EXHIBIT 10.4
DIVERSIFIED INVESTMENTS PORTFOLIO
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into as of the 8th day of December, 2003, by and among MHC OPERATING LIMITED
PARTNERSHIP (together with its affiliates, designees and assigns, the
"Purchaser"), an Illinois limited partnership having an address of Two North
Riverside Plaza, Suite 800, Chicago, Illinois 60606, DIVERSIFIED INVESTMENTS
SERVICES, LLC ("Diversified"), a Delaware limited liability company having an
address of 7625 Wisconsin Ave., Suite 150, Bethesda, Maryland 20814, and the
"Sellers"), each having an address of c/o Diversified Investments Services, LLC,
7625 Wisconsin Ave., Suite 150, Bethesda, Maryland 20814.
RECITALS:
A. Diversified directly or indirectly controls each of the
Sellers.
B. Diversified Investments - Shangri-La, Inc., a Delaware
corporation ("Shangri-La Inc.") owns the sole general partner interest and Tampa
Bay Communities, L.P., a Florida limited partnership ("Tampa Bay Communities")
owns the limited partner interest of Shangri-La Mobile Home Park, L.P., a
Delaware limited partnership ("Shangri-La LP"), registered in Florida as
Shangri-La Mobile Home Park of Largo, Ltd., which owns the development known as
"Shangri-La Mobile Home Park," containing 161 sites and located at 249 Jasper
Street, Largo, FL 33770, on the real property more particularly described on
Exhibit A-1 attached hereto and containing all of the property described in
Section 1(C) herein ("Shangri-La Property").
C. Diversified Investments - Terra Ceia, LLC, a Florida limited
liability company ("Terra Ceia Member") owns the sole membership interest of
Terra Ceia, LLC, a Florida limited liability company ("Terra Ceia LLC"), which
owns the development known as "Terra Ceia Village RV Resort," containing 203
sites and located at 9303 Highway 41 North, Palmetto, FL 34221, on the real
property more particularly described on Exhibit A-2 attached hereto and
containing all of the property described in Section 1(C) herein ("Terra Ceia
Property").
D. Diversified Investments - Southernaire, LLC, a Florida limited
liability company ("Southernaire Member") owns the sole membership interest of
Southernaire MHP, LLC, a Florida limited liability company ("Southernaire LLC"),
which owns the development known as "Southernaire Mobile Home Park," containing
107 sites and located at 1700 Sanford Road, Mt. Dora, FL 32757, on the real
property more particularly described on Exhibit A-3 attached hereto and
containing all of the property described in Section 1(C) herein ("Southernaire
Property").
E. Diversified Investments - Sixth Avenue, LLC, a Florida limited
liability company ("Sixth Avenue Member") owns the sole membership interest of
Sixth Avenue, LLC, a Florida limited liability company ("Sixth Avenue LLC"),
which owns the development known as "Sixth Avenue Mobile Home Park," containing
140 sites and located at 39345 6th Avenue East, Zephyrhills, FL 33540, on the
real property more particularly described on Exhibit A-4 attached
hereto and containing all of the property described in Section 1(C) herein
("Sixth Avenue Property").
F. Diversified Investments - Suni Sands, LLC, an Arizona limited
liability company ("Suni Sands Member") owns the sole membership interest of
Suni Sands, LLC, an Arizona limited liability company ("Suni Sands LLC"), which
owns the development known as "Suni Sands RV Park," containing 336 sites and
located at 1960 East 32nd Street, Yuma, AZ 85365, on the real property more
particularly described on Exhibit A-5 attached hereto and containing all of the
property described in Section 1(C) herein ("Suni Sands Property").
G. Diversified Investments - Cactus Gardens, LLC, an Arizona
limited liability company ("Cactus Gardens Managing Member") owns the sole
membership interest of Cactus Gardens RV, LLC, an Arizona limited liability
company ("Cactus Gardens LLC"), which owns the development known as "Cactus
Gardens," containing 430 sites and located at 10657 S. Avenue 9E, Yuma, AZ
85365, on the real property more particularly described on Exhibit A-6 attached
hereto and containing all of the property described in Section 1(C) herein
("Cactus Gardens Property").
H. Diversified Investments - Topics RVP, LLC, a Florida limited
liability company ("Topics Member") owns the sole membership interest of Topics
RVP, LLC, a Florida limited liability company ("Topics RVP LLC"), which,
together with Topics Kaplow, LLC, a Florida limited liability company and Topics
Filiault, LLC, a Florida limited liability company (together, "Topics TIC"), own
the development known as "Topics RV Park," containing 229 sites and located at
13063 County Line Road, Spring Hill, FL 34609, on the real property more
particularly described on Exhibit A-7 attached hereto and containing all of the
property described in Section 1(C) herein ("Topics Property").
I. Diversified Investments - Coachwood Colony MHP, LLC, a Florida
limited liability company ("Coachwood Member") owns the sole membership interest
of Coachwood Colony MHP, LLC, a Florida limited liability company ("Coachwood
LLC"), which owns the development known as "Coachwood Colony Mobile Home Park,"
containing 200 sites and located at 2610 W. Dogwood Place, Leesburg, FL 43748,
on the real property more particularly described on Exhibit A-8 attached hereto
and containing all of the property described in Section 1(C) herein ("Coachwood
Property").
J. Sierra Lakes, L.L.C., a Delaware limited liability company
("Sierra LLC") owns the sole membership interest of Waterway RV, LLC, a Delaware
limited liability company ("Waterway LLC"), which owns the development known as
"Waterway RV Park," containing 333 sites and located at Highway 24 & ICW, Cedar
Point, NC 28594, on the real property more particularly described on Exhibit A-9
attached hereto and containing all of the property described in Section 1(C)
herein ("Waterway Property").
K. Sierra LLC owns the sole membership interest of Desert
Paradise RV, LLC, an Arizona limited liability company ("Desert Paradise LLC"),
which owns the development known as "Desert Paradise RV Park," containing 262
sites and located at 10537 S. Ave. 9E, Yuma County, AZ, 85365 on the real
property more particularly described on Exhibit A-10 attached
2
hereto and containing all of the property described in Section 1(C) herein
("Desert Paradise Property").
L. Diversified Investments - GC, LLC, a North Carolina limited
liability company ("Goose Creek Member") owns the sole membership interest of
Goose CK, LLC, a North Carolina limited liability company ("Goose CK LLC"),
which, together with Artz Family, LLC, a North Carolina limited liability
company, Joseph F. Launie-Goose Creek, LLC, a North Carolina limited liability
company, and Frances A. Launie-Goose Creek, LLC, a North Carolina limited
liability company (collectively, "Goose Creek TIC") own the development known as
"Goose Creek Resort," containing 598 sites and located at 350 Red Barn Road,
Newport, NC 28570, on the real property more particularly described on Exhibit
A-11 attached hereto and containing all of the property described in Section
1(C) herein ("Goose Creek Property").
M. Shangri-La LP, Terra Ceia LLC, Southernaire LLC, Sixth Avenue
LLC, Suni Sands LLC, Cactus Gardens LLC, Topics RVP, LLC, Coachwood LLC,
Waterway LLC, Desert Paradise LLC and Goose CK LLC are sometimes referred to
hereinafter individually as a "Property Owner" or "Fee Seller" and collectively
as the "Property Owners" or "Fee Sellers". The partnership or membership
interests held by the Entity Sellers (as hereinafter defined) in the Property
Owners are sometimes referred to hereinafter individually as an "Equity
Interest" and collectively as the "Equity Interests". The Sellers owning Equity
Interests are sometimes referred to hereinafter individually as an "Entity
Seller" and collectively as the "Entity Sellers." The Entity Sellers, the Fee
Sellers, and Diversified are hereinafter referred to herein individually as a
"Seller" and collectively as the "Sellers."
N. The Shangri-La Property, the Terra Ceia Property, the
Southernaire Property, the Sixth Avenue Property, the Suni Sands Property, the
Cactus Gardens Property, the Topics Property, the Coachwood Property, the
Waterway Property, the Desert Paradise Property and the Goose Creek Property are
sometimes referred to hereinafter individually as an "Individual Property" and
collectively as the "Properties."
O. Each Entity Seller desires to sell to Purchaser, and Purchaser
desires to purchase from each Entity Seller, all of the Equity Interests owned
by such Entity Seller, upon and subject to the terms and conditions of this
Agreement.
THEREFORE, in consideration of and in reliance upon the above Recitals,
which by this reference are incorporated herein, the terms, covenants,
conditions and representations contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Diversified, the Sellers and Purchaser agree as follows:
1. PURCHASE AND SALE
A. Subject to the terms and conditions of this Agreement, each
Entity Seller hereby agrees to sell, assign, transfer, convey and deliver to
Purchaser, at the Closing (as such term is hereinafter defined), all of its
right, title and interest in and to all of the Equity Interests held by such
Entity Seller free and clear of all liens, claims and encumbrances. Purchaser,
in reliance
3
upon the representations and warranties of each Entity Seller contained herein
and on the terms and conditions herein set forth, hereby agrees to purchase the
Equity Interests from such Entity Seller at the Closing on the terms and
conditions set forth herein. If, in connection with Purchaser's financing of the
acquisition of any of the Equity Interests, (i) the applicable lender requires a
newly-formed entity to be the borrower, or (ii) Purchaser is required to deliver
to the lender a non-consolidation opinion from Purchaser's counsel with respect
to the applicable Property Owner and either (a) Purchaser's counsel is unable to
give such opinion because the Property Owner did not comply with the
"single-purpose covenants" required by Purchaser's lender with respect to the
period from its formation to the Closing or (b) the applicable Entity Seller
elects not to deliver an SPE Certificate (as such term is hereinafter defined),
Purchaser hereby agrees to purchase, and each applicable Property Owner agrees
to sell, all of the Individual Property owned by such Property Owner, upon and
subject to the terms and conditions of this Agreement in lieu of the purchase
and sale of Equity Interests, as described in the preceding sentence.
B. The Shangri-La Property, Terra Ceia Property, Southernaire
Property, Sixth Avenue Property, Suni Sands Property, Cactus Gardens Property,
Topics Property, Coachwood Property, Waterway Property, Desert Paradise
Property, and Goose Creek Property shall mean and include all of the respective
Property Owner's or Fee Seller's (as applicable) right, title and interest in
and to the following described property with respect to each Individual
Property:
(i) the real estate owned by such Property Owner or Fee
Seller described on Exhibits A-1 through A-11 attached to this
Agreement, respectively (as applicable with respect to each Individual
Property); together with all and singular the easements, covenants,
agreements, rights, privileges, tenements, hereditaments and
appurtenances thereunto now or hereafter belonging or appertaining (the
"Individual Tract of Land");
(ii) any land lying in the bed of any street, alley, road
or avenue (whether open, closed or proposed) within, in front of,
behind or otherwise adjoining the Individual Tract of Land or any of
it, any award made or to be made as a result of or in lieu of
condemnation affecting the Individual Property or any part thereof, and
any award for damage to the Individual Property or any part thereof by
reason of casualty (all of the foregoing being included within the term
"Individual Tract of Land");
(iii) all of the buildings, structures, fixtures,
facilities, installations and other improvements of every kind and
description now or hereafter in, on, over and under the Individual
Tract of Land, including, without limitation, any and all recreational
buildings, structures and facilities, plumbing, heating, ventilating,
air conditioning, mechanical, electrical and other utility systems,
water and sewage treatment plants and facilities (including wells and
septic systems), parking lots and facilities, landscaping, roadways,
sidewalks, swimming pools, security devices, signs and light fixtures,
which are not owned by tenants under the Individual Property Leases (as
such term is hereinafter defined) (collectively, the "Individual
Improvements") (the Individual Tract of Land and the Individual
Improvements being herein collectively referred to as the "Individual
Premises");
4
(iv) all manufactured homes, recreational vehicles and
park model homes (excluding the Inventory Homes, as such term is
hereinafter defined), furniture, furnishings, fixtures, equipment,
machinery, maintenance vehicles and equipment, tools, parts,
recreational equipment, carpeting, window treatments, office supplies
and equipment, and other tangible personal property of every kind and
description situated in, on, over or under the Individual Premises or
used in connection therewith which are not owned by tenants under the
Individual Property Leases, together with all replacements and
substitutions therefor (together with the items described in Section
1(C)(v) below and the Individual Intangible Personal Property described
in Section 1(C)(vi) below, collectively, the "Individual Personal
Property"), a substantially complete and accurate itemization of which
will be submitted to Purchaser pursuant to Section 8(A)(iii) below and
attached to this Agreement for each Individual Property as Exhibits B-1
through B-11, respectively;
(v) all existing surveys, blueprints, drawings, plans and
specifications (including, without limitation, structural, HVAC,
mechanical and plumbing, water and sewer plans and specifications),
construction drawings, soil tests, environmental reports, appraisals,
police reports, and other documentation for or with respect to the
Individual Property or any part thereof; all available tenant lists and
data, correspondence with past, present and prospective tenants,
vendors, suppliers, utility companies and other third parties,
stationery, brochures, booklets, manuals and promotional, marketing and
advertising materials concerning the Individual Property or any part
thereof; any declarations, by-laws, minute books and other materials
relating to any homeowners' association or similar organization
affecting the Individual Property, together with all supporting
documentation relating thereto; and such other existing books, records
and documents (including, without limitation, those relating to ad
valorem taxes and the Individual Property Leases) used in connection
with the operation of the Individual Property or any part thereof; and
(vi) the Individual Property Leases and the Individual
Property Service Contracts (as such term is hereinafter defined), and
all other intangible personal property used in connection with or
arising from the business now or hereafter conducted on or from the
Individual Property or any part thereof, including, without limitation,
claims, choses in action, lease and other contract rights, names and
telephone exchange numbers, reservation and contact lists, software,
web sites, goodwill, going-concern value, favorable ratings and
recommendations in national, regional and local trade publications and
the like (collectively, the "Individual Intangible Personal Property").
A summary of all current leases and other occupancy agreements
affecting the Individual Premises or any part thereof (collectively,
the "Individual Property Leases," with such summary being hereinafter
referred to as the "Individual Property Rent Roll"), including each
tenant's name, a description of the space leased, the amount of rent
due and the amount of any security deposit paid, the term of each
Individual Property Lease, and a description of any right to renew or
extend, will be submitted to Purchaser pursuant to Section 8(A)(i)
below, and will be attached to this Agreement for each Individual
Property as Exhibits C-1 through C-11, respectively. A list of all
employment, union, purchase, service and maintenance agreements,
equipment leases and any other
5
agreements, contracts, licenses and permits, including, without
limitation, cable television and satellite master antenna television
system agreements, affecting or pertaining in any way to the Individual
Property or any part thereof (collectively, the "Individual Property
Service Contracts") will be submitted to Purchaser pursuant to Section
8(A)(ii) below, and will be attached to this Agreement for each
Individual Property as Exhibits D-1 through D-11, respectively.
2. PURCHASE PRICE
The total consideration to be paid by Purchaser to the Sellers for the
Properties is Sixty-Seven Million Eight Hundred Thousand and 00/100 Dollars
($67,800,000.00) less an amount equal to fifty percent (50%) of the Defeasance
Costs (as hereinafter defined) subject to adjustment as set forth hereinafter
(the "Purchase Price"), which shall be paid as follows:
A. EARNEST MONEY. Within two (2) business days after execution of
a loan commitment by Purchaser meeting the terms set forth in Section 5.C.(v)
herein, Purchaser shall deliver to The Talon Group, a division of First American
Title Insurance Company, as escrowee ("Escrowee"), wire transferred Federal
funds in the sum of Six Hundred Thousand and 00/100 Dollars ($600,000.00)
(together with any and all interest earned thereon, net of investment costs, the
"Earnest Money"). If and as Purchaser directs, Escrowee shall invest the Earnest
Money in an interest bearing savings or money market account or short term U.S.
