EXHIBIT 10.5
WHITEHALL HOMES AT MIRAMAR LTD.,
LIMITED PARTNERSHIP AGREEMENT
This Agreement of Limited Partnership ("Agreement") dated March 12,
2003 by and among WHITEHALL HOMES AT MIRAMAR INC., a Florida Corporation
("General Partner"), a corporation organized and existing under the laws of
Florida with offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000; and
MIRAMAR INVESTMENT GROUP ONE, LLC, a Florida Limited liability company ("Limited
Partner"). Hereinafter, the Limited Partner, together with any persons hereafter
becoming limited partners-hereof and excluding any persons hereafter withdrawing
from the limited partnership as limited partners, from and after the time of
such withdrawal, shall be referred to collectively as the Limited Partners, and,
together with the General Partner shall be referred to collectively as the
Partners.
RECITAL
WHEREAS, the General Partner and the Limited Partner are desirous for
forming a limited partnership (Partnership) pursuant to the Revised Uniform
Limited Partnership Act of Florida (Act);
NOW, THEREFORE, the parties hereto, being duly sworn, and intending to
be legally bound, hereby state, agree, swear to and certify as follows:
Article I
NAME
1.1. NAME. The name of the Partnership is WHITEHALL HOMES AT
MIRAMAR LTD, a Florida Limited Partnership.
Article II
OFFICE AND AGENT FOR SERVICE
2.1. PLACE OF BUSINESS. The principal office of the Partnership
shall be located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000 or such other
location as may hereafter be determined by the General Partner. The General
Partner shall notify the Limited Partner(s) of any change in the principal
office of the Partnership.
2.2 AGENT FOR SERVICE OF PROCESS. The agent for service of process
for the Partnership shall be Xxxxxx Xxxxxxx, an individual having a business
address at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000 and a residence address
at 000 Xxxxx Xxx, Xxxxxxxx, Xxxxxxx
1
Article III
PURPOSES
3.1. PURPOSES. The purposes of the Partnership shall be to develop
the property described in Exhibit "A" attached hereto (the "Property") with a
172 Unit condominium, residential project (the "Project"). The Project shall
proceed pursuant to the development plan completed by the General Partner and
reviewed and approved by the Partnership (the "Development Plan"). A copy of the
Development Plan is attached to this Agreement as Exhibit "B". The General
Partner shall acquire ownership of the Property in the name of the Partnership
for the purposes of the Project.
3.2. POWERS TO CARRY OUT PURPOSES. In order to carry out its
purpose, the General Partner is empowered and authorized on behalf of the
Partnership as further set forth hereinbelow, and subject to the limitations as
set forth herein, to do any and all acts necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of
its purposes, and for the protection and benefit of the Partnership including,
without limitation, the acquisition and ownership of the Property by the
Partnership pursuant to that certain agreement for purchase and sale by and
between the Whitehall Quality Homes, Inc., (or its assignee) as Buyer, and SMR
Communities Joint Venture, a Florida General Partnership, as Seller, and
Xxxxxxxxx-Manatee Ranch, Inc., a Delaware Corporation ("SMR") executed in March
of 2002, (Miramar Project) (referred to herein as the "Purchase Agreement");
thereafter, the development of the Project on the Property and the subsequent
marketing, sale and disposition of individual residential condominium units in
the Project.
Article IV
TERM
4.1. TERM. The Partnership shall continue until terminated as
provided in Section 10 hereof.
Article V
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
5.1. CONTRIBUTION BY THE GENERAL PARTNER. The General Partner shall
initially contribute ONE DOLLAR ($1.00) to the capital of the Partnership.
Thereafter, the General Partner shall not be required to contribute monetary
funds to the capital and equity of the Partnership in exchange for its equity
interest therein as set forth below. The General Partner shall be required to
provide and to render all required management and development services to the
Partnership for the Property and the Project, inclusive, as well as to obtain
all necessary acquisition, development and construction funding for the
acquisition of the Property and the development of the Project and shall be
subject to all of the liabilities of the Partnership except as otherwise agreed
between the General Partner and the Partnership and the General Partner and its
creditors.
2
5.2. CONTRIBUTIONS BY THE LIMITED PARTNER. The Limited Partners
shall contribute ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000.00) to
the Partnership. All payments made by the Limited Partner shall be made to the
Partnership in cash or by check. The conditions precedent to the obligations of
the Limited Partner to complete its capital contribution are set forth in
Exhibit "C".
Upon payment of the total capital contributions of the Limited Partner
to the Partnership, the General Partner and the Limited Partners shall each be
deemed to have an equity interest in the Partnership in proportion to their
respective capital accounts, and neither the General Partner nor the Limited
Partner may transfer their interest in the Partnership without the consent of
all parties hereto and any such transfer shall be in compliance with applicable
security laws, if any. The equity interests of the General Partner and the
Limited Partner may not be changed or modified except as expressly provided for
in this Agreement. No additional capital contributions shall be required of the
Limited Partner and its interest in this Partnership cannot be modified except
as provided in this Agreement.
5.3. INITIAL CAPITAL ACCOUNTS. The initial capital accounts of the
General and the Limited Partner and their respective Units shall be as follows,
after the contribution of the capital contributions referred to above:
General Partner: $ 1.00
Limited Partner: $1,800,000.00
5.4. LIABILITY OF LIMITED PARTNER(S). A limited partner is not
liable for the obligations of this limited partnership.
5.5. CAPITAL ACCOUNTS. The Partnership shall establish for each
Partner an initial capital account as provided above. Each Partner's capital
account shall be increased by the net profits from operations allocated to each
Partner pursuant to Section 8 below which Section specifically provides for a
preferred equity and cash flow return to be paid to the Limited Partner from the
gross proceeds of individual condominium unit sales, all as provided
hereinbelow.
Except as otherwise provided in this Agreement, whenever it is
necessary to determine the capital account of any Partner for purposes of
Section 8 or 9, the capital account of such Partner shall be determined after
giving effect to the allocation for the Partnership's current year of net
profits and net losses from operations under Section 8.1., and all distributions
for such year under Section 9.2. Loans made by the limited partner to the
Partnership shall not be considered contributions to the capital of the
Partnership. A Partner shall not be entitled to withdraw any part of such
Partner's capital account or to receive any distribution from the Partnership,
except as specifically provided in this Agreement. Any Partner, including any
substituted Partner, who shall receive an Interest in the Partnership or whose
Interest in the Partnership shall be increased by means of a transfer to such
Partner of all or part of the interest of another Partner, shall have a capital
3
account which reflects such transfer.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Section throughout the term of this Agreement. If the
General Partner shall determine that it is necessary to modify the manner in
which the Capital Accounts, or other debits or credits thereto, are computed or
maintained in order to comply with such Regulations then upon the mutual consent
of the General Partner and the Limited Partner, the General Partner is
authorized to make such modification.
5.6. ALLOCATIONS AND DISTRIBUTIONS AMONG LIMITED PARTNERS. Whenever
amounts are allocated or distributed to the Limited Partners, such amounts shall
be allocated or distributed among the Limited Partners in the proportion that
the Unit(s) held by each of the Limited Partners bears to the aggregate Units
held by all of the Limited Partners.
5.7. DISALLOWANCE OF DEDUCTIONS. Notwithstanding any other
provisions of this Agreement, in the event that any fees paid to the General
Partner or its affiliates pursuant to this Agreement or any Schedule hereto, and
deducted by the Partnership in reliance on Section 707(a) and/or 707(c) of the
Internal Revenue Code of 1986, as amended (Code) are disallowed as deductions to
the Partnership on its federal income tax return and treated as Partnership
distributions, the General Partner shall be allocated items of Partnership
income, if any, in the year such fees were paid, equal to the amount of such
fees for which deductions were disallowed. In such event, the amounts paid to
the General Partner shall be deemed to be partnership distributions and not fee
payments.
