EXHIBIT 2.3
CONTRIBUTION AGREEMENT
MACOMB MANOR
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") is dated as of this
17th day of December, 1999, and is among HOME PROPERTIES OF
NEW YORK, L.P., a limited partnership formed under the laws of New York,
having its principal office at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx
00000 ("HOME PROPERTIES"), MACOMB APARTMENTS LIMITED PARTNERSHIP, a limited
partnership formed under the laws of Michigan, having its principal office
at c/o Schostak Brothers & Company, Inc., 00000 Xxxxxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000 (the "PARTNERSHIP"), and Macomb
Apartments Home Properties LLC, a limited liability company formed under
the laws of Michigan, having its principal office at c/o Schostak Brothers
& Company, Inc., 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000 (the "COMPANY").
W I T N E S S E T H :
This Agreement is made with reference to the following facts and
objectives:
A. The Company owns (or, prior to the Closing Date, shall own) a one
hundred percent (100%) fee simple interest in a Michigan apartment property
comprising 216 dwelling units known as Macomb Manor Apartments (the
"PROPERTY").
B. Upon the terms and conditions set forth in this Agreement, Home
Properties desires to obtain one hundred percent (100%) of the member
interests (the "INTERESTS") in the Company in exchange for assumption of
the Existing Loan covering the Property and limited partnership interests
(the "OP UNITS") in Home Properties issued to the Partnership.
C. It is expected that the exchange of the Interests for OP Units will
qualify for Federal income tax purposes, as a tax free transfer, pursuant
to Section 721 of the Code, and the parties will file their tax returns and
keep their books and records in a manner consistent with this expectation.
D. As used in this Agreement with initial capital letters, the
following terms, in each instance, shall have the meaning ascribed thereto:
"AFFILIATED COMPANIES" shall mean Deerfield Xxxxx Venture Limited
Partnership, a Michigan limited partnership, and Deerfield Xxxxx Home
Properties LLC, a Michigan limited liability company;
"CODE" shall mean and refer to the Internal Revenue Code of 1986, as
amended;
"CLOSING DATE" shall have the meaning given to it in
SECTION 5.2 below;
"COMPANY" shall mean Macomb Apartments Home Properties LLC;
"ENVIRONMENTAL LAWS" shall mean and refer to any Federal, state,
county or municipal environmental, health, chemical use, safety or
sanitation law, statute, ordinance or code relating to the protection of
the environment, and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of any
Hazardous Materials. and the rules, regulations and orders promulgated
and/or issued thereunder;
"EXISTING LENDER" shall mean and refer to Xxxxxxx, Xxxxx & Associates;
"EXISTING LOAN" shall mean the Note in favor of the Existing Lender,
which had an original principal balance of Four Million Two Hundred Ninety
Thousand and 00/100 Dollars ($4,290,000.00) and which has a principal
balance as of October 31, 1999 of approximately Four Million One Hundred
Two Thousand Two Hundred Six and 98/100 Dollars ($4,102,206.98) and which
is secured by a mortgage or deed of trust on the Property;
"GENERAL PARTNER" shall mean and refer to Macomb Apartments Venture,
Inc.;
"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 Michigan Environmental Laws, and the
regulations promulgated thereunder, in each case, as at the date of this
Agreement;
"HME" shall mean and refer to Home Properties of New York, Inc., a
Maryland corporation (which operates as a self-administered, and self-
managed, equity real estate investment trust);
"HME COMMON SHARES" shall mean and refer to the shares of common stock
in HME, which are traded on the New York Stock Exchange;
"HOME PROPERTIES" shall mean and refer to Home Properties of New York,
L.P., a New York limited partnership (in which HME is the sole general
partner, and through which HME conducts its operational, management and
investing activities);
"INTERESTS" shall mean and refer to all of the member interests in the
Company;
"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;
"OPERATING PARTNERSHIP AGREEMENT" shall mean and refer to the Second
Amended and Restated Agreement of Limited Partnership of Home Properties,
as amended;
"OPERATING PARTNERSHIP AMENDMENT" shall mean and refer to an amendment
to the Operating Partnership Agreement whereby the Partnership is admitted
as a limited partner to Home Properties;
"PARTNERSHIP" shall mean and refer to Macomb Apartments Limited
Partnership, a Michigan limited partnership;
"PROPERTY" shall mean and refer to the apartment project known as
Macomb Manor 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 Company 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 Company in and to (1) any award made after the date of this
Agreement as a result of condemnation, or in lieu thereof, and (2) any
unpaid award as at the date of this Agreement as a result of condemnation,
or in lieu thereof; and (ii) all buildings, structures, fixtures,
facilities, installations and other improvements of every kind and
description now or hereafter in, on, over and under the Land (the
"IMPROVEMENTS"), including, without limitation, any and all plumbing, air
conditioning, heating, ventilating, mechanical, electrical and other
utility systems, and fixtures, parking lots and facilities, landscaping,
roadways, fences, mail boxes, sidewalks, maintenance buildings, swimming
pools and other recreational facilities, security devices, signs and light
fixtures.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants, agreements and undertakings herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, Partnership and Home Properties agree as
follows:
ARTICLE I
EXCHANGE
1.1 EXCHANGE.
(a) Subject to closing under this Agreement, the Partnership, as
sole member of the Company, hereby agrees that it will exchange one hundred
percent (100%) of the Interests in the Company for OP Units.
(b) Prior to the Closing Date, the Partnership shall convey to the
Company all right, title and interest of the Partnership in and to the
following, which shall remain the property of the Company as of and after
the Closing Date:
(i) the Property
(ii) the Other Items (as hereinafter defined)
(iii)all present and subsequent leases with tenants, and/or
other occupancy agreements, together with all pending
applications for tenancy (in each instance, the
"LEASES");
(iv) 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 1 attached hereto; and
(v) 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").
ARTICLE II
CONSIDERATION
2.1 TOTAL CONSIDERATION. The aggregate consideration (the
"CONSIDERATION") payable by Home Properties for the Interests shall be
Eight Million Five Hundred Fifty Thousand and 00/100 Dollars
($8,550,000.00), payable in OP Units pursuant to
SECTION 2.3, subject to adjustments at Closing pursuant
to SECTION 2.6 and SECTION 2.7.
2.2 ASSIGNMENT OF MEMBER INTERESTS.
(a) On the Closing Date, the Partnership, as sole member of the
Company, shall assign the Interests to Home Properties in exchange for the
assumption of the indebtedness under the Existing Loan and the Conversion
Price and the Deferred Consideration Right as provided below. "CONVERSION
PRICE" means the Consideration less the principal amount at the Closing
Date of the Existing Loan less the Reserve Amount.
(b) "RESERVE AMOUNT" means the sum of (a) an amount equal to the
current liabilities of the Company as of the Closing Date (other than the
principal amount of the Existing Loan) (the "LIABILITIES RESERVE") and
(b) One Hundred Thousand and 00/100 Dollars ($100,000.00) (the "INDEMNITY
RESERVE"). The Reserve Amount shall consist of OP Units, the number of
which shall be calculated in accordance with the price formula set forth in
SECTION 2.3(b) below. The Reserve Amount shall be held
and disbursed by the Disbursing Agent (as defined in
SECTION 2.3) as described in SECTIONS 2.4 and 2.8. "DEFERRED
CONSIDERATION RIGHT" means the right to receive the Reserve Amount less all
amounts used to satisfy the current liabilities of the Company
("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 Company
which survive Closing (but only during the period of such survival)
("INDEMNITY CLAIMS").
2.3 PAYMENT OF THE CONVERSION PRICE.
(a) At Closing, the Reserve Amount shall be delivered to the
escrow offices of the Title Company (the "DISBURSING AGENT"), in accordance
with the Escrow Agreement.
(b) At Closing, the Conversion Price payable to the Partnership as
sole member of the Company shall be paid by the issuance of OP Units. The
number of OP Units to be issued to the Partnership shall be the Conversion
Price divided by the "MARKET VALUE" of an OP Unit. The Market Value of an
OP Unit shall be equal to the average closing price of a share of common
stock of HME, as listed on the New York Stock Exchange, for twenty (20)
consecutive trading days prior to, but not including, the day before the
Closing Date; however, if the twenty (20) day average value of an OP Unit
is less than Twenty-Six and 00/100 Dollars ($26.00), then the Market Value
of an OP Unit shall be deemed to be Twenty-Six and 00/100 Dollars ($26.00),
and if the twenty (20) day average value of an OP Unit is greater than
Twenty-Eight and 00/100 Dollars ($28.00), then the Market Value of an
OP Unit shall be deemed to be Twenty-Eight and 00/100 Dollars ($28.00).
