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): June 30, 1999
COMMERCIAL ASSETS, INC.
(Exact name of Company as specified in its charter)
Delaware 1-2262 84-1501789
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
3410 South Galena Street, Suite 210 80231
Denver, Colorado (Zip Code)
(Address of principal executive offices)
(303) 614-9410
(Company'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 June 30, 1999, Commercial Assets, Inc. (the "Company") acquired two
manufactured home communities located near Phoenix, Arizona from Five Whites,
L.L.C. and White Gregg, L.L.C. The communities consist of 304 developed
homesites and 101 sites ready for homes. The developed homesites are 100%
occupied.
The consideration for the communities was determined through arms-length
negotiations with the sellers. Total consideration for the communities was
$14,082,000, paid as follows:
o $9,564,000 in cash and
o $4,518,000 in the form of a note payable which provides for three
annual payments of principal and interest of $1,038,000, $2,000,000
and $2,207,000 and is secured by one of the communities.
The Company generally intends to continue to utilize the assets acquired in the
transaction as rental properties which is the same manner as they were employed
prior to the acquisition.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. Certain information
included in this Report, the Company's Annual Report to Stockholders and other
Company filings (collectively "SEC Filings") under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended (as well as
information communicated orally or in writing between the dates of such SEC
Filings) contains or may contain information that is forward looking, including,
without limitation, statements regarding projections of the Company's future
financial performance, cash flow, dividends and anticipated returns on real
estate investments. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include: general economic and business
conditions; interest rate changes; financing and refinancing risks; risks
inherent in owning real estate or debt secured by real estate; future
development rate of homesites; competition; the availability of real estate
assets at prices which meet the Company's investment criteria; the Company's
ability to reduce expense levels, implement rent increases and use leverage; and
other risks set forth in the Company's Securities and Exchange Commission
filings. Readers should carefully review the Company's financial statements and
the notes thereto, as well as the risk factors described in the SEC Filings.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Statement of Excess of Revenues Over Specific Operating Expenses of the
La Casa Blanca Manufactured Home Communities for the Year Ended
December 31, 1998 (audited) and the period from January 1, 1999 to
March 31, 1999 (unaudited).
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet of Commercial Assets,
Inc. and Subsidiaries as of March 31, 1999.
Pro Forma Condensed Consolidated Statement of Income of Commercial
Assets, Inc. and Subsidiaries for the Three Months Ended March 31,
1999.
Pro Forma Condensed Consolidated Statement of Income of Commercial
Assets, Inc. and Subsidiaries for the Year Ended December 31, 1998.
(c) Exhibits
Exhibit No. Description
10.14 Agreement of Sale dated May 6, 1999, between Five
Whites, L.L.C. and Community Acquisition and
Development Corporation
10.14 (a) Agreement of Sale dated May 6, 1999, between White
Gregg, L.L.C. and Community Acquisition and Development
Corporation
10.14 (b) Assignment of Agreement of Sale dated June 28, 1999,
between Community Acquisition and Development
Corporation and CAX La Casa Blanca, L.L.C.
10.14 (c) Assignment of Agreement of Sale dated June 28, 1999,
between Community Acquisition and Development
Corporation and CAX La Casa Blanca East, L.L.C.
10.14 (d) Promissory Note dated June 30, 1999 between CAX La
Casa Blanca East, L.L.C. and White Gregg, L.L.C.
23 Consent of Independent Auditors - Ernst & Young LLP
<PAGE>
SIGNATURE
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.
COMMERCIAL ASSETS, INC.
Date: July 14, 1999
By: /s/David M. Becker
David M. Becker
Chief Financial Officer
<PAGE>
Statement of Excess of Revenues Over Specific Operating Expenses
La Casa Blanca Manufactured Home Communities
Year ended December 31, 1998
<PAGE>
La Casa Blanca Manufactured Home Communities
Statement of Excess of Revenues
Over Specific Operating Expenses
Year ended December 31, 1998
Contents
Report of Independent Auditors.............................................. 1
Statement of Excess of Revenues Over Specific Operating Expenses............ 2
Notes to Statement of Excess of Revenues Over Specific Operating Expenses... 3
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Commercial Assets, Inc.
We have audited the accompanying statement of excess of revenues over specific
operating expenses of the La Casa Blanca Manufactured Home Communities (Note 1)
for the year ended December 31, 1998. This statement is the responsibility of
the management of the La Casa Blanca Manufactured Home Communities. Our
responsibility is to express an opinion on this 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 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 statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As described in Note 1, the statement of excess of revenues over specific
operating expenses excludes certain expenses that would not be comparable to the
operations of the community after acquisition by Commercial Assets, Inc. The
accompanying 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 community's revenues and expenses.
In our opinion, the 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 La Casa Blanca Manufactured Home
Communities for the year ended December 31, 1998 in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
June 15, 1999
1
<PAGE>
<TABLE>
<CAPTION>
La Casa Blanca Manufactured Home Communities
Statement of Excess of Revenues
Over Specific Operating Expenses
Three Months
Year ended December 31, Ended
1998 March 31, 1999
-------------------------------------------------------
(Unaudited)
Revenues
<S> <C> <C>
Rental $ 456,941 $140,991
Other 103,011 31,376
-------------------------------------------------------
559,952 172,367
Specific operating expenses
Property operations and maintenance 249,576 76,728
Real estate taxes 45,852 11,463
-------------------------------------------------------
295,428 88,191
-------------------------------------------------------
Excess of revenues over specific operating expenses $ 264,524 $ 84,176
=======================================================
</TABLE>
2
See accompanying notes.
<PAGE>
La Casa Blanca Manufactured Home Communities
Notes to Statement of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Properties
The La Casa Blanca Manufactured Home Communities (the "Communities") includes
two separate manufactured home communities located in Apache Junction, Arizona.
The Communities, which are under common management and control, have been
summarized as follows:
Community Number of Units
La Casa Blanca 198
La Casa Blanca East 207
---
Total 405
===
In June 1999, the communities were sold to Commercial Assets, Inc., a publicly
traded real estate investment trust.
Basis of Accounting
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties. Accordingly, the statement
excludes certain historical expenses not comparable to the operations of the
property after acquisition, such as professional fees, management fees,
depreciation, amortization and interest.
Revenue Recognition
Rental income attributable to manufactured home lots is recorded when due from
residents.
3
<PAGE>
1. Organization and Significant Accounting Policies (continued)
Use of Estimates
The preparation of the statement 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 statement and accompanying notes. Actual results could differ from those
estimates.
4
<PAGE>
Item 7(b).
<TABLE>
<CAPTION>
COMMERCIAL ASSETS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(In thousands)
(Unaudited)
As Previously Pro Forma Pro Forma
Reported Adjustments Results
------------------ ------------------ -------------------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 956 $ -- $ 956
Short-term investments 37,836 (21,374) (a) 16,462
Real estate, net 21,206 25,892 (a) 47,098
Investment in participating mortgages 9,993 -- 9,993
Investment in real estate joint venture 1,304 -- 1,304
Investment in and notes receivable from Westrec 4,011 -- 4,011
CMBS bonds 1,682 -- 1,682
Other assets, net 1,248 -- 1,248
---------- ---------- ----------
Total Assets $ 78,236 $ 4,518 $ 82,754
========== ========== ==========
LIABILITIES
Secured long-term notes payable $ -- $ 4,518 (a) $ 4,518
Accounts payable and accrued liabilities 1,225 -- 1,225
Management fees payable to related parties 122 -- 122
---------- ---------- ----------
1,347 4,518 5,865
---------- ---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock -- -- --
Common stock 104 -- 104
Additional paid-in capital 76,874 -- 76,874
Dividends in excess of accumulated earnings (89) -- (89)
---------- ---------- ----------
76,889 -- 76,889
---------- ---------- ----------
Total Liabilities and Stockholders' Equity $ 78,236 $ 4,518 $ 82,754
========== ========== ==========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL ASSETS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(In thousands, except per share data)
(Unaudited)
As Previously Pro Forma Pro Forma
Reported Adjustments Results
-------------------------------------------------------
RENTAL PROPERTY OPERATIONS
<S> <C> <C> <C>
Rental and other property revenues $ -- $ 576 (b) $ 576
Income from participating mortgages and leases 587 -- 587
Property operating expenses -- (269) (b) (269)
-------- -------- --------
Income from property operations before depreciation 587 307 894
Depreciation (89) (311) (c) (400)
-------- -------- --------
Income from property operations 498 (4) 494
-------- -------- --------
Interest and other income 701 (360) (d) 341
CMBS bonds revenue 38 -- 38
General and administrative expenses (133) -- (133)
Management fees paid to manager (80) (85) (e) (165)
Interest expense -- (79) (f) (79)
-------- -------- --------
OPERATING INCOME 1,024 (528) 496
Acquisition fees paid to manager (42) (129) (g) (171)
-------- -------- --------
NET INCOME $ 982 $ (657) $ 325
======== ======== ========
BASIC AND DILUTED EARNINGS PER SHARE $ 0.09 $ (0.06) $ 0.03
======== ======== ========
Weighted-Average Common Shares Outstanding 10,364 10,364 10,364
Weighted-Average Common Shares and Common Share Equivalents
Outstanding 10,365 10,365 10,365
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL ASSETS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands, except per share data)
(Unaudited)
As Previously Pro Forma Pro Forma
Reported Adjustments Results
-------------------------------------------------------
RENTAL PROPERTY OPERATIONS
<S> <C> <C> <C>
Rental and other property revenues $ -- $ 2,161 (b) $ 2,161
Income from participating mortgages and leases 587 -- 587
Property operating expenses -- (1,087) (b) (1,087)
--------- --------- ---------
Income from property operations before depreciation 587 1,074 1,661
Depreciation (50) (1,245) (c) (1,295)
--------- --------- ---------
Income from property operations 537 (171) 366
--------- ---------- ---------
Interest and other income 3,874 (1,616) (d) 2,258
CMBS bonds revenue 161 -- 161
General and administrative expenses (420) -- (420)
Management fees paid to manager (87) (342) (e) (429)
Interest expense -- (316) (f) (316)
--------- --------- ---------
OPERATING INCOME 4,065 (2,445) 1,620
Acquisition fees paid to manager (124) (171) (g) (295)
Costs related to potential marina investments (500) -- (500)
--------- --------- ---------
NET INCOME $ 3,441 $ (2,616) $ 825
========= ========= =========
BASIC AND DILUTED EARNINGS PER SHARE $ 0.33 $ (0.25) $ 0.08
========= ========= =========
Weighted-Average Common Shares Outstanding 10,357 10,357 10,357
Weighted-Average Common Shares and Common Share Equivalents
Outstanding 10,372 10,372 10,372
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
COMMERCIAL ASSETS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The pro forma condensed consolidated balance sheet of the Company as of March
31, 1999, is presented as if all reportable acquisitions of manufactured home
communities subsequent to March 31, 1999 had occurred on March 31, 1999. The pro
forma condensed consolidated statements of income are presented assuming all
reportable 1999 acquisitions had been completed: (i) on January 1, 1999 for the
statement of income for the three months ended March 31, 1999; and (ii) on
January 1, 1998 for the statement of income for the year ended December 31,
1998. In management's opinion, all adjustments necessary to reflect the
acquisitions have been made. The unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, the Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 1999 and Current Reports
on Form 8-K dated March 31, 1999, April 21, 1999, April 30, 1999, May 7, 1999
and June 10, 1999.
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 Company.
(a) Reflects the purchase of three manufactured home communities for
$25,892,000. The Company sold short-term investments and paid $21,374,000
of the acquisition price in cash. The remaining $4,518,000 was in the form
of deferred payments over three years discounted at a 7% per annum imputed
interest rate.
(b) Reflects adjustment for the revenues and property expenses of the
acquisitions of four manufactured home communities during 1999.
(c) Reflects depreciation of acquired assets on the straight-line basis over an
estimated useful life of 25 years for land improvements and buildings.
(d) Eliminates the interest income at (i) 4.9% per annum for the three months
ended March 31, 1999; and (ii) 5.5% per annum for the year ended December
31, 1998; on the short-term investments used to acquire the manufactured
home communities.
(e) Reflects management fees payable to the Company's manager based upon 1% per
annum of the average amount invested.
(f) Reflects interest expense at 7% on the present value of the deferred
payments of the acquisition price for one community.
(g) Reflects acquisition fees paid to the Company's manager based upon 0.5% of
the cost of the acquired communities.
(Community Acquisition and Development Corporation
National Agreement of Sale)
AGREEMENT OF SALE
THIS AGREEMENT OF SALE made as of this 6th day of May, 1999, by and
between COMMUNITY ACQUISITION AND DEVELOPMENT CORPORATION, a Delaware
corporation ("BUYER") and FIVE WHITES, L.L.C., an Arizona limited liability
company ("SELLER").
WHEREAS, SELLER is the fee simple owner of certain premises commonly
known as LA CASA BLANCA MOBILE HOME PARK located in Apache Junction, Maricopa
County, Arizona, 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 and equipment described in the Schedule of
Personal Property attached hereto as Exhibit "B" and made a part hereof (the
"Personal Property"), under the terms and conditions set forth herein (the
aforesaid Real Property and Personal Property being hereinafter collectively
referred to as the "Property").
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. SALE AND PURCHASE OF PROPERTY. SELLER agrees to sell and convey to
BUYER and BUYER agrees to purchase:
(a) All of SELLER's right, title and interest in and to the
Real Property, together with all right, title and interest, if any, of SELLER in
and to any land lying in the beds of any streets, avenues, alleys or passages,
open or proposed, bounding or abutting the Real Property, and drainage rights
appurtenant to the Real Property, together with all right, title and interest,
if any, of SELLER, in and to any easements, rights of way or passageways
appurtenant to or benefiting the Real Property and free of all liens and
encumbrances except the Permitted Exceptions, as that term is defined in
Paragraph 4 hereof;
(b) All articles of personal property of whatsoever nature or
sort, if any, which are owned by SELLER and which, as of the date of this
Agreement of Sale, are attached or appurtenant to or used in connection with or
located in or upon the Real Property, and any additions thereto or replacements
thereof which may be made between the date of this Agreement of Sale and the
date of Closing hereunder (all of the foregoing being hereinafter collectively
referred to as the "Personal
Page 1 of 22
<PAGE>
Property"), which Personal Property shall be conveyed by SELLER to BUYER at
Closing by a quitclaim bill of sale; and
SELLER's interest in the Real Property and the Personal Property are
hereinafter sometimes referred to collectively as the "Property".
2. CONSIDERATION. The total consideration to be paid by BUYER for the
Property shall be in the sum of SIX MILLION NINE HUNDRED AND THIRTY THOUSAND AND
NO/100 DOLLARS ($6,930,000.00) (the "Purchase Price").
3. PAYMENT OF CONSIDERATION. The Purchase Price shall be paid as
follows:
(a) Within five (5) business days of the Effective Date of
this Agreement of Sale, as that term is defined in paragraph 36 below, BUYER
shall deliver to Lawyers Title Insurance Company, at the following address:
LandAmerica Commercial Services, One Washington Mall, 15th Floor, Boston,
Massachusetts 02108, Attn: Robert Soule (the "Escrow Agent"), the sum of FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000.00) (less any Initial Deposit paid by BUYER
to Escrow Agent under the Letter of Intent dated April 12, 1999), which shall
represent the earnest money deposit for the Property (the "Deposit"). The
Deposit shall be deposited by Escrow Agent in its Trust Account until the
expiration of the BUYER's Inspection Period (as hereinafter defined).
(b) The Escrow Agent shall, upon receipt from BUYER of a
complete and fully executed W-9 Reporting Form, deposit the Deposit into an
interest bearing money market account, which interest shall accrue to BUYER's
benefit unless BUYER defaults hereunder.
(c) BUYER shall pay the balance of the Purchase Price to
SELLER at Closing by wire transfer of immediately available federal funds at the
office of the Escrow Agent.
4. TITLE INSURANCE.
A. Simultaneously with the Effective Date of this Agreement,
SELLER shall deliver to BUYER and Escrow Agent a copy of the owner's current
title insurance policy, if any, together with copies of all instruments recorded
in the public records or otherwise encumbering the Property, subsequent to the
effective date of said Policy.
B. Within twenty (20) days after the Effective Date, Escrow
Agent shall, at SELLER's expense, deliver to BUYER and BUYER's Attorney for
approval, as hereinafter provided, with a copy provided to SELLER's attorney, a
preliminary owner's title binder for a title insurance policy, together with
copies of all exception documents referred to therein, to be issued by an agent
of Escrow Agent licensed and qualified to do business in the state in which the
Real Property is located (the "State"). The binder 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
Page 2 of 22
<PAGE>
equal to the amount of the purchase price. The policy and binder shall be in a
current ALTA standard form "B", except that there shall be no exceptions unless
agreed to by BUYER. The policy shall insure marketable title.
C. BUYER shall have ten (10) days after receipt of the title
binder, together with copies of all exception documents referred to therein, and
the survey called for in paragraph 5 hereof to give written notice to SELLER or
SELLER's attorney of any objections by BUYER to the state of title (including
any matters shown on the survey which are unacceptable to BUYER). Failure of
BUYER to deliver a written notice of disapproval of the state of title to SELLER
or SELLER's attorney within said ten (10) day period shall be conclusive
evidence that BUYER has disapproved said preliminary title report and this
Agreement shall automatically terminate, in which event, Escrow Agent shall
immediately return the Deposit, plus any accrued interest, to BUYER and the
parties shall be released from any further obligations hereunder.
D. After due notice, SELLER shall have a reasonable time, not
to exceed thirty (30) days, to cure any title defects (and if necessary, the
Closing shall be delayed for that period). If SELLER fails to cure any title
defect as to which due notice is given, BUYER shall have the option to:
(a) terminate this Agreement, in which case BUYER
shall notify SELLER that BUYER will not proceed with the purchase, whereupon
this Agreement shall terminate and all parties shall be released from any
further obligations hereunder, except that BUYER shall be entitled to an
immediate refund of all monies paid in respect of the purchase price plus
accrued interest, if any, or
(b) proceed under this Agreement and accept title to
the Real Property subject to such defects, in which case the Closing shall take
place on the later of the date set for Closing as hereinafter provided or on a
date mutually agreed upon by SELLER and BUYER which shall be within ten (10)
days from the date of such election by BUYER (the date finally set by the
parties hereto for the Closing shall be hereinafter referred to as the "Closing
Date").
E. Escrow Agent or its agent, 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 the applicable state statutes to extinguish any right of
purchase or rescission in favor of any tenants or homeowners association.
5. SURVEY. BUYER shall, at its expense, within thirty (30) days after
the Effective Date obtain a current "as built" survey of the Real Property. The
survey must be acceptable and certified to BUYER and to the Title Insurer
insuring the Real Property so that the "survey" and "claims of easements"
exceptions can be removed from the title policy, and must be prepared in
accordance with the minimum requirements adopted by the agency or authority
regulation the preparation of surveys in the State in which the Real Property is
located. The survey shall locate all easements, streets, common area
improvements, building setback lines, and other manmade objects, excluding
manufactured homes and shall be super- imposed over an aerial photograph
Page 3 of 22
<PAGE>
so as to locate all manufactured homes and vacant spaces, if any. If the survey
discloses an encroachment or setback violation, this shall be deemed a defect in
title and paragraph 4 above, shall apply. The survey shall be dated and signed
by a registered and/or licensed land surveyor in the state in which the Real
Property is located. The surveyor's seal shall be affixed to the survey. The
surveyor's registration and/or license number shall be indicated thereon, and
the legal description of the Real Property shall be set forth on the survey. Any
other survey requirements in the Title Commitment shall also be complied with,
including a surveyor's certificate acceptable to the Title Insurer and counsel
for BUYER.
6. REPRESENTATIONS AND WARRANTIES.
A. To induce BUYER to enter into this Agreement, SELLER makes
the following representations and warranties, all of which shall be true and
correct continuously throughout the term of this Agreement, and which shall
survive the closing of title for a period of six (6) months from the Closing
Date (hereinafter defined):
(a) SELLER is the owner of the Property and has the
authority to execute and deliver this Agreement.
(b) To the best of SELLER's knowledge, there are no
special or other assessments levied against or relating to the Property and
SELLER does not know of any proposed assessments.
(c) 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.
(d) There are no leases which affect the Real
Property except as set forth in the Rent Roll attached hereto as Exhibit "C" and
made a part hereof and the information contained on the Rent Roll is true and
correct; no rental agents, brokers or finders have any rights with regard to
such leases and there are no commissions payable in connection therewith; no
tenant has an option to purchase any part of the Property; and SELLER is the
lessor under each such lease and has the right to assign same to BUYER.
(e) SELLER has received no notice of any violations
of any law, ordinance, rule, order, regulation, code or requirement, including
any requirement contained in any hazard insurance policy covering the Property
or any part thereof or of any board of fire underwriters or other body
exercising similar functions, which are applicable to the Property or to any
part thereof or which are applicable to the use or manner of use, occupancy,
possession or operation of the Property.
(f) To the best of SELLER's knowledge, SELLER has
obtained and kept in good standing all governmental permits, licenses, and
approvals necessary for the operation of the
Page 4 of 22
<PAGE>
Property as a manufactured housing (mobile home) community, including, as
applicable, all County Health Permits or other applicable permits, State
Department of Environmental Protection permits and State HRS permits, and, to
the best of SELLER's knowledge, there are no material violations currently
existing thereunder.
(g) A prospectus of the type required by the State
and local governmental agencies having jurisdiction over the Real Property (the
"Governing Laws"), has been provided to each tenant of the Property, if so
required by the Governing Laws. BUYER will not provide any prospectus to a
tenant of the Property prior to Closing unless both SELLER and BUYER have
approved such prospectus in writing.
(h) 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" attached hereto and made a part hereof (the
"Service Contracts"). With respect to the Service Contracts: (i) amounts paid or
payable thereunder shall be prorated between the parties at the Closing and
credits shall be given the parties as appropriate to such prorations; and (ii)
they can each be terminated upon thirty (30) days written notice or less except
as set forth on Exhibit "D".
(i) Except in the ordinary course of SELLER's
business, SELLER will not enter into any amendment to or modification of any of
the Leases prior to the Closing Date, which will reduce, forgive, or postpone
any rents or which would otherwise materially affect the value of the Property,
without BUYER's consent; no rents or other deposits are or will on the Closing
Date be held by SELLER, except only tenant security deposits and prepaid rents
for the current month; 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.
(j) Pending Closing hereunder, SELLER shall conduct
its business involving the Property in the ordinary course, and during said
period will:
(1) Refrain from entering into any contracts
or other commitments regarding the Property, other than in the ordinary and
usual course of business, without the prior written consent of BUYER;
(2) Continue to maintain and repair the
Property in at least the manner which SELLER has previously maintained and
repaired the Property, and SELLER will permit or commit no waste of the
Property; and
(3) Keep in effect SELLER's existing
policies of public liability and hazard and extended coverage insurance insuring
the Property.
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(k) No tenant has been granted any rent
concession not reflected on the face of the copy of the lease for that tenant as
provided by SELLER to BUYER (other than as set forth on the Rent Roll).
(l) To the best of SELLER's knowledge no
underground storage tanks, hazardous substances, or contaminants subject to
Federal, state or local laws or regulation have been used, stored or located on,
under or about the Property in any manner contrary to applicable law and the
Property is free from environmental contamination by such hazardous substances
which require remediation except as set forth in any Phase I Environmental
Report attached hereto as Exhibit "E".
B. SELLER, by executing this Agreement, agrees to indemnify,
defend and save and hold BUYER harmless from and against any and all losses,
costs, expenses, liabilities, claims, causes of action, suits or other matters
by reason of any breach of the above representations and warranties. Such
indemnification includes, but is not limited to, costs and attorneys' fees and
expenses (including attorneys' fees and expenses on appeal) reasonably incurred
in connection with the defense of any claims against BUYER by any party arising
out of the above matters. The SELLER's foregoing indemnity obligation shall
survive Closing and delivery of the Special Warranty Deed hereunder for a period
of six (6) months. In addition, should any representation or warranty made by
SELLER hereunder be determined by BUYER at or before Closing to be incorrect and
BUYER opt to terminate this Agreement as a result thereof, SELLER shall be
obligated to reimburse BUYER promptly upon written demand for the costs of
BUYER's diligence review of the Property through the date of termination up to a
maximum of $25,000.00. This indemnity obligation shall survive Closing and
delivery of the Special Warranty Deed hereunder and shall include all attorneys'
fees and costs incurred in collection of all sums due from SELLER to BUYER
pursuant to this Indemnity, together with interest on said sums at the maximum
rate permitted by law through collection.
C. In the event that any one or more of the representations or
warranties given by SELLER to BUYER in paragraph 6.A above is/are determined by
BUYER between the Closing Date and the Effective Date, to be inaccurate, BUYER
shall give written notice to SELLER and SELLER shall have the option to: use its
best efforts to promptly cure the violation(s); reimburse BUYER for the
reasonable cost of cure (including all reasonable attorneys' fees, engineering
fees, or other applicable fees, costs and charges); or to contest BUYER's
determination by written notice to BUYER, in which event BUYER shall have the
option to pursue the rights and remedies available to BUYER pursuant to
paragraph 20 of this Agreement.
D. To induce SELLER to enter into this Agreement, BUYER
represents and warrants that BUYER has the authority to sign all of the closing
papers.
7. TERMITE INSPECTION AND REPORT. Prior to the expiration of the
Inspection Period and at BUYER's expense, BUYER shall obtain a termite
certificate for the Property. Any infestation or damage therefrom found to be
existing shall be repaired in a reasonable time, not to exceed two (2) months
from the Closing Date, at SELLER's expense not to exceed $5,000.00. In
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the event SELLER fails to make said repairs within said time period, BUYER shall
have the right to make said repairs and to collect the cost thereof (not to
exceed $5,000.00) from SELLER in the manner provided for a reproration pursuant
to paragraph 12 below. Any sums advanced by BUYER in this connection shall bear
interest at the rate of fifteen percent (15%) per annum until paid. This
paragraph shall survive the closing of this transaction and delivery of the
Special Warranty Deed.
8. BUYER'S INSPECTION PERIOD. BUYER shall have until the later of (i)
forty-five (45) days after the Effective Date, or (ii) twenty (20) days after
the date the SELLER has furnished the BUYER with all of the Data set forth below
("BUYER's Inspection Period"), during which time BUYER shall have the right to
perform such due diligence evaluations as BUYER may reasonably require in
connection with its evaluation of the Property, including, but not limited to,
environmental, soils, flood plain, legal, financial and engineering studies (the
"Data"), all at BUYER's sole cost and expense. BUYER hereby indemnifies and
agrees to hold harmless and defend SELLER from and against any and all losses or
claims for property damage or personal injury or any liability under any
environmental or other law arising out of BUYER's inspections and BUYER and/or
any contractor of BUYER shall, prior to entry on the Real Property hereunder,
obtain casualty/liability insurance in an amount satisfactory to SELLER, or to
add SELLER to existing policies as a named insured, and provide SELLER with a
certificate of insurance evidencing that SELLER is insured against any such
loss. In the event that any inspection by BUYER or any consultant engaged by
BUYER in connection with BUYER's due diligence results in any damage or
disturbance to the Property or any other damage or disturbance, BUYER shall
cause such consultant, or undertake itself, at no cost to SELLER, to repair
promptly such damage and restore such Property to the condition it was in
immediately prior to such inspection. If BUYER approves of the Data, BUYER shall
deliver written notice to SELLER indicating BUYER's approval of the Data (the
"Data Approval Notice") prior to the expiration of the Inspection Period. If
BUYER fails to deliver the Data Approval Notice as aforesaid, the Data shall be
deemed unsatisfactory to BUYER and this Agreement shall automatically terminate,
in which event, Escrow Agent shall immediately return the Deposit, plus any
accrued interest, to BUYER and the parties shall be released from any further
obligations hereunder. In connection with BUYER's due diligence evaluations of
the Property, SELLER agrees to furnish the following information to BUYER on the
Effective Date (unless otherwise provided herein):
1. Current Rent Roll;
2. Monthly Financial Statements for the previous thirty-
six (36) months;
3. Community Prospectus or comparable State required
documents, if any;
4. Mobile Home Inventory List (None);
5. Previous Title Insurance Policy, if any;
6. Prior Survey, if any;
7. Liability Listing (contingent and non-contingent), if
any;
8. Lists of all current and previous legal action
(None);
9. Existing Environmental Phase I Report, if any;
10. True Copies of paid real estate and personal property
tax bills for the previous three (3) years;
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11. True Copies of Rental Increase Notices for previous
three (3) years (None available; however, SELLER
shall furnish BUYER an affidavit setting forth the
rental increases for that period or verified rent
rolls for those periods);
12. A statement confirming the number of occupied spaces,
developed but unoccupied spaces, and undeveloped
spaces and the net operating income ("NOI") for the
year 1998 and NOI to date through the 30th of the
month prior to the Acceptance Date; and
13. All leases and any amendments, certificates, or
incentive agreements pertaining thereto, will be
available at the Property during the Inspection
Period for review and copying by BUYER at its
expense.
.
The Inspection Period shall be extended one (1) day for each
day after the Effective Date (unless otherwise provided herein) SELLER fails to
provide the foregoing to BUYER.
SELLER agrees to provide BUYER with all of the items set forth
above for BUYER's review so that the only items left during the BUYER's
Inspection Period shall be the remaining due diligence items pertaining to: the
condition of the Property; zoning; code compliance; updated survey; updated
title; termite report; and environmental report.
SELLER acknowledges that if the residents of any of the mobile
home parks elect to purchase their mobile home park through a statutory
recognized residents' association, this Agreement shall be enforceable as to the
remaining mobile home parks and should any statutory recognized residents'
association elect to purchase their mobile home park, but then fails to close
for any reason, this Agreement shall be deemed a back-up contract and the terms
and conditions of this paragraph shall control upon the termination of the
residents' contract.
9. CONDITIONS PRECEDENT. The following are conditions precedent to
BUYER's obligation to close and consummate the transaction contemplated by this
Agreement. BUYER and only BUYER, may waive one or more of these conditions. In
the event that all of these conditions are not satisfied or fulfilled by the
Closing Date, BUYER may elect not to close this transaction, and in such event,
BUYER shall be entitled to the prompt return from Escrow Agent of the Deposit:
A. The representations and warranties of SELLER contained in
paragraph 6 above, and all other representations and warranties of SELLER
contained herein, 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.
B. The representations and warranties of BUYER contained in
paragraph 6 above, and all other representations and warranties of BUYER
contained herein, shall be true and correct on the Closing Date. BUYER, 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.
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C. There shall have been no material change in the physical
condition or the net operating income of the Property.
D. SELLER shall cooperate with representatives from Ernst &
Young LLP or any other accounting firm selected by BUYER ("CPA Representative")
to audit the financial Data provided by SELLER under paragraph 8 above, which
financial Data shall include, but not be limited to, income and expense reports,
original invoices and bank statements required under paragraph 8 above. The CPA
Representative shall have the right to update its review of the financial Data
between the expiration of BUYER's Inspection Period and the Closing Date.
9.1 The following are conditions precedent to SELLER's obligation to
close and consummate the transaction contemplated by this Agreement. SELLER and
only SELLER, may waive one or more of these conditions. In the event that all of
these conditions are not satisfied or fulfilled by the Closing Date, SELLER may
elect not to close this transaction, and in such event, BUYER shall be entitled
to the prompt return from Escrow Agent of the Deposit:
A. The Closing shall occur simultaneously with the closing of
that certain Agreement of Sale made as of this date by and between BUYER and
WHITE GREG, L.L.C.
B. The Closing shall occur simultaneously with the closing of
that certain Agreement of Sale made as of this date by and between BUYER and
WHITE SANDS ESTATES, L.L.C. (the "White Sands Contract"), provided, however,
when BUYER deposits the additional Deposit with Escrow Agent of $50,000.00,
making the total Deposit of $100,000.00 under the White Sands Contract, this
condition shall be deleted or deemed satisfied and of no further force and
effect.
C. In the event BUYER fails for any reason to close the
Agreements of Sale identified in Paragraphs A and B above, subject to the
condition in paragraph B being deleted or satisfied, SELLER may cancel this
Agreement of Sale.
10. CLOSING. The sale and purchase transaction contemplated by this
Agreement shall be closed and consummated on or before fifteen (15) business
days from the date of expiration of the Inspection Period on a date mutually
agreed to by the parties (the "Closing Date"). Closing shall be at the closest
office of an agent of the Escrow Agent located in the proximity of Apache
Junction, Arizona or, at BUYER's option, may be effected through the mail as
coordinated by counsel for SELLER and BUYER. Notice shall be given to Escrow
Agent at least five (5) days in advance of the date established by the parties
for Closing. The Closing shall be at 12:00 Noon, Eastern Standard Time on the
Closing Date unless otherwise agreed by the parties or their counsel. At
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 or applicable partnership 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.
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B. Special Warranty Deed from SELLER to BUYER conveying title
to the Real Property to BUYER free and clear of all liens, encumbrances and
matters other than the Permitted Exceptions.
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.
D. Affidavit of No Liens by SELLER.
E. Affidavit of Non-Foreign Status by SELLER.
F. Updated certified rent roll dated and accurate as of the
Closing Date and certified by SELLER to BUYER.
G. 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, all
authorizations, permits and licenses relating to the operation of the Property
which are assignable by SELLER, if any, and all leases, 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.
H. 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.
I. Assignment by SELLER, to the extent they exist and without
representation or warranty, to BUYER of all agreements, 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.
J. Closing Statement by SELLER and BUYER.
K. Such other documents as are reasonably necessary to close
and consummate the purchase and sale transaction contemplated by this Agreement.
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L. SELLER shall deliver to BUYER all existing plans and
specifications relating to the improvements located upon the Property which are
in SELLER's possession or reasonably accessible to SELLER.
M. SELLER shall deliver and assign to BUYER all of SELLER's
right, title and interest, if any, in and to all licenses, permits, certificates
of occupancy, 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.
N. BUYER shall deliver to SELLER the adjusted cash portion of
the Purchase Price and authorize Escrow Agent's delivery of the Deposit to
SELLER. Said sum shall be paid, at SELLER's election, by locally drawn cashier's
check or Federal Reserve Bank wire transfer.
11. CLOSING COSTS. SELLER shall pay for the cost of any corrective
documents required for marketable and insurable title, transfer stamps on the
Special Warranty Deed and all costs associated with the issuance of the title
binder and policy. BUYER shall pay for the cost of the survey, environmental
report, and the recording the Special Warranty Deed. Each party shall bear its
own attorneys' fees and other professional costs, except as otherwise provided
for herein.
12. 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
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 of the Closing
by the governmental agency having jurisdiction over the Property, 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 ten (10)
days of request therefor. In the event SELLER or BUYER fails to remit the
reproration amount requested within said ten (10) 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 highest lawful rate until paid, it being acknowledged
that this right shall survive Closing and delivery of the Special Warranty Deed.
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. However,
all rents received by BUYER attributable to periods prior to the Closing Date
shall be promptly remitted by BUYER to SELLER. All rents collected after the
Closing shall be first applied to current rents due, then to rents for periods
prior to the Closing Date unless they are clearly intended by the tenant to
apply for the period prior to Closing in which event they shall be promptly
remitted to SELLER. This
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obligation to remit shall survive the Closing and delivery of the Special
Warranty Deed. 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.
13. DELIVERY OF POSSESSION. At Closing, SELLER shall deliver to BUYER
possession of the Real Property free and clear of all leases, tenancies or
occupancy, except those tenants set forth in the current rent roll provided to
BUYER by SELLER, and subject only to the Permitted Exceptions.
14. FIRE OR OTHER CASUALTY. For purposes of this Agreement of Sale, a
"minor casualty" shall be any casualty occurring to the Real Property which
causes damages of less than One Hundred Fifty Thousand Dollars ($150,000.00) to
the Real Property. Any other casualty shall be a "major casualty". If, prior to
Closing hereunder, the Real Property is subjected to a major or minor casualty
of which SELLER becomes aware, SELLER shall give BUYER prompt written notice
thereof. If such casualty is a minor casualty, this Agreement of Sale shall
remain in full force and effect and the purchase contemplated herein shall be
concluded with no further adjustment, and at Closing SELLER shall assign,
transfer and set over to BUYER all of the right, title and interest of SELLER in
and to any awards that have been or that may thereafter be made for such
casualty, subject only to any rights of Tenant under each Lease. If such
casualty is a major casualty, the Real Property shall be considered a defective
parcel and BUYER shall have the right to terminate this Agreement whereupon the
Deposit will be refunded to the BUYER and the parties will be released from any
further liability hereunder.
15. EMINENT DOMAIN. For purposes of this Agreement of Sale, a "minor
condemnation" shall be any taking or condemnation by any body having the power
of condemnation or eminent domain which causes damages of less than One Hundred
Fifty Thousand Dollars ($150,000.00) to the Real Property. Any other taking or
condemnation shall be a "major condemnation". If prior to Closing hereunder the
Real Property is subjected to a major or minor condemnation of which SELLER
becomes aware, SELLER shall give BUYER prompt written notice thereof. If such
condemnation is a minor condemnation, this Agreement of Sale shall remain in
full force and effect and the purchase contemplated herein, less any interest
taken by eminent domain or condemnation, shall be effected with no further
adjustment, and at Closing, SELLER shall assign, transfer and set over to BUYER
all of the right, title and interest of SELLER in and to any awards that have
been or that may thereafter be made for such taking, subject only to rights of
Tenant under any Lease. If such condemnation is a major condemnation, the Real
Property subject to the major condemnation shall be considered a defective
parcel and BUYER shall have the right to terminate this Agreement whereupon the
Deposit will be refunded to the BUYER and the parties will be released from any
further liability hereunder
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16. NOTICES. All notices and other communications under this Agreement
of Sale shall be in writing and shall be effectively given only if sent by
nationally recognized overnight courier service, postage prepaid, return receipt
requested, addressed as follows:
To SELLER: James White
3700 South Ironwood Road
Apache Junction, AZ 85220
FAX No. __________________
With a copy to: Thomas Koniuszy, Esquire
Quindry & Koniuszy
4445 E. Broadway, Suite 109
Mesa, AZ 85206
FAX No. (480) 396-9738
To BUYER: Community Acquisition and Development
Corporation
Attn: Joseph W. Gaynor, President
2637 McCormick Dr., Ste. B
Clearwater, FL 33759
FAX No. (813) 791-9200
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With a copy to: Commercial Assets, Inc.
Attn: Bruce E. Moore, President
2 Ponds Edge Drive
Chadds Ford, PA 19317
FAX No. (610) 388-9616
or such other address as the party to be notified shall have designated to the
other party hereby by notice delivered in . accordance herewith. All such
notices shall be deemed given on the business day next following the day such
notice is accepted for delivery by the overnight courier service.
17. 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.
18. ASSIGNMENT. BUYER may assign its rights and interests under this
Agreement of Sale to any party without first obtaining the prior written consent
of SELLER. Prior to the expiration of the Inspection Period, BUYER will notify
SELLER of the identity of any proposed assignee of this Agreement of Sale.
19. 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
at no additional cost at the time of Closing and shall be covered by the Bill of
Sale.
20. 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 legally cognizable damages suffered by BUYER by reason of the delay in
BUYER's acquisition of the Property; or (b) sue SELLER for legally cognizable
damages sustained by BUYER by reason of the default of SELLER provided, however,
that in no event shall the damages recoverable exceed four percent (4%) of the
gross purchase price; or (c) obtain the prompt return from Escrow Agent of the
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.
21. 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
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be to obtain the 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
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.
22. PROVISIONS WITH RESPECT TO ESCROW.
(a) The duties and obligations of Escrow Agent hereunder shall
be entirely administrative and ministerial and not discretionary. Escrow Agent
shall be under no responsibility in respect of the Deposit other than to
faithfully follow the instructions herein contained. Escrow Agent may
conclusively rely upon any instructions or documents delivered to it by BUYER
and SELLER and purportedly executed by a duly authorized officer or partner
thereof and shall be under-no duty of independent inquiry with respect to any
facts or circumstances recited therein. In the event that any notice or
instruction required to be delivered to Escrow Agent hereunder is not so
delivered, Escrow Agent may hold the Deposit, if any, pending delivery to Escrow
Agent of such instruction or notice and may exercise all of Escrow Agent's
rights and remedies hereunder or otherwise provided by law. The parties hereto
jointly and severally agree to reimburse and indemnify Escrow Agent for, and
hold Escrow Agent harmless against, any loss, liability or expense, including
but not limited to, reasonable attorney's fees, which may be asserted against
Escrow Agent or to which Escrow Agent may be exposed or which may be incurred by
reason of the acceptance of, or the performance of duties and obligations under
this Agreement of Sale, except arising from such Escrow Agent's gross negligence
or willful misconduct. In no event shall Escrow Agent be liable for any loss,
cost or damage arising out of the performance of its duties hereunder, except
for acts of gross negligence or willful misconduct.
(b) In the event of any dispute or disagreement in connection
with the performance by Escrow Agent of its duties under this Agreement of Sale,
including, but not limited to, the respective rights of the parties to the
Deposit, Escrow Agent may consult with counsel selected and employed by Escrow
Agent, and Escrow Agent shall suffer no liability for any action taken or
suffered in good faith in accordance with the opinion of such counsel, if any,
provided, however, that the Deposit shall be disbursed in accordance with the
terms of this Agreement of Sale. Notwithstanding any other provision of this
Agreement of Sale, if any dispute or difference arises among the parties or if
any conflicting demand shall be made upon Escrow Agent, Escrow Agent shall not
be required to determine the same or take any action thereon. Rather, Escrow
Agent may await settlement of the controversy by appropriate legal proceedings;
or Escrow Agent may, by written notice to the parties hereto, initiate
litigation to determine to whom the Deposit held under this Agreement of Sale
shall be delivered; or Escrow Agent may file suit in interpleader with the
proper
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court in the United States District Court for the District in which the Real
Property is located, for the purpose of having the respective rights of the
parties adjudicated. Escrow Agent, upon initiation of such suit, may deposit
with the court the Deposit and, upon giving notice thereof to the parties
hereto, Escrow Agent shall be fully released and discharged from all further
obligations hereunder with respect to the Deposit except arising from gross
negligence or willful misconduct of Escrow Agent.
23. ACCEPTANCE DATE. SELLER shall have until 5:00 P.M. (EST) on the
fifth (5th) business day following Buyer's Execution Date, within which to
accept this Agreement. In the event SELLER fails to accept this Agreement as of
that time and date, this Agreement shall be null and void and of no further
effect and BUYER shall be entitled to the prompt return from Escrow Agent of the
Deposit.
24. CONFIDENTIALITY. SELLER and BUYER agree not to disclose any of the
terms of this Agreement prior to Closing except to the officers, directors,
employees and third party professionals assisting each party with the due
diligence and closing of this transaction.
25. OTHER OFFERS. SELLER shall neither solicit nor accept any client
offers so long as this Agreement is in full force and effect.
26. BROKER'S COMMISSION. SELLER and BUYER each warrant that there are
no real estate or other brokers or finders of any type involved in this
transaction other than Saguaro Properties, Inc., 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. BUYER shall be responsible to pay any
commissions due to Saguaro Properties, Inc., pursuant to a separate agreement.
27. SURVIVAL OF AGREEMENT. The terms and conditions of this Agreement
which expressly so state shall survive the Closing hereof.
28. TIME IS OF THE ESSENCE. SELLER and BUYER acknowledge that time is
of the essence of this Agreement.
29. 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.
30. 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
Page 16 of 22
<PAGE>
proceedings. The provisions of this paragraph shall survive Closing and delivery
of the Special Warranty Deed.
31. EXHIBITS. In the event that any exhibit which is referred to in
this Agreement is not attached hereto at the time of execution of this Agreement
by SELLER and BUYER, SELLER shall promptly cause any such missing exhibit to be
prepared and submitted to BUYER for BUYER's approval within five (5) days from
the Effective Date hereof. Upon approval of a given exhibit by BUYER, the same
shall be incorporated into this Agreement by written agreement executed by
SELLER and BUYER.
32. 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.
33. 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 the State in which
the Real Property is located. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
34. VENUE. Venue for any legal proceeding hereunder shall be in the
State in which the Real Property is located.
35. 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.
36. EFFECTIVE DATE. Unless otherwise set forth herein, the Effective
Date shall be the date this Agreement is executed by the SELLER, so long as
SELLER returns a fully executed duplicate original of this Agreement to the
BUYER, by either hand delivery or postmarked as of the date of the execution of
this Agreement by the SELLER. Each day of delay in returning the executed
Agreement to the BUYER shall likewise extend the Effective Date.
37. 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.
38. 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.
Page 17 of 22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year indicated below.
WITNESSES: COMMUNITY ACQUISITION AND
DEVELOPMENT CORPORATION, a
Delaware corporation
/s/Merrilyn Lovelady By:/s/Joseph W. Gaynor
Print Name: Merrilyn Lovelady Joseph W. Gaynor, President
/s/Cynthia E. Witte "BUYER"
Print Name: Cynthia E. Witte
Buyer's Execution Date: May 5,
1999
WITNESSES: SELLER:
FIVE WHITES, L.L.C., an Arizona
limited liability company
/s/Thomas E. Koniuszy By:/s/Alexander White
Print Name: Thomas E. Koniuszy Print Name: Alexander White
/s/Gary Gunsalus
Print Name: Gary Gunsalus Execution Date: May 6, 1999
/s/Thomas E. Koniuszy By:/s/Ester M. White
Print Name: Thomas E. Koniuszy Print Name: Esther M. White
/s/Gary Gunsalus
Print Name: Gary Gunsalus Execution Date: May 6, 1999
/s/Alexander White By:/s/James White
Print Name: Alexander White Print Name: James White
/s/Ester M. White
Print Name: Ester M. White Execution Date: May 6, 1999
/s/Alexander White By:/s/Ester K. White
Print Name: Alexander White Print Name: Esther K. White
/s/Ester M. White
Print Name: Ester M. White Execution Date: May 6, 1999
Page 18 of 22
<PAGE>
/s/Alexander White By:/s/James White, Jr.
Print Name: Alexander White Print Name: James White, Jr.
/s/Ester M. White
Print Name: Ester M. White Execution Date: May 6, 1999
Page 19 of 22
<PAGE>
/s/Alexander White By:/s/Jesse White
Print Name: Alexander White Print Name: Jesse White
/s/Ester M. White
Print Name: Ester M. White Execution Date: May 6, 1999
/s/Alexander White By:/s/John White
Print Name: Alexander White Print Name: John White
/s/Ester M. White
Print Name: Ester M. White Execution Date: May 6, 1999
/s/Alexander White By:/s/Agnes White
Print Name: Alexander White Print Name: Agnes White
/s/Ester M. White
Print Name: Ester M. White Execution Date: May 6, 1999
/s/Alexander White, Jr. By:/s/Alexander White, Jr.
Print Name: Print Name: Alexander White, Jr
/s/Agnes Keith
Print Name: Agnes Keith Execution Date: May 6, 1999
/s/Kathryn White By:/s/Kathryn White
Print Name: Print Name: Kathryn White
/s/Agnes Keith
Print Name: Agnes Keith Execution Date: May 6, 1999
Page 20 of 22
<PAGE>
JOINDER
______________________________ of ________________________________
joins in this Agreement of Sale for the sole purpose of agreeing to act as
Escrow Agent and to be legally bound to hold the Deposit in accordance with the
provisions in Paragraphs 3(a) and 22 hereof.
By:
Print Name:
As Escrow Agent
Page 21 of 22
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT "A" Metes and Bounds Description of the Property
EXHIBIT "B" Schedule of Personal Property
EXHIBIT "C" Rent Roll
EXHIBIT "D" Service Contracts
EXHIBIT "E" Phase I Environmental Audit Summary
Page 22 of 22
(Community Acquisition and Development Corporation
National Agreement of Sale)
AGREEMENT OF SALE
THIS AGREEMENT OF SALE made as of this 6th day of May, 1999, by and
between COMMUNITY ACQUISITION AND DEVELOPMENT CORPORATION, a Delaware
corporation ("BUYER") and WHITE GREGG, L.L.C., an Arizona limited liability
company ("SELLER").
WHEREAS, SELLER is the fee simple owner of certain premises commonly
known as LA CASA BLANCA EAST MOBILE HOME PARK located in Apache Junction,
Maricopa County, Arizona, 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 and equipment described in the Schedule of
Personal Property attached hereto as Exhibit "B" and made a part hereof (the
"Personal Property"), under the terms and conditions set forth herein (the
aforesaid Real Property and Personal Property being hereinafter collectively
referred to as the "Property").
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. SALE AND PURCHASE OF PROPERTY. SELLER agrees to sell and convey to
BUYER and BUYER agrees to purchase:
(a) All of SELLER's right, title and interest in and to the
Real Property, together with all right, title and interest, if any, of SELLER in
and to any land lying in the beds of any streets, avenues, alleys or passages,
open or proposed, bounding or abutting the Real Property, and drainage rights
appurtenant to the Real Property, together with all right, title and interest,
if any, of SELLER, in and to any easements, rights of way or passageways
appurtenant to or benefiting the Real Property and free of all liens and
encumbrances except the Permitted Exceptions, as that term is defined in
Paragraph 4 hereof;
(b) All articles of personal property of whatsoever nature or
sort, if any, which are owned by SELLER and which, as of the date of this
Agreement of Sale, are attached or appurtenant to or used in connection with or
located in or upon the Real Property, and any additions thereto or replacements
thereof which may be made between the date of this Agreement of Sale and the
date of Closing hereunder (all of the foregoing being hereinafter collectively
referred to as the "Personal
Page 1 of 21
<PAGE>
Property"), which Personal Property shall be conveyed by SELLER to BUYER at
Closing by a quitclaim bill of sale; and
SELLER's interest in the Real Property and the Personal Property are
hereinafter sometimes referred to collectively as the "Property".
2. CONSIDERATION. The total consideration to be paid by BUYER for the
Property shall be in the sum of SEVEN MILLION TWO HUNDRED AND FORTY-FIVE
THOUSAND AND NO/100 DOLLARS ($7,245,000.00) (the "Purchase Price"), based on
THIRTY- FIVE THOUSAND AND NO/100 DOLLARS ($35,000.00) per fully developed space.
3. PAYMENT OF CONSIDERATION. The Purchase Price shall be paid as
follows:
(a) Within five (5) business days of the Effective Date of
this Agreement of Sale, as that term is defined in paragraph 36 below, BUYER
shall deliver to Lawyers Title Insurance Company, at the following address:
LandAmerica Commercial Services, One Washington Mall, 15th Floor, Boston,
Massachusetts 02108, Attn: Robert Soule (the "Escrow Agent"), the sum of FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000.00) (less any Initial Deposit paid by BUYER
to Escrow Agent under the Letter of Intent dated April 12, 1999), which shall
represent the earnest money deposit for the Property (the "Deposit"). The
Deposit shall be deposited by Escrow Agent in its Trust Account until the
expiration of the BUYER's Inspection Period (as hereinafter defined).
(b) The Escrow Agent shall, upon receipt from BUYER of a
complete and fully executed W-9 Reporting Form, deposit the Deposit into an
interest bearing money market account, which interest shall accrue to BUYER's
benefit unless BUYER defaults hereunder.
(c) BUYER shall pay TWO MILLION AND NO/100 DOLLARS
($2,000,000.00), including the release by the Escrow Agent of the FIFTY THOUSAND
DOLLAR ($50,000.00) Deposit, to SELLER at Closing by wire transfer of
immediately available federal funds at the office of the Escrow Agent.
(d) The balance of FIVE MILLION TWO HUNDRED FORTY-FIVE
THOUSAND AND NO/100 DOLLARS ($5,245,000.00) shall be payable under an earn-out
agreement to be recorded in the public records of Maricopa County, Arizona,
having terms and conditions accepted and approved by SELLER and BUYER during the
Inspection Period, which shall include the following earn-out schedule:
(i) One (1) year after the date of Closing, BUYER
shall pay to SELLER ONE MILLION THIRTY-EIGHT THOUSAND AND NO/100 DOLLARS
($1,038,000.00) (the "Second Installment");
Page 2 of 21
<PAGE>
(ii) Two (2) years after the date of Closing, BUYER
shall pay to SELLER TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) (the "Third
Installment"); and
(iii) Three (3) years after the date of Closing,
BUYER shall pay to SELLER the balance of TWO MILLION TWO HUNDRED SEVEN THOUSAND
AND NO/100 DOLLARS ($2,207,000.00) (the "Last Installment").
(e) SELLER acknowledges that BUYER will assign its rights
under this Agreement to a newly formed Limited Liability Company, of which
Commercial Assets, Inc. will be a manager. Any entity to which BUYER assigns the
Contract, and which ultimately takes title to the Property, shall guaranty the
payment of the deferred portion of the consideration required under this
Agreement.
(f) Payment of the deferred portion of the consideration will
be secured by a lien and security interest against all of the assets of the
entity which owns the Property relating to the ownership and operation of the
Property, including the Real Property and the Personal Property excluding mobile
home inventory, all additions and replacements to the Personal Property
excluding mobile home inventory, and collateral assignments of any leases, all
as may be reasonably required or requested by SELLER, and as approved by SELLER
and SELLER's counsel in the reasonable exercise of their discretion.
(g) SELLER agrees that upon BUYER, its successors or assigns,
paying to SELLER the Third Installment, SELLER agrees to exercise a
Subordination Agreement with respect to the Last Installment so that BUYER, its
successors or assigns, may finance the Property and Personal Property, which
subordination shall be limited to a note in an amount not to exceed fifty
percent (50%) of the lesser of the Purchase Price or the appraised market value
of the Property as of the date of subordination. The terms and conditions,
covenants and restrictions of the Subordination Agreement shall be negotiated
during the Inspection Period and referenced in the Mortgage and Security
Agreement executed at Closing.
4. TITLE INSURANCE.
A. Simultaneously with the Effective Date of this Agreement,
SELLER shall deliver to BUYER and Escrow Agent a copy of the owner's current
title insurance policy, if any, together with copies of all instruments recorded
in the public records or otherwise encumbering the Property, subsequent to the
effective date of said Policy.
B. Within twenty (20) days after the Effective Date, Escrow
Agent shall, at SELLER's expense, deliver to BUYER and BUYER's Attorney for
approval, as hereinafter provided, with a copy provided to SELLER's attorney, a
preliminary owner's title binder for a title insurance policy, together with
copies of all exception documents referred to therein, to be issued by an agent
of Escrow Agent licensed and qualified to do business in the state in which the
Real Property is located (the "State"). The binder and policy to be issued
pursuant thereto shall be
Page 3 of 21
<PAGE>
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 binder
shall be in a current ALTA standard form "B", except that there shall be no
exceptions unless agreed to by BUYER. The policy shall insure marketable title.
C. BUYER shall have ten (10) days after receipt of the title
binder, together with copies of all exception documents referred to therein, and
the survey called for in paragraph 5 hereof to give written notice to SELLER or
SELLER's attorney of any objections by BUYER to the state of title (including
any matters shown on the survey which are unacceptable to BUYER). Failure of
BUYER to deliver a written notice of disapproval of the state of title to SELLER
or SELLER's attorney within said ten (10) day period shall be conclusive
evidence that BUYER has disapproved said preliminary title report and this
Agreement shall automatically terminate, in which event, Escrow Agent shall
immediately return the Deposit, plus any accrued interest, to BUYER and the
parties shall be released from any further obligations hereunder.
D. After due notice, SELLER shall have a reasonable time, not
to exceed thirty (30) days, to cure any title defects (and if necessary, the
Closing shall be delayed for that period). If SELLER fails to cure any title
defect as to which due notice is given, BUYER shall have the option to:
(a) terminate this Agreement, in which case BUYER
shall notify SELLER that BUYER will not proceed with the purchase, whereupon
this Agreement shall terminate and all parties shall be released from any
further obligations hereunder, except that BUYER shall be entitled to an
immediate refund of all monies paid in respect of the purchase price plus
accrued interest, if any, or
(b) proceed under this Agreement and accept title to
the Real Property subject to such defects, in which case the Closing shall take
place on the later of the date set for Closing as hereinafter provided or on a
date mutually agreed upon by SELLER and BUYER which shall be within ten (10)
days from the date of such election by BUYER (the date finally set by the
parties hereto for the Closing shall be hereinafter referred to as the "Closing
Date").
E. Escrow Agent or its agent, 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 the applicable state statutes to extinguish any right of
purchase or rescission in favor of any tenants or homeowners association.
5. SURVEY. BUYER shall, at its expense, within thirty (30) days after
the Effective Date obtain a current "as built" survey of the Real Property. The
survey must be acceptable and certified to BUYER and to the Title Insurer
insuring the Real Property so that the "survey" and "claims of easements"
exceptions can be removed from the title policy, and must be prepared in
accordance with the minimum requirements adopted by the agency or authority
regulation the preparation of surveys in the State in which the Real Property is
located. The survey shall locate all easements, streets, common area
improvements, building setback lines, and other manmade
Page 4 of 21
<PAGE>
objects, excluding manufactured homes and shall be super- imposed over an aerial
photograph so as to locate all manufactured homes and vacant spaces, if any. If
the survey discloses an encroachment or setback violation, this shall be deemed
a defect in title and paragraph 4 above, shall apply. The survey shall be dated
and signed by a registered and/or licensed land surveyor in the state in which
the Real Property is located. The surveyor's seal shall be affixed to the
survey. The surveyor's registration and/or license number shall be indicated
thereon, and the legal description of the Real Property shall be set forth on
the survey. Any other survey requirements in the Title Commitment shall also be
complied with, including a surveyor's certificate acceptable to the Title
Insurer and counsel for BUYER.
6. REPRESENTATIONS AND WARRANTIES.
A. To induce BUYER to enter into this Agreement, SELLER makes
the following representations and warranties, all of which shall be true and
correct continuously throughout the term of this Agreement, and which shall
survive the closing of title for a period of six (6) months from the Closing
Date (hereinafter defined):
(a) SELLER is the owner of the Property and has the
authority to execute and deliver this Agreement.
(b) To the best of SELLER's knowledge, there are no
special or other assessments levied against or relating to the Property and
SELLER does not know of any proposed assessments.
(c) 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.
(d) There are no leases which affect the Real
Property except as set forth in the Rent Roll attached hereto as Exhibit "C" and
made a part hereof and the information contained on the Rent Roll is true and
correct; no rental agents, brokers or finders have any rights with regard to
such leases and there are no commissions payable in connection therewith; no
tenant has an option to purchase any part of the Property; and SELLER is the
lessor under each such lease and has the right to assign same to BUYER.
(e) SELLER has received no notice of any violations
of any law, ordinance, rule, order, regulation, code or requirement, including
any requirement contained in any hazard insurance policy covering the Property
or any part thereof or of any board of fire underwriters or other body
exercising similar functions, which are applicable to the Property or to any
part thereof or which are applicable to the use or manner of use, occupancy,
possession or operation of the Property.
Page 5 of 21
<PAGE>
(f) To the best of SELLER's knowledge, SELLER has
obtained and kept in good standing all governmental permits, licenses, and
approvals necessary for the operation of the Property as a manufactured housing
(mobile home) community, including, as applicable, all County Health Permits or
other applicable permits, State Department of Environmental Protection permits
and State HRS permits, and, to the best of SELLER's knowledge, there are no
material violations currently existing thereunder.
(g) A prospectus of the type required by the State
and local governmental agencies having jurisdiction over the Real Property (the
"Governing Laws"), has been provided to each tenant of the Property, if so
required by the Governing Laws. BUYER will not provide any prospectus to a
tenant of the Property prior to Closing unless both SELLER and BUYER have
approved such prospectus in writing.
(h) 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" attached hereto and made a part hereof (the
"Service Contracts"). With respect to the Service Contracts: (i) amounts paid or
payable thereunder shall be prorated between the parties at the Closing and
credits shall be given the parties as appropriate to such prorations; and (ii)
they can each be terminated upon thirty (30) days written notice or less except
as set forth on Exhibit "D".
(i) Except in the ordinary course of SELLER's
business, SELLER will not enter into any amendment to or modification of any of
the Leases prior to the Closing Date, which will reduce, forgive, or postpone
any rents or which would otherwise materially affect the value of the Property,
without BUYER's consent; no rents or other deposits are or will on the Closing
Date be held by SELLER, except only tenant security deposits and prepaid rents
for the current month; 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.
(j) Pending Closing hereunder, SELLER shall conduct
its business involving the Property in the ordinary course, and during said
period will:
(1) Refrain from entering into any contracts
or other commitments regarding the Property, other than in the ordinary and
usual course of business, without the prior written consent of BUYER;
(2) Continue to maintain and repair the
Property in at least the manner which SELLER has previously maintained and
repaired the Property, and SELLER will permit or commit no waste of the
Property; and
(3) Keep in effect SELLER's existing
policies of public liability and hazard and extended coverage insurance insuring
the Property.
Page 6 of 21
<PAGE>
(k) No tenant has been granted any rent concession
not reflected on the face of the copy of the lease for that tenant as provided
by SELLER to BUYER (other than as set forth on the Rent Roll).
(l) To the best of SELLER's knowledge no underground
storage tanks, hazardous substances, or contaminants subject to Federal, state
or local laws or regulation have been used, stored or located on, under or about
the Property in any manner contrary to applicable law and the Property is free
from environmental contamination by such hazardous substances which require
remediation except as set forth in any Phase I Environmental Report attached
hereto as Exhibit "E".
B. SELLER, by executing this Agreement, agrees to indemnify,
defend and save and hold BUYER harmless from and against any and all losses,
costs, expenses, liabilities, claims, causes of action, suits or other matters
by reason of any breach of the above representations and warranties. Such
indemnification includes, but is not limited to, costs and attorneys' fees and
expenses (including attorneys' fees and expenses on appeal) reasonably incurred
in connection with the defense of any claims against BUYER by any party arising
out of the above matters. The SELLER's foregoing indemnity obligation shall
survive Closing and delivery of the Special Warranty Deed hereunder for a period
of six (6) months. In addition, should any representation or warranty made by
SELLER hereunder be determined by BUYER at or before Closing to be incorrect and
BUYER opt to terminate this Agreement as a result thereof, SELLER shall be
obligated to reimburse BUYER promptly upon written demand for the costs of
BUYER's diligence review of the Property through the date of termination up to a
maximum of $25,000.00. This indemnity obligation shall survive Closing and
delivery of the Special Warranty Deed hereunder and shall include all attorneys'
fees and costs incurred in collection of all sums due from SELLER to BUYER
pursuant to this Indemnity, together with interest on said sums at the maximum
rate permitted by law through collection.
C. In the event that any one or more of the representations or
warranties given by SELLER to BUYER in paragraph 6.A above is/are determined by
BUYER between the Closing Date and the Effective Date, to be inaccurate, BUYER
shall give written notice to SELLER and SELLER shall have the option to: use its
best efforts to promptly cure the violation(s); reimburse BUYER for the
reasonable cost of cure (including all reasonable attorneys' fees, engineering
fees, or other applicable fees, costs and charges); or to contest BUYER's
determination by written notice to BUYER, in which event BUYER shall have the
option to pursue the rights and remedies available to BUYER pursuant to
paragraph 20 of this Agreement.
D. To induce SELLER to enter into this Agreement, BUYER
represents and warrants: (1) that BUYER has the authority to sign all of the
closing papers; (2) that the first mortgage will contain a due on sale provision
as to the Property and Personal Property, excluding the mobile home inventory,
and further excluding any transfer of any member by assignment, merger or
consolidation; (3) that the owner of the Property shall remain a single asset
entity; and (4) the owner shall operate the Property in accordance with the
Rules and Regulations existing or promulgated by the division of the State of
Arizona having jurisdiction over the Property.
Page 7 of 21
<PAGE>
7. TERMITE INSPECTION AND REPORT. Prior to the expiration of the
Inspection Period and at BUYER's expense, BUYER shall obtain a termite
certificate for the Property. Any infestation or damage therefrom found to be
existing shall be repaired in a reasonable time, not to exceed two (2) months
from the Closing Date, at SELLER's expense not to exceed $5,000.00. In the event
SELLER fails to make said repairs within said time period, BUYER shall have the
right to make said repairs and to collect the cost thereof (not to exceed
$5,000.00) from SELLER in the manner provided for a reproration pursuant to
paragraph 12 below. Any sums advanced by BUYER in this connection shall bear
interest at the rate of fifteen percent (15%) per annum until paid. This
paragraph shall survive the closing of this transaction and delivery of the
Special Warranty Deed.
8. BUYER'S INSPECTION PERIOD. BUYER shall have until the later of (i)
forty-five (45) days after the Effective Date, or (ii) twenty (20) days after
the date the SELLER has furnished the BUYER with all of the Data set forth below
("BUYER's Inspection Period"), during which time BUYER shall have the right to
perform such due diligence evaluations as BUYER may reasonably require in
connection with its evaluation of the Property, including, but not limited to,
environmental, soils, flood plain, legal, financial and engineering studies (the
"Data"), all at BUYER's sole cost and expense. BUYER hereby indemnifies and
agrees to hold harmless and defend SELLER from and against any and all losses or
claims for property damage or personal injury or any liability under any
environmental or other law arising out of BUYER's inspections and BUYER and/or
any contractor of BUYER shall, prior to entry on the Real Property hereunder,
obtain casualty/liability insurance in an amount satisfactory to SELLER, or to
add SELLER to existing policies as a named insured, and provide SELLER with a
certificate of insurance evidencing that SELLER is insured against any such
loss. In the event that any inspection by BUYER or any consultant engaged by
BUYER in connection with BUYER's due diligence results in any damage or
disturbance to the Property or any other damage or disturbance, BUYER shall
cause such consultant, or undertake itself, at no cost to SELLER, to repair
promptly such damage and restore such Property to the condition it was in
immediately prior to such inspection. If BUYER approves of the Data, BUYER shall
deliver written notice to SELLER indicating BUYER's approval of the Data (the
"Data Approval Notice") prior to the expiration of the Inspection Period. If
BUYER fails to deliver the Data Approval Notice as aforesaid, the Data shall be
deemed unsatisfactory to BUYER and this Agreement shall automatically terminate,
in which event, Escrow Agent shall immediately return the Deposit, plus any
accrued interest, to BUYER and the parties shall be released from any further
obligations hereunder. In connection with BUYER's due diligence evaluations of
the Property, SELLER agrees to furnish the following information to BUYER on the
Effective Date (unless otherwise provided herein):
1. Current Rent Roll;
2. Monthly Financial Statements for the previous
thirty-six (36) months;
3. Community Prospectus or comparable State required
documents, if any;
4. Mobile Home Inventory List (None);
5. Previous Title Insurance Policy, if any;
6. Prior Survey, if any;
Page 8 of 21
<PAGE>
7. Liability Listing (contingent and non-contingent), if
any;
8. Lists of all current and previous legal action
(None);
9. Existing Environmental Phase I Report, if any;
10. True Copies of paid real estate and personal property
tax bills for the previous
three (3) years;
11. True Copies of Rental Increase Notices for previous
three (3) years (None available; however, SELLER
shall furnish BUYER an affidavit setting forth the
rental increases for that period or verified rent
rolls for those periods);
12. A statement confirming the number of occupied spaces,
developed but unoccupied spaces, and undeveloped
spaces and the net operating income ("NOI") for the
year 1998 and NOI to date through the 30th of the
month prior to the Acceptance Date; and
13. All leases and any amendments, certificates or
incentive agreements pertaining thereto, will be
available at the Property during the Inspection
Period for review and copying by BUYER at its
expense.
The Inspection Period shall be extended one (1) day for each
day after the Effective Date (unless otherwise provided herein) SELLER fails to
provide the foregoing to BUYER.
SELLER agrees to provide BUYER with all of the items set forth
above for BUYER's review so that the only items left during the BUYER's
Inspection Period shall be the remaining due diligence items pertaining to: the
condition of the Property; zoning; code compliance; updated survey; updated
title; termite report; and environmental report.
SELLER acknowledges that if the residents of any of the mobile
home parks elect to purchase their mobile home park through a statutory
recognized residents' association, this Agreement shall be enforceable as to the
remaining mobile home parks and should any statutory recognized residents'
association elect to purchase their mobile home park, but then fails to close
for any reason, this Agreement shall be deemed a back-up contract and the terms
and conditions of this paragraph shall control upon the termination of the
residents' contract.
9. CONDITIONS PRECEDENT. The following are conditions precedent to
BUYER's obligation to close and consummate the transaction contemplated by this
Agreement. BUYER and only BUYER, may waive one or more of these conditions. In
the event that all of these conditions are not satisfied or fulfilled by the
Closing Date, BUYER may elect not to close this transaction, and in such event,
BUYER shall be entitled to the prompt return from Escrow Agent of the Deposit:
A. The representations and warranties of SELLER contained in
paragraph 6 above, and all other representations and warranties of SELLER
contained herein, 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.
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B. The representations and warranties of BUYER contained in
paragraph 6 above, and all other representations and warranties of BUYER
contained herein, shall be true and correct on the Closing Date. BUYER, 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.
C. There shall have been no material change in the physical
condition or the net operating income of the Property.
D. SELLER shall cooperate with representatives from Ernst &
Young LLP or any other accounting firm selected by BUYER ("CPA Representative")
to audit the financial Data provided by SELLER under paragraph 8 above, which
financial Data shall include, but not be limited to, income and expense reports,
original invoices and bank statements required under paragraph 8 above. The CPA
Representative shall have the right to update its review of the financial Data
between the expiration of BUYER's Inspection Period and the Closing Date.
9.1 The following are conditions precedent to SELLER's obligation to
close and consummate the transaction contemplated by this Agreement. SELLER and
only SELLER, may waive one or more of these conditions. In the event that all of
these conditions are not satisfied or fulfilled by the Closing Date, SELLER may
elect not to close this transaction, and in such event, BUYER shall be entitled
to the prompt return from Escrow Agent of the Deposit:
A. The Closing shall occur simultaneously with the closing of
that certain Agreement of Sale made as of this date by and between BUYER and
FIVE WHITES, L.L.C.
B. The Closing shall occur simultaneously with the closing of
that certain Agreement of Sale made as of this date by and between BUYER and
WHITE SANDS ESTATES, L.L.C. (the "White Sands Contract"), provided, however,
when BUYER deposits the additional Deposit with Escrow Agent of $50,000.00,
making the total Deposit of $100,000.00 under the White Sands Contract and the
Escrow Agent is authorized to release the total Deposit to SELLER under the
White Sands Contract, this condition shall be deleted or deemed satisfied and of
no further force and effect.
C. In the event BUYER fails for any reason to close the
Agreements of Sale identified in Paragraphs A or B above, subject to the
condition in paragraph B being deleted or satisfied, SELLER may cancel this
Agreement of Sale.
10. CLOSING. The sale and purchase transaction contemplated by this
Agreement shall be closed and consummated on or before fifteen (15) business
days from the date of expiration of the Inspection Period on a date mutually
agreed to by the parties (the "Closing Date"). Closing shall be at the closest
office of an agent of the Escrow Agent located in the proximity of Apache
Junction, Arizona or, at BUYER's option, may be effected through the mail as
coordinated by counsel for SELLER and BUYER. Notice shall be given to Escrow
Agent at least five (5) days in advance of
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the date established by the parties for Closing. The Closing shall be at 12:00
Noon, Eastern Standard Time on the Closing Date unless otherwise agreed by the
parties or their counsel. At 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 or applicable partnership 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. Special Warranty Deed from SELLER to BUYER conveying title
to the Real Property to BUYER free and clear of all liens, encumbrances and
matters other than the Permitted Exceptions.
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.
D. Promissory Note or Earnout Agreement (at the option of
SELLER) executed by BUYER in favor of SELLER, having terms and conditions
accepted and approved by the BUYER and SELLER during the Inspection Period.
E. First Mortgage Lien on the Property executed by BUYER in
favor of SELLER, having terms and conditions accepted and approved by the BUYER
and SELLER during the Inspection Period.
F. Security Agreement and UCC Financing Statement granting a
first security lien on the Personal Property, excluding the mobile home
inventory, executed by BUYER in favor of SELLER, having terms and conditions
accepted and approved by the BUYER and SELLER during the Inspection Period.
G. Affidavit of No Liens by SELLER.
H. Affidavit of Non-Foreign Status by SELLER.
I. Updated certified rent roll dated and accurate as of the
Closing Date and certified by SELLER to BUYER.
J. 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, all
authorizations, permits and licenses relating to the operation of the Property
which are assignable by SELLER, if any, and all leases, contracts and other
items required to be assigned as set forth in this Agreement free and clear of
all liens and
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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.
K. 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.
L. Assignment by SELLER, to the extent they exist and without
representation or warranty, to BUYER of all agreements, 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.
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 to BUYER all existing plans and
specifications 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, permits, certificates
of occupancy, 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 Deposit to
SELLER. Said sum shall be paid, at SELLER's election, by locally drawn cashier's
check or Federal Reserve Bank wire transfer.
11. CLOSING COSTS. SELLER shall pay for the cost of any corrective
documents required for marketable and insurable title, transfer stamps on the
Special Warranty Deed and all costs associated with the issuance of the title
binder and policy. BUYER shall pay for the cost of the survey, environmental
report and the recording the Special Warranty Deed. Each party shall bear its
own attorneys' fees and other professional costs, except as otherwise provided
for herein.
12. 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.
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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 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 of the Closing by the governmental agency having jurisdiction over the
Property, 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 ten (10) days of request therefor. In the event SELLER or BUYER
fails to remit the reproration amount requested within said ten (10) 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 highest lawful rate until paid, it being
acknowledged that this right shall survive Closing and delivery of the Special
Warranty Deed. 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. However, all rents received by BUYER attributable to periods prior to the
Closing Date shall be promptly remitted by BUYER to SELLER. All rents collected
after the Closing shall be first applied to current rents due, then to rents for
periods prior to the Closing Date unless they are clearly intended by the tenant
to apply for the period prior to Closing in which event they shall be promptly
remitted to SELLER. This obligation to remit shall survive the Closing and
delivery of the Special Warranty Deed. 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.
13. DELIVERY OF POSSESSION. At Closing, SELLER shall deliver to BUYER
possession of the Real Property free and clear of all leases, tenancies or
occupancy, except those tenants set forth in the current rent roll provided to
BUYER by SELLER, and subject only to the Permitted Exceptions.
14. FIRE OR OTHER CASUALTY. For purposes of this Agreement of Sale, a
"minor casualty" shall be any casualty occurring to the Real Property which
causes damages of less than One Hundred Fifty Thousand Dollars ($150,000.00) to
the Real Property. Any other casualty shall be a "major casualty". If, prior to
Closing hereunder, the Real Property is subjected to a major or minor casualty
of which SELLER becomes aware, SELLER shall give BUYER prompt written notice
thereof. If such casualty is a minor casualty, this Agreement of Sale shall
remain in full force and effect and the purchase contemplated herein shall be
concluded with no further adjustment, and at Closing SELLER shall assign,
transfer and set over to BUYER all of the right, title and interest of SELLER in
and to any awards that have been or that may thereafter be made for such
casualty, subject only to any rights of Tenant under each Lease. If such
casualty is a major casualty, the Real
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Property shall be considered a defective parcel and BUYER shall have the right
to terminate this Agreement whereupon the Deposit will be refunded to the BUYER
and the parties will be released from any further liability hereunder.
15. EMINENT DOMAIN. For purposes of this Agreement of Sale, a "minor
condemnation" shall be any taking or condemnation by any body having the power
of condemnation or eminent domain which causes damages of less than One Hundred
Fifty Thousand Dollars ($150,000.00) to the Real Property. Any other taking or
condemnation shall be a "major condemnation". If prior to Closing hereunder the
Real Property is subjected to a major or minor condemnation of which SELLER
becomes aware, SELLER shall give BUYER prompt written notice thereof. If such
condemnation is a minor condemnation, this Agreement of Sale shall remain in
full force and effect and the purchase contemplated herein, less any interest
taken by eminent domain or condemnation, shall be effected with no further
adjustment, and at Closing, SELLER shall assign, transfer and set over to BUYER
all of the right, title and interest of SELLER in and to any awards that have
been or that may thereafter be made for such taking, subject only to rights of
Tenant under any Lease. If such condemnation is a major condemnation, the Real
Property subject to the major condemnation shall be considered a defective
parcel and BUYER shall have the right to terminate this Agreement whereupon the
Deposit will be refunded to the BUYER and the parties will be released from any
further liability hereunder.
16. NOTICES. All notices and other communications under this Agreement
of Sale shall be in writing and shall be effectively given only if sent by
nationally recognized overnight courier service, postage prepaid, return receipt
requested, addressed as follows:
To SELLER: Alexander White
980 East Broadway
Apache Junction, AZ 85220
FAX No. __________________
With a copy to: Thomas Koniuszy, Esquire
Quindry & Koniuszy
4445 E. Broadway, Suite 109
Mesa, AZ 85206
FAX No. (480) 396-9738
To BUYER: Community Acquisition and Development
Corporation
Attn: Joseph W. Gaynor, President
2637 McCormick Dr., Ste. B
Clearwater, FL 33759
FAX No. (813) 791-9200
With a copy to: Commercial Assets, Inc.
Attn: Bruce E. Moore, President
Page 14 of 21
<PAGE>
2 Ponds Edge Drive
Chadds Ford, PA 19317
FAX No. (610) 388-9616
or such other address as the party to be notified shall have designated to the
other party hereby by notice delivered in . accordance herewith. All such
notices shall be deemed given on the business day next following the day such
notice is accepted for delivery by the overnight courier service.
17. 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.
18. ASSIGNMENT. BUYER may assign its rights and interests under this
Agreement of Sale to any party without first obtaining the prior written consent
of SELLER. Prior to the expiration of the Inspection Period, BUYER will notify
SELLER of the identity of any proposed assignee of this Agreement of Sale.
19. 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
at no additional cost at the time of Closing and shall be covered by the Bill of
Sale.
20. 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 legally cognizable damages suffered by BUYER by reason of the delay in
BUYER's acquisition of the Property; or (b) sue SELLER for legally cognizable
damages sustained by BUYER by reason of the default of SELLER provided, however,
that in no event shall the damages recoverable exceed four percent (4%) of the
gross purchase price; or (c) obtain the prompt return from Escrow Agent of the
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.
21. 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 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
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<PAGE>
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 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.
22. PROVISIONS WITH RESPECT TO ESCROW.
(a) The duties and obligations of Escrow Agent hereunder shall
be entirely administrative and ministerial and not discretionary. Escrow Agent
shall be under no responsibility in respect of the Deposit other than to
faithfully follow the instructions herein contained. Escrow Agent may
conclusively rely upon any instructions or documents delivered to it by BUYER
and SELLER and purportedly executed by a duly authorized officer or partner
thereof and shall be under-no duty of independent inquiry with respect to any
facts or circumstances recited therein. In the event that any notice or
instruction required to be delivered to Escrow Agent hereunder is not so
delivered, Escrow Agent may hold the Deposit, if any, pending delivery to Escrow
Agent of such instruction or notice and may exercise all of Escrow Agent's
rights and remedies hereunder or otherwise provided by law. The parties hereto
jointly and severally agree to reimburse and indemnify Escrow Agent for, and
hold Escrow Agent harmless against, any loss, liability or expense, including
but not limited to, reasonable attorney's fees, which may be asserted against
Escrow Agent or to which Escrow Agent may be exposed or which may be incurred by
reason of the acceptance of, or the performance of duties and obligations under
this Agreement of Sale, except arising from such Escrow Agent's gross negligence
or willful misconduct. In no event shall Escrow Agent be liable for any loss,
cost or damage arising out of the performance of its duties hereunder, except
for acts of gross negligence or willful misconduct.
(b) In the event of any dispute or disagreement in connection
with the performance by Escrow Agent of its duties under this Agreement of Sale,
including, but not limited to, the respective rights of the parties to the
Deposit, Escrow Agent may consult with counsel selected and employed by Escrow
Agent, and Escrow Agent shall suffer no liability for any action taken or
suffered in good faith in accordance with the opinion of such counsel, if any,
provided, however, that the Deposit shall be disbursed in accordance with the
terms of this Agreement of Sale. Notwithstanding any other provision of this
Agreement of Sale, if any dispute or difference arises among the parties or if
any conflicting demand shall be made upon Escrow Agent, Escrow Agent shall not
be required to determine the same or take any action thereon. Rather, Escrow
Agent may await settlement of the controversy by appropriate legal proceedings;
or Escrow Agent may, by written notice to the parties hereto, initiate
litigation to determine to whom the Deposit held under this Agreement of Sale
shall be delivered; or Escrow Agent may file suit in interpleader with the
proper court in the United States District Court for the District in which the
Real Property is located, for the purpose of having the respective rights of the
parties adjudicated. Escrow Agent, upon initiation of such suit, may deposit
with the court the Deposit and, upon giving notice thereof to the parties
hereto, Escrow Agent shall be fully released and discharged from all further
obligations hereunder
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with respect to the Deposit except arising from gross negligence or willful
misconduct of Escrow Agent.
23. ACCEPTANCE DATE. SELLER shall have until 5:00 P.M. (EST) on the
fifth (5th) business day following Buyer's Execution Date, within which to
accept this Agreement. In the event SELLER fails to accept this Agreement as of
that time and date, this Agreement shall be null and void and of no further
effect and BUYER shall be entitled to the prompt return from Escrow Agent of the
Deposit.
24. CONFIDENTIALITY. SELLER and BUYER agree not to disclose any of the
terms of this Agreement prior to Closing except to the officers, directors,
employees and third party professionals assisting each party with the due
diligence and closing of this transaction.
25. OTHER OFFERS. SELLER shall neither solicit nor accept any client
offers so long as this Agreement is in full force and effect.
26. BROKER'S COMMISSION. SELLER and BUYER each warrant that there are
no real estate or other brokers or finders of any type involved in this
transaction other than Saguaro Properties, Inc., 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. BUYER shall be responsible to pay any
commissions due to Saguaro Properties, Inc., pursuant to a separate agreement.
27. SURVIVAL OF AGREEMENT. The terms and conditions of this Agreement
which expressly so state shall survive the Closing hereof.
28. TIME IS OF THE ESSENCE. SELLER and BUYER acknowledge that time is
of the essence of this Agreement.
29. 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.
30. 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 Special Warranty Deed.
31. EXHIBITS. In the event that any exhibit which is referred to in
this Agreement is not attached hereto at the time of execution of this Agreement
by SELLER and BUYER, SELLER
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<PAGE>
shall promptly cause any such missing exhibit to be prepared and submitted to
BUYER for BUYER's approval within five (5) days from the Effective Date hereof.
Upon approval of a given exhibit by BUYER, the same shall be incorporated into
this Agreement by written agreement executed by SELLER and BUYER.
32. 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.
33. 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 the State in which
the Real Property is located. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
34. VENUE. Venue for any legal proceeding hereunder shall be in the
State in which the Real Property is located.
35. 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.
36. EFFECTIVE DATE. Unless otherwise set forth herein, the Effective
Date shall be the date this Agreement is executed by the SELLER, so long as
SELLER returns a fully executed duplicate original of this Agreement to the
BUYER, by either hand delivery or postmarked as of the date of the execution of
this Agreement by the SELLER. Each day of delay in returning the executed
Agreement to the BUYER shall likewise extend the Effective Date.
37. 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.
38. 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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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year indicated below.
BUYER:
WITNESSES: COMMUNITY ACQUISITION AND DEVELOPMENT
CORPORATION, a Delaware corporation
/s/Merrilyn Lovelady By:/s/Joseph W. Gaynor
Print Name: Merrilyn Lovelady Joseph W. Gaynor, President
/s/Cynthia E. Witte
Print Name: Cynthia E. Witte Buyer's Execution Date: May 5, 1999
WITNESSES: SELLER:
WHITE GREGG, L.L.C., an Arizona
limited liability company
/s/Alexander White By:/s/James White, Jr.
Print Name: Alexander White Print Name: James White, Jr.,
Manager
/s/Thomas E. Koniuszy
Print Name: Thomas E. Koniuszy Execution Date: May 6, 1999
/s/Thomas E. Koniuszy By:/s/Alexander White
Print Name: Thomas E. Koniuszy Print Name: Alexander White,
Manager
/s/Gary Gunsalus
Print Name: Gary Gunsalus Execution Date: May 6, 1999
Page 19 of 21
<PAGE>
JOINDER
______________________________ of ________________________________
joins in this Agreement of Sale for the sole purpose of agreeing to act as
Escrow Agent and to be legally bound to hold the Deposit in accordance with the
provisions in Paragraphs 3(a) and 22 hereof.
By:
Print Name:
As Escrow Agent
Page 20 of 21
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SCHEDULE OF EXHIBITS
EXHIBIT "A" Metes and Bounds Description of the Property
EXHIBIT "B" Schedule of Personal Property
EXHIBIT "C" Rent Roll
EXHIBIT "D" Service Contracts
EXHIBIT "E" Phase I Environmental Audit Summary
Page 21 of 21
<PAGE>
ASSIGNMENT OF AGREEMENT OF SALE
COMMUNITY ACQUISITION AND DEVELOPMENT CORPORATION, a Delaware
corporation ("CADC") hereby assigns all of its right, title and interest in that
certain Agreement of Sale ("Agreement") dated May 6, 1999, as amended, by and
between FIVE WHITES, L.L.C., an Arizona limited liability company, as Seller,
and CADC, as Buyer, with respect to LA CASA BLANCA MOBILE HOME PARK to CAX LA
CASA BLANCA, L.L.C., a Delaware limited liability company ("CAX").
CAX by its signature below, hereby acknowledges this Assignment of the
Agreement.
This Agreement may be executed in counterparts and by facsimile, each
of which shall be fully effective as an original and all of which together shall
constitute one and the same instrument.
Dated this 28th day of June, 1999.
Witnesses: COMMUNITY ACQUISITION AND
DEVELOPMENT CORPORATION, a
Delaware corporation
/s/Merrilyn K. Lovelady
Print Name: Merrilyn K. Lovelady
By:/s/Joseph W. Gaynor
Joseph W. Gaynor, President
/s/Thomas P. McLaughlin, Jr.
Print Name: Thomas P. McLaughlin, Jr.
Acknowledged this 25th day of June, 1999.
Witnesses: CAX LA CASA BLANCA, L.L.C., a
Delaware limited liability company
/s/Janet L. Johnson By: Commercial Assets, Inc., a
Print Name: Janet L. Johnson Delaware corporation, its sole
member
/s/Marybeth Eichler By:/s/Bruce E. Moore
Print Name: Marybeth Eichler Bruce E. Moore
President
ASSIGNMENT OF AGREEMENT OF SALE
COMMUNITY ACQUISITION AND DEVELOPMENT CORPORATION, a Delaware
corporation ("CADC") hereby assigns all of its right, title and interest in that
certain Agreement of Sale ("Agreement") dated May 6, 1999, as amended, by and
between WHITE GREGG, L.L.C., an Arizona limited liability company, as Seller,
and CADC, as Buyer, with respect to LA CASA BLANCA EAST MOBILE HOME PARK to CAX
LA CASA BLANCA EAST, L.L.C., a Delaware limited liability company ("CAX").
CAX by its signature below, hereby acknowledges this Assignment of the
Agreement.
This Agreement may be executed in counterparts and by facsimile, each
of which shall be fully effective as an original and all of which together shall
constitute one and the same instrument.
Dated this 28th day of June, 1999.
Witnesses: COMMUNITY ACQUISITION AND
DEVELOPMENT CORPORATION, a
Delaware corporation
/s/Merrilyn K. Lovelady
Print Name: Merrilyn K. Lovelady
By:/s/Joseph W. Gaynor
Joseph W. Gaynor, President
/s/Thomas P. McLaughlin, Jr.
Print Name: Thomas P. McLaughlin, Jr.
Acknowledged this 25th day of June, 1999.
Witnesses: CAX LA CASA BLANCA EAST, L.L.C., a
Delaware limited liability company
/s/Janet L. Johnson By: Commercial Assets, Inc., a
Print Name: Janet L. Johnson Delaware corporation, its sole
member
/s/Marybeth Eichler By:/s/Bruce E. Moore
Print Name: Marybeth Eichler Bruce E. Moore
President
PROMISSORY NOTE
DATE: June 30, 1999
MAKER: CAX La Casa Blanca East, L.L.C., a Delaware limited liability
company
MAKER'S MAILING ADDRESS: c/o Commercial Assets, Inc.
3410 South Galena, Suite 210
Denver, Colorado 80231
PAYEE: White Gregg, L.L.C., an Arizona Limited Liability Company
PLACE OF PAYMENT: 980 East Broadway
Apache Junction, Arizona 85220
or such other place as is designated by Payee
PRINCIPAL AMOUNT: Five Million Two Hundred Forty-Five Thousand
($5,245,000.00) Dollars
TERMS OF PAYMENT:
A. On June 30, 2000, Maker shall pay to White Gregg, L.L.C.
the sum of $1,038,000.00;
B. On June 30, 2001, Maker shall pay to White Gregg,
L.L.C. the sum of $2,000,000.00
C. On June 30, 2002, Maker shall pay to White Gregg,
L.L.C. the sum of $2,207,000.00.
SECURITY FOR PAYMENT:
A first lien Deed of Trust against La Casa Blanca East Mobile
Home Park, located in Apache Junction, Pinal County, Arizona,
more particularly described in a Deed of Trust of even date
herewith, as well as all inventory,(except mobile homes)
equipment, tools, furniture and fixtures of maker.
Maker promises to pay to the order of Payee at the place for payment
and according to the terms of payment the principal amount stated above. This
Note shall not be deemed delinquent or
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late unless a payment is not made within ten (10) days after Payee gives Maker
written notice of default and an opportunity to cure.
If Maker defaults in the payment of this note or in the performance of
any obligation in any instrument securing or collateral to it by failing to cure
within the 10 day period after notice, this note shall bear interest at the
default rate of twelve (12%) percent until the default is cured. In addition,
Payee may declare the unpaid principal balance and accrued default interest on
this note immediately due. Maker waives all demands for payment, presentation
for payment, notices of intention to accelerate maturity, notice of acceleration
of maturity, protest, notices of protest, dishonor and notice of dishonor to the
extent permitted by law.
If this note or any instrument securing or collateral to it is given to
an attorney for collection or enforcement, or if suit is brought for collection
or enforcement, or if it is collected or enforced through probate, bankruptcy,
or other judicial proceeding, then Maker shall pay Payee all costs of collection
and enforcement, including reasonable attorney's fees and court costs, in
addition to other amounts due.
Each Maker is responsible for all obligations represented by this note.
When the context requires singular nouns and pronouns, include the
plural.
CAX La Casa Blanca East, L.L.C., a
Delaware limited liability company
Commercial Assets, Inc.,
a Delaware corporation
/s/David M. Becker
David M. Becker
Chief Financial Officer
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-74689) of Commercial Assets, Inc. of our report dated June 15, 1999,
with respect to the Statement of Excess of Revenues over Specific Operating
Expenses of the La Casa Blanca Manufactured Home Communities for the year ended
December 31, 1998 which is included in the Current Report (Form 8-K) dated June
30, 1999.
ERNST & YOUNG LLP
Denver, Colorado
July 12, 1999
