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Registration No. 333-
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U.S. Securities and Exchange Commission Washington, DC 20549
FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. ....)
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MEADOWS PRESERVATION, INC.
................................................................................
(Name of small business issuer in its charter)
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<S> <C> <C>
FLORIDA 6519 65-0860249
- ------------------------- ---------------------------- ------------------------------
(State or jurisdiction of (Primary standard industrial (I.R.S. Employer Identification
incorporation or organization) classification code number) No.)
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2555 PGA BOULEVARD, PALM BEACH GARDENS, FL 33410 (561) 626-0888
(Address and telephone number of principal executive offices and principal place
of business)
................................................................................
RICHARD MCCANN, PRESIDENT
MEADOWS PRESERVATION, INC.
2555 PGA BOULEVARD, PALM BEACH GARDENS, FL 33410
(561) 626-0888
................................................................................
(Name, address and telephone number of agent for service)
COPIES OF CORRESPONDENCE TO:
BLAKE D. RUBIN
STEPTOE & JOHNSON LLP
1330 CONNECTICUT AVENUE, NW
WASHINGTON, DC 20036
(202) 429-6211
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.............
.............................................................................[_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering..............................................[_]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering..............................................[_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box..........................................[_]
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CALCULATION OF REGISTRATION FEE
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===========================================================================================================================
DOLLAR PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE (1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share.................... $2,354,000 $1,000 /share $2,354,000 $694.43
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
___________________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
Disclosure Alternative used (check one): Alternative 1............;
Alternative 2......X.......
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Cross Reference Sheet
Between Form SB-1 and Prospectus
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Registration Statement Item and Heading Location in Prospectus
- --------------------------------------- ----------------------
1. Inside Front and Outside Back Cover Inside Front and Outside Back Cover
Pages of Prospectus Pages of Prospectus; Additional Information
2. Significant Parties Management
3. Relationship with Issuer of Experts Named Not Applicable
in Registration Statement
4. Legal Proceedings Legal Proceedings
5. Changes in and Disagreements with Not Applicable
Accountants
6. Disclosure of Commission Position on Disclosure of Commission Position
Indemnification for Securities Act Liabilities on Indemnification for Securities Act
Liabilities
Model B Items
- -------------
1. Cover Page Front Cover Page
2. Distribution Spread Not Applicable
3. Summary Information, Risk Factors Questions and Answers
and Dilution Summarizing this Prospectus; Risk Factors
4. Plan of Distribution Plan of Distribution of MPI Common Shares
5. Use of Proceeds to Issuer Use of Proceeds
6. Description of Business Description of Business
7. Description of Property Description of Property
8. Directors, Executive Officers and Management
Significant Employees
9. Remuneration of Directors and Officers Management
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10. Security Ownership of Management Management
and Certain Securityholders
11. Interest of Management and Others Interest of Management and Others
in Certain Transactions in Certain Transactions
12. Securities Being Offered Description of Securities
Part F/S
- --------
1. Financial Information Required in Prospectus Financial Statements
S-11
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13. Investment Policies of Registrant Description of Business; Use of Proceeds
14. Description of Real Estate Description of Property
15. Operating Data Description of Property
Guide 5
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1. Cover Page Front Cover
2. Suitability Standards Not Applicable
3. Summary of the Partnership and Use Description of Business; Use of
of Proceeds Proceeds
4. Compensation and Fees to the General Not Applicable
Partners and Affiliates
5. Conflicts of Interest Interest of Management and Others in
Certain Transactions
6. Fiduciary Responsibility of the Not Applicable
General Partner
7. Risk Factors Risk Factors
8. Prior Performance of the General Not Applicable
Partner and Affiliates
9. Management Management
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10. Investment Objectives and Policies Description of Business
11. Description of Real Estate Investments Description of Property
12. Federal Taxes Certain United States Federal Income Tax
Considerations
13. Glossary Glossary
14. Summary of Partnership Agreement Summary of the Partnership Agreement
15. Reports to Limited Partners Not Applicable
16. The Offering--Description of the Units Description of Securities
17. Redemption, Repurchase and Right of Description of Securities; Summary
Presentment Agreements of the Partnership Agreement
18. Plan of Distribution Plan of Distribution of MPI Common Shares
19. Summary of Promotional and Sales Not Applicable
Material
20. Undertakings Not Applicable
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MPI
MEADOWS PRESERVATION, INC.
RESCISSION OFFER
OFFER TO REFUND $845,000 OF PRE-FORMATION ADVANCES
OR
OFFER TO CONVERT PRE-FORMATION ADVANCES INTO
AN AGGREGATE OF 845 SHARES OF MPI COMMON STOCK
We are making this offering only to those owners of manufactured or
mobile homes who lease lots located in The Meadows Mobile Home Park at 2555 PGA
Boulevard, Palm Beach Gardens, Florida and who previously advanced money to our
predecessor and who have not been refunded such advances.
We are your homeowners' association for purposes of the Florida Mobile
Home Act. We are a for-profit corporation which has succeeded by mergers the
not-for-profit homeowners' association to which homeowners advanced a total of
$845,000, exclusive of $33,000 previously refunded.
Instead of accepting this refund, you can choose to have the money you
advanced converted into shares of common stock of MPI, with each $1,000 you
advanced converted into one share.
CONVERTING YOUR ADVANCE INTO COMMON STOCK INVOLVES CERTAIN RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE ___.
Whether you choose to accept the refund or to convert your advance
into shares of common stock, you will receive a payment of interest on the money
you advanced at the rate of 10 percent per annum from December 16, 1997 until
[Rescission Offer Expiration Date].
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The officers and directors of MPI are making this offering to refund
your advance or to convert your advance into common stock. They will not be
paid for their efforts.
Prospectus dated __________, 1998
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MPI
MEADOWS PRESERVATION, INC.
2,354 SHARES OF COMMON STOCK
$1,000 PER SHARE
MPI is making this offering only to the owners of manufactured or
mobile homes who lease lots located in The Meadows Mobile Home Park at 2555 PGA
Boulevard Palm Beach Gardens, Florida. The 2,354 shares offered include an
aggregate of 845 shares being offered to those homeowners who have previously
advanced an aggregate of $845,000, exclusive of $33,000 previously refunded, to
MPI's predecessor.
We are your homeowners' association for purposes of the Florida Mobile
Home Act. Using the money from the sale of common stock in this offering, we
intend to form, and be a general partner in, a general partnership that will
operate your mobile home park. No public market exists for shares of common
stock of MPI and none will exist after this offering.
PURCHASING THESE SHARES OF COMMON STOCK INVOLVES CERTAIN RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE ___.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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Per Share Total
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Minimum Maximum
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<S> <C> <C> <C>
Offering Price to the Meadows homeowners........ $1,000 0 $2,354,000
Underwriting discounts.......................... 0 0 0
Proceeds to MPI................................. $1,000 0 $2,354,000
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The officers and directors of MPI are offering these shares on behalf
of MPI. They will not be paid for their sales efforts.
Prospectus dated __________, 1998.
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS SUMMARIZING THIS PROSPECTUS...................................... 1
RISK FACTORS........................................................................... 9
EVENTS LEADING TO THIS OFFERING........................................................ 15
THE RESCISSION OFFER................................................................... 18
THE OFFER.............................................................................. 23
USE OF PROCEEDS........................................................................ 24
CAPITALIZATION......................................................................... 25
DIVIDEND POLICY........................................................................ 25
DESCRIPTION OF BUSINESS................................................................ 26
DESCRIPTION OF PROPERTY................................................................ 29
LEGAL PROCEEDINGS...................................................................... 31
SUMMARY OF THE PARTNERSHIP AGREEMENT................................................... 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.. 45
MANAGEMENT............................................................................. 46
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.............................. 50
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS................................ 51
DESCRIPTION OF SECURITIES.............................................................. 62
PLAN OF DISTRIBUTION OF MPI COMMON SHARES.............................................. 63
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.... 64
LEGAL MATTERS.......................................................................... 64
EXPERTS................................................................................ 64
ADDITIONAL INFORMATION................................................................. 65
GLOSSARY............................................................................... 65
FINANCIAL STATEMENTS................................................................... F-1
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QUESTIONS AND ANSWERS SUMMARIZING THIS PROSPECTUS
THESE QUESTIONS AND ANSWERS SUMMARIZE AND HIGHLIGHT SELECTED INFORMATION
FROM THIS PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND WHAT OWNERSHIP OF MPI COMMON SHARES MEANS AND
FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS INVOLVED, YOU SHOULD READ THE
ENTIRE PROSPECTUS CAREFULLY. CAPITALIZED TERMS USED IN THIS PROSPECTUS ARE MORE
FULLY DEFINED IN THE GLOSSARY ON PAGE __.
Q-1. WHAT IS MPI?
A-1. MPI is Meadows Preservation, Inc., a for-profit, stock corporation
organized under the laws of Florida. Its offices are located at 2555 PGA
Boulevard, Palm Beach Gardens, Florida 33410. Its telephone number is (561)
626-0888. MPI is the successor, by mergers, to Meadows Preservation Inc., a
Florida non-stock, non-profit membership corporation. It is both the owner of
The Meadows Mobile Home Park, 2555 PGA Boulevard, Palm Beach Gardens, Florida,
and the homeowners' association for the Park for purposes of the Florida Mobile
Home Act. All of the funds needed to purchase the Park were loaned by an
affiliate of Blue Ribbon Communities Limited Partnership ("BRC"). MPI is
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committed to contributing the beneficial interest in the Park and all proceeds
of this offering to a general partnership formed by MPI and BRC to operate the
Park.
Q-2. WHAT IS THE PARK?
A-2. The Park is The Meadows Mobile Home Park, which comprises fifty-five acres
of land currently used as a mobile home park, located at 2555 PGA Boulevard,
Palm Beach Gardens, Florida, 33410.
Q-3. WHO ARE THE MEADOWS HOMEOWNERS?
A-3. The Meadows Homeowners are the owners of manufactured or mobile homes who
lease lots located in the Park.
Q-4. WHY WAS MPI ORGANIZED?
A-4. MPI's predecessor, Meadows Preservation, Inc., a non-stock, not-for-
profit, membership corporation ("MPI-1") was organized under the laws of Florida
-----
to be the homeowners' association for the Park. All Meadows Homeowners were
eligible to become members and any Meadows Homeowner who consented in writing to
become a member and paid $1.00 for a membership certificate automatically became
a member. As a non-stock, not-for-profit membership corporation, MPI-1 was
unable to offer stock to its members, the Meadows Homeowners. MPI was organized
as a for-profit, stock corporation in order to permit the members of MPI-1 to
become shareholders. MPI-1 then merged into MPI through a series of mergers.
Q-5. WHAT IS MPI'S PURPOSE?
A-5. MPI is the homeowners' association for purposes of the Florida Mobile Home
Act and is one of two general partners in the Partnership. MPI will transfer
the Beneficial Interest in the Park to the Partnership but will continue to own
the
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record title to the Park and will operate the Park through the Partnership.
Q-6. WHAT IS THE PARTNERSHIP?
A-6. The Partnership is The Meadows Resort Partnership, a general partnership
formed under a general partnership agreement dated as of _____, 1998 between MPI
and BRC (the "Partnership Agreement"). The Partnership will own 100% of the
---------------------
Beneficial Interest in the Park and operate the Park. Interests in the
Partnership initially will be comprised of 4,708 partnership units, which are
fractional shares of an ownership interest in the Partnership.
Q-7. WHAT DOES IT MEAN TO OWN THE BENEFICIAL INTEREST IN THE PARK?
A-7. The Beneficial Interest is the economic benefit arising from ownership of
real estate, as distinguished from the "record interest," or "legal title" to
property. MPI, as successor to MPI-1, currently owns both the "Beneficial" and
"record" interests in the Park. MPI has agreed to contribute all of the funds
raised in this offering and the Beneficial Interest in the Park to the
Partnership, but will continue to be the record owner of the Park. As the
record owner, MPI will own the record interest to the Park, but all rights with
respect to the Park, such as the right to collect rent from tenants and the
right to the proceeds from any sale of the Park, will belong to the Partnership.
The Partnership will be treated as owner of the Park for Federal income tax
purposes.
Q-8. HOW MANY PARTNERSHIP UNITS WILL MPI OWN?
A-8. MPI and BRC each currently owns one partnership unit for which they each
contributed $1,000 to the Partnership. The partnership units will be divided
between MPI and BRC, but the number of partnership units to be issued to MPI
will not exceed 50 percent of all of the partnership units and the number of
partnership units to be issued to BRC will not be less than 50 percent of all of
the partnership units. Accordingly, the maximum number of partnership units
that may initially be issued to MPI will not exceed 2,354 and the minimum number
of partnership units that may initially be issued to BRC will not be less than
2,354. MPI will contribute to the Partnership all of the proceeds of this
offering. The number of partnership units that will be issued by the
Partnership to MPI will equal the total amount contributed by MPI to the
Partnership (which will not exceed $2,354,000), divided by $1,000.
Q-9. WHO ELSE WILL OWN PARTNERSHIP UNITS?
A-9. BRC. MPI and BRC are the only partners in the Partnership. BRC will
purchase all partnership units not purchased by MPI.
Q-10. WHAT RIGHTS AND OBLIGATIONS DOES MPI HAVE AS A GENERAL PARTNER OF THE
PARTNERSHIP?
A-10. As a general partner of the Partnership, MPI has the right to share in any
profits of the Partnership and, unless any creditors of the Partnership agree
otherwise, is liable for the debts and other obligations of the Partnership.
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Q-11. WHAT WILL MPI PAY FOR ITS PARTNERSHIP UNITS?
A-11. MPI will contribute all of the proceeds of the offering to the Partnership
in return for partnership units, as described in the Answer to Question 7, at
the rate of $1,000 for each partnership unit.
Q-12. WHAT WILL BRC PAY FOR ITS PARTNERSHIP UNITS?
A-12. BRC will contribute $1,000 for each partnership unit it acquires from the
Partnership. In addition, BRC will contribute $2,256,000 to the Partnership for
which BRC may in the future receive additional partnership units if lots in the
Park that are unoccupied as of the date of the Partnership Agreement are leased
to tenants. Some or all of these additional partnership units issued to BRC may
be sold to MPI. (See "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Unoccupied Lots -
- - Issuance of Additional Partnership Units to BRC.") To the extent that BRC
does not receive additional partnership units on account of this $2,256,000
contribution, BRC will have a priority right to receive that portion of this
contribution for which it did not receive additional partnership units, without
interest, out of Partnership distributions of net capital proceeds or upon
liquidation of the Partnership.
BRC has also agreed to contribute an additional $200,000 to pay for the
cost of certain capital improvements to the Park. BRC will not be issued
additional partnership units on account of this additional contribution but this
amount will be credited to BRC's partnership capital account. In addition, BRC
will pay $100,000 to MPI, a portion of which shall be applied by MPI to pay
interest to Meadows Homeowners who advanced funds to MPI-1.
Q-13. WHO WILL MANAGE THE PARK?
A-13. MHC Management Limited Partnership ("MHC Management"), a limited
--------------
partnership that, like BRC, is owned by MHC and its affiliates, currently
manages the Park for MPI. Upon MPI's contribution of the Beneficial Interest in
the Park to the Partnership, MHC Management will continue to manage the Park.
Q-14. WHAT FEES WILL BE PAID TO BRC AND/OR ITS AFFILIATES FOR SERVICES IN
ACQUIRING AND MANAGING THE PARK?
A-14. The management agreement to be entered into between the parties will
provide that the Partnership will pay MHC Management a management fee of four
percent of gross revenues from the Park. The Partnership will pay BRC or one of
its affiliates a fee of one percent of the gross revenues from the Park for any
period of time that neither BRC nor any of its affiliates is employed as the
manager of the Park. Also, the Partnership will pay BRC or one of its affiliates
a one-time placement fee of $120,000 and will reimburse BRC and its affiliates
for all legal fees and expenses paid by BRC in connection with or relating to
this offering, including the MPI-1 corporate restructuring, the acquisition and
financing of the Park, the structuring and documentation of the Partnership and
the Penn Florida Realty LP lawsuit referred to on page ___.
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Q-15. HOW WILL PROFITS, LOSSES AND CASH DISTRIBUTIONS OF THE PARTNERSHIP BE
SHARED BY MPI AND BRC?
A-15. Generally, profits earned and losses incurred by the Partnership in
owning and operating the Park will be shared by MPI and BRC in proportion to the
number of partnership units owned by each of them. If all 2,354 of the MPI
common shares offered by this Prospectus are sold, BRC and MPI will each own
approximately 50 percent of the partnership units. If MPI sells fewer than 2,354
of the MPI common shares, it will have less to contribute to the Partnership and
will receive fewer partnership units. For example, assume MPI sells only 750 MPI
common shares. Since each $1,000 contributed to the Partnership by MPI will give
it initially a 1/4708 percentage interest in the Partnership, $750,000 invested
in the Partnership will initially result in 750/4708 or approximately a 16
percent interest in the Partnership and 16 percent of the profits and losses of
the Partnership. Cash distributions from operations, if any, from the
Partnership will also be made to the partners in accordance with each partner's
percentage interest.
QUESTIONS 16 THROUGH 22 RELATE TO THOSE MEADOWS HOMEOWNERS WHO ADVANCED AN
AGGREGATE OF $845,000, EXCLUSIVE OF $33,000 PREVIOUSLY REFUNDED, TO MPI-1.
Q-16. WHAT HAPPENED TO THE MONEY I ADVANCED TO MPI-1?
A-16. Between December 1, 1997 and December 16, 1997, some of the Meadows
Homeowners advanced an aggregate of $845,000 to MPI-1, exclusive of $33,000
refunded at the request of some of the advancing homeowners, in order to assist
in purchasing the Park. These advances were placed into an interest-bearing
bank account at Barnett Bank.
Q-17. WHAT IS THE RESCISSION OFFER?
A-17. The Rescission Offer is an offer by MPI to return all advances to the
Meadows Homeowners who made such advances to MPI-1 (and who have not already
received a refund) . If you advanced funds, you will be refunded your advance
unless you reject the Rescission Offer and elect to convert your advance into
MPI common shares in accordance with this Prospectus.
Q-18. WHY IS MPI OFFERING TO RETURN THE MONEY I ADVANCED TO MPI-1?
A-18. Your advance was obtained without registration under the Securities Act
of 1933 or the securities laws of any state. The receipt of advances by MPI-1
may have inadvertently violated the registration and antifraud provisions of the
Federal and state securities laws. The possible existence of these violations
has prompted the making of the Rescission Offer. It is the position of MPI that
whether you reject the Rescission Offer and elect to receive MPI common shares
or your advance is returned to you with interest, you will no longer be able to
assert a claim against MPI relating to any advance made by you to MPI-1.
Q-19. WHAT HAPPENS IF I ACCEPT THE RESCISSION OFFER?
A-19. If you accept the Rescission Offer, MPI will refund your advance to you
out of its interest-bearing bank account at Barnett Bank, with interest at the
rate of 10 percent per annum, the legal rate of interest in Florida, from
December 16, 1997 until [Rescission Offer Expiration Date]. You
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will not be issued any MPI common shares on account of your advance.
Q-20. HOW DO I ACCEPT THE RESCISSION OFFER AND RECEIVE A REFUND OF MY ADVANCE?
A-20. To accept the Rescission Offer, you need do nothing. You will
automatically be deemed to have accepted the Rescission Offer unless you
affirmatively reject it.
Q-21. WHAT HAPPENS IF I DON'T RESPOND TO THE RESCISSION OFFER?
A-21. If you do not respond to the Rescission Offer, you will automatically be
deemed to have accepted the Rescission Offer and MPI will refund the entire
amount of your advance, together with interest at the rate of 10 percent per
annum as provided above.
Q-22. HOW DO I REJECT MPI'S RESCISSION OFFER AND CONVERT MY ADVANCE INTO MPI
COMMON SHARES?
A-22. If you decide to use the advance you previously made to buy MPI common
shares, you must affirmatively reject the Rescission Offer. To reject the
Rescission Offer, you must complete and sign the Subscription Agreement enclosed
with this Prospectus, and send it to MPI at 2555 PGA Boulevard, Palm Beach
Gardens, FL 33410, so that it is received by [Rescission Offer Expiration
Date]. If this Subscription Agreement is received by MPI by [Rescission Offer
Expiration Date], MPI will convert your advance into a number of MPI common
shares equal to the total amount of your advance, divided by $1,000, and will
issue that number of MPI common shares to you. In addition, you will receive
interest on your advance at the rate of 10 percent per annum from December 16,
1997 until [Rescission Offer Expiration Date].
Q-23. WHO CAN BUY THE MPI COMMON SHARES OFFERED BY THIS PROSPECTUS?
A-23. Only Meadows Homeowners are eligible to buy the MPI common shares offered
by this Prospectus (the "Offer").
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Q-24. WHAT IS THE COST OF AN MPI COMMON SHARE?
A-24. In this Offer, each MPI common share costs $1,000.
Q-25. HOW MANY MPI COMMON SHARES CAN I BUY?
A-25. You may purchase as many MPI common shares as you like. However, if the
Meadows Homeowners collectively subscribe (either by rejecting the Rescission
Offer or by subscribing for MPI common shares pursuant to this Prospectus) for
more than 2,354 MPI common shares, each Meadows Homeowner who subscribes for MPI
common shares will receive a proportionately reduced number of MPI common shares
and a refund of the extra purchase price paid. For example, if you subscribe for
8 MPI common shares at a cost of $8,000 and the Meadows Homeowners collectively
subscribe for 2600 MPI common shares, you will receive 8 x 2,354/2,600 = 7.24 or
7 MPI common shares (rounding to the nearest whole number), plus a refund of
$1,000.
Q-26. CAN I BUY MPI COMMON SHARES IF I DIDN'T ADVANCE ANY MONEY TO MPI-1?
A-26. Yes, if you are the owner of a manufactured or mobile home who leases a
lot located in the Park, you are a Meadows Homeowner and are eligible to
purchase
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MPI common shares, regardless of whether you advanced funds to MPI-1.
Q-27. HOW DO I PURCHASE MPI COMMON SHARES?
A-27. If you advanced funds to MPI-1 and wish to apply those funds to the
purchase of MPI common shares, you must complete and sign the Subscription
Agreement enclosed with this Prospectus and send it to MPI at 2555 PGA
Boulevard, Palm Beach Gardens, FL 33410. MPI MUST RECEIVE YOUR SIGNED
SUBSCRIPTION AGREEMENT BY [RESCISSION OFFER EXPIRATION DATE]. To purchase
additional MPI common shares or, if you have not advanced funds, to purchase MPI
common shares, you must complete the Subscription Agreement to indicate the
total number of MPI common shares you wish to purchase. You must then sign the
Subscription Agreement and send it, together with payment of $1,000 for each MPI
common share that you want to purchase, to MPI at 2555 PGA Boulevard, Palm Beach
Gardens, FL 33410. The Offer expires on [Offer Expiration Date]. MPI must
receive your signed Subscription Agreement and payment of the purchase price,
where applicable, by [Offer Expiration Date].
Q-28. WHAT ON-GOING PAYMENT(S) WILL I BE OBLIGATED TO MAKE AS AN MPI COMMON
SHAREHOLDER?
A-28. Once you have converted your advance and/or paid your purchase price for
any MPI common shares, you will not have to make any other payments to MPI.
Q-29. WHAT WILL I OWN IF I PURCHASE MPI COMMON SHARES?
A-29. You will own an interest in MPI, which is a general partner of the
Partnership. As the owner of MPI common shares, you will indirectly own an
interest in the Partnership. MPI will contribute the purchase price of each MPI
common share sold pursuant to this offer to the Partnership and, in exchange,
receive one partnership unit for each MPI common share sold. Initially, a
partnership unit will represent a 1/4708 share of ownership in the Partnership.
Because the Partnership will own the Beneficial Interest in the Park, owning MPI
common shares will result in owning an indirect ownership interest in the Park.
Q-30. CAN MY INTEREST IN THE PARTNERSHIP AND IN THE PARK CHANGE?
A-30. Yes. Because additional partnership units may be issued by the
Partnership and also because the number of MPI common shares issued to the
Meadows Homeowners may change, your indirect share of ownership in the
Partnership and in the Park may increase or decrease.
Q-31. ARE THERE ANY RISKS INVOLVED WITH PURCHASING MPI COMMON SHARES?
A-31. There are a number of risks associated with the purchase of MPI common
shares. You should carefully read the "RISK FACTORS" commencing on page [___]
for a description of these risks.
Q-32. HOW MANY MPI COMMON SHARES ARE FOR SALE?
A-32. MPI is offering to sell a maximum of 2,354 MPI common shares. This means
that
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the Meadows Homeowners can own in the aggregate no more than 2,354 MPI common
shares.
Q-33. WHAT WILL MPI DO WITH THE MONEY IT RECEIVES FROM THE SALE OF MPI COMMON
SHARES?
A-33. MPI will contribute the total proceeds from the sale of MPI common shares
received in this offering to the Partnership in exchange for partnership units.
Q-34. WILL I RECEIVE ANY RETURN ON ANY MPI COMMON SHARES THAT I PURCHASE?
A-34. Returns cannot be guaranteed. To the extent that MPI receives
distributions from the Partnership and, after paying its expenses and taxes,
elects to distribute any excess cash flow to MPI common shareholders, they will
receive a return on their investment. There can, of course, be no assurance
that the Partnership will be profitable or that it will be able to make
distributions to MPI and BRC. Even if it does make distributions to MPI and
BRC, there can be no assurance that MPI will make distributions to MPI common
shareholders after it pays its expenses and applicable taxes, or, if it does
make distributions, that such distributions will be in any particular amount.
Q-35. WHAT ARE MY RIGHTS AS AN MPI COMMON SHAREHOLDER?
A-35. As an MPI common shareholder, you will have one vote for each MPI common
share you own. The MPI common shareholders will vote with the MPI preferred
shareholders who have one- fortieth of a vote for each share of preferred stock
they own. Only Meadows Homeowners may own MPI preferred stock and only one
share of MPI preferred stock may be owned per lot occupied in the Park. The MPI
common and preferred shareholders voting as a group have the right to elect
MPI's Board of Directors and to vote on all other issues submitted to the MPI
shareholders by MPI's Board of Directors. The MPI common shareholders have the
right to receive all cash distributions if declared by the Board of Directors,
except that upon liquidation of MPI, the MPI preferred shareholders have a one
time priority right to receive $25 for each share of MPI preferred stock they
own.
Q-36. CAN I SELL MY MPI COMMON SHARES IF I NO LONGER WANT THEM?
A-36. You may sell your MPI common shares, but there are a limited number of
persons to whom you may sell them. There is no public market for MPI common
shares and none will develop because only Meadows Homeowners (and MPI) may own
MPI common shares. If you decide to sell your MPI common shares, you can sell
them ONLY to another Meadows Homeowner or to MPI. You will have the right to
require MPI to buy your MPI common shares at a price determined by applying a
formula. This right may be limited by the Florida Business Corporation Act,
which prohibits corporations from making a distribution to shareholders where
such distribution would cause the corporation to become insolvent. THE PRICE
WHICH MPI WOULD BE REQUIRED TO PAY MAY BE LESS THAN THE $1,000 YOU WILL PAY FOR
EACH MPI COMMON SHARE. (See "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Sale of
Partnership Units Relating to Put Right and Call Right.")
7
<PAGE>
Q-37. WHAT HAPPENS IF I SELL MY HOME IN THE PARK OR MOVE IT OUT OF THE PARK?
A-37. If you relocate your manufactured or mobile home outside the Park, or if
you sell it, you MUST sell all of the MPI common shares that you own either to:
(1) the person who buys your home or rents the lot on which your home was
located; (2) another Meadows Homeowner; or (3) MPI. As outlined in the answer
to Question 36, unless limited by Florida law, you will have the right to
require MPI to buy your MPI common shares at a price determined by applying a
formula. Also, MPI will have the right to buy all of your MPI common shares at
this same formula price if you fail to sell your MPI common shares by the date
on which you sell or relocate your home. (See "SUMMARY OF THE PARTNERSHIP
AGREEMENT -- Sale of Partnership Units Relating to Put Right and Call Right.")
Q-38. WHAT HAPPENS IF MPI DOES NOT HAVE THE MONEY TO BUY MY MPI COMMON SHARES?
A-38. If MPI is required to purchase your MPI common shares, MPI has the right
to require BRC to purchase such number of MPI's partnership units as is
necessary to pay the purchase price of your MPI common shares, exclusive of any
taxes that MPI may be required to pay as a result of the sale of partnership
units. There can be no assurance that BRC will always have enough funds
available to purchase MPI's partnership units, or that, after such purchase, MPI
will have enough cash to pay for your MPI common shares. MPI's sale of
partnership units to BRC may result in taxable gain to MPI. MPI's payment of
any such tax liability will reduce MPI's ability to purchase your MPI common
shares and to make distributions to MPI common shareholders.
Q-39. WHAT HAPPENS TO MY MPI COMMON SHARES WHEN I DIE?
A-39. If you own MPI common shares at the time of your death, ownership of
those MPI common shares will pass to your estate and ultimately to your heirs or
other beneficiaries under your will. To maintain ownership of these MPI common
shares, the person who owns the MPI common shares must also own your home or
another home and lease a lot located in the Park. If at any time they do not
own a home and lease a lot located in the Park, they must sell the MPI common
shares to another Meadows Homeowner or to MPI. They will have the right to
require MPI to buy the MPI common shares at a price determined by applying a
formula. Also, MPI will have the right to buy all of the MPI common shares at
the formula price. As outlined in the Answer to Question 36, these rights may
be limited by the Florida Business Corporation Act. (See "SUMMARY OF THE
PARTNERSHIP AGREEMENT -- Sale of Partnership Units Relating to Put Right and
Call Right.")
8
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING TOGETHER WITH
THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING MPI COMMON
SHARES.
1. THERE WILL BE LIMITED PUBLIC INFORMATION AVAILABLE ABOUT MPI
------------------------------------------------------------
There are only 381 lots in the Park and, currently, only 300 lots are
occupied. Meadows Homeowners who own their homes in the Park jointly with one or
more other persons will be considered one homeowner, however, and MPI common
shares will be issued to them jointly. Therefore, at least initially, in all
likelihood there will not be 300 MPI common shareholders. Accordingly, even if
you and other Meadows Homeowners purchase all of the common shares offered by
this Prospectus, MPI may not be required to file periodic reports with the
Securities and Exchange Commission in 1999 and subsequent years. While MPI
intends to provide annual reports containing unaudited financial statements to
its shareholders, the information contained in these reports will not be as
extensive as it would be if MPI were subject to the reporting requirements of
the Securities Exchange Act of 1934 ("Exchange Act").
------------
2. NEITHER MPI NOR THE PARTNERSHIP HAS ANY OPERATING HISTORY
---------------------------------------------------------
MPI was organized in June 1998 and has not previously engaged in any
business activity. Its predecessor, MPI-1, was organized in 1988 for the purpose
of serving as the homeowners' association for the Park for purposes of the
Florida Mobile Home Act and, until it acquired the Park in December 1997, never
engaged in any other business activity. MPI's directors and officers are unpaid
volunteers who have limited experience in managing mobile home parks and neither
MPI nor the Partnership is expected to have any full time employees. There can
be no assurance that MPI or the Partnership will be profitable.
3. THERE ARE RISKS IN OWNING MOBILE HOME PARKS
-------------------------------------------
All investments in real property, including mobile home parks, are subject
to some degree of risk, including the risk of adverse changes in general
economic and local conditions. These risks include excessive building resulting
in an oversupply of manufactured or mobile home spaces and/or alternative
housing or a decrease in employment indirectly reducing demand for such spaces.
Also, prospective tenants may find the Park less attractive due to aging
facilities or for other unknown reasons. Other factors you should consider
include: possible adverse changes in property values; zoning laws; Federal and
local rent controls; other laws and regulations and real property tax rates;
competition by other existing or new parks which may have greater financial or
other resources and the ability of the Partnership to provide for adequate
maintenance and supervision of the Park. Investment in residential property
involves other unpredictable contingencies, including, but not limited to, the
availability and price of fuel and electricity for heating and cooking and
transportation. In addition, the most common purchasers of manufactured or
mobile homes are younger, first-time buyers and retirees. Because of their often
limited income, these tenants of the Park may pose a risk of defaulting on their
rent
9
<PAGE>
obligations, resulting in losses to the Partnership and, ultimately, losses to
you as an MPI common shareholder.
4. REGULATIONS GOVERNING MOBILE HOME PARKS COULD CHANGE
----------------------------------------------------
The Florida Mobile Home Act regulates mobile home parks in Florida, and
such parks are the subject of substantial attention in the Florida legislature.
Changes or additions to the Florida Mobile Home Act may be introduced after the
date of this offering that could adversely impact the Park or the Partnership.
5. REFINANCING OF LOAN FROM MHC LENDING
------------------------------------
The existing loan obtained by MPI-1 from MHC Lending Limited Partnership
("MHC Lending") to finance the acquisition of the Park is due and payable on
-----------
__________, 1998. BRC is attempting to refinance the portion of the Loan that
will not be repaid out of capital contributions to the Partnership. However, no
commitment has yet been obtained to provide a loan for such refinancing and no
assurance can be given that replacement financing will be available or that, if
available, it will be available on terms that permit the Partnership to operate
on a profitable basis. (See "DESCRIPTION OF BUSINESS -- Management of the
Partnership.")
6. MPI WILL BE DEPENDENT ON DISTRIBUTIONS FROM THE PARTNERSHIP
-----------------------------------------------------------
MPI will have no material income-producing assets or activities other than
from its partnership units. This means that MPI will be entirely reliant on
distributions from the Partnership to make distributions to MPI common
shareholders and if those distributions decrease or cease, MPI common
shareholders may receive smaller or no distributions in the future. The
Partnership will be required to distribute up to $2,256,000 to BRC before making
any distributions to MPI to the extent that these funds are generated through
sales or refinancings of Partnership property or through other extraordinary
events. Even if MPI receives distributions from the Partnership, MPI's Board of
Directors, in its discretion, may choose not to distribute such cash or any part
of it that may be left after payment of costs and expenses, including taxes, and
thus may make no cash distributions to MPI common shareholders.
7. MPI'S COSTS AND EXPENSES WILL REDUCE CASH DISTRIBUTIONS TO MPI COMMON
---------------------------------------------------------------------
SHAREHOLDERS
------------
Although BRC has agreed to advance all costs and expenses incurred in
connection with this offering, MPI is responsible for all of its other costs and
expenses. These other costs and expenses will include: legal, accounting and
other professional service fees; Federal, state and local taxes; and insurance
and other administrative costs. MPI will use the distributions it receives from
the Partnership to finance these costs and expenses, directly reducing the
amount of distributions, if any, paid to MPI common shareholders.
10
<PAGE>
8. MPI COMMON SHAREHOLDERS WILL BE SUBJECT TO DOUBLE TAX ON INCOME EARNED BY
-------------------------------------------------------------------------
THE PARTNERSHIP
---------------
MPI, as a general partner of the Partnership, will be subject to United
States Federal income tax at a rate of up to 35 percent and Florida franchise
tax at a rate of up to 5.5 percent on its share of Partnership income. In
addition, MPI common shareholders will be subject to United States Federal
income tax on all distributions they receive from MPI, to the extent of MPI's
"earnings and profits," generally as ordinary income at rates up to 39.6
percent. (See "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.")
9. ANNUAL RENT INCREASES MAY BE DISPUTED BY MEADOWS HOMEOWNERS
-----------------------------------------------------------
All tenants of lots in mobile home parks in Florida, including Meadows
Homeowners, have certain statutory rights under the Florida Mobile Home Act with
respect to rent increases. Under the Florida Mobile Home Act, a mobile home park
owner must give each tenant in a mobile home park 90 days' notice of a proposed
rent increase. If a majority of the affected tenants agree, they can insist on
mediation or arbitration of proposed rental increases and, if the parties do not
agree that the decision made in any such mediation or arbitration will be
binding, the tenants may thereafter file an action opposing the rent increase in
the circuit court. For the first ten years of the Partnership's existence,
subject to applicable law and the provisions of the Park's prospectuses (rental
agreements), the Partnership plans to increase rent payable by Meadows
Homeowners at the rate of five percent or, if higher, the annual percentage
increase in the "Consumer Price Index for All Urban Consumers, All Items"
prepared by the Bureau of Labor Statistics of the United States Department of
Labor. BRC and MPI may, however, jointly agree to change the amount of any
rental increase. It is possible that the Meadows Homeowners, especially those
who are not MPI common shareholders, may challenge the proposed or any other
rental increases. To the extent that any such challenge is successful, the
Partnership's revenues would be less than expected, thereby reducing the cash
available for distribution by the Partnership to MPI and, in turn, the amount of
distributions from MPI to the MPI Common Shareholders.
10. TENANT VACANCIES IN THE PARK WILL ADVERSELY AFFECT PARTNERSHIP INCOME
-----------------------------------------------------------------------
Approximately 80 of the lots in the Park have been vacant for over 17
years. This vacancy history indicates that it may take substantial time to find
a replacement tenant for any existing Meadows Homeowner who moves out of the
Park. The loss of a tenant will reduce the Partnership's income and, thus, the
cash distributions MPI can make to the MPI common shareholders.
11
<PAGE>
11. CAPITAL EXPENDITURES MAY ADVERSELY AFFECT PARTNERSHIP INCOME
------------------------------------------------------------
From time to time, capital expenditures may be required to pay for
renovations and improvements to the Park. To the extent such expenditures are
not payable by tenants, the Partnership will be required to use a portion of the
Park's income to pay for the expenditures, directly reducing distributions to
MPI, and, in turn, distributions to the MPI common shareholders.
12. YOUR INDIRECT INTEREST IN THE PARTNERSHIP AS AN MPI COMMON SHAREHOLDER
---------------------------------------------------------------------
MAY BE REDUCED BY THE ISSUANCE OF ADDITIONAL PARTNERSHIP UNITS TO BRC
---------------------------------------------------------------------
Under the terms of the Partnership Agreement, BRC will make a supplemental
contribution of $2,256,000 on account of the lots in the Park that are not
occupied by tenants as of the date of the Partnership Agreement (collectively,
"Unoccupied Lots"). BRC will not receive partnership units in exchange for this
---------------
contribution unless and until these lots are leased by new tenants. At that
time, additional partnership units will be issued to BRC (for no additional
payment by BRC) based on the value of the newly leased lot and the value of the
partnership units at the time of leasing, as determined by a pre-set formula.
MPI will have the right to buy BRC's additional partnership units in certain
circumstances, but only if, and to the extent that, the new tenant buys MPI
common shares. In either case, the proportionate indirect ownership in the
Partnership of each MPI common shareholder will decrease, thereby reducing such
MPI common shareholder's percentage of any cash distributions made by the
Partnership. (See "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Unoccupied Lots --
Issuance of Additional Partnership Units to BRC.")
13. CHANGE IN USE OF THE PARK IS RESTRICTED
---------------------------------------
During the term of the Partnership Agreement, the use of the Park as a
mobile home park may not be changed without the approval of BRC and MPI. The
Partnership Agreement also provides that if the Partnership is liquidated before
the tenth anniversary of the date of the Partnership Agreement, MPI and BRC will
record a restrictive covenant against the title to the Park prohibiting any
change of use as a mobile home park through the tenth anniversary of the date of
the Partnership Agreement (unless such changes are required for reasons outside
MPI's and BRC's control). These restrictions may adversely impact the value of
your investment because the Park cannot be used for any purpose other than as a
mobile home park through the tenth anniversary of the date of the Partnership
Agreement.
14. MPI SHAREHOLDERS WILL HAVE NO DIRECT RIGHT TO MAKE DECISIONS REGARDING THE
--------------------------------------------------------------------------
PARK
----
MPI will act as the MPI shareholders' representative in all Partnership
decisions with respect to the operation and ownership of the Park. Because MPI
is a corporation, the decisions made on its behalf will be made by the Board of
Directors of MPI or the officers of MPI. Although each of the directors has been
or will be elected by MPI's shareholders, MPI's officers
12
<PAGE>
and directors may have little or no experience in managing mobile home parks.
This may affect their ability to make the best decisions on behalf of MPI. In
addition, because each of the officers and directors of MPI will also be a
Meadows Homeowner, they may have a conflict of interest in making decisions in
the interest of all of MPI's shareholders.
15. THE PARTNERS MAY INCUR ENVIRONMENTAL LIABILITY FROM THE PARK
------------------------------------------------------------
Under various Federal, state and local environmental laws, ordinances,
regulations and common law, a current or previous owner or operator of real
property may be liable for the costs of removal or remediation of hazardous or
toxic substances on, under or in such property. Such laws, ordinances and
regulations often impose liability whether or not the owner or operator knew of,
or was responsible for, the presence of such hazardous or toxic substances. MPI
is not aware of any material violations of currently applicable environmental
laws or regulations with respect to the Park. However, no extensive
environmental investigation of the Park has been undertaken and there can be no
assurance that violations have not occurred and will not occur in the future, or
that more stringent laws and regulations will not be enacted in the future. The
Partnership could suffer material adverse consequences, which, in turn, could
adversely affect the value of your investment in MPI or the amount of any
distributions to you.
16. YOU WILL HAVE LIMITED ABILITY TO TRANSFER YOUR MPI COMMON SHARES
----------------------------------------------------------------
There is no public market for the sale of MPI common shares and none can
develop. MPI common shares may not be pledged, mortgaged or encumbered for any
purpose and are subject to certain restrictions on transferability, as described
in MPI's Articles of Incorporation. These restrictions are summarized as
follows:
. MPI common shares may be owned only by (1) MPI, (2) Meadows Homeowners, or (3)
the estate of any Meadows Homeowner, so long as such estate owns a mobile or
manufactured home and leases a lot located in the Park.
. Any MPI common shareholder who desires to sell his or her MPI common shares is
permitted to sell them only to MPI or to another Meadows Homeowner.
. Any MPI common shareholder who ceases to be a Meadows Homeowner must sell his
----
or her MPI common shares to MPI or another Meadows Homeowner.
. All MPI common shareholders have the right to require MPI to purchase their
MPI common shares at any time at a price determined by applying a formula.
This right may be limited, however, by the Florida Business Corporation Act,
which prohibits corporations from making a distribution to shareholders where
such distribution would cause the corporation to become insolvent. The formula
price per MPI common share may be less than the $1,000 initial offering price.
. MPI has the right to require any MPI common shareholder who ceases to be or is
not a Meadows Homeowner to sell his or her MPI common shares to MPI at the
formula price. This right may be limited, however, by the Florida Business
Corporation Act, which prohibits corporations from making a distribution to
shareholders where such distribution
13
<PAGE>
would cause the corporation to become insolvent. The formula price per share
may be less than the $1,000 initial offering price. If any MPI common
shareholder sells his or her MPI common shares to MPI before December 18,
1999, the sale price will be only 80 percent of the formula price.
For a more detailed description of these restrictions on transferability, see
"SUMMARY OF THE PARTNERSHIP AGREEMENT -- Sale of Partnership Units Relating to
Put Right and Call Right" and "DESCRIPTION OF SECURITIES."
17. MPI WILL HAVE LIMITED ABILITY TO TRANSFER PARTNERSHIP UNITS
-----------------------------------------------------------
MPI may not transfer, sell or otherwise dispose of its partnership units
except to BRC or BRC's affiliates. The Partnership Agreement between MPI and
BRC allows BRC to transfer, sell or otherwise dispose of some or all of its
partnership units at any time to:
. an affiliate of BRC;
. any person or entity that acquires BRC's partnership units as a result of a
sale by BRC of a portfolio of assets;
. a successor, by merger or consolidation, to BRC; or
. MPI or an affiliate of MPI, which would thereafter become a substitute
partner.
Thus, not only is MPI's ability to transfer its partnership units limited, but
BRC could be replaced by a partner which is either not known to MPI or with whom
MPI would prefer not to be in partnership.
18. MPI MAY BE REQUIRED TO SELL ITS PARTNERSHIP INTEREST TO BRC IF BRC AND
----------------------------------------------------------------------
MPI CANNOT RESOLVE A DISAGREEMENT
---------------------------------
Under the Partnership Agreement, if a dispute occurs between MPI and BRC
anytime before the tenth anniversary of the date of the Partnership Agreement,
it will be resolved by mediation or, if mediation is unsuccessful, binding
arbitration. If a dispute occurs between MPI and BRC on or after the tenth
anniversary of the date of the Partnership Agreement, the parties must try to
resolve the dispute by mediation. However, if mediation is unsuccessful, either
MPI or BRC can initiate a buy-sell procedure which will result in either MPI
buying all of BRC's partnership units or BRC buying all of MPI's partnership
units (either directly or through an affiliate). In order to buy BRC's
partnership units in either of these circumstances, MPI would almost certainly
have to borrow money from a commercial lender. There can be no assurance that
such financing will be available on terms which would permit MPI to acquire
BRC's partnership units on an acceptable basis. Thus, in the event of a dispute,
MPI may be unable to acquire BRC's partnership units and, therefore, may be
required to sell its partnership units to BRC.
14
<PAGE>
19. MPI AND THE PARTNERSHIP COULD LOSE THE PARK BECAUSE OF AN EXISTING LAWSUIT
--------------------------------------------------------------------------
On December 8, 1997, prospective purchasers which alleged that they had
entered into an agreement to purchase the Park from its then-owners, filed a
complaint against MPI-1 alleging that the Florida Mobile Home Act, which granted
MPI-1 a right of first refusal to purchase the Park, violated the prospective
purchasers' constitutional rights and the prospective purchasers' contractual
right to purchase the Park. These plaintiffs seek damages in an unspecified
amount and the right to purchase the Park. Judgment in favor of the prospective
purchaser could result in MPI-1's acquisition of the Park being rescinded.
Although a court may order that the purchase price paid by MPI-1 be refunded if
the acquisition is rescinded, there is no guarantee that such an order would be
made, and, in any case, certain closing costs and other expenses incurred by MPI
and the Partnership could not be recovered. The Partnership will pay all costs
and expenses in connection with the defense of this complaint. (See "LEGAL
PROCEEDINGS").
20. THE INTERESTS OF MPI COMMON SHAREHOLDERS MAY CONFLICT WITH THE INTERESTS
------------------------------------------------------------------------
OF MPI PREFERRED SHAREHOLDERS.
-----------------------------
Because MPI common shareholders will effectively own MPI and thereby hold
an indirect ownership interest in the Partnership and the Park, the interests of
the MPI common shareholders may conflict with those of the MPI preferred
shareholders who do not own MPI common shares. For instance, MPI common
shareholders may favor annual increases in rent on lots in the Park because such
increases will increase revenues to the Partnership and could, in turn, result
in potential increases in cash distributions to MPI common shareholders. Because
MPI preferred shareholders are not entitled to these cash distributions from
MPI, but would be required to pay any additional rent as tenants in the Park,
the MPI preferred shareholders would, in all likelihood, not favor such rental
increases.
EVENTS LEADING TO THIS OFFERING
Organization of MPI-1
- ---------------------
Meadows Preservation, Inc., a Florida non-stock corporation and MPI's
predecessor ("MPI-1") was incorporated on March 2, 1988 for the purpose of being
-----
the homeowners' association for The Meadows Mobile Home Park at 2555 PGA
Boulevard, Palm Beach Gardens, Florida (the "Park") in accordance with the
----
Florida Mobile Home Act. MPI-1's Articles of Incorporation provided that MPI-1
"as the mobile home owners' association pursuant to the Florida Mobile Home Act,
Chapter 723, Florida Statutes, shall have the power to negotiate for, acquire
and operate the Meadows Mobile Home Park ... and once acquired, shall have the
power to convert said Park to a condominium, a cooperative form of ownership, or
another type of ownership." The Florida Mobile Home Act generally regulates the
operation of mobile home parks, including rental agreements for the park's lots
and obligations of the park's owner. In addition, the statute provides to the
tenants of lots in a mobile home park the right to form associations that are
capable of purchasing the park should the park's owner decide to sell it and
gives such associations the right of first refusal to purchase the park under
certain circumstances if the owner decides to sell it.
15
<PAGE>
On October 3, 1997, the then owners of the Park notified MPI-1 of their
intent to solicit offers to purchase the Park. (See "LEGAL PROCEEDINGS"). MPI-1
exercised its right of first refusal and acquired the Park on December 18, 1997
for $12,000,000. BRC's parent, Manufactured Home Communities, Inc. ("MHC"), on
---
behalf of BRC, and MPI-1 entered into a letter of intent dated December 12, 1997
(the "Letter of Intent") which stated:
----------------
(1) BRC or its affiliate would make a loan to MPI-1;
(2) MPI-1 would be converted into a for-profit corporation;
(3) MPI-1, after it was converted into a for-profit corporation, would
endeavor to raise money by selling shares of common stock;
(4) MPI and BRC would form the Partnership;
(5) MPI would contribute all of the funds raised from the sale of its
shares to the Partnership;
(6) MPI would retain the record interest in the Park, but would contribute
the Beneficial Interest to the Partnership and the Partnership would
thereafter own and operate the Park; and
(7) BRC would contribute funds to the Partnership.
Pursuant to the terms of the Letter of Intent, MHC Lending made a loan to
MPI-1 in the amount of the Park's purchase price, $12,000,000, plus closing
costs of $341,693 (the "Loan"). The proceeds of the Loan were used to purchase
----
the Park. The Loan is nonrecourse to MPI-1, except that MPI-1 is personally
liable for losses, damages, costs and expenses arising from its misapplication
of funds, fraud, and default under certain environmental, tax and insurance
provisions of the Loan. The Loan is secured by a first priority mortgage on the
Park and an assignment of all leases and rents on and from lots in the Park..
The maturity date of such Loan, as extended, is November 30, 1998.
Concurrently with the closing on MPI-1's acquisition of the Park and
pursuant to the provisions of the Letter of Intent, MPI-1 and BRC entered into
an Option Agreement which, as amended, gives BRC the option to purchase the Park
for the same price and on the same terms and conditions as MPI-1 acquired the
Park if, by December 1, 1998, the Closing Date has not occurred. BRC's option
may be exercised anytime beginning on December 1, 1998 and ending at 5:30 p.m.
on December 31, 1998.
Reason for Creation of MPI
- --------------------------
Because Florida law does not provide for not-for-profit corporations to
sell stock or other equity interests, MPI-1 was reorganized into MPI, a Florida
for-profit, stock corporation. This reorganization was effected through a
series of mergers with corporations organized by MPI-1 solely for the purpose of
this corporate reorganization. In June 1998, MPI-1 organized MPI as a Florida
for-profit, stock corporation. It also organized MPI Two, Inc. ("MPI-2") as a
-----
Delaware non-stock membership corporation and MPI Three, Inc. ("MPI-3") as a
-----
Delaware stock corporation.
16
<PAGE>
On June 30, 1998, MPI-1 was merged into MPI-2 with each member of MPI-1
receiving a non-voting membership interest in MPI-2 (members who were co-owners
of a mobile home located on a lot in the Park were deemed collectively to hold
one membership interest in the Delaware non-stock corporation). On July 1, 1998,
MPI-2 was merged into MPI-3 with each member of MPI-2 receiving one share of
non-voting Class B common stock. MPI-3 sold one share of its Class A common
stock to Richard McCann, President and Director of MPI-1 and MPI, for $1,000,
and MPI issued one MPI Common Share to MPI-3 in exchange for a promise to pay
$1,000. On July 2, 1998, MPI-3 was merged into MPI and the MPI-3 Class A common
shareholder, Mr. McCann, received one MPI Common Share and each holder of Class
B common stock of MPI-3 received one share of MPI Preferred Stock. (See
"DESCRIPTION OF SECURITIES").
As a result of these mergers, MPI succeeded to all of the assets,
liabilities and obligations of MPI-1 and each owner of a mobile or manufactured
home in the Park who was a member of MPI-1 became the owner of one share of MPI
preferred stock (the "Preferred Stock"). The holders of each share of MPI
---------------
Preferred Stock are entitled to cast 1/40th of one vote on all matters as to
which shareholders of MPI are entitled to vote. Holders of shares of MPI
Preferred Stock will not be entitled to any distributions or other economic
benefits whatsoever, except that upon liquidation of MPI they will have a
preferred right to receive $25 with respect to each share of MPI Preferred Stock
prior to any distributions in liquidation with respect to the MPI Common Shares.
MPI's Bylaws provide that any Meadows Homeowner who does not already own one
share of Preferred Stock shall be entitled to be issued one share of Preferred
Stock upon payment of Twenty-Five Dollars ($25.00) to MPI, provided that where
two or more Meadows Homeowners are co-owners of a mobile home located on a lot
in the Park, only one share of Preferred Stock shall be issued to such Meadows
Homeowners.
Formation of the Partnership
- ----------------------------
On September [___], 1998, MPI and BRC entered into the Partnership
Agreement pursuant to which both MPI and BRC made initial capital contributions
to the Partnership of $1,000 in exchange for one Partnership Unit. For a summary
of the terms and conditions of the Partnership Agreement, see "SUMMARY OF THE
PARTNERSHIP AGREEMENT."
On September [___], 1998, MPI, BRC and the Partnership entered into a
contribution agreement (the "Contribution Agreement") which provides that three
----------------------
business days after the expiration of the Offer, or earlier if mutually agreed
by MPI and BRC (the "Closing Date"), MPI will contribute to the Partnership all
------------
of the proceeds of the sale of shares of common stock of MPI ("MPI Common
----------
Shares") received from the Offer together with the Beneficial Interest in the
Park. The Contribution Agreement also provides that BRC will contribute to the
Partnership cash in the total amount of $7,164,000 less the proceeds of the
Offer (including any advances converted to MPI Common Shares). Under the terms
of the Contribution Agreement, MPI also agreed to execute a title holding,
nominee and agency agreement with the Partnership (the "Nominee Agreement"),
-----------------
which will provide that MPI will hold the record interest in the Park as nominee
for and agent of the Partnership and the parties will record against the title
to the Park a Memorandum of Title Holding, Nominee and Agency Agreement. Also,
BRC will pay to MPI
17
<PAGE>
$100,000 to be applied by MPI, among other things, to the interest to be paid by
MPI to Advancing Homeowners pursuant to the Rescission Offer.
The obligations of MPI and BRC to make the contributions of cash and
property on the Closing Date as described above are subject to the conditions
that:
(1) neither MPI nor BRC shall have become insolvent or the subject of
bankruptcy proceedings;
(2) each of MPI and BRC shall have simultaneously made the required
contributions of cash and property to the Partnership;
(3) all of the representations and warranties given by each of MPI and BRC
shall be true and correct;
(4) MPI shall have executed and delivered to the Partnership all necessary
documents;
(5) no liens shall have been recorded against the title to the Park other
than agreed liens, encumbrances, rights and charges; and
(6) all interest and other amounts due to MHC Lending under the Loan
through the Closing Date shall have been paid.
Pursuant to the Partnership Agreement, should any of these conditions not be
satisfied by either Partner, and not waived by the other Partner, upon the other
Partner's notice that the Partnership Agreement is terminated, the Partnership
shall dissolve and commence winding up and liquidating. (See "SUMMARY OF THE
PARTNERSHIP AGREEMENT -- Dissolution and Winding Up"). MPI and BRC expect that
all of these conditions will be satisfied.
THE RESCISSION OFFER
Between December 1, 1997 and December 16, 1997, certain Meadows Homeowners
(the "Advancing Homeowners") advanced an aggregate of $845,000 (exclusive of
--------------------
$33,000 previously refunded by request) to MPI-1 (the "Advances"), which
--------
Advances are currently held in an MPI interest-bearing bank account at Barnett
Bank (the "Park Purchase Account"). This Prospectus includes a Rescission Offer
---------------------
made to all Advancing Homeowners. Pursuant to the Rescission Offer, unless an
Advancing Homeowner affirmatively rejects the Rescission Offer on or before
[Rescission Offer Expiration Date], such Advancing Homeowner will be deemed to
have accepted the Rescission Offer. In such case, MPI will refund to such
Advancing Homeowner all Advances made by such Advancing Homeowner, together with
interest thereon at the rate of 10 percent per annum from December 16, 1997 (or
any later date when the Advancing Homeowner made the Advance) until [Rescission
Offer Expiration Date], the date the Rescission Offer will expire.
If any Advancing Homeowner affirmatively rejects the Rescission Offer by
submitting to MPI a completed, signed Subscription Agreement on or before
[Rescission Offer Expiration Date], such Advancing Homeowner shall be deemed to
have subscribed, pursuant to this Prospectus, for so many MPI Common Shares as
shall be equal to the amount of the Advance made by such Advancing Homeowner
divided by $1,000. TO REJECT THE RESCISSION OFFER, THE ADVANCING HOMEOWNER MUST
COMPLETE AND SIGN THE SUBSCRIPTION AGREEMENT (ENCLOSED WITH THIS PROSPECTUS),
AND SEND IT TO MPI. THE RESCISSION OFFER EXPIRES ON [RESCISSION OFFER
-------------------------------------------------
18
<PAGE>
EXPIRATION DATE].IF MPI DOES NOT RECEIVE FROM THE ADVANCING HOMEOWNER A
- -----------------------------------------------------------------------
SIGNED SUBSCRIPTION AGREEMENT BY [RESCISSION OFFER EXPIRATION DATE], the Advance
- -------------------------------------------------------------------
made by such Advancing Homeowner will be refunded, with interest, as provided
above, and no MPI Common Shares will be issued to such Advancing Homeowner.
Reason For the Rescission Offer
- -------------------------------
The Advances made by the Advancing Homeowners were obtained without
registration under the Securities Act of 1933, as amended (the "Act"), or the
---
securities laws of any state. Their receipt by MPI-1 may have violated the
registration and antifraud provisions of the Federal and state securities laws.
The possible existence of these violations has prompted the making of the
Rescission Offer. It is the position of MPI that if an Advancing Homeowner
rejects the Rescission Offer to return these funds and elects to receive MPI
Common Shares, such Advancing Homeowner will no longer be able to assert a claim
against MPI in connection with any such possible violations.
Tax Considerations of the Rescission Offer
- ------------------------------------------
Set forth below is a discussion of the material United States Federal
income tax considerations of the Rescission Offer under the Internal Revenue
Code of 1986, as amended (the "Code"). However, the discussion does not deal
----
with all of the tax consequences of the Rescission Offer; nor does it deal with
all of the tax consequences that may be significant to particular shareholders,
such as dealers in securities, shareholders who are not individuals and
shareholders who are subject to the alternative minimum tax.
ALL PERSONS AND ENTITIES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF ACCEPTING OR REJECTING THE RESCISSION
OFFER, INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL AND FOREIGN TAX
LAWS.
For United States Federal income tax purposes, MPI intends to treat the
Advances as if the Advances constituted MPI Common Shares and the Rescission
Offer as a taxable redemption of such MPI Common Shares with a redemption price
equal to the amount paid for such MPI Common Shares (and including in the
redemption price the portion of the payment denominated as interest). However,
the law applicable to the Rescission Offer is unclear and MPI has received
neither an opinion of counsel nor a ruling from the Internal Revenue Service
(the "Service") to that effect. Thus, the Service is not precluded from
-------
successfully asserting a contrary position or otherwise recharacterizing the
transaction in whole or in part. For example, the Service may characterize the
Rescission Offer as the return of the original purchase price (which would be
nontaxable) plus the payment of interest which would be taxable as ordinary
income.
19
<PAGE>
U.S. Holders
- ------------
The following discussion is limited to certain United States Federal
income tax consequences relevant to a U.S. Holder. For this purpose, a "U.S.
----
Holder" means a beneficial holder of MPI Common Shares that for United States
- ------
Federal income tax purposes is:
(1) a citizen or resident (as defined in Code Section 7701(b)) of the
United States;
(2) a corporation, partnership or other entity formed under the laws of
the United States or any political subdivision thereof;
(3) an estate, the income of which is subject to United States Federal
income taxation regardless of its source; or
(4) in general, a trust subject to the primary supervision of a court
within the United States and the control of a United States person as
described in Code Section 7701(a)(30).
Assuming MPI's treatment of the Advances as MPI Common Shares and the
Rescission Offer as a redemption of MPI Common Shares is correct for Federal
income tax purposes, the amount of gain or loss recognized by a U.S. Holder
accepting the Rescission Offer should equal the difference between the amount
received for MPI Common Shares and such U.S. Holder's tax basis in the MPI
Common Shares surrendered. A redemption of MPI Common Shares will be treated as
a sale or exchange for Federal income tax purposes if it:
(1) results in a "complete redemption" of the U.S. Holder 's interest in
MPI under Code Section 302(b)(3);
(2) is "substantially disproportionate" with respect to the U.S. Holder
under Code Section 302(b)(2); or
(3) is "not essentially equivalent to a dividend" with respect to the U.S.
Holder under Code Section 302(b)(1).
These three tests, which are more fully described below, are collectively
referred to herein as the "Redemption Tests." The Redemption Tests are applied
on a shareholder-by-shareholder basis. If a repurchase does not satisfy any of
the Redemption Tests, the payment of the proceeds from the sale will be treated
by MPI as a distribution with respect to the MPI Common Shares, the consequences
of which are more fully described below. Because the Redemption Tests are
applied independently to each MPI Common Shareholder, it is possible that some
persons accepting the Rescission Offer will be subject to distribution treatment
and others will receive tax redemption treatment.
BECAUSE THE APPLICATION OF THE REDEMPTION TESTS IS APPLIED ON A
SHAREHOLDER-BY-SHAREHOLDER BASIS, EACH U.S. HOLDER SHOULD CONSULT HIS OR HER OWN
TAX ADVISORS IN CONNECTION WITH THE POSSIBLE FEDERAL INCOME TAX TREATMENT THAT
MAY APPLY IN EACH U.S. HOLDER'S PARTICULAR CASE.
The acceptance of the Rescission Offer will result in a "complete
redemption" of all the MPI Common Shares owned by a U.S. Holder if either (1)
all of the MPI Common Shares
20
<PAGE>
actually and constructively owned by such U.S. Holder are sold pursuant to the
Rescission Offer or (2) all the MPI Common Shares actually owned by a U.S.
Holder are sold pursuant to the Rescission Offer and the U.S. Holder is eligible
to waive and effectively waives constructive ownership of such MPI Common Shares
under procedures described in Code Section 302(c).
The acceptance of the Rescission Offer will be "substantially
disproportionate" with respect to a U.S. Holder if (1) the percentage of MPI's
voting stock owned by the U.S. Holder immediately after the repurchase (taking
into account all MPI Common Shares purchased by MPI pursuant to the Rescission
Offer) equals less than 80 percent of the percentage of MPI's voting stock owned
by such U.S. Holder immediately before the repurchase and (2) such U.S. Holder
after the repurchase owns less than 50 percent of the total combined voting
power of all classes of stock of MPI entitled to vote.
The acceptance of the Rescission Offer will satisfy the "not essentially
equivalent to a dividend" test with respect to a U.S. Holder if, in light of the
U.S. Holder's individual circumstances (including his or her relative interest
in MPI), his or her sale of MPI Common Shares pursuant to the Rescission Offer
results in a "meaningful reduction" of his or her interest in MPI (after giving
effect to and thus treating as not outstanding, MPI Common Shares sold by all
MPI Common Shareholders pursuant to the Rescission Offer). This test may be
satisfied irrespective of the U.S. Holder's failure to satisfy the complete
redemption or substantially disproportionate tests.
In determining whether any of the Redemption Tests are satisfied, there
must be taken into account not only any MPI Common Shares owned by the U.S.
Holder, but also any MPI Preferred Stock and any options (including stock
purchase rights) held by such U.S. Holder, if any, to acquire MPI Common Shares.
The U.S. Holder also must take into account any such securities (including
options) which are considered to be owned by such U.S. Holder by reason of the
constructive ownership rules set forth in Code Sections 318 and 302(c).
Contemporaneous or related transactions in stock or stock rights of MPI may also
affect the Redemption Tests.
If the acceptance of the Rescission Offer fails to qualify as a tax
redemption, then the gross proceeds of such transaction will be characterized as
a distribution with respect to MPI's stock taxable as a dividend at ordinary
income tax rates to the extent of MPI's accumulated and current earnings and
profits (on a pro rata basis with other MPI Common Shareholders whose sales fail
to so qualify); any excess will be treated first as a return of capital and then
as a gain from a sale or exchange.
To the extent that a U.S. Holder rejects the Rescission Offer and receives
proceeds, denominated as interest on its Advance, such proceeds will be
characterized as a distribution with respect to MPI's stock taxable as a
dividend to the extent of MPI's accumulated and current earnings and profits.
See "CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS -- Consequences of
Ownership of MPI Common Shares -- U.S. Holders -- Dividends and Other
Distributions."
21
<PAGE>
A U.S. Holder who receives proceeds that are taxed as a dividend should
generally be able to transfer the unrecovered tax basis in the MPI Common Shares
sold to any retained, and possibly constructive, stock interest in MPI.
Any gain (other than dividend income) or loss recognized in a sale should
generally be capital gain or loss to a U.S. Holder who holds his, her or their
MPI Common Shares as capital assets. Capital gain or loss on a sale will
generally be treated as long-term capital gain or loss if the holding period for
the MPI Common Shares exceeds one year. Long-term capital gains of individuals
and other non-corporate taxpayers are taxed at a maximum marginal Federal income
tax rate of 20 percent on most capital assets held for more than one year,
whereas short-term capital gains and other income of such persons are taxed at
the maximum marginal Federal income tax rate of 39.6 percent.
Non-U.S. Holders
- ----------------
The following discussion is limited to certain United States Federal income
tax consequences relevant to a Non-U.S. Holder. For this purpose, a Non-U.S.
-------
Holder" means any MPI Common Shareholder other than a U.S. Holder.
- ------
For purposes of the following discussion, dividends and gain on the sale,
exchange or other disposition of MPI Common Shares will be considered to be
"United States trade or business income" if such income or gain is (1)
effectively connected with the conduct of a trade or business within the United
States of such Non-U.S. Holder or (2) in the case of certain residents of
certain countries which have an income tax treaty in force with the United
States, attributable to a permanent establishment (or, in the case of an
individual, a fixed base in the United States) as such terms are defined in the
applicable treaty.
Assuming MPI's treatment of the Advances as MPI Common Shares and the
Rescission Offer as a redemption of MPI Common Shares is correct for Federal
income tax purposes, pursuant to the Foreign Investment in Real Property Tax
Act, gain recognized by a Non-U.S. Holder accepting the Rescission Offer will be
treated as a sale or exchanges of MPI Common Shares that is subject to United
States Federal income taxation at regular graduated rates pursuant to Code
Section 897, unless an exemption is provided under an applicable tax treaty.
(See "CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS -- Consequences of
Ownership of MPI Common Shares -- Non-U.S. Holders -- Sale, Exchange or
Redemption of MPI Common Shares.") The gain would be treated as effectively
connected with the conduct of a trade or business within the United States and
the sale or other disposition generally would be subject to withholding tax
equal to 10 percent of the amount realized therefrom.
If the acceptance of the Rescission Offer fails to qualify as a tax
redemption, then the amount refunded (including the amount denominated as
interest) will be characterized as a distribution with respect to MPI's stock
taxable as a dividend to the extent of MPI's accumulated and current earnings
and profits. (See "CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS --
Consequences of Ownership of MPI Common Shares -- Non-U.S. Holders -- Dividends
and Other Distributions.")
22
<PAGE>
In addition, distributions, if any, paid on the MPI Common Shares, to the
extent not made from current and/or accumulated earnings and profits of MPI, as
determined for United States Federal income tax purposes, are also treated as
taxable exchanges of stock to which the rules applicable to sales, exchanges and
redemptions apply. (See "CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS --
Consequences of Ownership of MPI Common Shares -- Non-U.S. Holders -- Sale,
Exchange or Redemption of MPI Common Shares.")
To the extent that a Non-U.S. Holder rejects the Rescission Offer and
receives proceeds, denominated as interest on its Advance, such proceeds will be
characterized as a distribution with respect to MPI's stock taxable as a
dividend to the extent of MPI's accumulated and current earnings and profits.
See "CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS -- Consequences of
Ownership of MPI Common Shares -- Non-U.S. Holders -- Dividends and Other
Distributions."
For a discussion of the information reporting and backup withholding
obligations associated with any payment made hereunder, see "CERTAIN UNITED
STATES FEDERAL TAX CONSIDERATIONS -- Consequences of Ownership of MPI Common
Shares -- Non-U.S. Holders -- Information Reporting and Backup Withholding."
THE OFFER
To give each Meadows Homeowner the opportunity to share, indirectly, in
the ownership of the Park, MPI is offering to sell up to 2,354 MPI Common Shares
to Meadows Homeowners. Each Meadows Homeowner, regardless of whether such
Meadows Homeowner previously made an Advance to MPI-1, may purchase any number
of MPI Common Shares, up to a maximum aggregate of 2,354 MPI Common Shares. The
maximum aggregate number of MPI Common Shares includes (1) Advances converted
into MPI Common Shares, where Advancing Homeowners submit signed Subscription
Agreements and (2) MPI Common Shares subscribed to by Meadows Homeowners
pursuant to this Prospectus.
If MPI receives subscriptions from Meadows Homeowners to purchase more
than 2,354 MPI Common Shares, the shares to be purchased by each subscribing
shareholder (including, without limitation, those Advances converted into MPI
Common Shares by any Advancing Homeowners who did not accept the Rescission
Offer) will be reduced. The number of MPI Common shares each subscribing
shareholder will be permitted to purchase will be that number equal to the
number of MPI Common Shares subscribed for by such Meadows Homeowner, multiplied
by a fraction, the numerator of which is 2,354 and the denominator of which is
the aggregate number of MPI Common Shares for which MPI receives offers to
subscribe, adjusted to the nearest whole number.
All of the proceeds received by MPI from the sale of MPI Common Shares
pursuant to this offering will be contributed to the Partnership. MPI will
receive in exchange a fractional ownership interest in the Partnership,
including all of the benefits provided in the Partnership Agreement to a general
partner, together with all of the obligations of a general partner to the
Partnership (the "Partnership Units"). (See "USE OF PROCEEDS.")
-----------------
23
<PAGE>
TO ACCEPT THE OFFER, A MEADOWS HOMEOWNER MUST COMPLETE AND SIGN THE
SUBSCRIPTION AGREEMENT AND SEND IT TO MPI. THE OFFER EXPIRES ON [____, 1998].
---------------------------------
MPI MUST RECEIVE YOUR SIGNED SUBSCRIPTION AGREEMENT ON OR BEFORE THAT DATE.
- --------------------------------------------------------------------------
USE OF PROCEEDS
If all 2,354 of the MPI Common Shares offered by this Prospectus are sold,
MPI will receive aggregate proceeds of $2,354,000. If MPI sells less than 2,354
MPI Common Shares, it will receive proceeds of $1,000 for each MPI Share sold.
There will be no commissions or discounts payable in this offering.
All of the proceeds received by MPI from the sale of MPI Common Shares
pursuant to this offering will be contributed to the Partnership in exchange
for Partnership Units. MPI will contribute $1,000 for each Partnership Unit.
The number of MPI Common Shares sold will determine the amount of MPI's
contribution to the Partnership and the number of Partnership Units received by
MPI in exchange for such contribution. The number of Partnership Units issued
to MPI will determine MPI's percentage interest in the Partnership.
BRC will contribute $1,000 for each Partnership Unit it acquires from the
Partnership. In addition, BRC will contribute $2,256,000 to the Partnership for
which BRC may in the future receive additional Partnership Units if lots in the
Park that are unoccupied as of the date of the Partnership Agreement are leased
to tenants. Some or all of these additional Partnership Units issued to BRC may
be sold to MPI. (See "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Unoccupied Lots --
Issuance of Additional Partnership Units to BRC.") To the extent that BRC does
not receive additional Partnership Units on account of this $2,256,000
contribution, BRC will have a priority right to receive that portion of this
contribution for which it did not receive additional Partnership Units, without
interest, upon liquidation of the Partnership.
BRC has also agreed to contribute an additional $200,000 to pay for the
cost of certain capital improvements to the Park. BRC will not be issued
additional Partnership Units on account of this additional contribution but this
amount will be credited to BRC's partnership capital account. In addition, BRC
will pay $100,000 to MPI, a portion of which shall be applied by MPI to pay
interest to the Advancing Homeowners.
The Partnership will reimburse BRC for all costs and expenses of this
offering paid by BRC including, without limitation, all legal, accounting and
other fees and expenses incurred by MPI and BRC, or any of BRC's affiliates, in
connection with or relating to the acquisition of the Park by MPI, the financing
of such acquisition, the sale of MPI Common Shares, the reorganization of MPI
from a Florida non-stock, non-profit corporation into a Florida for profit,
stock corporation, the formation of the Partnership, the transfer of the
Beneficial Interest in the Park to the Partnership and the negotiation and
preparation of the various agreements, documents and writings relating to any of
the foregoing. These costs and expenses are estimated to aggregate approximately
[___________]. All contributions to the Partnership by MPI and BRC will be used
first to pay such expenses, and the balance will be used to repay a portion of
the
24
<PAGE>
Loan and to provide operating capital for the Partnership. (See "SUMMARY OF
THE PARTNERSHIP AGREEMENT Capital Contributions.")
CAPITALIZATION
The following table sets forth the capitalization of MPI as of September 30,
1998 and as adjusted to give effect to the issuance and sale of the MPI Common
Shares. The information set forth in the following table should be read in
conjunction with the financial statements and notes thereto included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
----------------------
Actual As Adjusted If
------ --------------
All Shares Sold No Shares Sold
--------------- --------------
DEBT
<S> <C> <C> <C>
Note Payable, MHC Lending/1/........................... $12,341,693 $12,341,693 $12,341,693
Total Debt............................................. $12,341,693 $12,341,693 $12,341,693
STOCKHOLDER'S EQUITY
Common Stock, $.01 par value, 10,000 shares
authorized; 1 share issued and outstanding as of
September 30, 1998; up to 2,354 shares
to be issued and outstanding as adjusted/2/............ $.01 $-24 $.01
Additional Paid-In Capital............................. $2,353,976 $2,353,976 $2,353,976
Preferred Stock, no par value, 400 shares authorized;
245 issued; 245 issued and outstanding--
Liquidation value $25.................................. $6,125 $6,125 $6,125
</TABLE>
/1/ On the Closing Date, the Beneficial Interest in the Park will be
transferred to the Partnership, which will assume this debt. Approximately
$______, after payment of all expenses, will be used to reduce this debt. (See
"USE OF PROCEEDS"). The Partnership intends to refinance this debt following the
closing on the transfer of the Beneficial Interest in the Park to the
Partnership. (See "DESCRIPTION OF BUSINESS -- Description of Business of the
Partnership.")
/2/ $.01 for each share purchased in the offering.
DIVIDEND POLICY
MPI intends to pay regular quarterly distributions to MPI Common
Shareholders to the extent cash is available after payment of taxes and
operating and other expenses. However, MPI may retain earnings in the sole
discretion of its Board of Directors for any purpose, including the repurchase
of MPI Common Shares. No assurance can be given that any level of distributions
will be made or sustained.
25
<PAGE>
DESCRIPTION OF BUSINESS
Description of Business of MPI
- ------------------------------
MPI currently owns the record interest and the Beneficial Interest in the
Park but will contribute the Beneficial Interest in the Park to the Partnership
as soon as practicable after the offering is completed. Thereafter, MPI will be
one of two Partners of the Partnership and will operate the Park through the
Partnership.
In addition, MPI will continue to act as the homeowners' association under
the Florida Mobile Home Act. MPI currently has no employees and does not
anticipate hiring any employees. MPI-1 acquired the Park on December 18, 1997
and, until then, had never engaged in any business activities other than being
the homeowners' association for the Park under the Florida Mobile Home Act.
MPI, as MPI-1's successor, does not intend to engage in any activities other
than acting as a general partner of the Partnership and operating the Park
through the Partnership and acting as the homeowners' association under the
Florida Mobile Home Act. In addition, on the Closing Date, MPI will execute the
Nominee Agreement, which will provide that MPI will hold the record interest in
the Park as nominee for and agent of the Partnership and the parties will record
against the title to the Park a Memorandum of Title Holding, Nominee and Agency
Agreement.
You should carefully review the information set forth under "RISK FACTORS"
beginning on page [___] for a description of those distinctive or special
characteristics of MPI's operations or the mobile home park industry which may
have a material impact upon MPI's future financial performance.
It is anticipated that the distributions from the Partnership will be
sufficient to pay MPI's expenses for the six month period following the
consummation of the Offer, and that MPI will not need to raise any additional
funds during this period. The Partnership Agreement provides that MPI is not
obligated to make additional capital contributions or any loans to the
Partnership.
MPI will be subject to the reporting requirements of Section 15(d) of the
Exchange Act this year. Thereafter, it is anticipated that MPI will not be
subject to these reporting requirements. Nevertheless, MPI intends to provide
its shareholders an annual report containing unaudited financial statements of
MPI. MPI's policy with regard to making annual reports to security holders may
be changed by the officers and directors of MPI without a vote of security
holders.
MPI's principal offices are located at: 2555 PGA Boulevard, Palm Beach
Gardens, Florida, 33410 and its telephone number is: (561) 626-0888.
Description of Business of the Partnership
- ------------------------------------------
BRC and MPI (the "Partners") formed the Partnership on September [___],
--------
1998. It is anticipated that MPI will convey the Beneficial Interest in the
Park to the Partnership as soon as
26
<PAGE>
practicable after the Offer is completed, at which time the Partnership will
acquire, hold, operate and, if and when appropriate, sell the Beneficial
Interest in the Park and engage in any and all activities reasonably related or
incidental thereto. The Partners are required to devote as much time as is
necessary to perform their duties and must exercise due diligence in causing the
Partnership to comply with all legal requirements applicable to the Partnership.
Pursuant to the Partnership Agreement, BRC is responsible for day-to-day
management and control of the business and affairs of the Partnership. BRC's
responsibilities include arranging and securing the initial financing necessary
to repay the debt due from MPI to MHC Lending (provided the terms of such
financing are consistent with the Property Management and Operation Plan (the
"Operation Plan") attached to the Partnership Agreement), arranging for the
--------------
refinancing(s) of such initial financing as may be required and incurring
indebtedness on behalf of the Partnership in the ordinary course of the
Partnership's business. Major decisions require the approval of both Partners.
(See "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Management of the Partnership.")
Distributions of all available net cash flow and net capital proceeds
(after necessary or appropriate reserves have been established), if any, will be
made by the Partnership to MPI and BRC, on a quarterly basis, based on the
number of Partnership Units owned by each approximately 14 days prior to the
date of distribution. (See "SUMMARY OF THE PARTNERSHIP AGREEMENT --
Distributions.")
In December, 1997, MHC Lending loaned $12,341,693.46 to MPI-1. The
Partnership will assume the Loan when the Beneficial Interest in the Park is
transferred to it. It is intended that the Partnership will refinance the Loan
after this offering, although no commitment from any lender has yet been
obtained.
It is anticipated that the rents from the Park will be sufficient to pay
all expenses of the Partnership, other than those incurred in the refinancing of
the Loan, for the six months following the Offer and that the Partnership will
not need to raise any other additional funds during this period. The Partnership
Agreement provides that neither Partner is obligated to make additional capital
contributions or any loans to the Partnership. BRC has, however, agreed to pay
the costs of marketing the Unoccupied Lots. (See "SUMMARY OF THE PARTNERSHIP
AGREEMENT -- Capital Contributions.")
Initially the Partnership's principal office will be located at: 2555 PGA
Boulevard, Palm Beach Gardens, Florida 33410 and its telephone number will be
(561) 626-0888.
Management of the Park
- ----------------------
MHC Management will manage the Park in accordance with the terms of a
property management and leasing agreement to be entered into between the
Partnership and MHC Management (the "Management Agreement"). MHC Management
--------------------
will receive a management fee of 4 percent of the Partnership's gross annual
revenues. If at any time MHC Management (or another affiliate of MHC) does not
manage the Park, BRC or its affiliate will receive a fee
27
<PAGE>
equal to one percent of the annual gross revenues of the Partnership. BRC or its
affiliate will also receive a one-time placement fee of $120,000 from the
Partnership.
The Management Agreement will provide that MHC Management will perform all
services and actions customarily performed or taken by managing agents of
properties of similar nature, location and character to the Park at the
Partnership's expense.
MHC Management will be responsible for:
. collecting all rents and paying expenses of the Park;
. hiring and supervising MHC Management personnel;
. contracting with third parties;
. maintaining the Park's equipment and the common areas of the Park;
. repairs to the Park;
. supervision of Meadows Homeowners' complaints, relocation, tenancies, etc.;
. maintaining insurance on the Park;
. advertising;
. complying with all laws, rules, regulations and other legal requirements;
. leasing currently occupied lots in the Park that become unoccupied;
. preparing an annual operating budget as well as year-end, monthly and interim
operating reports; and
. maintaining the Park's books and records and operating account.
MHC Management will subcontract for some or all of these services at the
Partnership's expense. The Partnership currently has no employees.
The Management Agreement will also provide that the Partnership shall
indemnify MHC Management for all liabilities, claims, suits, damages, judgments,
and reasonable costs and expenses, including reasonable attorneys' fees it
incurs, arising from (1) MHC Management's proper performance under the
Management Agreement; (2) the Partnership's negligent, willful or fraudulent
acts; and (3) the Partnership's performance of actions not permitted by the
Management Agreement.
Environmental Concerns
- ----------------------
Under various Federal, state and local environmental laws, ordinances,
regulations and common law, a current or previous owner or operator of real
property may be liable for the costs of removal or remediation of hazardous or
toxic substances in, under or on such property. Such laws, ordinances and
regulations often impose liability whether or not the owner or operator knew of,
or was responsible for, the presence of such hazardous or toxic substances. MPI
is not aware of any material violations of currently applicable environmental
laws or regulations with respect to the Park and therefore does not currently
contemplate any material capital expenditures for environmental control
facilities. However, no extensive environmental investigation has been
undertaken with respect to the Park and there can be no assurance that
violations have not occurred and will not occur in the future, or that more
stringent laws will not
28
<PAGE>
be enacted in the future that may require such expenditures, or that would
otherwise cause the Partnership or MPI to suffer material adverse consequences.
DESCRIPTION OF PROPERTY
The Meadows Mobile Home Park
- ----------------------------
The Park is located at 2555 PGA Boulevard, Palm Beach Gardens, Florida
33410. The Park consists of 55 acres of property zoned for residential mobile
home use. The Park's lots are divided into two phases: Phase I, constructed in
1968, contains 235 lots; Phase II, constructed in 1981, contains 146 lots, for a
total of 381 lots. The typical mobile home lot in the Park is approximately 60
by 68 feet in size. The smallest lot is 25 by 60 feet and the largest 87 by 72
feet.
The Park's Facilities
- ---------------------
The Park includes the following common facilities: a multiple purpose
building (incorporating a billiard room, social room, bathrooms, storage rooms
and laundry room); a heated pool; a jacuzzi; a deck area; six regulation-size
cement shuffleboard courts; a mobile home (with garage) used as an
administrative office and for storage; a system of private asphalt roads that
run throughout the Park, approximately 1.5 miles in length and 20 feet wide; 32
parking spaces appurtenant to the Park's clubhouse and other facilities; and a
pump house with four auxiliary pumps for use by tenants for irrigation purposes.
Location of the Park
- --------------------
Palm Beach Gardens, Florida was founded in 1959 and is located
approximately 9 miles from West Palm Beach and 406 miles from Tallahassee. It is
the second largest city in Palm Beach County with a population of approximately
35,000 residents.
Rental Prospectus
- -----------------
Each Meadows Homeowner rents a lot in the Park based on the terms of a
prospectus (rental agreement) approved by the State of Florida, Department of
Business and Professional Regulation, Division of Land Sales, Condominiums and
Mobile Homes. The prospectus summarizes the management of the Park and the
rental and other obligations of the tenants to the Park owner. Each prospectus
will continue to operate as a binding agreement between the Partnership, as
owner of the Park, and the applicable Meadows Homeowner.
The amount of "base rent" payable by each tenant is stated in the
prospectus applicable to him or her. In addition to the base rent, tenants are
required to pay: (1) "special use fees" such as security deposits, pet fees,
guest fees and pest control fees; (2) "governmental and utilities charges"
including real estate taxes and special assessments, water, sewer, wastewater,
trash, garbage, and cable television fees; and (3) "miscellaneous financial
obligations" such as delinquent rent charges, returned check charges, costs of
construction of improvements to the
29
<PAGE>
Park mandated by statute and future utility, educational and recreational costs
and expenses. The approved prospectus also requires that the tenants install
certain improvements and states that tenants must comply with the Rules and
Regulations of the Park.
Operating Data
- --------------
The average occupancy rate of the lots in the Park has been approximately
78% for the last 5 years. Currently, 300 of the 381 lots are occupied by Meadows
Homeowners, 80 lots are unoccupied, and 1 lot is used as an office. The
following table summarizes the occupancy rate of the Park's lots for each of the
last 5 years:
<TABLE>
<CAPTION>
YEAR PERCENTAGE OF OCCUPIED LOTS
---- ---------------------------
<S> <C>
1994 78.1%
1995 78.4%
1996 78.1%
1997 78.1%
1998 [78.4%]
(through September 1, 1998)
</TABLE>
None of the Meadows Homeowners leases more than 1 percent of the lots. The only
business carried on at the Park is the day-to-day management and administration
of the Park, and the leasing of lots in the Park to new tenants.
[The average annual rent paid per lot for each of the last 5 years is as
follows]:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998/1/
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Average Annual
Rent Per Lot $ 371 $ 374 $ 384 $ 384 $ 392
</TABLE>
/1/ Through September 1, 1998.
The rental prospectuses provide no fixed expiration dates for the leases. The
rental income from the lots in the Park constitutes approximately 99% of the
gross annual revenues of the Park's owner.
The real estate tax rate or "millage" rate for the Park is $21.3802 per $1,000
of the assessed value of the Park's real property. The amount of annual real
estate taxes paid on the Park in 1997 was $163,906.
Future Development & Renovations
- --------------------------------
Future renovation projects may include expanding and remodeling the
clubhouse, adding access control to the Park's entrance, redesigning the
entrance and adding an additional entrance to the Park. Any such projects would
be financed out of BRC's additional Capital Contribution
30
<PAGE>
of $200,000 towards capital improvements, the Partnership's gross revenues or
through borrowings.
LEGAL PROCEEDINGS
On December 8, 1997, Penn Florida Realty, L.P., a Delaware limited
partnership, d/b/a PNFLA Realty Limited Partnership and Penn Florida, Inc. (the
"Plaintiffs") filed an action in the Circuit Court for Palm Beach County,
----------
Florida, against MPI-1 seeking declaratory relief pursuant to Chapter 86,
Florida Statutes and damages in an unspecified amount. The Plaintiffs allege
that they had entered into a contract with the Park's then-owners to purchase
the Park for $12,000,000. They assert that MPI-1 "breached its obligation of
good faith and fiduciary duty" and "conspired with" BRC and certain of BRC's
affiliates to defeat the Plaintiffs' purchase rights and enable BRC to purchase
an otherwise unavailable property or an interest in such property. Before
selling the Park to the Plaintiffs, acting pursuant to the Florida Mobile Home
Act, the owners gave MPI-1, as the homeowners' association for the Park, notice
of the price, terms and conditions of the intended sale to the Plaintiffs and
offered MPI-1 the opportunity to purchase the Park pursuant to the same price,
terms and conditions. MPI-1 thereupon executed an agreement with the owners to
purchase the Park and did purchase the Park for $12,000,000.
In response to these events, the Plaintiffs brought the action described
above, alleging that MPI-1's purchase of the Park pursuant to the Florida Mobile
Home Act violated the Plaintiffs' constitutional and contractual rights. The
Plaintiffs seek judgment (1) finding that Section 723.071, Florida Statutes is
unconstitutional, on its face or as applied, (2) entitling them to close their
purchase of the Park pursuant to the terms of their contract, (3) finding that
MPI-1's contract to purchase the Park resulted from an unconstitutional statute
or an unconstitutional application of a statute and is subordinate to the
Plaintiffs' contract and (4) for compensatory damages, court costs, and such
other relief as the court deems appropriate. This action is currently in the
discovery stage. The court denied a motion for summary judgment by MPI.
SUMMARY OF THE PARTNERSHIP AGREEMENT
The rights and obligations of the Partners are governed by the Partnership
Agreement, and all schedules thereto, which documents have been filed with the
Securities and Exchange Commission (the "Commission") as an exhibit to this
----------
Registration Statement. For information on how to obtain a copy, see
"ADDITIONAL INFORMATION." The following summary and all other statements in
this Prospectus concerning the Partnership Agreement and related matters merely
outline material provisions of, and do not purport to be complete or in any way
modify or amend, the Partnership Agreement. Capitalized terms used in the
following description shall have the meanings given in the Glossary.
Capital Contributions
- ---------------------
On September [___], 1998, each of the Partners executed the Partnership
Agreement and made an initial Capital Contribution of $1,000 in return for one
(1) Partnership Unit. Promptly after completion of the Offer, MPI is required
to make supplemental Capital Contributions to the Partnership of: (1) all of the
cash proceeds received by MPI in the Offer; (2) the Beneficial
31
<PAGE>
Interest in the Park; and (3) MPI's right, title and interest in all of the
intangible property and tangible personal property acquired by MPI in connection
with its acquisition of the Park. MPI may not contribute more than $2,354,000 in
cash proceeds. MPI will receive, in exchange, that number of Partnership Units
equal to the cash proceeds received in the Offer divided by $1,000. BRC will
make a supplemental Capital Contribution of $4,708,000 less the amount of cash
proceeds contributed by MPI and will receive Partnership Units for such Capital
Contribution equal to $4,708,000 less the amount of MPI's Capital Contribution,
divided by $1,000.
BRC will contribute to the Partnership (1) an additional $2,256,000 on
account of the Unoccupied Lots, for which BRC will not immediately receive any
Partnership Units but will receive up to an additional 2,256 Partnership Units
at such time as the Unoccupied Lots are leased to tenants and (2) $200,000 to be
used by the Partnership to fund capital improvements to the Park, for which BRC
will not receive any Partnership Units, but will receive a credit to its
partnership capital account in the amount of $200,000. (See "SUMMARY OF THE
PARTNERSHIP AGREEMENT -- Unoccupied Lots -- Issuance of Additional Partnership
Units to BRC.")
No Partner may withdraw any Capital Contributions without the consent of
both Partners. Neither Partner will receive any interest, salary or drawing with
respect to its Capital Contributions or for services rendered on behalf of the
Partnership or otherwise, nor shall either Partner have any obligation to
restore a deficit balance in its Capital Account.
Distributions
- -------------
Under the Partnership Agreement, Net Cash Flow shall be distributed, at
quarterly intervals, to the Partners in the ratio of their Percentage Interests
as measured on the applicable Partnership Record Date. "Net Cash Flow" means
-------------
all cash received from Partnership operations not including amounts received as
Capital Contributions, reduced by all cash paid, or amounts used to establish
reasonable reserves, for all Partnership expenses, debt payments, capital
improvements, replacements or other contingencies. "Percentage Interest" means,
-------------------
as to each Partner, an interest in the Partnership determined by dividing the
Partnership Units owned by such Partner by the total number of Partnership Units
then outstanding. The "Partnership Record Date" means, with respect to each
-----------------------
distribution to the Partners, the date that is fourteen (14) days prior to the
date of such distribution (or if such fourteenth (14th) day is not a business
day, the last business day immediately preceding such fourteenth (14th) day).
Net Capital Proceeds, if any, shall be distributed at quarterly intervals
or such other times as shall be mutually agreed by the Partners to the Partners
on the applicable Partnership Record Date. Such distributions shall be made
first, to BRC in an amount equal to $28,200 for each Unoccupied Lot that has not
become occupied by a tenant at any time on or before the Partnership Record Date
and thereafter, to the Partners in the ratio of their Percentage Interests. "Net
---
Capital Proceeds" means the net cash proceeds remaining in the Partnership and
- ----------------
available for distribution derived from any excess Capital Contributions,
mortgages or other financings or refinancings, any sales and other dispositions
(other than in the ordinary course of business) of the property of the
Partnership, or any part thereof, any insurance award paid on account of
destruction by casualty or from an eminent domain proceeding or conveyance in
lieu thereof, or
32
<PAGE>
any other nonrecurring capital transaction after deduction of all expenses,
charges and taxes incurred by the Partnership in connection with obtaining such
proceeds and of any portion of such proceeds actually applied to the payment of
Partnership indebtedness or to repair, restore or improve the property of the
Partnership and after deduction of amounts used to establish reasonable
reserves. Net Capital Proceeds shall include all principal and interest payments
with respect to any note or other obligation received by the Partnership in
connection with any sales and other dispositions (other than in the ordinary
course of business) of the property of the Partnership.
