Exhibit 2.1
THIS CONTRIBUTION AGREEMENT (this "Agreement") made as of the
8th day of December, 1998, by and between OLD FRIENDS LIMITED
PARTNERSHIP, a Maryland limited partnership (the "Partnership"), having its
principal office at 14 Straw Hat Road, Owings Mills, Maryland 21117 and
HOME PROPERTIES OF NEW YORK, L.P., a New York limited partnership ("Home
Properties"), and HOME PROPERTIES OF NEW YORK, INC., a Maryland Corporation
("HME"), both having their principal office at 850 Clinton Square,
Rochester, New York 14604.
W I T N E S S E T H:
This Agreement is made with reference to the following facts and
objectives:
(a) The Partnership owns a 100% fee simple interest in a Maryland
apartment property known as Old Friends Apartments (the "Property").
(b) The Property comprises 51 dwelling units and is situated upon
land owned in fee simple by the Partnership.
(c) Upon the terms and conditions set forth in this Agreement, Home
Properties desires to obtain 100% of the partnership interests (the
"Interests") in the Partnership and thus a 100% partnership interest in the
fee simple Property, together with the related Personal Property, Service
Contracts and Trade Names (all as hereinafter defined), in exchange for
assumption of existing debt covering the Property and limited partnership
interests (the "OP Units") in Home Properties.
(d) As the current principal balance of the Bonds (defined below)
exceeds the value of the Property, Partnership agrees to allow the
collateral pledged as required by applicable Bond documents (but not worth
less than $400,000) to remain in place or be deposited in a comparable
Partnership account until the Closing.
(e) The Bonds will be replaced by Refunded Bonds (defined below)
which shall be issued on terms satisfactory to Home Properties.
(f) The OP Units are to be allocated among the various partners of
the Partnership (the "Partners") in accordance with SCHEDULE 1 attached
hereto.
(g) It is expected that the exchange of the Interests for OP Units
(but not the cash portion of the Consideration) will qualify for Federal
income tax purposes, as a tax free transfer, pursuant to Section 721 of the
Code.
(h) As used in this Agreement with initial capital letters, the
following terms, in each instance, shall have the meaning ascribed thereto:
"Bond Issuer" shall mean and refer to the City of Baltimore;
"Bonds" shall mean the $2,500,000 Baltimore City, Maryland Variable
Rate Semi-Annual Demand Housing Revenue Bonds (Old Friends School
Facility), 1984 Issue, as amended by Supplemental Indenture No. 2 dated May
3, 1993, which has a principal balance as of April 1, 1998 of approximately
$2,450,000;
"Code" shall mean and refer to the Internal Revenue Code of 1986, as
amended;
"Collateral" shall mean and refer to the collateral pledged as
required by applicable Bond documents (but not worth less than $400,000)
which shall remain in place or be deposited in a comparable Partnership
account until the Closing;
"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;
"General Partner" shall mean and refer to Herbert J. Siegel;
"Hazardous Materials" shall mean and refer to any hazardous substances
described or defined in (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; (ii) the Hazardous
Materials Transportation Act, as amended; (iii) the Resource Conservation
and Recovery Act, as amended; (iv) the Toxic Substances Control Act, as
amended; and (v) any applicable Maryland Environmental Laws, and the
regulations promulgated thereunder, in each case, as at the date of this
Agreement;
"HME" shall mean and refer to Home Properties of New York, Inc., a
Maryland corporation (which operates as a self-administered, and self-
managed, equity real estate investment trust);
"HME Common Shares" shall mean and refer to the shares of common stock
in HME, which are traded on the New York Stock Exchange;
"Capital Account Deficit" shall mean and refer to the negative Capital
Account amount of each Unit Partner (as hereinafter defined) for Federal
income tax purposes, as at the relevant date;
"Home Properties" shall mean and refer to Home Properties of New York,
L.P., a New York limited partnership (in which HME is the sole general
partner, and through which HME conducts its operational, management and
investing activities);
"OP Units" shall mean and refer to limited partnership interests in
Home Properties, which are, subject to restrictions, exchangeable, on a
one-to-one basis, for HME Common Shares;
"Partner" shall mean each and every one of the partners of the
Partnership and "Partners" shall refer to all of the partners of the
Partnership;
"Partnership" shall mean and refer to Old Friends Limited Partnership,
a Maryland limited partnership;
"Property" shall mean and refer to the apartment project known as Old
Friends Apartments, including: (i) the land occupied by such apartment
project (the "Land"), as more particularly described on EXHIBIT A attached
hereto, together with (a) all and singular the easements, rights-of-way,
rights, privileges, benefits, tenements, hereditaments and appurtenances
thereunto belonging or in anywise appertaining, and (b) all right, title
and interest of the Partnership in and to any land lying in the bed of any
street, road, avenue or alley, open or proposed, public or private, in
front of, behind, or otherwise adjoining the Land, or any part of the Land,
including, without limitation, all right, title and interest of the
Partnership in and to (1) any award made after the date of this Agreement
as a result of condemnation, or in lieu thereof, and (2) any unpaid award
as at the date of this Agreement as a result of condemnation, or in lieu
thereof; and (ii) all buildings, structures, fixtures, facilities,
installations and other improvements of every kind and description now or
hereafter in, on, over and under the Land (the "Improvements"), including,
without limitation, any and all plumbing, air conditioning, heating,
ventilating, mechanical, electrical and other utility systems, and
fixtures, parking lots and facilities, landscaping, roadways, fences, mail
boxes, sidewalks, maintenance buildings, swimming pools and other
recreational facilities, security devices, signs and light fixtures; and
"Refunded Bonds" shall mean those bonds to be issued by the Bond
Issuer which shall replace and refinance the Bonds.
"Unit Partners" shall mean the Partners who are entitled to elect and
who, in fact, elect to receive OP Units in exchange for their Interests and
"Unit Partner" shall mean each of the Unit Partners.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants, agreements and undertakings herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Partnership and Home Properties agree as follows:
1. EXCHANGE.
(a) The Partnership agrees that the Partners shall exchange 100% of
their Partnership interests for Home Properties' agreement to assume the
debt of the Refunded Bonds as provided by Section 5 below and OP Units. The
number of OP Units to be issued to the Partners shall be determined by the
following formula: $2,050,000, plus the amount of cash and value of
securities on deposit in Partnership accounts on the day of Closing (which
shall not be less than $400,000), minus the outstanding principal balance
of the Bonds on the day of Closing, times $____ per share.
(b) The transfer, exchange, conveyance and acquisition of the
Interests shall, in addition, include all of the right, title and interest
of the Partnership in and to the following:
(1) all furniture, furnishings, equipment, machinery and other
tangible personal property and fixtures of every kind and description owned
by the Partnership, and used in connection with the Property (in each
instance, the "Personal Property"), including, without limitation, all
ranges, refrigerators, disposals, dishwashers, water heaters, furnaces, air
conditioning units and equipment, carpeting, traverse rods, drapes and
other window treatments, exhaust fans, range hoods, screens, model unit
furniture, tools, parts, motors, supplies, pool and other recreational
equipment, cabinets, mirrors, shelving, computers and other office
equipment, stationery and other office supplies, maintenance vehicles and
accessories, normal levels of inventory, cash and securities in Partnership
accounts, and all replacements of, and/or substitutions for, any of the
foregoing; but specifically excluding (A) any personal property described
in EXHIBIT A-1 attached hereto and (B) any refunds on insurance which has
been pre-paid by the Partnership, if not adjusted at Closing;
(2) all present and subsequent leases with tenants, and/or other
occupancy agreements, together with all pending applications for tenancy
(in each instance, the "Leases");
(3) all service and maintenance contracts, and equipment leases, used
or useful in connection with the Property, and which are not to be
terminated under this Agreement (in each instance, the "Service
Contracts"), including, without limitation, natural gas purchase contracts,
vehicle, communication and other equipment leases (the "Equipment Leases",
and the vehicles and equipment covered thereby being herein called the
"Leased Equipment"), coin-operated laundry concession leases, and pending
purchase orders, all of which are listed on SCHEDULE 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
Property (in each instance, the "Trade Names"), except that the Partnership
makes no representation or warranty of title or usage with respect to such
Trade Names. Notwithstanding the foregoing, the name "The Siegel
Organization" and similar names containing the name "Siegel" are not
transferred; furthermore, the telephone number (410) 356-4400 is not
transferred and shall remain the property of Herbert Siegel, the General
Partner of the Partnership.
2. CONSIDERATION.
(a) The aggregate consideration (the "Consideration") payable by Home
Properties for 100% of the Interests shall be paid as follows:
(i) subject to restructuring as provided by Section 5 below, by Home
Properties' assumption of the obligations of the Partnership under the
Refunded Bonds.
(ii) by issuance by Home Properties of the OP Units computed under the
provisions of Section 1(a), to be allocated in accordance with the pro rata
shares of the Partners set forth on Schedule 1.
(b) Partnership shall provide evidence to Home Properties at Closing
that cash and/or securities worth at least $400,000 are in place in
Partnership accounts.
(c) At Closing, the General Partner shall establish from Partnership
funds otherwise distributable to the Partners or from funds supplied by one
or more Partners a "Reserve Amount." "Reserve Amount" means the sum of:
(a) an amount equal to the current liabilities of the Partnership on the
Closing Date (other than the principal amount of the Refunded Bonds),
together with such other amounts as the General Partner may reasonably
require (the "Liabilities Reserve") and (b) $5,000 (the "Indemnity
Reserve"); the Reserve Amount shall be held and disbursed by the Disbursing
Agent (as defined in Paragraph (d) of this Section 2) as described in
Paragraph (d) of this Section 2 and in Paragraphs (a) and (b) of Section
3. The Reserve Amount shall initially be used to pay all amounts used to
satisfy the current liabilities of the Partnership and the liabilities of
the Partnership that Home Properties has not specifically agreed to assume
as provided herein ("Liabilities Claims") and any amounts paid or subject
to claims of Home Properties by reason of a material breach or material
misrepresentation of any representations, warranties, covenants or
agreements of the Partnership which survive Closing (but only during the
period of such survival) ("Indemnity Claims").
(d) At Closing, the General Partner shall deliver in immediately
available funds from monies otherwise distributable to the partners of the
Partnership (but not from proceeds of Consideration) to Tydings &
Rosenberg, LLP (the "Disbursing Agent") the Reserve Amount. The Reserve
Amount shall be held and disbursed pursuant to the terms of an escrow
agreement that shall be in form and substance substantially similar to that
attached hereto as EXHIBIT H.
