum bonus payable to them being 50% of their base
salary.
Executive and Director Stock Purchase and Loan Program
In August 1996, the Board of Directors approved an Executive
and Director Stock Purchase and Loan Program. Pursuant to
the program, each officer and director of the Company was
eligible to receive loans for the purchase of Common Stock
under the Company's Dividend Reinvestment, Stock Purchase,
Resident Stock Purchase and Employee Stock Purchase Plan
("Dividend Reinvestment Plan") and receive options to
purchase Common Stock under the Company's Stock Benefit
Plan. The one-time program provided for loans up to a
formula amount for each officer based on salary and bonus
category and up to $60,000 for each independent director.
The Company loaned approximately 50% of the purchase price
and arranged loans from a commercial bank, guaranteed by the
Company, for the balance. The program also provided for the
issuance of stock options to purchase .25 shares of Common
Stock at the fair market value on the date of issuance
($20.50) for each share of Common Stock purchased. In the
aggregate, eighteen officers purchased 190,345 shares of
Common Stock and received 47,592 options to purchase Common
Stock at an exercise price of $20.50 vesting over five
years. The six independent directors purchased an aggregate
of
Page 28
<PAGE>
18,198 shares of Common Stock and received options to
purchase 4,554 shares of Common Stock for $20.50 per share
vesting over five years. The Company loaned the directors
and officers an aggregate of $2,063,469 maturing on August
31, 2016 with simple interest at 7% and guaranteed bank
loans totaling $2,033,180 repayable from the quarterly
dividends on the stock and the proceeds of any sale of the
stock.
Compensation of Directors
In 1996, the Company paid its directors who are not
employees of the Company annual compensation of $9,000 plus
$1,000 per day for attendance (in person or by telephone) at
Board and committee meetings. Effective January 1, 1997,
the annual director fee was increased to $10,000 per year.
Directors of the Company who are employees of the Company do
not receive any compensation for their services as
directors. All directors are reimbursed for their
expenses incurred in attending directors' meetings.
Pursuant to the Company's Stock Benefit Plan, each non-
employee director (other than Mr. Gosule) was granted
options to purchase 3,000 shares of Common Stock immediately
following the annual meeting of stockholders in 1996. The
options have an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant.
The Stock Benefit Plan does not have additional options
available for awards to directors. Subject to stockholder
approval of the changes to the Stock Benefit Plan,
the Board has approved additional awards to
each director of options to purchase 3,500 shares of Common
Stock immediately following the annual meeting of
stockholders in each of 1997, 1998 and 1999 at an exercise
price equal to the fair market value of the Company's Common
Stock on the date of grant. In addition, stockholder
approval of the proposed changes to the Stock Benefit Plan
would ratify the grants of options to purchase 4,554 shares
of Common Stock in August 1996 in connection with the
Executive and Director Stock Purchase and Loan Program
described below.
Compensation Committee Interlocks and Insider Participation
in Compensation Decisions
During the fiscal year 1996, the Compensation Committee was
comprised of Burton S. August, Sr., William Balderston, III
and Clifford W. Smith, Jr. None of them have ever been an
officer of the Company or any of its subsidiaries. Alan L.
Gosule joined the Committee at the beginning of 1997. Each
of the Compensation Committee members other than Mr. Gosule,
as well as each of the other independent directors,
participated in the Company's Executive and Director Stock
Purchase and Loan Program on August 12, 1996 and purchased
3,033 shares of Common Stock through the Company's Dividend
Reinvestment and Stock Purchase Plan for $19.788 per share
(3% below the five-day average market value as provided in
that Plan) and received options to purchase 759 shares of
Common Stock at the fair market value on that date of $20.50
per share. The purchases were financed 50% by a loan from
the Company due August 31, 2016 bearing simple interest at
7% per annum and 50% by a loan from a commercial bank
arranged by and guaranteed by the Company. Mr. August also
had an interest in the transactions consummated in January
1996 because he and members of his immediate family had
interests in a limited partnership merged into the Operating
Partnership as part of the Conifer Transaction. In
connection with such merger, Mr. August received 4,246 Units
in the Operating Partnership, and his immediate family
members received 5,404 Units in the Operating Partnership,
as merger consideration.
Page 29
<PAGE>
Item 12. Securities Ownership of Certain Beneficial Owners and
Management
The following table sets forth information as of
February 24, 1997 regarding the beneficial ownership of
shares of Common Stock by (i) directors, nominees and
certain executive officers of Home Properties, and
(ii) directors, nominees and executive officers of Home
Properties as a group, and (iii) each person known by the
Company to be the beneficial owner of more than a 5%
interest in the Company. The table also includes
information relating to the number and percentage of shares
of Common Stock and partnership units of the Operating
Partnership ("Units") beneficially owned by the persons
included in (i) and (ii) above (such Units are exchangeable
into shares, or cash at the election of the independent
directors of the Company. In preparing this table, the
Company has relied on information supplied by its officers,
directors, Nominees and certain stockholders, and upon
information contained in filings with the SEC.
<TABLE>
<CAPTION>
Number of Shares Percentage of Number of Percentage
Name and Address of Beneficially Outstanding Shares/Units of
Beneficial Owner Owned Shares(2) Owned Shares/Units
<S> <C> <C> <C> <C>
Norman P. Leenhouts 118,353(1) 1.9% 387,513(1)(3) 4.1%(4)
Nelson B. Leenhouts 117,453(1) 1.8% 386,365(1)(3) 4.1%(4)
Richard J. Crossed 118,852(5) 1.9% 313,816(5) 3.3%
Amy L. Tait 59,268(6) * 73,011(6) *
Burton S. August, Sr. 30,533(8) * 34,779(7)(8) *
William Balderston, III 13,533(7) * 13,533(7) *
Alan L. Gosule 0 * 0 *
Leonard Helbig, III 13,206(7) * 13,206(7) *
Roger W. Kober 13,220(7) * 13,220(7) *
Clifford W. Smith, Jr. 16,935(7) * 16,935(7) *
Paul L. Smith 14,033(7) * 14,033(7) *
All executive officers
and directors
as a group (13 persons) 554,571(9) 8.3%(10) 1,303,141(3)(9) 17.9%(11)
</TABLE>
Page 30
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned Outstanding Shares
<S> <C> <C>
Capital Growth Management 317,000(12) 5.42%
Limited Partnership
One International Place
Boston, MA 02110
Miller Anderson & Sherrerd 512,200(13) 8.81%
One Tower Bridge
West Conshohocken, PA 19428
and
Morgan Stanley Group Inc.
1585 Broadway
New York, NY 10036
Palisade Capital Management L.L.C. 502,000(14) 8.20%
1 Bridge Plaza, Suite 695
Fort Lee, NJ 07024
State Treasurer, State of Michigan 1,666,667(15) 26.76%
Bureau of Investments
Department of Treasury
Treasury Building, Box 15128
Lansing, MI 48901
</TABLE>
__________
* Less than 1%
(1) Includes 88,000 shares which may be acquired upon the exercise of
currently exercisable options by each of Norman and Nelson
Leenhouts.
(2) Assumes that all options included with respect to the person have
been exercised. The total number of shares outstanding used in
calculating the percentage assumes that none of the options held
by any other person have been exercised.
(3) Includes Units owned by Home Leasing and Leenhouts Ventures.
Norman Leenhouts and Nelson Leenhouts are each directors,
officers and 50% stockholders of Home Leasing and each owns 50%
of Leenhouts Ventures. Includes 50,000 Units owned by the
respective spouses of each of Norman and Nelson Leenhouts as to
which they disclaim beneficial ownership.
(4) Assumes that all options included with respect to the person have
been exercised and all Units included with respect to the person
have been exchanged for shares of Common Stock. The total number
of shares outstanding used in calculating the percentage assumes
that none of the options held by any other person have been
exercised and that none of the Units held by any other person
have been exchanged for shares.
(5) Includes 88,000 shares which may be acquired upon the exercise of
currently exercisable options. Also includes Mr. Crossed's
proportionate share of Units owned by Conifer and its affiliates.
(6) Includes 35,200 shares which may be acquired upon the exercise of
currently exercisable options. Also includes 3,246 shares owned
by Mrs. Tait's spouse as to which she disclaims beneficial
ownership. Mrs. Tait shares voting and dispositive power with
respect to 2,548 Units with her spouse.
(7) Includes 9,000 shares which may be acquired upon the exercise of
currently exercisable options.
(8) Includes 12,500 shares owned by immediate family members of Mr.
August as to which he disclaims beneficial ownership.
(9) Includes 406,000 shares which may be acquired upon the exercise
of immediately exercisable options.
(10) Assumes that all exercisable options included with respect to all
listed persons have been exercised.
(11) Assumes that all exercisable options included with respect to all
listed persons have been exercised and that all Units included
with respect to all listed persons have been exchanged for shares
of Common Stock.
(12) Based on a report on Schedule 13G, dated February 11, 1997,
reflecting that Capital Growth Management Limited Partnership has
shared dispositive and sole voting power with respect to shares
held in client accounts, as to which Capital Growth disclaims
beneficial ownership.
(13) Based on a report on Schedule 13G, dated February 14, 1997,
filed jointly on behalf of Miller Anderson & Sherrerd and Morgan
Stanley Group Inc., reflecting that the two Investment Advisors
have shared voting and dispositive power with respect to 515,200
shares.
Page 31
<PAGE>
(14) Based on a report in Schedule 13G, dated February 1, 1997,
reflecting that Palisade Capital Management, L.L.C. holds the
shares on behalf of clients in accounts over which Palisade has
sole voting and dispositive power.
(15) Based on a report on Form 13D, dated January 6, 1997, reflecting
that the State Treasurer, State of Michigan and the individual
members of the Michigan Department of Treasury's Bureau of
Investments, which manages the investments for four state-
sponsored retirement systems: Public School Retirement System,
State Employees' Retirement System, Michigan State Police
Retirement System and Judges' Retirement System acquired a Class
A Limited Partnership Interest in the Operating Partnership which
is convertible, at the option of the State of Michigan, into
1,666,667 shares of common stock, subject to adjustment, over
which the State Treasurer would have sole voting and dispositive
power.
Item 13. Certain Relationships and Related Transactions.
Certain directors and an executive officer of the Company
(or entities controlled by them or members of their
immediate families) had direct or indirect interests in
transactions which were consummated in connection with the
acquisition of Conifer Realty, Inc. and certain affiliates
on January 1, 1996 (the "Conifer Transaction"). The
following persons received Units in connection with the
Conifer Transaction, and certain indebtedness was or will be
repaid by the Company:
<TABLE>
<CAPTION>
Units Indebtedness
Name Received Repaid
<S> <C> <C>
Burton August Sr. 4,246 0
Immediate family members of Burton S. August, Sr. 5,404 0
Richard J. Crossed 68,021 0
Conifer Development, Inc. (1) 20,738 $1,433,190
C.O.F., Inc. (2) 285,403 0
Tamarack II Associates (3) 2,027 0
</TABLE>
_______________
(1) Richard J. Crossed owns a 40.6% interest in Conifer
Development, Inc.
(2) Formerly Conifer Realty, Inc. Richard J. Crossed owns
a 40.6% interest in C.O.F., Inc.
(3) Conifer Development, Inc. owns a 5% interest in
Tamarack II Associates. Mr. Crossed is a 2% General Partner
of a partnership comprised of his family members that owns a
39% interest in Tamarack II Associates.
In connection with the Conifer Transaction, the Company became
the general partner of St. Paul Genesee Associates, L.P.. In
May, 1996, Huntington Associates L.P., a partnership in which
the Operating Partnership serves as general partner, purchased
the property owned by St. Paul Genesee Associates at a
purchase price determined by the Board of Directors of the
Company, which was paid in cash and by a promissory note. Mr.
Crossed and Mr. August are partners of St. Paul Genesee
Associates and received or have an interest in $75,580 and
$18,965, respectively, of the cash and payments on the
promissory note received by St. Paul Genesee Associates. They
abstained from the action of the Board setting the purchase
price for the property. It is anticipated that the limited
partnership interests in Huntington Associates L.P. will be
sold in a tax credit transaction and that substantially all of
the Company's investment will be returned.
Page 32
<PAGE>
Directors and executive officers of the Company received loans
from the Company of 50% of the purchase price of shares of
Common Stock purchased by them in connection with the
Company's Executive and Director Stock Purchase and Loan
Program described above and commercial bank loans for the
balance, guaranteed by the Company. The indebtedness to the
Company of each of the named executive officers is: each of
Messrs. Leenhouts and Crossed - $290,408 and Mrs. Tait -
$206,000.
Home Leasing, in consideration of a portion of the Units and
cash received by it in connection with the formation of the
Company, assigned to HP Management certain management
contracts between it and certain entities of which it is a
general partner. As a general partner of those entities, Home
Leasing Corporation (and, indirectly, Norman and Nelson
Leenhouts) has an ongoing interest in such management
contracts. Pursuant to the Contribution Agreement, Conifer
assigned to the Company and its affiliates certain management
contracts between Conifer and entities in which it is the
general partner. As a general partner, Conifer (and
indirectly, Richard Crossed) has an ongoing interest in such
management contracts.
Page 33
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
(a) 1 and 2. Financial Statements and Schedules
The financial statements and schedules listed below are
filed as part of this annual report on the pages indicated.
HOME PROPERTIES OF NEW YORK, INC. AND THE ORIGINAL PROPERTIES
Consolidated and Combined Financial Statements
Page
Report of Independent Accountants F-2
Consolidated Balance Sheets
as of December 31, 1996 & 1995 F-3
Consolidated and Combined Statements of
Operations for the Years Ended
December 31, 1996 and 1995, for the Period
from August 4, 1994 through December 31, 1994
and for the Period from January 1, 1994 through
August 3, 1994 F-4
Consolidated and Combined Statements of
Stockholders' Equity/Owners Deficit
for the Years Ended December 31, 1996 and 1995,
for the Period from August 4, 1994 through
December 31, 1994 and for the Period from
January 1, 1994 through August 3, 1994 F-5
Consolidated and Combined Statements of
Cash Flows for the Years Ended December 31,
1996 and 1995, for the Period from August 4, 1994
through December 31, 1994 and for the Period
from January 1, 1994 through August 3, 1994 F-6
Notes to the Consolidated and Combined
Financial Statements F-7
Schedule III:
Real Estate and Accumulated Depreciation F-24
Page 34
<PAGE>
(a) 3. Exhibits
Exhibit Exhibit
Number
3.1 Articles of Incorporation of Home Properties of New
York, Inc.
3.2 Articles of Amendment and Restatement of Articles
of Incorporation of Home Properties of New York,
Inc.
3.3 Amended and Restated By-Laws of Home Properties of
New York, Inc. (Revised 12/30/96)
4.1 Form of certificate representing Shares of Common
Stock.
4.2 Agreement of Home Properties of New York, Inc. to
file instruments defining the rights of holders of
long-term debt of it or its subsidiaries with the
Commission upon request.
4.3 Credit Agreement between Manufacturers and Traders
Trust Company, Home Properties of New York, L.P.
and Home Properties of New York, Inc.
4.4 Amendment Agreement between Manufacturers and
Traders Trust Company, Home Properties of New York,
L.P. and Home Properties of New York, Inc. amending
the Credit Agreement.
4.5 Mortgage Spreader, Consolidation and Modification
Agreement between Manufacturers and Traders Trust
Company and Home Properties of New York, L.P.,
together with form of Mortgage, Assignment of
Leases and Rents and Security Agreement
incorporated therein by reference.
4.6 Mortgage Note made by Home Properties of New York,
L.P. payable to Manufacturers and Traders Trust
Company in the principal amount of $12,298,000.
4.7 Demand Grid Note, dated August 22, 1995, from the
Operating Partnership to Manufacturers and Traders
Trust Company in the maximum principal amount of
$15,000,000.
4.8 Spreader, Consolidation, Modification and Extension
Agreement between Home Properties of New York, L.P.
and John Hancock Mutual Life Insurance Company,
dated as of October 26, 1995, relating to
indebtedness in the principal amount of
$20,500,000.
4.9 Demand Grid Note, dated August 22, 1996 from the
Operating Partnership to Manufacturers and Traders
Trust Company in the maximum principal amount of
$25,000,000.
4.10 Demand Grid Note, dated March 5, 1997 from the
Operating Partnership to Manufacturers and Traders
Trust Company in the maximum principal amount of
$35,000,000.
Page 35
<PAGE>
10.1 Agreement of Limited Partnership of Home Properties
of New York, L.P.
10.2 Amended and Restated Agreement of Limited
Partnership of Home Properties of New York, L.P.
10.3 Amendments No. One through Eight to the Agreement
of Limited Partnership of Home Properties of New
York, L.P.
10.4 Amendment No. Nine to the Agreement of Limited
Partnership of Home Properties of New York, L.P.
10.5 Amendment No. Ten to the Agreement of Limited
Partnership of Home Properties of New York, L.P.
10.6 Articles of Incorporation of Home Properties
Management, Inc.
10.7 By-Laws of Home Properties Management, Inc.
10.8 Articles of Incorporation of Conifer Realty
Corporation.
10.9 By-Laws of Conifer Realty Corporation.
10.10 Employment Agreement between Home Properties of New
York, L.P. and Norman P. Leenhouts.
10.11 Employment Agreement between Home Properties of New
York, L.P. and Nelson B. Leenhouts.
10.12 Employment Agreement between Home Properties of New
York, L.P. and Richard J. Crossed.
10.13 Indemnification Agreement between Home Properties
of New York, Inc. and certain officers and
directors.
10.14 Indemnification Agreement between Home Properties
of New York, Inc. and Richard J. Crossed.
10.15 Indemnification Agreement between Home Properties
of New York, Inc. and Alan L. Gosule.
10.16 Home Properties of New York, Inc. 1994 Stock
Benefit Plan.
10.17 Registration Rights Agreement among Home Properties
of New York, Inc., Home Leasing Corporation,
Leenhouts Ventures, Norman P. Leenhouts, Nelson B.
Leenhouts, Amy L. Tait, David P. Gardner, Ann M.
McCormick, William E. Beach, Paul O'Leary, Richard
J. Struzzi, Robert C. Tait, Timothy A. Florczak and
Laurie Tones.
Page 36
<PAGE>
10.18 Lockup Agreements by Home Properties of New York,
Inc. and Conifer Realty, Inc., Conifer Development,
Inc., Richard J. Crossed, Peter J. Obourn and John
F. Fennessey.
10.19 Contribution Agreement between Home Properties of
New York, L.P. and Conifer Realty, Inc., Conifer
Development, Inc., Richard J. Crossed, Peter J.
Obourn and John H. Fennessey.
10.20 Amendment to Contribution Agreement between Home
Properties of New York, L.P. and Conifer Realty,
Inc., Conifer Development, Inc., Richard J.
Crossed, Peter J. Obourn and John H. Fennessey.
10.21 Agreement of Operating Sublease, dated October 1,
1986, among KAM, Inc., Morris Massry and Raintree
Island Associates, as amended by Letter Agreement
Supplementing Operating Sublease dated October 1,
1986.
10.22 Second Amended and Restated Incentive Compensation
Plan of Home Properties of New York, Inc.
10.23 Indemnification and Pledge Agreement between Home
Properties of New York, L.P. and Conifer Realty,
Inc., Conifer Development, Inc., Richard J.
Crossed, Peter J. Obourn and John H. Fennessey.
10.24 Form of Term Promissory Note payable to Home
Properties of New York, Inc. by officers and
directors in association with the Executive and
Director Stock Purchase and Loan Program.
10.25 Form of Pledge Security Agreement executed by
officers and directors in connection with Executive
and Director Stock Purchase and Loan Program.
10.26 Schedule of Participants, loan amounts and shares
issued in connection with the Executive and
Director Stock Purchase and Loan Program.
10.27 Guaranty by Home Properties of New York, Inc. and
Home Properties of New York, L.P. to The Chase
Manhattan Bank of the loans from The Chase
Manhattan Bank to officers and directors in
connection with the Executive and Director Stock
Purchase and Loan Program.
10.28 Subordination Agreement between Home Properties of
New York, Inc. and The Chase Manhattan Bank
relating to the Executive and Director Stock
Purchase and Loan Program.
10.29 Partnership Interest Purchase Agreement, dated as
of December 23, 1996, among Home Properties of New
York, Inc., Home Properties of New York, L.P. and
State of Michigan Retirement Systems.
Page 37
<PAGE>
10.30 Registration Rights Agreement, dated as of December
23, 1996 between Home Properties of New York, Inc.
and State of Michigan Retirement Systems.
10.31 Lock-Up Agreement, dated December 23, 1996 between
Home Properties of New York, Inc. and State of
Michigan Retirement Systems.
10.32 Contract of Sale between Lake Grove Associates
Corp. and Home Properties of New York, L.P., dated
December 17, 1996, relating to the Lake Grove
Apartments.
11 Computation of Per Share Earnings Schedule
21 List of Subsidiaries of Home Properties of New
York, Inc.
23.1 Consent of Coopers & Lybrand, LLP
23.2 Consent of Coopers & Lybrand, LLP
23.3 Consent of Coopers & Lybrand, LLP
27 Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K, dated January 5, 1996 was filed on December 6, 1996
reporting on the acquisition of several properties. On February
4, 1997, the Company filed Amendment No. 1 to Form 8-K/A, that
includes the following financial statements:
* Audited statement of revenues and certain expenses of Valley
Park South Apartments for the year ended December 31, 1995.
* Audited statement of revenues and certain expenses of the
Hudson Valley Acquisition for the year ended December 31, 1995.
* Pro forma condensed consolidated balance sheet of Home
Properties of New York, Inc. as of September 30, 1996 and related
notes (unaudited).
* Pro forma consolidated statement of operations of Home
Properties of New York, Inc. for the nine months ended September
30, 1995 and for the year ended December 31, 1995 and related
notes (unaudited).
* Notes to the pro forma consolidated statement of operations
of the Company for the nine months ended September 30, 1996 and
for the year ended December 31, 1995 (unaudited).
Amendment No. 2 to Form 8-K/A, dated May 16, 1995, was filed on
November 13, 1996 and included the following financial
statements:
* Audited Statement of Revenues and Certain Expenses for
Idylwood Apartments for the year ended December 31, 1994.
* Pro Forma Condensed Consolidated Balance Sheet for Home
Properties of New York, Inc. as of June 30, 1995 and related
notes (unaudited).
Page 38
<PAGE>
* Pro Forma Consolidated and Combined Statement of Operations
for Home Properties of New York, Inc. for the six months ended
June 30, 1995 (unaudited) and for the year ended December 31,
1994 (unaudited).
* Notes to the pro forma consolidated and combined statement
for operations of Home Properties of New York, Inc. for the six
months ended June 30, 1995 and for the year ended December 31,
1994 (unaudited).
Amendment No. 3 to Form 8-K, dated January 9, 1996 was filed on
November 13, 1996 and included the following financial
statements:
* Audited statements of net assets acquired of Conifer
Corporation and Subsidiaries as of March 31, 1995 and 1994 and
the related statements of acquired operations and cash flow for
the years then ended.
* Audited combined statement of revenues and certain expenses
of the Conifer Acquisition Property for the year ended December
31, 1995.
* Pro forms condensed consolidated balance sheet of the
Company as of December 31, 1995 and related notes (unaudited).
* Pro forma consolidated statement of operations of Home
Properties of New York, Inc. for the year ended December 31, 1995
and related notes (unaudited).
A Form 8-K, dated August 6, 1996 was filed on October 8, 1996,
reporting the increase by 580,000 shares of the Company's Common
Stock available for cash purchases under the Company's Dividend
Reinvestment, Stock Purchase Resident Stock Purchase and Employee
Stock Purchase Plan. No financial statements were filed.
A Form 8-K, dated December 23, 1996 was filed on January 7, 1997,
reporting the sale of $35 million Class A limited partnership
interest in Home Properties of New York, L.P. to the State
Treasurer of the State of Michigan, Custodian of the Michigan
Public School Employees' Retirement Systems, State Employees'
Retirement System, Michigan State Police Retirement System and
Michigan Judges' Retirement System. No financial statements were
included.
(c) Exhibits
See Item 14(a)(3) above.
(d) Financial Statement Schedules
See Index to Financial Statements attached
hereto on page F-1 of this Form 10-K.
Page 39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 13(d) of the
Securities Exchange Act of 1934, Home Properties of New York,
Inc. certifies that it has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Norman P. Leenhouts
----------------------------
Norman P. Leenhouts
Chairman of the Board, Co-Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of Home Properties of New York, Inc. and in the capacities
and on the dates indicated.
Signature Title Date
/s/ Norman P. Leenhouts Director, Chairman of the March 17, 1997
- ----------------------------
Norman P. Leenhouts Board of Directors and
Co-Chief Executive
Officer (Co-Principal
Executive Officer)
/s/ Nelson B. Leenhouts Director, President March 21, 1997
- ----------------------------
Nelson B. Leenhouts and Co-Chief Executive
Officer (Co-Principal
Executive Officer)
/s/ Richard J. Crossed Director, Executive Vice March 25, 1997
- ----------------------------
Richard J. Crossed President
/s/ Amy L. Tait Director, Executive Vice March 21, 1997
- ----------------------------
Amy L. Tait President
/s/ David P. Gardner Vice President, Chief Financial March 25, 1997
- ----------------------------
David P. Gardner Officer and Treasurer
(Principal Financial and
Accounting Officer)
Page 40
<PAGE>
Signature Title Date
/s/ Burton S. August, Sr. Director March 21, 1997
- ----------------------------
Burton S. August, Sr.
/s/ William Balderston, III Director March 17, 1997
- ----------------------------
William Balderston, III
/s/ Alan L. Gosule Director March 21, 1997
- ----------------------------
Alan L. Gosule
/s/ Leonard F. Helbig, III Director March 13, 1997
- ----------------------------
Leonard F. Helbig, III
/s/ Roger W, Kober Director March 25, 1997
- ----------------------------
Roger W. Kober
/s/ Clifford W. Smith, Jr. Director March 19, 1997
- ----------------------------
Clifford W. Smith, Jr.
/s/ Paul L. Smith Director March 12, 1997
- ----------------------------
Paul L. Smith
Page 41
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Page
Report of Independent Accountants F-2
Consolidated Balance Sheets as of
December 31, 1996 and 1995 F-3
Consolidated and Combined Statements of Operations
for the Years Ended December 31, 1996 and 1995, for
the Period From August 4, 1994 through December 31,
1994 and for the Period From January 1, 1994 through
August 3, 1994. F-4
Consolidated and Combined Statements of
Stockholders' Equity/Owners' Deficit
for the Years Ended December 31, 1996 and 1995, for
the Period From August 4, 1994 through December 31,
1994 and for the Period From January 1, 1994 through
August 3, 1994. F-5
Consolidated and Combined Statements of Cash Flows
for the Years Ended December 31, 1996 and 1995, for
the Period From August 4, 1994 through December 31,
1994 and for the Period From January 1, 1994 through
August 3, 1994. F-6
Notes to Consolidated and Combined Financial
Statements F-7
Schedule III:
Real Estate and Accumulated Depreciation F-24
Page F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Home Properties of New York, Inc.
We have audited the accompanying consolidated and combined
financial statements and the financial statement schedule of Home
Properties of New York, Inc. and the Original Properties listed
in Item 14(a) of this Form 10-K. These financial statements and
the financial statement schedule are the responsibility of the
Home Properties of New York, Inc. and the Original Properties'
management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Home Properties of New York, Inc. as of
December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for the years ended December 31,
1996 and 1995 and the period from August 4, 1994 through December
31, 1994, and the combined results of operations and cash flows
of the Original Properties for the period from January 1, 1994
through August 3, 1994, in conformity with generally accepted
accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information
required to be included therein.
/s/ Cooper & Lybrand L.L.P.
Rochester, New York
February 3, 1997
Page F-2
<PAGE>
<TABLE>
<CAPTION>
HOME PROPERTIES OF NEW YORK, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 and 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1996 1995
<S> <C> <C>
ASSETS
Real estate:
Land $ 15,080 $ 7,065
Buildings, improvements and equipment 246,693 191,138
-------- --------
261,773 198,203
Less: accumulated depreciation ( 40,237) ( 32,258)
-------- --------
Real estate, net 221,536 165,945
Cash and cash equivalents 1,523 812
Cash in escrows 5,637 3,754
Accounts receivable 2,185 1,252
Prepaid expenses 2,496 1,936
Deposit 1,900 -
Advances to affiliates 5,898 5,097
Deferred financing costs 1,616 1,976
Other assets 5,840 690
-------- --------
Total assets $248,631 $181,462
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $104,915 $ 86,149
Notes payable 261 470
Line of Credit - 4,500
Accounts payable 2,024 1,657
Accrued interest payable 601 383
Accrued expenses and other liabilities 2,525 1,882
Security deposits 2,545 1,902
-------- --------
Total liabilities 112,871 96,943
-------- --------
Minority interest 52,730 8,739
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000
shares authorized; no shares issued - -
Common stock, $.01 par value; 30,000,000
shares authorized; 6,144,498 and 5,408,817 shares
issued and outstanding at December 31, 1996 and
1995, respectively 61 54
Excess stock, $.01 par value; 10,000,000
shares authorized; no shares issued - -
Additional paid-in capital 98,092 83,413
Distributions in excess of accumulated earnings ( 13,062) ( 7,687)
Officer and director notes for stock purchases ( 2,061) -
-------- --------
Total stockholders' equity 83,030 75,780
-------- --------
Total liabilities and
stockholders' equity $248,631 $181,462
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
and combined financial statements.
Page F-3
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Original
Home Properties of New York, Inc. Properties
---------------------------------------- ----------
Years Ended
--------------------------- 08/04/94 01/01/94
December 31, December 31, Through Through
1996 1995 12/31/94 08/03/94
<S> <C> <C> <C> <C>
Revenues:
Rental income $42,214 $31,705 $10,995 $11,526
Property other income 1,025 1,062 423 415
Other income 2,431 1,534 525 79
Property management income - - - 834
-------- -------- -------- --------
Total revenues 45,670 34,301 11,943 12,854
-------- -------- -------- --------
Expenses:
Operating and maintenance 21,859 15,911 5,267 6,329
Property management - - - 625
General and administrative 1,482 1,200 400 407
Interest 9,208 6,432 1,444 3,126
Depreciation and amortization 8,077 6,258 2,191 1,584
-------- -------- -------- --------
Total expenses 40,626 29,801 9,302 12,071
-------- -------- -------- --------
Income before minority interest and
extraordinary item 5,044 4,500 2,641 783
Minority interest 897 455 256 -
-------- -------- -------- --------
Income before extraordinary item 4,147 4,045 2,385 783
Extraordinary item, prepayment
penalties, net of $141 in 1995 and
$265 in 1994 allocated to minority
interest - ( 1,249) ( 2,498) -
-------- -------- -------- --------
Net income (loss) $ 4,147 $ 2,796 ($ 113) $ 783
======== ======== ======== ========
Per share data:
Income before extraordinary item $.74 $.75 $.44
Extraordinary item - ($.23) ($.46)
---- ---- ----
Net income (loss) $.74 $.52 ($.02)
==== ==== ====
Weighted average number of
shares outstanding 5,601,027 5,408,474 5,408,230
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
and combined financial statements.