Treasury Bills or similar cash equivalent securities. If the transaction
contemplated by this Agreement closes in accordance with the provisions of this
Agreement, the Earnest Money shall be delivered by Escrowee to the Sellers as
payment toward the Purchase Price payable at the Closing. If the transaction
contemplated by this Agreement fails to close due to a default on the part of
any Seller or if a contingency set forth in this Agreement is not satisfied or
removed, Purchaser shall have the remedies provided in Section 11(A) below. If
the transaction contemplated by this Agreement fails to close due to a default
on the part of Purchaser, the Sellers shall have the remedies provided in
Section 11(B) below.
B. CASH BALANCE. At the Closing, Purchaser shall pay to the
Sellers the Purchase Price, less the Earnest Money, such net amount to be paid
by wire transferred Federal funds, subject, however, to such adjustments and
prorations as are required pursuant to this Agreement (such amount, as adjusted,
is hereinafter referred to as the "Cash Balance").
C. ALLOCATION OF PURCHASE PRICE. The Sellers acknowledge and
agree that Purchaser is acquiring the Properties and the Equity Interests as a
portfolio acquisition (the "Portfolio") and the parties have not determined
individual purchase prices for each of the Properties or the Equity Interests.
The Sellers may, as to themselves, allocate the Purchase Price to each Seller
based on the Sellers' valuations.
D. INVENTORY HOMES. At the Closing, Purchaser or its designee
shall acquire from Diversified or the Seller, as applicable, the inventory of
manufactured homes, recreational vehicles and park model homes held for sale by
Diversified at each Individual Property (the "Inventory Homes"). Purchaser shall
pay to Diversified at the Closing, as additional consideration, an amount equal
to Diversified's cost of acquisition of the Inventory Homes,
6
together with the cost of any permanent improvement or addition thereto,
(provided said homes are not leased as of the Closing Date) located at the
applicable Individual Property and owned by Diversified as of the Closing (which
in no event shall include any of Diversified's cost of labor, management fees or
holding costs of any kind, such as interest, which may relate to the Inventory
Homes). Purchaser and Diversified shall agree upon the calculation of the cost
of the Inventory Homes on or before the expiration of the Inspection Period.
Diversified shall convey title to the Inventory Homes via bill of sale and such
other evidence of conveyance of title as may be reasonably necessary to vest
good and indefeasible title in and to the Inventory Homes in Purchaser or
Purchaser's designee, including the original certificate of title and/or
manufacturer's statement of origin for each such Inventory Home (properly
endorsed). The Inventory Homes shall be in good condition and repair as of the
Closing Date. Notwithstanding anything to the contrary contained herein,
Diversified shall use commercially reasonable efforts to sell all of the
Inventory Homes at each Individual Property prior to the Closing, and in no
event shall Purchaser or Purchaser's designee be required to purchase Inventory
Homes, the cost of which exceeds Three Hundred Thousand and No/100 Dollars
($300,000.00) in the aggregate ("Inventory Home Cap"). Purchaser shall receive
at the Closing an assignment of any deposits held by Diversified for any
Inventory Home for which a sale contract is in effect on the Closing Date,
together with an assignment of Diversified's rights under any such sale
contracts. Notwithstanding anything contained herein to the contrary, at the
Closing, Purchaser or its designee shall receive title to all of the Inventory
Homes located at the Topic's Property, the Desert Paradise Property and the Suni
Sands Property ("Rental Home Properties"), but Purchaser shall pay for said
Inventory Homes after the Closing as follows: on the "Rental Home Test Date" (as
hereinafter defined) Purchaser or its designee shall pay to Diversified or the
Seller, as applicable, the cost for such Inventory Homes located at the Rental
Home Properties for which Purchaser has not executed "Rental Home Agreements"
(as herein after defined) subject to the Inventory Home Cap.
3. OPERATION OF PROPERTIES THROUGH CLOSING
From the date of this Agreement through the Closing, except as
otherwise specifically provided in this Agreement, each Seller or Property Owner
shall, with respect to the Individual Property directly or indirectly owned by
such Seller or Property Owner:
A. not sell, mortgage, pledge, hypothecate or otherwise transfer
or dispose of all or any part of the Individual Property or any interest therein
(other than disposal of items in the ordinary course of business provided such
items are replaced with comparable items), nor initiate, consent to, approve or
otherwise take any action with respect to zoning or any other governmental rules
or regulations applicable to all or any part of the Individual Property as of
the date of this Agreement;
B. neither take any action nor omit to take any action which
would render or allow any matter to be recorded against title to the Individual
Property or cause such title to be nonconforming to the requirements of this
Agreement without the prior written consent of Purchaser, which shall not be
unreasonably withheld;
7
C. provide Purchaser, upon reasonable prior oral notice, such
access to the Individual Property as is reasonably necessary for it to inspect
the same to assure that the applicable Seller or Property Owner is complying
with the requirements of this Section 3;
D. promptly deliver to Purchaser (i) copies of any operating
statements for the Individual Property which come into its possession or control
for any period(s) including the period between the date of this Agreement and
the Closing Date, and (ii) written notice of the occurrence of any event which
affects the truth or accuracy of any representations or warranties made or to be
made by the Sellers (or any of them) under or pursuant to this Agreement;
E. comply in all material respects with all laws, ordinances,
rules and regulations of any government, or any agency, body or subdivision
thereof, to the extent complied with by prudent owners of properties similar to
the Individual Property, and all agreements, covenants, conditions, easements
and restrictions, relating to the Individual Property;
F. maintain in full force and effect all insurance coverages for
the Individual Property in effect as of the date of this Agreement;
G. comply in all material respects with all covenants, conditions
and agreements set forth in the Existing Loan Documents (as such term is
hereinafter defined) and any and all other documents and instruments evidencing
or securing the Existing Loan Documents and promptly deliver to Purchaser copies
of any notices from any lender delivered to any Seller or Property Owner, as
applicable, relating to the Existing Loan Documents, including, without
limitation, any and all notices of default and copies of any notices from any
Seller or Property Owner to any lender relating to the Existing Loan Documents.
Each Seller shall take all action necessary to defease, in a timely manner, any
such loans that do not permit prepayment; and
H. operate, maintain and lease the Individual Property in a
manner consistent with the manner in which the applicable Seller or Property
Owner has operated and maintained the Individual Property prior to the date of
this Agreement; provided, however, that, except as set forth on Exhibit F
attached hereto, rental rates at the Individual Property shall not be modified
from the rates in effect on the date of this Agreement without Purchaser's prior
written consent, which shall not be unreasonably withheld.
4. STATUS OF TITLE TO PROPERTY
A. STATE OF TITLE. At the Closing, each Fee Seller shall, with
respect to its Individual Premises, convey to Purchaser or Purchaser's designee
the entire fee simple estate in and to the Individual Premises by a recordable
general warranty deed, subject only to: (i) matters of record and those
covenants, conditions and restrictions which are reviewed and approved by
Purchaser pursuant to Section 4(B) below as to each Individual Premises, (ii)
rights of tenants under the Individual Property Leases, as tenants only, and
rights of other occupants pursuant to written occupancy or lease agreements, as
tenants only, (iii) the lien of general real estate taxes for the year in which
the Closing occurs and subsequent years, not yet due or payable, and (iv)
matters shown on the Survey for such Individual Premises (the above enumerated
exceptions being hereinafter collectively referred to as the "Permitted
Exceptions").
8
B. PRELIMINARY EVIDENCE OF TITLE. The following documents
evidencing the condition of each Property Owner's title to the Individual
Property owned by such Property Owner shall be obtained as follows:
(i) Purchaser shall obtain a commitment (the "Title
Commitment") for an ALTA Form B (1970) Owner's Title Insurance Policy
(or at Purchaser's option a date down endorsement to the Property
Owner's current owner's title insurance policy) proposing to insure
Purchaser or Purchaser's designee and committing to insure title to the
Individual Premises in the amount of the allocable portion of the
Purchase Price attributable to such Individual Premises, issued through
the national office of First American Title Insurance Company (the
"Title Insurer") designated by Purchaser, in coordination with the
Title Insurer's local agency (if applicable), and irrevocable for at
least nine (9) months. The Title Commitment shall show fee simple title
to the Individual Premises in the applicable Property Owner. The
Owner's Title Insurance Policy to be issued to Purchaser at the Closing
shall contain (to the extent applicable and available) an extended
coverage endorsement over the so-called general or standard exceptions
which are a part of the printed form of the policy, a Florida Form 9
endorsement, an ALTA Form 3.1 zoning endorsement (including coverage as
to parking), an access endorsement, coverage insuring any easements for
utilities servicing the Individual Premises that do not connect to the
Individual Premises from a public street, an endorsement over or waiver
of any creditors' rights exclusion or exception, an endorsement which
keeps the policy in effect notwithstanding a technical dissolution of
the applicable Property Owner, a non-imputation endorsement with
respect to the applicable Property Owner, if available, and such other
endorsements as counsel for Purchaser shall reasonably deem
appropriate. In the event that said non-imputation endorsement is not
available in the state in which an Individual Property is located, the
applicable Property Owner shall deliver to Purchaser a Non-Imputation
Affidavit in the form attached hereto as Exhibit W (the "Non-Imputation
Affidavit"). The Owner's Title Insurance Policy for each Individual
Property located in Florida may, if applicable, contain an exception
for the rights of tenants under Section 723.071, Florida Statutes, with
respect to any subsequent sale of such Individual Premises.
(ii) Within fifteen (15) days after the date of this
Agreement, the Sellers shall furnish to Purchaser written results of
searches (the "UCC Searches") conducted by a company reasonably
acceptable to Purchaser of the records of the County Recorder of the
County and Secretary of State of the State in which the Individual
Property is located and the state in which each Seller was formed and
the state in which each Property Owner was formed for Uniform
Commercial Code ("UCC") financing statements, tax liens, judgments and
the like in the name of the applicable Seller and Property Owner, the
Individual Property and any other name or location reasonably requested
by Purchaser, effective as of a date after the date of this Agreement.
(iii) Purchaser shall obtain legible copies of all
documents of record referred to in the Title Commitment or disclosed by
the UCC Searches. Within fifteen (15) days after the date of this
Agreement, the Sellers shall furnish to Purchaser all other documents
9
evidencing or, to the extent in the possession or control of the
Sellers, relating to, matters reflected in the Title Commitment or the
UCC Searches.
(iv) Purchaser shall obtain, at Purchaser's expense, a
current plat of survey or update of an existing survey (the "Survey")
of the Individual Premises dated after the date of this Agreement,
certified to the applicable Property Owner, Purchaser or Purchaser's
designee, the Title Insurer and Diversified (and such other persons or
entities as Purchaser may designate) by a surveyor registered in the
State in which the Individual Premises are located as having been
prepared (a) in accordance with the "Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys", as jointly established
and adopted by the American Land Title Association ("ALTA") and the
American Congress on Surveying and Mapping ("ACSM") in 1999, and
including items 1 through 13 of Table A thereof, and (b) pursuant to
the Accuracy Standards (as adopted by ALTA and ACSM and in effect on
the date of such certification) of an "Urban" Survey (as defined
therein). The Survey shall also contain the surveyor's certification
whether the Individual Premises are located in any area designated by
any governmental agency or authority as being a flood-prone or
flood-risk area (whether pursuant to the Flood Disaster Act of 1973, as
amended, or otherwise), and whether the requirements of the National
Flood Insurance Program are applicable to the Individual Premises.
C. TITLE DEFECTS. If the Title Commitment, the UCC Searches or
the Survey (or any revision or update of any of them) with respect to any
Individual Property discloses exceptions to title other than Permitted
Exceptions or any other matter which does not conform to the requirements of
this Agreement, Purchaser shall so notify the Sellers within fifteen (15)
business days of Purchaser's receipt of all of the Title Commitments (including
copies of all of the documents referenced in said Title Commitments), UCC
Searches and Survey for each Individual Property and the Sellers shall have five
(5) business days to agree to have each such unpermitted exception to title
removed or correct each such other matter, in each case to the satisfaction of
Purchaser, on or before the Closing Date. If the Sellers do not agree to remove
or correct any such exception or other matter within the time specified or the
applicable Sellers fail to have each such unpermitted exception removed or
correct each such other matter as aforesaid, Purchaser may, at its option,
either (i) terminate this Agreement upon written notice to the Sellers and
immediately receive from Escrowee the Earnest Money, in which event this
Agreement, without further action of the parties, shall become null and void and
no party shall have any further rights or obligations under this Agreement, or
(ii) elect to accept title to the Individual Property as it then is with the
right to deduct from the Purchase Price a sum equal to the amount required to
discharge liens or encumbrances of a definite or ascertainable amount. If
Purchaser fails to make either such election, Purchaser shall be deemed to have
elected option (i) above. The rights and remedies of Purchaser set forth in this
Section 4(C) shall be the exclusive rights and remedies available to Purchaser
with respect to unpermitted exceptions to title.
5. CLOSING
A. CLOSING DATES. The closing ("Closing") of the transaction
contemplated by this Agreement (i.e., the payment of the Purchase Price, the
transfer and assignment of the Equity Interests, the transfer of title to the
applicable Individual Properties (if applicable), and the
10
satisfaction of all other terms and conditions of this Agreement) shall be
consummated at the office of Purchaser on or before January 31, 2004 (the
"Closing Date"); provided, however, that the Closing Date may be accelerated or
delayed upon the parties' mutual written agreement. Notwithstanding anything
contained herein to the contrary, and subject to the provisions of Section 5C(v)
below, (i) the Closing Date for the Cactus Gardens Property shall occur upon a
date which is mutually agreed upon by the parties hereto but which is after the
expiration or waiver of the defeasance lockout period for the mortgage loan
encumbering such property, but in no event earlier than January 31, 2004 or
later than May 15, 2004, (ii) in such event the Purchase Price allocated to the
Cactus Gardens Property shall be $7,725,141, and (iii) an allocable portion of
the Earnest Money based on Purchase Price allocations shall be held back as
Earnest Money for the Cactus Gardens Closing. If the date of Closing above
provided for falls on a Saturday, Sunday or legal holiday, the Closing Date
shall take place on the next business day.
