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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 3, 1997
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13136 16-1455126
(State or other (Commission file (I.R.S. Employer
jurisdiction of number) Identification
incorporation or Number)
organization
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(Address of principal executive offices)
Registrant's telephone number,
including area code: (716) 546-4900
Not applicable
(Former name or former address, if changed since last report)
Consecutive No. Page 1 of 5
Exhibit Index at Page 5
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HOME PROPERTIES OF NEW YORK, INC.
CURRENT REPORT
ON FORM 8-K
Item 2. Acquisition of Assets.
Home Properties of New York, L.P. (the "Operating Partnership"),
a New York limited partnership, or entities owned by the
Operating Partnership purchased, in unrelated transactions, two
multifamily residential properties. Collectively, these
acquisitions are deemed "significant acquisitions" pursuant to
the regulations of the Securities and Exchange Commission
governing the reporting of transactions under the Current Report
on Form 8-K.
Home Properties of New York, Inc. (the "Company") is the sole
general partner and holder of approximately sixty-seven percent
of the limited partnership interests in the Operating
Partnership.
Lake Grove Apartments. On February 3, 1997, the Operating
Partnership acquired Lake Grove Apartments, a 368 unit apartment
community located in the Village of Lake Grove, Town of
Brookhaven on Long Island, New York. Lake Grove Apartments was
96% occupied at the time of acquisition. The community was
purchased from Lake Grove Associates Corp. The purchase price
was $19 million, which was financed under the Operating
Partnership's line of credit, which bears interest at 175 basis
points over the 30-day LIBOR rate. The Purchase and Sale
Agreement relating to the Lake Grove Apartments was filed as an
exhibit to the Company's Report on Form 10-K for the period
ending December 31, 1996.
Royal Gardens Apartments. On May 28, 1997, the Operating
Partnership acquired 99.9% of the general partnership interests
in Royal Gardens I and Royal Gardens II, New Jersey general
partnerships that own the Royal Gardens Apartments, a 550-unit
community located in Piscataway, New Jersey. The Company
acquired the other .10% interest. The Royal Gardens was
constructed from 1967 to 1969 and was 97% occupied at the time of
acquisition. The purchase price was $19.5 million and was paid
by the issuance to the former partners of Royal Gardens I and
Royal Gardens II of 579,407 limited partnership units in the
Operating Partnership valued at $21.50 per Unit and the balance
by assuming the existing financing on the property. The existing
financing consists of two loans: (a) one having a principal
balance of approximately $5.1 million that bears interest at 8%
and matures in January, 1998; and (b) the other having a
principal balance of approximately $1.9 million that bears
interest at 7.5% and matures in November, 2005. The existing
lender has proposed an increase in the financing to $12 million
with interest at LIBOR plus 125 basis points and a 5 year
maturity. The Operating Partnership anticipates closing on this
refinancing within 60 days.
None of the above sellers were affiliated with the Operating
Partnership, the Company, any directors or officers of the
Company or any affiliates of any such director or officer.
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The two properties were previously operated as multifamily
apartment properties, and it is the intent of the Company and the
Operating Partnership to continue to operate them as multifamily
apartment communities.
The purchase prices were negotiated with the sellers and based on
an internal analysis by the Company of the historical cash flows
and fair market values of the properties.
Item 5. Other Events
At their annual meeting held on May 6, 1997, the shareholders of
the Company approved an amendment to the Company's Stock Benefit
Plan to increase the number of shares issuable thereunder to non-
employee directors by 100,000 and to make additional changes in
light of changes in Rule 16b-3 promulgated by the Securities and
Exchange Commission. Immediately following the shareholders'
meeting the Company awarded each of the non-employee directors
options to purchase 3,500 shares of the Company's Common Stock at
a purchase price of $22.75 per share.
Also at their annual meeting, the shareholders of the Company
approved the issuance of up to 5,000,000 shares of the Company's
Common Stock in one or more private placements or public offering
upon such terms and conditions as may be approved from time to
time by the Board of Directors. The Company has no current
arrangements for the sale of the additional shares.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of the business acquired:
Financial statements for the interests and properties
acquired and noted in Item 2 are not available at this time and
will be filed by amendment as soon as practicable, but not later
than 60 days from the date this Form 8-K must be filed.
b. Pro Forma Financial Information:
Pro forma Financial Statements of the Company
reflecting the interests and properties acquired and noted in
Item 2 are not available at this time and will be filed by
amendment as soon as practicable, but not later than 60 days from
the date this Form 8-K must be filed.
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c. Exhibits:
Exhibit 2.1 - Agreement among Home Properties of New
York, L.P. and Philip J. Solondz, Daniel Solondz and Julia
Weinstein relating to Royal Gardens I, together with Amendment
No. 1
Exhibit 2.2 - Agreement among Home Properties of New
York, L.P. and Philip J. Solondz and Daniel Solondz relating to
Royal Gardens II, together with Amendment No. 1
Exhibit 2.3 - Amended and Restated Stock Benefit Plan
of Home Properties of New York, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
HOME PROPERTIES OF NEW YORK, INC.
(Registrant)
Date: June 6, 1997
By: /s/ David P. Gardner
--------------------------------
David P. Gardner
Vice President
Chief Financial Officer and
Treasurer
Date: June 6, 1997
By: /s/ Norman Leenhouts
--------------------------------
Norman Leenhouts
Chairman of the Board of Directors
Co-Chief Executive Officer and Director
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HOME PROPERTIES OF NEW YORK, INC.
EXHIBIT INDEX
Location
--------
Exhibit 2.1
Agreement among Home Properties of New York, L.P.
and Philip J. Solondz, Daniel Solondz and
Julia Weinstein relating to Royal Gardens I,
together with Amendment No. 1 Pages to
Exhibit 2.2
Agreement among Home Properties of New
York, L.P. and Philip J. Solondz and
Daniel Solondz relating to Royal Gardens II,
together with Amendment No. 1 Pages to
Exhibit 2.3
Amended and Restated Stock Benefit Plan
of Home Properties of New York, Inc. Pages to
Note: Omitted Schedules and Exhibits to the foregoing will be
supplied upon request.
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Exhibit 2.1
AMENDMENT NO. ONE
TO
AGREEMENT
WHEREAS, Philip J. Solondz, Daniel Solondz and Julia Weinstein
(the "Contributing Partners") entered into an agreement, dated
April 8, 1997, (the "Agreement') with Home Properties of New
York, L.P. ("Home Properties') and Home Properties of New York,
Inc. ("REIT") whereby the Contributing Partners, subject to the
terms and conditions of the Agreement, agreed to transfer their
interests in Royal Gardens I to Home Properties; and
WHEREAS, the parties hereto wish to amend certain of the terms of
the Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. Any capitalized terms used herein and not defined shall have
the meaning given them in the Agreement.
2. Paragraph 2 of the Agreement shall be amended in its
entirety to read as follows:
"2. Consideration for Contribution. In consideration
of the contribution by Contributing Partners to Home
Properties of the RGI Interests, Home Properties agrees
to transfer to Contributing Partners Units having, in
the aggregate, a Market Value (as hereinafter defined)
as of the Closing Date (hereinafter defined) equal to
$8,721,818 less the principal balance of the mortgage
(the "First Union Mortgage") encumbering the RGI Real
Property on the Closing Date (the "Net Real Property
Value"). Notwithstanding the above, each of the
Contributing Partners may elect, upon written notice to
Home Properties given by the electing Contributing
Partner on or before the end of the Due Diligence
Period (hereinafter defined), to receive cash up to his
or her percentage interest in RGI multiplied by the Net
Real Property Value.
Contributing Partners represent that: (i) attached
hereto as Exhibit B are true and complete copies of the
First Union Mortgage and the promissory note secured
thereby; and (ii) the First Union Mortgage is in good
standing at this time and will not be in default on the
Closing Date.
For the purpose of determining the number of Units to
be issued to Contributing Partners, the "Market Value"
of a Unit shall be equal to $21.50 per Unit."
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The initial distribution payable with respect to the Units shall
be made on the date on which the REIT pays the dividend to the
holders of its common stock that relates to the earnings for the
calendar quarter in which the Units were issued and shall be pro-
rated such that the Contributing Partners receiving Units shall
receive a pro-rata distribution for the period from the date on
which the Units were issued to and including the last day of the
calendar quarter in which the Units were issued.
At the election of any Contributing Partner, to be given by
Contributing Partners to Home Properties on or before the end of
the Due Diligence Period, Home Properties shall execute such
documents and take such actions as are reasonably required by
such Contributing Partner, all such actions to be at no cost or
expense to Home Properties, as shall permit such Contributing
Partner to recast the transaction contemplated under this
agreement as a tax free exchange under Section 1031 of the
Internal Revenue Code of an interest in the RGI Real Property in
whole or in part."
3. The following sentence shall be added at the end of
Paragraph 24 of the Agreement: "For purposes of determining the
number of Units to be placed in escrow, the "Market Value" of a
Unit shall be $21.50."
4. Subparagraph (h) of Paragraph 25, clause (i) which begins on
page 27, and carries over to page 28 is hereby deleted and the
following is substituted therefor:
"(i) their aggregate built-in gain determined in accordance
with the principles set forth in Section 704(c) of the
Internal Revenue Code of 1986 ("Code") is $8,004,190
assuming the RGI Real Property has a fair market value of
$8,721,818 as of the date of the contribution(s) to Home
Properties;"
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment this 28th day of May, 1997.
/s/ Philip J. Solondz
________________________________
Philip J. Solondz
/s/ Daniel Solondz
________________________________
Daniel Solondz
/s/ Julia Weinstein
________________________________
Julia Weinstein
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HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
/s/ Ann M. McCormick
By: _______________________________
Ann M. McCormick
Vice President
HOME PROPERTIES OF NEW YORK, INC.
/s/ Ann M. McCormick
By: ________________________________
Ann M. McCormick
Vice President
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AGREEMENT
THIS AGREEMENT, made this 8th day of April, 1997, by
and between PHILIP J. SOLONDZ, DANIEL SOLONDZ and JULIA
WEINSTEIN, all having an office at 968 Stuyvesant Avenue, Union,
New Jersey 07063 (collectively, the "Contributing Partners"), and
HOME PROPERTIES OF NEW YORK, L.P., a New York limited
partnership, having an office at 850 Clinton Square, Rochester,
New York 14604 ("Home Properties") and HOME PROPERTIES OF NEW
YORK, INC., a Maryland real estate investment trust, having an
office at 850 Clinton Square, Rochester, New York 14604 ("REIT").
W I T N E S S E T H:
WHEREAS, Contributing Partners are the owners of all of
the partnership interests (the "RGI Interests") in Royal Gardens
I, a New Jersey general partnership ("RGI"), each Contributing
Partner owning a one-third RGI Interest; and
WHEREAS, RGI is the fee owner of a certain residential
apartment complex, located in the Town of Piscataway, New Jersey,
consisting of 246 apartment units known as a portion of Royal
Gardens Apartments, as more particularly described on Exhibit A
attached hereto (the "RGI Real Property"); and
WHEREAS, Contributing Partners each desire to
contribute to Home Properties all of their RGI Interests, and to
each receive from Home Properties limited partnership units in
Home Properties (the "Units"); and
WHEREAS, Home Properties desires to receive the RGI
Interests, and to issue to Contributing Partners Units evidencing
ownership by Contributing Partners of limited partnership
interests in Home Properties;
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NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual
covenants hereinafter contained, the parties hereto agree as
follows:
1. Contribution of Interests. Contributing Partners
each agree to contribute to Home Properties all of the right,
title and interest of Contributing Partners in RGI, which
Contributing Partners represent and warrant are all of the
outstanding partnership interests in RGI.
2. Consideration for Contribution. In consideration
of the contribution by Contributing Partners to Home Properties
of the RGI Interests, Home Properties agrees to transfer to
Contributing Partners Units (the "Closing Units") having, in the
aggregate, a Market Value (as hereinafter defined) as of the
Closing Date (hereinafter defined) equal to $9,169,090, less the
principal balance of the mortgage (the "First Union Mortgage")
encumbering the RGI Real Property on the Closing Date (the "Net
Real Property Value"). Notwithstanding the above, each of the
Contributing Partners may elect, upon written notice to Home
Properties given by the electing Contributing Partner on or
before the end of the Due Diligence Period (hereinafter defined),
to receive cash up to his or her percentage interest in RGI
multiplied by the Net Real Property Value.
Contributing Partners represent that (i) attached
hereto as Exhibit B are true and complete copies of the First
Union Mortgage and the promissory note secured thereby, and
(ii) the First Union Mortgage is in good standing at this time
and will not be in default on the Closing Date.
For the purpose of determining the number of Units to
be issued to Contributing Partners, the "Market Value" of a Unit
shall be equal to the average closing price for the five (5)
consecutive trading days prior to (i) the Closing Date or (ii)
other dates on which the Market
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Value is to be determined, of a share of the common stock of Home
Properties of New York, Inc. (the "REIT"), as listed on the New
York Stock Exchange. In the event that the number of Units to be
transferred to Contributing Partners at Closing as determined
above multiplied by the then annual per share dividend of the
REIT shares on the Closing Date and then divided by the Net Real
Property Value is less than .08, Contributing Partners shall be
entitled to additional Units ("Additional Units") from Home
Properties at Closing, determined as follows: (i) the Net Real
Property Value shall be multiplied by .08; (ii) the number of the
Units determined above shall be multiplied by the annual REIT per
share dividend rate on the Closing Date; (iii) the difference
between the products in (i) and (ii) shall be divided by the
Market Value of a Unit on the Closing Date; and (iv) the quotient
thus obtained shall be multiplied by three (3), and the product
thus obtained shall be the Additional Units to be transferred to
Contributing Partners on the Closing Date.
In the event that on the date which is the third
anniversary of the Closing Date, the number of Closing Units
transferred to Contributing Partners at Closing multiplied by the
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annual per share dividend rate of the REIT shares on such
anniversary date and then divided by the Net Real Property Value
is less than .08, Contributing Partners shall be entitled to
additional Units from Home Properties, determined as follows:
(i) the Net Real Property Value shall be multiplied by .08; (ii)
the number of Closing Units received at Closing shall be
multiplied by the then annual REIT per share dividend rate; (iii)
the difference between the products in (i) and (ii) shall be
divided by the then Market Value of a Unit, and the product thus
obtained shall be the Additional Units to be transferred to
Contributing Partners on such anniversary date.
In the event that on the date which is the fourth
anniversary of the Closing Date, the number of Closing Units
transferred to Contributing Partners at Closing multiplied by the
annual per share dividend rate of the REIT shares on such
anniversary date and then divided by the Net Real Property Value
is less than .08, Contributing Partners shall be entitled to
additional Units from Home Properties, determined as follows:
(i) the Net Real Property Value shall be multiplied by .08; (ii)
the number of Closing Units shall be multiplied by the then
annual REIT per share dividend rate; and (iii) the difference
between the products in (i) and (ii) shall be divided by the then
Market Value of a Unit, and the product thus obtained shall be
the Additional Units to be transferred to Contributing Partners
on such anniversary date.
The Additional Units received by Contributing Partners
shall not be included within the definition of Closing Units.
Appropriate adjustments shall be made to the above
calculations if any event occurs with respect to the REIT common
stock as described in Section 1.18 of the Limited Partnership
Agreement of Home Properties of New York, L.P., dated August 4,
1994 ("Limited Partnership Agreement").
Examples of the foregoing calculations are attached
hereto as Exhibit C.
The initial distribution payable with respect to the
Closing Units and Additional Units shall be made on the date on
which the REIT pays the dividend to the holders of its common
stock that relates to the earnings for the calendar quarter in
which the Units were issued and shall be pro-rated such that the
Contributing Partners receiving Units shall receive a pro-rata
distribution for the period from the date on which the Units were
issued to and including the last day of the calendar quarter in
which the Units were issued.
At the election of any Contributing Partner, to be
given by Contributing Partners to Home Properties on or before
the end of the Due Diligence Period, Home Properties shall
execute such documents and take such actions as are reasonably
required by such Contributing
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Partner, all such actions to be at no cost or expense to Home
Properties, as shall permit such Contributing Partner to recast
the transaction contemplated under this agreement as a tax free
exchange under Section 1031 of the Internal Revenue Code of an
interest in the RGI Real Property in whole or in part.
3. Deposit. The sum of One Hundred Thousand
($100,000.00) Dollars shall be paid by Home Properties at the
time of the execution and delivery of this Agreement, by check
accepted subject to collection, which sum shall be held in escrow
by Contributing Partners' attorneys, Lasser Hochman L.L.C. (the
"Escrowee") (such sum is hereinafter referred to as the
"Deposit"). The Deposit shall be returned to Home Properties at
the Closing (hereinafter defined). If this Agreement is
terminated by reason of Home Properties' default, the Deposit
shall be paid over to Contributing Partners. If this Agreement
is terminated for any other cause, the Deposit shall be refunded
to Home Properties.