3. RELEASE OF RESERVES; CLOSING COSTS.
(a) On the 90th day after the Closing Date, the Disbursing Agent shall
disburse to the General Partner that portion of the Reserve Amount that has
not been paid, disbursed or subject to Liability or Indemnity Claims. The
General Partner may then elect (i) to continue to hold such disbursed
amounts for up to 360 days after the Closing Date, in trust for the benefit
of the Partnership and the holders of Interests immediately prior to the
Closing Date (the "Holders"), as a fund against which to pay unanticipated
claims (the "Contingency Reserve"), or (ii) to distribute pro rata to the
Holders.
(b) At any time, and from time to time, after the 90th day after the
Closing Date that there is a Final Determination (as defined in EXHIBIT H)
that any remaining portion, if any, of the Reserve Amount is no longer
subject to Liability or Indemnity Claims, the Disbursing Agent shall
distribute such remaining portion to the General Partner. The General
Partner may then elect (i) to continue to hold such disbursed amounts for
up to 360 days after the Closing Date, in trust for the benefit of the
Holders , as a fund against which to pay unanticipated claims (the
"Contingency Reserve"), or (ii) to distribute pro rata to the Holders in
accordance with their percentage interests.
(c) Not later than 360 days after the Closing Date (provided that
there have been no unanticipated claims asserted against the Partnership),
the General Partner shall distribute any balance remaining in the
Contingency Reserve pro rata to the Holders in accordance with their
percentage interests. In the event that at the end of the 360 period
following Closing there are unanticipated claims pending or asserted, or
the General Partner has reason to believe that such unanticipated claims
may be asserted, the General Partner may continue to hold the Contingency
Reserve until such time as the General Partner deems prudent, after which
any undisbursed amount remaining in the Contingency Reserve shall be
disbursed by the General Partner pro rata to the Holders in accordance
with their percentage interests.
(d) Home Properties shall pay all recording fees, its attorneys'
fees, the costs of obtaining a binder or commitment from a title insurance
company, the premium for its title insurance policy, the costs for updating
any surveys, the costs of any environmental surveys and studies, one half
of any Maryland state and local recordation or transfer tax, and all other
costs and expenses incidental to or in connection with closing this
transaction customarily paid for by the purchaser of similar property. The
Partnership shall pay its attorneys' fees, one-half of any Maryland state
and local recordation or transfer tax, and all other costs and expenses
incidental to or in connection with closing this transaction customarily
paid for by the seller of similar property.
(e) Except as provided in Section 2 (b) above or as provided below,
or at any time prior to, the Closing Date, the General Partner shall have
the right to spend on behalf of the Partnership and/or distribute to the
partners of the Partnership any and all cash and securities held by the
Partnership, it being specifically agreed and understood that Home
Properties is not purchasing the cash and securities assets of the
Partnership.
4. OP UNITS.
(a) Distributions with respect to the OP Units will be identical in
amount and timing to the dividends on HME Common Shares, except that the
initial distribution payable with respect to the OP Units issued to the
Unit Partners shall be made on the date on which HME shall pay the dividend
to holders of HME Common Shares that relates to the earnings for the
calendar quarter in which the OP Units were issued to the Unit Partners,
and shall be prorated such that the Unit Partners will receive a pro-rata
distribution for the period from the date on which the OP Units were issued
to the Unit Partners to, and including, the last day of the calendar
quarter in which the OP Units were so issued.
(b) Subject to the terms of a Lock-Up Agreement, in the form of
EXHIBIT B attached hereto, to be dated the Closing Date, and to the terms
of the Second Amended and Restated Agreement of Limited Partnership of the
operating Partnership, as amended (the "Operating Partnership Agreement"),
the OP Units will be convertible into HME Common Shares, on a one-to-one
basis, after the elapse of one (1) year from and after the Closing Date
(the "Lock-Up Period"), during which the Unit Partners will be restricted
from converting, or transferring, any of the OP Units.
(c) From and after the expiration of the Lock-Up Period, the Unit
Partners shall have all of the transfer, exchange and conversion rights
with regard to the OP Units as are set forth in the Operating Partnership
Agreement.
(d) Upon the terms and conditions of a Registration Rights Agreement,
in the form of EXHIBIT C attached hereto, to be dated the Closing Date, the
Unit Partners shall have registration rights and a listing commitment with
regard to the shares of HME Common Shares into which the OP Units can be
converted (the "Registration Rights"), including demand and piggy back
rights. The exercise of Registration Rights shall be without cost to the
Partners. In addition, within 6 months of the Closing Date, HME agrees to
file and keep current at its sole cost and expense until all OP Units
issued pursuant to this Agreement have been converted into shares of HME
Common Shares, a registration statement (the "Registration Statement") with
the SEC registering the resale of the shares of common stock of HME into
which the OP Units may be converted and to use reasonable commercial
efforts to have the registration promptly declared effective by the
Securities and Exchange Commission ("SEC"). Notwithstanding anything to
the contrary contained in this Agreement, in the event that HME has not
filed the Registration Statement with the SEC by the date (the "Outside
Filing Date") which is 7 months after the Closing Date, then for and with
respect to each day during the period between the Outside Filing Date and
the date on which the Registration Statement is filed with the SEC, Home
Properties shall pay to the Unit Partners, as liquidated damages and not as
a penalty, the sum of $1,000, which sum shall be apportioned pro rata among
the Unit Partners.
5. REFUNDING OF BONDS. The parties agree that within forty five (45)
days from the date hereof, the Partnership shall apply to the Bond Issuer
to refund the Bonds. It shall be a condition of this Agreement that the
Bond Issuer shall approve the refunding of the Bonds to both Home
Properties' and the Partnership's satisfaction and that the Refunded Bonds
shall have been issued and closed. In the event that the Refunded Bonds
are not issued and closed to both parties' satisfaction within two hundred
ten (210) days from the date of the Partnership's application to the Bond
Issuer as aforesaid, then either party shall have the right to terminate
this Agreement by written notice to the other party, whereupon this
Agreement shall, thereafter, be deemed to be null and void and of no
further force and effect, neither party shall have any further rights or
obligations under this Agreement.
The Refunded Bonds shall be secured by a mortgage covering the
Property and guaranteed by Home Properties or HME. It is the parties'
intent that except as hereinafter immediately provided, any collateral
pledged as required by applicable bond documents to secure the Bonds will
be released; however, the Partnership acknowledges and agrees to allow the
Collateral to remain in place or deposited in a comparable Partnership
account until the Closing. The Partnership agrees to obtain the agreement
of the Partners to guarantee the bottom or last $1,400,000 of the principal
of the mortgage, after the exhaustion by the holder of the mortgage of all
remedies and recourse thereunder, including, but not limited to foreclosure
and sale of the Property. The guarantee shall be set forth in an agreement
in form and substance satisfactory to the Partners, but in no event will
the liability of the Partners exceed $1,400,000. All costs and expenses
relating to the issuance and closing of the Refunded Bonds, except the fees
of Partnership's counsel shall be borne and paid by Home Properties or HME,
including but not limited to, any assumption fees in connection with the
assumption of the Refunded Bonds.
6. PERMITTED EXCEPTIONS. The Property at Closing shall be subject
only to the following (the "PERMITTED EXCEPTIONS"):
(a) the Refunded Bonds;
(b) the lien of real estate taxes not yet due and payable;
(c) the Leases;
(d) the Service Contracts; and
(e) easements, rights-of-way, covenants, restrictions and other
matters of record which do not materially adversely affect the use and
operation of the Property.
(f) such other agreements and matters as may be agreed to by the
General Partner and Home Properties.
7. OBLIGATIONS AND COVENANTS OF THE PARTNERSHIP.
(a) From the date of this Agreement to the Closing Date, the
Partnership shall:
(1) Maintain, manage and operate the Property in substantially the
same condition and manner as such Property is now maintained, managed and
operated by the Partnership, and keep the Property, including, without
limitation, the Improvements and Personal Property, in substantially the
same good condition and repair as such Property is now maintained, ordinary
wear and tear excepted. The Partnership shall not be required to make
repairs or replacements other than in the ordinary course of business
except in the case of emergency. Within thirty (30) days prior to Closing,
the Partnership shall not be required to replace any carpet or appliance
without the Partnership's prior consent, which shall not be unreasonably
withheld or delayed. To the extent that any such replacement shall have
taken place within such thirty (30) day period, an appropriate credit shall
be made at Closing in favor of the Partnership;
(2) Maintain the Refunded Bonds in full force and effect, timely make
all payments, and observe and perform all covenants to be paid, observed or
performed by the Partnership thereunder, and promptly deliver to the Home
Properties notice of any receipt or delivery of any notice (including any
notice of default) thereunder;
(3) Promptly provide Home Properties with a copy of any notice,
citation, complaint or other directive from any person, entity or
governmental authority whereby compliance with any Environmental Law is
called into question;
(4) Maintain in full force and effect all of the existing insurance
policies regarding the Property;
(5) Promptly deliver notice to Home Properties of, and, defend, at
the Partnership's expense, all actions, suits, claims and other proceedings
affecting the Property, or the use, possession or occupancy thereof;
(6) Promptly deliver notice to Home Properties of any actual or
threatened condemnation of the Property, or any portion thereof;
(7) Maintain all Licenses in full force and effect;
(8) Maintain all Service Contracts in full force and effect; timely
make all payments, and observe and perform all obligations to be paid,
observed or performed by the Partnership thereunder; and promptly notify
Home Properties of any receipt or delivery of any notice (including any
notice of default) thereunder;
(9) Provide all services, repairs and other work required to be
provided by the landlord under the Leases;
(10) Reasonably cooperate with Home Properties (but without obligation
to incur expenses in connection therewith) in connection with (i) the
consummation of the transaction contemplated by this Agreement, and (ii)
the preparation of the Closing documents and apportionments hereunder;
(11) Promptly deliver to Home Properties a copy of any notice of
required work from any company insuring the Property against casualty loss;
(12) Subject to applicable governmental and lender requirements,
terminate all management agreements pertaining to the Property, effective
as of the completion of the Closing on the Closing Date, except that the
current management agreement with Home Properties or its affiliate shall
remain in full force and effect;
(13) Promptly deliver to Home Properties a copy of any notice of any
violation (or alleged violation) of any law, ordinance, order, requirement
or regulation of any Federal, state, county, municipal or other
governmental department, agency or authority relating to the Property; and
(14) Promptly give written notice to Home Properties of the occurrence
of any condition or event which materially and adversely affects the truth
or accuracy of any representation or warranty made (or to be made) by the
Partnership under or pursuant to this Agreement.