Page F-4
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
CONSOLIDATED AND COMBINED STATEMENTS OF
STOCKHOLDERS' EQUITY/OWNERS' DEFICIT
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Distributions Original
Common Stock Additional in Excess of Properties Officer/Director
---------------- Paid-In Accumulated Owners Notes for
Shares Amount Capital Earnings Deficit Stock Purchases
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $ - $ - $ - ($2,591) $ -
Distributions ( 933)
Net income 783
--------- --------- --------- --------- --------- ---------
Balance, August 3, 1994 ( 2,741)
Reclassification of Original
Properties deficit in
connection with formation
of the Company ( 2,741) 2,741
Initial capitalization of the
Company and gross proceeds
from the initial public
offering of stock 5,408,200 54 102,698
Offering and organization costs ( 8,986)
Acquisition of non-controlled
interest in entities included
in Original Properties 1,288
Adjustment for minority interest's
ownership of Operating
Partnership
at date of initial public
offering ( 8,857)
Issuance of common stock 234 4
Net loss of Company ( 113)
Dividends paid ($.26 per share) ( 1,406)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1994 5,408,434 54 83,406 ( 1,519)
Issuance of common stock 383 7
Net income of Company 2,796
Dividends paid
($1.66 per share) ( 8,964)
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1995 5,408,817 54 83,413 ( 7,687)
Issuance of common stock, net 735,681 7 14,679 ( 2,061)
Net income of Company 4,147
Dividends paid ( 9,522)
($1.69 per share) --------- --------- --------- --------- --------- ---------
Balance, December 31, 1996 6,144,498 $61 $98,092 ($13,062) $ - ($ 2,061)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated and
combined financial statements.
Page F-5
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Original
Home Properties of New York, Inc. Properties
---------------------------------------- ----------
Years Ended
------------------------ 08/04/94 01/01/94
December 31, December 31, Through Through
1996 1995 12/31/94 08/03/94
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,147 $ 2,796 ($ 113) $ 783
-------- -------- -------- --------
Adjustments to reconcile net income (loss)
to net
cash provided by operating activities:
Extraordinary item - deferred loan costs - 624 412 -
Equity in income of HP Management and ( 142) ( 35) ( 61) -
Conifer Realty
Income allocated to minority interest 897 455 256 -
Extraordinary item allocated to minority - ( 141) ( 265) -
interest
Depreciation and amortization 8,667 6,914 2,426 1,647
Changes in assets and liabilities:
Other assets ( 1,199) ( 1,652) 325 ( 1,208)
Accounts payable and accrued 1,871 850 171 1,305
liabilities -------- -------- -------- --------
Total adjustments 10,094 7,015 3,264 1,744
-------- -------- -------- --------
Net cash provided by operating activities 14,241 9,811 3,151 2,527
-------- -------- -------- --------
Cash flows used in investing activities:
Purchase of properties, net of mortgage ( 14,026) ( 9,402) ( 68,063) -
notes assumed
Additions to properties ( 8,843) ( 8,179) ( 1,703) ( 1,168)
Deposit on property ( 1,900) - - -
Advances to affiliates ( 15,308) ( 5,683) ( 1,344) -
Payments on advances to affiliates 14,507 1,930 - -
Other ( 71) ( 14) - -
-------- -------- -------- --------
Net cash used in investing activities ( 25,641) ( 21,348) ( 71,110) ( 1,168)
-------- -------- -------- --------
Cash flows from financing activities:
Proceeds from sale of common stock 12,625 7 102,756 -
Proceeds from mortgage and other notes 4,530 45,292 22,496 -
payable
Payments of mortgage and other notes ( 21,822) ( 28,429) ( 42,300) ( 631)
payable
Proceeds from line of credit 34,030 17,677 5,550 -
Payments on line of credit ( 38,530) ( 13,177) ( 5,550) -
Payment of offering expenses - - ( 8,986) -
Payment of interest rate reduction - - ( 1,675) -
agreements
Additions to deferred loan costs ( 243) ( 882) ( 763) ( 120)
Additions to cash escrows ( 196 ( 1,687) ( 5)
1,883)
Dividends and distributions paid ( 11,537) ( 9,970) ( 1,556) -
Capital contribution to minority interest 34,941 - 30 -
Capital distributions - - - ( 933)
-------- -------- -------- --------
Net cash provided by (used in) financing 12,111 10,714 68,315 ( 1,689)
activities -------- -------- -------- --------
Net increase (decrease) in cash 711 ( 823) 356 (
330)
Cash and cash equivalents:
Beginning of period 812 1,635 1,279 1,609
-------- -------- -------- --------
End of period $ 1,523 $ 812 $ 1,635 $ 1,279
========= ========== ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated and
combined financial statements.
Page F-6
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1 ORGANIZATION AND BASIS OF PRESENTATION
Organization
Home Properties of New York, Inc. (the " Company " ) was
formed in November 1993, as a Maryland corporation and is
engaged primarily in the ownership, management, acquisition
and development of residential apartment communities. On
August 4, 1994, the Company completed an initial public
offering ( " IPO " ) of 5,408,000 shares of common stock.
Net proceeds from the IPO of approximately $94,000 were
contributed to Home Properties of New York, L.P. (the "
Operating Partnership " ) in exchange for units representing
a 90.4% general partnership interest in the Operating
Partnership. The Operating Partnership acquired all of the
assets and assumed all of the liabilities of the Original
Properties and in connection therewith, (i) issued 575,375
units, representing a 9.6% minority interest in the
Operating Partnership, to insiders of Home Leasing
Corporation ( " HLC " ); (ii) paid $30,600 in cash to the
partners of the Original Properties; (iii) prepaid
approximately $29,600 of the approximately $58,000 of
mortgage indebtedness on the Original Properties; and
(iv) acquired four residential properties (the " Acquisition
Properties " ) from unaffiliated sellers for approximately
$32,400 in cash and the assumption of approximately $3,300
in existing mortgage indebtedness.
The Original Properties is not a legal entity but rather a
combination of twelve entities which were wholly owned by
HLC and its affiliates that were reorganized to combine
HLC's interest in certain investment properties and property
management operations. The entities owned 100% of each
property.
On January 1, 1996, the Operating Partnership acquired the
operations of Conifer Realty, Inc. and Conifer Development,
Inc. ("Conifer") and purchased certain of Conifer's assets
for a total acquisition price of $15,434. The acquisition
was funded by issuing 486,864 Operating Partnership units
(UPREIT units, valued at $17.25 per unit), the assumption of
$6,801 of existing mortgage debt and $235 in cash paid to
outside partners. Additional consideration will be paid in
UPREIT units if development fee income exceeds target levels
over the next five years. Conifer was involved in the
development and management of government-assisted housing
throughout New York State.
The acquisition has been accounted for using the purchase
method of accounting and, accordingly, the results of
operations are included from the date of acquisition
forward. The purchase price was allocated to three
communities containing 358 units valued at $10,173, general
partnership interests in 2,804 apartment units that Home
Properties will manage valued at $1,757, goodwill valued at
$3,348 and other assets valued at $156.
Page F-7
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
1 ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Basis of Presentation
The accompanying consolidated financial statements include
the accounts of the Company and its 68.2% (89.8% at December
31, 1995) general partnership interest in the Operating
Partnership. In addition, the combined financial statements
of the Original Properties present the historical financial
statements of the partnerships and assets acquired by the
Operating Partnership on a combined basis.
All significant intercompany balances and transactions have
been eliminated in these consolidated and combined financial
statements.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate
Real estate is recorded at the lower of cost or net
realizable value. Costs related to the acquisition,
development, construction and improvement of properties are
capitalized. Interest costs are capitalized until
construction is substantially complete. When retired or
otherwise disposed of, the related cost and accumulated
depreciation are cleared from the respective accounts and
the net difference, less any amount realized from
disposition, is reflected in income. There was $63 of
interest capitalized in 1996. Ordinary repairs and
maintenance are expensed as incurred.
The Company quarterly reviews its properties in
accordance with the Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long
Lived Assets" to determine if its carrying costs will be
recovered from future operating cash flows. In cases where
the Company does not expect to recover its carrying costs,
the Company recognizes an impairment loss. No such losses
have been recognized to date.
Depreciation
Properties are depreciated using a straight-line method over
the estimated useful lives of the assets as follows:
buildings, improvements and equipment - 5-40 years; and
tenant improvements - life of related lease. Depreciation
expense charged to operations was $7,979, $6,499, $2,192 and
$1,583 for the years ended December 31, 1996 and 1995, for
the period August 4, 1994 to December 31, 1994 and for the
period January 1, 1994 to August 3, 1994.
Page F-8
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
For purposes of the consolidated and combined statements of
cash flows, cash and cash equivalents include all cash and
highly liquid investments purchased with original maturities of three
months or less. The Company estimates that the fair value
of cash equivalents approximates the carrying value due to
the relatively short maturity of these instruments.
Cash in Escrows
Cash in escrows consists of cash restricted under the terms
of various loan agreements to be used for the payment of
property taxes and insurance as well as required replacement
reserves and tenant security deposits for residential
properties.
Deferred Charges
Costs relating to the financing of properties and interest
rate reduction agreements are deferred and amortized over
the life of the related agreement. The straight-line method,
which approximates the effective interest method,
is used to amortize all financing costs. The range of the terms of
the agreements are from 1-32 years. Accumulated
amortization was $1,349 and $1,588 as of December 31, 1996
and 1995, respectively.
Goodwill
Goodwill represents the excess of the purchase price of
acquired companies over the estimated fair value of the
tangible and intangible net assets acquired. Goodwill is
being amortized on a straight-line basis over forty years.
Accumulated amortization was $85 and $0 as of December 31,
1996 and 1995, respectively.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Page F-9
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising
Advertising expenses are charged to operations during the
year in which they were incurred. Advertising expenses
incurred and charged to operations were approximately
$1,256, $870, $262 and $267 for the years ended December 31,
1996 and 1995, for the period August 4, 1994 to December 31,
1994 and for the period January 1, 1994 to August 3, 1994.
Revenue Recognition
The Operating Partnership leases its residential properties
under leases with terms generally one year or less. Rental
income is recognized when earned. Property other income,
which consists primarily of income from operation of laundry
facilities, administrative fees, garage and carport rentals
and miscellaneous charges to residents, is recognized when
earned.
The Operating Partnership receives development and other fee
income from properties in the development phase. This fee
income is recognized on the percentage of completion method.
Income Taxes
The Company has elected to be taxed as a real estate
investment trust ( " REIT " ) under the Internal Revenue
Code of 1986, as amended, commencing with the taxable year
ended December 31, 1994. As a result, the Company generally
will not be subject to Federal or State income taxation at
the corporate level to the extent it distributes annually at
least 95% of its REIT taxable income to its shareholders and
satisfies certain other requirements. Accordingly, no
provision has been made for federal income taxes in the
accompanying consolidated financial statements for the years
ended December 31, 1996 and 1995 and for the period from
August 4, 1994 to December 31, 1994. Stockholders are taxed
on dividends and must report such dividends as either
ordinary income, capital gains, or as return of capital.
Prior to the formation of the Company, each partner of the
Original Properties was taxed individually on such partner's
share of partnership income or loss, thus no provision for
federal and state income taxes was provided in the combined
financial statements for the period from January 1, 1994 to
August 3, 1994.
Earnings Per Common Share
Earnings (loss) per common share amounts are based on the
weighted average number of common shares and common
equivalent shares outstanding during the period presented.
The exchange of an Operating Partnership unit for common
stock will have no effect on earnings (loss) per common
share as unitholders and stockholders effectively share
equally in the net income (loss) of the Operating
Partnership. Fully diluted earnings (loss) per common share
are based upon the increased number of common shares that
would be outstanding assuming the exercise of common share
options. Since fully diluted earnings per common share are
not materially dilutive, such amounts are not presented.
Page F-10
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Account Reclassifications
Certain account balances at December 31, 1995 and December
31, 1994 were reclassified to conform to account
classifications used by the Company at December 31, 1996.
These changes had no effect on reported results of
operations or financial position.
3 LINE OF CREDIT
As of December 31, 1996, the Company had an unsecured line
of credit of $25,000 with no outstanding balance. The line
of credit expires on August 22, 1997. Borrowings bear
interest at 1.75% over the one-month LIBOR rate. At
December 31, 1996, the interest rate was 7.34%.
Page F-11
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
4 MORTGAGE NOTES PAYABLE
Mortgage notes, collateralized by certain properties, are as
follows:
<TABLE>
<CAPTION>
December 31, Periodic
---------------- Interest Payment Maturity
1996 1995 Rate Terms (a) Date
<S> <C> <C> <C> <C> <C>
Westminster $ 3,230 - (b) (b) 1997
Conifer Court 412 - 10.53% 4 1999
Perinton, Riverton & Waterfalls 12,087 $12,185 (c) 76 2000
Valley Park South 9,650 - 8.50% (i) 2000
Wedgewood Village 5,750 5,750 (d) (d) 2001
Wedgewood Shopping 500 500 (d) (d) 2001
Brook Hill 5,019 5,089 7.75% 39 2002
Garden Village 4,723 4,790 7.75% 36 2002
1600 Elmwood 5,510 5,588 7.75% 42 2002
Village Green 4,920 4,989 7.75% 38 2002
Williamstowne Village 9,980 10,084 (e) 70 2002
Fairview 4,045 4,082 (f) 29 2003
Finger Lakes 4,045 4,082 (f) 29 2003
Hamlet Court 1,832 - (g) 14 2003
Springcreek & Meadows 3,254 3,312 (h) 23 2004
Idylwood 9,468 9,539 8.625% 74 2005
Raintree Island 6,582 6,664 8.50% 54 2006
Conifer Village 3,045 3,170 7.20% (j) 2010
Fairways at Village Green 4,584 - 8.23% 37 2019
Raintree Island 1,218 1,233 8.50% 10 2020
Harborside 5,061 5,092 8.92% 40 2027
-------- --------
$104,915 $86,149
======== =======
</TABLE>
(a) This amount represents the monthly payment of
principal and interest.
(b) Monthly payments of interest only at 1.75% above
LIBOR are due until maturity.
(c) The interest rate for the period August 4, 1994,
through August 31, 1999, is 6.75%; and, for the period
September 1, 1999, through maturity, the rate is .5%
over prime.
(d) The interest rate for the period August 4, 1994,
through July 31, 1999, is 6%; and, for the period
August 1, 1999, until maturity, the rate is fixed at 2%
over the five-year US Treasury bill yield with a
minimum of 7.5%. Monthly payments of interest only,
with a $100 principal payment due in August 1998, and
$150 payment due in August 1999, to be allocated
between the apartments and shopping center.
Page F-12
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -
(Continued)
4 MORTGAGE NOTES PAYABLE (Continued)
(e) The interest rate for the period October 27, 1995
through October 31, 2000 is 7.37%; and, for the period
November 1, 2000 until maturity, the rate is .5% above
prime.
(f) The interest rate for the period May 17, 1995
through April 30, 2000 is 7.71%; and, for the period
May 1, 2000 until maturity, the rate is .5% above
prime.
(g) The interest rate for the period January 1, 1996
through April 30, 1998 is 8.25%; for the period May 1,
1998 through May 1, 2003, the rate is 2.75% above the
five-year US Treasury Security, not to be lower than
7.75%.
(h) The interest rate for the period August 4, 1994
through July 31, 1997 is 6.75%; for the period August
1, 1997 through July 31, 2000, the rate is 1.75% above
the three-year US Treasury bond yield; and, for the
period August 1, 2000 through July 31, 2004, the rate
is .5% over prime.
(i) Monthly payments of interest only.
(j) Monthly payments of interest only with annual
principal payments of $135 in 1997 increasing to $330
in 2010.
Principal payments on the mortgage notes payable for years
subsequent to December 31, 1996 are as follows:
1997 $ 4,326
1998 1,233
1999 1,743
2000 22,579
2001 7,205
Thereafter 67,829
-------
$104,915
========
The Company determines the fair value of the mortgage notes
payable based on the discounted future cash flows at a
discount rate that approximates the Company's current
effective borrowing rate for comparable loans. Based on
this analysis, the Company has determined that the fair
value of the mortgage notes payable approximates $107,322 at
December 31, 1996.
The Company has incurred prepayment penalties on debt
restructurings which are accounted for as extraordinary
items in the statement of operations. Prepayment penalties
were approximately $1,390 and $2,763 for the year ended
December 31, 1995 and for the period from August 4, 1994 to
December 31, 1994, respectively. The 1995 paydowns totaled
$39,080 from six debt instruments and were financed by three
new borrowings in excess of $40,000. The 1994 paydowns
totaled $29,796 from seven debt instruments and were
financed from the proceeds of the IPO.
Page F-13
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
5 NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
December 31,
---------------- Interest
1996 1995 Rate
<S> <C> <C> <C>
Financial institution $ 72 $107 2.5%
Seller financing 189 363 7.5%
---- ----
$261 $470
==== ====
</TABLE>
Principal payments on the notes payable are approximately
$211 annually.
6 MINORITY INTEREST
The changes in minority interest for the two years ended
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Balance, beginning of year $ 8,739 $8,978
Issuance of UPREIT Units associated with
property acquisitions 10,168 453
Proceeds from private placement, net of
associated costs 34,941 -
Net income 897 314
Distributions ( 2,015) (1,006)
------- -------
$52,730 $8,739
======= =======
</TABLE>
7 STOCKHOLDERS' EQUITY
Dividend Reinvestment Plan
In November, 1995, the Company adopted the Dividend
Reinvestment, Stock Purchase, Resident Stock Purchase and
Employee Stock Purchase Plan (the " Plan " ). The Plan
provides the stockholders of the Company an opportunity to
automatically invest their cash dividends at a discount of
3% from the market price. In addition, eligible
participants may make monthly or other voluntary cash
investments in shares of common stock. During 1996, over
$12 million net was raised through this program.
Page F-14
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
7 STOCKHOLDERS' EQUITY (Continued)
Officer and Director Notes for Stock Purchases
On August 12, 1996, eighteen officers and the six
independent directors purchased an aggregate of 208,543
shares of common stock through the Dividend Reinvestment
Plan at the price of $19.79. The purchases were financed
50% from a bank loan and 50% by the Company. The Company
loans bear interest at 7% per annum and mature in August,
2016. The Company loans are nonrecourse, subordinate to the
above-referenced bank loans, and are collateralized by
pledges of the 208,543 common shares. The loans will be
repaid from the regular quarterly dividends paid on the
shares of common stock pledged, after the corresponding bank
loans are paid in full. The Company has guaranteed the bank
loans which total $1,874 at December 31, 1996.
Dividends
Stockholders are taxed on dividends and must report such
dividends as either ordinary income, capital gains, or as return of
capital. The appropriate amount of each per common share is
as follows:
<TABLE>
<CAPTION>
Ordinary Income Return of Capital
<C> <C> <C>
1994 5.785% 94.215%
1995 46.2% 53.8%
1996 51.1% 48.9%
</TABLE>
Operating Partnership Units/Interests
Units in the Operating Partnership ("UPREIT Units") are
exchangeable on a one-for-one basis into common shares. On
December 30, 1996, $35 million was raised in a private
placement through the sale of a Class A Limited Partnership
Interest to a state pension fund. The interest, which can
be converted into 1,666,667 shares of common stock, 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. Any
unconverted interest can be redeemed without premium by the
Company after ten years. Proceeds of the transaction, which
are anticipated to be used to fund future acquisitions, were
used to repay floating rate debt on an interim basis.
At December 31, 1996, 6,144,498 common shares and 2,869,686
convertible units/interests were outstanding, for a total of
9,014,184.
Page F-15
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
8 MANAGEMENT COMPANIES
The property management, leasing and development activities
for properties affiliated with HLC, which were not combined
with the Original Properties, and certain other properties
not affiliated with HLC, are performed by Home Properties
Management, Inc. (" HP Management " ). HP Management issued
non-voting common stock to the Operating Partnership in
exchange for management contracts for commercial and
development managed properties and certain other assets.
This exchange entitles the Operating Partnership to receive
99% of the economic interest of HP Management. The
remaining 1% economic interest and voting stock were issued
to the owners of HLC.
The property management, leasing and development activities
for properties affiliated with the Conifer acquisition which
occurred on January 1, 1996 are performed by Conifer Realty
Corp. ("Conifer Realty"). Conifer Realty issued non-voting
common stock to the Operating Partnership in exchange for
management contracts for residential, commercial and
development managed properties and certain other assets.
This exchange entitles the operating Partnership to receive
99% of the economic interest of Conifer Realty. The
remaining 1% economic interest and voting stock were issued
to the owners of HLC and Conifer.
HP Management and Conifer Realty (the "Management
Companies") receive development, construction and other fee
income from properties in the development phase. This fee
income is recognized on the percentage of completion method.
The Management Companies are accounted for under the equity
method.
The Management Companies provide property management and
administrative services to certain real estate and other
entities. In consideration for these services, the
Management Companies receive monthly management fees
generally based on a percentage of revenues or costs
incurred. Management fees are recognized as revenue when
they are earned.
The Company's share of income from the Management Companies
was $142, $35 and $61 for the years ended December 31, 1996
and 1995 and for the period August 4, 1994 to December 31,
1994. Summarized combined financial information of the
Management Companies at and for the years ended December 31,
1996 and 1995 and for the period August 4, 1994 to December
31, 1994 follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Management fees $2,942 $1,043 $431
Development and construction
management fees 1,971 320 170
General and administrative (4,448) (1,226) (499)
Other expenses ( 322) ( 101) ( 40)
------ ------ ----
Net income $ 143 $ 36 $ 62
====== ====== ====
Total assets $3,279 $ 646 $406
====== ====== ====
Total liabilities $2,762 $ 430 $226
====== ====== ====
</TABLE>
Page F-16
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -
(Continued)
9 TRANSACTIONS WITH AFFILIATES
The Company and the Management Companies recognized
management and development fee revenue, interest income and
other miscellaneous income from affiliated entities of
$6,170, $2,291, $821 and $813 for the years ended December
31, 1996 and 1995, for the period August 4, 1994 to December
31, 1994, and for the period January 1, 1994 to August 3,
1994, respectively.
The Company leases its corporate office space from HLC. The
lease requires an annual base rent of $172 through the
August, 2000 lease expiration. The lease also requires the
Company to pay a pro rata portion of property improvements,
real estate taxes and common area maintenance. Rental
expense was $349, $237, $96 and $134 for the years ended
December 31, 1996 and 1995, for the period August 4, 1994 to
December 31, 1994, and for the period January 1, 1994 to
August 3, 1994, respectively.
From time to time, the Company advances funds as needed to
the Management Companies which totaled $2,451 and $422 at
December 31, 1996 and 1995, respectively, and bear interest
at 1% over prime.
10 COMMITMENTS AND CONTINGENCIES
Ground Lease
The Company has a non-cancelable operating ground lease for
one of its properties. The lease expires May 1, 2020, with
options to extend the term of the lease for two successive
terms of twenty-five years each. The lease provides for
contingent rental payments based on certain variable
factors. The lease also requires the lessee to pay real
estate taxes, insurance and certain other operating expenses
applicable to the leased property. Ground lease expense was
$174, $169, $70 and $97 including contingent rents of $104,
$99, $40 and $57 for the years ended December 31, 1996 and
1995, for the period August 4, 1994 to December 31, 1994,
and for the period January 1, 1994 to August 3, 1994,
respectively. At December 31, 1996, future minimum rental
payments required under the lease are $70 per year until the
lease expires.
401(K) Savings Plan
The Company participates in a contributory savings plan.
Under the plan, the Company will match 75% of the first 4%
of participant contributions. Expenses under this plan for
the periods presented were not material.
Page F-17
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
10 COMMITMENTS AND CONTINGENCIES (Continued)
Employment Agreements
The Operating Partnership entered into five-year employment
agreements with two executives on August 4, 1994. The
executives have a base salary of $145 through December 31,
1996, and for each subsequent year the base salary shall be
10% in excess of the base salary for the preceding year.
The Operating Partnership has also entered into an
employment agreement with one other executive effective
January 1, 1996. The terms of that agreement are
substantially the same in all respects as described above.
The executives are also entitled to receive incentive
compensation pursuant to the Company's Incentive
Compensation Plan as it may be revised by the Compensation
Committee from time to time.
Incentive Compensation Plan
Effective January 1, 1996, the Incentive Compensation Plan
provides that eligible officers and key employees may earn a
cash bonus based on increases in funds from operations. No
cash bonuses will be payable under the Incentive
Compensation Plan unless the increase in funds from
operations per share, after giving effect to the bonuses, is
equal to or greater than 2%. The Company accrued $100 under
the prior formula in 1994 relative to results for the period
from August 4, 1994 to December 31, 1994. No bonus was
accrued for 1995. The Company accrued $495 based on the
formula for 1996.
Contingencies
The Company is subject to various legal proceedings and
claims that arise in the ordinary course of business. These
matters are generally covered by insurance. While the
resolution of these matters cannot be predicted with
certainty, management believes that the final outcome of
such legal proceedings and claims will not have a material
adverse effect on the Company's liquidity, financial
position or results of operations.
Debt Covenants
Certain loan agreements of the Company contain restrictions
which, among other things, require maintenance of certain
financial ratios and limit the payment of dividends. At
December 31, 1996, the Company was in compliance with these
covenants.
Guarantees
The Company has guaranteed temporary construction financing
totalling $13,479 associated with five entities and a total
of $3,692 of additional debt associated with six entities
where the Company is the general partner. In addition,
the Company, has guaranteed the Low Income Housing Tax Credit
to limited partners in thirty-two partnerships totalling
approximately $23,000. As of December 31, 1996, there were no
known conditions that would make certain such payments
necessary.
Page F-18
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
11 STOCK BENEFIT PLAN
The Company has adopted the 1994 Stock Benefit Plan as
Amended (the " Plan " ). Plan participants include
officers, non-employee directors, and key employees of the
Company. The Company has reserved 946,000 shares for
issuance to officers and employees and 54,000 shares for
issuance to non-employee directors. No options have been
exercised. Options granted to officers and employees of the
Company vest 20% for each year of service until 100% vested
on the fifth anniversary. Certain officers' options
(264,000) and directors' options (54,000) vest immediately
upon grant. The exercise price per share for stock options
may not be less than 100% of the fair market value of a
share of common stock on the date the stock option is
granted (110% of the fair market value in the case of
incentive stock options granted to employees who hold more
than 10% of the voting power of the Company's common stock).
During 1996, 144,000 options were granted with an exercise
price greater than the fair market value of the stock at the
date of the grant. The weighted average fair value of these
options was $0.78. Options granted to directors and
employees who hold more than 10% of the voting power of the
Company expire after five years from the date of grant. All
other options expire after ten years from the date of grant.
The Plan also allows for the grant of stock appreciation
rights and restricted stock awards, however, there were none
granted at December 31, 1996. At December 31, 1996, 302,222
common shares were available for future grant of options or
awards under the Plan.
Details of stock option activity during 1996, 1995 and 1994
are as follows:
<TABLE>
<CAPTION>
Number Option Price
of Shares Per Share
<S> <C> <C>
Options outstanding at August 4, 1994 - $ -
Granted, 1994 429,532 19.00
-------
Options outstanding at December 31, 1994 429,532 19.00
(194,000 shares exercisable)
Granted 1995 18,000 17.875
Cancelled 1995 ( 2,000) 19.00
-------
Options outstanding at December 31, 1995 445,532 17.875-19.00
(258,527 shares exercisable)
Granted, 1996 180,000 19.00
Granted, 1996 21,000 19.375
Granted, 1996 52,146 20.50
Cancelled, 1996 ( 900) 19.00
-------
Options outstanding at December 31, 1996 697,778 $17.875-$20.50
=======
</TABLE>
(411,053 shares exercisable)
Page F-19
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
11 STOCK BENEFIT PLAN (Continued)
The following table summarizes information about options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>
Weighted
Average Weighted Weighted
Remaining Average Average
Year Number Contractual Fair Value Number Exercise
Granted Outstanding Life of Options Exercisable Price
<S> <C> <C> <C> <C> <C>
1994 426,632 7 N/A 287,053 $19.000
1995 18,000 3 $1.39 18,000 17.875
1996 253,146 9 $1.01 106,000 19.060
------- - ------- -------
Totals 697,778 8 411,053 $18.970
======= = ======= =======
</TABLE>
The Company has adopted the disclosure only provisions of
Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation." Accordingly, no compensation
cost has been recognized for the stock option plan. Had
compensation for the Company's stock option plan been
determined based on the fair value at the date of grant for
awards in 1996 and 1995, the Company's proforma net income
and proforma earnings per share would have been $4,031 and
$2,771, and $.72 and $.51, respectively. The fair value of
each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following
assumptions used for grants in 1996 and 1995: dividend
yield of 9.315%; expected volatility of 18.97%; forfeiture
rate of 5%; and expected lives of 7.5 years for options with
a lifetime of ten years, and five years for options with a
lifetime of five years. The interest rate used in the
option-pricing model is based on a risk free interest rate
ranging from 5.25% to 6.87%.
Page F-20
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
12 PROPERTY ACQUISITIONS
Subsequent to the IPO in August, 1994 and through December
31, 1996, the Company has acquired the communities listed
below.
<TABLE>
<CAPTION>
Date Year Number Cost of
Community Acquired Constructed of Units Acquisitions
<S> <C> <C> <C> <C>
Harborside (1) 10/1/94 1972 281 $ 6,363
Northgate Manor 11/3/94 1962 224 7,277
Village Green 12/19/94 1988 248 9,080
Idylwood (2) 1/6/95 1969 720 17,627
Pearl Street 5/16/95 1969 60 1,238
Candlewood (3) 12/4/95 1969 126 2,950
Conifer Court 1/1/96 1963 20 703
Hamlet Court 1/1/96 1971 98 2,702
Westminster 1/1/96 1972 240 6,623
Village Green (Fairways) 3/5/96 1986 200 5,246
Carriage Hill 7/16/96 1973 140 4,396
Cornwall Park 7/16/96 1967 75 3,386
Lakeshore Villa 7/16/96 1975 152 4,421
Sunset Gardens 7/16/96 1968-71 217 5,357
Valley Park South 11/22/96 1971-73 384 18,914
</TABLE>
(1) Operation of Harborside commenced October 1, 1994
subject to an operating and management agreement. The
acquisition was accounted for on the equity method
until the final closing date of March 29, 1995.
(2) The acquisition of Idylwood occurred in stages,
with 44% being acquired on January 6, 1995 and the
balance on September 7, 1995. The 56% acquired in
September was subject to a lease entitling the
Operating Partnership to all items of income and
expense effective January 1, 1995. The acquisition was
accounted for on the equity method until the final
closing date in September 1995.
(3) Operation of Candlewood commenced December 4, 1995
subject to a net lease agreement. This acquisition was
accounted for on the equity method until the final
closing date of January 5, 1996.
Page F-21
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Conti
nued)
12 PROPERTY ACQUISITIONS (Continued)
Proforma Financial Information (Unaudited)
The following unaudited proforma information was prepared as
if the 1996 transactions related to the Conifer acquisition
and the subsequent acquisitions of seven separate apartment
communities had occurred on January 1, 1995. The proforma
financial information is based upon the historical
consolidated financial statements and is not necessarily
indicative of the consolidated results which actually would
have occurred if the transactions had been consummated at
the beginning of 1995, nor does it purport to represent the
results of operations for future periods.
<TABLE>
<CAPTION>
For the years ended December 31,
1996 1995
<S> <C> <C>
Total revenues $50,660 $45,112
Income before extraordinary item 3,744 3,363
Net income 3,744 2,225
Per share data $.67 $.62
Income before extraordinary item $.67 $.41
Weighted average numbers of shares 5,601,027 5,408,474
outstanding
</TABLE>
13 SUPPLEMENTAL CASH FLOW DISCLOSURES
<TABLE>
<CAPTION>
Original
Home Properties of New York, Inc. Properties
-------------------------------- ----------
Years Ended
---------------------- 08/04/94 01/01/94
December 31, December 31, Through Through
1996 1995 12/31/94 08/03/94
<S> <C> <C> <C> <C>
Cash paid for interest $8,441 $5,739 $1,268 $3,054
Mortgage loans assumed associated
with property acquisitions 35,849 14,694 14,700 -
Issuance of UPREIT Units associated with
property and other acquisitions 10,168 453 250 -
Raintree capitalized lease affecting
real estate and leasehold liability - 1,719 - -
Shares issued in exchange for
officer and director notes 2,061 - - -
</TABLE>
Page F-22
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AND THE ORIGINAL PROPERTIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)
14 SUBSEQUENT EVENT
On February 3, 1997, the Operating Partnership acquired Lake Grove
Apartments, a 368-unit apartment community located in Lake Grove,
Long Island, New York for $19,000. The Company borrowed $17,500
from its line of credit to fund the purchase plus closing costs,
net of a $1,900 deposit which had been made at December 31, 1996.
