SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------
Commission file number 0-15932
BF ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3038456
(State or other jurisdiction of incorporation
or organization) (I.R.S.Employer Identification No.)
100 Bush Street, Suite 1250, San Francisco, CA 94104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 989-6580
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
$.10 Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to this Form 10-KSB. [X]
The registrant's revenues for its most recent fiscal year, ending December 31,
1999, were $6,310,000.
As of March 1, 2000, the aggregate market value of the $.10 Par Value Common
Stock held by non-affiliates of the registrant was approximately $11,852,312
based on the closing sale price for the stock on that date. This amount excludes
the market value of 1,692,021 shares of Common Stock beneficially owned by the
registrant's directors and officers.
As of March 1, 2000, there were outstanding 3,447,919 shares of the registrant's
$.10 Par Value Common Stock.
Document Incorporated by Reference
Portions of the registrant's Proxy Statement to be mailed to stockholders in
connection with the registrant's Annual Meeting of Stockholders, scheduled to be
held in May 2000, are incorporated by reference in Part III of this report.
Except as expressly incorporated by reference, the registrant's Proxy Statement
shall not be deemed a part of this report.
<PAGE>
PART I
Item 1. Business.
General
- -------
BF Enterprises, Inc. and its subsidiaries (collectively the "Company")
currently is engaged primarily in the real estate business, including the
development of two large tracts of land, known as Meadow Pointe and Wesley
Chapel Lakes, in suburban Tampa, Florida, and, as owner and landlord, leasing a
228,000 square foot building on 16 acres in Tempe, Arizona. In addition, the
Company owns approximately 21 acres of undeveloped land in suburban Nashville,
Tennessee.
At December 31, 1999, the Company's assets also included approximately
$4.4 million of cash, cash equivalents and marketable securities, which the
Company intends to use for general corporate purposes, including development of
the Meadow Pointe and Wesley Chapel Lakes projects.
Real Estate
- -----------
The Company's principal real estate assets consist of the following:
Meadow Pointe. As of February 28, 2000, the Company owned approximately
328 acres in a master planned unit development, encompassing approximately 1,724
acres, known as Meadow Pointe, in Pasco County, Florida. Since 1992, the Company
has sold 2,258 lots, consisting of approximately 479 acres, to 6 homebuilders
and 834 acres to the two community development districts described below. The
Company also donated 79 acres to Pasco County, primarily for parks and a school
site, sold an acre to a local utility and, in 1997, sold a two- acre church site
and a one-acre day care site. Meadow Pointe is located about 20 miles northeast
of downtown Tampa, on County Road 581.
The Company commenced development of Meadow Pointe in 1992. Meadow
Pointe is being developed in accordance with a Development Order issued by the
Pasco County Board of County Commissioners, and is currently zoned for
approximately 2,750 single family homes, 1,500 multifamily residential units and
61.5 acres of commercial facilities.
Infrastructure construction at Meadow Pointe began in late February
1992, and the initial sales of residential lots to homebuilders closed in June
1992. The Company sold 457 lots in 1999, 314 lots in 1998, 297 lots in 1997, 269
lots in 1996, 211 lots in 1995, 284 lots in 1994, 267 lots in 1993 and 99 lots
during the last seven months of 1992, and sold 60 lots in the first two months
of 2000, for prices ranging from approximately $19,000 to $47,000. The
homebuilders currently are offering finished houses at base prices ranging from
approximately $90,000 to $300,000.
The Company is engaged in the development of residential lots and
multifamily and commercial parcels for sale to homebuilders and others. The
Company does not expect that it or any subsidiary or affiliate will engage in
the construction of houses on finished lots. In March 1991, the Company entered
into a Development and Management Agreement (the "Development Agreement") with
Devco II Corporation ("Devco"), a Florida corporation whose principals are
experienced Tampa-area real estate developers. Under the Development Agreement,
Devco is responsible for planning and managing, and advising the Company with
1
<PAGE>
respect to, the development of Meadow Pointe, including the sale of single
family lots and multifamily and commercial parcels.
Two community development districts, both local units of Florida
special purpose government, have been formed in conjunction with the development
of Meadow Pointe. These districts, whose jurisdiction is limited to the Meadow
Pointe project, together encompass all of the 1,724 acres within the project.
During the period February 1992 through September 1998, the two community
development districts issued an aggregate $74.9 million of capital improvement
revenue bonds. The bonds were issued to finance the acquisition of property, and
the construction of roads, utilities, recreation facilities and other
infrastructure systems. These infrastructure improvements are essential to the
development of finished lots by the Company and the sale of those lots to
homebuilders. One of the districts currently anticipates that $5 million of
additional capital will be required to finance the acquisition of property and
the construction of roads, utilities and other infrastructure systems within the
project.
Since January 2000 the Company has been actively marketing two
commercial tracts, 16 and 41 acres respectively, bordering County Road 581.
Several prospects are in various phases of negotiation regarding a possible
purchase.
Commercial Building in Tempe. The Company owns a 228,000 square foot
commercial building, with approximately 1,000 parking spaces, on 16 acres in the
Hohokam Industrial Park in Tempe, Arizona, which is currently subject to a
10-year triple net lease to Bank One, Arizona, NA, a subsidiary of Banc One
Corporation. The lease became effective March 1, 1995, and provided for the
tenant's phased occupancy of space during 1995. Rental of the entire premises
commenced January 1, 1996. Base rents due under the lease are: $1,452,000 in
1996; $1,628,000 in 1997; $1,707,200 in 1998; $1,826,000 in 1999; $1,848,000 in
2000; $1,936,000 in 2001; $1,953,600 in 2002; $1,975,600 in 2003; $1,980,000 in
2004; and $330,000 for the two months ending February 28, 2005, when the
original lease term ends. During that period, the Company will amortize income
from the lease on a straight-line basis, as required by generally accepted
accounting principles. Accordingly, in 1996, 1997 and 1998 the Company reported
- - and in each of the remaining five years of the original lease term will report
- - rental income from the lease of $1,815,000, the average rental during the
period January 1, 1996 through February 28, 2005. The lease also provides for
two five-year renewal periods, with base rents equal to the market rental rates
then in effect in the metropolitan Phoenix area.
Other Real Estate. The Company also owns approximately 21 acres of
undeveloped land in suburban Nashville, Tennessee of which 15 acres is zoned
high density residential and 6 acres is zoned commercial. The commercial acreage
was cleared in 1999 and grading will be completed as part of any sale of all or
part of the acreage. A draft contract for the purchase of approximately 1.2
acres was received in March 2000 and negotiations for a formal contract
continue.
In 1997 the Company formed a new subsidiary to make an initial
investment of $300,000, as a member of a limited liability company, in the
construction and ownership of 130 four bedroom student townhome units located
near the University of North Carolina at Charlotte, North Carolina. The
Company's investment was repaid in total in 1999 plus $26,000 of interest.
In October 1999 the Company formed a new subsidiary, Meadow Pointe
East, LLC, to be a partner in a general partnership to develop 2,000 acres
adjacent to the Meadow Pointe property. This new project, tentatively identified
as Wesley Chapel Lakes, is currently being
2
<PAGE>
zoned for approximately 3,000 lots together with certain retail commercial and
non-residential uses. The infrastructure construction should begin in the third
quarter of 2000. It is anticipated that two community development districts
encompassing the Wesley Chapel Lakes project will be formed. The districts may,
from time to time, issue special assessment bonds to finance infrastructure
construction. The land cost will be paid to the owner of the 2,000 acres as
finished lots are sold to homebuilders. The Company expects that the same 5
homebuilders presently active in Meadow Pointe will move into Wesley Chapel
Lakes.
Foreign Operations
- ------------------
The Company has no foreign operations and has no material assets in
foreign countries. A wholly owned foreign subsidiary holds 22% of the common
stock of Trout Creek Development Corporation, a Delaware corporation and a
development subsidiary of the Company.
Employees
- ---------
Currently, the Company has eight employees.
Competition
- -----------
The Company competes with many other firms and individuals who develop
real estate or hold undeveloped or developed property for lease or sale. While
competitive conditions vary substantially, depending upon the geographical area
and the type of real estate asset, within a particular market the most
significant competitive factors generally are location, price and zoning.
Development of the Meadow Pointe and Wesley Chapel Lakes projects will
take several more years and is dependent upon, among other things, the
availability of future financing on terms satisfactory to the Company and the
community development districts, the strength of the general economy and
employment growth in the Tampa area, residential mortgage interest rates,
competitive residential developments serving the same group of home buyers and
other factors related to the local Tampa real estate market. During 1999
construction began at several other residential projects in the same market area
as Meadow Pointe and Wesley Chapel Lakes, along or near County Road 581. These
new projects may have an adverse impact on the rate of lot sales at Meadow
Pointe and Wesley Chapel Lakes or lot prices, or both.
It is expected that the Tempe, Arizona property will remain under lease
with the existing tenant until at least March 2005. The Company expects to sell
its Nashville property when local conditions warrant as mentioned above.
Other Information
- -----------------
The Company's current business constitutes a single business segment,
real estate, consisting of several properties. Financial and other information
relating to the Company's operations by industry segments for the past three
years is, therefore, omitted. See the Company's Consolidated Financial
Statements.
Except for the lease of the 228,000 square foot Tempe commercial
building to one tenant, the Company's business is not dependent upon a single
customer or a limited number of customers, and is not seasonal. The Company does
not utilize raw materials, has no order
3
<PAGE>
backlog, and no material portion of its business is subject to government
contracts. The Company has no trademarks, service marks or tradenames other than
Meadow Pointe. The Company does not engage in or make any expenditures with
respect to research and development activities, and the Company's business is
not materially affected by compliance with federal, state or local provisions
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment.
Item 2. Properties.
----------
The Company leases its headquarters office space, consisting of
approximately 2,241 square feet, in the Shell Building at 100 Bush Street, in
San Francisco, under a lease expiring January 31, 2004. The Company believes
this office space is adequate for its current needs.
Item 3. Legal Proceedings.
-----------------
Meadow Pointe Litigation
------------------------
In March 1998, an action was commenced in the Pasco County, Florida
Circuit Court against a subsidiary of the Company and others relating to the
Meadow Pointe development. The Amended Complaint alleges that certain
individuals who purchased homes assumed that a homeowners association had been
established for the development. Plaintiffs seek money damages from all
defendants named in the Amended Complaint, except for the Company's subsidiary.
The only relief sought against the Company's subsidiary was an injunction
compelling the subsidiary to operate and maintain architectural control at
Meadow Pointe.
On July 2, 1998, the Court granted the subsidiary's motion to sever and
denied the subsidiary's motion to dismiss. Accordingly, on July 13, 1998,
plaintiffs filed a Severed Complaint against the Company's subsidiary, which
seeks injunctive relief and declaratory relief, but no damages.
On October 16, 1998, the Court granted summary judgment in favor of the
Company's subsidiary on Count 1 of the Severed Complaint for Declaratory Relief.
The Court ruled that the recently established voluntary homeowners association
for Meadow Pointe, to which the Company's subsidiary had assigned certain of its
rights pursuant to the Declarations of Restrictions recorded in the public
records of Pasco County, Florida, had standing to enforce said Declarations of
Restrictions. Plaintiffs moved for reconsideration of the Court's ruling. On
November 3, 1998, the Company's subsidiary moved for summary judgment on the
remaining count for injunctive relief. The court denied that motion on December
7, 1998, but on December 14, 1998, plaintiffs voluntarily dismissed the count
for injunctive relief. Certain plaintiffs then filed a notice of appeal on
January 27, 1999 from the Court's October 16, 1998 Order. On February 16, 2000,
the Florida Second District Court of Appeal affirmed the ruling of the Circuit
Court that the voluntary homeowners association had standing to enforce the
Declaration of Restrictions.
The Company is not a party to any other pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year covered by this report.
4
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------
Stockholder Matters.
-------------------
The Company's common stock trades on the Nasdaq National Market System
tier of The Nasdaq Stock Market under the symbol "BFEN". On March 1, 2000, there
were approximately 500 holders of record of the common stock.
Following is a list by calendar quarter of the reported high and low
closing bid quotations per share for the Company's common stock during 1999 and
1998, all of which quotations represent prices between dealers, do not include
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions:
<TABLE>
<CAPTION>
Bid Quotations
--------------
1999 High Low
------ ---- ---
<S> <C> <C>
1st Quarter $ 8 $ 7 5/8
2nd Quarter 7 3/4 7 1/4
3rd Quarter 8 1/2 6 3/4
4th Quarter 8 11/16 6 1/2
1998 High Low
------ ---- ---
1st Quarter $ 9 1/8 $ 8 1/8
2nd Quarter 8 3/8 8
3rd Quarter 8 3/16 7 3/4
4th Quarter 8 1/4 7 3/4
</TABLE>
The source of the foregoing quotations was the National Quotation
Bureau, Inc.
No cash dividends were paid in 1999 or 1998, and the Board of Directors
of the Company currently does not expect to declare cash dividends, in an effort
to conserve the Company's cash resources for real estate development activities
and other corporate purposes.
5
<PAGE>
Item 6. Selected Financial Data.
-----------------------
Following is a table of selected financial data of the Company for the last five
years:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Income statement data:
Revenues $ 6,310 $ 5,639 $ 5,606 $ 4,559 $ 3,550
Income before income taxes 3,183 2,859 2,980 2,137 477
Net income 3,839 2,829 3,079 2,137 445
Net income per share:
Basic 1.09 .78 .83 .57 .12
Diluted 1.00 .70 .75 .53 .11
Average shares used in computing basic
net income per share 3,508 3,640 3,697 3,746 3,788
Average shares and equivalents used
in computing diluted net income per share 3,852 4,039 4,078 4,042 4,029
Balance sheet data
(at end of period):
Total assets $25,140 $23,918 $21,842 $19,901 $18,521
Subordinated debentures, unmatured -- 719 719 805 817
Stockholders' equity 24,159 21,758 19,592 16,955 14,867
Stockholders' equity per
share (diluted) (1) 6.51 5.71 5.12 4.36 3.84
</TABLE>
Note: (1) Calculation of diluted stockholders' equity per share assumes
exercise at the end of each year of all dilutive options outstanding
at that time.
6
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
-----------------------------------
Results of Operations for the Three Years Ended December 31, 1999
- -----------------------------------------------------------------
During the years ended December 31, 1999, 1998 and 1997, the Company
realized net income of $3,839,000, $2,829,000 and $3,079,000, respectively. The
increase in net income from 1997 and 1998 to 1999 was primarily the result of a
$656,000 benefit for state income taxes deriving from the Company's successful
suit against the California Franchise Tax Board for reimbursement of a 1981
assessment (see Note I of Notes to Financial Statements) and higher gains from
sales of residential lots ("Lots") and other real estate at the Company's Meadow
Pointe project near Tampa, Florida.
Results for the years 1999, 1998 and 1997 included gains from sales of
Lots within Meadow Pointe of $3,184,000, $2,829,000 and $2,662,000,
respectively, on sales to homebuilders of 457 Lots in 1999, 314 Lots in 1998 and
297 Lots in 1997. The Company's reported gains from property sales at Meadow
Pointe are based in part upon estimates of the total revenues and costs to be
derived by the Company over the life of the project (see Note B of Notes to
Consolidated Financial Statements). It is the Company's practice to review
periodically these revenue and cost estimates and make cumulative adjustments to
reflect any revised estimates. Lot sales at Meadow Pointe are dependent upon,
among other things, the strength of the general economy in the Tampa area,
residential mortgage interest rates, competitive residential developments
serving the same group of home buyers and other factors related to the local
Tampa real estate market.
In addition to gains from Meadow Pointe Lot sales, results for 1999
included a gain of $11,000 from the sale of a model home at Meadow Pointe.
Results for 1997 included aggregate gains of $79,000 from sales of a two-acre
church site, a one-acre day care center site and a model home, all within the
Meadow Pointe project, and a lot in a residential development adjacent to Meadow
Pointe. Real estate sales in 1997 also included a gain of $61,000 from the sale
of a half acre of undeveloped land in Nashville, Tennessee. There were no such
gains in 1998.
Real estate rental income in each of 1997, 1998 and 1999 included
$1,815,000 of rental income from the Company's Tempe property (see Note G of
Notes to Consolidated Financial Statements). The rental of model homes at Meadow
Pointe accounted for $26,000, $27,000 and $26,000 of real estate leasing income
in 1997, 1998 and 1999, respectively. Depreciation and amortization expense
during each of these three years was entirely attributable to the Tempe
property.
Interest and dividends from investments in the years 1999, 1998 and
1997 has varied with the amount of funds available for investment.
General and administrative expenses charged against income were
$138,000 greater in 1999 than in 1998, and $72,000 greater in 1998 than in 1997.
The higher expenses in 1999 were primarily due to increased compensation for
executive officers. Expenses in 1998 were increased principally by higher
employee compensation and benefits expenses. Employee compensation expenses
capitalized against Tampa, Florida real estate in the years ended December 31,
1999, 1998 and 1997 were $24,000, $73,000 and $77,000, respectively,
representing 2%, 7% and 8%, respectively, of total compensation for those years.
The Company capitalizes a portion of the compensation of certain employees who
devote a significant portion of their time directly to the Meadow Pointe
project.
7
<PAGE>
In 1999 the Company realized a gain of $22,000 from the sale of a
marketable equity security. There were no such gains or losses in 1997 and 1998.
In 1998 the Company provided for estimated Florida income taxes of
$30,000. The $99,000 benefit for state income taxes in 1997 resulted from the
reversal of prior years' state income tax provisions.
Liquidity and Capital Resources
- -------------------------------
At December 31, 1999, the Company held $4,390,000 in cash, cash
equivalents and marketable securities as compared to $981,000 for all short-term
and long-term liabilities. From time to time, the Company purchases shares of
its common stock in the open market (see Note L of Notes to Consolidated
Financial Statements).
The Company's business plan calls for substantial expenditures during
the next several years relating to the planned development of Meadow Pointe.
During the period February 1992 through September 1998, two community
development districts encompassing the Meadow Pointe project issued
approximately $74.9 million of capital improvement revenue bonds. One of the
districts currently anticipates the need for approximately $5 million of
additional financing by one of the districts. The proceeds of such financing
have been and are expected to be used to construct infrastructure improvements
necessary for the development and sale of Lots, and multifamily parcels, in
Meadow Pointe (see Note H of Notes to Financial Statements). At December 31,
1999, real estate inventory held for current sale and land held for future
development at Meadow Pointe was $905,000 greater than at December 31, 1998,
as a result of the capitalization of various costs including payment of periodic
bond assessments to the two community development districts.
The Company's subsidiary Meadow Pointe East, LLC ("MPELLC") was formed
in October 1999, as a partner in a general partnership, to develop a 2,000 acre
tract of land adjacent to the Meadow Pointe property, tentatively identified as
Wesley Chapel Lakes. It is expected that the project will contain approximately
3,000 Lots together with certain retail, commercial and non-residential uses.
The infrastructure construction should begin in the third quarter of 2000. It is
anticipated that two community development districts encompassing the Wesley
Chapel Lakes project will be formed. The districts may, from time to time, issue
special assessment bonds to finance infrastructure construction. Under the
general partnership agreement, MPELLC will be entitled to receive 50% of the
general partnership's profits derived primarily from the sale of the Lots.
MPELLC has agreed to loan the partnership up to $1,000,000 of cash and/or a
letter of credit for development expenses. The cost of the land will be paid to
the owner of the 2,000 acres as finished lots are sold to homebuilders.
The Company intends to pay for its future expenditures at Meadow Pointe
and Wesley Chapel Lakes and its other operating expenses with (i) cash generated
from sales of property within Meadow Pointe, Wesley Chapel Lakes and its other
operations, and (ii) cash and cash equivalents on hand. There can be no
assurance that the Company will generate sufficient cash or have sufficient cash
and cash equivalents on hand to cover such expenditures.
The statements in this Report on Form 10-KSB regarding Meadow Pointe
and Wesley Chapel Lakes property sales, financing of Meadow Pointe and Wesley
Chapel Lakes expenditures and any other statements which are not historical
facts are forward looking statements. Such statements involve risks and
uncertainties, including, but not limited to, competition, general economic
conditions, ability to manage and continue growth and other factors detailed in
the Company's filings with the Securities and Exchange Commission. Should one or
more of these risks or uncertainties materialize, or should underlying
8
<PAGE>
assumptions prove incorrect, actual outcomes may vary materially from those
indicated.
Qualitative and Quantitative Disclosures About Market Risk
- ----------------------------------------------------------
The Company holds certain cash equivalents and marketable securities
for non-trading purposes which are sensitive to changes in market value. In
addition, the Company has issued debt which is subject to floating rates of
interest. The Company does not believe that changes in the market value of these
financial instruments will have a material impact, either favorable or
unfavorable, on its financial position or results of operations. The Company has
not in the past engaged in transactions requiring the use of derivative
financial instruments either for hedging or speculative purposes, and has no
plans to do so in the future.
9
<PAGE>
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
Index to Financial Statements and Schedule Covered by Report of Independent
Public Accountants
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of independent public accountants..........................................................12
Consolidated balance sheets at December 31, 1999 and 1998 ........................................13
Consolidated statements of income for the years ended December 31,
1999, 1998 and 1997 ..............................................................................14
Consolidated statements of stockholders' equity for the years ended
December 31, 1999, 1998 and 1997 .................................................................15
Consolidated statements of cash flows for the years ended December 31,
1999, 1998 and 1997 ..............................................................................16
Notes to consolidated financial statements ....................................................17-27
Schedule III - Real estate and accumulated depreciation at
December 31, 1999.................................................................................28
</TABLE>
10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and the Board of
Directors of BF Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of BF Enterprises,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999. These
consolidated financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and the 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of BF
Enterprises, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The accompanying schedule
listed in the index to the financial statements and schedule is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not a required part of the basic consolidated financial statements. This
information has been subjected to the auditing procedures applied in our audit
of the basic consolidated 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 consolidated financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
San Francisco, California
February 18, 2000
11
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31,
---------------------------
1999 1998
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 3,575 $ 3,347
Marketable securities, at market value 815 712
Receivables 223 74
Real estate rental property, net of depreciation 2,216 2,267
Real estate inventory held for current sale
and land held for future development 17,034 16,005
Lease contract receivable 652 661
Deferred tax assets 153 95
Other assets 472 757
-------- --------
TOTAL ASSETS $25,140 $23,918
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Payables and accrued liabilities $ 981 $ 1,441
Subordinated debentures, unmatured -- 719
-------- ------
Total Liabilities 981 2,160
------- ------
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value
Authorized -- 10,000,000 shares
Issued and outstanding --
3,450,599 and 3,578,599 shares 345 358
Capital surplus 14,376 15,887
Retained earnings 9,215 5,376
Other accumulated comprehensive income 223 137
------- --------
Total Stockholders' Equity 24,159 21,758
------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $25,140 $23,918
======= =======
</TABLE>
The accompanying notes are an integral
part of these consolidated statements.
12
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended
December 31,
------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues:
Real estate sales $4,179 $3,577 $ 3,456
Real estate rental income 1,841 1,842 1,841
Interest and dividends 233 207 287
Other 57 13 22
------- ------- ------
6,310 5,639 5,606
Costs and Expenses:
Cost of real estate sold 984 748 654
Real estate operating 40 43 52
Depreciation and amortization 96 96 96
Interest on subordinated debentures 50 52 55
General and administrative 1,979 1,841 1,769
----- ----- ------
3,149 2,780 2,626
Gross profit 3,161 2,859 2,980
Gains from sales of securities 22 -- --
-------- ------- -------
Income before income taxes 3,183 2,859 2,980
Provision (benefit) for state income taxes (656) 30 (99)
-------- -------- -------
Net income $ 3,839 $ 2,829 $3,079
======= ======= ======
Net income per share:
Basic $ 1.09 $ .78 $ .83
======= ======= =======
Diluted $ 1.00 $ .70 $ .75
======= ======= =======
Average shares used in computing basic
net income per share 3,508 3,640 3,697
Average shares and equivalents used in
computing diluted net income per share 3,852 4,039 4,078
</TABLE>
The accompanying notes are an integral
part of these consolidated statements
13
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Common Stock:
Balance at beginning of period $ 358 $ 367 $ 373
Purchases of common stock -- par value (25) (9) (6)
Exercise of stock options -- par value 12 -- --
-------- -------- -------
Balance at end of period $ 345 $ 358 $ 367
======== ======== =======
Capital Surplus:
Balance at beginning of period $15,887 $16,614 $17,078
Purchases of common stock --
excess over par value (1,887) (727) (464)
Exercise of stock options --
excess over par value 376 -- --
--------- --------- ---------
Balance at end of period $14,376 $15,887 $16,614
======= ======= =======
Retained Earnings (Deficit):
Balance at beginning of period $ 5,376 $ 2,547 $ (532)
Net income 3,839 2,829 3,079
-------- -------- --------
Balance at end of period $ 9,215 $ 5,376 $ 2,547
======== ======== =======
Other Accumulated Comprehensive Income
Balance at beginning of period $ 137 $ 64 $ 36
Unrealized gains from marketable equity
securities during period 86 73 28
-------- -------- ---------
Balance at end of period $ 223 $ 137 $ 64
======== ======== =========
Accumulated Comprehensive
Income (Loss):
Balance at beginning of period $ 5,513 $ 2,611 $ (496)
------- ------- --------
Net income 3,839 2,829 3,079
Unrealized gains from marketable
equity securities during period 86 73 28
-------- ------- --------
Comprehensive income for period 3,925 2,902 3,107
------ ------- -------
Balance at end of period $ 9,438 $ 5,513 $ 2,611
======= ======= =======
</TABLE>
The accompanying notes are an integral
part of these consolidated statements.
14
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,839 $ 2,829 $ 3,079
Adjustments to reconcile net income to net cash
used by operating activities:
Gains from securities (22) -- --
Gains from sales of real estate (3,195) (2,829) (2,802)
Net cash proceeds from sales of real estate 2,638 1,929 2,083
Mortgage loan payments -- -- 100
Real estate development costs (3,524) (2,878) (2,094)
Reimbursement of real estate
development costs 3,052 1,430 694
Changes in certain assets and liabilities:
Decrease (increase) in receivables (149) 15 30
Decrease (increase) in lease contract receivable 9 (62) (236)
Increase (decrease) in payables
and accrued liabilities 166 95 (14)
Other net 61 60 (256)
-------- -------- ------
Total adjustments to net income (964) (2,240) (2,495)
------- ------- -------
Net cash provided
by operating activities 2,875 589 584
Cash flows from investing activities:
Purchases of marketable securities (20) (359) (212)
Proceeds from sales of marketable securities 25 -- --
Investment in partnership (83) -- --
Investment in limited liability company 300 -- (300)
------ -------- -------
Net cash provided (used) by investing activities 222 (359) (512)
Cash flows from financing activities:
Reductions in subordinated debentures (1,345) (185) (662)
Purchases of the Company's common stock (1,912) (736) (470)
Proceeds from exercise of stock options 388 -- --
------- -------- ---------
Net cash used by financing activities (2,869) (921) (1,132)
------- ------- --------
Net increase (decrease) in cash
and cash equivalents 228 (691) (1,060)
Cash and cash equivalents at beginning of period 3,347 4,038 5,098
------- ------ ------
Cash and cash equivalents at end of period $ 3,575 $ 3,347 $ 4,038
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for
interest (net of amount capitalized) $ 50 $ 52 $ 55
======= ======= =======
Cash received during the year from
income tax refunds $ 656 $ -- $ --
====== ======== ========
</TABLE>
The accompanying notes are an
integral part of these consolidated statements.
15
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Business and Principles of Consolidation
BF Enterprises, Inc. and its subsidiaries (collectively the "Company") currently
is engaged primarily in the real estate business, including the development of
two large tracts of land, known as Meadow Pointe and Wesley Chapel Lakes, in
suburban Tampa, Florida, and, as owner and landlord, leasing a 228,000 square
foot building on 16 acres in Tempe, Arizona. In addition, the Company owns
approximately 21 acres of undeveloped land in suburban Nashville, Tennessee.
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All significant intercompany
balances have been eliminated.
Note B - 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 of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported results of operations during the reporting period. Actual results
could differ from those estimates.
Note C - Business Segments
The Company currently is engaged in only one business segment. The Company's net
investment in and the operating results of its various real estate activities
may be derived directly from the accompanying consolidated financial statements.
Note D - Earnings Per Share
Basic earnings per share is computed as earnings divided by the weighted average
number of shares outstanding during the reported period, excluding the dilutive
effects of stock options and other potentially dilutive securities. Diluted
earnings per share give effect to such dilutive securities. Earnings per share
data for the periods reported have been computed as follows (in thousands,
except per share amounts):
16
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income $3,839 $2,829 $3,079
====== ====== ======
Weighted average number of shares
outstanding:
Common Stock 3,508 3,640 3,697
Common stock equivalents -
stock options 344 399 381
------- ------- --------
3,852 4,039 4,078
====== ====== ======
Net income per share:
Basic - based on weighted average
number of shares of common stock
outstanding $1.09 $. 78 $ .83
===== ====== =======
Diluted - based on weighted average
number of shares of common stock and common
stock equivalents outstanding $ 1.00 $ .70 $ .75
====== ======= =======
</TABLE>
Note E - Cash and Cash Equivalents
Cash and cash equivalents include short-term investments with original
maturities of 90 days or less, such as treasury bills and notes, government
agency bills and notes, bank deposits, time deposits, certificates of deposit,
repurchase agreements, bankers' acceptances, and commercial paper, all of which
are carried at cost, which approximated market value.
17
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note F - Marketable Securities
The amortized cost and fair values of marketable securities available for sale
as of December 31, 1999 and 1998 were as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
------ -----
Gross Gross
Amortized Unrealized Fair Amortized Unrealized Fair
Cost Gains Value Cost Gains Value
---- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Common Stock $ 591 $ 224 $ 815 $ 575 $ 137 $ 712
===== ===== ===== ===== ===== =====
</TABLE>
Unrealized gains and losses are presented in stockholders' equity.
Proceeds from sales of securities available for sale were $25,000 in 1999. There
were no such sales in 1997 or 1998. Gross gains of $22,000 were realized on
securities sales in 1999. Gains and losses are computed using the specific
identification method.
Note G - Real Estate Rental Property
Real estate rental property is an office building and 16 acres of land in Tempe,
Arizona. In 1995, the Company entered into a new 10-year net lease with Bank
One, Arizona, NA, a subsidiary of Banc One Corporation. The lease provided for
the phased occupancy and rental of space by Bank One during 1995, with rental of
the entire premises commencing January 1, 1996. At December 31, 1999,
contractual rental revenues from the lease with Bank One are projected as
follows:
<TABLE>
<CAPTION>
<S> <C>
2000 1,848,000
2001 1,936,000
2002 1,953,600
2003 1,975,600
2004 1,980,000
2005 (two months) 330,000
</TABLE>
On January 1, 1996, in accordance with generally accepted accounting principles
(GAAP), the Company began amortizing on a straight-line basis (1) income from
the lease with Bank One, resulting in annual real estate leasing income of
$1,815,000 for the period ending February 28, 2005, and (2) a related $423,000
lease commission, with annual amortization expense of $46,000 over the same
period.
18
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Real estate rental property is carried at cost less accumulated depreciation
which is computed using the straight-line method over the estimated useful lives
of the assets. Real estate rental property for the years ended December 31, 1999
and 1998 was as follows (in thousands):
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation Net
---- ------------ ---
<S> <C> <C> <C>
1999 $4,470 $2,254 $2,216
====== ====== ======
1998 $4,470 $2,203 $2,267
====== ====== ======
</TABLE>
Note H - Real Estate Inventory Held for Current Sale and
Land Held for Future Development
At December 31, 1999, real estate inventory held for current sale and land held
for future development consisted primarily of approximately 343 acres of the
1,724 acres originally included in the Company's master-planned, mixed use
development known as Meadow Pointe near Tampa, Florida. The parcels within this
project are in various stages of development. Parcels on which the Company has
completed substantially all of its development activities are considered to be
held for current sale. Parcels on which development is not yet complete are
considered to be held for future development. These assets were carried at a
cost of $17,034,000 at December 31, 1999 and $16,005,000 at December 31, 1998,
which the Company believes was less than their fair value. Due to uncertainties
inherent in the valuation process and in the economy, it is reasonably possible
that the actual sales value of the Company's inventory of land held for current
sale and future development could be materially different than current
expectations.
