EXHIBIT 2.5
SALE, PURCHASE AND ESCROW AGREEMENT
This Agreement, dated as of July 6, 2000, is made by and
between Bank of America, Trustee ("Seller"), under the provisions of
Virginia Land Trust Agreement NST-1, dated as of December 30, 1980 (the
"Land Trust"), and HOME PROPERTIES OF NEW YORK, L.P., a New York limited
partnership ("Buyer") and constitutes (I) a contract of sale and purchase
between the parties and (II) an escrow agreement between Seller, Buyer
and FIRST AMERICAN TITLE INSURANCE COMPANY OF NEW YORK ("Escrow Agent"),
the consent of which appears at the end hereof.
1.1. Seller owns and holds fee title to that certain land (the "Land")
described in EXHIBIT A, together with all improvements (the
"Improvements") located thereon known as East Meadow Apartments and
located at 4023 Majestic Lane, Fairfax, Virginia (collectively, the "Real
Property").
1.2. In connection with the Real Property, Seller has (I) obtained certain
governmental permits and approvals, (II) obtained certain contractual
rights and other intangible assets, and (III) acquired certain other
items of tangible personal property more completely described in EXHIBIT
B (collectively, the "Personal Property"). The Real Property and the
Personal Property are collectively referred to as the "Property."
1.3. Seller now desires to sell and Buyer now desires to purchase all of
Seller's right, title and interest in and to the Property, upon the terms
and covenants and subject to the conditions set forth below.
2.1. In consideration of the covenants herein contained, Seller hereby
agrees to sell and Buyer hereby agrees to purchase the Property for a
total purchase price of $13,000,000.00 (the "Purchase Price"), which
shall be paid by Buyer as follows:
2.1.1 DEPOSIT. Buyer has, concurrently herewith,
delivered to Escrow Agent by bank wire of immediately available
funds the sum of $250,000 (the "Deposit").
2.1.2 ADDITION TO DEPOSIT. Buyer shall, on or before July
27, 2000 (the last day of the Investigation Period - as defined in
Section 5.3.2), deliver to Escrow Agent, by bank wire transfer of
immediately available funds, an additional $250,000, such money to
become part of the Deposit, for an aggregate Deposit of $500,000.
2.1.3 BALANCE OF PURCHASE PRICE. Buyer shall, at or
before the Closing (as defined in Section 6.1), deliver to Escrow
Agent, by bank wire transfer of immediately available funds, a sum
equal to the balance of the Purchase Price. The balance of the
Purchase Price delivered to Escrow Agent by Buyer and that received
by Seller at Closing shall each be adjusted to reflect prorations
and other adjustments pursuant to Section 7.1 and Section 2.3.
Following the collection of the Deposit, Escrow Agent shall invest the
Deposit in an interest-bearing account of a banking institution whose
principal office is in New York City.
Any interest earned on the Deposit shall be credited and delivered to
the party receiving the Deposit, except however, if the transaction
closes, at Closing any interest earned on the Deposit shall be credited
to Buyer.
3.1 Buyer's obligation to purchase is expressly conditioned upon each of
the following:
3.1.1 PERFORMANCE BY SELLER. Performance in all material
respects of the obligations and covenants of, and deliveries
required of, Seller hereunder.
3.1.2 TITLE INSURANCE. Subject to receipt of the payment
of the premium by Buyer, delivery at the Closing of a standard 1992
form of American Land Title Association owner's policy of title
insurance (or a signed marked binder thereof) (the "Title Policy")
with liability in the amount of the Purchase Price issued by FIRST
AMERICAN TITLE INSURANCE COMPANY (the "Title Company"), insuring
that fee title to the Real Property vests in Buyer subject to the
Permitted Encumbrances (as defined in Section 4.2.1) (At its
option, Buyer may direct the Title Company to issue additional title
insurance endorsements, if Buyer pays for the extra cost of such
additional endorsements, provided that the Title Company's failure
to issue any such additional endorsements shall not affect Buyer's
obligations under this Agreement).
3.1.3 SELLER'S REPRESENTATIONS. The representations and
warranties by Seller set forth in Section 11.1 being true and
correct in all material respects as of the Closing except as
modified by notice (in accordance with Section 11.1) to which Buyer
does not object in writing by the later of (I) three business days
after receipt thereof or (II) the end of the Investigation Period.
3.2. Seller's obligation to sell is expressly conditioned upon each of the
following:
3.2.1 PERFORMANCE BY BUYER. Performance in all material
respects of the obligations and covenants of, and deliveries
required of, Buyer hereunder.
3.2.2 RECEIPT OF PURCHASE PRICE. Receipt of the Purchase
Price and any adjustments due Seller under Article VII at the
Closing in the manner herein provided.
4.1 Buyer shall, at or before the Closing, deliver to Escrow Agent each of
the following:
4.1.1 PURCHASE PRICE. The Purchase Price as set forth in
Article II.
4.1.2 ASSIGNMENT OF LEASES AND CONTRACTS. Four executed
counterparts of the Assignment and Assumption of Leases, Contracts
and Other Property Interests (the "Assignment of Leases and
Contracts") in the form of EXHIBIT C.
4.1.3 BILL OF SALE. Four executed counterparts of a bill
of sale (the "Bill of Sale") in the form of EXHIBIT D.
4.1.4 CLOSING STATEMENT. An executed settlement
statement reflecting the prorations and adjustments required under
Article VII.
4.1.5 CASH - PRORATIONS. The amount, if any, required of
Buyer under Article VII.
4.2. Seller shall, at or before the Closing, deliver to Escrow Agent each
of the following:
4.2.1 DEED. A special or limited warranty deed (the
"Deed") with respect to the Real Property, executed and acknowledged
by Seller, pursuant to which Seller shall convey title to the Real
Property subject to the following (collectively, the "Permitted
Encumbrances"):
(1) Non-delinquent real property taxes and all
assessments and unpaid installments thereof which are not
delinquent.