The remaining available balance on the line of credit after this
borrowing is $7,500.
15 QUARTERLY FINANCIAL STATEMENT INFORMATION (UNAUDITED)
Quarterly financial information for the years ended December 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996
----------------------------------------
First Second Third Fourth
<S> <C> <C> <C> <C>
Revenues $10,540 $10,706 $11,816 $12,608
Income before minority interest
and extraordinary item 810 1,122 1,626 1,486
Minority interest 147 194 285 271
Extraordinary item, net of minority interest N/A N/A N/A N/A
Net income 663 928 1,341 1,215
Earnings per share:
Net income .12 .17 .24 .21
</TABLE>
<TABLE>
<CAPTION>
1995
----------------------------------------
First Second Third Fourth
<S> <C> <C> <C> <C>
Revenues $7,561 $8,180 $8,809 $9,751
Income before minority interest
and extraordinary item 851 1,030 1,245 1,374
Minority interest (84) (105) (126) (140)
Extraordinary item, net of minority interest N/A N/A N/A (1,249)
Net income (loss) 767 925 1,119 (15)
Earnings per share:
Income before extraordinary item .14 .17 .21 .23
Extraordinary item N/A N/A N/A (.23)
Net income .14 .17 .21 0
</TABLE>
Page F-23
<PAGE>
SCHEDULE III
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Total
Initial Cost Total Cost Cost,
-------------------------- Costs ----------------------- Net of
Buildings, Capitalized Buildings Accumu- Accumu-
Improve- Subsequent Improve- lated lated Year of
Encum- ments & Adjustments to ments & Total Deprecia- Deprecia- Acquisi-
brances Land Equipment (a) Acquisition Land Equipment (b) tion tion tion
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Brook Hill $ 5,019 $ 330 $ 7,920 $ 948 $ 330 $ 8,868 $ 9,198 $ 660 $ 8,538 1994
Apartments
Candlewood 387 2,592 33 387 2,625 3,012 85 2,927 1996
Apartments
Carriage 570 3,826 451 570 4,277 4,847 64 4,783 1996
Hill
Apartments
Conifer 412 91 612 9 91 621 712 22 690 1996
Court
Apartments
Conifer 3,045 358 8,555 26 358 8,581 8,939 628 8,311 1994
Village
Apartments
Cornwall 439 2,947 236 439 3,183 3,622 54 3,568 1996
Park
Townhouses
Fairview 4,045 580 5,305 $ 2,828 958 580 9,091 9,671 2,766 6,905 1985
Heights &
Fairview
Manor
Finger Lakes 4,045 200 4,536 1,882 759 200 7,177 7,377 2,076 5,301 1983
Manor
Apartments
Garden 4,723 354 8,546 789 354 9,335 9,689 823 8,866 1994
Village
Apartments
Hamlet Court 1,832 351 2,351 35 351 2,386 2,737 76 2,661 1996
Apartments
Harborside 5,061 250 6,113 1,187 250 7,300 7,550 455 7,095 1995
Manor
Idylwood 9,468 700 16,927 2,719 700 19,646 20,346 1,074 19,272 1995
Apartments
Lakeshore 573 3,848 83 573 3,931 4,504 62 4,442 1996
Villa
Apartments
Meadows 2,017 208 2,776 1,216 713 208 4,705 4,913 1,492 3,421 1984
Apartments
Newcastle 197 4,007 3,684 1,734 197 9,425 9,622 2,674 6,948 1982
Apartments
Northgate 290 6,987 1,182 290 8,169 8,459 616 7,843 1994
Manor
Apartments
Pearl Street 49 1,189 43 49 1,232 1,281 66 1,215 1995
Perinton 5,614 224 6,120 3,629 1,045 224 10,794 11,018 3,168 7,850 1982
Manor
Apartments
Raintree 7,800 6,654 3,217 4,410 14,281 14,281 3,199 11,082 1985
Island
Apartments
Riverton 5,116 240 6,640 2,523 1,769 240 10,932 11,172 3,857 7,315 1983
Knolls
Apartments &
Townhouses
1600 Elmwood 5,510 303 5,698 3,339 1,739 299 10,780 11,079 3,802 7,277 1983
Avenue
Apartments
Spanish 373 9,263 971 398 10,209 10,607 762 9,845 1994
Gardens
Apartments
Springcreek 1,237 128 1,702 745 413 128 2,860 2,988 915 2,073 1984
Apartments
Sunset 696 4,661 114 696 4,775 5,471 76 5,395 1996
Gardens
Apartments
Valley Park 9,650 2,459 16,454 6 2,459 16,460 18,919 83 18,836 1996
South
Apartments
Village 9,504 1,043 13,283 1,487 1,043 14,770 15,813 765 15,048 1994-
Green 1996
Apartments
Waterfalls
Village
Manufactured 1,357 409 1,995 1,206 195 409 3,396 3,805 887 2,918 1987
Home
Community
Wedgewood 500 100 504 15 184 100 703 803 262 541 1986
Shopping
Center
Wedgewood 5,750 1,000 9,327 2,297 1,354 1,000 12,978 13,978 3,447 10,531 1986
Village
Apartments
Westminster 3,230 860 5,763 150 860 5,913 6,773 191 6,582 1996
Apartments
Williamstowne 9,980 390 9,748 5,115 2,007 390 16,870 17,260 4,895 12,365 1985
Village
Apartments
Other Assets 907 125 295 907 420 1,327 235 1,092
-------- ------- -------- ------- ------- ------- -------- -------- ------- --------
$104,915 $15,059 $186,849 $31,821 $28,044 $15,080 $246,693 $261,773 $40,237 $221,536
======== ======= ======== ======= ======= ======= ======== ======== ======= ========
</TABLE>
(a) Represents the excess of fair value over the historical
cost of partnership interests as a result of the
application of purchase accounting for the acquisition of
non-controlled interests.
(b) The aggregate cost for Federal Income Tax purposes was
approximately $258,839.
Page F-24
<PAGE>
SCHEDULE III (CONTINUED)
HOME PROPERTIES OF NEW YORK, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(IN THOUSANDS)
Depreciation and amortization of the Company's
investments in buildings and improvements reflected in
the consolidated and combined statements of operations
are calculated over the estimated useful lives of the
assets as follows:
Buildings and improvements 5-40 years
Tenant improvements Life of related
lease
The changes in total real estate assets for the three
years ended December 31, 1996, are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance, beginning of year $198,203 $162,991 $ 76,646
New property acquisition 54,727 26,956 52,057
Adjustments - - 31,821
Additions 8,843 8,256 2,871
Disposals and retirements - - ( 404)
-------- -------- --------
Balance, end of year $261,773 $198,203 $162,991
======== ======== ========
</TABLE>
The changes in accumulated depreciation for the three
years ended December 31, 1996, are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance, beginning of year $32,258 $25,759 $22,268
Depreciation for the year 7,979 6,499 3,775
Disposals and retirements - - ( 284)
------- ------- -------
Balance, end of year $40,237 $32,258 $25,759
======= ======= =======
</TABLE>
Page F-25
<PAGE>
<TABLE>
<CAPTION>
HOME PROPERTIES OF NEW YORK, INC.
FORM 10-K
For Fiscal Year Ended December 31, 1996
Exhibit Index
Exhibit
Number Exhibit Location
<S> <C> <C>
3.1 Articles of Incorporated by
Incorporation of Home reference to Home
Properties of New York, Properties of New York,
Inc. Inc. Registration on
Form S-11, File No. 33-
78862 (the "S-11
Registration
Statement").
3.2 Articles of Amendment Incorporated by
and Restatement of reference to S-11
Articles of Registration Statement.
Incorporation of Home
Properties of New York,
Inc.
3.3 Amended and Restated By- Incorporated by
Laws of Home Properties reference to the Form 8-
of New York, Inc. K filed by Home
(Revised 12/30/96) Properties of New York,
Inc. dated December 23,
1996 (the "12/23/96 8-
K").
4.1 Form of certificate Incorporated by
representing Shares of reference to the Form 10-
Common Stock. K filed by Home
Properties of New York,
Inc. for the period
ended 12/31/94 (the
"12/31/94 10-K").
4.2 Agreement of Home Incorporated by
Properties of New York, reference to 12/31/94 10-
Inc. to file instruments K.
defining the rights of
holders of long-term
debt of it or its
subsidiaries with the
Commission upon request.
4.3 Credit Agreement between Incorporated by
Manufacturers and reference to the Form 10-
Traders Trust Company, Q filed by Home
Home Properties of New Properties of New York,
York, L.P. and Home Inc. for the quarterly
Properties of New York, period ended 6/30/94
Inc. (the "6/30/94 10-Q").
4.4 Amendment Agreement Incorporated by
between Manufacturers reference to the
and Traders Trust 12/31/94 10-K.
Company, Home Properties
of New York, L.P. and
Home Properties of New
York, Inc. amending the
Credit Agreement.
Page 1
<PAGE>
4.5 Mortgage Spreader, Incorporated by
Consolidation and reference to the 6/30/94
Modification Agreement 10-Q.
between Manufacturers
and Traders Trust
Company and Home
Properties of New York,
L.P., together with form
of Mortgage, Assignment
of Leases and Rents and
Security Agreement
incorporated therein by
reference.
4.6 Mortgage Note made by Incorporated by
Home Properties of New reference to the 6/30/94
York, L.P. payable to 10-Q.
Manufacturers and
Traders Trust Company in
the principal amount of
$12,298,000.
4.7 Demand Grid Note, dated Incorporated by
August 22, 1995, from reference to the Form 10-
Home Properties of New K filed by Home
York, L.P. to Properties of New York,
Manufacturers and Inc. for the period
Traders Trust Company in ended 12/31/95 (the
the maximum principal "12/31/95 10-K").
amount of $15,000,000.
4.8 Spreader, Consolidation, Incorporated by
Modification and reference to the
Extension Agreement 12/31/95 10-K.
between Home Properties
of New York, L.P. and
John Hancock Mutual Life
Insurance Company, dated
as of October 26, 1995,
relating to indebtedness
in the principal amount
of $20,500,000.
4.9 Demand Grid Note, dated Pages _____ to _______.
August 22, 1996 from the
Operating Partnership to
Manufacturers and
Traders Trust Company in
the maximum principal
amount of $25,000,000.
4.10 Demand Grid Note, dated Pages _____ to _______.
March 5, 1997 from the
Operating Partnership to
Manufacturers and
Traders Trust Company in
the maximum principal
amount of $35,000,000.
10.1 Agreement of Limited Incorporated by
Partnership of Home reference to S-11
Properties of New York, Registration Statement.
L.P.
Page 2
<PAGE>
10.2 Amended and Restated Incorporated by
Agreement of Limited reference to 6/30/94 10-
Partnership of Home Q.
Properties of New York,
L.P.
10.3 Amendments No. One Incorporated by
through Eight to the reference to 12/31/95 10-
Agreement of Limited K.
Partnership of Home
Properties of New York,
L.P.
10.4 Amendment No. Nine to Incorporated by
the Agreement of Limited reference to 12/23/96 8-
Partnership of Home K.
Properties of New York,
L.P.
10.5 Amendment No. Ten to the Pages _____ to ______.
Agreement of Limited
Partnership of Home
Properties of New York,
L.P.
10.6 Articles of Incorporated by
Incorporation of Home reference to S-11
Properties Management, Registration Statement.
Inc.
10.7 By-Laws of Home Incorporated by
Properties Management, reference to S-11
Inc. Registration Statement.
10.8 Articles of Incorporated by
Incorporation of Conifer reference to 12/31/95 10-
Realty Corporation. K.
10.9 By-Laws of Conifer Incorporated by
Realty Corporation. reference to 12/31/95 10-
K.
10.10 Employment Agreement Incorporated by
between Home Properties reference to 6/30/94 10-
of New York, L.P. and Q.
Norman P. Leenhouts.
10.11 Employment Agreement Incorporated by
between Home Properties reference to the 6/30/94
of New York, L.P. and 10-Q.
Nelson B. Leenhouts.
10.12 Employment Agreement Incorporated by
between Home Properties reference to 12/31/95 10-
of New York, L.P. and K.
Richard J. Crossed.
10.13 Indemnification Incorporated by
Agreement between Home reference to the 6/30/94
Properties of New York, 10-Q.
Inc. and certain
officers and directors.
Page 3
<PAGE>
10.14 Indemnification Incorporated by
Agreement between Home reference to 12/31/95 10-
Properties of New York, K.
Inc. and Richard J.
Crossed.
10.15 Indemnification Pages ______ to _______.
Agreement between Home
Properties of New York,
Inc. and Alan L. Gosule.
10.16 Home Properties of New Incorporated by
York, Inc. 1994 Stock reference to S-11
Benefit Plan. Registration Statement.
10.17 Registration Rights Incorporated by
Agreement among Home reference to the 6/30/94
Properties of New York, 10-Q.
Inc., Home Leasing
Corporation, Leenhouts
Ventures, Norman P.
Leenhouts, Nelson B.
Leenhouts, Amy L. Tait,
David P. Gardner, Ann M.
McCormick, William E.
Beach, Paul O'Leary,
Richard J. Struzzi,
Robert C. Tait, Timothy
A. Florczak and Laurie
Tones.
10.18 Lockup Agreements by Incorporated by
Home Properties of New reference to 12/31/95 10-
York, Inc. and Conifer K.
Realty, Inc., Conifer
Development, Inc.,
Richard J. Crossed,
Peter J. Obourn and John
F. Fennessey.
10.19 Contribution Agreement Incorporated by
between Home Properties reference to the Form 8-
of New York, L.P. and K filed by Home
Conifer Realty, Inc., Properties of New York,
Conifer Development, Inc., dated September
Inc., Richard J. 14, 1995.
Crossed, Peter J. Obourn
and John H. Fennessey.
10.20 Amendment to Incorporated by
Contribution Agreement reference to the Form 8-
between Home Properties K filed by Home
of New York, L.P. and Properties of New York,
Conifer Realty, Inc., Inc., dated January 9,
Conifer Development, 1996.
Inc., Richard J.
Crossed, Peter J. Obourn
and John H. Fennessey.
Page 4
<PAGE>
10.21 Agreement of Operating Incorporated by
Sublease, dated October reference to S-11
1, 1986, among KAM, Registration Statement.
Inc., Morris Massry and
Raintree Island
Associates, as amended
by Letter Agreement
Supplementing Operating
Sublease dated October
1, 1986.
10.22 Second Amended and Incorporated by
Restated Incentive reference to 12/31/95 10-
Compensation Plan of K.
Home Properties of New
York, Inc.
10.23 Indemnification and Incorporated by
Pledge Agreement between reference to 12/31/95 10-
Home Properties of New K.
York, L.P. and Conifer
Realty, Inc., Conifer
Development, Inc.,
Richard J. Crossed,
Peter J. Obourn and John
H. Fennessey.
10.24 Form of Term Promissory Pages _____ to _______.
Note payable to Home
Properties of New York,
Inc. by officers and
directors in association
with the Executive and
Director Stock Purchase
and Loan Program.
10.25 Form of Pledge Security Pages _____ to _______.
Agreement executed by
officers and directors
in connection with
Executive and Director
Stock Purchase and Loan
Program.
10.26 Schedule of Pages _____ to _______.
Participants, loan
amounts and shares
issued in connection
with the Executive and
Director Stock Purchase
and Loan Program.
10.27 Guaranty by Home Pages _____ to _______.
Properties of New York,
Inc. and Home Properties
of New York, L.P. to The
Chase Manhattan Bank of
the loans from The Chase
Manhattan Bank to
officers and directors
in connection with the
Executive and Director
Stock Purchase and Loan
Program.
Page 5
<PAGE>
10.28 Subordination Agreement Pages _____ to _______.
between Home Properties
of New York, Inc. and
The Chase Manhattan Bank
relating to the
Executive and Director
Stock Purchase and Loan
Program.
10.29 Partnership Interest Incorporated by
Purchase Agreement, reference to 12/23/96 8-
dated as of December 23, K.
1996, among Home
Properties of New York,
Inc., Home Properties of
New York, L.P. and State
of Michigan Retirement
Systems.
10.30 Registration Rights Incorporated by
Agreement, dated as of reference to 12/23/96 8-
December 23, 1996 K.
between Home Properties
of New York, Inc. and
State of Michigan
Retirement Systems.
10.31 Lock-Up Agreement, dated Incorporated by
December 23, 1996 reference to 12/23/96 8-
between Home Properties K.
of New York, Inc. and
State of Michigan
Retirement Systems.
10.32 Contract of Sale between Pages ______ to
Lake Grove Associates ________.
Corp. and Home
Properties of New York,
L.P., dated December 17,
1996, relating to the
Lake Grove Apartments.
11 Computation of Per Share Page ______
Earnings Schedule
21 List of Subsidiaries of Page ______
Home Properties of New
York, Inc.
23 Consent of Coopers & Page ______
Lybrand
27 Financial Data Schedule Page ______
Page 6
</TABLE>
<PAGE>
Exhibit 4.9
DEMAND GRID NOTE
Rochester, New York August 22, 1996 $25,000,000
For purposes of this Note:
1. The "Bank" means Manufacturers and Traders Trust
Company, a New York banking corporation having its chief
executive office at One M&T Plaza, Buffalo, New York 14240.
2. The "Bank's Prime Rate" means the rate per year
announced by the Bank as the prime rate of interest of the Bank.
3. The "Borrower" means Home Properties of New York, L.P.,
a New York limited partnership having its chief executive office
at 850 Clinton Square, Rochester, New York 14604.
4. "Business Day" means any day on which banks are open to
conduct regular business in both New York City and London.
5. The "Corporate General Partner" means Home Properties
of New York, Inc., a Maryland business corporation having its
chief executive office at 850 Clinton Square, Rochester, New York
14604.
6. The "Credit" means a line of credit made available by
the Bank to the Borrower in the maximum principal amount equal to
the Limiting Principal Amount.
Page 1
<PAGE>
7. "Demand" means any demand by the Holder for the payment
of the Outstanding Principal Amount.
8. "Distribution" means, with respect to any corporation,
(a) any dividend or other distribution, whether in cash or in the
form of any other asset, on account of any of its stock or (b)
any payment on account of the purchase, redemption, retirement or
other acquisition of any of its stock.
9. The "Holder" means the Bank or any transferee of this
Note.
10. The "Limiting Principal Amount" means $25,000,000.
11. "Loan" means any loan made by the Bank pursuant to the
Credit.
12. "One-Month Libor Rate" means, for any calendar month,
the rate, as determined by the Bank from any broker, quoting
service or commonly available source utilized by the Bank and as
adjusted, in the sole discretion of the Bank, to reflect any
increased cost directly or indirectly resulting from, or any
reserve required by, applicable law, any guideline or program of
any court, agency or other governmental authority or any other
circumstance affecting the London
Page 2
<PAGE>
interbank eurodollar market, at
which United States dollar deposits in immediately available
funds are offered in the London interbank eurodollar market at
approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date that is two Business Days before the
first Business Day of such calendar month for delivery on the
first Business Day of such calendar month for a one-month period.
13. The "Outstanding Principal Amount" means the
outstanding principal amount of this Note.
14. "Person" means (a) any individual, corporation,
partnership, limited liability company, joint venture, trust or
unincorporated association or (b) any other entity, body,
organization or group.
15. "Related Entity" means (a) the Borrower, (b) the
Corporate General Partner or (c) any Person (i) of which the
Borrower or the Corporate General Partner now or hereafter has
beneficial ownership, whether direct or indirect, of 50% or more
of the outstanding shares of any class of stock or 50% or more of
any class of other ownership interest or (ii) such lower
percentage of the outstanding shares of any class of such stock
or any class of such other ownership interest as is sufficient to
render such Person a subsidiary of the Borrower or the Corporate
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.
Page 3
<PAGE>
16. "Request" means any oral (including, but not limited
to, telephonic), written (including, but not limited to,
facsimile) or other request for a Loan that (a) states the
original principal amount of such Loan, the date such Loan is
requested to be made and the purpose of such Loan, (b) certifies
that no change in the Partnership Agreement of the Borrower or
the Certificate of Incorporation or By-laws of the Corporate
General Partner has been made since the date of this Note except
as disclosed in such request or a prior such request and (c)
contains any other information required by the Bank prior to the
making of such Loan.
For value received, the Borrower promises to pay to the
order of the Bank at any of the banking offices of the Bank, in
lawful money of the United States and immediately available
funds, on demand (a) the Limiting Principal Amount or the
Outstanding Principal Amount, if less, (b) interest, calculated
on the basis of a 360-day year for the actual number of days each
year (365 or 366, as applicable), on the Outstanding Principal
Amount from and including the date of this Note to but not
including the date the Outstanding Principal Amount is paid in
full at a rate per year that shall (i) on each day beginning
before the Outstanding Principal Amount becomes due, whether
pursuant to any Demand or otherwise, be 1.75% above the One-Month
Libor Rate for the calendar month in which such day falls and
(ii) on each day subsequent to the last day described in clause
(a)(i) of this sentence be 4% above the rate in effect such
subsequent day as the Bank's Prime Rate (provided, however, that (A)
Page 4
<PAGE>
in no event shall such interest be payable at a rate in
excess of the maximum rate permitted by applicable law and
(B) solely to the extent necessary to result in such interest not
being payable at a rate in excess of such maximum rate, any
amount that would be treated as part of such interest under a
final judicial interpretation of applicable law shall be deemed
to have been a mistake and automatically canceled, and, if
received by the Bank, shall be refunded to the Borrower, it being
the intention of the Bank and the Borrower that such interest not
be payable at a rate in excess of such maximum rate) and (c) each
cost and expense (including, but not limited to, the reasonable
fees and disbursements of counsel to the Holder, whether retained
for advice, litigation or any other purpose) incurred by the
Holder in endeavoring to (i) collect any amount payable pursuant
to this Note and remaining unpaid, (ii) preserve or exercise any
right or remedy of the Holder pursuant to this Note or (iii)
preserve or exercise any right or remedy of the Holder relating
to, enforce or realize upon any guaranty, endorsement,
collateral, subordination or other security or assurance of
payment now or hereafter securing the payment of or otherwise now
or hereafter applicable to any amount payable pursuant to this
Note.
In the absence of any Demand, a payment of interest
pursuant to this Note shall become due on the first day of each
calendar month.
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<PAGE>
In the absence of any earlier Demand, the Outstanding
Principal Amount shall become due on August 22, 1997.
If any of the Outstanding Principal Amount or any
interest payable pursuant to this Note is not paid within ten
days after the date it becomes due, whether pursuant to any
Demand or otherwise, the Borrower shall pay to the Holder on
demand a late charge of 6% thereof.
The Bank may make any Loan in reliance upon any Request
that the Bank in good faith believes to be valid and to have been
made in the name or on behalf of the Borrower by any officer of
the Corporate General Partner unless prior to receipt of such
Request by the Bank the Bank received from the Corporate General
Partner and had a reasonable time to act on written notice
revoking the authority of such officer to make a Request in the
name or on behalf of the Borrower. The Bank shall not incur any
liability to the Borrower or any other Person as a direct or
indirect result of making any Loan in accordance with the
preceding sentence.
The Credit is available subject to the Bank's
continuing review and right of modification, restriction,
suspension or termination at any time for any reason without any
prior notice to the Borrower. No modification, restriction,
suspension or termination of the Credit shall affect the
obligation of the Borrower to repay the original principal amount
of each Loan, the obligation
Page 6
<PAGE>
of the Borrower to pay interest on
the outstanding principal amount of each Loan or any other
obligation of the Borrower to the Holder pursuant to this Note or
otherwise.
For each period (1) beginning on the date of this Note
and ending on the last day of the calendar quarter containing
such date, (2) consisting of any calendar quarter beginning after
the calendar quarter containing the date of this Note and before
the calendar quarter containing the first date any Demand is made
or (3) beginning on the first day of the calendar quarter
containing the first date any Demand is made and ending on such
date, the Borrower shall pay to the Bank on demand a non-usage
fee equal to the product obtained by multiplying (a) the
difference between the Limiting Principal Amount and the daily
average during such period of the Outstanding Principal Amount
first by (b) 1/4% and then by (c) the fraction obtained by
dividing the number of days in such period by 360 (provided,
however, that (i) in no event shall there be payable any such non-
usage fee that would result in interest being payable on the
Outstanding Principal Amount at a rate in excess of the maximum
rate permitted by applicable law and (ii) solely to the extent
necessary to result in such interest not being payable at a rate
in excess of such maximum rate, any amount that would be treated
as part of such interest under a final judicial interpretation of
applicable law shall be deemed to have been a mistake and
automatically canceled and, if received by the Bank, shall be
refunded to the Borrower, it being the intention
Page 7
<PAGE>
of the Bank and
the Borrower that such interest not be payable at a rate in
excess of such maximum rate).
There shall be payable as principal pursuant to this
Note only so much of the Limiting Principal Amount as shall have
been advanced by the Bank as a Loan or Loans and is outstanding.
The Holder shall set forth on the schedule attached to and made a
part of this Note or any similar schedule (including, but not
limited to, any similar schedule maintained in computerized
records) annotations evidencing (1) the date and original
principal amount of each Loan, (2) the date and amount of each
payment to be applied to the Outstanding Principal Amount and (3)
the Outstanding Principal Amount after each Loan and each such
payment. Each such annotation shall, in the absence of manifest
error, be conclusive and binding upon the Borrower. No failure
by the Holder to make and no error by the Holder in making any
annotation on such attached schedule or any such similar schedule
shall affect the obligation of the Borrower to repay the original
principal amount of each Loan, the obligation of the Borrower to
pay interest on the outstanding principal amount of each Loan or
any other obligation of the Borrower to the Holder pursuant to
this Note or otherwise.
Until the Credit has been terminated by the Bank and
all amounts payable pursuant to this Note have been fully and
indefeasibly paid or otherwise discharged, the Borrower shall, unless
Page 8
<PAGE>
the prior written consent of the Holder to not doing so
shall have been obtained by the Borrower, assure that:
1. The aggregate outstanding principal amount at any
time of liabilities of Related Entities 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 does not
exceed 50% of the total of (a) the aggregate market value at such
time of all outstanding shares of stock of the Corporate General
Partner, (b) the aggregate market value at such time of all
outstanding partnership interests in the Borrower not owned by
the Corporate General Partner and (c) the aggregate outstanding
principal amount at such time of liabilities of the Borrower and
the Corporate 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;
2. The combined net income of all Related Entities
for any fiscal year of the Corporate General Partner before
distributions and non-cash expenses is at least 120% of the
higher of (a) all principal and interest scheduled to become due
during the immediately following fiscal year of the Corporate
General Partner with respect to liabilities of Related Entities
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,
except for any balloon payment of any of such principal that is
scheduled to become due during such immediately following fiscal
year and is reasonably expected to be
Page 10
<PAGE>
refinanced, extended or
paid prior to becoming due, or (b) all principal and interest
that would be scheduled to become due during such immediately
following fiscal year in connection with a loan for which (i) the
principal amount was equal to the aggregate outstanding principal
amount at the end of such fiscal year of such liabilities, (ii)
the rate of interest was a fixed rate of 9% per year and (iii)
300 monthly payments of principal and interest equal in amount
were scheduled to be made to repay the principal amount thereof
and pay interest in connection therewith;
3. The combined earnings of all Related Entities for
any fiscal year of the Corporate General Partner before interest,
tax, depreciation and amortization expense are at least 200% of
all principal and interest scheduled to become due during the
immediately following fiscal year of the Corporate General
Partner with respect to liabilities of Related Entities arising
from the borrowing of any money or the deferral of the purchase
price of any asset or pursuant to any capital lease, except for
any balloon payment of any of such principal that is scheduled to
become due during such immediately following fiscal year and is
reasonably expected to be refinanced, extended or paid prior to
becoming due;
4. The aggregate outstanding principal amount at the
end of each fiscal quarter of the Corporate General Partner of
liabilities of Related Entities does not exceed 550% of the
combined
Page 10
<PAGE>
earnings of all Related Entities for such fiscal quarter
before interest, tax, depreciation and amortization expense;
5. The combined earnings of all Related Entities for
any fiscal year of the Corporate General Partner before interest,
tax, depreciation and amortization expense that are attributable
to assets not subject to any mortgage, security interest or other
lien are at least 200% of the higher of (a) all principal and
interest scheduled to become due during the immediately following
fiscal year of the Corporate General Partner with respect to
liabilities of Related Entities (i) arising from the borrowing of
any money or the deferral of the purchase price of any asset or
pursuant to any capital lease and (ii) the payment of which is
not secured by any mortgage, security interest or other lien on
any asset of any Related Entity, except for any balloon payment
of any of such principal that is scheduled to become due during
such immediately following fiscal year and is reasonably expected
to be refinanced, extended or paid prior to becoming due, or (b)
all principal and interest that would be scheduled to become due
during such immediately following fiscal year in connection with
a loan for which (i) the principal amount was equal to the daily
average of the Outstanding Principal Amount during such fiscal
year of such liabilities, (ii) the rate of interest was a fixed
rate of 8% per year and (iii) 300 monthly payments of principal
and interest equal in amount were scheduled to be made the repay
the principal amount thereof and pay interest in connection
therewith;
Page 11
<PAGE>
6. The aggregate market value at any time of all real
property interests of Related Entities not subject to any
mortgage, security interest or other lien is at least 150% of the
aggregate outstanding principal amount at such time of
liabilities of Related Entities (a) 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 and (b) the payment of
which is not secured by any mortgage, security interest or other
lien on any asset of any Related Entity; and
7. No Related Entity that is a corporation declares,
pays or makes any Distribution, except for (a) dividends payable
solely in any of its stock, (b) cash dividends paid to the
Borrower or the Corporate General Partner by any Related Entity
all of the outstanding shares of stock of which other than shares
required by applicable law to enable any individual to serve as a
director of such Related Entity are owned by the Borrower or the
Corporate General Partner at the time of such payment and (c)
during each fiscal year of the Corporate General Partner, cash
dividends declared or paid by the Corporate General Partner in an
amount not exceeding (i) the consolidated earnings of the
Corporate General Partner for such fiscal year before
depreciation and amortization expense minus (ii) all principal
scheduled to become due during the immediately following fiscal
year of the Corporate General Partner with respect to liabilities
of Related Entities arising from the borrowing of any money or
the deferral of any of the purchase price of any asset or
Page 12
<PAGE>
pursuant to any capital lease, except for any balloon payment of
any of such principal that is scheduled to become due during such
immediately following fiscal year and is reasonably expected to
be refinanced, extended or paid prior to becoming due.
Each accounting term used in this Note shall be
construed as of any time in accordance with generally accepted
accounting principles as in effect at such time. Each accounting
computation that this Note requires to be made as of any time
shall be made in accordance with such principles as in effect at
such time, except where such principles are incompatible with any
requirement of this Note.
All amounts payable pursuant to this Note and remaining
unpaid shall, without any notice, demand, presentment or protest
of any kind (each of which is knowingly, voluntarily,
intentionally and irrevocably waived by the Borrower),
automatically become immediately due if the Borrower commences or
has commenced against it any proceeding pursuant to any
bankruptcy or insolvency statute.
