SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): February 18, 1999
HOME PROPERTIES OF NEW YORK, INC.
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(Exact name of registrant as specified in its charter)
Maryland 1-13136 16-1455126
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
850 Clinton Square, Rochester, New York 14604
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (716)546-4900
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Home Properties of New York, L.P. (the "Operating Partnership), a
New York limited partnership purchased, in unrelated transactions, four
multifamily residential properties and in another transaction one multifamily
residential property. Collectively and together with the acquisitions
described in Item 5 of this Current Report on Form 8-K, these acquisitions are
deemed "significant acquisitions" pursuant to the regulations of the Securities
and Exchange Commission governing the reporting of transactions under the
Current Report on Form 8-K.
Home Properties of New York, Inc. (the "Company") is the sole
general partner and holder, directly and indirectly through Home Properties
Trust in which the Company holds 100% of the beneficial interests, of
approximately fifty-five percent of the limited partnership interest in the
Operating Partnership.
RIDLEY PORTFOLIO. On July 29, 1999, the Operating Partnership acquired four
communities, with a total of 825 units, located in the suburbs of Philadelphia,
Pennsylvania, from Ridley Brook Associates, Greenacres Associates and Leonard
Klorfine. The purchase price of $31.5 million was paid in part by $7.8 million
in cash, a mortgage note given to the seller in the amount of $15.8 million,
bearing interest of 8.0% and maturing in 10 years and the remainder was funded
through the issuance of Operating Partnership Units valued at approximately
$7.9 million. The communities acquired have an average age of 34 years and
were about 96% occupied at the time of the acquisition.
THE COLONY APARTMENTS. On September 1, 1999, the Operating Partnership,
through its wholly owned subsidiary The Colony of Home Properties, LLC,
acquired The Colony Apartments, a 783 unit apartment community located in Mt.
Prospect, a suburb of Chicago, Illinois. The community was constructed in
phases between 1972 and 1978 and was 97% occupied at the time of acquisition.
The community was purchased from Chicago Colony Apartments Associates for a
purchase price of $41.5 million, which was paid in part by cash, with the
remainder by the assumption of a $16.3 million conventional mortgage that
carries a fixed rate of interest of 7.6% and matures in 2002. The cash was
financed under the Operating Partnership's line of credit then in place, which
bore interest at 125 basis points over the 30-day LIBOR rate.
None of the above sellers were affiliated with the Operating
Partnership, the Company, any directors or officers of the Company or any
affiliates of any such director or officer. The properties were all previously
operated as multifamily apartment properties, and it is the intent of the
Company and the Operating Partnership to continue to operate them as
multifamily apartment communities.
The purchase prices were negotiated with the sellers and based on
an internal analysis by the Company of the historical cash flows and fair
market values of the properties.
Item 5. OTHER EVENTS
In five other unrelated transactions, the Operating Partnership
acquired five multifamily residential properties.
THE MANOR APARTMENTS. On February 18, 1999, the Operating Partnership acquired
a 198 unit community located in Leesburg Virginia. The purchase price was $7.1
million and was financed under the Operating Partnership's line of credit
described above. The Manor Apartments are approximately 26 years old and
occupancy was at 95% at the time of acquisition.
RIDGEWAY COURT. On February 22, 1999, the Operating Partnership acquired a 66-
unit community located in Yeadon, Pennsylvania for a purchase price of $2.12
million. The acquisition was funded with available cash and the assumption of
$1.2 million of mortgage debt that bears interest of 8.375% and matures in
2010. Ridgeway Court is 27 years old and was 92% occupied at the time of
acquisition.
SPRINGWELL PARK. On April 7, 1999, the Operating Partnership acquired a 303-
unit community located in Dearborn, Michigan. The purchase price was $18.1
million and was funded by the issuance of Operating Partnership Units valued at
approximately $3.9 million, the assumption of an $11.7 million mortgage and
cash on hand. The mortgage carries a fixed rate of interest of 8% and matures
in 2015. Springwell Park Apartments was developed in two phases, the first in
1940 and the second in 1966. The community was 98% occupied at the time of the
acquisition.
SHERWOOD GARDENS. On May 27, 1999, the Operating Partnership acquired a
102-unit community located in Levittown, Pennsylvania. The purchase price was
$4.1 million and was funded with cash on hand and the assumption of a $3.1
million mortgage, which carries a 6.98% fixed rate of interest and matures in
2008. Sherwood Gardens was developed in 1968 and was 94.5% occupied at the
time of the acquisition.
MAPLE LANE. On July 9, 1999, the Operating Partnership acquired, through its
wholly owned subsidiaries, Home Properties Maple Lane I, LLC and Home
Properties Maple Lane II, LLC, a 396-unit community developed by the Holladay
Group and located in South Bend, Indiana. The purchase price of $17.4 million
was funded by the assumption of a $6 million conventional mortgage, a $6.4
million mortgage-backed bond, and cash on hand. The conventional mortgage
carries a fixed rate of interest of 7.2% and matures in 2008. The bond carries
a variable rate, at 5.55% at the time of the acquisition, and matures in 2007.
Maple Lane was constructed in phases between 1982 and 1989 and was 94% occupied
at the time of the acquisition.
None of the above sellers were affiliated with the Operating
Partnership, the Company, any directors or officers of the Company or any
affiliates of any such director or officer. The properties were all previously
operated as multifamily apartment properties, and it is the intent of the
Company and the Operating Partnership to continue to operate them as
multifamily apartment communities.
The purchase prices were negotiated with the sellers and based on
an internal analysis by the Company of the historical cash flows and fair
market values of the properties.
In addition, on July 30, 1999, the Operating Partnership acquired
substantially all of the development business of Community Investment
Strategies, Inc. ("CIS"), an affordable housing development company located in
New Brunswick, New Jersey. At the time of the acquisition, CIS had ten
affordable communities with approximately 750 units in various stages of
planning and development. The purchase price of $1.7 million was paid entirely
in Operating Partnership Units.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial Statement of Businesses Acquired
Financial statements for the interests and properties acquired and
noted in Item 2 are not available at this time and will be filed by amendment
as soon as practicable, but not later than 60 days from the date this Form 8-K
must be filed.
b. Pro Forma Financial Information
Pro forma financial statements of the Company reflecting the interests and
properties acquired and noted in Item 2 are not available at this time and will
be filed by amendment as soon as practicable, but not later than 60 days from
the date this Form 8-K must be filed.
c. Exhibits
Exhibit 2.1 - Contribution Agreement among Home Properties of New York,
L.P., Leonard Klorfine, Ridley Brook Associates and Greenacres Associates.
Exhibit 2.2 - Purchase and Sale Agreement among Home Properties of New
York, L.P. and Chicago Colony Apartments Associates.
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.
Dated: October 5, 1999 HOME PROPERTIES OF NEW YORK, INC.
(Registrant)
By: /s/ David P. Gardner
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David P. Gardner, Vice President
Exhibit 2.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT ("this Agreement") made as of the 16th day of
April, 1999, by and between Leonard Klorfine, an individual, Ridley Brook
Associates, a Pennsylvania limited partnership, Greenacres Associates, a
Pennsylvania limited partnership, all having an office at 105 Chesley Drive,
Suite 203, Media, Pennsylvania 19063 (collectively, the "Contributors") 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) Each of the Contributors owns a 100% fee simple interest in one or
more of four Pennsylvania apartment properties, one of which includes a 3,000
square foot commercial building (collectively, the "Portfolio") listed on
SCHEDULE 1 hereto.
(b) The Portfolio comprises 825 dwelling units and the commercial
building described above.
(c) Upon the terms and conditions set forth in this Agreement, each of
the Contributors desires to exchange, transfer and convey to Home Properties a
100% fee simple interest in the Property or Properties owned by such
Contributor, 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, cash and financing provided by
the Contributors.
(d) Upon the terms and conditions set forth in this Agreement, Home
Properties desires to acquire the Portfolio.
(e) It is expected that the exchange of the Portfolio for OP Units (but
not the cash or debt 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:
"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;
"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 Pennsylvania 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;
"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);
"Mortgage" shall mean and refer to the Mortgage to be given by Home
Properties to secure the Note and to be in substantially the form attached
hereto as EXHIBIT C;
"Note" shall mean and refer to the Note given by Home Properties to the
Contributors in partial payment of the Consideration as described in Section
2(b) and to be in substantially the form attached hereto as EXHIBIT B;
"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; and
"Property" or "Properties" shall mean and refer to any one or more of the
apartment projects and the commercial property comprising the Portfolio, as the
context may require, including in the case of each Property: (i) the land
occupied by such Property (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 relevant Contributor 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
relevant Contributor 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.
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 Contributors and Home Properties agree as follows:
1. CONTRIBUTION.
(a) Upon and subject to the terms and conditions set forth in this
Agreement, each of the Contributors agrees to transfer, exchange and contribute
the Property or Properties owed by such Contributor to Home Properties and Home
Properties agrees to acquire such Property or Properties from such Contributor.
(b) The transfer, exchange, conveyance and acquisition of the Portfolio
shall, in addition, include all of the right, title and interest of the
Contributors 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 Contributors, and used in connection with the Properties (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;
(2) all present and subsequent leases with tenants, and/or other
occupancy agreements, (in each instance, the "Leases");
(3) to the extent assignable, all service and maintenance contracts
used or useful in connection with the Properties (in each instance, the
"Service Contracts"), including, without limitation, natural gas purchase
contracts, coin-operated laundry concession leases, and pending purchase
orders, all of which are listed on SCHEDULE 2 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
Properties (in each instance, the "Trade Names"), except that the Contributors
make 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 the Portfolio shall be Thirty-One Million Five Hundred Thousand
and 00/100 Dollars ($31,500,000), subject to adjustments at Closing pursuant to
Section 16. The Consideration shall be allocated among the Properties in
accordance with SCHEDULE 3 attached hereto.
(b) The Consideration shall be payable as follows:
(i) $7,875,000 in cash at Closing by certified check or wire
transfer at the direction of the Contributors;
(ii) the issuance of 328,125 OP Units; and
(iii) by the delivery of a Note in the amount of $15,750,000
to be secured by a Mortgage on the Properties and to be
allocated among the Properties as described on Schedule 3.
(c) The Mortgage shall be filed against and shall be a lien on each
and all of the Properties constituting the Portfolio.
3. 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 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 Contributors, and shall be prorated such that the
Contributors will receive a pro-rata distribution for the period from the date
on which the OP Units were issued to the Contributors 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
D 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 Contributors will be restricted from converting, or transferring, any
of the OP Units.
(c) From and after the expiration of the Lock-Up Period, the
Contributors 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) Within nine months of the Closing Date, HME agrees to file at its
sole cost and expense, a registration statement (the "Registration Statement")
with the Securities and Exchange Commission ("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: (i) have the registration promptly
declared effective by the SEC; and (ii) keep such Registration Statement
current until all OP Units issued pursuant to this Agreement have been
converted into shares of HME Common Shares and sold. In addition, within nine
months of the Closing Date, HME agrees to file at its sole cost and expense a
listing application with the New York Stock Exchange ("NYSE") listing on the
NYSE the shares of common stock of HME into which the OP Units may be
converted.
4. OBLIGATIONS AND COVENANTS OF THE CONTRIBUTORS.
(a) From the date of this Agreement to the Closing Date, each
of the Contributors, with respect to the Property or Properties owned by such
Contributor shall:
(1) Maintain, manage and operate the Property in substantially
the same condition and manner as such Property is now
maintained, managed and operated, 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 and damage by fire or other casualty excepted;
(2) maintain in full force and effect the current level of
insurance coverages regarding the Property;
(3) Promptly deliver notice to Home Properties of, and, defend, at
the Contributor's expense, all actions, suits, claims and
other proceedings affecting the Property, or the use,
possession or occupancy thereof;
(4) Promptly deliver notice to Home Properties of any actual or
threatened condemnation of the Property, or any portion
thereof;
(5) Maintain all Licenses in full force and effect;
(6) Timely make all payments, and observe and perform all
obligations to be paid, observed or performed by the
Contributor under all Service Contracts; and promptly
notify Home Properties of any receipt or
delivery of any notice (including any notice of default)
thereunder;
(7) Provide all services, repairs and other work required to be
provided by the landlord under the Leases;
(8) 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;
(9) Promptly deliver to Home Properties a copy of any notice of
required work from any company insuring the Property against
casualty loss;
(10) 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
(11) 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.
(12) Complete the installation of smoke detectors in the bedrooms
of the apartment units at the Glen Brook Apartments as
required by the relevant municipality or provide Home
Properties with a credit at Closing in the amount reasonably
necessary to complete that installation.
(b) From the date of this Agreement to the end of the Due Diligence
Period, each Contributor, with respect to the Property or Properties owned by
such Contributor, agrees that it will promptly, and in any event prior to the
end of the Due Diligence Period, notify Home Properties in writing if it
engages in any of the following listed activities. If this Agreement has not
been terminated as permitted herein, from and after the Due Diligence Period to
the Closing Date each Contributor, with respect to the Property or Properties
owned by such Contributor, agrees that it shall not engage in any of the
following listed activities without first receiving the written consent of Home
Properties, which consent shall not be unreasonably withheld, conditioned or
delayed:
(1) Increase any wage or fringe benefit payable to any employee at
the Property; except for annual, scheduled or customary
increases
(2) Remove from the Property any article of Personal Property,
except as may be necessary for repairs, 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;
(3) Discard any article of Personal Property, except for
discarding of warn out or useless items, provided, however,
that 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 that will be binding on
Home Properties or, except in the ordinary course of business,
any purchase order affecting the Property, which shall extend
beyond, or relate to any work or improvement which will not
be completed and paid for prior to, the Closing Date;
(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 provided to Home Properties;
(7) Modify or amend the present form of lease in use by the
Contributor;
(8) Enter into any new license giving the right to occupy space,
franchise, concession or easement agreement affecting the
Property;
(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 Contributor;
(10) Sell or otherwise dispose of all or any part of the Property,
or the Personal Property, except in the case of the sale or
other disposition of items of Personal Property to be replaced
hereunder; and
(11) 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.
