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):
July 15, 1999
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<CAPTION>
MARYLAND 1-13136 16-1455126
<S> <C> <C>
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification
incorporation or organization Number)
</TABLE>
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)
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
CURRENT REPORT
ON FORM 8-K
Home Properties of New York, L.P. (the "Operating Partnership")), a New York
limited partnership has acquired certain property in certain transactions which
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 55% of the
partnership interests in the Operating Partnership.
Item 2. Acquisition or Disposition of Assets
On July 15, 1999, the Operating Partnership acquired the equity interests in
seventeen different entities which each individually own a single asset as
follows:
- - Canterbury No. 1 Limited Partnership, Canterbury No. 2 Limited
Partnership, Canterbury No. 3 Limited Partnership and Canterbury No. 4
Limited Partnership, all Maryland limited partnerships, which collectively
own a 618 unit apartment community in White Marsh, Maryland, and whose
partnership interests were formerly owned by a variety of individuals and
entities.
- - Chestnut Crossing Limited Partnership, a Maryland limited partnership,
which owns a 432 unit apartment community in Newark, Delaware, and whose
partnership interests were formerly owned by a variety of individuals and
entities.
- - Country Club Estates, LLC, a Maryland limited liability company, which
owns a 150 unit apartment community in Glen Burnie, Maryland, and whose
member interests were formerly owned by a variety of individuals and
entities.
- - Crainmont Limited Partnership, a Maryland limited partnership, which
owns a 370 unit apartment community in Glen Burnie, Maryland, and whose
partner interests were formerly owned by David C. Browne, Crainmont Corp.,
Estate of Jerome S. Cardin, Kanode Partnership, and Macks Operating
Partnership, LLLP.
- - Doub Meadow Limited Partnership, a Maryland limited partnership, which
owns a 95 unit apartment community in Hagerstown, Maryland, and whose
partner interests were formerly owned by Morton J. Macks, Thomas O. Frech
and Earle K. Shawe.
- - Falcon Crest Townhouses, LLC, a Maryland limited liability company,
which owns a 396 unit apartment community in Owings Mills, Maryland, and
whose member interests were formerly owned by a variety of individuals and
entities.
- - Harbor Exchange Limited Partnership, a Maryland limited partnership,
which owns a 132 unit apartment community in Olney, Maryland, and whose
partner interests were formerly owned by Camden Yard Exchange, LP and Macks
Family Partnership.
- - Orchard Landing Limited Partnership, a Maryland limited partnership,
which owns a 132 unit apartment community in Columbia, Maryland, and whose
partner interests were formerly owned by Orchard Landing Properties, Inc.,
Macks Meadows, LLLP, Lawrence M. Macks, Genine M. Fidler and Martha Macks.
- - Owings Run Apartments Limited Partnership, a Maryland limited
partnership, which owns a 270 unit apartment community in Owings Mills,
Maryland, and whose partner interests were formerly owned by Owings Run
Apartments, Inc., Macks Operating Properties, LLLP, Lawrence M. Macks, Josh
E. Fidler and Martha Macks.
- - Owings Run 2 Limited Partnership, a Maryland limited partnership,
which owns a 234 unit apartment community in Owings Mills, Maryland and
whose partner interests were formerly owned by Owings Run 2 Apartments,
Inc., Macks Operating Properties, LLLP, Lawrence M. Macks, Genine Macks
Fidler and Martha Macks.
- - Selford Townhouses, LLC, a Maryland limited liability company, which
owns a 102 unit apartment community in Baltimore, Maryland, and whose member
interests were formerly owned by a variety of individuals and entities.
- - Shakespeare Park Apartments limited partnership, a Maryland limited
partnership, which owns an 82 unit apartment community in Randallstown,
Maryland and whose partner interests were formerly owned by Morton J. Macks,
Thomas O. Frech, Allegheny Homes, Inc., Morton J. Macks and Coleman Bunting,
Jr.
- - Timbercroft I LLC and Timbercroft III LLC, both Maryland limited
liability companies, which collective own a 284 unit apartment community in
Owings Mills, Maryland, and whose member interests were formerly owned by a
variety of individuals and entities.
All of the above properties (the "Mid-Atlantic Portfolio"), which comprise
3,297 units in total, were previously managed by Vector Property Management,
LLC ("Vector"). The Mid-Atlantic Portfolio was 97.2% occupied at the time of
the acquisition and the buildings have an average age of 20 years. As part of
the transaction, the Operating Partnership also acquired the entity interests
in Vector, as well as other assets from an affiliated company Chesapeake Realty
Management, Inc. (the "Assets").
The total consideration for the Mid-Atlantic Portfolio and the Assets was
$156,500,000, consisting of operating partnership units in the Operating
Partnership having an agreed upon value of approximately $29.2 million, the
assumption of approximately $85.9 million of indebtedness and cash of
approximately $41.4 million. The assumed mortgages carry a weighted
average interest rate of 8.1% and have a weighted average maturity of 26
years. The cash consideration was funded in part from cash on hand, with
the remainder financed under the Operating Partnership's line of credit,
which bears interest at 125 basis points over the 30-day LIBOR rate.
None of the sellers were affiliated with the Operating Partnership, the
Company, the directors or officers of the Company or any affiliate of any
such director or officer. The apartment communities that comprise the Mid-
Atlantic Portfolio were previously operated as multifamily apartment
projects, and it is the intent of the Company and the Operating Partnership
to continue to operate the projects as multifamily apartment communities.
The personal property that comprises a portion of the Assets was used in
connection with the management of the Mid-Atlantic Portfolio. It is the
intent of the Company and the Operating Partnership to continue to use
those assets for that purpose.
The consideration was negotiated with representatives of the sellers and
was based on an internal analysis by the Company of the historical cash
flows and fair market value of the properties and assets.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of the business acquired:
Audited statement of revenues and certain expenses of the Mid-
Atlantic Portfolio for the year ended December 31, 1998.
b. Pro Forma Financial Information:
Pro forma condensed balance sheet of the Company as of March 31,
1999 and related notes (unaudited).
Pro forma condensed statement of operations of the Company for the
three months ended March 31, 1999 and for the year ended December
31, 1998 (unaudited).
c. Exhibits:
Exhibit 23.0 - Consent of PricewaterhouseCoopers LLP
Exhibit 99 - Additional Exhibits - Form of Contribution Agreement
with schedule setting forth material details in which documents
differ from form.
<PAGE>
THE MID-ATLANTIC PORTFOLIO
STATEMENT OF REVENUES AND CERTAIN EXPENSES
DECEMBER 31, 1998
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
July 1, 1999
To the Board of Directors and Shareholders of
Home Properties of New York, Inc.
In our opinion, the accompanying statement of revenues and certain expenses, as
defined in Note 1, present fairly, in all material respects, the revenues and
certain expenses, as defined in Note 1, of The Mid-Atlantic Portfolio for the
year ended December 31, 1998 in conformity with generally accepted accounting
principles. The statement of revenues and certain expenses is the
responsibility of The Mid-Atlantic Portfolio's management; our responsibility
is to express an opinion on this financial statement based on our audit. We
conducted our audit of the statement of revenues and certain expenses in
accordance with generally accepted auditing standards, which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
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 Mid-Atlantic Portfolio's revenues and expenses.
/S/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Rochester, New York
<PAGE>
THE MID-ATLANTIC PORTFOLIO
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(IN THOUSANDS)
FOR THE
PERIOD JANUARY 1, FOR THE
THROUGH YEAR ENDED
MARCH 31, 1999 DECEMBER 31, 1998
(UNAUDITED)
Revenues:
Rental income $ 6,218 $24,014
Other income 129 607
-------- -------
6,347 24,621
-------- -------
Certain expenses:
Property operating and maintenance 1,851 7,202
Real estate taxes 447 1,821
------- ------
2,298 9,023
------- ------
Revenues in excess of certain expenses $ 4,049 $15,598
======= ======
The accompanying note is an integral part of this financial statement.
<PAGE>
THE MID-ATLANTIC PORTFOLIO
NOTE TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
DECEMBER 31, 1998
I. 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 Mid-Atlantic
Portfolio, 12 residential properties owned and managed by common parties
not related to Home Properties of New York, Inc. (the "Company").
On July 15, 1999, the Company, through its subsidiary Home Properties of
New York, L.P., acquired 100% of the real estate of The Mid-Atlantic
Portfolio, 3,297 apartment units located in 12 communities. The properties
are primarily located in suburban markets of Baltimore, MD and Wilmington,
DE.
The acquisition was funded through the assumption of mortgages on eight of
the communities totalling approximately $86 million, approximately $43
million in cash and the issuance of Operating Partnership Units in Home
Properties of New York, L.P. valued at approximately $29 million. The
mortgages carry a weighted average interest rate of 8.17% and a weighted
average maturity of 26 years.
BASIS OF PRESENTATION
The accompanying financial statement has been prepared on the accrual basis
of accounting, but is not representative of the actual operations of The
Mid-Atlantic Portfolio for the period shown. As required by the Securities
and Exchange Commission Regulation S-X, Rule 3-14, certain expenses have
been excluded which may not be comparable to the proposed future operations
of The Mid-Atlantic Portfolio. 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
Mid-Atlantic Portfolio. The Company is not aware of any material factors
relating to The Mid-Atlantic Portfolio 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.
<PAGE>
INTERIM UNAUDITED FINANCIAL STATEMENT
The accompanying interim unaudited statement of revenues and certain
expenses for the period from January 1 through March 31, 1999 has been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission described above. The results of operations of such
interim period are not necessarily indicative of the results for the full
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
MARCH 31, 1999
(Unaudited, In Thousands)
This unaudited pro forma Condensed Consolidated Balance Sheet is presented as
if the Company had purchased the Mid-Atlantic Portfolio on March 31, 1999.
This unaudited pro forma Condensed Consolidated Balance Sheet should be read in
conjunction with the Statement of Revenues and Certain Expenses of the Mid-
Atlantic Portfolio and note thereto included elsewhere herein. In management's
opinion, all adjustments necessary to reflect the purchase of the Mid-Atlantic
Portfolio have been made.
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Home
Properties of
New York, Mid-Atlantic Pro Forma Company
Inc. (A) Portfolio (B) Adjustm.(C) Pro Forma
------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real Estate, net $ 885,073 $60,714 $ 93,942(D) $1,039,729
Cash and cash equivalents 27,341 (27,341) 0
Other assets 102,943 4,372(E) 107,315
---------- ------- --------- ---------
Total assets $1,015,357 $60,714 $ 70,973 $1,147,044
========== ======= ========= =========
LIABILITIES
Mortgage notes payable $419,185 $105,299 $(19,457) $505,027
Line of credit - 19,436 19,436
Other liabilities 24,761 24,761
--------- ------- --------- ---------
Total liabilities 443,946 105,299 (21) 549,224
--------- ------- --------- ---------
Minority interest 203,240 29,209(F) 232,449
--------- ------- -------- ---------
STOCKHOLDERS' EQUITY
Common Stock 182 182
Additional paid-in capital 413,524 (44,585) 44,585(G) 413,524
Distributions in excess of
accumulated earnings (29,492) (2,800)(H) (32,292)
Unrealized loss on available-
for-sale securities (2,360) (2,360)
Treasury stock, at cost (3,726) (3,726)
Officer and Director notes for
stock purchases (9,957) (9,957)
-------- ------- ------- --------
Total stockholders' equity 368,171 (44,785) 41,785 365,371
-------- ------- ------- --------
Total liabilities and
stockholders' equity $1,015,357 $60,714 $70,973 $1,147,044
========= ====== ====== =========
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<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(Unaudited, In Thousands, Except Share and Per Share Data)
(A) Reflects the Company's historical consolidated balance sheet as of March
31, 1999 as reported on form 10-Q.
(B) Reflects the Mid-Atlantic Portfolio historical balance sheet as of March
31, 1999 for the assets acquired by the Company.
(C) The pro forma adjustments reflect the purchase of the Mid-Atlantic
Portfolio for $154,656. The purchase price will be allocated $26,312 to
land, $3,347 to appliances and equipment and $124,997 to building. The
appliances and equipment have an estimated useful life of ten years and
the building has an estimated useful life of thirty-five years.
(D) Reflects the excess of the proposed cash purchase price of $154,656 over
the historical seller's cost basis of $60,714.
(E) Reflects the other assets acquired consisting primarily of cash in escrows.
(F) Reflects the issuance of 1,168,356 shares of operating units at a price of
$25.
(G) Represents historical seller's capital account zeroed out.
(H) Management contracts were purchased from an unrelated third party
management company for $2,800. The Company will self-manage the Mid-
Atlantic Portfolio and has directly expensed the cost of those management
contracts.
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited, In Thousands, Except Share and Per Share Data)
The unaudited pro forma Consolidated Statement of Operations for the three
months ended March 31, 1999 and for the year ended December 31, 1998 is
presented as if the acquisition of the Mid-Atlantic Portfolio had occurred on
January 1, 1998. The unaudited pro forma Consolidated Statement of Operations
should be read in conjunction with the Statements of Revenues and Certain
Expenses of the Mid-Atlantic Portfolio and notes thereto included elsewhere
herein. In management's opinion, all adjustments necessary to reflect the
effects of the purchase of the Mid-Atlantic Portfolio have been made.
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.
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<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1999
--------------------------------------------------------------------------------
Home Properties of New
York, Inc. Mid-Atlantic Pro forma Company
Historical (A) Portfolio (B) Adjustments Pro Forma
---------------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Rental Income $43,943 $6,218 $ $50,161
Property other income 1,286 129 1,415
Other income 2,537 (273) (C) 2,264
------ ----- ------ ------
Total revenues 47,766 6,347 (273) 53,840
------ ----- ------ ------
Expenses:
Operating and maintenance 20,999 2,298 23,297
General and administrative 2,156 190(D) 2,346
Interest 7,716 2,050(E) 9,766
Depreciation & Amortization 7,541 963(E) 8,504
------ ----- ----- ------
Total Expenses 38,412 2,298 3,203 43,913
------ ----- ----- ------
Income before minority interest $9,354 $4,049 ($3,476) 9,927
====== ===== ===== =====
Minority interest of Unit holders 3,805
-----
Net income $6,122
=====
Net income per share - Basic $0.34
=====
- Diluted $0.34
=====
Weighted average number of shares
outstanding:
- Basic 17,871,753
==========
- Diluted 17,960,058
==========
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Unaudited, In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
Home Properties of Mid-Atlantic Pro forma Company
New York, Inc. (A) Portfolio (B) Adjustment Pro-Forma
------------------ ------------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $137,557 $24,014 $161,571
Property other income 3,614 607 4,221
Other income 8,072 (1,094) (C) 6,978
------- ------ ------ -------
Total revenues 149,243 24,621 (1,094) 172,770
------- ------ ------ -------
Expenses:
Operating and Maintenance 63,136 9,023 72,159
General and administrative 6,685 739 (D) 7,424
Interest 23,980 8,199 (E) 32,179
Deprciation & Amortization 23,191 3,906 (F) 27,097
------- ------ ------ -------
Total expenses 116,992 9,023 12,844 138,859
------- ------ ------ -------
Net income before minority interest and
extraordinary item $32,251 $15,598 ($13,938) 33,911
======= ====== ====== =======
Minority interest of Unit holders 14,306
-------
Income before extraordinary item 19,605
Extraordinary item (899)
-------
Net Income $18,706
=======
Basic earnings per share data:
Income before extraordinary item $1.41
Extraordinary item ($0.06)
-----
Net Income $1.35
=====
Diluted earnings per share data:
Income before extraordinary item $1.40
Extraordinary item ($0.06)
-----
Net Income $1.34
=====
Weighted Average Number of shares
outstanding:
- Basic 13,898,221
==========
- Diluted 14,022,329
==========
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
FOR THE YEAR ENDED DECEMBER 31, 1998
(Unaudited, In Thousands)
(A) Reflects the historical consolidated statement of operations for the
Company for the three onths ended March 31, 1999 and the historical
consolidated statement of operations for the Company for the year
ended December 31, 1998.
