UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 14, 1997
ASSET INVESTORS CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-9360 84-1038736
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
3600 South Yosemite Street, Suite 350 80237
Denver, Colorado (Zip Code)
(Address of principal executive offices)
(303) 793-2703
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address,
if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 14, 1997, Asset Investors Corporation (the "Registrant"),
acquired seven manufactured housing communities, a 50% joint venture interest in
another manufactured housing community and certain manufactured housing
community management contracts from Brandywine Communities for an aggregate
purchase price of $29,399,000. The consideration was $22,871,000 of cash, the
assumption of $4,962,000 of existing debt, 363,372 shares of the Registrant's
Common Stock and 91,760 partnership units issued by Asset Investors Operating
Partnership, a limited partnership of which the Registrant is the general
partner. The partnership units are convertible, at the option of the holder,
into cash or shares of the Registrant's Common Stock, as determined by the
Registrant. The consideration was determined through arms length negotiations
with Brandywine Communities.
The eight communities are located in the Tampa, Florida area and
consist of 1,540 home sites with the opportunity to develop and lease an
additional 364 home sites on an earn-out basis. Under the earn-out agreement,
the Registrant will advance all development costs to bring the home sites on
line and earn a 10% per annum return on such advances. The Registrant will then
acquire the developed home sites as they are absorbed at a cost of 50% of the
sum of the advanced costs and the original purchase price of the home sites
within the respective community. The manufactured housing community management
contracts cover the eight communities acquired plus an additional four
communities with 477 home sites located in the same market area.
The Registrant also entered into an agreement with Brandywine
Communities under which the two companies have the opportunity to enter into
joint ventures to acquire any manufactured housing communities and manufactured
housing community management operations identified by Brandywine Communities for
future acquisition. The Registrant will receive a 10% preferred return on any
advances made for such acquisitions.
The Registrant generally intends to continue to utilize the assets
acquired in the transaction in the same manner as they were employed prior to
the acquisition as rental properties. Due to the Registrant's intent to acquire
additional manufactured housing communities, the Registrant's future dividends
and the taxable portion thereof cannot be estimated at this time.
Some of the statements in this Form 8-K, as well as statements made by
the Registrant in periodic press releases and oral statements made by the
Registrant's officials to analysts and stockholders in the course of
presentations about the Registrant and conference calls following quarterly
earnings releases, constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. The statements include
projections of the Registrant's cash flow and dividends. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Registrant to
be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such factors include the
following: general economic and business conditions; interest rate changes;
risks inherent in owning real estate or debt secured by real estate;
competition; the availability of real estate assets at prices which meet the
Registrant's investment criteria; the Registrant's ability to maintain or reduce
expense levels and the Registrant's ability to complete its multi-step
restructuring plan of which the acquisition described above is a part.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) Financial Statements
Combined Statements of Excess of Revenue Over Specific
Operating Expenses of the Brandywine Manufactured Home
Communities for the Year Ended December 31, 1996 (audited)
and the Period from January 1, 1997 to March 31, 1997
(unaudited)
Statements of Excess of Revenues Over Specific Operating
Expenses of The Royal Palm Village Manufactured Home
Community for the Year Ended December 31, 1996 (audited) and
the Period from January 1, 1997 to March 31, 1997
(unaudited)
(B) Pro-forma Financial Information
Pro-forma Condensed Consolidated Balance Sheet of Asset
Investors Corporation and Subsidiaries as of March 31, 1997
Pro-forma Condensed Consolidated Statement of Income of Asset
Investors Corporation and Subsidiaries for the Three Months
Ended March 31, 1997
Pro-forma Condensed Consolidated Statement of Income of Asset
Investors Corporation and Subsidiaries for the Year Ended
December 31, 1996
(C) Exhibits
Exhibit No. Description
----------- -----------
2.1 Form of Mobile Home Park Purchase and Sale
Agreement dated as of May 13, 1997,
entered into in connection with the
acquisition of six manufactured housing
communities.
2.1(a) Royal Palm Joint Venture Agreement dated
as of May 13, 1997, by and between Royal
Palm Village, LLC and Asset Investors
Operating Partnership, LP.
2.1(b) Form of Assignment and Assumption
Agreement dated as of May 13, 1997,
entered into in connection with the
acquisition of Prime-Forest Partners.
23 Consent of Independent Auditors - Ernst &
Young LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSET INVESTORS CORPORATION
Date: May 28, 1997
By: /s/ Kevin J. Nystrom
Kevin J. Nystrom
Chief Financial Officer
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Asset Investors Corporation
We have audited the accompanying combined statement of excess of revenues over
specific operating expenses for certain real estate properties ("The Brandywine
Manufactured Home Communities") for the year ended December 31, 1996. This
combined financial statement is the responsibility of The Brandywine
Manufactured Home Communities' management. Our responsibility is to express an
opinion on this combined financial statement 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 combined financial statement of excess of revenues
over specific operating expenses is 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
audit provides a reasonable basis for our opinion.
As described in Note 1, the combined financial statement of excess of revenues
over specific operating expenses excludes certain expenses that would not be
comparable to the operations of the properties after acquisition by Asset
Investors Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
properties' revenues and expenses.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the excess of revenues over specific operating
expenses (exclusive of expenses described in Note 1) of The Brandywine
Manufactured Home Communities for the year ended December 31, 1996 in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
April 23, 1997
1
<PAGE>
<TABLE>
<CAPTION>
The Brandywine Manufactured Home Communities
Combined Statements of Excess of Revenues
Over Specific Operating Expenses
Period from
January 1,
Year ended 1997
December 31, 1996 to March 31,
1997
----------------------------------------
(unaudited)
Revenues
<S> <C> <C>
Rental $ 4,419,109 $ 1,168,247
Other 11,494 4,484
----------------------------------------
4,430,603 1,172,731
Specific operating expenses
Property operations and maintenance 1,544,644 412,125
Real estate taxes 438,321 110,806
----------------------------------------
1,982,965 522,931
----------------------------------------
Excess of revenues over specific operating expenses $ 2,447,638 $ 649,800
========================================
</TABLE>
See accompanying notes. 2
<PAGE>
The Brandywine Manufactured Home Communities
Notes to Combined Statements of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Properties
The Brandywine Manufactured Home Communities (the "Communities") includes 7
manufactured home communities located in Florida. The Communities, which are
under common management and control, have been summarized as follows:
<TABLE>
<CAPTION>
Community Location Number of Lots
- --------------------------------------- -------------------------------------- -----------------
<S> <C> <C>
Stonebrook Homosassa Springs, Florida 115
Forestview Homosassa, Florida 171
Westwind I North Dunedin, Florida 195
Westwind II North Dunedin, Florida 189
Cardinal Court Largo, Florida 138
Park Royale North Pinellas, Florida 258
Sun Valley Estates Tarpon Springs, Florida 261
-----
1,327
=====
</TABLE>
Basis of Accounting
The accompanying statements of revenues over specific operating expenses are
presented on the accrual basis. These statements have been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties. Accordingly, the statements
exclude certain historical expenses not comparable to the operations of the
property after acquisition, such as professional fees, property management fees,
depreciation, amortization and interest.
Revenue Recognition
Rental income attributable to residential leases is recorded when due from
residents. Leases are for periods of up to one year, with rental payments due
monthly.
3
<PAGE>
The Brandywine Manufactured Home Communities
Notes to Combined Statements of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies (continued)
Use of Estimates
The preparation of the financial statements of excess of revenues over specific
operating expenses in conformity with generally accepted accounting principles
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.
2. Land Leases
Property operations and maintenance expense includes land lease expenses of
$258,163 relating to two of the properties. The lease expense is based upon 20%
of the gross rental income of each property, adjusted for lot care and
maintenance expenses. One lease expires in the year 2069 and the other in the
year 2073.
4
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Asset Investors Corporation
We have audited the accompanying statement of excess of revenues over specific
operating expenses for The Royal Palm Village Manufactured Home Community for
the year ended December 31, 1996. This financial statement is the responsibility
of the property's management. Our responsibility is to express an opinion on
this financial statement 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 financial statement of excess of revenues over
specific operating expenses is 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
audit provides a reasonable basis for our opinion.
As described in Note 1, the financial statement of excess of revenues over
specific operating expenses excludes certain expenses that would not be
comparable to the operations of the properties after acquisition by Asset
Investors Corporation. The accompanying financial statement was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission and is not intended to be a complete presentation of the
properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of expenses described in Note 1) of The Royal Palm Village
Manufactured Home Community for the year ended December 31, 1996 in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
April 23, 1997
1
<PAGE>
The Royal Palm Village Manufactured Home Community
Statements of Excess of Revenues
Over Specific Operating Expenses
<TABLE>
<CAPTION>
Period from
Year ended January 1, 1997
December 31, to March 31,
1996 1997
----------------------------------------
(unaudited)
Revenues
<S> <C> <C>
Rental $ 444,253 $ 119,662
Other 817 -
----------------------------------------
445,070 119,662
Specific operating expenses
Property operations and maintenance 178,378 45,413
Real estate taxes 45,309 11,500
----------------------------------------
223,687 56,913
----------------------------------------
Excess of revenues over specific operating expenses $ 221,683 $ 62,749
========================================
</TABLE>
See accompanying notes. 2
<PAGE>
The Royal Palm Village Manufactured Home Community
Statements of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
The Royal Palm Village Manufactured Home Community is located in Haines City,
Florida and includes 213 lots.
Basis of Accounting
The accompanying statements of revenues over specific operating expenses are
presented on the accrual basis. These statements have been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties. Accordingly, the statements
exclude certain historical expenses not comparable to the operations of the
property after acquisition, such as professional fees, property management fees,
depreciation, amortization and interest.
Revenue Recognition
Rental income attributable to residential leases is recorded when due from
residents. Leases are for periods of up to one year, with rental payments due
monthly.
Use of Estimates
The preparation of the financial statements of excess of revenues over specific
operating expenses in conformity with generally accepted accounting principles
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.
3
<PAGE>
ITEM 7(B).
<TABLE>
<CAPTION>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO-FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(Amounts in thousands)
(Unaudited)
As Previously Pro-Forma Pro-Forma
Reported Adjustments Results
---------------------- ---------------------- ---------------------
Assets
<S> <C> <C> <C>
Cash and cash equivalents $ 68,477 $ (22,871) (c) $ 45,606
Investment in rental properties, net -- 26,570 (a) 26,570
Investment in Commercial Assets 19,627 -- 19,627
Other assets, net 762 3,187 (b) 3,949
------------ ------------ ----------
Total Assets $ 88,866 $ 6,886 $ 95,752
============ ============ ==========
Liabilities
Accounts payable and accrued liabilities $ 1,070 $ 358 (c) $ 1,428
Mortgage notes payable -- 4,962 (c) 4,962
Management fees payable 2,349 -- 2,349
------------ ------------ ----------
Total Liabilities 3,419 5,320 8,739
------------ ------------ ----------
Minority interest in operating partnership -- 316 (c) 316
------------ ------------ ----------
Stockholders' Equity
Common Stock 248 4 (c) 252
Additional paid-in capital 228,759 1,246 (c) 230,005
Cumulative dividends (240,727) -- (240,727)
Cumulative net income 97,802 -- 97,802
------------ ------------ ----------
Dividends in excess of net income (142,925) -- (142,925)
Unrealized holding losses on debt securities (635) -- (635)
------------ ------------ ----------
Total Stockholders' Equity 85,447 1,250 86,697
------------ ------------ ----------
Total Liabilities and Stockholders' Equity $ 88,866 $ 6,886 $ 95,752
============ ============ ==========
</TABLE>
See Notes to Pro-Forma Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(In thousands, except per share data)
(Unaudited)
Pro-Forma Adjustments
---------------------------------------
Acquisition of
Resecuritization Manufactured
As Previously of Non-agency MBS Housing Communities Pro-Forma
Revenues Reported Bonds Results
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-agency MBS bonds $ 2,000 $ (2,000) (d) $ -- $ --
Rental income -- -- 1,168 (g) 1,168
Equity in earnings of Commercial Assets 464 -- -- 464
Equity in earnings of Royal Palm Joint Venture -- -- 2 (h) 2
Property management fees -- -- 48 (i) 48
Other income and expenses, net 52 830 (e) (279) (j) 603
---------- ------------ ---------- ----------
Total revenues 2,516 (1,170) 939 2,285
---------- ----------- ---------- ----------
Expenses
Management fees 277 (393) (f) 109 (k) (7)
Property operations and maintenance -- -- 412 (g) 412
Real estate taxes -- -- 111 (g) 111
Property management expenses -- -- 58 (i) 58
General and administrative 336 (42) (d) -- 294
Depreciation and amortization -- -- 265 (l) 265
Interest expense 26 (26) (e) 102 (m) 102
---------- ----------- ---------- ----------
Total expenses 639 (461) 1,057 1,235
---------- ----------- ---------- ----------
Net income before gain on resecuritization of
non-agency MBS bonds 1,877 (709) (118) 1,050
Gain on resecuritization of non-agency MBS bonds 7,359 -- -- 7,359
Management fees on resecuritization of non-agency
MBS bonds (2,072) -- -- (2,072)
---------- ----------- ---------- ----------
Net income $ 7,164 $ (709) $ (118) $ 6,337
========== =========== ========== ==========
Net income per share $ .29 $ .25
========== ==========
Weighted-average shares outstanding 24,841 25,204
</TABLE>
See Notes to Pro-Forma Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share data)
Pro-Forma Adjustments
---------------------------------------
Acquisition of
Resecuritization Manufactured
As Previously of Non-agency MBS Housing Pro-Forma
Reported Bonds Communities Results
-------------------------------------------------------------------------
Revenues (unaudited)
<S> <C> <C> <C> <C>
Non-agency MBS bonds $ 11,513 $ (11,513) (d) $ -- $ --
Rental income -- -- 4,419 (g) 4,419
Equity in earnings of Commercial Assets 1,875 -- -- 1,875
Equity in earnings of Royal Palm Joint Venture -- -- (3) (h) (3)
Property management fees -- -- 191 (i) 191
Other income and expenses, net 136 3,329 (e) (1,122) (j) 2,343
---------- ----------- ---------- ----------
Total revenues 13,524 (8,184) 3,485 8,825
---------- ----------- ---------- ----------
Expenses
Management fees 1,793 (2,270) (f) 399 (k) (78)
Property operations and maintenance -- -- 1,545 (g) 1,545
Real estate taxes -- -- 438 (g) 438
Property management expenses -- -- 240 (i) 240
General and administrative 1,145 (82) (d) -- 1,063
Elimination of DERs 825 -- -- 825
Depreciation and amortization -- -- 1,059 (l) 1,059
Interest expense 88 (88) (e) 408 (m) 408
---------- ----------- ---------- ----------
Total expenses 3,851 (2,440) 4,089 5,500
---------- ----------- ---------- ----------
Net income before gain on resecuritization
of non-agency MBS bonds 9,673 (5,744) (604) 3,325
Gain on resecuritization of non-agency MBS bonds -- 7,359 -- 7,359
Management fees on resecuritization of
non-agency MBS bonds -- (2,072) -- (2,072)
---------- ----------- ---------- ----------
Net income $ 9,673 $ (457) $ (604) $ 8,612
========== =========== ========== ==========
Net income per share $ .39 $ .35
========== ==========
Weighted-average shares outstanding 24,595 24,958
</TABLE>
See Notes to Pro-Forma Condensed Consolidated Financial Statements.
<PAGE>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
NOTES TO PRO-FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
The pro-forma condensed consolidated balance sheet of the Registrant as
of March 31, 1997, is presented as if the May 14, 1997, acquisition had occurred
on March 31, 1997. The pro-forma condensed consolidated statements of income are
presented as if the March 27, 1997 resecuritization of the non-agency MBS bonds
and the May 14, 1997, acquisition transaction had occurred: (i) on January 1,
1997, for the statement of income for the three months ended March 31, 1997; and
(ii) on January 1, 1996, for the statement of income for the year ended December
31, 1996. In management's opinion, all adjustments necessary to reflect the
resecuritization of the Registrant's non-agency MBS bond portfolio and the
acquisition of manufactured housing communities and management contracts have
been made. The unaudited pro-forma condensed consolidated financial statements
should be read in conjunction with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, and the Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1997.
The unaudited pro-forma condensed consolidated financial statements are
not necessarily indicative of what the actual financial position or results of
operations would have been assuming the transactions had been completed as of
the dates indicated, nor does it purport to represent the future financial
position or results of operations of the Registrant.
(a) Reflects the purchase of interests in seven manufactured housing
communities for $25,875,000 plus closing costs of $695,000.
(b) Reflects $2,508,000 paid for the acquisition of the related manufactured
housing community management contracts, $256,000 in advances and other
costs for the acquisition of the 50% joint venture interest in an
additional manufactured housing community and the acquisition of
manufactured home inventory at a cost of $423,000.
(c) Reflects consideration for the manufactured housing communities and
manufactured housing community management contracts of $22,871,000 of cash,
363,372 shares of Common Stock at $3.44 per share, 91,760 Operating
Partnership Units at $3.44 each, the assumption of $4,962,000 of existing
debt, and the assumption of $358,000 of other liabilities.
(d) Eliminates income from and expenses directly attributable to the non-agency
MBS bonds as a result of the resecuritization.
(e) Reflects the assumption that a portion of the proceeds from the
resecuritization of the non-agency MBS bonds is used to repay outstanding
debt and the remaining proceeds are invested in short-term investments
earning 5% per annum.
(f) Eliminates base fees and administrative fees on the non-agency MBS bonds
and adjusts incentive fees based upon adjusted net income.
(g) Reflects adjustment for seven acquired communities from the Combined
Statement of Excess of Revenues Over Specific Operating Expenses.
<PAGE>
(h) Reflects the equity in the earnings from the 50% joint venture interest in
another manufactured housing community.
(i) Reflects expenses of the manufactured housing community management business
and income earned from the four managed communities not owned by the
Registrant.
(j) Eliminates the short-term investment income at 5% per annum on the cash
used to acquire the manufactured housing communities and management
operations.
(k) Reflects base fees on assets acquired and additional incentive fees on
improved earnings as a result of the acquisition of the manufactured
housing communities and management operations (in thousands):
Three Months Ended Year Ended
March 31, 1997 December 31, 1997
----------------------- ---------------------
Base fees $ 77 $ 305
Incentive fees 32 94
------- --------
Total Adjustment $ 109 $ 399
======= ========
(l) Reflects depreciation and amortization of acquired assets on the
straight-line basis over the estimated useful lives of the assets. The
estimated useful lives are 25 years for land improvements and buildings and
10 years for the cost of management contracts on communities not owned by
the Registrant.
(m) Reflects interest expense on the assumed debt at 8.25% per annum.
MOBILE HOME PARK
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made effective the 13th day of May, 1997, by and
between:
SELLER: FAE MOBILE HOME PROPERTIES (1974), a
Pennsylvania limited partnership
2 Ponds Edge Drive
Chadds Ford, PA 19317
BUYER: HFIC INC., a Missouri corporation
c/o Property Asset Management
1873 S. Belleaire Street, 17th Floor
Denver, CO 80222
WITNESSETH:
WHEREAS, Seller is the fee simple owner of certain commonly known as
PARK ROYALE MOBILE HOME PARK located in Pinellas County, Florida, more
particularly described in Exhibit "A" attached hereto and made a part hereof
(together with all rights and easements appurtenant thereto and all permanent
improvements, fixtures and utility systems thereon, being hereinafter
collectively referred to as the "Real Property"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase the Real
Property and all personal property, fixtures and equipment described in the
Schedule of Personal Property attached hereto as Exhibit "B" and made a part
hereof (the "Personal Property"), together with all of Seller's right, title and
interest in and to (a) rights of way, reservations, privileges, appurtenances
and other estates and rights of Seller pertaining to the Real Property and
improvements; (b) each of the Leases (as defined in paragraph 7 herein) and all
modifications and amendments thereof, together with all security deposits in
Seller's possession; (c) each of the Service Contracts (as defined in paragraph
4 herein); (d) all licenses, warranties and guaranties, if any, and all benefits
thereof, which effect the improvements on the Real Property or any component
thereof; (e) utility rights, all permits, impact fee credits, if available,
plans and specifications, site plans, and all marketing, environmental,
engineering, architectural reports, if any, of Seller; (f) occupancy permits and
certificates and all other licenses and approvals issued with reference to the
Property by any governmental or quasi-governmental body or authority; (g) all
advertising brochures, and any and all rights to use existing trade names
affecting the Property; under the terms and conditions set forth herein (the
aforesaid Real Property and Personal Property, together with all of the
foregoing items listed in clauses (a) through (g) above, being hereinafter
collectively referred to as the "Property").
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, together with other valuable considerations, the receipt and sufficiency
of which is hereby acknowledged, Seller agrees to sell and Buyer agrees to buy
the Property on and under the terms and conditions herein set forth.
1. RECITALS. The above recitals are true and correct and are
incorporated herein by reference.
2. PURCHASE PRICE. The purchase price for the Real Property shall be
FIVE MILLION NINE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($5,950,000.00) and
for the Personal property shall be FIFTY THOUSAND AND 00/100 DOLLARS
($50,000.00), for a total purchase price (the "Purchase Price") of SIX MILLION
AND 00/100 DOLLARS ($6,000,000.00), and shall be payable as follows:
(a) Earnest Money Deposit. As an earnest money deposit (the
"Earnest Money Deposit"), Buyer has deposited with Ruden, McClosky, Smith,
Schuster & Russell, P.A., 150 Second Avenue North, Seventeenth Floor, St.
Petersburg, Florida 33701, (the "Escrow Agent"), the sum of ONE HUNDRED AND
NO/100 DOLLARS ($100.00) upon the execution of this Agreement by Buyer, which
sum shall be held in escrow and credited toward the Purchase Price at closing or
otherwise disbursed by Escrow Agent in accordance with the terms of this
Agreement.
(b) Cash. Cash at closing in the amount of SIX MILLION AND
NO/100 DOLLARS ($6,000,000.00), less any credits, adjustments or prorations due
to Buyer as provided herein payable by locally drawn cashier's check or Federal
Reserve Bank wire.
(c) Earn-Out. Pursuant to a separate Earn-Out Agreement of even
date, there is an additional contingent purchase price as described in the
foregoing Earn-Out Agreement.
3. KEY DOCUMENTS. Seller has furnished to Buyer the following
information regarding Buyer's review of the Property:
(a) current certified rent roll;
(b) thirty-six months of operating statements for the Property;
(c) All Prospectuses for the Property in the forms approved by
the Division of Florida Land Sales, Condominiums and Mobile Homes of the
Department of Business and Professional Regulation;
(d) copies of any engineering, architectural, utilities, soils
and asbestos reports;
2
<PAGE>
(e) list and copies of all permits held, and consents of
governmental authorizations required to operate the Property;
(f) form of tenant lease (attached to Prospectus);
(g) current Inspection Report prepared by Alexander Tudor,
Architect;
(h) copies of notes, mortgages and any other existing financing
documents;
(i) termite report;
(j) all applicable organizational and governing documents for
Seller including partnership agreements, certificates of limited partnership,
certificate of good standing, incumbency certificate, articles of organization,
regulations and operating agreement (for an LLC);
(k) current environmental audits prepared by EnviroAssessments,
Inc.; and
(l) summary letter from the Division of Florida Land Sales,
Condominiums and Mobile Homes of the Department of Business and Professional
Regulation regarding the Prospectus for the Property.
The foregoing shall be collectively deemed the "Key
Documents".
4. REPRESENTATIONS AND WARRANTIES.
(a) To induce Buyer to enter into this Agreement, Seller makes
the following representations and warranties, to the best of Seller's knowledge
and belief, all of which, except as otherwise provided herein, shall survive the
Closing of title for a period of one year from the Closing Date (hereinafter
defined):
(i) Seller is a validly existing and organized
limited partnership under the laws of the State of Pennsylvania, is in good
standing and authorized to do business in Florida, and has full power, authority
and legal right to execute and deliver, and to perform its obligations under
this Agreement, and such execution, delivery and performance will not conflict
with or result in a breach of, or constitute a default under, any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
by which it is bound, or by any of the provisions of any contract to which
Seller is a party or by which it is bound.
(ii) This Agreement and the obligations hereunder are
legal, valid and binding obligations of Seller, enforceable in accordance with
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their terms, all required action and approvals have been duly taken and
obtained, and there are no claims, defenses, personal or otherwise, or offset
whatsoever to the enforceability or validity hereto.
(iii) All of the items, lists and copies supplied or
made available to Buyer by Seller and his agents under this Agreement,
including, but not limited to, the Key Documents, are all of such items and are
true and correct (to the extent prepared by Seller or its employees), complete
and current list and copies as of the date furnished. The agreements,
representations and warranties made by Seller in this Agreement, in the
documents, instruments, reports and other information delivered to Buyer
hereunder, shall each be true and correct in all material respects on and as of
the Closing Date (provided, to the extent any document, instrument or report
delivered or made available to Buyer hereunder was not prepared by Seller or its
employees, Seller does not warrant the correctness of, or the information
contained in, such document, instrument or report, but only that it is a true
and complete copy of such document, instrument or report, prepared by such third
party and that Seller has no actual knowledge that any information contained
therein is not true and correct), with the same force and effect as though they
had been made or given on and as of the Closing Date, subject only to the
qualifications that on the date of closing, Seller may update any of such
documents, instruments, reports and other information to accurately reflect only
such changes therein between the date hereof and the Closing Date as have
occurred in the ordinary course of business or which are permitted by this
Agreement and which, in either event, do not materially or adversely affect the
Property or the operation thereof.
(iv) There are no outstanding claims, notices, orders
or directives delivered to or served upon Seller or its agents, or of which
Seller is aware, issued by any department or agency of any government having
jurisdiction over the Property, or by any private party which is the beneficiary
of any recorded covenant, condition, restriction, easement or other right
affecting the Property ("Private Rights"), alleging or pertaining to any
violation of law, code or ordinance or of Private Rights affecting the Property
or any part thereof, or requiring any work to be done upon or about the Property
or any part thereof. Seller has not received any notice of, and to the best of
Seller's knowledge there are no violations of any law, permit, code or ordinance
or Private Rights affecting, pertaining to or committed on the Property or any
portion thereof.
(v) Based on that certain owner's title commitment
issued by Lawyers Title Insurance Corporation in connection with this
transaction, and without any knowledge of Seller to the contrary, Seller has
good, marketable, insurable and indefeasible fee simple title to the Real
Property, 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 current taxes, zoning regulations and those title
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exceptions listed and described on Exhibit "C" attached hereto (the "Permitted
Exceptions").
(vi) Seller has received no notice of any pending or
threatened condemnation or similar proceeding affecting the Real Property or any
part thereof and Seller has no knowledge that any such proceeding is presently
contemplated; and the Property is free from damage or destruction due to any
casualty loss except if described in the Inspection Report prepared by Alexander
Tudor Architect.
(vii) *Seller has substantially complied with and the
Property is in material compliance with, all applicable laws, ordinances,
regulations, orders, rules and restrictions pertaining to or affecting the
ownership and operation of the Real Property and the sale thereof contemplated
by this Agreement, including, but not by way of limitation, the Florida Mobile
Home Act (Chapter 723, Florida Statutes) and, in particular ss. 723.011 and ss.
723.071 thereof.
(viii) *Seller has complied with and the Property is
in compliance with the Florida Mobile Home Act (Chapter 723, Florida Statutes)
and, in particular, Sections 723.011 and 723.071 thereof.
(ix) There are no actions, suits or other legal or
administrative proceedings, including bankruptcy proceedings, pending or
actually threatened, against or involving Seller or the Property and Seller is
not aware of any facts which might result in any such action, suit or other
proceeding.
(x) No goods or services have been contracted for by
Seller or furnished to the Real Property on Seller's behalf which might give
rise to any mechanic's liens upon or affecting all or any part of the Real
Property.
(xi) The right to assign the name "Park Royale Mobile
Home Park" by which the Property is commonly known and to use that name in the
operation of the Property has been assigned by the Seller to Buyer without
warranty, provided, however, that Buyer shall not be legally bound or under any
legal obligation to use said name.
(xii) There are no leases which affect the Real
Property except as set forth in the rent roll ("Rent Roll") delivered to Buyer
(the "Leases") and the information contained on the Rent Roll is true and
correct. All extensions and concessions are set forth on the Rent Roll. The form
lease attached to the Prospectus delivered to Buyer is a true copy of the
current lease form presently used for tenant Leases, complete with all
amendments, modifications, options and extensions thereto.
(xiii) All of the security deposits, which term shall
include any interest required to be paid thereon, if any, in regard to the
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Property, to which any tenants may have a claim, will be paid to Buyer on the
date of Closing or will be applied in reduction of the payment due Seller at
such time; thereafter, the responsibility for security deposits will be that of
Buyer. Seller agrees to provide Buyer with an itemized schedule of such security
deposits on the Closing Date.
(xiv) Seller has not received actual notice of any
pending proceedings before any legal or administrative agency having
jurisdiction over the Property with respect to any increase of real estate taxes
or other assessments on the Property; to Seller's knowledge, there are no
existing or pending assessments for public or capital improvements or the like;
(xv) *A prospectus of the type required under Chapter
723, Florida Statutes, has been provided, as applicable, to each tenant of the
Property. The Prospectus for the Property most recently approved by the Division
of Florida Land Sales, Condominiums and Mobile Homes contains all the terms and
conditions that all tenants on the Property are operating under.
(xvi) Seller has not contracted for any services or
employment and has made no commitments or obligations therefor which will bind
Buyer as a successor in interest with respect to the Property except those
contracts listed in Exhibit "D" (the "Service Contracts"). At closing, Seller
shall assign to Buyer all of its right, title and interest in and to the Service
Contracts and warranties and guaranties; provided, however, that Buyer shall
have the right after closing hereunder to terminate any such Service Contracts
as of the Closing Date, unless termination is prohibited in any such Service
Contract. Amounts paid or payable under the Service Contracts shall be prorated
between the parties at the Closing and credits shall be given the parties as
appropriate to such prorations.
(xvii) *The current use of the Property, the Leases,
Prospectuses and rules and regulations are in compliance with the Florida and
Federal Fair Housing Acts. Seller further represents and warrants that the use
of the Property, the Leases, Prospectuses, and rules and regulations qualify the
Property for the exemptions for housing for older persons under the Fair Housing
Act of 1988 and the Florida Civil Rights Act, and substantially comply in all
material respects with the rules published by the Department of Housing and
Urban Development, specifically including, but not limited to, having
significant facilities and services specifically designed to meet the physical
or social needs of older persons.
(xviii) No rents or other deposits are or will on the
Closing Date be held by Seller, except for prepaid rents for the current month
(which shall be prorated at Closing); and no commissions or other fees payable
to any person, entity or agent are due on the rentals collected or to be
collected under the Leases.
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(xix) Based on certificates, licenses, permits and
approvals, currently existing, including, as applicable, the Key Documents, the
Property is and may be used for its current operation as a rental mobile home
community and for the purposes for which the improvements thereon were
constructed and may continue to operate, based upon laws and ordinances in
effect on the date hereof, without violating any federal, state, local or any
other governmental building, zoning, environmental, health, safety, platting,
subdivision or other statute, ordinance or regulation or any applicable private
restriction; and necessary permits for such use and operation have been obtained
and are in full force and effect. No notice of violation of any of the foregoing
has been received by Seller.
(xx) Based on the survey prepared for the Property,
no building or other improvement on the Property relies on any premises other
than the Property to fulfill any governmental or applicable private requirement,
except for appurtenant easements of record.
(xxi) To the best of Seller's knowledge and belief,
based upon existing certificates of occupancy and other certificates, licenses,
permits, approvals and current zoning letter, all improvements on the Property
fully conform in all material respects with all zoning regulations and building
codes applicable at the time of their issuance (and Seller has received no
notice of any changes that are required to be implemented at the Property) and
with all private restrictions, and none of the buildings or improvements located
on the Property are prior non-conforming structures under the current applicable
zoning regulations.
(xxii) The Property is currently served by public
utility services, including, but not limited to, electrical, water, sanitary
sewer, cable television, and telephone services, which services have been and
presently are adequate and sufficient for operation of the buildings and
improvements on the Property at full occupancy.
(xxiii) *Seller hereby represents and warrants that
during the period of its ownership and control over the Property, Seller has not
knowingly permitted, and Seller has no knowledge of, (other than anything
disclosed in the Environmental Site Assessment prepared by EnviroAssessments,
Inc.) the presence, disposal, release or threatened release of any Hazardous
Substance (as hereinafter defined) on, into, from or under the Property or
improvements constructed thereon, by or through Seller, any tenant (present or
former) or any party whatsoever. As used in this Agreement, the term "Hazardous
Substance" means any waste oil, solvent mixture, or any hazardous, toxic or
dangerous substance, waste or material which is or becomes regulated under any
federal, state or local statute, ordinance, rule, regulation or other law now or
hereafter in effect pertaining to environmental protection, contamination or
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clean-up, including without limitation any substance, waste or material which
now or hereafter is (i) designated as a "solid or hazardous substance" under or
pursuant to the Federal Water Pollution Control Act (33 U.S.C. ss. 1257 et
seq.), (ii) defined as a "hazardous waste" under or pursuant to the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), (iii) defined as a
"hazardous substance" in (or for purposes of) the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), (iv)
defined as a "hazardous air pollutant" under or pursuant to the Federal Clean
Air Act (42 U.S.C. ss. 7401 et seq.), (v) defined as a hazardous, toxic or
dangerous substance under or pursuant to any so-called "Superfund" or
"Superlien" law, (vi) defined or listed as a "hazardous waste," "extremely
hazardous waste," "restricted hazardous waste," "infectious waste," "pollutant,"
"hazardous substance," "hazardous material," "petroleum product," or "pollutant"
under or pursuant to Florida's statutes and regulations, including without
limitation, Chapter 376, Florida Statutes.
(xxiv) *Seller further represents that, to Seller's
knowledge (based solely on actual knowledge of Seller and upon existing
environmental assessments, reports and studies prepared by EnviroAssessments,
Inc.) there was no presence, disposal, release or threatened release of any
Hazardous Substance on, from, or under the Property prior to Seller's
acquisition of ownership or control of the Property.
(xxv) *Seller further represents and warrants that to
Seller's knowledge and based on that certain environmental assessment report
prepared by EnviroAssessments, Inc., the Property (including underlying soil and
groundwater conditions) is not currently in violation of any state, local,
federal or other law, statute, regulation, code, ordinance, decree or order
relating to hygienic or environmental conditions, and that during Seller's
ownership of the Property, to Seller's knowledge, no party has used, generated,
stored, or disposed of any flammable explosives, radioactive materials,
Hazardous Substance, toxic substances or related materials, on, under or about
the Property, except, if any, in accordance with applicable law.
For purposes hereof, the terms "disposal", "release", and "threatened
release" shall mean and include the definitions thereof set forth in the
Comprehensive Environmental Response, Compensation and Liability Act and all
other federal, state, county, local and other laws, ordinances, codes, statutes,
rules, regulations, decrees and orders relating to or imposing liability or
standards of conduct regarding environmental or hygienic matters.
(xxvi) *Seller represents, warrants, acknowledges and
agrees that the representations and warranties contained in that certain
Indemnity Agreement that Buyer is required to provide to Pacific Mutual Life
Insurance Company (a copy of which is attached hereto as Exhibit "F") in
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connection with assumption of the Mortgage on the Property are true and correct
and Seller makes such representations and warranties contained in such Indemnity
Agreement to Buyer which are incorporated herein by reference (as made from
Seller to Buyer).
(xxvii) No persons or entities have any rights to use
any improvements or amenities situate on the Property, with the exception of any
easements shown on the owner's title commitment issued in connection with this
transaction, any items shown on the current survey of the Property, tenants of
the Property under the Leases and the rights of the respective lessees under the
cable lease, if any.
(xxviii) *Based on the current zoning letter for the
Property, and with no reason to suspect otherwise and with no actual notice to
the contrary, the present use of the Property as a rental mobile home community
with all existing amenities is a valid and permitted use under the zoning and
land use codes applicable to the Property. In the event of a casualty, the
current improvements and use of the Property could be rebuilt, including the
current existing density and current approved density.
(xxix) Seller owns no right of first refusal or
option or similar rights regarding the purchase of any property contiguous to
the land described in Exhibit "A" hereto and if Seller shall obtain any of the
same prior to Closing, Seller covenants to so advise Buyer, and Buyer at its
option, may require from Seller at Closing an assignment of such rights, without
payment of additional consideration.
(xxx) *Based on, and except as disclosed in that
certain Inspection Report prepared by Alexander Tudor Architect, the Property,
to the extent applicable, and with no knowledge of such to the contrary, is in
compliance with the Americans With Disabilities Act and Chapter 553 Florida
Statutes and the Federal Fair Housing Act.
Notwithstanding anything to the contrary contained herein, the
representations and warranties in paragraph 4(a) above which are noted with an
asterisk (*) shall survive Closing and shall not be limited by the one-year
survival language contained in paragraph 4(a) above.
(b) Buyer has the right, power and authority to enter into this
Agreement and to perform its obligations hereunder and the persons executing
this Agreement on behalf of Buyer have been duly authorized by Buyer to do so.
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5. TITLE INSURANCE.
(a) Seller has, at Seller's expense, delivered to Buyer and
Buyer's attorney with a copy provided to Seller's attorney, a preliminary
owner's title insurance commitment, together with copies of all exception
documents referred to therein, to be issued by a title insurance company
licensed and qualified to do business in Florida and approved by Buyer. The
commitment and policy 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 amount of the Purchase Price. The policy and commitment shall be in a
current ALTA standard form "B", except that there shall be no exceptions unless
agreed to by Buyer. All standard title policy exceptions shall be deleted. The
policy shall insure marketable title.
(b) The agent for the title insurance company shall be in
attendance at the closing and be in a position to issue the title policy upon
recording the appropriate documents and insure that Seller has complied with all
requirements set forth under Florida Statutes 723.071(1), (2) and (3) to
extinguish any right of purchase or rescission in favor of any tenants or
homeowners association, if any, upon the execution and delivery of the statutory
affidavit to be executed by Seller and to insure the Real Property free and
clear of all exceptions to title other matters not objected to by Buyer.
6. SURVEY. Buyer has at its expense obtained a current survey of the
Real Property.
7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES. The
representations and warranties of Seller contained in this Agreement shall be
true and correct on the Closing Date. Seller, by having closed the sale of the
Property, shall be deemed conclusively to have certified that as of the Closing
Date all such representations and warranties were true and correct on the
Closing Date.
8. CLOSING. The sale and purchase transaction contemplated by this
Agreement shall be closed and consummated on or before May 14, 1997 (the
"Closing Date"). Closing shall be at the offices of Buyer's counsel or, at
Buyer's option, may be effected through the mail as coordinated by counsel for
Seller and Buyer. The closing shall be at 10:00 A.M. on the Closing Date unless
otherwise agreed by the parties or their counsel. At the closing, Seller and, as
applicable, Buyer shall execute and deliver the following documents in form
acceptable to Buyer and/or undertake the following:
(a) All corporate certifications, resolutions and approvals
necessary to evidence both the Seller's and Buyer's authority to enter into and
consummate the transactions contemplated by this Agreement.
(b) General Warranty Deed from Seller to Buyer conveying title
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to the Real Property to Buyer free and clear of all liens, encumbrances and
matters other than matters not objected to in writing by Buyer.
(c) Bill of Sale from Seller to Buyer transferring the Personal
Property free and clear of all liens and encumbrances together with the original
Motor Vehicle Certificate of Title (properly endorsed and lien free) for each
mobile home unit and motor vehicle included in this purchase and sale. In the
event Seller does not have the original Motor Vehicle Certificate of Title (or
Manufacturer's Statement of Origin ("MSO")) at closing, Seller covenants and
agrees to deliver to Buyer the original Motor Vehicle Certificate of Title (or
MSO), properly endorsed and lien free, within thirty (30) days after the Closing
Date.
(d) Affidavit of No Liens by Seller.
(e) Gap Affidavit by Seller.
(f) Affidavit of Non-Foreign Status by Seller.
(g) Affidavit of Compliance by Seller in conformity with
Chapter 723.072, Florida Statutes, and attesting that Seller has complied with
all applicable provisions of Chapter 723 and all other applicable Florida and
Federal laws and regulations relating to mobile home park communities.
(h) Certified rent roll dated and accurate as of the Closing
Date and certified by Seller to Buyer.
(i) Assignment from Seller to Buyer assigning all of Seller's
right, title and interest, to the extent it exists and without representation or
warranty, in and to the name by which the Property is commonly known, and in all
authorizations, permits, and licenses relating to the operation of the Property
which are assignable by Seller, if any, and all Leases, Service Contracts and
other items required to be assigned as set forth in this Agreement free and
clear of all liens and encumbrances except for the matters permitted in this
Agreement; all of which shall be assumed by Buyer effective from and after the
Closing Date. Seller shall undertake all action, and execute all forms, required
by all governmental authorities and contract vendors to effect this assignment.
(j) Assignment by Seller, to the extent they exist and without
representation or warranty, of all currently existing and effective claims,
guaranties, warranties, indemnifications and all other rights, if any, which
Seller may have against suppliers, laborers, materialmen, contractors, or
sub-contractors arising out of or in connection with the installation,
construction and maintenance of the Property; all of which shall be assumed by
Buyer effective from and after the Closing Date.
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(k) Assignment by Seller, to the extent they exist to Buyer of
all agreements and rights, if any, which Seller has for access and utilities to
service the Property; all of which shall be assumed by Buyer effective from and
after the Closing Date.
(l) Seller covenants and agrees to transfer, or cause to be
transferred, to Buyer or to Buyer's designee, at closing or within sixty (60)
days after closing, the Motor Vehicle Dealer Licenses utilized in connection
with the Property.
(m) Closing Statement by Seller and Buyer.
(n) Such other documents as are reasonably necessary to close
and consummate the purchase and sale transaction contemplated by this Agreement.
(o) Seller shall deliver and assign to Buyer all existing plans
and specifications, marketing, engineering, architectural, and environmental
reports, site plans and advertising brochures relating to the improvements
located upon the Property which are in Seller's possession or reasonably
accessible to Seller.
(p) Seller shall deliver and assign to Buyer all of Seller's
right, title and interest, if any, in and to all licenses, approvals, permits,
certificates of occupancy, impact fee credits, mobile home titles (for Seller
owned mobile home units, if any) and such other comparable certificates or
documents issued by the appropriate governmental authorities with respect to the
Property or any part thereof which are legally assignable by Seller, if any.
(q) Buyer shall deliver to Seller the adjusted cash portion of
the Purchase Price and authorize Escrow Agent's delivery of the Earnest Money
Deposit to Seller. Said sum shall be paid, at Buyer's election, by locally drawn
cashier's check or Federal Reserve Bank wire transfer.
9. CLOSING COSTS. Seller shall pay for the cost of any corrective
documents required for marketable and insurable title and the recording of the
Warranty Deed, the documentary stamps on the Warranty Deed, all premiums, costs
and fees associated with the issuance of the title binder and policy. Buyer
shall pay for the survey and any environmental audits and other studies ordered
by Buyer. Each party shall bear its own attorneys' fees and other professional
costs, except as otherwise provided for herein.
10. PRORATIONS. Except as otherwise set forth in this Agreement, all
taxes and other operating expenses and revenue of the Property shall be prorated
as of the Closing Date. Taxes shall be prorated based upon the current year's
tax taking into account the maximum available discount. If the closing takes
place and the current year's taxes are not fixed and the current year's
assessment is available, taxes shall be prorated based upon such assessment and
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the prior year's millage. If the current year's assessment is not available,
then taxes shall be prorated on the prior year's tax taking into account the
maximum available discount. In the event the tax proration is incorrect on the
Closing Date because the property is reassessed for the tax year 1997 by
Pinellas County subsequent to the Closing Date, Buyer or Seller shall be
entitled, as the case may be, to a reproration of such taxes upon written
request made to the other party. Seller or Buyer shall remit the reproration
adjustment amount requested within thirty (30) days of request therefor. In the
event Seller or Buyer fails to remit the reproration amount requested within
said thirty (30) day period, the party seeking reimbursement shall be entitled
to all costs of collection, including all attorneys' fees and costs incurred in
collection thereof and the amount owing shall bear interest at the rate of
fifteen percent (15%) until paid, it being acknowledged that this right shall
survive closing and delivery of the Deed. Certified, ratified and confirmed
special assessments shall be paid by Seller. Special assessment liens pending as
of the Closing Date shall be assumed by Buyer. Any rents received by Seller in
respect of the period after the Closing Date shall be promptly remitted to
Buyer. With regard to delinquent rents, if any, Buyer shall not be held
responsible for and Buyer shall not be required to institute any proceedings
whatsoever to collect such delinquent rents. All rents collected by Buyer during
the first ninety (90) days after closing shall be first applied to current rents
due and then to any delinquency. This obligation to remit shall survive the
Closing and delivery of the Deed for a period of ninety (90) days. Seller shall
deliver to Buyer at the closing copies of such statements, invoices, bills and
receipts as shall be requested by Buyer to enable Buyer to verify the accuracy
of the amounts of any prorations made pursuant to this paragraph. Buyer shall be
credited at closing with all advance rentals and tenant security deposits
previously paid to Seller. All prorations shall be made so that Seller has the
benefit of all income and the burden of all expenses up to and including the
Closing Date and Buyer has the benefit of all income and the burden of all
expenses after the Closing Date.
11. PERSONAL PROPERTY. Seller represents that it is the owner of all
of the Personal Property free and clear of any and all liens and encumbrances
other than mortgages, security agreements and financing statements which are to
be released or satisfied of record at or prior to Closing hereunder. Seller
agrees that it shall not remove from the Real Property any of the Personal
Property currently used or useful in connection with the operation of the Real
Property as a rental mobile home community except as may be required in the
ordinary course of business for repair or replacement; any such replacement of
an item of Personal Property pending Closing hereunder to be with a similar item
or items of Personal Property of equal quality and quantity and free and clear
of any liens and encumbrances other than mortgages, security agreements and
financing statements to be released or satisfied of record at or prior to
Closing hereunder.
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12. CONDEMNATION. If, prior to closing, all or any part of the Real
Property is taken by any governmental authority under its power of eminent
domain, Buyer shall have the option, to be exercised within ten (10) days after
Buyer receives written notice from Seller of same:
(a) To take title to the Property at closing without any
abatement or adjustment in the Purchase Price, in which event Seller shall
unconditionally assign its rights in the condemnation award to Buyer (or Buyer
shall receive the condemnation award from Seller if it has already been paid to
Seller prior to closing); or
(b) To terminate this Agreement, whereupon the duties and
obligations of each of the parties hereto shall end and Buyer shall be entitled
to the prompt return from Escrow Agent of the Earnest Money Deposit and all
interest earned thereon.
13. RISK OF LOSS. Risk of loss by damage or destruction to the
Property prior to closing shall be borne by Seller. In the event of substantial
damage (i.e. in an amount in excess of $100,000.00) to said Property prior to
the closing by fire or other casualty:
(a) Seller shall give prompt notice of such damage to Buyer;
(b) Seller shall furnish Buyer promptly with an estimate of the
cost of the restoration, replacement or repair of such damage; and
(c) Buyer shall have the option to:
(i) terminate this Agreement and obtain the prompt
return from Escrow Agent of its Earnest Money Deposit and all interest earned
thereon; or
(ii) take title to the Property at closing without
any abatement or adjustment in the Purchase Price, in which event Seller shall
unconditionally assign its rights in any insurance proceeds to Buyer (or Buyer
shall receive the insurance proceeds paid to Seller if they have already been
paid prior to closing), together with payment from Seller to Buyer of the amount
of the deductible under any of Seller's insurance policies.
14. ASSIGNMENT OF NAME. At closing, Seller shall assign to Buyer,
without limitation, all of its right, title and interest in the name by which
the Property is commonly known hereinbefore referred to.
15. SUPPLIES. Inventories of supplies, including but not limited to
paint, toilet tissue, soap, paper towels and all cleaning materials, if any
located on the Real Property on the Closing Date shall be transferred to Buyer
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at no additional cost at the time of closing and shall be covered by the Bill of
Sale.
16. INDEMNITY. Seller agrees to indemnify and hold Buyer harmless of
and from all loss, cost, damage and expense of every kind, including reasonable
attorneys' fees, which Buyer shall sustain or become liable for resulting from
(a) breach of any covenant, representation or warranty contained in this
Agreement; or (b) Seller's ownership of the Property. Buyer agrees to indemnify
and hold Seller harmless of and from all loss, cost, damage and expense of every
kind, including reasonable attorneys' fees, which Seller shall sustain or become
liable for resulting from Buyer's ownership of the Property from and after the
Closing Date. The foregoing indemnity and all other indemnities contained in
this Agreement shall survive closing.
17. DEFAULT BY SELLER. If, under the provisions of this Agreement,
Seller shall be obligated to complete the sale of the Property but fails to do
so within the applicable period provided for closing and such default continues
for a period of fifteen (15) days after written notice thereof from Buyer to
Seller, or shall otherwise fail to perform any of the other obligations of
Seller hereunder within the required time period, Buyer shall have the option,
to be exercised in its sole discretion, to: (a) apply to the Circuit Court of
the County where the Real Property is located to seek to have specific
performance under this Agreement and in such action shall have the right to
recover damages suffered by Buyer by reason of the delay in Buyer's acquisition
of the Property; or (b) sue Seller for damages sustained by Buyer by reason of
the default of Seller provided; or (c) obtain the prompt return from Escrow
Agent of the Earnest Money Deposit, with interest, together with any other
amounts due and owing to Buyer pursuant to the terms of this Agreement, and
thereafter terminate this Agreement.
18. DEFAULT BY BUYER. If, under the provisions of this Agreement,
Buyer shall be obligated to complete the purchase of the Property but fails to
do so within the applicable period provided for closing, and such default
continues for a period of fifteen (15) days after written notice thereof from
Seller to Buyer, Seller's sole right and exclusive remedy against Buyer shall be
to obtain the Earnest Money Deposit (a) as consideration for the execution of
this Agreement; (b) as agreed on liquidated damages sustained by Seller because
of such default by Buyer (the parties hereto agreeing that the retention of such
funds shall not be deemed a penalty, and recognizing the impossibility of
precisely ascertaining the amount of damages to Seller because of such default
and hereby declaring and agreeing that the sum so retained is and represents the
reasonable damages of Seller); (c) in full settlement of any claims of damages
and in lieu of a specific performance by Seller against Buyer; and (d) in
consideration for the full and absolute release of Buyer by Seller of any and
all further obligations under this Agreement. In the event Buyer defaults
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hereunder, Buyer shall forthwith on demand by Seller return to Seller all title
papers and other documents relating to the Property, including Buyer's copy of
this Agreement.
19. FLORIDA MOBILE HOME ACT. Seller has previously delivered to Buyer
a true and complete copy of all applicable versions of the prospectus or
offering circular with respect to the Property required under ss.723.011 of the
Florida Mobile Home Act. At the closing, Seller shall deliver to Buyer an
executed original of the affidavit contemplated by ss.723.072 of said Act.
Seller further agrees to promptly deliver to Buyer, upon Buyer's request, such
other evidence of compliance with said Act and with all other relevant State and
Federal laws and regulations relating to mobile home park communities as Buyer
may reasonably require.
20. BROKER'S COMMISSION. Seller and Buyer each warrant that there are
no real estate or other brokers involved in this transaction and each party
shall indemnify and hold harmless the other party from all claims or damages for
any brokerage commissions and/or fees being claimed arising out of this
transaction resulting from the actions of the defaulting party.
21. ASSIGNMENT. Buyer shall have the right to assign this Agreement
without the prior written consent of Seller to a single asset entity owned or
controlled by Asset Investors Operating Partnership, L.P., a Delaware limited
partnership ("AIOP"). In the event of an assignment to an entity owned or
controlled by AIOP, Buyer shall have no further liability or responsibility
under this Agreement.
22. SURVIVAL OF AGREEMENT. The terms and conditions of this Agreement
which expressly so state shall survive the closing hereof.
23. TIME IS OF THE ESSENCE. Seller and Buyer acknowledge that time is
of the essence of this Agreement.
24. MODIFICATIONS. The parties acknowledge that this Agreement is the
entire agreement between the parties with respect to the subject matter hereof
and that this Agreement cannot be modified without a written agreement executed
by both parties.
25. ATTORNEYS' FEES. In the event of any litigation between the
parties arising out of this Agreement, or the collection of any funds due Buyer
or Seller pursuant to this Agreement, the prevailing party shall be entitled to
recover all costs incurred and reasonable attorneys' fees and expenses incurred.
As used herein and throughout this Agreement, the term "attorneys' fees" shall
be deemed to include all fees incurred whether by attorneys, paralegals, legal
assistants or law clerks whether in pretrial, trial, appeal, bankruptcy,
collection or declaratory proceedings. The provisions of this paragraph shall
survive closing and delivery of the deed.
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26. ESCROW AGENT. The sole responsibility of the Escrow Agent shall be
to deposit the Earnest Money Deposit in an account and documents necessary to do
so and to disburse said funds according to the terms of this Agreement. In the
event of a breach of this Agreement by either Seller or Buyer, or if, in the
sole discretion of the Escrow Agent, some doubt exists as to when, to whom or
under what circumstances such Earnest Money Deposit shall be disbursed
hereunder, and the parties hereto are unable after ten (10) days' prior written
notice thereof from Escrow Agent to agree and direct Escrow Agent, in writing,
as to when, to whom or under what circumstances Escrow Agent shall disburse the
same, Escrow Agent shall be entitled to interplead said Earnest Money Deposit
into the Circuit Court of Pinellas County, Florida, without further liability or
responsibility on its part. Costs, expenses and attorneys' fees incurred by
Escrow Agent in connection with any such interpleader may be deducted by Escrow
Agent from the amount of the Earnest Money Deposit prior to its deposit into the
registry of the Court. In any event, however, all parties agree that Escrow
Agent shall have no liability or any further responsibility to any party or
person whomsoever for any disbursement of the Earnest Money Deposit made by
Escrow Agent in good faith unless such disbursement shall constitute a willful
breach of the duties and obligations of Escrow Agent under this Agreement or
gross negligence on the part of Escrow Agent. Buyer acknowledges that Escrow
Agent is the attorney for Seller and agrees that Escrow Agent may represent
Seller in connection with any dispute arising under this Agreement
notwithstanding such service as Escrow Agent under this Agreement. The interest
received on the Earnest Money Deposit shall be applied to the account of Buyer
at closing. The Escrow Agent has executed the receipt attached to this Agreement
to confirm that the Escrow Agent is holding and will hold and disburse funds
paid in respect of the Purchase Price in escrow pursuant to the provisions of
this Agreement and as directed by the parties in the Settlement (Closing)
Statement.
27. NOTICE. Any notice, request, instruction or demand to be given
hereunder shall be given as follows:
If to the Seller:
To: FAE Mobile Home Properties (1974)
Address: 2 Ponds Edge Drive
Chadds Ford, PA 19317
Telephone: (610) 388-9600
Fax: (610) 388-9616
With copies to attorney for Seller:
To: Joseph W. Gaynor, Esq.
Address: Joseph W. Gaynor, P.A.
2637 McCormick Drive, Suite B
Clearwater, FL 34619
Telephone: (813) 669-9200
Fax: (813) 791-7920
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If to the Buyer:
To: Ms. Leslie B. Fox, President
Address: Asset Investors Operations Partnership, L.P.
3600 S. Yosemite Street
Suite 900
Denver, CO 80237
Telephone: 303-804-7732
Fax: 303-771-3461
With copies to attorney for Buyer:
To: Stephen J. Mitchell, Esquire
Address: Annis, Mitchell, Cockey, Edwards,
and Roehn, P.A.
201 N. Franklin Street
Suite 2100
Tampa, Florida 33602
Telephone: (813) 229-3321
Fax: (813) 223-9067
If to the Escrow Agent:
Escrow David S. Bernstein, Esquire
Agent: Ruden, McClosky, Smith, Schuster
Address: & Russell, P.A.
150 Second Avenue North
17th Floor
St. Petersburg, FL 33701
Telephone: (813) 895-1971
Fax: (813) 823-8979
28. NO ASSUMPTION OF LIABILITIES. The parties acknowledge that this
transaction contemplates only the sale and purchase of the Property and that the
Seller is not selling a business nor do the parties intend that Buyer be deemed
a successor of Seller with respect to any liabilities of Seller to any third
parties. Accordingly, in addition to the other terms and conditions of this
Agreement, Buyer shall neither assume nor be liable for any payments and
benefits to past and/or present employees of Seller in connection with the
business being conducted on or from the Property as may have accrued through the
Closing Date, including, but not limited to, salaries, wages, commission,
bonuses, vacation pay, health and welfare contributions, pensions, profit
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sharing, severance or termination pay, taxes or any other form of compensation
or fringe benefit.
29. CONSTRUCTION. This Agreement has been negotiated between the
parties, each of whom have been represented by counsel. Accordingly, this
Agreement shall not be construed against either party as the drafter of the
Agreement in the event of any litigation with respect to it.
30. RADON GAS 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 obtained from
your county public health unit.
The foregoing notice is provided pursuant to ss. 404.056(8),
Florida Statutes (1992), which requires that such notice be included in certain
real estate documents.
31. VENUE. Venue for any legal proceeding hereunder shall be in
Pinellas County, Florida, except with respect to an interpleader action pursuant
to paragraph 26 hereunder which the parties acknowledge shall be instituted in
Pinellas County, Florida, pursuant to said paragraph.
32. WAIVER OF JURY TRIAL. Seller and Buyer knowingly, voluntarily and
intentionally waive any right to trial by jury in respect to any litigation
arising out of, under or in connection with this Agreement or the transaction
described herein.
33. EFFECTIVE DATE. Unless otherwise set forth herein, the Effective
Date shall be the date on which the later of Seller and Buyer executes this
Agreement, as evidenced by the date inserted below the signature block.
34. PARTIAL INVALIDITY. If any term or provision of this Agreement
shall be held illegal, unenforceable or inoperative as a matter of law, the
remaining terms and provisions of this Agreement shall not be affected thereby,
but each such term and provision shall be valid and shall remain in full force
and effect.
35. COUNTERPART EXECUTION. This Agreement may be executed in several
counterparts, each of which shall be fully effective as an original and all of
which together shall constitute one and the same instrument.
36. FACSIMILE. A facsimile of this Agreement or any portion hereof,
including the signature page of any party, shall be deemed an original for all
purposes.
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37. SEC AND IRC. Seller agrees to cooperate with Buyer prior to and
after Closing in providing such information as is required by the Internal
Revenue Code and by the regulations of the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year indicated below.
WITNESSES: [SELLER], a ______
WITNESSES: FAE MOBILE HOME PROPERTIES (1974),
Pennsylvania limited partnership
authorized to transact business in
the state of Florida as FAE MOBILE
HOME PROPERTIES (1974), A LIMITED
PARTNERSHIP
/s/Gail E. Martin By: BRANDYWINE CORPORATION, a
Print Name: Gail E. Martin Delaware corporation authorized
to transact business in the
/s/Greg Duoranemski state of Florida as BRANDYWOOD
Print Name:Greg Duoranemski CORPORATION, its sole general
partner
By: /s/Bruce E. Moore
-------------------------------
Bruce E. Moore,
President
As to Seller "Seller"
SELLER'S EXECUTION DATE: May 13, 1997
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HFIC INC., a Missouri
corporation
___________________________ By:/s/Timothy Heuer
___________________________ ------------------------------------
Print Name:________________ Print Name: Timothy Heuer
Title: Vice President
___________________________
Print Name:________________
As to Buyer "Buyer"
BUYER'S EXECUTION DATE:_______________
6374-001-0416130.01
21
ROYAL PALM
JOINT VENTURE AGREEMENT
THIS ROYAL PALM JOINT VENTURE AGREEMENT, dated this 13th day of May,
1997, is made and entered into by and between Royal Palm Village, LLC, a Georgia
limited liability company (hereinafter referred to as "Royal Palm") and Asset
Investors Operating Partnership, LP, a Delaware limited partnership (hereinafter
referred to as "AIOP") (Royal Palm and AIOP are hereinafter sometimes referred
to singularly as "Venturer" and collectively as the "Venturers"), joined by AIC
Community Management Partnership, a Delaware general partnership (hereinafter
referred to as "AIC Management").
W I T N E S S E T H :
In consideration of the mutual covenants set forth herein, the parties
hereto hereby agree as follows:
ARTICLE I.
Definitions
1.01 "Affiliate" means any entity in which a Venturer, or a
shareholder, partner or member of a Venturer owns, directly or indirectly, ten
(10%) percent or more of the capital interests or voting power thereof, or any
individual or entity which owns, directly or indirectly, ten (10%) percent or
more of the capital interests or voting power of any Venturer or shareholders,
partners or members thereof.
1.02 "Agreement" means this Royal Palm Joint Venture Agreement as it
may be modified from time to time in accordance with the provisions hereof or by
agreement of the Venturers, as provided herein.
1.03 "Construction Improvements" means those facilities including but
not limited to manufactured housing pads, driveways, set-ups, infrastructure,
utilities, irrigation and landscaping to be constructed on the Property by the
Venture (defined below).
1.04 "Conversion" means the process whereby the Project is conveyed,
sold, transferred or otherwise converted into a resident owned community through
the use of a cooperative, condominium or other homeowners' association regime,
limited partnership or other entity, which are developer sponsored or third
party initiated programs.
1.05 "Project" means Royal Palm Village Mobile Home Park, located on
the Property and having a street address of 3000 W. Highway 17-92 West, Haines
City, Florida 33844, together with the Construction Improvements to be
constructed thereon, if any.
<PAGE>
1.06 "Property" means the real property described on Exhibit A attached
hereto and incorporated herein by reference.
1.07 "Set-ups" means the amenities attached or related to a
manufactured home which may include but are not limited to skirting, pilings, if
any, carports or garages, storage sheds and/or screened porches.
ARTICLE II.
Formation of Joint Venture
2.01 Formation of Venture. The Venturers hereby join in and form a
joint venture (herein referred to as the "Venture") to operate and develop the
Project.
2.02 Name of Venture. The business and affairs of the Venture shall be
conducted solely under the name of "Royal Palm Joint Venture" or such other name
as shall be approved by the Venturers and such name shall be used at all times
in connection with the Venture's business and affairs.
2.03 Principal Place of Business. The principal place of business of
the Venture shall be 2637 McCormick Drive, Clearwater, Florida 34759, or such
other address as may be agreed to by the Venturers.
2.04 Form of Ownership and Title. The title to the Property shall
remain in the name of Royal Palm and held solely for the benefit of the Venture
pursuant to the terms, conditions and provisions of this Agreement. Each of the
Venturers irrevocably waives during the term of the Venture any right to
maintain any action for partition with respect to the Property. Any personal
property acquired by the Venture shall be held in the name of Royal Palm for the
benefit of the Venture.
ARTICLE III.
3.01 Purposes, Powers and Development Functions. The purposes of the
Venture shall be strictly limited to the acquisition, ownership, operation, and
development of the Property, the construction of the Construction Improvements
and the sale or Conversion of the Project, and such other activities as shall be
directly related and incidental thereto.
ARTICLE IV.
Management of Venture
4.01 Business Decisions. No act shall be taken, sum expended, decision
made or obligation incurred by the Venture or any Venturer
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with respect to a matter which is within the scope of this Agreement without the
unanimous vote of the Venturers (or their Affiliates if applicable).
4.02 Approval by Venturers. In the event either Venturer desires
approval of a course of action, such approval shall be obtained in one or more
of the following ways:
(a) Meeting. Either Venturer shall have the right to call
a meeting of the Venturers at any time to discuss and act upon a proposed
decision. The actions approved at any such meeting shall be evidenced by minutes
of such meeting, which minutes shall be signed by a duly authorized
representative of each Venturer.
(b) Written Consent. In lieu of a meeting of the
Venturers, any decision may be made by the written consent of both of the
Venturers. Such written consent may be established by the signature of both
Venturers on the document or other instrument which implements or otherwise
evidences the decision.
(c) Voting. Each Venturer shall be entitled to one vote on
any matter for which a vote is permitted or required by this Agreement.
4.03 Delegation Pursuant to Management Agreement. Notwithstanding the
above, the Venturers acknowledge that the powers and duties with respect to the
management of the Project shall be delegated to AIC Community Management
Partnership, a Delaware general partnership ("AIC Management") pursuant to a
management agreement, the form of which is attached hereto as Exhibit B.
4.04 Venturer Responsibilities.
(a) Management. AIC Management shall be responsible for
the management of the Project under separate management agreement.
(b) Conversions. If the Project is to be subject to
Conversion, Royal Palm will be responsible for directing and overseeing all
aspects of the Conversion. Prior to the Commencement of any Conversion, Royal
Palm shall prepare for the Venture's approval a Conversion Budget and Proforma
(the "Conversion Budget").
(c) Development and Construction. Royal Palm shall be
responsible for overseeing the development of Property and construction of the
Construction Improvements. Royal Palm shall prepare, for approval by the
Venture, a Development and Construction Budget prior to implementing any such
activity (the "D&C Budget").
(d) Manufactured Home Sales. The Venture shall retain AIC
Management to be a licensed manufactured home dealer, to handle the sales and
resales of manufactured homes within the Project.
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Royal Palm shall prepare for approval by the Venture a Manufactured Home
Marketing Budget for each Project (the "MHM Budget").
(e) Floor Planning. If required by the MHM Budget for the
Project, Royal Palm will arrange for the benefit of the Venture a floor plan
loan for the Project and AIOP shall guaranty such floor plan loan if so required
by the financial institution making such loan. Neither Venturer shall accept or
receive any fees or other consideration for the establishment of such floor plan
loans. The terms and conditions of each loan must be acceptable to AIOP. If AIOP
desires to advance all or a portion of the funds needed to adequately market and
serve the Project, or AIOP does not approve the terms of the floor plan
financing, then AIOP shall make a loan to the Venture in accordance with Article
V below. Royal Palm shall prepare, for the approval by the Venture a Floor Plan
Budget for each Project (the "FP Budget").
4.05 Tax Matters Partner. Royal Palm shall be designated as the Tax
Matters Partner of the Venture under Subsection C of Chapter 63 as contained in
Subtitle F of the Code.
ARTICLE V.
Capital Contributions, Accounting and Distribution
5.01 Initial Capital Contributions. The Venturers have each contributed
the sum of One Hundred Dollars ($100.00) (the "Initial Capital Contribution"),
and each Venturer has the following capital interest in the Venture:
Royal Palm 50%
AIOP 50%
The foregoing percentages are herein referred to as the "Capital Interests."
5.02 Required Capital. Capital shall be required for (i) current
improvement costs in the amount of $200,000.00; (ii) the cost of the Set-ups;
(iii) the future acquisition cost of the Property by the Venture on August 1,
2000, in the amount of the balance of the first mortgage held by Prime Plus
Realty Partners, a Pennsylvania limited partnership, which is currently
$2,800,000.00; (iv) the costs needed to satisfy the D&C Budget; (v) the costs
needed to satisfy the MHM Budget; and (vi) the costs, if any, needed to satisfy
the FP Budget, including the cost of the debt service thereon (the "Required
Capital"). Capital, when so required pursuant to this Section 5.02, shall be
contributed by AIOP in the form of a Loan to the Venture in accordance with
Section 5.06.
5.03 Capital Accounts. The Venture shall establish for each Venturer a
capital account (the "Capital Account"), which shall be credited with the amount
of its Initial Capital Contributions,
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increased by: (i) the amount of money and the fair market value of any property
(other than money) comprising any additional capital contributions made by the
Venturer pursuant to this Agreement or otherwise, (ii) any amounts credited to
the Capital Account of each Venturer as a result of any Venture income, profits
or gains allocated to the Venturer (and as adjusted pursuant to Section
1.704-1(b)(2)(iv) of the Treasury Regulations), and (iii) the amount of any
Venture liabilities assumed by the Venturer or that are secured by any Venture
property distributed to that Venturer, and decreased by: (iv) the amount of
money and the fair market value of any property (other than money) comprising
any distributions to the Venturer, (v) any amount debited to the Capital Account
of a Venturer as a result of any Venture expenses, deductions, losses and
credits allocated to the Venturer (and as adjusted pursuant to Section
1.704-1(b)(2)(iv) of the Treasury Regulations), and (vi) the amount of any
liabilities of such Venturer that are assumed by the Venture or that are secured
by any property contributed by that Venturer to the Venture. The Capital Account
of a Venturer shall not be increased or decreased, as the case may be, with
regard to any built-in gain or loss allocated to the Venturer pursuant to
paragraph 7.01(e) hereof. In the event of a transfer of any Venture interest,
the transferee shall assume the Capital Account balance of the transferor. No
interest shall be paid on any present or future capital account balance. The
provisions of this Paragraph 5.03 are intended to comply with Treasury
Regulation Section 1.704-1(b) regarding the maintenance of the Capital Accounts
of the Venturers and this Paragraph 5.03 shall be interpreted and applied in a
manner consistent with such Regulations. In the event that the Venturers shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
Regulations, the Venturers may make such modifications, provided that it is not
likely to have a material affect on any amounts distributable to any Venturer
upon the dissolution of the Venture. The Venturers shall also make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Treasury Regulation Section 1.704-1(b).
5.04 Withdrawal of Capital. No Venturer shall have the right to demand
the withdrawal of all or any portion of the Venturer's capital contribution. In
the event that withdrawal of a capital contribution is permitted pursuant to the
provisions hereof, such contribution shall be returned to the Venturer in cash
unless otherwise approved by the Venturers.
5.05 Allocations on Transfer of Interests. In the case of a permitted
transfer of any interest in the Venture at any time other than the close of the
Venture's Fiscal Year, the allocable shares of the various items of income, gain
deduction, loss, credit, and allowance, as computed for United States federal
income tax purposes, shall be allocated between the transferor and the
transferee by closing the Venture's books with respect to said transfer. In the
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event any transfer not permitted under the terms of this Agreement is attempted,
no allocations shall be made and all distributions shall continue to be made to
the purported transferor.
5.06 Return on Capital. Loans from AIOP to the Venture shall accrue
interest at the rate of ten percent (10%) per annum, compounded quarterly. Loans
shall be interest only; provided, however, if the Venture has cash available for
distribution to the Venturers after paying all accrued interest due and payable
to AIOP, fifty percent (50%) of the remaining available cash shall be paid to
AIOP to reduce the principal balance due on such loan(s) (the "Principal
Reduction Payment"). After the interest on the loan(s) is(are) paid, and the
Principal Reduction Payment is paid, then the net cash flow from the Project
would be divided pari passu on a 50/50 basis between AIOP and Royal Palm. In the
event of any sales of any Project or interests in the Approved Entities or loan
restructurings, all net proceeds from each event would be paid to reduce loans
(with respect to each Project) until such time as AIOP is fully repaid (with
respect to each Project). Thereafter, any proceeds from such sales or loan
restructurings shall be divided pari passu on a 50/50 basis to the Venturers.
ARTICLE VI.
Special Obligations of the Venturers
6.01 Construction Compensation. Once the Construction Improvements have
commenced as contemplated hereunder, Royal Palm shall be entitled to receive
from the Venture a development fee in a sum equal to seven and one-half percent
(7.5%) of hard costs up to One Million Dollars ($1,000,000.00), and five percent
(5%) thereafter to be paid in accordance with the terms and provisions of the
D&C Budget. Except as provided in the previous sentence or as may be otherwise
approved by the Venturers, no fees or other compensation will be paid by the
Venture to either Venturer for the services of such Venturer; provided, however,
that the Venturers shall each be entitled to reimbursement in full for all
reasonable out-of-pocket costs and expenses incurred relative to the business of
the Venture; and provided further, that the Venturers' managerial salaries,
benefits, general office overhead and similar expenses shall not be deemed
expenses of the Venture.
6.02 Banking. The Venture shall open in the name of the Venture, and
will thereafter maintain in a bank selected by it, a separate bank account. All
checks in excess of $25,000 shall require the signature of a designated
representative from both Venturers. All Required Capital and proceeds of loans
made to the Venture shall be deposited in, and all disbursements of such
proceeds shall be made from, such account. All receipts of the Venture shall be
deposited to each such account. The funds in said account shall be used solely
for the business of the respective Venture.
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ARTICLE VII.
Profits, Losses and Accounting
7.01 Allocations of Taxable Profits and Losses
(a) Determination of Profit or Loss. The items of income,
gains, expenses, deductions, losses and credits generated by the Venture for
federal income tax purposes shall be determined in accordance with a generally
accepted method of accounting as soon as practicable after the close of the
fiscal year of the Venture.
(b) Costs and Expenses. The Venture shall pay all
expenses, (which expenses shall be billed directly to the Venture) of the
Venture which may include but are not limited to: (i) legal, audit, accounting,
and other fees; (ii) expenses and taxes incurred in connection with the
issuance, distribution and transfer of documents evidencing ownership of an
interest in the Venture or in connection with the business of the Venture; (iii)
expenses of organizing, revising, amending, converting, modifying or terminating
the Venture; (iv) expenses in connection with distributions made by the Venture
to, and communications and bookkeeping work necessary in maintaining relations
with, the Venturers; (v) costs of any accounting, statistical or bookkeeping
equipment necessary for the maintenance of the books and records of the Venture;
and (vi) the cost of preparation and dissemination of the informational material
and documentation relating to potential sale, refinancing or other disposition
of the Projects.
(c) Allocation. Except as otherwise provided in this
Article VII, the net profits, net gains and net losses generated by the Venture
for federal income tax purposes for a year shall be allocated among the
Venturers as follows:
(i) Net Income and Losses from Operations. All net
taxable income and net taxable losses and deductions generated from the
day-to-day operations of the Venture shall be allocated among the Venturers
according to their Capital Interests in the Venture, as such interests are
reflected in Section 5.01 hereinabove and as may be amended from time to time
(hereinafter called "Percentage Interests").
(ii) Income and Loss from Capital Transactions. Net
taxable income and gain and net taxable losses of the Venture attributable to
capital transactions (e.g., sales and refinancings) (hereinafter called "Capital
Transactions") shall be allocated among the Venturers as follows. For purposes
of determining the Capital Account balances of the Venturers, income shall be
allocated prior to reducing Capital Accounts by the distribution of proceeds
from the Capital Transactions:
(A) Income From Capital Transactions. All net
taxable income realized by the Venture which is attributable to
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Capital Transactions shall be allocated among the Venturers in the following
order of priority:
(1) First, an amount of such taxable income
equal to the sum of the negative Capital Account balances of the Venturers
having negative Capital Account balances shall be allocated to such Venturers
pro rata in proportion to their respective negative Capital Account balances;
and
(2) Then, such taxable income remaining, if
any, shall be allocated among the Venturers pro rata in proportion to the
balances of their respective Net Capital Investments (defined below) as
necessary to cause the Capital Account of each Venturer to at least equal the
balance of its respective Net Capital Investment; and
(3) Such taxable income remaining, if any,
shall be allocated among the Venturers so as to cause their Capital Accounts to
be in the ratio of their respective Percentage Interests with respect to the
portion of their Capital Accounts exceeding the amounts required in subsections
(1) and (2) above, with any remaining taxable income being allocated pro rata in
proportion to their respective Percentage Interests in the Venture.
(B) Loss from Capital Transaction. A taxable
loss of the Venture from a Capital Transaction shall be allocated so as to cause
the Capital Accounts of the Venturers to equal the amounts set forth in
subsections 7.01(c)(ii)(A)(1) through (3), but in inverse order of priority,
with any excess taxable loss being allocated among the Venturers in proportion
to their respective Percentage Interests in the Venture.
(d) Definitions. For purposes of this Section 7.01, the
following definitions apply:
(i) "Net Capital Investment" shall mean the net
amount of (i) the total amount of capital contributed by a Venturer to the
Venture, less (ii) the total amount of cash distributed from the Venture to the
Venturer pursuant to this Agreement.
(e) Income Characterization. For purposes of determin- ing
the character (as ordinary income or capital gain) of any taxable income of the
Venture allocated to the Venturers pursuant to this Article VII, such portion of
the taxable income of the Venture allocated pursuant to this Article VII which
is treated as ordinary income attributable to the recapture of depreciation
shall, to the extent possible, be allocated among the Venturers in the
proportion which (i) the amount of depreciation previously allocated to each
Venturer bears to (ii) the total of such depreciation allocated to all
Venturers. This paragraph 7.01(e) shall not alter the amount of
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allocations among the Venturers pursuant to this Article VII, but merely the
character of income so allocated.
7.02 Credits. Tax credits shall be allocated among the Venturers in
accordance with paragraph 7.01(c)(i) hereof.
7.03 Changes in Interests. Notwithstanding the foregoing, in the event
of a change in the Venturers' Percentage Interests in the Venture during a year,
whether occasioned by admission of a new Venturer, additional contributions,
assignments of interests or otherwise, the allocation of items of income and
expense shall be made so as to reflect the Venturers' varying Percentage
Interests in the Venture during the year. Profits and losses for the year shall
be prorated on a daily basis and allocated among the Venturers based upon the
period of time during which they held their respective Percentage Interests.
7.04 Crediting Accounts. Items of income, gains, expenses, deductions,
losses and credits shall be credited or debited, as the case may be, to each
Venturer's Capital Account.
7.05 Distribution of Cash and Profits. All distributions to the
Venturers of cash and profits available from Venture operations, after deduction
of Venture expenses, shall be made as and when approved by the Venturers. All
such distributions shall be made in accordance with the Capital Interests.
7.06 Fiscal Year. The fiscal year of the Venture shall be the calendar
year.
7.07 Tax Elections. The Venturers agree that the Venture will be
subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the
Internal Revenue Code of 1986, as amended (hereinafter referred to as the
"Code"); provided, however, with respect to the Venture that the filing of
United States partnership returns of income shall not be construed to extend the
purposes of the Venture or to expand the obligations or liabilities of either or
both of the Venturers. The Venturers shall make elections pursuant to the Code
and any Treasury Regulations promulgated thereunder which the Venturers deem to
be in the best interest of the Venture.
7.08 Books of Account and Records. The books of account and other
records of the Venture shall be kept and maintained at the expense of the
Venture at all times at 2 Ponds Edge Drive, Chadds Ford, PA 19317 or at any
other place or places agreed upon by the Venturers. The books of account shall
be maintained on a cash receipts and expenditures basis in accordance with
generally accepted accounting principles, consistently applied, and shall show
all items of income, expense, assets, liabilities, costs, receipts, profits and
losses of the Venture, the Capital Accounts of the Venturers, and such other
matters as the Venture's accountants or any Venturer shall deem reasonably
necessary or appropriate. Each Venturer shall
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have the right during usual business hours to audit, examine, and make copies of
or extracts from said books of account or records. Such right may be exercised
by an independent certified public accountant designated by such Venturer. Such
Venturer shall bear all expenses incurred in any such examination made at its
request.
ARTICLE VIII.
Term and Termination
8.01 Term. The Venture shall commence on the date hereof and shall
continue until December 31, 2050, when it shall be terminated and liquidated in
accordance with applicable law unless said termination and liquidation occurs
prior thereto pursuant to this Article VIII or is mutually extended by the
Venturers.
8.02 Dissolution By Agreement, Extraordinary Events, Etc.
(a) The Venture shall forthwith be dissolved and
terminated in accordance with the provisions of this Section upon the occurrence
of any of the following:
(i) If any Venturer shall make an assignment for the
benefit of creditors or file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking any reorganization, composition, liquidation, dissolution or similar
relief for itself under the present or future applicable federal or state law
relative to bankruptcy, insolvency, or other relief for debtors, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver,
conservator or liquidator of said Venturer or of any or all of its properties or
its interest in the Venture (the term "acquiesce" includes but is not limited to
the failure to file a petition or motion to vacate or discharge any order,
judgment or decree providing for such appointment within ten (10) days after the
appointment);
(ii) If a court of competent jurisdiction shall enter
an order, judgment or decree approving a petition filed against any Venturer
seeking any reorganization, composition, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy laws, or any present
or future applicable federal or state laws relating to bankruptcy, insolvency,
or other relief for debtors, and said Venturer shall acquiesce in the entry of
such order, judgment or decree (the term "acquiesce" includes but is not limited
to, the failure to file a petition or motion to vacate or discharge such order,
judgment or decree with ten (10) days after the entry of the order, judgment or
decree), or such order, judgment or decree shall remain unvacated and unstayed
for an aggregate of sixty (60) days (whether or not consecutive) from the date
of entry thereof, or any trustee, receiver, conservator or liquidator of said
Venturer or of all or any substantial part of its property or its interest in
the Venture shall be appointed without the consent or acquiescence
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of such Venturer and such appointment shall remain unvacated and unstayed for an
aggregate of sixty (60) days (whether or not consecutive);
(iii) If any Venturer defaults in the performance of
any covenants, condition, agreement, or obligation imposed upon said Venturer by
this Agreement or the governing documents for a Venture other than as set forth
above and said defaulting Venturer does not commence a cure within thirty (30)
days after written notice thereof has been sent by the non-defaulting Venturer
and received by the defaulting Venturer and said defaulting Venturer fails to
cure the default within ninety (90) days thereafter; or
(iv) The Venturers agree in writing that dissolution
and termination should occur.
(b) In order to effectuate the termination and dissolu-
tion of the Venture or any Venture, the Venturers shall wind up and liquidate
the Venture or any Venture by filing any certificates or notices required by
applicable law to be filed, securing independent appraisals of the fair market
value of the assets of the Venture or Venture and selling all remaining assets
of the Venture or Venture (except cash) at such prices and on such terms as the
Venturers in the exercise of their best business judgment under the
circumstances then presented, deem to be in the best interests of all of the
Venturers. The proceeds from such sales, together with the cash assets of the
Venture or Venture, shall thereupon be distributed in the following order of
priority:
(i) To the payment and discharge of all of the
Venture's debts and liabilities to persons other than Venturers or Affiliates;
(ii) To the payment of all principal and interest due
under any promissory notes to Affiliates which are secured by mortgages or deeds
to secure debt on any affected Property;
(iii) To the payment and discharge of all of the
Venture's debts and liabilities first to Venturers and then to Affiliates (other
than as provided in (ii) above);
(iv) To the setting up of such reserves as the
Venturers determine are necessary for any contingent or unforeseen liabilities
or obligations of the Venture arising out of or in connection with the Venture;
provided, however, that any such reserves shall be paid over to an escrow agent
(not a Venturer or any Affiliate) to be held by such agent for a reasonable
period and for the purpose of disbursing such reserves in payment of any of the
aforesaid contingencies and at the expiration of such period to
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distribute the balance thereafter remaining in the manner hereinafter
provided; and
(v) To the Venturers pursuant to their Capital
Interests.
8.03 Tax Consequences. It is the intention of the Venturers that all
amounts payable by the Venture under this Article VIII and Article IX to a
Venturer in exchange for its interest shall constitute payment for such
Venturer's interest in the Venture. The payments shall be considered a sale or
exchange of an interest in the Venture under Section 736(b) of the Code, and not
a payment of income under Section 736(a) or any other Section of the Code.
8.04 Survival. In the event of a termination of the Venture, the
applicable management and/or sales agreement shall remain in full force and
effect in accordance with the terms of said management agreement.
ARTICLE IX.
Sale, Assignment, Transfer, or Other Disposition
9.01 Prohibited Transfer. No Venturer may sell, transfer, assign or
otherwise dispose of or mortgage, hypothecate or otherwise encumber or permit or
suffer any encumbrance of all or any part of its interest in the Venture;
provided, however, AIOP and its Affiliates may pledge their interest as security
for any financing obtained by AIOP in the ordinary course of their business. Any
attempt to so transfer or encumber any Venture interest not expressly permitted
pursuant to this Paragraph 9.01 shall be void and neither the Venture nor the
Venturers shall be bound by any such transfer or encumbrance of a Venture
interest until a counterpart of the instrument of transfer or encumbrance is
executed and acknowledged by both of the Venturers. No shareholder of any
Venturer may sell, transfer, assign or otherwise dispose of its interest in the
Venturer unless such transaction is first approved by the Venturers.
Notwithstanding the foregoing, AIOP shall have the right to assign its interest
in the Venture to an Affiliate upon the prior written notice to Royal Palm which
assignment shall be conditioned upon the assignee executing an assignment and
assumption agreement, the form of which is attached hereto as Exhibit C.
9.02 (a) Buy-Sell Offer. At any time during the term of this Agreement
either Venturer (the "Offeror") shall have the right to offer to sell all (but
not a portion of) its interest in the Venture (the "Offer") to the other
Venturer (the "Offeree") at a price equal to the amount stated in the Offer (the
"Proposed Purchase Price"). Any election by a Venturer under this paragraph
9.02(a) must be evidenced in writing by notice delivered to the Offeree.
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(b) Acceptance or Reversal of Offer by Offeree. The
Offeree will have thirty (30) days after the receipt of the notice of the Offer
from the Offeror to accept the Offer. If the Offeree agrees to purchase the
Offeror's interest in the Venture, then the Offeree shall give written notice
thereof to the Offeror within the thirty (30) day period described above. If the
Offeree does not agree to purchase the Offeror's interest in the Venture, then
the Offeree shall be deemed to have elected to reverse the Offer. In the event
the Offeree elects to reverse the Offer, then the Offeror (or a designated third
party assignee of the Offeror's right to purchase) will be required to purchase
and the Offeree will be required to sell, the Offeree's interest in the Venture
at a price equal to the Proposed Purchase Price (adjusted to take into account
any difference between the Percentage Interests of the Offeror and the Offeree).
(c) Closing. Any purchase and sale of any interest in the
Venture pursuant to this paragraph 9.02 will be consummated at a closing to be
held at the principal place of business of the Venture at a date and place to be
determined by the purchasing Venturer (the "Closing"), unless otherwise agreed
in writing by the Venturers, not more than ninety (90) days after the date of
the notice of the Offer by the Offeror. At the Closing, the purchasing Venturer
will pay the purchase price in cash and the selling Venturer will convey all its
right, title and interest in the Venture and all of its property to the
purchasing Venturer or its assignee. If Royal Palm is the purchasing Venturer,
at the Closing, Royal Palm shall also cause the Venture as applicable to repay
to AIOP all loans made by AIOP to such entity (including accrued but unpaid
interest). If AIOP is the purchasing Venturer, contemporaneously with the
closing, Royal Palm shall convey fee simple title of the Property to the
Venture.
(d) Release of Liability and Repayment of Debt. The
purchasing Venturer shall use its best efforts to obtain the release of the
selling Venturer from any liability for any third party debt of the Venture,
whether as a guarantor or otherwise, on or before the date of closing, whether
such debt is secured by a mortgage on the Projects or otherwise. At the Closing,
the purchasing Venturer shall also either purchase any outstanding loans owed by
the Venture to the selling Venturer or shall cause the Venture to satisfy such
loans in full at that time.
9.03 Earnest Money. The purchasing Venturer shall, at the commencement
of said 90-day period, place the sum of $50,000.00 in non-refundable earnest
money, within a mutually agreeable escrow agent.
9.04 Prohibition Against Withdrawal. Upon receipt by the Offeree of an
Offer from the Offeror, neither Venturer shall take any action to bring about a
sale of its Venture interest to terminate unless both Venturers have complied
with all the requirements of this Section 9.
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9.05 Enforceability. The terms and provisions of this Section 9 shall
be enforceable by either Venturer by action or specific performance, action for
monetary damages, and such other rights and remedies provided by law and in
equity.
ARTICLE X.
General
10.01 Notices.
(a) All notices, offers, demands or requests provided for
or permitted to be given to any Venturer or any permitted transferee of the
interest of said Venturer pursuant to this Agreement, must be in writing and
shall be deemed to have been properly given or served when personally delivered
to the Venturer entitled thereto or by depositing the same in the United States
mail, addressed to said Venturer, postpaid and registered with return receipt
requested at the address set forth on the signature page of this Agreement.
(b) All notices, offers, demands, and requests shall be
effective upon personal delivery or upon being deposited in the United States
mail in accordance with the provisions of subparagraph (a) above. However, the
time period in which a response to any such notice, offer, demand or request
must be given shall commence to run fifteen (15) days after mailing or actual
delivery, whichever occurs first. Rejection or other refusal to accept or the
inability to deliver because of changed address shall be deemed to be receipt of
the notice, demand, or request sent.
(c) By giving to the other party at least fifteen (15)
days written notice thereof, the parties hereto and their respective successors
and assigns shall have the right from time to time and at any time during the
term of this Agreement to change their respective addresses and each shall have
the right to specify as his address any other address within the United States
of America.
10.02 Governing Law. This Agreement and the obligations of the Venturer
hereunder shall be interpreted, construed, and enforced in accordance with the
laws of the State of Delaware.
10.03 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto relative to the transactions contemplated hereunder
and supersedes any and all prior negotiations, understandings, or agreements in
regard thereto. No variations, modifications, or changes herein or hereof shall
be binding upon either Venturer unless and until set forth in a document duly
executed by or on behalf of each such Venturer as an amendment to this
Agreement. The governing documents for each Venture contemplated by this
Agreement shall contain the terms and conditions
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<PAGE>
of this Agreement modified only to comply with any statutory requirements
governing that form of ownership.
10.04 Waiver. None of the terms of this Agreement may be waived except
by an instrument in writing signed by each of the parties hereto. No consent or
waiver, express or implied, by any Venturer to or of any breach or default in
the performance by another Venturer of its obligations hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance by such other Venturer of the same or any other obligations of
such Venturer hereunder. Failure on the part of any Venturer to complain of any
act or failure to act of the other Venturer or to declare the other Venturer in
default, irrespective of how long such failure continues, shall not constitute a
waiver of such Venturer's rights hereunder.
10.05 Severability. In the event any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
10.06 Binding Agreement. Subject to the restrictions on transfers and
encumbrances set forth herein, this Agreement shall inure to the benefit of and
be binding upon the undersigned Venturers and their respective legal
representatives, successors, and assigns. Whenever in this Agreement a reference
to any Venturer is made, such reference shall be deemed to include a reference
to the legal representatives, successors, and assigns of such Venturer.
10.07 Equitable Remedies. The rights and remedies of any of the
Venturers hereunder shall not be mutually exclusive, i.e., the exercise of one
or more of the provisions hereof shall not preclude the exercise of any other
provisions hereof. Each of the Venturers confirms that damages at law may be an
inadequate remedy for a breach or threatened breach of this Agreement and agrees
that, in the event of a breach or threatened breach of any provision hereof, the
respective rights and obligations hereunder shall be enforceable by specific
performance, injunction, or other equitable remedy, but nothing herein contained
is intended to, nor shall it, limit or affect any right or rights at law or by
statute or otherwise of any party aggrieved as against the other for a breach or
threatened breach of any provision hereof, it being the intention by this
Section to make clear the agreement of the Venturers that the respective rights
and obligations of the Venturers hereunder shall be enforceable in equity as
well as at law or otherwise.
10.08 Prevailing Party. In the event of a dispute between the
Venturers, the prevailing Venturer shall be entitled to reasonable attorney's
fee and paralegal fees and court cost incurred prior to and during any
litigation, mediation or bankruptcy proceedings
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including interest from the date said fees and costs were advanced by the
prevailing Venturer at the rate of ten percent (10%) per annum.
10.09 Insurance. The Venture shall obtain, carry and maintain in force,
on behalf of the Venture, such insurance as approved by the Venture.
10.10 General Indemnification of Venturers. Neither Venturer shall be
liable to the Venture or to the other Venturer for losses, costs, damages, or
expenses suffered by the Venture or the other Venturer which arose out of any
action or inaction of the Venturer if the Venturer was not guilty of bad faith,
fraud, willful misconduct, negligence or breach of its fiduciary obligations or
default of its obligations under this Agreement. The Venture shall indemnify the
Venturers against any and all claims, demands, liabilities, damages, costs,
expenses, or losses incurred or suffered by the Venturers in the performance of
their duties if the same were not the result of the negligence, bad faith,
fraud, or willful misconduct of the Venturers or breach of this Agreement or
their fiduciary obligations by the Venturers. All judgments against the Venture
or any Venturer, with respect to which a Venturer is entitled to indemnification
must first be satisfied from the Venture assets.
10.11 Number and Gender. Whenever required by the context hereof, the
singular shall be deemed to include the plural, the plural shall be deemed to
include the singular, and the masculine, feminine and neuter genders shall each
be deemed to include the others.
10.12 Headings. All headings contained in this Agreement are for
convenience of reference only and shall not be considered in any way in
connection with the interpretation or enforcement of any provisions of this
Agreement.
10.13 Counterparts. This Agreement may be executed and delivered in one
or more counterpart copies, and all counterpart copies so executed and delivered
shall each be deemed to be an original and all together shall constitute one and
the same Agreement binding on all of the parties hereto; provided, however, that
no signature shall be binding or effective unless and until all signatures shall
have been obtained and delivered.
10.14 Survival. In the event this Agreement shall be terminated in
accordance with the provisions of Article VIII hereof, the provisions of
Articles VIII and IX hereof shall remain in full force and effect and shall be
binding upon the Venturers for all purposes.
10.15 Waiver of Jury Trial. Each of the Venturers hereby knowingly,
voluntarily and intentionally waives (to the fullest extent permitted by
applicable law) any rights it may have to a trial by jury of any disputes
arising under or relating to this Agreement
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and agrees that any such dispute shall be tried before a judge sitting without a
jury. Each of the Venturers hereby irrevocably consents to the jurisdiction and
venue of the Courts of the State of Delaware and of any Federal Court located
within Newcastle County, Delaware in connection with any action or proceeding
arising out of or relating to this Agreement or the actions contemplated hereby.
Each Venturer hereby waives personal service of any process in connection with
any such action or proceeding and agrees that the service thereof may be made by
certified or registered mail directed to the Venturer, and its counsel, at the
address of such Venturer, set forth below their respective signatures, or at
such other addresses of which the Venturer has given notice as provided in
Section 10.01 hereof. In the alternative, any Venturer may effect service upon
any other Venturer in any other form or manner permitted by law.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
set forth above.
Royal Palm Village, LLC,
a Georgia limited liability company
By: Parkemore Fairview LLC, a
Georgia limited liability
company, Authorized Member
By:/s/Bruce E. Moore
------------------------------
Bruce E. Moore, Authorized Member
Address: 2637 McCormick Drive
Clearwater, FL 34759
Asset Investors Operating
Partnership, L.P., a Delaware
limited partnership
By: Asset Investors Corporation, a
Maryland corporation
By: /s/Leslie B. Fox
-------------------------------
Leslie B. Fox, President
Address: 3600 S. Yosemite Street
Suite 350
Denver, CO 80237
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<PAGE>
AIC Community Management Partnership,
a Delaware general partnership
By: Community Management Investors
Corporation, a Delaware
corporation, general partner
By: /s/Bruce E. Moore
-----------------------------
Bruce E. Moore, President
Address: 2 Ponds Edge Drive
Chadds Ford, PA 19317
and
By: AIC Manufactured Housing Corp.,
a Delaware corporation
By: /s/Leslie B. Fox
-----------------------------
Leslie B. Fox, President
Address: 3600 S. Yosemite Street
Suite 350
Denver, CO 80237
6374-001-0415997.02
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SCHEDULE OF OMITTED
ASSIGNMENT AND ASSUMPTION AGREEMENTS
The Registrant has also entered into two additional Assignment and Assumption
Agreements which are substantially identical to the following Assignment and
Assumption Agreement in all material respects except as to the assignor,
assignee and partnership interest. Listed below are the material details in
which such documents differ from the document filed as part of this exhibit.
Assignor Assignee Partnership Interest
- -------- -------- --------------------
Forest View, LLC Asset Investors Operating Fifty percent
Partnership, L.P. (50%)
Forest View Investors, LLC AIC Manufactured Housing Corp. One percent (1%)
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
As used herein, the following capitalized terms have the
following meanings:
Assignor: Forest View Investors, LLC
c/o Bruce E. Moore
Brandywine Financial Services Corporation
2 Ponds Edge Drive
P.O. Box 500
Chadds Ford, PA 19317
Assignee: Asset Investors Operating Partnership, L.P.
c/o Leslie B. Fox
3600 South Yosemite Street
Suite 900
Denver, CO 80222
Partnership: Prime-Forest Partners,
a general partnership organized under
the laws of the State of Florida
Partnership Interest: A forty-nine percent (49%) interest
in the Partnership as a General Partner,
as owned by Assignor.
State: Florida
Effective Date of Transfer: May 13, 1997
FOR VALUE RECEIVED, Assignor hereby assigns, transfers,
conveys and sets over the Partnership Interest to Assignee. This Assignment
includes all rights in and claims to any and all Partnership profits and losses,
undistributed cash flow, proceeds from refinancing of the Partnership's
property, proceeds from insured casualties and/or dividends or distributions of
any kind, and any other benefits of any nature allocable to the Partnership
Interest under and pursuant to the Agreement of General Partnership of
Prime-Forest Partners dated April 22, 1988, as subsequently amended and modified
by assignment and acceptance of Partnership Interest in Prime-Forest Partners
and Amendment of Agreement of General Partnership of Prime-Forest Partners dated
November 30, 1995 (collectively, the "Partnership Agreement") arising on, from
and after the date hereof.
Assignor covenants, agrees, represents and warrants to
Assignee that Assignor owns the Partnership Interest free and clear of any
<PAGE>
liens, charges, security interests or encumbrances, and that Assignor will
execute and deliver all such further instruments and take all such further
action as may reasonably required to admit Assignee as a substitute General
Partner in the Partnership.
The parties agree that all costs and expenses, including
transfer fees and attorney's fees, required to admit Assignee as a substitute
General Partner in the Partnership will be paid by Assignor.
Assignee accepts all of the right, title and interest hereby
transferred from Assignor, and agrees to become a General Partner in the
Partnership. Assignee assumes and agrees to observe, perform and be bound by all
of the terms and provisions of the Partnership Agreement applicable to the
holder of the Partnership Interest in particular, and to Partners of the
Partnership generally, including, without limitation, the obligation to make
capital contributions as provided for therein. If all or any part of the
Partnership's real property is subject to a regulatory agreement, Assignee
agrees to be bound by the terms of such regulatory agreement and the note,
mortgage and other security agreement(s), if any, delivered in connection
therewith, to the same extent as the present Partners of the Partnership.
Assignor warrants, represents, covenants and agrees to the
following at or as of the date hereof:
(a) Organization and Standing of Partnership. The Partnership
is a general partnership, duly organized, validly existing and in good standing
under the laws of the State of Florida and under the laws of each other
jurisdiction in which the nature of its business or the ownership or leasing of
its properties requires such qualification. The Partnership has the power and
authority necessary to carry on its business as it is now being conducted, and
to own or lease the properties and assets currently owned or leased by it.
(b) Organization and Standing of Assignor. Assignor is a
limited liability company, duly organized, validly existing and in good standing
under the laws of the State of Georgia and under the laws of each other
jurisdiction in which the nature of its business or the ownership or leasing of
its properties requires such qualification. Assignor has the power and authority
necessary to carry on its business as now being conducted, and to own or lease
its properties and assets currently owned or leased by it.
(c) Ownership of Partnership Interests. Assignor owns one
hundred percent (100%) of the Partnership Interests of the Partnership subject
to this Agreement, free and clear of any and all liens and encumbrances.
(d) Due Authorization. Assignor has all power and authority
necessary to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by Assignor
have been duly authorized by all necessary action on the part of the Assignor.
This Agreement is a legal, valid and binding obligation of Assignor enforceable
against it in accordance with its terms except as such enforceability may be
limited by general equitable principles and by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
affecting the rights and remedies of creditors.
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<PAGE>
(e) No Conflict or Default. The execution, delivery and
performance of this Agreement by the Partnership and Assignor will not (i)
violate any statute, regulation or ordinance of any governmental authority or
require any filing with or authorization, consent or approval of any government
or governmental agency which has not been obtained, (ii) conflict with any term,
condition or provision of the operating agreement of Assignor or the Partnership
Agreement of the Partnership (iii) conflict with or result in a breach of any
agreement, deed, contract, mortgage, indenture, writ, order, decree, contractual
obligation or instrument to which the Partnership or Assignor is a party or by
which any of them or any of their property or assets are or may be bound, or
constitute a material default (or an event which, with the lapse of time or the
giving of notice, or both, would constitute a material default) thereunder, or
(iv) result in the creation or imposition of any lien, charge or encumbrance, or
restriction of any nature whatsoever on or with respect to any of the property
or assets of the Partnership (hereinafter, collectively, the "Assets").
(f) Financial Statements. Assignor has delivered to Assignee
and its representatives the various financial statements described on Exhibit
"A" attached hereto and incorporated herein by reference (collectively, the
"Financial Statements"). The Financial Statements (i) have been prepared from
and are in accordance with the Partnership's books and records, (ii) fairly
present the financial condition of the Partnership and the results of its
operation as of the relevant dates thereof and for the periods covered thereby,
and (iii) were prepared in accordance with generally accepted accounting
principles, applied on a consistent basis, except for the lack of certain
footnote and other presentation items required by generally accepted accounting
principles with respect to year-end and interim adjustments.
(g) Certain Events. Except as set forth on Exhibit "B"
attached hereto since April 30, 1997, the Partnership has not taken or agreed to
take or permitted or suffered to occur any of the following actions:
(i) selling, leasing, transferring or assigning
of any of its Assets in an aggregate amount
in excess of $1000, tangible or intangible;
(ii) permitting or suffering the filing of any
security interest upon any of the Assets,
except for those as have previously been
released and those contemplated to be
released as of the date hereof;
(iii) permitting or suffering the occurrence of
any damage, destruction or loss (whether or
not covered by insurance proceeds) to any of
the Assets;
(iv) canceling, compromising, waiving or
releasing any right or claim arising out of
the operation of its business (or series of
related rights or claims) either involving
more than $10,000 in the aggregate or
outside the ordinary course of business; or
(v) granting any bonus or any wage or salary
increase to any employee or group of
employees employed in its business or any
increase in any employee benefit plan or
arrangement affecting employees employed in
its business, or amending or terminating any
existing employee benefit plan or
arrangement or adopting any new employee
benefit plan or arrangement affecting
employees employed in its business.
3
<PAGE>
(h) Assets. The Partnership owns, leases or has rights to use
all properties and assets necessary for the conduct of its business as presently
conducted which properties and assets, constitute the Assets of the Partnership
and the Assets are sufficient to carry on its business as it has been conducted
up to the date hereof. Upon the consummation of the transactions contemplated
hereby, the Assignee will acquire good title to, or all rights to use, the
Assets, free and clear of any Security Interest. The Partnership has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any rights of any other Person with respect to any intellectual
property, and the Partnership has not received any charge, complaint, claim or
notice alleging such interference, infringement, misappropriation or violation.
The Partnership has no knowledge of any other Person interfering with,
infringing upon, misappropriating or otherwise coming into conflict with any
rights of the Partnership with respect to any intellectual property.
(i) Contracts. Assignor has delivered to Assignee correct and
complete copies of all written contracts as to which the Partnership is
presently a party, as more particularly described on Exhibit "C" attached hereto
and incorporated herein by reference (collectively, The "Contracts"). With
respect to each Contract (i) such Contract is legal valid, binding, and
enforceable by the Partnership and in full force and effect in accordance with
its respective terms, (ii) such Contract will continue to be legal, valid,
binding, and enforceable by the Partnership in accordance with its respective
terms and in full force and effect on identical terms following the Closing,
(iii) the Partnership is not, and to the best knowledge of the Partnership and
Assignor no other party thereto is, in breach or default thereof in any material
respect and no event has occurred which, with notice or lapse of time, would
constitute a breach or default thereof by the Partnership in any material
respect or permit termination, modification, or acceleration thereunder by any
other party thereto except as otherwise provided for therein, and (iv) no party
thereto has repudiated any provisions thereof. The Partnership is not a party to
any verbal contract, agreement, or other arrangement which, if reduced to
written form, would be required to be listed Exhibit "C".
(j) Rent Roll. The rent roll attached hereto as Exhibit "D" is
true, correct and complete as of April 30, 1997.
(k) Litigation. There are no actions, suits or orders pending
or, to the best knowledge of Assignor, investigations or proceedings threatened
against or affecting the Partnership, its business or the Assets at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and, to the best knowledge of Assignor there is no basis for any of the
foregoing.
(l) Employment. The Partnership has complied in all material
respects with all applicable laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity and collective
bargaining with respect to any and all employees employed in its business. The
Partnership has no material labor relations problems with respect to any and all
employees employed in its business, and, there has been no union organization
efforts by its employees employed in its business.
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(m) Employee Benefit Plans.
(i) The Partnership does not maintain or
contribute to any (i) nonqualified deferred
compensation, bonus, severance or retirement
plans or arrangements, (ii) qualified
defined contribution or defined benefit
plans or arrangements which are employee
pension benefit plans (as defined in Section
3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), or (iii)
employee welfare benefit plans, (as defined
in Section 3(1) of ERISA), or material
fringe benefit plans or programs. The
Partnership does not and has not within the
last five years contributed to or had any
potential liability under any defined
benefit pension or multiemployer pension
plan (as defined in Section 3(37) of ERISA).
The Partnership does not maintain or
contribute to or have any liability with
respect to any employee welfare benefit plan
which provides health, accident or life
insurance benefits to former employees,
their spouses or dependents, other than for
claims incurred while an employee in
accordance with Section 4980(B) or the
Internal Revenue Code of 1986 (the "Code")
or Sections 601 et seq. Of ERISA
(collectively referred to as "COBRA").
(ii) The employee pension benefit plans and
employee welfare benefit plans (and related
trusts and insurance contracts) comply in
form and in operation in all respects with
the applicable requirements of ERISA and the
Code; and the employee pension benefit plans
meet the requirements of "qualified plans"
under Section 401(a) of the Code, and each
such employee pension benefit plan has
received a favorable determination letter
from the Internal Revenue Service.
(iii) The Partnership has not incurred any
liability to the Pension Benefit Guaranty
Corporation (the "PBGC"), the Internal
Revenue Service, any multiemployer plan or
otherwise with respect to any Plan or with
respect to any employee pension benefit plan
currently or previously maintained by
members of the controlled group of companies
(as defined in Sections 414(b) and (c) of
the Code) that includes the Partnership (the
"Controlled Group") that has not been
satisfied in full, and no condition exists
that presents a material risk to the
Partnership or any member of the Controlled
Group of incurring such a liability.
(n) Tax Matters. The Partnership has filed all Tax Returns
that it was required by applicable federal, state or local law to file. All such
Tax Returns were prepared in good faith and are correct and complete in all
material respects. All Taxes owed by the Partnership (shown on any Tax Return or
otherwise assessed against the Seller) have been paid. No claim has ever been
made by an authority in a jurisdiction where the Partnership does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no security interests on any of the Assets of its business that arose in
connection with any failure (or alleged failure) to pay any Tax.
(o) Creditors and Liabilities. Exhibit "E" is a true and
accurate listing of the names, addresses and liabilities of the Partnership to
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every Creditor of the Partnership, other than those who are parties to service
type contracts, as of April 30, 1997. "Creditor" means a Person who has a right
to payment, whether or not the right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured. The Partnership is not a guarantor or
otherwise liable for any liability or obligation (including indebtedness) of any
other Person.
(p) Environmental and Safety Matters. The Partnership and
Assignor hereby represent and warrant with respect to its business and the real
property owned by the Partnership and located in Citrus County, Florida, (the
"Real Property") and, as to any other business or property of the Partnership,
in each instance to the best knowledge of Assignor and except for such
conditions as are otherwise disclosed in that certain Inspection Report prepared
by Alexander Tudor, Architect and/or that certain Environmental Audit prepared
by Enviro Assessments, Inc., as follows:
(i) the Partnership has complied and is in
compliance, in all material respects, with
all applicable Environmental and Safety
Requirements, and the Partnership and
Assignor have received no written notice,
report or information regarding any
liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), or
any corrective, investigatory or remedial
obligations, arising under Environmental and
Safety Requirements;
(ii) without limiting the generality or the
foregoing, the Partnership and Assignor have
obtained and complied with, and are in
material compliance with, all terms and
conditions of all permits, licenses and
other authorizations that may be required
pursuant to Environmental and Safety
Requirements for the occupation of the Real
Property and the operation of the
Partnership's business;
(iii) without limiting the generality of the
foregoing, none of the following exists at
the Real Property:
[A] underground storage tanks;
[B] material in any form or condition
containing asbestos; or
[C] materials or equipment containing
polychlorinated biphenyls;
(iv) the transactions contemplated by this
Agreement do not impose any obligations
under the Environmental and Safety
Requirements for site investigation or
cleanup, or notification to or consent of
government agencies or third parties; and
(v) without limiting the generality of the
foregoing, no facts, events or conditions
relating to the past or present properties
or operations of the Partnership will
prevent, hinder or limit continued
compliance with Environmental and Safety
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Requirements, give rise to any corrective,
investigatory or remedial obligations
pursuant to Environmental and Safety
Requirements, or give rise to any
liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise),
including without limitation those
liabilities relating to onsite or offsite
hazardous substance releases, personal
injury, property damage or natural resources
damage, pursuant to Environmental and Safety
Requirements.
(q) Compliance with Laws; Permits; Certain Operations. To the
best knowledge of Assignor,
(i) the Partnership and Assignor and each of their
respective officers, directors, agents and
employees have complied in all material respects
with all applicable laws and regulations of
foreign, federal, state and local governments and
all agencies thereof that affect its business or
the Assets, and no written claims have been filed
against the Partnership alleging a violation of
any such law or regulation which have not been
heretofore settled;
(ii) the Partnership holds all of the material
permits, licenses, certificates and other
authorizations of foreign, federal, state and
local governmental agencies required for the
conduct of its business; and
(iii) the Partnership has not violated, nor received
a notice or charge asserting any violation of any
state or federal acts (including rules and
regulations thereunder) regulating or otherwise
affecting federal communications, public
utilities, the employment of aliens or employee
health and safety, except for violations which
heretofore have been duly cured and except for
violations which individually or in the aggregate
will not have a material adverse effect on the
Partnership, its business or the Assets.
(v) Brokers' Fees. Assignor has not retained any broker or
finder in connection with the transactions contemplated herein so as to give
rise to any valid claim against Assignee for any brokerage or finder's
commission, fee or similar compensation.
(s) Disclosure. No representation or warranty made by the
Partnership and Assignor in the Key Documents, as defined in the Purchase and
Sale Agreement dated even date herewith as to which Assignee and certain of the
affiliates of Assignor are parties, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading.
(t) Material Changes. Since April 30, 1997, there has been
no change in any material respect in the assets and liabilities of the
Partnership's business.
Assignee warrants, represents, covenants and agrees that
Assignee (1) is acquiring the Partnership Interest solely for Assignee's own
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<PAGE>
account for investment and not with a view to any resale or distribution
thereof; (2) has reviewed the Partnership Agreement; (3) has consulted with an
attorney, accountant or investment advisor to determine the suitability of the
investment for Assignee's tax and financial planning purposes; and (4)
understands and agrees that: (a) the Partnership Interest has not been
registered under the Securities Act of 1933, as amended (the "Act"); (b)
Assignee must hold the Partnership Interest indefinitely unless an exemption
under the Act is available; (c) the Partnership has not made any commitment to
register the Partnership Interest under the Act or to file reports with the
Securities and Exchange Commission or any other governmental agency or to take
any other action which will enable Assignee to sell the Partnership Interests;
and (d) the transfer of the Partnership Interest is further restricted by the
terms of the Partnership Agreement, and Assignee shall abide by such
restrictions.
Assignee further warrants, represents, covenants and agrees to
the following at or as of the date hereof:
(a) Organization and Standing. Assignee is a corporation duly
organized validly existing and in good standing under the laws of the State of
Florida.
(b) Due Authorization and Performance. Assignee has all
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by Assignee has been duly authorized by the board of directors of
Assignee. This Agreement is a valid and legally binding obligation of Assignee,
enforceable against Assignee in accordance with its terms except as such
enforceability may be limited by general equity principles and by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application affecting the rights and remedies of creditors.
(c) No Violation. The execution, delivery and performance of
this Agreement by Assignee will not (i) violate any statute, regulation or
ordinance of any governmental authority or require any filing with or
authorization, consent or approval of any government or governmental agency,
(ii) conflict with any term, condition or provision of its articles of
incorporation or bylaws, or (iii) conflict with or result in a breach or any
agreement, deed, mortgage, indenture, writ, order, decree, contractual
obligation or instrument to which Assignee is a party or by which Assignee or
its assets are or may be bound, or constitute a default (or an event which, with
the lapse of time or the giving of notice, or both, would constitute a material
default) thereunder.
(d) Brokers' Fees. Assignee has not retained any broker or
finder in connection with the transactions contemplated herein so as to give
rise to any valid claim against Assignor for any brokerage or finder's
commission, fee or similar compensation.
(e) Litigation. There are no actions, suits, proceedings,
orders or investigations pending or, to the best knowledge of Assignee,
threatened against or affecting Assignee or its assets at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and
to the best of Assignee's knowledge, there is no basis for any of the foregoing.
(f) Representations and Warranties. Assignee hereby further
represents and warrants to Assignor that the representations and warranties of
Assignee in this Agreement are true and correct in all material respects.
Assignee hereby additionally represents and warrants to Assignor that neither
Assignee, nor any of its officers, directors, stockholders, employees or agents
has any knowledge as of the date of this Agreement of the breach or default on
the part of Assignor of any of the representations and warranties or covenants
and agreements of Assignor contained and set forth in this Agreement.
The representations and warranties set forth hereinabove shall
survive the performance of this Agreement (a) for a period of two (2) years
after the Closing Date with respect to representations and warranties relating
to other than (i) organization and authority of the Partnership and Assignor, on
the one hand, and Assignee, on the other hand, and (ii) environmental matters
8
<PAGE>
and (b) forever with respect to the representations and warranties referred to
in clause (a)(i) and (ii) above. The covenants and other agreements of Assignee
and Assignor contained in this Agreement shall survive the Closing and continue
in full force and effect forever thereafter. From and after the Closing,
Assignor shall indemnify Assignee and the Partnership against, and hold Assignee
and the Partnership harmless from, any and all liabilities, damages, fines,
penalties, fees, assessments, costs and expenses (including, without limitation,
interest and reasonable attorneys' fees) (collectively, the "Damages") paid,
suffered or incurred by Assignee and/or the Partnership as a result of or
arising from the following: (a) any breach of any representation and warranty by
Assignor; (b) any breach of any covenant or agreement made by Assignor in this
Agreement or in any Schedule hereto; (c) except for those existing obligations
described on Exhibit "F" attached hereto an incorporated herein by reference,
any obligation or liability of the Partnership which was incurred by the
Partnership or relates to events that occurred prior to the Closing Date.
Assignor hereby irrevocably appoints each General Partner of
the Partnership from time to time serving in such capacity as the
attorney-in-fact of Assignor (with full power of substitution), to make,
execute, swear to, acknowledge, record and file, in the name, place and stead of
Assignor, any and all documents (including, without limitation, an amendment to
the Partnership Agreement) necessary to effect the within assignment.
Any provision, of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining provisions of this Agreement, or affecting the
validity or enforceability of any provisions of this Agreement in any other
jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the 13th day of May 1997.
ASSIGNOR:
FOREST VIEW INVESTORS, LLC, a Georgia limited
liability company
By: PARKEMORE CORPORATION, a Pennsylvania
corporation, a Member
By:/s/Bruce E. Moore
------------------------------
Bruce E. Moore, President
ASSIGNEE:
ASSET INVESTORS OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: ASSET INVESTORS CORPORATION, a Maryland
corporation, general partner
By: /s/ Leslie B. Fox
-----------------------------
Leslie B. Fox, President
10
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-42605) of Asset Investors Corporation of our reports dated April 23,
1997, with respect to the Statements of Excess of Revenues over Specific
Operating Expenses of a) The Brandywine Manufactured Home Communities for the
year ended December 31, 1996 and b) The Royal Palm Village Manufactured Home
Community for the year ended December 31, 1996, both of which are included in
the Current Report (Form 8-K) dated May 14, 1997.
ERNST & YOUNG LLP
Phoenix, Arizona
May 27, 1997