Distributions in liquidation will be made in accordance with the Capital
Accounts of the Partners. (See " -- Dissolution and Winding Up.")
Allocations of Profit and Loss
- ------------------------------
Profit of the Partnership for each fiscal year, up to the amount of Net
Cash Flow distributed for such fiscal year, will be allocated in the same
proportion that Net Cash Flow is distributed. To the extent the Profit for the
fiscal year exceeds Net Cash Flow, such excess Profit will be allocated in the
same manner as Profit from a sale or disposition of less than all or
substantially all of the Partnership's assets (see below).
Loss of the Partnership (other than Loss from the sale of all or
substantially all assets or partial sales--see below) for each fiscal year shall
be allocated to the Partners as follows: (1) first, to those Partners with
positive Capital Account balances (determined with certain adjustments) in
proportion to and to the extent of, such Capital Account balances; and (2)
thereafter, to the Partners in the ratio of their Percentage Interests.
Profit resulting from a sale or other disposition of all or substantially
all of the Partnership's assets, or upon dissolution of the Partnership, shall
be allocated to those Partners having negative Capital Accounts (determined with
certain adjustments) in proportion to, and to the extent of, such negative
Capital Accounts. Any remaining such Profit and all Loss resulting from a sale
or other disposition of all or substantially all of the Partnership's assets, or
upon dissolution of the Partnership, shall be allocated to the Partners so as to
produce Capital Accounts for the Partners such that the amounts distributed in
liquidation of the Partnership (see below) will be in the amounts, sequence and
priority set forth with respect to distributions of Net Capital Proceeds. (See
" --Distributions.")
Profit of the Partnership resulting from the sale or other disposition
(other than in the ordinary course of business) of less than all or
substantially all of the Partnership's assets shall be allocated to those
Partners having negative Capital Accounts (determined with certain adjustments)
in proportion to and to the extent of, such negative Capital Accounts. Any
remaining such Profit and all Loss resulting from sale or other disposition
(other than in the ordinary course of business) of less than all or
substantially all of the Partnership's assets shall be allocated to the Partners
so as to produce Capital Accounts for the Partners (computed in the manner set
forth in the preceding sentence) such that if an amount of cash equal to such
positive Capital Account balances were distributed in accordance with such
positive Capital Account
33
<PAGE>
balances, such distribution would be in the amounts, sequence and priority set
forth with respect to distribution of Net Capital proceeds. (See " --
Distributions.")
Items of income, gain, loss and deduction arising in the fiscal year in
which there is a sale or other disposition of all or substantially all of the
Partnership's assets or in which the Partnership is dissolved shall be allocated
to the Partners to the extent and in the manner necessary to produce Capital
Accounts for the Partners such that the amounts distributed pursuant to
Dissolution and Winding Up (see below) will be in the same amounts, sequence and
priority as distributions of Net Capital Proceeds. (See " -- Distributions.")
Neither the Partners nor the Partnership shall make or attempt to make an
election under Code Section 754 to adjust the basis of Partnership property as
provided in Code Sections 734(b) and 743(b).
The Partnership Agreement also contains certain other allocation provisions
intending to comply with Treasury regulations that govern the allocation of
Partnership taxable income and loss.
Meetings of the Partners
- ------------------------
Meetings may be called by either Partner. Notice of the meeting, stating
the nature of the business to be transacted, must be given to the other Partner
no less than seven and no more than 30 days before the meeting. Where a vote of
both Partners is required or permitted, such vote may be given in person or by
telephone or in writing. The vote of the Partners holding more than 50 percent
of the Partnership Interests shall control (except that certain decisions
require the approval of both Partners). (See " -- Management of the
Partnership.")
Each Partner may authorize another person to act for it by executing a
proxy signed by the Partner or its attorney-in-fact. Such proxies are valid for
11 months and are revocable.
BRC or its appointee will conduct all Partnership meetings pursuant to
rules BRC deems appropriate. All such meetings, unless otherwise agreed, will
be held at the principal place of business of the Partnership.
Unoccupied Lots -- Issuance of Additional Partnership Units to BRC
- ------------------------------------------------------------------
BRC (directly or through its affiliates) shall be responsible for marketing
all Unoccupied Lots to potential tenants. On or before March 1 of each year,
BRC shall determine (1) the market value of each Partnership Unit, in accordance
with a specific formula (the "Unit Value") and (2) the market value of each lot
----------
that is occupied by a tenant, in accordance with a specific formula (the
"Occupied Lot Value"). (These formulas are specifically described under " --
- -------------------
Sale of Partnership Units Relating to Put Right and Call Right -- MPI Common
Shareholder's Put Right.") BRC must deliver notice of the Unit Value and
Occupied Lot Value (collectively, the "Values") to MPI in writing and such
------
values will be binding on BRC and MPI until notice of new Values has been
delivered to MPI in writing.
34
<PAGE>
If a new tenant takes possession of an Unoccupied Lot, BRC will receive,
for no additional consideration, additional Partnership Units in an amount equal
to the then-current Occupied Lot Value divided by the then-current Unit Value,
adjusted to the nearest whole number. Thereafter, subject to compliance with
applicable securities laws, MPI shall offer to sell to the new tenant, within 30
days after the date on which the new tenant takes possession of the Unoccupied
Lot, but not earlier than 183 days after the Closing Date, a number of MPI
Common Shares equal to the number of additional Partnership Units BRC received
upon the leasing of such Unoccupied Lot multiplied by: the number of MPI Common
Shares then issued and outstanding (not including any shares held as treasury
stock), divided by the number of Partnership Units held by MPI at that time (the
"Stock/Unit Ratio"), at a price equal to the Unit Value divided by the
----------------
Stock/Unit Ratio.
For example, assume that the current Occupied Lot Value is $40,335, the
Current Unit Value is $1,297.98, 1,000 MPI Common Shares were initially issued
by MPI and 1,000 Partnership Units were issued to MPI and that, using its own
funds, MPI has repurchased 250 MPI Common Shares from MPI Common Shareholders,
then, BRC would receive 31 additional Partnership Units and MPI would be
required to offer to sell the new tenant 23 MPI Common Shares at $1,730.64 per
share calculated as follows:
First, determine the number of Partnership Units to be issued by the
Partnership to BRC: $40,335 (the current Occupied Lot Value) divided by
$1,297.98 (the current Unit Value) = 31 (rounded to the nearest whole number).
Second, calculate the Stock/Unit Ratio: 750 (number of outstanding MPI
Common Shares) divided by 1,000 (number of MPI's Partnership Units) = 0.75.
Third, determine the number of MPI Common Shares which MPI would be
required to sell to the new tenant: 31 (the number of Partnership Units issued
to BRC) x 0.75 (the Stock/Unit Ratio) = 23 (rounded to the nearest whole
number).
Next determine the price per share payable by the new tenant: $1,297.98
(the current Unit Value) divided by 0.75 (the Stock/Unit Ratio) = $1,730.64
(See " -- Sale of Partnership Units Relating to Put Right and Call Right" for a
description of how the Occupied Lot Value and Unit Value are calculated and an
example of such calculations.)
If the new tenant accepts the offer to purchase all or some of the MPI
Common Shares, MPI shall issue the applicable MPI Common Shares to the new
tenant in exchange for the purchase price.
MPI is required to give written notice to BRC of the issuance of MPI Common
Shares to the new tenant, and such notice shall constitute MPI's request to
purchase a number of BRC's additional Partnership Units equal to the number of
MPI Common Shares issued to the new tenant, divided by the Stock/Unit Ratio.
For Example: assume 23 MPI Common Shares were issued to the new tenant and the
Stock/Unit Ratio is 0.75, then MPI's notice shall constitute its
35
<PAGE>
request to purchase all 31 of BRC's additional Partnership Units calculated by
dividing 23 (the number of MPI Common Shares issued to the new tenant) by 0.75
(the Stock/Unit Ratio) = 30.6667 (rounded to the nearest whole number). (See
above for calculation of Stock/Unit Ratio.)
BRC will sell such additional Partnership Units to MPI upon receipt of the
aggregate purchase price payable by the new tenant and evidence of the issuance
of the MPI Common Shares to the new tenant. BRC, however, is not obligated to
sell to MPI additional Partnership Units where such sale would cause BRC's
Partnership Interest to equal less than 50 percent of all the Partnership
Interests, and MPI has agreed not to issue any MPI Common Shares to the extent
that such issuance would cause BRC's Partnership Interest to fall below 50
percent.
Management of the Partnership
- ------------------------------
Under the Partnership Agreement, the Partners have delegated to BRC full
authority and responsibility to conduct the day-to-day management and control of
the business and affairs of the Partnership including, without limitation, the
authority to make all decisions with respect to the following:
(1) arranging initial refinancing of the Loan from MHC Lending, and
arranging for the refinancing of such debt, if necessary, and
granting, on behalf of the Partnership, all mortgages, encumbrances
and/or security interests required by lender(s) in connection with any
such refinancing, so long as the foregoing complies with the terms set
forth in the Operation Plan (see " -- Operation Plan");
(2) incurring indebtedness on behalf of the Partnership in the ordinary
course of business; and
(3) doing all other things authorized by the Partnership Agreement and
those other things that are necessary, advisable or convenient in
connection with the management, operation or administration of the
Park or the Partnership's business or affairs.
Certain management decisions, however, must be approved by both BRC and MPI.
They include:
(1) the performance of any act in contravention of the Partnership
Agreement;
(2) the sale, exchange or other transfer of all or a substantial portion
of the Park;
(3) arranging financing for the Partnership or securing such financing
(except for the initial refinancing of the Loan from MHC Lending and
the refinancing of such initial refinancing);
(4) changing the designation of the holder of legal record title to the
Park or any other property owned by the Partnership;
(5) dissolving the Partnership;
(6) ceasing or substantially altering the use of the Park as a mobile home
park or manufactured home community;
(7) performing any act that would make it impossible to carry on the
ordinary business of the Partnership;
36
<PAGE>
(8) modifying the amount of the Capital Contribution to be made in
exchange for issuance of a Partnership Unit;
(9) permitting either Partner to withdraw its Capital Contribution;
(10) altering or deviating from the Operation Plan (see " -- Operation
Plan");
(11) approving the annual operating budget for the Property to be prepared
and submitted by the Property Manager;
(12) approving any amendment to the Management Agreement or the appointment
of any replacement manager (unless the replacement manager is an
Affiliate of BRC); and
(13) any other Partnership action requiring the consent of both Partners
under the Partnership Agreement.
BRC also has been designated the "Tax Matters Partner" pursuant to the Code.
Operation Plan
--------------
Unless otherwise agreed by both Partners, the Park will be operated in
accordance with the terms of the Operation Plan. The following is a summary of
the material provisions of the Operation Plan.
Through the tenth anniversary of the date of the Partnership Agreement (the
"Partnership Execution Date"), the base rent payable by a Meadows Homeowner will
--------------------------
increase annually by the greater of: (a) five percent or (b) the annual
percentage increase in the "Consumer Price Index for All Urban Consumers, All
Items" prepared by the Bureau of Labor Statistics of the United States
Department of Labor. Also, through the tenth anniversary of the Partnership
Execution Date, each Meadows Homeowner will pay additional monthly rent equal to
one-twelfth of such Meadows Homeowner's pro rata share of aggregate ad valorem
and non-ad valorem taxes and utilities assessed on the Park, subject to
compliance with the rental prospectus and applicable law. The Partnership shall
apply no less than 1.5 percent of the annual gross revenues of the Partnership
to capital improvements or to reserves for capital improvements to the Park.
Subject to applicable law, BRC or its affiliate will act as the exclusive
sales and marketing agent for the Park and shall have the exclusive right to
develop and market additional lots in the Park, except that Meadows Homeowners
will have the right to sell their manufactured homes independent of BRC or its
affiliate. Meadows Homeowners may sublease their manufactured homes in
accordance with current practice in effect as of the date of the Partnership
Agreement so long as such Meadows Homeowners continue to comply with their
rental agreements, and both the Meadows Homeowners and the sublessees comply
with the Park's rules and regulations. Subject to applicable law, the
Partnership may require the removal from the Park of any manufactured home that
is not maintained in good condition and repair and in compliance with the rules
and regulations.
Indemnification
- ---------------
The Partnership will indemnify any Partner that incurs a personal loss or
damages arising from any act performed by such Partner on behalf of the
Partnership except where such Partner acted in bad faith, was grossly negligent
or engaged in willful misconduct.
37
<PAGE>
Execution of Documents
- ----------------------
The signatures of both BRC and MPI are necessary for the Partnership to
convey title to any real property owned by the Partnership. BRC's signature
alone is necessary and sufficient to execute any promissory notes, trust deeds,
mortgages or other instruments of hypothecation.
Call Right of BRC's Partnership Interest
- ----------------------------------------
On the tenth anniversary of the Partnership Execution Date and on each
fifth anniversary thereafter (the "Call Exercise Date"), MPI shall have the
------------------
right to require BRC to sell to MPI or certain of its Affiliates all (but not
less than all) of BRC's Partnership Units on terms including the following: (1)
MPI shall give BRC written notice of its exercise of this right at least 90 days
before the applicable Call Exercise Date; and (2) the price for BRC's
Partnership Units shall be the number of Partnership Units held by BRC,
multiplied by the then-current Unit Value (see " -- Sale of Partnership Units
Relating to Put Right and Call Right -- Determination of Unit Value" below),
plus $28,200 for each Unoccupied Lot that has not become an Occupied Lot by the
- ----
date on which the sale of BRC's Partnership Units is consummated.
Sale of Partnership Units Relating to Put Right and Call Right
- --------------------------------------------------------------
MPI Common Shares may be owned only by MPI, Meadows Homeowners or the
estate, beneficiaries or heirs of a deceased Meadows Homeowner, so long as such
estate, beneficiaries or heirs own a mobile or manufactured home and lease a lot
located in the Park (each such person an "Eligible Homeowner"). If an MPI
------------------
Common Shareholder desires to sell some or all of his or her MPI Common Shares,
he or she is required to give written notice to MPI and BRC of such fact,
specifying:
(1) the number of MPI Common Shares owned by such MPI Common Shareholder;
(2) the number of such MPI Common Shareholder's MPI Common Shares proposed
to be sold;
(3) the identity of any proposed purchaser of the MPI Common Shares (who
must be an Eligible Homeowner); and
(4) the date upon which the MPI Common Shareholder reasonably expects to
consummate the sale of such MPI Common Shares.
Such MPI Common Shareholder must give an additional written notice to MPI and
BRC containing the information outlined above promptly upon ceasing to be an
Eligible Homeowner.
MPI Common Shareholder's Put Right
----------------------------------
Each holder of MPI Common Shares has the right to sell his/her MPI Common
Shares to another Eligible Homeowner. Each holder of MPI Common Shares also has
the right to require that MPI purchase (the "Put Right") all or a portion of
---------
such holder's MPI Common Shares at the cash price which shall equal the then-
current Unit Value, divided by the Stock/Unit Ratio (the "Put Price"), except
------- ---------
that until December 18, 1999, the Put Price shall equal the then-current Unit
Value, divided by the Stock/Unit Ratio, multiplied by 80 percent.
------- ----------
38
<PAGE>
For example, assume 1,000 MPI Common Shares were initially issued by MPI
and accordingly, 1,000 Partnership Units were issued to MPI. If, using its own
funds, MPI has repurchased 250 MPI Common Shares from MPI Common Shareholders,
and the current Unit Value is $1,200, then the Put Price as of March 31, 1999
would be calculated as follows:
First, calculate the Stock/Unit Ratio: 750 (number of outstanding MPI
Common Shares) divided by 1,000 (number of MPI's Partnership Units) = 0.75.
Next, determine the Put Price: $1,200 (Unit Value) divided by 0.75
(Stock/Unit Ratio) x 80% = $1,280.
Determination of Unit Value
---------------------------
The following defined terms are used in the determination of the Unit
Value:
"Applicable Calendar Year" means the calendar year immediately preceding
the date on which the Unit Value is determined.
"Applicable Portion" means, for each Unoccupied Lot that becomes an
Occupied Lot during any Applicable Calendar Year, a fraction the numerator of
which shall be the number of days in the period commencing on the date that such
Unoccupied Lot becomes an Occupied Lot and ending on December 31 in the same
Applicable Calendar Year, and the denominator of which shall be 365.
"Average Occupied Lot Number" means (i) the number of Occupied Lots on the
first day of the Applicable Calendar Year, plus (ii) the aggregate of the
----
Applicable Portions for the Applicable Calendar Year.
"Occupied Lot Value" from time to time during any Applicable Calendar Year
means (i) the Property Net Operating Income, multiplied by (ii) sixteen (16),
-----------
divided by (iii) the Average Occupied Lot Number.
- -------
"Outstanding Mortgage" means the outstanding principal amount of any
mortgage indebtedness secured by the Park as of the last day of the Applicable
Calendar Year.
"Property Net Operating Income" means the net income of the Partnership
before depreciation expense, mortgage interest expense and extraordinary items
for the Applicable Calendar Year, as determined in accordance with generally
accepted accounting principles.
The Unit Value from time to time shall be equal to:
(i) The Occupied Lot Value, multiplied by (ii) the number of Occupied
----------
Lots as of the last day of such Applicable Calendar Year, minus (iii) the
-----
Outstanding Mortgage, divided by (iv) the aggregate number of Partnership
-------
Units issued and outstanding as of the last day of the Applicable Calendar
Year.
39
<PAGE>
For example, assume that as of January 1, 1999, 295 lots within the Park
are occupied and that on March 31, 1999, two Unoccupied Lots become Occupied
Lots and on August 31, 1999, three Unoccupied Lots become Occupied Lots, such
that as of December 31, 1999 there are 300 Occupied Lots within the Park. Assume
that the Property Net Operating Income for 1999 is $750,000; and as of December
31, 1999 the Outstanding Mortgage is $6,000,000 and there are 4,700 Partnership
Units outstanding. The Unit Value as of March 31, 2000 would be calculated as
follows:
First, determine the Applicable Portions for the lots that become occupied
during the Applicable Calendar Year: 275/365 (for each of the two lots that
become occupied on 3/31/99) and 122/365 (for each of the three lots that become
occupied on 8/31/99). For this purpose the Applicable Calendar Year is 1999
which is the calendar year immediately preceding the date on which the Unit
Value is determined.
Second, determine the Average Occupied Lot Number: 295 (Occupied Lots at
1/1/99) + [(275/365) + (275/365) + (122/365) + (122/365) + (122/365)] = 297.5096
Next, determine the Occupied Lot Value: $750,000 (1999 Property Net
Operating Income) x 16 divided by (297.5096) = $40,335.
Finally, determine the Unit Value: $40,335 x 300 (Occupied Lots at
12/31/99) - $6,000,000 (mortgage debt at 12/31/99) divided by 4,700 (Partnership
Units at 12/31/99) = $1,297.98.
To exercise the Put Right, such holder of MPI Common Shares shall give at
least 30 days' prior written notice to MPI and BRC of the exercise of the Put
Right (the "Put Notice"). As a condition to its obligation to pay the Put Price
----------
to any MPI Common Shareholder, MPI may require reasonable indemnification from
such MPI Common Shareholder in connection with the exercise of the Put Right.
MPI's Call Right
----------------
If an MPI Common Shareholder ceases to be an Eligible Homeowner for any
reason or a person other than an Eligible Homeowner acquires any right, or claim
of right, to MPI Common Shares (each such person a "Required Seller"), MPI shall
---------------
have the right (the "Call Right"), at any time thereafter, to purchase all of
----------
the MPI Common Shares owned by the Required Seller in exchange for the Put
Price. MPI shall exercise its Call Right by delivering written notice ("Call
----
Notice") to the record owner of such MPI Common Shares at the address of such
- ------
record owner listed in the books and records of MPI. Such notice shall specify
the date by which the MPI Common Shares owned or claimed by such Required Seller
are required to be transferred to MPI. As a condition to its obligation to pay
the Put Price to any MPI Common Shareholder, MPI may require reasonable
indemnification from such MPI Common Shareholder in connection with the exercise
of the Call Right. MPI shall, at the request of BRC, exercise the Call Right
with respect to the MPI Common Shares owned by a Required Seller.
40
<PAGE>
Failure of Required Seller to Transfer MPI Common Shares. If MPI
--------------------------------------------------------
exercises its Call Right, but the Required Seller fails to transfer to MPI such
Required Seller's MPI Common Shares, or to provide the required indemnification
by the date specified in MPI's notice, then, effective as of such specified date
(the "Effective Sale Date"), such Required Seller shall be deemed to have sold
-------------------
his or her MPI Common Shares to MPI. In that event, MPI shall elect either: (a)
to escrow the Put Price for such MPI Common Shares, or (b) that BRC shall fund
the Put Price to be escrowed. If MPI provides written notice to BRC of its
election to require BRC to fund the Put Price, BRC shall pay to MPI the Put
Price in cash to be placed in escrow by MPI. BRC's and MPI's Partnership Units
will thereafter be automatically adjusted as described above in " -- MPI Common
Shareholder's Put Right -- Effect on Partnership Units of BRC's Funding of Put
Price."
Required Seller's Rights. From the Effective Sale Date, such Required
------------------------
Seller's sole right shall be to receive the Put Price for such MPI Common
Shares, as calculated on any Effective Sale Date, upon delivery to MPI of the
certificates for such MPI Common Shares and the required indemnification. The
Required Seller shall not be entitled to receive any dividends or other
distributions from MPI on account of such MPI Common Shares and such shares
shall have no voting or other rights.
Funding of Put Price.
--------------------
Within 7 days of its receipt of the Put Notice, or if MPI exercises its
Call Right, MPI shall elect either (a) to fund the Put Price or (b) that BRC
shall fund the Put Price. If MPI elects to fund the Put Price of any MPI Common
Shares, it may do so solely out of its own funds and not out of borrowed moneys.
MPI shall make its election by giving written notice of such election to BRC
when delivering the Call Notice or within seven days after MPI's receipt of the
Put Notice. MPI's failure to make a timely election as aforesaid shall
conclusively be deemed its election to have BRC fund the Put Price.
Effect on Partnership Units of BRC's Funding of Put Price. Upon receipt by
---------------------------------------------------------
BRC of (1) a Put Notice or a Call Notice, (2) MPI's written election to have BRC
fund the Put Price and (3) evidence acceptable to BRC in its sole discretion
that the MPI Common Shares which are the subject of the Put Notice or the Call
Notice have been validly transferred to MPI and any reasonable indemnification
required has been given, BRC shall pay to MPI, or, at BRC's election, BRC shall
pay directly to the applicable MPI Common Shareholder on MPI's behalf, the Put
Price, in cash. Thereafter, in consideration of payment by BRC of the Put
Price, immediately upon such payment by BRC, and without further action by the
Partnership, MPI, BRC, or the shareholders or directors of MPI:
(A) the number of Partnership Units held by BRC shall be increased by the
number of MPI Common Shares transferred to MPI by the MPI Common
Shareholder pursuant to the Put Right or the Call Right divided by the
-------
Stock/Unit Ratio; and
(B) the number of Partnership Units held by MPI shall be decreased by the
same number.
41
<PAGE>
For example, assume that BRC owns 3,958 Partnership Units and MPI owns 750
Partnership Units. Further, assume that MPI receives a Put Notice with respect
to 5 MPI Common Shares at a time when the Put Price per share is $1,297.98 and
the Stock/Unit Ratio is 0.75. If MPI elects that BRC will fund the Put Price,
then upon payment of the Put Price by BRC, the Partnership Units held by BRC and
MPI shall be adjusted as follows:
First, calculate the amount to be paid by BRC on MPI's behalf: 5 (number of
MPI Common Shares subject to Put Notice) x $1,297.98 (Put Price per share) =
$6,489.90.
Then, adjust the number of MPI Common Shares by the Stock/Unit Ratio: 5
(number of MPI Common Shares) divided by 0.75 (Stock/Unit Ratio) = 6.6667.
Then, increase the number of Partnership Units owned by BRC: 3,958 (number
of Partnership Units owned by BRC) + 6.6667 (number of MPI Common Shares subject
to the Put Notice, adjusted by the Stock/Unit Ratio) = 3,964.6667 (number of
Partnership Units owned by BRC after it funds the Put Price).
And, reduce the number of Partnership Units owned by MPI: 750 (number of
Partnership Units owned by MPI) - 7 (number of MPI Common Shares subject to the
Put Notice, adjusted by the Stock/Unit Ratio) = 743.3333 (number of Partnership
Units owned by MPI after BRC funds the Put Price).
Loans
- -----
The interim loan made by MHC Lending to finance the acquisition of the Park
will (x) not be treated as a Capital Contribution but shall be a debt due from
the Partnership to such lender and (y) be repayable out of the sum of the
proceeds of the initial refinancing to be arranged by BRC (on behalf of the
Partnership), the initial Capital Contributions made to the Partnership by BRC
and the Capital Contributions made to the Partnership by MPI.
In the event that the Partners or either of them shall determine that
funds, in addition to Net Cash Flow, Net Capital Proceeds and the Capital
Contributions, are required by the Partnership for any reason, BRC, on behalf of
the Partnership, will try to obtain financing from a third party in the amount
required. If such third party financing is reasonably available from a third
party, the Partnership shall borrow such funds from such third party. If no
such financing is reasonably available from a third party, BRC, on behalf of the
Partnership, shall ask the Partners to loan such additional funds to the
Partnership in the proportion of their Percentage Interests. Within 30 days
after such request is made, each Partner shall either loan its proportionate
share of the additional funds to the Partnership upon the terms specified in
said notice, or notify BRC in writing that it elects not to make such loan (the
failure to timely make such loan or give written notification of the election
not to make such loan will conclusively constitute an election not to make such
loan). Either Partner's failure to make any such loan shall not constitute a
default under the Partnership Agreement.
42
<PAGE>
If the Partnership shall not have received all of the required additional
funds, BRC shall be entitled (but not obligated) to make a loan to the
Partnership in the amount of the shortfall, bearing interest at a reasonable
rate as determined by BRC. Any such loan or advance made to the Partnership
shall not be treated as a Capital Contribution but shall be a debt due from the
Partnership to the Partner making such loan or advance.
Transfer of Partnership Units
- -----------------------------
BRC shall be entitled to transfer, sell or otherwise dispose of its
Partnership Units, or any portion thereof to: (1) an Affiliate of BRC; (2) a
Person that acquires BRC's Partnership Units pursuant to a sale by BRC and/or
its Affiliates of a portfolio of assets; (3) a successor of BRC pursuant to a
merger or consolidation of BRC; or (4) MPI or an Affiliate of MPI. Upon any
such transfer, sale or other disposal, the transferee, purchaser or other
assignee shall become a substitute Partner of the Partnership with all of the
rights, powers and obligations of BRC under the Partnership Agreement.
MPI may not transfer, sell or otherwise dispose of its Partnership Units,
or any portion thereof, except to BRC or BRC's Affiliates.
Any hypothecation, mortgage, pledge or collateralization of Partnership
Units is expressly prohibited and any purported hypothecation, mortgage, pledge
or collateralization by either Partner is null and void and of no legal effect,
except that BRC can hypothecate, mortgage, pledge or collateralize all or any
portion of its Partnership Units at any time after the tenth anniversary of the
Partnership Execution Date. In addition, sale, assignment or transfer of
Partnership Units shall be treated for accounting and Federal tax purposes in
accordance with the Partnership Agreement.
Books and Records
- -----------------
BRC will be required to keep adequate books and records of the Partnership
at BRC's corporate office, setting forth a true and accurate account of all
business transactions arising out of and in connection with the conduct of the
Partnership's business and affairs. Each Partner shall have the right, at any
reasonable time, to have access to and inspect and copy the contents of such
books or records. The Partnership's fiscal year shall be the calendar year.
BRC, in consultation with the Partnership's accountants, will make all decisions
with respect to accounting and tax treatment relating to the Partnership's
business.
Dispute Resolution
- -------------------
If a deadlock between the Partners as to the proper resolution of any
matter or any other dispute between the Partners relating to the Partnership,
the Park, or the Partnership Agreement (a "Deadlock") occurs between the
--------
Partners that is not resolved before the tenth anniversary of the Partnership
Execution Date, the Partners will endeavor to settle such Deadlock by mediation.
If mediation is unsuccessful and binding arbitration is commenced prior to the
tenth anniversary of the Partnership Execution Date, such Deadlock will be
resolved through binding arbitration.
43
<PAGE>
However, if such Deadlock is not resolved before, and is not in binding
arbitration as of the tenth anniversary of the Partnership Execution Date, or
if such Deadlock occurs on or after the tenth anniversary of the Partnership
Execution Date, the Partners will endeavor to settle such Deadlock by mediation
and, if mediation is unsuccessful, either Partner may issue a notice initiating
a buy-sell procedure. Each such notice will constitute offers (the "Buy-Sell
--------
Offers") by the Partner giving the notice both (i) to sell all of its
- ------
Partnership Units to the other Partner or certain of its Affiliates for the
price per Partnership Unit set forth in such notice (the "Buy-Sell Unit Price")
-------------------
and (ii) to purchase or cause certain of its Affiliates to purchase all of the
other Partner's Partnership Units for a price per Partnership Unit equal to the
Buy-Sell Unit Price. The buying Partner shall also obtain (or cause the buying
Partner's designated Affiliate to obtain) discharges of any continuing liability
of the selling Partner on account of Partnership financing or, in lieu thereof,
provide to the selling Partner an indemnification and hold-harmless agreement.
Dissolution and Winding Up
- --------------------------
The Partnership shall dissolve and commence winding up and liquidation
upon the first to occur of any of the following ("Liquidating Events"):
------------------
(1) the sale of all or a substantial portion of the assets of the
Partnership;
(2) MPI and BRC shall each have voted to dissolve, wind up and
liquidate the Partnership;
(3) the happening of any other event that makes it unlawful,
impossible or impractical to carry on the business of the
Partnership;
(4) either party shall terminate the Partnership Agreement by
providing written notice to the other if the Registration
Statement does not become effective within six months of filing
with the Commission; or
(5) any of the conditions to either Partner's obligation to close
under the Contribution Agreement shall not be satisfied, such
Partner shall not have waived such condition and such Partner
shall have given notice to the other Partner terminating the
Partnership Agreement.
Upon the occurrence of a Liquidating Event, the Partnership shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors and the
Partners. The proceeds from liquidation shall be applied, first, to the payment
and discharge of all of the Partnership's debts and liabilities to creditors
other than the Partners, second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners and the balance, if any, to
the Partners in accordance with their Capital Accounts, after giving effect to
all contributions, distributions and allocations for all periods. If either
Partner has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever.
In the event that the Partnership is liquidated on or before the tenth
anniversary of the Partnership Execution Date, the Park shall not be converted
to a use other than a mobile home park or manufactured home community
44
<PAGE>
prior to the tenth anniversary of the Partnership Execution Date (subject to
causes beyond the parties' reasonable control, including, without limitation,
zoning changes, condemnation and casualty) and, on or before the date such
liquidation is completed, the Partners shall execute and record a restrictive
covenant, in recordable form and otherwise in form and substance reasonably
acceptable to both Partners, prohibiting any such change of use, against the
title to the Park.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Plan of Operation
- -----------------
MPI had no revenues from operations until MPI-1 acquired the Park on
December 18, 1997. The Partnership has had no revenues to date. The Beneficial
Interest in the Park will be transferred to the Partnership promptly following
completion of this Offer. The plan of operation for the Park for 1998 is as
follows: Total net rental income from the Park is expected to aggregate
approximately $1,409,000 for the calendar year 1998. Other income from the Park
is expected to aggregate approximately $11,000, for total revenues of
$1,420,000. Expenses, including repairs, maintenance, utilities, insurance,
taxes and administration are projected to be approximately $667,000, for a net
operating income of approximately $753,000. Debt service and capital expenses
are expected to total approximately $620,000, resulting in a projected total net
cash flow of approximately $133,000. The statements made in this paragraph are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from
these forward-looking statements. Factors that could cause a material
difference include, but are not limited to, the loss of rent paying tenants in
the Park, possible increases in the prices of utilities and other services,
increases in the interest rate on money borrowed to refinance the purchase of
the Park, unanticipated capital improvements, property tax increases and
repairs.
Neither MPI nor the Partnership expects to raise additional funds in the
next 12 months, except to refinance the Loan made by MHC Lending to MPI-1 to
acquire the Park. Neither MPI nor the Partnership plans to perform any research
and development, purchase or sell any significant equipment or hire any
employees.
Year 2000 Problem
- -----------------
The "Year 2000" problem refers to the potential problems occurring at the
turn of the century from computer programs that understand only two digits.
These computer programs may treat the year 2000 as the year 1900, causing the
computer applications to fail or to provide inaccurate data. Such problems
could result in both MPI's and the Partnership's temporary inability to process
transactions or engage in normal business activities. Neither MPI, the
Partnership nor MHC Management has made an assessment of the potential impact of
the Year 2000 problem on the operations of MPI and/or the Partnership's
operations and none of them intends to do so. Nonetheless, none of them expects
the Year 2000 problem to have a material effect on such operations.
45
<PAGE>
MPI will be responsible for receiving distributions from the Partnership,
if any, paying taxes and other expenses of MPI's operations and making
distributions to its shareholders (if it has funds to distribute). MPI does not
currently use a computer and therefore should not be affected by the Year 2000
problem. However, as the manager of the Park, MHC Management will be
responsible for managing the Park. MHC Management's duties will include
collecting rents and paying expenses, activities which may be impaired by the
Year 2000 problem. MHC Management has advised MPI that it anticipates that its
systems should be Year 2000 compliant by the year 2000. However, if any of its
systems fail because of the Year 2000 problem, MHC Management will process the
Partnership's accounts manually.
Certain factors beyond the control of MPI, the Partnership and MHC
Management, however, could materially affect operations. There can be no
guarantee that the operations of other entities upon which MPI, the Partnership
and/or MHC Management may rely would not adversely impact MPI and the
Partnership. For example, many public and private providers of fixed income
payments, such as the Social Security Administration and pension plan
administrators, could experience Year 2000 problems resulting in delayed
payments. Because many Meadows Homeowners are retired and may rely on such
fixed income to pay their rent, such delays could result in the inability of
some Meadows Homeowners to pay their rent and ultimately result in a disruption
of revenues to the Partnership. Moreover, utility services to the Park could be
adversely affected if suppliers of such services are not Year 2000 compliant.
Neither MPI, the Partnership nor MHC Management has made any inquiries as to the
state of readiness of any such suppliers to overcome their potential Year 2000
problems. Neither MPI, the Partnership nor MHC Management has formulated a
contingency plan to remediate any potential Year 2000 problems and none of them
intends to do so.
MANAGEMENT
1. Management of MPI
-----------------
Executive Officers and Directors of MPI
- ---------------------------------------
<TABLE>
<CAPTION>
NAME, AGE & OFFICE AND LENGTH OF BUSINESS EXPERIENCE
- ----------- -------------------- -------------------
RESIDENTIAL ADDRESS SERVICE FOR LAST FIVE YEARS
- ------------------- ------- -------------------
<S> <C> <C>
Mr. Richard McCann, 54 Principal Executive Officer since Retired since August 1992.
2555 PGA Boulevard #119 September 1998, President since Prior to retirement, employed as an
Palm Beach Gardens, FL 33410 February 1998 and Director since accountant.
September 1997
Ms. Theresa Tyrrell, 62 Vice-President since February 1998 Retired since 1980. Prior to
2555 PGA Boulevard #118 and Director since January 1997 retirement, employed as a secretary.
Palm Beach Gardens, FL 33410
Mr. Ted Stevenson, 67 Principal Financial Officer since Retired since 1990. Prior to
2555 PGA Boulevard #89 September 1998, retirement, employed
</TABLE>
46
<PAGE>
<TABLE>
<S> <C> <C>
Palm Beach Gardens, FL Secretary since August 1996 as manager of national accounts
33410 and Director since January for L'Air Liquide.
1997
Ms. Mary Bachiochi, 71 Principal Accounting Officer since Retired since 1991. Prior to
2555 PGA Boulevard #112 September 1998, Treasurer since April retirement, employed as an accounts
Palm Beach Gardens, FL 33410 1998 and Director since February 1998 receivable specialist at a hospital
and surgery center.
Mr. Gerald Flynn, 77 Director since January 1998 Retired since 1985. Prior to
2555 PGA Boulevard #43 retirement, employed as sales
Palm Beach Gardens, FL 33410 executive and consultant for
wholesale forest products business.
Mr. David McNab, 70 Director since January 1997 Retired since February 1986. Prior
2555 PGA Boulevard #180 to retirement, self-employed heating,
Palm Beach Gardens, FL 33410 plumbing and air conditioning
contractor.
</TABLE>
Significant Employees
- ---------------------
MPI has no employees and does not expect to hire any employees in the
future.
Legal Proceedings
- -----------------
No MPI director or officer has been involved in any bankruptcy or criminal
proceedings, excluding traffic violations and other minor offenses, in the last
five years.
Remuneration of Directors and Officers
- --------------------------------------
No director or officer of MPI will receive any remuneration for serving as
a director or officer of MPI.
Security Ownership of Directors, Officers and Certain Security Holders
- ----------------------------------------------------------------------
Each of the MPI directors owns one share of MPI Preferred Stock which they
received in exchange for their membership interests in MPI-1 as the result of
the series of mergers whereby MPI-1 was merged into MPI. Mr. McCann paid $1,000
and owns 1 MPI Common Share. MPI's directors and officers made Advances to MPI-
1 aggregating $64,000 and each of them has indicated an intention to convert all
of these Advances into MPI Common Shares in this Offer. Accordingly, after
completion of the offering, each of MPI's directors and officers, other than
Messrs. McCann and Flynn, will own 10 MPI Common Shares. Mr. McCann will own 17
MPI
47
<PAGE>
Common Shares and Mr. Flynn will own 7 MPI Common Shares. The percentage of MPI
Common Shares owned by each MPI officer and director will depend on the total
number of MPI Common Shares subscribed for by Meadows Homeowners. There are no
outstanding options or warrants to acquire any MPI Common Shares.
2. Management of BRC
-----------------
BRC was organized in December 1997. It has two partners: MHC Operating
Limited Partnership, an Illinois limited partnership, which owns a 99 percent
limited partnership interest and MHC-QRS Blue Ribbon Communities, Inc., a
Delaware corporation ("MHC-QRS"), organized in December 1997, which owns a one
-------
percent general partnership interest. MHC is the sole shareholder of MHC-QRS
and owns approximately 80 percent of MHC Operating Limited Partnership, while a
variety of persons own the remaining 20 percent interest. Mr. Samuel Zell,
Chairman of the Board of Directors of MHC, certain other officers of MHC and
other entities controlled by Mr. Zell, own in the aggregate approximately 15
percent of MHC's common stock.
MHC is a publicly owned Maryland corporation whose stock is traded on the
New York Stock Exchange. MHC is engaged in the business of owning and operating
manufactured and mobile home communities. MHC is self administered and self
managed and qualifies as a real estate investment trust for Federal income tax
purposes. MHC's communities are residential developments designed for single-
family manufactured homes. Residents own the homes and lease the lots on which
the homes are located. As of December 31, 1997, MHC owned or had a controlling
interest in 121 manufactured home communities throughout the United States. The
majority of MHC's properties are located in Florida, Arizona, Colorado and
California. MHC has approximately 778 full-time employees.
MHC has no financial or managerial commitments or other obligations
whatsoever to BRC, the Partnership or the Park, nor is MHC under any financial
or other obligation or duty to ensure that BRC complies with its obligations
under the Partnership Agreement.
Executive Officers and Directors of MHC-QRS
- -------------------------------------------
NAME & AGE OFFICE AND LENGTH OF SERVICE
- ---------- ----------------------------
Samuel Zell, 56 Chairman and Director since December 1997
Howard Walker, 58 President, Chief Executive Officer and Director
since December 1997
Thomas P. Heneghan, Jr., 34 Executive Vice President, Chief Financial
Officer, Treasurer and Director since December
1997
48
<PAGE>
Ellen Kelleher, 37 Executive Vice President, Assistant Secretary and
Director since December 1997
BUSINESS EXPERIENCE (last 5 years)
- ----------------------------------
TOM HENEGHAN has been Executive Vice President, Chief Financial Officer and
Treasurer of MHC since 1997 and is a member of MHC's management committee. He
was Vice President, Chief Financial Officer and Treasurer from February 1995 to
March 1997. From January 1994 to February 1995, Mr. Heneghan was a member of
the accounting firm Greenberg & Pociask, Ltd. From May 1993 until June 1994, he
was vice president of Capsure Holdings Corp. and from January 1993 to November
1993, he was controller of Capsure Holdings Corp. (a company engaged in the
business of providing surety and fidelity bonds). Mr. Heneghan was vice
president and controller of Great American Management and Investment, Inc. (a
holding company whose primary subsidiary offers products and services to the
building, electrical, automotive and aviation industries) from December 1993 to
December 1994, and controller from January 1993 to November 1993.
ELLEN KELLEHER has been Executive Vice President and General Counsel of MHC
since March 1997 and is a member of MHC's management committee. From March 1994
to March 1997, she was Senior Vice President and General Counsel of MHC. Ms.
Kelleher was a vice president of the law firm Rosenberg & Liebentritt, P.C. from
January 1993 until December 1995 and was an associate at that law firm from
October 1990 until January 1993.
HOWARD WALKER has been a director of MHC since November 1997, President of MHC
since September 1997 and Chief Executive Officer since December 1997. Since
March 1995, Mr. Walker has been President of Realty Systems, Inc., an affiliate
of MHC, and is a member of MHC's management committee. From January 1995 to
March 1995, he was a Vice President of MHC. From August 1994 to January 1995,
Mr. Walker was the principal of Walker Realty Co., a full-service real estate
company. From January 1989 to July 1994, he was a principal and partner of The
Markin Group, a full-service real estate company.
SAMUEL ZELL has been MHC's Chairman of the Board since March 1995 and its Chief
Executive Officer from March 1995 to August 1996. Mr. Zell had been Co-Chairman
of the Board of MHC from its formation in March 1993 until March 1995. From
1983 until its dissolution in 1993, he was a director of Mobile Home
Communities, Inc., MHC's predecessor. Currently, Mr. Zell is chairman of the
board of directors of Equity Group Investments, Inc, an investment company;
American Classic Voyages, Inc., a provider of overnight cruises in the United
States; Anixter International Inc., a distributor of electrical and cable
products; and Jacor Communications, Inc., an owner and operator of radio
stations. He also is chairman of the board of trustees of Capital Trust, a
specialized finance company; Equity Office Properties Trust, an equity real
estate investment trust primarily involved with office buildings; and Equity
Residential Properties Trust, an equity REIT primarily focused on multifamily
residential properties. Mr. Zell is a director of Chart House Enterprises,
Inc., an owner and operator of restaurants; Fred Meyer, Inc., an owner and
operator of grocery stores and discount stores;
49
<PAGE>
Ramco Energy plc, an independent oil company in the United Kingdom; and TeleTech
Holdings, Inc., a provider of customer care solutions.
Significant Employees
- ---------------------
Neither BRC nor MHC-QRS has any employees, nor do they expect to hire any
employees in the future.
Counsel
- -------
MPI's counsel with respect to the Offer and the Rescission Offer is Steptoe
& Johnson LLP, 1330 Connecticut Avenue, N.W., Washington, DC 20036. Steptoe &
Johnson LLP is also counsel to BRC, MHC and various of their affiliates.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
MPI has not been, and does not expect to be in the future, a party to any
transaction in which any officer, director, promoter or principal shareholder of
MPI or any member of their immediate families or any firms or corporations with
which they are associated, had or is to have a direct or indirect material
interest except as described herein. The officers and directors of MPI are
Meadows Homeowners and lease lots in the Park on which their homes are located.
Such leases are on terms similar to those prevailing for comparable transactions
with unaffiliated persons.
In June 1998, Richard McCann, President and a Director of MPI paid $1,000
for 1 share of common stock of a predecessor of MPI. That share was converted
into 1 MPI Common Share pursuant to the merger of that predecessor into MPI.
From January 14, 1998 through March 1, 1998, Mr. McCann acted as interim Park
manager for MHC Management for which he received fees of $2,500 per month.
The governing documents of MPI do not expressly prohibit the directors,
officers, security holders or affiliates of MPI from having a direct or indirect
pecuniary interest in any investment to be acquired or disposed of by MPI or any
transaction involving MPI. Also, the governing documents of MPI do not prohibit
the directors, officers, security holders or affiliates from engaging in
competing businesses, and they may do so.
BRC's affiliate, MHC, owns and/or manages a number of manufactured home
communities or mobile home parks in Florida, some of which compete or may
compete with the Park.
For a description of other transactions between MPI and certain affiliates
of BRC, see "DESCRIPTION OF PROPERTY -- Management of the Park" and
"DESCRIPTION OF BUSINESS -- Description of Business of the Partnership."
50
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States Federal
income and related tax considerations relevant to MPI Common Shareholders
relating to the purchase, ownership and disposition of MPI Common Shares and
MPI's purchase, ownership and disposition of Partnership Units. This discussion
is based upon the Code, Treasury Regulations, Service rulings and judicial
decisions now in effect, all of which are subject to change (possibly with
retroactive effect) or different interpretations. There can be no assurance
that the Service will not challenge one or more of the tax consequences
described herein and neither MPI, BRC nor the Partnership has obtained, nor do
they intend to obtain, a ruling from the Service with respect to the United
States Federal income tax, state tax, local tax, foreign tax or other tax
consequences of acquiring or holding the MPI Common Shares or the Partnership
Units. This discussion does not purport to deal with all aspects of United
States Federal income taxation that may be relevant to a particular holder in
light of the holder's particular circumstances (for example, persons subject to
the alternative minimum tax provisions of the Code). Also, it is not intended
to be wholly applicable to all categories of investors, some of which (such as
dealers in securities, banks, insurance companies, tax-exempt organizations and
persons holding MPI Common Shares as part of a hedging or conversion transaction
or straddle or persons deemed to sell MPI Common Shares under the constructive
sale provisions of the Code) may be subject to special rules. The discussion
also does not discuss any aspect of state, local or foreign law or United States
Federal estate and gift tax law applicable to U.S. Holders nor any aspect of
state, local or foreign law or United States Federal gift tax law applicable to
Non-U.S. Holders. In addition, this discussion is limited to original
purchasers of MPI Common Shares who hold such MPI Common Shares as a "capital
asset" within the meaning of Code Section 1221.
As described above, MPI will continue to own the record interest in the
Park, and the Partnership will own the Beneficial Interest in the Park. MPI
will enter the Nominee Agreement with the Partnership, whereby MPI will act as
nominee and agent of the Partnership with regard to the Park. Assuming that MPI
and the Partnership comply with the terms of the Nominee Agreement, it is
expected that the Partnership will be treated as owner of the Park for Federal
income tax purposes.
ALL PROSPECTIVE PURCHASERS OF MPI SHARES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF MPI SHARES AND MPI'S PURCHASE, OWNERSHIP
AND DISPOSITION OF PARTNERSHIP UNITS.
1. Taxation of MPI as a Corporation
--------------------------------
United States Federal Income Tax. MPI is a corporation that will be
--------------------------------
subject to United States Federal income tax separately from the MPI Common
Shareholders. MPI will be subject to a graduated income tax of 34 percent with
respect to its taxable income exceeding $75,000 but not exceeding $10,000,000.
In determining its net income or loss, MPI will subtract any operating expenses
and other allowable deductions from gross income. Net operating losses, if any,
will be deductible by MPI subject to certain carryback and carryover provisions.
MPI may
51
<PAGE>
accumulate its earnings for a bona fide business reason and thus, although MPI
may be subject to tax on its taxable income, MPI may retain such earnings rather
than make a distribution to the MPI Common Shareholders. In the event that MPI
allows its earnings to accumulate beyond the reasonable needs of the business,
it may be subject to an accumulated earnings tax of 39.6 percent. The after-tax
earnings of MPI will be subject to Federal income tax to the MPI Common
Shareholders when distributed to the MPI Common Shareholders. (See " --Dividends
and Other Distributions.")
An alternative minimum tax is imposed on corporations taxable under
Subchapter C of the Code. However, a corporation that had average gross
receipts of $5,000,000 or less for the three taxable years that ended with its
first tax year beginning after December 31, 1996, or had gross receipts of
$5,000,000 or less for the period during which the corporation was in existence
where the corporation was not in existence for the entire three-year period,
will qualify as a "small corporation" and will not be subject to the alternative
minimum tax. MPI believes that it will qualify as a "small corporation" and
should not be subject to an alternative minimum tax.
Florida Franchise Tax. In addition to United States Federal income tax,
---------------------
MPI will be subject to the Florida franchise tax at the rate of 5.5 percent of
MPI's net income. Net income for this purpose is generally a corporation's
adjusted Federal income subject to certain adjustments. MPI believes that,
because it will qualify as a "small corporation" under Code Section 55, MPI will
not be subject to the Florida alternative minimum tax.
2. Consequences of Ownership of MPI Common Shares
----------------------------------------------
A. U.S. Holders. The following discussion is limited to certain United
------------
States Federal income tax consequences relevant to a U.S. Holder. U.S. Holders
should consult their own tax advisors concerning the state, local, estate and
other tax consequences of the purchase, ownership and disposition of MPI Common
Shares.
Dividends and Other Distributions. Distributions, if any, paid on the MPI
---------------------------------
Common Shares, to the extent made from current and/or accumulated earnings and
profits of MPI, as determined for United States Federal income tax purposes,
will be included in a U.S. Holder's income as ordinary income (subject to a
possible dividends received deduction in the case of corporate holders).
Sale or Exchange of MPI Common Shares. Gain or loss realized on the sale
-------------------------------------
or exchange of MPI Common Shares will equal the difference between the amount
realized on such sale or exchange and the U.S. Holder's adjusted tax basis in
such MPI Common Shares. Such gain or loss will generally be long-term capital
gain or loss if the U.S. Holder has held or is deemed to have held the MPI
Common Shares for more than one year. Long-term capital gain realized on a sale
or exchange of MPI Common Shares by an individual will be subject to certain
maximum tax rates and losses realized on a sale or exchange of MPI Common Shares
held by any type of taxpayer may be limited. Gain on most capital assets held
by an individual more than one year is subject to a maximum tax rate of 20
percent. Deductions for capital losses in excess of capital
52
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gains for individuals may be limited and are not allowed for corporate
taxpayers. Carryback and carryover of such excess capital losses may be allowed.
Redemption of MPI Common Shares. Pursuant to the Put Right in the
-------------------------------
Partnership Agreement, MPI Common Shareholders may have the right or the
obligation under certain circumstances to sell MPI Common Shares to MPI. (See
"SUMMARY OF THE PARTNERSHIP AGREEMENT -- Put Right.") The sale of the MPI Common
Shares to MPI will be treated as a redemption for Federal income tax purposes.
The treatment accorded to any redemption by MPI of MPI Common Shares can only be
determined on the basis of particular facts as to each holder at the time of
redemption. In general, a U.S. Holder will recognize capital gain measured by
the excess of the amount received by the U.S. Holder upon the redemption over
such U.S. Holder's adjusted tax basis in the MPI Common Shares redeemed
(provided the MPI Common Shares are held as a capital asset) if such redemption
(i) results in a "complete termination" of the U.S. Holder's interest in all
classes of shares of MPI under Code Section 302(b)(3), (ii) is "substantially
disproportionate" with respect to the U.S. Holder's interest in MPI under Code
Section 302(b)(2) or (iii) is "not essentially equivalent to a dividend" with
respect to the U.S. Holder under Code Section 302(b)(1). In applying these
tests, there must be taken into account not only any MPI Common Shares owned by
the U.S. Holder, but also any MPI Preferred Stock and any other options
(including stock purchase rights) to acquire MPI Common Shares. The U.S. Holder
also must take into account any such securities (including options) which are
considered to be owned by such U.S. Holder by reason of the constructive
ownership rules set forth in Code Sections 318 and 302(c).
If the redemption does not meet any of the tests under Code Section 302,
then the redemption proceeds received from the MPI Common Shares will be treated
as a distribution on the MPI Common Shares as described under " -- Consequences
of Ownership of MPI Common Shares in MPI -- U.S. Holders -- Dividends and Other
Distributions". If the redemption is taxed as a dividend, the U.S. Holder's
adjusted tax basis in the MPI Common Shares will be transferred to any other
shares held by such U.S. Holder. If the U.S. Holder owns no other shares in
MPI, under certain circumstances, such basis may be transferred to a related
person, or it may be lost entirely.
Information Reporting and Backup Withholding. A U.S. Holder of MPI Common
--------------------------------------------
Shares may be subject to "backup withholding" at a rate of 31 percent with
respect to certain "reportable payments," including interest payments and
dividend payments. These backup withholding rules apply if the U.S. Holder,
among other things, (i) fails to furnish a social security number or other
taxpayer identification number ("TIN") certified under penalties of perjury
---
within a reasonable time after the request therefor, (ii) furnishes a TIN as to
which the Service provides notification that the TIN is incorrect, (iii) fails
to report properly interest or dividends or (iv) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN furnished is the correct number and that such U.S. Holder is not subject
to backup withholding. A U.S. Holder who does not provide MPI with its correct
TIN also may be subject to penalties imposed by the Service. Any amount
withheld from a payment to a U.S. Holder under the backup withholding rules is
creditable against the U.S. Holder's Federal income tax liability, provided that
the required information is furnished to the Service. Backup withholding
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<PAGE>
will not apply, however, with respect to payments made to certain holders,
including corporations, tax-exempt organizations and certain foreign persons,
provided their exemptions from backup withholding are properly established.
The Company will report to the U.S. Holders of MPI Common Shares and to the
Service the amount of any "reportable payments" for each calendar year and the
amount of tax withheld, if any, with respect to such payments.
B. Non-U.S. Holders. The following discussion is limited to certain
----------------
United States Federal tax consequences relevant to a Non-U.S. Holder. Non-U.S.
Holders should consult their own tax advisors concerning the state, local,
foreign and other tax consequences of the purchase, ownership and disposition of
the MPI Common Shares.
For purposes of United States Federal withholding tax on dividends
discussed below, a Non-U.S. Holder (as defined above) includes a non-resident
fiduciary of an estate or trust. For purposes of the following discussion,
dividends and gain on the sale, exchange or other disposition of MPI Common
Shares will be considered to be "United States trade or business income" if such
income or gain is (i) effectively connected with the conduct of a trade or
business within the U.S. of such Non-U.S. Holder or (ii) in the case of certain
residents of certain countries which have an income tax treaty in force with the
United States, attributable to a permanent establishment (or, in the case of an
individual, a fixed base) in the United States as such terms are defined in the
applicable treaty.
Dividends and Other Distributions. In general, distributions on MPI Common
---------------------------------
Shares treated as dividend income paid to a Non-U.S. Holder of MPI Common Shares
will be subject to withholding of United States Federal income tax at a 30
percent rate unless such rate is reduced by an applicable income tax treaty.
Dividends that are considered to be United States trade or business income could
be subject to United States Federal income tax at regular ordinary income tax
rates, but are not generally subject to the 30 percent United States Federal
withholding tax if the Non-U.S. Holder makes the appropriate notification to the
payor. To claim the benefit of an income tax treaty or to claim exemption from
withholding because the income is United States trade or business income, the
Non-U.S. Holder must provide to MPI a properly executed Internal Revenue Service
Form 1001 or Internal Revenue Service Form 4224 (or such successor forms as the
Service designates), as applicable, prior to the payment of dividend income.
Under recently issued Treasury Regulations generally promulgated under Code
Sections 1441 and 1442 (the "Withholding Regulations"), the required Forms 1001
-----------------------
and 4224 will be replaced with a new Internal Revenue Service Form W-8. The
Withholding Regulations are generally effective for payments made on or after
January 1, 1999, subject to certain transition rules. The Service has
announced, however, that it intends to amend the regulations to provide that
such regulations will be generally applicable beginning January 1, 2000 and to
provide certain new transition rules for satisfying the Withholding Regulations.
Under the Withholding Regulations, a Non-U.S. Holder may under certain
circumstances be required to obtain a United States taxpayer identification
number and make certain certifications to MPI. Special procedures are provided
in the Withholding Regulations for payments through qualified intermediaries.
Prospective investors should consult their tax advisors regarding the effect, if
any, of the Withholding Regulations.
54
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Any United States trade or business income received by a Non-U.S. Holder that is
a corporation may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30 percent rate or such lower rate as may be
applicable under an income tax treaty. Dividends paid to an address in a foreign
country generally are presumed (absent actual knowledge to the contrary) to be
paid to a resident of such country for purposes of the withholding tax discussed
above and for purposes of determining the applicability of a tax treaty rate.
Other recently adopted Treasury Regulations generally promulgated under Code
Section 894 that are effective with respect to payments made on and after
January 1, 1998, provide special rules to determine whether, for purposes of
determining the applicability of a tax treaty, dividends paid to a Non-U.S.
Holder that is an entity should be treated as paid to the entity or those
holding an interest in that entity. Prospective investors should consult their
tax advisors regarding the effect, if any, of the recently adopted regulations.
A Non-U.S. Holder of MPI Common Shares that is eligible for a reduced rate
of United States withholding tax pursuant to an income tax treaty may obtain a
refund of any amounts withheld at the 30 percent statutory rate by filing an
appropriate claim for a refund with the Service.
Sale, Exchange or Redemption of MPI Common Shares. MPI expects to be
-------------------------------------------------
treated as a United States real property holding corporation ("USRPHC") for
------
United States Federal tax purposes because of its ownership through the
Partnership of substantial real estate assets in the United States. A
corporation generally is characterized as a USRPHC if the fair market value of
its interests in United States real property equals or exceeds 50 percent of the
sum of the fair market value of its worldwide real property interests plus its
other assets used or held for use in a trade or business. As a result, pursuant
to the Foreign Investment in Real Property Tax Act, Non-U.S. Holders of MPI
Common Shares are subject to United States Federal income taxation at regular
graduated rates pursuant to Code Section 897 on any gain realized from the sale
or other disposition of such stock, unless an exemption is provided under an
applicable tax treaty. The gain would be treated as effectively connected with
the conduct of a trade or business within the United States and the sale or
other disposition generally would be subject to withholding tax equal to ten
percent of the amount realized therefrom. In addition, distributions, if any,
paid on the MPI Common Shares, to the extent not made from current and/or
accumulated earnings and profits of MPI, as determined for United States Federal
income tax purposes, are also treated as taxable exchanges of stock to which
these rules apply.
Federal Estate Tax. MPI Common Shares owned or treated as owned by an
------------------
individual who is not a citizen or resident of the United States (for Federal
estate tax purposes) will be included in such individual's estate for United
States Federal income tax purposes unless an applicable estate tax treaty
otherwise provides.
Information Reporting and Backup Withholding. MPI must report annually to
--------------------------------------------
the Service and to each Non-U.S. Holder any dividend that is subject to
withholding. Copies of these information returns may also be made available
under the provisions of a specific treaty or agreement to the tax authorities of
the country in which the Non-U.S. Holder resides.
55
<PAGE>
Generally, information reporting and backup withholding of United States
Federal income tax at a rate of 31 percent may apply to any payments to Non-U.S.
Holders if the payee fails to certify that the holder is a non-United States
person or if MPI or its paying agent has actual knowledge that the payee is a
United States person. The 31 percent backup withholding tax generally will not
apply to dividends paid to foreign holders outside the United States that are
subject to 30 percent withholding as discussed above or that are subject to a
tax treaty that reduces such withholding.
The payment of the proceeds on the disposition of MPI Common Shares to or
through a United States office of a United States or foreign broker will be
subject to information reporting and backup withholding unless the owner
provides certification as to its Non-U.S. Holder status under penalty of perjury
or otherwise establishes an exemption, provided that the broker does not have
actual knowledge that the holder is a United States person or that the
conditions of any other exception are not, in fact, satisfied. The proceeds of
the disposition by a Non-U.S. Holder of MPI Common Shares to or through a
foreign office of a broker will generally not be subject to backup withholding.
However, if such broker is a United States person, a controlled foreign
corporation for United States tax purposes, or a foreign person 50 percent or
more of whose gross income from all sources for certain periods is effectively
connected with a United States trade or business, information reporting will
apply unless such broker has documentary evidence in its files of the Non-U.S.
Holder's foreign status and has no actual knowledge to the contrary or unless
the Non-U.S. Holder otherwise establishes an exemption. Both backup withholding
and information reporting will apply to the proceeds of such dispositions if the
broker has actual knowledge that the payee is a U.S. Holder.
The Withholding Regulations alter the foregoing rules in certain respects.
The Withholding Regulations provide presumptions under which a Non-U.S. Holder
is subject to information reporting and backup withholding at the rate of 31
percent unless MPI receives certification of the holder's non-United States
status. Depending on the circumstances, this certification will need to be
provided (i) directly by the Non-U.S. Holder, (ii) in the case of a Non-U.S.
Holder that is treated as a partnership or other fiscally transparent entity, by
the partners, shareholders or other beneficiaries of such entity or (iii) by
certain qualified financial institutions or other qualified entities on behalf
of the Non-U.S. Holder.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's United States Federal income tax liability, provided that the requisite
procedures for claiming such refund or credit are followed.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO
PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO HIM OR HER OF PURCHASING, HOLDING AND DISPOSING OF THE MPI
SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
TAX LAWS,
56
<PAGE>
AND OF ANY PROPOSED CHANGE.
3. Consequences of Ownership of Partnership Units. This section discusses the
----------------------------------------------
Federal income tax consequences to MPI of becoming a Partner in the Partnership
and the Federal income tax consequences to MPI and MPI Common Shareholders of
MPI's ownership of Partnership Units.
Transfer of Cash and the Park for Partnership Units. As described in
---------------------------------------------------
greater detail above, MPI will contribute cash and the Beneficial Interest in
the Park to the Partnership, which will assume the Loan, in exchange for
Partnership Units.
Code Section 721 provides that, as a general rule, no gain or loss is
recognized to a partnership or to any of its partners in the case of a
contribution of property to the partnership in exchange for an interest in the
partnership. In addition, Code Section 731 provides that, as a general rule,
neither a partnership nor a partner recognizes gain or loss on the distribution
by the partnership of property, other than money, to a partner. However,
depending upon the circumstances, a partner's deemed relief from liabilities,
either in connection with a contribution to a partnership or a distribution from
a partnership or a repayment of part or all of such liabilities, could cause the
partner to recognize taxable gain on a contribution or distribution that would
otherwise qualify for tax free treatment under Code Sections 721 or 731. (See
"--Relief from Liabilities/Deemed Cash Distribution.")
Relief from Liabilities/Deemed Cash Distribution. Under the applicable
------------------------------------------------
provisions of the Code, MPI will include in the tax basis for its Partnership
Interest its share of the Partnership's liabilities, determined in accordance
with the Treasury Regulations under Code Section 752. MPI will also include in
the tax basis for its Partnership Interest any capital contributions that it has
actually made to the Partnership and its allocable share of all Partnership
income and gains and reduce its tax basis by the amount of all distributions
that it receives from the Partnership and its allocable share of all Partnership
losses. For purposes of these rules, if MPI's share of Partnership liabilities
is reduced for any reason, MPI will be deemed to receive a cash distribution
equal to the amount of such reduction. MPI will recognize gain as a result of
this deemed cash distribution if, and to the extent that, the deemed cash
distribution exceeds MPI's adjusted tax basis for its Partnership Interest. It
is not expected that MPI will recognize taxable gain as a result of its
contribution of the Beneficial Interest in the Park to the Partnership, which
will assume the Loan, and the refinancing of the Loan. However, future decreases
in MPI's share of Partnership liabilities could result in the recognition of
taxable gain without the receipt of cash. (See " -- Treatment of Partnership
Distributions.")
Treatment of Partnership Distributions. Distributions of money (including
--------------------------------------
deemed distributions resulting from decreases in MPI's share of Partnership
liabilities) by the Partnership to MPI generally will not be taxable to MPI for
Federal income tax purposes to the extent of MPI's aggregate tax basis in its
Partnership Units immediately before the distribution. Distributions of money in
excess of such tax basis generally will result in gain in the amount of such
excess, a portion of which may be ordinary income. Any reduction in MPI's share
of the Partnership's liabilities, either through repayment, refinancing or
otherwise, will be treated as a
57
<PAGE>
distribution of money to MPI. A decrease in MPI's Percentage Interest in the
Partnership because of an issuance of additional Partnership Units by the
Partnership also will decrease MPI's share of liabilities of the Partnership and
thus will result in a corresponding deemed distribution.
A non-pro rata distribution of money or property may result in ordinary
income to MPI, regardless of its tax basis in its Partnership Units, if such
distribution reduces MPI's share of the Partnership's "unrealized receivables"
(including depreciation recapture) and/or "inventory items" (both as defined in
Code Section 751) (collectively, "Code Section 751 Assets").
-----------------------
Gain or loss attributable to any "inventory items" will be treated as
ordinary gain or loss. Among other things, Code Section 751 Assets include, to
the extent not previously includible in Partnership income, any rights to
payment for services rendered or to be rendered. Unrealized receivables also
include amounts that would be subject to recapture as ordinary income if the
Partnership sold its assets at their fair market value. To the extent MPI
receives a non-pro rata distribution that reduces its share of Code Section 751
Assets, MPI will be treated as having received a distribution of its
proportionate share of Code Section 751 Assets and having exchanged such assets
with the Partnership in return for a portion of the actual distribution made to
MPI equal to the fair market value of its proportionate share of Code Section
751 Assets. This latter deemed exchange will generally result in MPI's
realization of ordinary income under Code Section 751(b). Such income will equal
the excess of (1) the portion of such distribution deemed received in exchange
for MPI 's proportionate share of the Code Section 751 Assets over (2) its tax
basis in the share of such Code Section 751 Assets deemed relinquished in the
exchange. Although the Partnership does not currently expect to make an actual
non-pro rata distribution of money or property, a deemed distribution of money
resulting upon the Partnership's subsequent issuance of additional Partnership
Units would constitute a non-pro rata distribution for purposes of Code Section
751(b). The Service has ruled that the change in MPI's share of Code Section 751
Assets that would normally occur upon such an issuance, when coupled with such
deemed distribution of money, will cause the application of Code Section 751(b).
Initial Basis of Partnership Units. In general, MPI will have an initial
----------------------------------
tax basis for its Partnership Units ("Initial Basis") equal to the money
-------------
contributed and its basis in any assets contributed by MPI to the Partnership,
reduced by its share of the liabilities from which it is relieved and increased
by its share of the liabilities of the Partnership. MPI's Initial Basis for its
Partnership Units will generally be increased by (a) its share of Partnership
taxable income and (b) increases in its share of liabilities incurred by the
Partnership, if any and MPI's initial basis in its Partnership Units will be
decreased (but not below zero) by (i) its share of Partnership distributions,
(ii) decreases in its share of liabilities of the Partnership, (iii) its share
of losses of the Partnership and (iv) its share of nondeductible expenditures of
the Partnership that are not chargeable to capital.
Allocations of Partnership Income, Gain, Loss and Deduction. Under Code
-----------------------------------------------------------
Section 704(b), a partnership's allocation of any item of income, gain, loss or
deduction to a partner will be given effect for Federal income tax purposes so
long as it has "substantial economic effect," or is otherwise allocated in
accordance with the "partner's interest in the partnership." It is
58
<PAGE>
intended that the Partnership will allocate its income, gain, loss or deduction
for each taxable year in a manner consistent with such requirements. If an
allocation does not satisfy these requirements, it will be reallocated among the
Partners on the basis of their respective interests in the Partnership, taking
into account all facts and circumstances.
Code Section 704(c) Tax Allocations with Respect to Contributed Property.
------------------------------------------------------------------------
Pursuant to Code Section 704(c), income, gain, loss and deduction attributable
to economically appreciated or depreciated property that is contributed to a
partnership must be allocated for Federal income tax purposes in a manner such
that the contributor is charged with, or benefits from, the unrealized gain or
unrealized loss associated with the property at the time of contribution. The
amount of such unrealized gain or unrealized loss is generally equal to the
difference between the fair market value of the contributed property at the time
of contribution and the adjusted tax basis of such property at the time of
contribution (referred to as "Code Section 704(c) Gain"). The Partnership
------------------------
Agreement requires allocations of income, gain, loss and deduction in a manner
that is consistent with Code Section 704(c).
Effect of Partnership Transactions on MPI. There are a variety of
-----------------------------------------
transactions that the Partnership may undertake with respect to the Park or the
debt secured by the Park which could cause the Partners, including MPI, to
recognize a significant amount of taxable gain, even though little or no cash is
distributable to them as a result thereof. Such transactions include but are not
limited to the sale of the Park. Pursuant to the Partnership Agreement, the
consent of both BRC and MPI is required prior to a sale of all or a substantial
portion of the Park. (See "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Management of
the Partnership.") If the Park is sold in a substantially tax-deferred
installment sale, or is disposed of in a "like-kind" exchange that is
substantially tax-deferred under Code Section 1031, MPI may recognize gain on
such sale or exchange as a result of depreciation recapture (which cannot be
deferred under the installment method of reporting) or as the result of the
receipt of property that is not of like-kind to the property exchanged.
Termination of the Partnership. In the event of the termination of the
------------------------------
Partnership, a distribution of the Partnership property (other than money) will
not result in taxable gain to MPI (except to the extent provided in Code Section
737 for liquidations occurring within seven years of the date of the transfer of
the Beneficial Interest in the Park to the Partnership) and MPI will hold such
distributed property with a basis equal to the adjusted basis of such
Partnership Units, reduced by any money distributed in liquidation. Further, the
liquidation of the Partnership will be taxable to MPI to the extent that any
money distributed in liquidation (including any money deemed distributed as a
result of relief from liabilities) exceeds MPI's tax basis in its Partnership
Units.
Limitations on Deductibility of Losses; Treatment of Passive Activities and
---------------------------------------------------------------------------
Portfolio Income. MPI may not deduct from taxable income its share of the
- ----------------
Partnership losses, if any, to the extent that such losses exceed MPI's adjusted
tax basis in its Partnership Units at the end of the Partnership's taxable year
in which the loss occurs. The "passive loss rules" and the "at risk rules" do
not apply to corporations such as MPI, unless 50 percent or more of the value of
the stock of MPI becomes owned directly or indirectly by five or fewer
individuals during the last
59
<PAGE>
half of the taxable year. It is not anticipated that the MPI Common Shares will
be so owned and these rules are therefore expected to be inapplicable.
Constructive Termination of the Partnership. Under Code Section
-------------------------------------------
708(b)(1)(B), a partnership will be considered to terminate if within a 12-month
period there is a sale or exchange of 50 percent or more of the interests in
partnership capital and profits. Except upon exercise of MPI's call right or the
termination of the Partnership pursuant to a Buy-Sell Closing (see "SUMMARY OF
THE PARTNERSHIP AGREEMENT -- MPI's Call Right" and "Dispute Resolution"), it is
not expected that the Partnership will terminate within the meaning of Code
Section 708(b)(1)(B). In the event of the constructive termination of the
Partnership, the Partnership will be deemed to contribute all of its assets and
liabilities to a new partnership in exchange for an interest in the new
partnership; and, immediately thereafter, the Partnership will be deemed to
distribute interests in the new partnership to the Partners in proportion to
their respective interests in the Partnership in liquidation of the Partnership.
MPI would generally recognize no gain or loss on the deemed receipt of the
interest in the new partnership and no change in the Partnership's basis in the
Beneficial Interest in the Park should result. The deemed new partnership would
be required to depreciate the Beneficial Interest in the Park as if it were
newly-acquired property. Thus, a tax termination would reduce the amount of
depreciation deductions available to the deemed new partnership and allocable to
MPI. A tax termination of the Partnership could also have the adverse effect on
any partner of the Partnership whose tax year is not the calendar year of
requiring the inclusion of more than one year of Partnership tax items in one
tax return of such partners, resulting in a "bunching" of income.
No Section 754 Election. If a partnership files an election under Code
-----------------------
Section 754 (a "Section 754 Election") and a partner transfers its interest, the
--------------------
basis of the partnership's property, with respect to the transferee partner
only, is either increased or decreased by the difference between the purchase
price for its partnership interest and the partner's proportionate share of the
partnership's adjusted basis for all partnership property. Any increase or
decrease resulting from such adjustment is allocated among the partnership's
assets in accordance with rules established under Code Section 755, which
results in an increase or decrease in depreciation deductions with respect to
the transferee partner. After such adjustment has been made, the transferee
partner's share of the adjusted basis of the partnership's property is equal to
the adjusted basis of its partnership interest.
The Partnership does not presently intend to file a Section 754 Election to
adjust the bases of Partnership property following the transfer of a Partnership
Unit because of the cost and tax accounting complexities such an election could
entail. In the absence of a Section 754 Election, MPI may recognize greater
taxable income than it would if a Section 754 Election were made. MPI may
recognize an offsetting capital loss upon liquidation of the Partnership, but
the deductibility of any such capital loss may be limited.
Disposition of Partnership Units by MPI. If Partnership Units are sold or
---------------------------------------
otherwise disposed of by MPI, the determination of gain or loss from the sale or
other disposition will be based on the difference between the amount realized
and the tax basis for such Partnership Units. (See "-- Initial Basis of
Partnership Units.") The sale or other disposition of Partnership Units by
60
<PAGE>
MPI is subject to certain restrictions. (See "SUMMARY OF THE PARTNERSHIP
AGREEMENT-- Transfer of Partnership Units.") Upon the sale of Partnership Units,
the "amount realized" will be measured by the sum of the cash and fair market
value of other property received plus the portion of the Partnership's
nonrecourse liabilities allocable to the Partnership Units sold. To the extent
that the amount of cash or property received plus the allocable share of the
Partnership nonrecourse liabilities exceeds MPI's basis for the Partnership
Units disposed of, MPI will recognize gain. The tax liability resulting from
such gain could exceed the amount of cash received upon such disposition. To the
extent that the amount realized upon the sale of Partnership Units attributable
to MPI's share of Code Section 751 Assets of the Partnership exceeds the basis
attributable to those assets, such excess will be treated as ordinary income.
Sale of MPI Common Shares at Put Price. In the event that an MPI Common
--------------------------------------
Shareholder sells such MPI Common Shareholder's MPI Common Shares to MPI
pursuant to the Put Right set forth in the Partnership Agreement and MPI sells a
number of Partnership Units to BRC, MPI will recognize gain or loss as a result
of such sale. (See "-- Disposition of Partnership Units by MPI.")
Notwithstanding the ability of BRC to elect to pay the Put Price directly to the
MPI Common Shareholder on MPI's behalf, BRC, MPI and the Partnership intend to
treat this transaction for Federal income tax purposes as a sale of Partnership
Units by MPI to BRC in exchange for the Put Price, followed by a redemption of
the MPI Common Shareholder's MPI Common Shares by MPI in exchange for the Put
Price. To the extent that such a sale of Partnership Units by MPI to BRC results
in taxable gain and MPI incurs a Federal or state corporate tax liability, MPI
will be solely responsible for payment of such tax liability. (See "-- Taxation
of MPI as a Corporation.") Any such payment by MPI may reduce MPI's ability to
make distributions to its remaining shareholders.
Tax Shelter Registration. Under Code Section 6111, the person principally
------------------------
responsible for organizing certain "tax shelters" must register the "tax
shelter" with the Service. MPI believes that no interests in a tax shelter are
being offered for sale hereunder and accordingly, that no tax shelter
registration is required.
Partnership Audit Procedures. The Federal income tax information returns
----------------------------
filed by the Partnership may be audited by the Service. Adjustments (if any)
resulting from such an audit may require each Partner to file an amended tax
return and possibly may result in an audit of the Partner's return. Any audit of
a Partner's return could result in adjustments of non-Partnership items.
Partnerships generally are treated as separate entities for purposes of Federal
tax audits, judicial review of administrative adjustments by the Service and tax
settlement proceedings. The tax treatment of Partnership items of income, gain,
loss, deduction and credit is determined at the partnership level in a unified
partnership proceeding rather than in separate proceedings with each partner.
The Code provides for one partner to be designated as the "Tax Matters Partner"
for these purposes. The Partnership Agreement of the Partnership appoints BRC as
the Tax Matters Partner for the Partnership. The Tax Matters Partner is
authorized, but not required, to take certain actions on behalf of the
Partnership and its Partners and can extend the statute of limitations for
assessment of tax deficiencies against Partners with respect to Partnership
items. The Tax Matters Partner will use reasonable efforts to keep each Partner
informed of
61
<PAGE>
administrative and judicial tax proceedings with respect to Partnership items in
accordance with temporary Treasury Regulations issued under Code Section 6223.
The Tax Matters Partner may seek judicial review (to which all the Partners are
bound) of a final Partnership administrative adjustment and, if the Tax Matters
Partner fails to seek judicial review, such review may be sought by any Partner
having at least a one percent interest in the profits of the Partnership and by
Partners having, in the aggregate, at least a five percent profits interest.
Only one judicial proceeding will go forward, however and each Partner with an
interest in the outcome may participate. The Partners will generally be required
to treat the Partnership items on their Federal income tax returns in a manner
consistent with the treatment of the items on the Partnership information
return. In general, this consistency requirement is waived if the partner files
a statement with the Service identifying the inconsistency. Failure to satisfy
the consistency requirement, if not waived, will result in an adjustment to
conform the treatment of the item by the Partner to the treatment on the
Partnership return. Even if the consistency requirement is waived, adjustments
to the Partner's tax liability with respect to the Partnership items may result
from an audit of the Partnership's or the Partner's tax return. Intentional or
negligent disregard of the consistency requirement may subject a Partner to
substantial penalties.
DESCRIPTION OF SECURITIES
The following summary of the terms of MPI Common Shares does not purport to
be complete and is subject to and qualified in its entirety by reference to the
Articles of Incorporation and Bylaws of MPI, copies of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part. (See
"ADDITIONAL INFORMATION.")
MPI's authorized shares consist of 10,000 shares of common stock having a
par value of $0.01 of which 1 share is currently issued and outstanding.
Pursuant to the Offer, MPI will issue a maximum of 2,354 MPI Common Shares. In
addition, MPI has authorized 400 shares of preferred stock having no par value
of which 245 shares are currently issued and outstanding. Subject to any
restrictions that may be imposed by applicable laws or regulations, holders of
MPI Common Shares are entitled to receive ratably such distributions, if any, as
may be declared by the Board of Directors out of legally available funds.
Holders of MPI Preferred Stock will not be entitled to receive any dividends or
distributions except that in the event of any liquidation, dissolution or
winding up of MPI, holders of MPI Preferred Stock will be entitled to $25 with
respect to each share of MPI Preferred Stock. In the event of any such
liquidation, dissolution or winding-up of MPI, each outstanding MPI Common Share
entitles its holder to participate pro rata in the assets that remain after MPI
pays its liabilities and makes the preferred payment to the holders of MPI
Preferred Stock. (See "EVENTS LEADING TO THE OFFERS MADE BY THIS PROSPECTUS --
Reason for Creation of MPI.")
Each outstanding MPI Common Share entitles the holder to cast one vote on
all matters presented to shareholders for a vote, including the election of
directors. Each outstanding share of MPI Preferred Stock entitles the holder to
cast 1/40 of one vote on all matters presented to shareholders for a vote,
including the election of directors.
62
<PAGE>
MPI Common Shareholders have no conversion, exchange, sinking fund,
redemption or appraisal rights or any preemptive rights to acquire unissued MPI
Common Shares, nor do they have cumulative voting rights in the election of
directors, except that under certain circumstances, MPI Common Shareholders may
have the right or the obligation to sell their MPI Common Shares to MPI. (See
"SUMMARY OF THE PARTNERSHIP AGREEMENT -- Sale of Partnership Units Relating to
Put Right and Call Right.") No MPI Common Shareholder will be liable to further
calls or to assessment by the issuer. All MPI Common Shares to be issued and
outstanding following the consummation of the Offer will be duly authorized,
fully paid and nonassessable.
Transferability of MPI Common Shares is restricted, as provided in the
Articles of Incorporation of MPI. Each certificate representing MPI Common
Shares will bear a legend reflecting the limitations on transferability. These
restrictions are summarized as follows:
MPI Common Shares may be owned only by MPI, another Meadows Homeowner or
the estate of any Meadows Homeowner, so long as such estate owns a mobile or
manufactured home and leases a lot located in the Park. Thus, any MPI Common
Shareholder who desires to sell his or her MPI Common Shares may only sell them
---
to these eligible owners. Any MPI Common Shareholder who ceases to be or who is
not a Meadows Homeowner must sell his or her MPI Common Shares to one of these
----
eligible owners. All MPI Common Shareholders have the right to require MPI to
purchase their MPI Common shares at any time at a price determined by the
formula described under "SUMMARY OF THE PARTNERSHIP AGREEMENT -- Sale of
Partnership Units Relating to Put Right and Call Right" in this Prospectus (the
Put Price). MPI, in turn, has the right to require any MPI Common Shareholder
who ceases to be or who is not a Meadows Homeowner to sell his or her MPI Common
Shares to MPI at the Put Price. These rights may be limited, however, by the
Florida Business Corporation Act, which prohibits corporations from making a
distribution to shareholders where such distribution would cause the corporation
to become insolvent.
For a more detailed summary of these restrictions on transfer, see "SUMMARY
OF THE PARTNERSHIP AGREEMENT -- Sale of Partnership Units Relating to Put Right
and Call Right." In addition, you should refer to MPI's Articles of
Incorporation and Bylaws, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part. (See "ADDITIONAL
INFORMATION.")
PLAN OF DISTRIBUTION OF MPI COMMON SHARES
The MPI Common Shares will be offered on a best efforts basis by certain of
the officers and directors of MPI. MPI will not use an underwriter or a broker
or dealer to distribute the MPI Common Shares. The officers and directors will
receive no discounts or commissions or other compensation in connection with the
sale of the MPI Common Shares. The maximum number of MPI Common Shares which may
be sold will be 2,354. Expenses of the Offer, including fees and expenses of
counsel to MPI and to BRC, estimated at [$__________] will be paid by the
Partnership.
63
<PAGE>
THE OFFER EXPIRES ON [OFFER EXPIRATION DATE]. TO ACCEPT, YOU MUST DELIVER
THE SUBSCRIPTION AGREEMENT (ENCLOSED WITH THIS PROSPECTUS) TO MPI BY THE CLOSE
OF BUSINESS ON [OFFER EXPIRATION DATE].
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
The Bylaws of MPI grant the officers and directors of MPI the right to
indemnification by MPI to the fullest extent authorized by the Florida Business
Corporation Act against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such director or officer in
connection with any action, suit or proceeding in which such director or officer
was or is made a party or is threatened to be made a party to or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that he or she is or was a
director or officer of MPI or is or was serving at the request of MPI as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan. MPI's obligation to indemnify any person who is or was
serving at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity
shall be reduced by any amount such person may collect as indemnification from
such other corporation, partnership, joint venture, trust enterprise or
nonprofit entity.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of MPI pursuant to the
foregoing provisions, or otherwise, MPI has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
LEGAL MATTERS
Steptoe & Johnson LLP, 1330 Connecticut Avenue, N.W., Washington, DC has
given its opinion that the MPI Common Shares offered by this Prospectus will,
when sold and fully paid for, be legally issued, fully paid and nonassessable.
EXPERTS
The balance sheets of BRC and MHC-QRS as of June 30, 1998, statement of
revenues and certain expenses for the Park for the six months ended June 30,
1998, the balance sheet of MPI-1 as of December 31, 1997, and statements of
income, cash flows and changes in members' equity for each of the two years in
the period then ended, appearing or incorporated by reference in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, to the
extent indicated in their reports thereon also appearing herein. Such financial
statements have also been included herein or incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as expert in
accounting and auditing.
64
<PAGE>
ADDITIONAL INFORMATION
MPI has filed with the Commission a Registration Statement with respect to
the MPI Common Shares offered by this Prospectus. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto. For further information with respect to the MPI Common Shares
offered by this Prospectus, reference is made to the Registration Statement,
including the exhibits thereto. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or
other document qualified in all respects by such reference. The Registration
Statement, together with exhibits thereto, may be inspected at the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, DC 20549, without charge and copies of the material contained
therein may be obtained at prescribed rates from the Commission's Public
Reference Room in Washington, DC. You can obtain information about the operation
of the Commission's Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission also maintains a Web site that contains reports,
proxy and information statements and other materials that are filed through the
Commission's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
-----
This Web site can be accessed at http://www.sec.gov.
GLOSSARY
"Act" means the Securities Act of 1933, as amended.
---
"Affiliate" means, with respect to any Person, (i) any Person directly or
---------
indirectly controlling, controlled by or under common control with such Person,
(ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting securities of such Person, (iii) any officer, director or
general partner of such Person, (iv) any Person who is an officer, director,
general partner, trustee, beneficiary or holder of ten percent (10%) or more of
the voting securities of any Person described in clauses (i) through (iii) of
this sentence, or (v) any Person who is a member of the immediate family of any
Person described in clauses (i) through (iv) of this sentence. As used in the
Partnership Agreement, "control" (in the context of the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
entities or persons, whether through the ownership of voting securities, by
contract or otherwise. The term "controlling" means the possession, direct or
indirect, of the power to cause the voting securities to be voted as the Person
sees fit.
"Advances" means the moneys advanced to MPI-1 by some of the Meadows Homeowners.
--------
"Advancing Homeowners" means Meadows Homeowners who made Advances to MPI-1.
--------------------
"Asset Value" means, with respect to any asset of the Partnership, the asset's
-----------
adjusted basis for Federal income tax purposes, except as provided in the
Partnership Agreement.
65
<PAGE>
"Beneficial Interest" means the profit, benefit or advantage and the ability to
-------------------
lease, sell, convey, mortgage, encumber, refinance, exchange, dedicate or
otherwise deal with the Park, resulting from ownership of the Park, as
distinguished from the "record interest."
"BRC" means Blue Ribbon Communities Limited Partnership, a Delaware limited
---
partnership and subsidiary of MHC.
"Capital Account" means, with respect to either Partner, the Capital Account
---------------
maintained for such Partner in accordance with the provisions of the Partnership
Agreement.
"Capital Contribution" means, with respect to either Partner, the amount of
--------------------
money and the initial Asset Value of any property (other than money) contributed
by such Partner to the Partnership, reduced by the amount of any liabilities of
such Partner assumed by the Partnership in connection with the contribution or
which are secured by any property contributed by such Partner to the
Partnership.
"Closing Date" shall mean three business days after the expiration of the Offer,
------------
or earlier if mutually agreed by MPI and BRC.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Code Section 704(c) Gain" means generally the amount of unrealized gain or
------------------------
unrealized loss with respect to property contributed to a partnership by a
partner, taking into account any variation between the basis of the property to
the partnership and its fair market value at the time of contribution.
"Code Section 751 Assets" means, collectively, "unrealized receivables"
-----------------------
(including depreciation recapture) and/or "inventory items," both as defined in
Code Section 751.
"Commission" means the Securities and Exchange Commission.
----------
"Contribution Agreement" means the contribution agreement dated as of ________,
----------------------
1998 by and between MPI, BRC and the Partnership.
"Deadlock" means a deadlock between the Partners as to the proper resolution of
--------
any matter or any other dispute between the Partners relating to the
Partnership, the Park, or the Partnership Agreement.
"Depreciation" means, for each fiscal year or other period, an amount equal to
------------
the depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such fiscal year or other period for Federal income tax
purposes, except that if the Asset Value of an asset differs from its adjusted
basis for Federal income tax purposes at the beginning of such fiscal year or
other period, Depreciation shall be an amount which bears the same ratio to such
beginning Asset Value as the Federal income tax depreciation, amortization or
other cost recovery deduction for such fiscal year or other period bears to such
beginning adjusted tax
66
<PAGE>
basis; provided, however, that if the Federal income tax depreciation,
-------- -------
amortization or other cost recovery deduction for such fiscal year or other
period is zero, Depreciation shall be determined with reference to such
beginning Asset Value using any reasonable method selected by BRC. With respect
to any asset of the Partnership for which depreciation is calculated in
accordance with Treasury Regulations Section 1.704-3(d), Depreciation shall be
calculated in the same manner.
"EDGAR" means the Commission's Electronic Data Gathering, Analysis and Retrieval
-----
system.
"Effective Sale Date" means the date specified in the notice given by MPI to a
-------------------
Required Seller by which a Required Seller must transfer his or her MPI Common
Shares and provide the required indemnification to MPI.
"Eligible Homeowner" means any Meadows Homeowner or the estate of a deceased
------------------
Meadows Homeowner, so long as such estate owns a mobile or manufactured home and
leases a lot located in the Park.
"Exchange Act" means the Securities Exchange Act of 1934.
------------
"Florida Mobile Home Act" means the Florida Mobile Home Act, Chapter 723,
-----------------------
Florida Statutes.
"Gross Fair Market Value" means fair market value, unreduced by any liabilities,
-----------------------
except that the initial Gross Fair Market Value of any asset contributed by a
Partner to the Partnership shall be determined by the contributing Partner and
the Partnership.
"Initial Basis" means a partner's initial tax basis for its interest in a
-------------
partnership.
"Letter of Intent" means the letter of intent dated December 12, 1997 by and
----------------
between BRC and MPI-1.
"Loan" means the loan of $12,341,693.46 from MHC Lending to MPI-1.
----
"Management Agreement" means the agreement by and between MHC Management and the
--------------------
Partnership pursuant to which MHC Management will manage the Park.
"Meadows Homeowners" means the owners of manufactured or mobile homes who lease
------------------
lots located in the Park.
"MHC" means Manufactured Home Communities, Inc., a Maryland corporation.
---
"MHC Lending" means MHC Lending Limited Partnership, an Illinois limited
-----------
partnership.
"MHC Management" means MHC Management Limited Partnership, an Illinois limited
--------------
partnership.
67
<PAGE>
"MHC-QRS" means MHC-QRS Blue Ribbon Communities, Inc., a Delaware corporation.
-------
"MPI" means Meadows Preservation, Inc., a Florida for-profit, stock corporation
---
that, by mergers, is the successor to MPI-1. MPI is making the Rescission Offer
and the Offer pursuant to this Prospectus.
"MPI-1" means Meadows Preservation, Inc., a Florida non-stock, not-for-profit
-----
corporation and the predecessor to MPI.
"MPI-2" means MPI Two, Inc., a Delaware non-stock, membership corporation.
-----
"MPI-3" means MPI Three, Inc., a Delaware stock corporation.
-----
"MPI Common Shareholders" means the owners of the MPI Common Shares.
-----------------------
"MPI Common Shares" means the shares of common stock of MPI, having a par value
-----------------
of $.01.
"MPI Preferred Stock" means the class of preferred stock issued by MPI pursuant
-------------------
to its Articles of Incorporation and Bylaws, having no par value.
"Net Capital Proceeds" means the net cash proceeds remaining in the Partnership
--------------------
and available for distribution derived from any excess Capital Contributions,
mortgages or other financings or refinancings, any sales and other dispositions
(other than in the ordinary course of business) of the property of the
Partnership, or any part thereof, any insurance award paid on account of
destruction by casualty or from an eminent domain proceeding or conveyance in
lieu thereof, or any other nonrecurring capital transaction after deduction of
all expenses, charges and taxes incurred by the Partnership in connection with
obtaining such proceeds and of any portion of such proceeds actually applied to
the payment of Partnership indebtedness or to repair, restore or improve the
property of the Partnership and after deduction of amounts used to establish
reasonable reserves. "Net Capital Proceeds" shall include all principal and
interest payments with respect to any note or other obligation received by the
Partnership in connection with any sales and other dispositions (other than in
the ordinary course of business) of the property of the Partnership.
"Net Cash Flow" means all cash received from Partnership operations not
-------------
including amounts received as Capital Contributions, reduced by all cash paid,
or amounts used to establish reasonable reserves, for all Partnership expenses,
debt payments, capital improvements, replacements or other contingencies.
"Nominee Agreement" means the Title Holding, Nominee and Agency Agreement to be
-----------------
entered into between MPI and the Partnership.
"Non-U.S. Holder" means any MPI Common Shareholder other than a U.S. Holder.
---------------
68
<PAGE>
"Occupied Lots" means all lots within the Park that are occupied by a
-------------
manufactured or mobile home as of the date of the Partnership Agreement or that
become so occupied during the term of the Partnership Agreement.