(c) Subject to the terms of a Lock-Up Agreement, in the form of
EXHIBIT F attached hereto, to be dated the Closing Date, and to the terms
of 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 (the "LOCK-UP PERIOD"), during which the
Partnership will be restricted from converting, or transferring, any of the
OP Units, provided, however, that (i) during the Lock-Up Period the
Partnership may transfer OP Units to Accredited Investors (as defined in
Regulation D) who are permitted transferees under Section 6.05(c) of the
Operating Partnership Agreement and (ii) this restriction shall not be
applicable to estates of deceased owners of OP Units.
(d) From and after the expiration of the Lock-Up Period, the
Partnership 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, and the Partnership shall, within the four (4) year period
following the expiration of the Lock-Up Period, distribute the OP Units to
the partners of the Partnership in proportion to their respective
interests.
(e) Upon the terms and conditions of a Registration Rights
Agreement, in the form of EXHIBIT D attached hereto, to be dated the
Closing Date, the Partnership 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 Partnership. In addition, within ten (10) months after the
Closing, HME agrees to file and keep current at its sole cost and expense,
a registration statement (the "REGISTRATION STATEMENT") with the SEC
registering the resale of the HME Common Shares 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
eleven (11) 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 Partnership, as liquidated damages and not as a penalty,
the sum of One Thousand and 00/100 Dollars ($1,000.00).
2.4 PAYMENT WITH RESPECT TO DEFERRED CONSIDERATION RIGHTS.
(a) On the 90th day after the Closing Date, the Disbursing Agent
shall distribute to the Partnership that portion of the Liabilities Reserve
which has not been paid for the liabilities of the Company as provided in
this Agreement, and one-half of that portion of the Indemnity Reserve that
has not been paid or subject to Indemnity Claims.
(b) On the 180th day after the Closing Date, the Disbursing Agent
shall distribute to the Partnership that portion of the Indemnity Reserve
that has not been paid, disbursed or subject to Indemnity Claims.
(c) At any time, and from time to time, after the 180th day after
the Closing Date that there is a Final Determination (as defined in
EXHIBIT G) that any remaining portion, if any, of the Indemnity Reserve is
no longer subject to Indemnity Claims, the Disbursing Agent shall
distribute such remaining portion to the Partnership.
2.5 PRORATED DISTRIBUTION. The initial distribution payable with
respect to OP Units issued as the Consideration shall be made on the date
on which HME pays the dividend to the holders of its common stock that
relates to the earnings for the calendar quarter in which the OP Units were
issued and shall be pro-rated such that the Partnership shall receive a
pro-rata distribution for the period from the date on which the OP Units
were issued to and including the last day of the calendar quarter in which
the OP Units were issued.
2.6 ADJUSTMENTS AT CLOSING. With respect to the Property, the
following shall be adjusted and pro-rated between Home Properties and the
Partnership as of the Closing Date as if Home Properties became the owner
of the Property as of midnight of the night preceding the Closing Date and
as if the Partnership was the owner of the Property prior thereto:
(a) real estate and personal property taxes on the usual and
customary "due date" basis;
(b) water and sewer rents and charges;
(c) fuel, electricity and other utilities;
(d) charges under the service contracts;
(e) laundry income;
(f) interest, reserves and escrows with respect to the Existing
Loan; and
(g) rents.
(i) All rent payments and other amounts (hereinafter
collectively referred to in this SECTION 2.6 as "RENT")
collected on or before the Closing Date for the month
in which the Closing Date occurs shall be prorated as
between the parties as of the Closing Date.
(ii) All rent collected after the Closing Date shall be
applied first to the rent due for the month in which
such rent was collected and shall then be applied to
the next most recent delinquent rent, including any
rent which was not collected for any period prior to
the Closing Date. Delinquent rent amounts collected
with respect to any period prior to the Closing Date
shall belong to the Partnership as the former member of
the Company and, if paid to Home Properties, Home
Properties shall promptly send such rent to the
Partnership for distribution to the former partners of
the Partnership pursuant to the agreement described in
PARAGRAPH (e) of SECTION 7.1.
(iii) All rent collected by the Company or the Partnership,
prior to the Closing Date, for months subsequent to
Closing Date shall be paid to Home Properties on the
Closing Date.
(iv) All rent collected for rental periods on or after the
Closing Date shall belong to Home Properties and, if
paid to the Company or the Partnership shall be
promptly sent to Home Properties.
Any error in the calculation of adjustments shall be corrected and any
post-closing receipts or expenditures related to the period prior to
Closing shall be prorated subsequent to the Closing Date with
appropriate credits to be given based upon corrected adjustments,
provided, however, that the adjustments (except if errors are caused
by misrepresentations) shall be final upon expiration of the 90th day
after the Closing Date. Amounts to be paid as an adjustment in favor
of the Company or the Partnership shall be paid by Home Properties in
cash at Closing. Amounts to be paid as an adjustment in favor of Home
Properties shall, at the option of the Partnership, be paid in cash or
charged against the Consideration.
2.7 COSTS.
(a) Home Properties shall pay any assumption fees payable to the
Existing Lender, all recording fees, the cost of the UCC Searches, the cost
of obtaining a Survey map, its attorneys' fees 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, any Michigan state and local transfer tax,
any recapture as a result of the assignment of the Interests due to the
Michigan single business 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. Home Properties and the Partnership shall
share equally the costs of the premium for the title insurance policy,
except that Home Properties shall be liable for the costs of any
endorsements to the title insurance policy.
(b) At the Partnership's election, some or all amounts payable
pursuant to SECTION 2.7(a) by the Partnership may be
charged against the Consideration, in which event Home Properties shall
cause same to be paid, or paid in cash.
2.8 ESCROW AGREEMENT. The Reserve Amount shall be held and disbursed
pursuant to the terms of an escrow agreement that shall be in form attached
hereto as EXHIBIT G.
2.9 INSURANCE REFUND. On the Closing Date, Home Properties shall cause
the cancellation of all insurance maintained by the Company and thereafter
shall diligently seek to obtain such refunds as may be due on account of
such cancellation. Upon receipt of such refunds, Home Properties shall pay
them over to the Partnership as former member of the Company for
distribution to the partners of the Partnership.
ARTICLR III
REPRESENTATIONS AND WARRANTIES
3.1 BY THE COMPANY. The Company hereby represents and warrants to Home
Properties that each of the following is true, complete and accurate in all
material respects as of the date hereof and as of the Closing Date. The
phrase "to the best knowledge of the Company" as used in this Agreement
shall mean the actual knowledge of Xxxxx X. Xxxxxxxx.
(a) PROPERTY DESCRIPTION. The Property owned by the Partnership
or the Company as of the date hereof and which shall be owned by the
Company on the Closing Date shall include 216 apartments and is more
particularly described on EXHIBIT A, attached hereto.
(b) OTHER ITEMS. Except in nonmaterial respects, the following
items now in or on the Property are owned by the Partnership or the Company
as of the date hereof and shall be owned by the Company on the Closing
Date:
(i) all heating, plumbing and lighting fixtures;
(ii) ranges, refrigerators, disposals and dishwashers, water
heaters;
(iii)any and all bathroom fixtures, wall-to-wall carpeting,
traverse rods, exhaust fans, hoods, signs, screens,
maintenance building, fences, carpeting and runners,
cabinets, mirrors, shelving, any humidifier and
dehumidifier units, air conditioning units, mailboxes,
office furniture, and related equipment in connection
with the Project, but specifically excluding washers
and dryers which are not owned by the Company; and
(iv) any fixtures appurtenant to the Property and any other
furniture or equipment used in connection with the
operation and maintenance of the Property, including
any vehicles used in connection with the operation and
maintenance of the Property (hereinafter with the items
listed in (l)- (3) above, collectively, the "OTHER
ITEMS").
(c) CONDITION OF OTHER ITEMS. To the best knowledge of the
Company, substantially all of the Other Items are in reasonable working
order or condition. Except with respect to the Existing Loan, the Company
has not subjected any of the Other Property to any security interests,
liens, claims, charges or other encumbrances.
