Exhibit 2.4
CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement"), made as of the
7th day of November, 1997 by and between
HOME PROPERTIES OF NEW YORK, L.P., a New York limited
partnership, having its principal office at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, (herein called "Buyer"),
and
the individuals or entities listed on the attached Schedule
A (herein collectively the "Contributors" and individually
a "Contributor"), who have addresses as listed on the
attached Schedule A.
W I T N E S S E T H:
WHEREAS, the Contributors are the holders of all of the
equity interests in Candlewood Associates Partnership, an Indiana
partnership (the "Partnership");
WHEREAS, the Partnership owns a certain apartment complex
and adjacent land located in the State of Indiana, all as more
particularly described on Exhibit A;
WHEREAS, the Contributors prior to Closing (as hereinafter
defined) will cause the Partnership to convey one hundred percent
of the fee interest in the Property (as hereinafter defined) to
them in the percentages listed on the attached Schedule A to be
held as tenants-in-common;
WHEREAS, each of the Contributors wish to contribute their
interest in the Property in exchange for cash or limited
partnership interests in the Buyer;
WHEREAS, Buyer desires to acquire the Property upon the
happening of certain events;
NOW, THEREFORE, in consideration, mutual covenants herein
contained, and for other good and valuable consideration, the
receipt and sufficiency whereof being
hereby acknowledged, the parties hereby agree as follows:
1. REAL PROPERTY DESCRIPTION. The Real Property to be
contributed by the Contributors consists of an apartment complex
commonly known as Candlewood Apartments, which includes 310
apartments and 107 garages, a maintenance garage and storage
facility and 209 carports (the " Project"), located in the Town
of Mishawaka, State of Indiana, on land more particularly
described on Exhibit A, attached hereto, together and including
all buildings and other improvements thereon, including but not
limited to, the 310 apartment units and 107 garages, and all
rights in and to any and all streets, roads, highways, alleys,
driveways, easements and rights-of-way appurtenant thereto (the
foregoing are hereafter collectively referred to as the
"Property").
2. OTHER ITEMS. The following items now in or on the Property,
are included in this Agreement and shall become the property of
Buyer at Closing (as hereafter defined):
A all heating, air-conditioning, plumbing and lighting
fixtures,
B ranges, refrigerators, dishwashers and disposals (one of
each for each apartment unit) and washers and dryers (208 of
each),
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C water heaters,
D any and all pools and pool equipment, bathroom
fixtures, wall-to-wall carpeting, traverse rods, exhaust
fans, hoods, signs, screens, maintenance building,
model unit furniture, fences, carpeting and runners,
cabinets, mirrors, shelving, ceiling fans, mail boxes,
office furniture, clubhouse facilities, sauna, jacuzzi
and any and all related equipment in connection with
the Property, and
E 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 A-
D above, collectively, the "Other Items").
Substantially all of the Other Items are in good working
order and condition now or will be so at the time of Closing and
will be acquired by the Buyer free and clear of all liens and
encumbrances.
3. PRICE AND MANNER OF PAYMENT.
A. The purchase price for the contribution of the Property
shall be a total of Fourteen Million Four Hundred Fifteen
Thousand and no/100 ($14,415,000) (the "Aggregate
Contribution Value"). The net contribution value (the
"Net Contribution Value") for the Property shall be an
amount equal to the Aggregate Contribution Value less
the principal balance and accrued interest outstanding
upon the existing financing with respect to the
Property (the "Existing Financing") on the Closing
Date. The Net Contribution Value shall be payable as
follows: (1) issuance of limited partnership units in
the Buyer (the `Units") as described below; and (2)
the balance, if any, at closing by wire transfer to an
account or accounts designated by the Contributors to
the extent one or more of them have not elected to
receive Units.