This Note shall be governed by and construed,
interpreted and enforced in accordance with the internal law of
the State of New York, without regard to principles of conflict
of laws.
This Note is given in replacement of and substitution
for, but not payment of, a Demand Grid Note, dated July 15, 1996,
in the
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<PAGE>
maximum principal amount of $17,000,000 executed and
delivered to the Bank by the Borrower.
THE BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER BASED ON
ANY CONTRACT, ON ANY NEGLIGENT OR INTENTIONAL TORT, ON ANY
STATUTE, REGULATION OR OTHER LAW OR OTHERWISE, IN CONNECTION
WITH, OR OTHERWISE RELATING TO, (A) THIS NOTE OR ANY GUARANTY,
ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER SECURITY OR
ASSURANCE OF PAYMENT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY
SECURING THE PAYMENT OF, OR OTHERWISE NOW OR HEREAFTER DIRECTLY
OR INDIRECTLY APPLICABLE TO, ANY AMOUNT PAYABLE PURSUANT TO THIS
NOTE, (B) ANY OTHER WRITING HERETOFORE OR HEREAFTER EXECUTED IN
CONNECTION WITH, OR OTHERWISE RELATING TO, THIS NOTE OR ANY SUCH
GUARANTY, ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER
SECURITY OR ASSURANCE OF PAYMENT OR (C) ANY COURSE OF DEALING,
COURSE OF PERFORMANCE OR OTHER CONDUCT HERETOFORE OR HEREAFTER
PURSUED, ANY ACTION HERETOFORE OR HEREAFTER TAKEN OR OMITTED TO
BE TAKEN, OR ANY ORAL OR WRITTEN REPRESENTATION HERETOFORE OR
HEREAFTER MADE, BY OR ON BEHALF OF THE HOLDER IN CONNECTION WITH,
OR OTHERWISE RELATING TO, THIS NOTE OR ANY SUCH GUARANTY,
ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER SECURITY OR
ASSURANCE OF PAYMENT.
HOME PROPERTIES OF NEW YORK, L.P.
By HOME PROPERTIES OF NEW YORK, INC.,
Its Sole General Partner
Page 14
<PAGE>
By /s/ Norman Leenhouts
--------------------
Norman Leenhouts, Chairman
Page 15
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 21st day of August in year 1996, before me
personally came Norman Leenhouts, to me known, who being by me
duly sworn, did depose and say that he resides at 1206 Fairway
18, Macedon, New York; that he is the Chairman of Home Properties
of New York, Inc., the corporation which executed the above
instrument on behalf of Home Properties of New York, L.P., the
limited partnership described therein and of which said corpora
tion is the sole general partner; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Ann M. McCormick
-------------------
Notary Public
Ann M. McCormick
Notary Public in the State of New York
Monroe County
Commission Expires March 21, 1998
Page 16
<PAGE>
SCHEDULE OF ADVANCES AND PAYMENTS
Original Outstanding
Principal Date Principal Principal
Date of Amount of of Amount of Amount of Approving
Loan Loan Payment Payment Note Employee
<PAGE>
Exhibit 4.10
DEMAND GRID NOTE
Rochester, New York March 5, 1997 $35,000,000
For purposes of this Note:
1. The "Bank" means Manufacturers and Traders Trust
Company, a New York banking corporation having its chief
executive office at One M&T Plaza, Buffalo, New York 14240.
2. The "Bank's Prime Rate" means the rate per year
announced by the Bank as the prime rate of interest of the Bank.
3. The "Borrower" means Home Properties of New York, L.P.,
a New York limited partnership having its chief executive office
at 850 Clinton Square, Rochester, New York 14604.
4. "Business Day" means any day on which banks are open to
conduct regular business in both New York City and London.
5. The "Corporate General Partner" means Home Properties
of New York, Inc., a Maryland business corporation having its
chief executive office at 850 Clinton Square, Rochester, New York
14604.
6. The "Credit" means a line of credit made available by
the Bank to the Borrower in the maximum principal amount equal to
the Limiting Principal Amount.
7. "Demand" means any demand by the Holder for the payment
of the Outstanding Principal Amount.
Page 1
<PAGE>
8. "Distribution" means, with respect to any corporation,
(a) any dividend or other distribution, whether in cash or in the
form of any other asset, on account of any of its stock or (b)
any payment on account of the purchase, redemption, retirement or
other acquisition of any of its stock.
9. The "Holder" means the Bank or any transferee of this
Note.
10. The "Limiting Principal Amount" means $35,000,000.
11. "Loan" means any loan made by the Bank pursuant to the
Credit.
12. "One-Month Libor Rate" means, for any calendar month,
the rate, as determined by the Bank from any broker, quoting
service or commonly available source utilized by the Bank and as
adjusted, in the sole discretion of the Bank, to reflect any
increased cost directly or indirectly resulting from, or any
reserve required by, applicable law, any guideline or program of
any court, agency or other governmental authority or any other
circumstance affecting the London interbank eurodollar market, at
which United States dollar deposits in immediately available
funds are offered in the London interbank eurodollar market at
approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date that is two Business Days before the
first Business Day of such calendar month
Page 2
<PAGE>
for delivery on the
first Business Day of such calendar month for a one-month period.
13. The "Outstanding Principal Amount" means the
outstanding principal amount of this Note.
14. "Person" means (a) any individual, corporation,
partnership, limited liability company, joint venture, trust or
unincorporated association or (b) any other entity, body,
organization or group.
15. "Related Entity" means (a) the Borrower, (b) the
Corporate General Partner or (c) any Person (i) of which the
Borrower or the Corporate General Partner now or hereafter has
beneficial ownership, whether direct or indirect, of 50% or more
of the outstanding shares of any class of stock or 50% or more of
any class of other ownership interest or (ii) such lower
percentage of the outstanding shares of any class of such stock
or any class of such other ownership interest as is sufficient to
render such Person a subsidiary of the Borrower or the Corporate
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.
16. "Request" means any oral (including, but not limited
to, telephonic), written (including, but not limited to,
facsimile)
Page 3
<PAGE>
or other request for a Loan that (a) states the
original principal amount of such Loan, the date such Loan is
requested to be made and the purpose of such Loan, (b) certifies
that no change in the Partnership Agreement of the Borrower or
the Certificate of Incorporation or By-laws of the Corporate
General Partner has been made since the date of this Note except
as disclosed in such request or a prior such request and (c)
contains any other information required by the Bank prior to the
making of such Loan.
For value received, the Borrower promises to pay to the
order of the Bank at any of the banking offices of the Bank, in
lawful money of the United States and immediately available
funds, on demand (a) the Limiting Principal Amount or the
Outstanding Principal Amount, if less, (b) interest, calculated
on the basis of a 360-day year for the actual number of days each
year (365 or 366, as applicable), on the Outstanding Principal
Amount from and including the date of this Note to but not
including the date the Outstanding Principal Amount is paid in
full at a rate per year that shall (i) on each day beginning
before the Outstanding Principal Amount becomes due, whether
pursuant to any Demand or otherwise, be 1.75% above the One-Month
Libor Rate for the calendar month in which such day falls and
(ii) on each day subsequent to the last day described in clause
(a)(i) of this sentence be 4% above the rate in effect such
subsequent day as the Bank's Prime Rate (provided, however, that
(A) in no event shall such interest be payable at a rate in
excess of the maximum rate permitted by applicable law and
(B) solely to the extent
Page 4
<PAGE>
necessary to result in such interest not
being payable at a rate in excess of such maximum rate, any
amount that would be treated as part of such interest under a
final judicial interpretation of applicable law shall be deemed
to have been a mistake and automatically canceled, and, if
received by the Bank, shall be refunded to the Borrower, it being
the intention of the Bank and the Borrower that such interest not
be payable at a rate in excess of such maximum rate) and (c) each
cost and expense (including, but not limited to, the reasonable
fees and disbursements of counsel to the Holder, whether retained
for advice, litigation or any other purpose) incurred by the
Holder in endeavoring to (i) collect any amount payable pursuant
to this Note and remaining unpaid, (ii) preserve or exercise any
right or remedy of the Holder pursuant to this Note or (iii)
preserve or exercise any right or remedy of the Holder relating
to, enforce or realize upon any guaranty, endorsement,
collateral, subordination or other security or assurance of
payment now or hereafter securing the payment of or otherwise now
or hereafter applicable to any amount payable pursuant to this
Note.
In the absence of any Demand, a payment of interest
pursuant to this Note shall become due on the first day of each
calendar month.
In the absence of any earlier Demand, the Outstanding
Principal Amount shall become due on August 22, 1997.
Page 5
<PAGE>
If any of the Outstanding Principal Amount or any
interest payable pursuant to this Note is not paid within ten
days after the date it becomes due, whether pursuant to any
Demand or otherwise, the Borrower shall pay to the Holder on
demand a late charge of 6% thereof.
The Bank may make any Loan in reliance upon any Request
that the Bank in good faith believes to be valid and to have been
made in the name or on behalf of the Borrower by any officer of
the Corporate General Partner unless prior to receipt of such
Request by the Bank the Bank received from the Corporate General
Partner and had a reasonable time to act on written notice
revoking the authority of such officer to make a Request in the
name or on behalf of the Borrower. The Bank shall not incur any
liability to the Borrower or any other Person as a direct or
indirect result of making any Loan in accordance with the
preceding sentence.
The Credit is available subject to the Bank's
continuing review and right of modification, restriction,
suspension or termination at any time for any reason without any
prior notice to the Borrower. No modification, restriction,
suspension or termination of the Credit shall affect the
obligation of the Borrower to repay the original principal amount
of each Loan, the obligation of the Borrower to pay interest on
the outstanding principal amount of each Loan or any other
obligation of the Borrower to the Holder pursuant to this Note or
otherwise.
Page 6
<PAGE>
For each period (1) beginning on the date of this Note
and ending on the last day of the calendar quarter containing
such date, (2) consisting of any calendar quarter beginning after
the calendar quarter containing the date of this Note and before
the calendar quarter containing the first date any Demand is made
or (3) beginning on the first day of the calendar quarter
containing the first date any Demand is made and ending on such
date, the Borrower shall pay to the Bank on demand a non-usage
fee equal to the product obtained by multiplying (a) the
difference between the Limiting Principal Amount and the daily
average during such period of the Outstanding Principal Amount
first by (b) 1/4% and then by (c) the fraction obtained by
dividing the number of days in such period by 360 (provided,
however, that (i) in no event shall there be payable any such non-
usage fee that would result in interest being payable on the
Outstanding Principal Amount at a rate in excess of the maximum
rate permitted by applicable law and (ii) solely to the extent
necessary to result in such interest not being payable at a rate
in excess of such maximum rate, any amount that would be treated
as part of such interest under a final judicial interpretation of
applicable law shall be deemed to have been a mistake and
automatically canceled and, if received by the Bank, shall be
refunded to the Borrower, it being the intention of the Bank and
the Borrower that such interest not be payable at a rate in
excess of such maximum rate).
There shall be payable as principal pursuant to this
Note only so much of the Limiting Principal Amount as shall have
been
Page 7
<PAGE>
advanced by the Bank as a Loan or Loans and is outstanding.
The Holder shall set forth on the schedule attached to and made a
part of this Note or any similar schedule (including, but not
limited to, any similar schedule maintained in computerized
records) annotations evidencing (1) the date and original
principal amount of each Loan, (2) the date and amount of each
payment to be applied to the Outstanding Principal Amount and (3)
the Outstanding Principal Amount after each Loan and each such
payment. Each such annotation shall, in the absence of manifest
error, be conclusive and binding upon the Borrower. No failure
by the Holder to make and no error by the Holder in making any
annotation on such attached schedule or any such similar schedule
shall affect the obligation of the Borrower to repay the original
principal amount of each Loan, the obligation of the Borrower to
pay interest on the outstanding principal amount of each Loan or
any other obligation of the Borrower to the Holder pursuant to
this Note or otherwise.
Until the Credit has been terminated by the Bank and
all amounts payable pursuant to this Note have been fully and
indefeasibly paid or otherwise discharged, the Borrower shall,
unless the prior written consent of the Holder to not doing so
shall have been obtained by the Borrower, assure that:
1. The aggregate outstanding principal amount at any
time of liabilities of Related Entities arising from the
borrowing of any money or the deferral of any of the purchase
price of any asset or
Page 8
<PAGE>
pursuant to any capital lease does not
exceed 50% of the total of (a) the aggregate market value at such
time of all outstanding shares of stock of the Corporate General
Partner, (b) the aggregate market value at such time of all
outstanding partnership interests in the Borrower not owned by
the Corporate General Partner and (c) the aggregate outstanding
principal amount at such time of liabilities of the Borrower and
the Corporate 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;
2. The combined net income of all Related Entities
for any fiscal year of the Corporate General Partner before
distributions and non-cash expenses is at least 120% of the
higher of (a) all principal and interest scheduled to become due
during the immediately following fiscal year of the Corporate
General Partner with respect to liabilities of Related Entities
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,
except for any balloon payment of any of such principal that is
scheduled to become due during such immediately following fiscal
year and is reasonably expected to be refinanced, extended or
paid prior to becoming due, or (b) all principal and interest
that would be scheduled to become due during such immediately
following fiscal year in connection with a loan for which (i) the
principal amount was equal to the aggregate outstanding principal
amount at the end of such fiscal year of such liabilities, (ii)
the rate of interest was a fixed rate of 9% per year and (iii)
Page 9
<PAGE>
300 monthly payments of principal and interest equal in amount
were scheduled to be made to repay the principal amount thereof
and pay interest in connection therewith;
3. The combined earnings of all Related Entities for
any fiscal year of the Corporate General Partner before interest,
tax, depreciation and amortization expense are at least 200% of
all principal and interest scheduled to become due during the
immediately following fiscal year of the Corporate General
Partner with respect to liabilities of Related Entities arising
from the borrowing of any money or the deferral of the purchase
price of any asset or pursuant to any capital lease, except for
any balloon payment of any of such principal that is scheduled to
become due during such immediately following fiscal year and is
reasonably expected to be refinanced, extended or paid prior to
becoming due;
4. The aggregate outstanding principal amount at the
end of each fiscal quarter of the Corporate General Partner of
liabilities of Related Entities does not exceed 550% of the
combined earnings of all Related Entities for such fiscal quarter
before interest, tax, depreciation and amortization expense;
5. The combined earnings of all Related Entities for
any fiscal year of the Corporate General Partner before interest,
tax, depreciation and amortization expense that are attributable
to assets not subject to any mortgage, security interest or other
lien are at
Page 10
<PAGE>
least 200% of the higher of (a) all principal and
interest scheduled to become due during the immediately following
fiscal year of the Corporate General Partner with respect to
liabilities of Related Entities (i) arising from the borrowing of
any money or the deferral of the purchase price of any asset or
pursuant to any capital lease and (ii) the payment of which is
not secured by any mortgage, security interest or other lien on
any asset of any Related Entity, except for any balloon payment
of any of such principal that is scheduled to become due during
such immediately following fiscal year and is reasonably expected
to be refinanced, extended or paid prior to becoming due, or (b)
all principal and interest that would be scheduled to become due
during such immediately following fiscal year in connection with
a loan for which (i) the principal amount was equal to the daily
average of the Outstanding Principal Amount during such fiscal
year of such liabilities, (ii) the rate of interest was a fixed
rate of 8% per year and (iii) 300 monthly payments of principal
and interest equal in amount were scheduled to be made the repay
the principal amount thereof and pay interest in connection
therewith;
6. The aggregate market value at any time of all real
property interests of Related Entities not subject to any
mortgage, security interest or other lien is at least 150% of the
aggregate outstanding principal amount at such time of
liabilities of Related Entities (a) 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 and (b) the payment of
which is not secured by any mortgage,
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<PAGE>
security interest or other lien on any asset of any Related Entity; and
7. No Related Entity that is a corporation declares,
pays or makes any Distribution, except for (a) dividends payable
solely in any of its stock, (b) cash dividends paid to the
Borrower or the Corporate General Partner by any Related Entity
all of the outstanding shares of stock of which other than shares
required by applicable law to enable any individual to serve as a
director of such Related Entity are owned by the Borrower or the
Corporate General Partner at the time of such payment and (c)
during each fiscal year of the Corporate General Partner, cash
dividends declared or paid by the Corporate General Partner in an
amount not exceeding (i) the consolidated earnings of the
Corporate General Partner for such fiscal year before
depreciation and amortization expense minus (ii) all principal
scheduled to become due during the immediately following fiscal
year of the Corporate General Partner with respect to liabilities
of Related Entities 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, except for any balloon payment of
any of such principal that is scheduled to become due during such
immediately following fiscal year and is reasonably expected to
be refinanced, extended or paid prior to becoming due.
Each accounting term used in this Note shall be
construed as of any time in accordance with generally accepted
accounting
Page 12
<PAGE>
principles as in effect at such time. Each accounting
computation that this Note requires to be made as of any time
shall be made in accordance with such principles as in effect at
such time, except where such principles are incompatible with any
requirement of this Note.
All amounts payable pursuant to this Note and remaining
unpaid shall, without any notice, demand, presentment or protest
of any kind (each of which is knowingly, voluntarily,
intentionally and irrevocably waived by the Borrower),
automatically become immediately due if the Borrower commences or
has commenced against it any proceeding pursuant to any
bankruptcy or insolvency statute.
This Note shall be governed by and construed,
interpreted and enforced in accordance with the internal law of
the State of New York, without regard to principles of conflict
of laws.
This Note is given in replacement of and substitution
for, but not payment of, a Demand Grid Note, dated August 22,
1996, in the maximum principal amount of $25,000,000 executed and
delivered to the Bank by the Borrower.
THE BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER BASED ON
ANY CONTRACT, ON ANY NEGLIGENT OR INTENTIONAL TORT, ON ANY
STATUTE,
Page 13
<PAGE>
REGULATION OR OTHER LAW OR OTHERWISE, IN CONNECTION
WITH, OR OTHERWISE RELATING TO, (A) THIS NOTE OR ANY GUARANTY,
ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER SECURITY OR
ASSURANCE OF PAYMENT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY
SECURING THE PAYMENT OF, OR OTHERWISE NOW OR HEREAFTER DIRECTLY
OR INDIRECTLY APPLICABLE TO, ANY AMOUNT PAYABLE PURSUANT TO THIS
NOTE, (B) ANY OTHER WRITING HERETOFORE OR HEREAFTER EXECUTED IN
CONNECTION WITH, OR OTHERWISE RELATING TO, THIS NOTE OR ANY SUCH
GUARANTY, ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER
SECURITY OR ASSURANCE OF PAYMENT OR (C) ANY COURSE OF DEALING,
COURSE OF PERFORMANCE OR OTHER CONDUCT HERETOFORE OR HEREAFTER
PURSUED, ANY ACTION HERETOFORE OR HEREAFTER TAKEN OR OMITTED TO
BE TAKEN, OR ANY ORAL OR WRITTEN REPRESENTATION HERETOFORE OR
HEREAFTER MADE, BY OR ON BEHALF OF THE HOLDER IN CONNECTION WITH,
OR OTHERWISE RELATING TO, THIS NOTE OR ANY SUCH GUARANTY,
ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER SECURITY OR
ASSURANCE OF PAYMENT.
HOME PROPERTIES OF NEW YORK, L.P.
By HOME PROPERTIES OF NEW YORK, INC.,
Its Sole General Partner
By /s/ Nelson B. Leenhouts
-----------------------
Nelson B. Leenhouts, President
Page 14
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 5th day of March in year 1997, before me person-
ally came Nelson B. Leenhouts, to me known, who being by me duly
sworn, did depose and say that he resides at 1200 Fairway 18,
Macedon, New York; that he is the President of Home Properties of
New York, Inc., the corporation which executed the above
instrument on behalf of Home Properties of New York, L.P., the
limited partnership described therein and of which said corpora
tion is the sole general partner; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Ann M. McCormick
--------------------
Notary Public
Ann M. McCormick
Notary Public in the State of New York
Monroe County
Commission Expires March 21, 1998
Page 15
<PAGE>
SCHEDULE OF ADVANCES AND PAYMENTS
Original Outstanding
Principal Date Principal Principal
Date of Amount of of Amount of Amount of Approving
Loan Loan Payment Payment Note Employee
Page 16
<PAGE>
EXHIBIT 10.5
HOME PROPERTIES OF NEW YORK, L.P.
AMENDMENT NO. TEN
TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
The Amended and Restated Agreement of Limited Partnership of Home
Properties of New York, L.P. (the "Partnership Agreement") is
hereby amended effective January 1, 1997, such that the "Schedule
A" attached hereto shall be substituted for the "Schedule A"
currently attached to the Partnership Agreement. The purpose of
this amendment is to reflect the substitution of Linda Wells
Davey as a limited partner and to reflect the current number of
Units currently held by the General Partner.
As modified above, the Partnership Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, this Amendment No. Ten to the Partnership
Agreement is hereby executed as of the 1st day of January, 1997.
GENERAL PARTNER
HOME PROPERTIES OF NEW YORK, INC.
/s/ Ann M. McCormick
- --------------------
Ann M. McCormick
Vice President and Secretary
LIMITED PARTNERS
See Schedule A attached.
By: HOME PROPERTIES OF NEW YORK, INC.
under a power of attorney
/s/ Ann M. McCormick
- --------------------
Ann M. McCormick
Vice President and Secretary
<PAGE>
<TABLE>
<CAPTION>
1/1/97
SCHEDULE A
HOME PROPERTIES OF NEW YORK, L.P.
PARTNERS, UNITS AND PERCENTAGE INTERESTS
GENERAL PARTNER
Number of Percentage
Name and Identifying Number Business or Residence Address Units Held Interest
<S> <C> <C> <C>
Home Properties of New York, Inc. 850 Clinton Square 6,144,498.156 83.62686%
Rochester, New York 14604
LIMITED PARTNERS
Home Leasing Corporation 850 Clinton Square 429,376 5.84382%
Rochester, New York 14604
Leenhouts Ventures 850 Clinton Square 8,010 0.10902%
Rochester, New York 14604
Norman P. Leenhouts 850 Clinton Square 467 0.00636%
Rochester, New York 14604
Nelson B. Leenhouts 850 Clinton Square 219 0.00298%
Rochester, New York 14604
Arlene Z. Leenhouts 850 Clinton Square 50,000 0.68050%
Rochester, New York 14604
Nancy E. Leenhouts 850 Clinton Square 50,000 0.68050%
Rochester, New York 14604
Amy L. Tait 850 Clinton Square 11,195 0.15236%
Rochester, New York 14604
Amy L. Tait and 850 Clinton Square 2,548 0.03468%
Robert C. Tait Rochester, New York 14604
Ann M. McCormick 850 Clinton Square 565 0.00769%
Rochester, New York 14604
Ann M. McCormick and 850 Clinton Square 1,737 0.02364%
Patrick M. McCormick Rochester, New York 14604
David P. Gardner 850 Clinton Square 3,506 0.04772%
Rochester, New York 14604
<PAGE>
William E. Beach 850 Clinton Square 2,433 0.03311%
Rochester, New York 14604
William E. Beach and 850 Clinton Square 3,046 0.04146%
Richelle A. Beach Rochester, New York 14604
Paul O'Leary 850 Clinton Square 3,207 0.04365%
Rochester, New York 14604
Richard J. Struzzi 850 Clinton Square 2,363 0.03216%
Rochester, New York 14604
Robert C. Tait 850 Clinton Square 70 0.00095%
Rochester, New York 14604
Timothy A. Florczak 850 Clinton Square 600 0.00817%
Rochester, New York 14604
Laurie Tones 850 Clinton Square 6,033 0.08211%
Rochester, New York 14604
John K. Gardner 223 Clark Lane 1,500 0.02042%
Money Purchase Pension Plan Camillus, New York 13031
Peter L. Cappuccilli, Sr. 605 Genesee Street 6,250 0.08506%
Syracuse, New York 13204
Rocco M. Cappuccilli 605 Genesee Street 6,250 0.08506%
Syracuse, New York 13204
J. Neil Boger 27 Arlington Drive 1,225 0.01667%
Pittsford, New York 14534
Joyce P. Caldarone 162 Anchor Drive 1,225 0.01667%
Vero Beach, Florida 32963
Linda Wells Davey 17 Green Valley Road 1,225 0.01667%
Pittsford, New York 14534
John G. Dorschel 20 NE Plantation Road 1,225 0.01667%
Stuart, Florida 34996
Richard J. Dorschel 32 Whitestone Lane 1,225 0.01667%
Rochester, New York 14618
Elizabeth Hatch Dunn P.O. Box 14261 2,450 0.03334%
North Palm Beach, Florida 33408
<PAGE>
Rufus Hedges c/o J. Ernest Brophy 2,450 0.03334%
1061 Coconut Road
Boca Raton, Florida 33432
Jeremy A. Klainer 295 San Gabriel Drive 612 0.00833%
Rochester, New York 14610
J. Robert Maney 506 Panorama Trail 2,450 0.03334%
Rochester, New York 14625
John A. McAlpin 6270 Bopple Hill Road 1,225 0.01667%
Naples, New York 14512-9771
George E. Mercier 99 Ridgeland Road 1,225 0.01667%
Rochester, New York 14623
Harold S. Mercier 404 Miami Avenue 1,225 0.01667%
Terrace Park, Ohio 45174
Michelle Mercier 99 Ridgeland Road 1,225 0.01667%
Rochester, New York 14623
Jack E. Post 4898 East Lake Road 1,225 0.01667%
Rushville, New York 14544
Robert T. Silkett 3 Dartmouth Court 1,225 0.01667%
Pittsford, New York 14534
Carolyn M. Steklof 144 Dunrovin Lane 1,225 0.01667%
Rochester, New York 14618
Conifer Development, Inc. 850 Clinton Square 20,738 0.28225%
Rochester, New York 14604
Conifer Realty, Inc. 850 Clinton Square 285,403 3.88435%
Rochester, New York 14604
Richard J. Crossed 850 Clinton Square 68,021 0.92577%
Rochester, New York 14604
Crossed Family Partnership 850 Clinton Square 7,200
Rochester, New York 14604
Peter J. Obourn 850 Clinton Square 30,700 0.41783%
Rochester, New York 14604
John H. Fennessey 850 Clinton Square 30,700 0.41783%
Rochester, New York 14604
Tamarack II Associates 850 Clinton Square 2,027 0.02759%
Rochester, New York 14604
<PAGE>
Burton S. August 11 Woodbury Place 4,246 0.05779%
Rochester, New York 14618
Charles J. August 355 Ambassador Drive 4,246 0.05779%
Rochester, New York 14610
Robert W. August 35 Woodstone Rise 1,158 0.01576%
Pittsford, New York 14534
John H. Cline 35 Vick Park A 2,316 0.03152%
Rochester, New York 14607
Ralph DeStephano, Sr. 1249-1/2 Long Pond Road 2,316 0.03152%
Rochester, New York 14626
Philip W. Dunsker 70 Woodland Road 2,316 0.03152%
Short Hills, New Jersey 07078
Gerald A. Fillmore 3800 Delano Road 2,316 0.03152%
F/B/O Living Trust of G.A.F. Oxford, Michigan 48371
Esther Lowenthal 1400 East Avenue 2,316 0.03152%
Rochester, New York 14610
Richard J. Katz, Jr. 191 Island Drive 2,316 0.03152%
Jupiter, Florida 33477
Anwer Masood, MD 1445 Portland Avenue 2,316 0.03152%
Rochester, New York 14621
Elizabeth W. Pine 1350 Highland Avenue 1,448 0.01971%
Rochester, New York 14620
Estate of Ernest I. Reveal, Jr. c/o Mr. Donald K. Easterly 2,316 0.03152%
Chase P.O. Box 1412
Rochester, New York 14603
Gregory J. Riley, MD 18 Whitestone Lane 2,316 0.03152%
Rochester, New York 14618
Thomas P. Riley 346 Beach Avenue 2,316 0.03152%
Rochester, New York 14612
<PAGE>
Tamarack Associates c/o Mr. Timothy D. Fournier 2,316 0.03152%
46 Prince Street
Rochester, New York 14607
William G. vonberg 8 Old Landmark Drive 2,316 0.03152%
Rochester, New York 14618
Stephen C. Whitney 9 Devonwood Lane 869 0.01183%
Pittsford, New York 14534
Mr. and Mrs. Frank Zamiara 136 Mendon-Ionia Road 2,316 0.03152%
Mendon, New York 14506
The Joseph A. Cicci Revocable Trust 109 Wyoming Street 104,118 1.41705%
Syracuse, New York 13204
TOTAL UNITS 7,347,517.156
</TABLE>
<PAGE>
EXHIBIT 10.15
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the 30th day of December, 1996
between Home Properties of New York, Inc. (the "Company"), a
Maryland corporation and Alan L. Gosule ("Indemnitee").
WHEREAS, highly competent persons are reluctant to
serve as directors and officers of the Company unless they are
provided with adequate protection through insurance and adequate
indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on
behalf of the Company;
WHEREAS, the current limitations on coverage of
available insurance and the uncertainties relating to
indemnification have increased the difficulty of attracting and
retaining such persons;
WHEREAS, the Board of Directors of the Company has
determined that the ability to attract and retain such persons is
in the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be
increased certainty of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for
the Company contractually to obligate itself to indemnify such
persons to the fullest extent permitted by applicable law so that
they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified; and
WHEREAS, the Indemnitee is willing to serve, continue
to serve and to consider taking on additional service for or on
behalf of the Company on the condition that the Indemnitee be so
indemnified;
NOW, THEREFORE, the Company and the Indemnitee hereby
agree as follows:
1. Statutory Indemnity. Without limiting any other
indemnification rights Indemnitee may have, under this Agreement
or otherwise, the Company hereby agrees to hold harmless and
indemnify Indemnitee to the full extent authorized or permitted
by the provisions of the Maryland General Corporation Law, or by
any amendment thereof or other statutory provisions authorizing
or permitting such indemnification which is adopted after the
date hereof.
2. Indemnity. Without limiting any other
indemnification rights Indemnitee may have, under this Agreement
or otherwise, subject only to the exclusions set forth in Section
3 hereof, the Company hereby agrees to hold harmless and
indemnify Indemnitee:
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<PAGE>
(a) Against any and all expenses (including attorneys'
fees and expenses incurred in defense or investigation of any
claim, including a claim against the Company or Indemnitee with
respect to this Agreement), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in
connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the
Company) to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact
that Indemnitee is, was or at any time becomes a director,
officer, employee or agent of the Company, or is or was serving
or at any time serves at the request of the Company as a
director, officer, employee or agent of Home Properties of
New York, L.P. (the "Partnership"), the limited partnership of
which the Company is general partner, or of any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise;
(b) Otherwise to the fullest extent as may be
permitted to Indemnitee by the Company under the non-exclusivity
provisions of Article VII of the By-laws of the Company as in
effect on the date hereof and subparagraphs (g) and (h) of
Section 2-418 of the Maryland General Corporation Law or any
successor provision; and
(c) The Company covenants and agrees to maintain
Directors' and Officers' Liability Insurance on terms at least as
favorable to Indemnitee as the policy currently in effect (the
"D&O Policy") unless otherwise approved by a majority of the
Board of Directors of the Company.
