-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WYaKGZDo4KXCug0YKh31T8yWddhaLPdmysople+RqVJbof8Z9VMdmLHoyLL+ONLI ycX5wcHWwGGu8Q3rxCTDhA== 0000914317-00-000126.txt : 20000223 0000914317-00-000126.hdr.sgml : 20000223 ACCESSION NUMBER: 0000914317-00-000126 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL PALM BEACH COLONY LTD PARTNERSHIP CENTRAL INDEX KEY: 0000764606 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 592501059 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-08893 FILM NUMBER: 550148 BUSINESS ADDRESS: STREET 1: 2501 S OCEAN DR CITY: HOLLYWOOD STATE: FL ZIP: 33019 BUSINESS PHONE: 3059273080 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL PALM BEACH COLONY LP DATE OF NAME CHANGE: 19850528 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 1999 Commission File Number 1-8893 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Delaware 59-2501059 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2501 S. Ocean Drive Hollywood, Florida 33019 -------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (305) 927-3080 Securities registered pursuant to Section 12(b) of the Act: Limited Partnership Units Name of Each Exchange on which Registered - None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and YES [ X ] NO [ ] (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] Indicate by checkmark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [XX] The aggregate market value of the limited partnership units held by non-affiliates of Registrant computed by reference to the last reported sale price of the Units over-the-counter on December 30, 1999 was approximately $1,600,000. Item 1. Business (a) General Development Of Business Royal Palm Beach Colony, Limited Partnership (the "Partnership" or the "Registrant") was organized under the Delaware Revised Uniform Limited Partnership Act. The Partnership is a successor to Royal Palm Beach Colony, Inc., (the "Predecessor Company") a Florida corporation organized in 1963. Pursuant to a Plan of Complete Liquidation (the "Plan"), the Predecessor Company transferred all of its assets, subject to all of its liabilities, to the Partnership in exchange for a number of partnership units ("Units") exactly equal to the number of shares of common stock of the Predecessor Company outstanding on July 11, 1985 (the "Effective Date"). On the Effective Date, the Units were distributed to the former holders of common stock of the Predecessor Company on the basis of one (1) Unit for each share of common stock of the Predecessor Company. The Partnership, as a successor to the Predecessor Company, has registered its Units under Section 12 (b) of the Securities Exchange Act of 1934. Under the Amended Agreement of Limited Partnership of the Registrant, the term of the Partnership expires December 31, 2005, unless extended by vote of a majority of the partnership units. Trading in Partnership Units The Units are currently trading over-the-counter under the symbol "RPAMZ." Results of Liquidation Activities The Partnership's principal business has been to operate, manage and dispose of the assets which were transferred to it on the Effective Date by the Predecessor Company. Since the Effective Date of the Predecessor Company's liquidation, the Partnership has engaged in a program of asset disposition resulting in the sale of assets for an aggregate gross consideration of $77,878,215. As of December 30, 1999, the Partnership had distributed an aggregate of $31,398,752, or $7.00 per Unit, to the general and limited partners, including $2,242,752, or $0.50 per Unit which was distributed in October 1999. See Item 5 - - Market for the Registrant's Common Equity and Related Stockholder Matters "Prior Distributions." As of December 30, 1999, the Partnership's remaining assets consisted principally of: (1) a 50% interest in 3.2 acres of commercial property in the "Crestwood" tract in the Village of Royal Palm Beach under option for sale for a price which would generate gross proceeds to the Partnership of approximately $250,000; (2) 45 residential lots in the Crestwood single family tract reacquired in 1999 as a result of the Partnership's acceptance of a deed in lieu offoreclosure, and currently under contract for sale (subject to certain contingencies) for gross proceeds of $1,316,250; (3) a tract of 4.54 acres in the Village zoned for approximately 84 multi-family residential units, currently under a contract of sale for gross proceeds of $350,000, the closing of which is subject to several contingencies; (4) 162 lots in the vicinity of the Village of Royal Palm Beach zoned for residential use but presently the subject of litigation as to the availability of building permits; and (5) a tract of approximately 22 acres in the Crestwood multi-family tract currently under contract of sale for $1,870,000, the closing of which is subject to numerous contingencies. Factors Affecting Future Operations and Distributions The availability of cash for distribution in the future will depend upon a variety of factors not currently determinable. Management has now substantially completed the development and sale of most of the Partnership's remaining land in Palm Beach County. After a number of years in which cash was not available for distribution as a result of the need to expend substantial sums to develop its properties in order to enhance ultimate sale values, a distribution of $2,242,752, or $0.50 per Unit, was made in October, 1999. See Item 2 - "Development and Sale of Residential Lots;" and Item 7 -- "Management Discussion and Analysis of Financial Condition -- Liquidity and Capital Resources." Although additional portions of the Partnership's remaining properties are under contract of sale, and the Partnership expects to receive future collections of contingent receivables relating to a prior sale of a utility plant, it is currently uncertain when additional cash will become available for distribution. See Item 2 -- Properties, for a discussion of other sources of and anticipated timing of the receipt of revenue which will affect future distributions. (b) Financial Information About Industry Segments Not applicable. (c) Narrative Description Of The Business Regulation Development and sales operations of the Partnership or by potential purchasers of real estate from the Partnership have been subject to regulation by a number of local, state and federal agencies concerning the nature and extent of improvements, and compliance with zoning regulations, building codes, health requirements and environmental protection. The Partnership believes that it has been in substantial compliance with all such laws and regulations which affect its properties and that it has developed the properties to the extent required by contract or law. If such laws or regulations are amended, in particular those concerning environmental protection, the cost of compliance could be increased. Reference is made to the discussion concerning the impact of land use regulatory issues affecting salability of certain properties remaining in Palm Beach County in Item 2 -- Properties -- "Acreage in the Vicinity of the Village." Competition The real estate business conducted by the Partnership is highly competitive. The Partnership's sales of its remaining land will compete with surrounding developments, and with owners of tracts of land in the area of all its properties. There are substantial tracts of vacant land and land under development in the general area of most of the Partnership's remaining real estate. These competitive considerations could affect the decisions of potential purchasers of the Partnership's remaining properties. The Partnership has historically marketed its properties through direct mail advertising to major brokers and developers, advertisements in major regional newspapers and direct contacts between officers of the Managing General Partner and real estate developers and brokers. The Partnership is currently marketing its remaining properties through local real estate brokers, including RTL Realty, of which Randy Rieger is a partner. Mr. Rieger served as interim Vice President and Chief Operating Officer of the Partnership's managing general partner between September 1995 and February 1996. Mr. Rieger currently provides services as an independent consultant to the Partnership for management services in addition to ongoing brokerage services. See Item 13 -- "Certain Relationships and Related Transactions." Impact of General Economic Conditions The development and sale of real estate occurs within a historically cyclical market, and is significantly influenced by general economic conditions. Sales of housing units and sales of tracts to builders are particularly affected by the costs and availability of mortgage financing and the rise and fall of interest rates in general.. If significant interest rate increases occur in the future, the real estate market could suffer as a result. Personnel: As of December 30, 1999, Stein Management Company, Inc. ("Steinco")the Managing General Partner, employed 1 person, who acts as an administrator of its books and records. The balance of the Partnership's affairs are carried out by independent brokers, contractors and other consultants under the direction of the Board of Directors of Steinco. See Item 10. Office Facilities: The Partnership's executive headquarters are located at 2501 S. Ocean Drive, Hollywood, Florida 33019. The premises are owned by an affiliate of Hasam Realty Limited Partnership ("Hasam L.P."), a general partner of the Partnership, and are being made available to the Partnership as an accommodation without charge. Item 2. Properties Palm Beach County, Florida The Company originally owned approximately 26,000 acres in Palm Beach County, in southeastern Florida, approximately 4,200 of which were located within the Village. The Village of Royal Palm Beach The Village, an incorporated municipality, is approximately eight miles from the Palm Beach International Airport and eleven miles west of Palm Beach. Two major area highways, Southern Boulevard and Okeechobee Road, lead directly from Palm Beach through West Palm Beach to the Village. The Village has a population of approximately 16,000 and is primarily residential. The Village has been developed in accordance with a master plan and includes schools, shopping facilities, community recreation areas, and its own police and fire departments. The Crestwood Tract Although the Partnership had previously sold nearly all of its land in the Village, it reacquired in 1992, through foreclosure of a defaulted purchase money mortgage, the 165 acre Crestwood Tract of undeveloped land in the Village. When reacquired, the Crestwood Tract was zoned and preliminary approval had been obtained for the development of 172 single-family homesites (the "Single Family Tract") and 625 multi-family units. The Crestwood Tract is bisected by a principal Village road and has access to all utilities, but was otherwise undeveloped with the exception of the existence of portions of a drainage system. Through December 30, 1999, all of the Crestwood Tract had been sold with the exception of the commercial land described below, and a tract intended for mutli-family residential construction described in item I (5)above. However, during 1999, a mortgage obligor defaulted under a non-recourse purchase money mortgage securing a remaining principal balance due of $1,298,500 secured by 45 residential lots in the Crestwood single family tract. The Partnership accepted a deed in lieu of foreclosure in respect of this property in October, 1999 and has contracted for its resale for gross proceeds of $1,316,250. This sale, which is subject to the satisfaction of certain conditions, is expected to close in February, 2000. Commercial Land within the Crestwood Tract In order to enhance the market value of the Crestwood Tract, the Partnership obtained the rezoning of an approximately 14 acre portion of the Crestwood Tract previously zoned for multi-family housing to permit the Partnership to develop a 14 acre shopping center site. The Partnership received site-plan approval in mid-1996. The Partnership has executed an agreement to sell the entire 14 acre portion to an unaffiliated shopping center developer ("Purchaser") in two phases. The closing on the first phase of the Commercial Site, consisting of a 11.8-acre shopping center site, occurred in February, 1997, resulting in gross proceeds of approximately $1,538,757. The second phase consists of two additional parcels in the 14 acre portion rezoned as described above, which adjoin the shopping center site. As to such parcels, the Partnership has agreed to accord an option to the Purchaser to acquire the parcels, with the price to be paid dependent on the terms upon which the Purchaser leases or sells such parcels to an unaffiliated third party. In such event the Purchaser will pay to the Partnership, (i) in the event of a lease, a sum equal to the five times the average annual rental under the lease, and (ii) in the event of a sale, 50% of the net proceeds of the sale; provided that the Partnership is not required to accept less than $3.50 per square foot. The Partnership and the Purchaser have entered into a contract to sell an additional 1.6 acres adjoining the above-described 14 acre shopping center site for a gross purchase price to the Partnership of approximately $120,000. The purchaser is presently preparing to seek the appropriate approvals from the Village and anticipates approvals by June of 2000. Residential Lots Within the Crestwood Tract As a result of management's decision to develop portions of the Crestwood Tract, the Partnership replanned the configuration of the entire tract. The project included a redesign of the Single Family Tract, and the Partnership received final plat approval to increase to 198 the number of residential lots for development for single family use (hereinafter the "Residential Tract"). "Development," as such term is applied to single-family lots, entails the completion of all necessary zoning, land use, environmental and other regulatory procedures, the installation of roads and utility connections to each lot and the provision of drainage facilities. Between 1995 and 1997, the Partnership completed the off-site and on-site improvements required for the development of the 198 lots in the Residential Tract. Through December 30, 1999, the Partnership had sold all of the 198 lots in the Residential Tract but had reacquired 45 such lots upon foreclosure in October,1 999.Such dispositions (including forfeited deposits and payments under such foreclosed mortgage) resulted in gross proceeds to the Partnership of approximately $5,855,000 and net cash proceeds of $1,016,000 after mandatory loan reduction and brokerage commissions and other closing costs. Of the foregoing, during the 1999 fiscal year only, the Partnership conveyed a total of 54 lots for aggregate gross proceeds of $1,688,000 and net cash proceeds, after mandatory loan reductions of $20,000 per lot and brokerage commissions and other closing costs, of $734,000. In August 1999 the Partnership sold a substantial part of the remainder of the multi-family zoned land (comprising approximately 26 acres) for $2,225,000 in gross proceeds, and approximately $1,886,000 in net proceeds after costs of sale. Previously, in November 1998, the Partnership sold 7.7 acres for net proceeds of $288,000. Other Acreage Within the Village In March, 1993 the Partnership reacquired a separate tract of 4.54 acres in the Village by accepting a deed in lieu of foreclosure on a mortgage with a principal balance of $300,000 (See Item 7 --"Foreclosure Transactions"). This parcel is bordered by a golf course and a principal Village road, is zoned for approximately 80 multi-family residential units and is being offered for sale in its present