"Offer" means the offer by MPI to sell MPI Common Shares pursuant to this
-----
Prospectus.
"Operation Plan" means the Property Management and Operation Plan pursuant to
--------------
which MPI and BRC agree to operate the Park.
"Park" means The Meadows Mobile Home Park, located at 2555 PGA Boulevard, Palm
----
Beach Gardens, Florida, 33410.
"Park Purchase Account" means the interest-bearing bank account at Barnett Bank
---------------------
holding the Advances.
"Partners" means, collectively, MPI and BRC.
--------
"Partnership" means The Meadows Resort Partnership, a Florida general
-----------
partnership to be formed by MPI and BRC.
"Partnership Agreement" means the General Partnership Agreement dated as of
---------------------
_______, 1998 by and between BRC and MPI.
"Partnership Execution Date" means the date of the Partnership Agreement.
--------------------------
"Partnership Interest" means an ownership interest in the Partnership, including
--------------------
any and all benefits provided in the Partnership Agreement to a Partner owning a
Partnership Interest, together with the obligations of such Partner owning a
Partnership Interest.
"Partnership Record Date" means, with respect to each distribution to the
-----------------------
Partners, the date that is fourteen (14) days prior to the date of such
distribution (or if such fourteenth (14th) day is not a business day, the last
business day immediately preceding such fourteenth (14th) day).
"Partnership Unit" means a fractional share of a Partnership Interest.
----------------
"Percentage Interest" means, as to each Partner, an interest in the Partnership
-------------------
determined by dividing the Partnership Units owned by such Partner by the total
number of Partnership Units then outstanding.
"Person" means any individual, partnership, corporation, limited liability
------
company, trust or other entity.
"Plaintiffs" means Penn Florida Realty, L.P., a Delaware limited partnership,
----------
d/b/a PNFLA Realty Limited Partnership and Penn Florida, Inc.
"Profit" and "Loss" mean for each fiscal year or other period, an amount equal
------ ----
to the Partnership's taxable income or loss for such fiscal year or other
period, determined in
69
<PAGE>
accordance with Code Section 703(a) (for the purposes of computing Profit and
Loss, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with adjustments as provided in the Partnership Agreement
"Prospectus" means Part 1 and Part F/S of the Registration Statement.
----------
"Registration Statement" means the registration statement for the sale of MPI
----------------------
Common Shares filed by MPI in accordance with the requirements of the Act.
"Rescission Offer" means the offer by MPI to refund all Advances pursuant to
----------------
this Prospectus.
"Required Seller" means an MPI Common Shareholder who ceases to be a Meadows
---------------
Homeowner or any person other than an Eligible Homeowner who acquires any right,
or claim of right, to MPI Common Shares.
"Section 754 Election" means an election under Code Section 754.
--------------------
"Service" means the Internal Revenue Service.
-------
"Stock/Unit Ratio" means, (i) as of the time immediately prior to any written
----------------
offer to sell MPI Common Shares to new Meadows Homeowners and (ii) as of the
time immediately prior to any transfer of MPI Common Shares to MPI by an MPI
Common Shareholder, the number of MPI Common Shares issued and outstanding (not
including any shares held as treasury stock) divided by the number of
-------
Partnership Units held by MPI.
"Subscription Agreement" means the agreement attached to this Prospectus as
----------------------
Exhibit A.
"TIN" means the taxpayer identification number of the taxpayer issued by the
---
Service.
"Treasury Regulations" mean the income tax regulations, including temporary
--------------------
regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Unoccupied Lots" means lots in the Park that are not occupied by tenants as of
---------------
the date of the Partnership Agreement.
"U.S. Holder" means a beneficial holder of MPI Common Shares that for United
-----------
States Federal income tax purposes is: (i) a citizen or resident (as defined in
Code Section 7701(b)) of the United States; (ii) a corporation, partnership or
other entity formed under the laws of the United States or any political
subdivision thereof; (iii) an estate the income of which is subject to United
States Federal income taxation regardless of its source; or (iv) in general, a
trust subject to the
70
<PAGE>
primary supervision of a court within the United States and the control of a
United States person as described in Code Section 7701(a)(30).
"USRPHC" means a United States real property holding corporation as such term is
------
defined in the Code.
"Withholding Regulations" means the Treasury Regulations generally promulgated
-----------------------
under Code Sections 1441 and 1442 that will generally be effective on and after
January 1 1999 pursuant to Treasury Decision 8734.
71
<PAGE>
FINANCIAL STATEMENTS
Financial Statements of Meadows Preservation, Inc. for the F-2
years ended December 31, 1997 and 1996
Statement of Revenues and Certain Expenses of The Meadows F-12
for the six months ended June 30, 1998
Balance Sheet of MHC-QRS Blue Ribbon Communities, Inc. as F-16
of June 30, 1998
Balance Sheet of Blue Ribbon Communities Limited Partnership F-21
as of June 30, 1998
F-1
<PAGE>
Report of Independent Auditors
To the owners of
Meadows Preservation, Inc.
We have audited the accompanying balance sheet of Meadows Preservation, Inc.
(the "Company") as of December 31, 1997 and the related statements of
operations, changes in members' equity and cash flows for each of the two years
in the period then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1997, and the results of its operations and its cash flows for each of the two
years in the period then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
May 5, 1998, except for Note 3,
as to which the date is
September 25, 1998
F-2
<PAGE>
Meadows Preservation, Inc.
Balance Sheet
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1998
1997 (UNAUDITED)
------------ -------------
<S> <C> <C>
ASSETS
Cash $ 10,021 $ 35,854
Restricted deposits 876,208 870,172
Accounts receivable - 16,103
Due from Management Company - 302,235
Rental property:
Land 3,093,726 3,093,726
Improvements 9,281,179 9,337,250
------------ ------------
12,374,905 12,430,976
Accumulated depreciation (11,866) (165,866)
------------ ------------
12,363,039 12,265,110
------------ ------------
Total Assets $ 13,249,268 $ 13,489,474
============ ============
LIABILITIES AND NET ASSETS
Note Payable $ 12,341,693 $ 12,341,693
Accrued interest 39,561 555,376
Accounts payable - 45,741
Advances payable to homeowners 876,208 870,172
------------ ------------
Total liabilities 13,257,462 13,812,982
Members' equity (8,194) (323,508)
------------ ------------
Total liabilities and net assets $13,249,268 $ 13,489,474
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
Meadows Preservation, Inc.
Statement of Operations
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30, 1998 JUNE 30, 1997
1996 1997 (UNAUDITED) (UNAUDITED)
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME
Rental revenue $ -- $ 48,367 $ 693,686 $ --
Association revenues 3,099 475 6 311
Interest and other income 165 411 6,036 158
------------------------------------------------------------------
Total income 3,264 49,253 699,728 469
EXPENSES
Association expenses $ 2,092 $ 9,152 $ 6,140 $ 253
Depreciation expense -- 11,866 154,000 --
Property, operating and maintenance -- 2,500 196,634 --
Real estate taxes -- 6,287 87,000 --
General and administration expense -- 494 15,892 --
Interest -- 39,561 555,376 --
------------------------------------------------------------------
Total operating expenses $ 2,092 69,860 1,015,042 253
Net income (loss) $ 1,172 $ (20,607) $ (315,314) $ 216
==================================================================
</TABLE>
See accompanying notes.
F-4
<PAGE>
Meadows Preservation, Inc.
Statement of Changes in Members' Equity
<TABLE>
<CAPTION>
<S> <C>
Members' equity (deficit), January 1, 1996 $ 11,241
Net income (loss), year ended December 31, 1996 1,172
--------------
Members' equity (deficit), January 1, 1997 12,413
Net income (loss), year ended December 31, 1997 (20,607)
--------------
Members' equity (deficit), December 31, 1997 (8,194)
Net income (loss) - six months ended June 30, 1998 (unaudited) (315,314)
--------------
Members' equity (deficit), June 30, 1998 (unaudited) $ (323,508)
==============
</TABLE>
See accompanying notes
F-5
<PAGE>
Meadows Preservation, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
YEAR ENDED YEAR ENDED JUNE 30, JUNE 30,
DECEMBER 31, DECEMBER 31, 1998 1997
1996 1997 (UNAUDITED) (UNAUDITED)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,172 $ (20,607) $(315,314) $ 216
Adjustments to reconcile increase in net
income to net cash provided by
operating activities: - - - -
Depreciation expense - 11,866 154,000 -
(Increase) decrease in restricted
deposits - (876,208) 6,036 -
Increase (decrease) in advances
payable to homeowners - 876,208 (6,036) -
Increase in accounts receivable - - (16,103) -
Increase in due from Management Company - - (302,235) -
Increase in accrued interest - 39,561 515,815 -
Increase in accounts payable - - 45,741 -
----------------------------------------------------------------
Net cash provided by operating activities - 30,820 81,904 216
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in rental property - (12,374,905) (56,071) -
----------------------------------------------------------------
Net cash used in investing activities - (12,374,905) (56,071) -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - 12,341,693 - -
----------------------------------------------------------------
Net cash provided by financing activities - 12,341,693 - -
----------------------------------------------------------------
Net increase (decrease) in cash 1,172 (2,392) 25,833 216
Cash at beginning of period 11,241 12,413 10,021 12,413
----------------------------------------------------------------
Cash at end of period $12,413 $ 10,021 $ 35,854 $12,629
================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
Meadows Preservation, Inc.
Notes to Financial Statements
December 31, 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Meadows Preservation, Inc., a Florida not-for-profit corporation ("MPI") was
formed on March 2, 1988, to be the homeowners' association for the Meadows
Mobile Home Park (the "Property"), a fifty-five acre property containing 381
manufactured home sites located in Palm Beach Gardens, Florida.
On December 12, 1997, MPI entered into a letter of intent with Blue Ribbon
Communities Limited Partnership ("BRC"), an affiliate of Manufactured Home
Communities, Inc. (MHC), a public real estate investment trust for the purchase
and operation of the Property. Consistent with the letter of intent, an
affiliate of MHC provided a mortgage loan to MPI which purchased the Property
for a total cost of approximately $12,375,000, including $375,000 of closing
costs, on December 18, 1997. Additionally, the letter of intent called for MPI
to convert into a for profit corporation and endeavor to raise money by selling
shares of common stock (the "Offering") to the owners of mobile homes within the
Property. Upon completion of the Offering, MPI would enter into a to-be-formed
Florida general partnership with BRC, named the Meadows Resort Partnership (the
"Partnership"), which would operate the Property. BRC would be designated as the
exclusive sales and marketing agent for the Property, subject to the right of
homeowners to sell their own homes, and have the right to develop and market
additional lots in the Property. BRC would also have commitments for funding
costs of the Offering, improvements and legal matters. Reimbursements to BRC
would be made for funds provided. MPI would contribute the proceeds from the
Offering, the beneficial interest in the Property and the related mortgage
payable to the Partnership which would assume the obligations of the underlying
mortgage. MPI's ownership interest in the Partnership will be determined based
on what the net value of the contributed assets and liabilities equals as a
percentage of total capital contributed in the Partnership at its inception. One
Partnership unit for each $1,000 contributed to the Partnership will be given to
each partner. However, in no event can MPI's interest in the Partnership be more
than fifty percent. MPI anticipates that it would account for its investment
using the equity method and accordingly, would receive its proportionate
ownership share of the operating income and losses in the Partnership.
F-7
<PAGE>
Meadows Preservation, Inc.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concurrently with the purchase of the Property, MPI entered into an option
agreement which, as amended, gives BRC the option to purchase the Property on
the same terms and conditions as MPI under certain circumstances. This option
expires on December 31, 1998. Additionally, should the Offering not occur, MPI
is required to sell the Property to MHC at a price equal to the outstanding
balance on the mortgage.
MPI had originally anticipated funding the down payment for the property
acquisition before the MHC loan was obtained through advance deposits from
owners of homes within the Property. Accordingly, at December 31, 1997, MPI has
restricted deposits of $876,208 in an interest bearing account which are due to
the homeowners. Included in the $876,208 are advances from officers and
directors of MPI totaling $64,000. The deposits plus accrued interest at ten
percent (10%) would be repaid to the respective homeowners upon completion of
the Offering, At such time, any homeowner may elect to have their deposits
refunded along with accrued interest or to use the deposits to acquire common
shares of stock in MPI at $1,000 per share. Should the Offering not be
completed, it is anticipated that all restricted funds would then be distributed
to the homeowners.
The accompanying 1997 statement of operations reflects the operations of the
homeowners' association for the twelve months ended December 31, 1997, along
with the revenues and expenses of the Property for the period from December 18,
1997 (date of the purchase of the Property) through December 31,1997.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
RENTAL PROPERTY
Rental property is stated at cost. Depreciation is computed on the straight
line basis over the estimated useful lives of the assets - 30 years for
improvements.
F-8
<PAGE>
Meadows Preservation, Inc.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RENTAL REVENUE RECOGNITION
Rental income is generated from short term leases and is recorded as revenue
when earned.
INCOME TAXES
No provision for income taxes has been provided in the accompanying financial
statements, because of MPI's tax status as a non-taxable homeowners' association
or due to operating losses realized since the Property was purchased.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The balance sheet as of June 30, 1998, and the statements of operations and cash
flows for the six month periods ended June 30, 1998 and 1997, and the statement
of members equity for the six months ended June 30, 1998, and related footnote
disclosures are unaudited. In the opinion of management, such financial
statements reflect all adjustments necessary for a fair presentation of the
results of the interim periods. All such adjustments are of a normal, recurring
nature.
2. NOTE PAYABLE
MPI is the borrower under a $12,341,693 mortgage note secured by the Property.
Principal plus accrued interest is due at the earlier of 30 days from the
effective date of the Offering described in Note 1 or November 30, 1998. Terms
of the note include the accrual of interest at the rate of nine percent per
annum. Upon repayment of the loan, interest expense over the life of the
outstanding loan may be reduced retroactively. Such reduction would occur
should a defined interest expense calculation yield an interest rate which is
less than nine percent (but in no event less than zero).
F-9
<PAGE>
Meadows Preservation, Inc.
Notes to Financial Statements (continued)
3. SUBSEQUENT EVENT
On July 2, 1998, MPI completed a series of non-cash mergers with entities formed
in June 1998. The mergers (which occured in the jurisdictions of two different
States) resulted in MPI becoming a Florida for-profit entity which may issue
equity securities. This series of mergers did not have any effect on the
operations or purpose of MPI.
As part of the mergers, each of the 245 members of MPI existing on June 2, 1998,
was issued at no cost a share of voting preferred stock in MPI. The terms of the
preferred shares entitles each holder to have one fortieth of one vote for MPI
matters on which common shareholders of MPI are entitled to vote. One preferred
share may be owned per household and the ownership of a preferred share does not
preclude the holder from purchasing common stock in MPI. Upon liquidation, a
priority return of twenty-five dollars per share will be made to holders of
preferred stock from available funds. Common and preferred shares of MPI may
only be owned by owners of mobile homes within the Property and may not be
pledged or encumbered by the owners. Additionally, an owner of common or
preferred stock may only resell shares to another homeowner in the Property or
to MPI. At the owners request, MPI would be required to repurchase common shares
from owners for a price determined by a predefined formula.
On the tenth anniversary of the partnership execution date and on each fifth
anniversary thereafter, MPI would have a call right to require BRC to sell to
MPI or its affiliates all of BRC's interest in the Partnership at a price
determined based on the then market value of the Property.
4. CONTINGENCIES
On December 8, 1997, a prospective purchaser of the Property filed a complaint
against MPI alleging that the Florida Mobile Home Act, which granted MPI the
right of first refusal to purchase the property, violated the prospective
buyer's constitutional and contractual right to purchase the Property. In the
suit, the prospective purchaser has requested the court to rescind MPI's
acquisition of the Property. In the event of such
F-10
<PAGE>
Meadows Preservation, Inc.
Notes to Financial Statements (continued)
4. CONTINGENCIES (CONTINUED)
rescission, MPI would most likely not recover the acquisition costs. However,
BRC has agreed to indemnify MPI against any losses and expenses in connection
with this complaint. The ultimate outcome of this situation is not presently
determinable. Management intends to defend this action vigorously.
The advance deposits from homeowners may be construed as the purchase of a
security, which was offered and sold without registration with the Securities
and Exchange Commission. The receipt of such funds may have inadvertently
violated certain federal and state securities laws. These possible violations
have prompted MPI to make a rescission offer to the homeowners who advanced such
funds (see Note 1). As of December 31, 1997, there have not been any
communications from or fines levied by any regulatory agency related to the
possible violations. BRC will advance funds for legal expenses incurred by MPI
in connection with the registration of these shares.
5. DUE FROM MANAGEMENT COMPANY (UNAUDITED)
The management company collects all revenues and disburses all expenses related
to the property from its central cash account. The amount collected by the
management company in excess of the expenses paid as of June 30, 1998, is due to
MPI and amounts to $302,235 (unaudited).
F-11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the owners of
The Meadows
We have audited the accompanying Statement of Revenue and Certain Expenses of
The Meadows (the Property) for the six months ended June 30, 1998. The Statement
of Revenue and Certain Expenses is the responsibility of the Property's
management. Our responsibility is to express an opinion on the Statement of
Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, for inclusion in the Registration Statement SB-1 of Meadows
Preservation, Inc. as described in Note 2, and is not intended to be a complete
presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and expenses for the six
months ended June 30, 1998, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
August 26, 1997
F-12
<PAGE>
THE MEADOWS
STATEMENT OF REVENUE AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
YEAR ENDED
SIX MONTHS ENDED DECEMBER 31, 1997
JUNE 30, 1998 (UNAUDITED)
-----------------------------------------------
<S> <C> <C>
REVENUE
Rental Income $ 694 $1,292
Interest and Other Income 6 29
-----------------------------------------------
Total Revenues 700 1,321
CERTAIN EXPENSES
Property operating and maintenance 184 326
Real estate taxes 87 166
Insurance 7 34
Management Fees 28 91
Interest Expense 555 60
Depreciation 154 9
-----------------------------------------------
Total Expenses 1,015 686
REVENUE IN EXCESS OF EXPENSES $ (315) $ 635
===============================================
</TABLE>
See accompanying notes.
F-13
<PAGE>
THE MEADOWS
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
JUNE 30, 1998
1. DESCRIPTION OF PROPERTY
The Meadows is a 381 site manufactured housing community located in Palm Beach
Gardens, Florida (the "Property"). On December 18, 1997, Meadows Preservation,
Inc. ("MPI"), the homeowners' association for the Property, purchased the
Property for approximately $12,375,000, with a note due to an affiliate of
Manufactured Home Communities, Inc., a public real estate investment trust
("MHC").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the six months
ended June 30, 1998, and the year ended December 31, 1997 (unaudited), were
prepared for purposes of complying with the rules and regulations of the
Securities and Exchange Commission, for inclusion in the Registration Statement
SB-1 of Meadows Preservation, Inc.
In preparation of the Company's statements of revenue and expenses management
made estimates and assumptions that effect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental of manufactured home sites are under short-term operating lease
arrangements. Rental income is generated from short term leases and is recorded
as revenues when earned.
The Property had a management agreement with a third party management company.
Upon acquisition of the Property by MPI, this management contract was canceled
and an affiliate of MHC became the management company for the Property. No fees
were paid to MHC's affiliate during 1997. Fees paid to MHC's affiliate amounted
to $28,000 in the six month period ended June 30, 1998.
UNAUDITED STATEMENT
In the opinion of management, the unaudited statement for the year ended
December 31, 1997, reflects all adjustments necessary for fair presentation of
the results of the period. All adjustments are of a normal, recurring nature.
F-14
<PAGE>
THE MEADOWS
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES (CONTINUED)
4. CONTINGENCIES
On December 8, 1997, a prospective purchaser of the Property filed a complaint
against MPI alleging that the Florida Mobile Home Act, which granted MPI the
right of first refusal to purchase the property, violated the prospective
buyer's constitutional and contractual right to purchase the Property. In the
suit, the prospective purchaser has requested the court to rescind MPI's
acquisition of the Property. In the event of such rescission, MPI would most
likely not recover the acquisition costs. However, BRC has agreed to indemnify
MPI against any losses and expenses in connection with this complaint. The
ultimate outcome of this situation is not presently determinable. Management
intends to defend this action vigorously.
F-15
<PAGE>
Report of Independent Auditors
To the Shareholder of
MHC-QRS Blue Ribbon Communities, Inc.
We have audited the accompanying balance sheet of MHC-QRS Blue Ribbon
Communities, Inc. (the "Company") as of June 30, 1998. This balance sheet is
the responsibility of the Company's management. Our responsibility is to
express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Company as of June 30, 1998, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
September 25, 1998
F-16
<PAGE>
MHC-QRS Blue Ribbon Communities, Inc.
Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investment in real estate partnership $ 100
-----------------
Total Assets $ 100
=================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Due to affiliate $ 100
Shareholder's equity
Common Stock, $1 par value, 1,000 shares authorized,
issued and outstanding 1,000
Less: capital contribution receivable (1,000)
-----------------
Total shareholder's equity -
Total liabilities and shareholder's equity $ 100
=================
</TABLE>
See accompanying notes.
F-17
<PAGE>
MHC-QRS Blue Ribbon Communities, Inc.
Notes to Balance Sheet
June 30, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
MHC-QRS Blue Ribbon Communities, Inc. (the "Company") was incorporated as a C-
Corporation under the laws of the State of Delaware on December 5, 1997. The
Company is the general partner in Blue Ribbon Communities Limited Partnership, a
Delaware limited partnership ("BRC"), which was formed to act as a general
partner in a to-be-formed Florida general partnership, the Meadows Resort
Partnership ("the Partnership"). The purpose of the Partnership would be to
operate a 381 site manufactured home community named "the Meadows", located in
Palm Beach Gardens, Florida. The other general partner would be Meadows
Preservation, Inc. ("MPI"), the owner of the Meadows.
The Company is a wholly-owned subsidiary of Manufactured Home Communities, Inc.
(MHC), a public real estate investment trust.
The initial $1,000 capital contribution to the Company was a receivable from MHC
in exchange for the equity interest. As of June 30, 1998, the $1,000 had not
been received, and is therefore, reflected as a reduction of shareholder's
equity in the accompanying balance sheet.
As of June 30, 1998, the sole activity of the Company was its incorporation.
USE OF ESTIMATES
The preparation of the balance sheet requires management to make estimates and
assumptions that affect the amounts reported in the balance sheet and
accompanying notes. Actual results could differ from those estimates.
F-18
<PAGE>
MHC-QRS Blue Ribbon Communities, Inc.
Notes to Balance Sheet (continued)
2. INVESTMENT IN REAL ESTATE PARTNERSHIP
The Company is the 1% owner and general partner of BRC. The Company has pledged
$100 for its ownership in BRC, which is expected to be paid in 1998. The
Company accounts for its investment in BRC using the equity method.
F-19
<PAGE>
MHC-QRS Blue Ribbon Communities, Inc.
Notes to Balance Sheet (continued)
2. INVESTMENT IN REAL ESTATE PARTNERSHIP (CONTINUED)
As of June 30, 1998, BRC had no assets or net equity.
Pursuant to a letter of intent dated December 12, 1997, between BRC and MPI, MPI
would endeavor to raise money by selling shares of common stock to the owners of
manufactured homes within the Property (the "Offering") and enter into the
Partnership described in Note 1 with BRC to operate the Property. Once the
Partnership is formed, BRC would agree to contribute an amount to the
Partnership equal to $4,708,000, less the amount, if any, of cash proceeds
contributed by MPI. A partnership unit would be given to BRC and MPI for each
$1,000 contributed. BRC would make an additional contribution of $2,256,000 on
account of the unoccupied lots at the Meadows, for which it will not immediately
receive partnership units. BRC can, however, receive up to 2,256 partnership
units based on a defined formula for no additional capital contribution as
unoccupied lots in the Property are leased. MPI may purchase additional
partnership units in certain circumstances, but only to the extent that Property
tenants purchase additional MPI common shares.
BRC would contribute $200,000 to the Partnership for future Property
improvements, and $100,000 to MPI for interest and operating costs.
Additionally, BRC would pay the costs related to the Offering; such Offering
costs would be reimbursed to BRC from the related offering proceeds, to the
extent funds are available.
BRC may be required at MPI's election to fund the purchase of MPI common shares
from MPI shareholders who wish to sell their shares or become ineligible to own
MPI shares as stipulated in the Contribution Agreement between BRC and MPI. BRC
intends to obtain the necessary funds for the contributions and costs through
future capital contributions from its owners.
F-20
<PAGE>
Report of Independent Auditors
To the Partners of
Blue Ribbon Communities Limited Partnership
We have audited the accompanying balance sheet of Blue Ribbon Communities
Limited Partnership (the "Partnership") as of June 30, 1998. This balance sheet
is the responsibility of the Partnership's management. Our responsibility is to
express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Partnership as of June 30,
1998, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
September 25, 1998
F-21
<PAGE>
Blue Ribbon Communities Limited Partnership
Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
-----------
Total Assets $ -
===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Partners' capital
Capital contributions $ 10,000
Capital contributions receivable (10,000)
-----------
Total liabilities and partners' capital $ -
===========
</TABLE>
See accompanying notes.
F-22
<PAGE>
Blue Ribbon Communities Limited Partnership
Notes to Balance Sheet
June 30, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Blue Ribbon Communities Limited Partnership ("BRC") is a Delaware limited
partnership that was formed on December 5, 1997. The partners in BRC are MHC-
QRS Blue Ribbon Communities, Inc., a Delaware corporation ("General Partner"),
and MHC Operating Limited Partnership, an Illinois limited partnership ("Limited
Partner"), both affiliates of Manufactured Home Communities, Inc., a public real
estate investment trust. Pursuant to the partnership agreement, the partners
are required to fund $10,000 in capital contributions. The General Partner has
pledged $100 for a 1% partnership interest and the Limited Partner has pledged
$9,900 for the remaining 99% partnership interest. The contributions have not
yet been paid and are, therefore, reflected as a reduction of partners' capital
in the accompanying balance sheet.
As of June 30, 1998, the sole activity of BRC, with the exception of the
commitments related to the joint venture as described below, was its formation.
On December 12, 1997, BRC entered into a letter of intent with Meadows
Preservation, Inc. ("MPI"), a homeowners' association for the Meadows Mobile
Home Park (the "Property"), a 381 lot manufactured home community located in
Palm Beach Gardens, Florida. Consistent with the letter of intent, an affiliate
of MHC provided a $12,341,693 mortgage loan to MPI for the purchase of the
Property. Additionally, the letter of intent called for MPI to convert to a for-
profit corporation and endeavor to raise money by selling shares of common stock
to the owners of mobile homes within the Property (the "Offering"). BRC would
enter into the to-be-formed Florida general partnership, The Meadows Resort
Partnership (the "Partnership"), with MPI to operate the Property. MPI would
contribute the beneficial interest of the Property, the related loan payable and
the proceeds of the stock offering to the Partnership. After such contribution
by MPI, the Partnership would assume responsibility for the performance of all
obligations under the loan.
F-23
<PAGE>
Blue Ribbon Communities Limited Partnership
Notes to Balance Sheet (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the balance sheet required management to make estimates and
assumptions that affect the amounts reported in the balance sheet and
accompanying notes. Actual results could differ from those estimates.
2. JOINT VENTURE PARTNERSHIP
BRC has agreed to contribute an amount to the Partnership equal to $4,708,000,
less the amount, if any, of cash proceeds contributed by MPI. A partnership
unit will be given to BRC and MPI for each $1,000 contribution, but at no time
may BRC's ownership interest be less than fifty percent. BRC would make an
additional contribution of $2,256,000 on account of the unoccupied lots at the
Meadows, for which it will not immediately receive partnership units. BRC can,
however, receive up to 2,256 partnership units based on a defined formula for no
additional capital contribution as unoccupied lots are leased. MPI may purchase
additional partnership units in certain circumstances, but only to the extent
that Property tenants purchase additional MPI common shares. Additionally, BRC
would receive a priority distribution of the $2,256,000 and would also receive
stipulated preferred returns in the event distributions are made from defined
excess Net Capital Proceeds under the Partnership Agreement. BRC may not
encumber its interest in the Partnership for a period of ten years from December
18, 1997.
BRC would be required at MPI's election to fund the purchase of MPI common
shares from MPI shareholders who wish to sell their shares or become ineligible
to own MPI shares as stipulated in the Contribution Agreement between BRC and
MPI. Such shares would be held in treasury by MPI, and BRC's partnership
interest in the Partnership would be increased to reflect the amount funded for
the shares with a corresponding reduction of MPI's interest in the Partnership.
BRC would contribute $200,000 to the Partnership for future Property
improvements, and pay $100,000 to MPI. Additionally, BRC would advance the
costs related to the offering and registration of MPI shares described in Note
1. BRC intends to obtain the necessary funds for the contributions and costs
through future capital contributions from its owners.
For services related to finding the management company (which is an affiliate of
BRC) for the Property, BRC would receive a finder's fee from the Partnership of
$120,000, plus costs paid by BRC related to the offering and registration of
shares by MPI, to the extent
F-24
<PAGE>
Blue Ribbon Communities Limited Partnership
Notes to Balance Sheet (continued)
2. PARTNERSHIP (CONTINUED)
funds are available from the initial capital contributions to the joint venture
by MPI. In the event an affiliate of BRC does not manage the Property, BRC
would prospectively be entitled to an annual asset management fee equal to one
percent of annual gross revenues of the Property, payable in monthly
installments for the term of the Partnership. In addition, BRC would be
designated as the exclusive sales and marketing agent for the Property, subject
to the right of the homeowner to sell their own home, and would have the right
to develop and market additional lots in the Property.
On the tenth anniversary of the partnership execution date and on each fifth
anniversary thereafter, MPI would have a call right to require BRC to sell to
MPI or its affiliates all of BRC's interest in the Partnership at a price
determined based on the then market value of the Property.
F-25
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of Meadows Preservation, Inc., a Florida
stock corporation ("MPI" or the "Registrant"), provide:
To the fullest extent permitted by the Florida Business
Corporation Act as the same exists or may be amended, no director
shall be personally liable to the Corporation or its stockholders for
monetary damages for any statement, vote, decision or failure to act
regarding corporate management or policy; provided, however, that the
foregoing shall not eliminate or limit the liability of a director as
set forth in Section 607.0831 or 607.0834 of the Florida Business
Corporation Act.
The Bylaws of MPI grant the directors and officers of MPI the right to
indemnification by MPI to the fullest extent authorized by the Florida Business
Corporation Act against all expense, liability and loss (including attorneys'
fees, judgments, fines, Employee Retirement Income Security Act of 1974, as
amended ("ERISA") excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such director or officer in connection with
any action, suit or proceeding in which such director or officer was or is made
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of MPI or is or was serving at the request of MPI as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan.
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities being registered:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee........ $ 683.22
Legal fees and expenses/1/................................. $ /2/
Accounting fees and expenses/1/............................ $ /2/
Blue Sky fees and expenses (including fees of counsel)/1/.. $ /2/
Costs of printing and engraving/1/......................... $ /2/
Miscellaneous/1/........................................... $ /2/
Total................................................. $ /2/
</TABLE>
__________________________
/1/ Estimated
/2/ To be completed by amendment
II-1
<PAGE>
ITEM 3. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant for expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereby, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such Act and
will be governed by the final adjudication of such issue.
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
Between December 1, 1997 and December 16, 1997, Meadows Preservation, Inc.
("MPI-1"), a Florida non-stock, not-for-profit corporation and the predecessor
to MPI, received an aggregate of $878,000 in advances from the following owners
of manufactured or mobile homes who lease lots in The Meadows Mobile Home Park
("Meadows Homeowners"):
<TABLE>
<S> <C> <C> <C>
Charles McLeod Donald Parker Daniel Kushner Carl Liljedahl
Jennie Librandi Fred Syrett Harriet Groombridge Martha Greenway
Cecil J. Ohearn Eleanor Pitcher Patricia Miller Ruth Buntain
Dorothea Smalenbach Margery Walsh Mary Kinney Rugh Kells
Eric Brown Jack Ernaberger Helen Kelemen Leo Landry
Marie Cotter Mary Bachiochi John Sullivan Edward Stevenson
Robert Menz John Wood Dan Whaley Robert Carr
Virginia Turnquist John E. Otis Frank Kennedy Richard Neilson
Frank Fitzmorris George Morris Richard McCann Lucille Dawson
David McNab Charlotte Barnes T.W. Stringfield Harry Wickman
Mildred Amidon Doris Morel Barbard Amidon Barry Heisler
Richard McCauley Barbara Harris Howard MacKinnon Rebecca Stewart
Joseph Gracey Arthur Kennedy Florence Jones Lucille Dawson
John Gordh Letizia Costa David Webster Albert Strickland
Madelein Johnson Donald Seaman Muriel Bauer Joseph Castellano
Doris Gormley Albert Chernesky Neil Casini Gordon Wright
Arthur Hochberg Nancy Mead Louise Smith Robert Gatcke
P.A. Paymar Barry Aumiller Virginia Wallace Ralph Eastridge
James Ballantyne Willard Watkins Mary Maloney Walter Jerome
Gerald Flynn Doots Ellington Theresa Tyrrell Daniel Hancock
Jinny Lawton Rose Travis Tony Masiello Stanley Leonard
Grace Romita Angelo Viteritti Evelyn Laigle Nancy Longwell
Joseph Cardello Bill Pearson Michael Venezia John A. Flynn
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
Rita Cocchi Carl Nagel Stanley Stull Fuller Bryden
Norma Toben David DeMario Lionel Delacey Dorothea Brown
Wesley Southard Geneva Palmer Herman Ficken Michael Trentacoste
Lewis MacLeod Margaret Cannon Carrado Sarro Beverly Voigt
Stephanie Gowing John McCormick Stanley Wilk Ruth Gilligan
Oerry Johnson Steve Edwards Weisbecker Joseph Lombardo
Theresa Schlitz Anna Greenberg H.R. Berg Evelyn Kerhart
Theodora Schumann Rush Workman Robert Waters Henry Paronett
Abe Weisman Mildred Horbert John A. Flynn William Doud
Ray Beauprey Alfred Masch Fred Sample Harriett Oneill
Seldon Tewksbury Raymond Palmer Anna Dewette Vincent Proietti
Albert Johnson John Basher Finchman Len Quintin
Ignatius McCormick Walter Maloney Charlse Gruber John Chanda
Marguerite Gruber Russell Skinner Joanne Montgomery Nellie Marinacci
Omer Ahern Frank Gribbins Imelda Smith Bob Bransome
Joseph Grosso Edna Goodsell Nancy McFarland
</TABLE>
An aggregate of $33,000 of such advances has been refunded by MPI-1 to
certain of the Meadows Homeowners who requested such refunds.
Although these funds were obtained only from the Meadows Homeowners, the
solicitation and receipt of such funds from the Meadows Homeowners may have
violated the registration provisions of the Securities Act of 1933, as amended
(the "Act") and state securities laws. While MPI does not admit any liability
under the aforesaid statutes, because of the possible existence of such
liability, MPI is making the offer to return to the respective Meadows
Homeowners the balance of the $845,000 of advances not previously refunded (the
"Rescission Offer") and such advances will be returned if the applicable Meadows
Homeowner does not expressly reject the Rescission Offer and subscribe to MPI's
Common Stock in this offering. Interest at 10% per annum, the legal rate of
interest in Florida, will be paid to the Meadows Homeowners with respect to the
period during which the advances were held by MPI-1 and MPI whether they accept
the Rescission Offer or elect to convert these advances into shares of MPI's
Common Stock.
In order to convert from a Florida non-stock, membership corporation into a
Florida for-profit stock corporation, MPI-1 caused the incorporation of MPI Two,
Inc., a Delaware non-stock membership corporation ("MPI Two"), MPI Three, Inc.,
a Delaware stock corporation ("MPI Three") and MPI. MPI Three issued one share
of its Class A Common Stock to Richard McCann in exchange for $1,000. MPI
issued one share of its Class A Common Stock to MPI Three in exchange for a
promise by MPI Three to pay MPI $1,000.
On June 30, 1998, MPI-1 was merged with and into MPI Two. All 245 of the
members of MPI-1 automatically became members of MPI Two (members who were co-
owners of a mobile home located on a lot in The Meadows Mobile Home Park were
deemed collectively to hold one membership interest in MPI Two). The members of
MPI Two had no voting rights or other powers.
II-3
<PAGE>
On July 1, 1998, MPI Two was merged with and into MPI Three. Each
membership interest in MPI Two automatically was converted into one share of
Class B Common Stock of MPI Three, which shares had no voting rights or other
powers.
On July 2, 1998, MPI Three was merged with and into MPI. Each share of
Class B Common Stock of MPI Three outstanding immediately prior to the merger
automatically was converted into one share of Preferred Stock of MPI ("Preferred
Share"). The share of Class A Common Stock of MPI Three outstanding immediately
prior to the merger automatically was converted into one share of Common Stock
of MPI.
The shares issued pursuant to MPI-1's corporate reorganization were not
registered under the Act. Because there were 245 Meadows Homeowners who were
members of MPI-1 on June 30, 1998 when MPI-1 was merged into MPI Two, all 245 of
such Meadows Homeowners automatically became members of MPI Two as a result of
that merger. On July 1, 1998 when MPI Two merged with and into MPI Three, each
of such members' membership interests were automatically converted into one
share of Class B Common Stock of MPI Three, and on July 2, 1998 when MPI Three
was merged with and into MPI, each such share of MPI Three Class B Common Stock
automatically became one Preferred Share. The MPI Preferred Shares have no
rights to any dividends or distributions from MPI except for a right to receive
$25 in liquidation of MPI. The Preferred Shares are in the nature of membership
interests inasmuch as they have no right to participate in the profits of MPI
and only a very limited voting right, having only 1/40/th/ of one vote per
Preferred Share. Accordingly, neither the Class B Common Stock of MPI Three nor
the Preferred Shares should be considered to be securities required to be
registered under the Act. Even if deemed to be securities, the issuance of such
Class B Common Stock of MPI Three and Preferred Shares should be exempt by
virtue of being private transactions not involving public offerings within the
meaning of Section 4(2) of the Act.
The issuance of one share of Common Stock of MPI Three to Mr. McCann,
President and a Director of MPI and formerly President and a Director of MPI-1,
and the issuance of one share of Class A Common Stock of MPI to MPI Three, in
order to effect the conversion of MPI-1 into a Florida for-profit stock
corporation should be deemed to be private transactions not requiring
registration under the Act as not involving a public offering within the meaning
of said Section 4(2) of the Act.
ITEM 5. INDEX TO EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
SEQUENTIAL
EXHIBIT ----------
NUMBER DESCRIPTION OF DOCUMENT PAGE NUMBER
- ------ ----------------------- -----------
2.1 ARTICLES OF INCORPORATION OF MPI
2.2 BYLAWS OF MPI
3.1 FORM OF COMMON STOCK CERTIFICATE
3.2 FORM OF PREFERRED STOCK CERTIFICATE
4.1 FORM OF SUBSCRIPTION AGREEMENT
6.1 GENERAL PARTNERSHIP AGREEMENT DATED ___________, 1998
II-4
<PAGE>
BETWEEN MPI AND BRC
6.2 FORM OF TITLE HOLDING, NOMINEE AND AGENCY AGREEMENT
TO BE ENTERED INTO BETWEEN MPI AND THE PARTNERSHIP
6.3 CONTRIBUTION AGREEMENT AMONG MPI, BRC AND THE PARTNERSHIP
DATED ___________, 1998
6.4 LETTER OF INTENT DATED DECEMBER 12, 1997 FROM MHC TO MPI-1
6.5 AGREEMENT OF PURCHASE AND SALE AMONG H.G.G.S.
ASSOCIATES, MPI-1 AND SONJA DAWS AND LETTER AMENDMENT
THERETO DATED OCTOBER 15, 1997
6.6 MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT,
FIXTURE FILING AND ASSIGNMENT OF LEASES AND RENTS
DATED DECEMBER 18, 1997 BY MPI-1 TO MHC LENDING, AS AMENDED
6.7 AGREEMENT AND PLAN OF MERGER BY AND BETWEEN MPI-1 AND MPI TWO, INC.
DATED JUNE 29, 1998
6.8 AGREEMENT AND PLAN OF MERGER BY AND BETWEEN MPI TWO, INC. AND MPI
THREE, INC. DATED JUNE 30, 1998
6.9 AGREEMENT AND PLAN OF MERGER BETWEEN MPI THREE, INC. AND MPI DATED
JULY 1, 1998
6.10 FORM OF PROPERTY MANAGEMENT AND LEASING AGREEMENT TO BE ENTERED
BETWEEN THE PARTNERSHIP AND MHC MANAGEMENT LIMITED PARTNERSHIP
6.11 OPTION AGREEMENT DATED DECEMBER 18, 1997 BY AND BETWEEN MPI-1 AND BRC,
AS AMENDED
6.12 MEMORANDUM OF OPTION AGREEMENT DATED DECEMBER 18, 1997 BY AND BETWEEN
MPI-1 AND BRC, AS AMENDED
10.1 CONSENT OF ERNST & YOUNG
11.1 LEGAL OPINION OF STEPTOE & JOHNSON LLP*
* To be filed by amendment
II-5
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Palm
Beach Gardens, State of Florida on September 30, 1998.
MEADOWS PRESERVATION, INC.
By (Signature and Title): /s/ Richard McCann
--------------------------------
Richard McCann, President
Each person whose signature appears below hereby constitutes and appoints
Richard McCann and Mary Bachiochi, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any amendments to this Registration Statement, and
any and all documents in connection therewith, and to file the same, with all
exhibits thereto, and all documents in connection therewith with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, and grants
to said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as he or she might or could do in
person, and hereby ratifies, approves and confirms all that each of such
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Form SB-1 was signed by the following persons in the
capacities and on the dates stated below.
SIGNATURE TITLE DATE
/s/ Richard McCann President, Principal Executive September 30, 1998
- --------------------- Officer and Director
Richard McCann
/s/ Theresa Tyrrell Vice-President and Director September 28, 1998
- ---------------------
Theresa Tyrell
/s/ Ted Stevenson Secretary, Principal Financial September 17, 1998
- --------------------- Officer and Director
Ted Stevenson
/s/ Mary Bachiochi Treasurer, Principal Accounting September 28, 1998
- --------------------- Officer and Director
Mary Bachiochi
/s/ Gerald Flynn Director September 28, 1998
- ---------------------
Gerald Flynn
/s/ David McNab Director September 28, 1998
- ---------------------
David McNab
II-6
<PAGE>
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
MEADOWS PRESERVATION, INC.
--------------------------
FIRST: The name of the corporation (the "Corporation") is:
-----------
Meadows Preservation, Inc.
SECOND: The initial principal office of the Corporation is 2555 PGA
Boulevard, Palm Beach Gardens, Florida 33410.
THIRD: The address of the registered office of the Corporation in the
State of Florida is 1201 Hays Street, Tallahassee, Florida 32301. The name of
the Corporation's registered agent at such address is Corporation Service
Company.
FOURTH: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
Florida Business Corporation Act.
The Corporation, as the mobile homeowners' association pursuant to Chapter
723, Florida Statutes, shall have the power to negotiate for, acquire, and
operate the Meadows Mobile Home Park, Palm Beach Gardens, Florida, on behalf of
the mobile homeowners of said Park, and once acquired shall have the power to
convert said Park to a condominium, a cooperative form of ownership, or another
type of ownership.
FIFTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,400 shares, divided into 10,000
shares of common stock, par value $.01 per share ("Common Stock") and [400]
------------
shares of redeemable preferred stock, having no par value ("Preferred Stock").
---------------
(1) Common Stock.
------------
(a) Voting Rights. Each holder of Common Stock shall have one vote on
each matter submitted to a vote of stockholders, at a meeting or otherwise, for
each share of Common Stock held of record by such holder as of the record date
for such meeting.
(b) Liquidation. Subject to the rights of the holders of the
Preferred Stock, upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, each holder of outstanding shares
of Common Stock shall be entitled to share ratably in the assets of the
Corporation to be distributed among the holders of shares of Common Stock then
outstanding in proportion to the number of shares of Common Stock held by such
holder. A consolidation or merger of the Corporation, a sale or transfer of all
or substantially all of its assets as an entirety, or any purchase or redemption
of stock of the Corporation of any
<PAGE>
class, shall not be regarded as a "liquidation, dissolution or winding up of the
Corporation" within the meaning of this section (1)(b).
(c) Restriction on Transfer.
(i) Shares of Common Stock may not be transferred to, or owned
by, any person other than the Corporation, MPI Three, Inc., a Delaware
corporation ("MPI Three"), any owner of a mobile or manufactured home
---------
located on a lot leased by such owner in the Meadows Mobile Home Park,
2555 PGA Boulevard, Palm Beach Gardens, Florida (the "Park"), or the
----
estate of any such owner so long as such estate owns a mobile or
manufactured home and leases a lot located in the Park (each such
person an "Eligible Homeowner"), provided that shares of Common Stock
------------------ --------
may not be owned by MPI Three at any time after MPI Three shall have
merged with and into the Corporation.
(ii) In the event that a holder of shares of Common Stock
("Stockholder") reasonably expects to cease to be an Eligible
-----------
Homeowner or such holder desires to sell all or any portion of such
holder's Common Stock for any reason, then such holder shall give
prompt written notice of such fact to the Corporation and Blue Ribbon
Communities Limited Partnership ("BRC"), which notice shall specify
---
(w) the number of shares of Common Stock owned by such holder, (x) the
number of shares of Common Stock proposed to be sold if the holder
continues to be an Eligible Homeowner (y) the identity of any proposed
purchaser of such holder's Common Stock (who must also be an Eligible
Homeowner), and (z) the date upon which the holder reasonably expects
to consummate the sale of such Common Stock. Such holder shall give an
additional written notice to the Corporation and BRC containing the
aforesaid information promptly upon ceasing to be an Eligible
Homeowner.
(iii) Each holder of shares of Common Stock shall have the right
to sell such shares to any other Eligible Homeowner. Except as
limited by the Florida Business Corporation Act, each holder of shares
of Common Stock shall also have the right to require the Corporation
to purchase (the "Put Right") such shares (the "Put Stock") at the
--------- ---------
cash price calculated in accordance with Schedule A attached hereto
(the "Put Price"), which Put Right may be exercised by such holder
---------
only by giving at least thirty (30) days' prior notice in writing to
the Corporation and BRC (the "Put Notice"). In accordance with
----------
Section 607.06401 of the Florida Business Corporation Act, the
Corporation may not pay the Put Price to any holder of Common Stock
if, after doing so: (a) the Corporation would not be able to pay its
debts as they become due in the usual course of business; or (b) the
-2-
<PAGE>
Corporation's total assets would be less than the sum of its total
liabilities plus the amount needed, if the Corporation were to be
dissolved at the time of payment of the Put Price, to satisfy the
preferential rights upon dissolution of the holders of Preferred Stock
whose preferential rights are superior to those receiving the Put
Price.
(iv) In the event that (A) a holder of shares of Common Stock
ceases to be an Eligible Homeowner for any reason or (B) a person
other than an Eligible Homeowner acquires any right, or claim of
right, to shares of Common Stock (each such holder or other person a
"Required Seller"), except as limited by the Florida Business
----------------
Corporation Act, the Corporation shall have the right (the "Call
----
Right"), at any time thereafter, to purchase all of the shares of
-----
Common Stock owned by such Required Seller in exchange for the Put
Price. The Corporation shall exercise such right by written notice to
the record owner of such shares at the address of such record owner
listed in the books and records of the Corporation, such notice to
specify the date by which the shares of Common Stock owned or claimed
by such Required Seller are required to be transferred to the
Corporation. In accordance with Section 607.06401 of the Florida
Business Corporation Act, the Corporation may not exercise its Call
Right and pay the Put Price if, after doing so: (a) the Corporation
would not be able to pay its debts as they become due in the usual
course of business; or (b) the Corporation's total assets would be
less than the sum of its total liabilities plus the amount needed, if
the Corporation were to be dissolved at the time of payment of the Put
Price, to satisfy the preferential rights upon dissolution of the
holders of Preferred Stock whose preferential rights are superior to
those receiving the Put Price.
(v) If the Corporation exercises its Call Right as provided in
the immediately preceding subsection, but the Required Seller fails to
transfer to the Corporation such Required Seller's Common Stock, or to
provide the indemnification required by subsection (vi) below, by the
date specified in the Corporation's notice given pursuant to the
immediately preceding subsection, then, effective as of such date (the
"Effective Sale Date"), such Required Seller shall be deemed to have
-------------------
sold his or her shares of Common Stock to the Corporation as of the
Effective Sale Date. Thereafter, such Required Seller's sole right
shall be to receive the Put Price for such shares, as calculated as of
the Effective Sale Date, upon delivery to the Corporation of the
certificates for such shares and the required indemnification; and the
Required Seller shall not be entitled to receive any dividends or
other distributions from the Corporation on account of such shares of
Common Stock and such shares shall have no voting or other rights.
-3-
<PAGE>
(vi) The Corporation may require reasonable indemnification from
the holder of shares of Common Stock as a condition to the
Corporation's obligation to pay the Put Price to such holder in
connection with the exercise of either a Put Right or Call Right.
(2) Preferred Stock.
---------------
(a) Limited Voting Rights. Except as may otherwise be provided
by the laws of the State of Florida, each holder of Preferred Stock shall have
one-fortieth of a vote on each matter submitted to a vote of stockholders, at a
meeting or otherwise, for each share of Preferred Stock held of record by such
holder as of the record date for such meeting.
(b) Limited Liquidation Rights. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
each holder of Preferred Stock, before any amount shall be paid to the holders
of Common Stock, shall be entitled to receive Twenty-five Dollars ($25) for each
share of Preferred Stock owned by such holder. Except as provided herein with
respect to liquidation, dissolution or winding up of the Corporation, holders of
Preferred Stock shall have no right to any dividends or other distributions made
by the Corporation, all such rights being reserved to the holders of the Common
Stock. If, on liquidation, dissolution or winding up, the assets of the
Corporation distributable as set forth in this section (b) among the holders of
Preferred Stock shall be insufficient to permit the payment to them of the
amount set forth in this subsection (b), the entire assets of the Corporation
shall be distributed ratably among the holders of Preferred Stock. A
consolidation or merger of the Corporation, a sale or transfer of all or
substantially all of its assets as an entirety, or any purchase or redemption of
stock of the Corporation of any class, shall not be regarded as a "liquidation,
dissolution or winding up of the Corporation" within the meaning of this section
(2)(b).
(c) Redemption; Restriction on Transfer. Shares of Preferred
Stock may not be transferred to, or owned by, any person who is not an Eligible
Homeowner. Shares of Preferred Stock may be redeemed by the Corporation, at its
sole election, for twenty-five dollars ($25.00) for each share if, at any time,
the record owner of such shares ceases to be an Eligible Homeowner or any person
other than an Eligible Homeowner acquires any right, or claim of right, in or to
such shares of Preferred Stock. The Corporation shall exercise such right by
written notice to the record owner of such shares at the address of such record
owner listed in the books and records of the Corporation. Such shares shall be
deemed to have been redeemed as of the date such notice is mailed or delivered
by the Corporation and, thereafter, except for the right of the record owner to
receive twenty-five dollars ($25.00) for each such share from the Corporation,
such shares shall have no further voting or other rights.
SIXTH: The name and mailing address of the sole incorporator of the
Corporation are as follows:
Caroline H. B. Gaudet, Esq.
1330 Connecticut Avenue NW
Washington, DC 20036
-4-
<PAGE>
SEVENTH: The powers of the incorporator shall terminate upon the
filing of this Certificate of Incorporation, and the names and addresses of the
persons who are to serve as the directors of the Corporation until the first
annual meeting of stockholders or until their successors are elected and qualify
are:
Name Mailing Address
---- ---------------
Richard McCann 2555 PGA Boulevard, #119
Palm Beach Gardens, FL 33410
Theresa Tyrell 2555 PGA Boulevard, #118
Palm Beach Gardens, FL 33410
Ted Stevenson 2555 PGA Boulevard, #89
Palm Beach Gardens, FL 33410
Mary Bachiochi 2555 PGA Boulevard, #112
Palm Beach Gardens, FL 33410
Gerald Flynn 2555 PGA Boulevard, #43
Palm Beach Gardens, FL 33410
David McNab 2555 PGA Boulevard, #180
Palm Beach Gardens, FL 33410
EIGHTH: The business, property and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors. Elections of
directors need not be by written ballot unless the Bylaws of the Corporation so
provide. In furtherance and not in limitation or exclusion of the powers
conferred by the laws of the State of Florida, the Board of Directors of the
Corporation is expressly authorized and empowered:
(a) to make, alter or repeal the Bylaws of the Corporation,
subject to the power of the stockholders of the Corporation to alter or repeal
any Bylaw made by the Board of Directors;
(b) to transfer the beneficial interest in the Park to The
Meadows Resort Partnership (the "Partnership"), to operate the Park through the
-----------
Partnership and to hold the record interest in the Park as nominee for the
Partnership;
(c) subject to the laws of the State of Florida, from time to
time to sell, lease or otherwise dispose of any part or parts of the other
properties of the Corporation and to cease to conduct the business connected
therewith or again to resume the same, as the Board of Directors may deem best;
and
(d) in addition to the powers and authorities hereinbefore and by
the laws of the State of Florida conferred upon the Board of Directors, to
exercise all such powers and to
-5-
<PAGE>
do all such acts and things as may be exercised or done by the Corporation;
subject, nevertheless, to the provisions of said laws, of the Articles of
Incorporation of the Corporation as from time to time amended, and of its
Bylaws.
NINTH: The Corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provisions contained in this
Certificate of Incorporation in the manner now or hereafter prescribed by the
laws of the State of Florida and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to these Articles of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
TENTH: To the fullest extent permitted by the Florida Business
Corporation Act as the same exists or may be amended, no director shall be
personally liable to the Corporation or its stockholders for monetary damages
for any statement, vote, decision or failure to act regarding corporate
management or policy; provided, however, that the foregoing shall not eliminate
-------- -------
or limit the liability of a director as set forth in Section 607.0831 or
607.0834 of the Florida Business Corporation Act.
ELEVENTH: The duration of the existence of the Corporation is
perpetual.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinabove named, for the purpose of forming a corporation pursuant to the
Florida Business Corporation Act does make this Certificate, hereby declaring,
certifying and acknowledging under penalties of perjury that the facts herein
stated are true and that this Certificate is her act and deed, and accordingly
has hereunto set her hand, this 25th day of June, 1998.
/s/ Caroline H. B. Gaudet
-------------------------
Caroline H. B. Gaudet,
Incorporator
-6-
<PAGE>
EXHIBIT 2.2
______________________________________________________
______________________________________________________
BYLAWS
OF
MEADOWS PRESERVATION, INC.
_______________
INCORPORATED UNDER THE LAWS OF THE
STATE OF FLORIDA
_______________
ADOPTED AS OF JUNE 26, 1998
______________________________________________________
______________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I OFFICES...................................................... 1
-------
Section 1. Registered Office....................................... 1
Section 2. Other Offices........................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS..................................... 1
------------------------
Section 1. Place of Meetings....................................... 1
Section 2. Annual Meeting.......................................... 1
Section 3. Special Meetings........................................ 1
Section 4. Notice of Meetings...................................... 2
Section 5. List of Stockholders.................................... 2
Section 6. Quorum.................................................. 2
Section 7. Voting.................................................. 3
Section 8. Proxies................................................. 3
Section 9. Action Without a Meeting................................ 3
ARTICLE III BOARD OF DIRECTORS........................................... 4
------------------
Section 1. Powers.................................................. 4
Section 2. Election and Term....................................... 4
Section 3. Number.................................................. 4
Section 4. Quorum and Manner of Acting............................. 4
Section 5. Organization Meeting.................................... 4
Section 6. Regular Meetings........................................ 4
Section 7. Special Meetings; Notice................................ 4
Section 8. Removal of Directors.................................... 5
Section 9. Resignations............................................ 5
Section 10. Vacancies............................................... 5
Section 11. Compensation of Directors............................... 5
Section 12. Action Without a Meeting................................ 5
Section 13. Telephonic Participation in Meetings.................... 6
Section 14. Executive Committee..................................... 6
Section 15. Manner of Acting by Executive Committee................. 6
Section 16. Other Committees........................................ 6
ARTICLE IV OFFICERS..................................................... 7
--------
Section 1. Principal Officers...................................... 7
Section 2. Election and Term of Office............................. 7
Section 3. Other Officers.......................................... 7
Section 4. Removal................................................. 7
Section 5. Resignations............................................ 7
Section 6. Vacancies............................................... 7
Section 7. Chairman of the Board................................... 7
Section 8. President............................................... 7
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 9. Vice President......................................... 8
Section 10. Treasurer.............................................. 8
Section 11. Secretary.............................................. 8
Section 12. Salaries............................................... 9
ARTICLE V INDEMNIFICATION OF OFFICERS AND DIRECTORS.................. 9
-----------------------------------------
Section 1. Right to Indemnification............................... 9
Section 2. Right to Advancement of Expenses....................... 10
Section 3. Right of Indemnitee to Bring Suit...................... 10
Section 4. Non-Exclusivity of Rights.............................. 10
Section 5. Insurance.............................................. 11
Section 6. Indemnification of Employees and Agents of
the Corporation..................................... 11
Section 7. Repeals and Modifications.............................. 11
ARTICLE VI SHARES AND THEIR TRANSFER.................................. 11
-------------------------
Section 1. Subscription Price..................................... 11
Section 2. New Tenants............................................ 11
Section 3. Additional Shares...................................... 12
Section 4. Certificate for Stock.................................. 12
Section 5. Stock Certificate Signature............................ 12
Section 6. Stock Leger............................................ 12
Section 7. Cancellation........................................... 12
Section 8. Registrations of Transfers of Stock.................... 12
Section 9. Regulations............................................ 13
Section 10. Lost, Stolen, Destroyed or Mutilated Certificates...... 13
Section 11. Record Dates........................................... 13
ARTICLE VII MISCELLANEOUS PROVISIONS................................... 13
------------------------
Section 1. Corporate Seal......................................... 13
Section 2. Voting of Stocks Owned by the Corp..................... 13
Section 3. Dividends.............................................. 14
Section 4. Execution of Contracts................................. 14
Section 5. Loans.................................................. 14
Section 6. Checks, Etc............................................ 14
Section 7. Fiscal Year............................................ 14
Section 8. Rules of Interpretation................................ 14
ARTICLE VIII AMENDMENTS................................................. 15
----------
</TABLE>
-ii-
<PAGE>
BYLAWS
OF
MEADOWS PRESERVATION, INC.
(A FLORIDA CORPORATION)
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ARTICLE I
OFFICES
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SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation
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shall be located at 2555 PGA Boulevard, Palm Beach Gardens, Florida.
SECTION 2. OTHER OFFICES. The Corporation may establish or
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discontinue, from time to time, such other offices within or without the State
of Florida as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
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SECTION 1. PLACE OF MEETINGS. Meetings of stockholders shall be held
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at such place or places, within or without the State of Florida and at such time
and date, as may from time to time be fixed by the Board of Directors, or as
shall be specified in the respective notices, or waivers of notice, thereof.
SECTION 2. ANNUAL MEETING. Annual meetings of stockholders for the
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election of Directors and the transaction of other business shall be held on
such date, at such time and at such place as may be designated by the Board of
Directors. At each annual meeting, the stockholders entitled to vote shall elect
a Board of Directors and may transact such other proper business as may come
before the meeting.
SECTION 3. SPECIAL MEETINGS. At any time in the interval between
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annual meetings, special meetings of the stockholders, or of any class thereof
entitled to vote, for any purpose or purposes, unless otherwise prescribed by
statute or by the Articles of Incorporation, may be called at any time by the
Chairman of the Board, if any, or the President or by order of the Board of
Directors and shall be called by the President or Secretary upon the written
request
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of stockholders holding of record at least 10% of the outstanding shares of
stock of the Corporation entitled to vote at such meeting. Such written request
shall state the purpose or purposes for which such meeting is to be called.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law,
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written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting shall be given not less than ten
days or more than sixty days before the date on which the meeting is to be held
to each stockholder of record entitled to vote thereat by delivering a notice
thereof to him personally or by mailing such notice in a postage prepaid
envelope directed to him at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be directed to another address, in
which case such notice shall be directed to him at the address designated in
such request. Notice shall not be required to be given to any stockholder who
shall waive such notice in writing, whether prior to or after such meeting, or
who shall attend such meeting in person or by proxy unless such attendance is
for the express purpose of objecting, at the beginning of such meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Every notice of a special meeting of the stockholders, besides the
time and place of the meeting, shall state briefly the objects or purposes
thereof.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the
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Secretary or other officer of the Corporation who shall have charge of the stock
ledger to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting or, if not so specified, at the
place where the meeting is to be held. The list shall also be kept and produced
at the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who may be present. The original or duplicate
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.
SECTION 6. QUORUM. Except as otherwise provided by law or the
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Articles of Incorporation of the Corporation, whenever a class of stock of the
Corporation is entitled to vote as a separate class, or whenever classes of
stock of the Corporation are entitled to vote together as a single class, on any
matter brought before any meeting of the stockholders, whether annual or
special, holders of shares entitled to cast a majority of the votes entitled to
be cast by all the holders of the shares of stock of such class voting as a
separate class, or classes voting together as a single class, as the case may
be, outstanding and entitled to vote thereat, present in person or by proxy,
shall constitute a quorum at any such meeting of the stockholders. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the holders of a majority of the votes represented by the issued
and outstanding stock of the Corporation entitled to vote thereat and present in
person or represented by proxy shall have the power to adjourn the meeting from
time to time, without notice other than announcement of such meeting, until a
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quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
SECTION 7. VOTING. Except as otherwise provided in the laws of the
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state of Florida or the Articles of Incorporation of the Corporation, every
holder of record of the common stock of the Corporation shall at every meeting
of the stockholders be entitled to one vote for each share of common stock held
by him on the record date and every holder of record of the preferred stock of
the Corporation shall at every meeting of the stockholders be entitled to one-
fortieth of one vote for each share of preferred stock held by him on the record
date; provided, however, that shares of its own stock belonging to the
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Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held by the
Corporation, shall neither be entitled to vote nor counted for quorum purposes.
Nothing in this Section shall be construed as limiting the right of the
Corporation to vote its own stock held by it in a fiduciary capacity. A majority
of the votes cast at a meeting of stockholders, duly called and at which a
quorum is present, shall be sufficient to take or authorize action upon any
matter which may properly come before the meeting, unless a different vote is
required by the express provisions of law, of the Articles of Incorporation, or
of these Bylaws, in which case such express provision shall govern and control
the decision of such matter. Unless demanded by a stockholder of the Corporation
present in person or by proxy at any meeting of the stockholders and entitled to
vote thereat or so directed by the chairman of the meeting or required by law,
the vote thereat on any question need not be by written ballot. On a vote by
written ballot, each ballot shall be signed by the stockholder voting, or in his
name by his proxy, if there be such proxy, and shall state the number of shares
voted by him and the number of votes to which each share is entitled.
SECTION 8. PROXIES. Each stockholder entitled to vote at a meeting
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of stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. A proxy
acting for any stockholder shall be duly appointed by an instrument in writing
signed by such stockholder personally or by his attorney-in-fact. No proxy shall
be valid after the expiration of eleven months from the date of its receipt by
the secretary or other officer or agent authorized to tabulate votes unless the
proxy itself expressly provides for a longer period.
SECTION 9. ACTION WITHOUT A MEETING. Any action required to be taken
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at any annual or special meeting of stockholders or any action which may be
taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken shall be signed and dated by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Such consent must be delivered
to the Corporation by delivery to its principal office in Florida, its principal
place of business, the corporate secretary, or another officer or agent of the
corporation having custody of the book in which proceedings of meetings of
shareholders are recorded. No written consent shall be effective to take the
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corporate action referred to therein unless, within 60 days of the date of the
earliest dated consent delivered as described in this Section 9, written
consents signed by the number of holders required to take action are delivered
to the corporation by delivery as set forth in this Section 9. Within 10 days
after obtaining such authorization, notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Such notice shall fairly
summarize the material features of the authorized action, and if the action be
such for which dissenters' rights are provided by the Florida Business
Corporation Act, the notice shall contain a clear statement of the right of
shareholders dissenting therefrom to be paid the fair value of their shares upon
compliance with the provisions of the Florida Business Corporation Act. Whenever
action is taken pursuant to this Section 9, the written consent of the
stockholders consenting thereto or the written reports of inspectors appointed
to tabulate such consents shall be filed with the minutes of proceedings of
shareholders.
ARTICLE III
BOARD OF DIRECTORS
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SECTION 1. POWERS. The business and affairs of the Corporation shall
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be managed under the direction of the Board of Directors.
SECTION 2. ELECTION AND TERM. Except as otherwise provided by law,
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Directors shall be elected at the annual meeting of stockholders and shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualify, or until they sooner die, resign or are removed. At
each annual meeting of stockholders, at which a quorum is present, the persons
receiving a plurality of the votes cast shall be the Directors.
SECTION 3. NUMBER. The number of Directors shall be such number as
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shall be determined from time to time by the Board of Directors, but shall not
be less than one nor more than ten and initially shall be six.
SECTION 4. QUORUM AND MANNER OF ACTING. Unless otherwise provided by
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law, the presence of a majority of the Directors then in office shall constitute
a quorum for the transaction of business and the act of a majority of the
Directors present at any meeting at which a quorum is present shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Articles of Incorporation. In the absence of a quorum, a
majority of the Directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present. The Board of Directors may hold meetings, both regular and special, at
such place or places within or without the State of Florida as the Board of
Directors may from time to time determine or as shall be specified in the
respective notices, or waivers of notice, thereof.
SECTION 5. ORGANIZATION MEETING. The first meeting of each newly
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elected Board of Directors may be held immediately after each annual meeting of
stockholders for the election of Directors. The Board of Directors may meet at
the place of the annual meeting of
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stockholders for the purpose of organization, the election of officers and the
transaction of other business. Notice of such meeting need not be given. If such
meeting is held at any other time or place, notice thereof must be given as
hereinafter provided for special meetings of the Board of Directors, subject to
the execution of a waiver of the notice thereof signed by, or the attendance at
such meeting of, all Directors who may not have received such notice.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
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Directors may be held without notice at such time and place, within or without
the State of Florida, as shall from time to time be determined by the Board of
Directors.
SECTION 7. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
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of Directors shall be held whenever called by the Chairman of the Board, if any,
the President, on the written request of any Director, or by the Secretary.
Notice of each such meeting shall be mailed to each Director, addressed to him
at his residence or usual place of business, at least two days before the date
on which the meeting is to be held, or shall be sent to him at such place by
telegram, telex or telecopy or be delivered personally or by telephone, not
later than the day before the day on which such meeting is to be held. Each such
notice shall state the time and place of the meeting and, as may be required,
the purposes thereof. Notice of any meeting of the Board of Directors need not
be given to any Director if he shall sign a written waiver thereof either before
or after the time stated therein for such meeting, or if he shall be present at
the meeting. Unless limited by law, the Articles of Incorporation, these Bylaws
or the terms of the notice thereof, any and all business may be transacted at
any meeting without the notice thereof having specifically identified the
matters to be acted upon.
SECTION 8. REMOVAL OF DIRECTORS. Any Director or the entire Board
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of Directors may be removed, with or without cause, at any time, by action of
the holders of record of the majority of votes represented by the issued and
outstanding stock of the Corporation entitled to vote for the election of such
Director(s) (a) present in person or represented by proxy at a meeting of
holders of such stock and entitled to vote thereon or (b) by a consent in
writing in the manner contemplated in Section 9 of Article II.
SECTION 9. RESIGNATIONS. Any Director of the Corporation may resign
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at any time by giving written notice to the Chairman of the Board, if any, the
President, a Vice President, if any, or the Secretary of the Corporation. The
resignation of any Director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 10. VACANCIES. Except as otherwise provided in the laws of
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the State of Florida or the Articles of Incorporation of the Corporation, any
newly created directorships and vacancies occurring in the Board by reason of
death, resignation, retirement, disqualification or removal, with or without
cause, may be filled by the action of a majority of the Directors, then in
office. The Director so chosen, whether selected to fill a vacancy or elected to
a new directorship, shall hold office until the next meeting of stockholders at
which the election of Directors is in the regular order of business, and until
his successor has been elected and qualifies, or until he sooner dies, resigns
or is removed.
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SECTION 11. COMPENSATION OF DIRECTORS. The Directors may be paid
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their expenses of attendance at each meeting of the Board of Directors and may
be paid a fee for attendance at each meeting of the Board and/or a stated fee as
a Director. No such payment shall preclude any Director from serving the
Corporation or any parent or subsidiary corporation thereof in any other
capacity and receiving compensation therefor.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
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permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting if a written consent thereto is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes or proceedings of the Board or
committee.
SECTION 13. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the
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Board of Directors or any committee thereof may participate in a meeting of the
Board or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting.
SECTION 14. EXECUTIVE COMMITTEE. The Board of Directors may select
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an executive committee from among its members. In all cases in which specific
directions shall not have been given by the Board of Directors, the executive
committee shall have and may exercise all of the powers and authority of the
Board of Directors, so far as may be permitted by law, in the management of the
business and affairs of the Corporation whenever the Board of Directors is not
in session. The fact that the executive committee has acted shall be conclusive
evidence that the Board of Directors was not in session at the time of such
action and had not theretofore given specific directions with respect to the
matters concerning which the executive committee took action, unless actual
notice to the contrary shall have been given. The Board of Directors may
delegate to the executive committee any or all of the powers of the Board of
Directors, so far as may be permitted by law, in the management of the business
and affairs of the Corporation and may from time to time extend, so far as may
be permitted by law, modify, curtail or restrict the powers so delegated.
SECTION 15. MANNER OF ACTING BY EXECUTIVE COMMITTEE. The executive
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committee may meet at stated times or on notice given personally to all by any
one of their own number. The executive committee may fix its own rules or
procedures and meet at such times and at such place or places as may be provided
by such rules or by resolution of the executive committee or of the Board of
Directors. At every meeting of the executive committee the presence of a
majority of all the members shall be necessary to constitute a quorum and the
affirmative vote of a majority of all the members present shall be necessary for
the adoption by it of any resolution.
SECTION 16. OTHER COMMITTEES. The Board of Directors may, by
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resolution or resolutions passed by a majority of the whole Board, designate one
or more other committees which, to the extent provided in said resolution or
resolutions, shall have and may exercise all the powers and authority of the
Board of Directors, so far as may be permitted by law, in the
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management of the business and affairs of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. In the absence or
disqualification of any member of any committee of the Board, the members
thereof present at any meeting and not disqualified from voting, whether or not
they constitute a quorum, may unanimously appoint a member of the Board of
Directors to act in the place of such absent or disqualified member.
ARTICLE IV
OFFICERS
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SECTION 1. PRINCIPAL OFFICERS. The Board of Directors shall elect a
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President, a Secretary and a Treasurer, and may in addition elect a Chairman of
the Board, one or more Vice Presidents and such other officers as it deems fit;
the President, the Secretary, the Treasurer, the Chairman of the Board, if any,
and the Vice Presidents, if any, being the principal officers of the
Corporation. One person may hold, and perform the duties of, any two or more of
said offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of
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the Corporation shall be elected annually by the Board of Directors at the first
meeting after each annual meeting of the stockholders. Each such officer shall
hold office until his successor shall have been elected and shall qualify, or
until his earlier death, resignation or removal.
SECTION 3. OTHER OFFICERS. In addition, the Board may elect, or the
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Chairman of the Board, if any, or the President may appoint, such other officers
as they deem fit. Any such other officers chosen by the Board of Directors shall
be subordinate officers and shall hold office for such period, have such
authority and perform such duties as the Board of Directors, the Chairman of the
Board, if any, or the President may from time to time determine.
SECTION 4. REMOVAL. Any officer elected or appointed by the Board
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of Directors may be removed, either with or without cause, by the affirmative
vote of a majority of the whole Board of Directors.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
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giving written notice to the Chairman of the Board, if any, the President, the
Secretary or the Board of Directors. Any such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6. VACANCIES. Any vacancy in any office may be filled for
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the unexpired portion of the term in the manner prescribed in these Bylaws for
election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board of
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Directors if one be elected, shall preside, if present, at all meetings of the
Board of Directors and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of
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Directors.
SECTION 8. PRESIDENT. The President shall be the chief executive
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officer of the Corporation and shall have the general powers and duties of
supervision and management usually vested in the office of president of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the Corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts on behalf of the
Corporation. The President shall cause the seal to be affixed to any instrument
requiring it and when so affixed the seal shall be attested by the signature of
the Secretary, any Assistant Secretary or the Treasurer. The President shall
have such other rights, duties and powers as from time to time shall be assigned
to him by the Board of Directors.
SECTION 9. VICE PRESIDENT. The Vice President (or if there shall be
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more than one, the Vice Presidents in the order determined by the Board of
Directors) shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President, and shall have such other
powers and shall perform such other duties as from time to time shall be
assigned to him by the Board of Directors.
SECTION 10. TREASURER. Except as the Board of Directors may
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otherwise determine, the Treasurer shall have charge and custody of, and be
responsible for, all funds and securities of the Corporation and shall keep or
cause to be kept full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit or cause to be deposited
all moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation in accordance with the
annual budget for the Corporation approved by the Board of Directors or as
otherwise may be approved by the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the President and the Board of
Directors, when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the Corporation; in
general, he shall perform all the duties incident to the office of Treasurer and
shall have such other rights, duties and powers as from time to time may be
assigned to him by the Board of Directors or the President. If required by the
Board of Directors, the Treasurer shall give the Corporation a bond (which shall
be renewed every six years) in such sum and with such surety or sureties as
shall be satisfactory to the Board for the faithful performance of the duties of
his office and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
The Assistant Treasurer (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer, and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
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SECTION 11. SECRETARY. Except as the Board of Directors may
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otherwise determine, the Secretary shall attend all meetings of the Board of
Directors and of the stockholders and record all the proceedings of the meetings
of the stockholders and of the Board of Directors in a book or books to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors; he shall have
charge of the stock records of the Corporation; he shall see that all reports,
statements and other documents required by law are properly kept and filed; he
shall have charge of the seal of the Corporation and have authority to affix the
same to any instrument requiring it, and when so affixed, it shall be attested
by his signature or by the signature of an Assistant Secretary, which may be in
facsimile; and in general he shall perform all the duties incident to the office
of Secretary and shall have such other right, duties and powers as from time to
time may be assigned to him by the President or the Board of Directors.
The Assistant Secretary (or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors) shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
SECTION 12. SALARIES. The salaries of the principal officers shall
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be fixed from time to time by the Board of Directors, and the salaries of any
other officers may be fixed by the President.
ARTICLE V
INDEMNIFICATION OF OFFICERS AND DIRECTORS
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SECTION 1. RIGHT TO INDEMNIFICATION. (a) Each person who was or is
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made a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter, a "proceeding"), by reason of the fact that he or
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she is or was a Director or officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
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action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Business Corporation Act of the State of Florida, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in
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connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the indemnitee's heirs, executors and administrators; provided,
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however, that, except as provided in Section 3 of this Article with respect to
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proceedings to enforce rights to indemnification, the Corporation shall be
required to indemnify a person in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
(b) The Corporation's obligation, if any, to indemnify any person who
was or is serving at its request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, enterprise or nonprofit
entity shall be reduced by any amount such person may collect as indemnification
from such other corporation, partnership, joint venture, trust, enterprise or
nonprofit entity.
SECTION 2. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
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indemnification conferred in Section 1 of this Article shall include the right
to be paid by the Corporation the expenses (including reasonable attorneys'
fees) incurred by the indemnitee in connection with any proceeding for which
such right to indemnification is applicable in advance of its final disposition;
provided, however, that the Corporation shall have first received an undertaking
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by or on behalf of such indemnitee to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such indemnitee shall not be entitled to be
indemnified by the Corporation.
SECTION 3. RIGHT OF INDEMNITEE TO BRING SUIT. The rights to
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indemnification and to the advancement of expenses conferred in Sections 1 and 2
of this Article shall be contract rights. If a claim under Sections 1 and 2 of
this Article is not paid in full by the Corporation within sixty days after a
written claim therefor has been received by the Corporation, except in case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense of the
Corporation that, and (ii) any suit by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Business Corporation Act of the State of Florida. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper under the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Business Corporation Act of the State of Florida, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
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brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Section or otherwise, shall be on the Corporation.
SECTION 4. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification
--------- -------------------------
and to the advancement of expenses conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Articles of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
SECTION 5. INSURANCE. The Corporation may maintain insurance, at
--------- ---------
its expense, to protect itself and any Director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Business Corporation Act of the State of Florida.
SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
--------- ----------------------------------------------
CORPORATION. The Corporation may, to the extent authorized from time to time by
- -----------
the Board of Directors, grant rights to indemnification, and to the advancement
of expenses, to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article with respect to indemnification and
advancement of expenses of Directors and officers of the Corporation.
SECTION 7. REPEALS AND MODIFICATIONS. Any repeal or modification of
--------- -------------------------
the foregoing provisions of this Article shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VI
SHARES AND THEIR TRANSFER
-------------------------
SECTION 1. COMMON STOCK SUBSCRIPTION PRICE. Shares of common stock
--------- -------------------------------
may not be issued or transferred to, or owned by, any person who is not an
Eligible Homeowner (as that term is defined in the Certificate of Incorporation
of the Corporation). The subscription price for each share of common stock of
the Corporation issued pursuant to the initial offering of shares of common
stock by the Corporation shall be One Thousand Dollars ($1,000). Thereafter, the
subscription price for each share of common stock of the Corporation shall be
determined in accordance with Schedule 2.5(b) to the form of General Partnership
Agreement of The Meadows Resort Partnership attached to these Bylaws as Exhibit
A, as such form of General Partnership Agreement may be amended, supplemented or
otherwise modified from time to time (such form of Partnership Agreement, as
amended, supplemented or modified, the "Partnership Agreement").
---------------------
-11-
<PAGE>
SECTION 2. NEW TENANTS. Subject to the provisions of Section 2.5(f)
--------- -----------
of the Partnership Agreement, the Corporation shall, subject to satisfying all
applicable federal and state securities laws, within thirty (30) days after the
date upon which any person who becomes an Eligible Homeowner by virtue of
leasing a lot within the Meadows Mobile Home Park in Palm Beach Gardens, Florida
(the "Property") which was unoccupied as of the date of the Partnership
--------
Agreement (any such person hereinafter a "New Tenant"), offer in writing to
----------
issue to such New Tenant a number of shares of common stock of the Corporation
equal to the Increase Number (as such term is defined in the Partnership
Agreement), multiplied by the Stock/Unit Ratio (as such term is defined in the
----------
Partnership Agreement) at an issue price per share of common stock of the
Corporation equal to the Unit Value (as such term is defined in the Partnership
Agreement), as divided by the Stock/Unit Ratio (the "Issue Price"), and if such
------- -----------
New Tenant shall accept such offer within thirty (30) days after the New
Tenant's receipt thereof, the Corporation shall promptly issue to the New Tenant
the number of shares of common stock of the Corporation with respect to which
such offer is accepted, which shall not be more than the Increase Number
multiplied by the Stock/Unit Ratio, in exchange for payment of the aggregate
issue price for such shares. The Corporation shall at all time maintain a
sufficient number of authorized but unissued shares of common stock to fulfill
its obligations under this Section 2.
SECTION 3. ADDITIONAL SHARES. At the written request of Blue Ribbon
--------- -----------------
Communities Limited Partnership ("BRC") from time to time or at any time, the
---
Corporation shall issue such number of additional shares of common stock of the
Corporation as BRC shall request to any New Tenant and/or stockholder of the
Corporation specified by BRC for the Issue Price per share then pertaining and
will increase the number of authorized shares of common stock as necessary to
comply with its obligations under this Section 3.
SECTION 4. CERTIFICATE FOR STOCK. Every stockholder of the
--------- ---------------------
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors shall prescribe, certifying the number and kind
and class of shares of the capital stock of the Corporation owned by him. No
certificate shall be issued for partly paid shares.
SECTION 5. STOCK CERTIFICATE SIGNATURE. The certificates for such
--------- ---------------------------
stock shall be numbered in the order in which they shall be issued and shall be
signed by the Chairman of the Board, if any, or the President and the Secretary
or Treasurer of the Corporation and its seal shall be affixed thereto. The
signatures of such officers of the Corporation may be either manual or facsimile
signatures and the seal may be either facsimile or any other form of seal. In
case any officer of the Corporation who has signed, or whose facsimile signature
has been placed upon, any such certificate shall have ceased to be such officer
before such certificate is issued, the certificate may be issued by the
Corporation with the same effect as if he were such officer at the date of
issue. All certificates representing stock which is restricted or limited as to
its transferability or voting powers or which is preferred or limited as to its
dividends, or as to its share of the assets upon liquidation, or is redeemable,
shall have a statement of such restriction, limitation, preference or redemption
provision, or a summary thereof, plainly stated on the certificate.
SECTION 6. STOCK LEDGER. A record shall be kept by the Secretary or
--------- ------------
by any other officer, employee or agent designated by the Board of Directors of
the name of each person, firm
-12-
<PAGE>
or corporation holding capital stock of the Corporation, the number of shares
represented by, and the respective dates of, each certificate for such capital
stock, and in case of cancellation of any such certificate, the respective dates
of cancellation.
SECTION 7. CANCELLATION. Every certificate surrendered to the
--------- ------------
Corporation for exchange or registration of transfer shall be canceled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except,
subject to Section 10 of this Article VI, in cases provided for by applicable
law.
SECTION 8. REGISTRATIONS OF TRANSFERS OF STOCK. Upon surrender to
--------- -----------------------------------
the Corporation or the transfer agent of the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and for all other
purposes, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Florida.
SECTION 9. REGULATIONS. The Board of Directors may make such rules
--------- -----------
and regulations as it may deem expedient, not inconsistent with the Articles of
Incorporation or these Bylaws, concerning the issue, transfer and registration
of certificates for shares of the stock of the Corporation. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
clerks or one or more transfer agents and one or more registrars, and may
require all certificates of stock to bear the signature or signatures of any of
them.
SECTION 10. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The
---------- -------------------------------------------------
Board of Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been stolen, lost or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be stolen, lost
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such stolen, lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and to give a bond, with sufficient surety,
to the Corporation to indemnify it against any loss or claim which may arise by
reason of the issuance of a new certificate.
SECTION 11. RECORD DATES. The Board of Directors may fix, in
---------- ------------
advance, a date as a record date for the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action. Such record date shall not be more than sixty or less than
ten days before the date of such meeting, or more than sixty days prior to any
other action.
-13-
<PAGE>
SECTION 12. PREFERRED STOCK SUBSCRIPTION PRICE. Shares of preferred
---------- ----------------------------------
stock may not be issued or transferred to, or owned by, any person who is not an
Eligible Homeowner. Any Eligible Homeowner who does not already own one share of
Preferred Stock shall be entitled to be issued one share of preferred stock upon
payment of Twenty-Five Dollars ($25.00) to the Corporation, provided that where
two or more Eligible Homeowners are co-owners of a mobile home located on a lot
in the Park, only one share of Preferred Stock shall be issued to such Eligible
Homeowners.
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
SECTION 1. CORPORATE SEAL. The Board of Directors shall provide a
--------- --------------
corporate seal, which shall be in the form of a circle and shall bear the name
of the Corporation and words and figures showing that it was incorporated in the
State of Florida in the year 1997. The Secretary shall be the custodian of the
seal. The Board of Directors may authorize a duplicate seal to be kept and used
by any other officer.
SECTION 2. VOTING OF STOCKS OWNED BY THE CORPORATION. The Board of
--------- -----------------------------------------
Directors may authorize any person on behalf of the Corporation to attend, vote
and grant proxies to be used at any meeting of stockholders of any corporation
(except the Corporation) in which the Corporation may hold stock.
SECTION 3. DIVIDENDS. Subject to the provisions of the Articles of
--------- ---------
Incorporation, the Board of Directors may, out of funds legally available
therefor, declare dividends upon the common stock of the Corporation as and when
they deem expedient. Dividends may be paid in cash, in property, or in shares of
the Corporation's common stock, subject to the provisions of law and of the
Articles of Incorporation. Before declaring any dividend there may be set apart
out of any funds of the Corporation available for dividends such sum or sums as
the Directors from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Board of Directors shall deem conducive to the
interests of the Corporation and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
SECTION 4. EXECUTION OF CONTRACTS. The Board of Directors may
--------- ----------------------
authorize any officer or officers or other person or persons to enter into any
contracts or execute and deliver any instrument in the name and on behalf of the
Corporation, and such authority may be general or confined to specific
instances. If and to the extent authorized by the Board of Directors, the power
to enter into contract and execute and deliver instruments may be delegated by
any such officer or officers or person or persons.
SECTION 5. LOANS. No loan shall be contracted on behalf of the
--------- -----
Corporation, and no negotiable paper shall be issued in its name, except by such
officer or officers or other person or persons as may be designated by the Board
of Directors from time to time. If and to the extent authorized by the Board of
Directors, the power to contract loans or issue negotiable papers may be
delegated by any such officer or officers or person or persons.
-14-
<PAGE>
SECTION 6. CHECKS, ETC. All checks, drafts, bills of exchange, and
--------- -----------
other orders for the payment of money, notes, letters of credit, acceptances,
bills of lading, warehouse receipts, insurance certificates, obligations, and
other evidences of indebtedness issued in the name of the Corporation shall be
signed by such officer or officers or other person or persons as the Board of
Directors may from time to time designate, subject to any restrictions that the
Board of Directors may, in its sole discretion, from time to time impose, and
unless so authorized by the Board of Directors or by the provisions of these
Bylaws, no officer or other person shall have any power or authority to sign any
such instrument. If and to the extent authorized by the Board of Directors, the
power to sign any such instruments may be delegated by any such officer or
officers or person or persons.
SECTION 7. FISCAL YEAR. The fiscal year of the Corporation shall
--------- -----------
begin on such date as the Board of Directors may designate.
SECTION 8. RULES OF INTERPRETATION. The use of the masculine or any
--------- -----------------------
other pronoun herein when referring to any party has been for convenience only
and shall be deemed to refer to the particular party intended regardless of the
actual gender of such party.
ARTICLE VIII
AMENDMENTS
----------
These Bylaws of the Corporation may be altered, amended or repealed by
the Board of Directors or by the affirmative vote of the holders of record of a
majority of the votes entitled to be cast on matters submitted to a vote of
stockholders of the Corporation (a) present in person or by proxy at a meeting
of holders of such stock or (b) by a consent in writing in the manner
contemplated in Section 9 of Article II; provided, however, that notice of the
-------- -------
proposed alteration, amendment or repeal is contained in the notice of such
meeting. Bylaws, whether made or altered by the stockholders or by the Board of
Directors, shall be subject to alteration or repeal by the stockholders as in
this Article VIII above provided.
-15-
<PAGE>
EXHIBIT 3.1
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
NUMBER SHARES
- ------ ------
C 0
MEADOWS PRESERVATION, INC.
TOTAL AUTHORIZED ISSUE OF COMMON STOCK
10,000 SHARES PAR VALUE $.01 EACH
COMMON STOCK
THIS IS TO CERTIFY THAT ___________________________________________ IS THE OWNER
OF _____________________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
MEADOWS PRESERVATION, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this Certificate properly
endorsed. WITNESS, the seal of the Corporation and the signatures of its duly
authorized officers.
DATED
__________________________________ __________________________________
SECRETARY PRESIDENT
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT........ Custodian.........
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act..........................
(State)
JT TEN - as joint tenants with the right of
survivorship and not as tenants
in common
Additional abbreviations may also be used though not in the
above list
</TABLE>
For value received_____ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute
and appoint
___________________________________________________________________ Attorney to
transfer the said Shares on the books of the within named Corporation with full
power of substitution in the premises.
Dated____________________________________ 19______
In presence of
____________________________
____________________________________
EACH HOLDER OF COMMON STOCK SHALL HAVE ONE VOTE ON EACH MATTER SUBMITTED TO
A VOTE OF STOCKHOLDERS FOR EACH SHARE OF COMMON STOCK OWNED. EACH HOLDER OF
PREFERRED STOCK SHALL HAVE ONE-FORTIETH OF A VOTE ON EACH MATTER SUBMITTED TO A
VOTE OF STOCKHOLDERS FOR EACH SHARE OF PREFERRED STOCK OWNED. HOLDERS OF COMMON
STOCK SHALL HAVE THE EXCLUSIVE RIGHT TO RECEIVE ALL CASH DIVIDENDS AND
DISTRIBUTIONS DECLARED BY THE BOARD OF DIRECTORS OF MEADOWS PRESERVATION, INC.
(THE "COMPANY"), EXCEPT THAT UPON LIQUIDATION OF THE COMPANY, PREFERRED
STOCKHOLDERS SHALL HAVE A ONE-TIME PRIORITY RIGHT TO RECEIVE $25 FOR EACH SHARE
OF PREFERRED STOCK OWNED. EXCEPT FOR SUCH RIGHT TO RECEIVE $25 PER SHARE IN
LIQUIDATION, HOLDERS OF PREFERRED STOCK SHALL HAVE NO RIGHT TO RECEIVE ANY
DIVIDENDS OR OTHER DISTRIBUTIONS FROM THE COMPANY OR TO OTHERWISE PARTICIPATE IN
ANY WAY IN THE EARNINGS AND PROFITS OF THE COMPANY.
SHARES OF COMMON STOCK MAY NOT BE TRANSFERRED TO, OR OWNED BY, ANY PERSON
OTHER THAN THE COMPANY, AN OWNER OF A MOBILE OR MANUFACTURED HOME WHO LEASES A
LOT LOCATED IN THE MEADOWS MOBILE HOME PARK, OR THE ESTATE OF SUCH OWNER SO LONG
AS SUCH ESTATE OWNS A MOBILE OR MANUFACTURED HOME AND LEASES A LOT LOCATED IN
THE MEADOWS MOBILE HOME PARK. SUCH TRANSFER SHALL OCCUR ONLY IN ACCORDANCE WITH
THE TERMS OF THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS.
<PAGE>
EXHIBIT 3.2
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
NUMBER SHARES
- ------ ------
P 0
MEADOWS PRESERVATION, INC.
TOTAL AUTHORIZED ISSUE OF PREFERRED STOCK
400 SHARES WITHOUT PAR VALUE
PREFERRED STOCK
THIS IS TO CERTIFY THAT ___________________________________________ IS THE OWNER
OF _____________________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF PREFERRED STOCK OF
MEADOWS PRESERVATION, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this Certificate properly
endorsed. WITNESS, the seal of the Corporation and the signatures of its duly
authorized officers.
DATED
__________________________________ __________________________________
SECRETARY PRESIDENT
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-...... Custodian.......
(Cust) (Minor)
TEN ENT - as tenants by the
entireties under Uniform Gifts to Minors
Act...........................
(State)
JT TEN - as joint tenants with
right of survivorship
and not as tenants in
common
Additional abbreviations may also be used though not in the above
list.
For value received _______ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
_______________________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ___________________________ 19_______
In presence of
_________________________________
________________________________________
EACH HOLDER OF COMMON STOCK SHALL HAVE ONE VOTE ON EACH MATTER SUBMITTED TO
A VOTE OF STOCKHOLDERS FOR EACH SHARE OF COMMON STOCK OWNED. EACH HOLDER OF
PREFERRED STOCK SHALL HAVE ONE-FORTIETH OF A VOTE ON EACH MATTER SUBMITTED TO A
VOTE OF STOCKHOLDERS FOR EACH SHARE OF PREFERRED STOCK OWNED. HOLDERS OF COMMON
STOCK SHALL HAVE THE EXCLUSIVE RIGHT TO RECEIVE ALL CASH DIVIDENDS AND
DISTRIBUTIONS DECLARED BY THE BOARD OF DIRECTORS OF MEADOWS PRESERVATION, INC.
(THE "COMPANY"), EXCEPT THAT UPON LIQUIDATION OF THE COMPANY, PREFERRED
STOCKHOLDERS SHALL HAVE A ONE-TIME PRIORITY RIGHT TO RECEIVE $25 FOR EACH SHARE
OF PREFERRED STOCK OWNED. EXCEPT FOR SUCH RIGHT TO RECEIVE $25 PER SHARE IN
LIQUIDATION, HOLDERS OF PREFERRED STOCK SHALL HAVE NO RIGHT TO RECEIVE ANY
DIVIDENDS OR OTHER DISTRIBUTIONS FROM THE COMPANY OR TO OTHERWISE PARTICIPATE IN
ANY WAY IN THE EARNINGS AND PROFITS OF THE COMPANY.
