EXHIBIT 2.1
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(COLUMBIA, MD)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of July 27, 2001
by and among Fentil, Inc. (the "Corporation"), Krupp Realty Limited Partnership
- - IV ("Seller" and together with the Corporation, the "Selling Entities"), each
with an address of c/o The Berkshire Group, One Beacon Street, Suite 1500,
Boston, MA 02108, Attention: David C. Quade, Telecopier No. 617-423-8916, and
Home Properties of New York, L.P., a New York limited partnership ("Buyer"),
with an address of 850 Clinton Square, Rochester, New York 14604.
WHEREAS, Seller owns all of the issued and outstanding shares of capital
stock of the Corporation; and
WHEREAS, Buyer desires to purchase all of the issued and outstanding shares
of capital stock of the Corporation from the Seller, and the Seller desires to
sell all of the issued and outstanding shares of capital stock of the
Corporation to the Buyer, upon the terms and subject to the conditions
hereinafter set forth (the "Acquisition"); and
NOW, THEREFORE, in consideration of the mutual undertakings and covenants
herein contained, the parties hereto hereby covenant and agree as follows:
SECTION 1
PURCHASE AND SALE
1.01. Purchase by Buyer.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Buyer agrees to purchase all of the Stock (as defined below)
from the Seller, and the Seller agrees to sell all of the Stock to the
Buyer.
(b) The Purchase Price for the Stock shall be FOURTEEN MILLION FIVE
HUNDRED THOUSAND AND NO/00 DOLLARS ($14,500,000.00) (the "Purchase Price"),
subject to the prorations and adjustments as hereinafter provided in this
Agreement.
1.02. Closing Date.
(a) Except as otherwise provided in this Agreement, the delivery of
all documents necessary for the closing of this transaction pursuant to
this Agreement (the "Closing") shall take place in the offices of Seller's
counsel, Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts or
such other place as Seller and Buyer shall mutually agree, at 10:00 A.M.
local time on August 1, 2001 or such earlier date or place as Buyer and
Seller shall mutually agree in writing (the "Original Closing Date"). It is
agreed that time is of the essence of this Agreement. If Seller shall elect
to cure any title
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or survey matter under Section 2.02 or Section 2.03, if necessary, the
Original Closing Date shall be extended until fifteen (15) days after the
earlier of (a) the expiration of the thirty (30) day cure period as set
forth in said Section 2.02 or Section 2.03, as applicable, or (b) the date
Seller notifies Buyer that such matter has been cured. At either party's
request, Closing shall be conducted through an escrow administered by
Escrow Agent (as defined below).
(b) On the Original Closing Date, the following actions shall be
taken:
(i) Subject to Section 1.03 hereof, Buyer shall pay the Purchase
Price to Seller by wire transfer of immediately available federal
funds;
(ii) Seller shall deliver or cause to be delivered to Buyer one
or more certificates for the Stock, duly endorsed in blank or with
stock powers duly endorsed in blank, together with such other
documents as Buyer may reasonably request to evidence the transfer to
Buyer of good and valid title in and to the Stock, free and clear of
any Encumbrance (except such as may be created by Buyer); and
(iii) Each party shall take such other actions, and shall execute
and deliver such other instruments or documents, as shall be required
under Article VI hereof.
1.03 Payment of Monies.
All monies payable under this Agreement, unless otherwise specified in this
Agreement, shall be paid by wire transfer of immediately available funds.
1.04 Payment of Purchase Price.
The Purchase Price, subject to prorations and adjustments, shall be paid as
follows:
(a) Deposit. Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) has been paid as a deposit pursuant to Section 1.05 (the
"Deposit");
(b) Payment at Closing. At the Closing, Buyer shall deliver to Escrow
Agent cash in an amount equal to the Purchase Price less the amount of the
Deposit held by the Escrow Agent, and subject to adjustments and
apportionments as set forth herein. The Purchase Price, as adjusted, shall
be paid at Closing by wire transfer of immediately available federal funds,
transferred to the order or account of Seller or such other person as
Seller may designate in writing.
1.05 Deposit; Escrow Agent.
The Deposit shall be delivered by Buyer to LandAmerica Title Insurance
Corporation (the "Escrow Agent") within one (1) business day after the date of
this Agreement. Failure of the Buyer to so deliver the Deposit shall constitute
a breach by Buyer of this Agreement for which the Seller may exercise the
remedies set forth in Section 12.03. Upon receipt from Buyer of the Deposit,
Escrow Agent shall invest the Deposit in an interest-bearing account or money
market fund acceptable to Buyer and Seller. All interest on the Deposit shall
accrue to Buyer, except as otherwise provided in Section 12.03 hereof. At the
Closing, Escrow Agent shall
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release the Deposit to Seller, which Deposit shall be credited against the
balance of the Purchase Price owed by Buyer to Seller. Escrow Agent shall agree
to hold and dispose of the Deposit in accordance with the terms and provisions
of this Agreement.
1.06 Escrow Provisions.
Escrow Agent hereby acknowledges receipt by Escrow Agent of the Deposit
paid by Buyer to be applied to the Purchase Price under the terms hereof. Escrow
Agent agrees to hold, keep and deliver said Deposit and all other sums delivered
to it pursuant hereto in accordance with the terms and provisions of this
Agreement. Escrow Agent shall not be entitled to any fees or compensation for
its services hereunder. Escrow Agent shall be liable only to hold said sums and
deliver the same to the parties named herein in accordance with the provisions
of this Agreement, it being expressly understood that by acceptance of this
agreement Escrow Agent is acting in the capacity of a depository only and shall
not be liable or responsible to anyone for any damages, losses or expenses
unless same shall have been caused by the gross negligence or willful
malfeasance of Escrow Agent. In the event of any disagreement between Buyer and
Seller resulting in any adverse claims and demands being made in connection with
or for the monies involved herein or affected hereby, Escrow Agent shall refuse
to comply with any such claims or demands so long as such disagreement may
continue; and in so refusing Escrow Agent shall make no delivery or other
disposition of any of the monies then held by it under the terms of this
Agreement, and in so doing Escrow Agent shall not become liable to anyone for
such refusal; and Escrow Agent shall refrain from acting until (a) the rights of
the adverse claimants shall have been finally adjudicated in a court of
competent jurisdiction of the monies involved herein or affected hereby, or (b)
all differences shall have been adjusted by agreement between Seller and Buyer,
and Escrow Agent shall have been notified in writing of such agreement signed by
the parties hereto. Escrow Agent shall not be required to disburse any of the
monies held by it under this Agreement unless in accordance with either a joint
written instruction of Buyer and Seller or an undisputed Escrow Demand from
either Buyer or Seller in accordance with the provisions hereinafter. Upon
receipt by Escrow Agent from either Buyer or Seller (the "Notifying Party") of
any notice or request (the "Escrow Demand") to perform any act or disburse any
portion of the monies held by Escrow Agent under the terms of this Agreement,
Escrow Agent shall give written notice to the other party (the "Notified
Party"). If within five (5) business days after the giving of such notice,
Escrow Agent does not receive any written objection to the Escrow Demand from
the Notified Party, Escrow Agent shall comply with the Escrow Demand. If Escrow
Agent does receive written objection from the Notified Party in a timely manner,
Escrow Agent shall take no further action until the dispute between the parties
has been resolved pursuant to either clause (a) or (b) above. Further Escrow
Agent shall have the right at all times to pay all sums held by it into any
court of competent jurisdiction after a dispute between or among the parties
hereto has arisen, whereupon Escrow Agent's obligations hereunder shall
terminate.
Seller and Buyer jointly and severally agree to indemnify and hold harmless
said Escrow Agent from any and all costs, damages and expenses, including
reasonable attorneys' fees, that said Escrow Agent may incur in its compliance
of and in good faith
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with the terms of this agreement; provided, however, this indemnity shall not
extend to any act of gross negligence or willful malfeasance on the part of the
Escrow Agent.