(b) From the date of this Agreement to the Closing Date, the
Partnership shall not:
(1) Except with the consent or in conjunction with Home Properties,
modify, amend, renew, extend, terminate or otherwise alter the Refunded
Bonds, or any document or documents relating thereto;
(2) Increase any wage or fringe benefit payable to any employee at
the Property, without the prior written consent of Home Properties, in each
instance, which consent shall not be unreasonably withheld, conditioned or
delayed;
(3) Remove from the Property any article of Personal Property, except
as may be necessary for repairs, or the discarding of worn out or useless
items, provided, however, that any such article removed for repairs shall
be returned to the Property promptly upon its repair, and shall remain a
part of the Personal Property, whether or not such article shall be located
on the Property at the time of the Closing, and any such article so
discarded shall be replaced with a new or replacement article of similar
quality and utility prior to Closing;
(4) Modify, amend, renew, extend, terminate or otherwise alter any of
the Service Contracts, or enter into any new service or maintenance
contract, equipment lease or, except in the ordinary course of business,
any purchase order affecting the Property, and extending beyond, or for any
work or improvement which will not be completed and paid for prior to, the
Closing Date, without the prior written consent of Home Properties, in each
instance, which consent shall not be unreasonably withheld, conditioned or
delayed;
(5) Except in the ordinary course of business, terminate any Lease.
Ordinary course of business shall be deemed to include, without limitation,
non-renewals of problem tenants, commencement of summary ejectment
proceeding where a tenant is more than ten (10) days delinquent in the
payment of rent, cases of any Lease where the tenant is more than thirty
(30) days delinquent in the payment of rent, or in which there has been a
material violation of the obligations of tenant;
(6) Except in the ordinary course of business, enter into any new
Lease, or renew or extend any existing Lease, for a term in excess of
twelve months, or at a monthly rental less than the relevant rental rate
set forth in the rental schedule for the Property approved by Home
Properties;
(7) Modify or amend the present form of lease in use by the
Partnership, without the prior written consent of Home Properties;
(8) Enter into any new license, franchise, concession or easement
agreement affecting the Property, without the prior written consent of Home
Properties, in each instance, which consent shall not be unreasonably
withheld, conditioned or delayed;
(9) Except in the ordinary course of business of the Partnership,
apply any Security Deposits against rent delinquencies or other Lease
defaults, other than in the case of tenants who have vacated their
apartments, or are currently involved in litigation with the Partnership;
(10) Undertake or commence any renovations or alterations at the
Property, except those necessary to comply with any of the provisions of
this Agreement, without the prior written consent of Home Properties, in
each instance, which consent shall not be unreasonably withheld,
conditioned or delayed;
(11) Sell, mortgage, pledge, hypothecate or otherwise transfer or
dispose of all or any part of the Property, or the Personal Property, or
any interest therein, except in the case of the sale or other disposition
of items of Personal Property to be replaced hereunder;
(12) Except in connection with application to the Bond Issuer to
modify the Refunded Bonds, initiate, consent to, approve or otherwise take
any action with respect to the zoning, or any other governmental rule or
regulation, presently applicable to all or any part of the Property; and
(13) Issue any press release or other media publicity of any kind
whatever with respect to this Agreement, or the transaction contemplated
hereby, without the prior written consent of Home Properties.
7.1 OBLIGATIONS AND COVENANTS OF HOME PROPERTIES AND HME. Home
Properties and HME covenant and agree with the Partnership, both before and
after Closing:
(a) Distributions with respect to the OP Units will be identical in
amount and timing to the dividends on HME Common Shares, except that the
initial distribution payable with respect to the OP Units issued to the
Unit Partners shall be made on the date on which HME shall pay the dividend
to holders of HME Common Shares that relates to the earnings for the
calendar quarter in which the OP Units were issued to the Unit Partners,
and shall be prorated such that the Unit Partners will receive a pro-rata
distribution for the period from the date on which the OP Units were issued
to the Unit Partners to, and including, the last day of the calendar
quarter in which the OP Units were so issued.
(b) The General Partner may retain copies of any and all books and
records pertaining to the Partnership and the operation of the Property so
that the General Partner may wind up the affairs of the previously
conducted business. Home Properties will cause the management company
currently managing the Property to cooperate with the General Partner so as
to enable him to wind up the Partnership's affairs as aforesaid.
(c) At the Closing, Home Properties shall deliver to each Unit
Partner good and marketable title to the OP Units allocated to such Unit
Partner, free and clear of all liens, charges, encumbrances and
restrictions, except as contained in the Operating Partnership Agreement,
the Registration Rights Agreement, and the Lock-Up Agreement, and shall, by
execution of the Amendment, admit each Unit Partner as a limited partner in
Home Properties.
(d) At all times for and during a period of ten (10) years from and
after the Closing Date, Home Properties shall allocate to each Unit
Partner, for Federal Income tax purposes, pursuant to Section 752 of the
Code, nonrecourse debt of Home Properties in an aggregate amount not less
than the principal amount of debt guaranteed by the Unit Partners pursuant
to Section 5 hereof.
(e) The initial tax basis Capital Account Deficit of each Unit Partner
in the Property, shall be determined by reference to each such Unit
Partners Capital Account Deficit in the Partnership as at (just prior to)
the contribution of such Partner's interest in the Partnership to Home
Properties on the Closing Date, and shall be based upon the estimated
information set forth in Schedule 3 attached hereto and shall be updated
based upon the information set forth in a schedule to be furnished by the
accountant for the General Partner within the time required by Section
34(e) hereof. Thereafter, for a period of ten (10) years from and after the
Closing Date, the Capital Account Deficit of each Unit Partner shall be
adjusted annually to reflect changes occasioned at the level of Home
Properties, including, without limitation, distributions made by Home
Properties. Furthermore, in complying with Section 4.04 of the Operating
Partnership Agreement, Home Properties agrees that the methodology chosen
under Section 704(c) of the Internal Revenue Code shall be the
"traditional" method.
(f) For a period of ten (10) years from and after the Closing Date,
Home Properties shall not sell, exchange, transfer or otherwise dispose of
the Property, or any replacement of the Property (in any event, a "Property
Transfer"), unless such Property Transfer occurs in such manner as to be
tax free to the relevant Unit Partner. For a period of five (5) years
following the expiration of the ten (10) year period after the Closing
Date, Home Properties agrees that, in the event that it desires to sell,
exchange, transfer or otherwise dispose of the Property, it will use
commercially reasonable efforts to effectuate such Property Transfer in
such manner as to be tax free to the relevant Unit Partner.
(g) Future transactions involving HME, or Home Properties, including,
without limitation, merger(s), sale(s) of assets or similar transactions,
shall be structured in such manner as to (i) not result in an amendment to
the definition of Conversion Factor as it is currently included in the
Operating Partnership Agreement; (ii) prevent, in the context of such a
transaction, a different per unit value being assigned to the OP Units
issued to the Unit Partners than the value assigned per share to the then
outstanding HME Common Shares; and (iii) for a period of ten (10) years
from and after the Closing Date, not interfere with the tax deferred nature
of the transaction contemplated by this Agreement with respect to the OP
Units issued to the Unit Partners.
8. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP.
(a) The Partnership represents and warrants that each of the
following is
true, complete and accurate as of the date of this Agreement (and,
except as designated in writing by the Partnership at or before Closing,
will be true, complete and accurate as of the Closing Date) with regard to
such Partnership and the Property:
(1) To the best knowledge of the Partnership, the Partnership is the
sole owner of, and has good, marketable and insurable fee simple title to
the Property, free and clear of all liens, charges and encumbrances, except
the Permitted Exceptions.
(2) To the best knowledge of the Partnership, the Partnership owns
legal and beneficial title to the Personal Property, other than the Leased
Equipment, free and clear of all liens, charges and encumbrances, except
the Permitted Exceptions.
(3) There are no agreements with regard to the Leased Equipment other
than the Equipment Leases set forth in SCHEDULE 2 attached hereto, and true
and complete copies of all Equipment Leases have been or will be delivered
to Home Properties.
(4) To the best knowledge of the Partnership, each of the Equipment
Leases is in full force and effect; none of the parties thereto is in
default of any of its obligations thereunder; and no event has occurred
that, with the giving of notice, or the passage of time, or both, would
constitute a default thereunder.
(5) To the best knowledge of the Partnership, the Bonds are in full
force and effect; there exists no default thereunder; and no event has
occurred that with the giving of notice, or the passage of time, or both,
would constitute a default thereunder.
(6) To the best knowledge of the Partnership, true, complete and
accurate copies of the Bond documents have been or will be made available
to Home Properties.
(7) The Partnership is a limited partnership, duly organized, validly
existing, and in good standing under the laws of the State of Maryland, and
subject to consent of the Partners of the Partnership and consent of the
Bond Issuer, has full power and authority to enter into, and to fully
perform and comply with the terms of this Agreement and to own, lease and
operate its properties and to carry on its business as it is now being
conducted.
(8) Subject to consent of the Partners of the Partnership and consent
of the Bond Issuer, the execution and delivery of this Agreement, and its
performance by the Partnership, will not conflict with, or result in the
breach of, any contract, agreement, law, rule or regulation to which the
Partnership is a party, or by which the Partnership is bound.
(9) Subject to consent of the Partners of the Partnership and consent
of the Bond Issuer, to the best knowledge of the Partnership this Agreement
is valid and enforceable against the Partnership in accordance with its
terms, and each instrument to be executed by the Partnership pursuant to
this Agreement, or in connection herewith, will, when executed and
delivered, be valid and enforceable against the Partnership in accordance
with its terms, except as such enforcement may be limited by bankruptcy and
other laws affecting creditors, rights generally.
(10) [Intentionally Omitted]
(11) No written notice has been received by the Partnership from any
insurer, or from the Bond Issuer, with respect to any defect which
materially and adversely affects the Property, or the use or operation
thereof, which remains uncured or uncorrected.
(12) To the best knowledge of the Partnership and except as set forth
on tax bills for the Property, there are no special or other assessments
for public improvements or otherwise now affecting the Property, nor does
the Partnership know of (i) any pending or threatened special assessments
affecting the Property, or (ii) any contemplated improvements affecting the
Property that may result in a special assessment against the Property.
(13) To the best knowledge of the Partnership, the Partnership has not
received any notice from any party that the Property, or the current use,
occupation or condition thereof, violate(s) any governmental statute, law
ordinance, rule or regulation applicable (or allegedly applicable) to the
Property, or any order of any governmental agency relating to the Property
and/or the use and/or legal occupancy thereof, or any applicable deed
restrictions or other covenant, easement or agreement pertaining to the
Property (including, without limitation, any of the Permitted Exceptions),
or any approval pertaining to the Property, and to the best knowledge of
the Partnership, the Property, and the current use, occupation and
condition thereof, do not violate any such statute, law, ordinance, rule,
regulation, order, restriction, covenant, easement, agreement or approval.