(B) Reflects the historical revenues and certain expenses of the Mid-Atlantic
Portfolio which was not owned by the Company for the three months ended
March 31, 1999 and for the year ended December 31, 1998.
(C) The resulting reduction in interest income (from the decrease in cash used
to finance the acquisition) is calculated at 4% and amounts to $273 and
$1,094 for the three months ended March 31, 1999 and for the year ended
December 31, 1998 respectively.
(D) Reflects additional general and administrative expenses.
(E) Reflects the assumption of debt and line of credit borrowed to finance
the acquisition. The interest rates range from 6.38% to 9.34% and
amounts to $2,050 and $8,199 for the three months ended March 31, 1999
and for the year ended December 31, 1998, respectively.
(F) Reflects depreciation and amortization related to the acquisition. See
Note C on page 11 for further information on useful lives of these assets.
(G) Management contracts amounting to $2,800 which were expensed at closing
have not been included in these Pro Forma Consolidated Statement of
Operations because they are material nonrecurring charges.
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: July 30, 1999
By: /S/ DAVID P. GARDNER
David P. Gardner
Vice President
Chief Financial Officer and
Treasurer
Date: July 30, 1999
By: /S/ NORMAN LEENHOUTS
Norman Leenhouts
Chairman of the Board of Directors
Co-Chief Executive Officer and Director
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
EXHIBIT INDEX
LOCATION
EXHIBIT 23.0
Consent of PricewaterhouseCoopers LLP Attached hereto
EXHIBIT 99
Form of Contribution Agreement with
schedule setting forth material details in which
document differs from form Attached hereto
Exhibit 23.0
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements on
Forms S-3 (Nos. 33-96004, 333-37229, 333-46243, 333-2672, 333-2674, 333-58799,
333-67733, 333-64069, 333-52601 and 333-75253) and on Forms S-8 (Nos. 333-05705,
333-12551, 333-58801 and 333-60731) filed by Home Properties of New York, Inc.
of our report dated June 18, 1999 of our audit of The Mid-Atlantic Portfolio
for the year ended December 31, 1998, which report is included in the
accompanying Form 8-K. We also consent to the reference to our firm under
the caption "Experts."
/S/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Rochester, New York
July 27, 1999
EXHIBIT 99
Form of Contribution Agreement
with schedule setting forth material details
in which documents differ from form
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT ("this Agreement") made as of the 22nd day of
April, 1999, by and between___________________, a Maryland limited partnership
(the "Partnership"), having its principal office at 4750 Owings Mills
Boulevard, Owings Mills, Maryland 21117 and Home Properties of New York, L.P.,
a New York limited partnership ("Home Properties"), and Home Properties of New
York, Inc., a Maryland Corporation ("HME"), both having their principal office
at 850 Clinton Square, Rochester, New York 14604.
W I T N E S S E T H:
This Agreement is made with reference to the following facts and
objectives:
(a) The Partnership owns a 100% fee simple interest in a _______
apartment property known as _____________________(the "Property").
(b) The Property comprises ___ dwelling units and is situated upon land
owned in fee simple by the Partnership.
(c) Upon the terms and conditions set forth in this Agreement, Home
Properties desires to obtain 100% (but not less than 90%) of the partnership
interests (the "Interests") in the Partnership and thus a 100% (but not less
than 90%) partnership interest in the fee simple Property, together with the
related Personal Property, Service Contracts and Trade Names (all as
hereinafter defined), in exchange for limited partnership interests (the "OP
Units") in Home Properties and cash.
(d) The OP Units and cash are to be allocated among the various partners
of the Partnership (the "Partners") in accordance with SCHEDULE 1 attached
hereto.
(e) It is expected that the exchange of the Interests for OP Units (but
not the cash portion of the Consideration) will qualify for Federal income tax
purposes, as a tax free transfer, pursuant to Section 721 of the Code.
(f) As used in this Agreement with initial capital letters, the
following terms, in each instance, shall have the meaning ascribed thereto:
"Affiliated Loans" shall mean the loans secured by mortgages on the
properties owned by the Affiliated Partnerships as described on Schedule 3
hereto.
"Affiliated Partnerships" shall mean the entities (other than the
Partnership) listed on the attached Schedule 2.
"Code" shall mean and refer to the Internal Revenue Code of 1986, as
amended;
"Environmental Law" shall mean and refer to any Federal, state, county or
municipal environmental, health, chemical use, safety or sanitation law,
statute, ordinance or code relating to the protection of the environment,
and/or governing the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of any Hazardous Materials, and
the rules, regulations and orders promulgated and/or issued thereunder;
"Existing Lender" shall mean and refer to _____________________.;
"Existing Loan" shall mean the Mortgage Note in favor of the Existing
Lender, which had an original principal balance of $_______________ and which
has a principal balance as of December 31, 1998 of approximately
$_______________ and which is secured by a mortgage or deed of trust on the
Property;
"General Partner" shall mean and refer to the general partner of the
Partnership if the Partnership is a limited partnership or the managing member
of the Partnership if the Partnership is actually a limited liability company;
"Hazardous Materials" shall mean and refer to any hazardous substances
described or defined in (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; (ii) the Hazardous
Materials Transportation Act, as amended; (iii) the Resource Conservation and
Recovery Act, as amended; (iv) the Toxic Substances Control Act, as amended;
and (v) any applicable Maryland Environmental Laws, and the regulations
promulgated thereunder, in each case, as at the date of this Agreement;
"HME" shall mean and refer to Home Properties of New York, Inc., a
Maryland corporation (which operates as a self-administered, and self-managed,
equity real estate investment trust);
"HME Common Shares" shall mean and refer to the shares of common stock in
HME, which are traded on the New York Stock Exchange;
"Capital Account Deficit" shall mean and refer to the negative Capital
Account amount of each Unit Partner (as hereinafter defined) for Federal income
tax purposes, as at the relevant date;
"Home Properties" shall mean and refer to Home Properties of New York,
L.P., a New York limited partnership (in which HME is the sole general partner,
and through which HME conducts its operational, management and investing
activities);
"OP Units" shall mean and refer to limited partnership interests in Home
Properties, which are, subject to restrictions, exchangeable, on a one-to-one
basis, for HME Common Shares;
"Partner" shall mean each and every one of the partners of the Partnership
if the Partnership is a partnership and each and every one of the members if
the Partnership is actually a limited liability company and "Partners" shall
refer to all of the partners or members, as applicable, of the Partnership;
"Property" shall mean and refer to the apartment project known as
_______________, including: (i) the land occupied by such apartment project
(the "Land"), as more particularly described on EXHIBIT A attached hereto,
together with (a) all and singular the easements, rights-of-way, rights,
privileges, benefits, tenements, hereditaments and appurtenances thereunto
belonging or in anywise appertaining, and (b) all right, title and interest of
the Partnership in and to any land lying in the bed of any street, road,
avenue or alley, open or proposed, public or private, in front of, behind, or
otherwise adjoining the Land, or any part of the Land, including, without
limitation, all right, title and interest of the Partnership in and to (1) any
award made after the date of this Agreement as a result of condemnation, or in
lieu thereof, and (2) any unpaid award as at the date of this Agreement as a
result of condemnation, or in lieu thereof; and (ii) all buildings, structures,
fixtures, facilities, installations and other improvements of every kind and
description now or hereafter in, on, over and under the Land (the
"Improvements"), including, without limitation, any and all plumbing, air
conditioning, heating, ventilating, mechanical, electrical and other utility
systems, and fixtures, parking lots and facilities, landscaping, roadways,
fences, mail boxes, sidewalks, maintenance buildings, swimming pools and other
recreational facilities, security devices, signs and light fixtures; and
"Unit Partners" shall mean the Partners who are entitled to elect and who,
in fact, elect to receive OP Units in exchange for their Interests and "Unit
Partner" shall mean each of the Unit Partners.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants,
agreements and undertakings herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Partnership and Home Properties agree as follows:
1. EXCHANGE.
(a) Home Properties agrees that it shall make an offer (the "Offer") to
each of the Partners to exchange the Partner's Interests in the Partnership for
cash and/or OP Units and/or a combination of cash and OP Units. The substance
of the Offer shall be that each Partner may exchange his or her Interest for a
pro rata share of the Consideration as set forth in Section 2. The Partnership
agrees that it will use its reasonable efforts to solicit acceptance from the
Partners of the Offer, whether in exchange for cash or OP Units. Upon and
subject to the terms and conditions set forth in this Agreement, Home
Properties agrees that on the Closing Date (as hereinafter defined), it shall
accept an assignment of the Interests from the Partners who have accepted the
Offer and will issue OP Units and/or pay cash to the Partners as each Partner
shall elect and as provided herein.
(b) Subject to : (i) closing under this Agreement and (ii) closing under
the agreements for acquisition of the interests of the Affiliated Partnerships,
the General Partner hereby agrees that it will accept the Offer with respect to
all of its Interests.
(c) The transfer, exchange, conveyance and acquisition of the Interests
shall, in addition, include all of the right, title and interest of the
Partnership in and to the following:
(1) all furniture, furnishings, equipment, machinery and other tangible
personal property and fixtures of every kind and description owned
by the Partnership, and used in connection with the Property (in
each instance, the "Personal Property"), including, without
limitation, all ranges, refrigerators, disposals, dishwashers, water
heaters, furnaces, air conditioning units and equipment, carpeting,
traverse rods, drapes and other window treatments, exhaust fans,
range hoods, screens, model unit furniture, tools, parts, motors,
supplies, pool and other recreational equipment, cabinets, mirrors,
shelving, computers and other office equipment, stationery and other
office supplies, maintenance vehicles and accessories, normal levels
of inventory, and all replacements of, and/or substitutions for, any
of the foregoing; but specifically excluding (A) cash in the
Partnership which shall belong to the Partners of the Partnership,
(B) the office furniture and equipment located in the corporate
office at 4750 Owings Mills Boulevard, Owings Mills, Maryland , (C)
any personal property described in EXHIBIT A-1 attached hereto, (D)
tax refunds from the IRS for Section 444 deposits (approximating
$100,000.00), (E) any refunds on insurance which has been pre-paid
by the Partnership, if not adjusted at Closing, and (F) certain
assets of Chesapeake Realty Management, Inc. and the stock of Vector
Property Management, LLC, which shall separately be purchased by
Home Properties and HME pursuant to the provisions of Section 34,
below;
(2) all present and subsequent leases with tenants, and/or other
occupancy agreements, together with all pending applications for
tenancy (in each instance, the "Leases");
(3) all service and maintenance contracts, and equipment leases, used or
useful in connection with the Property, and which are not to be
terminated under this Agreement (in each instance, the "Service
Contracts"), including, without limitation, natural gas purchase
contracts, vehicle, communication and other equipment leases (the
"Equipment Leases", and the vehicles and equipment covered thereby
being herein called the "Leased Equipment"), coin-operated laundry
concession leases, and pending purchase orders, all of which are
listed on SCHEDULE 4 attached hereto; and
(4) all trademarks, service marks, logos, trade, assumed or business
names and telephone numbers related to the use and operation of the
Property (in each instance, the "Trade Names"), except that the
Partnership makes no representation or warranty of title or usage
with respect to such Trade Names.
2. CONSIDERATION.
(a) The aggregate consideration (the "Consideration") payable by Home
Properties for 100% of the Interests shall be ______________________ Dollars
($_____________), subject to adjustments at Closing pursuant to Section 16 and
costs paid pursuant to Paragraph (e) of Section 3.
(b) On the Closing Date, each of the Partners who has accepted the Offer
shall assign their Interests to Home Properties in exchange for the Exchange
Price. "Exchange Price" means the Consideration less the principal amount on
the Closing Date of the Existing Loan, multiplied by the percentage interest of
the relevant Partner's Interest in the Partnership as set forth on SCHEDULE 1.
At Closing, the General Partner shall establish from Partnership funds
otherwise distributable to the Partners a "Reserve Amount". "Reserve Amount"
means the sum of: (a) an amount equal to the current liabilities of the
Partnership on the Closing Date (other than the principal amount of the
Existing Loan), together with such other amounts as the General Partner may
reasonably require (the "Liabilities Reserve") and (b) _____________Dollars
($___________) (the "Indemnity Reserve"); provided, however, that the Indemnity
Reserve portion of the Reserve Amount shall be reduced in proportion to the
Interests of Partners of the Partnership ("Dissenting Partners") who do not
accept the Offer. The Reserve Amount shall be held and disbursed by the
Disbursing Agent (as defined in Paragraph (c) of this Section 2) as described
in Paragraph (c) of this Section 2 and in Paragraphs (a) and (b) of Section 3.
The Reserve Amount shall initially be used to pay all amounts used to satisfy
the current liabilities of the Partnership and the liabilities of the
Partnership that Home Properties has not specifically agreed to assume as
provided herein ("Liabilities Claims") and any amounts paid or subject to
claims of Home Properties by reason of a material breach or material
misrepresentation of any representations, warranties, covenants or agreements
of the Partnership which survive Closing (but only during the period of such
survival) ("Indemnity Claims"). In the event that the holders of more than
10% of the Interests are Dissenting Partners, Home Properties shall have the
right to terminate this Agreement by giving written notice thereof to the
Partnership within ten (10) days after Home Properties receives notification
thereof. (If, as more fully provided in Section 11(a)(3) hereof, Home
Properties terminates this Agreement due to the presence of 10% or more of
Dissenting Partners, or if the acquisition of interests in Affiliated
Partnerships shall fail to close, then the Partnership acting through its
General Partner shall have the right to terminate this Agreement by giving
written notice thereof to Home Properties.)
(c) At Closing, the General Partner shall deliver in immediately
available funds from monies otherwise distributable to the partners of the
Partnership (but not from proceeds of Consideration) to Tydings & Rosenberg LLP
(the "Disbursing Agent") the Reserve Amount. The Reserve Amount shall be held
and disbursed pursuant to the terms of an escrow agreement that shall be in
form and substance substantially similar to that attached hereto as EXHIBIT H.