SECTION 2
CERTAIN PROPERTY MATTERS
2.01 Property.
The Corporation is the bare legal title owner of the following as agent for
Seller, the beneficial owner of the Property (defined below) pursuant to the
Agreement to Hold Title, dated April 25, 1982, attached as Exhibit A hereto
("Agreement to Hold Title"):
(a) that certain tract or parcel of land located in Columbia,
Maryland, more particularly described in Schedule A attached hereto (the
"Land");
(b) the 234 unit apartment complex, commonly known as the Fenland
Field Apartments, which contains related improvements, facilities,
amenities, structures, driveways and walkways, all of which have been
constructed on the Land (collectively, the "Improvements");
(c) all right, title and interest of the Selling Entities in and to
any alleys, strips or gores adjoining the Land, and any easements,
rights-of-way or other interests in, on, under or to, any land, highway,
street, road, right-of-way or avenue, open or proposed, in, on, under,
across, in front of, abutting or adjoining the Land, and all right, title
and interest of the Selling Entities in and to any awards for damage
thereto by reason of a change of grade thereof;
(d) the accessions, appurtenant rights, privileges, appurtenances and
all the estate and rights of the Selling Entities in and to the Land and
the Improvements, as applicable, or otherwise appertaining to any of the
property described in the immediately preceding clauses (a), (b) and/or
(c);
(e) all personal property, including, without limitation, the personal
property listed in Schedule B attached hereto, owned by the Selling
Entities and located on or in or used solely in connection with the Land
and Improvements, but expressly excluding all computer programs and
computer software (collectively, the "Personal Property"); and
(f) all of the Selling Entities' interest in all permits, warranties,
guaranties, plans, specifications, reports, books and records, and any
intangible property, now or hereafter, owned by Selling Entities and used
in connection with the Land, Improvements and Personal Property, including
without limitation the right to use any trade style or name now used in
connection with the same, any contract rights, escrow or security deposits,
utility agreements or other rights related to the ownership of or use and
operation of the Property, as hereinafter defined.
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All of the items described in subparagraphs (a), (b), (c), (d), (e) and (f)
above are collectively referred to as the "Property".
2.02 Title.
Buyer's obligation to purchase the Stock shall be conditioned upon the
Corporation then holding good and clear record and marketable fee simple title
to the Property, subject only to the Permitted Exceptions (as hereinafter
defined). Seller has furnished Buyer with a copy of the most recent title policy
for the Property in Seller's possession and Buyer has obtained from LandAmerica
Title Insurance Corporation, Boston NCS office, Attention: Robert Soule, Esq.
(the "Title Insurer") a Commitment For Title Insurance (Case No. 19399 dated
June 1, 2001) with copies of all instruments and plans mentioned therein as
exceptions to title (all of such items are hereinafter collectively referred to
as the "Commitment"). The exceptions set forth in Schedule B, Section 2 of the
Commitment and any other matters of record existing as of the date of the
Commitment have been accepted by Buyer. Notwithstanding the foregoing, Seller,
at its cost, shall be obligated to cure or remove by Closing or otherwise enable
the Title Insurer to insure over all mortgages and deeds of trust against the
Property listed in Schedule B, Section 1 of the Title Commitment, as well as any
other monetary liens not exceeding $50,000 in the aggregate.
2.03 Survey.
Seller has furnished Buyer with a copy of the most recent as-built survey
of the Property in Seller's possession (the "Prior Survey"), and Buyer obtained
a current as-built survey (the "Survey") of the Land and the Improvements by a
registered land surveyor. Buyer has accepted any and all encumbrances,
encroachments or other survey defaults shown on the Survey or Prior Survey.
2.04 Permitted Exceptions.
The following items are hereinafter referred to as the "Permitted
Exceptions".
(a) All possible title objections, survey objections, and any defects
in or to title to the Property or other matters affecting or relating to
the title to, or the survey of, or the condition of the Property which
Buyer has accepted pursuant to Section 2.02 and/or Section 2.03;
(b) Leases described on Schedule C and Service Contracts described on
Schedule D, or which Seller is permitted to enter into pursuant to this
Agreement;
(c) the lien of non-delinquent real and personal property taxes and
assessments not yet due and payable as of the Closing;
(d) rights of parties in possession not shown by the public records,
and any subtenants or licensees under any Leases;
(e) discrepancies, conflicts in boundary lines, shortages in area,
encroachments, and any state of facts which an inspection of the Property
would disclose and which are not shown by the public records;
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(f) easements or claims of easements shown by the public records or
which an inspection of the Property would disclose;
(g) Subject to any proration provisions hereof, any service,
installation, connection, maintenance or construction charges due after
Closing, and charges for sewer, water, electricity, telephone, cable
television or gas; and
(h) any and all liens, exceptions, obligations or other matters which
are caused or created by or on behalf of Buyer or any of Buyer's agents,
employees or representatives.
SECTION 3
SELLER'S PRE-CLOSING DELIVERIES
3.01 Seller has furnished to Buyer, or made available at the Property, for
inspection and approval by Buyer, the following (to the extent in the possession
of Seller):
(a) Leases. Seller shall provide Buyer with access on-site to the
originals (or copies, if originals are not available) of all leases and
related lease files.
(b) Taxes. A copy of 2001 real estate and personal property tax (if
applicable) statements for the Property and tax abatements or abatement
applications for such year (if any).
(c) Current Rent Roll. A list of the current rents now being collected
on each of the apartment units in the Improvements which includes:
apartment number, unit type, tenant name, commencement and termination
dates, lease rent and security deposits.
(d) Service Contracts. Copies of all service, maintenance, supply,
governmental, utility and management contracts entered into by Seller
currently affecting the use, ownership, maintenance and/or operation of the
Property.
(e) Utility Bills. Copies of all utility bills (gas, electric, water
and sewer) relating to the Property for the immediately prior twelve (12)
month period.
(f) Environmental Reports. Copies of any existing environmental
reports (Phase I or other) for the Property.
3.02 Except as otherwise expressly set forth in this Agreement, Seller
makes no representations or warranties as to the truth, accuracy, or
completeness of any materials, data, or other information, including without
limitation, the contents of Seller's or its property manager's books and
records, marketing materials prepared by Seller, the Leases, the Service
Contracts, rent rolls or income and expense statements, supplied to Buyer in
connection with Buyer's inspection of the Property. It is the parties' express
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understanding and agreement that all such materials were provided by Seller
solely for Buyer's convenience in making its own examination and determination
to purchase the Stock, and, in making such examination and determination, Buyer
relied exclusively on its own independent investigation and evaluation of the
Property and Corporation and not on any materials supplied by Seller.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.01 Organization of Seller. Seller is a Massachusetts limited partnership
duly organized, validly existing and in good standing under the laws of
Massachusetts.
4.02 Corporate Organization of the Corporation. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland. The Corporation has all necessary corporate power and
authority to own the Property.
4.03 Ability to Perform. Each of the Selling Entities has full power to
execute, deliver and carry out the terms and provisions of this Agreement and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and this Agreement constitutes the legal, valid
and binding obligation of the Selling Entities enforceable in accordance with
its terms. Except as set forth in this Agreement, no order, permission, consent,
approval, license, authorization, registration or validation of, or filing with,
or exemption by, any governmental agency, commission, board or public authority
is required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement by the Selling Entities or the taking
by the Selling Entities of any action contemplated by this Agreement.
4.04 Capitalization. The authorized capital stock of the Corporation
consists of 5,000 shares of common stock, $0.00 par value per share, all of
which shares are issued and outstanding (the "Stock"). Seller is the lawful
beneficial owner of all of the Stock free and clear of any encumbrances. All of
the shares of Stock have been duly authorized and validly issued and are fully
paid and nonassessable. The Corporation does not have and is not bound by any
outstanding subscriptions, options, warrants, calls or other commitments calling
for the Corporation to issue, deliver or sell, or cause to be issued, delivered
or sold, any shares of Stock or any other equity security of the Corporation or
any securities convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any shares of Stock or any other
equity security of the Corporation. There are no outstanding contractual
obligations of the Corporation to repurchase, redeem or otherwise acquire any
shares of capital stock of the Corporation.