(d) ORGANIZATION AND AUTHORIZATION. The Company is a limited
liability company duly organized, validly existing and in good standing
under the laws of the State of Michigan and was formed under the laws of
the State of Michigan. It has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Partnership is the sole member of the Company.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. (i) the Company has
full power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby; (ii) as of the Closing
Date, all actions necessary to be taken by it or on its behalf to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby, will have been duly and validly taken; and (iii) this
Agreement has been duly and validly executed and delivered by it and,
assuming due execution and delivery by Home Properties, constitutes a valid
and binding agreement enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally as at the time in
effect and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) CONSENTS AND APPROVALS; NO VIOLATION. To the best knowledge
of the Company, neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby
will: (i) conflict with or will result in any breach of any provision of
its Articles of Organization or Operating Agreement; (ii) require it to
obtain any consent, approval, authorization or permit from, or file with or
notify, any governmental or regulatory authority, except where the failure
to obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not have a Material Adverse Effect (defined
below); (iii) except to the extent that the consent of the Existing Lender
is required for assumption of the Existing Loan, constitute a breach or
will result in a default under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, agreement or
other instrument or obligation of any kind to which it is a party or by
which it is bound, except for any such breach or default as would not have
a Material Adverse Effect; or (iv) violate any order, writ, injunction,
judgment, decree, law, statute, rule, regulation or governmental permit or
license applicable to it, which violation would have a Material Adverse
Effect, unless any waiver, consent, approval, authorization, permit, filing
or notification necessary to prevent any such conflict, breach, default or
violation has been obtained prior to the Closing Date. For purposes of
this Agreement, "MATERIAL ADVERSE EFFECT" means a material adverse effect
on the business, assets, financial condition or results of operation of the
party making the representation or warranty to which such qualification is
being applied.
(g) LIABILITIES. Except (i) as disclosed in SCHEDULE 3.1(G)
attached hereto, (ii) for liabilities and obligations incurred in the
normal course of business of the Company including, without limitation, the
Existing Loan, and (iii) as otherwise disclosed in this Agreement, the
Company has no material liability or obligation of any nature which in any
way materially affects or is related to the Property or the Other Items
whether now due or to become due, absolute, contingent or otherwise,
including liabilities for past due taxes (or any interest or penalties
thereto).
(h) LITIGATION. Except as disclosed in SCHEDULE 3.1(H) attached
hereto, there is no litigation, proceeding or investigation which, to the
best knowledge of the Company, is pending, or, to the best knowledge of the
Company, threatened, against or affecting the Company or the Property that
might affect or relate to the validity of this Agreement or any action
taken or to be taken pursuant hereto, or that might have a Material Adverse
Effect upon the Property or the Other Items or any part or the operation
thereof, unless fully covered by insurance.
(i) COMPLIANCE WITH LAWS. To the best knowledge of the Company,
without additional investigation, except as disclosed in SCHEDULE 3.1(I)
attached hereto, the Company has not received written notice, which remains
outstanding that it has not complied with and is in default under, or in
violation of, or received any written notice which remains outstanding that
the Company, the Property or the Other Items may be in violation of, any
law, ordinance, rule, regulation or code or condition in any approval or
permit pursuant thereto (including without limitation, any zoning, sign,
environmental, labor, safety, health or price or wage control, ordinance,
rule, regulation or order of) applicable to the ownership, development,
operation or maintenance of the Property or the Other Items.
(j) LEASES. There are no written leases affecting the Property
to which the Company is a party with a term greater than one (1) year. All
leases affecting the Property have been, or will be prior to closing,
assigned to the Company as landlord. The rent roll attached hereto as
SCHEDULE 3.1(J) is true and correct as of the date of this Agreement.
(k) CONDEMNATION. To the best of the knowledge of the Company,
without additional investigation, the Company has not received written
notice of pending condemnation of the Property, or any part thereof, or of
any plans for improvements which might result in a special assessment
against the Property.
(l) SERVICE CONTRACTS. There are no Service Contracts with
respect to the Property or the Other Items which will continue in effect
after the Closing except as set forth on SCHEDULE 3.1(L) attached hereto.
(m) EXECUTORY CONTRACTS. There are no executory contracts
connected with the Property or the Other Items, except as set forth on
SCHEDULE 3.1(M) attached hereto.
(n) ONGOING PERFORMANCE. Until the Closing Date, the Company
shall continue to fulfill all of its obligations under the terms of the
Existing Mortgage, the leases encumbering the Property, the service
contracts and the executory contracts, and the Company shall operate, and
perform maintenance and repair with respect to, all landscaping, buildings,
fixtures and facilities, including, without limitation, the Other Items, in
a commercially reasonable manner and in accordance with its current
practice.
(o) APPLIANCES. All of the ranges and refrigerators in the
Property are the property of the Company and not of the tenants.
(p) ENVIRONMENTAL. To the best of the knowledge of the Company,
without additional investigation, except as identified in the report
described in SCHEDULE 3.1(P) attached hereto, the Company has received no
notice of any violation of any applicable Environmental Laws.
(q) TAXES. The Company 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 Company, and
including any interest, penalties or additions attributable thereto.
(r) (i) All of the representations and warranties of the Company set
forth in this Agreement shall survive the Closing for a
period of one (1) year 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 Company shall be
brought, if at all, within one (1) year from the date
of Closing or thereafter be forever barred except for
any claim relating to an intentional and material
misrepresentation or fraud, which claim shall not be
subject to such time limit.
(ii) The Company 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 Company, set forth in this Agreement.
(iii)Except as expressly provided in this Agreement, the
Company has made no representations and/or warranties
regarding the Properties, and, except as expressly set
forth in this Agreement, Home Properties shall, at
Closing, accept each Property in "AS IS" condition,
with all faults, and without any other representations
or warranties of any kind, whether as to
merchantability, or fitness for a particular purpose,
or otherwise.
3.2 BY HOME PROPERTIES. Home Properties hereby represents and warrants
to the Company that each of the following is true, complete and accurate as
of the date hereof and as of the Closing Date and thereafter, as set forth
in subparagraph <> below.
(a) ORGANIZATION AND AUTHORIZATION. Home Properties is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of New York and was formed under the New York Act. It
has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. It is duly
qualified or licensed to do business as a foreign limited partnership and
in good standing in each jurisdiction in which the property owned, leased
or operated by it makes such qualification or license necessary, except in
each case in those jurisdictions where the failure to be so duly qualified
or licensed and in good standing would not have a Material Adverse Effect.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Subject to receipt of
approval of the Board of Directors of HME as provided by
SECTION 7.1(d) below, (i) Home Properties has full power
and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby; (ii) all actions necessary
to be taken by it or on its behalf to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby, have been
duly and validly taken; and (iii) this Agreement has been duly and validly
executed and delivered by it and, assuming due execution and delivery by
the Company and the Partnership, constitutes a valid and binding agreement
enforceable against it in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally as at the time in effect and by
general principles of equity, regardless or whether such enforceability is
considered in a proceeding in equity or at law.
(c) CONSENTS AND APPROVALS; NO VIOLATIONS. To the best of Home
Properties' knowledge, as of the Closing Date, neither the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the Operating Partnership Amendment, or the other agreements
contemplated by this Agreement, nor the issuance and delivery of the
OP Units, nor the consummation of the transactions contemplated hereby
will: (i) conflict with or will result in any breach of any provision of
the Operating Partnership Agreement or Certificate of Limited Partnership;
(ii) require it to obtain any consent, approval, authorization or permit
from, or file with or notify, any governmental or regulatory authority,
except where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not have a Material
Adverse Effect; (iii) constitute a breach or will result in a default under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
of any kind to which it is a party or by which it is bound, except for any
such breach or default as would not have a Material Adverse Effect; or
(iv) violate any order, writ, injunction, judgment, decree, law, statute,
rule, regulation or governmental permit or license applicable to it, which
violation would have a Material Adverse Effect, unless, any waiver,
consent, approval, authorization, permit, filing or notification necessary
to prevent any such conflict, breach, default or violation has been
obtained prior to the Closing Date.
(d) PARTNERSHIP INTERESTS. On the Closing Date, the OP Units to
be issued as provided in this Agreement shall be duly issued by Home
Properties and the Partnership will be duly admitted as a limited partner
of Home Properties.
(e) OPERATING PARTNERSHIP AGREEMENT. A true, correct and complete
copy of Operating Partnership Agreement is attached hereto as EXHIBIT B.
Home Properties hereby agrees that, with the following exceptions, the
Operating Partnership Agreement shall not be further amended on or prior to
the Closing Date: (i) the Operating Partnership Amendment, (ii) amendments
in connection with the issuance of additional shares of common stock by
HME, and (iii) amendments to reflect the issuance of additional OP Units in
connection with 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.
(f) LITIGATION. 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.
(g) CONDITION OF TITLE TO OP UNITS. At the Closing, Home
Properties shall deliver to the Partnership good and marketable title to
the OP Units, 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 Operating Partnership Amendment, admit the Partnership as
a limited partner in Home Properties.
(h) ACCURACY OF FINANCIAL INFORMATION. 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 Company or
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.