B. Each of the Contributors shall have the right to elect
to receive their portion of the Net Contribution Value in
cash or in Units, provided however that a Contributor must
establish that he is an Accredited Investor under the
securities laws in order to elect to receive Units. In
the event that a Contributor elects to receive Units,
the number of Units he will receive will be equal to
his percentage share of the Net Contribution Value as
set forth on the attached Schedule A divided by the
"Market Value" of a Unit. The Market Value of a Unit
shall be equal to the average closing price for 20
consecutive trading days prior to, but not including,
the Closing Date of a share of common stock of Home
Properties of New York, Inc., ("HME") as listed on the
New York Stock Exchange.
C. No less than one business day prior to the Closing
Date, each of the Contributors shall notify the Buyer as to his
election to receive cash or Units.
D. The initial distribution payable with respect to Units
issued hereunder 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 Units
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were issued and shall be pro-rated such that the
Contributors receiving Units shall receive a pro-rata
distribution for the period from the date on which the
Units were issued to and including the last day of the
calendar quarter in which the Units were issued.
4. ADJUSTMENTS AT CLOSING. The following shall be adjusted and
prorated between the Contributors and the Buyer at Closing as if
the Buyer was the owner of the Property as of the Closing
Date:
A current fiscal year real estate taxes,
B water charges,
C sewer charges,
D fuel, electricity and other utilities,
E security deposits pursuant to the leases (including interest
thereon), unless the security deposits are assigned to the Buyer,
F charges under the service contracts assumed by Buyer,
G laundry income;
H any other charges incurred with respect to the Property
which the Partnership or the Contributors are obligated to pay;
H Rents.
(1) All rent payments collected as of the Closing Date for the
month of Closing shall be prorated as between the parties as of
the Closing Date.
(2) All rent collected after Closing, for any period prior to
Closing, shall belong to Contributors and, if paid to Buyer,
Buyer shall promptly send such rent to the Contributors c/o Xxx
Xxxxxxxxxx.
(3) All rent collected by the Contributors or the Partnership,
prior to the Closing, for rental periods subsequent to Closing
shall be paid to Buyer at Closing.
(4) All rent collected by Buyer, the Partnership or the
Contributors for rental periods after the Closing shall belong to
Buyer and, if paid to the Contributors, the Contributors shall
promptly send such rent to Buyer.
Any error in the calculation of adjustments shall be
corrected subsequent to Closing 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
sixtieth day after Closing.
5. COSTS. Buyer shall pay all recording fees, Buyer's
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
Contributors shall pay the transfer tax, if any, the costs
of obtaining the Title Commitment (hereinafter defined) and
title policy, attorneys' fees, if any, incurred by them in
connection with this transaction,
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and all other costs and expenses incidental to or in connection
with closing this transaction customarily paid for by the
seller of similar property.
6. EVIDENCE OF TITLE. The Contributors shall furnish to the
Buyer, at Contributor's expense, and within ten (10) days from
the execution hereof, an A.L.T.A. commitment for an owner's
title insurance policy ("Title Commitment") issued by a
nationally recognized title insurer (the "Title Company")
without standard exceptions, including ALTA zoning
endorsement 3.1, contiguous endorsement, and comprehensive
endorsement, in an amount equal to the Aggregate
Contribution Value, naming the Buyer as the insured,
undertaking to insure title in the condition required
hereunder, with a policy pursuant thereto to be issued as
soon after Closing as possible. The cost of the Title
Commitment and policy shall be paid by the Contributors.
The Contributors shall also furnish Buyer, at Contributors'
expense, a UCC search with reference to the Other Items
within 15 days of the date of this Agreement. The
Contributors shall also provide Buyer with a copy of the
most recent instrument survey of the Property.
7. TITLE DOCUMENTS. At the time of Closing, each of the
Contributors shall deliver to Buyer the following:
A. A warranty deed;
B. A Xxxx of Sale in the form attached hereto as
Exhibit B;
C. 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;
D. An Assignment of leases and security deposits in the form
attached hereto as Exhibit C . In lieu of an assignment of the
security deposits, the Contributors may provide Buyer with a
credit at Closing for all security held by Contributors with
respect to all leases encumbering the Property.
