Exhibit 2.3
CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement"), made as of the
17th 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 all of the general partners of
the Scotsdale Apartments, a Michigan co-partnership (the
"Partnership");
WHEREAS, the Partnership owns a certain apartment complex
and adjacent land located in the State of Michigan, 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 ("Property Interests") 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 Scotsdale Apartments, which includes 376
apartments (two of which are currently used as model apartments)
(the " Project"), located in the City of Westland, State of
Michigan, 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 376
apartment units, 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, plumbing and lighting fixtures,
B ranges, refrigerators and disposals (one of each for each
apartment unit),
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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,
any portable dishwashers, air conditioning units other than
such units owned by tenants, mail boxes, office furniture,
clubhouse facilities, 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").
3. PRICE AND MANNER OF PAYMENT.
A. The purchase price for the contribution of the Property
Interests shall be a total of Thirteen Million Six Hundred
Thousand and no/100 ($13,600,000) (the "Consideration").
The Consideration shall be payable as follows: to the
holder of the Note that is secured by a mortgage on the
Property in an amount sufficient to release the lien of that
mortgage and to pay all amounts outstanding under the Note
with the balance (the "Net Consideration") payable by (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 Xxxxxx X. Xxxxxxx for distribution to the
appropriate Contributors.
B. Each of the Contributors shall have the right to elect to
receive all or a portion of their portion of the Net
Consideration in cash or in Units, provided however that
only those Contributors who can establish that they are
Accredited Investors under the securities laws may elect to
receive Units. In the event that a Contributor elects to
receive Units, the number of Units they will receive will be
equal to their percentage share of the Net Consideration as
set forth on the attached Schedule A divided by $25.25. The
price of $25.25 a Unit shall prevail regardless of whatever
the price of a share of the common stock of Home Properties
of New York, Inc. ("HME") is on the Closing Date.
C. No less than one business day prior to the Closing Date,
each of the Contributors shall notify the Buyer as to their
election to receive cash or Units.
D. The initial distribution payable with respect to Units
issued as part of the Consideration shall be made on the date on
which HME pays the dividend to the holders of its common
stock that relates to the earnings for the calendar quarter
in which the Units 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.
At the option of the Contributors, any net adjustment in favor of
the Contributors may be made in cash or Units.
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A current fiscal year real estate taxes,
B water charges,
C sewer charges,
D security deposits pursuant to the leases, unless the
security deposits are assigned to the Buyer,
E charges under the service contracts assumed by Buyer,
F laundry income;
G 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
Xxxxxx X. Xxxxxxx.
(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, 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. Contributors have already provided
Buyer with evidence of title in the form of Ticor Title Policy
Commitment No. 82-353839, a UCC search and survey pursuant
to the prior Contribution Agreement of the parties dated
September 16, 1997, which has been terminated. This
Agreement replaces the terminated agreement. Buyer
acknowledges that the Ticor Commitment, the UCC search and
the survey received by the Buyer pursuant to the terminated
agreement are, subject to the exceptions provided
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below, accepted, and that Buyer has no objection to the
disclosures made in the Ticor Commitment, the UCC search and
the survey, except Contributors shall cause the financing
statement reflected on the UCC Search and the Xxxxxx
Mortgage documents reflected in the Ticor Commitment to be
terminated as of the Closing Date. As promptly after closing
as possible, Contributors, at their expense, (except, for
any special endorsements that Buyer may want) shall have
delivered to Buyer a final Ticor Title Policy showing
marketable title as of the date of closing.
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;
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 (with any interest due to the
tenants);
D. The Assignment attached hereto as Exhibit B. In lieu of
an assignment of the security deposits, the Contributors may
provide Buyer with a credit at Closing for all security
deposits held by Contributors with respect to all leases
encumbering the Property.
8. AS-IS SALE. Buyer affirms that it has thoroughly inspected
the physical condition of the Project and all financial
information and data pertaining to the operation of the
Project. Buyer acknowledges that it is satisfied with its
findings and that, except as specifically provided in the
Agreement, Contributors have made no representations or
warranties with respect to the financial operation of the
Project or its physical condition, and that the Buyer takes
the Project at closing in its as-is condition.
9. CLOSING DATE. The closing shall take place by mail and wire
transfer on November 26, 1997 (the "Closing Date"), time
being of the essence.
10. POSSESSION. Buyer shall have possession and occupancy of
the Property from and after the date of delivery of the
deed.
11. BROKER'S COMMISSION. Buyer and the Contributors represent
to each other that the only broker employed in connection
with this transaction is the Xxxxx Organization and the
Contributors hereby agree to pay any and all commission due
to that broker. The Contributors and Buyer each represent
to the other that there are no other 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.
12. 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
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purchase and receiving the Contributors; share of insurance
monies, collectible for such loss or damage, or the award
for such taking by eminent domain.
13. CONDITIONS PRECEDENT.
A It shall be a condition to Buyer's obligation to close that
there are at Closing 376 apartment units (including 2 model
apartments), which are all in compliance with federal,
state, county or local laws, ordinances, rules and
regulations;
B 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.
C 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,
14. 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.
15. 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:
To the Contributors: x/x Xxxxxx X. Xxxxxxx
00 0/0 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 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
16. PLANS. The Contributors have provided 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 Seller's office or at the
Property during the Due Diligence Period.
17. APPLICABLE LAW. This Agreement shall be construed and
governed in accordance with the laws of the State of Michigan.
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18. 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.
19. BINDING AGREEMENT. This Agreement shall not be binding or
effective until properly executed by Buyer and the Contributors.
20. 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.
21. CONTRIBUTOR COVENANTS.
A. The Contributors will provide, or cause to be
provided, a signed representation letter substantially
in the form attached hereto as Exhibit C. 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 operate the Property in a commercially
reasonable manner with standards and procedures of no
less quality than those currently in place.
22. BUYER COVENANTS.
A. After Closing, any Contributor shall have the right to
convert Units into cash or one-for-one shares of common
stock of Home Properties of New York, Inc. (HME) as
provided in Section 6.08 of the Second Amended and
Restated Agreement of Limited Partnership of Buyer
dated September 23, 1997 (the "Limited Partnership
Agreement"), which is hereby incorporated by reference.
B. Buyer commits itself to perform the terms and
conditions of the Registration Rights Agreement, in the
form of Exhibit D attached hereto.
C. Within 30 days of the Closing Date, the Buyer agrees to
file a registration statement (the "Registration
Statement") with the Commission 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 thereafter
declared effective by the Commission. In the event
that the Buyer has not filed the Registration Statement
within 30 days of the Closing Date, then for and with
respect to each day after that 30th day and prior to
the date on which the Registration Statement is filed
with the Commission, the Buyer shall pay to the
Contributors in the aggregate the sum of $2,000 per
diem.
D. Prior to the Closing Date, the Buyer agrees to amend
the first sentence of paragraph (a) of Section 6.08 of
the Partnership Agreement to read as follows:
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"Subject to Section 6.08(c) hereof, until such
time as is within 30 days of any dissolution of the
Partnership under subparagraph (i) or (ii) of Section
7.01(a) hereof, each Limited Partner (other than the
General Partner or the QRS, if the General Partner or
the QRS is also a Limited Partner) shall have the right
(the "Purchase Right") to require the Partnership to
purchase on the Specified Purchase Date all or a
portion of the Units held by such Limited Partner at a
price equal to and in the form of the Cash Amount to be
paid by the Partnership."
E. For a period of five years after the Closing Date,
the Buyer shall not sell, exchange, transfer or
otherwise dispose of the Project unless done as a tax
free exchange.
22. EMPLOYEES. The Buyer agrees that for a period of 60 days
following the Closing, it shall not terminate the employment
of any person currently employed at the Property, except for
good cause.
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/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx, by power of attorney on behalf of
Xxxxx X. Xxxx, Co-Trustee under Trust Agreement of
Xxxxxxx Xxxx, dated 10/30/84, as amended, Xxxxx Xxxx
Xxxxx, Co-Trustee under Trust Agreement of Xxxxxxx
Xxxx, dated 10/30/84, as amended, Xxxxxx X. Xxxxx, Co-
Trustee under Trust Agreement of Xxxxxxx Xxxx, dated
10/30/84, as amended, Xxxxx X. Xxxx, Trustee under
Xxxxx X. Xxxx Trust Agreement, dated 10/30/84, as
amended, Xxxxxx X. Xxxxxxx, Trustee under Xxxxxx X.
Xxxxxxx Agreement of Trust, dated 6/26/92, as amended,
Xxxx Xxxxxxx, Trustee under Xxxx Xxxxxxx Agreement of
Trust, dated 6/26/92, as amended, Xxxxx Xxxxxx, Co-
Trustee of the J. Xxxxxxx Xxxxxx Trust Agreement, dated
1/5/88, as amended, Xxxxxx X. Xxxxxx, Co-Trustee of the
J. Xxxxxxx Xxxxxx Trust Agreement, dated 1/5/88, as
amended, Xxxxx Xxxxxx, Trustee under Xxxxx Xxxxxx
Revocable Trust Agreement, dated 1/5/88, as amended
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