THE SHARE OF PREFERRED STOCK EVIDENCED BY THIS CERTIFICATE MAY NOT BE
PLEDGED OR HYPOTHECATED AND MAY NOT BE TRANSFERRED TO, OR OWNED BY, ANY PERSON
OTHER THAN THE COMPANY, AN OWNER OF A MOBILE OR MANUFACTURED HOME WHO LEASES A
LOT LOCATED IN THE MEADOWS MOBILE HOME PARK, OR THE ESTATE OF SUCH OWNER SO LONG
AS SUCH ESTATE OWNS A MOBILE OR MANUFACTURED HOME AND LEASES A LOT LOCATED IN
THE MEADOWS MOBILE HOME PARK. SUCH TRANSFER SHALL OCCUR ONLY IN ACCORDANCE WITH
THE TERMS OF THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS.
<PAGE>
EXHIBIT 4.1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is entered into by and
---------
between Meadows Preservation, Inc., a Florida corporation (the "Company"), 2555
-------
PGA Boulevard, Palm Beach Gardens, FL, 33410, and the undersigned subscriber
(the "Subscriber").
----------
IN CONSIDERATION of the covenants and other matters set forth in this
Agreement, it is mutually agreed as follows:
1. GENERAL
This Agreement provides for the subscription by the Subscriber to
share(s) of the common stock, $.01 par value of the Company (the "Shares "), at
------
the subscription price of One Thousand Dollars ($1000) per Share, as described
in the Company's prospectus dated _____________, 1998 (the "Prospectus"). The
----------
Subscriber acknowledges that he or she has received a copy of the Prospectus.
2. SUBSCRIPTION TO COMMON STOCK
The Subscriber hereby subscribes to the Shares described on the
Subscription Page (which begins on page 3 of this Agreement).
3. ISSUANCE OF STOCK AND STOCK CERTIFICATES
Subject to the provisions of this Agreement and the Prospectus, upon
payment to the Company of the subscription price and the Company's receipt of a
completed and signed copy of this Agreement, the Company will issue fully paid
Shares to the Subscriber.
4. SUBSCRIBER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
The Subscriber hereby represents, warrants and covenants to the
Company as follows:
(a) The Subscriber is an owner of a manufactured or mobile home
located in The Meadows Mobile Home Park (the "Park"), 2555 PGA Boulevard, Palm
Beach Gardens, Florida (a "Meadows Homeowner"). The Subscriber leases a lot in
-----------------
the Park and is acquiring the Shares subscribed to in this Agreement solely for
his/her own account.
(b) The Subscriber acknowledges that his/her ability to sell or
dispose of any Shares is limited because the Company's Articles of Incorporation
permit transfers only to another Meadows Homeowner or to the Company.
(c) The Subscriber agrees that certificates representing the
Shares subscribed to in this Agreement shall bear a legend in substantially the
following form:
Shares of Common Stock may not be transferred to, or owned by,
any person other than the Company, an owner of a mobile or
manufactured home who leases a lot located in The Meadows
Mobile Home Park, or the estate of such owner so long as such
<PAGE>
estate owns a mobile or manufactured home and leases a lot
located in The Meadows Mobile Home Park. Such transfer shall
occur only in accordance with the terms of the Company's Articles
of Incorporation and Bylaws.
(d) The Subscriber hereby consents to the contribution by the
Company to The Meadows Resort Partnership, a Florida general partnership to be
formed by the Company and Blue Ribbon Communities Limited Partnership, of: (i)
all of the proceeds received by the Company from the sale of the Shares offered
by the Prospectus, and (ii) all of the Company's beneficial interest in The
Meadows Mobile Home Park, which assets constitute substantially all of the
Company's assets, in return for Partnership Units, as described in the
Prospectus.
5. GOVERNING LAW
This Agreement shall be interpreted in accordance with and in all
respects governed by the laws of Florida applicable to contracts made and to be
performed wholly within that jurisdiction.
[Rest of Page Left Blank]
2
<PAGE>
SUBSCRIPTION PAGE
(Please print all information exactly as you wish it to appear on the Company's
records.)
The Subscriber hereby subscribes for:
Number of Shares: [please insert number] ______________
For aggregate subscription price:
[please insert amount which is number
of Shares multiplied by $1,000] $_____________
Which shall be payable by:
Delivery of the enclosed check payable to
Meadows Preservation, Inc. in the amount of $_____________
and/or
Rejection of the Rescission Offer (as defined
in the Prospectus) and application of advances
which I previously made, in the amount of $_____________.
_______________________________ _________________________________
_______________________________ _________________________________
(Name(s) of Subscriber(s))* (Social Security Number(s))
________________________________________________________________________________
(Address) (Telephone)
___________________________________
(Signature)
___________________________________
(Printed Name)
___________________________________
(Signature if joint owners)*
___________________________________
(Printed Name)
Executed this ______ day of ____________, 1998.
3
<PAGE>
ACCEPTED AND AGREED TO:
Meadows Preservation, Inc.
Date:___________________ By: ________________________________
Name: ______________________________
Title: ______________________________
* If the Shares are to be held jointly with another individual, both
Subscribers must sign.
4
<PAGE>
EXHIBIT 6.1
GENERAL PARTNERSHIP AGREEMENT
OF
THE MEADOWS RESORT PARTNERSHIP
THIS GENERAL PARTNERSHIP AGREEMENT (this "Agreement") is entered into
---------
and shall be effective as of the ____ day of ________, 1998, by and between BLUE
RIBBON COMMUNITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("BRC"),
---
and MEADOWS PRESERVATION, INC., a Florida corporation ("MPI").
---
RECITALS
--------
A. MPI is a corporation organized under the laws of the State of Florida
to acquire the Property (as hereinafter defined), to hold the record interest
therein and to be responsible for the operation thereof pursuant to Fla. Stat.
(S)(S) 723.071 and 723.077.
B. The parties hereto now desire to form a general partnership to own,
finance, operate and manage the Property, and desire to enter into this
Agreement in order to govern the affairs of such partnership and set forth the
parties' rights, obligations and understandings with respect to such
partnership.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and intending to be legally bound hereby, the Partners (as hereinafter defined)
agree as follows:
SECTION 1. THE PARTNERSHIP
1.1 Formation. The Partners hereby enter into and form The Meadows Resort
---------
Partnership (the "Partnership"). The authority of the Partners shall be
-----------
strictly limited to the purposes and scope set forth in this Agreement.
1.2 Name. The name of the Partnership shall be "The Meadows Resort
----
Partnership".
1.3 Purpose and Scope of Partnership.
--------------------------------
(a) The purpose of the Partnership is to acquire, hold, operate and,
if and when appropriate, sell the Property or the beneficial interest therein,
and to engage in any and all activities reasonably related or incidental
thereto.
(b) The Partners intend that this Agreement and the Partners'
general rights and duties shall be governed by the Act (as hereinafter defined),
as interpreted by applicable court decisions, except as stated below:
(i) Where an express contractual agreement contained in this
Agreement to the contrary has been made, such agreement shall
apply to the extent it can legally be made and enforced;
<PAGE>
(ii) The Partners generally intend and expect that claims and
requests for enforcement of contributions and periodic
accountings may be made by one Partner to or against the other
Partner from time to time without causing or requiring a winding
up or termination of the Partnership, partition or any similar
requirement that the Partnership and/or its assets be divided
before such claims or rights of action exist or are enforceable
between the Partners; and
(iii) Except as otherwise provided in this Agreement, neither
Partner shall have any authority to act for, or to assume any
obligations or responsibility on behalf of, the other Partner.
1.4 Legal Situs. For purposes of legal designation of the Partnership,
-----------
the Partners agree that:
(a) all business of the Partnership shall be conducted solely under
the name of "The Meadows Resort Partnership";
(b) legal notice of the Partnership's name and any modification
thereof shall be made as and to the extent required by applicable law; and
(c) the principal place of business of the Partnership shall be
located at the Property.
1.5 Independent Activities. Each Partner and its Affiliates may,
----------------------
notwithstanding this Agreement, engage in whatever activities it or they choose,
whether the same are competitive with the Partnership or otherwise, without
having or incurring any obligation to offer any interest in such activities to
the Partnership or the other Partner or its Affiliates. Neither this Agreement
nor any activity undertaken pursuant hereto shall prevent either Partner or its
Affiliates from engaging in such activities, or require either Partner or its
Affiliates to permit the Partnership or the other Partner or its Affiliates to
participate in any such activities or entitle the Partnership or the other
Partner or its Affiliates to any rights to the income, gain or profits derived
therefrom, and as a material part of the consideration for the execution of this
Agreement by each Partner, each Partner, for itself and its Affiliates, hereby
waives, relinquishes and renounces any such right or claim of participation.
1.6 Considered a Partnership. The Partners intend that, pursuant to the
------------------------
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code (as
hereinafter defined), the Partnership will be treated as a partnership for
Federal income tax purposes. Each Partner agrees not to make or attempt to make
an election under Code Section 761 to be excluded from the application of
Subchapter K or from the application of any comparable provisions of applicable
state or local law. The Partnership and the Partners shall not elect
classification of the Partnership for Federal tax purposes as other than a
partnership under Treasury Regulations Section 301.7701-3. BRC in its sole
discretion may determine whether to make or fail to make, on behalf of the
Partnership, any corresponding election available for state or local tax
purposes.
-2-
<PAGE>
1.7 Definitions. Capitalized words and phrases used in this Agreement
-----------
have the following meanings:
(a) "Act" means the [Revised] Uniform Partnership Act of the State of
Florida as amended from time to time (or any corresponding provisions of
succeeding law).
(b) "Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting securities of such Person, (iii) any officer, director or
general partner of such Person, (iv) any Person who is an officer, director,
general partner, trustee, beneficiary or holder of ten percent (10%) or more of
the voting securities of any Person described in clauses (i) through (iii) of
this sentence, or (v) any Person who is a member of the immediate family of any
Person described in clauses (i) through (iv) of this sentence. As used in
Section 1.7(b)(i) hereof, "control" (in the context of the terms "controlling,"
- -----------------
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
entities or persons, whether through the ownership of voting securities, by
contract or otherwise. As used in Section 1.7(b)(ii) hereof, the term
------------------
"controlling" means the possession, direct or indirect, of the power to cause
the voting securities to be voted as the Person sees fit.
(c) "Agreement" means this General Partnership Agreement, as amended,
supplemented or restated from time to time. Words such as "herein,"
"hereinafter," "hereof," "hereto" and "hereunder" refer to this Agreement as a
whole, unless the context otherwise requires.
(d) "Asset Value" means, with respect to any asset of the
Partnership, the asset's adjusted basis for Federal income tax purposes, except
as follows:
(i) The initial Asset Value of any asset contributed by a
Partner to the Partnership shall be the Gross Fair Market Value
of such asset;
(ii) Upon the distribution in kind of any Partnership asset, the
Asset Value of such asset shall be adjusted immediately prior to
such distribution to equal its Gross Fair Market Value;
(iii) To the extent that an adjustment is necessary or
appropriate to reflect the relative economic interest of the
Partners in the Partnership, the Asset Values of all Partnership
assets shall be adjusted to equal their respective Gross Fair
Market Values as of the following times: (1) upon the acquisition
of an interest in the Partnership by a new Partner or an
additional interest by an existing Partner in exchange for more
than a de minimis capital contribution; and (2) upon the
distribution by the Partnership to a Partner of more than a de
minimis amount of property as consideration for an interest in
the Partnership; and
(iv) If the Asset Value of an asset has been determined or
adjusted in
-3-
<PAGE>
accordance with paragraphs (i), (ii) or (iii) of this Section
-------
1.7(d), such Asset Value shall thereafter be adjusted by the
------
Depreciation taken into account with respect to such asset for
purposes of computing Profit and Loss.
(e) "Capital Account" means, with respect to either Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(i) The Capital Account of each Partner shall be credited with
the amount of cash and the Asset Value of any property
contributed by such Partner to the Partnership pursuant to this
Agreement plus all income, gain and Profit of the Partnership
allocated to such Partner pursuant to this Agreement, plus the
amount of any Partnership liabilities assumed by such Partner or
which are secured by any Partnership property distributed to such
Partner.
(ii) The Capital Account of each Partner shall be debited with
the amount of cash and the Asset Value of any Partnership
property distributed to such Partner pursuant to this Agreement,
plus all Loss and items of loss and deduction allocated to such
Partner pursuant to this Agreement, plus the amount of any
liabilities of such Partner assumed by the Partnership or which
are secured by any property contributed by such Partner to the
Partnership.
(iii) In the event any Partnership Interest is transferred in
accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it
relates to the transferred Partnership Interest.
(iv) In determining the amount of any liability for purposes of
Sections 1.7(e)(i) and 1.7(e)(ii) hereof, there shall be taken
---------------------------------
into account Code Section 752(c) and any other applicable
provisions of the Code and Treasury Regulations.
(v) The Capital Account of each Partner shall be adjusted as
provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(j) to
take into account any required basis adjustments with respect to
Code Section 38 property.
(vi) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with
Treasury Regulations Section 1.704-1(b) and shall be interpreted
and applied consistently therewith.
(f) "Capital Contribution" means, with respect to either Partner, the
amount of money and the initial Asset Value of any property (other than money)
contributed by such Partner to the Partnership, reduced by the amount of any
liabilities of such Partner assumed by the Partnership in connection with the
contribution or which are secured by any property
-4-
<PAGE>
contributed by such Partner to the Partnership. The initial Capital
Contributions of the Partners are set forth on Exhibit A attached hereto.
(g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).
(h) "Contribution Agreement" means the Contribution Agreement to be
executed by and among BRC, MPI and the Partnership after this Agreement is
executed, in the form attached hereto Exhibit 1.7(b).
(i) "Deadlock" means a deadlock between the Partners as to the proper
resolution of any matter described in Section 5.2 hereof or any other dispute
-----------
between the Partners relating to the Partnership, the Property, this Agreement
or the interpretation of this Agreement.
(j) "Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such fiscal year or other period for
Federal income tax purposes, except that if the Asset Value of an asset differs
from its adjusted basis for Federal income tax purposes at the beginning of such
fiscal year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Asset Value as the Federal income tax depreciation,
amortization or other cost recovery deduction for such fiscal year or other
period bears to such beginning adjusted tax basis; provided, however, that if
-------- -------
the Federal income tax depreciation, amortization or other cost recovery
deduction for such fiscal year or other period is zero, Depreciation shall be
determined with reference to such beginning Asset Value using any reasonable
method selected by BRC. With respect to any asset of the Partnership for which
depreciation is calculated in accordance with Treasury Regulations Section
1.704-3(d), Depreciation shall be calculated in the same manner.
(k) "Gross Fair Market Value" means fair market value, unreduced by
any liabilities, except that the initial Gross Fair Market Value of any asset
contributed by a Partner to the Partnership shall be determined by the
contributing Partner and the Partnership.
(l) "MPI Documents" means the Articles of Incorporation and Bylaws of
MPI, as amended, supplemented or restated from time to time.
(m) "MPI Stock" means all of the authorized and issued shares of the
common stock of MPI. The subscription price for each share of MPI Stock issued
prior to the second anniversary of the Partnership Execution Date shall be One
Thousand Dollars ($1,000). Thereafter, the subscription price for each share of
MPI Stock shall be determined in accordance with Schedule 2.6(b) attached
hereto. MPI Stock shall be issued solely to owners of manufactured or mobile
homes who lease lots located in the Property.
(n) "MPI Stockholder" means an owner of MPI Stock.
(o) "MPI Subscription Agreements" means the subscription agreements
-5-
<PAGE>
executed between MPI and MPI Stockholders with respect to the issuance of MPI
Stock.
(p) "Net Capital Proceeds" means the net cash proceeds remaining in
the Partnership and available for distribution derived from any excess Capital
Contributions, mortgages or other financings or refinancings, any sales and
other dispositions (other than in the ordinary course of business) of the
property of the Partnership, or any part thereof, any insurance award paid on
account of destruction by casualty or from an eminent domain proceeding or
conveyance in lieu thereof, or any other nonrecurring capital transaction after
deduction of all expenses, charges and taxes incurred by the Partnership in
connection with obtaining such proceeds and of any portion of such proceeds
actually applied to the payment of Partnership indebtedness or to repair,
restore or improve the property of the Partnership and after deduction of
amounts used to establish reasonable reserves. "Net Capital Proceeds" shall
include all principal and interest payments with respect to any note or other
obligation received by the Partnership in connection with any sales and other
dispositions (other than in the ordinary course of business) of the property of
the Partnership.
(q) "Net Cash Flow" means all cash received from Partnership
operations not including amounts received as Capital Contributions, reduced by
all cash paid, or amounts used to establish reasonable reserves, for all
Partnership expenses, debt payments, capital improvements, replacements or other
contingencies.
(r) "Occupied Lots" means all lots within the Property that are
occupied by a manufactured or mobile home as of the date of this Agreement or
that become so occupied during the term of this Agreement.
(s) "Partner" means any Person who (i) is described as such in the
first paragraph of this Agreement or has become a Partner pursuant to the terms
of this Agreement and (ii) has not ceased to be a Partner pursuant to the terms
of this Agreement.
(t) "Partnership" means the general partnership formed pursuant to
this Agreement and the partnership continuing the business of the Partnership in
the event of dissolution of the Partnership as herein provided.
(u) "Partnership Execution Date" means the date of this Agreement.
(v) "Partnership Interest" means an ownership interest in the
Partnership and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such holder to comply with the terms and provisions of
this Agreement.
(w) "Partnership Legal Costs" means all of the legal fees and expenses
paid by BRC or its Affiliates, including, without limitation, legal fees and
expenses of MPI's counsel paid by BRC or its Affiliates, in connection with or
relating to the acquisition of the Property by MPI, the financing of such
acquisition, the registration and sale of shares of MPI Stock, the
reorganization of MPI from a non-profit corporation into a for-profit stock
corporation, this Agreement and the Contribution Agreement, the litigation
relating to MPI's right to acquire the Property and all other agreements,
documents, writings and actions relating to any of the foregoing.
-6-
<PAGE>
(x) "Partnership Record Date" means, with respect to each
distribution pursuant to Section 4 hereof, the date that is fourteen (14) days
---------
prior to the date of such distribution (or if such fourteenth (14th) day is not
a business day, the last business day immediately preceding such fourteenth
(14th) day).
(y) "Partnership Units" means the fractional, undivided shares of the
Partnership Interests issued to the Partners pursuant to Section 2 hereof, as
---------
adjusted pursuant to Section 2.6 or 9 hereof, from time to time or at any time.
----------------
The number of Partnership Units issued to the Partners is set forth on Exhibit A
attached hereto, as such Exhibit A may be amended, supplemented or restated from
time to time.
(z) "Percentage Interest" means, as to each Partner, an interest in
the Partnership determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding.
(aa) "Person" means any individual, partnership, corporation, limited
liability company, trust or other entity.
(bb) "Profit" and "Loss" mean for each fiscal year or other period,
an amount equal to the Partnership's taxable income or loss for such fiscal year
or other period, determined in accordance with Code Section 703(a) (for the
purposes of computing Profit and Loss, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from Federal
income tax and not otherwise taken into account in computing
Profit or Loss shall be added to such taxable income or loss;
(ii) Any expenditure of the Partnership described in Code
Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B)
expenditure pursuant to Treasury Regulations Section 1.704-
1(b)(2)(iv)(i) and not otherwise taken into account in computing
Profit or Loss shall be subtracted from such taxable income or
loss;
(iii) In the event the Asset Value of any Partnership asset is
adjusted pursuant to Sections 1.7(d)(ii) or 1.7(d)(iii) hereof,
----------------------------------
the amount of such adjustment shall be taken into account as gain
or loss from the disposition of such asset for purposes of
computing Profit or Loss for the fiscal year or other period in
which such adjustment occurs;
(iv) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Asset
Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Asset Value;
-7-
<PAGE>
(v) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing Federal
taxable income or loss, there shall be taken into account
Depreciation for such fiscal year or other period; and
(vi) Notwithstanding any other provision hereof, any items which
are specially allocated pursuant to Sections 3.4 and 3.8 hereof
--------------------
shall not be taken into account in computing Profit or Loss.
Nevertheless, such items shall be taken into account in adjusting
Capital Accounts pursuant to Section 1.7(e) hereof.
--------------
(cc) "Property" means the real property located at the northwest
corner of PGA Boulevard and Prosperity Farms Road in Palm Beach County, Florida,
and commonly known as "The Meadows Resort", as more particularly described on
Exhibit B attached hereto (including all improvements thereon), to which record
title is and will be owned by MPI and beneficial ownership is or will be held by
the Partnership, together with all of MPI's right, title and interest in and to
all personal or intangible property related to or used in connection with the
aforesaid real property and/or improvements, including, without limitation, the
personal property listed on Exhibit C attached hereto.
(dd) "Prospectus" means Part I of a registration statement, in form
and substance acceptable to MPI and BRC, to be filed by MPI in accordance with
the requirements of the Securities Act of 1933, as amended, offering to sell up
to 2,354 shares of MPI Stock to the Eligible Homeowners.
(ee) "Stock/Unit Ratio" means, (i) as of the time immediately prior to
any written offer described in Section 2.6(d) hereof and (ii) as of the time
--------------
immediately prior to any transfer of Put Stock pursuant to Section 9.2(e) hereof
--------------
or of MPI Stock pursuant to Section 9.2(f) hereof, the number of shares of MPI
--------------
Stock issued and outstanding (not including any shares held as treasury stock)
divided by the number of Partnership Units held by MPI.
- ----------
(ff) "Treasury Regulations" mean the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
(gg) "Unoccupied Lots" means all lots within the Property that are not
occupied by a manufactured or mobile home as of the date of this Agreement.
1.8 Transactions with Affiliates.
----------------------------
BRC may, on behalf of the Partnership, purchase or obtain goods or
services from, or provide goods or services to, either Partner or its
Affiliates; provided that the amounts paid for, and other terms relating to the
furnishing of, such goods or services may not be materially less advantageous to
the Partnership than the amounts and terms for and upon which
-8-
<PAGE>
similar goods or services could be obtained or furnished in the same geographic
area to or from good quality corporations or business enterprises which are not
a Partner or an Affiliate thereof. Without limiting the generality of the
foregoing, the Partners expressly authorize the Partnership to enter into a
management agreement with respect to the Property with MHC Management Limited
Partnership, an Illinois limited partnership, substantially in the form attached
hereto as Exhibit D (the "Management Agreement"). Amounts paid to either Partner
--------------------
or its Affiliates for goods or services in transactions authorized pursuant to
this Section 1.8 shall be treated for all purposes as amounts paid to non-
-----------
Partners and any compensation or reimbursement received by either Partner from
any such Affiliate shall belong to such Partner and not to the Partnership.
Neither Partner nor any of its Affiliates shall otherwise receive any
compensation for services rendered to the Partnership except for such fees,
commissions and other compensation expressly provided for in this Agreement.
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS
2.1 Initial Capital Contributions. Each of the Partners shall make an
-----------------------------
initial Capital Contribution of One Thousand Dollars ($1,000.00) to the
Partnership and shall receive one (1) Partnership Unit in exchange therefor, as
shown on Exhibit A attached hereto.
2.2 Supplemental Capital Contributions. In accordance with, and subject
----------------------------------
to the terms and conditions of, the Contribution Agreement, within three (3)
business days after the date upon which the offer to sell shares of MPI Stock
pursuant to the Prospectus expires (the "Closing Date"):
------------
(a) MPI shall contribute to the Partnership:
(i) all of the cash raised by MPI from the offering of its
shares of MPI Stock pursuant to the Prospectus (the "MPI Cash"),
--------
(ii) all of the beneficial interest in the Property, subject
only to the Permitted Exceptions (as defined in the Contribution Agreement); and
(iii) all of MPI's right, title and interest in and to the Other
Property (as defined in the Contribution Agreement), subject only to the
Permitted Exceptions.
The Partners hereby agree that the Asset Value of the Property and the
Other Property, subject to the Permitted Exceptions, is zero.
(b) BRC shall contribute to the Partnership cash in the amount of (i)
[Four Million Seven Hundred Seven Thousand Five Hundred Twenty-nine 42/100
Dollars ($4,707,529.42)], less (ii) the MPI Cash (such net amount, the "BRC
---- ---
Cash").
(c) BRC shall contribute to the Partnership cash in the amount of
[Two Million Two Hundred Fifty-six Thousand Dollars ($2,256,000)] with respect
to the Unoccupied Lots (as hereinafter defined) in the Property. Except as
provided in Section 2.6 hereof, BRC shall
-----------
-9-
<PAGE>
not receive any Partnership Units on account of its Capital Contribution
described in this Section 2.2(c).
--------------
(d) BRC shall contribute to the Partnership cash in the amount of Two
Hundred Thousand Dollars ($200,000), to be used by the Partnership to fund
capital improvements to the Property, as more particularly described in the
Property Management and Operation Plan (as hereinafter defined). BRC shall not
receive any Partnership Units on account of its Capital Contribution described
in this Section 2.2(d).
--------------
2.3 Issuance of Additional Partnership Units.
----------------------------------------
BRC is hereby authorized to cause the Partnership to issue additional
Partnership Units to BRC, BRC's Affiliates or MPI, on the following terms and
conditions:
(a) One (1) Partnership Unit shall be issued to each Partner for each
Capital Contribution, in cash, of One Thousand Dollars ($1,000) made by it to
the Partnership pursuant to Sections 2.2(a)(i) or (b) hereof. BRC is hereby
-------------------------
authorized to amend Exhibit A to this Agreement to reflect all Capital
Contributions made pursuant to Section 2.2 hereof, the Capital Account balances
-----------
of the Partners as a result of the Capital Contributions made by the Partners
pursuant to Section 2.2 hereof, the number of Partnership Units issued to each
----------
Partner pursuant to Section 2.3 hereof and the Percentage Interest of each
-----------
Partner.
(b) Partnership Units shall be issued solely to BRC, BRC's Affiliates
and MPI.
(c) The aggregate number of Partnership Units issued to MPI shall not
exceed fifty percent (50%) of all of the Partnership Units issued by the
Partnership.
(d) Such other terms and conditions, consistent with the foregoing
terms and conditions, as shall be reasonably necessary or appropriate.
(f) BRC is authorized to cause the Partnership to issue Partnership
Units pursuant to the provisions of Section 2.6 hereof.
-----------
2.4 No Additional Capital Contributions. No Partner shall be obligated to
-----------------------------------
make any further Capital Contributions to the Partnership.
2.5 Other Matters.
-------------
(a) Except as otherwise provided in this Agreement, no Partner shall
withdraw any Capital Contributions without the consent of both Partners.
(b) Neither Partner shall receive any interest, salary or drawing with
respect to its Capital Contributions or its Capital Account or for services
rendered on behalf of the Partnership or otherwise in its capacity as a Partner,
except as otherwise provided in this Agreement.
-10-
<PAGE>
(c) Neither Partner shall have any obligation at any time to restore a
deficit balance in its Capital Account.
2.6 Unoccupied Lots It is agreed that:
---------------
(a) BRC shall be solely responsible, at BRC's or its Affiliate's
expense, for marketing or causing its Affiliate to market the Unoccupied Lots.
Any and all such expenditures by BRC or its Affiliates shall not be treated as
Capital Contributions, and BRC shall not receive any additional Capital Account
credit with respect thereto.
(b) On or before March 1 of each year during the term of this
Agreement, BRC shall (i) determine (y) the market value of each Partnership
Unit in accordance with the formula set forth in Schedule 2.6(b) attached hereto
(the "Unit Value") and (z) the market value of each Occupied Lot in accordance
----------
with the formula set forth in Schedule 2.6(b) attached hereto (the "Occupied Lot
------------
Value") and (ii) deliver to MPI a written notice setting forth the Unit Value
- -----
and the Occupied Lot Value, which Unit Value and Occupied Lot Value shall be
binding on both Partners until the date upon which BRC shall deliver to MPI
another written notice pursuant to this Section 2.6(b).
--------------
(c) In the event that a tenant takes possession of an Unoccupied Lot
(each such tenant, a "New Tenant"), then immediately upon the date that the New
----------
Tenant takes possession of such Unoccupied Lot, and without further action by
the Partnership or the Partners, the number of Partnership Units held by BRC
shall be increased by a number (the "Increase Number") equal to (i) the Occupied
---------------
Lot Value then pertaining, divided by (ii) the Unit Value then pertaining,
-------
adjusted to the nearest whole number.
(d) Subject to compliance with applicable securities laws and the
provisions of Section 2.6(f) hereof, MPI shall, not earlier than one hundred
--------------
eighty three (183) days after the Closing Date, and thereafter promptly, offer
in writing to issue to each New Tenant who has taken possession of an Unoccupied
Lot, a number of authorized shares of MPI Stock equal to the Increase Number
multiplied by the Stock/Unit Ratio, at an issue price per share of MPI Stock
- ----------
equal to the Unit Value divided by the Stock/Unit Ratio (the "Issue Price"), and
------- -----------
if such New Tenant shall accept such offer within thirty (30) days after the New
Tenant's receipt thereof, MPI shall promptly issue to the New Tenant the number
of shares of MPI Stock with respect to which such offer shall be accepted (the
"Issue Number"), which shall be a whole number that is not more than the
------------
Increase Number multiplied by the Stock/Unit Ratio, in exchange for payment of
the aggregate Issue Price for such shares. MPI agrees that MPI shall at all
times maintain a sufficient number of authorized but unissued shares of MPI
Stock to fulfil its obligations under this Section 2.6(d).
--------------
(e) MPI shall give written notice to BRC of the issuance of any MPI
Stock to a New Tenant pursuant to Section 2.6(d) hereof, and such notice shall
--------------
serve as a request from MPI to purchase from BRC the number of Partnership Units
held by BRC that is equal to the Issue Number divided by the Stock/Unit Ratio,
-------
for a price per Partnership Unit that is equal to the Issue Price multiplied by
----------
the Stock/Unit Ratio. Subject to the provisions of Section 2.6(f) hereof, BRC
--------------
hereby agrees to sell to MPI, on the terms of this Section 2.6(e), the number of
--------------
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<PAGE>
Partnership Units that is equal to the Issue Number divided by the Stock/Unit
-------
Ratio, and upon receipt by BRC of (i) written notice from MPI as aforesaid, (ii)
evidence reasonably satisfactory to BRC of the issuance to the New Tenant of the
number of shares of MPI Stock that is equal to the Issue Number and (iii)
payment in cash of the aggregate purchase price for such Partnership Units, BRC
shall transfer such number of Partnership Units to MPI and modify Exhibit A
accordingly.
(f) Notwithstanding anything in this Section 2.6 to the contrary, BRC
-----------
shall not be obligated to transfer to MPI Partnership Units pursuant to Section
-------
2.6(e) hereof to the extent that the transfer of such Partnership Units would
- ------
cause BRC's Partnership Interest immediately following such transfer to equal
less than fifty percent (50%) of all of the Partnership Interests. Accordingly,
MPI agrees that MPI shall not be required to, and shall not, issue shares of MPI
Stock to a New Tenant to the extent that, pursuant to this Section 2.6(f), BRC
--------------
will not be obligated to transfer a corresponding number of Partnership Units to
MPI in connection with the issuance of such shares of MPI Stock.
(g) At BRC's written request from time to time or at any time, subject
to compliance with applicable securities laws, MPI shall issue such number of
additional shares of MPI Stock as BRC shall request (the "Additional Shares") to
-----------------
any New Tenant and/or MPI Stockholder specified by BRC for the Issue Price per
share then pertaining, adjusted in accordance with Section 2.6(e) hereof, and
--------------
that MPI will increase the number of authorized shares of MPI Stock as necessary
to comply with its obligations under this Section 2.6(g). Any such request by
--------------
BRC shall serve as BRC's agreement to sell to MPI a number of Partnership Units
held by BRC computed in accordance with Section 2.6(e) hereof, and upon receipt
--------------
by BRC of (i) evidence reasonably satisfactory to BRC of the issuance to the New
Tenant and/or MPI Stockholder of such Additional Shares and (ii) payment in cash
of the aggregate purchase price for such Partnership Units determined in
accordance with Section 2.6(e) hereof, BRC shall transfer such number of
--------------
Partnership Units to MPI and modify Exhibit A accordingly.
(h) MPI agrees that, at all times throughout the term of this
Partnership, the MPI Documents shall permit and provide for the rights and
obligations set forth in this Section 2.6.
-----------
(i) MPI acknowledges and agrees that the provisions of this Section
-------
2.6 comprise an essential component of the joint venture between MPI and BRC,
- ---
that such provisions are fair and reasonable in scope and content, that an award
of money damages may be inadequate for any breach of this Section 2.6 by MPI and
-----------
that any such breach may cause BRC irreparable harm. Accordingly, in addition
to any other remedies that may be available at law or in equity, BRC shall be
entitled, without the requirement of posting a bond or other security, to
equitable relief, including specific performance, and MPI agrees not to oppose
the granting of such relief on the basis that BRC has an adequate remedy at law.
-12-
<PAGE>
SECTION 3. ALLOCATIONS OF PROFIT, LOSS AND NONRECOURSE LIABILITIES
3.1 Allocations of Profit and Loss.
------------------------------
(a) Profit. Profit of the Partnership (other than Profit described in
------
Sections 3.2 and 3.3 hereof) for each fiscal year shall be allocated to the
- --------------------
Partners as follows:
(i) First, an amount of Profit not in excess of the amount (if
-----
any) of Net Cash Flow distributed for such fiscal year pursuant
to Section 4.1 hereof shall be allocated to the Partners in
-----------
proportion to the amounts of such Net Cash Flow so distributed to
each Partner; and
(ii) Thereafter, any remaining Profit shall be allocated in the
----------
same manner as set forth in Section 3.3 hereof.
-----------
(b) Loss. Loss of the Partnership (other than Loss described in
----
Sections 3.2 and 3.3 hereof) for each fiscal year shall be allocated to the
- --------------------
Partners as follows:
(i) First, to those Partners with positive Capital Account
-----
balances (determined by (A) taking into account the adjustments,
allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), and (B) adding to
such balance such Partner's share of partnership minimum gain and
minimum gain attributable to partner nonrecourse debt determined
pursuant to Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5)), in proportion to, and to the extent of, such
Capital Account balances; and
(ii) Thereafter, to the Partners in the ratio of their
----------
Percentage Interests.
3.2 Sale of All or Substantially All Assets. Profit resulting from a sale
---------------------------------------
or other disposition of all or substantially all of the Partnership's assets, or
upon dissolution of the Partnership, shall be allocated to those Partners having
deficit balances in their Capital Accounts (computed after taking into account
any other Profit or Loss for the fiscal year in which such event occurred and
all distributions pursuant to Sections 4.1 and 4.2 hereof with respect to such
--------------------
fiscal year and after adding back each Partner's share of partnership minimum
gain and minimum gain attributable to partner nonrecourse debt, determined
pursuant to Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)) in
proportion to, and to the extent of, such deficits. Any remaining such Profit
and all Loss resulting from a sale or other disposition of all or substantially
all of the Partnership's assets, or upon dissolution of the Partnership, shall
be allocated to the Partners so as to produce Capital Accounts for the Partners
such that the amounts distributed pursuant to Section 12.2(a)(iii) hereof will
--------------------
be in the amounts, sequence and priority set forth in Section 4.2 hereof.
-----------
3.3 Partial Sales. Profit of the Partnership resulting from sale or other
-------------
disposition (other than in the ordinary course of business) of less than all or
substantially all of the
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<PAGE>
Partnership's assets shall be allocated to those Partners having deficit
balances in their Capital Accounts (computed after taking into account any other
Profit or Loss for the fiscal year in which such event occurred and all
distributions pursuant to Sections 4.1 and 4.2 hereof with respect to such
--------------------
fiscal year, including any distribution of any proceeds from the transaction or
event giving rise to such Profit and after adding back each Partner's share of
partnership minimum gain and minimum gain attributable to partner nonrecourse
debt determined pursuant to Treasury Regulations Section 1.704-2(g)(1) and
1.704-2(i)(5)) in proportion to, and to the extent of, such deficits. Any
remaining such Profit and all Loss resulting from sale or other disposition
(other than in the ordinary course of business) of less than all or
substantially all of the Partnership's assets shall be allocated to the Partners
so as to produce Capital Accounts for the Partners (computed in the manner set
forth in the preceding sentence) such that if an amount of cash equal to such
positive Capital Account balances were distributed in accordance with such
positive Capital Account balances, such distribution would be in the amounts,
sequence and priority set forth in Section 4.2 hereof.
-----------
3.4 Special Allocation Rules. Notwithstanding any other provision of this
------------------------
Agreement:
(a) Nonrecourse Deductions. Nonrecourse deductions (as defined in
----------------------
Treasury Regulations Section 1.704-2(b)(1)) for each fiscal year shall be
allocated to the Partners in the ratio of their Percentage Interests.
(b) Minimum Gain Chargeback. If there is a net decrease in
-----------------------
partnership minimum gain (as defined in Treasury Regulations Section 1.704-2(d))
or in partner nonrecourse debt minimum gain (as defined in Treasury Regulations
Section 1.704-2(i)(3)) during a Partnership fiscal year, the Partners shall be
allocated items of Partnership income and gain in accordance with Treasury
Regulations Sections 1.704-2(f) and 1.704-2(i)(4).
(c) Limitation on Loss Allocations and Qualified Income Offset. A
----------------------------------------------------------
Partner shall not be allocated items of loss or deduction to the extent such an
allocation would cause or increase a deficit Capital Account balance for such
Partner as of the close of any taxable year in excess of the amount of such
balance that the Partner is obligated or deemed obligated to restore pursuant to
Treasury Regulations Section 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) or 1.704-
2(i)(5). In determining the Capital Account balance of a Partner for this
purpose, adjustments, allocations and distributions described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) shall be taken into
account. Any items of loss and deduction not allocated to a Partner under this
Section 3.4(c) shall be allocated first to the other Partner to the extent such
- -------------- -----
other Partner has a positive Capital Account balance (as adjusted in accordance
with the preceding sentence and after adding back such other Partner's share of
partnership minimum gain and partner nonrecourse debt minimum gain determined
pursuant to Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)), and
thereafter as provided in applicable Treasury Regulations. If a Partner
- ----------
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulations Section l.704-l(b)(2)(ii)(d)(4), (5) or (6) which results
in a negative Capital Account balance in excess of any deficit balance which the
Partner is obligated or deemed obligated to restore pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) or 1.704-2(i)(5), items
of Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income, and gain) shall be allocated to such
Partner in an
-14-
<PAGE>
amount and manner sufficient to eliminate such excess deficit balance as quickly
as possible. This Section 3.4(c) is intended to comply with the qualified income
--------------
offset requirement of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied consistently therewith.
(d) Partner Nonrecourse Deductions. Any partner nonrecourse
------------------------------
deductions (as defined in Treasury Regulations Section 1.704-2(i)(2)) for each
fiscal year shall be specially allocated to the Partner who bears the economic
risk of loss with respect to the partner nonrecourse debt (as defined in
Treasury Regulations Section 1.704-2(b)(4)) to which partner nonrecourse
deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i).
(e) Curative Allocations.
--------------------
(i) Loss Limit Curative Allocations. The special allocations
-------------------------------
set forth in Section 3.4(c) hereof (the "Loss Limit Allocations")
-------------- ----------------------
are intended to comply with certain requirements of Treasury
Regulations Section 1.704-1(b). Notwithstanding any other
provisions of this Agreement (other than the provisions of this
Section 3.4 and Section 3.5 hereof), the Loss Limit Allocations
----------- -----------
shall be taken into account in allocating other Profits, Losses
and items of income, gain, loss and deduction between the
Partners so that, to the extent possible, the net amount of such
allocations of other Profits, Losses and other items and the Loss
Limit Allocations to each Partner shall be equal to the net
amount that would have been allocated to each Partner if the Loss
Limit Allocations had not occurred.
(ii) Audit Adjustment Curative Allocations. In the event there
-------------------------------------
is a final administrative or judicial determination for Federal
income tax purposes for any taxable year that changes the Capital
Account balances of the Partners from the Capital Account
balances for such taxable year as previously computed by the
Partnership (an "Adjustment"), then, notwithstanding anything
----------
contained in Section 3.1 hereof, items of Profit, Loss, income,
-----------
gain, loss and deduction for that taxable year and, if necessary,
subsequent taxable years, shall be allocated between the Partners
so that, to the extent possible, the Capital Account balances of
the Partners (taking into account such Adjustment) for that
taxable year, and all subsequent taxable years, are the same as
they would have been had such Adjustment not occurred. The
reallocation described in the preceding sentence shall not be
made to the extent that the Adjustment constitutes the correction
of an arithmetic or computational error.
3.5 Allocations with Respect to Contributed Property; Asset Value
-------------------------------------------------------------
Adjustments.
- -----------
(a) Contributed Property. In accordance with Code Section 704(c) and
--------------------
the Treasury Regulations thereunder, income, gain, loss and deduction (and any
item thereof) with respect to any property contributed to the Partnership shall,
solely for tax purposes, be allocated
-15-
<PAGE>
between the Partners so as to take into account any variation at the time of
contribution between the adjusted basis of such property to the Partnership for
Federal income tax purposes and the Asset Value of the contributed property
("Section 704(c) Allocations"). BRC shall elect the method under which Section
--------------------------
704(c) Allocations will be made for each such item of contributed property.
(b) Asset Value Adjustments. In the event the Asset Value of any
-----------------------
Partnership property is adjusted so as to differ from its adjusted basis for
Federal income tax purposes, subsequent allocations of income, gain, loss and
deduction (and any item thereof) with respect to such property shall, in
accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)(g) and 1.704-
1(b)(4), take account of any variation between the adjusted basis of such
property for Federal income tax purposes and the Asset Value of such property in
the same manner as under Code Section 704(c) and the Treasury Regulations
thereunder ("Reverse Section 704(c) Allocations"). BRC shall elect the method
----------------------------------
under which Reverse Section 704(c) Allocations will be made for each item of
property whose Asset Value is so adjusted.
(c) Tax Allocations Only. Allocations pursuant to this Section 3.5
-------------------- -----------
are solely for tax purposes and shall not affect, or in any way be taken into
account in computing, either Partner's Capital Account or share of Profit, Loss
or other items, or distributions pursuant to any provision of this Agreement.
3.6 Depreciation Recapture. Pursuant to Treasury Regulations Section
----------------------
1.1245-1(e), to the extent the Partnership recognizes gain as a result of a
sale, exchange or other disposition of Partnership assets which is taxable as
ordinary income under Code Section 1245 or Code Section 1250, such ordinary
income shall be allocated between the Partners in the same proportion as the
depreciation giving rise to such ordinary income was allocable among the
Partners. In no event, however, shall either Partner be allocated ordinary
income hereunder in excess of the amount of gain allocated to the Partner under
this Agreement. Any ordinary income that is not allocated to a Partner due to
the gain limitation described in the immediately preceding sentence shall be
allocated to the other Partner if such other Partner's share of total gain on
the sale, exchange or other disposition of the property exceeds its share of
depreciation from such Partnership assets.
3.7 Allocations of Nonrecourse Liabilities. The Partners' shares of
--------------------------------------
Partnership nonrecourse liabilities shall be determined in accordance with rules
of Treasury Regulations Section 1.752-3. "Excess nonrecourse liabilities" (as
that term is defined in Treasury Regulations Section 1.752-3(a)(3)) shall be
allocated among the Partners in accordance with their Percentage Interests.
3.8 Special Allocation in Year of Sale or Dissolution. Items of income,
-------------------------------------------------
gain, loss and deduction arising in the fiscal year in which there is a sale or
other disposition of all or substantially all of the Partnership's assets or in
which the Partnership is dissolved shall be allocated to the Partners to the
extent and in the manner necessary to produce Capital Accounts for the Partners
such that the amounts distributed pursuant to Section 12.2(a)(iii) hereof will
--------------------
be in the amounts, sequence and priority set forth in Section 4.2 hereof.
-----------
-16-
<PAGE>
3.9 Section 754 Election. Neither the Partners nor the Partnership shall
--------------------
make or attempt to make an election under Code Section 754 to adjust the basis
of Partnership property as provided in Code Sections 734(b) and 743(b).
SECTION 4. DISTRIBUTIONS
4.1 Distribution of Net Cash Flow. Except as otherwise provided in
-----------------------------
Section 12.2 hereof, Net Cash Flow (after necessary or appropriate reserves have
- ------------
been established from time to time or at any time), if any, shall be
distributed, at quarterly intervals, to the Partners who are Partners on the
applicable Partnership Record Date in the ratio of their Percentage Interests as
measured on such Partnership Record Date.
4.2 Distribution of Net Capital Proceeds. Except as otherwise provided in
------------------------------------
Section 12.2 hereof, Net Capital Proceeds (after necessary or appropriate
- ------------
reserves have been established from time to time or at any time), if any, shall
be distributed, at quarterly intervals or such other times as shall be mutually
agreed by the Partners, to the Partners who are Partners on the applicable
Partnership Record Date in the following order and priority:
(a) First, to BRC an amount equal to $28,200 for each Unoccupied Lot
-----
that has not become an Occupied Lot at any time on or before such Partnership
Record Date; and
(b) Thereafter, to the Partners in the ratio of their Percentage
----------
Interests.
SECTION 5. MANAGEMENT
5.1 Authority of BRC. Subject to the provisions of Section 5.2 hereof, to
---------------- -----------
facilitate the operations of the Partnership, the Partners hereby delegate to
and vest in BRC full authority and responsibility to conduct the day-to-day
management and control of the business and affairs of the Partnership including,
without limitation, the authority to make all decisions respecting the
Partnership (other than Joint Decisions, as hereinafter defined, which shall be
subject to the approval of both Partners pursuant to Section 5.2 hereof). BRC's
-----------
powers and authority pursuant to this Section 5.1 shall include, without
-----------
limitation, the power and authority to:
(a) arrange initial acquisition financing for the Property (provided
that the terms of such initial acquisition financing are consistent with the
approved terms for such initial acquisition financing as set forth in the
Property Management and Operation Plan), arrange for the refinancing(s) of such
initial acquisition financing and grant, on behalf of the Partnership, all
mortgages, encumbrances and/or security interests required by the lender or
lenders (which may be Affiliates of BRC) in connection with any of the
foregoing;
(b) incur indebtedness on behalf of the Partnership in the ordinary
course of the Partnership's business; and
(c) do all other things authorized by this Agreement and, subject to
Section 5.2 hereof, do all other things and make all other decisions that are
- -----------
necessary, advisable or convenient in connection with the management, operation
or administration of the Property or in
-17-
<PAGE>
connection with the Partnership's business or affairs.
Except as otherwise provided in Section 5.2 hereof, whenever in this
-----------
Agreement it is provided that any act be performed by the Partnership or the
Partners on behalf of the Partnership, or any words of like import are used, it
is intended that all such acts shall be performed by BRC. Subject to Section
-------
5.8 hereof, any instrument or document executed by BRC shall be binding upon the
- ---
Partnership.
5.2 Joint Decisions.
---------------
The unanimous agreement of the Partners shall be required for any of
the following Partnership actions (the "Joint Decisions"):
---------------
(a) the performance of any act in contravention of this Agreement;
(b) the sale, exchange or other transfer of all or a substantial
portion of the Property;
(c) the mortgaging or encumbering of all or a substantial portion of
the Property or the assigning or granting of a security interest in all or a
substantial portion of the personal property of the Partnership, revenues or
income from the Property or any other assets of the Partnership, or the
incurring of indebtedness by the Partnership; provided, that BRC shall have the
power, without the unanimous approval of the Partners, to (i) arrange initial
acquisition financing for the Property (provided that the terms of such initial
acquisition financing are consistent with the approved terms for such initial
acquisition financing as set forth in the Property Management and Operation
Plan), arrange for the refinancing(s) of such initial acquisition financing, and
grant, on behalf of the Partnership, all mortgages, encumbrances and/or security
interests required by the lender or lenders (which may be Affiliates of BRC) in
connection therewith, and (ii) incur indebtedness on behalf of the Partnership
in the ordinary course of the Partnership's business;
(d) the changing of the designation of the holder of legal record
title to the Property or any other property owned by the Partnership;
(e) the dissolution of the Partnership;
(f) the ceasing or substantial altering of the use of the Property as
a mobile home park or manufactured home community;
(g) the performance of any act which would make it impossible to
carry on the ordinary business of the Partnership, except as otherwise provided
in this Agreement;
(h) modifying the amount of the Capital Contribution to be made in
exchange for issuance of a Partnership Unit as set forth or provided for in
Section 2.3 or 2.6 hereof;
- ------------------
(i) permitting either Partner to withdraw its Capital Contribution;
-18-
<PAGE>
(j) any alteration to or deviation from the Property Management and
Operation Plan attached hereto as Exhibit F (the "Property Management and
-----------------------
Operation Plan");
- --------------
(k) approve the annual operating budget for the Property to be
prepared and submitted by the Property Manager (as hereinafter defined);
(l) approve any amendment of the Management Agreement or the
appointment of any replacement manager for the Property (unless such replacement
manager shall be another Affiliate of BRC); and
(m) any other Partnership action for which the consent of both
Partners is required pursuant to the provisions of this Agreement.
5.3 Right to Rely on BRC. Any Person dealing with the Partnership may
--------------------
rely upon a certificate signed by BRC as to:
(a) the identity of either Partner;
(b) the existence or nonexistence of any fact or facts which
constitute a condition precedent to acts by a Partner or which are in any other
manner germane to the affairs of the Partnership; and
(c) the Persons who are authorized to execute and deliver any
instrument or document on behalf of the Partnership.
5.4 Tax Matters Partner. BRC shall be designated the "Tax Matters
-------------------
Partner" as provided in Code Section 6231(a)(7) (and in similar provisions of
state and local law).
(a) The Tax Matters Partner shall be responsible for the filing of
the Partnership information returns required under Code Section 6031.
(b) A Partner shall provide written notice to the Tax Matters Partner
of its intent to file an original or an amended income tax return on which such
Partner will take a position with respect to a partnership item that is
inconsistent with the position taken by the Tax Matters Partner on the
Partnership return. Such notice must be given at least thirty (30) days prior
to the filing of such return. At such time, such Partner shall provide the Tax
Matters Partner with a statement detailing the inconsistent item or items
contained in such return. Within ten (10) days after receipt of such statement,
the Tax Matters Partner shall provide a copy of such statement to the other
Partner.
(c) The Tax Matters Partner shall include in each Partnership return
sufficient information to entitle each eligible Partner to notice from the
Internal Revenue Service (the "IRS") pursuant to Code Section 6223(a).
---
(d) No Partner other than the Tax Matters Partner shall participate
in any audit or judicial proceeding governed by Code Sections 6221 or 6233, and
each Partner other than the
-19-
<PAGE>
Tax Matters Partner hereby waives all rights to file a petition for judicial
review or to participate in a judicial proceeding under Code Sections 6226 or
6228. Each Partner other than the Tax Matters Partner hereby waives all rights
to file an administrative adjustment request with respect to a partnership item
under Code Section 6227.
(e) Each Partner other than the Tax Matters Partner hereby waives all
rights to enter into settlement negotiations with the IRS or any other
governmental authority with respect to items reflected on the Partnership's tax
returns.
(f) Each Partner shall report to the Tax Matters Partner the
conversion of a partnership item to a nonpartnership item under Code Section
6231(b) or any other provision of the Code within ten (10) days after learning
of the conversion.
(g) The Tax Matters Partner shall be authorized to cause the
Partnership to incur expenses in the performance of its duties pursuant to this
Agreement.
(h) The provisions of this Section 5.4 shall govern the conduct of
-----------
each Person who is currently a Partner and each Person who was a Partner during
the applicable Partnership taxable year. A Partner shall not be relieved of any
duties or responsibilities imposed under this Section 5.4 by the termination or
-----------
transfer of its Partnership Interest.
(i) All terms used in this Section 5.4 that are defined in Code
-----------
Section 6231(a) shall have the meanings set forth therein.
5.5 Duties and Obligations of the Partners.
--------------------------------------
(a) Each Partner shall devote to the Partnership such time as may be
necessary for the proper performance of all duties hereunder, but neither
Partner shall be required to devote full time to the performance of such duties.
(b) Subject to and in recognition of the various rights, obligations
and scope of operating and execution authority granted to the Partners
hereunder, the Partners shall exercise due diligence to cause the Partnership to
comply with all legal requirements applicable to the Partnership and with all
agreements to which the Partnership is a party, or by which the Partnership is
bound. The Partners shall devote such of their time to the affairs of the
Partnership's business as is reasonably necessary.
5.6 Indemnification by and of Partners. Each Partner shall be solely
----------------------------------
responsible for and shall indemnify and hold harmless the Partnership and the
other Partner from and against the indemnitor Partner's own bad faith, grossly
negligent or willfully wrongful acts or omissions and for its acts and omissions
which are beyond the scope of its authority hereunder or which are in breach of
its obligations hereunder. Neither Partner shall be liable to the Partnership or
to the other Partner for any loss or damage arising out of any activities in
such Partner's capacity as Partner or Tax Matters Partner, as the case may be,
within the scope of such Partner's authority, not in breach of such Partner's
obligations hereunder and pursuant to the Partnership's business, unless caused
by such Partner's bad faith acts, gross negligence or willful misconduct. The
-20-
<PAGE>
Partnership will be responsible for any attorneys' fees or penalties arising out
of any decisions made by BRC as Tax Matters Partner, and neither Partner shall
be required to make any additional Capital Contribution on account of any such
fees or penalties. Except to the extent that a Partner incurs loss or damage
caused by its bad faith acts, gross negligence or willful misconduct, or for its
acts or omissions which are beyond the scope of its authority hereunder, the
Partnership shall, out of Partnership assets (but not the assets of any
Partners), indemnify and hold the Partners harmless from and against any
personal loss or damage incurred by them arising from any act performed by them
for and on behalf of the Partnership or arising out of any business of the
Partnership. Nothing in this Section 5.6 shall supercede or invalidate any
-----------
separate indemnification given to MPI by BRC or its Affiliates on or before the
date of this Agreement.
5.7 Compensation and Loans.
----------------------
(a) Compensation and Reimbursement. BRC or its Affiliate shall be
------------------------------
entitled to the following: (i) for any period during which neither BRC nor any
of its Affiliates is the Property Manager pursuant to the Management Agreement
or any other separate management agreement, an annual asset management fee equal
to one percent (1%) of the annual gross revenues of the Partnership shall be
payable, in monthly installments, by the Partnership to BRC or its Affiliate,
(ii) for any period during which BRC or any of its Affiliates is the Property
Manager pursuant to the Management Agreement or another separate management
agreement, BRC or such Affiliate (as the case may be) shall be entitled to
compensation and fees as set forth in the Management Agreement or such other
separate management agreement, (iii) a placement fee of One Hundred Twenty
Thousand Dollars ($120,000) (being one percent (1%) of the gross purchase price
paid by MPI for the Property) (iv) reimbursement for Partnership Legal Costs
paid by BRC or its Affiliates (which are estimated at Three Hundred Fifty-one
Thousand Eight Hundred Thirty-five 96/100 Dollars ($351,835.96) as of the date
hereof, but are subject to increase), and (iv) the issuance of additional
Partnership Units in accordance with Section 2.6 hereof. MPI shall be entitled
-----------
to reimbursements for any direct expenses incurred in connection with the
Partnership's business, and for any legal or consulting fees in connection with
or relating to the acquisition of the Property by MPI, not to exceed Ten
Thousand Dollars ($10,000) in the aggregate.
(b) Partner Loans.
-------------
(i) The interim loan made by BRC's Affiliate to finance the
acquisition of the Property as aforesaid shall (x) not be treated
as a Capital Contribution but shall be a debt due from the
Partnership to such lender, and (y) be repayable out of the sum
of the proceeds of the initial acquisition financing to be
arranged by BRC (on behalf of the Partnership), the initial
Capital Contributions made to the Partnership by BRC and the
Capital Contributions made to the Partnership by MPI.
(ii) In the event that the Partners or either of them shall
determine that funds, in addition to Net Cash Flow, Net Capital
Proceeds and the Capital Contributions provided for in this
Agreement, are required by the Partnership for any reason, BRC,
on behalf of the Partnership, shall endeavor to obtain financing
from a third party in the amount of such required additional
funding. In the event that (A) any such financing is
-21-
<PAGE>
available from a third party, then, subject to Section 5.2
-----------
hereof, the Partnership shall borrow such funds from such third
party, or (B) no such financing is reasonably available from a
third party, BRC shall request the Partners to loan such
additional funds to the Partnership in the proportion of their
Percentage Interests, by notice in writing to the Partners
setting forth the total amount of the proposed loan, each
Partner's proportionate share thereof, the proposed rate of
interest and the proposed term for such loan. Within thirty (30)
days after such request is made, each Partner shall either (y)
loan its proportionate share of the additional funds to the
Partnership upon the terms specified in said notice, or (z)
notify BRC in writing that it elects not to loan its
proportionate share of such additional funds (the failure to
timely make such loan or give written notification of the
election not to make such loan shall conclusively constitute an
election not to make such loan). Either Partner's failure to make
any such loan pursuant to this Section 5.7(b)(ii) shall not
------------------
constitute a default under this Agreement. If the Partnership
shall not have received all of the required additional funds
pursuant to the foregoing provisions of this Section 5.7(b)(ii),
------------------
BRC shall be entitled (but not obligated) to make a loan to the
Partnership in the amount of the shortfall, which loan shall bear
interest at the rate determined in good faith by BRC taking into
consideration, without limitation, prevailing interest rates, the
interest rates BRC is required to pay in the event BRC has itself
borrowed funds to loan or advance to the Partnership and the risk
factor of any such loan (except that if MPI has loaned its
proportionate share of any such additional funds pursuant to the
foregoing provisions of this Section 5.7(b)(ii), but BRC has not
------------------
loaned its proportionate share of such funds, then such rate of
interest shall instead be equal to the interest rate payable with
respect to the funds loaned by MPI, if less). Any loan or
advance made to the Partnership pursuant to this Section
-------
5.7(b)(ii) shall not be treated as a Capital Contribution but
----------
shall be a debt due from the Partnership to the Partner making
such loan or advance.
5.8 Execution of Documents. The signatures of both BRC and MPI shall be
----------------------
necessary to convey title to any real property owned by the Partnership. The
signature of BRC alone shall be necessary and sufficient to execute any
promissory notes, trust deeds, mortgages or other instruments of hypothecation
that are consistent with the provisions of Section 5.1 and Section 5.2 hereof.
----------- -----------
Both Partners agree that a copy of this Agreement may be delivered to the
appropriate parties in order to confirm the foregoing, and further agree that
the signature of BRC alone shall be sufficient to execute any "statement of
partnership" or other documents necessary to effectuate this or any other
provision of this Agreement. The Partners do hereby appoint BRC as their
attorney-in-fact for the execution of any or all of the documents described
herein.
5.9 Property.
--------
(a) MPI, as record owner of legal title to the Property, hereby
declares and warrants that the Property shall be held by MPI solely as nominee
for the Partnership for the use
-22-
<PAGE>
and benefit of the Partnership in accordance with the provisions of this
Agreement and the Nominee Agreement entered into concurrently herewith by and
between MPI and the Partnership, in the form attached hereto as Exhibit G. MPI
agrees to take any and all action with respect to the Property that has been
approved by BRC (or if such action requires a Joint Decision pursuant to Section
-------
5.2 hereof, that has been approved by both Partners), and to refrain from taking
- ---
any action with respect to the Property that has not been approved by BRC. The
Property shall be recorded as the property of the Partnership on the
Partnership's books and records, notwithstanding that legal title thereto is
held in the name of MPI.
(b) The Partnership shall hire one (1) or more qualified Persons
(which may be Affiliates of BRC) (the "Property Manager") to perform the day-to-
----------------
day management and operation functions at or relating to the Property, which
functions shall be performed in accordance with the Property Management and
Operation Plan, applicable industry standards, prudent property management
practices and the terms and conditions of the Management Agreement.
SECTION 6. BOOKS AND RECORDS
6.1 Books and Records. BRC shall keep adequate books and records of the
-----------------
Partnership at BRC's corporate office, setting forth a true and accurate account
of all business transactions arising out of and in connection with the conduct
of the Partnership's business and affairs, including, without limitation, all
receipts and expenditures, assets and liabilities, profits and losses, and all
other records necessary for recording the Partnership's business and affairs.
Each Partner and/or its designated representative shall have the right, at any
reasonable time, to have access to and inspect and copy the contents of such
books or records.
6.2 Fiscal Year. The fiscal year of the Partnership shall be the calendar
-----------
year.
6.3 Reports. BRC shall:
--- -------
(a) prepare and make available to MPI a statement of Partnership
operations for each calendar quarter;
(b) cause to be prepared, and make available to MPI, within one
hundred twenty (120) days after the end of each fiscal year, a profit and loss
statement, a balance sheet and a statement of changes in financial provision;
and
(c) provide quarterly reports to MPI of the activities of BRC
pursuant to Section 5.1 hereof, since the date of the previous report.
-----------
6.4 Accounting Decisions. All decisions as to accounting and tax
--------------------
treatment of any items relating to the Partnership's business shall be made by
BRC in consultation with the Partnership's accountants.
-23-
<PAGE>
SECTION 7. AMENDMENTS; MEETINGS
7.1 Amendments.
----------
(a) Except as provided in Section 7.1(b) hereof, this Agreement
--------------
shall be amended only by written document signed by both Partners.
(b) Notwithstanding Section 7.1(a) hereof, BRC, without obtaining the
--------------
consent of MPI, may amend this Agreement, in its sole discretion, to reflect:
(i) the admission, substitution, termination or withdrawal of
any Person pursuant to Section 8.1 hereof, so long as any Person
-----------
admitted or substituted as a Partner pursuant to Section 8.1
-----------
hereof has executed a written document in a form reasonably
satisfactory to BRC agreeing to be bound by this Agreement;
(ii) a change that is required by this Agreement; or
(iii) a change to satisfy any requirements or conditions
contained in any order, directive, opinion, ruling or regulation
of a Federal or state agency or contained in Federal or state
law.
(c) BRC may also, without obtaining the consent of MPI, amend Exhibit
A to this Agreement to reflect any increase or decrease in the Capital
Contributions, Capital Account Balances and/or number of Partnership Units owned
by either Partner pursuant to the provisions of this Agreement.
7.2 Meetings.
---------
(a) Meetings of the Partners may be called by either Partner. The
call shall state the nature of the business to be transacted at such meeting.
Notice of any such meeting shall be given to the other Partner not less than
seven (7) days nor more than thirty (30) days prior to the date of such meeting.
Whenever the vote or consent of both Partners is permitted or required under
this Agreement, such vote or consent may be given at a meeting of Partners in
person or by telephone or may be given by means of a written consent signed by
Partners holding the requisite percentage of Partnership Interests. Except as
otherwise expressly provided in this Agreement, the vote of Partners holding
more than fifty (50%) of the Partnership Interests shall control.
(b) Each Partner may authorize any Person or Persons to act for him,
her or it by proxy on all matters in which such Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Each such proxy must be signed by the Partner or his, her or its
attorney-in-fact. No such proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy. Each
such proxy shall be revocable at the pleasure of the Partner executing it unless
otherwise provided in
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the proxy.
(c) Each meeting of Partners shall be conducted by BRC or such other
Person as BRC may appoint pursuant to such rules for the conduct of the meeting
as BRC deems appropriate. Unless otherwise agreed upon, all such meetings shall
be held at the principal place of business of the Partnership.
SECTION 8. TRANSFER OF PARTNERSHIP UNITS
8.1 Assignments by BRC. Notwithstanding anything contained herein to the
------------------
contrary, BRC shall be entitled to transfer, sell or otherwise dispose of its
Partnership Units, or any portion thereof, only to (a) an Affiliate of BRC, (b)
a Person that acquires BRC's Partnership Units pursuant to a sale by BRC and/or
its Affiliates of a portfolio of assets, (c) a successor entity pursuant to a
merger or consolidation of BRC or (d) MPI or MPI's Affiliate. Upon any such
permitted transfer, sale or other disposal, the transferee, purchaser or other
assignee shall become a substitute Partner of the Partnership with all of the
rights, powers and obligations of BRC hereunder.
8.2 Assignment by MPI. MPI shall not be entitled to transfer, sell or
-----------------
otherwise dispose of its Partnership Units, or any portion thereof, except to
BRC or BRC's Affiliates.
8.3 Hypothecation. Any hypothecation, mortgage, pledge or
-------------
collateralization of Partnership Units is expressly prohibited and any such
purported hypothecation, mortgage, pledge or collateralization in any manner by
either Partner shall be null and void and of no legal effect; provided that,
--------
notwithstanding the foregoing, BRC shall be entitled to hypothecate, mortgage,
pledge or collateralize all or any portion of its Partnership Units at any time
after the tenth (10th) anniversary of the Partnership Execution Date.
8.4 Prohibited Assignments. Any transfer, sale or other disposal or
----------------------
purported transfer, sale or other disposal, whether by operation of law or
otherwise, of Partnership Units shall be null and void and of no legal effect
unless it is permitted by this Section 8.
---------
8.5 Distributions and Allocations with Respect to Transferred Partnership
---------------------------------------------------------------------
Interests. If any Partnership Units are sold, assigned or transferred during any
- ---------
accounting period in compliance with the provisions of this Agreement, Profits,
Losses, each item thereof and all other items of income, gain, loss and
deduction attributable to the transferred Partnership Units for such period
shall be divided and allocated between the transferor and the transferee by
taking into account their varying interests during the period in accordance with
Code Section 706(d), using any conventions permitted by law and selected by BRC.
Solely for purposes of making such allocations and distributions, the
Partnership shall recognize such transfer not later than the end of the calendar
month during which it is given notice of such transfer and all distributions on
or before such date shall be made to the transferor, and all distributions
thereafter shall be made to the transferee; provided, however, that if the
Partnership does not receive a notice stating the date such Partnership Units
were transferred and such other information as BRC may reasonably require within
thirty (30) days after the end of the accounting period during which the
transfer occurs, then all of such items shall be allocated, and all
distributions shall be made, to the Person who, according to the books and
records of the Partnership, on the last day of the
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<PAGE>
accounting period during which the transfer occurs, was the owner of the
Partnership Units. Neither the Partnership nor BRC shall incur any liability for
making allocations and distributions in accordance with the provisions of this
Section 8.5, whether or not BRC or the Partnership has knowledge of any transfer
of ownership of any Partnership Units.
SECTION 9. SALE AND PURCHASE RIGHTS
9.1 Call Right. On the tenth (10th) anniversary of the Partnership
----------
Execution Date and on each fifth (5th) anniversary thereafter (each a
"Call Exercise Date"), MPI shall have the right to require BRC to sell to MPI
------------------
or its Affiliate (except that for this purpose the words "more than fifty
percent (50%)" shall be substituted for the words "ten percent (10%)" wherever
they appear in the definition of Affiliate in Section 1.7 hereof) (the "Call
----------- ----
Right") all (but not less than all) of BRC's Partnership Interest, on the
- -----
following terms and conditions:
(a) The Call Right may be exercised solely by written notice from MPI
to BRC given at least ninety (90) days prior to the applicable Call Exercise
Date, time being of the essence.
(b) The price for BRC's Partnership Interest shall be calculated in
accordance with Schedule 9.1(b) attached hereto.
(c) The closing on the purchase and sale of BRC's Partnership Interest
pursuant to this Section 9.1 (the "Call Closing") shall be held at the principal
----------- ------------
place of business of the Partnership at a date and time reasonably selected by
BRC, such time being not earlier than ninety (90) days after the Call Exercise
Date.
(d) At the Call Closing, MPI shall pay to BRC, in cash, the price for
BRC's Partnership Interest, and BRC shall execute, acknowledge and deliver to
MPI all documents as are necessary or appropriate to effect the transfer to MPI
of all of BRC's Partnership Interest.
9.2 Sale of MPI Stock by MPI Stockholders.
-------------------------------------
MPI agrees that:
(a) Shares of MPI Stock may not be transferred to, or owned by, any
person other than MPI, any owner of a mobile or manufactured home located on a
lot leased by such owner in the Property, or the estate of any such owner so
long as such estate owns a mobile or manufactured home and leases a lot located
in the Property (each such person an "Eligible Homeowner").
------------------
(b) In the event that an MPI Stockholder ceases to be an Eligible
Homeowner or such MPI Stockholder desires to sell all or any portion of such MPI
Stockholder's MPI's Stock for any reason, then such MPI Stockholder shall give
prompt written notice of such fact to MPI and BRC, which notice shall specify
(w) the number of shares of MPI Stock owned by such MPI Stockholder, (x) the
number of shares of MPI Stock proposed to be sold if such MPI Stockholder
continues to be an Eligible Homeowner (y) the identity of any proposed purchaser
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<PAGE>
of such MPI Stockholder's MPI's Stock (who must also be an Eligible Homeowner),
and (z) the date upon which such MPI Stockholder reasonably expects to
consummate the sale of such MPI Stock. Such MPI Stockholder shall give an
additional written notice to MPI and BRC containing the aforesaid information
promptly upon ceasing to be an Eligible Homeowner.
(c) Each holder of shares of MPI Stock shall have the right to sell
such shares to any other Eligible Homeowner. Each holder of shares of MPI Stock
shall also have the right at any time to require MPI to purchase (the "Put
---
Right") such shares (the "Put Stock") at the cash price calculated in accordance
- ----- ---------
with Schedule 9.2 attached hereto (the "Put Price"), which Put Right may be
------------ ---------
exercised by such MPI Stockholder only by giving at least thirty (30) days'
prior notice in writing to MPI and BRC (the "Put Notice"). MPI shall within
----------
seven (7) days after its receipt of each Put Notice, elect either (x) to fund
the Put Price or (y) that BRC shall fund the Put Price on the terms of this
Section 9.2(c). MPI shall make such election by giving written notice of such
- --------------
election to BRC within seven (7) days after MPI's receipt of the applicable Put
Notice (and MPI's failure to make a timely election as aforesaid shall
conclusively be deemed its election to pursue clause (y)). Upon receipt by BRC
of (i) MPI's written notice selecting option (y) above (or MPI shall be deemed
to have selected clause (y) as aforesaid) and (ii) evidence acceptable to BRC in
its sole discretion that the Put Stock has been validly transferred to MPI and
any reasonable indemnification required by Section 9.2(f) hereof has been given
---------------
by the MPI Stockholder, (A) BRC shall pay to MPI, or, at BRC's election, BRC
shall pay directly to the MPI Stockholder on MPI's behalf, the Put Price, in
cash and (B) in consideration of payment by BRC of the Put Price as aforesaid,
immediately upon such payment by BRC, and without further action by the
Partnership, the Partners or the shareholders or directors of MPI (except that
BRC may modify Exhibit A to reflect such adjustment): (x) the number of
Partnership Units held by BRC shall be increased by the number of shares of Put
Stock transferred to MPI by the MPI Stockholder pursuant to the Put Right,
divided by the Stock/Unit Ratio; and (xi) the number of Partnership Units held
- -------
by MPI shall be decreased by the same number.
(d) In the event that (A) a holder of shares of MPI Stock ceases to be
an Eligible Homeowner for any reason or (B) a person other than an Eligible
Homeowner acquires any right, or claim of right, to shares of MPI Stock (each
such holder or other person a "Required Seller"), MPI shall have the right (the
---------------
"Call Right"), at any time thereafter, to purchase all of the shares of MPI
----------
Stock owned by such Required Seller in exchange for the Put Price. MPI shall
exercise such right by written notice to the record owner of such MPI Stock at
the address of such record owner listed in the books and records of MPI, such
notice to specify the date by which the shares of MPI Stock owned or claimed by
such Required Seller are required to be transferred to MPI. If MPI exercises
its rights under this Section 9.2(d), MPI shall elect either (x) to fund the Put
--------------
Price or (y) that BRC shall fund the Put Price on the terms of this Section
-------
9.2(d). Upon receipt by BRC of (i) written notice from MPI selecting option (y)
- ------
above and (ii) evidence acceptable to BRC in its sole discretion that the
applicable MPI Stock has been validly transferred to MPI and any reasonable
indemnification required by Section 9.2(f) hereof has been given by the Required
---------------
Seller, (A) BRC shall pay to MPI, or, at BRC's election, BRC shall pay directly
to the Required Seller on MPI's behalf, the Put Price in cash, and (B) in
consideration of payment by BRC of the Put Price as aforesaid, immediately upon
such payment by BRC, and without further action by the Partnership, the Partners
or the shareholders or directors of MPI (except that BRC may modify Exhibit A to
reflect such adjustment): (i) the number of Partnership Units held by BRC
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shall be increased by the number of shares of MPI Stock transferred to MPI by
the Required Seller pursuant to this Section 9.2(d), divided by the Stock/Unit
-------------- -------
Ratio; and (ii) the number of Partnership Units held by MPI shall be decreased
by the same number. MPI shall at the request of BRC exercise the Call Right
with respect to the shares of MPI Stock owned by a Required Seller.
(e) If MPI exercises its Call Right as provided in Section 9.2(d)
--------------
hereof, but the Required Seller fails to transfer to MPI such Required Seller's
MPI Stock, or to provide the indemnification required by Section 9.2(f) hereof
---------------
below, by the date specified in MPI's notice given pursuant to Section 9.2(d)
--------------
hereof, then, effective as of such date (the "Effective Sale Date"), such
-------------------
Required Seller shall be deemed to have sold his or her MPI Stock to MPI as of
the Effective Sale Date. MPI shall elect either (x) to escrow the Put Price for
such MPI Stock or (y) that BRC shall fund the Put Price to be escrowed by MPI on
the terms of this Section 9.2(e). Upon receipt by BRC of written notice from
--------------
MPI selecting option (y) above, (A) BRC shall pay to MPI the Put Price in cash
to be placed in escrow by MPI, and (B) in consideration of payment by BRC of the
Put Price as aforesaid, immediately upon such payment by BRC, and without
further action by the Partnership, the Partners or the shareholders or directors
of MPI (except that BRC may modify Exhibit A to reflect such adjustment): (i)
the number of Partnership Units held by BRC shall be increased by the number of
shares of MPI Stock owned by the Required Seller, divided by the Stock/Unit
-------
Ratio; and (ii) the number of Partnership Units held by MPI shall be decreased
by the same number. Effective from the date specified in MPI's notice to the
Required Seller, such Required Seller's sole right shall be to receive the Put
Price for such MPI Stock, as calculated as of the Effective Sale Date, upon
delivery to MPI of the certificates for such shares and the required
indemnification; and the Required Seller shall not be entitled to receive any
dividends or other distributions from MPI on account of such shares of MPI Stock
and such shares shall have no voting or other rights.
(f) MPI may require reasonable indemnification from the holder of
shares of MPI Stock as a condition to the obligation to pay the Put Price to
such holder in connection with the exercise of either a Put Right or Call Right.
(g) MPI agrees that it shall pay the Put Price of any Put Stock or MPI
Stock pursuant to Section 9.2(c), (d) or (e) hereof solely out of its own funds
--------------------------
or funds provided by BRC as aforesaid, and that it shall not be entitled,
directly or indirectly, to borrow any moneys on account of the Put Price.
(h) At all times throughout the term of this Partnership, the MPI
Documents shall permit the rights and obligations set forth in this Section 9.2.
-----------
9.3 Remedies. The parties agree that the provisions of Sections 9.1 and
-------- ----------------
9.2 hereof comprise an essential component of the joint venture between MPI and
- ---
BRC, that such provisions are fair and reasonable in scope and content, that an
award of money damages may be inadequate for any breach of Sections 9.1 or 9.2
-------------------
hereof by MPI or BRC and that any such breach may cause the non-breaching party
irreparable harm. Accordingly, in addition to any other remedies that may be
available at law or in equity, the non-breaching party shall be entitled,
without the requirement of posting a bond or other security, to equitable
relief, including specific
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<PAGE>
performance, and the breaching party agrees not to oppose the granting of such
relief on the basis that the non-breaching party has an adequate remedy at law.
SECTION 10. DISPUTE RESOLUTION
10.1 Mediation; Arbitration.
----------------------
If a Deadlock shall occur at any time prior to the tenth (10th)
anniversary of the Partnership Execution Date, and such Deadlock shall not be
resolved to both Partners' satisfaction by the tenth (10th) anniversary of the
Partnership Execution Date, then the provisions of this Section 10.1 shall
------------
apply:
(a) Mediation. The Partners shall first endeavor to settle such
---------
Deadlock by mediation under the CPR Model Mediation Procedure for Business
Disputes.
(b) Referral to Arbitration. In the event the Partners are unable to
-----------------------
resolve such Deadlock through mediation as aforesaid within thirty (30) days
after the initiation of such mediation procedure, either Partner may refer such
Deadlock to arbitration pursuant to the provisions of this Section 10.1(b) by
---------------
sending written notice to that effect to the other Partner. Any such
arbitration shall be conducted on the following terms and conditions:
(i) Any such arbitration shall be conducted in accordance with
the rules of the American Arbitration Association (the "AAA") by
---
a single arbitrator, jointly selected by the Partners, or, absent
agreement as to the selection of such arbitrator within thirty
(30) days after the written notice provided for in Section
-------
10.1(b) hereof, by the AAA. Such single arbitrator shall be an
-------
independent and impartial person with not less than ten (10)
years experience, as an owner or owner's representative, in the
mobile home park or manufactured home community industry in the
United States;
(ii) The arbitration shall be held in the county and state in
which the Property is located (or at such other location as shall
be jointly approved by the Partners);
(iii) The Partners shall be entitled to make written submissions
and to present relevant written evidence to the arbitrator.
Promptly following his or her appointment, the arbitrator shall
notify each of the Partners of the latest date (being not less
than fifteen (15) days after the date of such notification unless
extended by the arbitrator for good cause shown, but in no case
shall said period be extended by more than an additional thirty
(30) days) that the arbitrator will accept submissions or written
evidence. Submissions and/or evidence shall not be considered by
the arbitrator if received after the specified deadline. Unless
otherwise agreed by both Partners, there shall be no formal
hearing or oral submissions;
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<PAGE>
(iv) The arbitrator shall issue his or her decision in writing
to both Partners as soon as reasonably possible, but in all cases
within fifteen (15) days after the latest date for acceptance of
written submissions and/or evidence;
(v) Any decision rendered by the arbitrator pursuant to this
Section 10.1(b) shall be binding upon the parties hereto and, to
---------------
extent permitted by law, shall be enforceable by a court of
competent jurisdiction by an order of specific performance;
(vi) The arbitrator shall not have the power to adjudicate or
make any award with respect to any matter that is not subject to
the arbitration; and
(vii) Each Partner shall bear its own costs and expenses incurred
in connection with the arbitration together with fifty percent
(50%) of the costs and expenses of the arbitrator.
10.2 Mediation; Buy-Sell.
-------------------
If a Deadlock shall not have been resolved to both Partners'
satisfaction (and such Deadlock shall not be in binding arbitration), as of the
tenth (10th) anniversary of the Partnership Execution Date, or if a Deadlock
occurs on or after the tenth (10th) anniversary of the Partnership Execution
Date, then the provisions of this Section 10.2 shall apply:
------------
(a) Mediation. The Partners shall first endeavor to settle such
---------
Deadlock by mediation under the CPR Model Mediation Procedure for Business
Disputes.
(b) Buy or Sell Notice. In the event the Partners are unable to
------------------
resolve such Deadlock through mediation within thirty (30) days after the
initiation of such mediation procedure, either Partner may issue a notice
initiating the buy-sell procedure set forth in this Section 10.2 (a "Buy-Sell
------------- --------
Notice") to the other Partner.
- ------
(c) Buy-Sell Offers. In the event that either Partner delivers to the
---------------
other Partner a Buy-Sell Notice, such Buy-Sell Notice shall be deemed to
comprise offers (the "Buy-Sell Offers") by the Partner giving such Buy-Sell
---------------
Notice both (i) to sell all of its Partnership Units to the other Partner or its
Affiliate (except that for the purposes of this Section 10.2, the words "more
------------
than fifty percent (50%)" shall be substituted for the words "ten percent (10%)"
wherever they appear in the definition of Affiliate set forth in Section 1.7
-----------
hereof) for the price per Partnership Unit set forth in the Buy-Sell Notice (the
"Buy-Sell Unit Price") and (ii) to purchase or to cause its Affiliate to
-------------------
purchase all of the other Partner's Partnership Units for a price per
Partnership Unit equal to the Buy-Sell Unit Price. A Buy-Sell Notice shall be
void and of no effect if it does not set forth a Buy-Sell Unit Price per
Partnership Unit.
(d) Acceptance. Within thirty (30) days after delivery of the Buy-
----------
Sell Notice, the offeree-Partner shall accept one of the Buy-Sell Offers set
forth in said Buy-Sell Notice by a written acceptance delivered to the offeror-
Partner stating the offeree-Partner's acceptance of the offer to buy or to sell,
as the case may be. Failure of the offeree-Partner to accept one of the
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<PAGE>
Buy-Sell Offers within such thirty (30) days shall be deemed to be an acceptance
of the offeror-Partner's offer to buy, with such acceptance being deemed to have
been made on the thirtieth (30th) day after delivery of the Buy-Sell Notice.
Buy-Sell Offers shall be irrevocable for thirty (30) days after delivery. After
a Buy-Sell Notice has been delivered by a Partner, the other Partner may not
deliver a Buy-Sell Notice, and neither Partner shall dispose of, alienate or in
any way encumber all or any part of its Partnership Interest. In addition,
neither Partner shall take any action which would result in a material adverse
change in the assets or liabilities of the Partnership or condition of the
Property.
(e) Closing
-------
(i) Acceptance of a Buy-Sell Offer pursuant to this Section
-------
10.2 shall constitute a binding agreement between the offeror-
----
Partner and the offeree-Partner to buy and sell the applicable
Partnership Interests at a closing (the "Buy-Sell Closing") to be
----------------
held at the principal place of business of the Partnership, at a
date and time reasonably selected by BRC, within sixty (60) days
after the date the Buy-Sell Offer is accepted, or deemed to be
accepted. At the Buy-Sell Closing, the selling Partner shall
assign and deliver all of its Partnership Interest to the buying
Partner (or the buying Partner's designated Affiliate) free and
clear of all liens, encumbrances and claims of third parties. If
the selling Partner is unable to so deliver its Partnership
Interest at the Buy-Sell Closing (or any extension thereof), the
buying Partner may, at its sole election: (A) terminate the
agreement to purchase such Partnership Interest if such inability
constitutes a material default by the selling Partner; (B) accept
the selling Partner's Partnership Interest in its then current
condition with appropriate adjustments in price; or (C) extend
the date for the Buy-Sell Closing for thirty (30) days, during
which period the selling Partner shall use its best efforts to
remove any such liens, encumbrances or claims affecting its
Partnership Interest.
(ii) At the Buy-Sell Closing, the buying Partner shall pay (or
shall cause the buying Partner's designated Affiliate to pay) to
the selling Partner, in cash, a purchase price equal to the
product of (y) the number of Partnership Units owned by the
selling Partner as of the date of the Buy-Sell Closing and (z)
the Buy-Sell Unit Price. The buying Partner shall also obtain (or
shall cause the buying Partner's designated Affiliate to obtain)
discharges of any continuing liability of the selling Partner on
account of Partnership financing or, in lieu of such discharges,
shall provide to the selling Partner, if the selling Partner so
agrees, in its sole discretion, an indemnification and hold-
harmless agreement with respect to such liability and all other
continuing liabilities of the selling Partner reasonably
satisfactory to the selling Partner.
(iii) In connection with the Buy-Sell Closing, each Partner shall
execute, acknowledge and deliver all documents as are necessary
or appropriate to effect the transfer of the Partnership Interest
in question.
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<PAGE>
Each Partner hereby irrevocably appoints the other Partner as its
attorney-in-fact for the sole purpose of executing, acknowledging
and delivering said documents in its behalf pursuant to this
Section 10.2 in the event such Partner fails to execute,
------------
acknowledge or deliver the same. Notwithstanding the foregoing
power of attorney and in addition to any other rights which the
Partners have hereunder, a Partner desiring to enforce a purchase
or sale pursuant to this Section 10.2 shall have the right to
------------
apply to a court of competent jurisdiction for specific
performance of this Section 10.2, and the other Partner shall not
------------
plead as a defense that an adequate remedy at law exists.
SECTION 11. REPRESENTATIONS AND WARRANTIES
11.1 Representations of BRC. BRC hereby represents and warrants to MPI
----------------------
that:
(a) Existence and Power. BRC is duly organized, validly existing and
-------------------
in good standing under the laws of the State of Delaware and is duly licensed
and qualified in all jurisdictions in which such licensing and qualification is
required in light of the assets owned or business conducted therein, except
where the failure to be so qualified does not, individually or in the aggregate,
have a material adverse effect on its financial condition, business or assets.
BRC has all requisite power and authority (i) to own its assets and to carry on
the business in which it is engaged and (ii) to execute, deliver and perform its
obligations under this Agreement.
(b) Due Authorization, Etc. This Agreement has been duly authorized,
-----------------------
executed and delivered on behalf of BRC and will constitute, when executed and
delivered by MPI, the legal, valid and binding obligation of BRC, enforceable
against BRC in accordance with its terms, subject as to enforceability only to
bankruptcy, insolvency and other similar laws.
(c) Consents. No authorization, consent, approval, license or formal
--------
exemption from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority (Federal, state or local), is
required in connection with the making and performance by BRC of this Agreement.
11.2 Representations of MPI. MPI hereby represents and warrants to BRC
----------------------
that:
(a) Existence and Power. MPI has been validly converted into, and
-------------------
is, a for-profit corporation, duly organized, validly existing and in good
standing under the laws of the State of Florida and is duly licensed and
qualified in all jurisdictions in which such licensing and qualification is
required in light of the assets owned or business conducted therein, except
where the failure to be so qualified does not, individually or in the aggregate,
have a material adverse effect on its financial condition, business or assets.
MPI has all requisite power and authority (i) to own its assets and to carry on
the business in which it is engaged and (ii) to execute, deliver and perform its
obligations under this Agreement.
(b) Due Authorization, Etc. This Agreement has been duly authorized,
-----------------------
executed and delivered on behalf of MPI and will constitute, when executed and
delivered by BRC, the legal, valid and binding obligation of MPI, enforceable
against MPI in accordance with
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<PAGE>
its terms, subject as to enforceability only to bankruptcy, insolvency and other
similar laws.
(c) Consents. No authorization, consent, approval, license or formal
--------
exemption from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority (Federal, state or local), is
required in connection with the making and performance by MPI of this Agreement.
SECTION 12. DISSOLUTION AND WINDING UP
12.1 Liquidating Events. The Partnership shall dissolve and commence
------------------
winding up and liquidating upon the first to occur of any of the following
("Liquidating Events"):
- --------------------
(a) The sale of all or a substantial portion of the assets of the
Partnership;
(b) MPI and BRC shall each have voted to dissolve, wind up and
liquidate the Partnership;
(c) The happening of any other event that makes it unlawful,
impossible or impractical to carry on the business of the Partnership;
(d) Either party shall terminate this Agreement by written notice to
the other in the event that the Registration Statement (as defined in the
Contribution Agreement) shall not become effective within six (6) months after
the date of its filing with the U.S. Securities and Exchange Commission; or
(e) Any of the conditions to either Partner's obligation to close
under the Contribution Agreement shall not have been satisfied as of the Closing
Date, such Partner shall not have waived such conditions and such Partner shall
have given notice to the other Partner terminating this Agreement.
The insanity, lack of legal capacity, incapacity, death, insolvency,
adjudication of bankruptcy or dissolution of either Partner or any individual
partner, member and/or manager, shareholder or principal of either Partner, or
the transfer or assignment (whether by operation of law or otherwise) of any
interest of either Partner, the appointment of a successor or receiver for
either Partner or any individual partner, member and/or manager, shareholder or
principal of either Partner, shall not dissolve or terminate the Partnership.
Neither Partner shall have the right to withdraw from the Partnership or to have
the Partnership dissolved or to have its Capital Contribution returned except as
provided in this Agreement.
12.2 Winding Up.
----------
(a) Except as otherwise provided in Section 12.1 hereof, upon the
------------
occurrence of a Liquidating Event, the Partnership shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets
and satisfying the claims of its creditors and the Partners. No Partner shall
take any action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Partnership's business and affairs. BRC (or in the
event
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<PAGE>
BRC has ceased to be a Partner, MPI) (the "Liquidating Partner") shall be
-------------------
responsible for overseeing the winding up and dissolution of the Partnership and
shall take full account of the Partnership's liabilities and assets, and the
Partnership's assets shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom, to the extent
sufficient therefor, shall be applied and distributed in the following order:
(i) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners;
(ii) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners; and
(iii) The balance, if any, to the Partners in accordance with
their Capital Accounts, after giving effect to all contributions,
distributions and allocations for all periods. If either Partner
has a deficit balance in its Capital Account (after giving effect
to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation
occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to
such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose
whatsoever.
The Liquidating Partner shall not receive any additional compensation for any
services performed pursuant to this Section 12.
----------
(b) In the discretion of the Liquidating Partner, a pro rata portion
of the distributions that would otherwise be made to the Partners pursuant to
this Section 12 may be:
----------
(i) distributed to a trust established for the benefit of the
Partners for the purpose of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the
Partnership or of the Partners arising out of or in connection
with the Partnership. The assets of any such trust shall be
distributed to the Partners from time to time, in the reasonable
discretion of the Liquidating Partner, in the same proportions as
the amount distributed to such trust by the Partnership would
otherwise have been distributed to the Partners pursuant to this
Agreement; or
(ii) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be
distributed to the Partners as soon as practicable.
12.3 Certain Terminations. Notwithstanding any other provisions of this
--------------------
Section 12, in the event the Partnership is terminated within the meaning of
- ----------
Code Section 708(b)(1)(B), but no
-34-
<PAGE>
Liquidating Event has occurred, the Property shall not be liquidated, the
Partnership's liabilities shall not be paid or discharged, and the Partnership's
affairs shall not be wound up.
12.4 Liquidation of Partner's Interest. Except as otherwise specifically
---------------------------------
provided in this Agreement, any distribution made to a Partner as a result of
the liquidation of such Partner's interest in the Partnership (within the
meaning of Treasury Regulations Section 1.761-1(d)), which liquidation is not a
result of dissolution of the Partnership, shall be made in accordance with the
positive Capital Account balances of the Partners, as determined after taking
into account all Capital Account adjustments for the Partnership fiscal year
during which such liquidation occurs through the date of such liquidation (other
than those adjustments due to distributions made pursuant to this Section 12.4),
------------
by the end of such year (or, if later, within ninety (90) days after the date of
such liquidation). All distributions upon liquidation of a Partner's interest
in the Partnership shall be made in accordance with the timing requirements of
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2).
12.5 Rights of Partners. Except as otherwise provided in this Agreement,
------------------
each Partner shall look solely to the assets of the Partnership for the return
of its Capital Contribution and shall have no right or power to demand or
receive property other than cash from the Partnership.
12.6 Records of Liquidation. Each of the Partners shall be furnished with
----------------------
a statement prepared by the Partnership's accountants which shall set forth the
assets and liabilities of the Partnership as of the date of the occurrence of
the Liquidating Event and the plans for compliance with Section 12.2 hereof.
------------
12.7 Restrictions on Use of Property. It is agreed to that in the event
-------------------------------
that the assets of the Partnership are liquidated on or before the tenth (10th)
anniversary of the Partnership Execution Date, the Property shall not be
converted to a use other than a mobile home park or manufactured home community
during the period ending on the tenth (10th) anniversary of the Partnership
Execution Date (subject to causes beyond the parties' reasonable control,
including, without limitation, zoning changes, condemnation and casualty), and,
on or before the date such liquidation is completed, the Partners shall execute
and record a restrictive covenant, in recordable form and otherwise in form and
substance reasonably acceptable to both Partners, prohibiting any such change of
use, against the title to the Property.
SECTION 13. MISCELLANEOUS
13.1 Further Action. Each Partner agrees to perform any further acts and
--------------
to execute and deliver any documents which may be reasonably necessary to effect
the provisions of this Agreement.
13.2 Notices. Except as otherwise specifically provided herein, any
-------
notice, payment, demand or communication required or permitted to be given by
any provision of this Agreement shall be in writing and shall be delivered
personally, or sent by nationally recognized overnight courier or registered or
certified mail,
If to BRC: Blue Ribbon Communities Limited Partnership
c/o Manufactured Home Communities, Inc.