(14) To the best knowledge of the Partnership, all certificates of
occupancy, operating permits and licenses (the "Licenses") required by any
relevant governmental authority for the lawful use, operation and occupancy
of the Property have been issued, and are in full force and effect.
(15) The Partnership has received no notice that the current use,
operation or occupancy of any part, or all, of the Property violates any of
the Licenses, and to the best knowledge of the Partnership all of the
Licenses can remain with the Property after acquisition by Home Properties
of the Partnership interests without charge by any relevant governmental
authority.
(16) There is no action, proceeding or investigation pending, or, to
the best knowledge of the Partnership, threatened, against the Partnership,
or the Property, by or before any court or governmental department,
commission, board, agency or instrumentality, and the Partnership does not
know of any basis for any such action, proceeding or investigation.
(17) To the best knowledge of the Partnership, all financial
information about the Property heretofore or hereafter furnished by the
Partnership or the General Partner to Home Properties is, and shall be,
true, complete and correct in all material respects as of the date therein
specified.
(18) The Partnership has no knowledge of any Federal, state, county or
municipal plan to change the highway or road system in the vicinity of the
Property, or to restrict or change access from any such highway or road to
the Property, or of any pending or threatened condemnation or eminent
domain proceedings relating to or affecting the Property.
(19) To the best knowledge of the Partnership, there are no trade or
assumed names affecting or identifying the Property other than the Trade
Names, and the use of such Trade Names is freely transferable to Home
Properties.
(20) The Partnership has not (i) made a general assignment for the
benefit of its creditors; (ii) admitted in writing its inability to pay its
debts as they mature; (iii) had an attachment, execution or other judicial
seizure of any property interest which remains in effect; or (iv) become
generally unable to meet its financial obligations as they mature.
(21) To the best knowledge of the Partnership, there is not pending
any case, proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or recomposition of the Partnership,
or the debts of the Partnership, under any law relating to bankruptcy,
insolvency, reorganization or the relief of debtors, or seeking the
appointment of a receiver, trustee, custodian or other similar official for
the Partnership or the Property.
(22) To the best knowledge of the Partnership, and except for lead
paint, asbestos, Hazardous Materials customarily used in the operation and
management of residential rental communities, and as identified in
environmental reports or surveys furnished to the Partnership, there are no
Hazardous Materials on, in or under the Property, and the Property has
never been used by the Partnership, or any other person, to generate,
treat, store, dump, release, emit, use, transport or in any manner deal
with Hazardous Materials.
(23) To the best knowledge of the Partnership, the present use and
occupation of the Property does not violate any Environmental Law.
(24) To the best knowledge of the Partnership, the tax-related
information set forth on Schedule 3 attached hereto is true, complete and
accurate in all material aspects as at the date set forth therein. The
obligations of Home Properties contained in Section 7.1(d) and the
representations of Home Properties contained in Section 9(a)(17) are
conditioned upon the material accuracy of the representations of this
Paragraph and the attached Schedule 3.
(25) To the best knowledge of the Partnership, the summaries of Leases
affecting the Property attached as EXHIBIT D to this Agreement (the "Rent
Roll") are, in all material ways true, complete and accurate as at the date
set forth therein.
(26) True and complete copies of all Leases have been made available
to Home Properties at the principal office of the Partnership.
(27) Except for the Bonds, the Partnership has not assigned,
mortgaged, pledged, hypothecated or otherwise encumbered any of its rights
or interests under any of the Leases.
(28) To the best knowledge of the Partnership, the Rent Roll attached
as Exhibit D accurately includes each tenant's name, a description of the
dwelling unit leased by such tenant, the amount of rent due monthly from
such tenant, the amount of the security deposit, if any, paid by such
tenant (collectively, the "Security Deposits"), and the expiration date of
the term of such Lease.
(29) To the best knowledge of the Partnership, except as indicated on
the Rent Roll, each Lease is in full force and effect.
(30) To the best knowledge of the Partnership, except as indicated on
the Rent Roll, all rents are being paid and are current (within 15 days of
their due date).
(31) To the best knowledge of the Partnership, except as indicated on
the Rent Roll, no tenant has paid any rent for more than one month in
advance.
(32) To the best knowledge of the Partnership, except as indicated on
the Rent Roll, no tenant is entitled to any free rent, abatement of rent or
similar concession except in accordance with the past practice of the
Partnership.
(33) To the best knowledge of the Partnership, as of the date of this
Agreement, the Security Deposits under the Leases are as set forth in the
Rent Roll.
(34) To the best knowledge of the Partnership, no brokerage commission
or other compensation is payable (or will, with the passage of time, or
occurrence of any event, or both, be payable) with respect to any Lease.
(35) As of Closing, and upon the deposit of the Security Deposit funds
into a segregated account as described in Section 16 (d), the Partnership
shall have complied with all of the requirements of the relevant Maryland
laws regarding the holding of tenant security deposits.
(36) Except for the Service Contracts listed on SCHEDULE 2 attached
hereto, there are no service or maintenance contracts, or pending purchase
orders pertaining to the Property which may not be terminated upon not more
than thirty (30) days, notice, without payment of any penalty or
termination fee.
(37) True and complete copies of the Service Contracts have been made
available to Home Properties at the principal office of the Partnership.
(38) To the best knowledge of the Partnership, each of the Service
Contracts is in full force and effect; none of the parties thereto is in
default of any of its obligations thereunder; and no event has occurred
that, with the giving of notice, or the passage of time, or both, would
constitute a default thereunder.
(39) SCHEDULE 1 hereto lists the current holders of all outstanding
Partner Interests of the Partnership together with the percentage interest
held by each Partner. In the event that any Partner listed on SCHEDULE 1
transfers any Interests prior to the Closing Date, the Partnership shall
promptly provide written notice to Home Properties of such transfer, and
such notice shall include the names of the transferor and the transferee,
the address of the transferee and the number of units transferred.
(40) To the best knowledge of the Partnership, except: (i) as
disclosed in SCHEDULE 4 attached hereto; (ii) for liabilities and
obligations incurred in the normal course of business of the Partnership;
and (iii) as otherwise disclosed in this Agreement, the Partnership has no
material liability or obligation of any nature which is any way materially
affects or is related to the Property or Personal Property whether now due
or to become due, absolute, contingent or otherwise, including liabilities
for taxes (or any interest or penalties thereto).
(41) Except as previously disclosed to Home Properties, all of the
ranges and refrigerators in the Property are the property of the
Partnership and not of the tenants.
(42) To the best knowledge of the Partnership, the Partnership has
filed or will file when due all notices, reports and returns of Taxes (as
defined below) required to be filed before the Closing Date and has paid
or, if due after the date hereof and prior to the Closing Date, will pay,
all Taxes and other charges for the periods shown to be due on such
notices, reports and returns. "Taxes" shall mean all taxes, charges, fees,
levies or other assessments, including, without limitation, income, excise,
property, sale, gross receipts, employment and franchise taxes imposed by
the United States, or any state, county, local or foreign government, or
subdivision or agency thereof with respect to the assets or the business of
the Partnership, and including any interest, penalties or additions
attributable thereto.
(b) To the best knowledge of the Partnership, all of the
representations and warranties of the Partnership, set forth in this
Agreement shall be true and correct in all material respects at the date of
this Agreement, and (except as disclosed in writing by the Partnership at
or before Closing), all shall be deemed to be repeated at, and as of the
Closing Date, and shall be true and correct in all material respects as at
the Closing Date.
(c) All of the representations and warranties of the Partnership, set
forth in this Agreement, including, without limitation, the following
indemnity, shall survive the Closing for a period of six months following
Closing, and shall not be deemed to have merged in any document delivered
at the Closing. Any claim for any breach of any representation or warranty
of the Partnership shall be brought, if at all, within six months from the
date of Closing or thereafter be forever barred and the limitations of
liability as set forth in Paragraph (d) below shall apply to any such
claim.
(d) The Partnership agrees to indemnify Home Properties, and hold
harmless and defend Home Properties, from and against any and all losses,
costs, claims, liabilities, damages and expenses, including, without
limitation, reasonable attorneys, fees, arising as the result of a material
breach of any of the representations and warranties of the Partnership, set
forth in this Agreement. Notwithstanding anything to the contrary
contained in this Agreement, neither the General Partner nor any other
partners of the Partnership shall have any personal liability, and no
action of any kind shall be maintained against any of them or their
respective assets, with respect to this Agreement and/or the transactions
described in this Agreement, and Home Properties, its successors and
assigns, shall look solely to the assets of the Partnership and the cash or
assets held by the Disbursing Agent pursuant to Paragraph (c) of Section 2
above, for the payment of any claim against or the performance of any
obligation of the Partnership. The foregoing limitation of liability shall
not apply in the case of fraud or intentional and material
misrepresentation.
(e) Except as expressly provided in this Agreement, the Partnership,
has made no representations and/or warranties regarding the Property and
the Partnership Interests, and, except as expressly set forth in this
Agreement, Home Properties shall, at Closing, accept the Property and the
Partnership Interests in "AS IS" condition, with all faults, and without
any other representations or warranties of any kind, whether as to
merchantability, or fitness for a particular purpose, or otherwise.
(f) Home Properties acknowledges that it or its affiliate is managing
the Property and that certain of the information upon which the Partnership
has relied in making the aforesaid representations and warranties was
supplied by such manager.
9. REPRESENTATIONS AND WARRANTIES OF HOME PROPERTIES AND HME.
(a) Home Properties and HME represent and warrant that each of the
following is true, complete and accurate as of the date of this Agreement,
and will be true, complete and accurate as of the Closing Date, and, 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 the Registration Rights Agreement by HME, nor
the execution and delivery of the Lock-Up Agreement by HME and Home
Properties, nor the execution and delivery of the Amendment (as hereinafter
defined) by Home Properties, nor the execution, delivery and performance
of all other agreements contemplated by this Agreement, nor the issuance
and delivery of the OP Units by Home Properties, will conflict with, or
result in any breach of, any contract, agreement, law, rule or regulation
to which either HME or Home Properties is a party, or by which either HME
or Home Properties is bound.
(3) Subject to the approval of the Board of Directors of HME (the
"Board"), which Home Properties agrees to use all good faith reasonable
efforts to obtain 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 Unit
Partner good and marketable title to the OP Units allocated to such Unit
Partner, free and clear of all liens, charges, encumbrances and
restrictions, except as contained in the Operating Partnership Agreement,
the Registration Rights Agreement, and the Lock-Up Agreement, and shall, by
execution of the Amendment, admit each Unit Partner as a limited partner in
Home Properties.