5. OBLIGATIONS AND COVENANTS OF HOME PROPERTIES AND HME. Home
Properties and HME covenant and agree with the Contributors, both before and
after Closing:
(a) The Contributors may retain copies of any and all books and records
pertaining to the Contributors and the operation of the Properties so that the
Contributors may wind up the affairs of the previously conducted business.
(b) At the Closing, Home Properties shall deliver to each Contributor
good and marketable title to the OP Units allocated to such Contributor, free
and clear of all liens, charges, encumbrances and restrictions, except as
contained in the Operating Partnership Agreement and the Lock-Up Agreement, and
shall, by execution of the Amendment, admit each Contributor as a limited
partner in Home Properties.
(c) 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 Contributor.
(d) 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
Contributors 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
Contributors.
(e) Home Properties shall utilize the "traditional"
method" for making allocations under Section 704(c) of the Code with respect to
the Properties.
The obligations of Home Properties as set forth above in sub-paragraphs
(c), (d) and (e) of this Paragraph 5 shall be continuing obligations of Home
Properties for the time periods, if any, as specified above and shall survive
Closing and shall not be deemed to have merged into any document delivered at
Closing.
6. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS.
(a) Except as reasonable construction may require that the relevant
representation and warranty is made by the Contributors collectively, or that
the relevant representation and warranty is made by some of the Contributors
and not others, or applies to some of the Properties and not others, each
Contributor represents and warrants 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) with regard to such Contributor,
and the Property or Properties, owned by such Contributor.
(1) The Contributor owns legal and beneficial title to the Personal
Property free and clear of all liens, charges and
encumbrances.
(2) The Contributor, to the extent not an individual, is a limited
partnership, duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Pennsylvania,
and 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.
(3) The execution and delivery of this Agreement, and its
performance by the Contributor, will not conflict with, or
result in the breach of, any contract, agreement, law, rule
or regulation to which the Contributor is a party, or by
which the Contributor is bound.
(4) This Agreement is valid and enforceable against the
Contributor in accordance with its terms, and each instrument
to be executed by the Contributor pursuant to this Agreement,
or in connection herewith, will, when executed and delivered,
be valid and enforceable against the Contributor in
accordance with its terms, except as such enforcement may be
limited by bankruptcy and other laws affecting creditors,
rights generally.
(5) No written notice has been received by the Contributor from any
insurer with respect to any defect which affects the Property,
or the use or operation thereof, which remains uncured or
uncorrected.
(6) There is no action, proceeding or investigation pending, or, to
the best knowledge of the Contributor, threatened, against the
Contributor, or the Property, by or before any court or
governmental department, commission, board, agency or
instrumentality, except as disclosed on Schedule 4.
(7) All financial information about the Property heretofore or
hereafter furnished by the Contributor to Home Properties is,
and shall be, true, complete and correct in all material
respects as of the date therein specified.
(8) The Contributor has not (i) made a general assignment for the
benefit of its creditors; (ii) admitted in writing an inability
to pay 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 financial obligations as they mature.
(9) There is not pending any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation,
dissolution or ecomposition of the Contributor, or the debts
of the Contributor, 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 Contributor or the Property.
(10) The summaries of Leases affecting the Property attached as
EXHIBIT E to this Agreement (the "Rent Roll") are, in all
material ways true, complete and accurate as at the date
set forth therein.
(11) True and complete copies of all Leases have been made
available to Home Properties at the principal office of the
Contributor.
(12) Except as indicated on the Rent Roll, to the best knowledge of
Contributor each Lease is in full force and effect.
(13) Except as indicated on the Rent Roll, all rents are being paid
and are current (within 15 days of their due date).
(14) Except as indicated on the Rent Roll, no tenant has paid any
rent for more than one month in advance.
(15) Except as indicated on the Rent Roll, no tenant is entitled to
any free rent, abatement of rent or similar concession.
(16) As of the date of this Agreement, the security deposits paid by
tenants under the Leases (collectively, the "Security
Deposits") are as set forth in the Rent Roll.
(17) 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.
(18) Except for the Service Contracts listed on SCHEDULE 2 attached
hereto, there are no Service Contracts pertaining to the
Property.
(19) True and complete copies of the Service Contracts have been
made available to Home Properties at the principal office of
the Contributor.
(20) To best of knowledge of the Contributor, 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.
(21) Except for no more than five refrigerators, all of the ranges
and refrigerators in the Property are the property of the
Contributor and not of the tenants.
(b) All of the representations and warranties of the Contributors, set
forth in this Agreement shall be true and correct in all material respects at
the date of this Agreement, 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 Contributors set
forth in this Agreement shall survive the Closing for a period of twelve (12)
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 Contributors shall be brought, if at all,
within twelve (12) months from the date of Closing or thereafter be forever
barred except for any claim relating to an intentional and material
misrepresentation or fraud, which claim shall not be subject to such time
limit.
(d) The Contributors agree 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 Contributors, set
forth in this Agreement.
(e) Except as expressly provided in this Agreement, the Contributor has
made no representations and/or warranties regarding the Properties, and, except
as expressly set forth in this Agreement, Home Properties shall, at Closing,
accept each Property 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.
7. 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, as the context
may require, thereafter:
(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 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 within the Due Diligence Period, 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 within the Due
Diligence Period, 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
Contributor ood and marketable title to the OP Units allocated to such
Contributor, free and clear of all liens, charges, encumbrances and
restrictions, except as contained in the Operating Partnership Agreement
and the Lock-Up Agreement, and shall, by execution of the Amendment,
admit each Contributor as a limited partner in Home Properties.
(7) The Operating Partnership Agreement attached as EXHIBIT F, to
this Agreement is true, complete and accurate as at the date of this 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 Contributor 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 have no material liability or obligation of any nature which is 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).
(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 each Contributor, and
hold harmless and defend each Contributor, 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.
8. 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 Contributors 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), except as
otherwise disclosed to or discovered by Home Properties on or prior to the
expiration of the Due Diligence Period.
(2) Prior to the expiration of the Due Diligence Period, the Board shall
have approved the acquisition of the Portfolio by Home Properties 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 Properties shall have been terminated (effective as at the
completion of the Closing on the Closing Date), without cost or expense to Home
Properties.
(4) The Contributors shall have obtained from the relevant
municipalities any Certificates of Occupancy or similar proof of right to
occupy the Properties as may be required as a matter of law to be delivered by
the seller of real property as a condition to transfer of title to the
Properties by those municipalities and shall have paid all costs, fees, charges
and expenses in connection therewith.
(5) The Contributors shall have delivered to Home Properties all of the
documents and other items required to be delivered by the Contributors to Home
Properties under the terms of this Agreement.
(6) The Contributors shall have fulfilled such other
conditions to Closing as are set forth in this Agreement, including, without
limitation, the performance by each Contributor of the obligations and
covenants of such Contributor set forth in this Agreement.
(b) Each of Home Properties' Conditions is for the benefit of Home
Properties, and, accordingly, except for the condition specified in sub-
paragraph (a)(2) above, any such condition may be waived by Home Properties at
any time.
(c) If any Home Properties' Conditions shall not have been satisfied or
(except for the condition specified in sub-paragraph (a)(2) above) waived by
Home Properties, Home Properties shall have the right to terminate this
Agreement by written notice to the Contributors, 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, except for the indemnity provisions of Section 10 below, and subject
to the provisions of Section 20 of this Agreement.
9. CONDITIONS TO THE OBLIGATIONS OF THE CONTRIBUTORS.
(a) Without limiting any of the rights of the Contributors elsewhere set
forth in this Agreement, it is agreed that the obligations of the Contributors
under this Agreement shall be subject to the satisfaction of the conditions set
forth following (the "Contributors' 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) Prior to the expiration of the Due Diligence
Period, the Board shall have approved the acquisition of the Portfolio by Home
Properties on the terms and conditions set forth in this Agreement
(3) Home Properties shall have delivered to the Contributors all of
the documents and other items required to be delivered by Home Properties under
the terms of this Agreement.
(4) Home Properties shall have fulfilled such other
conditions to Closing as are set forth in this Agreement.
(b) Each of the Contributors' Conditions is for the benefit of the
Contributors, and, accordingly, any such condition may be waived by the
Contributors at any time.
(c) If any of the Contributors' Conditions shall not have been
satisfied or waived by the Contributors, the Contributors 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, except for the indemnity provisions of Section 10 below, and
subject to the provisions of Section 20 of this Agreement.
10. INSPECTION PERIOD. Subject to the rights of existing tenants at the
Properties, Home Properties shall have a period of forty-five (45) days from
and after the date of this Agreement (the "Due Diligence Period") within which
to examine title to the Properties and 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 Properties, including, without
limitation, all Leases and related documents, 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
Properties, 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 relevant Contributor, which consent shall not be
unreasonably withheld. Home Properties shall conduct itself and its
examinations in a manner to minimize disruption to the staff and tenants of the
Contributors and Properties. Home Properties acknowledges that the
Contributors have advised it of the prior ground settlement condition at the
Arbor Crossing property, which has been remediated. The Contributors shall
provide Home Properties with a copy of the engineer's report on this matter,
which Home Properties shall have the right to review during the Due Diligence
Period. If Home Properties is not satisfied with the condition or remediation,
it may terminate this Agreement as hereinafter provided. Home Properties may
declare the Due Diligence Period ended at any earlier time provided that the
approval of the Board has been previously obtained. 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, in which event Home Properties
shall have no obligation or liability under this Agreement, or with regard to
the Contributors or the Properties, 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 and Home Properties shall be deemed to have
approved the state of title (subject, however, to paragraph 12(b) below) and
physical and financial condition of the Properties (including without
limitation, environmental condition) in all respects as of the date of
expiration of the Due Diligence Period. 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 Contributors harmless from and against any and all loss, claims, damage and
expense arising out of entry by Home Properties and its agents onto the
Properties and any testing performed thereon. Home Properties and HME shall
repair any damage which they may cause as a result of any such entry and
testing. Such indemnity shall survive any termination of this Agreement,
notwithstanding any provision to the contrary. 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 Properties.
11. COOPERATION. At all times during the term and pendency of this
Agreement, the Contributors will cooperate fully with Home Properties (but with
no obligation to incur cost or expense in connection therewith) in all
reasonable manner in providing the following to the extent that they are in the
Contributors' possession or reasonably available to the Contributors: books,
records and other documentation for review, including, without limitation, all
Leases and related documents, 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 Contributors (excluding personal tax returns of Leonard Klorfine),
and annual and monthly operating statements relating to the Properties. The
Contributors will provide access by the representatives of Home Properties to
all financial and other information relating to the Properties as is available
to Contributors.
12. TITLE.
(a) At Closing, each Contributor will transfer and convey to Home
Properties title to the Property or Properties owned by such Contributor in
the same state as exists at the end of the Due Diligence Period.
(b) Notwithstanding anything to the contrary contained herein, the
Contributors shall be obligated to remove (or to cause the title company to
affirmatively insure over) at the expense of the Contributors (a) any mortgages
or deeds of trust to secure debt regarding any financing obtained by any
Contributor; (b) any mechanic's or materialman's lien for work done on any of
the Properties on behalf of the Contributors; and (c) any other monetary lien
against any of the Properties.
13. CLOSING DATE. If this Agreement shall not have been terminated by
Home Properties, or the Contributors, 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 within
sixty (60) days after the date of this Agreement (any such day upon which the
Closing occurs being herein referred to as the "Closing Date"). The Closing
shall be held at the Contributors' office, at such time, or at such other
place, as may be mutually agreed upon by the parties.
14. CLOSING DOCUMENTS.
(a) At or prior to the Closing, each Contributor, with respect to the
Property or Properties owned by such Contributor shall deliver to Home
Properties the following, each of which shall be in form and substance
satisfactory to Home Properties:
(1) a special warranty deed (the "Deed"), conveying to Home
Properties title to the Property in the same state as exists at the end
of the Due Diligence Period, which Deed shall be in recordable form,
duly executed and acknowledged by the relevant Contributor;
(2) an assignment of all of the Contributor's right, title and
interest in and to the Leases and Security Deposits, together with an
indemnity by the Contributor in favor of Home Properties from and against
any and all claims, liabilities, damages and expenses (including, without
limitation, reasonable attorney's fees) arising or accruing under any of
the Leases prior to the Closing Date, and with similar indemnity of Home
Properties in favor of the Contributor with respect to matters arising
after the Closing Date;
(3) an assignment of all of the Contributor's right, title and
interest in and to the Service Contracts, together with an indemnity by the
Contributor, in favor of Home Properties, from and against any and all
claims, liabilities, damages and expenses (including, without limitation,
reasonable attorneys' fees) arising or accruing under any of the Service
Contracts assigned prior to the Closing Date, and with a similar indemnity
of Home Properties, in favor of the Contributor, with respect to matters
arising after the Closing Date;
(4) a bill of sale conveying and transferring to the Home
Properties all right, title and interest of the Contributor in and to all of
the Personal Property, which bill of sale shall contain a warranty that such
property is free and clear of all liens, charges, encumbrances, security
interests and adverse claims other than the Permitted Exceptions;
(5) the Affidavit of the Contributor, stating, under penalty of
perjury, the United States taxpayer identification number of the Contributor,
and that the Contributor is not a foreign person within the meaning of Section
1445 of the Code;
(6) 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;
(7) an update of the Rent Roll pertaining to the Property
(including a listing of all delinquent and prepaid rents, and all security
deposits, dated as of or as close as reasonably practicable to the Closing
Date), and represented and certified by the Contributor to be true, accurate,
complete and correct in all material respects;
(8) all keys to the Property in the possession of the Contributor,
which shall be remain at the rental office and need not be brought to closing;
(9) the "as-built" plans and specifications for the
Property, if in the Contributor's possession;
(10) a quit claim assignment to Home Properties of any contractors'
or subcontractors' guarantees or warranties relating to the Improvements or
Personal Property;
(11) a certified copy of the Certificate of Limited Partnership
of any of the Contributors that is a partnership, and such other evidence of
their power and authority as the title company may reasonably request;
(12) a letter addressed to all of the tenants in the
Property advising them of the change of 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, the
form of the letter to be approved by Home Properties;
(13) such existing maintenance records in regard to the
Property and in the Contributor's possession which Home Properties may
request not later than five (5) days prior to the Closing Date (which
shall be delivered at the Property);
(14) the currently effective Licenses regarding the
Property, or other reasonably acceptable evidence of the right to use and
occupy the Property that are in the Contributor's possession;
(15) a signed counterpart of the Lock-Up Agreement;
(16) a signed counterpart of the Amendment to the Operating
Partnership Agreement admitting the Contributors as limited partners of Home
Properties (the "Amendment");
(17) such additional documentation as Home Properties, or
the title company, may reasonably deem necessary in order to effectuate the
transaction contemplated by this Agreement.