state without further development. This land is under a contract for sale for $350,000 and closing of this sale is expected in June of 2000, subject to numerous contingencies and conditions. Utility Contingent Receivable In 1983 the Partnership's Predecessor Company sold to the Village of Royal Palm Beach a water and sewage treatment system servicing the Village. Pursuant to the agreement of sale ("Utility Contract"), the Predecessor company received $2,510,000 on closing, and was entitled to future payments to a maximum of $10,900,000 as future connections, measured by consumption increases, were made to the system over a period ending August, 2001. As of September 30, 1999, $4,623,000 had not been received. The Utility Contract also provided for contingent extension periods aggregating not more than three additional years to compensate for possible future governmental building moratoriums or water use restrictions. The Partnership's consultants have advised it that the term has been extended through 2003 as a result of water usage restrictions imposed by the South Florida Water Management District in 1990 and 1991 and moratorium actions taken by the Village of Royal Palm Beach in 1985 and 1986. The Utility Contract also calls for payments to the Partnership equal to 25% of any "Guaranteed Revenues" (payment by developers to secure guaranteed allocations of plant capacity) collected by the Village to a maximum payment of $500,000, of which $314,000 was received through September,1999. To date, the Partnership has received the following Utility Contract payments: Fiscal Year Ended Amount Received Based On September 30 Consumption Guaranteed Amounts - ------------ ----------- ------------------ 1984 $ 919,000 1985 830,000 1986 637,000 1987 859,000 1988 240,000 $30,000 1989 761,000 45,000 1990 -0- 35,000 1991 293,000 21,000 1992 357,000 37,000 1993 168,000 47,000 1994 58,000 27,000 1995 413,000 20,000 1996 108,000 19,000 1997 207,000 22,000 1998 427,000 11,000 ------- ------ Total $6,277,000 $314,000 * The Partnership is also entitled to receive approximately $379,000 in January, 2000 in respect of 1999. The Utility Contract with extensions management believes have already accumulated will expire in 2003, subject to extensions of up to one additional year. The ability of the Partnership to realize the maximum price is dependent upon the rate at which the population in the Village grows, and levels of water consumption which in turn depends upon economic, social and climatic factors which cannot be predicted. Historically, water consumption tends to increase based upon increases in population. During most of fiscal 1990, however, due to drought conditions existing in most Southern Florida, the South Florida Water Management District imposed mandatory water usage restrictions. The imposition of these restrictions resulted in a decrease in aggregate water consumption in the area from which the Partnership's receipts are projected while population was increasing. It is considered extremely unlikely that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the maximum remaining $4,623,000 in contingent payments under the Utility Contract prior to the expiration of the contingent payment term. Acreage in the Vicinity of the Village Substantially all of the property previously owned by the Predecessor Company in Palm Beach County outside of the Village limits, originally aggregating approximately 23,800 acres, was sold under the Predecessor Company's retail installment sales program, which terminated prior to the inception of the Partnership. The Partnership currently retains one tract in the vicinity of the Village. The tract originally consisted of 208 one-acre lots located approximately eight miles northwest of the Village. These lots have been improved with graded unpaved access roads and drainage facilities. One lot from this tract was sold during 1996 for $12,000, 36 were sold in 1997 for $190,188, and 9 were sold in 1999 for $48,155, leaving a balance of 162 lots. The timing of future sales of the land discussed above, the manner in which the land may be developed and therefore the ultimate realizable prices for this land are dependent upon a complex and interrelated number of factors arising out of governmental regulations concerning permissible land use. All of such lots are subject to numerous governmental regulations under which new development may not be permitted unless adequate public facilities (such as roads and drainage) must be in place concurrently with the impacts of such development. The Indian Trail Improvement District (formerly known as the Indian Trail Water Control District) prepared a drainage plan which would result in an exemption for such lots from further compliance with such concurrency requirements and would allow the issuance of building permits for single-family residences on such lots. Such plan was opposed by other governmental agencies, however, and the Palm Beach County Health Department originally denied an application for septic tank permits, due to inadequate drainage. Following the institution of administrative proceedings to compel the issuance of septic tank permits, the Partnership was successful in obtaining approval for such permits for 3 of the 4 lots for which application was made; the 4th lot was wetland and required additional mitigation. However, the South Florida Water Management District has refused to permit development to proceed, and the Partnership is currently engaged in administrative proceedings to set aside such refusal. Numerous additional permits are required before building can be commenced, and there is no assurance that all of such permits can be obtained. The Partnership believes that should it eventually succeed in obtaining all the necessary permits for at least some of the lots, this would substantially increase the value of such lots and that the aggregate realizable value of all such lots will substantially exceed their book value of $561,374. Should the Partnership be unsuccessful in overturning the administrative denial of septic tank permits, the Partnership may elect to pursue other legal remedies, including a possible claim for "inverse condemnation." There can be no assurance that any such litigation would be successful. Another tract, consisting of approximately 470 acres, and which contained a significant amount of wetlands, was sold in August, 1999 for approximately $1,350,000 to the Nature Conservancy on behalf of Palm Beach County. The aforesaid amount does not include approximately $345,600 of "mitigation credits" granted to the Partnership in connection which such transaction which increased the value of two other tracts of land held by the Partnership, one of which was sold in August of 1999. Another tract in the vicinity of the Village the Partnership previously held a involved a disputed claim to approximately 24 acres of undeveloped land. This claim had not originally been accorded value on the Partnership's balance sheet and was considered to have little or no value. During 1994, in connection with the resolution of this claim with adjoining land owners, and in order to give value to such claim, the Partnership relinquished a portion of its claim, acquired five adjoining acres for $141,879, and executed a joint development agreement with one of such adjoining landowners relating to the Partnership's acreage and such landowner's acreage (comprising approximately 22 acres in the aggregate of which the Partnership now owns approximately 12 acres). The Partnership and the joint developer thereafter entered into an agreement to sell the entire combined parcel. After several closing extensions required in order to obtain various governmental agency approvals, this parcel was sold in April 1999 for gross proceeds of $968,000 and net cash proceeds after commissions and expenses of $833,000. Item 3. Pending Legal Proceedings. There are no pending legal proceedings, other than routine and immaterial litigation incidental to its business, to which the Partnership is a party or to which its property is subject. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Units currently trade on the over-the-counter market (Symbol RPAMZ). The following table sets forth, for the fiscal periods of the Partnership indicated, the reported high and low closing prices for the Partnership's Units in over-the-counter trading during the fiscal years ended September 30, 1998 and 1999. The Partnership's Units were held by approximately 325 holders of as of December 31, 1999. Based on its tax records, including beneficial owners, the Partnership believes that there were a total of approximately 359 unit holders as of such date. Fiscal Year Ended: September 30, 1999 Quarter High Low - ------- ---- --- First 27/32 23/32 Second 31/32 23/32 Third 31/32 23/32 Fourth 1 3/16 49/64 Fiscal Year Ended: September 30, 1998 Quarter High Low - ------- ---- --- First 7/8 11/16 Second 13/16 5/8 Third 57/64 21/32 Fourth 55/64 3/4 Prior Distributions The Partnership Agreement requires the Managing General Partner to consider quarterly whether the Partnership has Cash Available for Distribution in respect of the Partnership Units, and to make distributions unless the costs of the distribution would be disproportionately high in relation to the Cash Available for Distribution. "Cash Available for Distribution" in general means the excess cash held by the Partnership over anticipated expenditures and reserves for anticipated or contingent liabilities. The Partnership is not a party to any agreements which would restrict its ability to make future distributions. See Item 1 -- "Factors Affecting Future Operations and Distributions." At the inception of the Partnership, its assets were assigned a tax basis in the hands of the Partnership based upon the net fair market value of the assets transferred from the Predecessor Company as determined by reference to the aggregate market value of the Units at the time of original issuance. Each Unit's pro rata share of such net fair market value resulted in a capital account of $6.31 per Unit, which also became the original tax basis of each Unit in the hands of the original Unitholders. As a result of taxable income and loss and distributions since inception, the capital account and tax basis attributable to each Unit which has remained in the hands of an original Unitholder has been reduced to $1.61 as of September 30, 1999. Each person acquiring a Unit after inception has a tax basis in such Unit equal to the net price paid therefor. Such basis is thereafter increased by such Unit's allocable share of the Partnership's income and decreased by the allocable share of taxable loss and by any cash distributions made. A distribution itself is not a taxable event except to the extent that the distribution reduces the Unitholder's basis below zero. Section 17-607(a) of the Delaware Revised Uniform Limited Partnership Act provides generally that a limited partnership shall not make a distribution to a partner if, after giving effect to the distribution, all liabilities of the partnership exceed the fair value of its assets. A limited partner who receives such a distribution is liable to the limited partnership for the amount thereof, but only if such limited partner knew at the time of the distribution that distribution violated said Section 17-607(a). No claim based on any such wrongful distribution may be made more than three years after such distribution. In the normal course of events, however, the Managing General Partner does not anticipate that the liabilities of the Partnership immediately following any future distribution will ever exceed the fair value of its net assets. See also "Factors Affecting Future Operations and Distributions" under Item 1. The Partnership has declared and paid the following liquidating distributions: Payment Date Amount Per Unit - ------------ --------------- April 15, 1986 $ .25 August 15, 1986 .35 December 15, 1986 .40 January 15, 1988 .50 July 15, 1988 .50 January 15, 1989 .50 July 17, 1989 1.00 September 29, 1989 .75 March 30, 1990 .75 July 31, 1990 .50 August 30, 1991 .50 December 15, 1991 .25 December 16, 1992 .25 October 27, 1999 .50 ----- 7.00 Item 6. Selected Financial Data The following is a summary of selected financial data (in thousands of dollars except as to per unit amounts) as of and for the periods ended on the dates indicated:
Fiscal Years Ended September 30, ----------------------------------------------------- 1999 1998 1997 1996 1995 Selected Income Statement Data Revenues $8,412 2,170 3,107 $ 397 $ 497 Net income (loss) 3,107 (215) 391 (690) (787) Income (loss) per unit 0.69 (.05) .09 (.15) (.18) Selected Balance Sheet Data Total assets $5,936 4,786 5,228 5,486 5,425 Mortgage Notes Payable -0- 1,322 1,676 2,065 1,511 Partners' equity 5,652 2,546 2,761 2,370 3,060 Cash distributions per unit -0- -0- -0- -0- .25
Since the Partnership's sole business has been the disposition of its assets and the distribution of proceeds to its Unitholders, results in any period are not comparable with any other period and are not indicative of the results which may be anticipated in any future period. See Item 5 -- Prior Distributions (relating to prior returns of capital). Item 7. Management's Discussion And Analysis Of Financial Condition And Results of Operations During the fiscal year, the Partnership had gross revenues of $8,411,560 most of which of which resulted from land sales, as compared with $$2,170,116 in 1998 and $3,106,552 in 1997. Net income was $3,106,905 as compared with a loss of $214,676 in 1998 and net income of $390,844 in 1997. The Partnership's cash balances at any particular point depend primarily on the timing of sales of its real estate, which timing can be affected by numerous factors. See Item 2. Cash increased from $ 6,553 at September 30, 1998 to $3,113,800 at September 30, 1999 as a result of the closing of material land sales. As of December 30, 1999 cash had decreased to $605,166 principally as a result of a distribution to Unitholders of $2,242,752 in October 1999. See Financial Information - Statements of Cash Flows. During the current fiscal year, and based upon management's judgment that ordinary operating expenses will not increase, the Partnership anticipates that cash flow and liquidity requirements will be satisfied by existing cash, additional land sales and contingent utility receipts described "Utility Contingent Receipts", below. Effect of Land Sales on Future Cash Flow The Partnership's future revenues will depend solely upon its ability to develop and/or sell its remaining real estate, and upon receipts from a prior sale of a utility plant. Total net cash flow which might become available for distribution is unpredictable due to uncertain conditions in the South Florida real estate market in which the Partnership's remaining real estate is located, and competition from other owners and developers of real estate in the South Florida market. These conditions will continue to affect the realizable value of the Partnership's remaining land, including decisions by parties holding options on the Partnership's land to exercise such options in whole or in part. The rate of construction in the Village of Royal Palm Beach could also significantly affect future payments to the Partnership under the contract described under the caption "Utilities Contingent Receivable" under Item 2 above. As indicated under such caption, it is considered unlikely that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the full amount of such payments prior to the expiration of the contingent payment term. Environmental Matters There are no environmental contingencies in respect of the Partnership or its properties. Use of all of the Partnership's properties is subject to compliance with state and county land use regulations