EARN-OUT AGREEMENT
(Casa Del Mar)
THIS EARN-OUT AGREEMENT, dated as of the 27th day of October, 1997, is
made and entered into by and between COMMUNITY CASA DEL MAR JOINT VENTURE, a
Delaware general partnership (hereinafter referred to as "Community"), and
XXXXXX CORPORATION OF DELAWARE, a Delaware corporation (hereinafter referred to
as "Xxxxxx") and AIC COMMUNITY MANAGEMENT PARTNERSHIP, a Delaware partnership,
d/b/a Brandywine Communities ("Brandywine").
W I T N E S S E T H
In consideration of the mutual covenants set forth herein,
the parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.01 "Affiliate" means any entity in which Xxxxxx, or Community or a
shareholder, partner or member of Xxxxxx owns, directly or indirectly, ten (10%)
percent or more of the capital interests or voting power thereof respectively,
or any individual or entity which owns, directly or indirectly, ten (10%)
percent or more of the capital interests or voting power of either Community or
Xxxxxx, shareholders, partners or members thereof, respectively.
1.02 "Agreement" means this Earn-Out Agreement, as it may be modified
from time to time in accordance with the provisions hereof or by agreement of
Community and Xxxxxx , as provided herein.
1.03 "Effective Date" means the 27 day of October, 1997.
1.04 "Earn-Out Price" means the sum of Sixteen Thousand Five Hundred
Fifty Dollars ($16,550.00) for each Newly Occupied Pad as that term is
hereinafter defined in Section 2.01(c).
1.05 "Property" means the Casa Del Mar Mobile Home Park described in
Exhibit "A" attached hereto and incorporated herein by reference. The address of
the Property is 00000 Xxxxx Xxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx 00000.
1.06 "Potential Earn-Out Pads" (as such term is defined below in
Section 2.01(c)) and located on the Property.
1.07 "Sales Agreement" means that certain Agreement of Sale, having an
effective date of August 24, 1997, as amended September 30, 1997, and further
amended October 8, 1997, by and between Community Acquisition Joint Venture,
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a/k/a Community Acquisition and Development Partnership as assigned to Community
wherein Xxxxxx has agreed to sell to Community and Community has agreed to
purchase from Xxxxxx the Property.
ARTICLE II
Earn-Out
2.01 Earn-Out. As a condition precedent to Xxxxxx'x obligation to sell
the Property and as part of the net purchase price of Three Million Eight
Hundred Fifty Thousand Dollars ($3,850,000.00), of which One Million Five
Hundred Thousand Dollars ($1,500,000.00), in value has been paid and Two Million
Three Hundred Fifty Thousand Dollars ($2,350,000.00), is still due and owing to
Xxxxxx, Xxxxxx and Community have agreed as follows:
(a) Management. Community shall during the term of this
Agreement enter into a management agreement with Brandywine under the terms and
conditions of the Management Agreement, a copy of which is attached hereto and
marked Exhibit "B" (the "Management Agreement").
(b) Manufactured Home Sales. Community shall retain Brandywine
to be a licensed manufactured home dealer, to handle the sales and re-sales of
manufactured homes within the Property. Community shall prepare for Xxxxxx'x
approval, a manufactured home marketing budget and rental rate pro forma (the
"MHM Budget"). Community shall provide the necessary funds that are needed to
satisfy the MHM Budget. The initial MHM Budget is attached hereto and
incorporated herein by reference. So long as Community maintains this MHM
Budget, including a cost of living adjustment throughout the term of this
Agreement, the MHM Budget shall be deemed approved by Xxxxxx.
(c) Newly Occupied Pads. As of September 30, 1997, a total of
ninety-eight (98) manufactured housing pads are currently occupied on this
Property or subject to pending contracts (and these pads subject to pending
contracts were purchased by Community) as evidence by that certain Rent Roll
dated as of the 30th day of September, 1997, and certified as of October 24,
1997, by Xxxxxx to be true and correct, a copy of which is attached hereto and
incorporated herein by reference as Exhibit "C" (the "Existing Occupied Pads").
At full occupancy of Phase I of the Property it will have a total of 243
manufactured housing pads in Phase I (of which three (3) are being utilized for
the water plant) leaving a balance of two hundred and forty (240) developed lots
. Thus, as of October 24, 1997, one hundred forty two (142) manufactured housing
pads are currently unoccupied in Phase I (the "Potential Earn-Out Pads"). At the
end of each Monthly Earn-Out Period (as such term is defined below), the parties
shall determine which of the Potential Earn-Out Pads were occupied by Tenants.
The Potential Earn-Out Pads that were occupied during such prior Monthly
Earn-Out Period shall hereinafter be referred to the "Newly Occupied Pads".