(b) At the Closing, Home Properties shall deliver to each Contributor
the following, each of which shall be in form and substance satisfactory to
such Contributor:
(1) proof of the issuance of the OP Units allocated to the
Contributor (by and through the execution and delivery of the Amendment,
which shall evidence and reflect the ownership of the OP Units by such
Contributor);
(2) a receipt for the Security Deposits;
(3) 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;
(4) 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;
(5) a signed counterpart of the Amendment;
(6) a mortgage title insurance policy or policies in the aggregate
amount of $15,750,000 insuring that the Mortgage is a valid first lien against
the Properties;
(7) a duly executed original of the Note (only one original to be
delivered to the Contributors);
(8) six (6) executed original counterparts of the Mortgage in
recordable form;
(9) UCC-1 financing statements evidencing the Contributors'
security interest in the Personal Property, as reasonably required by
Contributors;
(10) signed counterparts of all other documents listed in
Section 14(a) equired to be signed by Home Properties;
(11) a certified copy of the Operating Partnership
Agreement;
(12) on behalf of HME, a certificate of good standing from each
of the Secretary of State of Maryland and the Secretary of State of New York;
(13) a certificate of good standing from the Secretary of State
of New York for Home Properties; and
(14) such additional documentation as the Contributor or the title
company may reasonably deem necessary to effectuate the transaction set forth
in this Agreement.
15. ADJUSTMENTS.
(a) As to each Property, the following items shall be adjusted between
the relevant Contributor and Home Properties as of the date of the Closing Date
(it being understood that Home Properties shall have the benefit of monies
received and expenses incurred on the date of Closing) and shall be paid in
cash at Closing:
(1) real estate and personal property taxes,
(2) rents under the Leases for the relevant month, as and when collected
and as described in subparagraph (b) below;
(3) coin operated laundry concession income;
(4) 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 Contributor 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;
(5) amounts paid or payable under the Service Contracts to be assigned to
and assumed by Home Properties;
(6) fees paid for assignable current Licenses;
(7) the full amount of Security Deposits then held under the Leases;
(8) any special assessment for public improvements or otherwise which
is or may become payable with respect to the Property in annual installments;
and
(9) 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 Contributors 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 relevant Contributor, and if paid to Home
Properties, Home Properties shall promptly send such rent to the relevant
Contributor, less all reasonable expenses incurred by Home Properties, if any,
in regard to the collection thereof. At the Closing, each Contributor shall
deliver to Home Properties a schedule of all such past due, but uncollected
rents owed by tenants. The Contributors shall retain the right to proceed
against the relevant tenants for such uncollected rents in their own name and
to enforce the terms of the related Lease. All rents collected by any
Contributor, prior to Closing, for rental period(s) subsequent to the Closing
shall be paid by that Contributor to Home Properties at the Closing or deducted
as an adjustment at Closing. All rents collected by Home Properties or a
Contributor for rental periods after the Closing shall belong to Home
Properties, and if paid to a Contributor, that Contributor shall promptly send
such rent to Home Properties.
Notwithstanding the above, in the event that rents which are due and
payable to the Contributors by the tenants but uncollected as of the Closing
Date are less than $5,000 in the aggregate, then such rents shall be adjusted
at Closing and Home Properties shall have the right to any and all rents
subsequently collected from such tenants.
(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 Contributors delivering Security Deposit accounts,
there shall be, at each Contributor's election, an adjustment at Closing of an
amount equal to the aggregate amount of the Security Deposits shown on the
updated Rent Roll provided by the Contributors.
(e) The Contributors 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 Properties. Home Properties
shall be responsible for all such expenses commencing upon the Closing Date.
(f) Home Properties shall give the Contributors a credit at Closing in
the amount of $5,060 for 11 new air conditioning units.
16. CLOSING COSTS. Home Properties shall pay its attorneys' fees, the
costs for obtaining binders or commitments from a title insurance company, the
premium for the title insurance policies, the costs of updating any surveys,
the costs of any environmental surveys and studies, one-half of any state and
local 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 Contributors shall pay the costs of their attorneys'
fees, one-half of any state and local 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.
17. CONDEMNATION AND DESTRUCTION.
(a) If, during the Due Diligence Period, any 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 Contributors shall
promptly, but in any event prior to the end of the Due Diligence Period, notify
Home Properties of such fact. If, after the end of the Due Diligence Period
and prior to the Closing Date, all or any material 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 Contributors 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 Contributors given not later
than the earlier of five (5) business days after receipt of the notice from the
Contributors or Closing):
(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 (except for the indemnity provisions of Section 10 above); or
(ii) to accept title to the Property (other than the portion so taken),
without abatement of the Consideration, in which event the Contributors 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, during the Due Diligence Period, all or any part of any Property
is damaged or destroyed by fire or other casualty, the Contributors shall
notify Home Properties of such fact. If, after the end of the Due Diligence
Period and prior to the Closing Date, all or any material part of any Property
is damaged or destroyed by fire or other casualty, the Contributors 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
Contributors given not later than the earlier of five (5) business days after
receipt of the notice from the Contributors or Closing):
(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 (except for the indemnify provisions of Section 10 above); or
(ii) to accept title to the relevant Property without abatement of the
Consideration, in which event the Contributors shall assign to Home Properties,
at the Closing, all of the right, title and interest of the Contributors in and
to the insurance proceeds awarded or to be awarded to the Contributors as the
result of such damage or destruction.
(c) In the event there is damage to or destruction of an immaterial part
of any Property by fire or other casualty Home Properties shall accept title to
the Property without abatement of the Consideration and the Contributors shall
assign to Home Properties, at the Closing, all of the right, title and interest
of the Contributors in and to the insurance proceeds awarded or to be awarded
to the Contributors as the result of such damage or destruction.
(d) An "immaterial" part of any Property shall be deemed to have been
damaged or destroyed if the cost of repair or replacement thereof shall be
$500,000, 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 $500,000.
18. BROKER'S COMMISSION. The Contributors 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 Diversified Realty Group of North America, to whom, pursuant
to separate agreement, Home Properties shall pay a real estate brokerage
commission upon and in conjunction with the Closing of the transaction under
this Agreement.
19. EARNEST MONEY. Concurrently with the execution of this Agreement by
both Home Properties and the Contributors, Home Properties will deposit
$250,000 in cash (the "Earnest Money Deposit") with Commonwealth Land Title
Insurance Company, Philadelphia, Pennsylvania (the "Escrow 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
G attached hereto. At Closing, the Earnest Money Deposit, shall be applied to
the Consideration payable for the Portfolio. 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 a Contributor 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 a Contributor, or the inability of a Contributor to close,
the Earnest Money Deposit, shall be paid to the Contributors. As used anywhere
in this Agreement, the term "Earnest Money Deposit" includes all earnings
thereon, if any.
20. DEFAULTS AND REMEDIES.
(a) If the Contributors fail or refuse 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 Contributors to
perform, prior to the Closing, or if any of the representations, warranties and
covenants of the Contributors contained in this Agreement shall not be true,
complete and correct at Closing in any material respect (except as otherwise
disclosed to or discovered by Home Properties prior to the expiration of the
Due Diligence Period), 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 Contributors
of the actual out-of-pocket due diligence costs incurred by Home Properties in
connection with proposed acquisition of the Portfolio, up to the sum of $50,000
(after the payment of which, this Agreement shall be deemed null, void, and of
no further force or effect between the parties, except for the indemnity
provisions of paragraph 10 above).
(b) If Home Properties fails or refuses to perform in accordance with
the terms of this Agreement or if any of the representations, warranties and
covenants by Home Properties contained in this Agreement shall not be true,
complete and correct at Closing in any material respect, the Earnest Money
Deposit shall be forfeited to the Contributors as liquidated damages (which
shall be the sole and exclusive remedy of the Contributors 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
Contributors acknowledge and agree 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 Contributors as a result of having subjected
the Portfolio to the terms of this Agreement; (ii) the actual damages suffered
and costs incurred by the Contributors 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. Home Properties' indemnification of the Contributors as
provided in Paragraph 10 of this Agreement shall be in addition to the
liquidated damages represented by the Earnest Money Deposit.
21. OTHER PROHIBITED ACTIVITIES.
(a) During the term and pendency of this Agreement, the Contributors
will cease to market the Portfolio, or any Property, and, in that regard, the
Contributors 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 Portfolio, or any Property.
(b) Both Home Properties and the Contributors agree to keep this
Agreement confidential, and not to disclose its contents to anyone except their
respective lenders, legal counsel and accountants, and except that HME may 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.
22. RISK OF LOSS. Until the Closing, the risk of loss or damage to all
or any part of any Properties, from fire or other casualty, or from
condemnation, shall be borne by the Contributors, subject to the terms of this
Agreement.
23. 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 (charges prepaid and return receipt requested) or by
telecopy with confirmation of receipt, as follows:
(I) if to the Contributors:
c/o Leonard Klorfine and Associates
105 Chesley Drive, Suite 203
Media, Pennsylvania 19063
Telecopier No.: (610) 891-9530
With copy to:
Blank, Rome, Comisky & McCauley
One Logan Square
Philadelphia, PA 19103
Attn: Michael Harris, Esq.
Telecopier No.: (215) 832-5315
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
Ann M. McCormick
Telecopier No.: (716) 546-5433
(b) Any such notice, demand or request shall be deemed to have been
rendered or given when received or if rejected on the date so rejected.
24. ASSIGNMENT. Neither this Agreement nor any interest hereunder shall
be assigned or transferred by any Contributor or by Home Properties.
25. 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 Commonwealth of
Pennsylvania applicable to contracts made and to be performed wholly within the
Commonwealth of Pennsylvania .
26. 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.
27. 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.
28. 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.
29. CONDITION OF APARTMENTS. The Contributors will use commercially
reasonable efforts, in accordance with its existing business practices, to
ensure that at the time of the Closing the vacant apartment units are in
rentable condition in accordance with this Section 29. The parties recognize
that tenants at the Properties 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, each Contributor with respect to the Property or Properties owned
by it 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,
(subject to damage caused by fire or other casualty) in accordance with the
condition apartment units of Contributors have been at the commencement date
of tenancies in the normal course of business. In the event that any apartment
unit vacant 30 or more days prior to Closing is not in such rentable condition,
Home Properties shall receive a closing credit equal to the amount reasonably
necessary to bring that unit to such rentable condition based on such standard
typical for the Property. For units vacated within 30 days prior to Closing,
the Contributors will continue to use commercially reasonable efforts, in
accordance with their 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.
30. MISCELLANEOUS.
(a) The Contributors acknowledge that audited financial statements
pertaining to the Properties 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 Contributors agree to provide Home Properties, and its
representatives, with access to the books and records of the Contributors
pertaining to the Properties after the Closing, upon reasonable advance notice,
in order to conduct the required audit, at the expense of Home Properties.
After the Closing, each of the Contributors will provide, or cause to be
provided, a signed Representation Letter, substantially in the form of EXHIBIT
H attached hereto, with respect to the Property or Properties owned by that
Contributor.
(b) 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.
(c) Within one hundred twenty (120) days of the Closing Date each of the
Contributors shall also provide Home Properties with a schedule showing: (i)
the net book value of the Property or Properties and the Personal Property
owned by that Contributor as of the Closing Date.
(d) This Agreement may be executed in counterparts and by facsimile
signatures.
IN WITNESS WHEREOF, the Partnership and Home Properties have executed this
Agreement as at the day and year first above written.
/s/ Leonard Klorfine
Leonard Klorfine
GREENACRES ASSOCIATES
/s/ Leonard Klorfine
By: Leonard Klorfine,
General Partner
RIDLEY BROOK ASSOCIATES
/s/ Leonard Klorfine
By: Leonard Klorfine,
General Partner
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: _/s/ Norman Leenhouts
Date: 4/16/99
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Norman Leenhouts
Date: 4/16/99
<PAGE>
LIST OF
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Description of Portfolio
Schedule 2 - Schedule of Services Contracts
Schedule 3 - Allocation of Consideration
Schedule 4 - Schedule of Litigation
EXHIBITS
Exhibit A - Description of the Land
Exhibit B - Form of Note
Exhibit C - Form of Mortgage
Exhibit D - Lock-Up Agreement
Exhibit E - Rent Rolls
Exhibit F - Operating Partnership Agreement
Exhibit G - Escrow Agreement - Earnest Money Deposit
Exhibit H - Representation Letter
The Registrant will furnish supplementally a copy of any ommitted schedule
or exhibit to the Commission upon request.
Exhibit 2.2
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
CHICAGO COLONY APARTMENTS ASSOCIATES (SELLER)
AND
HOME PROPERTIES OF NEW YORK, L.P. (BUYER)
COLONY APARTMENTS
MT. PROSPECT, ILLINOIS
<PAGE>
LIST OF EXHIBITS
EXHIBIT A - THE LAND
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - EARNEST MONEY ESCROW INSTRUCTIONS
EXHIBIT D - RENT ROLL
EXHIBIT E- EXISTING LOAN DOCUMENTS
EXHIBIT F - FORM OF SPECIAL WARRANTY DEED
EXHIBIT G - FORM OF BILL OF SALE
EXHIBIT H- FORM OF ASSIGNMENT OF LEASES
EXHIBIT I - FORM OF ASSIGNMENT OF CONTRACTS AND INTANGIBLES
EXHIBIT J - FORM OF NON-FOREIGN AFFIDAVIT
EXHIBIT K - FORM OF 1099-S DESIGNATION AGREEMENT
The Registrant will furnish supplementally a copy of any ommitted schedule
or exhibit to the Commission upon request.
