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EXHIBIT 10.1 RECREATIONAL VEHICLE PARK PURCHASE AND SALE AGREEMENT

Purchase and Sale Agreement

EXHIBIT 10.1   RECREATIONAL VEHICLE PARK  PURCHASE AND SALE AGREEMENT | Document Parties: MANUFACTURED HOME COMMUNI | Diversified Investments Services, LLC You are currently viewing:
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MANUFACTURED HOME COMMUNI | Diversified Investments Services, LLC

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Title: EXHIBIT 10.1 RECREATIONAL VEHICLE PARK PURCHASE AND SALE AGREEMENT
Governing Law: Arizona     Date: 3/2/2004
Industry: Real Estate Operations     Sector: Services

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                                                                    EXHIBIT 10.1

 

                            RECREATIONAL VEHICLE PARK

                           PURCHASE AND SALE AGREEMENT

 

         THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made this 9th day

of October, 2003 by and among:

 

SELLER:            Paradise RV Resort - Neil Spizizen, General Partner

                  31150 Northwestern Hwy,   Suite 200

                  Farmington Hills,   MI   48334

                  (hereinafter referred to as "Seller")

 

BUYER:             Diversified Investments Services, LLC,

                  a Delaware limited liability company

                  c/o Barry L. Haase, Manager

                  (hereinafter referred to as "Buyer")

 

                                    WITNESSETH:

 

         WHEREAS, Seller is the current owner and holder of the Property (as

hereinafter defined) which is currently being operated as a Recreational Vehicle

Park and which is commonly known as the "Paradise RV Resort" and Seller desires

to sell the Property (as hereinafter defined) to Buyer, and Buyer desires to

purchase the Property (as hereinafter defined) from Seller upon and subject to

the terms and conditions of this Agreement;

 

         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 (as hereinafter defined) on and under the terms and conditions

herein set forth.

 

         1.        RECITALS. The above recitals are true and correct and are

incorporated herein by reference.

 

         2.        PROPERTY. Seller agrees to sell and convey and Buyer agrees to

purchase and accept the following described property (collectively, the

"Property"):

 

                  (a)       Land. The fee simple estate in and to that certain

tract of real estate located in Sun City, Arizona, as more particularly

described on Exhibit "A" attached hereto and incorporated herein by reference,

together with all tenements, hereditaments, appurtenances, rights, privileges

and easements pertaining thereto, including, without limitation, all right,

title and interest of Seller therein, and all right, title and interest of

Seller, if any, in and to any street or road abutting or adjoining the

aforementioned land to the center line thereof (collectively, the "Land"); and

 

                  (b)       Improvements. All buildings, structures, fixtures,

facilities, and other improvements of every kind and description in, on, over

and under the Land (excluding any mobile homes owned by tenants of the park),

including, without limitation, 950 zoned, licensed and permitted mobile home

rental spaces, any and all plumbing, air-conditioning, heating, ventilating,

mechanical, electrical and other utility systems, recreational facilities,

signs, light fixtures, parking lots, landscaping and security devices

(collectively, the "Improvements") (the Land and Improvements are sometimes

hereinafter collectively referred to as the "Real Property"); and

 

                  (c)       Personal Property. All furniture, furnishings,

equipment, appliances, supplies, inventory and other tangible personal property

installed in, affixed to or placed upon the Real Property, which are owned by

Seller and which are used or useful, directly or indirectly, in connection with

the operation of the Real Property as a Recreational Vehicle Park, including,

without limitation, the items described in the Schedule of Personal Property,

attached hereto as Exhibit "B" and incorporated herein by reference

(collectively, the "Personal Property"); and

 

                  (d)       Intangibles; Leases. All right, title and interest of

Seller in and to the intangible personal property used or useful, directly or

indirectly, in connection with or arising from the operation of the Real

Property as a Recreational Vehicle Park, including, without limitation, all

rights and interests Seller may have to any warranties made in favor of Seller

related to the Real Property, the Personal Property or the construction thereof,

all contract rights, and all tenant leases demising all or portions of the Real

Property (including any security deposits or advance rent paid thereunder)