-35-
<PAGE>
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: President
With a copy to: Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: General Counsel
If to MPI: Meadows Preservation, Inc.
2555 PGA Boulevard
Palm Beach Gardens, Florida 33410
Attention: President
Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally or by nationally
recognized overnight courier, or as of the date on which the same was deposited
in a regularly maintained receptacle for the deposit of United States mail, if
sent by registered or certified mail, postage and charges prepaid. Either
Partner may from time to time specify a different address by notice to the other
Partner.
13.3 Binding Effect. Subject to the restrictions on assignment herein
--------------
contained and except as otherwise provided in this Agreement, every covenant,
term and provision of this Agreement shall be binding upon and inure to the
benefit of the Partners and their respective successors and assigns.
13.4 Construction. Every covenant, term and provision of this Agreement
------------
shall be construed simply according to its fair meaning and not strictly for or
against either Partner.
13.5 Time. Time is of the essence with respect to this Agreement.
----
13.6 Headings. Section and other headings contained in this Agreement are
--------
for reference purposes only and are not intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any provision hereof.
13.7 Severability. Every provision of this Agreement is intended to be
------------
severable. If any term or provision hereof is unenforceable, illegal or invalid
for any reason whatsoever, such unenforceability, illegality or invalidity shall
not affect the enforceability, validity or legality of the remainder of this
Agreement.
13.8 Incorporation by Reference. Every exhibit attached to this Agreement
--------------------------
and referred to herein is hereby incorporated in this Agreement by reference.
13.9 Construction. Whenever required by the context, any gender used in
------------
this Agreement shall include any other gender, the singular shall include the
plural and the plural shall include the singular.
-36-
<PAGE>
13.10 Governing Law. The laws of the State of Florida, without reference
-------------
to its conflict of laws rules, shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the Partners.
13.11 Venue. Each of the Partners irrevocably (a) agrees that any suit,
-----
action or other legal proceeding arising out of or relating to this Agreement
shall be brought in the state of Florida in a court located in Palm Beach
County, or the Federal District Court for the Southern District of Florida, (b)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (c) waives any objection which it may have to the laying of venue
of any such suit, action or proceeding in any of such courts and any claim that
any such suit, action or proceeding has been brought in an inconvenient forum.
13.12 Holding of Assets; Waiver of Action for Partition. All property,
-------------------------------------------------
real or personal, owned by the Partnership, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in the Partnership's assets or any portion thereof.
Each of the Partners irrevocably waives any right that it may have to maintain
any action for partition with respect to any of the Partnership's assets.
13.13 Counterpart Execution. This Agreement may be executed in any number
---------------------
of counterparts with the same effect as if each of the Partners had signed the
same document. All counterparts shall be construed together and shall
constitute one agreement.
13.14 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof shall
supersede any and all prior understandings between the parties with respect to
the subject matter hereof (the Partners acknowledging that any separate
indemnification described in Section 5.6 hereof shall survive the execution of
-----------
this Agreement), and may be amended only by an amendment effectuated in
accordance with the provisions of this Agreement.
-37-
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
day first above set forth.
BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
Witness: By: MHC-QRS Blue Ribbon Communities, Inc.,
a Delaware corporation, General Partner
By:_______________________________
_______________________________
Name:_____________________________
_______________________________
Title:____________________________
MEADOWS PRESERVATION, INC., a Florida
corporation
By:_____________________________________
_______________________________
Name:___________________________________
_______________________________
Title:__________________________________
-38-
<PAGE>
EXHIBIT A
---------
Names, Capital Contributions and
--------------------------------
Partnership Interests of Partners (as of September _, 1998)
-----------------------------------------------------------
<TABLE>
<CAPTION>
Capital Number of
Names and Capital Account Partnership Percentage
- ---------
Addresses Contributions Balance Units Interest
- --------- ------------- ------- ----- --------
<S> <C> <C> <C> <C>
Blue Ribbon Communities $1,000 $1,000 1 50%
Limited Partnership
Meadows Preservation, Inc. $1,000 $1,000 1 50%
</TABLE>
<PAGE>
Schedule 2.6(b)
---------------
Determination of Unit Values
----------------------------
For purposes of this Schedule 2.6(b), the capitalized terms set forth below
shall have the meanings respectively ascribed to them. Other capitalized terms
used herein but not defined below shall have the meanings set forth in the
General Partnership Agreement of The Meadows Resort Partnership dated as of
___________, 1998 by and between Blue Ribbon Communities Limited Partnership and
Meadows Preservation, Inc.
"Applicable Calendar Year" means the calendar year immediately preceding
the Determination Date.
"Applicable Portion" means, for each Unoccupied Lot that becomes an
Occupied Lot during any Applicable Calendar Year, a fraction the numerator of
which shall be the number of days in the period commencing on the date that such
Unoccupied Lot becomes an Occupied Lot and ending on December 31 in the same
Applicable Calendar Year, and the denominator of which shall be 365.
"Average Occupied Lot Number" means (a) the number of Occupied Lots on the
first day of the Applicable Calendar Year, plus (b) the aggregate of the
----
Applicable Portions for the Applicable Calendar Year.
"Determination Date" means the date upon which the Unit Value and/or
Occupied Lot Value are determined pursuant to Section 2.6(b) of the Agreement.
"Outstanding Mortgage" means the outstanding principal amount of any
mortgage indebtedness secured by the Property as of the last day of the
Applicable Calendar Year.
"Property Net Operating Income" means the net income of the Partnership
before depreciation expense, mortgage interest expense and extraordinary items
for the Applicable Calendar Year, as determined in accordance with generally
accepted accounting principles.
1. Throughout the term of the Agreement, the Occupied Lot Value from time to
time shall be an amount equal to:
(a) The Property Net Operating Income, multiplied by (b) sixteen (16),
-----------
divided by (c) the Average Occupied Lot Number.
-------
2. Throughout the term of the Agreement, the Unit Value from time to time
shall be equal to:
(a) The Occupied Lot Value, multiplied by (b) the number of Occupied Lots
----------
as of the last day of such Applicable Calendar Year, minus (c) the
-----
Outstanding Mortgage, divided by (d) the aggregate number of Partnership
-------
Units issued and outstanding as of the last day of the Applicable Calendar
Year.
<PAGE>
Schedule 9.1(b)
---------------
Determination of Price for BRC's Partnership Units
--------------------------------------------------
For purposes of this Schedule 9.1(b), capitalized terms used but not
defined herein shall have the meanings set forth in the General Partnership
Agreement of The Meadows Resort Partnership dated as of ___________, 1998 by
and between Blue Ribbon Communities Limited Partnership and Meadows
Preservation, Inc. or in Schedule 2.6(c) attached thereto.
The price for BRC's Partnership Units from time to time shall be an amount
equal to:
(a) The number of Partnership Units held by BRC, multiplied by (b) the Unit
----------
Value, plus (c) an amount equal to $28,200 for each Unoccupied Lot that
----
has not become an Occupied Lot at any time on or before the Call Closing
Date.
<PAGE>
Schedule 9.2
------------
Determination of Put Price
--------------------------
For purposes of this Schedule 9.2, capitalized terms used but not defined
herein shall have the meanings set forth in the General Partnership Agreement of
The Meadows Resort Partnership dated as of ___________, 1998 by and between
Blue Ribbon Communities Limited Partnership and Meadows Preservation, Inc. or in
Schedule 2.6(c) attached thereto.
1. For the period commencing on the date of the Agreement and ending on the
second (2nd) anniversary of the Partnership Execution Date, the Put Price shall
be equal to (a) the Unit Value then pertaining, (b) divided by the Stock/Unit
-------
Ratio, multiplied by (b) eighty percent (80%).
----------
2. From and after the day immediately following the second (2nd) anniversary
of the Partnership Execution Date through the end of the term of the Agreement,
the Put Price from time to time shall be equal to (a) the Unit Value then
pertaining, divided by (b) the Stock/Unit Ratio.
-------
<PAGE>
GENERAL PARTNERSHIP AGREEMENT
OF
THE MEADOWS RESORT PARTNERSHIP
______________, 1998
THE PARTNERSHIP INTERESTS DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES ACT OF ANY STATE OR
JURISDICTION. NO SALE, OFFER TO SELL, OR OTHER TRANSFER OF THESE INTERESTS MAY
BE MADE BY A PARTNER UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
UNLESS IN THE OPINION OF COUNSEL TO THE MEADOWS RESORT PARTNERSHIP THE PROPOSED
DISPOSITION FALLS WITHIN A VALID EXEMPTION FROM THE REGISTRATION PROVISIONS OF
THOSE ACTS.
<PAGE>
Exhibit 6.2
THE MEADOWS RESORT
TITLE HOLDING, NOMINEE AND AGENCY AGREEMENT
--------------------------------------------
THIS TITLE HOLDING, NOMINEE AND AGENCY AGREEMENT (this "Agreement") is made
---------
this __ day of ____________, 1998, by and between THE MEADOWS RESORT
PARTNERSHIP, a Florida general partnership ("Owner"), and MEADOWS PRESERVATION,
-----
INC., a Florida corporation ("Nominee").
-------
RECITALS
--------
A. Nominee is a partner in Owner and has contributed to Owner all of
Nominee's beneficial interest in the property described on Exhibit A attached
hereto and made a part hereof (the "Property") pursuant to the Contribution
--------
Agreement of even date herewith among Owner, Nominee and
Blue Ribbon Communities Limited Partnership (the "Contribution Agreement").
----------------------
Accordingly, Owner is the beneficial owner, and the owner for Federal income tax
purposes, of the Property.
B. Owner and Nominee have agreed that, pursuant to Section 723.077,
Florida Statutes, Nominee shall hold the record interest in the Property, on and
subject to the terms of this Agreement.
C. The parties desire to enter into this Agreement in order to set forth
Nominee's agreement to hold the record interest in the Property as nominee and
agent of Owner, and to set forth the parties' respective rights, obligations and
understandings with respect to the Property and the beneficial and record
interests therein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree that:
1. Record Interest Held as Nominee. Effective as of the date hereof,
-------------------------------
Nominee shall hold the record interest in the Property in its own name solely
for the benefit of Owner, as holder of the beneficial interest in the Property,
on and subject to the terms of this Agreement.
2. Agency Status of Nominee. Nominee shall have the power and
------------------------
authority to, and shall, whenever and as directed in writing by Owner, lease,
sell, convey, mortgage, encumber, refinance, exchange, dedicate or otherwise
deal with the Property or any part thereof, all at the cost of Owner. Nominee
shall not have the power or authority to, and shall not, lease, sell, convey,
mortgage, encumber, refinance, exchange, dedicate or otherwise deal with the
Property or any part thereof except when and as directed in writing by Owner.
<PAGE>
3. Business Relationship.
---------------------
3.1 Business of Nominee. The business of Nominee, as it relates to
-------------------
its ownership of title to the Property, shall be and hereby is limited to the
holding in Nominee's name of the record interest in the Property.
3.2 Nominee's Business Conducted as Agent. Nominee's business
-------------------------------------
described in Section 3.1 hereof shall be carried on solely as nominee and agent
-----------
for the benefit of Owner. Nominee shall identify itself as nominee of Owner in
all dealings with third parties relating to the Property.
3.3 Restrictions on Dealings with Property. Neither Nominee nor any
--------------------------------------
officer, director or shareholder thereof shall buy, sell, own, hold, borrow,
mortgage, encumber, pledge or otherwise in any manner deal with all or any part
of the Property for the individual account of Nominee or any such officer,
director or shareholder or for the account of anyone other than Owner.
4. Dealings with Property.
----------------------
4.1 Powers of Owner. Owner shall have the sole and exclusive
---------------
authority to direct Nominee to lease, sell, convey, mortgage, encumber,
refinance, exchange, dedicate or otherwise deal with the Property or any part
thereof, and Owner shall have sole and exclusive authority to negotiate and
agree upon the terms and conditions of any such lease, sale, conveyance,
mortgage, encumbrance, refinancing, exchange, dedication or other transaction.
4.2 Distribution of Proceeds. Upon a sale, mortgage or refinancing
------------------------
of, or any other transaction relating to, all or a portion of the Property, the
proceeds of such sale, mortgage, refinancing or other transaction shall be
distributed within the sole and absolute discretion of Owner.
5. Liquidation, Etc. of Nominee. In the event of the liquidation,
----------------------------
dissolution, bankruptcy or resignation of Nominee, a successor or successors to
Nominee may be appointed by Owner. Subject to Section 723.077, Florida Statutes,
Owner shall have the right to substitute a nominee or nominees at any time and
from time to time at will or to direct Nominee to convey legal title to all or
any portion of the Property to Owner. Owner shall pay any documentary stamp or
other transfer taxes due as a result of any such transfer.
6. No Beneficial Interest in Nominee. From and after the date hereof,
---------------------------------
neither Nominee nor any officer, director or shareholder thereof shall have or
claim any beneficial interest whatever (by reason of Nominee's existence) in all
or any portion of the Property. Any and all right, title, equity, interest,
lien, claim and/or demand of any nature whatever in and to all or any portion of
the Property at any time registered or recorded in the name of Nominee or held
or received or receivable by Nominee shall belong to Owner and is hereby
irrevocably waived and disclaimed by Nominee.
2
<PAGE>
7. Indemnification. In undertaking and exercising its duties herein,
---------------
Nominee shall be free and wholly exonerated from any and all liability of any
kind whatsoever except in the willful default of said duties and Owner shall
indemnify Nominee against any liability, cost and expense to which the Nominee
may be subjected by reason of title to the Property being in its name, except to
the extent that such liability, cost or expense is incurred because of the act
or omission of Nominee in its capacity as a general partner of Owner.
8. Insurance. Owner shall maintain liability and casualty insurance on
---------
the Property with Owner being the named insured and Nominee being an additional
named insured.
9. Taxes. Owner expressly assumes liability for payment of any and all
-----
federal, state and local real property and transfer taxes imposed upon Nominee
as holder of legal title to the Property. Owner shall indemnify Nominee against
all such taxes paid by Nominee as a result of Nominee holding the record
interest in the Property.
10. Compensation. Nominee shall be entitled to no compensation or other
------------
payments for its services.
11. Authority of Nominee. Nominee represents and warrants to Owner
--------------------
that:
(a) Existence and Power. Nominee has all requisite power and authority
-------------------
to execute, deliver and perform its obligations under this Agreement.
(b) Due Authorization, Etc. This Agreement has been duly authorized,
----------------------
executed and delivered on behalf of Nominee and will constitute, when executed
and delivered by the other party hereto, the legal, valid and binding obligation
of Nominee, enforceable against Nominee in accordance with its terms. The
person who executes this Agreement on behalf of Nominee has been duly authorized
so to act.
(c) Consents. No authorization, consent, approval, license or formal
--------
exemption from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority (Federal, state or local), is
required in connection with the making and performance by Nominee of this
Agreement.
12. Memorandum. Each of the parties shall execute a memorandum of this
----------
Agreement to be recorded among the land records of Palm Beach County, Florida.
13. Amendments. The terms of this Agreement may be modified solely by
----------
instrument executed and acknowledged by Owner and Nominee. Subject to Section
723.077, Florida Statutes, Owner shall have the power to revoke this Agreement
at any time and forthwith upon any such revocation, Nominee shall convey the
record interest in the Property to Owner or Owner's designee, at Owner's
expense.
14. Construction. Every covenant, term and provision of this Agreement
------------
shall be construed simply according to its fair meaning and not strictly for or
against either party.
3
<PAGE>
15. Severability. Every provision of this Agreement is intended to be
------------
severable. If any term or provision hereof is unenforceable, illegal or invalid
for any reason whatsoever, such unenforceability, illegality or invalidity shall
not affect the enforceability, validity or legality of the remainder of this
Agreement.
16. Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts with the same effect as if each of the parties had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
17. Further Action. Nominee and Owner agree to perform any further
--------------
acts and to execute and deliver any documents which may be reasonably necessary
to effect the provisions of this Agreement.
18. Headings. Section and other headings contained in this Agreement
--------
are for reference purposes only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision
hereof.
19. Notices. Except as otherwise specifically provided herein, any
-------
notice, payment, demand, or communication required or permitted to be given by
any provision of this Agreement shall be in writing and shall be delivered
personally, or sent by nationally recognized overnight courier or registered or
certified mail, to the following addresses:
If to Owner: Blue Ribbon Communities Limited Partnership
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: President
and: Meadows Preservation, Inc.
2555 PGA Boulevard
Palm Beach Gardens, Florida 33410
Attention: President
With a copy to: Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: General Counsel
If to Nominee: Meadows Preservation, Inc.
2555 PGA Boulevard
Palm Beach Gardens, Florida 33410
Attention: President
4
<PAGE>
Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally or by nationally
recognized overnight courier, or as of the date on which the same was deposited
in a regularly maintained receptacle for the deposit of United States mail, if
sent by registered or certified mail, postage and charges prepaid. Any party
hereto may from time to time specify a different address by notice to the other
party hereto.
20. Applicable Law. This agreement shall be governed, construed and
--------------
interpreted by the laws of the State of Florida.
21. Successors. This Agreement may not be assigned by Nominee. Owner may
----------
assign this Agreement to any third party. Subject to the foregoing restriction
on assignment, this Agreement shall inure to the benefit of and bind all parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, Owner and Nominee have executed this Agreement under
seal as of the date first above written.
OWNER:
THE MEADOWS RESORT PARTNERSHIP
BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
Witness: By: MHC-QRS Blue Ribbon Communities, Inc.,
a Delaware corporation, General Partner
______________________________ By:__________________________(SEAL)
Name:________________________
______________________________ Title:_______________________
MEADOWS PRESERVATION, INC.,
a Florida corporation
______________________________ By:________________________________(SEAL)
Name_______________________________
______________________________ Title: _____________________________
5
<PAGE>
NOMINEE:
MEADOWS PRESERVATION, INC.,
a Florida corporation
______________________________ By:________________________________(SEAL)
Name:______________________________
______________________________ Title:_____________________________
6
<PAGE>
EXHIBIT 6.3
CONTRIBUTION AGREEMENT
----------------------
THIS CONTRIBUTION AGREEMENT, dated as of __________, 1998 (this
"Agreement"), is made by and among MEADOWS PRESERVATION, INC., a Florida
---------
corporation ("MPI"), BLUE RIBBON COMMUNITIES LIMITED PARTNERSHIP, a Delaware
limited partnership ("BRC"), and THE MEADOWS RESORT PARTNERSHIP, a Florida
---
general partnership (the "Partnership").
-----------
RECITALS
--------
A. MPI is a corporation organized under the laws of the State of Florida
to acquire the Property (as hereinafter defined), to hold the record interest
therein and to be responsible for the operation thereof pursuant to Fla. Stat.
(S) 723.071.
B. MPI and BRC have entered into the Partnership Agreement (as hereinafter
defined) forming the Partnership.
C. MPI and BRC have each agreed to contribute to the Partnership, in
exchange for Partnership Units (as hereinafter defined), certain moneys, on and
subject to the terms set forth in this Agreement.
D. The Partnership wishes to receive the aforesaid contributions of cash,
in exchange for the issuance of Partnership Units, on and subject to the terms
set forth in this Agreement.
E. MPI has also agreed to contribute to the Partnership the beneficial
interest in the Real Property (as hereinafter defined) together with all of
MPI's right, title and interest in and to the Other Property (as hereinafter
defined), subject to the Permitted Exceptions, on and subject to the terms set
forth in this Agreement, and the Partnership has agreed to accept the
contribution of the beneficial interest in the Real Property and all of MPI's
right, title and interest in and to the Other Property, subject to the Permitted
Exceptions, and to assume MPI's obligations under the Mortgage (as hereinafter
defined), on and subject to the terms set forth in this Agreement.
F. The Partnership and MPI have agreed that, pursuant to Fla. Stat.
(S)723.077, MPI shall hold the record interest in the Real Property, as nominee
and agent of the Partnership, on and subject to the terms of the Nominee
Agreement (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency
whereof are hereby acknowledged, the parties hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. The following terms shall have the meanings
-------------
respectively assigned to them:
"Act" means the Securities Act of 1933, as amended.
"Advancing Homeowners" means, collectively, the Homeowners who, prior
to the date hereof, advanced to MPI's predecessor in interest, Meadows
Preservation, Inc., a Florida not-for-profit, non-stock corporation, any portion
of the Prepaid Funds.
"Applicable Law" means, with respect to any Person, any federal, state
or local statute, law, code, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree or other
requirement of any Governmental Authority (including any environmental laws)
applicable to such Person or any of its properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Closing Date" means three (3) business days after the date upon which
the offer to sell Shares pursuant to the Prospectus expires (or such earlier
date after the offer to sell Shares has expired as shall be mutually agreed
between BRC and MPI).
"Easements" means all easements, if any, benefiting the Land.
"Governmental Authority" means any federal, territorial, state or
local governmental authority, quasi-governmental authority, instrumentality,
court, commission, tribunal or organization or any regulatory, administrative or
other agency, or any political or other subdivision, department or branch of any
of the foregoing having jurisdiction over the Property or the Partnership.
"Homeowners" means the owners of manufactured or mobile homes who
lease lots located within the Property.
"Improvements" means all improvements and structures now or at any
time hereafter on the Land.
"Intangible Property" means, collectively, the following intangible
property: business telephone numbers, the name "The Meadows Mobile Home Park
Development," logos and similar items, leases, rental agreements, prepaid rents
and maintenance fees, marketing information, deposits, contract rights, permits
and licenses, pertaining to the Real Property, the Tangible Personal Property or
the use of either thereof.
2
<PAGE>
"Land" means all that certain tract or parcel of land situated and
lying in Palm Beach County, Florida, which is more particularly described on
Exhibit 1A attached hereto.
- ----------
"Lien" means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, hypothecation, restriction,
encumbrance, adverse right or charge of any kind in respect of such asset.
"Mortgage" means the Mortgage, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases and Rents dated December 18,
1997 from MPI to BRC's affiliate, MHC Lending Limited Partnership, recorded on
December 19, 1997 in Official Record Book 10145, Page 1538 of the Public Records
of Palm Beach County, Florida, as supplemented, amended or modified from time to
time.
"Nominee Agreement" means the Title Holding, Nominee and Agency
Agreement, to be entered into by and between MPI, as agent and nominee, and the
Partnership, as holder of the beneficial interest in the Real Property, at the
Closing Date, in the form attached hereto as Exhibit 1B.
----------
"Other Property" means, collectively, the Intangible Property and the
Tangible Personal Property.
"Partnership Agreement" means the General Partnership Agreement of the
Partnership, dated __________________, 1998, made by and between MPI and BRC.
"Partnership Interest" means an ownership interest in the Partnership
and includes any and all benefits to which the holder of such Partnership
Interest may be entitled as provided in the Partnership Agreement, together with
all obligations of such holder to comply with the terms and provisions of the
Partnership Agreement.
"Partnership Units" means the fractional, undivided shares of the
Partnership Interests issued pursuant to the Partnership Agreement.
"Permitted Exceptions" means, collectively, (i) those restrictions,
covenants, agreements, easements, matters and things of fact or of record
affecting title to the Property set forth on Exhibit 1C attached hereto, and
----------
(ii) real estate taxes that have accrued but are not yet due and payable.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, estate, Governmental Authority or other entity
or organization.
"Prepaid Funds " means moneys advanced by certain Homeowners to MPI's
predecessor in interest, Meadows Preservation, Inc., a Florida not-for-profit,
non-stock corporation, on account of the proposed acquisition of an ownership
interest in MPI or the Property.
3
<PAGE>
"Property" means, collectively, the Real Property and the Other
Property.
"Prospectus" means Part I of the Registration Statement offering to
sell and issue Shares to the Homeowners.
"Real Property" means, collectively, the Land, the Improvements, the
Easements and the Rights and Appurtenances.
"Registration Statement" means a registration statement, in form and
substance acceptable to MPI and BRC, filed by MPI in accordance with the
requirements of the Act with respect to the offering of up to 2,354 Shares.
"Rescission Offer" means a rescission offer, in form and substance
acceptable to MPI and BRC, made by MPI in accordance with the requirements of
the Act with respect to the Prepaid Funds.
"Rights and Appurtenances" means, collectively, all rights and
appurtenances, if any, pertaining to the Land or the Improvements, including,
without limitation, the right, title and interest of MPI, if any, in and to the
streets, alleys or rights of way adjacent to the Land.
"SEC" means the United States Securities and Exchange Commission.
"Shares" means the authorized shares of common stock of MPI, having a
par value of $0.1.
"Subscribed Shares" means all of the Shares subscribed to by the
Homeowners pursuant to the offering made by the Prospectus including, without
limitation, Shares issued to Homeowners who reject the Rescission Offer.
"Tangible Personal Property" means, collectively, all of MPI's right,
title and interest in and to all appliances, fixtures, equipment, vehicles,
inventory from sales operations, machinery, furniture, carpet, drapes and other
personal property, if any, located on or about the Land or the Improvements or
used in the operation and maintenance thereof, including, without limitation,
the Tangible Personal Property listed on Exhibit 1D attached hereto and made a
----------
part hereof.
1.2 Other Defined Terms. Certain other terms are defined elsewhere in
-------------------
this Agreement.
ARTICLE II
REGISTRATION STATEMENT
----------------------
2.1 Filing of Registration Statement. At such time as MPI and BRC shall
--------------------------------
agree, MPI shall file the Registration Statement with the SEC. MPI shall use
its best efforts to make
4
<PAGE>
the Registration Statement effective and to comply with the securities laws of
the states and countries where Homeowners reside in order to offer the Shares to
the Homeowners.
2.2. Delivery of Prospectus. Subject to compliance with applicable state
----------------------
laws, promptly following the date upon which the Registration Statement shall
become effective pursuant to the Act, MPI shall deliver a Prospectus to each of
the Homeowners.
ARTICLE III
CONTRIBUTIONS
-------------
3.1 Contribution of MPI. On the Closing Date, MPI shall, in
-------------------
consideration of the Partnership Units described in Section 4.1 hereof,
-----------
contribute to the Partnership all of the cash raised by MPI from the sale of
Subscribed Shares pursuant to the Registration Statement (the "MPI Cash");
--------
3.2 Additional Contribution of MPI On the Closing Date, MPI shall also:
------------------------------
(a) transfer and contribute to the Partnership all of the beneficial
interest in the Real Property, subject only to the Permitted Exceptions; and
(b) transfer and contribute to the Partnership all of MPI's right,
title and interest in and to the Other Property, subject only to the Permitted
Exceptions.
MPI shall, at the request of BRC or the Partnership, execute and deliver such
documents and instruments of transfer, conveyance and assignment and take such
further action as BRC or the Partnership shall reasonably request in order to
complete more effectively the transfer and contribution to the Partnership of
the Other Property and the transfer and contribution to the Partnership of the
beneficial interest in the Real Property.
On the Closing Date, the Partnership shall assume all of MPI's obligations under
the Mortgage.
3.3 Contribution of BRC. On the Closing Date, BRC shall, in consideration
-------------------
of the Partnership Units described in Section 4.2 hereof, contribute to the
-----------
Partnership cash in the amount of (a) Four Million Seven Hundred Seven Thousand
Five Hundred Twenty-nine 42/100 Dollars ($4,707,529.42), less (b) the MPI Cash
----
(such net amount, the "BRC Cash");
--------
3.4 Additional Contribution of BRC. On the Closing Date, BRC shall also
------------------------------
contribute to the Partnership:
(a) cash in the amount of Two Million Two Hundred Fifty-six Thousand
Dollars ($2,256,000) on account of the lots within the Real Property that are
not occupied by manufactured or mobile homes as of the date of the Partnership
Agreement; and
5
<PAGE>
(b) Two Hundred Thousand Dollars ($200,000), to be used by the
Partnership to fund certain capital improvements to the Real Property.
3.5 Accrued Interest. On the Closing Date, MPI shall pay to MHC Lending
----------------
Limited Partnership ("MHC Lending") all interest and other amounts that have
-----------
accrued or are payable under the Mortgage through the Closing Date.
ARTICLE IV
PARTNERSHIP INTERESTS
---------------------
4.1 Interest of MPI. In consideration of the contribution of cash
---------------
described in Section 3.1 hereof, the Partnership shall issue to MPI, effective
-----------
as of the date hereof, so many Partnership Units as shall be equal to the MPI
Cash, divided by One Thousand (1,000).
-------
4.2 Interest of BRC. In consideration of the contribution of cash
---------------
described in Section 3.3 hereof, the Partnership shall issue to BRC, effective
-----------
as of the date hereof, so many of the Partnership Units as shall be equal to the
BRC Cash, divided by One Thousand (1,000).
-------
ARTICLE V
CONDITIONS PRECEDENT.
--------------------
5.1 Conditions Precedent for MPI. The obligation of MPI to close the
----------------------------
transactions hereunder and to make the contributions of cash, property and
interests provided for in Sections 3.1 and 3.2 hereof is subject to satisfaction
--------------------
of all of the following conditions on or before the Closing Date, any one or
more of which may be expressly waived in writing by MPI:
(a) BRC shall have simultaneously made the contribution of cash
described in Sections 3.3 and 3.4 hereof and made the payment to MPI provided
--------------------
for in Section 9.3 hereof and shall have executed, as a general partner of the
-----------
Partnership, all documents required to be delivered by the Partnership pursuant
to Section 6.2 hereof
-----------
(b) Neither the Partnership nor BRC shall have made a general
assignment for the benefit of its creditors, or have admitted in writing its
inability to pay its debts as they become due, or have filed a petition in
bankruptcy or been adjudicated a bankrupt or insolvent or have filed a petition
seeking any reorganization, arrangement, composition, readjustment liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or have filed any answer admitting or failing to reasonably contest
the material allegations of a petition filed against it in any such proceeding
or seek or consent to or acquiesce in the appointment of any trustee, receiver
or liquidator of it for any material part of its property.
(c) All of the representations and warranties given by BRC shall
remain true and correct at the Closing Date as though made on such date.
6
<PAGE>
5.2 Conditions Precedent for BRC. The obligation of BRC to close the
----------------------------
transactions hereunder and to make the contribution of cash provided for in
Sections 3.3 and 3.4 hereof is subject to satisfaction of all of the following
- --------------------
conditions on or before the Closing Date, any one or more of which may be
expressly waived in writing by BRC:
(a) MPI shall have simultaneously made the contributions of cash,
property and interests described in Sections 3.1 and 3.2 hereof.
--------------------
(b) MPI shall have executed and delivered to the Partnership all of
the agreements, documents and other items required to be delivered by MPI
pursuant to Section 6.1 hereof, and shall have executed, as a general partner of
-----------
the Partnership, all documents required to be delivered by the Partnership
pursuant to Section 6.2 hereof.
-----------
(c) Neither the Partnership nor MPI shall have made a general
assignment for the benefit of its creditors, or have admitted in writing its
inability to pay its debts as they become due, or have filed a petition in
bankruptcy or been adjudicated a bankrupt or insolvent or have filed a petition
seeking any reorganization, arrangement, composition, readjustment liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or have filed any answer admitting or failing to reasonably contest
the material allegations of a petition filed against it in any such proceeding
or seek or consent to or acquiesce in the appointment of any trustee, receiver
or liquidator of it or for any material part of its property.
(d) No Liens shall have recorded against the title to the Real
Property other than the Permitted Exceptions.
(e) All of the representations and warranties given by MPI shall
remain true and correct at the Closing Date as though made on such date.
(f) MPI shall have paid to MHC Lending all interest and other amounts
that have accrued or are payable under the Mortgage through the Closing Date.
ARTICLE VI
DELIVERIES
----------
6.1 MPI's Deliveries. On the Closing Date, MPI shall deliver to the
----------------
Partnership the following documents and other items:
(a) The cash required to be contributed by MPI pursuant to Section
-------
3.1 hereof.
---
(b) The Nominee Agreement, duly executed by MPI.
(c) An Assignment and Assumption of Beneficial Interest, in the form
7
<PAGE>
attached hereto as Exhibit 6.1(c) (the "Assignment of Beneficial
-------------- ------------------------
Interest"), duly executed by MPI.
--------
(d) A Warranty Bill of Contribution, in the form attached hereto as
Exhibit 6.1(d), duly executed by MPI.
--------------
(e) An Assignment of Leases, in the form attached hereto as Exhibit
-------
6.1(e), duly executed by MPI.
------
(f) An Assignment of Permits, Trade Name, Warranties, and Service and
Management Contracts, and Intangible Property, in the form
attached hereto as Exhibit 6.1(f) (the "Assignment of Permits"),
-------------- ---------------------
duly executed by MPI.
(g) An Assignment and Assumption of Mortgage, in the form attached
hereto as Exhibit 6.1(g) (the "Assignment of Mortgage"), duly
--------------- ----------------------
executed by MPI.
(h) All tenant deposits held by MPI as of the date hereof.
(i) An affidavit in accordance with IRS Code Section 1445 certifying
that MPI is not a foreign person subject to the withholding rules
of the Foreign Investment in Real Property Act.
(j) The originals of all contracts pertaining to the Property,
including, without limitation, leases, deposits, rental
agreements and other agreements between MPI and its tenants and
the service contracts made by MPI listed on Exhibit 6.1(j)
--------------
attached hereto.
(k) Certificates of title to all vehicles(s) owned by MPI and
assignments thereof to the Partnership.
(l) All necessary and proper consents of MPI consenting to and
approving the transactions described in this Agreement.
6.2 Partnership's Deliveries. On the Closing Date, the Partnership shall
------------------------
deliver to MPI, each duly executed by the Partnership:
(a) The Nominee Agreement.
(b) The Assignment of Beneficial Interest.
(c) The Assignment of Permits.
(d) The Assignment of Mortgage.
8
<PAGE>
6.3 BRC's Deliveries. On the Closing Date, BRC shall deliver to the
----------------
Partnership:
(a) The cash required to be contributed by BRC pursuant to Sections
--------
3.3 and 3.4 hereof.
-----------
(b) All necessary and proper consents of BRC consenting to and
approving the transactions described in this Agreement.
6.4 Recordation of Documents. Promptly following the delivery of the
------------------------
documents listed in Sections 6.1 and 6.2 hereof, the Partnership shall cause the
--------------------
Title Company to record among the land records of Palm Beach County, Florida the
Nominee Agreement and the Assignment of Mortgage.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
7.1. Representations and Warranties by MPI. MPI hereby represents and
-------------------------------------
warrants to the Partnership and BRC (in the case of the representations and
warranties set forth in Sections 7.1.1 and 7.1.2) and to the Partnership (in the
------------------------
case of the representations and warranties set forth in Section 7.1.3) that:
-------------
7.1.1 MPI is duly organized, validly existing and in good standing
under the laws of the State of Florida.
7.1.2 MPI has the full right, power and capacity to enter into this
Agreement and to carry out the transactions contemplated hereby, no consent or
authorization of any person is required as a condition precedent to the
consummation by MPI of this Agreement or the transactions or other events
contemplated herein except those consents that have been obtained, and the
Person who executed this Agreement on behalf of MPI is duly authorized to bind
MPI.
7.1.3 All of the representations and warranties set forth in Section
8 of the Agreement of Purchase and Sale dated November 1997 by and between
H.G.G.S. Associates and Meadows Preservation, Inc. remain true and correct as of
the date hereof as if given by MPI to the Partnership herein (except that for
these purposes (a) "Seller" shall be deemed to mean MPI and "Purchaser" shall be
deemed to mean the Partnership and (b) all such representations and warranties
shall be subject to any disclosures made by MPI to BRC in writing on or before
the date hereof).
7.2 Representations and Warranties by BRC. BRC hereby represents and
-------------------------------------
warrants to the Partnership and MPI that:
7.2.1 BRC is duly formed and validly existing under the laws of the
State of Delaware.
9
<PAGE>
7.2.1 BRC has the full right, power and capacity to enter into this
Agreement and to carry out the transactions contemplated hereby, no consent or
authorization of any person is required as a condition precedent to the
consummation by BRC of this Agreement or the transactions or other events
contemplated herein except those consents that have been obtained, and the
Person who executed this Agreement on behalf of MHC-QRS Blue Ribbon Communities,
Inc. ("MHC-QRS"), the general partner of BRC, is duly authorized to bind MHC-
-------
QRS, as general partner of BRC.
7.3 No Brokers.
----------
7.3.1 MPI and BRC each hereby represents and warrants to the
Partnership and each other that it has not dealt with, or otherwise disclosed
this Agreement or the subject matter hereof to, any broker, agent, or salesman
(collectively, a "Broker"), so as to create any legal right or claim in any
------
Broker for a commission or compensation with respect to the negotiation and/or
execution of this Agreement, the contribution of cash, interests or property to
the Partnership or the other events provided for in this Agreement. MPI and BRC
each hereby agrees to indemnify, defend and hold the Partnership and each other
harmless from any and all claims (and all expenses incurred in defending any
such claims or in enforcing this indemnity, including attorneys' fees and court
costs) made by a Broker for a sales commission or similar fee resulting out of
or in any way connected with any claimed agency or other relationship with the
indemnifying party and relating to the execution of this Agreement, the
contribution of cash or property to the Partnership or the other events provided
for in this Agreement.
7.4 Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations, warranties and covenants set forth in Sections 7.1, 7.2 and 7.3
-------------------------
hereof shall survive for a period of one (1) year after the date of this
Agreement.
ARTICLE VIII
COSTS
-----
8.1 Costs. The Partnership hereby agrees to pay all of the legal fees and
-----
expenses in connection with or relating to the acquisition of the Property by
MPI, the financing of such acquisition, the registration and sale of Shares, the
reorganization of MPI from a non-profit corporation into a for-profit stock
corporation, the Partnership Agreement and this Agreement, the litigation
relating to MPI's right to acquire the Property and all other agreements,
documents, writings and actions relating to any of the foregoing
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Further Action. The parties hereto agree to perform any further acts
--------------
and to
10
<PAGE>
execute and deliver any documents which may be reasonably necessary to effect
the provisions of this Agreement.
9.2 Notices. Except as otherwise specifically provided herein, any notice,
-------
payment, demand or communication required or permitted to be given by any
provision of this Agreement shall be in writing and shall be delivered
personally, or sent by nationally recognized overnight courier or registered or
certified mail,
If to BRC: Blue Ribbon Communities Limited Partnership
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: President
With a copy to: Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: General Counsel
If to MPI: Meadows Preservation, Inc.
2555 PGA Boulevard
Palm Beach Gardens, Florida 33410
Attention: President
If to Partnership: to BRC and MPI
Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally or by nationally
recognized overnight courier, or as of the date on which the same was deposited
in a regularly maintained receptacle for the deposit of United States mail, if
sent by registered or certified mail, postage and charges prepaid. Any party
may from time to time specify a different address by notice to the other
parties.
9.3 Payment to MPI. BRC shall pay to MPI the sum of One Hundred Thousand
--------------
Dollars ($100,000) (the "MPI Payment") to be applied by MPI, among other things,
-----------
to the interest payable by MPI to the Advancing Homeowners pursuant to the
Rescission Offer. At MPI's request, BRC shall pay to MPI a portion of the MPI
Payment equal to the interest payable by MPI as aforesaid, by not later than the
date upon which such interest in payable by MPI, and shall pay any remaining
balance of the MPI Payment to MPI on the Closing Date.
9.4 Assignment. The parties' respective obligations under this Agreement
----------
may not be assigned without the written consent of the other parties hereto.
9.5 Binding Effect. Subject to the restrictions on assignment herein
--------------
contained and except as otherwise provided in this Agreement, every covenant,
term and provision of this
11
<PAGE>
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns.
9.6 Fair Meaning. Every covenant, term and provision of this Agreement
------------
shall be construed simply according to its fair meaning and not strictly for or
against either party.
9.7 Time. Time is of the essence with respect to this Agreement.
----
9.8 Headings. Section and other headings contained in this Agreement are
--------
for reference purposes only and are not intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any provision hereof.
9.9 Severability. Every provision of this Agreement is intended to be
------------
severable. If any term or provision hereof is unenforceable, illegal or invalid
for any reason whatsoever, such unenforceability, illegality or invalidity shall
not affect the enforceability, validity or legality of the remainder of this
Agreement.
9.10 Incorporation by Reference. Every Exhibit attached to this Agreement
--------------------------
and referred to herein is hereby incorporated in this Agreement by reference.
9.11 Construction. All references to Articles, Sections or Exhibits shall
------------
be deemed to refer to the appropriate Articles or Sections of, or Exhibits to,
this Agreement. Unless otherwise specified in this Agreement, the terms
"herein," "hereof, "hereunder," and other terms of like or similar import, shall
be deemed to refer to this Agreement as a whole, and not to any particular
Article, Section, Subsection or clause hereof. Whenever required by the context,
any gender used in this Agreement shall include any other gender, the singular
shall include the plural and the plural shall include the singular.
9.12 Governing Law. The laws of the State of Florida, without reference to
-------------
its conflict of laws rules, shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the parties hereto.
9.13 Venue. Each of the parties hereto irrevocably (a) agrees that any
-----
suit, action or other legal proceeding arising out of or relating to this
Agreement shall be brought in the state of Florida in a court located in Palm
Beach County, or the Federal District Court for the Southern District of
Florida, (b) consents to the jurisdiction of each such court in any such suit,
action or proceeding and (c) waives any objection which it may have to the
laying of venue of any such suit, action or proceeding in any of such courts and
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum.
9.14 Counterpart Execution. This Agreement may be executed in any number
---------------------
of counterparts with the same effect as if each of the parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
9.15 Entire Agreement. This Agreement and the Exhibits hereto constitutes
----------------
the entire
12
<PAGE>
agreement between the parties hereto with respect to the subject matter hereof,
shall supersede any and all prior understandings between the parties with
respect to the subject matter hereof, and may be amended only by an amendment
effectuated in accordance with the provisions of this Agreement
9.16 Waiver. Any condition granted by this Agreement to any party may be
------
waived by such party, but no such waiver may be relied upon or asserted by any
other party unless such waiver has been made in writing by the waiving party,
except as specifically provided herein.
9.17 Third Party Beneficiaries. Nothing in this Agreement is intended or
-------------------------
shall be construed to confer upon or to give to any person, firm or corporation
other than the parties hereto and their permitted successors and assigns any
right, remedy, or claim under or by reason of this Agreement. All terms and
conditions in this Agreement shall be for the sole and exclusive benefit of the
parties hereto and their permitted successors and assigns.
9.18 Books and Record. Each party agrees that it will cooperate with and
----------------
make available to the other party, during normal business hours, all books and
records, information and personnel (without substantial disruption of
employment) retained and remaining in existence hereafter that are necessary or
useful in connection with any tax inquiry, audit, investigation or dispute, any
litigation or investigation or any other matter requiring any such books and
records, information or employees for any reasonable business purpose. The
party requesting any such books and records, information or employees shall bear
all of the out-of-pocket costs and expenses (including without limitation,
attorneys' fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such books and records,
information or employees.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
day first above set forth.
BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
Witness: By: MHC-QRS Blue Ribbon Communities, Inc., a
Delaware corporation, General Partner
By:_________________________________
Name:_______________________________
Title: _____________________________
________________________
________________________
Witness: MEADOWS PRESERVATION, INC., a Florida
corporation
13
<PAGE>
By:_________________________________
Name:_______________________________
Title: _____________________________
__________________________
__________________________
THE MEADOWS RESORT PARTNERSHIP, a
Florida general partnership
By: Blue Ribbon Communities Limited Partnership,
a Delaware limited partnership
Witness: By: MHC-QRS Blue Ribbon Communities, Inc.,
a Delaware corporation
__________________________
__________________________
By:_________________________________
Name: ______________________________
Title: _____________________________
By: Meadows Preservation, Inc., a Florida
corporation
_________________________ By:________________________________
Name: _____________________________
_________________________ Title: ____________________________
14
<PAGE>
EXHIBIT 1A
----------
LEGAL DESCRIPTION
-----------------
PARCEL 1
- --------
From the center of Section 5, Township 42 South, Range 43 East, Palm Beach
County, Florida; thence N.0 degrees 30'10"E. along the North-South quarter line
of the said Section 5 a distance of 275 feet to the point of beginning; thence
continue N. 0 degrees 30'10"E. along the said North-South quarter line a
distance of 1050.85 feet to a point, thence S.89 degrees 51'42"W. a distance of
1323.60 feet to a point; thence S.0 degrees 47'20"W. a distance of 1252.40 feet
to a point in the Northerly right-of-way line of PGA Boulevard, as now laid out
and in use; thence S.89 degrees 07'28"E. along said northerly right-of-way line
a distance of 789.81 feet to a point; thence N.0 degrees 30'10" E. a distance of
225 feet to a point; thence S.89 degrees 07' 28"E. a distance of 540 feet to the
point of beginning.
PARCEL 2
- --------
The South 636.0 feet of the North one-half of the Southwest quarter of the
Northwest quarter, of Section 5, Township 42 South, Range 43 East, Palm Beach
County, Florida.
TOGETHER WITH:
The North ten feet of the South 646 Feet of the North half of the Southwest
quarter of the Northwest quarter; and, the North ten feet of the South half of
the Southwest quarter of the Northwest quarter; Section 5, Township 42 South,
Range 43 East, Palm Beach County, Florida.
<PAGE>
EXHIBIT 1B
----------
FORM OF TITLE HOLDING, NOMINEE AND AGENCY AGREEMENT
---------------------------------------------------
See Attached
<PAGE>
EXHIBIT 1C
----------
PERMITTED EXCEPTIONS
--------------------
1. The Mortgage;
2. Real Property Taxes for fiscal year 1998;
3. Applicable zoning and other regulatory laws and ordinances;
4. Rights of tenants under disclosed unrecorded rental agreements;
5. Easements for provision of existing utilities services and all other
easements which benefit the Property and that are approved by Purchaser;
and
6. The title exceptions listed in Schedule B of Title Policy No. FA-35-146510
issued by First American Title Insurance Company, dated December 19, 1997.
<PAGE>
EXHIBIT 1D
-----------
TANGIBLE PERSONAL PROPERTY
--------------------------
<PAGE>
EXHIBIT 6.1(C)
-------------
FORM OF ASSIGNMENT OF BENEFICIAL INTEREST
-----------------------------------------
<PAGE>
EXHIBIT 6.1(D)
-------------
FORM OF WARRANTY BILL OF CONTRIBUTION
-------------------------------------
THIS WARRANTY BILL OF CONTRIBUTION, made on _________________, 1998 between
MEADOWS PRESERVATION, INC, a Florida corporation ("Transferor") and THE MEADOWS
----------
RESORT PARTNERSHIP, a Florida general partnership ("Transferee").
----------
WITNESSETH:
WHEREAS, pursuant to that certain Contribution Agreement dated as of
____________, 1998 (the "Contribution Agreement"), Transferor has agreed to
----------------------
contribute and transfer to Transferee all of the beneficial interest in that
certain mobile home commonly known as The Meadows Mobile Home Park in Palm Beach
Gardens, Florida (the "Park"), on and subject to the terms of the Contribution
----
Agreement; and
WHEREAS, in the Contribution Agreement, Transferor agreed to transfer and
contribute to Transferee all of its right, title and interest in and to all
appliances, fixtures, equipment, vehicles, inventory from sales operations,
machinery, furniture, carpet, drapes and other personal property, if any,
located on or about the Park or the improvements thereon or used in the
operation and maintenance thereof.
KNOW ALL MEN BY THESE PRESENTS that Transferor, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, has
contributed, conveyed, transferred, assigned and delivered, and by these
presents does contribute, convey, transfer, assign and deliver to Transferee the
following goods and chattels, to wit:
SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN BY THIS REFERENCE.
Transferor covenants to Transferee that Transferor is the lawful owner of
the said goods and chattels; that they are free from all encumbrances; that
Transferor has good right to sell that property; and that Transferor will
warrant and defend the sale of said property, goods and chattels unto Transferee
against the lawful claims and demands of all persons whomsoever.
"Transferor" and "Transferee" shall be used for singular or plural, natural
or artificial, which terms shall include the heirs, legal representatives,
successors and assigns of Transferor and Transferee whenever the context so
requires or admits.
<PAGE>
IN WITNESS WHEREOF, Transferor has executed this Warranty Bill of
Contribution as of ________________, 1998
Signed, Sealed and Delivered
in the presence of MEADOWS PRESERVATION, INC., a Florida corporation
Witness:
By: __________________________
___________________________ Name: ________________________
Title: _________________________
___________________________
STATE OF Florida
COUNTY OF ____________
The foregoing instrument was acknowledged before me this ___ day of
______________, 1998 by _________________, as __________ of Meadows
Preservation, Inc., a Florida corporation. He/she is personally known to me or
has produced a Driver's License as Identification.
[Notary Seal] Notary Public
Printed Name: ______________________
My Commission Expires: _____________
-2-
<PAGE>
EXHIBIT 6.1(E)
-------------
FORM OF ASSIGNMENT OF LEASES
----------------------------
ASSIGNOR: MEADOWS PRESERVATION, INC., a Florida corporation
ASSIGNEE: THE MEADOWS RESORT PARTNERSHIP, a Florida general partnership
FOR VALUE RECEIVED, the undersigned ("Assignor") does hereby assign to THE
--------
MEADOWS RESORT PARTNERSHIP, a Florida general partnership ("Assignee"), its
--------
entire interest and position as present lessor, by virtue of its ownership in
the premises described in Exhibit "A" attached hereto (the "Premises") with
respect to all leases, profits, security deposits, prepaid rents or rental
arrangements executed or delivered, oral leases pursuant to Chapter 723, Florida
Statutes, and the prospectus 500716P, as approved by the Department of Business
and Professional Regulation, governing the afore-referenced oral leases and
rental arrangements, now existing or hereafter made or existing (hereinafter
collectively referred to as the "Leases"), with respect to the Premises.
Assignor does hereby empower Assignee, its agents or attorneys to collect,
sue for, settle, compromise and give acquittance for all of the rents that may
become due under the Leases from _____________, 1998 and thereafter, and to
avail itself of and pursue all remedies for the enforcement of the Leases and
Assignor's rights in and under the Leases as Assignor might have pursued but for
this assignment. All sums due under any Leases prior to _____________, 1998,
whether paid or unpaid, shall be and remain the property of Assignor hereunder.
Assignor warrants that it is the sole owner of the entire lessor's interest
in the Leases; that the Leases are valid and enforceable; that no rent reserved
in the Leases has been assigned or anticipated; and that no rent for any period
subsequent to the date of this assignment has been collected in advance of the
time when the same is due under the terms of the Leases.
This assignment is made in conjunction with the assignment of the
beneficial interest in the Premises by Assignor to Assignee.
This instrument shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto. The words "Assignor",
"Assignee" and "lessor", wherever used herein, shall include the persons named
herein and designated as such and their respective successors and assigns, and
all words and phrases shall be taken to include the singular or plural and
masculine, feminine or neuter gender, as may
<PAGE>
fit the case.
This assignment shall cover all leases and all rental arrangements of
Assignor relating to the Premises.
IN WITNESS WHEREOF, Assignor has executed this Assignment of Leases on the
date of acknowledgment, but the same is to be effective as of _____________,
1998.
Signed, Sealed and Delivered
in the presence of MEADOWS PRESERVATION, INC., a
Florida corporation
Witness:
By: ____________________________
___________________________ Name ___________________________
Title: _________________________
___________________________
<PAGE>
EXHIBIT 6.1(F)
-------------
FORM OF ASSIGNMENT OF PERMITS, TRADE NAME, WARRANTIES, AND SERVICE AND
----------------------------------------------------------------------
MANAGEMENT CONTRACTS, AND INTANGIBLE PROPERTY
---------------------------------------------
THIS ASSIGNMENT OF PERMITS, TRADE NAME, WARRANTIES, AND SERVICE AND
MANAGEMENT CONTRACTS, AND INTANGIBLE PROPERTY (hereinafter referred to as the
"Assignment") is made and entered into this ___ day of ____________, 1998, by
- -----------
and between MEADOWS PRESERVATION, INC., a Florida corporation (hereinafter
referred to as "Assignor"), and THE MEADOWS RESORT PARTNERSHIP, a Florida
--------
general partnership (hereinafter referred to as "Assignee").
--------
WITNESSETH:
For and in consideration of the sum of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, Assignor does hereby transfer, assign,
and convey unto Assigee, and its successors and assigns, all of the right,
interest, benefits, and privileges of Assignor in and to:
(i) the trade name "The Meadows Mobile Home Park Development", and
all derivatives thereof (the "Development");
(ii) the signs servicing the Development;
(iii) any and all warranties, and agreements, to the extent that any
may exist, from any contractors, subcontractors, vendors or
suppliers regarding their performance, quality of workmanship,
and/or quality of materials supplied in connection with the
construction, manufacture, development, installation, repair
and/or operation of any and all fixtures, equipment, items of
personal property and improvements located in or used in
connection with the Development, or any portion thereof;
(iv) all Assignor's service contracts and management contracts,
identified on Attachment "A" attached hereto and incorporated
--------------
herein by this reference;
(v) any and all use, occupancy and operating permits and certificates
and all other permits, approvals and certificates obtained in
connection with the Development, or any portion thereof, to the
extent any of the foregoing may exist and to the extent the same
may be assignable;
(vi) any and all plans, specifications and permits relating to the
Development;
(vii) Intangible Property shall be defined as and include the
following: telephone numbers, logos and similar items, leases,
rental agreements, prepaid rents and maintenance fees, marketing
information, deposits, contract rights, permits and licenses,
pertaining to the Development; and
<PAGE>
(viii) all other intangible property owned by Assignor in connection
with the Development.
This Assignment is given in accordance with that certain Contribution
Agreement dated _____________, 1998 by and among Assignor, Assignee and Blue
Ribbon Communities Limited Partnership relating to the Development.
Assignor hereby represents and warrants to Assignee that no previous
assignment of its interest in such items covered hereby has been made.
Dated the day and year first above written.
WITNESSES: MEADOWS PRESERVATION, INC., a Florida
corporation
________________________ By: _______________________________
Name:______________________________
________________________ Title: ____________________________
_____________________________
)
STATE OF FLORIDA ) ss:
)
________ COUNTY )
____________________________ )
The foregoing instrument was acknowledged before me this __ day of ___________,
1998, by ____________________ as ____________________ of Meadows Preservation,
Inc., a Florida corporation. He/She is personally known to me or has produced
driver's license as identification.
________________________________
Notary Public
Name of Notary Printed:
<PAGE>
EXHIBIT 6.1(G)
FORM OF ASSIGNMENT AND ASSUMPTION OF MORTGAGE
---------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF MORTGAGE ("Agreement") effective as of
---------
the __ day of __________, 1998, by and among Meadows Preservation, Inc., a
Florida corporation, whose address is 2555 PGA Boulevard, Palm Beach Gardens,
Florida 33410 ("MPI"), The Meadows Resort Partnership, a Florida general
partnership whose address is c/o Manufactured Home Communities, Inc., Two North
Riverside Plaza, Suite 800, Chicago, Illinois 60606 ("Partnership"), and MHC
-----------
Lending Limited Partnership, whose address is Two North Riverside Plaza, Suite
800, Chicago, Illinois 60606 ("Lender").
------
WITNESSETH:
WHEREAS, MPI is the owner of the record and beneficial interests in that
certain real property located at the northwest corner of PGA Boulevard and
Prosperity Farms Road in Palm Beach County, Florida, and commonly known as The
Meadows Mobile Home Park, including all improvements thereon, more particularly
described in EXHIBIT A attached hereto (the "Property"), and
--------
WHEREAS, Lender has previously made a loan to MPI in the original principal
amount of Twelve Million Three Hundred Forty-one Thousand Six Hundred Ninety-
three Dollars and No Cents ($12,341,693.00) (with all accrued interest thereon,
the "Loan"), which is evidenced by a Promissory Note executed by MPI in favor of
----
Lender dated December 18, 1998, in the amount of the Loan (the "Note"), and
----
which Note is secured by, among other things, a Mortgage, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases and Rents dated
December 18, 1997 and recorded on December 19, 1997 in Official Record Book
10145, Page 1538 of the Public Records of Palm Beach County, Florida, as
extended by a Mortgage Extension Agreement, dated March 30, 1998, and recorded
as aforesaid on May 14, 1998 in Official Record Book 10403, Page 97 and as
further extended and amended by a Mortgage Extension and Amendment Agreement,
dated August 19, 1998, and recorded as aforesaid on September 3, 1998 in
Official Record Book 10620, Page 1335 (collectively, the "Mortgage"); and
--------
WHEREAS, MPI, Partnership and Lender have agreed to a further extension of
the Note and Mortgage as hereinafter set forth; and
WHEREAS, MPI and Partnership intend that the beneficial interest in the
Property will be conveyed to Partnership by MPI as of the date hereof, but that
MPI will retain the record interest in the Property; and
WHEREAS, the Mortgage provides that MPI shall not convey the Property or
any direct or indirect interest therein without the prior written consent of the
Lender; and
<PAGE>
WHEREAS, Lender is willing to consent to the conveyance of the beneficial
interest in the Property, provided that Partnership assumes liability for the
payment of the Loan and responsibility for the performance of all obligations
under the Note and Mortgage;
NOW, THEREFORE, as an inducement to cause Lender to consent to the assignment,
and for other valuable consideration, the receipt and sufficiency of which are
acknowledged, it is agreed as follows:
1. Consent to Assignment of Beneficial Interest. Lender hereby consents
--------------------------------------------
to the assignment of the beneficial interest in the Property from MPI to the
Partnership, subject to the Mortgage.
2. Assignment of the Loan: Assumption by Partnership. MPI hereby
-------------------------------------------------
assigns to the Partnership, effective as of the date hereof, all of MPI's
rights, duties and obligations in, to, and arising out of the Loan together with
the Note and Mortgage (other than MPI's obligation to pay interest and other
amounts accrued or payable through the date hereof), subject to the covenants,
conditions, and provisions of the Loan as provided in the Note and the Mortgage.
The Partnership hereby assumes, as of the date hereof, all liability for the
payment of the outstanding principal amount of the Loan and for the payment of
all interest and other amounts due thereon or in connection therewith (other
than interest or other amounts that accrued or are payable through the date
hereof) and the performance of all of the obligations of MPI with respect to the
Loan, the Note and the Mortgage.
If Lender so requests, the Partnership shall execute an allonge to the Note
to further evidence the Partnership's liability for the payment thereof.
3. Ratification. The Partnership hereby remakes, ratifies and confirms
------------
in each and every respect all terms, provisions, conditions, representations,
warranties, liabilities, obligations and/or indebtedness contained in or
evidenced by the Note, the Mortgage or the Loan, as hereby specifically modified
and amended.
4. Amendment and Waiver in Writing. No provision of this Agreement can
-------------------------------
be amended or waived, except by a statement in writing signed by the party
against which enforcement of the amendment or waiver is sought.
5. Assignment. This Agreement and all related documents shall be
----------
binding upon and inure to the benefit of the respective successors and assigns
of MPI and the Partnership and the successors and assigns of Lender. This
provision does not, however, modify or impair the restrictions on transfers of
the Property or interests therein set forth in the Mortgage.
6. Entire Agreement/Counterparts. This Agreement and the documents
-----------------------------
referenced herein and those executed concurrently herewith represent the entire
agreement among the parties concerning the Loan referenced herein, and each such
document may be executed in one or more counterparts, all of which counterparts
of any such document shall constitute one and the same instrument.
<PAGE>
7. Severability. Should any provision of this Agreement be invalid or
------------
unenforceable for any reason, the remaining provisions hereof shall remain in
full effect.
8. Applicable Law. The validity and construction of this Agreement and
--------------
all other documents executed with respect to the Loan shall be determined
according to the laws of the state of Florida applicable to contracts executed
and performed within that state.
9. Gender and Number. Words used herein indicating gender or number
-----------------
shall be read as the context may require.
10. Captions Not Controlling. Captions and headings have been included
------------------------
in this Agreement for the convenience of the parties, and shall not be construed
as affecting the content of the respective paragraphs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MEADOWS PRESERVATION, INC., a Florida
WITNESS: corporation
___________________________ By: ____________________________
Name: __________________________
___________________________ Title: ___________________________
BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
WITNESS: By: MHC-QRS Blue Ribbon Communities, Inc.,
a Delaware corporation, General Partner
___________________________ By: ____________________________
Name: __________________________
___________________________ Title: ___________________________
MHC LENDING LIMITED PARTNERSHIP, an
Illinois limited partnership
WITNESS: By: MHC Lending-QRS, Inc., an Illinois
<PAGE>
___________________________ By: ____________________________
Name: __________________________
___________________________ Title: ___________________________
__________________________
)
STATE OF FLORIDA ) ss:
)
__________ COUNTY )
__________________________)
The foregoing instrument was acknowledged before me this __ day of ___________,
1998, by ____________________ as ____________________ of Meadows Preservation,
Inc., a Florida corporation. He/She is personally known to me or has produced
driver's license as identification.
________________________________
Notary Public
Name of Notary Printed:
__________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
__________________________)
The foregoing instrument was acknowledged before me this __ day of ___________,
1998, by ____________________ as ____________________ of MHC-QRS Blue Ribbon
Communities, Inc., General Partner of Blue Ribbon Communities Limited
Partnership, a Delaware limited partnership. He/She is personally known to me
or has produced driver's license as identification.
________________________________
Notary Public
Name of Notary Printed:
<PAGE>
__________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
__________________________)
The foregoing instrument was acknowledged before me this __ day of __________,
1998, by ____________________ as ____________________ of MHC Lending-QRS, Inc.,
General Partner of MHC Lending Limited Partnership, an Illinois limited
partnership. He/She is personally known to me or has produced driver's license
as identification.
________________________________
Notary Public
Name of Notary Printed:
<PAGE>
EXHIBIT 6.1(J)
CONTRACTS PERTAINING TO THE PROPERTY
------------------------------------
1. Management Agreement with MHC Management Limited Partnership
<PAGE>
EXHIBIT 6.4
Direct Phone: (312) 466-3827
Direct Fax: (312) 474-0205
December 12, 1997
VIA HAND DELIVERY
- -----------------
Ms. Theresa Tyrrell, President
Meadows Preservation, Inc.
2555 PGA Boulevard, #118
Palm Beach Gardens, Florida 33410
RE: PROPOSED SALE OF THE MEADOWS MOBILE HOME PARK, PALM BEACH GARDENS,
FLORIDA (THE "COMMUNITY")
Dear Ms. Tyrrell:
On behalf of Blue Ribbon Communities, an affiliate of Manufactured Home
Communities, Inc. (collectively, "MHC"), and at the request of Mr. Marty Pozgay
of FMO Conversion Services, Inc., I am pleased to present the following proposal
to Meadows Preservation, Inc. (the "HOA") in connection with the above-
referenced transaction.
I. LOAN. MHC hereby agrees to make a loan (the "Loan") to the HOA to acquire
the Community, subject to and upon the following terms and conditions:
1. PRINCIPAL AMOUNT. The principal amount of the Loan will be
----------------
$12,000,000, being the purchase price for the Community under that certain
Agreement of Purchase and Sale dated November 28, 1997 by and between the
HOA, as Purchaser, and H.G.G.S. Associates, a Florida partnership, as
Seller (as amended, the "Purchase Agreement"), subject to adjustment as
provided for in the Purchase Agreement, plus the amount of any closing
----
costs payable by the HOA under the Purchase Agreement, less the HOA's cash
----
payment, if any, to be paid as part of the purchase price. The $350,000
earnest money deposit (the "Earnest Money Deposit") previously loaned by
MHC to the HOA pursuant to that certain (i) letter agreement dated November
25, 1997, (ii) Promissory Note and Agreement dated November 26, 1997 and
(iii) Power of Attorney from the HOA in favor of Mr. Pozgay dated December
1, 1997 (collectively, the "Original Documents") shall be applied as
provided for in the Purchase Agreement, and the HOA shall immediately
deliver to MHC the $150,000 balance of the Earnest Money Deposit to be
returned to the HOA upon the closing under the Purchase Agreement.
2. CLOSING AND USE OF PROCEEDS. The closing of the Loan shall occur
---------------------------
concurrently with the closing under the Purchase Agreement (collectively,
the "Closing"). The
<PAGE>
proceeds of the Loan shall be used to pay the purchase price and any
closing costs payable by the HOA under the Purchase Agreement.
3. INTEREST. The principal amount of the Loan will accrue interest at a
--------
per annum rate equal to nine percent (9%). All such interest shall be
payable in one lump-sum payment on the Maturity Date (as hereinafter
defined).
4. TERM. The Loan will mature on the date (the "Maturity Date") which is
----
the earlier of (i) ninety (90) days after the date of the Closing (the
"Closing Date") or (ii) the date ten (10) days after the HOA delivers
written notice to MHC that the HOA has raised the funds necessary to make
its capital contribution to the Partnership (as hereinafter defined)
pursuant to Section II below. The entire principal amount of the Loan,
----------
together with all accrued interest, shall be due and payable on the
Maturity Date.
5. COLLATERAL. The Loan will be secured by a first priority mortgage lien
----------
on the Community, together with an assignment of leases and rents,
financing statements, and other customary documentation.
6. LOAN DOCUMENTATION. The Loan documents shall be in such form as
------------------
reasonably prescribed by MHC and shall include customary representations,
warranties, covenants and other provisions.
7. NON-RECOURSE. The Loan will be non-recourse to the HOA, subject to
------------
customary "carve-outs" for fraud, intentional acts of the HOA, etc.
II. PARTNERSHIP. MHC hereby agrees to form a general partnership with the HOA
(the "Partnership") to own and operate the Community from and after the
Maturity Date, subject to and upon the following terms and conditions:
1. FORMATION OF PARTNERSHIP. During the period between the Closing Date
------------------------
and the Maturity Date, the HOA shall be converted to a for-profit
corporation and shall seek to raise funds for use as the HOA's capital
contribution to the Partnership by selling shares in the HOA for $1,000
each. MHC shall pay all reasonable costs and expenses incurred by the HOA
in connection with the registration (if applicable) and offering of such
shares, and shall have the right to designate the attorneys and other
professional advisers handling such registration and offering. The HOA's
corporate documents shall provide that such shares may be purchased and
held only by owners ("Homeowners") of mobile or manufactured homes
("Homes") located on sites ("Homesites") within the Community and that if a
Homeowner shareholder desires to sell such Homeowner's Home or relocate the
Home outside the Community, such Homeowner shall sell such Homeowner's
shares to the HOA pursuant to the mechanism described in paragraph 2 of
this Section II. If the HOA raises such funds in the aggregate amount of
----------
$750,000 or more by the Maturity Date, then MHC and the HOA shall form the
Partnership effective as of the Maturity Date pursuant to a partnership
agreement in form reasonably prescribed by MHC, and in connection therewith
(i) the HOA shall contribute such funds together with all of the beneficial
interest in the Community as its capital contribution to the Partnership,
(ii) the
<PAGE>
Partnership shall refinance the Community with a loan from a third-party
lender and use the proceeds to partially repay the Loan, and (iii) the
difference between the full amount of the Loan and the portion of the Loan
so repaid shall be deemed to be MHC's capital contribution to the
Partnership. One partnership unit in the Partnership shall be issued for
each $1,000 capital contribution made (other than the contribution of the
beneficial interest in the Community). After the Partnership is formed, if
any shares in the HOA are sold to the HOA in connection with the proposed
sale or relocation of a Home by a Homeowner shareholder, MHC shall pay to
the HOA (or directly to the selling shareholder, at MHC's election) $1,000
(discounted by 20% for the first two (2) years after the Maturity Date), in
cash, per share sold and in exchange for each such payment made, the
Partnership units owned by MHC will be increased by one and the Partnership
units held by the HOA will be decreased by one. If the HOA fails to raise
such funds in the aggregate amount of $750,000 or more by the Maturity
Date, or if the HOA raises such funds but fails to enter into the
Partnership as aforesaid, then the HOA shall convey the Community to MHC on
the Maturity Date as described in Section III below.
-----------
2. STRUCTURE AND MANAGEMENT OF PARTNERSHIP. The Partnership shall be a
---------------------------------------
for-profit entity. MHC shall own a minimum of 50% of the interests in the
Partnership at all times; provided, however, the HOA shall have the right
to purchase all (but not less than all) of MHC's interest in the
Partnership on the tenth (10th) anniversary of the Maturity Date, and on
each fifth (5th) anniversary of the Maturity Date thereafter, based upon an
agreed-upon formula. In addition, each individual HOA shareholder shall
have the right to sell its HOA shares to the HOA. MHC shall pay to the HOA
(or directly to the selling shareholder, at MHC's election) $1,000
(discounted by 20% for the first two (2) years after the Maturity Date), in
cash, per share and in exchange for each such payment made, the Partnership
units owned by MHC will be increased by one and the Partnership units held
by the HOA will be decreased by one. MHC shall act as the managing partner
of the Partnership and, during any period that MHC is not acting as the
property manager of the Community, MHC shall receive an asset management
fee equal to one percent (1%) of the gross revenues from the Community each
month. MHC shall have consent rights with respect to major decisions
affecting the Community. Unless and until MHC's interest in the Partnership
is acquired by the HOA as aforesaid, MHC shall agree not to mortgage or
otherwise encumber its interest in the Partnership for a period of ten (10)
years after the Closing Date (the "Restriction Period") without the HOA's
consent.
3. MANAGEMENT AND OPERATION OF COMMUNITY. Unless and until otherwise
-------------------------------------
agreed, MHC or its affiliate shall act as the property manager of the
Community. MHC or such affiliate shall receive a property management fee
equal to four percent (4%) of the gross revenues from the Community each
month. In addition, subject to applicable law, MHC or its affiliate shall
act as the exclusive sales/resales and marketing agent at the Community
(provided, however, that each Homeowner shall have the right to sell such
Homeowner's Home independent of MHC), and shall have the exclusive right to
develop and market additional Homesites within the Community. The
Partnership shall agree (i) not to convert the use of the Community to any
use other than mobile home park or manufactured home community use during
the Restriction Period (subject to causes beyond the Partnership's
reasonable control such as zoning changes,
<PAGE>
condemnation/casualty, etc.), (ii) to spend at least $400,000 (which sum
shall be funded solely by MHC) within a reasonable time after the Maturity
Date on capital improvements to the Community, including, without
limitation, installation of a gate at the front entrance, improvements to
the clubhouse building and street repairs, (iii) to make a one-time
contribution of $100,000 (which sum shall be funded solely by MHC) to the
MPI Park Purchase Account on the Maturity Date, (iv) to limit annual base
rent increases at the Community during the Restriction Period to the
greater of (A) five percent (5%) or (B) the corresponding annual percentage
increase in the "Consumer Price Index for All Urban Consumers, All Items"
prepared by the Bureau of Labor Statistics of the United States Department
of Labor, and (v) to limit additional rent pass-throughs at the Community
during the Restriction Period to (A) ad valorem taxes, (B) non-ad valorem
assessments, (C) costs incurred by the Partnership to comply with
governmental directives and (D) any other items currently passed through to
the Homeowners.
4. SUBLEASING. Homeowners may continue to sublease their Homes
----------
substantially in accordance with current Community practice; provided,
however, that each Homeowner shall remain responsible for complying with
such Homeowner's rental agreement, for maintaining such Homeowner's Home in
compliance with the standards set forth in the Community's rules and
regulations (the "Rules and Regulations"), and for ensuring that such
Homeowner's sublessee complies with the Rules and Regulations.
5. MAINTENANCE OF HOMES. Each Homeowner shall be responsible for
--------------------
maintaining such Homeowner's Home in good condition and repair and in
compliance with the standards set forth in the Rules and Regulations. If
any Homeowner fails to properly maintain such Homeowner's Home, such
Homeowner shall be given written notice of such failure and a reasonable
opportunity to cure such failure. If such Homeowner does not timely cure
such failure, management may require that such Homeowner's Home be moved to
another Site designated by management or removed from the Community.
6. UPGRADE POLICY. Upon the sale or other transfer of a Home not meeting
--------------
then-current Community standards, or upon a change in the persons occupying
such a Home (other than changes involving related parties), management may
require that the Home be upgraded to then-current Community standards,
moved to another Site designated by management or removed from the
Community. If the new owner or proposed occupant of the Home acquires the
Home before any such required upgrades are completed, such new owner or
proposed occupant shall not be given a rental agreement unless and until
they complete the required upgrades within six (6) months after they
acquire the Home.
III. CONVEYANCE OF COMMUNITY TO MHC. As an alternative to Section II above,
----------
MHC hereby agrees to acquire the Community from the HOA on the Maturity
Date, subject to and upon the following terms and conditions:
1. ACQUISITION OF COMMUNITY BY MHC. If the HOA fails to raise the funds
-------------------------------
necessary to make a capital contribution of at least $750,000 by the
Maturity Date, or if the HOA raises such funds but fails to enter into the
Partnership as aforesaid, then on the Maturity Date the HOA shall sell the
Community to MHC upon terms and conditions
<PAGE>
substantially identical to those set forth in the Purchase Agreement;
provided, however, that forgiveness of the Loan by MHC shall constitute
payment in full of the purchase price for the Community.
2. MANAGEMENT AND OPERATION OF THE COMMUNITY. In the event that MHC
-----------------------------------------
acquires the Community as aforesaid, MHC shall comply with all of the
covenants and agreements of the Partnership set forth in paragraph 3 of
Section II above, and the provisions of paragraphs 4, 5 and 6 of Section II
---------- ----------
above shall also apply.
If the foregoing is acceptable, please sign the enclosed copy of this
letter on behalf of the HOA where indicated below and return the same to the
undersigned as soon as possible. Upon the HOA's execution of this letter
agreement, the Original Documents shall be deemed to be superseded by this
letter agreement and the HOA shall not be required to repay the Earnest Money
Deposit to MHC except to the extent provided in paragraph 1 of Section I above
---------
unless (i) the Purchase Agreement is terminated and the Earnest Money Deposit is
returned to the HOA in accordance with the terms thereof, (ii) the Purchase
Agreement is terminated by the HOA other than at MHC's direction, (ii) the HOA
acquires the Community or any ownership interest therein other than as
contemplated hereinabove or (iv) the HOA fails to negotiate in good faith with
MHC to reach agreement regarding the documentation necessary to consummate the
transactions described hereinabove. Notwithstanding the foregoing, however, the
Power of Attorney shall be deemed extended until the Closing Date to give MHC
the right, at its sole discretion, to direct Mr. Pozgay to terminate the
Purchase Agreement prior to the Closing.
<PAGE>
If there are any questions, please call me immediately at (312) 466-3827.
Sincerely,
MANUFACTURED HOME COMMUNITIES, INC.
/s/ Thomas P. Heneghan
------------------------------
Thomas P. Heneghan
Executive Vice President/Chief Financial Officer
TPH/cdp
Enclosure
ACCEPTED AND AGREED TO THIS 12TH DAY OF DECEMBER, 1997:
MEADOWS PRESERVATION, INC.
By: /s/ Theresa Tyrrell
------------------------------
Theresa Tyrrell, President
cc: Marty Pozgay
Ben Wilkinson
Blake Rubin
Howard Walker
Ellen Kelleher
David Lee
David Fell
<PAGE>
EXHIBIT 6.5
AGREEMENT OF PURCHASE AND-SALE
------------------------------
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made this ______ day
of _________________, 1997, by and among:
SELLER: H.G.G.S. Associates, a Florida partnership
2555 P.G.A. Boulevard
Palm Beach Gardens, Florida 33410
PURCHASER: Meadows Preservation, Inc.
2555 PGA Boulevard, Lot #209*
Palm Beach Gardens, Florida 33410
*or other lot number as designated
by Association
ESCROW AGENT: Sonya Daws, Esq.
Skelding, Labasky, et al., P.A.
P.O. Box 669
Tallahassee, Florida 32302
In consideration of the mutual covenants and promises contained herein,
Seller and Purchaser agree as follows:
1. Purchase and Sale. Subject to the terms and conditions of this
-----------------
Agreement, Seller hereby agrees to sell and convey to Purchaser, and Purchaser
hereby agrees to purchase from Seller, the following described property (herein
collectively called the "Property"):
A. Real Property. That certain tract of Real Property (the "Real
-------------
Property") located at the northwest corner of PGA Boulevard and Prosperity Farms
Road in Palm Beach County, Florida, consisting of 55 acres zoned RMH in the City
of Palm Beach Gardens, operating as the Meadows Mobile Home Park Development,
being more particularly described on Exhibit "A", attached hereto and
-----------
incorporated herein by reference, together with all improvements, including, but
not limited to, 381 zoned, licensed, permitted mobile home rental spaces, all of
which are developed with full utility services and fully rentable.
B. Easements. All easements, if any, benefitting the Real Property.
---------
<PAGE>
Meadows Mobile Home Park
________________
C. Rights and Appurtenances. All rights and appurtenances pertaining
------------------------
to the foregoing, if any, including any right, title and interest of Seller, if
any, in and to adjacent streets, alleys or rights of way.
D. Improvements. All improvements (the "Improvements") in and on the
------------
Real Property.
E. Tangible Personal Property. All of Seller's right, title and
--------------------------
interest in all appliances, fixtures, equipment, vehicles, inventory from sales
operations, machinery, furniture, carpet, drapes and other personal property, if
any, located on or about the Real Property and the Improvements or used in the
operation and maintenance thereof (the "Tangible Personal Property"). A schedule
of the Tangible Personal Property proposed by Seller is set forth in Exhibit "C"
-----------
attached hereto and made a part hereof. Purchaser shall accept or reject said
schedule during the Inspection Period (hereinafter defined). Seller currently
owns five (5) mobile homes which are excluded from this transaction; Seller
shall continue to pay rent after Closing on the five (5) spaces occupied by
Seller's mobile homes.
F. Intangible Property. All of Seller's right, title and interest in
-------------------
the following intangible property (the "Intangible Property"): business
telephone numbers, the Park name, "The Meadows Mobile Home Park Development,"
logos and similar items, leases, rental agreements, prepaid rents and
maintenance fees, marketing information, deposits, contract rights, permits and
licenses, pertaining to the Real Property, the Improvements, or the Tangible
Personal Property or the use thereof.
2. Purchase Price. Seller agrees to sell and convey, and Purchaser agrees
--------------
to purchase the Property for a total consideration of TWELVE MILLION DOLLARS
($12,000,000.00) payable as follows:
A. Earnest Money. The Purchaser agrees to deposit with Escrow Agent
-------------
(hereinafter defined), within three (3) business days after the Effective Date,
(hereinafter defined) the sum of THREE HUNDRED FIFTY THOUSAND DOLLARS
($350,000.00) in cash ("Earnest Money"). The Earnest Money shall be held in an
interest bearing account by Sonya Daws, Esq., Skelding, Labasky, et al., P.A.
("Escrow Agent") in a fully insured financial institution, with interest to
accrue to Seller in the event of Purchaser's default. If the sale of the
Property is consummated pursuant to the terms of this Agreement, the accrued
interest on the Earnest Money shall belong to the Purchaser. If Purchaser
terminates this Agreement in accordance with any right to terminate that
Purchaser is granted by the terms of this Agreement, the Earnest Money and
accrued interest thereon shall be immediately returned to Purchaser, and no
party hereto shall have any further obligations under this Agreement.
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B. Balance of Purchase Price. The balance of the Purchase Price,
-------------------------
subject to the provisions and adjustments permitted or required by this
Agreement against the cash portion of the Purchase Price, shall be paid as
follows:
(1) The sum of Two Hundred Thousand Dollars ($200,000.00) by confirmed
wire transfer at Closing from the Escrow Agent. The balance of the
Earnest Money shall be returned to Purchaser at Closing.
(2) Execution and delivery of a non-recourse promissory note in an amount
equal to the balance of the Purchase Price after all adjustments and
prorations (the "Note"), secured by an irrevocable standby letter of
credit due and payable on January 6, 1998 (the "Letter of Credit") to
be issued by Capital City Bank, Tallahassee, Florida (the "Bank") upon
receipt of a confirmed wire transfer of said funds from Purchaser. All
interest or earnings of any nature on the funds deposited with the
Bank shall accrue solely to the benefit of Seller, and shall be paid
to Seller with the proceeds of the Letter of Credit on January 6,
1998. Purchaser shall pay all costs and fees charged by the Bank for
its services, which shall not exceed $2,500. Any Bank costs and fees
in excess of $2,500 shall be paid by Seller. The sole security and the
sole source of payment for the Note shall be the Letter of Credit, or
the proceeds thereof, and Seller shall not look to Purchaser, the
Property or any other source for payment. Purchaser shall have fully
performed its obligations under this Agreement, and shall have no
liability to the Bank or to Seller under the Note, the Letter of
Credit, and any agreement and/or instruments relating thereto, once
the funds securing the Letter of Credit have been deposited with the
Bank. Seller shall execute such waivers as may be required by the
title insurer of all legal and/or equitable claims to the Property for
repayment of the Note, including, without limitation, any claim of a
vendor's lien. The Note shall be non-interest bearing and shall mature
and become due and payable on January 6, 1998. The Note shall be paid
solely by the execution and delivery to Seller of the Letter of Credit
or delivery of the proceeds thereof, on January 6, 1998, by Bank; and
upon such delivery, the Note shall be deemed paid in full, satisfied,
canceled and returned to Purchaser. Seller agrees that Purchaser shall
have no liability to Seller in the event the Bank defaults under the
Letter of Credit. Seller shall further execute such waivers, estoppels
or other instruments as Purchaser's lender may require.
The Earnest Money and all interest thereon, all adjustments,
prorations and other credits, if any, shall be credited against the
cash portion of the Purchase Price at Closing with the remaining
Earnest Money being returned to Purchaser at Closing.
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3. Closing.
-------
A. Date and Time of Closing. The closing, payment of the purchase
------------------------
price and conveyance of title (the "Closing") shall be held five (5) calendar
days after the expiration of the Inspection Period (hereinafter defined) at a
place to be mutually agreed upon (the "Closing" or "Closing Date"), unless the
parties mutually agree upon another time or date.
B. At or prior to the Closing, Purchaser shall deliver the
following:
(1) The Purchase Price by confirmed wire transfer as set forth
in Paragraph 2(B), less Purchaser's Earnest Money and accrued interest, less
adjustments and prorations to Purchaser.
(2) Such consents and authorizations as reasonably necessary to
evidence authorization of Purchaser for the purchase of the Property, the
execution and delivery of any documents required in connection with Closing,
documentation necessary for the consummation of any Section 1031 Exchange
(subject to the limitations set forth in Paragraph 31) and the taking of all
action to be taken by the Purchaser in connection with Closing.
C. At or prior to the Closing, Seller shall deliver the following:
(1) An executed Statutory Warranty Deed warranting good and
marketable fee simple title to the Real Property to Purchaser subject only to
the Permitted Exceptions.
(2) "Marked down" title commitment updated through the Closing
Date deleting the "gap" exception from Schedule B-II and all other exceptions
except for the Permitted Exceptions (hereinafter defined) (owners policy to be
delivered "post closing" at Seller's expense).
(3) An executed Warranty Bill of Sale and Assignment conveying
the Tangible Personal Property to Purchaser and such assignments as may be
necessary to convey Seller's interest in the Intangible Property.
(4) Assignment of all Intangible Property including. without
limitation, all permits, licenses, warranties regarding the Property and the
books and records pertaining to the planning, development, construction and
operation of the Property; and the originals of the foregoing.
(5) An affidavit as required by (S)723.072, Florida Statutes,
----------------
showing Seller's compliance with (S)723.071, Florida Statutes.
----------------
(6) Tenant Deposits held by Seller as of the Closing Date.
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(7) A certified and current rent roll, including identification
of tenants by name and lot number, the current monthly rent, the lease and
prospectus applicable to each lot, the identification of tenant deposits, and
both prepaid and delinquent rents, certified as accurate by Seller as of the
Closing Date.
(8) An Assignment of all Leases and Rental Agreements for the
Property, together with the original instruments for each lease or rental
agreement. Additionally, Seller shall assign, to the extent assignable, all
permits, licenses, warranties, promotional materials, contracts (if Purchaser
elects to assume obligation), Park Name, logos, phone numbers and similar items
used in the operation of the Property.
(9) An affidavit stating that no work has been performed on the
Property that would entitle any person or entity to record a mechanic's or
materialman's lien against the Property, except persons or entities that have
been fully paid and have released all claims; that Seller has sole possession of
the Property, except for tenants and guests under unrecorded leases,
reservations or rental agreements; that there are no unrecorded easements; and
other matters reasonably required by the title insurer.
(10) An affidavit in accordance with IRS Code 1445 certifying
that Seller is not a foreign person subject to the withholding rules of the
Foreign Investment in Real Property Act.
(11) The originals of all disclosed contracts pertaining to the
Property, including, but not limited to, leases, deposits, rental agreements and
other disclosed agreements between Seller and its tenants and service contracts
that will be assumed by Purchaser, which are attached as Exhibit "D" and made a
part hereof (collectively the "Assumed Contracts"). All Assumed Contracts shall
be assigned at Closing. Seller shall indemnify Purchaser from all loss, cost or
expense in connection with all the claims, demands, actions or causes of action
asserted against Purchaser or the Property (the "Claims") arising out of the
Assumed Contracts prior to Closing, and for claims arising out of any contracts
not assumed by Purchaser both prior to and subsequent to Closing. Purchaser
shall indemnify Seller from all loss, cost or expense in connection with any
Claims arising out of the Assumed Contracts subsequent to the Closing.
(12) A closing statement setting forth the allocation of closing
costs, purchase proceeds, etc.
(13) Certificates of title to vehicle(s), if any.
(14) Such consents and authorizations as reasonably necessary to
evidence Seller's authority to sell the Property, including, without limitation,
an affidavit as required by Section 620.605, Florida Statutes, and such
----------------
documentation as title insurer may require to ensure good and marketable title
to the Property passing to Purchaser; the execution and delivery of any
documents required in connection with the Closing; documentation necessary for
the completion of any Section 1031 Exchange (subject to the
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limitations set forth in Paragraph 31); and the taking of all action necessary
to be taken by Seller in connection with the Closing.
D. Proration: Taxes. At Closing, prorations of income and expense
----------------
and the apportionment of taxes shall be apportioned between Seller and Purchaser
as of the Date of Closing on the basis that Seller owns the Property on the Date
of Closing, the following items. The prorations and credits shall be applied to
the cash due at Closing:
(1) All real estate and personal property taxes and assessments
based upon the discounted amount of the latest available bills. The parties
agree to reprorate the taxes at such time as the exact amount of such taxes for
1997 become known. The 1996 taxes shall be paid by Seller prior to closing.
(2) All rents (both earned and prepaid), other income, utilities
and all other operation expenses with respect to the Property, and real estate
and personal property taxes and other assessments with respect to the Property
for the year in which the Closing occurs, shall be prorated as of the date of
Closing. If the Closing shall occur before any rents from the Property have
actually been paid for the month in which the Closing occurs, only the rents
actually received by Seller will be prorated at Closing. That so long as any
tenant owing rent to Seller is fully current in his/her obligations to
Purchaser, then subsequent to the Closing, if any such rents owing to Seller are
actually received by Purchaser; immediately upon its receipt of such rents,
Purchaser shall pay to the Seller its proportionate share thereof for such
month. Purchaser shall pay over to Seller any such rents not apportioned at the
Closing received by Purchaser, for the benefit of Seller.
(3) All utility and/or service charges. Seller shall, where
practical, cause meters to be read and obtain final invoices through and
including the Date of Closing. Where this is not practical, the parties shall
assume equal per them use over the period of the billing, and adjustment shall
be made accordingly. Utility deposits, if any, shall be retained by Seller.
Purchaser shall replace any utility deposits or utility bonds outstanding with
regard to the utilities serving the Property.
(4) Any Assumed Contracts, including prepaid items or licenses
to the extent they are assumable (equipment leases, maintenance contracts, etc.)
(5) The agreements of Seller and Purchaser set forth in this
section 3(D) shall survive the Closing and shall not be merged in the Deed.
E. The parties agree that closing costs shall be paid as listed
below. Each party shall be responsible for payment of its respective attorneys'
fees.
Purchaser Seller
--------- ------
Recording of Deed Seller's Broker's Commission (see (P)12)
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________________
<TABLE>
<CAPTION>
<S> <C>
Costs of First Mortgage, if any Documentary Stamps on Deed
including intangible tax, Pending Special Assessment Liens, if any
documentary stamps & recording Title Insurance Commitment and
fees Title Insurance Policy with standard
endorsements and mortgagee policy
if desired by Purchaser
Purchaser's Broker's Commission Recording of any mortgage or lien
(see (P)12) satisfactions
Bank fees for issuance of Letter
of Credit not to exceed $2,500.00 Impact fees, if any
</TABLE>
4. Contingencies. Purchaser's obligation to purchase the Property is
-------------
contingent upon the following:
A. Inspection Period. Purchaser's right, for a period of fifteen
-----------------
(15) days after the Effective Date (hereinafter defined) (the "Inspection
Period"), to physically examine the Property and conduct reasonable
investigations with respect to the documentation set forth in Exhibit B attached
hereto and made a part hereof (the "Property Documentation"). The Property
Documentation will be made available for inspection and copying on the
"Effective Date" as defined herein, at the offices of The Meadows Mobile Home
Park on the Property. Seller shall make the Property Documentation available in
an orderly form, and shall make it available for copying. All expenses of the
inspection shall be paid by Purchaser. Seller agrees that Purchaser is permitted
to contact the last environmental and structural inspection companies used by
Seller to issue updated and recertified reports to Purchaser for Purchaser's use
and Seller shall cooperate with Purchaser to effectuate the issuance of these
reports (at no cost to Seller). Purchaser shall indemnify Seller from all loss,
cost or expense for any property damage, personal injury or death arising out of
or by reason of Purchaser's examination and investigation hereunder. If
Purchaser has not delivered, by facsimile or hand delivery, written notice to
Seller cancelling this transaction prior to 5:00 p.m. on the expiration date of
the Inspection Period, Purchaser shall be deemed to have approved the inspection
and to have waived all contingencies except those set forth in paragraph 7 and
shall proceed to Closing without further right to any cancellation or claim
against the Earnest Money; provided, however, this waiver shall be subject to
the title evidence contingency including the survey contingency, the conditions
of Closing set forth in paragraph 7 and the other provisions of this Agreement.
If Purchaser does cancel this transaction prior to 5:00 p.m. on the expiration
date of `the Inspection period, in its sole and arbitrary discretion, this
Agreement shall be null and void, and all Earnest Money, and accrued interest
thereon, shall be promptly returned.
That during the times between 9:30 a.m. and 5:00 p.m. on weekdays
only, from and after the Effective Date, herein defined, Seller shall afford
Purchaser and its representatives access to the Property, including, but not
limited to, the right to conduct Phase 1 environmental, soil, engineering and
other tests and to inspect the mechanical, plumbing and utility systems located
at the Property, together with all other aspects of the
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Property; provided, however, if Purchaser or its representatives enter upon the
Property pursuant to the terms hereof, Purchaser agrees to indemnify and hold
Seller harmless from all damage caused to any person or the Property as a result
of such entry and the negligent acts or omissions of Purchaser or its
representatives. Purchaser may not open up utility systems or conduct soil
borings without Seller's prior written approval. Seller's representative must
accompany Purchaser's inspectors during any inspections or testing. Seller
shall have the right to approve each consultant or inspector hired by Purchaser
for inspection of the Property.
Seller shall disclose to Purchaser's representatives, including
financial and legal advisors, provided the designated representatives are not
residents of The Meadows Mobile Home Park, and Purchaser's accountant (who shall
be licensed as a certified public accountant, and who shall have no family,
personal or business relationship or association with any resident of The
Meadows Mobile Home Park) a current rent roll and a summary of expenses by major
categories of payroll, taxes, utilities, insurance, and maintenance for the
Property for 1995 and 1996. Purchaser shall have the further right, at
Purchaser's expense, to have an audit or further review by Purchaser's
accountant of the expenses of the Property for 1995, 1996 and 1997 to date. Such
financial disclosure shall be confidential and shall not be disclosed except to
Purchaser's lenders and financial and legal advisors. Purchaser's
representatives and Purchaser's accountant shall sign a confidentiality
agreement with Seller prior to receipt of any financial disclosure. Further,
Seller, if necessary, will furnish Purchaser's potential lenders with the same
information for the purpose of considering a loan to Purchaser, but the
potential lenders shall give Seller a confidentiality agreement prior to receipt
of any financial disclosure.