(i) FINANCIAL CONDITION. HME or Home Properties has not (A) made
a general assignment for the benefit of creditors; (B) admitted in writing
its inability to pay its debts as they mature; (C) had an attachment,
execution or other judicial seizure of any property interest which remains
in effect; or (D) become generally unable to meet its financial obligations
as they mature.
(j) DEBTOR PROCEEDINGS. 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.
(k) LIABILITIES. Except (A) as disclosed in writing to the
Partnership; (B) for liabilities and obligations incurred in the normal
course of business of HME or Home Properties; and (C) as otherwise
disclosed in this Agreement or in periodic filings (as updated) by HME or
Home Properties, HME and Home Properties has no material liability or
obligation of any nature which in any way materially affects their
financial statements, whether now due or to become due, absolute,
contingent or otherwise, including liabilities for taxes (or any interest
or penalties thereto).
(l) TAX FILINGS. 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. For purposes hereof, "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 Company, and including any interest, penalties or
additions attributable thereto, which arise after Closing.
(m) ASSUMPTION OF LIABILITIES. HME and Home Properties will be
responsible for all activities, operations, debts, liabilities of and
claims against the Company which arise and result from occurrences from and
after Closing.
(n) INDEMNIFICATION. HME and Home Properties will promptly,
timely and accurately make all announcements regarding this transaction to
the public and as otherwise may be required by the applicable securities
laws. HME and Home Properties will indemnify and save the Partnership and
the Company from and against any and all liability, claims, damages, costs
and expenses arising by or through HME or Home Properties with respect to
the offering of OP Units pursuant to this Agreement and with respect to
public statements regarding the transaction contemplated by this Agreement;
provided, however, that such indemnity shall not apply to statements made
or damages caused directly by the Partnership or the General Partner.
(o) REIT. Home Properties shall use its reasonable efforts to
cause HME to continue to be taxed as a real estate investment trust under
the Code unless the Board of Directors of HME determines that it is in the
best interest of the shareholders of HME to be taxed otherwise.
(p) (i) 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 for a period of one (1) year
following Closing, except subparagraphs (h) and (m)
above which shall not be subject to the foregoing one
(1) year limitation, and except subparagraph (o) which
shall survive the Closing for a period of ten (10) years,
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 Company shall be
brought, if at all, within one (1) year from the date
of Closing (except as to subparagraph (o) for which the
time limit shall be 10 years) or thereafter be forever
barred except for claims arising under
subparagraphs (h) and (m), and except for any claim
relating to an intentional and material
misrepresentation or fraud, which claims shall not be
subject to such time limit.
(ii) Home Properties and HME agree to indemnify the Company
and the Partnership, and hold harmless and defend each
of the Company and the Partnership, 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.
3.3 BY THE PARTNERSHIP. The Partnership hereby represents and warrants
to Home Properties that each of the following is true, complete and
accurate in all material respects as of the date hereof and as of the
Closing Date. The phrase "to the best knowledge of the Partnership" as
used in this Agreement shall mean the actual knowledge of Xxxxx X.
Xxxxxxxx.
(a) CONSENTS. The Partnership has obtained any consents of its
partners necessary to the prior transfer of the Property to the Company and
to the transaction contemplated by this Agreement.
(b) ORGANIZATION AND AUTHORIZATION. The Partnership is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Michigan and was formed under the laws of the State of
Michigan.
(c) AUTHORITY RELATIVE TO THIS AGREEMENT. (i) the Partnership has
full power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby; (ii) as of the Closing
Date, all actions necessary to be taken by it or on its behalf to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby, will have been duly and validly taken; and (iii) this
Agreement has been duly and validly executed and delivered by it and,
assuming due execution and delivery by Home Properties, constitutes a valid
and binding agreement enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally as at the time in
effect and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(d) CONSENTS AND APPROVALS; NO VIOLATION. To the best knowledge
of the Partnership, neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby
will: (i) conflict with or will result in any breach of any provision of
its Partnership Agreement or Certificate of Limited Partnership;
(ii) require it to obtain any consent, approval, authorization or permit
from, or file with or notify, any governmental or regulatory authority,
except where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not have a Material
Adverse Effect (defined above); (iii) except to the extent that the consent
of the Existing Lender is required for assumption of the Existing Loan,
constitute a breach or will result in a default under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation of any kind to which
it is a party or by which it is bound, except for any such breach or
default as would not have a Material Adverse Effect; or (iv) violate any
order, writ, injunction, judgment, decree, law, statute, rule, regulation
or governmental permit or license applicable to it, which violation would
have a Material Adverse Effect, unless any waiver, consent, approval,
authorization, permit, filing or notification necessary to prevent any such
conflict, breach, default or violation has been obtained prior to the
Closing Date.
(e) LITIGATION. Except as disclosed in SCHEDULE 3.3(E) attached
hereto, there is no litigation, proceeding or investigation which, to the
best knowledge of the Partnership, is pending, or, to the best knowledge of
the Partnership, threatened, against or affecting the Partnership or the
Property that might affect or relate to the validity of this Agreement or
any action taken or to be taken pursuant hereto, or that might have a
Material Adverse Effect upon the Property or the Other Items or any part of
the operation thereof, unless fully covered by insurance.
(f) COMPLIANCE WITH LAWS. To the best knowledge of the
Partnership, without additional investigation, except as disclosed in
SCHEDULE 3.3(F) attached hereto, the Partnership has not received written
notice, which remains outstanding that it has not complied with and is in
default under, or in violation of, or received any written notice which
remains outstanding that the Partnership, the Property or the Other Items
may be in violation of, any law, ordinance, rule, regulation or code or
condition in any approval or permit pursuant thereto (including without
limitation, any zoning, sign, environmental, labor, safety, health or price
or wage control, ordinance, rule, regulation or order of) applicable to the
ownership, development, operation or maintenance of the Property or the
Other Items.
(g) LEASES. As of the Closing, all leases affecting the Property
shall have been assigned to the Company as landlord.
(h) TAXES. The Partnership has filed, or will file when due, all
notices, reports and returns of Taxes (as defined above) 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.
(i) (1) All of the representations and warranties of the
Partnership set forth in this Agreement shall survive
the Closing for a period of six (6) 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 (6)
months from the date of Closing or thereafter be
forever barred except for any claim relating to an
intentional and material misrepresentation or fraud,
which claim shall not be subject to such time limit.
(2) 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.
(3) Except as expressly provided in this Agreement, the
Partnership has made no representations and/or
warranties regarding the Properties, and, except as
expressly set forth in this Agreement, Home Properties
shall, at Closing, accept each Property in "AS IS"
condition, with all faults, and without any other
representations or warranties of any kind, whether as
to merchantability, or fitness for a particular
purpose, or otherwise.
(4) 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
SECTION 2.2(b) above, for the payment
of any claim against or the performance of any
obligation of the Partnership. The foregoing
limitation of liability shall not apply in the case of
fraud or intentional and material misrepresentation;
provided, however, that in no event shall any limited
partner have any liability under this Agreement except
in the event that such limited partner makes a
fraudulent or intentional and material
misrepresentation in any assignment or investor
questionnaire regarding such limited partner's interest
which will be conveyed to Home Properties at Closing.
ARTICLE IV
COVENANTS OF THE PARTIES
4.1 FURTHER ASSURANCE. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all
things necessary under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
4.2 REPRESENTATIONS AND WARRANTIES. Each of the parties hereto shall
give written notice to the other party promptly upon the occurrence of, or
upon becoming aware of, either: (a) any condition or event which, if known
on the date hereof, would have made any representation or warranty
contained in this Agreement not true in any material respect; or (b) any
material and adverse development in the condition (financial or otherwise)
or operations of such party.
4.3 FINANCIAL ACCESS.
(a) On the Closing Date, the Company and/or the Partnership will
provide a signed representation letter substantially in the form of
EXHIBIT C attached hereto. The Company and the Partnership will provide
access to Home Properties' representative to all financial and other
information relating to the Company, the Partnership and the Property as is
sufficient to enable them to prepare audited and pro-forma financial
statements, in conformity with Regulation S-X of the Securities and
Exchange Commission (the "COMMISSION") and any registration Statement,
report or disclosure statement to be filed with the Commission.
(b) Prior to the Closing Date, Home Properties shall from time to
time, promptly after request, supply to the Partnership, and certify to the
Partnership the accuracy and completeness of, copies of any financial
statements and records and other documents and information requested by the
Partnership regarding Home Properties and HME which are available to the
public.
(c) The Parties hereto recognize that for federal income tax
purposes: (i) the Company is disregarded as a separate entity; and
(ii) the Partnership is deemed to own all of the assets actually owned by
the Company. Accordingly, at the Closing Date, the Partnership will be
treated for federal income tax purposes as having contributed all of the
Company's assets to Home Properties in exchange for the Consideration. The
parties hereto shall prepare their tax returns for their respective taxable
years which include the Closing Date consistent with that characterization
of the transaction.