<PAGE>
PURCHASE AND SALE AGREEMENT
COLONY APARTMENTS
THIS PURCHASE AND SALE AGREEMENT (this AGREEMENT) is entered into as of
the 28th day of June, 1999 by and between Seller and Buyer, upon the
following terms and conditions:
WHEREAS, Seller desires to sell and Buyer desires to purchase, the
Property (hereinafter defined) on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual undertakings, covenants
and agreements contained herein, and other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
References in this Agreement to the following terms shall have the
following meanings:
BUYER: Home Properties of New York, L.P., a New York limited
partnership
DEPOSIT: See Section 3.1
DOCUMENTS: all books, records, plans, studies, site analyses,
certificates of occupancy, property tax information,
permits, existing title insurance policies, existing
surveys, existing zoning analyses, existing engineering
reports, existing code compliance reports, building
specifications, Property Contracts, Leases, agreements or
other instruments or documents contained in Sellers files
relating to the construction, operation and maintenance
of the Property in each case, to the extent the same are
in Sellers possession or control.
ENVIRONMENTAL REQUIREMENTS: All laws, ordinances, statutes, codes,
rules, regulations, agreements, judgments, orders and
decrees now or hereafter enacted, promulgated, or
amended, of the United States, the states, the counties,
the cities or any other political subdivisions in which
the Real Property is located and any other political
subdivision, agency or instrumentality exercising
jurisdiction over the owner of the Real Property, the
Real Property or the use of the Real Property relating to
pollution, the protection or regulation of human health,
natural resources or the environment, or the emission,
discharge, release or threatened release of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or waste or Hazardous Materials into the
environment (including, without limitation, ambient air,
surface water, ground water or land or soil).
ESCROWED AMOUNT: See Section 3.1
EXISTING LOAN: That certain loan in the original principal amount of
$17,4000,000.00 from Lender to Seller, evidenced by the
Note and secured by the Mortgage and the Existing Loan
Documents.
EXISTING LOAN
DOCUMENTS: That certain Promissory Note (the Note) in the
original principal amount of $17,400,000, dated as of
July 31, 1995 made by Seller in favor of Lender secured
by: (y) that certain Mortgage, Security Agreement and
Financing Statement (the Mortgage) dated as of even date
therewith encumbering the Real Property, and (z) any and
all other documents and instruments evidencing, security
or relating to the Existing Loan from Lender to Seller
executed in connection therewith, listed on EXHIBIT E
attached hereto and incorporated herein by reference.
HAZARDOUS SUBSTANCES: Any substance which is or contains:
(i) any hazardous substance as now or hereafter defined
in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.) or any
regulations promulgated under CERCLA; (ii) any hazardous
waste as now or hereafter defined in the Recourse
Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.) or regulations promulgated under RCRA; (iii) any
substance regulated by the Toxic Substances Control Act
(15 U.S.C. Section 2601 et. seq.); (iv) gasoline, diesel
fuel or other petroleum hydrocarbons; (v) asbestos and
asbestos containing materials, in any form, whether
friable or nonfriable; (vi) polychlorinated biphenyls;
(vii) radon gas; and (viii) any additional substances or
materials which are now or hereafter classified or
considered to be hazardous or toxic under Environmental
Requirements or the common law, or any other applicable
law related to the Property. Hazardous Materials shall
include, without limitation, any substance, the presence
of which on the Real Property: (A) requires reporting,
investigation or remediation under Environmental
Requirements; (B) causes or threatens to cause a nuisance
on the Real Property or adjacent property or poses or
threatens to pose a hazard to the health or safety of
persons on the Real Property or adjacent property; or
(C) if emanated or migrated from the Real Property, could
constitute a trespass.
IMPROVEMENTS: All buildings, structures and other improvements situated
upon the Land and all fixtures, systems and facilities
owned by Seller and located on the Land.
INTANGIBLE PROPERTY: All of Sellers right, title and interest, if any, in all
intangible assets of any nature relating to the Land, the
Improvements or the Personal Property, including, without
limitation, all of Sellers right, title and interest in
all (i) warranties relating to the Improvements or
Personal Property in the possession of Seller, (ii) all
licenses, permits and approvals relating to the Real
Property, (iii) the use of the name Colony Apartments,
and (iv) all plans and specifications, in each case to
the extent that Seller may legally transfer the same.
LAND: All of the land described on EXHIBIT A attached
hereto located at 475 Enterprise Drive, Mt. Prospect, IL,
together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title
and interest (if any) of Seller in and to any streets,
alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in
connection with such land and all right, title and
interest (if any) of Seller in all mineral and
development rights appurtenant to such land.
LEASES: All of Sellers rights in all leases and other occupancy
agreements covering any portion of the Land or
Improvements.
LENDER: John Hancock Mutual Life Insurance Company, a
Massachusetts corporation.
PERSONAL PROPERTY: All furniture, carpeting, appliances,
equipment, machinery, inventories, supplies, signs and
other tangible personal property of every kind and
nature, if any, owned by Seller and installed, located at
and used in connection with the ownership, occupation and
operation of the Real Property, including, without
limitation, the Personal Property listed on EXHIBIT B
attached hereto. Personal Property specifically
excludes: (i) any items of personal property owned by
tenants at or on the Real Property, and (ii) any items of
personal property owned by third parties and leased to
Seller.
PROPERTY: The Real Property, the Personal Property, the Leases, the
Tenant Deposits, the Intangible Property and the Property
Contracts known as Colony Apartments, located at 475
Enterprise Drive, Mount Prospect, Illinois.
PROPERTY CONTRACTS: All of Sellers rights, if any, in all service,
supply and equipment rental, management, operating and
leasing contracts affecting the Property, to the extent
that (i) Seller is entitled to transfer the same to
Buyer, and (ii) Buyer does not elect to have Seller
terminate them in accordance with Section 4.3 below.
PURCHASE PRICE: $41,500,000.00
REAL PROPERTY: The Land and the Improvements.
SELLER: Chicago Colony Apartments Associates, an Illinois
general partnership.
TENANT DEPOSITS: Sellers rights to unapplied security deposits under
the Leases.
TITLE COMPANY: Ticor Title Insurance Company
203 North LaSalle Street
Suite 1390
Chicago, IL 60601
ARTICLE 2
PURCHASE AND SALEPURCHASE AND SALEPURCHASE AND SALE
2.1 Seller hereby agrees to sell and convey the Property to Buyer and
Buyer hereby agrees to buy the Property from Seller for the Purchase Price
and otherwise subject to the covenants, provisions, terms and conditions
contained herein.
ARTICLE 3
PURCHASE PRICE; DEPOSIT; ADJUSTMENTSPURCHASE PRICE; DEPOSIT;
ADJUSTMENTSPURCHASE PRICE; DEPOSIT; ADJUSTMENTS
3.1 DEPOSIT. Contemporaneously with the execution and delivery of this
Agreement (and as a condition precedent to the effectiveness of this
Agreement), Buyer shall deposit immediately available funds with the Title
Company (hereinafter the Escrow Agent) the sum of Five Hundred Thousand and
00/100 Dollars ($500,000) (the DEPOSIT) to secure Buyers obligations under
this Agreement. The Escrow Agent shall hold the Deposit in a segregated
interest bearing money market account with an FDIC insured bank reasonably
acceptable to Buyer and Seller. The Deposit and all interest accrued on the
Deposit (collectively, the ESCROWED AMOUNT) shall be maintained by the Escrow
Agent in such account or accounts until the Escrow Agent is required to cause
the Escrowed Amount to be disbursed pursuant to the terms and conditions of
this Agreement and the Earnest Money Escrow Instructions attached hereto as
EXHIBIT C. The Escrowed Amount shall be applied to the Purchase Price if the
Closing occurs, as provided in Section 3.2(c) below.
3.2 PURCHASE PRICE. The Purchase Price, subject to adjustment as
provided herein, shall be as specified in Article 1 above and shall be paid
on the Closing Date (as hereinafter defined) in the following manner:
(a) Buyer shall assume the payment of the existing principal balance
of the Existing Loan as of the Closing Date (the Loan Principal
Balance), and the payment of interest accruing thereon from and after
the Closing Date and shall agree to perform, assume and observe all
obligations of the Seller under the Existing Loan Documents evidencing,
relating to or securing the Existing Loan.
(b) Buyer shall pay to Seller in United States dollars by wire
transfer of federal funds, the Purchase Price less the Loan Principal
Balance (the Cash Balance).
(c) The Escrowed Amount shall be applied towards the Cash Balance.
3.3 TAX PRORATION. All due and payable real estate taxes, all general and
special assessments on the Land and ad valorem taxes, if any, on the Personal
Property (based on the most recent ascertainable taxes) attributable to the
Property through the Closing Date shall be prorated and adjusted as of the
Closing Date. In no event shall Seller be charged with or be responsible for
any increase in the taxes on the Property resulting from the sale of the
Property or from any improvements made or leases entered into on or after the
Closing Date. If the tax statements for the fiscal year during which the
Closing Date occurs are not finally determined, then the tax figures for the
immediately prior fiscal year shall be used for the purposes of prorating
taxes on the Closing Date, provided that there shall be no further adjustment
to be made after the Closing Date. Any tax refunds or proceeds (including
interest thereon) on account of a favorable determination resulting from a
challenge, protest, appeal or similar proceeding relating to taxes and
assessments relating to the Property (i) for all tax periods occurring prior
to the applicable tax period in which the Closing occurs shall be retained by
and paid exclusively to Seller and (ii) for the applicable tax period in
which the Closing occurs shall be prorated as of the Closing Date after
reimbursement to Seller and Buyer, as applicable, for all fees, costs and
expenses (including reasonable attorneys and consultants fees) incurred by
Seller or Buyer, as applicable, in connection with such proceedings such that
Seller shall retain and be paid that portion of such tax refunds or proceeds
as is applicable to the portion of the applicable tax period prior to the
Closing Date and Buyer shall retain and be paid that portion of such tax
refunds or proceeds as is applicable to the portion of the applicable tax
period from and after the Closing Date. Neither Seller nor Buyer shall
settle any tax protests or proceedings in which taxes for the tax period for
which the other party is responsible are being adjudicated without the
consent of such party, which consent shall not be unreasonably withheld,
conditioned or delayed. After the Closing, Buyer shall be responsible for
and control any tax protests or proceedings for any period for which taxes
are adjusted between the parties under this Agreement and for any later
period. Buyer and Seller shall cooperate in pursuit of any such proceedings
and in responding to reasonable requests of the other for information
concerning the status of and otherwise relating to such proceedings;
provided, however, that neither party shall be obligated to incur any out-of-
pocket fees, costs or expenses in responding to the requests of the other.
3.4 CONTRACT PRORATION. To the extent Property Contracts are not
terminated pursuant to Section 4.3, prepaid or past due amounts under any
Property Contracts which are assigned to Buyer at Closing shall be prorated
and adjusted as of the Closing Date.
3.5 UTILITY PRORATION. To the extent reasonably feasible, the Seller
shall cause all meters for electricity, gas, water, sewer or other public
utility usage at the Property to be read as of the day immediately preceding
the Closing Date, and the Seller shall pay all charges for such utilities
which have accrued on or prior to the Closing Date; provided, however, that
if and to the extent such charges are paid directly by tenants, no such
reading or payment shall be required. If the utility companies are unable or
refuse to read meters for which payment by the Seller is required, all
charges for such utilities to the extent unpaid shall be prorated and
adjusted as of the Closing Date based on the most recent bills therefor and
no further adjustment shall be made. The Seller shall provide notice to the
Buyer within five (5) days of the Closing Date setting forth (i) whether
utility meters will be read as of the Closing Date and (ii) a copy of the
most recent bill for any utility charges which are to be prorated and
adjusted as of the Closing Date.
3.6 INCOME AND EXPENSE PRORATION. Collected rents for the then current and
any future period, security deposits which have not been previously applied
by Seller, prepaid rentals, interest under the Existing Loan Documents, and
all expenses and other charges in connection with the operation of the
Property shall be apportioned and shall be adjusted as of the Closing Date,
and the net amount thereof, if in favor of Seller, shall be added to the
Purchase Price, or if in favor of Buyer, shall be deducted from the Purchase
Price. From and after Closing all security deposits credited to Buyer shall
thereafter be deemed transferred to Buyer and Buyer shall assume and be
solely responsible for the payments of security deposits to tenants in
accordance with the Leases and applicable law. Seller shall be entitled to
retain or if transferred to Buyer receive a credit for any utility deposits
and any deposits for third parties under any of the Property Contracts.
Seller shall receive a credit for the full amount of any escrows or reserves
held by or on behalf of Lender. In addition to the foregoing, at Closing the
Purchase Price shall be increased by the amount of uncollected or past due
rent; provided, however, that no adjustment shall be made for rent which is
more than two (2) months past due. Seller shall be entitled to attempt to
collect all rents and other charges which are more than two (2) months past
due but shall not be entitled to pursue eviction proceedings in connection
with such collection efforts.
3.7 PRORATIONS GENERALLY. A statement of prorations and other
adjustments shall be prepared by Seller in conformity with the provisions of
this Article 3 and submitted to Buyer for review and approval not less than
two (2) business days prior to the Closing Date. For purposes of making
prorations, Buyer shall be deemed to be in title to the Property and entitled
to the income from and responsible for the expenses thereof, on the Closing
Date.
3.8 CLOSING COSTS.
(a) Seller shall pay: (i) state and county transfer tax imposed in
connection with the consummation of the transaction contemplated hereby
(the State Transfer Tax), (ii) recording charges for documents to clear
title, evidence Sellers authority or enable Seller to convey, (iii) the
costs of a standard owners title policy, (iv) the costs of an ALTA As-
Built Survey per ALTA/ACSM 1997 Minimum Standard Detail Requirements (v)
its legal fees and expenses related to the negotiation and preparation
of this Agreement and all documents required to close the transaction
contemplated hereby, and (vi) 50% of the escrow fees of the Escrow
Agent.