All information provided by Seller to Purchaser's representatives or
accountants shall remain strictly confidential and shall not be used for any
purpose other than to analyze Purchaser's prospective purchase of the Real
Property. Should Purchaser for any reason whatsoever elect not to proceed with
the closing of the sale and purchase of the Property, Purchaser shall give
written notice to Seller of such fact within the aforesaid period, whereupon
this Agreement shall terminate and the parties hereto shall have no further
obligations under this Agreement, and Purchaser shall return to Seller all
documents in its possession provided to Purchaser pursuant to this Agreement,
and Seller shall return all of Purchaser's Earnest Money Deposit to Purchaser.
Purchaser will furnish Seller with copies of any reports obtained by
Purchaser with respect to the physical condition of the Property or its
operation.
The provisions of this Paragraph 4 A. shall survive the Closing or
termination of this Agreement.
B. Title Evidence. Within ten (10) days of the Effective Date,
--------------
Purchaser shall obtain a current ALTA owner's policy commitment for title
insurance, together with copies of all exception documents referred to therein.
The title commitment and owner's policy on ALTA Standard Form 1970 B Revised, to
be issued pursuant thereto, shall be
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________________
paid for by Purchaser, shall be issued at the minimum promulgated rate, and
shall be in an amount equal to the Purchase Price. Purchaser shall receive a
credit against the Purchase Price at Closing in an amount equal to the cost of
the title search and the owner's policy, mortgagee policy, if required by
Purchaser, and such endorsements as Purchaser may reasonably require.
Purchaser shall have two (2) business days after receipt of Seller's
prior survey, the title commitment, and copies of all exception documents to
give written notice to Seller of any objections by Purchaser to the state of
title (including any matters shown on Seller's prior survey which are reasonably
unacceptable to Purchaser). Failure of Purchaser to deliver a written notice of
disapproval of the status of title to Seller within said 10-day period shall be
conclusive evidence that Purchaser has approved each and every matter contained
in the title commitment and shown on the Seller's prior survey, and that
Purchaser will accept title in that condition.
C. Permitted Exceptions. Seller shall convey and transfer to
--------------------
Purchaser at Closing, good and marketable fee simple title to the Property, free
and clear of all liens and encumbrances, except those that can be and are
discharged by the Seller at or before Closing, and the following, hereinafter
collectively referred to as the "Permitted Encumbrances:"
(1) Real Property Taxes for the year in which the sale and
purchase is closed, which shall be prorated as provided for elsewhere herein;
(2) Applicable Zoning and other regulatory laws and ordinances;
(3) Rights of tenants under disclosed unrecorded rental
agreements;
(4) Easements for provision of existing utilities services and
all other easements which benefit the Property and that are approved by
Purchaser; and
(5) The title exceptions listed in Schedule B of the title
commitment which Purchaser approves, or is deemed to have approved, pursuant to
this Paragraph 4.
D. Title Defects. After due notice of any title defect, Seller shall
-------------
have the obligation to cure any defects that can, with reasonable diligence, be
cured on or before the Closing Date. As to any other defects, Seller shall have
the option to cure such defects within thirty (30) days after written notice.
Purchaser's consent shall be deemed to have been granted if Purchaser fails to
respond within ten (10) days after written notice from Seller of Seller's intent
to cure such "other" defects (and, if necessary, the closing shall be delayed
for that period). Should Seller either elect not to cure, or if Purchaser does
not give its consent to a cure by Seller, Purchaser shall have the option to:
(1) Terminate this Agreement, in which case Purchaser shall
notify Seller that Purchaser will not proceed with the purchase, whereupon this
Agreement shall
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terminate, Purchaser's Earnest Money shall be promptly refunded, and all parties
shall be released from any further obligations hereunder, or
(2) Proceed under this Agreement and accept title to the Real
Property subject to such defects, in which case the Closing shall take place on
the later of the date set for Closing as herein provided or on a date mutually
agreed upon by Seller and Purchaser and without reduction in the Purchase Price.
5. Survey. Purchaser may, at its expense, within twenty (20) days of the
------
Effective Date, update any prior survey or obtain a new survey of the Real
Property in a form acceptable to the title insurer. The legal description of
the Real Property is described in Exhibit "A." Seller shall furnish Purchaser
------------
with surveys in its possession, if any. If the survey discloses lack of access,
a violation of deed restrictions, zoning regulations or covenants of this
Agreement, easements which are not approved by Purchaser, that any improvements
are not entirely on the Property, or other reasonable survey objections, the
same shall be treated as a title defect and treated as provided in Paragraph
4.D. Purchaser shall have two (2) business days from receipt of said survey to
deliver a written notice of disapproval of the status of title based upon
Purchaser's survey. Failure of Purchaser to deliver a written notice of
disapproval based upon Purchaser's survey within said fifteen business day
period shall be conclusive evidence that Purchaser has approved each and every
matter contained in Purchaser's survey and that Purchaser will accept title in
that condition.
6. Escrow Agent. The Escrow Agent shall be Sonya Daws, Esq., Skelding,
------------
Labasky, et al., P.A. All sums deposited with the Escrow Agent will be held in
an interest bearing trust account as the Good Faith Deposit for the transaction
described herein. The sole liability of the Escrow Agent shall be to deposit
the funds in an interest bearing account and to disburse said funds according to
the terms of this Agreement. No fees shall be charged by Escrow Agent for
setting up the escrow and administering it. However, notwithstanding the
foregoing, in the event of a breach of this Agreement by either the Seller or
the Purchaser, and in the event of a dispute as to the disposition of said
escrowed funds, the parties hereto agree to allow the Escrow Agent to deposit
the funds into the court registry and such deposit shall terminate Escrow
Agent's responsibility for the escrowed funds. The parties shall indemnify and
hold harmless the Escrow Agent from all liability hereunder, save for gross
negligence or intentional acts, and shall reimburse the Escrow Agent for all
court costs and attorneys' fees reasonably incurred by it, including attorneys'
fees on appeal in the event it is joined in any legal proceedings regarding this
Agreement.
7. Conditions to Purchaser's Obligation to Close. Purchaser's obligation
---------------------------------------------
to close this transaction is expressly conditioned upon the following, which, if
not satisfied or waived by Purchaser on or before the Closing Date, shall permit
Purchaser, to declare this Contract null and void and of no further force and
effect by written notice to Seller; whereupon the Earnest Money shall be
returned immediately to Purchaser, and neither the Seller nor the Purchaser
shall have any further obligations hereunder to the other.
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A. Seller shall have performed and complied with all of the covenants
and agreements herein contained which are to be performed prior to the Closing
Date; and,
B. Seller shall have delivered the "marked down" Commitment from the
title underwriter updated through the Closing Date in the full amount of the
Purchase Price subject only to the Permitted Exceptions and deleting the "gap"
exception from Schedule B-2; and,
C. The Property shall not have been materially affected by any
moratorium, legislative or regulatory change, or any flood, accident,
condemnation or other material adverse event.
D. All representations and warranties of Seller as set forth in
Paragraph 8 next below, shall be substantially true and correct.
E. Purchaser may at any time or times before closing waive any of the
foregoing conditions but only in writing signed by Purchaser and delivered to
Seller. In the event any of the conditions are not waived by Purchaser prior to
Closing Date, Purchaser my terminate this Contract and in such event Escrow
Agent shall promptly return all Deposit monies and the interest thereon to
Purchaser and, upon receipt of such refund, this Contract shall be null and void
and neither Purchaser or Seller shall have any further liabilities or
obligations hereunder.
8. Warranties and Representations. The parties agree that Seller has made
------------------------------
no representations or warranties to Purchaser of any kind regarding the
financial or business status of the Property, other than as set forth in this
Agreement. Seller hereby represents and warrants to Purchaser that:
A. Seller has good, marketable and insurable title to the Real
Property, and the Real Property is free and clear of all liens, encumbrances,
restrictions, security interests, covenants, conditions and other matters in any
way affecting title to the Real Property, other than the Permitted Exceptions,
save for an existing first mortgage with an unpaid principal balance of
approximately $205,000.00 that will be satisfied at Closing.
B. Seller has no knowledge of any declarations, covenants or
restrictions of record which would prevent the continued use of the Property as
a 381-space mobile home park.
C. As of the date this Agreement is signed by Seller, there is no
pending or threatened condemnation or similar proceeding affecting the Real
Property, or any part thereof.
D. To Seller's knowledge, there are no actions, suits or other legal
or administrative proceedings, including bankruptcy proceedings, pending or
threatened,
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________________
against or involving Seller or the Property which could affect the consummation
of the transactions contemplated hereby.
E. No goods or services have been contracted for or furnished to the
Real Property which will give rise to any mechanic's liens or other liens
affecting all or any part of the Real Property, except for ongoing maintenance
expense, which will be paid in full prior to or at Closing. Seller may contract
for repairs or services which could result in a lien but that Seller shall not
allow any such liens to attach to the Real Property and shall execute an
appropriate affidavit of no liens at Closing upon which Purchaser and the Title
Insurer may rely.
F. That except as shown on any surveys obtained pursuant to Paragraph
5, there are no encroachments on the Property and the Improvements which are
constructed on the Property do not encroach upon the land of others.
G. Seller has entered into no covenants, conditions, easements,
restrictions, agreements or encumbrances which would prohibit the operation of a
mobile home park on the Real Property defined in Paragraph 1.(A.) of this
Agreement, consisting of the Property as defined in Paragraph 1. (A.-F.) of this
Agreement.
H. There are no rental agreements which affect the Real Property
except as set forth in the Rent Roll identified in Exhibit "B" which has been
-----------
provided by Seller. There are no rental agreements in excess of 12 months and
no rental agreements affording discounted rents except as set forth in the Rent
Roll. The information contained therein is true and correct as of the Effective
Date; no rental agents, brokers or finders have any rights with regard to such
rental agreements, and there are no commissions payable in connection therewith;
no tenant has an option to purchase any part of the Property; and Seller is the
landlord under each such rental agreement and has the right to assign same to
Purchaser.
I. To the best of Sellers knowledge, Seller is in compliance with
Chapter 723, Florida Statutes and all regulations promulgated thereunder.
----------------
J. Water and sewer services are provided by the City of Palm Beach
Gardens, Florida ("City"), and all costs of design, construction and permitting
of water and sewer facilities and all connection fees have been paid. Seller is
current in its obligation to the City for water and sewer services.
K. The Tangible Personal Property is in good working condition, and
at the time of Closing will be in good working order; and the Tangible Personal
Property is free and clear of all liens and encumbrances, except as otherwise
provided in this Agreement.
L. Seller has the right to assign the name by which the Property is
commonly known and to use that name in the operation of the Property. Seller
represents to Purchaser that Seller has received no notice objecting to the use
of this name for Seller's
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________________
Park, but Seller otherwise makes no warranty or representation as to Purchaser's
ability to use or to continue to use this name.
M. The information contained in the Financial Statements identified
in Exhibit B hereto is true and correct in all material respects. Seller has
not been notified of any material increases in expenses that are not reflected
in such statements. Without limitating the generality of the foregoing
representations and warranties, Seller specifically warrants and represents that
the Financial Statements prepared by Gerson, Preston & Company, P.A., for fiscal
years 1993-1994, 1994-1995, and 1995-1996, and delivered to Purchaser are true
and correct in all materials respects. Seller further warrants and represents
that for the financial statements reflecting the fiscal year 1995-1996, no part
of the net operating income shown thereon is attributable to the approximately
89 unrented mobile home spaces on the Property.
N. To the best of Seller's knowledge, there are no existing or
continuing violations of any law, ordinance, rule, order, regulation, code or
requirement, including any requirement contained in any hazard insurance policy
covering the Property or any part thereof or of any board or fire underwriters
or other body exercising similar function, which are applicable to the Property
or to any part thereof or which are applicable to the use or manner of use,
occupancy, possession or operation of the Property, except as disclosed by those
documents provided by Seller pursuant to Paragraph 4 above.
O. To the best of Seller's knowledge, Seller has obtained and kept in
good standing all governmental permits, licenses and approvals necessary for the
operation of the Property, including, as applicable, all health permits,
Department of Environmental Protection permits and HRS permits, and Seller has
not received notice of any material violations thereunder.
P. The execution and delivery of this Contract and the consummation
of the transactions contemplated by this Contract have been duly and validly
authorized by all general partners of the Seller. This Contract has been duly
and validly executed and delivered by all general partners of Seller, or by such
general partner that has been authorized by the Seller to execute and deliver
this Contract and (assuming the valid execution and delivery of this Contract by
Purchaser) constitutes a legal, valid and binding agreement of Seller
enforceable against it in accordance with its terms.
Q. To the best of Seller's knowledge and except as disclosed by
documents delivered by Seller pursuant to Paragraph 4 above, the use of the
Property is consistent with the zoning uses authorized and permitted by the
ordinances of the City and County where the Property is located; and, except
those disclosed to Purchaser pursuant to Paragraph 4 there are no unpaid
assessments, impact fees or other development type charges pertaining to the
Property except those disclosed to Purchaser pursuant to Paragraph 4.
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R. Seller has not entered into any commitments or agreements with any
governmental authorities or agencies affecting the Property excepting those
disclosed by Purchaser pursuant to Paragraph 4 herein and Seller has received no
notices from any such governmental agencies and has no independent knowledge of
uncured violations at the Property of building, fire, air pollution or zoning
codes, rules, ordinances or regulations, environmental and hazardous substances
laws, or other rules, ordinances or regulations relating to the Property.
S. Neither the execution and delivery of this Agreement by Seller,
nor the consummation by Seller, of the transactions contemplated hereby will (i)
require Seller to file or register with, notify, or obtain any permit,
authorization, consent, or approval of, any governmental or regulatory
authority; (ii) conflict with or breach any provision of the Articles of
Incorporation or By-laws, or other corporate documents of Seller; (iii) violate
or breach any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement or other indenture, deed of trust license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Seller is a party, or by which Seller, the Property or any of Seller's
material assets may be bound; or (iv) violate any order, writ, injunction,
decree, judgment, statute, law or ruling of any court or governmental authority
applicable to Seller, the Property or any of Seller's material assets.
T. To the best of Sellers knowledge, neither this Contract nor any
Exhibit nor any written statement or transaction document furnished or to be
furnished by Seller to Purchaser in connection with the transactions
contemplated by this Agreement contains or will contain any untrue statement of
material fact or omits or will omit any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
U. Prior to the Closing, Seller will only enter into customary twelve
(12) month Rental Agreements. Seller will not enter into any amendment to or
modification of any of the Rental Agreements prior to the Closing, which will
reduce, forgive or postpone any rents or which would otherwise materially affect
the value of the Property, without Purchaser's consent, which will not be
unreasonably withheld. There are no commissions or other fees payable to any
person, entity or agent on the rentals collected or to be collected under the
Rental Agreements; save for a rental commission agreement with David Hendel
Associates, Inc. The rental commissions under said Agreement shall be payable
through Closing and the Agreement shall terminate at Closing and be of no
further effect.
V. No person, firm, corporation or other legal entity whatsoever has
any right, contract or option whatsoever to acquire the Property or any portion
or portions thereof or any interest or interests therein, except for the rights
of the tenants of the Property under Florida Statutes 723.071.
----------------
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W. From the date of the Agreement to the Closing Date, Seller shall
conduct its business involving the Property in the ordinary course, and during
said period will:
(1) Refrain from transferring any of the Property or creating on
the Property any easements, liens, mortgages, encumbrances or other interest
that would affect the Property or Seller's abilities to comply with the terms of
this Agreement;
(2) Refrain from entering into any contracts or other commitments
with respect to the operation of the Property that extend more than 30 days
beyond the Closing Date, other than in the ordinary course of business with the
prior written consent of Purchaser, which will not be unreasonably withheld.
Rental agreements with prospective new residents of the Park entered into at the
prevailing rental rate and terms without concession are excluded from this
requirement;
(3) Continue to maintain and repair the Property in at least the
manner which Seller has previously maintained and repaired the Property, and
Seller will permit no wasting of the Property;
(4) Give Purchaser notice of all notices received by Seller of
violation of laws or municipal ordinances, regulations, orders or requirements
of departments of housing, building, fire, labor, health, or other state, city
or municipal departments or other governmental authorities having jurisdiction
against or affecting the Property or the use or operation thereof and either
comply with the notice or make adequate provision therefor.
(5) Keep in effect Seller's existing polices on public liability
and hazard and extended coverage insurance insuring the Property.
X. Seller specifically represents, covenants and warrants that, to
the best of its actual knowledge, the Property and the use and operation thereof
will comply with all state and federal environmental laws, rules and
regulations, including, without limitation, the Federal Resource Conservation
and Recovery Act and the Comprehensive Environmental Response Compensation and
Liability Act of 1980 and all amendments and supplements thereof and shall
continue to comply therewith at all times. Specifically, and without limiting
the generality of the foregoing, Seller represents, covenants and warrants that
Seller has not used the Property and that to the best of its actual knowledge,
the Property is not now being used for the handling, storage, transportation, or
disposal of hazardous or toxic materials, nor is Seller aware of any hazardous
substances used, stored or handled on land adjacent to the Property. Further,
Seller represents and warrants that Seller has never been cited or notified of
any violation of any state or federal environmental law, rule or regulations.
In the event that the representations and warranties contained herein prove to
be incorrect, Seller agrees to indemnify, defend, and hold Purchaser harmless
from and against any loss to Purchaser, for which Seller is directly liable,
including, without limitation, Attorneys' Fees (as hereinafter defined) and
costs of site investigation and cleanup, incurred by Purchaser, but excluding
consequential damages, as a result of Seller's handling, storage,
transportation, or disposal of hazardous
15
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Meadows Mobile Home Park
________________
or toxic materials during Seller's ownership of the Property. This provision
shall survive the closing of purchase and shall not be merged in the deed.
Y. The Property contains and is zoned, licensed and permitted to
contain and operate a mobile home park with 381 rentable mobile home spaces, of
which all 381 are fully rentable with full utility services. The Property
currently has 292 rental spaces rented and 89 rental spaces unrented.
Seller's foregoing representations and warranties shall survive the Closing and
shall not be merged in the deed for a period of one (1) year from the Closing.
9. Risk of Loss.
------------
A. Condemnation. If, prior to Closing, action is initiated to take
------------
any of the Property by eminent domain proceedings or by deed in lieu thereof
that exceeds five percent (5%) of the Real Property, Purchaser may either (a)
terminate this Agreement, or (b) consummate the Closing, in which latter event
the award of the condemning authority shall be assigned to Purchaser at Closing.
Notwithstanding the foregoing, if the taking of any of the Property is less than
5% of the Real Property, the award or the rights to the award of the condemning
authority shall be assigned to Purchaser at Closing.
B. Casualty. Seller assumes all risks and liability for damage to or
--------
injury occurring to the Property by fire, storm, accident, or any other casualty
or cause until the Closing has been consummated. If the Property, or any part
thereof, suffers any damage in excess of $50,000.00 prior to the Closing from
fire or other casualty which Seller, at its sole option, does not repair,
Purchaser may either: (a) terminate this Agreement, or (b) consummate the
Closing, in which latter event the proceeds of any insurance not exceeding the
Purchase Price and covering such damage shall be assigned to Purchaser at the
Closing. In such event, Seller shall credit Purchaser against the cash portion
of the purchase price an amount equal to the deductible under said insurance
coverage.
10. Possession. Seller agrees to deliver possession of the Property to
----------
Purchaser at Closing, subject only to the rights of tenants-in-possession under
disclosed rental agreements, Assumed Contracts and the Permitted Exceptions.
11. Default and Liquidated Damages. In the event of a default by either
------------------------------
Purchaser or Seller, the parties agree to the following:
A. In the event of a default by Seller, Purchaser may, at its option,
elect to demand and be entitled to an immediate refund of the Earnest Money,
together with any interest thereon, and Purchaser may pursue any remedies
available as a result of Seller's breach, including specific performance.
Notwithstanding any other provision of this Agreement, in the event Purchaser
loses the tax benefits of its (S) 1031 Exchange by reason of any act or omission
of Seller, then Purchaser, in addition to any other remedies it may have, may
seek consequential damages from Seller arising out of or in any way related to
16
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Meadows Mobile Home Park
________________
Purchaser's loss of tax benefits under its (S)1031 Exchange, in a sum not to
exceed $250,000.00.
B. If Purchaser breaches, defaults or fails to perform its
obligations under this Agreement and Seller has not breached, defaulted or
failed to perform any material obligations under this Agreement, then, as
Seller's sole and absolute remedy, to the exclusion of all other remedies
including, without limitation, specific performance, the Earnest Money shall be
paid to Seller, in which case the Earnest Money shall constitute the entire
liquidated damages of Seller and Purchaser shall thereupon be relieved of all
further obligations and liabilities arising out of this Agreement, it being
agreed that the actual damages of Seller are difficult or impossible to
ascertain and that said Earnest Money represents the parties' best estimate of
actual damages of Seller.
The provisions of this paragraph 11 shall survive Closing and shall not be
merged in the Deed.
12. Real Estate Commissions. Except as stated in this section, neither
-----------------------
Seller nor Purchaser has contacted any real estate broker, finder, or similar
person in connection with the transaction contemplated hereby and that neither
party is obligated to pay any brokerage fee or commission in connection with
this sale.
To the knowledge of Seller and of Purchaser, except for the real estate
brokers employed by Seller as set forth below, no Acquisition Fees (as
hereinafter defined) have been paid or are due and owing to any person or entity
by the Seller and the Purchaser. As used herein, "Acquisition Fees" shall mean
all fees paid to any person or entity in connection with the selection and
purchase of the Property, including real estate commissions, selection fees,
nonrecurring management and startup fees, conversion fees, development fees or
any other fee of similar nature. Seller and Purchaser each hereby agree to
indemnify and hold harmless the other from and against any and all claims for
Acquisition Fees or similar charges with respect to this transaction, arising
by, through or under the indemnifying party, and each further agrees to
indemnify and hold harmless the other from any loss or damage resulting from any
inaccuracy in the representations contained in this section. This
indemnification agreement of the parties shall survive the Closing.
Seller and Purchaser each represent that there is no broker involved
in the purchase and sale of the Property other than Lancore Realty, Inc. and
David Hendel, Associates, Ltd. Lancore Realty, Inc., shall receive an
Acquisition Fee of $350,000. Seller shall pay $250,000 of said Acquisition Fee,
and Purchaser shall pay the balance of $100,000. In addition, David Hendel
Associates, Inc., as a Seller's broker, shall receive an Acquisition Fee of
$530,000, which Acquisition Fee shall be paid in its entirety by Seller. No
other broker, salesman, commission agent or other person (collectively "Broker")
has participated in the negotiations for and procurement of this Agreement. If
this transaction fails to close for any reason, then no Acquisition Fees shall
be owing to Broker.
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________________
13. Governing Law and Amendment. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of Florida. No amendment or
modification of this Agreement shall be valid or enforceable unless confirmed in
writing and signed by each of the parties hereto.
14. Binding Effect. This Agreement shall inure to the benefit of and
--------------
shall be binding upon the successors and assigns of the parties hereto.
15. Entire Agreement. This Agreement embodies the entire agreement between
----------------
the parties relative to the subject matter hereof, and there are no oral or
written agreements between the parties, nor any representations made by either
party relative to the subject matter hereof, which are not expressly set forth
herein. The parties further agree that, upon the full execution of this
Agreement by Seller and Purchaser, the Letter of Intent between the parties
dated July 8, 1997, shall be superseded in its entirety by this Agreement and
shall be of no further effect.
16. Amendment. This Agreement may be amended only by a written instrument
---------
executed by the party or parties to be bound thereby.
17. Headings. The captions and headings used in this agreement are for
--------
convenience only and do not in any way limit, amplify or otherwise modify the
provisions of this Agreement.
18. Construction. All of the provisions of this agreement shall not be
------------
more strictly construed against any one of the parties hereto in that both
parties have made substantial contributions to the negotiation and drafting of
this Agreement.
19. Binding Effect; No Assignment. This Agreement shall bind and inure to
-----------------------------
the benefit of Seller and Purchaser and their respective heirs, executors,
administrators. personal and legal representatives, successors and
successors-in-interest. Purchaser may not assign Purchaser's rights under this
Agreement.
20. Invalid Provision. If any provision of this agreement is held to be
-----------------
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable; this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
this agreement shall remain in full force and effect and shall not be affected
by such illegal, invalid or unenforceable provision or by its severance from
this Agreement.
21. Attorneys' Fees. In the event it becomes necessary for either party
---------------
hereto to file suit to enforce this Agreement or any provision contained herein,
the party prevailing in such suit shall be entitled to recover, in addition to
all other remedies or damages, as provided herein, reasonable attorneys' fees,
paralegal fees and costs incurred in such suit at trial, appellate, bankruptcy
and/or administrative proceedings.
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22. Multiple Counterparts. This Agreement may be executed in a number of
---------------------
identical counterparts which, taken together, shall constitute collectively but
one (1) agreement; but in making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart executed by
the party to be charged.
23. Effective Date. This Agreement shall not be effective unless signed by
--------------
both Purchaser and Seller, and, as used in this Agreement, the terms "date of
this Agreement" or "date hereof" shall mean and refer to the date of execution
of the last of Purchaser and Seller to execute this Agreement (the "Effective
Date").
24. Exhibits. The following exhibits are attached to this agreement and
--------
are incorporated into this Agreement and made a part hereof:
A. Exhibit "A." Description of the Real Property.
------------
B. Exhibit "B." Property Documentation.
------------
C. Exhibit "C." Schedule of Tangible Personal Property.
------------
D. Exhibit "D." Assumed Contracts.
------------
25. Authority. Each party hereto represents and warrants to the other that
---------
the execution of this Agreement is within the power of the respective parties
and has been duly authorized by all necessary partnership or corporate actions;
and any other documents required or necessary to be executed pursuant to the
provisions hereof are valid, binding obligations and are enforceable in
accordance with their terms.
26. Notices. All notices provided for herein will be in writing and sent
-------
by telefax, registered or certified mail to the following addresses:
The Seller: H.G.G.S. Associates, a Florida partnership
2555 P.G.A. Boulevard
Palm Beach Gardens, Florida 33410
With Copy to:
The Purchaser: Meadows Preservation, Inc.
2555 PGA Boulevard, Lot #209*
Palm Beach Gardens, Florida 33410
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Meadows Mobile Home Park
________________
*or other lot number as designated by Purchaser
With Copy to:
The Escrow Agent: Sonya Daws, Esq.
Skelding, Labasky, et al., P.A.
P.O. Box 669
Tallahassee, Florida 32302
or to such other address as is designated from time to time in writing by those
entitled to receive notice. Telefax notice is effective on the date of
transmission, so long as a certified or registered mailing is forwarded to the
party being noticed on the same day as the telefax transmission. Notice by mail
shall be effective as of the date of mailing.
27. Liability and Indemnification.
-----------------------------
A. Purchaser does not and shall not assume any liability for any
claims arising out of any occurrence prior to the Closing Date with respect to
the Property.
B. From and after the Closing Date, Seller agrees to indemnify and
hold harmless Purchaser, and Purchaser's successors and assigns, from and
against any and all claims, penalties, damages, liabilities, actions, causes of
action, costs and expenses (including attorneys' fees), arising out of, as a
result of or as a consequence of: (i) any property damage or injuries to
persons, including death, caused by any occurrence at the Project or in
connection with the Seller's use, possession, operation, repair and maintenance
of the Project prior to the Closing Date; and (ii) any breach by Seller of any
of its representations, warranties, or obligations set forth herein or in any
other document or instrument delivered by Seller in connection with the
consummation of the transactions contemplated herein. In such event, Seller
shall be promptly notified by Purchaser and shall have the right and duty to
defend such claims against Purchaser.
C. From and after the Closing Date, Purchaser agrees to indemnify and
hold harmless Seller, and Seller's successors and assigns, from and against any
and all claims, penalties, damages, liabilities, actions, causes of action,
costs and expenses (including attorneys' fees), arising out of, or as a
consequence of any property damage or injuries to persons, including death,
caused by any occurrence at the Property after the Closing Date or in connection
with the Purchaser's use, possession, operation, repair and maintenance
20
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Meadows Mobile Home Park
________________
of the Property after the Closing Date. In such event, Purchaser shall be
promptly notified by Seller and shall have the right and duty to defend such
claims brought against Seller.
The provisions of this paragraph shall survive Closing and shall not be
merged into the Deed.
28. Third Parties. This Agreement shall not be deemed to confer in favor
-------------
of any third parties any rights whatsoever as third-party beneficiaries, the
parties hereto intending by the provisions hereof to confer no such benefits or
status.
29. Termination of Offer. The offer must be executed by all parties no
--------------------
later than November 17, 1997, at 5:00 p.m. Eastern Standard Time. If not fully
executed prior to said time, then this offer shall automatically terminate.
30. Agreement to Survive Closing. Any provision which by its nature or
----------------------------
effect is required to be performed, or which may be performed, or which may be
breached after delivery of the deed, shall survive said delivery of deed except
as otherwise expressly provided by this Contract. The time limitations
applicable to Seller's Representations and Warranties set forth in Paragraph 8
above, shall not be applicable to other survival provisions set forth in this
Agreement nor to those warranties expressly set forth on the Warranty Deed, Bill
of Sale or any other conveyancing document executed and delivered by Seller to
Purchaser.
31. Like-Kind Exchange (Section 1031, IRC). Seller and Purchaser agree to
--------------------------------------
the following regarding possible Exchanges pursuant to (S)1031 of the Internal
Revenue Code:
A. Seller may consummate the sale of the Property as part of a so-
called like kind exchange (the "Exchange") pursuant to (S)1031 of the Internal
Revenue Code of 1986, as amended (the "Code"), provided that:
(i) The Closing shall not be delayed of affected by reason of
the Exchange nor shall the consummation or accomplishment of the Exchange be a
condition precedent or condition subsequent to Seller's obligations under the
agreement of sale:
(ii) Seller shall affect the Exchange through an assignment of
rights under the agreement of sale to a qualified intermediary;
(iii) Purchaser shall not incur any costs or expenses in
connection with the Exchange; and
(iv) Purchaser shall not be required to take an assignment of
the purchase agreement for the replacement property or to required to acquire or
hold title to
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Meadows Mobile Home Park
________________
any real property for purposes of consummating the Exchange. Purchaser shall not
by the agreement of sale or acquiescence to the Exchange: (a) have its rights
under the agreement of sale affected or diminished in any manner, or (b) be
responsible for compliance with or deemed to have warranted to Seller that the
Exchange in fact complies with (S)1031 of the Code.
B. Purchaser may consummate the sale of the Property as part of a so-
called like kind exchange (the "Exchange") pursuant to (S)1031 of the Internal
Revenue Code of 1986, as amended (the "Code"), provided that:
(i) The Closing shall not be delayed of affected by reason of
the Exchange nor shall the consummation or accomplishment of the Exchange be a
condition precedent or condition subsequent to Purchaser's obligations under the
agreement of sale;
(ii) Purchaser shall affect the Exchange through an assignment
of rights under the agreement of sale to a qualified intermediary;
(iii) Seller shall not incur any costs or expenses in
connection with the Exchange; and
(iv) Seller shall not be required to take an assignment of the
purchase agreement for the replacement property or to required to acquire or
hold title to any real property for purposes of consummating the Exchange.
Seller shall not by the agreement of sale or acquiescence to the Exchange: (a)
have its rights under the agreement of sale affected or diminished in any
manner, or (b) be responsible for compliance with or deemed to have warranted to
Purchaser that the Exchange in fact complies with (S)1031 of the Code.
32. Radon Disclosure. Radon is a naturally occurring radioactive gas
----------------
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels of radon
that exceed federal and state guidelines have been found in building in Florida.
Additional information regarding radon and radon testing may be obtained from
your County Public Health Unit.
33. Further Assurances. In the event of clerical error or oversight, and
------------------
in the event that not all documents have been fully or properly executed or
obtained, each party agrees to give to the other such further assurances and
execute such further documents as necessary to fully and completely effect the
transfer of the Property to Purchaser under this Agreement and execute such
other instruments as may be necessary to effectuate the terms of this Agreement.
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Meadows Mobile Home Park
________________
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by persons empowered to bind the parties to perform their
respective obligations hereunder the date and year set forth beside their
respective signatures.
[SIGNATURES SET FORTH ON FOLLOWING PAGES]
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Meadows Mobile Home Park
________________
WITNESSES as to Seller: SELLER:
H.G.G.S. ASSOCIATES, a Florida partnership
By: /s/ David Hendel
---------------------------
/s/ David Hendel, Managing General
________________________________
Print Name: Partner, on behalf of the Partnership
_____________________
/s/
________________________________
Print Name: Dated: 11-28 , 1997.
_____________________ ---------------------
WITNESSES as to Purchaser PURCHASER:
MEADOWS PRESERVATION, INC., a
Florida corporation not for profit
/s/ By: /s/ Theresa Tyrrell
- -------------------------------- ----------------------------------
Print Name: Print Name: Theresa Tyrrell
_____________________ --------------------------
Title: President
-------------------------------
/s/
- --------------------------------
Print Name: Dated: 11-25
_____________________ -----------------------, 1997
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Meadows Mobile Home Park
________________
ESCROW AGENT
------------
I hereby acknowledge receipt of $350,000.00 Earnest Money Deposit by check from
Purchaser on this 28th day of November, 1997, and agree to perform the
---- --------
obligations of Escrow Agent as set forth above.
Skelding, Labasky, et al., P.A.
By: /s/ Sonya Daws
----------------------------------
Sonya Daws, Esq.
As Its:
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Meadows Mobile Home Park
__________________
EXHIBIT "A"
-----------
DESCRIPTION OF REAL PROPERTY
----------------------------
The Meadows Mobile Home Park Development
Legal Description
- -----------------
From the center of Section 5, Township 42 South, Range 43 East, Palm Beach
County, Florida; thence North 0 degrees 30'10" East along the North-South
Quarter line of the said Section 5 a distance of 275 feet to the Point of
Beginning; thence continue North 0 degrees 30'10" East along the said North-
South Quarter line a distance of 1,050.85 feet to a point; thence South 89
degrees 51'42" East a distance of 1,323.60 feet to point; thence South 0 degrees
47'20" West a distance of 1,252.40 feet to a point in the Northerly right-of-way
line of PGA Boulevard, as now laid out and in use; thence South 89 degrees
07'28" East along said Northerly right-of-way line a distance of 789.81 feet to
a point; thence North 0 degrees 30'10" East a distance of 225 feet to a point,
thence South 89 degrees 07'28" East a distance of 540 feet to the Point of
Beginning.
All lying and being in Palm Beach County, Florida, and containing in all 35.71
acres, more or less.
Phase II
- --------
The South 636.0 feet of the North 1/2 of the Southwest 1/4 of the Northwest 1/4,
of Section 5, Township 42 South, Range 43 East, Palm Beach County, Florida.
Containing in all 19.342 acres, more or less.
TOGETHER WITH:
The North 10 feet of the South 646 feet of the North 1/2 of the Southwest 1/4 of
the Northwest 1/4; and, the North 10 feet of the South 1/2 of the Southwest 1/4
of the Northwest 1/4; Section 5, Township 42 South, Range 43 East, Palm Beach
County, Florida.
Containing in all .6082 acres, more or less.
Total acres Phase II: 19.95 acres, more or less.
Total Acres - Meadows Mobile Home Park: 55.66 acres, more or less.
Zoned RMH/City of Palm Beach Gardens, operated as a 381-unit mobile home
community and located on Northwest comer of PGA Boulevard and Prosperity Farms
Road in northern Palm Beach County, Florida.
[Best available legal description. Seller will furnish complete legal
description during Inspection Period]
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Meadows Mobile Home Park
__________________
EXHIBIT "B"
-----------
PROPERTY DOCUMENTATION
----------------------
Within three (3) days from the Effective Date and at all reasonable times
hereafter, Seller shall deliver to Purchaser, or make available at Seller's
offices in the Property, the following items in Seller's possession:
1. An inventory of furniture, furnishings, equipment, and other tangible
personal property to be included in the transaction.
2. A legal description of the Real Property to be included in the
transaction.
3. Seller's most recent existing title insurance policy, abstract, or
both, together with copies of any easements, restrictions, mortgages,
or other encumbrances pertaining to the Park.
4. Any existing surveys of the Park.
5. All Prospectuses approved for the Property together with all Rental
Agreements and Rules and Regulations for the Property.
6. A current rent roll for the Park. The rent roll shall have attached to
it copies of all forms of Rental Agreements used for tenants who are
identified in the rent roll. The rent roll shall specify which Rental
Agreement form is used for each tenant. The rent roll shall identify
any promotional or discounted rents. It shall also identify any tenants
that have notified the Park of their intent to vacate, and those that
rent or sublet mobile homes in the Park.
7. Financial statements for the Park's operation from 1993 to date.
(Subject to provisions in paragraph 4A of the Agreement.)
8. Copies of all contracts of a continuing nature pertaining to the
operation of the Park, including equipment leases, service contracts,
and agreements with employees.
9. All ad valorem tax bills for the past two years together with any
notices of proposed property taxes for the year to date.
10. All utility bills for the past two years and year to date.
11. A schedule setting forth the names of all present employees and their
compensation.
12. Copies of all approved Amendments to Prospectuses and copies of all
written communication pertaining to the Park to and from the Florida
Bureau of Mobile Homes.
13. Copies of all written communications to and from any incorporated
homeowners' association pertaining to the Park
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Meadows Mobile Home Park
__________________
14. Copies of any plans, specifications, or other drawings for the
construction of improvements in the Park, including utilities.
15. Copies of all permits and licenses required for the operation of the
Park.
16. Copies of any written communications in the past two years to and from
any governmental or quasi-governmental authorities pertaining to any
alleged defects, deficiencies in the operation of the Park, or non-
compliance by the Park with any governmental laws or regulations.
17. A written description of any litigation involving the ownership and
operation of the Park. Said description shall cover the past two
years, the present, and any threatened litigation.
18. A copy of any environmental reports or audits pertaining to the Park
within Sellers possession or control.
19. A description of the location of any toxic or hazardous substances
known to Seller to exist in the Park. If any such substances have been
removed from the Park, detailed information pertaining to the removal
shall be provided.
20. Representative copies of all notices sent to tenants of changes to
rent or other charges made by Park for the past three years.
21. All books and records of Seller relating to the Property not
specifically referenced above.
28
<PAGE>
Meadows Mobile Home Park
__________________
EXHIBIT "C"
-----------
SCHEDULE OF TANGIBLE PERSONAL PROPERTY
--------------------------------------
[to be agreed upon during Inspection Period]
29
<PAGE>
Meadows Mobile Home Park
__________________
EXHIBIT "D"
-----------
ASSUMED CONTRACTS
-----------------
[to be agreed upon during Inspection Period]
30
<PAGE>
LAW OFFICES
SKELDING, LABASKY, CORRY, EASTMAN, HAUSER, JOLLY & METZ
A PROFESSIONAL ASSOCIATION
THE MADIGAN BUILDING
318 NORTH MONROE STREET
TALLAHASSEE, FLORIDA 32301
WILLIAM W. CORRY SUSAN MARKS*
LINDA C. COX FRANK S. MESSERSMITH*
SONYA K. DAWS JOHN P. NOBLE JR.*
DAVID D. EASTMAN GOVERNMENTAL CONSULTANTS
BARBARA C. FROMM *NOT A MEMBER OF THE
JAMES C. HAUSER October 15, 1997 FLORIDA BAR
WARREN H. HUSBAND ________________________________
JOHN W. JOLLY, JR.
RONALD A. LABASKY MILLARD F. CALDWELL (1897-1984)
STEPHEN W. METZ JOHN A. MADIGAN, JR. (1919-1984)
CARL R. PETERSON, JR. ________________________________
JACK M. SKELDING, JR. REPLY TO: P.O. BOX 969
GAYLE S. SWEDMARK TALLAHASSEE, FL 32302
WILLIAM R. WATERS, JR. TELE: (904) 222-3730
FAX: (904) 224-6422
Via: Certified Mail -Return Receipt Requested
---------------------------------------------
Ms. Theresa Tyrrell, President
Meadows Preservation, Inc.
2555 PGA Boulevard, #118
Palm Beach Gardens, Florida 33410
RE: PROPOSED SALE OF THE MEADOWS MOBILE HOME PARK ("COMMUNITY")
Dear Ms. Tyrrell:
On October 3, 1997, you were given notice of the Seller's intent to solicit
purchase offers for the Community from the general public. Such notice was
provided to the Meadows Preservation, Inc. (hereafter "Association"), as the
Chapter 723 homeowners association pursuant to the requirements of Section
723.071, Florida Statutes.
The Seller has determined it will modify the terms and conditions upon
which it would accept a purchase offer for the Community. The mobile home
owners residing in the Community, by and through Association, shall have the
right to purchase the Community, provided Association meets the price, terms and
conditions of Seller as contained in the letter to you from Mr. Richard S. Webb,
IV, dated October 3. 1997, enclosing the Agreement of Purchase and Sale for the
Meadows Mobile Home Park (hereafter the "Agreement"), as modified by the
contents of this letter.
Only those paragraphs and terms and conditions specifically mentioned
<PAGE>
Ms. Theresa Tyrell, President
Meadows Preservation, Inc.
October 15, 1997
Page 2
________________________________________________________________________________
below are being changed. The terms of paragraphs 2.B and 29 of the Agreement
are withdrawn entirely and replaced by the language quoted below. In all other
respects, the Agreement remains unchanged. The revised provisions of the
Agreement shall now read:
2. Paragraph 2.B. The provision of paragraph 2B are revised to read as
-------------
follows:
2.B. Balance of Purchase Price: The balance of the Purchase Price, subject
-------------------------
to the provisions and adjustments permitted or required by this Agreement
against the Purchase Price, shall be paid as follows:
(1) The sum of Two Hundred Thousand Dollars ($200,000.00) by confirmed
wire transfer at Closing from the Escrow Agent. The balance of the
Earnest Money shall be returned to Purchaser at Closing.
(2) Execution and delivery of a promissory note in an amount equal to the
balance of the Purchase Price after all adjustments and prorations
(the "Note"), secured by an irrevocable standby Letter of Credit due
and payable on January 6, 1998 (the "Letter of Credit") to be issued
by either Wilmington Trust (Delaware); First Trust (Pennsylvania); or
First Union Bank (Pennsylvania) (the "Bank") upon receipt of a
confirmed wire transfer of said funds from Purchaser. All interest or
earnings of any nature on the funds deposited with the Bank shall
accrue solely to thc benefit of Purchaser. Purchaser shall pay all
costs and fees charged by the Bank for its services. The security for
the Note shall be the Letter of Credit, or the proceeds thereof.
Seller shall not look to the property for payment. Seller shall
execute such waivers as may be required by the title insurer of all
legal and/or equitable claims to the Property for repayment of the
Note, including, without limitation, any claim of a vendor's lien. The
Note shall bear
<PAGE>
Ms. Theresa Tyrell, President
Meadows Preservation, Inc.
October 15, 1997
Page 3
________________________________________________________________________________
interest at the rate of 5% per annum and shall be paid in a single
installment of principal and accrued interest on January 6, 1998. The
Note shall be paid together with the accrued interest at 5% per annum
on January 6, 1998, by Purchaser. If the Note and accrued interest
are not paid in accordance with these terms, Seller may demand payment
under the Letter of Credit. Upon such payment, the Note shall be
deemed paid in full, satisfied, canceled and shall be returned to
Purchaser. Seller shall further execute such waivers, estoppels or
other instruments as Purchaser's lender may require.
The Earnest Money and all interest thereon, all adjustments,
prorations and other credits, if any, shall be credited against the
cash portion of the Purchase Price at Closing with the remaining
Earnest Money being returned to Purchaser at Closing.
29. Termination of Offer. The offer must be executed by all parties no
--------------------
later than November 29, 1997, at 5:00 p.m. Eastern Standard Time. If not fully
executed prior to said time, then this offer shall automatically terminate.
If you have any questions or seek additional information related to the
matters discussed in this letter, you may contact the undersigned, or Richard S.
Webb, IV, at the address and telephone number stated in his letter of October 3,
1997.
<PAGE>
Ms. Theresa Tyrell, President
Meadows Preservation, Inc.
October 15, 1997
Page 4
________________________________________________________________________________
Sincerely,
/s/
Carl R. Peterson, Jr.
For Seller, HGGS Associates
CRPjr/bhc
Enclosure
xc: HGGS Associates
Richard S. Webb, IV, Esq.
All Officers of the Association at addresses listed below
(via: certified mail, return receipt requested/*regular U.S. Mail)
Ms. Barbara Harris Ms. Mary Bachiochi
2555 PGA Boulevard, #209 2555 PGA Boulevard, #112
Palm Beach Gardens, FL 33410 Palm Beach Gardens, FL 33410
Mr. Richard McCann and *Mr. Richard McCann
2555 PGA Boulevard, #119 RR #2, Kemble
Palm Beach Gardens, FL 33410 Ontario NOH ISO
CANADA
Mr. David McNab and *Mr. David McNab
2555 PGA Boulevard, #180 1739 Windle Drive
Palm Beach Gardens, FL 33410 Sudbury
Ontario P8E 2Y6
CANADA
Mr. Ted Stevenson and *Mr. Ted Stevenson
2555 PGA Boulevard, #89 59 Robin Glade Drive
Palm Beach Gardens, FL 33410 Etobicoke
Ontario M9B 2R1
CANADA
Mr. Albert Harding Mr. Dan Whaley
427 Winston Road 2555 PGA Boulevard, #157
Marietta, GA 30064 Palm Beach Gardens, FL 33410
<PAGE>
EXHIBIT 6.6
MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT,
FIXTURE FILING AND ASSIGNMENT OF LEASES AND RENTS
THIS MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT, FIXTURE FILING
AND ASSIGNMENT OF LEASES AND RENTS (this "Mortgage") is executed on December 18,
1997 by MEADOWS PRESERVATION, INC., a Florida corporation, having an office at
2555 PGA Boulevard, Palm Beach Gardens, Florida 33410, as mortgagor
("Mortgagor"), to MHC LENDING LIMITED PARTNERSHIP, an Illinois limited
partnership, having an address at c/o Manufactured Home Communities, Inc., Two
North Riverside Plaza, Suite 800 Chicago, Illinois 60606, as mortgagee (together
with its successors and assigns, "Mortgagee"), and any other holder or holders
---------
of all or any part of the Obligations. All capitalized terms not otherwise
defined herein shall have the meaning set forth in Section 1.1 hereof.
-----------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Mortgagor has requested Mortgagee to lend to Mortgagor the
sum of Twelve Million Three Hundred Forty-one Thousand Six Hundred Ninety-three
46/100 Dollars ($12,341,693.46), upon the terms and conditions set forth in this
Mortgage and the Term Sheet; and
WHEREAS, Mortgagee has agreed to lend the said sum of Twelve Million
Three Hundred Forty-one Thousand Six Hundred Ninety-three 46/100 Dollars
($12,341,693.46) to Mortgagor, conditioned, among other things, upon Mortgagor
executing and delivering to Mortgagee this Mortgage, constituting a first lien
on the Mortgaged Property in order to better secure Mortgagor's performance of
Mortgagor's obligations pursuant to the Note and the other Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby expressly acknowledged by all parties, to
secure full and complete payment and performance of the Obligations, including
Mortgagor's performance of Mortgagor's obligations pursuant to the Note and the
other Loan Documents, Mortgagor does hereby grant, pledge, mortgage, warrant,
sell, transfer, assign, and convey unto Mortgagee subject only to the Permitted
Encumbrances, the following (collectively, the "Mortgaged Property"):
------------------
All of Mortgagor's right, title and interest, now owned or hereafter
acquired, in and to the following described properties and interests and all
replacements or substitutes therefor and all products and proceeds thereof, and
accessions thereto, and whether held to be real or personal property, tangible
or intangible:
(1) The Real Property;
<PAGE>
(2) All Leases and Rents;
(3) All proceeds or awards payable or to be payable under each policy
of insurance relating to the Real Property, and any returned, refunded or
rebated premiums in connection therewith;
(4) All rights or awards due to Mortgagor arising out of any eminent
domain or condemnation proceedings for the taking or for loss of value of any of
the Real Property or any proceeds of any suit or action;
(5) All revenue and income received by or on behalf of Mortgagor
resulting from the operation of the Real Property as a mobile home park or
manufactured home community, including, without limitation, all rent (i) paid by
tenants for the use of lots located within the Real Property, or (ii) generated
by other operations on the Real Property (collectively, "Revenue");
-------
(6) All trademarks, trade names, logos, service marks, licenses,
contract rights, general intangibles, franchises or symbols under which any of
the Real Property is operated or the business of Mortgagor at the Real Property
is conducted and all good will, books and records, tenant lists, correspondence,
files and advertising materials and rights therein respecting the use,
occupancy, possession, operation, management, maintenance, marketing and
ownership of the Real Property
(7) All accounts and accounts receivable, including all present and
future right to payment from any consumer credit or charge card organization or
entity (such as those organizations which sponsor or administer the American
Express, Carte Blanche, Discover, Diners Club, Visa and Master Cards) arising
out of the leasing and operation of, or the business conducted at or in relation
to, any of the Real Property;
(8) All contracts of sale and options relating to the disposition of
all or any portion of the Real Property;
(9) All monetary deposits which Mortgagor has been, or may be,
required to give to any public or private utility with respect to utility
services furnished, or to be furnished, to the Real Property;
(10) All permits, licenses, franchises, certificates, and other rights
and privileges obtained by Mortgagor in connection with the Real Property;
(11) All environmental tests, studies and reports, current and future
environmental claims and rights of action including tort claims and rights of
indemnity and contribution under CERCLA (as hereinafter defined) against the
prior owners,
2
<PAGE>
neighboring owners, tenants, consultants, advisors and third parties;
(12) All agreements now or hereafter entered into by or on behalf of
Mortgagor with any party with respect to the management, franchising, leasing,
brokerage, promotional, marketing or consulting services rendered or to be
rendered, with respect to the management, franchising, leasing, promotion,
marketing, operation or sale of any portion of the Real Property;
(13) All leasehold interests and assignments of leasehold interests
now or hereafter obtained by or on behalf of Mortgagor as a lessee, to any land;
(14) All of the plans, specifications, and drawings, including,
without limitation, architectural and engineering plans, specifications and
analyses heretofore or hereafter prepared by any architect or engineer with
respect to any of the Real Property and which are available to or in the
possession of Mortgagor;
(15) All contracts, bonds and agreements now or hereafter entered into
by and between Mortgagor and any contractor or other party, as well as all
right, title, and interest of Mortgagor in, to, and under any subcontracts,
providing for the construction (original, restorative or otherwise) of any of
the Improvements, or the furnishing of any materials, supplies, equipment or
labor in connection with any such construction;
(16) All contracts, contract rights, bonds and agreements now or
hereafter affecting the Real Property;
(17) Any claim of Mortgagor against Mortgagee (now or hereafter
existing) and all money, instruments, securities, documents, chattel paper,
credits, demands, and any other property, rights, or interests of Mortgagor
which at any time shall come into the possession, custody or control of
Mortgagee (or any agent, affiliate, or subsidiary of Mortgagee);
(18) Every deposit account including the entire balance therein (now
or hereafter existing) of Mortgagor with any banking or financial institution,
and all money, instruments, securities, documents, chattel paper, credits,
demands, and any other property, rights, or interests of Mortgagor which at any
time shall come into the possession, custody or control of any banking, or
financial institution;
(19) All books, records and computer software concerning the
foregoing, and the property described in clauses (1) through (18) above; and
(20) All later-acquired property, products and proceeds
3
<PAGE>
arising by virtue of any transaction related to the disposition of any portion
of the foregoing.
TO HAVE AND TO HOLD the Mortgaged Property, together with all and
singular the rights, hereditaments and appurtenances in anywise appertaining or
belonging thereto, unto Mortgagee and Mortgagee's successors and assigns, for
the uses and purposes hereinafter set forth, forever.
FOR THE PURPOSE OF SECURING the payment of the principal indebtedness
of TWELVE MILLION THREE HUNDRED FORTY-ONE THOUSAND SIX HUNDRED NINETY-THREE
46/100 DOLLARS ($12,341,693.46) together with all accrued and unpaid interest
and the payment and performance of all other Obligations and all modifications,
amendments, additions and extensions thereof.
It is the intention of the parties hereto that this Mortgage shall
also constitute a Security Agreement within the meaning of the Uniform
Commercial Code as enacted in the state in which the Land is located (the
"Code"). Mortgagor hereby grants a security interest to Mortgagee in the
personalty and fixtures comprising a part of the Mortgaged Property, and such
security interest shall attach for the benefit of Mortgagee to further secure
the Indebtedness. Mortgagor hereby authorizes Mortgagee to file financing and
continuation statements with respect to such collateral in which Mortgagor has a
mortgageable interest, without the signature of Mortgagor, whenever lawful, and
upon request, Mortgagor shall promptly execute financing and continuation
statements in form satisfactory to Mortgagee to further evidence and secure
Mortgagee's interest in such collateral, and shall pay all filing fees in
connection therewith. In the event of the occurrence of one or more Events of
Defaults, Mortgagee, pursuant to the applicable provision of the Code, shall
have the option of proceeding as to both real and personal property in
accordance with its rights and remedies in respect of the real property, in
which event the default provisions of the Code shall not apply. The parties
agree that in the event Mortgagee elects to proceed with respect to collateral
constituting personalty or fixtures separately from the real property, the
giving of five days' notice by Mortgagee, sent by an overnight mail service,
postage prepaid, to Mortgagor at its address referred to in Section 5.13 hereof,
------------
designating the place and time of any public sale or the time after which any
private sale or other intended disposition of such collateral is to be made,
shall be deemed to be reasonable notice thereof and Mortgagor waives any other
notice with respect thereto.
TO THE EXTENT that any of the Mortgaged Property is not subject to the
Code and is not real property pursuant to Applicable Law, Mortgagor hereby
assigns to Mortgagee all of Mortgagor's right, title and interest in and to the
Mortgaged Property to secure the Obligations, together with the right of set-off
with
4
<PAGE>
regard to such Mortgaged Property or any part thereof.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For purposes of this Mortgage, the
-----------
following terms shall have the respective meanings set forth in this Article 1:
"Applicable Law" means, with respect to the Mortgaged Property or any
--------------
portion thereof or any Person, any federal, state or local statute, law, code,
ordinance, rule, administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree or other requirement of any Governmental
Authority (including any Environmental Laws) applicable to the Mortgaged
Property or portion thereof, to manufactured home communities, mobile home parks
or tenants thereof or to such Person or any of such Person's properties, assets,
officers, directors, employees, consultants or agents (in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person).
"Assignment of Leases and Rents" means the Assignment of Leases and
------------------------------
Rents, dated of even date herewith, and executed by the Mortgagor.
"Bankruptcy Code" means Title 11 of the United States Code, as in
---------------
effect from time to time.
"Clean-up" means any "removal," "remedial action," or "response," as
--------
each such term is defined in sections 101(23) -101(25) of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 26 U.S.C. (S)
(S) 4611 and 42 U.S.C. (S) (S) 9601 et seq. ("CERCLA").
-- ---
"Contamination" means the uncontained presence of any Hazardous
-------------
Substances on, about, over or under the Mortgaged Property or arising from the
Mortgaged Property which may require action under any of the Environmental Laws,
or which may be in violation of any of the Environmental Laws.
"Debtor Relief Laws" means any applicable relief, liquidation,
------------------
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization, or similar laws affecting the rights or remedies of creditors
generally, as in effect from time to time.
"Environmental Claims" means any and all claims, losses, suits, fines,
--------------------
liens, penalties, judgments, actions, liabilities, damages and all reasonable
expenses (including reasonable
5
<PAGE>
attorneys' fees, expert fees and disbursements) that may at any time be imposed
upon, incurred by or asserted or awarded against Mortgagor, Mortgagee or the
Real Property and attributable to circumstances occurring during the period
Mortgagor holds fee title to the Real Property, and arising directly or
indirectly from or out of: (i) the presence of Hazardous Substances or
Contamination on, in, or under all or any portion of the Real Property,
regardless of whether or not caused by or within the control of Mortgagor; (ii)
the violation of any Environmental Laws relating to or affecting the Real
Property or Mortgagor, whether or not caused by or within the control of
Mortgagor; or (iii) the enforcement of this Mortgage, including, without
limitation, (A) the costs of Clean-Up with respect to any and all Hazardous
Substances or Contamination from all or any portion of the Real Property or any
surrounding areas, (B) additional costs required to take necessary precautions
to protect against the Release of Hazardous Substances on, in, under or
affecting the Real Property or into the air, any body of water, any other public
domain or any surrounding area, and (C) costs incurred to comply with the
Environmental Laws in connection with all or any portion of the Real Property or
any surrounding areas.
"Environmental Laws" means all Applicable Laws relating to the control
------------------
of any pollutant or the protection of human health, safety or the environment
including, without limitation, (i) all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of Hazardous Substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances, chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature; and (ii) all
requirements pertaining to the protection of the health and safety of employees
or the public.
"Equipment" means, collectively, all fixtures, building materials,
---------
machinery, equipment, inventory, appliances, apparatus, furniture, furnishings,
and personal property owned by Mortgagor and used in connection with or
resulting from the operation of the Real Property.
"Event of Default" has the meaning set forth in Section 3.1 hereof.
---------------- -----------
"Governmental Authority" means any federal, territorial, state or
----------------------
local governmental authority, quasi-governmental authority, instrumentality,
court, commission, tribunal or organization or any regulatory, administrative or
other agency, or
6
<PAGE>
any political or other subdivision, department or branch of any of the foregoing
having jurisdiction over any of the Mortgaged Property or Mortgagor.
"Hazardous Substances" means any chemical substance, object,
--------------------
condition, material or waste that is or may be hazardous to human health, safety
or the environment, including, without limitation, any chemicals, substances,
materials and wastes: (i) the presence of which requires investigation or
remediation under any Applicable Law; or (ii) which are defined as "hazardous
wastes," "hazardous substances," "hazardous materials," "toxic substances," "air
pollutants," "toxic pollutants," "extremely hazardous waste" or "restricted
hazardous waste" under any Environmental Laws; or (iii) which are toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
dangerous or mutagenic or otherwise hazardous and are regulated by any
Governmental Authority; or (iv) the presence of which causes a nuisance to
adjacent properties or poses a hazard to the health or safety of Persons; or (v)
the presence of which on adjacent properties constitutes a trespass by
Mortgagor; or (vi) without limitation, which contain radioactive materials,
pesticides, pollutants, contaminants, chemicals, lead, ureaformaldehyde,
flammable explosives, radon, gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenyls (PCBs) or asbestos.
"Impositions" means all (a) taxes, levies, fees, water and sewer
-----------
rents, assessments and all other governmental charges and all charges for
utility or communications services which may at any time be assessed, levied or
imposed upon Mortgagor, the Mortgaged Property, this Mortgage or the Obligations
or which may arise in connection with the ownership, use, occupancy or operation
of the Mortgaged Property, (b) all income, excess profits, sales, gross receipts
and other taxes, duties or imposts assessed, levied or imposed by any
governmental authority on Mortgagor or the Mortgaged Property, (c) all lawful
claims and demands of mechanics, materialmen and others which, if unpaid, might
create a lien on the Mortgaged Property, and (d) insurance premiums and similar
charges with respect to the ownership, use, occupancy or operation of the
Mortgaged Property.
"Improvements" means, collectively, all of the buildings,
------------
improvements, structures, Equipment, amenities and personal property and any
additions or alterations thereto or replacements thereof which are now existing
or are hereafter constructed and/or installed upon the Land.
"Indebtedness" means all present and future indebtedness and
------------
obligations of Mortgagor to Mortgagee arising out of, relating to, evidencing or
secured by the Loan, the Note or the other Loan Documents.
7
<PAGE>
"Land" means that certain tract of land located in Palm Beach County,
----
Florida, as more particularly described in Exhibit A attached hereto, together
---------
with all streets, vaults, alleys, strips and gores appurtenant to such land, and
underlying roadways or public rights-of-way or otherwise.
"Leases" means, collectively, all present and future ground leases,
------
lot leases, occupancy agreements, subleases, licenses, permits, concessions or
other agreements or arrangements, whether oral or written, and all present and
future agreements for the use or occupancy of all or any portion of the Land or
any lots located thereon, together with any and all extensions or renewals
thereof.
"Lessee" means the lessee, sublessee, tenant, subtenant, licensee,
------
concession holder or other Person having the right to use or occupy all or any
portion of the Real Property pursuant to a Lease or otherwise.
"Lien" means any lien (including any mechanic's, judgment or tax
----
lien), mortgage, security interest, assignment, pledge or encumbrance, or
conditional sale or title retention agreement or lease in the nature thereof, or
any other interest in property, designed to secure the repayment of
indebtedness, whether arising by agreement or under any Applicable Law, or
otherwise.
"Loan" means acquisition financing in the principal amount of TWELVE
----
MILLION THREE HUNDRED FORTY-ONE THOUSAND SIX HUNDRED NINETY-THREE 46/100 DOLLARS
($12,341,693.46) to be made to Mortgagor by Mortgagee pursuant to the Term
Sheet, as such Loan may be extended, renewed, curtailed or increased from time
to time."
"Loan Documents" means this Mortgage, the Term Sheet, the Note, the
--------------
Assignment of Leases and Rents and such other instruments evidencing, securing
or pertaining to the Obligations, or any portion thereof, as shall from time to
time be executed and delivered by Mortgagor to Mortgagee in connection with the
Loan.
"Management Agreement" means the Management Agreement to be entered
--------------------
into between Mortgagor and a management company selected by Mortgagor and
approved by Mortgagee in writing prior to the effectiveness thereof, and any
other management agreement given in substitution, amendment or modification of
the foregoing which has been approved in writing by Mortgagee prior to the
effectiveness thereof, which approval may be given or withheld in Mortgagee's
sole discretion.
"Manager" means the Person engaged to manage the Property pursuant to
-------
the Management Agreement.
8
<PAGE>
"Mortgage" means this Mortgage, Security Agreement, Financing
--------
Statement, Fixture Filing, and Assignment of Leases and Rents, as the same may,
at any time and from time to time, be renewed, extended, modified, restated,
increased, consolidated, spread, severed or supplemented.
"Mortgaged Property" means any and all of the property of Mortgagor
------------------
referred to in the granting clause hereof.
"Mortgagee" has the meaning set forth in the first paragraph of this
---------
Mortgage.
"Mortgagor" has the meaning, set forth in the first paragraph of this
---------
Mortgage.
"Net Proceeds" means when used with respect to any condemnation award
------------
or insurance proceeds allocable to the Mortgaged Property or any part thereof,
the gross proceeds from condemnation or insurance so allocable, with respect to
which that term is used, remaining after payment of all expenses (including
reasonable attorneys' fees and any expenses of the Mortgagee) incurred in the
collection of such gross proceeds.
"Note" means that certain Promissory Note dated the date hereof in the
----
principal amount of Twelve Million Three Hundred Forty-one Thousand Six Hundred
Ninety-three 46/100 Dollars ($12,341,693.46), with a maturity date no later than
the date that is the earlier of (i) ninety (90) days after the date of the Note,
or (ii) ten (10) days after the date upon which Mortgagor delivers to
Mortgagee's affiliate, Blue Ribbon Communities, an affiliate of Manufactured
Home Communities, Inc. (collectively "MHC") written notice pursuant to Section
II(1) of the Term Sheet.
"Obligations" means all present and future indebtedness, obligations
-----------
and liabilities of Mortgagor to Mortgagee, and all renewals and extensions
thereof, or any part thereof, arising under the Note, and all interest accruing
thereon, and reasonable attorney's fees incurred in the drafting, negotiation,
enforcement or collection thereof, together with all indebtedness, obligations
and liabilities of Mortgagor pursuant to any of the other Loan Documents, and
all renewals and extensions thereof, or any part thereof.
"Permitted Encumbrances" means those items set forth in Exhibit B
---------------------- ---------
attached hereto.
"Person" means any individual, corporation, limited liability company,
------
general partnership, limited partnership, joint venture, association, joint
stock company, trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other form of entity.
9
<PAGE>
"Property" means the property located at the northwest corner of PGA
--------
Boulevard and Prosperity Farms Road in Palm Beach County, Florida, and commonly
known as "The Meadows Mobile Home Park".
"Real Property" means the Land and the Improvements, and all estates,
-------------
easements, licenses, interests, rights, rights of way, water rights, mineral
rights, titles, powers, appurtenances and privileges of every kind and character
which Mortgagor now has or at any time hereafter acquires, in and to the Land
and the Improvements, including the rights and easements expressly described on
Exhibit A attached hereto.
- ---------
"Release" means any use, treatment, generation, spilling, leaking,
-------
pumping, emitting, emptying, discharging, injecting, storing, escaping,
leaching, dumping, discarding, burying, abandoning, transporting, handling or
disposing of Hazardous Substances.
"Rents" means all rents, royalties, revenues, issues, bonuses, income,
-----
receipts, accounts, accounts receivable, deposits, profits and other benefits
now due, or which may become due, or to which Mortgagor may now or hereafter
become entitled, or may demand or claim, including additional, percentage,
participation and other rentals, fees and deposits, arising or issuing from or
out of the Leases or the Real Property, including cash, securities or letters of
credit deposited thereunder to secure performance by the Lessees of their
obligations thereunder and any interest accrued thereon or dividends payable to
the holders thereof, any premium or other consideration payable by any Lessee
for or upon the cancellation or modification of a Lease, or arising or issuing
from or out of the Real Property or any part thereof or interest therein,
together with any and all rights which Mortgagor may have with respect to rent
insurance proceeds or business interruption insurance proceeds, and settlements,
judgments and bankruptcy claims with respect to unpaid rents or the rejection or
termination of any Lease, and the rents and other sums payable to Mortgagor in
connection with the underletting of space covered under any Lease and any
consideration payable to Mortgagor in connection with the assignment of any
Lease.
"Revenue" has the meaning set forth in Paragraph (5) of the granting
-------
clause hereof.
"Term Sheet" means the term sheet between Mortgagor and MHC dated
----------
December 12, 1997.
Section 1.2 Other Definitions.
(a) All capitalized terms not otherwise defined herein shall have the
respective meanings assigned to such terms in the
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Term Sheet.
(b) Defined terms used in the singular shall import the plural and
vice versa.
(c) The words "hereof," "herein," "hereunder" and similar terms when
used in this Mortgage shall refer to this Mortgage as a whole and not to any
particular provision of this Mortgage.
(d) The words "include" and "including" wherever used in this
Mortgage shall be deemed to be followed by the words "without limitation.
(e) Any reference to any Loan Document in this Mortgage shall be
deemed to mean such Loan Document as it may from time to time be amended,
restated, extended or otherwise modified in accordance with the terms thereof.
Each of the Loan Documents is incorporated by reference into this Mortgage.
REPRESENTATIONS,
----------------
WARRANTIES AND COVENANTS OF MORTGAGOR
-------------------------------------
Section 2.1 Covenant Against Transfers. Mortgagor shall not, without
--------------------------
the prior written consent of Mortgagee, transfer, sell, lease, convey, exchange,
mortgage, encumbrance, pledge, assign or otherwise dispose of the Mortgaged
Property or any portion of, or any direct or indirect interest in, the Mortgaged
Property.
Section 2.2 Limitation on Indebtedness. Mortgagor shall not incur,
--------------------------
create, contract for, waive, assume, have outstanding, guaranty or otherwise
become liable with respect to Indebtedness except as expressly permitted by this
Mortgage or otherwise expressly approved by Mortgagee in writing.
Section 2.3 Title to Land: Validity of Mortgage. Mortgagor
-----------------------------------
represents, warrants, covenants and agrees that:
1. Mortgagor is the owner of the fee simple legal title to the Real
Property, subject to no Lien other than the Permitted
Encumbrances and will preserve such title and will warrant
generally and defend the same unto Mortgagee against all claims
and demands by any person claiming by, through or under
Mortgagor;
2. Mortgagor has the necessary power, authority and right to execute
this Mortgage, and this Mortgage constitutes a lien on the
Mortgaged Property prior to all other liens other than the
Permitted Encumbrances;
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3. This Mortgage has been duly authorized, executed and delivered by
Mortgagor and constitutes the legal, valid and binding obligation
of Mortgagor, enforceable against Mortgagor in accordance with
its terms, subject to bankruptcy and insolvency laws and general
principles of equity; and
4. Mortgagor at its expense will generally warrant and defend the
validity and priority of the liens, security interests and
assignments granted and made by Mortgagor herein against the
claims of any and all persons and parties claiming by, through or
under Mortgagor.
Section 2.4 Use of the Mortgaged Property. Mortgagor represents,
-----------------------------
warrants, covenants and agrees that, to the best of Mortgagor's knowledge, the
use of the Real Property as a manufactured home community or mobile home park is
permitted as a matter of right as a principal use and not a nonconforming use
under all applicable zoning and subdivision ordinances and other land use
regulations, and the Real Property and all future uses thereof will comply in
all material respects with all applicable zoning ordinances, land use
regulations, restrictive covenants and all Applicable Law.
Section 2.5 Utilities. Mortgagor represents, warrants and covenants
---------
that all utility services and facilities necessary for the operation, occupancy
and use of the Mortgaged Property, including without limitation public water,
storm and sanitary sewer facilities, and gas, electric and telephone facilities,
are adequate to serve the Mortgaged Property.
Section 2.6 Separate Lot. Mortgagor represents and warrants that (a)
------------
the Land is comprised of one (1) or more separate tax parcels, all of which tax
parcels are owned by Mortgagor; and (b) the Real Property is assessed for
purposes of taxes as a portion of such tax parcels so that the Real Property
shall never become subject to the lien of any taxes levied or assessed against
any real property other than such tax parcels.
Section 2.7 Payment and Performance. Mortgagor agrees that it will
-----------------------
(a) punctually pay to Mortgagee the Obligations, including amounts required to
be paid to Mortgagee pursuant to the terms of the Note, as and when the same
shall become due and payable; and (b) punctually keep and perform each and all
other of the obligations of Mortgagor under the Loan Documents.
Section 2.8 Taxes, Liens and Other Charges.
------------------------------
1. Mortgagor shall pay, before the date on which penalties attach
thereto, all Impositions, and shall
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submit to Mortgagee such evidence of the due and punctual payment
thereof as Mortgagee may require.
2. Mortgagor shall permit no mechanic's, materialman's, laborer's,
statutory or other Lien (other than Permitted Encumbrances) to be
created, filed of record or remain outstanding upon all or any
part of the Mortgaged Property.
3. Notwithstanding the foregoing provisions of this Section 2.8,
------------
Mortgagor shall have the right to contest the validity or amount
of any such Impositions or Liens in appropriate proceedings,
provided that Mortgagor shall (i) give Mortgagee written notice
of its intention to contest, (ii) diligently prosecute such
contest, (iii) at all times effectively stay or prevent any
official or judicial sale of the Mortgaged Property or any part
thereof relating to such Impositions or Liens, and (iv) establish
or post such reserves, bonds or security for the liabilities
relating to such Impositions or Liens as may reasonably be
required by Mortgagee.
Section 2.9 Insurance.
---------
1. Mortgagor shall, at its expense, procure for, deliver to and
maintain for the benefit of Mortgagee until the Obligations are
fully repaid, original fully paid insurance policies (or evidence
thereof satisfactory to Mortgagee) providing the coverages
described below, issued by such insurance companies, in such
amounts, in such form and content, payable at such times and with
expiration dates as are reasonably approved by Mortgagee. Such
policies shall provide that the insurer shall give Mortgagee at
least twenty (20) days' prior written notice of cancellation or
diminution thereof, provide that no act or thing done by the
insured shall invalidate or diminish the insurance provided to
Mortgagee and, except for liability policies, contain
noncontributing "mortgagee" or "loss payable" clauses
satisfactory to Mortgagee.
2. Mortgagor will keep the Improvements and the Equipment insured
against loss or damage from (i) the perils of fire and hazards
ordinarily included under standard extended coverage endorsements
in amounts necessary to prevent the application of any co-
insurance provisions of the applicable policies up to the full
replacement cost of the Improvements and Equipment without
deduction for depreciation; and (ii) boiler or pressure vessel
explosion (if there are boilers or
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pressure vessels located on the Mortgaged Property) in an amount
customarily carried in the case of similar operations. The term
"full replacement cost" as used above means the cost of replacing
all such Improvements and Equipment, exclusive of the costs of
excavations, foundations and footings below the lowest basement
floor. Such replacement cost shall be determined from time to
time at the request of Mortgagee (but not more frequently than
once in every twelve (12) months) by an architect, engineer or
insurer selected by Mortgagor and approved by Mortgagee. Each
policy shall contain a "replacement cost endorsement" and an
"agreed amount" endorsement satisfactory to Mortgagee.
3. Mortgagor shall maintain or cause to be maintained general public
liability insurance and workers' compensation insurance in
amounts usually carried by similar operations against claims for
bodily injury or death occurring upon, in or about the Mortgaged
Property, with such general public liability insurance to afford
protection to the limit of not less than One Million Dollars
($1,000,000) in respect of bodily injury or death for any one
occurrence and to the limit of not less than Five Million Dollars
($5,000,000) for the aggregate of all occurrences during any
given annual policy period. Mortgagee shall be named as an
additional insured under such policies.
4. Mortgagor shall maintain or cause to be maintained property
damage insurance against claims for damage to property (including
loss of use) occurring upon, in or about the Mortgaged Property,
with such insurance to afford protection to the limit of not less
than Five Hundred Thousand Dollars ($500,000) in respect of
damage to property for any one occurrence and One Million Dollars
($1,000,000) for the aggregate of all occurrences during any
given annual policy period. During any period of development and
construction upon the Land, Mortgagor shall maintain or cause
others to maintain, builder's risk insurance of the type
customarily carried in the case of similar development and
construction for the full replacement cost of work in place and
materials stored at or upon the Land.
5. If at any time the Land is located in an area that has been
identified by the Federal Insurance Administration as having
special flood and mudslide hazards, and in which the sale of
flood insurance has been made available under the National Flood
Insurance
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Act of 1968, Mortgagor shall purchase and maintain a flood
insurance policy in the amount of the Obligations, or the maximum
limits of coverage available on the Mortgaged Property, whichever
is less. In the event that the Mortgaged Property is not in an
area having special flood and mudslide hazards, Mortgagor shall
deliver to Mortgagee on the date of the first advance a
certificate issued by Mortgagor's insurance company or by a
certified land surveyor stating that the Mortgaged Property is
not in such a flood or mudslide area.
6. Mortgagor will keep the Mortgaged Property insured against any
other risk insured against by persons operating similar
properties in the locality of the Land, in such amounts as are
insured against by such persons, or as from time to time may be
reasonably required by Mortgagee, including, without limitation,
twelve (12) month rent loss insurance coverage.
7. Mortgagor shall promptly notify Mortgagee of any loss covered by
such insurance and agrees that if an Event of Default shall have
occurred and be continuing, Mortgagee is hereby authorized and
empowered, at its option, to adjust, compromise or settle any
loss under any insurance policies maintained pursuant hereto, and
to collect and receive the proceeds from any such policy or
policies, subject to the provisions set forth herein. Each
insurance company is hereby authorized and directed to make
payment for all such losses directly to Mortgagee, instead of to
Mortgagor and Mortgagee jointly if an Event of Default shall have
occurred and be continuing. In the event any insurance company
fails to disburse directly and solely to Mortgagee but disburses
instead either solely to Mortgagor or to Mortgagor and Mortgagee
jointly, Mortgagor agrees immediately to endorse and transfer
such proceeds to Mortgagee to be applied as set forth herein.
Upon any failure of Mortgagor to so endorse and transfer such
proceeds, Mortgagee may execute such endorsements or transfers
for and in the name of Mortgagor, and Mortgagor hereby
irrevocably appoints Mortgagee as its agent and attorney-in-fact
to do so.
8. Prior to the expiration date of each policy maintained pursuant
to this Section, a renewal or replacement thereof reasonably
satisfactory to Mortgagee (or evidence thereof) shall be
delivered to Mortgagee. Mortgagor shall deliver to Mortgagee
receipts (or other evidence) evidencing the full payment of
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<PAGE>
premiums when and as due for all such insurance policies and
renewals or replacements. The delivery of any insurance policies
hereunder shall constitute an assignment of all unearned premiums
as further security hereunder. In the event of the foreclosure of
this Mortgage or any other transfer of title to all or part of the
Mortgaged Property in extinguishment or partial extinguishment of
the Indebtedness, all right, title and interest of Mortgagor in and
to all insurance policies maintained pursuant to this Section then
in force shall belong to the purchaser as its interests may appear,
and Mortgagee is hereby irrevocably appointed by Mortgagor as
attorney-in-fact for Mortgagor to assign Mortgagor's interest, if
any, in any such policies to such purchaser, as its interests may
appear, without accounting to Mortgagor for any unearned premiums
therefor.
9. So long as an Event of Default has not occurred and is continuing,
Mortgagor may collect, adjust and compromise any losses or claims
under any such insurance policies arising with respect to the
Mortgaged Property or the use and operation thereof, provided,
--------
however, Mortgagee must approve any adjustment or compromise by
-------
Mortgagor in excess of Twenty Five Thousand Dollars ($25,000). If
an Event of Default has occurred and is continuing, Mortgagee shall
collect, adjust and compromise any losses or claims under any such
insurance policies arising with respect to the Mortgaged Property
or the use or operation thereof. The Net Proceeds of such
insurance, whether collected by Mortgagee or Mortgagor, shall be
deposited with Mortgagee to be applied only as set forth in Section
-------
2.12 hereof.
----
10. Mortgagor shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be
maintained under this Section 2.9 unless Mortgagee is included
-----------
thereon as a named insured with loss payable to Mortgagee under a
standard mortgagee endorsement or such other endorsement as
Mortgagee may require. Mortgagor shall immediately notify
Mortgagee whenever any such separate insurance is taken out and
shall promptly deliver to Mortgagee the policy or policies of such
insurance.
Section 2.10 Monthly Deposits. If Mortgagee requests, upon the occurrence
----------------
of an Event of Default, Mortgagor shall deposit with Mortgagee, monthly, until
the Obligations are fully repaid, such sums determined by Mortgagee in its sole
discretion to be
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<PAGE>
sufficient to pay, at least ten (10) days before the date penalties attach
thereto, all Impositions. Such deposits shall be held by Mortgagee to pay the
Impositions as the same accrue and are payable. Such deposits may be commingled
with the general funds of Mortgagee and no interest shall be payable thereon.
If such funds are insufficient to pay the Impositions in full, as the same
become payable, Mortgagor will deposit with Mortgagee upon demand such
additional sums as may be required. Nothing contained herein shall obligate
Mortgagee to pay any amounts in excess of the amount of funds deposited with
Mortgagee pursuant to this Section. Should Mortgagor fail to deposit with
Mortgagee sums sufficient to pay in full all Impositions at least ten (10) days
before the date penalties attach thereto, Mortgagee, at Mortgagee's election,
but without any obligation to do so, may advance any amounts required to make up
the deficiency, and any amounts so advanced shall be deemed to be part of the
Obligations. Upon the occurrence of an Event of Default, Mortgagee may, at its
option, apply any money in the fund resulting from such deposits to the payment
of the Obligations in such manner as it may elect. In the event of a
foreclosure of this Mortgage or deed in lieu thereof or sale under power of
sale, the purchaser of the Mortgaged Property shall succeed to all the rights of
Mortgagor in and to such deposits. The collection of such deposits by Mortgagee
shall not relieve Mortgagor of any of its obligations under this Section, or any
other provision of this Mortgage, and under no circumstances shall Mortgagee be
liable for failure to make any payment on behalf of Mortgagor for any
Impositions.
Section 2.11 Condemnation. Promptly upon learning of the institution or
------------
the proposed, contemplated or threatened institution of any condemnation
proceeding (which term when used in this Mortgage shall include any damage or
taking by any governmental or quasi-governmental authority and any transfer by
private sale in lieu or under threat thereof), Mortgagor will notify Mortgagee
of the pendency of such proceedings. So long as an Event of Default has not
occurred and is continuing, Mortgagor shall be entitled to commence, appear in
and prosecute, in its own name, any action or proceeding relating to any
condemnation of the Mortgaged Property or any part thereof, or sale in lieu of
condemnation, and to settle or compromise any claim in connection therewith;
provided, however, that, Mortgagee must approve any such settlement or
- -------- -------
compromise in excess of Twenty Five Thousand ($25,000.00). If an Event of
Default has occurred and is continuing, or if Mortgagor shall not take any
action as described in the preceding sentence, Mortgagee is hereby authorized,
at its option, to commence, appear in and prosecute, in its own name or in the
name of Mortgagor, any action or proceeding relating to any condemnation, and to
settle or compromise any claim in connection therewith. All such compensation,
awards, damages, claims, rights of action and proceeds and the right thereto are
hereby assigned by Mortgagor to Mortgagee, and the Net Proceeds thereof, whether
collected by
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Mortgagee or Mortgagor, shall be deposited with Mortgagee to be applied only as
set forth in Section 2.12 hereof Mortgagor agrees to execute such further
------------
assignments of any compensation, awards, damages, claims, rights of action and
proceeds as Mortgagee may require. If, prior to the receipt by Mortgagee of
such award or proceeds, the Mortgaged Property or any part thereof shall have
been sold by the foreclosure of this Mortgage, or as a result of other legal
action relating to this Mortgage, Mortgagee shall have the right to receive such
award or proceeds to the extent of any unpaid Obligations following such sale,
with legal interest thereon, whether or not a deficiency judgment on this
Mortgage shall have been sought or recovered, and to the extent of attorneys'
fees, costs and disbursements incurred by Mortgagee in connection with the
collection of such award or proceeds.
Section 2.12 Damage and Destruction; Condemnation; Application of Net
--------------------------------------------------------
Proceeds.
- --------
1. If the Mortgaged Property or any part thereof is damaged or
destroyed by fire or other casualty in whole or in part, or if
title to, or the use of, the Mortgaged Property or any part
thereof, or the interest of Mortgagor in the Mortgaged Property or
any part thereof, shall be taken under the exercise of the power of
eminent domain by any governmental body or by any person, firm or
corporation acting under governmental authority, either temporarily
or permanently, or is conveyed by a sale in lieu of condemnation,
the Net Proceeds resulting from any such event described in this
Section will be deposited in an account fund with Mortgagee (the
"Net Proceeds Account").
2. The Net Proceeds arising out of any casualty loss or
condemnation award or sale in lieu of condemnation shall, at
Mortgagee's sole option, be released from the Net Proceeds Account
to Mortgagor in whole or in part upon conditions satisfactory to
Mortgagee for the restoration or repair of the Mortgaged Property
damaged, or applied to the prepayment of the Obligations.
Notwithstanding the foregoing, provided that no default hereunder
or Event of Default shall have occurred and be continuing,
Mortgagee shall permit such Net Proceeds to be paid to Mortgagor to
reimburse Mortgagor's costs of restoring and repairing the
Mortgaged Property. Disbursements of such Net Proceeds that are
not required for such purposes shall be applied to the prepayment
of the Obligations. Disbursements of such Net Proceeds from the
Net Proceeds Account to Mortgagor shall be made in the same manner
and subject to the same conditions as
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advances of development and construction loan proceeds are made in
accordance with Mortgagee's standard development and construction
lending practices. In no event shall Mortgagee be required to
approve disbursements of such Net Proceeds unless Mortgagee
reasonably determines that restoration is economically feasible and
the Mortgaged Property can be restored and rebuilt to a profitable
condition with such Net Proceeds and other funds available to
Mortgagor within a reasonable period of time (which time period
must, at a minimum, be prior to the maturity date set forth in the
Note), and further provided that Mortgagor continues to satisfy the
other operating covenants with respect to the Mortgaged Property as
required pursuant to the terms of this Mortgage to the extent the
same remain applicable during any such restoration. The Mortgaged
Property shall be so restored and rebuilt by Mortgagor as to be of
at least equal value and of substantially the same character as
existed prior to the casualty loss or the exercise of the power of
eminent domain, and such restoration and rebuilding shall be
promptly commenced after the loss or the exercise of such power.
3. Notwithstanding the provisions of this Section 2.12, in the event
------------
the Net Proceeds are less than Twenty Five Thousand Dollars
($25,000) and if no default hereunder or Event of Default has
occurred and is continuing, such Net Proceeds shall be paid
directly to Mortgagor to be used solely to repair or restore the
Mortgaged Property or to prepay the Obligations, whichever
Mortgagor shall elect. a) In the event the
4. In the event the Net Proceeds are not sufficient to pay in full the
costs of repairing, rebuilding, altering and restoring the
Mortgaged Property as provided in this Section, whether such
determination shall be made at the time Mortgagor elects to repair,
rebuild, restore or alter the Mortgaged Property or at any time
thereafter, Mortgagor will nonetheless complete the work thereof
and pay that portion of the costs thereof in excess of the amount
of such Net Proceeds and Mortgagee may, as a condition precedent to
approving the disbursement of any Net Proceeds, require that
Mortgagor deposit monies with Mortgagee or furnish to Mortgagee an
irrevocable letter of credit or a surety bond satisfactory to
Mortgagee, in either case in an amount sufficient to pay the costs
of repairing, rebuilding, altering and restoring the Mortgaged
Property in excess of the Net Proceeds available for such purposes;
provided, however, that
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Mortgagor shall not be required to complete such work if it pays
the Obligations in full. Mortgagor shall not, by reason of the
payment of any costs in excess of the amount of Net Proceeds
(whether by direct payment thereof or payment to the Mortgagee
therefor), be entitled to any reimbursement from Mortgagee or any
abatement or diminution of the payments payable under the Loan
Documents.
5. If any work required to be performed under this Section 2.12
------------
involves an estimated expenditure of more than five percent (5%) of
the original principal amount of the Note, no such work will be
undertaken until plans and specifications therefor, prepared by an
architect or engineer satisfactory to Mortgagee, have been
submitted to and approved by Mortgagee.
Section 2.13 Care of Mortgaged Property.
--------------------------
1. Mortgagor shall keep the Mortgaged Property in good condition and
repair (ordinary wear and tear excepted), shall not commit or
suffer any waste and shall not do or suffer to be done anything
which would or could increase the risk of fire or other hazard to
the Mortgaged Property or any part thereof or which would or could
result in the cancellation of any insurance policy carried with
respect to the Mortgaged Property.
2. Except as is otherwise specifically provided in Section 2.13,
------------
Mortgagor shall not remove, demolish or materially alter, enlarge
or change any of the Improvements without Mortgagee's consent, nor
shall any new Improvements be constructed on the Land without
Mortgagee's consent, which shall not be unreasonably withheld.
Except as otherwise provided herein, Mortgagor shall not remove or
permit to be removed from the Land any Equipment without the
consent of Mortgagee, except where appropriate replacements are
immediately made which are free of any Lien, security interest or
claim superior to that of this Mortgage and which have a value and
utility at least equal to the value and utility of the items
removed, which replacements shall, without further action, become
subject to the lien of this Mortgage.
3. Mortgagee and its representatives are hereby authorized to enter
upon and inspect the Mortgaged Property whenever Mortgagee deems
such inspection to be necessary, at reasonable times, subject to
and in compliance with Mortgagor's obligations and covenants
20
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pursuant to approved Leases at the Real Property, and with prior
notice; provided, however, that upon the occurrence of an Event of
-------- -------
Default, Mortgagee and its representatives may so enter whenever
Mortgagee may deem it necessary or desirable without prior notice.
4. Mortgagor shall promptly comply, in all material respects, with all
present and future Applicable Laws.
5. Mortgagor shall not initiate, join in or consent to any change in
any private restrictive covenant, zoning ordinance, easement or
other public or private restriction limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof
without Mortgagee's consent, which shall not be unreasonably
withheld, conditioned or delayed as long as the Mortgaged Property
is not materially impaired thereby.
Section 2.14 Further Assurances; After-Acquired Property. At any time
-------------------------------------------
and from time to time, upon request by Mortgagee, Mortgagor shall make, execute
and deliver or cause to be made, executed and delivered, to Mortgagee and, where
appropriate, cause to be recorded or filed in such offices and places as shall
be deemed desirable by Mortgagee, any and all such other and further deeds to
secure debt, mortgages, deeds of trust, security agreements, financing
statements, continuation statements, instruments of further assurance,
certificates and other documents as may, in the reasonable opinion of Mortgagee,
be necessary or desirable in order to effectuate, complete or perfect, or to
continue and preserve, (a) the obligations of Mortgagor under this Mortgage and
(b) the lien of this Mortgage as a lien upon, assignment of and security
interest in and to all of the Mortgaged Property, whether now owned or hereafter
acquired by Mortgagor, subject only to Permitted Encumbrances, and (c) the
security for the Obligations. Upon any failure by Mortgagor to do so, Mortgagee
may make, execute, record and file any and all such deeds to secure debt,
mortgages, deeds of trust, security agreements, financing statements,
continuation statements, instruments, certificates and documents for and in the
name of Mortgagor, and Mortgagor hereby irrevocably appoints Mortgagee the agent
and attorney-in-fact of Mortgagor to do so. Unless otherwise agreed in writing
by Mortgagee, the lien hereof shall automatically attach, without further act,
to all improvements, alterations, substitutions, restorations and replacements
of, and all additions and appurtenances to, the Mortgaged Property released to
or acquired by Mortgagor with the same effect as if such after-acquired property
had been owned by Mortgagor as of the date hereof and had been specifically
described in the granting clauses hereof, to the extent permitted by Applicable
Law.
21
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Section 2.15 Expenses. Except as otherwise agreed between Mortgagor
--------
and Mortgagee in writing, Mortgagor shall pay or reimburse Mortgagee, upon
demand therefor, for all reasonable attorneys' fees, costs and expenses incurred
by Mortgagee in any suit, action, legal proceeding or dispute of any kind in
which Mortgagee is made a party or appears as a party plaintiff or defendant,
affecting the Obligations, this Mortgage or the Mortgaged Property including,
without limitation, any foreclosure proceedings, any condemnation action
involving the Mortgaged Property or any part thereof, any federal bankruptcy or
state insolvency proceeding involving Mortgagor or the Mortgaged Property, and
any such amounts paid by Mortgagee shall be added to the Obligations and shall
bear interest from and after the date when paid at the default rate set forth in
the Note.b) Subrogation. To the full extent of the Obligations, Mortgagee is
-----------
hereby subrogated to the Liens, claims, demands and other encumbrances, and to
the rights of the owners and holders of each Lien, claim, demand and other
encumbrance on the Mortgaged Property which is paid or satisfied, in whole or in
part, from proceeds of the Obligations, and the respective Liens, claims,
demands and other encumbrances shall be, and each of them is hereby, preserved
and shall pass to and be held by Mortgagee as additional collateral and further
security for the Obligations, to the same extent they would have been preserved
and would have been passed to and held by Mortgagee had they been duly and
legally assigned, transferred, set over and delivered unto Mortgagee by
assignment, notwithstanding the fact that any instrument providing public notice
of the same may be satisfied and canceled of record.
Section 2.17 Sales and Encumbrances Prohibited.
---------------------------------
1. The identity and management of Mortgagor was and continues to be a
material consideration upon which Mortgagee has relied in
connection with, and which constitutes valuable consideration to
Mortgagee for, extending to Mortgagor the Loan, and any change in
such identity and management could materially impair or jeopardize
the security for the payment of the Obligations. Therefore,
Mortgagor agrees, as part of the consideration for the extending to
Mortgagor of the Loan, that without Mortgagee's prior written
consent and except as is otherwise specifically provided in the
Term Sheet or this Mortgage, Mortgagor shall not, voluntarily or by
operation of law: (i) permit the sale, transfer, conveyance,
assignment or any other disposition of any beneficial interest in
Mortgagor or any of its shareholder interests; (ii) permit the
pledge, encumbrance, hypothecation or granting of a security
interest in Mortgagor; or (iii) cause or permit any junior
encumbrance or Lien to be placed on the Mortgaged Property, except
for the
22
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Permitted Encumbrances, unless such Lien is not a consensual Lien,
and Mortgagor shall remove or bond over such inferior Lien or
encumbrance within thirty (30) days after filing. Such consent may
be given or withheld by Mortgagee in its sole discretion and may be
conditioned upon payment to Mortgagee of a reasonable fee for
processing the request for consent and other administrative costs
incurred in connection therewith, a reasonable increase in the
interest rate charged with respect to the Obligations, the
modification of the terms of this Mortgage or the other Loan
Documents, or any combination of the foregoing, all of which
Mortgagor agrees are reasonable conditions to the approval of any
such transfer.