3. Limitations on Indemnity. No indemnity pursuant to
Section 2 hereof shall be paid by the Company:
(a) if the act or omission of the Indemnitee was
material to the matter giving rise to the proceedings and was
committed in bad faith or as a result of active and deliberate
dishonesty;
(b) in the case of any criminal proceeding, the
Indemnitee had reasonable cause to believe that the act or
omission was unlawful;
(c) if a final decision by a court having jurisdiction
in the matter, or an opinion of Company counsel (or, if requested
by Indemnitee, counsel independent of the Company and Indemnitee)
shall determine that such indemnification is unlawful; or
(d) if the liability arises under the Securities Act
of 1933 in connection with any offering registered under that Act
and the Company has not received an opinion of its counsel or
opinion of a court of appropriate jurisdiction that such
indemnification is not against public policy.
4. Continuation of Indemnity. All agreements and
obligations of the Company contained herein shall continue during
the period Indemnitee is a director, officer, employee or agent
of the Company (or is or was serving at the request of the
Company as a
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<PAGE>
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall
continue thereafter for the benefit of Indemnitee and his
personal representatives, with respect to any claim or
threatened, pending or completed action, suit or proceeding,
whether, civil, criminal or investigative, that may be asserted,
threatened or exist by reason of the fact that Indemnitee was a
director of the Company or serving in any other capacity referred
to herein.
5. Notification and Defense of Claim. Promptly after
receipt by Indemnitee of notice of any claim or the commencement
of any action, suit or proceeding, Indemnitee will, if a claim
for indemnity in respect thereof is to be made against the
Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company
will not relieve it from any liability which it may have to
Indemnitee otherwise than under this Agreement. With respect to
any such action, suit or proceeding as to which Indemnitee
notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate
therein at its own expense; and
(b) Except as otherwise provided below, to the extent
that it may wish, the Company, jointly with any other
indemnifying party similarly notified, will be entitled to assume
the defense thereof, with counsel reasonably satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its
election so to assume the defense thereof the Company will not be
liable to Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by Indemnitee in connection with
the defense thereof other than reasonable costs of investigation,
or reasonable expenses incurred by Indemnitee in interpreting
this Agreement and in concluding whether or not a conflict of
interest may exist as contemplated in (ii) below, or as otherwise
provided below. Indemnitee shall have the right to employ its
counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from the Company
of its assumption of the defense thereof shall be at the expense
of Indemnitee unless (i) the employment of counsel by Indemnitee
has been authorized by the Company, (ii) Indemnitee shall have
reasonably concluded that there may be a conflict of interest
between the Company and Indemnitee in the conduct of the defense
of such action which would materially hinder the ability of
counsel to the Company to represent Indemnitee, or (iii) the
Company shall not in fact have employed counsel reasonably
satisfactory to Indemnitee to assume the defense of such action,
in each of which cases the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit
or proceeding brought by or on behalf of the Company or as to
which Indemnitee shall have made the conclusion provided for in
(ii) above;
(c) The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in
settlement of any action or claim effected without its written
consent. The Company shall not settle any action or claim in any
manner which would impose any liability, penalty, limitation or
acknowledgment of fault on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will
unreasonably withhold their consent to any proposed settlement;
and
Page 3
<PAGE>
(d) Nothing contained herein shall require Indemnitee
or the Company to take any actions which would limit the
availability of coverage under the D&O Policy or would permit the
carrier to disclaim coverage. Indemnitee and the Company agree
to use their respective best efforts to comply with the terms and
conditions of the D&O Policy.
6. Advance and Repayment of Expenses. The Company
shall advance to Indemnitee all reasonable expenses incurred by
Indemnitee in defending any civil or criminal action, suit or
proceeding against Indemnitee, within 10 days of receiving (a) a
written affirmation of Indemnitee that (i) the act or omission
giving rise to any such action, suit or proceeding was not
committed in bad faith or the result of active and deliberate
dishonesty, and (ii) in the case of a criminal proceeding,
Indemnitee did not have reasonable cause to believe that the act
or omission giving rise to such action, suit or proceeding was
unlawful, and (b) a written undertaking by or on behalf of
Indemnitee to repay the amount advances if it is ultimately
determined that the Indemnitee has not met the standard of
conduct necessary for indemnification under applicable law.
7. Enforcement. (a) The Company expressly confirms
and agrees that it has entered into this Agreement and assumed
the obligations imposed on the Company hereby in order to induce
Indemnitee to become or continue as a director or officer of the
Company, and acknowledges that Indemnitee is relying upon this
Agreement in continuing in such capacity; and
(b) In the event either the Company or Indemnitee
brings any action to enforce rights or to collect moneys due
under this Agreement, to the extent that Indemnitee is successful
in such action, the Company shall reimburse Indemnitee for all of
Indemnitee's reasonable fees and expenses in defending, bringing
or pursuing such action.
8. Separability. Each of the provisions of this
Agreement is a separate and distinct agreement and independent of
the others, so that if any provision hereof shall be held to be
invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
9. Governing Law; Binding Effect; Amendment and
Termination.
(a) This Agreement shall be
interpreted and enforced in accordance with the laws of the State
of New York without regard to principles of conflicts of laws
except to the extent the laws of the State of Maryland apply by
reason of the fact that the Company is a corporation organized
under the laws of the State of Maryland;
(b) This Agreement shall be binding upon Indemnitee
and upon the Company, its successors and assigns, and shall inure
to the benefit of Indemnitee, his heirs, personal representatives
and assigns and to the benefit of the Company, its successors and
assigns, and supersedes any prior agreement between the parties;
and
Page 4
<PAGE>
(c) No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on and as of the day and year first above written.
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Nelson B. Leenhouts
---------------------------------
Nelson B. Leenhouts, President
/s/ Alan L. Gosule
---------------------------------
Alan L. Gosule
Page 5
<PAGE>
EXHIBIT 10.24
Repayment of this Note is subject and subordinate to repayment of a
Term Promissory Note in the original principal amount of
$____x_____ given by the undersigned to The Chase Manhattan Bank
this date.
TERM PROMISSORY NOTE
$ _______x____________ Rochester, New York
August 12, 1996
For value received, the undersigned promises to pay to the order
of HOME PROPERTIES OF NEW YORK, L.P. ("Home Properties" or "HME"),
at its office located at 850 Clinton Square Rochester, New York,
14604 or to such other address as Home Properties may notify the
undersigned, the principal amount of x Dollars
($ __________x____________) (the "Loan").
Maturity Date. The entire amount of principal, and remaining
accrued interest on, this Note shall be due on August 31, 2016 (the
"Maturity Date").
Interest. The undersigned promise(s) to pay interest on the
unpaid balance of the principal amount of the Loan from and
including the date of the Loan to but excluding the date the Loan
shall be paid in full at the rate of 7% per annum. Interest shall
be calculated on the basis of a year of 360 days and payable for
the actual number of days elapsed. Interest shall accrue and be
paid solely from the regular quarterly dividends paid on the shares
of common stock (the "Shares") of Home Properties pledged to Home
Properties by the undersigned pursuant to the Pledge Security
Agreement dated the date of this Note (the "Pledge Agreement").
Accrued interest shall not be compounded.
Payments. All payments under this Note shall be made in lawful
money of the United States of America and in immediately available
funds at Home Properties' office specified above. During the
existence of an Event of Default as hereinafter defined, Home
Properties may apply any money received or collected for payment of
this Note to the principal of, interest on or any other amount
payable under, this Note in any order that Home Properties may
elect.
The loan may be prepaid at any time without premium or penalty.
All partial prepayments shall be applied to the reduction and
payment of principal in the inverse order of maturity.
Non-Recourse. This Note shall be a non-recourse obligation of
the undersigned. By accepting this Note, Home Properties agrees to
look solely to the collateral represented by the Shares pledged
under the Pledge Agreement for repayment of all amounts due
hereunder and waives its right to seek or obtain any judgment or
deficiency judgment against the undersigned for such amounts.
Records. The date and amount of the Loan and each payment of
principal, and the outstanding principal balance of the loan, shall
be recorded by Home Properties on its books and any such record
shall be conclusive absent manifest error.
Representations and Warranties. The undersigned represents and
warrants upon the execution and delivery of this Note, that:
(a) the execution, delivery and performance of this Note do not
violate or conflict with any law applicable to the undersigned, any
order or judgment of any court or other agency of government
applicable to the undersigned or any of the undersigned's assets or
any material contractual restriction binding on or materially
affecting the undersigned or any of the undersigned's assets;
(b) to the best of undersigned's knowledge, all governmental and
other consents that are required to have been obtained by the
undersigned with respect to this Note have been obtained and are in
full force and effect and all conditions of any such consents have
been complied with; and (c) the undersigned's obligations under
this Note constitute its legal, valid and binding obligations,
enforceable in accordance with its terms except to the extent that
such enforcement may be limited by applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights
generally.
Security. This Note is secured pursuant to the terms of the
Pledge Agreement.
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<PAGE>
Default. If any of the following events of default shall occur
with respect to the undersigned (each an "Event of Default"):
(a) any representation or warranty made or deemed
made by the undersigned in this Note shall prove to have
been incorrect in any material respect on or as of the
date made or deemed made;
(b) the undersigned: (i) shall generally not, or be
unable to, or shall admit in writing an inability to, pay
debts as such debts become due; (ii) shall make an
assignment for the benefit of creditors; (iii) shall file
a petition in bankruptcy or for any relief under any law
of any jurisdiction relating to reorganization,
arrangement, readjustment of debt, dissolution or
liquidation; (iv) shall have any such petition filed
against the undersigned and the same shall remain
undismissed for a period of 30 days or shall consent or
acquiesce thereto; or (v) shall have had a receiver,
custodian or trustee appointed for all or a substantial
part of the undersigned's property;
(c) if the undersigned shall die or be declared
incompetent;
(d) there occurs a default pursuant to the terms of
the Term Promissory Note given this date by the
undersigned to The Chase Manhattan Bank, which Note is
secured by a first pledge of the Shares;
(e) the undersigned leaves the employment of or is
no longer serving as a Director of Home
Properties or Home Properties of New York, Inc., as the
case may be, regardless of the circumstances;
THEN, in any such case, if Home Properties shall elect by notice to
the undersigned, the unpaid principal amount of this Note, together
with accrued interest, shall become forthwith due and payable;
provided that in the case of an event of default under (b) above,
the unpaid principal amount of this Note, together with accrued
interest, shall immediately become due and payable without any
notice or other action by Home Properties.
Certain Waivers. The undersigned waives presentment, notice
of dishonor, protest and any other notice or formality with respect
to this Note.
Notices. All notices, requests, demands or other
communications to or upon the undersigned or Home Properties shall
be in writing and shall be deemed to be delivered upon receipt if
delivered by hand or overnight courier or five days after mailing
to the address (a) of the undersigned as set forth next to the
undersigned's execution of this Note, (b) of Home Properties as
first set forth above, or (c) of the undersigned or Home Properties
at such other address as the undersigned or Home Properties shall
specify to the other in writing.
Assignment. This Note shall be binding upon the undersigned
and the undersigned's successors and shall inure to the benefit of
Home Properties and its successors and assigns.
Entire Agreement, Amendment and Waiver. This Note and the
Pledge Agreement executed by the undersigned constitute the entire
agreement between the undersigned and Home Properties and may be
amended only by a writing signed on behalf of each party and shall
be effective only to the extent set forth in that writing. No
delay by Home Properties in exercising any power or right hereunder
shall operate as a waiver thereof or of any other power or right;
nor shall any single or partial exercise of any power or right
preclude other or future exercise thereof, or the exercise of any
other power or right hereunder.
Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of New York.
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<PAGE>
Use of Proceeds. The proceeds of the Loan represented by this
Note will be used by the undersigned to purchase the Shares and
Home Properties is instructed to disburse such proceeds directly to
or at the direction of HME with respect to such purchase.
_______x__________________________
Address for Notices:
_______x__________________________
_______x__________________________
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<PAGE>
EXHIBIT 10.25
The security interest granted herein is subject and
subordinate to a security interest granted by the
undersigned this date to The Chase Manhattan Bank.
PLEDGE SECURITY AGREEMENT
The undersigned executes and delivers this Pledge Security
Agreement (the "Agreement") to Home Properties of New York,
L.P. ("Home Properties"), having an office located at 850
Clinton Square, Rochester, New York 14604, in consideration
of a loan made by Home Properties to the undersigned.
Accordingly, Home Properties shall have the rights, remedies
and benefits hereinafter set forth.
Definitions. The term "Liabilities" shall include any and
all indebtedness, obligations and Liabilities of any kind of
the undersigned to Home Properties with respect to a certain
loan (the "Loan") from Home Properties evidenced by a
promissory note of even date herewith (the "Note") in the
principal amount of $____X____________, the proceeds of
which are being used by the undersigned to purchase the
Collateral (as defined below).
The term "Collateral" means all property in which the
undersigned grants a security interest pursuant to the
"Grant of Security Interest" paragraph set forth below.
The term "Obligor" means the undersigned.
Grant of Security Interest. As security for the payment of
the Liabilities, the undersigned hereby grants Home
Properties a security interest in, a general lien upon
and/or right of set-off against (as applicable) the
____X_____ shares (the "Shares") of common stock of Home
Properties acquired by the undersigned on this date with the
proceeds of the Loan and a loan ("Chase Loan") from The
Chase Manhattan Bank ("Chase"). By accepting this
Agreement, Home Properties acknowledges and agrees that the
pledge hereunder is secondary and subordinate to a pledge
given by the undersigned to Chase to secure the Chase Loan.
The undersigned agrees that Home Properties' records will be
the accurate record of any substitutions in and additionals
to the Collateral.
A certificate ("Certificate") for the Shares shall be issued
in the name of the undersigned, but when issued shall be
forwarded by Home Properties' transfer agent directly to
Chase and Chase shall have and maintain custody of the
Certificate until the Chase Loan is paid in full. Upon
payment in full of the Chase Loan, the undersigned will
instruct Chase to deliver the Certificate to Home
Properties. The undersigned also agrees to execute and
deliver to Home Properties blank stock powers with respect
to the Certificate upon the execution of this Agreement.
Covenants. As long as any part of the Liabilities remain
unpaid the undersigned agrees to:
a) defend the Collateral against all claims, keep the
Collateral free from other security interests (other than
the pledge to Chase) and not dispose of any portion of the
Collateral without Home Properties' written consent;
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<PAGE>
b) notify Home Properties promptly of any changes in the
undersigned's name or address;
c) execute and deliver any financing statements or other
documents, pay any costs of title searches and filing fees,
and take any other action Home Properties requests in
relation to the security interest;
d) pay all taxes and other charges which may be levied
against the Collateral.
Warranties. As long as any part of the Liabilities remain
unpaid the undersigned warrants to Home Properties that:
a) each document representing the Collateral is genuine;
b) the undersigned owns the Collateral free of any claims,
liens, encumbrances and security interests, except of Chase
and Home Properties;
c) the undersigned is fully authorized to enter into this
Agreement.
Voting Rights. So long as no Event of Default occurs, the
Shares will remain registered in the name of the
undersigned. However, after a default and payment in full
of the Chase loan, the undersigned authorizes Home
Properties to transfer the shares into Home Properties' name
or the name of any nominee and agrees that thereafter Home
Properties does not have to send the undersigned any
communications with respect to the Shares and any proxies
issued by the undersigned will be invalid. Home Properties
shall then have the right to vote in person or by proxy
without any direction from the undersigned.
Default. It shall be an Event of Default if Obligor shall
default in the performance of any of his/her agreements
herein, or the occurrence and continuance of any Event of
Default under Obligor's note.
Upon the occurrence of an Event of Default, unless and to
the extent that Home Properties shall otherwise elect, all
of the Liabilities shall become and be due and payable
forthwith.
Dividends/Income. After payment in full of the Chase Loan
and until the Loan is paid in full, all cash dividends from
the Collateral shall be paid directly to Home Properties
pursuant to the terms of the Note. If the undersigned
receives any dividends or income during the term of this
Agreement, the undersigned agrees to promptly turn the same
over to Chase until such time as the Chase Loan is paid in
full and thereafter to Home Properties. Home Properties
shall apply the cash dividends so received to the
Liabilities but Home Properties will account for it and pay
over to the undersigned any cash which remains on hand after
the Liabilities are satisfied.
General Waivers. Without affecting the liability of the
undersigned to Home Properties, any of the following may be
done by Home Properties without notice to the undersigned.
a) change, renew or extend the time for repayment of any
part of the Liabilities;
b) change the rate of interest or any other provisions
with respect to any part of the Liabilities;
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c) surrender, sell or otherwise dispose of any money or
property which is in Home Properties' possession as
collateral security for the Liabilities;
d) release or discharge any party liable to Home
Properties in whole or in part for the Liabilities or accept
any additional parties or guarantors;
e) delay or refrain from exercising any of Home
Properties' rights; and
f) settle or compromise any and all claims.
Custody of Collateral. Home Properties agrees to use
reasonable care to protect any Collateral in its possession.
However, Home Properties shall not be required to:
a) vote the stock;
b) collect any debt;
c) exercise any conversion rights;
d) take any steps necessary to preserve rights against
prior parties;
e) notify the undersigned of any maturities, calls,
conversions, or other similar matters concerning the
Collateral, except for forwarding to the undersigned those
communications which are addressed to the undersigned; or
f) act upon any request the undersigned may send Home
Properties.
Changes in Collateral. Whether or not an Event of Default
has occurred, the undersigned authorizes Home Properties to:
a) receive and hold as additional collateral any non-cash
increases in or profits on the Collateral, including without
limitation any shares issued as the result of a stock split
or similar distribution; and
b) surrender the Collateral and receive any payment or
distribution upon redemption, dissolution or liquidation of
the issuer of the Collateral.
If the undersigned receives any of the payments or
distributions described above after payment in full of the
Chase Loan, the undersigned agrees to turn them over to Home
Properties.
Further Assurance. The undersigned appoints Home Properties
as its attorney to take any necessary steps, including the
filing of financing statements, to perfect Home Properties'
security interest without first obtaining the undersigned's
signature. Upon Home Properties' request, the undersigned
will execute any amendments, including UCC-3 forms, which
are necessary to perfect and continue Home Properties'
security interest in the Collateral.
Modification. This Agreement cannot be modified except by a
written agreement.
Notices. The undersigned waives any right to notice of any
action Home Properties may take with respect to the
Collateral. If Home Properties shall provide such notice,
the undersigned agrees that notice will be sufficiently
given if sent to the undersigned's address shown in this
Agreement or to a new address which the undersigned shall
have notified Home Properties of in writing. The
undersigned agrees that notice of foreclosure sale sent at
least five days before the sale provides the undersigned
with a reasonable opportunity to exercise the undersigned's
right of redemption of the Collateral and any other legal
rights.
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Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York. The undersigned consents to the
nonexclusive jurisdiction and venue of the state or federal
courts located in such state. In the event of a dispute
hereunder, suit may be brought against the undersigned in
such courts or in any jurisdiction where the undersigned or
any of its assets may be located. Service of process by
Home Properties in connection with any dispute shall be
binding on the undersigned if sent to the undersigned by
registered mail at the address(es) specified below or to
such further address(es) as the undersigned may specify to
Home Properties in writing.
IN WITNESS WHEREOF, the undersigned has executed this
instrument or has caused this instrument to be duly executed
this _____ day of August, 1996.
______________________________
Signature
__X____________________________
Address:
__X_____________________________
__x_____________________________
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EXHIBIT 10.26
<TABLE>
<CAPTION>
NAME OF PARTICIPANTS SHARES ISSUED COMPANY LOAN AMOUNT
<S> <C> <C>
William E. Beach 963 38,103.59
Lawrence R. Brattain 1,779 70,411.41
C. Terence Butwid 2,527 100,017.10
Richard J. Crossed 7,338 290,417.38
Kathleen M. Dunham 778 30,780.47
John H. Fennessey 1,289 51,007.14
Timothy A. Florczak 834 33,012.77
Timothy D. Fournier 2,401 95,004.38
David P. Gardner 2,174 86,017.08
Nelson B. Leenhouts 7,338 290,417.38
Norman P. Leenhouts 7,338 290,417.38
Robert J. Luken 1,016 40,218.43
Ann M. McCormick 2,123 84,000.12
Paul O'Leary 1,001 39,611.36
John Oster 1,719 68,002.92
Richard J. Struzzi 956 37,809.95
Amy L. Tait 5,206 206,005.95
Robert C. Tait 812 32,112.06
Burton S. August, Sr. 759 30,017.00
William Balderston, III 759 30,017.00
Leonard Helbig, III 759 30,017.00
Roger W. Kober 759 30,017.00
Clifford W. Smith, Jr. 759 0
Paul L. Smith 759 30,017.00
</TABLE>
<PAGE>
Exhibit 10.27
GUARANTY
(UNLIMITED AMOUNT)
This Guaranty is granted by the Guarantor to THE CHASE MANHATTAN BANK
having an office located at One Chase Square, Rochester, New York ("Business
Office"), and/or any of its subsidiaries and/or affiliates and wherever located
(hereinafter with their respective successors and assigns, collectively or
individually, as the context may require, referred to as "Chase").
RECITALS. Pursuant to separate notes (the "notes"), Chase is providing
up to 24 term loans aggregating up to $2.1 million (the "loans") to the
Directors and certain key employees (individually, a "Borrower" and
collectively, the "Borrowers") of Home Properties of New York, Inc. ("Home
Properties") to assist the Borrowers in financing their purchases of shares of
the common stock of Home Properties under its Executive Stock Purchase and Loan
Program (the "Program"); and Home Properties and its subsidiary, Home
Properties of New York, L.P. ("Home Properties L.P.") (Home Properties and Home
Properties L.P. are hereinafter collectively referred to as the "Guarantor",
and the term "Guarantor" shall mean each Guarantor individually and both of
them together) represents that, by assisting the Borrowers in financing such
purchases and thereby acquiring a significant equity interest in Home
Properties, it expects to derive advantage from each and every such
accommodation.
CONSIDERATION. To induce Chase, at its option, at any time or from time
to time, to extend the above described loans, with or without security, to or
for the accounts of the Borrowers, each Guarantor hereby agrees as follows:
GUARANTY. The Guarantor (and if there is more than one Guarantor,
jointly and severally) absolutely and unconditionally guarantees to Chase that
each Borrower will promptly perform and observe every agreement and condition
contained in any instrument, writing or arrangement relating to or the subject
of the loan to each Borrower (a "Credit Arrangement") to be performed or
observed by such Borrower, that all sums stated to be payable in, or which
become payable under, any Credit Arrangement, will be promptly paid in full
when due, whether at maturity or earlier by reason of acceleration or
otherwise, together with interest and any and all legal and other costs and
expenses paid or incurred in connection therewith by Chase (collectively, the
"Guaranteed Obligations"), and, in case of one or more extensions of time of
payment or renewals, in whole or in part, of any Credit Arrangement or
obligation, that the same will be promptly paid or performed when due,
according to each such extension or renewal, whether at maturity or earlier by
reason of acceleration or otherwise. The Guarantor agrees that, as between the
Guarantor and Chase, the Guaranteed Obligations may be declared to be due and
payable for purposes of this Guaranty notwithstanding any stay, injunction or
other prohibition which may prevent, delay or vitiate any such declaration as
against any Borrower and that, in the event of any such declaration (or
attempted declaration), the Guaranteed Obligations (whether or not due and
payable by any Borrower) shall forthwith become due and payable by the
Guarantor for purposes of this Guaranty. The Guarantor further guarantees that
all payments made by any Borrower to Chase of any Guaranteed Obligation will,
when made, be final and agrees that if any such payment is recovered from, or
repaid by, Chase in whole or in part by reason of any bankruptcy, insolvency or
similar proceeding instituted by or against such Borrower, this Guaranty shall
continue to be fully applicable to such obligation to the same extent as though
the payment so recovered or repaid had never been originally made on such
obligation.
Each Guarantor further specifically guarantees to make prompt payment
when due of the additional interest ("interest rate differential") payments
with respect to the loans, as further described below.
This is a guaranty of payment and performance and not a guaranty of
collection only.
This Guaranty is enforceable irrespective of the validity, regularity or
enforceability of any instrument, writing or arrangement relating to or the
subject of a Credit Arrangement or the obligations thereunder and irrespective
of any present or future law or order of any government (whether of right or in
fact and whether Chase shall have consented thereto) or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any obligation of
any Borrower or other obligor or to vary the terms of payment.
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CONSENTS AND WAIVERS. The Guarantor hereby consents that from time to
time, without notice to or further consent of the Guarantor, the performance or
observance by any Borrower of any Credit Arrangement or Guaranteed Obligation
may be waived or the time of performance thereof extended by Chase, and payment
of any Guaranteed Obligation may be accelerated in accordance with any
agreement governing the same, or may be extended, or any Credit Arrangement may
be renewed in whole or in part, or the terms of any Credit Arrangement or any
part thereof may be changed, including increase or decrease in the rate of
interest thereon, or any collateral therefor may be exchanged, surrendered or
otherwise dealt with as Chase may determine, or any co-guarantor or any other
party liable upon or in respect of any obligation may be released, and any of
the acts mentioned in any Credit Arrangement may be done, all without notice to
or affecting the liability of the Guarantor hereunder. The Guarantor waives
notice of acceptance of this Guaranty and of the creation of any Guaranteed
Obligations. The Guarantor hereby waives presentment of any instrument, demand
for payment, protest and notice of non-payment or protest thereof or of any
exchange, sale, surrender or other handling or disposition of any such
collateral, and any requirement that Chase exhaust any right, power or remedy
or proceed against any Borrower under any Credit Arrangement or against any
other person under any other guaranty of, or security for, any of the
Guaranteed Obligations. The Guarantor hereby further waives any defense
whatsoever which might constitute a defense available to, or discharge of, any
Borrower or a guarantor. No payment by the Guarantor pursuant to any provision
hereunder shall entitle the Guarantor, by subrogation to the rights of Chase or
otherwise, to any payment by any Borrower (or out of the property of such
Borrower) except after payment in full of all sums (including interest, costs
and expenses) which may be or become payable by any Borrower to Chase at any
time or from time to time, unless the Guaranteed Obligations shall be paid in
full.
FINANCIAL STATEMENTS. Each Guarantor shall furnish to Chase, within 120
days after the end of the Guarantor's fiscal year or at such other times or
intervals as Chase may request, audited financial statements showing the
Guarantor's financial condition at the end of and for the entire fiscal year.
Such statements shall fairly present the financial condition of the Guarantor
as at the end of such fiscal year or periods in accordance with generally
accepted accounting principles consistently applied.
RIGHTS CUMULATIVE. The rights, powers and remedies granted to Chase
herein shall be cumulative and in addition to any rights, powers and remedies
to which Chase may be entitled either by operation of law or pursuant to any
other document or instrument delivered or from time to time to be delivered to
Chase in connection with any Credit Arrangement.
SECURITY. As collateral security for the payment of any and all
obligations and liabilities of the Guarantor to Chase, now existing or
hereafter arising, the Guarantor grants to Chase a security interest in and a
lien upon and right of offset against all moneys, deposit balances, securities
or other property or interest therein of the Guarantor now or at any time
hereafter held or received by or for or left in the possession or control of
Chase or any of its affiliates, whether for safekeeping, custody, transmission,
collection, pledge or for any other or different purpose.
REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and warrants
that: (a) it is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and, if relevant under such
laws, in good standing; (b) it has the power to execute and deliver this
Guaranty and to perform its obligations hereunder and has taken all necessary
action to authorize such execution, delivery and performance; (c) such
execution, delivery and performance do not violate or conflict with any law
applicable to it, any provision of its organizational documents, any order or
judgment of any court or other agency of government applicable to it or any of
its assets or any material contractual restriction binding on or materially
affecting it or any of its assets; (d) to the best of Guarantor's knowledge,
all governmental and other consents that are required to have been obtained by
it with respect to this Guaranty have been obtained and are in full force and
effect and all conditions of any such consents have been complied with; (e) its
obligations under this Guaranty constitute its legal, valid and binding
obligations, enforceable in accordance with its terms except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally; (f) all financial
statements and related information furnished and to be furnished to Chase from
time to time by the Guarantor are true and complete and fairly present the
financial or other information stated therein as at such dates or for the
periods covered thereby; (g) there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the Guarantor, threatened
against or affecting the Guarantor before any court, governmental agency or
arbitrator, which involve forfeiture of any assets of the Guarantor or which
may materially adversely affect the financial condition, operations, properties
or business of the Guarantor or the ability of the
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<PAGE>
Guarantor to perform its
obligation under this Guaranty; and (h) there has been no material adverse
change in the financial condition of the Guarantor since the last such
financial statements or information.
COVENANTS. Each Guarantor hereby covenants that: (a) all shares of Home
Properties' common stock purchased pursuant to the Program will be registered
under the Securities Act of 1933 and freely tradeable on the New York Stock
Exchange and can be sold without restriction by Chase, as pledgee, pursuant to
each Borrower's Pledge Security Agreement securing his/her loan; (b) during the
initial five years of the term of each loan, each Guarantor will pay Chase, in
cash on the date interest on each loan is due and payable, an interest rate
differential payment on each loan equal to 0.94% per annum on the aggregate
principal amount of each loan outstanding; (c) at the end of any fiscal quarter
of Home Properties, the aggregate outstanding principal amount of the
liabilities of Home Properties, Home Properties L.P. and any entity owned 50%
or more by Home Properties or Home Properties L.P. (collectively, the "Related
Entities") shall not exceed 60% of the total of (i) the aggregate market value
at such time of all outstanding shares ot Home Properties' common stock plus,
(ii) the aggregate market value at such time of all outstanding partnership
interests in Home Properties L.P. on an as-converted basis based upon the then-
current conversion price of such interests into shares of Home Properties'
common stock, plus (iii) the aggregate outstanding principal amount of
liabilities of the Related Entities; (d) for any fiscal year of Home
Properties, the combined net income of all Related Entities before
distributions and non-cash expenses shall be at least 120% of all principal and
interest payments due during that fiscal year with respect to the liabilities
of the Related Entities. For purposes of the foregoing calculations, the term
"liabilities" shall mean the liabilities of the Related Entities as shown on
their respective balance sheets and determined in accordance with generally
accepted accounting principles consistently applied. Home Properties will
provide Chase with reports showing the calculations required by subparagraphs
(c) and (d) above within 15 days following the end of a quarter and within 30
days following a year end.
DEFAULT. If any of the following events of default shall occur (each an
"Event of Default"):
(a) Either Guarantor shall fail to timely make any interest rate
differential payment or shall fail to pay any other amount payable
under this Guaranty within five days after demand by Chase;
(b) any representation or warranty made or deemed made by the
Guarantor in this Guaranty or in any other document executed in
connection with the loans (this Guaranty and all agreements,
instruments or other documents executed by the Guarantor in
connection with the loans being the "Facility Documents") or which
is contained in any certificate, document, opinion, financial or
other statement furnished at any time under or in connection with
any Facility Document, shall prove to have been incorrect in any
material respect on or as of the date made or deemed made;
(c) the Guarantor shall fail to perform or observe any term,
covenant or agreement contained in any Facility Document on its
part to be performed or observed, and such failure shall continue
for five consecutive days;
(d) the Guarantor shall fail to pay when due any indebtedness
(including but not limited to indebtedness for borrowed money) or
if any such indebtedness shall become due and payable, or shall be
capable of becoming due and payable at the option of any holder
thereof, by acceleration of its maturity, or if there shall be any
default by the Guarantor under any agreement relating to such
indebtedness;
(e) the Guarantor: (i) shall generally not, or be unable to, or
shall admit in writing its inability to, pay its debts as such
debts become due; (ii) shall make an assignment for the benefit of
creditors; (iii) shall file a petition in bankruptcy or for any
relief under any law of any jurisdiction relating to
reorganization, arrangement, readjustment of debt, dissolution or
liquidation; (iv) shall have any such petition filed against it and
the same shall remain undismissed for a period of 30 days or shall
consent or acquiesce thereto; or (v) shall have had a receiver,
custodian or trustee appointed for all or a substantial part of its
property;
(f) any Facility Document shall at any time and for any reason
cease to be in full force and effect or shall be declared null and
void, or its validity or enforceability shall be contested by the
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<PAGE>
relevant Guarantor or such Guarantor shall deny it has any further
liability or obligation under any Facility Document or shall fail
to perform its obligations under any Facility Document;
(g) any security agreement or other agreement by the Guarantor
granting a security interest, lien, mortgage or other encumbrance
securing obligations under any Facility Document shall at any time
and for any reason cease to create a valid and perfected first
priority security interest, lien, mortgage or other encumbrance in
or on the property purported to be subject to such agreement or
shall cease to be in full force and effect or shall be declared
null and void, or the validity or enforceability of any such
agreement shall be contested by any party to such agreement, or
such party shall deny it has any further liability or obligation
under such agreement or any such party shall fail to perform any of
its obligations under such agreement, or an event of default shall
occur under such agreement;
(h) the Guarantor shall make or permit to be made any material
change in the character, management or direction of its business
or operations (including, but not limited to, a change in its
executive management or in the ownership of its capital stock which
effects a change in the control of any such business or
operations), which is not satisfactory to Chase;
(i) the Guarantor shall suffer a material adverse change in its
business, financial condition, properties or prospects;
(j) any action, suit, proceeding or investigation against or
affecting the Guarantor before any court or governmental agency
which involves forfeiture of any assets of the Guarantor shall
have been commenced;
(k) Home Properties ceases paying cash dividends of at least $.42
per share per quarter on or before March 5th, June 5th, September
5th and December 5th each year;
(l) failure of either Guarantor to provide an audited set of
financial statements within 120 days after each year end as
required by the terms of this Guaranty, or the failure of Home
Properties to provide the required quarterly and annual financial
calculations required by the terms of this Guaranty a within 15
days following the end of a quarter or within 30 days following a
year end as the case may be, provided that in each such case, the
relevant Guarantor shall first have five days to cure such a
default after receiving notice from Chase of such default;
THEN, IN ANY SUCH CASE, if Chase shall so elect, in the exercise of its sole
discretion, by notice to the Guarantor, Chase may require that Guarantor
forthwith pay the unpaid principal amount of any or all of the loans,
together with accrued interest; provided that in the case of an event of
default under (e) above, all such amounts shall immediately become due and
payable without any notice or other action by Chase.
COSTS. The Guarantor agrees to reimburse Chase on demand for all costs,
expenses and charges (including, without limitation, fees and charges of
external legal counsel for Chase and costs allocated by its internal legal
department) in connection with the enforcement of this Guaranty.
ENTIRE AGREEMENT, AMENDMENT AND WAIVERS. This Guaranty constitutes the
entire agreement between the Guarantor and Chase in respect of the subject
matter hereof and may be amended only by a writing signed on behalf of each
party and shall be effective only to the extent set forth in that writing.
No delay by Chase in exercising any power or right hereunder shall operate
as a waiver thereof or of any other power or right; nor shall any single or
partial exercise of any power or right preclude other or future exercise
thereof, or the exercise of any other power or right hereunder. No waiver
shall be deemed to be made by Chase of any of its rights hereunder unless
the same shall be in writing signed on behalf of Chase, and each waiver, if
any, shall be a waiver only with respect to the specific instance involved
and shall in no way impair the rights of Chase or the obligations of the
Guarantor to Chase in any other respect at any other time.
SUCCESSORS. This agreement shall be immediately binding upon the
Guarantor, and the successors of the Guarantor. Chase may assign this Guaranty
or any of its rights and powers hereunder, with all or any of the obligations
hereby guaranteed, and may assign and/or deliver to any such assignee any of
the security therefor and, in the event of such assignment, the assignee hereof
or of such rights and powers and of such security, if any such security be so
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<PAGE>
assigned and/or delivered, shall have the same rights and remedies as if
originally named herein in place of Chase, and Chase shall be thereafter
fully discharged from all responsibility with respect to any such Security
so assigned and/or delivered.
GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York. The
undersigned consent(s) to the nonexclusive jurisdiction and venue of the
state or federal courts located in such state. In the event of a dispute
hereunder, suit may be brought against the undersigned in such courts or
in any jurisdiction where the undersigned or any of its assets may be
located. Service of process by Chase in connection with any dispute
shall be binding on the undersigned if sent to the undersigned by
registered mail at the address(es) specified below or to such further
address(es) as the undersigned may specify to Chase in writing.
GUARANTOR WAIVERS. EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW)
ANY RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO
THIS GUARANTY, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S OPTION,
BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
Address for notices: HOME PROPERTIES OF NEW YORK, INC.
850 Clinton Square By: /s/ Nelson B. Leenhouts_
Rochester, NY 14604 Print Name: Nelson B. Leenhouts
Telecopier No. (716) 546-5433 Title: President
HOME PROPERTIES OF NEW YORK, L.P.
Address for notices: By: HOME PROPERTIES OF NEW YORK, INC.
Its General Partner
850 Clinton Square
By: /s/ Nelson B. Leenhouts
Rochester, NY 14604
Print Name: Nelson B. Leenhouts
Telecopier No. (716) 546-5433 Title: President
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 199___, before me
came ______________________________, and ________________________________ to
me known to be the individual(s) described in and who executed the
foregoing instrument and __________ duly acknowledged that __________
executed the same.
State of New York)
) ss:
County of Monroe )
On this 12th day of August, 1996, before me personally came
Nelson B. Leenhouts, to me known, who, being by me duly sworn, did depose
and say that he resides in Macedon, NY; that he is President of Home Properties
of New York, Inc., the corporation described in and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
/s/ Thomas P. Young
-------------------
Thomas P. Young
Notary Public, State of New York
Monroe County
My commission expires 11/30/97
State of New York)
) ss:
County of Monroe )
On this 12th day of August, 1996, before me came Nelson B. Leenhouts,
to me known to be the President of the general partner of the partnership of
Home Properties of New York, L.P. and to me known to be the person described
in and who executed the foregoing instrument in the partnership name of
Home Properties of New York, L.P., and he acknowledges that he executed the
same as the act and deed of said partnershp for the uses and purposes therein
mentioned.
/s/ Thomas P. Young
-------------------
Thomas P. Young
Notary Public, State of New York
Monroe County
My commission expires 11/30/97
<PAGE>
Exhibit 10.28
SUBORDINATION AGREEMENT
The undersigned makes and grants this Subordination Agreement to THE
CHASE MANHATTAN BANK and its affiliates, including subsidiaries whether now
existing or hereafter created, (collectively, "Chase"), having an office
located at One Chase Square, Rochester, New York ("Business Office").
RECITAL. Pursuant to their participation in the Executive Stock
Purchase and Loan Program (the "Program") of Home Properties of New York,
Inc., the Directors and officers listed on Rider A hereto (individually, a
"Borrower", and collectively, the "Borrowers"), are now indebted to the
undersigned in the principal sums set forth opposite their respective names on
Rider A (collectively, the "Subordinated Debt").
This Subordination Agreement includes any Rider attached hereto.
CONSIDERATION. To induce Chase, at its option, to make loans to the
Borrowers to enable them to purchase shares of the undersigned's common stock
under the Program, with or without security, the undersigned hereby agrees
with each of the Borrowers, for the benefit of Chase, as hereinafter set
forth.
STANDBY. With respect to each Borrower, except as may be provided
herein, the undersigned will not ask, demand, sue for, take or receive from a
Borrower, by set-off or in any other manner, the whole or any part of any
moneys, principal or interest, now or hereafter owing by that Borrower to the
undersigned as part of the Subordinated Debt, nor any security therefor,
unless and until all indebtedness of that Borrower to Chase with respect to
his/her loan described above, whether now existing or hereafter arising,
direct or indirect, absolute or contingent, joint or several, secured or
unsecured, due or not due, and whether arising directly between the Borrower
and Chase or acquired outright, conditionally or as collateral security from
another by Chase (collectively, the "Chase Debt"), shall have been fully paid,
with interest (including interest accruing after the commencement of any
proceeding mentioned in the paragraph next following).
DISTRIBUTIONS. In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets of a Borrower or the
proceeds thereof, to creditors of that Borrower, or upon any indebtedness of
that Borrower, by reason of any receivership, insolvency or bankruptcy
proceeding, or assignment for the benefit of
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creditors, or any proceeding by
or against that Borrower for any relief under any bankruptcy or insolvency law
or laws relating to the relief of debtors, readjustment of indebtedness,
reorganizations, compositions or extensions, then and in any such event any
payment or distribution of any kind or character, either in cash, securities
or other property, which shall be payable or deliverable upon or with respect
to any or all Subordinated Debt, shall be paid or delivered direct to Chase
for application on the Chase Debt, due or not due, until the Chase Debt shall
have first been fully paid and satisfied. The undersigned irrevocably
authorizes and empowers Chase, in any proceeding mentioned in the preceding
sentence, to demand, sue for, collect and receive every such payment or
distribution and give acquittance therefor; and to file claims and take such
other steps, in Chase's own name or in the name of the undersigned or
otherwise, as Chase may deem necessary or advisable for the enforcement of
this agreement or of any and all claims upon or with respect to any and all
Subordinated Debt or for the collection of any and all payments or
distributions which may be payable or deliverable at any time upon or with
respect to any of the Subordinated Debt. An irrevocable power of attorney is
granted to Chase to effect the foregoing, including supplying any necessary
endorsements.
RECEIPT OF PROCEEDS. Except as may be provided herein, should any
payment or distribution or security or proceeds thereof be received by the
undersigned upon or with respect to any of the Subordinated Debt prior to the
satisfaction of all of the Chase Debt, the undersigned will forthwith deliver
the same to Chase in precisely the form received (except for the indorsement
or assignment of the undersigned where necessary), for application on any of
the Chase Debt, due or not due, and, until so delivered, the same will be held
in trust by the undersigned as property of Chase. In the event of the lure of
the undersigned to make any such indorsement or assignment, Chase, or any of
its officers or employees, are hereby irrevocably authorized to make the same.
SECURITY. As security for its obligations to Chase hereunder and as
security for payment of the Chase Debt, the undersigned hereby assigns to
Chase, and grants Chase a security interest in, the Subordinated Debt and any
instrument evidencing the same. The undersigned and each Borrower will do all
things necessary in the opinion of Chase to protect the rights of Chase
hereunder including but not limited to delivering possession to Chase of any
instrument evidencing the Subordinated Debt, or, if no such instrument exists,
creating an instrument evidencing such Subordinated Debt and delivering
possession of the same to Chase. Upon the failure by a Borrower to pay when
due any of his/her the Chase Debt, whether by acceleration or otherwise, or
upon the occurrence of any event, condition or act
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(including notice and lapse
of time, if specified) which is defined or described as a default or an event
of default in any document or instrument pertaining to or evidencing the Chase
Debt, Chase may, without limitation of any other provision herein, in its name
or the name of the undersigned or otherwise, take any action for the
collection of the Subordinated Debt, may receive the proceeds thereof and give
acquittances therefor and after deducting the costs and expenses of any action
taken, including reasonable counsel fees, may apply such proceeds to any of
the obligations of the undersigned hereunder or to any of the Chase Debt as
Chase may elect, accounting to the undersigned for any balance remaining. The
undersigned irrevocably appoints Chase as the lawful attorney and agent of the
undersigned to execute financing statements on behalf of the undersigned and
to file such financing statements signed by Chase alone in any public office.
NO ASSIGNMENT WITHOUT SUBROGATION. The undersigned will not assign or
transfer, or further subordinate, to others any claim the undersigned has or
may have against a Borrower while any Chase Debt remains unpaid, unless such
assignment, transfer or subordination is made expressly subject and
subordinate to this agreement and the rights of Chase hereunder.
REPRESENTATIONS AND WARRANTIES. If the undersigned is other than an
individual, the undersigned represents and warrants upon the execution and
delivery of this Subordination Agreement, that: (a) it is duly organized and
validly existing under the laws of the jurisdiction of its organization or
incorporation and, if relevant under such laws, in good standing; (b) it has
the power to execute and deliver this Subordination Agreement and to perform
its obligations hereunder and has taken all necessary action to authorize such
execution, delivery and performance; (c) such execution, delivery and
performance do not violate or conflict with any law applicable to it, any
provision of its organizational documents, any order or judgment of any court
or other agency of government applicable to it or any of its assets or any
material contractual restriction binding on or materially affecting it or any
of its assets; (d) to the best of undersigned's knowledge, all governmental
and other consents that are required to have been obtained by it with respect
to this Subordination Agreement have been obtained and are in full force and
effect and all conditions of any such consents have been complied with;
(e) its obligations under this Subordination Agreement constitute its legal,
valid and binding obligations, enforceable in accordance with its terms except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights generally;
(f) all financial statements and related information furnished and to be
furnished to Chase from time to time by the undersigned are true and complete
and
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fairly present the financial or other information stated therein as at
such dates or for the periods covered thereby; (g) there are no actions,
suits, proceedings or investigations pending or, to the knowledge of the
undersigned, threatened against or affecting the undersigned before any court,
governmental agency or arbitrator, which involve forfeiture of any assets of
the undersigned or which may materially adversely affect the financial
condition, operations, properties or business of the undersigned or the
ability of the undersigned to perform its obligation under this Subordination
Agreement; and (h) there has been no material adverse change in the financial
condition of the undersigned since the last such financial statements or
information.
CHANGES TO CHASE DEBT. Chase, at any time and from time to time, may
enter into such agreement or agreements with a Borrower as Chase may deem
proper extending the time of payment of or renewing or otherwise altering the
terms of all or any of the obligations of that Borrower to Chase or affecting
the security underlying any or all of such obligations, or may exchange, sell
or surrender or otherwise deal with any such security, or may release any
balance of funds of that Borrower with Chase, or may release any guarantor,
without notice to the undersigned, and without in any way impairing or
affecting this Subordination Agreement thereby.
BOOKS OF ACCOUNT. The undersigned shall make and maintain in its books
of account notations satisfactory to Chase of its rights and priorities
hereunder and from time to time on request, shall furnish Chase with sworn
financial statements. Chase may inspect the books of account and records of
the undersigned at any time during business hours.
COSTS. The undersigned agree(s) to reimburse Chase on demand for all
costs, expenses and charges (including, without limitation, fees and charges
of external legal counsel for Chase and costs allocated by its internal legal
department) in connection with the enforcement of this Subordination
Agreement.
NOTICES. All notices, requests, demands or other communications to or
upon the undersigned or Chase shall be in writing and shall be deemed to be
delivered upon receipt if teletransmitted by telecopier or delivered by hand
or overnight courier or five days after mailing to the telecopier number or
address, respectively (a) of the undersigned as set forth next to the
undersigned's execution of this agreement, (b) of Chase at the address set
forth above or (c) of the undersigned or Chase at such other telecopier number
or address as the undersigned or Chase shall specify to the other in writing.
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ENTIRE AGREEMENT, AMENDMENT AND WAIVERS BY CHASE. This Subordination
Agreement and any attachments hereto constitute the entire agreement between
the undersigned and Chase in respect of the subject matter hereof and may be
amended only by a writing signed on behalf of each party and shall be
effective only to the extent set forth in that writing. No delay by Chase in
exercising any power or right hereunder shall operate as a waiver thereof or
of any other power or right; nor shall any single or partial exercise of any
power or right preclude other or future exercise thereof, or the exercise of
any other power or right hereunder. No waiver shall be deemed to be made by
Chase of any of its rights hereunder unless the same shall be in writing
signed on behalf of Chase, and each waiver, if any, shall be a waiver only
with respect to the specific instance involved and shall in no way impair the
rights of Chase or the obligations of the undersigned to Chase in any other
respect at any other time.
WAIVERS BY UNDERSIGNED. All obligations and liabilities of the Borrowers
to Chase shall be deemed to have been made or incurred at the request of the
undersigned and in reliance upon this Subordination Agreement, and the
undersigned expressly waives all notice of the acceptance by Chase of this
Subordination Agreement, all other notices whatsoever, reliance by Chase upon
the subordination herein provided for, and any circumstance which might
otherwise constitute a defense available to, or discharge of any Borrower or
any subordinated creditor.
SUCCESSORS. This Subordination Agreement shall be binding upon the
undersigned, and the executors, administrators, successors and assigns of the
undersigned.
GOVERNING LAW; JURISDICTION. This Subordination Agreement shall be
governed by and construed in accordance with the laws of the State of New
York. The undersigned consent(s) to the nonexclusive jurisdiction and venue
of the state of federal courts located in such state. In the event of a
dispute hereunder, suit may be brought against the undersigned in such courts
or in any jurisdiction where the undersigned or any of its assets may be
located. Service of process by Chase in connection with any dispute shall be
binding on the undersigned if sent to the undersigned by registered mail at
the address(es) specified below or to such further address(es) as the
undersigned may specify to Chase in writing.
WAIVER OF JURY TRIAL. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
SUBORDINATION AGREEMENT, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S
OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
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IN WITNESS WHEREOF, the undersigned has executed this instrument or has
caused this instrument to be duly executed by its proper officer(s) this
12th day of August, 1996.
HOME PROPERTIES OF NEW YORK, INC.,
By: /s/ Nelson B. Leenhouts
___________________________________
Nelson B. Leenhouts, President
Address for notices:
850 Clinton Square,
Rochester, NY 14604
Telecopy No.: (716) 546-5433
<PAGE>
Rider A
Acknowledgment of Subordination
The undersigned Borrower hereby accepts, and acknowledges receipt of a
copy of, the foregoing Subordination Agreement, and agrees that he/she will
not repay any of the Subordinated Debt to the above-signed subordinating
creditor except as in the foregoing agreement provided. In the event of a
breach by such subordinating creditor or the undersigned Borrower of any of
the provisions of the foregoing agreement, all of the obligations and
liabilities of the undersigned Borrower to Chase shall, without notice or
demand, become immediately due and payable unless Chase shall otherwise elect.
No waiver by Chase of any right hereunder shall be valid unless in
writing and no waiver by Chase of any right shall be deemed a waiver of any
other right. Nothing herein shall limit or affect in any manner any right
Chase may have by virtue of any other instrument or agreement.
Borrower Signature:
___________________________
Address:
Principal Amount of Loan:
<PAGE>
EXHIBIT 10.32
PF 27 (2/79) Standard N.Y.B.T. U. Form 8041 Contract of Sale
CONSULT YOUR LAWYER BEFORE SIGNING THIS INSTRUMENT -THIS
INSTRUMENT SHOULD BE USED BY LAWYERS ONLY
NOTE: FIRE LOSSES. This form of contract contains no express
provision as to risk of loss by fire or other casualty before
delivery of the deed. Unless express provision is made, the
provisions of Section 5-1311 of the General Obligations Law will
apply. This section also places risk of loss upon purchaser if
title or possession is transferred prior to closing.
THIS AGREEMENT, made the 17th day of December, 1996 between LAKE
GROVE ASSOCIATES CORP., a New York corporation, having an office
at 107 Northern Boulevard, Suite 200, Great Neck, New York 11021,
hereinafter described as the seller, and HOME PROPERTIES OF NEW
YORK, L.P., a New York limited partnership, having an office at
850 Clinton Square, Rochester, New York 14604,
hereinafter described as the purchaser,
WITNESSETH, that the seller agrees to sell and convey, and the
purchaser agrees to purchase, all those certain plots, pieces or
parcels of land, with the buildings and improvements thereon
erected, situate, lying and being as described in Schedule A
annexed hereto and made a part hereof,
1. This sale includes all right, title and interest, if any, of
the seller in and to any land lying in the bed of any
street, road or avenue opened or proposed, in front of or
adjoining said premises, to the center line thereof, and all
right, title and interest of the seller in and to any award
made or to be made in lieu thereof and in and to any unpaid
award for damage to said premises by reason of change of
grade of any street; and the seller will execute and deliver
to the purchaser, on closing of title, or thereafter, on
demand, all proper instruments for the conveyance of such
title and the assignment and collection of any such award.
2. [Intentionally Omitted]
3. [Intentionally Omitted]
4. [Intentionally Omitted]
5. [Intentionally Omitted]
6. Said premises are sold and are to be conveyed subject to:
a. Zoning regulations and ordinances of the city, town or
village in which the premises lie which are not violated by
existing structures.
b. Consents by the seller or any former owner of premises
for the erection of any structure or structures on, under or
above any street or streets on which said premises may abut.
c. Encroachments of stoops, areas, cellar steps, trim and
cornices, if any, upon any street or highway.
7. [Intentionally Omitted]
8. [Intentionally Omitted]
9. [Intentionally Omitted]
10. The following are to be apportioned:
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a. Rents as and when collected.
b. [Intentionally Omitted]
c. [Intentionally Omitted\
d. Taxes and sewer rents, if any, on the basis of the
fiscal year for which assessed.
e. Water charges on the basis of the calendar year.
f. Fuel, if any.
11. If the closing of the title shall occur before the tax rate
is fixed, the apportionment of taxes shall be upon the basis
of the tax rate for the next preceding year applied to the
latest assessed valuation.
12. If there be a water meter on the premises, the seller shall
furnish a reading to a date not more than thirty days prior
to the time herein set for closing title, and the unfixed
meter charge and the unfixed sewer rent, if any, based
thereon for the intervening time shall be apportioned on the
basis of such last reading.
13. The deed shall be the usual bargain and sale deed (without
covenant against grantor's acts) (the "Deed") in proper
statutory short form for record and shall be duly executed
and acknowledged so as to convey to the purchaser the fee
simple of the said premises, free of all encumbrances,
except as herein stated, and shall contain the covenant
required by subdivision 5 of Section 13 of the Lien Law.
If the Seller is a corporation, it will deliver to the
purchaser at the time of the delivery of the deed hereunder
a resolution of its Board of Directors authorizing the sale
and delivery of the Deed, and a certificate by the Secretary
or Assistant Secretary of the corporation certifying such
resolution and setting forth facts showing that the
conveyance is in conformity with the requirements of Section
909 of the Business Corporation Law. The Deed in such case
shall contain a recital sufficient to establish compliance
with said section.
14. At the closing of the title, the seller shall deliver to the
purchaser a certified check to the order of the recording
officer of the county in which the deed is to be recorded
for the amount of the documentary stamps to be affixed
thereto in accordance with Article 31 of the Tax Law, and a
certified check to the order of the appropriate officer for
any other tax payable by reason of the delivery of the deed,
and a return, if any be required, duly signed and sworn to
by the seller; and the purchaser also agrees to sign and
swear to the return and to cause the check and the return to
be delivered to the appropriate officers promptly after the
closing of title.
15. [Intentionally Omitted]
16. The seller shall give and the purchaser shall accept a title
such as any reputable title company, a Member of the New
York Board of Title Underwriters, will approve and insure in
accordance with the standard form of title policy approved
by the New York State Insurance Department, subject only to
the matters which Purchaser has agreed to accept title
pursuant to in this Contract.
17. All sums paid on account of this contract, and the
reasonable expenses of the examination of title to said
premises and of the survey, if any, made in connection
therewith are hereby made liens on said premises, but such
liens shall not continue after default by the purchaser
under this contract.
18. [Intentionally Omitted]
19. The amount of any unpaid taxes, assessments, water charges
and sewer rents which the seller is obligated to pay and
discharge, with the interest and penalties thereon to a date
not less than two business days after the date of closing
title, may at the option of the seller be allowed to the
purchaser out of the balance of the purchase price, provided
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official bills therefor with interest and penalties thereon
figured to said date are furnished by the seller at the
closing.
20. If at the date of closing there may be any other liens or
encumbrances which the seller is obligated to pay and
discharge, the seller may use any portion of the balance of
the purchase price to satisfy the same, provided the seller
shall simultaneously either deliver to the purchase at the
closing of title instruments in recordable form and
sufficient to satisfy such liens and encumbrances of record
together with the cost of recording or filing said
instruments; or, provided that the seller has made
arrangements with the title company employed by the
purchaser in advance of closing, seller will deposit with
said company sufficient monies, acceptable to and required
by it to insure obtaining and the recording of such
satisfactions and the issuance of title insurance to the
purchaser either free of any such liens and encumbrances, or
with insurance against enforcement of same out of the
insured premises. The purchaser, if request is made within
a reasonable time prior to the date of closing of title,
agrees to provide at the closing separate certified checks
as requested, aggregating the amount of the balance of the
purchase price, to facilitate the satisfaction of any such
liens or encumbrances. The existence of any such taxes or
other liens and encumbrances shall not be deemed objections
to title if the seller shall comply with the foregoing
requirements.
21. If a search of the title discloses judgments, bankruptcies
or other returns against other persons having names the same
as or similar to that of the seller, the seller will on
request deliver to the purchaser an affidavit showing that
such judgments, bankruptcies or other returns are not
against the seller.
22. [Intentionally Omitted]
23. [Intentionally Omitted]
24. [Intentionally Omitted]
25. [Intentionally Omitted]
26. This agreement may not be changed or terminated orally. The
stipulations aforesaid are to apply to and bind the heirs,
executors, administrators, successors and assigns of the
respective parties.
27. If two or more persons constitute either the seller or the
purchaser, the word "seller" or the word "purchaser" shall
be construed as if it read "sellers" or purchasers" wherever
the sense of this agreement so requires.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto.
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF.
LAKE GROVE ASSOCIATES CORP.
By: ____________________________
Name: ____________________________
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: _________________________________
Name: _________________________________
Title: __________________________________
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ESCROW AGENT:
__________________________________
STATE OF NEW YORK)
COUNTY OF MONROE) ss:
On the 13th day of December, 1996, before me personally came
Norman Leenhouts, to me know, who, being by me duly sworn, did
depose and say that he resides at No. 1206 Fairway 18, Macedon,
New York 14502; that he is the Chairman of Home Properties of New
York, Inc., general partner of Home Properties of New York, L.P.,
the partnership described in and which executed the foregoing
instrument; that he signed his name by order of the Board of
Directors or said corporation.
_____________________________
Notary Public
STATE OF NEW YORK)
COUNTY OF MONROE) ss:
On the ____ day of December, 1996, before me personally came
Norman Leenhouts, to me know, who, being by me duly sworn, did
depose and say that he resides at No. 1206 Fairway 18, Macedon,
New York 14502; that he is the Chairman of Home Properties of New
York, Inc., general partner of Home Properties of New York, L.P.,
the partnership described in and which executed the foregoing
instrument; that he signed his name by order of the Board of
Directors or said corporation.
_____________________________
Notary Public
CONTRACT OF SALE
LAKE GROVE ASSOCIATES
TO
HOME PROPERTIES OF NEW YORK, L.P.
PREMISES
Section 016.00
Block 03.00
Lot 011.00 and 012.000
County of Town: Suffolk
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Return by Mail to:
Miles A. Epps
Attorney at Law
107 Northern Boulevard
Suite 200
Great Neck, New York 11021
THE OBSERVANCE OF THE FOLLOWING SUGGESTIONS WILL SAVE TIME AND
TROUBLE AT THE CLOSING OF THIS TITLE
The Seller should bring with him all insurance policies and
duplicates, receipted bills for taxes, assessments and water
rates, and any leases, deeds or agreements affecting the
property.
When there is a water meter on the premises, he should order it
read, and bring bills therefor to the closing.
If there are mortgages on the property, he should promptly
arrange to obtain the evidence required under Paragraph 5 of this
contract.
He should furnish to the purchaser a full list of tenants, giving
the names, rent paid by each, and date to which the rent has been
paid.
The Purchaser should be prepared with cash or certified check
drawn to the order of the seller. The check may be certified for
an approximate amount and cash may be provided for the balance of
the settlement.
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RIDER attached to and forming part of Contract of Sale between
LAKE GROVE ASSOCIATES CORP., Seller, and HOME PROPERTIES OF NEW
YORK, L.P., Purchaser
Premises: District 0208, Section 016.00, Block 03.00, Lots
011.000 and 012.000, County of Suffolk, Town of Brookhaven, State
of New York.
28. The purchase price for the Premises is Nineteen Million
Dollars and 00/100 Dollars ($19,000,000.00), payable by Purchaser
as follows:
(a) One Million Nine Hundred Thousand and 00/100
Dollars ($1,900,000.00) (the "Initial Payment"), by check of
Purchaser, subject to collection, payable to the order of the
Escrow Agent (as hereinafter defined), which shall be held by him
in accordance with the provisions of Paragraph 42 hereof and,
subject to the terms of this Contract, shall be applied on
account of the purchase price at closing, receipt of which is
hereby acknowledged; and
(b) Seventeen Million One Hundred Thousand and no/100
Dollars ($17,100,000.00), representing the balance of the
purchase price, at the closing, by certified or official bank or
teller's check, drawn on a bank which is a member of the New York
Clearing House, or by wire transfer of immediately available
federal funds, payable to the order of Seller, or as Seller shall
direct, or wired to Seller or as Seller shall direct, as the case
may be.
29. Purchaser covenants and agrees that prior to the
closing of title hereunder, Purchaser shall in no event take
possession of the Premises or any part thereof.
30. (a) Promptly following the execution of this Contract,
Purchaser shall, at its sole cost and expense, cause title to the
Premises to be examined by any reputable title insurance company
(the "Title Company"), and shall direct the Title Company to
deliver a copy of its title report (the "Title Report") to Seller
or Seller's attorney simultaneously with the delivery of the same
to Purchaser. Purchaser agrees that, within fifteen (15) days
after it receives the Title Report but in no event later than
thirty (30) days prior to the date of closing of title hereunder,
Purchaser will furnish to Seller notice of any exceptions to
title to the Premises set forth in the Title Report or otherwise
known to Purchaser which are not exceptions subject to which
Purchaser has agreed to take title pursuant to this Contract.
The failure of Purchaser to give such notice to Seller setting
forth all such claimed title defects within the time period
hereinbefore provided shall constitute a waiver by Purchaser of
all title defects not included in such notice which are set forth
in such Title Report or otherwise known to Purchaser; provided,
however, that delivery of the Title Report by the Title Company
to Seller's attorney by the day specified in the preceding
sentence shall be deemed to be such notice by Purchaser with
respect to all matters set forth in the Title Report which are
not exceptions subject to which Purchaser has agreed to take
title pursuant to this Contract. If, after giving such notice to
Seller, Purchaser learns through continuation reports or
otherwise, of any title defects which are not exceptions subject
to which Purchaser has agreed to accept title pursuant to this
Contract, Purchaser shall give notice thereof to Seller promptly
after the date Purchaser learns thereof (a copy of such
continuation report being deemed such notice for purposes of this
sentence), it being agreed that Purchaser's failure to give
notice of any such title defects to Seller as aforesaid shall
constitute a waiver thereof.
(b) If, at the date of closing of title hereunder,
Seller is unable to convey to Purchaser title to the Premises
subject to and in accordance with the provisions of this
Contract, Seller shall be entitled, upon notice delivered to
Purchaser at or prior to such closing, to a reasonable
adjournment or adjournments of such closing, for not exceeding
ninety (90) days in the aggregate, to enable Seller to convey
such title. If Seller does not so elect to adjourn such closing,
or if at the adjourned date Seller is unable to convey title
subject to and in accordance with the provisions of this
Contract, either party may terminate this Contract by notice
delivered on the date scheduled for such closing or the date to
which such closing may have been so adjourned, in which event
both parties hereto shall promptly direct the Escrow Agent to
return the Deposit (as hereinafter defined) to Purchaser; Seller
shall reimburse Purchaser for the net cost of
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title examination
actually incurred by Purchaser; and this Contract shall thereupon
be deemed canceled, void and of no further effect, and neither
party shall have any obligations of any nature to the other
hereunder or by reason hereof, except that the provisions of
Paragraph 37 hereof shall survive such termination. If Seller
elects to adjourn the closing as hereinbefore provided, this
Contract shall remain in effect for the period or periods of
adjournment, in accordance with its terms. Nothing contained in
this Paragraph or elsewhere in this Contract shall be deemed to
require Seller to take or bring any action or proceeding or any
other steps to remove any defect in or objection to title or to
fulfill any condition or to expend any moneys therefor, nor shall
Purchaser have any right of action against Seller therefor, at
law or in equity; provided, however, that Seller shall
nevertheless have the unqualified obligation to satisfy and
discharge (i) all mortgages and (ii) all other liens and
encumbrances in ascertainable amounts, provided such other liens
and encumbrances may be discharged by payment or bonding and the
aggregate amount thereof does not exceed One Hundred Thousand and
no/100 Dollars ($100,000.00); and that the provisions of this
sentence shall not apply to any defect in or objection to title
willfully and intentionally created by Seller after the date of
execution and delivery of this Contract in order to render title
to the Premises unmarketable.
(c) Notwithstanding any termination of this Contract
by Seller pursuant to subparagraph (b) of this Paragraph,
Purchaser may, within five (5) days following such termination,
accept such title to the Premises as Seller can convey, without
reduction of the purchase price or any credit or allowance on
account thereof and without any claim against Seller; provided,
however, that if, at the time of such termination, there are any
liens and/or encumbrances which Seller is obligated to satisfy
and discharge pursuant to the last sentence of such subparagraph,
Seller shall either bond or satisfy and discharge such liens
and/or encumbrances, or pay to Purchaser, as an adjustment at
closing, the aggregate amount of such liens and encumbrances, but
in no event shall the amount of such adjustment exceed One
Hundred Thousand and no/100 Dollars ($100,000.00). The
acceptance of a Deed to the Premises by Purchaser shall be deemed
to be full performance and discharge of every agreement and
obligation on Seller's part to be performed under this Contract,
except for those, if any, which this Contract specifically
provides shall survive the closing of title hereunder. For
convenience, Seller may omit from the Deed the recital of any or
all of the "subject to" clauses herein contained and/or any other
title exceptions, defects or objections which have been waived or
consented to by Purchaser, but the same shall nevertheless
survive delivery of the Deed.
(d) If the Premises shall, at the time of closing of
title, be subject to any liens, such as judgment liens or the
lien of transfer, inheritance, estate, franchise, license or
other similar taxes, or any encumbrances or other title
exceptions (other than exceptions subject to which Purchaser has
agreed to accept title pursuant to this Contract) which would be
grounds for Purchaser to reject title hereunder, the same shall
not be deemed an objection to title provided that, at the time of
closing, either (a) Seller uses all or a portion of the balance
of the purchase price to satisfy the same and delivers to
Purchaser at the closing of title instruments in recordable form
sufficient to satisfy and discharge of record such liens and
encumbrances together with the cost of recording or filing such
instruments, or (b) the Title Company will issue or bind itself
to issue a policy which will insure Purchaser against collection
thereof from or enforcement thereof against the Premises, such
policy either to be at regular rates or any excess premium to be
paid by Seller. If request is made within a reasonable time
prior to the date of closing of title, Purchaser agrees to
provide at the closing of title separate certified or official
bank checks, as requested, aggregating not more than the amount
to be paid by Purchaser to Seller at that date, to facilitate the
satisfaction of any of such liens or other defects, and the
existence of any thereof shall not be deemed defects in or
objections to title if Seller shall comply with the foregoing
requirements.
31. Neither Purchaser's interest under this Contract nor
any part thereof may be assigned by Purchaser or any successor-in-
interest to Purchaser unless (a) Seller shall give its prior
written consent to such assignment, (b) a duplicate original of
the instrument of assignment, shall be delivered to Seller within
five (5) days after the execution thereof but in any event at
least fifteen (15) days prior to the date of closing of title
hereunder, and (c) in and by such instrument of assignment, the
assignee(s) shall assume and agree in writing, expressly for the
benefit of Seller as well as the assignor, to perform or cause to
be performed all obligations on the part of Purchaser under and
in connection with this Contract. Any purported assignment not
complying
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with the foregoing shall be void. No assignment shall
relieve Purchaser from liability for the performance of the
obligations undertaken by Purchaser under this Contract.
32. (a) Subject to the provisions of this Contract, the
closing of title hereunder will take place at the office of Miles
A. Epps, Esq., 107 Northern Boulevard, Great Neck, New York
11021, at 10:00 a.m., on February 3, 1997 (the "Original Closing
Date").
(b) Purchaser shall have the right to one or more
adjournments of the closing of title to a date not later than the
fifteenth (15th) day (or, if such fifteenth (15th) day is a
Saturday, Sunday or legal holiday, the next business day)
following the Original Closing Date, provided that: (i) the
closing of title shall take place at the same location and at the
same time as specified in subparagraph (a) of this Paragraph on
the date to which the closing shall be so adjourned; (ii)
Purchaser shall give written notice of such adjournment to Seller
at least three (3) business days prior to the Original Closing
Date (or any later date to which Purchaser or Seller shall
adjourn the closing); (iii) if Purchaser fails to give notice of
such adjournment to Seller on or before the third (3rd) business
day prior to the Original Closing Date (or such later date),
Purchaser shall be deemed to have waived its rights to adjourn
the closing; and (iv) time shall be of the essence with respect
to Purchaser's obligations under this Contract as of (a) the
Original Closing Date, if Purchaser fails to give such notice of
adjournment to Seller on or before such third (3rd) business day,
or (b) if Purchaser shall give such notice of adjournment to
Seller on or before such third (3rd) business day, the date to
which Purchaser shall have adjourned the date of closing in
accordance with this Paragraph 32 (or any later date to which
Seller shall adjourn the closing). If Purchaser shall adjourn
the closing in accordance with this Paragraph 32, all
apportionments will be computed as of the date to which Purchaser
shall have so adjourned the closing, or as of any later date to
which the closing shall have been adjourned by Seller.
(c) Seller hereby grants to Purchaser and Purchaser's
employees and agents, including any accountants, attorneys,
surveyors or engineers who may be employed by Purchaser, the
right, at Purchaser's sole cost and expense and subject to
subparagraphs (c) and (d) of Paragraph 52 hereof, (i) to enter
upon the Premises for the purposes of making such inspections,
engineer's reports, surveys, maps, contour studies, test borings,
environmental studies and other sub-surface soil tests, (ii) to
review the books and records of the Premises, including but not
limited to the Leases (as hereinafter defined) and the Service
Contracts (as hereinafter defined) and (iii) to make such other
investigations (the activities set forth in clauses (i), (ii) and
(iii) of this sentence being hereinafter referred to collectively
as the "Property Studies"), as may be reasonably necessary in
order for Purchaser to determine whether Purchaser wishes to
purchase the Premises. Seller will provide Purchaser with a
reasonable opportunity to review any such books, records, Leases,
Service Contracts or other documentation relating to the Premises
promptly following a request therefor by Purchaser, and Purchaser
agrees that any information with respect to the Premises or the
operation thereof which Purchaser obtains as a result of the
Property Studies will be kept strictly confidential and not
disclosed to any third parties other than Purchaser's attorneys
or other professional counselors.
(d) If Purchaser, in its sole discretion, shall
conclude from the Property Studies that Purchaser does not wish
to purchase the Premises, Purchaser shall have the right to
terminate this Contract by giving notice of such termination (the
"Termination Notice") to Seller on or before the forty-fifth
(45th) day next following the date of this Contract (the
"Contingency Date"), time being of the essence with respect to
the giving of the Termination Notice by Purchaser on or before
the Contingency Date. Upon the giving of the Termination Notice
on or before the Contingency Date, this Contract shall wholly
cease and terminate, and neither party shall have any further
obligation to the other by reason hereof, except that both
parties shall promptly direct the Escrow Agent to deliver the
Deposit to Purchaser. If Purchaser does not give Seller the
Termination Notice on or before the Contingency Date, this
Contract shall remain in full force and effect; Purchaser's
obligations hereunder to purchase the Premises and pay the
purchase price therefor in accordance with this Contract shall be
and become unconditional as of the Contingency Date, except as
otherwise expressly provided in this Contract; and Purchaser
shall be deemed to have waived as of the Contingency Date any
objections under this Contract with respect to the use to which
the Premises may be put.
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(e) Purchaser, for itself, its agents, employees and
contractors, hereby assumes all responsibility and risk in
entering upon the Premises and performing the Property Studies,
and Purchaser hereby agrees to indemnify and hold Seller harmless
from and against any liability, expense, loss, cost or damage,
including attorney's fees, arising out of or in connection with
Purchaser's entry upon or use of the Premises prior to the
closing of title for the purpose of making of the Property
Studies.
(f) Purchaser acknowledges and agrees that its
obligations to indemnify Seller under the provisions of this
Paragraph 32 shall survive the closing of title hereunder, and
that, notwithstanding anything contained in this Paragraph 32 or
the entry of Purchaser in the Premises for the purpose of making
the Property Studies, Purchaser shall in no event be deemed a
vendee in possession of the Premises.
(g) Purchaser shall have the right to accelerate the
closing of title to a date (an "Early Closing Date") earlier than
the Original Closing Date, by giving notice of such acceleration
to Seller not later than the fifteenth (15th) day before the
Early Closing Date, in which event the Early Closing Date shall
be deemed, for all purposes of this Contract, to be the Original
Closing Date.
33. This Contract may be executed in any number of
counterparts, each of which may be signed by either of the
parties and shall for all purposes be deemed to be an original,
and all of which together shall constitute but one and the same
agreement.
34. The parties hereto agree that neither this Contract nor
any memorandum or short form thereof shall be recorded or
tendered for recording in any land record office relating to the
Premises. Purchaser further agrees that the recording of this
Contract or any memorandum or short form thereof, by or at the
instance of Purchaser shall constitute, at Seller's election, a
default by Purchaser hereunder. Upon Seller's giving notice of
such default to Purchaser, this Contract shall terminate and be
of no further force and effect, and the recording of such notice
shall be deemed sufficient and adequate notice to third parties
that this Contract is void and of no further force and effect.
35. If any provisions of this Rider conflict with the
printed provisions of this Contract, the provisions of this Rider
shall control.
36. All notices, demands, requests, consents or other
communications ("Notices") which either party may give or be
required to give to the other hereunder shall be in writing and
shall be: (a) delivered by hand; or (b) sent by registered or
certified mail, return receipt requested, postage prepaid; or (c)
sent by reputable overnight courier service, such as Federal
Express; or (d) transmitted by legible facsimile (with answer
back confirmation); in any event addressed to the parties at
their respective addresses first above set forth. A copy of any
Notice given by Purchaser to Seller prior to the date of closing
of title hereunder shall simultaneously be given in the same
manner to Seller's attorney, Miles A. Epps, Esq., 107 Northern
Boulevard, Suite 200, Great Neck, New York 11021; and a copy of
any Notice given by Seller to Purchaser prior to said date shall
simultaneously be given in the same manner to Purchaser's
attorney, Ann M. McCormick, Esq., 850 Clinton Square, Rochester,
New York 14604. Notices given in the manner aforesaid shall be
deemed to have been given (i) on the day so delivered by hand;
or (ii) five (5) business days after the day mailed, if sent by
registered or certified mail, return receipt requested; or (iii)
the first (1st) business day after the date of deposit, if sent
by reputable overnight courier service; or (iv) the date of
transmission with confirmed answer back, if transmitted by
facsimile. Either party may change its address for the receipt
of Notices by giving Notice to the other party in any manner
aforesaid.
37. Each of Purchaser and Seller warrants and represents
the other that it did not deal with any broker, finder or similar
agent or party who or which might be entitled to a commission or
compensation on account of introducing the parties, the
negotiation or execution of this Contract and/or the closing of
the transaction provided for herein other than Prime Sites Ltd.,
as broker, whose commission shall be paid by Purchaser pursuant
to a separate agreement, and Magnum Realty Corp., as finder,
whose fee shall be paid by Seller pursuant to a separate
agreement. Purchaser agrees to indemnify and hold Seller
harmless from and against all loss, liability,
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damage and expense
(including, without limitation, reasonable attorneys' fees)
imposed upon or incurred by Seller by reason of any claim for
commissions or other compensation for bringing about this
transaction by Prime Sites Ltd. or any other broker, finder
(other than Magnum Realty Corp.) or similar agent or party who
claims to have dealt with Purchaser in connection with this
transaction; and Seller agrees to indemnify and hold Purchaser
harmless from and against all loss, liability, damage and expense
(including, without limitation, reasonable attorneys' fees)
imposed upon or incurred by Purchaser by reason of any claim for
commissions or other compensation for bringing about this
transaction by Magnum Realty Corp. The provisions of this
Paragraph 37 shall survive the closing of title hereunder or any
termination of this Contract.
38. Seller represents and warrants to Purchaser that Seller
is not a "foreign person", as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"). Seller
shall deliver to Purchaser at the closing or on such earlier date
as may be required pursuant to the applicable regulations
promulgated by the Internal Revenue Service ("IRS"), an affidavit
of an officer of Seller, sworn to under penalties of perjury,
setting forth the Seller's tax identification number, and stating
that the Seller is not a "foreign person", as such term is
defined in the Code. If required pursuant to applicable
regulations promulgated under the Code, Purchaser may furnish a
copy of the affidavit delivered by Seller to the IRS or other
agency designated for receipt of such affidavit.
39. [Intentionally omitted]
40. The submission of this Contract by Seller to Purchaser
shall not be deemed an offer to sell. The obligations of the
parties hereto shall not be binding until a fully executed
original of this Contract, signed by both parties, has been
delivered and the Deposit required hereunder has been delivered
to the Escrow Agent.
41. The parties hereto understand that the Premises are
unique and that if Purchaser defaults in the performance of any
of the terms of this Contract, Seller's damages would be
uncertain and difficult to ascertain. Accordingly, if Purchaser
defaults in the performance of any of the terms of this Contract,
then Seller shall be entitled to retain the Deposit as liquidated
damages for such default, and Seller and Purchaser shall be
released and relieved from any further liability hereunder. The
amount so retained by Seller shall in no event be considered a
penalty.
42. (a) The Initial Payment, together with any interest
earned thereon (the "Deposit"), shall be paid to and held in
escrow by Seller's attorney, MILES A. EPPS, Esq. (the "Escrow
Agent"). Simultaneously with the closing of title, the Escrow
Agent shall deliver the Deposit to Seller. Subject to the
provisions of subparagraphs (c) and (d), if the Escrow Agent
receives notice from Seller that Purchaser has defaulted in any
way in its obligations under this Contract, the Escrow Agent
shall deliver or mail the Deposit to Seller fifteen (15) days
after delivering a copy of such notice to Purchaser; and, in the
event that the Escrow Agent receives notice from Purchaser that
Purchaser is entitled under the terms of this Contract to the
return of the Deposit, the Escrow Agent shall deliver or mail the
Deposit to Purchaser fifteen (15) days after delivering a copy of
such notice to Seller.
(b) Any Notice to the Escrow Agent shall be sufficient
only if received by the Escrow Agent within the applicable time
period set forth herein, if any. Notices to the Escrow Agent
shall be delivered to him at 107 Northern Boulevard, Great Neck,
New York 11021 in the manner specified in Paragraph 36 hereof.
(c) Upon receipt of a demand for the Deposit made by
Purchaser or Seller pursuant to paragraph (a) hereof and in
accordance with paragraph (b) hereof, the Escrow Agent shall
promptly deliver a copy thereof to the other party in the manner
specified in Paragraph 36 hereof. The other party shall have the
right to object to the delivery of the Deposit by delivery to and
receipt by the Escrow Agent of notice of objection within twelve
(12) days after the date of the Escrow Agent's delivery of such
copy to the other party, but not thereafter. Such notice of
objection may be signed by the attorney for Seller or Purchaser,
as the case may be. Upon receipt of such notice of objection,
the Escrow Agent shall promptly deliver a copy thereof to the
party who made the demand in the manner specified in Paragraph 36
hereof.
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(d) In the event that (i) the Escrow Agent shall have
received a notice of objection as provided for in subparagraph
(c) hereof within the time therein prescribed, or (ii) any other
disagreement or dispute shall arise between or among any of the
parties hereto and/or any other persons resulting in adverse
claims and demands being made for the Deposit, whether or not
litigation has been instituted, then and in any such event, the
Escrow Agent shall refuse to comply with any claims or demands on
it and continue to hold the Deposit until the Escrow Agent has
received either (A) a Notice signed by both Seller and Purchaser
directing the delivery of the Deposit, or (B) a final order of a
Court of competent jurisdiction, entered in a proceeding in which
Seller and Purchaser are parties, directing the delivery of the
Deposit, in either of which events, the Escrow Agent shall then
deliver the Deposit in accordance with said direction. The
Escrow Agent shall not be or become liable in any way or to any
person for its refusal to comply with any such claims or demands
until and unless it has received a direction of the nature
described in (A) or (B) hereof. Upon delivery of the Deposit by
the Escrow Agent, as provided in this subparagraph (d), the
Escrow Agent shall be released of and from all liability
hereunder except for any gross negligence or willful misconduct.
Notwithstanding the foregoing provisions of this subparagraph
(d), the Escrow Agent shall have the following rights in the
circumstances described in (i) and (ii) above:
(x) If the Escrow Agent shall have received a Notice
signed by either Seller or Purchaser advising that a litigation
between Seller and Purchaser over entitlement to the Deposit has
been commenced, the Escrow Agent may, on notice to Seller and
Purchaser, deposit the Deposit with the Clerk of the Court in
which said litigation is pending after paying from the Deposit
all court costs relating to such deposit;
(y) The Escrow Agent may, on notice to Seller and
Purchaser, take such affirmative steps as it may, at its option,
elect in order to terminate its duties as the Escrow Agent,
including, without limitation, the deposit of the Deposit with a
court of competent jurisdiction and the commencement of an action
for interpleader, the costs thereof to be borne by whichever of
Seller or Purchaser is the losing party; and
(z) Upon the taking by the Escrow Agent of either of
the actions described in (x) or (y) above, the Escrow Agent shall
be released of and from all liability hereunder except for any
gross negligence or willful misconduct.
(e) The Escrow Agent shall not be responsible in any
manner for the validity or sufficiency of any cash, instruments,
or any other property delivered to it hereunder, or for the value
or collectibility of any check or other instrument so delivered,
or for any representation made or obligations assumed by any
other party to this agreement. Nothing contained herein shall be
deemed to obligate the Escrow Agent to deliver any cash,
instrument, or other property referred to herein unless the same
shall have first been received by the Escrow Agent pursuant to
this Contract. The Escrow Agent shall have the right to act in
reliance upon any document, instrument or signature believed by
him to be genuine and to assume that any person purporting to
give any notice or instructions in accordance with the provisions
hereof have been duly authorized to do so. The Escrow Agent
shall not be liable for any action taken or omitted hereunder
except in the case of his gross negligence or willful misconduct.
(f) The Escrow Agent shall not be bound by any
modification, cancellation or rescission of this Contract unless
the same is in writing and signed by the other parties hereto and
a copy thereof has been received by the Escrow Agent. In no
event, however, shall any modification of this Contract which
shall affect the rights or duties of the Escrow Agent be binding
on the Escrow Agent unless the Escrow Agent shall have given his
prior written consent. The Escrow Agent has executed this
Contract solely to confirm that he is holding the Deposit in
escrow pursuant to the provisions of this Paragraph and for no
other purpose.
(g) If there shall be any dispute between Seller and
Purchaser with respect to the Deposit or any other matter arising
out of this Contract, Purchaser agrees that the Escrow Agent may
represent Seller notwithstanding that the Escrow Agent is
simultaneously acting as escrow agent hereunder.
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(h) The Deposit shall be invested by the Escrow Agent in
U.S. government securities, FDIC-insured certificates of deposit
or an FDIC-insured interest-bearing money market or bank account,
but the Escrow Agent shall not be liable for any reasonable delay
in investing, reinvesting or distributing the Deposit or for any
loss incurred by reason of any such investments. If the closing
occurs, any interest earned or accrued on the Deposit shall be
paid to Seller. If the closing does not occur, then all interest
earned on the Deposit shall be paid to the party entitled to
receive the Deposit.
(i) Seller and Purchaser hereby agree jointly and
severally to indemnify and hold the Escrow Agent harmless from
any damage, cost, liability or expense (including, but not
limited to, legal fees either paid to retained attorneys or
representing the fair value of legal services rendered by the
Escrow Agent) which the Escrow Agent may incur by reason of his
acting hereunder, without prejudice to any right either party may
have to recover from the other party for any such damage, cost,
liability or expense; it being expressly acknowledged by the
parties hereto that the foregoing indemnity shall apply to such
legal fees and expenses incurred by the Escrow Agent in defending
an action brought by either party hereto alleging misconduct or
negligence by the Escrow Agent; unless there is a final
determination by a court of law that the Escrow Agent was grossly
negligent or engaged in intentional acts of misconduct.
43. It is understood and agreed that all understandings and
agreements heretofore had between the parties hereto are merged
in this Contract, which alone fully and completely expresses
their understandings, and that the same is entered into after
full investigation, neither party relying upon any express or
implied statement, representation, warranty, guarantee, promise,
"setups" or information not embodied in this Contract, made by
the other, or by any real estate broker, agent, employee, servant
or other person representing or purporting to represent Seller.
Subject to the provisions of subparagraphs (c) and (d) of
Paragraph 32 hereof, Purchaser represents that it has inspected,
examined and investigated the Premises and the fixtures,
equipment, machinery and personal property, if any, therein and
is familiar with the physical condition thereof, that it has
independently investigated, analyzed and appraised the value and
profitability thereof, that it has reviewed all Leases, or has
been given full opportunity to review all Leases, that it is
thoroughly acquainted with all of the foregoing, that it agrees
to accept the Premises and such fixtures, equipment, machinery
and personal property "as is", in their condition as of the date
hereof, subject to reasonable use, wear, tear and natural
deterioration to and including the date of the closing, subject
to the provisions of Paragraph 45 hereof, without any liability
or responsibility on the part of Seller for any condition caused
by tenants at the Premises after the date hereof. Seller has not
made and does not make any representations as to the physical
condition, expenses, income, operation, rent roll or any other
matter or thing affecting or relating to the Premises, except as
herein specifically set forth. Purchaser hereby expressly
acknowledges that all representations and warranties which Seller
has made, and upon which Purchaser relied in entering into this
Contract, have been included in this Contract.
Without limiting the generality of the foregoing, the
Purchaser has not relied on any representations or warranties,
and Seller has not made any representations or warranties, in
either case express or implied, as to (i) the current or future
real estate tax liability, assessment or valuation of the
Premises; (ii) the potential qualification of the Premises for
any and all benefits conferred by federal, state or municipal
laws, whether for subsidies, special real estate tax treatment,
insurance, mortgages, or any other benefits, whether similar or
dissimilar to those enumerated; (iii) the compliance of the
Premises, in its current or any future state with applicable
zoning ordinances and the ability to obtain a variance in respect
to the Premises' non-compliance, if any, with said zoning
ordinances; (iv) the availability of any financing for the
purchase, alteration, rehabilitation or operation of the Premises
from any source, including but not limited to State, City or
Federal government or any institutional lender; (v) the current
or future use of the Premises, including but not limited to the
use of the Premises, including but not limited to the use of the
Premises for residential (including cooperative or condominium
use) or commercial purposes; (vi) the presence or absence of any
rules or notices of violations of law issued by any governmental
authority; and (vii) the topography area, contour, soil
conditions or any other aspects of the physical condition of the
Premises. The Seller is not liable or bound in any manner by any
verbal or written statements, representations, real estate
brokers' "set-ups" or information pertaining to the Premises, the
uses to which the Premises may be put or the physical condition
thereof
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furnished by any real estate broker, agent, employee, or
other person, unless the same are specifically set forth herein.
44. The Premises are also being sold and are to be conveyed
subject to:
(a) Any state of facts an accurate current survey or
inspection of the Premises would show, provided the same does not
materially impair the marketability of the Premises;
(b) Any covenants, restrictions, easements,
agreements, consents or reservations of record, if any, not
violated by the existing structures on the Premises or the
current use thereof;
(c) All current zoning, building, environmental and
other laws, ordinances, codes, restrictions and regulations of
all governmental authorities having or claiming jurisdiction with
respect to the Premises or the use or improvement thereof and all
zoning variances and special exceptions relating thereto, if any,
not violated by the existing structures on the Premises or the
current use thereof, and all future such zoning, building,
environmental and other laws, ordinances, codes, restrictions,
regulations, zoning variances and special exceptions;
(d) Any and all violations of law, ordinances, orders
or requirements noted of record by any municipal, state or other
governmental authority having or claiming jurisdiction, which may
affect the Premises on, before or after the date of this
Contract, if any, whether or not noted on, before or after the
date hereof;
(e) Encroachments of stoops, areas, flagpoles, roof
cornices, wheel guards, stone bases, leaders, gutters, window
trims, vent pipes, signs, piers, lintels, window sills, fire
escapes, ledges, fences, coping, ladders and retaining bulkhead
or yard walls, if any, upon any street or highway or adjoining
property and encroachments of such elements projecting from
adjoining property over or upon the Premises, if any;
(f) All rights, easements and agreements, whether or
not of record, for the erection and/or maintenance of water, gas,
steam, electric, telephone, sewer or other utility pipelines,
poles, wires, conduits, cable boxes, holes, drains or other like
facilities, fixtures, equipment and installations in, on, across
or under the Premises, if any;
(g) Possible lack or revocable nature of the right, if
any, of the owner of the Premises to maintain or use any spaces,
facilities or appurtenances outside the building lines, whether
on, over or under the ground, including, without limitation, all
vaults, vault lights, marquees, signs, coal chutes, sub-surface
equipment and sidewalk openings, if any;
(h) Minor variations, if any, between tax lot lines,
fences, walls, shrubs, trees or driveway surfaces, and record
lines of title;
(i) All currently existing and future liens against
the Premises for unpaid real estate taxes, vault charges, if any,
assessments and water and sewer charges and rents not due and
payable as of the date of the closing of title hereunder, subject
to adjustment as provided in this Contract;
(j) The liability of Seller or any corporate
predecessor of Seller for New York State Franchise Taxes and the
lien thereof, subject to the provisions of Paragraph 30(d)
hereof;
(k) Rights of tenants and other occupants of the
Premises ("Tenants") under, and all terms and conditions of, all
leases, subleases and other occupancy agreements of any space in
or on the Premises in effect at the date hereof and at the date
of the closing of title hereunder, whether or not of record, and
all renewals, replacements and amendments thereof (hereinafter
referred to collectively as "Leases"), provided, however, that
nothing contained in this clause (k) shall be deemed to modify in
any respect any other provision of this Contract relating to the
Tenants or Leases, or to constitute a representation by Seller
that all or any such Leases will be in effect at the date of
closing;
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(l) Any financing statements, if any, on or with
respect to personality filed more than five (5) years prior to
the date of the closing and not renewed, or entered into by or
arising from the acts of any tenant at the Premises; and
(o) The effect of all current or future laws of the
United States and the State of New York and any other
governmental regulations relating to the rights and obligations
of the Tenants under the Leases and the permissible rents which
may be charged to or collected from them.
45. (a) Seller agrees to give Purchaser reasonably prompt
notice of any fire or other casualty occurring at the Premises
between the date hereof and the date of closing, or of any actual
or threatened condemnation of all or any part of the Premises of
which Seller has knowledge.
(b) If prior to the closing there shall occur (i)
damage to the Premises caused by fire or other casualty the
reasonably estimated cost to repair of which is One Hundred
Thousand and no/100 Dollars ($100,000.00) or more, or (ii) a
taking by condemnation of any material portion of the Premises,
then, in either such event, Seller or Purchaser may terminate
this Contract by notice given to the other within seven (7) days
after Seller has given Purchaser the notice referred to in
Paragraph 45(a), or at the closing, whichever is earlier, in
which event the respective obligations of Seller and Purchaser
shall be the same as set forth in Paragraph 30(b) in the event
this Contract is terminated as the result of title being
unmarketable; provided, however, that if Seller shall so
terminate this Contract, Purchaser may nevertheless elect to
accept title to the Premises in "as is" condition as of the date
of such termination, by giving notice of such election to Seller
within three (3) days after such termination. If neither party
shall so terminate this Contract, or if Seller so terminates this
Contract and Purchaser elects to accept title to the Premises
pursuant to the preceding sentence, then the closing shall take
place as herein provided, without abatement or reduction of the
purchase price, and Seller shall assign to Purchaser at the
closing, by written instrument, expressly made without warranty
or representation by or recourse to Seller, all of Seller's
interest in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of any such fire,
casualty or condemnation, less any amount thereof theretofore
expended for or required to reimburse Seller for the cost of any
restoration made by or on behalf of Seller; and if Seller has so
terminated this Contract and Purchaser has nevertheless so
elected to accept title to the Premises, Seller shall pay to
Purchaser, as an adjustment at closing, an amount equal to the
applicable deductible amount, if any, under Seller's fire or
casualty insurance.
(c) If, prior to the closing, there shall occur (i)
damage to the Premises caused by fire or other casualty the
reasonably estimated cost to repair of which is less than One
Hundred Thousand and no/100 Dollars ($100,000.00) or (ii) a
taking by condemnation of any part of the Premises which is not
material, then, in either such event, neither party shall have
the right to terminate this Contract by reason thereof, and the
obligations of Seller and Purchaser under this Contract shall
remain in full force and effect; provided however, that at
closing (i) Purchaser shall accept the Premises in its damaged or
"as is" condition as of such date and/or subject to such taking,
as the case may be, and (ii) Seller shall assign to Purchaser, by
written instrument expressly made without representation or
warranty by or recourse to Seller all of Seller's interest in any
insurance proceeds or condemnation awards which may be payable to
Seller on account of any such fire, casualty or condemnation, in
each case less any amount thereof theretofore expended or
required to reimburse Seller for the cost of any protective
restoration made by or on behalf of Seller. Notwithstanding the
foregoing, in the event of any such damage caused by fire or
other casualty, Seller shall pay to Purchaser, as an adjustment
at closing, an amount equal to the lesser of (x) such reasonably
estimated cost of repair or (y) the applicable deductible amount,
if any, under Seller's fire or casualty insurance, unless, prior
to closing, Seller shall have repaired and restored the Premises
at its sole cost and expense (in which case, Seller shall be
entitled to retain any and all insurance proceeds).
(d) For purposes of this Paragraph, a taking of a
material part of the Premises shall mean any taking which leaves
remaining a balance of the Premises which may not be economically
operated for the purpose for which the Premises were operated
prior to such taking, and shall include any permanent taking
which results in a diminution of the aggregate of the gross rents
payable under all Leases at the Premises by more than twenty
percent (20%), and any
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taking which necessitates repairs or
restoration having a reasonably estimated cost of One Hundred
Thousand no/100 Dollars ($100,000.00).
(e) Whenever, as a result of an assignment by Seller
of insurance proceeds pursuant to this Paragraph, Purchaser shall
be entitled to file a claim with or collect proceeds from
Seller's insurer, Seller agrees to cooperate fully and promptly
with Purchaser in connection therewith, to provide such
information as Purchaser may reasonably request relating thereto
and to execute promptly such drafts, checks, claims, releases,
acquittances and the like as may be required by such insurer or
as may be reasonably requested by Purchaser with respect thereto;
and the obligations of Seller pursuant to this subparagraph (e)
shall survive the closing.
(f) The parties agree that the foregoing provisions of
this Paragraph 45 shall apply to this Contract in lieu of the
provisions of Section 5-1311 of the General Obligations Law of
the State of New York.
