<PAGE>
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):
October 31, 1997
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13136 16-1455126
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation or organization Identification
Number)
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(Address of principal executive offices)
Registrant's telephone number, including area code: (716) 546-4900
Not applicable
(Former name or former address, if changed since last report)
Consecutive No. Page 1 of
Exhibit Index at Page
<PAGE>
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 purchased, in unrelated transactions, four multifamily
residential properties and in two separate transactions purchased four
additional 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, directly and indirectly through Home Properties Trust in which the
Company holds 100% of the beneficial interests, of approximately 53.6 percent of
the limited partnership interests in the Operating Partnership.
Hill Court South and Hudson Arms Apartments. On October 31, 1997, the Operating
Partnership acquired Hill Court Apartments South and all of the equity interests
in Lobozzo and Company for a combined purchase price of $6.6 million, which was
paid by the issuance of 269,934 limited partnership units in the Operating
Partnership. Hill Court Apartments South is a 95 unit apartment community.
Lobozzo and Company was the owner of a 135 unit apartment community known as
Hudson Arms Apartments. The communities are located in the Rochester, New York
suburb of Irondequoit, are approximately 35 years old and were 87% occupied at
the time of closing. Hill Court Apartments South were owned by Hill Court South
Apartment Company. The former partners of Lobozzo and Company whose interests
were acquired by the Operating Partnership are Michael E. McCusker, Claude S.
Fedele, Geraldine B. Lynch, Richard M. Bachelder, Jack P. Schifano and Joseph M.
Lobozzo, II.
Cloverleaf Apartments. On November 3, 1997, the Operating Partnership acquired
the Cloverleaf Apartments, a 148 unit apartment community located in Pittsburgh,
Pennsylvania. The purchase price of $3.0 million was financed under the
Operating Partnership's line of credit, which bears interest at 125 basis points
over the 30 day LIBOR rate or, at the Operating Partnership's option, at a money
market rate quoted by the lender and acceptable to the Operating Partnership.
The community is approximately 40 years old and was 94% occupied at the time of
closing. Cloverleaf Apartments were owned by Hudson Palisades Associates.
Scotsdale Apartments. On November 26, 1997, the Operating Partnership acquired
the Scotsdale Apartments, a 376 unit apartment community located in the Detroit
suburb of Westland. The purchase price of $13.6 million was paid in cash drawn
under the Operating Partnership's line of credit, which is described above. The
community is approximately 24 years old and was 97% occupied at the time it was
acquired. The Scotsdale Apartments were owned by the Trusts of Estelle Kahn,
Kopel I. Kahn, Jerome M. Keywell, Rita Keywell, J. Phillip Levant and Ethel
Levant.
<PAGE>
Candlewood Apartments. On February 9, 1998, the Operating Partnership acquired
the Candlewood Apartments, a 310 unit apartment community located in Mishawaka,
Indiana, a suburb of South Bend. The purchase price of $13,350,000 was paid in
cash drawn under the Company's line of credit to pay off the existing mortgage
and to fund closing costs and by issuance of 185,778 limited partnership units
in the Operating Partnership. The community was built in phases between 1984 and
1989 and was 9 Apartments were previously owned by Donald H. Schefmeyer and
Stephen W. Hall.6% occupied at closing. Candlewood Apartments were previously
owned by Donald H. Schefmeyer and Stephen W. Hall.
Cedar Glen Apartments. On March 2, 1998, the Operating Partnership acquired the
Cedar Glen Apartments, a 110-unit apartment community located in Philadelphia,
Pennsylvania. The purchase price of $2,600,000 was paid in cash drawn under the
Company's line of credit. The community is approximately 32 years old and was
95% occupied at the time of closing. Cedar Glen Apartments was previously owned
by Cedar Glen Associates.
Park Shirlington Apartments and Braddock Lee Apartments. On March 13, 1998, the
Operating Partnership acquired Park Shirlington Apartments, a 294-unit apartment
community located in Arlington, Virginia, and Braddock Lee Apartments, a
254-unit apartment community located in Alexandria, Virginia, for a combined
purchase price of $26,400,000, which was paid for by the issuance of 994,620
limited partnership units in the Operating Partnership. The communities are
approximately 44 years old and were 97% occupied at the time of closing. Park
Shirlington Apartments was previously owned by Park Shirlington Apartments
Limited Partnership. Braddock Lee Apartments was previously owned by Braddock
Lee Apartments Limited Partnership.
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. The properties were all 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. On March 20, 1998, the Company announced that the Operating Partnership
had entered into various agreements to purchase 4,452 apartment units for a
combined price of approximately $174 million. A copy of the press release is
attached hereto as an exhibit.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of the business acquired:
Audited statement of revenues and certain expenses of
Candlewood Apartments for the year ended December 31, 1997.
Audited statement of revenues and certain expenses of Park
Shirlington Apartments and Braddock Lee Apartments combined for
the year ended December 31, 1997.
b. Pro Forma Financial Information:
Pro forma condensed consolidated balance sheet of the
Company as of December 31, 1997 and related notes (unaudited).
Pro forma consolidated statement of operations of the
Company for the year ended December 31, 1997 (unaudited).
<PAGE>
Notes to the pro forma consolidated statement of operations
of the Company for the year ended December 31, 1997 (unaudited).
c. Exhibits:
Exhibit 2.1 - Purchase and Sale Agreements dated June 17,
1997 among Home Properties of New York, L.P. and various
individuals relating to Hill Court Apartments South and Hudson
Arms Apartments, together with a letter amendment dated September
24, 1997.
Exhibit 2.2 - Contract of Sale, dated October 10, 1997,
between Home Properties of New York, L.P. and Hudson Palisades
Associates relating to Cloverleaf Apartments.
Exhibit 2.3 - Contribution Agreement, dated November 17,
1997 among Home Properties of New York, L.P. and various trusts
relating to Scotsdale Apartments.
Exhibit 2.4 - Contribution Agreement, dated November 7, 1997
among Home Properties of New York, L.P. and Donald H. Schefmeyer
and Stephen W. Hall relating to Candlewood Apartments, together
with Amendment No. One dated December 3, 1997.
Exhibit 2.5 - Purchase and Sale Agreement dated November 26,
1997 by and between Home Properties of New York, L.P. and Cedar
Glen Associates.
Exhibit 2.6 - Contribution Agreement dated March 2, 1998
among Home Properties of New York, L.P., Braddock Lee Limited
Partnership and Tower Construction Group, LLC.
Exhibit 2.7 - Contribution Agreement dated March 2, 1998
among Home Properties of New York, L.P., Park Shirlington Limited
Partnership and Tower Construction Group, LLC.
Exhibit 2.8 - Press Release Issued on March 20, 1998
Exhibit 23.0 - Consent of Coopers and Lybrand, L.L.P.
<PAGE>
Candlewood Apartments
_____
Statement of Revenues and Certain Expenses
December 31, 1997
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders of
Home Properties of New York, Inc.
We have audited the accompanying statement of revenues and certain expenses, as
defined in Note 1, of Candlewood Apartments for the year ended December 31,
1997. The statement of revenues and certain expenses is the responsibility of
Candlewood Apartments' management. Our responsibility is to express an opinion
on the statement of revenues and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, as described in Note 1, and is not intended to be a
complete presentation of Candlewood Apartments' revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses, as
defined in Note 1, of Candlewood Apartments for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Rochester, New York
March 16, 1998
<PAGE>
Candlewood Apartments
Statement of Revenues and Certain Expenses
(In Thousands)
<TABLE>
<CAPTION>
Year Ended
December 31,
1997
<S> <C>
Revenues:
Rental income $2,242
Other income 45
------
2,287
------
Certain expenses:
Property operating and maintenace 644
Real estate taxes 247
------
891
------
Revenues in excess of ceratin expenses $1,396
------
</TABLE>
The accompanying note is an integral part of the financial statement.
<PAGE>
Candlewood Apartments
Note to Statement of Revenues and Certain Expenses
December 31, 1997
1. Basis of Presentation and Summary of Significant Accounting Policies
Business
The accompanying statement of revenues and certain expenses includes the
operations (see "Basis of Presentation" below) of Candlewood Apartments, a
residential property owned by parties not related to Home Properties of New
York, Inc. (the "Company").
The Company, through its subsidiary Home Properties of New York, L.P.,
acquired 100% of the real estate of Candlewood Apartments, a 310 unit
apartment community located in Mishawaka, Indiana, on February 9, 1998.
Basis of Presentation
The accompanying financial statement is not representative of the actual
operations of Candlewood Apartments for the period shown. Certain expenses
have been excluded which may not be comparable to the proposed future
operations of Candlewood Apartments. Expenses excluded relate to property
management fees, interest expense, depreciation and amortization expense
and other expenses not directly related to the future operations of
Candlewood Apartments. The Company is not aware of any material factors
relating to Candlewood Apartments that would cause the reported financial
information not to be necessarily indicative of future operating results.
Revenue Recognition
Rental income attributable to residential leases is recorded when due from
residents. Leases are generally for terms of one year.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
<PAGE>
<PAGE>
Park Shirlington and Braddock Lee Apartments
_____
Statement of Revenues and Certain Expenses
December 31, 1997
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders of
Home Properties of New York, Inc.
We have audited the accompanying statement of revenues and certain expenses, as
defined in Note 1, of the Park Shirlington and Braddock Lee Apartments for the
year ended December 31, 1997. The statement of revenues and certain expenses is
the responsibility of the Park Shirlington and Braddock Lee Apartments'
management. Our responsibility is to express an opinion on the statement of
revenues and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenues and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, as described in Note 1, and is not intended to be a
complete presentation of the Park Shirlington and Braddock Lee Apartments'
revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses, as
defined in Note 1, of the Park Shirlington and Braddock Lee Apartments for the
year ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Rochester, New York
March 18, 1998
<PAGE>
Park Shirlington and Braddock Lee Apartments
Statement of Revenues and Certain Expenses
(In Thousands)
<TABLE>
Year Ended
December 31,
1997
--
<S> <C>
Revenues:
Rental income $4,642
Other income 128
------
4,770
------
Certain expenses:
Property operating and maintenance 1,837
Real estate taxes 241
-----
2,078
------
Revenues in excess of certain expenses $2,692
======
</TABLE>
The accompanying note is an integral part of the financial statement.
<PAGE>
Park Shirlington and Braddock Lee Apartments
Note to Statement of Revenues and Certain Expenses
December 31, 1997
1. Basis of Presentation and Summary of Significant Accounting Policies
Business
The accompanying statement of revenues and certain expenses includes the
operations (see "Basis of Presentation" below) of the Park Shirlington and
Braddock Lee Apartments, 2 residential properties owned by parties not
related to Home Properties of New York, Inc. (the "Company").
The Company, through its subsidiary Home Properties of New York, L.P.,
acquired 100% of the real estate of the Park Shirlington and Braddock Lee
Apartments, 548 apartment units located in 2 communities in suburban
markets in Northern Virginia, on March 13, 1998.
Basis of Presentation
The accompanying financial statement is not representative of the actual
operations of the Park Shirlington and Braddock Lee Apartments for the
period shown. Certain expenses have been excluded which may not be
comparable to the proposed future operations of the Park Shirlington and
Braddock Lee Apartments. Expenses excluded relate to property management
fees, interest expense, depreciation and amortization expense and other
expenses not directly related to the future operations of the Park
Shirlington and Braddock Lee Apartments. The Company is not aware of any
material factors relating to the Park Shirlington and Braddock Lee
Apartments that would cause the reported financial information not to be
necessarily indicative of future operating results.
Revenue Recognition
Rental income attributable to residential leases is recorded when due from
residents. Leases are generally for terms of one year.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited, In Thousands)
This unaudited pro forma Condensed Consolidated Balance Sheet is presented as if
the Company had purchased the Candlewood Apartments, Cedar Glen Apartments and
Park Shirlington and Braddock Lee Apartments on December 31, 1997. This
unaudited pro forma Condensed Consolidated Balance Sheet should be read in
conjunction with the Statement of Revenues and Certain Expenses of the
Candlewood Apartments and Park Shirlington and Braddock Lee Apartments on
December 31, 1997 and note thereto included elsewhere herein. In management's
opinion, all adjustments necessary to reflect the purchase of the Candlewood
Apartments, Cedar Glen Apartments and Park Shirlington and Braddock Lee
Apartments have been made.
<TABLE>
<CAPTION>
As of December 31, 1997
Home Park
Properties Candlewood Cedar Glen Shirlington &
of New York Apartments Apartments Braddock Lee Pro Forma Company
Inc. (A) (B) (B)Apartments (B) Adjustments (C) Pro Forma
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate, net $478,597 $6,506 $250 $3,758 $31,836 (D) $520,947
Cash and cash
equivalents 3,809 3,809
Other assets 61,417 61,417
Total assets $543,823 $6,506 $250 $3,758 $31,836 $586,173
LIABILITIES
Mortgage notes
payable $210,096 $ $ $ $ $210,096
Line of credit 8,750 11,069 19,819
Other liabilities 16,698 16,698
Total Liabilities 235,544 11,069 246,613
Minority interest 156,847 31,281 (E) 188,128
STOCKHOLDERS
EQUITY
Common stock $ 93 $ 93
Additional paid-in
capital 176,021 176,021
Accumulated deficit ( 19,700) 6,506 250 3,758 (10,514) (F) ( 19,700)
Treasury stock, at cost ( 426) ( 426)
Officer and Director
notes for stock
purchases ( 4,556) ( 4,556)
Total stockholders'
equity 151,432 6,506 250 3,758 (10,514) 151,432
Total liabilities and
stockholders'
equity $543,823 $6,506 $250 $3,758 $31,836 $586,173
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(Unaudited, In Thousands)
(A) Reflects the Company's historical consolidated balance sheet as of December
31, 1997 as reported on Form 10-K.
The Company's historical audited consolidated balance sheet includes the
balance sheet of Hill Court South and Hudson Arms Apartments (acquired
October 31, 1997), Cloverleaf Apartments (acquired November 3, 1997), and
Scotsdale Apartments (acquired November 26, 1997). The acquisitions were
recorded as follows:
<TABLE>
<CAPTION>
Appliances & Other Purchase
Land Building Equipment Assets Price
<S> <C> <C> <C> <C> <C>
Hill Court South
and Hudson Arms
Apartments $ 805 $ 5,565 $230 $64 $ 6,664 (1)
Cloverleaf 370 2,482 148 3,000 (2)
Scotsdale 1,692 11,532 376 13,600 (2)
Total $2,867 $19,579 $754 $64 $23,264
</TABLE>
(1) Funded by the issuance of 269,934 units at $24.69 per unit.
(2) Funded with Company's line of credit.
(B) Reflects the Candlewood Apartments, Cedar Glen Apartments and Park
Shirlington and Braddock Lee Apartments historical balance sheets as of
December 31, 1997 for the assets/liabilities acquired by the Company.
(C) The pro forma adjustments reflect the purchase of Candlewood Apartments,
Cedar Glen Apartments and Park Shirlington and Braddock Lee Apartments,
acquired February 9, 1998, March 2, 1998 and March 13, 1998, respectively.
The purchase price was allocated as follows:
<TABLE>
<CAPTION>
Appliances & Purchase
Land Building Equipment Price
<S> <C> <C> <C> <C>
Candlewood Apartments $1,550 $11,490 $310 $13,350
Cedar Glen Apartments 715 1,775 110 2,600
Park Shirlington and
Braddock Lee Apartments 8,220 17,632 548 26,400
$10,485 $30,897 $968 $42,350
</TABLE>
The appliances and equipment have an estimated useful life of ten years and
the building has an estimated useful life of thirty-five years.
<PAGE>
(D) Reflects the excess of the cash purchase price over the historical seller's
cost basis as follows:
<TABLE>
<CAPTION>
Purchase Historical Pro Forma
Price Cost Basis Adjustments
<S> <C> <C> <C>
Candlewood Apartments $13,350 $6,506 $ 6,844
Cedar Glen Apartments 2,600 250 2,350
Park Shirlington and
Braddock Lee Apartments 26,400 3,758 22,642
$42,350 $10,514 $31,836
</TABLE>
(E) Reflects the 185,778 units issued at $26.27 per unit and 994,620 units
issued at $26.54 per unit for the acquisition of Candlewood Apartments and
Park Shirlington and Braddock Lee Apartments, respectively.
(F) Represents historical seller's capital account zeroed out.
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited, In Thousands, Except Share and Per Share Data)
The unaudited pro forma Consolidated Statement of Operations for the year ended
December 31, 1997 is presented as if the acquisitions of Hill Court South and
Hudson Arms Apartments, Cloverleaf Apartments, Scotsdale Apartments, Candlewood
Apartments, Cedar Glen Apartments and Park Shirlington and Braddock Lee
Apartments had occurred on January 1, 1997. The unaudited pro forma Consolidated
Statement of Operations should be read in conjunction with the Statements of
Revenues and Certain Expenses of Candlewood Apartments and Park Shirlington and
Braddock Lee Apartments and notes thereto included elsewhere herein. In
management's opinion, all adjustments necessary to reflect the effects of the
purchase of Hill Court South and Hudson Arms Apartments, Cloverleaf Apartments,
Scotsdale Apartments, Candlewood Apartments, Cedar Glen Apartments and Park
Shirlington and Braddock Lee Apartments.
The unaudited pro forma Consolidated Statement of Operations is not necessarily
indicative of what the actual results of operations would have been assuming the
transactions had occurred as of the beginning of the period presented, nor does
it purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997
Hill Court/
Hudson, Park
Home Properties Cloverleaf & Shirlington &
of New York, Inc. Scotsdale Candlewood Cedar Glen Braddock Lee Pro Forma Company
Historical (A) Apts. (B) Apts. (C) Apts. (C) Apts. (C) Adjustment Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $64,002 $3,949 $2,242 $516 $4,642 $ $75,351
Property other income 2,222 94 45 13 128 2,502
Other income 3,473 16 3,489
Total revenues 69,697 4,059 2,287 529 4,770 81,342
Expenses:
Operating and maintenance 31,317 2,103 891 223 2,078 36,612
General and administrative 2,255 100(D) 2,355
Interest 11,967 1,905(E) 13,872
Depreciation and amortization 11,200 1,539(F) 12,739
Total expenses 56,739 2,103 891 223 2,078 3,544 65,578
Income before loss on
disposition of property ,
minority interest and
extraordinary item 12,958 1,956 1,396 306 2,692 (3,544) 15,764
Loss on disposition of property 1,283 1,283
Income before minority interest
and extraordinary item $11,675 $1,956 $1,396 $ 306 $2,692 ($3,544) 14,481
Minority interest of Unit holders 6,078
Income before extraordinary item 8,403
Extraordinary item, prepayment penalties ( 957)
net of $817 allocated to minority interest
Net income $ 7,446
Basic earnings per shared data:
Income before extraordinary item $ 1.13
Extraordinary item ($ 0.13)
Net Income $ 1.00
Diluted earnings per share data:
Income before extraordinary item $ 1.11
Extraordinary item ($ 0.13)
Net Income $ 0.98
Weighted average number of shares outstanding:
Basic 7,415,888
Diluted 7,558,167
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited, In Thousands)
(A) Reflects the historical consolidated statement of operations for the
Company for the year ended December 31, 1997.