2. The consent by Mortgagee to any sale, transfer, conveyance, pledge,
encumbrance, assignment, creation of a security interest in or
other hypothecation or disposition of all or any part of the
Mortgaged Property or any interest in Mortgagor shall not be deemed
to constitute a novation of the Obligations or a consent to any
further sale, transfer, pledge, encumbrance, creation of a security
interest or other hypothecation or disposition, or to waive
Mortgagee's right, at its option, to exercise its remedies for
default, without notice to or demand upon Mortgagor or to any other
person or entity, upon any such sale, transfer, pledge,
encumbrance, creation of a security interest or other hypothecation
or disposition to which Mortgagee shall not have consented.
Section 2.18 Right to Cure. Mortgagor agrees that upon its receipt of
-------------
written notice from Mortgagee of the occurrence of an Event of Default and the
expiration of all applicable grace periods, Mortgagee, at its option and without
any obligation to do so, may perform or observe or cause the performance or
observance of any provision of this Mortgage or any other Loan Document giving
rise to such Event of Default, and all payments made or reasonable costs
incurred by Mortgagee in connection therewith shall be secured hereby and shall
be, without demand, immediately repaid by Mortgagor to Mortgagee with interest
thereon at the default rate set forth in the Note from the date such payment is
made or expense is incurred by Mortgagee, to the date Mortgagee is reimbursed
therefor. Mortgagee shall be the sole judge of the necessity for any such
actions and of any amounts necessary to be paid in connection therewith.
Mortgagee is hereby empowered to enter and to authorize others to enter upon the
Mortgaged Property, or any part thereof, for the purpose of such performance or
observance without thereby becoming liable to Mortgagor or any person in
possession of any portion of the Mortgaged Property or holding
23
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under Mortgagor. Mortgagor expressly acknowledges and agrees, however, that
notwithstanding anything contained in this Section 2.18 to the contrary,
------------
Mortgagee shall not be obligated under this Section to incur any expense or to
perform any act whatsoever.
Section 2.19 Books and Records. Mortgagor shall keep and maintain, or
-----------------
shall cause to be kept and maintained, at Mortgagor's cost and expense and in
accordance with generally accepted accounting principles, proper and accurate
books, records and accounts reflecting all items of income and expense payable
by Mortgagor in connection with the operation of the Mortgaged Property.
Mortgagee and its agents shall have the right from time to time at all times
during normal business hours (with prior notice to Mortgagor if no Event of
Default shall have occurred) to examine such books, records and accounts at the
office of Mortgagor or at the office of such other person or entity maintaining
such books, records or accounts and to make copies or extracts thereof as
Mortgagee shall desire and to discuss Mortgagor's finances and accounts with
Mortgagor, at such reasonable times as may be requested by Mortgagee.
Section 2.20 No Release of Hazardous Substances. Mortgagor shall not,
----------------------------------
and shall not permit any Lessees or other occupants of the Real Property or any
part thereof to, now or at any time in the future, manufacture or Release any
Hazardous Substances on, under, over or about the Mortgaged Property. Mortgagor
shall not allow a Lien relating to any Hazardous Substances to be imposed or
remain on the Mortgaged Property pursuant to any Environmental Laws. If it
shall be determined that Mortgagor, any Lessee of any portion of the Mortgaged
Property, or any other Person caused or permitted, from and after the date
hereof, any Release or Contamination for which Mortgagor, Mortgagee or any
subsequent owner of the Mortgaged Property would be liable, Mortgagor shall act
promptly to effectuate, at its own cost, a Clean-Up of such Hazardous
Substances.
Section 2.21 Environmental Claims. If Mortgagor receives any notice,
--------------------
or otherwise learns, of the occurrence of an Environmental Claim, or of any
event involving actual or potential Release or Contamination on, from, under,
over or otherwise affecting the Mortgaged Property or any portion thereof,
whether caused by Mortgagor, any Lessee or any other Person, Mortgagor shall
promptly give written notice of same to Mortgagee and shall promptly comply with
Mortgagee's obligations under Applicable Law with regard to such Release,
Contamination, or Environmental Claim.
Section 2.22 Environmental Proceedings. Mortgagor shall have the
-------------------------
right to control and participate in any proceeding involving an Environmental
Claim, private claim, or Clean-Up through knowledgeable and experienced counsel
of its choice, subject to Mortgagee's prior written consent, provided, however,
-------- -------
24
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that at Mortgagee's option, Mortgagee may participate in and contribute to such
proceeding or Clean-Up and appoint its own counsel at any time after
consultation with Mortgagor, all of which shall be at Mortgagor's sole cost and
expense. If, however, Mortgagee notifies Mortgagor in writing of Mortgagee's
intent to control such proceeding or private claim within thirty (30) days of
Mortgagor's notice of such matter to Mortgagee, Mortgagee shall have the right
to undertake the control, conduct or settlement of such claims through its own
counsel at Mortgagor's sole cost and expense and may settle such matters without
Mortgagor's consent at Mortgagor's sole cost and expense. In the event any
proposed settlement includes non-monetary relief, including Clean-Up, Mortgagee
may, acting in good faith, agree to such Clean-Up and settle such matter after
consultation with Mortgagor, but (unless an Event of Default shall have occurred
and be continuing) only with the prior consent of Mortgagor, which may not be
unreasonably withheld or delayed, and provided that if Mortgagor fails to notify
Mortgagee in writing whether it consents to such non-monetary relief within ten
(10) days from Mortgagee's request for Mortgagor's approval, Mortgagor shall be
deemed to have consented to such non-monetary relief.
Section 2.23 Environmental Indemnity. Mortgagor hereby agrees to
-----------------------
indemnify and hold harmless Mortgagee, Mortgagee's partners, stockholders,
officers, directors, employees and agents from and against any and all
Environmental Claims. As used herein, "Environmental Claims" mean any and all
claims, losses, suits, fines, liens, penalties, judgments, actions, liabilities,
damages and all reasonable expenses (including reasonable attorneys' fees,
expert fees and disbursements) that may at any time be imposed upon, incurred by
or asserted or awarded against Mortgagee or the Mortgaged Property and
attributable to circumstances occurring during the period Mortgagor holds fee
title to the Mortgaged Property, and arising directly or indirectly from or out
of: (i) the presence of Hazardous Substances or Contamination on, in, or under
all or any portion of the Mortgaged Property, regardless of whether or not
caused by or within the control of Mortgagor; (ii) the violation of any
Environmental Laws relating to or affecting the Mortgaged Property or Mortgagor,
whether or not caused by or within the control of Mortgagor; or (iii) the
enforcement of this Mortgage, including, without limitation, (A) the costs of
Clean-Up with respect to any and all Hazardous Substances or Contamination from
all or any portion of the Mortgaged Property or any surrounding areas, (B)
additional costs required to take necessary precautions to protect against the
Release of Hazardous Substances on, in, under or affecting the Mortgaged
Property or into the air, any body of water, any other public domain or any
surrounding area, and (C) costs incurred to comply with the Environmental Laws
in connection with all or any portion of the Mortgaged Property or any
surrounding areas.
25
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It is expressly agreed that the indemnity set forth above may be
assigned or otherwise transferred by Mortgagee to its successors and assigns and
to any purchaser in a foreclosure sale, without notice to Mortgagor and without
any further consent of Mortgagor. To the extent notice of any such assignment
or transfer is required by Applicable Law, Mortgagor hereby gives advance
consent to any such assignment or transfer to maximize the extent and effect of
the indemnity given hereby.
Section 2.24 Compliance with Applicable Law. Mortgagor will do or
------------------------------
cause to be done all things necessary to preserve and keep in full force and
effect its right to own, mortgage and grant a security interest in property and
to enforce contracts in the State of Florida. Mortgagor will comply, in all
material respects, with or cause to be complied with (a) all Applicable Law, and
(b) every contract, agreement or other instrument, applicable to Mortgagor, made
by Mortgagor with respect to the Mortgaged Property or to which Mortgagor is a
party or has given its consent, the nonperformance of or noncompliance with
which would have a material adverse affect on the Mortgaged Property or
Mortgagee.
Section 2.25 Indemnification. Mortgagor shall at all times protect,
---------------
indemnify and save harmless Mortgagee from and against all liabilities, losses,
damages, claims, obligations, penalties, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon, incurred by
or asserted against Mortgagee on account of (a) any failure of Mortgagor to
comply with any of the terms of this Mortgage, (b) any loss or damage to
property or any injury to or death of any person that may be occasioned by any
cause whatsoever pertaining to the Mortgaged Property or the use thereof, (c)
any representation or warranty of Mortgagor set forth herein or in any of the
other Loan Documents proving to be untrue in any material respect, or (d) any
action, suit, claim, demand, administrative proceeding, enforcement action or
governmental or private action contesting or affecting title to the Mortgaged
Property, or arising from or in connection with the financing, acquisition,
equipping, ownership, use or operation of the Mortgaged Property; provided,
--------
however, that the foregoing indemnity shall not be applicable with respect to
- -------
the gross negligence or willful misconduct of the parties to be indemnified.
The foregoing shall be equally applicable to the respective officers, directors,
employees and agents of Mortgagee.
ARTICLE 3
EVENTS OF DEFAULT AND REMEDIES
Section 3.1 Events of Default. Each of the following shall be an
-----------------
Event of Default hereunder:
1. Failure by Mortgagor to pay the Obligations or any
26
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other sum that may be due and payable under any of the Loan
Documents when as the same shall become due and payable, whether at
maturity or by acceleration;
2. Any transfer prohibited under Sections 2.1 or 2.17 hereof to which
------------ ----
Mortgagee shall not have first consented in writing;
3. Failure by Mortgagor to observe or perform any term, covenant,
condition or agreement of this Mortgage or of any other Loan
Document (other than any failure resulting in any other Event of
Default described in this Section 3.1) within thirty (30) days
-----------
after written notice of such failure; provided, however, if such
-------- -------
failure cannot be cured within such thirty (30) day period, then
failure by Mortgagor to commence the curing thereof within such
thirty (30) day period and diligently to prosecute such curing to
completion within sixty (60) days after the initial written notice
of such failure has been given by Mortgagee;
4. If any material representation or warranty of Mortgagor contained
in this Mortgage or in any other Loan Document proves to be untrue
or misleading in any material respect as of the date made;
5. The occurrence of any default or "Event of Default" under any of
the other Loan Documents and the expiration of all applicable grace
periods;
6. Mortgagor shall (1) execute a general assignment for the benefit of
its creditors, or (ii) become the subject, voluntarily or
involuntarily, of any bankruptcy, insolvency or reorganization
proceeding; provided, however, it shall not be an Event of Default
-------- -------
if Mortgagor becomes the subject of an involuntary bankruptcy,
insolvency or reorganization proceeding so long as Mortgagor
promptly objects to such proceeding and seeks a dismissal thereof
and the proceeding is dismissed within ninety (90) days following
its filing, or (iii) admit in writing that it is unable to pay its
debts generally as they become due, or (iv) apply for or consent to
the appointment of a custodian, receiver, trustee, or liquidator of
itself or of all or a substantial part of its assets, or (v) file a
voluntary petition seeking protection under any Debtor Relief Laws,
or other insolvency law now or hereafter existing, or (vi) file an
answer admitting the material allegations of, or consenting to, or
default in filing an answer to, a petition filed against it in any
bankruptcy, reorganization, or other
27
<PAGE>
insolvency proceedings, or (vii) institute or voluntarily be or
become a party to any other judicial proceedings intended to effect
a discharge of the debts of Mortgagor, in whole or in part, or a
postponement of the maturity and the collection thereof, or a
suspension of any of the rights or powers of Mortgagee granted in
the Note, this Mortgage or any of the other Loan Documents;
7. An order, judgment, or decree shall be entered by any court of
competent jurisdiction appointing a custodian, receiver, trustee,
or liquidator of Mortgagor or of all or any substantial part of
Mortgagor's assets; or
8. The filing by any person or entity of any claim in any legal or
equitable proceeding challenging the priority of the lien of this
Mortgage, subject only to the Permitted Encumbrances, and the
failure of Mortgagor to have such proceeding dismissed or bonded
against within thirty (30) days thereafter;
9. The occurrence of any event of default under any of the instruments
and other documents evidencing and securing any subordinate
indebtedness secured by a Lien on the Mortgaged Property that is
expressly permitted by Mortgagee and the expiration of all
applicable grace periods;
10. The rezoning of the Land so as to have a material adverse effect on
the security provided by this Mortgage;
11. The levy, attachment or seizure pursuant to court order of any
right, title or interest of Mortgagor or of any successor to
Mortgagor, in and to the Mortgaged Property if such order is not
vacated and the proceeding in which it was entered is not dismissed
within thirty (30) days after the entry of such order;
12. The existence of any material encroachment which has occurred
without the approval of Mortgagee or which is not a Permitted
Encumbrance and which is not removed or corrected within thirty
(30) days after the earlier of Mortgagee's written notice to
Mortgagor of the existence thereof or Mortgagor's discovery
thereof; provided, however, that if such encroachment cannot be
-------- -------
removed or corrected within such thirty (30) day period, the
failure to commence the moving or correction thereof within such
thirty (30) day period and diligently to prosecute such moving or
correction
28
<PAGE>
to completion within ninety (90) days after the earlier of such
notice from Mortgagee or discovery by Mortgagor;
13. The condemnation, demolition, destruction or substantial damage of
or to the Improvements such that in Mortgagee's reasonably judgment
they cannot be restored or rebuilt to a profitable condition within
a reasonable time with funds available to Mortgagor; or
14. The revocation or suspension of any governmental permit issued in
connection with the Mortgaged Property and which is material to the
operation or use of the Mortgaged Property if such permit is not
reinstated on terms acceptable to Mortgagee within thirty (30) days
of such revocation or suspension.
Section 3.2 Remedies.
--------
(a) In addition to any other rights and remedies which Mortgagee may
have under this Mortgage and the other Loan Documents or pursuant to law or
equity, and without limitation thereof, upon and at any time after the
occurrence of any Event of Default, Mortgagee at any time may take such action
as Mortgagee deems advisable to protect and enforce its rights against Mortgagor
and in and to the Mortgaged Property, including the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such order
as Mortgagee may determine in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Mortgagee:
(i) declare the whole of the principal sum of the Loan, interest,
along with any other sum payable under the Note, this Mortgage and any other
Loan Document to be immediately due and payable, without presentment, demand,
protest, notice of protest and non-payment or other notice of default, notice of
accelerate or notice of intention to accelerate or other notice of any kind, all
of which are hereby waived by Mortgagor and all other parties obligated in any
manner whatsoever on the Obligations;
(ii) enter into or upon the Mortgaged Property, either personally or
by its agents, nominees or attorneys, and dispossess Mortgagor and its agents
and employees therefrom, and thereupon Mortgagee may (v) use, operate, manage,
lease, control, insure, maintain, repair, restore and otherwise deal with all
and every part of the Mortgaged Property and conduct the business thereat on
such terms and for such period as Mortgagee shall determine; (w) complete any
construction on the Mortgaged Property in such manner and form as Mortgagee
deems advisable, including, without limitation, as permitted pursuant to this
Mortgage; (x)
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<PAGE>
make alterations, additions, renewals, replacements and improvements to or on
the Mortgaged Property; (y) exercise all rights and powers of Mortgagor with
respect to the Mortgaged Property, whether in the name of Mortgagor or
otherwise, including the right to make, cancel, enforce or modify Leases, obtain
and evict tenants, and demand, sue for, collect and receive all earnings,
revenues, rents, issues, profits and other income of the Mortgaged Property and
every part thereof and as otherwise may be set forth in the Assignment of Leases
and Rents; and (z) apply the Revenue or other income from the Mortgaged Property
in the manner prescribed by Mortgagee, subject to Applicable Law, with any
surplus being paid to Mortgagor or any other Person who may be lawfully entitled
thereto;
(iii) institute proceedings for the complete foreclosure of this
Mortgage, in which case the Mortgaged Property may be sold for cash or credit in
one or more parcels;
(iv) with or without entry and, to the extent permitted, and
pursuant to the procedures provided, by Applicable Law, institute proceedings
for the partial foreclosure of this Mortgage for the portion of the indebtedness
secured hereby then due and payable, subject to the lien of this Mortgage
continuing unimpaired and without loss of the priority hereof so as to secure
the balance of the Obligations secured hereby not then due;
(v) sell the Mortgaged Property or any part thereof and all
estate, claim, demand, right, title and interest of Mortgagor therein and rights
of redemption thereof, to the extent permitted pursuant to Applicable Law, at
one or more sales, in whole or in parcels, at such time and place, upon such
terms and after such notice thereof as may be required or permitted by
Applicable Law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Mortgaged Property, this Mortgage shall continue as a lien on
the remaining portion of the Mortgaged Property;
(vi) subject to Section 5.14 hereof, institute an action, suit
------------
or proceeding in equity for the specific performance of any covenants,
conditions or agreements contained herein or in the Note or any other Loan
Document;
(vii) subject to Section 5.14 hereof, recover judgment on the
------------
Note or any other guaranty either before, during, after or in lieu of any
proceedings for the enforcement of this Mortgage;
(viii) apply for the appointment of a custodian, trustee,
receiver, liquidator or conservator of the Mortgaged Property, without regard
for the adequacy of the security for the indebtedness secured hereby and without
regard for the solvency of
30
<PAGE>
Mortgagor or of any Person liable for the payment of the indebtedness secured
hereby; or
(ix) pursue such other legal or equitable remedies as Mortgagee
may have under Applicable Law.
(b) Without limiting the rights of Mortgagee pursuant to this Section
-------
3.2(b), Mortgagee may further, by summary proceedings, initiate an action for
- ------
possession or otherwise, dispossess any tenants, users or occupiers of the
Mortgaged Property then or thereafter in default in the payment of any rent or
other charge for the use thereof, and any tenants or other users or occupiers
whose leasehold estates or rights to use the Mortgaged Property are subordinate
to the lien of this Mortgage, whether or not any such tenant, user or occupier
is so in default; and Mortgagor hereby irrevocably appoints Mortgagee attorney-
in-fact of Mortgagor for all such purposes. If Mortgagor remains in possession
after demand by Mortgagee for surrender of possession of the Mortgaged Property,
such continued possession by Mortgagor shall be as tenant of Mortgagee, and
Mortgagor agrees to pay monthly in advance to Mortgagee such rent for the
Mortgaged Property so occupied as Mortgagee may demand, and in default of so
doing, Mortgagor may also be dispossessed by summary proceedings or otherwise.
In case of the appointment of a receiver of the rents, the foregoing agreement
of Mortgagor to pay rent shall inure to the benefit of such receiver.
(c) Mortgagee may require Mortgagor to assemble the Mortgaged
Property, or any part thereof, and make it available to Mortgagee at the Land or
at such other place as Mortgagee may reasonably designate.
(d) In the event of the transfer of the Mortgaged Property pursuant
to a foreclosure, deed in lieu of foreclosure, or otherwise, and subject to the
terms and conditions of the Loan Agreement, Mortgagee may surrender the
insurance policies maintained pursuant to the terms hereof, or any part thereof,
and receive and apply the unearned premiums as a credit on the Indebtedness,
and, in connection therewith, Mortgagor hereby appoints Mortgagee (or any
officer of Mortgagee), as the true and lawful agent and attorney-in-fact for
Mortgagor (with full powers of substitution), which power of attorney shall be
deemed to be a power coupled with an interest and therefore irrevocable, to
collect such premiums.
(e) Mortgagee may retain the Mortgaged Property which does not
constitute real property, or part thereof, in satisfaction of the Indebtedness,
or part thereof, whenever the circumstances are such that Mortgagee is entitled
to do so under the Code.
31
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(f) Mortgagee may buy the Mortgaged Property, or any part thereof, at
any public sale or judicial sale (including any sale of the collateral as
contemplated in Subsection 3.2(e) hereof).
-----------------
(g) Mortgagee may buy the Mortgaged Property, or any part thereof, at
any private sale if the Mortgaged Property, or part thereof, being sold is a
type customarily sold in a recognized market or a type which is the subject of
widely distributed standard price quotations.
(h) In the event that Mortgagee shall own the Real Property as a
result of the exercise of its right of foreclosure on the Mortgaged Property, or
pursuant to a deed in lieu of foreclosure, Mortgagee will comply with paragraph
3 of Section II of the Term Sheet and the provisions of paragraphs 4, 5 and 6 of
Section II of the Term Sheet will apply.
ARTICLE 4
LEASES AND RENTS
Section 4.1 Compliance. Mortgagor shall comply with all of the
----------
terms, covenants and conditions in this Mortgage and the other Loan Documents
with respect to the Leases and Rents.
Section 4.2 Assignment.
----------
(a) Mortgagor does hereby absolutely and irrevocably grant, transfer
and assign to Mortgagee all of Mortgagor's right, title and interest in and to
all Leases and Rents, subject, however, to the license granted by Mortgagee to
Mortgagor in Section 4.2(b) hereof. This assignment of Leases and Rents is
--------------
absolute and irrevocable, and shall constitute a present assignment subject to
the grant of a license by Mortgagee to Mortgagor to collect and use such Rents
in accordance with Section 4.2(b) hereof. Upon the occurrence and during the
--------------
continuance of an Event of Default, Mortgagee may, at its option, revoke such
license by notice to Mortgagor, and all Rents collected and held by Mortgagor
after the occurrence of such Event of Default shall be paid over to Mortgagee
and applied in the manner prescribed by Mortgagee, subject to Applicable Law,
with any surplus being paid to Mortgagor or any other person or entity who may
be lawfully entitled thereto.
(b) The assignment contained in this Section 4.2 shall be fully
-----------
operative without any further action on the part of either party and Mortgagee
shall be entitled, at its option, upon the occurrence of an Event of Default, to
all Rents, whether or not Mortgagee shall take possession of the Mortgaged
Property
32
<PAGE>
(c) So long as no Event of Default shall have occurred and be
continuing, Mortgagor shall have a license, subject to the terms and conditions
of the Term Sheet, this Mortgage and the Assignment of Leases and Rents, to
collect and receive all Rents for application in accordance with the Loan
Documents.
Section 4.3 Debtor Relief Laws.
------------------
(a) Without limiting the generality of any provision of this Article
4, if a proceeding under the Bankruptcy Code is commenced by or against
Mortgagor, then, pursuant to Section 552(b)(2) of the Bankruptcy Code, the
security interest granted by this Mortgage shall automatically extend to all
Rents, Revenue and all fees, charges, accounts and other payments for the use
and occupancy of lots and other public facilities in the Real Property acquired
by Mortgagor after the commencement of the case and such Rents, Revenue and
other fees, charges, accounts and payments shall constitute cash collateral
under Section 363(a) of the Bankruptcy Code.
(b) During the continuation of any Event of Default, Mortgagee shall
have the right, but not the obligation, to file in its own name or on behalf of
Mortgagor, any proof of claim in any bankruptcy or insolvency proceeding in
which the debtor is a Lessee or guarantor under a Lease.
ARTICLE 5
MISCELLANEOUS
Section 5.1 Release. If the Obligations are paid and performed in
-------
full in accordance with the terms of this Mortgage, the Note and the other Loan
Documents, then this conveyance shall become null and void and be satisfied of
record or assigned, without recourse, pursuant to an instrument acceptable to
Mortgagee in its sole discretion, to another lender designated by Mortgagor at
Mortgagor's request and expense, but shall remain in full force and effect until
so satisfied or assigned.
Section 5.2 Rights Cumulative. All rights, remedies, powers,
-----------------
privileges and Liens expressly conferred by the Loan Documents are cumulative of
all other rights, remedies, powers, privileges and Liens herein, or by law or in
equity provided, or provided in any other Loan Documents, and shall not be
deemed to deprive Mortgagee of any such other legal or equitable rights,
remedies, powers, privileges and Liens by judicial proceedings, or otherwise,
appropriate to enforce the conditions, covenants and terms of this Mortgage, the
Note and the other Loan Documents, and the employment of any rights, remedies,
powers and privileges hereunder, or otherwise, shall not prevent the concurrent
or subsequent employment of any other appropriate rights, remedies,
33
<PAGE>
powers and privileges.
Section 5.3 Waivers and Consents. No failure or delay of Mortgagee
--------------------
in exercising any right or power hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of Mortgagee
hereunder and under the other Loan Documents are cumulative and not exclusive of
any rights or remedies which it would otherwise have. No waiver of any provision
of this Mortgage or any of the other Loan Documents or consent to any departure
by Mortgagor or any other Person therefrom shall in any event be effective
unless signed in writing by Mortgagee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on Mortgagor or any other Person in any case shall entitle
Mortgagor or such Person to any other or further notice or demand in similar or
other circumstances.
Section 5.4 Other Waivers. Mortgagor hereby waives (i) all rights of
-------------
marshaling in the event of any foreclosure of the Liens hereby created and (ii)
the benefit of all appraisement, valuation, stay, extension and redemption laws
now or hereafter in force.
Section 5.5 Severability. In the event any one or more of the
------------
provisions contained in this Mortgage or in any other Loan Documents should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions. If the
rights, remedies, powers, privileges and Liens created by this Mortgage shall be
invalid or unenforceable as to any part of the Obligations, then the unsecured
portion of the Obligations shall be completely paid prior to the payment of the
remaining and secured portion of the Obligations, and all payments made on the
Obligations shall be considered to have been paid on and applied first to the
complete payment of the unsecured portion of the Obligations.
Section 5.6 Taxes and Insurance. At the request of Mortgagee at any
-------------------
time following an Event of Default, Mortgagor shall create a fund or reserve for
the payment of all insurance premiums, taxes, and assessments against the
Mortgaged Property by paying to Mortgagee, contemporaneously with each
installment of interest on the Note, a sum equal to the premiums that will next
34
<PAGE>
become due and payable on the insurance policies covering the Mortgaged
Property, or any part thereof, plus taxes and assessments next due on the
Mortgaged Property, or any part thereof, as estimated by Mortgagee, less all
sums paid previously to Mortgagee therefor, divided by the number of
installments of interest to elapse before one month prior to the date when such
premiums, taxes, and assessments will become delinquent, such sums to be held by
Mortgagee, without interest, for the purposes of paying such premiums, taxes,
and assessments. Any excess reserve shall, at the discretion of Mortgagee, be
credited by Mortgagee on subsequent payments to be made on the Obligations by
Mortgagor, and any deficiency shall be paid by Mortgagor to Mortgagee on or
before the date when such ground rentals, premiums, taxes, and assessments,
shall have become delinquent. Transfer of legal title to the Mortgaged Property
shall automatically transfer title in all sums deposited under the provisions of
this Section 5.6 to the purchaser thereof, or at Mortgagee's option, may be
-----------
applied to the Obligations.
Section 5.7 Right of Entry. At any time, and from time to time,
--------------
upon three (3) business days prior notice to Mortgagor, Mortgagee and/or its
agents shall have the right to enter upon and inspect the Mortgaged Property,
provided that Mortgagee and/or its agents shall use reasonable efforts not to
interfere with the normal operation of the Mortgaged Property.
Section 5.8 Binding Effect; Covenants Running with the Land. The
-----------------------------------------------
provisions of this Mortgage shall be binding upon Mortgagor, and its successors
and assigns, and shall inure to the benefit of Mortgagee, and its successors and
assigns, and the provisions hereof shall likewise be covenants running with the
land.
Section 5.9 Counterparts. This Mortgage may be executed in any
------------
number of counterparts each of which shall be deemed an original, and all of
which when taken together shall be one and the same Mortgage. Signature and
acknowledgment pages may be detached from the counterparts and attached to a
single copy of the document to physically form one document, which may be
recorded.
Section 5.10 Financing Statement. Mortgagee shall have the right at
-------------------
any time to file this Mortgage as a financing statement, but the failure to do
so shall not impair the validity and enforceability of this Mortgage against
Mortgagor in any respect whatsoever. A carbon, photographic, or other
reproduction of this Mortgage, or any financing statement relating to this
Mortgage, shall be sufficient as a financing statement.
Section 5.11 References. All references to "Article" "Articles,"
----------
"Section," "Sections," "Subsection," or "Subsections" contained herein are,
unless specifically indicated otherwise,
35
<PAGE>
references to articles, sections and subsections of this Mortgage.
Section 5.12. Captions. The captions, headings, and arrangements
--------
used in this Mortgage are for convenience only and do not in any way affect,
limit, amplify, or modify the terms and provisions hereof.
Section 5.13 Notices. Except as otherwise specifically provided
-------
herein, any notice, payment, demand, or communication required or permitted to
be given by any provision of this Mortgage shall be in writing and shall be
delivered personally, or sent by nationally recognized overnight courier or
registered or certified mail,
If to Mortgagee:
MHC Lending Limited Partnership
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: President
With a copy to:
Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: General Counsel
If to MPI:
Meadows Preservation, Inc.
2555 PGA Boulevard,
Palm Beach Gardens, Florida 33410
Attention: President
Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally or by nationally
recognized overnight courier, or as of the date on which the same was deposited
in a regularly maintained receptacle for the deposit of United States mail, if
sent by registered or certified mail, postage and charges prepaid. Mortgagee or
Mortgagor may from time to time specify a different address by notice to the
other.
Section 5.14 Limit on Remedies. Notwithstanding any provision
-----------------
contained herein or in any of the other Loan Documents to the contrary, in the
event that Mortgagee shall fail to give any notice to any Person under this
Mortgage, the sole and exclusive remedy for such failure shall be to seek
appropriate equitable
36
<PAGE>
relief to force Mortgagee to give such notice and to have any action of such
Person postponed or revoked and any proceedings in connection therewith delayed
or terminated pending the giving of such notice by Mortgagee, and no Person
shall have any right to damages (whether actual or consequential) or any other
type of relief against Mortgagee not specifically provided for herein, all of
which damages or other relief are hereby expressly waived. The foregoing is not
intended and shall not be deemed under any circumstances to require Mortgagee to
give notice of any type or nature to any Person except as expressly required
hereby or thereby, or by Applicable Law.
Section 5.15 Governing Law. This Mortgage is being executed and
-------------
delivered, and is intended to be performed, in the State of Florida, and the
substantive and procedural laws of such state shall govern the validity,
construction, enforcement and interpretation of this Mortgage, unless otherwise
specified herein or unless Applicable Law requires the application of such laws.
Section 5.16 Relationship. Nothing contained in this Mortgage, the
------------
Note or the other Loan Documents, nor the acts of the parties hereto shall be
construed to create a relationship of principal and agent, partnership or joint
venture between Mortgagor and Mortgagee.
Section 5.17 Attorneys' Fees. If this Mortgage shall be foreclosed,
---------------
or if any of the Loan Documents is placed in the hands of an attorney for
collection or is collected through any court, including any bankruptcy court,
there shall be included in the computation of the sums secured hereby, to the
extent permitted by Applicable Law, the amount of the fee for the services of
the attorney retained by Mortgagee in the foreclosure action or proceeding, and
all disbursements, costs, allowances and additional allowances provided by
Applicable Law.
Section 5.18 Consent to Service of Process and Jurisdiction, Waiver
------------------------------------------------------
of Trial by Jury. MORTGAGOR IRREVOCABLY (A) AGREES THAT ANY SUIT, ACTION OR
- ----------------
OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE, MAY BE
BROUGHT IN THE STATE OF FLORIDA IN A COURT LOCATED IN PALM BEACH COUNTY, OR THE
FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, (B) CONSENTS TO THE
JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (C)
WAIVES ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. MORTGAGOR
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY SERVICE OF COPIES OF SUCH PROCESS TO MORTGAGOR AT ITS
ADDRESS PROVIDED IN SECTION 5.13 HEREOF. NOTHING IN THIS SECTION 5.18, HOWEVER,
------------ ------------
SHALL AFFECT THE RIGHT OF MORTGAGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE
37
<PAGE>
LAW OR AFFECT THE RIGHT OF MORTGAGEE TO BRING ANY SUIT, ACTION OR PROCEEDING
AGAINST MORTGAGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
MORTGAGOR HEREBY WAIVES AND MORTGAGEE BY ITS ACCEPTANCE OF THIS MORTGAGE HEREBY
WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING BROUGHT IN CONNECTION
WITH THIS MORTGAGE, WHICH WAIVER IS INFORMED AND VOLUNTARY.
Section 5.19 Future Advances. In addition to all other Indebtedness
---------------
secured by this Mortgage, this Mortgage shall secure also and constitute a first
lien on the Mortgaged Property for all future advances made by Mortgagee to
Mortgagor for any purpose under the Loan within twenty (20) years from the date
of this Mortgage to the same extent as if such advances were made on the date of
the execution of this Mortgage. Any such advances may be made at the option of
Mortgagee. The total amount of Indebtedness, including future advances, that is
secured by this Mortgage, may increase or decrease from time to time, but shall
not exceed a maximum principal amount of Twelve Million Three Hundred Forty-one
Thousand Six Hundred Ninety-three 46/100 Dollars ($12,341,693.46) at any one
time, plus interest thereon and any disbursements made by Mortgagee for the
payment of taxes, levies or insurance on all or any part of the Mortgaged
Property encumbered by this Mortgage, with interest on such disbursement.
Section 5.20 Non-Recourse. If an Event of Default has occurred,
------------
Mortgagee shall have all rights reserved in the Note, this Mortgage and every
other Loan Document and shall have full recourse to the Mortgaged Property and
to the other collateral given by Mortgagor to secure the Obligations; provided,
--------
however, that any judgment obtained by Mortgagee in any proceeding to enforce
- -------
such rights shall be enforced only against the Mortgaged Property and such other
collateral; accordingly, except as otherwise provided below, neither Mortgagor
nor any shareholder thereof shall be personally obligated or liable for the
observance or performance of any of the obligations of Mortgagor under this
Mortgage, or any other Loan Document including the payment of any of the
Obligations, whether by enforcement of a money judgment, judgment or order for
specific performance or otherwise. Notwithstanding the foregoing, Mortgagee
shall not in any way be prohibited from naming Mortgagor or any of its
successors or assigns or any Person holding under or through them as parties to
any actions, suits or other proceedings initiated by Mortgagee to enforce such
rights or to foreclose its Mortgage lien or otherwise realize upon any other
lien or security interest created in any other collateral given to secure the
payment of the Obligations; provided, however, that any judgment obtained by
-------- -------
Mortgagee in any proceeding to enforce such rights shall be enforced only
against the Mortgaged Property and such other collateral. The foregoing
restriction shall not apply to, and Mortgagor shall be personally liable for,
any losses, damages, costs and expenses incurred by Mortgagee as a result of (A)
any material misstatement of fact (1)
38
<PAGE>
made by Mortgagor or any person or entity constituting Mortgagor to induce
Mortgagee to advance the Loan or (2) contained in any Loan Document to the
knowledge of Mortgagor, (B) fraud committed by Mortgagor or any person or entity
constituting Mortgagor, (C) application by Mortgagee of any insurance proceeds,
condemnation awards, trust funds, or Rents in a manner which is not in
accordance with the provisions of this Mortgage, (D) default with respect to any
of the covenants contained in Section 2.20, Section 2.21, Section 2.22 or
------------ ------------ ------------
Section 2.23 hereof, (E) any default with respect to Mortgagor's obligations to
- ------------
pay Impositions pursuant to Section 2.8 hereof or to pay insurance premiums
-----------
pursuant to Section 2.9 hereof, or (F) any loss, damage, expense or liability on
-----------
the part of Mortgagee (including, without limitation, attorneys fees and
disbursements) arising from, in respect of, as a consequence of, or in
connection with any of the following: (1) the existence of any circumstances or
the occurrence of any action described in clause (i) of Section 2.20 hereof; (2)
------------
claims asserted by any Person (including, without limitation, any Governmental
Authority), in connection with or in any way arising out of the presence,
storage, use disposal, generation, transportation, or treatment of any Hazardous
Substances on, in or under the Mortgaged Property; (3) the violation or claimed
violation of any Environmental Laws in regard to the Mortgaged Property after
the date of this Mortgage; or (4) the preparation of an environmental audit on
the Mortgaged Property, whether conducted or authorized by Mortgagor, Mortgagee,
or a third party or the implementation or any environmental audit's
recommendations, if such audit reveals that the Mortgaged Property is not in
compliance with the applicable provisions under this Mortgage. Notwithstanding
anything in this Section 5.20 to the contrary, if Mortgagor enters into a
management agreement with respect to the Property with an affiliate of
Mortgagee, and for so long as such management agreement shall be continuing, the
provisions of clauses (D), (E) and (F) of this Section 5.20 shall not apply
(other than with respect to acts affirmatively taken by Assignor).
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the
date first written above.
WITNESS: MORTGAGOR:
MEADOWS PRESERVATION, INC.,
/s/___________________________ a Florida corporation
Name
WITNESS: By: /s/ Theresa Tyrrell
Name: Theresa Tyrrell
Title: President
/s/___________________________
Name:
39
<PAGE>
The undersigned hereby certifies
that the address of the within
Mortgagee is:
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Certified by: /s/ David W. Fell
Name: David W. Fell
On behalf of Mortgagee
40
<PAGE>
)
STATE OF FLORIDA ) ss:
)
___________ COUNTY )
)
The foregoing instrument was acknowledged before me this __ day of
December, 1997, by ______________________ as ____________________ of Meadows
Preservation, Inc., a Florida. He/She is personally known to me or has produced
a driver's license as identification.
/s/_________________________
Notary Public
Name of Notary Printed:
_________________________________
(NOTARY SEAL)
My commission expires:
My commission number is:
41
<PAGE>
Exhibit A
PARCEL 1
- --------
From the center of Section 5, Township 42 South, Range 43 East, Palm Beach
County, Florida; thence N.0 degrees 30'10"E. along the North-South quarter line
of the said Section 5 a distance of 275 feet to the point of beginning; thence
continue N.0 degrees 30'10"E. Along the said North-South quarter line a distance
of 1050.85 feet to a point, thence S.89 degrees 51'42"W. a distance of 1050.85
feet to a point, thence S.89 degrees 51'42"W. a distance of 1323.60 feet to a
point; thence S.0 degrees 47'20"W. a distance of 1252.40 feet to a point in the
Northerly right-of-way line of PGA Boulevard, as now laid out and in use; thence
S.89 degrees 07'28"E. along said northerly right-of-way line a distance of
789.81 feet to a point; thence N.0 degrees 30'10"E. a distance of 225 feet to a
point; thence S.89 degrees 07'28"E. a distance of 540 feet to the point of
beginning.
PARCEL 2
- --------
The South 636.0 feet of the North one-half of the Southwest quarter of the
Northwest quarter, of Section 5, Township 42 South, Range 43 East, Palm Beach
County, Florida.
TOGETHER WITH:
The North ten feet of the South 646 feet of the North half of the Southwest
quarter of the Northwest quarter; and, the North ten feet of the South half of
the Southwest quarter of the Northwest quarter; Section 5, Township 42 South,
Range 43 East, Palm Beach County, Florida.
<PAGE>
Exhibit B
---------
Permitted Excumbrances
----------------------
1. General Taxes for the year 1998 and subsequent years which are not due and
payable.
2. Any lien arising under chapter 159, Florida Statutes, in favor of any city,
town, village or port authority for unpaid service charges for service by any
water system, sewer system, or gas system servicing the lands described herein.
3. Resolution fixing setback requirements for Building and Improvements on
Prosperity Farms Road filed August 14, 1956, recorded in Deed Book 1150, Page
659.
4. Right-of-Way Easement granted to SOUTHERN BELL TELEPHONE & TELEGRAPH
COMPANY by instrument filed October 21, 1968, recorded in Official Record Book
1681, Page 296.
5. Easement granted to FLORIDA POWER & LIGHT COMPANY by instrument filed
November 11, 1971, recorded in Official Record Book 1950, Page 213.
6. Easement granted to FLORIDA POWER & LIGHT COMPANY by instrument filed
October 12, 1972, recorded in Official Record Book 2748, Page 1442.
7. Easement Grant for Storm Drainage to ROYAL AMERICAN INDUSTRIES, INC., A
DELAWARE CORPORATION filed November 25, 1981, in Official Record Book 3633, Page
608.
<PAGE>
MORTGAGE EXTENSION AGREEMENT
----------------------------
THIS MORTGAGE EXTENSION AGREEMENT, dated March 30, 1998 (this "Agreement"),
---------
is made by and between MHC LENDING LIMITED PARTNERSHIP, an Illinois limited
partnership having an office at c/o Manufactured Home Communities, Inc., Two
North Riverside Plaza, Suite 800 Chicago, Illinois 60606 (together with its
successors and assigns, "Mortgagee"), and MEADOWS PRESERVATION, INC., a Florida
---------
corporation having an office at 2555 PGA Boulevard, Palm Beach Gardens, Florida
33410 ("Mortgagor").
---------
W I T N E S S E T H:
--------------------
WHEREAS, Mortgagee is the holder of a Promissory Note, dated December 18,
1997, in the principal amount of $12,341,693.46 (the "Note"), made by Mortgagor
----
and due and payable on the date (the "Maturity Date") that is the earlier of (i)
-------------
ninety (90) days after December 18, 1997 or (ii) ten (10) days after the date
upon which Mortgagor delivers to Mortgagee's affiliate, Blue Ribbon Communities
Limited Partnership, an affiliate of Manufactured Home Communities, Inc.
(collectively, "MHC"), written notice pursuant to Section II(1) of that certain
---
term sheet dated December 12, 1997 between MHC and Mortgagor;
WHEREAS, the Note is secured, among other things, by a Mortgage, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Leases and
Rents (the "Mortgage"), dated December 18, 1997, and recorded on December 19,
--------
1997 in Official Record Book 10145, Page 1538 of the Public Records of Palm
Beach County, Florida;
WHEREAS, the Mortgage constitutes a lien on the property more particularly
described on Exhibit A attached hereto, together with the improvements thereon;
---------
WHEREAS, as of the date of this Agreement, the principal amount outstanding
under the Note and the Mortgage is $12,341,693.46, with interest thereon at the
rate set forth in the Note; and
WHEREAS, the parties have agreed to extend the Maturity Date, as
hereinafter set forth.
<PAGE>
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00), the
mutual covenants hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged,
Mortgagor and Mortgagee hereby covenant and agree as follows:
1. Extension of Maturity Date. Mortgagee hereby extends the Maturity Date
--------------------------
to the earlier of (i) thirty (30) days after the execution of a partnership
agreement between Mortgagor and Blue Ribbon Communities Limited Partnership or
(ii) July 31, 1998.
2. Principal and Interest Payments. Mortgagor, in consideration of the
-------------------------------
above extension and other valuable consideration, the receipt and sufficiency
whereof are hereby acknowledged, hereby agrees to pay the principal indebtedness
set forth above and all interest accrued thereon on or before the Maturity Date,
as extended by Section 1 of this Agreement, and to comply with all of the other
---------
terms of the Note and the Mortgage, except to the extent expressly modified by
this Agreement.
3. No Defenses. Mortgagor hereby agrees and acknowledges that there are
-----------
no defenses or offsets to the Note, the Mortgage or the debt secured by the
Mortgage.
4. No Other Changes. Except as expressly modified by this Agreement, all
----------------
of the covenants and agreements contained in the Note and/or the Mortgage remain
unchanged and in full force and effect.
5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Florida, without reference to its
conflict of laws rules.
6. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall constitute an original and both of which together shall constitute
one and the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: MORTGAGOR:
/s/ MEADOWS PRESERVATION, INC., a Florida
- -------------------
corporation
WITNESS:
By: /s/ Richard McCann
/s/ Name: Richard McCann
- -------------------
Title: President
MORTGAGEE:
MHC LENDING LIMITED PARTNERSHIP, an
Illinois limited partnership
WITNESS: By: MHC Lending-QRS, Inc., an Illinois
corporation
/s/
- -------------------
By: /s/ Ellen Kelleher
WITNESS: Name: Ellen Kelleher
Title: Executive Vice President/
General Counsel
/s/
- -------------------
-3-
<PAGE>
_________________________
)
STATE OF FLORIDA ) ss:
)
_______________ COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this __ day of March, 1998,
by ____________________ as ____________________ of Meadows Preservation, Inc., a
Florida corporation. He/She is personally known to me or has produced driver's
license as identification.
________________________________
Notary Public
Name of Notary Printed:
___________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this __ day of March, 1998,
by ____________________ as ____________________ of MHC Lending-QRS, Inc.,
General Partner of MHC Lending Limited Partnership, an Illinois limited
partnership. He/She is personally known to me or has produced driver's license
as identification.
________________________________
Notary Public
Name of Notary Printed:
-4-
<PAGE>
MORTGAGE EXTENSION AND AMENDMENT AGREEMENT
------------------------------------------
THIS MORTGAGE EXTENSION AND AMENDMENT AGREEMENT, dated August 19, 1998
(this "Agreement"), is made by and between MHC LENDING LIMITED PARTNERSHIP, an
---------
Illinois limited partnership having an office at c/o Manufactured Home
Communities, Inc., Two North Riverside Plaza, Suite 800 Chicago, Illinois 60606
(together with its successors and assigns, "Mortgagee"), and MEADOWS
---------
PRESERVATION, INC., a Florida corporation having an office at 2555 PGA
Boulevard, Palm Beach Gardens, Florida 33410 ("Mortgagor").
---------
W I T N E S S E T H:
--------------------
WHEREAS, Mortgagee is the holder of a Promissory Note, dated December 18,
1997, in the principal amount of $12,341,693.46 (the "Note"), made by Meadows
----
Preservation, Inc. ("MPI-1") and due and payable on the date set forth in the
Note;
WHEREAS, the Note is secured, among other things, by a Mortgage, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Leases and
Rents (the "Mortgage"), dated December 18, 1997, and recorded on December 19,
--------
1997 in Official Record Book 10145, Page 1538 of the Public Records of Palm
Beach County, Florida;
WHEREAS, the maturity date of the Note and Mortgage was extended by that
certain Mortgage Extension Agreement dated March 30, 1998 (the "Mortgage
--------
Extension") recorded on May 14, 1998 in Official Record Book 10403, Page 97 of
- ---------
the Public Records of Palm Beach County, Florida;
WHEREAS, as of the date of this Agreement, the principal amount outstanding
under the Note and the Mortgage is $12,341,693.46, with interest thereon at the
rate set forth in the Note; and
WHEREAS, Mortgagor, the successor by mergers to MPI-1, and Mortgagee have
agreed to further extend the Maturity Date and to modify the Mortgage, as
hereinafter set forth.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00), the
mutual covenants hereinafter set forth and
<PAGE>
other good and valuable consideration, the receipt and sufficiency whereof are
hereby acknowledged, Mortgagor and Mortgagee hereby covenant and agree as
follows:
1. Extension of Maturity Date. Mortgagee hereby extends the Maturity Date
--------------------------
to the earlier of (i) thirty (30) days after the execution of a partnership
agreement between Mortgagor and Blue Ribbon Communities Limited Partnership or
(ii) November 30, 1998.
2. Principal and Interest Payments. Mortgagor, in consideration of the
-------------------------------
above extension and other valuable consideration, the receipt and sufficiency
whereof are hereby acknowledged, hereby agrees to pay the principal indebtedness
set forth above and all interest accrued thereon on or before the Maturity Date,
as extended by Section 1 of this Agreement, and to comply with all of the other
---------
terms of the Note and the Mortgage, except to the extent expressly modified by
this Agreement.
3. Replacement of Exhibit A. Exhibit A attached to the Mortgage and the
------------------------
Mortgage Extension is hereby replaced by Exhibit A attached hereto.
4. No Defenses. Mortgagor hereby agrees and acknowledges that there are no
-----------
defenses or offsets to the Note, the Mortgage or the debt secured by the
Mortgage.
5. No Other Changes. Except as expressly modified by this Agreement, all
----------------
of the covenants and agreements contained in the Note and/or the Mortgage remain
unchanged and in full force and effect.
6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Florida, without reference to its
conflict of laws rules.
7. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall constitute an original and both of which together shall constitute
one and the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: MORTGAGOR:
/s/ MEADOWS PRESERVATION, INC., a Florida
- ------------------
Corporation
WITNESS:
By: /s/ Mary Bachiochi
/s/ Name: Mary Bachiochi
- ------------------
Title: Treasurer
MORTGAGEE:
MHC LENDING LIMITED PARTNERSHIP, an
Illinois limited partnership
WITNESS: By: MHC Lending-QRS, Inc., an Illinois
corporation
/s/
- ------------------
By: /s/ David W. Fell
WITNESS: Name: David W. Fell
Title: Vice President
/s/
- ------------------
-3-
<PAGE>
_________________________
)
STATE OF FLORIDA ) ss:
)
_______________ COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this __ day of August, 1998,
by ____________________ as ____________________ of Meadows Preservation, Inc., a
Florida corporation. He/She is personally known to me or has produced driver's
license as identification.
________________________________
Notary Public
Name of Notary Printed:
___________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this __ day of August, 1998,
by ____________________ as ____________________ of MHC Lending-QRS, Inc.,
General Partner of MHC Lending Limited Partnership, an Illinois limited
partnership. He/She is personally known to me or has produced driver's license
as identification.
________________________________
Notary Public
Name of Notary Printed:
-4-
<PAGE>
EXHIBIT 6.7
AGREEMENT AND PLAN OF MERGER
OF MPI-1, INC. INTO MPI TWO, INC.
AGREEMENT AND PLAN OF MERGER dated as of June 29, 1998 (this "Agreement"),
---------
by and between MPI-1, INC., a Florida nonstock, not-for-profit corporation
("MPI"), and MPI Two, Inc., a Delaware nonstock corporation ("MPI Two").
--- -------
WHEREAS, MPI is a nonstock, not-for-profit corporation duly organized and
existing under the laws of the State of Florida, having been incorporated on
March 8, 1988;
WHEREAS, MPI Two is a nonstock corporation duly organized and existing
under the laws of the State of Delaware, having been incorporated on June 24,
1998;
WHEREAS, the respective Boards of Directors of MPI and MPI Two and the
Members of MPI have approved the merger of MPI into MPI Two (the "Merger"), upon
------
the terms and subject to the conditions set forth in this Agreement and the
Members of MPI Two have no voting rights;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of the mutual benefits hereby provided, it is
agreed by and between the parties hereto as follows:
1. THE MERGER. At the Effective Time of the Merger (as defined in Section
3 hereof), upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Chapter 617, Florida Statutes (the "Florida
-------
Act") and the General Corporation Law of the State of Delaware (the "Delaware
- --- --------
Act"), MPI shall be merged with and into MPI Two. MPI Two shall be the
- ---
surviving corporation in accordance with this Agreement. The corporate and
separate existence of MPI shall thereupon cease. The corporate existence of MPI
Two with all of its purposes, powers and objects shall continue unaffected and
unimpaired by the merger.
2. CLOSING. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at 11:00
-------
a.m. on June 29, 1998 (the "Closing Date") at the offices of Pennington, Moore,
------------
Wilkinson, Bell & Dunbar, P.A., unless another time, date or place is agreed to
in writing by the parties hereto.
3. EFFECTIVE TIME OF THE MERGER. Upon the Closing, the parties shall file
a certificate of merger, substantially in the form attached hereto as Exhibit A
(the "Certificate of Merger"), with the Secretary of State of the State of
---------------------
Delaware and articles of merger, substantially in the form attached hereto as
Exhibit B (the "Articles of Merger"), with the Department of State of the State
------------------
of Florida, each executed in accordance with the relevant provisions of the
Delaware Act and the Florida Act, and shall make all other filings, recordings
or publications required under the Delaware Act or the Florida Act in connection
with the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware and the Articles of Merger are duly
<PAGE>
filed with the Department of State of the State of Florida, or at such other
time as the parties may agree and specify in the Certificate of Merger and the
Articles of Merger (the time at which the Merger becomes effective, the
"Effective Time of the Merger").
----------------------------
4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Section 259 of the Delaware Act and Section 617.1106, Florida Statutes.
5. SURVIVING CORPORATION. Following the Merger, the separate corporate
existence of MPI shall cease and MPI Two shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and possess
---------------------
without further act or deed, all of the estate, rights, privileges and powers,
both public and private, and all of the property, real, personal and mixed, of
each of the parties hereto; all debts due to MPI shall be vested in the
Surviving Corporation; all claims, demands, property, rights, privileges, powers
and franchises and every other interest of either of the parties hereto shall be
as effectively the property of the Surviving Corporation as they were of the
respective parties hereto; the title to any real estate vested by deed or
otherwise in MPI shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Surviving Corporation; all rights of
creditors and all liens upon any property of either of the parties hereto shall
be reserved unimpaired, limited in lien to the property affected by such lien at
the effective time of the merger; all debts, liabilities and duties of either of
the parties shall be vested in the Surviving Corporation as if such debts,
liabilities or duties had been incurred or contracted by it; and the Surviving
Corporation shall indemnify and hold harmless the officers and directors of each
of the parties hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger, all in accordance with the
Delaware Act and the Florida Act. The Surviving Corporation shall continue to
be governed by the laws of the State of Delaware.
6. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of MPI
Two as in effect immediately prior to the Effective Time of the Merger shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
7. BYLAWS. The Bylaws of MPI Two as in effect immediately prior to the
Effective Time of the Merger shall be the Bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
8. DIRECTORS. The individual or individuals who are the directors of MPI
Two immediately prior to the Effective Time of the Merger shall be the director
or directors of the Surviving Corporation until thereafter they cease to be
directors in accordance with the Delaware Act and the Certificate of
Incorporation and Bylaws of the Surviving Corporation
9. OFFICERS. The individuals who are the officers of MPI Two immediately
prior to the Effective Time of the Merger shall be the officers of the Surviving
Corporation until thereafter they cease to be officers in accordance with the
Delaware Act and the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
-2-
<PAGE>
10. EFFECT OF THE MERGER ON MEMBERSHIP INTERESTS. As of the Effective Time
of the Merger, by virtue of the Merger and without any action on the part of any
member of MPI or MPI Two, each individual who was a member of MPI immediately
prior to the Effective Time of the Merger shall become a member of the Surviving
Corporation and shall be entitled to those rights afforded to members under the
Certificate of Incorporation and Bylaws of the Surviving Corporation and the
Delaware Act.
11. SERVICE OF PROCESS ON SURVIVING CORPORATION. The Surviving Corporation
agrees that it may be served with process in the State of Florida in any
proceeding for enforcement of any obligation of MPI as well as for the
enforcement of any obligation of the Surviving Corporation arising from the
Merger.
12. TERMINATION. This Agreement may be terminated and abandoned by action
of the Board of Directors of MPI at any time prior to the Effective Time of the
Merger, whether before or after approval by the members of MPI.
13. PLAN OF REORGANIZATION. This Agreement constitutes a Plan of
Reorganization to be carried out in the manner, on the terms and subject to the
conditions herein set forth.
14. FURTHER ASSURANCES OF TITLE. If at any time the Surviving Corporation
shall consider or be advised that any acknowledgements or assurances in law or
other similar actions are necessary or desirable in order to acknowledge or
confirm in and to the Surviving Corporation any right, title or interest of MPI
held immediately prior to the Effective Time of the Merger, MPI shall and will
execute and deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right, title, or
interest in the Surviving Corporation as shall be necessary to carry out the
purposes of this Agreement, and the Surviving Corporation and the proper
officers and directors thereof are fully authorized to take any and all such
action in the name of MPI or otherwise.
15. ASSETS, LIABILITIES, RESERVES, ACCOUNTS, ETC. At the Effective Time of
the Merger, the assets, liabilities, reserves and accounts of each corporation
shall be taken on the books of the Surviving Corporation at the amounts at which
they respectively, shall then be carried on the books of said corporations
subject to such adjustments, if any, as may be appropriate in giving effect to
the Merger.
16. GENERAL PROVISIONS
(a) No Rights or Remedies in Third Parties. Except as otherwise
--------------------------------------
expressly provided in this Agreement, nothing herein expressed or implied is
intended, or shall be construed, to confer on or to give any person, firm or
corporation other than MPI and MPI Two any rights or remedies under or by reason
of this Agreement.
(b) Execution of Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts. Each such counterpart hereof shall be deemed to be an
original instrument but all such counterparts together shall constitute but one
Agreement.
-3-
<PAGE>
(c) Entire Agreement. This Agreement, including the documents and
----------------
instruments referred to herein (a) constitutes the entire agreement and
supercedes all other prior agreements and understandings, both written and oral,
between the parties, with respect to the subject matter hereof; (b) is not
intended to confer on any other person any rights or remedies hereunder; and (c)
shall not be assigned by operation or law or otherwise.
(d) Severability. In the event that, for any reason, any provision
------------
of this Agreement is construed to be invalid, the invalidity of such provision
is not to be considered or held to impair or invalidate any other provision of
this Agreement.
(e) Filing of Required Documents. The parties each hereby agree to
----------------------------
file in a timely manner such documents as are required, in the opinion of their
counsel, to be filed with any applicable governmental authority.
(f) Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
MPI-1, INC.
By: /s/ Richard McCann
------------------
Name: Richard McCann
Title: President
MPI TWO, INC.
By: /s/ Richard McCann
------------------
Name: Richard McCann
Title: President
The Undersigned, secretary of MPI Two, Inc., hereby certifies that the Board of
Directors of MPI Two, Inc. adopted this Agreement by unanimous written consent.
/s/ Ted Stevenson
-----------------
Ted Stevenson
-4-
<PAGE>
EXhibit 6.8
AGREEMENT AND PLAN OF MERGER
OF MPI TWO, INC.
INTO MPI THREE, INC.
AGREEMENT AND PLAN OF MERGER dated as of June 30th, 1998, by and
between MPI Two, Inc., a Delaware nonstock corporation ("MPI Two"), and MPI
-------
Three, Inc., a Delaware stock corporation ("MPI Three").
---------
WHEREAS, MPI Two is a nonstock corporation duly organized and existing
under the laws of the State of Delaware, having been incorporated on June 24,
1998;
WHEREAS, MPI Three is a stock corporation duly organized and existing
under the laws of the State of Delaware, having been incorporated on June 24,
1998;
WHEREAS, the respective Boards of Directors of MPI Two and MPI Three
and the sole stockholder of MPI Three with voting rights have approved the
merger of MPI Two into MPI Three (the "Merger"), upon the terms and subject to
------
the conditions set forth in this Agreement
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of the mutual benefits hereby provided, it is
agreed by and between the parties hereto as follows:
1. THE MERGER. At the Effective Time of the Merger (as defined in
Section 3 hereof), upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "Delaware Act"), MPI Two shall be merged with and into MPI
------------
Three. MPI Three shall be the surviving corporation in accordance with this
Agreement. The corporate and separate existence of MPI Two shall thereupon
cease. The corporate existence of MPI Three with all of its purposes, powers and
objects shall continue unaffected and unimpaired by the merger.
2. CLOSING. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at 11:15
-------
a.m. on July 1, 1998 (the "Closing Date") at the offices of Pennington, Moore,
------------
Wilkinson, Bell & Dunbar, P.A.,, unless another time, date or place is agreed to
in writing by the parties hereto.
3. EFFECTIVE TIME OF THE MERGER. Upon the Closing, the parties shall
file with the Secretary of State of the State of Delaware a certificate of
merger, substantially in the form of Exhibit A hereto (the "Certificate of
--------------
Merger"), executed in accordance with the relevant provisions of the Delaware
- ------
Act, and shall make all other filings, recordings or publications required under
the Delaware Act in connection with the Merger. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such other time as the
parties may agree and specify in the Certificate of Merger (the time at which
the Merger becomes effective, the "Effective Time of the Merger").
----------------------------
<PAGE>
4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 259 of the Delaware Act.
5. SURVIVING CORPORATION. Following the Merger, the separate
corporate existence of MPI Two shall cease and MPI Three shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
---------------------
possess without further act or deed, all of the estate, rights, privileges and
powers, both public and private, and all of the property, real, personal and
mixed, of each of the parties hereto; all debts due to MPI Two shall be vested
in the Surviving Corporation; all claims, demands, property, rights, privileges,
powers and franchises and every other interest of either of the parties hereto
shall be as effectively the property of the Surviving Corporation as they were
of the respective parties hereto; the title to any real estate vested by deed or
otherwise in MPI Two shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Surviving Corporation; all rights of
creditors and all liens upon any property of either of the parties hereto shall
be reserved unimpaired, limited in lien to the property affected by such lien at
the effective time of the merger; all debts, liabilities, and duties of either
of the parties shall be vested in the Surviving Corporation as if such debts,
liabilities or duties had been incurred or contracted by it; and the Surviving
Corporation shall indemnify and hold harmless the officers and directors of each
of the parties hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger, all in accordance with the
Delaware Act. The Surviving Corporation shall continue to be governed by the
laws of the State of Delaware.
6. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
MPI Three as in effect immediately prior to the Effective Time of the Merger
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
7. BYLAWS. The Bylaws of MPI Three as in effect immediately prior to
the Effective Time of the Merger shall be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
8. DIRECTORS. The individuals who are the directors of MPI Three
immediately prior to the Effective Time of the Merger shall be the directors of
the Surviving Corporation until thereafter they cease to be directors in
accordance with the Delaware Act and the Certificate of Incorporation and Bylaws
of the Surviving Corporation.
9. OFFICERS. The individuals who are the officers of MPI Three
immediately prior to the Effective Time of the Merger shall be the officers of
the Surviving Corporation until thereafter they cease to be officers in
accordance with the Delaware Act and the Certificate of Incorporation and Bylaws
of the Surviving Corporation.
10. MANNER OF CONVERTING THE MEMBERSHIP INTERESTS OF MPI TWO. At the
Effective Time of the Merger, each membership interest in MPI Two (members who
are co-owners of a mobile home located on a lot in the Meadows Mobile Home Park
shall be deemed to collectively hold one membership interest in MPI Two)
immediately prior to the Merger shall be converted solely into one share of
Class B common stock, par value $.01 per share, of MPI Three ("Class B Common
--------------
Stock").
- -----
-2-
<PAGE>
11. TERMINATION. This Agreement may be terminated and abandoned by
action of the Board of Directors of MPI Two at any time prior to the Effective
Time of the Merger, whether before or after approval by the members of MPI Two
or the stockholders of MPI Three.
12. PLAN OF REORGANIZATION. This Agreement constitutes a Plan of
Reorganization to be carried out in the manner, on the terms and subject to the
conditions herein set forth.
13. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware.
14. FURTHER ASSURANCES OF TITLE. If at any time the Surviving
Corporation shall consider or be advised that any acknowledgements or assurances
in law or other similar actions are necessary or desirable in order to
acknowledge or confirm in and to the Surviving Corporation any right, title or
interest of MPI Two held immediately prior to the Effective Time of the Merger,
MPI Two shall and will execute and deliver all such acknowledgements or
assurances in law and do all things necessary or proper to acknowledge or
confirm such right, title, or interest in the Surviving Corporation as shall be
necessary to carry out the purposes of this Agreement, and the Surviving
Corporation and the proper officers and directors thereof are fully authorized
to take any and all such action in the name of MPI Two or otherwise.
15. ASSETS, LIABILITIES, RESERVES, ACCOUNTS, ETC. At the Effective
Time of the Merger, the assets, liabilities, reserves and accounts of each
corporation shall be taken on the books of the Surviving Corporation at the
amounts at which they respectively, shall then be carried on the books of said
corporations subject to such adjustments, if any, as may be appropriate in
giving effect to the Merger.
16. GENERAL PROVISIONS
(a) No Rights or Remedies in Third Parties. Except as otherwise
--------------------------------------
expressly provided in this Agreement, nothing herein expressed or implied is
intended, or shall be construed, to confer on or to give any person, firm or
corporation other than MPI Two and MPI Three any rights or remedies under or by
reason of this Agreement.
(b) Execution of Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts. Each such counterpart hereof shall be deemed to be an
original instrument but all such counterparts together shall constitute but one
Agreement.
(c) Entire Agreement. This Agreement, including the documents and
----------------
instruments referred to herein (a) constitutes the entire agreement and
supercedes all other prior agreements and understandings, both written and oral,
between the parties, with respect to the subject matter hereof; (b) is not
intended to confer on any other person any rights or remedies hereunder; and (c)
shall not be assigned by operation or law or otherwise.
-3-
<PAGE>
(d) Severability. In the event that, for any reason, any provision of
------------
this Agreement is construed to be invalid, the invalidity of such provision is
not to be considered or held to impair or invalidate any other provision of this
Agreement.
(e) Filing of Required Documents. The parties each hereby agree to
----------------------------
file in a timely manner such documents as are required, in the opinion of their
counsel, to be filed with any applicable governmental authority.
(f) Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
MPI TWO, INC.
By: /s/ Richard McCann
------------------
Name: Richard McCann
Title: President
MPI THREE, INC.
By: /s/ Richard McCann
------------------
Name: Richard McCann
Title: President
The undersigned, secretary of MPI Two, Inc. and MPI Three, Inc., hereby
certifies that the Board of Directors of MPI Two, Inc. adopted this Agreement by
unanimous written consent and that the holders of a majority of the outstanding
stock of MPI Three, Inc. entitled to vote thereon adopted this Agreement by
unanimous written consent.
/s/ Ted Stevenson
-----------------
Ted Stevenson
-4-
<PAGE>
EXHIBIT 6.9
AGREEMENT AND PLAN OF MERGER
OF MPI THREE, INC.
INTO MEADOWS PRESERVATION, INC.
AGREEMENT AND PLAN OF MERGER dated as of July 1, 1998, between MPI Three,
Inc., a Delaware corporation ("MPI Three"), and Meadows Preservation, Inc., a
---------
Florida corporation ("MPI").
---
WHEREAS, MPI Three is a corporation duly organized and existing under the
laws of the State of Delaware, having been incorporated on June 24, 1998;
WHEREAS, MPI is a corporation duly organized and existing under the laws of
the State of Florida, having been incorporated on June 25, 1998;
WHEREAS, the respective Boards of Directors of MPI Three and MPI and the
voting stockholders of MPI Three and MPI have approved the merger of MPI Three
into MPI (the "Merger"), upon the terms and subject to the conditions set forth
------
in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of the mutual benefits hereby provided, it is
agreed by and between the parties hereto as follows:
1. THE MERGER. At the Effective Time of the Merger (as defined in Section
3 hereof), upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the "Delaware Act") and the Florida Business Corporation Act (the
------------
"Florida Act"), MPI Three shall be merged with and into MPI. MPI shall be the
- ------------
surviving corporation in accordance with this Agreement. The corporate and
separate existence of MPI Three shall thereupon cease. The corporate existence
of MPI with all of its purposes, powers and objects shall continue unaffected
and unimpaired by the merger.
2. CLOSING. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at 7 p.m.
-------
p.m. on Wednesday, May 27, 1998 (the "Closing Date") at Pennington, Moore,
------------
Wilkinson, Bell & Dunbar, P.A., unless another time, date or place is agreed to
in writing by the parties hereto.
3. EFFECTIVE TIME OF THE MERGER. Upon the Closing, the parties shall file
a certificate of merger, substantially in the form attached hereto as Exhibit A
(the "Certificate of Merger"), with the Secretary of State of the State of
---------------------
Delaware and articles of merger, substantially in the form attached hereto as
Exhibit B (the "Articles of Merger"), with the Department of State of the State
------------------
of Florida, each executed in accordance with the relevant provisions of the
Delaware Act and the Florida Act and shall make all other filings, recordings or
publications required under the Delaware Act or the Florida Act in connection
with the Merger. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware and the Articles of Merger are duly filed with the
<PAGE>
Department of State of the State of Florida, or at such other time as the
parties may agree and specify in the Certificate of Merger and the Articles of
Merger (the time at which the Merger becomes effective, the "Effective Time of
-----------------
the Merger").
- ----------
4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Section 259 of the Delaware Act and Sections 607.1106 and 607.1107(4) of the
Florida Act.
5. SURVIVING CORPORATION. Following the Merger, the separate corporate
existence of MPI Three shall cease and MPI shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and possess
---------------------
without further act or deed, all of the estate, rights, privileges and powers,
both public and private, and all of the property, real, personal and mixed, of
each of the parties hereto; all debts due to MPI Three shall be vested in the
Surviving Corporation; all claims, demands, property, rights, privileges, powers
and franchises and every other interest of either of the parties hereto shall be
as effectively the property of the Surviving Corporation as they were of the
respective parties hereto; the title to any real estate vested by deed or
otherwise in MPI Three shall not revert or be in any way impaired by reason of
the merger, but shall be vested in the Surviving Corporation; all rights of
creditors and all liens upon any property of either of the parties hereto shall
be reserved unimpaired, limited in lien to the property affected by such lien at
the effective time of the merger; all debts, liabilities, and duties of each of
the parties hereto shall thenceforth attach to the Surviving Corporation as if
such debts, liabilities, and duties had been incurred or contracted by it; and
the Surviving Corporation shall indemnify and hold harmless the officers and
directors of each of the parties hereto against all such debts, liabilities and
duties and against all claims and demands arising out of the merger, all in
accordance with the Delaware Act and the Florida Act. The Surviving Corporation
shall continue to be governed by the laws of the State of Florida.
6. ARTICLES OF INCORPORATION. The Articles of Incorporation of MPI as in
effect immediately prior to the Effective Time of the Merger shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
7. BYLAWS. The Bylaws of MPI as in effect immediately prior to the
Effective Time of the Merger shall be the Bylaws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
8. DIRECTORS. The individuals who are the directors of MPI immediately
prior to the Effective Time of the Merger shall be the directors of the
Surviving Corporation until thereafter they cease to be directors in accordance
with the Florida Act and the Certificate of Incorporation and Bylaws of the
Surviving Corporation.
9. OFFICERS. The individuals who are the officers of MPI immediately prior
to the Effective Time of the Merger shall be the officers of the Surviving
Corporation until thereafter they cease to be officers in accordance with the
Florida Act and the Articles of Incorporation and Bylaws of the Surviving
Corporation.
-2-
<PAGE>
10. MERGER CONSIDERATION.
(a) Class A Common Stock
--------------------
(i) At the Effective Time of the Merger, each share of
Class A common stock of MPI Three ("Class A Common Stock") outstanding
--------------------
immediately prior to the Effective Time of the Merger, shall automatically be
converted into, and shall become, one (1) share of MPI's common stock, par value
$.01 per share (the "Class A Merger Consideration").
------------------------------
(ii) Upon surrender of the certificates representing shares
of Class A Common Stock (collectively, the "MPI Three A Stock Certificates") for
------------------------------
cancellation to MPI, the holder of such certificates shall be entitled to
receive in exchange therefor certificates representing shares of MPI's common
stock issued pursuant to the provisions of this Section 10(a), and the MPI Three
A Stock Certificates so surrendered shall forthwith be cancelled.
(iii) The Class A Merger Consideration shall be deemed to
have been paid or provided in full satisfaction of all rights pertaining to the
shares of Class A Common Stock theretofore represented by such MPI Three A Stock
Certificates.
(b) Class B Common Stock
--------------------
(i) At the Effective Time of the Merger, each share of
Class B common stock of MPI Three ("Class B Common Stock") outstanding
--------------------
immediately prior to the Effective Time of the Merger, shall automatically be
converted into, and shall become, one (1) share of MPI's preferred stock, no par
value (the "Class B Merger Consideration").
----------------------------
(ii) Upon surrender of the certificates representing shares
of Class B Common Stock (collectively, the "MPI Three B Stock Certificates") for
------------------------------
cancellation to MPI, the holder of such certificates shall be entitled to
receive in exchange therefor certificates representing shares of MPI's preferred
stock pursuant to the provisions of this Section 10(b), and the MPI Three B
Stock Certificates so surrendered shall forthwith be cancelled.
(iii) The Class B Merger Consideration shall be deemed to
have been paid or provided in full satisfaction of all rights pertaining to the
shares of Class B Common Stock theretofore represented by such MPI Three B Stock
Certificates.
11. TERMINATION. This Agreement may be terminated and abandoned by action
of the Board of Directors of MPI Three at any time prior to the Effective Time
of the Merger, whether before or after approval by the voting stockholders of
MPI Three.
12. PLAN OF REORGANIZATION. This Agreement constitutes a Plan of
Reorganization to be carried out in the manner, on the terms and subject to the
conditions herein set forth.
-3-
<PAGE>
13. FURTHER ASSURANCES OF TITLE. If at any time the Surviving
Corporation shall consider or be advised that any acknowledgements or assurances
in law or other similar actions are necessary or desirable in order to
acknowledge or confirm in and to the Surviving Corporation any right, title or
interest of MPI Three held immediately prior to the Effective Time of the
Merger, MPI Three shall and will execute and deliver all such acknowledgements
or assurances in law and do all things necessary or proper to acknowledge or
confirm such right, title, or interest in the Surviving Corporation as shall be
necessary to carry out the purposes of this Agreement, and the Surviving
Corporation and the proper officers and directors thereof are fully authorized
to take any and all such action in the name of MPI Three or otherwise.
14. ASSETS, LIABILITIES, RESERVES, ACCOUNTS, ETC. At the Effective
Time of the Merger, the assets, liabilities, reserves and accounts of each
corporation shall be taken on the books of the Surviving Corporation at the
amounts at which they respectively, shall then be carried on the books of said
corporations subject to such adjustments, if any, as may be appropriate in
giving effect to the Merger.
16. GENERAL PROVISIONS
(a) No Rights or Remedies in Third Parties. Except as
--------------------------------------
otherwise expressly provided in this Agreement, nothing herein expressed or
implied is intended, or shall be construed, to confer on or to give any person,
firm or corporation other than MPI and MPI Three any rights or remedies under or
by reason of this Agreement.
(b) Execution of Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts. Each such counterpart hereof shall be
deemed to be an original instrument but all such counterparts together shall
constitute but one Agreement.
(c) Entire Agreement. This Agreement, including the
----------------
documents and instruments referred to herein (a) constitutes the entire
agreement and supercedes all other prior agreements and understandings, both
written and oral, between the parties, with respect to the subject matter
hereof; (b) is not intended to confer on any other person any rights or remedies
hereunder; and (c) shall not be assigned by operation or law or otherwise.
(d) Severability. In the event that, for any reason, any
------------
provision of this Agreement is construed to be invalid, the invalidity of such
provision is not to be considered or held to impair or invalidate any other
provision of this Agreement.
(e) Filing of Required Documents. The parties each hereby
----------------------------
agree to file in a timely manner such documents as are required, in the opinion
of their counsel, to be filed with any applicable governmental authority.
(f) Headings. The headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
-4-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
MPI THREE, INC.
By: /s/ Richard McCann
------------------
Name: Richard McCann
Title: President
MEADOWS PRESERVATION, INC.
By: /s/ Richard McCann
------------------
Name: Richard McCann
Title: President
-5-
<PAGE>
EXHIBIT 6.10
THE MEADOWS
PROPERTY MANAGEMENT AND LEASING AGREEMENT
-----------------------------------------
THIS PROPERTY MANAGEMENT AND LEASING AGREEMENT (this "Agreement") is made
as of _________, 1998 by and between THE MEADOWS RESORT PARTNERSHIP, a Florida
general partnership having an address of 2555 PGA Boulevard, Palm Beach Gardens,
Florida 33410 ("Owner"), and MHC MANAGEMENT LIMITED PARTNERSHIP, an Illinois
limited partnership having an address of c/o Manufactured Home Communities,
Inc., Two North Riverside Plaza, Suite 800, Chicago, Illinois 60606 ("Agent").
RECITALS:
A. Owner is the beneficial owner of that certain parcel of real property
and certain improvements now or hereafter located thereon, being operated as a
manufactured home community commonly known as "The Meadows" and more
particularly described on Exhibit A attached hereto and made a part hereof (the
---------
"Property").
B. Owner desires (i) to engage Agent to perform the property management
and leasing services more particularly described in this Agreement, and (ii) to
appoint Agent as managing agent for the Property, and Agent desires to accept
such engagement and appointment and perform such services, all upon and subject
to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth hereinbelow, Owner and Agent agree as follows:
1. APPOINTMENT OF AGENT. Owner hereby appoints Agent as the managing and
leasing agent for the Property, and Agent hereby accepts such appointment, upon
and subject to the terms and conditions set forth in this Agreement. Agent
shall be deemed to be an independent contractor, and no partnership or joint
venture relationship between Owner and Agent is created or is intended by this
Agreement. Agent at all times shall act in a good faith manner towards Owner,
shall deal at arm's-length with all parties and shall serve Owner's best
interests; provided, however, with respect to funds of Owner, including Rent (as
such term is hereinafter defined), which come into the possession or control of
Agent, Agent shall be deemed to hold and deal with such funds in trust for the
benefit of Owner and will have the responsibilities of a trustee with respect to
such funds. Agent shall not take any action which is beyond the scope of its
rights and obligations under this Agreement.
2. TERM. This Agreement shall commence as of ______, 1998 and shall
remain in full force and effect until [_______], [and shall thereafter
automatically renew for successive one (1) month periods beginning on the first
day of each month and ending on the last day of such month unless terminated as
provided in Section 10 below].
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3. AGENT'S DUTIES AND POWERS AS MANAGING AGENT.
(a) GENERAL SCOPE. Agent shall manage, coordinate and supervise the
-------------
proper conduct of the operation, maintenance and management (including internal
accounting
<PAGE>
functions) of the Property (all such activities being hereinafter
collectively referred to as "Management Activities"), consistent with good
industry practice and standards acceptable to Owner. Agent shall have such
responsibilities, and shall perform or take, or cause to be performed or taken,
all such services and actions customarily performed or taken by managing agents
of property of similar nature, location and character to that of the Property as
Agent shall reasonably deem necessary or advisable for the proper conduct of the
Management Activities, including, without limitation, the duties and powers set
forth in subsections (b) through (k) below. Unless otherwise specifically
provided in this Agreement, all services and actions which Agent is required or
permitted to perform or take, or cause to be performed or taken, under this
Agreement in connection with the Management Activities shall be performed or
taken, as the case may be, for and on behalf of Owner and at Owner's expense
(exclusive of Agent's overhead expenses, travel expenses, compensation of
Agent's executives and other home office employees, bookkeeping expenses, and
expenses relating to the preparation of management and leasing reports),
including, without limitation, Agent's contracting with third parties for
certain services as provided for hereinbelow. Notwithstanding the foregoing,
Agent shall be subject to the limitations of Agent's power and authority set
forth in Section 5 below. No business of Agent other than the Management
---------
Activities shall be transacted at the Property or from offices located thereon,
and the use of the Property by Agent or its employees shall be limited to the
conduct of the Management Activities.
(b) RENT BILLS AND COLLECTIONS.
--------------------------
(i) If applicable, Agent shall prepare and deliver to all
persons and/or entities occupying or using space in the Property (individually,
a "Resident"; collectively, "Residents") timely bills setting forth all fixed,
base or minimum rent and all other amounts payable to Owner by such Residents,
including, without limitation, if applicable to the Property, taxes,
electricity, natural gas and other utility services (all such fixed, base or
minimum rent and other amounts, if any, being sometimes hereinafter collectively
referred to as "Rent"; provided, however, that the term "Rent" shall not include
security deposits, if any, of Residents) under their respective leases or
license, occupancy or similar agreements (individually, a "Lease"; collectively;
"Leases"). Agent shall compute all components of Rent. Agent and Owner shall
direct all Residents to make payments of Rent into the Operating Account (as
such term is hereinafter defined). Any Rent collected directly by Agent shall be
promptly deposited by Agent into the Operating Account.
(ii) Except as otherwise directed by Owner, Agent shall take
all such actions as Agent shall deem necessary or advisable to collect the Rent,
to enforce all rights and remedies of Owner under the Leases and to protect the
interests of Owner, including, without limitation, the preparation and delivery
to Residents of all "late payment", default and other appropriate notices,
requests, bills, demands and statements. Unless and to the extent otherwise
directed by Owner, Agent may retain counsel, collection agencies and such other
persons and firms as Agent shall deem appropriate or advisable, to enforce by
legal action the rights and remedies of Owner against any Resident in default in
the performance of such Resident's obligations under a Lease. Agent shall
promptly notify Owner of any such legal action and the progress of same. Owner
shall have the right at all times to control or direct Owner's representation in
any legal action.
2
<PAGE>
(c) EMPLOYEES.
---------
(i) To the extent Agent deems necessary for the conduct of
the Management Activities, Agent shall hire personnel who, in each instance,
shall be employees of Agent; provided, however, that Agent shall not employ any
entity or person with whom Agent or its principals has any financial, ownership
or similar affiliation, without first disclosing the nature of such affiliation
to Owner and obtaining Owner's prior consent. The wages and benefits of all
personnel hired by Agent whose wages are not provided for in the Approved Budget
(as such term is hereinafter defined) or otherwise consented to by Owner to
perform services at the Property shall be paid by Agent without reimbursement by
Owner; provided, however, if Agent reasonably believes that additional personnel
(or overtime not provided for in the Approved Budget) is required for the
performance of the Management Activities hereunder, then with Owner's approval
(which shall not be unreasonably withheld) Agent may employ such additional
personnel (or approve such overtime). Agent shall direct and supervise all
personnel hired by Agent in the performance of their duties and shall discharge
all personnel whose employment Agent or Owner shall determine to be unnecessary
or undesirable. Agent shall use all reasonable efforts to avoid duplication of
services among its personnel and the payment of overtime whenever reasonably
possible. Agent shall use due care in the selection of personnel it employs to
perform the Management Activities.
(ii) Agent shall (A) pay all wages and other benefits properly
payable to the personnel hired by Agent pursuant to Section 3(c)(i) above, (B)
---------------
maintain accurate payroll records, (C) remit to the proper authorities all
required income and social security withholding taxes, unemployment insurance
payments, worker's compensation payments and such other amounts with respect to
the wages and other benefits payable to such personnel as may be required under
applicable laws, together in each case with all required reports or other
filings, and (D) obtain, maintain and administer all medical, disability and
other insurance benefits and other benefits as may from time to time be required
under any union or other agreements or arrangements pertaining to Owner's or
Agent's employment, as the case may be, of such personnel.
(iii) Agent shall give Owner notice of any disputes with
employees who are subject to union or other labor contracts. Agent may conduct
negotiations in connection with union and other labor contracts affecting the
employees of Agent who are rendering services in connection with the Management
Activities, and shall use all reasonable efforts to settle and compromise all
controversies and disputes arising under such contracts upon such terms and
conditions as shall be approved by Owner. Agent shall perform all of its
obligations under such contracts and shall monitor and enforce all of Owner's
rights thereunder.
(d) PROFESSIONALS AND CONTRACTORS. To the extent Agent deems
-----------------------------
necessary in connection with the Management Activities, Agent shall (i) identify
and enter into contracts with reputable architects, engineers, accountants,
attorneys, tradesmen and other independent contractors to perform services at
the Property; provided, however, that Agent shall not enter into any contract
with any entity or person with whom Agent or its principals has any financial,
ownership or similar affiliation without first disclosing the nature of such
affiliation to Owner and obtaining Owner's prior consent, and (ii) supervise the
administration, and monitor the performance, of all work to be performed and
services to be rendered under all such contracts.
3
<PAGE>
Except where necessary for the preservation or protection of the Property or the
safety of Residents or required to avoid the suspension of any services at the
Property, Agent shall not enter into any agreement with any such professional or
other independent contractor which would require the payment of more than
$500.00 in any twelve (12) month period unless such agreement is provided for in
an Approved Budget (either as an identified "line item" thereof or as an
unidentified portion of an identified "line item" thereof) or is otherwise
consented to by Owner. Each such contract shall to the extent commercially
reasonable (i) be in the name of Agent, (ii) be for a period of time not to
exceed twelve (12) months, (iii) be assignable at Owner's option to Owner or
Owner's nominee and (iv) require all contractors to provide evidence of
insurance in such amounts and covering such losses as Agent deems reasonably
necessary or as otherwise directed by Owner. In negotiating such contracts,
Agent shall seek to include a provision for cancellation thereof by Owner on not
less than thirty (30) days' written notice without penalty (unless such a
cancellation provision is not commercially feasible given the subject matter of
the contract, in which case, with Owner's prior approval, Agent may agree to
other cancellation terms). Upon termination of this Agreement, Owner agrees that
any such contract which has been entered into in the name of Agent and otherwise
in accordance with the terms hereof shall be assigned to, and the obligations
thereunder arising after the date of such assignment, will be assumed by Owner.
Agent shall make available to Owner, without cost to Owner, the advice and
consultation of Agent's staff in connection with the Property. Agent shall deal
at arm's-length with all third parties and shall act consistent with the
interests of Owner at all times in performance of the Management Activities.
(e) MAINTENANCE.
-----------
(i) Agent shall cause the Property, including, without
limitation, common areas thereof, roadways, sidewalks, signs, parking areas and
landscaping, to be maintained in good and safe condition comparable to that of
other properly maintained properties of similar type and location to the
Property and in accordance with standards prescribed by Owner.
(ii) Agent shall cause all equipment and systems located at
or servicing the Property, including the potable water and/or wastewater
treatment plant(s), if any, to be operated as effectively as their respective
conditions will permit and in full compliance with all applicable laws, rules
and legal requirements and maintained in good repair. Agent shall immediately
notify Owner of its receipt of any notices or other communication from any
governmental authority concerning the operation of any such potable water and/or
wastewater treatment plant(s), and shall promptly deliver to Owner copies of any
such notices or other communications. Further, Agent shall provide or make
available, or cause to be provided or made available, to Residents those
services which Owner is required to provide or to make available under Leases.
(iii) Agent shall enter into such service and maintenance
contracts (in Agent's name) as Agent shall deem necessary or appropriate for the
operation and maintenance of the Property (or if applicable Agent will submit or
cause such contracts to be submitted to Owner for execution), including, without
limitation, the equipment and systems located at or servicing the Property,
contracts for utilities, telephone service, landscape maintenance, rubbish
removal, fuel, security, food vending and vermin extermination. Agent shall
purchase in reasonable quantities and at reasonable prices all supplies,
materials, tools
4
<PAGE>
and equipment which are necessary or appropriate for the proper operation and
maintenance of the Property.
(iv) Agent shall take all reasonably necessary precautions
against fire, vandalism and trespass to the Property.
(v) In addition to the foregoing, to the extent provided for
in the Approved Budget or to the extent Owner has otherwise made adequate
monetary provision therefor, Agent shall cause all roadways, sidewalks, parking
areas and all other common areas of the Property to be kept free from cracks,
excess water, debris and other accumulations to the extent any of the foregoing
could (A) materially adversely affect the operation of the Property or (B)
create a safety hazard, and shall cause any rubbish, excess water, debris and
other accumulations to be removed therefrom.
(f) REPAIRS. Agent shall cause such ordinary and necessary repairs
-------
and replacements to be made to the Property (in accordance with the Approved
Budget) and all equipment and systems located at or servicing the Property, and
shall cause such infrastructure alterations to be made at the Property (in
accordance with the Approved Budget), as Agent shall deem necessary or advisable
for the proper operation and maintenance of the Property. Notwithstanding the
cost limitations set forth in Section 5 below, Agent shall cause to be made all
---------
repairs which are immediately necessary for the preservation or protection of
the Property or the safety of Residents and required to avoid the suspension of
any necessary services at the Property, without Owner's prior approval and
without limitation as to cost; provided, however, that in each instance Agent
shall, before causing any such emergency repair to be made, use reasonable
efforts and all practicable means under the circumstances to notify Owner of the
emergency repair.
(g) SUPERVISION OF RESIDENTS.
------------------------
(i) Agent shall plan and coordinate the moving in and moving
out of Residents at the Property in order to ensure a minimum of disturbance to
the operation of the Property and to other Residents then occupying or preparing
to occupy space at the Property.
(ii) Agent shall receive and use all reasonable efforts to
attend to and resolve any complaints, disputes or disagreements by or among
Residents (except with respect to evictions which are covered under sub-
paragraph (iv) below) but shall not settle any dispute with a Resident relating
to an amount in excess of $500.00 (per dispute) without the prior consent of
Owner.
(iii) Agent shall monitor all Residents and shall take
commercially reasonable steps to cause their compliance with the terms and
provisions of their respective Leases and the rules and regulations of the
Property.
(iv) Unless and to the extent otherwise directed by Owner,
Agent may terminate tenancies, evict Residents, enforce landlord's liens and
recover possession of premises occupied by Residents, and sue in Owner's name
under Owner's supervision to
5
<PAGE>
recover Rent and other sums due to the extent necessary to remedy illegal or
harmful conduct, a default under any Lease or a violation of the rules and
regulations of the Property.
(h) INSURANCE.
---------
(i) During the term of this Agreement and all renewals
thereof, Owner, at Owner's expense, shall carry and maintain primary general
liability insurance for the benefit of Owner and Agent naming Agent as an
additional insured ("Owner's Liability Insurance"). Owner's Liability Insurance
shall include coverage for losses arising from the ownership, management and
operation of the Property, including the utilization of independent contractors.
If Owner's Liability Insurance has a deductible, or similar clause, Owner shall
be responsible for paying any losses that are not covered by Owner's Liability
Insurance because of said deductible or similar clause. Owner shall also
maintain any insurance required by the Leases.
(ii) During the term of this Agreement and all renewals
thereof, Agent, at Agent's expense, shall carry and maintain general liability
insurance for the benefit of Agent and Owner naming Owner as additional insured
("Agent's Liability Insurance"). If Agent's Liability Insurance has a
deductible, or similar clause, Agent shall be responsible for paying any losses
not covered by Agent's Liability Insurance because of said deductible or similar
clause.
(iii) In connection with claims by third parties, as between
Owner's Liability Insurance and Agent's Liability Insurance, Owner's Liability
Insurance shall for all purposes be considered the primary coverage. No claim
shall be made by Owner or its insurance company under or with respect to any
insurance maintained by Agent except in the event that Owner's Liability
Insurance is exhausted or in the event such claim is caused by negligence or
misconduct on the part of Agent or Agent's employees.
(iv) Each insurance policy maintained by Owner or by Agent with
respect to the Property shall contain a waiver of subrogation clause, so that no
insurer shall have any claim over or against Owner or Agent, as the case may be,
by way of subrogation or otherwise, with respect to any claims that are insured
under such policy. All insurance relating to the Property shall be only for the
benefit of the party securing said insurance and all others named as insured.
Owner and Agent hereby release each other from all rights of recovery under or
through subrogation or otherwise for any and all losses and damages to the
extent of such insurance coverage and agree that no insurer shall have a right
to recover any amounts paid with respect to any claim against Owner or Agent by
subrogation, assignment or otherwise.
(v) Owner shall cause to be placed and kept in force fire and
extended coverage insurance and such other insurance as Owner may elect, at
Owner's expense.
(vi) Agent shall cause, at Owner's expense pursuant to the
Approved Budget, for all employees working at the Property (except with respect
to Agent's officers, directors and home office employees, with respect to whom
insurance shall be placed and kept in force by Agent at Agent's expense), to be
placed and kept in force worker's compensation
6
<PAGE>
insurance in compliance with all applicable federal, state and local laws and
regulations and employer's liability coverage covering all employees of Agent,
and Agent shall furnish Owner certificates evidencing such insurance and Agent's
Liability Insurance (each of which shall contain a provision requiring the
insurer to give Owner thirty (30) days' prior written notice before
cancellation, and shall name Owner as an insured).
(vii) Agent, at its expense, shall furnish employee dishonesty
insurance with limits of at least $500,000.00 per loss and in an amount
sufficient to cover all employees (whether on-site or off-site) employed by
Agent who shall be responsible for handling any moneys belonging to Owner that
come under the custody or control of Agent. Agent shall be responsible for the
amount of any deductible under such insurance.
(viii) Unless a service agreement has been established as part
of Owner's insurance program or separate agreement has been otherwise reached
with Owner, Agent shall promptly investigate and make a full written report to
Owner and the applicable insurance carrier(s) as to all alleged accidents and/or
alleged claims for damages relating to the ownership, operation, management and
maintenance of the Property as well as (and including) any damage or destruction
to the Property and the estimated cost of repair. Agent shall promptly report
to Owner in writing (A) the existence of any asserted claims or lawsuits
relating to the Property and (B) the incurrence of any damage to the Property.
(ix) Upon commencement of the term of this Agreement, (A) Agent
shall provide Owner with certificates of insurance and loss payable endorsements
evidencing compliance with the terms of this Agreement and (B) Owner shall
provide Agent with certificates of insurance (showing Agent as additional
insured) and loss payable endorsements evidencing compliance with the terms of
this Agreement.
(i) ADVERTISING - PUBLIC RELATIONS.
------------------------------
(i) Agent shall hire such advertising services, shall place
such advertisements and shall generally supervise and attend to all promotional
matters pertaining to the operation of the Property as Agent shall deem
advisable consistent with and subject to the cost limitations set forth in the
Approved Budget.