relating to environmental matters, which the Partnership takes into account in considering the values of its properties. Results of Operations Fiscal Years Ended September 30 --------------------------------------- 1999 1998 1997 ---------- ---------- ---------- Sales of land, net $8,000,000 $1,706,000 $2,874,000 Interest income 29,000 7,000 5,000 Sale of utility system (a) 379,000 439,000 227,000 Other (b) 3,000 18,000 1,000 ---------- ---------- ---------- Total revenues $8,411,000 $2,170,00 $3,107,000 ========== ========== ========== (a) As discussed in Note 9 to the financial statements, income recognized on the sale of the utility system varies with water consumption and other factors. Cost of Sales Cost of sales relates to the sales of land as discussed above. This item varies as a result of dissimilar profit margins and income recognition methods on the various sales of land and buildings as discussed above. Selling, Administrative and Other Expenses Selling, general and administrative expenses were $768,537 in 1997, and declined to $646,467 in 1998 primarily as the result of a decrease in brokerage commissions on lower real estate sales. In 1999, primarily due to increased sales commissions resulting from a material increase in sales, such expenses increased to 1,332,872. Interest expense increased from $33,434 in 1997 to $89,147 in 1998, primarily because the Partnership had completed development activities in the residential lots in 1998 and therefor ceased the capitalization of interest expense. In 1999 interest cost decreased to $47,212 as the result of increased sales which enabled the Partnership to reduce its indebtedness to zero during the year. Depreciation and Property Taxes Property tax expense increased from 1997 to 1998 primarily because development activities were completed and such taxes could no longer be capitalized. Property tax expense decreased from 1998 to 1999 because of substantial sales of the Partnership's properties. Income Taxes The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reported its income as a Partnership for taxable years through December 31, 1997. The application of the grandfather rules terminated for taxable years commencing after December 31, 1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that is currently governed by this provision may elect to continue its Partnership tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal Tax on its gross income for federal income tax purposes (principally revenues less tax cost of land sold). The Partnership has elected to continue its Partnership status beyond December 31, 1997. Selling, general and administrative expenses include federal tax of $70,000 and zero dollars for the years ended September 30, 1999 and 1998, respectively. See Note 7 to the Financial Statements included with this report. Item 8. Financial Statements and Supplementary Data Financial Statements and supplementary data are listed under Item 14 herein. Item 9. Disagreements with Accountants on Accounting and Financial Disclosure None PART III Item 10. Directors and Executive Officers of the Registrant The following information is provided with respect to the directors and officers of each general partner of the Registrant.(l)
- ------------------------------------- ----------------------------------- ------------------------------------------- Name and Age Present Position With the Other Positions Registrant With the Registrant - ------------------------------------- ----------------------------------- ------------------------------------------- Irving Cowan 67 President of Steinco Private Investor David B. Simpson 61 Vice President and Director of Attorney currently in private practice Steinco and counsel to the Partnership Jack Friedland 74 Member of Friedco,LLC (1) Private Investor Leonard Friedland 75 Member of Friedco,LLC (1) Private Investor Herbert Tobin 59 Director of Steinco Private Investor Director, Secretary And Treasurer(*)of Steinco Marjorie Cowan 59 Member of Friedco,LLC (1) Private Investor Harold Friedland 69 Member of Friedco Private Investor
(1) The general partners of the Partnership are Stein Management Company, Inc. ("Steinco") and Hasam Realty L.P. The general partner of Hasam L.P. is Friedco, L.C., ("Friedco") a Florida limited liability company. Friedco is managed by its four members, Jack, Harold and Leonard Friedland and Marjorie Cowan, who are brothers and sister. Irving Cowan is the husband of Marjorie Cowan. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the officers and directors of the general partners of the Partnership, and persons who own more than ten percent of the Partnership's Units, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such officers, directors and greater than ten-percent Unitholders are required by SEC regulations to furnish the Partnership with copies of all Section 16(a) forms they file. No such forms were furnished to the Partnership during fiscal 1997. Based solely on the foregoing the Partnership believes that during fiscal 1999, no purchases or sales of units were made requiring compliance with applicable Section 16(a) filing requirements. Item 11. Executive Compensation During fiscal 1998 no executive officer of the Managing General Partner received compensation exceeding $60,000. All officers and directors of Steinco, as a group (4 persons) earned $52,500 in cash compensation. The Partnership Agreement provides that the Partnership will provide and pay for all payroll and other costs of Steinco (to the extent such costs are not paid directly by the Partnership) in connection with the employment of personnel, and the costs of office space, outside clerical and professional assistance, equipment, and other facilities which are ordinary and necessary to the conduct and management of the Partnership's affairs. Since 1994, however, for administrative convenience, all such reimburseable expenses have been paid directly by the Partnership. Steinco's sole function is to serve as the Managing General Partner and it does not conduct any other operations. Other than the foregoing, the Managing General Partner is not entitled to any compensation in respect of the discharge of its obligations under the Partnership Agreement. Hasam L.P., the other General Partner, is not entitled to compensation of any nature under the Partnership Agreement but is entitled to reimbursement for such expenses as it may reasonably incur in the discharge of its ordinary and necessary obligations as a General Partner. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of December 30, 1999 information concerning (i) all persons who are known to the Registrant to be the beneficial owner of more than 5% of the Units and (ii) the beneficial ownership of Units of directors and officers of each General Partner of the Registrant. Amount Beneficially Percent of Name and Address Owned (a) Class - ------------------ --------- ----- Harold Friedland 712,417 (1) 15.8% 636 Old York Road #210 Jenkintown, PA 19046 Jack Friedland 1,155,834 (1)(2) 25.8% 111 Regatta Drive Jupiter, FL 33477 Leonard Friedland 1,170,196 (1)(3) 26.1% 6530 Allison Road Miami Beach, FL 33131 Marjorie Cowan 1,057,929 (1)(4) 23.6% 3725 S. Ocean Dr. Hollywood, FL 33019 Samuel Friedland Family Foundation 637,417 14.2% 2501 S. Ocean Dr. Hollywood, FL 33019 Hasam Realty Limited Partnership 75,000 1.7% 2501 S. Ocean Dr. Hollywood, FL 33019 Stein Management Company 20,093 Less than 1% 2501 S. Ocean Drive Hollywood, FL 33019 David B. Simpson 1,460 (5) Less than 1% 2 University Plaza #109 Hackensack, N. J. 07601 All officers and 2,361,822 52.7% directors as a group (See footnotes) (a) Includes all units as to which owner holds sole or shared voting or investment power. (1) Includes 637,417 units owned by the Samuel Friedland Family Foundation and 75,000 units owned by Hasam Realty Limited Partnership, of which this individual may be deemed a controlling person. In the case of Harold Friedland does not include 316,144 Units owned by an adult child and 65,000 Units owned by trusts for other adult children of which Jack Friedland is one of three trustees. In the case of Leonard Friedland, includes Units held for benefit of Mr. Friedland and adult children of Mr. Friedland. (2) Does not include 2,500 units owned Jack Friedland's wife. | (3) Does not include 2,500 units owned by Leonard Friedland's ex-wife. (4) Does not include 96,900 units owned by Mrs. Cowan's husband, Irving Cowan. Includes 16,993 units owned by a trust for a minor child of which Mr. and Mrs. Cowan are trustees; Includes 21,708 Units owned jointly with Mr. Cowan (5) Does not include 20,000 Units owned by Stein Management Company, of which Mr. Simpson's wife owns 50% of the common stock. Item 13. Certain Relationships and Related Transactions Borrowing from Related Parties In June, 1995, the Company borrowed $500,000 from Hasam Realty, L.P. for general working capital purposes, secured by a first mortgage on the Crestwood commercial property referred to in Item 2. In February, 1996, Hasam agreed to add to principal $27,249 of interest accrued through January 31, 1996 and unpaid. The loan (including said amount added to principal) was originally payable in full on June 29, 1996 but was extended through and paid on February 28, 1997. The loan bore interest at a rate equal to two percent over the Prime Rate, defined as the highest fluctuating rate of interest per annum as published by the Wall Street Journal. Management believes that the terms of this borrowing were fair and reasonable, and at least as favorable as the terms which could have been obtained from an unaffiliated institutional lender. On June 13, 1996, the Partnership borrowed $300,000 from an affiliate of Jack Friedland and $25,000 directly from Mr. Friedland, who is an affiliate of Hasam Realty Limited Partnership, a general partner of the Partnership. These loans, originally due on October 1, 1996, were extended through and paid in January, 1997. Indian Trail Improvement District Randy Rieger was elected on an interim basis as a Vice President and Chief Operating Officer of Stein Management Company, Inc., the Partnership's managing general partner, in September 1995, shortly following the death of the company's then-principal operating offcer. Mr. Rieger had been active as a real estate broker, directly and through affiliated companies, in the south Florida real estate market for many years. Prior to his election in 1995, Mr. Rieger had been serving as a consultant to the Partnership under an arrangement pursuant to which he was paid consulting fees, and additional amounts applicable to future brokerage commissions were being paid to RTL Realty Corp. (50% owned by Mr. Rieger) which had been engaged as the Partnership's exclusive broker in respect to a substantial portion of its real estate assets. Under such prior arrangement, RTL Realty Corp. has received substantial brokerage commissions in connection with the Partnership's real estate sales. See Item 2 Properties -- "The Village of Royal Palm Beach." Mr. Rieger resigned following the election of new officers on February 14, 1996; however, Mr. Rieger has continued to serve the Partnership as a consultant under a consulting and brokerage agreement with Mr. Rieger and RTL Realty Corp, dated May 23, 1996, which was originally scheduled to expire on December 31, 1996 was extended through December 31, 1998 and has been continued since such date on an at will basis (the "RTL Agreement"). Under the RTL Agreement, RTL receives $6,000 per month in consideration of Mr. Rieger's services to the Partnership, in addition to brokerage on sales of the Partnership's properties at a varying schedule of rates and reimbursement of approved expenses. The Partnership also reimburses RTL for certain expenses, including office expenses, at the rate of $2,500 per month. RTL may earn additional commissions on other transactions on a negotiated basis. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) The following documents are filed as a part of this report: 1. Financial Statements: 2. Independent Auditor's Report Royal Palm Beach Colony, Limited Partnership Financial Statements: Balance sheets as of September 30, 1999 and 1998. Statements of income for the years ended September 30, 1999,1998, and 1997. Statements of partners' equity for the years ended September 30, 1999, 1998, and 1997. Statements of cash flows for the years ended September 30, 1999,1998, and 1997. 3. Financial Statement Schedules: Schedule IX - Valuation and qualifying accounts Schedule X - Supplementary Income Statement Information Schedules other than those listed above have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (b) Reports on Form 8-K None. (c) Exhibits NOTE: All references in this table of exhibits to "Registration Statement" relate to the Registration Statement of the Registrant on Form S-14 (file Number 2-96374) as originally filed with the Securities and Exchange commission on March 12, 1985, as supplemented by Amendment No. 1 filed May 23, 1985 and as effective on June 10, 1985. 3(a) Certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. filed as Exhibit 3(d) to the Registration Statement and incorporated herein by reference. 3(b) Restated certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. included as Appendix B to the Registration Statement and incorporated herein by reference. 3(c) Amended Certificate and Agreement of Limited Partnership of Royal Palm Beach Colony, L.P. (filed May 21, 1985 with the Secretary of State of Delaware) changing name to Royal Palm Beach Colony, Limited Partnership. Filed as Exhibit 3(g) to Amendment Number One to the Registration Statement and incorporated herein by reference. 3(d) Restated Certificate and Agreement of Limited Partnership (revised) included as Appendix B to Amendment No. 1 to the Registration Statement and filed July 11, 1985 with the Secretary of State of Delaware and incorporated herein by reference. 3(e) Restated Certificate of Limited Partnership dated December 16, 1986. Filed as Exhibit 3(e) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(f) Amended and Restated Agreement of Limited Partnership dated December 16, 1986. Filed as Exhibit 3(f) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(g) Amendment No. 1 to Amended and Restated Agreement of Limited Partnership dated December 30, 1986. Filed as Exhibit 3(g) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 3(h) Second Amended and Restated Certificate of Limited Partnership dated December 30, 1986. Filed as Exhibit 3 (h) to Report on Form 10-K for the fiscal year ended September 30, 1986 and incorporated herein by reference. 4(a) Form of Unit Certificate issued to Limited Partners and Assignees of the Partnership. Filed as Exhibit 4 (a) to the Registration Statement and incorporated herein by reference. 4(b) Loan Agreement between Royal Palm Beach Colony, Limited Partnership and Union Bank of Florida dated October 6, 1994, pertaining to loan in the amount of $975,000. Filed as Exhibit 4(b) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(c) Correction to description of Exhibit 4(c) filed with Report of Registrant on Form 10-K for fiscal year ended September 30, 1995. Said Exhibit relates to is a promissory note for $27,247.83 of accrued interest on Promissory Note in the amount of $500,000 filed as Exhibit 4(d) to said report on Form 10-K. Filed as Exhibit 4(c) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(d) Correction to description of Exhibit 4(d) filed with Report of Registrant on Form 10-K for fiscal year ended September 30, 1995. Said Exhibit is a Promissory note from Registrant to Hasam Realty Limited Partnership in the amount of $500,000. Filed as Exhibit 4(d) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(e) Agreement between Registrant and Gerald M. Higier dated December 1, 1995 relating to purchase of 10.8 acre commercial tract. Filed as Exhibit 4(e) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(f) Agreement between Registrant and Gerald M. Higier dated in 1995 relating to purchase of 24 acres. Filed as Exhibit 4(f) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1995 and incorporated herein by reference. 4(g) Agreement executed August 12, 1996 between the Registrant and Lennar Homes, Inc. relating to sale of 86 single family lots in Crestwood Unit 3 - Plat Three. Filed as Exhibit 4(g) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(h) First Mortgage Modification Amendment dated June 26, 1995 to Loan Agreement referred to in Exhibit 4(b). Filed as Exhibit 4(h) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(i) Second Mortgage Modification Amendment dated October 21, 1996 to Loan Agreement referred to in Exhibit 4(b). Filed as Exhibit 4(i) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4 (j) Mortgage dated June 13, 1996 between Crossroads Associates, Ltd. and the Registrant pertaining to secured loan of $300,000 to the Registrant. Filed as Exhibit 4(j) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4 (k) Promissory Note dated June 13, 1996 in the amount of $300,000 from Registrant to Crossroads Associates, Ltd. relating to Mortgage referred to in Exhibit 4(j). Filed as Exhibit 4(k) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(l) Letter Agreement dated May 23, 1996 between Randy Rieger and the Registrant relating to brokerage and consulting services. Filed as Exhibit 4(l) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1996 and incorporated herein by reference. 4(m) Agreement for Purchase and Sale between the Registrant and TCR SFA Apartments, Inc. dated March 18, 1998 and First and Second Amendments thereto dated in June and December of 1998, respectively, relating to the sale of approximately 21.8 acres in the Crestwood Tract, Filed as Exhibit 4(m) to the Report of the Registrant on Form 10-K for the fiscal year ended September 30, 1998 and incorporated herein by reference. 4(n) Contract dated in October, 1999 between Registrant and Certex Homes relating to the the sale of approximately 20.82 acres of land in the Village of Royal Palm Beach. SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP By: Stein Management Company, Inc. Managing General Partner By: /s/ David B. Simpson -------------------- David B. Simpson, Vice President Date: February 15, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Name Title - ---- ----- /s/David B. Simpson - ------------------- David B. Simpson Director, Vice President, Stein Management Company, Inc. /s/Herbert Tobin - ---------------- Herbert Tobin Director, Stein Management Company, Inc. /s/Irving Cowan - ---------------- Irving Cowan Director, President, Stein Management Company, Inc. Dated: February 15, 2000 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 Independent auditors' report Financial statements: Balance sheets Statements of operations Statements of partners' equity Statements of cash flows Notes to financial statements Schedule X - Supplemental Income Statement Information Independent Auditors' Report Partners Royal Palm Beach Colony, Limited Partnership Hollywood, Florida We have audited the accompanying balance sheets of Royal Palm Beach Colony, Limited Partnership as of September 30, 1999, and 1998, and the related statements of operations, partners' equity, and cash flows for each of the three years in the period ended September 30, 1999. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards._ Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements._ An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Royal Palm Beach Colony, Limited Partnership as of September 30, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 1999 in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in item 14(a)3 is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. LEFCOURT, BILLIG, TIKTIN & YESNER, P.A. Coral Gables, Florida November 17, 1999
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP BALANCE SHEETS SEPTEMBER 30, 1999 AND 1998 1999 1998 -------------- -------------- ASSETS Cash $ 3,113,800 $ 6,553 Utility and other receivables (Note 2) 401,972 439,825 Property held for sale (Notes 3 and 5) 2,379,916 4,279,599 Other assets (Note 4) 40,621 59,627 -------------- -------------- $ 5,936,309 $ 4,785,604 ============== ============== LIABILITIES AND PARTNERS' EQUITY Liabilities: Mortgage notes payable, bank (Note 5) -- $ 1,321,750 Accounts payable and other liabilities (Note 6) $ 283,345 917,795 -------------- -------------- Subsequent events (Notes 3 and 12) 283,345 2,239,545 Partners' equity: 4,485,504 units authorized and outstanding 5,652,964 2,546,059 -------------- -------------- $ 5,936,309 $ 4,785,604 ============== ==============
See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS Years ended September 30, ---------------------------------------- 1999 1998 1997 ----------- ----------- ----------- Revenues (Note 11) $ 8,411,560 $ 2,170,116 $ 3,106,552 ----------- ----------- ----------- Costs and expenses: Cost of sales 3,729,906 1,394,684 1,747,627 Selling, general and administrative expenses (Notes 7 and 8) 1,332,872 646,467 768,537 Interest (Note 5) 47,212 89,147 33,434 Depreciation and property taxes 194,665 254,494 166,110 ----------- ----------- ----------- 5,304,655 2,384,792 2,715,708 ----------- ----------- ----------- Net income (loss) $ 3,106,905 ($ 214,676) $ 390,844 =========== =========== =========== Net income (loss) per unit $ 0.69 ($ 0.05) $ 0.09 =========== =========== =========== Weighted average number of units outstanding 4,485,504 4,485,504 4,485,504 =========== =========== ===========
See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' EQUITY Partnership General Limited Total Units Partners Partners Equity ----------- ----------- ----------- ----------- Balance, September 30, 1996 4,485,504 $ 118,351 $ 2,251,540 $ 2,369,891 Net income 8,286 382,558 390,844 ----------- ----------- ----------- ----------- Balance, September 30, 1997 4,485,504 126,637 2,634,098 2,760,735 Net loss (4,551) (210,125) (214,676) ----------- ----------- ----------- ----------- Balance, September 30, 1998 4,485,504 122,086 2,423,973 2,546,059 Net income 65,866 3,041,039 3,106,905 ----------- ----------- ----------- ----------- Balance, September 30, 1999 4,485,504 $ 187,952 $ 5,465,012 $ 5,652,964 =========== =========== =========== ===========
See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS Years ended September 30, ----------------------------------------- 1999 1998 1997 ----------- ----------- ----------- Cash flows from operating activities: Cash received: Collections on land sales and receivables $ 6,612,133 $ 1,852,861 $ 2,730,995 Interest income 18,384 7,018 1,154 Sale of utility system 438,572 228,661 127,393 Other cash received 817 18,304 1,000 ----------- ----------- ----------- 7,069,906 2,106,844 2,860,542 ----------- ----------- ----------- Cash expended: Selling, general and administrative, property taxes and other expenses 2,169,094 654,811 1,274,637 Interest paid (net of amounts capitalized) 47,212 89,147 33,434 Improvements to property held for sale 421,531 1,050,849 1,156,495 ----------- ----------- ----------- 2,637,837 1,794,807 2,464,566 ----------- ----------- ----------- Net cash provided by operating activities 4,432,069 312,037 395,976 ----------- ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (3,072) ----------- Cash flows from financing activities: Proceeds from mortgage notes payable: Bank 17,800 945,778 1,043,560 Payments on mortgage payable: Bank (1,339,550) (1,300,000) (580,000) General partner (527,249) Other (325,000) ----------- ----------- ----------- Net cash used in financing activities (1,321,750) (354,222) (388,689) ----------- ----------- ----------- Net increase (decrease) in cash 3,107,247 (42,185) 7,287 Cash at beginning of year 6,553 48,738 41,451 ----------- ----------- ----------- Cash at end of year $ 3,113,800 $ 6,553 $ 48,738 =========== =========== ===========
(continued)
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (CONTINUED) Years ended September 30, ----------------------------------------- 1999 1998 1997 ----------- ----------- ----------- Reconciliation of net income (loss) to net cash provided by operating activities: Net income (loss) $ 3,106,905 $ (214,676) $ 390,844 ----------- ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 1,302 1,975 2,754 Change in assets and liabilities Increase in: Mortgage notes, utility and other receivables (63,272) (243,235) Other assets (4,322) Accounts payable and accrued liabilities 156,470 Estimated cost of development of land sold 16,000 Decrease in: Utility and other receivables 37,853 Property held for sale 1,899,683 460,340 510,049 Other assets 20,776 1,342 Accounts payable and accrued liabilities (634,450) (276,114) Estimated cost of development of land sold (30,142) ----------- ----------- ----------- Total adjustments 1,325,164 526,713 5,132 ----------- ----------- ----------- Net cash provided by operating activities $ 4,432,069 $ 312,037 $ 395,976 =========== =========== ===========
See notes to financial statements. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 1. Organization and summary of significant accounting policies: The primary business purpose of the Partnership is the operation, management and orderly disposition of its assets and the distributions of the proceeds therefrom to unitholders. The general partners of the Partnership are Hasam Realty Limited Partnership and Stein Management Company, Inc. ("Steinco"). Steinco is the Managing General Partner which employs the management and clerical employees necessary to carry out the operation of the Partnership. Steinco is reimbursed by the Partnership for related expenses. A summary of the Partnership's accounting principles is as follows: Land sales: Generally, land sales are recognized when the purchaser has made an adequate down payment, 20% to 25% of the purchase price, the Partnership has no substantial remaining obligations with respect to the property, and the collectibility of the related receivable is reasonably predictable. Otherwise, either the installment or the cost recovery method is used. Under the installment method, portions of profit are recognized as cash payments are received from the buyer. Under the cost recovery method no profit is recognized until cash payments received from the buyer, including interest and principal, exceed the seller's cost of the property sold. Sale of Utility System: The Partnership recognizes profit on the 1983 sale of a utility system in the years in which increases in consumption generate amounts due to the Partnership. (See Note 9). Cash: The Partnership considers all highly liquid debt investments with maturities of three months or less when purchased to be cash equivalents. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 1. Organization and summary of significant accounting policies (continued): Property held for sale: Property held for sale is stated at the lower of cost or estimated net realizable value. The cost of property held for sale includes the original purchase price, cost of land development and development period real estate taxes and interest. Net income (loss) per unit: Net income (loss) per unit is calculated based on the weighted average number of units outstanding during the year. Concentrations of risk: Assets which subject the Partnership to concentrations of risk consist primarily of property held for sale. The Partnership's property held for sale is located in Florida. The Partnership's ability to sell its property is substantially dependent upon the Florida real estate economic sector. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. Reclassifications: Certain items in the 1998 financial statements have been reclassified to conform to the 1999 presentation. 2. Utility and other receivables: September 30, -------------------- 1999 1998 -------- -------- Utility receivable (Note 9) $379,363 $438,572 Accrued interest receivable 10,522 Other 12,087 1,253 -------- -------- $401,972 $439,825 ======== ======== ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 3. Property held for sale: Included in property held for sale at September 30, 1999 is the net carrying value, $1,033,907, of a mortgage note receivable in default which is considered to be an in-substance foreclosure. The mortgage note receivable was received in connection with an October 26, 1998 sale. In October 1999 the underlying property on this mortgage note receivable was reacquired by acceptance of a deed in lieu of foreclosure. In connection with an August 18, 1999 sale of land, the Partnership received mitigation credits which increased the value of two other tracts of land, one of which was sold on August 27, 1999 and the other tract remains in property held for sale at September 30, 1999. The value of the mitigation credits received ($345,600) was included in net sales of land and allocated to the cost of properties which were benefited. 4. Other assets: Other assets consist of the following: September 30, ------------------ 1999 1998 ------- ------- Furniture and equipment, net of accumulated depreciation $ 3,131 $ 1,361 Prepaid expenses 37,490 58,266 ------- ------- $40,621 $59,627 ======= ======= ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 5. Mortgage notes payable, bank: Mortgage notes payable, bank consist of the following:
September 30, ---------------------------- 1999 1998 ---------- ---------- Mortgage notes payable, bank: On July 15, 1998, the Partnership combined certain construction development loans under a $2,925,000 Consolidation Promissory Note, at 1% over the prime rate (for an effective rate of 9.50% at September 30, 1998.) Property held for sale with a cost of approximately $2,259,000 was collateral for this loan and the loan below. The loan was fully repaid at September 30, 1999. $ 0 $1,028,598 On September 2, 1997, the Partnership entered in to a Future Advance for Working Capital Loan in the amount of $300,000 at 1% over the prime rate (for an effective rate of 9.50% at September 30, 1998). The loan was fully repaid at September 30, 1999. 0 293,152 ---------- ---------- $ 0 $1,321,750 ========== ==========
Interest is capitalized for property being developed as follows: September 30, ------------------------------ 1999 1998 1997 ------- -------- -------- Capitalized $ 61,212 $191,893 Charged to operations $47,212 89,147 33,434 ------- -------- -------- Total interest incurred $47,212 $150,359 $225,327 ======= ======== ======== ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 6. Accounts payable and other liabilities: Accounts payable and other liabilities consist of the following: September 30, -------------------- 1999 1998 -------- -------- Accounts payable $100,874 $671,594 Accrued liabilities: Current property taxes 96,934 205,690 Other 85,537 40,511 -------- -------- $283,345 $917,795 ======== ======== Property taxes related to 1994, 1995, 1996 and 1997 in the amount of $329,160 were delinquent at September 30, 1998 and were included in accounts payable. The delinquent taxes were paid during the year ended September 30, 1999. 7. Income taxes: The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reported its income as a partnership for taxable years through December 31, 1997. The application of the grandfather rules terminated for taxable years commencing after December 31, 1997. Under the Taxpayer Relief Act of 1997, a publicly traded partnership that is currently governed by this provision may elect to continue its partnership tax status beyond December 31, 1997 by agreeing to pay an annual 3.5% Federal tax on its gross income for Federal income tax purposes (principally revenues less cost of land sold). The Partnership has elected to continue its Partnership status beyond December 31, 1997. Selling, general and administrative expenses include Federal tax of $70,000 and $0 for the years ended September 30, 1999 and 1998, respectively. The partners are required to include in their income tax returns their share of the Partnership's income or loss, as adjusted to reflect the effects of certain transactions which are accorded different accounting treatment for federal income tax purposes. The Partnership is on a calendar year end for income tax purposes. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 7. Income taxes (continued): The following analysis summarizes the major differences between the financial reporting and income tax basis of the partner's equity account at September 30, 1999. Partners' equity, financial reporting basis $5,652,964 Add item recorded for tax purposes only: Step-up in basis of property $17,000,000 Less: Cost of sales - step-up adjusted for unamortized additional capitalized inventory costs and any adjustments as a result of repossessions. 15,450,817 ----------- 1,549,183 Add items not presently deductible for tax purposes 40,109 1,589,292 ----------- ---------- Partners' equity, income tax basis $7,242,256 ========== 8. Lease information: The Partnership occupies its office facility in a building owned by an entity related by common ownership. The Partnership does not pay any rent at this office facility. Other long-term operating leases on real and personal property are not considered material. 9. Other transactions: A subsidiary of the Company, Royal Palm Beach Utilities Company ("Utilities"), previously sold to the Village of Royal Palm Beach ("Village") all of its assets, consisting of a water treatment and distribution system and a sanitary sewer collection, treatment and disposal system located in the Village. The sale requires payments to be received by Utilities as future connections (as measured by increase in consumption) are added to the system, over a period which is expected to be extended from August, 2001 through 2003. Should consumption not increase sufficiently, the Partnership would not receive the full sale amount._ (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 9. Other transactions (continued): The maximum proceeds to Utilities approximates $13,410,000, of which, under the terms of the sale, approximately $4,623,000 had not yet been received as of September 30, 1999. In addition, the Partnership had the right to receive up to $500,000, of which $314,572 has already been received, as the Village collects guaranteed revenues from developers._ Since future increases in consumption and payment of guaranteed revenues cannot be assured and, therefore, the extent of future payments to the Partnership is uncertain, the Partnership accounts for this transaction utilizing the cost recovery method of accounting. The Partnership has previously fully recovered its cost and recognizes profit on the sale as increases in consumption generate amounts due to the Partnership._ Revenues related to the sale of utility system of $379,363, $438,572, and $227,053 were recognized for fiscal years 1999, 1998 and 1997, respectively. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 10. Comparative quarterly financial information (unaudited):
First Second Third Fourth quarter quarter quarter quarter Full year ----------- ----------- ----------- ----------- ----------- 1999: Revenues: $ 2,514,254 $ 4,232 $ 1,593,713 $ 4,299,361 $ 8,411,560 Cost and expenses 2,400,505 252,326 998,757 1,653,067 5,304,655 ----------- ----------- ----------- ----------- ----------- Net income (loss) $ 113,749 $ (248,094) $ 594,956 $ 2,646,294 $ 3,106,905 =========== =========== =========== =========== =========== Net (income) loss per unit $ 0.03 $ (0.06) $ 0.13 $ 0.59 $ 0.69 =========== =========== =========== =========== =========== 1998: Revenues: $ 489,037 $ 620,488 $ 618,981 $ 441,610 $ 2,170,116 Cost and expenses 555,056 764,610 786,995 278,131 2,384,792 ----------- ----------- ----------- ----------- ----------- Net income (loss) $ (66,019) $ (144,122) $ (168,014) $ 163,479 $ (214,676) =========== =========== =========== =========== =========== Net income (loss) per unit $ (0.01) $ (0.03) $ (0.04) $ 0.03 $ (0.05) =========== =========== =========== =========== =========== 1997: Revenues: $ 320,619 $ 1,659,912 $ 327,224 $ 798,797 $ 3,106,552 Cost and expenses 291,774 1,146,565 459,632 817,737 2,715,708 ----------- ----------- ----------- ----------- ----------- Net income (loss) $ 28,845 $ 513,347 $ (132,408) $ (18,940) $ 390,844 =========== =========== =========== =========== =========== Net income (loss) per unit $ 0.01 $ 0.11 $ (0.03) $ (0.00) $ 0.09 =========== =========== =========== =========== ===========
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 11. Revenues: Revenues consist of the following:
Years ended September 30, ------------------------------------------------ 1999 1998 1997 ------------- ------------- ------------- Net sales of land $ 7,999,974 $ 1,706,222 $ 2,873,445 Interest income 28,906 7,018 5,054 Sale of utility system (Note 9) 379,363 438,572 227,053 Other 3,317 18,304 1,000 ------------- ------------- ------------- $ 8,411,560 $ 2,170,116 $ 3,106,552 ============= ============= =============
12. Subsequent event: On October 27, 1999 the Partnership distributed $2,242,752 ($.50 per unit) to unitholders of record as of October 12, 1999. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP SCHEDULE X - SUPPLEMENTAL INCOME STATEMENT INFORMATION YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997 September 30, ---------------------------------- 1999 1998 1997 -------- -------- -------- 1. Maintenance and repairs $ 1,921 $ 0 $ 580 ======== ======== ======== 2. Taxes, other than payroll and income taxes $265,113 $254,791 $166,837 ======== ======== ======== 3. Advertising $ 3,000 $ 0 $ 168 ======== ======== ======== EX-4 2 Exhibit 4(n) REAL ESTATE SALE CONTRACT [Royal Palm Beach Townhouse Property] PALM BEACH COUNTY, FLORIDA This Contract is made as of the __ day of October, by and Between ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP, a Delaware Limited Partnership ("Seller"), and CENTEX HOMES, a Nevada General partnership ("Purchaser"). In consideration of the mutual agreements herein set forth, the Parties agree as follows: 1. PROPERTY. Seller is the owner of fee simple title to the Property described in Exhibit A attached hereto and incorporated herein by reference, consisting of approximately Twenty and Eighty-Two Hundredths (20.82)+/- acres of land in the Village of Royal Palm Beach, Palm Beach County, Florida 2. PURCHASE AND SALE. Seller agrees to sell and convey the property to Purchaser and Purchaser agrees to purchase and acquire the Property from Seller on the terms and conditions hereinafter set forth. 3. PURCHASE PRICE AND PAYMENT. Purchaser shall pay a total purchase price of one Million Eight Hundred Seventy Thousand Dollars ($1,870,000), subject to the adjustments and credits set forth in this Contract, in immediately available funds satisfactory to Seller at Closing (defined in Section 5). 4. DEPOSIT 4.1. Earnest Money Deposit. On the Effective Date (defined in section 22), Purchaser shall deliver to Escrow Agent (identified in Section 22) a check in the amount of Fifty Thousand Dollars ($50,000), as the Earnest Money Deposit for this transaction in accordance with the provision of Section 4.3. Escrow Agent shall place all deposit monies in an interest-bearing escrow account during the pendency of this Contract. 4.2. Additional Deposit. If this Contract is not terminated pursuant to Section 6, then on or before 6:00 p.m., Florida time on the last day of the Feasibility Period, Purchaser shall deliver to Escrow Agent a second check in the amount of Fifty Thousand Dollars ($50,000) (the Additional Deposit) in accordance with the provision of Section 4.3, which shall be combined with the Earnest Money Deposit for an aggregate total deposit of One Hundred Thousand Dollars ($100,000). If Purchaser 1 fails to deliver the Additional Deposit before expiration of the Feasibility Period, it will be deemed to have elected to terminate this Contract pursuant to Section 6 and the Earnest Money Deposit shall be promptly returned to Purchaser. 4.3. Reference to Deposit. References in this Contract to the Deposit shall include the Earnest Money Deposit, the Additional Deposit and/or any Extension Deposit, as the context may require, together with any and all interest accrued thereon. 4.4. Application of Deposit. If this Contract is terminated during the Feasibility Period for any reason, Escrow Agent shall immediately return the Earnest Money Deposit to Purchaser. If this Contract is terminated as a remedy for default pursuant to Section 16, Escrow Agent shall deliver the Deposit to the non-defaulting party as described in Section 16. If this Contract is terminated because of failure of a Condition to Closing set forth in Section 10, Escrow Agent shall return the Deposit to Purchaser as therein set forth. 4.5. Termination. If this transaction is terminated before the Closing, the Escrow Agent shall deliver the Deposit to Seller or to Purchaser pursuant to the terms of this Contract, or if Seller and Purchaser dispute the distribution of the Deposit, Escrow Agent may deliver the Deposit to the appropriate court in Palm Beach County, Florida, in an interpleader action and thereafter shall be relieved of any further obligation therefor. 4.6. Exculpation of Escrow Agent. Escrow Agent shall not be liable to either Party for damages or otherwise for any action taken in good faith; provided, however, that this release of liability shall not apply to willful acts of malfeasance or gross negligence by Escrow Agent. In any legal action involving Escrow Agent including any interpleader action initiated by Escrow Agent, all legal expenses reasonably incurred by Escrow Agent including all discovery and appeals expenses shall be borne by the Party against which final judgment is rendered or as otherwise ordered by the court. 5. CLOSING 5.l Closing Date. Purchaser agrees to complete the Closing and purchase the Property not later than one hundred eighty (180) days after the Effective Date. The Closing shall occur at the office of the Closing Agent (identified in Section 5.2 First Extension. Anything herein to the contrary notwithstanding, if the Conditions to Closing shall not have been 2 satisfied within one hundred eighty (180) days after the Effective Date due to circumstances beyond Purchaser's control, then Purchaser shall have the right to postpone the Closing for thirty (30) days, i.e., until two hundred ten (210) days after the Effective Date (the First Extension), upon notice to Seller given at least ten (10) days prior to commencement of the First Extension, together with the delivery: (a) to Escrow Agent of Purchaser's check for $12,500; and (b) to Seller of Purchaser's check for $12,500. In the event of closing, both of the aforesaid $12,500 payments shall be treated as additions to the Purchase Price and shall be shown as such on the Closing Statement, i.e., the Purchase Price shall be shown as increased to $l,895,000. Upon closing: (i) the $12,500 payment held by Escrow Agent shall be delivered to Seller and credited against the Purchase Price; and (ii) the $12,500 payment to Seller shall be acknowledged on the Closing Statement as previously received by Seller and credited against the Purchase Price. Accordingly, credits of 525,000 with regard to the First Extension shall be shown on the Closing Statement against the increased Purchase Price of $1,895,000. In the event that Seller shall default or be unable to timely deliver good title to the Property to Purchaser, both of the aforesaid 512,500 payments shall be refunded to Purchaser. The $12,500 payment to Seller described in (G) above is a non-refundable extension in the event Purchaser terminates this contract pursuant to Section 5.5(b). 5.3 Second Extension. Anything herein to the contrary notwithstanding, if the Conditions to Closing shall not have been satisfied within two hundred ten (210) days after the Effective Date due to circumstances beyond Purchaser's control, then Purchaser shall have the right to postpone the Closing for an additional thirty (30) days, i.e., until two hundred forty (240) days after the Effective Date (the Second Extension), upon notice to Seller given at least ten (10) days prior to commencement of the Second Extension, together with the delivery: (a) to Escrow Agent of Purchaser's check for $12,500; and (b) to Seller of Purchaser's check for $12,500. In the event of closing, both or the aforesaid S12,500 payments shall be treated as further additions to the Purchase Price and shall be shown as such on the Closing Statement, i.e., the Purchase Price shall be shown as further increased to $1,920,000. Upon closing: (i) the $12,500 payment held by Escrow Agent shall be delivered to Seller and credited against the Purchase Price; and (ii) the $12,500 payment to Seller shall be acknowledged on the Closing Statement as previously received by Seller and credited against the Purchase Price. Accordingly, credits of $25,000 with regard to the First Extension and a further S25,000 with regard to the Second Extension shall be shown on the Closing Statement against the further increased Purchase Price of $1,920,000. In the event that Seller shall default or be unable to timely deliver good title to the Property to Purchaser, both of the aforesaid $12,500 payments with regard to the First Extension and both of the 3 aforesaid $12,500 payments with regard to the Second Extension shall be refunded to Purchaser. The $12,500 payment to Seller described in (G) above is a non-refundable extension fee in the event Purchaser terminates this contract pursuant to Section 5.5(b). 5.4 [Deleted.] 5.5 Options If Conditions to Closing Not Satisfied by the End of the Second Extension. If the Conditions to Closing shall not have been satisfied within two hundred forty (240) days after the Effective Date due to circumstances beyond Purchaser's control, then Purchaser shall have the right to either: (a) waive the unsatisfied Conditions to Closing and complete the purchase by consummating the Closing. or (b) terminate this Contract, in which event the Deposit shall be returned to Purchaser. 6. FEASIBILITY PERIOD. Seller hereby grants Purchaser the right for a period of Sixty (60) days following the Effective Date (the Feasibility Period) to inspect and investigate the Property and the feasibility of Purchaser's proposed development according to the following terms. 6.1. Suitability for Use. Purchaser shall determine, in its sole discretion, whether the Property is suitable for development and construction of a community containing one hundred eighty-seven (187) Townhouse Units, together with related amenities, structures and improvements (the Project). Purchaser shall have the unilateral right to terminate this Contract at any time before expiration of the Feasibility Period by delivering notice thereof to Seller, whereupon Escrow Agent shall return the Deposit to Purchaser and neither Party shall have any further obligation hereunder, except for the obligations of Purchaser described in Sections 6.3 and 6.4 which shall survive termination of this Contract. 6.2. Available Plans and Permits. Within five (5) days after the Effective Date, Seller shall deliver to Purchaser (or 5eller shall authorize its engineering firm to deliver to Purchaser) all of the following items pertaining to the Property, to the extent they are within Seller's control, possession or access: (a) development plans, construction plans, land use plans and drainage plans; (b) governmental approvals and permits, surveys, topographical surveys, title policies, engineering data and soil tests and traffic studies; and (c) technical documents, plans and/or drawings. 6.3. Purchaser's Investigation of the Property. At all times prior to Closing, Purchaser shall have the right to enter upon the Property and to make all inspections and investigations of the condition of the Property which it may deem 4 necessary, including, but not limited to, soil borings, percolation tests, engineering and topographical studies, and the availability of utilities, all of which inspections shall be undertaken at Purchaser's expense. After completing its investigation of the Property, if Purchaser elects to terminate this Contract in accordance with this Section, Purchaser shall repair and restore any damage caused to the Property by its testing and investigation. If Purchaser elects to terminate this Contract in accordance with this Section, Purchaser shall concurrently deliver to Seller copies of all non-proprietary studies and reports obtained by Purchaser during the Feasibility Period. 6.4, Indemnification. Purchaser hereby agrees to indemnify Seller and hold Seller harmless from and against all claims, losses, expenses, demands, and liability, including, but not limited to, attorneys' fees and expenses incurred prior to trial, at trial and on appeal, for nonpayment for services rendered to Purchaser, for construction liens, or for damage to persons or property arising out of Purchaser's investigation of or entry onto the Property. This indemnification and agreement to hold harmless shall survive the termination or Closing of this Contract. 7. TITLE. 7.1. Title to be Conveyed. At Closing, Seller shall convey to Purchaser by general warranty deed, complying with the requirements of the State of Florida and Title Company, good and marketable title in fee simple to the Property, free and clear of any and all liens, encumbrances, conditions, easements, assessments, restrictions and other conditions, except for the following Permitted Exceptions: (a) general real estate taxes and special assessments for the year of Closing and subsequent years not yet due and payable; (b) covenants, conditions, easements, dedications and rights-of-way shown on the Survey (defined in Section 7.3), to which Purchaser fails to object or agrees to accept; and (c) matters of record to which Purchaser fails to object or agrees to accept pursuant to Section 7.2. 7.2. Title Review. 7.2.1. Title Commitment. Within thirty (30) days after the Effective Date, Purchaser shall, at Seller's expense (provided Purchaser does not terminate this Contract during the Feasibility Period), obtain a title search, together with complete legible copies of all instruments identified as conditions or exceptions to title, and then shall have Title Company issue a Title Commitment to Purchaser for the Property. 5 7.2.2. Purchaser's Review. Purchaser shall have thirty (30) days after receipt of the Title Commitment and complete copies of all exceptions identified therein, in which to notify Seller of any objections Purchaser has to the condition of title. Purchaser shall have the right to object to any condition that has an adverse effect on: (a) construction, development of Subdivi1ion Improvements (herein defined); (b) sale or occupancy of residential dwellings of the type intended by Purchaser; (c) the cost of construction or ownership thereof; or (d) the cost or ability to obtain or market mortgages on completed dwellings. If Purchaser fails to notify Seller in writing of objections to title within the 30-day review period, title shall be deemed accepted subject to the conditions set forth in the Title Commitment. 7.2.3. Seller's Response. Within ten (10) days after receipt of Purchaser's title objections, Seller shall notify Purchaser if Seller agrees to attempt to cure such objections to Purchaser's satisfaction. If Seller agrees to attempt to cure such objections, Seller shall have a reasonable period of time, not exceeding ninety (90) days, in which to do so. If Seller (i) fails to respond to Purchaser's title objections within ten (10) days after receipt, or (ii) declines to attempt to cure the title objections, or (iii) agrees to attempt to cure the title objections but fails to cure same within ninety (90) days, Purchaser shall notify Seller within ten (10) days after such event of Purchaser's election to either: (a) waive the title objection(s) and proceed with Closing; or (b) attempt to cure the title objection(s) at Purchaser's expense. If Purchaser elects to attempt to cure the title objection(s) pursuant to clause (b), Purchaser shall have a period of at least sixty (60) days from the date of notice to Seller in which to do so; provided, however, that Purchaser and Seller may mutually agree upon a longer period for Purchaser to complete its correction of the title objection(s). If, at the end of the period allowed for Purchaser to cure the title objection(s), Purchaser has been unable to do so, Purchaser shall have the right to waive such uncured title objection(s) and proceed with the Closing. If Purchaser fails to waive its title objection (5) within the 10-day period set forth in clause (a), or after it has attempted to cure same pursuant to clause (b), Purchaser shall have the right to terminate this Contract and Escrow Agent shall return the Deposit to Purchaser. 7.2.4. Seller's Obligations. Seller covenants and agrees that no later than the Closing Date, it will discharge all liens against the Property securing any obligation of Seller or Seller's predecessors in title, or any claim filed by contractors, suppliers or workers for work performed or materials supplied by such claimants. 6 7.2.5. Update. Seller shall cause Title Company to issue an updated Title Commitment (the Update) for the Property. If the Update contains any new or different conditions of title than the original Title Commitment, and such conditions have not been approved by Purchaser in accordance with this Contract, Purchaser shall have the right to object to such new or different conditions prior to Closing. If Purchaser so objects, the Closing shall be postponed, and Seller shall have ten (10) days after receipt of Purchaser's new title objections in which to notify Purchaser if Seller agrees to attempt to cure the objections to Purchaser's satisfaction. All other rights of the Parties concerning title shall be governed by Subsection 7 2.3. 7.2.6. New Instruments. Seller shall not record new instruments affecting the Property without Purchaser's prior written consent. 7.3. Survey. Within three (3) days after the Effective Date, Seller shall deliver to Purchaser the existing boundary survey or boundary sketch of the Property prepared by a Florida licensed surveyor. Upon receipt of a copy of the Title Commitment, Purchaser shall obtain an update of the existing survey or sketch showing all Schedule B-2 exceptions affecting the Property, certified to Purchaser and Title Company (the Survey), which shall depict all boundaries, easements, rights-of-way, improvements, encroachments and other conditions apparent on the Property or revealed by the Title Commitment, and which shall delineate the limits of any wetlands or environmentally restricted areas. If the Survey reveals defects, encroachments, disputes or other matters that are not Permitted Exceptions, Purchaser shall have the right to object to such matters within the feasibility Period and such matters shall be governed by the provisions of 5ection 7.2 concerning title objections. The Survey may be updated prior to Closing, and Purchaser shall have the right to object to any new or different conditions revealed by such further update. 7.4. Survey Expense. Purchaser shall bear the expense of the Survey updates. 7.5. Owner's Title Insurance. Purchaser shall not be obligated to proceed to Closing unless the Title Company is prepared to issue an Owner's Title Insurance Policy in the amount of the purchase price, insuring the gap, excepting only the Permitted exceptions and deleting the standard exceptions for: (a) rights of parties in possession; (b) errors or defects not revealed by the Survey; (c) taxes or assessments for prior years due to a change in land use or reclassification from agricultural or open space to residential use; (d) construction, mechanics' 7 and materialmen's liens which have not been filed of record but relate to work performed for Seller before the Closing; and (e) exclusion for rights or claims of creditors under federal bankruptcy or state insolvency laws. Purchaser shall pay the title insurance premium. 8. DEVELOPMENT APPROVAL PROCESS. 8.1. Land Use and Zoning. If the existing land use and 20ning applicable to the Property does not permit the development and construction of the Project, Purchaser shall have the right, at its expense, to seek re-zoning of the Property in Seller's name, to permit the use, development, and construction of the Project aforesaid (the Rezoning Approval) Seller hereby agrees to give Purchaser its full and timely cooperation, and, if required by the Governmental Authorities, upon reasonable notice, to: (i) join in execution of the re-zoning application; and (ii) attend any governmental meetings or hearings required by the Governmental Authorities and requested by Purchaser with respect to facilitating the re-zoning. Purchaser agrees: (a) to begin preparing the application for any necessary Rezoning Approval as soon as Purchaser can obtain verifiable engineering data for such application; (b) to pursue the Rezoning Approval diligently; and (c) not to unreasonably delay such application for any reason within Purchaser's control. 8.2 Preliminary Site Plan. Purchaser, at its expense, shall prepare a plan layout for the Property (the Preliminary Site Plan) depicting the Project, and shall submit such Preliminary Site Plan to the Governmental Authorities for approval with respect to facilitating the re-zoning. 8.3. Site Plan. Upon expiration of the Feasibility Period, and provided Purchaser has not terminated this Contract, Purchaser, at Purchaser's expense, shall engage a licensed professional engineer as the Project Engineer to prepare the technical design documents and engineering plans for the construction and installation of the Subdivision Improvements, and prepare the plan layout for the Property consistent with the Preliminary Site Plan depicting 187 townhouse Lots with associated streets, parking areas, driveways, drainage structures, ponds and easements (the Site Plan), and submit such Site Plan to the Governmental Authorities for approval. Said approval of the Site Plan shall be a Condition to Closing. 8.4. Development Permits. 8.4.1 Application. Purchaser and Seller, jointly and promptly, shall apply for, and diligently seek, approval of the Site Plan and for all Development Permits (defined in Section 8 (2) necessary for construction or installation of the Subdivision Improvements, including the desired yield of one hundred eighty-seven (187) townhouse units. Purchaser shall be responsible for any and all expenses attributable to the Development Permits. 8.4.2 Yield Under 187 Units. If the Governmental Authorities do not approve Development Permits for one hundred eighty-seven (187) townhouse units, but do approve Development Permits for at least one hundred seventy-five (175) townhouse units, then the Purchase Price under this Contract shall be reduced by the sum of Ten Thousand Dollars ($10,000) for each townhouse unit approved below the desired yield of one hundred eighty-seven (187). For example, if the Governmental Authorities approve Development Permits for only one hundred eighty-two (182) townhouse units, then the Purchase Price shall be reduced by Fifty Thousand Dollars ($50,000). 8.4.3 Yield Under 175 Units. If the Governmental Authorities do not approve Development Permits for at least one hundred seventy-five (175) units, then Purchaser shall have the right to either: (a) complete the purchase by consummating the Closing at a Purchase Price of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000); or (b) terminate this Contract, in which event the Deposit shall be returned to Purchaser. 8.4.4 Off-Site Improvements. As of the Effective Date, Seller and Purchaser expect that no approval of the Site Plan or any Development Permit shall impose any new or additional requirements for Off-Site improvements (defined in Section 22). Notwithstanding anything contained in this Contract to the contrary, if the Governmental Authorities do condition approval of the Site Plan or any Development Permit on new or additional Off-Site improvements the cost of which shall exceed Fifty Thousand Dollars ($50,000) in the aggregate, then Purchaser shall have the right to deem the Site Plan or such Development Permit not approved for the purposes of this Contract, unless Seller shall agree to pay by credit at the Closing the amount of all such new or additional Off-Site improvements exceeding S50,000. 8.5 Mitigation. By way of inclusion and not limitation, Seller hereby expressly warrants and represents to purchaser that: (a) except as set forth in this Section 8.5, all environmental mitigation for the Property has been achieved and completed at Seller's sole cost and expense; and (b) all approvals required from the Governmental Authorities for such environmental mitigation (with the exception of any approval required from the Village of Royal Palm Beach) already have been obtained, are available for Purchaser's inspection, and shall be transferred to Purchaser not later than Closing, at no expense to Purchaser. Notwithstanding anything contained herein to the 9 contrary: (i) Purchaser acknowledges that it will be required to obtain a modification of the existing Army Corps of Engineers permit based upon Purchaser's submission of its proposed site plan for the Property, and (ii) Seller agrees that additional filing fees, if any, charged by the Army Corps of Engineers and additional costs of mitigation, if any, mandated by the Army Corps of Engineers shall be paid by Seller. 8.6. Concurrency. By way of inclusion and not limitation, Seller hereby expressly warrants and represents to Purchaser that Seller already has received one hundred eighty-seven (187) units of traffic concurrency for the Property, all of which shall be transferred to Purchaser not later than Closing, at no expense to Purchaser. Purchaser shall apply for a certificate from the Governmental Authorities assuring that the Property is entitled to the issuance of building permits for one hundred eighty-seven (187) Townhouse Units without the necessity of Purchaser constructing any Off-Site improvements or paying any additional expenses or fees (except customary impact fees and fees for the issuance of building permits applicable generally to all residential construction). 8.7. Availability of Utilities. Within the Feasibility Period, Purchaser shall determine: (a) if it will be able to obtain water, sewer, electricity, natural gas, cable television and telephone services to the Property in sufficient size and capacity to provide service to the one hundred eighty-seven (187) townhouses intended for the Property; and (b) the cost required to bring such utilities to the Property. 8.8. Plat Approval. The Plat of the Property shall have been approved, in form satisfactory to Purchaser, prior to Closing, as a condition precedent to Closing and shall be ready for recording upon payment of the fees or charges imposed by the Governmental Authorities for recording. 8.9. Transfer and Assignment of Owner's Rights. At Closing, Seller shall transfer and assign to Purchaser all right, title and interest in and to, any and all permits, plans, applications, approvals, certifications, engineering, drawings, designs, calculations and other information and/or documents relating to the Property or its development, and shall execute and deliver to Purchaser such evidence of transfer as shall be required by Purchaser. 8.10 County Approvals Not Required. Seller hereby represents to Purchaser that ne1ther the Site Plan nor the Plat for the Project requires the approval of any Governmental Authorities at the Palm Beach County level ("County Approvals"). Purchaser shall endeavor to obtain satisfactory written confirmation that no County Approvals are required. If Purchaser 10 either (a) shall be unable to obtain such written confirmation, or (b) shall determine that any County Approvals are necessary for the Site Plan and/or the Plat, then Purchaser shall give notice to Seller of such requirement(s). In such event, the Closing Date automatically shall be postponed to occur not later than thirty (30) days after Purchaser's receipt of final County Approvals. Anything herein to the contrary notwithstanding, the Closing shall be not later than two hundred seventy (270) days after the Effective Date. 9. REPRESENTATIONS AND WARRANTIES. 9.1. Seller's Representations and Warranties. Seller hereby represents and warrants to Purchaser as of the Effective Date and as of the Closing Date as follows: 9.1.1. Authority. The execution and delivery of this Contract by Seller and the consummation by Seller of the transaction contemplated by this Contract are within Seller's capacity and all requisite action has been taken to make this Contract valid and binding on Seller in accordance with its terms. 9.1.2. No Leqal Bar. The execution by Seller of this Contract and the consummation by Seller of the transaction hereby contemplated does not, and on the Closing Date will not (a) result in a breach of or default under any indenture, agreement, instrument or obligation to which Seller is a party and which affects all or any portion of the Property, or (b) to Seller's knowledge, constitute a violation of any governmental requirement. 9.1.3. No Default. Seller is not in default under any indenture, mortgage, deed of trust, loan agreement, or other agreement to which Seller is a party and which affects any portion of the Property. 9.1.4. Title. Seller is the owner of marketable fee simple title to the Property, subject only to the Permitted Exceptions (and encumbrances of record which will be discharged at Closing), and no part of the Property has ever been occupied by Seller as a residence or homestead. Seller has no knowledge of any circumstance or event that may give rise to an attempt by any Governmental Authority to seize the Property under any civil or criminal law authorizing seizure or forfeiture as a penalty for violation. 9.1.5. Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of Seller, threatened against the Property, including without limitation, condemnation or eminent domain claims, actions or proceedings. 11 9.1.6. No Hazardous Material. Seller has not received any notice and has no knowledge that the Property or the real property adjoining and/or contiguous to the Property has ever been used by previous owners and/or operators, and Seller has not used the Property or the real property adjoining and/or contiguous to the Property to generate, manufacture, refine, transport, treat, store, handle or dispose of Hazardous Material, as defined herein, whether used in construction or stored on the Property, and Seller has not received a summons, citation, directive, letter or other communication, written or oral, from any agency or department of the State of Florida or the U.S. Government concerning any intentional or unintentional action or omission which resulted in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Material on the Property or on the real property adjoining and/or contiguous to the Property. 9.1.7. Parties in Possession. There are no parties in possession of any portion of the Property or improvements as lessees, tenants or trespassers. 9.1.8. No Violations of Law. Seller has no knowledge of any violation of local, state or federal laws, ordinances, rules or regulations applicable to the Property. 9.1.9. Site Conditions. Seller has no knowledge of any condition of the Property that will, or may, interfere with Purchaser's use of the Lots for construction of townhouses, or will, or may, materially increase the expense of construction of townhouses (exclusive of the need for fill, if any), except as depicted on the Survey or revealed in the Title Commitment. 9.1.10. No Unrecorded Commitments. The Property is subject to no commitments for contributions or assessments of money or land or use agreements, easements or restrictions except as set forth in the official public records of real property. 9.2. Duty to Disclose. Seller shall disclose to Purchaser in writing any conditions or events that arise or occur subsequent to the Effective Date that become known to Seller and which contradict or modify in any material respect any representation of Seller set forth herein or otherwise have a material effect upon the Property or its use. 9.3. Covenant Against Waste. Seller shall not knowingly permit trash or other material to be deposited upon the Property and shall deliver it to Purchaser in substantially the same condition in which the Property exists as of the Effective Date of this Contract. Seller shall not remove trees, excavate 12 or remove dirt or fill material from the property or do any other act that would increase the difficulty or expense of constructing or installing the Subdivision Improvements. 9.4. Purchaser's Representations and Warranties. Purchaser hereby represents and warrants to Seller as of the Effective Date and as of Closing Date as follows: 9.4.1. Authority. The execution and delivery of this Contract by Purchaser and the consummation by Purchaser of the transaction contemplated by this Contract are within Purchaser's capacity and all requisite action has been taken to make this Contract valid and binding on Purchaser in accordance with its terms. 9.4.2. No Legal Bar. The execution by Purchaser of this Contract and the consummation by Purchaser of the transaction hereby contemplated does not, and on the Closing Date will not (a) result in a breach of or default under any indenture, agreement, instrument or obligation to which Purchaser is a party and which affects all or any portion of the Property, or (b) to Purchaser's knowledge, constitute a violation of any governmental requirement. 9.5. Survival. Seller's representations and warranties contained in this Section 9 shall survive Closing and shall not be merged therein for a period of one (1) year. Title warranties contained in the deed of conveyance shall not be limited by this Section. 10. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. Purchaser shall not be obligated to close unless each of the following conditions (the Conditions to Closing) are either fulfilled or waived, in writing, by Purchaser. 10.1. Compliance with Covenants. Seller shall have performed all covenants, agreements and obligations and complied with all conditions required by this Contract to be performed or complied with by Seller prior to the Closing Date, and Seller's representations and warranties shall be true and correct in all material respects. 10.2. Status of Title. The status of title to the Property shall be as required by this Contract. 10.3. Development Approvals. The approvals required under this Contract for land use and zoning (Section 8.1), site plan (Section 8.3), concurrency (Section 8.6) and plat (Section 8.8) shall have been satisfied and fulfilled. The attachment or imposition to any of the approvals required of Sections 8.1, 8.3, 13 8.6, and 8.8, or conditions objectionable to Purchaser shall prevent the fulfillment of the Conditions to Closing by satisfaction, nor shall any approval(s) be deemed final until they become non-appealable. 10.4. Moratorium. There will be no general moratorium imposed by any Governmental Authority or utility supplier with respect to the issuance of building permits affecting the Property or sanitary sewer, water or electricity connections with respect to the Property. If any such moratorium exists, the Closing shall he delayed until the moratorium has been lifted or for one hundred eighty (180) days, whichever is sooner. If the moratorium has not been lifted within one hundred eighty (180) days and Purchaser chooses not to waive this condition, either Party shall have the right to terminate this Contract by notice, whereupon Escrow Agent shall refund the Deposit to Purchaser and neither Party shall have any further obligation hereunder, except for Purchaser's obligations under Sections 6.3 and 6.4. 10.5. Satisfaction of Conditions. As more particularly set forth in Section 5 of this Contract, if the Conditions to Closing shall not have been satisfied, then Purchaser shall have the right to elect to either: (a) waive the unsatisfied Conditions to Closing and complete the purchase by closing; or (b) terminate this Contract, in which event the Deposit shall be returned to Purchaser. 11. CLOSING DOCUMENTS. 11.1. Documents. At Closing, Seller shall deliver the following documents ("Seller's Closing Documents") to Purchaser: 11.1.1. Deed. A General Warranty Deed duly executed by Seller so as to convey to Purchaser good and marketable fee simple title to the Property free and clear of all liens, encumbrances and other conditions of title other than the Permitted Exceptions. 11.1.2. Construction Lien Affidavit. An affidavit from Seller attesting that: (a) no individual, entity or Governmental Authority has any claim against the Property under the applicable construction lien law; (b) no individual, entity or Governmental Authority is either in possession of the Property or has a possessory interest or claim in the Property; and (c) no improvements to the Property have been made for which payment has not been made. Seller shall indemnify Purchaser against any claims asserted by contractors or suppliers for work performed or materials supplied for the Property which were not authorized in writing by Purchaser. 14 11.1.3. Seller's Affidavit. An affidavit from Seller in form and content reasonably satisfactory to the Title Company to enable the Title Company to delete exceptions to the Title Commitment for matters appearing between the effective date of the Title Commitment and the effective date of the Title Policy. ll.1.4. FIRPTA. A Non-Foreign Transferor Affidavit in accordance with Section 1445 of the Internal Revenue Code. ll.l.5. Closing Statement. A Closing Statement setting forth the purchase price, Deposit and all credits, adjustments and prorations between Purchaser and Seller, and the net proceeds due Seller. 11.1.6. Corrective Documents. Documentation required to clear title to the Property of all unpermitted liens, encumbrances and exceptions, if any, and such other documents duly executed in recordable form as are contemplated herein or reasonably required from Seller or Title Company to consummate the Closing, and delete all standard title exceptions. 11.1.7. Assignments. Instruments reasonably required to effect the transfer of Seller's rights, title and interest in any development related material as described in Section 8. 11.2. Pre-Closing Delivery. Copies of the Closing Documents shall be delivered to Purchaser's Counsel for review at least five (5) days prior to the Closing Date. 12. CLOSING PROCEDURE. The Closing shall proceed in the following manner: 12.1. Transfer of Funds. Purchaser shall fund the purchase price to the Closing Agent by wire transfer. 12.2. Delivery of Documents. Seller shall deliver Seller's Closing Documents to Closing Agent. 12.3 Disbursement of Funds and Documents. If Title Company will endorse the Title Commitment to delete the exception for matters appearing between the effective date of the Title Commitment and the effective date of the Owner's Title Policy, then Closing Agent shall disburse the sale proceeds to Seller, and the Seller's Closing Documents to Purchaser and Closing Agent shall immediately record the Deed in the Public Records. If Title Company will not endorse the Title Commitment to insure the gap, Closing Agent shall record the Deed when Closing Agent is holding the purchase price in cleared funds. After the Deed is 15 recorded, Title Company shall be requested to issue the Owner's Title Policy without any change from the effective date of the Title Commitment. Closing Agent shall disburse the purchase price to Seller, and the Seller's Closing Documents to Purchaser upon the issuance of the Owner's Title Policy. 13. PRORATIONS AND CLOSING COSTS. 13.1. Prorations. The following items shall be prorated and adjusted between Seller and Purchaser as of the midnight preceding Closing, except as otherwise specified: 13.1.1. Taxes. Real estate taxes shall be prorated on the Closing Date based on amounts for the current year with maximum discount taken, except that if tax amounts for the current year are not available, prorations shall be made based upon the taxes for the preceding year, with maximum discount taken. 13.1.2. Pending and Certified Liens. Certified municipal liens and pending municipal liens for which work has been substantially completed shall be paid by Seller; provided, however, that Purchaser shall be exclusively responsible for payment of any liens or assessments arising from its use of the Property. 13.l.3. Other Items. All other items required by any other provision of this Contract to be prorated or adjusted. 13.2. Re-Proration of Taxes. If subsequent to Closing, taxes for the year of Closing are determined to be higher or lower than as prorated, a re-proration and adjustment will be made at the request of Purchaser or Seller upon presentation of actual tax bills and any payment required as a result of the re-proration shall be made within 30 days following demand therefor. All other prorations and adjustments shall be final. 13.3. Seller's Closing Costs. Seller shall pay for the following items at the time of Closing: (a) Certified and pending municipal special assessment liens for which the work has been substantially completed pursuant to Subsection 13.1.2; (b) Title Curative Instruments, if any; and (c) State and local transfer taxes and documentary stamps on the Deed. 16 13.4 Purchaser's Closing Costs. Purchaser shall pay for the following items: (a) Recording of the Deed; and (b) Owner's Title Insurance Premium. 14. POSSESSION. Purchaser shall be granted full possession o(pound) the Property at Closing. 15. CONDEMNATION. In the event of the institution of any proceedings by any Governmental Authority which shall relate to the taking or proposed taking of any portion of the Property by eminent domain prior to Closing, or in the event of the taking of any portion of the Property by eminent domain prior to Closing, Seller shall promptly notify Purchaser and Purchaser shall thereafter have the right and option to terminate this Contract by giving Seller notice of Purchaser's election to terminate within ten (10) days after receipt by Purchaser of the notice from Seller. Seller hereby agrees to furnish Purchaser with notice of a proposed condemnation within two (2) days after Seller's receipt of such notification. Should Purchaser terminate this Contract, the Deposit shall immediately be returned to Purchaser and thereafter the Parties shall be released from their respective obligations and liabilities hereunder except as set forth in Sections 6.3 and 6.4. Should Purchaser elect not to terminate, the Parties shall proceed to Closing and Seller shall assign and convey all of its right, title and interest in all awards in connection with such taking to Purchaser. If Purchaser fails to notify Seller of its election to purchase the Property within the 10-day period, Purchaser will be deemed to have terminated this Contract and its Deposit shall be refunded. 16. DEFAULT. 16.1. Purchaser's Default. In the event that this transaction fails to close due to a wrongful refusal or default on the part of Purchaser, the deposit shall be delivered by Escrow Agent to Seller as agreed liquidated damages and thereafter, neither Purchaser nor Seller shall have any further obligation under this Contract except as set forth in Sections 6.3 and 6.4; provided, however, that Purchaser shall also be responsible for the removal of any liens asserted against the Property by persons claiming by, through or under Purchaser, but not otherwise. Purchaser and Seller acknowledge that if Purchaser defaults, Seller will suffer damages in an amount which cannot be ascertained with reasonable certainty on the Effective Date and that the amount of the Deposit to be paid to Seller most closely approximates the amount necessary to compensate Seller in the event of such default. Purchaser and Seller agree that this is a bona fide liquidated damages provision and not a penalty or 17 forfeiture provision. Seller waives all other remedies including the right to recover damages in excess of the Deposit and the right to enforce specific performance. 16.2. Seller's Default. In the event that Seller shall fail to fully and timely perform any of its obligations hereunder, then Purchaser may, at its option: (a) declare Seller's default under this Contract by notice delivered to Seller, in which event the Deposit shall be refunded to Purchaser and Purchaser may recover all damages occasioned by such default up to the total out-of-pocket expenses paid to third parties by Purchaser and incurred pursuant to this Contract through the date of default, including attorneys' fees and other expenses of recovery, but in no event to exceed One Hundred Thousand Dollars ($100,000); (b) enforce specific performance of this Contract; or (c) grant such extensions of time as Purchaser deems proper under the circumstances without waiving any other remedy. 16.3. Notice. Prior to declaring a default and exercising the remedies described herein, the non-defaulting Party shall issue notice of default to the defaulting Party describing the event or condition of default in sufficient detail to enable a reasonable person to determine the action necessary to cure the default. The defaulting Party shall have thirty (30) days from delivery of the notice in which to cure the default. If the default has not been cured within the 30-day period, the non-defaulting Party may exercise the remedies described above. 17. REAL ESTATE COMMISSION. Seller has entered into a separate agreement with RTL Realty, Inc. and National Realty Investment Group, Inc., both licensed real estate brokers, for payment of real estate commissions upon Closing. Seller shall be exclusively responsible for payment of such real estate commissions due RTL Realty, Inc. and National Realty Investment Group, Inc. and Purchaser shall have no liability whatsoever for such obligations. Purchaser has engaged the services of Centex Realty, Inc. and Purchaser shall be exclusively responsible for payment of the real estate commission due Centex Realty, Inc. and Seller shall have no liability whatsoever for such obligation. Apart from the agreements to pay commissions to the brokers set forth in this paragraph; Seller and Purchaser each represent and warrant to the other that neither party has engaged the services of any other real estate agent or broker with respect to this transaction, and Seller and Purchaser agree to indemnify and hold each other harmless from any and all claims for any brokerage fees or commissions asserted by brokers, agents, consultants or finders claiming by, through or under the indemnifying party. The provisions of this Section shall survive the Closing or termination of this Contract. 18 18. IMPACT FEES. Purchaser acknowledges that development of the Property will require payment of impact fees to the Governmental Authorities, and such impact fees have not been paid and are not included as part of the Property. Payment of such fees shall be Purchaser's responsibility after Closing. The requirement of the payment of impact fees shall not be a condition of Closing. To the extent Seller has paid impact fees with respect to the Property (such as traffic, water/sewer, roads, education/schools, police, fire, libraries, parks) to any of the Governmental Authorities, Seller, at Closing shall assign to Purchaser and Purchaser shall receive credit for the impact fees paid attributable to the Property. 19. NOTICES. Any notice, request, demand, instruction or other communication to be given to either party hereunder, except where required to be delivered at the Closing, shall be in writing and shall be hand-delivered or sent by Federal Express or a comparable overnight mail service, or mailed by U.S. registered or certified mail, return receipt requested, postage prepaid, to Purchaser, Seller, Purchaser's Counsel, Seller's Counsel and Escrow Agent, at their respective addresses set forth below. Notice shall be deemed to have been given upon receipt or refusal of delivery of said notice. The addressees and addresses for the purpose of this Section may be changed by giving notice. Unless and until such written notice is received, the last addressee and address stated herein shall be deemed to continue in effect for all purposes hereunder. If to Seller: ROYAL PALM BEACH COLONY LIMITED PARTNERSHIP a Delaware Limited Partnership c/o Randy E. Rieger 3225 Aviation Avenue, Suite 700 Coconut Grove, FL 33133; With a copy to: MARTIN SHAPIRO, ESQ. 767 Arthur Godfrey Road Miami Beach, FL 33140. If to Purchaser: CENTEX HOMES 8198 Jog Road, Suite 200 Boynton Beach, Florida 33437 Attn: Trent Bass - Division President; With a copy to: Kenneth Y. Gordon, Esq. Centex Homes 8198 Jog Road, Suite 200 Boynton Beach, Florida 33437. 19 20. ASSIGNMENT. The terms and conditions of this Contract are hereby made binding on the successors and assigns of the Parties. Except as herein set forth, neither Party may assign its interest in this Contract without the prior written consent of the other Party. Any attempt to assign this Contract without prior written consent of the other Party will be of no effect and will be an event of default hereunder. Notwithstanding the foregoing, Purchaser shall have the right to enter into agreements with other potential users of the Property which agreements may be in the form of partnership or joint venture agreements, contracts for sale, partial assignments or other forms of participation. Seller agrees to cooperate with Purchaser by allowing Purchaser the freedom to structure such deals without being in violation of this Contract provided that Purchaser shall remain exclusively liable to Seller for the performance of this Contract, and no such agreement shall affect Seller's rights or Purchaser's obligations hereunder; and Purchaser shall have the right to assign this Contract without Seller's consent to a wholly-owned affiliate or subsidiary of Purchaser or to any other entity in which Purchaser is a principal with at least a fifty percent (50%) ownership interest. Purchaser shall notify Seller of any such agreements prior to the Closing, and Seller will accommodate such agreements by delivering separate deeds and title insurance policies, if reasonably requested, provided that Purchaser shall bear all expenses in excess of those set forth in Section 13 hereof. 21. MISCELLANEOUS. 21.1. Counterparts. This Contract may be executed any number of counterparts, any one and all of which shall constitute the Contract of the Parties and each of which shall be deemed an original. 21.2. Section and Paragraph Headings. The section and paragraph headings herein contained are for the purposes of identification only and shall not be considered in construing this Contract. 21.3. Amendment. No modification or amendment of this Contract shall be of any force or effect unless in writing executed by both Seller and Purchaser. 21 4. Attorneys' Fees. If any Party obtains a judgment against any other party by reason of breach of this Contract, attorneys' fees and costs shall be included in such judgment. 21.5. Governing Law. This Contract shall be interpreted in accordance with the laws of the State of Florida, both substantive and remedial. 20 21.6. Entire Contract. This Contract sets forth the entire agreement between Seller and Purchaser relating to the Property and all subject matter herein and supersedes all prior and contemporaneous negotiations, understandings and agreements, written or oral, between the Parties. 21.7. Time of the Essence. Time is of the essence in the performance of all obligations by Purchaser and Seller under this Contract. 21.8. Computation of Time. Any reference herein to time periods of less than six (6) days shall exclude Saturdays, Sundays and legal holidays in the computation thereof. Any time period provided for in this Contract which ends on a Saturday, Sunday or legal holiday shall extend to 6 00 p.m. on the next Full Business Day. 21.9. Successors and Assigns. This Contract shall inure to the benefit of and be binding upon the permitted successors and assigns of the Parties. 21.10. Acceptance Date. This Contract shall be null and void and of no further force and effect unless a copy of same executed by Seller is delivered to Purchaser three (3) days from delivery to Seller. 21.11. Construction of Contract. All of the Parties to this Contract have participated freely in the negotiation and preparation hereof; accordingly, this Contract shall not be more strictly construed against any one of the Parties. 21.12. Gender. As used in this Contract, the masculine shall include the feminine and neuter the singular shall include the plural and the plural shall include the singular as the context may require. 21.13. Exclusivity. Centex Corporation, a Nevada corporation, is not a party to this Contract and shall have no direct or derivative liability for any obligation of Purchaser under this Contract. 21.14. Relationship of the Parties. Nothing herein contained shall be deemed to (l) create a relationship between Seller and Purchaser as other than buyer and seller; (2) authorize either Party to bind the other in any manner whatever; or (3) create a fiduciary duty on the part or either Party to the other. 22. DEFINITIONS. The following terms when used in this Real Estate Sale Contract shall have the following meanings: 21 22.1. Business Day. Any day, except Saturdays, that the banks in Palm Beach County, Florida are open for business. 22.2. Closing. The act of conveyance of the Property to Purchaser concurrently with the delivery of the purchase price to Seller. 22.3. Closing Agent. Metropolitan Title and Guaranty Company, 8198 Jog Road, Suite 100, Boynton Beach, Florida 33437. 22.4. Closing Date. The date on which Property is conveyed to Purchaser. 22.5. Contract. This Real Estate Sale Contract. 22.6. Development Permits. All approvals or permits that must be officially issued or rendered by any Governmental Authority before Purchaser can lawfully begin construction of the Subdivision Improvements, including without limitation, all approvals or permits required by the U.S. Environmental Protection Agency ("EPA"), U.S. Army Corps of Engineers ("Corps"), Florida Department of Environmental Protection ("DEP"), South Florida Water Management District ("SFWMD"), Palm Beach County, and the Village of Royal Palm Beach. 22.7. Effective Date. The date the last Party (excluding Escrow Agent) receives a fully executed copy of this Contract. 22.8. Escrow Agent. Martin Shapiro, Esq., 767 Arthur Godfrey Road, Miami Beach, Florida 33140. 22.9. Feasibility Period. The period of time beginning on the Effective Date and ending sixty (60) days thereafter. 22.10. Governmental Authority. Any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency, or other instrumentality of any of them, having jurisdiction over the Property, or any portion thereof, and whose approval is necessary for the satisfaction of any conditions contained in this Contract. 22.11. Hazardous Material. Any flammable or explosive materials, petroleum or petroleum products, natural gas or synthetic gas usable for fuel, radioactive materials, hazardous wastes or substances or toxic wastes or substances, including without limitation, any substances now or hereafter defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "toxic materials" or "toxic substances" under any applicable governmental requirements. 22 22.12. Lot. Each residential building site depicted on the Preliminary Subdivision Plan of the Property. 22.13. Off-Site. Any condition or matter associated with development of the Project but which is located on land outside the boundaries of the relevant plat or the Preliminary Subdivision Plan. 22.14. Preliminary Site Plan. The engineering drawings, plans and specifications for the Lots in the form receiving final approval by the Governmental Authorities. 22.15. Property. The real property described in Exhibit A, all of Seller's rights under the covenants, conditions, restrictions and easements encumbering or benefitting such real property, and any improvements thereon, and any entitlements to utility capacities, storm water discharge, environmental mitigation credits and/or traffic concurrency units associated with ownership of such real property. 22.16. Purchaser's Counsel. Kenneth Y. Gordon, Centex Homes, 8198 Jog Road, Suite 200, Boynton Beach, Florida 33407. 22.17. Seller's Counsel. Martin Shapiro, Esq., 767 Arthur Godfrey Road, Miami Beach, Florida 33140. 22.18. Subdivision Improvements. The streets, storm water management structures, storm sewers, water lines, sanitary sewers, electric lines and other improvements necessary for construction and occupancy of townhouses on the Lots. 22.19. Title Commitment. An ALTA Title Insurance Commitment from a Title Company acceptable to Purchaser, agreeing to issue the Title Policy to Purchaser upon satisfaction of the Purchaser's obligations pursuant to this Contract. 22.20. Title Company. Metropolitan Title and Guaranty Company, 8198 Jog Road, Suite 100, Boynton Beach, Florida 33437. 22.21. Title Policy. An ALTA Owners Title Insurance Policy in the amount of the purchase price, insuring Purchaser's title to the land and easements described in this Contract, subject only to the Permitted Exceptions as herein defined. IN WITNESS WHEREOF, the Parties have executed this Contract as of the date last written below. 23 WITNESSES: Executed by Seller on October 22, 1999 /s/??????????? ROYAL PALM BEACH COLONY - --------------- LIMITED PARTNERSHIP, a Delaware Limited Partnership /s/Rebecca Santamaria By: STEIN MANAGEMENT COMPANY, INC. - --------------------- as Managing General Partner By /s/Randy E. Reiger ------------------ Randy E. Reiger Authorized Agent WITNESSES: Executed by Purchaser on October 20, 1999 /s/Kathleen D. Breland CENTEX HOMES - ---------------------- a Nevada General Partnership /s/Karl Reid Hotaling By: CENTEX REAL ESTATE CORPORATION, - --------------------- a Nevada corporation, Managing General Partner By: /s/Trent Bass ------------- Trent Bass, Division President 24 ESCROW AGENT'S RECEIPT FOR DEPOSIT MARTIN SHAPIRO, ESQ., Escrow Agent, acknowledges receipt from Purchaser of the Earnest Money Deposit in the sum of $50,000, to be held and disbursed strictly in accordance with the term of this Contract. DATED: October __, 1999. __________________________________ MARTIN SHAPIRO, ESQ., Escrow Agent 25 EXHIBIT A --------- LEGAL DESCRIPTION A parcel of land being a portion of Sections 34-27 -- T435, R41E Palm Beach County, Fla. 26 EX-27 3
5 0000764606 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP YEAR SEP-30-1999 SEP-30-1999 3,113,800 0 401,972 0 2,379,916 5,895,688 24,915 21,784 5,936,309 283,345 0 0 0 0 5,652,964 5,936,309 7,999,974 8,411,560 3,729,906 3,729,906 1,527,537 0 47,212 3,106,905 0 3,106,905 0 0 0 3,106,905 .69 0
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