Two community development districts, both local units of Florida special purpose
government, have been formed in conjunction with the development of Meadow
Pointe. These districts, whose jurisdiction is limited to the Meadow Pointe
project, together encompass all of the 1,724 acres within the project. During
the period February 1992 through September 1998, the two community development
districts issued an aggregate $74.9 million of capital improvement revenue
bonds. All of these bonds were issued to finance the acquisition of property,
and the construction of roads, utilities, recreation facilities and other
infrastructure systems.
Approximately $22 million of the capital improvement revenue bonds issued by the
districts are payable in equal annual installments of principal and interest
over 20 years. The balance of the bonds are payable over a fixed term, but must
be prepaid in part each time a developed lot or other land is sold. Annual bond
installments are paid by special assessments levied against individual parcels
of land within the district areas. These special assessments are collected
either directly by the districts or by the Pasco County Assessor, in the same
manner as county property taxes, on behalf of the districts. The outstanding
bonds are secured by a first lien upon and pledge of the special assessments. If
19
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
any parcel owner, including the Company's subsidiaries (until such time as their
land has been developed and sold or otherwise transferred), but excluding the
districts and the county, fails to make payment of an assessment, then such
owner's parcel will become subject to a lien which may ultimately be foreclosed
for nonpayment. As of December 31, 1999, parcels of land owned by the Company's
subsidiaries were subject to bonds in the principal amount of approximately
$22 million.
The two community development districts have purchased land from one of the
Company's subsidiaries for use in the construction of roads, ponds, conservation
areas and neighborhood parks. The Company has accounted for payments it received
from the two districts in connection with those transactions, as of the date
received, as reductions in the carrying value of all property to be developed
within the district areas.
In October 1999, the Company formed a new subsidiary, Meadow Pointe East, LLC
("MPELLC") to act as one of two general partners in a partnership to develop a
2,000 acre tract of land adjacent to Meadow Pointe, tentatively identified as
Wesley Chapel Lakes. The Company has, through MPELLC, agreed to loan the
partnership up to $1,000,000 of cash and/or a letter of credit for development
expenses. MPELLC is entitled to interest on the loan, at a rate of 1% over the
Wells Fargo Bank prime rate, plus 50% of the general partnership's profits
derived primarily from the sale of residential lots. Advances of $83,000 had
been made on the loan through December 31, 1999 and were included in other
assets in the accompanying consolidated financial statements. This investment
and all related loans will be accounted for as an equity method investment with
no income recognized until profits are generated by the partnership. The Wesley
Chapel Lakes project is structured to provide for the sale of improved lots
directly from the current landowner to homebuilders. Neither the Company nor its
subsidiaries will be obligated to fund improvements in excess of the loan to the
partnership or will be subject to a requirement to acquire any lots from the
current owner.
20
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note I - Income Taxes
As of December 31, 1999 and 1998, the Company had recorded the following net
deferred tax assets. Amounts at December 31, 1998 have been adjusted to conform
to the Company's 1998 federal income tax returns as filed in September 1999.
<TABLE>
<CAPTION>
Tax Effect (in thousands)
-------------------------
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 4,976 $ 3,828
Federal Alternative Minimum Tax
payments 153 95
Deferred tax liabilities:
Land basis (3,952) (1,756)
Effect of accelerated depreciation (204) (191)
Other (169) (157)
-------- ---------
804 1,819
Less: valuation allowance (651) (1,724)
--------- --------
Net deferred tax assets $ 153 $ 95
========= =========
</TABLE>
The Company did not include a provision for federal income taxes in the
consolidated statement of operations for the years ended December 31, 1999, 1998
and 1997 because it realized the benefits, respectively, of $1,073,000,
$1,105,000 and $1,202,000 of deferred tax assets.
In February 1996, the Company's predecessor, on behalf of the Company, filed a
complaint against the California Franchise Tax Board (the "FTB") for a refund of
assessed income taxes and accrued interest for the year ended December 31, 1981.
The suit arose out of the FTB's assessment for 1981 taxes, based on its
contention that a loss attributable to the 1981 acquisition by the Company's
predecessor of a warrant for the purchase of its common stock should have been
treated as a business deduction rather than a non-business deduction. The
Company appealed the FTB's assessment to the California State Board of
Equalization, which denied the appeal in July 1994. In March 1995, the Company
made payment to the FTB of the assessment and accrued interest and filed a
21
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
request for refund in the full amount of that payment. The amount the Company
paid to the FTB, after reimbursement by the Company's predecessor of the
related federal and state income tax benefits, was approximately $400,000.
The Company's request for refund was denied and the action described above
was filed. In May 1997, the Court granted the FTB's motion for summary
judgement and dismissed the Company's action. The Company filed an appeal of
the judgement with a California Court of Appeal. In late 1998, the
Appellate Court unanimously upheld the Company's position. The
Appellate Court ordered reimbursement to the Company of the entire amount
originally paid to the FTB, plus interest to the date of reimbursement.
Reimbursement of $926,000 was received from the FTB in April 1999. In March
1999, the Company recorded a state income tax benefit of $656,000, after
deduction of related federal and state income taxes of $270,000 that are the
liability of the Company's predecessor.
In 1998 the Company provided for estimated Florida income taxes
of $30,000. The $99,000 benefit for state income taxes for the year ended
December 31, 1997, resulted from the reversal of prior years' state income tax
provisions.
Following is a reconciliation from the expected federal statutory income tax
rate to the effective tax rate, expressed as a percentage of pre-tax income, for
the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected federal statutory income tax rate 34.0% 34.0% 34.0%
State income taxes, net of federal tax benefit 3.2 3.2 3.9
Refund of prior year's state income tax (20.6)% -- --
Reversal of prior year's state income tax -- -- (3.3)
Utilization of deferred tax assets (37.2) (36.2) (37.9)
------- ------- -------
Effective tax rate (20.6)% 1.0% (3.3)%
======== ======== =========
</TABLE>
22
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1999, the Company had available for federal income tax purposes
unused operating loss carryforwards of approximately $13,400,000 which expire as
follows (in thousands):
<TABLE>
<CAPTION>
Year of Expiration
------------------
<S> <C>
2002 $ 600
2003 1,100
2004 700
2005 500
2006 700
2007 1,500
2008 2,100
2009 2,200
2010 100
2011 800
2012 100
2013 3,000
--------
$13,400
</TABLE>
Note J - Subordinated Debentures
At December 31, 1999, the date of maturity of the Company's Floating Rate
Subordinated Debentures the Company deposited with the Paying Agent and Trustee,
$719,000, the amount required for redemption of all floating rate debentures
outstanding at that date. Up to the date of maturity, the interest rate for the
floating rate debentures was variable and equal to 1% above the average monthly
yield on three-month United States Treasury bills, subject to a minimum of 7%
per annum and a maximum of 10% per annum. The average interest rate for these
debentures was 7% for the years ended December 31, 1999, 1998 and 1997.
In connection with a corporate reorganization in June 1987, pursuant to which
the Company took transfer of certain businesses, the Company also assumed
related liabilities, including the obligations with respect to five series of
subordinated debentures. At December 31, 1999, the $356,000 of these debentures
still due and outstanding, all of which have matured, was included in payables
and accrued liabilities in the accompanying consolidated financial statements.
At December 31, 1999, the Company had outstanding a $400,000 letter of credit
for the benefit of the debenture trustee in connection with principal payments
on two series, the Series D and E debentures. This letter of credit secures the
Company's obligations to pay the outstanding principal of, and accrued interest
on, those debentures upon presentment thereof in accordance with the indenture
governing the debentures.
23
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note K - Rental Commitments
Rental expense, primarily for office premises, amounted to $76,000, $52,000 and
$59,000 for the years ended December 31, 1999, 1998 and 1997, respectively. As
of December 31, 1999, the approximate minimum rental commitments under the
Company's office lease, which expires on January 31, 2004 were:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 72,000
2001 72,000
2002 72,000
2003 72,000
2004 6,000
</TABLE>
Note L - Stockholders' Equity
From time to time, the Company purchases shares of its common stock in the open
market. In 1999, 1998 and 1997 the Company purchased shares of its common stock,
primarily in open market transactions: 247,500 shares for $1,912,000 in 1999,
91,594 shares for $736,000 in 1998 and 63,700 shares for $470,000 in 1997.
In 1999 an officer of the Company and two trusts, of which the widow of a former
officer is a trustee, exercised options for the purchase of an aggregate of
119,500 shares of the Company's common stock. The Company received proceeds of
$388,000 from the exercise of these options. No options were exercised in 1998
and 1997.
Note M - Stock Plans
The Company's 1997 Long-Term Incentive Plan (the "1997 Plan") provides for the
granting of non-qualified stock options, incentive stock options, stock
appreciation rights, restricted stock, performance awards, stock payments and
deferred stock to employees, who may also be directors of the Company. The
Company's 1993 Long-Term Equity Incentive Plan (the "1993 Employee Plan") and
Amended and Restated Management Incentive Compensation Plan (the "Original
Employee Plan") govern certain non-qualified stock options issued to officers
and employees prior to adoption of the 1997 Plan; no new grants of options or
other stock rights may be made under the 1993 Employee Plan or the Original
Employee Plan. The Company's 1994 Stock Option Plan for Outside Directors (the
"1994 Director Plan"), provides for the grant of stock options to those of its
directors who are not employed by the Company (the "Outside Directors").
24
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 1997 Plan, the 1993 Employee Plan and the Original Employee Plan are
administered by the Board of Directors or a committee (the "Committee"),
composed of not less than two directors who are disinterested persons (as that
term is defined in Rule 16b-3, promulgated pursuant to the Securities Exchange
Act of 1934, as amended). The Committee selects participants in the 1997 Plan
and determines the number of shares subject to the options and other stock
rights granted pursuant to that plan, and the terms of those options and other
rights.
The 1994 Director Plan replaced the Company's Non-Employee Directors' Option
Plan (the "Original Director Plan"). Under the Original Director Plan, each
Outside Director was automatically granted, upon election as a director, a
non-qualified option for 5,000 shares of the Company's common stock. All of the
options which were granted under the Original Director Plan have been exercised.
No new options may be granted under the Original Director Plan.
Pursuant to the 1994 Director Plan, any person who becomes an Outside Director
is to be granted a non-qualified option to purchase 5,000 shares of the
Company's common stock, the grant to be effective on the date of his or her
election or appointment as an Outside Director, and each Outside Director who
has served as such for at least one year will also receive an option to purchase
2,000 shares of the Company's common stock on the date of each annual meeting of
stockholders at which he or she is reelected a director. In accordance with the
1994 Director Plan, two Outside Directors were granted options for 5,000 shares
each upon approval of the plan in May 1994 and subsequently received options for
2,000 shares each on the dates of the annual meetings of stockholders in May
1995, May 1996, May 1997, May 1998 and May 1999. Another Outside Director was
granted, at the time of his appointment in October 1996, a non-qualified option
to purchase 5,000 shares of the Company's common stock, and, in accordance with
the 1994 Director Plan, subsequently received options for 2,000 shares on the
date of the annual meeting of stockholders in May 1998 and May 1999. All options
granted pursuant to the 1994 Director Plan have a per share exercise price equal
to the fair market value of the Company's common stock on the grant date.
The Company does not recognize any compensation expense related to the options
that it grants as they are all exercisable at the fair value of the Company's
stock on the date of grant. This method of accounting for options is acceptable
under GAAP. In 1996 the FASB established a second, preferred method of
accounting for compensation awarded through options which applies an option
pricing theory to measuring option compensation. This method of accounting is
set forth in Statement of Financial Accounting Standards No. 123 "Accounting for
Stock Based Compensation" (SFAS 123). SFAS 123 permits the continued application
of the method employed by the Company. Had compensation costs for the Company's
option plans been determined consistent with SFAS 123, the Company's net income
25
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and earnings per share would have been reduced to the following pro forma
amounts as of December 31, 1999, 1998 and 1997 (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C> <C>
Net income: As reported $ 3,839 $ 2,829 $ 3,079
SFAS 123 adjustment (114) (157) (188)
--------- ---------- --------
Pro forma $ 3,725 $ 2,672 $ 2,891
======== ======== =======
Diluted income
per share: As reported $ 1.00 $ .70 $ .75
SFAS 123 adjustment (.03) (.04) (.04)
--------- -------- --------
Pro forma $ .97 $ .66 $ .71
======== ======== ========
</TABLE>
As of December 31, 1999 and March 1, 2000, 361,500 shares were available for
future grant under the 1997 Plan, 61,000 shares were available for future grant
under the 1994 Director Plan and 826,000 of the stock options were exercisable.
The options expire 10 years following their grant. Options granted under the
1997 Plan are fully vested at the date of grant. Options granted pursuant to the
1994 Director Plan, and granted prior to May 27, 1998, vest at the rate of 25%
per year, for each of the first four years. On May 27, 1998, the Board of
Directors amended the 1994 Director Plan to provide that all options granted on
and after that date become fully vested on the date of grant.
The fair value of each option grant is estimated as of the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Risk free interest rate 6.3% 4.6% 5.7%
Expected dividend yield none none none
Expected life of options 5 years 5 years 5 years
Expected volatility 0.1% 0.1% 0.1%
</TABLE>
Based on these assumptions, the weighted average fair value of options granted
would be calculated as $1.98 in 1999, $1.59 in 1998 and $2.06 in 1997. The SFAS
123 adjustments for 1999, 1998 and 1997 appearing above are the product of these
weighted average fair values and the number of options granted in each of the
three years, after giving effect to the capitalization of a portion of these
compensation costs to the Meadow Pointe project.
26
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the status of the Company's stock option plans at December 31,
1999, 1998 and 1997 and changes during the years then ended is presented in the
table below:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- --------------------- -------------------------
Weighted- Weighted- Weighted-
--------- --------- ---------
Options Average Options Average Options Average
------- ------- ------- ------- ------- -------
Exercise Exercise Exercise
-------- -------- --------
Price Price Price
----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
Beginning Of
Year 904,000 $ 4.54 804,500 $ 4.14 704,500 $ 3.55
Granted 55,500 7.29 99,500 7.80 100,000 8.28
Exercised (119,500) 3.25 -- -- -- --
Expired (13,000) 8.27 -- -- -- --
-------- ----------- ---------- ----------- ----------
Outstanding at End
of Year 827,000 4.86 904,000 4.54 804,500 4.14
======= ======= =======
Exercisable at End
of Year 826,000 4.85 895,500 4.52 789,250 4.10
======= ======= =======
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding
------------------------------------
Options Exercisable
-------------------
Weighted Weighted -
Number Average Average Number Weighted -
Range of Outstanding at Remaining Exercise Exercisable at Average
Exercise Prices 12/31/99 Contractual Life Price 12/31/99 Exercise Price
--------------- -------- ---------------- ------ -------- --------------
<S> <C> <C> <C> <C> <C>
$2.50 to $2.88 388,000 2.73 years $2.67 388,000 $2.67
$3.87 to $4.75 94,000 5.80 years 4.66 94,000 4.66
$5.87 to $6.25 103,000 6.86 years 6.23 103,000 6.23
$7.25 to $9.00 242,000 8.72 years 7.88 241,000 7.87
------- -------
827,000 826,000
======= =======
</TABLE>
27
<PAGE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
BF ENTERPRISES, INC. AND SUBSIDIARIES
December 31, 1999
(Thousands of dollars)
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Cost to Company Carried at Close of Period
----------------------- ---------------------------
Life on Which
Depreciation
in Latest
Statements
Buildings and Buildings and Accumulated Date of Date of Operations
Description Land Improvements Land Improvements Total Depreciation Construction Acquired is Computed
- ----------- ---- ------------ ---- ------------ ----- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Office Building -
Tempe, Arizona $ 736 $ 3,734 $ 736 $ 3,734 $ 4,470 $ 2,254 1977 1977 40 Years
===== ======= ===== ======= ======= =======
</TABLE>
Notes:
(1) For Federal income tax purposes at December 31, 1999, real estate was
carried at a cost of $1,668,000.
(2) Reconciliation of "Real Estate and Accumulated Depreciation":
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
1999 1998 1997
------ ------ -----
Investment Accumulated Investment Accumulated Investment Accumulated
Amount Depreciation Amount Depreciation Amount Depreciation
--------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
year $ 4,470 $ 2,203 $ 4,470 $ 2,152 $ 4,470 $ 2,101
Additions:
Depreciation
charged to
costs &
expenses 51 51 51
------- ------- ------- ------- -------- -------
Balance at end
of year $ 4,470 $ 2,254 $ 4,470 $ 2,203 $ 4,470 $ 2,152
======= ======= ======= ======= ======= =======
</TABLE>
28
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
-----------------------------------------------------------
and Financial Disclosure.
------------------------
None.
PART III
The information required by Items 10 through 13 of this Part is
incorporated by reference from the Company's Proxy Statement, under the captions
"Nomination and Election of Directors," "Beneficial Stock Ownership," and
"Compensation of Executive Officers and Directors," which Proxy Statement will
be mailed to stockholders in connection with the Company's annual meeting of
stockholders which is scheduled to be held in May 2000.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
-------------------------------------------------------
Form 8-K.
---------
(a) 1. Financial Statements
The following consolidated financial statements of BF Enterprises, Inc. and
its subsidiaries are included in Item 8 of this report:
Report of independent public accountants.
Consolidated balance sheets at December 31, 1999 and 1998.
Consolidated statements of income for the years ended
December 31, 1999, 1998 and 1997.
Consolidated statements of stockholders' equity for
the years ended December 31, 1999, 1998 and 1997.
Consolidated statements of cash flows for the years
ended December 31, 1999, 1998 and 1997.
Notes to financial statements.
Selected quarterly financial data for the years ended
December 31, 1999 and 1998 have not been included in
the notes to the financial statements as they were
not required.
Financial Statement Schedules:
III - Real estate and accumulated depreciation
Schedules I, II, IV and V have been omitted as they are
inapplicable.
29
<PAGE>
(a) 3. Exhibits
--------
Exhibit
Number Description
- ------ -----------
3.1 Restated Certificate of Incorporation - incorporated by reference
to Exhibit 3 (a) to Amendment No. 1 on Form 8 to the registrant's
Form 10 registration statement, filed with the Securities and
Exchange Commission on June 23, 1987.
3.2 By-Laws - incorporated by reference to Exhibit 3 (b) to the
registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989.
4.1 Restated Certificate of Incorporation (filed as Exhibit 3.1).
4.2 By-Laws (filed as Exhibit 3.2).
4.3 Specimen common stock certificate - incorporated by reference to
Exhibit 4 (c) to Amendment No. 1 on Form 8 to the registrant's
Form 10 registration statement, filed with the Securities and
Exchange Commission on June 23, 1987.
4.4 Indenture dated as of October 1, 1972, as amended, between IDS
Realty Trust and First National Bank of Minneapolis - incorporated
by reference to Exhibits 6(t) and 6(v) to the Form S-14
Registration Statement of Boothe Financial Corporation (formerly
known as Boothe Interim Corporation and now known as Robert Half
International Inc.) filed with the Securities and Exchange
Commission on December 31, 1979.
4.5 Indenture, dated as of October 26, 1993, between the registrant and
American National Bank and Trust Company, as Trustee for the
registrant's Floating Rate Subordinated Debentures due December 31,
1999 - incorporated by reference to Exhibit 4.5 to the registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1993.
4.6 Specimen certificate for the registrant's Floating
Rate Subordinated Debentures due December 31, 1999 -
incorporated by reference to Exhibit 4.6 to the
registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1993.
10.1 Reorganization and Distribution Agreement between the registrant
and Boothe Financial Corporation (now known as Robert Half
International Inc.), as amended and restated as of June 15, 1987
- incorporated by reference to Exhibit 2 to Amendment No. 2 on
30
<PAGE>
Form 8 to the registrant's Form 10 registration statement, filed
with the Securities and Exchange Commission on July 17, 1987.
10.2 Pledge and Security Agreement between the registrant
and Boothe Financial Corporation (now known as Robert
Half International Inc.), dated as of June 15, 1987 -
incorporated by reference to Exhibit 10 (b) to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
10.3 Tax Sharing Agreement between the registrant and
Boothe Financial Corporation (now know as Robert Half
International Inc.), dated as of June 15, 1987 -
incorporated by reference to Exhibit 10 (c) to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
10.4 Agreement of Assignment and Assumption of Rights
under the Indenture, dated June 15, 1987, between the
registrant and Boothe Financial Corporation (now
known as Robert Half International Inc.) -
incorporated by reference to Exhibit 10 (f) to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
10.5 Assumption of Obligations and Liabilities, dated June 15, 1987,
between the registrant and Boothe Financial Corporation (now known
as Robert Half International Inc.) - incorporated by reference to
Exhibit 10 (g) to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987.
*10.6 Amended and Restated Management Incentive Compensation Plan of the
registrant - incorporated by reference to Exhibit 10.9 to the
registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991.
*10.7 Non-Employee Directors' Option Plan of the
registrant, as amended - incorporated by reference to
Exhibit 10 (j) to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989.
*10.8 The registrant's 1993 Long-Term Equity Incentive Plan
- incorporated by reference to Exhibit 10.8 to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
*10.9 The registrant's 1994 Stock Option Plan for Outside
Directors - incorporated by reference to Exhibit 10.9
to the registrant's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1994.
*10.10a Employment Agreement between the registrant and Brian P. Burns,
dated as of November 30, 1992 - incorporated by reference
to Exhibit 10.15 to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.
*10.10b Amendment to Employment Agreement between the registrant and
Brian P. Burns, dated as of December 28, 1995 - incorporated by
reference to Exhibit 10.10b to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.
31
<PAGE>
*10.10c Second Amendment to Employment Agreement between the
registrant and Brian P. Burns, dated as of January 1,
1997 - incorporated by reference to Exhibit 10.10c to
the registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
*10.10d Employment Agreement between the registrant and Brian
P. Burns, dated as of January 1, 2000 - filed
herewith to the registrant's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999.
*10.11a Employment Agreement by and between the registrant
and Paul Woodberry, dated as of December 22, 1992 -
incorporated by reference to Exhibit 10.16 to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
*10.11b Amendment to Employment Agreement between the
registrant and Paul Woodberry, dated as of January 1,
2000 - filed herewith to the registrant's Annual
Report on Form 10-KSB for the fiscal year ended
December 31, 1999.
*10.12a The registrant's Profit Sharing Plan, as amended and
restated effective July 1, 1989 - incorporated by
reference to Exhibit 10.9 to the registrant's
Registration Statement on Form S-1 and Form S-4
(Registration No. 33-56290) filed with the Securities
and Exchange Commission on December 24, 1992.
*10.12b First Amendment of the registrant's Profit Sharing
Plan, adopted December 12, 1994 - incorporated by
reference to Exhibit 10.12 (b) to the registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
*10.12c Second Amendment of the registrant's Profit Sharing
Plan, adopted March 31, 1995 - incorporated by
reference to Exhibit 10.12c to the registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
*10.13 Amended Trust Agreement, under the registrant's
Profit Sharing Plan, dated September 7, 1992, between
the registrant and John M. Price, as trustee -
incorporated by reference to Exhibit 10.10 to the
registrant's Registration Statement on Form S-1 and
Form S-4 (Registration No. 33-56290) filed with the
Securities and Exchange Commission on December 24,
1992.
10.14 Amended and Restated Letter of Credit Reimbursement
Agreement, dated April 30, 1994, among IBJ Schroder
Bank & Trust Company, the registrant and the
registrant's wholly-owned subsidiary, Boothe
Financial Corporation - incorporated by reference to
Exhibit 10.14 to the registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30,
1994.
10.15 Loan and Security Agreement, dated April 30, 1994,
executed by the registrant and its wholly-owned
subsidiary, Boothe Financial Corporation, in favor of
IBJ Schroder Bank & Trust Company - incorporated by
reference to Exhibit 10.15 to the registrant's
Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1994.
10.16 Lease, regarding premises at 1515 W. 14th Street, Tempe, Arizona,
dated as of March 1, 1995, between the registrant, as landlord,
32
<PAGE>
and Bank One, Arizona, NA, as tenant - incorporated by
reference to Exhibit 10.17 to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994.
10.17 Development and Management Agreement, dated as of
March 1, 1991, between Trout Creek Development
Corporation, a wholly-owned subsidiary of the
registrant, and DEVCO II Corporation - incorporated
by reference to Exhibit 10.20 (a) to the registrant's
Form 8-K report dated March 14, 1991, filed with the
Securities and Exchange Commission on March 15, 1991.
10.18 Guarantee, dated as of March 1, 1991, by the registrant -
incorporated by reference to Exhibit 10.20 (b) to the registrant's
Form 8-K report dated March 14, 1991, filed with the Securities
and Exchange Commission on March 15, 1991.
10.19a Office Lease, dated as of March 26, 1990, between
Bush Street Limited Partnership, as landlord, and the
registrant, as tenant - incorporated by reference to
Exhibit 10.24 (a) to the registrant's Annual Report
on Form 10-K for the fiscal year ended December 31,
1990.
10.19b Lease Extension Agreement, dated as of January 19,
1995, between JMB Group Trust IV, as landlord, and
the registrant, as tenant - incorporated by reference
to Exhibit 10.21 (b) to the registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994.
10.19c Second Amendment to Lease, dated as of May 15, 1998,
between 100 Bush Corporation, as landlord, and the
registrant, as tenant - filed herewith to the
registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998.
10.20 Property Acquisition Agreement, dated as of September 25, 1995,
between Meadow Pointe II Community Development District and Trout
Creek Properties, Inc., a wholly-owned subsidiary of the
registrant - incorporated by reference to Exhibit 10.22 to the
registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
*10.21 1997 Long-Term Incentive Plan of BF Enterprises, Inc.
dated as of December 10, 1997 and approved by the
Company's stockholders at the Company's 1998 Annual
Meeting of Stockholders held on May 27, 1998 - filed
herewith to the registrant's Annual Report on
Form-10KSB for the fiscal year ended December 31, 1998.
*10.22 Amended BF Enterprises, Inc. 1994 Stock Option Plan
for Outside Directors including all amendments
through May 27, 1998 - filed herewith to the
registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998.
10.23 Amended and Restated Letter of Credit Reimbursement
Agreement, dated July 31, 1998, among IBJ Schroder
Bank & Trust Company, the registrant and the
registrant's wholly-owned subsidiary, Boothe
Financial Corporation - filed herewith to the
registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998.
33
<PAGE>
10.24 Agreement of General Partnership of Meadow Pointe General
Partnership dated October 3, 1999 made by and between Meadow
Pointe East, LLC and Devco III, L.L.C.- filed herewith to the
registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999.
10.25 Agreement for Development, Sale and Purchase of Real Property
dated October 5, 1999 made by and between Clearwater Bay
Associates, Inc. and Meadow Pointe General Partnership - filed
herewith to the registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999.
10.26 Management Agreement dated October 3, 1999 made by and among
Meadow Pointe General Partnership, Devco III, LLC and
Donald A. Buck - filed herewith to the registrant's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1999.
10.27 Grid Promissory Note dated October 3, 1999 made by and between
Meadow Pointe General Partnership and Meadow Pointe East, LLC -
filed herewith to the registrant's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999.
21 Subsidiaries of the registrant.
- --------------------------------------------
* Management contract or compensatory plan required to be filed
as an exhibit pursuant to Item 14 (c) of Form 10-K.
34
<PAGE>
(b) Reports on Form 8-K
--------------------
The registrant did not file any report on Form 8-K during the last
quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BF ENTERPRISES, INC.
--------------------
(Registrant)
Date: March 24, 2000 By: /s/ S. Douglas Post
-----------------------------------------
S. Douglas Post, Vice President and
Treasurer
(Principal Accounting Officer)
35
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: March 24, 2000 By: /s/ Brian P. Burns
---------------------------------
Brian P. Burns
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Date: March 24, 2000 By: /s/ Paul Woodberry
---------------------------------
Paul Woodberry
Executive Vice President,
Chief Financial Officer and a Director
(Principal Financial Officer)
Date: March 24, 2000 By: /s/ Daniel S. Mason
---------------------------------
Daniel S. Mason, Director
Date: March 24, 2000 By: /s/ Ralph T. McElvenny, Jr.
---------------------------------
Ralph T. McElvenny, Jr., Director
Date: March 24, 2000 By: /s/ Charles E.F. Millard
---------------------------------
Charles E.F. Millard, Director
Date: March 24, 2000 By: /s/ S. Douglas Post
---------------------------------
S. Douglas Post, Vice President and
Treasurer
(Principal Accounting Officer)
36
Exhibit 21
BF ENTERPRISES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name of Subsidiary State or Country of Incorporation
- ------------------ ---------------------------------
<S> <C>
BF Holdings, Ltd. Cayman Islands
BF Regent, LLC Delaware
BF University Club Apartments, Inc. Delaware
Boothe Financial Corporation Delaware
Meadow Pointe East, LLC Delaware
Trout Creek Properties, LLC Delaware
Trout Creek Development Corporation Delaware
</TABLE>
37
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into as of January 1, 2000 by and between BF ENTERPRISES,
INC., a Delaware corporation ("Corporation"), and BRIAN P. BURNS, an individual
domiciled in Florida ("Officer").
R E C I T A L S
A. Corporation and Officer entered into that certain Employment Agreement,
dated November 30, 1992 (the "1992 Employment Agreement");
B. Corporation and Officer entered into that certain Amendment to
Employment Agreement, dated December 28, 1995 (the "First Amendment"),
pursuant to which certain provisions of the 1992 Employment Agreement
were amended;
C. Corporation and Officer entered into that certain Second Amendment to
Employment Agreement, dated December 12, 1996 (the "Second Amendment"),
pursuant to which certain provisions of the 1992 Employment Agreement
and the First Amendment were amended;
D. Corporation and Officer entered into that certain Second Amendment to
Employment Agreement, dated January 1, 1997 (the "Third Amendment,"
together with the 1992 Employment Agreement, the First Amendment and
the Second Amendment, the "Employment Agreement"), pursuant to which
certain provisions of the 1992 Employment Agreement, the First
Amendment and the Second Amendment were amended; and
E. Corporation and Officer desire to amend and restate the Employment
Agreement in its entirety, pursuant to which Corporation will continue
to employ Officer as the Chairman of Corporation's Board of Directors
(the "Board of Directors"), Chief Executive Officer and President, and
Officer is willing to accept such continued employment by Corporation,
on the terms and subject to the conditions set forth in this Agreement.
F. The parties hereto, in consideration of the mutual covenants contained
herein, agree upon the following terms of employment of Officer by
Corporation.
A G R E E M E N T
1. Duties. During the term of this Agreement, Officer agrees to be
employed by and to serve Corporation as Chairman of the Board of Directors,
Chief Executive Officer and President, and Corporation agrees to employ and
retain Officer in such capacities. Officer shall devote such of his business
time, energy, and skill to the affairs of the Corporation as shall be necessary
to perform the duties of such positions. Officer shall continue to be permitted
to engage, from time to time, in various charitable and community affairs,
managing his personal investments, serving as a member of boards of directors or
as a trustee of other companies, associations or entities, participating in
outside business activities which are not related to the business and affairs of
Corporation for which he may receive compensation and any other activities that
Officer is currently participating in or in the past has participated in,
provided that such activities do not materially and adversely interfere with the
performance of his duties under this Agreement.
2. Term of Employment. The term of employment of Officer by Corporation
shall commence on the date hereof and continue until December 31, 2004 (the
"Employment Period"), unless terminated earlier pursuant to Section 5 herein. At
any time before December 31, 2004 Corporation and Officer may by mutual written
agreement extend Officer's employment under the terms of this Agreement for such
additional periods as they may agree. All references herein to the Employment
Period shall refer to both the initial Employment Period and any such successive
Employment Periods.
3. Compensation.
3.1 Base Salary. As payment for the services to be rendered by
Officer as provided herein, Corporation agrees to pay to Officer a base salary
at the rate of Two Hundred Ninety-Five Thousand and No/100 Dollars ($295,000.00)
per annum (the "Base Salary") payable in equal semi-monthly installments. The
Base Salary shall be subject to review by the Board of Directors, but shall in
no event be less than a rate of $295,000 per annum during the Employment Period.