Escrowee shall place the Deposit in an interest bearing
account. In the event this transaction is consummated, the
interest earned on the Deposit shall be the property of Home
Properties (interest earned on the Deposit shall also be included
within the term "Deposit"). If this transaction does not close,
interest earned on the Deposit shall be paid to the party
entitled to payment of the Deposit. Except in connection with
the Closing, Escrowee shall make no distribution of the Deposit
except upon three (3) days' prior written notice to the parties.
If either party shall protest such distribution, Escrowee shall
continue to hold the Deposit until the dispute is finally
resolved by the parties or by a court of competent jurisdiction.
The function of Escrowee is as an accommodation to the parties
and no liability shall attach to or against Escrowee for any
action taken by it in good faith and believed by it to be
authorized or within the rights or powers conferred upon it by
this agreement. Home Properties agrees that Escrowee
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shall be permitted to represent Contributing Partners in any
litigation concerning the Deposit or this Agreement,
notwithstanding its function as escrow agent hereunder.
4. Due Diligence Period. (a) Home Properties shall
have a period of forty-five (45) days from the date hereof (the
"Due Diligence Period"), to investigate, review and inspect any
and all matters relating to the RGI Real Property which Home
Properties shall deem appropriate. Not by way of limitation,
Home Properties, and its engineers, contractors and other
representatives may inspect the RGI Real Property and the
equipment therein, including the roofs, walls, foundations,
heating ventilation and air-conditioning systems, plumbing
systems and electrical systems thereof. Home Properties shall
also have the right to inspect the financial records of RGI
relating to the RGI Real Property, including lease and mortgage
documentation. All inspections of the RGI Real Property or the
financial records of RGI shall take place during normal business
hours, and on not less than two (2) days' advance notice thereof.
Home Properties shall permit a representative of Contributing
Partners to be present at any such inspection. In the event Home
Properties shall determine that it is not satisfied with the
physical condition of the RGI Real Property, or with the
financial results of the operation of the RGI Real Property, or
with any other matter relating to the RGI Real Property as a
result of its inspection, Home Properties shall have the right to
terminate this agreement by written notice to Contributing
Partners, setting forth the cause for such termination, given
prior to the expiration of the Due Diligence Period in which
event the Deposit shall be returned to Home Properties within
three (3) business days and neither party shall have any further
rights or liabilities hereunder thereafter. In the event that
Home Properties does not terminate this Agreement within the Due
Diligence Period as hereinabove provided, Home Properties shall
be deemed to have waived its right to terminate pursuant to this
Paragraph 4.
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(b) Contributing Partners shall provide access by Home
Properties' representatives to all financial and other
information relating to RGI as is sufficient to enable them to
prepare audited financial statements, at Home Properties'
expense, in conformity with Regulation S-X of the Securities and
Exchange Commission (the "Commission") and any registration
statement, report or disclosure statement required to be filed
with the Commission. Except as provided in a letter
substantially in the form attached hereto as Exhibit D,
Contributing Partners shall not be required to certify the
accuracy of its financial information, and the financial
statements produced by Home Properties shall not constitute
representations or warranties of Contributing Partners to Home
Properties, the Commission or to the public.
5. Title Search. Contributing Partners agree to
provide to Home Properties the most recent title insurance policy
and survey of the RGI Real Property in the possession of
Contributing Partners. Home Properties agrees to promptly obtain
at Home Properties' cost and expense a title report of the RGI
Real Property from a New Jersey licensed title insurance company
selected by Home Properties (the "Title Company") and a survey of
the RGI Real Property by a licensed New Jersey surveyor and to
furnish a copy of such title report and survey to Contributing
Partners promptly after Home Properties receives the same, but in
no event later than forty-five (45) days from the date hereof.
If Home Properties deems anything in such title report or survey
to constitute an objection to title of RGI in the RGI Real
Property, then Home Properties shall give notice thereof to
Contributing Partners, specifying such objection. If
Contributing Partners elect not to cure any such objection, or in
the event Contributing Partners are unable to cure any such
objection within sixty (60) days from Home Properties' notice
thereof, Home Properties' sole right shall be to terminate this
Agreement on written notice to Contributing Partners within five
(5) days after Contributing Partners shall notify Home
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Properties that they do not elect to cure such objection, or that
they are unable to cure same, in which event the Deposit shall be
returned to Home Properties, and no party shall have any further
rights or liabilities hereunder or against each other thereafter;
provided however, that if Home Properties shall not so terminate
this Agreement, Home Properties shall accept the RGI Interests
without reduction or abatement of the consideration set forth
above. It is distinctly understood and agreed that Contributing
Partners and/or RGI shall not be required to bring any action or
proceeding, take any steps, or otherwise incur any expense to
remove or cure such title defect or otherwise render RGI's title
to the RGI Real Property marketable. If Home Properties fails to
give Contributing Partners notice of any matter it deems to be
an objection to title by the date forty five (45) days from the
date hereof (time being of the essence with respect to such
date), such matter shall not be deemed an objection to RGI's
title to the RGI Real Property.
The following shall not be deemed to be title defects
rendering RGI's title to the RGI Real Property unmarketable:
a. Zoning ordinances and other applicable
governmental regulations and requirements, provided none of the
same prevent use of the RGI Real Property as a multiple dwelling
for residential purposes;
b. Rights of the public and adjoining owners in
highways, streets, roads and lanes bounding the Property;
c. Retaining walls and other walls, bushes, trees,
hedges, fences and the like extending from or onto the RGI Real
Property, and any portion of the RGI Real Property lying in the
bed of any public street, provided none of same prevent or
materially restrict use of the RGI Real Property as a multiple
dwelling for residential purposes;
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d. Rights and easements relating to the construction,
operation, and maintenance of utility lines, wires, cables,
pipes, poles, distribution boxes and other such equipment in, on,
over, or under the RGI Real Property, provided none of same
prevent or materially restrict use of the RGI Real Property as a
multiple dwelling for residential purposes;
e. Liens for unpaid taxes, assessments, water charges
and sewer rents, subject to adjustment as set forth in this
Agreement;
f. Standard conditions and exceptions to title
guaranty contained in the currently effective ALTA Owner's
Standard Form Owner's Title Insurance Policy;
g. Such state of facts which a current and accurate
survey of the RGI Real Property might disclose, provided none of
same prevent or materially restrict the use of the RGI Real
Property as a multiple dwelling for residential purposes;
h. Residential Tenancies as hereinafter provided;
i. The present physical condition of the RGI Real
Property, and all improvements thereon, and any changes that may
result in such condition from reasonable wear and tear and
natural deterioration prior to Closing;
j. Easements of record, provided none of same prevent
or materially restrict use of the RGI Real Property as a multiple
dwelling for residential purposes;
k. Restrictions of record, provided none of same
prevent or materially restrict use of the RGI Real Property as a
multiple dwelling for residential purposes; and
l. Matters set forth on Exhibit E attached hereto.
6. Residential Tenancies. The title of RGI to the
RGI Real Property at Closing shall be subject to the rights of
persons who are currently residential tenants of the RGI Real
Property set forth on Exhibit F attached hereto, and persons who
shall hereafter become
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residential tenants of the RGI Real Property in accordance with
this Paragraph 6 (herein referred to as the "Residential
Tenancies"). Contributing Partners shall furnish to Home
Properties at the Closing an updated rent roll for the RGI Real
Property, which rent roll will include a schedule of security
deposits. It is distinctly understood and agreed that
Contributing Partners do not undertake or guarantee that the
Residential Tenancies existing on the date hereof will be in
force and effect at Closing, and Home Properties agrees that the
removal or vacation of tenants prior to Closing shall not give
rise to any claim on the part of Home Properties or affect this
Agreement in any manner whatsoever. Contributing Partners shall
have the right, but not the obligation, to cause RGI to institute
summary proceedings or take such other legal action as it desires
in the event of any default or failure of a tenant of the RGI
Real Property to perform under its lease prior to Closing. RGI
may not apply the security deposit of any tenant who is in
default under his lease prior to Closing if such tenant is still
in occupancy of his or her apartment unit on the Closing Date.
Contributing Partners may cause RGI to rent any
apartment now vacant or which may become vacant between the date
hereof and the Closing, or modify or renew any existing
Residential Tenancy, providing that the rent charged shall not be
less than the prior rent for such apartment and the term shall
not exceed one year.
Contributing Partners represent the following:
a. Exhibit F attached hereto accurately sets forth
with respect to each Residential Tenancy the name of the tenant,
the monthly rental payable by such tenant as of February 1, 1997,
and the security deposit held by RGI with respect to such tenant.
In the event any rent information on Exhibit F shall be
inaccurate, Contributing Partners' obligation with respect to
this representation shall be to pay to Home Properties any rents
which shall be less
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than represented to the extent of such deficiency to the end of
the lease represented, and Contributing Partners shall not be
liable for consequential damages as a result of the inaccuracy of
this representation.
b. Attached as Exhibit G is the form of lease
generally employed by RGI with respect to the Residential
Tenancies.
c. Contributing Partners shall cause RGI to continue
to operate the RGI Real Property in a commercially reasonable
manner until Closing.
d. To the best of Contributing Partners' knowledge,
there is no litigation, proceeding or investigation pending, or
threatened against or affecting RGI, the RGI Real Property or
Contributing Partners that might adversely affect this Agreement,
RGI or the RGI Real Property, or the operation thereof, except as
described on Exhibit H hereof.
7. Service Contracts. Contributing Partners
represent the following:
a. Set forth on Exhibit I is a description of all of
the service contracts with respect to the RGI Real Property (the
"Service Contracts").
b. The copies of the Service Contracts delivered to
Home Properties are true and complete copies.
Between the date hereof and Closing, Contributing
Partners may cause RGI to modify, extend or terminate any
existing Service Contract or enter into any new Service Contract
or with Home Properties' prior consent except if same is
terminable without cause and without penalty upon not more than
one (1) months' prior notice in which case not such consent shall
be required.
8. Employees. Contributing Partners represent that
the employees of RGI are as set forth on Exhibit J and the
salaries and other employee benefits paid to such employees are
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set forth on Exhibit J. The foregoing representation shall
survive Closing for a period of six (6) months.
9. Personal Property. All personal property and
supplies owned by RGI and used in the operation and maintenance
of the RGI Real Property and at Closing located at the RGI Real
Property (hereinafter referred to as the "Personal Property")
shall remain the property of RGI after the Closing and shall be
in "as is" condition as of the Closing Date. The Personal
Property of RGI includes, but is not limited to, the property
described in the list attached hereto as Exhibit K.
10. Representations Limited. Home Properties affirms
that Contributing Partners have not made nor has Home Properties
relied upon any representation, warranty or promise made by
Contributing Partners or any broker, with respect to the RGI Real
Property or its physical condition, income, expenses, operation
or use, other than as specifically set forth in this Agreement.
As hereinabove provided, Home Properties is being given an
opportunity to investigate the RGI Real Property and Personal
Property owned by RGI, the income and expenses of the RGI Real
Property, and such other matters as it deems necessary or
appropriate. HOME PROPERTIES UNDERSTANDS AND AGREES THAT IF HOME
PROPERTIES ELECTS TO PROCEED WITH THIS TRANSACTION FOLLOWING ITS
INVESTIGATIONS AS AFORESAID, THE RGI REAL PROPERTY AT CLOSING
SHALL BE IN ITS "AS IS" CONDITION ON THE DATE HEREOF, SUBJECT TO
REASONABLE USE, WEAR AND TEAR, AND NORMAL DEPRECIATION BETWEEN
THE DATE HEREOF AND THE CLOSING DATE. It is expressly understood
and agreed that Contributing Partners have no duty to disclose
any condition affecting the RGI Real Property or any equipment,
fixtures or personal property therein, whether such condition is
apparent or latent, or known or unknown
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to Contributing Partners. Home Properties agrees that any and
all financial information, leasing information or other
information of any kind with respect to the RGI Real Property
which Home Properties has received or may receive from
Contributing Partners, or any of Contributing Partners' employees
or agents, or any broker, was furnished on the express condition
that Home Properties make an independent verification of the
accuracy of any and all such information, and Contributing
Partners shall not be responsible for any errors or omissions in
such information.
11. The Closing. The consummation of the transaction
contemplated by this Agreement (the "Closing") shall take place
at the offices of Lasser Hochman, L.L.C., 75 Eisenhower Parkway,
Roseland, New Jersey, at ten o'clock in the forenoon, on or
before the date which shall be sixty (60) days following the date
hereof (the "Closing Date"). The following shall take place at
the Closing:
a. Contributing Partners shall deliver to Home
Properties an assignment (the "RGI Assignment") of their RGI
Interests free and clear of all liens and encumbrances.
b. Home Properties shall deliver to Contributing
Partners an assignment of the Units (the "HP Assignment")
determined in accordance with paragraph 2 hereof. In the event
any Contributing Partner elects to receive cash in lieu of some
or all Units, Home Properties shall pay same to such Contributing
Partner by good certified check, or official check of a banking
institution, or at the option of such Contributing Partner, by
wire transfer of immediately available federal funds to an
account designated by such Contributing Partner.
c. Contributing Partners shall execute such documents
as shall be required to designate representatives of Home
Properties as the signatories on the security deposit account
maintained by RGI.
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d. Contributing Partners shall deliver to Home
Properties the title to the truck owned by RGI.
e. Any management agreement relating to the RGI Real
Property shall be terminated at Closing.
f. The parties shall execute and deliver to each
other any other instruments required to be delivered under any
provision of this Agreement, or reasonably requested by the Title
Company or the attorney for any party in connection with this
transaction.
g. Contributing Partners shall provide Home
Properties with such information and documentation as Home
Properties may reasonably request in order to establish that each
of the Contributing Partners is an accredited investor as
required under Federal and State Securities Laws.
12. Adjustments at Closing. The following adjustments
are to be made at the Closing as of the close of business on the
date of Closing:
a. The rents of the RGI Real Property actually
collected by RGI at the date of Closing shall be apportioned
between Contributing Partners and RGI for the benefit of Home
Properties based upon the number of days of the month each of
them holds the RGI Interests. Home Properties agrees to use good
faith efforts after Closing to collect any delinquent rentals
owed to RGI for the benefit of Contributing Partners. Rents
collected after Closing shall be applied first to the current
month, then to the most recent arrearage, then to the next recent
arrearage and so forth. Any rents collected after Closing which
are applicable to arrearages which arose during Contributing
Partners' period of ownership of the RGI Interests shall be
forthwith paid by Home Properties to Contributing Partners. If
Home Properties fails to collect any rents due to be paid to
Contributing Partners within sixty (60) days following Closing,
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Contributing Partners may proceed to collect same from the
tenants in their own names or in the name of the then current
landlord of the RGI Real Property. A credit shall be given to
Home Properties for discounts or other incentives given to
current tenants, except that no adjustment shall be made at
Closing for rent concessions to tenants attributable to the month
in which the Closing occurs.
b. There shall also be adjusted and apportioned
between Contributing Partners and RGI for the benefit of Home
Properties the following: (i) real estate taxes on the basis of
the fiscal year for which assessed; (ii) water charges; (iii)
sewer rents; (iv) gas; (v) electric; (vi) fuel based on a current
written fuel company statement (at cost); (vii) unopened building
supplies (at cost); (viii) payroll and accrued vacation pay; (ix)
social security and unemployment payments; (x) any amounts
prepaid with respect to any Service Contracts retained after
Closing; and (xi) any other items customarily adjusted between
parties in closings of multifamily residential properties in
northern New Jersey. If the Closing shall occur before the
annual tax rate is fixed, the apportionment of real estate taxes
shall be upon the basis of the tax rate for the next preceding
year applied to the latest valuation of the RGI Real Property.
The parties shall further adjust the real estate taxes for the
year of Closing once the annual taxes for such year are finally
determined.
c. Assessments for public improvements, if any, shall
be paid by Contributing Partners if the improvement has been
completed on or before the date hereof, but only to the extent of
any installments due and payable prior to Closing.
d. Any adjustment error (either due to a
miscalculation or a receipt or invoice received after Closing)
shall be corrected subsequent to the Closing Date with
appropriate credits to be given based on corrected adjustments.
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13. Destruction of the RGI Real Property. In the
event that the RGI Real Property shall be destroyed or damaged by
reason of fire, storm, accident or other casualty, and the cost
of repair thereof shall exceed the sum of One Hundred Thousand
($100,000.00) Dollars in the aggregate, either party shall have
the option to terminate this Agreement on written notice to the
other party given within ten (10) business days after such
casualty, whereupon the Deposit shall be returned to Home
Properties and no party shall have any further rights or
liabilities hereunder thereafter. If neither party terminates
this Agreement, or if the cost of repair of the damage does not
exceed One Hundred Thousand and 00/100 ($100,000.00) Dollars in
the aggregate, Contributing Partners shall cause RGI to repair
such damage, or grant to RGI for the benefit of Home Properties
an appropriate reduction of the consideration paid by Home
Properties at Closing.