(B) Reflects the combined historical revenues and certain expenses of Hill
Court/Hudson, Cloverleaf and Scotsdale Apartments which were not owned by
the Company for the period January 1, 1997 through the respective dates of
acquisition.
(C) Reflects the historical revenues and certain expenses of Candlewood
Apartments, Cedar Glen Apartments and Park Shirlington and Braddock Lee
Apartments which were not owned by the Company for the year ended December
31, 1997.
(D) Reflects additional general and administrative expenses.
(E) Reflects the increase related to debt borrowed to finance the acquisitions.
The interest is calculated as follows:
Principal
Balance Interest
Line of credit average
of 7.32%:
Cloverleaf Apartments
(for the period
1/1/97-11/3/97) $ 3,000 $183
Scotsdale Apartments
(for the period
1/1/97-11/26/97) 13,600 912
Candlewood Apartments
(for the period
1/1/97-12/31/97) 8,469 620
Cedar Glen Apartments
(for the period 1/1/97 -
12/31/97) 2,600 190
$27,669 $1,905
(F) Reflects depreciation and amortization related to the acquisition. See
Notes on page 14 for further information on useful lives of these assets.
<PAGE>
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: March 23, 1998
By: /s/ David P. Gardner
David P. Gardner
Vice President
Chief Financial Officer and
Treasurer
Date: March 23, 1998
By: /s/ David P. Gardner
David P. Gardner
Vice President
Chief Financial Officer and
Treasurer
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Location
Exhibit 2.1
<S> <C>
Purchase and Sale Agreements dated June 17, 1997 among
Home Properties of New York, L.P. and various individuals
relating to Hill Court Apartments South and Hudson Arms Previously filed as an Exhibit to
Apartments together with a letter amendment dated Form 8-K filed on 2/20/98.
September 24, 1997
Exhibit 2.2
Contract of Sale, dated October 10, 1997, between Home
Properties of New York, L.P. and Hudson Palisades Associates Previously filed as an Exhibit to
relating to Cloverleaf Apartments Form 8-K filed on 2/20/98.
Exhibit 2.3
Contribution Agreement, dated November 17, 1997 among Home
Properties of New York, L.P. and various trusts relating Previously filed as an Exhibit to
to Scotsdale Apartments Form 8-K filed on 2/20/98.
Exhibit 2.4
Contribution Agreement, dated November 7, 1997,
among Home Properties of New York, L.P. and
Donald H. Schefmeyer and Stephen W.
Hall relating to Candlewood Apartments, together with Previously filed as an Exhibit to
Amendment No. One, dated December 3, 1997 Form 8-K filed on 2/20/98.
Exhibit 2.5
Purchase and Sale Agreement, dated November 26, 1997 by
and between Home Properties of New York, L.P., and Cedar
Glen Associates. Pages _____ to _____
Exhibit 2.6
Contribution Agreement, dated March 2, 1998 among
Home Properties of New York, L.P., Braddock Lee Limited
Partnership and Tower Construction Group, LLC. Pages _____ to _____
<PAGE>
Exhibit 2.7
Contribution Agreement, dated March 2, 1998 among
Home Properties of New York, L.P., Park Shirlington
Limited Partnership and Tower Construction Group, LLC. Pages _____ to _____
Exhibit 2.8
Press Release Issued on March 20, 1998 Pages _____ to _____
Exhibit 23.0
Consent of Coopers & Lybrand, L.L.P. Pages ____ to _____
</TABLE>
Note: Omitted Schedules and Exhibits to the foregoing will be supplied
upon request.
<PAGE>
Exhibit 2.5
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement"), made as of the 26th day of
November , 1997 by and between
HOME PROPERTIES OF NEW YORK, L.P., a New York limited partnership,
having its principal office at 850 Clinton Square, Rochester, New York
14604, (herein called "Buyer"), and
CEDAR GLEN ASSOCIATES, having an office at 9140 Old Bustleton Avenue,
Philadelphia, Pennsylvania (herein called the "Seller").
W I T N E S S E T H:
WHEREAS, Seller is the fee owner of a certain residential apartment complex
located in the City of Philadelphia, State of Pennsylvania more commonly known
as Cedar Glen Apartments, all as more particularly described below;
WHEREAS, Seller desires to sell said property to Buyer, and Buyer desires
to purchase that property from
Seller, upon the happening of certain events;
NOW, THEREFORE, in consideration of the property, mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency whereof being hereby acknowledged, the parties hereby agree as
follows:
1. REAL PROPERTY DESCRIPTION. The Real Property to be conveyed consists of one
or more parcels of land known as Cedar Glen Apartments, which includes 110
apartments (the "Project"), located in the City of Philadelphia and State
of Pennsylvania, more particularly described on Exhibit "A", attached
hereto, together with and including all buildings and other improvements
thereon, including but not limited to, the 110 apartment units, and all
rights of Seller in and to any and all streets, roads, highways, alleys,
driveways, easements and rights-of-way appurtenant thereto (the foregoing
are hereafter collectively referred to as the "Property").
2. OTHER ITEMS. The following items now in or on the Property, are included in
this sale and shall become the property of Buyer at Closing (as hereafter
defined):
A all heating, plumbing and lighting fixtures,
B ranges, refrigerators and garbage disposals (one for each
apartment),
C water heaters,
D any and all bathroom fixtures, wall-to-wall carpeting, exhaust
fans, signs, screens, maintenance building, model unit furniture,
fences, carpeting and runners, cabinets, mirrors, shelving, any
air conditioning units, mail boxes, office furniture, and related
equipment, if any, in connection with the Project and which are
owned by Seller,
Page 1
<PAGE>
E other than a computer, a printer, a fax machine and a photo
copier, any fixtures appurtenant to the Property and any other
furniture or equipment used in connection with the operation and
maintenance of the Property (hereinafter with the items listed in
A-D above, collectively, the "Other Items") and which are owned
by the Seller.
Seller's interest in the Other Items will be transferred to Buyer
by absolute Bill of Sale.
3. EXCEPTIONS. Buyer agrees to accept title to the Property subject only to
the following:
A. Restrictive covenants of record common to the tract or
subdivision, provided same have not been violated.
B. Water line, sanitary sewer, drainage, gas line and main,
electrical, telephone easements and other easements of record
provided that, no building or other improvements, including
Project signage, are located over the area covered by such
easement or are adversely affected.
4. PRICE AND MANNER OF PAYMENT.
A. The purchase price for the Property shall be a total of Two
Million Six Hundred Thousand and NO/100 ($2,600,000) (the
"Purchase Price") payable as follows: (i) by payment of $50,000
(the "Deposit") as a deposit; and (ii) the remainder payable at
Closing by check or by wire transfer to an account designated by
Seller.
B The Deposit shall be paid to Mesirov, Gelman, Jaffe, Cramer &
Jamieson (the "Escrow Agent"), who shall deposit that amount in
an interest bearing account. The Deposit (with interest) shall be
applied against the Purchase Price at Closing. The Deposit shall
be forfeited to Seller as Seller's sole remedy and as liquidated
damages if Buyer fails to complete this transaction for any
reason other than a termination of this Agreement as permitted
herein. In the event of such a termination, Seller shall promptly
instruct the Escrow Agent to refund the Deposit (with interest)
to Buyer and upon the return of the Deposit this Agreement shall
wholly cease and terminate and neither party shall have any
further claim against the other by reason of this Agreement.
5. ADJUSTMENTS AT CLOSING. The following shall be adjusted and prorated
between the parties at Closing as if the Buyer was the owner of the
Property as of midnight of the night preceding the Closing Date:
A current fiscal year real estate taxes,
B water charges,
C sewer charges,
D fuel,
E electricity,
Page 2
<PAGE>
F all rentals and security deposits (including interest thereon)
pursuant to the leases,
G charges under the Service Contracts,
H laundry income;
I any other charges incurred with respect to the Property which
Seller is obligated to pay; and
J Rents.
(1) All rent payments collected for the month of Closing shall
be deemed prorated as between the parties as of the Closing.
(2) All rent collected after Closing, for any period prior to
Closing, shall belong to Seller and, if paid to Buyer, Buyer
shall promptly send such rent to Seller.
(3) All rent collected by Seller, prior to the Closing, for
rental periods subsequent to Closing shall be paid to Buyer
at Closing.
(4) All rent collected by Buyer or Seller for rental periods
after the Closing shall belong to Buyer and, if paid to
Seller, Seller shall promptly send such rent to Buyer.
Any error in the calculation of adjustments shall be corrected
subsequent to Closing with appropriate credits to be given based
upon corrected adjustments, provided, however, that the
adjustments (except if errors are caused by misrepresentations)
shall be final upon expiration of the sixtieth day after Closing.
6. COSTS. Buyer shall pay all recording fees, one-half of the transfer tax,
Buyer's attorneys' fees, the costs of obtaining a binder or commitment from
a title insurance company, the premium for Buyer's title insurance policy,
up to $15,000.00 towards the prepayment penalty with respect to the
existing mortgage on the Property and all other costs and expenses
incidental to or in connection with closing this transaction customarily
paid for by the purchaser of similar property. Seller shall pay one-half of
the transfer tax, attorneys' fees, if any, incurred by Seller in connection
with this transaction, any prepayment penalty in excess of $15,000.00 and
all other costs and expenses incidental to or in connection with closing
this transaction customarily paid for by the seller of similar property.
7. TITLE AND SURVEY. Within ten (10) days after the date of this Agreement
Seller shall provide Buyer with a copy of the most recent title policy and
instrument survey of the Property in Seller's possession.
8. INSPECTION. Upon and after acceptance of this Agreement by Seller, Seller
agrees that Buyer and its authorized representatives shall have the right
and privilege to enter upon the Property and Seller's offices, upon
reasonable notice, during regular business hours, for the purpose of
gathering such information and conducting such environmental and
engineering studies or other tests and reviews as Buyer may deem
appropriate and necessary. All such inspections, studies, tests and reviews
shall be at Buyer's sole
Page 3
<PAGE>
expense and Buyer or its agents shall supply
Seller with proof of insurance as requested by Seller. Seller agrees to
cooperate with Buyer by making available to Buyer such records, plans,
drawings or other data as may be in Seller's possession or control relating
to the Property and its operation; provided, however, that Buyer agrees to
indemnify Seller of and from any loss or damage occasioned by such entry,
and agrees further to restore to its original condition, at Buyer's own
cost and expense, any property disturbed by such entry.
9. TITLE DOCUMENTS. At the time of Closing, Seller shall deliver to Buyer the
following:
A A warranty deed conveying good and marketable title to the
Property.
B A Bill of Sale conveying good title, free of all encumbrances to
the Other Items.
C A current rent roll ("Rent Roll") certified, as of the date of
Closing, which shall include a list of all tenants, all rental
obligations of each tenant with respect to the Property and all
security deposits (with interest).
D Complete originals of each lease listed on the Rent Roll.
E An assignment, assumption, and indemnity agreement of all of
Seller's rights and obligations to all contracts affecting the
Property (the "Service Contracts), to all leases encumbering the
Property and to all security deposits (including interest
thereon) in substantially the form attached hereto as Exhibit B.
In lieu of an assignment of the security deposits, the Seller may
provide Purchaser with a credit at Closing for all security
deposits (with interest thereon) held by Seller with respect to
all leases encumbering the Property. In either case, Buyer will
indemnify and hold the Seller harmless from any claims from
residents with respect to security deposits transferred to Buyer
or for which Buyer is provided a credit at Closing as the case
may be.
F As specified by Buyer, a copy of all data concerning the Property
that is stored in the computer that is excluded from the sale.
10. TITLE EXAMINATION; OBJECTIONS TO TITLE.
A Within the Due Diligence Period (as hereinafter defined), Buyer
agrees to furnish to Seller a specification in writing of any
objection to title that Buyer believes it is not required to take
title subject to, which shall not include the exceptions
permitted in Section 3 of this Agreement. Seller may, but shall
not be required to, bring any action or proceedings or take such
other action as may be appropriate to render title to the
Property marketable.
B Seller shall have ten (10) days from receipt of notice, if any,
from Buyer of its title objections within which it must notify
Buyer in writing if it cannot cure.
C In the absence of such notice from Seller, Seller shall be
obligated to cure the title objections, if any, made by Buyer. If
Seller notifies Buyer that Seller is unable to convey good and
marketable title to the property described above, subject to and
in accordance with the provisions of this contract, or is not
able or unwilling to obtain a commitment for title insurance and
thereafter pay the premium for said title insurance to insure the
exception(s) on behalf of the Buyer
Page 4
<PAGE>
then, except as hereinafter
provided, Buyer may elect, by written notice to Seller, to
either:
(1) terminate this Agreement by notice delivered to the
Seller within five (5) days of receipt of Seller's
notice that Seller cannot cure the title objections, or
is unwilling or unable to obtain title insurance in
which event this Agreement shall wholly cease and
terminate, and neither party shall have any further
claim against the other by reason of this Agreement,
except Buyer shall have the right to the return of the
Deposit; or
(2) Notwithstanding anything to the contrary contained
herein, Buyer may accept such title as Seller may be
able to convey, without reduction of the Purchase Price
or any credit or allowance against the same and without
any other liability on the part of Seller and if Buyer
elects to do so, Seller shall have no right to
terminate this Agreement as hereinabove provided. The
acceptance of the deed by Buyer shall be deemed to be a
full performance and discharge of every agreement and
obligation on the part of Seller to be performed
pursuant to the provisions of this Agreement, except
those, if any, which are herein specifically stated to
survive the delivery of the deed.
(3) If a search of the title discloses judgments,
bankruptcies or other returns against other persons
having names the same as or similar to that of Seller,
Seller will on request deliver to Buyer an affidavit
showing that such judgments, bankruptcies or other
returns are not against Seller.
11. USE OF PROPERTY. Seller represents that, to the best of Seller's knowledge,
the Property and any improvement thereon are in full compliance with
restrictive covenants, statutes, ordinances, regulations, and/or other
administrative enactments including, but not limited to building codes and
zoning ordinances for the present use as a multi- residential dwelling.
12. CLOSING DATE. The Closing shall occur not less than 65 nor more than 80
days after the end of the Due Diligence Period (as hereinafter defined)
provided that the Buyer does not terminate this Agreement as permitted
herein (the "Closing" or "Closing Date") by mail or at the Seller's office,
or at such other time and place as may be mutually agreed upon.
13. POSSESSION. Buyer shall have possession and occupancy of the Property from
and after the date of delivery of the deed, subject only to matters herein
provided for.
14. BROKER'S COMMISSION. Buyer represents to Seller that it did not employ any
broker in connection with this sale other than Guiney and Glatstian
Associates, Inc. and that Buyer shall be responsible for the payment of all
fees and commissions to that broker. Seller and Buyer each agree to
indemnify the other for any and all claims and expenses, including legal
fees, if any other fees or commission is determined to be due by reason of
the employment of any other broker by the indemnifying party. This
representation and indemnity shall survive the Closing.
Page 5
<PAGE>
15. RISK OF LOSS. The risk of loss or damage to the Property by fire or other
casualty or by taking by eminent domain, until Closing, shall be assumed by
Seller. Upon the happening of such event, but only if the cost of repair or
replacement exceeds $100,000. Buyer shall have the election of terminating
this Agreement without further liability hereunder, or of completing this
purchase and receiving the Seller's share of insurance monies, collectible
for such loss or damage, or the award for such taking by eminent domain. In
the event that the cost of repair or replacement is less than $100,000,
Buyer shall not have the option of terminating this Agreement, but shall
have the right to receive the Seller's share of insurance monies,
collectible for such loss or damage, or the award for such taking by
eminent domain.
16. CONDITIONS PRECEDENT.
A It shall be a condition to Buyer's obligations to close that all
of the representations and warranties of the Seller are true and
correct as of the Closing;
B It shall be a condition to Buyer's obligation to close that there
are at Closing 110 apartment units in rentable condition, and to
the best of Seller's knowledge which are all in compliance with
federal, state, county or local laws, ordinances, rules and
regulations;
C Buyer shall have [forty-five (45)] days after the date of this
Agreement (the "Due Diligence Period") within which to review and
inspect the Property and the Other Items (including, but not
limited to, performing engineering and Phase I environmental
studies), the Seller's books and records pertaining to the
Property and the Other Items, matters relating to zoning
compliance and compliance by the Property and the Other Items
with other applicable governmental regulations, the market in
which the Property operates, the tax assessment on the Property
as it relates to the purchase price and to the assessment on
comparable properties, Service Contracts, executory contracts,
and such other matters as Buyer shall deem reasonably necessary
or appropriate in connection with the Property and the Other
Items. If Buyer determines that it does not wish to purchase the
Property and the Other Items as a result of its findings during
the Due Diligence Period and notifies Seller of such decision
within the Due Diligence Period, this Agreement shall be null and
void and neither party shall have any further rights or
obligations under this Agreement, except Buyer shall have the
right to the return of the Deposit. Buyer's failure to object
within the Due Diligence Period shall be deemed a waiver by Buyer
of the condition contained in this Section 16(C).
It is understood that the contingencies set forth herein are for
Buyer's benefit and may be waived by Buyer at any time. If the
above contingencies are not satisfied or waived by the Buyer, the
Buyer shall have the right to terminate this Agreement by written
notice to Seller. In the event of such a termination, this
Agreement shall be null and void and neither party shall have any
further rights or obligations under this Agreement, except Buyer
shall have the right to the return of the Deposit.
17. ENVIRONMENTAL CERTIFICATION. By acceptance of this Agreement, Seller
represents, warrants, and certifies to Buyer that Seller has no knowledge
of any violation, and has received no notice of any violation of any
applicable Environmental Laws (below defined). To the best of Seller's
knowledge, Seller has not, nor has any
Page 6
<PAGE>
other person, used, generated,
stored, dumped, released, buried, dispersed or emitted any Hazardous
Substance on the Property in violation of Environmental Laws nor are there
any underground tanks on the Property, nor is there a violation of any
Environmental Laws with respect to the current use of the Property.