(2) The residential leases currently affecting the
Property and any new residential leases executed in accordance
with this Agreement after the date hereof (collectively, the
"Leases"), and the rights of the tenants thereunder.
(3) Any other lien, encumbrance, easement or other
exception or matter voluntarily imposed or consented to by
Buyer prior to or as of the Closing.
(4) All exceptions to title contained or disclosed
in the Title Report (as defined in Section 5.1.1) other than
Title Objections (as defined in Section 5.3.1) identified and
not thereafter waived by Buyer.
4.2.2 ASSIGNMENT OF LEASES AND CONTRACTS. Four executed
counterparts of the Assignment of Leases and Contracts, together
with original executed counterparts (or copies if originals are not
in Seller's possession) of the Leases and the service contracts,
equipment leases, maintenance agreements and other contracts
affecting the Property enumerated in EXHIBIT E (the "Contracts")
assigned thereby. Schedule B of the Assignment of Leases and
Contracts shall list all of the Contracts except those Contracts
which Buyer notifies Seller during the Investigation Period that it
would like terminated (provided, however, that such Contracts are
terminable by the Final Closing Date at no cost to Seller should
Seller give notice to the applicable vendor at the end of the
Investigation Period).
4.2.3 BILL OF SALE. Four executed counterparts of the
Bill of Sale.
4.2.4 NOTICES TO TENANTS. Four executed notices to
tenants signed by Seller (or Seller's manager for the Improvements)
in the form of EXHIBIT F.
4.2.5 FIRPTA CERTIFICATE. Four executed copies of a
certificate in the form of EXHIBIT G, with respect to the Foreign
Investment in Real Property Tax Act.
4.2.6 MISCELLANEOUS. Originals or copies of any
additional documents, instruments or records in the possession of
Seller or its agents which are necessary for the ownership and
operation of the Property.
4.2.7 CLOSING STATEMENT. An executed settlement
statement reflecting the prorations and adjustments required under
Article VII.
4.2.8 CASH - PRORATIONS. The amount, if any, required of
Seller under Article VII.
4.3. The failure of Buyer or Seller to make any delivery required above by
and in accordance with this Article IV shall constitute a default
hereunder by such party.
5.1. Seller shall deliver, cause to be delivered, or make available to
Buyer the following:
5.1.1 PRELIMINARY TITLE REPORT. A current preliminary
title report covering the Real Property issued by the Title Company,
together with copies of all documents referred to as exceptions
therein (collectively, the "Title Report").
5.1.2 SURVEY. A recent survey of the Real Property
prepared by a licensed surveyor (the "Survey").
5.1.3 LEASES AND CONTRACTS. Copies of the Leases and the
Contracts.
5.1.4 BOOKS AND RECORDS. Copies of the managing agent's
rent collection records and tax bills and utility bills and other
financial and profit and loss statements regarding the Property for
the 1999 calendar year and year to date, it being acknowledged that
the foregoing shall not include any financial analyses, budgets,
projections, appraisals, or confidential materials.
5.1.5 PLANS AND SPECIFICATIONS. Copies of all plans and
specifications for the Improvements which are in Seller's
possession.
5.1.6 PERMITS. Copies of all govern-mental permits,
certificates of occupancy and approvals, in each case regarding the
Property, which are in Seller's possession.
5.1.7 ENVIRONMENTAL REPORTS. Copies of all Phase I
Environmental Reports or other environmental reports or documents
regarding the Property, which are in Seller's possession.
5.1.8 OTHER. To the extent in Seller's possession, such
other documents, reports and information relating to the Property
requested by Buyer in writing to Seller as may be reasonably
necessary for Buyer's investigation of the Property.
If requested by Seller, Buyer shall provide written verification of its
receipt of those items listed in this Section 5.1 which are delivered to
Buyer.
5.2. Prior to the expiration of the Investigation Period, Buyer and Buyer's
representatives, agents and designees shall have the right at reasonable
times and upon reasonable notice to Seller to enter upon the Real
Property, at Buyer's sole cost, solely for the purpose of conducting such
non-destructive physical inspections, non-destructive soil and
engineering tests and a non-destructive Phase I environmental site
assessment as Buyer may elect to make or obtain, PROVIDED that Buyer
promptly repairs any damage to the reasonable satisfaction of Seller.
Buyer acknowl-edges and agrees that the inspection, testing and survey of
the Real Property by Buyer and Buyer's representatives, agents and
designees shall be subject to the rights of the tenants under the Leases
and shall be performed in such a manner as to not interfere with the
rights of such tenants. Buyer shall give Seller reasonable prior notice
of any inspection, test or survey so that Seller will have the
opportunity to have a representative present thereat, which right Seller
reserves.
5.2.1 NO COMMUNICATION WITH TENANTS. Neither Buyer nor
Buyer's representatives, agents and designees shall communicate with
any tenants without the prior written approval of Seller. Seller
reserves the right to have a representative be present at any
meeting with any tenant.
5.2.2 INDEMNITY AND INSURANCE. Buyer hereby agrees to
indemnify and hold harmless Seller, The Edwin E. Hollenback III 1991
Trust ("the Land Trust Beneficiary"), the trustee and the
beneficiary of the Land Trust Beneficiary, and their respective
employees, agents, successors and assigns, from and against any
mechanics' lien or claim therefor, any claim, cause of action,
lawsuit, damage, liability, loss, cost or expense (including,
without limitation, attorneys' fees) arising out of any such entry
by Buyer or its representatives, agents or designees or out of any
such inspections, tests or survey conducted by Buyer, its
representa-tives, agents or designees. Prior to any entry upon the
Real Property, Buyer shall, or shall cause its agents to, maintain
and deliver to Seller, for Seller's reasonable approval, policies of
commercial general liability insurance in such amounts, covering
such risks and in such form as is customary and appropriate with
respect to such entry, inspections, tests and surveys. The
provisions of the preceding two sentences shall survive the
termination of this Agreement or the Closing hereunder.
