EXHIBIT 10.7
WHITEHALL HOMES AT GRAND HAVEN, LTD.
LIMITED PARTNERSHIP AGREEMENT
This Agreement of Limited Partnership ("Agreement") dated January 7th
2004, by and among WHITEHALL HOMES AT GRAND HAVEN, 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 GRAND
HAVEN INVESTMENT GROUP ONE, LLC, a Florida limited liability company ("Limited
Partner"), a limited liability company organized and existing under the laws of
Florida with offices at 0000 0xx Xxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx 00000.
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 Partner, shall be referred to collectively as the
Limited Partner, 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 intending to be legally bound, hereby
state, agree as follows:
Article I
NAME
1.1. NAME. The name of the Partnership is WHITEHALL HOMES AT GRAND HAVEN,
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 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.
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Article III
PURPOSES
3.1. PURPOSES. The purposes of the Partnership shall be to acquire
approximately 7.5 acres of land in Village E-2 located in the River Club at
Grand Haven Community located in the City of Palm Coast, Florida (the
"Property") and develop this land into approximately 96 residential units for
sale to individual unit purchasers (the "Project"), to be developed on the real
property described on Exhibit "A" attached to this Agreement. 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.
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 "Contract for Sale and Purchase of Real
Estate" by and between Grand Haven Developers, LLC, a Delaware limited liability
company as Seller and Whitehall Quality Homes, Inc, a Florida corporation, as
Purchaser ("Purchase Agreement"), dated as of March 26, 2003, as same may be
amended; and thereafter, the physical development of the property acquired and
the marketing, sale and disposition of individual residential units constructed
thereon.
Article IV
TERM
4.1. TERM. The Partnership shall continue until terminated as provided in
Article 10 hereof.
Article V
CAPITAL CONTRIBUTIONS
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 of the Partnership. 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.
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5.2. CONTRIBUTIONS BY THE LIMITED PARTNER. The Limited Partner shall
contribute ONE MILLION ONE HUNDRED THOUSAND DOLLARS ($1,100,000.00) to the
Partnership. All payments made by the Limited Partner shall be made to the
Partnership in cash or by check upon execution of this Agreement. 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 contribution by the Limited Partner to
the Partnership, the General Partner and the Limited Partner shall each be
deemed to have interests in the Partnership in proportion to their respective
Percentage of Interest in the Partnership. The term Percentage of Interest in
the Partnership shall mean the percentage of interest in the Partnership as set
forth in this Agreement, 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 interests of the General Partner and the Limited
Partner may not be changed or modified except as expressly provided for in this
Agreement or by written Agreement by both the General Partner and the Limited
Partner. 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 AND PERCENTAGE OF INTEREST. The initial
capital accounts of the General and the Limited Partner and their respective
percentage of interest shall be as follows, after the contribution of the
capital contributions referred to above:
Capital Percentage of Interest
------- ----------------------
General Partner: $ 1.00 25%
Limited Partner: $1,100,000.00 75%
5.4. LIABILITY OF LIMITED PARTNER(s). A limited partner is not liable for
the obligations of this 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
distribution and cash flow return to be paid to the Limited Partner from the
gross proceeds of individual 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
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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 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
Treasury Regulation 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. NEGATIVE CAPITAL ACCOUNT. Except as otherwise provided in this
Agreement, no Partner shall at any time have any liability to the Partnership or
any Partner, or be obligated to restore, or otherwise be responsible for, any
negative Capital Account of such Partner in the Partnership.
5.7. DISALLOWANCE OF DEDUCTIONS. Notwithstanding any other provisions of
this Agreement, in the event that any amounts paid to the General Partner or its
affiliates pursuant to this Agreement on any Exhibit 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 ("Internal Revenue 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
amounts 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
Partner 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, with written consent of the Limited
Partner, 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
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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 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 any
repayment of interest or principal on such Loans shall be subject, inferior and
subordinate in all respects to the right of the Limited Partner to the priority
of distributions as required to be made to it 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 Article 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, firms 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
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authority. The General Partner is hereby specifically authorized to act as the
"Tax Matters Partner" under the Internal Revenue Code and in any similar
capacity under state and/or local law.
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 Partner on
a quarter annual basis.
k. Maintain or cause to be maintained proper books and records of
the Partnership.
l. 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.
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r. To perform or cause to be performed all of the Partnership's
obligations under any agreement to which the Partnership is a party.
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 and 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
to distributions of the Limited Partner provided for in Article IX are not
adversely 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 any other provision
to the contrary in this Partnership Agreement, the General Partner is not be
empowered (without the prior written 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;
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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, subject to the terms and conditions of this Partnership Agreement,
including the requirement that all repayments of principal and interest shall be
subordinate to the priority distribution to be paid to the Limited Partner as
required by this Partnership Agreement.
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%.
l. 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 in the Development Plan or the approved Budget.
n. General Partner may make a change in excess of such allowed
amounts
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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 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. The 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 shall have the
right to remove the General Partner for cause as set forth below. If there would
be no remaining General Partner after the removal of the General Partner, a new
General Partner shall be simultaneously selected by the Limited Partner. The new
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 new General Partner
is not simultaneously elected, the Partnership shall thereupon terminate in
accordance with Section 10. hereof unless continued as set forth therein. Upon a
General Partner's removal, the interest of such General Partner in the
Partnership shall be forfeited provided that such General Partner shall still be
entitled to receive any and all distributions as set forth in this Agreement up
and until the time of such removal, in accordance with and subject to the terms
and conditions set forth in Section 10.2. If the General Partner purports to
resign or withdraw from Partnership in violation hereof, such Partner shall
remain liable for the debts, obligations and liabilities of the Partnership to
the same extent as if such Partner had not purported to resign or withdraw and,
in addition, shall be liable to the Partnership and the Partners for any damages
sustained by reason of such purported resignation or withdrawal.
For all purposes of this Section 7.4., the right of the Limited Partner to
remove the General Partner for cause 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 Partner.
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
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c. The failure and/or default by the General Partner in satisfying
and 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 PARTNER. The Limited Partner 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 or 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 and which may compete with
the Partnership.
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
Partner as provided for in Section 7.7, the General Partner shall not be liable
for the return of the Capital Contributions of the Limited Partner, or any
portion thereof, except as provided herein relating to the obligation to make
distributions as provided for herein, and as provided in Section 7.11j.
7.9. INDEMNIFICATION. The Partnership, but not the 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
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development and sale of the Project, including any actions or claims of Unit
owners or Homeowner Associations and excepting, specifically, any actions,
damages 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 residential units and 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 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 residential units.
d. To maintain all licenses and permits required to accomplish the
Development Plan and the sale of the individual residential 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
residential units.
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g. To plan, prepare and contract for ongoing advertising and
promotional programs reasonably required to sell the individual residential
units.
h. To maintain full, true and accurate records and accounts of the
business transactions of the Partnership.
i. To provide the Limited Partner 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 until there has been distributed to the
Limited Partner the return of its entire capital contribution of $1,100,000.00.
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 Internal Revenue 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 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.
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c. Notwithstanding anything herein to the contrary, the Limited
Partner shall in no event be allocated net profits and net gains in excess of
$2,200,000 plus any additional amount not to exceed $220,000 to the extent the
Limited Partner has received distributions in excess of $2,200,000 as provided
in Sections 9.1 through 9.3 hereunder. For purposes hereunder, the term net
profits or net gains shall mean the profits and gains as allocated in Section
8.1 less any losses allocated in Section 8.2 hereunder.
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. The Limited Partner shall not be
allocated losses to the extent such allocation would cause Limited Partner to
have a negative capital account. 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 Partner unexpectedly receive
any adjustments, allocations, or distributions described in Treasury Regulation
Sections 1.7041(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 Partner in accordance with Regulation Section
1.7041(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 Partner
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 Internal Revenue 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 Internal Revenue 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 $1,100,000.00 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 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 Internal Revenue 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
14
of such 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 distribution of revenues resulting from sales of
residential units in the Project until the aggregate distributions to the
Limited Partner total Two Million Two Hundred Thousand Dollars ($2,200,000.00),
which is 200% of the Limited Partner Capital Contribution as reflected in
Section 5.2 of this Agreement. In addition, after payment of the said priority
distribution, the Limited Partner shall be entitled to receive additional
distributions of an amount equal to one percent of the Gross Sales Price of each
residential unit sold in the Project, such additional distribution not to exceed
a total of $220,000.00.
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 residential 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 6% of the gross sales
price for each of the first twenty-four individual residential units sold by the
Partnership in the Project, (ii) distributions in an amount equal to 7% of the
gross sales price for each of the next twenty-four individual residential units
sold by the Partnership in the Project and (iii) distributions in an amount
equal to 8% of the gross sales price for each of the remaining individual
residential units in the Project until the Limited Partner has received the a
total priority distribution of $2,200,000.00. Thereafter an amount equal to 2%
of the gross sales price of the remainder of the individual residential units
shall be paid to the Limited Partner, such additional distributions not to
exceed a total of $220,000.00 until all of the residential units to be developed
and sold by the Partnership have been sold to bonafide third party purchasers.
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 residential 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 to the Limited Partner hereunder are less than 35% of the taxable
income allocated to the
15
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 35%
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 only 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 only after the amounts have
been disbursed to the Limited Partner as priority distributions 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. the General Partner shall be entitled to receive such amounts as
are required to pay federal income taxes on profits allocated to the General
Partner, provided such distributions shall not under any circumstances exceed
35% of such profits so allocated 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).
d. If the General Partner chooses to receive any additional
distributions from the remaining net closing proceeds after the distributions
above permitted, the Limited Partner shall receive as distributions amounts
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 Section 9.1 of this
Agreement.
e. After the Limited Partner has received distributions which in the
aggregate
16
total $ 2,200,000.00 pursuant to Article 9.2, the Limited Partner shall receive
at each closing of a residential unit an amount equal to one percent of the
gross sale price of the unit, until the Limited Partner has received an
additional distribution of $220,000.00, and the General Partner shall receive
the remainder of the proceeds then available for distribution."
9.5. CASH DISTRIBUTIONS. All cash distributions to the Limited Partner
shall be made to the Limited Partner 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.
9.9. TERMINATION OF LIMITED PARTNER. At such time as the Limited Partner
shall have received all of the distributions as provided in Sections 9.1 through
9.3, then upon written notice to the General Partner, the Limited Partner may
withdraw from the Partnership.
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
residential units in such Project of the Property has 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 Interest, that the Partnership should be dissolved;
c. The death, incompetency, insolvency, bankruptcy or removal of the
General Partner, unless the Limited Partner consents in writing within 30 days
of such event to continue the Partnership, and a successor General Partner is
elected by the Limited Partner within such thirty-day period; or/
d. The sale of all, or substantially all of the Partnership's
assets.
17
For the purposes of this Agreement, the bankruptcy of the 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
forfeited provided that the General Partner shall be only entitled to receive
the distributions, if any, as set forth in Section 7.4 and none other. As set
for the Section 7.4, the New 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.
It is the intent hereof that the General Partner that is so removed or
terminated shall have no continuing interest in the profits or avails of this
Partnership. 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.
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 residential 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
18
account until the Limited Partner has received distributions which in the
aggregate total One Million One Hundred Thousand Dollars ($1,100,000.00) 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 residential units, then in that event, the
General Partner 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 XI.
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. I 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.
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 assign or or assignee has paid any reasonable expense of the
19
Partnership 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 Partners 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 Internal Revenue Code, or the corresponding provisions of subsequent law, to
adjust the basis of Partnership property as provided in Sections 734 and 743 of
the Internal Revenue 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 Partner in accordance with the provisions of Section 11.3.
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
20
by a Partner delivering notice to the other Partner 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 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
21
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 Partner.
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 Partner 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 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 (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 Partner an annual cash flow report for the
Partnership for such fiscal year. This report shall be mailed to the Limited
Partner together with any amounts distributable to the Limited Partner 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 Partner 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 Partner 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 Partner, within 90 days after the end of
each fiscal year of the Partnership, financial statements of the Partnership
from such fiscal year.
22
14.8. PARTNERSHIP TAX RETURN. In lieu of the reports required by this
Agreement, the General Partner may, in its discretion, cause to be delivered to
the Limited Partner 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 Partner, such notice shall be given to the
Limited Partner at its 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 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
23
Agreement of Limited Partnership as of the day and year first above written.
General Partner:
WHITEHALL HOMES AT GRAND HAVEN, INC.,
a Florida corporation
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx, Its President
Address of General Partner:
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Limited Partner:
GRAND HAVEN INVESTMENT GROUP ONE,
LLC, a Florida limited liability company
By its Manager:
NEILRON CORP., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx - Vice President
Address of Limited Partner:
0000 Xxxxxx Xxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxx 00000
24