"Environmental Laws" shall mean all federal, state and local environmental,
health, chemical use, safety and sanitation laws, statutes, ordinances and
codes relating to the protection of the environment and/or governing the
use, storage, treatment, generation, transportation, processing, handling,
production or disposal of any Hazardous Substance and the rules,
regulations, and orders with respect thereto. "Hazardous Substance" means,
without limitation, any flammable, explosive or radioactive material,
polychlorinated biphenyl, petroleum or petroleum product, methane,
hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials, as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
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.), the Toxic
Substances Control Act, as amended (15 U.S.C. Sections 2601, et seq.), or
any other Environmental Law and the regulations promulgated thereunder
applicable on the effective date of this Agreement. From the date of
acceptance hereof to and including the date of Closing, Seller shall
promptly provide Buyer with a copy of any notice, citation, complaint or
other directive from any person, entity or governmental authority whereby
Seller's compliance with Environmental Laws is called into question, and
promptly notify Buyer of any new information or other developments which
could tend to supplement or modify the information contained herein.
18. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer as of the date hereof and as of Closing, that:
A To the best of Seller's knowledge, there is no litigation,
proceeding or investigation pending, or to the knowledge of
Seller threatened, against or affecting Seller that might affect
or relate to the validity of this Agreement, any action taken or
to be taken pursuant hereto, or the Property, the Other Item or
any part or the operation thereof, whether or not fully covered
by insurance or any proceeding pending for the increase or
decrease of the assessed valuation of all or a portion of the
Property.
B To the best of Seller's knowledge, Seller has complied with and
is not in default under, or in violation of, or received any
notice that the Seller, the Property or the Other Items may be in
violation of, any law, ordinance, rule, regulation or code or
condition in any approval or permit pursuant thereto (including
without limitation, any zoning, sign, environmental, labor,
safety, health or price or wage control, ordinance, rule,
regulation or order applicable to the ownership, development,
operation or maintenance of the Property or the Other Items.
Page 7
<PAGE>
C With the exception of one lease, there are no written leases
affecting the Property with a term greater than one (1) year.
D To the best of Seller's knowledge, there is no pending
condemnation of the Property, or any part thereof, or of any
plans for improvements which might result in a special assessment
against the Property.
E Seller has not received any written notice or request from any
insurance company, Board of Fire Underwriters (or organization
exercising functions similar thereto) requesting the performance
of any work or alteration in respect of the Property or the Other
Items with which Seller has not complied.
F Security deposits (with interest) held by Seller will be
correctly identified by Seller as of Closing with respect to the
Property.
G Seller and Seller's employees and agents have not let, and will
not let any contracts for improvements to the Property which will
not be fully completed and fully paid for prior to Closing.
H Until Closing, Seller shall continue to fulfill all of its
obligations under the terms of the Leases encumbering the
Property, and under the Service Contracts, and Seller shall
operate, maintain and repair at Seller's expense, all
landscaping, buildings, fixtures and facilities and shall
continue to operate the Property in the manner in which Seller
currently does so.
I The Rent Roll to be given by Seller to Buyer at Closing will be
true and correct.
J The financial information previously provided to Buyer with
respect to the Property is substantially accurate.
K All of the ranges and refrigerators located within the apartment
units are the property of the Seller and not of the tenants.
L This Agreement has been duly authorized, executed and delivered
and constitutes a legal and binding obligation of Seller,
enforceable in accordance with its terms, except as may be
limited by bankruptcy and other laws affecting creditors' rights
generally.
M Neither the entry into this Agreement, nor the carrying out of
the transactions contemplated herein has resulted or will result
in any violation of, or be in conflict with, or result in the
creation of, any mortgage, lien, encumbrance or charge (other
than those contemplated hereby) upon any of the properties or
assets of Seller pursuant to, or constitute a default under, any
certificate of incorporation, by-law, partnership agreement, or
mortgage, indenture, contract, agreement, instrument, franchise,
permit, judgment, decree, order, statute, rule or regulation
applicable to Seller or the Property.
N To the best of Seller's knowledge, no consent or approval by, or
authorization of, or filing, registration or qualification with,
any federal, state or local governmental authority, bureau,
department or agency, or any corporation, person or other entity
is required as of the Closing either for the execution, delivery
or performance of this Agreement by Seller, or in connection with
Page 8
<PAGE>
the consummation by Seller of the transactions contemplated by
this Agreement, except for such consents, approvals,
authorizations, filings, registrations or qualifications as have
been obtained by Seller as of the date hereof and disclosed and
accepted by Buyer.
O Seller shall permit Buyer to examine and copy all of the leases
encumbering the Property, including all additions, amendments or
modifications thereto as provided herein. Seller shall not accept
any prepayment in excess of one month of any rent due under any
leases with respect to the Property.
The representations and warranties of Seller contained in this
Agreement, the statements in any Exhibit or Schedules attached to this
Agreement, or other instruments furnished to Buyer at or prior to
Closing pursuant to this Agreement, or in connection with the
transactions contemplated by Seller pursuant to this Agreement, do not
contain any untrue statements of a material fact, or fail to state a
material fact necessary to make it not misleading.
The representations and warranties contained herein shall survive
delivery and recording of the deed and shall not merge therein.
Seller acknowledges that each of the representations made by it in
this paragraph 18 and elsewhere in this Agreement is material to Buyer
hereunder. As to any representation or warranty set forth herein,
Seller shall indemnify, defend and hold Buyer sale and harmless from
and against any and all loss, damage, claim, counterclaim, cause of
action, cost or expense, including, without limitation, reasonable
attorneys' fees and disbursements at both trial and appellate levels,
suffered, paid or incurred by, or asserted against Buyer, directly or
indirectly, whether foreseen or unforeseen, and whether for personal
injury or death or for property damage or otherwise by reason of
Seller's breach of any warranty or obligation under this Agreement or
if any representation of Seller in this Agreement is wholly or
partially untrue.
Irrespective of anything to the contrary contained herein, the
representations and warranties of Seller and the indemnity by Seller
herein contained shall expire and be of no further effect upon the
expiration of 12 months after Closing. This expiration shall not apply
to any breach of warranty or representation which arises out of fraud
or an intentional material misrepresentation made by Seller.
19. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
Seller as of the date hereof and as of the Closing:
(a) Buyer is and will be as of the date of Closing duly
organized, validly existing and in good standing under the
laws of the State of New York and has all the requisite
power and authority to enter into and carry out this
Agreement according to its terms.
(b) This Agreement has been duly authorized, executed and
delivered and constitutes a legal and binding obligation of
Buyer, enforceable in accordance with its terms, except as
may be limited by bankruptcy and other laws affecting
creditors' rights generally.
Page 9
<PAGE>
(c) To the best of its knowledge after due inquiry, there is no
litigation, proceeding or investigation pending, or to the
knowledge of Buyer threatened, against or affecting Buyer or
the partners of Buyer that might affect or relate to the
validity of this Agreement or any action taken or to be
taken pursuant hereto, or that might have a material adverse
effect on the business or operations of the Buyer.
20. ASSIGNMENT. This Agreement, and all rights of Buyer hereunder, may be
assigned by Buyer to any affiliate without Seller's prior consent. Any
other assignment by Buyer shall require the Seller's prior written consent,
which consent shall not be unreasonably withheld. Any assignment by the
Buyer shall not relieve the Buyer of any obligation of the Buyer created by
this Agreement. Seller may convey its interest in the Property to an
affiliate without the Buyer's prior written consent, provided that the
assignee shall agree in writing to be subject to the terms of this
Agreement.
21. NOTICE. All notices given pursuant to any provisions of this Agreement
shall be in writing and shall be effective only if delivered personally, or
sent by registered or certified mail, postage prepaid or sent by a national
over-night carrier, to the addresses set forth below:
To Seller: Dresner & Litz
9140 Old Bustleton Road
Apartment C-111
Philadelphia, PA 19115
Attn: Jack Litz and Arnold Dresner
with a
copy to: Mesirov, Gelman, Jaffee, Cramer & Jamieson
1735 Market Street
Philadelphia, PA 19103
Attn: Harvey Shapiro, Esq.
To Buyer: HOME PROPERTIES OF NEW YORK, L.P.
Attn: Norman Leenhouts, Chairman
850 Clinton Square
Rochester, New York 14604
22. PLANS, WARRANTIES AND GUARANTIES. Seller agree to provide Buyer with all
plans and architectural drawings in Seller's possession for the
improvements completed at the Property, including, without limitation, all
"as-built" plans in Seller's possession and Seller further agrees that it
will endeavor to turn over the same to Buyer at Closing. Seller shall
assign to Buyer at Closing any and all guaranties and warranties Seller has
with respect to the Property, the improvements thereon, and the equipment
relating to the Property, if any.
Page 10
<PAGE>
23. APPLICABLE LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Pennsylvania.
24. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the parties, and any and all prior understandings or agreements,
whether written or oral, are hereby merged into this Agreement. This
Agreement cannot be modified except by a written instrument signed by the
parties hereto.
25. BINDING AGREEMENT. This Agreement shall not be binding or effective until
properly executed by Buyer and Seller.
26. CONFIDENTIALITY. By execution of this Agreement and except as otherwise
provided herein, prior to the Closing each of Seller and Buyer agree to
keep any and all information with respect to the transactions contemplated
by this Agreement strictly confidential, and will not disclose any such
information, without the other's prior written consent. Buyer may disclose
the existence of this Agreement to the extent necessary to conduct its due
diligence with respect to the Property.
27. FINANCIAL ACCESS. Seller will provide a signed representation letter in
substantially the form attached hereto as Exhibit C to enable an
Independent Public Accountant to render an opinion on such financial
statements. Seller will provide access by Buyer's representatives, to all
financial and other information relating to the Property as is sufficient
to enable them to prepare audited financial statements, at Buyer's 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.
IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be
executed as of the day and date first above written.
HOME PROPERTIES OF NEW YORK, L.P.
For purposes of agreeing to act as By: Home Properties of New York, Inc.
Escrow Agent hereunder General Partner
MESIROV, GELMAN, JAFFE,
CRAMER & JAMIESON By: /s/ Norman Leenhouts
----------------------------------
By: /s/ Bernard B. Kolodner Title: Chairman
------------------------- ----------------------------------
Bernard B. Kolodner
Title: Partner
-------------------------
CEDAR GLEN ASSOCIATES
By: /s/ Arnold Dresner
-------------------------------
Arnold Dresner, General Partner
/s/ Jack Litz
-------------------------------
Jack Litz, General Partner
Page 11
<PAGE>
Exhibit 2.6
CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement"), made as of the 2nd day of March,
1997 by and among
HOME PROPERTIES OF NEW YORK, L.P., a New York limited partnership,
having its principal office at 850 Clinton Square, Rochester, New York
14604, (the "Partnership")
BRADDOCK LEE LIMITED PARTNERSHIP, a Virginia limited partnership (the
"Contributor"), having its principal office at 11501 Huff Court, North
Bethesda, Maryland 20895; and
TOWERCONSTRUCTION GROUP, LLC, a Maryland limited liability company
("Tower"), having its principal office at 11501 Huff Court, North
Bethesda, Maryland 20895.
W I T N E S S E T H:
WHEREAS, the Contributor owns a certain apartment complex and adjacent land
located in the State of Virginia, all as more particularly described on Exhibit
A;
WHEREAS, the Contributor wishes to contribute its interest in the Property
in exchange for limited partnership interests in the Partnership;
WHEREAS, Partnership desires to acquire the Property upon the happening of
certain events;
WHEREAS, Tower has the right to manage the Property and earn fees therefor
pursuant to that certain Management Agreement, dated on or about the date first
written above, by and between the Contributor and Tower (the "Management
Agreement");
WHEREAS, Tower wishes to contribute its interests in the Management
Agreement in exchange for limited partnership interests in the Partnership and
the Partnership wishes to acquire Tower's interest in the Management Agreement
in order to effect a termination of the Management Agreement;
WHEREAS, the parties hereto also desire, subject to the terms and
conditions set forth herein and in the agreement noted below, that Park
Shirlington Limited Partnership ("Park Shirlington") contributes to the
Partnership and the Partnership shall accept from Park Shirlington, the real
property described in Schedule 1 attached hereto (the "Park Shirlington
Property"), pursuant to a contribution agreement entered into between Park
Shirlington, Tower and the Partnership of even date herewith (the "Park
Shirlington Contribution Agreement"), and that the transactions contemplated
therein close simultaneously with, and as a condition to, the closing of the
transactions contemplated hereby;
NOW, THEREFORE, in consideration, mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged, the parties hereby agree as follows:
Page 1
<PAGE>
1. REAL PROPERTY DESCRIPTION. The Real Property to be contributed by the
Contributor consists of an apartment complex commonly known as Park
Shirlington Apartments, which includes 254 apartments and one apartment
converted for use as an office (the " Project"), located in Alexandria,
Virginia, on land more particularly described on Exhibit A attached hereto,
together and including all buildings and other improvements thereon,
including but not limited to, the 254 apartment units and one apartment
converted for use as an office, and all rights in and to any and all
streets, roads, highways, alleys, driveways, easements and rights-of-way
appurtenant thereto (the foregoing are hereafter collectively referred to
as the "Property").
2. OTHER ITEMS. The following items now or at the Closing (hereinafter
defined) in or on the Property and owned by the Contributor, are included
in this Agreement and shall become the property of Partnership at Closing
(as hereafter defined):
A all heating, air-conditioning, plumbing and lighting fixtures,
B ranges, refrigerators and disposals (one of each for each
apartment unit),
C water heaters,
D any and all bathroom fixtures, exhaust fans, hoods, signs,
screens, maintenance building, fences, cabinets, mirrors,
shelving, mail boxes, and any and all related equipment in
connection with the Property, and
E any fixtures appurtenant to the Property and any other furniture
or equipment used in connection with the operation and
maintenance of the Property (hereinafter with the items listed in
A-D above, collectively, the "Other Items").
The Other Items will be acquired by the Partnership free and clear of
all liens and encumbrances.
3. CONSIDERATION AND MANNER OF PAYMENT.
A In consideration for the contribution of the Property by the
Contributor to the Partnership, subject to the terms and conditions
herein, the Partnership agrees to issue to the Contributor or to the
partners of the Contributor as designated in writing by the
Contributor (collectively, the "Designees" and individually, a
"Designee") limited partnership interests in the Partnership
(collectively, the "Units" and each one of the Units, a "Unit") having
a value, determined as described in paragraph C below, of Eleven
Million Six Hundred Forty-Six Thousand Three Hundred and Forty-Four
and no/100 Dollars ($11,646,344) (the "Contributor's Contribution
Value"). Notwithstanding the above, the Contributor may only designate
individuals or entities to be Designees who have established to the
reasonable satisfaction of the Partnership that they are accredited
investors under applicable securities laws.
B In consideration for the contribution of the Management Agreement by
Tower to the Partnership, subject to the terms and conditions herein,
the Partnership agrees to issue Units having a value, determined as
described in paragraph C below, of Six Hundred Twelve Thousand Nine
Hundred Sixty-Six and no/100 Dollars ($612,966) ("Tower's Contribution
Value"). Notwithstanding anything to the contrary herein, the
Partnership shall be required to issue the Units to Tower and Tower
shall be obligated to contribute the Management Agreement to the
Page 2
<PAGE>
Partnership only if and when the Closing occurs with respect to the
contribution of the Property by the Contributor to the Partnership.
C The total number of Units to be issued to the Contributor, the
Designees and Tower will be equal to the Contributor's Contribution
Value and Tower's Contribution Value, respectively, divided by the
"Market Value" of a Unit. The Market Value of a Unit shall be equal to
the average closing price for 20 consecutive trading days prior to,
but not including, the Closing Date of a share of common stock of Home
Properties of New York, Inc., ("HME") as listed on the New York Stock
Exchange. Notwithstanding the above, the Market Value shall not exceed
$30 per Unit.
D The initial distribution payable with respect to Units issued
hereunder shall be made on the date on which HME 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 Contributor, Designees and Tower 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.
E Upon the expiration of the Due Diligence Period and provided
Partnership has not exercised its right to terminate this Agreement,
Partnership shall deposit the sum of Two Hundred Thirty Thousand
Dollars ($230,000.00) with Tri-State Commercial Settlements, Inc. (the
"Title Company") as a good faith deposit hereunder (the "Deposit").
The Deposit shall be deposited in an FDIC or FSLIC institution and
shall be held and disbursed as provided in the Escrow Agreement
attached hereto as Exhibit B. The Deposit, along with accrued interest
shall be refunded to the Partnership at Closing in the event
Partnership consummates the transaction contemplated hereby, upon
termination of this Agreement by Partnership expressly permitted
hereunder, or upon Contributor's default. In the event Partnership
fails to acquire the Property other than by reason of a termination by
Partnership expressly permitted hereunder or Contributor's default,
the Deposit shall, at Contributor's election, be forfeited to the
Contributor as liquidated damages. Any and all sums deposited
hereunder shall be applied or refunded as provided herein. (All
references to "Deposit" shall be deemed to include all accrued
interest thereon).
4. ADJUSTMENTS AT CLOSING. The following shall be adjusted and prorated
between the Contributor and the Partnership at Closing as if the
Partnership was the owner of the Property as of the Closing Date. All such
adjustments and pro-rations between Contributor and Partnership shall be
settled in cash and shall not increase or decrease the Contributor's
Contribution Value, as the case may be.
A All ad valorem real estate taxes with respect to the Property for
the calendar year or other applicable tax period in which the
Closing is consummated. If the amount of such taxes is not known
at Closing, proration of such taxes will be made upon the basis
of the previous year's or other most recent applicable tax period
taxes. In such event, the Contributor and Partnership agree to
re-prorate/adjust the taxes between themselves after the Closing,
based upon the full amount of the actual taxes for the Property
when the amount of the actual taxes is known.
B water charges.
Page 3
<PAGE>
C sewer charges.
D fuel, electricity and other utilities.
E All tenant security deposits (and interest thereon if required by
law or contract to be earned thereon) shall be transferred or
credited to Partnership at Closing. At Closing, Partnership shall
assume Contributor's obligations related to tenant security
deposits to the extent they are properly credited and transferred
to Partnership. Partnership agrees that it will indemnify,
defend, hold Contributor harmless and will indemnify Contributor
against all demands, claims, losses, costs, damages, expenses or
liabilities, including, but not limited to, attorneys' fees,
arising out of or in connection with the transfer or disposition
of such security deposits.
F charges under the service contracts assumed by Partnership.
G laundry income.
H any other charges incurred with respect to the Property which the
Partnership or the Contributors are obligated to pay.
I Rents.
(1) All rent payments collected as of the Closing Date for the
month of Closing shall be prorated as between the parties as
of the Closing Date.
(2) All rent collected after Closing for any period prior to
Closing shall belong to Contributor and, if paid to
Partnership, Partnership shall promptly send such rent to
the Contributor.
(3) All rent collected by the Contributor prior to the Closing
for rental periods subsequent to Closing shall be paid to
Partnership at Closing.
(4) All rent collected by Partnership or the Contributor for
rental periods after the Closing shall belong to Partnership
and, if paid to the Contributor, the Contributor shall
promptly send such rent to Partnership.