3.2 Bonuses. Officer shall be eligible to receive a bonus of
up to one hundred percent (100%) of Officer's Base Salary for each calendar year
(or portion thereof) during the Employment Period, with the actual amount of any
such bonus to be determined in the discretion of the Board of Directors based
upon its evaluation of Officer's performance during such year. Subject to
Section 5 herein, all such bonuses shall be payable within forty-five (45) days
after the end of the calendar year to which such bonus relates.
1
<PAGE>
3.3 Additional Benefits. During the Employment Period,
Officer shall be entitled to the following additional benefits:
3.3.1 General Benefits. Officer shall be eligible to
participate in such of Corporation's benefit and deferred compensation plans as
are now generally available or later made generally available to executive
officers of Corporation, including, without limitation, profit sharing, medical,
dental, health, annual physical examination, life, disability insurance, tax
preparation, estate planning, financial planning, and supplemental retirement
programs (including, without limitation, the Group Ltd., Life and AD&D benefits
through UNUM, the Travel and Accident Plan through the Hartford and The Aetna
Group Medical Plan). Corporation shall also pay the premiums on Officer's
current long-term care insurance plan. For purposes of establishing the
length of service under any benefit plans or programs of Corporation, the
parties hereto acknowledge and agree that Officer has provided more than twenty
years of service to Corporation (f/k/a Boothe Financial) as a Director, and in
the year 2001 will have provided twenty (20) years of service to the Corporation
as a Chairman of the Board of Directors and Chief Executive Officer.
3.3.2 Clubs. Corporation shall, in accordance with past
practices, pay all dues charged for business, health and social clubs, and
similar organizations of which Officer is a member or desires to become a member
and all other clubs used now or in the future by Officer for business
development.
3.3.3 Automobile. For Corporation's convenience, and as
a condition of Officer's employment by Corporation, Officer shall, to the extent
reasonably possible, use a luxury automobile to be provided and maintained by
Corporation. Corporation shall pay all costs of gasoline, servicing and other
upkeep of the automobile during the Employment Period. Officer shall be
entitled to exchange such automobile for a new luxury automobile every three
(3) years during the Employment Period. Corporation shall, in accordance with
past practices, provide (at Corporation's expense) adequate personal injury and
property damage insurance covering such automobile.
3.3.4 Tax Preparation, Financial Planning and Estate
Planning. Corporation will pay the fees for tax preparation, outside custom
financial planning and estate planning for Officer by a recognized financial
planning organization and a law firm of Officer's choice.
3.3.5 Vacation. Officer shall be entitled to no less than
five (5) weeks of vacation during each calendar year during the Employment
Period, prorated for partial years.
3.3.6 Other Expenses. In accordance with past practices,
Corporation shall promptly reimburse Officer for all reasonable business
expenses (e.g., travel, business, entertainment, etc.) incurred by Officer in
performing his duties hereunder upon Officer accounting to Corporation for such
expenses (in accordance with past practices).
4. Extended Healthcare Benefits. In consideration for Officer's more
than twenty years of service to Corporation, in the event of a termination of
this Agreement for a reason other than a Termination for Cause, Officer and his
then current wife shall each continue to participate until the later of his or
her death, at the Corporation's expense (or its successor's or assign's
expense), in whatever medical, healthcare, dental, life insurance,
reimbursement, disability and other benefits, plans and programs may be
maintained by Corporation from time to time for its then current employees as if
Officer were still a full-time employee of Corporation; provided, however, that
when Officer attains the age of 65 or for any other reason is no longer eligible
for such benefits, plans or programs, Corporation shall otherwise pay for all
healthcare costs of Officer and his then current wife (including, without
limitation, insurance premiums for healthcare, dental, life, disability and
long-term care, and prescriptions and ancillary treatments and procedures).
5. Termination. Unless otherwise agreed to in writing by
Corporation and Officer, Officer's employment hereunder may only be terminated
under the following circumstances, in addition to terminations pursuant to
Section 6 hereof:
5.1 Death.
5.1.1 Termination Upon Death. Officer's
employment will be terminated upon Officer's death ("Termination Upon Death").
5.1.2 Payment Upon Termination Upon Death.
In the event of Termination Upon Death, Corporation shall immediately pay to
Officer's estate all accrued Base Salary, bonus compensation, vested deferred
compensation (other than pension plan or profit sharing plan benefits which
will be paid in accordance with the applicable plan), any benefits under
any plans of Corporation in which Officer is a participant to the full extent of
Officer's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by Officer in connection with his duties
hereunder, all to the Date of Termination (as defined in Section 5.8 herein),
the death benefits provided in Section 5.1.3 and, Officer's then current wife
shall be entitled to those benefits described in Section 4 herein.
2
<PAGE>
5.1.3 Death Benefits. Notwithstanding anything in
this Agreement to the contrary, in the event of Termination Upon Death,
Corporation shall continue to pay to Officer's estate or assignee, as the case
may be, one hundred percent (100%) of Officer's Base Salary at the time of
Officer's death through the remaining Employment Period; provided, however, that
in no event shall the aggregate amount payable under this Section 5.1.3 be
less than two (2) times Officer's then Base Salary.
5.2 Disability.
5.2.1 Termination By Reason of Disability. If,
during the Employment Period, Officer becomes incapacitated due to physical or
mental illness (such incapacity being determined by a qualified, independent
physician selected by Corporation and approved by Officer (or, if Officer is
unable to give such approval, by his legal representative or his wife)) for a
period of more than six (6) consecutive months, Corporation shall have the right
to terminate Officer's employment hereunder by Notice of Termination (as defined
in Section 5.7 herein)("Termination By Reason of Disability").
5.2.2 Payment Upon Termination By Reason of
Disability In the event of a Termination By Reason of Disability, Corporation
shall immediately pay Officer all accrued Base Salary, bonus compensation,
vested deferred compensation (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Corporation in which Officer is a participant to the
full extent of Officer's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by Officer in connection with his
duties hereunder, all to the Date of Termination, together with the disability
benefits provided in Section 5.2.3, and those benefits described in
Sections 3.3.2, 3.3.3, 3.3.4 and 4 described herein.
5.2.3 Disability Benefits. Notwithstanding
anything in this Agreement to the contrary, in the event of Termination By
Reason of Disability pursuant to Section 5.2.1, Corporation shall pay to Officer
the difference between (a) seventy-five percent (75%) of the sum of Officer's
Base Salary (at the rate payable at the Date of Termination) through the
remaining Employment Period, and (b) amounts received by Officer from
long-term disability insurance carried by Corporation, on the dates specified
in Section 3.1 through the remaining Employment Period; provided,
however, that in no event shall the aggregate amount payable under this Section
5.2.3 be less than two (2) times Officer's then Base Salary.
5.3 Cause.
5.3.1 Termination For Cause. Officer's employment
hereunder may be terminated for cause and effected upon receipt by Officer
of a Notice of Termination ("Termination For Cause"). For purposes of this
Agreement, "Termination For Cause" shall mean termination by Corporation
of Officer's employment by Corporation by reason of Officer's willful
dishonesty towards, fraud upon, or deliberate injury or attempted injury to,
Corporation or by reason of Officer's willful material breach of this Agreement
which has resulted in material injury to Corporation; provided, however, for
purposes of this Section 5.3, no act or failure to act on Officer's part shall
be considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interests of Corporation. Notwithstanding the foregoing, any termination of
Officer shall not be considered a Termination For Cause pursuant to this
Section 5.3 and shall be considered a Termination Without Cause pursuant to
Section 5.4 hereof, if such termination is effected without (a) reasonable
notice to Officer setting forth the reasons for Corporation's intention
regarding a Termination For Cause; (b) an opportunity for Officer, together
with his counsel, to be heard before the Board of Directors; and (c) delivery
to Officer of a Notice of Termination as provided for in Section 5.7 hereof
from the Board of Directors finding that in the good faith opinion of the
Board of Directors, Officer was guilty of conduct set forth above in the
preceding sentence, and specifying the particulars thereof in
detail. If Officer is the prevailing party as a result of a hearing before the
Board of Directors pursuant to Section 5.3.1(b) above, Officer shall be promptly
reimbursed for attorneys' fees and related costs pursuant to Section 8.10
herein.
5.3.2 Payment Upon Termination For Cause. In the
event of a Termination For Cause, Officer shall immediately be paid all accrued
Base Salary, bonus compensation, vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of Corporation in which
Officer is a participant to the full extent of Officer's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred
by Officer in connection with his duties hereunder, all to the Date of
Termination, and Officer shall be entitled to receive any extension of
benefits beyond the Date of Termination, provided that (a) such benefits were
received by Officer prior to the Date of Termination, and (b) such extension is
customarily offered by Corporation to its employees or is otherwise required by
applicable law.
3
<PAGE>
5.4 Without Cause.
5.4.1 Termination Without Cause. Any termination of
Officer by Corporation upon receipt by Officer of a Notice of Termination
(including any action which is deemed a termination of Officer pursuant to
Section 5.6 hereof), other than a Termination Upon Death, Termination By Reason
of Disability or a Termination For Cause pursuant to Sections 5.1, 5.2 and
5.3, respectively, shall be deemed a "Termination Without Cause."
5.4.2 Payment Upon Termination Without Cause.
In the event of any Termination Without Cause, Officer shall immediately be paid
all accrued Base Salary, bonus compensation, vested deferred compensation
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of
Corporation in which Officer is a participant to the full extent of Officer's
rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by Officer in connection with his duties hereunder,
all to the Date of Termination, together with all severance compensation
provided in Section 5.4.3.
5.4.3 Severance Compensation. In the event of any
Termination Without Cause, (a) Corporation shall pay Officer in a lump sum
payment within 30 days after the Date of Termination the aggregate of the
following amounts: (i) an amount equal to Officer's Base Salary (at the rate
payable at the Date of Termination) through the Employment Period, plus
(ii) an amount equal to the amount in clause (i) above in lieu of a bonus;
provided, however, that in no event shall such aggregate amount be less than two
(2) times Officer's Base Salary; and (b) Officer shall be entitled to those
benefits described in Sections 3.3.2, 3.3.3, 3.3.4 and 4 herein.
5.5 Voluntary Termination.
5.5.1 Termination by Officer. Officer may
terminate Officer's employment by Corporation for any reason with thirty (30)
days prior written notice to Corporation ("Voluntary Termination").
For purposes of this Section 5.5, "Voluntary Termination" shall not include a
Termination Upon Change in Control pursuant to Section 6 herein or
any termination of Officer's employment pursuant to Section 5.6 herein.
5.5.2 Payment Upon Voluntary Termination. In the
event of a Voluntary Termination, on or after the Date of Termination,
Corporation shall no longer be obligated to pay Officer any amounts payable to
Officer hereunder for such period, whether in the form of Base Salary, bonus or
otherwise, and Officer shall have no right to compensation or other benefits
hereunder for any such period, but Corporation shall pay Officer all accrued
Base Salary, bonus compensation, vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of Corporation in which
Officer is a participant to the full extent of Officer's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred
by Officer in connection with his duties hereunder, all to the Date of
Termination, and Officer shall be entitled to those benefits described in
Section 4 herein.
5.6 Other Events of Termination. The following
circumstances shall specifically be deemed a Termination Without Cause of
Officer's employment by Corporation:
5.6.1 a vote by the Board of Directors to
Terminate Officer Without Cause, as defined in Section 5.4 hereof;
5.6.2 any termination of Officer's employment by
Corporation which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 5.7 hereof;
5.6.3 a breach by Corporation of this Agreement,
and a subsequent election by Officer to terminate this Agreement pursuant to
Section 5.5 above; or
5.6.4 the performance of any other act by
Corporation which is designed to prevent and does prevent Officer from properly
performing the authorities, duties and responsibilities of his employment
hereunder, including without limitation, a change in the duties or position
of Officer within Corporation.
4
<PAGE>
5.7 Notice of Termination. Any termination of Officer's
employment by Corporation or by Officer (other than termination pursuant to
Section 5.1 hereof) shall be communicated by written notice to the other party
hereto ("Notice of Termination"), which shall (a) indicate the specific
termination provision in this Agreement relied upon; (b) set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Officer's employment under the provision so indicated; and (c) contain any other
information required by this Agreement.
5.8 Effective Date of Termination. For purposes of this
Section 5, "Date of Termination" shall mean: (a) if Officer's employment is
terminated by his death, the last day of the month during which his death
occurs; (b) if Officer's employment is terminated pursuant to Section 5.2
hereof, the termination date stated in the Notice of Termination after the
expiration of six (6) consecutive months of Officer's incapacity due to physical
or mental illness, in accordance with the procedure set forth in Section 5.2
hereof; (c) if Officer's employment is terminated pursuant to Sections 5.3 or
5.4 hereof, the date that the Notice of Termination is communicated pursuant to
Section 5.7 hereof; (d) if Officer's employment is terminated pursuant to
Section 5.5 hereof, the termination date stated in the Notice of Termination
received by Corporation; (e) if Officer's employment is deemed terminated
pursuant to Section 5.6.1 or 5.6.2 hereof, the date of such action which is
deemed a termination of Officer by Corporation or, if deemed terminated pursuant
to Section 5.6.3 or 5.6.4, the date specified by the Officer in the Notice of
Termination; or (f) if Officer's employment is terminated pursuant to Section 6
herein, the date set forth in the Notice of Termination.
6. Termination of Employment Upon Change in Control.
6.1 Certain Definitions.
6.1.1 Change in Control. "Change in Control"
shall mean any of the following events:
(a) Corporation is provided a copy of a
Schedule 13D or Schedule 14D-1 filed pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") indicating that any person, entity or
"group" (as such terms are defined in Section 13(d)(3) of the Exchange Act)
that does not on the date hereof hold more than five percent (5%) of the
outstanding shares of Corporation entitled to vote for the election
of directors has become the holder of more than twenty percent (20%) (in one or
more transactions, in the aggregate) of either the then outstanding shares of
common stock or the combined voting power of Corporation's then outstanding
voting securities entitled to vote generally in the election of directors;
(b) as a result of or in connection with
any cash tender offer, merger, or other business combination, sale of assets
or contested election, or combination of the foregoing, the persons who
were directors of Corporation just prior to such event shall cease to
constitute a majority of the Board;
(c) Corporation's stockholders approve a
definitive agreement providing for a transaction in which Corporation will cease
to be an independent publicly-owned corporation;
(d) the stockholders of Corporation
approve a definitive agreement either (x) to merge, consolidate or reorganize
Corporation with or into another corporation in which the holders of the
Corporation's common stock immediately before such merger, consolidation or
reorganization will not, immediately following such merger or reorganization,
hold as a group on a fully-diluted basis both the ability to elect at least a
majority of the directors of the surviving corporation and at least a majority
in value of the surviving corporation's outstanding equity securities, or
(y) to sell or otherwise dispose of all or substantially all of the assets of
the Company;
(e) the stockholders of Corporation
approve the liquidation or dissolution of Corporation; or
(f) an Offer (as defined in Section
6.1.2 below) is made. As used in this Agreement, "Corporation" shall mean
Corporation as defined herein and any successor to its business and/or assets
upon a Change in Control which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
5
<PAGE>
6.1.2 Tender Offer or Exchange Offer. "Offer"
shall mean a tender offer or exchange offer for shares of Corporation's common
stock other than one made by Corporation or by a person, entity, or "group,"
as such terms are defined in Section 13(d)(3) of the Exchange Act, that on the
date hereof holds more than five percent (5%) of the outstanding shares of
Corporation entitled to vote for the election of directors where the offeror
acquires more than twenty percent (20%) (in one or more transactions, in
the aggregate) of either the then outstanding shares of common stock or the
combined voting power of Corporation's then outstanding voting securities
entitled to vote generally in the election of directors.
6.1.3 Termination Upon a Change in Control.
Officer may, in his sole and absolute discretion, terminate his employment with
Corporation within one hundred eighty (180) days following a Change in Control
("Termination Upon Change in Control").
6.1.4 Payment Upon a Change in Control. In the
event of a Termination Upon a Change in Control, Officer shall immediately be
paid all accrued Base Salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan any benefits under
any plans of Corporation in which Officer is a participant to the full extent of
Officer's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by Officer in connection with his duties hereunder,
all to the Date of Termination, together with all severance compensation
provided in Section 6.1.5 herein.
6.1.5 Severance Payment Upon a Change in Control.
(a) In the event of a Termination Upon a
Change in Control, (ii) Corporation shall pay Officer in a lump sum payment
with thirty (30) days after the Date of Termination the aggregate of the
following amounts: (A) an amount equal to Officer's Base Salary (at the rate
payable at the time of such termination) through the Employment Period, plus
(B) an amount equal to the amount in clause (A) above in lieu of a bonus;
provided, however, that in no event shall such aggregate amount be less than
two (2) times Officer's Base Salary; and (iii) Officer shall be entitled to
those benefits described in Sections 3.3.2, 3.3.3, 3.3.4 and 4 herein.
(b) Officer shall not be required to
mitigate the amount of any payment provided for in this Section 6.1 by seeking
other employment or otherwise, and the amount of any payment provided for
in this Section 6.1 shall not be reduced by any compensation earned by
Officer, either as the result of employment by any other employer after the date
of his termination of employment with Corporation or otherwise.
(c) Notwithstanding anything else in this
Agreement, solely in the event of a Termination Upon a Change in Control
pursuant to Section 6.1, the aggregate of the amount of severance compensation
paid to Officer under Sections 3 or 6.1 or otherwise, shall not include any
amount that Corporation is prohibited from deducting for federal income tax
purposes by virtue of Section 280G of the Internal Revenue Code or any
successor provision.
6.1.6 Non-exclusivity of Rights. Nothing in this
Agreement is intended to or shall prevent or limit Officer's continuing or
future participation in any benefit, bonus, incentive or other plans, programs,
policies or practices provided by Corporation or its subsidiaries and for
which Officer may qualify, nor shall anything herein limit or otherwise affect
such rights as Officer may have under any stock option or
other agreements with Corporation or any of its subsidiaries. Amounts which are
vested benefits or which Officer is otherwise entitled to receive under any
plan, policy, practice or program of Corporation or any of its subsidiaries at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program; provided that the vesting schedules, if
any, under all stock options held by Officer shall continue to run to the
maximum extent permitted by applicable law.
7. Protection of Corporation's Business.
7.1 Non-Solicitation. During the Employment Period, and for a
period of one (1) year following termination of Officer's employment under this
Agreement for any reason whatsoever, Officer shall not directly or indirectly,
as a partner, more than five percent (5%) shareholder, employee, consultant or
in any similar manner whatsoever employ or join in partnership with any person
who was an officer of the Corporation or any subsidiary of the Corporation of
the rank of vice president or higher during the six-month period prior to the
termination of Officer's employment hereunder and Officer shall not solicit any
officer of the Corporation or any of its subsidiaries to leave the employ of the
Corporation; provided, however, that notwithstanding the foregoing, Officer may
join the law firm of Further, Fahrner & Mason in any capacity and/or may employ
or solicit Ms. Carol Young and Ms. Janet Dalpe to leave the employ of
Corporation at any time during or after the Employment Period.
6
<PAGE>
8. Miscellaneous.
8.1 Confidentiality. Officer agrees that all proprietary
information considered confidential by Corporation and relating to the business
or operations of Corporation shall be kept and treated as confidential both
during and after the Employment Period; provided, however, that such information
may be disclosed to third parties if required by applicable law or court process
or if such information (a) was then generally known to the public other than as
a result of a disclosure by Officer, (b) is or becomes known or available to
Officer on a non-confidential basis from a source whom, insofar as is known to
Officer, is not prohibited from transmitting the information to third parties by
a contractual, legal, fiduciary or other obligation, or (c) is independently
developed by Officer.
8.2 Waiver. The waiver of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of the same or other provision hereof.
8.3 Entire Agreement Modifications. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral, with respect to the subject matter hereof, including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements, or other payments to Officer from
Corporation. All modifications to the Agreement must be in writing and signed by
the party against whom enforcement of such modification is sought.
8.4 Notices. All notices, requests, consents and other
communications required or permitted under this Agreement shall be in writing
(including electronic transmission) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service,
electronically transmitted, or mailed (airmail if international) by registered
or certified mail (postage prepaid), return receipt requested, addressed to:
If to Corporation:
BF Enterprises, Inc.
100 Bush Street, Suite 1250
San Francisco, California 94104
(415) 989-6580
Fax: (415) 788-5756
Attn: Douglas Post, Vice President and Treasurer
If to Officer:
Brian P. Burns
217 Via Tortuga
Palm Beach, Florida 33480
(561) 832-0084
Fax: (561) 832-6668
and
Brian P. Burns
1055 California Street
San Francisco, California 94108
With a Copy to:
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
777 South Flagler Drive
Suite 500, East Tower
West Palm Beach, Florida 33401
(561) 650-0553
Fax: (561) 655-5677
Attn: Michael V. Mitrione, Esq.
7
<PAGE>
and
Thomas & Clough Co. P.A.
223 Sunset Avenue
Suite 200
Palm Beach, Florida 33480
(561) 655-2004
Fax: (561) 655-2322
Attn: Dana D. Thomas, C.P.A.
or to such other address as any party may designate by notice complying with the
terms of this Section 8.4. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
8.5 Headings. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
8.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California.
8.7 Severability. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of this Agreement shall be deemed valid and
enforceable to the extent possible.
8.8 Survival of Corporation's Obligations. Corporation's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to
Corporation. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of Corporation. In the event any such
merger, consolidation, or reorganization shall be accomplished by transfer of
stock or by transfer of assets or otherwise, the provisions of this Agreement
shall be binding upon the surviving or resulting corporation or person. This
Agreement shall be binding upon and inure to the benefit of the executors,
administrators, heirs, successors and permitted assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by Corporation or by Officer.
8.9 Counterparts. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
8.10 Prevailing Parties. If any civil action, arbitration or
other legal proceeding is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any provision of this Agreement, the successful or prevailing
party or parties shall be entitled to recover reasonable attorneys' fees, sales
and use taxes, court costs and all expenses even if not taxable as court costs
(including, without limitation, all such fees, taxes, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgment proceedings),
incurred in that civil action, arbitration or legal proceeding, in addition to
any other relief to which such party or parties may be entitled. Attorneys' fees
shall include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes and all other charges billed by the
attorney to the prevailing party.
8
<PAGE>
8.11 Attorney's Fees. If litigation shall be brought to
enforce or interpret any provision contained herein, Corporation, to the extent
permitted by applicable law and Corporation's Certificate of Incorporation,
hereby indemnifies Officer to the maximum extent permitted by law for Officer's
reasonable attorneys' fees and disbursements incurred in such litigation.
8.12 Indemnification. In addition to any rights to
indemnification to which Officer is entitled under the Corporation's Certificate
of Incorporation and Bylaws, Corporation shall indemnify officer at all times
during and after the Employment Period to the maximum extent permitted under
Section 145 of the Delaware Corporations Code or any successor provision thereof
and any other applicable state law, and shall advance Officer's expenses in
defending any civil or criminal action, suit or proceeding, to the maximum
extent permitted under such applicable state law.
8.13 Arbitration. Notwithstanding anything to the contrary in
this Agreement, all claims for monetary damages and disputes relating in any way
to the performance, interpretation, validity, or breach of this Agreement shall
be referred to final and binding arbitration, before a single arbitrator, under
the commercial arbitration rules of the American Arbitration Association in San
Francisco County, California. The arbitrator shall be selected by the parties
and if the parties are unable to reach agreement on selection of the arbitrator
within thirty (30) days after the notice of arbitration is served, then the
arbitrator will be selected by the American Arbitration Association. All
documents, materials, and information in the possession of a party to this
Agreement and in any way relevant to the claims or disputes shall be made
available to the other parties for review and copying not later than sixty (60)
days after the notice of arbitration is served. To the extent that a party would
be required to make confidential information available to any other, an
agreement or an order shall be entered in the proceeding protecting the
confidentiality of and limiting access to such information before a party is
required to produce such information. Information produced by a party shall be
used exclusively in the arbitration or litigation that may arise, and shall not
otherwise be disclosed. In no event shall a party be entitled to punitive
damages in any arbitration or judicial proceeding and all parties hereby waive
their rights to any punitive damages. In the event an arbitration panel or a
court concludes that the punitive damages waiver contained in the previous
sentence is unenforceable, then the parties agree that the court with subject
matter jurisdiction over the confirmation of the award shall have sole and
exclusive jurisdiction to determine issues of entitlement and amount of punitive
damages. The arbitrator shall NOT have subject matter jurisdiction to decide any
issues relating to the statute of limitations or to any request for injunctive
relief, and the parties hereby stipulate to stay the arbitration proceeding
(without the need of a bond) until any such issues in dispute are resolved.
Judgment upon the award rendered by the arbitrator shall be final, binding and
conclusive upon the parties and their respective administrators, executors,
legal representatives, heirs, successors and permitted assigns, and may be
entered in any court of competent jurisdiction.
8.14 Jurisdiction and Venue. The parties acknowledge that a
substantial portion of the negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in San Francisco County, California.
Any civil action or legal proceeding not addressed by Section 8.13 herein and
arising out of or relating to this Agreement shall be brought in the courts of
record of the State of California in San Francisco County or the United States
District Court, Northern District of California. Each party consents to the
jurisdiction of such court in any such civil action or legal proceeding and
waives any objection to the laying of venue of any such civil action or legal
proceeding in such court. Service of any court paper may be effected on such
party by mail, as provided in this Agreement, or in such other manner as may be
provided under applicable laws, rules of procedure or local rules.
9
<PAGE>
8.15 Survival. Sections 3.3, 4, 5, 6, 7 and 8 shall survive
any termination or expiration of this Agreement. IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year
first above written.
CORPORATION:
BF ENTERPRISES, INC.
By: /s/ Charles E.F. Millard
------------------------------
Name: Charles E. F. Millard
Title: Chairman of the Compensation
Committee
OFFICER:
By: /s/ Brian P. Burns
--------------------------
Brian P. Burns
10
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made
and entered into as of January 1, 2000, by and between BF ENTERPRISES, INC.
("Corporation") and PAUL WOODBERRY ("Officer").
The parties hereto do hereby agree as follows:
1. Section 2.2 of the Employment Agreement dated as of December 22, 1992
("Employment Agreement") between Corporation and Officer is hereby
amended by changing both of the date references appearing therein from
"December 31, 1997" to "December 31, 2004."
2. In all other respects the Employment Agreement is hereby ratified and
confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and date first above written.
BF ENTERPRISES, INC.
By: /s/ Brian P. Burns
------------------------
President
/s/ Paul Woodberry
------------------------
Paul Woodberry
AGREEMENT OF GENERAL PARTNERSHIP
OF
MEADOW POINTE GENERAL PARTNERSHIP
Dated: October 3, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
ORGANIZATION OF THE PARTNERSHIP.....................................1
1.1 Formation..................................................1
1.2 Name.......................................................1
1.3 Business and Purpose.......................................1
1.4 Principal Place of Business................................2
ARTICLE 2
TERM OF PARTNERSHIP.................................................2
2.1 Term.......................................................2
2.2 Partition..................................................2
ARTICLE 3
CAPITAL CONTRIBUTIONS AND FINANCING.................................2
3.1 Initial Capital Contributions..............................2
3.2 Development Contributions..................................2
3.3 Additional Capital Contributions...........................3
3.4 Return of Capital..........................................3
3.5 Revaluation of Partnership Property........................3
ARTICLE 4
ALLOCATIONS AND DISTRIBUTIONS TO PARTNERS...........................4
4.1 Allocations; Fiscal Year...................................4
4.2 Allocation of Profits, Gains and Losses....................4
(a) Losses............................................4
(b) Profits and Gains.................................4
4.3 Allocation of Tax Items....................................4
4.4 Gain or Loss From Property Contributed to Partnership......4
4.5 Gain or Loss From Revaluation of Property..................4
4.6 Distributions..............................................5
ARTICLE 5
MANAGEMENT OF THE PARTNERSHIP.......................................5
5.1 Management.................................................5
5.2 Executive Manager; Representatives.........................5
5.3 Managing Partner's Duties..................................6
5.4 Major Decisions............................................8
5.5 Replacement of Managing Partner............................9
5.6 Representatives on CDD Board..............................10
i
<PAGE>
5.7 Tax Matters Partner.......................................10
5.8 Contracts of the Partnership..............................10
5.9 Consents and Approvals....................................10
5.10 Restrictions on Partners..................................10
ARTICLE 6
ACCOUNTING AND TAX MATTERS.........................................10
6.1 Books and Records.........................................10
6.2 Annual Financial Reports..................................11
6.3 Accountants...............................................11
6.4 Bank Accounts.............................................11
ARTICLE 7
RESTRICTIONS ON TRANSFER...........................................11
7.1 General Restrictions......................................11
7.2 Permitted Transfer........................................11
7.3 Partners Bound By Agreement...............................11
7.4 Reciprocal Buy-Sell Procedure.............................12
(a) Reciprocal Buy-Sell..............................12
(b) Election to Withdraw or Cause to Withdraw........12
(c) Buy-Sell Price...................................12
(d) Closing..........................................13
ARTICLE 8
INDEMNIFICATION....................................................14
8.1 Indemnification by a Partner of a Partner.................14
8.2 Reliance..................................................14
8.3 Litigation Instituted by a Third Party....................14
8.4 Covenants of Partners.....................................14
8.5 Indemnification by Partners...............................14
8.6 Indemnification by Partnership............................14
8.7 Failure to Pay............................................15
8.8 Terms of Indemnification..................................15
ARTICLE 9
PAYMENT OF INDEMNIFICATION CONTRIBUTION............................16
9.1 Loan......................................................16
9.2 Interest Rate.............................................16
9.3 Distributions While Loan is Outstanding...................16
9.4 Security Interest.........................................16
ARTICLE 10
TERMINATION, DISSOLUTION AND LIQUIDATION...........................17
10.1 Termination and Dissolution...............................17
ii
<PAGE>
10.2 Method of Liquidation.....................................18
10.3 Reasonable Time for Liquidation...........................19
10.4 Date of Termination.......................................19
ARTICLE 11
MISCELLANEOUS......................................................19
11.1 Insurance.................................................19
11.2 Limited Purpose...........................................19
11.3 Preformation Expenses.....................................19
11.4 Other Activities..........................................19
11.5 Further Assurances........................................20
11.6 Entire Agreement..........................................20
11.7 Assignments...............................................20
11.8 Notices...................................................20
11.9 Binding Effect............................................21
11.10 Headings..................................................21
11.11 Specific Performance......................................21
11.12 Governing Law.............................................21
11.13 Jurisdiction and Venue....................................21
11.14 No Construction Against Draftsmen.........................21
11.15 Severability..............................................21
11.16 Enforcement Costs.........................................22
11.17 Ability to Enter Agreement................................22
11.18 Amendments................................................22
11.19 Creditor Liens............................................22
11.20 Arbitration...............................................22
11.21 Non-Competition Agreement.................................23
iii
<PAGE>
AGREEMENT OF GENERAL PARTNERSHIP
OF
MEADOW POINTE GENERAL PARTNERSHIP
THIS AGREEMENT OF GENERAL PARTNERSHIP (this "Agreement") is made as of
the 3rd day of October, 1999, by and between MEADOW POINTE EAST, LLC, a Delaware
limited liability company ("MEADOW POINTE"), and DEVCO III, L.L.C., a Florida
limited liability company ("Devco"). Meadow Pointe and Devco are hereinafter
collectively referred to as the "Partners" and individually as a "Partner."
RECITALS:
The Partners desire to conduct a business together as general partners
under the laws of the State of Florida.
In consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Partners hereby agree to become partners and form a
general partnership under the Uniform Partnership Act of the State of Florida
(the "Act"), to engage in the business described in this Agreement for the
period and upon the terms and conditions set forth in this Agreement.
ARTICLE 1
ORGANIZATION OF THE PARTNERSHIP
1.1 Formation. The Partners hereby form a partnership under the Act on
the terms and conditions set forth in this Agreement (the "Partnership").
1.2 Name. The business of the Partnership shall be conducted under the
firm name and style of "Meadow Pointe General Partnership." The business and
affairs of the Partnership shall at all times be conducted solely under the name
of the Partnership or under such other names upon which the Partners shall
unanimously agree.
1.3 Business and Purpose. The business and purpose of the Partnership
shall be to:
(a) develop, market and sell the real property located in
Pasco County, Florida and described in Exhibit A attached hereto (the
"Property"), pursuant to the terms and conditions of that certain Agreement for
Development, Sale and Purchase of Unimproved Real Property between Clearwater
Bay Associates, Inc., a Florida corporation ("Seller"), and the Partnership (the
"Purchase Agreement");
(b) do all other things the Partners agree in writing to do in
accordance with the terms of this Agreement; and
1
<PAGE>
(c) conduct such other activities as may be necessary or
incidental to the foregoing.