During each subsequent Monthly Earn-Out Period, the manufactured housing pads
that were deemed Newly Occupied Pads for such prior Monthly Earn-Out Period
shall for purposes of this Agreement, thereafter be deemed part of the Existing
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Occupied Pads and removed from the pads deemed Potential Earn-Out Pads.
(d) Marketing Criteria. Community agrees to have on-site at
all times during the term of this Agreement, at least eight (8) manufactured
home models and an on-site sales team of not less than one (1) sales personnel
during normal business hours and Community shall use its best efforts to obtain
additional off-site signage to advertise the Property. Community also agrees to
include this Property along with all other properties owned by Community or its
Affiliates in its national advertising program.
(e) Earn-Out. Commencing as of the Effective Date, through and
including December 1, 1997, and monthly thereafter (the "Monthly Earn-Out
Period(s)") until November 1, 2022, Community agrees to pay Xxxxxx the sum of
Sixteen Thousand Five Hundred Fifty Dollars ($16,550.00), for each newly
occupied Pad (the "Monthly Earn-Out") The Monthly Earn-Out shall be paid by
Community to Xxxxxx on or before the 15th day of each month following each
Monthly Earn-Out Period. Unless this Agreement is terminated pursuant to
subparagraph (g) hereof, this Agreement shall terminate sixty (60) days
following the earlier of: (i) When Phase I of the Property no longer has any
Potential Earn-Out Pads remaining; or (ii) November 1, 2022, at which time
Xxxxxx shall execute a Satisfaction of the Performance Mortgage referenced in
Section 3.02 below, during which sixty (60) day period the parties shall
complete a final accounting of the Monthly Earn-Out due Xxxxxx hereunder and pay
any sums due Xxxxxx. Any sums due Xxxxxx under the Annual Earn-Out shall be paid
prior to the recording of the Satisfaction of Performance Mortgage in the Public
Records of Charlotte County, Florida.
(f) Earn-Out Payment. From October 27, 1997, to October 30,
1999, Xxxxxx shall at its option: receive the sum of Sixteen Thousand Five
Hundred Fifty Dollars ($16,550.00) (the "Earn-Out Price") in cash for each Newly
Occupied Pad or in lieu of said cash, be paid in 4,729 AIOP Limited Partners
Partnership Units (the "AIOP Units") as calculated on the closing price as of
August 29, 1997(which was $3.50) of the stock of Asset Investors Corporation as
published in the Wall Street Journal. Commencing November 1, 1999, and annually
thereafter on November 1st of each year (the "Adjustment Date") during the term
of this Agreement, Xxxxxx shall at its option, receive the Earn-Out Price in
cash or in lieu of said cash, the number of AIOP Units calculated by the closing
price as of the last Friday of October of that year of the stock of Asset
Investors Corporation as published in the Wall Street Journal, divided into the
Earn-Out Price to establish the number of AIOP Units per Newly Occupied Pad for
that twelve (12) month period; for example, if the stock price is $4.50, then
the number of AIOP Units would be 3,678 until the next Adjustment Date.
(g) Early Termination. If Community: (i) fails to fund the MHM
Budget for a period of thirty (30) days after written notice of the default by
Xxxxxx, and/or (ii) fails to pay Xxxxxx in cash or AIOP Units, the Earn-Out
Price after thirty (30) days written notice of default by Xxxxxx, then Xxxxxx
may terminate this Agreement.
(h) Remedies. In the event Xxxxxx elects to terminate this
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Agreement pursuant to paragraph (g) above (the "Early Termination"), Xxxxxx
shall have the option to xxx for specific performance and damages or exercise
its rights and remedies under the terms and conditions of the mortgage of even
date herewith (the "Performance Mortgage"). Any sums due Xxxxxx shall bear
interest at the rate of fifteen percent (15%) per annum from the due date until
paid in full.
ARTICLE III
General
3.01 Books of Account and Records. The books of account and other
records pertaining to the Earn-Out shall be maintained by Brandywine at the
expense of Community at all times at 0 Xxxxx Xxxx Xxxxx, Xxxxxx Xxxx, XX 00000.
The books of account shall be maintained on a cash receipts and expenditures
basis in accordance with generally accepted accounting principles, consistently
applied, and shall show all items of income, expense, assets, liabilities,
costs, receipts, profits and losses pertaining to this Agreement, and such other
matters as the accountants of Community shall deem reasonably necessary or
appropriate. Xxxxxx shall have the right during usual business hours to audit,
examine, and make copies of or extracts from said books of account or records as
they pertain to the Earn-Out. Such right may be exercised by an independent
certified public accountant designated by such party. Such Party shall bear all
expenses incurred in any such examination made at its request.
3.02 Performance Mortgage. Simultaneously herewith, Community has
executed a Performance Mortgage securing the performance of Community hereunder
which incorporates the terms and conditions of this Agreement by reference, as
if more specifically set forth therein.
3.03 Notices.
(a) All notices, offers, demands or requests provided for or
permitted to be given to any party, or any permitted transferee of the interest
of said party pursuant to this Agreement, must be in writing and shall be deemed
to have been properly given or served when personally delivered to the party
entitled thereto or by depositing the same in the United States mail, addressed
to said party, postpaid and registered with return receipt requested at the
address set forth on the signature page of this Agreement.
(b) All notices, offers, demands, and requests shall be
effective upon personal delivery or upon being deposited in the United States
mail in accordance with subparagraph (a) above. However, the time period in
which a response to any such notice, offer, demand or request must be given
shall commence to run three (3) days after mailing or actual delivery, whichever
occurs first. Rejection or other refusal to accept or the inability to deliver
because of changed address shall be deemed to be receipt of the notice, demand,
or request sent.
(c) By giving to the other party at least fifteen (15) days
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written notice thereof, the parties hereto and their respective successors and
assigns shall have the right from time to time and at any time during the term
of this Agreement to change their respective addresses and each shall have the
right to specify as his address any other address within the United States of
America.
3.04 Governing Law. This Agreement and the obligations of the parties
hereunder shall be interpreted, construed, and enforced in accordance with the
laws of the State of Florida.
3.05 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto relative to the transactions contemplated hereunder
and supersedes any and all prior negotiations, understandings, or agreements in
regard thereto. No variations, modifications, or changes herein or hereof shall
be binding upon either Party unless and until set forth in a document duly
executed by or on behalf of each such Party as an amendment to this Agreement.
3.06 Waiver. None of the terms of this Agreement may be waived except
by an instrument in writing signed by each of the parties hereto. No consent or
waiver, express or implied, by any Party to or of any breach or default in the
performance by another Party of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such other Party of the same or any other obligations of such
party hereunder. Failure on the part of any party to complain of any act or
failure to act of the other party or to declare the other party in default,
irrespective of how long such failure continues, shall not constitute a waiver
of such party's rights hereunder.
3.07 Severability. In the event any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
3.08 Binding Agreement. Subject to the restrictions on transfers and
encumbrances set forth herein, this Agreement shall inure to the benefit of and
be binding upon the undersigned parties and their respective legal
representatives, successors, and assigns. Whenever in this Agreement a reference
to any party is made, such reference shall be deemed to include a reference to
the legal representatives, successors, and assigns of such party.
3.09 Equitable Remedies. The rights and remedies of any of the parties
hereunder shall not be mutually exclusive, i.e., the exercise of one or more of
the provisions hereof shall not preclude the exercise of any other provisions
hereof. Each party confirms that damages at law may be an inadequate remedy for
a breach or threatened breach of this Agreement and agrees that, in the event of
a breach or threatened breach of any provision hereof, the respective rights and
obligations hereunder shall be enforceable by specific performance, injunction,
or other equitable remedy, but nothing herein contained is intended to, nor
shall it, limit or affect any right or rights at law or by statute or otherwise
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of any party aggrieved as against the other for a breach or threatened breach of
any provision hereof, it being the intention by this Agreement to make clear the
agreement of the parties that the respective rights and obligations of the
parties hereunder shall be enforceable in equity as well as at law or otherwise.
Notwithstanding the exercise of the rights and remedies of Xxxxxx hereunder or
under the Performance Mortgage, this Agreement and the Performance Mortgage
shall be subject to and subordinate and inferior to any lease or rental
agreement entered into by Community with any tenant occupying a manufactured
home on the Property and the only rights Xxxxxx has with respect to a Newly
Occupied Pad shall be the collection of the Earn-Out Price due Xxxxxx for that
Newly Occupied Pad. In the event of a foreclosure under the terms of the
Performance Mortgage, Community shall have the continued right to manage the
Property and lease Newly Occupied Pads and re-lease Existing Occupied Pads until
Xxxxxx is paid in full through the exercise of its judgment in foreclosure.