4.05 Property. The Corporation owns no real or personal property of any
kind other than the Property.
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4.06 Employees. The Corporation does not have and has never had any
employees during the period that Seller was a stockholder of the Corporation.
4.07 Corporation's Tax Status. The Corporation holds bare legal title to
the Property, and the Seller holds all equitable and beneficial interest in the
Property, pursuant to the Agreement to Hold Title. The Corporation has been
treated for income tax purposes as a disregarded or pass-through entity and has
never reported any income from the Property. True and correct copies of the
Corporation's tax returns for 1998, 1999 and 2000 are attached hereto as Exhibit
B. The Seller has reported all of the income from the Property and taken
depreciation. Neither the Seller nor the Corporation has been audited, or
received notice from the IRS or any other taxing authority which calls into
question the Corporation's status as a disregarded entity for income tax
purposes.
4.08 Leases. As of the date of this Agreement there are no leases or other
rental agreements or occupancy agreements (written or verbal) entered into by
the Selling Entities which grant any possessory interest in and to any space
situated on or in the Improvements or that otherwise give rights with regard to
use of the Improvements other than the leases (the "Leases") described in
Schedule C attached hereto (the "Rent Roll"). The Rent Roll is true, accurate
and complete in all material respects as of the date hereof. Except as otherwise
specifically set forth in the Rent Roll or elsewhere in this Agreement:
(a) to the knowledge of Seller, the Leases are in full force and
effect;
(b) Except as set forth on Schedule 4.04, none of the Selling Entities
has sent written notice to any current tenant of the Property, nor received
any written notice from any such tenant, claiming that such tenant, or such
Selling Entity, as the case may be, is in default, which default remains
uncured;
(c) no action or proceeding instituted against a Selling Entity by any
tenant of any unit in the Property is presently pending;
(d) there are no security deposits or other deposits other than those
set forth in the Rent Roll;
(e) no rent has been paid more than thirty (30) days in advance under
any Lease other than as shown on the Rent Roll; and
(f) no leasing commission shall be due for any period subsequent to
the Closing other than for tenants who have executed a lease after the date
hereof but do not move in until after the Closing, which commissions shall
be paid by Buyer.
4.09 Service and Management Contracts. Schedule D attached hereto lists all
governmental, utility, services, maintenance, supply and management contracts
(collectively, "Service Contracts") entered into by the Selling Entities
currently affecting the operation of the Property. To the knowledge of the
Seller, each of the Service Contracts is in full force and effect; none of the
parties thereto is in default of any of its
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obligations thereunder; and no event has occurred that, with the giving of
notice, or the passage of time, or both, would constitute a default thereunder.
4.10 No Actions. Except as set forth on Schedule E attached hereto, there
are no pending, or to Seller's knowledge, threatened legal actions, proceedings
or investigations before any court or governmental department, commission,
board, agency or instrumentality against the Corporation or the Seller affecting
or relating to the Property and Seller does not know of any basis for such
action, proceeding or investigation. Except as set forth on Schedule E attached
hereto, there are no claims of any kind or nature which have been asserted
against the Corporation or the Property.
4.11 No Violation Notice. The Selling Entities have not received written
notice:
(a) from any federal, state, county or municipal authority alleging
any fire, health, safety, building, pollution, environmental, deed
restriction or other violation of law in respect of the Property or any
part thereof, which has not been corrected;
(b) concerning the possible or anticipated condemnation of any part of
the Property, or the widening, change of grade or limitation on use of
streets abutting the same or concerning any special taxes or assessments
levied or to be levied against the Property or any part thereof;
(c) from any insurance company or bonding company of any defects or
inadequacies in the Property or any part thereof, which would adversely
affect the insurability of the same or cause the imposition of
extraordinary premiums or charges therefor or of any termination or
threatened termination of any policy of insurance or bond; or
(d) concerning any change in the deed restriction classification of
the Property or any part thereof.
4.12 No Management Contracts, Employment Contracts, Unions, Pension Plans.
The Selling Entities have not entered into any management contracts, employment
contracts or labor union contracts and has not established any retirement,
pension or profit sharing plans relating to the operation or maintenance of the
Property which shall survive the Closing or for which Buyer shall have any
liability or obligation.
4.13 Conflict with Other Agreement. The execution and delivery of this
Agreement, and its performance by the Selling Entities, will not conflict with,
or result in the breach of, any contract or agreement to which the Selling
Entities are a party, or by which the Selling Entities are bound.
4.14 Financial Status. The Corporation has not: (i) made a general
assignment for the benefit of its credits; (ii) admitted in writing its
inability to pay its debts as they mature; (iii) had an attachment, execution or
other judicial seizure of any property
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interest which remains in effect; or (iv) become generally unable to meet its
financial obligations as they mature.
4.15 No Bankruptcy. To the knowledge of the Seller, there is not pending
any case, proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or recomposition of the Corporation, or the
debts of the Corporation under any law relating to bankruptcy, insolvency,
reorganization or the relief of debtors, or seeking the appointment of a
receiver, trustee, custodian or other similar official for the Corporation or
the Property.
4.16 No Liabilities. To the knowledge of the Seller, except: (i) as
disclosed in Schedule F attached hereto; and (ii) as otherwise disclosed in this
Agreement, the Corporation has no material liability or obligation of any nature
which in any way materially affects or is related to the Property whether now or
due or to become due, absolute, contingent or otherwise, including liabilities
for taxes (or any interest or penalties thereto).
4.17 Taxes. The Corporation has filed or will file when due all returns of
Taxes (as defined below) required to be filed before the Closing Date and has
paid or, if due after the date hereof and prior to the Closing Date, will pay,
all Taxes and other charges for the periods shown to be due on such returns.
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, excise, property, sale, gross receipts,
employment and franchise taxes imposed by the United States, or any state,
county, local or foreign government, or subdivision or agency thereof with
respect to the assets or the business of the Corporation and including any
interest, penalties or additions attributable thereto.
4.18 Personal Property. The Corporation owns legal and the Seller owns
beneficial title to the Personal Property, free and clear of all liens, charges
and encumbrances, except the Permitted Exceptions.
As used in this Agreement, or in any other agreement, document, certificate
or instrument delivered by Seller to Buyer, the phrase "to Seller's knowledge",
"to Seller's actual knowledge", "to the best of Seller's knowledge" or any
similar phrase shall mean the actual, not constructive or imputed, knowledge of
David C. Quade, Executive Vice President and Chief Financial Officer of The
Berkshire Group and Rick Ragsdale, Regional Operations Vice President, but
without any obligation on their part to make any independent investigation of
the matters being represented and warranted, or to make any inquiry of any other
persons, or to search or examine any files, records, books, correspondence and
the like.
At Closing, Seller shall represent and warrant to Buyer by delivering to
Buyer a certificate (the "Seller's Representation Certificate") certifying that
all representations and warranties of Seller in this Agreement remain true and
correct in all material respects as of the Closing Date and all of the
representations and warranties contained herein shall be deemed remade by Seller
effective as of the Closing Date; provided, however, that to
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the extent that Seller becomes aware of any facts or circumstances which would
make a representation or warranty untrue in any material respect, Seller shall
promptly deliver written notice to Buyer of such facts or circumstances after
becoming aware of same (but in no event later than the Closing Date) and, the
Seller's Representation Certificate may be revised at Closing to make exception
or qualification with respect to such matters as may be necessary for such
representations to remain true, but Buyer's agreement to allow such amendment of
Seller's Representation Certificate shall not affect or indicate any waiver of
any condition to Closing set forth in this Agreement, and Buyer may terminate
this Agreement and receive the Deposit, if Seller fails, for any reason, to
deliver Seller's Representation Certificate at Closing without any material
change, except as to changes which are permitted or contemplated pursuant to
Section 8 hereof.