B. CLOSING DOCUMENTS.
(i) Entity Sellers. At the Closing, each Entity Seller
shall deliver to Purchaser the following items (the "Transaction
Documents") (each in form and substance reasonably acceptable to
Purchaser, if not attached to this Agreement as an Exhibit and executed
[if necessary] by such Entity Seller):
(a) an assignment and assumption agreement
substantially in the form attached hereto as Exhibit R,
pursuant to which (i) such Entity Seller transfers its Equity
Interest to Purchaser and (ii) Purchaser assumes all
obligations of such Entity Seller in the applicable Property
Owner in accordance with the terms of the partnership
agreement or operating agreement (as applicable) of such
Property Owner;
(b) evidence of the "Consents and Approvals" (as
such term is hereinafter defined) required to transfer the
Equity Interests to Purchaser and to otherwise consummate the
transactions contemplated hereunder;
(c) a copy of resolutions of the board of
directors or similar governing body of each managing member or
general partner (as applicable) of each Entity Seller,
certified by an officer thereof as duly adopted and in full
force and effect, authorizing execution and delivery of this
Agreement and all documents contemplated herein to which such
Entity Seller is a party and performance by such Entity Seller
of the transactions contemplated hereunder;
(d) resignations of all managers, managing
members, general partners, officers and/or directors (as
applicable) of the applicable Property Owner;
(e) a good standing certificate for the
applicable Property Owner issued not more than ten (10) days
prior to the Closing Date by the Secretary of State of the
state of organization of such Property Owner;
(f) an opinion of counsel for such Entity Seller
in the form attached hereto as Exhibit P;
11
(g) if Purchaser is required to deliver a
non-consolidation opinion in connection with the financing of
the acquisition of the Equity Interests, a certificate
containing certain representations, warranties and covenants
required in order for Purchaser to deliver said
non-consolidation opinion (the "SPE Certificate");
(h) each of the items set forth in Sections
5(B)(ii)(d), 5(B)(ii)(e), 5(B)(ii)(g), 5(B)(ii)(j),
5(B)(ii)(l), 5(B)(ii)(n) and 5(B)(ii)(o) below and a rent roll
for the Individual Property certified by the general partner
or managing member (as applicable) of the Property Owner as
being true, complete and correct, in each case with respect to
the Individual Property owned by the applicable Property Owner
in which Purchaser is purchasing the Equity Interests; and
(i) all of the books and records of each
Property Owner in which Purchaser is purchasing the Equity
Interests.
(ii) Fee Sellers. If applicable, at the Closing, each Fee
Seller shall deliver to Purchaser the following original items with
respect to the Individual Property owned by such Fee Seller (each in
form and substance reasonably acceptable to Purchaser, if not attached
to this Agreement as an Exhibit, and executed (if necessary) by such
Seller):
(a) a general warranty deed in substantially the
form of Exhibit G attached hereto, subject only to the
Permitted Exceptions, sufficient to transfer and convey to
Purchaser or Purchaser's designee fee simple title to the
Individual Premises as required by this Agreement, and
otherwise in form acceptable to the Title Insurer;
(b) a bill of sale in substantially the form of
Exhibit H attached hereto sufficient to transfer to Purchaser
or Purchaser's designee title to the tangible Individual
Personal Property and containing appropriate warranties of
title as required by this Agreement;
(c) a letter in substantially the form of
Exhibit I attached hereto, advising tenants under the
Individual Property Leases of the change in ownership and
management of the Individual Property and directing them to
pay rent to Purchaser or as Purchaser may direct, together
with a letter in substantially the form of Exhibit J attached
hereto advising vendors and other third parties of the change
in ownership and management of the Property;
(d) any and all affidavits, certificates or
other documents required by the Title Insurer in order to
cause it to issue at the Closing the Owner's Title Insurance
Policy (or marked-up commitment therefor) in the form and
condition required by this Agreement;
(e) evidence of the termination of the
applicable management agreement and any manufactured home,
recreational vehicle or park model home sale brokerage
agreements;
12
(f) an assignment in substantially the form of
Exhibit K attached hereto of the Individual Property Leases
(including an updated Individual Property Rent Roll certified
by such Fee Seller as of the Closing Date as being true,
accurate and complete), and all security deposits thereunder,
and an assignment in substantially the form of Exhibit L
attached hereto of the Individual Property Service Contracts,
and the other items of Individual Intangible Personal Property
referred to in Section 1(C)(vi) above;
(g) all of the original Individual Property
Leases, all written Individual Property Service Contracts
assigned to Purchaser, and any and all building plans,
surveys, site plans, engineering plans and studies, utility
plans, landscaping plans, development plans, blueprints,
specifications and drawings, construction drawings, soil
tests, environmental reports and other documentation
concerning all or any part of the Individual Property and in
the possession or control of such Seller, and all keys for the
Individual Property;
(h) [Intentionally Omitted];
(i) any bonds, warranties or guaranties which
are in any way applicable to the Individual Property or any
part thereof;
(j) an appropriate assignment and/or bill of
sale, together with certificates of title or manufacturer's
statements of origin, for any Inventory Homes located at the
Individual Property to be acquired by Purchaser hereunder,
executed by the applicable Seller which owns said Inventory
Homes;
(k) as applicable, a corporate resolution or
partner consent authorizing the sale of the Individual
Property to Purchaser and the execution of the documents to be
delivered at the Closing, a certificate of good standing, a
certified copy of the articles of incorporation and by-laws
and a certificate of incumbency certifying the titles and
signatures of the corporate officers, managers or partners
authorized to consummate the transaction contemplated by this
Agreement on behalf of such Seller, a certified copy of such
Seller's partnership agreement or limited liability company
agreement and/or such other evidence of such Seller's power
and authority as Purchaser may reasonably request;
(l) such Seller's affidavit stating, under
penalty of perjury, such Seller's U.S. Taxpayer Identification
Number and that such Seller is not a "foreign person" within
the meaning of Section 1445 of the Internal Revenue Code (the
"Code");
(m) transfer tax returns as required by
applicable law (including, without limitation, a Florida
Department of Revenue Form DR-219 with respect to each
Individual Property located in Florida);
(n) all other necessary or appropriate documents
as are necessary for such Seller to comply with its
obligations under this Agreement, or as reasonably
13
required by Purchaser or the Title Insurer in order to perfect
the conveyance, transfer and assignment of the Individual
Property to Purchaser or Purchaser's designee (including,
without limitation, the currently effective certificate(s) of
occupancy for the Individual Property, to the extent
available);
(o) an affidavit or other statement, in form and
substance acceptable to Purchaser and the Title Insurer, which
satisfies the requirements of any applicable statute of the
state in which the Individual Property is located (if any)
which is substantially similar to the requirements of Florida
Statutes, Section 723.072; and
(p) an assignment from the appropriate Seller in
form acceptable to Purchaser of any existing contracts for the
sale of Inventory Homes which pertain to any Inventory Homes
located at the Individual Property owned by said Seller to be
acquired by Purchaser hereunder.
(iii) Purchaser. Purchaser shall deliver or cause to be
delivered to the Sellers at the Closing the Cash Balance payable at the
Closing as required pursuant to Section 2(C) above and execute and
deliver to the Sellers at the Closing such documents listed above which
call for Purchaser's execution.
C. CLOSING PRORATIONS AND ADJUSTMENTS.
(i) A statement of prorations and adjustments shall be
prepared by Purchaser in conformity with the provisions of this
Agreement and submitted to the applicable Seller for each Individual
Property for review not less than three (3) days prior to the Closing
Date. For purposes of prorations, Purchaser shall be deemed the owner
of the applicable Individual Property on the Closing Date. In addition
to prorations and adjustments that may otherwise be provided for in
this Agreement, the following items shall be prorated or adjusted (as
the case requires) with respect to the Individual Property as of the
Closing Date:
(a) real estate and personal property taxes and
assessments (if the amount of taxes or assessments for the
year in question is not known, then the same shall be prorated
on the basis of the most recent ascertainable bill(s);
(b) rents paid under the Individual Property
Leases for the calendar month during which the Closing occurs,
and the amount of any rents paid to the applicable Property
Owner which are applicable to the period subsequent to the
calendar month during which the Closing occurs. However, no
prorations shall be made for delinquent lot rental amounts or
other charges existing as of the Closing. Rents and other
charges which at the Closing are unpaid or past due
(hereinafter "Delinquent Rents") shall not be prorated. The
applicable Property Owner shall not take any action against
tenants to collect Delinquent Rents. For ninety (90) days
after the Closing, Purchaser shall use reasonable efforts to
collect Delinquent Rents, but such undertaking shall not be
deemed to obligate Purchaser to expend any funds or institute
any legal proceedings of any nature. Rents and other
14
amounts received by Purchaser or the applicable Property Owner
after the Closing from a tenant owing Delinquent Rents shall
be applied, on a tenant by tenant basis: (i) first, to all of
Purchaser's costs of collection incurred with respect to
Delinquent Rents (including reasonable attorneys' fees and
costs); (ii) second, to rents due for the month in which such
payment is received by Purchaser; (iii) third, to rents
attributable to any period after the Closing which are past
due on the date of receipt; and (iv) fourth, to Delinquent
Rents. For the purpose of the foregoing application of rents,
rents received from tenants that are not delinquent shall not
be applied to or commingled with Delinquent Rents. The
applicable Property Owner shall promptly remit to Purchaser
any sums received by such party from tenants after the Closing
for application (if applicable) to Delinquent Rents by
Purchaser in the manner provided above. Purchaser shall
promptly remit to the applicable Property Owner any amounts
due such party on account of Delinquent Rents after
application of rents in the manner provided above;
(c) the full amount of the security and other
deposits paid under the Individual Property Leases, together
with interest thereon if required by law or otherwise;
(d) water, electric, telephone and all other
utility and fuel charges, fuel on hand (at cost plus sales
tax) and any deposits with utility companies (to the extent
possible, utility prorations shall be handled by meter
readings on the Closing Date);
(e) amounts due and prepayments under the
Individual Property Service Contracts being assumed by
Purchaser;
(f) assignable license and permit fees; and
(g) other expenses of operation and similar
items.
Any proration which must be estimated at the Closing (including real
estate taxes and personal property taxes) shall be reprorated and
finally adjusted within ninety (90) days after the Closing Date (or,
with respect to the real estate and personal property taxes, within
thirty (30) days after receipt of the applicable tax bill), otherwise
all prorations shall be final.
(ii) Notwithstanding anything to the contrary contained in
this Agreement, each Seller shall be responsible for, or shall cause
the applicable Property Owner or Diversified to be responsible for,
and, at or prior to the Closing, shall pay all amounts due through the
Closing for employees' salaries, vacation pay, withholding and payroll
taxes, and other compensation and benefits, and any management fee
affecting the Individual Property. If and to the extent such Seller has
not paid or caused to be paid all such amounts as of the Closing,
Purchaser shall receive a credit against the Cash Balance payable at
the Closing in an amount equal to the amount not so paid. If and as
requested by Purchaser, each Seller shall terminate or cause to be
terminated as of the Closing the
15
employment of all employees who work at the Individual Property. The
Sellers shall indemnify and hold Purchaser harmless from and against
any and all obligations and other matters relative to any terminated
employees and, with respect to any employees not terminated, applicable
to the period prior to the Closing, including attorneys' fees incurred
by Purchaser in connection therewith.
(iii) Purchaser shall receive a credit against the Purchase
Price for each dollar of "New Cactus Gardens Value" not generated by
the Fee Seller of the Cactus Gardens Property from the date hereof
through the Closing Date for such property. "New Cactus Gardens Value"
shall mean (a) the number of new rental agreements executed at the
Cactus Gardens Property from and after the date hereof for a term
encompassing the entire season at the Cactus Gardens Property (which
number of new agreements shall not exceed five (5) and shall be reduced
on an agreement-for-agreement basis to the extent any of the 277 rental
agreements which are in full force and effect for the entire season at
the Cactus Gardens Property as of the date hereof is no longer in full
force and effect or a viable tenancy as a result of the tenant not
arriving at the property to honor such rental agreement as of the
Closing Date), (b) multiplied by the net rental income provided for in
such rental agreement, (c) divided by 0.0762; provided, however, in no
event shall New Cactus Gardens Value exceed $103,346. For example, if
the amount of New Cactus Gardens Value equals $100,000, Purchaser would
receive a credit equal to $3,346.
(iv) Purchaser shall receive a credit against the Purchase
Price for each dollar of "New Desert Paradise Value" not generated by
the Fee Owner of the Desert Paradise Property from the date hereof
through the Closing Date for such property. "New Desert Paradise Value"
shall mean (a) the number of new rental agreements executed at the
Cactus Gardens Property from and after the date hereof for a term
encompassing the entire season at the Desert Paradise Property (which
number of new rental agreements shall not exceed ten (10) and shall be
reduced on an agreement-for-agreement basis to the extent any of the 67
agreements which are in full force and effect for the entire season at
the Desert Paradise Property as of the date hereof is no longer in full
force and effect or a viable tenancy as a result of the tenant not
arriving at the property to honor such agreement as of the Closing
Date), (b) multiplied by the net rental income provided for in such
agreement, (c) divided by 0.0742; provided, however, in no event shall
New Desert Paradise Value exceed $212,264. For example, if the amount
of New Desert Paradise Value equals $210,000, Purchaser would receive a
credit equal to $2,264.
(v) Purchaser and Sellers have received a preliminary
indication that the loan proceeds that will be made available in
connection with the financing of all of the Individual Properties,
other than the Cactus Gardens Property, will be no less than
approximately $41,770,000 based on a 10 year maturity date with an
interest rate below 6.0% per annum. Following the execution of this
Agreement, Purchaser shall enter into a loan commitment with a mortgage
lender selected by Purchaser except that Purchaser agrees to give prior
notice to Sellers of the identity of the mortgage lender and agrees to
enter into consultation regarding such selection with Sellers. To the
extent that loan proceeds made available by the mortgage lender
selected in accordance with the terms above for the Cactus Gardens
Property is materially less than $5,050,000 due to the net
16
operating income from such property not supporting such loan amount,
Purchaser shall receive a credit against the Purchase Price allocated
to the Cactus Garden Property in an amount equal to the amount by which
said loan proceeds are less than $5,050,000. For example, if such loan
proceeds equal $5,000,000, Purchaser will receive a credit against the
Purchase Price equal to $50,000. In the event such loan proceeds are
materially less than $5,050,000 due to other reasons, Diversified may
elect to proceed with the sale, in which case Purchaser shall receive
the credit against the Purchase Price described above, or elect to form
a joint venture with Purchaser (with Purchaser owning a 25% interest of
the equity and on terms generally set forth in that certain letter
agreement of even date hereof between Diversified and Purchaser) for
the acquisition of the Cactus Gardens Property based on a value of the
Cactus Gardens Property of $7,350,000, which transaction is subject to
Purchaser obtaining adequate financing satisfactory to Purchaser for
the acquisition of such interest. In the event Diversified elects to
form the joint venture and Purchaser does not obtain such financing,
Purchaser shall have no obligation to purchase or form a joint venture
with respect to such property.
D. CLOSING COSTS. Purchaser shall be responsible for its own
legal fees, as well as all fees associated with Purchaser's environmental and
engineering inspections, costs of Surveys, and one-half of the following
expenses (collectively, the "Shared Expenses"): transfer taxes, recording fees,
deed recording costs, stamp taxes, intangible taxes, costs of the Title
Commitments and Owner's Title Insurance Policies, escrow and other closing
costs. The Sellers shall be responsible for their own legal fees, as well as
one-half of the Shared Expenses. Purchaser shall be responsible for one hundred
percent (100%) of, any costs and expenses incurred in connection with the
prepayment or defeasance of the loan currently encumbering the Properties,
including, without limitation, the lender's attorney fees ("Defeasance Costs").
E. POSSESSION. Upon consummation of the Closing, each Seller
shall deliver to Purchaser full and complete possession of the Individual
Property owned by such Seller, subject only to the rights of tenants under the
Individual Property Leases and the rights of any lessee under any common area
laundry lease.
