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