14. Violations; Certificate of Occupancy. Home
Properties agrees that on the Closing Date the RGI Real Property
shall be subject to all notes or notices of violation of law or
municipal ordinances, orders or requirements now or prior to
Closing issued by any governmental agency or authority.
Contributing Partners and/or RGI shall not be required to repair
or otherwise comply with any violations affecting the RGI Real
Property, whether now existing or hereafter occurring.
Contributing Partners represent that they have not received any
notes or notices of any such violations.
In the event that a certificate of occupancy or other
like governmental permit is required to transfer the RGI
Interests, Home Properties agrees to apply for same and to pay
any application fee required for same. If any governmental
agency requires the correction of physical conditions of the RGI
Real Property as a condition to issuance of such certificate,
Home Properties shall make such correction and pay the costs of
same.
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15. Condemnation. In the event that the entire RGI
Real Property or a substantial part thereof shall have been taken
by eminent domain, or shall be in the process of being so taken,
on the Closing Date, either party shall have the option to
terminate this agreement on written notice to the other party,
whereupon the Escrowee shall return the Deposit to Home
Properties and no party shall have any further rights or
liabilities hereunder or against the other party. In the event
any such taking shall not include a substantial part of the RGI
Real Property or in the event that neither party shall terminate
this Agreement in accordance with this Paragraph 15, Home
Properties shall accept the RGI Real Property in the condition in
which it is left following such taking, with an abatement of the
consideration measured by the proceeds of any condemnation award
collected by Contributing Partners. In the event the award has
not been collected by Contributing Partners at the time of
Closing, Contributing Partners shall assign to Home Properties at
Closing all rights of Contributing Partners and RGI in the
collection of such award and Home Properties shall accept the RGI
Real Property without abatement of the consideration.
16. Environmental Laws. Contributing Partners
represent and warrant that RGI has not received notice of any
violation or claimed violation of any law, rule or regulation
relating to hazardous substances with respect to the RGI Real
Property. For the purpose of this Agreement, "hazardous
substances" means, without limitation, any radioactive material,
polychlorinated biphenyl, petroleum or petroleum product,
methane, hazardous materials, hazardous wastes, hazardous or
toxic substances, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. section 9601 et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Appendix Sections 1801,
et seq.), the Resource Conservation and Recovery Act, as amended
(42
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U.S.C. Sections 6901, et seq.) and the Toxic Substances Control
Act, as amended (15 U.S.C. Sections 2601, et seq.), or any other
state or federal environmental laws and regulations promulgated
thereunder. Contributing Partners shall contemporaneously with
the execution of this Agreement cause RGI to deliver to Home
Properties documentation regarding the removal of oil tanks from
the RGI Property.
17. No Brokerage. Contributing Partners represent to
Home Properties and Home Properties represents to Contributing
Partners that it did not deal with any real estate broker in
connection with this transaction. This representation shall
survive Closing. Contributing Partners and Home Properties agree
to indemnify the other and hold the other harmless from and
against all damages and expenses that the indemnified party may
incur as a result of any claim of any broker who dealt with the
indemnifying party.
18. Home Properties' Default. If Home Properties
shall default in the payment of the balance of purchase price or
shall otherwise default in the performance of any of the other
terms and provisions of this Agreement on the part of Home
Properties to be performed, Contributing Partners shall retain as
liquidated damages the Deposit paid by Home Properties hereunder
and neither party shall have any further liability hereunder to
each other thereafter.
19. Liability of Contributing Partners. The liability
of Contributing Partners hereunder in the event of default in the
performance of any of the terms and provisions of this Agreement
on the part of Contributing Partners to be performed is hereby
limited to the return of the Deposit to Home Properties. The
foregoing shall not limit Home Properties' right to obtain
specific performance of Contributing Partners' obligation to
contribute the RGI Interests pursuant to this Agreement.
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20. Notices. All notices, requests, consents,
approvals or other communications under this Agreement shall be
in writing and delivered personally or mailed by certified mail,
return receipt requested, postage prepaid, or delivered by
overnight commercial courier (e.g., Federal Express, United
Parcel Service), addressed
a. If to Seller, at:
c/o Daniel Solondz
968 Stuyvesant Avenue
Union, New Jersey 07063
with a copy to:
Irving C. Marcus, Esq.
Lasser Hochman, L.L.C.
75 Eisenhower Parkway
Roseland, New Jersey 07068
b. If to Purchaser, at:
Home Properties of New York, L.P.
850 Clinton Square
Rochester, New York 14604
Attn: Mr. Norman Leenhouts
with a copy to:
Ann McCormick, Esq.
Home Properties, Inc.
850 Clinton Square
Rochester, New York 14604
Any party may, by notice given as aforesaid, change its address
for all subsequent notices. All notices hereunder shall be
effective upon receipt of same.
21. Merger. Except as otherwise provided herein, the
acceptance of an assignment of the RGI Interests by Home
Properties shall be deemed to be a full performance by
Contributing Partners of, and shall discharge Contributing
Partners from, all obligations
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hereunder; and Contributing Partners shall have no liability
hereunder thereafter to Home Properties. In the event that it
shall appear prior to Closing that any representation of
Contributing Partners shall be materially inaccurate or untrue,
the sole right of Home Properties shall be either to waive such
representation and close or terminate this Agreement. In the
event of such termination, the Deposit shall be returned to Home
Properties, and neither party shall have any further rights or
liabilities hereunder. The representations of Contributing
Partners herein shall survive Closing for a period of six (6)
months only.
22. Further Assurances. Each of the parties hereby
agrees to execute, acknowledge, and deliver such other documents
or instruments as the other may reasonably require from time to
time to carry out the purposes of this Agreement.
23. Miscellaneous Provisions. The parties further
agree as follows:
a. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
b. This Agreement contains the entire agreement
between the parties, and may not be modified or changed except by
an agreement in writing executed by the parties hereto.
c. The captions herein are for convenience and
reference only and in no way define, limit or describe the scope
or intent of this Agreement or affect any of the terms or
provisions hereof.
d. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
e. Home Properties agrees that it will not register,
record or file this Agreement or any memorandum thereof.
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f. This Agreement shall be governed by the laws of
the State of New Jersey.
g. This Agreement shall not be construed for or
against any party by reason of the fact that Contributing
Partners' attorney drafted this Agreement.
24. Pre-Contribution Partnership Liabilities and
Assets. Home Properties agrees to assume only those liabilities
of RGI and the RGI Real Property as are specifically described
herein; provided however, Home Properties specifically does not
assume any liabilities relating to litigation pending or
threatened against RGI or its assets, as of the date hereof or
the Closing. The transaction is being structured as the
contribution of the RGI Interests to Home Properties which will
then own all of the partnership interests in RGI. Home
Properties will therefore have no entity to look to with respect
to any liabilities of RGI that Home Properties has not agreed to
assume or with respect to the breach of any of Contributing
Partners' representations or warranties contained in this
Agreement. To secure those obligations, each of the Contributing
Partners shall place in escrow Units having a Market Value of
$75,000.00 for a period of one hundred twenty (120) days
following the Closing substantially on the terms of the Escrow
Agreement executed and delivered at the Closing.
Home Properties acknowledges and agrees that the assets
of RGI will consist solely of the RGI Real Property, the Personal
Property, security deposits of tenants and Residential Tenancies
on the Closing Date and any other asset of RGI shall be
distributed to the Contributing Partners prior to the
contribution of the RGI Interest to Home Properties.
If the assets and liabilities of RGI are not as
provided herein on the Closing Date, appropriate post-closing
adjustments shall be made by the parties.
25. Tax Matters and Other Agreements. (a) Home
Properties represents that: (i) it is duly formed and in good
standing as a limited partnership of the State of New York, and
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is or will be at the date of Closing authorized to do business in
the State of New Jersey; (ii) the REIT is the general partner of
Home Properties; (iii) the Limited Partnership Agreement,
delivered to Contributing Partners, is a true and complete copy
thereof, and there have been no amendments thereto, except
numbers one through ten, true copies of which have been delivered
to the Contributing Partners; (iv) the execution, delivery and
performance of all obligations of Home Properties under this
Agreement and all writings related hereto have been duly
authorized by Home Properties and will not conflict with the
Limited Partnership Agreement, as amended, or the certificate of
limited partnership of Home Properties or with any provision of
any agreement to which Home Properties or the REIT is a party or
by which either is bound; (v) no consent or approval of or
notification to any person (including, without limitation, the
limited partners of Home Properties) or governmental authority is
required in connection with the execution, delivery and
performance by Home Properties of this Agreement or any writing
relating hereto or the consummation of the transaction
contemplated hereby or thereby; (vi) this Agreement and all
writings related hereto have been duly executed and delivered by
Home Properties and each constitutes a valid and binding
obligation of Home Properties enforceable against Home Properties
in accordance with their respective terms, except (A) that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors rights, and (B) that the remedy
of specific performance and injunction and other forms of
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may
be brought; (vii) all reports of the REIT required to be filed
pursuant to the Securities Exchange Act of 1934 ("Securities
Act") have been filed and are true and correct in all material
respects and contain no material omission; and (viii) there is no
action, proceeding or investigation
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pending, or to the best knowledge of Home Properties, threatened
against Home Properties or the REIT before any court or
administrative agency, that might result, either individually or
in the aggregate in any material adverse change in the business,
prospects, condition, affairs, operations, properties or assets
of Home Properties or the REIT or any material liability on the
part of Home Properties or the REIT.
(b) Home Properties represents that the Units to be
issued to Contributing Partners hereunder have been duly
authorized for issuance to Contributing Partners, and upon such
issuance, will be validly issued, fully paid and non-assessable,
free and clear of all liens, encumbrances, restrictions and
claims of every kind.
(c) At any time and from time to time after the
Closing, Home Properties agrees to exchange each Unit at the
request of a Contributing Partner for cash equal to the Market
Value (as defined in the Limited Partnership Agreement) of one
share of common stock of the REIT at the time of such exchange,
provided that Home Properties may elect to exchange any such Unit
presented to Home Properties for one share of common stock of the
REIT. Upon exchange of Units for common stock of the REIT, the
shares of common stock of the REIT issued to a Contributing
Partner shall be validly issued, fully paid and non-assessable,
free and clear of all liens, encumbrances, restrictions and
claims of every kind and the Contributing Partner so exchanging
for REIT common stock shall be deemed, for all purposes, to be a
holder of such common stock on the date sixty (60) business days
following written notice to Home Properties of the Contributing
Partner's desire to exchange for such common stock. Sufficient
shares of common stock of the REIT shall be reserved by
appropriate corporate action in connection with the conversion of
Units into shares hereunder. The issuance of the shares to
Contributing Partners shall not be subject to pre-emptive rights,
rights of first refusal or other
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preferential contractual rights of the REIT or any stockholder of
the REIT or any other person and will not conflict with any
provision of any agreement to which the REIT is a party or by
which it is bound or the articles of incorporation or bylaws of
the REIT. In the event Home Properties elects to give REIT
common stock in exchange, such stock shall be subject to demand
registration rights as provided in the agreement attached hereto
as Exhibit L.
(d) Home Properties agrees that it shall make cash
distributions to the Contributing Partners for each Unit equal to
the dividend paid by the REIT to its stockholders for each share
of common stock of the REIT (subject to adjustment as provided
below). Such payment shall be made contemporaneously with the
payment of the dividend by the REIT to its stockholders.
(e) (i) If any event any event occurs with respect to
the REIT common stock, as described in Section 1.18 of the
Limited Partnership Agreement, the number of shares of REIT
common stock to be taken into account in determining cash
distributions as provided in subsection (d) above shall be
appropriately adjusted.
(ii) Home Properties represents that as of the
date hereof and the Closing, the Conversion Factor (as defined in
the Limited Partnership Agreement) is and shall be 1.0.
(iii) Upon the occurrence of each adjustment
or readjustment pursuant to this subsection, the REIT at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Contributing
Partner a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The REIT shall, upon the
written request, at any time, of any Contributing Partner,
furnish or cause to be furnished to such Contributing
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Partner, a like certificate setting forth; (i) such adjustments
and readjustments; and (ii) the number of shares of REIT common
stock and the amount, if any, of other property that at the time
would be received upon the exchange of the Units and the cash
distribution to be made in accordance with Subsection (d).
(f) Anything herein to the contrary notwithstanding,
at any time following Closing, in the event a Contributing
Partner may determine that he or she desires to exchange some or
all of its Units for real property of Home Properties in
redemption of its Units, Home Properties, in its sole discretion,
may decline to distribute any Home Properties real property
requested by the Contributing Partner, and the Contributing
Partner in his or her sole discretion, may decline to accept any
Home Properties real property offered by Home Properties. In the
event that Contributing Partner and Home Properties are unable to
agree upon existing real property owned by Home Properties to be
distributed to Contributing Partner, the Contributing Partner may
designate other real property for sale by a third party which he
or she desires to acquire as a distribution from Home Properties.
In such event, Home Properties shall acquire such real property
designated by Contributing Partner and convey such real property
to Contributing Partner as a distribution in redemption of some
or all of his or her Units. If Contributing Partner shall desire
that real property designated by him or her to be acquired by
Home Properties and distributed to Contributing Partner be
encumbered by debt of such type and amount so that the
Contributing Partners can minimize or eliminate recognition of
income resulting from such distribution, Home Properties shall
cooperate with the Contributing Partner's reasonable requests to
achieve such objective, provided that any costs or expenses
incurred by Home Properties in extending such cooperation shall
be reimbursed by the Contributing Partner upon Home Properties
making such distribution. The parties mutually agree to treat
such
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transaction for tax reporting purposes in such a way to reduce
the tax consequences of the transaction and will endeavor to
report the transaction consistently with each other to the extent
allowed by law. In case of property for sale by a third party
and designated by the Contributing Partner, the cash portion of
the purchase price for such real property shall be equal to the
then Market Value of that portion of the Contributing Partner's
Units proposed to be redeemed as of the date such Units are
redeemed, unless the Contributing Partner pays the difference in
the cash portion of the purchase price above the value of the
Units of Contributing Partner proposed to be redeemed. Upon the
request of Home Properties, the Contributing Partner desiring to
exchange Unit for real property shall loan to Home Properties,
provided that Home Properties shall provide adequate security for
said loan reasonably acceptable to said Contributing Partner, the
entire cash portion of the purchase price in connection with a
purchase of real estate from a third party. Such loan shall bear
interest at a rate equal to the dividend yield on the Unit at the
time of the making of such loan and such loan shall be repaid
within 90 days of the making of such loan. In no event shall
Home Properties be required to provide cash for such purchases to
the extent it shall be required to advance more than the total of
$5,000,000 in any calendar year together with the cash
requirement to be advanced under Paragraph 25(f) under the
Related Contribution Agreement (hereinafter defined) on account
of the cash portion of the purchase price, whether such cash is
raised through loans from the Contributing Partners or otherwise.
Any mortgage loan encumbering the real property purchased by Home
Properties shall be non-recourse, and the Contributing Partner
shall indemnify Home Properties against any liability or expenses
resulting from the acquisition and distribution of such real
property.
(g) In furtherance of Contributing Partners'
contributions to the capital of Home Properties or to otherwise
minimize Contributing Partners' tax liabilities, Contributing
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Partners shall each guaranty indebtedness of Home Properties in
the amount elected by Contributing Partners at Closing or
thereafter. Each Contributing Partner's guaranty shall provide
that (i) it shall be enforced only after due diligence and
reasonable legal means to collect from Home Properties have been
used for the purpose of satisfying Home Properties' indebtedness,
and (ii) shall be released upon exchange of the Units for common
stock of the REIT or sale, redemption or other disposition of the
Units by Contributing Partners, or a distribution of property to
the Contributing Partners set forth in subparagraph (d) above.
In the event that Contributing Partners' obligations under the
guaranty shall terminate under the terms of the Guaranty, Home
Properties shall promptly provide Contributing Partners written
notice of such termination.
(h) As a partner contributing interests in a
partnership in exchange for a limited partnership interest in
Home Properties, Contributing Partners will receive annually from
Home Properties Form 1065, Schedule K-1, Partner's Share of
Income, Credit, Deductions, etc. This form will also be part of
the tax return, Form 1065, filed by Home Properties with the
Internal revenue Service. Home Properties represents that the
Schedule K-1 submitted to Contributing Partners for use in the
preparation of their tax returns will reflect the allocation to
Contributing Partners as partners of a share of non-recourse
liabilities in accordance with Reg. Sec. 1.752-3 under the
Internal Revenue Code, such that the Contributing Partners shall
recognize no income upon the contribution of the RGI Interests to
Home Properties, and for the period of time that Contributing
Partners retain Units except to the extent cash distributions
from Home Properties to a Contributing Partner, as described in
Section 25(d) hereof, exceeds such Contributing Partner's basis
in his or her Home Properties partnership interest. The
Contributing Partners represent that, as of December 31, 1996:
(i) their aggregate built in gain
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determined in accordance with the principles set forth in Section
704(c) of the Internal Revenue Code of 1986 ("Code") is
$8,451,462 assuming the RGI Real Property has a fair market value
of $9,169,090 as of the date of the contribution(s) to Home
Properties; (ii) the amount of nonrecourse debt encumbering the
RGI Real Property is $5,174,178; (iii) their aggregate capital
accounts with respect to RGI is ($4,456,550).