(collectively, the "Leases") and any possessory liens inuring to the landlord by

application of Arizona law; and

 

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                  (e)       Name. All right, title and interest to Seller, if

any, in and to the name "Paradise RV Resort", together with all logos or other

identification, signs or symbols, if any, associated or used in connection with

such name (collectively, the "Name"); and

 

                  (f)       Licenses; Permits. All licenses, permits,

authorizations, consents, variances, waivers, approvals, and the like, from any

federal, state, county, municipal or any other governmental or a

quasi-governmental body, agency, department, board commission, bureau or other

entity or instrumentality affecting the operation of the Real Property as a

Recreational Vehicle Park (collectively, the "Licenses and Permits"); and

 

                  (g)       Plans and Reports. To the extent the following are in

Seller's possession, all plans and specifications, surveys, engineering reports,

studies and similar documents prepared for or used in connection with the Real

Property in its development and operation as a Recreational Vehicle Park

(collectively, the "Plans and Reports").

 

         3.        PURCHASE PRICE. Subject to credits, adjustments and prorations

as provided herein, the purchase price for the Property shall be TWENTY FIVE

MILLION AND NO/100 DOLLARS ($25,000,000.00) (the "Purchase Price") which shall

be payable as follows:

 

                  (a)       Initial Earnest Money Deposit. As an initial earnest

money deposit (the "Initial Deposit"), Buyer shall, within two (2) Business Days

(as hereinafter defined) after the Effective Date of this Agreement, deposit

with First American Title ("Escrow Agent") the sum of ONE HUNDRED THOUSAND AND

NO/100 DOLLARS ($100,000.00) which sum shall be held in an interest bearing

account for the benefit of Buyer and credited toward the Purchase Price of the

Property at closing or otherwise disbursed by Escrow Agent in accordance with

the terms of this Agreement.

 

                   (b)       Additional Earnest Money Deposit. As an additional

earnest money deposit (the "Additional Deposit") Buyer shall, within two (2)

Business Days (as hereinafter defined) after the expiration of the Inspection

Period (as hereinafter defined), provided Buyer has not terminated this

Agreement prior to the expiration of the Inspection Period, deposit with Escrow

Agent the additional sum of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000.00)

which sum shall be deposited in the same interest bearing account as the Initial

Deposit and credited toward the Purchase Price of the Property at closing. The

Initial Deposit and the Additional Deposit shall hereinafter collectively be

referred to as the "Earnest Money Deposit" which shall become non-refundable

upon expiration of the Inspection Period, but shall be fully refundable at

Buyer's request prior thereto or as otherwise provided herein including, without

limitation, Seller's failure to perform any covenants or obligations of Seller

hereunder and a failure of a condition precedent to Buyer's obligation to close

as set forth herein. The Earnest Money Deposit will be held in an interest

bearing escrow account with the interest credited to Buyer. Should Buyer not

make any part of the Earnest Money Deposit or withdraw the Earnest Money Deposit

during the Inspection Period, this Agreement shall be null and void, and the

parties to this Agreement shall have no further obligations to each other.

 

                  (c)       Management Fee. Buyer shall pay to NEIL SPIZIZEN an

amount equal to three percent (3%) of collected revenues for the time period

from the Closing Date through April 30, 2005. Such Management Fee will be paid

to NEIL SPIZIZEN monthly.

 

                  (d)       Cash. At closing, Buyer shall pay or cause to be paid

(i.e., by a third party lender) to Seller the balance of the Purchase Price,

less any credits, adjustments or prorations due to Buyer as provided herein,

plus any additional consideration due to Seller as provided for hereinafter,

payable by locally drawn cashier's check or Federal Reserve Bank wire transfer

of U.S. Funds.

 

         4.        INSPECTION PERIOD. Buyer shall have the right, for a period of

forty-five (45) days from and after the Effective Date of this Agreement (the

"Inspection Period"), to obtain and review information concerning the Property,

to review and analyze the various due diligence items to be provided to Buyer by

Seller as set forth below, to make such physical, zoning, land use,

environmental and other examinations, inspections and investigations of the

Property or the use and operation thereof which Buyer, in Buyer's sole

discretion, may determine to make, and to decide whether the same are

satisfactory to Buyer. All expenses of the inspection shall be paid by Buyer.

Buyer shall have the right, in its sole and arbitrary discretion, to terminate

this Agreement prior to the expiration of the Inspection Period by providing

written notice to Seller of its election to terminate. If Buyer has not given

written notice to Seller terminating this transaction prior to 5:00 P.M. EST on

the expiration date of the Inspection Period, Buyer shall be deemed to have

approved the inspection and to have waived this contingency. If Buyer does

terminate this transaction, in its sole and arbitrary discretion, prior to the

expiration of the Inspection Period, this Agreement shall terminate and be

deemed null and void, and the Initial Deposit together with any and all interest

shall be returned to Buyer, and the parties to this Agreement shall have no

further obligation to each other.

 

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                  Attached hereto as Exhibit "C" and incorporated herein by

reference is a list of the preliminary items of due diligence (the "Preliminary

Items of Due Diligence") to be provided by Seller to Buyer, which Seller shall

provide to Buyer within five (5) days after the Effective Date of this

Agreement. During the Inspection Period, Buyer shall have the option to request

any additional specific items or documentation which may be reasonably required

by Buyer to perform its due diligence by giving Seller written notice of such

request. Subject to Seller's warranties and representations set forth in this

Agreement, Buyer shall rely solely on its own investigations, including but not

limited to environmental studies, termite inspections and engineering reports,

and an accounting review of the books and records of the Property in determining

the physical and financial condition of the Property.

 

         5.         RIGHT OF ENTRY. Seller hereby grants to Buyer and Buyer's

agents, employees, contractors, and representatives (collectively, the "Buyer's

Investigators"), from and after the Effective Date of this Agreement through the

Closing Date (as hereinafter defined), unless this Agreement is sooner

terminated pursuant to the terms set forth herein, a right of entry upon the

Real Property and a right of inspection of the Real Property and all records

associated therewith for the purpose of physically inspecting the Property,

conducting environmental, soil, engineering, structural and other tests as Buyer

may deem necessary, inspecting the mechanical, plumbing and utility systems

located on the Property, and ascertaining the working order and condition of the

Property (including all Leases, books and financial records pertaining to the

Recreational Vehicle Park), provided said right is exercised during normal

business hours, upon prior notice to Seller, and in a reasonable manner which

does not interfere with Seller's operation of the Property. Furthermore, Buyer

shall have the right to meet with the managers, any park employees, including,

without limitation, assistant managers, maintenance personnel, marketing

personnel, and brokers, tenants and the homeowners' association (if one exists)

at any time prior to the Closing Date (as hereinafter defined). All expenses of

the inspection shall be paid by Buyer. Buyer shall indemnify, defend and hold

harmless Seller from and against all liabilities, damages, claims, costs, fees

and expenses whatsoever (including reasonable attorney's fees and costs at trial

and all appellate levels) arising out of or resulting from any such inspection

or investigation. Notwithstanding anything contained herein to the contrary, the

provisions of this paragraph shall survive the closing and any cancellation or

termination of this Agreement.

 

         6.        REPRESENTATIONS. Seller makes the following representations,

all of which shall be true and correct as of the Effective Date of this

Agreement and as of the Closing Date (as hereinafter defined):

 

                  (a)       Seller is a limited partnership duly organized,

validly existing, and in good standing under the laws of the State of Arizona.

Seller has full power to own the Property and to conduct its present business

from the Real Property.

 

                  (b)       Seller has good, marketable and insurable title to

the Real Property and has good and marketable title to all other assets that

comprise or make-up the Property being sold hereunder, all of which free and

clear of all mortgages, liens, security interests, charges, claims, restrictions

and other encumbrances of every kind except as otherwise specifically provided

for in this Agreement or as will be discharged at or before closing, and there

will be no restrictions on the transfer of the Property at the time of closing.

 

                  (c)       There is no pending or to the best of Seller's

knowledge threatened condemnation or similar proceeding affecting the Real

Property or any part thereof and Seller has no knowledge that any such

proceeding is presently contemplated and the Property is free from damage or

destruction due to any casualty loss.

 

                  (d)       There are no claims, actions, suits or other legal or

administrative proceedings, including, without limitation, bankruptcy

proceedings, pending or, to the best of Seller's knowledge, threatened, against

or involving Seller or the Property which could affect the consummation of the

transaction contemplated hereby, and Seller is not aware of any facts which

might result in any such action, suit or other proceeding, except as set forth

on Exhibit "D" attached hereto and incorporated herein by reference. There are

no judgments, orders or stipulations against Seller or the Property, except as

set forth on Exhibit "D" attached hereto and incorporated herein by this

reference.

 

                  (e)       There are no special or other assessments levied

against or relating to the Property and Seller does not know of any proposed

assessments.

 

                  (f)       No rents or other deposits due under the Leases are

or will on the Closing Date (as hereinafter defined) be held by Seller, except

security deposits and prepaid rents as reflected on the rent rolls provided by

Seller to Buyer under this Agreement; there are no commissions or other fees

payable to any person, entity or agent on the rentals collected or to be

collected under any Leases encumbering the Property; that no tenant under any

Leases shall be entitled to any rebates, rent concessions or free rent which

will survive the Closing Date except as reflected on the rent rolls provided by

Seller to Buyer

 

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under this Agreement; that no commitments have been made to any tenant under any

Leases for repairs or improvements; no tenant has an option to purchase any part

of the Property; Seller is the landlord under each Lease and has the right to

assign same to Buyer; and that no rents due under any of the Leases have been

assigned, hypothecated or encumbered other than to the holders of the

indebtedness to be released at closing.

 

                  (g)       Seller is not subject to any charter, by-law, rule,

agreement or restriction of any kind or character which would prevent the

consummation of this Agreement and the transaction contemplated hereby. Seller

has full power and authority to execute this Agreement and all documents

necessary to accomplish the sale contemplated herein, fully perform hereunder

and to consummate the transaction contemplated hereby without the consent or

joinder of any other party.

 

                  (h)       To the best of Seller's knowledge, Seller has

complied with all applicable laws, ordinances, regulations, orders, rules and

restrictions pertaining to or affecting the ownership and operation of the

Property and the sale thereof contemplated by this Agreement.

 

                  (k)       To the best of Seller's knowledge, Seller has

obtained and kept in good standing all governmental permits, licenses and

approvals necessary for the operation of the Property, including, as applicable,

all health permits, Department of Environmental Protection permits and HRS

permits, and Seller has not received notice of any violations thereunder.

 

                   (l)       All utilities, including, without limitation, water,

electricity, telephone, cable, storm sewer and sanitary sewer services and

facilities have been extended to the Real Property and are available to the Real

Property. Water and sewer services are provided to the Real Property by the

municipality in which the Property is located and all costs of design,

permitting and installation of water and sewer facilities and connection fees

have been paid and Seller is current in its obligations to such municipality for

water and sewer services.

 

                  (m)       The use of the Property as a Recreational Vehicle

Park is permitted under the current zoning classification for the Property. All

permits associated with the use of the Real Property as a Recreational Vehicle

Park have been obtained and are in good standing. The Real Property contains and

is zoned, licensed and permitted to contain and operate a Recreational Vehicle

Park with 950 spaces, which spaces are all equipped with full utility services

and are properly spaced within set back requirements.

 

                  (n)       Seller has the right to assign the Name by which the

Property is commonly known and to use that Name in the operation of the

Property. Seller has received no notice objecting to the use of the Name for the

Property, but Seller otherwise makes no warranty or representation as to Buyer's

ability to use or to continue to use the Name.

 

                  (o)       The Personal Property is in good working condition,

and at the time of closing will be in good working order; and the Personal

Property is free and clear of all liens and encumbrances, except as otherwise

provided in this Agreement.

 

                  (p)       All sales tax due in connection with the operation of

the Property as a Recreational Vehicle Park, if any, have been paid by Seller to

the State of Arizona Department of Revenue.

 

                  (q)       Seller has no knowledge of latent defects or adverse

facts that exist with respect to the physical condition of the Property which

have not been specifically disclosed in writing to Buyer.

 

                  (r)       To the best of Seller's knowledge, neither this

Agreement nor any Exhibit nor any written statement or document furnished or to

be furnished by Seller to Buyer in connection with the transactions contemplated

by this Agreement contains or will contain any untrue statement of material fact

or omits or will omit any material fact necessary to make the statements

contained therein, in light of the circumstances under which they were made, not

misleading,

 

                  (s)       The financial information contained in the operating

statements identified in Exhibit "C" attached hereto is substantially correct.

Seller has not been notified of any material increases in expenses that are not

reflected in such statements.

 

The foregoing representations and warranties shall survive the Closing Date (as

hereinafter defined) for one year.

 

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         7.        SELLER'S COVENANTS.

 

                  (a)       From the date of this Agreement to Closing Date (as

hereinafter defined), Seller shall conduct its business involving the Property

in the ordinary course, and during said period will:

 

                            (i)       Operate the Property in a prudent manner and

continue its advertising commitments and marketing programs, if any. It is the

intention of the parties that the general operation of the Property shall not be

changed between the Effective Date of this Agreement to the Closing Date (as

hereinafter defined), except as set forth herein or as otherwise agreed upon

between the Buyer and the Seller;

 

                           (ii)      Refrain from entering into any contracts or

other commitments with respect to the operation of the Property that extend more

than 30 days beyond the Closing Date, other than in the ordinary course of

business, without the prior written consent of Buyer, which consent will not be

unreasonably withheld. Rental agreements with prospective new residents of the

Property entered into at the prevailing rental rate and terms without concession

are excluded from this requirement;

 

                          (iii) Keep in effect Seller's existing policies of

public liability and hazard and extended coverage insurance insuring the

Property which costs, if the policies are assumable by Buyer, shall be prorated

at the Closing Date (as hereinafter defined);

 

                          (iiii) Promptly comply with all notices of violation

of laws or municipal ordinances, regulations, orders or requirements of

departments of housing, building, fire, labor, health, or other state, city or

municipal departments or other governmental authorities having jurisdiction

against or affecting the Property or the use or operation thereof;

 

                           (iv)      Provide the annual rent increase notice for

the Property due in the normal course of business for a lot rent increase for

each site in an amount approved by the Buyer;

 

                            (v)       Provide the updated items of Due Diligence

on a timely basis pursuant to the terms of this Agreement and provide the most

recent financial information or other materials or documents during the time

period from the Effective Date of this Agreement until the Closing Date (as

hereinafter defined), including, without limitation, a certified monthly rent

roll, a certified monthly and year-to-date operating statement and other items

which may be reasonably requested from time to time; and

 

                  (b)       Commencing as of the Effective Date of this Agreement

and continuing until the Closing Date (as hereinafter defined), Seller shall:

(i) not take any action or fail to take any action which would cause any of the

representations or warranties made by Seller under this Agreement to be in any

way not substantially true, complete and accurate; (ii) not perform any act or

permit any act to be performed that may cause material damage, waste or

destruction to the Property; and (iii) comply with all federal, state and

municipal laws, statutes, ordinances and orders relating to the Property.

 

         8.        TITLE INSURANCE.

 

                  (a)       The Real Property shall be conveyed to Buyer or an

assignee of Buyer as may be permitted by this Agreement by a recordable warranty

deed, and shall be subject only to those exceptions to title and those

covenants, conditions and restrictions of record which are reflected in the

Commitment (as hereinafter defined) to which Buyer has not objected within the

time frame set forth in paragraph 8(c) below, at which time such matters shall

become Permitted Exceptions as set forth in paragraph 8(c) below. Without

limiting the generality of the foregoing, unless specifically agreed in writing

by Buyer, the Real Property shall not be subject to any (i) mortgage, deed to

secure debt, deed of trust, security agreement, judgment, lien or claim of lien,

or any other title exception or defect that is monetary in nature, or (ii) any

easement, restriction, zoning, prohibition, or other requirement of governmental

authorities that would prevent the use of the Real Property as a Recreational

Vehicle Park with associated facilities. The title to the Real Property shall be

subject to current and future ad valorem property taxes which are not yet due

and payable.

 

                  (b)       Within fifteen (15) days after the Effective Date of

this Agreement, the Seller shall, at Seller's sole cost and expense, deliver, or

cause to be delivered to Buyer and Buyer's attorney, an ALTA Form B Commitment

for an owner's title insurance policy (the "Commitment") issued by a Arizona

licensed title insurer (the "Title Company") acceptable to Buyer and Buyer's

attorney, showing marketable fee simple title to the Land vested in Seller. The

Commitment shall be accompanied by the best copies available from the Title

Company of all documents of record referred to in the Commitment. The Commitment

shall describe the Land, and such legal description shall be incorporated into

this Agreement and shall be used in all closing documents

 

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<PAGE>

 

(unless a survey shows a different legal description); shall list Buyer as the

prospective named insured; and shall show as the policy amount the Purchase

Price.

 

                  (c)       Buyer shall within ten (10) days after Buyer's

receipt of the Commitment examine the Commitment and notify Seller in writing of

those particular liens, encumbrances, exceptions, qualifications or defects

listed in the Commitment, which are not acceptable to Buyer (any such liens,

encumbrances, exceptions, qualifications or defects are collectively, the "Title

Defects"). If Buyer fails to provide Seller with timely notice of the existence

of any Title Defects within such ten (10) day period, then, for all purposes of

this Agreement, Buyer shall be deemed to have accepted title in the condition

described in the Commitment, and any and all title encumbrances, exceptions or

other matters, which are set forth in the Commitment, and to which Buyer does

not object during such period, shall be deemed to be "Permitted Exceptions".

With regard to Title Defects to which Buyer does object to during said ten

(10) day period, other than the liens or other exceptions to be discharged at or

before the closing, Seller shall have thirty (30) days from the date Seller

receives written notice from Buyer within which to cure, satisfy or remove such

Title Defects. The Seller agrees that it will use its best efforts to satisfy or

eliminate such Title Defects within the thirty (30) days provided therefor.

 

                   If Seller, after using its best efforts, shall fail to cure

or eliminate the Title Defects within the thirty (30) day period, then Seller

shall promptly provide written notice to Buyer of the date Seller reasonably

expects to cure or eliminate the Title Defects or that Seller does not

reasonably expect to cure or eliminate the Title Defects. Within fifteen (15)

days following its receipt of such written notice from Seller, Buyer shall

deliver to Seller written notice of Buyer's election to either (a) terminate

this Agreement by reason and on account of the existence of such uncured Title

Defects, (b) extend the time period for Seller to eliminate the Title Defects

for no more than thirty (30) additional days, or (c) waive the existence of the

uncured Title Defects and agree in writing to close its purchase of the Property

and thereby accept a conveyance of the title to the Real Property subject to and

notwithstanding the existence of Title Defects and without any reduction of the

Purchase Price on account thereof, at which time the Title Defects shall be

deemed Permitted Exceptions. In the event that Buyer elects to terminate this

Agreement due to the existence of uncured Title Defects by giving written notice

of that fact to Seller, Buyer shall be entitled to a return of the Earnest Money

Deposit and Extension Fee, if any, and all interest earned thereon, and

thereafter, all rights, obligations, and liabilities of the parties under this

Agreement


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