6. CASUALTY LOSS AND CONDEMNATION
If, prior to the Closing, any Individual Property (or any part thereof)
shall be condemned, or destroyed or materially damaged by fire or other casualty
(that is, damage or destruction in excess of Five Hundred Thousand and 00/100
Dollars [$500,000.00]), the Sellers shall immediately so notify Purchaser and
Purchaser shall have the option either to terminate this Agreement upon written
notice to the Sellers or to consummate the transaction contemplated by this
Agreement notwithstanding such condemnation, destruction or material damage. If
Purchaser elects to consummate the transaction contemplated by this Agreement,
Purchaser shall be entitled to receive the condemnation proceeds or settle the
loss under all policies of insurance applicable to the destruction or damage and
receive the proceeds of insurance applicable thereto, and the applicable Seller
shall, at the Closing and thereafter as necessary, execute or cause to be
executed and deliver to Purchaser all required proofs of loss, assignments of
claims and other similar items. If Purchaser elects to terminate this Agreement,
the Earnest Money shall be returned to Purchaser by Escrowee, in which event
this Agreement shall, without further action
17
of the parties, become null and void and no party shall have any further rights
or obligations under this Agreement. If there is any other damage or destruction
(that is, damage or destruction of Five Hundred Thousand and 00/100 Dollars
[$500,000.00] or less) to the Individual Property or any part thereof, the
applicable Seller shall either repair such damage prior to the Closing or, at
Purchaser's option, assign all insurance claims pertaining to such damage or
destruction to Purchaser by executing or causing to be executed and delivering
to Purchaser at the Closing and thereafter as necessary all required proofs of
loss, assignments of claims and other similar items, or allow Purchaser a credit
against the allocable portion of the Cash Balance payable at the Closing in an
amount equal to the reasonably estimated cost of repair. If Purchaser elects to
take an assignment of all insurance claims as aforesaid, Purchaser shall receive
at the Closing a credit against the allocable portion of the Cash Balance
payable at the Closing in an amount equal to any deductible(s) and uninsured
amounts applicable thereto.
7. REPRESENTATIONS AND WARRANTIES OF SELLERS
A. Each Seller, with respect to the Individual Property owned by
such Seller (if applicable) or the Property Owner in which such Seller owns
Equity Interests, represents and warrants to Purchaser that the following are
true, complete and correct as of the date of this Agreement:
(i) There is no material action, proceeding or
investigation pending or, to the applicable Seller's knowledge,
threatened against the applicable Seller, the Property Owner or the
Individual Property before any court or governmental department,
commission, board, agency or instrumentality, and the applicable Seller
does not know of any basis for any such action, proceeding or
investigation.
(ii) The applicable Seller has not received from any
governmental authority any notice of any material violation of any
zoning, building, fire or health code or any other law, ordinance, rule
or regulation applicable to the Individual Property, or any part
thereof, of which Purchaser has not been notified.
(iii) The applicable Seller is duly organized, validly
existing, qualified and empowered to conduct its business, and has full
power and authority to enter into and fully perform and comply with the
terms of this Agreement. Neither the execution and delivery of this
Agreement nor its performance will conflict with or result in the
breach of any contract, agreement, law, ordinance, rule or regulation
to which the Seller is a party or by which the Seller is bound, or give
rise to a right, not waived on or before the Closing, to accelerate the
maturity of an obligation secured by the applicable existing financing
which encumbers any of the Individual Properties.
(iv) To the applicable Seller's knowledge, without
independent inquiry or investigation, there is no plan, study or effort
by any governmental authority or agency which in any way affects or
would affect the present use or zoning of the Individual Property, and
there is no existing, proposed or contemplated plan to widen, modify or
realign any street or highway or any existing, proposed or contemplated
eminent domain proceedings that would affect the Individual Property in
any way whatsoever.
18
(v) Exhibits C-1 through C-11, respectively (as
applicable), describe all existing Individual Property Leases, and are
true, complete and correct. Each of the Individual Property Leases is
in effect, was the result of arm's-length negotiation, and the rights
of each lessee thereunder are as tenants only. No commissions to any
broker or leasing agent are due or will become due on account of any of
the Individual Property Leases or upon extension or renewal of the
original term thereof or upon the leasing of additional space at the
Individual Property, whether or not pursuant to an option contained in
such Individual Property Lease.
(vi) With respect to the Individual Property or any part
thereof, there are no unpaid taxes, fees or assessments of any kind or
nature whatsoever that are delinquent or otherwise due and payable. All
fees and expenses required to be paid in connection with the
development and zoning of the Individual Property have been paid in
full and there are no agreements with governmental or
quasi-governmental authorities, agencies or utilities with respect to
the Individual Property or any portion thereof which would bind the
Individual Property following the Closing other than any matters set
forth in the Title Commitment for the Individual Property.
(vii) All financial information about the Individual
Property heretofore or hereafter furnished by the Sellers to Purchaser
(including, without limitation, the operating statements to be provided
to Purchaser pursuant to Section 8(A)(v) below) is and shall be true,
complete and correct in all material respects as of the date therein
specified and shall present fairly the financial condition of the
Individual Property and, with respect to projections, shall be based
upon the best information available to the Sellers at the time when
first delivered to Purchaser.
(viii) The transactions contemplated by this Agreement are
the result of an unsolicited offer within the meaning of Section
723.071, Florida Statutes.
(ix) To the applicable Seller's knowledge, based solely
upon those environmental reports relating to the Individual Property
prepared for Purchaser, and without independent inquiry or
investigation, there are no Hazardous Materials (as such term is
hereinafter defined) on, in or under the Individual Property, and the
Individual Property has never been used to generate, treat, store,
dispose of, transport or in any manner deal with Hazardous Materials.
For purposes of this Agreement, the term Hazardous Materials shall
include hazardous substances as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et seq.), petroleum and petroleum
products and any other hazardous or toxic materials, substances or
wastes regulated under any federal, state or local laws or regulations
relating to protection of heath, safety or the environment. There is
excepted from the foregoing any Hazardous Materials used, kept, stored
or transported upon the Individual Property in accordance with
requirements of law and in the ordinary course of the applicable
Seller's operation of its business upon the Individual Property.
19
(x) Exhibits Q-1 through Q-11, respectively (as
applicable), set forth (a) the issued and outstanding partnership or
membership interests of each Property Owner, (b) the capital
contributions made by each Entity Seller to each Property Owner, and
(c) the capital account balances of each Entity Seller in each Property
Owner.
(xi) Each Entity Seller has previously delivered to
Purchaser the following financial statements of each Property Owner in
which such Entity Seller owns Equity Interests (the "Financial
Statements"): (a) the unaudited balance sheet of such Property Owner as
of December 31 in each of the years 2001 and 2002, and the related
unaudited statements of income and cash flows for each of such fiscal
years then ended (the most recent of which, the "Balance Sheet"), (b)
an unaudited balance sheet of such Property Owner as of September 30,
2003 (the "Interim Balance Sheet") and the related unaudited statements
of income and cash flows for the three months then ended, including, in
each case, any notes thereto, and (c) the annualized net operating
income and number of sites with respect to each Individual Property as
set forth on Exhibit M attached hereto. Each of the Financial
Statements is consistent with the books and records of such Property
Owner (which, in turn, are accurate and complete in all material
respects) and fairly presents such Property Owner's financial
condition, assets and liabilities as of its respective date and the
results of operations and cash flows for the period related thereto.
The Financial Statements utilize the accrual method of accounting
consistent with the method utilized to prepare the relevant tax return
of each Property Owner. The Interim Balance Sheet utilizes the cash
method of accounting.
(xii) The Entity Sellers are, and on the Closing Date will
be, the sole record and beneficial owners and holders of the Equity
Interests, and have good and marketable title to the Equity Interests,
free and clear of all liens, claims and encumbrances, except as may
exist in favor of the lenders with respect to the Existing Loan
Documents. Upon consummation of the transactions contemplated hereby,
Purchaser will be vested with good and marketable title to all of the
outstanding equity securities of the Property Owners free and clear of
all liens, claims and encumbrances, except as may exist in favor of the
lenders with respect to the Existing Loan Documents. There are no
contracts or other agreements relating to the issuance, sale or
transfer of any equity securities, phantom stock or appreciation
rights, profit participation, or other securities (whether or not
convertible) of the Property Owner, including options, warrants, puts
or calls, all of which will have been canceled, terminated or expired
at no expense to the Property Owner on or before the Closing. The
Property Owner has not owned, does not own, and has no contract to
acquire, any equity securities or other securities of any entity or any
direct or indirect equity or ownership interest in any other business.
There are currently existing no preemptive rights with respect to any
Equity Interests nor have any Equity Interests been issued in violation
of then existing preemptive rights.
(xiii) Each Property Owner has no material liabilities or
obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise) other than (a) liabilities
or obligations specifically reflected or reserved against in the
Financial Statements, (b) current liabilities incurred in the ordinary
course of business since the date of the Balance Sheet and (c)
obligations under executory
20
contracts that are to be performed in the ordinary course of business
and are apparent from the plain reading of such contracts. None of the
matters described in clauses (a) through (c) hereof is a liability
resulting from a breach of contract, breach of warranty, tort,
infringement or claim or proceeding.
(xiv) No representation or warranty of the Sellers in this
Agreement or any of the Schedules or Exhibits attached hereto omits to
state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not
misleading.
(xv) No Property Owner currently has any employees.
(xvi) Each Property Owner is organized for the sole purpose
of owning and operating the Individual Property owned by such Property
Owner and does not own and has not owned any other assets or engaged in
any other business activity since its organization.
(xvii) Each Property Owner has duly filed all federal,
state, county and municipal income, excise and other tax returns
required to be filed by it as of the date of this Agreement.
(xviii) All federal, state, county and municipal taxes and
assessments and other governmental or quasi-governmental levies of any
kind relating to each Property Owner that have become due for payment
prior to the date of this Agreement have been paid or shall be paid in
full by the Property Owner together with any interest and penalties
thereon prior to the Closing.
(xix) Subject to the truth and accuracy of the
representations of investors, if any, obtained by each Entity Seller or
Property Owner, each offer, sale and issuance of equity interests by
such Entity Seller or Property Owner was or is exempt from the
registration requirements of the Securities Act of 1933, as amended,
and all applicable state securities laws, and each Entity Seller and
Property Owner has complied with, and is currently in compliance with,
in all material respects, all applicable federal and state securities
laws.
B. Each Seller represents and warrants to Purchaser that, as of
the Closing, each of the representations and warranties set forth in Section
7(A) above shall be true, complete and correct in all material respects except
for changes in the operation of the applicable Individual Property occurring
prior to the Closing which are specifically permitted by or pursuant to this
Agreement (including, without limitation, the provisions of Section 3 above).
C. The representations and warranties set forth herein are deemed
to be made only by each Seller only with respect to the Individual Property
which is owned by such Seller or the Property Owner in which such Seller owns
Equity Interests. No Seller shall be deemed to make any representation or
warranty as to any Individual Property which it does not own or as to any entity
in which it does not have an ownership or management interest.
21
D. The foregoing representations and warranties (and the
representations and warranties contained in any SPE Certificate) of each
respective Seller shall survive the execution and delivery of this Agreement,
the Closing and the delivery of all documents and the performance of any and all
covenants and obligations in accordance with this Agreement for a period of one
(1) year from the Closing Date. The Sellers shall protect, defend, indemnify and
hold harmless Purchaser, its affiliates, subsidiaries and designees, if any, and
their respective principals, shareholders, directors, officers, partners,
members, agents, employees, successors and assigns (collectively, the
"Indemnified Parties") from and against any and all claims, demands, losses,
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings and orders, judgments, remedial action requirements, enforcement
actions of any kind, and all costs and expenses incurred in connection therewith
(including, without limitation, reasonable attorneys' fees and expenses)
resulting from or arising out of (i) any breach of the representations and
warranties set forth in Section 7(A) above, in any SPE Certificate or in any
Non-Imputation Affidavit, (ii) any misrepresentation by the Sellers or
non-fulfillment of any covenant to be performed or complied with by the Sellers
under this Agreement, (iii) any claim, action or proceeding of any kind
whatsoever, whether instituted or commenced prior to or after the Closing, which
relates to or arises from the conduct of any Seller's or Property Owner's
business or assets on or prior to the Closing, or (iv) any claim, action or
proceeding of any kind whatsoever relating to or arising from the allocation of
the Purchase Price among the Sellers or the distribution of the proceeds thereof
to the direct or indirect owners of the Sellers. There is expressly excepted
from the foregoing, and Purchaser shall be deemed to have waived any claim for
protection or indemnification from any Seller with regard to, any of those
matters set forth in (i) through (iv) above which are disclosed to Purchaser
prior to the Closing in the normal course of Purchaser's due diligence
investigation.
E. The Sellers shall protect, defend, indemnify and hold harmless
the Indemnified Parties from and against any and all claims, demands, losses,
expenses, damages, liabilities, fines, penalties, charges, administrative and
judicial proceedings and orders, judgments, remedial action requirements,
enforcement actions of any kind, and all costs and expenses incurred in
connection therewith (including, without limitation, reasonable attorneys' fees
and expenses) pursuant to any federal, state or local laws or regulations
relating to protection of health, safety or the environment ("Environmental
Laws") resulting from the following, if resulting from the acts of the Sellers,
their contractors, subcontractors, agents or employees: (i) the use, generation,
transportation, storage, disposal or presence, other than in the Sellers'
ordinary course of their business upon the Individual Properties and in
compliance with law, prior to the Closing, on the Individual Properties of any
Hazardous Materials or the release or discharge of any Hazardous Materials on,
under or from the Individual Properties, (ii) any failure, prior to the Closing,
to comply with any Environmental Laws, (iii) the treatment, storage or disposal
off the Individual Properties, prior to the Closing, of any Hazardous Materials,
or (iv) any breach of the representations and warranties set forth in Section
7(A)(ix) above. This indemnity shall survive the Closing for a period of one (1)
year from the Closing Date.
F. The Sellers shall provide to Purchaser and its auditors (i)
prior to and following the Closing, access at all reasonable times to all
financial and other information in the Sellers' possession relating to the
Properties necessary for Purchaser and its auditors to prepare audited financial
statements in conformity with Regulations S-X of the Securities and Exchange
22
Commission ("SEC") or other materials required for any registration statement,
report or other disclosure to be filed with the SEC or necessary to comply with
any SEC rule or regulation, and (ii) at the Closing (or prior thereto if
required by Purchaser's auditors) an executed representations letter, as
required by Generally Accepted Auditing Standards as promulgated by the Auditing
Standards Division of the American Institute of Public Accountants, which
representation is required to enable an independent public accountant to render
an opinion on such financial statements; provided, however, that Purchaser shall
pay for any actual costs incurred by the Sellers in connection with their
obligations under this Section 7(F). The obligation of the Sellers to provide
such access and representations letter shall survive Closing and the Sellers
(and each of them) shall indemnify and hold the Indemnified Parties harmless
from and against any losses, costs, expenses (including, without limitation,
reasonable attorneys' fees and expenses) and liabilities arising from the
failure of the Sellers to comply with these obligations.
G. The obligations of the Sellers under this Section 7 shall be
secured as follows:
Each Seller shall fund from the proceeds of the Closing into an escrow account
held by the Title Insurer, as escrow agent (the "Holdback Escrow"), such portion
of the sum of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) as the
allocable portion of the Purchase Price payable to such Seller shall bear to the
total Purchase Price. The Holdback Escrow shall be subject to Purchaser's valid
claims under this Section 7 and any SPE Certificate to the extent of the full
amount of the Holdback Escrow as to such claim(s) arising against any one or
more Sellers. The Holdback Escrow or any residual portion thereof not subject to
Purchaser's claims on the date one (1) year subsequent to the Closing Date shall
be returned by the Title Insurer in accordance with directions from the Sellers
or their counsel. In addition to the foregoing, Purchaser shall have the right
to pursue any Seller for such claims arising only against such Seller, provided,
however, that (i) the maximum amount of such claims as shall be recoverable
against any particular Seller (exclusive of a recovery from the Holdback Escrow)
shall be limited to an amount equivalent to the proportion of One Hundred Fifty
Thousand and 00/100 Dollars ($150,000.00) that the allocable portion of the
Purchase Price payable to such Seller bears to the total Purchase Price, and
(ii) that no claim shall be actionable against or payable by a Seller if made
from and after the date one (1) year after the Closing Date.