(d) Partners who have elected to receive cash in exchange for their
Interests shall be paid their Exchange Price in cash at the Closing.
(e) Partners who are accredited under applicable securities laws and who
have elected to receive OP Units in exchange for their Interests shall be paid
their Exchange Price by the issuance of OP Units. The number of OP Units to be
issued to each Unit Partner shall be the Exchange Price for such Unit Partner
divided by $25.00.
3. RELEASE OF RESERVES; CLOSING COSTS.
(a) On the 180th day after the Closing Date, the Disbursing Agent shall
disburse to the General Partner that portion of the Reserve Amount that has not
been paid, disbursed or subject to Liability or Indemnity Claims. The General
Partner may then elect (i) to continue to hold such disbursed amounts for up to
360 days after the Closing Date, in trust for the benefit of the Partnership
and the holders of Interests immediately prior to the Closing Date (the
"Holders"), as a fund against which to pay unanticipated claims (the
"Contingency Reserve"), or (ii) to distribute pro rata to the Holders.
Notwithstanding the above, Dissenting Partners shall not be entitled to a
distribution of any portion of the Indemnity Reserve.
(b) At any time, and from time to time, after the 180th day after the
Closing Date that there is a Final Determination (as defined in EXHIBIT H) that
any remaining portion, if any, of the Reserve Amount is no longer subject to
Liability or Indemnity Claims, the Disbursing Agent shall distribute such
remaining portion to the General Partner. The General Partner may then elect
(i) to continue to hold such disbursed amounts for up to 360 days after the
Closing Date, in trust for the benefit of the Holders, as a fund against which
to pay unanticipated claims (the "Contingency Reserve"), or (ii) to distribute
pro rata to the Holders in accordance with their percentage interests.
Notwithstanding the above, Dissenting Partners shall not be entitled to a
distribution of any portion of the Indemnity Reserve.
(c) Not later than 360 days after the Closing Date (provided that there
have been no unanticipated claims asserted against the Partnership), the
General Partner shall distribute any balance remaining in the Contingency
Reserve pro rata to the Holders in accordance with their percentage
interests. In the event that at the end of the 360 period following Closing
there are unanticipated claims pending or asserted, or the General Partner has
reason to believe that such unanticipated claims may be asserted, the General
Partner may continue to hold the Contingency Reserve until such time as the
General Partner deems prudent, after which any undisbursed amount remaining in
the Contingency Reserve shall be disbursed by the General Partner pro rata to
the Holders in accordance with their percentage interests. Notwithstanding
the above, Dissenting Partners shall not be entitled to a distribution of any
portion of the Indemnity Reserve.
(d) Home Properties shall pay all recording fees, its attorneys' fees,
the costs of obtaining a binder or commitment from a title insurance company,
the premium for its title insurance policy, the costs for updating any surveys,
the costs of any environmental surveys and studies, all fees and charges in
connection with HUD TPA's of Existing Loans and HUD approvals of general
partners and management companies, one half of any Maryland state and local
recordation or transfer tax, and all other costs and expenses incidental to or
in connection with closing this transaction customarily paid for by the
purchaser of similar property. The Partnership shall pay its attorneys' fees,
one-half of any Maryland state and local recordation or transfer tax, and all
other costs and expenses incidental to or in connection with closing this
transaction customarily paid for by the seller of similar property.
(e) The amounts payable pursuant to paragraph (d) above by the
Partnership on account of local transfer tax shall be charged against the
Consideration, at the option of the Seller.
(f) On, or at any time prior to, the Closing Date, the General Partner
shall have the right to spend on behalf of the Partnership and/or distribute to
the partners of the Partnership any and all cash and securities held by the
Partnership, it being specifically agreed and understood that Home Properties
is not purchasing the cash and securities assets of the Partnership.
4. OP UNITS.
(a) Distributions with respect to the OP Units will be identical in
amount and timing to the dividends on HME Common Shares, except that the
initial distribution payable with respect to the OP Units issued to the Unit
Partners shall be made on the date on which HME shall pay the dividend to
holders of HME Common Shares that relates to the earnings for the calendar
quarter in which the OP Units were issued to the Unit Partners, and shall be
prorated such that the Unit Partners will receive a pro-rata distribution for
the period from the date on which the OP Units were issued to the Unit Partners
to, and including, the last day of the calendar quarter in which the OP Units
were so issued.
(b) Subject to the terms of a Lock-Up Agreement, in the form of EXHIBIT
B attached hereto, to be dated the Closing Date, and to the terms of the Second
Amended and Restated Agreement of Limited Partnership of Home Properties, as
amended (the "Operating Partnership Agreement"), the OP Units will be
convertible into HME Common Shares, on a one-to-one basis, after the elapse of
one (1) year from and after the Closing Date (the "Lock-Up Period"), during
which the Unit Partners will be restricted from converting, or transferring,
any of the OP Units.
(c) From and after the expiration of the Lock-Up Period, the Unit
Partners shall have all of the transfer, exchange and conversion rights with
regard to the OP Units as are set forth in the Operating Partnership Agreement.
(d) Upon the terms and conditions of a Registration Rights Agreement, in
the form of EXHIBIT C attached hereto, to be dated the Closing Date, the Unit
Partners shall have registration rights and a listing commitment with regard to
the shares of HME Common Shares into which the OP Units can be converted (the
"Registration Rights"), including demand and piggy back rights. The exercise
of Registration Rights shall be without cost to the Partners. In addition,
within 6 months of the Closing Date, HME agrees to file and keep current at its
sole cost and expense until all OP Units issued pursuant to this Agreement have
been converted into shares of HME Common Shares, a registration statement (the
"Registration Statement") with the SEC registering the resale of the shares of
common stock of HME into which the OP Units may be converted and to use
reasonable commercial efforts to have the registration promptly declared
effective by the Securities and Exchange Commission ("SEC"). Notwithstanding
anything to the contrary contained in this Agreement, in the event that HME has
not filed the Registration Statement with the SEC by the date (the "Outside
Filing Date") which is 7 months after the Closing Date, then for and with
respect to each day during the period between the Outside Filing Date and the
date on which the Registration Statement is filed with the SEC, Home Properties
shall pay to the Unit Partners, as liquidated damages and not as a penalty, the
sum of $10,000, which sum shall be apportioned pro rata among the Unit
Partners.
5. EXISTING LOAN. The Partnership and the Affiliated Partnerships
have represented to Home Properties that the Existing Loan and the Affiliated
Loans had an aggregate principal balance of approximately $106,000,000 as of
December 31, 1998 as set forth on the attached Schedule 3. The parties agree
that Home Properties will at Closing either assume or prepay the Existing Loan
and the Affiliated Loans as described on Schedule 3 hereto. Home Properties
shall be responsible for payment of all TPA fees and charges, plus an aggregate
of up to $971,000 of prepayment fees and penalties in connection with the
prepayment of the loans that are to be prepaid as listed on Schedule 3 (the
"Prepayment Fees") and for payment of up to 1% of the then current principal
balance of the loans that are to be assumed as listed on Schedule 3 as
assumption fees (approximately $500,000) (the "Assumption Fees"). To the
extent the sum of the aggregate Prepayment Fees plus the aggregate Assumption
Fees exceeds $1,471,000, the Partnership and the Affiliated Partnerships shall
have the obligation to pay the excess. If the sum of the aggregate Prepayment
Fees and the aggregate Assumption Fees shall be less than $1,471,000 (the
"Difference"), then the Consideration shall be increased by an amount equal to
the ratio which results from dividing the Consideration by $153,700,000 and
multiplying that ratio by the amount of the Difference.
If the Existing Loan and Affiliated Loans are to be assumed, Home Properties
agrees to utilize all prompt reasonable good faith efforts to obtain the
approval of the Existing Lender and Affiliated Lenders, such efforts to
commence immediately upon execution of this Agreement. If, despite such prompt,
reasonable, good faith efforts, Home Properties has been unable to obtain the
consent of the Existing Lender and Affiliated Lenders for assumption of the
Existing Loan and the Affiliated Loans by the anticipated Closing Date of June
30, 1999, then to the extent necessary for Home Properties to obtain the
consent of the Existing Lender and the Affiliated Lenders for the assumption of
the Existing Loan and Affiliated Loans or the consent of the Existing Lender
and Affiliated Lenders for substituting Home Properties as the General Partner
with respect to such Existing Loan and Affiliated Loans, Home Properties shall
be entitled to an extension of the Closing Date for no longer than 30 days.
Notwithstanding the foregoing, it is agreed and understood that existing loans
at the Gateway, and Chestnut Crossing projects shall be assumed at Closing, and
shall be prepaid by Home Properties after Closing, but such loans shall not be
pre-paid until: (i) with respect to the Gateway loan, prepayment shall not
occur before October 1, 1999; and (ii) with respect to the Chestnut Crossing
loan, prepayment shall not occur before February 1, 2000 (collectively, the
"Lock-out Loans"). The parties agree that the Lock-out Loans shall be adjusted
as if they were assumed and prepaid at Closing (i.e. with the costs of
assumption and proforma prepayments made as of the dates set forth above all
adjusted at Closing), that Home Properties and HME shall be responsible for all
performance under the Lock-out Loans from and after Closing, and that that Home
Properties and HME shall indemnify and hold the Partnership and the Partners
harmless from any loss, claim and damage arising out of any default under the
Lock-out Loans from and after Closing. Furthermore, the parties agree and
understand that the obligation of Home Properties to expend a maximum of
$1,471,000 in prepayment and assumption fees as set forth in the first
paragraph of this Section 5 includes all prepayment and assumption fees with
respect to the Lock-out Loans.
6. PERMITTED EXCEPTIONS. The Property at Closing shall be subject only
to the following (the "PERMITTED EXCEPTIONS"):
(a) the Existing Loan;
(b) the lien of real estate taxes not yet due and payable;
(c) the Leases;
(d) the Service Contracts; and
(e) easements, rights-of-way, covenants, restrictions and other matters
of record which do not materially adversely affect the use and
operation of the Property.
(f) such other agreements and matters as may be agreed to by the General
Partner and Home Properties.
7. OBLIGATIONS AND COVENANTS OF THE PARTNERSHIP.
(a) From the date of this Agreement to the Closing Date, the Partnership
shall:
(1) Maintain, manage and operate the Property in substantially the same
condition and manner as such Property is now maintained, managed and
operated by the Partnership, and keep the Property, including,
without limitation, the Improvements and Personal Property, in
substantially the same good condition and repair as such Property is
now maintained, ordinary wear and tear excepted;
(2) Maintain the Existing Loan in full force and effect, timely make all
payments, and observe and perform all covenants to be paid, observed
or performed by the mortgagor thereunder, and promptly deliver to
the Home Properties notice of any receipt or delivery of any notice
(including any notice of default) thereunder;
(3) Promptly provide Home Properties with a copy of any notice,
citation, complaint or other directive from any person, entity or
governmental authority whereby compliance with any Environmental Law
is called into question;
(4) Maintain in full force and effect all of the existing insurance
policies regarding the Property;
(5) Promptly deliver notice to Home Properties of, and, defend, at the
Partnership's expense, all actions, suits, claims and other
proceedings affecting the Property, or the use, possession or
occupancy thereof;
(6) Promptly deliver notice to Home Properties of any actual or
threatened condemnation of the Property, or any portion thereof;
(7) Maintain all Licenses in full force and effect;
(8) Maintain all Service Contracts in full force and effect; timely make
all payments, and observe and perform all obligations to be paid,
observed or performed by the Partnership thereunder; and promptly
notify Home Properties of any receipt or delivery of any notice
(including any notice of default) thereunder;
(9) Provide all services, repairs and other work required to be provided
by the landlord under the Leases;
(10) Reasonably cooperate with Home Properties (but without obligation to
incur expenses in connection therewith) in connection with (i) the
consummation of the transaction contemplated by this Agreement, and
(ii) the preparation of the Closing documents and apportionments
hereunder;
(11) Promptly deliver to Home Properties a copy of any notice of required
work from any company insuring the Property against casualty loss;
(12) Subject to applicable governmental and lender requirements,
terminate all management agreements pertaining to the Property,
effective as of the completion of the Closing on the Closing Date;
(13) Promptly deliver to Home Properties a copy of any notice of any
violation (or alleged violation) of any law, ordinance, order,
requirement or regulation of any Federal, state, county, municipal
or other governmental department, agency or authority relating to
the Property; and
(14) Promptly give written notice to Home Properties of the occurrence of
any condition or event which materially and adversely affects the
truth or accuracy of any representation or warranty made (or to be
made) by the Partnership under or pursuant to this Agreement.
(b) From the date of this Agreement to the Closing Date, the Partnership
shall not:
(1) Except with the consent or in conjunction with Home Properties,
modify, amend, renew, extend, terminate or otherwise alter the
Existing Loan, or any document or documents relating thereto;
(2) Increase any wage or fringe benefit payable to any employee at the
Property, without the prior written consent of Home Properties, in
each instance, which consent shall not be unreasonably withheld,
conditioned or delayed;
(3) Remove from the Property any article of Personal Property, except as
may be necessary for repairs, or the discarding of worn out or
useless items, provided, however, that any such article removed for
repairs shall be returned to the Property promptly upon its repair,
and shall remain a part of the Personal Property, whether or not
such article shall be located on the Property at the time of the
Closing, and any such article so discarded shall be replaced with a
new or replacement article of similar quality and utility prior to
Closing;
(4) Modify, amend, renew, extend, terminate or otherwise alter any of
the Service Contracts, or enter into any new service or maintenance
contract, equipment lease (including by way of example and not by
way of limitation, any new cable contract or laundry contract) or,
except in the ordinary course of business, any purchase order
affecting the Property, and extending beyond, or for any work or
improvement which will not be completed and paid for prior to, the
Closing Date, without the prior written consent of Home Properties,
in each instance, which consent shall not be unreasonably withheld,
conditioned or delayed;
(5) Except in the ordinary course of business, terminate any Lease.