5.3. Buyer shall have the right to make the following investigations.
5.3.1 TITLE AND SURVEY. Buyer shall have until July 17,
2000 at 4:00 P.M. New York City Time to notify Seller of any
objections (the "Title Objections") with respect to the Title Report
and the Survey based on its review thereof. If Buyer does not give
such notice, such failure shall be conclusively deemed to be full
and complete approval of the Title Report and the Survey and any
matter disclosed therein. If Buyer does give such notice, Seller
shall have five business days after receipt thereof to notify Buyer
that Seller (a) will cause or (b) elects not to cause any or all
Title Objections to be removed or insured over by the Title Company.
Seller's failure to notify Buyer within such five business day
period as to any Title Objection shall be deemed an election by
Seller not to remove or have the Title Company insure over such
Title Objection. If Seller notifies or is deemed to have notified
Buyer that Seller shall not remove nor have the Title Company insure
over any or all of the Title Objections, Buyer shall have until the
end of the Investigation Period to (I) terminate this Agreement or
(II) waive such Title Objections and proceed to closing without any
abatement or reduction in the Purchase Price on account of such
Title Objections. If Buyer does not give such notice, Buyer shall
be deemed to have elected to waive such Title Objections.
5.3.2 GENERAL INVESTIGATION. In addition, Buyer shall
have from the date hereof until July 27, 2000 at 4:00 P.M. New York
City Time (the "Investigation Period") to notify Seller that as a
result of Buyer's review of the documents set forth in Section 5.1
(other than the Title Report or the Survey which are covered in
Section 5.3.1 above) or Buyer's investigation of the Real Property
pursuant to Section 5.2 it (I) disapproves of any matter or item
affecting the Property (which disapproval may be in Buyer's sole
discretion) or (II) it has not been able to obtain (after using
commercially reasonable efforts to do so) the approval of the Board
of Directors of its general partner, Home Properties of New York,
Inc., and thus has elected to terminate this Agreement. If Buyer
fails to give such notice of disapproval and termination prior to
the expiration of the Investigation Period, such failure shall be
conclusively deemed to be a waiver of Buyer's right to terminate
this Agreement under this Section 5.3.2.
5.4. If Buyer terminates this Agreement in accordance with Section 5.3,
then all further rights and obligations of the parties shall cease and
terminate without any further liability of either party to the other
(except those obligations which are specifically provided to survive such
termination as provided in this Agreement).
5.5. Nothing contained in this Agreement or otherwise shall require Seller
to render its title marketable or to remove or correct any exception or
matter disapproved by Buyer or to spend any money or incur any expense in
order to do so.
Escrow Agent shall close the escrow (the "Closing") as soon as all
conditions to closing contained in this Agreement have been satisfied
which shall in any event be not later than August 3, 2000 (the "Final
Closing Date"), time being of the essence (subject only to Seller's cure
rights under Section 13.6, in which event Seller will give Buyer not less
than three business days notice of the date of Closing), by recording and
delivering all documents and funds as set forth in Article VIII.
7.1. Prior to the Closing, Seller shall determine the amounts of the
prorations in accordance with this Agreement and notify Buyer thereof.
Buyer shall review and approve such determination promptly and prior to
the Closing, such approval not to be unreasonably withheld or delayed.
Thereafter, Buyer and Seller shall each inform Escrow Agent of such
amounts.
7.1.1 CERTAIN ITEMS PRORATED. In accordance with the
notifications, Escrow Agent shall prorate between the parties (and
the parties shall deposit funds therefor with Escrow Agent or shall
instruct Escrow Agent to debit against sums held by Escrow Agent
owing to such party), as of 11:59 p.m. the day prior to the Closing,
all income and expenses with respect to the Property and payable to
or by the owner of the Property, including, without limitation: (I)
all real property taxes on the basis of the fiscal period for which
assessed (if the Closing shall occur before the tax rate is fixed,
the apportionment of taxes shall be based on the tax rate for the
preceding period applied to the latest assessed valuation, and after
the Closing, when the actual real property taxes are finally fixed,
Seller and Buyer shall promptly make a recalculation of such
proration, and the appropriate party shall make the applicable
payment reflecting the recalculation to the other party); (II)
rents, other tenant payments and tenant reimbursements
(collectively, "Tenant Payments") if any, received under the Leases;
(III) charges for water, sewer, electricity, gas, fuel and other
utility charges, all of which shall be read promptly before Closing,
unless Seller elects to close its own applicable account, in which
event Buyer shall open its own account and the respective charges
shall not be prorated; (IV) the cost, based on the invoices of
Seller's suppliers, of all building supplies (but not building
materials) all in unopened containers, in accordance with an
inventory to be made by Seller as of a date not more than ten days
preceding the Closing; (V) amounts prepaid and amounts accrued but
unpaid on the Contracts which are to be assumed by Buyer; and
(VI) periodic fees for licenses, permits or other authori-zations
with respect to the Property. The adjustment obligation in item (I)
above shall survive the Closing.
7.1.2 LEASING COMMISSIONS. At the Closing Buyer shall pay
or reimburse Seller for all reasonable & customary leasing
commissions, tenant improvement costs and other charges payable by
reason of or in connection with any Lease entered into after the
date of this Agreement, any renewal or extension of an existing
Lease after such date and any new lease referred to Section 13.4.
7.1.3 TAXES. Real property tax refunds and credits
received after the Closing which are attributable to a fiscal tax
year prior to the Closing shall belong to Seller. Any such refunds
and credits attributable to the fiscal tax year during which the
Closing occurs shall be apportioned between Seller and Buyer after
deducting the reasonable out-of-pocket expenses of collection
thereof. This apportionment obligation shall survive the Closing.
7.1.4 SECURITY AND OTHER DEPOSITS. At the Closing,
Seller shall deliver to (or credit) Buyer all unapplied refundable
security deposits (plus interest accrued thereon to the extent
required to be paid by the applicable Lease or applicable law)
required to be held by Seller under the Leases and Buyer shall pay
Seller an amount equal to all utility and contract deposits then
held by third parties with respect to the Property.