7A. REPRESENTATIONS AND WARRANTIES OF PURCHASER
A. Purchaser represents and warrants to the Sellers that the
following are true, complete and correct as of the date of this Agreement:
(i) Purchaser is duly organized, validly existing,
qualified and empowered to conduct its business, and has full power and
authority to enter into and fully perform and comply with the terms of
this Agreement. Neither the execution and delivery of this Agreement
nor its performance will conflict with or result in the breach of any
contract, agreement, law, ordinance, rule or regulation to which
Purchaser is a party or by which Purchaser is bound.
23
(ii) Purchaser initiated the negotiations regarding its
acquisition of the Portfolio, and the Sellers did not solicit
Purchaser's offer to acquire the Portfolio.
B. Purchaser represents and warrants to the Sellers that, as of
the Closing, each of the representations and warranties set forth in Section
7.A(A) above shall be true, complete and correct in all material respects.
C. The foregoing representations and warranties of Purchaser
shall survive the execution and delivery of this Agreement, the Closing and the
delivery of all documents and the performance of any and all covenants and
obligations in accordance with this Agreement for a period of one (1) year from
the Closing Date.
8. SCHEDULES, CONSENTS AND APPROVALS
A. Within fifteen (15) days after the date of this Agreement, the
Sellers shall furnish to Purchaser:
(i) the Individual Property Rent Rolls provided for in
Section 1(B)(v) above, and make available to Purchaser true, correct
and complete copies of all the Individual Property Leases;
(ii) the lists of all Individual Property Service
Contracts provided for in Section 1(B)(vi) above, together with a true,
correct and complete copy of each written Individual Service Contract
and a true, correct and complete summary of each oral Individual
Property Service Contract;
(iii) the itemizations of the tangible Individual Personal
Property as provided for in Section 1(B)(iv) above;
(iv) a schedule of all insurance policies owned by or on
behalf of each Seller with respect to each Individual Property or any
part thereof;
(v) copies of all operating statements for each
Individual Property which are in the possession or control of the
Sellers for any time during the period commencing with the first day of
the second full calendar year preceding the date of this Agreement and
ending on the date of this Agreement;
(vi) copies of the most recent surveys of and title
policies or commitments for each Individual Premises in the possession
or control of the Sellers;
(vii) copies of all environmental reports, termite
inspection reports, soil tests, appraisals and police reports (within a
three (3) year period prior to the date of this Agreement) for each
Individual Property in the possession or control of the Sellers;
(viii) a true, correct and complete copy of each of the loan
agreement, note and mortgage or deed of trust for each loan encumbering
the Individual Premises (the "Existing Loan Documents"); and
24
(ix) with respect to each Individual Property located in
Florida, Seller shall use best efforts to furnish to Purchaser the
additional items set forth on Exhibit N attached hereto.
B. Within fifteen (15) days after the date of this Agreement, the
Sellers shall make the additional items set forth on Exhibit O attached hereto,
to the extent in the Sellers' possession or control, available to Purchaser
either at the applicable Individual Property or by delivery to Purchaser, at
Purchaser's option.
9. PURCHASER'S CONDITIONS PRECEDENT
At the option of Purchaser, the obligations of Purchaser under this
Agreement are contingent and conditional upon any one (1) or more of the
following, the failure of any of which shall, at the election of Purchaser and
after the return to Purchaser of the Earnest Money, render this Agreement null
and void:
A. Purchaser shall have until 3:00 p.m. (Chicago, Illinois time)
on the date which is forty-five (45) days after the date of Seller's execution
of this Agreement within which to inspect the Properties and review all of the
documents and other information provided for in Sections 4 and 8 above (the
"Inspection Period"). Notwithstanding anything to the contrary contained herein,
if for any reason whatsoever Purchaser determines that any Individual Property
is unsuitable for its purposes and notifies the Sellers of such decision within
the Inspection Period, the Earnest Money shall be returned to Purchaser, at
which time this Agreement shall be null and void and no party shall have any
further rights or obligations under this Agreement. Purchaser's failure to
object within the Inspection Period shall be deemed a waiver by Purchaser of the
condition contained in this Section 9(A). During the Inspection Period,
Purchaser and its agents, engineers, surveyors, appraisers, auditors and other
representatives shall have the right to enter upon the Properties upon
reasonable prior oral notice to inspect, examine, survey, obtain engineering
inspections and environmental studies, appraise and otherwise do that which, in
the opinion of Purchaser, is necessary to determine the boundaries, acreage and
condition of the Properties and the suitability of the Properties for the uses
intended by Purchaser (including, without limitation, inspect, review and copy
any and all documents in the possession or control of the Sellers, their
respective agents, contractors or employees, and which pertain to the
construction, ownership, use, occupancy or operation of the Properties or any
part thereof). Also during the Inspection Period, the Sellers shall make all
books, files and records of the Sellers and Property Owners relating in any way
to the Properties, including all calculations and supporting workpapers used to
determine the annualized net operating income for each Individual Property as
set forth on Exhibit M attached hereto, available for examination by Purchaser
and Purchaser's agents and representatives, who shall have the right to make
copies of such books, files and records and to extract therefrom such
information as they may desire, and who shall have the right to audit and to
have certified, thoroughly and completely, all income and expenses, profits and
losses, and operational results of the Properties for the two (2) calendar years
prior to the Closing and for the current calendar year to date. During the
Inspection Period, Purchaser shall have the right to verify the net operating
income figures set forth on Exhibit M attached hereto. Accordingly, Purchaser
shall deliver to the Sellers within ten (10) days after the full execution of
this Agreement, a list of all books, files, records and other information and
materials
25
required by Purchaser to verify such net operating income figures. The Sellers
shall promptly deliver all such books, files, records and other information and
materials to Purchaser, but no later than ten (10) days after the receipt of
Purchaser's request for net operating income information. In addition, the
Sellers shall use best efforts to promptly deliver to Purchaser any other
materials reasonably required by Purchaser after its review of the materials
initially delivered by the Sellers.
B. Each and every representation and warranty of the Sellers
contained herein is true, correct and complete in all material respects as of
the Closing.
C. As of the Closing, the Sellers shall have fully performed and
satisfied in all material respects each and every obligation, term and condition
to be performed and satisfied by the Sellers under this Agreement.
D. The prospectus for each Individual Property located in Florida
as required by Section 723.011, Florida Statutes, shall have been approved by
the Florida Department of Business and Professional Regulation (Division of
Florida Land Sales, Condominiums and Mobile Homes) (the "Department") as
evidenced by a letter from the Department. The Sellers and Property Owners shall
promptly and timely meet all requirements to correct any deficiencies of any
such prospectus so that the approval of the Department to said prospectus is not
delayed or withheld, but no submission shall be made by the Sellers or Property
Owners in connection with said prospectus without the prior written consent of
Purchaser.
E. The applicable Property Owners shall have fully complied with
the provisions and requirements of Section 723.071, Florida Statutes with
respect to each Individual Property located in Florida. To the extent any
Property Owner delivers a notice to the tenants' homeowners' association at its
Individual Property located in Florida as required by Section 723.071, Florida
Statutes, Purchaser shall not be deemed to have consented or agreed to any
allocation of the Purchase Price set forth in such notice. With respect to each
Individual Property located in Florida, the applicable Property Owners shall
prepare, execute and deliver to Purchaser and the Title Insurer the affidavit
provided for in Section 723.072, Florida Statutes, in form suitable for
recording.
F. Prior to the expiration of the Inspection Period, Purchaser
shall have received all consents and approvals required under any agreement or
other document to which the Sellers are a party or by which the Sellers or the
Portfolio (or any portion thereof) are bound with respect to the sale of the
Portfolio to Purchaser as contemplated hereby, including, without limitation,
consents of the limited partners or members of the direct or indirect owners of
each of the Property Owners and the net proceeds thereof to be received by such
limited partners or members and consents required from any governmental
authority having jurisdiction over any of the assets in the Portfolio for the
conveyance of the assets of the Portfolio (collectively, the "Consents and
Approvals"). Purchaser shall not be obligated to consummate the Closing unless
and until Purchaser receives all such Consents and Approvals or the Sellers
represent and warrant to Purchaser that the Sellers have the authority to sell
the Portfolio.
26
G. Purchaser shall have received the Owner's Title Insurance
Policy (or marked-up commitment therefor) insuring fee simple title to the
Individual Premises in (as applicable) the Property Owner or Purchaser (or
Purchaser's designee, if applicable) for the allocable portion of the Purchase
Price attributable to such Individual Premises and subject only to Permitted
Exceptions, and otherwise in the form and condition required by this Agreement.
In no event shall any such Owner's Title Insurance Policy raise as an exception
the right of first refusal contained in Section 723.071, Florida Statutes, as it
relates to the sale of the applicable Individual Property from the applicable
Seller to Purchaser or its designee hereunder.
H. Purchaser and certain Sellers shall have entered into that
certain (i) Letter Agreement dated as of the date hereof regarding the formation
of various joint venture entities and (ii) Subscription Agreement dated as of
the date hereof regarding the purchase of various preferred equity interests by
Purchaser or an affiliate thereof and certain other membership interests by
Purchaser or an affiliate thereof.
I. Prior to or at the time of the Closing, the tenant in common
interests of the Topics TIC in the Topics Property and the Goose Creek TIC in
the Goose Creek TIC shall be acquired by Topics RVP LLC and Goose CK LLC,
respectively, so that Topics RVP LLC owns 100% of the fee simple title to the
Topics Property and Goose Creek CK LLC owns 100% of the fee simple title to the
Goose Creek Property.
If any of the foregoing conditions are not satisfied with respect to
any Individual Property, Purchaser shall have the right to terminate this
Agreement with respect to such Individual Property.
9A. SELLER'S CONDITIONS PRECEDENT
At the option of the Sellers, the obligations of the Sellers under this
Agreement are contingent upon any one (1) or more of the following, the failure
of which shall, at the election of the Sellers and after the return to Purchaser
of the Earnest Money, render this Agreement null and void:
A. Purchaser and certain Sellers shall have entered into that
certain (i) Letter Agreement dated as of the date hereof regarding the formation
of various joint venture entities and (ii) Subscription Agreement dated as of
the date hereof regarding the purchase of various preferred equity interests by
Purchaser or an affiliate thereof and certain other membership interests by
Purchaser or an affiliate thereof.
B. Prior to the expiration of the Inspection Period, Seller shall
have received the Consents and Approvals.
10. BROKERAGE
No brokerage commissions shall be due for services rendered in
connection with the sale and purchase of the Portfolio (or any portion thereof).
The Sellers and Purchaser shall indemnify and hold each other harmless from and
against any and all claims of all brokers and finders claiming by, through or
under the Sellers or Purchaser, as applicable, and in any way related to
27
the sale and purchase of the Portfolio (or any portion thereof), pursuant to
this Agreement or otherwise, including, without limitation, reasonable attorneys
fees incurred by the indemnified party in connection with such claims.
11. DEFAULT AND REMEDIES
A. Notwithstanding anything to the contrary contained in this
Agreement, if any Seller fails to perform in accordance with the terms of this
Agreement, at Purchaser's option, either the Earnest Money shall be returned to
Purchaser (at which time this Agreement shall be null and void and no party
shall have any further rights or obligations under this Agreement), or Purchaser
may sue for specific performance of this Agreement.
B. Notwithstanding anything to the contrary contained in this
Agreement, if Purchaser fails to perform in accordance with the terms of this
Agreement, at the Sellers' option, either the Earnest Money shall be forfeited
to the Sellers (at which time this Agreement shall be null and void and no party
shall have any further rights or obligations under this Agreement), or the
Sellers may sue for specific performance of this Agreement. The Sellers
acknowledge and agree that (i) the Earnest Money (or remaining balance thereof)
is a reasonable estimate of and bears a reasonable relationship to the damages
that would be suffered and costs that would be incurred by the Sellers as a
result of having subjected the Portfolio to the terms of this Agreement and the
failure of the Closing to occur due to a default of Purchaser under this
Agreement; (ii) the actual damages suffered and costs incurred by the Sellers as
a result of such subjection and failure to close due to a default of Purchaser
under this Agreement would be extremely difficult and impractical to determine;
(iii) Purchaser seeks to limit its liability under this Agreement to the amount
of the Earnest Money (or remaining balance thereof) in the event the Closing
does not occur due to a default of Purchaser under this Agreement; and (iv) the
Earnest Money (or remaining balance thereof) shall be and constitute valid
liquidated damages.
12. SECTION 1031 EXCHANGE
A. Notwithstanding anything contained herein to the contrary, in
accordance with the terms set forth herein, either party (the "Exchanging
Party") shall be entitled, at its option, to structure the transfer of the
Portfolio (or any portion thereof) from the Sellers to Purchaser as part of a
non-simultaneous tax-deferred "like-kind" exchange under Section 1031 of the
Code (a "Like-Kind Exchange") with respect to the Exchanging Party involving, in
whole or part, real property other than the Portfolio (or any portion thereof).
B. If the Exchanging Party desires to effectuate a tax-free
exchange as aforesaid, the Exchanging Party shall so notify the other party (the
"Cooperating Party") no later than five (5) business days prior to the Closing
Date and shall at that time present to the Cooperating Party a written
"Like-Kind Exchange Agreement" in form reasonably acceptable to both parties and
which both parties shall execute. The Like-Kind Exchange Agreement shall
provide, among other things, that the Sellers shall receive at the Closing the
Purchase Price. More generally, although the Cooperating Party shall reasonably
cooperate with the Exchanging Party to assist the Exchanging Party in
accomplishing a Like-Kind Exchange, by so cooperating, the Cooperating Party
shall incur no extra expense, no delays and no extra risks, and the Like-Kind
28
Exchange Agreement shall contain such indemnities and other provisions as will
reasonably insulate the Cooperating Party from liability in connection with the
Like-Kind Exchange. The Cooperating Party makes no representations or warranties
to the Exchanging Party concerning the tax consequences of the Exchanging
Party's actions in this regard. Apart from the obligation to sign the Like-Kind
Exchange Agreement and convey or acquire (as the case may be) the Portfolio as
provided herein, the Cooperating Party shall have no obligation or liability in
connection with the Like-Kind Exchange and the Exchanging Party shall indemnify
and hold the Cooperating Party harmless from any damages, liability and claims,
including reasonable attorney's fees incurred by the Cooperating Party, in
connection therewith. The parties hereby agree that the Cooperating Party shall
not take title to any real estate other than the Portfolio (or any portion
thereof).
13. MISCELLANEOUS
A. This Agreement shall not be canceled or merged upon
consummation of the Closing.
B. Prior to the Closing, no party shall release to the public any
information with respect to the transactions contemplated herein unless required
to do so by applicable law.
C. Neither this Agreement nor any interest hereunder shall be
assigned or transferred by the Sellers. Purchaser may assign or otherwise
transfer all or any portion of its interest under this Agreement, including,
without limitation, assignments of the right to purchase any manufactured homes
or recreational vehicles to Realty Systems, Inc., or any other affiliate of
Purchaser; provided however that no such assignment shall release Purchaser from
any liability hereunder. As used in this Agreement, the term "Purchaser" shall
be deemed to include any assignee or other transferee of any Purchaser. Subject
to the foregoing, this Agreement shall inure to the benefit of and shall be
binding upon the Sellers and Purchaser and their respective successors and
assigns.