Buyer agrees to inform Seller promptly in writing if it discovers that any
representation or warranty of Seller is inaccurate in any material respect, or
if it believes that Seller has failed to deliver to Buyer any document or
material which it is obligated to deliver hereunder.
If Buyer notifies Seller prior to Closing that any representation or
warranty made in Section 4 is not true and correct in any material respect and
Seller fails to cure or remedy the same prior to Closing, Buyer may either (a)
except as otherwise set forth in this paragraph, terminate this Agreement and
the Deposit shall be returned to Buyer, and neither party shall have further
rights or obligations pursuant to this Agreement, except for Buyer's obligation
to repair any damage to the Property and to indemnify the Selling Entities as
set forth in Section 6.01; or (b) waive any such representation or warranty and
close the transaction without any reduction in the Purchase Price.
Notwithstanding the foregoing, Buyer shall not have the right to terminate this
Agreement on account of a breach of a Seller representation or warranty to the
extent that, prior to the date hereof, Buyer discovered or learned of
information (from whatever source, including, without limitation, a disclosure
from Seller or Seller's agents or employees or as a result of Buyer's due
diligence tests, investigations and inspections of the Property) that
contradicts any such representations and warranties, or renders any such
representations and warranties untrue or incorrect.
All of the representations and warranties of the Seller, set forth in this
Agreement, including without limitation, the following indemnity, shall survive
the Closing for a period of nine (9) months following Closing, and shall not be
deemed to have merged in any document delivered at the Closing. Any claim for
any breach of any representation or warranty of the Partnership shall be
brought, if at all, within nine (9) months from the date of Closing or
thereafter be forever barred and the limitations of liability as set forth in
the paragraph below shall apply to any such claim. The foregoing limitation of
liability shall not apply in the case of fraud or intentional and material
misrepresentation.
The Seller agrees to indemnify Buyer and hold harmless and defend Buyer
from and against any and all losses, costs, claims, liabilities, damages and
expenses, including, without limitation, reasonable attorneys' fees, arising as
the result of a breach of any of the representations and warranties of the
Seller, set forth in this Agreement.
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If subsequent to Closing Buyer notifies Seller within nine (9) months after
Closing that Buyer discovered post-closing that any representation or warranty
made in Section 4 was not true and correct in any material respect and
specifying the breach with particularity, subject to the limitations set forth
in Section 17.02, Buyer shall have available all remedies at law or in equity as
a consequence thereof. If Buyer does not notify Seller of the breach of any of
its representations and warranties set forth in this Section 4 and institute a
lawsuit therefor in a court of competent jurisdiction within nine (9) months
after the Closing, Buyer shall be deemed to have waived all of its rights to
claim and sue for any breach by Seller of any of its representations and
warranties made in this Section 4. The foregoing limitation of liability shall
not apply in the case of fraud or intentional and material misrepresentation.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.01 No Intention to Liquidate. Buyer has no current intention (a) to
liquidate the Corporation or to merge the Corporation with or into another
entity, (b) to sell or otherwise dispose of the Stock except a sale for no
consideration from the Exchange Accommodation Titleholder (as defined in Section
17.15(d) below) to Buyer and from Buyer to Home Properties of New York, Inc. or
(c) to cause the Corporation to sell or otherwise dispose of any of its assets,
except for dispositions of assets in the ordinary course of business of the
Corporation.
5.02. Buyer Acquisition of Stock. Buyer is acquiring the Stock for its own
account and not with a view to distribution within the meaning of Section 2(11)
of the Securities Act.
At Closing, Buyer shall represent and warrant to Seller by delivering to
Seller a certificate (the "Buyer's Representation Certificate") certifying that
all representations and warranties of Buyer in this Agreement remain true and
correct in all material respects as of the Closing Date and all of the
representations and warranties contained herein shall be deemed remade by Buyer
effective as of the Closing Date; provided, however, that to the extent that
Buyer becomes aware of any facts or circumstances which would make a
representation or warranty untrue in any material respect, Buyer shall promptly
deliver written notice to Seller of such facts or circumstances after becoming
aware of same (but in no event later than the Closing Date) and, the Buyer's
Representation Certificate may be revised at Closing to make exception or
qualification with respect to such matters as may be necessary for such
representations to remain true, but Seller's agreement to allow such amendment
of Buyer's Representation Certificate shall not affect or indicate any waiver of
any condition to Closing set forth in this Agreement, and Seller may terminate
this Agreement, if Buyer fails, for any reason, to deliver Buyer's
Representation Certificate at Closing without any material change, except as to
changes which are permitted or contemplated pursuant to Section 8 hereof.
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Seller agrees to inform Buyer promptly in writing if it discovers that any
representation or warranty of Buyer is inaccurate in any material respect, or if
it believes that Buyer has failed to deliver to Seller any document or material
which it is obligated to deliver hereunder.
If Seller notifies Buyer prior to Closing that any representation or
warranty made in Section 5 is not true and correct in any material respect and
Buyer fails to cure or remedy the same prior to Closing, Seller may either (a)
except as otherwise set forth in this paragraph, terminate this Agreement, and
neither party shall have further rights or obligations pursuant to this
Agreement; or (b) waive any such representation or warranty and close the
transaction without any change in the Purchase Price.
If subsequent to Closing, Seller notifies Buyer within nine (9) months
after Closing that Seller discovered post-closing that any representation or
warranty made in Section 5 was not true and correct in any material respect and
specifying the breach with particularity, Seller shall have available all
remedies at law or in equity as a consequence thereof. If Seller does not notify
Buyer of the breach of any of its representations and warranties set forth in
this Section 5 and institute a lawsuit therefor in a court of competent
jurisdiction within nine (9) months after the Closing, Seller shall be deemed to
have waived all of its rights to claim and sue for any breach by Buyer of any of
its representations and warranties made in this Section 5.
SECTION 6
ACCESS; PURCHASE "AS IS"
6.01 Prior to Closing, Buyer, its agents and representatives, shall be
entitled to enter upon the Property (as coordinated through Seller's property
manager), including all leased areas, upon at least two (2) business days prior
notice to Seller, to perform inspections and tests of the Property, including
surveys, environmental studies, examinations and tests of all structural and
mechanical systems within the Improvements, and to examine the books and records
and all other documents relating to the Property in the possession or control of
Seller or Seller's property manager. Buyer shall also have the right to
interview Seller's on-site personnel and vendors. Seller shall have the right to
have a representative present during all times that Buyer, its agents,
consultants or representatives have entered the Property for the purpose of
conducting its investigations in accordance with this Section 6.01. Before
entering upon the Property, Buyer shall furnish to Seller evidence of general
liability insurance coverage naming the Selling Entities as an insured in such
amounts and insuring against such risks as Seller may reasonably require.
Notwithstanding the foregoing, Buyer shall not be permitted to interfere
unreasonably with the operations of the Selling Entities at the Property or
interfere with any tenant's occupancy at the Property, and the scheduling of any
inspections shall take into account the timing and availability of access to
tenants' premises, pursuant to tenants' rights under the Leases or otherwise. If
Buyer wishes to engage in any testing which will damage or disturb any portion
of the Property, Buyer shall obtain Seller's prior consent thereto, which may be
granted, refused or conditioned
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in the sole and absolute discretion of Seller. Without limiting the generality
of the foregoing, Seller's written approval shall be required prior to any
testing or sampling of surface or subsurface soils, surface water, groundwater
or any materials in or about the Property in connection with Buyer's
environmental due diligence. Buyer shall restore the Property to the same
condition as existed prior to such tests or investigations, shall repair any
damage to the Property caused by any such tests or investigations, and shall
indemnify the Selling Entities from any and all liabilities, claims, costs and
expenses resulting therefrom or from any breach of any other obligations of
Buyer under this Section 6.01. Buyer and its agents and representatives shall
not reveal or disclose any information obtained concerning the Property or the
Selling Entities to anyone outside of Buyer's organization, other than its
agents, consultants and representatives. The obligations and indemnification set
forth in this Section 6.01 shall survive Closing or the termination of this
Agreement.