7.1.5 DELINQUENT RENTALS. Delinquent Tenant Payments, if
any, shall not be prorated and all rights thereto shall be re-tained
by Seller, who reserves the right to collect and retain such
delinquent Tenant Payments, and Buyer agrees to cooperate with
Seller in Seller's efforts to collect such Tenant Payments,
including, if necessary, joining in any legal action instituted by
Seller. If at any time after the Closing Buyer shall receive any
such delinquent Tenant Payments (all of which Buyer shall use its
best efforts to obtain), Buyer shall immediately remit such Tenant
Payments to Seller, provided that any monies received by Buyer from
a delinquent tenant shall be applied first to current rents then due
and payable and then to delinquent rents in the inverse order in
which they became due and payable. This Section 7.1.5 shall survive
the Closing.
7.1.6 ADDITIONAL PAYMENTS. If the Tenant Payments required
to be made by any tenants include utility pass throughs, capital
expenditure pass throughs, additional rent or escalation charges or
other charges ("Additional Payments"), Seller and Buyer shall at the
Closing reasonably estimate the unpaid amount thereof attributable
to any period prior to the Closing and Buyer shall pay such amount
to Seller at the Closing.
7.1.7 TRUE UP. If either Seller or Buyer party notifies
the other on or before October 3, 2000 that due to an erroneous
estimate or otherwise that one or more prorations or credits under
this Article VII was incorrectly calculated or credited, then,
provided that such errors in the aggregate exceed $5,000 in favor of
either party, the Seller and Buyer shall promptly make such
adjustments and the applicable party shall promptly pay to the other
such amount. The failure of a party to obtain any previously
unavailable information or discover an error or omission with
respect to any proration or credit and to notify the other party as
provided above by October 3, 2000 shall be deemed a waiver to its
right to "true-up" as provided in this paragraph. This Section
7.1.7 shall survive the Closing.
7.2. Seller shall pay (I) the "Grantor's tax", in the amount Escrow Agent
determines to be required by law, (II) one-half of Escrow Agent's escrow
fee or escrow termination charge and (III) Seller's own attorneys' fees.
7.3. Buyer shall pay (I) all state and local transfer taxes other than the
"Grantor's tax", in the amount Escrow Agent determines to be required by
law, (II) one-half of Escrow Agent's escrow fee or escrow termination
charge, (III) the cost of the Title Report, the title premium for the
Title Policy and the cost of any other title insurance endorsements
ordered by Buyer, (IV) the cost of the Survey and any update thereof, (V)
transfer fees, recording charges and any other costs incurred in
recording the Deed or any other instruments other than the taxes referred
to above, (VI) any costs incurred in connection with Buyer's
investigation of the Property pursuant to Article V and (VII) Buyer's own
attorneys' fees.
8.1. At the Closing, Escrow Agent shall deliver the Purchase Price to
Seller, and the transaction shall not be considered closed until such
delivery occurs.
8.2. Escrow Agent shall, at the Closing, hold for personal pickup or
arrange for wire transfer, (I) to Seller, or order, as instructed by
Seller, all sums and any proration or other credits to which Seller is
entitled less any appropriate proration or other charges and (II) to
Buyer, or order, any excess funds theretofore delivered to Escrow Agent
by Buyer and all sums and any proration or other credits to which Buyer
is entitled less any appropriate proration or other charges.
8.3. Escrow Agent shall cause the Deed and any other documents that Seller
or Buyer desires to record to be recorded with the appropriate county
recorder and, after recording, returned to the grantee, beneficiary or
person acquiring rights under said document or for whose benefit said
document was acquired.
8.4. Escrow Agent shall at the Closing deliver by overnight express
delivery to Buyer the following:
(1) one conformed copy of the Deed;
(2) two originals of the Assignment of Leases and Contracts;
(3) two originals of the Bill of Sale;
(4) two originals of the Notice to Tenants;
(5) two originals of the FIRPTA Affidavit;
(6) one original of the Closing Statement; and
(7) one original of the Title Policy.
8.5. Escrow Agent shall at the Closing deliver by overnight express
delivery to Seller, the following:
(1) one conformed copy of the Deed;
(2) two originals of the Assignment of Leases and Contracts;
(3) two originals of the Bill of Sale;
(4) two originals of the Notice to Tenants;
(5) two originals of the FIRPTA Affidavit; and
(6) one original of the Closing Statement.
8.6. Escrow Agent shall at the Closing deliver by overnight express
delivery, each other document received hereunder by Escrow Agent to the
person acquiring rights under said document or for whose benefit said
document was acquired.
9.1. If escrow or this Agreement is terminated for any reason, Buyer shall,
within five days following such termination, deliver to Seller all
documents and materials relating to the Property previously delivered to
Buyer by Seller. Escrow Agent shall deliver all documents and materials
deposited by Seller and then in Escrow Agent's possession to Seller.
9.2. If escrow or this Agreement is terminated for any reason, Escrow Agent
shall deliver all documents and materials deposited by Buyer and then in
Escrow Agent's possession to Buyer.
9.3. If escrow or this Agreement is terminated (I) pursuant to Section 5.3,
Section 10.2 or Article XII or (II) due to the failure of a condition set
forth in Section 3.1, then Buyer shall be entitled to obtain the return
of the Deposit. If the closing of title does not take place and escrow
or this Agreement is terminated for any other reason, Seller shall be
entitled to the Deposit, and Escrow Agent shall deliver the Deposit to
Seller.
9.4. If Escrow Agent receives a notice from either party instructing Escrow
Agent to deliver the Deposit to such party, Escrow Agent shall deliver a
copy of the notice to the other party within three days after receipt of
the notice. If the other party does not object to the delivery of the
Deposit as set forth in the notice within three business days after
receipt of the copy of the notice, Escrow Agent shall, and is hereby
authorized to, deliver the Deposit to the party requesting it pursuant to
the notice. Any objection hereunder shall be by notice setting forth the
nature and grounds for the objection and shall be sent to Escrow Agent
and to the party requesting the Deposit.