D. This Agreement constitutes the entire agreement between the
Sellers and Purchaser with respect to the Portfolio and shall not be modified or
amended except in a written document signed by all of the Sellers and Purchaser.
Any prior agreement or understanding between the Sellers and Purchaser
concerning the Portfolio (or any portion thereof) is hereby rendered null and
void. All Exhibits attached to this Agreement are hereby incorporated herein and
made a part of this Agreement.
E. [Intentionally Omitted].
F. This Agreement constitutes an offer by Purchaser which must be
accepted by the Sellers within one (1) business day after the date execution
copies of this Agreement are submitted by Purchaser to the Sellers for
execution. If this Agreement is not so accepted and returned to Purchaser within
said one (1) business day period, this offer shall be deemed revoked.
G. Time is of the essence of this Agreement. In the computation
of any period of time provided for in this Agreement or by law, the day of the
act or event from which the period
29
of time runs shall be excluded, and the last day of such period shall be
included, unless it is a Saturday, Sunday or legal holiday, in which case the
period shall be deemed to run until the end of the next day which is not a
Saturday, Sunday or legal holiday.
H. All questions regarding the construction, validity and
interpretation of this Agreement shall be governed and interpreted in accordance
with the laws of the State of Illinois.
I. All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and delivered
personally (including delivery by overnight courier such as Airborne Express) or
by facsimile, addressed as follows:
(i) If to Diversified or the Sellers:
Diversified Investments Services, LLC
7625 Wisconsin Avenue
Suite 150
Bethesda, Maryland 20814
Telephone: (800) 701-1535
Telecopy: (916) 782-2902
Attention: Gayle Benson
with a copy to:
Haile, Shaw & Pfaffenberger
249 Royal Palm Way
Suite 501
Palm Beach, Florida 33480
Telephone: (561) 833-5600
Telecopy: (561) 296-0257
Attention: Drennen L. Whitmire, Jr.
(ii) If to Purchaser:
MHC OPERATING LIMITED PARTNERSHIP
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Telephone: (312) 279-1400
Telecopy: (312) 279-1710
Attention: President
30
With a copy to:
Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Telephone: (312) 279-1400
Telecopy: (312) 279-1715
Attention: General Counsel
and to:
Katten Muchin Zavis Rosenman
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Telephone: (312) 902-5532
Telecopy: (312) 577-8668
Attention: Daniel J. Perlman
All notices given in accordance with the terms hereof shall be deemed received
when delivered personally or, if sent by facsimile, as of the date of
transmission provided an original of such facsimile is also sent by personal
delivery. Any party hereto may change its address for receiving notices,
requests, demands or other communications by notice sent in accordance with the
terms of this Section 16(I).
J. At the Closing, each Fee Seller and Entity Seller shall
deliver to Purchaser its affidavit stating, under penalty of perjury, such
Seller's U.S. taxpayer identification number and that such Seller is not a
foreign person within the meaning of Section 1445 of the Code. The purpose of
this affidavit is to assure Purchaser that the withholding of taxes by Purchaser
is not required by said Section 1445 upon such Seller's disposition of such
Individual Property or Equity Interests (as applicable), and such certification
shall be in form prescribed by said Section 1445 or regulations promulgated
pursuant thereto. If any Seller does not deliver such an affidavit to Purchaser
at the Closing, or if Purchaser has actual knowledge or receives notice that the
affidavit is false, then, in either such event, Purchaser shall be entitled to
withhold from the Sellers an amount equal to ten percent (10%) of the Purchase
Price, which amount Purchaser shall report and pay over to the Internal Revenue
Service within ten (10) days after the Closing as required by the Code or
regulations promulgated pursuant thereto.
K. This Agreement may be executed in any number of identical
counterparts, any or all of which may contain the signatures of fewer than all
of the parties but all of which shall be taken together as a single instrument.
L. Notwithstanding anything herein to the contrary, except as
reasonably necessary to comply with applicable securities laws, each party (and
each employee, representative or other agent of each party) hereto may disclose
to any and all persons, without limitation of any kind, any information with
respect to the United States federal income "tax treatment" and "tax
31
structure" (in each case, within the meaning of Treasury Regulations Section
1.6011-4) of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to such parties (or
their representatives) relating to such tax treatment and tax structure;
provided that with respect to any document or similar item that in either case
contains information concerning the tax treatment or tax structure of the
transaction as well as other information, this sentence shall only apply to such
portions of the document or similar item that relate to the United States
federal income tax treatment or tax structure of the transactions contemplated
hereby.
14. HOLDBACKS
A. Each Seller with respect to the Individual Property listed on
Exhibit T attached hereto owned, directly or indirectly, by such Seller shall
fund from its respective share of the proceeds of the Closing into an escrow
account (the "Rent Increase Escrow") held by said Escrowee, the amount in the
column entitled "Amount of Holdback" shown on Exhibit T. On each applicable Test
Date (as shown on Exhibit T), Escrowee shall disburse the amount of the
applicable holdback as follows:
(i) With respect to the Shangri La Property and the Sixth
Avenue Property, to the applicable Sellers, an amount equal to (1) the
product of (a) the number of executed permanent manufactured home
leases in effect as of the Test Date (not to exceed the applicable
number set forth in the column titled "# Sites" on Exhibit T) having a
term of no less than twelve (12) months, (b) the monthly rental
increase over the existing monthly rental applicable to each such lease
(but in no event more than the applicable amount set forth in the "Site
Rent" column on Exhibit T), and (c) twelve (12) months; divided by (2)
the applicable Cap Rate Net of Defeasance shown on Exhibit T. The
balance of the Amount of Holdback shall be disbursed to Purchaser.
(ii) With respect to the Cactus Gardens Property, Desert
Paradise Property, Suni Sands Property, Goose Creek Property and
Waterway RV Property, (1) the product of (a) the number of executed
permanent recreational vehicle site leases in effect as of the Test
Date (not to exceed the applicable number set forth in the column
titled "# Sites" on Exhibit T) for the following season, and (b) the
seasonal rental increase over the existing seasonal applicable to each
such lease (but in no event more than the applicable amount set forth
in the "Site Rent" column on Exhibit T) divided by (2) the applicable
Cap Rate Net of Defeasance shown on Exhibit T. The balance of the
Amount of Holdback shall be disbursed to Purchaser.
The parties agree to deliver notice of the rental increases set forth on the
column titled "Site Rent" to the tenants at each applicable Individual Property
at the time required in order to have the rental increase in effect as of the
applicable Test Date.
B. Each Seller with respect to the Individual Property listed on
Exhibit X attached hereto owned, directly or indirectly, by such Seller shall
fund from its respective share of the proceeds of the Closing into an escrow
account (the "Rental Home Escrow") held by Escrowee an amount equal to the
"Amount of Holdback" shown on said Exhibit X. On April 1, 2004 (the
32
"Rental Home Test Date"), Escrowee shall disburse the following amount to each
applicable Seller: (1) the product of (a) the number (not to exceed the number
listed under the column "# Sites" on Exhibit X) of executed seasonal rental home
agreements existing on the Rental Home Test Date which are for a term of no less
than three (3) months (provided that up to 50% of the number of sites may be
subject to one or more agreements which provide for a term of not less than
three (3) months in the aggregate), and for which the tenant is in occupancy
with rental paid in advance for the entire season (the "Rental Home Agreement")
and (b) the applicable full seasonal rental amount for each Rental Home
Agreement (not to exceed the amount listed under the column "Site Rent" on
Exhibit X); divided by (2) the applicable Cap Rate Net of Defeasance shown on
Exhibit X. The balance, if any, of the Amount of Holdback shall be paid to
Purchaser on the Rental Home Test Date. Purchaser shall use commercially
reasonable efforts to lease the unleased rental homes at lease rates and other
lease terms which are consistent with those then in place at each applicable
Individual Property.
[Signature Page Follows]
33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
WITNESSES: PURCHASER:
_____________________________ MHC OPERATING LIMITED PARTNERSHIP,
Name:________________________ an Illinois limited partnership
_____________________________
Name:________________________ By: MANUFACTURED HOME COMMUNITIES,
INC., a Maryland corporation, as its General
Partner
By:_________________________________________
Name:____________________________________
Title:___________________________________
WITNESSES:
SELLERS:
_____________________________ COACHWOOD COLONY MHP, LLC, a Florida
Name:________________________ limited liability company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS -
COACHWOOD COLONY MHP, LLC, a
Florida limited liability company, as its
Sole and Managing Member
By: ________________________________________
Barry L. Haase
Manager
WITNESSES:
DIVERSIFIED INVESTMENTS -
COACHWOOD COLONY MHP, LLC, a Florida
_____________________________ limited liability company
Name:________________________
_____________________________ By: __________________________________
Name:________________________ Barry L. Haase
Manager
34
WITNESSES:
SHANGRI-LA MOBILE HOME PARK, L.P., a
Delaware limited partnership, authorized to
transact business in the State of Florida as
_____________________________ SHANGRI-LA MOBILE HOME PARK OF LARGO, LTD.
Name:________________________
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - SHANGRI-LA,
INC., a Delaware corporation, as its General
Partner
By: ___________________________________
Barry L. Haase
Chairman
WITNESSES:
DIVERSIFIED INVESTMENTS - SHANGRI-LA,
INC., a Delaware corporation
_____________________________
Name:________________________ By: ___________________________________
_____________________________ Barry L. Haase
Name:________________________ Chairman
WITNESSES:
TAMPA BAY COMMUNITIES, L.P., a Florida
limited partnership
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - TBC,
_____________________________ INC., a Florida corporation, as its General
Name:________________________ Partner
By: _______________________________
Barry L. Haase
CEO
35
WITNESSES:
SIXTH AVENUE, LLC, a Florida limited liability
company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - SIXTH
_____________________________ AVENUE LLC, a Florida limited liability
Name:________________________ company, as its Sole and Managing Member
By: _______________________________
Barry L. Haase
Manager
WITNESSES:
DIVERSIFIED INVESTMENTS - SIXTH
AVENUE, LLC, a Florida limited liability company
_____________________________
Name:________________________ By: ___________________________________
_____________________________ Barry L. Haase
Name:________________________ Manager
WITNESSES:
SOUTHERNAIRE MHP, LLC, a Florida limited
liability company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS -
_____________________________ SOUTHERNAIRE, LLC, a Florida limited
Name:________________________ liability company, as its Sole and Managing
Member
By: _______________________________
Barry L. Haase
Manager
WITNESSES:
DIVERSIFIED INVESTMENTS -
SOUTHERNAIRE, LLC, a Florida limited liability
company
_____________________________
Name:________________________
_____________________________ By: _______________________________
Name:________________________ Barry L. Haase
Manager
36
WITNESSES:
TERRA CEIA, LLC, a Florida limited liability
company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - TERRA
_____________________________ CEIA, LLC, a Florida limited liability
Name:________________________ company, as its Sole and Managing Member
By: _______________________________
Barry L. Haase
Manager
WITNESSES:
DIVERSIFIED INVESTMENTS - TERRA CEIA,
_____________________________ LLC, a Florida limited liability company
Name:________________________
_____________________________ By: ________________________________
Name:________________________ Barry L. Haase
Manager
WITNESSES:
TOPICS RVP, LLC, a Florida limited liability
company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - TOPICS
_____________________________ RVP, LLC, a Florida limited liability
Name:________________________ company, as its Sole and Managing Member
By: _______________________________
Barry L. Haase
Manager
WITNESSES:
DIVERSIFIED INVESTMENTS - TOPICS RVP,
LLC, a Florida limited liability company
_____________________________
Name:________________________ By: ___________________________________
_____________________________ Barry L. Haase
Name:________________________ Manager
37
WITNESSES:
GOOSE CK, LLC, a North Carolina limited
liability company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - GC, LLC, a
_____________________________ North Carolina limited liability company, as
Name:________________________ its Sole Member
By: EAST WEST COMMUNITIES, LLC, a
Delaware limited liability company, as
its Sole Member
By: DIVERSIFIED INVESTMENTS -
EW, LLC, a Delaware limited
liability company, as its Managing
Member
By: _______________________________
Barry L. Haase
Managing Member
WITNESSES:
DIVERSIFIED INVESTMENTS - GC, LLC, a
North Carolina limited liability company
_____________________________
Name:________________________ By: EAST WEST COMMUNITIES, LLC, a
_____________________________ Delaware limited liability company, as
Name:________________________ its Sole Member
By: DIVERSIFIED INVESTMENTS - EW,
LLC, a Delaware limited liability
company, as its Managing Member
By: _____________________________
Barry L. Haase
Managing Member
38
WITNESSES:
WATERWAY RV, LLC, a Delaware limited
liability company
_____________________________
Name:________________________ By: SIERRA LAKES, L.L.C., a Delaware limited
_____________________________ liability company, as its Sole and Managing
Name:________________________ Member
By: DIVERSIFIED INVESTMENTS
PARTNERS, LLC, a Delaware limited
liability company, as its Managing
Member
By: ____________________________________
Barry L. Haase
Managing Member
WITNESSES:
SIERRA LAKES, L.L.C., a Delaware limited
liability company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS
_____________________________ PARTNERS, LLC, a Delaware limited
Name:________________________ liability company, as its Managing Member
By: ________________________________________
Barry L. Haase
Managing Member
WITNESSES:
CACTUS GARDENS RV, LLC, an Arizona limited
liability company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - CACTUS
_____________________________ GARDENS, LLC, an Arizona limited liability
Name:________________________ company, as its Managing Member
By: ________________________________________
Barry L. Haase
Manager
39
WITNESSES:
DIVERSIFIED INVESTMENTS - CACTUS
GARDENS, LLC, an Arizona limited liability
company
_____________________________
Name:________________________
_____________________________ By: ___________________________________
Name:________________________ Barry L. Haase
Manager
WITNESSES:
DESERT PARADISE RV, LLC, an Arizona
limited liability company
_____________________________
Name:________________________ By: SIERRA LAKES, L.L.C., a Delaware limited
_____________________________ liability company, as its Sole and Managing
Name:________________________ Member
By: DIVERSIFIED INVESTMENTS
PARTNERS, LLC, a Delaware limited
liability company, as its Managing
Member
By: _____________________________
Barry L. Haase
Managing Member
WITNESSES:
SUNI SANDS, LLC, an Arizona limited liability
company
_____________________________
Name:________________________ By: DIVERSIFIED INVESTMENTS - SUNI
_____________________________ SANDS, LLC, an Arizona limited liability
Name:________________________ company, as its Sole and Managing Member
By: ____________________________________
Barry L. Haase
Manager
40
WITNESSES: DIVERSIFIED INVESTMENTS - SUNI SANDS,
LLC, an Arizona limited liability company
_____________________________ By: ___________________________________
Name:________________________ Barry L. Haase
_____________________________ Manager
Name:________________________
WITNESSES: DIVERSIFIED INVESTMENTS SERVICES,
LLC, a Delaware limited liability company
_____________________________ By: ___________________________________
Name:________________________ Name: Barry L. Haase
_____________________________ Title: Manager
Name:________________________
41
SCHEDULE OF EXHIBITS
EXHIBITS A-1 through A-11 Legal Descriptions of Land.
EXHIBITS B-1 through B-11 Schedules of Tangible Personal Property - to be
attached within 15 days of the date of this
Agreement pursuant to Section 8(A)(iii).
EXHIBITS C-1 through C-11 Rent Rolls Property - to be attached within 15 days
of the date of this Agreement pursuant to Section
8(A)(i).
EXHIBITS D-1 through D-11 Schedules of Service Contracts Property - to be
attached within 15 days of the date of this
Agreement pursuant to Section 8(A)(ii).