3.10 Casa Del Mar Utilities. Xxxxxx acknowledges receipt of that
certain letter from H2O Utility Services, Inc.("H2O") dated October 22, 1997
wherein H2O indicates that it may cost up to One Hundred Thousand Dollars
($100,000.00) (the "Bid") to expand the existing Casa Del Mar Water Treatment
Facility (the "Facility") to permit said Facility to service Phase I at Casa Del
Mar. Community and Xxxxxx agree that as a post closing item, they will rebid the
Bid or allow H2O to perform the additional engineering needed to give Community
a firm bid in order to satisfy this condition precident to the closing of the
purchase of Casa Del Mar. Once a firm bid is obtained and accepted by the
parties that amount will be due and owing by Xxxxxx, but in no event shall the
Bid exceed One Hundred Thousand Dollars ($100,000.00). Community agrees to
advance the amount due under the approved Bid upon the execution of the contract
pertaining to the approved Bid and Xxxxxx shall reimburse Community the amount
so advanced up to One Hundred Thousand Dollars ($100,000.00) from the Earn-Out
Price payments due Xxxxxx commencing with the thirty first (31st) Earn-Out Price
payment until said amount is totally reimbursed to Community, after which all
subsequent Earn-Out Price payments shall be payable to Xxxxxx in accordance with
this Agreement.
3.11 Prevailing Party. In the event of a dispute between the parties,
the prevailing party shall be entitled to reasonable attorney's fee and
paralegal fees and court cost incurred prior to and during any litigation,
mediation or bankruptcy proceedings including interest from the date said fees
and costs were advanced by the prevailing party at the rate of ten percent (10%)
per annum.
3.12 Number and Gender. Whenever required by the context hereof, the
singular shall be deemed to include the plural, the plural shall be deemed to
include the singular, and the masculine, feminine and neuter genders shall each
be deemed to include the others.
3.13 Headings. All headings contained in this Agreement are for
convenience of reference only and shall not be considered in any way in
connection with the interpretation or enforcement of any provisions of this
Agreement.
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3.14 Counterparts. This Agreement may be executed and delivered in one
or more counterparts and by facsimile, and all of which shall be fully effective
as an original and all of which shall constitute one and the same instrument
binding on all of the parties hereto; provided, however, that no signature shall
be binding or effective unless and until all signatures shall have been obtained
and delivered.
3.15 Joinder. Brandywine hereby joins in the execution of this
Agreement so as to bind said parties to the specific paragraphs set forth herein
as well as the terms and conditions of the exhibits referenced herein in which
Brandywine is to be a party.
3.16 Waiver of Jury Trial. Each of the parties hereby knowingly,
voluntarily and intentionally waives (to the fullest extent permitted by
applicable law) any rights it may have to a jury trial by jury of any disputes
arising under or relating to this Agreement and agrees that any such dispute
shall be tried before a judge sitting without a jury. Each of the parties hereby
irrevocably consents to the jurisdiction and venue of the Courts of the State of
Florida and of any Federal Court located within Hillsborough County, Florida in
connection with any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. Each party hereby waives
personal service of any process in connection with any such action or proceeding
and agrees that the service thereof may be made by certified or registered mail
directed to the party, and its counsel, at the address of such party, and its
counsel, set forth in Section 3.03 hereof, or at such other addresses of which
the party has given notice as provided in Section 3.03 hereof. In the
alternative, any party may effect service upon any other party in any other form
or manner permitted by law.
THE REST OF THIS PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this Agreement is executed effective as of the date
set forth above.
WITNESSETH: COMMUNITY CASA DEL MAR JOINT
VENTURE, a Delaware general partnership
By: COMMUNITY ACQUISITION AND DEVELOPMENT
CORPORATION
/s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, President
/s/ Xxxx Canotenoto Address: 0000 XxXxxxxxx Xx., Xxx.
---------------------------------
X
Name: Xxxx Canotenoto Xxxxxxxxxx, XX 00000
XXXXXX CORPORATION OF DELAWARE, a
Delaware corporation
/s/ Xxxx Canotenoto By:/s/Xxxxxxx Xxxxxx
--------------------------------- ----------------------------------------
Name: Xxxx Canotenoto Xxxxxxx Xxxxxx, President
.Address: 3000 Gulf to Xxx Xxxx. 0xx Xxxxx
/s/ Xxxxxxxxx X. Xxxxxxx Xxxxxxxxxx, XX 00000
-----------------------------
Name: Xxxxxxxxx X. Xxxxxxx
AIC Community Management Partnership, a
Delaware general partnership, d/b/a
Brandywine Communities
/s/ Xxxxxxxxx X. Xxxxxxx
----------------------------- By:Community Management Investors
Name: Xxxxxxxxx X. Xxxxxxx Corporation,
a Delaware corporation, General Partner
By: /s/Xxxxxx X. Xxxxxx
/s/ Xxxx Canotenoto --------------------------------
Name: Xxxx Canotenoto Xxxxxx X. Xxxxxx Vice President
Address: 0 Xxxxx Xxxx Xxxxx
Xxxxxx Xxxx, XX 00000
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