Article VI. LOANS TO THE PARTNERSHIP
6.1. LOANS TO THE PARTNERSHIP. If the General Partner or the
Limited Partners shall make any loan or loans to the Partnership or advance
money on its behalf (other than as expressly required herein), the amount of any
such loan or advance shall not be deemed an increase in or contribution to the
capital account of the lending Partner or entitle such lending Partner to any
increase in its share of the distributions of the Partnership, or entitle or
subject such lending Partner to any greater proportion of the profits, gains, or
losses which the Partnership may sustain. Except as provided herein: (i) the
General Partner or any affiliate of the General Partner (Affiliate) may, but is
not obligated to, loan or cause to be loaned to the Partnership such additional
sums as the General Partner deems appropriate and necessary for the conduct of
the Partnership's business (ii) loans made by a General Partner, or any
Affiliate of the General Partner, shall be upon such terms and for such
maturities as the General Partner deems reasonable; (iii) if: (a) the General
Partner or any Affiliate of a General Partner borrows money and reloans the
money to the Partnership, such General Partner or its Affiliate shall be
reimbursed for the actual interest paid by such party on such original loan, and
other borrowing costs incurred; (b) the General Partner or any Affiliate of the
General Partner loans its own money to the
4
Partnership, the Partnership shall pay interest to the General Partner or its
Affiliate at a rate of interest equal to the rate of interest earned by any
Lender to the Partnership with respect to the acquisition, development or
construction of the Property and/or Project; and (iv) any such loans referred to
in this Paragraph 6.2. and the interest earned thereon (but in no event at a
rate greater than the maximum rate allowed by the appropriate usury law) may be
payable from borrowings, cash flow and reserves, to the extent such reserves are
not committed to repairs, and shall immediately become due and payable upon the
sale, exchange or other disposition of all or substantially all of the
Partnership's property or prior to any distributions of capital or interim
capital items to the Partners, provided however that all such repayments shall
be subject to the priority of distributions to the Limited Partner as required
by Article IX below.
Article VII. MANAGEMENT AND CONTROL
7.1. OVERALL MANAGEMENT AND CONTROL. The General Partner shall have
full, exclusive and complete discretion in the management and control of the
Partnership for the purposes set forth in Section 3. Such discretion shall
include, without limitation, the right to cause the Partnership to do the
following and to perform any of the following on behalf of the Partnership:
a. Acquire ownership to the Property in the name of the
Partnership pursuant to the terms of the Purchase Agreement.
b. Perform any and all acts necessary to carry out any and all
agreements entered into or required in connection with the Purchase Agreement
and to pay all sums due pursuant thereto
c. Expend funds, including profits, in furtherance of the
Partnership's business and the development of the Project.
d. Employ, on behalf of the Partnership and in connection with
the Project, individuals, fees and corporations, and professionals on such terms
and for such compensation as the General Partner shall, in its reasonable
discretion, determine.
e. Do all acts and things which, in the General Partner's
judgment, are necessary or desirable for the proper management of the
Partnership, the Property, the Project and/or its other assets.
f. Compromise, MEDIATE, submit to arbitration, xxx or defend
any and all claims for or against the Partnership.
g. Make or revoke any election permitted the Partnership by
any taxing authority. The General Partner is hereby specifically authorized to
act as the "Tax Matters Partner" under the Code and in any similar capacity
under state and/or local law.
5
h. In the ordinary course of the Partnership business, buy,
sell, transfer, assign, convey, lease or sublet portions of the property or
assets on behalf of the Partnership, upon such terms and conditions and for such
consideration as the General Partner may determine; however, such authority
shall not include a sale of all of the Property or substantially all of the
assets or the Project, and such authority is subject to the limitations set
forth in Section 7.2.
i. Obtain a written lending commitment and to borrow funds for
the Partnership purposes for acquisition of the Property and development and
construction of the Project and subsequent thereto refinance any such loans or
mortgages on behalf of the General Partner and/or the Partnership upon terms and
upon such security as the General Partner shall determine.
j. Disseminate financial and other reports to the Limited
Partners.
k. Maintain or cause to be maintained proper books and records
of the Partnership.
I. Assist the accountants for the Partnership in the
preparation of financial statements and tax returns.
m. Execute and file necessary certificates and other
Partnership documents including any amendment thereto.
n. To invest funds of the Partnership, including funds held as
reserves, in certificates of deposit, interest-bearing, time deposits in state
or national banks; in United States Government securities; in bank repurchase
agreements, bankers' acceptances or money market funds, as the General Partner
may, from time to time, deem to be in the best interests of the Partnership.
o. To acquire, enter into and pay for any contract of
insurance which the General Partner reasonably deems necessary and proper for
the protection of the Partnership, for the conservation of the assets of the
Partnership, or for any purpose beneficial to the Partnership.
p. To employ attorneys, brokers, consultants, managers and
accountants on behalf of the Partnership, including affiliates of the General
Partner.
q. To establish reasonable reserve funds from income derived
from the Partnership's operations or from capital transactions to provide for
future requirements of the Partnership.
r. To perform or cause to be performed all of the
Partnership's obligations under any agreement to which the Partnership is a
party.
6
s. To make, execute and deliver any and all documents of
transfer and conveyance and any and all other instruments and agreements,
including agreements with regulatory agencies, that may be necessary or
appropriate to carry out the powers herein granted.
t. Perform any and all acts and execute any and all documents
as the General Partner, shall deem necessary or appropriate to carry out the
purposes of the Partnership.
u. Borrow funds in the name of the Partnership from the
General Partner, or from affiliates of the General Partner, provided however,
that all repayments of principal or interest on such loans shall be subordinate
to all the provisions of this Agreement relating to the preferred return to be
paid to the Limited Partner.
V. SUBJECT TO THE REQUIREMENTS AND RESTRICTIONS OF THIS
AGREEMENT, BORROW FUNDS IN THE NAME OF THE PARTNERSHIP FROM INSTITUTIONAL OR
PRIVATE LENDERS ON SUCH TERMS AND CONDITIONS AS ARE COMMON IN THE MARKET PLACE,
AND GIVE SUCH SECURITY AS IS NECESSARY TO EFFECTUATE SUCH LOANS, PROVIDED THAT
THE RIGHTS OT DISTRIBUTIONS OF THE LIMITED PARTNER PROVIDED FOR IN ARTICLE IX
ARE NOT ADVERESLY AFFECTED OR MODIFIED.
The General Partner agrees to manage and control the affairs of the
Partnership to the best of its ability, and to conduct the operations
contemplated under this Agreement in a careful and prudent manner and in
accordance with good industry practice. Except as otherwise provided herein, all
Partnership decisions shall be made by the General Partner. The General Partner
shall devote such time as, in its discretion, may be necessary for the proper
performance of its duties hereunder, and may subcontract to others any portion
of its management duties hereunder, but such subcontracting shall not relieve
the General Partner from its supervisory obligations and responsibilities set
forth herein.
7.2. LIMITATION ON MANAGEMENT RIGHTS. Notwithstanding the
generality of the foregoing, the General Partner shall not be empowered (without
the consent of the Limited Partner) to:
a. Do any act in contravention of this Agreement;
b. Possess the Property or other Partnership property
including, without limitation the Property or assign any rights in specific
Partnership property for other than a Partnership purpose;
c. Admit a person as a substitute General or Limited Partner,
except as otherwise permitted in this Agreement;
d. Change or reorganize the Partnership into any other legal
form;
7
e. Require any Limited Partner to make any contribution to the
capital of the Partnership not provided for herein; or
f. Amend this Agreement, if any such amendment would
materially change the rights, duties and obligations of the parties to this
Agreement.
g. Reinvest the proceeds of any loan secured by the
Partnership Property received by the Partnership in any manner for other than
the benefit of the Partnership or in any manner inconsistent with the
Development Plan or the Partnership's objectives.
h. Construct improvements to the Property or Project not
contemplated by the Development Plan.
i. Borrow money in the name of the Partnership or utilize
property owned by the Partnership as collateral security for loans other than
the development and acquisition loan referenced in the Development Plan, and
other financing of the Partnership property (i.e. furniture and decoration of
models), provided however, that this limitation shall not apply to borrowing in
the name of the Partnership from the General Partner, or affiliates of the
General Partner.
j. Sell or contract to sell units other than in accordance
with the schedule of minimum prices approved and agreed upon by the Partners,
which is attached hereto as Exhibit "D" (the "Schedule of Minimum Prices"),
provided however, that if units are sold at prices different than the agreed
Schedule of Minimum Prices, the scheduled payments due the Limited Partner as
provided herein shall be based on the greater of the Schedule of Minimum Prices
or the actual sales price.
k. Make any change in the Development Plan which would have,
the effect of lowering the total project, budgeted sell out by more than 20%.