(5) Partnership will make reasonable efforts to collect all
rents due for the month of the Closing and any past due
rents, but shall not be required to bring suit to collect
such rents. Any rent received from any tenant after Closing
shall first be applied to pay any rent owing by that tenant
for the month of the Closing and then to pay rent owing for
the then current month and thereafter in reverse order of
delinquency. Any rents due for the month of Closing (and
accruing prior to the Closing Date) and past due rents not
collected by Partnership within the period of 180 days
following the Closing Date shall be assigned to the
Contributor without recourse who may pursue such remedies
for collection thereof for its own account.
Page 4
<PAGE>
Any error in the calculation of adjustments shall be
corrected subsequent to Closing with appropriate credits to be
given based upon corrected adjustments, provided, however, that
the adjustments (except if errors are caused by
misrepresentations and except for actual taxes) shall be final
upon expiration of the sixtieth day after Closing.
5. COSTS. Partnership shall pay all recording fees, Partnership's attorneys'
fees, one-half of any applicable transfer and recordation taxes, the costs
of obtaining any title commitment and title policy and all other costs and
expenses incidental to or in connection with closing this transaction
customarily paid for by the transferee of similar property. The Contributor
shall pay one-half of any applicable transfer and recordation taxes,
attorneys' fees, if any, incurred by them in connection with this
transaction, and all other costs and expenses incidental to or in
connection with closing this transaction customarily paid for by the
transferor of similar property. Partnership shall pay all out-of-pocket
closing costs payable by the Contributor hereunder (excluding Contributor's
attorneys' fees which shall be paid directly by Contributor) and the
Contribution Value of the Property shall be reduced at Closing by the
amount so paid by Partnership.
6. EVIDENCE OF TITLE. The Contributor shall furnish to the Partnership, at
Contributor's expense, and within ten (10) days from the execution hereof,
a copy of the most recent title policy relating to the Property along with
the most recent instrument survey of the Property, in each case, to the
extent in its possession or control.
7. CLOSING DOCUMENTS.
A At the time of Closing, the Contributor shall deliver to
Partnership the following:
(1) A special warranty deed in the form provided for under
the laws of the state where the Property is located
pursuant to which Contributor shall warrant title only
against anyone whomsoever is lawfully claiming the
Property, by through or under Contributor, but not
otherwise (the "Deed"). Such Deed shall convey the
Property to Partnership subject to: (i) all zoning and
building laws, ordinances, resolutions and regulations
of all governmental authorities having jurisdiction
which affect the Property and the use and improvement
thereof; (ii) all leases identified in the Rent Roll
(hereinafter defined); (iii) ad valorem real estate
taxes for the current year and subsequent years which
are not yet due and payable; and (iv) easements,
covenants, restrictions, agreements and/or reservations
of record, so long as they do not interfere with the
use of the Property as a rental apartment complex, if
any, (v) private, public and utility easements and
roads and highways, if any, and (vi) and any other
exceptions not objected to or waived by Partnership
under Section 9(b)(collectively, the "Permitted
Exceptions").
(2) A Bill of Sale in the form attached hereto as Exhibit
C;
(3) A current rent roll ("Rent Roll") certified, as of the
date of Closing, which shall include a correct list of
all tenants, all rental obligations of each tenant with
respect to the Property and all security deposits along
with a copy of all leases shown on the Rent Roll;
Page 5
<PAGE>
(4) An Assignment of leases, security deposits and
contracts in the form attached hereto as Exhibit D (the
"Assignment") along with a copy of all contracts so
assigned. In lieu of an assignment of the security
deposits, the Contributor may provide Partnership with
a credit at Closing for all security held by
Contributor (including any accrued interest, if
required by law or contract to be earned thereon) with
respect to all leases encumbering the Property.
(5) Reserved; A
(6) Contributor's affidavit stating Contributor's federal
taxpayer identification number and certifying that
Contributor is not a foreign person, corporation,
partnership, trust or estate as defined in the Internal
Revenue Code and Regulations thereunder pursuant to the
Foreign Investment in Real Property Tax Act of 1980.
(7) Copies of the personnel files of all employees employed
at the Property and remaining in the employment of the
Partnership after the Closing.
(8) An executed original of the Registration Rights
Agreement in the form attached hereto as Exhibit E.
(9) An executed original of the Stock Put Agreement in the
form attached hereto as Exhibit F (the "Stock Put
Agreement").
(10) An executed original of an assignment, assumption and
termination of Management Agreement assigning
Contributor's interest as owner under the Management
Agreement.
(11) Any additional funds, documents and or instruments as
may be necessary for the proper performance by the
Contributor of its obligations contemplated by this
Agreement.
B At the time of Closing, Partnership shall deliver to Contributor
the following:
(1) The Assignment;
(2) Evidence of organization, existence and authority of
Partnership and HME and the authority of each person
executing documents on behalf of each, reasonably
satisfactory to Contributor;
(3) An opinion of a nationally recognized law firm acting
as counsel for Partnership and HME reasonably
acceptable in form and content to the Contributor to
the effect that (1) HME has been organized in
conformity with the requirements for qualification as a
real estate investment trust under the Code and
currently qualifies to be taxed as such, and (2)
Partnership is classified as a partnership and not as
an association (or publicly traded partnership) taxable
as a corporation for federal income tax purposes;
(4) Such cash as may be required of Partnership to pay
closing costs or charges properly allocable to
Partnership;
Page 6
<PAGE>
(5) An Amendment to the Partnership's Partnership Agreement
in the form necessary to admit Contributor, Designees,
Tower and their respective designees as limited
partners of the Partnership and evidencing the issuance
of the Units required pursuant to this Agreement;
(6) An executed original of the Registration Rights
Agreement in the form attached hereto as Exhibit E;
(7) An executed original of the Stock Put Agreement in the
form attached hereto as Exhibit F; and
(8) Any additional funds, documents and or instruments as
may be necessary for the proper performance by
Partnership of its obligations contemplated by this
Agreement.
(9) An executed original of an assignment, assumption and
termination of the Management Agreement assuming
Contributor's interest as owner under the Management
Agreement and terminating the Management Agreement.
C. At the time of the Closing, Tower shall deliver to the
Partnership an executed original of a termination of the
Management Agreement.
8. INSPECTION. For a period of Thirty (30) days after the date of this
Agreement (the "Due Diligence Period"), the Contributor agrees that
Partnership and its authorized representatives shall have the right and
privilege to enter upon the Property and the Partnership's offices, upon
reasonable notice, during regular business hours, for the purpose of
gathering such information and conducting such environmental and
engineering studies or other tests and reviews as Partnership may deem
appropriate and necessary, including but not limited to a review of the
Contributor's books and records pertaining to the Property and the Other
Items, matters relating to zoning compliance and compliance by the Property
and the Other Items with other applicable governmental regulations, the
markets in which the Property operates, any service or other contracts
relating to the Property, the tax assessment on the Property and on
comparable properties and such other matters as Partnership shall deem
reasonably necessary or appropriate in connection with the Property and the
Other Items. All such inspections, studies, tests and reviews shall be at
Partnership's sole expense. Contributor agrees to cooperate with
Partnership by making available to Partnership such records, plans,
drawings or other data as may be in Contributor's possession or control
relating to the Property and its operation; excluding however, any files
containing confidential documents such as personnel documents, tax returns,
appraisals, market analyses, projections, internal communications, or
correspondence between the property manager and Contributor. Partnership
agrees that it will provide Tower and Contributor with a copy of any third
party reports received by Partnership with respect to its due diligence
activities pursuant to this paragraph. In addition, promptly upon execution
of this Agreement by all of the parties, the Partnership will order a
commitment (the "Title Commitment") for an ALTA owner's policy in the
amount of $11,646,344 from the Title Company. Partnership hereby agrees to
indemnify, defend and hold Contributor, Contributor's tenants, agents,
employees, partners and the Property harmless from and against all claims,
losses, costs, damages, expenses or liabilities, including, but not limited
to, mechanic's and materialmen's liens and attorneys' fees arising out of
or in connection with Partnership's access to or entry upon the Property.
If any inspection or test disturbs the Property, Partnership will restore
the
Page 7
<PAGE>
Property, at Partnership's own cost and expense, to the same condition as
existed prior to any inspection or test. The Partnership agrees that prior
to any physical inspection or testing at the Property, it or its agents
will provide the Contributor with appropriate evidence of insurance
reasonably satisfactory to Contributor. The Partnership agrees that its
rights under this Section 8 shall be subject to the rights of the residents
at the Property and that it will use its reasonable efforts to minimize any
disruption to those residents. Partnership shall have the right to
terminate this Agreement if it determines that it does not wish to purchase
the Property as a result of its findings during the Due Diligence Period
and notifies the Contributor in writing of such decision within the Due
Diligence Period (the "Termination Notice"). In such event, this Agreement
shall be null and void and neither party shall have any further rights or
obligations under this Agreement. Partnership's failure to deliver the
Termination Notice within the Due Diligence Period shall be deemed to be a
waiver by Partnership of its right to terminate the Agreement as provided
in this Section 8.
9. TITLE; TITLE EXAMINATION; OBJECTIONS TO TITLE.
A Contributor shall convey the Property to Partnership by Deed,
subject to the Permitted Exceptions. Title to all Other Items
purchased herein, if any, shall be conveyed to Partnership by
bill of sale, free and clear of all security interests, liens and
encumbrances, but subject to any Permitted Exceptions.
B Within ten (10) days after Partnership's receipt of the Title
Commitment Partnership shall deliver to Contributor a statement
(a "Statement of Title Defects") of defects, encumbrances or
objections to title or survey matters ("Title Defects"). If
Partnership fails to deliver a Statement of Title Defects within
such time period as aforesaid, such failure shall be deemed to be
a waiver of any such Title Defects and Contributor shall convey
title in accordance with this Agreement and such Title Defects
will be additional Permitted Exceptions. Upon receipt of
Partnership's Statement of Title Defects, Contributor shall have
five (5) business days to determine whether it wishes to attempt
to cure any matters shown on such statement. If Contributor is
unable or unwilling to cure or attempt to cure any such matters,
Contributor shall give notice to Partnership within such five (5)
day period, but if no such notice is given, Contributor shall be
deemed to be unwilling to cure any such Title Defects. If
Contributor does not agree to attempt such cure, Partnership
shall have ten (10) days after the expiration of the foregoing
five (5) business day period to terminate this Agreement, in
which case it shall have the right to the return of the Deposit,
or to give Contributor notice that it has elected to take title
to the Property subject to the Title Defects without abatement of
the Contribution Value and such Title Defects will be additional
Permitted Exceptions. If no notice is given by the Partnership
within the ten (10) day period, the Partnership shall be deemed
to have terminated this Agreement. Partnership agrees that
Contributor shall be under no obligation whatsoever to commence
any proceedings, suits or actions to clear title or eliminate any
Title Defects or expend any funds in connection therewith.
10. CLOSING DATE. Unless this Agreement is terminated as provided herein, the
Closing shall occur within 10 days after the end of the Due Diligence
Period (as hereinafter defined) (the "Closing" or "Closing Date") at the
Contributor's office.
Page 8
<PAGE>
11. POSSESSION. Partnership shall have possession and occupancy of the Property
from and after the date of delivery of the deed subject only to the
Permitted Exceptions and to the rights of tenants shown on the Rent Roll
delivered to Partnership at Closing pursuant to Section 7A (3).
12. BROKER'S COMMISSION. The Contributor, Tower and Partnership each represent
to the other that there are no fees or commissions due as a result of their
employment of any Broker other than the fees due to Carey Winston, which
fees Partnership agrees to pay. The Contributor, Tower and Partnership each
agree to indemnify the other for any and all claims and expenses, including
legal fees, if any other fees or commission is determined to be due by
reason of the employment of any other broker by the indemnifying party.
This representation and indemnity shall survive the Closing.
13. RISK OF LOSS. Risk of loss resulting from any eminent domain proceeding
which is commenced prior to Closing, and risk of loss to the Property due
to fire or any other casualty prior to Closing shall remain with
Contributor. If prior to the Closing the Property or any portion thereof is
destroyed or damaged in excess of $250,000, or if the Property or any
portion thereof shall is subjected to a bona fide threat of condemnation or
becomes the subject of any proceedings, judicial, administrative or
otherwise, with respect to the taking by eminent domain or condemnation,
Contributor shall notify Partnership thereof within a reasonable time after
receipt of actual notice thereof by Contributor, but in any event prior to
Closing, and, at its option, Partnership may, within 5 days after receipt
of such notice, elect to cancel this Agreement in which event this
Agreement shall terminate and the Deposit shall be returned to Partnership.
If the Closing Date is within the aforesaid 5-day period, then Closing
shall be extended to the next business day following the end of said 5-day
period. If no such election is made, and in any event if the destruction or
damage is not in excess of $250,000, this Agreement shall remain in full
force and effect and the contribution contemplated herein, less any
interest taken by eminent domain or condemnation, shall be effected with no
further adjustment, and upon the Closing of this contribution, Contributor
shall assign, transfer and set over to Partnership all of the right, title
and interest of Contributor in and to any awards that have been or that may
thereafter be made for such taking, and Contributor shall assign, transfer
and set over to Partnership any insurance proceeds that may have been or
that may thereafter be made for such damage or destruction giving
Partnership a credit at Closing for any deductible under such policies.
Contributor hereby agrees that it shall keep all insurance policies
presently existing which relate to the Property in effect through the
Closing Date.
14. CONDITIONS PRECEDENT TO PARTNERSHIP'S OBLIGATION TO CLOSE.
A It shall be a condition to Partnership's obligation to consummate
the Closing that there are at Closing 254 apartment units in
rentable condition and one apartment unit converted for use as
the Property Office and with respect to all of which the
Contributor has received no notice from any governmental
authority or agency having jurisdiction over the Contributor, the
Property and the Other Items stating that the Contributor, the
Property or the Other Items are in violation of any federal,
state, county or local laws, ordinances, rules and regulations.
In the event that the Contributor has received any such notice,
then at its election, the Contributor shall have up to sixty (60)
days after the receipt of such notice to cure any violation set
forth therein and the Closing Date shall be extended to that date
which is five days after the violation has been cured, but such
extension is not to be for more than 65 days. If the Contributor
fails to notify the Partnership that it has elected to cure any
such violation within 10 days of the receipt of any
Page 9
<PAGE>
such notice, then the Contributor shall be deemed unwilling to
cure any such violation.
B It shall be a condition to Partnership's obligation to
consummate the Closing that the Partnership has not
exercised its right to terminate this Agreement as provided
in Section 8.
C It shall be a condition to Partnership's obligation to
consummate the Closing that on or before the Closing Date,
all management agreements relating to the Property shall
have been terminated, other than the Management Agreement,
the termination of which shall be effected by the
Partnership and Tower immediately after its contribution to
the Partnership in accordance with this Agreement.
D It shall be a condition to Partnership's obligation to
consummate the Closing that on the Closing Date the Title
Company is prepared to issue a title policy insuring the
Partnership's fee interest in the Property subject only to
the Permitted Exceptions.
It is understood that the conditions set forth in this
Section 14 are for Partnership's benefit and may be waived by
Partnership at any time. If the above conditions are not
satisfied or waived by the Partnership, the Partnership shall
have the right to terminate this Agreement by written notice to
the Contributor. In the event of such a termination, this
Agreement shall be null and void and neither party shall have any
further rights or obligations under this Agreement, except
Partnership shall have the right to the return of its Deposit and
the obligations set forth in Sections 8 and 12 herein shall
survive any such termination.
15. CONDITIONS TO THE PARTIES' OBLIGATIONS TO CLOSE. In addition to all other
conditions set forth herein, the obligation of Contributor and Tower, on
the one hand, and Partnership, on the other hand, to consummate the Closing
contemplated hereunder shall be contingent upon the following:
A The other party's representations and warranties contained herein
shall be true and correct as of the date of this Agreement and
the Closing Date.
B As of the Closing Date, the other party shall have performed its
obligations hereunder and all deliveries to be made at Closing
have been tendered;
C There shall exist no pending or threatened actions, suits,
arbitrations, claims, attachments, proceedings, assignments for
the benefit of creditors, insolvency, bankruptcy, reorganization
or other proceedings, against the other party that would
materially and adversely affect the other party's ability to
perform its obligations under this Agreement; and
D There shall exist no pending or threatened action, suit or
proceeding with respect to the other party before or by any court
or administrative agency which seeks to restrain or prohibit, or
to obtain damages or a discovery order with respect to, this
Agreement or the consummation of the transactions contemplated
hereby.
Page 10
<PAGE>
E With respect to Contributor's and Tower's obligations to
consummate the Closing, as of the Closing Date, Park Shirlington
shall have contributed and the Partnership shall have accepted
the Park Shirlington Property pursuant to the Park Shirlington
Contribution Agreement and the transactions contemplated therein
have closed simultaneously with the transactions contemplated
hereby.
So long as a party is not in default hereunder, if any condition to
such party's obligation to proceed with the Closing hereunder has not
been satisfied as of the Closing Date, such party may, in its sole
discretion, (i) terminate the Agreement by delivering written notice
of termination to the other party on or before the Closing Date
specifying the unsatisfied condition entitling the non-defaulting
party to terminate this Agreement and provided the other party fails
to satisfy the condition specified in the notice within five days
after receipt of the notice; (ii) elect to extend the Closing for up
to 60 days until such condition is satisfied, and (iii) elect to
consummate the transaction, notwithstanding the non-satisfaction of
such condition, in which event such party shall be deemed to have
waived any such condition. In the event such party elects to close,
notwithstanding the nonsatisfaction of such condition, there shall be
no liability on the part of any other party hereto for breaches of
representations and warranties of which the party electing to close
had actual knowledge at the Closing. Notwithstanding the foregoing,
the failure of a condition due to the breach of a party shall not
relieve such breaching party from any liability it would otherwise
have hereunder. So long as the Partnership is not in default
hereunder, upon termination of this Agreement as provided above, the
Partnership shall have the right to the return of its Deposit.
16. REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR. The Contributor makes the
following representations and warranties to Partnership as of the date
hereof and as of Closing:
A To the best of the Contributor's knowledge, the leases (the
"Leases") listed on the rent roll attached hereto as Exhibit G
and the contracts listed on the attached Exhibit H (the
"Contracts") comprise all of the leases and rights to the
property and all of the contracts to which Partnership will be
subject on the Closing Date
B. All of Contributor's obligations under the Leases and Contracts
are fully performed and, to the best of such Contributor's
knowledge, except as set forth on the attached Exhibits and
except for delinquencies in the payment of rent for the current
month, there is no default under any of the Leases and Contracts
by any party thereto or no event which, with the giving of notice
or passage of time, or both, would constitute a default
thereunder. There are no other security deposits (the "Security
Deposits") except as identified on Exhibit G.