4.4 NEGATIVE COVENANTS. The Company agrees that, prior to the Closing
Date, it will not take any of the following actions without first obtaining
Home Properties' prior written consent, which consent shall not be
unreasonably withheld or delayed:
(a) Create, incur or assume any indebtedness for money borrowed,
including obligations in respect of capital leases, except: (i) purchase
money mortgages granted in connection with the acquisition of property in
the ordinary course of business consistent with past practice; and
(ii) short-term indebtedness for borrowed money in accordance with loan
agreements and lines of credit in effect as of the date hereof.
(b) Assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of business
consistent with past practices.
(c) Sell or otherwise dispose of or abandon any of its assets
except in the ordinary course of business.
(d) Increase the rate or terms of: (i) compensation payable or to
become payable to any of its employees; or (ii) any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for
or with any employee, except salary increases to site employees not
exceeding three percent (3%) occurring in the ordinary course of business
in accordance with its customary practices (which shall include normal
periodic performance reviews and related compensation and benefit
increases).
(e) Enter into any agreement, commitment or transaction
(including, without limitation, any borrowing, capital expenditure or
capital financing), material to the business, operations or financial
condition of its business, except agreements, commitments or transactions
in the ordinary course of business consistent with past practice.
(f) Transfer, mortgage, pledge, grant any security interest in or
permit the imposition of any lien or other encumbrance on any of its assets
other than in the ordinary course of business consistent with past
practice.
4.5 MANAGEMENT AGREEMENTS. On or prior to the Closing Date, the
Company shall terminate any agreements pertaining to the management of the
Property.
4.6 CLOSING DOCUMENTS. On the Closing Date, the Company shall deliver
to Home Properties a certificate of title and any necessary transfer
documents relating to any vehicles, a current rent roll ("RENT ROLL")
certified as of the date of the Closing Date, which shall include a list of
all tenants, all rental obligations of each tenant with respect to the
Property and all security deposits (including all interest due to tenants
pursuant to Michigan or other applicable laws). On the Closing Date, the
Partnership shall either transfer to the Company an amount equal to the
aggregate amount of the security deposits shown on the Rent Roll (including
all interest due to tenants pursuant to Michigan or other applicable laws),
or the OP Units payable to the Partnership shall be reduced by such amount,
and, in either event, the Company shall assume all obligations related to
the security deposits. On the Closing Date, the Company shall also deliver
to Home Properties complete originals of each lease listed on the Rent
Roll, to the extent available. On the Closing Date, the Partnership and
Home Properties shall deliver to each other an assignment and assumption of
the Interests, which shall include mutual indemnities related to the
Company's liabilities with respect to the ownership of the Property prior
to and after the Closing Date.
4.7 TAX PROVISIONS. Home Properties agrees to observe and comply with
the following:
(a) At all times for and during a period of ten (10) years from
and after the Closing Date, Home Properties shall allocate to the
Partnership or then-holders of OP Units originally issued to the
Partnership ("UNIT HOLDERS"), for Federal Income tax purposes (i) pursuant
to Section 752 of the Code and Section 1.752-3 of the Treasury Regulations,
nonrecourse debt of Home Properties in an aggregate amount not less than
the deficit in the Partnership's capital (i.e., the excess of the
Partnership's debts over the adjusted tax basis of the Partnership's assets
("CAPITAL ACCOUNT DEFICIT"), as adjusted from time to time for income or
loss allocated, and cash distributed, to the Partnership by Home
Properties, and (ii) sufficient qualified nonrecourse financing (within the
meaning of Section 465(b)(6) of the Code) to prevent the application of
Subsection 465(e) of the Code to the Unit Holders.
(b) The initial Capital Account Deficit shall be determined as at
(just prior to) the contribution of the Partnership's interest in the
Company to Home Properties on the Closing Date, and shall be based upon the
estimated information set forth in SECTION 4.8(a) and
shall be updated based upon the information set forth in a schedule to be
furnished by the accountant for the Partnership within the time required by
SECTION 4.8(b) hereof. Thereafter, for a period of ten
(10) years from and after the Closing Date, the Capital Account Deficit
shall be adjusted annually to reflect income or loss allocated, and cash
distributed, to the Partnership by Home Properties. Home Properties will
use the traditional method (and not the curative or remedial method), as
contemplated by Treasury Regulations Section 1.704-3(b) to allocate book-
tax differences with respect to the assets which are deemed contributed to
Home Properties by the Partnership.
(c) Home Properties agrees that for a period of ten (10) years
following the Closing Date, (i) Home Properties shall not prepay,
additionally secure or otherwise restructure the debt allocable to and
encumbering the Property in such manner as to cause a reduction in the
amount of the Partnership's share (determined under Section 1.752-3 of the
Treasury Regulations) of nonrecourse debt without the Partnership's prior
written consent, and (ii) Home Properties will not dispose of any of its
interest in the Property, unless such Property is exchanged for property of
like kind ("REPLACEMENT PROPERTY") on a tax-deferred basis under
Section 1031 of the Code, or otherwise is tax-deferred beyond the ten (10)
year period referred to in SECTION 4.7(a) hereof.
Replacement Property acquired by Home Properties pursuant to such tax-
deferred, like-kind exchange shall remain subject to the restriction on
disposition contained hereunder until the end of the aforesaid ten (10)
year period. 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 or Replacement Property, it will use commercially
reasonable efforts to effectuate such Property transfer in such manner as
to be tax free to the Partnership or Unit Holders.
(d) In the event that Home Properties takes any action prohibited
by SECTION 4.7(a) or (c) hereof, Home
Properties shall indemnify and save harmless the Partnership or the Unit
Holders from and against any federal and state income tax liability,
including but not limited to: (i) income taxes suffered as a result of all
payments made under this subsection; and (ii) interest, penalties and the
reasonable fees of attorneys and accountants. For this purpose, the
Partnership or Unit Holders shall be conclusively deemed to be liable for
(and Home Properties shall indemnify and save the Partnership or Unit
Holders harmless from and against) tax on any income or gain of the
Partnership or Unit Holders, and on any payments to the Partnership or Unit
Holders made under this SECTION 4.7(b) in an amount equal
to the product of such income, gain or payment and the highest combined
rate of Federal and State of Michigan income tax applicable to individuals
with respect to income or gain of the type in question.
(e) 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 shall be issued
in accordance with SECTION 2.5.
(f) 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 Partnership or Unit Holders 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 Partnership or Unit
Holders.
4.8 PARTNERSHIP FINANCIAL INFORMATION.
(a) The Partnership represents that, to the best of the
Partnership's knowledge, as of December 31, 1999: (i) the adjusted basis
of the Property for Federal income tax purposes (including adjustments to
basis made pursuant to Sections 734 and 743 of the Code) will be One
Million Four Hundred Thirty-Four Thousand Nine Hundred Fifteen and 00/100
Dollars ($1,434,915.00); (ii) the amount of nonrecourse debt encumbering
the Property will be Four Million Ninety-One Thousand Three Hundred Thirty
and 00/100 Dollars ($4,091,330.00), and (iii) the estimated initial Capital
Account Deficit of the Partnership (computed on a tax basis and taking into
account adjustments to basis made pursuant to Sections 734 and 743 of the
Code and the tax basis of certain other assets to be transferred with the
Property) will be Two Million Four Hundred Thousand and 00/100 Dollars
($2,400,000.00).
(b) Within one hundred twenty (120) days of the Closing Date the
Partnership shall also provide Home Properties with a schedule showing:
(i) the net book value of the Property as of the Closing Date; and (ii) an
update to SECTION 4.8(a) providing the actual information
which was estimated in such Section and detail with respect to assets of
the Partnership necessary to determine the initial Capital Account Deficit.
To the extent (and only to the extent) that there is any inaccuracy in the
information provided by the Partnership to Home Properties pursuant to
SECTIONS 4.8(a) and (b) or if the update to SECTION 4.8(a) provided pursuant
to this SECTION 4.8(b) is materially different from the
information contained in SECTION 4.8(a), then Home
Properties shall not be liable to the Partnership for the tax on any gain
to the Partnership that results from such inaccuracy or material
difference. Home Properties shall not be liable to the Partnership for the
tax on any gain to the Partnership that results from Home Properties'
inability to comply with the obligations of SECTION 4.7(a)
of this Agreement as a result of the Partnership's failure to distribute
OP Units as provided in SECTION 2.3(d) of this Agreement.
The information in SECTION 4.7 shall be calculated in a
manner consistent with the calculations made for federal income tax
depreciation purposes.
