-----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, RhZlj+UL+i3Sf4bxTYuXwmRuljP/khfDz/QeVQQMOkWgrCvY6z5eF4tuRW1+50i+ nXBXeMhxbubUItFAXU83pg== 0000914317-97-000025.txt : 19970203 0000914317-97-000025.hdr.sgml : 19970203 ACCESSION NUMBER: 0000914317-97-000025 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19970131 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 001-08893 FILM NUMBER: 97515387 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, 1996 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 (I.R.S. Employer of 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: Name of Each Exchange Title of Each Class on which Registered Limited Partnership Units None Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by checkmark 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 (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 the last reported sale price of the Units over-the-counter on December 31, 1996 was approximately $1,592,649. PART I 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. American Stock Exchange Listing On January 16, 1996 the American Stock Exchange halted trading in the Partnership's Units pending a review of, among other matters, the Partnership's inability to meet the Exchange's listing standards. The Partnership's units did not resume trading on the Exchange and, following such review, were delisted on March 28, 1996. See Item 5. The Units are currently trading over-the-counter under the symbol "YYGHA." 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 $65,298,575. As of December 31, 1996, the Partnership had distributed an aggregate of $29,156,000, or $6.50 per Unit, to the general and limited partners. See Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters "Prior Distributions." As of September 30, 1996, the Partnership's remaining assets consisted principally of; (1) a 165 acre tract of land in the Village of Royal Palm Beach (the "Village"), (a portion of which is now under development -see Item 2 -- Properties -- "Village of Royal Palm Beach"), which land was reacquired in January, 1992 by foreclosure of a mortgage and which is included in the balance sheet at $4,476,742 (this tract is hereinafter referred to as the "Crestwood" tract), (3) unsold land in Palm Beach County, Florida which is included in the balance sheet at its book value of $485,596, (4) a tract of land in the Village reacquired by foreclosure in 1993 and included in the balance sheet at $287,650, (5) contingent receivables relating to a prior sale of utility assets with a maximum future undiscounted value of $5,603,000 (which amount, other than $129,000 earned as of September 30, 1996 but not payable to the Partnership until January, 1997, has not been included in the balance sheet due to its contingent nature -- see Note 11 to the Financial Statements), and (6) cash in the amount of $41,451. Through December 31, 1996, there had been no material changes in the Partnership's real estate assets. 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. (1) Recent Efforts to Resume Active Business Activities In early 1992, a large portion of the Partnership's remaining land consisted of the undeveloped 165 acre "Crestwood" Tract described above, which had been sold during the process of the Partnership's liquidation but reacquired by the Partnership in 1992 when the purchaser was unable to service the interest and amortization payments to the Partnership on a $5,039,952 purchase money mortgage. Management's attempts to remarket the Crestwood Tract on a bulk basis were unsuccessful. Management perceived that due to changes in the market for real estate in southern Florida, the Crestwood Tract would continue to be difficult to market at acceptable prices. Among other factors depressing the local market was the "overhang" of large undeveloped tracts which were on the market as the result of bank insolvencies. Management also concluded that the market for developed land -- defined for purposes of this discussion as buildable lots which have been properly zoned and developed with grading, roads and utility lines brought to the property boundaries -- was tightening, with local and national builders competing for a shrinking supply of such developed land. With the liquidation of the Partnership having progressed to the point at which the major portion of the Partnership's assets had been liquidated, management began to consider the most effective means to maximize unitholder value with respect to the balance of the Partnership's assets. After study, management concluded that the Partnership's continuing liquidation should proceed along two tracks. First, it was determined that unitholder values could most effectively be increased if some or all of the Crestwood Tract were temporarily withheld from sale and selectively developed. In the judgment of management, the prospective incremental increase in selling prices of developed land over amounts which might reasonably be anticipated from the sale of the land in its raw state would substantially exceed the cost of developing such land, and warranted investment of a portion of the Partnership's cash assets in development activities. Management therefore commenced the development of one portion of the Crestwood Tract, consisting of originally of 170 lots zoned for single family housing (increased in a revised site-plan to 198 lots), in order to enhance its sale value. Management's decision to commence development was influenced, in part, by an appraisal obtained in 1992 of the Crestwood Tract which indicated that such tract had a then current fair market value in the approximate amount of $4,500,000 and could have a significantly higher value if rezoning and re-permitting work were accomplished. Management was further of the opinion that the Crestwood Tract would have an indefinite but substantially higher value if developed with roads and a utility infrastructure. See Item 2 -- Properties -"Village of Royal Palm Beach." Second, management concluded that generally strengthening conditions in the south Florida real estate market might present an opportunity to the Partnership to capitalize on its status as a publicly traded entity. In early 1994 the Partnership retained a private consultant to determine whether unitholder values could further be enhanced by utilizing the Partnership's cash and remaining land as a vehicle for the resumption of active business operations, either in the land development business or by expanding its activities into home building and other real estate-related fields. Management also wished to obtain an independent review of its assumption that the market value of the Partnership's units might be enhanced over time were the Partnership to convert from a liquidating to an active business mode. Management also concluded that its decision to develop portions of its remaining Palm Beach County real estate would be consistent either with a decision to proceed with the Partnership's complete liquidation, to resume business operations, or to complete its liquidation by acquiring and distributing to unitholders the securities of another entity in connection with a business combination. It therefore proceeded with the development plans described above, and at the same time explored the business and tax implications of the resumption of business activities and/or business combination with another entity. The progress of such land development, and financing recently obtained therefor, is discussed under Item 2 -- Properties -- "Village of Royal Palm Beach." Management ultimately concluded that the most logical course for the Partnership to follow would involve the addition of home building operations. After several potential affiliations were identified, a memorandum of understanding was executed with Regency Homes, Inc., a prominent, privately-owned South Florida home builder, envisioning a business combination of the two entities. However, protracted negotiations with Regency were suspended in early December 1995 and terminated in late December, 1995. While management might consider a business combination with an appropriate operating business, it is not actively seeking such transactions and no discussions concerning any such transaction have taken place. The Partnership is proceeding with the liquidation of the its remaining assets. In connection therewith, the Partnership is continuing to develop the residential lots in the Crestwood tract, and may develop other properties if such development would enhance liquidation values. The status of real estate dispositions and development is discussed in Item 2 below. (2) Cash Available for Distribution Management intends to continue to invest in the development of portions of the Partnership's remaining land in Palm Beach County as a means of achieving a higher return upon sale. Because of a substantial reduction in sales revenues in 1993 and 1994, and the cash requirements for such land development activities in 1995, together with cash expenditures in connection with the proposed transaction with Regency Homes, Inc. and normal operating expenses, no cash has been available for distribution since December 1992. Although at currently targeted sales prices the Partnership could realize cash proceeds from the sale of the Crestwood lots in a range exceeding $5,000,000, there can be no assurance that currently targeted prices will be realized, and initial sales proceeds will be applied to repayment of debt, including bank financing incurred for development work expected to total approximately $2,625,000 It is therefore considered doubtful that cash will be available for distribution in 1997. See Item 2 - Properties - Development and Sale of Residential Lots; and Item 7 -- Management Discussion and Analysis of Financial Condition -- Liquidity and Capital Resources. The timing of the resumption of liquidating distributions will depend largely upon the timing of future sales of the Partnership's remaining land (developed or undeveloped) and future collections of contingent receivables relating to a prior sale of a utility plant. 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 Randy Rieger, who 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. Interest rates have moved in a narrow range during the past year, and declined slightly in December 1995. If significant increases occur in the future, the real estate market could suffer as a result. Personnel As of January 31, 1997, Stein Management Company, Inc. ("Steinco") the Managing General Partner, employed 2 persons. 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 28,000 acres in Palm Beach County, in southeastern Florida, approximately 4,200 of which were located within the Village. The Villaqe 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 is otherwise undeveloped with the exception of the existence of portions of a drainage system. Commercial Land within the Crestwood Tract In order to enhance the market value of the Crestwood Tract, the Partnership obtained the rezoning of a 28 acre portion of the Crestwood Tract previously zoned for multi-family housing to permit the Partnership to develop a 14 acre portion for use as a shopping center site. The Partnership received site-plan approval in mid-1996. The Partnership has executed an agreement to sell the entire 28 acre portion to an unaffiliated shopping center developer ("Purchaser") in four phases. The first phase relates to an 11.8 acre tract to be sold for $3.00 per square foot (approximately $1,542,024 subject to final survey). The closing on this phase was subject to soil testing, availability of sufficient utility connections, environmental matters, site-plan approval and approval of the premises by a major supermarket chain as a site for a new supermarket. All of such conditions have now been satisfied, the parties are awaiting the issuance of a building permit and the satisfaction of other conditions which are considered likely to occur during January, 1997. The closing is therefore expected to take place by the end of February, 1997. Were the Purchaser to refuse to close, which is considered highly unlikely, its only liability would be its loss of deposits presently aggregating $71,000. The second and third phases consist of two additional parcels in the 14 acre portion rezoned as described above, and adjoin the shopping center site, but as to which building permits are not expected to be available for approximately four years. As to such parcels, the Partnership has agreed, during a five-year period following the pending closing on the first phase, 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. If the Partnership itself obtains an unsolicited offer to lease or purchase the parcels which the Partnership desires to accept, the Purchaser may exercise a right of first refusal in which case the Partnership must accept (i) in the event of a lease, a sum equal to five times the average annual rental to be paid by the third party during the first five years of the proposed lease, and (ii) in the event of a sale, 50% of the net proceeds to be paid by the third party. The final phase relates to a contiguous 14-acre parcel as to which rezoning from the current multi-family to commercial use is not considered feasible for several years. The Purchaser has been granted an option ending four years after the first closing to acquire this parcel at $3.50 per square foot (approximately $2,129,000 subject to survey). However, after two years from the first closing, the Partnership for multi-family residential purposes only, for a price which is less than the option price, subject to the Purchaser's right of first refusal at the same price. Randy Rieger, who became vice-president of the Partnership's managing general partner in September, 1995 for an interim period following the death of its President, is entitled to a commission of 10% of the net proceeds to the Partnership on all of the above-described transactions. See Item 13. Residential Lots within the Crestwood Tract As a result of management's decision to develop portions of the Crestwood Tract, the Partnership has replanned the configuration of the entire tract. This project has included a redesign of the Single Family Tract, and the Partnership has now received final plat approval to increase to 198 the number of residential lots which may be developed 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 required regulatory procedures, the installation of roads and utility connections to each lot and the provision of drainage facilities. In 1995, the Partnership completed the off-site utility infrastructure for the entire Crestwood Tract. The cost of such construction, approximating $975,000, was financed with the proceeds of a $975,000 construction loan from Union Bank of Florida, ("Union Bank Loan " -- See Item 13 -"Certain Relationships and Related Transactions"). See Item 7 -Management Discussion and Analysis -- "Liquidity." Under the terms of the Union Bank Loan, the Partnership is paying interest at a rate equal to 2% above the bank's prime lending rate. The Union Bank's aggregate commitment in respect of the Residential Tract, originally $2,175,000, has been increased to $2,625,000 (which includes the $975,000 advanced for infrastructure for the entire Crestwood Tract and $350,000 advanced for on-site improvement of Phase I of the Residential Tract (see below.) The Union Bank Loan, which is secured by a first mortgage on the 198 undeveloped homesites, is due in full on January 31, 1998. The Partnership is required to apply $20,000 of the proceeds of each lot sale to payment of the Union Bank Loan. The Partnership is developing the residential lots in three phases, of which Phase I, comprising 32 lots, has been developed with on-site improvements, financed by $350,000 in borrowings under the Union Bank Loan. Five of the residential lots in Phase I were purchased for the aggregate sum of $170,000 by Regency Homes, Inc. under an option which covered all 32 lots. The option as to the balance of the lots has terminated because of Regency's failure to purchase a specified minimum number of lots per month, although the Partnership continues to negotiate with Regency and others for the sale of individual lots. In addition, on August 12, 1996, the Partnership executed an agreement with Lennar Homes, Inc. ("Lennar"), a prominent South Florida developer, for the purchase of 86 lots in Phase II of the Residential Tract for an aggregate of $2,451,000. The Partnership holds deposits under letters of credit aggregating $490,200. The agreement contemplates that all lots will be taken and paid for over an 18-month period after completion by the Partnership of development work. It is anticipated that closing on at least 22 of the lots will occur during the summer of 1997, resulting in gross proceeds to the Partnership of approximately $612,000. The Partnership intends to finance on-site development of the 166 lots in Phases II and III of the Residential Tract, anticipated to cost in the range of $1.9 million, with the balance of the borrowing available under the Union Bank Loan and the net proceeds of a public bond financing effected in November, 1996 by the Indian Trail Water Control District (the "District"), which produced net available funds for the project of approximately $1,074,000. The bonds are a direct obligation of the District and not of the Partnership, and interest and principal on the bonds will payable from taxes levied on the lots in the Residential Tract. Such bond issue resulted in an increase in an aggregate real estate tax of approximately $117,000 per annum on the entire Residential Tract, of which amount $600 is allocable to each lot individually. 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 100 multi-family residential units and is being offered for sale in its present state without further development. An agreement to sell this acreage for $325,000 was terminated by the purchaser in November 1996 and the property is currently being remarketed 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, 1995, $5,365,000 had not been received or earned. 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 $262,657 has already been received. It is not possible to predict the amount or timing of future revenues to the Partnership under this program. To date, the Partnership has received the following Utility Contract payments:
Amount Received Based On Fiscal Year Ended consumption Guaranteed September 30, Increases Revenues ------------- --------- -------- 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* Total $5,535,000 $262,000 ========== ========
- ---------------------------------- * The Partnership anticipates receipt of $129,000 in late January, 1997. 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. Management believes that there remain sufficient potential new home water hookups in the area served by the utility to enable the Partnership to realize the maximum remaining $5,365,000 in contingent payments under the Utility Contract. There can be no assurance, particularly in view of the decline in payments from 1995 to 1996, that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the full amount or even a substantial portion of such payments 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 three tracts in the vicinity of the Village. The first tract originally consisted of 206 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. In October, 1996, the County of Palm Beach Nature Conservancy purchased, for approximately $100,000, 18 lots within this parcel for use as a conservation easement. The County has also agreed to purchase an additional 16 such lots for $84,000, with a closing anticipated in late February, 1997. Assuming that this sale is closed, the Partnership will retain 171 lots in this tract. Palm Beach County has adopted land development regulations under which new development will not be permitted unless adequate public facilities (such as roads) will be in place concurrently with the impacts of such development. The Indian Trail Water Control District ("District") is currently preparing a revised 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 has been opposed by other governmental agencies, however, and it is uncertain whether the plan will be adopted. If the plan is not approved these lots may not be usable for residential purposes. Further, even assuming a favorable result, the administrative process leading to the availability of building permits cannot be expected to be completed before mid-1998. The second tract, consisting of 470 acres, had been reserved for use by the District, in part, as a water retention area for such revised drainage plan. The Partnership is presently evaluating possible alternative uses of this tract, which contains a significant amount of wetlands. Since the use of this land is also dependent on the extension of roads, and development activity on this tract may meet with opposition from governmental agencies concerned with wildlife and wetlands preservation, it is not possible to estimate the realizable value of this land. However, in 1996 the Partnership rejected an offer of $1,100,000 for this tract and alternatives to such sale are being examined with a view to obtaining a higher price. Accordingly, management is of the opinion that its realizable value is in excess of its current book value of $213,421. The timing of future sales of the land discussed above, the manner in which they may be developed and 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. The third tract in the vicinity of the Village the Partnership previously held 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 5 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 have entered into an agreement to sell the entire combined parcel for a price of $1.90 per square foot, subject to survey, which would result in a gross selling price of approximately $1,986,000 (less selling commissions) of which the Partnership's share would be approximately $993,000. The sale is subject to the purchaser's ability to have the premises rezoned for use as a shopping center, approval of the premises as a site for a supermarket by a major supermarket chain, and the issuance of all necessary building and other permits, with a closing date (subject to all of the foregoing) no later than June 30, 1997. The agreement is also subject the ability of the Partnership to cause the owner of an adjoining residence, which is not owned by the Partnership or its joint developer, to sell such residence to the purchaser. There is no assurance that such permits will be obtained, nor can the Partnership predict whether the rezoning process, which involves proceedings before several governmental bodies, or the sale of the aforesaid residence, could be completed or obtained within the required time frame. Hernando County, Florida The Predecessor Company originally owned approximately 17,600 acres in Hernando County, Florida, located 56 miles from Tampa, with 13 miles of road frontage along U.S. Highway 19, a major area highway. In 1994 the Partnership sold a 14 acre tract in this area for $125,000. The Partnership presently retains approximately 20 acres in this area with negligible value. Lake County, Florida The Predecessor Company originally owned approximately 12,300 acres in Lake County, Florida, located in Central Florida on the outskirts of the Ocala National Forest approximately 39 miles from Ocala and 6 miles from Deland. Lake County is predominantly rural with a population of approximately 14,000. At September 30, 1992, the Partnership owned no property in Lake County; however, in March of 1993 the Partnership accepted a deed in lieu of foreclosure on a mortgage on a 1400 acre portion of this property with a principal balance of $706,000. See Item 7 -- "Foreclosure Transactions." Approximately 1,000 acres of this property which are remote, undeveloped and may be unsuited for any development, were sold by the Partnership for a cash price of $350,000 in June, 1993. The balance of the tract was sold in 1994 in two transactions for prices aggregating $360,000, of which $248,000 was represented by a purchase money mortgage payable over a five year term. In November 1995 this mortgage having a principal balance of $222,471 and deferred profit of $48,958, was sold for $168.962. 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 On January 16, 1996 the American Stock Exchange halted trading in the Partnership's Units pending a review of, among other matters, the Partnership's inability to meet the Exchange's listing standards. The Partnership's units did not resume trading on the Exchange and, following such review, were delisted on March 28, 1996. 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 as reported on the American Stock Exchange through January 15, 1996; information for periods thereafter relates to over-the-counter trading. The Partnership's Units were held by approximately 649 holders of record as of December 31, 1996. Based on its tax records, including beneficial owners, the Partnership believes that there are a total of approximately 1,000 unit holders.
Fiscal Year Ended: September 30, 1996 Quarter High Low ------- ---- --- First 1 1/2 3/4 Second 13/16 7/8 Third 9/16 17/20 Fourth 9/16 3/4 September 30, 1995 First 15/16 3/4 Second 1 13/16 Third 2 13/16 Fourth 1-11/16 1 3/8
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. No distributions were made since December of 1992, in light of management's judgment that Partnership cash should be conserved and applied to the development activities discussed in Item 2, and, during 1994 and 1995, in light of the possibility that the Partnership might resume active business operations as discussed in Item 1. It is unlikely that distributions will be made during fiscal 1996, although management, in reviewing the Partnership's use of cash, will consider the tax effect on partners in the event that the Partnership generates taxable income from its development and sale activities. 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 $1.85 as of September 30, 1996. 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 --- 6.50
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, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Selected Income Statement Data Revenues $ 397 $ 497 $ 832 $ 1,717 $ 1,510 Net income (loss) (690) (787) (554) 773 398 Income (loss) per unit (.15) (.18) (.12) .17 .09 Selected Balance Sheet Data Total assets 5,486 5,425 4,650 5,090 5,361 Mortgage notes payable 2,065 1,511 -- -- -- Partners' equity 2,370 3,060 3,847 4,401 4,750 Cash distributions per unit -0- -0- .25 .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 Liquidity and Capital Resources During the fiscal year, the Partnership continued to incur substantial expenses in the planning and development of its properties in addition to normal ongoing administrative costs. The Partnership had withheld its properties from sale during the fiscal year ended September 30, 1995, and during most of the quarter ended December 31, 1995, in anticipation of a business combination which was being negotiated throughout most of that year, but which negotiations were terminated in December, 1995. The only revenues for the year ended September 30, 1996, were the proceeds of $182,000 received upon the sale of five residential lots and one undeveloped lot, offset in part by approximately $71,000 of terminated merger expense. In addition, the Partnership received $433,000 in payment of an installment on a contingent note held in respect of a prior sale of the utility system. See Item 1. During the quarter ended December 31, 1995 the Partnership also received $168,962 in satisfaction of a mortgage note receivable. The Partnership is obligated to repay a working capital loan in the amount of $527,000 due to Hasam Realty Limited Partnership, a general partner of the Partnership, on February 28, 1997. See Item 13 -- "Certain Relationships and Related Transactions." In June 13, 1996 the Partnership obtained an additional working capital loan in the amount of $300,000 from an affiliate of Jack Friedland and $25,000 from Mr. Friedland directly. Mr. Friedland is affiliated with Hasam Realty Limited Partnership, a general partner of the Partnership. The loan was originally for a term ending October 31, 1996, at an interest rate of 2% over the prime rate of Union Bank, and is secured by a first mortgage lien on a 4.54 acre tract of undeveloped land in Palm Beach County and a tract of approximately 14 acres of commercially zoned land in the Crestwood tract described in Item 2. As a result of the deferral of closing on several transactions which had been anticipated to produce substantial cash proceeds, the maturity date of the note was extended through February 28, 1997. As a result of the foregoing, the Partnership's cash balances declined from $84,000 at September 30, 1995 to $41,000 at September 30, 1996. 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 current cash, the bank financing described in Item 2 -- Properties -- "Village of Royal Palm Beach", and land sales and contingent utility receipts described under Item 2 -- Properties -- "Utility Contingent Receipts." In the event of a deferral of land sales beyond currently anticipated dates, management believes that additional financing arrangements will be available from, or guaranteed by, Hasam Realty Limited Partnership, a general partner of the Partnership, or an institutional lender. Affect of Land Sales on Future Cash Flow Assuming that the Partnership continues to liquidate, total net cash flow which might become available for distribution remains unpredictable due to uncertain conditions in the South Florida real estate market in which the Partnership's remaining real estate is located, and the competitive factors described in Item 1 -- Business -- "Competition." 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. See Item 2. Certain of the Partnership's land in Palm Beach County located outside of the Village of Royal Palm Beach (see Item 2 -- Properties -- "Acreage in the Vicinity of the Village") has been the subject of substantial regulatory concerns relating to land use issues, and the salability of such land has been adversely affected by doubts concerning the future availability of building permits. At the inception of the Partnership, such land, in the aggregate, was assigned appraised or estimated values aggregating approximately $1.7 million and is carried on the Partnership's balance sheet at $343,000. As indicated under Item 2 -- " Acreage in the Vicinity of the Village," the Partnership recently rejected an offer of $1.1 million for a 483 acre portion of this land. While the Partnership believes that all or a major portion of the acreage in the vicinity of the Village will ultimately be sold, aggregate realizable values cannot be estimated. It also remains possible, on the other hand, that continuing development and possible future road building activity in the vicinity of this land could have a favorable impact on the value of the land, although such impact is entirely speculative. For a discussion of the land use issues which could affect future development of this acreage see Item 2 -- Properties -- "Acreage in the Vicinity of the Village." As indicated in Item 2, the Partnership is committed to the continuing development of phases II and III of the Crestwood Residential Tract, as the most efficacious manner in which to enhance liquidation values. As indicated under Item 1 -- "Factors Affecting Future Operations and Distributions," it is unlikely, in view of management's decision to continue development activities as an aid to the enhancement of ultimate liquidation proceeds, and the Partnership's obligation to repay indebtedness incurred to finance such development and for working capital, that distributions to partners will be made during fiscal 1997. 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. See Item 1 -- Business -"Factors Affecting Future Operations and Distributions" and "Regulation" and Item 2 -- Properties -- "Acreage in the Vicinity of the Village." Results of Operations
Fiscal Years Ended September 30 -------------------------------------- 1996 1995 1994 -------- -------- -------- Revenues Sales of land, net $182,000 -0- $520,000 Recognized profit on installment and cost recovery sales (a) 1,000 31,000 18,000 Interest income (b) 5,000 32,000 67,000 Sale of utility system (c) 129,000 432,000 86,000 Other (d) 80,000 2,000 141,000 -------- -------- -------- Total revenues $397,000 $497,000 $832,000 ======== ======== ========
a) Recognized profit on installment and cost recovery sales has changed from year to year as collections of the Partnership's mortgage notes receivable related to sales reported on the installment and cost recovery basis decreased. b) Interest income decreased from 1994 to 1996 as the Partnership's mortgage notes receivable decreased. c) As discussed in Note 11 to the financial statements, income recognized on the sale of the utility system varies with water consumption and other factors. d) Other income in 1996 includes $74,000 received as a foreclosure settlement, net of related expenses. Other income in 1994 includes $119,000 recovered as a litigation settlement for breach of contract against a third party. 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, have not varied significantly during the last three years. However, in 1996 and 1995 the Company incurred $70,720 and $405,261, respectively, in costs related to a proposed merger, as to which negotiations have been terminated. Provision for doubtful accounts In 1994 a provision for doubtful accounts and an allowance for doubtful accounts of $48,500 was recorded. In 1995 it was determined that this allowance of $48,500 was no longer required. Depreciation and property taxes The increase in this item from 1994 to 1995 relates to assessments of penalties and interest on delinquent 1994 taxes not yet paid. Item 8. Financial Statements and Supplementary Data The financial statements and the 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)
Present Position With the Registrant Name Age and other positions - ---- --- ------------------- Irving Cowan 64 Chairman and President of Steinco (1)(*) Private Investor Randy Rieger (**) 47 Vice President and Chief Operating Officer of Steinco, September 1995 through February 1996; President of RTL Realty, Inc. and Royal T Land, Inc., privately held real estate consultants and brokers for over five years David B. Simpson 58 Director and Vice President(*)of Steinco; attorney currently in private practice and counsel to the Partnership; partner, Holtzmann, Wise & Shepard, Counsel to Partnership, September 1991 to August 1993 Dr. Ernest Sayfie 66 Director of Steinco; Physician in private practice Herbert Tobin 56 Director, and Secretary and Treasurer(*) of Steinco; President, The Ben Tobin Companies, LTD, a real estate development company. Jack Friedland 71 Member, Friedco, L.C.(l); Private Investor Leonard Friedland 74 Member, Friedco, L.C.(l); Private Investor Harold Friedland 66 Member, Friedco, L.C.(l); Private Investor Marjorie Cowan 56 Member, Friedco, L.C.(l); Private Investor
(1) The general partners 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. (*) Elected to this position on February 14, 1996. (**) Mr. Rieger, who was elected on an interim basis following the death in September, 1995, of Martin Katz, President of the managing general partner, resigned following the election of the officers referred to in the above table. See Item 13. 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 and the American Stock Exchange. 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 1996. Based solely on the foregoing the Partnership believes that during fiscal 1996, no purchases or sales of units were made requiring compliance with applicable Section 16(a) filing requirements. Item 11. Executive Compensation During fiscal 1996 no executive officer of the Managing General Partner received compensation exceeding $60,000 except Randy Rieger, who received $60,000 through February, 1996 (the date of Mr. Rieger's resignation as Vice President) and $42,000 through end of the fiscal year in management and consulting and brokerage fees. All officers and Directors, as a group (5 persons) earned $127,400 in cash compensation (including the compensation paid to Mr. Rieger described above) and $4,300 in other benefits. 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. The Partnership reimbursed Steinco approximately $45,000 in the fiscal year ended September 30, 1994 for such expenses. 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. No such expenses were reimbursed in the fiscal year ended September 30, 1996. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of December 15, 1996 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 Dr. Ernest Sayfie 150 Less than 1% 3001 S. Ocean Dr. Hollywood, FL 33019 All officers and directors 2,361,972 52.7% 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 payable in full on June 29, 1996 but was extended through February 28, 1997. The loan and bears 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 are 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, have been extended through February 28, 1997. See Item 7. Indian Trail Water Control District The Indian Trail Water Control District, a public entity whose seven supervisors included Martin J. Katz until his death in September, 1995 and to which Jack Friedland has recently been elected, has prepared a drainage and reclamation plan covering a portion of the Company's acreage in the vicinity of the Village of Royal Palm Beach. In addition, the Partnership is negotiating with the District for the issuance of bonds to finance a portion of the Partnership's acreage in the Village. Reference is made to Item 2 - Properties - -- Palm Beach County -"The Village of Royal Palm Beach" and "Acreage in the Vicinity of the Village." Herbert Tobin, a Director of Steinco, is Chairman of the Board and Director, of Union Bank of Florida, which made a land development loan to the Partnership in 1994. See Item 2. 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 Mr. Katz's death. 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 of a substantial portion of its real estate assets. Under such prior arrangement, RTL Realty Corp. will be entitled to substantial brokerage commissions in the event that certain real estate sales currently under contract relating to a shopping center site are consummated. See Item 2 -- Properties -- "The Villaqe 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 (the "RTL Agreement"). Under the RTL Agreement, RTL received $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. In November, 1996, the Partnership approved an extention of the RTL Agreement until December 31, 1997, and also agreed to reimburse RTL for certain expenses at the rate of $2,500 per month for office expenses. In the fiscal year ended September 30, 1996, Mr. Rieger was paid $113,060 under the original and revised agreements, of which $60,000 was paid to him as officer's compensation. See Item 10. General Partners The general partners do not receive any compensation for serving as such. See Item 11 -- "Executive Compensation." 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: Independent Auditor's Report Royal Palm Beach Colony, Limited Partnership Financial Statements: Balance sheets as of September 30, 1996 and 1995. Statements of operations for the years ended September 30, 1996, 1995 and 1994. Statements of partners' equity for the years ended September 30, 1996, 1995 and 1994. Statements of cash flows for the years ended September 30, 1996, 1995 and 1994. 2. 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 Prommissory Note in the amount of $500,000 filed as Exhibit 4(d) to said report on Form 10-K. 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 Prommissory note from Registrant to Hasam Realty Limited Partnership in the amount of $500,000. 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 Crrestwood Unit 3 - Plat Three. 4(h) First Amendment to Loan Agreement and First Mortgage Modification Amendment dated June 26, 1995 to Loan Agreement referred to in Exhibit 4(b). 4(i) Second Mortgage Modification Amendment dated October 21, 1996 to Loan Agreement referred to in Exhibit 4(b). 4 (j) Mortgage dated June 13, 1996 between Crossroads Associates, Ltd. and the Registrant pertaining to secured loan of $300,000 to the Registrant. 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). 4(l) Letter Agreement dated May 23, 1996 between Randy Rieger and the Registrant relating to brokerage and consulting services. 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 Date: January 31, 1997 By: /s/ David B. Simpson -------------------- David B. Simpson, Vice President 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 dates indicated.
Name Title Date - ---- ----- ---- /s/Irving Cohen Chairman, President and Director, January 31, 1997 - --------------- Stein Management Company, Inc. Irving Cowan /s/David B. Simpson Vice President and Director, January 31, 1997 - ------------------- Stein Management Company, Inc. David B. Simpson /s/Ernest Sayfie Director, January 31, 1997 - ---------------- Stein Management Company, Inc. Ernest Sayfie /s/Herbert Tobin - ---------------- Director, January 31, 1997 Herbert Tobin Stein Management Company, Inc.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1996, 1995, 1994 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, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for each of the three years in the period ended September 30, 1996. 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 misstatement. 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, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 1996 in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 14 to the financial statements, in anticipation of a proposed merger which was ultimately terminated, the Partnership suspended land sales during fiscal year 1995 which resulted in insufficient cash resources to meet its obligations as they become due. Management's plans in regard to these matters are also described in Note 14. These matters raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements and schedules do not include any adjustments that might result from the outcome of this uncertainty. As described in Note 1, the primary business purpose of the Partnership is the operation, management and orderly disposition of its assets and the distribution of the proceeds therefrom to unitholders. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in item 14(a)2 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ LEFCOURT, BILLIG, SARBEY, TIKTIN & YESNER, P.A. Coral Gables, Florida December 11, 1996
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP BALANCE SHEETS SEPTEMBER 30, 1996 AND 1995 ASSETS 1996 1995 ---------- ---------- Cash $ 41,451 $ 83,902 Mortgage notes and other receivables (Note 2): Mortgage notes receivable 236,153 Other 133,318 435,883 Property held for sale (Note 3) 5,249,988 4,607,661 Other assets (Note 4) 61,376 61,891 ---------- ---------- $5,486,133 $5,425,490 ========== ========== LIABILITIES AND PARTNERS' EQUITY Liabilities: Mortgage notes payable, bank (Note 5) $1,212,412 $1,010,513 Mortgage notes payable, general partner (Note 5) 527,249 500,000 Mortgage and note payable, related parties (Note 5) 325,000 Accounts payable and other liabilities (Note 6) 1,037,439 840,402 Estimated costs of development of land sold 14,142 14,441 Subsequent events (Notes 5 and 6) Partners' equity: 4,485,504 units authorized and outstanding 2,369,891 3,060,134 ---------- ---------- $5,486,133 $5,425,490 ========== ========== See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS Years ended September 30, --------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Revenues (Notes 13 and 14) $ 396,924 $ 497,651 $ 831,773 ----------- ----------- ----------- Costs and expenses: Cost of sales 135,533 439,195 Selling, general and administrative expenses 752,935 807,505 804,930 Terminated merger costs (Note 7) 70,720 405,261 Provision for doubtful accounts (48,500) 48,500 Depreciation and property taxes 127,979 120,734 92,941 ----------- ----------- ----------- 1,087,167 1,285,000 1,385,566 ----------- ----------- ----------- Net loss ($ 690,243) ($ 787,349) ($ 553,793) =========== =========== =========== Net loss per unit ($ 0.15) ($ 0.18) ($ 0.12) =========== =========== =========== 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 Partner Partners Equity ----------- ----------- ----------- ----------- Balance, September 30, 1993 4,485,504 $ 161,415 $ 4,239,861 $ 4,401,276 Net loss (11,740) (542,053) (553,793) ----------- ----------- ----------- ----------- Balance, September 30, 1994 4,485,504 149,675 3,697,808 3,847,483 Net loss (16,691) (770,658) (787,349) ----------- ----------- ----------- ----------- Balance, September 30, 1995 4,485,504 132,984 2,927,150 3,060,134 Net loss (14,633) (675,610) (690,243) ----------- ----------- ----------- ----------- Balance, September 30, 1996 4,485,504 $ 118,351 $ 2,251,540 $ 2,369,891 =========== =========== =========== =========== See notes to financial statements.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS Years ended September 30, ---------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Cash flows from operating activities: Cash received: Collections on land sales and receivables $ 434,830 $ 161,428 $ 469,393 Interest income 7,622 77,207 56,051 Sale of utility system 432,800 85,800 215,050 Other cash received 6,398 14,985 106,021 ----------- ----------- ----------- 881,650 339,420 846,515 ----------- ----------- ----------- Cash expended: Selling, general and administrative, property taxes and other expenses 528,353 845,097 991,682 Interest paid (net of amounts capitalized) 72,696 4,750 Acquisition of property held for sale 18,766 123,552 Improvements to property held for sale 848,616 1,439,903 597,404 ----------- ----------- ----------- 1,449,665 2,308,516 1,712,638 ----------- ----------- ----------- Net cash used in operating activities (568,015) (1,969,096) (866,123) ----------- ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (1,335) (758) (11,387) ----------- ----------- ----------- Net cash used in investing activities (1,335) (758) (11,387) ----------- ----------- ----------- (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (CONTINUED) Years ended September 30, ---------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Cash flows from financing activities: Proceeds from mortgage notes payable: Bank 301,899 1,010,513 General partner 500,000 Others 325,000 Payments on mortgage payable: Bank (100,000) ----------- ----------- ----------- Net cash provided by financing activities 526,899 1,510,513 ----------- ----------- ----------- Net decrease in cash (42,451) (459,341) (877,510) Cash at beginning of year 83,902 543,243 1,420,753 ----------- ----------- ----------- Cash at end of year $ 41,451 $ 83,902 $ 543,243 =========== =========== =========== (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (CONTINUED) Years ended September 30, ---------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Reconciliation of net loss to net cash used in operating activities: Net loss ($ 690,243) ($ 787,349) ($ 553,793) ----------- ----------- ----------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 3,428 4,334 3,599 Provision for doubtful accounts (48,500) 48,500 Sundry 4,227 Change in assets and liabilities: Increase in: Mortgage notes and other receivables (158,232) Property held for sale (642,327) (1,097,773) (485,947) Other assets (1,578) (28,696) Accounts payable and accrued liabilities 197,037 297,436 191,670 Estimated costs of development of land sold Decrease in: Mortgage notes and other receivables 538,718 36,356 Other assets 61,740 Estimated cost of development of land sold (299) (244,979) (77,812) ----------- ----------- ----------- Total adjustments 94,979 (1,181,747) (312,330) ----------- ----------- ----------- Net cash flow used in operating activities ($ 595,264) ($1,969,096) ($ 866,123) =========== =========== ===========
Supplemental information concerning investing and financing activities: As discussed in Note 5, in fiscal 1996 the Partnership issued a note payable to the general partner for unpaid interest in the amount of $27,249. In connection with the 1995 recording of an in substance foreclosure of the property described in Note 3, the Partnership recorded the property and concurrently reduced its mortgage notes receivable by the carrying value of the receivable, $65,064, in fiscal year 1995. See notes to financial statements. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 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 distribution 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: Land sales are accounted for under the accrual method when the purchaser has made an adequate down payment, generally 20% to 25% of the purchase price, the Partnership has no substantial remaining obligations with respect to the property, and 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 11). Cash: The Partnership considers all highly liquid debt investments with maturities of three months or less to be cash equivalents. Mortgage notes receivable: Mortgage notes receivable represent amounts due from the sale of properties and in certain cases have been reduced by the deferred profit which is being recognized under the installment method of accounting. The Partnership evaluates the carrying amount of delinquent mortgage notes receivable to determine that such amount is not in excess of the estimated fair market value of the underlying land. 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. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 1. Organization and summary of significant accounting policies (continued): Property and equipment: Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the assets on the straight-line method for financial reporting purposes and accelerated methods for tax reporting purposes. Net (loss) per unit: Net (loss) per unit is calculated based on the weighted average number of units outstanding during the year. Concentrations of credit risk: Assets which subject the Partnership to concentrations of credit risk consist primarily of cash and property held for sale. The Partnership places its temporary cash investments with high credit quality institutions. At times, such investments may exceed the FDIC insurance limit. 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. 2. Mortgage notes and other receivables: Mortgage notes receivable consist of the following as of September 30, 1995:
Mortgage notes receivable $ 285,801 Less: Deferred profit (49,648) --------- $ 236,153 =========
In December 1995, the Partnership received $168,962 as full settlement of a mortgage note which had a carrying value at the date of settlement of $173,513 (mortgage note receivable $222,471 less deferred profit of $48,958). The loss on this transaction, $4,551, has been included in 1996 selling, general and administrative expenses. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 2. Mortgage notes and other receivables (continued): Other receivables consist of the following:
September 30, ------------------------ 1996 1995 --------- --------- Utility receivable (Note 11) $129,000 $432,800 Accrued interest receivable 2,833 Other 4,318 250 -------- -------- $133,318 $435,883 ======== ========
3. Property held for sale: Included in property held for sale at September 30, 1995 is the net carrying value of a mortgage note receivable in default which was considered to be an in substance foreclosure. The Partnership filed an action to foreclose on the mortgage. The in substance foreclosure was recorded by reclassifying the net carrying value of the receivable of $65,064, consisting of a mortgage note receivable of $137,614 less related deferred profit of $72,550, to property held for sale. In September 1996, the Partnership received $155,000 from the purchaser of the property as part of a joint stipulation settlement to settle and compromise the litigation. Proceeds received in excess of the net carrying value of the in substance foreclosure and related settlement expenses amount to $74,047 and have been included in revenues (See Note 13). 4. Other assets: Other assets consist of the following:
September 30, ----------------------------- 1996 1995 --------- --------- Furniture and equipment, net of accumulated depreciation $ 6,090 $ 8,184 Prepaid expenses 55,286 53,707 --------- --------- $ 61,376 $ 61,891 ========= =========
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 5. Mortgages and note payable: Mortgages and note payable consist of the following:
September 30, --------------------------- 1996 1995 ----------- ---------- Mortgage notes payable - bank: On October 6, 1994 the Partnership entered into a construction/development loan agreement whereby the Partnership borrowed $975,000 at 2% over the prime rate (10.25% at September 30, 1996). Interest only is payable monthly and, as modified on June 26, 1995 (see below), the loan matures on July 1, 1997. Property held for sale with a cost of approximately $2,978,000 is collateral for this loan and the additional borrowings described below. The mortgage requires certain release principal payments as land is sold. $ 875,000 $ 975,000 On June 26, 1995, the Partnership entered into a modification of the above loan agreement whereby the Partnership may borrow, under the same terms as above, up to an additional $1,200,000 based on the minimum proceeds of a $1,000,000 municipal bond issuance of the Indian Trail Water Control District during November, 1996. 337,412 35,513 ----------- ---------- On October 21, 1996 the Partnership combined these obligations under a Consolidation Promissory Note, whereby the Partnership may borrow up to $2,625,000 at 2% over the prime rate, maturing on January 31, 1998. $ 1,212,412 $1,010,513 =========== ========== Mortgage notes payable, general partner: On June 29, 1995 the Partnership borrowed $500,000 from its general partner for working capital. The terms of the mortgage call for monthly interest payments at a rate of 2% over prime (10.25% at September 30, 1996) with the outstanding principal balance due at maturity on June 29, 1996. Property held for sale with a cost of approximately $787,000 is collateral for this loan. On February 9, 1996 the Partnership issued a note payable to the general partner for unpaid interest in the amount of $27,249 and on September 30, 1996 the general partner extended the due date of both notes to February 28, 1997. $ 527,249 $ 500,000 =========== ========== (continued)
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 5. Mortgage notes payable (continued):
September 30, --------------------------- 1996 1995 ----------- ---------- Mortgage note payable, related party: On June 13, 1996, the Partnership borrowed $300,000 from a related company for working capital. The terms of the mortgage call for monthly interest payments at a rate of 2% over prime (10.25% at September 30, 1996) with the outstanding principal balance at maturity on October 31, 1996. Property held for sale with a cost of approximately $287,000 is collateral for this loan. No payments of interest have been made and on September 30, 1996 the lender waived the default for nonpayment of interest and extended the due date of the mortgage to February 28, 1997. $ 300,000 Note payable, related party: On September 4, 1996, the Partnership borrowed $25,000 from a unit holder for working capital. The terms of the note call for monthly interest payments at a rate of 2% over prime (10.25% at September 30, 1996) with the outstanding balance due upon maturity which has been extended to February 28, 1997. 25,000 ----------- $ 325,000 ===========
Interest is capitalized for property being developed. All other interest is charged to operations as incurred as follows for the years ended September 30:
1996 1995 ---- ---- Capitalized $ 119,870 $ 89,605 Charged to operations 72,696 16,630 --------- ---------- Total interest incurred $ 192,566 $ 106,235 ========= ==========
There was no interest incurred during 1994. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 6. Accounts payable and other liabilities: Accounts payable and other liabilities consist of the following:
September 30, --------------------------- 1996 1995 ---------- --------- Accounts payable $ 750,934 $ 555,547 Accrued liabilities: Property taxes 130,772 107,352 Other 80,733 83,703 Due to landowner 75,000 93,800 ---------- --------- $1,037,439 $ 840,402 ========== =========
Property taxes related to calendar year 1994, which were due March 31, 1995, and property taxes related to calendar year 1995, which were due March 31, 1996, in the approximate amounts of $144,431 and $147,735, respectively, are delinquent and are included in accounts payable at September 30, 1996. Due to landowner represents reimbursement due for development costs in connection with common areas. Payment of $75,000 was due on June 30, 1996, with interest at 8% per annum. Due date was extended to December 31, 1996 and payment was made November 6, 1996. 7. Terminated merger costs: During fiscal year 1995, a potential affiliation with a privately-owned South Florida home builder was identified and a memorandum of understanding was executed for the purpose of merger. However, after protracted negotiations, the attempt to merge was terminated in December 1995. Costs incurred during the years ended September 30, 1996 and 1995 in connection with the terminated merger amounted to approximately $71,000 and $405,000, respectively, and have been expensed in the statement of operations. Such costs include fees for financial, capital and real estate consultants, and attorneys' fees. 8. Income taxes: The Partnership is not subject to income taxes. Instead, 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. Pursuant to the Tax Reform Act of 1986, the Company changed its fiscal year end, September 30, to a calendar year end for income tax purposes. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 8. Income taxes (continued): The following analysis summarizes the major differences between the financial reporting and income tax basis of the partners' equity account at September 30, 1996.
Partners' equity, financial reporting basis $ 2,369,891 Add items recorded for tax purposes only: Step-up in basis of property $ 17,000,000 Less: Cost of sales - step-up as adjusted for unamortized additional capitalized inventory costs 11,139,231 ------------ 5,860,769 Add items not deducted for tax purposes 40,270 ------------ 5,901,039 ----------- Partners' equity, income tax basis $ 8,270,930 ===========
The Partnership, pursuant to the transitional grandfather rules of the Internal Revenue Code dealing with publicly traded partnerships, reports its income as a partnership. Under current provisions, the application of the grandfather rules is scheduled to terminate for the taxable year commencing after December 31, 1997. At that point in time the Partnership will be required to determine its income tax status pursuant to the operative Internal Revenue Code provisions, regulations and rules thereunder governing publicly traded partnerships. The ultimate determination, which is dependent upon future results of operations and other factors, will result in the Partnership either retaining its status as a partnership or, alternatively, being taxed as a corporation. These provisions will become operative for the taxable year beginning January 1, 1998. 9. Related party transactions: The Partnership reimbursed Steinco approximately $45,000 for payroll and related expenses for fiscal year 1994. 10. 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 properties are not considered material. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 11. 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 increases 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. The maximum proceeds to Utilities was approximately $13,410,000, of which, under the terms of the sale, approximately $5,365,000 had not yet been received as of September 30, 1996. In addition, the Partnership had the right to receive up to $500,000, of which $262,000 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 $129,000, $432,800 and $85,800 were recognized for fiscal years 1996, 1995 and 1994, respectively. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 12. Comparative quarterly financial information (unaudited):
First Second Third Fourth quarter quarter quarter quarter Full year ----------- ----------- ----------- ----------- ----------- 1996: Revenues $ 144,044 $ 7,197 $ 12,476 $ 260,207 $ 396,924 Costs and expenses 375,444 283,059 185,668 242,996 1,087,167 ----------- ----------- ----------- ----------- ----------- Net income (loss) ($ 231,400) ($ 275,862) ($ 173,192) $ 17,211 ($ 690,243) =========== =========== =========== =========== =========== Net income (loss) per unit ($ 0.05) ($ 0.06) ($ 0.04) $ 0.00 ($ 0.15) =========== =========== =========== =========== =========== 1995: Revenues $ 19,758 $ 36,840 $ 10,666 $ 430,387 $ 497,651 Costs and expenses 215,640 282,400 338,582 448,378 1,285,000 ----------- ----------- ----------- ----------- ----------- Net loss ($ 195,882) ($ 245,560) ($ 327,916) ($ 17,991) ($ 787,349) =========== =========== =========== =========== =========== Net loss per unit ($ .04) ($ .06) ($ .07) ($ .01) ($ .18) =========== =========== =========== =========== =========== 1994: Revenues $ 145,468 $ 70,504 $ 390,362 $ 225,439 $ 831,773 Costs and expenses 202,220 329,583 499,026 354,737 1,385,566 ----------- ----------- ----------- ----------- ----------- Net loss ($ 56,752) ($ 259,079) ($ 108,664) ($ 129,298) ($ 553,793) =========== =========== =========== =========== =========== Net loss per unit ($ .01) ($ .06) ($ .02) ($ .03) ($ .12) =========== =========== =========== =========== ===========
Year end adjustments at September 30, 1995 principally include the write-off of terminated merger costs of approximately $220,000, which had previously been capitalized. Year end adjustments at September 30, 1994 principally include the reporting of a third quarter land sale on the installment basis whereas the accrual method had previously been used. At year end, management determined that the installment method of accounting was more appropriate. The effect of this adjustment was to increase the 1994 net loss by approximately $61,000. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 13. Revenues: Revenues consist of the following:
Years ended September 30, -------------------------------------- 1996 1995 1994 -------- -------- -------- Land revenues: Gross sales of land $182,000 $581,575 Less profit deferred until principal collections are received 61,395 -------- -------- Net sales of land 182,000 520,180 Recognized profit on installment and cost recovery sales 690 $ 30,929 18,316 Interest income 4,789 31,916 66,814 Sale of utility system (Note 11) 129,000 432,800 85,800 Foreclosure settlement, net (Note 3) 74,047 Other 6,398 2,006 140,663 -------- -------- -------- $396,924 $497,651 $831,773 ======== ======== ========
In fiscal year 1994, other revenue principally consists of $119,000 received as a litigation settlement against an unrelated third party for breach of contract. The third party failed to reimburse the Partnership for the costs incurred in building a road. The Partnership received the full amount due of $119,000 prior to final judicial determination. 14. Liquidity: During the year ended September 30, 1995, the Partnership incurred substantial expenses in the development of its properties in addition to normal ongoing administrative costs and costs incurred in connection with the terminated merger described in Note 7. In anticipation of adding home building operations through the proposed merger, management made a decision to suspend land sales activity pending the outcome of the merger. This suspension of land sales resulted in insufficient cash resources available for the Partnership to meet its obligations as they become due. (continued) ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (CONTINUED) YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 14. Liquidity: (continued): Since the termination of the merger in December 1995, the Partnership has resumed land sales efforts and has entered into sales contracts for which closings are pending. However, there is no assurance that such closings will occur, or that their timing will coincide with the Partnership's cash requirements. Management believes that shortfalls in cash flow are temporary and that the Partnership will be able to arrange short term financing sufficient to fund ongoing operations. The success of the sales efforts or obtaining additional borrowings is necessary to enable the Partnership to meet its current obligations and continue as a going concern.
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP SCHEDULE IX - VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 Column C- ----------------------------- (1) (2) Column B- Charged Charged Column E- Balance at to to Balance at Column A beginning costs and other Column D- end of Description of period expenses accounts deductions period ----------- --------- -------- -------- ---------- ------ Deferred profit: 1994 $110,049 $ (A) $ 61,395 $ (B) (18,316) (E) (1) 153,127 1995 153,127 (B) (30,929) (C) (72,550) 49,648 1996 49,648 (B) (690) 0 (F) (48,958) Allowance for doubtful accounts: 1994 0 48,500 48,500 1995 48,500 (D) (48,500) 0 1996 $ 0 $ 0 (A) Deferred profit on current year sales (B) Recognized profit on installment and cost recovery sales (C) Deferred profit on receivable - the underlying property was recorded as an in substance foreclosure (See Note 3 to Financial Statements) (D) Recovery of reserved receivable (E) Rounding (F) Part of settlement transaction (See Note 3 to Financial Statements)
ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP SCHEDULE X - SUPPLEMENTAL INCOME STATEMENT INFORMATION YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994 September 30, ---------------------------------- 1996 1995 1994 -------- -------- ------- 1. Maintenance and repairs $ 0 $ 0 $ 580 ======== ======== ======== 2. Taxes, other than payroll and income taxes $128,589 $119,201 $ 92,267 ======== ======== ======== 3. Advertising $ 0 $ 600 $ 2,500 ======== ======== ========
EX-4 2 EXHIBIT (g) CONTRACT FOR SALE AND PURCHASE LENNAR HOMES, INC. ("Buyer") and ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP ("Seller"), hereby agree that Seller shall sell and Buyer shall buy the following real property ("Property") upon the terms and conditions of this Contract for Sale and Purchase ("Contract"). 1. DESCRIPTION OF PROPERTY: See Paragraph 37 for the description of the Property. 2. PURCHASE PRICE AND METHOD OF PAYMENT: A. Purchase Price....................................$2,451,000.00 B. Initial Deposit and Additional Deposit in accordance with Paragraph 48.......$ 490,200.00 C. Balance to close in U.S. Dollars, in cashier's check issued by local financial institution, subject to adjustments and prorations. 3. intentionally omitted. 4. EFFECTIVE DATE: The "Effective Date" of this Contract will be the date when the last one of the Buyer and Seller has signed this offer. 5. PLACE OF CLOSING: This transaction shall close in Palm Beach County or at another location acceptable to the parties. 6. intentionally omitted. 7. intentionally omitted. 8. EVIDENCE OF TITLE: (A) Seller shall provide a standard title insurance commitment ("Commitment") issued by a Florida licensed title insuror agreeing to issue to Buyer, upon recording of the deed to Buyer, an owner's policy of title insurance ("Policy") in the amount of the Purchase Price, subject only to those title exceptions set forth in this Contract or which shall be discharged by Seller at or before Closing. Seller shall pay the premium for the Policy. (B) The Commitment shall be brought current to a date subsequent to the Effective Date. The commitment shall show a marketable title of record in Seller, in accordance with current title standard adopted by the Florida Bar, subject to only those title exceptions permitted by this Contract or which shall be discharged by Seller at or before Closing. At Closing, Seller shall convey to Buyer a marketable title of record as described in this paragraph. (C) Seller, at Seller's expense, shall deliver the Commitment to Buyer within 20 days after the Effective Date. Buyer shall examine the Commitment within 15 days after receipt thereof, and Buyer shall, within the same 15 day period, notify Seller in writing of any title defects. If any title defects render title unmarketable, Seller shall use diligent effort to cure such defects (including the bringing of unnecessary lawsuits) within 90 days from receipt of such notice. If Seller shall fail to cure such defects within the 90 day period, Buyer shall have the option of: (1) accepting title as is; or (2) demanding a return of the Deposit, in which case, the Deposit shall forthwith be returned to Buyer, and Buyer and Seller shall be relieved, as to each other, of all obligations under this Contract. 9. RESTRICTIONS AND EASEMENTS; BUILDING AND ZONING: (A) Buyer shall take title subject to: (1) zoning restrictions imposed by governmental authority; (2) restrictions and matters appearing on the plat, or otherwise common to the subdivision which do not render title unmarketable or adversely affect Buyer's intended use of the Property; (3) taxes for the year of closing; (4) restrictions, utility easements and other matters which do not render title unmarketable or adversely affect Buyer's use of the Property. (B) Seller warrants that, at the time of Closing, the Property shall not be in violation of building or zoning codes and that all approvals are consistent with the Buyer's intended use of the Property which is the construction and sale of single family homes. If the Property is in violation of such codes, Seller shall pay the expenses required to bring the Property into compliance with such codes at the time of Closing. This warranty shall not survive Closing. 10. SURVEY: Buyer, within the time allowed for delivery of the Commitment and examination thereof, may have the Property surveyed at Buyer's expense. If the survey shows any encroachment on the Property or that any improvements on the Property in fact encroach on setback lines, easements, or lands of others, or violate any restriction, Contract covenant, or applicable governmental regulation, the same shall be treated as a title defect which renders title unmarketable. 11. INGRESS AND EGRESS: Seller covenants and warrants that there is ingress and egress to the Property over public roads. 12. intentionally omitted. 13. intentionally omitted. 14. POSSESSION: Seller warrants and represents that there are not parties in possession or with a right to possession of the Property other than Seller, and that Seller shall deliver possession of the Property to Buyer upon Closing. 15. intentionally omitted. 16. intentionally omitted. 17. intentionally omitted. 18. intentionally omitted. 19. CLOSING DOCUMENTS: Seller shall deliver to Buyer at Closing (a) statutory warranty deed subject to matters contained in Paragraph 9.(A); (b) affidavit attesting to the absence of liens or potential lienors known to Seller, gap affidavit, and affidavit of possession; (c) FIRPTA affidavit or exemption certificate as may be required to exempt Seller or any agent from the income tax withholding requirements or Seller shall authorize Buyer to withhold the necessary amount. 20. TITLE INSURANCE AGAINST ADVERSE MATTERS: Buyer shall receive title insurance against adverse matters pursuant to Section 627.7841 F.S. 21. EXPENSES: State documentary stamps and surtax on deed and the cost of recording any corrective instruments shall be paid by Seller. The cost of recording the deed shall be paid by Buyer. 22. PRORATIONS: All prorations shall be made as of midnight of the day preceding the Closing. Taxes shall be prorated based on the current year's tax with due allowance being made for the maximum allowable discount. If Closing occurs on a date when the current year's assessment is not available, then taxes shall be prorated on the prior year's tax. However, any tax proration based on an estimate may at the request of either party be subsequently readjusted upon receipt of the tax bill, and a statement to that effect will be set forth on the closing statement. 23. SPECIAL ASSESSMENT LIENS: Certified, confirmed and ratified special assessment liens as of Closing are to be paid by Seller. Pending liens as of Closing shall be assumed by Buyer, provided, however, that where the improvement has been substantially completed as of the Effective Date, such pending lien shall be considered as certified or ratified and Seller shall, at Closing, be charged an amount equal to the last estimate by the public body of the assessment for the improvements. 24. intentionally omitted. 25. PERSONS BOUND; GENDER; FLORIDA LAW: The benefits and obligations of this Contract shall enure to and bind the respective heirs, personal representatives, successors and assigns of the parties hereto. Whenever used, the singular shall include the plural, the plural the singular, and the use of any gender shall include all genders. This Contract shall be governed by the laws of the State of Florida. 26. DEFAULT: If Buyer fails to perform this Contract within the time specified (including the payment of the Deposit), the Deposit made, or agreed to be made by Buyer, may be retained or recovered by or for the account of Seller as agreed upon liquidated damages as consideration for the execution of this Contract and in full settlement of Seller's claims, whereupon Buyer and Seller shall be relieved, as to each other, of all obligations under this Contract; this shall be Seller's sole remedy. If, for any reason other than failure of Seller to make Seller's title marketable after diligent effort, Seller fails, neglects or refuses to perform this Contract, Buyer may seek specific performance or elect to receive the return of Buyer's Deposit without thereby waiving any action for damages resulting from Seller's breach. 27. ATTORNEY'S FEES AND COSTS: In connection with any litigation (including all appeals and interpleaders) involving Seller, Buyer, or broker arising out of this Contract, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney's fees at trial and appellate levels. 28. ASSIGNABILITY: Buyer may not assign this Contract without the written consent of Seller except assignments to a wholly owned subsidiary of Buyer or to Lennar Corporation. 29. TIME: Time is of the essence for all provisions of this Contract. 30. ENTIRE AGREEMENT; TYPEWRITTEN OR HANDWRITTEN PROVISIONS; NOT RECORDABLE: This Contract, including any exhibits and riders attached, set forth the entire agreement between Buyer and Seller and contains all the covenants, promises, agreements, representations, conditions and understandings. Typewritten or handwritten provisions inserted in this Contract or attached hereto as exhibits or riders shall control all printed provisions in conflict therewith. Neither this Contract nor any notice of it, shall be recorded in any public records. 31. RADON GAS: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your local public health unit. 32. WARRANTY: Seller warrants and represents that there are no facts known to Seller which materially affect the value or desirability of the Property which are not readily observable by Buyer or which have not been disclosed to Buyer. 33. intentionally omitted. 34. intentionally omitted. 35. intentionally omitted. 36. intentionally omitted. 37. DESCRIPTION OF PROPERTY: The Property being sold and purchased pursuant to this Contract is eighty-six (86) single family home lots (the "Lots") located in the Village of Royal Palm Beach, Florida, described as Lots 1 through 86, inclusive, in "Crestwood Unit 3 - Plat Three" according to the plat thereof recorded or to be recorded in the Public Records of Palm Beach County, Florida. 38. INVESTIGATION PERIOD: Buyer shall have 45 days from the Effective Date to investigate the suitability of the Property for Buyer's purposes and to procure an environmental audit. If for any reason Buyer is dissatisfied with its investigation, Buyer shall have the right at any time during said 45-day period to cancel this Contract, in which event the Deposit will be refunded to Buyer and the parties released of all rights and obligations hereunder. Buyer shall be deemed to have waived its right of cancellation if not exercised by Buyer giving Seller written notice thereof during such 45-day period. Seller will provide Buyer with any documents requested by Buyer relating to the Property which are in Seller's possession. If Buyer does not exercise its right of cancellation, Buyer shall be deemed have agreed to purchase the Property subject only to Seller's obligations set forth in this Contract. 39. SITE PLAN AND PLAT APPROVALS: Seller represents that Seller has received from the Village of Royal Palm Beach site plan approval for the subdivision described in paragraph 37. Seller agrees to obtain final plat approval within sixty (60) days after the Effective Date and to record the plat within 30 days after such approval. Copies of the site plan and plat are attached hereto as Exhibit "A". 40. SUBDIVISION IMPROVEMENTS/INDIAN TRAIL WATER CONTROL DISTRICT ASSESSMENTS: Seller shall construct and pay for (i) all the subdivision improvements for the Property shown on the plans attached hereto as Exhibits B, C, and D, (ii) any other subdivision improvements (except house pads) and bonds required by the Village of Royal Palm Beach as a condition of plat approval, and (iii) all landscaping and entranceway improvements shown on the plans attached hereto as Exhibit D. Seller agrees that all utilities, including sewer, water, electric and telephone, will be installed to the locations on the Property as shown on the above-described plans. Buyer understands and agrees that lots will not be filled to grade or fully cleared, but Seller will provide sufficient clean sand fill stockpiled on or within 2,000 feet of the Property on paved roads to fill the lots to 8" below fixed floor. At Seller's option, payment for the improvements described above may be provided in whole or in part from the proceeds of bonds issued for such purpose by the Indian Trail Water Control District ("District"), which bonds would be paid from assessments on the Lots within the Subdivision. With respect to such assessments, Buyer agrees to include in all lot sales contract it enters into with prospective purchasers, immediately prior to the space reserved in the contract for the signature of the purchaser, the following disclosure statement in boldfaced and conspicuous type which is larger than the type in the remaining text of the contract: INDIAN TRAIL WATER CONTROL DISTRICT IMPOSES TAXES OR ASSESSMENTS, OR BOTH TAXES AND ASSESSMENTS, ON THIS PROPERTY THROUGH A SPECIAL TAXING DISTRICT. THESE TAXES AND ASSESSMENTS PAY THE CONSTRUCTION, OPERATION AND MAINTENANCE COSTS OF CERTAIN PUBLIC FACILITIES OF THE DISTRICT AND ARE SET ANNUALLY BY THE GOVERNING BOARD OF THE DISTRICT. THESE TAXES AND ASSESSMENTS ARE IN ADDITION TO ALL OTHER TAXES AND ASSESSMENTS PROVIDED BY LAW. Buyer consents to the District's recording in the Public Records of Palm Beach County an assessment disclosure statement. Title to the lots will be conveyed by Seller to Buyer subject to such assessment rights of the District. Seller represents to Buyer that assessments for construction debt, which will be determined at the time the bonds are issued by the District, will not exceed $600.00 per year per lot. In the event assessments will exceed $600.00 per year per lot, Seller will promptly notify Buyer and Buyer may either cancel this Contract or elect to deduct from the purchase price of each lot at time of closing an amount equal to the excess above $600.00 per year for the remainder of the assessment term. Seller will pay the costs of any of the improvements described above which are not paid from the District bond proceeds. 41. COMMENCEMENT AND COMPLETION OF SUBDIVISION IMPROVEMENTS: (A) Seller must use all reasonable efforts to commence construction of the subdivision improvements, but if for any reason Seller fails to commence construction within ninety (90) days from the Effective Date, then Seller shall notify Buyer within seven (7) days of such failure, and either party may then cancel this Contract by giving written notice to the other party within thirty (30) days after such notice, whereupon the Deposit shall be returned to Buyer and the parties shal1 be released of all obligations and liabilities hereunder. Provided, however, Buyer at Buyer's sole option may extend said date for commencement of construction by up to two (2) three (3) month extentions by giving written notice to Seller, which notice must be given within seven (7) days after the above-described notice by Seller of failure to commence construction. If construction is not commenced by said extended date, either party may then cancel this Contract. (B) Seller must use all reasonable efforts to complete construction of the subdivision improvements, but in the event that completion and acceptance by the Village is not achieved within two hundred forty (240) days from the Effective Date, Seller shall notify Buyer within seven (7) days of such failure, and Buyer as its sole remedy may cancel this Contract, whereupon the Deposit shall be returned to Buyer and the parties shall be released of all obligations and liabilities hereunder. Provided, however, Buyer at Buyer's sole option may extend said date for completion and acceptance of construction by up to two (2) three (3) month extentions by giving written notice to Seller, which notice must be given within seven (7) days after the above-described notice by Seller of failure to complete construction. Provided further, however, if completion and acceptance is delayed for reasons beyond delays, Seller shall have the right to extend the applicable achievement date for a period of time equal to the delay(s). In any event, if completion and acceptance is not achieved by August 15, 1997, this Contract shall be deemed canceled, whereupon the Deposit shall be returned to Buyer and the parties shall be released of all obligations and liabilities hereunder. (C) If Buyer exercises the option herein to purchase the two model lots prior to completion of the subdivision improvements and acceptance by the Village, and if this Contract is thereafter canceled pursuant to paragraph (A) or (B) above, then Seller shall purchase each model from Buyer (including the lot) for $100,000.00 each if undecorated and $150,000.00 each if decorated. (D) Notwithstanding the provisions of Paragraph 43 conditioning the sale of certain lots on completion and acceptance of the subdivision improvements, Buyer may at its option purchase and close on lots prior to the subdivision improvements being completed and accepted by the Village of Royal Palm Beach. In such event, the net proceeds realized by Seller from such sale (i.e., the sale price minus the mortgage release price, normal closing expenses, and brokers' commission) shall be held in escrow by Seller's attorney or another mutually acceptable escrow agent, and disbursed to Seller upon the subdivision improvements being completed and accepted by the Village. The subdivision improvements are being financed by the District and Union Bank of Florida. Buyer will be given a copy of the financing agreement within twenty (20) after the Effective Date. 42. ACCESS TO THE PROPERTY: Buyer shall have the right to enter upon the Property to perform surveys, engineering studies, inspections, and test borings. Buyer agrees to indemnify and hold Seller harmless from and against any loss, damage, claim, demand or liability with respect to any injury to person or property caused by entry upon the Property by Buyer or its representatives, agents or employees. The provisions of this paragraph shall survive this Contract. 43. SCHEDULE OF LOT PURCHASES: The purchase price of $2,451,000.00 for the 86 lots is based upon a price of $28,500.00 for each lot. Buyer shall close on the purchase of the lots at the aforementioned price per lot in accordance with the following schedule: (a) Buyer shall have the option of purchasing two (2) contiguous model lots, namely, Lots 65 and 66 after Seller has commenced construction of the subdivision improvements. (b) Lots 67 through 72 and 27 through 41, within 20 days after written evidence from Seller to Buyer that the subdivision improvements have been completed and accepted by the Village of Royal Palm Beach. (c) Lots 73 through 75, 42 through 52, and 15 through 21, during the first six (6) month period following the closing on the initial 21 lots described in (b) above. (d) Lots 1 through 14 and 53 through 59, during the second (6) month period following the closing on the initial 21 lots described in (b) above. (e) Lots 60 through 64, 76 through 86, and 22 through 26, during the third six (6) month period following the closing on the initial 21 lots described in (b) above. (f) The lots to be closed during each such period shall close at the same time. If Buyer closes on more than 21 lots during any period, the excess shall be credited against the minimum for the next succeeding period. Buyer agrees that it shall not sell lots to another builder until Seller has sold and conveyed all the lots in the adjoining subdivision known as "Crestwood Unit 3 - Plat Two." If between the Effective Date and the date that Buyer closes on the purchase of the last of the 86 lots (or the sooner termination of this Contract in accordance with the provisions hereof), Seller receives a written offer(s) to purchase lots in "Crestwood Unit 3 - Plat Two" at a price below $28,500.00 per lot, which offer Seller desires to accept, Buyer shall have a first right of refusal to purchase such lots at the same price and upon the same terms and conditions as contained in the offer. Seller will deliver to Buyer a copy of such acceptable offer, and Buyer must notify Seller of its election to purchase within five (5) days after delivery, otherwise Buyer shall be deemed to have waived its first right of refusal with respect to said offer. 44. HOMEOWNERS ASSOCIATION: Buyer will receive the homeowners' association documents and budget applicable to the Property, which Buyer shall review during the investigation period. If Buyer does not exercise its right of cancellation during the investigation period, Buyer will be deemed to have approved such documents. Seller shall execute and record the aforesaid homeowners' association documents in the Public Records of Palm Beach County prior to closing on the first lots. Title to the lots will be conveyed by Seller to Buyer subject to said recorded documents. 45. ARCHITECTURAL APPROVAL: No home may be constructed on any lot until the plans and specifications for the home, the landscape plan, and the location of the home on the lot have been approved in writing by Seller. Any approvals shall be made promptly and not unreasonably withheld. Buyer will submit architectural elevations and plans to Seller during the Investigation Period to receive an approval for the 86 lots. Buyer's failure to comply the architectural control restriction set forth above will entitle Seller to exercise any and all remedies allowed in law or equity. 46. REAL ESTATE BROKER: Seller and Buyer represent and warrant to each other that neither of them has dealt or consulted with any real estate brokers, salesmen or finders in connection with this transaction, except RTL Realty, whose commission shall be Seller's obligation. Seller and Buyer hereby mutually agree to indemnify, save and hold each other harmless from and against any and all losses, damages, claims, costs and expenses (including attorney's fees and expenses) in any way resulting from or connected with any claims or suits for a broker's or salesman's commission, finder's fee or other like compensation, made or brought by any person or entity resulting from its own acts, except as aforesaid. This provision shall survive closing. 47. NOTICES: Any notices required to be given by the terms of this Contract or under any applicable law by either party shall be in writing and shall be either hand-delivered or sent by certified or registered mail, postage prepaid, return receipt requested, or sent via Federal Express or other similar courier service, and such notice shall be deemed to have been given when postmarked, when hand-delivered or when sent via courier service in accordance with the terms of this paragraph. Such written notice shall be addressed as follows: To Buyer: Lennar Homes, Inc. 12230 Forrest Hills Boulevard West Palm Beach, Florida 33414 Attention: Tom Herman with copies to Morris Watsky 700 N.W. 107 Avenue Miami, Florida 33172 Mark Shevory 8190 W. State Road 84 Davie, Florida 33324 To Seller: Royal Palm Beach Colony, Limited Partnership c/o Randy Rieger 1541 Sunset Drive #301 Coral Gables, Florida 33143 with copy to Martin Shapiro 767 Arthur Godfrey Road Miami Beach, Florida 33140 48. DEPOSIT: Upon execution of this Contract by both parties, Buyer shall deliver to Seller an unconditional letter of credit, effective for a period of twenty four (24) months, in the amount of $100,000.00 representing Seller's initial Deposit. A copy of the letter of credit is attached hereto as Exhibit "E". Seller acknowledges receipt of the original letter of credit. Within three business days after the end of the investigation period, if Buyer has not elected to cancel this Contract, Buyer shall increase the letter of credit to $490,200.00. The letter of credit will be from Universal American Mortgage Company naming Seller as beneficiary. In the event that Seller determines that Buyer is in default, Seller may convert the Deposit into cash by drawing the funds under the letter credit. Within five business days after receiving the funds, Seller shall give Buyer written notice that the Deposit has been converted to cash and describing the nature of the default. Seller agrees to keep the funds in a separate escrow account for a period of 30 days after giving such written notice. If Buyer files and serves a lawsuit on Seller contesting the default within said 30-day period, Seller shall continue to hold the funds in the escrow account pending court order. If the letter of credit will expire at any time prior to the closing on the last lots, Buyer agrees to obtain an extension of the term of the letter of credit and deliver proof thereof to Seller no later than 30 days before its expiration. The parties agree that the letter of credit shall be reduced by 20 percent of the purchase price of the lots being purchased at each takedown, and the amount of the Deposit shall be reduced accordingly. 49. HAZARDOUS MATERIALS: Seller represents to the best of its knowledge that there are no hazardous materials or residual contamination in, on, under or about, the Property. Hazardous materials shall include any substances regulated under any and all Federal, State and local statutes and laws, including case law. 50. MORATORIUM: As condition precedent to closing, there shall be no moratorium of any kind relating to the Property. This will include any moratoriums on water or sewer connections, building permits, certificates of occupancy, or building inspections. In such event the closing will be postponed for up to thirty (30) for the moratoriums(s) to be removed, failing which this Contract shall terminate and the parties released of all liability and obligations hereunder. Provided, however, Buyer may elect two (2) ninety (90) day further extentions of the closing. 51. REPRESENTATIONS AND WARRANTIES: Seller hereby warrants, covenants and represents the following to Buyer with full knowledge that Buyer is relying upon same in executing this Contract and performing hereunder. A. Seller has full power and authority to make, deliver, enter into and perform pursuant to the terms and conditions of this Contract and has taken all necessary action to authorize the execution, delivery and performance of the terms and conditions of this Contract and all documents to be executed and delivered by Seller pursuant hereto. There are no actions, suits or proceedings pending or threatened against by or affecting Seller in any court or before any governmental agency relating to the Property, the ownership of the Property, or Seller's ability to convey the Property. B. This Contract and the documents to be executed and delivered by Buyer and Seller in connection with this Contract will not breach the terms and conditions of or cause a default in any mortgage, restrictive covenant or easement, or any other agreement or document encumbering or affecting the Property. C. Seller has received no notice of any change contemplated in any applicable laws, ordinances, or restrictions, or of a judicial or administrative action (except those of a general application) or of any action by adjacent landowners, which would prevent, limit or impede Buyer's use of the Property for single family residential use. D. Seller has received no notice of any violation or any applicable laws, ordinances, regulations, statutes, rules and restrictions pertaining to and affecting the Property. E. No approval(s) or consent(s) by third parties or governmental authorities are required in order for Seller to convey the Property as contemplated hereby. F. There is sewer and water available in sufficient capacity to service the entire Property. The sewer and water lines will be of sufficient size to service the Property. Each of the foregoing warranties, covenants and representations shall be true and correct at closing and shall survive the closing. In the event that any of the warranties and representations are not correct or as represented by Seller, and Seller fails to remedy same within thirty (30) days after written notice from Buyer, then Buyer may, at its option, elect to cancel and terminate this Contract, whereupon the Escrow Agent shall return the Deposit delivered to it by Buyer and the rights and obligations of the parties each to the other with respect to this transaction shall cease and terminate. Seller agrees to cooperate fully with Buyer, at no cost to Seller, in its examination and verification of Seller's warranties and representations. 52. CONDITIONS PRECEDENT TO CLOSING: Buyer's obligation to close pursuant to this Contract is conditioned on the following: A. No material adverse change in the condition of the Property shall have occurred since the date of this Contract. B. As of closing, there shall be no governmental prohibition (including zoning restrictions or conditions) that prevents Buyer from receiving building permits for construction of the intended improvements. C. As of the closing, there shall be no (i) leases or other occupancy agreements, or (ii) contracts for labor or service that affect the Property. D. All of Seller's covenants and obligations contained in this Contract shall have been performed by Seller, and all of Seller's warranties and representations are true and correct and shall be true and correct at closing. E. No condemnation proceedings or any other matters which might have a material adverse effect on the value of the Property shall be pending or threatened against the Property at the closing. F. Any and all permits, licenses, or qualifications from any Federal, State or other local governmental agencies having jurisdiction over the Property, required for the development of the Property and construction of Buyer's model homes shall be obtained or obtainable. G. Seller gives to Buyer evidence that its development loan financing is in a position to be funded and that the District Bonds have been sold and the proceeds thereof are available to pay for the subdivision improvements required to be constructed in accordance with paragraph 40 hereof. H. Water and sewer shall be available to the Property pursuant to an agreement with the governmental agencies having jurisdiction and all other utilities shall be available to the Property. If any of the conditions precedent to Buyer's obligation have not been satisfied, Buyer may cancel this Agreement by notifying Seller (unless Seller shall satisfy the condition precedent within thirty (30) days after such notice), in which event Seller shall return the Deposit to Buyer. Buyer may waive, at Buyer's option and in Buyer's sole discretion, any of the conditions precedent to Buyer's obligation to close. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP Date signed: By: s/sRandy Rieger August 12, 1996 --------------- Randy Rieger, as Authorized Agent of Stein Management Company, Inc., Managing General Partner LENNAR HOMES, INC. Date signed: By: /s/Tom Herman August 9, 1996 ------------- Tom Herman Vice President EXHIBIT (h) FIRST AMENDMENT TO LOAN AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of the 26th day of June, 1995 (the "Amendment"), is made by and between Royal Palm Beach Colony, Limited partnership, a Delaware Limited Partnership (hereinafter referred to as "BORROWER"), and Union Bank of Florida ("Bank" or "Lender"). RECITALS A. Borrower has applied to Bank for a future advance of $1,200,000.00 ("Future Advance") to the Note secured by the Mortgage in the original principal amount of $975,000.00 to be advanced by Bank pursuant to the terms hereof and evidenced by notes described in the First Mortgage Modification Agreement executed this date by the Bank and Borrower. B. Bank is willing to make the Loan modification described above based on the terms and conditions set forth in this Amendment. NOW, THEREFORE for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower and Bank hereby agree as follows: 2. The term "Loan" shall be in the amount of $2,175,000.00. 3. The term "Improvements" shall include the on-site infrastructure lot improvements to be constructed with the proceeds of the Future Advance. 4. The term "Use of Proceeds" shall mean the permitted use of the Loan proceeds under the Note as set forth in the Loan Agreement. Exhibit "C" of the Loan Agreement shall be hereby deleted. 5. The term "Note" shall include the Future Advance Promissory Note (For Non-Revolving Line of Credit) of even date herewith in the amount of $1,200,000.00) and the Consolidation Promissory Note (For Non-Revolving Line of Credit) of even date herewith in the amount of $2,175,000.00. 4. The release price as set forth in paragraph 5.26 shall be amended from $10,000.00 to $20,000.00 per developed lot. 6. A commitment fee in the amount of $19,500.00 (two percent (2%) computed on $975,000.00) is due from Borrower and earned upon closing of the Future Advance whether or not any disbursements are made thereunder. If Borrower draws Loan proceeds under the Future Advance beyond $975,000.00 ("Excess Funding"), additional commitment fees of two percent (2%) based on the amount of such Excess Funding shall be due and owing at the time draws representing such Excess Funding disbursed by Lender. 7. The parties agree that the mortgagee title insurance for the Future Advance shall be in the amount of $975,000.00 but such insurance shall be increased and paid for by the Borrower in the event of any Excess Funding to the Borrower up to the future advance amount of $1,200,000.00. 8. The maturity date of the Loan shall be July 1, 1997. 9. Borrower agrees to give Lender immediate written notice upon the recording of the Plats for Phases I, II and III. 10. Borrower shall be in default under the Loan if Borrower fails to record the Plats for Phases I, II and III prior to the date upon which such Plats (the preliminary approved plats for such phases having been submitted to Bank by the date of this Amendment) expire with Palm Beach County, Florida. 11.The parties hereto agree that no funding of Future Advance proceeds for Phase I (except for the closing costs associated with the closing of the Future Advance set forth on the Closing Statement made this date) shall be made by Bank until Borrower has submitted to Bank all permits and necessary governmental authorizations (including Plat recordation and site plan approval) for the construction of the on-site infrastructure lot improvements; provided Bank with proof that the off-site improvements constructed with the original proceeds of the Loan have been accepted by the appropriate governmental authorities; and provided proof that the 1994 real estate taxes have been paid for the Property. Likewise, no funding of Future Advance proceeds for Phases II and III shall be made by Bank until such Plats have been recorded, site plans have obtained final approval by the governmental authorities and all of the permits and governmental authorizations as described above have been obtained by Borrower and provided to Bank. 12. All other terms and conditions of the Loan Agreement shall be amended consistent with the matters set forth above. IN WITNESS WHEREOF, Borrower and bank have executed this Amendment as of the above written date by their respective officers all duly authorized thereunto. Signed, sealed and delivered in the presence of: "BORROWER" ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership BY: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, Managing General Partner By: /s/Martin J. Katz ----------------- Martin J.Katz, President (seal) /s/Jane Rankin - ------------------- Jane Rankin /s/Martin Shapiro - ------------------- Martin Shapiro Address: 2501 South Ocean Drive Hollywood, FL 33019 "LENDER" Union Bank of Florida /s/Jane Rankin - ------------------- BY: /s/Jack Brewer, Sr. Jane Rankin ------------------- Jack Brewer, Sr. Vice President /s/Martin Shapiro - ------------------- Martin Shapiro Address: 1801 North Pine Island Road Plantation, FL 33322 Prepared by: Jane C. Rankin, Esq. Kubicki Draper/BM Suite 1600 One East Broward Blvd. Ft. Lauderdale, FL 33309 305-768-0011 FIRST MORTGAGE MODIFICATION AGREEMENT THIS AGREEMENT is made this 26th day of June, 1995 by and between Royal Palm Beach Colony, Limited Partnership, a Delaware Limited Partnership, whose address is 2501 South Ocean Drive, Hollywood, FL 33019 (hereinafter referred to as "Borrower") and Union Bank of Florida, with its offices at 1901 North Pine Island Road, Plantation, FL 33322 (hereinafter referred to as "Lender"). W I T N E S S E T H: WHEREAS, Borrower executed a Promissory Note ("Note") in favor of Lender dated October 6, 1994 in the original principal amount of $975.000.00 which Note was secured by a Real Estate Mortgage, Assignment and Security Agreement of even date therewith ("Mortgage") given by Borrower in favor of Lender recorded in Official Records Book 9464, at Page 1619, of the Public Records of Palm Beach County, Florida, encumbering the property described therein ("Property"): WHEREAS, the Loan is additionally secured by certain other documents including but not limited to UCC-1 Financing Statement(s), filed in the Public Records of Palm Beach County, Florida and with the Secretary of State of Florida (jointly and severally referred to as the "Loan Documents or "Security Documents"); and WHEREAS, the Note, Mortgage and Security Documents are further subject to an unrecorded Loan Agreement ("Loan Agreement") dated October 6, 1994; and WHEREAS, the principal balance that is outstanding under the Loan as of the date hereof is $975,000.00 plus accrued interest thereon; and WHEREAS, Borrower represents to Lender that it is the fee simple owner of the Property described in the Mortgage; and that there are no inferior mortgages or other liens or encumbrances now outstanding against the Property except as permitted by the terms of the Loan Agreement, and that the lien of said Mortgage held by Lender is a valid first subsisting lien on the Property. WHEREAS, the parties hereto desire to increase the amount of the Note and Mortgage by $1,200,000.00 such that the total secured under such Loan would be $2,175,000.00 and to modify certain terms and conditions of the Loan Agreement; and NOW, THEREFORE, in consideration of these premises, TEN AND NO/100 DOLLARS ($10.00) and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The foregoing recitals are true and correct and are incorporated herein by reference. 2. The outstanding principal balance of the Loan as of the date of this Agreement is $975,000.00. 3. The Borrower this date has executed a Future Advance Promissory Note (For Non-Revolving Line of Credit) in the amount of S1,200,000.00, and a Consolidation Promissory Note (For Revolving Line of Credit) in the amount of $2,175,000.00, evidencing the total indebtedness under the Loan which shall be secured by the Mortgage and Security Documents. [The foregoing notes hereinafter included in the term "Note".] 4. Borrower and Lender have this date executed a First Amendment to Loan Agreement which shall be incorporated by reference into the Loan Agreement and the Security Documents. 5. The maturity date of the Loan shall be extended to July 1, 1997. 6. The Maximum Possible Principal Debt, including future advances, which may be secured by the Mortgage shall be increased from $1,950,000.00 to two (2) times the amount of the indebtedness secured thereby. 7. All of the Property shall remain in all respects subject to the lien, charge and encumbrance of said Mortgage in favor of Lender, and nothing herein contained, and nothing done pursuant hereto, shall affect or be construed to affect the lien, charge or encumbrance of, or warranties title in, or conveyance affected by said Mortgage, or the priority thereof over other liens, charges or encumbrances or conveyances, or to release or affect the liability of any party or parties who may now or hereafter be liable under or on account of said Mortgage, or the Note secured thereby; nor shall anything herein contained or done in pursuance hereof affect or be construed to affect any other security or instrument, if any, held by Lender as security for or evidence of the aforesaid indebtedness. 8. The Borrower hereby ratifies and re-affirms all of the terms and conditions of the Note, Mortgage, Security Documents and Loan Agreement as modified herein, and Borrower does hereby acknowledge, certify, affirm and represent with full knowledge that Lender is acting in reliance thereon in the execution of this Agreement; that there are no claims, offsets, breaches of any agreement, document or writing relating directly or indirectly to the loan evidenced by the Note; no matter, item or thing that would diminish or reduce the amount owed under the Note; or any action or causes or action by the Borrower or any person dealing with the Borrower against Lender directly or indirectly relating to the loan evidenced by the Note and the Borrower affirms there is no offset or defense as to the indebtedness owed as of this date and that Borrower is not in default of the Note, Mortgage, Security Documents or Loan Agreement as of this date. Borrower further acknowledges that all representations and warranties made by the Borrower in the loan documents remain true and correct as of this date. 9. Borrower agrees to pay all fees and costs related to the recording of this Agreement and as set forth by Lender. 10. Except as modified herein, the Mortgage, Security Documents and Loan Agreement shall remain in full force and effect according to their terms and if there is any conflict in the terms of this Agreement and the aforedescribed documents, the terms of this Agreement shall apply. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first set forth above. Signed, sealed and delivered in the presence of: "BORROWER" ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership BY: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, Managing General Partner By: /s/Martin J. Katz ----------------- Martin J.Katz, President (seal) - ------------------- Printed Name: - ------------------- Printed Name: Address: 2501 South Ocean Drive Hollywood, FL 33019 "LENDER" Union Bank of Florida - ------------------- BY: /s/Jack Brewer, Sr. Printed Name: ------------------- Jack Brewer, Sr. Vice President - ------------------- Printed Name: Address: 1801 North Pine Island Road Plantation, FL 33322 (seal) STATE OF FLORIDA COUNTY OF :ss The foregoing instrument was acknowledged before me this _ day of , 1995 by Martin J. Katz as President of STEIN MANAGEMENT COMPANY, INC. a Florida corporation, as Managing General Partner of ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership, on behalf of the Limited Partnership. He is known to me or has produced a _____________as identification. ---------------------- Notary Public (Seal) STATE OF FLORIDA COUNTY OF The foregoing instrument was acknowledged before me this ______ day of ___________, 1995 by Jack Brewer, Sr. Vice President of Union Bank of Florida on behalf of the Bank. He is known to me or has produced a Florida driver's license as identification. Notary Public (Seal) Borrower's Taxpayer Identification No. 59-2501059 CONSOLIDATED PROMISSORY NOTE (For Non-Revolving Line of Credit) $2,175,000.00 May _ , 1994 Fort Lauderdale, Florida FOR VALUE RECEIVED, ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership, (sometimes hereinafter referred to as the "undersigned" or the "Borrower"), promises to pay to the order of Union Bank of Florida, or any subsequent holder of this note ("Bank") at its principal offices located at Plantation, Florida (or at such other place or places as Bank may designate) the principal sum of Two Million one Hundred Seventy Five Thousand and No/100 Dollars ($2,175,000.00) or so much thereof as may be from time to time outstanding, plus interest thereon at the Rate hereinafter defined, all in accordance with the terms and conditions of this Promissory Note (the "Note") and in accordance with the Loan Agreement dated October 6, 1994, as amended, by and between Borrower and Bank (the "Loan Agreement"). This Note is secured by a Real Estate Mortgage, Assignment, and Security Agreement dated October 6, 1994 filed for record in the public records of Palm Beach County, Florida, as amended (the "Mortgage"), UCC Financing Statements filed for record in the public records of Palm Beach County, Florida, and in the Office of the Secretary of State of the State of Florida (the "Financing Statements"), and other written agreements by and between Borrower and Bank. The Mortgage and such other agreements are hereinafter referred to collectively as the "Security Documents". Terms used herein but not otherwise defined hereunder are defined as set forth in the Security Documents or the Loan Agreement. All of the terms, definitions, conditions and covenants of the Loan Agreement and the Security Documents are expressly made a part of this Note by reference in the same manner and with the same effect as if set forth herein at length, and any holder of this Note is entitled to the benefits of and remedies provided in the Loan Agreement and the Security Documents. Subject to the terms and conditions of this Note and the Security Documents, Bank shall advance funds to Borrower pursuant to the terms of the Loan Agreement. l. Prime Rate. For purposes hereof, "Prime Rate" means the highest fluctuating rate of interest per annum as published by the "Wall Street Journal." 2. Interest. The outstanding Loan principal balance shall bear interest at a variable rate per annum equal to the Prime Rate plus two percent (2.0%). The interest rate hereunder shall be adjusted daily in accordance with fluctuations in the Prime Rate. Interest shall be computed on the basis of a daily amount of interest accruing on the daily outstanding principal balance during a 360-day year multiplied by the actual number of days the principal is outstanding during such applicable interest period. 3. Payment of Interest. Interest accrued in accordance with this Note shall be due and payable monthly, in arrears, on the first day of each month immediately following the calendar month for which said interest has accrued. All accrued but unpaid interest shall be due and payable in full on the Maturity Date, as defined in Paragraph 6 below. All payments of principal and interest shall be made in lawful currency of the United States of America which shall be legal tender in payment of all debts, public and private, at the time of payment. 4. Prepayment. This Note may be prepaid in whole or in part at any time without fee, premium or penalty. Any partial prepayment shall be applied in accordance with paragraph 10 below and shall not postpone the due date of any subsequent periodic installments or the Maturity Date, or change the amount of such installments due, unless Bank shall otherwise agree in writing. 5. Late Charges. Should Borrower fail to pay the installments of interest or principal (if applicable) on any due date provided for herein, then Borrower further promises to pay a late payment charge equal to five percent (5%) of the amount of the unpaid installment as liquidated compensation to Bank for the extra expense to Bank to process and administer the late payment, Borrower agreeing, by execution hereof, that any other measure of compensation for a late payment is speculative and impossible to compute. This provision for late charges shall not be deemed to extend the time for payment or be a "grace period" or "cure period" that gives Borrower a right to cure a Default or Default Condition. Imposition of late charges is not contingent upon the giving of any notice or lapse of any cure period provided for in the Mortgage and shall not be deemed a waiver of any right or remedy of Bank, including without limitation, acceleration of this Note. 6. Maturity Date. The then outstanding principal balance plus all accrued but unpaid interest shall be due and payable on July 1, 1997 (the "Maturity Date"). 7. Default. Any failure of Borrower to comply with any term, covenant, or condition of this Note, including without limitation, Borrower's failure to pay principal, interest, or expenses when same shall become due, or the existence of any Default Condition or Default under the Security Documents or Loan Agreement shall be deemed, at the option of Bank, a Default under this Note. a. Acceleration. Upon the occurrence of a Default hereunder or under the terms of any one or more of the Security Documents or the Loan Agreement, Bank may declare the then outstanding principal and all accrued but unpaid interest immediately due and payable and upon acceleration and thereafter this Note shall bear interest at the Default Rate, hereinafter defined, until all indebtedness evidenced hereby and secured by the Security Documents has been paid in full. Further, in the event of such acceleration, the Loan, and all other indebtedness of Borrower to Bank arising out of or in connection with the Loan shall become immediately due and payable, without presentation, demand, protest or notice of any kind, all of which are hereby waived by Borrower. 9. Default Rate. After default or maturity or upon acceleration, and thereafter, the unpaid indebtedness then evidenced by this Note and due under and secured by the Security Documents shall bear interest at a fixed rate equal to the maximum rate then permitted under applicable law. 10. Application of Payments. A11 sums received by Bank for application to the Loan may be applied by Bank to late charges, expenses, costs, interest, principal, and other amounts owing to Bank in connection with the Loan in the order selected by Bank in its sole discretion. 11. Expenses. In the event this Note is not paid when due on any stated or accelerated maturity date, or should it be necessary for Bank to enforce any other of its rights under the Loan Documents, Borrower will pay to Bank, in addition to principal, interest and other charges due hereunder or under the other Loan Documents, all costs of collection or enforcement, including reasonable attorneys' fees, paralegals' fees, legal assistants' fees, costs and expenses, whether incurred with respect to collection, litigation, bankruptcy proceedings, interpretation, dispute, negotiation, trial, appeal, defense of actions instituted by a third party against Bank arising out of or related to the Loan, enforcement of any judgment based on this Note, or otherwise, whether or not a suit to collect such amounts or to enforce such rights is brought or, if brought, is prosecuted to judgment. 12. Waiver. A11 persons now or at any time liable for payment of this Note, whether directly or indirectly, including without limitation any Guarantor, hereby waive presentment, protest, notice of protest and dishonor. The undersigned expressly consents to any extensions and renewals, in whole or in part, to the release of any or all Guarantors or co-makers and any collateral security or portions thereof, given to secure this Note, and all delays in time of payment or other performance which Bank may grant, in its sole discretion, at any time and from time to time without limitation all without any notice or further consent of Borrower, and any such grant by Bank shall not be deemed a waiver of any subsequent delay or any of Bank's rights hereunder or under any of the other Loan Documents. 13. Usury. In no event shall this or any other provision herein or in the Loan Agreement or Security Documents, permit the collection of any interest which would be usurious under the law governing this transaction. If any such interest in excess of the maximum rate allowable under applicable law has been collected, Borrower agrees that the amount of interest collected above the maximum rate permitted by applicable law, together with interest thereon at the rate required by applicable law, shall be refunded to Borrower, and Borrower agrees to accept such refund, or, at Borrower's option, such refund shall be applied as a principal payment hereunder. 14. Modification. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, changes, modifications, or discharges is sought. 15. Applicable Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida. 16. Notices. All notices or other communications required or permitted to be given pursuant to the provisions of this Note shall be given in accordance with the notice provisions of the Loan Agreement. 17. Successors and Assigns. As used herein, the terms "Borrower" and "Bank" shall be deemed to include their respective heirs, personal representatives, successors and assigns. 18. Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively operate to invalidate this Note, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Note. The remaining provisions of this Note shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby. In the event any provisions of this Note are inconsistent with the provisions of the Loan Agreement, the Security Documents, or any other agreements or documents executed in connection with this Note, this Note shall control. 19. Captions: Pronouns. Captions are for reference only and in no way limit the terms of this Note. The pronouns used in this instrument shall be construed as masculine, feminine, or neuter as the occasion may require. Use of the singular includes the plural, and vice versa. 20. Business Day. Any reference herein or in the Loan Agreement or Security Documents to a day or business day shall be deemed to refer to a banking day which shall be a day on which Bank is open for the transaction of business, excluding any national holidays, and any performance which would otherwise be required on a day other than a banking day shall be timely performed in such instance, if performed on the next succeeding banking day. Notwithstanding such timely performance, interest shall continue to accrue hereunder until such payment or performance has been made. 21. WAIVER OF TRIAL BY JURY: THE PARTIES (INCLUDING ANY GENERAL PARTNER(S) OF THE BORROWER) HEREBY MUTUALLY AGREE THAT NEITHER PARTY, NOR ANY PARTNER, ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF THE PARTIES (ALL OF WHOM ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDINGS, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY INSTRUMENT EVIDENCING, SECURING, OR RELATING TO THE INDEBTEDNESS AND OTHER OBLIGATIONS EVIDENCED HEREBY, ANY RELATED AGREE- MENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE INDEBTEDNESS EVIDENCED HEREBY OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG THE PARTIES, OR ANY OF THEM. NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES WITH BANK, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. BANK HAS IN NO WAY AGREED WITH OR REPRESENTED TO ANY OF THE PARTIES THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. THE WAIVER CONTAINED HEREIN IS IRREVOCABLE AND CONSTITUTES A KNOWING AND VOLUNTARY WAIVER. 22. This Note is a consolidation of that certain Promissory Note (For Non-Revolving Line of Credit) dated October 6, 1994 in the original principal amount of Nine Hundred Seventy Five Thousand and No/100 Dollars ($975,000.00) upon which full documentary stamps were paid and affixed to the Real Estate Mortgage, Assignment and Security Agreement securing same and that certain Future Advance Promissory Note (For Non-Revolving Line of Credit) of even date herewith in the original principal amount of One Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00) upon which full documentary stamps were paid and affixed to the First Mortgage Modification Agreement securing same. IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the day and year first above written. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership BY: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, Managing General Partner By:/s/Marvin J. Katz ----------------- Martin J.Katz, President (seal) Borrower's Taxpayer Identification No. 59-2501059 FUTURE ADVANCE PROMISSORY NOTE (For Non-Revolving Line of Credit) $1,200,000.00 __________, 1994 Fort Lauderdale Florida FOR VALUE RECEIVED, ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership, (sometimes hereinafter referred to as the "undersigned" or the "Borrower"), promises to pay to the order of Union Bank of Florida, or any subsequent holder of this note ("Bank") at its principal offices located at Plantation, Florida (or at such other place or places as Bank may designate) the principal sum of One Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00) or so much thereof as may be from time to time outstanding, plus interest thereon at the Rate hereinafter defined, all in accordance with the terms and conditions of this Promissory Note (the "Note") and in accordance with the Loan Agreement dated October 6, 1994, as amended, by and between Borrower and Bank (the "Loan Agreement"). This Note is secured by a Real Estate Mortgage, Assignment, and Security Agreement dated October 6, 1994, filed for record in the public records of Palm Beach County, Florida, as amended (the "Mortgage"), UCC Financing Statements filed for record in the public records of Palm Beach County, Florida, and in the Office of the Secretary of State of the State of Florida (the "Financing Statements"), and other written agreements by and between Borrower and Bank. The Mortgage and such other agreements are hereinafter referred to collectively as the "Security Documents~. Terms used herein but not otherwise defined hereunder are defined as set forth in the Security Documents or the Loan Agreement. All of the terms, definitions, conditions and covenants of the Loan Agreement and the Security Documents are expressly made a part of this Note by reference in the same manner and with the same effect as if set forth herein at length, and any holder of this Note is entitled to the benefits of and remedies provided in the Loan Agreement and the Security Documents. Subject to the terms and conditions of this Note and the Security Documents, Bank shall advance funds to Borrower pursuant to the terms of the Loan Agreement. 1. Prime Rate. For purposes hereof, "Prime Rate" means the highest fluctuating rate of interest per annum as published by the "Wall Street Journal". 2. Interest. The outstanding Loan principal balance shall bear interest at a variable rate per annum equal to the Prime Rate plus two percent (2.0%). The interest rate hereunder shall be adjusted daily in accordance with fluctuations in the Prime Rate. Interest shall be computed on the basis of a daily amount of interest accruing on the daily outstanding principal balance during a 360-day year multiplied by the actual number of days the principal is outstanding during such applicable interest period. 3. Payment of Interest. Interest accrued in accordance with this Note shall be due and payable monthly, in arrears, on the first day of each month immediately following the calendar month for which said interest has accrued. All accrued but unpaid interest shall be due and payable in full on the Maturity Date, as defined in Paragraph 6 below. All payments of principal and interest shall be made in lawful currency of the United States of America which shall be legal tender in payment of all debts, public and private, at the time of payment. 4. Prepayment. This Note may be prepaid in whole or in part at any time without fee, premium or penalty. Any partial prepayment shall be applied in accordance with paragraph 10 below and shall not postpone the due date of any subsequent periodic installments or the Maturity Date, or change the amount of such installments due, unless Bank shall otherwise agree in writing. 5. Late Charges. Should Borrower fail to pay the installments of interest or principal (if applicable) on any due date provided for herein, then Borrower further promises to pay a late payment charge equal to five percent (5%) of the amount of the unpaid installment as liquidated compensation to Bank for the extra expense to Bank to process and administer the late payment, Borrower agreeing, by execution hereof, that any other measure of compensation for a late payment is speculative and impossible to compute. This provision for late charges shall not be deemed to extend the time for payment or be a "grace period" or "cure period" that gives Borrower a right to cure a Default or Default Condition. Imposition of late charges is not contingent upon the giving of any notice or lapse of any cure period provided for in the Mortgage and shall not be deemed a waiver of any right or remedy of Bank, including without limitation, acceleration of this Note. 6. Maturity Date. The then outstanding principal balance plus all accrued but unpaid interest shall be due and payable on July 1, 1997 (the "Maturity Date"). 7. Default. Any failure of Borrower to comply with any term, covenant, or condition of this Note, including without limitation, Borrower's failure to pay principal, interest, or expenses when same shall become due, or the existence of any Default Condition or Default under the Security Documents or Loan Agreement shall be deemed, at the option of Bank, a Default under this Note. 8. Acceleration. Upon the occurrence of a Default hereunder or under the terms of any one or more of the Security Documents or the Loan Agreement, Bank may declare the then outstanding principal and all accrued but unpaid interest immediately due and payable and upon acceleration and thereafter this Note shall bear interest at the Default Rate, hereinafter defined, until all indebtedness evidenced hereby and secured by the Security Documents has been paid in full. Further, in the event of such acceleration, the Loan, and all other indebtedness of Borrower to Bank arising out of or in connection with the Loan shall become immediately due and payable, without presentation, demand, protest or notice of any kind, all of which are hereby waived by Borrower. 9. Default Rate. After default or maturity or upon acceleration, and thereafter, the unpaid indebtedness then evidenced by this Note and due under and secured by the Security Documents shall bear interest at a fixed rate equal to the maximum rate then permitted under applicable law. 10. Application of Payments. All sums received by Bank for application to the Loan may be applied by Bank to late charges, expenses, costs, interest, principal, and other amounts owing to Bank in connection with the Loan in the order selected by Bank in its sole discretion. 11. Expenses. In the event this Note is not paid when due on any stated or accelerated maturity date, or should it be necessary for Bank to enforce any other of its rights under the Loan Documents, Borrower will pay to Bank, in addition to principal, interest and other charges due hereunder or under the other Loan Documents, all costs of collection or enforcement, including reasonable attorneys' fees, paralegals' fees, legal assistants' fees, costs and expenses, whether incurred with respect to collection, litigation, bankruptcy proceedings, interpretation, dispute, negotiation, trial, appeal, defense of actions instituted by a third party against Bank arising out of or related to the Loan, enforcement of any judgment based on this Note, or otherwise, whether or not a suit to collect such amounts or to enforce such rights is brought or, if brought, is prosecuted to judgment. 12. Waiver. A11 persons now or at any time liable for payment of this Note, whether directly or indirectly, including without limitation any Guarantor, hereby waive presentment, protest, notice of protest and dishonor. The undersigned expressly consents to any extensions and renewals, in whole or in part, to the release of any or all Guarantors or co-makers and any collateral security or portions thereof, given to secure this Note, and all delays in time of payment or other performance which Bank may grant, in its sole discretion, at any time and from time to time without limitation all without any notice or further consent of Borrower, and any such grant by Bank shall not be deemed a waiver of any subsequent delay or any of Bank's rights hereunder or under any of the other Loan Documents. 13. Usury. In no event shall this or any other provision herein or in the Loan Agreement or Security Documents, permit the collection of any interest which would be usurious under the law governing this transaction. If any such interest in excess of the maximum rate allowable under applicable law has been collected, Borrower agrees that the amount of interest collected above the maximum rate permitted by applicable law, together with interest thereon at the rate required by applicable law, shall be refunded to Borrower, and Borrower agrees to accept such refund, or, at Borrower's option, such refund shall be applied as a principal payment hereunder. 14. Modification. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, changes, modifications, or discharges is sought. 15. Applicable Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida. 16. Notices. All notices or other communications required or permitted to be given pursuant to the provisions of this Note shall be given in accordance with the notice provisions of the Loan Agreement. 17. Successors and Assigns. As used herein, the terms "Borrower" and "Bank" shall be deemed to include their respective heirs, personal representatives, successors and assigns. 18. Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively operate to invalidate this Note, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Note. The remaining provisions of this Note shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby. In the event any provisions of this Note are inconsistent with the provisions of the Loan Agreement, the Security Documents, or any other agreements or documents executed in connection with this Note, this Note shall control. 19. Captions: Pronouns. Captions are for reference only and in no way limit the terms of this Note. The pronouns used in this instrument shall be construed as masculine, feminine, or neuter as the occasion may require. Use of the singular includes the plural, and vice versa. 20. Business Day. Any reference herein or in the Loan Agreement or Security Documents to a day or business day shall be deemed to refer to a banking day which shall be a day on which Bank is open for the transaction of business, excluding any national holidays, and any performance which would otherwise be required on a day other than a banking day shall be timely performed in such instance, if performed on the next succeeding banking day. Notwithstanding such timely performance, interest shall continue to accrue hereunder until such payment or performance has been made. 21. WAIVER OF TRIAL BY JURY: THE PARTIES (INCLUDING ANY GENERAL PARTNER(S) OF THE BORROWER) HEREBY MUTUALLY AGREE THAT NEITHER PARTY, NOR ANY PARTNER, ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF THE PARTIES (ALL OF WHOM ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDINGS, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY INSTRUMENT EVIDENCING, SECURING, OR RELATING TO THE INDEBTEDNESS AND OTHER 0BLIGATIONS EVIDENCED HEREBY, ANY RELATED AGREE- MENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE INDEBTEDNESS EVIDENCED HEREBY OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG THE PARTIES, OR ANY OF THEM. NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS SEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES WITH BANK, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. BANK HAS IN NO WAY AGREED WITH OR REPRESENTED TO ANY OF THE PARTIES THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. THE WAIVER CONTAINED HEREIN IS IRREVOCABLE AND CONSTITUTES A KNOWING AND VOLUNTARY WAIVER. 22. This Note represents a future advance to that certain Promissory Note (For Non-Revolving Line of Credit) dated October 6, 1994 in the original principal amount of Nine Hundred Seventy Five Thousand and No/100 Dollars ($975,000.00) upon which full documentary stamps were paid and affixed to the Real Estate Mortgage, Assignment and Security Agreement securing same. IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the day and year first above written. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership BY: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, Managing General Partner By:/s/Martin J. Katz ----------------- Martin J. Katz, President (seal) Documentary Stamps in the amount of $4,200.00 have been paid and affixed to the First Mortgage Modification Agreement securing this Note. EXHIBIT 4(i) SECOND AMENDMENT TO LOAN AGREEMENT THIS SECOND AMENDMENT TO LOAN AGREEMENT, dated as of the day of October, 1996 (the "Amendment"), is made by and between Royal Palm Beach Colony, Limited partnership, a Delaware Limited Partnership (hereinafter referred to as "BORROWER"), and Union Bank of Florida ("Bank" or "Lender"). RECITALS A. Borrower has applied to Bank for a future advance of $550,000.00 ("Future Advance") to the Loan secured by the Mortgage and Loan Documents in the current principal amount of $2,175,000.00 to be advanced by Bank pursuant to the terms hereof and evidenced by note and "L/C" described herein and in the Second Mortgage Modification Agreement executed this date by the Bank and Borrower. B. Bank is willing to make the Loan modification described above based on the terms and conditions set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower and Bank hereby agree as follows: 1. The term "Loan" shall be in the amount of $2,625,000.00 which represents the sum of the renewal of the outstanding principal balance of 1,212,412.55 and the current availability under the Loan ($862,587.45) plus the Future Advance described herein. 2. The "Use of Proceeds" for the Future Advance set forth herein shall be attached as Exhibit "A" hereto and incorporated by reference herein. 3. The term "Note" shall be collectively the Renewal Promissory Note (For Non-Revolving Line of Credit)in the amount of $1,212,412.55, the Future Advance Promissory Note (For Non-Revolving Line of Credit) in the amount of $1,412,587.45 and the Consolidation Promissory Note in the amount of $2,625,000.00, all of even date herewith which Note shall be secured by the Mortgage and Loan Documents. 4. A commitment fee in the amount of (i) $10,375.00 [one half of one percent (.05%) computed on the Loan amount as of the First Amendment to Loan Agreement - $2,075,000.00] is due from Borrower for the renewal of the existing Loan until January 31, 1998; and (ii) $11,000.00 [two percent (2%)] computed on $550,000.00] is due from Borrower and earned upon closing of the Future Advance whether or not any disbursements are made thereunder. 5. The amount advanced to date under the Note is $1,212,412.55 leaving a balance of $862,587.45 available for disbursement under this non-revolving Loan facility. This balance, plus the Future Advance, results in a total of $1,412,587.45 available for disbursement effective upon this date. Of this total amount $950,000.00 will be allocated for the issuance of an Irrevocable (Documentary) Letter of Credit ("L/C") for the benefit of Indian Trail Water Control District to fund the remaining costs of Borrower's infrastructure development of Phases II and III of Crestwood Unit #3 (the "Project") after Borrower's use of bond proceeds derived from the sale of special assessment revenue bonds issued by ITWCD for the Project ("Bond Offering") with the remaining available Loan balance to be disbursed to the Borrower per the Use of Proceeds as and when requested by Borrower for so long as Borrower is not in default under the Loan. A. The L/C shall be (i) for a term of no more than one (1) year; (ii) shall be in a form and have attached as exhibits a requisition form and draw schedule approved by Bank;(iii) shall be secured by the Mortgage and the existing collateral for the Loan; and (iv) shall be delivered by Bank to ITWCD upon the successful closing of the Bond Offering. To the extent that any amounts outstanding under the Loan during the term of the Note or the L/C exceed sixty percent (60%) of the value of the Bank's collateral ("Value"), as determined by Bank's appraisal, Bank at its sole discretion shall require sufficient additional collateral to regain the sixty percent (60%) Loan-to-Value such as the following: i) Cash security in a form acceptable to Bank; and/or ii) Additional real estate collateral of same loan-to- Value acceptable to Bank in Bank's sole discretion. B. In the event the current appraised value of the collateral (as determined by an appraiser acceptable to Bank) for the Loan becomes decreased such that the Loan-to Value is less than sixty percent (60%), the Borrower shall be required to provided Bank with additional collateral as set forth in items (i) and (ii) above in this section. C. Bank shall have received opinions of counsel for the issuing entity and such other parties as Bank may require, a copy of the Bond Offering documentation and such other documentation and agreements as Bank may reasonably require upon review of the foregoing. D. Any uncured Default by Borrower under the Bond Offering documents shall be a Default under the Loan. E. Bank shall have approved of the final form and content of the Agreement between ITWCD and Borrower for the development of the Project. 6. The parties agree that the mortgagee title insurance issued in favor of Bank shall at all times during the Loan be in an amount of at least the outstanding indebtedness under the Loan. 7. The maturity date of the Loan shall be January 31, 1998. 8. Bank agrees to waive any and all pre-sale requirements for lots in Phase I which were a condition to funding Loan Proceeds for Phase II and III. 9. All other terms and conditions of the Loan Agreement shall be amended consistent with the matters set forth above. IN WITNESS WHEREOF, Borrower and Bank have executed this Amendment as of the above written date by their respective officers all duly authorized thereunto. Signed, sealed and delivered in the presence of: "BORROWER" ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware Limited Partnership BY: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, Managing General Partner ------------------------------- By: Randy Rieger, Authorized Agent (seal) - --------------------------- Address: 2501 South Ocean Drive Printed Name: Hollywood, FL 33019 - --------------------------- Printed Name: "LENDER" Union Bank of Florida ___________________________ BY: ---------------------------(Seal) Printed Name: John S. Chaperon, President - --------------------------- Address: 1801 North Pine Island Road Printed Name: Plantation, FL 33322 EXHIBIT 4(j) MORTGAGE THIS MORTGAGE, executed this _____ day of ___________________, 1996, between ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Florida limited partnership, whose address is 2501 South Ocean Drive, Hollywood, FL 33019, hereinafter referred to as the "MORTGAGOR" and CROSSROADS ASSOCIATES, LTD., a Florida limited partnership, whose address is 5858 Central Avenue, St. Petersburg, FL 33743, its successors and assigns, hereinafter referred to as the "MORTGAGEE." (The term "MORTGAGOR" as used in every instance shall include the Mortgagor's heirs, executors, administrators, successors, legal representatives and assigns, either voluntary or by an act of the parties, or involuntary by operation of law, and shall denote the single and/or plural, the masculine and/or feminine, and natural and/or artificial persons whenever and wherever the context so requires or admits.) W I T N E S S E T H: THAT for good and valuable consideration, and to secure the payment of the promissory note (the "Note") as hereinafter described, together with interest thereon, the MORTGAGOR grants, bargains, sells, and conveys to the MORTGAGEE in fee simple, the following described real property (the "Property") of which the MORTGAGOR is now seized and possessed, and in actual possession, situate in the County of Palm Beach, State of Florida, to wit: SEE EXHIBIT "A" ATTACHED HERETO TOGETHER with all buildings and improvements now or hereafter situated on the Property. AND TOGETHER with the tenements, hereditaments, easements and appurtenances thereunto belonging, and the rents, issues, and profits hereof. TO HAVE AND TO HOLD the same unto the said MORTGAGEE, in fee simple. The MORTGAGOR hereby covenants with the MORTGAGEE that the MORTGAGOR is indefeasibly seized with the absolute and fee simple title to said property, and has full power and lawful authority to sell, convey, transfer and mortgage the same; that it shall be lawful at any time hereafter for the MORTGAGEE to peaceably and quietly enter upon, have, hold and enjoy said Property, and every part thereof; that the Property is free and discharged from all liens, encumbrances and claims of any kind, including taxes and assessments, except taxes for the current year that are not yet due and payable; that the MORTGAGOR will make, at MORTGAGOR'S expense, to MORTGAGEE such other and further assurances to perfect the fee simple title to said Property in the MORTGAGEE as may hereafter be required; and, that MORTGAGOR hereby fully warrants unto the MORTGAGEE the title to said Property and will defend the same against the lawful claims and demands of all persons whomsoever. NOW, THEREFORE, the conditions of this Mortgage are such that if the MORTGAGOR shall pay unto the MORTGAGEE the indebtedness evidenced by the Note of even date herewith, made by the MORTGAGOR and payable to the MORTGAGEE in the original principal sum of $300,000.00, together with interest as therein stated, and shall perform, comply with and abide by each and every stipulation, agreement, condition and covenant contained in this Mortgage and in the Note secured hereby, then this Mortgage and the estate hereby created shall cease and be null and void. AND, the MORTGAGOR does hereby further covenant and agree as follows: 1. To perform and comply with every covenant contained in the Note and this Mortgage. 2. To pay all and singular the principal and interest and other sums of money payable by virtue of said Note and this Mortgage, or either, promptly on the days respectively the same become severally due. 3. To pay, before becoming delinquent, all obligations, encumbrances, taxes, assessments, paving, sidewalk, sanitary and other assessments, levies or liens, now or hereafter levied or imposed upon or against the mortgaged property, and to exhibit to the MORTGAGEE, before such taxes, assessments, liens, and encumbrances become delinquent, the official receipts for payment thereof. If the same, or any part hereof, are not paid before becoming delinquent, the MORTGAGEE may at any time pay the same with accrued interest and charges, if any, without waiving or affecting MORTGAGEE'S option to foreclose this Mortgage, or any right hereunder. Every payment so made shall bear interest from the date thereof at the highest rate authorized by law, but if there is at the time of default no maximum lawful rate, then at the rate of 18% per annum, and all such payments with interest shall be secured by the lien hereof. 4. If all or any part of the Property or an interest therein is sold, transferred or conveyed, all the sums secured by this Mortgage shall be immediately due and payable. 5. In the event any judgment or mechanic's lien is filed against the mortgaged Property and is not discharged or removed within thirty (30) days, or in the event that any legal proceeding is initiated against the mortgaged Property and is not dismissed or otherwise terminated within thirty (30) days from the date of filing of such legal proceedings, the MORTGAGEE at its option may accelerate the entire indebtedness secured by this Mortgage and demand payment in full. 6. To pay all costs, fees, charges and expenses of every kind, including the cost of an abstract of title to said Property or a title insurance policy, found to be convenient or expedient in connection with any suit for the foreclosure of this Mortgage, and also including reasonable attorneys' fees incurred or expended at any time by the MORTGAGEE because of the failure of the MORTGAGOR to perform, comply with and abide by any of the covenants, conditions and stipulations of the Note, or this Mortgage, or in the foreclosure of this Mortgage and in collecting the amount secured hereby with or without legal proceedings, and to reimburse the MORTGAGEE for every payment made or incurred for any such purpose with interest from date of every such payment at the highest rate permitted by law, but if there is at the time of default no maximum lawful rate, then at the rate of 18% per annum, and such payments and obligations, with interest therein as aforesaid, shall be secured by the lien of this Mortgage. 7. To permit, commit or suffer no waste and at all times keep the Property in a state of good repair and condition. 8. MORTGAGOR shall not further encumber the Property without the prior written consent of the MORTGAGEE. 9. No waiver of any covenant herein or in the obligation secured hereby shall at any time hereafter be held to be a waiver of any of the other terms hereof or of the Note secured hereby, or future waiver of the same covenant. 10. In order to accelerate the maturity of the indebtedness hereby secured because of the failure of the MORTGAGOR to pay any tax assessment, liability, obligation or encumbrances upon said property as herein provided, it shall not be necessary nor requisite that the MORTGAGEE shall first pay the same. 11. If the MORTGAGOR shall fail for a period of fifteen (15) days to fully and promptly to pay the amounts required to be paid by the Note hereby secured or the interest therein specified or any of the sums of money herein referred to or hereby and promptly to perform, each and every of the terms and covenants contained herein, then, without notice or demand, the aggregate sum mentioned in said Note, less previous payments, if any, and any and all sums mentioned herein or secured hereby shall become due and payable forthwith at the option of the MORTGAGEE and the MORTGAGEE shall be entitled thereupon without notice or demand to institute suit to enforce the rights of the MORTGAGEE hereunder or under the Note. In the event of any default or breach on the part of the MORTGAGOR hereunder or under the Note, the MORTGAGEE shall have the option to enforce payment of all sums secured hereby either by suit upon the Note or by foreclosure of this Mortgage, and one action shall not be a bar to or waiver of the MORTGAGEE'S right to institute or maintain the other, provided said MORTGAGEE shall have only one payment of the indebtedness. 12. In the event that the MORTGAGOR shall (a) consent to the appointment of a receiver, trustee, or liquidator of all or a substantial part of the MORTGAGOR'S assets, or (b) be adjudicated a bankrupt, or insolvent, or file a voluntary petition in bankruptcy, or admit in writing its inability to pay its debts as they mature, or (c) make a general assignment for the benefit of creditors, or (d) file a petition or answer seeking reorganization or arrangement with creditors, or to take advantage of any insolvency law, or (e) file an answer admitting the material allegations of a petition filed against the MORTGAGOR in any bankruptcy, reorganization or insolvency proceeding, or (f) action shall be taken by the MORTGAGOR for the purpose of affecting any of the foregoing, or (g) any order, judgment or decree shall be entered upon an application of a creditor of MORTGAGOR by a court of competent jurisdiction approving a petition seeking appointment of a receiver or trustee of all or a substantial part of the MORTGAGOR'S assets and such order, judgment or decree shall continue unstayed and in effect for any period of thirty (30) consecutive days, the MORTGAGEE may declare the Note hereby secured forthwith due and payable, whereas the principal of and the interest accrued on the Note and all other sums hereby secured shall become forthwith due and payable as if all of the said sums of money were originally stipulated to be paid on such day; and thereupon the MORTGAGEE without notice or demand may prosecute a suit at law and/or in equity as if all monies secured hereby had matured prior to its institution. 13. The MORTGAGEE, or any person authorized by the MORTGAGEE, shall have the right to enter upon and inspect the Property at all reasonable times. 14. It is agreed that nothing in the Note or this Mortgage shall operate to require the MORTGAGOR to pay interest at a rate greater than the maximum lawful rate of interest allowable from time to time under the laws of the State of Florida or the United States of America, whichever is higher, or unlimited, or to make any payment or to do any act contrary to law. If any clauses or provisions herein would operate to invalidate this Mortgage or the Note in whole or in part, such clauses or provisions only shall be considered invalid, and the remainder of this Mortgage shall remain operative and in full force and effect. 15. If all or any part of the Property shall be damaged or taken through condemnation (which terms when used in this Mortgage shall include any damage or taking by any governmental authority, and any transfer by private sale in lieu thereof), either temporarily or permanently, the entire indebtedness secured hereby shall at the option of the MORTGAGEE, become immediately due and payable. The MORTGAGEE shall be entitled to all compensation awards, and other payments or relief therefor and is hereby authorized, at its option, to commence, appear in and prosecute, in its own or the MORTGAGOR'S name, any action or proceeding relating to any condemnation, and to settle or compromise any claim in connection therewith. All such compensation is hereby assigned by the MORTGAGOR to the MORTGAGEE, who, after deducting therefrom all its expenses, including attorneys' fees, may release any monies so received by it without affecting the lien of this Mortgage or may apply the same in such manner as the MORTGAGEE shall determine, to the reduction of the sums secured hereby, and any balance of such monies then remaining shall be paid to the MORTGAGOR. MORTGAGOR agrees to execute such further assignments of any compensation, awards, damages, claims, rights of action and proceeds as the Mortgage may require. 16. MORTGAGOR will procure and maintain for the benefit of the MORTGAGEE during the life of this Mortgage a standard ALTA Mortgagee Policy, which shall be issued by a title insurance company approved by MORTGAGEE or its counsel. Such policy shall provide coverage for the full principal amount of the loan evidenced by the Note secured hereby, together with such affirmative coverage and such reinsurance or coinsurance as MORTGAGEE or its counsel shall reasonably require, and shall not contain any title exceptions not approved by MORTGAGEE or its counsel. Such mortgagee title policy shall insure all of the Property described on Exhibit "A". 17. MORTGAGOR agrees (to the full extent permitted by law) that in case of an event of default, neither MORTGAGOR nor anyone claiming by, through or under it, shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, to prevent or hinder the enforcement or foreclosure of this Mortgage or the final and absolute sale of the mortgaged Property or the final and absolute possession of the mortgaged Property by the purchasers in foreclosure, and the MORTGAGOR, for itself and for all who may at any time claim through or under it, hereby waives (to the full extent that it may lawfully do so) the benefit of all such laws and any and all right to have the assets comprising the mortgaged Property marshalled upon any foreclosure and the MORTGAGOR agrees that the mortgaged Property may be sold in its entirety. 18. (a) MORTGAGOR hereby represents that neither the MORTGAGOR nor any other person has ever used the mortgaged Property as a storage facility for any "Hazardous Substances" used in the ordinary course of the MORTGAGOR's business. (b) MORTGAGOR hereby agrees to indemnify the MORTGAGEE and hold MORTGAGEE harmless from and against any and all losses, liabilities, including strict liability, damages, injuries, expenses, including reasonable attorneys' fees, cost of any settlement or judgement or claims of any and every kind whatsoever paid incurred or suffered by, or asserted against, the MORTGAGEE by any person or entity or governmental agency for, with respect to, or as a direct or indirect result of, the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or release from the mortgaged Property of any Hazardous Substance (including, without limitation, any losses, liabilities, including strict liability, damages, injuries, expenses, including reasonable attorneys' fees, cost of any settlement or judgement or claims asserted or arising under the Comprehensive Environmental Response, Compensation and Liability Act, any so called federal, state or local "Superfund"or "Superlien" laws, statutes, law, ordinance, code, rule, regulation, order or decree regulating, with respect to or imposing liability, including strict liability, substances or standards of conduct concerning any Hazardous Substances) and, regardless of whether within the control of the MORTGAGEE. (c) For purposes of this Mortgage, "Hazardous Substances" shall mean and include asbestos, asbestos-containing materials and those elements or compounds which are contained in the list of hazardous substances adopted by the U.S. Environmental Protection Agency (EPA) and the list of toxic pollutants designated by Congress or the EPA or defined by any other Federal, state or local statute, law or ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material as now or at any time hereunder in effect. (d) If the MORTGAGOR receives any notice of (i) the happening of any material event involving the spill, release, leak, seepage, discharge or cleanup of any Hazardous Substance on the Property or in connection with the MORTGAGOR'S operations thereon or (ii) any complaint, order, citation or material notice with regard to air emissions, water discharges, or any other environmental, health or safety matter affecting the MORTGAGOR (an "Environmental Complaint") from any person or entity (including without limitation the EPA) then the MORTGAGOR shall immediately notify the MORTGAGEE orally and in writing of said notice. (e) MORTGAGEE shall have the right but not the obligation, and without limitation of the MORTGAGEE's rights under this Mortgage to enter onto the Property or to take such other actions as it deems necessary or advisable to cleanup, remove, resolve or minimize the impact of, or otherwise deal with, any such Hazardous Substance or Environmental Complaint following receipt of any notice from any person or entity (including without limitation the EPA) asserting the existence of any Hazardous Substance or an Environmental Complaint pertaining to the Property or any part thereof which, if true, could result in an order, suit or other action against MORTGAGOR and/or which, in the sole opinion of MORTGAGEE, could jeopardize its security under this Mortgage. All reasonable costs and expenses incurred by MORTGAGEE in the exercise of any such rights shall be secured by this Mortgage and shall be payable by MORTGAGOR upon demand. (f) MORTGAGEE shall have the right, in its sole discretion, to require MORTGAGOR to periodically (but not more frequently than annually unless an Environmental Complaint is then outstanding) perform (at MORTGAGOR'S expense) an environmental audit and, if deemed necessary by MORTGAGEE, an environmental risk assessment, each of which must be satisfactory to MORTGAGEE, of the Property, hazardous waste management practices and/or hazardous waste disposal sites used by MORTGAGOR. Said audit and/or risk assessment must be by an environmental consultant satisfactory to MORTGAGEE. Should MORTGAGOR fail to perform said environmental audit or risk assessment within 30 days of MORTGAGEE'S written request, MORTGAGEE shall have the right but not the obligation to retain an environmental consultant to perform said environmental audit or risk assessment. All costs and expenses incurred by MORTGAGEE in the exercise of such rights shall be secured by this Mortgage and shall be payable by MORTGAGOR upon demand or charged to MORTGAGOR'S loan balance at the discretion of MORTGAGEE. (g) Any breach of any warranty, representation or agreement contained in this Section shall be an event of default hereunder and shall entitle MORTGAGEE to exercise any and all remedies provided in this Mortgage, or otherwise permitted by law. 19. MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE AND ANY DOCUMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF MORTGAGOR. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE'S MAKING THE LOAN SECURED HEREBY. 20. MORTGAGOR agrees that time is of the essence hereof in connection with all obligations of MORTGAGOR in this Mortgage or in the Note. 21. Whenever in this Mortgage one of the parties is named or referred to, the successors and/or assigns of such party shall be included and the covenants and agreements contained herein shall bind and inure to their respective successors and assigns. IN WITNESS WHEREOF, the MORTGAGOR has executed this Mortgage as of the date and year first set forth above. Signed in the presence of: ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP - ------------------------------------- (Signature of Witness) By: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, as Managing _____________________________________ General Partner (Print Name of Witness) _____________________________________ By: /s/Irving Cowan --------------- (Signature of Witness) Irving Cowan, President - ------------------------------------- (Print Name of Witness) [NOTARIAL ACKNOWLEDGMENT ON FOLLOWING PAGE] STATE OF FLORIDA ) COUNTY OF DADE ) The foregoing instrument was acknowledged before me this 13th day of June, 1996, by Irving Cowan, as President of Stein Management Company, Inc., a Florida corporation, on behalf of said corporation, and who did/did not take an oath and who is personally known to me or who has produced driver's license as identification. ------------------------------- Notary Public, State of Florida This Instrument Prepared by: IRWIN M. FROST, P.A. IRWIN M. FROST, ESQ. 1101 Brickell Avenue, Suite 1400 Miami, FL 33131 Phone No. (305) 374-3001) EXHIBIT 4(k) PROMISSORY NOTE $300,000.00 ___________________, 1996 St. Petersburg, Florida FOR VALUE RECEIVED, ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP, a Delaware limited partnership, promises to pay to the order of CROSSROADS ASSOCIATES, LTD. a Florida limited partnership, at its principal office located in St. Petersburg, Florida (or such other place as the holder may designate) the principal sum of Three Hundred Thousand Dollars and 00/100 ($300,000.00), plus interest thereon from date at the Rate hereinafter defined. For purposes hereof, "Prime Rate" means the highest fluctuating rate of interest per annum as published by the Wall Street Journal. The outstanding loan principal balance shall bear interest at a variable rate per annum equal to the Prime Rate plus two percent (2.0% ) (the "Rate"). The Rate shall be adjusted daily in accordance with fluctuations in the Prime Rate. Interest shall be computed on the basis of a daily amount of interest accruing on the daily outstanding principal balance during a 360 day year compounded daily, for the actual number of days the principal is outstanding during such applicable interest period. The then outstanding principal balance of this Promissory Note, plus all accrued but unpaid interest, shall be due and payable on October 31, 1996, or earlier upon the sale, transfer or other conveyance of all or any part of the property securing this Promissory Note (the "Maturity Date"). Should Maker fail to pay the installments of interest on any due date provided for herein, then Maker further promises to pay a late payment charge equal to four percent (4%) of the amount of the unpaid installment. After default or maturity or upon acceleration, and thereafter, the unpaid indebtedness then evidenced by this Promissory Note shall bear interest at a fixed rate equal to the maximum rate then permitted by applicable law, or if there shall be no maximum rate then at the rate of eighteen percent (18%) per annum. In no event shall this Promissory Note permit the collection of any interest which would be usurious under the law governing this transaction. If any such interest in excess of the maximum rate allowable under applicable law has been collected, Maker agrees that the amount of interest collected above the maximum rate permitted by applicable law, together with interest thereon at the rate required by applicable law, shall be refunded to Maker, and Maker agrees to accept such refund. This Promissory Note may be prepaid in whole or in part at any time without penalty. Anyone now or at any time liable for payment of this Promissory Note, whether directly or indirectly, hereby waives presentment, protest, notice of protest and dishonor. Maker further agrees to pay all costs of collection, including without limitation a reasonable attorney's fee, in case the principal of this Promissory Note or any installment of interest thereon is not paid when due, or in case it becomes necessary to protect the security hereof, whether suit be brought or not. This Promissory Note is secured by a first mortgage of even date herewith encumbering certain property in the State of Florida, and is to be construed and enforced according to the laws of the State of Florida; upon default in the payment of principal and/or interest when due, the whole sum of principal and interest remaining unpaid shall, at the option of the holder, become immediately due and payable. MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY DOCUMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF MAKER, GUARANTORS OR HOLDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER'S MAKING THE LOAN EVIDENCED HEREBY. IN WITNESS WHEREOF, Maker has caused this Promissory Note to be duly executed as of the day and year first above written. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP By: STEIN MANAGEMENT COMPANY, INC., a Florida corporation, Managing General Partner By: /s/Irving Cowan --------------- Irving Cowan, President [Corporate Seal] Attest: _____________________________ Secretary EX-27 3
5 YEAR SEP-30-1996 SEP-30-1996 41,451 0 133,318 0 5,249,988 0 6,090 0 5,486,133 1,037,439 3,102,100 0 0 0 2,369,891 5,486,133 182,000 396,924 135,533 135,533 878,938 0 72,696 (690,243) 0 (690,243) 0 0 0 (690,243) (.15) 0
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