(b) Buyer shall pay: (i) 50% of the escrow fees of the Escrow
Agent, (ii) charges to record the deed, and evidence of Buyers existence
or authority, (iii) Buyers legal fees and expenses related to the
negotiation of this Agreement and all documents required to close the
transaction contemplated hereby, (iv) all costs related to the Buyers
inspection and due diligence, including, without limitation, the cost of
appraisals, architectural, engineering, credit and environmental
reports, (v) all costs associated with additional title insurance
coverages or endorsements as well as the cost of a new lenders title
policy or any required endorsements to the Lenders existing policy, (vi)
all costs and expenses in connection with the assumption of the Existing
Loan (including, but not limited to application fee, the assumption fee,
title costs and legal costs), and (vii) any local transfer tax imposed
by the Village of Mt. Prospect or mortgage tax other than the State
Transfer Tax and other taxes associated with the assumption of the
Existing Loan Documents.
(c) All other closing costs shall be paid by Seller or Buyer in
accordance with the custom in the jurisdiction where the Property is
located.
ARTICLE 4
PRECLOSING OPERATIONPRECLOSING OPERATIONPRECLOSING OPERATION
4.1 LEASES. A rent roll (the Rent Roll) containing a list of all
occupants of the Property and all Tenant Deposits held pursuant to the Leases
as of the date hereof is attached hereto as EXHIBIT D. During the pendency
of this Agreement, Seller may enter into Leases with new tenants or
modifications of Leases with existing tenants substantially in accordance
with Sellers existing leasing practices, provided that in all events any new
or modified Leases shall (i) be at or near market rent, (ii) be for a term of
not more than one (1) year (with respect to residential Leases only), and
(iii) on the Sellers current standard form of lease. Notwithstanding the
foregoing, Seller agrees to obtain Buyers prior written consent to any Leases
that provide for a term in excess of one (1) year, which consent Buyer agrees
shall not be unreasonably withheld, and Buyers consent shall be deemed to
have been granted if Buyer has not responded within five (5) Business Days
following the submission of a proposed Lease to Buyer for approval.
4.2 CONDUCT OF BUSINESS. At all times prior to Closing, Seller shall
continue (a) to conduct business with respect to the Property in the same
manner in which said business has been heretofore conducted, (b) to insure
the Property substantially as currently insured, and (c) maintain the
Property in its current condition, reasonable wear and tear and damage by
casualty excepted, including ordinary preparation for occupancy of
residential units vacated prior to Closing.
4.3 PROPERTY CONTRACTS. Seller shall make copies of all Property
Contracts available for Buyer to review promptly after the date hereof.
On or before the Diligence Date (as defined below), unless Buyer has
provided written otice to Seller of Buyers election to terminate this
Agreement, Buyer shall rovide written notice to Seller of the Property
Contracts that Buyer desires to have terminated by Seller, and Seller
will terminate the Property Contracts so identified at or before Closing,
provided that such Property ontracts may be terminated without cost or
liability to Seller and if there is cost or liability to Seller, Buyer
shall be responsible for any such liability. At Closing, Seller shall assign
and Buyer shall assume the Property Contracts, except those Property Contracts
which Seller has agreed to terminate. Buyer and Seller shall indemnify,
defend and hold the other harmless from and against any and all claims under
the Property Contracts which relate to its respective period of ownership.
Notwithstanding the foregoing, Sellers existing management contract and
exclusive brokerage contract for the Property shall be terminated by Seller
effective as of the Closing Date. Seller shall not, during the pendency of this
Agreement, enter into any Property Contracts or modifications, renewals or
terminations of any existing Property Contracts, in each case that would be
binding upon Buyer or the Property after Closing, without the written consent
of Buyer, which consent Buyer agrees shall not be unreasonably withheld. If
Buyer disapproves any such request, then Buyers notice shall specify the
reasons for such disapproval.
ARTICLE 5
ACCESS, INSPECTION, DILIGENCEACCESS, INSPECTION, DILIGENCEACCESS, INSPECTION,
DILIGENCE
5.1 ACCESS/PURCHASERS RESPONSIBILITIES/PURCHASERS INDEMNITY.
(a) From the date hereof through the Diligence Date (hereinafter
defined), Seller agrees that Buyer and its authorized agents or
representatives shall be entitled to enter upon the Real Property during
normal business hours upon advance written notice to Seller and make
such reasonable, nondestructive investigations, studies and tests
including, without limitation, surveys and engineering studies as Buyer
deems necessary or advisable, provided, however, that Buyer shall not be
permitted to conduct physical testing without Sellers prior written
consent, which consent shall not be unreasonably withheld, conditioned
or delayed. Sellers prior written consent for physical inspections or
testing may be conditioned upon receipt of a detailed description of the
proposed physical inspection or testing, a list of contractors who will
be performing the physical inspection or testing, evidence of insurance
satisfactory to Seller, and such other information as Seller reasonably
requires in connection with such proposed inspection or testing. Seller
also agrees to make all Documents not previously delivered to Buyer
available to Buyer or Buyers agents during normal business hours for
review and copying at Buyers expense upon advance written notice to
Seller from the date hereof through the Diligence Date.
(b) Buyer agrees that in conducting any inspections, investigations or
tests of the Property and/or the Documents, Buyer and its agents and
representatives shall (i) not unreasonably interfere with the operation
and maintenance of the Property, (ii) not unreasonably disturb the
tenants under the Leases or unreasonably interfere with their use of the
Property pursuant to their respective Leases, (iii) not damage any part
of the Property or any personal property owned or held by any tenant or
third party, (iv) not injure or otherwise cause bodily harm to Seller,
the property manager, or their respective guests, agents, invitees,
contractors and employees or any tenant or their guests or invitees, (v)
maintain comprehensive general liability insurance in terms and amounts
reasonably acceptable to Seller covering any accident arising in
connection with the presence of Buyer, its agents and representatives on
the Property, and deliver a certificate of insurance verifying such
coverage to Seller prior to entry upon the Property; (vi) promptly pay
when due the costs of all tests, investigations and examinations done
with regard to the Property; (vii) not permit any liens to attach to the
Real Property by reason of the exercise of Buyers rights hereunder,
(viii) fully restore the Property to the condition in which the same was
found before any such inspection or tests were undertaken; and (ix) not
reveal or disclose any information obtained during the due diligence
period concerning the Property and the Documents to anyone outside
Buyers organization, except in accordance with the confidentiality
standards set forth in Section 5.5 herein.
(c) Buyer will indemnify, defend, and hold Seller and its property
manager harmless from all losses, costs, liens, claims, causes of
action, liability, damages and out-of pocket expenses, including,
without limitation, reasonable attorneys fees incurred by Seller as a
result of the entry upon or inspections, tests or investigations of the
Property conducted by or on behalf of Buyer. This indemnity obligation
of Buyer shall survive the termination of this Agreement for any reason.
(d) Buyer acknowledges and agrees that the Documents including,
without limitation, the documents listed in Section 5.2 below are
provided to Buyer for informational purposes only and do not constitute
representations or warranties of Seller or its agents, employees or
representatives of any kind as to the truth, accuracy or completeness of
the Documents or the source(s) thereof. Seller has not undertaken any
independent investigation as to the truth, accuracy or completeness of
the Documents, and is providing the Documents solely as an accommodation
to Buyer.
5.2 DILIGENCE. Subject to SECTION 5.1, above, Buyer shall promptly
commence and actively pursue the following due diligence items:
(a) Review title and survey matters;
(b) Review Property Contracts;
(c) Obtain and review engineering reports;
(d) Obtain and review environmental reports on oil, hazardous waste,
and asbestos;
(e) Review applicable zoning and other land use controls, and other
permits, licenses, permissions, approvals and consents;
(f) Review all Leases affecting the Property; and
(g) Review the Existing Loan Documents.
Buyer shall complete its due diligence on or before the date which is fifteen
(15) days from the date hereof (the DILIGENCE DATE). Notwithstanding any
other term or provision herein to the contrary, but subject to provisions of
Section 5.1(e) above, in the event that Buyers due diligence shall reveal any
matters which are not acceptable to Buyer, in Buyers sole discretion, Buyer
may elect, by written notice to Seller received by Seller on or before the
Diligence Date, not to proceed with this purchase, in which event this
Agreement shall terminate, the Escrow Agent shall return the Escrowed Amount
to the Buyer and this Agreement shall be null and void without recourse to
either party hereto (except to the extent such recourse arises in connection
with a provision of this Agreement which is intended to survive termination).
BUYER ACKNOWLEDGES THAT, PURSUANT TO THE TERMS OF THIS AGREEMENT, BUYER SHALL
BE AFFORDED A FULL OPPORTUNITY TO INSPECT THE PROPERTY, OBSERVE ITS PHYSICAL
CHARACTERISTICS AND EXISTING CONDITIONS AND CONDUCT SUCH INVESTIGATIONS AND
STUDIES ON AND OF SAID PROPERTY AS IT DEEMS NECESSARY AND THAT, UNLESS BUYER
TERMINATES THIS AGREEMENT PURSUANT TO THIS SECTION 5.3 BUYER SHALL BE DEEMED
TO HAVE WAIVED ON THE DILIGENCE DATE ANY AND ALL OBJECTIONS TO OR COMPLAINTS
REGARDING (INCLUDING, BUT NOT LIMITED TO, FEDERAL, STATE OR COMMON LAW BASED
ACTIONS AND ANY PRIVATE RIGHT OF ACTION UNDER STATE AND FEDERAL LAW TO WHICH
THE PROPERTY IS OR MAY BE SUBJECT, INCLUDING BUT NOT LIMITED TO, CERCLA AND
RCRA) PHYSICAL CHARACTERISTICS AND EXISTING CONDITIONS, INCLUDING, WITHOUT
LIMITATION, STRUCTURAL AND GEOLOGIC CONDITIONS, SUBSURFACE SOIL AND WATER
CONDITIONS AND SOLID AND HAZARDOUS WASTE AND HAZARDOUS SUBSTANCES ON, UNDER,
ADJACENT TO OR OTHERWISE AFFECTING THE PROPERTY. BUYER FURTHER HEREBY
ASSUMES THE RISK OF CHANGES IN APPLICABLE LAWS AND REGULATIONS RELATING TO
PAST, PRESENT AND FUTURE ENVIRONMENTAL CONDITIONS ON THE PROPERTY AND THE
RISK THAT ADVERSE PHYSICAL CHARACTERISTICS AND CONDITIONS, INCLUDING, WITHOUT
LIMITATION, THE PRESENCE OF HAZARDOUS SUBSTANCES OR OTHER CONTAMINANTS, MAY
NOT HAVE BEEN REVEALED BY ITS INVESTIGATION.
5.3 COPIES OF REPORTS/RETURN OF DOCUMENTS.
(a) As additional consideration for the transaction contemplated herein,
Buyer shall promptly deliver to Seller copies of any and all reports,
tests or studies involving structural or geologic conditions,
environmental, hazardous waste or Hazardous Substances contamination of
the Property and all other materials obtained in connection with Buyers
diligence, which reports, tests and studies shall be addressed to both
Buyer and Seller at no cost to Seller, provided, however, that Buyer
shall have no obligation to cause any such tests or studies to be
performed on the Property. If such reports, tests or studies indicate
the existence or reasonable potential existence of any environmental,
hazardous waste or Hazardous Substance contamination of any portion of
the Property, Seller may terminate this Agreement by giving written
notice to Buyer within ten (10) business days after Buyer provides
Seller with copies of such reports, tests or studies. Upon such
termination, in accordance with paragraphs (b) and (c) below, the
Escrowed Amount shall be promptly returned to Buyer and neither Buyer
nor Seller shall have any further obligation or liability to the other
hereunder, except those obligations arising under provisions of this
Agreement which are expressly intended to survive termination.
(b) If this Agreement is terminated for any reason whatsoever, Buyer
shall promptly deliver to Seller all Documents delivered to Buyer or
Buyers agents, representatives or designees by Seller or Sellers agents,
representatives or employees pursuant to this Agreement.
(c) The return of the Escrowed Amount to Buyer under this Agreement
shall be contingent upon Buyers fulfillment of its obligations under
Section 5.3(a) and (b).
5.4 CONFIDENTIALITY. Buyer acknowledges and agrees that any and all of
the Documents are proprietary and confidential in nature and will be
delivered to Buyer solely to assist Buyer in determining the feasibility of
purchasing the Property. Further, each party hereto agrees to maintain in
confidence, and not to discuss with or to disclose to any person or entity
who is not a party to this Agreement, any material term of this Agreement or
any aspect of the transactions contemplated hereby, except as provided in
this Section. Seller may publicly disclose the existence of this Agreement
provided that the identity of Buyer is not disclosed. Buyer shall not
disclose to anyone other than its partners and financiers the Documents
and/or any information disclosed by Seller to Buyer which is not generally
known by the public regarding Sellers operations and/or the Property. Each
party hereto may discuss with and disclose to its accountants, attorneys,
existing or prospective lenders, investment bankers, underwriters, rating
agencies, partners, consultants and other advisors to the extent such parties
reasonably need to know such information and are bound by a confidentiality
obligation identical in all material respects to the one created by this
Section. Additionally, each party may discuss and disclose such matters to
the extent necessary to comply with any requirements of the Securities and
Exchange Commission or in order to comply with any law or interpretation
thereof or court order. This provision shall survive termination of this
Agreement but shall terminate upon the Closing. Any press release to be made
regarding any matter which is the subject of the confidentiality obligation
created in this Section shall be subject to the reasonable approval of Buyer
and the Seller, respectively both as to timing and content.
5.5 BUYERS ACKNOWLEDGMENT. BUYER ACKNOWLEDGES THAT AS OF THE DILIGENCE DATE
IT HAS HAD AN OPPORTUNITY TO CONDUCT DILIGENCE ON THE PROPERTY AND IS
ACQUIRING THE PROPERTY IN ITS CURRENT CONDITION BASED ON ITS DILIGENCE.