C. The Contributor has made no prior assignment or conveyance of the
Leases, Security Deposits and Contracts and the Contributor is
the valid holder of landlord's interest in the Leases, and has
the full power and authority to assign its interest in the
Leases, Security Deposits and Contracts to Partnership.
D To the best of the Contributor's knowledge, there is no
litigation, proceeding or investigation pending, or to the
knowledge of the Contributor threatened, against or affecting the
Contributor that might affect or relate to the validity of this
Agreement, any action taken or to be taken pursuant hereto, or
the Property or the Other Items or any part or the operation
thereof, whether or not fully covered by insurance.
Page 11
<PAGE>
E To the best of the Contributor's knowledge, the Contributor has
not received any written notices from any governmental authority
or agency having jurisdiction over the Contributor or the
Property that the Contributor, the Property or the Other Items
are in violation of, any law, ordinance, rule, regulation or code
or condition in any approval or permit pursuant thereto
(including without limitation, any zoning, sign, environmental,
labor, safety, health or price or wage control, ordinance, rule,
regulation or order of) applicable to the ownership, development,
operation or maintenance of the Property or the Other Items.
Promptly upon receipt of any such notice, the Contributor shall
provide the Partnership with a copy.
F All of Tower's obligations under the Management Agreement have
been performed and the Partnership has no claim of any nature
against Tower or any of its successors and assigns relating to
the Management Agreement.
The Partnership acknowledges, understands and agrees that, except
as provided in this Agreement to the contrary, Partnership's
acquisition of the Property and Other Items and any other rights
and interests to be contributed, conveyed, transferred and/or
assigned is on an "AS IS" "WHERE IS" PHYSICAL BASIS, WITHOUT
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH REGARD TO
PHYSICAL CONDITION OR COMPLIANCE WITH ANY LEGAL REQUIREMENTS OR
TITLE EXCEPTIONS OF THE PROPERTY, INCLUDING WITHOUT LIMITATION
ANY LATENT OR PATENT DEFECTS, CONDITION OF SOILS (INCLUDING
SURFACE AND SUBSURFACE CONDITIONS), EXISTENCE OR NON EXISTENCE OF
HAZARDOUS SUBSTANCES OR POLLUTANTS, QUALITY OF CONSTRUCTION,
STATE OF REPAIR, WORKMANSHIP, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR AS TO THE PHYSICAL MEASUREMENTS OR USABLE
SPACE THEREOF, TITLE TO THE PROPERTY, THE ASSIGNABILITY,
ASSUMABILITY OR TRANSFERABILITY OR VALIDITY OF ANY LICENSES,
PERMITS, GOVERNMENT APPROVALS, WARRANTIES OR GUARANTIES RELATING
TO THE PROPERTY OR THE USE OR OPERATION THEREOF, ZONING, BUILDING
CODE, ACCESS, ENVIRONMENTAL, FIRE OR LIFE SAFETY, SUBDIVISION OR
OTHER ORDINANCES, LAWS, CODES OR REGULATIONS, OF ANY KIND, PRIOR
OR CURRENT OPERATIONS CONDUCTED ON THE PROPERTY AND SURROUNDING
PROPERTY, OR ANY COVENANTS, CONDITIONS, RESTRICTIONS OR
DECLARATIONS OF RECORD AND ALL OTHER MATTERS OR THINGS AFFECTING
OR RELATING TO THE PROPERTY.
As used in the foregoing representations and warranties, the
phrase "to the best of Contributor's knowledge" shall mean the actual,
conscious knowledge of Edgar W. Tullar, the Contributor's Director of
Operations.
The representations and warranties of the Contributor contained
in this Agreement, the statements in any Exhibit or Schedules attached
to this Agreement, or other instruments furnished to Partnership at or
prior to Closing pursuant to this Agreement, or in connection with the
transactions contemplated pursuant to this Agreement, do not contain
any untrue statements of a material fact, or fail to state a material
fact necessary to make it not misleading.
Page 12
<PAGE>
The representations and warranties contained herein shall not
survive delivery of the Deed and shall merge therein. This expiration
shall not apply to the representation set forth in paragraphs 16.D.
and 16.F. or to any breach of warranty or representation which arises
out of an intentional material misrepresentation made by the
Contributor.
17. REPRESENTATIONS AND WARRANTIES OF PARTNERSHIP. Partnership represents and
warrants to the Contributor, Tower and Designees as of the date hereof and
as of the Closing as follows:
A Partnership is and will be as of the date of Closing duly
organized, validly existing and in good standing under the laws
of the State of New York and has all the requisite power and
authority to enter into and carry out this Agreement according to
its terms.
B This Agreement has been duly authorized, executed and delivered
and constitutes a legal and binding obligation of Partnership,
enforceable in accordance with its terms, except as may be
limited by bankruptcy and other laws affecting creditors' rights
generally.
C To the best of its knowledge after due inquiry, there is no
litigation, proceeding or investigation pending, or to the
knowledge of Partnership threatened, against or affecting
Partnership or the partners of Partnership that might affect or
relate to the validity of this Agreement or any action taken or
to be taken pursuant hereto, or that might have a material
adverse effect on the business or operations of the Partnership.
D HME has been organized in conformity with the requirements for
qualification as a real estate investment trust under the
Internal Revenue Code of 1986 (the "Code") and its method of
operation is expected to enable it to continue to satisfy the
requirements for taxation as a real estate investment trust under
the Code for the fiscal year ending December 31, 1997 and in the
future.
E The Partnership is classified as a partnership and not as an
association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
F (i) HME and the Partnership have filed or caused to be filed all
federal, state, local, foreign and other tax returns, reports,
information returns and statements required to be filed by them;
(ii) HME and the Partnership have paid or caused to be paid all
taxes (including interest and penalties) that are shown as due
and payable on such returns or claimed by any taxing authority to
be due and payable with respect to such returns, except those
which are being contested by them in good faith by appropriate
proceedings and in respect of which adequate reserves are being
maintained on their books in accordance with generally accepted
accounting principles consistently applied; (iii) HME and the
Partnership do not have any material liabilities for taxes other
than those incurred in the ordinary course of business and in
respect of which adequate reserves are being maintained by them
in accordance with generally accepted accounting principles
consistently applied; (iv) as of the date of this Agreement,
Federal and state income tax returns for HME and the Partnership
have not been audited by the Internal Revenue Service or state
authorities; (v) as of the date of this Agreement, no deficiency,
assessment with respect to, or proposed adjustment of, HME's or
the Partnership's federal, state, local, foreign or other
Page 13
<PAGE>
tax
returns is pending or, to the best of the Partnership's
knowledge, threatened; and (vi) as of the date of this Agreement,
there is no tax lien, whether imposed by any federal, state,
local or other tax authority, outstanding against the assets,
properties or business of HME or the Partnership
G. The Partnership has delivered to Contributor a complete and
correct copy of: (i) the Articles of Incorporation and by-laws of
HME; and (ii) the Second Amended and Restated Agreement of
Limited Partnership of Partnership, in each case, as amended.
H. The Partnership has previously made available to the Contributor
as requested in writing by the Contributor complete and correct
copies of: (i) the annual report on Form 10-K for HME for the
period ending December 31, 1996; (ii) all quarterly reports on
Form 10-Q for HME for each of the first three quarters in 1997;
(iii) definitive proxy statement for HME for the 1997
Shareholders' Meeting; (iv) any current reports on Form 8-K filed
by HME since September 30, 1997; and (v) any other form, report,
schedule and statement and filed by HME for 1997 with the
Securities and Exchange Commission ("SEC") under the Exchange
Act, since January 1, 1997 (collectively, the "SEC Documents").
As of their respective dates, each of the SEC Documents complied
in all material respects with the requirements of the Exchange
Act to the extent applicable to such SEC Documents, and none of
such SEC Documents (as of their respective dates) contained an
untrue statement of a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except
as the same was corrected or superseded in a subsequent document
duly filed with the SEC. HME is not aware of any reports or
filings required to be filed under the Exchange Act with the SEC
under the rules and regulations of the SEC that have not been
filed.
The representations and warranties of the Partnership
contained in this Agreement, the statements in any Exhibit or
Schedules attached to this Agreement, or other instruments
furnished to Contributor at or prior to Closing pursuant to this
Agreement, or in connection with the transactions contemplated
pursuant to this Agreement, do not contain any untrue statements
or a material fact, or fail to state a material fact necessary to
make it not misleading.
The representations and warranties contained herein shall
survive delivery of the assignment of the Deed and shall not
merge therein.
18. ASSIGNMENT. This Agreement, and all or any portion of the rights of
Partnership hereunder, may not be assigned by Partnership without the prior
written consent of the Contributor, which may be granted or withheld in its
sole discretion.
19. NOTICE. All notices given pursuant to any provisions of this Agreement
shall be in writing and shall be effective upon receipt and then only if
delivered personally, or sent by registered or certified mail, postage
prepaid or sent by a national over-night carrier, or by telecopy with
confirmation of receipt to the addresses set forth below:
Page 14
<PAGE>
To the Contributor
and Tower: c/o The Tower Companies
Attn: Jeffrey S. Abramson
11501 Huff Court
North Bethesda, Maryland 20895
Telecopy No.: (301) 984-6033
To Partnership: HOME PROPERTIES OF NEW YORK, L.P.
Attn: Norman Leenhouts, Chairman
850 Clinton Square
Rochester, New York 14604
Telecopy No.: (716) 546-5433
20. PLANS. The Contributor agrees to provide Partnership with all plans and
architectural drawings in their possession for the improvements completed
at the Property, including, without limitation, all "as-built" plansin
their possession and the Contributor further agree that they will endeavor
to turn over the same to Partnership at the Property during the Due
Diligence Period.
21. APPLICABLE LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Virginia.
22. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the parties, and any and all prior understandings or agreements,
whether written or oral, are hereby merged into this Agreement. This
Agreement cannot be modified except by a written instrument signed by the
parties hereto.
23. BINDING AGREEMENT. This Agreement shall not be binding or effective until
properly executed by Partnership, Tower and the Contributor.
24. CONFIDENTIALITY. By execution of this Agreement and except as otherwise
provided herein, prior to the Closing the Contributor, Tower and
Partnership agree to keep any and all information with respect to the
transactions contemplated by this Agreement strictly confidential, and will
not disclose any such information, without the other's prior written
consent, unless such disclosure is required by law or judicial process. The
Partnership may disclose the existence of this Agreement to the extent
necessary to conduct its due diligence with respect to the Property. The
Partnership agrees that it will obtain the consent of the Contributor,
which shall not be unreasonably withheld or delayed, with respect to the
content of any press releases to be issued on or after the Closing Date by
the Partnership relating to the transaction described herein.
25. CONTRIBUTOR COVENANTS.
A Upon the request of the Partnership, the Contributor will
provide, or cause to be provided, a signed representation letter
substantially in the form attached hereto as Exhibit I. The
Contributor will provide access by Partnership's representatives,
to all financial and other information relating to the Property
as is sufficient to enable them to prepare audited financial
statements, at Partnership's 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.
Page 15
<PAGE>
B Prior to the Closing Date, the Contributor shall continue to
fulfill all of their obligations under the terms of the leases
encumbering the Property and under the service contracts and the
Contributor shall operate, maintain and repair all landscaping,
buildings, fixtures and facilities in accordance with its current
practices.
C Contributor covenants that it hereby waives any and all claims it
may have against the Partnership as assignee of the Management
Agreement relating to any defaults by Tower in the performance of
its obligations under the Management Agreement.
D The Contributor covenants that it will not assign its Units to
any person or entity unless such person or entity shall establish
that they are an accredited investor under applicable securities
laws, unless prior to that assignment the Contributor or the
assignee has properly exercised their rights under the Stock Put
Agreement, such exercise to be immediately effective upon receipt
of the assigned Units.
26. PARTNERSHIP COVENANTS.
A The Partnership hereby covenants to the Contributor, Tower and
any Designees as follows:
(i) For a period of fifteen (15) years from and after the
Closing Date, the Partnership shall not sell, exchange,
transfer or otherwise dispose of the Property unless such
transaction occurs in a manner as to be tax free to the
Contributor and its partners, Tower and any Designees and
their respective successors and assigns. After the foregoing
15-year period, Partnership will use commercially reasonable
efforts to effect any disposition of all or part of the
Property through a I.R.S. Code Section 1031 tax-free
exchange or other
transaction which does not cause federal income tax gain to
be incurred by the Contributor, its partners, Tower, any
Designees and their respective successors and assigns. In
the event that the Partnership breaches any of its
obligations set forth in this Section 26(A)(i), Partnership
shall indemnify, defend and hold harmless each of
Contributor, its partners, Tower, any Designees and their
respective successors and assigns (each an "Indemnified
Party" and collectively the "Indemnified Parties") from and
against the aggregate federal, state and local income taxes
incurred by such Indemnified Party as a result thereof
(collectively, "Taxes") plus the Taxes incurred by such
Indemnified Party as a result of the receipt of the
Indemnity Payment (the "Tax Indemnity Amount"). Any such
Taxes shall be deemed to be the amount of gain or income
recognized by the relevant Indemnified Party multiplied by
the highest actual rate or rates imposed upon such
Indemnified Party for such gain or income (assuming it is
the last dollar of income or gain) for the year in which
such gain or income is recognized. In determining the Tax
Indemnity Amount, no effect shall be given to the
Indemnified Parties' tax deductions, tax credits, tax carry
forwards nor to any other of their tax benefits or tax
attributes. The Tax Indemnity Amount shall be payable by the
Partnership to each Indemnified Party not later than thirty
(30) days following the filing of tax returns for the
Indemnified Party for the year in question.
Page 16
<PAGE>
(ii) The Partnership hereby guaranties to Contributor, Tower, any
Designees and their respective successors, assigns, and
designees that for the Applicable Period (hereinafter
defined): (a) the value of each Unit shall not be less than
the initial Market Value; and (b) each Unit shall receive or
accrue a return on the initial Market Value of not less than
eight percent (8%) compounded quarterly (the "Value
Guaranty"). For purposes of the foregoing Value Guaranty,
the 8% return shall be deemed to include both (x) cash and
non-cash dividends and distributions relating to the Units
paid or payable with respect to the Applicable Period, and
(y) amounts by which the value of the Units (based on the
average closing price for 20 consecutive trading days prior
to, but not including, the expiration date of the relevant
Applicable Period of a share of common stock of HME as
listed on the New York Stock Exchange) at the end of the
Applicable Period exceeds the initial Market Value.
The Partnership shall pay any obligations accruing under the
foregoing Value Guaranty with respect to each Unit upon the
expiration of the relevant Applicable Period in the form of
additional Units. Two examples of the application of the
foregoing Value Guaranty are attached as Exhibit J.
For purposes of this Section, the term "Applicable Period"
means the shorter of the following three periods of time:
(aa) from the Closing Date to the 36th month anniversary of
the Closing Date; (bb) from the Closing Date to the date on
which the Unit owner exercises its Purchase Right (as
defined in the Partnership Agreement); and (cc) from the
Closing Date to the date on which the Unit owner exercises
its put rights pursuant to the Stock Put Agreement.
(iii)The Partnership covenants and agrees that it shall use its
reasonable commercial efforts to cause HME to continue to be
taxed as a real estate investment trust under the Code
unless the Board of Directors of HME determines that it is
in the best interests of shareholders of HME to be taxed
otherwise.
(iv) The Partnership agrees to use the "traditional method" under
Section 704(c) of the U.S. Internal Revenue Code to adjust
for discrepancies between the agreed-upon value of the
various components of the contributed Property (or for any
property received in exchange for the contributed Property
in a like-kind exchange) and the adjusted tax basis of such
components.
27. REPRESENTATIONS AND COVENANTS OF TOWER.
A Tower hereby represents and warrants to the Partnership as of the
date hereof and as of the Closing Date that it has made no prior
assignment of its rights under the Management Agreement and that
it has the full power and authority to assign its interest in the
Management Agreement to the Partnership.
Page 17
<PAGE>
B Tower hereby represents and warrants that it is an accredited
investor under the applicable securities laws and covenants that
it will not assign its Units to any person or entity unless such
person or entity shall establish that they are also such an
accredited investor.
28. DEFAULT. In the event that Partnership fails to acquire the Property
pursuant to this Agreement other than by reason of a termination by
Partnership expressly permitted hereunder or Contributor's or Tower's
default, Partnership agrees that Contributor's and Tower's sole remedies
shall be (i) to have the Title Company deliver the Deposit to Contributor
and Tower as liquidated damages to recompense Contributor and Tower for
time spent, labor and services performed, and loss of its bargain and to
terminate this Agreement; or (ii) to seek specific performance. The
Partnership acknowledges that in the event of such a failure by the
Partnership, the damages suffered by the Contributor and Tower will be
difficult to ascertain with certainty. Therefore, the Partnership, the
Contributor and Tower agree that in the event of such a failure by the
Partnership, and if the Contributor and Tower do not elect to seek specific
performance, then the sum of $230,000 is a good faith estimate of the
Contributor's and Tower's damages and at Contributor's election said sum
shall be promptly paid to Contributor and Tower in the form of the Deposit.
In such event the Contributor and Tower agree to accept the Deposit as
Contributor's and Tower's total damages and relief hereunder in the event
of Partnership's default hereunder. In the event that Partnership does so
default and this Agreement is terminated, Partnership shall have no further
right, title, or interest in the Property. In the event Contributor fails
to sell the Property to Partnership pursuant to this Agreement or Tower
fails to terminate the Management Agreement other than by reason of a
termination by Contributor expressly permitted hereunder or Partnership's
default, Partnership's sole remedies shall be (i) cancellation of this
Agreement in which event Partnership shall be entitled to the return by the
Title Company to Partnership of the Deposit, or (ii) to seek specific
performance. In no event shall either party be entitled to any remedies or
damages for breach of this Agreement, except as set forth hereinabove. And
in no event shall any party be entitled to punitive or consequential
damages for the breach of this Agreement.
29. RECORDATION. Neither Party may record this Contribution Agreement; and any
recordation shall render the contract void. Also, neither party may file a
lis pendens against the Property.
30. TOWER'S INABILITY TO PERFORM. Notwithstanding anything set forth herein to
the contrary, if Tower is unable or unwilling to contribute the Management
Agreement to the Partnership at Closing: (i) this Agreement shall remain in
full force and effect; (ii) Tower shall be deleted as a party to this
Agreement, shall have no rights or liabilities hereunder and shall be
released of any liabilities accruing under this Agreement by the other
parties hereto; (iii) the Contributor's Contribution Value shall be
increased by the amount of Tower's Contribution Value; (iv) Contributor
shall deliver the Property to the Partnership free and clear of the
Management Agreement; and (v) Contributor shall indemnify, defend and hold
Partnership harmless from any claims made by Tower for any management fees
respecting the Property.
31. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach or the validity thereof shall be settled by final
and binding arbitration in accordance with the most current Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association
("AAA"). The arbitration shall be conducted by a tribunal of three (3)
arbitrators (the "Tribunal"). Each party shall appoint an arbitrator within
ten (10) days from the filing of the Demand and Submission in accordance
with
Page 18
<PAGE>
Paragraph 7 of the Rules and the two (2) arbitrators shall jointly appoint
the third arbitrator, within fifteen (15) days from their appointment, in
accordance with Paragraph 7 of the Rules. If the two (2) appointed
arbitrators fail to agree upon a third arbitrator within said fifteen (15)
days and fail to agree to an extension of such period, the third arbitrator
shall be appointed by the AAA in accordance with Paragraph 15 of the Rules.
The place of arbitration shall be Arlington, Virginia and the Award shall
be issued at the place of arbitration. The Tribunal may, however, call and
conduct hearings and meetings at such other places as the parties may
agree. The law applicable to the arbitration procedure shall be the Federal
Arbitration Act (the "Act") as supplemented by any law of the place of
arbitration which is not inconsistent with the Act.
The decision of the Tribunal (the "Award") shall be made within ninety (90)
days of the appointment of the Tribunal pursuant to the provisions hereof,
and the parties hereby agree that any such decision need not be accompanied
by a reasoned opinion. The Award may, except as limited by Section 27 of
this Agreement, include (i) recovery of actual damages for violation of any
obligations under this Agreement or of governing law, including the
recovery of attorneys' fees to the prevailing party (ii) injunctive relief
against threatened or actual violations of any obligation under the
Agreement or of governing law or (iii), if and to the extent permitted
under the terms of the Agreement, the remedy of specific performance. The
Award shall be final and binding on the parties. Judgment upon the Award
may be entered in any court having jurisdiction thereof or having
jurisdiction over one or more of the parties or their assets. The parties
specifically waive any right they may enjoy to apply to any court for
relief from the provisions of this Agreement or from any decision of the
Tribunal made prior to the Award.
32. EXECUTION IN COUNTERPARTS. . This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected thereon as the
signatories.
33. SIGNATURE BY FACSIMILE. The parties may execute and deliver this Agreement
by forwarding signed facsimile copies of their signature page to this
Agreement and delivering an original of the same by overnight courier. Such
facsimile signatures shall have the same binding effect as original
signatures, and the parties hereby waive any defense to validity based on
any such copies or signatures.
34. ACCREDITED STATUS. The Contributor and Tower hereby represent to the
Partnership that they each are as of the date of this Agreement, and will
be as of the Closing Date, an accredited investor under applicable
securities laws.
IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be
executed as of the day and date first above written.
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: /s/ Amy L. Tait
---------------------------
Amy L. Tait
Title: Executive Vice President
---------------------------
Page 19
<PAGE>
BRADDOCK LEE LIMITED PARTNERSHIP
By: /s/ Ronald D. Abramson
---------------------------
Print Name: Ronald D. Abramson
Title: General Partner
Page 20
<PAGE>
BRADDOCK LEE LIMITED PARTNERSHIP
By: /s/ Lane F. Libby
----------------------------------
Print Name: Lane F. Libby
Title: General Partner
Page 21
<PAGE>
BRADDOCK LEE LIMITED PARTNERSHIP
By: /s/ Leona Libby Feldman
-------------------------------------------
Print Name: Leona Libby Feldman
Title: General Partner
Page 22
<PAGE>
TOWER CONSTRUCTION GROUP, L.L.C
By: /s/ Jeffrey S. Abramson
-------------------------------------------
Title: Jeffrey S. Abramson, Manager
Page 23
<PAGE>
Exhibit 2.7
CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement"), made as of the 2nd day of March,
1997 by and among
HOME PROPERTIES OF NEW YORK, L.P., a New York limited partnership, having
its principal office at 850 Clinton Square, Rochester, New York 14604, (the
"Partnership")
PARK SHIRLINGTON LIMITED PARTNERSHIP, a Virginia limited partnership (the
"Contributor"), having its principal office at 11501 Huff Court, North
Bethesda, Maryland 20895; and
TOWER CONSTRUCTION GROUP, LLC, a Maryland limited liability company
("Tower"), having its principal office at 11501 Huff Court, North Bethesda,
Maryland 20895.
W I T N E S S E T H:
WHEREAS, the Contributor owns a certain apartment complex and adjacent land
located in the State of Virginia, all as more particularly described on Exhibit
A;
WHEREAS, the Contributor wishes to contribute its interest in the Property
in exchange for limited partnership interests in the Partnership;
WHEREAS, Partnership desires to acquire the Property upon the happening of
certain events;
WHEREAS, Tower has the right to manage the Property and earn fees therefor
pursuant to that certain Management Agreement, dated on or about the dates first
written above, by and between the Contributor and Tower (the "Management
Agreement");
WHEREAS, Tower wishes to contribute its interests in the Management
Agreement in exchange for limited partnership interests in the Partnership and
the Partnership wishes to acquire Tower's interest in the Management Agreement
in order to effect a termination of the Management Agreement;
WHEREAS, the parties hereto also desire, subject to the terms and
conditions set forth herein and in the agreement noted below, that Braddock Lee
Limited Partnership ("Braddock Lee") contributes to the Partnership and the
Partnership shall accept from Braddock Lee, the real property described in
Schedule 1 attached hereto (the "Braddock Lee Property"), pursuant to a
contribution agreement entered into between Braddock Lee, Tower and the
Partnership of even date herewith (the "Braddock Lee Contribution Agreement"),
and that the transactions contemplated therein close simultaneously with, and as
a condition to, the closing of the transactions contemplated hereby;
NOW, THEREFORE, in consideration, mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency whereof
being hereby acknowledged, the parties hereby agree as follows:
Page 1
<PAGE>
1. REAL PROPERTY DESCRIPTION. The Real Property to be contributed by the
Contributor consists of an apartment complex commonly known as Park
Shirlington Apartments, which includes 293 apartments and one apartment
converted for use as an office (the " Project"), located in Arlington,
Virginia, on land more particularly described on Exhibit A attached hereto,
together and including all buildings and other improvements thereon,
including but not limited to, the 293 apartment units and one apartment
converted for use as an office, and all rights in and to any and all
streets, roads, highways, alleys, driveways, easements and rights-of-way
appurtenant thereto (the foregoing are hereafter collectively referred to
as the "Property").
2. OTHER ITEMS. The following items now or at the Closing (hereinafter
defined) in or on the Property and owned by the Contributor, are included
in this Agreement and shall become the property of Partnership at Closing
(as hereafter defined):
A all heating, air-conditioning, plumbing and lighting fixtures,
B ranges, refrigerators and disposals (one of each for each apartment
unit),
C water heaters,
D any and all pools and pool equipment, bathroom fixtures, exhaust fans,
hoods, signs, screens, maintenance building, fences, cabinets,
mirrors, shelving, mail boxes, office furniture and equipment,
including but not limited to computers, and any and all related
equipment in connection with the Property, and
E any fixtures appurtenant to the Property and any other furniture or
equipment used in connection with the operation and maintenance of the
Property, including a 1995 Ford pickup truck, VIN 1FTDF15YXSNB04957
used in connection with the operation and maintenance of the Property,
but excluding a condenser pump not belonging to the Contributor
(hereinafter with the items listed in A-D above, collectively, the
"Other Items").
The Other Items will be acquired by the Partnership free and clear of
all liens and encumbrances.
3. CONSIDERATION AND MANNER OF PAYMENT.
A In consideration for the contribution of the Property by the
Contributor to the Partnership, subject to the terms and conditions
herein, the Partnership agrees to issue to the Contributor or to the
partners of the Contributor as designated in writing by the
Contributor (collectively, the "Designees" and individually, a
"Designee") limited partnership interests in the Partnership
(collectively, the "Units" and each one of the Units, a "Unit") having
a value, determined as described in paragraph C below, of Thirteen
Million Four Hundred Thirty-Four Thousand Five Hundred and Sixty-Three
and no/100 Dollars ($13,434,563) (the "Contributor's Contribution
Value"). Notwithstanding the above, the Contributor may only designate
individuals or entities to be Designees who have established to the
reasonable satisfaction of the Partnership that they are accredited
investors under applicable securities laws.
Page 2
<PAGE>
B In consideration for the contribution of the Management Agreement by
Tower to the Partnership, subject to the terms and conditions herein,
the Partnership agrees to issue Units having a value, determined as
described in paragraph C below, of Seven Hundred Seven Thousand
Eighty-Two and no/100 Dollars ($707,082) ("Tower's Contribution
Value"). Notwithstanding anything to the contrary herein, the
Partnership shall be required to issue the Units to Tower and Tower
shall be obligated to contribute the Management Agreement to the
Partnership only if and when the Closing occurs with respect to the
contribution of the Property by the Contributor to the Partnership.
C The total number of Units to be issued to the Contributor, the
Designees and Tower will be equal to the Contributor's Contribution
Value and Tower's Contribution Value, respectively, divided by the
"Market Value" of a Unit. The Market Value of a Unit shall be equal to
the average closing price for 20 consecutive trading days prior to,
but not including, the Closing Date of a share of common stock of Home
Properties of New York, Inc., ("HME") as listed on the New York Stock
Exchange. Notwithstanding the above, the Market Value shall not exceed
$30 per Unit.
D The initial distribution payable with respect to Units issued
hereunder shall be made on the date on which HME 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 Contributor, Designees and Tower 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.
E Upon the expiration of the Due Diligence Period and provided
Partnership has not exercised its right to terminate this Agreement,
Partnership shall deposit the sum of Two Hundred Seventy Thousand
Dollars ($270,000.00) with Tri-State Commercial Settlements, Inc. (the
"Title Company") as a good faith deposit hereunder (the "Deposit").
The Deposit shall be deposited in an FDIC or FSLIC institution and
shall be held and disbursed as provided in the Escrow Agreement
attached hereto as Exhibit B. The Deposit, along with accrued interest
shall be refunded to the Partnership at Closing in the event
Partnership consummates the transaction contemplated hereby, upon
termination of this Agreement by Partnership expressly permitted
hereunder, or upon Contributor's default. In the event Partnership
fails to acquire the Property other than by reason of a termination by
Partnership expressly permitted hereunder or Contributor's default,
the Deposit shall, at Contributor's election, be forfeited to the
Contributor as liquidated damages. Any and all sums deposited
hereunder shall be applied or refunded as provided herein. (All
references to "Deposit" shall be deemed to include all accrued
interest thereon).
4. ADJUSTMENTS AT CLOSING. The following shall be adjusted and prorated
between the Contributor and the Partnership at Closing as if the
Partnership was the owner of the Property as of the Closing Date. All such
adjustments and pro-rations between Contributor and Partnership shall be
settled in cash and shall not increase or decrease the Contributor's
Contribution Value, as the case may be.
Page 3
<PAGE>
A All ad valorem real estate taxes with respect to the Property for the
calendar year or other applicable tax period in which the Closing is
consummated. If the amount of such taxes is not known at Closing,
proration of such taxes will be made upon the basis of the previous
year's or other most recent applicable tax period taxes. In such
event, the Contributor and Partnership agree to re-prorate/adjust the
taxes between themselves after the Closing, based upon the full amount
of the actual taxes for the Property when the amount of the actual
taxes is known.e full amount of the actual taxes for the Property when
the amount of the actual taxes is known.taxes is known.e full amount
of the actual taxes for the Property when the amount of the actual
taxes is known.
B water charges.
C sewer charges.
D fuel, electricity and other utilities.
E All tenant security deposits (and interest thereon if required by law
or contract to be earned thereon) shall be transferred or credited to
Partnership at Closing. At Closing, Partnership shall assume
Contributor's obligations related to tenant security deposits to the
extent they are properly credited and transferred to Partnership.
Partnership agrees that it will indemnify, defend, hold Contributor
harmless and will indemnify Contributor against all demands, claims,
losses, costs, damages, expenses or liabilities, including, but not
limited to, attorneys' fees, arising out of or in connection with the
transfer or disposition of such security deposits.
F charges under the service contracts assumed by Partnership.
G laundry income.
H any other charges incurred with respect to the Property which the
Partnership or the Contributors are obligated to pay.
I Rents.
(1) All rent payments collected as of the Closing Date for the month
of Closing shall be prorated as between the parties as of the
Closing Date.
(2) All rent collected after Closing for any period prior to Closing
shall belong to Contributor and, if paid to Partnership,
Partnership shall promptly send such rent to the Contributor.
(3) All rent collected by the Contributor prior to the Closing for
rental periods subsequent to Closing shall be paid to Partnership
at Closing.
(4) All rent collected by Partnership or the Contributor for rental
periods after the Closing shall belong to Partnership and, if
paid to the Contributor, the Contributor shall promptly send such
rent to Partnership.
(5) Partnership will make reasonable efforts to collect all rents due
for the month of the Closing and any past due rents, but shall
not be required to bring suit to collect such rents. Any rent
received from any tenant after Closing shall first be applied to
pay any rent
Page 4
<PAGE>
owing by that tenant for the month of the Closing and then to pay
rent owing for the then current month and thereafter in reverse
order of delinquency. Any rents due for the month of Closing (and
accruing prior to the Closing Date) and past due rents not
collected by Partnership within the period of 180 days following
the Closing Date shall be assigned to the Contributor without
recourse who may pursue such remedies for collection thereof for
its own account.
Any error in the calculation of adjustments shall be corrected
subsequent to Closing with appropriate credits to be given based
upon corrected adjustments, provided, however, that the
adjustments (except if errors are caused by misrepresentations
and except for actual taxes) shall be final upon expiration of
the sixtieth day after Closing.
5. COSTS. Partnership shall pay all recording fees, Partnership's attorneys'
fees, one-half of any applicable transfer and recordation taxes, the costs
of obtaining any title commitment and title policy and all other costs and
expenses incidental to or in connection with closing this transaction
customarily paid for by the transferee of similar property. The Contributor
shall pay one-half of any applicable transfer and recordation taxes,
attorneys' fees, if any, incurred by them in connection with this
transaction, and all other costs and expenses incidental to or in
connection with closing this transaction customarily paid for by the
transferor of similar property. Partnership shall pay all out-of-pocket
closing costs payable by the Contributor hereunder (excluding Contributor's
attorneys' fees which shall be paid directly by Contributor) and the
Contribution Value of the Property shall be reduced at Closing by the
amount so paid by Partnership.
6. EVIDENCE OF TITLE. The Contributor shall furnish to the Partnership, at
Contributor's expense, and within ten (10) days from the execution hereof,
a copy of the most recent title policy relating to the Property along with
the most recent instrument survey of the Property, in each case, to the
extent in its possession or control.
7. CLOSING DOCUMENTS.
A At the time of Closing, the Contributor shall deliver to Partnership
the following:
(1) A special warranty deed in the form provided for under the laws
of the state where the Property is located pursuant to which
Contributor shall warrant title only against anyone whomsoever is
lawfully claiming the Property, by through or under Contributor,
but not otherwise (the "Deed"). Such Deed shall convey the
Property to Partnership subject to: (i) all zoning and building
laws, ordinances, resolutions and regulations of all governmental
authorities having jurisdiction which affect the Property and the
use and improvement thereof; (ii) all leases identified in the
Rent Roll (hereinafter defined); (iii) ad valorem real estate
taxes for the current year and subsequent years which are not yet
due and payable; and (iv) easements, covenants, restrictions,
agreements and/or reservations of record, so long as they do not
interfere with the use of the Property as a rental apartment
complex, if any, (v) private, public and utility easements and
roads and highways, if any, and (vi) and any other exceptions not
objected to or waived
Page 5
<PAGE>
by Partnership under Section 9(b)(collectively, the "Permitted
Exceptions").
(2) A Bill of Sale in the form attached hereto as Exhibit C;
(3) A current rent roll ("Rent Roll") certified, as of the date of
Closing, which shall include a correct list of all tenants, all
rental obligations of each tenant with respect to the Property
and all security deposits along with a copy of all leases shown
on the Rent Roll;
(4) An Assignment of leases, security deposits and contracts in the
form attached hereto as Exhibit D (the "Assignment") along with a
copy of all contracts so assigned. In lieu of an assignment of
the security deposits, the Contributor may provide Partnership
with a credit at Closing for all security held by Contributor
(including any accrued interest, if required by law or contract
to be earned thereon) with respect to all leases encumbering the
Property.
(5) A certificate of title and any other documentation necessary to
transfer title to the Truck.
(6) Contributor's affidavit stating Contributor's federal taxpayer
identification number and certifying that Contributor is not a
foreign person, corporation, partnership, trust or estate as
defined in the Internal Revenue Code and Regulations thereunder
pursuant to the Foreign Investment in Real Property Tax Act of
1980.
(7) Copies of the personnel files of all employees employed at the
Property and remaining in the employment of the Partnership after
the Closing.
(8) An executed original of the Registration Rights Agreement in the
form attached hereto as Exhibit E.
(9) An executed original of the Stock Put Agreement in the form
attached hereto as Exhibit F (the "Stock Put Agreement").
(10) An executed original of an assignment, assumption and termination
of Management Agreement assigning Contributor's interest as owner
under the Management Agreement.
(11) Any additional funds, documents and or instruments as may be
necessary for the proper performance by the Contributor of its
obligations contemplated by this Agreement.
B At the time of Closing, Partnership shall deliver to Contributor the
following:
(1) The Assignment;
Page 6
<PAGE>
(2) Evidence of organization, existence and authority of Partnership
and HME and the authority of each person executing documents on
behalf of each, reasonably satisfactory to Contributor;
(3) An opinion of a nationally recognized law firm acting as counsel
for Partnership and HME reasonably acceptable in form and content
to the Contributor to the effect that (1) HME has been organized
in conformity with the requirements for qualification as a real
estate investment trust under the Code and currently qualifies to
be taxed as such, and (2) Partnership is classified as a
partnership and not as an association (or publicly traded
partnership) taxable as a corporation for federal income tax
purposes;
(4) Such cash as may be required of Partnership to pay closing costs
or charges properly allocable to Partnership;
(5) An Amendment to the Partnership's Partnership Agreement in the
form necessary to admit Contributor, Designees, Tower and their
respective designees as limited partners of the Partnership and
evidencing the issuance of the Units required pursuant to this
Agreement;
(6) An executed original of the Registration Rights Agreement in the
form attached hereto as Exhibit E;
(7) An executed original of the Stock Put Agreement in the form
attached hereto as Exhibit F; and
(8) Any additional funds, documents and or instruments as may be
necessary for the proper performance by Partnership of its
obligations contemplated by this Agreement.