ARTICLE V
INSPECTION; CLOSING DATE
5.1 INSPECTION. Except as expressly provided in this Agreement, Home
Properties acknowledges that it is acquiring the Property "AS IS" based on
Home Properties' inspection. 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 (1) or more surveyors, attorneys, engineers, auditors,
architects, and/or other experts of its choice (a) to inspect any document
related to any Property, including, without limitation, all Leases and
related documents, documents pertaining to the Existing Loan, working
drawings, plans and specifications, surveys, appraisals, engineer's
reports, environmental reports, insurance policies, service contracts, real
estate tax receipts and annual and monthly operating statements, and (b) to
inspect, examine, survey, appraise and obtain engineering inspection and
environmental reports with respect to the Property, documents pertaining to
the Existing Loans, or all of the Property, and otherwise to do all that,
which, in the opinion of Home Properties, is necessary to determine the
condition and value of the Property 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 Company, 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 Company or the
Property, and Home Properties shall be entitled to the immediate return of
the Deposit, and this Agreement shall, thereafter, be null, void and of no
further force or effect (other than with respect to the indemnities and
agreements that expressly survive termination of this Agreement). If not
so terminated by Home Properties, this Agreement shall continue in full
force and effect according to its terms, and, subject to the closing
conditions, Home Properties shall be deemed to have waived its right to
object to the condition of, or any document pertaining to, the Property.
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 shall indemnify and hold the Company 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 shall repair any damage which it may cause as a
result of any such entry and testing; Home Properties shall cause its
entry, inspections and testing (if any) to be conducted in a manner so as
to minimize disruption to tenants at the Property. The indemnities in this
SECTION 5.1 shall survive the Closing and/or the
termination of this Agreement.
5.2 CLOSING DATE. If this Agreement has not 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 ("CLOSING") shall occur no later
than fifteen (15) days following the later of (i) approval by the Existing
Lender of the assumption of the Existing Loan and (ii) expiration of the
Due Diligence Period, but in no event prior to January 14, 2000 ("CLOSING
DATE"). Home Properties and HME agree to use commercially reasonable good
faith efforts to expeditiously attempt to obtain all necessary approvals of
the Existing Lender; provided, however, that if such approval cannot be
obtained prior to the Closing Date, the Partnership or Home Properties may
elect to postpone the Closing Date up to 30 days as necessary to obtain
such approvals. The Closing shall be held at the offices of the
Partnership's attorneys, at such time, or at such other place, as may be
mutually agreed upon by the parties.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
6.1 CONDITIONS TO PARTNERSHIP'S AND COMPANY'S OBLIGATIONS. The
obligations of the Partnership and Company under this Agreement shall be
subject to the satisfaction of the following conditions precedent
("PARTNERSHIP'S CONDITIONS").
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Home Properties set forth herein shall be true and correct in
all material respects as of the Closing Date, as certified in writing by
the general partner of Home Properties.
(b) COVENANTS. Home Properties has complied, in all material
respects, with the covenants made by it in this Agreement to be complied
with by it from the date hereof through the Closing Date.
(c) REGISTRATION RIGHTS AGREEMENT. The Partnership and Home
Properties shall have entered into a registration rights agreement in the
form of EXHIBIT D attached hereto.
(d) APPROVAL TO ASSUME LOAN. The Existing Lender shall have
approved the assumption of the Existing Loan by the Company and Home
Properties and the Existing Lender's counsel shall have prepared all
necessary assumption documents and shall otherwise be prepared to close the
assumption of the Existing Loan.
(e) SIMULTANEOUS CLOSING. Closing hereunder shall occur
simultaneously with closing pursuant to the Contribution Agreement which
has been executed by and between the Affiliated Companies and Home
Properties.
(f) PARTNERSHIP INFORMATION. Home Properties has provided to the
Partnership: (i) evidence acceptable to the Company of due formation,
existence and good standing of Home Properties; (ii) certification that the
person signing documents on behalf of Home Properties is authorized to do
so; (iii) Secretary's Certificate certifying that the Board of Directors of
HME has duly adopted resolutions authorizing the transaction contemplated
by this Agreement, and the execution of the Closing documents to be
executed and delivered by Home Properties pursuant to this Agreement; and
(iv) a certified copy of the Operating Partnership Agreement.
6.2 EFFECT OF FAILURE TO SATISFY CONDITION. Subject to
SECTION 9.11(b), if any of the Partnership's Conditions
shall not have been fulfilled by Home Properties, or otherwise satisfied,
or waived by the Partnership within the time provided, the Partnership
shall have the right to terminate this Agreement by written notice to Home
Properties, in which event the Deposit shall be returned to Home
Properties, and this Agreement shall, thereafter, be deemed to be null and
void and of no further force or effect, and no party shall have any further
rights or obligations under this Agreement (other than with respect to
those indemnities and agreements that expressly survive termination of this
Agreement).
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF HOME PROPERTIES
7.1 CONDITIONS TO HOME PROPERTIES' OBLIGATIONS. The obligations of
Home Properties under this Agreement shall be subject to the satisfaction
of the following conditions precedent ("HOME PROPERTIES' CONDITIONS").
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and Partnership set forth in this Agreement shall
be true and correct in all material respects as of the Closing Date, as
certified in writing.
(b) COVENANTS. The Company and Partnership have complied, in all
material respects, with the covenants made by them in this Agreement to be
complied with by them from the date hereof through the Closing Date.
(c) CONDITION OF PROPERTY. Subject to
SECTION 9.12, there has been no material adverse change
in the condition of the Property from its condition at the expiration of
the Due Diligence Period.
(d) APPROVALS. Home Properties has obtained the requisite
approval of the Board of Directors of HME to the transactions described in
this Agreement on the terms and conditions described herein, including,
without limitation, the Operating Partnership Amendments, within the Due
Diligence Period, which such Board approval Home Properties agrees to use
all good faith efforts to obtain.
(e) PARTNERSHIP AGREEMENT. The Partnership shall have executed an
agreement whereby it agrees that it will be responsible for making all
final distributions to the partners of the Partnership and shall indemnify
Home Properties from all claims relating thereto.
(f) INSPECTION. Home Properties has been satisfied within the
time provided in its sole discretion with the results of the inspection, or
has not terminated this Agreement, as provided by SECTION 5.1.
(g) PARTNERSHIP AND LLC INFORMATION. The Company, or the
Partnership, as applicable, has provided to Home Properties: (i) evidence
acceptable to Home Properties of due formation, existence and good standing
of the Company and the Partnership; (ii) certification that the person
signing documents on behalf of the Company and the Partnership is
authorized to do so; and (iii) proof of consent of the partners of the
Partnership, as required by the Partnership's partnership agreement to the
prior transfer of the Property to the Company.
(h) APPROVAL TO ASSUME LOAN. The Existing Lender shall have
approved the assumption of the Existing Loan by the Company and Home
Properties and the Existing Lender's counsel shall have prepared all
necessary assumption documents and shall otherwise be prepared to close the
assumption of the Existing Loan.
(i) SIMULTANEOUS CLOSING. Closing hereunder shall occur
simultaneously with the closing pursuant to the Contribution Agreement
which has been executed by and between the Affiliated Companies and Home
Properties.
7.2 EFFECT OF FAILURE TO SATISFY CONDITION. Subject to
SECTION 9.11(a), if any of Home Properties' Conditions
shall not have been fulfilled by the Company or the Partnership, or
otherwise satisfied or waived by Home Properties within the time provided,
Home Properties shall have the right to terminate this Agreement by written
notice to the Company, in which event the Deposit shall be returned to Home
Properties, and this Agreement, shall, thereafter, be deemed to be null and
void and of no further force or effect, and no party shall have any further
rights or obligations under this Agreement (other than with respect to
those indemnities and agreements that expressly survive termination of this
Agreement).
ARTICLE VIII
TITLE MATTERS
8.1 TITLE CONDITION. At Closing, the Company will hold good and
marketable fee simple title to the Property free and clear of all liens,
charges and encumbrances, except the Permitted Exceptions (as defined in
SECTION 8.6 below).
8.2 TITLE POLICY. Promptly upon execution of this Agreement by all
parties, the Partnership shall order a commitment (the "TITLE COMMITMENT")
for an ALTA Owner's Policy of Title Insurance (the "TITLE POLICY")
regarding the Property in the amount of the Consideration and confirming
good and marketable title to such Property, subject only to the Permitted
Exceptions and other matters of record approved by Home Properties. The
Title Policy shall be issued by First American Title Insurance Company or
other title company mutually acceptable to Home Properties and the Company
(the "TITLE COMPANY"). Home Properties and the Partnership shall share
equally the cost of the expenses in connection with the Title Commitment
and Title Policy, except that Home Properties shall be solely responsible
for the cost of endorsements, if any. The Title Policy shall be issued as
soon as practicable after the completion of the Closing on the Closing
Date.