(i) In the event that any Contributing Partner shall
transfer any of the Units, Home Properties shall arrange for the
delivery of an amendment to the guaranty pursuant to which the
amount of the Contributing Partner's guaranty shall thereafter be
allocated among the Contributing Partners and their transferees
based on the relative number of Units they hold after the
transfer.
(j) Home Properties agrees that for the period that
any of the Contributing Partners own the Units, Home Properties
shall not restructure such Contributing Partner's share of Home
Properties debt in such manner as to cause a reduction in the
amount of Contributing Partners' share of non-recourse debt
allocable to and encumbering the RGI Real Property without
Contributing Partners' prior written consent which may be
arbitrarily withheld. In the event that Home Properties takes
any such action, Home Properties shall indemnify and save
harmless the Contributing Partners from and against any federal
and state income tax liability, including but not limited to (i)
income taxes suffered as a result of all payments made under this
subsection (including this subsection (j)(i)) and (ii) interest,
penalties and the reasonable fees of attorneys and accountants.
(k) Home Properties shall not sell, exchange or
otherwise dispose of the RGI Real Property in a transaction which
results in the recognition of income to Contributing Partners
under Section 704(c) of the Internal Revenue Code of 1986 (the
"Code") or otherwise
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("Disposition Gain"). In the event that Home Properties shall
dispose of the RGI Real Property in violation of the foregoing
restriction, Home Properties shall indemnify and save harmless
Contributing Partners from any federal and state income tax
liability suffered by it including but not limited to (i) income
taxes suffered as a result of all payments made under this
subsection (including this subsection l(k)) and (ii) interest,
penalties and the reasonable fees of attorneys and accountants.
(l) Home Properties will not make any allocations
curative, remedial or otherwise, pursuant to the Treasury
Regulations under Section 704(c) of the Code with respect to the
RGI Real Property, intended to eliminate distortions caused by
the ceiling rule.
(m) The obligations set forth in this Article shall
survive the Closing.
26. Contingency. The consummation of this transaction
is contingent upon the simultaneous consummation of the
transaction set forth in the agreement of even date between
Philip J. Solondz and Daniel Solondz, and Home Properties with
respect to Royal Gardens II, a New Jersey general partnership
(the "Related Contribution Agreement").
27. Interpretation. If any of the terms and
provisions of this agreement shall conflict with those of the
Limited Partnership Agreement, the terms and provisions of this
agreement shall be controlling.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
/S/ Philip J. Solondz
------------------------------
PHILIP J. SOLONDZ
/s/ Daniel Solondz
------------------------------
DANIEL SOLONDZ
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<PAGE>
/s/ Julia S. Weinstein
------------------------------
JULIA WEINSTEIN
HOME PROPERTIES OF NEW YORK, L.P.
By: HOME PROPERTIES OF NEW
YORK, INC., General Partner
/s/ Ann M. McCormick
By: ------------------------------
ANN M. McCORMICK
VICE PRESIDENT
HOME PROPERTIES OF NEW YORK, INC.
/s/ Ann M. McCormick
By: ------------------------------
ANN M. McCORMICK
VICE PRESIDENT
Page 30
<PAGE>
Exhibit 2.2
AMENDMENT NO. ONE
TO
AGREEMENT
WHEREAS, Philip J. Solondz and Daniel Solondz (the "Contributing
Partners") entered into an agreement, dated April 8, 1997, (the
"Agreement') with Home Properties of New York, L.P. ("Home
Properties') and Home Properties of New York, Inc. ("REIT")
whereby the Contributing Partners, subject to the terms and
conditions of the Agreement, agreed to transfer their interests
in Royal Gardens II to Home Properties; and
WHEREAS, the parties hereto wish to amend certain of the terms of
the Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. Any capitalized terms used herein and not defined shall have
the meaning given them in the Agreement.
2. Paragraph 2 of the Agreement shall be amended in its
entirety to read as follows:
"2. Consideration for Contribution. In consideration
of the contribution by Contributing Partners to Home
Properties of the RGII Interests, Home Properties
agrees to transfer to Contributing Partners Units
having, in the aggregate, a Market Value (as
hereinafter defined) as of the Closing Date
(hereinafter defined) equal to $10,778,182 less the
principal balance of the mortgage (the "First Union
Mortgage") encumbering the RGII Real Property on the
Closing Date (the "Net Real Property Value").
Notwithstanding the above, each of the Contributing
Partners may elect, upon written notice to Home
Properties given by the electing Contributing Partner
on or before the end of the Due Diligence Period
(hereinafter defined), to receive cash up to his or her
percentage interest in RGII multiplied by the Net Real
Property Value.
Contributing Partners represent that: (i) attached
hereto as Exhibit B are true and complete copies of the
First Union Mortgage and the promissory note secured
thereby; and (ii) the First Union Mortgage is in good
standing at this time and will not be in default on the
Closing Date.
For the purpose of determining the number of Units to
be issued to Contributing Partners, the "Market Value"
of a Unit shall be equal to $21.50 per Unit."
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<PAGE>
The initial distribution payable with respect to the Units shall
be made on the date on which the REIT pays the dividend to the
holders of its common stock that relates to the earnings for the
calendar quarter in which the Units were issued and shall be pro-
rated such that the Contributing Partners receiving Units shall
receive a pro-rata distribution for the period from the date on
which the Units were issued to and including the last day of the
calendar quarter in which the Units were issued.
At the election of any Contributing Partner, to be given by
Contributing Partners to Home Properties on or before the end of
the Due Diligence Period, Home Properties shall execute such
documents and take such actions as are reasonably required by
such Contributing Partner, all such actions to be at no cost or
expense to Home Properties, as shall permit such Contributing
Partner to recast the transaction contemplated under this
agreement as a tax free exchange under Section 1031 of the
Internal Revenue Code of an interest in the RGII Real Property in
whole or in part."
3. The following sentence shall be added at the end of
Paragraph 24 of the Agreement: "For purposes of determining the
number of Units to be placed in escrow, the "Market Value" of a
Unit shall be $21.50."
4. Subparagraph (h) of Paragraph 25, clause (i) which begins on
page 27, and carries over to page 28 is hereby deleted and the
following is substituted therefor:
"(i) their aggregate built-in gain determined in accordance
with the principles set forth in Section 704(c) of the
Internal Revenue Code of 1986 ("Code") is $10,066,217
assuming the RGII Real Property has a fair market value of
$10,778,182 as of the date of the contribution(s) to Home
Properties;"
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment this 28th day of May, 1997.
/s/ Philip J. Solondz
----------------------------
Philip J. Solondz
/s/ Daniel Solondz
----------------------------
Daniel Solondz
Page 2
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HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
/s/ Ann M. McCormick
By: _______________________________
Ann M. McCormick
Vice President
HOME PROPERTIES OF NEW YORK, INC.
/s/ Ann M. McCormick
By: ________________________________
Ann M. McCormick
Vice President
Page 3
<PAGE>
AGREEMENT
THIS AGREEMENT, made this 8th day of April, 1997, by
and between PHILIP J. SOLONDZ and DANIEL SOLONDZ, both having an
office at 968 Stuyvesant Avenue, Union, New Jersey 07063
(collectively, the "Contributing Partners"), and HOME PROPERTIES
OF NEW YORK, L.P., a New York limited partnership, having an
office at 850 Clinton Square, Rochester, New York 14604 ("Home
Properties") and HOME PROPERTIES OF NEW YORK, INC., a Maryland
real estate investment trust, having an office at 850 Clinton
Square, Rochester, New York 14604 ("REIT").
W I T N E S S E T H:
WHEREAS, Contributing Partners are the owners of all of
the partnership interests (the "RGII Interests") in Royal Gardens
II, a New Jersey general partnership ("RGII"), each Contributing
Partner owning a one-half RGII Interest; and
WHEREAS, RGII is the fee owner of a certain residential
apartment complex, located in the Town of Piscataway, New Jersey,
consisting of 304 apartment units known as a portion of Royal
Gardens Apartments, as more particularly described on Exhibit A
attached hereto (the "RGII Real Property"); and
WHEREAS, Contributing Partners each desire to
contribute to Home Properties all of their RGII Interests, and to
each receive from Home Properties limited partnership units in
Home Properties (the "Units"); and
WHEREAS, Home Properties desires to receive the RGII
Interests, and to issue to Contributing Partners Units evidencing
ownership by Contributing Partners of limited partnership
interests in Home Properties;
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<PAGE>
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual
covenants hereinafter contained, the parties hereto agree as
follows:
1. Contribution of Interests. Contributing Partners
each agree to contribute to Home Properties all of the right,
title and interest of Contributing Partners in RGII, which
Contributing Partners represent and warrant are all of the
outstanding partnership interests in RGII.
2. Consideration for Contribution. In consideration
of the contribution by Contributing Partners to Home Properties
of the RGII Interests, Home Properties agrees to transfer to
Contributing Partners Units (the "Closing Units") having, in the
aggregate, a Market Value (as hereinafter defined) as of the
Closing Date (hereinafter defined) equal to $11,330,910 less the
principal balance of the mortgage (the "First Union Mortgage")
encumbering the RGII Real Property on the Closing Date (the "Net
Real Property Value"). Notwithstanding the above, each of the
Contributing Partners may elect, upon written notice to Home
Properties given by the electing Contributing Partner on or
before the end of the Due Diligence Period (hereinafter defined),
to receive cash up to his or her percentage interest in RGII
multiplied by the Net Real Property Value.
Contributing Partners represent that (i) attached
hereto as Exhibit B are true and complete copies of the First
Union Mortgage and the promissory note secured thereby, and
(ii) the First Union Mortgage is in good standing at this time
and will not be in default on the Closing Date.
For the purpose of determining the number of Units to
be issued to Contributing Partners, the "Market Value" of a Unit
shall be equal to the average closing price for the five (5)
consecutive trading days prior to (i) the Closing Date or (ii)
other dates on which the Market
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<PAGE>
Value is to be determined, of a share of the common stock of Home
Properties of New York, Inc. (the "REIT"), as listed on the New
York Stock Exchange. In the event that the number of Units to be
transferred to Contributing Partners at Closing as determined
above multiplied by the then annual per share dividend of the
REIT shares on the Closing Date and then divided by the Net Real
Property Value is less than .08, Contributing Partners shall be
entitled to additional Units ("Additional Units") from Home
Properties at Closing, determined as follows: (i) the Net Real
Property Value shall be multiplied by .08; (ii) the number of the
Units determined above shall be multiplied by the annual REIT per
share dividend rate on the Closing Date; (iii) the difference
between the products in (i) and (ii) shall be divided by the
Market Value of a Unit on the Closing Date; and (iv) the quotient
thus obtained shall be multiplied by three (3), and the product
thus obtained shall be the Additional Units to be transferred to
Contributing Partners on the Closing Date.
In the event that on the date which is the third
anniversary of the Closing Date, the number of Closing Units
transferred to Contributing Partners at Closing multiplied by the
annual per share dividend rate of the REIT shares on such
anniversary date and then divided by the Net Real Property Value
is less than .08, Contributing Partners shall be entitled to
additional Units from Home Properties, determined as follows:
(i) the Net Real Property Value shall be multiplied by .08; (ii)
the number of Closing Units received at Closing shall be
multiplied by the then annual REIT per share dividend rate; (iii)
the difference between the products in (i) and (ii) shall be
divided by the then Market Value of a Unit, and the product thus
obtained shall be the Additional Units to be transferred to
Contributing Partners on such anniversary date.
In the event that on the date which is the fourth
anniversary of the Closing Date, the number of Closing Units
transferred to Contributing Partners at Closing multiplied by the
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<PAGE>
annual per share dividend rate of the REIT shares on such
anniversary date and then divided by the Net Real Property Value
is less than .08, Contributing Partners shall be entitled to
additional Units from Home Properties, determined as follows:
(i) the Net Real Property Value shall be multiplied by .08; (ii)
the number of Closing Units shall be multiplied by the then
annual REIT per share dividend rate; and (iii) the difference
between the products in (i) and (ii) shall be divided by the then
Market Value of a Unit, and the product thus obtained shall be
the Additional Units to be transferred to Contributing Partners
on such anniversary date.
The Additional Units received by Contributing Partners
shall not be included within the definition of Closing Units.
Appropriate adjustments shall be made to the above
calculations if any event occurs with respect to the REIT common
stock as described in Section 1.18 of the Limited Partnership
Agreement of Home Properties of New York, L.P., dated August 4,
1994 ("Limited Partnership Agreement").
Examples of the foregoing calculations are attached
hereto as Exhibit D.
The initial distribution payable with respect to the
Closing Units and Additional Units shall be made on the date on
which the REIT pays the dividend to the holders of its common
stock that relates to the earnings for the calendar quarter in
which the Units were issued and shall be pro-rated such that the
Contributing Partners receiving Units shall receive a pro-rata
distribution for the period from the date on which the Units were
issued to and including the last day of the calendar quarter in
which the Units were issued.
At the election of any Contributing Partner, to be
given by Contributing Partners to Home Properties on or before
the end of the Due Diligence Period, Home Properties shall
execute such documents and take such actions as are reasonably
required by such Contributing
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<PAGE>
Partner, all such actions to be at no cost or expense to Home
Properties, as shall permit such Contributing Partner to recast
the transaction contemplated under this agreement as a tax free
exchange under Section 1031 of the Internal Revenue Code of an
interest in the RGII Real Property in whole or in part.
3. Deposit. The sum of One Hundred Fifty Thousand
($150,000.00) Dollars shall be paid by Home Properties at the
time of the execution and delivery of this Agreement, by check
accepted subject to collection, which sum shall be held in escrow
by Contributing Partners' attorneys, Lasser Hochman L.L.C. (the
"Escrowee") (such sum is hereinafter referred to as the
"Deposit"). The Deposit shall be returned to Home Properties at
the Closing (hereinafter defined). If this Agreement is
terminated by reason of Home Properties' default, the Deposit
shall be paid over to Contributing Partners. If this Agreement
is terminated for any other cause, the Deposit shall be refunded
to Home Properties.
Escrowee shall place the Deposit in an interest bearing
account. In the event this transaction is consummated, the
interest earned on the Deposit shall be the property of Home
Properties (interest earned on the Deposit shall also be included
within the term "Deposit"). If this transaction does not close,
interest earned on the Deposit shall be paid to the party
entitled to payment of the Deposit. Except in connection with
the Closing, Escrowee shall make no distribution of the Deposit
except upon three (3) days' prior written notice to the parties.
If either party shall protest such distribution, Escrowee shall
continue to hold the Deposit until the dispute is finally
resolved by the parties or by a court of competent jurisdiction.
The function of Escrowee is as an accommodation to the parties
and no liability shall attach to or against Escrowee for any
action taken by it in good faith and believed by it to be
authorized or within the rights or powers conferred upon it by
this agreement. Home Properties agrees that Escrowee
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<PAGE>
shall be permitted to represent Contributing Partners in any
litigation concerning the Deposit or this Agreement,
notwithstanding its function as escrow agent hereunder.
4. Due Diligence Period. (a) Home Properties shall
have a period of forty-five (45) days from the date hereof (the
"Due Diligence Period"), to investigate, review and inspect any
and all matters relating to the RGII Real Property which Home
Properties shall deem appropriate. Not by way of limitation,
Home Properties, and its engineers, contractors and other
representatives may inspect the RGII Real Property and the
equipment therein, including the roofs, walls, foundations,
heating ventilation and air-conditioning systems, plumbing
systems and electrical systems thereof. Home Properties shall
also have the right to inspect the financial records of RGII
relating to the RGII Real Property, including lease and mortgage
documentation. All inspections of the RGII Real Property or the
financial records of RGII shall take place during normal business
hours, and on not less than two (2) days' advance notice thereof.
Home Properties shall permit a representative of Contributing
Partners to be present at any such inspection. In the event Home
Properties shall determine that it is not satisfied with the
physical condition of the RGII Real Property, or with the
financial results of the operation of the RGII Real Property, or
with any other matter relating to the RGII Real Property as a
result of its inspection, Home Properties shall have the right to
terminate this agreement by written notice to Contributing
Partners, setting forth the cause for such termination, given
prior to the expiration of the Due Diligence Period in which
event the Deposit shall be returned to Home Properties within
three (3) business days and neither party shall have any further
rights or liabilities hereunder thereafter. In the event that
Home Properties does not terminate this Agreement within the Due
Diligence Period as hereinabove provided, Home Properties shall
be deemed to have waived its right to terminate pursuant to this
Paragraph 4.