(9) An executed original of an assignment, assumption and termination
of the Management Agreement assuming Contributor's interest as
owner under the Management Agreement and terminating the
Management Agreement.
C. At the time of the Closing, Tower shall deliver to the Partnership an
executed original of a termination of the Management Agreement.
8. INSPECTION. For a period of Thirty (30) days after the date of this
Agreement (the "Due Diligence Period"), the Contributor agrees that
Partnership and its authorized representatives shall have the right and
privilege to enter upon the Property and the Partnership's offices, upon
reasonable notice, during regular business hours, for the purpose of
gathering such information and conducting such environmental and
engineering studies or other tests and reviews as Partnership may deem
appropriate and necessary, including but not limited to a review of the
Contributor's books and records pertaining to the Property and the Other
Items, matters relating to zoning compliance and compliance by the Property
and the Other Items with other applicable governmental regulations, the
markets in which the Property operates, any service or other contracts
relating to the Property, the tax assessment on the Property and on
Page 7
<PAGE>
comparable properties and such other matters as Partnership shall deem
reasonably necessary or appropriate in connection with the Property and the
Other Items. All such inspections, studies, tests and reviews shall be at
Partnership's sole expense. Contributor agrees to cooperate with
Partnership by making available to Partnership such records, plans,
drawings or other data as may be in Contributor's possession or control
relating to the Property and its operation; excluding however, any files
containing confidential documents such as personnel documents, tax returns,
appraisals, market analyses, projections, internal communications, or
correspondence between the property manager and Contributor. Partnership
agrees that it will provide Tower and Contributor with a copy of any third
party reports received by Partnership with respect to its due diligence
activities pursuant to this paragraph. In addition, promptly upon execution
of this Agreement by all of the parties, the Partnership will order a
commitment (the "Title Commitment") for an ALTA owner's policy in the
amount of $13,434,563 from the Title Company. Partnership hereby agrees to
indemnify, defend and hold Contributor, Contributor's tenants, agents,
employees, partners and the Property harmless from and against all claims,
losses, costs, damages, expenses or liabilities, including, but not limited
to, mechanic's and materialmen's liens and attorneys' fees arising out of
or in connection with Partnership's access to or entry upon the Property.
If any inspection or test disturbs the Property, Partnership will restore
the Property, at Partnership's own cost and expense, to the same condition
as existed prior to any inspection or test. The Partnership agrees that
prior to any physical inspection or testing at the Property, it or its
agents will provide the Contributor with appropriate evidence of insurance
reasonably satisfactory to Contributor. The Partnership agrees that its
rights under this Section 8 shall be subject to the rights of the residents
at the Property and that it will use its reasonable efforts to minimize any
disruption to those residents. Partnership shall have the right to
terminate this Agreement if it determines that it does not wish to purchase
the Property as a result of its findings during the Due Diligence Period
and notifies the Contributor in writing of such decision within the Due
Diligence Period (the "Termination Notice"). In such event, this Agreement
shall be null and void and neither party shall have any further rights or
obligations under this Agreement. Partnership's failure to deliver the
Termination Notice within the Due Diligence Period shall be deemed to be a
waiver by Partnership of its right to terminate the Agreement as provided
in this Section 8.
9. TITLE; TITLE EXAMINATION; OBJECTIONS TO TITLE.
A Contributor shall convey the Property to Partnership by Deed, subject
to the Permitted Exceptions. Title to all Other Items purchased
herein, if any, shall be conveyed to Partnership by bill of sale, free
and clear of all security interests, liens and encumbrances, but
subject to any Permitted Exceptions.
B Within ten (10) days after Partnership's receipt of the Title
Commitment Partnership shall deliver to Contributor a statement (a
"Statement of Title Defects") of defects, encumbrances or objections
to title or survey matters ("Title Defects"). If Partnership fails to
deliver a Statement of Title Defects within such time period as
aforesaid, such failure shall be deemed to be a waiver of any such
Title Defects and Contributor shall convey title in accordance with
this Agreement and such Title Defects will be additional Permitted
Exceptions. Upon receipt of Partnership's Statement of Title Defects,
Contributor shall have five (5) business days to determine whether it
wishes to attempt to cure any matters shown on such statement. If
Contributor is unable or unwilling to cure or attempt to
Page 8
<PAGE>
cure any such
matters, Contributor shall give notice to Partnership within such five
(5) day period, but if no such notice is given, Contributor shall be
deemed to be unwilling to cure any such Title Defects. If Contributor
does not agree to attempt such cure, Partnership shall have ten (10)
days after the expiration of the foregoing five (5) business day
period to terminate this Agreement, in which case it shall have the
right to the return of the Deposit, or to give Contributor notice that
it has elected to take title to the Property subject to the Title
Defects without abatement of the Contribution Value and such Title
Defects will be additional Permitted Exceptions. If no notice is given
by the Partnership within the ten (10) day period, the Partnership
shall be deemed to have terminated this Agreement. Partnership agrees
that Contributor shall be under no obligation whatsoever to commence
any proceedings, suits or actions to clear title or eliminate any
Title Defects or expend any funds in connection therewith.
10. CLOSING DATE. Unless this Agreement is terminated as provided herein, the
Closing shall occur within 10 days after the end of the Due Diligence
Period (as hereinafter defined) (the "Closing" or "Closing Date") at the
Contributor's office.
11. POSSESSION. Partnership shall have possession and occupancy of the Property
from and after the date of delivery of the deed subject only to the
Permitted Exceptions and to the rights of tenants shown on the Rent Roll
delivered to Partnership at Closing pursuant to Section 7A (3).
12. BROKER'S COMMISSION. The Contributor, Tower and Partnership each represent
to the other that there are no fees or commissions due as a result of their
employment of any Broker other than the fees due to Carey Winston, which
fees Partnership agrees to pay. The Contributor, Tower and Partnership each
agree to indemnify the other for any and all claims and expenses, including
legal fees, if any other fees or commission is determined to be due by
reason of the employment of any other broker by the indemnifying party.
This representation and indemnity shall survive the Closing.
13. RISK OF LOSS. Risk of loss resulting from any eminent domain proceeding
which is commenced prior to Closing, and risk of loss to the Property due
to fire or any other casualty prior to Closing shall remain with
Contributor. If prior to the Closing the Property or any portion thereof is
destroyed or damaged in excess of $250,000, or if the Property or any
portion thereof shall is subjected to a bona fide threat of condemnation or
becomes the subject of any proceedings, judicial, administrative or
otherwise, with respect to the taking by eminent domain or condemnation,
Contributor shall notify Partnership thereof within a reasonable time after
receipt of actual notice thereof by Contributor, but in any event prior to
Closing, and, at its option, Partnership may, within 5 days after receipt
of such notice, elect to cancel this Agreement in which event this
Agreement shall terminate and the Deposit shall be returned to Partnership.
If the Closing Date is within the aforesaid 5-day period, then Closing
shall be extended to the next business day following the end of said 5-day
period. If no such election is made, and in any event if the destruction or
damage is not in excess of $250,000, this Agreement shall remain in full
force and effect and the contribution contemplated herein, less any
interest taken by eminent domain or condemnation, shall be effected with no
further adjustment, and upon the Closing of this contribution, Contributor
shall assign, transfer and set over to Partnership all of the right, title
and interest of Contributor in and to any awards that have been or that may
thereafter be made for such taking, and Contributor shall assign, transfer
and set over to Partnership any insurance proceeds
Page 9
<PAGE>
that may have been or
that may thereafter be made for such damage or destruction giving
Partnership a credit at Closing for any deductible under such policies.
Contributor hereby agrees that it shall keep all insurance policies
presently existing which relate to the Property in effect through the
Closing Date.
14. CONDITIONS PRECEDENT TO PARTNERSHIP'S OBLIGATION TO CLOSE.
A It shall be a condition to Partnership's obligation to consummate the
Closing that there are at Closing 293 apartment units in rentable
condition and one apartment unit converted for use as the Property
Office and with respect to all of which the Contributor has received
no notice from any governmental authority or agency having
jurisdiction over the Contributor, the Property and the Other Items
stating that the Contributor, the Property or the Other Items are in
violation of any federal, state, county or local laws, ordinances,
rules and regulations. In the event that the Contributor has received
any such notice, then at its election, the Contributor shall have up
to sixty (60) days after the receipt of such notice to cure any
violation set forth therein and the Closing Date shall be extended to
that date which is five days after the violation has been cured, but
such extension is not to be for more than 65 days. If the Contributor
fails to notify the Partnership that it has elected to cure any such
violation within 10 days of the receipt of any such notice, then the
Contributor shall be deemed unwilling to cure any such violation.
B It shall be a condition to Partnership's obligation to consummate the
Closing that the Partnership has not exercised its right to terminate
this Agreement as provided in Section 8.
C It shall be a condition to Partnership's obligation to consummate the
Closing that on or before the Closing Date, all management agreements
relating to the Property shall have been terminated, other than the
Management Agreement, the termination of which shall be effected by
the Partnership and Tower immediately after its contribution to the
Partnership in accordance with this Agreement.
D It shall be a condition to Partnership's obligation to consummate the
Closing that on the Closing Date the Title Company is prepared to
issue a title policy insuring the Partnership's fee interest in the
Property subject only to the Permitted Exceptions.
It is understood that the conditions set forth in this Section 14 are
for Partnership's benefit and may be waived by Partnership at any
time. If the above conditions are not satisfied or waived by the
Partnership, the Partnership shall have the right to terminate this
Agreement by written notice to the Contributor. In the event of such a
termination, this Agreement shall be null and void and neither party
shall have any further rights or obligations under this Agreement,
except Partnership shall have the right to the return of its Deposit
and the obligations set forth in Sections 8 and 12 herein shall
survive any such termination.
15. CONDITIONS TO THE PARTIES' OBLIGATIONS TO CLOSE. In addition to all other
conditions set forth herein, the obligation of Contributor and Tower, on
the one hand, and Partnership, on the other hand, to consummate the Closing
contemplated hereunder shall be contingent upon the following:
Page 10
<PAGE>
A The other party's representations and warranties contained herein
shall be true and correct as of the date of this Agreement and the
Closing Date.
B As of the Closing Date, the other party shall have performed its
obligations hereunder and all deliveries to be made at Closing have
been tendered;
C There shall exist no pending or threatened actions, suits,
arbitrations, claims, attachments, proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings, against the other party that would materially and
adversely affect the other party's ability to perform its obligations
under this Agreement; and
D There shall exist no pending or threatened action, suit or proceeding
with respect to the other party before or by any court or
administrative agency which seeks to restrain or prohibit, or to
obtain damages or a discovery order with respect to, this Agreement or
the consummation of the transactions contemplated hereby.
E With respect to Contributor's and Tower's obligations to consummate
the Closing, as of the Closing Date, Braddock Lee shall have
contributed and the Partnership shall have accepted the Braddock Lee
Property pursuant to the Braddock Lee Contribution Agreement and the
transactions contemplated therein have closed simultaneously with the
transactions contemplated hereby.
So long as a party is not in default hereunder, if any condition to
such party's obligation to proceed with the Closing hereunder has not
been satisfied as of the Closing Date, such party may, in its sole
discretion, (i) terminate the Agreement by delivering written notice
of termination to the other party on or before the Closing Date
specifying the unsatisfied condition entitling the non-defaulting
party to terminate this Agreement and provided the other party fails
to satisfy the condition specified in the notice within five days
after receipt of the notice; (ii) elect to extend the Closing for up
to 60 days until such condition is satisfied, and (iii) elect to
consummate the transaction, notwithstanding the non-satisfaction of
such condition, in which event such party shall be deemed to have
waived any such condition. In the event such party elects to close,
notwithstanding the nonsatisfaction of such condition, there shall be
no liability on the part of any other party hereto for breaches of
representations and warranties of which the party electing to close
had actual knowledge at the Closing. Notwithstanding the foregoing,
the failure of a condition due to the breach of a party shall not
relieve such breaching party from any liability it would otherwise
have hereunder. So long as the Partnership is not in default
hereunder, upon termination of this Agreement as provided above, the
Partnership shall have the right to the return of its Deposit.
16. REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR. The Contributor makes the
following representations and warranties to Partnership as of the date
hereof and as of Closing:
Page 11
<PAGE>
A To the best of the Contributor's knowledge, the leases (the "Leases")
listed on the rent roll attached hereto as Exhibit G and the contracts
listed on the attached Exhibit H (the "Contracts") comprise all of the
leases and rights to the property and all of the contracts to which
Partnership will be subject on the Closing Date
B. All of Contributor's obligations under the Leases and Contracts are
fully performed and, to the best of such Contributor's knowledge,
except as set forth on the attached Exhibits and except for
delinquencies in the payment of rent for the current month, there is
no default under any of the Leases and Contracts by any party thereto
or no event which, with the giving of notice or passage of time, or
both, would constitute a default thereunder. There are no other
security deposits (the "Security Deposits") except as identified on
Exhibit G.
C. The Contributor has made no prior assignment or conveyance of the
Leases, Security Deposits and Contracts and the Contributor is the
valid holder of landlord's interest in the Leases, and has the full
power and authority to assign its interest in the Leases, Security
Deposits and Contracts to Partnership.
D To the best of the Contributor's knowledge, there is no litigation,
proceeding or investigation pending, or to the knowledge of the
Contributor threatened, against or affecting the Contributor that
might affect or relate to the validity of this Agreement, any action
taken or to be taken pursuant hereto, or the Property or the Other
Items or any part or the operation thereof, whether or not fully
covered by insurance.
E To the best of the Contributor's knowledge, the Contributor has not
received any written notices from any governmental authority or agency
having jurisdiction over the Contributor or the Property that the
Contributor, the Property or the Other Items are in violation of, any
law, ordinance, rule, regulation or code or condition in any approval
or permit pursuant thereto (including without limitation, any zoning,
sign, environmental, labor, safety, health or price or wage control,
ordinance, rule, regulation or order of) applicable to the ownership,
development, operation or maintenance of the Property or the Other
Items. Promptly upon receipt of any such notice, the Contributor shall
provide the Partnership with a copy.
F All of Tower's obligations under the Management Agreement have been
performed and the Partnership has no claim of any nature against Tower
or any of its successors and assigns relating to the Management
Agreement.
The Partnership acknowledges, understands and agrees that, except as
provided in this Agreement to the contrary, Partnership's acquisition
of the Property and Other Items and any other rights and interests to
be contributed, conveyed, transferred and/or assigned is on an "AS IS"
"WHERE IS" PHYSICAL BASIS, WITHOUT REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, WITH REGARD TO PHYSICAL CONDITION OR COMPLIANCE WITH ANY
LEGAL REQUIREMENTS OR TITLE EXCEPTIONS OF THE PROPERTY, INCLUDING
WITHOUT LIMITATION ANY LATENT OR PATENT DEFECTS, CONDITION OF SOILS
(INCLUDING SURFACE AND SUBSURFACE CONDITIONS), EXISTENCE OR NON
EXISTENCE OF HAZARDOUS SUBSTANCES OR POLLUTANTS, QUALITY OF
CONSTRUCTION, STATE OF REPAIR, WORKMANSHIP, MERCHANTABILITY
Page 12
<PAGE>
OR FITNESS
FOR ANY PARTICULAR PURPOSE OR AS TO THE PHYSICAL MEASUREMENTS OR
USABLE SPACE THEREOF, TITLE TO THE PROPERTY, THE ASSIGNABILITY,
ASSUMABILITY OR TRANSFERABILITY OR VALIDITY OF ANY LICENSES, PERMITS,
GOVERNMENT APPROVALS, WARRANTIES OR GUARANTIES RELATING TO THE
PROPERTY OR THE USE OR OPERATION THEREOF, ZONING, BUILDING CODE,
ACCESS, ENVIRONMENTAL, FIRE OR LIFE SAFETY, SUBDIVISION OR OTHER
ORDINANCES, LAWS, CODES OR REGULATIONS, OF ANY KIND, PRIOR OR CURRENT
OPERATIONS CONDUCTED ON THE PROPERTY AND SURROUNDING PROPERTY, OR ANY
COVENANTS, CONDITIONS, RESTRICTIONS OR DECLARATIONS OF RECORD AND ALL
OTHER MATTERS OR THINGS AFFECTING OR RELATING TO THE PROPERTY.
As used in the foregoing representations and warranties, the phrase
"to the best of Contributor's knowledge" shall mean the actual, conscious
knowledge of Edgar W. Tullar, the Contributor's Director of Operations.
The representations and warranties of the Contributor contained in
this Agreement, the statements in any Exhibit or Schedules attached to this
Agreement, or other instruments furnished to Partnership at or prior to
Closing pursuant to this Agreement, or in connection with the transactions
contemplated pursuant to this Agreement, do not contain any untrue
statements of a material fact, or fail to state a material fact necessary
to make it not misleading.
The representations and warranties contained herein shall not survive
delivery of the Deed and shall merge therein. This expiration shall not
apply to the representation set forth in paragraphs 16.D. and 16.F. or to
any breach of warranty or representation which arises out of an intentional
material misrepresentation made by the Contributor.
17. REPRESENTATIONS AND WARRANTIES OF PARTNERSHIP. Partnership represents and
warrants to the Contributor, Tower and Designees as of the date hereof and
as of the Closing as follows:
A Partnership is and will be as of the date of Closing duly organized,
validly existing and in good standing under the laws of the State of
New York and has all the requisite power and authority to enter into
and carry out this Agreement according to its terms.
B This Agreement has been duly authorized, executed and delivered and
constitutes a legal and binding obligation of Partnership, enforceable
in accordance with its terms, except as may be limited by bankruptcy
and other laws affecting creditors' rights generally.
C To the best of its knowledge after due inquiry, there is no
litigation, proceeding or investigation pending, or to the knowledge
of Partnership threatened, against or affecting Partnership or the
partners of Partnership that might affect or relate to the validity of
this Agreement or any action taken or to be taken pursuant hereto, or
that might have a material adverse effect on the business or
operations of the Partnership.
Page 13
<PAGE>
D HME has been organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal
Revenue Code of 1986 (the "Code") and its method of operation is
expected to enable it to continue to satisfy the requirements for
taxation as a real estate investment trust under the Code for the
fiscal year ending December 31, 1997 and in the future.
E The Partnership is classified as a partnership and not as an
association (or publicly traded partnership) taxable as a corporation
for federal income tax purposes.