EXHIBIT E Intentionally Omitted.
EXHIBIT F Schedule of Approved Rent Increases Property - to
be attached pursuant to Section 3(H).
EXHIBIT G Form of Warranty Deed.
EXHIBIT H Form of Bill of Sale.
EXHIBIT I Form of Letter to Tenants.
EXHIBIT J Form of Letter to Vendors.
EXHIBIT K Form of Assignment of Leases and Security Deposits.
EXHIBIT L Form of Assignment of Service Contracts and
Intangible Personal Property.
EXHIBIT M Schedule of Property Net Operating Income - to be
attached within 15 days after the date of this
Agreement.
EXHIBIT N Schedule of Additional Due Diligence Deliveries
(Florida Developments).
EXHIBIT O Schedule of Additional Due Diligence Deliveries
(General).
EXHIBIT P Form of Opinion of Counsel of Entity Sellers.
42
EXHIBIT Q-1 through Q-11 Description of Equity Interests - to be attached
within 15 days after the date of this Agreement.
EXHIBIT R Form of Assignment and Assumption Agreement.
EXHIBIT S Intentionally Omitted.
EXHIBIT T Schedule of Rental Increase Holdback.
EXHIBIT U Intentionally Omitted.
EXHIBIT V Intentionally Omitted.
EXHIBIT W Form of Non-Imputation Affidavit.
EXHIBIT X Schedule of Rental Home Holdback.
43
EXHIBIT "A"
LEGAL DESCRIPTION OF LAND
[A-1 THROUGH A-11]
EXHIBIT "B"
SCHEDULES OF TANGIBLE PERSONAL PROPERTY
[B-1 THROUGH B-11]
(TO BE ATTACHED WITHIN 15 DAYS AFTER THE DATE OF THIS AGREEMENT)
EXHIBIT "C"
RENT ROLLS
[C-1 THROUGH C-11]
(TO BE ATTACHED WITHIN 15 DAYS AFTER THE DATE OF THIS AGREEMENT)
EXHIBIT "D"
SCHEDULES OF SERVICE CONTRACTS
[D-1 THROUGH D-11]
(TO BE ATTACHED WITHIN 15 DAYS AFTER THE DATE OF THIS AGREEMENT)
EXHIBIT "E"
INTENTIONALLY OMITTED.
EXHIBIT "F"
SCHEDULE OF APPROVED RENT INCREASES
(TO BE ATTACHED WITHIN 15 DAYS AFTER THE DATE OF THIS AGREEMENT)
EXHIBIT "G"
This Instrument Prepared by and Return to:
Daniel J. Perlman, Esq.
Katten Muchin Zavis Rosenman
525 W. Monroe Street
Suite 1600
Chicago, Illinois 60661
TAX ACCOUNT NOS.: ___________________________
WARRANTY DEED
THIS WARRANTY DEED made as of the ____ day of ______________, 2004, by
______________________________________________________________________, having
an address at c/o Diversified Investments Services, LLC, 7625 Wisconsin Ave.,
Suite 150, Bethesda, Maryland 20814 (hereinafter called "Grantor")
to________________ _________________, a________________________ _______________,
having an address at c/o Manufactured Home Communities, Inc., Two North
Riverside Plaza, Suite 800, Chicago, Illinois 60606 (hereinafter called
"Grantee").
(Where used herein, the terms "Grantor" and "Grantee" include all
parties to this instrument and their respective legal representatives,
successors and assigns).
WITNESSETH:
That the Grantor, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, by these presents does hereby
grant, bargain, sell, alien, remise, release, convey and confirm unto the
Grantee all that certain land situate and being in ______________________
County, ___________________, as more particularly described in Exhibit "A"
attached hereto and incorporated herein (the "Property"), subject to those
matters set forth on Exhibit "B" attached hereto and incorporated herein.
TO HAVE AND TO HOLD the same in fee simple forever.
TOGETHER with all the tenements, hereditaments and appurtenances
thereto belonging or in anywise appertaining.
AND the Grantor does hereby fully warrant the title to said Property,
and will defend the same against the lawful claims and demands of all persons
whomsoever.
IN WITNESS WHEREOF, the Grantor has caused these presents to be
executed the day and year first above written.
Signed, sealed and delivered in the presence of:
WITNESSES: ______________________________________
a _______________________
________________________________
Print Name:
By:___________________________________
________________________________ Barry L. Haase
Print Name:
STATE OF _________________ )
COUNTY OF ___________________ )
The foregoing instrument was acknowledged before me this ____ day of
____________, 2004 by Barry L. Haase, as _________________ of
___________________________________, a ______________ ____________________, on
behalf of the _________. Such person is personally known to me or has produced a
_________________ driver's license and did not take an oath.
___________________________________
NOTARY PUBLIC
Printed Name of Notary: ___________
Commission No.: ___________________
(NOTARIAL SEAL) Commission Expiration:_____________
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
EXHIBIT B
PERMITTED EXCEPTIONS TO TITLE
EXHIBIT "H"
This Instrument Prepared by:
Daniel J. Perlman
Katten Muchin Zavis Rosenman
525 W. Monroe Street
Suite 1600
Chicago, Illinois 60661
BILL OF SALE, ABSOLUTE
KNOW ALL MEN BY THESE PRESENTS, that ______________________________,
having an address at c/o Diversified Investments Services, LLC, 7625 Wisconsin
Ave., Suite 150, Bethesda, Maryland 20814 (hereinafter called "Grantor"), for
and in consideration of the sum of Ten and No/100 Dollars ($10.00) lawful money
of the United States, to it paid by ________________________, a ______________
____________________ (hereinafter called "Grantee") having an address at c/o
Manufactured Home Communities, Inc., Two North Riverside Plaza, Suite 800,
Chicago, Illinois 60606, the receipt of which is hereby acknowledged, has
granted, bargained, sold, transferred and delivered, and by these presents does
grant, bargain, sell, transfer and deliver unto Grantee, its legal
representatives, successors and assigns, the following personal property located
on or about the real property comprising _______________ Mobile Home Park in
__________________ County, __________________, as more particularly described on
Exhibit "A" attached hereto:
See Exhibit "B" attached hereto for personal property conveyed hereby.
TO HAVE AND TO HOLD the same unto Grantee, its legal representatives,
successors and assigns forever.
AND Grantor does for itself and its representatives, successors and
assigns, covenant to and with Grantee, its legal representatives, successors and
assigns, that it is the lawful owner of the property specified herein, that it
has good right to sell the property, that the property is free of all
encumbrances, and that it will warrant and defend the sale of the property unto
Grantee, its legal representatives, successors and assigns against the lawful
claims and demands of all persons whomsoever.
IN WITNESS WHEREOF, Grantor has caused these presents to be executed
this ____ day of ____________________, 2004.
Signed, sealed and delivered in the presence
of:
WITNESSES: _____________________________________
a______________________________
__________________________________
Print Name:
By:__________________________________
__________________________________ Barry L. Haase
Print Name:
STATE OF _____________ )
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me this ____ day of
_______________, 2004 by Barry L. Haase, as ________________________ of
___________________________________, a ________________ ________________ on
behalf of _____________________________. Such person is personally known to me
or has produced a ________________ driver's license and did not take an oath.
___________________________________
NOTARY PUBLIC
Printed Name of Notary: ___________
Commission No.: ____________________
(NOTARIAL SEAL) Commission Expiration: ______________
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
SCHEDULE OF PERSONAL PROPERTY
All tangible personal property to be conveyed by Grantor to Grantee under the
terms of that certain Purchase and Sale Agreement with date of December ____,
2003, including, without limitation, the personal property hereinafter described
(see following pages):
EXHIBIT "I"
[LETTERHEAD OF SELLER]
__________ _____, 2004
RE: [NAME OF DEVELOPMENT] (the "Property")
Dear Residents:
This is to advise you that as of the date hereof the Property has been
sold to _____________________ ("Purchaser") whose address is Two North Riverside
Plaza, Suite 800, Chicago, Illinois 60606. Effective as of the date hereof,
Purchaser is responsible for management of the Property.
Please continue to make all payments of rent and other charges due
under your lease or occupancy agreement by mail or personal delivery to the
management office at the Property.
Sincerely,
____________________________________,
a____________________________________
By:__________________________________
Name:_____________________________
Title:____________________________
EXHIBIT "J"
[LETTERHEAD OF SELLER]
__________ ____, 2004
RE: [NAME OF DEVELOPMENT] (the "Property")
To Whom It May Concern:
This is to advise you that as of the date hereof the Property has been
conveyed to ________________________ ("Purchaser"), whose address is Two North
Riverside Plaza, Suite 800, Chicago, Illinois 60606. Effective as of the date
hereof, Purchaser is responsible for management of the Property.
Sincerely,
____________________________________,
a____________________________________
By:__________________________________
Name:_____________________________
Title:____________________________
EXHIBIT "K"
ASSIGNMENT OF LEASES AND SECURITY DEPOSITS
THIS ASSIGNMENT OF LEASES AND SECURITY DEPOSITS (this "Assignment") is
made this ___ day of _________________, 2004, by and between
_____________________________________________________________, having an address
of c/o Diversified Investments Services, LLC, 7625 Wisconsin Ave., Suite 150,
Bethesda, Maryland 20814 (hereinafter "Assignor") and , a , having an address of
c/o Manufactured Home Communities, Inc., Two North Riverside Plaza, Suite 800,
Chicago, Illinois 60606 (hereinafter "Assignee").
WHEREAS, Assignor, by Warranty Deed of even date herewith, has conveyed
to Assignee the land described in Exhibit "A" attached hereto and made a part
hereof (the "Land"); and
WHEREAS, Assignor and Assignee intend that Assignor also assign to
Assignee Assignor's interest as Lessor or Landlord under those certain
manufactured home lot leases and other occupancy agreements as to portions of
the Land (the "Leases") identified on Exhibit "B" attached hereto.
NOW, THEREFORE, Assignor and Assignee, for and in consideration of Ten
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby agree as follows:
1. Assignor by these presents does hereby assign to Assignee all
of Assignor's right, title and interest in and to the Leases identified in
Exhibit "B" attached hereto and by this reference incorporated herein and all
security deposits and prepaid rents held by Assignor with respect to the Leases.
Security deposits and prepaid rents have been assigned by giving Assignee a
credit against the purchase price of the Land.
2. Assignor warrants and represents to Assignee that it is the
Lessor or Landlord under the Leases and that its interest therein has not been
pledged, assigned, mortgaged or otherwise transferred by Assignor, other than as
collateral security for the existing first note and mortgage upon the Land.
3. Assignee hereby accepts such assignment upon the terms and
subject to the conditions set forth herein, and Assignee hereby assumes and
agrees to perform all covenants and obligations of Assignor under the Leases
assigned hereby accruing or arising from, after and including the date hereof,
with Assignor remaining responsible for all such covenants and obligations
accruing or arising prior to the date hereof.
4. Assignor hereby agrees to indemnify, defend and hold Assignee
harmless from and against all claims, costs, expenses, demands, actions,
judgments and liabilities arising out of all matters or events related to the
Lessor's or Landlord's obligations under the Leases arising
prior to the date hereof. Assignee hereby agrees to indemnify, defend and hold
Assignor harmless from and against all claims, costs, expenses, demands,
actions, judgments and liabilities arising out of all matters or events related
to the Lessor's or Landlord's obligations under the Leases arising from, after
and including the date hereof.
5. This Assignment shall be binding on and inure to the benefit
of Assignor and Assignee, and their respective successors and assigns.
[Signature Page Follows]
EXECUTED as of the date first above written.
WITNESSES: __________________________________, a
__________________ ________________
__________________________________
Name:
By: _________________________________
Barry L. Haase
__________________________________
Name:
STATE OF ________________ )
COUNTY OF ________________ )
The foregoing instrument was acknowledged before me this ____ day of
_______________, 2004 by Barry L. Haase, as ________________________________ of
____________________________________, a ______________ _______________________
on behalf of ______________________________________. Such person is personally
known to me or has produced a ___________________ driver's license and did not
take an oath.
________________________________
NOTARY PUBLIC
Printed Name of Notary: ________
Commission No.: ________________
(NOTARIAL SEAL) Commission Expiration:__________
ACCEPTANCE OF ASSIGNMENT OF LEASES
______________________, a_____________ _____________, as Assignee in
the above Assignment of Leases and Security Deposits ("Assignment"), does hereby
consent to and accept said Assignment according to the terms therein set forth,
and agree to abide by each and every of the terms of the Assignment.
Dated this ____ day of _____________, 2004.
Signed, sealed and delivered
in the presence of: _______________________, a___________
_____________________
By: ______________________________
Name: ______________________________
Title: ______________________________
__________________________________
Name:
__________________________________
Name:
STATE OF ____________________
COUNTY OF ___________________
The foregoing instrument was acknowledged before me this __ day of
__________, 2004 by ___________________________, as _________________of
____________________________, on behalf of the ________________________________
.. Such person is personally known to me or has produced a ________driver's
license as identification and did not take an oath.
________________________________
NOTARY PUBLIC
Printed Name of Notary: ________
Commission No.: ________________
(NOTARIAL SEAL) Commission Expiration:__________
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
SCHEDULE OF LEASES
EXHIBIT "L"
ASSIGNMENT OF SERVICE CONTRACTS
AND INTANGIBLE PERSONAL PROPERTY
THIS ASSIGNMENT OF SERVICE CONTRACTS AND INTANGIBLE PERSONAL PROPERTY
("Assignment") is made this ___ day of _________________, 2004, by and between
______________________________________________________________, having an
address of c/o Diversified Investments Services, LLC, 7625 Wisconsin Ave., Suite
150, Bethesda, Maryland 20814 ("Assignor") to _______________, a _____________,
having an address of c/o Manufactured Home Communities, Inc., Two North
Riverside Plaza, Suite 800, Chicago, Illinois 60606 ("Assignee").
I.
RECITALS
1.1 Assignor, as Seller, has agreed to sell its interest in the
land described in Exhibit "A" attached hereto (the "Land") and all buildings and
other improvements owned by Assignor constructed thereon (the "Improvements")
(the Land and the Improvements shall sometimes hereinafter together be referred
to as the "Property") to Assignee, as Buyer, pursuant to the terms of that
certain Purchase and Sale Agreement between (among other parties) Assignor, as
Seller, and Assignee, as Buyer, with effective date of December ___, 2003.
1.2 Assignor has entered into certain service contracts for the
benefit of the Property as described in Exhibit "B" attached hereto and made a
part hereof (the "Service Contracts").
1.3 Assignor desires to assign to Assignee, and Assignee desires
to acquire, all right, title and interest of Assignor in and to the Service
Contracts, in and to the fictitious name "_______________________________" as
registered with the Secretary of State of the State of ______________, in and to
the telephone number (_____) ____________ and facsimile number (_____)
____________ currently used by ________________ Manufactured Home Community, to
the extent that same are legally assignable absent the consent of the issuing or
granting party, governmental agency or authority, and all right, title and
interest of Assignor in and to all licenses, permits and manufacturer,
contractor or supplier warranties relating to the Land and/or the Improvements
(collectively, the "Intangible Personal Property").
II.
AGREEMENT
2.1 In consideration of the sum of Ten Dollars ($10.00) paid by
Assignee, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Assignor hereby assigns to Assignee all of its
right, title and interest in and to the Service Contracts and the Intangible
Personal Property.
2.2 Assignor warrants and represents to Assignee that its interest
in the Service Contracts and Intangible Personal Property has not been pledged,
assigned, mortgaged or otherwise transferred by Assignor, other than as
collateral security for the first note and mortgage upon the Land.