6.02 Intentionally Omitted.
6.03 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND
AGREED THAT THE SELLING ENTITIES ARE NOT MAKING AND HAVE NOT AT ANY TIME MADE
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR
TO CLOSING, SUCH INVESTIGATIONS REGARDING THE STOCK AND THE PROPERTY, INCLUDING
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS OF THE PROPERTY,
AS BUYER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF
THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN
WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE
PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED
BY OR ON BEHALF OF THE SELLING ENTITIES OR THEIR AGENTS OR EMPLOYEES WITH
RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS AND WARRANTIES OF SELLER AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, UPON CLOSING, BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS,
AND EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER, UPON CLOSING, SHALL
BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED THE SELLING ENTITIES (AND
THEIR AFFILIATED ENTITIES AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS (COLLECTIVELY, "SELLER AFFILIATES")) FROM
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AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR
UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST THE SELLING ENTITIES
(AND THEIR OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME
BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR
PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER
ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY OR THE
STOCK (COLLECTIVELY, THE "LIABILITIES").
THE PROVISIONS OF THIS SECTION SHALL SURVIVE CLOSING OR ANY TERMINATION OF
THIS AGREEMENT.
6.04 Without limiting the generality of the foregoing release provisions of
this Section 6, except as otherwise provided herein, Buyer waives any rights it
may have against the Selling Entities or any Seller Affiliates in connection
with any and all Liabilities which arise or which are in any way related to any
Hazardous Materials in, on, above or beneath the Property or emanating therefrom
including, without limitation, under CERCLA (defined below), and Buyer agrees
that it shall not (i) implead either of the Selling Entities, (ii) bring a
contribution action or similar action against either of the Selling Entities or
(iii) attempt in any way to hold either of the Selling Entities responsible with
respect to any such matter. As used herein, "Hazardous Materials" shall mean and
include, but shall not be limited to any petroleum product and all hazardous or
toxic substances, wastes or substances, any substances which because of their
quantitated concentration, chemical, or active, flammable, explosive, infectious
or other characteristics, constitute or may reasonably be expected to constitute
or contribute to a danger or hazard to public health, safety or welfare or to
the environment, including, without limitation, any hazardous or toxic waste or
substances which are included under or regulated (whether now exiting or
hereafter enacted or promulgated, as they may be amended from time to time)
including, without limitation, the Comprehensive and Liability Act of 1980, 42
U.S.C. Section 9601 et seq. ("CERCLA"), the Federal Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., similar state laws and regulations
adopted thereunder (collectively, "Hazardous Materials Laws"). The provisions of
this Section 6.04 shall survive Closing or any termination of this Agreement.
6.05 Seller has provided to Buyer certain unaudited historical financial
information regarding the Property relating to certain periods of time in which
Seller owned the Property. Seller makes no representation or warranty that such
material is complete or accurate or that Buyer will achieve similar financial or
other results with respect to the operations of the Property, it being
acknowledged by Buyer that Seller's operation of the Property by the Selling
Entities and allocations of revenues or expenses may be vastly different than
Buyer may be able to attain. Buyer acknowledges that it is a
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sophisticated and experienced purchaser of real estate and further that Buyer
has relied upon its own investigation and inquiry with respect to the operation
of the Property and releases the Selling Entities from any liability with
respect to such historical information.
SECTION 7
INSURANCE
7.01 Maintenance of Insurance. Until the Closing, Seller shall cause the
present insurance on the Property to be maintained. Subject to the provisions of
Section 7.02, the risk of loss in and to the Property shall remain vested in the
Selling Entities until the Closing. Buyer will obtain its own insurance on the
Property at Closing.
7.02 Casualty or Condemnation. If prior to the Closing, the Improvements or
any material portion thereof (having a replacement cost equal to or in excess of
twenty percent (20%) of the Purchase Price) are damaged or destroyed by fire or
casualty, or are taken by eminent domain by any governmental entity, and the
Selling Entities are unable to restore such damage or destruction prior to the
Closing Date in the case of a casualty, then Buyer shall have the option,
exercisable by written notice given to Seller at or prior to the Closing, to
terminate this Agreement, whereupon all obligations of all parties hereto shall
cease, the Deposit shall be returned to Buyer and this Agreement shall be void
and without recourse to the parties hereto except for provisions which are
expressly stated to survive such termination. If Buyer does not elect to
terminate this Agreement or if such damage or destruction or taking has a
replacement cost or is in an amount of less than twenty percent (20%) of the
Purchase Price, Buyer shall proceed with the purchase of the Property without
reduction or offset of the Purchase Price, and in such case, unless the Selling
Entities shall have previously restored the Property to its condition prior to
the occurrence of any such damage or destruction, the Selling Entities shall pay
over or assign to Buyer all amounts received or due from, and all claims
against, any insurance company or governmental entity as a result of such
destruction or taking and Buyer shall be entitled to a credit against the
Purchase Price equal to the deductible amount under the insurance maintained by
the Selling Entities.
SECTION 8
SELLER'S OBLIGATIONS PRIOR TO CLOSING
Seller covenants that between the date of this Agreement and the Closing:
8.01 Leases. The Selling Entities shall not without Buyer's prior written
consent (which consent shall not be unreasonably withheld, conditioned or
delayed), (a) enter into any new lease for an apartment unit with a first-time
tenant unless the lease is for a period of no more than one year and the rent
shall be not less than the then current lease rent for such unit; or (b) enter
into, amend, renew or extend any Lease for an apartment unit with an existing
tenant unless the lease is for a period of not more than one year and that the
rent for the amended, renewal or extension term shall not be less than the
current lease rent for such unit; or (c) terminate any Lease except by reason of
a
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default by the tenant thereunder or by reason of the provisions contained in the
Lease. If Buyer fails to reply to Seller's request for consent in a notice given
within five (5) days after Buyer receives such request, Buyer's consent shall be
deemed to have been granted.
8.02 Continuation of Service Contracts. The Selling Entities shall not
modify or amend any Service Contract or enter into any new service contract for
the Property unless the same is terminable without penalty by the then owner of
the Property upon not more than thirty (30) days' notice. Buyer shall assume all
Service Contracts at Closing.
8.03 Replacement of Personal Property. No personal property included as
part of the Property shall be removed from the Property unless the same is
replaced with similar items of at least equal quality prior to the Closing.
8.04 Tax Procedure. The Selling Entities shall not withdraw, settle or
otherwise compromise any protest or reduction proceeding affecting real estate
taxes assessed against the Property for any fiscal period in which the Closing
is to occur or any subsequent fiscal period without the prior written consent of
Buyer. Real estate tax refunds and credits received after the Closing which are
attributable to the fiscal tax year during which the Closing occurs shall be
apportioned between Seller and Buyer, after deducting the expenses of collection
thereof, based upon the relative time periods each owns the Property, which
obligation shall survive the Closing.
8.05 Access. The Selling Entities shall allow Buyer or Buyer's
representatives access to the Property, the Leases and other documents required
to be delivered under this Agreement upon reasonable prior notice at reasonable
times; provided Buyer agrees that the original leases and all other original
documents shall remain on-site at the Property.
8.06 Operations. The Selling Entities shall manage and maintain the
Property in good operating condition comparable to that existing as of the date
hereof, normal wear and tear and casualty and condemnation damage excepted. The
Selling Entities will perform all current non-structural maintenance and repairs
as may be needed to maintain the Property or as may be reasonably appropriate to
facilitate the leasing of vacant rental space. The Selling Entities will make
replacements of items of furniture, fixtures and equipment under the same
circumstances and according to the same standard that such replacements have
been made in the past.