BUYER FURTHER ACKNOWLEDGES THAT NEITHER SELLER NOR ITS EMPLOYEES, AGENTS OR
REPRESENTATIVES HAVE MADE ANY REPRESENTATION OR WARRANTY AS TO THE CONDITION
OF THE PROPERTY OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS ON, IN,
UNDER OR WITHIN THE PROPERTY OR A PORTION THEREOF WHICH SURVIVE CLOSING
HEREUNDER. THE BUYER ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS TO BE
CONVEYED BY THE SELLER TO THE BUYER AS IS, WITH ALL FAULTS, AND SUBSTANTIALLY
IN ITS CURRENT CONDITION. THE BUYER FURTHER ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS EXPRESSLY CONTAINED HEREIN, NEITHER THE SELLER NOR ANY AGENT,
EMPLOYEE OR OTHER REPRESENTATIVE OF THE SELLER (OR PURPORTED AGENT, EMPLOYEE
OR OTHER REPRESENTATIVE OF THE SELLER) HAS MADE ANY GUARANTEE, REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED (AND THE SELLER SHALL NOT HAVE ANY LIABILITY
WHATSOEVER) AS TO THE VALUE, USES, HABITABILITY, CONDITION, DESIGN,
OPERATION, FINANCIAL CONDITION OR PROSPECTS, OR FITNESS FOR PURPOSE OR USE OF
THE PROPERTY (OR ANY PART THEREOF) OR ANY OTHER GUARANTEE, REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY
PART THEREOF) OR INFORMATION SUPPLIED TO BUYER WITH RESPECT THERETO.
FURTHER, THE SELLER SHALL HAVE NO LIABILITY FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT AS TO THE PROPERTY OR THE FAILURE OF THE PROPERTY, OR ANY PART
THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS AND REGULATIONS. IN PARTICULAR,
THE BUYER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED TO BUYER BY
SELLER WITH RESPECT TO THE PROPERTY UNDER THIS AGREEMENT (AND ANY OTHER
INFORMATION THE BUYER MAY HAVE OBTAINED REGARDING IN ANY WAY ANY OF THE
PROPERTY, INCLUDING WITHOUT LIMITATION, ITS OPERATIONS OR ITS FINANCIAL
HISTORY OR PROSPECTS FROM THE SELLER OR ITS AGENTS, EMPLOYEES OR OTHER
REPRESENTATIVES) IS DELIVERED TO THE BUYER AS A COURTESY, WITHOUT
REPRESENTATION OR WARRANTY AS TO ITS ACCURACY OR COMPLETENESS, AND NOT AS AN
INDUCEMENT TO ACQUIRE THE PROPERTY; THAT NOTHING CONTAINED IN SUCH DELIVERIES
SHALL CONSTITUTE OR BE DEEMED TO BE A GUARANTEE, REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, IN ANY REGARD AS TO ANY OF THE PROPERTY (EXCEPT AS
EXPRESSLY PROVIDED HEREIN); AND THAT THE BUYER IS RELYING ONLY UPON THE
PROVISIONS OF THIS AGREEMENT AND ITS OWN INDEPENDENT ASSESSMENT OF THE
PROPERTY AND ITS PROSPECTS IN DETERMINING WHETHER TO ACQUIRE THE PROPERTY.
THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE CLOSING.
5.6 BUYERS RELEASE OF SELLER. SELLER AND ITS PROPERTY MANAGER ARE HEREBY
RELEASED FROM ALL RESPONSIBILITY AND LIABILITY REGARDING THE CONDITION
(INCLUDING THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND SURFACE AND
SUBSURFACE WATERS, OF MATERIALS OR SUBSTANCES THAT HAVE BEEN OR MAY BE IN THE
FUTURE DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR SUBJECT TO
REGULATION AND THAT MAY NEED TO BE SPECIALLY TREATED, HANDLED AND/OR REMOVED
FROM THE PROPERTY UNDER CURRENT OR FUTURE FEDERAL, STATE AND LOCAL LAWS,
REGULATIONS OR GUIDELINES), VALUATION, SALABILITY OR UTILITY OF THE PROPERTY,
OR ITS SUITABILITY FOR ANY PURPOSE WHATSOEVER. BUYER ACKNOWLEDGES THAT ANY
INFORMATION OF ANY TYPE WHICH BUYER HAS RECEIVED OR MAY RECEIVE FROM SELLER,
ITS PROPERTY MANAGER OR THEIR RESPECTIVE AGENTS, INCLUDING, WITHOUT
LIMITATION, ANY ENVIRONMENTAL REPORTS AND SURVEYS, IS FURNISHED ON THE
EXPRESS CONDITION THAT BUYER SHALL MAKE AN INDEPENDENT VERIFICATION OF THE
ACCURACY OF SUCH INFORMATION, ALL SUCH INFORMATION BEING FURNISHED WITHOUT
ANY WARRANTY WHATSOEVER.
ARTICLE 6
TITLE AND SURVEYTITLE AND SURVEYTITLE AND SURVEY
6.1 TITLE AND SURVEY. Not more than five (5) days after Sellers
execution of this Agreement, Seller shall deliver to Buyer: (a) a current
ALTA Urban As-Built Survey of the Real Property per ALTA/ACSM 1997 Minimum
Standard Detail Requirements (the Survey); (b) a commitment for an ALTA
Owners Policy of Title Insurance from the Escrow Agent (the Title
Commitment); and (c) a Phase I Environmental Inspection Report prepared by
Dames & Moore (the Phase I)
If (i) the Survey, (ii) matters listed as exceptions in the Title
Commitment, or (iii) matters disclosed in the Phase I Report are not
satisfactory to Buyer, Buyer shall, no less than five (5) business days
before the Diligence Date, provide Seller with written notice of such
objections (the Title Objections). Seller, at its sole cost and expense
shall have the right, but not the obligation, to cure or remove any Title
Objections and shall give Buyer written notice on or prior to the Diligence
Date, identifying those Title Objections, if any, that Seller agrees to use
reasonable efforts to cure; provided, however, that Seller shall not be
obligated to incur any costs or expenses in excess of $10,000 in connection
with any such cure undertaken by Seller. If there are Title Objections which
Seller is unable or unwilling to cure by the Diligence Date, Buyer may
terminate this Agreement as provided in SECTION 5.2, above or waive such
objections which Seller is not willing or able to cure and proceed to
closing. Those exceptions or title deficiencies which (i) Buyer does not
object to pursuant to this SECTION 6.1 or (ii) are waived because Seller is
unwilling or unable to cure shall be the Permitted Exceptions.
6.2 DEED. On the Closing Date, Seller shall convey by good and
sufficient special warranty deed to Buyer good and clear record and
marketable fee simple title to all of the Real Property free and clear of all
liens, encumbrances, conditions, easements, assessments, restrictions and
other conditions, except for the following:
(a) All Leases;
(b) All zoning, building and other laws applicable to the Property;
(c) All matters which arise after the Diligence Date which are
agreed upon or consented to by Buyer;
(d) The Existing Loan Documents;
(e) The lien, if any, for real estate taxes for current year not due
and payable prior to the Closing Date (subject to proration in
accordance with Section 3.3 herein);
(f) All matters shown on Schedule B of the Title Commitment or of
public record as of the effective date of the Title Commitment and which
Seller has not agreed to (or is not obligated to) cure pursuant to
SECTION 6.1, above;
(g) The Permitted Exceptions;
(h) Any matters shown on the Survey; and
(i) All matters, whether or not of record, to the extent caused by
Buyer or its agents, representatives or contractors.
6.3 LEASE ASSIGNMENT. At the Closing, Seller shall assign the Leases
to Buyer and Buyer shall assume Sellers obligations thereunder and Seller
shall convey the Personal Property to Buyer by quitclaim bill of sale.
6.4 EXISTING LOAN.
(a) The obligations of Seller under this Agreement are contingent
and conditioned upon the following:
i. Lenders approval of the assignment to Buyer of the
Existing Loan; and
ii. Receipt by Seller from Lender at Closing of a release of
all of its obligations as borrower under the Loan
Documents, including, without limitation, a release by
Lender of Seller from its obligations under the
Certificate and Indemnity Agreement listed on EXHIBIT E;
provided however, that, at its option, Seller may waive
the condition set forth in this Section 6.4(a)(ii).
(b) Within three (3) days of the date hereof, Seller shall provide
Buyer with a true, correct and complete copy of all Loan Documents
executed in connection with the Existing Loan, which documents are listed
on EXHIBIT E attached hereto.
(c) Buyer shall, at its sole cost and expense, simultaneously with
the execution of this Agreement, deliver to Seller a check payable to
Seller in the amount of $5,000.00 (the Application Fee) to reimburse
Seller for the fee charged to Seller by Lender for applying for its
consent to the assignment and assumption of the Existing Loan. In the
event Purchaser does not deliver the Application Fee to Seller as
provided in the immediately preceding sentence, Seller may offset the
Application Fee against the Earnest Money without further action or
consent by Buyer. Buyer and Seller agree to diligently pursue such
application until Lender grants its approval of the assignment and
assumption of the Existing Loan to Buyer. In the event that Lender has
not granted its approval of the assignment and assumption of the
Existing Loan to Buyer within thirty (30) days from the expiration of
the Diligence Date, then either Buyer or Seller may elect to terminate
this Agreement by written notice to the other party, and the Escrowed
Amount shall be returned to Buyer and this Agreement shall thereupon
terminate and be of no further force and effect. In connection with
such application, Buyer agrees to simultaneously provide Seller with
copies of all materials submitted to Lender and Buyer agrees that it
shall not withdraw or amend its application without Sellers prior
written consent.
(d) Buyer agrees to submit all materials requested by Lender and/or
those documents required to be submitted to Lender pursuant to the
applicable provisions of the Loan Documents on or before expiration of
the Diligence Date. Buyer acknowledges that such application documents
include, without limitation, the following:
(i) information regarding Buyers finances and credit;
(ii) information regarding Buyers management experience and
general reputation in the community; and
(iii) information regarding the ownership structure of Buyer,
including a list of all persons having or proposing to have
more than a ten percent (10%) ownership interest in
Buyer.
(e) Buyer shall pay all fees and costs, if any, charged by the
Lender relating to the assignment and assumption of the Existing Loan.
(f) Buyer and Seller agree to cooperate with Buyers efforts to
obtain Lenders consent. Subject to the other provisions of this
Agreement, Buyer and Seller each agree to execute and deliver any and
all documents or instruments or take such other action as may be
necessary or proper to effectuate, confirm, perform or carry out the
assignment and assumption of the Existing Loan.
ARTICLE 7
CONDITIONS PRECEDENT AND CLOSINGCONDITIONS PRECEDENT AND CLOSINGCONDITIONS
PRECEDENT AND CLOSING
7.1 BUYERS CONDITIONS PRECEDENT. In addition to any other conditions
precedent in favor of Buyer as may be set forth elsewhere in this Agreement,
Buyers obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.1 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may
be waived in whole or in part only by written notice of such waiver from
Buyer to Seller.
(a) Seller performing and complying in all material respects with
all of the terms of this Agreement to be performed and complied with by
Seller prior to or at the Closing;
(b) Buyer shall have received approval of the Board of Directors of
Home Properties of New York, Inc., provided that if Buyer has not
terminated this Agreement for failure to obtain such approval on or
before the Diligence Date, then Buyer shall be deemed to have waived
this condition to Closing; and
(c) Satisfaction in full of the requirements of Section 6.4 with
respect to the Existing Loan.
Notwithstanding the foregoing, if the conditions set forth in
Sections 7.1(a)-(c) or any other condition of Closing (other than an
obligation of Buyer under Section 7.2 below) shall not have been fulfilled on
or before the Closing Date, Seller shall have the right (in its sole
discretion), exercisable by written notice to Buyer at or before the Closing,
to extend the Closing Date for a period of up to thirty (30) days to provide
additional time for the fulfillment of such conditions. Upon any such
extension, the term Closing Date as used herein shall mean the date set forth
in such written notice from Seller. If Buyers conditions as set forth in
this Section 7.1 have not been met as of the Closing Date (as the same may be
extended as aforesaid) then Buyer shall have the right to terminate this
Agreement by written notice to Seller, and upon receipt of such notice Seller
shall direct the Escrow Agent to return the Escrowed Amount to Buyer and this
Agreement shall thereupon terminate and be of no further force or effect.
7.2 SELLERS CONDITIONS PRECEDENT. In addition to any other conditions
precedent in favor of Seller as may be set forth elsewhere in this Agreement,
Sellers obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.2 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may
be waived in whole or part only by written notice of such waiver from Seller
to Buyer.
(a) Buyer performing and complying in all material respects with all of
the terms of this Agreement to be performed and complied with by Buyer
prior to or at the Closing, including, without limitation, payment by
the Buyer of the Purchase Price (as adjusted as otherwise provided
herein);.
(b) On the Closing Date, all of the representations of Buyer set
forth in this Agreement shall continue to be true, accurate and
complete.
(c) Satisfaction of the requirements of Section 6.4 with respect to
the Existing Loan.
(d) The release by Lender of Seller from any and all obligations and
liability under the Existing Loan Documents and the form of the
assumption and release documents being satisfactory to Seller in their
sole, but reasonable discretion.
7.3 CLOSING DATE. Subject to Sellers right to extend the Closing Date
as provided in Section 7.1, the consummation of the purchase and sale
contemplated in this Agreement (the CLOSING) shall occur through an escrow
closing arrangement on the date that is fifteen (15) days from the Diligence
Date (the CLOSING DATE), at the office of the Escrow Agent or through the
escrow closing arrangements. It is agreed that time is of the essence in
this Agreement.