Ordinary course of business shall be deemed to include, without
limitation, non-renewals of problem tenants, commencement of summary
ejectment proceeding where a tenant is more than ten (10) days
delinquent in the payment of rent, cases of any Lease where the
tenant is more than thirty (30) days delinquent in the payment of
rent, or in which there has been a material violation of the
obligations of tenant;
(6) Except in the ordinary course of business, enter into any new Lease,
or renew or extend any existing Lease, for a term in excess of
twelve months, or at a monthly rental less than the relevant rental
rate set forth in the rental schedule for the Property approved by
Home Properties;
(7) Modify or amend the present form of lease in use by the Partnership,
without the prior written consent of Home Properties;
(8) Enter into any new license, franchise, concession or easement
agreement affecting the Property, without the prior written consent
of Home Properties, in each instance, which consent shall not be
unreasonably withheld, conditioned or delayed;
(9) Except in the ordinary course of business of the Partnership, apply
any Security Deposits against rent delinquencies or other Lease
defaults, other than in the case of tenants who have vacated their
apartments, or are currently involved in litigation with the
Partnership;
(10) Undertake or commence any renovations or alterations at the
Property, except those necessary to comply with any of the
provisions of this Agreement, without the prior written consent of
Home Properties, in each instance, which consent shall not be
unreasonably withheld, conditioned or delayed;
(11) Sell, mortgage, pledge, hypothecate or otherwise transfer or dispose
of all or any part of the Property, or the Personal Property, or any
interest therein, except in the case of the sale or other
disposition of items of Personal Property to be replaced hereunder;
(12) Initiate, consent to, approve or otherwise take any action with
respect to the zoning, or any other governmental rule or regulation,
presently applicable to all or any part of the Property; and
(13) Issue any press release or other media publicity of any kind
whatever with respect to this Agreement, or the transaction
contemplated hereby, without the prior written consent of Home
Properties.
7.1 OBLIGATIONS AND COVENANTS OF HOME PROPERTIES AND HME. Home
Properties and HME covenant and agree with the Partnership, both before and
after Closing:
(a) Distributions with respect to the OP Units will be identical in
amount and timing to the dividends on HME Common Shares, except that the
initial distribution payable with respect to the OP Units issued to the Unit
Partners shall be made on the date on which HME shall pay the dividend to
holders of HME Common Shares that relates to the earnings for the calendar
quarter in which the OP Units were issued to the Unit Partners, and shall be
prorated such that the Unit Partners will receive a pro-rata distribution for
the period from the date on which the OP Units were issued to the Unit Partners
to, and including, the last day of the calendar quarter in which the OP Units
were so issued.
(b) The General Partner may retain copies of any and all books and
records pertaining to the Partnership and the operation of the Property so that
the General Partner may wind up the affairs of the previously conducted
business.
(c) At the Closing, Home Properties shall deliver to each Unit Partner
good and marketable title to the OP Units allocated to such Unit Partner, free
and clear of all liens, charges, encumbrances and restrictions, except as
contained in the Operating Partnership Agreement, the Registration Rights
Agreement, and the Lock-Up Agreement, and shall, by execution of the Amendment,
admit each Unit Partner as a limited partner in Home Properties.
Notwithstanding anything to the contrary contained herein or in the Operating
Partnership Agreement, the Registration Rights Agreement, and the Lock-Up
Agreement, Unit Partners shall have the right to pledge their OP Units and
interests in the Operating Partnership, HME (the General Partner) and Home
Properties hereby consenting to such pledges (provided that any pledgee agrees
to be bound by the Lock-up Agreement, if applicable) and hereby agreeing to
execute any documents reasonably requested by the Unit Partners to confirm
their rights to pledge their Units and interests.
(d) At all times for and during a period of ten (10) years from and
after the Closing Date, Home Properties shall allocate to each Unit Partner,
for Federal Income tax purposes, pursuant to Section 752 of the Code,
nonrecourse debt of Home Properties in an aggregate amount not less than the
Capital Account Deficit of such Partner, as adjusted from time to time. After
the expiration of such ten (10) year period Home Properties may, in its sole
and absolute discretion and without obligation so to do, continue such
allocations to Unit Partners.
(e) The initial tax basis Capital Account Deficit of each Unit Partner
in the Property, shall be determined by reference to each such Unit Partners'
Capital Account Deficit in the Partnership as at (just prior to) the
contribution of such Partner's interest in the Partnership to Home Properties
on the Closing Date, and shall be based upon the estimated information set
forth in SCHEDULE 5 attached hereto and shall be updated based upon the
information set forth in a schedule to be furnished by the accountant for the
General Partner within the time required by SECTION 33(E) hereof . Thereafter,
for a period of ten (10) years from and after the Closing Date, the Capital
Account Deficit of each Unit Partner shall be adjusted annually to reflect
changes occasioned at the level of Home Properties, including, without
limitation, distributions made by Home Properties. During this period Home
Properties shall monitor the Capital Account Deficit of the Unit Partners to
fulfill the obligations of the immediately preceding paragraph. At the end of
such ten (10) year period, each Unit Partner shall have the right to execute an
agreement obligating such Unit Partner to restore a any portion of a deficit
balance in such Unit Partner's Capital Account. Furthermore, in complying with
Section 4.04 of the Operating Partnership Agreement, Home Properties agrees
that the methodology chosen under Section 704(c) of the Internal Revenue Code
shall be the "traditional" method.
(f) For a period of ten (10) years from and after the Closing Date, Home
Properties shall not sell, exchange, transfer or otherwise dispose of the
Property, or any replacement of the Property (in any event, a "Property
Transfer"), unless such Property Transfer occurs in such manner as to be tax
free to the relevant Unit Partner. For a period of five (5) years following
the expiration of the ten (10) year period after the Closing Date, Home
Properties agrees that, in the event that it desires to sell, exchange,
transfer or otherwise dispose of the Property, it will use commercially
reasonable efforts to effectuate such Property Transfer in such manner as to be
tax free to the relevant Unit Partner.
(g) Future transactions involving HME, or Home Properties, including,
without limitation, merger(s), sale(s) of assets or similar transactions, shall
be structured in such manner as to (i) not result in an amendment to the
definition of Conversion Factor as it is currently included in the Operating
Partnership Agreement; (ii) prevent, in the context of such a transaction, a
different per unit value being assigned to the OP Units issued to the Unit
Partners than the value assigned per share to the then outstanding HME Common
Shares; and (iii) for a period of ten (10) years from and after the Closing
Date, not interfere with the tax deferred nature of the transaction
contemplated by this Agreement with respect to the OP Units issued to the Unit
Partners.
(h) (i) If a transaction is proposed that would result in Unit Partners
receiving securities as a result of the proposed transaction that are not
publicly traded (a "Going Private Transaction"), Home Properties and HME shall
structure such transaction to provide Unit Partners with at least the following
alternatives: (A) to receive cash at the time of closing of the Going Private
Transaction in an amount that will result in the Unit Holders receiving no less
than $25 per OP Unit after payment by the Unit Holder of such Unit Holder's
federal and state tax liability on the disposition of their OP Units, if any,
incurred as a result of the Going Private Transaction; or (B) to remain as
constituents of the private entity or holders of OP Units, receiving dividends
or distributions of not less than, and comparable to, in time, amount, and tax
treatment, the dividends for the four calendar quarters prior to the Going
Private Transaction.
(ii) Notwithstanding anything in this Agreement, the Lock-Up Agreement or
the Operating Agreement to the contrary, Unit Partners shall have the right
exercise their Purchase Rights under the Operating Partnership Agreement
without delay or restriction in connection with any such Going Private
Transaction, and participate in the Going Private Transaction as any other
shareholder of HME Common Shares. HME hereby agrees that in the event that a
Unit Partner elects to exercise their Purchase Rights in connection with any
Going Private Transaction, HME will agree to purchase the OP Units subject to
the Purchase Right by delivering HME Common Shares.
(iii) If, in connection with any Going Private Transaction, a Unit
Partner elects to convert to HME Common Shares pursuant to subparagraph (ii)
above, or a Unit Partner elects to receive cash pursuant to subparagraph (i)(A)
above, then, upon receipt by such Unit Partner of the full consideration
available from the Going Private Transaction resulting from the Unit Partner's
election, the tax protection provisions of subsections (d), (e), (f) and (g) of
this Section 7.1 shall no longer apply to such Unit Partner.
(iv) It is specifically agreed and understood that the tax protection
provisions of subsections (d), (e), (f) and (g) of this Section 7.1 remain in
effect in the event that the Going Private Transaction is structured in a
manner such that Unit Partners will necessarily incur a tax recognition event
as a result of the Going Private Transaction (i.e. without any action taken on
behalf of the Unit Partners), and in the event that a Unit Partner elects to
remain as a constituent of the private entity pursuant to subparagraph (i)(B)
above.
8. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP.
(a) The Partnership represents and warrants that each of the following
is true, complete and accurate in all material respects as of the date of this
Agreement (and, except as designated in writing by the Partnership at or before
Closing and approved in writing by Home Properties if any such written
designation would have a material impact upon the transaction, will be true,
complete and accurate as of the Closing Date) with regard to such Partnership
and the Property:
(1) To the best knowledge of the Partnership, the Partnership is the
sole owner of, and has good, marketable and insurable fee simple
title to the Property, free and clear of all liens, charges and
encumbrances, except the Permitted Exceptions.
(2) To the best knowledge of the Partnership, the Partnership owns legal
and beneficial title to the Personal Property, other than the Leased
Equipment, free and clear of all liens, charges and encumbrances,
except the Permitted Exceptions.
(3) There are no agreements with regard to the Leased Equipment other
than the Equipment Leases set forth in SCHEDULE 4 attached hereto,
and true and complete copies of all Equipment Leases have been or
will be delivered to Home Properties.
(4) To the best knowledge of the Partnership, each of the Equipment
Leases is in full force and effect; none of the parties thereto is
in default of any of its obligations thereunder; and no event has
occurred that, with the giving of notice, or the passage of time, or
both, would constitute a default thereunder.
(5) To the best knowledge of the Partnership, the Existing Loan is in
full force and effect; there exists no default thereunder; and no
event has occurred that with the giving of notice, or the passage of
time, or both, would constitute a default thereunder.
(6) To the best knowledge of the Partnership, true, complete and
accurate copies of the Existing Loan documents have been or will be
made available to Home Properties.
(7) The Partnership is a limited partnership, duly organized, validly
existing, and in good standing under the laws of the State of
Maryland and, subject to the consent of the Partners of the
Partnership and, if the Existing Loan is to be assumed, the consent
of Existing Lenders (including, if applicable, HUD), has full power
and authority to enter into, and to fully perform and comply with
the terms of this Agreement and to own, lease and operate its
properties and to carry on its business as it is now being
conducted.
(8) Subject to the consent of the Partners of the Partnership and, if
the Existing Loan is to be assumed, the consent of Existing Lenders
(including, if applicable, HUD), the execution and delivery of this
Agreement, and its performance by the Partnership, will not conflict
with, or result in the breach of, any contract, agreement, law, rule
or regulation to which the Partnership is a party, or by which the
Partnership is bound.
(9) Subject to the consent of the Partners of the Partnership and, if
the Existing Loan is to be assumed, the consent of Existing Lenders
(including, if applicable, HUD), to the best knowledge of the
Partnership this Agreement is valid and enforceable against the
Partnership in accordance with its terms, and each instrument to be
executed by the Partnership pursuant to this Agreement, or in
connection herewith, will, when executed and delivered, be valid and
enforceable against the Partnership in accordance with its terms,
except as such enforcement may be limited by bankruptcy and other
laws affecting creditors', rights generally.
(10) No written notice has been received by the Partnership from any
insurer, or from the Existing Lender, with respect to any defect
which materially and adversely affects the Property, or the use or
operation thereof, which remains uncured or uncorrected.
(11) To the best knowledge of the Partnership and except as set forth on
tax bills for the Property, there are no special or other
assessments for public improvements or otherwise now affecting the
Property, nor does the Partnership know of (i) any pending or
threatened special assessments affecting the Property, or (ii) any
contemplated improvements affecting the Property that may result in
a special assessment against the Property.
(12) To the best knowledge of the Partnership, the Partnership has not
received any notice from any party that the Property, or the current
use, occupation or condition thereof, violate(s) any governmental
statute, law ordinance, rule or regulation applicable (or allegedly
applicable) to the Property, or any order of any governmental agency
relating to the Property and/or the use and/or legal occupancy
thereof, or any applicable deed restrictions or other covenant,
easement or agreement pertaining to the Property (including, without
limitation, any of the Permitted Exceptions), or any approval
pertaining to the Property, and to the best knowledge of the
Partnership, the Property, and the current use, occupation and
condition thereof, do not violate any such statute, law, ordinance,
rule, regulation, order, restriction, covenant, easement, agreement
or approval.
(13) To the best knowledge of the Partnership, all certificates of
occupancy, operating permits and licenses (the "Licenses") required
by any relevant governmental authority for the lawful use, operation
and occupancy of the Property have been issued, and are in full
force and effect.
(14) The Partnership has received no notice that the current use,
operation or occupancy of any part, or all, of the Property violates
any of the Licenses, and to the best knowledge of the Partnership
all of the Licenses can remain with the Property after acquisition
by Home Properties of the Partnership interests without charge by
any relevant governmental authority.
(15) There is no action, proceeding or investigation pending, or, to the
best knowledge of the Partnership, threatened, against the
Partnership, or the Property, by or before any court or governmental
department, commission, board, agency or instrumentality, and the
Partnership does not know of any basis for any such action,
proceeding or investigation.
(16) To the best knowledge of the Partnership, all financial information
(excluding projections) about the Property heretofore or hereafter
furnished by the Partnership or the General Partner to Home
Properties is, and shall be, true, complete and correct in all
material respects as of the date therein specified.
(17) The Partnership has no knowledge of any Federal, state, county or
municipal plan to change the highway or road system in the vicinity
of the Property, or to restrict or change access from any such
highway or road to the Property, or of any pending or threatened
condemnation or eminent domain proceedings relating to or affecting
the Property.
(18) To the best knowledge of the Partnership, there are no trade or
assumed names affecting or identifying the Property other than the
Trade Names, and the use of such Trade Names is freely transferable
to Home Properties.
(19) The Partnership has not (i) made a general assignment for the
benefit of its creditors; (ii) admitted in writing its inability to
pay its debts as they mature; (iii) had an attachment, execution or
other judicial seizure of any property interest which remains in
effect; or (iv) become generally unable to meet its financial
obligations as they mature.
(20) To the best knowledge of the Partnership, there is not pending any
case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or recomposition
of the Partnership, or the debts of the Partnership, under any law
relating to bankruptcy, insolvency, reorganization or the relief of
debtors, or seeking the appointment of a receiver, trustee,
custodian or other similar official for the Partnership or the
Property.
(21) To the best knowledge of the Partnership, and except for lead paint,
asbestos, Hazardous Materials customarily used in the operation and
management of residential rental communities, and as identified in
environmental reports or surveys furnished to Home Properties, there
are no Hazardous Materials on, in or under the Property, and the
Property has never been used by the Partnership, or any other
person, to generate, treat, store, dump, release, emit, use,
transport or in any manner deal with Hazardous Materials.
(22) To the best knowledge of the Partnership, the present use and
occupation of the Property does not violate any Environmental Law.
(23) To the best knowledge of the Partnership, the tax-related
information set forth on SCHEDULE 5 attached hereto is true,
complete and accurate in all material aspects as at the date set
forth therein. The obligations of Home Properties contained in
Section 7.1(d) and the representations of Home Properties contained
in Section 9(a)(17) are conditioned upon the material accuracy of
the representations of this Paragraph and the attached SCHEDULE 5.
