EXHIBIT 10.1 ENCORE PORTFOLIO CONTRIBUTION AND ASSIGNMENT AGREEMENT

 

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                                                                    EXHIBIT 10.1

 

                                ENCORE PORTFOLIO

 

                      CONTRIBUTION AND ASSIGNMENT AGREEMENT

 

         THIS CONTRIBUTION AND ASSIGNMENT AGREEMENT (this "Agreement") is made

and entered into as of the 17th day of February, 2004, by and among MHC-ENCORE

HOLDINGS, L.P. (together with its affiliates, designees and assigns, the

"Partnership"), a Delaware limited partnership having an address of c/o

Manufactured Home Communities, Inc., Two North Riverside Plaza, Suite 800,

Chicago, Illinois 60606, EMB/NHC, L.L.C. ("Contributor"), a Delaware limited

liability company having an address of c/o National Home Communities, L.L.C.,

6991 East Camelback Road, Suite B-310, Scottsdale, Arizona 85251, and the "New

GP Entities" (as hereinafter defined), each having an address of c/o National

Home Communities, L.L.C., 6991 East Camelback Road, Suite B-310, Scottsdale,

Arizona 85251.

 

                                R E C I T A L S:

 

         A.        EMB/NHC-NewGP-LEMB, Inc., a Delaware corporation ("New

GP-LEMB") owns the sole general partner interest, and Contributor owns the sole

limited partner interest, of LEMB, L.P., a Delaware limited partnership ("LEMB

LP"), which indirectly, through one or more entities, owns an interest (I) in

the properties known as (i) "Encore Port Charlotte," located in Port Charlotte,

Florida, on the real property more particularly described on Exhibit A-1

attached hereto and containing all of the property described in Section 1(C)

herein ("Port Charlotte Property"), (ii) "Encore Harlingen," located in

Harlingen, Texas on the real property more particularly described on Exhibit A-2

attached hereto and containing all of the property described in Section 1(C)

herein ("Encore Harlingen Property"), and (iii) "Sunburst Harlingen," located in

Harlingen, Texas, on the real property more particularly described on Exhibit

A-3 attached hereto and containing all of the property described in Section 1(C)

herein ("Sunburst Harlingen Property"), (iv) "Sunburst Port Richey," located in

Port Richey, Florida, on the real property more particularly described on

Exhibit A-4 attached hereto and containing all of the property described in

Section 1(C) herein ("Port Richey Property"), (v) "Encore Vero Beach," located

in Vero Beach, Florida, on the real property more particularly described on

Exhibit A-5 attached hereto and containing all of the property described in

Section 1(C) herein ("Vero Beach Property"), (vi) "Encore Daytona Beach,"

located in Daytona Beach, Florida, on the real property more particularly

described on Exhibit A-6 attached hereto and containing all of the property

described in Section 1(C) herein ("Daytona Beach Property"), and (II) a ground

lease interest in the property known as "Tahoe Valley Campground," located in

Lake Tahoe, California, on the real property more particularly described on

Exhibit A-7 attached hereto and containing all of the property described in

Section 1(C) herein ("Tahoe Property"). In addition, LEMB LP owns all of the

outstanding equity interests of Encore Communities, L.L.C., a Delaware limited

liability company.

 

         B.        EMB/NHC-NewGP-LEMB II, Inc., a Delaware corporation ("New

GP-LEMB II"), owns the sole general partner interest, and Contributor owns the

sole limited partner interest, of LEMB II, L.P., a Delaware limited partnership

("LEMB II LP"), which (I) owns a

 

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ground lease interest in the properties known as (i) "Southern Comfort," located

in Weslaco, Texas, on the real property more particularly described on Exhibit

A-8 attached hereto and containing all of the property described in Section 1(C)

herein ("Southern Comfort Property"), (ii) "Sunburst Weslaco," located in

Weslaco, Texas on the real property more particularly described on Exhibit A-9

attached hereto and containing all of the property described in Section 1(C)

herein ("Weslaco Property"), (iii) "Encore Mercedes," located in Mercedes,

Texas, on the real property more particularly described on Exhibit A-10 attached

hereto and containing all of the property described in Section 1(C) herein

("Mercedes Property"), and (II) indirectly, through one or more entities, owns

an interest the Port Charlotte Property, the Encore Harlingen Property, the

Sunburst Harlingen Property, the Port Richey Property, the Vero Beach Property,

the Daytona Beach Property, and the Tahoe Property.

 

         C.        EMB/NHC-NewGP-LEMB III, Inc., a Delaware corporation ("New

GP-LEMB III"), owns the sole general partner interest, and Contributor owns the

sole limited partner interest, of LEMB III, L.P., a Delaware limited partnership

("LEMB III LP"), which owns the properties known as (i) "Paradise Park," located

in Paradise Park, Texas, on the real property more particularly described on

Exhibit A-11 attached hereto and containing all of the property described in

Section 1(C) herein ("Paradise Park Property"), (ii) "Sunburst St. Petersburg,"

located in St. Petersburg, Florida on the real property more particularly

described on Exhibit A-12 attached hereto and containing all of the property

described in Section 1(C) herein ("St. Petersburg Property"), and (iii) "Encore

Sarasota South," located in Sarasota South, Florida, on the real property more

particularly described on Exhibit A-13 attached hereto and containing all of the

property described in Section 1(C) herein ("Sarasota South Property").

 

         D.        EMB/NHC-NewGP-CA3, Inc., a Delaware corporation ("New

GP-CA3"), owns the sole general partner interest, and Contributor owns the sole

limited partner interest, of NHC-CA3, L.P., a Delaware limited partnership

("NHC-CA3 LP"), which owns the property known as "Pacific Dunes Ranch," located

in California Central Coast, California, on the real property more particularly

described on Exhibit A-14 attached hereto and containing all of the property

described in Section 1(C) herein ("Pacific Dunes Property").

 

         E.        EMB/NHC-NewGP-CA4, Inc., a Delaware corporation ("New

GP-CA4"), owns the sole general partner interest, and Contributor owns the sole

limited partner interest, of NHC-CA4, L.P., a Delaware limited partnership

("NHC-CA4 LP"), which indirectly, through one or more entities, owns an interest

in the Port Charlotte Property, the Encore Harlingen Property, the Sunburst

Harlingen Property, the Port Richey Property, the Vero Beach Property, the

Daytona Beach Property, and the Tahoe Property.

 

         F.        On or about January 8, 2004, Contributor provided the

requisite notice ("Notice") under each of the partnership agreements of the

Property Owners (the "Partnership Agreements") to exercise the buy/sell

provisions contained in Section 5.4 of the Partnership Agreements (the "Buy/Sell

Provisions").

 

         G.        Property Asset Management, Inc. and/or its affiliates as

general and limited partners of the Property Owners (collectively, "PAMI")

failed to respond to the Notice in a manner sufficient to qualify as the "Buyer"

within the meaning of the Buy/Sell Provisions.

 

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         H.        Contributor has represented to the Partnership that PAMI has

breached its obligations under the Partnership Agreements and has repudiated the

terms of the Partnership Agreements, including without limitation, the Buy/Sell

Provisions.

 

         I.        Immediately prior to this Agreement, the Partnership loaned to

Contributor an amount necessary to enable Contributor to acquire all of the

partnership or membership interests in each of the Property Owners owned by PAMI

(collectively, the "PAMI Interests") and to pay PAMI in full for the PAMI

Interests within the meaning of the Buy/Sell Provisions, which loan ("Loan") is

evidenced by a promissory note payable to the Partnership (the "Note").

 

         J.        Following the acquisition of the PAMI Interests, Contributor

directly or indirectly owns all of the issued and outstanding limited

partnership or membership interests in the Property Owners (the "LP Interests"),

and pursuant to the terms of the Buy/Sell Provisions, Contributor designated New

GP to own the general partner or managing member interests of each of the

Property Owners (the "GP Interests" and together with the LP Interests, the

"Interests").

 

         K.        The Partnership has relied upon the foregoing events and upon

Contributor's representations that Contributor qualifies as the "Buyer" within

the meaning of the Buy/Sell Provisions in causing the Partnership to make the

Loan and in entering into this Agreement.

 

         L.        LEMB LP, LEMB II LP, LEMB III LP, NHC-CA3 LP, and NHC-CA4 LP

are sometimes referred to hereinafter individually as a "Property Owner" and

collectively as the "Property Owners." New GP-LEMB, New GP-LEMB II, New GP-LEMB

III, New GP-CA3, and New GP-CA4 are sometimes referred to hereinafter

individually as a "New GP Entity" and collectively as the "New GP Entities."

 

         M.        The Port Charlotte Property, the Encore Harlingen Property,

the Sunburst Harlingen Property, the Port Richey Property, the Vero Beach

Property, the Daytona Beach Property, the Tahoe Beach Property, the Southern

Comfort Property, the Weslaco Property, the Mercedes Property, the Paradise Park

Property, the St. Petersburg Property, the Sarasota South Property, and the

Pacific Dunes Property are sometimes referred to hereinafter individually as an

"Individual Property" and collectively as the "Properties."

 

         N.        Contributor desires to contribute to the Partnership, and the

Partnership desires to accept such contribution from Contributor, all of the LP

Interests owned by Contributor, upon and subject to the terms and conditions of

this Agreement. Each of the New GP Entities desires, and Contributor shall cause

New GP, to assign to the Partnership, and the Partnership desires to accept such

assignment from Contributor, all of the GP Interests owned by the New GP

Entities, upon and subject to the terms and conditions of this Agreement

 

         THEREFORE, in consideration of and in reliance upon the above Recitals,

which by this reference are incorporated herein, the terms, covenants,

conditions and representations contained in this Agreement, and other good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, Contributor, each of the New GP Entities and the Partnership agree

as follows:

 

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1.        CONTRIBUTION AND ASSIGNMENT

 

         A.        Subject to the terms and conditions of this Agreement,

Contributor hereby agrees to contribute to the Partnership, at the Closing (as

such term is hereinafter defined), all of its right, title and interest in and

to all of the LP Interests held by Contributor free and clear of all liens,

claims, liabilities and encumbrances. The Partnership shall not assume any

obligations or liabilities of the Contributor relating the ownership of the LP

Interests arising prior to the date hereof. The Partnership, in reliance upon

the representations and warranties of Contributor contained herein and on the

terms and conditions herein set forth, hereby agrees to accept the contribution

of the LP Interests from Contributor at the Closing on the terms and conditions

set forth herein. Notwithstanding anything to the contrary, in the event that it

is later determined that Contributor did not acquire the PAMI Interests pursuant

to the Buy/Sell Provisions or otherwise, no contribution of the LP Interests

shall be deemed to have been made by Contributor and Contributor shall not be

deemed to have become a Limited Partner of the Partnership at any time.

 

         B.        Subject to the terms and conditions of this Agreement, each

New GP Entity hereby agrees, and Contributor shall cause each New GP Entity, to

assign to the Partnership or, at the direction of the Partnership, its

designated affiliate, at the Closing (as such term is hereinafter defined), all

of its right, title and interest in and to all of the GP Interests held by such

New GP Entity free and clear of all liens, claims, liabilities and encumbrances.

Neither the Partnership nor any designee of the Partnership shall assume any

obligations or liabilities of the Contributor or any New GP Entity relating the

ownership of the GP Interests arising prior to the date hereof. The Partnership

or its designated affiliate, in reliance upon the representations and warranties

of Contributor contained herein and on the terms and conditions herein set

forth, hereby agrees to accept the contribution of the GP Interests from such

New GP Entity at the Closing on the terms and conditions set forth herein.

Notwithstanding anything to the contrary, in the event that it is later

determined that Contributor did not acquire the PAMI Interests pursuant to the

Buy/Sell Provisions or otherwise, no contribution of the GP Interests shall be

deemed to have been made by Contributor.

 

         C.        The Port Charlotte Property, the Encore Harlingen Property,

the Sunburst Harlingen Property, the Port Richey Property, the Vero Beach

Property, the Daytona Beach Property, the Tahoe Beach Property, the Southern

Comfort Property, the Weslaco Property, the Mercedes Property, the Paradise Park

Property, the St. Petersburg Property, the Sarasota South Property, and the

Pacific Dunes Property shall mean and include all of the respective Property

Owner's direct or indirect right, title and interest in and to the following

described property with respect to each Individual Property:

 

                  (i)       the real estate owned (or ground leased, as

         applicable) by such Property Owner described on Exhibits A-1 through

         A-14 attached to this Agreement, respectively (as applicable with

         respect to each Individual Property); together with all and singular

         the easements, covenants, agreements, rights, privileges, tenements,

         hereditaments and appurtenances thereunto now or hereafter belonging or

         appertaining (the "Individual Tract of Land");

 

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                  (ii)      any land lying in the bed of any street, alley, road

         or avenue (whether open, closed or proposed) within, in front of,

         behind or otherwise adjoining the Individual Tract of Land or any of

         it, any award made or to be made as a result of or in lieu of

         condemnation affecting the Individual Property or any part thereof, and

         any award for damage to the Individual Property or any part thereof by

         reason of casualty (all of the foregoing being included within the term

         "Individual Tract of Land");

 

                  (iii)     all of the buildings, structures, fixtures,

         facilities, installations and other improvements of every kind and

         description now or hereafter in, on, over and under the Individual

         Tract of Land, including, without limitation, any and all recreational

         buildings, structures and facilities, plumbing, heating, ventilating,

         air conditioning, mechanical, electrical and other utility systems,

         water and sewage treatment plants and facilities (including wells and

         septic systems), parking lots and facilities, landscaping, roadways,

         sidewalks, swimming pools, security devices, signs and light fixtures,

         which are not owned by tenants under the Individual Property Leases (as

         such term is hereinafter defined) (collectively, the "Individual

         Improvements") (the Individual Tract of Land and the Individual

          Improvements being herein collectively referred to as the "Individual

         Premises");

 

                  (iv)      all manufactured homes, recreational vehicles and

         park model homes, furniture, furnishings, fixtures, equipment,

          machinery, maintenance vehicles and equipment, tools, parts,

         recreational equipment, carpeting, window treatments, office supplies

         and equipment, and other tangible personal property of every kind and

         description situated in, on, over or under the Individual Premises or

         used in connection therewith which are not owned by tenants under the

         Individual Property Leases, together with all replacements and

         substitutions therefor (together with the items described in Section

         1(C)(v) below and the Individual Intangible Personal Property described

         in Section 1(C)(vi) below, collectively, the "Individual Personal

         Property"), a substantially complete and accurate itemization of which

          may be submitted to the Partnership pursuant to Section 5(A)(iii)

         below;

 

                  (v)       all existing surveys, blueprints, drawings, plans and

         specifications (including, without limitation, structural, HVAC,

         mechanical and plumbing, water and sewer plans and specifications),

         construction drawings, soil tests, environmental reports, appraisals,

         police reports, and other documentation for or with respect to the

         Individual Property or any part thereof; all available tenant lists and

         data, correspondence with past, present and prospective tenants,

         vendors, suppliers, utility companies and other third parties,

         stationery, brochures, booklets, manuals and promotional, marketing and

         advertising materials concerning the Individual Property or any part

         thereof; any declarations, by-laws, minute books and other materials

         relating to any homeowners' association or similar organization

         affecting the Individual Property, together with all supporting

         documentation relating thereto; and such other existing books, records

         and documents (including, without limitation, those relating to ad

         valorem taxes and the Individual Property Leases) used in connection

         with the operation of the Individual Property or any part thereof;

 

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                  (vi)      the Individual Property Leases and the Individual

         Property Service Contracts (as such term is hereinafter defined), and

         all other intangible personal property used in connection with or

         arising from the business now or hereafter conducted on or from the

         Individual Property or any part thereof, including, without limitation,

         claims, choses in action, lease and other contract rights, names and

         telephone exchange numbers, reservation and contact lists, software,

         web sites, goodwill, going-concern value, favorable ratings and

         recommendations in national, regional and local trade publications and

         the like (collectively, the "Individual Intangible Personal Property").

         A summary of all current leases and other occupancy agreements

         affecting the Individual Premises or any part thereof (collectively,

         the "Individual Property Leases," with such summary being hereinafter

         referred to as the "Individual Property Rent Roll"), including each

         tenant's name, a description of the space leased, the amount of rent

         due and the amount of any security deposit paid, the term of each

         Individual Property Lease, and a description of any right to renew or

         extend, may be submitted to the Partnership pursuant to Section 5(A)(i)

         below. A list of all employment, union, purchase, service and

         maintenance agreements, equipment leases and any other agreements,

         contracts, licenses and permits, including, without limitation, cable

         television and satellite master antenna television system agreements,

         affecting or pertaining in any way to the Individual Property or any

         part thereof (collectively, the "Individual Property Service

         Contracts") may be submitted to the Partnership pursuant to Section

         5(A)(ii) below; and

 

                  (vii)     all cash, cash equivalents and inventory, including

         monies held on account by lenders (the "Cash").

 

2.        CONSIDERATION

 

         The total consideration to be given by the Partnership to Contributor

in exchange for (i) Contributor's contribution of the LP Interests to the

Partnership and (ii) each New GP Entity's assignment of the GP Interests to the

Partnership shall be the issuance by the Partnership to Contributor of a 13.66%

limited partnership interest in the Partnership (the "Master LP Interest") and

the extinguishment of the Note (the "Consideration").

 

3.        CLOSING

 

         A.        CLOSING DATE. The closing ("Closing") of the transaction

contemplated by this Agreement (i.e., the contribution and assignment of the

Interests, and the satisfaction of all other terms and conditions of this

Agreement) shall be consummated at the office of the Partnership on or before

February 17, 2004 (the "Closing Date"); provided, however, that the Closing Date

may be accelerated or delayed upon the parties' mutual written agreement.

 

         B.        CLOSING DOCUMENTS.

 

                  (i) Contributor. At the Closing, Contributor shall deliver to

         the Partnership the following items (the "Transaction Documents") (each

         in form and substance reasonably acceptable to the Partnership, if not

         attached to this Agreement as an Exhibit and executed [if necessary] by

         Contributor):

 

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                            (a)       an assignment and assumption agreement

                  substantially in the form attached hereto as Exhibit B,

                  pursuant to which (i) Contributor transfers its LP Interests

                  to the Partnership and (ii) the Partnership assumes all

                  obligations of Contributor in the applicable Property Owner in

                  accordance with the terms of the partnership agreement of such

                  Property Owner;

 

                           (b)       a counterpart signature page to the Limited

                  Partnership Agreement of the Partnership (the "Master LP

                  Agreement");

 

                           (c)       the originally executed Note for

                  cancellation by the Partnership;

 

                           (d)       evidence of the termination of the

                  applicable property management or other management agreement

                  with respect to each Individual Property and any manufactured

                   home, recreational vehicle or park model home sale brokerage

                  agreements;

 

                           (e)       all other necessary or appropriate documents

                  as are necessary for Contributor to comply with its

                  obligations under this Agreement, or as reasonably required by

                  the Partnership in order to perfect the conveyance, transfer

                  and assignment of the LP Interests and GP Interests to the

                  Partnership or the Partnership's designee.

 

                  (ii)      New GP Entities. At the Closing, each New GP Entity

         shall deliver to the Partnership an assignment and assumption agreement

         substantially in the form attached hereto as Exhibit B, pursuant to

         which (i) such New GP Entity transfers its GP Interests to the

         Partnership or its designee and (ii) the Partnership or its designee

         assumes all obligations of Contributor in the applicable Property Owner

          in accordance with the terms of the partnership agreement of such

         Property Owner.

 

                  (iii)     Partnership. The Partnership shall deliver or cause

         to be delivered to Contributor at the Closing:

 

                            (a)       a copy of the Master LP Agreement indicating

                  the issuance of the Master LP Interest to Contributor,

                  together with a counterpart signature page to the Master LP

                  Agreement; and

 

                            (b)       the Note, property marked cancelled.

 

         C.        POST-CLOSING DOCUMENTS. After the Closing, Contributor shall,

at the request of the Partnership, deliver to the Partnership the following

items:

 

                           (a)       a rent roll for the Individual Property

                  certified by the general partner of the Property Owner as

                  being true, complete and correct, in each case with respect to

                  the Individual Property directly or indirectly owned by the

                  applicable Property Owner;

 

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                           (b)       all of the books and records of each

                  Property Owner or Individual Property;

 

                           (c)       all of the original Individual Property

                  Leases, all written Individual Property Service Contracts, and

                  any and all building plans, surveys, site plans, engineering

                  plans and studies, utility plans, landscaping plans,

                  development plans, blueprints, specifications and drawings,

                  construction drawings, soil tests, environmental reports and

                  other documentation concerning all or any part of the

                   Individual Property and in the possession or control of

                  Contributor, and all keys for the Individual Property;

 

                           (d)       to the extent that a Property Owner does not

                  own any Inventory Homes located at the applicable Individual

                  Property, an appropriate assignment and/or bill of sale,

                  together with certificates of title or manufacturer's

                  statements of origin, for any such Inventory Homes, executed

                  by the applicable person or entity which owns such Inventory

                  Homes;

 

                           (e)       Contributor's affidavit stating, under

                  penalty of perjury, such Contributor's U.S. Taxpayer

                  Identification Number and that Contributor is not a "foreign

                  person" within the meaning of Section 1445 of the Internal

                  Revenue Code (the "Code");

 

                           (f)       transfer tax returns as required by

                  applicable law (including, without limitation, a Florida

                  Department of Revenue Form DR-219 with respect to each

                  Individual Property located in Florida);

 

                           (g)       an affidavit or other statement, in form and

                  substance acceptable to the Partnership, which satisfies the

                  requirements of any applicable statute of the state in which

                  the Individual Property is located (if any) which is

                  substantially similar to the requirements of Florida Statutes,

                  Section 723.072.

 

4.        REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR

 

         A.        Contributor, with respect to the Property Owner in which

Contributor owns LP Interests, represents and warrants to the Partnership that

the following are true, complete and correct as of the date of this Agreement:

 

                  (i)       Except for the that certain action filed against

          Contributor in the Court of Chancery of the State of Delaware on

         February 13, 2004, there is no material action, proceeding or

         investigation pending or, to Contributor's knowledge, threatened

         against Contributor, the Property Owner or the Individual Property

         before any court or governmental department, commission, board, agency

         or instrumentality, and Contributor does not know of any basis for any

         such action, proceeding or investigation.

 

                   (ii)      Contributor has not received from any governmental

         authority any notice of any material violation of any zoning, building,

         fire or health code or any other law,

 

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         ordinance, rule or regulation applicable to the Individual Property, or

         any part thereof, of which the Partnership has not been notified.

 

                  (iii)     Contributor is duly organized, validly existing,

         qualified and empowered to conduct its business, and has full power and

         authority to enter into and fully perform and comply with the terms of

         this Agreement. Neither the execution and delivery of this Agreement

         nor its performance will conflict with or result in the breach of any

         contract, agreement, law, ordinance, rule or regulation to which

         Contributor is a party or by which Contributor is bound, or give rise

         to a right, not waived on or before the Closing, to accelerate the

         maturity of an obligation secured by the applicable existing financing

         whi