8. INSPECTION. Upon and after acceptance of this Agreement by
the Contributors, the Contributors agree that Buyer and its
authorized representatives shall have the right and
privilege to enter upon the Property and the Partnership's
offices, upon reasonable notice, during regular business
hours, for the purpose of gathering such information and
conducting such environmental and engineering studies or
other tests and reviews as Buyer may deem appropriate and
necessary. All such inspections, studies, tests and reviews
shall be at Buyer's sole expense. The Contributors agree to
cooperate with Buyer by making available to Buyer such
records, plans, drawings or other data as may be in their or
the Partnerships' possession or control relating to the
Property and their operation; provided, however, that Buyer
agrees to indemnify the Contributors and the Partnership of
and from any loss or damage occasioned by such entry, and
agrees further to restore to its original condition, at
Buyer's own cost and expense, any property disturbed by such
entry.
9. TITLE; TITLE EXAMINATION; OBJECTIONS TO TITLE.
A The Contributors shall convey to Buyer good, marketable
and insurable fee simple title to all of the Property by warranty
deed. Title to all Other Items purchased herein, if
any, shall be conveyed to Buyer by xxxx of sale with
covenants and warranties of title, free and clear of
all security interests, liens and encumbrances.
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B Buyer shall have ten (10) days from and after its
receipt of the Title Commitment and the UCC search to approve
or object to the condition of title disclosed in the Title
Commitment or UCC search. Buyer's approval of title
shall be a condition precedent to Buyer's obligation to
close the transaction contemplated by this Agreement,
which condition Buyer reserves the right to waive. If
objection to the title is made, Buyer, at its option,
may either terminate this Agreement or give the
Contributors ten (10) days from the date it is notified
in writing of the particular defects claimed, either to
remedy the title, or to terminate this Agreement if
unable to remedy the title or obtain title insurance.
10. CLOSING DATE. Unless this Agreement is terminated as
provided herein, the Closing shall occur within 30
days after the end of the Due Diligence Period (as
hereinafter defined) (the "Closing" or "Closing Date")
at the Contributor's attorney's office, or at the
offices of the Title Company.
11. POSSESSION. Buyer shall have possession and occupancy of
the Property from and after the date of delivery of the deed.
12. BROKER'S COMMISSION. The Contributors and Buyer each
represent to the other that there are no fees or
commissions due as a result of their employment of any
Broker. The Contributors and Buyer each agree to indemnify
the other for any and all claims and expenses, including
legal fees, if any other fees or commission is determined to
be due by reason of the employment of any other broker by
the indemnifying party. This representation and indemnity
shall survive the Closing.
13. RISK OF LOSS. The risk of loss or damage to all or part of
the Property by fire or other casualty or by taking by eminent
domain, until Closing, shall be assumed by the Contributors
and upon the happening of such event, Buyer shall have the
election of terminating this Agreement without further
liability hereunder, or of completing this purchase and
receiving the Contributors; share of insurance monies,
collectible for such loss or damage, or the award for such
taking by eminent domain.
14. CONDITIONS PRECEDENT.
A It shall be a condition to Buyer's obligation to close
that there are at Closing 310 apartment units in rentable
condition and which are all in compliance with federal,
state, county or local laws, ordinances, rules and
regulations;
B Buyer shall have thirty (30) days after the date of
this Agreement (the "Due Diligence Period") within which to
review and inspect the Property and the Other Items
(including, but not limited to, performing engineering
and Phase I environmental studies), the Partnership's
books and records pertaining to the Property and the
Other Items, matters relating to zoning compliance and
compliance by the Property and the Other Items with
other applicable governmental regulations, the markets
in which the Property operates, any service or other
contracts relating to the Property, the tax assessment
on the Property and on comparable properties and such
other matters as Buyer shall deem reasonably necessary
or appropriate in connection with the Property and the
Other Items. If Buyer determines that it does not wish
to purchase the Property as a result of its findings
during the Due Diligence Period and notifies the
Contributors of such decision within the Due Diligence
Period, this Agreement shall be null and void and
neither party shall have any further rights
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or obligations under this Agreement. Buyer's failure to object
within the Due Diligence Period shall be deemed a
waiver by Buyer of the condition contained in this
Section 14(B).
C It shall also be a condition to Buyer's obligation to
close that during the Due Diligence Period, the Buyer shall
obtain the approval of the Board of Directors (the
"Board") of its general partner - Home Properties of
New York, Inc., - to the acquisition of the
Property on the terms and conditions described herein.
If Buyer does not obtain the Board's approval within
the Due Diligence Period, the Buyer shall promptly
notify the Contributors in which event this Agreement
shall be null and void and neither party shall have any
further rights or obligations under this Agreement.
Buyer's failure to notify the Contributors within the
Due Diligence Period of its failure to obtain Board
approval shall be deemed a waiver by Buyer of the
conditions contained in this Section 14(C).
D It shall be a condition to Buyer's obligation to close
that on or before the Closing Date, all management agreements
relating to the Property shall have been terminated.
E It shall be a condition to Buyer's obligation to close
that on the Closing Date it shall acquire 100% of the fee
interest in the Property.
It is understood that the contingencies set forth herein are
for Buyer's benefit and may be waived by Buyer at any time.
If the above contingencies are not satisfied or waived by
the Buyer, the Buyer shall have the right to terminate this
Agreement by written notice to the Contributors. In the
event of such a termination, this Agreement shall be null
and void and neither party shall have any further rights or
obligations under this Agreement.
15. ENVIRONMENTAL CERTIFICATION. By acceptance of this
Agreement, each of the Contributors represents, warrants, and
certifies to Buyer that such Contributor has no knowledge of
any violation, and has received no notice of any violation
of any applicable Environmental Laws (below defined). To
the best of each of the Contributor's knowledge, the
Partnership and such Contributor has not, nor has any other
person, used, generated, stored, dumped, released, buried,
dispersed or emitted any Hazardous Substance on the Property
nor are there any transformers or underground tanks on the
Property, nor is there a violation of any Environmental Laws
with respect to the current use of the Property.
"Environmental Laws" shall mean all federal, state and local
environmental, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the
protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing,
handling, production or disposal of any Hazardous Substance
and the rules, regulations, and orders with respect thereto.
"Hazardous Substance" means, without limitation, any
flammable, explosive or radioactive material,
polychlorinated biphenyl, petroleum or petroleum product,
methane, hazardous materials, hazardous wastes, hazardous or
toxic substances or related materials, as defined in the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601,
et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Appendix Sections 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42
U.S.C. Sections 6901, et seq.), the Toxic Substances Control
Act, as amended (15 U.S.C. Sections 2601, et seq.), or any
other Environmental Law and the regulations promulgated
thereunder applicable on the effective date of this
Agreement.
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From the date of acceptance hereof to and including the date of
Closing, each of the Contributors shall immediately provide
Buyer with a copy of any notice, citation, complaint or
other directive from any person, entity or governmental
authority whereby the Partnership's or such Contributor's
compliance with Environmental Laws is called into question,
and immediately notify Buyer of any new information or other
developments which could tend to supplement or modify the
information contained herein.
16. REPRESENTATIONS AND WARRANTIES OF SELLER. Each of the
Contributors represents and warrants to Buyer as of the date
hereof and as of Closing, that:
A To the best of such Contributor's knowledge after due
inquiry, the Partnership and such Contributor has no liability
or obligation of any nature which in any way affects or is
related to the Property, the Other Items or the
Partnership whether now due or to become due, absolute,
contingent or otherwise, including liabilities for
taxes (or any interest or penalties thereto) other than
disclosed in this Agreement.
B To the best of such Contributor's knowledge, after due
inquiry, there is no litigation, proceeding or investigation
pending, or to the knowledge of such Contributor
threatened, against or affecting the Partnership or
such Contributor that might affect or relate to the
validity of this Agreement, any action taken or to be
taken pursuant hereto, or the Property, the Other Items
or the Partnership or any part or the operation
thereof, whether or not fully covered by insurance.
C To the best of such Contributor's knowledge after due
inquiry, the Contributor and the Partnership has complied with
and is not in default under, or in violation of, or
received any notice that the Contributor, 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.
D To the best of such Contributor's knowledge after due
inquiry, there are no written leases affecting the Property with
a term greater than one (1) year.
E To the best of such Contributor's knowledge after due
inquiry, there is no 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.
F Security deposits held by the Partnership or the
Contributors will be correctly
identified as of Closing with respect to the Property.
G To the best of such Contributing Partner's knowledge
after due inquiry, the
financial information previously provided to Buyer with respect
to the Property is substantially accurate.
H This Agreement has been duly authorized, executed and
delivered and constitutes a legal and binding
obligation of such Contributor, enforceable in
accordance with its terms, except as may be limited by
bankruptcy and other laws affecting creditors' rights
generally.
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I Neither the entry into this Agreement, nor the carrying
out of the transactions contemplated herein has resulted or will
result in any violation of, or be in conflict with, or
result in the creation of, any mortgage, lien,
encumbrance or charge (other than those contemplated
hereby) upon any of the properties or assets of the
Partnership or the Contributor pursuant to, or
constitute a default under, any certificate of
incorporation, by-law, partnership agreement, or
mortgage, indenture, contract, agreement, instrument,
franchise, permit, judgment, decree, order, statute,
rule or regulation applicable to the Partnership, the
Contributor or the Property.
J To the best of such Contributor's knowledge, no consent
or approval by, or authorization of, or filing, registration or
qualification with, any federal, state or local
governmental authority, bureau, department or agency,
or any corporation, person or other entity is required
as of the Closing either for the execution, delivery or
performance of this Agreement by such Contributor, or
in connection with the consummation by such Contributor
of the transactions contemplated by this Agreement.
The representations and warranties of the Contributors
contained in this Agreement, the statements in any Exhibit
or Schedules attached to this Agreement, or other
instruments furnished to Buyer at or prior to Closing
pursuant to this Agreement, or in connection with the
transactions contemplated pursuant to this Agreement, do not
contain any untrue statements of a material fact, or fail to
state a material fact necessary to make it not misleading.
The representations and warranties contained herein shall
survive delivery of the assignment of the deed and shall not
merge therein.
Each of the Contributors acknowledges that each of the
representations made by it in this paragraph 16 and
elsewhere in this Agreement is material to Buyer hereunder.
As to any representation or warranty set forth herein, each
of the Contributor shall indemnify, defend and hold Buyer
safe and harmless from and against any and all loss, damage,
claim, counterclaim, cause of action, cost or expense,
including, without limitation, reasonable attorneys' fees
and disbursements at both trial and appellate levels,
suffered, paid or incurred by, or asserted against Buyer,
directly or indirectly, whether foreseen or unforeseen, and
whether for personal injury or death or for property damage
or otherwise by reason of such Contributor's breach of any
warranty or obligation under this Agreement or if any
representation of such Contributor in this Agreement is
wholly or partially untrue.
Irrespective of anything to the contrary contained herein
the representations and warranties of the Contributor,
herein contained, shall expire and be of no further effect
upon the expiration of 12 months after Closing. This
expiration shall not apply to any breach of warranty or
representation which arises out of an intentional material
misrepresentation made by any Contributor.
17. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents
and warrants to each of the Contributors as of the date hereof and as
of the Closing:
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(a) Buyer is and will be as of the date of Closing
duly organized, validly existing and in good standing
under the laws of the State of New York and has all the
requisite power and authority to enter into and carry
out this Agreement according to its terms.
(b) Subject to the receipt of the approval of the
Board, this Agreement has been duly authorized,
executed and delivered and constitutes a legal and
binding obligation of Buyer, enforceable in accordance
with its terms, except as may be limited by bankruptcy
and other laws affecting creditors' rights generally.