8.07 Miscellaneous. During the period from the date of this Agreement to
the Closing Date, and except as may be required or specifically permitted
pursuant to this Agreement or otherwise consented to by Buyer, Seller shall
cause the Corporation:
(a) not to declare or pay any dividends on or make any other
distributions in respect of any shares of Stock;
(b) not to adopt any amendments to its Articles of Incorporation or
other charter documents or by-laws;
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(c) not to issue, deliver or sell any shares (whether original
issuance or from treasury shares) of its capital stock or securities
convertible into or exercisable for shares of its capital stock, or effect
any stock split, reverse stock split, recapitalization, reclassification or
similar transaction or otherwise change its equity capitalization as it
exists on the date hereof;
(d) not to purchase, redeem or otherwise acquire any shares of its
capital stock or any securities convertible into or exercisable for any
shares of its capital stock; and
(e) not to authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement with respect
to, any merger, consolidation, purchase and assumption transaction or
business combination (other than the Acquisition), any acquisition of a
material amount of assets or securities or assumption of liabilities or any
disposition of a material amount of assets or securities.
SECTION 9
SELLER'S CLOSING OBLIGATIONS
9.01 Closing, Deliveries and Obligations. At the Closing, Seller shall
deliver the following to Buyer:
(a) Stock Power. A Stock Power duly executed by the Seller, pursuant
to which the Seller shall convey the Stock to the Buyer.
(b) Stock Certificates. All certificates evidencing ownership of the
Stock, endorsed by Seller to the Buyer.
(c) Corporate Documents. Certified copies of the Articles of
Incorporation and all amendments thereto of the Corporation certified by
the Maryland State Department of Assessments and Taxation ("SDAT") and
certified copies of the By-Laws of the Corporation, and a good standing
certificate from SDAT.
(d) Lease Records. Original copies of all Leases, and related
documents in the possession or under the control of Seller. Such records
shall include a schedule of all cash security deposits (including pet
deposits and interest, if any) and a check to Buyer or credit against the
Purchase Price in the amount of such security deposits (including pet
deposits and interest, if any) held by Seller at the Closing under the
Leases together with appropriate instruments of transfer or assignment with
respect to any lease securities which are other than cash and a schedule
updating the Rent Roll and setting forth all arrears in rents and all
prepayments of rents.
(e) Permits; Warranties. Seller shall deliver, to the extent in the
possession of Seller, all original warranties and guaranties and original
copies of all certificates, licenses, permits, authorizations and approvals
issued for or with respect to the Property by governmental authorities
having jurisdiction, except that photocopies
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may be substituted if the originals are posted at the Property or are
otherwise not available.
(f) Title Affidavits. Such affidavits as the Title Insurer may
reasonably require in order to omit from its title insurance policy all
exceptions for (i) parties in possession other than under the rights to
possession granted under the Leases; (ii) mechanics' liens; and (iii) in
the event Buyer elects to purchase a non-imputation endorsement, any
affidavit reasonably required by the title company to issue such
endorsement.
(g) Files. Seller shall make all of its files and records relating to
the Property available to Buyer at the Property upon reasonable prior
notice for copying, which obligation shall survive the Closing.
(h) Notices of Sale. Sufficient letters, executed by Seller, advising
the tenants under the Leases of the sale of the Property to Buyer and
directing that all rents and other payments thereafter becoming due under
the Leases be sent to Buyer or as Buyer may direct.
(i) Non-Foreign Affidavit. The Selling Entities shall execute and
deliver to Buyer and Buyer's counsel, at Closing such evidence as may be
reasonably required by Buyer to show compliance by the Selling Entities
with the Foreign Investment and Real Property Tax Act, IRC Section
1445(b)(2), as amended.
(j) Seller's Representation Certificate. The Seller's Representation
Certificate duly executed by Seller as provided in Section 4 hereof in form
reasonably satisfactory to Buyer's and Seller's counsel.
(k) Seller's Resolutions. Resolutions of the Seller authorizing the
sale of the Stock in accordance with the terms hereof.
(l) Closing Statement. A closing statement, in form reasonably
satisfactory to Buyer's and Seller's counsel.
(m) Termination of Management Agreement. A termination of any
management agreements affecting the Property, signed by Seller and the
manager.
(n) Security Deposits. In lieu of acquiring the existing Security
Deposit accounts, Buyer may receive a credit at Closing equal to the total
of all Security Deposits plus accrued interest to the extent required by
law. In that event, Buyer shall execute any documentation required by the
lending institution holding the Security Deposits directing it to refund
the Security Deposit plus interest to the Seller.
(o) UCC Searches. Buyer shall have obtained, at its cost, Maryland
State UCC searches, against the Property, the Corporation and the Seller
(related to the Property), which shall be clear of all liens (other than
those filed as security in connection with any loans previously paid off or
to be paid off by Seller at Closing).
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9.02 Seller's Expenses. Seller shall pay its own counsel fees and one-half
of any escrow fees. As this transaction has been structured as a sale of stock,
the parties anticipate that no state or local transfer or recordation taxes will
be due. However, in the event it is determined that state or local transfer or
recordation taxes are due as a result of the transaction described herein, the
parties shall share the cost of such taxes equally. This provision shall survive
Closing for a period of nine (9) months.
SECTION 10
BUYER'S CLOSING OBLIGATIONS
At the Closing, Buyer shall:
10.01 Payment of Purchase Price. Deliver to Seller the Purchase Price, as
adjusted for (i) apportionments under Section 11 and (ii) any adjustments
thereto required pursuant to the express provisions of this Agreement.
10.02 Buyer's Representation Certificate. The Buyer's Representation
Certificate duly executed by Buyer as provided in Section 5 hereof in form
reasonably satisfactory to Buyer's and Seller's counsel.
10.03 Other Documents. Deliver a closing statement and any other documents
required by this Agreement to be delivered by Buyer.
10.04 Buyer's Expenses. Pay its own counsel fees, costs of Buyer's owner's
title policy, costs of survey, all costs related to its due diligence
investigations, and one-half of any escrow fees. As this transaction has been
structured as a sale of stock, the parties anticipate that no state or local
transfer or recordation taxes will be due. However, in the event it is
determined that state or local transfer or recordation taxes are due as a result
of the transaction described herein, the parties shall share the cost of such
taxes equally. This provision shall survive Closing for a period of nine (9)
months.
SECTION 11
APPORTIONMENTS AND ADJUSTMENTS TO PURCHASE PRICE
The following apportionments shall be made between the parties at the
Closing as of the close of the business day prior to the Closing:
(a) Buyer shall receive from Seller a credit for any rent and other
income under Leases collected by the Selling Entities before Closing that
applies to any period after Closing. Uncollected rent and other uncollected
income shall not be prorated at Closing. After Closing, Buyer shall apply
all rent and income collected by Buyer from a tenant, first to the month in
which Closing occurred, then to such tenant's current monthly rental and
then to arrearages in the reverse order in which they were due, remitting
promptly to Seller, any balance properly allocable to periods prior to
Closing. Buyer shall bill and use commercially reasonable efforts to
collect such rent arrearages in
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the ordinary course of business, but shall not be obligated to engage a
collection agency or take legal action to collect any rent arrearages.