(ii) Agent shall represent Owner in connection with all matters
of general public interest which pertain to the Property and shall attempt to
resolve amicably any complaints, disputes or disagreements in connection
therewith as promptly as is reasonably possible; provided, however, that Agent
shall not expend in excess of $500.00, per dispute, to resolve such complaints,
disputes or disagreements without first obtaining Owner's approval.
(j) COMPLIANCE. Agent shall take or cause to be taken all such
----------
appropriate actions in and about or affecting the Property as necessary to
comply with all laws, rules, regulations and other legal requirements applicable
to the Property, including in connection with any financing secured by the
Property so long as the terms of such financing to be complied with by Agent are
fully disclosed to Agent. Agent, however, shall not take any such action as long
as Owner is contesting, or has affirmed its intention to contest any such
requirement.
7
<PAGE>
Notwithstanding the cost limitations set forth in Section 5 below,
---------
Agent may, without Owner's prior written approval, take or cause to be taken any
such actions without limitation as to cost if failure to do so would or might,
in Agent's reasonable judgment, expose Owner or Agent to criminal liability;
provided, however, that in each such instance Agent shall, if reasonably
possible, before taking or causing to be taken any such action, notify Owner of
the need for such action and obtain Owner's approval. Agent and Owner shall
each promptly notify the other of any violation, order, rule or determination
affecting the Property of any governmental authority or agency.
Agent shall take or cause to be taken all such appropriate actions in
and about or affecting the Property reasonably necessary to comply with all
terms and conditions contained in any ground lease, space lease, mortgage, deed
of trust or other security instrument affecting the Property.
(k) PAYMENT OF EXPENSES. Agent shall pay with funds from the
-------------------
Operating Account all expenses of the Property, including, without limitation,
Agent's compensation under the Agreement. Agent shall not be required to make
any expenditure of funds if such funds are not available from the Operating
Account or from contributions by Owner. Agent shall at all times use all
reasonable efforts to obtain for Owner, and shall credit to the account of Owner
in each case, all discounts, rebates and other favorable financial terms which
may be available in connection with any costs or expenses Agent shall incur
under this Agreement.
4. AGENT'S DUTIES AND POWERS AS LEASING AGENT.
(a) DUTIES. Agent shall use all reasonable efforts consistent with
------
normal and customary practices in the residential leasing business, to negotiate
and, whenever possible, consistent with this Section 4(a), consummate Leases for
------------
manufactured home sites at the Property which become available for rent from
time to time after the date of execution of the general partnership agreement of
The Meadows Resort Partnership, at rentals and upon such other terms and
conditions as shall be consistent with the relevant market for the Property and
as may be designated by Owner from time to time. Without limiting the
foregoing, Agent hereby agrees that (i) all Leases shall be on Owner's standard
lease form or other form approved by Owner, (ii) Leases for all spaces in the
Property shall be entered into with creditworthy residents which
creditworthiness Agent shall determine by making customary inquiries with
reputable credit rating agencies, and (iii) each manufactured home located at
the Property shall meet the standards of Owner (i.e., with respect to age, model
and manufacturer), as set forth in writing to Agent by Owner from time to time
(it being understood that if Owner revises its standards such revised standards
shall only apply prospectively).
(b) POWERS. Subject to the terms and conditions of this Agreement and
------
to the provisions of any mortgage financing entered into by Owner, Agent shall
have the power to:
(i) negotiate and prepare or cause to be prepared all new Leases
on Owner's standard form or other form approved by Owner and modifications (so
long as such modifications do not materially impact the rights, remedies and
economic benefits of Owner under the Leases) or terminations of existing Leases
(which terminations must be on terms approved by Owner); and
8
<PAGE>
(ii) authorize or provide for advertisements and other promotional
activities, including renting plans and signs and circular matter,
contemplated under the marketing and promotional program developed by Owner
and Agent, consistent with and subject to the cost limitations as set forth
in the Approved Budget (as defined below).
5. LIMITATIONS OF AGENT'S POWERS AND AUTHORITY. Except to the extent
provided for in any Approved Budget (either as an identified "line item" thereof
or as an unidentified portion of an identified "line item" thereof) or as
otherwise specifically provided in this Agreement with respect to emergency
situations, Agent shall not, without the prior approval of Owner, incur any
single expense for a repair, alteration, service, supply or other matter
whatsoever which would involve a cost in excess of $500.00 or such other sum as
Owner may from time to time designate in writing. Agent shall be relieved of its
obligations under this Agreement to the extent such obligations are not
performed because of Owner's failure or refusal to make funds available for the
performance of such obligations.
6. OPERATING BUDGETS.
(a) BUDGET FOR FIRST OPERATING YEAR. Owner has received a copy of
-------------------------------
Agent's Budget Summary for 1998 ("1998 Budget"). Agent shall manage the
Property consistent with and subject to the cost limitations set forth in such
1998 Budget.
(b) ANNUAL BUDGETS AFTER FIRST OPERATING YEAR. Agent shall prepare
-----------------------------------------
annually for Owner's review and approval (which shall not be unreasonably
withheld or delayed) a pro forma income forecast and proposed operating budget
for all costs pertaining to the operation and maintenance of the Property during
each Operating Year (as defined below). Agent shall manage the Property
consistent with and subject to the cost limitations set forth in each Approved
Budget.
(c) APPROVED BUDGETS AND OPERATING YEARS. The 1998 Budget, each pro
------------------------------------
forma income forecast and operating budget prepared by Agent in accordance with
Section 6(b) above, together with any adjustments thereto, is referred to in
- -------------
this Agreement and shall be deemed to be the "Approved Budget" for the period
covered thereby. Each Approved Budget shall cover a calendar year, which
calendar year is referred to in this Agreement as the "Operating Year".
(d) LIMITATIONS OF APPROVED BUDGET. Except as otherwise specifically
------------------------------
provided in this Agreement, Agent shall use all reasonable efforts to incur
costs and expenses in connection with the operation and maintenance of the
Property during any Operating Year within the limitations established by the
Approved Budget for such Operating Year. Agent shall give Owner notice if Agent
expects to exceed any item in the Approved Budget by an amount in excess of ten
percent (10%) of the amount budgeted for such item. Notwithstanding the
foregoing, Agent shall not be required to obtain Owner's prior approval with
respect to, and the calculation of any Operating Budget overages shall not take
into consideration, the following:
9
<PAGE>
(i) costs and expenses relating to utility charges, real estate
taxes, insurance or otherwise which are not within Agent's reasonable
control and which, if not incurred, would or might, in Agent's reasonable
judgment, adversely and materially affect the operation and maintenance of
the Property; and
(ii) other costs and expenses (including costs and expenses relating
to a Lease or service contract approved by Owner) which this Agreement
specifically provides Agent may incur.
In addition, if any Operating Year shall commence before Owner shall have
reviewed and adjusted the Approved Budget for such year, Agent shall use its
reasonable judgment in incurring costs and expenses relating to the operation
and maintenance of the Property until such review and adjustment of the Approved
Budget for such Operating Year shall have taken place and in doing so shall be
guided by the Approved Budget for such Operating Year in effect without
adjustment. In such a case, Agent shall be subject to the same financial
limitations established in the Approved Budget as if such budget had been
reviewed and adjusted by Owner for the then current Operating Year.
7. BOOKS, ACCOUNTS, RECORDS, REPORTS AND REMITTANCES.
(a) BOOKS AND RECORDS. Agent shall establish and maintain such books
-----------------
of account, records and other documentation pertaining to the operation and
maintenance of the Property as Owner may prescribe from time to time and
otherwise as are customarily maintained by managing agents of properties similar
in location and size to that of the Property. Owner and any representative of
Owner shall have the right to inspect such records and audit any and all
statements at any reasonable time, and make photocopies of same and such right
of inspection, audit and photocopying shall survive the expiration or
termination of this Agreement. Agent agrees that all such records shall be and
shall at all times remain the property of Owner except for software, and shall
be delivered to Owner at its request, and Agent shall not destroy any records
without first obtaining Owner's prior written approval.
(b) OPERATING ACCOUNT. Except as otherwise directed by Owner, Agent
-----------------
shall open and maintain an account separate from Agent's personal account (the
"Operating Account") in a banking institution acceptable to Owner. The Operating
Account shall be in the name of Owner, and shall be the property of Owner. The
designation of those employees of Agent who are authorized to sign checks on the
Operating Account, in addition to representatives of Owner, shall be subject to
the prior approval of Owner. All amounts collected from operation of the
Property shall be deposited by Agent into the Operating Account. If such amounts
are not sufficient to pay the expenses of the Property, Owner shall make monthly
deposits into the Operating Account in an amount necessary to pay such monthly
expenses of the Property as shown in the Approved Budget. Agent shall then make
withdrawals from the Operating Account as Agent shall deem necessary or
advisable in connection with the Management Activities. On or after the twenty-
fifth (25th) day of each month (or the next business day if the 25th is not a
business day), Owner shall notify Agent if Owner wishes to have Agent distribute
to Owner out of the Operating Account any net amounts remaining from the prior
month's collections. Upon receipt of such notice, Owner and Agent
10
<PAGE>
shall agree on the amount and Agent shall make the distribution to such account
as directed by Owner.
Owner and Agent agree that a petty cash fund (not to exceed $200.00)
will be maintained at the Property. Upon commencement of this Agreement, all
amounts in the petty cash fund are the property of Owner and to the extent
amounts in the petty cash fund are expended for Property related items, Owner
shall replenish amounts so spent from time-to-time (up to $200.00) upon receipt
of evidence of such expenditures. At the end of the term of this Agreement, all
amounts in the petty cash fund shall be retained by Owner.
(c) SECURITY DEPOSITS. Agent shall retain all security deposits, if
-----------------
any, of Residents received by Agent, and apply such in accordance with the
Leases. Owner shall remit to Agent or otherwise provide Agent direct access to
all other security deposits with respect to the Property.
(d) MONTHLY REPORTS. Agent shall prepare and deliver to Owner, not
---------------
later than the sixth (6th) day of each month, monthly reports setting forth
detailed statements of income and collections, expenses and disbursements,
balance of the Operating Account, Leases signed during the month and other
matters requested by Owner relating to the Management Activities (all in
accordance with the method of accounting designated by Owner) for the preceding
month. Agent shall furnish Owner with a general ledger and such further
information covering the operation and maintenance of the Property as Owner may
require. Such statements shall list accounts payable over thirty (30) days past
due and will break down expenses and charges into major categories. In addition
such monthly statements will show the amount each Resident was billed that
month, and the amount each Resident paid. Upon Owner's request, such statements
shall be accompanied by appropriate documentation of all expenditures made by
Agent on behalf of Owner under this Agreement.
(e) INTERIM REPORTS. Within twenty (20) days after the end of each
---------------
calendar quarter, Agent shall prepare and deliver to Owner a report as of the
last day of the preceding quarterly period, setting forth detailed statements of
collections, disbursements, delinquencies, balance of the Operating Account,
accounts payable and other matters requested by Owner relating to the Management
Activities (all in accordance with the method of accounting designated by Owner)
for the preceding quarter. Such statements shall, upon Owner's request, be
accompanied by appropriate documentation of all expenditures made by Agent under
this Agreement. Such quarterly statements shall be accompanied by Agent's
written estimates of the amounts, if any, by which any major categories of the
Approved Budget must be adjusted to fund adequately the operation and
maintenance of the Property for the then current quarter. Agent shall also
furnish Owner with such further information covering the operation and
maintenance of the Property as Owner may reasonably require.
(f) YEAR-END AND FINAL REPORTS. As soon as practicable after the end
--------------------------
of each Operating Year but in no event later than forty-five (45) days after the
end of each Operating Year, and after the expiration or termination of this
Agreement, Agent shall prepare and deliver to Owner detailed statements
(prepared in accordance with the accrual basis of accounting) of all receipts,
expenses and charges pertaining to the operation and maintenance of the Property
during the preceding Operating Year.
11
<PAGE>
8. COMPENSATION - MANAGEMENT AND LEASING FEES. Owner shall pay Agent as
Agent's sole and exclusive fee ("Agent's Fee") for its performance of the
Management Activities and its activities pursuant to Section 4 hereof, an annual
---------
amount equal to four percent (4%) of the Rent actually collected by or for the
account of Owner in each calendar year, or portion thereof, during the term of
this Agreement. Owner shall pay Agent's fee monthly, on or about the final day
of each calendar month based upon Rent actually collected during such month.
9. ADJUSTMENTS. If after the end of each Operating Year, or the
termination of this Agreement, it is determined that the sums theretofore paid
to Agent under Section 8 above are greater or less than the sums required to be
---------
paid by Owner to Agent under Section 8 above, then there shall promptly be an
---------
adjustment, and payment or reimbursement, as applicable, between Owner and
Agent.
10. DEFAULT - TERMINATION
(a) RIGHT TO TERMINATE. During the initial term of this Agreement
-------------------
commencing on ______, 1998 and ending on _______, (i) Owner shall have the right
to terminate this Agreement, for cause only, at any time upon thirty (30) days'
prior written notice to Agent and (ii) Agent shall have the right to terminate
this Agreement, for cause only, at any time upon thirty (30) days' prior written
notice. After said initial term of this Agreement, either party shall have the
right to terminate this Agreement, with or without cause, for any reason, at any
time upon thirty (30) days' prior written notice to the other party.
(b) AUTOMATIC TERMINATION. This Agreement shall terminate immediately
---------------------
and automatically (i) if all or substantially all of the Property is sold or
condemned or acquired by eminent domain, or (ii) if Agent or any of its
principals files a petition for bankruptcy, reorganization or arrangement under
any statute, or makes an assignment for the benefit of creditors, or takes
advantage of any insolvency statute.
(c) SURVIVAL OF OBLIGATIONS. Upon the expiration or termination of
-----------------------
this Agreement, (i) Owner's appointment of Agent hereunder shall cease and
terminate and, except as otherwise specifically provided hereunder, Owner and
Agent shall have no further obligation or liability to the other, (ii) Agent
shall no longer have any authority to represent Owner or take or cause to be
taken any actions on Owner's behalf and (iii) Owner shall pay Agent all fees
payable to Agent hereunder which shall have accrued through the date of such
expiration or termination. The provisions of this Section 10(c) shall survive
-------------
any such expiration or termination.
(d) RETURN OF OWNER'S PROPERTY. Promptly upon the expiration or
--------------------------
termination of this Agreement, Agent shall (i) pay over to Owner any balance of
funds held by Agent on Owner's account pursuant to this Agreement and (ii)
return to Owner all books, records, Leases, agreements and other documents
pertaining to the management, leasing and operation of the Property.
12
<PAGE>
11. INDEMNIFICATION.
(a) SCOPE. Owner shall defend, indemnify and hold harmless Agent, its
-----
principals, officers, directors, shareholders, partners, employees and agents
(individually and collectively, "Owner's Indemnitees") from and against all
liabilities, claims, suits, damages, judgments, reasonable costs and expenses of
whatever nature, including reasonable counsel fees incurred by reason of or
arising out of any injury to or death of any person(s), damage to property
(including environmental contamination of any kind), loss or use of any property
or otherwise in connection with (i) the proper performance by Agent of Agent's
obligations under this Agreement, (ii) Owner's officers' and/or directors' or
employees' negligence, willful misconduct or fraud and (iii) actions taken by
Owner which are not permitted or are prohibited by this Agreement. Owner shall
not be required to defend, indemnify, hold harmless or reimburse Owner's
Indemnitees with respect to any matter arising out of Agent's, Agent's officers'
and/or directors' or employees' negligence, willful misconduct or fraud. With
respect to Owner's obligation to defend Agent in third-party lawsuits covered by
the terms of this Section 11, Owner shall be permitted to hire counsel of its
----------
own choosing and Owner will not be responsible for counsel fees of Agent if
Agent seeks separate legal representation; provided, however, in the event that
the interests of Agent and Owner in any third-party lawsuit are so divergent
that representation of each by the same counsel would create a clear conflict,
then Owner shall be responsible for the reasonable fees and expenses of Agent's
separate attorneys.
(b) CONDITIONS. The obligation of Owner to indemnify, hold harmless
-----------
and reimburse Agent under Section 11(a) above is subject to the condition that
-------------
Agent shall not take or fail to take any actions, including the failure to
promptly notify Owner or an admission of liability, which would bar Owner from
enforcing any applicable coverage under policies of insurance or would prejudice
any defense of Owner in any appropriate legal proceedings pertaining to any such
matter or otherwise prevent Owner from defending itself with respect to any such
matter.
(c) SURVIVAL. The provisions of this Section 11 shall survive the
-------- ----------
expiration and any termination of this Agreement.
(d) RELEASE FROM LIABILITY. Each party hereby releases the other in
----------------------
respect of any claim (including a claim for negligence) that it might otherwise
have against the other party for loss, damage or destruction with respect to its
property by fire or other casualty occurring during the term of this Agreement
if, and to the extent, covered under the fire insurance policy covering the
Property or any other insurance policy carried by Owner or Agent. Owner and
Agent shall both be named insureds under the fire and extended coverage, rent
insurance and "all risk" insurance covering the Property, as well as any other
insurance carried by Owner or Agent with respect to the Property.
12. TIMELY PERFORMANCE. Owner and Agent shall each perform all of their
respective obligations under this Agreement in a proper, prompt and timely
manner. Each shall furnish the other with such information and assistance as
the other may from time to time reasonably request in order to perform its
responsibilities hereunder. Owner and Agent each shall take all such actions as
the other may from time to time reasonably request and otherwise
13
<PAGE>
cooperate with the other so as to avoid or minimize any delay or impairment of
either party's performance of its obligations under this Agreement.
13. ASSIGNMENT.
(a) PERMISSIBLE ASSIGNMENTS. Agent may not assign this Agreement or
------------------------
delegate its responsibilities hereunder except as contemplated by this Agreement
without the prior consent of Owner.
(b) ASSUMPTION AND RELEASE. Each permitted assignee of this Agreement
-----------------------
shall agree in writing to personally assume, perform and be bound by all of the
terms, covenants, conditions and agreements contained in this Agreement, and
thereupon the assignor of this Agreement shall be relieved of all obligations
hereunder except those which shall have accrued prior to the effectiveness of
such assignment.
14. NOTICES.
(a) GENERAL. Any and all notices, consents, approvals or other
--------
communications given under this Agreement shall be deemed to have been properly
given when delivered, if personally delivered, or when received, if sent
certified or registered mail, return receipt requested and postage prepaid, and
addressed to the parties at the following address:
a) If to Owner, to: MEADOWS PRESERVATION, INC.
2555 PGA Boulevard
Palm Beach Gardens, Florida 33410
Attn: President
and: BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attn: President
b) If to Agent, to: MHC MANAGEMENT LIMITED PARTNERSHIP
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza
Suite 800
Chicago, Illinois 60606
Attn: President
14
<PAGE>
with a copy to: Manufactured Home Communities, Inc.
Two North Riverside Plaza
Suite 800
Chicago, Illinois 60606
Attn: General Counsel
Any notice delivered by either party in any manner other than those
described above shall be deemed properly given when received. Either party may
change its address for the giving of notices under this Agreement by delivering
to the other party ten (10) days' written notice of such change of address.
(b) EMERGENCY NOTICES. Either party may give notice of emergency
------------------
situations orally (personally, by telephone or otherwise) or by telecopy, telex,
telegram or other method, provided that the party giving any such emergency
notice shall confirm the same by written notice in accordance with Section 14(a)
-------------
above.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida applicable to agreements made
and to be performed in the State of Florida.
16. COMPLIANCE WITH LAWS. Agent, in fulfilling its obligations under this
Agreement, shall comply with all applicable law, rules, regulations and other
legal requirements.
17. GOVERNMENTAL ORDERS. In the event that any governmental agency,
authority or department should order the repair, alteration or removal of any
structure or condition at the Property, and if after written notice of the same
to Owner by such body or by Agent, Owner fails to authorize Agent or others to
make such repairs, alterations or removal, Agent shall be released from any
responsibility in connection therewith, and Owner shall be answerable to such
body for any and all penalties and fines whatsoever imposed because of such
failure on Owner's part.
18. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall be
construed without regard to any presumption or other rule requiring construction
against the party causing this Agreement to be drafted. This Agreement may not
be modified, amended or terminated (except as provided in this Agreement), nor
may any term or provision hereof be waived or discharged, except by instrument
signed by Owner and Agent. All of the terms of this Agreement, whether so
expressed or not, shall be binding upon the respective successors and permitted
assigns of the parties hereto and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. If any of the provisions of this Agreement shall to any extent be
invalid or unenforceable, the remaining provisions of this Agreement shall not
be affected thereby and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. The headings of this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which
15
<PAGE>
together shall constitute one and the same instrument. Any references in this
Agreement to any one gender, masculine, feminine or neuter, includes the other
two, and the singular includes the plural, and vice versa, unless the context
otherwise requires.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
OWNER:
THE MEADOWS RESORT PARTNERSHIP
a Florida general partnership
By: Blue Ribbon Communities Limited
Partnership, its General Partner
By: MHC-QRS Blue Ribbon
Communities, Inc., General Partner
By: __________________________
Name: ___________________
Title: ___________________
AGENT:
MHC MANAGEMENT LIMITED PARTNERSHIP,
an Illinois limited partnership
By: MHC Operating Limited Partnership,
an Illinois limited partnership
Its: General Partner
By: Manufactured Home Communities, Inc.,
a Maryland corporation
Its: General Partner
By: __________________________
Name: ___________________
Title: ___________________
16
<PAGE>
EXHIBIT 6.11
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (this "Option Agreement"), dated as of December
----------------
18, 1997, is made by and between MEADOWS PRESERVATION, INC., a Florida
corporation ("Seller"), and BLUE RIBBON COMMUNITIES LIMITED PARTNERSHIP, a
------
Delaware limited partnership ("Purchaser").
---------
W I T N E S S E T H:
-------------------
WHEREAS, by deed of even date with this Option Agreement, Seller has
acquired fee simple title to all that parcel of real estate located at the
northwest corner of PGA Boulevard and Prosperity Farms Road in Palm Beach
County, Florida, and commonly known as "The Meadows Mobile Home Park", which is
more particularly described on Exhibit A attached hereto (the "Land"), together
--------- ----
with all improvements thereon (with the Land, the "Property");
--------
WHEREAS, Purchaser and Seller propose to enter into a joint venture
for the ownership of beneficial title to, and the management and operation of,
the Property, conditioned upon Seller raising sufficient investment capital from
owners of mobile or manufactured homes located on the Land by an agreed date;
and
WHEREAS, Purchaser has agreed to provide, or cause to be provided,
interim financing for Seller's acquisition of the Property, conditioned upon,
among other things, Seller granting to Purchaser the option to purchase the
Property set forth in this Option Agreement, exercisable by Purchaser if Seller
fails to raise the aforesaid investment, give notice thereof to Purchaser and
enter into the aforesaid joint venture with Purchaser on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
whereof are hereby acknowledged, the parties hereto hereby agree as follows:
1. Grant of Option. Seller hereby grants to Purchaser, and Purchaser
---------------
hereby accepts the grant of, the exclusive option to purchase the Property, upon
and subject to the terms and conditions set forth in this Agreement and in
Schedule A attached hereto, which Schedule A is incorporated
-1-
<PAGE>
herein by reference. Capitalized terms used but not defined herein shall have
the meanings set forth in Schedule A.
2. Consideration. The consideration for the option granted by this
-------------
Option Agreement (the "Option") is described in the recitals hereto.
------
3. Option Period.
-------------
(a) The Option may be exercised by notice in writing from
Purchaser to Seller at any time during the period commencing on March 18, 1998
and ending at 5:30 p.m. on April 17, 1998.
(b) Notwithstanding anything in Section 3(a) hereof to the
------------
contrary, the Option shall expire and become ineffective if, by March 18, 1998,
(i) Seller shall have raised not less than Seven Hundred Fifty Thousand Dollars
($750,000) from the sale of shares in Seller for One Thousand Dollars ($1,000)
each to owners of mobile or manufactured homes located on the Land, effected in
compliance with all applicable Federal and state laws, (ii) Purchaser shall have
received notice in writing from Seller that Seller has achieved the event
described in clause (i) of this Section 3(b), and attaching evidence of such
------------
event reasonably acceptable to Purchaser, and (iii) Seller and Purchaser shall
have entered into a written partnership agreement creating the joint venture
described in the recitals above.
4. Obligations Pending Closing.
---------------------------
Effective from the date of this Option Agreement through (i)
March 18, 1998 if Purchaser shall not exercise the Option, or (ii) Closing if
Purchaser shall exercise the Option:
(a) Condition of Property. Seller shall continue to maintain the
---------------------
Property in the ordinary course of business, consistent with the maintenance of
the Property over the six (6) month period immediately preceding execution of
this Option Agreement, and Seller shall not cause or permit any material adverse
change in the condition of the Property, changes caused by casualty or the
elements excepted.
(b) Leases. Seller shall not enter into any leases or contracts
------
with respect to the Property or any portion thereof without the prior written
consent of Purchaser except tenant leases and service contracts made in the
ordinary course of business and terminable on not more than thirty (30) days'
-2-
<PAGE>
notice if writing.
(c) Liens. Seller shall not create or consent to the creation of
-----
any Liens against the Property other than liens approved by Purchaser in
writing.
Notwithstanding anything in this Section 4 to the contrary, if Seller
enters into a management agreement with respect to the Property with Purchaser
or an affiliate of Purchaser, and for so long as such management agreement shall
be continuing, Seller shall be deemed to have satisfied its obligations under
Sections 4(a) and (b) hereof (other than with respect to any acts affirmatively
taken by Seller in violation of Sections 4(a) or (b)).
5. Condemnation. In the event any Governmental Authority should
------------
notify Seller, or Seller should become aware, of any permanent or temporary
actual or threatened taking or condemnation of any material portion of the
Property, Seller shall promptly notify Purchaser of the same. Purchaser shall
thereafter be entitled to elect by written notice to Seller, given within
fifteen (15) days after Seller's aforesaid notification to Purchaser, either (i)
to proceed with this Option Agreement, with no change in the terms hereof, in
which event if Purchaser does not terminate this Option Agreement during the
Inspection Period, any and all proceeds of such taking or condemnation shall be
delivered or assigned to Purchaser at Closing, or (ii) to terminate this Option
Agreement, in which event both parties shall be relieved from any further
liabilities or obligations hereunder.
6. Representations.
---------------
a. Seller Representations. Seller represents and warrants to
----------------------
Purchaser as follows, all of which representations and warranties are true and
correct as of the date hereof and shall be true and correct as of Closing
hereunder:
i. Seller (A) is a corporation duly formed and validly
existing under the laws of the State of Florida, and has full power and
authority to sell the Property to Purchaser, and (B) has obtained all necessary
consents and approvals as may be required for Seller to enter into and perform
this Option Agreement.
ii. This Option Agreement has been duly authorized,
executed and delivered by Seller and constitutes the
-3-
<PAGE>
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to bankruptcy and insolvency laws and general
principles of equity.
iii. To the best of Seller's knowledge, Seller is the sole
legal and equitable owner of record and in fact of good and marketable fee
simple title to the Property.
iv. Seller is not a "foreign person" as that term is
defined in Section 1445 of the Internal Revenue Code.
v. To the best of Seller's knowledge, no taking by power
of eminent domain or condemnation proceedings have been instituted or are
threatened for the permanent or temporary taking or condemnation of all or any
portion of the Property.
vi. Except as disclosed to Purchaser, to the best of
Seller's knowledge, there is no pending or threatened, litigation, proceeding or
investigation relating to the Property or Seller's title thereto, nor, to the
best of Seller's knowledge, does Seller have reasonable grounds to know of any
basis for such litigation, proceedings or investigations.
vii. Seller has not received any written notice of any
violation of any laws, regulations, orders or requirements issued by any
Governmental Authority, or action in any court on account thereof, against or
affecting the Property.
viii. The person executing this Option Agreement on behalf
of Seller represents and warrants that he or she is an officer of Seller, has
been duly authorized by Seller to execute this Option Agreement, and has full
power and authority to execute the same on behalf of Seller.
ix. No representation, warranty or covenant by Seller in
this Option Agreement contains or will contain any untrue statement of material
fact, or omits or will omit to state a material fact necessary to make the
statements therein not misleading.
For the purposes of this Section 6, the term "best of Seller's
knowledge" shall be deemed to mean the actual knowledge of Seller without
investigation.
b. Purchaser Representations. Purchaser represents and warrants
-------------------------
to Seller as follows, all of which
-4-
<PAGE>
representations and warranties are true and correct as of the date hereof and
shall be true and correct as of Closing hereunder:
i. Purchaser is a limited partnership duly formed and
validly existing under the laws of the State of Delaware.
ii. Purchaser has obtained all necessary consents and
approvals as may be required for Purchaser to enter into this Option Agreement.
iii. The person executing this Option Agreement on behalf
of Purchaser represents and warrants that he or she is an officer of the general
partner of Purchaser, has been duly authorized by such general partner to
execute this Option Agreement, and has full power and authority to execute the
same on behalf of Purchaser.
iv. No representation, warranty or covenant by Purchaser
in this Option Agreement contains or will contain any untrue statement of
material fact, or omits or will omit to state a material fact necessary to make
the statements therein not misleading.
c. Survival of Representations and Warranties.
------------------------------------------
The representations and warranties set forth in this Section 6
---------
shall survive Closing and delivery of the deed for a period of two (2) years.
7 Default. If Purchaser, through no fault of Seller, shall fail to
-------
close or to perform any of its other obligations hereunder, Seller's sole and
exclusive remedy shall be the right to terminate this Option Agreement and to
receive reimbursement from Purchaser for all Seller's actual out-of-pocket
expenses incurred in connection with this Option Agreement. If Seller, through
no fault of Purchaser, shall fail to close or to perform any of its other
obligations hereunder, Purchaser's sole and exclusive remedies shall be either
the right to terminate this Option Agreement and to receive reimbursement from
Seller for all Purchaser's actual out-of-pocket expenses incurred in connection
with this Option Agreement, or the right to specific performance of the terms
hereof. In the event of any dispute hereunder, the prevailing party will be
entitled to collect its reasonable litigation costs (including reasonable
attorney's fees) from the other party.
-5-
<PAGE>
8. Indemnification by Seller. Seller shall hold harmless, indemnify
-------------------------
and defend Purchaser and the Property from and against any misrepresentation or
breach of warranty by Seller under this Option Agreement and any claims,
actions, suits, proceedings, demands, assessments, judgments, costs and expenses
(including reasonable attorneys' fees) incident thereto. Promptly after the
receipt by Purchaser of notice of the commencement of any claim, proceeding, or
other action in respect of which indemnity may be sought from Seller (each an,
"Action"), Purchaser shall notify Seller in writing of the commencement of such
Action (but the omission to so notify Seller shall not relieve Seller for any
liability that it may otherwise have to Purchaser except to the extent that
Seller is materially prejudiced or forfeits substantive rights or defenses as a
result of such failure). Seller shall have the right, at its option and
expense, to assume the defense of any Action in which Purchaser is a party,
using counsel selected by it and reasonably acceptable to Purchaser. Seller
shall not, without the prior written consent of Purchaser (which consent shall
not be unreasonably withheld), settle or compromise any claim or consent to
entry of judgment that does not include an unconditional release of Purchaser
for all liabilities with respect to such claim.
9. Broker. Each party, by the execution hereof, represents and
------
warrants that such party has not engaged the services of any broker, finder,
agent or other similar person or entity in connection with the Option. Each
party shall indemnify and hold harmless the other against and from any loss,
cost, damage or fee (including reasonable attorneys' fees) resulting from any
inaccuracy of such representation and warranty. This provision shall survive
Closing and the delivery of the deed or the termination of this Option
Agreement.
10. Miscellaneous.
-------------
a. Notices. All notices, consents, approvals, demands and other
-------
communications under this Option Agreement shall be in writing and shall be
deemed properly delivered, given or served if (i) personally delivered against
receipted copy, (ii) mailed by certified or registered mail, return receipt
requested, postage prepaid, (iii) sent by telefacsimile (provided the
transmitting machine produces an acknowledgment of delivery), or (iii) sent by
overnight courier service to the parties at the following addresses:
-6-
<PAGE>
If to Purchaser:
Blue Ribbon Communities Limited
Partnership
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: President
With a copy to:
Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: General Counsel
If to Seller:
Meadows Preservation, Inc.
2555 PGA Boulevard
Palm Beach Gardens, Florida 33410
Attention: President
All notices shall be deemed received (i) if personally delivered or
sent by telefacsimile, on the date of hand or telefacsimile delivery, (ii) if
sent by courier, one business day after it is sent, and (iii) if mailed, forty-
eight (48) hours after deposit in the United States mail. Either party may
change its address for the purpose of this Section by giving ten (10) days prior
written notice of such change to the other party in the manner provided in this
Section.
b. Governing Law. This Option Agreement shall be construed and
-------------
enforced in accordance with the laws of the State of Florida.
c. Headings. The captions and headings herein are for
--------
convenience and reference only and in no way define or limit the scope of
content of this Option Agreement or in any way affect its provisions.
d. Counterparts. This Option Agreement may be executed in two
-------------
or more counterpart copies, each of which counterparts shall have the same force
and effect as if both parties hereto had executed a single copy of this Option
Agreement.
e. Assignment; Binding Effect. Seller and
--------------------------
-7-
<PAGE>
Purchaser agree that the terms and conditions of this Option Agreement shall be
binding upon, and shall inure to the benefit of, their respective successors and
assigns. Purchaser shall have the absolute right to assign this Option Agreement
to its Affiliate. For the purposes of this Agreement, an "Affiliate" shall mean
any entity or person directly or indirectly controlling, controlled by, or under
common control with Purchaser ("control" here meaning the power to direct
management and policies by any lawful means).
f. Entire Agreement. This Option Agreement and the Exhibits and
----------------
Schedules attached hereto contain the final and entire agreement between the
parties hereto with respect to the subject matter hereof, and are intended to be
an integration of all prior negotiations and understandings. No change or
modification to this Option Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any of the provisions of
this Option Agreement shall be valid unless the same is in writing and is signed
by the party against whom it is sought to be enforced.
g. Risk of Loss. The risk of loss to the Property shall remain
------------
with Seller and shall pass to Purchaser simultaneously with Seller's delivery of
a deed to the Property to Purchaser or Purchaser's agent at Closing.
h. Recordation. At the request of Purchaser, Seller shall
-----------
execute a Memorandum of Option to be recorded among the land records of Palm
Beach County, Florida.
i. Further Assurances. Each party shall, whenever and as often
------------------
as it shall be requested so to do by the other, cause to be executed,
acknowledged and delivered any and all such further instruments and documents
and do all such further acts and things as may be necessary or proper, in the
reasonable opinion of the requesting party, in order to carry out the intent and
purposes of this Option Agreement. This provision shall survive Closing and the
delivery of the deed.
j. Time Of Essence. Time is of the essence in this Option
---------------
Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the date first above set forth.
WITNESS: PURCHASER:
/s/ BLUE RIBBON COMMUNITIES LIMITED
- ------------------
PARTNERSHIP, a Delaware limited
WITNESS: partnership
/s/ By: MHC-QRS Blue Ribbon Communities,
- ------------------
Inc., a Delaware corporation, General
Partner
By: /s/ Howard Walker
-------------------------
Name: Howard Walker
Title: President
WITNESS: SELLER:
/s/ MEADOWS PRESERVATION, INC., a Florida
- ---------------------
WITNESS:
By: /s/ Theresa Tyrrell
--------------------------
/s/ Name: Theresa Tyrrell
- -------------------
Title: President
-9-
<PAGE>
SCHEDULE A
----------
TERMS AND CONDITIONS OF PURCHASE AND SALE
-----------------------------------------
Capitalized terms used in these terms and conditions shall have the
meanings set forth in the Option Agreement unless the context otherwise
requires.
1. Subject to exercise of the Option, and upon the terms and conditions of the
Option Agreement and this Schedule A, Seller will sell and convey to
Purchaser the following described property (herein collectively called the
"Property"):
--------
A. LAND. The "Land", as defined in the Option Agreement.
----
B. IMPROVEMENTS. All improvements in and on the Land.
------------
C. REAL PROPERTY. The Land and the Improvements, collectively.
-------------
D. EASEMENTS. All easements, if any, benefiting the Real Property.
---------
E. RIGHTS AND APPURTENANCES. All rights and appurtenances pertaining to
------------------------
the foregoing, if any, including any right, title and interest of
Seller, if any, in and to adjacent streets, alleys or rights of way.
F. TANGIBLE PERSONAL PROPERTY. All of Seller's right, title and interest
--------------------------
in all appliances, fixtures, equipment, vehicles, inventory from sales
operations, machinery, furniture, carpet, drapes and other personal
property, if any, located on or about the Real Property and the
Improvements or used in the operation and maintenance thereof (the
"Tangible Personal Property"). A schedule of the Tangible Personal
--------------------------
Property is set forth in Appendix "A" attached hereto and made a part
-----------
hereof.
G. INTANGIBLE PROPERTY. All of Seller's right, title and interest in the
-------------------
following intangible property (the "Intangible Property"): business
-------------------
telephone numbers, the name "The Meadows Mobile Home Park
Development," logos and similar items, leases, rental agreements,
prepaid rents and maintenance fees, marketing information, deposits,
contract rights, permits and licenses, pertaining to the Real
Property, the Improvements, or the Tangible Personal Property or the
use thereof.
2. PURCHASE PRICE. The purchase price for the Property shall be TWELVE MILLION
--------------
THREE HUNDRED FORTY-ONE THOUSAND SIX HUNDRED NINETY-THREE DOLLARS AND
FORTY-SIX CENTS ($12,341,693.46) (the "Purchase Price"), payable by the
--------------
forgiveness of that certain loan (the "Loan") from MHC Lending Limited
----
Partnership ("MHCL"), an affiliate of Purchaser, to Seller, evidenced by a
----
promissory note of even date with the Option Agreement from Seller to MHCL
and secured, by among other things, a Mortgage, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases and Rents and
an Assignment of Leases and Rents.
<PAGE>
3. CLOSING.
-------
A. DATE AND TIME OF CLOSING. The closing and conveyance of title (the
------------------------
"Closing") shall be held thirty (30) calendar days after Seller
-------
receives the Option Exercise Notice, at a place to be mutually agreed
upon (the "Closing" or "Closing Date"), unless the parties mutually
------- ------------
agree upon another time or date.
B. At or prior to the Closing, Purchaser shall:
(i) Cause MHCL to forgive the Loan, as payment of the
Purchase Price; and
(ii) Deliver to Seller such consents and authorizations as
reasonably necessary to evidence authorization of
Purchaser for the purchase of the Property, the
execution and delivery of any documents required in
connection with Closing and the taking of all action
to be taken by the Purchaser in connection with
Closing.
C. At or prior to the Closing, Seller shall deliver to Purchaser the
following (all executed as necessary):
(i) A Statutory Warranty Deed warranting good and
marketable fee simple title to the Real Property to
Purchaser subject only to the Permitted Exceptions
(hereinafter defined).
(ii) "Marked down" title commitment updated through the
Closing Date deleting the "gap" exception from
Schedule B-II and all other exceptions except for the
Permitted Exceptions (owner's policy to be delivered
"post closing" at Seller's expense).
(iii) A Warranty Bill of Sale and Assignment conveying the
Tangible Personal Property to Purchaser and such
assignments as may be necessary to convey Seller's
interest in the Intangible Property.
(iv) An Assignment of all Intangible Property including,
without limitation, all permits, licenses, warranties
regarding the Property and the books and records
pertaining to the planning, development, construction
and operation of the Property; and the originals of
the foregoing.
(v) An affidavit as required by (S) 723.072, Florida
-------
Statutes, showing Seller's compliance with (S)
--------
723.071, Florida Statutes.
----------------
<PAGE>
(vi) Tenant Deposits held by Seller as of the Closing
Date.
(vii) A certified and current rent roll, including
identification of tenants by name and lot number, the
current monthly rent, the lease and prospectus
applicable to each lot, the identification of tenant
deposits, and both prepaid and delinquent rents,
certified as accurate by Seller as of the Closing
Date.
(viii) An Assignment of all Leases and Rental Agreements for
the Property, together with the original instruments
for each lease or rental agreement. Additionally,
Seller shall assign, to the extent assignable, all
permits, licenses, warranties, promotional materials,
contracts (if Purchaser elects to assume obligation),
the name "The Meadows Mobile Home Park Development,"
logos, phone numbers and similar items used in the
operation of the Property.
(ix) An affidavit stating that no work has been performed
on the Property that would entitle any person or
entity to record a mechanic's or materialman's lien
against the Property, except persons or entities that
have been fully paid and have released all claims;
that Seller has sole possession of the Property,
except for tenants and guests under unrecorded
leases, reservations or rental agreements; that there
are no unrecorded easements; and other matters
reasonably required by the title insurer.
(x) An affidavit in accordance with IRS Code 1445
certifying that Seller is not a foreign person
subject to the withholding rules of the Foreign
Investment in Real Property Act.
(xi) The originals of all disclosed contracts pertaining
to the Property, including, but not limited to,
leases, deposits, rental agreements and other
disclosed agreements between Seller and its tenants
and service contracts that will be assumed by
Purchaser, which are attached as Appendix "B" and
made a part hereof (collectively the "Assumed
-------
Contracts"). All Assumed Contracts shall be assigned
---------
at Closing. Seller shall indemnify Purchaser from all
loss, cost or expense in connection with all the
claims, demands, actions or causes of action asserted
against Purchaser or the Property (the "Claims")
------
arising out of the Assumed Contracts prior to
Closing, and for claims arising out of any contracts
not assumed by Purchaser both prior to and subsequent
to Closing. Purchaser shall indemnify Seller from all
loss, cost or expense in connection with any
<PAGE>
Claims arising out of the Assumed Contracts
subsequent to the Closing.
(xii) A closing statement setting forth the allocation of
closing costs, purchase proceeds, etc.
(xiii) Certificates of title to vehicles(s), if any.
(xiv) Such consents and authorizations as reasonably
necessary to evidence Seller's authority to sell the
Property, including, without limitation, an affidavit
as required by Section 620.605, Florida Statutes, and
----------------
such documentation as the title insurer may require
to ensure good and marketable title to the Property
passing to Purchaser; the execution and delivery of
any documents required in connection with the
Closing; and documentation necessary for the taking
of all action necessary to be taken by Seller in
connection with the Closing.
D. Proration: Taxes: At Closing, proration of income and expense and the
-----------------
apportionment of taxes shall be apportioned between Seller and
Purchaser as of the Closing Date on the basis that Seller owns the
Property on the Closing Date, with respect to the following items:
(i) All real-estate and personal property taxes and
assessments based upon the discounted amount of the
latest available bills. The parties agree to
reprorate the taxes at such time as the exact amount
of such taxes for 1998 become known. The 1998 taxes
shall be paid by Seller prior to Closing.
(ii) All rents (both earned and prepaid), other income,
utilities and all other operation expenses with
respect to the Property, and real estate and personal
property taxes and other assessments with respect to
the Property for the year in which the Closing occurs
shall be prorated as of the Closing Date. If the
Closing shall occur before any rents from the
Property have actually been paid for the month in
which the Closing occurs, only the rents actually
received by Seller will be prorated at Closing. If
any tenant owing rent to Seller is fully current in
his/her obligations to Purchaser, then subsequent to
the Closing, if any such rents owing to Seller are
actually received by Purchaser; immediately upon its
receipt of such rents, Purchaser shall pay to Seller
its proportionate share thereof for such month.
Purchaser shall pay over to Seller any such rents not
apportioned at the Closing received by Purchaser, for
the benefit of Seller.
<PAGE>
(iii) All utility and/or service charges. Seller shall,
where practical, cause meters to be read and obtain
final invoices through and including the Closing
Date. Where this is not practical, the parties shall
assume equal per diem use over the period of the
billing, and adjustment shall be made accordingly.
Utility deposits, if any, shall be retained by
Seller. Purchaser shall replace any utility deposits
or utility bonds outstanding with regard to the
utilities serving the Property.
(iv) Any Assumed Contracts, including prepaid items or
licenses to the extent they are assumable (equipment
leases, maintenance contracts, etc.).
(v) The agreements of Seller and Purchaser set forth in
this section 3(D) shall survive the Closing and shall
not be merged in the Deed.
E. The parties agree that closing costs shall be paid as listed below.
Each party shall be responsible for payment of its respective
attorney's fees.
PURCHASER SELLER
--------- ------
Recording of Deed Commission payable to any Seller's
broker
Costs of First Mortgage, if any including Documentary Stamps on Deed
intangible tax, documentary stamps & Pending Special Assessment Liens, if
recording fees any
Commission payable to any Purchaser's Title Insurance Commitment and Title
broker Insurance Policy with standard
endorsements and mortgagee policy if
desired by Purchaser Recording of
any mortgage or lien satisfactions
Impact fees, if any
4. Contingencies. Purchaser's obligation to purchase the Property is
-------------
contingent upon the following:
A. TITLE EVIDENCE. Within ten (10) days after the date Seller receives
--------------
the Option Exercise Notice, Seller shall deliver to Purchaser a
current ALTA owner's policy commitment for title insurance, together
with copies of all exception documents referred to therein. The title
commitment and owner's policy on ALTA Standard Form 1970 B Revised, to
be issued pursuant thereto, shall be paid for by Seller, shall be
issued at the minimum promulgated rate, and shall be in an amount
equal to the Purchase Price.
Purchaser shall have five (5) business days after receipt of the
survey described in Section 5 hereof, the title commitment, and copies
of all exception documents to give written notice to Seller of any
objections by Purchaser to the state of title
<PAGE>
(including any matters shown on the survey which are reasonably
unacceptable to Purchaser). Failure of Purchaser to deliver a written
notice of disapproval of the status of title to Seller within said
five (5) business day period shall be conclusive evidence that
Purchaser has approved each and every matter contained in the title
commitment and shown on the survey, and that Purchaser will accept
title in that condition.
B. PERMITTED EXCEPTIONS. Seller shall convey and transfer to Purchaser at
--------------------
Closing good and marketable fee simple title to the Property, free and
clear of all liens and encumbrances, except those that can be and are
discharged by Seller at or before Closing, and the following,
hereinafter collectively referred to as the "Permitted Encumbrances."
----------------------
(i) Real Property Taxes for the year in which the sale and
purchase is closed, which shall be prorated as
provided for elsewhere herein;
(ii) Applicable zoning and other regulatory laws and
ordinances;
(iii) Rights of tenants under disclosed unrecorded rental
agreements;
(iv) Easements for provision of existing utilities services
and all other easements which benefit the Property and
that are approved by Purchaser; and
(v) The title exceptions listed in Schedule B of the title
commitment which Purchaser approves, or is deemed to
have approved, pursuant to this Paragraph 4.
C. TITLE DEFECTS. After due notice of any title defect, Seller shall have
-------------
the obligation to cure any defects that can, with reasonable
diligence, be cured on or before the Closing Date. As to any other
defects, Seller shall have the option to cure such defects within
thirty (30) days after written notice. Purchaser shall be deemed to
have consented to such cure if Purchaser fails to respond within ten
(10) days after written notice from Seller of Seller's intent to cure
such "other" defects (and, if necessary, the Closing shall be delayed
for that period). Should Seller either elect not to cure, or if
Purchaser does not give its consent to a cure by Seller, Purchaser
shall have the option to:
(i) withdraw the Option Exercise Notice and declare the
Option Agreement null and void and of no further force
and effect by written notice to Seller, whereupon
neither Seller nor Purchaser shall have any further
obligations under the Option Agreement or these terms
and conditions, or
<PAGE>
(ii) Proceed under the Option Agreement and these terms and
conditions and accept title to the Real Property
subject to such defects, in which case the Closing
shall take place on the later of the date set for
Closing as herein provided or on a date mutually agreed
upon by Seller and Purchaser, without reduction in the
Purchase Price.
5. SURVEY. Purchaser may, at its expense, within twenty (20) days after the
------
date upon which Seller receives the Option Notice Exercise, update any
prior survey or obtain a new survey of the Real Property in a form
acceptable to the title insurer. The legal description of the Real Property
is described in Exhibit "A" to the Option Agreement. Seller shall furnish
-----------
Purchaser with all surveys in its possession, if any. If the survey
discloses lack of access, a violation of deed restrictions, zoning
regulations or covenants or these terms and conditions, easements which are
not approved by Purchaser, that any improvements are not entirely on the
Property, or other reasonable survey objections, the same shall be treated
as a title defect and treated as provided in Paragraph 4(C). Purchaser
shall have five (5) business days from receipt of said survey to deliver a
written notice of disapproval of the status of title based upon Purchaser's
survey. Failure of Purchaser to deliver a written notice of disapproval
based upon Purchaser's survey within said five (5) business day period
shall be conclusive evidence that Purchaser has approved each and every
matter contained in Purchaser's survey and that Purchaser will accept title
in that condition.
6. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. Purchaser's obligation to
---------------------------------------------
close this transaction is expressly conditioned upon the following, which
if not satisfied or waived by Purchaser on or before the Closing Date,
shall permit Purchaser to withdraw the Option Exercise Notice and declare
the Option Agreement null and void and of no further force and effect by
written notice to Seller; whereupon neither Seller nor Purchaser shall have
any further obligations under the Option Agreement or these terms and
conditions.
A. Seller shall have performed and complied with all of the covenants and
agreements contained in the Option Agreement and/or these terms and
conditions which are to be performed prior to the Closing Date;
B. Seller shall have delivered the "marked down" commitment from the
title underwriter updated through the Closing Date in the full amount
of the Purchase Price subject only to the Permitted Exceptions and
deleting the "gap" exception from Schedule B-2;
C. The Property shall not have been materially affected by an moratorium,
legislative or regulatory change, or any flood, accident, condemnation
or other material adverse event; and
D. All representations and warranties of Seller as set forth in Paragraph
7 next below shall be substantially true and correct as of the Closing
Date.
<PAGE>
Purchaser may at any time or times before Closing waive any of the
foregoing conditions but only in writing signed by Purchaser and delivered to
Seller. In the event any of the conditions are not waived by Purchaser prior to
the Closing Date, Purchaser may withdraw the Option Exercise Notice and declare
the Option Agreement null and void and of no further force and effect by written
notice to Seller, and thereafter neither Purchaser nor Seller shall have any
further liabilities or obligations under the Option Agreement or these terms and
conditions
7. WARRANTIES, REPRESENTATIONS AND COVENANTS. The parties agree that Seller
-----------------------------------------
has made no representations or warranties to Purchaser of any kind
regarding the financial or business status of the Property, other than as
set forth in the Option Agreement and these terms and conditions. Seller
hereby represents and warrants to, and covenants with, Purchaser that:
A. Seller has good, marketable and insurable title to the Real Property,
and the Real Property is free and clear of all liens, encumbrances,
restrictions, security interests, covenants, conditions and other
matters in any way affecting title to the Real Property, other than
the Permitted Exceptions, save for the Loan (which will be satisfied
at Closing as payment of the Purchase Price).
B. Seller has no knowledge of any declarations, covenants or restrictions
of record which should prevent the continued use of the Property as a
381-space mobile home park, all of which are fully developed with full
utility services and fully rentable.
C. There are no pending or threatened condemnation or similar proceeding
affecting the Real Property, or any part thereof.
D. Except as otherwise disclosed to Purchaser in writing, to Seller's
knowledge, there are no action, suits or other legal or administrative
proceedings, including bankruptcy proceedings, pending or threatened,
against or involving Seller or the Property which could affect the
consummation of the transactions contemplated hereby.
E. No goods or services have been contracted for or furnished to the Real
Property which will give rise to any mechanic's liens or other liens
affecting all or any part of the Real Property, except for ongoing
maintenance expense, which will be paid in full prior to or at
Closing. Seller may contract for repairs or services which could
result in a lien but Seller shall not allow any such liens to attach
to the Real Property and shall execute an appropriate affidavit of no
liens at Closing upon which Purchaser and the Title Insurer may rely.
F. That except as shown on any surveys obtained pursuant to Paragraph 5,
there are no encroachments on the Property and the Improvements which
are constructed on the Property do not encroach upon the land of
others.
G. Seller has entered into no covenants, conditions, easements,
restrictions, agreements or encumbrances which would prohibit the
operation of a mobile home park on the Real Property.
<PAGE>
H. There are no rental agreements which affect the Real Property except
as set forth in the rent roll attached as Appendix "C" (the "Rent
------------ ----
Roll") which has been provided by Seller. There are no rental
----
agreements in excess of twelve (12) months and no rental agreements
affording discounted rents except as set forth in the Rent Roll. The
information contained therein is true and correct as of the Effective
Date; no rental agents, brokers or finders have any rights with regard
to such rental agreements, and there are no commissions payable in
connection therewith; no tenant has an option to purchase any part of
the Property; and Seller is the landlord under each such rental
agreement and has the right to assign same to Purchaser.
I. To the best of Seller's knowledge, Seller is in compliance with
Chapter 723, Florida Statutes, and all regulations promulgated
thereunder.
J. Water and sewer services are provided by the City of Palm Beach
Gardens, Florida ("City"), and all costs of design, construction and
----
permitting of water and sewer facilities and all connection fees have
been paid. Seller is current in its obligation to the City for water
and sewer services.
K. The Tangible Personal Property is in good working condition, and at
the time of Closing will be in good working order; and the Tangible
Personal Property is free and clear of all liens and encumbrances,
except as otherwise provided in these terms and conditions.
L. Seller has the right to assign the name by which the Property is
commonly known and to use that name in the operation of the Property.
Seller represents to Purchaser that Seller has received no notice
objecting to the use of this name for the Property, but Seller
otherwise makes no warranty or representation as to Purchaser's
ability to use or to continue to use this name.
M. To the best of Seller's knowledge, the information contained in the
Financial Statements identified in Appendix "D" attached hereto is
true and correct in all material respects. Seller has not been
notified of any material increases in expenses that are not reflected
in such statements; for the financial statements reflecting the fiscal
year 1995-1996, no part of the net operating income shown thereon is
attributable to the approximately 89 unrented mobile home spaces on
the Property.
N. To the best of Seller's knowledge, there are no existing or continuing
violations of any law, ordinance, rule, order, regulation, code or
requirement, including any requirement contained in any hazard
insurance policy covering the Property or any part thereof or of any
board of fire underwriters or other body exercising a similar
function, which are applicable to the Property or to any part thereof
or which are applicable to the use or manner of use, occupancy,
possession or operation of the Property, except as disclosed by those
documents provided by Seller pursuant to Paragraph 3 hereof.
<PAGE>
O. To the best of Seller's knowledge, Seller has obtained and kept in
good standing all governmental permits, licenses and approvals
necessary for the operation of the Property, including, as applicable,
all health permits, Department of Environmental Protection permits and
HRS permits, and Seller has not received notice of any material
violations thereunder.
P. To the best of Seller's knowledge and except as disclosed by documents
delivered by Seller hereunder, the use of the Property is consistent
with the zoning uses authorized and permitted by the ordinances of the
City and County where the Property is located; and, except those
disclosed to Purchaser pursuant to Paragraph 3 hereof there are no
unpaid assessments, impact fees or other development type charges
pertaining to the Property except those disclosed to Purchaser
pursuant to Paragraph 3 hereof.
Q. Seller has not entered into any commitments or agreements with any
governmental authorities or agencies affecting the Property excepting
those disclosed by Purchaser pursuant to Paragraph 3 hereof, and
Seller has received no notices from any such governmental agencies and
has no independent knowledge of uncured violations at the Property of
building, fire, air pollution or zoning codes, rules, ordinances or
regulations, environmental and hazardous substances laws, or other
rules, ordinances or regulations relating to the Property.
R. Neither the execution and delivery of the Option Agreement by Seller,
nor the consummation by Seller of the transactions contemplated hereby
will (i) require Seller to file or register with, notify, or obtain
any permit, authorization, consent, or approval of, any governmental
or regulatory authority; (ii) conflict with or breach any provision of
the Articles of Incorporation, Bylaws or other corporate documents of
Seller; (iii) violate or breach any provision of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract,
agreement or other instrument, commitment or obligation to which
Seller is a party, or by which Seller, the Property or any of Seller's
material assets may be bound; or (iv) violate any order, writ,
injunction, decree, judgment, statute, law or ruling of any court or
governmental authority applicable to Seller, the Property or any of
Seller's material assets.
S. To the best of Seller's knowledge, neither these terms and conditions
nor any Appendix nor any written statement or transaction document
furnished or to be furnished by Seller to Purchaser in connection with
the transactions contemplated by these terms and conditions contain or
will contain any untrue statement of material fact or omits or will
omit any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
T. Prior to the Closing, Seller will only enter into customary, twelve
(12) month rental agreements. Seller will not enter into any amendment
to or modification of any of the rental agreements prior to the
Closing which will reduce, forgive or
<PAGE>
postpone any rents or which would otherwise materially affect the
value of the Property, without Purchaser's consent, which will not be
unreasonably withheld. There are no commissions or other fees payable
to any person, entity or agent on the rentals collected or to be
collected under the rental agreements save as agreed with Purchaser in
writing.
U. Except as disclosed to Purchaser in writing, no person, firm,
corporation or other legal entity whatsoever, other than Purchaser,
has any right, contract or option whatsoever to acquire the Property
or any portion or portions thereof or any interest or interests
therein, except for the rights of the tenants of the Property under
Florida Statutes Section 723.071.
----------------
V. Seller specifically represents, covenants and warrants that, to the
best of its actual knowledge, the Property and the use and operation
thereof will comply with all state and Federal environmental laws,
rules and regulations, including, without limitation, the Federal
Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability Act of 1980 and all
amendments and supplements thereof and shall continue to comply
therewith at all times. Specifically, and without limiting the
generality of the of the foregoing, Seller represents, covenants and
warrants that Seller has not used the Property and that to the best of
its actual knowledge, the Property is not now being used for the
handling, storage, transportation, or disposal of hazardous or toxic
materials, nor is Seller aware of any hazardous substances used,
stored or handled on land adjacent to the Property. Further, Seller
represents and warrants that Seller has never been cited or notified
of any violation of any state or federal environmental law, rule or
regulations. In the event that the representations and warranties
contained herein prove to be incorrect, Seller agrees to indemnify,
defend, and hold Purchaser harmless from and against any loss to
Purchaser, for which Seller is directly liable, including, without
limitation, reasonable attorneys' fees and costs of site investigation
and cleanup, incurred by Purchaser, but excluding consequential
damages, as a result of Seller's handling, storage, transportation, or
disposal of hazardous or toxic materials during Seller's ownership of
the Property. This provisions shall survive the Closing of the
purchase and shall not be merged in the deed.
W. The Property contains and is zoned, licensed and permitted to contain
and operate a mobile home park with 381 rentable mobile home spaces,
of which all 381 are fully rentable with full utility services. The
Property currently has 292 rental spaces rented and 89 rental spaces
unrented.
Seller's foregoing representations and warranties shall survive the Closing and
shall not be merged in the deed for a period of one (1) year from the Closing.
8. RISK OF LOSS.
------------
A. Condemnation. If, after the Option Exercise Notice has been given,
------------
but prior to Closing, action is initiated to take any of the Property
by eminent domain
<PAGE>
proceedings or by deed in lieu thereof that exceeds five percent (5%)
of the Real Property, Purchaser may either (a) withdraw the Option
Exercise Notice and declare the Option Agreement null and void and of
no further force and effect by written notice to Seller; whereupon
neither Seller nor Purchaser shall have any further obligations under
the Option Agreement or these terms and conditions, or (b) consummate
the Closing, in which latter event the award of the condemning
authority shall be assigned to Purchaser at Closing. Notwithstanding
the foregoing, if Purchaser exercises the Option and the taking of any
of the Property is less than 5% of the Real Property, the award or the
rights to the award of the condemning authority shall be assigned to
Purchaser at Closing.
9. CASUALTY. Seller assumes all risks and liability for damage to or injury
--------
occurring to the Property by fire, storm, accident, or any other casualty
or cause until the Closing has been consummated. If, after the Option
Exercise Notice has been given but prior to Closing, the Property, or any
part thereof, suffers any damage in excess of $50,000.00 from fire or other
casualty which Seller, at its sole option, does not repair, Purchaser may
either: (a) withdraw the Option Exercise Notice and declare the Option
Agreement null and void and of no further force and effect by written
notice to Seller; whereupon neither Seller nor Purchaser shall have any
further obligations under the Option Agreement or these terms and
conditions, or (b) consummate the Closing, in which latter event the
proceeds of any insurance not exceeding the Purchase Price and covering
such damage shall be assigned to Purchaser at the Closing. In such event,
Seller shall pay to Purchaser at Closing an amount equal to any deductible
under said insurance coverage.
10. POSSESSION. Seller agrees to deliver possession of the Property to
----------
Purchaser at Closing, subject only to the rights of tenants-in-possession
under disclosed rental agreements, Assumed Contracts and the Permitted
Exceptions.
11. DEFAULT AND LIQUIDATED DAMAGES. In the event of a default by either
------------------------------
Purchaser or Seller after Purchaser has exercised the Option, the parties
agree to the following:
A. In the event of a default by Seller, Purchaser may pursue any remedies
available as a result of Seller's breach, including specific
performance.
B. In the event of a default by Purchaser, Seller may pursue any remedies
available as a result of Purchaser's breach, including specific
performance.
The provisions of this Paragraph 11 shall survive Closing and shall not be
merged in the deed.
12. REAL ESTATE COMMISSIONS.Except as stated in this section, neither Seller
-----------------------
nor Purchaser has contacted any real-estate broker, finder, or similar
person in connection with the transaction contemplated hereby and neither
party is obligated to pay any brokerage fee or commission in connection
with this sale.
To the knowledge of Seller and of Purchaser, no Acquisition Fees (as
hereinafter defined) have been paid or are due and owing to any person or
entity by Seller or Purchaser. As used herein, "Acquisition Fees" shall
mean all fees paid to any person or entity in connection with the selection
and purchase of the Property, including real estate
<PAGE>
commissions, selection fees, nonrecurring management and startup fees,
conversion fees, development fees or any other fee of similar nature.
Seller and Purchaser each hereby agree to indemnify and hold harmless the
other from and against any and all claims for Acquisition Fees or similar
charges with respect to this transaction, arising by, through or under the
indemnifying party, and each further agrees to indemnify and hold harmless
the other from any loss or damage resulting from any inaccuracy in the
representations contained in this section. This indemnification agreement
of the parties shall survive the Closing.
13. LIABILITY AND INDEMNIFICATION
-----------------------------
A. Purchaser does not and shall not assume any liability for any claims
arising out of any occurrence prior to the Closing Date with respect
to the Property.
B. From and after the Closing Date, Seller agrees to indemnify and hold
harmless Purchaser, and Purchaser's successors and assigns, from and
against any and all claims, penalties, damages, liabilities, actions,
causes of action, costs and expenses (including attorney's fees),
arising out of, as a result of or as a consequence of: (i) any
property damage or injuries to persons, including death, caused by any
occurrence at the Property or in connection with the Seller's use,
possession, operation, repair and maintenance of the Property prior to
the Closing Date; and (ii) any breach by Seller of any of its
representations, warranties, or obligations set forth herein or in any
other document or instrument delivered by Seller in connection with
the consummation of the transactions contemplated herein. In such
event, Seller shall be promptly notified by Purchaser and shall have
the right and duty to defend such claims against Purchaser.
C. From and after the Closing Date, Purchaser agrees to indemnify and
hold harmless Seller, and Seller's successors and assigns, from and
against any and all claims, penalties, damages, liabilities, actions,
causes of action, costs and expenses (including attorneys' fees),
arising out of, or as a consequence of any property damage or injuries
to persons, including death, caused by any occurrence at the Property
after the Closing Date in connection with Purchaser's use, possession,
operation, repair and maintenance of the Property after the Closing
Date. In such event, Purchaser shall be promptly notified by Seller
and shall have the right and duty to defend such claims brought
against Seller.
The provisions of this Paragraph 13 shall survive Closing and shall not be
merged into the deed.
14. THIRD PARTIES. Neither the Option Agreement nor these terms and conditions
-------------
shall be deemed to confer in favor of any third parties any rights
whatsoever as third-party beneficiaries, the parties hereto intending by
the provisions hereof to confer no such benefits or status.
15. PROVISIONS TO SURVIVE CLOSING. Any provision which by its nature or effect
-----------------------------
is required to be performed, or which may be performed, or which may be
breached after delivery of the deed, shall survive delivery of said deed
except as otherwise expressly provided by the Option Agreement or these
terms and conditions. The time limitations applicable to
<PAGE>
Seller's representations and warranties set forth in Paragraph 7 above,
shall not be applicable to other survival provisions set forth in the
Option Agreement or these terms and conditions, nor to those warranties
expressly set forth in the Warranty Deed, Bill of Sale or any other
conveyancing document executed and delivered by Seller to Purchaser.
16. RADON DISCLOSURE. Radon is a naturally occurring radioactive gas that, when
----------------
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon
that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtaining from your County Public Health Unit.
17. PURCHASER'S COVENANTS. The parties hereby agree that, if Purchaser
---------------------
exercises the Option and the Closing occurs, then:
A. MANAGEMENT AND OPERATION OF PROPERTY. Unless and until otherwise
------------------------------------
determined by Purchaser, Purchaser or its affiliate shall act as the
property manager of the Property. In addition, subject to applicable
law, unless and until otherwise determined by Purchaser, Purchaser or
its affiliate as the exclusive sales/resales and marketing agent at
the Property (provided, however, that each owner (a "Homeowner") of a
---------
mobile or manufactured home (a "Home") located on a site ("Homesite")
---- --------
on the Property shall have the right to sell such Home independent of
Purchaser), and shall have the exclusive right to develop and market
additional Homesites within the Property.
B. USE OF PROPERTY. Purchaser shall (i) not convert the use of the
---------------
Property to any use other than a mobile home park or manufactured home
community use during the period of ten (10) years commencing on the
Closing Date (the "Restriction Period") (subject to causes beyond
------------------
Purchaser's reasonable control, including, without limitation, zoning
changes, condemnation and casualty), (ii) spend at least Four Hundred
Thousand Dollars ($400,000) (which sum shall be funded solely by
Purchaser or its affiliate) within a reasonable time after the Closing
Date on capital improvements to the Property, including, without
limitation, installation of a gate at the front entrance, improvements
to the clubhouse building and street repairs, (iii) make a one-time
contribution of One Hundred Thousand Dollars ($100,000) (which sum
shall be funded solely by Purchaser or its affiliate) to the MPI Park
Purchase Account on the Closing Date, (iv) limit annual base rent
increases at the Property during the Restriction Period to the greater
of (A) five percent (5%) or (B) the corresponding annual percentage
increase in the "Consumer Price Index for All Urban Consumers, All
Items" prepared by the Bureau of Labor Statistics of the United States
Department of Labor, and (v) to limit additional rent pass-throughs to
(A) ad valorem taxes, (B) non-ad valorem assessments and (C) costs
incurred by Purchaser or its affiliate to comply with governmental
directives.
C. SUBLEASING. Homeowners may continue to sublease their Homes
----------
substantially in accordance with current Property practice; provided,
--------
however, that each Homeowner shall remain responsible for complying
-------
with such Homeowner's
<PAGE>
rental agreement, for maintaining such Homeowner's Home in compliance
with the standards set forth in the Property's rules and regulations
(the "Rules and Regulations"), and for ensuring that such Homeowner's
sublessee complies with the Rules and Regulations.
D. MAINTENANCE OF HOMES. Each Homeowner shall be responsible for
--------------------
maintaining such Homeowner's Home in good condition and repair and in
compliance with the standards set forth in the Rules and Regulations.
If any Homeowner fails to properly maintain such Homeowner's Home,
Purchaser shall give such Homeowner written notice of such failure. If
such Homeowner does not cure such failure within thirty (30) days (or
if such failure cannot reasonably be cured within such thirty (30) day
period, if such Homeowner does not commence the curing of such failure
within such thirty (30) day period and diligently prosecute such
curing to completion within a reasonable time thereafter), Purchaser
may require that such Homeowner's Home be moved to another Homesite
designated by Purchaser or removed from the Property.
E. UPGRADE POLICY. Upon the sale or other transfer of a Home not meeting
--------------
then-current Property standards, or upon a change in the persons
occupying such a Home (other than changes involving related parties),
Purchaser may require that the Home be upgraded to then-current
Property standards, moved to another Homesite designated by Purchaser
or removed from the Property. If the new owner or proposed occupant of
the Home acquires the Home before any such required upgrades are
completed, such new owner or proposed occupant shall not be given a
rental agreement unless and until they complete the required upgrades
within six (6) months after they acquire the Home.
The provisions of this Section 17 shall survive the Closing and shall not be
merged in the deed.
18. APPENDICES. The following appendices are attached to and are incorporated
----------
into these terms and conditions:
A. Appendix "A"Schedule of Tangible Personal Property.
-----------
B. Appendix "B"Assumed Contracts.
-----------
C. Appendix "C"Rent Roll
-----------
D. Appendix "D"Financial statements
-----------
<PAGE>
Appendix A
----------
Schedule of Tangible Personal Property
--------------------------------------
See attached
<PAGE>
EXHIBIT "B"; ITEM 1.
TANGIBLE PERSONAL PROPERTY INCLUDED
INCLUDED IN THE SALE OF THE MEADOWS MOBILE HOME PARK IS ALL OF THE TANGIBLE
PERSONAL PROPERTY LOCATED UPON THE PREMISES AT 2555 P.G.A. BOULEVARD, PALM BEACH
GARDENS, FLORIDA 33410
INCLUDING:
1. 1994 CHEVROLET PICK UP TRUCK VIN 1GCDC1477RZ274568
2. TWO (2) JOHN DEER LAWN TRACTORS
3. DIXON LAWN TRACTOR
4. MISCELLANEOUS POWER AND HAND LAWN EQUIPMENT
5. TOOLS AND SPARES IN GARAGE
6. 4000 WATT GENERAC GENERATOR
7. MAIN OFFICE FURNITURE
8. MAIN OFFICE COMPUTER
9. MAIN OFFICE MOBILE HOME WITH ATTACHED GARAGE VIN T3228A &
T3228B
10. OLD OFFICE MOBILE HOME
11. CLUB HOUSE FURNITURE
12. CLUB HOUSE TV SET
13. CLUB HOUSE KITCHEN APPLIANCES
14. CLUB HOUSE BILLIARD TABLE AND ACCESSORIES
EXCLUDING:
1. COMPUTER AND RELATED EQUIPMENT IN MANAGER'S OFFICE
2. MANAGER'S FURNITURE (DESK, CHAIR, CREDENZA, TABLE, AND 2 CHAIRS)
3. TWO (2) FOUR DRAWER INSULATED LEGAL FILE CABINETS
4. PERSONAL PROPERTY OF MANAGER STORED IN OFFICE, GARAGE, OR "OLD
OFFICE TRAILER"
5. BOOKS AND RECORDS OF ALL ENTITIES (INCLUDING BUT NOT LIMITED TO: H.G.G.S.
ASSOCIATES; DAVID HENDEL ASSOCIATES, INC.; DAVID HENDEL LTD.), AND FILE
CABINETS STORING THEM
6. SIX MOBILE HOMES LOCATED ON LOTS 140A, 332, 335, 401, 403, & 434
7. ALL BANK ACCOUNTS CHECKS AND RECORDS OF H.G.G.S. ASSOCIATES
<PAGE>
Appendix B
----------
Assumed Contracts
-----------------
Water use permit compliance monitoring provided by ViroGroup without a current
written agreement.
<PAGE>
Appendix C
----------
Rent Roll
---------
See attached
<PAGE>
Appendix D
----------
Financial Statements
--------------------
Not attached by agreement
<PAGE>
AMENDMENT TO OPTION AGREEMENT
-----------------------------
THIS AMENDMENT TO OPTION AGREEMENT (this "Amendment"), made as of this 30th
---------
day of March, 1998, by and between MEADOWS PRESERVATION, INC., a Florida
corporation ("Seller"), and BLUE RIBBON COMMUNITIES LIMITED PARTNERSHIP, a
------
Delaware limited partnership ("Purchaser").
---------
WITNESSETH:
WHEREAS, the parties entered into that certain Option Agreement dated as of
December 18, 1997 (the "Option Agreement"), whereby Seller granted to Purchaser,
----------------
on the terms and conditions set forth in the Option Agreement, the exclusive
option to purchase (the "Option") all that parcel of real estate located at the
------
northwest corner of PGA Boulevard and Prosperity Farms Road in Palm Beach
County, Florida, and commonly known as "The Meadows Mobile Home Park", which is
more particularly described on Exhibit A attached hereto (the "Land"), together
--------- ----
with all improvements thereon (with the Land, the "Property");
--------
WHEREAS, pursuant to the Option Agreement, the Option may be exercised at
any time during the period commencing on March 18, 1998 and ending at 5:30 p.m.
on April 17, 1998.
WHEREAS, Seller and Purchaser have agreed to extend the period during which
the Option may be exercised by Purchaser, and to make certain other amendments
to the Option Agreement, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, made one to another, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Section 3(a) of the Option Agreement is hereby deleted in its entirety
------------
and replaced with the following:
"3(a) The Option may be exercised by notice in writing from Purchaser
to Seller at any time during the period commencing on August 1, 1998
and ending at 5:30 p.m. on August 31, 1998."
2. The date "March 18, 1998" shall be deleted wherever it appears in
Sections 3(b) and 4 and replaced with the date "August 1, 1998".
- -------------------
3. Except as specifically modified by this Amendment, all of the remaining
terms of the Option Agreement shall continue in full force and effect.
4. This Amendment shall be construed and enforced in accordance with the
laws of the State of Florida.
<PAGE>
5. This Amendment may be executed in two or more counterpart copies, each
of which counterparts shall have the same force and effect as if the parties
hereto had executed a single copy of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above set forth.
SELLER:
BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
WITNESS:
By: MHC-QRS Blue Ribbon Communities, Inc.,
/s/ a Delaware corporation, General Partner
- --------------------
/s/ By: /s/ Ellen Kelleher
- --------------------
Name: Ellen Kelleher
Title: Executive Vice President/General Counsel
SELLER:
WITNESS: MEADOWS PRESERVATION, INC., a Florida
corporation
/S/ BY: /S/ RICHARD MCCANN
- --------------------
NAME: RICHARD MCCANN
TITLE: PRESIDENT
/S/
- --------------------
<PAGE>
SECOND AMENDMENT TO OPTION AGREEMENT
------------------------------------
THIS SECOND AMENDMENT TO OPTION AGREEMENT (this "Amendment"), made
---------
as of this 19th day of August, 1998, by and between MEADOWS PRESERVATION, INC.,
a Florida corporation ("Seller"), and BLUE RIBBON COMMUNITIES LIMITED
------
PARTNERSHIP, a Delaware limited partnership ("Purchaser").
---------
WITNESSETH:
WHEREAS, Meadows Preservation, Inc., a Florida corporation ("MPI-1"),
-----
and Purchaser entered into that certain Option Agreement dated as of December
18, 1997, as amended by that certain Amendment to Option Agreement dated as of
March 30, 1998 (collectively, the "Option Agreement"), whereby Seller granted to
----------------
MPI-1, on the terms and conditions set forth in the Option Agreement, the
exclusive option to purchase (the "Option") all that parcel of real estate
------
located at the northwest corner of PGA Boulevard and Prosperity Farms Road in
Palm Beach County, Florida, and commonly known as "The Meadows Mobile Home
Park", which is more particularly described on Exhibit A attached hereto,
---------
together with all improvements thereon;
WHEREAS, pursuant to the Option Agreement, the Option may be exercised
at any time during the period commencing on August 1, 1998 and ending at 5:30
p.m. on August 31, 1998; and
WHEREAS, Seller, the successor by mergers to MPI-1, and Purchaser have
agreed to extend the period during which the Option may be exercised by
Purchaser, to modify the circumstances in which the Option may be exercised, and
to make certain other amendments to the Option Agreement, as hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, made one to another, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. The Option Agreement is hereby amended as follows:
(a) The portion of the second recital of the Option Agreement
commencing with the words ", conditioned upon" in the third line and continuing
through the words "an agreed date" in the fifth and sixth lines is deleted in
its entirety.
(b) The third recital of the Option Agreement is hereby deleted
in its entirety and replaced with the following new recital:
"WHEREAS, Purchaser has agreed to provide, or
cause to be provided, interim financing for
Seller's acquisition of the Property, conditioned
upon, among other things, Seller granting to
Purchaser the option to purchase the Property
<PAGE>
set forth in this Option Agreement if Seller fails
to enter into the aforesaid joint venture with
Purchaser on the terms and conditions hereinafter
set forth."
(c) Section 3(a) of the Option Agreement is
------------
deleted in its entirety and replaced with the following new
Section 3(a):
------------
"3(a) The Option may be exercised by notice in
writing from Purchaser to Seller at any time
during the period commencing on December 1, 1998
and ending at 5:30 p.m. on December 31, 1998."
(d) The portion of Section 3(b) of the Option
------------
Agreement commencing with the date "March 18, 1998 " on
the third line and continuing through the words and
numbers "reasonably acceptable to Purchaser, and (iii)"
on the eleventh line is hereby deleted and replaced
with "December 1, 1998,".
(e) The date "August 1, 1998" on the second line of Section 4 of
---------
the Option Agreement is hereby deleted and replaced with the date "December 1,
1998".
(f) Exhibit A to the Option Agreement is hereby replaced with
Exhibit A attached hereto.
2. Except as specifically modified by this Amendment, all of the
remaining terms of the Option Agreement shall continue in full force and effect.
3. This Amendment shall be construed and enforced in accordance with
the laws of the State of Florida.
4. This Amendment may be executed in two or more counterpart copies,
each of which counterparts shall have the same force and effect as if the
parties hereto had executed a single copy of this Amendment.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above set forth.
SELLER:
BLUE RIBBON COMMUNITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
WITNESS:
By: MHC-QRS Blue Ribbon Communities, Inc.,
/s/_____________________ a Delaware corporation, General Partner
/s/_____________________ By: /s/ David W. Fell
Name: David W. Fell
Title: Vice President
SELLER:
WITNESS: MEADOWS PRESERVATION, INC., a florida
corporation
/s/______________________ By: /s/ Mary Bachiochi
Name: Mary Bachiochi
Title: Treasurer
/s/______________________
-3-
<PAGE>
EXHIBIT 6.12
MEMORANDUM OF OPTION AGREEMENT
------------------------------
THIS MEMORANDUM OF OPTION AGREEMENT (this "Memorandum") is made and
entered into as of this 18 day of December, 1997 by and between MEADOWS
PRESERVATION, INC., a Florida corporation ("Optionor") and BLUE RIBBON
COMMUNITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("Optionee").
W I T N E S S E T H:
-------------------
WHEREAS, Optionor and Optionee have heretofore entered into that
certain Option Agreement of even date herewith (the "Option Agreement"), with
respect to certain real property (together, with all improvements thereon, the
"Property") located at the northwest corner of PGA Boulevard and Prosperity
Farms Road in Palm Beach County, Florida, and commonly known as "The Meadows
Mobile Home Park", which is more particularly described on Exhibit A attached
---------
hereto; and
WHEREAS, Optionor and Optionee have agreed to enter into this
Memorandum for purposes of giving notice of the Option Agreement.
NOW, THEREFORE, in consideration of the covenants hereinafter
contained and for other good and valuable consideration and in consideration of
the covenants and agreements contained in the Option Agreement, Optionor and
Optionee do hereby covenant and agree as follows:
1. Option. Pursuant to the Option Agreement, Optionor has granted to
------
Optionee and Optionee has accepted from Optionor the irrevocable option to
purchase the Property from Optionor in accordance with the terms and conditions
of the Option Agreement (the "Option"). Optionee may elect to exercise the
Option at any time during the period commencing March 18, 1998 and ending at
5:30 p.m. on April 17, 1998; provided that the Option will expire and become
--------
ineffective if, by March 18, 1998, Optionor shall have raised an agreed sum from
the owners of mobile or manufactured homes located on the Property, given notice
of such event to Optionee and formed a partnership with Optionee for the
ownership and operation for the Property, as more fully set forth in the Option
Agreement. The Option may be
2
<PAGE>
exercised by Optionee by written notice to Optionor.
2. Transfer of Option. Optionee has the absolute right and authority
------------------
to assign its rights under the Option Agreement to its Affiliate, as defined in
the Option Agreement.
3. Notice. The sole purpose of this Memorandum is to give notice of
------
the Option Agreement, which is incorporated herein by this reference.
4. Miscellaneous. The covenants, conditions and agreements contained
-------------
in this Memorandum shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
5. Counterparts. This Memorandum may be executed in two or more
------------
counterpart copies, each of which counterparts shall have the same force and
effect as if both parties hereto had executed a single copy of this Memorandum.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum
as of the day and year first above written.
WITNESS: OPTIONEE:
/s/ BLUE RIBBON COMMUNITIES LIMITED
-------------------
PARTNERSHIP, a Delaware limited
partnership
WITNESS:
/s/ By: MHC-QRS Blue Ribbon Communities,
-------------------
Inc., a Delaware general
partnership, General Partner
By: /s/ Howard Walker
-------------------------
Name: Howard Walker
Title: President
WITNESS: OPTIONEE:
/s/
- --------------------
MEADOWS PRESERVATION, INC., a Florida
corporation
WITNESS:
By: /s/ Theresa Tyrrell
/s/ -----------------------
- --------------------
Name: Theresa Tyrrell
Title: President
4
<PAGE>
_________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this ___ day of
December, 1997, by ____________ as President of MHC-QRS Blue Ribbon Communities,
Inc., General Partner of Blue Ribbon Communities Limited Partnership, a Florida
limited partnership. He/She is personally known to me or has produced driver's
license as identification.
/s/
-------------------------
Notary Public
Name of Notary Printed:
_________________________
)
STATE OF FLORIDA ) ss:
)
LEON COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this 18 day of December,
1997, by _________________ as President of Meadows Preservation, Inc., a
Florida. He/She is personally known to me or has produced driver's license as
identification.
/s/
----------------------------
Notary Public
Name of Notary Printed:
5
<PAGE>
AMENDED MEMORANDUM OF OPTION AGREEMENT
--------------------------------------
THIS AMENDED MEMORANDUM OF OPTION AGREEMENT (this "Amended Memorandum") is
------------------
made and entered into as of this 30th day of March, 1998 by and between MEADOWS
PRESERVATION, INC., a Florida corporation ("Optionor"), and BLUE RIBBON
--------
COMMUNITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("Optionee").
--------
W I T N E S S E T H:
-------------------
WHEREAS, Optionor and Optionee entered into that certain Option Agreement
dated December 18, 1997 (the "Option Agreement") with respect to certain real
----------------
property (together with all improvements thereon, the "Property") located at the
--------
northwest corner of PGA Boulevard and Prosperity Farms Road in Palm Beach
County, Florida, and commonly known as "The Meadows Mobile Home Park", which is
more particularly described on Exhibit A attached hereto;
---------
WHEREAS, a Memorandum of Option Agreement dated as of December 18, 1997 was
recorded on December 19, 1997 in Official Records Book 10145, Page 1599 of the
Public Records of Palm Beach County, Florida;
WHEREAS, Optionor and Optionee have entered into that certain Amendment to
Option Agreement of even date herewith (the "Amendment"); and
---------
WHEREAS, Optionor and Optionee have agreed to enter into this Amended
Memorandum for purposes of giving notice of the Option Agreement, as amended by
the Amendment.
NOW, THEREFORE, in consideration of the covenants hereinafter contained and
for other good and valuable consideration and in consideration of the covenants
and agreements contained in the Amendment, Optionor and Optionee do hereby
covenant and agree as follows:
1. Option. Pursuant to the Option Agreement, as amended by the
------
Amendment, Optionor has granted to Optionee and Optionee has accepted from
Optionor the irrevocable option to purchase the Property from Optionor in
accordance with the terms and conditions of the Option Agreement, as amended by
the
<PAGE>
Amendment (the "Option"). Optionee may elect to exercise the Option at any time
during the period commencing August 1, 1998 and ending at 5:30 p.m. on August
31, 1998; provided that the Option will expire and become ineffective if, by
--------
August 1, 1998, Optionor shall have raised an agreed sum from the owners of
mobile or manufactured homes located on the Property, given notice of such event
to Optionee and formed a partnership with Optionee for the ownership and
operation for the Property, as more fully set forth in the Option Agreement. The
Option may be exercised by Optionee by written notice to Optionor.
2. Transfer of Option. Optionee has the absolute right and authority to
------------------
assign its rights under the Option Agreement to its Affiliate, as defined in the
Option Agreement.
3. Notice. The sole purpose of this Amended Memorandum is to give notice
------
of the Option Agreement, as amended by the Amendment, which Option Agreement and
Amendment are each incorporated herein by this reference.
4. Miscellaneous. The covenants, conditions and agreements contained in
-------------
this Amended Memorandum shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
5. Counterparts. This Amended Memorandum may be executed in two or more
------------
counterpart copies, each of which counterparts shall have the same force and
effect as if both parties hereto had executed a single copy of this Amended
Memorandum.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amended
Memorandum as of the day and year first above written.
WITNESS: OPTIONEE:
/s/ BLUE RIBBON COMMUNITIES LIMITED
- ----------------
PARTNERSHIP, a Delaware limited
WITNESS: partnership
/s/ By: MHC-QRS Blue Ribbon Communities,
- ----------------
Inc., a Delaware corporation,
General Partner
By: /s/ Ellen Kelleher
Name: Ellen Kelleher
Title: Executive Vice President/
General Counsel
WITNESS: OPTIONOR:
/s/ MEADOWS PRESERVATION, INC., a Florida
- ----------------
corporation
WITNESS:
By: /s/ Richard McCann
/s/ Name: Richard McCann
- ----------------
Title: President
-4-
<PAGE>
_________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
_________________________)
The foregoing instrument was acknowledged before me this __ day of March, 1998,
by ____________________ as ____________________ of MHC-QRS Blue Ribbon
Communities, Inc., General Partner of Blue Ribbon Communities Limited
Partnership, a Delaware limited partnership. He/She is personally known to me
or has produced driver's license as identification.
________________________________
Notary Public
Name of Notary Printed:
_________________________
)
STATE OF FLORIDA ) ss:
)
__________ COUNTY )
_________________________)
The foregoing instrument was acknowledged before me this __ day of March, 1998,
by ____________________ as ____________________ of Meadows Preservation, Inc., a
Florida corporation. He/She is personally known to me or has produced driver's
license as identification.
________________________________
Notary Public
Name of Notary Printed:
-4-
<PAGE>
SECOND AMENDED MEMORANDUM OF OPTION AGREEMENT
---------------------------------------------
THIS SECOND AMENDED MEMORANDUM OF OPTION AGREEMENT (this "Second
------
Amended Memorandum") is made and entered into as of this 19th day of August,
- ------------------
1998 by and between MEADOWS PRESERVATION, INC., a Florida corporation
("Optionor"), and BLUE RIBBON COMMUNITIES LIMITED PARTNERSHIP, a Delaware
--------
limited partnership ("Optionee").
--------
W I T N E S S E T H:
-------------------
WHEREAS, Meadows Preservation, Inc., a Florida corporation ("MPI-1")
-----
and Optionee entered into that certain Option Agreement dated December 18, 1997,
as amended by that certain Amendment to Option Agreement dated as of March 30,
1998 (as amended through the date hereof, the "Option Agreement") with respect
----------------
to certain real property (together with all improvements thereon, the
"Property") located at the northwest corner of PGA Boulevard and Prosperity
--------
Farms Road in Palm Beach County, Florida, and commonly known as "The Meadows
Mobile Home Park", which is more particularly described on Exhibit A attached
---------
hereto;
WHEREAS, a Memorandum of Option Agreement dated as of December 18,
1997 (the "Memorandum of Option") was recorded on December 19, 1997 in Official
--------------------
Records Book 10145, Page 1599 of the Public Records of Palm Beach County,
Florida and an Amended Memorandum of Option Agreement dated as of March 30, 1998
(the "Amended Memorandum of Option") was recorded on May 14, 1998 in Official
----------------------------
Records Book 10403, Page 104 of the Public Records of Palm Beach County,
Florida;
WHEREAS, Optionor, as successor by mergers to MPI-1, and Optionee
have entered into that certain Second Amendment to Option Agreement of even date
herewith (the "Amendment"); and
---------
WHEREAS, Optionor and Optionee have agreed to enter into this Second
Amended Memorandum for purposes of giving notice of the Option Agreement, as
amended by the Amendment.
NOW, THEREFORE, in consideration of the covenants hereinafter
contained and for other good and valuable consideration and in consideration of
the covenants and agreements contained in the Amendment, Optionor and Optionee
do
<PAGE>
hereby covenant and agree as follows:
1. Option. Pursuant to the Option Agreement, as amended by the
------
Amendment, Optionor has granted to Optionee and Optionee has accepted from
Optionor the irrevocable option to purchase the Property from Optionor in
accordance with the terms and conditions of the Option Agreement, as amended by
the Amendment (the "Option"). Optionee may elect to exercise the Option at any
time during the period commencing December 1, 1998 and ending at 5:30 p.m. on
December 31, 1998; provided that the Option will expire and become ineffective
--------
if, by December 1, 1998, Optionor shall have formed a partnership with Optionee
for the ownership and operation for the Property, as more fully set forth in the
Option Agreement. The Option may be exercised by Optionee by written notice to
Optionor.
2. Legal Description. Exhibit A attached to the Memorandum of Option
-----------------
and the Amended Memorandum of Option is hereby replaced by Exhibit A attached
hereto.
3. Transfer of Option. Optionee has the absolute right and authority
------------------
to assign its rights under the Option Agreement, as amended by the Amendment, to
its Affiliate, as defined in the Option Agreement.
4. Notice. The sole purpose of this Second Amended Memorandum is to
------
give notice of the Option Agreement, as amended by the Amendment, which Option
Agreement and Amendment are each incorporated herein by this reference.
5. Miscellaneous. The covenants, conditions and agreements
-------------
contained in this Second Amended Memorandum shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
6. Counterparts. This Second Amended Memorandum may be executed in
------------
two or more counterpart copies, each of which counterparts shall have the same
force and effect as if both parties hereto had executed a single copy of this
Second Amended Memorandum.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amended Memorandum as of the day and year first above written.
WITNESS: OPTIONEE:
/s/ BLUE RIBBON COMMUNITIES LIMITED
-------------------
PARTNERSHIP, a Delaware limited
WITNESS: partnership
/s/ By: MHC-QRS Blue Ribbon Communities,
-------------------
Inc., a Delaware corporation,
General Partner
By: /s/ David W. Fell
Name: David W. Fell
Title: Vice President
WITNESS: OPTIONOR:
/S/ MEADOWS PRESERVATION, INC., a Florida
-------------------
corporation
WITNESS:
By: /s/ Mary Bachiochi
/s/ Name: Mary Bachiochi
-------------------
Title: Treasurer
-3-
<PAGE>
_________________________
)
STATE OF ILLINOIS ) ss:
)
COOK COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this __ day of August, 1998,
by ____________________ as ____________________ of MHC-QRS Blue Ribbon
Communities, Inc., General Partner of Blue Ribbon Communities Limited
Partnership, a Delaware limited partnership. He/She is personally known to me
or has produced driver's license as identification.
________________________________
Notary Public
Name of Notary Printed:
_________________________
)
STATE OF FLORIDA ) ss:
)
_______________ COUNTY )
_________________________ )
The foregoing instrument was acknowledged before me this __ day of August, 1998,
by ____________________ as ____________________ of Meadows Preservation, Inc., a
Florida corporation. He/She is personally known to me or has produced driver's
license as identification.
________________________________
Notary Public
Name of Notary Printed:
-4-
<PAGE>
EXHIBIT 10.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports with respect to the financial statements indicated below in
the Registration Statement (Form SB-1) of Meadows Preservation, Inc. for the
registration of 2,354 shares of its common stock.
<TABLE>
<CAPTION>
Financial Statements Date of Auditors' Report
-------------------- ------------------------
<S> <C>
Financial Statements of Meadows Preservation, Inc. for May 5, 1998, except for Note 3,
the years ended December 31, 1997 and 1996 as to which the date is
September 25, 1998
Statement of Revenues and Certain Expenses of The August 26, 1998
Meadows for the six months ended June 30, 1998
Balance Sheet of MHC-QRS Blue Ribbon September 25, 1998
Communities, Inc. as of June 30, 1998
Balance Sheet of Blue Ribbon Communities Limited September 25, 1998
Partnership as of June 30, 1998
</TABLE>
/s/ Ernst & Young LLP
Chicago, Illinois
September 29, 1998