9.5. The return of documents and monies as set forth above shall not affect
the right of either party to seek such legal or equitable remedies as
such party may have under Article X with respect to the enforcement of
this Agreement. The obligations under this Article IX shall survive
termination of this Agreement.
10.1. If, for any reason whatsoever (other than the failure of a condition
set forth in Section 3.1 and other than a termination of this Agreement
pursuant to Section 5.3, Section 10.2 or Article XII), Buyer fails to
complete the acquisition as herein provided, Seller shall be released
from any further obligations hereunder (and, upon demand of Seller, Buyer
shall promptly deliver to Seller an instrument confirming such release).
Insofar as it would be extremely impracticable and difficult to estimate
the damage and harm which Seller would suffer due to such failure, and
insofar as a reasonable estimate of the total net detriment that Seller
would suffer from such failure is the amount of the Deposit, Seller shall
be entitled to the Deposit, and Escrow Agent shall deliver the Deposit
to Seller, which amount is not intended to be and is not a penalty, and
which shall be Seller's sole remedy for damages arising from Buyer's
failure to complete the acquisition.
10.2. If the sale is not completed as herein provided solely by reason of
any material default of Seller, Buyer shall be entitled to (I) terminate
this Agreement (by delivering notice to Seller which includes a waiver of
any right, title or interest of Buyer in the Property) and obtain the
return of the Deposit or (II) treat this Agreement as being in full force
and effect and pursue only the specific performance of this Agreement.
Buyer waives any right to pursue any other remedy at law or equity for
such default of Seller, including, without limitation, any right to seek,
claim or obtain damages, punitive damages or consequential damages.
11.1. The matters set forth in this Section 11.1 constitute representations
and warranties by Seller which are now and (subject to matters contained
in any notice given pursuant to the next succeeding sentence) shall, in
all material respects, at the Closing be true and correct. If Seller
learns of, or has a reason to believe that any of the following
representations and warranties may cease to be true, Seller shall give
prompt notice to Buyer (which notice shall include copies of the
instrument, correspondence, or document, if any, upon which Seller's
notice is based). As used in this Section 11.1, the phrase "to the
extent of Seller's actual knowledge" shall mean the actual knowledge of
V. Thomas Crockett of CANTEX Management Corporation, Seller's management
company for the Property, and Dorothy Fischer, Seller's on-site manager
responsible for the Property. There shall be no duty imposed or implied
to investigate, inspect, or audit any such matters, and there shall be no
personal liability on the part of Mr. Crockett and/or Ms. Fischer. To
the extent Buyer has or acquires actual knowledge or is deemed to know
prior to the expiration of the Investigation Period that these
representations and warranties are inaccurate, untrue or incorrect in any
way, such representations and warranties shall be deemed modified to
reflect Buyer's knowledge or deemed knowledge. Buyer shall be deemed to
know a representation or warranty is untrue, inaccurate or incorrect if
this Agreement or any files, documents, materials, analyses, studies,
tests, or reports disclosed or made available to Buyer prior to the
expiration of the Investigation Period contains information which is
inconsistent with such representation or warranty.
11.1.1 NO BROKER. Seller has not engaged or dealt with
any broker or finder in connection with the sale contemplated by
this Agreement, except Transwestern Carey Winston, LLC (the
"Broker"). Seller shall pay all brokerage commissions to the
Broker, as the Broker may be entitled thereto. Seller shall
indemnify and hold harmless Buyer from any claims, costs, damages or
liabilities (including attorneys' fees) arising from any breach of
the representation contained in this Section 11.1.1 or if the same
shall be based on any statement, representation or agreement by
Seller with respect to the payment of any brokerage commissions or
finders fees.
11.1.2 POWER AND AUTHORITY. Seller has the legal power,
right and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.
11.1.3 PROCEEDINGS. To the extent of Seller's actual
knowl-edge, there is no pending or threatened condemnation or
similar proceeding affecting any part of the Real Property.
11.1.4 CONTRAVENTION. Seller is not prohibited from
consummating the transactions contemplated by this Agreement by any
law, regulation, agreement, instrument, restriction, order, or
judgment.
11.1.5 LEASES AND CONTRACTS. The Leases and Contracts
comprise all of the existing leases and contracts which will affect
the Property on and after the Closing.
11.1.6 COMPLIANCE. Seller has not received writ-ten
notice from any governmental authority that the Real Property is not
in material compliance with all applicable laws, except for such
failures to comply, if any, which have been remedied.
11.1.7 LITIGATION. To the extent of Seller's actual
knowledge, there is no material litigation affecting the Property
actually known to Seller which litigation is not covered by
insurance.
11.2. The matters set forth in this Section 11.2 constitute representations
and warranties by Buyer which are now and shall, at the Closing, be true
and correct.
11.2.1 NO BROKER. Except for the Broker, Buyer has not
engaged or dealt with any broker or finder in connection with the
sale contemplated by this Agreement. Buyer shall indemnify and hold
Seller harmless from any claims, costs, damages or liabilities
(including attorneys' fees) arising from any breach of the
representation contained in this Section 11.2.1 or if the same shall
be based on any statement, representation or agreement by Buyer with
respect to the payment of any brokerage commissions or finders fees.
11.2.2 POWER AND AUTHORITY. Buyer has the legal power,
right and authority to enter into this Agreement and, subject to the
approval of the Board of Directors of its general partner, Home
Properties of New York, Inc., (which will have been obtained should
Buyer not terminate this Agreement prior to the end of the
Investigation Period) Buyer has the legal power, right and authority
to consummate the transactions contemplated hereby.
11.2.3 INDEPENDENT INVESTIGATION. The consummation of
this transaction shall con-stitute Buyer's acknowledgment that it
has independently inspected and investigated the Property and has
made and entered into this Agreement based upon such inspection and
investigation and its own examination of the condition of the
Property.