(24) To the best knowledge of the Partnership, the summaries of Leases
affecting the Property attached as EXHIBIT D to this Agreement (the
"Rent Roll") are, in all material ways true, complete and accurate
as at the date set forth therein.
(25) True and complete copies of all Leases have been made available to
Home Properties at the principal office of the Partnership.
(26) Except for the Existing Loan, the Partnership has not assigned,
mortgaged, pledged, hypothecated or otherwise encumbered any of its
rights or interests under any of the Leases.
(27) To the best knowledge of the Partnership, the Rent Roll attached as
EXHIBIT D accurately includes each tenant's name, a description of
the dwelling unit leased by such tenant, the amount of rent due
monthly from such tenant, the amount of the security deposit, if
any, paid by such tenant (collectively, the "Security Deposits"),
and the expiration date of the term of such Lease.
(28) To the best knowledge of the Partnership, except as indicated on the
Rent Roll, each Lease is in full force and effect.
(29) To the best knowledge of the Partnership, except as indicated on the
Rent Roll, all rents are being paid and are current (within 15 days
of their due date).
(30) To the best knowledge of the Partnership, except as indicated on the
Rent Roll, no tenant has paid any rent for more than one month in
advance.
(31) To the best knowledge of the Partnership, except as indicated on the
Rent Roll, no tenant is entitled to any free rent, abatement of rent
or similar concession except in accordance with the past practice of
the Partnership.
(32) To the best knowledge of the Partnership, as of the date of this
Agreement, the Security Deposits under the Leases are as set forth
in the Rent Roll.
(33) To the best knowledge of the Partnership, no brokerage commission or
other compensation is payable (or will, with the passage of time, or
occurrence of any event, or both, be payable) with respect to any
Lease.
(34) As of Closing, and upon the deposit of the Security Deposit funds
into a segregated account as described in Section 16 (d), the
Partnership shall have complied with all of the requirements of the
relevant Maryland laws regarding the holding of tenant security
deposits.
(35) Except for the Service Contracts listed on SCHEDULE 4 attached
hereto, there are no service or maintenance contracts, or pending
purchase orders pertaining to the Property which may not be
terminated upon not more than thirty (30) days, notice, without
payment of any penalty or termination fee.
(36) True and complete copies of the Service Contracts have been made
available to Home Properties at the principal office of the
Partnership.
(37) To the best knowledge of the Partnership, each of the Service
Contracts is in full force and effect; none of the parties thereto
is in default of any of its obligations thereunder; and no event has
occurred that, with the giving of notice, or the passage of time, or
both, would constitute a default thereunder.
(38) SCHEDULE 1 hereto lists the current holders of all outstanding
Partner Interests of the Partnership together with the percentage
interest held by each Partner. In the event that any Partner listed
on SCHEDULE 1 transfers any Interests prior to the Closing Date, the
Partnership shall use good faith reasonable efforts to promptly
provide written notice to Home Properties of such transfer, and such
notice shall include the names of the transferor and the transferee,
the address of the transferee and the number of units transferred.
(39) To the best knowledge of the Partnership, except: (i) as disclosed
in SCHEDULE 6 attached hereto; (ii) for liabilities and obligations
incurred in the normal course of business of the Partnership; and
(iii) as otherwise disclosed in this Agreement, the Partnership has
no material liability or obligation of any nature which is any way
materially affects or is related to the Property or Personal
Property whether now due or to become due, absolute, contingent or
otherwise, including liabilities for taxes (or any interest or
penalties thereto).
(40) Except as previously disclosed to Home Properties, all of the ranges
and refrigerators in the Property are the property of the
Partnership and not of the tenants.
(41) To the best knowledge of the Partnership, the Partnership has filed
or will file when due all notices, reports and returns of Taxes (as
defined below) required to be filed before the Closing Date and has
paid or, if due after the date hereof and prior to the Closing Date,
will pay, all Taxes and other charges for the periods shown to be
due on such notices, reports and returns. "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including,
without limitation, income, excise, property, sale, gross receipts,
employment and franchise taxes imposed by the United States, or any
state, county, local or foreign government, or subdivision or agency
thereof with respect to the assets or the business of the
Partnership, and including any interest, penalties or additions
attributable thereto.
(b) To the best knowledge of the Partnership, all of the representations
and warranties of the Partnership, set forth in this Agreement shall be true
and correct in all material respects at the date of this Agreement, and (except
as disclosed in writing by the Partnership at or before Closing and approved in
writing by Home Properties if any such written disclosure would have a material
impact upon the transaction), all shall be deemed to be repeated at, and as of
the Closing Date, and shall be true and correct in all material respects as at
the Closing Date.
(c) All of the representations and warranties of the Partnership, set
forth in this Agreement, including, without limitation, the following
indemnity, shall survive the Closing for a period of six months following
Closing, and shall not be deemed to have merged in any document delivered at
the Closing. Any claim for any breach of any representation or warranty of the
Partnership shall be brought, if at all, within six months from the date of
Closing or thereafter be forever barred and the limitations of liability as set
forth in Paragraph (d) below shall apply to any such claim. The foregoing
limitation of liability shall not apply in the case of fraud or intentional and
material misrepresentation.
(d) The Partnership agrees to indemnify Home Properties, and hold
harmless and defend Home Properties, from and against any and all losses,
costs, claims, liabilities, damages and expenses, including, without
limitation, reasonable attorneys, fees, arising as the result of a material
breach of any of the representations and warranties of the Partnership, set
forth in this Agreement. Notwithstanding anything to the contrary contained in
this Agreement, neither the General Partner nor any other partners of the
Partnership shall have any personal liability, and no action of any kind shall
be maintained against any of them or their respective assets, with respect to
this Agreement and/or the transactions described in this Agreement, and Home
Properties, its successors and assigns, shall look solely to the assets of the
Partnership and the cash or assets held by the Disbursing Agent pursuant to
Paragraph (c) of Section 2 above, for the payment of any claim against or the
performance of any obligation of the Partnership. The foregoing limitation of
liability shall not apply in the case of fraud or intentional and material
misrepresentation; provided, however, that in no event shall any limited
partner have any liability under this Agreement except in the event that such
limited partner makes a fraudulent or intentional and material
misrepresentation in any assignment or investor questionnaire regarding such
limited partner's interest which will be conveyed to Home Properties at
Closing.
(e) Except as expressly provided in this Agreement, the Partnership, has
made no representations and/or warranties regarding the Property and the
Interests, and, except as expressly set forth in this Agreement, Home
Properties shall, at Closing, accept the Property and the Interests in "AS
IS" condition, with all faults, and without any other representations or
warranties of any kind, whether as to merchantability, or fitness for a
particular purpose, or otherwise.
9. REPRESENTATIONS AND WARRANTIES OF HOME PROPERTIES AND HME.
(a) Home Properties and HME represent and warrant that each of the
following is true, complete and accurate as of the date of this Agreement, and
will be true, complete and accurate as of the Closing Date and thereafter, as
the context may require, with respect to subparagraphs (6), (13), (14) and (15)
only:
(1) Home Properties and HME are duly organized, validly existing and in
good standing (under the laws of the State of New York and the State
of Maryland, respectively), and each has all the requisite power and
authority to enter into and carry out and perform this Agreement,
according to its terms, and to own, lease and carry on its business
as it is now being conducted.
(2) Neither the execution and delivery of this Agreement, nor the
performance of this Agreement by Home Properties, nor the execution,
delivery and performance of the Registration Rights Agreement by
HME, nor the execution and delivery of the Lock-Up Agreement by HME
and Home Properties, nor the execution and delivery of the Amendment
(as hereinafter defined) by Home Properties, nor the execution,
delivery and performance of all other agreements contemplated by
this Agreement, nor the issuance and delivery of the OP Units by
Home Properties, will conflict with, or result in any breach of, any
contract, agreement, law, rule or regulation to which either HME or
Home Properties is a party, or by which either HME or Home
Properties is bound.
(3) Subject to the approval of the Board of Directors of HME (the
"Board"), which Home Properties agrees to use all good faith
reasonable efforts to obtain on or before May 4, 1999, this
Agreement has been duly authorized, executed and delivered, and
constitutes a legal and binding obligation of Home Properties and
HME, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy and other laws affecting
creditors rights generally.
(4) Subject to the approval of the Board, which Home Properties agrees
to use all good faith reasonable efforts to obtain on or before May
4, 1999, each instrument to be executed and delivered by Home
Properties and/or HME pursuant to this Agreement, or in connection
herewith, will, when executed and delivered, be valid and
enforceable against Home Properties and/or HME in accordance with
its terms, except as such enforcement may be limited by bankruptcy
and other laws affecting creditors, rights generally.
(5) To the best knowledge of Home Properties, there is no litigation,
proceeding or investigation pending, or threatened, against or
affecting Home Properties, or HME, that might affect the validity of
this Agreement, or any action taken, or to be taken, by Home
Properties, or HME, pursuant to this Agreement, or that might have a
material adverse effect on the business of Home Properties.
(6) At the Closing, Home Properties shall deliver to each Unit Partner
good and marketable title to the OP Units allocated to such Unit
Partner, free and clear of all liens, charges, encumbrances and
restrictions, except as contained in the Operating Partnership
Agreement, the Registration Rights Agreement, and the Lock-Up
Agreement, and shall, by execution of the Amendment, admit each Unit
Partner as a limited partner in Home Properties.
(7) The Operating Partnership Agreement attached as EXHIBIT E, to this
Agreement is true, complete and accurate as at the date of this
Agreement, and shall not be further amended prior to the Closing
Date, except for (i) amendments in connection with the issuance of
additional shares under HME's Dividend Reinvestment Stock Purchase,
Resident Stock Purchase and Employee Stock Purchase Plan; (ii)
amendments in connection with mergers or other transactions wherein
additional OP Units are issued in connection with the acquisition of
real property, or of interests in entities which own real property;
and (iii) amendments to reflect the transfer or assignment of
limited partnership interests in Home Properties or the exercise by
partners of their Purchase Rights under the Operating Partnership
Agreement.
(8) All financial information heretofore or hereafter furnished by HME
or Home Properties concerning such entities is, and shall be, true,
complete and correct in all material respects as of the date therein
specified. All of the information furnished and statements made by
HME or Home Properties to the Partnership with respect to this
Agreement, and in the periodic filings (as updated) by HME or Home
Properties with the Securities and Exchange Commission, are true and
correct in all material respects and do not misstate or fail to
state any material fact.
(9) HME or Home Properties has not (i) made a general assignment for the
benefit of creditors; (ii) admitted in writing its inability to pay
its debts as they mature; (iii) had an attachment, execution or other
judicial seizure of any property interest which remains in effect; or
(iv) become generally unable to meet its financial obligations as
they mature.
(10) There is not pending any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
recomposition of HME or Home Properties, or the debts of HME or Home
Properties, under any law relating to bankruptcy, insolvency,
reorganization or the relief of debtors, or seeking the appointment
of a receiver, trustee, custodian or other similar official for HME
or Home Properties.
(11) Except: (i) as disclosed in writing to the Partnership; (ii) for
liabilities and obligations incurred in the normal course of
business of HME or Home Properties; and (iii) as otherwise disclosed
in this Agreement or in periodic filings (as updated) by HME or Home
Properties, HME and Home Properties has no material liability or
obligation of any nature which in any way materially affects their
financial statements, whether now due or to become due, absolute,
contingent or otherwise, including liabilities for taxes (or any
interest or penalties thereto).
(12) HME and Home Properties will file when due all notices, reports and
returns of Taxes (as defined below) required to be filed after the
Closing Date and will pay, all Taxes and other charges for the
periods shown to be due on such notices, reports and returns arising
after Closing. "Taxes" shall mean all taxes, charges, fees, levies
or other assessments, including, without limitation, income, excise,
property, sale, gross receipts, employment and franchise taxes
imposed by the United States, or any state, county, local or foreign
government, or subdivision or agency thereof with respect to the
assets or the business of the Partnership, and including any
interest, penalties or additions attributable thereto, which arise
after closing .
(13) The provisions of Section 4 (a), (b), (c) and (d) of this Agreement,
and the provisions of Section 7.1 (a), (b), (c), (d), (e), (f), and
(g) of this Agreement, are incorporated by reference herein as if
recited at length as a representation and warranty of HME and Home
Properties.
(14) HME and Home Properties will be responsible for all activities,
operations, debts, liabilities of and claims against the
Partnership which arise and result from occurrences from and after
Closing.
(15) HME and Home Properties will promptly, timely and accurately make
all announcements regarding this transaction to the limited partners
of the Partnership and the public, such announcement to the public
to occur upon or immediately subsequent to execution of this
Agreement. HME and Home Properties will indemnify and save the
Partnership and its Partners from and against any and all liability,
claims, damages, costs and expenses arising by or through HME or
Home Properties with respect to the offering of OP Units pursuant to
this Agreement and with respect to public statements regarding the
transaction contemplated by this Agreement; provided, however, that
such indemnity shall not apply to statements made or damages caused
directly by the Partnership or the General Partner prior to Closing.
(b) All of the representations and warranties of Home Properties, and
HME, set forth in this Agreement, including, without limitation, the following
indemnity, shall survive the Closing, and shall not be deemed to have merged in
any document delivered at the Closing.
(c) Home Properties and HME agree to indemnify the Partnership and each
Partner, and hold harmless and defend the Partnership and each Partner, from
and against any and all losses, costs, claims, liabilities, taxes (including
taxes on any indemnification amount), damages and expenses, including, without
limitation, reasonable attorneys' fees, arising as the result of a breach of
any of the obligations, covenants, representations and/or warranties of Home
Properties and/or HME set forth in this Agreement.
10. CONDITIONS TO THE OBLIGATIONS OF HOME PROPERTIES.
(a) Without limiting any of the rights of Home Properties elsewhere set
forth in this Agreement, it is agreed that the obligations of Home Properties
under this Agreement shall be subject to the satisfaction of the conditions set
forth following ("Home Properties' Conditions"):
(1) All of the representations and warranties of the Partnership set forth
in this Agreement shall be true, accurate and correct in all material
respects as of the Closing Date (as if made on the Closing Date).
(2) On or before May 4, 1999, the Board shall have
approved the acquisition of the Property by Home Properties and HME on the
terms and conditions set forth in this Agreement.
(3) On or before the Closing Date, all of the management agreements
pertaining to the Property shall have been terminated (effective as at the
completion of the Closing on the Closing Date), without cost or expense to
Home Properties.
(4) As at the Closing Date, the Existing Loan shall be in full force and
effect, with no default or right to accelerate occurring thereunder
except, if Home Properties has not elected to assume the Existing Loan or
to be approved by the Existing Lender as the substituted General Partner,
by reason of the consummation of the transaction contemplated under this
Agreement.
(1) The Partnership shall have delivered to Home Properties all of the
documents and other items required to be delivered by the
Partnership to Home Properties under the terms of this Agreement.
(2) The General Partner shall have executed an agreement whereby it
agrees that he will be responsible for making all final
distributions to the former Partners of the Partnership from (i) any
amounts remaining in the Reserve Amount and/or Contingency Reserve
(as the case may be) at the time of expiration of such Accounts, and
(ii) and from any other Partnership funds that the General Partner
holds, and shall indemnify Home Properties for all claims relating
thereto.
(7) Josh E. Fidler shall have executed an agreement whereby he agrees
that he will be responsible for causing the General Partner to
perform its obligations pursuant to subparagraph (6) above and shall
indemnify Home Properties in the event of the General Partner's
failure to do so.
(8) No less than 90% of the interests of the Partners shall have agreed
in writing within sixty (60) days after the execution of this
Contribution Agreement to exchange their Interests in the
Partnership for cash and/or OP Units and assignments for such
interests shall have been received by Closing.
(9) If Home Properties is to assume the Existing Loan (subject to the
provisions of Section 5 regarding the Gateway and Chestnut Crossing
loans), then within the Due Diligence Period of this Agreement, the
Existing Lender shall have approved the assumption of the Existing
Loan by Home Properties (or substitution of Home Properties as
General Partner of the Partnership).
(10) No less than 90% of the interests in the Affiliated Partnerships
have approved contribution agreements for the assignment to Home
Properties of no less than 90% of the interests in the Affiliated
Partnerships in exchange for any combination of OP Units and cash
pursuant to Contribution Agreements to be executed by and between
the Affiliated Partnerships and Home Properties, and the closing
thereof, shall occur simultaneously with the closing of the
transaction described in this Agreement and assignments for such
interests shall have been received by Closing.
(11) It is a condition of this transaction that (i) no fewer than an
aggregate of $23 million in OP Units be issued to all Partners in
the Partnership and to partners in Affiliated Partnerships accepting
the Offer in this Agreement and the offer made to partners in
Affiliated Partnerships pursuant to contribution agreements entered
into by such Affiliated Partnerships, with the balance of the
Consideration paid in cash, and (ii) no more than an aggregate of
$35 million in OP Units to be issued all Partners in the Partnership
and to partners in Affiliated Partnerships accepting the Offer in
this Agreement and the offer made to partners in Affiliated
Partnerships pursuant to contribution agreements entered into by
such Affiliated Partnerships, [if all accepting Partners and
partners of Affiliated Partnerships desire more than and aggregate
of $35 million in OP Units, such OP Units shall be pro-rated among
accepting Partners and partners of Affiliated Partnerships], with
the balance to be cash.
(12) The fulfillment by the Partnership of such other conditions to
Closing as are set forth in this Agreement, including, without
limitation, the performance by each partnership of the obligations
and covenants of such Partnership set forth in this Agreement.
(b) Each of Home Properties' Conditions is for the benefit of Home
Properties, and, accordingly, any such condition may be waived by Home
Properties at any time.
(c) If any Home Properties' Conditions shall not have been fulfilled by
the Partnership, or otherwise satisfied or waived by Home Properties, Home
Properties shall have the right to terminate this Agreement by written notice
to the Partnership, in which event the Earnest Money Deposit shall be returned
to Home Properties, and this Agreement shall, thereafter, be deemed to be null,
void and of no further force or effect, and neither party shall have any
further rights or obligations under this Agreement, but subject to the
provisions of Section 23 of this Agreement.
11. CONDITIONS TO THE OBLIGATIONS OF THE PARTNERSHIP.
(a) Without limiting any of the rights of the Partnership elsewhere set
forth in this Agreement, it is agreed that the obligations of the Partnership
under this Agreement shall be subject to the satisfaction of the conditions set
forth following (the "Partnership's Conditions"):
(1) All of the representations and warranties of Home Properties, and
HME, set forth in this Agreement shall be true, accurate and correct
as of the Closing Date (as if made on the Closing Date).
(2) Home Properties shall have delivered to the Partnership all of the
documents and other items required to be delivered by Home
Properties under the terms of this Agreement.
(3) No less than 90% of the interests of the Partners shall have agreed
in writing within sixty (60) days after the execution of this
Contribution Agreement to exchange their Interests in the
Partnership for cash and/or OP Units and assignments for such
interests shall have been received by Closing.
(4) Within the Due Diligence Period of this Contribution Agreement, if
the Existing Loan is to be assumed by Home Properties, the Existing
Lender shall have approved the assumption of the Existing Loan by
Home Properties (or substitution of Home Properties as General
Partner of the Partnership).
(5) No less than 90% of the interests in the Affiliated Partnerships
have approved contribution agreements for the assignment to Home
Properties of no less than 90% of the interests in the Affiliated
Partnerships in exchange for any combination of OP Units and cash
pursuant to Contribution Agreements to be executed by and between
the Affiliated Partnerships and Home Properties, and the closing
thereof, shall occur simultaneously with the closing of the
transaction described in this Agreement and assignments for such
interests shall have been received by Closing.
(6) The fulfillment by Home Properties of such other conditions to
Closing as are set forth in this Agreement.
(b) Each of the Partnership's Conditions is for the benefit of the
Partnership, and, accordingly, any such condition may be waived by the
Partnership at any time.
(c) If any of the Partnership's Conditions shall not have been fulfilled
by Home Properties, or otherwise satisfied or waived by the Partnership, the
Partnership shall have the right to terminate this Agreement by written notice
to Home Properties, in which event the Earnest Money Deposit shall be returned
to Home Properties, and this Agreement shall, thereafter, be deemed to be null,
void and of no further force or effect, and neither party shall have any
further rights or obligations under this Agreement, but subject to the
provisions of Section 23 of this Agreement.
12. INSPECTION PERIOD. Subject to the rights of existing tenants at the
Property, Home Properties shall have a period , beginning April 1, 1999 and
ending May 15, 1999 (the "DUE DILIGENCE PERIOD") within which to cause one or
more surveyors, attorneys, engineers, auditors, architects, and/or other
experts of its choice (i) to inspect any document related to any Property,
including, without limitation, all Leases and related documents, documents
pertaining to the Existing Loan, working drawings, plans and specifications,
surveys, appraisals, engineer's reports, environmental reports, insurance
policies, service contracts, real estate tax receipts and annual and monthly
operating statements, and (ii) to inspect, examine, survey, appraise and obtain
engineering inspection and environmental reports with respect to the Property,
documents pertaining to the Existing Loan, or all of the Property, and
otherwise to do all that, which, in the opinion of HME, is necessary to
determine the condition and value of the Properties for the uses intended by
Home Properties, provided, however, that Home Properties shall not conduct any
environmental study of any Property beyond a Phase 1 level without the consent
of the Partnership, which consent shall not be unreasonably withheld. Home
Properties may declare the Due Diligence Period ended at any earlier time.
Home Properties must be satisfied in all respects (in the sole and absolute
discretion of Home Properties) with the results of all reviews, inspections and
investigations conducted by, or under, Home Properties during the Due Diligence
Period. If Home Properties shall not be so satisfied, Home Properties may,
within the Due Diligence Period, terminate this Agreement by giving the
Partnership written notice of such termination and returning to the Partnership
all documents supplied to Home Properties by the Partnership and providing the
Partnership with all studies and surveys procured by Home Properties during the
Due Diligence Period, in which event Home Properties shall have no obligation
or liability under this Agreement, or with regard to the Partnership or the
Property, and Home Properties shall be entitled to the immediate return of the
Earnest Money Deposit, and this Agreement shall, thereafter, be null, void and
of no further force or effect. If not so terminated by Home Properties, this
Agreement shall continue in full force and effect according to its terms. Home
Properties shall be responsible for payment of all of the costs of its due
diligence activities, including, without limitation, all engineering and
environmental reports, and all financial and Lease audits. Home Properties and
HME shall indemnify and hold the Partnership harmless from and against any and
all loss, claims, damage and expense arising out of entry by Home Properties
and its agents onto the Property and any testing performed thereon. Home
Properties and HME shall repair any damage which it may cause as a result of
any such entry and testing. Home Properties and HME shall cause their entry,
inspections and testing (if any) to be conducted in a manner so as to minimize
disruption to tenants at the Property.
Home Properties and HME shall give written notice to the Partnership as
soon as the Board has, pursuant to paragraphs (a)(3) and (a)(4) of Section 9
hereof, acted upon a request for approval of this Agreement and the
transactions envisioned herein. In the event that the Board has failed to
approve by May 4, 1999, or Home Properties shall fail to give the Partnership
notice of approval by May 6, 1999, the Partnership shall have the right to
terminate this Agreement by giving written notice to Home Properties, in which
event the Earnest Money Deposit shall be returned to Home Properties and
neither party shall have any further obligation under this Agreement.
13. TITLE.
(a) At Closing, the Partnership will hold good, marketable and insurable
fee simple title to the Property, free and clear of all liens, charges and
encumbrances, except the Permitted Exceptions.
(b) Within 10 days of the execution of this Contribution Agreement, the
Partnership will furnish and deliver to Home Properties a copy of the most
recent title policy issued with respect to the Property and a copy of the most
recent survey of the Property.
(c) The obligation of Home Properties to complete the transaction
described in this Agreement is conditioned upon the ability of Home Properties
to obtain title insurance with respect to the Property insuring that, as of the
Closing Date, title to the Property is not subject to any liens or
encumbrances, other than the Permitted Exceptions.
(d) The Partnership agrees that, upon the request of Home Properties, it
will provide an affidavit in such customary form as shall allow Home Properties
to obtain a non-imputation endorsement to the title policy purchased by Home
Properties.
(e) If any title commitment, UCC search or survey discloses exceptions
to title other than the Permitted Exceptions, or any other matter which does
not conform to the requirements of this Agreement, Home Properties shall so
notify the Partnership in writing, such notice to be furnished to the
Partnership, if at all, within fifteen (15) days following receipt by Home
Properties of the title commitments, the UCC searches and surveys, but not
later than the end of the Due Diligence Period. The Partnership shall have the
right, but not the obligation, within forty-five (45) days from the date of the
receipt of such notice by the Partnership (the "Correction Period"), to have
each such unpermitted exception to title removed, or to correct each such other
matter, in each case to the reasonable satisfaction of the Home Properties.
Home Properties shall have no obligation to close within the Correction Period
unless the Partnership shall have caused each unpermitted exception to be
removed or corrected to the reasonable satisfaction of Home Properties. If,
within the Correction Period, the Partnership fails to have each such
unpermitted exception removed, or to correct each such other matter as
aforesaid, Home Properties may, at its option, and as the sole and exclusive
remedy of Home Properties, either (i) terminate this Agreement, in which event
this Agreement, without further action of the parties, shall become null and
void such that neither party shall have any further rights or obligations under
this Agreement, and Home Properties shall be entitled to the immediate return
of the Earnest Money Deposit, or (ii) elect to take title to each Property as
it then is. If Home Properties fails to make either such election within five
(5) days following the expiration of the Correction Period, Home Properties
shall be deemed to have elected option (ii). Any exception to title (other
than a Permitted Exception), or any other matter which does not conform to the
requirements of this Agreement, to which the Home Properties does not object,
as aforesaid, shall be deemed approved by Home Properties, and shall be deemed
to be an additional Permitted Exception. Notwithstanding anything to the
contrary contained herein, the Partnership shall be obligated to remove (or to
cause the title company to affirmatively insure over) at the expense of the
Partnership (a) any mortgages or deeds to secure debt regarding any financing
obtained by any Partnership, other than the Existing Loan; (b) any mechanic's
or materialman's lien for work done on any Property on behalf of the
Partnership; and (c) any other monetary lien against any Property resulting
from any act or omission of the Partnership.
14. CLOSING DATE. If this Agreement shall not have been terminated by
Home Properties, or the Partnership, for any of the reasons set forth in this
Agreement, and within the time(s) herein limited, the closing of the
transaction contemplated by this Agreement (the "Closing") shall occur on June
30, 1999 unless such Closing Date is extended as provided in Section 5 of this
Agreement (any such day upon which the Closing occurs being herein referred to
as the "Closing Date"). Home Properties and HME agree to use commercially
reasonable good faith efforts to expeditiously attempt to obtain all necessary
approvals of the holders of the Existing Loan. The Closing shall be held at
the Partnership's office, at such time, or at such other place, as may be
mutually agreed upon by the parties.
15. CLOSING DOCUMENTS.
(a) At or prior to the Closing, the Partnership shall deliver to Home
Properties the following, each of which shall be in form and substance
satisfactory to Home properties:
(1) if Home Properties is to assume (or obtain lender consent to the
substitution of Home Properties as the General Partner under) the
Existing Loan , an estoppel certificate from the Existing Lender
confirming that there is no default under the Existing Loan, and
that there exists no event that with the passage of time or the
giving of notice, or both, would constitute such a default;
(2) any and all affidavits, certificates or other documents reasonably
and customarily required by the title company in order to cause it
to issue the title policy regarding the Property in the form and
condition required by this Agreement;
(3) an update of the Rent Roll pertaining to the Property (including a
listing of all delinquent and prepaid rents, and all security deposits
(including all interest due to tenants pursuant to Maryland or other
applicable laws), dated as of (or as close as reasonably practicable to)
the Closing Date, and represented and certified by the Partnership to be
true, accurate, complete and correct in all material respects;
(4) to the extent in the possession of the Partnership all of the
original Leases, Service Contracts and Equipment Leases (in the case
of the Equipment Leases or Service Contracts, limited to those
Equipment Leases or Service Contracts which Home Properties is
required, or has elected, to assume under this Agreement)such
materials to remain at the rental office and need not be brought to
closing;
(5) all keys to the Property in the possession of the Partnership, which
shall be remain at the rental office and need not be brought to
closing;
(6) duly executed certificates of title, and other transfer documents,
with regard to any vehicle owned by the Partnership;
(7) a certified copy of the Certificate of Limited Partnership of the
Partnership, and such other evidence of the Partnership's power and
authority as the title company may reasonably request;
(8) a letter to each of the tenants in the Property advising them of the
change of beneficial ownership of the Property, and the transfer of
the Security Deposits, and directing that rentals or other payments
thereafter be paid to a payee designated by Home Properties;
(9) such existing maintenance records in regard to the Property which
Home Properties may request not later than five (5) days prior to
the Closing Date (which shall be delivered at the Property);
(10) the currently effective Licenses regarding the Property, or other
reasonably acceptable evidence of the right to use and occupy the
Property;
(11) signed notices to each utility service provider, advising of the
change in beneficial ownership of the Property;
(12) a signed counterpart of the Lock-Up Agreement;
(13) a signed counterpart of the Registration Rights Agreement;
(13.1) executed assignments of Interests from the Partners who have
accepted the Offer set forth in this Agreement;
(14) a signed counterpart of the Amendment to the Operating Partnership
Agreement admitting the Unit Partners as limited partners of Home
Properties (the "Amendment");
(15) a statement of the aggregate amount of the Security Deposits (with
interest) as shown on the updated Rent Roll, which amount shall be
adjusted as more fully provided in Section 16 (d);
(16) such additional documentation as Home Properties, or the title
company, may reasonably deem necessary or desirable in order to
effectuate the transaction contemplated by this Agreement; and
(17) a signed counterpart of the Escrow Agreement-Reserve Amount in form
substantially similar to EXHIBIT H;
(b) At the Closing, Home Properties shall deliver to the Partnership the
following, each of which shall be in form and substance satisfactory to such
Partnership:
(1) proof of the issuance of the OP Units allocated to the Unit Partners
(by and through the execution and delivery of the Amendment, which
shall evidence and reflect the ownership of the OP Units by such
Partners);
(2) proof of the payment of cash allocated to the Partners who have
elected to receive cash in exchange for their Interests;
(3) a receipt for the Security Deposits [acknowledged by the deduction
described in Section 16 (d)] and evidence that the Security Deposits
have been placed into a segregated account as required by such
Section;
(4) a certificate of the Secretary of HME certifying that the Board of
Directors of HME have duly adopted resolutions authorizing the
transaction contemplated by this Agreement, and the execution of all
of the Closing documents to be executed and delivered by Home
Properties pursuant to this Agreement;
(1) a sworn statement on behalf of HME certifying that the person
signing documents in connection with the transaction contemplated by
this Agreement on behalf of Home Properties is authorized to do so;
(6) a signed counterpart of the Registration Rights Agreement;
(7) a signed counterpart of the Lock-Up Agreement;
(8) a signed counterpart of the Amendment;
(9) signed counterparts of all other documents listed in Section 15(a)
required to be signed by Home Properties;
(10) a certified copy of the Operating Partnership Agreement;
(11) on behalf of HME, a certificate of good standing from the Secretary
of State of Maryland;
(12) on behalf of Home Properties, a certificate of good standing from
the Secretary of State of New York; and
(13) such additional documentation as the Partnership may reasonably deem
necessary to effectuate the transaction set forth in this Agreement.
(c) At the Closing, the parties shall make adjustments, reimbursements
and consummate the transactions described in Section 34 of this Agreement.
16. ADJUSTMENTS.
(a) The following items shall be adjusted between the Partnership and
Home Properties as of the date of the Closing Date (it being understood that
the Partnership shall have the benefit of monies received and expenses incurred
on the date of Closing) and shall be paid in cash at Closing:
(1) interest on the Existing Loan;
(2) real estate and personal property taxes,
(3) rents under the Leases for the relevant month, as and when
collected;
(4) coin operated laundry concession income;
(5) charges for water, sewer, electricity, fuel, gas, telephone and
other utilities, which are not metered or otherwise charged directly
to tenants under the Leases; provided that if the consumption of any
such utilities is measured by meters, at Closing the Partnership
shall furnish a current reading of each meter, and provided,
further, that if there is not a meter, or if the meter(s) cannot be
read by the relevant utility prior to the Closing, the charges
therefor shall be adjusted at the Closing on the basis of the
charges for the prior period for which bills were issued, and shall
be further adjusted when the bills for the period including the
Closing Date are issued;
(6) amounts paid or payable under the Service Contracts to be assigned
to and assumed by Home Properties (seasonal contracts for services
such as pool, landscaping and the like shall be adjusted based upon
benefits received);
(7) fees paid for assignable current Licenses;
(8) insurance and tax escrows (if paid by Partnership, shall be fully
reimbursed by Home Properties at Closing on loans assumed with the
Partnership recovering directly from such lender on loans prepaid);
prepaid real estate taxes; prepaid mortgage insurance; replacement
reserve escrows (if paid by Partnership, shall be fully reimbursed
by Home Properties at Closing on loans assumed with the Partnership
recovering directly from such lender on loans prepaid); other
expenses of operation;
(1) any special assessment for public improvements or otherwise which is
or may become payable with respect to the Property in annual
installments; and
(2) such other amounts as are customarily adjusted between parties to
similar transactions in the local jurisdiction.
(b) Rents which are due and payable to the Partnership by any tenant but
uncollected as of the Closing Date shall not be adjusted at the Closing. All
rents collected by Home Properties after the Closing Date shall be applied
first to any due but unpaid rentals accruing subsequent to the Closing Date,
and then to any rents past due for the calendar month in which the Closing Date
occurs (subject to adjustment), and then to any rents due and unpaid prior to
the Closing Date. All rent collected after Closing for any period prior to the
Closing shall belong to the Partnership, and if paid to Home Properties, Home
Properties shall promptly send such rent to the General Partner for
distribution to the former Partners of the Partnership pursuant to the
agreement described in subparagraph (a) (6) of Section 10, less all reasonable
expenses incurred by Home Properties, if any, in regard to the collection
thereof. At the Closing, the Partnership shall deliver to Home Properties a
schedule of all such past due, but uncollected rents owed by tenants. All
rents collected by the Partnership, prior to Closing, for rental period(s)
subsequent to the Closing shall be paid by the Partnership to Home Properties
at the Closing or deducted as an adjustment at Closing, at the option of the
Partnership. All rents collected by Home Properties or the Partnership for
rental periods after the Closing shall belong to Home Properties, and if paid
to the Partnership, the Partnership shall promptly send such rent to Home
Properties.
(c) Any adjustment estimated at the Closing shall be finally adjusted as
soon as practicable after the Closing. Any error in the calculation of
apportionments shall be corrected subsequent to the Closing with appropriate
credits to be given based upon corrected adjustments; provided, however, that
all adjustments (except as to errors caused by misrepresentation) shall be
deemed final upon the expiration of ninety (90) days after the Closing Date.
(d) In lieu of the Partnership delivering Security Deposit accounts,
there shall be an adjustment at Closing of an amount equal to the aggregate
amount of the Security Deposits (with interest) shown on the updated Rent Roll
provided by the Partnership, which amount shall be set aside by Home Properties
at Closing into a segregated account for security deposits in accordance with
Maryland Law.
(e) The Partnership shall be responsible for, and shall make
arrangements for payment of, all amounts due to the Closing Date for employees,
salaries, accrued vacation pay, withholding and payroll taxes, and other
benefits, and any management fee affecting the Property (the General Partner
may utilize one or more payroll periods after Closing to finalize these
payments). Home Properties shall be responsible for all such expenses
commencing upon the Closing Date.
17. POSSESSION. Upon completion of the Closing, the Partnership shall
deliver to Home Properties full and complete possession of the Property,
subject only to the Permitted Exceptions and such other agreements and matters
as may be agreed to by the General Partner and Home Properties .
18. CONDEMNATION AND DESTRUCTION.
(a) If, prior to the Closing Date, the Property, or any part of any
Property, is taken by eminent domain (or is the subject of a pending or
contemplated taking which has not been consummated), the Partnership shall
notify Home Properties of such fact, and Home Properties shall have the option
(which option shall be set forth in a notice from Home Properties to the
Partnership given not later than fifteen (15) business days after receipt of
the notice from the Partnership):
(i) to terminate this Agreement, in which event, the Earnest Money
Deposit shall be returned to Home Properties, and, thereafter, this
Agreement shall be deemed to be null, void and of no further force
or effect between the parties; or
(ii) to accept title to the Property (other than the portion so taken),
without abatement of the Consideration, in which event the
Partnership shall assign and turn over to Home Properties at the
Closing, and Home Properties shall be entitled to receive and keep,
all amounts awarded, or to be awarded, as the result of the taking.
(b) If, prior to the Closing Date, all or any material part of any
Property is damaged or destroyed by fire or other casualty, the Partnership
shall notify Home Properties of such fact, and Home Properties shall have the
option (which option shall be set forth in a notice from Home Properties to the
Partnership given not later than fifteen (15) business days after receipt of
the notice from the Partnership):
(i) to terminate this Agreement, in which event, the Earnest Money
Deposit shall be returned to Home Properties, and, thereafter, this
Agreement shall be deemed to be null, void and of no further force
or effect between the parties; or
(ii) to accept title to the relevant Property without abatement of the
Consideration, in which event the Partnership shall assign to Home
Properties, at the Closing, all of the right, title and interest of
the Partnership in and to the insurance proceeds awarded or to be
awarded to the Partnership as the result of such damage or
destruction.
(c) In the event there is damage to or destruction of an Immaterial part
of the Property by fire or other casualty, such damage or destruction shall,
subject to receipt of insurance proceeds, be repaired promptly by the
Partnership, and in the event such damage or destruction cannot be fully
repaired by the Closing Date, then at the option of Home Properties (i) the
Closing shall be postponed until such repairs shall have been completed, or
(ii) the Closing shall be held as scheduled, and Home Properties shall accept
title to the Property without abatement of the Consideration, in which event
the Partnership shall assign to Home Properties, at the Closing, all of the
right, title and interest of the Partnership in and to the insurance proceeds
awarded or to be awarded to the Partnership as the result of such damage or
destruction.
(d) An "Immaterial" part of the Property shall be deemed to have been
damaged or destroyed if the cost of repair or replacement thereof shall be
$250,000, or less, and a "Material" part thereof shall be deemed to have been
damaged or destroyed if the cost of repair or replacement thereof shall be
greater than $250,000.
20. BROKER'S COMMISSION. The Partnership and Home Properties each
represent to the other than the transaction described in this Agreement was not
brought about or assisted in any way by any broker, firm or salesman, or other
person or persons acting or functioning as, or in a role similar to a broker
(any such broker, firm or salesman, or other person, is herein referred to as a
"Broker"), except Insignia/ESG, to whom, pursuant to separate agreement, the
Partnership shall pay a real estate brokerage commission at the time of, and in
conjunction with the Closing of the transaction under this Agreement. The
Partnership agrees that should any claim be made for a commission or other
compensation with regard to this transaction by any broker claiming through the
Partnership, other than a broker engaged in writing by Home Properties, or HME,
the Partnership shall have the sole responsibility for paying any such claim,
and shall indemnify and hold harmless Home Properties, and HME, from and
against any such claim of any broker, and all liabilities and expenses in
connection therewith, including court costs and attorneys, fees and expenses.
21. EARNEST MONEY. Concurrently with the execution of this Agreement by
both Home Properties and the Partnership, Home Properties will deposit
____________ Dollars ($_________) in cash (the "Earnest Money Deposit") with
the Disbursing Agent, to be held in an interest bearing account, at an insured
institution acceptable to Home Properties pursuant to the terms of an Escrow
Agreement in the form of EXHIBIT F attached hereto. Five days after the
expiration of the Due Diligence Period, provided Home Properties shall not have
terminated this Agreement pursuant to the provisions of Section 12, Home
Properties will deposit an additional __________________ Dollars ($___________)
with the Disbursing Agent, which sum shall become a part of the Earnest Money
Deposit. At Closing, the Earnest Money Deposit, shall be returned to Home
Properties, and shall not be applied to the Consideration payable for the
Interests. If this Agreement shall not have been properly terminated by Home
Properties pursuant to the provisions of this Agreement, the Earnest Money
Deposit shall be refundable to Home Properties in the event only that the
Partnership defaults, or is unable to close for any reason. In the event Home
Properties does not close for any reason other than as a result of the
permitted termination of this Agreement by Home Properties, or the default of
the Partnership, or the inability of the Partnership to close, the Earnest
Money Deposit, shall be paid to the Partnership. As used anywhere in this
Agreement, the term "Earnest Money Deposit" includes all earnings thereon, if
any.
22. COOPERATION. At all times during the term and pendency of this
Agreement, the Partnership will cooperate fully with Home Properties (but with
no obligation to incur cost or expense in connection therewith) in all
reasonable manner in providing books, records and other documentation for
review, including, without limitation, all Leases and related documents, copies
of documentation relating to the Existing Loan, working drawings, plans and
specifications, surveys, appraisals, engineer's reports, environmental reports,
insurance policies, service contracts, real estate tax receipts, copies of tax
returns filed by the Partnership, and annual and monthly operating statements
relating to the Property, and in the possession of, or reasonably available to
the Partnership. Subject to existing tenant leases, the Partnership will
provide access to the Property for all physical inspections required by Home
Properties. The Partnership will provide access by the representatives of Home
Properties to all financial and other information relating to the Property as
is sufficient to enable such representatives to prepare audited financial
statements, at the expense of Home Properties, 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. Home Properties shall conduct itself and its examinations
in a manner to minimize disruption to the staff and tenants of the Partnership
and Property.
23. DEFAULTS AND REMEDIES.
(a) If the Partnership fails or refuses to perform in accordance with
the terms of this Agreement, including, without limitation, the failure or
refusal to perform any covenant or obligation on the part of the Partnership to
perform, prior to the Closing, or if any of the representations, warranties and
covenants of the Partnership contained in this Agreement shall not be true,
complete and correct at Closing, Home Properties may terminate this Agreement,
in which event the Earnest Money Deposit shall be returned to Home Properties,
and Home Properties shall, in addition, be entitled to reimbursement by the
Partnership of the actual out-of-pocket due diligence costs incurred by Home
Properties in connection with proposed acquisition of the Interests, up to the
sum of $__________ (after the payment of which, this Agreement shall be deemed
null, void, and of no further force or effect between the parties). The
parties agree and understand that in no event shall the Partnership be liable
for any damages in excess of the aforesaid sum and that the aforesaid
limitation of liability is a material inducement for the Partnership to enter
into this Agreement.
(b) If Home Properties fails or refuses to perform in accordance with
the terms of this Agreement, the Earnest Money Deposit shall be forfeited to
the Partnership as liquidated damages (which shall be the sole and exclusive
remedy of the Partnership against Home Properties), at which time this
Agreement shall be deemed to be null, void and of no further force or effect
between the parties. In that regard, the Partnership acknowledges and agrees
that (i) the Earnest Money Deposit is a reasonable estimate of, and bears a
reasonable relationship to, the damages suffered and costs incurred by the
Partnership as a result of having subjected the Interests to the terms of this
Agreement; (ii) the actual damages suffered and costs incurred by the
Partnership as a result of such failure of Home Properties to close under this
Agreement would be extremely difficult and impractical to determine; (iii) Home
Properties seeks to limit its liability under this Agreement to the amount of
the Earnest Money Deposit in the event this Agreement is terminated and the
transaction contemplated by this Agreement does not close due to a default of
Home Properties under this Agreement; and (iv) the Earnest Money Deposit shall
be and constitute valid liquidated damages. The foregoing limitation shall
apply only in the event that Home Properties does not close the transaction
contemplated by this Agreement, and such limitation shall not apply in the
event that Home Properties closes and thereafter Home Properties or HME
breaches one of its obligations hereunder after Closing.
24. OTHER PROHIBITED ACTIVITIES.
(a) During the term and pendency of this Agreement, the Partnership will
cease to market the Property, and, in that regard, the Partnership will refrain
from soliciting or accepting any offer from any third party, or, engaging in
any discussion with any third party concerning the sale, refinancing or
recapitalization of the Property.
(b) Except as required by Section 9(a)(15), until Closing, both Home
Properties and the Partnership agree to keep this Agreement confidential, and
not to disclose its contents to anyone except their respective lenders, legal
counsel and accountants, and except to the Partners in connection with the
Offer and except that HME shall and may promptly make such public announcement
regarding the transaction contemplated by this Agreement, as may, in its
judgment, be required by, or appropriate under, applicable securities laws (any
such statements or announcements to be true, complete and correct in all
material respects with regard to the nature of such statements or
announcements).
25. RISK OF LOSS. Until the Closing, the risk of loss or damage to all
or any part of any Property, from fire or other casualty, or from condemnation,
shall be borne by the Partnership, subject to the terms of this Agreement.
26. NOTICES.
(a) all notices, demands, or requests made and/or given pursuant to,
under, or by virtue of this Agreement must be in writing and sent to the party
to which the notice, demand or request is being made and/or given, by postage
prepaid, certified or registered mail, return receipt requested, by nationally
recognized courier service, or by personal delivery, as follows:
(I) if to the Partnership:
___________________________
4750 Owings Mills Boulevard
Owings Mills, Maryland 21117
Attention: Josh E. Fidler
With copy to:
Searle Mitnick, Esq.
Tydings & Rosenberg, LLP
100 East Pratt Street
Baltimore, MD 21202
and
(ii) if to Home Properties:
c/o Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Attention: Norman P. Leenhouts, Chairman and
Co-Chief Executive Officer
(b) Any such notice, demand or request shall be deemed to have been
rendered or given on the date of receipt, in the case of delivery by courier
service or personal delivery, or three (3) business days after mailing.
27. ASSIGNMENT. Neither this Agreement nor any interest hereunder shall
be assigned or transferred by the Partnership or by Home Properties.
28. GOVERNING LAW. The corporate laws of the State of Maryland will
govern all questions concerning the relative rights and obligations of the
parties with respect to any HME Common Shares acquired or acquirable by the
holders of OP Units on account of their OP Units. Except as limited by the
Operating Partnership Agreement, the laws of the State of New York will govern
all other questions concerning the relative rights and obligations of the
holders of OP Units as limited partners in Home Properties, or otherwise with
respect to the OP Units. This Agreement shall, otherwise, be governed,
construed and interpreted in accordance with the laws of the State of Maryland
applicable to contracts made and to be performed wholly within the State of
Maryland without giving effect to the conflicts-of-laws principles thereof.
29. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the various
documents referred to herein contains, or incorporates, all of the terms agreed
upon between the parties with respect to the subject matter, and supersedes any
and all prior written or oral understandings. This Agreement may not be
modified or amended except in, and by, a written instrument executed by the
parties hereto.
30. WAIVER. No waiver by either party of any failure or refusal of the
other party to comply with any of the obligations of such party hereunder shall
be deemed a waiver of any other or subsequent failure or refusal so to comply.
31. ARTICLE HEADINGS. The headings of the various sections of this
Agreement have been inserted only for purposes of convenience, and are not part
of this Agreement, and shall not be deemed in any manner to modify, explain,
qualify or restrict any of the provisions of this Agreement.
32. CONDITION OF APARTMENTS. The Partnership will use commercially
reasonable efforts, in accordance with its existing business practices, to
ensure that at the time of the Closing the vast majority of apartment units are
in rentable condition. The parties recognize that tenants at the Property move
out at various times and that it may not be possible for all units to be fully
prepared at the time of Closing. Accordingly, the Partnership shall be fully
responsible for insuring that all units that have been vacated 30 or more days
prior to Closing shall be in full rentable condition. In the event that any
apartment unit vacant 30 or more days prior to Closing is not in rentable
condition, Home Properties shall receive a closing credit equal to the amount
reasonably necessary to bring that unit to rentable condition based on a
standard typical for the Property. For units vacated within 30 days prior to
Closing, the Partnership will continue to use commercially reasonable efforts,
in accordance with its existing business practices, to prepare such units for
subsequent tenancy, however, if any such units are not in full rentable
condition at the time of Closing there shall be no credit given to Home
Properties.
33. MISCELLANEOUS.
(a) Subject to existing tenant leases, upon reasonable notice and during
business hours between the date of this Agreement and the Closing Date, Home
Properties, and agents and representatives of Home Properties, shall have the
right to enter upon any Property for the purpose of examining, inspecting and
testing such Property, provided that Home Properties shall conduct itself in a
manner to minimize disruption to tenants and staff at the Property.
(b) The Partnership acknowledges that audited financial statements
pertaining to the Property for a minimum of one, and a maximum of three, prior
calendar year(s) of operation, and the portion of the calendar year in which
the Closing occurs, up to the Closing Date, are required to be filed by Home
Properties with the Securities and Exchange Commission after the Closing.
Accordingly, the General Partner agrees to provide Home Properties, and its
representatives, with access to the books and records of the Partnership
pertaining to the Property after the Closing, upon reasonable advance notice,
in order to conduct the required audit, at the expense of Home Properties.
After the Closing, the General Partner will provide, or cause to be provided, a
signed Representation Letter, in the form of EXHIBIT G attached hereto, with
respect to the Property owned by the Partnership.
(c) The parties hereto recognize that, at the Closing Date, the
Partnership will terminate for federal income tax purposes. The General
Partner hereby covenants to cause the tax returns to be prepared for the
Partnership for the period up to the Closing Date. Home Properties shall make
available to the General Partner (and his representatives) promptly upon
request, all financial and other information relating to the Partnership which
is necessary to permit the General Partner to file a tax return on behalf of
the Partnership for its taxable year ended on the Closing Date, and for such
other purposes as may be requested by the General Partner in order to wind up
business affairs for the entity and the Partners.
(d) Time is of the essence of this Agreement. In the computation of any
period of time provided for in this Agreement, or by law, the day of the act or
event from which the period of time runs shall be excluded, and the last day of
such period shall be included, unless it is a Saturday, Sunday, or legal
holiday, in which case the period shall be deemed to run until the end of the
next day which is not a Saturday, Sunday, or legal holiday.
(e) The General Partner shall cause tax returns for the Partnership for
the period up to the Closing Date to be completed within one hundred twenty
(120) days of the Closing Date. A copy of such final tax return shall be
submitted to Home Properties promptly upon its filing with the IRS. Within one
hundred twenty (120) days of the Closing Date the General Partner shall also
provide Home Properties with a schedule showing: (i) the net book value of the
Property and the Personal Property owned by the Partnership as of the Closing
Date; and (ii) an updated SCHEDULE 5 providing the actual information which was
estimated in such Schedule. The obligation of Home Properties contained in
Section 7.1(d) and the representations of Home Properties as contained in
Section 9(a)(13) are conditioned upon the actual information updated pursuant
to this Section 33(e) not being materially different from the estimated
information. The information on the Schedule shall be calculated in a manner
consistent with the calculations made for federal income tax depreciation
purposes.
(f) The date upon which this Agreement shall have been signed by both
the Partnership and Home Properties shall be considered to be the date of this
Agreement.
(g) The Partnership and the General Partner agree that they will not
trade in common stock of HME, or cause such stock to be traded on their behalf,
prior to the Closing Date.
(h) This Agreement may be executed in counterparts and by facsimile
signatures.
34. SPECIAL PROVISIONS.
(a) FALCONCREST REHABILITATION COSTS. The parties recognize and agree
that between April 1, 1999 and June 30, 1999 ("2{nd} Quarter 1999") it is
anticipated that the Partnership will incur substantial costs and expenses
related to the rehabilitation of various apartment units at the project, it
currently being estimated that the Partnership will expend approximately
$13,500 per renovated unit at the project during such period (the "Projected
Rehab Costs"), and the parties desire that the Partnership continue such
renovation program at the project. The parties further recognize and agree
that HME and Home Properties will have the benefit of the Projected Rehab Costs
(not the Partnership) and, accordingly, HME and Home Properties will reimburse
the Partnership, as an adjustment at Closing, for the actual amount of
Projected Rehab Costs incurred by the Partnership during 2{nd} Quarter 1999
based upon the following formula: HME and Home Properties shall pay the
Partnership $13,500 for each unit fewer than 150 units which remain to be
renovated at the project at Closing (i.e., there are 396 units at the project,
117 Section 2 units do not need renovation, and it is estimated that 146 units
may be renovated by June 30, 1999. Assuming such numbers, HME and Home
Properties would reimburse as follows: [396 - 117 - 146 = 133; 150 - 133 = 17;
17 x $13,500 = $229,500]); provided, however, that in no event shall HME and
Home Properties be obligated to reimburse the Partnership more than $350,000.
If more than 150 units remain to be renovated by June 30, 1999, the Partnership
will pay HME/Home Properties $13,500 for each unit which remains to be
renovated in excess of 150.
(b) TIMBERCROFT I & III EQUITY PRESERVATION RESERVE. The parties
recognize and agree that Timbercroft I, LLC and Timbercroft III, LLC currently
have posted with lenders an Equity Preservation Reserve of approximately
$800,000 (the "Equity Preservation Reserve"). At Closing, Home Properties
shall pay and reimburse the Partnership the principal balance and accrued
interest as of the Closing Date of the Equity Preservation Reserve such that
after Closing Home Properties shall be solely entitled to the Equity
Preservation Reserve posted with lenders.
(c) PURCHASE OF VECTOR PROPERTY MANAGEMENT LLC. The parties have agreed
that Home Properties will purchase the stock of the current management company
for the project, Vector Property Management, LLC ("Vector") pursuant to the
terms of a Membership Interest Purchase Agreement between Vector and Home
Properties executed contemporaneously herewith (the "Management Purchase
Agreement"). At Closing, the parties shall execute and deliver all documents
and monies required by the Management Purchase Agreement to effectuate the
purchase and sale of the stock of Vector.
(d) PURCHASE OF VARIOUS ASSETS OF CHESAPEAKE REALTY MANAGEMENT, INC. The
parties have agreed that Home Properties will purchase certain assets comprised
of various cars, trucks and dumpsters from Chesapeake Realty Management, Inc.,
a company affiliated with the Partnership ("Chesapeake"), for a price equal to
the depreciated book value of such assets on the books of Chesapeake (such
price not to exceed $100,000), pursuant to the terms of an Asset Purchase
Agreement between Chesapeake and Home Properties executed contemporaneously
herewith (the "Asset Purchase Agreement"). At Closing, the parties shall
execute and deliver all documents and monies required by the Asset Purchase
Agreement to effectuate the purchase and sale of the various assets sold by
Chesapeake to Home Properties.
IN WITNESS WHEREOF, the Partnership and Home Properties have executed this
Agreement as at the day and year first above written.
[COUNTERPART SIGNATURE PAGES FOLLOW]
1
<PAGE>
[Partnership Counterpart Signature Page]
[NAME OF PARTNERSHIP]
By: ________________________________
Date: ______________________________
_____________________, as General Partner,
but only for purposes of acknowledging and
agreeing to the provisions of subparagraph
(a)(6) of Section 10, paragraph (b) of
Section 16 and paragraphs (b), (c) and (e)
of Section 33.
________________________________
JOSH E. FIDLER, but only
for the purpose of agreeing to the
provisions of subparagraph (a)(7)
of Section 10.
2
<PAGE>
[Home Properties/HME Counterpart Signature Page]
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By:________________________________
Norman Leenhouts, Chairman & Co-Chief
Executive Officer
Date:_______________________________
HOME PROPERTIES OF NEW YORK, INC.
By:________________________
Norman Leenhouts, Chairman & Co-Chief
Executive Officer
Date:________________________
3
<PAGE>
LIST
OF
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Schedule of Partners
Schedule 2 - Schedule of Affiliated Partnerships
Schedule 3 - Loan Schedule
Schedule 4 - Schedule of Services Contracts and Equipment Leases
Schedule 5 - Schedule of Tax-Related Information on Partnership
Schedule 6 - Schedule of Liabilities
EXHIBITS
Exhibit A - Description of the Land
Exhibit A-1 - Description of Personal Property not included
Exhibit B - Lock-Up Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - Rent Rolls
Exhibit E - Operating Partnership Agreement
Exhibit F - Escrow Agreement - Earnest Money Deposit
Exhibit G - Representation Letter
Exhibit H - Escrow Agreement - Reserve Amount
1
midatla5.doc
<PAGE>
PORTFOLIO INFORMATION
<TABLE>
<CAPTION>
NAME AND LOCATION #OF PRICE OWNER ENTITY
UNITS
<S> <C> <C> <C>
Owings Run Apartments 270 $20,357,143 Home Properties Owings Run
4604 Owings Run Road Limited Partnership
Owings Mills, MD 21117
Owings Run 2 Apartments 234 17,642,857 Home Properties Owings Run 2
4604 Owings Run Road Limited Partnership
Owings Mills, MD 21117
Canterbury Apartments, 240 8,900,000 Home Properties Canterbury No. 1
Section 1 Limited Partnership
6 Livia Court
Baltimore, MD 21237
Canterbury Apartments, 204 8,100,000 Home Properties Canterbury No. 2
Section 2 Limited Partnership
6 Livia Court
Baltimore, MD 21237
Canterbury Apartments, 108 4,900,000 Home Properties Canterbuy No. 3
Section 3 Limited Partnership
6 Livia Court
Baltimore, MD 21237
Canterbury Apartments, 66 4,250,000 Home Properties Canterbury No. 4, LLC
Section 4
6 Livia Court
Baltimore, MD 21237
Chestnut Crossing Apartments 432 15,200,000 Home Properties Chestnut Crossing
146 A Chestnut Crossing Dr. Limited Partnership
Newark, DE 19713
Timbercroft Apartments, 122 4,000,000 Home Properties Timbercroft I, LLC
Section I
67 Timbergrove Road
Owings Mills, MD 21117
Timbercroft Apartments, 162 5,250,000 Home Properties Timbercroft III, LLC
Section III
67 Timbergrove Road
Owings Mills, MD 21117
Falcon Crest Townhouses 396 13,550,000 Home Properties Falcon Crest
59 High Falcon Road Townhouses, LLC
Owings Mills, MD 21117
Selford Townhouses 102 5,400,000 Home Properties Selford
11 Sandy Court Townhouses, LLC
Baltimore, MD 21227
Country Club Apartments 150 5,000,000 Home Properties Country Club
7491 Furnace Branch Road Estates, LLC
Glen Burnie, MD 21060
Village Square Apartments 370 15,800,000 Home Properties Village Square
Sections 1, 2 and 3 Limited Partnership
8297 A Cramer Court
Glen Burnie, MD 21061
Gateway Village Apartments 132 7,900,000 Home Properties Gateway Village
9978 Guilford Road Limited Partership
Columbia, MD 20794
Tamarron Apartments 132 9,750,000 Home Properties Tamarron, LLC
18101 Marksman Circle
Olney, MD 21060
Shakespeare Park Apartments 82 3,900,000 Home Properties Shakespeare Park
3604-1B Ann Hathaway Drive Limited Partnership
Randallstown, MD 21133
Doub Meadow Townhouses 95 3,800,000 Home Properties Doub Meadow
101 Doub Way Limited Partnership
Hagerstown, MD 21740
</TABLE>