8.3 UCC SEARCHES. Promptly upon execution of this Agreement by all
parties, Home Properties shall order written results of searches (the "UCC
SEARCHES") of the records of the Michigan Secretary of State and of the
County in which the Property is located for Uniform Commercial Code
Financing Statements, tax liens, or the like, in either the name of the
Company, the Partnership or the Property effective as of the date after the
date of this Agreement, accompanied by copies of all documents disclosed by
the UCC Searches. Home Properties shall bear all of the expenses of the
UCC Searches.
8.4 SURVEY. Promptly upon execution of this Agreement by all parties,
if desired by Home Properties, Home Properties shall order a survey of the
Property (the "SURVEY"), which shall be by a competent Michigan surveyor
dated after the date of this Agreement and certified as directed by Home
Properties. Home Properties shall bear all of the expenses of obtaining
the Survey, if any.
8.5 OBJECTIONS TO TITLE. 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 Commitment, the UCC
Searches and Survey, and the Partnership shall have the right, but not the
obligation, within fifteen (15) 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 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 even 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 (other than with respect to those indemnities and
agreements that expressly survive termination of this Agreement), and Home
Properties shall be entitled to the immediate return of the Deposit; or
(ii) waive its rights under SECTION <> and elect to
take title to the 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 Home Properties does not object, as aforesaid, shall be
deemed approved by Home Properties, and shall be deemed to be an additional
Permitted Exception.
8.6 PERMITTED EXCEPTIONS. The obligation of Home Properties to close
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 title objections other than the lien of the mortgage securing the
Existing Loan, any apartment leases for tenants of the Property and the
title exceptions identified in EXHIBIT E attached hereto (collectively the
"PERMITTED EXCEPTIONS").
8.7 AFFIDAVIT OF TITLE. The Partnership agrees that, upon the request
of Home Properties, it will provide an affidavit in such customary form AS
shall allow Home Properties to obtain a non-imputation endorsement to the
title policy purchased by Home Properties.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENT. This Agreement may be amended only by a writing
executed by Home Properties, the Partnership and the Company.
9.2 WAIVER OF COMPLIANCE. Except as otherwise provided in this
Agreement, any failure of any party to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled
to the benefits thereof only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
9.3 ENTIRE AGREEMENT. This Agreement, including the documents,
schedules, certificates and instruments referred to herein, embody the
entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other
than those expressly set forth or referred to herein or therein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such transactions.
9.4 ASSIGNMENT. This Agreement and all obligations and rights of the
parties hereunder may not be assigned by any party.
9.5 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 Michigan without giving effect to the conflicts-of-laws principles
thereof.
9.6 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. Article and Section references which do
not otherwise specify, are to the designated Article or Section of this
Agreement.
9.7 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted. All provisions of this
Agreement shall be enforced to the full extent permitted by law.
9.8 NOTICES. All notices, demands or requests given pursuant to any
provision of this Agreement shall be in writing and shall be effective only
if delivered personally, or sent by registered or certified mail, postage
prepaid or sent by nationally recognized overnight carrier, to the
addresses set forth below:
TO HOME PROPERTIES: Home Properties of New York, L.P.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxx
WITH A COPY TO: Home Properties of New York, L.P.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
TO THE COMPANY: Macomb Apartments Home Properties LLC
c/o Schostak Brothers and Company, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
WITH A COPY TO: Honigman, Miller, Xxxxxxxx and Xxxx
2290 First National Building
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. XxXxxxxxxx, Esq.
TO THE PARTNERSHIP: Macomb Apartments Limited Partnership
c/o Schostak Brothers and Company, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
WITH A COPY TO: Honigman, Miller, Xxxxxxxx and Xxxx
2290 First National Building
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. XxXxxxxxxx, Esq.
Any such notice, demand or request shall be deemed to have been given
on the date of receipt in the case of delivery in person, delivery by
courier service, or national overnight delivery, or three (3) business days
after mailing if sent by registered or certified mail, postage pre-paid.
Notice shall be deemed delivered upon refusal of delivery by the recipient.
9.9 CONFIDENTIALITY. By execution of this Agreement and except as
otherwise provided herein, prior to the Closing Date Home Properties agrees
to keep any and all information obtained in or in connection with the due
diligence process with respect to the Company, its operations, the Property
and Other Items strictly confidential, and will not disclose any such
information without the Company's prior written consent, except to the
extent required by law or as may be appropriate under applicable laws,
including the securities laws. In the event this Agreement is terminated,
Home Properties agrees to promptly return to the Company all documents and
materials provided to Home Properties, together with copies of any reports
obtained by Home Properties.
9.10 BROKER'S COMMISSION. The Company, the Partnership and Home
Properties each represent to the other that it did not employ any broker in
connection with this sale other than Chase Securities, Inc., and the
Partnership agrees that, pursuant to separate agreement, it will pay any
fees and commissions. Home Properties agrees to indemnify the Company and
the Partnership, and the Company and the Partnership agree to indemnify
Home Properties, from any and all claims and expenses, including legal
fees, if any other fee or commission is determined to be due by reason of
the employment of any other broker by the indemnifying party.
9.11 DEFAULTS AND REMEDIES.
(a) DEFAULT BY THE COMPANY. If the Partnership or the Company
defaults hereunder at or prior to closing in any respect, Home Properties,
as its sole remedies, may terminate this Agreement, in which event the
Deposit shall be returned to Home Properties, or may seek specific
performance of this Agreement, but not damages. Home Properties shall not
have any right to seek any other remedy against the Company. In the event
of a breach by the Partnership or the Company of the representations
contained in SECTIONS 3.1 or 3.3 hereof, of which breach Home Properties
does not have knowledge at or prior to Closing, Home Properties, as its sole
remedy, may seek to recover only its actual damages that compensate Home
Properties for direct, actual injury sustained by it, and nothing more.
(b) DEFAULT BY HOME PROPERTIES. If Home Properties fails or
refuses to perform in accordance with the terms of this Agreement, the
Deposit shall be forfeited to the Partnership as liquidated damages (which
shall be the sole and exclusive remedy of the Partnership against Home
Properties), at which time this Agreement shall be deemed to be null, void
and of no further force or effect between the parties (other than with
respect to the indemnities and agreements that expressly survive
termination of this Agreement). In that regard, the Partnership
acknowledges and agrees that (i) the Deposit is a reasonable estimate of,
and bears a reasonable relationship to, the damages suffered and costs
incurred by the Partnership as a result of having subjected the Interests
to the terms of this Agreement; (ii) the actual damages suffered and costs
incurred by the Partnership as a result of such failure of Home Properties
to close under this Agreement would be extremely difficult and impractical
to determine; (iii) Home Properties seeks to limit its liability under this
Agreement to the amount of the Deposit in the event this Agreement is
terminated and the transaction contemplated by this Agreement does not
close due to a default of Home Properties under this Agreement; and
(iv) the Deposit shall be and constitute valid liquidated damages. The
foregoing limitation shall apply only in the event that Home Properties
does not close the transaction contemplated by this Agreement, and such
limitation shall not apply in the event that Home Properties closes and
thereafter Home Properties or HME breaches one (1) of its obligations
hereunder after Closing.
9.12 CONDEMNATION AND DESTRUCTION.
(a) If, prior to the Closing Date, the Property, or any material
part of any Property, is taken by eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), the
Partnership shall notify Home Properties of such fact, and Home Properties
shall have the option (which option shall be set forth in a notice from
Home Properties to the Partnership given not later than fifteen (15)
business days after receipt of the notice from the Partnership):
(i) to terminate this Agreement, in which event, the
Deposit shall be returned to Home Properties, and,
thereafter, this Agreement shall be deemed to be null,
void and of no further force or effect between the
parties (other than with respect to the indemnities and
agreements that expressly survive termination of this
Agreement); or
(ii) to accept the assignment of the Interests, 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, the Partnership's
Interests, if any, in 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 Company
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 Company given not later than fifteen (15) business days
after receipt of the notice from the Company):
(i) to terminate this Agreement, in which event, the
Deposit shall be returned to Home Properties, and,
thereafter, this Agreement shall be deemed to be null,
void and of no further force or effect between the
parties (other than with respect to the indemnities and
agreements that expressly survive termination of this
Agreement); or
(ii) to accept the assignment of the Interests 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, if any, in and to the insurance proceeds
awarded or to be awarded to the Company as the result
of such damage or destruction.
(c) In the event there is damage to or destruction of an
immaterial part of the Property by fire or other casualty, such damage or
destruction shall, subject to receipt of insurance proceeds, be repaired
promptly by the Company, 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 the assignment of the Interests 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, if any, in and to the insurance proceeds awarded or to be
awarded to the Company 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 Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), 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 Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00).
9.13 NUMBER OF DAYS. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls
on a Saturday, Sunday or holiday on which federal banks are or may elect to
be closed, then the final day shall be deemed to be the next day which is
not a Saturday, Sunday or such holiday.
9.14 DEPOSIT.
(a) Upon the execution of this Agreement, Home Properties shall
deposit with the Disbursing Agent in escrow the sum of Three Hundred
Seventy-Five Thousand and 00/100 Dollars ($375,000.00) (the deposit,
together with any interest earned thereon, is the "DEPOSIT"). If Closing
is completed hereunder or if this Agreement is terminated by Home
Properties pursuant to the exercise of any right of termination as provided
in herein, the Disbursing Agent shall refund the Deposit to Home
Properties. If this Agreement is terminated by the Partnership pursuant to
the exercise of any right of termination as provided herein, the Disbursing
Agent shall deliver the Deposit to the Partnership. Notwithstanding the
above, the Disbursing Agent shall deliver the Deposit to Home Properties in
the event that the Partnership terminates this Agreement as a result of the
failure of the condition described in SECTION 6.1(d)
hereof, and 6.1(f) if the failure to simultaneously close
is caused by the Company or the Partnership.
(b) Notwithstanding anything contained in this
SECTION 9.14, if either party terminates this Agreement
as a result of the other's default or pursuant to the exercise of any right
of termination conferred by this Agreement, Disbursing Agent shall not
disburse the Deposit until the earlier to occur of (i) receipt by
Disbursing Agent of written instructions from the Partnership and Home
Properties or (ii) entry of a final and unappealable adjudication
determining which party is entitled to receive the Deposit, as applicable,
at which time the Deposit shall be distributed in accordance with such
written instructions or adjudication. Except to the extent of any dispute
between them, the Partnership and Home Properties agree to act in good
faith to provide the Disbursing Agent with the instructions described in
(i) above in the event that the Agreement is terminated.
(c) In the event of a dispute between Home Properties and the
Partnership with respect to the Deposit, the Disbursing Agent may deposit
the Deposit with a court of proper jurisdiction and commence an
interpleader action. Upon notifying the Partnership and Home Properties of
the commencement of such action, Disbursing Agent shall be released from
all liability with respect to the Deposit, except to the extent of
accounting for any moneys previously delivered by Disbursing Agent out of
escrow. Disbursing Agent shall not be liable to either the Partnership or
Home Properties, other than for performance of its duties under this
Agreement or his gross negligence or intentional wrongdoing. Disbursing
Agent may rely upon the genuineness or authenticity of any document
tendered to it by either the Partnership or Home Properties, and shall be
under no duty of independent inquiry with respect to any acts or
circumstances recited in such document. The Partnership and Home
Properties shall indemnify, defend and hold harmless Disbursing Agent from
and against all cost, claims or liabilities arising from the performance by
Disbursing Agent of his obligations under this Agreement, other than for
his failure to comply herewith, gross negligence or intentional wrongdoing.
(d) As used in this SECTION 9.14, the term
"DEPOSIT" shall refer to the amount set forth at SECTION 9.14(a), together
with all interest thereon. The Deposit shall be held by the Disbursing Agent
in one (1) or more federally-insured money market accounts acceptable to both
the Partnership and Home Properties, or in short-term United States government
obligations having a maturity date which is acceptable to the General Partner
and Home Properties or in one (1) or more interest-bearing deposit accounts of
a bank or other financial institution acceptable to the General Partner and
Home Properties. The Partnership's taxpayer identification number is
00-0000000; Home Properties' taxpayer identification number is 00-0000000.
9.15 PLANS. The Company agrees to provide Home Properties with all
plans and architectural drawings in its possession for the improvements
completed at the Property, including, without limitation, all "as built"
plans in its possession and the Company further agrees that it will
endeavor to make the same available to Home Properties for inspection at
the Company's office or at the Property during the Due Diligence Period and
to turn over the same to Home Properties at Closing.
9.16 SURVIVAL. The representations and warranties of HME and Home
Properties, the Partnership and the Company will survive Closing for a
period of one (1) year, except as otherwise specifically provided herein.
9.17 COUNTERPARTS. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original for all
purposes and all of which, when taken together, shall constitute one (1)
and the same instrument.
ARTICLE X
CLOSING DOCUMENTS
10.1 CLOSING DOCUMENTS.
(a) At the time of Closing, the Company and the Partnership shall
deliver to Home Properties the following:
(i) Properly executed Assignments to Home Properties of no
less than one hundred percent (100%) of the Interests;
(ii) A current rent roll ("RENT ROLL") certified, as of the
date of Closing, which shall include a correct list of
all tenants, all rental obligations of each tenant with
respect to the Property and all security deposits along
with a copy of all leases shown on the Rent Roll;
(iii)A certificate of title and any other documentation
necessary to transfer title to any vehicles, if any;
(iv) Copies of the personnel files of all employees employed
at the Property by the Company, if any, and remaining
in the employment of Home Properties after the Closing;
(v) An executed original of the Registration Rights
Agreement and the Lock-Up Agreement in the form
attached hereto as EXHIBIT D and EXHIBIT F,
respectively;
(vi) An estoppel certificate from the Existing Lender
confirming that there is no default under the Existing
Loan, and that there exists no event that with the
passage of time or the giving of notice, or both, would
constitute such a default;
(vii)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;
(viii)All keys to the Property in the possession of the
Company, which shall remain at the rental office and
need not be brought to Closing;
(ix) Such evidence of the Company's power and authority as
the Title Company may reasonably request;
(x) A signed counterpart of the Escrow Agreement in form
substantially similar to EXHIBIT G; and
(xi) Any additional funds, documents and/or instruments as
may be necessary for the proper performance by the
Company of its obligations contemplated by this
Agreement.
(xii)The representation letter substantially in the form of
EXHIBIT C.
(b) At the time of Closing, Home Properties shall deliver to the
Partnership the following:
(i) Evidence of organization, existence and authority of
Home Properties and HME and the authority of each
person executing documents on behalf of each,
reasonably satisfactory to the Partnership;
(ii) Such cash as may be required of Home Properties to pay
closing costs or charges properly allocable to Home
Properties;
(iii)An Amendment to the Home Properties' Partnership
Agreement in the form necessary to admit the
Partnership as limited partners of Home Properties and
evidencing the issuance of the OP Units required
pursuant to this Agreement;
(iv) An executed original of the Registration Rights
Agreement in the form attached hereto as EXHIBIT D; and
(v) Any additional funds, documents and/or instruments as
may be necessary for the proper performance by Home
Properties of its obligations contemplated by this
Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
[END OF TEXT]
SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT
BETWEEN HOME PROPERTIES OF NEW YORK, L.P.,
MACOMB APARTMENTS LIMITED PARTNERSHIP
AND MACOMB APARTMENTS HOME PROPERTIES LLC
COMPANY:
MACOMB APARTMENTS HOME PROPERTIES LLC,
a Michigan limited liability company
By: Macomb Apartments Limited Partnership,
a Michigan limited partnership
Its: sole member
By: ,
a
Its: General Partner
By:
Printed Name:
Its:
SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT
BETWEEN HOME PROPERTIES OF NEW YORK, L.P.,
MACOMB APARTMENTS LIMITED PARTNERSHIP
AND MACOMB APARTMENTS HOME PROPERTIES LLC
PARTNERSHIP:
MACOMB APARTMENTS LIMITED PARTNERSHIP,
a Michigan limited liability company
By: ,
a
Its: General Partner
By:
Printed Name:
Its:
SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT
BETWEEN HOME PROPERTIES OF NEW YORK, L.P.,
MACOMB APARTMENTS LIMITED PARTNERSHIP
AND MACOMB APARTMENTS HOME PROPERTIES LLC
HOME PROPERTIES:
HOME PROPERTIES OF NEW YORK, L.P.,
a New York limited liability company
By: Home Properties of New York, Inc.,
a New York corporation
Its: General Partner
By:
Printed Name:
Its:
SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT
BETWEEN HOME PROPERTIES OF NEW YORK, L.P.,
MACOMB APARTMENTS LIMITED PARTNERSHIP
AND MACOMB APARTMENTS HOME PROPERTIES LLC
DISBURSING AGENT:
(Solely for the purpose of acknowledging receipt of
this Agreement and its
agreement to perform the obligations specifically
provided herein to be performed by it):
,
a
By:
Printed Name:
Its:
