EXHIBIT 2.1
Contribution Agreement among Home Properties of New York, L.P.,
Gateside-Bryn Mawr Company, L.P., Willgold Company,
Gateside-Xxxxxxx Company, Gateside-Five Points Company,
Strafford Arms, Gateside-Queensgate Company,
Gateside Malvern Company, King Road Associates
and Cottonwood Associates
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CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement"), made as of the 26th day of
January, 2000 by and among
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
HOME PROPERTIES OF NEW YORK, INC., a Maryland corporation, having its
principal office at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (herein
called "HME"), and
GATESIDE-BRYN MAWR COMPANY, L.P.; WILLGOLD COMPANY; GATESIDE-XXXXXXX
COMPANY; GATESIDE-FIVE POINTS COMPANY; STRAFFORD ARMS; GATESIDE-QUEENSGATE
COMPANY; GATESIDE MALVERN COMPANY; KING ROAD ASSOCIATES; and COTTONWOOD
ASSOCIATES each having its principal office c/o the Gateside Corporation,
000 Xxxxxxxx Xxxxx Xxxxxx, Xxx, Xxx Xxxx 00000 (herein collectively the
"Contributors" and each individually a "Contributor").
W I T N E S S E T H:
WHEREAS, the Contributors own a 100% fee simple interest in the certain
apartment complexes or adjacent vacant land located in the Commonwealth of
Pennsylvania (collectively, the "Portfolio") listed on SCHEDULE 1 hereto.
WHEREAS, the Portfolio comprises 2,113 apartment units and 81 garages, as
well as vacant land described above.
WHEREAS, upon the terms and conditions set forth in this Agreement, each
of the Contributors desires to exchange, transfer and convey to Buyer a 100%
fee simple interest in the Property or Properties (defined below) owned by such
Contributor, together with the Other Items (as hereinafter defined) in exchange
for limited partnership interests ("Units") in Buyer and the Buyer shall
acquire the Properties subject to all the debt secured by the Properties shown
on SCHEDULE 2 hereto.
WHEREAS, upon the terms and conditions set forth in this Agreement, Buyer
desires to acquire the Portfolio.
NOW, THEREFORE, in consideration of the 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 property to be conveyed to Buyer consists
of the Portfolio, including in the case of each property the land more
particularly described on EXHIBIT A attached hereto, together with and
including all buildings and other improvements thereon, including but not
limited to, the 2,113 apartment units and 81 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
individually referred to as the "Property" or collectively as the
"Properties").
2. OTHER ITEMS. All of each Contributor's interest, if any, in any of the
following items which may exist and be located at the Property owned by
such Contributor, are included in this Agreement and shall be conveyed to
Buyer at Closing (as hereafter defined):
A. all heating, air-conditioning, plumbing and lighting fixtures.
B. ranges, refrigerators; dishwashers and garbage disposals.
C. central system water heaters.
D. 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, and any and
all related equipment used by the Contributor in connection with the
operation and maintenance of the Property, and
E. any fixtures appurtenant to the Property and any other furniture or
equipment used by the Contributor 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").
The Other Items will be conveyed in their "as is" condition as of Closing
and will be conveyed to Buyer by Xxxx of Sale free and clear of all liens and
encumbrances, except in connection with the Existing Loans (as hereinafter
defined) and any equipment leases or installment contracts, which have been
disclosed to Buyer prior to the end of the Due Diligence Period.
3. PRICE AND MANNER OF PAYMENT.
A. The Aggregate Contribution Value for the contribution by the
Contributors to the Buyer shall be One Hundred Thirty-Five Million
Eight Hundred Seventy Thousand and no/100 ($135,870,000.00) (the
"Aggregate Contribution Value"). The Aggregate Contribution Value
shall be allocated among the Properties in accordance with SCHEDULE
1. The net contribution value (the "Net Contribution Value") for
the contribution shall be an amount equal to the Aggregate
Contribution Value less the principal balance and accrued interest
outstanding upon the existing financing secured by the Properties on
the Closing Date. The existing financing is set forth on SCHEDULE 2
attached hereto (collectively, the "Existing Loans" and each
individually, an "Existing Loan"). The Net Contribution Value shall
be allocated among the Properties in accordance with SCHEDULES 1 AND
2. The Net Contribution Value, subject to adjustment as set forth
herein, shall be payable by issuance of Units to the Contributors,
or to the partners of the Contributors in accordance with each
partner's pro rata interest in Contributors as designated in writing
by the Contributors (collectively, the "Designees" and individually,
a Designee") having a value, determined as described in paragraph C
below, equal to the Net Contribution Value. Notwithstanding the
above, the Contributors may only designate individuals or entities
to be Designees who have established to the reasonable satisfaction
of the Buyer that they are accredited investors under applicable
securities laws.
B. Contributors have estimated that the real estate taxes (net of 2%
discount) ("Real Estate Taxes") for the Properties known as
Broadlawn and Mansion House will be $211,000 (net of 2% discount)
for the calendar year 2000 (the "Estimated Taxes"). The term "Real
Estate Taxes" shall mean the county and town real property taxes due
for Broadlawn and Mansion House for the calendar year January 1,
2000 through December 31, 2000 and the school taxes that would have
been payable in the year 2000 if the school tax amount due for the
year 2000 was at the rate charged for the actual fiscal period of
July 1, 2000 to June 30, 2001. In the event that the Real Estate
Taxes exceed the Estimated Taxes, then the Aggregate Contribution
Value will be decreased by an amount equal to the difference between
the Real Estate Taxes and $211,000 divided by nine percent (9%).
The amount by which the Aggregate Contribution Value is decreased
shall be allocated 95% to the value of Broadlawn and 5% to the value
of Mansion House. Promptly after the Real Estate Taxes are known
(estimated to be June-July, 2000), Buyer will notify the Broadlawn
and Mansion House Contributors of the amount of the Real Estate
Taxes. If the Real Estate Taxes exceed the Estimated Taxes, then
within ten (10) days after receipt of Buyer's notice, the Broadlawn
and Mansion House Contributors shall pay Buyer in cash the amount by
which the Aggregate Contribution Value is to be decreased in
accordance with the above formula. Xxxxxx X. Xxxxxxxx and Xxxxxx
Xxxxxx hereby jointly and severally guarantee the performance of the
Broadlawn and Mansion House Contributors of the obligations set
forth in this paragraph.
C. The total number of Units to be issued to the Contributor and the
Designees will be equal to the Net Contribution Value divided by the
"Market Value" of a Unit. The Market Value of a Unit shall be equal
to $27.25 If there has been a stock split, stock dividend,
combination or similar event prior to the Closing Date, the
foregoing Market Value shall be adjusted accordingly.
D. Simultaneously with the execution of this Agreement , Buyer shall
deposit Three Million and No/100 Dollars ($3,000,000) with Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx ("Escrow Agent") as a good faith
deposit hereunder (the "Deposit"). The Escrow Agent shall hold the
Deposit as escrow agent and shall hold and disburse the Deposit as
provided in the Escrow Agreement attached hereto as EXHIBIT G. Any
interest earned on such investment shall be reported to Buyer's
Federal tax identification number. The Deposit shall be refunded to
Buyer at Closing in the event Buyer consummates the transaction
contemplated hereby, upon termination of this Agreement by Buyer as
expressly permitted hereunder, or upon the Contributor's default and
resulting termination of this Agreement by Buyer as expressly
permitted hereunder. In the event Buyer fails to close other than
by reason of a termination by Buyer expressly permitted hereunder or
the Contributor's default, the Deposit shall be forfeited to the
Contributors as liquidated damages. Any and all sums deposited
hereunder shall be applied or refunded as provided herein. (All
references to "Deposit" shall be deemed to include all accrued
interest thereon.)
E. This Section 3 shall survive Closing.
4. UNITS.
A. Distributions with respect to Units will be identical in amount and
timing to the dividends on shares of HME stock, except that 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 were issued and shall be pro-
rated such that the Contributor and/or the Designees 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. No distributions
will be paid on the Redeemed Units (hereinafter defined).
B. Subject to the terms of a Lock-Up Agreement, in the form of EXHIBIT
C attached hereto, to be dated the Closing Date, and to the terms of
the Second Amended and Restated Agreement of Limited Partnership of
Buyer, as amended (the "Operating Partnership Agreement"), the Units
will be convertible into shares of common stock of HME, on a one-to-
one basis, after the elapse of one (1) year from and after the
Closing Date ("Lock-Up Period"), during which the Contributors and
any Designees will be restricted from converting or transferring any
of the Units except as otherwise provided in the Lock-Up Agreement.
C. 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 Contributor or Designees shall have registration rights and a
listing commitment with regard to the shares of HME into which the
Units can be converted (the "Registration Rights"), including demand
and piggy back rights. The exercise of Registration Rights shall be
without cost to the Contributor or Designees.
D. Within 10 months of the Closing Date, HME agrees to file and keep
current at its sole cost and expense until all Units issued pursuant
to this Agreement have been converted into shares of HME common
stock, a registration statement (the "Registration Statement") with
the SEC registering the resale of the shares of common stock of HME
into which the Units may be converted and to use reasonable
commercial efforts to have the registration promptly declared
effective by the Securities and Exchange Commission ("SEC").
E. This Section 4 shall survive Closing.
5. ADJUSTMENTS AT CLOSING. The following shall be adjusted and prorated
between each Contributor and the Buyer at Closing as if the Buyer was the
owner of the Property as of the Closing Date: The adjustments shall be
made in cash or as an adjustment to the Net Contribution Value, at the
option of each Contributor.
A. current fiscal year real estate taxes,
B. water charges,
C. sewer charges,
D. electricity and other utilities,
E. security deposits pursuant to the leases (including interest thereon
and administrative fees), unless the security deposits or the
accounts in which they are deposited are assigned to the Buyer,
F. charges under all service contracts, maintenance agreements, vending
machine leases or contracts and other contracts and agreements in
effect at Closing relating to the maintenance, repair, use,
operation or occupancy of the Properties to which any Contributor is
a party listed on Schedule 5 attached hereto (the "Service
Contracts"),
G. laundry income,
H. any other charges incurred with respect to the Property which the
Contributor is obligated to pay,
I. any reserves and escrows with respect to the Existing Loan, if
applicable, if and to the extent that the relevant Existing Lender
(hereafter defined) requires such reserves and escrows to remain in
place after the Closing,
J. interest with respect to the Existing Loan, if applicable,
K. 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.
All rents collected after the Closing Date from any resident in
occupancy as of the Closing Date shall be applied first to any rents past
due from such resident for the calendar month in which the Closing Date
occurs (subject to adjustment), and then paid to the relevant Contributor
for any rents due from and unpaid by such resident for the month prior to
the month in which the Closing Date occurs and then to any rentals due
from and unpaid by such resident accruing in any month subsequent to the
month in which the Closing Date occurs, and then to the other months prior
to the Closing Date. All sums specifically paid pursuant to the
agreements referenced on Schedule 6 attached hereto shall be the sole
property of the applicable Contributor.
L. fuel, if any, as estimated by the supplier, at the Contributor's
cost plus any sales taxes thereon,
M. fees for licenses and other permits that can be assumed by Buyer,
N. utility deposits,
O. wages, fringe benefits and other compensation to personnel employed
at the Properties, provided any amounts payable to such personnel as
a result of their termination by Buyer or its affiliates after the
Closing shall be the sole responsibility of the Buyer, and
P. all other expenses as are customarily apportioned in accordance with
real estate closings of comparable properties in Pennsylvania.
Buyer and the Contributors acknowledge and agree that it is the
Contributors' intention to have the relevant utility read the meters for
their respective utility provided as of the Closing Date. If and to the
extent that any Contributor is unable to arrange for such a reading, then
the adjustment shall be made on the Closing Date based on an average of
the prior 2 months billing by the relevant utility with such amount to be
further adjusted as provided in the next sentence when actual bills are
available. 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
one hundred eighty (180) days after Closing. This Section 5 shall survive
the Closing for one hundred and eighty (180) days, provided that Buyer's
obligations under sub-paragraph O above with respect to termination
payments shall survive the Closing indefinitely.
6. COSTS. Buyer shall pay all recording fees, Buyer's attorneys' fees, one-
half of any applicable transfer taxes, any taxes due by reason of
conveyance of the Other Items, any assumption fees or other costs charged
by the holders of the Existing Loans in connection with the assumption of
the Existing Loans outlined in the mortgage documents, the costs of
obtaining the Title Commitment (hereinafter defined) and title policy, the
cost of an updated survey, any mortgage recording taxes, and all other
costs and expenses incidental to or in connection with closing this
transaction customarily paid for by the purchaser of similar property.
Each Contributor shall pay one-half of any applicable transfer taxes
relating to the Property owned by it, attorneys' fees, if any, incurred by
it in connection with this transaction, and all other costs and expenses
incidental to or in connection with closing this transaction customarily
paid for by the seller of similar property. This Section 6 shall survive
Closing.
7. EVIDENCE OF TITLE AND ENVIRONMENTAL. Promptly upon execution of this
Agreement by both parties, the Contributors shall deliver to the Buyer the
most recent title policy relating to each Property, the most recent
instrument survey of each Property and copies of any environmental reports
relating to each Property to the extent in Contributors' possession and
not previously delivered.
8. CLOSING DOCUMENTS.
A. At the time of Closing, each Contributor shall deliver to Buyer the
following with respect to the Property owned by such Contributor:
(1) A quit claim deed without warranty in the form provided for
under the laws of the Commonwealth of Pennsylvania (the
"Deed"). Each such Deed shall convey to the Buyer fee simple
title to each Property, free and clear of all liens, charges
and encumbrances except for the following: (i) the Existing
Loans, if any; (ii) all leases identified in the Rent Roll
(hereinafter defined) and others entered into in the ordinary
course of business; (iii) real estate taxes for the current
year and subsequent years which are not yet due and payable;
(iv) easements, covenants, restrictions, agreements and/or
reservations of record, (v) public and utility easements and
roads and highways, if any (vi) any state of facts that an
accurate survey would disclose; (vii) the standard printed
exclusions from coverage contained in the ALTA form of owners
title policy currently used in Pennsylvania; (viii) any laws,
rules, regulations, statutes or other legal requirements
affecting the Properties (including, without limitation, those
relating to zoning and land use) and any violations thereof now
or hereafter issued or noted; and (ix) the matters set forth on
SCHEDULE 4 (collectively, the "Permitted Exceptions");
(2) A Xxxx of Sale conveying the Other Items;
(3) A current rent roll ("Rent Roll") certified, as of the date of
Closing, as being true in all material respects which shall
include a correct list of all tenants, arrearages of each
tenant (with a schedule showing to which period the arrearages
pertain) and all security deposits (with interest);
(4) An executed assignment of leases, security deposits and
contracts (the "Assignment") in the form attached hereto as
EXHIBIT E. In lieu of an assignment of the security deposits
or the accounts in which they are deposited, each Contributor
may provide Buyer with a credit at Closing for all security
deposits held by Contributor (including any accrued interest,
if required by law or contract to be earned thereon less
administrative expenses which Contributors are entitled to
receive by law or pursuant to the leases) with respect to all
leases encumbering the Property;
(5) A certificate of title and any other documentation necessary to
transfer title to any vehicles included as Other Items;
(6) A Lock-Up Agreement in the form attached hereto as EXHIBIT C,
executed by the Contributor and Designees receiving Units.
(7) An affidavit by each Contributor and Designee stating
Contributor's or Designee's federal taxpayer identification
number and certifying that Contributor or Designee is not a
foreign person, corporation, partnership, trust or estate as
defined in the Internal Revenue Code and Regulations thereunder
pursuant to the Foreign Investment in Real Property Tax Act of
1980;
(8) All leases shown on the Rent Roll, Service Contracts and copies
of the personnel files of all employees employed at the
Property and who shall become employees of the Buyer after the
Closing shall be available at or delivered to each Property;
(9) An executed counterpart of the Registration Rights Agreement
executed by the Contributor and Designees receiving Units; and
(10) Any additional documents and/or instruments as may be
necessary for the proper performance by the Contributors of
their obligations contemplated by this Agreement.
B. At the time of Closing, Buyer shall deliver to each Contributor the
following:
(1) An executed counterpart of the Assignment;
(2) Evidence of organization, existence and authority of Buyer and
HME and the authority of each person executing documents on
behalf of each, reasonably satisfactory to Contributors;
(3) An Amendment to the Operating Partnership Agreement
substantially in the form attached hereto as EXHIBIT H with a
revised Schedule A thereto evidencing the issuance of the
Units required pursuant to this Agreement;
(4) An executed counterpart of the Registration Rights Agreement
executed by HME;
(5) Any additional documents and or instruments as may be
necessary for the proper performance by Buyer of its
obligations contemplated by this Agreement.
(6) An opinion of counsel from Xxxxx Peabody LLP regarding the
Units in form and substance satisfactory to Contributors as
to the following matters:
(i) The Buyer is an existing limited partnership under the
laws of the State of New York in good standing. HME is
a corporation validly existing and in good standing
under the laws of the State of Maryland.
(ii) The execution and delivery of this Agreement and the
Amendment to Operating Partnership Agreement and the
performance by the Buyer of its obligations thereunder
will not violate the Operating Partnership Agreement,
as amended or the Certificate of Limited Partnership.
(iii) The Units issued and sold pursuant to this Agreement
will, when paid for and issued in accordance with the
terms thereof, be duly and validly issued, fully paid
and nonassessable and free and clear of any liens and
the Units so issued will not be in violation of any
preemptive rights of any partner in the Buyer.
(iv) The Common Shares (defined below) issuable upon
exchange of the Units have been duly authorized and
reserved for issuance, and will, when issued and
delivered in accordance with the terms of the Operating
Partnership Agreement be duly and validly issued, fully
paid and nonassessable and free and clear of any liens
and the Common Shares so issued will not be in
violation of any preemptive rights of any partner in
the Buyer.
9. 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
Properties and the Contributors' offices, upon reasonable notice, during
regular business hours, subject to the rights of tenants under their
leases, 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 possession or control relating
to the Properties and their operation, including but not limited to prior
environmental and engineering studies; provided, however, that Buyer
agrees to restore to its original condition, at Buyer's own cost and
expense, any property disturbed or damaged by such entry, which
obligations shall survive termination. In exercising its rights
hereunder, in no event shall Buyer have any right to conduct any boring or
drilling or take any other such invasive actions. Buyer and HME each
jointly and severally agrees to indemnify and hold Contributors and their
direct and indirect shareholders, officers, directors, partners,
principals, members, employees, agents, contractors, representatives,
accountants, advisors, attorneys, affiliates, consultants, and any
successors or assigns of the foregoing (collectively with Contributors,
"Contributor Related Parties") harmless from and against any and all
losses, costs, damages, liens, claims, liabilities or expenses (including,
but not limited to, reasonable attorneys' fees, court costs and
disbursements) incurred by the Contributors or the Contributor Related
Parties in connection with or by reason of or relating to Buyer taking any
of the actions described in this Section or otherwise relating to Buyer's
access to, or inspection of, the Properties, or any tests, inspections or
other due diligence conducted pursuant to this Agreement. The indemnity
provided for above shall survive Closing or the termination hereof.
10. TITLE; TITLE EXAMINATION; OBJECTIONS TO TITLE.
A. Promptly upon execution of this Agreement by all parties, the Buyer
shall order a title commitment for each Property (the "Title
Commitment") from Commonwealth Title Insurance Company (the "Title
Company").
B. Buyer has delivered to the relevant Contributor(s) a statement (a
"Statement of Title Defects") of defects, encumbrances or objections
to title or survey matters which are not Permitted Exceptions
("Title Defects"). Any defects of title which exist as of the
date of this Agreement and which were not listed on such Statement
of Title Defects are additional Permitted Exceptions. The relevant
Contributor(s) shall have ten (10) business days after the date of
this Agreement to determine whether to attempt to cure any matters
shown on such statement. If Contributor(s) is(are) unable or
unwilling to cure or attempt to cure any such matters,
Contributor(s) shall give notice to Buyer within such ten (10) day
period, but if no such notice is given, Contributor(s) shall be
deemed to be unwilling to cure any such Title Defects. If
Contributor(s) do(es) not agree to attempt such cure, Buyer shall
have ten (10) days after the expiration of the foregoing ten (10)
business day period to terminate this Agreement, or to give
Contributor notice that it has elected to take title to the relevant
Property or Properties subject to the Title Defects without
abatement of the Net Contribution Value and such Title Defects will
be additional Permitted Exceptions. If no notice is given by the
Buyer within the ten (10) day period, the Buyer shall be deemed to
have terminated this Agreement. Contributors shall have no
obligation to expend any sums or commence any proceedings or take
any other actions in order to cure any Title Defects. It shall be a
condition to Buyer's obligation to close that on the Closing Date,
the Properties shall not be subject to any additional Title Defects
(other than Permitted Exceptions) beyond those which appeared in the
Title Commitment and were not objected to by Buyer in a statement of
Title Defects ("Additional Objections"). The Buyer may, at its
option, agree to acquire the Properties subject to Additional
Objections and if Buyer does so elect or fails to object thereto
within ten (10) days following receipt of an update to the Title
Commitment setting forth such Additional Objection, then such
Additional Objections shall become Permitted Exceptions.
11. CLOSING DATE. Unless this Agreement is terminated as provided herein,
the Closing shall occur on or before March 1, 2000 (the "Closing" or
"Closing Date") at the Contributors' attorney's office, or at such other
place as may be mutually agreed upon by the parties. In the event that
Buyer requires additional time to complete the New Debt financing
described in Section 28G below or to complete the assumption of the
Existing Loans described in Section 15(B) below, upon written notice
delivered to Contributors on or before March 1, 2000, Buyer may extend the
Closing Date for up to an additional seventeen (17) days. Time shall be
of the essence as to Buyer's obligation to close the transactions
hereunder by not later than March 17, 2000. Contributors shall have the
right to extend the Closing Date by notice to Buyer in order to attempt to
cure any Title Defects or satisfy any other conditions hereunder, provided
that Contributors shall not be entitled to extend the Closing Date by more
than 20 days in the aggregate.
12. POSSESSION. Buyer shall have possession and occupancy of the Properties
from and after the Closing Date, subject to the rights of tenants under
their leases and the Permitted Exceptions.
13. BROKER'S COMMISSION. Each Contributor represents to Buyer that it did not
employ any broker in connection with this sale. The Buyer represents to
each Contributor that it employed Insignia-Xxxxxxx Cross, as broker and
agrees that it will pay a 1% brokerage fee due as a result of Buyer's
employment of that broker. Each Contributor agrees to indemnify Buyer 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 Contributors. Buyer agrees to indemnify each Contributor
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 Buyer and for any claims for fees or expenses made by
Insigna-Xxxxxxx Cross. These representations and indemnities shall survive
the Closing or the termination hereof.
14. CONDEMNATION AND DESTRUCTION.
A. If, prior to the Closing Date, any Property, or more than 30% of the
square footage of any Property, is taken by eminent domain (or is
the subject of a pending taking which has not been consummated),
the Contributors shall notify Buyer of such fact, and Buyer shall
have the option (which option shall be set forth in a notice from
Buyer to the Contributors given not later than fifteen (15) business
days after receipt of the notice from the Contributors, time being
of the essence):
(i) to terminate this Agreement and, thereafter, this Agreement
shall be deemed to be null, void and of no further force or
effect between the parties; or
(ii) to accept title to the Property (other than the portion so
taken), without abatement of the Aggregate Contribution Value,
in which event the Contributor shall assign and turn over to
Buyer at the Closing, and Buyer shall be entitled to receive
and keep, all amounts awarded, or to be awarded, as the result
of the taking.
If Buyer fails to deliver notice of its election within such 15
business day period, then it shall be deemed to have elected clause (ii).
B. If, prior to the Closing Date, all or any material (defined below)
part of any Property is damaged or destroyed by fire or other
casualty, the Contributors shall notify Buyer of such fact, Buyer
shall have the option (which option shall be set forth in a notice
from Buyer to the Contributors given not later than fifteen (15)
business days after receipt of the notice from Contributors):
(i) to terminate this Agreement and, thereafter, this Agreement
shall be deemed to be null, void and of no further force or
effect between the parties; or
(ii) to accept title to the relevant Property without abatement of
the Aggregate Contribution Value, in which event the
Contributors shall assign to Buyer, at the Closing, all of the
right, title and interest of the Contributors in and to the
insurance proceeds awarded or to be awarded to Contributors as
the result of such damage or destruction less any amounts
expended by any Contributor in repairing such damage or
destruction or collecting such proceeds.
If Buyer fails to deliver notice of its election within such 15
business day period, then it shall be deemed to have elected clause (ii).
C. In the event there is damage to or destruction of an immaterial part
of any Property by fire or other casualty, such damage or
destruction shall, subject to receipt of insurance proceeds, be
repaired promptly by Contributor, and in the event such damage or
destruction cannot be fully repaired by the Closing Date, then the
Closing shall be held as scheduled, and Buyer shall accept title to
the Property or Properties without abatement of the Aggregate
Contribution Value, in which event Contributor shall assign to
Buyer, at the Closing, all of the right, title and interest of
Contributor in and to the insurance proceeds awarded or to be
awarded to Contributor as the result of such damage or destruction
less any amounts expended by any Contributor in repairing such
damage or destruction or collecting such proceeds.
D. An "Immaterial" part of any single Property shall be deemed to have
been damaged or destroyed if the cost of repair or replacement
thereof shall be $2,000,000 or less, and a "Material" part thereof
shall be deemed to have been damaged or destroyed if the cost of
repair or replacement thereof shall be greater than $2,000,000.
15.CONDITIONS PRECEDENT.
A. It shall be a condition to Buyer's obligation to close that within
ten (10) business days after the date of this Agreement, time being
of the essence, Buyer shall obtain the approval of the Board of
Directors (the "Board") of its general partner - HME - to the
acquisition of the Properties on the terms and conditions described
herein. If Buyer does not obtain the Board's approval by the
aforementioned date, 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, except for those that expressly survive termination.
B. It shall be a condition to Buyer's and Seller's obligation to close
that by the Closing Date, the Lenders holding the Existing Loans
identified on SCHEDULE 2 (collectively, the "Existing Lenders" and
each individually, an "Existing Lender") shall approve Buyer's
assumption of the Existing Loans having an approximate total
principal balance after the February 1, 2000 payments of $73,200,951
on terms acceptable to Buyer and shall agree to provide the releases
described below at Closing ("Lender Approval"). Seller and Buyer
agree to cooperate with each other in obtaining Lender Approval. At
Closing, Contributors or their affiliates shall be released from
their obligations under any and all "carve-out," "good guy",
environmental, or similar guarantees or indemnities ("Carve Out
Guarantees") under the Existing Loans, and Buyer agrees to assume
the Carve-Out Guarantees and/or to provide substitute guarantees or
environmental indemnities reasonably acceptable to the Existing
Lenders. In the event this Section 15(B) contingency has not been
satisfied within the time specified, then either party shall have
the right to terminate this Agreement by written notice to the
other, provided that such contingency has not been satisfied prior
to the time the written notice is so given.
C. It shall be a condition to Buyer's obligation to close that as of
the Closing Date, all management agreements relating to the
Properties shall have been terminated.
D. It shall also be a condition to Contributors' obligation to close
that within ten (10) business days after the date of this Agreement,
time being of the essence, Contributors shall obtain the approval of
the terms of this Agreement by a key partner in both Gateside Five
Points Company (Golf Club Apartments) and Strafford Arms (Sugartown
Mews Apartments). If Contributor does not obtain the partner's
approval by the aforementioned date, Contributor shall promptly
notify Buyer in which event this Agreement shall be null and void
and neither party shall have any further rights or obligations under
this Agreement, except for those that expressly survive termination.
E. It shall be a condition to Buyer's obligation to close that on or
before the Closing Date the Contributors shall have obtained from
the relevant municipalities any Certificates of Occupancy or similar
proof of right to occupy the Properties as may be required as a
matter of law to be delivered by the seller of real property as a
condition to transfer of title to the Properties by those
municipalities and shall have paid all costs, fees, charges and
expenses in connection therewith.
F. The Contributors shall remove any and all underground storage tanks
at Strafford Arms and shall remove and/or remediate any contaminated
soil arising from such tanks to the reasonable satisfaction of
Buyer. Contributors shall restore to its original condition, at
Contributors' own cost and expense, any property disturbed or
damaged by such removal and remediation. In the event that the
removal and remediation of underground storage tanks as required
above has not been completed by Closing, 7,339 (value of $200,000)
of the Units issued at Closing to the Strafford Arms Contributor
shall be deemed to be held in escrow with the Escrow Agent pending
such completion. The parties shall execute an escrow agreement at
Closing providing for the disposition of Units in accordance with
the foregoing. The removal and remediation shall thereafter be
completed no later than March 31, 2000 subject to delays caused by
force majeure events. By executing this Agreement, Xxxxxx X.
Xxxxxxxx and Xxxxxx Xxxxxx hereby jointly and severally guarantee
the performance of the Contributors as set forth in this paragraph.
The obligations set forth in this paragraph shall survive Closing.
G. The New Debt Guarantee [as defined in Section 28(G)] shall have been
executed and delivered.
It is understood that the contingencies set forth in Sections 15
(C) and (E) above are for Buyer's benefit and may be waived by
Buyer at any time. In the event of a termination under this
Section 15, this Agreement shall be null and void and neither party
shall have any further rights or obligations under this Agreement,
except for those that expressly survive termination, including but
not limited to the return of the Deposit to the Buyer.
16. ENVIRONMENTAL CERTIFICATION. Subject to the limitations set forth in
Section 17, by acceptance of this Agreement, each Contributor represents,
warrants, and certifies to Buyer that it has received no notice of any
violation of any applicable Environmental Laws (below defined), except as
disclosed in the environmental reports provided to Buyer. Subject to the
limitations set forth in Section 17, except as disclosed in the
environmental reports provided to Buyer, to the best of each Contributor's
knowledge, Contributor has not used, generated, stored, dumped, released,
buried, dispersed or emitted any Hazardous Substance on the Property in
violation of Environmental Laws nor are there any underground tanks on 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.
From the date of acceptance hereof to and including the date of Closing,
the Contributors shall promptly provide Buyer with a copy of any notice,
citation, complaint or other directive from any governmental authority
claiming that a Property is in violation of Environmental Laws.
17. REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR. Each Contributor
represents and warrants to Buyer as of the date hereof and as of Closing,
that, with respect to the Property or Other Items owned by that
Contributor and/or the relevant Existing Loan:
A. There is no litigation, proceeding or investigation pending, or to
the knowledge of the Contributor threatened, against or affecting
the Contributor that might affect or relate to the validity of this
Agreement, any action taken or to be taken pursuant hereto, or the
Property or the Other Items or any part or the operation thereof,
whether or not fully covered by insurance, except "slip and fall"
and similar litigation covered by insurance, which shall remain
Contributor's responsibility after Closing.
B. To the best of Contributor's knowledge, the Contributor has provided
to Buyer copies of any notices received by Contributor regarding any
violation of any law, ordinance, rule, regulation, code 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.
C. To the best of the Contributor's knowledge, there are no written
leases affecting the Property with a term greater than one (1) year.
D. Contributor has not received written notice of any 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.
E. Subject to the approvals required from the parties identified in
Section 15D, this Agreement has been duly authorized, executed and
delivered by Contributor and constitutes a legal and binding
obligation of the Contributor, enforceable against Contributor in
accordance with its terms, except as may be limited by bankruptcy
and other laws affecting creditors' rights generally.
F. Subject to receipt of Lender Approval, 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 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 Contributor or the
Property.
G. Subject to the approvals required from the parties identified in
Section 15D, to the best of the Contributor's knowledge, except for
the Lender Approval and compliance with federal and state securities
laws, 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 the Contributor, or in connection with the consummation by the
Contributor of the transactions contemplated by this Agreement.
H. There exists and shall exist as of the Closing no monetary default
under the Existing Loan and all payments due and payable under the
Existing Loan on or before the Closing Date shall have been made.
I. Except for the Service Contracts listed on Schedule 5 attached
hereto, there are no service or maintenance contracts entered into
by or on behalf of Contributors pertaining to the Properties which
may not be terminated upon not more than thirty (30) days' notice
without payment of any penalty or termination fee.
The Contributors acknowledge that each of the representations made
by them in this paragraph 17 and elsewhere in this Agreement is material
to Buyer hereunder and, as such, it is a condition to Buyer's obligation
to close hereunder, that such representations shall be true in all
material respects as of the Closing Date.
A. Buyer expressly acknowledges that, except as expressly set forth in
this Agreement, neither Contributors, nor any person acting on behalf
of Contributors, nor any person or entity which prepared or provided
any of the materials heretofore or to be reviewed by Buyer in
conducting its due diligence, nor any other Contributor Related Party
has made any oral or written representations or warranties, whether
expressed or implied, by operation of law or otherwise, with respect to
the Properties, the zoning and other laws, regulations and rules
applicable thereto or the compliance by the Properties therewith, the
revenues and expenses generated by or associated with the Properties,
the leases, or otherwise relating to the Properties or the transactions
contemplated herein. Buyer further acknowledges that, all materials
which have been, or are heretofore, provided by any of the Contributor
Related Parties are provided without any warranty or representation,
expressed or implied as to their content, suitability for any purpose,
accuracy, truthfulness or completeness and Buyer shall not have any
recourse against Contributor or any of the other Contributor Related
Parties in the event of any errors therein or omissions therefrom.
Buyer is acquiring the Properties based solely on its own independent
investigation and inspection of the Properties and not in reliance on
any information provided by Contributors, or any of the other
Contributor Related Parties, except for the representations expressly
set forth herein.
B. Buyer acknowledges and agrees that it is purchasing each Property "AS
IS" and "WITH ALL FAULTS", based upon the condition of the Properties
as of the date of this Agreement, reasonable wear and tear and, subject
to the provisions of this Agreement, loss by condemnation or fire or
other casualty excepted. Buyer acknowledges and agrees that, except as
expressly set forth herein, its obligations under this Agreement shall
not be subject to any financing contingency or other contingencies or
satisfaction of conditions.
C. Any and all uses of the phrase "to the best of the Contributor's
knowledge" or other references to a Contributor's or the Contributor's
knowledge in this Agreement shall mean the actual, present, conscious
knowledge of Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxx (the "Contributor
Knowledge Individuals") as to a fact at the time given without
investigation or inquiry.
D. None of the representations or warranties of Contributors contained in
this Agreement shall survive the Closing and each of such
representations and warranties shall be merged into the Deeds delivered
at Closing.
E. The representations and warranties of Contributors set forth in this
Agreement are subject to the following limitations: (i) Contributors
do not represent or warrant that any particular Lease will be in force
or effect as of the Closing or that the tenants will not be in default
thereunder; and (ii) to the extent that Contributors have delivered or
made available to Buyer, prior to the date of this Agreement, any
information with respect to the Properties or otherwise and such
information contains provisions inconsistent with any of such
representations and warranties, then such representations and
warranties shall be deemed modified to conform to such provisions.
F. Notwithstanding anything to the contrary contained herein, each of the
covenants, representations, warranties, and other obligations of the
Contributors hereunder, are being made by each Contributor severally
(but not jointly) and are being made by such Contributor solely to the
extent of, and with respect to, the Property owned by such Contributor.
18. REPRESENTATIONS AND WARRANTIES OF BUYER AND HME. Buyer and HME each
jointly and severally represents and warrants to the Contributors as of
the date hereof and as of the Closing:
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 and all of the other documents being
executed and delivered by Buyer in connection with the transactions
contemplated hereby (collectively, together with all such documents
being executed and delivered by HME, the "Transaction Documents")
according to their respective terms, and to own its properties and
carry on its business as presently conducted and as planned to be
conducted.
HME is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and has all the
requisite power and authority to enter into and carry out this
Agreement, the Registration Rights Agreement and the other
Transaction Documents to which it is a party according to their
respective terms and to own its properties and to carry on its
business as presently conducted and as planned to be conducted.
B. Subject to the receipt of the approval of the Board this Agreement
and the other Transaction Documents to which Buyer and/or HME is a
party have been duly authorized, executed and delivered and
constitute legal and binding obligations of Buyer and HME,
enforceable in accordance with their terms, except as may be limited
by bankruptcy and other laws affecting creditors' rights generally.
C. There is no litigation, proceeding or investigation pending, or to
the knowledge of Buyer or HME threatened, against or affecting Buyer
or the partners of Buyer or HME or its shareholders 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 operations of the Buyer or HME.
D. The Units, when issued in accordance with this Agreement and the
Operating Partnership Agreement will be duly and validly issued,
free and clear of all liens, claims and encumbrances and the
issuance thereof will not be subject to rights of first refusal,
preemptive or other similar rights. The shares of common stock,
$.01 par value per share, of HME (the "Common Shares") issuable upon
exchange of the Units have been duly and validly reserved for
issuance in accordance with the certificate of incorporation of HME,
and when issued in exchange for the Units, will be duly and validly
issued and authorized, free and clear of all liens, claims and
encumbrances and the issuance thereof will not be subject to rights
of first refusal, preemptive or other similar rights.
A true and complete copy of the Operating Partnership Agreement,
including all amendments thereto, has been delivered to
Contributors.
E. Neither the entry into this Agreement or any of the Transaction
Documents, nor the carrying out of the transaction 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 upon any of the properties or assets of Buyer
or HME pursuant to, or constitute a default under, (x) any
certificate of incorporation, bylaw, partnership agreement, or (y)
subject to receipt of the approval of the Existing Lenders as
described in Section 15C above, any mortgage, indenture, contract,
agreement, instrument, franchise, permit, judgment, decree, order,
statute, rule or regulation applicable to Buyer or HME or their
respective properties.
F. HME has made with the SEC all filings required to be made by it
since January 1, 1997 (the "SEC Reports"). The Buyer is not
required to file any reports with the SEC. The SEC Reports were
prepared and filed in compliance with the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or the Securities Act of
1933, as amended (the "Securities Act"), as applicable, and the
rules and regulations promulgated by the SEC thereunder, and did
not, as of their respective dates, contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. The
financial statements and the interim financial statements of HME
included in the SEC Reports were prepared in accordance with U.S.
Generally Accepted Accounting Principles applied on a consistent
basis ("GAAP") (except as may be otherwise noted therein) and fairly
presented the financial condition and results of operations of HME
and its subsidiaries as at the dates thereof and for the periods
then ended, subject, in the case of the interim financial
statements, to normal year-end adjustments and any other adjustments
described in the SEC Reports.
Since September 30, 1999, there has not been any material adverse
change in or affecting the business, properties, condition
(financial or otherwise) or operations of Buyer and HME taken as a
whole, except changes in the price of a share of common stock as
listed on the New York Stock Exchange.
G. HME is organized and operates, and intends to continue to operate,
in a manner so as to qualify as a "real estate investment trust"
under Sections 856 through 860 of the Code. To the best of HME's
knowledge, HME has not received any written notice from the Internal
Revenue Service which specifically calls in to question HME's
qualifications as a "real estate investment trust" under Section 856
through 860 of the Code and HME has taken no action that would
reasonably be expected to cause HME to cease to so qualify.
H. Subject to the approvals required from the Board identified in
Section 15A, to the best of the Buyer's knowledge, except for the
Lender Approval and compliance with federal and state securities
laws, 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 the Buyer, or in connection with the consummation by the Buyer of
the transactions contemplated by this Agreement.
The representations and warranties of Buyer and HME contained herein
shall survive delivery of the deed and shall not merge therein.
The Buyer and HME acknowledge that each of the representations made
by it in this paragraph 18 and elsewhere in this Agreement is material to
the Contributors, and as such, it is a condition to Contributors'
obligation to close hereunder that such representations shall be true in
all material respects as of the Closing Date. As to any representation or
warranty set forth herein, Buyer and HME 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 or HME's breach of any warranty
or obligation under this Agreement or if any representation of Buyer or
HME in this Agreement is wholly or partially untrue.
Irrespective of anything to the contrary contained herein, the
representations and warranties of the Buyer and HME herein contained shall
expire and be of no further effect upon the expiration of twelve (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 or HME .
19. ASSIGNMENT. This Agreement, and all or any portion of the rights of Buyer
hereunder, may not be assigned by Buyer by operation of law or otherwise
without the prior written consent of the Contributors, which shall not be
unreasonably withheld. A transfer by HME of its general partnership
interest in Buyer shall constitute an assignment hereunder.
Notwithstanding the above, without the Contributors' consent, the Buyer
may direct that one or more or all of the Contributors, for reasons of
administrative convenience and/or the Existing Lenders' requirements,
convey title to the Property and the Other Items and any other rights or
items being conveyed hereunder (on Buyer's behalf, and in exchange for
limited partnership interests in Buyer, as set forth in Paragraph 3.A.
hereof) to an entity in which Buyer, directly or indirectly, holds 100% of
the equity interests, provided that such entity is either disregarded as a
separate entity for Federal income tax purposes or treated as a
partnership for such purposes.
20. 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 an original of any such
notice delivered by telecopy being simultaneously delivered by one of the
other methods permitted hereunder) with confirmation of receipt to the
addresses set forth below:
To the Contributors: GATESIDE CORPORATION
Attn: Xxxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx X-000
Xxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
with a copy to: Fried, Frank, Harris, Xxxxxxx and Xxxxxxxx
Attn: Xxxx X. Silver, Esq.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
and Xxxxxx Xxxxxx
Weissbarth, Xxxxxx & Xxxxxxxxxx
000 Xxxx 00{xx} Xxxxxx
Xxx Xxxx, Xxx Xxxx 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
To HME: HOME PROPERTIES OF NEW YORK, INC.
Attn: Xxx X. XxXxxxxxx, General
Counsel
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Notices shall be deemed delivered upon actual delivery or refusal of
delivery by the recipient. This Section shall survive Closing or the
termination hereof.
21. PLANS. Contributors agree to provide Buyer at Closing 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 Contributors further agrees that it will endeavor to
make the same available to Buyer for inspection at the Contributors'
office or at the Properties during the Due Diligence Period and to turn
over the same to Buyer at Closing.
22. APPLICABLE 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 Common Shares acquired or acquirable by the
holders of Units on account of their 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 Units as limited partners in Buyer, or otherwise with
respect to the Units. This Agreement shall, otherwise, be governed,
construed and interpreted in accordance with the laws of the State of New
York without giving effect to the conflicts-of-laws principles thereof.
This Section shall survive Closing or the termination hereof.
23. 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. Except as expressly provided herein, none of the
provisions hereof shall survive the Closing or the termination hereof.
This Section shall survive Closing or the termination hereof.
24. BINDING AGREEMENT. This Agreement shall not be binding or effective until
properly executed by Buyer and the Contributors.
25. CONFIDENTIALITY. By execution of this Agreement and except as otherwise
provided herein, prior to the Closing and in the event of a termination
without 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, except as required
by law and except to their respective employees, partners and consultants.
This Agreement shall not be recorded. This Section shall survive the
termination hereof.
26. CONTRIBUTOR COVENANTS.
A. Each Contributor will provide, or cause to be provided, a signed
representation letter substantially in the form attached hereto as
EXHIBIT B. Upon reasonable notice, each Contributor will provide
access by Buyer's representatives, to all financial and other
information relating to the Property owned by such Contributor as is
sufficient to enable them to prepare audited financial statements,
at Buyer's expense, in conformity with Regulation S-X of the SEC and
any registration statement, report or disclosure statement required
to be filed with the SEC. This covenant shall survive Closing
hereunder.
B. Prior to the Closing Date, each Contributor shall continue to
fulfill all of its obligations under the terms of the leases
encumbering the Property owned by such Contributor and under the
Service Contracts in accordance with its customary practice and the
Contributor shall operate, maintain and repair all landscaping,
buildings, fixtures and facilities in accordance with customary
practice and operate the Property in a commercially reasonable
manner with standards and procedures of no less quality than those
currently in place.
C. The Contributors shall complete tax returns for each Contributor for
the period up to the Closing Date by October 31, 2000; a copy of
each such final tax return shall be submitted to Buyer promptly upon
its filing with the IRS. By October 31, 2000 each of the
Contributors shall provide Buyer with a schedule showing: (i) the
net book value of the Property on an asset by asset basis and the
Other Items owned by the Contributors as of the Closing Date; and
(ii) an updated SCHEDULE 3 providing the actual information which
was estimated in such Schedule. The obligation of the Buyer
contained in Section 28 is conditioned upon the actual information
updated pursuant to this Section 26C not being materially different
from the estimated information. The information on the Schedule
shall be calculated in a manner consistent with the calculations
made for federal income tax depreciation purposes. These
obligations shall survive Closing hereunder.
27. PRE-TRANSFER LIABILITIES. Buyer agrees to assume only those liabilities
with respect to the Property as are specifically described herein
including, without limitation, all Leases and Service Contracts.
28. BUYER AND HME COVENANTS. Buyer and HME covenant and agree with
Contributors, both before and after Closing:
A. At all times for and during a period of ten (10) years from and
after the Closing Date, Buyer shall allocate to each Unit Partner
(defined below), for Federal Income tax purposes, pursuant to
Section 752 of the code, nonrecourse debt of Buyer in an aggregate
amount not less than the Capital Account Deficit (defined below) of
such Unit Partner, as adjusted from time to time. Notwithstanding
the above, the covenant set forth in this sub-paragraph A shall be
limited to partners Sterling and Lipiner to four (4) and nine (9)
years, respectively.
B. The initial tax basis Capital Account Deficit of each Unit Partner
in each Property shall be determined by reference to each such Unit
Partners' Capital Account Deficit in the Contributor as at (just
prior to) the contribution of such Contributor's interest in the
Contributor to Buyer on the Closing Date, and shall be based upon
the estimated information set forth in SCHEDULE 3 attached hereto
and shall be updated based upon the information set forth in a
schedule to be furnished by the accountant for the Contributors
within the time required by Section 26C hereof. Thereafter, for a
period of ten (10) years from and after the Closing Date, the
Capital Account Deficit of each Unit Partner shall be adjusted
annually to reflect changes occasioned at the level of Buyer
including, without, limitation, distributions made by Buyer. During
this period Buyer shall monitor the Capital Account Deficit of the
Unit Partners to fulfill the obligations of the immediately
preceding paragraph. At the end of such ten-year period, Buyer
shall cooperate with each Unit Partner by providing each Unit
Partner with the right to execute an agreement obligating such Unit
Partner to restore any portion of a deficit balance in such Unit
Partner's capital account and/or provide the opportunity to each
Unit Partner to enter into a "bottom-tier guaranty" with respect to
debt of the Buyer. Furthermore, in complying with Section 4.04 of
the Operating Partnership Agreement, Buyer agrees that the
methodology chosen under Section 704(c) of the Code shall be the
"traditional" method.
C. For a period of ten (10) years from and after the Closing Date, Home
Properties shall not sell, exchange, transfer or otherwise dispose
of the Property, or any replacement of the Property (in any event, a
"Property Transfer"), unless such Property Transfer occurs in such
manner as to be tax free to the relevant Unit Partner.
D. For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Capital Account Deficit" shall mean and refer to the negative
Capital Account amount of each Unit Partner (as hereinafter defined)
for Federal income tax purposes, as at the relevant date;
"Unit Partners" shall mean the Contributors or Designees that
received Units in exchange for properties and "Unit Partner" shall
mean each of the Unit Partners.
E. Buyer shall promptly seek Lender Approval from Existing Lenders of
Buyer's assumption of the Existing Loans.
F. Buyer hereby guarantees to the Estate of Dolgenos, as Designee of
one or more Contributors ("Estate"), that the Anniversary Market
Value of a Unit (defined below) shall not be less than $27.25. This
guarantee shall be limited to 555,788 Units issued to the Estate.
For purposes of this Section, "Anniversary Date" shall be the one
year anniversary of the Closing Date and "Anniversary Market Value
of a Unit" shall be equal to the average closing price of a share of
HME common stock as listed on the New York Stock Exchange for a 20-
day period consisting of the 20 consecutive trading days prior to
the Anniversary Date ("Anniversary Pricing Period"). In the event
that the Anniversary Market Value of a Unit is less than $27.25,
then on or about the Anniversary Date Buyer shall pay to the Estate
and its successors, assigns and designees the difference between
$27.25 and the Anniversary Market Value of a Unit (on up to 555,788
Units) by issuing additional Units; however, if the 20-day average
closing price is less than $24, then the Anniversary Market Value of
a Unit (for purposes of calculating the difference in the dollar
value only) shall be $24 and Buyer's obligation under the foregoing
guarantee shall be limited to paying the difference in the dollar
value of the Units between $27.25 and $24 by issuing additional
Units calculated by dividing such difference in dollar value by the
actual average 20 consecutive trading days closing price. In the
event that there has been a stock split, stock dividend,
combination or similar event prior to the Anniversary Date, the
foregoing amounts shall be adjusted accordingly. Similarly, in the
event that there has been a merger, consolidation, or other similar
transaction, the Anniversary Market Value shall be determined taking
into account such transaction, and HME, Buyer or its successor shall
deliver, in lieu of Units, securities or other assets or other
consideration which had been paid to holders of Units in such
transaction, such that the Estate would receive what it would have
received had it held the Units at the time of the transaction,
adjusted through the Anniversary Date as may be appropriate so that
the intent and purposes of the foregoing guaranty would be met.
Two examples of the foregoing price guaranty are attached as EXHIBIT
F. Any additional Units issued shall be subject to the same terms
and conditions as the Units issued at Closing, including a one-year
Lock-Up Period and Registration Rights as set forth in Sections 4B
and C above. All Units issued hereunder shall be issued promptly
after the Anniversary Date pursuant to documentation including
covenants and representations concerning their issuance and the
issuance of Common Shares upon their conversion, substantially
similar to such covenants and representations and warranties
contained herein, except that there shall be no further price
guarantee beyond that described above.
G. Simultaneously with the Closing and the closing of the New Debt
(defined below), and subject to the provision by the Designated
Partners (defined below) of the New Debt Guarantee (defined below),
Buyer shall distribute $30,000,000 to such designees of Contributors
("Designated Partners") and in such amounts as shall be designated
in writing by the Contributors, in redemption of a portion of the
Designated Partners' Units (the "Redeemed Units"). The value used
to calculate the number of Units to be redeemed shall be $27.25.
The redemption shall be financed by a loan in an amount not less
than $30,000,000 ("New Debt"). The New Debt will be secured by
properties owned by Buyer or its affiliates other than the
Properties, which properties shall be free and clear of debt (other
than the New Debt) on the Closing Date and, except as provided in
the next sentence , for so long as the New Debt is outstanding
("Subject Properties"). Secondary financing on the Subject Property
shall be permitted subject to the following conditions: (1) the
secondary financing together with the first mortgage financing shall
not exceed 70% of the then current value of the Subject Properties;
(ii) the then current value of the Subject Properties shall equal at
least $75,000,000; (iii) the secondary financing source shall be the
same as the first mortage holder; (iv) no secondary financing shall
be put in place prior to the second anniversary of the Closing Date;
and (v) Xxxxxx Xxxxxxxx and/or Xxxxxx Xxxxxx shall have approved in
writing the secondary financing, which approval shall not be
unreasonbly withheld or delayed. Buyer shall structure the New Debt
as a master facility secured by the Subject Properties, which will
have a value of at least $75,000,000 ("New Debt Facility"). The
terms and conditions of the New Debt Facility shall be acceptable to
Buyer. Buyer will take an advance under the New Debt Facility on
the Closing Date of $30,000,000, which will be distributed to the
Designated Partners as described above. This $30,000,000 advance
under the New Debt Facility will be evidenced by a promissory note.
Simultaneously with the Closing, the Designated Partners shall each
provide a "bottom guarantee" of the initial $30,000,000 note in
amounts equal to their respective shares of the distribution
described above ("New Debt Guarantee"). Any other advances
pursuant to the New Debt Facility shall be taken at least thirty
(30) days after the Closing and shall be evidenced by separate
promissory notes. All costs incurred in connection with the
financing of the Subject Properties shall be borne by Buyer. This
obligation shall constitute an essential obligation of this
transaction.
H. Upon the first occurrence of a vacancy on the Board of HME, Xxxxxx
Xxxxxxxx will be considered by that Board as a candidate for
nomination and election to fill the vacancy.
I. On or before Closing, Buyer shall enter into an agreement (the "Land
Contribution Agreement") with Gateside Springhouse Company
("Gateside") to purchase approximately 10 acres of vacant land owned
by it adjacent to the Property known as Xxxxxxx Park Apartments,
Allentown, PA for 151,560 Units ($4,130,000 divided by $27.25 per
Unit), which transaction shall provide for a closing within three
(3) years after the Closing Date hereunder, time being of the
essence. In the event that there has been a stock split, stock
dividend, combination or similar event prior to the Closing on the
vacant land, the foregoing number of Units shall be adjusted
accordingly. Units issued as consideration pursuant to the Land
Contribution Agreement shall be subject to the same terms and
conditions as the Units issued at Closing pursuant to this
Agreement, including a one-year Lock-Up Period and Registration
Rights as set forth in Sections 4B and C above. The Buyer's
obligation under the Land Contribution Agreement shall be secured by
a $2.0 million guarantee of payment by HME in form reasonably
satisfying to Gateside ("HME Guaranty") . The Land Contribution
Agreement shall provide that in the event of Buyer's default under
that Agreement, Gateside's sole remedy shall be to receive payment
in the amount of $2.0 million either under the HME Guaranty or from
the Buyer as liquidated damages. The Land Contribution Agreement
shall also provide that at the closing pursuant to the Land
Contribution Agreement ("Land Closing Date"), Buyer shall reimburse
Gateside for real estate taxes which accrued and were paid from and
after the Closing Date to the Land Closing Date. The Land
Contribution Agreement shall be in form reasonably acceptable to
Buyer and Gateside; provided that the Land Contribution Agreement
shall in all events provide: (1) for standard liquidated damage
provisions with respect to Gateside's sole remedy of $2.0 million
referenced above; (2) that Buyer's obligation to close thereunder
shall be absolute and is not subject to any conditions whatsoever
(other than Gateside delivering a deed in the form contemplated
hereunder and such other closing documents contemplated hereunder as
are applicable to such property); (3) that Gateside shall not make
any representations or warranties thereunder other than as to
Gateside's existence and its due authority to enter into the
transaction; (4) that such property and Gateside's title thereto
shall be conveyed in its then current "as is" condition, except that
there shall be no liens filed against the property as a result of
Gateside's acts or failure to act and provided Gateside will agree
that it shall not record or permit to be recorded any instruments
against such property without Buyer's consent; and (5) that Buyer
shall have not right to terminate such Land Contribution Agreement,
except in the case of a taking by eminent domain relating to such
property comparable to the circumstances provided for in Section 14
and except in the event of the payment of the $2.0 million of
liquidated damages as provided above. The Land Contribution
Agreement shall otherwise be in form comparable to this Agreement,
but solely to the extent that the provisions hereof are applicable
thereto.
J. This Section 28 shall survive Closing.
29. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected
thereon as the signatories.
30. TERMINATION OF AGREEMENT. If this Agreement shall terminate for any
reason, then, within ten (10) days thereafter, Buyer and HME shall deliver
to the Contributors: (i) all documents and information at any time
delivered to Buyer or HME from or on behalf of Contributors, and (ii)
copies of all reports, analyses or other data compiled or prepared by or
on behalf of Buyer or HME in connection with this transaction. The
provisions of this Section 30 shall survive the termination hereof.
31. DEFAULT. In the event that Buyer defaults in its obligation to close
pursuant to this Agreement, the Contributors agree that the Contributors'
sole remedies shall be: (i) to have the Escrow Agent deliver the Deposit
to the Contributors as liquidated damages to recompense the Contributors
for time spent, labor and services performed, and loss of its bargain and
to terminate this Agreement; or (ii) to seek specific performance. Buyer
acknowledges that in the event of such a default by Buyer, the damages
suffered by the Contributors will be difficult to ascertain with
certainty. Therefore, Buyer and the Contributors agree that in the event
of such a default by Buyer and if the Contributors do not elect to seek
specific performance, then the Deposit is a good faith estimate of the
Contributors' damages and at the Contributors' election said sum shall be
promptly paid to the Contributors in the form of the Deposit. In such
event the Contributors agree to accept the Deposit as the Contributors'
total damages and relief hereunder in the event of Buyer's default
hereunder. In the event that Buyer does so default and this Agreement is
terminated, Buyer shall have no further right, title, or interest in the
Properties. In the event the Contributors default in their obligation to
sell the Properties to Buyer pursuant to this Agreement, Buyer's sole
remedies shall be: (i) cancellation of this Agreement in which event
Buyer shall be entitled to the return by the Escrow Agent to Buyer of the
Deposit; or (ii) to seek specific performance. In no event shall either
party by entitled to any remedies or damages for breach of this Agreement,
except as set forth hereinabove. In no event shall any party be entitled
to punitive or consequential damages for the breach of this Agreement.
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/ Xxxxxx X. Xxxxxxxxx
Title: President
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Title: President
CONTRIBUTORS:
GATESIDE-BRYN MAWR COMPANY L. P., a
New York limited partnership
By: Gateside Bryn-Mawr Company LLC, a Delaware limited liability company,
General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, Member and Manager
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Member and Manager
WILLGOLD COMPANY, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
GATESIDE-TREXLER COMPANY, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
GATESIDE-FIVE POINTS COMPANY, a Pennsylvania limited partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, Special Limited Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
By: Sagar Points, Inc., a Delaware corporation, General Partner
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
STRAFFORD ARMS, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
By: Staf-Arms Corp., a Delaware corporation, General Partner
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
GATESIDE-QUEENSGATE COMPANY, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
GATESIDE MALVERN COMPANY, a Pennsylvania limited partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
KING ROAD ASSOCIATES, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
COTTONWOOD ASSOCIATES, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
Xxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxx sign below individually
solely to acknowledge their obligations in Section 3(B) and
Section 15(F) hereof:
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Gateside Springhouse Company signs below solely to acknowledge
its obligation in Section 28(I) hereof.
GATESIDE SPRINGHOUSE COMPANY, a Pennsylvania general partnership
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, General Partner
By: The Estate of Xxxxx Xxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Executor
SCHEDULE 1 DESCRIPTION OF PORTFOLIO
SCHEDULE 2 EXISTING LOANS
SCHEDULE 3 SCHEDULE OF TAX-RELATED INFORMATION
SCHEDULE 4 TITLE MATTERS
SCHEDULE 5 SERVICE CONTRACTS
SCHEDULE 6 GATESIDE CORPORATION; AGED A/P-TENANTS
PAYING OFF PAST DUE BALANCES
EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTIES
EXHIBIT B PRICEWATERHOUSECOOPERS LLP LETTER
EXHIBIT C LOCK-UP AGREEMENT
EXHIBIT D REGISTRATION RIGHTS AGREEMENT
EXHIBIT E FORM OF ASSIGNMENT OF TENANTS' LEASES,
SECURITY DEPOSITS AND CONTRACTS ("ASSIGNMENT")
EXHIBIT F EXAMPLE OF CALCULATION
EXHIBIT G ESCROW AGREEMENT
EXHIBIT H OPERATING PARTNERSHIP AGREEMENT