7.4 CLOSING DELIVERIES. On the Closing Date, Seller shall deliver or
cause to be delivered:
(a) A duly executed and acknowledged special warranty deed conveying
the Land and the Improvements to Buyer in the form attached hereto as
EXHIBIT F;
(b) A duly executed quitclaim bill of sale conveying the Personal
Property to Buyer in the form attached hereto as EXHIBIT G;
(c) A duly executed assignment and assumption of the Leases and
Tenant Deposits (the ASSIGNMENT OF LEASES) in the form attached hereto
as EXHIBIT H;
(d) A duly executed assignment and assumption of contracts and
intangibles (the ASSIGNMENT OF CONTRACTS) conveying the Property
Contracts and the Intangible Property, in the form attached hereto as
EXHIBIT I;
(e) A certificate or certificates of non-foreign status from Seller
in the form attached hereto as EXHIBIT J;
(f) Customary affidavits sufficient for the Escrow Agent to delete any
exceptions for mechanics or materialmens liens and parties in possession
from Buyers title policy and such other affidavits relating to such
title policy as the Escrow Agent may reasonably request including lien
waivers from the Broker (as hereinafter defined) and the property
manager;
(g) An updated Rent Roll (including a list of all delinquent,
prepaid rents and Tenant Deposits) certified by the Seller as true and
correct as of the Closing Date;
(h) Such other instruments as Buyer, Lender or the Escrow Agent may
reasonably request to effectuate the transactions contemplated by this
Agreement including a duly executed Transfer Tax Declaration form;
(i) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of the Purchase Price as adjusted;
(j) Evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Seller to sell the
Property and the authority of the person or persons executing the
various documents on behalf of Seller in connection with the sale of the
Property;
(k) Originals, or where unavailable, copies of all Property
Contracts, Leases (with all amendments and modifications thereto),
operating information, permits, warranties and financial information
about the Property in Sellers possession or control relating to the
Property;
(l) All keys to all locks on the Property and similar items, to the
extent in Sellers possession; and
(m) The following documents with respect to the assignment and
assumption of the Existing Loan:
(i) Assignment and Assumption of the Mortgage;
(ii) Assignment of Assignment of Leases and Rents;
(iii) UCC-3 Assignments of Financing Statements; and
(iv) Written approval of Lender to the assignment to Buyer of
the Existing Loan to Buyer.
7.5 BUYERS DELIVERIES. On the Closing Date, Buyer shall deliver or
cause to be delivered at its expense each of the following to Seller:
(a) The Purchase Price for the Property, as such Purchase Price may
have been adjusted pursuant to the provisions of this Agreement and
credited for any portion of the Escrowed Amount paid to Seller, in the
manner provided for in Article 3;
(b) Evidence in form and substance reasonably satisfactory to
Escrow Agent and Seller of Buyers authority to purchase the Property;
(c) The Assignment of Leases;
(d) The Assignment of Contracts;
(e) Duly executed assumption agreement regarding the Existing Loan
Documents and such other instruments as Lender may require in connection
with and to evidence the assumption of the Existing Loan Documents by
Buyer;
(f) Such other instruments as Seller or Escrow Agent may reasonably
request to effectuate the transactions contemplated by this Agreement;
(g) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of such amounts;
(h) Such evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Buyer and the
authority of the person or persons who are executing the various
documents on behalf of Buyer in connection with the purchase of the
Property;
(i) Acknowledgment by Buyer of Buyers receipt from Seller of the
Tenant Deposits; and
(j) The following documents with respect to the assignment and
assumption of the Existing Loan:
(i) Written approval of Lender to the assignment to Buyer of
the Existing Loan;
(ii) Assignment and Assumption of the Mortgage;
(iii) Assignment of Assignment of Leases and Rents;
(iv) UCC-3 Assignments of Financing Statements; and
(v) Release of Sellers obligations under the Loan Documents
(hereinafter defined), including, without limitation, a release of
Seller from its obligations pursuant to the Certificate and
Indemnity Agreement executed in connection with the Existing Loan,
all in forms reasonably satisfactory to Seller; and
(vi) Such other documents as may be reasonably requested by
Lender in connection with the assignment of the Existing Loan to
Purchaser and the assumption of the obligations under the Existing
Loan by Purchaser, including, without limitation, an Environmental
Indemnity Agreement.
(k) Executed counterparts of any other documents listed in Section
7.4 required to be signed by Buyer.
7.6 POSSESSION. Possession of the Property shall be delivered to Buyer
by Seller at the Closing, subject only to those items listed in Section 6.2
of this Agreement and rights arising under any Property Contracts not
terminated by Buyer pursuant to Section 4.3. Seller and Buyer covenant and
agree to execute, at Closing, a written notice of the acquisition of the
Property by Buyer, for duplication and transmittal to all tenants affected by
the sale and purchase of the Property (or otherwise in such manner as will
comply with applicable law respecting notification of tenants). Such notice
shall be prepared by Buyer and approved by Seller, shall notify the tenants
of the sale and transfer and shall contain appropriate instructions relating
to the payment of future rentals, the giving of future notices, and other
matters reasonably required by Buyer or required by law. Unless a different
procedure is required by applicable law, in which event such laws shall be
controlling, Buyer agrees to transmit or otherwise deliver such letters to
the tenants promptly after the Closing.
ARTICLE 8
CASUALTY AND CONDEMNATIONCASUALTY AND CONDEMNATIONCASUALTY AND CONDEMNATION
8.1 CASUALTY. If the Improvements are materially damaged by fire or
any other casualty and are not substantially restored to the condition
immediately prior to such casualty before the Closing Date, Buyer shall have
the following elections:
(a) to purchase the Property in its then condition and pay the
Purchase Price, in which event Seller shall pay over or assign to Buyer
as the case may be, on the Closing Date, amounts recovered or
recoverable by Seller on account of any insurance as a result of such
casualty up to the amount of the Purchase Price, less any amounts
reasonably expended by Seller for partial restoration; or
(b) if any portion of the Improvements suffers damage in excess of
$1,500,000 from fire or any other casualty which Seller, in its sole
option, elects not to repair, to terminate this Agreement by giving
notice of termination to Seller on or before that date which is thirty
(30) days after the occurrence of the fire or other casualty or on the
Closing Date, whichever occurs first, in which event the Escrow Agent
shall return the Escrowed Amount to Buyer, this Agreement shall
terminate and neither Seller nor Buyer shall have any recourse against
the other (except to the extent such recourse arises in connection with
a provision of this Agreement which is intended to survive termination).
8.2 CONDEMNATION. If any substantial portion of or interest in the
Property shall be taken or is in the process of being taken by exercise of
the power of eminent domain or if any governmental authority notifies Seller
prior to the Closing Date of its intent to take or acquire any portion of or
interest in the Property (each an EMINENT DOMAIN TAKING), Seller shall give
notice promptly to Buyer of such event and Buyer shall have the option to
terminate this Agreement by providing notice to Seller to such effect on or
before the date which is ten (10) days from Sellers notice to Buyer of such
Eminent Domain Taking or on the Closing Date, whichever occurs first, in
which event the Escrow Agent shall return the Escrowed Amount to Buyer, this
Agreement shall terminate, and neither Seller nor Buyer shall have any
recourse against the other (except to the extent such recourse arises in
connection with a provision of this Agreement which is intended to survive
termination). If Buyer does not timely notify Seller of its election to
terminate this Agreement, Buyer shall purchase the Property and pay the
Purchase Price, and Seller shall pay over or assign to Buyer on delivery of
the deed awards recovered or recoverable by Seller on account of such Eminent
Domain Taking up to the amount of the Purchase Price, less any amounts
reasonably expended by Seller in obtaining such award.
ARTICLE 9
BROKERAGE COMMISSIONSBROKERAGE COMMISSIONSBROKERAGE COMMISSIONS
Seller and Buyer each mutually represent and warrant to the other that they
have not dealt with, and are not obligated to pay, any fees or commissions to
any broker in connection with the transaction contemplated by this Agreement
other than William E. Montana of Draper and Kramer (the BROKER). Seller
agrees to pay all commissions, payments and fees due to the Broker at the
Closing. Buyer agrees to indemnify, defend and hold Seller harmless from
and against all loss, liabilities, costs, damages and expenses (including
reasonable attorneys fees) arising from any claims for brokerage or finders
fees, commissions or other similar fees in connection with the transaction
covered by this Agreement insofar as such claims shall be based upon alleged
arrangements or agreements made by Buyer or on Buyers behalf. Seller hereby
agrees to indemnify, defend and hold Buyer harmless from and against all
loss, liabilities, costs, damages and expenses (including reasonable
attorneys fees) arising from any claims for brokerage or finders fees,
commissions or other similar fees, including any claim made by the Broker, in
connection with the transaction covered by this Agreement as such claims
shall be based upon alleged arrangements or agreements made by Seller or on
Sellers behalf.
ARTICLE 10
DEFAULT, TERMINATION AND REMEDIESDEFAULT, TERMINATION AND REMEDIESDEFAULT,
TERMINATION AND REMEDIES
10.1 SELLERS DEFAULT. In the event that Seller shall have failed in any
material respect adverse to Buyer as of the Closing Date to have performed
any of the covenants and agreements contained in this Agreement which are to
be performed by Seller on or before the Closing Date or Seller defaults in
its obligation to close hereunder, Buyer shall have the right to terminate
this Agreement and receive the Escrowed Amount and may bring an action
against Seller to recover its actual costs incurred to third parties in
connection with its examination of the Property prior to Closing in an amount
not to exceed $25,000, whereupon this Agreement shall terminate without
further recourse. Except as otherwise provided in this Section 10.1, Buyer
hereby waives and relinquishes any right to sue Seller for any reason
whatsoever, and agrees that Seller shall not be liable to Buyer for any
actual, punitive, speculative, consequential or other damages for breach by
Seller prior to the Closing, except for payment of the Escrowed Amount. IN
NO EVENT SHALL SELLER, ITS DIRECT OR INDIRECT PARTNERS, SHAREHOLDERS, OWNERS
OR AFFILIATES, ANY OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF THE FOREGOING, OR
ANY AFFILIATE OR CONTROLLING PERSON THEREOF, HAVE ANY LIABILITY BEYOND ITS
INTEREST IN THE PROPERTY FOR ANY CLAIM, CAUSE OF ACTION OR OTHER LIABILITY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY, WHETHER BASED
ON COMMON LAW, CONTRACT, STATUTE, EQUITY OR OTHERWISE.
10.2 BUYERS DEFAULT. In the event that Buyer shall have failed in any
material respect adverse to Seller as of the Closing Date to have performed
any of the covenants and agreements contained in this Agreement which are to
be performed by Buyer on or before the Closing Date, or if Buyer defaults in
its obligation to close hereunder, Seller shall be entitled to receive the
Escrowed Amount as liquidated damages, in lieu of all other remedies
available to Seller at law or in equity for such default, and Buyer shall
direct the Escrow Agent to release the Escrowed Amount to Seller. Seller and
Buyer agree that the damages resulting to Seller as a result of such default
by Buyer as of the date of this Agreement are difficult or impossible to
ascertain and the liquidated damages set forth in the preceding sentence
constitute Buyers and Sellers reasonable estimate of such damages.
Notwithstanding the foregoing, in the event of Buyers default or a
termination of this Agreement, Seller shall have all remedies available at
law or in equity in the event Buyer or any party related to or affiliated
with Buyer asserts any claims or rights to the Property that would otherwise
delay or prevent Seller from having clear, indefeasible and marketable title
to the Property.
ARTICLE 11
REPRESENTATIONS AND WARRANTIESREPRESENTATIONS AND WARRANTIESREPRESENTATIONS
AND WARRANTIES
11.1 BUYERS REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
(a) Buyer is a limited partnership, duly organized and in good
standing under the laws of the State of New York, is qualified to do
business in the State of Illinois and has the power and authority to
enter into this Agreement and to execute and deliver this Agreement and
to perform all duties and obligations imposed upon it hereunder. As of
the date of this Agreement, except for the approval described in Section
7.1(b), Buyer has obtained all necessary corporate, partnership or other
organizational authorizations required in connection with the execution
and delivery of this Agreement. Each of the individuals executing this
Agreement on Buyers behalf is authorized to do so. Buyer has the
financial ability to pay the Purchase Price by (i) tendering the Cash
Balance, and (ii) assuming the Existing Loan, and to perform the other
covenants of Buyer set forth in this Agreement.
(b) Neither the execution nor the delivery of this Agreement, nor
the consummation of the purchase and sale transaction contemplated
hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement conflict with or will result in the breach
of any of the terms, conditions or provisions of any agreement or
instrument to which Buyer is a party or by which Buyer or any of Buyers
assets is bound;
(c) Buyer is not in any way affiliated with Seller;
(d) Except for the approval by Lender of Buyers assumption of the
Existing Loan as described in Section 6.4, no approval, consent, order
or authorization of, or designation, registration or declaration with,
any of the United States, the State of Illinois, any department, board,
agency, office, commission or other subdivisions thereof, or any
official thereof or any third party is required in connection with the
valid execution and delivery of, and performance of the covenants of,
this Agreement by Buyer.
(e) There are no actions, suits or proceedings pending or, to the
knowledge of Buyer, threatened, against or affecting Buyer which, if
determined adversely to Buyer, would adversely affect its ability to
perform its obligations hereunder.
As a condition precedent to Sellers obligation to close the purchase and sale
transaction contemplated in this Agreement, Buyers representations and
warranties contained herein must remain and be true and correct as of the
Closing Date. Prior to the Closing Date, Buyer shall notify Seller in
writing of any facts, conditions or circumstances which render any of the
representations and warranties set forth in this SECTION 11.1 in any way
inaccurate, incomplete, incorrect or misleading.
11.2 SELLERS REPRESENTATIONS AND WARRANTIES. Seller is a general
partnership existing under the laws of the State of Illinois.
(a) Seller has full right, power and authority and is duly
authorized to enter into this Agreement, to perform each of the
covenants on its part to be performed hereunder and to execute and
deliver, and to perform its obligations under all documents required to
be executed and delivered by it pursuant to this Agreement and this
Agreement constitutes the valid and binding obligation of Seller
enforceable in accordance with its terms.
(b) A list of all notes, mortgages loan agreements and other
financing documents relating to the Existing Loan is attached to this
Agreement as EXHIBIT E. To Sellers knowledge, no default exists or is
claimed to exist on the part of the borrower under the Existing Loan,
and to Sellers knowledge, no event or condition exists which, with the
giving of notice, passage of time or both could constitute such a
default.
(c) Seller has directed its property manager to deliver or to make
available to Buyer (i) complete copies of all Leases and (ii) the Rent
Roll.
(d) Seller has directed its property manager to deliver or to make
available to Buyer copies of all Property Contracts.
(e) To Sellers knowledge, Seller has not been served with notice of
any actions, suits, or proceedings against or affecting the Seller or
the Property that either (i) are not covered by applicable insurance or
(ii) if determined adversely to Seller would materially affect the
ownership or operation of the Property or Sellers ability to perform its
obligations under this Agreement.