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<PAGE>
(b) Contributing Partners shall provide access by Home
Properties' representatives to all financial and other
information relating to RGII as is sufficient to enable them to
prepare audited financial statements, at Home Properties'
expense, in conformity with Regulation S-X of the Securities and
Exchange Commission (the "Commission") and any registration
statement, report or disclosure statement required to be filed
with the Commission. Except as provided in a letter
substantially in the form attached hereto as Exhibit D,
Contributing Partners shall not be required to certify the
accuracy of its financial information, and the financial
statements produced by Home Properties shall not constitute
representations or warranties of Contributing Partners to Home
Properties, the Commission or to the public.
5. Title Search. Contributing Partners agree to
provide to Home Properties the most recent title insurance policy
and survey of the RGII Real Property in the possession of
Contributing Partners. Home Properties agrees to promptly obtain
at Home Properties' cost and expense a title report of the RGII
Real Property from a New Jersey licensed title insurance company
selected by Home Properties (the "Title Company") and a survey of
the RGII Real Property by a licensed New Jersey surveyor and to
furnish a copy of such title report and survey to Contributing
Partners promptly after Home Properties receives the same, but in
no event later than forty-five (45) days from the date hereof.
If Home Properties deems anything in such title report or survey
to constitute an objection to title of RGII in the RGII Real
Property, then Home Properties shall give notice thereof to
Contributing Partners, specifying such objection. If
Contributing Partners elect not to cure any such objection, or in
the event Contributing Partners are unable to cure any such
objection within sixty (60) days from Home Properties' notice
thereof, Home Properties' sole right shall be to terminate this
Agreement on written notice to Contributing Partners within five
(5) days after Contributing Partners shall notify Home
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<PAGE>
Properties that they do not elect to cure such objection, or that
they are unable to cure same, in which event the Deposit shall be
returned to Home Properties, and no party shall have any further
rights or liabilities hereunder or against each other thereafter;
provided however, that if Home Properties shall not so terminate
this Agreement, Home Properties shall accept the RGII Interests
without reduction or abatement of the consideration set forth
above. It is distinctly understood and agreed that Contributing
Partners and/or RGII shall not be required to bring any action or
proceeding, take any steps, or otherwise incur any expense to
remove or cure such title defect or otherwise render RGII's title
to the RGII Real Property marketable. If Home Properties fails
to give Contributing Partners notice of any matter it deems to
be an objection to title by the date forty five (45) days from
the date hereof (time being of the essence with respect to such
date), such matter shall not be deemed an objection to RGII's
title to the RGII Real Property.
The following shall not be deemed to be title defects
rendering RGII's title to the RGII Real Property unmarketable:
a. Zoning ordinances and other applicable
governmental regulations and requirements, provided none of the
same prevent use of the RGII Real Property as a multiple dwelling
for residential purposes;
b. Rights of the public and adjoining owners in
highways, streets, roads and lanes bounding the Property;
c. Retaining walls and other walls, bushes, trees,
hedges, fences and the like extending from or onto the RGII Real
Property, and any portion of the RGII Real Property lying in the
bed of any public street, provided none of same prevent or
materially restrict use of the RGII Real Property as a multiple
dwelling for residential purposes;
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d. Rights and easements relating to the construction,
operation, and maintenance of utility lines, wires, cables,
pipes, poles, distribution boxes and other such equipment in, on,
over, or under the RGII Real Property, provided none of same
prevent or materially restrict use of the RGII Real Property as a
multiple dwelling for residential purposes;
e. Liens for unpaid taxes, assessments, water charges
and sewer rents, subject to adjustment as set forth in this
Agreement;
f. Standard conditions and exceptions to title
guaranty contained in the currently effective ALTA Owner's
Standard Form Owner's Title Insurance Policy;
g. Such state of facts which a current and accurate
survey of the RGII Real Property might disclose, provided none of
same prevent or materially restrict the use of the RGII Real
Property as a multiple dwelling for residential purposes;
h. Residential Tenancies as hereinafter provided;
i. The present physical condition of the RGII Real
Property, and all improvements thereon, and any changes that may
result in such condition from reasonable wear and tear and
natural deterioration prior to Closing;
j. Easements of record, provided none of same prevent
or materially restrict use of the RGII Real Property as a
multiple dwelling for residential purposes;
k. Restrictions of record, provided none of same
prevent or materially restrict use of the RGII Real Property as a
multiple dwelling for residential purposes; and
l. Matters set forth on Exhibit E attached hereto.
6. Residential Tenancies. The title of RGII to the
RGII Real Property at Closing shall be subject to the rights of
persons who are currently residential tenants of the RGII Real
Property set forth on Exhibit F attached hereto, and persons who
shall hereafter become
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residential tenants of the RGII Real Property in accordance with
this Paragraph 6 (herein referred to as the "Residential
Tenancies"). Contributing Partners shall furnish to Home
Properties at the Closing an updated rent roll for the RGII Real
Property, which rent roll will include a schedule of security
deposits. It is distinctly understood and agreed that
Contributing Partners do not undertake or guarantee that the
Residential Tenancies existing on the date hereof will be in
force and effect at Closing, and Home Properties agrees that the
removal or vacation of tenants prior to Closing shall not give
rise to any claim on the part of Home Properties or affect this
Agreement in any manner whatsoever. Contributing Partners shall
have the right, but not the obligation, to cause RGII to
institute summary proceedings or take such other legal action as
it desires in the event of any default or failure of a tenant of
the RGII Real Property to perform under its lease prior to
Closing. RGII may not apply the security deposit of any tenant
who is in default under his lease prior to Closing if such tenant
is still in occupancy of his or her apartment unit on the Closing
Date.
Contributing Partners may cause RGII to rent any
apartment now vacant or which may become vacant between the date
hereof and the Closing, or modify or renew any existing
Residential Tenancy, providing that the rent charged shall not be
less than the prior rent for such apartment and the term shall
not exceed one year.
Contributing Partners represent the following:
a. Exhibit F attached hereto accurately sets forth
with respect to each Residential Tenancy the name of the tenant,
the monthly rental payable by such tenant as of February 1, 1997,
and the security deposit held by RGII with respect to such
tenant. In the event any rent information on Exhibit F shall be
inaccurate, Contributing Partners' obligation with respect to
this representation shall be to pay to Home Properties any rents
which shall be
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less than represented to the extent of such deficiency to the end
of the lease represented, and Contributing Partners shall not be
liable for consequential damages as a result of the inaccuracy of
this representation.
b. Attached as Exhibit G is the form of lease
generally employed by RGII with respect to the Residential
Tenancies.
c. Contributing Partners shall cause RGII to continue
to operate the RGII Real Property in a commercially reasonable
manner until Closing.
d. To the best of Contributing Partners' knowledge,
there is no litigation, proceeding or investigation pending, or
threatened against or affecting RGII, the RGII Real Property or
Contributing Partners that might adversely affect this Agreement,
RGII or the RGII Real Property, or the operation thereof, except
as described on Exhibit H hereof.
7. Service Contracts. Contributing Partners
represent the following:
a. Set forth on Exhibit I is a description of all of
the service contracts with respect to the RGII Real Property (the
"Service Contracts").
b. The copies of the Service Contracts delivered to
Home Properties are true and complete copies.
Between the date hereof and Closing, Contributing
Partners may cause RGII to modify, extend or terminate any
existing Service Contract or enter into any new Service Contract
or with Home Properties' prior consent except if same is
terminable without cause and without penalty upon not more than
one (1) months' prior notice in which case not such consent shall
be required.
8. Employees. Contributing Partners represent that
the employees of RGII are as set forth on Exhibit J and the
salaries and other employee benefits paid to such employees are
set
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forth on Exhibit J. The foregoing representation shall survive
Closing for a period of six (6) months.
9. Personal Property. All personal property and
supplies owned by RGII and used in the operation and maintenance
of the RGII Real Property and at Closing located at the RGII Real
Property (hereinafter referred to as the "Personal Property")
shall remain the property of RGII after the Closing and shall be
in "as is" condition as of the Closing Date. The Personal
Property of RGII includes, but is not limited to, the property
described in the list is attached hereto as Exhibit K.
10. Representations Limited. Home Properties affirms
that Contributing Partners have not made nor has Home Properties
relied upon any representation, warranty or promise made by
Contributing Partners or any broker, with respect to the RGII
Real Property or its physical condition, income, expenses,
operation or use, other than as specifically set forth in this
Agreement. As hereinabove provided, Home Properties is being
given an opportunity to investigate the RGII Real Property and
Personal Property owned by RGII, the income and expenses of the
RGII Real Property, and such other matters as it deems necessary
or appropriate. HOME PROPERTIES UNDERSTANDS AND AGREES THAT IF
HOME PROPERTIES ELECTS TO PROCEED WITH THIS TRANSACTION FOLLOWING
ITS INVESTIGATIONS AS AFORESAID, THE RGII REAL PROPERTY AT
CLOSING SHALL BE IN ITS "AS IS" CONDITION ON THE DATE HEREOF,
SUBJECT TO REASONABLE USE, WEAR AND TEAR, AND NORMAL DEPRECIATION
BETWEEN THE DATE HEREOF AND THE CLOSING DATE. It is expressly
understood and agreed that Contributing Partners have no duty to
disclose any condition affecting the RGII Real Property or any
equipment, fixtures or personal property therein, whether such
condition is apparent or latent,
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or known or unknown to Contributing Partners. Home Properties
agrees that any and all financial information, leasing
information or other information of any kind with respect to the
RGII Real Property which Home Properties has received or may
receive from Contributing Partners, or any of Contributing
Partners' employees or agents, or any broker, was furnished on
the express condition that Home Properties make an independent
verification of the accuracy of any and all such information, and
Contributing Partners shall not be responsible for any errors or
omissions in such information.
11. The Closing. The consummation of the transaction
contemplated by this Agreement (the "Closing") shall take place
at the offices of Lasser Hochman, L.L.C., 75 Eisenhower Parkway,
Roseland, New Jersey, at ten o'clock in the forenoon, on or
before the date which shall be sixty (60) days following the date
hereof (the "Closing Date"). The following shall take place at
the Closing:
a. Contributing Partners shall deliver to Home
Properties an assignment (the "RGII Assignment") of their RGII
Interests free and clear of all liens and encumbrances.
b. Home Properties shall deliver to Contributing
Partners an assignment of the Units (the "HP Assignment")
determined in accordance with paragraph 2 hereof. In the event
any Contributing Partner elects to receive cash in lieu of some
or all Units, Home Properties shall pay same to such Contributing
Partner by good certified check, or official check of a banking
institution, or at the option of such Contributing Partner, by
wire transfer of immediately available federal funds to an
account designated by such Contributing Partner.
c. Contributing Partners shall execute such documents
as shall be required to designate representatives of Home
Properties as the signatories on the security deposit account
maintained by RGII.
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d. Any management agreement relating to the RGII Real
Property shall be terminated at Closing.
e. The parties shall execute and deliver to each
other any other instruments required to be delivered under any
provision of this Agreement, or reasonably requested by the Title
Company or the attorney for any party in connection with this
transaction.
f. Contributing Partners shall provide Home
Properties with such information and documentation as Home
Properties may reasonably request in order to establish that each
of the Contributing Partners is an accredited investor as
required under Federal and State Securities Laws.
12. Adjustments at Closing. The following adjustments
are to be made at the Closing as of the close of business on the
date of Closing:
a. The rents of the RGII Real Property actually
collected by RGII at the date of Closing shall be apportioned
between Contributing Partners and RGII for the benefit of Home
Properties based upon the number of days of the month each of
them holds the RGII Interests. Home Properties agrees to use
good faith efforts after Closing to collect any delinquent
rentals owed to RGII for the benefit of Contributing Partners.
Rents collected after Closing shall be applied first to the
current month, then to the most recent arrearage, then to the
next recent arrearage and so forth. Any rents collected after
Closing which are applicable to arrearages which arose during
Contributing Partners' period of ownership of the RGII Interests
shall be forthwith paid by Home Properties to Contributing
Partners. If Home Properties fails to collect any rents due to
be paid to Contributing Partners within sixty (60) days following
Closing, Contributing Partners may proceed to collect same from
the tenants in their own names or in the name of the then current
landlord of the RGII Real Property. A credit shall be given to
Home
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Properties for discounts or other incentives given to current
tenants, except that no adjustment shall be made at Closing for
rent concessions to tenants attributable to the month in which
the Closing occurs.
b. There shall also be adjusted and apportioned
between Contributing Partners and RGII for the benefit of Home
Properties the following: (i) real estate taxes on the basis of
the fiscal year for which assessed; (ii) water charges; (iii)
sewer rents; (iv) gas; (v) electric; (vi) fuel based on a current
written fuel company statement (at cost); (vii) unopened building
supplies (at cost); (viii) payroll and accrued vacation pay; (ix)
social security and unemployment payments; (x) any amounts
prepaid with respect to any Service Contracts retained after
Closing; and (xi) any other items customarily adjusted between
parties in closings of multifamily residential properties in
northern New Jersey. If the Closing shall occur before the
annual tax rate is fixed, the apportionment of real estate taxes
shall be upon the basis of the tax rate for the next preceding
year applied to the latest valuation of the RGII Real Property.
The parties shall further adjust the real estate taxes for the
year of Closing once the annual taxes for such year are finally
determined.
c. Assessments for public improvements, if any, shall
be paid by Contributing Partners if the improvement has been
completed on or before the date hereof, but only to the extent of
any installments due and payable prior to Closing.
d. Any adjustment error (either due to a
miscalculation or a receipt or invoice received after Closing)
shall be corrected subsequent to the Closing Date with
appropriate credits to be given based on corrected adjustments.
13. Destruction of the RGII Real Property. In the
event that the RGII Real Property shall be destroyed or damaged
by reason of fire, storm, accident or other casualty, and
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<PAGE>
the cost of repair thereof shall exceed the sum of One Hundred
Thousand ($100,000.00) Dollars in the aggregate, either party
shall have the option to terminate this Agreement on written
notice to the other party given within ten (10) business days
after such casualty, whereupon the Deposit shall be returned to
Home Properties and no party shall have any further rights or
liabilities hereunder thereafter. If neither party terminates
this Agreement, or if the cost of repair of the damage does not
exceed One Hundred Thousand and 00/100 ($100,000.00) Dollars in
the aggregate, Contributing Partners shall cause RGII to repair
such damage, or grant to RGII for the benefit of Home Properties
an appropriate reduction of the consideration paid by Home
Properties at Closing.
14. Violations; Certificate of Occupancy. Home
Properties agrees that on the Closing Date the RGII Real Property
shall be subject to all notes or notices of violation of law or
municipal ordinances, orders or requirements now or prior to
Closing issued by any governmental agency or authority.
Contributing Partners and/or RGII shall not be required to repair
or otherwise comply with any violations affecting the RGII Real
Property, whether now existing or hereafter occurring.
Contributing Partners represent that they have not received any
notes or notices of any such violations.
In the event that a certificate of occupancy or other
like governmental permit is required to transfer the RGII
Interests, Home Properties agrees to apply for same and to pay
any application fee required for same. If any governmental
agency requires the correction of physical conditions of the RGII
Real Property as a condition to issuance of such certificate,
Home Properties shall make such correction and pay the costs of
same.
15. Condemnation. In the event that the entire RGII
Real Property or a substantial part thereof shall have been taken
by eminent domain, or shall be in the process of
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<PAGE>
being so taken, on the Closing Date, either party shall have the
option to terminate this agreement on written notice to the
other party, whereupon the Escrowee shall return the Deposit to
Home Properties and no party shall have any further rights or
liabilities hereunder or against the other party. In the event
any such taking shall not include a substantial part of the RGII
Real Property or in the event that neither party shall terminate
this Agreement in accordance with this Paragraph 15, Home
Properties shall accept the RGII Real Property in the condition
in which it is left following such taking, with an abatement of
the consideration measured by the proceeds of any condemnation
award collected by Contributing Partners. In the event the award
has not been collected by Contributing Partners at the time of
Closing, Contributing Partners shall assign to Home Properties at
Closing all rights of Contributing Partners and RGII in the
collection of such award and Home Properties shall accept the
RGII Real Property without abatement of the consideration.
16. Environmental Laws. Contributing Partners
represent and warrant that RGII has not received notice of any
violation or claimed violation of any law, rule or regulation
relating to hazardous substances with respect to the RGII Real
Property. For the purpose of this Agreement, "hazardous
substances" means, without limitation, any radioactive material,
polychlorinated biphenyl, petroleum or petroleum product,
methane, hazardous materials, hazardous wastes, hazardous or
toxic substances, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. section 9601 et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Appendix Sections 1801,
et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901, et seq.) and the Toxic Substances
Control Act, as amended (15 U.S.C. Sections 2601, et seq.), or
any other state or federal environmental laws and regulations
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promulgated thereunder. Contributing Partners shall
contemporaneously with the execution of this Agreement cause RGII
to deliver to Home Properties documentation regarding the removal
of oil tanks from the RGII Property.
17. No Brokerage. Contributing Partners represent to
Home Properties and Home Properties represents to Contributing
Partners that it did not deal with any real estate broker in
connection with this transaction. This representation shall
survive Closing. Contributing Partners and Home Properties agree
to indemnify the other and hold the other harmless from and
against all damages and expenses that the indemnified party may
incur as a result of any claim of any broker who dealt with the
indemnifying party.
18. Home Properties' Default. If Home Properties
shall default in the payment of the balance of purchase price or
shall otherwise default in the performance of any of the other
terms and provisions of this Agreement on the part of Home
Properties to be performed, Contributing Partners shall retain as
liquidated damages the Deposit paid by Home Properties hereunder
and neither party shall have any further liability hereunder to
each other thereafter.
19. Liability of Contributing Partners. The liability
of Contributing Partners hereunder in the event of default in the
performance of any of the terms and provisions of this Agreement
on the part of Contributing Partners to be performed is hereby
limited to the return of the Deposit to Home Properties. The
foregoing shall not limit Home Properties' right to obtain
specific performance of Contributing Partners' obligation to
contribute the RGII Interests pursuant to this Agreement.
20. Notices. All notices, requests, consents,
approvals or other communications under this Agreement shall be
in writing and delivered personally or mailed by
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certified mail, return receipt requested, postage prepaid, or
delivered by overnight commercial courier (e.g., Federal Express,
United Parcel Service), addressed
a. If to Seller, at:
c/o Daniel Solondz
968 Stuyvesant Avenue
Union, New Jersey 07063
with a copy to:
Irving C. Marcus, Esq.
Lasser Hochman, L.L.C.
75 Eisenhower Parkway
Roseland, New Jersey 07068
b. If to Purchaser, at:
Home Properties of New York, L.P.
850 Clinton Square
Rochester, New York 14604
Attn: Mr. Norman Leenhouts
with a copy to:
Ann McCormick, Esq.
Home Properties, Inc.
850 Clinton Square
Rochester, New York 14604
Any party may, by notice given as aforesaid, change its address
for all subsequent notices. All notices hereunder shall be
effective upon receipt of same.
21. Merger. Except as otherwise provided herein, the
acceptance of an assignment of the RGII Interests by Home
Properties shall be deemed to be a full performance by
Contributing Partners of, and shall discharge Contributing
Partners from, all obligations hereunder; and Contributing
Partners shall have no liability hereunder thereafter to Home
Properties. In the event that it shall appear prior to Closing
that any representation of
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Contributing Partners shall be materially inaccurate or untrue,
the sole right of Home Properties shall be either to waive such
representation and close or terminate this Agreement. In the
event of such termination, the Deposit shall be returned to Home
Properties, and neither party shall have any further rights or
liabilities hereunder. The representations of Contributing
Partners herein shall survive Closing for a period of six (6)
months only.
22. Further Assurances. Each of the parties hereby
agrees to execute, acknowledge, and deliver such other documents
or instruments as the other may reasonably require from time to
time to carry out the purposes of this Agreement.
23. Miscellaneous Provisions. The parties further
agree as follows:
a. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
b. This Agreement contains the entire agreement
between the parties, and may not be modified or changed except by
an agreement in writing executed by the parties hereto.
c. The captions herein are for convenience and reference only
and in no way define, limit or describe the scope or intent of
this Agreement or affect any of the terms or provisions hereof.
d. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
e. Home Properties agrees that it will not register,
record or file this Agreement or any memorandum thereof.
f. This Agreement shall be governed by the laws of
the State of New Jersey.
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g. This Agreement shall not be construed for or
against any party by reason of the fact that Contributing
Partners' attorney drafted this Agreement.
24. Pre-Contribution Partnership Liabilities and
Assets. Home Properties agrees to assume only those liabilities
of RGII and the RGII Real Property as are specifically described
herein; provided however, Home Properties specifically does not
assume any liabilities relating to litigation pending or
threatened against RGII or its assets, as of the date hereof or
the Closing. The transaction is being structured as the
contribution of the RGII Interests to Home Properties which will
then own all of the partnership interests in RGII. Home
Properties will therefore have no entity to look to with respect
to any liabilities of RGII that Home Properties has not agreed to
assume or with respect to the breach of any of Contributing
Partners' representations or warranties contained in this
Agreement. To secure those obligations, each of the Contributing
Partners shall place in escrow Units having a Market Value of
$75,000.00 for a period of one hundred twenty (120) days
following the Closing substantially on the terms of the Escrow
Agreement executed and delivered at the Closing.
Home Properties acknowledges and agrees that the assets
of RGII will consist solely of the RGII Real Property, the
Personal Property, security deposits of tenants and Residential
Tenancies on the Closing Date and any other asset of RGII shall
be distributed to the Contributing Partners prior to the
contribution of the RGII Interest to Home Properties.
If the assets and liabilities of RGII are not as
provided herein on the Closing Date, appropriate post-closing
adjustments shall be made by the parties.
25. Tax Matters and Other Agreements. (a) Home
Properties represents that: (i) it is duly formed and in good
standing as a limited partnership of the State of New York, and
is or will be at the date of Closing authorized to do business in
the State of New Jersey; (ii) the
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REIT is the general partner of Home Properties; (iii) the Limited
Partnership Agreement, delivered to Contributing Partners, is a
true and complete copy thereof, and there have been no amendments
thereto, except numbers one through ten, true copies of which
have been delivered to the Contributing Partners; (iv) the
execution, delivery and performance of all obligations of Home
Properties under this Agreement and all writings related hereto
have been duly authorized by Home Properties and will not
conflict with the Limited Partnership Agreement, as amended, or
the certificate of limited partnership of Home Properties or with
any provision of any agreement to which Home Properties or the
REIT is a party or by which either is bound; (v) no consent or
approval of or notification to any person (including, without
limitation, the limited partners of Home Properties) or
governmental authority is required in connection with the
execution, delivery and performance by Home Properties of this
Agreement or any writing relating hereto or the consummation of
the transaction contemplated hereby or thereby; (vi) this
Agreement and all writings related hereto have been duly executed
and delivered by Home Properties and each constitutes a valid and
binding obligation of Home Properties enforceable against Home
Properties in accordance with their respective terms, except (A)
that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors rights, and (B) that the remedy
of specific performance and injunction and other forms of
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may
be brought; (vii) all reports of the REIT required to be filed
pursuant to the Securities Exchange Act of 1934 ("Securities
Act") have been filed and are true and correct in all material
respects and contain no material omission; and (viii) there is no
action, proceeding or investigation pending, or to the best
knowledge of Home Properties, threatened against Home Properties
or
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the REIT before any court or administrative agency, that might
result, either individually or in the aggregate in any material
adverse change in the business, prospects, condition, affairs,
operations, properties or assets of Home Properties or the REIT
or any material liability on the part of Home Properties or the
REIT.
(b) Home Properties represents that the Units to be
issued to Contributing Partners hereunder have been duly
authorized for issuance to Contributing Partners, and upon such
issuance, will be validly issued, fully paid and non-assessable,
free and clear of all liens, encumbrances, restrictions and
claims of every kind.
(c) At any time and from time to time after the
Closing, Home Properties agrees to exchange each Unit at the
request of a Contributing Partner for cash equal to the Market
Value (as defined in the Limited Partnership Agreement) of one
share of common stock of the REIT at the time of such exchange,
provided that Home Properties may elect to exchange any such Unit
presented to Home Properties for one share of common stock of the
REIT. Upon exchange of Units for common stock of the REIT, the
shares of common stock of the REIT issued to a Contributing
Partner shall be validly issued, fully paid and non-assessable,
free and clear of all liens, encumbrances, restrictions and
claims of every kind and the Contributing Partner so exchanging
for REIT common stock shall be deemed, for all purposes, to be a
holder of such common stock on the date sixty (60) business days
following written notice to Home Properties of the Contributing
Partner's desire to exchange for such common stock. Sufficient
shares of common stock of the REIT shall be reserved by
appropriate corporate action in connection with the conversion of
Units into shares hereunder. The issuance of the shares to
Contributing Partners shall not be subject to pre-emptive rights,
rights of first refusal or other preferential contractual rights
of the REIT or any stockholder of the REIT or any other person
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and will not conflict with any provision of any agreement to
which the REIT is a party or by which it is bound or the articles
of incorporation or bylaws of the REIT. In the event Home
Properties elects to give REIT common stock in exchange, such
stock shall be subject to demand registration rights as provided
in the agreement attached hereto as Exhibit K.
(d) Home Properties agrees that it shall make cash
distributions to the Contributing Partners for each Unit equal to
the dividend paid by the REIT to its stockholders for each share
of common stock of the REIT (subject to adjustment as provided
below). Such payment shall be made contemporaneously with the
payment of the dividend by the REIT to its stockholders.
(e) (i) If any event any event occurs with respect to
the REIT common stock, as described in Section 1.18 of the
Limited Partnership Agreement, the number of shares of REIT
common stock to be taken into account in determining cash
distributions as provided in subsection (d) above shall be
appropriately adjusted.
(ii) Home Properties represents that as of the
date hereof and the Closing, the Conversion Factor (as defined in
the Limited Partnership Agreement) is and shall be 1.0.
(iii) Upon the occurrence of each adjustment
or readjustment pursuant to this subsection, the REIT at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Contributing
Partner a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The REIT shall, upon the
written request, at any time, of any Contributing Partner,
furnish or cause to be furnished to such Contributing Partner, a
like certificate setting forth; (i) such adjustments and
readjustments; and (ii) the
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number of shares of REIT common stock and the amount, if any, of
other property that at the time would be received upon the
exchange of the Units and the cash distribution to be made in
accordance with Subsection (d).
(f) Anything herein to the contrary notwithstanding,
at any time following Closing, in the event a Contributing
Partner may determine that he or she desires to exchange some or
all of its Units for real property of Home Properties in
redemption of its Units, Home Properties, in its sole discretion,
may decline to distribute any Home Properties real property
requested by the Contributing Partner, and the Contributing
Partner in his or her sole discretion, may decline to accept any
Home Properties real property offered by Home Properties. In the
event that Contributing Partner and Home Properties are unable to
agree upon existing real property owned by Home Properties to be
distributed to Contributing Partner, the Contributing Partner may
designate other real property for sale by a third party which he
or she desires to acquire as a distribution from Home Properties.
In such event, Home Properties shall acquire such real property
designated by Contributing Partner and convey such real property
to Contributing Partner as a distribution in redemption of some
or all of his or her Units. If Contributing Partner shall desire
that real property designated by him or her to be acquired by
Home Properties and distributed to Contributing Partner be
encumbered by debt of such type and amount so that the
Contributing Partners can minimize or eliminate recognition of
income resulting from such distribution, Home Properties shall
cooperate with the Contributing Partner's reasonable requests to
achieve such objective, provided that any costs or expenses
incurred by Home Properties in extending such cooperation shall
be reimbursed by the Contributing Partner upon Home Properties
making such distribution. The parties mutually agree to treat
such transaction for tax reporting purposes in such a way to
reduce the tax consequences of the
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<PAGE>
transaction and will endeavor to report the transaction
consistently with each other to the extent allowed by law. In
case of property for sale by a third party and designated by the
Contributing Partner, the cash portion of the purchase price for
such real property shall be equal to the then Market Value of
that portion of the Contributing Partner's Units proposed to be
redeemed as of the date such Units are redeemed, unless the
Contributing Partner pays the difference in the cash portion of
the purchase price above the value of the Units of Contributing
Partner proposed to be redeemed. Upon the request of Home
Properties, the Contributing Partner desiring to exchange Unit
for real property shall loan to Home Properties, provided that
Home Properties shall provide adequate security for said loan
reasonably acceptable to said Contributing Partner, the entire
cash portion of the purchase price in connection with a purchase
of real estate from a third party. Such loan shall bear interest
at a rate equal to the dividend yield on the Unit at the time of
the making of such loan and such loan shall be repaid within 90
days of the making of such loan. In no event shall Home
Properties be required to provide cash for such purchases to the
extent it shall be required to advance more than the total of
$5,000,000 in any calendar year together with the cash required
to be advanced under Paragraph 25(f) under the Related
Contribution Agreement (hereunder defined) on account of the cash
portion of the purchase price, whether such cash is raised
through loans from the Contributing Partners or otherwise. Any
mortgage loan encumbering the real property purchased by Home
Properties shall be non-recourse, and the Contributing Partner
shall indemnify Home Properties against any liability or expenses
resulting from the acquisition and distribution of such real
property.
(g) In furtherance of Contributing Partners'
contributions to the capital of Home Properties or to otherwise
minimize Contributing Partners' tax liabilities, Contributing
Partners shall each guaranty indebtedness of Home Properties in
the amount elected by
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Contributing Partners at Closing or thereafter. Each
Contributing Partner's guaranty shall provide that (i) it shall
be enforced only after due diligence and reasonable legal means
to collect from Home Properties have been used for the purpose of
satisfying Home Properties' indebtedness, and (ii) shall be
released upon exchange of the Units for common stock of the REIT
or sale, redemption or other disposition of the Units by
Contributing Partners, or a distribution of property to the
Contributing Partners set forth in subparagraph (d) above. In
the event that Contributing Partners' obligations under the
guaranty shall terminate under the terms of the Guaranty, Home
Properties shall promptly provide Contributing Partners written
notice of such termination.
(h) As a partner contributing interests in a
partnership in exchange for a limited partnership interest in
Home Properties, Contributing Partners will receive annually from
Home Properties Form 1065, Schedule K-1, Partner's Share of
Income, Credit, Deductions, etc. This form will also be part of
the tax return, Form 1065, filed by Home Properties with the
Internal revenue Service. Home Properties represents that the
Schedule K-1 submitted to Contributing Partners for use in the
preparation of their tax returns will reflect the allocation to
Contributing Partners as partners of a share of non-recourse
liabilities in accordance with Reg. Sec. 1.752-3 under the
Internal Revenue Code, such that the Contributing Partners shall
recognize no income upon the contribution of the RGII Interests
to Home Properties, and for the period of time that Contributing
Partners retain Units except to the extent cash distributions
from Home Properties to a Contributing Partner, as described in
Section 25(d) hereof, exceeds such Contributing Partner's basis
in his or her Home Properties partnership interest. The
Contributing Partners represent that, as of December 31, 1996:
(i) their aggregate built in gain determined in accordance with
the principles set forth in Section 704(c) of the Internal
Revenue
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<PAGE>
Code of 1986 ("Code") is $10,618,945 assuming the RGII Real
Property has a fair market value of $11,330,910 as of the date of
the contribution(s) to Home Properties; (ii) the amount of
nonrecourse debt encumbering the RGII Real Property is
$1,906,062; (iii) their aggregate capital accounts with respect
to RGII is $(1,194,097).
(i) In the event that any Contributing Partner shall
transfer any of the Units, Home Properties shall arrange for the
delivery of an amendment to the guaranty pursuant to which the
amount of the Contributing Partner's guaranty shall thereafter be
allocated among the Contributing Partners and their transferees
based on the relative number of Units they hold after the
transfer.
(j) Home Properties agrees that for the period that
any of the Contributing Partners own the Units, Home Properties
shall not restructure such Contributing Partner's share of Home
Properties debt in such manner as to cause a reduction in the
amount of Contributing Partners' share of non-recourse debt
allocable to and encumbering the RGII Real Property without
Contributing Partners' prior written consent which may be
arbitrarily withheld. In the event that Home Properties takes
any such action, Home Properties shall indemnify and save
harmless the Contributing Partners from and against any federal
and state income tax liability, including but not limited to (i)
income taxes suffered as a result of all payments made under this
subsection (including this subsection (j)(i)) and (ii) interest,
penalties and the reasonable fees of attorneys and accountants.
(k) Home Properties shall not sell, exchange or
otherwise dispose of the RGII Real Property in a transaction
which results in the recognition of income to Contributing
Partners under Section 704(c) of the Internal Revenue Code of
1986 (the "Code") or otherwise ("Disposition Gain"). In the
event that Home Properties shall dispose of the RGII Real
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Property in violation of the foregoing restriction, Home
Properties shall indemnify and save harmless Contributing
Partners from any federal and state income tax liability suffered
by it including but not limited to (i) income taxes suffered as a
result of all payments made under this subsection (including this
subsection l(k)) and (ii) interest, penalties and the reasonable
fees of attorneys and accountants.
(l) Home Properties will not make any allocations
curative, remedial or otherwise, pursuant to the Treasury
Regulations under Section 704(c) of the Code with respect to the
RGII Real Property, intended to eliminate distortions caused by
the ceiling rule.
(m) The obligations set forth in this Article shall
survive the Closing.
26. Contingency. The consummation of this transaction
is contingent upon the simultaneous consummation of the
transaction set forth in the agreement of even date between
Philip J. Solondz, Daniel Solondz and Julia Weinstein and Home
Properties with respect to Royal Gardens I, a New Jersey general
partnership (the "Related Contribution Agreement")
27. Interpretation. If any of the terms and
provisions of this agreement shall conflict with those of the
Limited Partnership Agreement, the terms and provisions of this
agreement shall be controlling.
[The remainder of this page is intentionally left blank]
[Signature page immediately follows]
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IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
/s/ Philip J. Solondz
----------------------------
PHILIP J. SOLONDZ
/s/ Daniel Solondz
----------------------------
DANIEL SOLONDZ
HOME PROPERTIES OF NEW YORK, L.P.
By: HOME PROPERTIES OF NEW
YORK, INC., General Partner
/s/ Ann M. McCormick
By: ----------------------------
ANN M. McCORMICK
VICE PRESIDENT
HOME PROPERTIES OF NEW YORK, INC.
/s/ Ann M. McCormick
By: ----------------------------
ANN M. McCORMICK
VICE PRESIDENT
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Exhibit 2.3
HOME PROPERTIES OF NEW YORK, INC.
AMENDED AND RESTATED
STOCK BENEFIT PLAN
This Amended and Restated Stock Benefit Plan amends and
restates the Home Properties of New York, Inc. 1994 Stock Benefit
Plan in its entirety, subject to shareholder approval of certain
provisions at the 1997 Annual Meeting of Shareholders of Home
Properties of New York, Inc.
1. PURPOSES OF THE PLAN
The purposes of this Stock Benefit Plan, as amended (the
"Plan") are to enable Home Properties of New York, Inc. (the
"Company") and its Subsidiaries to attract and retain the
services of key employees and persons with managerial,
professional or supervisory responsibilities, including, but not
limited to, members of the Board of Directors, responsible for
the future success of the Company, and to provide them with
increased motivation and incentive to exert their best efforts on
behalf of the Company by enlarging their personal stake in its
success.
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) "Award" means a grant of a Stock Option,
Restricted Stock or SAR.
(b) "Board of Directors" means the Board of Directors
of the Company.
(c) "Code" means the Internal Revenue Code of 1986,
including any and all amendments thereto.
(d) "Committee" means the committee appointed by the
Board of Directors from time to time to administer the
Plan pursuant to Section 2.2.
(e) "Common Stock" means the Company's Common Stock,
$.01 par value.
(f) "Company" means Home Properties of New York, Inc.
and any of its predecessors, subsidiaries or
successors.
(g) "Eligible Director" means a member of the
Company's Board of Directors who is not otherwise an
employee of the Company or any Subsidiary.
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<PAGE>
(h) "Director's Option" means an option grant made to
an Eligible Director pursuant to Section 4.2.
(i) "Fair Market Value" means, with respect to a
specific date, (a) if the Common Stock is listed or
admitted to trading on any securities exchange or the
NASDAQ - National Market System, the closing price on
such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such
day, or (b) if the Common Stock is not listed or
admitted to trading on any securities exchange or the
NASDAQ - National Market System, the last reported sale
price on such day or, if no sale takes place on such
day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source
designated by the Plan Administrator, or if no such
last reported sale price or closing bid and asked
prices are available, the average of the reported high
bid and low asked prices on such day, as reported by a
reliable quotation source designated by the Plan
Administrator, or if there shall be no bid and asked
prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day
(not more than ten days prior to the date in question)
for which prices have been so reported; provided that
if there are no bid and asked prices reported during
the ten days prior to the date in question, the Fair
Market Value of the Common Stock shall be determined by
the Plan Administrator acting in good faith on the
basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate.
(j) "Incentive Stock Option" means an option granted
under the Plan which is intended to qualify as an
incentive stock option under Section 422 of the Code.
(k) "Non-Qualified Stock Option" means an option
granted under the Plan which is not an Incentive Stock
Option.
(l) "Participant" means a person to whom an Award has
been granted under the Plan.
(m) "Plan Administrator" means the Board of Directors
prior to consummation of the Company's initial public
offering of its Common Stock, and the Committee
thereafter.
(n) "Restricted Stock" means shares of Common Stock
awarded to a Participant subject to such conditions on
vesting, transferability and other restrictions as are
established by the Plan Administrator.
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(o) "Rule 16b-3" means Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended from
time to time, or any successor rule.
(p) "Stock Appreciation Right" means the right to
receive a number of shares of Common Stock, an amount
of cash, or a combination of shares and cash, the
aggregate value of which is determined by reference to
a change in the Fair Market Value of the Common Stock
(referred to herein also as "SARs").
(q) "Stock Option" means an Incentive Stock Option or
a Non-Qualified Stock Option granted under the Plan.
(r) "Subsidiary" means Home Properties of New York,
L.P., Home Properties Management, Inc., any partnership
of which the Company is general partner and holder of a
majority of interests or any corporation (other than
the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the
granting of the Stock Option, each of the corporations
other than the last corporation in the unbroken chain
owns 50% or more of the total voting power of all
classes of stock in one of the other corporations in
such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the Plan
Administrator which shall be the Board of Directors
prior to consummation of the Company's initial public
offering and by the Committee thereafter which shall at
all times consist of two (2) or more persons, each of
whom shall be members of the Board of Directors. Each
member of the Committee shall be eligible to serve
under Rule 16b-3 and such other rules as the Board of
Directors may deem appropriate. The Board of Directors
may from time to time remove members from, or add
members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of
Directors. The Plan Administrator shall select one of
its members as Chairman, and shall hold meetings at
such times and places as it may determine.
(b) The Plan Administrator shall have the full power,
subject to and within the limits of the Plan, to: (i)
interpret and administer the Plan, and any Awards made
under it; (ii) make and interpret rules and regulations
for the administration of the Plan and to make changes
in and revoke such rules and regulations (and in the
exercise of this power, shall generally determine all
questions of policy and expediency that may arise and
may correct any defect, omission, or inconsistency in
the Plan or any agreement evidencing the grant of any
Award in a manner and to the extent it shall deem
necessary to make the Plan fully effective); (iii)
determine those persons to whom Awards and Director's
Options shall be granted and the number of
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Awards or Director's Options and the nature of the
Awards to be granted to any person subject to any
limitations imposed by applicable law or regulations or
resolutions of the Board of Directors of the Company;
(iv) determine the terms of Awards granted under the
Plan, consistent with the provisions of the Plan; and
(v) generally, exercise such powers and perform such
acts in connection with the Plan as are deemed
necessary or expedient to promote the best interests of
the Company. The interpretation and construction by
the Plan Administrator of any provisions of the Plan or
of any Award shall be final, binding and conclusive.
(c) The Committee may act only by a majority of its
members then in office; however, the Plan Administrator
may authorize any one or more of its members or any
officer of the Company to execute and deliver documents
on behalf of the Plan Administrator.
(d) No member of the Plan Administrator shall be
liable for any action taken or omitted to be taken or
for any determination made by him or her in good faith
with respect to the Plan, and the Company shall
indemnify and hold harmless each member of the Plan
Administrator against any cost or expense (including
counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Plan
Administrator) arising out of any act or omission in
connection with the administration or interpretation of
the Plan, unless arising out of such person's own fraud
or bad faith.
2.3 Effective Date
The Plan became effective upon its adoption by the Board of
Directors of the Company on May 10, 1994 and the shareholders of
the Company on May 23, 1994 and was amended by action of the
Board of Directors on February 6, 1996 and the shareholders of
the Company on May 7, 1996. This Amended and Restated Plan was
approved by the Board of Directors of the Company on February __,
1997 subject to the approval of shareholders of the Company on
May 6, 1997.
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2.4 Duration
If approved by the shareholders of the Company, as provided
in Section 2.3, unless sooner terminated by the Board of
Directors, the Plan shall remain in effect for a period of ten
(10) years following its adoption by the Board of Directors.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may be
subject to Awards granted under the Plan shall be 1,000,000, and
the number of such shares which shall be available for issuance
pursuant to Director's Options made to Eligible Directors under
the Plan shall be 154,000. The Awards shall be subject to
adjustment in accordance with Section 7.1, and shares to be
issued upon exercise of Awards may be either authorized and
unissued shares of Common Stock or authorized and issued shares
of Common Stock purchased or acquired by the Company for any
purpose. If an Award or portion thereof shall expire or is
terminated, cancelled or surrendered for any reason without being
exercised in full, the unpurchased shares of Common Stock which
were subject to such Award or portion thereof shall be available
for future grants of Awards under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in
whole or in part, at any time by the Board of Directors. The
Board of Directors may from time to time make such amendments to
the Plan as it may deem advisable, including amendments deemed
necessary or desirable to comply with Section 422 of the Code
with respect to Incentive Stock Options and Rule 16b-3 or any
successor or replacement provisions and any regulations issued
thereunder; provided, however, that no amendment shall be made
without the approval of the Company's shareholders if such
approval is required in the determination of the Board of
Directors in order to preserve the intended benefits of the Plan
to the Company and the Participants under applicable laws, rules
or regulations of any governmental authorities, stock exchange or
other body.
Except as otherwise provided herein, termination or
amendment of the Plan shall not, without the consent of a
Participant, affect such Participant's rights under any Award
previously granted to such Participant.
2.7 Participants and Grants
Awards, other than Director's Options, may be granted by the
Plan Administrator to those persons other than Eligible Directors
who the Plan Administrator determines have the capacity to make a
substantial
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contribution to the success of the Company. The Plan
Administrator may grant Stock Options other than Director's
Options to purchase such number of shares of Common Stock
(subject to the limitations of Section 2.5) as the Plan
Administrator may, in its sole discretion, determine. In
granting Stock Options other than Director's Options under the
Plan, the Plan Administrator, on an individual basis, may vary
the number of Incentive Stock Options or Non-Qualified Stock
Options as between Participants and may grant Incentive Stock
Options and/or Non-Qualified Stock Options to a Participant in
such amounts as the Plan Administrator may determine in its sole
discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be evidenced
by written agreements executed by the Company and the Participant
to whom granted, which agreement shall state the number of shares
of Common Stock which may be purchased upon the exercise thereof
and shall contain such investment representations and other terms
and conditions as the Plan Administrator may from time to time
determine, or, in the case of Incentive Stock Options, as may be
required by Section 422 of the Code, or any other applicable law.
3.2 Price
Subject to the provision of Sections 3.6(d) and 7.1, the
exercise price per share of Common Stock subject to a Stock
Option shall, in no case, be less than one hundred percent (100%)
of the Fair Market Value of a share of Common Stock on the date
the Stock Option is granted.
3.3 Period
The duration or term of each Stock Option granted under the
Plan shall be for such period as the Plan Administrator shall
determine but in no event more than ten (10) years from the date
of grant thereof.
3.4 Exercise
Stock Options other than Director's Options may be
exercisable immediately upon granting of the Stock Option or at
such other time or times as the Plan Administrator shall specify
when granting the Stock Option. Once exercisable, a Stock Option
shall be exercisable, in whole or in part, until the expiration
or termination of their terms by giving a written notice of
exercise, signed by the person exercising the Stock Option, to
the Secretary of the Company at the principal office of the
Company specifying the number of shares of Common Stock as to
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which the Stock Option is then being exercised together with
payment of the full exercise price for the number of shares being
purchased. The date both such notice and payment are received by
the office of the Corporate Secretary of the Company shall be the
date of exercise of the Stock Option as to such number of shares.
Notwithstanding any provision to the contrary, no Stock Option
may at any time be exercised with respect to a fractional share.
3.5 Payment of Exercise Price
The exercise price for shares of Common Stock as to which a
Stock Option other than a Director's Option has been exercised
and any amount required to be withheld, as contemplated by
Section 7.3, may be paid:
(a) in cash, or by check, bank draft or money order
payable in United States dollars to the order of the
Company; or
(b) by the delivery by the Participant to the Company
of whole shares of Common Stock having an aggregate
Fair Market Value on the date of exercise equal to the
aggregate of the exercise price of Common Stock as to
which the Stock Option is then being exercised; or
(c) by the delivery of instructions to the Company to
withhold from the shares of Common Stock that would
otherwise be issued on the exercise that number of
whole shares of Common Stock having a Fair Market Value
equal to the exercise price; or
(d) by any combination of (a), (b) or (c) above.
The Plan Administrator may, in its discretion, impose
limitations, conditions and prohibitions on the use by
a Participant of shares of Common Stock to pay the
exercise price payable by such Participant upon the
exercise of a Stock Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the
following provisions shall apply to Incentive Stock Options
granted under the Plan:
(a) Incentive Stock Options shall only be granted to
Participants who are employees of the Company or its
Subsidiaries.
(b) To the extent that the aggregate Fair Market Value
of Common Stock, with respect to which Incentive Stock
Options are exercisable for the first time by a
Participant during any calendar year under this Plan
and any other Plan of the Company or a Subsidiary,
exceeds
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$100,000, such Stock Options shall be treated as Non-
Qualified Stock Options.
(c) Any Participant who disposes of shares of Common
Stock acquired upon the exercise of an Incentive Stock
Option by sale or exchange either within two (2) years
after the date of the grant of the Incentive Stock
Option under which the shares were acquired or within
one (1) year of the acquisition of such shares, shall
promptly notify the Secretary of the Company at the
principal office of the Company of such disposition,
the amount realized, the exercise price per share paid
upon exercise and the date of disposition.
(d) No Incentive Stock Option shall be granted to a
Participant who, at the time of the grant, owns stock
representing more than ten percent (10%) of the total
combined voting power of all classes of stock either of
the Company or any parent or Subsidiary of the Company,
unless the purchase price of the shares of Common Stock
purchasable upon exercise of such Incentive Stock
Option is at least one hundred ten percent (110%) of
the Fair Market Value (at the time the Incentive Stock
Option is granted) of the Common Stock and the
Incentive Stock Option is not exercisable more than
five (5) years from the date it is granted.
3.7 Termination of Employment
(a) In the event a Participant's employment by, or
relationship with, the Company shall terminate for any
reason other than those reasons specified in Sections
3.7(b), (c),(d) or (e) hereof while such Participant
holds Stock Options granted under the Plan, then all
rights of any kind under any outstanding Option held by
such Participant which shall not have previously lapsed
or terminated shall expire immediately.
(b) If a Participant's employment by, or relationship
with, the Company or its Subsidiaries shall terminate
as a result of such Participant's total disability,
each Stock Option held by such Participant (which has
not previously lapsed or terminated) shall immediately
become fully exercisable as to the total number of
shares of Common Stock subject thereto (whether or not
exercisable to that extent at the time of such
termination) and shall remain so exercisable by such
Participant for a period of one (1) year after
termination unless such Stock Option expires earlier by
its terms. For purposes of the foregoing sentence,
"total disability" shall mean permanent mental or
physical disability as determined by the Plan
Administrator.
(c) In the event of the death of a Participant, each
Stock Option held by such Participant (which has not
previously lapsed or terminated) shall immediately
become fully exercisable as to the total number of
shares of Common Stock subject thereto (whether or not
exercisable to that extent at the time of death) by the
executor or administrator of
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the Participant's estate or by the person or persons to
whom the deceased Participant's rights thereunder shall
have passed by will or by the laws of descent or
distribution, and shall remain so exercisable for a
period of one (1) year after such Participant's death
unless such Stock Option expires earlier by its terms.
(d) If a Participant's employment by the Company shall
terminate by reason of such Participant's retirement in
accordance with Company policies, each Stock Option
held by such Participant at the date of termination
(which has not previously lapsed or terminated) shall
immediately become fully exercisable as to the total
number of shares of Common Stock subject hereto
(whether or not exercisable to that extent at the time
of such termination) and shall remain so exercisable by
such Participant for a period of three (3) months after
termination, unless the Stock Option expires earlier by
its terms.
(e) In the event the Company terminates the employment
of a Participant who at the time of such termination
was an officer of the Company and had been continuously
employed by the Company during the five (5) year period
immediately preceding such termination, for any reason
except "good cause" (hereafter defined) and except upon
such Participant's death, total disability or
retirement in accordance with Company policies, each
Stock Option held by such Participant (which has not
previously lapsed or terminated and which has been held
by such Participant for more than six (6) months prior
to such termination) shall immediately become fully
exercisable as to the total number of shares of Common
Stock subject thereto (whether or not exercisable to
that extent at the time of such termination) and shall
remain so exercisable for a period of three (3) months
after such termination unless such Stock Option expires
earlier by its terms. A termination for "good cause"
shall have occurred only if the Participant in question
is terminated, by written notice (i) because of his or
her conviction of a felony for a crime involving an act
of fraud or dishonesty, (ii) intentional acts or
omissions on such Participant's part causing material
injury to the property or business of the Company, or
(iii) because such Participant shall have breached any
material term of any employment agreement in place
between such Participant and the Company and shall have
failed to correct such breach within any grace period
provided for in such agreement. "Good cause" for
termination shall not include bad judgment or any act
or omission reasonably believed by such Participant, in
good faith, to have been in, or not opposed to, the
best interests of the Company.
3.8 Effect of Leaves of Absence
It shall not be considered a termination of employment when
a Participant is on military or sick leave or such other type of
leave of absence which is considered by the Plan Administrator as
a continuing of the employment relationship of the Participant
with the Company or
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any of its Subsidiaries. In case of such leave of absence, the
employment relationship shall be deemed to have continued until
the later of (i) the date when such leave shall have been ninety
(90) days in duration, or (ii) the date as of which the
Participant's right to re-employment shall have no longer been
guaranteed either by statute or contract.
4. DIRECTOR'S OPTIONS
4.1 General
Each Director's Option granted under the Plan shall be
evidenced by an agreement (an "Agreement") duly executed on
behalf of the Company and by the Eligible Director to whom such
Director's Option is granted and dated as of the applicable date
of grant. Each Agreement shall be signed on behalf of the
Company by an officer or officers delegated such authority by the
Plan Administrator using manual signature. Each Agreement shall
comply with and be subject to the terms and conditions of the
Plan.
Any Agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan or this Section 4 as
may be determined by the Plan Administrator. All Director's
Options granted under the Plan shall be Non-Qualified Stock
Options.
4.2 Director's Options
Subject to the limitation in Section 4.10, an option to
purchase 3,000 shares of Common Stock (as adjusted pursuant to
Section 7.1) shall be granted upon the effective date of the
election of each member of the Company's Board of Directors
(each, a "Director") and an option to purchase an additional
3,000 shares of Common Stock (as adjusted pursuant to Section
7.1) shall be granted automatically in each of the years 1995
and 1996, immediately following the annual meeting the Company's
shareholders, who is an Eligible Director at such time
immediately following such annual meeting beginning with the
annual meeting of the shareholders at which the shareholders
approve the Plan. An option to purchase 759 shares of Common
Stock shall have been granted to each Director on August 12,
1996. An option to purchase an additional 3,500 shares of Common
Stock (as adjusted pursuant to Section 7.1) shall be granted
automatically in each of the years 1997, 1998 and 1999,
immediately following the annual meeting the Company's
shareholders, who is an Eligible Director at such time
immediately following such annual meeting. Such additional
options shall be granted to Eligible Directors from time to time
as may be determined by the Plan Administrator.
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4.3 Director's Option Exercise Price
The exercise price per share for a Director's Option shall
be the Fair Market Value determined in accordance with Section
2.1(i) on the date of grant or, in the case of options granted on
the effective date of the Company's initial public offering of
its Common Stock, the initial public offering price.
4.4 Exercise
Director's Options shall be exercisable immediately upon
grant and are exercisable in whole or in part, at any time from
time to time, until the expiration or termination of their term
in accordance with Section 4.6 by giving written notice of
exercise, signed by the person exercising the Director's Option,
to the Secretary of the Company at the principal office of the
Company specifying the number of shares of Common Stock as to
which the Director's Option is then being exercised together with
payment of the full exercise price for the number of shares of
Common Stock to be purchased. The date both such notice and
payment are received by the office of the Corporate Secretary of
the Company shall be the date of exercise of the Director's
Option as to such number of shares. Notwithstanding any provision
to the contrary, no Director's Option may at any time be
exercised with respect to a fractional share.
4.5 Payment of Exercise Price
The exercise price for may be paid:
(a) in cash, or by check, bank draft or money order
payable in United States dollars to the order of the
Company; or
(b) by the delivery by the Director to the Company of
whole shares of Common Stock having an aggregate Fair
Market Value on the date of exercise equal to the
aggregate exercise price of the Common Stock as to
which the Stock Option is then being exercised; or
(c) delivery of instructions to the Company to
withhold from the shares of Common Stock that would
otherwise be issued on the exercise that number of
whole shares having a Fair Market Value equal to the
exercise price; or
(d) by any combination of (a), (b) or (c) above.
4.6 Term of Director's Options
Each Director's Option shall expire five (5) years from its
date of grant, but shall be subject to earlier termination as
follows:
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(a) In the event of the termination of a Director's
Option holder's service as a Director, by reason of his
or her removal as Director (by the shareholders, the
Board of Directors or otherwise), the then-outstanding
Director's Options of such holder (whether or not then
exercisable) shall automatically expire on (and may not
be exercised on) the effective date of such
termination.
(b) In the event of the termination of a Director's
Option holder's service as a Director by reason of
retirement or total and permanent disability, the then-
outstanding Director's Options of such holder shall
become exercisable, to the full extent of the number of
shares of Common Stock remaining covered by such
Director's Options, regardless of whether such
Director's Options were previously exercisable, and
each such Director's Option shall expire one (1) year
after the date of such termination or on the stated
expiration date, whichever is earlier. For purposes of
this Section 4.7, the phrase "by reason of retirement"
means (a) mandatory retirement pursuant to Board policy
or (b) termination of service by deciding not to stand
for re-election.
(c) In the event of the death of a Director's Option
holder while such holder is a Director, the then-
outstanding Director's Options of such holder shall
become exercisable, to the full extent of the number of
shares of Common Stock remaining covered by such
Director's Options, regardless of whether such
Director's Options were previously exercisable, and
each such Director's Option shall expire one (1) year
after the date of death of such optionee or on the
stated grant expiration date, whichever is earlier.
Exercise of a deceased holder's Director's Options that
are still exercisable shall be by the estate of such
holder or by the person or persons to whom the holder's
rights have passed by will or the laws of descent and
distribution.
(d) In the event of the termination of a Director's
Option holder's service as a Director for any reason
other than as described in Sections 4.7(a)-(c),
including without limitation, expiration of the
Director's term in office (without renomination or
reelection) or by resignation, the then outstanding
Director's Options of such holder shall become
exercisable, to the full extent of the number of shares
of Common Stock remaining covered by such Director's
Options, regardless of whether such Director's Options
were previously exercisable, and each such Director's
Option shall expire three(3) months after the effective
date of such termination.
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4.7 Limitation of Rights
Neither the recipient of a Director's Option under the Plan
nor the recipient's successor or successors in interest shall
have any rights as a shareholder of the Company with respect to
any shares of Common Stock subject to a Director's Option granted
to such person until the date of issuance of a stock certificate
for such shares of Common Stock.
4.8 Limitation as to Directorship
Neither the Plan, nor the granting of a Director's Option,
nor any other action taken pursuant to the Plan shall constitute
or be evidence of any agreement or understanding, express or
implied, that an Eligible Director has a right to continue as a
Director for any period of time or at any particular rate of
compensation.
4.9 Limit on Awards to Eligible Directors
Notwithstanding any provision to the contrary, an Eligible
Director shall not be entitled to receive or participate in any
Award under the Plan other than Director's Options which are
granted to such Eligible Director pursuant to Section 4.2 and
meet all of the requirements of Section 4 applicable thereto.
4.10 Termination of Director's Options
Notwithstanding any provision to the contrary, no Director's
Option shall be granted pursuant to Section 4.2 on a date when
the number of shares of Common Stock authorized for issuance
pursuant to the Plan and then available for issuance pursuant to
new Director's Options is less than the aggregate number of such
shares which would be issuable pursuant to Director's Options
otherwise required to be granted on such date.
4.11 Conflicting Provisions
In the event of any conflict between a provision of this
Section 4 and a provision in any other paragraph of the Plan with
respect to Director's Options, such provision of this Section 4
shall be deemed to control. Except in the case of conflict,
however, provisions in other sections are applicable.
5. STOCK APPRECIATION RIGHTS
5.1 Stock Appreciation Rights
In conjunction with the granting of Stock Options, the Plan
Administrator may, in its discretion, award SARs to an officer or
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employee which entitle such individual to receive payment from
the Company in accordance with this section and upon such terms
and conditions as the Plan Administrator shall determine from
time to time.
5.2 Grant of SAR
A SAR granted under this Section may be made part of a Stock
Option at the time such Stock Option is granted or at any time
thereafter until the option expires.
5.3 Amount Payable Upon Election
A SAR shall entitle the Participant to elect to receive, in
lieu of exercising the Stock Option to which it relates, an
amount (payable, in the sole discretion of the Plan
Administrator, in cash, Common Stock, or a combination thereof)
equal to 100 percent of the excess of:
(a) the Fair Market Value per share of the Company's
Common Stock on the date such SAR is exercised,
multiplied by the number of shares with respect to
which such SAR is being exercised, over
(b) the aggregate option exercise price (under the
stock option agreement to which the SAR relates) for
such number of shares of Common Stock.
5.4 Exercise of SAR
A SAR shall be exercisable only to the extent that it has a
positive value and the Stock Option to which it relates is
exercisable, except that no SAR shall be exercisable during the
first six (6) months after the date of its grant. Further, in
the case of an officer of the Company subject to the provisions
of Section 16 of the Securities Exchange Act of 1934, the SAR
must be exercised during the period beginning on the third
business day following the date of release for publication by the
Company of financial data specified under
Rule 16b-3(e)(1)(ii) under the Securities Exchange Act of 1934
and ending on the twelfth business day following such date.
5.5 Effect on Related Stock Option
Upon the exercise of a SAR, the related Stock Option (or the
appropriate portion thereof) with respect to which such SAR is
exercised shall be automatically cancelled and shall not
thereafter be exercisable.
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5.6 Effect on Stock Subject to Plan
For purposes of determining the number of shares available
under the Plan, all shares of Common Stock with respect to which
a SAR is exercised shall no longer be available.
6. RESTRICTED STOCK AWARDS
6.1 Grants
The Plan Administrator may, in its discretion, grant one or
more Restricted Stock Awards to any eligible employee. Each
Restricted Stock Award Document shall specify the number of
shares of Common Stock to be issued to the Participant, the date
of such issuance, the consideration for such shares, if any, by
the Participant, the restrictions imposed on such shares, and the
conditions of release or lapse of such restrictions. Stock
certificates evidencing shares of Restricted Stock subject to
restrictions shall be held by the Company until the restrictions
on such shares shall have lapsed and the shares shall have vested
in accordance with the provisions of the Award. Promptly after
the lapse of restrictions, a certificate or certificates
evidencing the number of shares of Common Stock as to which the
restrictions have lapsed shall be delivered to the Participant.
The Participant shall deliver to the Corporation such further
assurance and documents as the Plan Administrator may require.
6.2 Restrictions
(a) Pre-Vesting Restraints. Shares of Common Stock
comprising any Restricted Stock Award may not be sold,
assigned, transferred, pledged or otherwise disposed of
or encumbered, either voluntarily or involuntarily,
until the restrictions have lapsed.
(b) Dividend and Voting Rights. Unless otherwise
provided in the applicable Award Document, a
Participant receiving a Restricted Stock Award shall be
entitled to cash dividend and voting rights for all
shares of Common Stock issued even though they are not
vested, provided that such rights shall terminate
immediately as to any Restricted Stock that ceases to
be eligible for vesting.
(c) Accelerated Vesting. Unless otherwise provided by
the Plan Administrator, the restrictions on Restricted
Stock shall lapse upon the Participant's termination of
employment with the Corporation by reason of
Retirement, Total Disability or death.
(d) Forfeiture. Unless otherwise specified by the
Plan Administrator, Restricted Stock as to which the
restrictions have not lapsed in accordance with the
provisions of the Award or pursuant to
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Section 6.2(c) shall be forfeited upon a Participant's
termination of employment. Upon the occurrence of any
forfeiture of shares of Restricted Stock, such
forfeited shares shall be automatically transferred to
the Company without payment of any consideration by the
Company and without any action by the Participant.
7. MISCELLANEOUS PROVISIONS
7.1 Adjustments Upon Changes in Capitalization
In the event of changes to the outstanding shares of Common
Stock of the Company through reorganization, merger,
consolidation, recapitalization, reclassification, stock split-
up, stock dividend, stock consolidation or otherwise, or in the
event of a sale of all or substantially all of the assets of the
Company, an appropriate and proportionate adjustment shall be
made in the number and kind of shares as to which Awards or
Director's Options may be granted. A corresponding adjustment
changing the number or kind of shares and/or the purchase price
per share of unexercised Stock Options or portions thereof which
shall have been granted prior to any such change shall likewise
be made. Notwithstanding the foregoing, in the case of a
reorganization, merger or consolidation, or sale of all or
substantially all of the assets of the Company, in lieu of
adjustments as aforesaid, the Plan Administrator may in its
discretion accelerate the date of vesting of an Award or the date
after which an Award may or may not be exercised or the stated
expiration date thereof. Adjustments or changes under this
Section shall be made by the Plan Administrator, whose
determination as to what adjustments or changes shall be made,
and the extent thereof, shall be final, binding and conclusive.
7.2 Non-Transferability
No Award or Director's Option shall be transferable except
by will or the laws of descent and distribution, nor shall any
Award or Director's Option be exercisable during the
Participant's lifetime by any person other than the Participant
or his guardian or legal representative, except pursuant to a
qualified domestic relations order. Any purported transfer
contrary to this provision will be null and void and without
effect.
7.3 Withholding
The Company's obligations under this Plan shall be subject
to applicable federal, state and local tax withholding
requirements. Federal, state and local withholding tax due at
the time of a grant or upon the exercise of any Award may, in the
discretion of the Plan Administrator, be paid in shares of Common
Stock already owned by the Participant or through the withholding
of shares otherwise issuable
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to such Participant, upon such terms and conditions as the Plan
Administrator shall determine. If the Participant shall fail to
pay, or make arrangements satisfactory to the Plan Administrator
for the payment, to the Company of all such federal, state and
local taxes required to be withheld by the Company, then the
Company shall, to the extent permitted br law, have the right to
deduct from any payment of any kind otherwise due to such
Participant an amount equal to any federal, state or local taxes
of any kind required to be withheld by the Company.
7.4 Compliance with Law and Approval of Regulatory Bodies
No Award or Director's Option shall be exercisable and no
shares will be delivered under the Plan except in compliance with
all applicable federal and state laws and regulations including,
without limitation, compliance with all federal and state
securities laws and withholding tax requirements and with the
rules of all domestic stock exchanges on which the Common Stock
may be listed. Any share certificate issued to evidence shares
for which an Award or Director's Option is exercised may bear
legends and statements the Plan Administrator shall deem
advisable to assure compliance with federal and state laws and
regulations. No Stock Option shall be exercisable and no shares
will be delivered under the Plan, until the Company has obtained
consent or approval from regulatory bodies, federal or state,
having jurisdiction over such matters as the Plan Administrator
may deem advisable. In the case of the exercise of a Stock
Option by a person or estate acquiring the right to exercise the
Stock Option as a result of the death of the Participant, the
Plan Administrator may require reasonable evidence as to the
ownership of the Stock Option and may require consents and
releases of taxing authorities that it may deem advisable.
7.5 No Right to Employment
Neither the adoption of the Plan nor its operation, nor any
document describing or referring to the Plan, or any part
thereof, nor the granting of any Award hereunder, shall confer
upon any Participant under the Plan any right to continue in the
employ of the Company or any Subsidiary, or shall in any way
affect the right and power of the Company or any Subsidiary to
terminate the employment of any Participant at any time with or
without assigning a reason therefor, to the same extent as might
have been done if the Plan had not been adopted.
7.6 Exclusion from Pension Computations
By acceptance of any Award under the Plan, the recipient
shall be deemed to agree that any income realized upon the
receipt or exercise thereof or upon the disposition of the shares
received upon exercise
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will not be taken into account as "base remuneration", "wages",
"salary" or "compensation" in determining the amount of any
contribution to or payment or any other benefit under any
pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
7.7 Abandonment of Options
A Participant may at any time abandon a Stock Option prior
to its expiration date. The abandonment shall be evidenced in
writing, in such form as the Plan Administrator may from time to
time prescribe. A Participant shall have no further rights with
respect to any Stock Option so abandoned.
7.8 Severability
If any of the terms of provisions of the Plan conflict with
the requirements of Rule 16b-3, then such terms or provisions
shall be deemed inoperative as to directors and officers to the
extent they so conflict with the requirements of Rule 16b-3.
7.9 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as a
convenience to facilitate reference, such headings, numbering and
paragraphing shall not in any case be deemed in any way material
or relevant to the construction of the Plan or any provision
hereof. The use of the masculine gender shall also include
within its meaning the feminine. The use of the singular shall
also include within its meaning the plural and vice versa.
7.10 Use of Proceeds
Funds received by the Company upon the exercise of Stock
Options shall be used for the general corporate purposes of the
Company.
7.11 Construction of Plan
The place of administration of the Plan shall be in the
State of New York, and the validity, construction,
interpretation, administration and effect of the Plan and of its
rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of New
York.
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