I. Make any change in the budget for the completion of the
Project and implementation of the Development Plan as approved by the Partners
(the "Budget"), which change would increase any category by more than 10 % over
the approved amount, unless there are other changes in other categories which
will reasonably lower the proposed change to not more than 10 % over the
approved amount. A copy of the Budget is attached to this Agreement as Exhibit
"E".
m. Make any expenditure, or incur any obligation by or on
behalf of the Partnership involving a sum in excess of one hundred and ten
percent (110 %) of the amount budgeted therefor in the Development Plan or the
approved Budget.
n. General Partner may make a change in excess of such allowed
amounts if General Partner shall fund the excess change from other than
Partnership funds, or loan
proceeds otherwise available to the Partnership from Partnership borrowings
(other than
8
loans from the General Partner or an affiliate of the General Partner).
o. Sell or contract to sell the Property or Project in a bulk
sale except to a bonafide third party purchaser in an arms length transaction.
7.3. RIGHT TO EXAMINE PARTNERSHIP RECORDS, ETC. Each Limited
Partner shall have the right to examine the books and records of the Partnership
at its principal place of business during regular business hours and to make
reasonable inquiry as to Partnership affairs.
7.4. RIGHT TO REMOVE GENERAL PARTNER. The General Partner may not
voluntarily withdraw from the Partnership. The Limited Partner(s) shall have the
right to remove the General Partner for cause upon the affirmative vote of the
Limited Partner(s) who at least hold One Hundred percent (100%) of the
outstanding Limited Partner Units. At the request of Limited Partners who hold
at least One Hundred percent (100%) of the outstanding Units, the General
Partner shall call a meeting within 5 days after such notice, on the question of
removal and the selection of a substitute General Partner. If there would be no
remaining General Partner after the removal of the General Partner, at least one
substitute General Partner shall be simultaneously selected by a vote of Limited
Partners who own collectively at least One Hundred percent (100%) of the
outstanding Units. The substitute General Partner shall succeed to the interest
of the General Partner and be entitled to all distributions to the General
Partner under Article VIII and Article IX and as elsewhere provided in this
Agreement. If a substitute General Partner is not simultaneously elected, the
Partnership shall thereupon terminate in accordance with Section 10. hereof.
Upon a General Partner's removal, the interest of such General Partner in the
Partnership shall be automatically converted into a Limited Partnership Interest
as of the date of such removal, in accordance with and subject to the terms and
conditions set forth in Section 10.2.
For all purposes of this Section 7.4., the right of the Limited
Partners to remove the General, Partner for cause upon affirmative vote of the
Limited Partners as provided hereinabove shall be limited, specifically, to a
finding, of the following cause for such removal having occurred and having, not
been remedied by such General Partner for a period of thirty days after written
notice thereof from the Limited Partners,
a. The default by the General Partner in its obligations under
the terms and provisions of the Purchase Agreement and the failure to cure such
default within any curative period as provided under such Purchase Agreement; or
b. An event of default under the terms and provisions of any
acquisition, development and construction loan financing loan obtained by the
Partnership with respect to acquisition of the Property and the development and
construction of the Project thereon, or the failure to cure such event of
default within any curative period as provided thereunder; or
c. The failure and/or default by the General Partner in
satisfying and
9
discharging, all obligations and requirements of this Agreement, including, but
not limited to the provisions hereof related to Affirmative Obligations of the
General Partner set forth in Section 7.11.
7.5. NO MANAGEMENT BY LIMITED PARTNERS. The Limited Partner(s)
shall take no part in the management of or transact any business for or on
behalf of the Partnership and shall not have any right or authority to act for
or bind the Partnership. The exercise of the rights and powers of a Limited
Partner under Sections 7.2. and 7.4. hereof shall not be deemed taking part in
the day-to-day affairs of the Partnership of the exercise of control over
Partnership affairs.
7.6. CONFLICTS OF INTEREST. Any Partner may engage in or possess an
interest in other business ventures of any nature or description independently
or with others, including but not limited to, the real estate business in all
phases which shall include, without limitation, ownership, operation,
management, syndication and development of real property, and neither the
Partnership nor any Partner shall have any rights in or to such independent
ventures or the income or profits derived therefrom.
7.7. LIMITATIONS ON GENERAL PARTNER'S LIABILITY. The General
Partner shall not be liable, responsible or accountable in damages or otherwise
to any other Partner or the Partnership for any acts performed by it in good
faith and within the scope of this Agreement. The General Partner shall,
however, be liable for such actions to the extent they are attributable to gross
negligence, fraud, or intentional violation of the provisions of this Agreement.
The General Partner shall not be liable to any other Partner or the Partnership
in the event that any taxing authority disallows or adjusts any income,
deductions or credits in the Partnership's tax returns.
7.8. LIMITATION ON LIABILITY OF THE GENERAL PARTNER FOR RETURN OF
LIMITED PARTNER'S CAPITAL. Subject to the General Partner's liabilities to the
Limited Partners as provided for in Section 7.7, the General Partner shall not
be liable for the return of the Capital Contributions of the Limited Partners,
or any portion thereof, except as provided herein relating to the obligation to
make distributions as provided for herein, and as provided in Section 7.11 j.
7.9. INDEMNIFICATION. The Partnership, but not any Limited Partner,
shall indemnify and hold harmless the General Partner and its shareholders,
successors, assigns, officers and directors, for any claim, loss, damage,
liability, action, cost or expense (including reasonable attorney fees) arising
out of any act or failure to act by them (including any act or failure to act as
'Tax Matters Partner") if such act or failure to act is in good faith, within
the scope of this Agreement and is not attributable to gross negligence, fraud,
or intentional violation of the provisions of this Agreement. The Partnership
and the General Partner shall indemnify and hold harmless the Limited Partner
from and against all liabilities, damages, and actions (including attorneys'
fees) which may arise from this Agreement and/or the development and sale of the
Project, including any actions or claims of Unit owners or Condominium
Associations and excepting, specifically, any actions, damages
10
or liabilities resulting from the breach of this Agreement by the Limited
Partner or resulting or arising from or attributable to gross negligence or
fraud of the Limited Partner, its agents or employees.
7.10. RELATED PERSONS. The fact that a partner or any "Related
Person" (as hereinafter defined) is employed by the Partnership, or is directly
or indirectly interested in or connected with any person, firm, or corporation
employed by the Partnership to render or perform a service, or from which or
whom the Partnership may purchase any property, shall not prohibit the General
Partner from employing such person, firm or corporation or from otherwise
dealing with him or it, and neither the Partnership nor the Partners thereof
shall have any rights in or to any income derived therefrom, provided that any
such transaction is done in good faith and on not materially less favorable
terms than would be obtainable from an unrelated party. Neither the Partnership
nor any of the Partners shall, as a consequence of the Partnership relationship
created herein, have any rights in or to any income or profits derived
therefrom. A "Related Person" shall include any person, firm or corporation
affiliated with a Partner; and any partner, venturer, employee, officer,
director, or shareholder thereof; or any member of the family of any of the
foregoing.
7.11. AFFIRMATIVE OBLIGATIONS OF GENERAL PARTNER. The General
Partner shall have the following affirmative obligations as a part of the
Development Plan approved by the Partners:
a. To build, develop, supervise, and contract for the
construction of condominium phases, units and condominium common elements and
amenities of the community and, as necessary, supervise and engage in financing
activities on behalf of the Partnership as set forth in the Development Plan and
supervise and engage in sales of the individual condominium units, which
obligation shall include, but shall not be limited to the affirmative
obligations to cause the substantial completion of the items as set forth in
Exhibit "F" attached hereto ("Substantial Completion Obligations of the General
Partner").
b. To supervise all necessary staff and to attend to the
hiring of staff as required from time to time.
c. To review AND SET all prices, fees and rates for the
Development Plan and the sale of the individual condominium units.
d. To maintain all licenses and permits required to accomplish
the Development Plan and the sale of the individual condominium units.
e. To maintain suitable internal accounting and internal
auditing systems
f. To maintain such inventories, provisions, supplies, and
equipment as may be required in order to develop and construct the improvements
contemplated by the Development Plan and to engage in the sale of the individual
condominium units.
11
g. To plan, prepare and contract for ongoing advertising and
promotional programs reasonably required to sell the individual condominium
units.
h. To maintain full, true and accurate records and accounts of
the business transactions of the Partnership.
i. To provide the Partners with a quarterly operating
statement within 45 days after the last day of each calendar quarter, and to
provide an annual operating statement within 90 days after the last day of each
fiscal year.
J. TO COMPLY WITH ALL OF THE TERMS AND CONDITIONS OF THE
PURCHASE AGREEMENT, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SPECIFICALLY TO TAKE SUCH ACTIONS AND ARRANGE SUCH FUNDING UNDER THE LOANS
OBTAINED BY THE PARTNERSHIP TO ACQUIRE PHASES II AND III OF THE PROPERTY AS
PROVIDED FOR UNDER THE PURCHASE AGREEMENT, ON OR BEFORE THE REQUIRED ACQUISITION
DATE SPECIFIED THEREFOR IN THE PURCHASE AGREEMENT. IN ADDITION TO ALL OF THE
RIGHTS OF THE LIMITED PARTNER UNDER THIS AGREEMENT IT IS SPECIFICALLY PROVIDED
THAT IF THE PARTNERSHIP DOES NOT ACQUIRE THE PHASE II AND PHASE II PORTIONS OF
THE PROPERTY UNDER THE PURCHASE AGREEMENT, THIS IS A MATERIAL DEFAULT BY THE
GENERAL PARTNER, AND UPON SUCH DEFAULT THE GENERAL PARTNER SHALL NOT BE ENTITLED
TO ANY DISTRIBUTIONS FROM THE PARTNERSHIP, EXCEPT FOR THE REIMBURSEMENT PROVIDED
FOR IN SECTION 9.4 OF THIS AGREEMENT UNTIL THERE HAS BEEN DISTRIBUTED TO THE
LIMITED PARTNER THE RETURN OF ITS ENTIRE CAPITAL CONTRIBUTION OF $1,800,000.00.
ALL PROCEEDS AVAILABLE FROM ANY SOURCE TO THE PARTNERSHIP SHALL BE DISTRIBUTED
TO THE LIMITED PARTNER UNTIL SUCH AMOUNT HAS BEEN DISTRIBUTED THE LIMITED
PARTNER.
Article VIII
ALLOCATIONS OF PROFITS AND LOSSES
8.1. ALLOCATION OF PROFITS.
a. The profits and gains of the Partnership shall be allocated
twenty-five percent (25%) to the Limited Partner and seventy-five percent (75%)
to the General Partner. The allocations hereunder shall comply with Section
704(b) of the Internal Revenue Code;
b. The allocation method set forth in this Article is intended
to allocate net profits and net losses to the Partners for Federal Income tax
purposes in accordance with their economic interests in the Partnership while
complying with the requirements of Internal Revenue Code Section 704(b) and the
Regulations promulgated thereunder. If, in the opinion of the General Partner,
such allocations shall not (i) satisfy the requirements of Internal Revenue Code
Section 704(b) or the Regulations thereunder, (ii) comply with any other
provisions of the Code or Regulations, or (iii) properly take into account any
expenditure made by the Partnership, then upon the mutual consent of the General
Partner and the Limited Partner, net profits and net losses shall be allocated
in such manner as the
12
General Partner shall determine to be required to reflect properly (i), (ii), or
(iii), as applicable, and upon the mutual consent of the General Partner and the
Limited Partner, the General Partner shall have the right to reflect any such
change in the method of allocating net profits and net losses; provided,
however, that any change in the method of allocating net profits and net losses
shall not materially alter the economic agreement among the Partners.
8.2. ALLOCATION OF INCOME TO THE GENERAL PARTNER. The balance of
all taxable income for each taxable year not allocated to the Limited Partner
shall be allocated to the General Partner.
8.3. ALLOCATION OF LOSSES. The Limited Partner shall be allocated
all of the tax losses of the Partnership until such time as the Capital Accounts
of the Limited Partner and General Partner are equal. To the extent that the
General Partner's basis shall under the federal tax laws require the suspension
of tax losses otherwise allocable to the General Partner, such losses shall be
allocated to the Limited Partner.
8.4. INTERIM CAPITAL TRANSACTIONS. Intentionally omitted.
8.5. NET GAIN FROM DISSOLUTION AND TERMINATION. Except for any
depreciation recapture all net gains and net losses of the Partnership in
connection with a sale of substantially all of its assets or dissolution and
termination of the Partnership, as determined for federal income tax purposes,
will be allocated in the following order of priority, to the extent applicable:
a. First, any such gain in an amount equal to the "minimum
gain" (as defined in Treasury Regulation Section 1.704-1 (b)(4)(iv)(c))
attributable to the property which is the subject of the capital transaction
giving rise to such gain (whether or not such gain has been recognized for
federal income tax purposes) will be allocated to all Partners with an Adjusted
Capital Account Deficit in the amount and in the proportions necessary to
eliminate such Adjusted Capital Account Deficit as quickly as possible;
b. Then, an amount equal to the deficit in the capital account
of each Partner shall be allocated to each Partner with a deficit remaining in
his capital account. (In the event that, such net gains are less than the
aggregate of the deficits in the capital accounts of each such Partner, such
gains shall be allocated among such Partners in the same ratio that the deficit
in the capital accounts of each such Partner bears to the aggregate of all such
Partners' deficits);
c. Then, to the Partners in amounts equal to the amounts
distributed pursuant to Section 9.2 hereof and in the same order of priority.
8.6. NET LOSSES FROM DISSOLUTION AND TERMINATION. The net losses
upon dissolution or termination of the Partnership shall be allocated as
provided in Article 8.3.
13
8.7. DEPRECIATION RECAPTURE. Notwithstanding the foregoing, if the
taxable gain to be allocated pursuant to Section 8.2 or 8.3 above includes
income treated as ordinary income for federal income tax purposes because it is
attributable to the recapture of depreciation, such gain so treated as ordinary
income shall be allocated to and reported by the Partners in proportion to their
accumulated depreciation allocations, and the Partnership shall keep records of
such allocations.
8.8. SPECIAL ALLOCATIONS. In the event any Partners unexpectedly
receive any adjustments, allocations, or distributions described in Treasury
Regulation Sections 1.704l(b)(2)(ii)(d)(4), 1.704-1 (b)(2)(ii)(d)(5), or 1.704-1
(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Partners in accordance with Regulation Section
1.704l(b)(4)(iv)(d) in an amount and manner sufficient to allocate the deficit
balances as quickly as possible. Any special allocations of items of income or
gain pursuant to this Section shall be taken into account in computing
subsequent allocations of Profits pursuant to this Section, so that the net
amount of any items so allocated and the Profits, Losses and all other items
allocated to each Partner pursuant to this Section, to the extent possible, be
equal to the net amount that would have been allocated to each such Person
pursuant to the provisions of this Section if such unexpected adjustments,
allocations or distributions had not occurred.
8.9. CHANGE IN ALLOCATIONS. It is the intent of the Partners that
each Partner's distributive share of income, gain, loss, deduction, or credit
(or item thereof) shall be allocated in accordance with this Section 8 to the
fullest extent permitted by Section 704(b) of the Code and Regulations. In order
to preserve and protect the allocations provided for in this Section 8 the
General Partner is authorized and directed to allocate income, gain, loss,
deduction or credit (or item thereof) arising in any year differently than
otherwise provided for in this Section 8 if, and to the extent that, the
allocations under this Section 8 would cause the allocations to violate Section
704(b) of the Code or its Regulations thereunder. Any allocation made pursuant
to this Section 8.9 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Section 8 and no amendment of this
Agreement or approval of any Partner shall be required.
Notwithstanding, any provision in this Article VIII, it is the
agreement of the Partners that the Limited Partner shall be allocated ordinary
taxable income of no more than the lesser of actual distributions to the Limited
Partner that are in excess of its initial capital contribution of $1,800,000.00
plus any losses allocated to the Limited Partner, and in the event that the
Limited Partner shall receive less than its initial capital contribution in
total distributions from this limited partnership, it shall be allocated a loss
in the amount of such deficiency.
8.10. TAX ALLOCATIONS. Notwithstanding the provisions of paragraph
8.3 hereof and in accordance with Code Section 704(c) and the Regulations
promulgated thereunder, income, a loss and deduction with respect to any
property contributed to the capital of the Partnership shall solely, for tax
purposes, be allocated as quickly as possible among the Partners so as to take
into account any variations between the adjusted basis of such
14
property to the Partnership for federal income tax purposes and the fair-market
value of such property as of the date such property was contributed to the
capital of the Partnership.
Article IX
DISTRIBUTIONS TO PARTNERS
9.1. DISTRIBUTIONS TO THE LIMITED PARTNER. The Limited Partner
shall be entitled to a priority of distribution from sales of condominium units
until the aggregate distributions to the Limited Partner totals 200% of the
Limited Partner Capital Contributions as reflected in Section 5.2 of this
Agreement. In addition to this priority distribution, the Limited Partner shall
be entitled to additional priority distributions totaling TWO HUNDRED AND FIFTY
THOUSAND DOLLARS ($250,000.00) as provided for hereinafter. After the aggregate
distributions to the Limited Partner totals 200% of the Limited Partner Capital
Contributions, and the Limited Partner has received the additional priority
distributions totaling $250,000.00, the Limited Partner shall be deemed to have
received the return of its capital account.
9.2. DISTRIBUTIONS TO LIMITED PARTNER FROM SALES OF UNITS. The
General Partner shall direct each closing agent engaged by the Partnership with
respect to the closing of the sale of individual condominium units in the
Project to make to the Limited Partner at the time of each such closing the
following preferred distributions: (i) distributions in an amount equal to 7.25%
of the gross sales price for each of the first twenty individual condominium
units sold by the Partnership in the Project and (ii) distributions in an amount
equal to 9.25% of the gross sales price for each of the next twenty individual
condominium units in the Project, and (iii) distributions in the amount of
10.25% of the remaining number of individual condominium units required to be
sold in order for the Limited Partner to receive the total priority distribution
of $3,600,000.00, which is 200% of its capital contribution of $1,800,000.00,
and thereafter distributions in an amount equal to 3% of the gross sales price
of the remainder of the individual condominium units, until the Limited Partner
has received additional distributions totaling $250,000.00. It is further agreed
that if units are sold at prices different than the agreed Schedule of Minimum
Prices, the scheduled payment due the Limited Partner as provided herein shall
be based on the greater of the Schedule of Minimum Prices or the actual sales
price. Such preferred distributions shall continue by the closing agent(s) until
such time as the General Partner has confirmed that the Limited Partner has
received the preferred distributions provided for hereinabove. The percentages
of each unit gross sales price required to be paid above are based upon the
projected sales prices for individual condominium units in the Project as
previously determined by the General Partner and shall be set forth as an
exhibit to this Partnership Agreement and shall govern the distributions for all
purposes. Any adjustment in such percentages shall be agreed, in writing, by all
of the Partners. The amount of the preferred distribution shall be the stated
percentage of the greater of the minimum approved sales price or the actual
sales price. "Sales Price" as used in this section shall include charges to
buyer of the unit for the options and upgrades.
Notwithstanding anything herein to the contrary, in the event that the
distributions
15
to the Limited Partner hereunder are less than 40% of the taxable income
allocated to the Limited Partner, then in that event, prior to any distributions
to the General Partner, the Limited Partner shall receive an amount equal to the
greater of 40% of the taxable income allocated to the Limited Partner for the
tax year of the distribution and prior tax years, or the actual amount of the
aggregate tax paid by the Limited Partner for the tax year of the distribution
and prior tax years, which amounts shall be credited against the total amounts
due the Limited Partner hereunder.
9.3. DISTRIBUTIONS TO LIMITED PARTNER OTHER THAN FROM SALES OF
UNITS. The General Partner shall direct each closing agent of a sale of
Partnership property other than units, and of a re-finance of Partnership
property with respect to the closing, of the sale or refinance to make to the
Limited Partner at the time of each such closing a preferred distribution in an
amount equal to the proceeds of such sale or refinance available to the
Partnership after the satisfaction of loans to the partnership approved by the
Limited Partner. Such preferred distributions shall continue by such closing
agent(s) until such time as the General Partner has confirmed that the Limited
Partner has received an amount from distributions under this section and the
preceding section totaling, in the aggregate the preferred distributions
required by Section 9.2 above.
9.4. DISTRIBUTIONS TO THE GENERAL PARTNER. The General Partner
shall be entitled to receive distributions from the Partnership in accordance
with the following:
a. Distributions to the General Partner shall be from net
closing proceeds from each closing in excess of costs of closing as disclosed on
the closing statement, after required loan paydown, and after the amounts
disbursed to the Limited Partner as a priority distribution as detailed above,
in accordance with this Article.
b. The General Partner shall receive the reimbursement of sums
equal to the allocated general overhead costs of 4% of the gross sales price of
the individual units in the Project paid at each closing which have been
expended by the General Partner as disclosed on the approved budgets.
c. In addition to the foregoing, until the distributions from
the Partnership to the Limited Partner (as paid to the Limited Partner by the
closing agents of the respective unit closings, and otherwise from the
commencement of the Partnership) are in the aggregate the sum of $2,200,000.00,
from the remaining net closing proceeds the General Partner shall receive an
amount which shall, when added to amounts distributed to the General Partner
from the Partnership in the current and prior tax years (other than
distributions of the allocated general overhead cost reimbursement as in b.
above), in the aggregate be equal to the greater of 40% of the taxable income
allocated to the General Partner for the tax year of the distribution and prior
tax years, or the actual amount of the aggregate tax paid by the General Partner
for the tax year of the distribution and prior tax years.
d. If the General Partner chooses to receive additional
distributions from the
16
remaining net closing proceeds after the distributions above, the Limited
Partner shall receive as a distribution an amount equal to the sums distributed
to the General Partner. Distributions to the Limited Partner under this
subsection shall be counted in satisfaction of the distributions to which the
Limited Partner is entitled under Article 9.1 of this Agreement.
e. After the Limited Partner has received distributions which
in the aggregate total $2,200,000.00, and after the satisfaction of the
distributions to the Limited Partner from the closing proceeds pursuant to
Article 9.2, the General Partner shall receive as a distribution from the
Partnership the remaining net closing proceeds, without the limitations in (c)
above or the requirement for distributions to the Limited Partner (as provided
in subsection d. above) in excess of the distributions detailed in Article 9.2.
9.5. CASH DISTRIBUTIONS. All cash distributions to the Limited
Partners shall be made to the Limited Partners at the addresses specified in
this Agreement, or such other address of which a Limited Partner shall notify
the Partnership in writing.
9.6 DISTRIBUTIONS IN KIND. If any assets of the Partnership shall
be distributed in kind, such assets shall be distributed to the Partners
entitled thereto as tenants-in-common in the same proportions in which such
Partners would have been entitled to cash distributions.
9.7. ONLY CASH IN RETURN OF CAPITAL. No Partner shall be entitled
to demand and receive property other than cash in return for such Partner's
Capital Contributions to the Partnership, and no Partner shall have the right to
xxx for a partition of Partnership property.
9.8. STANDARDS FOR DISTRIBUTIONS AND ALLOCATIONS. The methods
hereinabove set forth by which distributions and allocations are made are hereby
expressly consented to by each Partner as an express condition to becoming a
Partner.
Article X
DISSOLUTION AND LIQUIDATION
10.1. DISSOLUTION. The Partnership shall be dissolved, and its
business wound up, upon the earliest to occur of:
a. The Project has been completed and all of the individual
single family, residential (INCLUDING LAND CONDOMINIUMS) condominium units in
such Project have been sold and/or conveyed;
b. The General Partner's determination, with the consent of
the holders of at least One Hundred percent (100 %) of the outstanding Limited
Partnership Units, that the Partnership should be dissolved;
17
c.The death, incompetency, insolvency, bankruptcy or removal
of a General Partner, unless the remaining General Partner if any, consent(s) in
writing within sixty (60) days of such event to continue the Partnership. If
there is no remaining General Partner, the Partnership shall terminate unless
the holders of at least One Hundred percent (100%) of the outstanding Limited
Partnership Units consent in writing within 30 days of such event to continue
the Partnership, and a successor General Partner is elected by the holders of at
least One Hundred percent (100 %) of the outstanding Units within such
thirty-day period; or
d.The sale of all, or substantially all of the Partnership's
assets.
For the purposes of this Agreement, the bankruptcy of a General Partner
shall be deemed to occur when such General Partner files a petition in
bankruptcy or voluntarily takes advantage of any bankruptcy or insolvency law,
or is adjudicated a bankrupt, or when a petition or answer is filed proposing
the adjudication of such General Partner as a bankrupt and such General Partner
either consents to the filing, thereof, or such petition or answer is not
discharged or denied prior to the expiration of 120 days from the date of such
filing. The insolvency of a General Partner shall be deemed to occur when such
General Partner's assets are insufficient to pay such General Partner's
liabilities.
10.2. CONTINUATION OF PARTNERSHIP. In the event the Partnership is
continued upon the death, incompetency, insolvency, bankruptcy or removal of a
General Partner, the Partnership Interest of such General Partner shall be
converted into a Limited Partnership Interest as of the date of such event. Upon
the happening of such event, such Limited Partnership Interest shall be entitled
to one hundred percent (100 %) of all distributions and allocations pursuant to
Section 8 and 9 hereof to which such General Partner was entitled prior to such
event and no other distribution or allocation subsequent to such event.
Provided, that such interest at all times is subordinate and inferior to payment
of the priority distributions to the Limited Partner. Such Limited Partnership
Interest, including all of the rights and obligations of a Limited Partner under
this Agreement, shall descend and vest in such General Partner or his or its,
successors, heirs, legatees or legal representatives. Such General Partner, or
such successors, heirs, legatees or legal representatives may be admitted as a
Limited Partner in accordance with the provisions of Section 11.3.
Notwithstanding anything to the contrary in this Agreement, it is
expressly agreed and understood that a deceased, incompetent, insolvent,
bankrupt or removed General Partner and his or its heirs, legatees, successors
or legal representatives shall remain fully liable for all Partnership
liabilities and obligations arising, prior to the date of any such events,
whether such liabilities and obligations are fixed or contingent as of such
date. The liability of the deceased, incompetent, insolvent, bankrupt or removed
General Partner shall continue with respect to such liabilities as if the
deceased, incompetent, insolvent, bankrupt or removed General Partner has
remained and continued as a General Partner of the Partnership.
18
10.3. EARLY TERMINATION OF THE PARTNERSHIP. In the event the
Partnership terminates prior to the Closing on the Property, or prior to the
commencement of the development of the Property into condominium units, or in
the event that the Partnership sells the Property at a bulk sale, then prior to
any other distributions, the General Partner shall proceed as quickly as
possible in winding up the affairs of the Partnership and shall liquidate the
assets and distribute the proceeds of the Partnership as follows:
a. First to repay any loans made to the Partnership by the
Limited Partner, with interest as provided in such loan documents;
b. Next, to the Limited Partner in accordance with its then
positive capital account until the Limited Partner has received distributions
which in the aggregate total $1,800,000 plus any additional capital
contributions made by the Limited Partner; and
c. Thereafter, to the Limited Partner in an amount equal to
the greater of 15% of the actual capital contributions made by the Limited
Partner prior to such sale, or termination or 50% of the remaining proceeds.
d. The remaining proceeds shall be distributed to the General
Partner.
e. All sums due under this section shall be paid within 10
days of the sale or termination.
10.4 TERMINATION OF PARTNERSHIP SUBSEQUENT TO COMMENCEMENT OF
DEVELOPMENT. In the event the Partnership terminates subsequent to the
commencement of development of the Property into condominium units, then in that
event, the General Partnership shall proceed as quickly as possible in winding
up the affairs of the Partnership and shall distribute the proceeds as provided
in Article 9 of this Agreement.
Article XI
ASSIGNMENT OF INTEREST OF PARTNERS
11.1. ASSIGNMENT OF INTEREST OF PARTNERS. The Partnership Interest
of any Partner may be assigned only as permitted by the provisions of this
Article 11. Neither the Partnership nor the Partners shall be bound by any such
assignment until a counterpart of the instrument of assignment, executed and
acknowledged by the parties thereto, is delivered to the Partnership, and such
assignment shall be effective as of the date specified therein, subject to
compliance as hereinafter set forth, with applicable federal and state
securities laws. The Limited Partner shall be entitled to pledge, mortgage, or
hypothecate its Limited Partner's Interest.
11.2. RESTRICTIONS ON ASSIGNMENT OF INTEREST. Except as may be
provided in Sections 7.4,10 or 12.1, and 11.1 above, no Partner shall transfer,
sell, assign, give or otherwise dispose of his or her Partnership Interest or a
part thereof, whether voluntarily or by operation of law, or at judicial sale or
otherwise.
19
11.3. SUBSTITUTE PARTNER. No Assignee or transferee of all or part
of the Partnership Interest of any Partner shall have the right to become a
substitute Partner, unless:
a. His assignee has stated such intention in the instrument of
assignment;
b. The assignee has executed an instrument reasonably
satisfactory to both the General and Limited Partner accepting and adopting the
terms and provisions of this Agreement; and
c. The assignor or assignee has paid any reasonable expense in
connection with the admission of the assignee as a Partner.
11.4. TRANSFEROR - TRANSFEREE ALLOCATIONS. As between a Limited
Partner and his transferee, profits and losses for any month shall be
apportioned to the person who is the holder of that Limited Partnership Interest
transferred on the last day of such month, without regard to the results of the
Partnership's operations during the period before and after such transfer. A
transferee of, or substitute Limited Partner for, a Limited Partner's Limited
Partnership Interest shall be entitled to receive distributions from the
Partnership with respect to such Limited Partnership Interest only after the
effective date of such assignment.
11.5. LIMITED PARTNERSHIP INTEREST TRANSFERRED TO THE GENERAL
PARTNER. IF A General Partner should acquire an Interest as a Limited Partner,
such General Partner shall with respect to such Interest, enjoy all of the
rights and be subject to all of the obligations and duties of a Limited Partner
to the extent of such Interest.
11.6. SECTION 754 ELECTION. In the event of a transfer of all or
part of the Interest of a Partner in the Partnership, by sale or exchange or on
the death of a Partner, at the request of the Partner or the executor,
administrator or other legal representative of a deceased Partner, the General
Partner may, in its sole discretion, cause the Partnership to elect, pursuant to
Section 754 of the Code, or the corresponding provisions of subsequent law, to
adjust the basis of Partnership property as provided in Sections 734 and 743 of
the Code.
Article XII
DEATH, BANKRUPTCY, INSANITY OR INCOMPETENCY OF A LIMITED PARTNER
12.1. DEATH, BANKRUPTCY, INSANITY OR INCOMPETENCY OF A LIMITED
PARTNER. THE death, adjudication of insanity, legal incompetency, general
assignment for the benefit of creditors, or adjudication of bankruptcy of a
Limited Partner shall not dissolve the Partnership. In any of such events, the
Interest of such Limited Partner and all rights and obligations under this
Agreement shall descend to and vest in the heirs, legatees or legal
representatives of such Limited Partner. Such heirs, legatees or legal
representatives may be admitted as substitute Limited Partners in accordance
with the provisions of Section 11.3.
20
Article XIII
ARBITRATION
13.1. APPLICATION; LOCATION. Whenever (a) there exists a dispute
whether a Partner is in default under the terms of this Agreement, (b) the
Partners disagree and such disagreement materially impairs the ability of the
Partnership to develop the Project or otherwise pursue the Partnership's
objectives, or (c) the Partners mutually agree to submit any other question,
matter, or dispute to arbitration, the provisions of this Article shall apply,
provided however that this provision shall not apply to the obligation to
contribute to the capital of this Partnership. The location of the arbitration
shall be in Sarasota County, Florida.
13.2. INITIATING ARBITRATION; SELECTION OF ARBITRATORS. Arbitration
shall be instituted by a Partner delivering notice to the other Partner(s) of
its intention to arbitrate specifying the matters to be arbitrated. The
arbitration shall be conducted by three arbitrators. The arbitrators shall be
impartial and shall not be related, directly or indirectly, so far as employment
of services is concerned, to any Partner or to any Affiliate thereof. In an
arbitration proceeding involving any specialized area of the management and
operation of the Project, the arbitrators shall have substantial knowledge and
experience in such a specialized area. For example, in any dispute involving
accounting procedures, the arbitrators shall be independent certified public
accountants.
13.3. PROCEDURES. The arbitrators shall be chosen, and the
arbitration shall be conducted, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The three arbitrators shall
investigate the facts and shall hold hearings at which the Partners may present
evidence and arguments, be represented by counsel and conduct cross examination.
The three arbitrators shall render a written decision upon the matter presented
to them by a majority vote within 30 days after the date upon which the last
arbitrator is appointed, and that decision shall be final and binding on the
Partners. Judgment upon the decision rendered in such arbitration may be entered
by any court having jurisdiction thereof. No Partner shall be considered in
default hereunder during the pendency of arbitration proceedings relating to a
disputed default, provided however, that if the matter being arbitrated involves
the obligation for the payment of money, interest due shall be computed from the
date such payment or expenditure should have been made. If the three arbitrators
shall fail to render a decision within such 30-day period, then any Partner
shall have the right to seek judicial determination of the issues.
13.4 LIMITATIONS ON AUTHORITY. In determining, any question,
matter, or dispute before them, the arbitrators shall apply the provisions of
this Agreement, without varying therefrom in any respect. They shall not have
the power to add to, modify, or change any of the provisions of this Agreement.
13.5 ATTORNEYS' FEES; SPECIFIC PERFORMANCE. The costs of any
arbitration proceeding shall be shared equally by the Partners. The prevailing
party in any such arbitration proceeding, as determined by the arbitrators,
shall be entitled to reimbursement
21
of reasonable attorneys' fees incurred in such proceeding. The prevailing party
shall be entitled to an order by a Court of competent jurisdiction for specific
performance of the arbitrator's final decision and any party hereunder may seek
specific performance of the obligation to arbitrate as required hereunder.
Article XIV
MISCELLANEOUS PROVISIONS
14.1. FISCAL YEAR. The General Partner may select the fiscal year of
the Partnership subject to the requirements of the Internal Revenue Code.
14.2. RECORDS. The General Partner shall-keep, or cause to be kept,
full and accurate records of all transactions of the Partnership in accordance
with principles and practices generally accepted for such methods of accounting
and depreciation as shall, in the opinion of the General Partner, be in the best
interest of the Limited Partners.
14.3. AVAILABILITY FOR INSPECTION.
a. All of such books of account shall, at all times, be
maintained at the office of the Partnership at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx 00000, and shall be open during reasonable business hours for the
reasonable inspection and examination by the Limited Partners or their
authorized representatives.
b. The General Partner shall as a minimum maintain the
following records at the aforesaid office of the Partnership: (i) a current list
of the full name and last known business address of each Partner set forth in
alphabetical order; (ii) a copy of the Agreement and Certificate of Limited
Partnership and all certificates of amendment thereto, together with executed
copies of any power of attorney pursuant to which any certificate has been
executed; (iii) copies of the Partnership's federal, state and local income tax
returns and reports, if any, for the three most recent years for which they have
been prepared; and (iv) copies of any then effective written Partnership
Agreement and of any financial statements of the Partnership for the three most
recent years for which they have been prepared.
c. The General Partner shall not be obligated to deliver or
mail copies of the Agreement and Certificate of Limited Partnership or
amendments thereto to each Limited Partner. However, upon the written request of
any Limited Partner, the General Partner shall mail a copy of such requested
documents to such Limited Partner.
14.4. TAX RETURNS. The General Partner shall prepare, or cause to be
prepared
22
(by April 1st of the year after the fiscal year to which such tax return
relates), a federal income tax return and such state tax returns as are required
for the Partnership.
14.5. CASH FLOW STATEMENTS. Within 90 days after the end of each
fiscal year of the Partnership, the General Partner shall use its best efforts
to cause to be delivered to the Limited Partners an annual cash flow report for
the Partnership for such fiscal year. This report shall be mailed to the Limited
Partners together with any amounts distributable to the Limited Partners
pursuant to Section 9.
14.6. TAX INFORMATION. Within 90 days after the end of each fiscal
year of the Partnership, the General Partner shall use its best efforts to cause
to be delivered to the Limited Partners such information as shall be necessary
(including a statement for that year of each Limited Partner's share of net
profits, net gains and losses, and other items of the Partnership) for the
preparation by the Limited Partners of their federal and state income and other
tax returns.
14.7. FINANCIAL STATEMENTS. The General Partner shall use its best
efforts to cause to be delivered to the Limited Partners, within 90 days after
the end of each fiscal year of the Partnership, financial statements of the
Partnership from such fiscal year.
14.8. PARTNERSHIP TAX RETURN. In lieu of the reports required by
Sections 14.1 and 14.3, the General Partner may, in its discretion, cause to be
delivered to the Limited Partners a copy of the federal Partnership return for
each year, within thirty (30) days after such return has been filed.
14.9. BANK ACCOUNTS. The General Partner may elect to maintain a
special bank account or accounts in which shall be deposited all funds of the
Partnership. Withdrawals from such account or accounts shall be made upon the
signature of the General Partner.
14.10. NOTICES. Whenever any notice is required or permitted to be
given under any provisions of this Agreement, such notice shall be in writing,
signed by or on behalf of the person giving the notice, and shall be deemed to
have been given when delivered by personal delivery or mailed by certified mail,
postage prepaid, return receipt requested, addressed to the person or persons to
whom such notice is to be given as follows (or at such other address as shall be
stated on a notice similarly given):
a. If to the General Partner, at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx 00000.
b. If to the Limited Partners, such notice shall be given to
the Limited Partner at its respective address indicated herein, or at such other
address as may be furnished to the General Partner in writing.
14.11. BINDING EFFECT. Except as herein otherwise provided to the
contrary, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, their
23
personal representatives, heirs, successors and permitted assigns.
14.12. NO ORAL MODIFICATION. No modification or waiver of this
Agreement or any part hereof shall be valid or effective unless in writing and
signed by the party or parties sought to be charged therewith; and no waiver of
any breach or condition of this Agreement shall be deemed to be a waiver of any
other subsequent breach or condition, whether of like or different nature.
14.13. APPLICABLE LAWS. This Agreement shall be governed by and
construed in accordance with the laws of Florida. The venue for any proceeding
brought to enforce the terms and provisions of this Agreement shall be agreed to
be in Sarasota County, Florida, or in the United States District Court, Middle
District of Florida, Tampa Division.
14.14. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument which may be sufficiently
evidence by one counterpart.
IN WITNESS WHEREOF, the parties hereto have executed and certified this
Agreement of Limited Partnership as of the day and year first above written.
General Partner:
Whitehall Homes at Miramar, Inc., a
corporation organized and existing
under the laws of Florida
By /s/ Xxxxxx Xxxxxxx
------------------------
As President
Limited Partner:
Miramar Investment Group One, LLC, a Florida
Limited Liability Company
By its Manager:
Neilron Miramar Corporation, a Florida
corporation
By /s/ [ILLEGIBLE]
------------------------
Its President (Vice)
Address of Limited Partnership:
0000 Xxxxxx Xxxxxx, Xxxxx X
Xxxxxxxx, XX 00000
24
EXHIBIT "C"
Conditions Precedent to Limited Partner Capital Contributions
The obligations of the Limited Partner to fund its Capital Contribution is
subject to and contingent upon the satisfaction of the following conditions
precedent:
1. The issuance of a Final Site Plan Approval of the Project by all
governmental agencies having jurisdiction over such matters, including;
but not limited to Lakewood Ranch; and
2. The funding of an Acquisition and Development Loan by a Lender
consistent with a written commitment which has been approved by the
Limited Partner; and
3. The Closing of a Revolving Construction Loan for Vertical Improvements
by a Lender consistent with a written commitment letter which has been
approved by the Limited Partner; and
4. There being no material changes in the Development Plan. "Material
Change" is defined either as a change, which shall increase any
individual line item of the Budget in excess of 20%, or increase the
total budget in excess of 10% in the aggregate of all line items of
said Budget; and
5. No event is in existence at the time of funding which would constitute
the basis for removal of the Managing General Partner under the
Agreement.
6. There not being in existence any right of termination by the Buyer
under the Purchase Agreement with SMR.
7. There not being in existence any moratorium or threatened moratorium or
similar governmental action, which would unreasonably interfere or
adversely affect the ability of the Partnership to proceed with the
immediate development of the Project.
General Partner shall provide written notice to the Limited Partner that he
expects the accomplishment of all of the foregoing within 10 business days from
the date of the Notice. A statement, in affidavit form, from the principal of
the General Partner that the foregoing has been satisfied shall be prima facie
evidence that the foregoing has been satisfied, and that funding of the total
capital contribution of the Limited Partner is due. Failure to complete the
funding of the total capital contribution of the Limited Partner within 10
business days after the receipt of the affidavit above shall be deemed a
default, and shall, in the sole discretion of the General Partner allow the
dissolution of the Partnership, and in such event, the Limited Partner shall be
entitled solely to the return of its capital contribution previously paid to the
Partnership (if any).
GUARANTEE OF PERFORMANCE. PLEDGE. HYPOTHECATION. AND SECURITY
AGREEMENT
THIS GUARANTEE OF PERFORMANCE, PLEDGE, HYPOTHECATION AND SECURITY
AGREEMENT ("Agreement"), dated as of__________________________, 2003, is
executed by and among XXXXXX XXXXXXX and XXXXXX XXXXXXX, husband and wife,
("Xxxxxxx") and Whitehall Homes of Miramar, Inc., a Florida corporation
("Xxxxxxx") and Miramar Investment Group One, LLC, a Florida limited liability
company ("Pledgee").
WITNESSETH, THAT:
WHEREAS, Pledgee has on or about even date herewith become a Limited
Partner in Whitehall Homes at Miramar Ltd., a Florida limited partnership
("Partnership"),in accordance with the Whitehall Homes at Miramar, Ltd., Limited
Partnership Agreement ("Partnership Agreement"), and
WHEREAS, in accordance with, and pursuant to Section 7.11 j. of the
Partnership Agreement, Whitehall Homes at Miramar, Inc., the General Partner of
the Partnership, ("General Partner") has agreed as follows:
"j. To comply with all of the terms and conditions of the Purchase
Agreement, and without limiting the generality of the foregoing, specifically to
take such actions and arrange such funding under the loans obtained by the
Partnership to acquire Phases II and III of the Property as provided for under
the Purchase Agreement on or before the required acquisition date specified
therefor in the Purchase Agreement. In addition to all of the rights of the
Limited Partner under this Agreement it is specifically provided that if the
Partnership does not acquire the Phase II and Phase II portions of the Property
under the Purchase Agreement, this is a material default by the General Partner,
and upon such default the General Partner shall not be entitled to any
distributions from the Partnership, except for the reimbursement provided for in
Section 9.4 of this Agreement until there has been distributed to the Limited
Partner the return of its entire capital contribution of $1,800,000.00. All
proceeds available from any source to the Partnership shall be distributed to
the Limited Partner until such amount has been distributed the Limited Partner."
(The obligations of the General Partner set forth hereinabove are hereinafter
referred to as the "Affirmative Obligations"), and
WHEREAS, Xxxxxxx and Xxxxxxx have agreed to guarantee the performance
by the General Partner of the Affirmative Obligations, and
WHEREAS, Xxxxxxx has agreed, as security for the performance of the
Affirmative Obligations by the General Partner, to grant, hypothecate and pledge
to Pledgee a security interest in the Collateral hereinafter described in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and in order to induce Pledgee to enter into the
Partnership Agreement, the parties hereto agree as follows:
1
I.
PERFORMANCE GUARANTEE
Xxxxxxx and Pledgor do hereby, jointly and severally, irrevocably and
unconditionally guarantee to Pledgee the performance by General Partner of the
Affirmative Obligations.
II.
PLEDGE
As security for the due and punctual performance by the General Partner
of the Affirmative Obligations, Xxxxxxx does hereby pledge, hypothecate, assign,
transfer and convey to Pledgee, its successors and assigns, and grants to
Pledgee, it successors and assigns, a security interest in and to the following
described property ("Collateral"):
All of Xxxxxxx'x General Partner's Interest in Whitehall Homes at Edgewater
Moorings, Ltd., together with the right to collect and receive ail proceeds and
payments of any type,(including but not limited Distributions under Article IX)
payable or distributable pursuant to or arising out of the Whitehall Homes at
Edgewater Moorings, Ltd. Limited Partnership Agreement, and all proceeds
therefrom.
III.
REPRESENTATIONS AND WARRANTIES
Xxxxxxx hereby represents and warrants that: (a) Xxxxxxx is the legal
and equitable owner of the Collateral and its interests therein are free and
clear of all liens, security interests, charges and encumbrances of every kind
and nature; (b) Xxxxxxx has good right, power and lawful authority to pledge,
assign and deliver the Collateral in the manner hereby done or contemplated; (c)
no consent or approval (other than any which may be incidental to any filing
with a filing officer to perfect the security interests in the Collateral) of
any governmental body, regulatory authority, person, trust or entity is or will
be (i) necessary to the validity of the rights created hereunder or (ii)
required prior to assignment, transfer and delivery of any of the Collateral to
Pledgee; (d) to Xxxxxxx'x knowledge, no material dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral; and (e) this Agreement constitutes the legal, valid and binding
obligation of Xxxxxxx enforceable against Xxxxxxx and the Collateral in
accordance with its terms.
IV.
COLLECTIONS ON COLLATERAL BY PLEDGEE
Upon the failure of the General Partner to discharge and perform its
Affirmative Obligations as set forth above, Xxxxxxx shall hold all proceeds of
the Collateral in trust for Pledgee and shall promptly remit same to Pledgee,
and Pledgee shall without limitation be entitled to receive all Distributions,
payments, and proceeds that Xxxxxxx is entitled to receive as the General
Partner in Whitehall Homes at Edgewater Moorings, Ltd.
2
V.
FURTHER ASSURANCE
Xxxxxxx, upon request of Pledgee, will promptly correct any defect,
error or omission which may be discovered in the contents of this Agreement, or
in the execution hereof, and will do such further acts and things, and execute,
acknowledge and deliver such further instruments and agreements, and financing
statements covering and constituting Collateral, that Pledgee may at any time
and from time to time request in connection with administration or enforcement
of this Agreement or related to the Collateral or any part thereof or in order
to assure and confirm unto Pledgee the rights, powers, and remedies hereunder.
VI.
EVENTS OF DEFAULT REMEDIES
Upon failure of the General Partner to satisfy and discharge the
Affirmative Obligations, in addition to any and all other rights and remedies
which Pledgee may have hereunder, Pledgee shall be entitled to all rights and
remedies under under the Uniform Commercial Code of the State of Florida.
VII.
WAIVERS
To the full extent that Pledgor may lawfully so agree, Pledgor will not
at any time plead, claim or take the benefit of any appraisement, valuation,
stay, extension, moratorium or redemption law now or hereafter in force in order
to prevent or delay enforcement of this Agreement, and Pledgor, for itself and
all who may claim under Pledgor, as far as Pledgor now or hereafter may, hereby
waives the benefit of all such laws. No delay on the part of Pledgee in
exercising any power, lien, option or other right hereunder and no notice or
demand which may be given to or made upon Pledgor with respect to any power,
lien, option or other right hereunder shall constitute a waiver thereof, or
limit or impair the right of Pledgee to take any action or to exercise any
option or any other right under this Agreement. Each and every remedy given
Pledgee shall, to the extent permitted by law, be cumulative and shall be in
addition to any other remedy given hereunder or now or hereafter existing at law
or in equity or by statute.
VIII.
NOTICE
Any notice to Xxxxxxx or Pledgor hereunder shall be in writing and
shall be effective on the date on which manually delivered to an officer of
Pledgor or deposited in the United States mails in a property addressed and
stamped envelope addressed to:
Xxxxxx and Xxxxxx Xxxxxxx/and
Whitehall Homes of Edgewater Moorings, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Fax No: 000-000-0000
3
Copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxxxx, Xxxxxxx 00000
Fax No: 000-000-0000
or at such other address as Xxxxxxx may designate to
Pledgee.
IX.
FILING
Pledgee shall have the right at any time to execute and file this
Agreement as a Financing Statement (or a separate UCC financing statement), but
failure of Pledgee to do so shall not impair the validity or enforceability of
this Agreement.
X.
COSTS AND EXPENSES
Xxxxxxx (i) will pay all reasonable out-of-pocket expenses, including,
without limitation, any recording or filing fees, (or any similar fees or
taxes), incurred by Pledgee in connection with administration of this Agreement
enforcement of the rights of Pledgee in connection with this Agreement and
including, without limitation, fees and disbursements of counsel for Pledgee,
and (ii) shall indemnify and hold harmless Pledgee for all liabilities with
respect to any action arising out of this Agreement.
XI.
TERMINATION
This Agreement shall terminate only at such time as Pledgee has
received the sum of $1,800,00.00 as specified in Section 7.11(j) of the
Partnership Agreement, at which time Pledgee shall reassign and redeliver,
without recourse, or representation, or warranty by Pledgee, at the expense of
Xxxxxxx, to Xxxxxxx, such of the Collateral (if any) as shall then be under the
control of Pledgee, and not applied and paid to Pledgee as contemplated by this
Agreement, and/or which has not have been sold or otherwise disposed of by
Pledgee.
XII.
NON-ASSUMPTION OF LIABILITY
Pledgee shall not assume or become liable for, nor shall it be deemed
or construed to have assumed or become liable for, any obligation of Xxxxxxx
with respect to any of the Collateral, or otherwise, by reason of the grant to
it of security interests in the Collateral.
4
XIII.
GOVERNING LAW
This Agreement shall be a contract made under and governed by the laws
of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
Witnesses:
/s/ [ILLEGIBLE] /s/ Xxxxxx Xxxxxxx
---------------------- ----------------------------
Xxxxxx Xxxxxxx
___________________________
/s/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx
"XXXXXXX"
Whitehall Homes At Edgewater
Moorings, Inc.
/s/ [ILLEGIBLE] By /s/ Xxxxxx Xxxxxxx
----------------------- ----------------------------
Xxxxxx Xxxxxxx
As President
___________________________
"PLEDGOR"
Miramar Investment Group, LLC, a
Florida limited liability company,
By Its Manager
NEILRON Inc., a Florida corporation,
By /s/ [ILLEGIBLE]
___________________________ -----------------------------
As President
___________________________ "PLEDGEE"
5