46. Seller is hereby authorized by Purchaser to continue
any proceeding or proceedings pending for the reduction of the
assessed valuation of the Premises as of the date of closing of
title hereunder, and to try or settle the same in Seller's
discretion, provided, however, that the refund of taxes, if any,
for any tax year which is the subject of such a proceeding and
for part of which Purchaser owns the Premises shall be divided
between Seller and Purchaser in the same ratio as the ratio of
the number of days in such tax year during which the Premises
were owned by Seller to the number of days in such tax year
during which the Premises were owned by Purchaser, after
deducting from such refund all expenses, including counsel fees,
incurred by Seller in obtaining such refund. Purchaser shall
deliver to Seller, upon demand, receipted tax bills and canceled
checks used in payment of such taxes and shall execute any and
all consents or other documents, and do any act or thing
necessary for the collection of such refund by Seller. Any
refunds due for periods prior to Purchaser's ownership shall
remain the property of Seller. The provisions of this Paragraph
shall survive the closing of title hereunder.
47. Purchaser acknowledges being advised by Seller that the
sewage treatment plant (the "Sewer Plant") at the Premises is
being upgraded in accordance with environmental requirements
pursuant to SPDES Permit No. 0079499 (STP-89-01) issued by the
Suffolk County Department of Health Services ("SCDOHS") and an
SCDOHS Order of Consent No. UPG-89-01A dated October 26, 1992, as
amended, and that Seller anticipates such upgrading will be
completed before the Original Closing Date. At the closing of
title (or as soon thereafter as possible, if any required
governmental consents or approvals have not yet then been
obtained), Seller shall transfer and assign, without
representation or warranty, express or implied, all of Seller's
right, title and interest in and to the Sewer Plant (including,
but not limited to, any existing licenses and/or permits
necessary for the operation or maintenance thereof and any
contractor's or manufacturer's obligations under any construction
contracts and guarantees with respect thereto, if any) to
Purchaser, and Purchaser shall assume all of Seller's obligations
with respect to the Sewer Plant (including, but not limited to,
Seller's obligations under the terms of any such construction
contracts, licenses and permits, but not including Seller's
obligations to pay for any labor or materials performed or
purchased with respect to the Sewer Plant prior to the date of
closing ("Seller's Pre-Existing Obligations"), it being expressly
agreed that Purchaser shall not be responsible for the cost of
labor and/or materials incurred by Seller prior to the closing of
title hereunder), from and after the date of closing. In
connection with such assumption, Purchaser shall reimburse Seller
at closing for any deposits made by Seller in order to obtain any
such licenses or permits and, as soon as reasonably practicable
after the date of closing, replace any bonds posted by Seller to
obtain such licenses or franchises with bonds posted by
Purchaser; Purchaser shall be entitled to an adjustment at
closing in an amount equal to Seller's Pre-Existing Obligations,
if any, remaining unpaid as of such date; Purchaser hereby agrees
to indemnify and hold Seller harmless from and against any
liability, expense, loss, cost or damage, including reasonable
attorney's fees, relating to the construction, operation or
maintenance of the Sewer Plant (including Seller's Pre-Existing
Obligations, if any, provided that Purchaser has received an
adjustment with respect thereto at closing; it being expressly
acknowledged and agreed that Seller shall continue to be
responsible for all other Seller's Pre-Existing Obligations) and
the provisions of this subparagraph shall survive the closing of
title hereunder.
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<PAGE>
48. (a) For the purpose of this Contract, the term "net
cost of title examination" or "net charge of title examination"
shall mean the expense actually incurred by Purchaser for title
examination plus the cost of any survey redating actually
obtained or survey inspection actually made.
(b) This Contract contains the entire agreement
between the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings, if any, with
respect thereto, and may not be modified, changed or
supplemented, nor may any obligations hereunder be waived, except
by written instrument signed by the party to be charged or by its
agent duly authorized in writing or as otherwise expressly
permitted herein. The parties do not intend to confer any
benefit hereunder on any person, firm or corporation other than
the parties hereto, their successors and assigns. The provisions
of this Paragraph shall survive the closing of title hereunder.
(c) No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other agreement
or provision herein contained. No extension of time for
performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or
acts.
(d) All sums paid on account of this Contract and the
net cost of title examination, if any, made in connection
therewith are hereby made liens on the Premises, but such liens
shall not continue after default by the Purchaser under this
Contract or termination of this Contract pursuant to the terms
hereof.
(e) In no event shall Seller be required to accept the
check of a corporation or a partnership unless said corporation
or partnership is the grantee of the Premises, nor shall Seller
be required to accept an endorsed check, unless the endorser is
the payee of the check and the grantee of the Premises.
(f) This Contract shall bind and inure to the benefit
of the parties hereto and their respective successors and,
subject to the provisions of Paragraph 31 hereof, assigns, but
shall not inure to the benefit of or be enforceable by any other
person or entity.
(g) This Contract shall be governed by, interpreted
under and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts made and to be
performed wholly within such State.
(h) Any and all checks received or to be received
hereunder in payment, or part payment, are and shall be deemed
subject to collection.
49. This sale also includes all fixtures and articles of
personal property, if any, which are owned by Seller and are
attached to, appurtenant to or used in connection with the
Premises but only to the extent that such fixtures or articles of
personal property are located at the Premises at the time of
closing. Such personal property as is included in this sale is
sold "as is" and, except as otherwise provided in Paragraph 51
(i) hereof, Seller makes no representation regarding the present
condition or state of title, or the condition or state of title
on the date of closing, of any such fixtures or other articles of
personal property. Seller acknowledges and agrees that the 1988
gray Ford pick-up truck (title and identification number
1FTEF14N9JNA40047) used at the Premises is included in this sale
and shall be deemed "personal property" for the purposes of this
Paragraph; that Seller shall deliver to Purchaser at closing (or
as soon thereafter as reasonably practicable) the certificate of
title with respect to such pick-up truck, completed to effect the
transfer of title thereto to Purchaser; and that the provisions
of this sentence shall survive the closing of title hereunder.
Seller represents and warrants that, prior to the closing of
title hereunder, Seller shall not remove from the Premises any
fixtures or other items of personal property owned by Seller and
used in the operation or maintenance of the Premises, unless such
fixtures or items of personal property are replaced with
reasonably equivalent fixtures or items of personal property.
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50. Notwithstanding any provision of this Contract to the
contrary, no officer, director or shareholder of Seller shall
have any personal liability under, arising out of or in
connection with this Contract, the transactions contemplated by
this Contract, any default or breach by Seller under this
Contract or the inaccuracy of any representation or warranty set
forth in this Contract, it being expressly agreed by Purchaser
that no such officer, director or shareholder shall be named as a
defendant by Purchaser in any action brought or claim asserted
against Seller relating to this Contract or such transactions,
default, breach or inaccuracy, and that any judgment against
Seller in favor of Purchaser relating to this Contract or such
transactions, default, breach or inaccuracy
shall be levied or collected only against and collectible only
out of corporate assets of Seller, and shall not be levied
against or collectible out of the assets of any such officer,
director or shareholder. The provisions of this Paragraph 50
shall survive the closing of title hereunder.
51. Seller represents and warrants to Purchaser as follows
as of the date of this Contract:
(a) The rent schedule (the "Rent Roll") annexed hereto
and made a part hereof as Schedule B accurately and completely
sets forth the following information with respect to the Tenants
under the Leases as of the dates indicated thereon: (i) the name
of each Tenant and an identification of the unit occupied by such
Tenant; (ii) the monthly rentals (other than arrears) actually
and currently being collected from each Tenant; (iii) the amount
of any security or other deposits made by each Tenant and held by
Seller; and (iv) under the heading "Opening Balance", the amount
of any rent arrears owed by each Tenant as of the date indicated
therein.
(b) No brokerage or leasing commissions are (and, as
of the date of closing, none will be) owed or payable in the
future by Seller with respect to any of the Leases;
(c) The Leases referred to on the Rent Roll constitute
all of the leases, tenancies or occupancies affecting the
Premises on the date hereof, and there are no other agreements
which confer upon any Tenant or any other person or entity any
rights to the possession of any portion of the Premises.
(d) No Tenant has been granted any rent concession or
allowance with respect to rent payable after the date hereof.
(e) Schedule C annexed hereto and made a part hereof
sets forth all of the service and maintenance contracts and union
contracts, if any, affecting the Premises or the operation
thereof (the "Service Contracts").
(f) Schedule D annexed hereto and made a part hereof
sets forth all of the superintendents, porters, handymen and
other similar persons (each, an "Employee" and, collectively,
"Employees") employed by Seller in connection with the operation
of the Premises.
(g) Seller has not received notice from any company
underwriting insurance policies covering the Premises requiring
the performance of any work at the Premises which has not been
completed.
(h) Seller has not transferred any development or air
rights with respect to the Premises or granted to any person or
entity the right to acquire any such rights and, to the best of
Seller's knowledge, no former owner of the Premises transferred
or granted to any person or entity the right to acquire any such
rights (other than to its successor as owner of fee title to the
Premises).
(i) All fixtures and articles of personal property, if
any, included in this conveyance will at the date of closing be
owned by Seller free and clear of any conditional bills of sale,
chattel mortgages, security agreements, financing statements or
other security interests of any kind (except as otherwise
provided in Paragraph 44(l) hereof).
(j) No person or entity has any right or option to
acquire title to the Premises.
(k) Seller has not presented any offering plan to the
Attorney General of the State of New York or the Tenants at the
Premises in connection with the proposed conversion thereof to
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cooperative or condominium status, and there has not been any
solicitation or market test made with respect to any such
proposed conversion.
None of the representations and warranties set forth in this
Paragraph (and, except as otherwise expressly indicated to the
contrary, none of the representations or warranties, if any, of
Seller set forth elsewhere in this Contract) shall survive the
closing.
52. (a) Seller agrees that from the date hereof until the
date of closing, Seller shall:
(i) operate and maintain the Premises, or cause
the Premises to be operated and maintained, in the ordinary
course of business and in a manner consistent with the practices
and procedures followed by Seller prior to the date hereof,
except to the extent that Seller is precluded from so doing by
acts of God, fire or other casualty, storm, strikes, labor
difficulties, riots, insurrection, inability to obtain materials
or equipment or other similar or dissimilar events or occurrences
beyond the control of Seller;
(ii) cause all fire and extended coverage and
other insurance policies currently in effect with respect to the
Premises (or renewal or replacement policies of like coverage and
like amounts or limits) to be kept in full force and effect
through and including the date of closing;
(iii) not increase the compensation payable to
hourly or salaried Employees, except (x) if Purchaser has given
its prior written consent to such increase, which consent shall
not be unreasonably withheld or delayed, or (y) pursuant to any
contracts in effect at the date hereof or any industry- or
owners' association-wide collective bargaining agreements
becoming effective after the date hereof, or (z) in accordance
with the usual past practice of Seller;
(iv) not engage any new hourly or salaried
employees for employment at the Premises, except as required to
replace existing Employees and any such new employees shall be
employed for compensation not greater than required by any
applicable union contract or, if there is no such applicable
union contract, at such compensation as to which Purchaser shall
have given its prior written consent, which consent shall not be
unreasonably withheld or delayed;
(v) not enter into any Service Contracts (other
than employment agreements or union contracts in accordance with
clauses (iii) and (iv) of this subparagraph (a)) except for (x)
renewals or extensions of existing Service Contracts at the then-
prevailing rates of compensation provided each such renewal or
extension may be canceled by Seller or its successors on not more
than thirty (30) days' prior written notice, or (y) any other
service or maintenance contracts entered into in the ordinary
course of business provided each such contract may be canceled by
Seller or its successors on not more than thirty (30) days' prior
written notice, or (z) any other service or maintenance contracts
to which Purchaser shall have given its prior written consent,
which consent shall not be unreasonably withheld or delayed;
(vi) cause any management agreement with respect
to the Premises, if any, to be terminated on or before the date
of closing; and
(vii) execute and deliver to Purchaser all
written consents or authorizations as may be necessary, in the
reasonable opinion of Purchaser or its counsel, to make a search
of the records of any Federal, State or City agency having
jurisdiction relating to the Premises in order to verify any
warranties or representations made herein by Seller or any
information relating to the Premises or the tenancies thereof
that are set forth in this Contract.
(b) Seller and Purchaser agree that if any apartment
at the Premises is vacant at the date hereof or becomes vacant
after the date hereof and prior to the date of closing, Seller
will not enter into any new lease for such vacant apartment,
unless (i) at a rent not less than the prevailing rent then being
charged for similar apartments at the Premises, and for a term
not longer than two (2) years, or (ii) Purchaser has given its
prior written consent to the terms of such new lease, which
consent Purchaser agrees not unreasonably to withhold or delay.
It is also understood and agreed that Seller shall not modify any
existing Lease to reduce the rent payable thereunder or to
shorten the term thereof, after the date hereof and prior to the
date of closing,
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unless Purchaser has given its prior written
consent to the terms of such modification, renewal or extension,
which consent Purchaser agrees not unreasonably to withhold or
delay; provided however, that nothing contained in this Contract
shall be deemed to prohibit or preclude Seller from (i) renewing
or modifying any existing Lease, if such renewal or modification
is required by applicable law, at such rent and on such terms as
may be required by applicable law, or (ii) instituting summary
proceedings prior to the date of closing against any current
Tenant or future Tenant who has defaulted under its Lease or any
future Lease, and applying and retaining any security which may
have been deposited by such Tenant in accordance with the terms
of such Tenant's Lease, or applicable law (but no such security
shall be so applied and retained unless such Tenant shall have
vacated its apartment). Notwithstanding the foregoing, Purchaser
acknowledges and agrees that: (i) Seller has no obligation to
institute any such proceedings against any Tenant, and has not
made and is not willing to make any representation and assumes no
responsibility with respect to the continued occupancy at the
Premises of any Tenant; (ii) the removal of any Tenant prior to
the closing, whether voluntarily by surrender of possession, by
summary proceedings or otherwise, shall not give rise to any
claim or objection by Purchaser hereunder, or to any abatement or
reduction in the purchase price; and (iii) it will not be an
objection to title that any Tenant at the Premises is a hold-over
tenant or in default under any Lease.
(c) Seller hereby agrees that it shall permit
Purchaser or its designated agents, engineer or appraiser to
enter the Premises at reasonable times for reasonable periods of
time on business days, for the purpose of inspecting the Premises
in order to make any study or record or compilation of data
required by any lending institution or for any like purpose,
provided that (i) Purchaser gives reasonable prior written notice
of such inspection to Seller; (ii) Purchaser or such agents,
engineer or appraiser are accompanied during all such inspections
by a representative of Seller; (iii) such inspection shall not
impede or interfere with the normal business operation of the
Premises; and (iv) such permission shall be subject to the
rights of the Tenants at the Premises under the Leases and
applicable law.
(d) Purchaser covenants and agrees that prior to the
closing, Purchaser (i) shall not contact any Tenant at the
Premises for any reason whatsoever, either directly or indirectly
by correspondence, telephone, telegraph or otherwise, with
respect to the conveyance of the Premises contemplated hereby;
and (ii) shall not issue any publicity or press release relating
to such conveyance of the Premises.
53. (a) At the closing, the following items shall be
apportioned between the parties as of the day next preceding the
closing, in accordance with the customs with respect to title
closings recommended by The Real Estate Board of New York, Inc.
(except where expressly otherwise provided herein):
(i) rents and all other charges paid (including
any prepaid rents) or payable by Tenants at the Premises, as,
when and if collected, subject to the provisions of subparagraphs
(b) and (c) hereof;
(ii) real estate taxes, unmetered water charges
and sewer rents levied or imposed upon the Premises on the basis
of the fiscal or calendar year for which assessed. If the
closing shall occur before a new tax rate is fixed, the
apportionment of taxes shall be on the basis of the tax rate for
the immediately preceding period applied to the latest assessed
valuation, subject to post-closing adjustment in accordance with
subparagraph (f) hereof;
(iii) vault charges, if any;
(iv) charges payable under Service Contracts
assigned to Purchaser, on the basis of the period covered by such
contracts;
(v) electricity, gas and other utility charges to
the extent such charges are not directly metered to and payable
by Tenants, if any, subject, however, to the provisions of
subparagraph (d) hereof; and
Page 19
<PAGE>
(vi) such other items, if any, as may be
expressly made the subject of apportionment under any other
provisions of this Contract.
No adjustments or apportionments shall be made between the
parties except as provided in this Paragraph.
(b) If on the date of the closing, there are past due
rents or charges owed by Tenants and Seller is entitled to all or
part of the same, then Purchaser agrees that with respect to the
then current rentals (i.e., due with respect to the month in
which the closing occurs), the first rentals and monies received
by Purchaser subsequent to the date of the closing from such
Tenants shall be applied: first, to the rent for the month in
which the closing occurs, which payment shall be received in
trust by Purchaser for the account of Seller in payment of such
rents and Seller's share of which, determined in accordance with
Paragraph 53(a) (i) hereof, will be remitted by Purchaser to
Seller forthwith; then, to rents which become due after the date
of closing, which shall be retained by Purchaser; and the
balance, if any, to rents which became due prior to the first day
of the month in which the closing occurs, which shall be remitted
by Purchaser to Seller. Purchaser will make reasonable efforts
(but without any obligation to institute legal proceedings in
connection therewith) to collect past due rents, if any, for the
account of Seller and any such rents, if received, shall be
received in trust by Purchaser for the account of Seller and will
be remitted by Purchaser to Seller forthwith. Any past due rents
not so collected by Purchaser within the period of one hundred
twenty (120) days following the date of the closing shall be
reassigned to Seller so that Seller may pursue such remedies for
collection thereof, for Seller's own account, as Seller may deem
advisable.
(c) If there are any additional rents or charges
(e.g., percentage rent, real estate taxes, insurance, operating
expenses or other such charges) not yet due or payable by Tenants
but attributable in whole or in part to the period prior to the
date of closing, then Purchaser agrees that when the same are
received by Purchaser subsequent to the date of the closing from
such Tenants, the same shall be received in trust by Purchaser
for the account of Seller in payment of such additional rents and
such portion thereof as is attributable to the period prior to
the date of closing will be remitted by Purchaser to Seller
forthwith. Purchaser will make reasonable efforts (but without
any obligation to institute legal proceedings in connection
therewith) to collect such additional rents, if any, for the
account of Seller.
(d) Seller shall cause all water, electricity, gas and
other utility meters to be read on the day preceding the date of
closing, or as close thereto as may be reasonably possible, and
shall pay all bills rendered as a result of such readings. The
cost of such utilities for the period, if any, between the date
of the meter reading and the date of closing shall be adjusted on
the basis of the most recently issued bill therefor. If Seller
does not obtain such a meter reading for any such utility, the
adjustment therefor shall be on the basis of the most recently
issued bill therefor, subject to post-closing adjustment in
accordance with subparagraph (f) hereof. At the closing,
Purchaser shall reimburse Seller in an amount equal to all
deposits, if any, made by Seller with any utility company which
will remain on deposit for the benefit of Purchaser subsequent to
the closing.
(e) The amount of any unpaid taxes, water charges and
sewer rents which Seller is obligated to pay and discharge, with
the interest and penalties thereon to a date not more than two
(2) business days after the date of closing, may, at the option
of Seller, be allowed to Purchaser as a reduction of the purchase
price, provided official bills therefor with interest and
penalties thereon figured to said date, are furnished by Seller
at the closing.
(f) To the extent that any of the prorations made upon
the date of closing pursuant to this Paragraph are based upon
estimates of payments to be made and/or expenses to be incurred
by Purchaser subsequent to the date of closing, or have been
erroneously made, Seller and Purchaser agree to adjust such
prorations promptly upon receipt by Seller or Purchaser, as the
case may be, of bills or other documentation setting forth the
actual and/or correct amount of such expenses. The provisions of
this Paragraph shall survive the closing.
(g) In addition to the other adjustments and
apportionments set forth in this Paragraph, Purchaser shall be
entitled to the following adjustments at closing:
Page 20
<PAGE>
(i) The adjustment, if any, with respect to
Seller's Pre-Existing Obligations pursuant to Paragraph 47
hereof;
(ii) An adjustment of $640.00 with respect to
each common hallway at the Premises which has not been painted
within two (2) prior to the date of closing;
(iii) An adjustment of $180.00 with respect to
each vacant one-bedroom apartment at the Premises which has not
been painted since such apartment became vacant;
(iv) An adjustment of $300.00 with respect to
each vacant one-bedroom apartment at the Premises in which the
floors have not been sanded and polyurethaned since such
apartment became vacant;
(v) An adjustment of $240.00 with respect to
each vacant two-bedroom apartment at the Premises which has not
been painted since such apartments became vacant; and
(vi) An adjustment of $350.00 with respect to
each vacant two-bedroom apartment at the Premises in which the
floors have not been sanded and polyurethaned since such
apartment became vacant.
54. (a) In connection with the conveyance of the Premises
by Seller to Purchaser, Seller shall deliver to Purchaser at the
closing:
(i) [Intentionally omitted];
(ii) an instrument duly executed and acknowledged
by Seller, in which Seller assigns to Purchaser all of Seller's
right, title and interest as landlord, in, to and under all
Leases or future leases in effect as of the date of closing,
which instrument shall contain no representations or warranties,
express or implied;
(iii) an instrument duly executed and
acknowledged by Seller in which Seller assigns to Purchaser all
of Seller's right, title and interest under the Service Contracts
in effect as of the date of closing, if any, a schedule of which
shall be annexed thereto, which instrument shall contain no
representations or warranties, express or implied;
(iv) an instrument duly executed and acknowledged
by Seller in which Seller assigns to Purchaser all of Seller's
right, title and interest in and to all security and similar
deposits made by Tenants pursuant to the terms of their Leases, a
schedule of which shall be annexed thereto, which instrument
shall contain no representations or warranties, express or
implied. Seller shall, at its option, either deliver therewith a
good certified or official bank check to Purchaser's order in the
aggregate amount of such deposits, including accrued interest, if
any, which would be due to Tenants, if such deposits were
withdrawn on the date of closing, or make arrangements to
transfer the accounts in which such deposits are maintained to
Purchaser (in either case, less any permissible administrative
expenses, the aggregate amount of which shall, in the case of a
transfer of accounts, be apportioned as of the date of closing);
(v) an instrument duly executed and acknowledged
by Seller in which Seller assigns to Purchaser, to the extent
transferable and in effect on the date of closing, all of
Seller's right, title and interest in and to all existing
licenses and permits held by Seller and relating to Seller's
ownership or operation of the Premises (but expressly without
warranty or representation by Seller that it has any rights in
the foregoing which are transferable), which assignment may be
general in nature;
(vi) a form letter, addressed to the Tenants and
executed by Seller, advising such Tenants of the conveyance of
the Premises and the transfer of their security and similar
deposits to Purchaser, directing them to pay rent to a person and
at an address designated by
Page 21
<PAGE>
Purchaser and containing such other
information as may be required in accordance with New York law;
(vii) all records and files relating to the
operation and maintenance of the Premises in Seller's possession
or under Seller's control. Such records and files shall include
(to the extent available) but not be limited to counterparts of
the Leases and Service Contracts and a copy of any transferable
permits or licenses;
(viii) all other instruments and documents,
including a statement of adjustments, to be executed,
acknowledged where appropriate and/or delivered by Seller to
Purchaser pursuant to any of the other provisions of this
Contract; and
(ix) any and all keys to the Premises in Seller's
possession.
(b) In connection with the conveyance of the Premises
by Seller to Purchaser, Purchaser shall deliver to Seller or the
Title Company, as the case may be, the following:
(i) an instrument or counterparts of the
instrument described in clause (ii) of subparagraph (a) hereof,
duly executed and acknowledged by Purchaser, in which Purchaser
assumes and agrees to observe and perform all of the obligations
of Seller under the Leases described in said clause which arise
on and after the date of closing and to indemnify Seller in
respect thereof;
(ii) an instrument or counterparts of the
instrument described in clause (iii) of subparagraph (a) hereof,
duly executed and acknowledged by Purchaser, in which Purchaser
assumes and agrees to observe and perform all of the obligations
of Seller under the Service Contracts described in said clause,
if any, which arise on and after the date of closing and to
indemnify Seller in respect thereof;
(iii) an instrument or counterparts of the
instrument described in clause (iv) of subparagraph (a) hereof,
duly executed and acknowledged by Purchaser, in which Purchaser
acknowledges receipt of, and agrees to indemnify Seller, from and
after the date of closing, in respect of, the deposits assigned
to Purchaser pursuant to said clause;
(iv) if Purchaser is a partnership, a certificate
executed by a general partner of Purchaser certifying that such
general partner has been duly authorized by all requisite
partnership action to enter into the within transaction, and to
execute, acknowledge and deliver on behalf of Purchaser this
Contract and the documents contemplated hereby (and if such
general partner shall be a corporation, that all required
corporate actions, including consents of shareholders, if
required, necessary to authorize the execution and delivery of
this Contract and the other documents contemplated hereby, shall
have been performed and obtained), together with a copy of
Purchaser's Certificate and/or Agreement of Limited Partnership
evidencing the authority of the general partner, certified as
true, correct and complete by said general partner;
(v) if Purchaser is a corporation, certified
resolutions of the Board of Directors of Purchaser and, if
required, consent of the shareholders of Purchaser, authorizing
the purchase of the Premises by Purchaser and the execution and
delivery of this Contract and the other documents contemplated
hereby and such other proof of Purchaser's right, power and
authority to acquire the premises from Seller on the terms and
conditions of this Contract as Seller may reasonably require; and
Page 22
<PAGE>
(vi) all other instruments and documents,
including a statement of adjustments, to be executed,
acknowledged where appropriate and/or delivered by Purchaser to
Seller and Purchaser shall pay or cause to be paid to Seller all
sums of money to which Seller may be entitled pursuant to any of
the other provisions of this Contract.
LAKE GROVE ASSOCIATES CORP.
(Seller)
By: /s/ Allan Green
-------------------
Name: Allan Green
Title: President
HOME PROPERTIES OF NEW YORK, L.P.
(Purchaser)
BY: Home Properties of New York, Inc.,
a general partner
By: /s/ Norman Leenhouts
--------------------
Name: Norman Leenhouts
Title: Chairman
ESCROW AGENT:
/s/ Miles A. Epps
-----------------
MILES A. EPPS
Page 23
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
HOME PROPERTIES OF NEW YORK, INC.
COMPUTATION OF PER SHARE EARNINGS SCHEDULE
(In Thousands, Except Shares and Per Share Data)
Years Ended
--------------------------
08/04/94
December 31, December 31, Through
1996 1995 12/31/94
<S> <C> <C> <C>
Primary Shares
Outstanding:
Weighted average number of 5,601,027 5,408,474 5,408,230
shares outstanding
Net effect of dilutive 31,097 - -
stock options (1) --------- --------- ---------
TOTAL 5,632,124 5,408,474 5,408,230
========= ========= =========
Fully-diluted Shares
Outstanding:
Weighted average number of
shares outstanding 5,601,027 5,408,474 5,408,230
Net effect of dilutive 105,617 - -
stock options(1) --------- --------- ---------
TOTAL 5,706,644 5,408,474 5,408,230
========= ========= =========
Income before $4,147 $4,045 $2,385
extraordinary item
Extraordinary item - (1,249) (2,498)
--------- --------- ---------
Net income (loss) $4,147 $2,796 ($113)
========= ========= =========
Primary Earnings Per Share
(2):
Income before $.74 $.75 $.44
extraordinary item
Extraordinary item - ($.23) ($.46)
--------- --------- ---------
Net income (loss) $.74 $.52 ($.02)
========= ========= =========
Fully-diluted Earnings Per
Share (3):
Income before $.73 $.75 $.44
extraordinary item
Extraordinary item - ($.23) ($.46)
--------- --------- ---------
Net income (loss) $.73 $.52 ($.02)
========= ========= =========
</TABLE>
(1) The net effect is based upon the treasury stock method using
average market prices during the periods presented for the
primary amounts, and the higher of the average market prices
or the market price at year-end for the fully-diluted
amounts.
(2) Primary earnings per share for the years presented have been
reported on the Company's financial statements based only
upon the shares of common stock outstanding, since the
dilutive effect of the stock options is not considered to be
material.
(3) Since fully-diluted earnings per share are not materially
dilutive, such amounts were not presented in the Company's
financial statements.
<PAGE>
EXHIBIT 21
SUBSIDIARIES
OF
HOME PROPERTIES OF NEW YORK, INC.
as of December 31, 1996
1. Home Properties of New York, L.P.
2. Through Home Properties of New York, L.P. (the "Operating
Partnership"), Home Properties of New York, Inc. has
interests in the following entities:
* The Operating Partnership owns 9,900 shares of non-
voting common stock of Home Properties Management,
Inc., a Maryland corporation. Officers and directors
of Home Properties own 100 shares of voting common
stock of Home Properties Management, Inc. Such shares
represent all of the outstanding common stock of Home
Properties Management.
* The Operating Partnership owns 891 shares of non-voting
common stock of Conifer Realty Corporation, a Maryland
corporation. Officers and directors of Home Properties
own 9 shares of voting stock of Conifer Realty
Corporation. Such shares represent all of the
outstanding common stock of Conifer Realty Corporation.
Page 1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements of Home Properties of New York, Inc. on Forms S-3 (Nos.
33-96004 and 333-13723) of the Home Properties of New York, Inc.
Dividend Reinvestment, Stock Purchase, Resident Stock Purchase
and Employee Stock Purchase Plan, on Form S-8 (No. 33-05705)
relating to the Home Properties of New York, Inc. 1994 Stock Benefit Plan,
as amended, and on Form S-8 (No. 333-12551) relating to the Home Properties
Retirement Savings Plan, of our report dated February 3, 1997, on
our audits of the consolidated financial statements and financial
statement schedule of Home Properties of New York, Inc. as of
December 31, 1996 and 1995, for the years ended December 31, 1996
and 1995 and the period from August 4, 1994 through December 31,
1994, and the combined financial statements and financial
statement schedule of the Original Properties for the period from
January 1, 1994 through August 3, 1994, which report is included
in this Annual Report on Form 10-K. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Rochester, New York
March 26, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Home Properties of New York, Inc. on
Form S-3 (No. 333-2674) of our report dated February 3, 1997,
on our audits of the consolidated financial statements of Home
Properties of New York, Inc. as of December 31, 1996 and 1995,
for the years ended December 31, 1996 and 1995 and the period
from August 4, 1994 through December 31, 1994, and the combined
financial statements of the Original Properties for the period
from January 1, 1994 through August 3, 1994, which report is
included in the Annual Report on Form 10-K. We also consent to
the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Rochester, New York
March 26, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Home Properties of New York, Inc. on
Form S-3 (No. 333-2672) of our report dated February 3, 1997,
on our audits of the consolidated financial statements of Home
Properties of New York, Inc. as of December 31, 1996 and 1995,
for the years ended December 31, 1996 and 1995 and the period
from August 4, 1994 through December 31, 1994, and the combined
financial statements of the Original Properties for the period
from January 1, 1994 through August 3, 1994, which report is
included in the Annual Report on Form 10-K. We also consent to
the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Rochester, New York
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
HOME PROPERTIES OF NEW YORK, INC.'S FINANCIAL STATEMENTS CONTAINED IN
ITS DECEMBER 31, 1996 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,523
<SECURITIES> 0
<RECEIVABLES> 2,185
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 261,773
<DEPRECIATION> 40,237
<TOTAL-ASSETS> 248,631
<CURRENT-LIABILITIES> 0
<BONDS> 104,915
0
0
<COMMON> 61
<OTHER-SE> 82,969
<TOTAL-LIABILITY-AND-EQUITY> 248,631
<SALES> 0
<TOTAL-REVENUES> 45,670
<CGS> 0
<TOTAL-COSTS> 31,418
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,208
<INCOME-PRETAX> 5,044
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,147
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,147
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