After the Closing, the Seller shall continue to have the right, in its own
name, to demand payment of and to collect rent arrearages owed to the
Seller by any tenant for periods prior to Closing, which right shall
include, without limitation, the right to continue or commence legal
actions or proceedings against any tenant. The Buyer agrees to cooperate
with the Seller in connection with all efforts by the Seller to collect
such rents and to take all steps, whether before or after the Closing Date,
as may be reasonably necessary to carry out the intention of the foregoing,
including, without limitation, the delivery to the Seller, upon demand, of
any relevant books and records (including any rent statements, receipted
bills and copies of tenant checks used in payment of such rent), the
execution of any and all consents or other documents, and the undertaking
of any action reasonably necessary for the collection of such rents by the
Seller;
(b) it is the intent of the parties that all security deposits
(including pet deposits and interest, if any) shown on the Rent Roll shall
be transferred by Seller to Buyer at Closing; on the Closing, Buyer shall
in writing acknowledge receipt of and expressly assume all Seller's
financial and custodial obligations with respect thereto, it being the
intent and purpose of this provision that, at Closing, Seller will be
relieved of all fiduciary and custodial obligations, and that Buyer will
assume all such obligations and be directly accountable to the residents of
the Property with respect thereto;
(c) there shall be no adjustment for wages, vacation pay, pension and
welfare benefits and other fringe benefits of all persons employed by
Seller at the Property; it being the intent of the parties that
simultaneously with the Closing, Seller shall terminate any existing
management agreement and Buyer shall have no liability or obligation with
respect to any employee of Seller or its management company prior to
Closing;
(d) electricity charges, water charges, sewer rents and vault charges,
if any, and other utility charges on the basis of the fiscal period for
which assessed; to the extent possible, as of Closing, Seller shall close
each utility account, retain any utility deposit and arrange for a final
utility reading; otherwise apportionment of utilities at the Closing shall
be based on the last available reading, subject to adjustment after the
Closing on a per diem basis, when the next reading is available;
(e) all general real estate and personal property taxes and other ad
valorem taxes and assessments; and
(f) prepayments paid by Seller under Service Contracts and under any
Terminable Service Contract, but only to the extent not terminated until
after Closing.
If the Closing shall occur before a new tax rate is fixed, the
apportionment of taxes at the Closing shall be upon the basis of the old tax
rate for the preceding period applied to the latest assessed valuation. Promptly
after the new tax rate is fixed, the apportionment of taxes shall be recomputed.
Any discrepancy resulting from such
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recomputation and any errors or omissions in computing apportionments at the
Closing shall be promptly corrected, which obligation shall survive the Closing.
If any operating expenses or other prorations cannot conclusively be determined
as of the date of Closing, then the same shall be adjusted at Closing based upon
the most recently issued bills thus far and shall be re-adjusted within sixty
(60) days, or such longer period as may be necessary, after the Closing occurs.
The provisions of this Section 11 shall survive the Closing.
SECTION 12
FAILURE TO PERFORM
12.01 Buyer's Election. If Seller is unable to satisfy all of Seller's
obligations as set forth in this Agreement, Buyer shall have the right to elect,
in its sole discretion, at the Closing, to accept the Stock subject to such
unfulfilled obligations and to pay therefor the Purchase Price without reduction
or offset.
12.02 Seller's Default. If at the Closing, Seller is unable to satisfy all
of Seller's obligations as set forth in this Agreement, and Buyer does not elect
to acquire the Stock as provided in Section 12.01, Seller shall be in default
under this Agreement and all Deposits made hereunder shall be forthwith returned
to Buyer. Except as set forth in the next succeeding sentence, the return of the
Deposit shall be the sole and exclusive remedy of Buyer. In addition to the
foregoing, if Buyer desires to purchase the Stock in accordance with the terms
of this Agreement and Seller intentionally refuses to perform Seller's
obligations hereunder, Buyer, at its option, and as Buyer's sole and exclusive
remedy, shall have the right to compel specific performance or affirmative
injunctive relief by Seller hereunder (and, if Buyer is the prevailing party,
Buyer shall be reimbursed for its reasonable attorney's fees) in which event any
Deposit made hereunder shall be delivered to Seller at Closing and credited
against the Purchase Price.
12.03 Buyer's Default. The parties acknowledge that in the event of Buyer's
failure to fulfill its obligations hereunder it is impossible to compute exactly
the damages which would accrue to Seller in such event. The parties have taken
these facts into account in setting the amount of the Deposit, required pursuant
to Section 1.04, and hereby agree that: (i) such amount together with the
interest earned thereon is the pre-estimate of such damages which would accrue
to Seller; (ii) such amount represents damages and not any penalty against
Buyer; and (iii) if this Agreement shall be terminated by Seller by reason of
Buyer's failure to fulfill Buyer's obligations hereunder, the Deposit together
with the interest thereon shall be Seller's full and liquidated damages in lieu
of all other rights and remedies which Seller may have against Buyer at law or
in equity.
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SECTION 13
BROKERAGE FEES
13.01 Brokerage Fees. Seller and Buyer mutually represent and warrant that
neither Seller nor Buyer has dealt with any broker in connection with this
purchase and sale and that neither Seller nor Buyer knows of any broker who has
claimed or may have the right to claim a commission in connection with this
purchase and sale. Seller and Buyer shall indemnify and defend each other
against any costs, claims or expenses, including attorneys' fees, arising out of
the breach on their respective parts of any representations, warranties or
agreements contained in this Section. The representations and obligations under
this Section shall survive the Closing or, if the Closing does not occur, the
termination of this Agreement.
SECTION 14
NOTICES
14.01 Effective Notices. All notices under this Agreement shall be in
writing and shall be delivered personally or shall be sent by Federal Express or
other comparable overnight delivery courier, addressed as set forth at the
beginning of this Agreement. Notices shall be deemed effective, when so
delivered. Copies of all such notices to Buyer shall also be sent to Home
Properties of New York, L.P., 850 Clinton Square, Rochester, New York 14604,
Attention: Kathleen K. Suher, Esq. and Norman Leenhouts, and copies of all such
notices to Seller shall also be sent to Scott D. Spelfogel, Esq., The Berkshire
Group, One Beacon Street, Boston, Massachusetts 02108 and Richard A. Toelke,
Esq., Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110.
SECTION 15
LIMITATIONS ON SURVIVAL
15.01 Representations and Warranties. Except as otherwise expressly
provided in this Agreement, no representations, warranties, covenants or other
obligations of Seller set forth in this Agreement shall survive the Closing, and
no action based thereon shall be commenced after Closing. The representations,
warranties, covenants and other obligations of Seller set forth in Section 5 and
of Buyer set forth in Section 6 shall survive until nine (9) months after the
Closing, and no action based thereon shall be commenced more than nine (9)
months after the Closing.
15.02 Merger. The delivery of the items listed in Section 9.01 by Seller,
and the acceptance thereof by Buyer, shall be deemed the full performance and
discharge of each and every obligation on the part of Seller to be performed
hereunder and shall be merged in the delivery and acceptance of such items,
except as provided in Section 15.01 and except for such other obligations of
Seller which are expressly provided herein to survive the Closing.
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SECTION 16
INTENTIONALLY OMITTED
Section 17
MISCELLANEOUS PROVISIONS
17.01 Assignment. Buyer shall not have the right to assign this Agreement
without Seller's prior written consent, which consent may be given or withheld
in Seller's sole and absolute discretion. Notwithstanding the foregoing, Buyer
shall be entitled to assign this Agreement and its rights hereunder to a
corporation, general partnership, limited partnership, limited liability company
or other lawful entity entitled to do business in the state in which the
Property is located provided such entity shall be controlled by, controlling or
under the common control with Buyer or an Exchange Accommodation Titleholder
pursuant to Section 17.15 ("Assignee"). In the event of such an assignment of
this Agreement to Assignee (a) Buyer shall notify Seller at least seven (7) days
prior to Closing and (b) Assignee shall assume all obligations of Buyer under
this Agreement, provided that Buyer shall remain jointly and severally liable
for all obligations under this Agreement, including, without limitation, payment
of the Purchase Price.
17.02 Limitation of Seller's Liability. No shareholders, partners or
members of any of the Selling Entities (except Seller as the stockholder of the
Corporation) nor any of their respective officers, directors, agents, employees,
heirs, successors or assigns shall have any personal liability of any kind or
nature for or by reason of any matter or thing whatsoever under, in connection
with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Buyer hereby waives for itself and anyone
who may claim by, through or under Buyer any and all rights to sue or recover on
account of any such alleged personal liability.
Notwithstanding anything set forth in this Agreement to the contrary, Buyer
agrees that the Selling Entities shall have no liability to Buyer for any breach
of Seller's covenants, agreements, representations or warranties hereunder or
under any other agreement, document, certificate or instrument delivered by
Seller to Buyer unless the valid claims for all such breaches collectively
aggregate more than Fifty Thousand and No/100 Dollars ($50,000), in which event
the full amount of such valid claims shall be actionable, up to the cap set
forth in the following sentence. Further, Buyer agrees that any recovery against
the Selling Entities for any breach of covenants, agreements, representations
and warranties hereunder or under any other agreement, document, certificate or
instrument delivered by the Selling Entities to Buyer, or under any law
applicable to the Property or this transaction, shall be limited to Buyer's
actual damages not in excess of Four Hundred Fifty Thousand and No/100 Dollars
($450,000.00) in the aggregate and that in no event shall Buyer be entitled to
seek or obtain any other damages of any kind, including, without limitation,
consequential, indirect or punitive damages.
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The foregoing limitation of liability shall not apply in the case of fraud or
intentional and material misrepresentation.
17.03 Integration. This Agreement embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein, and all prior agreements, understandings, representations and
statements, oral or written, are merged into this Agreement. Neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged
or terminated except by an instrument signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such instrument.
17.04 Governing Law. This Agreement shall be governed by, and construed in
accordance with the laws of the state in which the Property is located.
17.05 Captions. The captions in this Agreement are inserted for convenience
of reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions hereof.
17.06 Bind and Inure. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective, permitted successors
and assigns.
17.07 Drafts. This Agreement shall not be binding or effective until
properly executed and delivered by both Seller and Buyer. The delivery by Buyer
to Seller of an executed counterpart of this Agreement shall constitute an offer
which may be accepted by the delivery to Buyer of a duly executed counterpart of
this Agreement and the satisfaction of all conditions under which such offer is
made, but such offer may be revoked by Buyer by written notice given at any time
prior to such acceptance and satisfaction.
17.08 Number and Gender. As used in this Agreement, the masculine shall
include the feminine and neuter, the singular shall include the plural and the
plural shall include the singular, as the context may require.
17.09 Attachments. If the provisions of any schedule or rider to this
Agreement are inconsistent with the provisions of this Agreement, the provisions
of such schedule or rider shall prevail. The Schedules attached are hereby
incorporated as integral parts of this Agreement.
17.10 No Recording. Neither this Agreement nor any memorandum or short form
hereof shall be recorded or filed in any public land or other public records of
any jurisdiction, by either party and any attempt to do so may be treated by the
other party as a breach of this Agreement.
17.11 Time of the Essence. Time is of the essence with respect to this
Agreement, including but not limited to the occurrence of the Closing as of the
originally scheduled date.
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17.12 Property Information and Confidentiality. The Buyer agrees that,
prior to the Closing, all Property information furnished by Seller to Buyer or
discovered by Buyer shall be kept strictly confidential and shall not, without
the prior consent of the Seller, be disclosed by the Buyer or the Buyer's
representatives, in any manner whatsoever, in whole or in part, and will not be
used by the Buyer or the Buyer's representatives, directly or indirectly, for
any purpose other than evaluating the Property. Moreover, the Buyer agrees that,
prior to the Closing, such information will be transmitted only to the Buyer's
representatives (i) who need to know such information for the purpose of
evaluating the Property, and who are informed by the Buyer of the confidential
nature of such information and (ii) who agree to be bound by the terms of this
Section 17.12. The provisions of this Section 17.12 shall in no event apply to
information which is a matter of public record and shall not prevent Buyer from
complying with applicable laws, including, without limitation, governmental
regulatory disclosure, tax and reporting requirements.
17.13 Press Releases. The Buyer and Seller, for the benefit of each other,
hereby agree that between the date hereof and the Closing Date, they will not
release or cause or permit to be released any press notices, publicity (oral or
written) or advertising promotion relating to, or otherwise announce or disclose
or cause or permit to be announced or disclosed, in any manner whatsoever, the
terms, conditions or substance of this Agreement or the transactions
contemplated herein, without first obtaining the written consent of the other
party hereto. It is understood that the foregoing shall not preclude either
party from discussing the substance or any relevant details of the transactions
contemplated in this Agreement with any of its attorneys, accountants,
professional consultants or potential lenders, as the case may be, or prevent
either party hereto from complying with applicable laws, including, without
limitation, governmental regulatory, disclosure, tax and reporting requirements.
17.14 Return of Property Information. In the event this Agreement is
terminated, the Buyer and the Buyer's representatives shall promptly deliver to
the Seller all originals and copies of all information provided to Buyer to
Seller relating to the Property. Notwithstanding anything contained herein to
the contrary, in no event shall the Buyer be entitled to receive a return of the
Deposit or the accrued interest thereon, if any, if and when otherwise entitled
thereto pursuant to this Agreement until such time as the Buyer and the Buyer's
Representatives shall have performed the obligations contained in the preceding
sentence.
17.15 Tax-Free Exchange.
(a) Notwithstanding any terms in this Agreement to the contrary,
Seller and Buyer shall have the right to consummate the transactions
contemplated by this Agreement in a manner which qualifies as a
tax-deferred exchange, in whole or in part, under the provisions of Section
1031 of the Code, and the Treasury Regulations thereunder.
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(b) Buyer and Seller agree to cooperate with each other with respect
to any tax-deferred exchange pursuant to the provisions of Section 1031 of
the Code and the Treasury Regulations thereunder and to execute any and all
documents reasonably requested by the other party in connection therewith,
provided that (i) the cooperating party shall not incur additional costs or
expenses attributable to the exchange, including reasonable attorneys'
fees, deed excise taxes and recording fees; and (ii) the cooperating party
shall not be required to purchase any replacement property in connection
with any such deferred exchange (the "Replacement Property").
(c) Seller and Buyer acknowledge that the cooperating party shall not
be deemed the requesting party's agent in connection with any such
exchange. Seller and Buyer further acknowledge that all agreements in
connection with performing the exchange shall be prepared at the requesting
party's expense by the requesting party's counsel.
(d) Without limiting the foregoing, each of Seller and Buyer shall
have the right to transfer all or any portion of its interests under this
Agreement to a qualified intermediary (the "Intermediary") or Exchange
Accommodation Titleholder ("Exchange Accommodation Titleholder") in
accordance with the provisions of Section 1031 of the Code and the Treasury
Regulations thereunder.
(e) The terms and provisions of this Section 17.15 shall survive the
Closing.
17.16 Audit. The Seller 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 Exchanges Commission (the
"Commission") and any registration statement, report or disclosure statement
required to be filed with the Commission.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
SELLER ENTITIES:
FENTIL, INC., a Maryland corporation
WITNESS:
By: Krupp Realty Limited Partnership
- IV, a Massachusetts limited
________________________________ partnership, its sole shareholder
By: The Krupp Corporation, a
Massachusetts corporation,
its general partner
WITNESS:
________________________________ By:___________________________
Name:_________________________
Title:________________________
KRUPP REALTY LIMITED
PARTNERSHIP - IV, a Massachusetts
limited partnership
By: The Krupp Corporation, a
Massachusetts corporation, its
general partner
WITNESS:
________________________________ By:_________________________
Name:_______________________
Title:______________________
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BUYER:
WITNESS:
HOME PROPERTIES OF NEW YORK
L.P.
By: HOME PROPERTIES OF
________________________________ NEW YORK, INC.,
its general partner
By:______________________
Name:____________________
Title:___________________
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RECEIPT
The Purchase and Sale Agreement, has been received by the Escrow Agent on
this the _______ day of ______________, 2001, and the Escrow Agent acknowledges
the terms thereof and agrees to perform as Escrow Agent in accordance therewith.
ESCROW AGENT
LANDAMERICA TITLE INSURANCE
CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
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LIST OF SCHEDULES & EXHIBITS
Schedule A - Description of Land
Schedule B - Personal Property
Schedule C - Rent Roll
Schedule D - Service Contracts
Schedule E - Litigation
Schedule F - Liabilities
Exhibit A - Agreement to Hold Title
Exhibit B - Corporation's Tax Returns
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SCHEDULE E
None
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SCHEDULE F
None
A-33