F (i) HME and the Partnership have filed or caused to be filed all
federal, state, local, foreign and other tax returns, reports,
information returns and statements required to be filed by them; (ii)
HME and the Partnership have paid or caused to be paid all taxes
(including interest and penalties) that are shown as due and payable
on such returns or claimed by any taxing authority to be due and
payable with respect to such returns, except those which are being
contested by them in good faith by appropriate proceedings and in
respect of which adequate reserves are being maintained on their books
in accordance with generally accepted accounting principles
consistently applied; (iii) HME and the Partnership do not have any
material liabilities for taxes other than those incurred in the
ordinary course of business and in respect of which adequate reserves
are being maintained by them in accordance with generally accepted
accounting principles consistently applied; (iv) as of the date of
this Agreement, Federal and state income tax returns for HME and the
Partnership have not been audited by the Internal Revenue Service or
state authorities; (v) as of the date of this Agreement, no
deficiency, assessment with respect to, or proposed adjustment of,
HME's or the Partnership's federal, state, local, foreign or other tax
returns is pending or, to the best of the Partnership's knowledge,
threatened; and (vi) as of the date of this Agreement, there is no tax
lien, whether imposed by any federal, state, local or other tax
authority, outstanding against the assets, properties or business of
HME or the Partnership
G. The Partnership has delivered to Contributor a complete and correct
copy of: (i) the Articles of Incorporation and by-laws of HME; and
(ii) the Second Amended and Restated Agreement of Limited Partnership
of Partnership, in each case, as amended.
H. The Partnership has previously made available to the Contributor as
requested in writing by the Contributor complete and correct copies
of: (i) the annual report on Form 10-K for HME for the period ending
December 31, 1996; (ii) all quarterly reports on Form 10-Q for HME for
each of the first three quarters in 1997; (iii) definitive proxy
statement for HME for the 1997 Shareholders' Meeting; (iv) any current
reports on Form 8-K filed by HME since September 30, 1997; and (v) any
other form, report, schedule and statement and filed by HME for 1997
with the Securities and Exchange Commission ("SEC") under the Exchange
Act, since January 1, 1997 (collectively, the "SEC Documents"). As of
their respective dates, each of the SEC Documents complied in all
material respects with the requirements of the Exchange Act to the
extent applicable to such SEC Documents, and none of such SEC
Documents (as of their respective dates) contained an untrue statement
of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, except as the same was corrected or
superseded in a subsequent document duly filed with the SEC.
Page 14
<PAGE>
HME is not aware of any reports or filings required to be filed under
the Exchange Act with the SEC under the rules and regulations of the
SEC that have not been filed.
The representations and warranties of the Partnership contained in
this Agreement, the statements in any Exhibit or Schedules attached to this
Agreement, or other instruments furnished to Contributor at or prior to
Closing pursuant to this Agreement, or in connection with the transactions
contemplated pursuant to this Agreement, do not contain any untrue
statements or a material fact, or fail to state a material fact necessary
to make it not misleading.
The representations and warranties contained herein shall survive
delivery of the assignment of the Deed and shall not merge therein.
18. ASSIGNMENT. This Agreement, and all or any portion of the rights of
Partnership hereunder, may not be assigned by Partnership without the prior
written consent of the Contributor, which may be granted or withheld in its
sole discretion.
19. NOTICE. All notices given pursuant to any provisions of this Agreement
shall be in writing and shall be effective upon receipt and then only if
delivered personally, or sent by registered or certified mail, postage
prepaid or sent by a national over-night carrier, or by telecopy with
confirmation of receipt to the addresses set forth below:
To the Contributor
and Tower: c/o The Tower Companies
Attn: Jeffrey S. Abramson
11501 Huff Court
North Bethesda, Maryland 20895
Telecopy No.: (301) 984-6033
To Partnership: HOME PROPERTIES OF NEW YORK, L.P.
Attn: Norman Leenhouts, Chairman
850 Clinton Square
Rochester, New York 14604
Telecopy No.: (716) 546-5433
20. PLANS. The Contributor agrees to provide Partnership with all plans and
architectural drawings in their possession for the improvements completed
at the Property, including, without limitation, all "as-built" plans in
their possession and the Contributor further agree that they will endeavor
to turn over the same to Partnership at the Property during the Due
Diligence Period.
21. APPLICABLE LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Virginia.
22. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the parties, and any and all prior understandings or agreements,
whether written or oral, are hereby merged into this Agreement. This
Agreement cannot be modified except by a written instrument signed by the
parties hereto.
23. BINDING AGREEMENT. This Agreement shall not be binding or effective until
properly executed by Partnership, Tower and the Contributor.
Page 15
<PAGE>
24. CONFIDENTIALITY. By execution of this Agreement and except as otherwise
provided herein, prior to the Closing the Contributor, Tower and
Partnership agree to keep any and all information with respect to the
transactions contemplated by this Agreement strictly confidential, and will
not disclose any such information, without the other's prior written
consent, unless such disclosure is required by law or judicial process. The
Partnership may disclose the existence of this Agreement to the extent
necessary to conduct its due diligence with respect to the Property. The
Partnership agrees that it will obtain the consent of the Contributor,
which shall not be unreasonably withheld or delayed, with respect to the
content of any press releases to be issued on or after the Closing Date by
the Partnership relating to the transaction described herein.
25. CONTRIBUTOR COVENANTS.
A Upon the request of the Partnership, the Contributor will provide, or
cause to be provided, a signed representation letter substantially in
the form attached hereto as Exhibit I. The Contributor will provide
access by Partnership's representatives, to all financial and other
information relating to the Property as is sufficient to enable them
to prepare audited financial statements, at Partnership's 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.
B Prior to the Closing Date, the Contributor shall continue to fulfill
all of their obligations under the terms of the leases encumbering the
Property and under the service contracts and the Contributor shall
operate, maintain and repair all landscaping, buildings, fixtures and
facilities in accordance with its current practices.
C Contributor covenants that it hereby waives any and all claims it may
have against the Partnership as assignee of the Management Agreement
relating to any defaults by Tower in the performance of its
obligations under the Management Agreement.
D The Contributor covenants that it will not assign its Units to any
person or entity unless such person or entity shall establish that
they are an accredited investor under applicable securities laws,
unless prior to that assignment the Contributor or the assignee has
properly exercised their rights under the Stock Put Agreement, such
exercise to be immediately effective upon receipt of the assigned
Units.
26. PARTNERSHIP COVENANTS.
A The Partnership hereby covenants to the Contributor, Tower and any
Designees as follows:
(i) For a period of fifteen (15) years from and after the Closing
Date, the Partnership shall not sell, exchange, transfer or
otherwise dispose of the Property unless such transaction occurs
in a manner as to be tax free to the Contributor and its
partners, Tower and any Designees and their respective successors
and assigns. After the foregoing 15-year period, Partnership will
use commercially reasonable efforts to effect any disposition of
all or part of the Property through a I.R.S. Code Section 1031
tax-free exchange or other
Page 16
<PAGE>
transaction which does not cause federal income tax gain to
be incurred by the Contributor, its partners, Tower, any
Designees and their respective successors and assigns. In the
event that the Partnership breaches any of its obligations set
forth in this Section 26(A)(i), Partnership shall indemnify,
defend and hold harmless each of Contributor, its partners,
Tower, any Designees and their respective successors and assigns
(each an "Indemnified Party" and collectively the "Indemnified
Parties") from and against the aggregate federal, state and local
income taxes incurred by such Indemnified Party as a result
thereof (collectively, "Taxes") plus the Taxes incurred by such
Indemnified Party as a result of the receipt of the Indemnity
Payment (the "Tax Indemnity Amount"). Any such Taxes shall be
deemed to be the amount of gain or income recognized by the
relevant Indemnified Party multiplied by the highest actual rate
or rates imposed upon such Indemnified Party for such gain or
income (assuming it is the last dollar of income or gain) for the
year in which such gain or income is recognized. In determining
the Tax Indemnity Amount, no effect shall be given to the
Indemnified Parties' tax deductions, tax credits, tax carry
forwards nor to any other of their tax benefits or tax
attributes. The Tax Indemnity Amount shall be payable by the
Partnership to each Indemnified Party not later than thirty (30)
days following the filing of tax returns for the Indemnified
Party for the year in question.
(ii) The Partnership hereby guaranties to Contributor, Tower, any
Designees and their respective successors, assigns, and designees
that for the Applicable Period (hereinafter defined): (a) the
value of each Unit shall not be less than the initial Market
Value; and (b) each Unit shall receive or accrue a return on the
initial Market Value of not less than eight percent (8%)
compounded quarterly (the "Value Guaranty"). For purposes of the
foregoing Value Guaranty, the 8% return shall be deemed to
include both (x) cash and non-cash dividends and distributions
relating to the Units paid or payable with respect to the
Applicable Period, and (y) amounts by which the value of the
Units (based on the average closing price for 20 consecutive
trading days prior to, but not including, the expiration date of
the relevant Applicable Period of a share of common stock of HME
as listed on the New York Stock Exchange) at the end of the
Applicable Period exceeds the initial Market Value.
The Partnership shall pay any obligations accruing under the
foregoing Value Guaranty with respect to each Unit upon the
expiration of the relevant Applicable Period in the form of
additional Units. Two examples of the application of the
foregoing Value Guaranty are attached as Exhibit J.
For purposes of this Section, the term "Applicable Period" means
the shorter of the following three periods of time: (aa) from the
Closing Date to the 36th month anniversary of the Closing Date;
(bb) from the Closing Date to the date on which the Unit owner
exercises its Purchase Right (as defined in the Partnership
Agreement); and (cc) from the Closing
Page 17
<PAGE>
Date to the date on which
the Unit owner exercises its put rights pursuant to the Stock Put
Agreement.
(iii)The Partnership covenants and agrees that it shall use its
reasonable commercial efforts to cause HME to continue to be
taxed as a real estate investment trust under the Code unless the
Board of Directors of HME determines that it is in the best
interests of shareholders of HME to be taxed otherwise.
(iv) The Partnership agrees to use the "traditional method" under
Section 704(c) of the U.S. Internal Revenue Code to adjust for
discrepancies between the agreed-upon value of the various
components of the contributed Property (or for any property
received in exchange for the contributed Property in a like-kind
exchange) and the adjusted tax basis of such components.
27. REPRESENTATIONS AND COVENANTS OF TOWER.
A Tower hereby represents and warrants to the Partnership as of the date
hereof and as of the Closing Date that it has made no prior assignment
of its rights under the Management Agreement and that it has the full
power and authority to assign its interest in the Management Agreement
to the Partnership.
B Tower hereby represents and warrants that it is an accredited investor
under the applicable securities laws and covenants that it will not
assign its Units to any person or entity unless such person or entity
shall establish that they are also such an accredited investor.
28. DEFAULT. In the event that Partnership fails to acquire the Property
pursuant to this Agreement other than by reason of a termination by
Partnership expressly permitted hereunder or Contributor's or Tower's
default, Partnership agrees that Contributor's and Tower's sole remedies
shall be (i) to have the Title Company deliver the Deposit to Contributor
and Tower as liquidated damages to recompense Contributor and Tower for
time spent, labor and services performed, and loss of its bargain and to
terminate this Agreement; or (ii) to seek specific performance. The
Partnership acknowledges that in the event of such a failure by the
Partnership, the damages suffered by the Contributor and Tower will be
difficult to ascertain with certainty. Therefore, the Partnership, the
Contributor and Tower agree that in the event of such a failure by the
Partnership, and if the Contributor and Tower do not elect to seek specific
performance, then the sum of $270,000 is a good faith estimate of the
Contributor's and Tower's damages and at Contributor's election said sum
shall be promptly paid to Contributor and Tower in the form of the Deposit.
In such event the Contributor and Tower agree to accept the Deposit as
Contributor's and Tower's total damages and relief hereunder in the event
of Partnership's default hereunder. In the event that Partnership does so
default and this Agreement is terminated, Partnership shall have no further
right, title, or interest in the Property. In the event Contributor fails
to sell the Property to Partnership pursuant to this Agreement or Tower
fails to terminate the Management Agreement other than by reason of a
termination by Contributor expressly permitted hereunder or Partnership's
default, Partnership's sole remedies shall be (i) cancellation of this
Agreement in which event Partnership shall be entitled to the return by the
Title Company to Partnership of the Deposit, or (ii) to seek specific
performance. In no event shall either party be entitled to any remedies or
damages for breach of this Agreement, except as set forth
Page 18
<PAGE>
hereinabove. And
in no event shall any party be entitled to punitive or consequential
damages for the breach of this Agreement.
29. RECORDATION. Neither Party may record this Contribution Agreement; and any
recordation shall render the contract void. Also, neither party may file a
lis pendens against the Property.
30. TOWER'S INABILITY TO PERFORM. Notwithstanding anything set forth herein to
the contrary, if Tower is unable or unwilling to contribute the Management
Agreement to the Partnership at Closing: (i) this Agreement shall remain in
full force and effect; (ii) Tower shall be deleted as a party to this
Agreement, shall have no rights or liabilities hereunder and shall be
released of any liabilities accruing under this Agreement by the other
parties hereto; (iii) the Contributor's Contribution Value shall be
increased by the amount of Tower's Contribution Value; (iv) Contributor
shall deliver the Property to the Partnership free and clear of the
Management Agreement; and (v) Contributor shall indemnify, defend and hold
Partnership harmless from any claims made by Tower for any management fees
respecting the Property.
31. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach or the validity thereof shall be settled by final
and binding arbitration in accordance with the most current Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association
("AAA"). The arbitration shall be conducted by a tribunal of three (3)
arbitrators (the "Tribunal"). Each party shall appoint an arbitrator within
ten (10) days from the filing of the Demand and Submission in accordance
with Paragraph 7 of the Rules and the two (2) arbitrators shall jointly
appoint the third arbitrator, within fifteen (15) days from their
appointment, in accordance with Paragraph 7 of the Rules. If the two (2)
appointed arbitrators fail to agree upon a third arbitrator within said
fifteen (15) days and fail to agree to an extension of such period, the
third arbitrator shall be appointed by the AAA in accordance with Paragraph
15 of the Rules. The place of arbitration shall be Arlington, Virginia and
the Award shall be issued at the place of arbitration. The Tribunal may,
however, call and conduct hearings and meetings at such other places as the
parties may agree. The law applicable to the arbitration procedure shall be
the Federal Arbitration Act (the "Act") as supplemented by any law of the
place of arbitration which is not inconsistent with the Act.
The decision of the Tribunal (the "Award") shall be made within ninety (90)
days of the appointment of the Tribunal pursuant to the provisions hereof,
and the parties hereby agree that any such decision need not be accompanied
by a reasoned opinion. The Award may, except as limited by Section 27 of
this Agreement, include (i) recovery of actual damages for violation of any
obligations under this Agreement or of governing law, including the
recovery of attorneys' fees to the prevailing party (ii) injunctive relief
against threatened or actual violations of any obligation under the
Agreement or of governing law or (iii), if and to the extent permitted
under the terms of the Agreement, the remedy of specific performance. The
Award shall be final and binding on the parties. Judgment upon the Award
may be entered in any court having jurisdiction thereof or having
jurisdiction over one or more of the parties or their assets. The parties
specifically waive any right they may enjoy to apply to any court for
relief from the provisions of this Agreement or from any decision of the
Tribunal made prior to the Award.
Page 19
<PAGE>
32. EXECUTION IN COUNTERPARTS. . This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected thereon as the
signatories.
33. SIGNATURE BY FACSIMILE. The parties may execute and deliver this Agreement
by forwarding signed facsimile copies of their signature page to this
Agreement and delivering an original of the same by overnight courier. Such
facsimile signatures shall have the same binding effect as original
signatures, and the parties hereby waive any defense to validity based on
any such copies or signatures.
34. ACCREDITED STATUS. The Contributor and Tower hereby represent to the
Partnership that they each are as of the date of this Agreement, and will
be as of the Closing Date, an accredited investor under applicable
securities laws.
IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be
executed as of the day and date first above written.
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: /s/ Amy L. Tait
---------------------------------
Title: Executive Vice President
PARK SHIRLINGTON LIMITED PARTNERSHIP
By: /s/ Albert Abramson
---------------------------------
Print Name: Albert Abramson
Title: General Partner
Page 20
<PAGE>
PARK SHIRLINGTON LIMITED PARTNERSHIP
By: /s/ Beverly Bernstein
---------------------------------
Print Name: Beverly Bernstein
Title: General Partner
Page 21
<PAGE>
PARK SHIRLINGTON LIMITED PARTNERSHIP
By: /s/ Anne S. Reich
---------------------------------
Print Name: Anne S. Reich
Title: General Partner
Page 22
<PAGE>
TOWER CONSTRUCTION GROUP, L.L.C
By: /s/ Jeffrey S. Abramson
---------------------------------
Jeffrey S. Abramson
Title: Manager
Page 23
<PAGE>
Exhibit 2.8
HOME PROPERTIES DISCLOSES ACQUISITION PIPELINE
For Immediate Release:
Friday, March 20, 1998
Rochester, New York/ PR Newswire/ -- Home Properties (NYSE:HME), a real estate
investment trust ("REIT") specializing in apartment communities in select
Northeast, Midwest and Mid-Atlantic markets, today disclosed that is has entered
into various agreements to purchase 4,452 apartment units for a combined price
of $174 million. The properties are located in Maryland, Connecticut, Illinois,
and Pennsylvania. The agreements are subject to certain conditions and
approvals. Detailed information on the acquisitions will be released by the
Company when the transactions are consummated.
On February 5, 1998, Home Properties disclosed that it had $92 million of
acquisitions in four unrelated transactions under contract. Since then, the
Company has closed on two of these transactions totaling $16 million, completed
an additional acquisition for $27 million, and entered into additional
agreements totaling $98 million. Two previously announced contracts totaling $76
million are still pending.
This press release contains forward-looking statements. Although the Company
believes expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations will be
achieved.
Home Properties is a self-managed real estate investment trust which now
operates 162 communities with 22,364 apartment units. Of these, 15,016 units in
67 communities are owned outright, 4,862 units are managed by the Company as
general partner, and 2,486 units are managed for others. The communities are
located throughout the Northeastern quadrant of the United States, including New
York, Michigan, Pennsylvania, New Jersey, Ohio, Virginia, and Indiana. In
addition, Home Properties manages 1.7 million square feet of commercial space.
Home Properties' common stock is traded on the New York Stock Exchange under the
symbol "HME" and on the Berlin Stock Exchange under the symbol "HMP GR". The
Company's web site address is www.homeproperties.com.
*****
For further information:
Amy L. Tait, Executive Vice President
Home Properties of New York, Inc.
(716) 246-4108
<PAGE>
Exhibit 23.0
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements on
Forms S-3 (Nos. 333-37437, 333-37229, 333-30835, 333-13723, 333-43303,
333-46243, 333-2672, and 333-2674) and on Forms S-8 (Nos. 333-05705 and
333-12551) filed by Home Properties of New York, Inc. of our reports dated March
16, 1998 and March 18, 1998, on our audits of the Candlewood Apartments and Park
Shirlington and Braddock Lee Apartments, respectively, for the year ended
December 31, 1997, which reports are included in the accompanying Form 8-K. We
also consent to the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Rochester, New York
March 23, 1998