(c) To the best of its knowledge after due
inquiry, there is no litigation, proceeding or investigation
pending, or to the knowledge of Buyer threatened,
against or affecting Buyer or the partners of Buyer
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 on
the business or
The representations and warranties of the Buyer
contained in this Agreement, the statements in any Exhibit
or Schedules attached to this Agreement, or other
instruments furnished to Contributors at or prior to Closing
pursuant to this Agreement, or in connection with the
transactions contemplated pursuant to this Agreement, do not
contain any untrue statements or a material fact, or fail to
state a material fact necessary to make it not misleading.
The representations and warranties contained herein
shall survive delivery of the assignment of the deed and
shall not merge therein.
The Buyer acknowledges that each of the representations
made by it in this paragraph 17 and elsewhere in this
Agreement is material to the Contributors. As to any
representation or warranty set forth herein, Buyer shall
indemnify, defend and hold the Contributors safe and
harmless from and against any and all loss, damage, claim,
counterclaim, cause of action, cost or expense, including,
without limitation, reasonable attorneys' fees and
disbursements at both trial and appellate levels, suffered,
paid or incurred by, or asserted against the Contributors,
directly or indirectly, whether foreseen or unforeseen, and
whether for personal injury or death or for property damage
or otherwise by reason of Buyer's breach of any warranty or
obligation under this Agreement or if any representation of
Buyer in this Agreement is wholly or partially untrue.
Irrespective of anything to the contrary contained
herein the representations and warranties of the Buyer,
herein contained, shall expire and be of no further effect
upon the expiration of 12 months after Closing. This
expiration shall not apply to any breach of warranty or
representation which arises out of an intentional material
misrepresentation made by Buyer.
18. ASSIGNMENT. This Agreement, and all or any portion of the
rights of Buyer hereunder, may not be assigned by Buyer
without the prior written consent of the Contributors, which
shall not be unreasonably withheld.
19. NOTICE. All notices given pursuant to any provisions 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 a national over-night
carrier, or by telecopy with confirmation of receipt to the
addresses set forth below:
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To the Contributors: Xxx Xxxxxxxxxx
c/o Action Management
000 Xxxxx Xx. Xxxxx Xxxx.
Xxxxx 000
Xxxxx Xxxx, XX 00000
Telecopy No: (000) 000-0000
To Buyer: HOME PROPERTIES OF NEW YORK, L.P.
Attn: Xxxxxx Xxxxxxxxx, Chairman
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
20. PLANS. The Contributors agree to provide Buyer with all
plans and architectural drawings in their possession for the
improvements completed at the Properties, including, without
limitation, all "as-built" plans in their possession and the
Contributors further agree that they will endeavor to turn
over the same to Buyer at the Contributor's office or at the
Property during the Due Diligence Period.
21. APPLICABLE LAW. This Agreement shall be construed and
governed in accordance with the laws of the State of Indiana.
22. ENTIRE AGREEMENT. This Agreement shall constitute the
entire agreement between the parties, and any and all prior
understandings or agreements, whether written or oral, are
hereby merged into this Agreement. This Agreement cannot be
modified except by a written instrument signed by the
parties hereto.
23. BINDING AGREEMENT. This Agreement shall not be binding or
effective until properly executed by Buyer and the Contributors.
24. CONFIDENTIALITY. By execution of this Agreement and except
as otherwise provided herein, prior to the Closing each of the
Contributors and Buyer agree to keep any and all information
with respect to the transactions contemplated by this
Agreement strictly confidential, and will not disclose any
such information, without the other's prior written consent.
Buyer may disclose the existence of this Agreement to the
extent necessary to conduct its due diligence with respect
to the Property.