(7) The Operating Partnership Agreement attached as EXHIBIT E, to
this Agreement is true, complete and accurate as at the date of this
Agreement, and shall not be further amended prior to the Closing Date,
except for (i) amendments in connection with the issuance of additional
shares under HME's Dividend Reinvestment Stock Purchase, Resident Stock
Purchase and Employee Stock Purchase Plan, and (ii) amendments in
connection with mergers or other transactions wherein additional OP Units
are issued in connection with the acquisition of real property, or of
interests in entities which own real property.
(8) through (11) -- [Intentionally Omitted]
(12) All financial information heretofore or hereafter furnished by
HME or Home Properties concerning such entities is, and shall be, true,
complete and correct in all material respects as of the date therein
specified. All of the information furnished and statements made by HME or
Home Properties to the Partnership with respect to this Agreement, and in
the periodic filings (as updated) by HME or Home Properties with the
Securities and Exchange Commission, are true and correct in all material
respects and do not misstate or fail to state any material fact.
(13) 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.
(14) 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.
(15) Except: (i) as disclosed in writing to the Partnership; (ii) for
liabilities and obligations incurred in the normal course of business of
HME or Home Properties; and (iii) as otherwise disclosed in this Agreement
or in periodic filings (as updated) by HME or Home Properties, HME and Home
Properties has no material liability or obligation of any nature which 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).
(16) HME and Home Properties will file when due all notices, reports
and returns of Taxes (as defined below) required to be filed after the
Closing Date and will pay, all Taxes and other charges for the periods
shown to be due on such notices, reports and returns arising after Closing.
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, excise, property, sale, gross
receipts, employment and franchise taxes imposed by the United States, or
any state, county, local or foreign government, or subdivision or agency
thereof with respect to the assets or the business of the Partnership, and
including any interest, penalties or additions attributable thereto, which
arise after Closing .
(17) The provisions of Section 4 (a), (b), (c) and (d) of this
Agreement, and the provisions of Section 7.1 (d), (e), (f) and (g) of this
Agreement, are incorporated by reference herein as if recited at length as
a representation and warranty of HME and Home Properties.
(18) HME and Home Properties will be responsible for all activities,
operations, debts, liabilities of and claims against the Partnership which
arise and result from occurrences from and after Closing.
(b) All of the representations and warranties of Home Properties, and
HME, set forth in this Agreement, including, without limitation, the
following indemnity, shall survive the Closing, and shall not be deemed to
have merged in any document delivered at the Closing.
(c) Home Properties and HME agree to indemnify the Partnership and
each Partner, and hold harmless and defend the Partnership and each
Partner, from and against any and all losses, costs, claims, liabilities,
taxes (including taxes on any indemnification amount), damages and
expenses, including, without limitation, reasonable attorneys' fees,
arising as the result of a breach of any of the obligations, covenants,
representations and/or warranties of Home Properties and/or HME set forth
in this Agreement.
10. CONDITIONS TO THE OBLIGATIONS OF HOME PROPERTIES.
(a) Without limiting any of the rights of Home Properties elsewhere
set forth in this Agreement, it is agreed that the obligations of Home
Properties under this Agreement shall be subject to the satisfaction of the
following conditions ("Home Properties' Conditions"):
(1) All of the representations and warranties of the Partnership set
forth in this Agreement shall be true, accurate and correct in all material
respects as of the Closing Date (as if made on the Closing Date).
(2) Prior to the expiration of the Due Diligence Period, the Board
shall have approved the acquisition of the Property by Home Properties and
HME on the terms and conditions set forth in this Agreement.
(3) On or before the Closing Date, all of the management agreements
(except any management agreement with Home Properties or its affiliates)
pertaining to the Property shall have been terminated (effective as at the
completion of the Closing on the Closing Date), without cost or expense to
Home Properties.
(4) As at the Closing Date, the Refunded Bonds shall be in full force
and effect, with no default or right to accelerate occurring thereunder.
(5) The Partnership shall have delivered to Home Properties all of
the documents and other items required to be delivered by the Partnership
to Home Properties under the terms of this Agreement.
(6) The General Partner shall have executed an agreement whereby he
agrees that he will be responsible for making all final distributions to
the former Partners of the Partnership from (i) any amounts remaining in
the Reserve Amount and/or Contingency Account (as the case may be) at the
time of expiration of such Accounts, and (ii) and from any other
Partnership funds that the General Partner holds, and shall indemnify Home
Properties for all claims relating thereto.
(7) 100% of the interests of the Partners shall have agreed in
writing within sixty (60) days after the execution of this Contribution
Agreement to exchange their Interests in the Partnership for cash and/or OP
Units and assignments for such interests shall have been received by
Closing.
(8) Within two hundred ten (210) days after the Partnership shall
have applied to the Bond Issuer to refund the Bonds, the Bond Issuer shall
have issued and closed the Refunded Bonds as described in Section 5 of this
Agreement.
(9) The average occupancy rate for the Property for the ninety (90)
day period prior to Closing shall not be less than seventy five percent
(75%).
(10) The fulfillment by the Partnership of such other conditions to
Closing as are set forth in this Agreement, including, without limitation,
the performance by each Partnership of the obligations and covenants of
such Partnership set forth in this Agreement.
(11) Home Properties shall have no obligation to issue OP Units to any
Partner who does not demonstrate to Home Properties' reasonable
satisfaction that he is an accredited investor as defined in applicable
securities laws.
(b) Each of Home Properties' Conditions is for the benefit of Home
Properties, and, accordingly, any such condition may be waived by Home
Properties at any time.
(c) If any Home Properties' Conditions shall not have been fulfilled
by the Partnership, or otherwise satisfied, or waived, by Home Properties,
Home Properties shall have the right to terminate this Agreement by written
notice to the Partnership, in which event this Agreement shall, thereafter,
be deemed to be null, void and of no further force or effect, and neither
party shall have any further rights or obligations under this Agreement,
but subject to the provisions of Section 23 of this Agreement.
11. CONDITIONS TO THE OBLIGATIONS OF THE PARTNERSHIP.
(a) Without limiting any of the rights of the Partnership elsewhere
set forth in this Agreement, it is agreed that the obligations of the
Partnership under this Agreement shall be subject to the satisfaction of
the following conditions (the "Partnership's Conditions"):
(1) All of the representations and warranties of Home Properties, and
HME, set forth in this Agreement shall be true, accurate and correct as of
the Closing Date (as if made on the Closing Date).
(2) Home Properties shall have delivered to the Partnership all of
the documents and other items required to be delivered by Home Properties
under the terms of this Agreement.
(3) 100% of the interests of the Partners shall have agreed in
writing within sixty (60) days after the execution of this Contribution
Agreement to exchange their Interests in the Partnership for cash and/or OP
Units and assignments for such interests shall have been received by
Closing.
(4) Within two hundred ten (210) days after the Partnership shall
have applied to the Bond Issuer to refund the Bonds, the Bond Issuer shall
have issued and closed the Refunded Bonds as described in Section 5 of this
Agreement.
(5) Intentionally Omitted.
(6) Intentionally Omitted.
(7) The fulfillment by Home Properties of such other conditions to
Closing as are set forth in this Agreement.
(b) Each of the Partnership's Conditions is for the benefit of the
Partnership, and, accordingly, any such condition may be waived by the
Partnership at any time.
(c) If any of the Partnership's Conditions shall not have been
fulfilled by Home Properties, or otherwise satisfied, or waived by the
Partnership, the Partnership shall have the right to terminate this
Agreement by written notice to Home Properties, in which event this
Agreement shall, thereafter, be deemed to be null, void and of no further
force or effect, and neither party shall have any further rights or
obligations under this Agreement, but subject to the provisions of Section
23 of this Agreement.
12. INSPECTION PERIOD. Subject to the rights of existing tenants at the
Property, Home Properties shall have a period of thirty (30) days from and
after the date of this Agreement (the "DUE DILIGENCE PERIOD") within which
to cause one or more surveyors, attorneys, engineers, auditors, architects,
and/or other experts of its choice (i) to inspect any document related to
any Property, including, without limitation, all Leases and related
documents, documents pertaining to the Bonds, working drawings, plans and
specifications, surveys, appraisals, engineer's reports, environmental
reports, insurance policies, service contracts, real estate tax receipts
and annual and monthly operating statements, and (ii) to inspect, examine,
survey, appraise and obtain engineering inspection and environmental
reports with respect to the Property, documents pertaining to the Bonds, or
all of the Property, and otherwise to do all that, which, in the opinion of
HME, is necessary to determine the condition and value of the Properties
for the uses intended by Home Properties, provided, however, that Home
Properties shall not conduct any environmental study of any Property beyond
a Phase 1 level without the consent of the Partnership, which consent shall
not be unreasonably withheld. Home Properties may declare the Due
Diligence Period ended at any earlier time. Home Properties must be
satisfied in all respects (in the sole and absolute discretion of Home
Properties) with the results of all reviews, inspections and investigations
conducted by, or under, Home Properties during the Due Diligence Period.
If Home Properties shall not be so satisfied, Home Properties may, within
the Due Diligence Period, terminate this Agreement, in which event Home
Properties shall have no obligation or liability under this Agreement, or
with regard to the Partnership or the Property, and this Agreement shall,
thereafter, be null, void and of no further force or effect. If not so
terminated by Home Properties, this Agreement shall continue in full force
and effect according to its terms. Home Properties shall be responsible
for payment of all of the costs of its due diligence activities, including,
without limitation, all engineering and environmental reports, and all
financial and Lease audits. Home Properties and HME shall indemnify and
hold the Partnership harmless from and against any and all loss, claims,
damage and expense arising out of entry by Home Properties and its agents
onto the Property and any testing performed thereon; Home Properties and
HME shall repair any damage which it may cause as a result of any such
entry and testing; Home Properties and HME shall cause their entry,
inspections and testing (if any) to be conducted in a manner so as to
minimize disruption to tenants at the Property.
Home Properties and HME shall give written notice to the Partnership as
soon as the Board has, pursuant to paragraphs (a)(3) and (a)(4) of Section
9 hereof, acted upon a request for approval of this Agreement and the
transactions envisioned herein. In the event that the Board has failed to
approve, or Home Properties shall fail to give the Partnership notice of
approval, within the Due Diligence Period, the Partnership shall have the
right to terminate this Agreement by giving written notice to Home
Properties, in which event neither party shall have any further obligation
under this Agreement.
13. TITLE.
(a) At Closing, the Partnership will hold good, marketable and insurable
fee
simple title to the Property, free and clear of all liens, charges and
encumbrances, except the Permitted Exceptions.