Any and all of the foregoing shall be exclusively on and
subject to the terms and conditions set forth in this Agreement. The powers and
purposes of the Partnership hereby granted shall be limited strictly to the
foregoing, all for the production of income and profit, and shall not be
extended by implication or otherwise except by the unanimous written agreement
of the Partners.
1.4 Principal Place of Business. The Partnership's principal place of
business shall be at 15436 North Florida Avenue, Tampa, Florida 33613. The
business of the Partnership may be conducted at such other place or places as
may from time to time be selected by the Partners.
ARTICLE 2
TERM OF PARTNERSHIP
2.1 Term. The Partnership term (the "Term") shall commence on the date
hereof and shall continue through the close of business on June 30, 2025, unless
the Partnership is sooner terminated in accordance with Section 10.l herein.
2.2 Partition.
(a) No Partner shall have the right, and each Partner agrees
that it shall not take any action, to withdraw from the Partnership except as
expressly permitted herein, nor to dissolve, terminate, liquidate or petition a
court for the dissolution, termination or liquidation of the Partnership, except
as provided in this Agreement.
(b) No Partner shall take any action to subject any of the
Partnership's assets to the authority of any court of bankruptcy, insolvency,
receivership or similar proceeding, nor shall either Partner have any ownership
interest in or have the right to obtain a judicial partition of any of such
assets.
ARTICLE 3
CAPITAL CONTRIBUTIONS AND FINANCING
3.1 Initial Capital Contributions. Each of Meadow Pointe and Devco
shall make an initial capital contribution to the Partnership of One Thousand
and No/100 Dollars ($1,000.00) in cash by cashier's check.
3.2 Development Contributions. Meadow Pointe agrees to advance to the
Partnership up to and including (but not in excess of) an aggregate amount equal
to One Million and No/100 Dollars ($1,000,000.00) (the "Advance"). The Advance
(and interest accrued thereon) shall be
2
<PAGE>
treated as debt of the Partnership and such debt shall bear and accrue interest
at the prime rate (or similar base rate) of Wells Fargo & Company, adjusted from
day to day, plus one (1) point, but not in excess of the maximum rate that may
legally be charged. The Advance (and interest accrued thereon) shall be repaid
to Meadow Pointe pursuant to the terms and conditions set forth in the grid
promissory note attached hereto as Exhibit B. The Advance shall be used to pay
for the following up-front development costs, as necessary:
(a) the modification of an existing Development Regional
Impact and Development Order issued by Pasco County with respect to the
Property;
(b) the establishment of a contingency fund for working
capital; and
(c) the payment of the annual fee, and the repayment of draws,
if any, on a Letter of Credit to be established by Meadow Pointe in favor of
Seller in order to secure the payment of (I) assessments on any Community
Development District Series A Bonds on the Property for a period of one year
after the lapse of the capitalized interest account established by each such
Community Development District (a "CDD") and (ii) certain ad valorem taxes
related to the Property.
3.3 Additional Capital Contributions. Only after funds contributed by
the Partners pursuant to Sections 3.1 and the Advance to the Partnership
pursuant to Section 3.2 above have been exhausted shall the Partners be required
to make additional capital contributions. If, subject to the foregoing sentence,
the General Partners determine that additional funds are required to carry out
the purpose of the Partnership in accordance with this Agreement, each Partner
shall be required to contribute one-half (1/2) of the additional funds required
in the form of an additional capital contribution within ninety (90) days of
receiving written notice of such determination.
3.4 Return of Capital. No Partner shall be entitled to receive interest
on its Capital Account or on its capital contributions. Except as otherwise
provided herein, no Partner shall have the right to demand or to receive the
return of all or any part of its Capital Account or its capital contributions
from the Partnership.
3.5 Revaluation of Partnership Property. Upon (a) the admission of any
Partner to the Partnership, (b) the liquidation of a Partner's interest in the
Partnership, (c) the making of any additional capital contributions or partial
withdrawals by a Partner which changes the Partner's relative percentage
interest in the Partnership (other than a de minimus amount) as determined by
reference to the relative balances in the Partner's Capital Accounts, or (d)
immediately before liquidation of the Partnership, all the property of the
Partnership shall be revalued at its fair market value as determined by the
General Partners, and the Partners' Capital Accounts shall be adjusted to
reflect the manner in which the unrealized income, gain, loss or deduction
inherent in such property (that has not been reflected in adjustments to the
Partners' Capital Accounts previously) would be allocated among the Partners if
the property were sold at its fair market value on the valuation date.
3
<PAGE>
ARTICLE 4
ALLOCATIONS AND DISTRIBUTIONS TO PARTNERS
4.1 Allocations; Fiscal Year. The profits, gains and losses of the
Partnership shall be determined for each calendar or fiscal year of the
Partnership in accordance with the books of the Partnership (within the meaning
of Regulation ss.1.704-1(b)(2)(iv)(g)) and the method of accounting selected by
the Partners. "Profits" and "gains" or "losses" as used herein include each item
of Partnership income, gain, loss and deduction determined in accordance with
the books of the Partnership. The fiscal year of the Partnership shall end on
December 31.
4.2 Allocation of Profits, Gains and Losses. The profits, gains
or losses of the Partnership shall be allocated as follows:
(a) Losses. Losses for any year shall be allocated:
(I) first, to the Partners up to the positive
balance of their Capital Accounts, ratably in accordance with the positive
balances of their Capital Accounts; and
(ii) next, to the Partners, ratably in accordance
with the respective basis of each Partner of its interest in the Partnership.
(b) Profits and Gains. Any profits or gains of the Partnership
for any year shall be allocated as follows:
(I) first, to any Partner previously allocated
losses under Section 4.2(a) hereof, to the extent of such losses (reduced by
allocations under this clause for all prior years), ratably and in inverse
order to the manner in which such losses were allocated; and
(ii) thereafter, 50% to Meadow Pointe and 50% to
Devco.
4.3 Allocation of Tax Items. After the application of Sections 4.4 and
4.5, the items of income, gain, loss and deduction, for federal and state income
tax purposes, shall be allocated among the Partners in proportion to the
corresponding "book" items in Section 4.2.
4.4 Gain or Loss From Property Contributed to Partnership. In
accordance with Regulation ss.704(c) of the Code, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership by a Partner shall, solely for tax purposes, be allocated among the
Partners so as to take account of any variation between the adjusted basis of
such property to the Partnership for federal income tax purposes and its fair
market value at the time of contribution.
4.5 Gain or Loss From Revaluation of Property. Allocations of income,
gain, loss and deduction with respect to property which has been adjusted on the
books of the Partnership to fair market value pursuant to Section 3.5 shall,
following such adjustment, take account of any variation
4
<PAGE>
between the adjusted basis of such property for federal income tax purposes and
its value on the Partnership's books in the same manner as under ss.704(c) of
the Code.
4.6 Distributions. Distributions of available cash flow shall be made
to the Partners at such time as the Partners may, from time to time, determine;
provided, however, that to the extent there is available cash flow,
distributions shall be made to the Partners at least annually in an amount equal
to such Partner's federal income tax liability attributable to ownership of an
interest in the Partnership, as if each Partner were subject to income tax at
the highest marginal rate set forth in Section 1 of the Code, which is currently
39.6%. The balance of available cash flow, if any, shall be distributed 50% to
Meadow Pointe and 50% to Devco. As used in this Section 4.6, "available cash
flow" means all of the Partnership's gross cash proceeds from any source less
the portion thereof required to pay any and all outstanding and unpaid
Partnership debt (including any Advance (and accrued and unpaid interest
thereon) pursuant to Section 3.2 herein) and to pay or establish reserves for
ordinary and necessary expenses and fees and capital improvements, replacements
and contingencies, all as reasonably determined by the Partners. Available cash
flow shall not be reduced by depreciation, amortization or other similar
non-cash allowances, and shall be increased by any reductions in reserve which,
when previously established, reduced available cash flow. Notwithstanding
anything to the contrary contained herein, until the Advance (and any accrued
and unpaid interest thereon) is repaid in full, the Partners shall not make any
distributions pursuant to this Section 4.6.
ARTICLE 5
MANAGEMENT OF THE PARTNERSHIP
5.1 Management. The Partnership shall have a managing partner who shall
have the authority and responsibility to manage the day-to-day business and
affairs of the Partnership (the "Managing Partner"). Subject to Section 5.5
herein, the Partners hereby appoint Devco as the Managing Partner of the
Partnership. Subject to Section 5.4 herein, the Managing Partner shall have the
power, authority and discretion to take action for and on behalf of the
Partnership. All decisions, elections and actions taken by the Managing Partner
for and on behalf of the Partnership shall be final and binding on the other
Partner, subject to the consent of both Partners as to Major Decisions. Within
the scope of its authority, the Managing Partner shall have the right to execute
any and all documents and such execution shall be binding upon the Partnership
and the other Partner.
5.2 Executive Manager; Representatives. Notwithstanding anything herein
to the contrary, each of the Partners hereby acknowledges and agrees that Donald
A. Buck shall be primarily responsible for, and shall devote the amount of time
reasonably necessary to, the performance of Devco's obligations as the Managing
Partner under Section 5.1 herein (the "Executive Manager") and hereby authorizes
the Executive Manager to execute any and all documents on behalf of the
Partnership within the scope of his authority, which documents shall be binding
upon the Partnership and both Partners. The Partners shall cause the Partnership
to enter into a management agreement with Devco and Donald A. Buck on terms
acceptable to the Partners
5
<PAGE>
to provide for, among other things, an initial budget and the payment of a
management fee to Devco (the "Management Agreement"), a copy of which is
attached hereto as Exhibit C.
5.3 Managing Partner's Duties. The Managing Partner shall implement or
cause to be implemented all decisions approved by the Partners and shall conduct
or cause to be conducted the ordinary and usual business and affairs of the
Partnership in accordance with and as limited by this Agreement, including the
following:
(a) protect all interests of the Partnership;
(b) maintain, or cause to be maintained, in accordance with
generally accepted accounting principles, applied in a consistent manner, books
and records pertaining to the Partnership's business showing all of its assets
and liabilities, receipts and disbursements, profits and losses, Partners'
capital contributions, distributions and Capital Accounts and all transactions
entered into by the Partnership;
(c) prepare, or cause to be prepared, and deliver to each of
the Partners within fifteen (15) days of the end of each month, a balance sheet
and income statement compared to the budget set forth in the Development Plan
and Budget for such month and the year-to-date;
(d) within thirty (30) days after the date of this Agreement,
the Managing Partner shall deliver the Development Plan and Budget, a form of
which is attached hereto as Exhibit D, to Meadow Pointe for its approval. The
Managing Partner shall use commercially reasonable efforts to implement the
Development Plan and Budget and each subsequently approved Development Plan and
Budget (each of which may be amended from time to time pursuant to Section
5.4(j) herein) in accordance with the terms thereof;
(e) within sixty (60) days after the end of each fiscal year,
the Managing Partner shall prepare or cause the independent accounting firm
approved by the Partners to prepare and deliver to each Partner a report setting
forth in sufficient detail all such information and data with respect to
business transactions affected by or involving the Partnership during such
fiscal year as shall enable the Partnership and the Partners to prepare their
state, federal and local income tax returns in accordance with the laws, rules
and regulations then prevailing (including a balance sheet, income statement,
changes in cash positions and capital accounts, and comparison of actual results
to budget). The Managing Partner shall also prepare or cause such independent
accountants to prepare Federal, state and local tax returns required of the
Partnership and shall file the same on or before the due date (or an extension
thereof) and shall pay any taxes required to be paid by the Partnership;
(f) maintain all funds of the Partnership in the name of the
Partnership in an account in a bank or banks located in Pasco County, Florida,
approved by the Partners;
(g) make distributions periodically to the Partners in
accordance with Sections 4.6 and 5.4(k) herein;
6
<PAGE>
(h) undertake such actions as are necessary or desirable in
order that the Partnership promptly complies with all material present and
future laws, ordinances, orders, rules, regulations and requirements of all
governmental authorities having jurisdiction, which may be applicable to the
Partnership and the operations and management thereof;
(I) perform other obligations provided elsewhere in this
Agreement to be performed by the Managing Partner;
(j) subject to Section 5.4(n) herein, engage, at the
Partnership's expense, a firm of independent certified public accountants to
audit the Partnership's financial statements and to provide other services to
the Partnership;
(k) cause Seller to submit the Property to new Community
Development Districts having geographical boundaries established by the
Partnership;
(l) coordinate the acquisition of the Property;
(m) apply for, conduct negotiations for, and seek to obtain in
Seller's name all permits (including, but not limited to, an amendment to the
existing Development Order ("DO"), the existing Development of Regional Impact
("DRI") and the existing Master Planned Unit Development Approval ("PUD") with
respect to the Property, and all governmental, quasi-governmental and utility
permits, licenses and approvals relating to or required in connection with the
development, use, marketing or sale of all or any portion of the Property in
accordance with the Site Development Plan attached hereto as Exhibit E
(collectively, the "Permits");
(n) negotiate with residential builders and other parties for
the sale of single family residential lots on the Property and any of the
Property designated "commercial" on the amended DO and close all such sales;
(o) monitor, advise Meadow Pointe and its representatives with
respect to, and use its best efforts to take all actions necessary to insure
that all Permits (including, but not limited to, the DO, the PUD and the DRI)
remain effective and in good standing, and that the development, use,
operation, marketing, and sale of the Property is in accordance with the Permits
(including, but not limited to, the DO, the PUD and the DRI) and other
applicable governmental laws, ordinances, rules, regulations, and requirements;
(p) consult with Meadow Pointe from time to time concerning
possible changes to the DO, the PUD, and the DRI that are necessary or desirable
to facilitate the development, use, operation, marketing, and sale of the
Property in accordance with the Development Plan and Budget and, if approved by
Meadow Pointe in writing, apply for, conduct negotiations for, and seek to
obtain all such approved changes to the DO, the PUD and the DRI;
(q) use its best efforts to cause the Property to be
development to be finished in accordance with the Development Plan and Budget
and the Permits, supervise and coordinate the development of the Property in a
manner that is consistent with good business practices required of
7
<PAGE>
an owner of such a project, file notices of commencement, and furnish Meadow
Pointe monthly, or more often as Meadow Pointe may reasonably require, written
progress reports disclosing in reasonable detail the status of the development,
including receipts, disbursements, construction costs, current cash requirements
and available invoice copies;
(r) inspect the Property as often as necessary and at regular
intervals so as to be kept informed as to the stage of development and condition
of the Property and the quality of the work being performed; and
(s) if deemed advisable by the Partners, coordinate and
supervise the extension of the existing CDD II on the eastern portion of Meadow
Pointe to include a portion of the Property, which extension thereof shall have
the geographic boundaries agreed upon by both Partners.
Both Partners hereby acknowledge that affiliates of the Partners are currently
developing a master planned community adjacent to the Property which is from
time to time referred to herein as "Meadow Pointe Property."
5.4 Major Decisions. The following decisions or courses of actions are
deemed to be "Major Decisions" in the conduct of the business and affairs of the
Partnership, each of which require the prior written consent of both Partners
before the Managing Partner (or the Executive Manager) can take action on any
such Major Decision:
(a) decisions with respect to purchasing and developing (I)
that certain tract of land known to the Partners as the "Krusen Douglas
Property" consisting of approximately 118 acres and which is located south of
Meadow Pointe Property and the Property and (ii) any portion of that certain
tract of land known to the Partners as the "Porter Ranch";
(b) merge with any Person;
(c) approve or amend the Site Development Plan attached hereto
as Exhibit E;
(d) enter into any agreement which will impose material
restrictions on the manner in which the Partnership conducts its business and
affairs;
(e) the purchase price of the Property;
(f) any other decision or course of action which by any
provision of this Agreement expressly is required to be approved by the
Partners;
(g) borrow or commit to borrow any material amount of
money in the name of the Partnership;
(h) except as set forth herein, dissolve, liquidate or
terminate the Partnership;
8
<PAGE>
(I) require the Partners to make additional capital
contributions pursuant to Section 3.3 herein;
(j) approve or amend each Development Plan and Budget or
approve expenditures in excess of any line-item budgeted for therein;
(k) approve any distribution(s) of available cash flow;
(l) incur any liens on Partnership property;
(m) except as otherwise provided for herein, admit new
partners;
(n) except as otherwise provided for herein, select and retain
legal counsel and other professionals to provide services to the Partnership;
(o) commence and make decisions with respect to legal actions
to enforce or defend the rights of the Partnership not in the ordinary course of
business;
(p) enter into agreements with Partners or affiliates of the
Partners to provide goods, property, or services to the Partnership;
(q) arrange and approve any investment of the
Partnership's capital;
(r) alter the Partnership's business and purpose;
(s) approve all non-CDD expenditures;
(t) amend this Agreement;
(u) amend or modify the Management Agreement; or
(v) take any other action which requires the consent of all
Partners under this Agreement.
5.5 Replacement of Managing Partner. In the event that the Managing
Partner (a) is an insolvent Partner, (b) ceases to be a Partner of the
Partnership, (c) is willfully or grossly negligent in the management of the
business and affairs of the Partnership, or (d) breaches a fiduciary obligation
to the other Partner, then upon any such event and written notice from Meadow
Pointe to the Managing Partner and the failure of the Managing Partner to cure
such event within ten (10) business days, Meadow Pointe shall become the new
Managing Partner. Upon the replacement of the Managing Partner with a new
Managing Partner, the Partners shall execute such instruments as shall be
reasonably necessary to evidence such replacement and if any instrument has been
recorded evidencing the authority of the previous Managing Partner, such
9
<PAGE>
instrument shall be modified of record to evidence the replacement of the
previous Managing Partner and selection of the new Managing Partner.
5.6 Representatives on CDD Board. Each of the Partners acknowledges and
agrees that with respect to, and at all times after the formation of, each CDD
formed by Seller relating to the Property, pursuant to Chapter 190, Florida
Statutes, as amended, for the purpose of providing funds for the construction
and acquisition of certain improvements on the Property, Meadow Pointe shall be
entitled to nominate a majority of the Partnership's representatives (each, a
"Representative") on each such CDD Board and Devco shall be entitled to nominate
the Partnership's other Representatives on each such CDD Board. Each
Representative shall have the power and authority to serve as a Representative
on behalf of the Partner who appointed such Representative unless and until such
Partner designates in writing a new Representative. In no event may a
Representative delegate his decision-making authority to any other Person except
another Representative. Each Partner hereby ratifies and affirms any and all
decisions and actions taken by its respective Representatives with respect to
the CDD Board to which such Representative was nominated.
5.7 Tax Matters Partner. Meadow Pointe shall be the "tax matters
partner" of the Partnership as defined in Section 6231 of the Code and shall
have all of the powers and duties expressly conferred on the tax matters partner
by the Code. Meadow Pointe shall advise and consult with Devco with respect to
any tax matters prior to acting upon such matters.
5.8 Contracts of the Partnership. All contracts on behalf of the
Partnership shall be made in the name of the Partnership. Except as otherwise
agreed to by the Partners, no contract shall be made on behalf of the
Partnership solely in the name of a Partner without disclosure to third parties
of the existence of the Partnership.
5.9 Consents and Approvals. In any instance under this Agreement in
which the consent or approval of a Partner to any proposed action is required,
such consent or approval shall be in the Partner's sole and absolute discretion
unless otherwise set forth herein. If any Partner shall fail to respond within
fifteen (15) days after receipt of a written request for response, such Partner
shall be deemed to have consented to such request.
5.10 Restrictions on Partners. Unless otherwise authorized pursuant to
this Agreement, no Partner shall have the power or authority to bind the
Partnership in any contract, agreement, promise or undertaking or to act for or
on behalf of the Partnership in any respect whatsoever, nor shall any Partner
take or cause to be taken any action which will in any way impede the other
Partners or the Partnership from carrying out its responsibilities under this
Agreement.
10
<PAGE>
ARTICLE 6
ACCOUNTING AND TAX MATTERS
6.1 Books and Records. The books and records and all files of the
Partnership shall be kept at its principal office. Each Partner, its
accountants, attorneys and other professional representatives shall, during
regular business hours, have free access to the Partnership's books and records,
upon reasonable prior notice, for the purpose of inspecting or copying the same.
The Managing Partner shall cause the Partnership to retain copies of the records
of the Partnership for a fiscal year for a period of six (6) years after that
fiscal year.
6.2 Annual Financial Reports. Audited annual financial statements
(consisting of a year-end balance sheet and the related statements of income,
capital and cash flows for the Fiscal Year) shall be prepared and copies thereof
shall be delivered to each Partner within sixty (60) days of the end of each
Fiscal Year.
6.3 Accountants. Pursuant to Section 5.4(n) herein, the Partners agree
that Thomas & Clough Co., P.A., located at 223 Sunset Avenue, Suite 200, Palm
Beach, Florida 33480, Attn: Dana Thomas, shall be the Partnership's accountants
and shall prepare the Partnership's financial statements, tax returns and other
tax related filings.
6.4 Bank Accounts. Each Partner and the Executive Manager shall have
the authority to sign checks for the payment of Partnership debts and
obligations incurred in the ordinary course of business and expressly included
in the Development Plan and Budget; provided, however, that any check for an
amount in excess of Ten Thousand and No/100 Dollars ($10,000) shall require the
joint signature of both Partners.
ARTICLE 7
RESTRICTIONS ON TRANSFER
7.1 General Restrictions. Except as otherwise expressly provided in
this Agreement, no Partner shall sell, transfer, pledge, assign, hypothecate,
encumber, or in any other manner dispose of any portion or all of its interest
in the Partnership without the prior written consent of the other Partner;
provided, however, that each Partner may transfer all or a portion of its
interest in the Partnership to an affiliate of such Partner. A Partner may
withhold such consent for any reason or for no reason. Any unauthorized attempt
to do any of the foregoing shall be null and void.
7.2 Permitted Transfer. If Meadow Pointe or any of its affiliates
enters into an agreement to sell all or substantially all of its/their assets, a
merger, a consolidation or any other business combination with a third party,
Meadow Pointe shall have the right to assign all or any portion of its interest
in the Partnership (including any of its payment or performance obligations) to
a third party upon thirty (30) days prior written notice to Devco.
11
<PAGE>
7.3 Partners Bound By Agreement. Any person or entity acquiring an
interest in the Partnership shall be bound by all of the terms and conditions of
this Agreement to the same extent as its transferor and shall confirm the same,
upon request, by signing a counterpart of this Agreement.
7.4 Reciprocal Buy-Sell Procedure.
(a) Reciprocal Buy-Sell. If (I) the Partners are unable to
reach agreement as to a Major Decision after ten (10) business days after either
Partner notifies the other Partner in writing that an impasse has been reached
on a Major Decision, or (ii) except as set forth in Section 7.2, either Partner,
after January 1, 2003, desires to sell its interest in the Partnership at any
time, either Partner may institute the following reciprocal buy-sell procedure
(hereinafter referred to as the "Buy-Sell Procedure") by giving written notice
(hereinafter referred to as the "Buy-Sell Notice") to the other Partner. The
Partner giving a Buy-Sell Notice shall be referred to hereinafter in this
Section 7.4 as the "Offeror" and the Partner receiving such notice shall be
referred to hereinafter as the "Offeree." To be effective, the Buy-Sell Notice
shall be in writing and shall state an amount in U.S. cash (hereinafter referred
to as the "Buy-Sell Value"), as determined in the sole and absolute discretion
of the Offeror, for use in determining Buy-Sell Price pursuant to Section 7.4(c)
hereof (hereinafter referred to as the "Buy-Sell Price"). The Buy-Sell Notice
shall constitute an irrevocable offer by the Offeror either to (I) withdraw from
the Partnership in exchange for the Buy-Sell Price, as hereinafter defined, or
(ii) permit the withdrawal of the Offeree from the Partnership in exchange for
the Buy- Sell Price.
(b) Election to Withdraw or Cause to Withdraw. The Offeree
shall elect one of the following options: (I) to withdraw and to calculate the
Buy-Sell Price pursuant to Section 7.4(c) herein based upon the Buy-Sell Value
set forth in the Buy-Sell Notice; or (ii) to cause the Offeror to withdraw from
the Partnership and to pay the Offeror a Buy-Sell Price pursuant to Section
7.4(c) hereof based upon the Buy-Sell Value set forth in the Buy-Sell Notice.
The Offeree shall give notice of such election (hereinafter referred to as a
"Notice of Election") to the Offeror prior to the thirtieth (30th) day following
the date upon which the Buy-Sell Notice is given. The failure by the Offeree to
give an effective and timely Notice of Election shall conclusively be deemed an
election by the Offeree to withdraw from the Partnership for a Buy-Sell Price to
be calculated pursuant to Section 7.4(c) hereof based upon the Buy-Sell Value
set forth in the Buy-Sell Notice, and the date of the Notice of Election with
respect to such deemed election shall be the thirtieth (30th) day following the
giving of the Buy-Sell Notice. The party designated in accordance with the
provisions of this Section 7.4(b) to withdraw from the Partnership is
hereinafter collectively referred to as the "Withdrawing Party" and the other
party is hereinafter referred to as the "Continuing Party."
(c) Buy-Sell Price. The Buy-Sell Price payable to the
Withdrawing Party shall be an amount in cash (U.S.) equal to the amount of cash
which such Withdrawing Party would have received on the Buy-Sell Closing Date
(as hereinafter defined) if the Partnership had distributed an amount equal to
the net amount available for distribution by the Partnership following a sale of
all of the assets of the Partnership for the Buy-Sell Value as stated in the
Buy-Sell Notice, after the satisfaction of all Partnership liabilities,
including, without limitation, loans made pursuant to Section 3.3 herein (less
the aggregate amount of any distributions distributed to the Withdrawing
12
<PAGE>
Party between the date of the Buy-Sell Notice and the Buy-Sell Closing Date) to
the Partners in liquidation of the Partnership in the order and priority set
forth in Section 10.2 hereof, assuming the prior allocation of any gain or loss
which would have been recognized by the Partnership in connection with any sale
of the Partnership assets for such amount; provided, however, that if the
Withdrawing Party is indebted to the Partnership or the Continuing Party on the
date of the Buy-Sell Notice, the Buy-Sell Price shall be reduced by the amount,
including accrued and unpaid interest, owed to the Partnership or the Continuing
Party by such Withdrawing Party on the Buy-Sell Closing Date.
(d) Closing.
(I) Effective as of the Buy-Sell Closing Date,
the Withdrawing Party shall cease to be a Partner of the Partnership and the
provisions of this Section 7.4(d) shall apply. Subsequent to the Buy-Sell
Closing Date, the Withdrawing Party shall have no further interest in the
Partnership's capital, profits, losses, gains or distributions. Within one
hundred and twenty (120) days after the date of the Notice of Election (the
"Buy-Sell Closing Date"), the Buy-Sell Price shall be paid to the Withdrawing
Party by U.S. federal funds, and the Partners shall execute and deliver an
amendment to this Agreement, reflecting the withdrawal of the Withdrawing
Party from the Partnership as of the Buy-Sell Closing Date. On or prior to the
Buy-Sell Closing Date, the Continuing Party shall contribute such amount to
the capital of the Partnership as shall be necessary to enable the Partnership
to pay the Buy-Sell Price to the Withdrawing Party on the Buy-Sell Closing Date.
In the event the Continuing Party should fail to make such required
contribution, or in the event the Partnership should fail to purchase the
Withdrawing Party's interest and pay the full amount of the Buy-Sell Price to
the Withdrawing Party by the Buy-Sell Closing Date, the Continuing Party
shall be in default, the Withdrawing Party shall have the right to proceed
against the Continuing Party at law for damages (notwithstanding any
limitation of liability otherwise contained in the Agreement) or to seek
specific performance of Continuing Party's obligations under this Section 7.4,
and the right to recover all attorneys' fees and costs of litigation incurred in
the enforcement of its rights under this Section 7.4, the Withdrawing Party
shall have no obligation to sell its interest in the Partnership to the
Continuing Party and the Withdrawing Party shall be fully reinstated to all
authority, rights and obligations it held in the Partnership immediately before
the Buy-Sell Closing Date. In the event the Withdrawing Party fails to close the
sale of its interest in the Partnership on the Buy-Sell Closing Date, the
Continuing Party shall have the right to proceed against the Withdrawing Party
at law for damages (notwithstanding any limitation of liability otherwise
contained in this Agreement) or to seek specific performance of Withdrawing
Party's obligations under this Section 7.4, and the right to recover all
attorneys' fees and costs of litigation incurred in the enforcement of its
rights under this Section 7.4.
(ii) Notwithstanding anything herein to the
contrary, if Devco is the Continuing Party under this Section 7.4, Devco
shall, effective as of the Buy-Sell Closing Date, assume all guarantees
of CDDs and deliver written evidence thereof (satisfactory in form and
substance to Meadow Pointe) to Meadow Pointe, and Devco shall deliver to Meadow
Pointe at the Buy-Sell Closing, a general release (satisfactory in form and
substance to Meadow Pointe) in favor of Meadow Pointe with respect to any such
CDD. Meadow Pointe, as the Withdrawing Party, shall
13
<PAGE>
terminate any Letter of Credit with respect to the guarantee of any such CDD,
effective as of the Buy-Sell Closing Date.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by a Partner of a Partner. Each Partner (herein,
the "Indemnifying Partner") hereby agrees to indemnify and hold each other
Partner and its affiliates, principals, officers, directors, shareholders,
Representatives, agents and employees and the Partnership harmless from and
against any and all liabilities, losses, damages, claims, demands, actions and
rights of action (including reasonable attorneys' and paralegals' fees and
costs, whether suit is instituted or not, and if instituted, whether at the
pretrial, trial or appellate level) which shall or may arise by virtue of
anything done or omitted to be done by the Indemnifying Partner (itself or
through its affiliates, principals, officers, directors, shareholders,
Representatives, agents and employees) outside the scope, or in breach of the
terms of this Agreement or the gross negligence or willful misconduct of such
parties. The Indemnifying Partner shall be notified promptly of the existence of
any such claim, demand, action or right of action and shall be given reasonable
opportunity to participate in the defense thereof.
8.2 Reliance. Each Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document reasonably believed by such Partner to be genuine, to have
been signed or presented by the proper party or parties and which is delivered
or given for the benefit of the Partnership.
8.3 Litigation Instituted by a Third Party. If litigation is instituted
by any party not a Partner or an affiliate of any Partner against the
Partnership and/or a Partner (whether while a Partner or after any permitted
withdrawal of a Partner from the Partnership), as a result of the alleged act or
omission of any Partner or the Partnership while acting under or by reason of
this Agreement, the Partnership shall pay all legal fees and/or disbursement of
the Partnership and any Partner pertaining to such litigation.
8.4 Covenants of Partners. Each Partner agrees (a) to pay its debts
punctually and (b) not to knowingly cause or suffer anything to be done whereby
the Partnership's property may be attached or taken in execution and agrees in
the event of a breach of the above to indemnify and hold harmless the
Partnership and the other Partner as an Indemnifying Partner in accordance with
Section 8.1 above.
8.5 Indemnification by Partners. Each Partner hereby agrees to
indemnify the Partnership from and against any and all fees and costs which
shall or may arise relating directly to any tax audit of that Partner's
corporate or individual tax return.
14
<PAGE>
8.6 Indemnification by Partnership. Except as specifically provided to
the contrary in Sections 8.1, 8.2, 8.3, 8.4 and 8.5 above and for acts of gross
negligence, willful misconduct and fraud, the Partnership shall indemnify and
save harmless the Partners and their affiliates, principals, officers,
directors, shareholders, representatives, agents and employees to the extent
that such other Partner is called upon for any payment, judgment, damage or cost
of any kind arising out of or in connection with this Agreement, including,
without limitation, acts done by such parties in furtherance of the purposes of
the Partnership prior to the date of this Agreement. This indemnification shall
be a cost of the Partnership. Neither the Partnership nor any Partner shall seek
indemnification or contribution from the other Partner for any matter arising
out of the matters set forth in this Section 8.6, it being the understanding of
the Partnership and the Partners that, except for gross negligence, wilful
misconduct and fraud, these items are released and discharged and the
Partnership shall be solely responsible for these items.
8.7 Failure to Pay. If any Partner shall fail to make any payment
required pursuant to this Section (such Partner being hereinafter sometimes
called the "Noncontributing Partner"), the other Partner, as its sole remedy,
after an additional period of fifteen (15) days after giving notice to the
Noncontributing Partner and the Noncontributing Partner failing to cure such
default within such time, may (but shall not be required to) individually, or
collectively on an equal basis, contribute on behalf of the Noncontributing
Partner pursuant to Article 9 all or any part of such Partner's indemnification
contribution that should have been made by the Noncontributing Partner.
8.8 Terms of Indemnification. Each indemnity provided for under this
Agreement shall be subject to the following provisions:
(a) The indemnity shall cover the costs and expenses of the
indemnitee, including reasonable attorneys' fees and court costs, related to any
actions, suits or judgments incident to any of the matters covered by such
indemnity.
(b) The indemnitee shall notify the indemnitor of any claim (a
"Notice of Claim") against the indemnitee covered by the indemnity promptly but
in no event later than ten (10) days after the indemnitee has notice of such
claim, but failure to notify the indemnitor shall in no case prejudice the
rights of the indemnitee under this Agreement unless the indemnitor shall be
prejudiced by such failure and then only to the extent the indemnitor shall be
prejudiced by such failure. The Notice of Claim shall specify the nature and
details of such facts and circumstances (including any amount claimed) which may
give rise to indemnification under this Article 8. If the claim or demand set
forth in the Notice of Claim relates to a claim or demand asserted by a thirty
party (a "Third Party Claim"), the indemnitor shall have the right to employ
counsel acceptable to the indemnitee to defend any such claim or demand, and the
indemnitee shall have the right to participate in the defense of any such Third
Party Claim. The indemnitor shall notify the indemnitee, in writing, within
fifteen (15) days after the Date of the Notice of Claim (as hereinafter
defined), of the indemnitor's decision to defend in good faith any Third Party
Claim. So long as the indemnitor is defending in good faith any such Third Party
Claim, the indemnitee shall not settle or compromise such Third Party Claim. The
indemnitee shall make available to the indemnitor or its representatives all
records and other materials reasonably required by them for their use in
contesting any Third
15
<PAGE>
Party Claim and shall cooperate with the indemnitor in connection therewith. If
the indemnitor does not so elect to defend any such Third Party Claim, the
indemnitee shall have no obligation to do so and the indemnitee may settle such
liability, and the liability of the indemnitor hereunder shall be conclusively
established by such settlement, which amount of such liability shall include
both the settlement consideration and the reasonable costs and expenses,
including attorneys' fees, incurred by the indemnitee in effecting such
settlement.
(c) Within thirty (30) days after either the indemnitor and
the indemnitee reach agreement on the amount of any indemnification obligation
of the indemnitor, or any such indemnification obligation is otherwise
determined (in either case, the "Indemnification Amount"), the indemnitee shall
demand payment of the Indemnification Amount from the indemnitor, who shall pay
such amount due in cash within thirty (30) days of the indemnitee's demand
therefor. With respect to any Indemnification Amount or portion thereof not paid
by the indemnitor within such thirty (30) day period, the indemnitee may, at his
option, from time to time, in addition to any other remedies or rights he may
have with respect to the collection thereof, cause the indemnitor to offset the
amount of any Indemnification Amount due the indemnitee from the indemnitor
hereunder against any agreements with the indemnified party. The term "Date of
the Notice of Claim" as used herein shall mean the date the notice is deemed
delivered pursuant to Section 11.8 herein.
(d) No indemnity hereunder shall be construed to limit or
diminish the coverage of any indemnitee under any insurance obtained by the
Company. Payment shall not be a condition precedent to any indemnification
provided in this Agreement.
ARTICLE 9
PAYMENT OF INDEMNIFICATION CONTRIBUTION
9.1 Loan. If a Partner makes all or any part of an indemnification
contribution made pursuant to Article 8 which such Partner was required to make,
the contribution of such Partner shall be treated as a loan to the other Partner
(the "Loan").
9.2 Interest Rate. The Loan shall bear interest at a rate per annum
equal to the greater of eighteen percent (18%) or the highest legal rate of
interest permitted by law. The Loan shall be due and payable on or before the
date of the Partnership's termination or dissolution, but may be prepaid at any
time without penalty. Any partial payment shall be applied first in reduction of
the balance of interest and then of principal due.
9.3 Distributions While Loan is Outstanding. If the Partnership makes
any distributions while there is a balance due under the Loan, including
applicable interest, the Partnership shall pay to the contributing Partner the
sums which would otherwise be distributed to the Noncontributing Partner (up to
the full balance due, including applicable interest), and such sums shall be
applied first in reduction of the balance of interest and then of principal due.
16
<PAGE>
9.4 Security Interest. Each Partner hereby grants to the other Partner
a security interest in its interest in the Partnership as security for the
repayment of any advance made by a contributing Partner pursuant to this
Section. This Partnership Agreement shall be the Security Agreement relative to
such security interest. While the Loan is outstanding, the noncontributing
Partner will execute such further documents to evidence or perfect the aforesaid
security interest as the contributing Partner may reasonably request. If the
noncontributing Partner fails to deliver to the contributing Partner any
document required by this Section within ten (10) days after demand, the
contributing Partner shall have and is hereby irrevocably granted the power and
authority, coupled with an interest, to execute any such financing statements or
other documents on behalf of the noncontributing Partner as its
attorney-in-fact.
ARTICLE 10
TERMINATION, DISSOLUTION AND LIQUIDATION
10.1 Termination and Dissolution. The Partnership shall be terminated
and dissolved upon the occurrence of any of the following events, unless the
Partners agree in writing, within ten (10) days after the occurrence of any such
event, to continue the business of the Partnership:
(a) expiration of the term of the Partnership;
(b) the Partners agree in writing to dissolve the
Partnership and wind up its affairs;
(c) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(d) a final and nonappealable judgment is entered by a court
of competent jurisdiction ruling that a Partner is Bankrupt or insolvent, or a
final and nonappealable order for relief is entered by a court with appropriate
jurisdiction against a Partner, in each case under any federal or state
Bankruptcy or insolvency laws as now or hereafter in effect, unless prior to the
entry of such order or judgment the remaining Partner agrees in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such order or judgment, of a substitute partner;
(e) the occurrence of any event which makes it unlawful for
the business of the Partnership to be carried on or for the Partners to carry on
the business of the Partnership;
(f) either Partner fails to perform or comply with any of its
material obligations hereunder at the time or times and in the manner required
under this Agreement, provided that the other Partner gives the non-performing
Partner thirty (30) days' prior written notice of such default or breach and the
non-performing Partner fails to commence curing any default or breach within
such
17
<PAGE>
30-day period or after commencing the same fails to pursue the curing of such
default with due diligence;
(g) Donald A. Buck is not the Executive Manager of the
Partnership for any reason and the Partners are unable to agree on a replacement
for him within thirty (30) days after his termination is effective;
(h) subject to Section 5.4(j) herein, the amounts expended by
the Partnership exceed the Development Plan and Budget;
(I) the Partnership fails to sell and close lots according to
the schedule attached hereto as Exhibit F, provided that such delay is not the
direct result of governmental action or inaction beyond the control of the
Partners or acts of God over which the Partnership has no reasonable control;
(j) all portions of the Property have been sold;
(k) after using its best efforts, the Managing Partner is
unable to cause Seller to establish one (1) or more additional CDDs or to obtain
CDD Series A Bonds and Series B Bonds in amounts deemed by both Partners to be
sufficient and on terms and conditions satisfactory to the Partners to be able
to finance infrastructure on the Property;
(l) any other act requiring dissolution of the Partnership
pursuant to the Act, as such Act may be amended from time to time;
(m) after using its best efforts, the Managing Partner is
unable to cause Seller to amend the existing DO, the existing DRI or the
existing PUD; or
(n) if the Purchase Agreement is terminated for any reason.
10.2 Method of Liquidation. Immediately before liquidation of the
Partnership, the Partnership's property shall be revalued at its fair market
value as determined by the Partnership's accountants, and the Partners' Capital
Accounts shall be appropriately adjusted to reflect such revaluation. If any
Partner has a deficit balance in its Capital Account after adjustment to reflect
such revaluation, such Partner shall, before the later of the end of the
Partnership's taxable year or the expiration of ninety (90) days following the
liquidation, contribute to the Partnership the amount necessary to eliminate
such deficit balance, and such amount shall be used to satisfy creditors' claims
or for distribution to other Partners in satisfaction of their Capital Account
balances. Upon the termination and liquidation of the Partnership, the
Partnership's assets shall be applied and distributed as follows:
(a) first, to satisfy the liabilities and obligations of
the Partnership, other than liabilities or obligations to the Partners;
18
<PAGE>
(b) next, to the establishment of any reserves deemed
necessary by the Partners for the payment of any contingent or unforseen
liabilities or obligations of the Partnership and, at the expiration of such
period as the Partners deem advisable, the balance of such reserves shall be
applied and distributed in the manner hereinafter provided in this Section 10.2;
then
(c) next, to satisfy the liabilities and obligations of the
Partnership to any Partner (including, without limitation, an Advance made
pursuant to Section 3.2 herein); and
(d) finally, to the Partners in accordance with the positive
balances of their respective Capital Accounts.
10.3 Reasonable Time for Liquidation. A reasonable time shall be
allowed for the orderly liquidation of the Partnership's assets pursuant to
Section 10.2 hereof in order to reduce the risk of loss which might be attendant
upon such a liquidation.
10.4 Date of Termination. The Partnership shall be terminated when all
of its assets shall have been applied and distributed in accordance with the
provisions of Section 10.2 hereof. The establishment of any reserves in
accordance with the provisions of Section 10.2 hereof shall not have the effect
of extending the term of the Partnership, but any such reserves shall be
distributed in the manner provided in Section 10.2 hereof upon expiration of the
period of such reserve.
ARTICLE 11
MISCELLANEOUS
11.1 Insurance. The Partnership shall carry and maintain in force such
levels of insurance as deemed appropriate by the Partners and in accordance with
the Development Plan and Budget, the premiums for which shall be a cost and
expense in connection with the operation of the Partnership.
11.2 Limited Purpose. Nothing in this Agreement shall be deemed, held
or construed as creating an association, general partnership or joint enterprise
among the Partners for any purpose other than that specifically set forth
herein.
11.3 Preformation Expenses. Each of the Partners will pay its own
attorneys' fees and all other costs incurred by it in connection with the
negotiation of this Agreement.
11.4 Other Activities. Each Partner and any of its affiliates,
principals, officers, directors, shareholders, agents and employees, or any
person or entity holding a legal or beneficial interest in a Partner may engage
in or possess an interest in other business ventures of every nature and
description, independently or with others. The Partners represent and warrant to
each other that their engagement in any permitted business venture will not in
any way interfere with or limit their ability to adequately perform each of
their duties, obligations and responsibilities under this Agreement. Neither the
Partnership nor the Partners (not engaging in such permitted activities) shall
have any right by virtue of this Agreement to enter into or participate in such
other Partners' permitted
19
<PAGE>
independent ventures or to share the income or profits derived therefrom or any
other rights therein, and each of the Partners hereby waives whatever statutory
or other rights to the contrary which it may now or hereafter possess.
11.5 Further Assurances. The Partners hereby agree from time to time to
execute and deliver such further and other transfers, assignments and documents
and do all matters and things which may be convenient or necessary to more
effectively and completely carry out the intentions of this Agreement.
11.6 Entire Agreement. This Agreement represents the entire
understanding and agreement between the Partners with respect to the subject
matter hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and between the Partners.
11.7 Assignments. Except as set forth in Section 7.2 herein, neither
Partner may assign its rights and/or obligations hereunder without the prior
written consent of each other party to this Agreement.
11.8 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing (including facsimile, telex,
telefax and telegraphic communication) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service,
telecommunicated, or mailed (airmail if international) by registered or
certified mail (postage prepaid), return receipt requested, addressed to:
With a copy to:
MEADOW POINTE EAST, L.L.C. Lewis F. Crippen, Esq.
c/o BF Enterprises, Inc. Gunster, Yoakley, Valdes-Fauli
& Stewart, P.A.
100 Bush Street 777 S. Flagler Drive
Suite 1250 Suite 500-East
San Francisco, CA 94104 West Palm Beach, FL 33401
Attn: Brian P. Burns, Esq.
Stuart B. Aronoff
Fax: (561) 655-5677
Fax: (415) 788-5756
With a copy to:
DEVCO III, L.L.C Akerman, Senterfitt & Eidson
15436 North Florida Avenue 100 S. Ashley
Tampa, Florida 33613 Suite 1500
Attn: Donald A. Buck Tampa, Florida 33602
Fax: (813) 969-0128 Attn: Mark K. Straley, Esq.
Fax: (813) 223-2837
20
<PAGE>
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered on: (a) the
date delivered if by personal delivery; (b) the date telecommunicated if by
telegraph; (c) the date of transmission with confirmed answer back if by
facsimile, telex, telefax or other telegraphic method; and (d) the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
11.9 Binding Effect. All of the terms and provisions of this Agreement,
whether so expressed or not, shall be binding upon, inure to the benefit of, and
be enforceable by the Partners and their respective legal representatives,
successors and permitted assigns.
11.10 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect in any way
the meaning or interpretation of this Agreement.
11.11 Specific Performance. Each of the Partners acknowledge that the
Partners will be irreparably damaged (and damages at law would be an inadequate
remedy) if this Agreement is not specifically enforced. Therefore, in the event
of a breach or threatened breach by any Partner of any provision of this
Agreement, then the other Partners shall be entitled, in addition to all other
rights or remedies, to injunctions restraining such breach, without being
required to show any actual damage or to post any bond or other security and/or
to a decree for specific performance of the provisions of this Agreement.
11.12 Governing Law. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida without regard to principles of conflicts
of laws.
11.13 Jurisdiction and Venue. The Partners acknowledge that a
substantial portion of negotiations, anticipated performance and execution of
this Agreement occurred or shall occur in Palm Beach County, Florida, and that,
therefore, each of the Partners irrevocably and unconditionally (I) agrees that
any suit, action or legal proceeding arising out of or relating to this
Agreement shall be brought in the courts of record of the State of Florida in
Palm Beach County or the District Court of the United States, Southern District
of Florida; (ii) consents to the jurisdiction of each such court in any suit,
action or proceeding; (iii) waives any objection which it may have to the laying
of venue of any suit, action or proceeding in any of such courts; and (iv)
agrees that service of any court paper may be effected on such Partner by mail,
as provided in this Agreement, or in such other manner as may be provided under
applicable laws or court rules in Florida.
11.14 No Construction Against Draftsmen. The Partners acknowledge that
this is a negotiated Agreement, and that in no event shall the terms hereof be
construed against either Partner on the basis that such party, or its counsel,
drafted this Agreement.
11.15 Severability. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation,
21
<PAGE>
such provision shall be inapplicable and deemed omitted to the extent so
contrary, prohibited or invalid, but the remainder hereof shall not be
invalidated thereby and shall be given full force and effect so far as possible.
If any provision of this Agreement may be construed in two or more ways, one of
which would render the provision invalid or otherwise voidable or unenforceable
and another of which would render the provision valid and enforceable, such
provision shall have the meaning which renders it valid and enforceable.
11.16 Enforcement Costs. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees, sales and use taxes, court costs and all
expenses even if not taxable as court costs (including, without limitation, all
such fees, taxes, costs and expenses incident to arbitration, appellate,
bankruptcy and post-judgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or parties may
be entitled. Attorneys' fees shall include, without limitation, paralegal' fees,
investigative fees, administrative costs, sales and use taxes and all other
charges billed by the attorney to the prevailing party.
11.17 Ability to Enter Agreement. Each Partner represents and warrants
that it is duly organized, validly existing and in good standing under the laws
of the state of its organization, with all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
11.18 Amendments. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
11.19 Creditor Liens. Creditors of individual Partners shall solely be
entitled to a charging lien on Partnership property and shall not be entitled to
own Partnership property.
11.20 Arbitration. Notwithstanding anything to the contrary in this
Agreement, all claims for monetary damages and disputes relating in any way to
the performance, interpretation, validity, or breach of this Agreement shall be
referred to final and binding arbitration, before a single arbitrator, under the
commercial arbitration rules of the American Arbitration Association in Pasco
County, Florida. The arbitrator shall be selected by the parties and if the
parties are unable to reach agreement on selection of the arbitrator within
thirty (30) days after the notice of arbitration is served, then the arbitrator
will be selected by the American Arbitration Association. All documents,
materials, and information in the possession of a party to this Agreement and in
any way relevant to the claims or disputes shall be made available to the other
parties for review and copying not later than sixty (60) days after the notice
of arbitration is served. To the extent that a party would be required to make
confidential information available to any other, an agreement or an order shall
be entered in the proceeding protecting the confidentiality of and limiting
access to such information before a party is required to produce such
information. Information produced by a party shall be
22
<PAGE>
used exclusively in the arbitration or litigation that may arise, and shall not
otherwise be disclosed. In no event shall a party be entitled to punitive
damages in any arbitration or judicial proceeding and all parties hereby waive
their rights to any punitive damages. In the event an arbitration panel or a
court concludes that the punitive damages waiver contained in the previous
sentence is unenforceable, then the parties agree that the court with subject
matter jurisdiction over the confirmation of the award shall have sole and
exclusive jurisdiction to determine issues of entitlement and amount of punitive
damages. The arbitrator shall NOT have subject matter jurisdiction to decide any
issues relating to the statute of limitations or to any request for injunctive
relief, and the parties hereby stipulate to stay the arbitration proceeding
(without the need of a bond) until any such issues in dispute are resolved.
Judgment upon the award rendered by the arbitrator shall be final, binding and
conclusive upon the parties and their respective administrators, executors,
legal representatives, heirs, successors and permitted assigns, and may be
entered in any court of competent jurisdiction.
11.21 Non-Competition Agreement. Neither Devco, Donald A. Buck nor
Meadow Pointe shall, during the term of this Agreement and for three (3) years
after the occurrence of any event set forth in Sections 7.1, 7.4, 10.1(f),
10.1(g), 10.1(h), 10.1(I), 10.1(k), 10.1(m) or 10.1(n), without the other
parties' written consents, directly or indirectly, enter into an agreement with
any person or entity to provide financing or development or construction
services for lots similar to those on the Property or other multi-family sites
for residential housing (a "Transaction") within four (4) miles of the Property
in Hillsborough or Pasco Counties (the "Service Area"), without first providing
the other parties the opportunity to participate in any such Transaction. In the
event Devco, Donald A. Buck or Meadow Pointe desire to enter into any such
Transaction, then it/he shall promptly provide the other parties with written
notice thereof. The parties shall thereafter have a period of ninety (90) days
following the receipt of such notice within which to agree upon the terms and
conditions of the other parties' participation in the Transaction; provided,
however, that each of Meadow Pointe and Devco (which shall for purposes of this
Section 11.21 include Donald A. Buck) be entitled, but not obligated, to
participate in the Transaction on an equal (50%) basis (economic, ownership or
otherwise). Each of the parties shall use their best efforts to agree upon
commercially reasonable terms and conditions acceptable to the parties to allow
the other parties to participate in any such Transaction. In the event the
parties shall not have agreed upon or consummated such affiliation within such
ninety (90) day period, the party that introduced the Transaction to the other
parties pursuant to this Section 11.21 shall thereafter be permitted to enter
into negotiations with such person or entity and consummate the Transaction. The
parties hereto acknowledge and agree that neither J. Robert Sierra, Sr., nor J.
Robert Sierra, Jr., or any entities that they own or control (except Devco),
shall be subject to the terms and conditions of this Section 11.21.
11.22 Confidentiality; Public Announcements.
(a) Each of the Partners shall maintain in confidence, and
will cause their members, directors, officers, employees, agents and advisors to
maintain in confidence, any written, oral or other information obtained in
confidence from the other party in connection with this Agreement and the
transactions contemplated herein, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes
23
<PAGE>
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent required for the consummation of any transactions contemplated herein,
or (c) the furnishing or use of such information is required by a legal
proceeding or legal requirements.
(b) Any public announcement or similar publicity with respect
to this Agreement or any transaction contemplated hereby (including, without
limitation, any press release) will be issued, if at all, at such time and in
such manner as Meadow Pointe shall determine, in its sole and absolute
discretion, unless required by a legal requirements.
24
<PAGE>
The undersigned have duly executed this Agreement as of the day and
year first above written.
MEADOW POINTE EAST, LLC, a Delaware
limited liability company
By: /s/ Stuart B. Aronoff
--------------------------
Name: Stuart B. Aronoff
Title: Senior Vice President
DEVCO III, L.L.C., a Florida limited
liability company
By: /s/ Donald A. Buck
-----------------------------
Name: Donald A. Buck
Title: President
25
<PAGE>
JOINDER AGREEMENT
THIS JOINDER is intended to be and is hereby made a part of and
incorporated in the foregoing Agreement of General Partnership of Meadow Pointe
General Partnership (the "Agreement"). Terms not otherwise defined herein shall
have the meanings ascribed thereto in the Agreement.
TO INDUCE Meadow Pointe to enter into the Agreement, and with the
understanding that Meadow Pointe intends to rely hereon, the undersigned, an
executive of Devco, hereby agrees to be bound by the terms and conditions of
Section 4.2 and Article 11 (including, without limitation, Section 11.21) of the
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Joinder this 3rd
day of October, 1999.
/s/ Donald A. Buck
------------------------
Donald A. Buck
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
(Not Available)
A-1
<PAGE>
EXHIBIT B
FORM OF GRID PROMISSORY NOTE (NON-NEGOTIABLE)
U.S. $1,000,000 October __, 1999
FOR VALUE RECEIVED, MEADOW POINTE GENERAL PARTNERSHIP, a Florida
general partnership ("Maker"), hereby promises to pay to the order of MEADOW
POINTE EAST, L.L.C., a Delaware limited liability company ("Lender"), at its
offices at 100 Bush Street, Suite 1250, San Francisco, California 94104 (or at
such other place or places as Lender or the holder hereof may designate in
writing, from time to time), the principal sum, not to exceed ONE MILLION AND
NO/100 DOLLARS (U.S.$1,000,000.00) (the "Loan"), or such lesser sum outstanding
at the time when payment is due hereunder, in lawful money of the United States
of America, together with interest accruing thereon from the date hereof at the
rates and times hereinafter provided calculated on the daily principal balance
from time to time outstanding hereunder as is indicated from time to time on the
Grid Schedule attached hereto as Exhibit "A."
1. Principal and Interest Payments.
Maker promises to pay interest (calculated on the basis of a 360-day
year for the actual number of days elapsed) on the outstanding principal
balance, plus accrued interest from time to time outstanding hereunder from the
date hereof at the prime rate (or similar base rate) of Wells Fargo & Company,
adjusted from day to day, plus one (1) point (the "Interest"). The unpaid
principal balance and all accrued interest, shall be due and payable as follows:
(a) Maker shall repay the principal due and payable, together
with any unpaid and accrued Interest due and payable hereunder, in full by no
later than October 6, 2004 (the "Due Date"), which shall be a date five (5)
years after the date hereof; provided, however, that Maker agrees that to the
extent it has available cash flow, it will use such available cash flow, from
time to time, to repay the principal due and payable, together with any unpaid
and accrued Interest due and payable hereunder, in full; and
(b) Accrued Interest shall be paid semiannually on January 1
and July 1 of each calendar year subsequent to the date hereof.
(c) All payments hereunder will be made by cash, check or wire
transfer in such coins or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts.
2. Intent Not to Commit Usury.
Nothing herein contained, nor any transactions related hereto, shall be
construed or so operate as to require Maker to pay interest at a greater rate
than is now lawful in such case to contract for,
B-1
<PAGE>
or to make any payment, or to do any act contrary to applicable law. Should any
interest or other charges paid by Maker or any party liable for the payment of
this Note in connection with the Loan result in the computation or earning of
interest in excess of the maximum rate of interest that is legally permitted
under applicable law, then any and all such excess shall be and the same is
hereby waived by Lender and the holder hereof, and any and all such excess paid
by Maker shall be automatically credited against and in reduction of the balance
due under this indebtedness, and the portion of said excess which exceeds the
balance due under this indebtedness shall be paid by Lender to Maker and parties
liable for the payment of this Note.
3. Consent to Extensions of Time. It is agreed that the granting to
Maker of this Note or any other party of an extension or extensions of time for
the payment of any sum or sums due hereunder or under any document delivered in
connection with this Note or for the performance of any covenant or stipulation
thereof shall not in any way release or affect the liability of Maker of this
Note.
4. Waivers.
Maker and all endorsers, sureties and guarantors of this Note hereby
waive demand, presentment, notice of nonpayment, dishonor and protest.
5. Attorneys' Fees.
In case suit shall be brought for the collection hereof, or if it is
necessary to place the same in the hands of an attorney for collection, Maker
and all endorsers and guarantors of this Note agree to pay reasonable attorneys'
fees for making such collection, including but not limited to, all fees and
costs incident to any appellate, post-judgment and bankruptcy proceedings that
may result, whether the holder hereof is obligated therefor or not.
6. Jurisdiction and Venue.
Any civil action or legal proceeding arising out of or relating to this
Note shall be brought in the courts of record of the State of Florida in Palm
Beach County or the United States District Court, Southern District of Florida,
West Palm Beach Division. Each party consents to the jurisdiction of such court
in any such civil action or legal proceeding and waives any objection to the
laying of venue of any such civil action or legal proceeding in such court.
Service of any court paper may be effected on such party by mail, as provided in
this Note, or in such other manner as may be provided under applicable laws,
rules of procedure or local rules.
7. Governing Law.
The provisions of this Note, and any documents or instruments related
hereto or executed in conjunction herewith, shall be construed according to the
laws of the State of Florida, except if federal law would allow the payment of
interest hereunder at a higher maximum rate than would applicable Florida law,
such federal law shall apply to the determination of the highest applicable
lawful rate of interest hereunder.
B-2
<PAGE>
7. Limitation on Advances and Use of Proceeds of this Note.
Maker may request advances hereunder solely for the payment of the
actual up-front development costs incurred by Maker in connection with
development and construction of real property located in Pasco County, Florida
and for no other purpose. No funds advanced by Lender shall be utilized for any
purpose other than as specified herein. Advances under this Note shall be made
not more than once each month. All advances hereunder shall be made by cashier's
check or by wire transfer of funds into a bank account in the State of Florida
maintained by Maker or an authorized agent of Maker. Maker hereby irrevocably
authorizes and instructs the holder hereof to note on the Grid Schedule attached
hereto as Exhibit "A" all advances of principal made hereunder, all accruals of
interest hereunder and all repayments of principal or interest hereunder. The
amounts noted thereon shall be conclusive and binding upon the parties as to the
indebtedness evidenced hereby absent fraud or manifest error. Lender shall have
no obligation to make any advances to Maker if Devco III, L.L.C., a Florida
limited liability company ("Devco"), or Donald A. Buck is in breach of any
provision of the Agreement of General Partnership of Maker, between Devco and
Lender.
8. Consent to Changes.
Maker consents and agrees that the granting to Maker or to any other
party of any extension of time for the performance of any covenant or
stipulation herein or the release of Maker or any other party, or the agreement
of Lender not to sue Maker or any other party, or the suspension of the right to
enforce this Note against Maker or any other party, or the discharge of Maker or
any other party, shall not in any way release or affect the liability of Maker,
all rights against such parties being expressly reserved.
9. Amendment.
The provisions of this Note may not be amended, supplemented, waived or
changed orally, but only by a writing signed by the party as to whom enforcement
of any such amendment, supplement, waiver or modification is sought and making
specific reference to this Note. Maker has executed this Note as a principal and
not as a surety or accommodation party.
10. Assumability.
This Note shall not be assumable without Lender's prior written
consent, which may be withheld for any reason whatsoever.
11. Prepayment.
This Note may be prepaid, in whole or in part, at any time without
penalty provided that any partial payment shall be applied against the principal
amount outstanding and shall not postpone the due date of any subsequent payment
unless Lender shall otherwise agree in writing in its sole discretion.
B-3
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Note as of the day and year
first above written.
WITNESS: MEADOW POINTE GENERAL
PARTNERSHIP
By: MEADOW POINT EAST, LLC, a
Delaware limited liability company,
and a general partner
__________________________ By:
Print Name: ________________ Name:
Title:
- --------------------------
Print Name: ________________
STATE OF CALIFORNIA
COUNTY OF __________
Personally appeared before me, the undersigned authority in and for the
said county and state, on this ___ day of _____________, 1999, within my
jurisdiction, the within named ________________, who acknowledged that he is the
__________ of MEADOW POINT EAST, LLC, a Delaware limited liability company, and
that for and on behalf of the said corporation, and as its act and deed he/she
executed the above and foregoing instrument, after first having been duly
authorized by said corporation so to do.
Print Name:
(NOTARY SEAL) NOTARY PUBLIC - STATE OF CALIFORNIA
Commission Number:
My commission expires:
B-4
<PAGE>
EXHIBIT "A"
<TABLE>
<CAPTION>
GRID SCHEDULE
<S> <C> <C> <C> <C> <C>
Principal Principal Interest Interest
Date Advance Repayment Accrual Repayment Balance
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
</TABLE>
B-5
<PAGE>
EXHIBIT C
FORM OF MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of this ____ day of October, 1999, by and among MEADOW POINTE GENERAL
PARTNERSHIP, a Florida general partnership (the "Partnership"), DEVCO III, LLC,
a Florida limited liability company ("Devco"), and DONALD A. BUCK (the
"Executive Manager"), individually. Capitalized terms not defined herein shall
have the meaning ascribed to them in that certain Agreement of General
Partnership between Devco and Meadow Pointe East, L.L.C., a Delaware limited
liability company, of even date herewith (the "Partnership Agreement").
WITNESSETH:
WHEREAS, the Partnership has entered into an Agreement for Development,
Sale and Purchase of Real Property, dated October __, 1999, with Clearwater Bay
Associates, Inc., a Florida corporation (the "Purchase Agreement"), pursuant to
which the Partnership has agreed to develop and market single family building
lots and building units in a master planned development presently known as
Wesley Chapel Lakes (the "Property"); and
WHEREAS, pursuant to the terms of the Partnership Agreement, Devco and
the Executive Manager have agreed, and are obligated, to develop and manage the
Property in accordance with the Purchase Agreement and the Partnership
Agreement; and
WHEREAS, the Partnership, Devco and the Executive Manager desire to
enter into this Agreement for the purpose of defining the terms of their
relationship with respect to the development and management of the Property.
NOW, THEREFORE, in consideration of the mutual premises herein
contained, the parties hereto do hereby agree as follows:
1. MANAGEMENT AGREEMENT. Pursuant to the terms and conditions of this
Agreement, the Partnership hereby employs Devco as its manager of the Property
pursuant to the terms and conditions of this Agreement and the Partnership
Agreement. The Executive Manager agrees to fully perform all obligations of
Devco under this Agreement and the Partnership Agreement.
2. MANAGEMENT. The Executive Manager and Devco each agree that they
will use their best efforts to develop and manage the Property in accordance
with the terms of the Purchase Agreement and the Partnership Agreement
throughout the term of this Agreement. The Partnership hereby grants to Devco
the authority described in Section 1.3 of the Partnership Agreement.
C-1
<PAGE>
3. CAPITAL IMPROVEMENTS. The Development Plan and Budget (the "Budget")
(approved pursuant to the terms of the Partnership Agreement) constitutes the
authorization for Devco to expend money to develop and market the Property.
Except for expenditures made and obligations incurred which were included in the
Budget, previously approved by the Partnership, or otherwise not required to be
approved by the Partnership, Devco shall not have any authority to make any
expenditure or incur any obligation on behalf of the Partnership.
4. PARTNERSHIP EXPENSES. The expense of any third party independent
contractor retained by the Partnership or by Devco on behalf of the Partnership
and in accordance with the Budget or otherwise approved of by the Partnership
shall be an expense of the Partnership.
5. EXECUTIVE MANAGER'S FEE. In consideration to oversee, supervise and
develop the Property on behalf of Devco under this Agreement and for the benefit
of the Partnership, the Executive Manager shall be paid the sum of One Hundred
Fifty Thousand Dollars ($150,000) per year during the term hereof from monies of
the Partnership and/or the CDDs (as defined in Section 8 herein), as applicable.
This fee shall be paid in equal monthly installments beginning one (1) month
from the date hereof.
6. PAYMENTS AND REIMBURSEMENTS TO DEVCO. Subject to Section 7 below, in
accordance with the Budget, as amended from time to time, the Partnership shall
promptly pay or, if applicable, reimburse Devco for all costs and expenses
reasonably incurred by Devco in connection with the performance of its duties
hereunder, including office overhead expense, professional and clerical expense,
and other standard annual charges listed on Exhibit A attached hereto and
approved by the Partnership. Except for the fee to be paid to the Executive
Manager as set forth in Section 5 above, the Partnership shall not pay or
reimburse Devco for any additional amounts for the services of the Executive
Manager.
7. MANAGEMENT FEES FROM THE COMMUNITY DEVELOPMENT
DISTRICTS. As more particularly set forth in the Purchase Agreement, the
Partnership plans to establish one or more community development districts
pursuant to Chapter 190, Florida Statutes (individually and collectively, the
"CDDs"), to finance and manage the construction of certain public infrastructure
improvements that will benefit the Property. As set forth in the Purchase
Agreement and Exhibit "F" thereto, the Partnership intends to enter into one or
more Project Management Agreements with the CDDs pursuant to which the
Partnership shall be compensated for supervising the construction of
infrastructure improvements by the CDDs. Devco will provide construction
management services to the CDDs on behalf of the Partnership, however, Devco
will not receive any management fees directly from the CDDs (including monies to
pay the Executive Manager's fee described in Section 5 above). The parties
anticipate that such fees will be paid to the Partnership by the CDDs and the
Partnership will, in turn, make payments to Devco (including all or a portion of
the Executive Manager's fee, as applicable). However, if and to the extent that
Devco receives such management fees from the CDDs (other than compensation
received by the Executive Manager or by other Devco employees for serving on the
board of supervisors of the CDDs), such fees paid directly by the CDDs shall be
credited against the amounts due to Devco hereunder.
C-2
<PAGE>
8. NON-ASSIGNABILITY. This Agreement is not assignable by Devco or the
Executive Manager without the prior written consent of both partners of the
Partnership.
9. EMPLOYEES; INDEPENDENT CONTRACTOR. Devco shall have in its employ at
all times a sufficient number of capable employees to enable it to reasonably,
properly, adequately, safely and economically manage, operate, maintain and
account for the Property. All matters pertaining to the employment, supervision,
compensation, promotion and discharge of such employees are the responsibility
of Devco, which is in all respects the employer of such employees. Devco shall
fully comply with all acts and regulations having to do with workmen's
compensation, social security, unemployment insurance, hours of labor, wages,
working conditions and other employer/employee related subjects. Neither Devco
nor the Executive Manager shall be considered employees of the Partnership.
Devco shall at all times during the term of this Agreement be considered an
independent contractor of the Partnership.
10. MANAGEMENT FEE UPON TERMINATION. Notwithstanding anything
contained herein to the contrary, if the Partnership terminates this Agreement
pursuant to Section 11 hereof, then in such event Devco shall only be entitled
to receive, as full and sole compensation under this Agreement, all payments
already paid or accrued pursuant to Sections 5, 6 and 7 hereof as of the date of
termination. Upon any such termination, the Partnership shall pay all reasonable
and customary costs and expenses incurred by Devco pursuant to the terms of this
Agreement and the Partnership Agreement through the date of the termination.
11. TERM AND TERMINATION.
(a) Term. This Agreement shall become effective on the date
hereof and shall continue in full force and effect, until earlier terminated
pursuant to Section 11(b) herein.
(b) Termination. This Agreement shall terminate immediately
upon the occurrence of the earlier of the following events:
(i) In the Partnership's reasonable discretion,
For Cause (as hereinafter defined).
(ii) Upon the termination of the Partnership for
any reason or the occurrence of any event described in Article 10 of the
Partnership Agreement.
(iii) Upon the termination of the Purchase Agreement
for any reason.
(iv) If Devco ceases to be a partner of the
Partnership.
(c) Termination for Cause. "For Cause" shall mean (i) a
default by Devco in any respect in the performance or observance of any
covenant, or term of this Agreement or the Partnership Agreement, provided that
the breach shall be material and adverse to the Partnership and that Devco shall
fail either (A) to cure, terminate or remove such default within thirty (30)
days after
C-3
<PAGE>
written notice thereof from the Partnership to Devco, or (B) if such default
cannot be cured within the aforesaid 30-day period, to diligently pursue the
cure of such default within such additional period as shall be reasonable to
cure such default, provided Devco is capable of curing such default and such
cure may be accomplished without damage or expense to the Partnership by reason
of the cure; or (ii) if Devco engages in criminal misconduct or commits fraud
which results in a loss to the Partnership.
(d) Effect of Termination. Upon termination of this Agreement,
Devco shall, as soon as practicable but in no event later than the thirtieth
(30th) day after notice is given in accordance with Section 13 hereof:
(i) Surrender and deliver to the Partnership:
(A) all funds held by Devco in
connection with the Property; and
(B) any other monies of the Partnership
in possession of Devco in any bank account;
(ii) Deliver to the Partnership as received any
monies due the Partnership under this Agreement but received by Devco after the
effective date of such termination;
(iii) Deliver to the Partnership all materials,
equipment, tools and supplies, keys, contracts and documents relating to the
Property, and copies of such other accountings, papers, and records as the
Partnership shall request pertaining to the Property;
(iv) If applicable, assign the existing contracts
relating to the development of the Property to the Partnership or such third
parties as the Partnership shall direct;
(v) Vacate any portion of the Property then
occupied by Devco as a consequence of this Agreement; and
(vi) Furnish all such information in order to
effectuate an orderly and systematic ending of Devco's duties and activities
hereunder. Within ten (10) days after any such termination, Devco shall
deliver to the Partnership any written reports required hereunder for any
period not covered by prior reports at the time of termination. With regard to
the originals of all papers and records pertaining to the Property, the
possession of which are retained by Devco after termination, Devco shall:
(A) make the same available for inspection and reproduction by the Partnership
at reasonable times upon request of the Partnership; (B) deliver same into the
Partnership's possession in the event the Partnership in good faith requires
same for use in a legal or quasi-legal proceeding; and (C) not destroy the
same without first offering to deliver the same to the Partnership.
12. ASSIGNMENTS. Neither party may assign its rights and/or obligations
hereunder without the prior written consent of each other party to this
Agreement.
C-4
<PAGE>
13. NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing (including facsimile, telex, telefax
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
With a copy to:
MEADOW POINTE GENERAL Lewis F. Crippen, Esq.
PARTNERSHIP Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
c/o BF Enterprises, Inc. 777 S. Flagler Drive
100 Bush Street Suite 500-East
Suite 1250 West Palm Beach, FL 33401
San Francisco, CA 94104 Fax: (561) 655-5677
Attn: Brian P. Burns, Esq.
Stuart B. Aronoff
Fax: (415) 788-5756
With a copy to:
DEVCO III, L.L.C. Akerman, Senterfitt & Eidson
15436 North Florida Avenue 100 S. Ashley
Tampa, Florida 33613 Suite 1500
Attn: Donald A. Buck Tampa, Florida 33602
Fax: (813) 969-0128 Attn: Mark K. Straley, Esq.
Fax: (813) 223-2837
or to such other address as any party may designate by notice complying with the
terms of this Section 13. Each such notice shall be deemed delivered on: (a) the
date delivered if by personal delivery; (b) the date telecommunicated if by
telegraph; (c) the date of transmission with confirmed answer back if by
facsimile, telex, telefax or other telegraphic method; and (d) the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
14. BINDING EFFECT. All of the terms and provisions of this Agreement,
whether so expressed or not, shall be binding upon, inure to the benefit of, and
be enforceable by the parties hereto and their respective legal representatives,
successors and permitted assigns.
15. HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect in any way
the meaning or interpretation of this Agreement.
C-5
<PAGE>
16. GOVERNING LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida without regard to principles of conflicts
of laws.
17. NO CONSTRUCTION AGAINST DRAFTSMEN. The parties acknowledge that
this is a negotiated Agreement, and that in no event shall the terms hereof be
construed against either party on the basis that such party, or its counsel,
drafted this Agreement.
18. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
19. ABILITY TO ENTER INTO AGREEMENT. Each party represents and warrants
that it is duly organized, validly existing and in good standing under the laws
of the state of its organization, with all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
20. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
21. ARBITRATION. Notwithstanding anything to the contrary in this
Agreement, all claims for monetary damages and disputes relating in any way to
the performance, interpretation, validity, or breach of this Agreement shall be
referred to final and binding arbitration, before a single arbitrator, under the
commercial arbitration rules of the American Arbitration Association in Pasco
County, Florida. The arbitrator shall be selected by the parties and if the
parties are unable to reach agreement on selection of the arbitrator within
thirty (30) days after the notice of arbitration is served, then the arbitrator
will be selected by the American Arbitration Association. All documents,
materials, and information in the possession of a party to this Agreement and in
any way relevant to the claims or disputes shall be made available to the other
parties for review and copying not later than sixty (60) days after the notice
of arbitration is served. To the extent that a party would be required to make
confidential information available to any other, an agreement or an order shall
be entered in the proceeding protecting the confidentiality of and limiting
access to such information before a party is required to produce such
information. Information produced by a party shall be used exclusively in the
arbitration or litigation that may arise, and shall not otherwise be disclosed.
In no event shall a party be entitled to punitive damages in any arbitration or
judicial proceeding and all parties hereby waive their rights to any punitive
damages. In the event an arbitration panel or a court concludes that the
punitive damages waiver contained in the previous sentence is
C-6
<PAGE>
unenforceable, then the parties agree that the court with subject matter
jurisdiction over the confirmation of the award shall have sole and exclusive
jurisdiction to determine issues of entitlement and amount of punitive damages.
The arbitrator shall NOT have subject matter jurisdiction to decide any issues
relating to the statute of limitations or to any request for injunctive relief,
and the parties hereby stipulate to stay the arbitration proceeding (without the
need of a bond) until any such issues in dispute are resolved. Judgment upon the
award rendered by the arbitrator shall be final, binding and conclusive upon the
parties and their respective administrators, executors, legal representatives,
heirs, successors and permitted assigns, and may be entered in any court of
competent jurisdiction.
22. RELATIONSHIP OF PARTIES. The parties are aware and agree that the
relationship between the Partnership and Devco (including the Executive Manager)
under this Agreement shall be that of an independent contractor and not an agent
or employee.
23. NO THIRD PARTY BENEFICIARY. This Agreement is solely between the
parties hereto and no person or persons not a party hereto shall have any rights
or privileges whatsoever either as a third party beneficiary or otherwise.
24. INCONSISTENCIES. Notwithstanding anything herein to the contrary,
if any provision in this Agreement shall be deemed inconsistent with the
Partnership Agreement, such provision herein shall be deemed invalid to the
extent so inconsistent and the Partnership Agreement shall control such matter
between the parties to this Agreement.
25. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonably attorneys' fees, sales and use taxes, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that civil
action, arbitration or legal proceeding, in addition to any other relief to
which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administration costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
26. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of the negotiations, anticipated performance and execution of this
Agreement occurred or shall occur in Pasco County, Florida. Any civil action,
arbitration or legal proceeding arising out of or relating to this Agreement
shall be brought in the courts of record of the State of Florida in Pasco County
or the United States District Court, Southern District of Florida. Each party
consents to the jurisdiction of such court in any such civil action, arbitration
or legal proceeding and waives any objection to the laying of venue of any such
civil action, arbitration or legal proceeding in such court. Service of any
court paper may be effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided under applicable laws,
rules or procedure or local rules.
C-7
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
the day and year first above written.
MEADOW POINTE GENERAL
PARTNERSHIP:
MEADOW POINTE EAST, L.L.C.,
General Partner
By:_____________________________
Name:
Title:
DEVCO III, L.L.C., General Partner
By:_____________________________
Name:
Title:
EXECUTIVE MANAGER:
Donald A. Buck
DEVCO, III, L.L.C.
By:_____________________________
Name:
Title:
C-8
<PAGE>
EXHIBIT "A"
EXPENSES
(See Attachment)
C-9
<PAGE>
EXHIBIT D
FORM OF DEVELOPMENT PLAN AND BUDGET
D-1
<PAGE>
EXHIBIT E
SITE DEVELOPMENT PLAN
E-1
<PAGE>
EXHIBIT F
SCHEDULE OF PROPOSED SALES
F-1
<PAGE>
AGREEMENT FOR DEVELOPMENT, SALE AND
PURCHASE OF REAL PROPERTY
This is an Agreement for the Development, Sale and Purchase of Real
Property (the "Agreement"), dated as of the date set forth below, between
Clearwater Bay Associates, Inc., a Florida corporation (the "Seller") and Meadow
Pointe General Partnership, a general partnership formed under the Florida
Partnership Act (the "Buyer").
1. Background and Purpose. This Agreement pertains to certain
unimproved real property in Pasco County, Florida, presently known as Wesley
Chapel Lakes and more particularly described on Exhibit "A" attached hereto,
together with any improvements thereon and all appurtenances, including, without
limitation, any and all permits and licenses obtained or applications filed by
the Seller with respect to the real property (to the extent such permits and
licenses are transferable), the benefit of all easements, if any, serving the
real property and the right, title and interest of the Seller, if any,
reversionary or otherwise, in and to any and all land lying between the
boundaries of the land and the rights-of-way of any adjoining public highways,
roads, or streets (collectively the "Property"). As more particularly described
below, the Property does not include, however, certain Excluded Property (as
defined below) and certain exclusive rights to convey potable water sites on the
Property which shall be retained by the Seller to the extent permitted
hereunder.
The Buyer has been organized to engage in the real estate development
business. As provided below, the Seller has agreed to allow the Buyer to develop
and plat the Property and
1
<PAGE>
following such development, to sell platted single-family building lots and
multi-family building sites (collectively, "building lots") to the Buyer or the
Buyer's designee.
2. Purchase Price and Terms of Payment. Subject to the
adjustments, price escalations, and prorations provided for elsewhere herein,
during the term of this Agreement, the purchase price for the Property shall be
based on the building lot prices set forth on Exhibit "B" attached hereto. At
each of the several closings hereunder, the purchase price for the building lots
then being purchased shall be paid in cash to the Seller by bank wire transfer
or a cashier's check or other check acceptable to the Seller to be delivered to
the Seller at closing. As set forth in Exhibit "B" attached hereto, the base or
1999 building lot prices shall escalate 3% each calendar year thereafter during
the term of this Agreement. Thus, the building lot prices shall escalate on
January 1 of each year during the term of this Agreement, and the escalated
price for such year shall remain in effect through December 31.
3. Master Plan. The parties have agreed upon a master plan for
the development of the Property as a mixed-use project containing a minimum of
3,004 building lots, together with certain retail, commercial and other
non-residential uses as described below (the "Initial Master Plan"). A copy of
the Initial Master Plan is attached hereto as Exhibit "C". With the prior
written consent of the Seller, which consent shall not be unreasonably withheld
or delayed, the Buyer shall have the right to modify the Initial Master Plan
from time to time, provided that no such modification: (a) shall result in a
decrease in the aggregate purchase price, as escalated pursuant to Exhibit "B"
attached hereto, to the Seller, or (b) materially reduce development rights or
materially increase development obligations of the Property as a whole. As used
herein, the "aggregate purchase price" refers to the total monies that would be
realized by the Seller from the development
2
<PAGE>
of the Property in accordance with the Initial Master Plan based on the building
lot prices set forth in Exhibit "B". The "aggregate purchase price" is intended
to establish a minimum amount to be realized by the Seller from the development
and sale of building lots hereunder and is not intended to in any way limit the
amounts that may be realized by the Seller from the sale of building lots
pursuant to this Agreement and the Master Plan. As used herein, the "Master
Plan" means the Initial Master Plan as modified from time to time pursuant to
this Agreement.
4. Modifications to DRI. The development of the Property is
governed by a development order for Wesley Chapel Lakes known as DRI 166. A copy
of the DRI and associated development order is attached hereto as composite
Exhibit "D". The parties shall promptly endeavor to obtain a satisfactory
modification to the DRI to: (a) permit the development of the Property
substantially in accordance with the Initial Master Plan; and (b) modify the
exactions relative to transportation improvements that are required for
development in accordance with the Initial Master Plan. The Seller agrees to
timely execute all reasonable applications and documents required to modify the
DRI and cooperate fully with the effort to obtain such modification. The
modifications sought to the existing DRI shall be acceptable to both parties. In
particular, the parties shall endeavor to: (a) pay transportation impact fees to
Pasco County as the development progresses in lieu of making offsite roadway and
other infrastructure improvements or, alternatively, (b) obtain a phased
schedule of roadway and other infrastructure improvements which will minimize
the amount of "front end" expenditures and facilitate the cost effective
development of the Property in accordance with the Initial Master Plan, in which
case transportation and other impact fee credits shall be obtained for all such
improvements. For purposes of this Agreement, "front end" expenditures means
those expenditures made to construct basic public infrastructure improvements,
3
<PAGE>
including, but not limited to, off site roads, water lines, storm water
management facilities, and wastewater management facilities. During the term of
this Agreement, no impact fees or front end expenditures shall be paid by the
Seller. Any impact fee credits received with respect to such fees or
expenditures shall only benefit the Property. The parties shall attempt to
obtain compensation (in cash or by way of transportation or other impact fee
credits) for all rights-of-way, easements or similar exactions of real property
required pursuant to the modified DRI. The parties shall also endeavor to
maximize the permissible density that may be developed on the Property, as well
as maximize the acreage available for commercial and non-residential uses. To
the extent such densities and entitlements are not required to develop the
Property in accordance with the Master Plan, the Seller shall retain all rights
with respect thereto and may seek to sell or assign such excess entitlements to
the Buyer or to others for use in the development of other lands that are not
the subject of this Agreement.
If the modifications of the existing DRI are not acceptable, either
party may, in its sole and absolute discretion, terminate this Agreement,
provided that if the modifications are not acceptable to the Seller, the Seller
shall inform Buyer thereof, in writing, within 10 days of written notification
of a modification deemed unacceptable to the Seller. If the Seller does not
notify Buyer within such 10 day period, the modifications to the DRI shall be
deemed to be approved by the Seller. The cost of modifying the DRI shall be
evenly shared by the Buyer and Seller, provided that the Buyer shall be solely
responsible for all costs after Seller has expended $50,000. With the Seller's
written consent, which consent shall not be unreasonably withheld or delayed,
the Buyer shall hire such consultants and professionals as are required to
modify the DRI. Invoices for costs associated with the modification of the DRI
shall be submitted to the Seller on a monthly basis, and the Seller shall
4
<PAGE>
reimburse the Buyer for its one-half share of such costs within ten working days
following receipt of such invoices.
5. Phasing of Development. The development of the Property in
accordance with the Master Plan shall occur in phases as depicted on the Phasing
Schedule attached hereto as Exhibit "E". A part of the first phase consisting of
approximately 400 building lots in the southern end of the Property shall be
physically connected to the existing Meadow Pointe community (the "Meadow Pointe
Expansion Parcel"). Following the development of the Meadow Pointe Expansion
Parcel and the balance of the first phase, the development shall proceed in
additional phases, including a phase in the northern part of the Property that
will be accessed from an entrance on State Road 54. Except for the phase or
phases that are accessed from State Road 54, it is anticipated that the
development of the Property will be physically connected to the existing Meadow
Pointe community. Although the development constructed pursuant to the Phasing
Schedule need not be contiguous, all development shall be served by the
arterial, collector and other roads constructed in accordance with this
Agreement and as shown on the Master Plan, and all utility lines and other
infrastructure shall be sized to serve the entire development as shown on the
Master Plan. With the Seller's prior consent, which consent shall not be
unreasonably withheld or delayed, the Buyer shall have the right, from time to
time, to modify the Phasing Schedule, provided such modification does not
materially impair or reduce the value of the balance of the Property.
6. Community Development District Financing.
----------------------------------------
a. Formation and Control of CDDs. To facilitate the financing and
development of the Property in accordance with this Agreement, the Buyer shall,
at its expense, petition Pasco County to establish on an appropriate time table
5
<PAGE>
two or more community development districts pursuant to Chapter 190, Florida
Statutes. The Seller agrees to execute and/or consent to the filing of the
necessary petitions with Pasco County, and to cooperate fully with the Buyer's
effort to establish the new districts. As used herein, the term "CDDs" refers,
individually and collectively, to the new districts to be formed
to develop the Property. During the term of this Agreement, the Seller agrees
that it shall cast its votes at landowner elections for the newly-formed CDDs as
reasonably directed by the Buyer to ensure that three persons designated by the
Buyer are elected to the Board of Supervisors of the CDDs. The Seller, at its
option, may designate and elect two members of the Board of Supervisors of the
newly-formed CDDs, provided, however, that when the registered voters within any
such newly-formed CDD are entitled to representation on the Board of
Supervisors, the Seller shall relinquish its seats on the Board in order to
allow the Buyer to remain in control of the district as long as possible. Except
as to matters contemplated in this Agreement and official actions taken by
representatives of the Seller serving on the Board of Supervisors, the Seller
shall have no other responsibility or obligations with respect to the CDDs.
b. Bonded Indebtedness; Special Assessments. The CDDs will, from time
to time, issue special assessment revenue bonds to finance the acquisition or
construction of community development infrastructure improvements that will
benefit the Property. The Buyer shall be entitled to receive management fees
from the CDDs for supervising the construction of infrastructure improvements,
provided such fees are based on commercially reasonable hourly charges for the
time actually spent on such construction supervision as set forth in the
management agreement, the form of which is attached hereto as Exhibit "F". In no
event shall construction supervision fees exceed 5% of the bond proceeds
deposited in the construction account. The Seller acknowledges and agrees that
the lien of such special assessments will be coequal in dignity with the lien of
ad valorem taxes.
6
<PAGE>
The Seller further acknowledges and agrees that the CDDs will be issuing
long-term or "Series A" bonds which will constitute a lien on the Property for a
period or periods of 30 years or less, as well as short-term or "Series B" bonds
which will be paid in full upon the conveyance of building lots at the several
closings hereunder, or, alternatively before the improved building lots are sold
to consumers. As used herein, "Bonded Indebtedness" refers to both the Series A
and Series B bonds. All Bonded Indebtedness incurred by the CDDs shall be
subject to prior review and approval by the Seller, which approval shall not be
withheld or delayed, as long as: (a) the Bonded Indebtedness to be incurred is
for the acquisition or construction of infrastructure improvements permitted
under Chapter 190, Florida Statutes and associated financing costs; (b) the
infrastructure improvements to be acquired or constructed will provide special
benefit to the Property or the portion of the Property then being developed; and
(c) the amount of Bonded Indebtedness is commercially reasonable based on the
amount of debt incurred and assessments levied upon building lots of comparable
size by other community development districts in Hillsborough and Pasco Counties
as evidenced by a certificate from the Financial Advisor (as defined below) to
the CDDs. Without the Seller's prior written consent, the Buyer agrees that the
CDDs will not incur long term or Series A debt in an aggregate principal amount
in excess of $25.0 million. Before the CDDs incur any Bonded Indebtedness, the
Buyer shall provide written notice thereof to the Seller, together with
reasonable supporting documentation concerning the proposed bond issue and the
associated levy of special assessments. The Seller shall then have a period of
10 days following such notification to raise any objections thereto. If the
Seller does not provide written notice of an objection within such 10 day
period, then the proposed bond issue and associated levy of special assessments
shall be deemed to be approved by the Seller. At the closings on the bond issues
by the CDDs, the Seller
7
<PAGE>
shall consent to the imposition of the special assessments and execute such
other instruments as are reasonably necessary to effectuate the bond closings,
provided, however, that the Bonded Indebtedness shall be secured solely by the
special assessments and shall be non-recourse as to the Seller. Except as to the
Bonded Indebtedness, the Buyer shall not cause any liens or encumbrances to
attach to any portion of the Property that is owned by the Seller without the
Seller's prior written consent.
c. Buyer's Guarantee. The Buyer (or either partner of Buyer) agrees
that it will pay or cause to be paid ad valorem taxes and all special
assessments of the CDDs (collectively, the "Liens") on the Property until such
time as building lots are sold to the Buyer or to builders or other third
parties. To ensure that the Liens are paid in a timely manner, the Buyer shall
guarantee payment of the Liens on the lands owned by the Seller during the term
of this Agreement on an ongoing basis for successive one year periods. The
amount of the Buyer's guarantee shall be based upon a certificate (the
"Guarantee Certificate") prepared each year, at no expense to the Seller, by
Rizzetta & Company, Incorporated, the firm that is expected to serve as
financial advisor to the CDDs, or by another qualified firm, reasonably
acceptable to the Seller, that is hired by the CDDs to provide similar financial
advisory services (the "Financial Advisor"). With respect to that portion of the
Property not owned by the Buyer, Buyer's designee, or their respective
successors-in-title as of the date of each such certificate, the Guarantee
Certificate shall set forth: (a) the estimated amount of ad valorem taxes for
the following calendar year based on the "TRIM" notice prepared by the Pasco
County Property Appraiser using the current assessed value and the current
millage rate in effect, and (b) the total amount of special assessments for
Bonded Indebtedness that will be levied and become due and payable during the
8
<PAGE>
following calendar year, regardless of whether such special assessments will be
included in the Seller's ad valorem tax bill or separately invoiced to the
Seller by the CDDs. The Financial Advisor shall prepare the initial
Guarantee Certificate as of July 31, 2000 and an updated Guarantee
Certificate shall be prepared as of July 31 of each ensuing year during the term
of this Agreement.
The Buyer's guarantee shall be secured by a non-contingent, irrevocable
bank letter of credit furnished by the Buyer (or either partner of the Buyer)
for the benefit of the Seller (the "LC"). The LC shall be issued on or before
August 15, 2000 by IBJ Whitehall Bank and Trust Company of New York or another
bank selected by the Buyer and reasonably acceptable to the Seller (the "Issuer
Bank"). The LC shall be delivered to the Seller. The Buyer shall cause the LC to
be renewed annually thereafter during the term of this Agreement in the amount
of the updated guarantee as set forth each year in the Guarantee Certificate. If
not already renewed by Buyer, the Seller shall notify the Buyer in writing of
the requirement to renew the LC at least 30 days prior to the expiration
thereof, but failure of Seller to do so shall not preclude Seller from drawing
under the LC as hereinafter provided. If the Buyer does not then furnish a
renewal LC in the amount of the updated guarantee, then the Seller may present a
sight draft pursuant to the existing LC and otherwise in accordance with this
paragraph and the terms of this Agreement during the 15 day period prior to its
expiration. The LC shall provide for payment to the Seller upon presentation of
a sight draft accompanied by an affidavit signed by the Seller stating that: (a)
Liens upon lands owned by Seller are now due and owing or Buyer (or either
partner of Buyer) has not renewed the LC as required by this Agreement, (b)
Seller has made written demand on Buyer to pay such Liens if such Liens are due
and payable, and (c) the Seller has received no notice from the Buyer that
Seller is in "material default" hereunder, of if the Buyer has made such a claim
that the matter has been resolved by
9
<PAGE>
arbitration or litigation as provided elsewhere in this Agreement with a finding
that the Seller is not in "material default" hereunder. As used in this section,
the Seller is in "material default" if the Seller has breached this Agreement in
a manner that prevents or seriously impairs the Buyer's ability to develop the
Property and purchase building lots in accordance with this Agreement. If the
Buyer asserts that the Seller is in material default of its obligations
hereunder, it shall: (a) so notify the Seller in writing, and (b) simultaneously
extend the expiration date of the LC for a period of one year from the date of
such notice. The Buyer's claims against the Seller and the Seller's entitlement
to draw upon the LC shall then be determined by arbitration or legal proceedings
as provided elsewhere in this Agreement. Failure of Buyer to so extend the
expiration date of the LC shall entitle Seller to draw under the LC upon
presentation of a sight draft accompanied by an affidavit signed by Seller
stating that Buyer has failed to extend the expiration date of the LC after
serving notice on Seller asserting that Seller is in material default under this
Agreement.
7. Easements and Conveyances. During the term of this
Agreement, the Seller shall, without cost to Buyer, upon Buyer's request, grant
temporary or permanent easements or convey fee title to Pasco County, the CDDs
or other governmental agencies, utility companies, or, with the Seller's prior
written approval, which approval shall not be unreasonably withheld or delayed
any other party designated by Buyer, over or under any portions of the Property
for the purpose of: (a) installing roads, sewer, water, other utilities, or
drainage facilities of any kind, including, but not limited to, pipes, detention
or retention ponds, ditches, and swales, as may be needed to facilitate the
development of any portion of the Property and (b) preserving wetlands and other
conservation areas that cannot be developed as building lots. Any compensation
for easements and conveyances made pursuant to this section shall be paid to the
10
<PAGE>
Seller. The Seller acknowledges, however, that no compensation is presently
paid (nor is any compensation anticipated to be paid in the future) for the
granting of such easements and conveyances. The form of the easements or
instruments of conveyance shall be as reasonably determined by the appropriate
governmental or quasi-governmental agency or utility, or, if they do not
determine the form, by the Buyer. The location of the easements and fee
conveyances shall be consistent with the Master Plan for the Property. Buyer
agrees that in the event that it fails to purchase the balance of the Property,
upon request of Seller, Buyer shall likewise grant or, to the extent the Buyer
is in actual or constructive control thereof, shall cause other entities to
grant such easements and other conveyances pursuant to by this Section that are
necessary for the orderly development of the balance of the Property to Seller,
at no cost to Seller, consistent with the Master Plan as it may be reasonably
modified by Seller. This provision shall survive the termination of this
Agreement.
8. Technology Rights. During the term of this Agreement, Buyer
shall have the right to grant leases, easements and other use rights over,
across, under and through the Property to third parties for the purpose of the
installation of technological facilities. These facilities may include, without
limitation, towers for the installation of microwave transmission antennas,
cellular telephone and PCS antennas; fiber optic cable; cable television, if
permitted by Pasco County; and any other technological transmission line or
facility designated by Buyer. Upon the request of Buyer, Seller shall execute
any such lease, easement, use right or other document as may be reasonably
requested by Buyer. All revenue derived from such activities shall be shared
equally by the Buyer and Seller. In the event that this Agreement terminates,
Buyer's rights pursuant to this paragraph shall terminate as to any portion of
the Property which has not been conveyed by Seller to Buyer or Buyer's designee
pursuant to this Agreement.
11
<PAGE>
9. Construction of Infrastructure. The Buyer and the CDDs
(including their respective agents and contractors) shall have the right to
enter onto the Property to construct roads, together with drainage facilities,
underground utility lines, entry walls, and all other subdivision infrastructure
which are permitted to be constructed by the CDDs pursuant to Florida law
(collectively, the "Infrastructure") provided: (a) the Infrastructure is
constructed in accordance with Pasco County specifications and complies with all
rules and regulations of governmental agencies having jurisdiction over it, (b)
the Infrastructure is consistent with and is appropriately sized as necessary to
accommodate the development as set forth in the Master Plan, (c) the Buyer or
the CDDs pay the cost of constructing the Infrastructure, and (d) any
Infrastructure consisting of roads and utilities lines are connected to existing
public rights of ways and utility lines dedicated to Pasco County and/or
existing rights of ways owned by the Meadow Pointe II Community Development
District (the "MPII CDD"), in which latter case the Buyer shall cause the MPII
CDD to grant perpetual easements for ingress and egress over such roadways for
the benefit of that portion of the Property served by the Infrastructure. With
respect to all contracts in excess of $200,000 for the construction of
Infrastructure, the Buyer and/or the CDDs shall cause the contractor to obtain a
payment and performance bond in statutory form or otherwise reasonably
acceptable to the Seller.
10. Platting; Deed Restrictions. During the term of this
Agreement, the Seller shall, without cost to Buyer, upon Buyer's request, timely
join in the execution of subdivision plats required in connection with the
development of the Property. All plats for the Property shall be consistent with
the Master Plan and the Phasing Schedule as modified from time to time. The cost
of preparing and filing subdivision plats shall be borne by the Buyer or the
CDDs. During the term of this Agreement, the Seller shall also, without cost to
Buyer, upon Buyer's request, timely execute,
12
<PAGE>
or join in the execution of, covenants, restrictions and conditions regulating
the residential use of the Property then being platted.
11. Non-Residential Property. Although included in the Wesley
Chapel Lakes DRI, the non-residential property along State Road 54, the proposed
County Line Road extension, and the proposed golf course site lying east of the
Property as shown on Exhibit "C" (collectively the "Excluded Property") is being
retained by the Seller and is not subject to this Agreement, except that the
development and proposed uses thereof shall be governed by the Master Plan and
shall be reasonably acceptable to the Buyer. The Buyer acknowledges that it is
acceptable for the Excluded Property to be used as a golf course or other
recreational facility. The Excluded Property shall not be included in the CDDs.
In no event (except upon the termination of this Agreement) shall the Seller
develop the Excluded Property as a competing residential subdivision.
The retail and other non-residential uses on proposed County Road 56
(the "CR 56 Property") shall be marketed and sold by the Seller in a manner
consistent with the Master Plan. The Buyer shall provide access and utility
service to the CR 56 Property by constructing collector roads and related
infrastructure during the ordinary course of its development of the residential
portions of the Property pursuant to the Master Plan. The net sales proceeds
received from the sale of the CR 56 Property shall be split between the parties
as follows: (a) first, the Seller shall receive $6,000 per gross acre for such
property (which shall be prorated as necessary for fractional acres), (b)
second, the Seller shall be reimbursed from the net sales proceeds for any costs
reasonably incurred by the Seller to improve such CR 56 Property for sale, and
(c) third, the remaining net sales proceeds then shall be divided with the
Seller receiving 50% and the Buyer receiving 50%, provided this Agreement is in
full force and effect and the Buyer is not in material default hereunder. As
used
13
<PAGE>
herein, "net sales proceeds" means the mutually agreed upon gross sales price of
the CR 56 Property, or portion thereof, as actually received at closing less
those usual and customary closing expenses ordinarily borne by the sellers of
real property in Pasco County, Florida.
12. Property Taxes. Beginning January 1, 2000 and continuing
thereafter during the term of this Agreement, the Buyer shall be responsible for
paying all ad valorem taxes assessed against the Property, except the Excluded
Property. In addition, if Buyer excludes the Taxing District Parcel (as defined
below) and/or any environmentally contaminated land from this Agreement as
provided elsewhere herein, the Buyer shall not be required to pay ad valorem
taxes on such excluded lands and the Seller shall promptly reimburse Buyer for
all taxes paid prior to Buyer's election to exclude such lands from this
Agreement. Seller and Buyer shall endeavor to maintain an agricultural or "green
belt" exemption on all portions of the Property not in active development.
Either party may, at its expense, challenge the assessment or the denial of an
exemption with respect to any portion of the Property by initiating
administrative or judicial proceedings. The parties agree to cooperate with any
such challenge and to join in the execution of all petitions and other
instruments needed in connection with a challenge. The Seller represents that
the Property is presently leased for cattle grazing pursuant to the Lease
Agreements attached hereto as composite Exhibit "G" (collectively the "Leases").
The Buyer shall be entitled to all rental income received pursuant to the Leases
(or any subsequent leases) from cattle grazing and other agricultural uses of
the Property during the period in which Buyer is responsible for paying and pays
the ad valorem taxes. Upon expiration or termination of the Leases, the Seller
shall execute such other agricultural leases of the Property as Buyer may from
time to time negotiate, provided, however, that if the Buyer fails to timely
negotiate agricultural leases thereby placing the "greenbelt"
14
<PAGE>
or agricultural exemption in jeopardy, then the Seller shall have the right to
enter into agricultural leases. Without the Seller's prior written consent, any
new agricultural lease negotiated by the Buyer shall be on a year-to-year basis
or, alternatively, shall be terminable by the Seller in the event of a
termination of this Agreement. Notwithstanding the foregoing, the Buyer's
obligation to pay ad valorem taxes on the Property owned by the Seller shall
terminate if the Seller takes any action which causes the Property owned by
Seller to become ineligible for a "greenbelt" or agricultural exemption. The
Buyer shall not impair access to Seller and agricultural tenants via existing
unimproved dirt roads or trails to all lands not in active development which are
available for agricultural use or future development. The Seller may, at its
expense, construct additional unimproved dirt roads or trails to lands not in
active development, provided the foregoing does not impair the Buyer's
development of the Property pursuant to the Master Plan and the Phasing
Schedule, as amended from time to time.
13. Contract Benchmarks and Take Down Schedule.
------------------------------------------
a. Engineering and Construction. The Buyer agrees to use its best
efforts to cause: (i) Buyer's civil engineer to begin work on construction plans
for the first units or plats in the Meadow Pointe Expansion Parcel by January 1,
2000, and (ii) the actual construction of infrastructure for the first units or
plats in the Meadow Point Expansion Parcel to begin by July 1, 2000. Although
the Buyer shall proceed in good faith and use reasonable diligence to meet these
contractual milestones, the Seller acknowledges that the Buyer may be delayed
because of events of force majeure, adverse weather, or unexpected delays in
obtaining the necessary permits from governmental agencies. If the actual
construction of infrastructure for the first plats or units in the Meadow Pointe
Expansion Parcel has not begun by August 1, 2001 and the Seller contends that
15
<PAGE>
the delay has been caused by Buyer's failure to exercise reasonable diligence in
obtaining the necessary permits, then the dispute shall be submitted to
arbitration for resolution as provided elsewhere in this Agreement. If the
arbitrator concludes that the Buyer has not exercised reasonable diligence under
the circumstances, then the Seller may, at its option, terminate this Agreement.
b. Building Lot Takedowns. To keep this Agreement in effect and
preserve the Buyer's right to purchase additional building lots from Seller,
beginning in 2001 and in each calendar year thereafter during the term of this
Agreement, the Buyer shall purchase building lots which shall generate gross
sales proceeds in annual aggregate amounts not less than as set forth in the
Minimum Sales Schedule attached hereto as Exhibit "H". The Buyer may, at the
Buyer's option, purchase more building lots than are required to satisfy the
Minimum Sales Schedule, in which case the amount of such "excess" and early
purchases, escalated as if the purchases had been made in accordance with the
Minimum Sales Schedule, shall be credited against the Buyer's purchase
obligations for the ensuing calendar quarters or years. Subject to the
provisions of this section, the Buyer shall purchase at least 25% of the annual
amount required pursuant to the Minimum Sales Schedule during each calendar
quarter. The Buyer may, at its option, direct Seller to convey title to the
building lots being purchased directly to builders.
14. Title to Real Property; Title Insurance/Survey.
----------------------------------------------
a. Representations; Acceptable Encumbrances. The Seller shall convey
and transfer to the Buyer or the Buyer's designee at each of the several
closings hereunder, good and marketable fee simple title to the Property being
purchased, free and clear of all liens, encumbrances, objections, defects,
exceptions, irregularities, encroachments and other survey defects, and
possessory interests
16
<PAGE>
in favor of third parties, except those that can be and are discharged by the
Seller at or before closing, and the following, herein collectively called the
"Acceptable Encumbrances":
(1) Real property taxes and special assessments for the year
in which the sale and purchase is closed.
(2) Applicable zoning and other regulatory laws and
ordinances.
(3) The title exceptions, if any, set forth in Exhibit"I"
attached hereto.
b. Initial Title Evidence. Within 60 days from the date of this
Agreement, the Buyer shall obtain a title insurance commitment (the "Title
Binder"). The Title Binder shall be issued by Chicago Title Insurance Company or
another title insurer reasonably acceptable to the Seller (the "Title Company"),
who shall agree to issue to the Buyer or Buyer's designee, upon recording of a
deed or deeds from the Seller as provided below, an ALTA (Form B) owner's policy
of title insurance, insuring the fee simple title of the Buyer to the Property,
subject only to the Acceptable Encumbrances. The cost of the Title Binder and
the title insurance policies issued pursuant thereto shall be borne by the
Buyer. The Seller agrees to promptly furnish the Buyer with any existing title
insurance policies and surveys of the Property. Within 120 days from the date of
this Agreement, the Buyer shall, at its expense, obtain a current survey plat
prepared by a registered Florida Land Surveyor (the "Survey"). Within 15 days
after receipt of the Title Binder and the Survey, the Buyer shall furnish copies
thereof to the Seller and shall notify the Seller of any objections to title. If
the Buyer fails to notify the Seller in writing that title to the Property is
not acceptable within the foregoing 15-day period, the title shall be deemed to
have been approved by the Buyer and the Buyer agrees that the Seller may make
exception for any matters disclosed by the Title Binder and Survey in the deeds
to be delivered to the Buyer at the several closings hereunder.
17
<PAGE>
c. Title Curative Matters. If the Seller's or Owners' (as hereinafter
defined) title to the Property is not shown by the Title Binder and the Survey
to be good and marketable as specified above, the Seller (provided that written
notice is given within the foregoing 15-day period) shall take prompt and
effective measures to make the title good and marketable without exception other
than the Acceptable Encumbrances, and shall have a period of 120 days after
receipt of notice thereof to do so. If the Seller fails after diligent effort to
make the title good and marketable or to remove or discharge any liens,
encumbrances, defects, or objections, other than the Acceptable Encumbrances,
within such period, the Buyer may, at his option: (i) terminate this Agreement;
(ii) accept a conveyance of title to the Property in its existing condition; or
(iii) elect to undertake title curative measures itself, in which event the
Seller shall pay for all costs reasonably incurred by Buyer up to a maximum of
$50,000.
d. Pasco Heights Road and Bridge District. A portion of the Property,
containing 200 acres more or less (the "Taxing District Parcel"), lies within a
special taxing district known as the Pasco Heights Road and Bridge District (the
"District"). The Seller acknowledges that the foregoing constitutes an
unacceptable title defect and agrees, at Seller's expense, to forthwith
undertake all necessary title corrective measures, including (without
limitation) paying in full all special assessments levied by the District on the
Taxing District Parcel and causing the boundaries of the District to be
contracted so that no portion of the Taxing District Parcel lies within the
boundaries or jurisdiction of the District, provided that the Seller shall not
be obligated to spend more than $100,000 with respect to this title defect. If
the foregoing cannot be accomplished within one year from the date of this
Agreement, then the Buyer shall have the options set forth in the preceding
subparagraph and the additional option of excluding the Taxing District Parcel
18
<PAGE>
from this Agreement, in which case: (a) the Buyer's obligations hereunder shall
be decreased by the number of building lots lost as shown on the Master Plan,
and (b) the Seller shall, at its expense, cause such excluded land to be
developed in accordance with the Master Plan and the Phasing Schedule attached
hereto as Exhibit "E", and the Seller and its successors and assigns shall be
prohibited from using the excluded land for any purpose other than residential
development.
e. Federal Land Bank Mortgage. The Property is presently encumbered
with a first mortgage in favor of the Federal Land Bank which secures a note
with an outstanding principal balance of approximately $500,000 (the
"Mortgage"). Within 120 days of the date of this Agreement, the Seller shall
either: (a) satisfy and discharge the Mortgage of record, or (b) provide
assurances satisfactory to the Buyer, in its sole discretion, that the lien of
the Mortgage will not encumber any land to be developed by the Buyer which lies
to the south of proposed County Road 56. If the mortgage is so modified, the
Seller shall cause the Mortgage to be timely satisfied and discharged of record
when the Buyer provides written notice to the Seller that the Buyer will be
commencing development of that portion of the Property lying north of proposed
County Road 56 pursuant to the Phasing Schedule.
f. Title Updates. At each of the several closings hereunder, the Title
Binder shall be updated and endorsed to a current date and title insurance
policies shall be issued to the Buyer or the Buyer's designee in the amount of
the purchase price for that portion of the Property being purchased at such
closing.
g. Additional Title Covenants. During the term of this Agreement, the
Seller agrees that it will not cause any liens or encumbrances to attach to the
Property or file of record any instrument that would or might affect title to
the Property except as requested by the Buyer in connection with
19
<PAGE>
the development of the Property pursuant to the Agreement. Any breach of this
covenant shall constitute a default by the Seller hereunder. Without the
Seller's prior consent, the Buyer likewise agrees that it will not cause any
liens or encumbrances to attach to the Property or file of record any
instruments that would or might affect title to the Property except as
contemplated in this Agreement.
15. Inspections and Possession. During the term of this
Agreement, the Seller agrees that the Buyer and its representatives and agents
may enter upon the Property for the purposes of performing tests as to the
suitability of the surface and subsurface of the Property, adequacy of the
drainage, and other tests the Buyer deems necessary for a thorough examination
of the Property. The Buyer and its representatives and agents (including the
CDDs) shall also have the right to enter upon the Property to construct and
maintain the Infrastructure, and to market the Property to home builders,
brokers, and other third parties. Within ten business days following the date of
this Agreement, the Seller shall make available or deliver copies of all
reports, tests, surveys, and other documents in the possession of Seller or
Seller's agents or consultants which pertain to the Property. During the 90 day
period following the date of this Agreement (the "Preliminary Inspection
Period"), the Buyer anticipates making preliminary tests and investigations,
including (without limitation) obtaining a Phase 1 Environmental Assessment
Report, to determine the feasibility of developing the Property as contemplated
in this Agreement. If the Buyer concludes, in Buyer's sole and absolute
discretion, that the Property is unsuitable for Buyer's proposed development,
the Buyer shall so notify the Seller before the end of the Preliminary
Inspection Period whereupon this Agreement shall terminate and the parties shall
have no further rights or obligations hereunder. Following the Preliminary
Inspection Period, the Buyer anticipates making significant additional
20
<PAGE>
expenditures in connection with its development of the Property pursuant to
this Agreement. Accordingly, the parties anticipate that the Buyer will conduct
as much of its due diligence inspections as possible during the Preliminary
Inspection Period. However, nothing herein should be construed to in any way
limit or impair: (a) the Buyer's continuing right to conduct inspections and
investigations of the Property throughout the term of this Agreement; or (b) the
Buyer's continuing right to terminate or cause the termination of this Agreement
by, among other things, failing to purchase the requisite number of building
lots required to satisfy the Minimum Sales Schedule attached hereto as
Exhibit "H". The Buyer agrees to indemnify and hold harmless the Seller from any
and all claims which may result from the exercise by the Buyer of its
inspection rights under this paragraph. All engineering studies, plans,
permits, or other information obtained by the Buyer shall become the property of
Seller at no cost to Seller upon the termination of this Agreement, provided
the Seller is not in default hereunder.
16. Expenses. The Seller shall pay for all corrective
title work which is required.
The Buyer shall pay for documentary stamps on the deeds, title insurance and
recording the deeds.
17. Conveyances. Title to the Property being conveyed at
the several closings hereunder shall be conveyed to Buyer or Buyer's designee by
Special Warranty Deed free and clear of all liens or encumbrances except for the
Acceptable Encumbrances.
18. Condemnation. If, while this Agreement is in full force
and effect, any action or proceeding is filed or threatened, under which any
portion of the Property owned by the Seller may be taken pursuant to any law,
ordinance, or regulation, or by condemnation or the right of eminent domain
(collectively, a "Taking"), then the following provisions shall apply. In the
event that Seller receives a written notice to the effect that a Taking is
pending or threatened, Seller shall
21
<PAGE>
notify Buyer immediately following receipt of such notice. The award or awards
for such Taking in connection with any proceedings or settlement negotiations
for the determination of the amount thereof ("Condemnation Proceeds") shall be
paid to the Seller and the Buyer as follows: (a) first, the Seller shall be
entitled to receive such portion of the Condemnation Proceeds, with interest
thereon if and to the extent payable by the condemning authority, equal to the
fair market value of the Property so taken, plus severance damages, if any, to
the portion of the Property not so taken, and (b) second, the Buyer shall be
entitled to receive such portion of the Condemnation Proceeds, with interest
thereon if and to the extent payable by the condemning authority, equal to the
fair market value of its rights pursuant to this Agreement in the Property so
taken, plus severance damages, if any, to the portion of the Property not so
taken. In addition, the Buyer's obligations hereunder shall be decreased by the
amount of building lots lost by any Taking as shown on the Master Plan. In the
event of any disagreement between Seller and the Buyer as to that portion of the
Condemnation Proceeds to which each is entitled, the determination of respective
values is set forth above shall be made pursuant to arbitration or litigation as
provided elsewhere herein.
19. Seller's Representations and Warranties. Seller
hereby represents and warrants to Buyer all of the following, which
representations and warranties are true and correct as of the date of this
Agreement and shall survive the several closings hereunder:
a. Ownership of the Property. The Seller has entered into a valid and
enforceable agreements to purchase the Property from Wesley Chapel Lakes, Ltd. a
Florida limited partnership and Pasco Heights Development Corporation, a
Florida corporation (collectively, the "Owners"), copies of which are attached
hereto as composite Exhibit "J" (the "Underlying Purchase Agreement"). The
Seller and each of the Owners have the requisite power and authority to perform
22
<PAGE>
their respective obligations under the Underlying Purchase Agreement. If Seller
is obligated to perform an obligation under this Agreement with respect to a
portion of the Property not owned by Seller, the Seller shall be deemed to have
performed its obligation if the obligation is performed by Owner. The Seller
agrees that it shall timely perform its obligations under the Underlying
Purchase Agreement so that Seller is able to deliver marketable title to
building lots and fully perform all of its other obligations hereunder.
b. Litigation. The Property is not the subject of any present
litigation and the Seller is unaware of any pending or threatened litigation
relating to the Property.
c. Condemnation Proceedings. Seller has no knowledge of any
threatened or pending eminent domain or condemnation action proceeding affecting
the Property, except the Seller is aware that a natural gas transmission line
may be built across the Property by a public or private utility company.
d. Taxes. Seller has paid or will cause to be paid all ad valorem
taxes and assessments which are due in connection with the Property.
e. No Violations. Seller has received no notice of any violation of
any applicable laws, ordinances, regulations, statutes, rules, or restrictions
pertaining to and affecting the Property, except that the Seller has not met
certain conditions imposed by the Wesley Chapel Lakes DRI.
f. Not a Foreign Person. Seller is not a "foreign person" under
section 1445 of the Internal Revenue Code of 1986, as amended, and agrees to
satisfy the requirements of said statute by executing an affidavit at each of
the several closings hereunder.
g. No Bankruptcy. Seller is solvent and is not the subject of any
pending or threatened bankruptcy, insolvency, or receivership proceedings.
23
<PAGE>
h. Leases. The Leases attached hereto as composite Exhibit "G" are in
full force and effect and the tenants are not in default thereunder.
i. Environmental Matters. To the best of Seller's knowledge and belief,
after reasonable investigation, the Property does not contain, and there is not
located on or about the Property nor has there been any discharge, uncontrolled
loss, seepage or filtration of oil, petroleum or chemical liquids or solids,
liquid or gaseous products, asbestos or asbestos-related products or any
hazardous waste or hazardous substance, as hereinafter defined, on or about the
Property. To the best of Seller's knowledge and belief, after reasonable
investigation, the Property has not been used as a burial ground or for
industrial or manufacturing purposes; landfill, dumping or other waste disposal
activities or operations; storage of raw materials, products or waste disposal
activities or operations; storage of raw materials, products or waste disposal
activities or operations; storage of raw materials, products or waste of a toxic
or hazardous nature; for underground storage tanks or pipelines used for
petroleum, petroleum products, or chemicals; or for any other use which might
give rise to the existence on the Property of toxic materials, hazardous
substances or hazardous waste as those terms are used in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. ss.
9601 et seq., as amended, Superfund Amendments and Reauthorizations Act of 1986,
Resource Conservation and Recovery Act of 1976 or in any other federal, state or
local law (and all regulations promulgated under any of the same) as such laws
are amended from time to time, nor has the Property been treated with
pesticides, herbicides or other toxic chemicals, except those customarily used
in cattle and agricultural operations in central Florida. In addition, the
Seller has no actual knowledge of any contamination from such cattle and
agricultural operations. As used herein "reasonable investigation" by the Seller
means the Seller has reviewed all files and records
24
<PAGE>
of the Seller and the Owner and has conducted a physical inspection of the
Property. Seller has no knowledge of the presence of radon gas. Notwithstanding
anything to the contrary herein contained and in addition to any other remedies
herein provided, this representation and warranty shall survive each of the
several closings hereunder. Seller shall and does hereby indemnify Buyer from
and against all claims, actions, causes of action, liability and expense
(including reasonable attorneys' fees and charges or claims by any governmental
agency) pertaining to environmental contamination if the foregoing
representations and warranties by the Seller as to environmental matters are
untrue.
20. Environmental Remediation. Seller agrees that it shall be
solely responsible for the costs of environmental "clean up" or remediation of
contamination (as defined in the preceding sub-paragraph) with respect to the
Property. Unless the Seller's representations and warranties in the preceding
sub-paragraph are untrue, the parties agree, however, that the Seller shall not
be obligated to spend more than $100,000 in connection with the "clean up" or
remediation of the Property. If the cost thereof exceeds $100,000, then the
Buyer may, at its option, either: (a) terminate this Agreement, or (b) exclude
the contaminated portion(s) of the Property (including reasonable buffer areas
and access corridors to facilitate future remediation) from this Agreement, in
which event the Buyer's obligations hereunder shall be decreased by the amount
of the excluded building lots as shown on the Master Plan.
21. Site Balancing. The parties acknowledge that the Initial
Master Plan for the development of the Property appears to be "balanced". As
used herein, "balanced" means that the fill dirt expected to be obtained from
the lakes and ponds as generally depicted on the Initial Master Plan appears to
be sufficient to provide fill dirt for building lots and road rights-of-way
without any need to import fill dirt from an off-site source. The Buyer may need
to reconfigure the lakes and
25
<PAGE>
pond boundaries as shown on the Initial Master Plan during the course of
development. Without the Seller's prior consent, however, the Buyer agrees that
it shall not expand the overall lake and pond areas as generally depicted on
Initial Master Plan in order to generate additional fill dirt if such expansion
would materially decrease the overall number of building lots that can be
constructed on the Property. The Seller acknowledges that site balancing and
other factors may result in fluctuations in the number of building lots actually
constructed in a particular unit, phase or plat of the development. As used
herein, a "material decrease" means a net decrease of more than 30 building lots
as shown on the overall Master Plan for the development of the Property.
22. Potable Water Wells. The Property lies within a proposed
water supply corridor identified in the West Coast Regional Water Supply
Authority Master Plan through the year 2020. If a governmental agency with
jurisdiction over water seeks to acquire land for a regional well site, the
parties will endeavor to ensure that the location of the well site or sites is
consistent with the Master Plan, and will not interfere with Buyer's proposed
development of the Property. The parties will use their best efforts to ensure
that each such well site does not exceed two acres. Any compensation paid with
respect to the acquisition of a well site shall be paid to the Seller. The Buyer
agrees that it shall not seek to sell a well site on the Property to any person,
including a governmental agency having jurisdiction with respect to potable
water. If not already prohibited by applicable zoning regulations, upon request
by Seller, the parties agree that commercially reasonable deed restrictions
shall be placed on building lots to prohibit sales to third parties of potable
well sites on such building lots, provided, however, that nothing herein shall
be construed to prevent the Buyer, the CDDs or the owners of building lots from
installing wells for lawn and landscape irrigation, lake augmentation, and other
26
<PAGE>
such uses typical in residential developments. The Seller's exclusive right to
sell land to a governmental agency for use as a well site does not constitute a
legal interest in any portion of the Property (except the land comprising the
actual well site). In no event shall the Seller's rights pursuant to this
paragraph be referenced in any instrument recorded in the public records of
Pasco County. Upon request by the Buyer, Seller shall execute a disclaimer or
release, in recordable form, relinquishing any claim or right relative to water
rights with respect to any portion of the Property that has been sold to the
Buyer or the Buyer's designee.
23. Termination by Seller. Upon the occurrence of an Event of
Termination, as defined below, this Agreement shall immediately terminate and
shall thereafter be null and void and of no further force or effect, except for:
(a) the provisions of this Section which shall survive termination, and (b) the
post-termination obligations of Buyer set forth in Section 7 above. Except as
specifically provided in this section, Seller hereby expressly waives all rights
to seek damages from Buyer if an Event of Termination occurs. Seller
acknowledges that the consideration received from the Buyer in return for
Seller's waiver of its rights to seek damages from the Buyer includes, but is
not limited to, the Buyer's construction of improvements on and to the Property,
Buyer's efforts to modify the DRI, and Buyer's efforts in establishing the CDDs.
An "Event of Termination" is defined as follows: (a) Buyer's failure to
maintain an irrevocable letter of credit or other security acceptable to Seller
securing Buyer's guarantee of the Liens as required pursuant to this Agreement;
(b) Buyer's failure, after 30 days' written demand from the Seller to do so, to
pay all ad valorem taxes and special assessments levied or assessed against the
Property; (c) Buyer's failure to purchase the requisite number of building lots
to satisfy the Minimum Sales Schedule during the year 2001 and any subsequent
year thereafter or during any calendar quarter of the year 2001 and any
subsequent year, subject to the Buyer's rights pursuant to
27
<PAGE>
Section 13(b) above to make early purchases of building lots; or (d) Buyer's
material breach of any of Buyer's covenants in this Agreement.
Upon the termination of the Agreement by the Seller pursuant to this
section, the Buyer shall promptly: (a) assign (without recourse) to Seller all
of Buyer's right, title and interest in and to all engineering studies,
construction plans, permits, and other entitlements and other information
pertaining to the Property and the development thereof, and shall furnish copies
of all documents so assigned that are in the Buyer's possession (b) cause the
representatives of the Buyer serving on the Boards of Supervisors of the CDDs to
tender their resignations so that replacement supervisors may be elected, (c)
execute and deliver a quitclaim or release, in recordable form and otherwise
reasonably acceptable to the Seller, disclaiming and releasing the Buyer's
rights with respect to the Property and the Excluded Property pursuant to this
Agreement, and (d) cooperate as reasonably necessary with the Seller or the
Seller's designee to facilitate the orderly transition of development
responsibilities from the Buyer to the Seller or the Seller's designee. If a
termination of this Agreement occurs within five years of the date hereof, the
Buyer shall not be entitled to any revenues derived from the activities
described in Section 8 hereof following such termination. Following the
termination of this Agreement, the Seller may use the name or names selected by
the Buyer (as provided below) to market the development on the Property. If the
Buyer fails to perform the foregoing obligations following an Event of
Termination with reasonable promptness under the circumstances, then the Seller
may seek specific performance of the Buyer's obligations hereunder and the Buyer
shall be liable for any delay damages incurred by Seller, provided Seller makes
written demand to the Buyer for performance of the Buyer's obligations hereunder
within six months from the occurrence of the Event of Termination. After such
six month period, the Seller may seek
28
<PAGE>
specific performance of the Buyer's obligations hereunder but shall not have any
right to recover delay damages from the Buyer.
24. Default by Seller. In the event the Seller defaults
under any provision of this Agreement, the Buyer has the right to either:
(a) seek specific performance of this Agreement or (b) pursue any and all rights
and remedies available to Buyer under Florida law.
25. Non-Monetary Default; Notice and Opportunity to Cure. With
respect to any non-monetary default, the parties shall each have a grace period,
after notice of the non-monetary default has been given to the defaulting party,
to cure the non-monetary default, provided the defaulting party forthwith upon
notice of default commences and proceeds with due diligence and good faith to
cure the default as expeditiously as possible. In no event shall such curative
period for a non-monetary default extend beyond 60 days after notice of the
non-monetary default has been given to the defaulting party.
26. Affidavit. At the several closings hereunder, the Seller
shall furnish the Buyer with a Seller's affidavit stating either that there have
been no improvements made to the Property by the Seller during the 90 days
immediately preceding the date of closing or, if there have been any such
improvements, that all lienors in connection with said improvements have been
paid in full; that, subject to the rights granted pursuant to this Agreement,
Seller has sole possession of the Property subject only to the possessory rights
of the Buyer, the CDDs, the tenants under the Leases, or others as expressly
contemplated herein; and that there are no unrecorded easements or contracts for
sale relating to the Property created or permitted by Seller.
27. Notices. Any notices required or permitted under
this Agreement shall be deemed delivered when hand delivered or mailed, postage
29
<PAGE>
prepaid by express mail or certified mail return receipt requested, addressed to
the respective parties at the respective addresses set forth below:
SELLER: Clearwater Bay Associates, Inc.
Attention: Lee E. Arnold, Jr., President
121 N. Osceola Ave
Clearwater, FL 33755
WITH A COPY TO:
Johnson, Blakely, Pope, Bokor,
Ruppel & Burns, P.A.
Attention: Timothy A. Johnson, Jr.
911 Chestnut St.
Clearwater, FL 33756
BUYER: Meadow Pointe General Partnership
c/o Devco III, LLC
Attention: Donald A. Buck
15436 North Florida Avenue
Suite 200
Tampa, Florida 33613
WITH COPIES TO:
Akerman, Senterfitt & Eidson, P.A.
Attention: Mark K. Straley
100 S. Ashley Drive, Suite 1500
Tampa, FL 33602
and
Meadow Pointe East, L.L.C.
c/o BF Enterprises, Inc.
Attention: Stuart B. Aronoff or
Brian P. Burns
100 Bush St.
Suite 1250
San Francisco, CA 94104
and
30
<PAGE>
Gunster, Yoakley, Valdes-Fauli
& Stewart, P.A.
Attention: Lewis F. Crippen
777 South Flagler Drive
Suite 500 East
West Palm Beach, FL 33401
28. No Other Agreements. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and between the parties, including (without
limitation) the letter of intent dated May 12, 1999. No agreements, unless
incorporated in this Agreement, shall be binding upon any of the parties.
29. Time of the Essence. Time is of the essence with
regard to this Agreement.
30. Successors and Assigns. The covenants herein
contained shall bind, and the benefits and advantages shall inure to, the
respective successors and assigns of the parties hereto.
31. Interpretation. Whenever the context hereof shall so
require, the singular shall include the plural, the male gender shall include
the female gender and neuter and vice versa. This Agreement and any related
instruments shall not be construed more strictly against one party than
against the other by virtue of the fact that initial drafts were made and
prepared by counsel for one of the parties, it being recognized that this
Agreement and any related instruments are the product of extensive negotiations
between the parties hereto and that both parties hereto have contributed
substantially and materially to the final preparation of this Agreement and
all related instruments.
32. Headings. Caption headings herein are for ease of
reference only and are not part of this Agreement.
31
<PAGE>
33. Survival. This Agreement shall not be merged into
the documents executed at the several closings hereunder, but shall survive the
several closings hereunder and the provisions hereof shall remain in full force
and effect.
34. Attorney's Fees and Costs. In the event of any litigation
or arbitration proceeding arising out of this Agreement, the prevailing party
shall be entitled to recover all costs incurred including reasonable attorney's
fees for services rendered in connection with such litigation or arbitration
proceeding, including appellate proceedings and cost judgment proceedings.
35. Arbitration. Notwithstanding anything to the contrary in
this Agreement, all claims for monetary damages and disputes relating in any way
to the performance, interpretation, validity, or breach of this Agreement shall
be referred to final and binding arbitration, before a single arbitrator, under
the commercial arbitration rules of the American Arbitration Association in
Pasco County, Florida. The arbitrator shall be selected by the parties and if
the parties are unable to reach agreement on selection of the arbitrator within
30 days after the notice of arbitration is served, then the arbitrator will be
selected by the American Arbitration Association. All documents, materials, and
information in the possession of a party to this Agreement and in any way
relevant to the claims or disputes shall be made available to the other parties
for review and copying not later than sixty (60) days after the notice of
arbitration is served. To the extent that a party would be required to make
confidential information available to any other, an agreement or an order shall
be entered in the proceeding protecting the confidentiality of and limiting
access to such information before a party is required to produce such
information. Information produced by a party shall be used exclusively in the
arbitration or litigation that may arise, and shall not otherwise be disclosed.
The arbitrator shall NOT have subject matter jurisdiction to decide any issues
relating to the statute of limitations or to any request for injunctive relief,
32
<PAGE>
and the parties hereby stipulate to stay the arbitration proceeding (without
the need of a bond) until any such issues in dispute are resolved. Judgment
upon the award rendered by the arbitrator shall be final, binding and conclusive
upon the parties and their respective administrators, executors, legal
representatives, heirs, successors and permitted assigns, and may be entered in
any court of competent jurisdiction.
36. Waiver. No waiver hereunder of any condition or
breach shall be deemed to be a continuing waiver of any subsequent breach.
37. Choice of Law; Venue. This Agreement shall be
governed by the laws of Florida. Venue for any judicial action arising
hereunder shall lie in Pasco County.
38. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument; and any party or signatory hereto may execute this Agreement by
signing any such counterpart.
39. Assignment. This Agreement may not be assigned by Buyer
without the Seller's prior written approval, which shall not be unreasonably
withheld or delayed, as long as the development of the Property by the assignee
is managed and supervised either by Donald A. Buck or by another experienced and
competent residential real estate developer reasonably acceptable to the Seller.
40. Real Estate Commissions. The Seller shall pay any and all
commission due to Colliers Arnold and Joanne Kearney Real Estate (collectively,
the "Brokers") in connection with the transactions contemplated by this
Agreement. Except for the Brokers, the parties represent to each other that
there are no real estate brokerage, finder, or other commissions or fees due or
to become due as a result of any actions taken by either party with respect to
the transactions contemplated by this Agreement. Each party hereby agrees to
indemnify, defend, and save the other party harmless from any and all loss,
33
<PAGE>
costs, damages, expenses, or attorneys' fees that either party may suffer or
incur as a result of any acts or omissions to act of the other party regarding
any real estate commission or claim thereto. Lee Arnold is a licensed real
estate broker and has an interest in the Property. Colliers Arnold is the agent
of the Seller. Joanne Kearney Real Estate does not represent either party but
the Seller is responsible for paying any compensation due to such
firm.
41. Radon Gas. Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels of radon
that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
42. Recordation. The Seller and the Buyer shall execute a
memorandum of this Agreement, in the form attached hereto as Exhibit "K", which
shall be recorded in the Public Records of Pasco County, Florida to give
constructive notice to third parties of Buyer's rights hereunder. Prior thereto,
the Seller shall execute and shall cause the Owner to execute a memorandum of
the Underlying Purchase Agreement, in the form attached hereto as Exhibit "L",
which shall also recorded in the Public Records of Pasco County, Florida before
the memorandum of this Agreement.
43. Notices pertaining to the Property. The Seller agrees to
promptly furnish to the Buyer copies of all notices concerning the Property that
the Seller receives, including (without limitation) all notices from
governmental agencies.
44. Term of this Agreement. Unless sooner terminated pursuant
to the terms of this Agreement, this Agreement shall terminate upon the sale of
all building lots shown on the Master Plan and the sale of CR 56 Property or on
December 31, 2017, whichever occurs first.
34
<PAGE>
45. Confidentiality. To the extent practical and feasible
under the circumstances, the parties agree: (a) to keep the terms and conditions
hereof in strict confidence; and (b) to cause their respective advisors and
consultants to similarly maintain strict confidentiality as to the terms and
conditions hereof. Nothing contained herein shall be construed to preclude the
parties and their respective advisors and consultants from making such
disclosures to governmental agencies and others as reasonably required to
perform the parties' respective obligations hereunder or as required under
federal and state securities laws and regulations. In no event shall Seller make
any public news release or statement concerning this Agreement without the
Buyer's prior written consent, which consent shall be given (or withheld) in
Buyer's sole and absolute discretion. If and when the Buyer determines that a
public announcement concerning the transactions contemplated by this Agreement
is appropriate, the parties shall jointly prepare an appropriate news release or
statement.
46. Name of Development. The Buyer shall have the right to select
the name or names to be used to market the development to be constructed on the
Property.
47. Condition Precedent. The Buyer's obligations hereunder are
contingent upon the Owners' execution of the joinder agreement which is appended
hereto.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the dates set forth below. The last date of execution by Buyer or Seller
shall be deemed to be the date of this Agreement for all purposes.
Signed, sealed and delivered in
the presence of: "SELLER"
CLEARWATER BAY ASSOCIATES, INC.
/s/ Laura St. Clair Klug
- --------------------------- By: /s/ Lee E. Arnold, Jr.
-----------------------
Print or type your name here: Lee E. Arnold, Jr., President
Laura St. Clair Klug
Date: 10/4/99
-------------
/s/ Mary K. Friend
- -----------------------------
Print or type your name here
Mary K. Friend
"BUYER "
MEADOW POINTE GENERAL
PARTNERSHIP
By: Devco III, LLC, as its
managing general partner
/s/ Pamela Braun By: /s/ Donald A. Buck
- --------------------------------------- -------------------
Print or type your name here: Donald A. Buck, President
Pamela Braun
Date: 10/5/99
-----------
/s/ Morry V. Diggs
- ---------------------------------------
Print or type your name here:
Morry V. Diggs
36
<PAGE>
JOINDER BY WESLEY CHAPEL LAKES, LTD. AND PASCO HEIGHTS
DEVELOPMENT CORPORATION (collectively the "OWNERS")
RECITALS
A. Owners, or their related party predecessors in interest, have
owned the Property described in the foregoing Agreement for
many years.
B. Efforts by Owners to develop the Property over the years have
been unsuccessful.
C. The Property has limited access to a desirable entry for
marketing purposes. The best entry access for the foreseeable
future is through Buyer's adjacent project.
D. The Owners are currently not in compliance with the DRI
Development Order governing development of the Property.
E. Seller is willing to oversee development of the Property in a
transaction which will enable finished lots to be developed
for purchase by Buyer.
F. Buyer, as the developer of the project adjacent to the
Property is the party best positioned to purchase lots and
build homes within the Property.
G. Buyer will not enter into the foregoing Agreement for the
purchase of lots without the execution by Owners of this
Joinder.
Now therefore, to induce the Buyer to enter into the transactions
contemplated in the foregoing Agreement and in consideration of $10 and other
good and valuable consideration, receipt of which is hereby acknowledged, the
Owners join in the Agreement and represent, warrant and agree as follows:
1. Purchase Agreement. Each of the Owners has entered into a
valid and enforceable purchase agreement with the Seller, copies of which are
attached hereto as composite Exhibit "J" (the "Underlying Purchase Agreement").
37
<PAGE>
2. Performance of Obligations. The Owners shall perform all of
their respective obligations under the Underlying Purchase Agreement.
3. Cooperation and Consent. Upon request by the Buyer, the Owners
shall cooperate and promptly perform all obligations of the Seller hereunder
which necessarily require action by the fee simple owner of the Property or any
part thereof, including, without limitation, the execution of deeds, joining in
subdivision plats and consenting to the creation of the CDDs.
4. Owners' Guarantee. The Owners, jointly and severally,
unconditionally guarantee to Buyer the performance of the Seller's obligations
under their respective Underlying Purchase Agreement and the performance of the
Seller's obligations under the Agreement with the Buyer.
5. Third Party Beneficiary. The Owners acknowledge and agree that
the Buyer is a third party beneficiary of the Underlying Purchase Agreement, and
is entitled to all rights of a third party beneficiary with respect thereto.
6. Remedies. The Buyer shall have the same rights and remedies
as to the Owners as it has with respect to the Seller to enforce the Agreement,
including (without limitation) the provisions of this Joinder.
WESLEY CHAPEL LAKES, LTD.
By: Wesley Chapel Lakes, Inc., as its sole
general partner
/s/ Laura St. Clair Klug
-------------------------- By: /s/ Jared D. Brown
-------------------------
Print or type your name here: Jared D. Brown, President
Laura St. Clair Klug
Date: October 4, 1999
------------------
/s/ Carol M. Turrell
- ---------------------------
Print or type your name here:
Carol M. Turrell
38
<PAGE>
LEE ARNOLD DEVELOPMENT
CORPORATION
/s/ Laura St. Clair Klug
------------------------ By: /s/ Lee E. Arnold, Jr.
-----------------------
Print or type your name here: Lee E. Arnold, Jr., President
Laura St. Clair Klug
Date: 10-4-99
-------------
/s/ Mary K. Friend
- -------------------------
Print or type your name here
Mary K. Friend
39
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of this 3rd day of October, 1999, by and among MEADOW POINTE GENERAL
PARTNERSHIP, a Florida general partnership (the "Partnership"), DEVCO III, LLC,
a Florida limited liability company ("Devco"), and DONALD A. BUCK (the
"Executive Manager"), individually. Capitalized terms not defined herein shall
have the meaning ascribed to them in that certain Agreement of General
Partnership between Devco and Meadow Pointe East, L.L.C., a Delaware limited
liability company, of even date herewith (the "Partnership Agreement").
WITNESSETH:
WHEREAS, the Partnership has entered into an Agreement for Development,
Sale and Purchase of Real Property, dated October 5, 1999, with Clearwater Bay
Associates, Inc., a Florida corporation (the "Purchase Agreement"), pursuant to
which the Partnership has agreed to develop and market single family building
lots and building units in a master planned development presently known as
Wesley Chapel Lakes (the "Property"); and
WHEREAS, pursuant to the terms of the Partnership Agreement, Devco and
the Executive Manager have agreed, and are obligated, to develop and manage the
Property in accordance with the Purchase Agreement and the Partnership
Agreement; and
WHEREAS, the Partnership, Devco and the Executive Manager desire to
enter into this Agreement for the purpose of defining the terms of their
relationship with respect to the development and management of the Property.
NOW, THEREFORE, in consideration of the mutual premises herein
contained, the parties hereto do hereby agree as follows:
1. MANAGEMENT AGREEMENT. Pursuant to the terms and conditions of this
Agreement, the Partnership hereby employs Devco as its manager of the Property
pursuant to the terms and conditions of this Agreement and the Partnership
Agreement. The Executive Manager agrees to fully perform all obligations of
Devco under this Agreement and the Partnership Agreement.
2. MANAGEMENT. The Executive Manager and Devco each agree that they
will use their best efforts to develop and manage the Property in accordance
with the terms of the Purchase Agreement and the Partnership Agreement
throughout the term of this Agreement. The Partnership hereby grants to Devco
the authority described in Section 1.3 of the Partnership Agreement.
3. CAPITAL IMPROVEMENTS. The Development Plan and Budget
(the "Budget")(approved pursuant to the terms of the Partnership Agreement)
1
<PAGE>
constitutes the authorization for Devco to expend money to develop and
market the Property. Except for expenditures made and obligations
incurred which were included in the Budget, previously approved by the
Partnership, or otherwise not required to be approved by the Partnership,
Devco shall not have any authority to make any expenditure or incur any
obligation on behalf of the Partnership.
4. PARTNERSHIP EXPENSES. The expense of any third party independent
contractor retained by the Partnership or by Devco on behalf of the Partnership
and in accordance with the Budget or otherwise approved of by the Partnership
shall be an expense of the Partnership.
5. EXECUTIVE MANAGER'S FEE. In consideration to oversee, supervise and
develop the Property on behalf of Devco under this Agreement and for the benefit
of the Partnership, the Executive Manager shall be paid the sum of One Hundred
Fifty Thousand Dollars ($150,000) per year during the term hereof from monies of
the Partnership and/or the CDDs (as defined in Section 8 herein), as applicable.
This fee shall be paid in equal monthly installments beginning one (1) month
from the date hereof.
6. PAYMENTS AND REIMBURSEMENTS TO DEVCO. Subject to Section 7 below, in
accordance with the Budget, as amended from time to time, the Partnership shall
promptly pay or, if applicable, reimburse Devco for all costs and expenses
reasonably incurred by Devco in connection with the performance of its duties
hereunder, including office overhead expense, professional and clerical expense,
and other standard annual charges listed on Exhibit A attached hereto and
approved by the Partnership. Except for the fee to be paid to the Executive
Manager as set forth in Section 5 above, the Partnership shall not pay or
reimburse Devco for any additional amounts for the services of the Executive
Manager.
7. MANAGEMENT FEES FROM THE COMMUNITY DEVELOPMENT
DISTRICTS. As more particularly set forth in the Purchase Agreement, the
Partnership plans to establish one or more community development districts
pursuant to Chapter 190, Florida Statutes (individually and collectively, the
"CDDs"), to finance and manage the construction of certain public infrastructure
improvements that will benefit the Property. As set forth in the Purchase
Agreement and Exhibit "F" thereto, the Partnership intends to enter into one or
more Project Management Agreements with the CDDs pursuant to which the
Partnership shall be compensated for supervising the construction of
infrastructure improvements by the CDDs. Devco will provide construction
management services to the CDDs on behalf of the Partnership, however, Devco
will not receive any management fees directly from the CDDs (including monies to
pay the Executive Manager's fee described in Section 5 above). The parties
anticipate that such fees will be paid to the Partnership by the CDDs and the
Partnership will, in turn, make payments to Devco (including all or a portion of
the Executive Manager's fee, as applicable). However, if and to the extent that
Devco receives such management fees from the CDDs (other than compensation
received by the Executive Manager or by other Devco employees for serving on the
board of supervisors of the CDDs), such fees paid directly by the CDDs shall be
credited against the amounts due to Devco hereunder.
2
<PAGE>
8. NON-ASSIGNABILITY. This Agreement is not assignable by Devco or the
Executive Manager without the prior written consent of both partners of the
Partnership.
9. EMPLOYEES; INDEPENDENT CONTRACTOR. Devco shall have in its employ at
all times a sufficient number of capable employees to enable it to reasonably,
properly, adequately, safely and economically manage, operate, maintain and
account for the Property. All matters pertaining to the employment, supervision,
compensation, promotion and discharge of such employees are the responsibility
of Devco, which is in all respects the employer of such employees. Devco shall
fully comply with all acts and regulations having to do with workmen's
compensation, social security, unemployment insurance, hours of labor, wages,
working conditions and other employer/employee related subjects. Neither Devco
nor the Executive Manager shall be considered employees of the Partnership.
Devco shall at all times during the term of this Agreement be considered an
independent contractor of the Partnership.
10. MANAGEMENT FEE UPON TERMINATION. Notwithstanding anything
contained herein to the contrary, if the Partnership terminates this Agreement
pursuant to Section 11 hereof, then in such event Devco shall only be entitled
to receive, as full and sole compensation under this Agreement, all payments
already paid or accrued pursuant to Sections 5, 6 and 7 hereof as of the date of
termination. Upon any such termination, the Partnership shall pay all reasonable
and customary costs and expenses incurred by Devco pursuant to the terms of this
Agreement and the Partnership Agreement through the date of the termination.
11. TERM AND TERMINATION.
(a) Term. This Agreement shall become effective on the date
hereof and shall continue in full force and effect, until earlier terminated
pursuant to Section 11(b) herein.
(b) Termination. This Agreement shall terminate immediately
upon the occurrence of the earlier of the following events:
(i) In the Partnership's reasonable discretion, For Cause
(as hereinafter defined).
(ii) Upon the termination of the Partnership for any reason
or the occurrence of any event described in Article 10 of the Partnership
Agreement.
(iii) Upon the termination of the Purchase Agreement for any
reason.
(iv) If Devco ceases to be a partner of the Partnership.
(c) Termination for Cause. "For Cause" shall mean (i) a
default by Devco in any respect in the performance or observance of any
covenant, or term of this Agreement or the Partnership Agreement, provided that
the breach shall be material and adverse to the Partnership and
3
<PAGE>
that Devco shall fail either (A) to cure, terminate or remove such default
within thirty (30) days after written notice thereof from the Partnership to
Devco, or (B) if such default cannot be cured within the aforesaid 30-day
period, to diligently pursue the cure of such default within such additional
period as shall be reasonable to cure such default, provided Devco is capable of
curing such default and such cure may be accomplished without damage or expense
to the Partnership by reason of the cure; or (ii) if Devco engages in criminal
misconduct or commits fraud which results in a loss to the Partnership.
(d) Effect of Termination. Upon termination of this Agreement,
Devco shall, as soon as practicable but in no event later than the thirtieth
(30th) day after notice is given in accordance with Section 13 hereof:
(i) Surrender and deliver to the Partnership:
(A) all funds held by Devco in connection with the
Property; and
(B) any other monies of the Partnership in possession
of Devco in any bank account;
(ii) Deliver to the Partnership as received any monies due
the Partnership under this Agreement but received by Devco after the effective
date of such termination;
(iii) Deliver to the Partnership all materials, equipment,
tools and supplies, keys, contracts and documents relating to the Property, and
copies of such other accountings, papers, and records as the Partnership shall
request pertaining to the Property;
(iv) If applicable, assign the existing contracts relating
to the development of the Property to the Partnership or such third parties as
the Partnership shall direct;
(v) Vacate any portion of the Property then occupied by
Devco as a consequence of this Agreement; and
(vi) Furnish all such information in order to effectuate an
orderly and systematic ending of Devco's duties and activities hereunder.
Within ten (10) days after any such termination, Devco shall deliver to the
Partnership any written reports required hereunder for any period not covered
by prior reports at the time of termination. With regard to the originals
of all papers and records pertaining to the Property, the possession of
which are retained by Devco after termination, Devco shall: (A) make the same
available for inspection and reproduction by the Partnership at reasonable
times upon request of the Partnership; (B) deliver same into the Partnership's
possession in the event the Partnership in good faith requires same for use
in a legal or quasi-legal proceeding; and (C) not destroy the same without
first offering to deliver the same to the Partnership.
4
<PAGE>
12. ASSIGNMENTS. Neither party may assign its rights and/or
obligations hereunder without the prior written consent of each other party to
this Agreement.
13. NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing (including facsimile, telex, telefax
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
With a copy to:
MEADOW POINTE GENERAL Lewis F. Crippen, Esq.
PARTNERSHIP Gunster, Yoakley, Valdes-Fauli
& Stewart, P.A.
c/o BF Enterprises, Inc. 777 S. Flagler Drive
100 Bush Street Suite 500-East
Suite 1250 West Palm Beach, FL 33401
San Francisco, CA 94104 Fax: (561) 655-5677
Attn: Brian P. Burns, Esq.
Stuart B. Aronoff
Fax: (415) 788-5756
With a copy to:
DEVCO III, L.L.C. Akerman, Senterfitt & Eidson
15436 North Florida Avenue 100 S. Ashley
Tampa, Florida 33613 Suite 1500
Attn: Donald A. Buck Tampa, Florida 33602
Fax: (813) 969-0128 Attn: Mark K. Straley, Esq.
Fax: (813) 223-2837
or to such other address as any party may designate by notice complying with the
terms of this Section 13. Each such notice shall be deemed delivered on: (a) the
date delivered if by personal delivery; (b) the date telecommunicated if by
telegraph; (c) the date of transmission with confirmed answer back if by
facsimile, telex, telefax or other telegraphic method; and (d) the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
14. BINDING EFFECT. All of the terms and provisions of this
Agreement, whether so expressed or not, shall be binding upon, inure to the
benefit of, and be enforceable by the parties hereto and their respective legal
representatives, successors and permitted assigns.
5
<PAGE>
15. HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect in any way
the meaning or interpretation of this Agreement.
16. GOVERNING LAW. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida without regard to principles of conflicts
of laws.
17. NO CONSTRUCTION AGAINST DRAFTSMEN. The parties acknowledge that
this is a negotiated Agreement, and that in no event shall the terms hereof be
construed against either party on the basis that such party, or its counsel,
drafted this Agreement.
18. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
19. ABILITY TO ENTER INTO AGREEMENT. Each party represents and warrants
that it is duly organized, validly existing and in good standing under the laws
of the state of its organization, with all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
20. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
21. ARBITRATION. Notwithstanding anything to the contrary in this
Agreement, all claims for monetary damages and disputes relating in any way to
the performance, interpretation, validity, or breach of this Agreement shall be
referred to final and binding arbitration, before a single arbitrator, under the
commercial arbitration rules of the American Arbitration Association in Pasco
County, Florida. The arbitrator shall be selected by the parties and if the
parties are unable to reach agreement on selection of the arbitrator within
thirty (30) days after the notice of arbitration is served, then the arbitrator
will be selected by the American Arbitration Association. All documents,
materials, and information in the possession of a party to this Agreement and in
any way relevant to the claims or disputes shall be made available to the other
parties for review and copying not later than sixty (60) days after the notice
of arbitration is served. To the extent that a party would be required to make
confidential information available to any other, an agreement or an order shall
be entered in the proceeding protecting the confidentiality of and limiting
access to such information
6
<PAGE>
before a party is required to produce such information. Information produced by
a party shall be used exclusively in the arbitration or litigation that may
arise, and shall not otherwise be disclosed. In no event shall a party be
entitled to punitive damages in any arbitration or judicial proceeding and all
parties hereby waive their rights to any punitive damages. In the event an
arbitration panel or a court concludes that the punitive damages waiver
contained in the previous sentence is unenforceable, then the parties agree that
the court with subject matter jurisdiction over the confirmation of the award
shall have sole and exclusive jurisdiction to determine issues of entitlement
and amount of punitive damages. The arbitrator shall NOT have subject matter
jurisdiction to decide any issues relating to the statute of limitations or to
any request for injunctive relief, and the parties hereby stipulate to stay the
arbitration proceeding (without the need of a bond) until any such issues in
dispute are resolved. Judgment upon the award rendered by the arbitrator shall
be final, binding and conclusive upon the parties and their respective
administrators, executors, legal representatives, heirs, successors and
permitted assigns, and may be entered in any court of competent jurisdiction.
22. RELATIONSHIP OF PARTIES. The parties are aware and agree that the
relationship between the Partnership and Devco (including the Executive Manager)
under this Agreement shall be that of an independent contractor and not an agent
or employee.
23. NO THIRD PARTY BENEFICIARY. This Agreement is solely between the
parties hereto and no person or persons not a party hereto shall have any rights
or privileges whatsoever either as a third party beneficiary or otherwise.
24. INCONSISTENCIES. Notwithstanding anything herein to the contrary,
if any provision in this Agreement shall be deemed inconsistent with the
Partnership Agreement, such provision herein shall be deemed invalid to the
extent so inconsistent and the Partnership Agreement shall control such matter
between the parties to this Agreement.
25. ENFORCEMENT COSTS. If any civil action, arbitration or other legal
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonably attorneys' fees, sales and use taxes, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that civil
action, arbitration or legal proceeding, in addition to any other relief to
which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administration costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
26. JURISDICTION AND VENUE. The parties acknowledge that a
substantial portion of the negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Pasco County, Florida. Any civil
action, arbitration or legal proceeding arising out of or relating to this
7
<PAGE>
Agreement shall be brought in the courts of record of the State of Florida in
Pasco County or the United States District Court, Southern District of
Florida. Each party consents to the jurisdiction of such court in any such
civil action, arbitration or legal proceeding and waives any objection to the
laying of venue of any such civil action, arbitration or legal proceeding in
such court. Service of any court paper may be effected on such party by
mail, as provided in this Agreement, or in such other manner as may be provided
under applicable laws, rules or procedure or local rules.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
the day and year first above written.
MEADOW POINTE GENERAL
PARTNERSHIP:
MEADOW POINTE EAST, L.L.C.,
General Partner
By: /s/ Stuart B. Aronoff
----------------------
Name: Stuart B. Aronoff
Title: Senior Vice President
DEVCO III, L.L.C., General Partner
By: /s/ Donald A. Buck
-------------------
Name: Donald A. Buck
Title: President
EXECUTIVE MANAGER:
/s/ Donald A. Buck
----------------------
Donald A. Buck
DEVCO, III, L.L.C.
By: /s/ Donald A. Buck
-------------------
Name: Donald A. Buck
Title: President
8
<PAGE>
EXHIBIT "A"
EXPENSES
(See Attachment)
9
<PAGE>
WCL (MEADOW POINT III) DEVCO NON CDD
Standard Annual Charges
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
1. Office rent $3,000 $3,150 $3,308 $3,473 $3,647
2. Office utilities 180 189 198 208 219
3. Telephone (including mobile phones) 1,440 1,512 1,588 1,667 1,750
4. Receptionist services 1,752 1,840 1,932 2,028 2,130
5. Computer service charges 1,500 1,575 1,654 1,736 1,823
6. Office supplies, expense 108 113 119 125 131
7. Club dues 2,400 2,520 2,646 2,778 2,917
8. Mileage 4,500 4,725 4,961 5,209 5,470
9. Devco staff 144,000 151,200 158,760 166,698 175,033
------- ------- ------- ------- -------
Total $158,880 $166,824 $175,165 $183,923 $193,120
</TABLE>
10
GRID PROMISSORY NOTE (NON-NEGOTIABLE)
U.S. $1,000,000 October 3, 1999
FOR VALUE RECEIVED, MEADOW POINTE GENERAL PARTNERSHIP, a Florida
general partnership ("Maker"), hereby promises to pay to the order of MEADOW
POINTE EAST, L.L.C., a Delaware limited liability company ("Lender"), at its
offices at 100 Bush Street, Suite 1250, San Francisco, California 94104 (or at
such other place or places as Lender or the holder hereof may designate in
writing, from time to time), the principal sum, not to exceed ONE MILLION AND
NO/100 DOLLARS (U.S.$1,000,000.00) (the "Loan"), or such lesser sum outstanding
at the time when payment is due hereunder, in lawful money of the United States
of America, together with interest accruing thereon from the date hereof at the
rates and times hereinafter provided calculated on the daily principal balance
from time to time outstanding hereunder as is indicated from time to time on the
Grid Schedule attached hereto as Exhibit "A."
1. Principal and Interest Payments.
-------------------------------
Maker promises to pay interest (calculated on the basis of a 360-day
year for the actual number of days elapsed) on the outstanding principal
balance, plus accrued interest from time to time outstanding hereunder from the
date hereof at the prime rate (or similar base rate) of Wells Fargo & Company,
adjusted from day to day, plus one (1) point (the "Interest"). The unpaid
principal balance and all accrued interest, shall be due and payable as follows:
(a) Maker shall repay the principal due and payable, together
with any unpaid and accrued Interest due and payable hereunder, in full by no
later than October 6, 2004 (the "Due Date"), which shall be a date five (5)
years after the date hereof; provided, however, that Maker agrees that to the
extent it has available cash flow, it will use such available cash flow, from
time to time, to repay the principal due and payable, together with any unpaid
and accrued Interest due and payable hereunder, in full; and
(b) Accrued Interest shall be paid semiannually on January 1
and July 1 of each calendar year subsequent to the date hereof.
(c) All payments hereunder will be made by cash, check or wire
transfer in such coins or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts.
2. Intent Not to Commit Usury.
--------------------------
Nothing herein contained, nor any transactions related hereto, shall be
construed or so operate as to require Maker to pay interest at a greater rate
than is now lawful in such case to contract for,
1
<PAGE>
or to make any payment, or to do any act contrary to applicable law. Should any
interest or other charges paid by Maker or any party liable for the payment of
this Note in connection with the Loan result in the computation or earning of
interest in excess of the maximum rate of interest that is legally permitted
under applicable law, then any and all such excess shall be and the same is
hereby waived by Lender and the holder hereof, and any and all such excess paid
by Maker shall be automatically credited against and in reduction of the balance
due under this indebtedness, and the portion of said excess which exceeds the
balance due under this indebtedness shall be paid by Lender to Maker and parties
liable for the payment of this Note.
3. Consent to Extensions of Time. It is agreed that the granting to
Maker of this Note or any other party of an extension or extensions of time for
the payment of any sum or sums due hereunder or under any document delivered in
connection with this Note or for the performance of any covenant or stipulation
thereof shall not in any way release or affect the liability of Maker of this
Note.
4. Waivers.
-------
Maker and all endorsers, sureties and guarantors of this Note hereby
waive demand, presentment, notice of nonpayment, dishonor and protest.
5. Attorneys' Fees.
---------------
In case suit shall be brought for the collection hereof, or if it is
necessary to place the same in the hands of an attorney for collection, Maker
and all endorsers and guarantors of this Note agree to pay reasonable attorneys'
fees for making such collection, including but not limited to, all fees and
costs incident to any appellate, post-judgment and bankruptcy proceedings that
may result, whether the holder hereof is obligated therefor or not.
6. Jurisdiction and Venue.
----------------------
Any civil action or legal proceeding arising out of or relating to this
Note shall be brought in the courts of record of the State of Florida in Palm
Beach County or the United States District Court, Southern District of Florida,
West Palm Beach Division. Each party consents to the jurisdiction of such court
in any such civil action or legal proceeding and waives any objection to the
laying of venue of any such civil action or legal proceeding in such court.
Service of any court paper may be effected on such party by mail, as provided in
this Note, or in such other manner as may be provided under applicable laws,
rules of procedure or local rules.
7. Governing Law.
-------------
The provisions of this Note, and any documents or instruments related
hereto or executed in conjunction herewith, shall be construed according to the
laws of the State of Florida, except if federal law would allow the payment of
interest hereunder at a higher maximum rate than would
2
<PAGE>
applicable Florida law, such federal law shall apply to the determination of the
highest applicable lawful rate of interest hereunder.
7. Limitation on Advances and Use of Proceeds of this Note.
-------------------------------------------------------
Maker may request advances hereunder solely for the payment of the
actual up-front development costs incurred by Maker in connection with
development and construction of real property located in Pasco County, Florida
and for no other purpose. No funds advanced by Lender shall be utilized for any
purpose other than as specified herein. Advances under this Note shall be made
not more than once each month. All advances hereunder shall be made by cashier's
check or by wire transfer of funds into a bank account in the State of Florida
maintained by Maker or an authorized agent of Maker. Maker hereby irrevocably
authorizes and instructs the holder hereof to note on the Grid Schedule attached
hereto as Exhibit "A" all advances of principal made hereunder, all accruals of
interest hereunder and all repayments of principal or interest hereunder. The
amounts noted thereon shall be conclusive and binding upon the parties as to the
indebtedness evidenced hereby absent fraud or manifest error. Lender shall have
no obligation to make any advances to Maker if Devco III, L.L.C., a Florida
limited liability company ("Devco"), or Donald A. Buck is in breach of any
provision of the Agreement of General Partnership of Maker, between Devco and
Lender.
8. Consent to Changes.
------------------
Maker consents and agrees that the granting to Maker or to any other
party of any extension of time for the performance of any covenant or
stipulation herein or the release of Maker or any other party, or the agreement
of Lender not to sue Maker or any other party, or the suspension of the right to
enforce this Note against Maker or any other party, or the discharge of Maker or
any other party, shall not in any way release or affect the liability of Maker,
all rights against such parties being expressly reserved.
9. Amendment.
---------
The provisions of this Note may not be amended, supplemented, waived or
changed orally, but only by a writing signed by the party as to whom enforcement
of any such amendment, supplement, waiver or modification is sought and making
specific reference to this Note. Maker has executed this Note as a principal and
not as a surety or accommodation party.
10. Assumability.
------------
This Note shall not be assumable without Lender's prior written
consent, which may be withheld for any reason whatsoever.
3
<PAGE>
11. Prepayment.
----------
This Note may be prepaid, in whole or in part, at any time without
penalty provided that any partial payment shall be applied against the principal
amount outstanding and shall not postpone the due date of any subsequent payment
unless Lender shall otherwise agree in writing in its sole discretion.
4
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Note as of the day and year
first above written.
WITNESS: MEADOW POINTE GENERAL
PARTNERSHIP
By: MEADOW POINT EAST, LLC, a
Delaware limited liability company, and
a general partner
/s/ Geraldine Burton By: /s/ Stuart B. Aronoff
- --------------------------------------- -------------------------
Print Name: Geraldine Burton Name: Stuart B. Aronoff
Title: Senior Vice President
/s/ S. Douglas Post
- ---------------------------------------
Print Name: S. Douglas Post
STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 3rd day of October, 1999, within my jurisdiction,
the within named Stuart B. Aronoff, who acknowledged that he is the Senior Vice
President of MEADOW POINT EAST, LLC, a Delaware limited liability company, and
that for and on behalf of the said corporation, and as its act and deed he
executed the above and foregoing instrument, after first having been duly
authorized by said corporation so to do.
/s/ Janet L. Dalpe
-----------------------------
Print Name: Janet L. Dalpe
(NOTARY SEAL) NOTARY PUBLIC - STATE OF CALIFORNIA
Commission Number: 1214970
My commission expires: April 3, 2003
5
<PAGE>
EXHIBIT "A"
GRID SCHEDULE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Principal Principal Interest Interest
Date Advance Repayment Accrual Repayment Balance
- ---- --------- --------- -------- --------- -------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
- ------ --------- --------- -------- --------- ----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Dec-31-1999
<CASH> 3,575
<SECURITIES> 815
<RECEIVABLES> 223
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,140
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 345
<OTHER-SE> 23,814
<TOTAL-LIABILITY-AND-EQUITY> 25,140
<SALES> 4,179
<TOTAL-REVENUES> 6,310
<CGS> 984
<TOTAL-COSTS> 984
<OTHER-EXPENSES> 2,115
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 3,183
<INCOME-TAX> (656)
<INCOME-CONTINUING> 3,839
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,839
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.00
</TABLE>