25. CONTRIBUTOR COVENANTS.
A. The Contributors will provide, or cause to be
provided, a signed representation letter substantially
in the form attached hereto as Exhibit D. The
Contributors will provide access by Buyer's
representatives, to all financial and other information
relating to the Property as is sufficient to enable
them to prepare audited financial statements, at
Buyer's expense, in conformity with Regulation S-X of
the Securities and Exchange Commission (the
"Commission") and any registration statement, report or
disclosure statement required to be filed with the
Commission.
B. Prior to the Closing Date, the Contributors shall
continue to fulfill all of their obligations under the
terms of the leases encumbering the Property and under
the Service Contracts and the Partnership and the
Contributors shall operate, maintain and repair all
landscaping, buildings, fixtures and facilities in
accordance with normally accepted business principles
and operate the Property
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in a commercially reasonable manner with standards and
procedures of no less quality than those currently in
place.
26. EXISTING FINANCING. There currently exists mortgage
financing with respect to the Property having a current
principal balance of approximately $8.0 million and held by
First Financial Bank, F.S.B. (the "Existing Lender"). If
Buyer elects to assume the Existing Financing, Buyer shall
be responsible for the payment of any assumption fees and
other related costs and an additional closing adjustment
shall be made with respect to all reserves and escrows held
by the Existing Lender with respect to the Existing
Financing if and to the Existing Lender requires those
reserves and escrows remain in place after the assumption by
the Buyer of the Existing Financing. The Contributors
acknowledge that Buyer has made no representation that it
intends to assume the Existing Financing.
27. TAX DEFERRED EXCHANGE. The Contributors have advised Buyer
that one or both of them may seek to effect a tax deferred
exchange pursuant to Section 1031 of the Internal Revenue
Code in connection with the conveyance of the Property (or
any portion thereof). If either or both of the Contributors
are able to negotiate terms acceptable to them for the
transfer or acquisition of an exchange property or
properties, then Buyer agrees to accommodate the
Contributors in seeking to effect a tax deferred exchange
for that property or properties. Buyer agrees to cooperate
with the Contributors with respect to such exchange and
agrees to execute all documentation required to effectuate
such exchange, provided: (a) Buyer makes no warranty
whatsoever with respect to the qualification of the
transaction for tax deferred exchange treatment under
Section 1031; (b) Buyer shall have no responsibility,
obligation or liability with respect to the tax consequences
to Seller; and (c) Buyer's expenses with respect to the
conveyance of the Property shall be limited to the expenses
as set forth in this Agreement and Buyer shall have no
additional expense as a result of such an exchange. The
covenants and obligations contained in this Section shall
survive the Closing.
28. COVENANTS.
(a) The Buyer hereby covenants to the Contributors as follows:
(i) For a period of five (5) years from and after the
Closing Date, the Buyer shall allocate to each of the
Contributors, from time to time, for Federal income tax
purposes, pursuant to Section 752 of the Internal
Revenue Code of 1986, as amended, nonrecourse debt of
the Buyer in an aggregate amount not less than the
Negative Basis of the respective Contributor in the
Property. "Negative Basis" shall mean and refer to the
deficit cost basis of each of the Contributors in the
Property at the Closing Date.
(ii) For a period of five (5) years from and after the
Closing Date, the Buyer shall not sell, exchange,
transfer or otherwise dispose of the Property unless
such transaction occurs in a manner as to be tax free
to the Contributors.
(b) The Contributors hereby covenant as follows:
Within thirty (30) days of the Closing Date, each
of the Contributors shall provide the Buyer with a
schedule showing: (i) each of the Contributor's share
of the principal balance of the Existing Loan as of the
Closing Date, which allocation will be consistent with
the allocation set forth on Schedule 1 attached hereto;
Page 11
and (ii) the net book value of the Property and Other
Items as of the Closing Date The information on the
schedule shall be calculated in a manner consistent
with the calculations made and to be made for Federal
income tax purposes.
IN WITNESS WHEREOF, the parties hereto have caused this
Instrument to be executed as of the day and date first above
written.
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
General Partner
By: /s/ Xxx X. Xxxx
------------------------------------
Xxx X. Xxxx
Title: Executive Vice President
CONTRIBUTORS:
/s/ Xxx Xxxxxxxxxx
------------------------------------
Xxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxx
------------------------------------
Xxxxxxx Xxxx
Page 12
AMENDMENT NO. ONE
TO
CONTRIBUTION AGREEMENT
This Amendment No. One is dated the 3rd day of December, 1997 and
amends the Contribution Agreement, dated November 7, 1997 by and
between Home Properties of new York, L.P. (the "Buyer") and Xxx
Xxxxxxxxxx and Xxxxxxx Xxxx (the "Contributors").
All capitalized terms used herein and not defined shall have the
meaning given them in the Contribution Agreement.
The Contribution Agreement is hereby amended as follows:
1. Section 3.A of the Contribution Agreement shall be amended
to provide that the Aggregate Contribution Value shall be a total
of Thirteen Million Three Hundred Fifty Thousand and no/100
($13,350,000).
2. Section 3.B. of the Contribution Agreement shall be amended
to provide that the Market Value of a Unit shall not exceed
$27.25 per Unit regardless of the 20 day average closing price.
3. Section 5 of the Agreement shall be amended to provide that,
in addition to the other costs that Buyer is obligated to pay,
Buyer shall pay up to $136,500 toward the prepayment penalty with
respect to the Existing Financing. The Contributors shall pay
any portion of the prepayment penalty in excess of $136,500.
4. Section 6 of the Contribution Agreement shall be deleted in
its entirety and the following shall be substituted in its place:
"6. Evidence of Title. The Buyer acknowledges that the
Contributors have provided a title commitment issued by
Chicago Title Insurance Company (No. 00139068) (the "Title
Commitment"). Within fifteen days of the date of Amendment
No. One to the Contribution Agreement, the Contributors shall
provide the Buyer with a UCC search conducted in the State of
Indiana as against the Partnership and the Contributors. The
cost of the Title Commitment, title policy and UCC searches
shall be paid by the Contributors."
5. Section 9.B. of the Contribution Agreement shall be deleted
in its entirety and the following shall be substituted in its
place:
"Attached hereto as Exhibit B is a list of Buyer's comments
and questions with respect to the Title Commitment. It shall
be a condition to Buyer's obligation to close that the
Contributors shall have resolved the matters set forth on
Exhibit B to the Buyer's reasonable satisfaction at or prior
to Closing. In addition, if the UCC searches provided
pursuant to Section 6 of this Agreement reveal any
encumbrances on the Property or the Other Items, it shall be a
condition to Buyer's obligation to close that the Contributors
shall have caused those encumbrances to be removed at or prior
to Closing."
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6. Section 10 shall be amended to provide that the Closing
shall occur on or before January 6, 1998. Notwithstanding the
above, if the holder of the Existing Financing is unwilling to
permit the transfer of the Property to the Buyer without the
payment of an assumption fee and without the imposition of a
default rate of interest, then the Buyer shall have the right to
extend the Closing Date to no later than January 31, 1998 in
order to be able to place substitute financing on the Property.
7. Section 14.B. shall be deleted in its entirety and the
following shall be substituted in its place:
"B. It shall be a condition to Buyer's obligation to close
that the Contributors shall have caused to be constructed on
the Property a lift station that shall be sufficient to
adequately drain surface water from the parking areas located
on the Property."
8. Section 14.C. shall be deleted in its entirety.
The parties acknowledge and agree that the covenants contained in
Section 28 of the Contribution Agreement shall only apply if and
to the extent that the Contributors elect to receive their
portion of the Net Contribution Value in Units.
As amended hereby, the Contribution Agreement shall remain in
full force and effect.
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
By: /s/ Xxx X. XxXxxxxxx
-----------------------------------
Xxx X. XxXxxxxxx
Title: Vice President
/s/ Xxx Xxxxxxxxxx
-----------------------------------
Xxx Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxx
-----------------------------------
Xxxxxxx Xxxx
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