11.2.4 BUYER RELIANCE. Buyer is experienced in and
knowledgeable about the ownership and management of multi-family
residential rental real estate properties, and it has relied and
will rely exclusively (except as expressly set forth in Section
11.1) on its own consultants, advisors, counsel, employees, agents,
principals and/or studies, investigations and/or inspections with
respect to the Property, its condition, value and potential. Buyer
agrees that, notwithstanding the fact that it has received certain
information from Seller or its agents or consultants, Buyer has
relied solely upon and will continue to rely solely upon its own
analysis and will not rely on any information provided by Seller or
its agents or consultants, except as expressly set forth in Section
11.1.
11.3. EXCEPT AS SPECIFICALLY SET FORTH IN THIS ARTICLE XI, NEITHER SELLER
NOR BUYER HAVE MADE, MAKE OR HAVE AUTHORIZED ANYONE TO MAKE, ANY WARRANTY
OR REPRESENTATION OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, AS TO THE
LEASES; THE CONTRACTS; ANY WRITTEN MATERIALS DELIVERED TO BUYER; THE
PERSONS PREPARING SUCH MATERIALS; THE PRESENT OR FUTURE PHYSICAL
CONDITION, HABITABILITY, MERCHANTABILITY, DEVELOPMENT POTENTIAL OR
FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; ZONING, BUILDING OR
LAND USE LAW OR COMPLIANCE OF THE PROPERTY THEREWITH (INCLUDING, WITHOUT
LIMITATION, THE AMERICANS WITH DISABILITIES ACT); OPERATION, INCOME
GENERATED BY, OR ANY OTHER MATTER OR THING AFFECTING OR RELATING TO THE
PROPERTY OR TO THIS AGREEMENT. BUYER EXPRESSLY ACKNOWLEDGES THAT NO SUCH
WARRANTY OR REPRESENTATION HAS BEEN MADE AND THAT BUYER IS NOT RELYING ON
ANY WARRANTY OR REPRESENTATION WHATSOEVER OTHER THAN AS IS EXPRESSLY SET
FORTH IN THIS ARTICLE XI. BUYER SHALL ACCEPT THE PROPERTY "AS IS, WHERE
IS, WITH ALL FAULTS" IN ITS CONDITION ON THE DATE OF CLOSING SUBJECT ONLY
TO THE EXPRESS PROVISIONS OF THIS AGREEMENT. BUYER ALSO ACKNOWLEDGES
THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTY
IS BEING SOLD "AS-IS."
11.3.1 NO ENVIRONMENTAL REPRESENTATIONS. Seller makes no
representations or warranties as to whether the Property contains
asbestos, radon or any hazardous materials or harmful or toxic
substances, or pertaining to the extent, location or nature of same,
if any. Further, to the extent that Seller has provided to Buyer
information from any inspection, engineering or environmental
reports concerning asbestos, radon or any hazardous materials or
harmful or toxic substances, Seller makes no representations or
warranties with respect to the accuracy or completeness, methodology
of preparation or otherwise concerning the contents of such reports.
11.3.2 RELEASE OF CLAIMS. Buyer acknowledges and agrees
that Seller makes no representation or warranty as to, and Buyer
waives and releases Seller, the Land Trust Beneficiary, and the
trustee of the Land Trust Beneficiary from any present or future
claims arising from or relating to, the presence or alleged presence
of asbestos, radon or any hazardous materials or harmful or toxic
substances in, on, under or about the Property, including without
limitation any claims under or on account of (I) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
the same may have been or may be amended from time to time, and
similar state statutes, and any regulations promulgated thereunder,
(II) any other federal, state or local law, ordinance, rule or
regulation, now or hereafter in effect, that deals with or otherwise
in any manner relates to, environmental matters of any kind, (III)
this Agreement, or (IV) the common law.
Promptly upon learning thereof, Seller shall give Buyer written
notice of any condemnation, damage or destruction of the Real Property
occurring prior to the Closing. If prior to the Closing all or a
material portion of the Real Property is condemned, damaged or destroyed,
Buyer shall have the option of either (I) applying the proceeds of any
condemnation award or payment under any insurance policies toward the
payment of the Purchase Price to the extent such condemnation awards or
insurance payments have been received by Seller, receiving from Seller an
amount equal to any applicable deductible under any such insurance policy
and receiving an assignment from Seller of Seller's right, title and
interest in any such awards or payments, or (II) terminating this
Agreement by delivering written notice of such termination to Seller and
Escrow Agent within ten days after Buyer has received written notice from
Seller of such material condemnation, damage or destruction. If prior to
the Closing an immaterial portion of the Real Property is condemned,
damaged or destroyed, the proceeds of any condemnation award or payment
and any applicable deductible under any insurance policies shall be
applied toward the payment of the Purchase Price to the extent such
condemnation awards or insurance payments have been received by Seller
and Seller shall assign to Buyer all of Seller's right, title and
interest in any such awards or payments.
12.1. From and after the date hereof, Seller shall operate the Property in
accordance with its standard business procedures.
12.2. Seller shall not, without the prior written approval of Buyer, which
approval will not be unreasonably withheld or delayed:
(I) make any material structural alterations or additions
to the Real Property except as (a) in the ordinary course of
operating the Real Property, (b) required for maintenance and repair
or (c) required by any of the Leases or the Contracts;
(II) sell, transfer, encumber or change the status of
title of all or any portion of the Real Property;
(III) change or attempt to change, directly or
indirectly, the current zoning of the Real Property in a manner
materially adverse to it; or
(IV) cancel, amend or modify, in a manner materially
adverse to the Real Property, any license or permit held by Seller
with respect to the Real Property or any part thereof which would be
binding upon Buyer after the Closing.
12.3. Prior to the expiration of the Investigation Period, Seller may
cancel, amend and modify any of the Leases and any of the Contracts,
PROVIDED notice is given to Buyer within five business days after such
action and in any event at least two business days prior to the
expiration of the Investigation Period. After the expiration of the
Investigation Period, Seller may not cancel, amend, or modify any
material Contracts or Leases, in a manner binding upon Buyer after the
Closing, unless Seller gives Buyer notice within five business days after
such action and PROVIDED such action is (I) in the ordinary course of
operating the Property, ( II) required by any of the Leases or any of the
Contracts or (III) approved by Buyer which approval will not be
unreasonably withheld or delayed.
12.4. Prior to the expiration of the Investigation Period, Seller may enter
into any new lease or contract, PROVIDED notice is given to Buyer within
5 business days after such action. After the expiration of the
Investigation Period, Seller may enter into any new lease in the ordinary
course of business. After the expiration of the Investigation Period,
Seller may not enter into any new contract without Buyer's consent, which
consent will not be unreasonably withheld or delayed. Notwithstanding
the preceding sentence, after the expiration of the Investigation Period,
Seller may enter into any new contracts without Buyer's consent if doing
so is in the ordinary course of operating the Property and the contract
(I) will not be binding on Buyer or (II) is cancelable on 30 days or less
notice without penalty or premium.
If Seller shall request Buyer's approval to any of the foregoing
matters, Buyer shall have five days from its receipt of such request to
give Seller notice of its approval or disapproval of such matter. If
Buyer does not give such notice, such matter shall be deemed approved by
Buyer.
12.5. Seller and Buyer shall, prior to the Closing, maintain the
confidentiality of this sale and purchase and shall not, except as
required by law or governmental regulation applicable to Seller or Buyer,
disclose the terms of this Agreement or of such sale and purchase to any
third parties whomsoever other than the principals of the Broker, Escrow
Agent, the Title Company and such other persons whose assistance is
required in carrying out the terms of this Agreement. Neither Seller nor
Buyer shall at any time, prior to the Closing, issue a press release or
otherwise communicate with media representatives regarding this sale and
purchase unless such release or communication has received the prior
approval of the other party hereto. Buyer agrees that all documents and
information regarding the Property of whatsoever nature made available to
it by Seller or Seller's agents and the results of all tests and studies
of the Property (collectively, the "Proprietary Information") are
confidential and Buyer shall not disclose any Proprietary Information to
any other person except those assisting it with the analysis of the
Property, and only after procuring such person's agreement to abide by
these confidentiality restrictions. This Section 13.5 shall survive the
Closing or termination of the Agreement.
12.6. If any title defect or other matter which would entitle Buyer to
terminate this Agreement shall first arise or be disclosed after Buyer
notifies Seller of its Title Objections pursuant to Section 5.3.1, Seller
may elect, by written notice to Buyer, to cure such defect or other
matter by causing it to be removed, insured over or bonded and Seller may
adjourn the Closing for up to thirty days to do so. Nothing contained in
this Section 13.6 shall require Seller to cure any such title defect or
other matter or to incur any liability or expense to do so.
All notices, demands or other communications given hereunder shall
be in writing and shall be deemed to have been duly delivered upon the
receipt by facsimile transmission as evidenced by receipt transmission
report, or upon the delivery by overnight express delivery service,
addressed as follows:
If to Buyer, to: Home Properties of New York, L.P.
850 Clinton Square
Rochester, New York 14604
Attention: Norman Leenhouts, Chairman
Telephone: (716) 546-4900
Facsimile: (716) 232-3147
with a copy to: Home Properties of New York, L.P.
850 Clinton Square
Rochester, New York 14604
Attention: Kathleen K. Suher, Esq.
Telephone: (716) 262-9335
Facsimile: (716) 232-3147
If to Seller, to the
Land Trust Beneficiary: The Edwin E. Hollenback III 1991 Trust
c/o Hans Bertram-Nothnagel, trustee
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6471
Facsimile: (212) 909-6836
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Mark Marmer, Esq.
Telephone: (212) 909-7211
Facsimile: (212) 909-6836
If to Escrow Agent, to: First American Title Insurance
Company of New York
228 East 45{th} Street
New York, New York 10017
Attention: Mindy Haas, Esq.
Telephone: (212) 850-0623
Facsimile: (212) 922-0881
or to such other address or to such other person as any party shall
designate to the others for such purpose in the manner hereinabove set
forth.
13.1. Captions in this Agreement are inserted for convenience of reference
only and do not define, describe or limit the scope or the intent of this
Agreement or any of the terms hereof.
13.2. All exhibits referred to herein and attached hereto are a part hereof.
13.3. This Agreement contains the entire agreement between the parties
relating to the transaction contemplated hereby and all prior or
contemporaneous agreements, understandings, representations and
statements, oral or written, are merged herein.
13.4. No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, waiver,
amendment, discharge or change is or may be sought.
13.5. Should any party hereto employ an attorney for the purpose of
enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency,
bankruptcy, arbitration, declaratory relief or other litigation, the
prevailing party shall be entitled to receive from the other party or
parties thereto reimbursement for all reasonable attorneys' fees and all
costs, including but not limited to service of process, filing fees,
court and court reporter costs, investigative costs, expert witness fees
and the cost of any bonds, whether taxable or not, and such reimbursement
shall be included in any judgment, decree or final order issued in that
proceeding. The "prevailing party" means the party in whose favor a
judgment, decree, or final order is rendered.
13.6. This Agreement shall be construed and enforced in accordance with the
laws of the State in the Commonwealth of Virginia.
13.7. Time is of the essence to this Agreement and to all dates and time
periods set forth herein.
13.8. Only the warranties and representations contained in Sections 11.1 and
11.2 and the provisions of Section 11.3 shall survive the Closing, the
delivery of the Deed and the payment of the Purchase Price, PROVIDED that
(I) such represen-tations and warranties (but not such provisions) shall
cease and terminate three (3) months after the date of Closing, except to
the extent that Buyer or Seller, as the case may be, shall have
commenced, on or before such three (3) month period has expired, a legal
proceeding based on the breach thereof as of the date of Closing, and
(II) the maximum total liability for which Seller shall be responsible
with respect to all representations and warranties shall not exceed
$250,000 in the aggregate. Unless otherwise expressly herein stated to
survive, all other representations, covenants, conditions and agreements
contained herein shall merge into and be superseded by the various
documents executed and delivered at Closing and shall not survive the
Closing. Seller shall have no liability to Buyer after Closing for any
matter disclosed by Seller or learned by Buyer prior to Closing.