Seller reserves the right to update the representations and warranties
made by it herein. All of Sellers representations and warranties shall be
deemed to be updated by information disclosed to or obtained by Purchaser in
connection with its due diligence investigations. As a condition precedent
to Buyers obligation to close the purchase and sale transaction contemplated
in this Agreement, Sellers representations and warranties contained herein
shall be true and correct as of the Closing Date.
11.3 SELLER; SELLERS KNOWLEDGE. Whenever a representation is made to
Sellers knowledge, or a term of similar import, the accuracy of such
representation shall be based solely on the actual knowledge of Rock DErrico,
without independent investigation or inquiry except for inquiry of Sellers
property manager for the Property. Notwithstanding the foregoing, if, prior
to the Closing, Buyer obtains actual knowledge that any representation or
warranty of Seller is inaccurate and Buyer nonetheless proceeds with the
Closing, Seller shall have no liability for any such matter regarding which
Buyer had actual knowledge prior to Closing.
11.4 PROPERTY CONVEYED AS IS. (a) NOTWITHSTANDING ANYTHING CONTAINED
HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT, EXCEPT AS EXPRESSLY
SET FORTH HEREIN, SELLER AND ITS PROPERTY MANAGER HAVE NOT MADE AND ARE NOT NOW
MAKING, AND THEY SPECIFICALLY DISCLAIM, ANY OTHER WARRANTIES, REPRESENTATIONS
OR GUARANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF
TITLE (OTHER THAN SELLERS WARRANTY OF TITLE SET FORTH IN THE DEED
(HEREINAFTER DEFINED) TO BE DELIVERED AT CLOSING), (II) ENVIRONMENTAL MATTERS
RELATING TO THE PROPERTY OR ANY PORTION THEREOF, (III) GEOLOGICAL CONDITIONS,
INCLUDING, WITHOUT LIMITATION, SUBSIDENCE, SUBSURFACE CONDITIONS, WATER
TABLE, UNDERGROUND WATER RESERVOIRS, LIMITATIONS REGARDING THE WITHDRAWAL OF
WATER, AND EARTHQUAKE FAULTS AND THE RESULTING DAMAGE OF PAST AND/OR FUTURE
EARTHQUAKES, (IV) WHETHER, AND TO THE EXTENT TO WHICH THE PROPERTY OR ANY
PORTION THEREOF IS AFFECTED BY ANY STREAM (SURFACE OR UNDERGROUND), BODY OF
WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY OR SPECIAL FLOOD HAZARD, (V)
DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE EXISTENCE OF INSTABILITY, PAST
SOLID REPAIRS, SOIL ADDITIONS OR CONDITIONS OF SOIL FILL, OR SUSCEPTIBILITY
TO LANDSLIDES, OR THE SUFFICIENCY OF ANY UNDERSHORING, (VII) ZONING TO WHICH
THE PROPERTY OR ANY PORTION THEREOF MAY BE SUBJECT, (VIII) THE AVAILABILITY
OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION THEREOF INCLUDING, WITHOUT
LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (IX) USAGES OF ADJOINING
PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF, (XI) THE VALUE,
COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION, AGE, USE,
DESIGN, QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY, OPERATION,
TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY PORTION
THEREOF, OR ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR
CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, OR
ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR
AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, (XII) THE
PRESENCE OF HAZARDOUS SUBSTANCES IN OR ON, UNDER OR IN THE VICINITY OF THE
PROPERTY, (XIII) THE CONDITION OR USE OF THE PROPERTY OR COMPLIANCE OF THE
PROPERTY WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR LOCAL
ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES,
CODES OR OTHER SIMILAR LAWS, (XIV) THE EXISTENCE OR NON-EXISTENCE OF
UNDERGROUND STORAGE TANKS, (XV) ANY OTHER MATTER AFFECTING THE STABILITY OR
INTEGRITY OF THE REAL PROPERTY, (XVI) THE POTENTIAL FOR FURTHER DEVELOPMENT
OF THE PROPERTY, (XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING
ENTITLEMENTS AFFECTING THE PROPERTY, (XVIII) THE MERCHANTABILITY OF THE
PROPERTY OR FITNESS OF THAT PROPERTY FOR ANY PARTICULAR PURPOSE (BUYER
AFFIRMING THAT BUYER HAS NOT RELIED ON SELLERS OR ITS PROPERTY MANAGERS SKILL
OR JUDGMENT TO SELECT OR FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND
THAT SELLER MAKES NO WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR
PURPOSE), OR (XIX) TAX CONSEQUENCES.
(b) BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ITS PROPERTY MANAGER
OR ANY OF THEIR RESPECTIVE AGENTS, EXPECT AS EXPRESSLY SET FORTH HEREIN, AND
ACKNOWLEDGES THAT NO OTHER SUCH REPRESENTATIONS HAVE BEEN MADE. BUYER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF
REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
BUYERS CONSULTANTS IN PURCHASING THE PROPERTY. BUYER WILL CONDUCT SUCH
INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY AS BUYER DEEMS NECESSARY,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF, AND SHALL RELY UPON SAME. UPON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYERS INSPECTIONS
AND INVESTIGATIONS. BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER
SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY AS IS,
WHERE IS, WITH ALL FAULTS. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT THERE
ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR
AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY.
THE TERMS AND CONDITIONS OF THIS SECTION 11.4(B) SHALL EXPRESSLY SURVIVE THE
CLOSING, NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE
INCORPORATED INTO THE DEED. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY
ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO
THE PROPERTY FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR
OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO
HEREIN. BUYER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE AS IS NATURE
OF THIS SALE AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS
THAT MAY BE ASSOCIATED WITH THE PROPERTY. BUYER HAS FULLY REVIEWED THE
DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT WITH ITS COUNSEL AND
UNDERSTANDS THE SIGNIFICANCE AND EFFECT THEREOF.
ALT
---------------
Buyers Initials
ARTICLE 12
MISCELLANEOUS
12.1 SUCCESSORS AND ASSIGNS. Without the prior written consent of
Seller, Buyer shall not, directly or indirectly, assign this Agreement or any
of its rights hereunder. Any attempted assignment in violation hereof shall,
at the election of Seller in its sole discretion, be of no force or effect
and shall constitute a default by Buyer. Notwithstanding the foregoing and
so long as it will not affect the Lenders consent to or the timing of the
Closing, Buyer may elect to have a nominee entity accept title to the
Property at Closing, provided that any such nominee must be an affiliated
entity controlled by or under common control with Buyer, and Buyer shall give
written notice of such nominee to Seller, together with any reasonable
evidence of affiliation requested by Seller, a minimum of fifteen (15) days
prior to Closing. No designation of a nominee to receive title shall release
Buyer from its obligations under this Agreement.
12.2 NOTICES. Except as otherwise specifically provided herein, any
notice required or permitted to be delivered under this Agreement shall be in
writing and shall be deemed given (i) when delivered or refused if sent by
hand during regular business hours, (ii) three (3) days after being sent by
United States Postal Service, registered or certified mail, postage prepaid,
return receipt requested, (iii) on the next business day when sent by a
reputable overnight express mail service that provides tracing and proof of
receipt or refusal of items mailed, or (iv) when received by the addressee if
by telecopier transmission addressed to Seller or Buyer, as the case may be,
at the address or addresses set forth below or such other addresses as the
parties may designate in a notice similarly sent. Any notice given by a
party to Escrow Agent shall be simultaneously given to the other party. Any
notice given by a party to the other party relating to its entitlement to the
Escrowed Amount shall be simultaneously given to the Escrow Agent.
(1) If to Seller:
Paine Webber Properties Incorporated
265 Franklin Street - 16th Floor
Boston, MA 02110
Attn: Mr. Rock M. DErrico
and
Chicago Colony Apartments Company, L.P.
1401 South Brentwood Boulevard
St. Louis, MO 63144
Attn: Mr. Lewis A. Levey
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Andrew C. Sucoff, Esq.
(2) If to Buyer:
Home Properties
300 South Saint Louis Blvd., Suite 202
South Bend, Indiana 46617
Attn: Donald H. Schefmeyer
with a copy to:
Home Properties
850 Clinton Square
Rochester, NY 14604
Attn: Ann McCormick, Esq.
(3) If to the Escrow Agent:
Victoria C. Bresnahan, Escrow Officer
Ticor Title Insurance Company
203 No. LaSalle Street, Suite 1390
Chicago, IL 60601
12.3 CONSTRUCTION. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words of a singular
number shall be held to include the plural and vice versa, unless the context
requires otherwise.
12.4 CAPTIONS. The captions used in connection with the Articles of this
Agreement are for convenience only and shall not be deemed to extend, limit
or otherwise define or construe the meaning of the language of this
Agreement.
12.5 NO OTHER PARTIES. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
12.6 AMENDMENTS. This Agreement may be amended only by a written
instrument executed by Seller and Buyer (or Buyers assignee or transferee).
12.7 SEVERABILITY. If any provision of this Agreement or application to
any party or circumstance shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
12.8 APPLICABLE LAW. This Agreement shall be construed under and in
accordance with the laws of state in which the Property is located.
12.9 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original but such counterparts
together shall constitute one and the same instrument notwithstanding that
both Buyer and Seller are not signatory to the same counterpart.
12.10 TIME OF THE ESSENCE. Time is expressly declared to be of the
essence of this Agreement, provided, however that in the event any date
hereunder falls on a Saturday, Sunday or legal holiday, the date applicable
shall be the next business day.
12.11 NO PERSONAL LIABILITY. The obligations of Seller hereunder shall
be binding only on the Property and neither Buyer nor anyone claiming by,
through or under Buyer shall be entitled to obtain any judgment extending
liability beyond the Property or creating personal liability on the part of
the partners of the Seller or of the officers, directors, shareholders,
advisors or agents of Seller or Sellers partners or any of their successors.
12.12 NO RECORDATION. Without the prior written consent of Seller, there
shall be no recordation of either this Agreement or any memorandum hereof, or
any affidavit pertaining hereto, and any such recordation of this Agreement
or memorandum hereto by Purchaser without the prior written consent of Seller
shall constitute a default hereunder by Buyer, whereupon this Agreement
shall, at the option of Seller, terminate and be of no further force and
effect. Upon termination, the Escrowed Amount shall be immediately delivered
to Seller, whereupon the parties shall have no further duties or obligations
to one another except as otherwise specifically provided herein.
12.13 WAIVER. The excuse or waiver of the performance by a party of any
obligation of the other party under this Agreement shall only be effective if
evidenced by a written statement signed by the party so excusing or waiving.
No delay in exercising any right or remedy shall constitute a waiver thereof,
and no waiver by Seller or Buyer of the breach of any covenant of this
Agreement shall be construed as a waiver of any preceding or succeeding
breach of the same or any other covenant or condition of this Agreement.
12.14 BINDING ON SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
12.15 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated
herein, and it supersedes all prior discussions, understandings or agreements
between the parties. All Exhibits and Schedules attached hereto are a part
of this Agreement and are incorporated herein by reference.
12.16 CONSTRUCTION OF AGREEMENT. This Agreement shall not be construed
more strictly against one party than against the other merely by virtue of
the fact that it may have been prepared primarily by counsel for one of the
parties, it being recognized that both Buyer and Seller have contributed
substantially and materially to the preparation of this Agreement.
12.17 FURTHER INSTRUMENTS. Each party, promptly upon the request of the
other, shall execute and have acknowledged and delivered to the other or to
Escrow Agent, as may be appropriate, any and all further instruments
reasonably requested or appropriate to evidence or give effect to the
provisions of this Agreement and which are consistent with the provisions of
this Agreement.
12.18 BUYER REPRESENTED BY COUNSEL. Buyer hereby represents and warrants
to Seller that (i) Buyer is not in a significantly disparate bargaining
position in relation to Seller, (ii) Buyer is represented by legal counsel in
connection with the transaction contemplated by this Agreement, and (iii)
Buyer is buying the Property for business, commercial, investment or other
similar purpose and not for use as Buyers residence.
12.19 PREPARATION OF DOCUMENTS. All of the documents to be executed at
the Closing shall be in the form prepared to the reasonable satisfaction of
Sellers and Buyers counsel and delivered to Buyer on or before five (5)
business days prior to the Closing Date, provided that the failure to timely
deliver such documents shall not constitute a default by Seller hereunder.
ARTICLE 13
IRS FORM 1099-S DESIGNATION
In order to comply with information reporting requirements of Section
6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder, the parties agree (1) to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as EXHIBIT K at or prior to
the Closing to designate the Escrow Agent (the DESIGNEE) as the party who
shall be responsible for reporting the contemplated sale of the Property to
the Internal Revenue Service (the IRS) on IRS Form 1099-S; (2) to provide the
Designee with the information necessary to complete Form 1099-S; (3) that the
Designee shall not be liable for the actions taken under this Agreement, or
for the consequences of those actions, except as they may be the result of
gross negligence or willful misconduct on the part of the Designee; and (4)
that the Designee shall be indemnified by the parties for any costs or
expenses incurred as a result of the actions taken hereunder, except as they
may be the result of gross negligence or willful misconduct on the part of
the Designee. The Designee shall provide all parties to this transaction
with copies of the IRS Forms 1099-S filed with the IRS and with any other
documents used to complete IRS Form 1099-S.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
SELLER:
CHICAGO COLONY APARTMENTS ASSOCIATES
By: Chicago Colony Apartments Company, L.P., general
partner
By:/s/ Lewis A. Levey
---------------------------
Name: Lewis A. Levey
Title: Managing General Partner
By: PaineWebber Income Properties Seven Limited
Partnership, general partner
By: Seventh Income Properties Fund, Inc.,
managing general partner
By:/s/ Rock M. D'Errico
-------------------------
Name: Rock M. D'Errico
Title: Vice President
BUYER:
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc., General
Partner
By: /s/Amy L. Tait
-------------------------
Name: Amy L. Tait
Title: Executive Vice President
ESCROW AGENT:
TICOR TITLE INSURANCE COMPANY
By:/s/______________________
Name:
Title:
