<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: March 31, 1994 Commission File No. 1-6963
ORIOLE HOMES CORP.
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1228702
- -------------------------------------------------- --------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1690 S. Congress Ave., Suite 200 Delray Beach, Fl. 33445
- -------------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 274-2000
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at March 31, 1994
- ------------------------------------- -----------------------------
Common Stock, Class A, par value $.10 1,895,549
Common Stock, Class B, par value $.10 2,729,975
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ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
March 31, December 31,
1994 1993
(Unaudited) (Audited)
------------ ------------
Cash and cash equivalents $ 9,513,927 $ 14,650,532
------------ ------------
Receivables:
Mortgage notes 1,891,186 1,618,659
Other - 4,000
------------ ------------
1,891,186 1,622,659
------------ ------------
Inventories:
Land 112,423,461 111,959,716
Houses and condominiums completed or
under construction 39,872,134 38,057,470
Model houses and condominiums 2,446,177 2,416,948
------------ ------------
154,741,772 152,434,134
Less: Estimated costs of completion
included in inventories 22,093,302 24,031,951
------------ ------------
132,648,470 128,402,183
------------ ------------
Property and equipment (at cost):
Land 7,171,689 7,172,279
Buildings 23,010,742 23,130,421
Furniture, fixtures and equipment 5,364,379 5,357,097
------------ ------------
35,546,810 35,659,797
Less: Accumulated depreciation 10,025,227 9,920,818
------------ ------------
25,521,583 25,738,979
------------ ------------
Other:
Prepaid expenses 2,101,176 1,812,081
Unamortized debt issuance costs 2,512,333 2,497,438
Investment in and advances to joint venture 3,516,399 3,500,000
Land held for investment (at cost) 2,791,450 2,791,450
Other assets 1,260,499 727,271
------------ ------------
12,181,857 11,328,240
------------ ------------
Total Assets $181,757,023 $181,742,593
============ ============
See notes to consolidated financial statements
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ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Liabilities:
Notes payable - banks $ 10,000 $ 96,317
Mortgage notes payable 14,506,251 14,399,479
Accounts payable 5,858,363 6,507,891
Dividends payable - 762,078
Customer deposits 9,515,688 6,091,570
Income taxes payable 202,897 647,326
Accrued expenses and other liabilities 5,473,883 7,157,750
Deferred income taxes 753,235 850,908
12 1/2% Senior Notes due January 15, 2003,
net of $1,779,814 discount in 1994 and
$1,812,306 discount in 1993 68,220,186 68,187,694
------------ ------------
Total Liabilities 104,540,503 104,701,013
Shareholders' Equity:
Class A common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
1,895,549 in 1994 and in 1993 189,555 189,555
Class B common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
2,729,975 in 1994 and in 1993 272,998 272,998
Additional paid-in capital 19,267,327 19,267,327
Retained earnings 57,486,640 57,311,700
------------ ------------
Total Shareholders' Equity 77,216,520 77,041,580
------------ ------------
Total Liabilities and Shareholders' Equity $181,757,023 $181,742,593
============ ============
</TABLE>
See notes to consolidated financial statements
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ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
------------------------------
1994 1993
----------- -----------
Revenues:
Sale of houses and condominiums $20,515,583 $17,983,802
Sale of land 186,010 -
Other operating revenues 881,747 1,025,574
Gain on sale of property and land
held for investment, net 20,958 7,252
Interest, rentals and other income 739,426 882,764
----------- -----------
22,343,724 19,899,392
----------- -----------
Costs and Expenses:
Cost of houses and condominiums sold 17,485,479 14,636,651
Cost of land sold 159,738 -
Costs relating to other operating revenues 647,935 598,101
Selling, general and administrative
expenses 3,770,404 3,685,136
Interest costs incurred 2,555,768 2,474,763
Interest capitalized (deduct) (2,555,768) (2,317,932)
----------- -----------
22,063,556 19,076,719
----------- -----------
Income before provision for income taxes
and extraordinary item 280,168 822,673
Provision for income taxes 105,228 309,329
----------- -----------
Income before extraordinary item 174,940 513,344
Extraordinary Item-Loss on repurchase of debt
(less applicable income taxes of $602,906) - (999,288)
----------- -----------
Net Income (Loss) $ 174,940 $ (485,944)
=========== ===========
Earnings per Class A and
Class B Common Share:
Net income before extraordinary item $ .04 $ .11
Extraordinary item - (.22)
----------- -----------
Total Net Income (Loss) $ .04 $ (.11)
=========== ===========
Average Number of Class A and Class B
Common Shares Outstanding 4,625,524 4,625,524
=========== ===========
Dividends per Class A Common Share $ - $ .40
=========== ===========
Dividends per Class B Common Share $ - $ .425
=========== ===========
See notes to consolidated financial statements
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ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
<TABLE>
<CAPTION>
March 31,
---------------------------
1994 1993
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 174,940 $ (485,944)
----------- ------------
Adjustments to reconcile net income to net
cash (used in) operating activities
Depreciation 302,723 301,817
Amortization 92,597 1,665,417
Deferred income taxes (97,673) (502,422)
Gain on sale of property and equipment and other assets (20,959) (7,252)
Changes in assets and liabilities
(Increase) in receivables (268,527) (214,960)
(Increase) in inventories (4,246,287) (6,153,534)
(Increase) decrease in other assets (822,323) 128,522
(Decrease) increase in accounts payable (649,528) 21,345
Increase in customer deposits 3,424,118 1,821,151
(Decrease) in income taxes payable (444,429) (207,017)
(Decrease) increase in accrued expenses and other liabilities (1,683,867) 884,552
----------- -----------
Total adjustments (4,414,155) (2,262,381)
----------- -----------
Net cash (used in) operating activities (4,239,215) (2,748,325)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in joint venture (16,399) -
Capital expenditures (181,133) (88,388)
Proceeds from the sale of property
and equipment and other assets 116,765 22,800
----------- -----------
Net cash (used in) investing activities (80,767) (65,588)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgage notes 106,814 -
Payment of mortgage notes (42) (39)
Repayments under line of credit agreements (86,317) (13,000,000)
Payment of term loan - (22,000,000)
Repurchase of debentures - (18,563,000)
Proceeds of Senior Notes (net) - 68,069,400
Senior notes issuance cost (75,000) (2,453,038)
Dividends paid (762,078) (1,918,459)
----------- ------------
Net cash (used in) provided by financing activities (816,623) 10,134,864
----------- ------------
NET (DECREASE) INCREASE IN CASH (5,136,605) 7,320,951
CASH AT BEGINNING OF PERIOD 14,650,532 6,942,103
----------- ------------
CASH AT END OF PERIOD $ 9,513,927 $ 14,263,054
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest (net of amount capitalized) $ 2,155,008 $ -
Income taxes $ 647,330 $ 415,862
</TABLE>
See notes to consolidated financial statements
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FORM 10Q
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of March 31, 1994, the related
statements of income and cash flows for the three months ended
March 31, 1994 and 1993 have been prepared by the Company without
audit. In the opinion of the management of the Company, all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the unaudited interim periods have been reflected
herein.
Certain footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's December 31, 1993 annual
report to shareholders.
Certain balances have been reclassified to conform to the current year
presentation.
2. The results of operations for the three months ended March 31, 1994
are not necessarily indicative of the results for the entire year.
3. Affiliated Companies.
The Company does not have investments in affiliated companies.
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ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Backlog of Contracts for Sales of Houses and Condominiums
March 31, 1994 December 31, 1993
-------------------- --------------------
Units Amounts Units Amounts
----- ----------- ----- -----------
Single-Family Homes 107 $18,705,442 81 $14,068,923
Multi-Family 251 38,352,892 176 25,286,538
----- ----------- ----- -----------
Total 358 $57,058,334 257 $39,355,461
===== =========== ===== ===========
5. Following is a computation of earnings per share:
Three Months Ended
-------------------------
3/31/94 3/31/93
---------- ----------
Income before extraordinary item $ 174,940 $ 513,344
Extraordinary item - (999,288)
---------- ----------
Net Income (Loss) $ 174,940 $ (485,944)
========== ==========
Weighted average number of
common shares outstanding 4,625,524 4,625,524
========== ==========
Earnings per share before
extraordinary item $ .04 $ .11
Extraordinary item - (.22)
---------- ----------
Total earnings (loss) per share $ .04 $ (.11)
========== ==========
6. Credit commitments
On January 13, 1993, the Company issued its 12 1/2% Senior Notes
("Notes"), due January 15, 2003. The Notes have a face value of
$70,000,000 and were issued at a discount of $1,930,600. The Notes
are senior unsecured obligations of the Company subject to redemption
at the Company's option on or after January 15, 1998, at 105% of the
principal amount and thereafter at prices declining annually to 100%
of the principal amount on or after January 15, 2001.
The indenture under which the Notes were issued requires sinking fund
payments of $17,500,000 on January 15, 2001 and January 15, 2002.
The indenture contains certain covenants that, among other things,
limit the ability of the Company to incur additional indebtedness, pay
dividends or make certain other distributions, repurchases or
issuances of capital stock or subordinated indebtedness.
A portion of the proceeds of the Notes offering was used to repay all
debt outstanding under the Company's bank credit agreement, and the
redemption at par of the Company's outstanding 12 7/8% Subordinated
Debentures due July 15, 2000. The balance of the proceeds were added
to the Company's working capital.
On July 13, 1993, the Company entered into a secured revolving loan
agreement with a bank which provides up to $10,000,000 in short-term
financing at an interest rate of prime plus 1 1/2%. As of March 31,
1994, the outstanding loan balance was $10,000.
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<PAGE> 8
GRANT THORNTON
Board of Directors
Oriole Homes Corp.
We have reviewed the accompanying consolidated balance sheet of Oriole Homes
Corp. and Subsidiaries as of March 31, 1994, and the related consolidated
statements of income and cash flows for the three-month period then ended.
These financial statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data, and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein) and in our report dated February
4, 1994, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1993, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
Grant Thornton
Miami, Florida
April 29, 1994
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION
RESULTS OF OPERATIONS.
THREE MONTHS ENDED MARCH 31, 1994, COMPARED TO THREE MONTHS ENDED MARCH 31, 1993
The Company's revenues from home sales increased $2.5 million (or 14.1%) during
the first quarter of 1994 as compared to the same period in 1993. The Company
delivered 154 homes in the 1994 quarter compared to 145 in the same period of
1993, with an increase of 7.4% in the average selling price of homes delivered
(from $124,026 to $133,218). The number of new contracts signed (255) and the
aggregate dollar value of those contracts ($38.2 million) increased in 1994
from 244 and $30.4 million in the 1993 period. The Company anticipates that our
second quarter revenues and earnings will be lower than those recorded in the
second quarter of 1993 and the recently ended first quarter of 1994. However,
the Company expects sales to rebound in the third and fourth quarters of this
year.
Other operating revenues decreased to $.9 million during the first quarter of
1994 from $1.0 million in the same period of 1993 as a result of a refund in
previously paid real estate taxes that was shown in the first quarter of 1993.
Interest, rentals and other income decreased from $.9 million for $.7 million,
reflecting the absence in 1994 of larger interest income on short term
investments that was shown in 1993.
Cost of home sales increased to $17.5 million in 1994 from $14.6 million in
1993 mainly as a result of an increase in the number of homes delivered. As a
percentage of home sales, cost of homes sold increased to 85.2% from 81.4%.
Gross margins during the first quarter of 1994 have decreased due to increased
construction costs and the inability of the Company, due to market conditions,
to immediately pass those increases on to customers.
Selling, general and administrative expenses remained at approximately the same
level in the 1994 period as compared to the 1993 first quarter, but as a
percentage of total revenues, these expenses decreased to 16.9% from 18.6% in
the same period of 1993.
Net income before extraordinary item in the 1994 first quarter decreased to $.2
million from $.5 million in the comparable period 1993. The decrease is
attributed mainly to lower margins from sales of houses and condominiums. Net
results from the 1993 first quarter were affected by nonrecurring extraordinary
expenses in the amount of $999,288, net of income taxes, in connection with
early redemption on February 16, 1993 of the 12 7/8% Subordinated Debentures
due July 15, 2000 and the early repayment of a bank credit agreement.
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The value of the Company's backlog of undelivered housing, which reflects new
sales contracts that have yet to close, increased 36% to $57,058,334
(representing 358 units) as of March 31, 1994, from $41,920,318 (representing
339 units) as of March 31, 1993. The average per unit value of the Company's
Backlog now stands at $159,381, representing an increase of 29% over the
$123,659 recorded at the end of 1993's first quarter. Included in this year's
backlog is 22 units from the upscale project Fairway Point valued at a total of
$10,610,915, or an average of $482,314 per unit. If the Fairway Point units are
eliminated, the backlog as of March 31, 1994 would have consisted of 336 units
with a value of $46,447,419, or an average of $138,236 per unit, as compared to
245 units with a value of $33,965,511, or $138,635 per unit, as of December 31,
1993.
FINANCIAL CONDITION AND LIQUIDITY
The Company's financing needs depend primarily upon sales volume, asset
turnover, land acquisition and inventory balances. The Company has financed its
working capital needs through funds generated by operations, borrowings and the
issuance of common stock.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
The March 31, 1994 unaudited Financial Statements included in this form 10-Q
have been reviewed by Grant Thornton, in accordance with established
professional standards and procedures for such a review.
(a) Joint Venture Agreement re: Regency Lakes
(b) There were no reports on Form 8-K for the three months ended March 31, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13, of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ORIOLE HOMES CORP
-----------------
(Registrant)
Date: May 5, 1994 s/ R.D. Levy
- ----------------------- -----------------------------------
R.D. Levy,
Chairman of the Board,
Chief Executive Officer,
Director
Date: May 5, 1994 s/ A. Nunez
- ----------------------- -----------------------------------
A. Nunez, Senior Vice President
Treasurer, Chief Financial Officer,
Chief Accounting Officer, Director
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<PAGE> 1
EXHIBIT 99
JOINT VENTURE AGREEMENT
RE:
REGENCY LAKES
THIS JOINT VENTURE AGREEMENT made and entered into
this 31st day of December, 1993, by and between Regency Development II, Inc., a
Florida corporation (the "Regency"), a wholly-owned subsidiary of Regency
Homes, Inc., a Florida corporation and Oriole Joint Venture, Limited, a Florida
limited partnership (the "Oriole Subsidiary"), of which Oriole Limited, Inc., a
Florida corporation is the general partner. Oriole Limited, Inc., is a
wholly-owned subsidiary of Oriole Homes Corp. ("Oriole").
WITNESSETH:
WHEREAS, Regency has acquired rights to certain
properties, but requires additional capital to purchase and develop the
properties; and
WHEREAS, Oriole Homes Corp. through its affiliates
desires to provide capital funding to Regency; and
WHEREAS, Regency and Oriole are entering into this
agreement to define their respective rights and obligations; and
WHEREAS, the parties are entering into this agreement
for the development of the real property described in Exhibits "A" "B" and "C"
and to construct dwelling units thereon, and to
<PAGE> 2
develop, and sell the dwelling units and/or developed sites to others.
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. - The Joint Venture and its Purpose.
A. Name. The Joint Venture shall henceforth be known as
"Regency Lakes." The Joint Venture will prepare, publish and file a
fictitious name registration in accordance with the laws of the State of
Florida.
B. Limitation of Joint Venture. The parties hereto are
associating themselves in this Joint Venture solely for the purposes hereof,
and shall not be considered partners, nor shall the entity be considered a
partnership, except for federal income tax purposes. No party shall have any
right or authority to bind any other party or to incur any obligations on
behalf of the Joint Venture except as expressly provided herein.
C. Purpose. The purpose of this Joint Venture shall be to
purchase and develop the real property known to the parties as Regency Lakes,
which aggregates approximately 240 acres as described in Exhibits "A", "B" and
"C". It is the intention of the Joint Venture to sell undeveloped and
developed lots to builders ("lots") and/or develop, construct and sell
dwelling units thereon (collectively, the "dwelling units").
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<PAGE> 3
Regency grants to the Joint Venture any and all rights it has to purchase
Regency Lakes.
All property acquired in the names of the Joint
Venture shall be referred to herein as the "Premises" and the development of
Regency Lakes shall be referred to herein as the "Project".
Notwithstanding anything in the foregoing to the
contrary, in the event that the Joint Venture shall sell, transfer, or convey
any of the Premises in exchange for other real property (the "Acquired
Property") such Acquired Property shall be developed in accordance with the
terms and conditions of this Joint Venture Agreement.
In addition, the purpose of the Joint Venture shall
include engaging in all activities reasonable or necessary to accomplish the
construction and sale of raw land, developed sites and dwelling units.
D. Place of Business. Location of the principal
place of business shall be Regency Homes, Inc., 2826 University Drive, Coral
Springs, Florida 33065.
E. Term. The Joint Venture shall continue until
December 31, 2000, unless earlier terminated. The Joint Venture shall be
terminated by the bankruptcy or insolvency of any party hereto in accordance
with Section 11 hereof or the assignment by a party of its interest herein
pursuant to Section 13 hereof.
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SECTION 2. - Contributions and Lines of Credit
A. Contributions.
Oriole has made a contribution of $2,100,000
as a capital contribution to the Joint Venture. Regency has made a capital
contribution of $475,000 in the form of deposits for the purchase of the real
estate set forth in Exhibit "A", "B" and "C" and has made additional
investments beneficial to the Joint Venture in the amount of $85,000. Until
required by the joint Venture the $2,100,000 capital contribution of Oriole
Subsidiary will bear interest at the daily over-night repo interest rate of
First Union Bank, N.A.
B. Future Capital Requirements of the Joint Venture.
1. The Joint Venture may be required to provide
certain performance bonds and other bonds and sureties required by various
governmental authorities. Regency hereby agrees that it will provide all
bonds or letters of credit required to satisfy such obligations or shall cause
such bonds or letters of credit to be provided at the expense of the Joint
Venture.
2. Oriole Subsidiary shall make additional capital
contributions up to $3,500,000 to: (i): either make construction payments or
fund land purchases at such time in an amount mutually determined by the Joint
Venturers; and (ii) to develop
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<PAGE> 5
the Project. It is anticipated that such additional contributions will be
required on or about April 15, 1994.
3. Regency hereby agrees to use its
best efforts including its corporate guarantees to arrange for acquisition,
development, take-out, and working capital loans on terms that are mutually
satisfactory to the Joint Venturers in amounts sufficient to develop the
Premises. In the event that such funds are not obtained in amounts or terms
satisfactory to either the Oriole Subsidiary or Regency, then the Project will
not proceed.
SECTION 3. - Obligations and Compensation of Regency.
A. Pre-Construction Responsibilities.
1. Regency shall use its best efforts
to obtain the approval of all appropriate governmental authorities necessary to
obtain development and building permits for the Project. Oriole Subsidiary has
the right to review for approval all site plans, schematic drawings, plans and
specifications, working drawings, and the marketing and economic feasibility
studies provided for in Section 3(A)(3) hereof, for the Project (the "Project
Documentation").
2. Regency, on behalf of the Joint
Venture, shall prepare, or cause to be prepared, on a timely basis, all other
documentation and plans, as is reasonably required to complete the Project.
After Regency prepares such documentation, and
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<PAGE> 6
Oriole Subsidiary reviews and approves, then Regency shall use its best efforts
to obtain all governmental approvals therefor. The cost of all Project
Documentation, and the obtaining of all approvals, shall be an expense of the
Joint Venture.
3. Notwithstanding anything in the
foregoing to the contrary, prior to commencement of construction, Regency shall
prepare a marketing program and economic feasibility study.
B. Construction Obligations.
1. Regency shall be responsible for
coordinating, supervising, inspecting, expediting and controlling the
construction of the Project to completion in accordance with this Joint Venture
Agreement, including but not limited to: (a) obtaining all necessary
governmental approvals not heretofore obtained; (b) employing qualified and
competent general contractor, contractors and subcontractors, job
superintendent, and other personnel as necessary; (c) controlling and
supervising ongoing land development, including landscaping, sewer, water,
utilities, and other infrastructure; and (d) overseeing the construction of the
Project in accordance with the Project Documentation.
2. Before construction begins on the
Project, Regency shall provide Oriole Subsidiary with a full and complete
itemized budget (the "Approved Project Budget") setting forth all of the
anticipated costs to be incurred in order to develop and
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<PAGE> 7
construct and market, and sell the land, developed lots or the dwelling units
thereon. This budget when approved by Oriole Subsidiary shall be designated
the "Approved Project Budget". The Approved Project Budget shall be revised as
required according to Section 3(B)(4)(ii)(c) hereof, or when development plans
have materially altered, and when so revised shall be submitted to Oriole
Subsidiary for approval. This process shall continue so that there will at all
times be a current Approved Project Budget.
3. The budget shall provide for all
items required to acquire and develop the Premises, and construct and sell the
dwelling units, including, but not limited to, the following: land costs,
engineering, architectural, market and feasibility studies, attorneys and
accountant fees, permits, licenses, building supplies and labor, debt service
of principal and interest, job superintendent, sales manager and staff,
advertising and marketing expenses, cost of sales center, furnishing of model
units, and travel and direct expenses incurred by Regency, all of which shall
be approved expenses of the Joint Venture.
The parties hereby agree that with respect to travel
and other direct expenses incurred by Regency and paid for by the Joint
Venture, such items shall be reviewed and be a part of the Approved Project
Budget. When appropriate, such expenses shall be allocated pro rata among the
Regency or Oriole Subsidiary
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<PAGE> 8
affiliates that benefit from such expenses, so that the Joint Venture pays only
its proportionate share of such costs.
4. Regency shall be specifically responsible for the following services:
(i) Compliance with Law. Regency shall give all notices and
utilize its best efforts to ensure compliance with all laws, ordinances, rules
and regulations bearing upon the Project.
(ii) Construction. a) Regency shall oversee the construction of the
Project so that the Project is completed in the most expeditious and
economical manner consistent with projected and actual sales, the Approved
Project Budget, the Project documentation, good workmanship and the best
interests of the Joint Venture.
b) The Joint Venturers shall keep such records as are
reasonably necessary for: (i) fulfillment of their responsibilities under this
Agreement and (ii) maintenance of full and complete accounting records together
with such documentation as may be necessary for the proper financial
management of the Project.
c) All work and materials on the Project shall be
performed and obtained pursuant to appropriate contracts at prices designated
in the Approved Project Budget. In order to
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<PAGE> 9
facilitate the development process and avoid unnecessary delays, the parties
hereby agree as follow:
Upward cost deviations from the Approved Project Budget that reduce the
projected profits of the Project, prior to the payment of fees, by less than
20% in the aggregate, may be approved by Regency without the consent of Oriole
Subsidiary. Cost deviations resulting from borrowings or any other budget item
subject to floating, rather than fixed-rate terms, shall not be counted in
computing the limit. In the event that upward cost deviations exceed the
aforesaid limitations, then the parties shall mutually determine a new Approved
Project Budget. The new Approved Project Budget shall then be subject to a 20%
in the aggregate limitation on upward cost deviations that result in a
reduction of profit of the Project, prior to the distribution of fees. In all
such situations Regency shall notify Oriole Subsidiary as soon as reasonably
possible after it becomes aware of any actual or potential cost overruns from
the Approved Project Budget.
(iii) Marketing Supervision. Regency shall be entitled to receive a
marketing supervision fee, (the "Marketing Supervision Fee") for services in
developing programs for the marketing of the land, developed lots or dwelling
units and supervising the overall marketing and sales program. Regency's
Marketing Supervision Fee shall be an amount equal to five percent (5%) of the
gross sale price of all lots or dwelling
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units sold, and shall be earned and paid to Regency on the last day of the
month following the closing of such land, developed lot or dwelling unit.
(iv) Project Supervision Fee. Regency shall be entitled to receive
a project supervision fee (the "Project Supervision Fee") for services in
structuring the Project, contracting for the land, supervising construction and
land development. Regency's Project Supervision Fee shall be the amount
obtained by subtracting all expenses of the Joint Venture (excluding any fees
and Preferred Return due to the Venturers) from "gross revenues" to obtain a
number referred to as Gross Profits Prior to Fees and Preferred Return; then,
from the Gross Profits Prior to Fees and Preferred Return subtract the
distributions required by 10B (ii), (iii), (iv) (v) and (vii) to the Venturers
(the excluded fees and Preferred Return due to the Venturers); after the
subtraction of the aggregate of the fees, reserves, as necessary, and
Preferred Return due the Venturers as required by 10B (ii), (iii), (iv), (v)
and (vii) from Gross Profits Prior to Fees and Preferred Return the remainder
shall be multiplied by ninety (90%) percent. The product of this
multiplication shall be Regency's Product Supervision Fee. See the example of
this calculation on Exhibit "D".
5. Insurance. Regency, on behalf of the Joint Venture, shall require
each contractor and subcontractor employed on the Project to procure and
maintain, at such contractor's or
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subcontractor's own cost and expense, during the performance of such labor:
(i) a policy of Workers' Compensation Insurance for the protection of such
contractor's or subcontractor's employees, including executive, managerial,
and supervisorial employees, and a comprehensive liability policy for personal
injury and property damage caused by such contractor or subcontractor or its of
ficers, agents or employees in an amount not less than $300,000 in the
aggregate and $300,000 per occurrence with the Joint Venture, Regency and
Oriole Subsidiary named as additional insureds.
Further, Regency shall obtain through competitive
bidding from insurance companies having a rating of A+ according to Best's
Insurance Guide and maintain in the name of the Joint Venture during the course
of this Agreement:
(i) a policy of Worker's Compensation
Insurance for the protection of such of its employees as are engaged in any
work required to be performed hereunder;
(ii) a comprehensive liability policy
insuring the Joint Venture, Regency, and Oriole Subsidiary and their respective
officers and directors for personal injury and property damage in an amount of
not less than $2,000,000 per occurrence for bodily injury and $1,000,000 per
occurrence for property damage;
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(iii) a term life insurance policy, insuring
the life of Ben L. Martz with the Joint Venture named as the beneficiary, in
the amount of Two Million Dollars ($2,000,000), said policy to be for a
renewable 10 year term to be maintained until the earlier to occur for the
completion of the Project or a period of ten years;
(iv) builder's risk insurance and fire and
extended coverage insurance as required to insure the Project being constructed
and all material delivered to the site for their full insurable value against
loss or destruction during the course of construction and upon completion by
fire, elements, vandalism or malicious mischief, and other risks generally
covered by such insurance. The loss payable endorsement under such policy
shall name any beneficiary or a deed of trust or comparable mortgage instrument
providing interim financing; and
(v) fidelity bonds on all employees with
authority to execute checks and receive, hold, and disburse funds on behalf of
the Joint Venture.
Notwithstanding any standard referred to in
this Subsection (i)-(v) above, insurance shall, at all times, be carried that
will satisfy the financial institution(s) that has provided construction
financing to the Joint Venture.
6. Payments for Labor and Materials. Regency
shall require lien releases for labor performed and materials furnished
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to the Project. The bills shall be approved by Regency in accordance with the
Approved Project Budget and promptly paid.
SECTION 4. - Obligations and Compensation of Oriole
Subsidiary.
Regency and Oriole Subsidiary are required to provide
all future funding for the Project in accordance with Section 2(B)(2). hereof,
subject to the approval process of Section 3(B)(2).
Oriole Subsidiary must diligently review and approve
pertinent documents, attend management meetings, and use its best efforts to
assist the Joint Venture as provided in Section 6 hereof. In the event that
Regency submits budget revisions, plans, specifications, development proposals
or other documents hereunder to Oriole Subsidiary, Oriole Subsidiary shall
promptly review same, and respond to Regency within ten (10) business days
indicating their approval or disapproval, all subject to Section 5(D) hereof.
Oriole Subsidiary holds itself available to consult with Regency and the Joint
Venture on construction activities and marketing efforts.
As a fee for these services Oriole Subsidiary shall
receive from the Joint Venture $2,800 from the sale of each developed lot or
dwelling unit and 5% of the gross sale price on land sales. These fees shall be
paid on the last day of the month following the closing of each sale. The
payment of these fees are guaranteed by Regency Homes, Inc.
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SECTION 5. - Management.
A. Authority. Except as may be specifically
provided otherwise herein, Regency shall have exclusive authority to direct and
manage the business of this Joint Venture on a day-to-day basis.
Notwithstanding anything in the foregoing to the contrary, Oriole Subsidiary
retains management responsibilities of a critical and material nature. All of
the following actions shall require unanimous approval of Regency and the
Oriole Subsidiary.
1. Sell, exchange, lease, assign or
transfer any interest in the Premises or Project or grant any options with
respect to the Premises or Project except for sales in accordance with sales
prices and terms previously approved by Oriole Subsidiary;
2. Hypothecate or mortgage the
Premises, the Project or any portion thereof;
3. Authorize any work for the
construction of improvements or supply of material for the Project except in
accordance with the limitations imposed by Section 3(B)(2) hereof; and/or
4. Make any assignment for the benefit
of creditors.
B. Time Limitations. Regency shall devote such
of its time and attention to its responsibilities under this Agreement
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as is required to diligently manage the business of this Joint Venture.
C. Meetings and Review Procedure. The Joint
Venturers shall meet on the 15th day of each month but if the 15th day of the
month is a holiday or a weekend day than the monthly meeting shall be held on
the next business day. At such meeting, Regency will provide current project
information, review any revisions to, or deviations from, the Approved Project
Budget, and any plans or agreements which by the terms of this Joint Venture
Agreement require the approval of Oriole Subsidiary, and the progress and
problems, if any, with respect to any contractor or subcontractor. In
addition, all marketing and financing approvals required pursuant to Section 6
hereof shall be made at such time, provided that the information required to
make such decisions has been provided to Oriole Subsidiary not less than ten
(10) business days prior to such meeting. Regency shall timely provide to
Oriole Subsidiary, the minutes of such meeting.
D. Approval. Whenever approval of a Joint
Venturer is required under the terms of this Agreement, such approval shall not
be unreasonably withheld, and shall be promptly given. If no response is given
within ten (10) business days, approval shall be deemed to have been given.
Oriole Subsidiary hereby acknowledges and agrees that
management decisions for real estate development must frequently
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be made quickly in order to be effectively implemented. It is the intention of
the parties that whenever possible Oriole Subsidiary will render its approval
or disapproval as promptly as possible, but in no event later than ten (10)
business days after such approval is requested. When Regency identifies a
particular approval as requiring expedited decision making, Oriole Subsidiary
hereby agrees to use its best efforts to respond as diligently and quickly as
possible, and to take whatever actions can be taken to accelerate its review
and approval process.
SECTION 6. - Marketing and Financing.
Regency shall propose, subject to final approval by
Oriole Subsidiary, the marketing program, pricing, financing, budget and
policies to be followed in connection with the sell-out of the Project. Such
programs and policies shall be periodically reviewed by the Joint Venturers.
It is contemplated that the sale of the dwelling units may involve employment
by the Joint Venture of outside marketing consultants, real estate agents, real
estate brokers, or other professionals involved in marketing, financing, and
selling land, developed lots and dwelling units, all of whom may be retained to
evaluate or implement the marketing programs or policies of the Joint Venture.
Regency and Oriole Subsidiary shall use their
respective best efforts to obtain permanent financing for the purchasers of
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developed lots or dwelling units within the Project at then current market
rates.
SECTION 7. - Books and Records
The books and records of the Joint Venture shall be
maintained by Regency at the expense of the Joint Venture. Such reports shall
be prepared on an annual basis in accordance with generally accepted accounting
principles. Oriole or its representatives shall have the right during normal
business hours at all times to inspect, copy and audit such books of account
and all other records of the Joint Venture.
In order to insure an orderly and timely flow of
financial information, the parties have agreed on the data and reports to be
transmitted. A sample of such reports is attached hereto and incorporated
herein by reference as Exhibit "E".
Within 75 days subsequent to the close of each Joint
Venture fiscal year (December 31), the Joint Venture shall provide federal and
state Partnership Income Tax Returns. Within 45 days subsequent to the close
of the audit year the Joint Venture shall provide audited financial statements
prepared by the certified public accountants of the Joint Venture (which is
presently Grant Thornton). The Joint Venture shall also furnish to the parties
a final audited statement on or before 45 days after termination of the Joint
Venture. All audited financial statements of the Joint Venture shall be
prepared in accordance with generally accepted
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accounting principles using the accrual method of accounting. Any profits shall
be recognized for accounting purposes at the time of closing of the sale of the
land, developed lots or dwelling units being sold by the Joint Venture. In
each tax return filed on behalf of the Joint Venture, all optional methods of
treatment and all possible elections shall be so made as to result in the
lowest taxable income for such return then filed. All expenses, costs and fees
of the certified public accountants of the Joint Venture shall be an expense of
the Joint Venture.
All monies received by the Joint Venture shall be
deposited in a Joint Venture bank account or accounts and all payments to be
made by the Joint Venture shall be made only by checks drawn on said account or
accounts. Such checks contemplated by the Pre-Approved Budget may be signed by
a designated representative from Regency. All checks outside of the Pre-
Approved Budget shall be signed by both a designated representative from
Regency and the Oriole Subsidiary.
Notwithstanding the foregoing, Sun Bank/South
Florida, N.A. may honor, rely and pay any checks presented for payment drawn on
the Joint Venture Account at Sun Bank/South Florida, N.A. signed by any one
person designated on its signature card, however Regency and Oriole Subsidiary
agree to be bound by the provisions of the penultimate paragraph of this
Section 7.
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SECTION 8. - Project Expenses
A. All costs and expenses incurred by the Joint
Venturers in connection with their responsibilities hereunder and in connection
with the construction of the Project and sale of the lots and dwelling units
including, but not limited to, marketing fees, advertising, sales promotion,
sales presentation, maintenance of a trailer, on-site trailer and personnel
expenses, insurance, taxes, commissions, and debt service on the construction
loan shall be expenses of the Joint Venture. No Joint Venturer nor any of
their employees or agents shall receive any salary, fees, commissions, overhead
payments or other compensation, other than specifically provided in this Joint
Venture Agreement, for any services rendered in connection with the Project.
B. In connection with the development of the
Project, and sale of the dwelling units, Regency may retain on behalf of the
Joint Venture a job superintendent, project manager, accountants, sales
manager, salesmen, and similar personnel, all at the cost of the Joint Venture.
Oriole Subsidiary hereby acknowledges that Regency or its affiliates are
engaged in the development of additional projects in the South Florida area.
As a result, whenever appropriate and possible, Regency shall divide certain
expenses, including personnel, among several projects in proportion to the use
by, or benefit to, the respective projects
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of such personnel or other items, thereby minimizing cost to this Joint
Venture.
Regency shall be entitled to reimbursement for direct
travel and other expense, incurred in connection with the performance of its
obligations hereunder, and it is entitled to reimbursement for general and
administrative overhead, or executive salaries, including the salary of Ben L.
Martz or his successor(s) to the amounts provided in the Approved Project
Budget.
SECTION 9. - Preferred Return.
Regency and Oriole Subsidiary shall be paid a
preferred return quarterly, on any capital contributions to the Joint Venture
(the "Preferred Return"). The Preferred Return, which shall aggregate fifteen
(15%) percent per annum shall be paid quarterly on the last day of the month of
March, June, September and December. It is anticipated that deferrals of the
Preferred Return will be required from time to time, however, if cash is
available the Joint Venture will apply such proceeds to the payment of the
Preferred Return. The Venturers agreed that no more than one half of such
Preferred Return payable during any fiscal year (1/2 of 15%) or seven and
one-half (7 1/2%) percent may be deferred but notwithstanding the foregoing all
deferred preferred return shall be paid no later than the last business day of
January of the following year.
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The Joint Venturers shall receive repayments of their
contributed capital from the Joint Venture pursuant to a release-payment
schedule relating to the sale of land, developed lots or dwelling units. As
sales are consummated release payments shall be made to the Joint Venturer
pursuant to Exhibit "F". Exhibit "F" shall be agreed to, completed and made a
part of this Agreement within ten (10) days after the Joint Venture has
negotiated its acquisition and development loan currently anticipated to be
funded on or before April 15, 1994.
Regency Homes, Inc. shall guarantee the payment of
the release-payments and the repayment of Oriole Subsidiary's capital
contribution and if called upon will pay promptly such payments when due. Ben
L. Martz the controlling shareholder of Regency Homes, Inc. personally
guarantees the prompt payment of the release-payments, the Preferred Return and
the payment of Oriole Subsidiary's capital contribution.
SECTION 10. - Distributions
A. At the conclusion of the Project, each Joint
Venturer shall be entitled to receive, after the payment of the fees to the
Venturers (with the exception of the Project Supervision Fee to Regency which
shall be paid in accordance with the provisions of Section 10B.), the payment
of their Preferred Return, and current release payments, an amount equal to
fifty percent (50%) of the cumulative profit of the Joint Venture. Losses
shall be
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shared one (1%) percent to Oriole Subsidiary and ninety-nine (99%) percent to
Regency. If, as a result of said payment of profits, the cumulative profit of
either Venturer is reduced to less than zero, then the Joint Venturer with such
negative balance agrees to repay to the Joint Venture an amount sufficient to
bring its cumulative amount to a zero balance. Said amounts shall be
distributed or repaid, as the case may be, within fifteen (15) days after the
date the federal income tax return for the Joint Venture for each fiscal year
is required to be filed.
B. Any net cash available for distribution held by the Joint
Venture and not required for the purposes of its business, derived from the
proceeds of sale of land, developed lots or dwelling units, shall be paid and
distributed at such time as the Venturers shall mutually agree, as follows:
(i) First, to the repayment of those debts, obligations, and
liabilities to third parties of the Joint Venture; except that the
payments to institutional lenders of permanent financing do not
require repayment except for current payments then due.
(ii) Next, to the payment of fees to the Oriole Subsidiary.
(iii) Next, to the payment of Marketing Supervision fees of
Regency.
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(iv) Next, to the establishment of any reserves which the Joint
Venturers deem reasonably necessary for contingent, unmatured, or
unforeseen liabilities or obligations of the Joint Venture.
(v) Next to the payment of the Preferred Return to the Oriole
Subsidiary.
(vi) Next to the payment of the Preferred Return to Regency.
(vii) Next, to the Oriole Subsidiary, until such time as all release
payments (Exhibit "F") as described in Section 9 are current.
(viii) Next, to Oriole Subsidiary and Regency until such time as any
remaining capital contributions made by either of them have been returned
to them.
(ix) Next to Regency, its Project Supervision Fee.
(x) The balance, if any, shall be distributed fifty percent (50%) to
Oriole Subsidiary and fifty percent (50%) to Regency.
C. The distributions to Oriole Subsidiary referred to in Section
10B(ii), (v), (vii) and (viii) are guaranteed by Regency Homes, Inc. and Ben L.
Martz guarantees the distributions to
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Oriole Subsidiary referred to in Section 10B(v), (vii) and (viii) pursuant to
Exhibit "G" attached hereto and made a part hereof.
D. a) In support of the guarantee by Ben L. Martz he agrees to
provide the Oriole Subsidiary annually, on or before the 10th day of February
of each year, a current financial statement as of December 31 of the previous
year reflecting his personal income and balance sheet in such detail as shall
be reasonably required by the Oriole Subsidiary.
b) Ben L. Martz also agrees to subordinate, prior to April
15, 1994 his personal loans to Regency Homes, Inc. in the approximate amount of
$2,335,000 to the obligations of Regency Homes, Inc. in guaranteeing the
Preferred Return and return of Oriole Subsidiary's capital contribution to the
Joint Venture.
SECTION 11. - Termination of Joint Venture.
A. In the event that any Joint Venturer (the "Defaulting Joint
Venturer") is unable or unwilling to substantially perform its material
obligations hereunder, except in the event of Force Majeure, then the
Non-Defaulting Joint Venturer may purchase the Defaulting Joint Venturer's
interest, provided however, that such purchase right is exercised in good faith
and in accordance with this Joint Venture Agreement. A Joint Venturer shall be
conclusively deemed to be unable or unwilling to perform its material
obligations hereunder under the following circumstances, which are exemplary
but not exclusive: (i) any Joint Venturer
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shall become insolvent or subject to bankruptcy proceedings, which insolvency
or proceedings are not resolved favorably to the affected Joint Venturer,
within ninety (90) days of their commencement; or (ii) except in accordance
with Section 13 hereof, in the event any Joint Venturer shall sell all, or
substantially, all of its assets, or all or substantially all of its shares (or
in the event that Regency shall sell, transfer, or assign its interest to any
person, firm, or entity other than Ben L. Martz or affiliate thereof,) without
the prior written approval of both Joint Venturers.
The Non-Defaulting Joint Venturer shall have the
right to purchase the Defaulting Joint Venturer's interest for an amount equal
to the Defaulting Joint Venturer's capital investment in the Joint Venture.
The capital contributions shall be repaid as a first priority distribution from
the Joint Venture as net cash becomes available for distribution. From and
after the date of purchase of the Joint Venture Interest, the Defaulting Joint
Venturer shall have no interest whatsoever in the profits, losses, and/or cash
flow of the Joint Venture.
For purposes of this agreement, the term "force
majeure" shall mean (i) strikes, labor unrest, or labor difficulties; (ii)
unavailability of materials or supplies; (iii) governmental laws, ordinances,
rules, or regulations; (iv) civil unrest; (v) natural disasters or Acts of God;
or (vi) other causes of similar nature not within the control of such Joint
Venturer, then performance
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of such act or completion of such work shall be excused for the period of delay
and the period allowed for such performance of completion shall be extended for
a period equivalent to the period of such delay. In no event will delay in
performance or completion reasonably resulting from force majeure give use to,
or entitle any Joint Venturer to exercise any rights which would otherwise be
exercisable hereunder in the event of such failure of performance or
completion.
B. This Joint Venture may also be terminated by
the exercise by Regency of the option rights granted to Regency under a
"Warrant and Stock Rights Agreement" attached hereto as Exhibit "H". From and
after the date of exercise of either of its options in Exhibit "H". Oriole
shall have no interest whatsoever in the fees, profits, losses, and/or cash
flow of the Joint Venture.
SECTION 12. - Representations. The parties
hereto specifically warrant, covenant and represent as follows:
A. They are duly organized, validly existing,
and in good standing as proper business entities under the laws of Florida as
described in the first paragraph of this Agreement;
B. All actions required to authorize the
officers or partners of the parties to execute and deliver this Joint Venture
Agreement and to perform their obligations hereunder have been taken;
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C. They are institutions organized to enter into real estate
transactions. They have participated in other real estate development
activities, have extensive knowledge and experience in financial and business
matters, and have thoroughly analyzed their involvement in the Joint Venture;
and
D. They intend to fully exercise all of their management rights
contained herein.
SECTION 13. - Non-Encumbrance of Interest. No party or any affiliate
of a party to this Agreement shall pledge, sell, transfer, convey, or
hypothecate its interest in this Joint Venture in any manner whatsoever,
directly or indirectly, nor make such interest subject to any lien or security
interest. Any such purported pledge, sale, transfer, conveyance, encumbrance
or hypothecation shall, as between the parties hereto, be of no force and
effect, and no other party shall acquire any rights under this agreement by
reason of any such pledge, sale, transfer, conveyance, encumbrance or
hypothecation.
In any situation involving a transfer or assignment
of the interest of a Joint Venturer, in whole or in part, the Joint Venturer
seeking to transfer or assign its interest shall obtain a tax letter opinion
from competent tax counsel stating a description of the contemplated
transaction and the tax ramifications to the Joint Venture itself, and to each
party to the Joint Venture of the proposed transfer or assignment. This
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opinion shall be furnished to all parties to the Joint Venture at least 25 days
prior to the proposed transfer or assignment and shall be obtained and
furnished at the cost of the Joint Venturer seeking to transfer or assign its
interest. No transfer will be permitted if there are any negative tax aspects
to the other Joint Venture parties unless said party agrees.
SECTION 14. - Notices. Any notice to be given
to the Joint Venture by any party hereto or by any party thereto to the other
party shall be in writing and shall be deemed duly given if and when mailed by
United States Registered or Certified Mail, Return Receipt Requested, with
proper postage prepaid, at the addresses as follows, or such new address as set
forth in a notice, as provided in this paragraph, given by the party changing
its address, except that any notice of change of address shall not be effective
until received.
All notices to be given to Regency shall be sent to:
Edward C. Jensen, President
Regency Development II, Inc.
2826 University Drive
Coral Springs, Florida 33065
with a copy to: Gillespie & Allison
1515 So. Federal Hwy., Suite 300
Boca Raton, Florida 33432
Attn: R. Bowen Gillespie, III
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All notices to be given to Oriole Subsidiary shall be sent to:
Richard D. Levy, Chief Executive
Officer Oriole Homes Corp.
1690 S. Congress Blvd.
Delray Beach, Florida 33445
and
with a copy to: Fine Jacobson Schwartz Nash & Block
Suite 3600
100 S.E. 2nd Street
Miami, Florida 33131
Attn: George R. Richards
SECTION 15. - Warranty Provisions. The parties
agree to procure the necessary insured warranty program covering dwelling units
to provide warranty coverage for the warranties imposed by law, after
termination of the Joint Venture or, in the alternative, to provide out of the
funds of the Joint Venture at termination, a contingency reserve fund of
sufficient amount and duration to provide such warranty coverage.
SECTION 16. - Waiver of Right to
Participation. Each party waives any right which it may have to require
partition of any property which may be owned by the Joint Venture at any time
hereafter. The rights of the parties to require a disposal of the Joint Venture
property or of their interest in the Joint Venture are only those provided for
herein.
SECTION 17. - Arbitration. Any controversy or
dispute arising out of or relating to this Agreement or the breach thereof
shall be settled by arbitration. Such arbitration shall be effected by
arbitrators selected as hereinafter provided and
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shall be conducted in accordance with the rules existing at the date thereof by
the American Arbitration Association. The dispute shall be submitted to three
arbitrators, each of them having had at least 10 years experience in the
residential real estate construction business: one arbitrator being selected by
the Joint Venturer or Joint Venturers constituting one side of the controversy
or dispute, one arbitrator being selected by the Joint Venture or Joint
Venturers constituting the other side of the controversy or dispute, and the
third arbitrator being selected by the American Arbitration Association. In
the event that any Joint Venturer, within 10 days after any notification of any
demand for arbitration hereunder, shall not have selected its arbitrator and
given notice thereof by registered or certified mail to the other Joint
Venturer, such arbitrator shall be selected by the American Arbitration
Association. The meeting of the arbitrators shall be held at such place or
places as may be agreed upon by the arbitrators in Palm Beach County, Florida.
Judgment may be entered on any award rendered by the arbitrators in any federal
or state court having jurisdiction over the site of the Property. Each Joint
Venturer shall bear the cost of the fees and expenses of the arbitrator
selected by or for it, and the fees and expenses of the third arbitrator shall
be borne by the Joint Venturer demanding arbitration.
SECTION 18. - Attorneys' Fees. Should litigation be
brought by either party against the other with reference to the terms of
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this Joint Venture Agreement, the prevailing party in such litigation shall be
entitled to receive as part of the judgment, reasonably incurred costs,
including attorneys' fees for the court of original jurisdiction and for any
courts of appeal which adjudicate said cause.
SECTION 19. - Indemnification. Each Joint
Venturer shall be indemnified by the other and held harmless against and from
all claims, demands, actions, and rights of action which shall or may arise by
virtue of any acts taken in good faith on behalf, or for the benefit, of the
Joint Venture, or anything done or omitted to be done by the other (through or
by agents, employees, or other representatives) in good faith provided the
other shall be promptly notified of the existence of the claim, demand, action,
or right of action and shall be given reasonable opportunity to participate in
the defense thereof. Such indemnification shall specifically include
reasonable attorneys' fees.
SECTION 20. - Miscellaneous.
A. Entire Agreement. This Agreement represents
the entire agreement between the parties with respect to their association in
this Joint Venture. All prior agreements and understandings with respect
thereto are merged in this Agreement.
B. Modification of this Agreement. This
Agreement may not be changed or terminated orally, but only by an instrument in
writing duly executed by the parties hereto.
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C. Agreement Binding on Successors and Assigns.
This Agreement shall be binding upon the parties hereto and their successors
and assigns, however, neither party hereto shall assign its interest hereunder,
nor shall Regency transfer, sell, or convey any of its capital stock, or Oriole
Subsidiary transfer, sell, or convey any of its partnership interests, directly
or indirectly, without complying with the terms of this Agreement.
D. Law Governing. This Agreement shall be
governed by the laws of the State of Florida.
E. Headings. The headings in this Agreement are
inserted for convenience and identification only and are in no way intended to
describe, define or limit the scope, intent or interpretation of this Agreement
or any provision hereof.
F. Other Business. The Joint Venturers may
engage in one or more businesses other than that required by this Agreement and
may develop and acquire other property for their own account or jointly with
other parties and pursue businesses similar to and in direct competition with
the business of this Joint Venture. The Joint Venturers acknowledge that this
association is not an exclusive engagement but is limited to the terms and
relationships delineated herein.
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G. Counterparts. This Joint Venture Agreement
may be executed in any number of counterparts, each of which shall constitute
but one and the same document.
REGENCY DEVELOPMENT II, INC.
By:
-----------------------------
Edward C. Jensen, President
ORIOLE JOINT VENTURE, LIMITED,
a Florida limited partnership
By: Oriole Limited, Inc., General
Partner
---------------------------------
Richard D. Levy, Chairman and
Chief Executive Officer
(REGENCY HOMES, INC.
(
(
Only as to (By:
Section 10 hereof -----------------------------
( Edward C. Jensen, President
(
(--------------------------------
(Ben L. Martz
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