2.3 Assignee hereby accepts such assignment upon the terms and
subject to the conditions set forth herein, and Assignee hereby assumes and
agrees to perform all covenants and obligations of Assignor under the Service
Contracts and Intangible Personal Property assigned hereby accruing or arising
from, after and including the date hereof, with Assignor remaining responsible
for all such covenants and obligations arising prior to the date hereof.
2.4 Assignor hereby agrees to indemnify, defend and hold Assignee
harmless from and against all claims, costs, expenses, demands, actions,
judgments and liabilities arising out of all matters or events related to
Assignor's obligations under the Service Contracts and Intangible Personal
Property arising prior to the date hereof. Assignee hereby agrees to indemnify,
defend and hold Assignor harmless from and against all claims, costs, expenses,
demands, actions, judgments and liabilities arising out of all matters or events
related to Assignor's obligations under the Service Contracts and Intangible
Personal Property arising from, after and including the date hereof.
2.5 This Assignment shall be binding on and inure to the benefit
of Assignor and Assignee, and their respective successors and assigns.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
from the date hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, Assignor has executed these presents as of the day
and year first hereinabove written.
Signed, sealed and delivered
in the presence of:
WITNESSES: _____________________________________
a______________________________
__________________________________
Print Name:
By:________________________________
_______________________________ Barry L. Haase
Print Name:
STATE OF ________________ )
COUNTY OF ________________ )
The foregoing instrument was acknowledged before me this ____ day of
_________, 2004 by Barry L. Haase, as _____________________________________ of
___________________________________________, a _______________ _________________
on behalf of ____________________________________. Such person is personally
known to me or has produced a ___________________ driver's license and did not
take an oath.
________________________________
NOTARY PUBLIC
Printed Name of Notary: ________
Commission No.: ________________
(NOTARIAL SEAL) Commission Expiration:__________
ACCEPTANCE OF ASSIGNMENT OF SERVICE CONTRACTS
AND INTANGIBLE PERSONAL PROPERTY
________________________, a_____________ ___________, as Assignee under
the above Assignment of Service Contracts and Intangible Personal Property
("Assignment"), does hereby consent to and accept said Assignment according to
the terms therein set forth, and agrees to abide by each and every of the terms
of the Assignment.
Dated this ____ day of ______________, 2004.
Signed, sealed and delivered
in the presence of: _______________________, a____________________
By: ______________________________
Name: ______________________________
Title: ______________________________
__________________________________
Name:
__________________________________
Name:
STATE OF ____________________
COUNTY OF ___________________
The foregoing instrument was acknowledged before me this __ day of
___________, 2004, by ______________________, as _____________________ of
_____________________, a __________________, on behalf of the
____________________________. Such person is personally known to me or has
produced a _____________ driver's license as identification and did not take an
oath.
________________________________
NOTARY PUBLIC
Printed Name of Notary: ________
Commission No.: ________________
(NOTARIAL SEAL) Commission Expiration:__________
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
SCHEDULE OF SERVICE CONTRACTS
EXHIBIT "M"
SCHEDULE OF PROPERTY NET OPERATING INCOME
(TO BE COMPLETED WITHIN 15 DAYS AFTER THE DATE OF THIS AGREEMENT)
PROPERTY SITES NOI *
- -------- ----- -----
1. $
2. $
3. $
4. $
5. $
6. $
7. $
8. $
9. $
10. $
11. $
Total: $
*annualized net operating income
EXHIBIT "N"
SCHEDULE OF ADDITIONAL DUE DILIGENCE DELIVERIES (FLORIDA DEVELOPMENTS)
1. Confirmation that annual filing fees have been paid to the
Florida Department of Business and Professional Regulation (the "Department").
2. Confirmation of approval by the Department of all prospectuses
utilized with respect to each Florida Development, and identification of the
lots to which each prospectus applies.
3. Confirmation that the applicable prospectus was delivered to
each tenant and completed with correct information for such tenant's lot.
4. Confirmation that Leases are signed and are in the file for
the initial term of each tenant, as well as copies of Leases signed for
subsequent terms, if any.
5. Confirmation that the approved prospectus(es), if approved
prior to 1988, have been amended to conform to statutory changes made in 1986
and 1988.
6. Confirmation that records of meetings with the tenants'
negotiation committee for any year in which the rent was contested include a
written record of the "material factors" used in establishing the lot rental
amount as disclosed to the committee, pursuant to Rule 7D 32.004, Fla. Admin.
Code.
7. Confirmation that records of security deposits, if any, are
maintained in appropriate accounts pursuant to the requirements of Section
83.49, Florida Statutes. If there are deposits, provisions must be made to
transfer those funds to Purchaser at Closing.
8. Copies of rental increase notices from 1987 to the present
with confirmation of mailing within ninety-five (95) days of effective date.
9. Confirmation that rental increase notices have been filed with
the Department for the years 1992 to the present.
10. Confirmation that all advertising that has been used with
respect to each Florida Development since 1987 has been filed with the
Department. A copy of all advertising used should be made available to Purchaser
upon demand.
11. Written confirmation that the homeowners association at each
Florida Development was incorporated in accordance with Section 723.075 -
723.079, Florida Statutes. There should be notification by the homeowners
association of such incorporation by certified mail, return receipt requested.
12. Written confirmation that any notices of changes in each
Florida Development's rules or regulations, reductions in services or utilities
or amendments to each Florida Development's prospectus(es) have been filed with
the Department.
13. Confirmation that Seller has complied with the notice
provisions of Section 723.071(2), Florida Statutes.
14. With respect to any Individual Property considered exempt from
sales tax, a copy of the DR-72-2 filed with the Florida Department of Revenue
("FDOR") and the Certificate of Registration issued by the FDOR for 2001, 2002
and 2003.
EXHIBIT "O"
SCHEDULE OF ADDITIONAL DUE DILIGENCE DELIVERIES (GENERAL)
1. Blueprints of existing as-builts, including grading, utilities, common
area facilities, etc.
2. Schedule of all contracts relating to miscellaneous revenues (laundry,
vending, cable television, etc.) (if different from Service Contracts).
3. Schedule of current employee salaries and related benefits.
4. Intentionally omitted.
5. Copies of all real estate and personal property tax bills for the prior
two (2) years and all correspondence relating to said real estate or
personal property tax bills.
6. Schedule of all utility bills with vendor name, account number and
payments for the prior two (2) years.
7. Intentionally omitted.
8. Schedule of all current litigation related to the Property or its
tenants and correspondence relating to any open litigation or zoning
disputes relating to the Property.
9. Accounts receivable aging report and written description of current
collection and late fee policies.
10. Paid bill files and check registers for review for the prior two (2)
years.
11. Copies of all permits and licenses (front and back), including
certificate(s) of occupancy.
12. Copies of all warranties still in effect.
13. Schedule of all current zoning violations or disputes.
14. Bank statements for the prior two (2) years for the account where
rental revenues are deposited, including related enclosures.
15. General ledger reports for the prior two (2) years.
16. Rent rolls for the prior two (2) years.
17. Copies of all paid repair and maintenance invoices over $500.00.
18. Copies of all paid administrative invoices over $500.00.
19. Tenant correspondence, including rent increase notices, advertisements,
tenant applications, tenant reports, tenant work orders or maintenance
requests, and security
complaints (or security log, if this is the methodology for tracking
security complaints/incidents).
20. Existing environmental, engineering, soil testing and appraisal
reports, if any.
21. Intentionally omitted.
22. Current-year operating and capital budget, if any.
23. Five (5) year capital budget, if any.
24. Copies of 2003 sales tax returns, if any.
25. Copies of organizational documents of the Property Owners.
26. Copies of 2002 federal income tax return of each Entity Seller.
EXHIBIT "P"
FORM OF OPINION OF COUNSEL
Unless otherwise defined herein, the definitions of capitalized terms
used in this opinion shall be the same as those set forth in the Purchase and
Sale Agreement (the "Agreement") dated as of December ____, 2003 by and among
MHC Operating Limited Partnership, Diversified Investments Services, LLC, and
the Sellers (as defined in the Agreement).
A. Each Seller and each Property Owner is duly organized, validly
existing and in good standing under the laws of the state of its organization
and has full power and authority to carry on its business as it is now being
conducted.
B. The execution and delivery of the Transaction Documents, and
the performance by each of the Sellers of their respective obligations
thereunder, will not (i) violate the organizational documents of such Seller,
(ii) to our knowledge, result in a breach of any of the terms or conditions of
or constitute a default under any material written indenture, contract,
instrument, agreement, lease or license to which any of the Sellers or any
Property Owner is a party or by which any of the Sellers or any Property Owner
is bound; or (ii) to our knowledge, constitute an event which would permit any
party to modify, alter, amend, cancel or otherwise affect or terminate any such
indenture, contract, instrument, agreement or license. To our knowledge, none of
the Sellers nor any Property Owner is a party to, nor expressly bound by, any
judgment, injunction or decree of any court or governmental authority which
would restrict or interfere with the performance by the Sellers of their
respective obligations under the Transaction Documents.
C. The execution and delivery of the Transaction Documents, and
the performance by each of the Sellers of their respective obligations
thereunder, have been duly authorized by all requisite corporate, partnership or
limited liability company action, as applicable.
D. The Transaction Documents have been duly executed and
delivered by each of the Sellers.
E. The Transaction Documents are enforceable against each of the
Sellers in accordance with their terms.
F. Immediately prior to the consummation of the Transaction, the
Entity Sellers were the sole registered owners of the Equity Interests. Assuming
Purchaser has purchased the Equity Interests for value in good faith and without
notice of any adverse claim, Purchaser will have acquired all of the Entity
Sellers' rights in the Equity Interests free of any adverse claim, any lien in
favor of the issuer and any restrictions on transfer imposed by the issuer.
G. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is required
for the execution and delivery by each of the Sellers of the Transaction
Documents and for the consummation by each of the Sellers of the Transaction.
EXHIBIT "Q-1" THROUGH "Q-11"
DESCRIPTION OF EQUITY INTERESTS
[SEE ATTACHED]
(TO BE ATTACHED WITHIN 15 DAYS AFTER THE DATE OF THIS AGREEMENT)
EXHIBIT "R"
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment") is made as
of _______ __, 2004 by __________________ ("Assignor"), a limited partner of
______________, L.P., a ___________ limited partnership (the "Partnership"), in
favor of , a ("Assignee"). This Assignment is being entered into pursuant to
that certain Purchase and Sale Agreement (the "Agreement") dated as of December
____, 2003, by and among Assignee, Diversified Investments Services, LLC, a
Delaware limited liability company and the Sellers (as defined in the
Agreement).
A. Assignor hereby assigns, sets over, transfers, grants and
conveys unto Assignee all of Assignor's right, title and interest in and to the
Partnership, including, without limitation, Assignor's interest as a limited
partner of the Partnership (collectively, the "Interest"), free and clear of all
liens, claims and encumbrances.
B. Assignee hereby accepts such assignment of the Interest from
Assignor and assumes all of the liabilities of Assignor with respect to the
Interest arising on and after the date hereof and agrees to perform all of the
duties and obligations to be performed by Assignor under the Agreement of
Limited Partnership of the Partnership, dated as of ________________, as the
same may be amended from time to time (with Assignor remaining responsible for
all such liabilities, duties and obligations accruing or arising prior to the
date hereof).
C. The foregoing assignments, setting over, transfers, grants and
conveyances are made without representation or warranty of any kind or nature
whatsoever, except as may otherwise be expressly set forth in the Agreement. The
parties agree to take any further actions and execute and deliver any additional
documents which may be necessary or appropriate to evidence and/or effect the
transfer and assignment of the Interest from Assignor to Assignee.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed as of the date first above written.
ASSIGNOR:
____________________________________________
By:__________________________________
Name: _______________________________
Its:_________________________________
ASSIGNEE:
____________________________________________
By:__________________________________
Name: _______________________________
Its:_________________________________
EXHIBIT "S"
INTENTIONALLY OMITTED
EXHIBIT "T"
SCHEDULE OF RENT INCREASE HOLDBACK
CAP RATE
RESULTING NET OF AMOUNT OF
SITE RENT # SITES INCOME DEFEASANCE HOLDBACK TEST DATE
-----------------------------------------------------------------------
SHANGRI LA 9.00 157 $ 16,956 7.10% $ 238,817 04/01/04
SIXTH AVE. 10.00 127 $ 15,240 7.75% $ 196,645 05/01/04
CACTUS GARDENS 75.00 277 $ 20,775 7.62% $ 272,638 10/01/04
DESERT PARADISE 50.00 67 $ 3,350 7.42% $ 45,148 10/01/04
SUNI SANDS 50.00 181 $ 9,050 8.56% $ 105,724 11/15/04
GOOSE CREEK RESORT 160.00 498 $ 79,680 6.99% $1,139,914 04/01/04
WATERWAY RV 200.00 331 $ 66,200 7.16% $ 924,581 04/01/04
----------
TOTAL $2,923,468
----------
EXHIBIT "U"
INTENTIONALLY OMITTED.
EXHIBIT "V"
INTENTIONALLY OMITTED.
EXHIBIT "W"
FORM OF NON-IMPUTATION AFFIDAVIT
State of __________________)
) ss
County of _________________)
The undersigned, after being first duly sworn, states as follows:
1. The undersigned are all of the members of ___, a ___ ("Company") which
owns the properties described in Exhibit A attached hereto ("Properties").
2. To the best of the knowledge of the undersigned, there exists no
unrecorded deed, land contract, lease, option to purchase, mortgage, deed of
trust, judgment lien, tax lien, agreement or other instrument or encumbrance
affecting title to any of the Properties, other than as described in Title
Insurance Commitment Number ____________ issued by _____________ on ____________
(the "Title Commitment").
3. Neither the Company nor any of its members have done anything to create
any deed, land contract, lease, option to purchase, mortgage, deed of trust,
judgment lien, tax lien, agreement or other instrument or encumbrance affecting
title to any of the Properties, other than as disclosed in the Title Commitment.
4. There exists no litigation nor threatened litigation against the
Company which purports to affect the Properties.
5. An independent examination of the business records of the Company would
reveal that the records would not disclose or suggest the existence of any
unrecorded legal or equitable interests in the Properties.
6. The undersigned make this affidavit for the purpose of inducing MHC
Operating Limited Partnership, an Illinois limited partnership ("MHC") to close
the transactions contemplated by that certain Purchase and Sale Agreement dated
as of December ____, 2003 between MHC, as purchaser, and Diversified Investments
Services, LLC, a Delaware limited liability company, and the Sellers (as defined
therein), as amended from time to time, with the knowledge that MHC and its
affiliate _____________, L.L.C., a Delaware limited liability company (the
"Membership Interest Purchaser") which is acquiring the membership interests in
the Company will rely on the assurances and representations made herein.
[Remainder of page intentionally left blank]
Each of the undersigned certify under penalty of perjury that the foregoing is
true and correct.
_____________________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
EXHIBIT "X"
SCHEDULE OF RENTAL HOME HOLDBACK
Cap Rate
Resulting Net of Amount of
Site Rent # Sites Income Defeasance Holdback Test Date
-------------------------------------------------------------------------
TOPICS RV RESORT $1,500.00 10 15,000 8.01% $ 187,266 04/01/04
DESERT PARADISE $1,800.00 10 18,000 7.42% $ 242,558 04/01/04
SUNI SANDS $1,800.00 20 36,000 8.56% $ 420,561 04/01/04
---------
TOTAL $ 850,414