(b) Within 10 days of the execution of this Contribution Agreement, the
Partnership will furnish and deliver to Home Properties a copy of the most
recent title policy issued with respect to the Property and a copy of the
most recent survey of the Property.
(c) The obligation of Home Properties to complete the transaction
described in this Agreement is conditioned upon the ability of Home
Properties to obtain title insurance with respect to the Property insuring
that, as of the Closing Date, title to the Property is not subject to any
liens, encumbrances or other than the Permitted Exceptions.
(d) The Partnership agrees that, upon the request of Home Properties, it
will provide an affidavit in such customary form as shall allow to obtain a
non-imputation endorsement to the title policy purchased by Home
Properties.
(e) If any title commitment, UCC search or survey discloses exceptions to
title other than the Permitted Exceptions, or any other matter which does
not conform to the requirements of this Agreement, Home Properties shall so
notify the Partnership in writing, such notice to be furnished to the
Partnership, if at all, within fifteen (15) days following receipt by Home
Properties of the title commitments, the UCC searches and surveys, but not
later than the end of the Due Diligence Period. The Partnership shall have
the right, but not the obligation, within forty-five (45) days from the
date of the receipt of such notice by the Partnership (the "Correction
Period"), to have each such unpermitted exception to title removed, or to
correct each such other matter, in each case to the reasonable satisfaction
of the Home Properties. Home Properties shall have no obligation to close
within the Correction Period unless the Partnership shall have caused each
unpermitted exception to be removed or corrected to the reasonable
satisfaction of Home Properties. If, within the Correction Period, the
Partnership fails to have each such unpermitted exception removed, or to
correct each such other matter as aforesaid, Home Properties may, at its
option, and as the sole and exclusive remedy of Home Properties, either (i)
terminate this Agreement, in which event this Agreement, without further
action of the parties, shall become null and void such that neither party
shall have any further rights or obligations under this Agreement, or (ii)
elect to take title to each Property as it then is. If Home Properties
fails to make either such election within five (5) days following the
expiration of the Correction Period, Home Properties shall be deemed to
have elected option (ii). Any exception to title (other than a Permitted
Exception), or any other matter which does not conform to the requirements
of this Agreement, to which the Home Properties does not object, as
aforesaid, shall be deemed approved by Home Properties, and shall be deemed
to be an additional Permitted Exception. Notwithstanding anything to the
contrary contained herein, the Partnership shall be obligated to remove (or
to cause the title company to affirmatively insure over) at the expense of
the Partnership (a) any mortgages or deeds to secure debt regarding any
financing obtained by any Partnership, other than the Bonds; (b) any
mechanic's or materialman's lien for work done on any Property on behalf of
the Partnership; and (c) any other monetary lien against any Property
resulting from any act or omission of the Partnership.
(f) If required by Home Properties, the Partnership shall obtain at Home
Properties' sole expense, within thirty (30) days after issuance and
closing of the Refunded Bonds, a current survey of the Property prepared by
a duly licensed surveyor selected by Partnership. The survey shall be in
form and substance reasonably satisfactory to Home Properties, but it shall
not be required to meet the Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys.
14. CLOSING DATE. If this Agreement shall not have been terminated by
Home Properties, or the Partnership, for any of the reasons set forth in
this Agreement, and within the time(s) herein limited, the closing of the
transaction contemplated by this Agreement (the "Closing") shall occur
within ten (10) days after the expiration of one hundred eighty (180) days
after issuance and closing of the Refunded Bonds, but if Closing does not
take place within one (1) year from the date of this Agreement, either
party shall have the right to terminate this Agreement by giving written
notice to the other party`, in which event neither party shall have any
further obligation under this Agreement; provided, however, that if Closing
does not take place within the time aforesaid due to breach of this
Agreement by one of the parties, the other party may extend the time for
Closing for an additional one hundred eighty (180) days and/or avail itself
of any of its other rights under this Agreement (any such day upon which
the Closing occurs being herein referred to as the "Closing Date"). Home
Properties and HME agree to use commercially reasonable good faith efforts
to expeditiously attempt to obtain all necessary approvals of the Bond
Issuer. The Closing shall be held at the Partnership's office, at such
time, or at such other place, as may be mutually agreed upon by the
parties.
15. CLOSING DOCUMENTS.
(a) At or prior to the Closing, the Partnership shall deliver to Home
Properties the following, each of which shall be in form and substance
satisfactory to Home properties:
(1) An estoppel certificate from the Bond Issuer, the holder of the
Refunded Bonds or some other person with knowledge, confirming that there
is no default under the Bonds, and that there exists no event that with the
passage of time or the giving of notice, or both, would constitute such a
default
(2) any and all affidavits, certificates or other documents reasonably and
customarily required by the title company in order to cause it to issue the
title policy regarding the Property in the form and condition required by
this Agreement;
(3) an update of the Rent Roll pertaining to the Property (including a
listing of all delinquent and prepaid rents, and all security deposits
(including all interest due to tenants pursuant to Maryland or other
applicable laws), dated as of (or as close as reasonably practicable to)
the Closing Date, and represented and certified by the Partnership to be
true, accurate, complete and correct in all material respects;
(4) to the extent in the possession of the Partnership all of the original
Leases, Service Contracts and Equipment Leases (in the case of the
Equipment Leases or Service Contracts, limited to those Equipment Leases or
Service Contracts which Home Properties is required, or has elected, to
assume under this Agreement (such materials shall remain at the rental
office and need not be brought to Closing);
(5) all keys to the Property in the possession of the Partnership, which
shall be remain at the rental office and need not be brought to Closing;
(6) duly executed certificates of title, and other transfer documents,
with regard to any vehicle owned by the Partnership;
(7) a certified copy of the Certificate of Limited Partnership of the
Partnership, and such other evidence of the Partnership's power and
authority as the title company may reasonably request;
(8) a letter to each of the tenants in the Property advising them of the
change of beneficial ownership of the Property, and the transfer of the
Security Deposits, and directing that rentals or other payments thereafter
be paid to a payee designated by Home Properties;
(9) such existing maintenance records in regard to the Property which Home
Properties may request not later than five (5) days prior to the Closing
Date (which shall be delivered at the Property);
(10) the currently effective Licenses regarding the Property, or other
reasonably acceptable evidence of the right to use and occupy the Property;
(11) signed notices to each utility service provider, advising of the
change in beneficial ownership of the Property;
(12) a signed counterpart of the Lock-Up Agreement;
(13) a signed counterpart of the Registration Rights Agreement;
(14) a signed counterpart of the Amendment to the Operating Partnership
Agreement admitting the Unit Partners as limited partners of Home
Properties (the "Amendment");
(15) a statement of the aggregate amount of the Security Deposits (with
interest) as shown on the updated Rent Roll , which amount shall be
adjusted as more fully provided in Section 16 (d); and
(16) such additional documentation as Home Properties, or the title
company, may reasonably deem necessary or desirable in order to effectuate
the transaction contemplated by this Agreement.
(17) a signed counterpart of the Escrow Agreement-Reserve Amount in form
substantially similar to Exhibit H;
(18) a signed counterpart of the Indemnification Agreement Amount in form
substantially similar to Exhibit F;
(19) an assignment of the Partnership interests in form and substance
reasonably acceptable to Home Properties.
(b) At the Closing, Home Properties shall deliver to the Partnership the
following, each of which shall be in form and substance satisfactory to
such Partnership:
(1) proof of the issuance of the OP Units allocated to the Unit Partners
(by and through the execution and delivery of the Amendment, which shall
evidence and reflect the ownership of the OP Units by such Partners);
(2) Intentionally Omitted;
(3) a receipt for the Security Deposits and evidence that the Security
Deposits have been placed into a segregated account as required by such
Section;
(4) a certificate of the Secretary of HME certifying that the Board of
Directors of HME have duly adopted resolutions authorizing the transaction
contemplated by this Agreement, and the execution of all of the Closing
documents to be executed and delivered by Home Properties pursuant to this
Agreement;
(5) a sworn statement on behalf of HME certifying that the person signing
documents in connection with the transaction contemplated by this Agreement
on behalf of Home Properties is authorized to do so;
(6) a signed counterpart of the Registration Rights Agreement;
(7) a signed counterpart of the Lock-Up Agreement;
(8) a signed counterpart of the Amendment;
(9) signed counterparts of all other documents listed in Section 15(a)
required to be signed by Home Properties;
(10) a certified copy of the Operating Partnership Agreement;
(11) on behalf of HME, a certificate of good standing from the Secretary of
State of Maryland;
(12) on behalf of Home Properties, a certificate of good standing from the
Secretary of State of New York; and
(13) such additional documentation as the Partnership may reasonably deem
necessary to effectuate the transaction set forth in this Agreement.
16. ADJUSTMENTS.
(a) The following items shall be adjusted between the Partnership and Home
Properties as of the date of the Closing Date (it being understood that the
Partnership shall have the benefit of monies received and expenses incurred
on the date of Closing) and shall be paid in cash at Closing:
(1) interest on the Refunded Bonds;
(2) real estate and personal property taxes,
(3) rents under the Leases for the relevant month, as and when collected;
(4) coin operated laundry concession income;
(5) charges for water, sewer, electricity, fuel, gas, telephone and other
utilities, which are not metered or otherwise charged directly to tenants
under the Leases; provided that if the consumption of any such utilities is
measured by meters, at Closing the Partnership shall furnish a current
reading of each meter, and provided, further, that if there is not a meter,
or if the meter(s) cannot be read by the relevant utility prior to the
Closing, the charges therefor shall be adjusted at the Closing on the basis
of the charges for the prior period for which bills were issued, and shall
be further adjusted when the bills for the period including the Closing
Date are issued;
(6) amounts paid or payable under the Service Contracts to be assigned to
and assumed by Home Properties;
(7) fees paid for assignable current Licenses;
(8) insurance and tax escrows; prepaid real taxes; prepaid mortgage
insurance; replacement reserve escrows; other expenses of operation.
(9) any special assessment for public improvements or otherwise which is
or may become payable with respect to the Property in annual installments;
such other amounts as are customarily adjusted between parties to similar
transactions in the local jurisdiction
(b) Rents which are due and payable to the Partnership by any tenant but
uncollected as of the Closing Date shall not be adjusted at the Closing.
All rents collected by Home Properties after the Closing Date shall be
applied first to any due but unpaid rentals accruing subsequent to the
Closing Date, and then to any rents past due for the calendar month in
which the Closing Date occurs (subject to adjustment), and then to any
rents due and unpaid prior to the Closing Date. All rent collected after
Closing for any period prior to the Closing shall belong to the
Partnership, and if paid to Home Properties, Home Properties shall promptly
send such rent to the General Partner for distribution to the former
Partners of the Partnership pursuant to the agreement described in
subparagraph (a) (6) of Section 10, less all reasonable expenses incurred
by Home Properties, if any, in regard to the collection thereof. At the
Closing, the Partnership shall deliver to Home Properties a schedule of all
such past due, but uncollected rents owed by tenants. All rents collected
by the Partnership, prior to Closing, for rental period(s) subsequent to
the Closing shall be paid by the Partnership to Home Properties at the
Closing or deducted as an adjustment at Closing. All rents collected by
Home Properties or the Partnership for rental periods after the Closing
shall belong to Home Properties, and if paid to the Partnership, the
Partnership shall promptly send such rent to Home Properties.
(c) Any adjustment estimated at the Closing shall be finally adjusted as
soon as practicable after the Closing. Any error in the calculation of
apportionments shall be corrected subsequent to the Closing with
appropriate credits to be given based upon corrected adjustments; provided,
however, that all adjustments (except as to errors caused by
misrepresentation) shall be deemed final upon the expiration of ninety (90)
days after the Closing Date.
(d) Intentionally Omitted.
(e) The Partnership shall be responsible for, and shall make arrangements
for payment of, all amounts due to the Closing Date for employees,
salaries, accrued vacation pay, withholding and payroll taxes, and other
benefits, and any management fee affecting the Property (the General
Partner may utilize one or more payroll periods after Closing to finalize
these payments); Home Properties shall be responsible for all such expenses
commencing upon the Closing Date.
17. POSSESSION. Upon completion of the Closing, the Partnership shall
deliver to Home Properties full and complete possession of the Property,
subject only to the Permitted Exceptions and such other agreements and
matters as may be agreed to by the General Partner and Home Properties .
18. CONDEMNATION AND DESTRUCTION.
(a) If, prior to the Closing Date, the Property, or any part of any
Property, is taken by eminent domain (or is the subject of a pending or
contemplated taking which has not been consummated), the Partnership shall
notify Home Properties of such fact, and Home Properties shall have the
option (which option shall be set forth in a notice from Home Properties to
the Partnership given not later than fifteen (15) business days after
receipt of the notice from the Partnership):
(i) to terminate this Agreement, and, thereafter, this Agreement shall be
deemed to be null, void and of no further force or effect between the
parties; or
(ii) to accept title to the Property (other than the portion so taken),
without abatement of the Consideration, in which event the Partnership
shall assign and turn over to Home Properties at the Closing, and Home
Properties shall be entitled to receive and keep, all amounts awarded, or
to be awarded, as the result of the taking.
(b) If, prior to the Closing Date, all or any material part of any
Property is damaged or destroyed by fire or other casualty, the Partnership
shall notify Home Properties of such fact, and Home Properties shall have
the option (which option shall be set forth in a notice from Home
Properties to the Partnership given not later than fifteen (15) business
days after receipt of the notice from the Partnership):
(i) to terminate this Agreement, and, thereafter, this Agreement shall be
deemed to be null, void and of no further force or effect between the
parties; or
(ii) to accept title to the relevant Property without abatement of the
Consideration, in which event the Partnership shall assign to Home
Properties, at the Closing, all of the right, title and interest of the
Partnership in and to the insurance proceeds awarded or to be awarded to
the Partnership as the result of such damage or destruction.
(c) In the event there is damage to or destruction of an Immaterial (as
hereinafter defined) part of the Property by fire or other casualty, such
damage or destruction shall, subject to receipt of insurance proceeds, be
repaired promptly by the Partnership, and in the event such damage or
destruction cannot be fully repaired by the Closing Date, then at the
option of Home Properties (i) the Closing shall be postponed until such
repairs shall have been completed, or (ii) the Closing shall be held as
scheduled, and Home Properties shall accept title to the Property without
abatement of the Consideration, in which event the Partnership shall assign
to Home Properties, at the Closing, all of the right, title and interest of
the Partnership in and to the insurance proceeds awarded or to be awarded
to the Partnership as the result of such damage or destruction.
(d) An "Immaterial" part of the Property shall be deemed to have been
damaged or destroyed if the cost of repair or replacement thereof shall be
$250,000, or less, and a "Material" part thereof shall be deemed to have
been damaged or destroyed if the cost of repair or replacement thereof
shall be greater than $250,000.
20. BROKER'S COMMISSION. The Partnership and Home Properties each
represent to the other than the transaction described in this Agreement was
not brought about or assisted in any way by any broker, firm or salesman,
or other person or persons acting or functioning as, or in a role similar
to a broker (any such broker, firm or salesman, or other person, is herein
referred to as a "Broker"). Each party agrees that should any claim be
made for a commission or other compensation with regard to this transaction
by any Broker claiming through that party, other than a Broker engaged in
writing by the other party, such party shall have the sole responsibility
for paying any such claim, and shall indemnify and hold harmless the other
party from and against any such claim of any Broker, and all liabilities
and expenses in connection therewith, including court costs and attorneys,
fees and expenses.
21. Intentionally Omitted.
22. COOPERATION. At all times during the term and pendency of this
Agreement, the Partnership will cooperate fully with Home Properties (but
with no obligation to incur cost or expense in connection therewith) in all
reasonable manner in providing books, records and other documentation for
review, including, without limitation, all Leases and related documents,
copies of documentation relating to the Existing Loan, working drawings,
plans and specifications, surveys, appraisals, engineer's reports,
environmental reports, insurance policies, service contracts, real estate
tax receipts, copies of tax returns filed by the Partnership, and annual
and monthly operating statements relating to the Property, and in the
possession of, or reasonably available to the Partnership. Subject to
existing tenant leases, the Partnership will provide access to the Property
for all physical inspections required by Home Properties. The Partnership
will provide access by the representatives of Home Properties to all
financial and other information relating to the Property as is sufficient
to enable such representatives to prepare audited financial statements, at
the expense of Home Properties, in conformity with Regulation S-X of the
Securities and Exchange Commission (the "Commission"), and any registration
statement, report or disclosure statement required to be filed with the
Commission. Home Properties shall conduct itself and its examinations in a
manner to minimize disruption to the staff and tenants of the Partnership
and Property.
23. DEFAULTS AND REMEDIES.
(a) If the Partnership fails or refuses to perform in accordance with the
terms of this Agreement, including, without limitation, the failure or
refusal to perform any covenant or obligation on the part of the
Partnership to perform, prior to the Closing, or if any of the
representations, warranties and covenants of the Partnership contained in
this Agreement shall not be true, complete and correct at Closing, Home
Properties may terminate this Agreement, in which event Home Properties
shall be entitled to reimbursement by the Partnership of the actual out-of-
pocket due diligence costs incurred by Home Properties in connection with
proposed acquisition of the Interests, up to the sum of $10,000 (after the
payment of which, this Agreement shall be deemed null, void, and of no
further force or effect between the parties). The parties agree and
understand that in no event shall the Partnership be liable for any damages
in excess of the aforesaid $10,000 and that the aforesaid limitation of
liability is a material inducement for the Partnership to enter into this
Agreement.
(b) If Home Properties fails or refuses to perform in accordance with the
terms of this Agreement, $50,000.00 ("Liquidated Damages Amount") shall be
paid to the Partnership as liquidated damages (which shall be the sole and
exclusive remedy of the Partnership against Home Properties), at which time
this Agreement shall be deemed to be null, void and of no further force or
effect between the parties. In that regard, the Partnership acknowledges
and agrees that (i) the Liquidated Damages Amount is a reasonable estimate
of, and bears a reasonable relationship to, the damages suffered and costs
incurred by the Partnership as a result of having subjected the Interests
to the terms of this Agreement; (ii) the actual damages suffered and costs
incurred by the Partnership as a result of such failure of Home Properties
to close under this Agreement would be extremely difficult and impractical
to determine; (iii) Home Properties seeks to limit its liability under this
Agreement to the amount of the Liquidated Damages Amount 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 Liquidated Damages Amount shall be and constitute valid
liquidated damages. The foregoing limitation shall apply only in the event
that Home Properties does not close the transaction contemplated by this
Agreement, and such limitation shall not apply in the event that Home
Properties closes and thereafter Home Properties or HME breaches one of its
obligations hereunder after Closing
24. OTHER PROHIBITED ACTIVITIES.
(a) During the term and pendency of this Agreement, the Partnership will
cease to market the Property, and, in that regard, the Partnership will
refrain from soliciting or accepting any offer from any third party, or,
engaging in any discussion with any third party concerning the sale,
refinancing or recapitalization of the Property.
(b) Both Home Properties and the Partnership agree to keep this Agreement
confidential, and not to disclose its contents to anyone except their
respective lenders, legal counsel and accountants, and except to the
Partners 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.
25. RISK OF LOSS. Until the Closing, the risk of loss or damage to all or
any part of any Property, from fire or other casualty, or from
condemnation, shall be borne by the Partnership, subject to the terms of
this Agreement.
26. NOTICES.
(a) all notices, demands, or requests made and/or given pursuant to,
under, or by virtue of this Agreement must be in writing and sent to the
party to which the notice, demand or request is being made and/or given, by
postage prepaid, certified or registered mail, return receipt requested, by
nationally recognized courier service, or by personal delivery, as follows:
(i) if to the Partnership:
Old Friends Limited Partnership
14 Straw Hat Road
Owings Mills, Maryland 21117
Attention: Herbert J. Siegel, General Partner
With copy to:
William D. Shaughnessy, Jr.
Tydings & Rosenberg, LLP
100 E. Pratt St.
Baltimore, MD 21201
and
(ii) if to Home Properties:
c/o Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Attention: Norman P. Leenhouts, Chairman and
Co-Chief Executive Officer
(b) Any such notice, demand or request shall be deemed to have been
rendered or given on the date of receipt, in the case of delivery by
courier service or personal delivery, or three (3) business days after
mailing.
27. ASSIGNMENT. Neither this Agreement nor any interest hereunder shall
be assigned or transferred by the Partnership or by Home Properties.
28. GOVERNING LAW. The corporate laws of the State of Maryland will
govern all questions concerning the relative rights and obligations of the
parties with respect to any HME Common Shares acquired or acquirable by the
holders of OP Units on account of their OP Units. Except as limited by the
Operating Partnership Agreement, the laws of the State of New York will
govern all other questions concerning the relative rights and obligations
of the holders of OP Units as limited partners in Home Properties, or
otherwise with respect to the OP Units. This Agreement shall, otherwise,
be governed, construed and interpreted in accordance with the laws of the
State of Maryland applicable to contracts made and to be performed wholly
within the State of Maryland without giving effect to the conflicts-of-laws
principles thereof.
29. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the various documents
referred to herein contains, or incorporates, all of the terms agreed upon
between the parties with respect to the subject matter, and supersedes any
and all prior written or oral understandings. This Agreement may not be
modified or amended except in, and by, a written instrument executed by the
parties hereto.
30. Intentionally Omitted.
31. 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.
32. 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.
33. CONDITION OF APARTMENTS. The Partnership will use commercially
reasonable efforts, in accordance with its existing business practices, to
ensure that at the time of the Closing the vacant apartment units are in
rentable condition. The parties recognize that tenants at the Property
move out at various times and that it may not be possible for all units to
be fully prepared at the time of Closing. Accordingly, the Partnership
shall be fully responsible for insuring that all units that have been
vacated 30 or more days prior to Closing shall be in full rentable
condition. In the event that any apartment unit vacant 30 or more days
prior to Closing is not in rentable condition, Home Properties shall
receive a closing credit equal to the amount reasonably necessary to bring
that unit to rentable condition based on a standard typical for the
Property. For units vacated within 30 days prior to Closing, the
Partnership will continue to use commercially reasonable efforts, in
accordance with its existing business practices, to prepare such units for
subsequent tenancy, however, if any such units are not in full rentable
condition at the time of Closing there shall be no credit given to Home
Properties. The provisions of this Section are subject to the provisions
of Section 7(a)(1).
34. MISCELLANEOUS.
(a) Subject to existing tenant leases, upon reasonable notice and during
business hours between the date of this Agreement and the Closing Date,
Home Properties, and agents and representatives of Home Properties, shall
have the right to enter upon any Property for the purpose of examining,
inspecting and testing such Property, provided that Home Properties shall
conduct itself in a manner to minimize disruption to tenants and staff at
the Property.
(b) The Partnership acknowledges that audited financial statements
pertaining to the Property for a minimum of one, and a maximum of three,
prior calendar year(s) of operation, and the portion of the calendar year
in which the Closing occurs, up to the Closing Date, are required to be
filed by Home Properties with the Securities and Exchange Commission after
the Closing. Accordingly, the General Partner agrees to provide Home
Properties, and its representatives, with access to the books and records
of the Partnership pertaining to the Property after the Closing, upon
reasonable advance notice, in order to conduct the required audit, at the
expense of Home Properties. After the Closing, the General Partner will
provide, or cause to be provided, a signed Representation Letter, in the
form of EXHIBIT G attached hereto, with respect to the Property owned by
the Partnership.
(c) The parties hereto recognize that, at the Closing Date, the
Partnership will terminate for federal income tax purposes. The General
Partner hereby covenants to cause the tax returns to be prepared for the
Partnership for the period up to the Closing Date. Home Properties shall
make available to the General Partner (and his representatives) promptly
upon request, all financial and other information relating to the
Partnership which is necessary to permit the General Partner to file a tax
return on behalf of the Partnership for its taxable year ended on the
Closing Date, and for such other purposes as may be requested by the
General Partner in order to wind up business affairs for the entity and the
Partners.
(d) Time is of the essence of this Agreement. In the computation of any
period of time provided for in this Agreement, or by law, the day of the
act or event from which the period of time runs shall be excluded, and the
last day of such period shall be included, unless it is a Saturday, Sunday,
or legal holiday, in which case the period shall be deemed to run until the
end of the next day which is not a Saturday, Sunday, or legal holiday.
(e) The General Partner shall cause tax returns for the Partnership for
the period up to the Closing Date to be completed and filed when due; a
copy of such final tax return shall be submitted to Home Properties
promptly upon its filing with the IRS. No later than the later of (i)
December 31, 1999 or (ii) thirty (30) days after Closing, the General
Partner shall also provide Home Properties with a schedule showing: (i) the
net book value of the Property and the Personal Property owned by the
Partnership as of the Closing Date; and (ii) an updated Schedule 3
providing the actual information which was estimated in such Schedule. The
obligation of Home Properties contained in Section 7.1(d) and the
representations of Home Properties as contained in Section 9(a)(17) are
conditioned upon the actual information updated pursuant to this Section
34(e) not being materially different from the estimated information. The
information on the Schedule shall be calculated in a manner consistent with
the calculations made for federal income tax depreciation purposes.
(f) The date upon which this Agreement shall have been signed by both the
Partnership and Home Properties shall be considered to be the date of this
Agreement.
(g) The Partnership and the General Partner agree that they will not trade
in common stock of HME, or cause such stock to be traded on their behalf,
prior to the Closing Date.
(h) This Agreement may be executed in counterparts and by facsimile
signatures.
(i) HME will cause the manager of the Property to abide by, adhere to and
act in all respects consistently, cooperatively and in conformance with,
all of the provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Partnership and Home Properties have executed this
Agreement as at the day and year first above written.
OLD FRIENDS LIMITED PARTNERSHIP
By:
Herbert J. Siegel, General Partner
Date:
Herbert J. Siegel, as General Partner,
but only for purposes of acknowledging and agreeing to the provisions of
subparagraph (a)(6) of Section 10, paragraph (b) of Section 16 and paragraphs
(b), (c) and (e) of Section 34.
Date:
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties Of New York, Inc., General Partner
By:
Norman Leenhouts, Chairman and Co-Chief Executive Officer
Date:
HOME PROPERTIES OF NEW YORK, Inc.
By:
Norman Leenhouts, Chairman and Co-Chief Executive Officer
Date:
<PAGE>
LIST
OF
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Schedule of Partners
Schedule 2 - Schedule of Services Contracts and Equipment Leases
Schedule 3 - Schedule of Tax-Related Information on Partnership
Schedule 4 - Schedule of Liabilities
EXHIBITS
Exhibit A - Description of the Land
Exhibit A-1 - Description of Personal Property not included
Exhibit B - Lock-Up Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - Rent Rolls
Exhibit E - Operating Partnership Agreement
Exhibit F - Indemnification Agreement
Exhibit G - Representation Letter
Exhibit H - Escrow Agreement - Reserve Amount
<PAGE>
AMENDMENT NO. 1
TO CONTRIBUTION AGREEMENT
THIS AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT ("Amendment") made as of
the ____ day of June, 1999, by and among OLD FRIENDS LIMITED PARTNERSHIP,
a Maryland limited partnership ("Partnership") having its principal
office at 20 Pleasant Ridge Drive, Suite A, Owings Mills, Maryland 21117
and HOME PROPERTIES OF NEW YORK, L.P., a New York limited partnership
("Home Properties") and HOME PROPERTIES OF NEW YORK, INC., a Maryland
corporation ("HME"), both having their principal office at 850 Clinton
Square, Rochester, New York 14604.
W I T N E S S E T H:
WHEREAS, the Partnership, Home Properties and HME executed a Contribution
Agreement dated as of December 8, 1998 ("Contribution Agreement").
WHEREAS, the parties now desire to make certain changes to the
Contribution Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Terms not defined herein shall have the meanings ascribed to them by
the Contribution Agreement.
2. Section 2(b) of the Contribution Agreement shall be deleted and
replaced with the following:
Partnership shall provide evidence to Home Properties at Closing
that cash and/or securities worth at least $400,000 are in place in
Partnership accounts; however, Partnership shall receive a credit at
Closing in an amount equal to the principal payments paid by the
Partnership during the period between the Bond Closing and Closing
pursuant to the promissory note and loan and financing agreement made in
connection with the Refunded Bonds.
3. Section 23(b) of the Contribution Agreement shall be amended to add
at the end of the Section the following:
Notwithstanding the foregoing, in the event Home Properties fails to
close the transaction contemplated by the Contribution Agreement, the
Partnership shall have, as its sole additional remedy, the right to sue
Home Properties for specific performance to require Home Properties to
close as required by the Contribution Agreement. However, no default by
Home Properties shall entitle the Partnership to receive any damages in
excess of the Liquidated Damages Amount.
4. Louis J. Siegel and Andrew N. Siegel sign below as General Partners
to ratify the Partnership's execution of the Contribution Agreement, as
amended by this Amendment.
5. Except as modified by this Amendment, the Contribution Agreement
remains unchanged and in full force and effect.
OLD FRIENDS LIMITED PARTNERSHIP
By: ____________________________
Herbert J. Siegel, General Partner
Date: ____________________________
By: ____________________________
Louis J. Siegel, General Partner
Date: ____________________________
By: ____________________________
Andrew N. Siegel, General Partner
Date: ____________________________
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: ____________________________
Date: ____________________________
HOME PROPERTIES OF NEW YORK, INC.
By: ____________________________
Date: ____________________________
<PAGE>
AMENDMENT NO. 2
TO CONTRIBUTION AGREEMENT
THIS AMENDMENT NO. 2 TO CONTRIBUTION AGREEMENT ("Amendment") made as of
the ____ day of July, 1999, by and among OLD FRIENDS LIMITED PARTNERSHIP,
a Maryland limited partnership ("Partnership") having its principal
office at 20 Pleasant Ridge Drive, Suite A, Owings Mills, Maryland 21117
and HOME PROPERTIES OF NEW YORK, L.P., a New York limited partnership
("Home Properties") and HOME PROPERTIES OF NEW YORK, INC., a Maryland
corporation ("HME"), both having their principal office at 850 Clinton
Square, Rochester, New York 14604.
W I T N E S S E T H:
WHEREAS, the Partnership, Home Properties and HME executed a Contribution
Agreement dated as of December 8, 1998 ("Contribution Agreement").
WHEREAS, the Contribution Agreement was amended by Amendment No. 1 to
Contribution Agreement dated as of June 29, 1999.
WHEREAS, the parties now desire to make certain changes to the
Contribution Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Terms not defined herein shall have the meanings ascribed to them by
the Contribution Agreement.
2. A new Section 35 shall be added to the Contribution Agreement as
follows:
35. TRANSFER OF PARTNERSHIP INTERESTS. Notwithstanding anything to
the contrary set forth in this Agreement, Home Properties hereby directs
the Partners to assign 5% of the Partnership interests to Century
Investors, LLC, a New York limited liability company owned by Home
Properties. The remaining 95% of the Partnership interests shall be
assigned to Home Properties.
3. Except as modified by this Amendment, the Contribution Agreement
remains unchanged and in full force and effect.
OLD FRIENDS LIMITED PARTNERSHIP
By: ____________________________
Herbert J. Siegel, General Partner
Date: ____________________________
By: ____________________________
Louis J. Siegel, General Partner
Date: ____________________________
By: ____________________________
Andrew N. Siegel, General Partner
Date: ____________________________
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: ____________________________
Date: ____________________________
HOME PROPERTIES OF NEW YORK, INC.
By: ____________________________
Date: ____________________________