13.9. Buyer may not assign its rights under this Agreement, except, however,
Buyer may, provided it notifies Seller at least 5 business days in
advance of the Closing , assign its rights, but not its obligations
hereunder, to an affiliate or subsidiary of Buyer which is owned or
controlled by Buyer.
13.10. If any term, covenant, condition, provision or agreement herein
contained is held to be invalid, void or otherwise unenforceable by any
court of competent jurisdiction, the fact that such term, covenant,
condition, provision or agreement is invalid, void or otherwise
unenforceable shall in no way affect the validity or enforceability of
any other term, covenant, condition, provision or agreement herein
contained.
13.11. All terms of this Agreement shall be binding upon, inure to the
benefit of and be enforceable by, the parties hereto and their respective
legal representatives, successors and assigns (subject to Section 15.9).
13.12. Seller and Buyer acknowledge each to the other that both they and
their counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments or exhibits hereto.
13.13. This Agreement may be executed in any number of counterparts, each of
which so executed shall be deemed original; such counterparts shall
together constitute but one agreement.
13.14. This Agreement may not be recorded and any attempt to do so shall be
of no effect whatsoever.
13.15. In any action brought to enforce the obligations of Seller under this
agreement, the judgment or decree shall be subject to the provisions of
Section 15.8 and shall, in any event, be enforceable against Seller only
to the extent of its interest in the Property, including any proceeds
there-of, and no other property or assets of Seller shall be subject to
levy, execution or lien for the satisfaction of any remedies against
Seller.
13.16. It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Bank of America solely as
trustee of the Land Trust, in the exercise of the powers and authority
conferred and vested in it under the trust agreement creating the Land
Trust, (b) each of the representations, undertakings and agreements
herein made on the part of Seller is made and intended not as personal
representations, undertakings and agreements by Bank of America or the
trustee of the Land Trust Beneficiary, but is made and intended for the
purpose of binding only the Land Trust and (c) under no circumstances
shall Bank of America or the trustee of the Land Trust Beneficiary be
personally liable for the payment of any indebtedness or expenses of the
Land Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by Seller under
this Agreement or the transactions contemplated thereby.
Escrow Agent shall not be bound in any way by any other agreement or
contract between Seller and Buyer, whether or not Escrow Agent has
knowledge thereof. Escrow Agent's only duties and responsibilities shall
be to hold the Deposit and other documents delivered to it as agent and
to dispose of the Deposit and such documents in accordance with the terms
of this Agreement. With-out limiting the generality of the foregoing,
Escrow Agent shall have no responsibility to protect the Deposit and
shall not be responsible for any failure to demand, col-lect or enforce
any obligation with respect to the Deposit or for any diminution in value
of the Deposit from any cause, other than Escrow Agent's gross negligence
or willful misconduct. Escrow Agent may, at the expense of Seller and
Buyer, consult with counsel and ac-coun-tants in connection with its
duties under this Agree-ment. Escrow Agent shall be fully protected in
any act taken, suffered or permitted by it in good faith in accor-dance
with the advice of counsel and account-ants. Escrow Agent shall not be
obligated to take any action hereunder that may, in its reasonable
judgment, involve it in any liability unless Escrow Agent shall have been
furnished with rea-sonable indemnity satisfactory in amount, form and
substance to Escrow Agent.
Escrow Agent is acting as a stake-holder only with respect to the
Deposit. If there is any dispute as to whether Escrow Agent is obligated
to de-liver the Deposit or as to whom the Deposit is to be delivered,
Escrow Agent shall not make any deliv-ery, but shall hold the Deposit
until receipt by Escrow Agent of an authorization in writing, signed by
all the parties having an interest in the dispute, directing the
disposi-tion of the Deposit, or, in the absence of authoriza-tion, Escrow
Agent shall hold the Deposit until the final determination of the rights
of the parties in an appropri-ate proceeding. Escrow Agent shall have no
responsi-bility to determine the authenticity or validity of any notice,
instruction, instrument, document or other item delivered to it, and it
shall be fully protected in acting in accor-dance with any written
notice, direction or instruction given to it under this Agreement and
believed by it to be authentic. If written authorization is not given,
or proceedings for a determination are not begun, within thirty (30) days
after the date scheduled for the closing of title and diligently
continued, Escrow Agent may, but is not required to, bring an appropriate
action or proceeding for leave to deposit the Deposit with a court of the
State of New York or the Commonwealth of Virginia pending a
determination. Escrow Agent shall be reimbursed for all costs and
expenses of any action or proceeding, including, without limita-tion,
attorneys' fees and disbursements incurred in its capacity as Escrow
Agent, by the party determined not to be entitled to the Deposit. Upon
making delivery of the Deposit in the manner provided in this Agreement,
Escrow Agent shall have no further liabil-ity hereunder. In no event
shall Escrow Agent be under any duty to insti-tute, defend or participate
in any proceeding that may arise between Seller and Buyer in connection
with the Deposit.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first set forth above.
SELLER:
BANK OF AMERICA, solely as trustee, under the
provisions of Virgina Land Trust Agreement NST-1,
dated as of December 30, 1980
By:
-----------------------------
Name:
Title:
BUYER:
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc., its general
partner
By:
-----------------------------
NAME:
TITLE:
CONSENT AND AGREEMENT OF ESCROW AGENT
THE UNDERSIGNED ESCROW AGENT HEREBY AGREES TO (I) accept the
foregoing Agreement, (II) be escrow agent under said Agreement, and (III)
be bound by said Agreement in the performance of its duties as escrow
agent.
FIRST AMERICAN TITLE INSURANCE COMPANY OF NEW YORK
By:
-----------------------------
NAME:
TITLE:
