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Sample Business ContractsHome: Sample Business Contracts:
BRITTANY BAY AT ANDROS ISLE, LTD.
LIMITED PARTNERSHIP AGREEMENT
January , 1998
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION........................................1
1.1. DEFINED TERMS.....................................................................1
1.2. PRINCIPLES OF CONSTRUCTION........................................................7
SECTION 2. FORMATION, EXPENSE OF FORMATION...................................................8
2.1. FORMATION.........................................................................8
2.2. EXPENSES OF FORMATION AND ACQUISITION.............................................8
SECTION 3. NAME..............................................................................8
SECTION 4. PURPOSE...........................................................................8
SECTION 5. TERM..............................................................................9
SECTION 6. PRINCIPAL PLACE OF BUSINESS.......................................................9
SECTION 7. CAPITAL...........................................................................9
7.1. CAPITAL ACCOUNTS..................................................................9
7.2. CONTRIBUTIONS OF BUILDER.........................................................10
7.3. CONTRIBUTIONS OF THE LIMITED PARTNER.............................................11
7.4. CONTRIBUTIONS OF BAV.............................................................11
7.5. ADDITIONAL CONTRIBUTIONS.........................................................11
7.6. INTEREST ON CAPITAL..............................................................12
7.7. WITHDRAWALS OF CAPITAL...........................................................12
7.8. NEGATIVE CAPITAL ACCOUNTS........................................................12
7.9. INSTITUTIONAL LOANS..............................................................12
7.10. SEPARATE OBLIGATIONS. ..........................................................12
7.11. FAILURE TO CONTRIBUTE. .........................................................13
SECTION 8. ALLOCATION OF PROFITS AND LOSSES.................................................14
8.1. DETERMINATION....................................................................14
8.2. ALLOCATION OF PROFITS AND LOSSES.................................................14
8.3. SPECIAL ALLOCATIONS..............................................................15
8.4. ALLOCATION AND PROPORTION........................................................16
8.5. TAX STATUS.......................................................................16
8.6. BASIS INFORMATION................................................................16
8.7. TAX MATTERS PARTNER..............................................................16
SECTION 9. DISTRIBUTIONS, BOOKS AND RECORDS AND AUDITS......................................16
9.1. DISTRIBUTIONS OF NET CASH FLOW...................................................16
9.2. GUARANTY.........................................................................17
9.3. LIQUIDATING DISTRIBUTIONS........................................................18
9.4. BOOKS AND RECORDS................................................................18
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9.5. AUDITS...........................................................................18
9.6. REPORTS AND STATEMENTS...........................................................19
9.7. LOAN TO THE PARTNERS.............................................................20
SECTION 10. DEVELOPMENT OF THE PROPERTY......................................................21
10.1. FULL COST DEVELOPMENT BUDGET.....................................................21
10.2. DEVELOPMENT AND MARKETING AGREEMENT..............................................21
10.3. BUILDER FEES.....................................................................21
10.4. OVERHEAD REIMBURSEMENT FEES......................................................21
10.5. SALES CONTRACTS..................................................................22
SECTION 11. MANAGEMENT.......................................................................22
11.1. MANAGEMENT CONCEPT...............................................................22
11.2. GENERAL PARTNER REPRESENTATIVES..................................................22
11.3. MANAGEMENT COMMITTEE MEETINGS....................................................22
11.4. TIME LIMITS FOR EXERCISE OF APPROVAL RIGHTS......................................23
11.5. STANDARDS OF APPROVAL............................................................23
11.6. DOCUMENT EXECUTION. ............................................................23
11.7. CONTROL OF PARTNERSHIP...........................................................23
11.8. DESIGNATION OF PROJECT...........................................................24
SECTION 12. INSURANCE........................................................................24
12.1. INSURANCE TO BE MAINTAINED.......................................................24
12.2. FORM OF POLICIES.................................................................24
SECTION 13. DEFAULT..........................................................................25
13.1. BUILDER EVENTS OF DEFAULT........................................................25
13.2. CONSEQUENCES OF BUILDER DEFAULT..................................................26
SECTION 14. LIMITED PARTNERS.................................................................26
14.1. LIMITATION OF LIABILITIES OF LIMITED PARTNERS....................................26
14.2. NO CONTROL OF BUSINESS OR RIGHT TO ACT FOR PARTNERSHIP...........................26
14.3. NO PRIORITY......................................................................27
SECTION 15. SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION..................................27
15.1. TRANSFER OF GENERAL PARTNER'S INTEREST...........................................27
15.2. TRANSFER OF LIMITED PARTNERSHIP INTERESTS........................................28
SECTION 16. TERMINATION AND DISSOLUTION......................................................31
16.1. EVENTS RESULTING IN TERMINATION AND DISSOLUTION..................................31
16.2. MANAGEMENT DURING LIQUIDATION....................................................31
16.3. PARTNER'S RIGHT TO BID FOR ASSETS................................................32
16.4. RECONSTITUTION OF PARTNERSHIP AFTER WITHDRAWAL OF THE
LAST REMAINING GENERAL PARTNER...................................................32
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16.5. DEATH, INCOMPETENCE, BANKRUPTCY OR DISSOLUTION OF A LIMITED PARTNER..............32
SECTION 17. REPRESENTATIONS AND WARRANTIES..................................................32
17.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUILDER.............................32
17.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LIMITED PARTNER.................36
17.3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BAV. ...............................37
SECTION 18. PERMITTED TRANSACTIONS AND CONFLICTS.............................................38
18.1...........................................................................................38
18.2...........................................................................................38
SECTION 19. INDEMNIFICATION AND CONTRIBUTION.................................................38
19.1. INDEMNIFICATION BY THE PARTNERSHIP...............................................38
19.2. INDEMNIFICATION BY GENERAL PARTNERS..............................................39
19.3. CONTRIBUTION. ..................................................................39
19.4. LIABILITY OF GENERAL PARTNERS TO LIMITED PARTNER.................................39
SECTION 20. MISCELLANEOUS....................................................................39
20.1. NOTICE...........................................................................39
20.2. PARTITION........................................................................41
20.3. GOVERNING LAW....................................................................41
20.4. SUCCESSORS.......................................................................41
20.5. PRONOUNS.........................................................................41
20.6. CAPTIONS NOT PART OF AGREEMENT...................................................41
20.7. SEVERABILITY.....................................................................41
20.8. COUNTERPARTS.....................................................................41
20.9. ENTIRE AGREEMENT AND AMENDMENT...................................................41
20.10. EXHIBITS.........................................................................42
20.11. ATTORNEYS' FEES..................................................................42
20.12. FURTHER ASSURANCES...............................................................42
20.13. EQUITABLE REMEDIES...............................................................42
20.14. FORCE MAJEURE....................................................................42
20.15. NO THIRD PARTY RIGHTS............................................................42
20.16. BROKERS..........................................................................42
20.17. SURVIVAL.........................................................................42
20.18. RELIANCE ON EXPERTS..............................................................43
20.19. SUBMISSION TO JURISDICTION.......................................................43
20.20. REMEDIES CUMULATIVE: NO WAIVER...................................................43
20.21. NO WAIVER........................................................................43
20.22. CONFIDENTIALITY..................................................................43
20.23. CONSTRUCTION.....................................................................43
20.24. DISPUTE RESOLUTION...............................................................43
20.25. WAIVER OF TRIAL BY JURY..........................................................44
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LIMITED PARTNERSHIP AGREEMENT
OF
BRITTANY BAY AT ANDROS ISLE, LTD.
This Limited Partnership is entered into as of January _________, 1998,
by and between ZUCKERMAN HOMES AT ANDROS ISLE, INC., a Florida corporation
("Builder") and BANKATLANTIC VENTURE PARTNERS 3, INC., a Florida corporation
("BAV") and BANKATLANTIC DEVELOPMENT CORPORATION, a Florida corporation
("Limited Partner").
WHEREAS, the parties hereto desire to form a limited partnership under
the laws of the State of Florida under the name Brittany Bay at Andros Isle,
Ltd. (the "Partnership") for the term and upon the conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises hereafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
1.1. DEFINED TERMS. Any capitalized terms used herein shall have
the meaning ascribed to such capitalized terms in this Section 1.1 or as
elsewhere expressly defined in this Agreement. As used in this Agreement, the
following terms shall have the following meanings (such meaning to be equally
applicable to both the singular and plural forms of the terms defined):
"Act of Insolvency" shall mean, with respect to a Person, the
occurrence of any of the following events (including, in the case of Person that
is a general or limited partnership, the occurrence of any of the following with
respect to any general partner of such Person):
(i) the dissolution or liquidation of such Person, except
in the case of a dissolution or liquidation of a Partner
contemporaneous with a Transfer permitted pursuant to Section 15;
(ii) the making by such Person of an assignment for the
benefit of its creditors which has not been revoked or reassigned
within thirty (30) days;
(iii) the commencement by such Person of a voluntary case
under, or the entry with respect to such Person of an order for relief
under, any chapter of the Federal Bankruptcy Code (as now or hereafter
in effect) or the entry with respect to such Person of a similar order
or decree under any federal or state law, now in existence or hereafter
enacted, having the same general purpose or effect, if such order or
decree shall not be vacated within thirty (30) days after the entry
thereof; or
(iv) the appointment of a receiver, trustee,
administrator, conservator, sequestrator, liquidator or similar
official in any federal, state or foreign judicial or nonjudicial
proceeding,
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to hold, administer or liquidate all or substantially all of the assets
of such Person, if such appointment shall not be revoked or terminated
within thirty (30) days.
"Additional Capital" shall mean additional capital to be contributed to
the Partnership required to be contributed to the Partnership as provided in
Section 7.5.
"Additional Conditions" shall mean that (i) as to the initial
contribution as set forth in 7.2.1 and 7.3.1, Builder has obtained the proper
zoning, subdivision and planned unit development approvals, consents, permits
and authorizations and all other permits, approvals, consents and authorizations
of any type and from all governmental entities or authorities (with respect to
the four (4) model lots) ("Model Lots") to be acquired by the Partnership
pursuant to the Purchase Contract and the construction of the Residences thereon
in the manner contemplated for the Project and/or necessary for the Partnership
to obtain building permits for the construction of the Residences to be
constructed on the Model Lots (subject to the payment of applicable permit
fees), (ii) with respect to the additional contribution to be made pursuant to
Sections 7.2.2 and 7.3.2, the Builder has obtained the proper zoning,
subdivision and planned unit development approvals, consents, permits and
authorizations and all other permits, approvals, consents and authorizations of
any type and from all governmental entities or authorities with respect to the
balance of the Lots to be acquired by the Partnership pursuant to the Purchase
Contract ("Balance of the Lots") and the construction of Residences thereon in a
manner contemplated for the Project and/or necessary for the Partnership to
obtain building permits for the construction of the Residences (subject to the
payment of applicable permit fees), (iii) the Partnership and Builder have
executed the Development and Marketing Agreement, (iv) BAV has approved in
writing the Full Cost Development Budget for the Project, (a copy of which is
attached hereto as Exhibit D and made a part hereof), which includes among other
things, the pricing of the Residences, (v) the Management Committee has approved
the terms and conditions of all Property Loans (as defined in Section 7.9) as
more fully described in Section 7.9, (vi) the Management Committee shall have
approved the Full Cost Development Budget; and (vii) BAV shall have approved in
writing the status of title, all due diligence information with respect to the
Project and the plan of development for the Project.
"Affiliate" shall mean, with respect to a Person, any Person or group
or Persons which, directly or indirectly, Controls, is Controlled by or is under
Common Control with, the specified Person.
"Agreement" shall mean this Limited Partnership Agreement, as modified,
supplemented or amended from time to time.
"BAV" shall mean BankAtlantic Venture Partners 3, Inc., a Florida
corporation, as a general partner.
"BAV Adjusted Capital Contribution" shall mean the capital
contributions of BAV pursuant to Section 7.4 hereof less all distributions made
to BAV pursuant to Section 9.1.3 hereof.
"BAV Capital Contribution" shall mean all capital contributed to the
Partnership by BAV pursuant to this Agreement.
"BAV Preference Amount" shall mean an amount, accruing from the Initial
Contribution Date and determined from time to time, equal to ten and one-half
percent (10.5%) per year (cumulative and
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compounded) of the BAV Adjusted Capital Contribution to be paid monthly in
accordance with Section 9.1.1 hereof.
"Break-up Fee" shall mean the sum of Zero Dollars ($00.00).
"Builder Adjusted Capital Contributions" shall mean the capital
contributions of Builder less all distributions made to Builder pursuant to
Section 9.1.3.
"Builder Capital Contribution" shall mean all capital contributed to
the Partnership by Builder pursuant to this Agreement.
"Builder Preference Amount" shall mean an amount accruing from the
Initial Contribution Date and determined from time to time equal to ten and
one-half percent (10.5%) per year (cumulative and compounded) of the Builder
Adjusted Capital Contribution to be paid monthly in accordance with Section
9.1.1 hereof.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close in Fort
Lauderdale, Florida.
"Capital Account" shall have the meaning provided in Section 7.1.
"Cash Flow"shall mean, for any period, the total cash receipts of the
Partnership for such period including proceeds of loans to the Partnership and
contributions to capital.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Control" shall mean (including, with correlative meaning, the terms
"Controlling," "Controlled by" and "under Common Control with") with respect to
a Person, (i) the beneficial ownership (as defined in Rule 13d-3 under the
Securities and Exchange Act of 1934) of ten percent (10%) or more of the voting
securities of such Person, (ii) the status of being a director, officer,
partner, executor, trustee or other fiduciary of such Person or (iii) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Default Loans" shall have the meaning set forth in Section 7.11.
"Development and Marketing Agreement" shall mean that certain
development and marketing agreement by and between the Partnership and Builder
or an Affiliate thereof, a copy of which is attached as Exhibit A.
"Fiscal Year" shall mean each year ended December 31.
"Full Cost development Budget" shall have the meaning provided in
Section 10.
"GAO Fee" or "Builder Fee" shall mean those fees to be paid to Builder
as a reimbursement of its general and administrative overhead as provided in
Section 10.3.
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"General Partners" shall mean the Builder and BAV, or any other person
or entity that succeeds either of them in such capacity as permitted by this
Agreement.
"Gross Sales Price of a Residence Closed" shall mean the gross dollar
amount paid or payable by purchasers pursuant to purchase contracts in
connection with the sale of Residences (and related land) by the Partnership
without deduction for any expenses or costs of sales, cost of construction or
cost of the land, including, without limitation, interest and other carrying
costs.
"Indemnifying Partner" shall have the meaning provided in Section
19.2.1.
"Initial Contribution Date" shall mean the date upon which BAV and the
Limited Partner make their initial contribution to the Partnership and shall be
the earlier to occur of (i) July 31, 1998; or (ii) a date which is the later to
occur of the date upon which BAV approves or is deemed to have approved the
title commitment, survey and appraisal to be prepared and delivered pursuant to
Section 17.1.11; and the satisfaction (as determined by BAV) by Builder of all
of the Additional Conditions, other than the additional condition referred to in
(ii) of the definition of the Additional Conditions.
"Interest" shall mean the entire interest a Partner has in Partnership
Profits, Losses, capital and loans owed by the Partnership to such Partner.
"Limited Partner" shall mean BankAtlantic Development Corporation, a
Florida corporation, and any other person who may be admitted to the Partnership
as an additional or substituted Limited Partner.
"Limited Partner Adjusted Capital Contribution" shall mean the capital
contributions of Limited Partner pursuant to Section 7.3 hereof less all
distributions made to Limited Partner pursuant to Section 9.1.3 hereof.
"Limited Partner Capital Contribution" shall mean all capital
contributed to the Partnership by Limited Partner pursuant to this Agreement.
"Limited Partner Preference Amount" shall mean an amount, accruing from
the Initial Contribution Date and determined from time to time, equal to ten and
one-half (10.5%) per year (cumulative and compounded) of the Limited Partner
Adjusted Capital Contribution to be paid monthly in accordance with Section
9.1.1 hereof.
"Losses" shall mean Partnership loss, deductions, credits or items
thereof as described in Section 704(b) of the Code. Such term shall not include
items of loss or deduction allocated pursuant to Section 8.3.3 or 8.3.4
hereafter or any amount which is subject to Section 704(c) of the Code.
"Management Committee" shall have the meaning provided in Section 11.
"Net Cash Flow" shall mean, for any period, Cash Flow for such period
less, (i) all payments in such period of operating expenses of the Partnership,
including interest on loans of the Partnership, excluding any expenses not
involving cash expenditures (such as amounts charged for depreciation and
amortization), (ii) all payments in such period on account of the principal
amount of any loans to the Partnership, (iii) all payments in such period of
expenses by the Partnership for capital expenditures in
<PAGE>
connection with the development and construction of the Partnership Property,
(iv) the payment in full of all principal and interest under any Default Loans,
and (v) the Working Capital Reserve.
"Net Profits" shall mean total gross cash receipts, excluding the
proceeds of any loans or capital contributions, of the Partnership less all cash
expenditures of the Partnership, excluding payments of loan principal,
distributions of Net Cash Flow pursuant to Section 9.1 and the Builder Fee.
"Notice" shall have the meaning provided in Section 20.1.
"Overhead Reimbursement Fee" shall mean those fees to be paid to BAV as
a reimbursement of the general and administrative overhead as provided in
Section 10.4.
"Partner Nonrecourse Debt" shall have the meaning provided in Section
8.3.4.
"Partner Nonrecourse Deduction" shall have the meaning provided in
Section 8.3.4.
"Partner Nonrecourse Minimum Gain" shall have the meaning provided in
Section 8.3.4.
"Partner Representative" shall have the meaning provided in Section
11.2.
"Partners" shall refer, collectively, to the General Partners and the
Limited Partner. Reference to the "Partner" shall be to any one of them.
"Partnership" shall refer to Brittany Bay at Andros Isle, Ltd., a
Florida limited partnership.
"Partnership Act" shall mean the Revised Uniform Limited .Partnership
Act of the State of Florida.
"Permitted Encumbrances" shall mean those certain liens, charges,
encumbrances, exceptions and/or reservations listed on Exhibit B hereto to which
the Property is either subject at the time of its conveyance to the Partnership
or to which the Property will be subject after conveyance; provided such
exceptions have been approved by BAV and the Limited Partner.
"Permitted Transfer" shall mean those transfers of Interests permitted
by Sections 15.1 and 15.2 hereof.
"Permitted Transferee" shall mean, with respect to BAV or the Limited
Partner, any Person of which BAV has beneficial ownership (as defined in Rule
13d-3 of the Securities and Exchange Act of 1934) of more than 80 percent of the
Voting Interests therein, and in the case of BAV or the Limited Partner, shall
specifically include BankAtlantic, F.S.B., BankAtlantic Bancorp, Inc., BFC
Financial Corporation and/or any Person controlling, Controlled by, or under
common Control with BAV, the Limited Partner, BankAtlantic, F.S.B., BankAtlantic
Bancorp, Inc. or BFC Financial Corporation.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
<PAGE>
"Project" shall mean the ninety (90) single family duplex residential
development and related amenities as described in Section 4 hereof.
"Profits" shall mean Partnership income, gain or items thereof as
described in Section 704(b) of the Code. Such term shall not include any items
of income or gain specifically allocated pursuant to Sections 8.3.2, 8.3.3 or
8.3.4 hereof or any amount which is subject to Section 704(c)of the Code.
"Property" shall mean the real property legally described on Exhibit C.
"Regulations" shall mean the Income Tax Regulations promulgated under
the Code as such Regulations may be amended from time to time.
"Residences" shall mean the ninety (90) single family duplex residences
which will be constructed on the Property in accordance with the plans and
specifications as are approved in writing by the Management Committee and in
accordance with all laws, ordinances, codes and regulations in effect from time
to time having jurisdiction over the Property and which shall be sold to third
party purchasers.
"Residence Closed" or "Residence Closing" shall mean the closing of the
sale of a Residence, and shall be deemed to occur upon the earlier of the date
at which payment in full for such Residence is received by the Partnership or
legal title passes from the Partnership to the purchaser and the purchase price
is paid from such purchaser to the Partnership.
"State" shall mean the State of Florida.
"Substitute Representative" shall have the meaning provided in Section
11.2.
"Tax Matters Partner" shall have the meaning provided in Section 8.7.
"Transfer" shall mean any sale, assignment, pledge, encumbrance,
hypothecation, disposition, gift or other transfer (or the sufferance of any of
the foregoing to occur), whether voluntarily or involuntarily, by operation of
law or otherwise.
"Voting Interests" shall mean, with respect to a Person, the securities
or other membership interests of all classes the holders of which are
ordinarily, in the absence of contingencies, entitled to elect the directors or
Persons performing similar functions of such Person.
"Withdrawal" shall refer to (i) the resignation of a General Partner
from the Partnership, (ii) the transfer, sale, assignment, pledge, encumbrance
or other disposition of a General Partner's Interest (but not any pledge or
assignment by a General Partner of its beneficial interest in any fees due to it
or distributions under this Agreement) other than to a Permitted Transferee, or
(iii) the dissolution (which is not followed by a reconstitution), liquidation
or bankruptcy of a General Partner. For purposes of this definition, bankruptcy
of a General Partner shall be deemed to occur when such General Partner is
voluntarily adjudicated a bankrupt or insolvent, or seeks, consents to or does
not contest the appointment of a receiver or trustee for itself or for all or
any part of its property, or files a petition seeking relief under the
bankruptcy, arrangement, reorganization or other debtor relief laws of the
United States or any state or any other competent jurisdiction, or makes a
general assignment for the benefit of creditors, or admits in writing an
inability to pay its debts as they may mature, or a petition is
<PAGE>
filed against a General Partner seeking relief under the bankruptcy,
arrangement, reorganization or other debtor relief laws of the United States or
any state or other competent jurisdiction, or a court of competent jurisdiction
enters an order, judgment or decree appointing, without consent of such General
Partner, a receiver or trustee for it, or for all or any part of its property,
and such petition, order, judgment or decree shall not be and remain discharged
or stayed within a period of thirty (30) days after its entry. "Withdraw" shall
mean the taking or suffering of any action constituting a Withdrawal. Withdrawal
shall not include (i) an assignment, pledge, encumbrance or transfer of a
General Partner's interest in the Partnership to any entity as collateral
security for any loans made to the Partnership, directly or indirectly, by such
entity or any financial institution or (ii) the sale, transfer or assignment by
a General Partner of its interest in the Partnership to a Permitted Transferee,
provided that such General Partner remains liable for its obligations under this
Agreement.
"Working Capital Reserves" shall mean the reserves retained by the
Partnership in the amount indicated under the caption "working capital
reserves," or like heading, on the Full Cost Development Budget, as may be
increased or decreased by the Management Committee from time to time.
1.2. PRINCIPLES OF CONSTRUCTION.
1.2.1. All references to sections, schedules and exhibits
are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.
1.2.2. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles consistently applied.
SECTION 2. FORMATION, EXPENSE OF FORMATION.
2.1. FORMATION. The parties hereto hereby enter into and form the
Partnership as a limited partnership for the limited purposes and scope set
forth in this Agreement. The Partnership shall be governed by the Partnership
Act, as from time to time amended, except as expressly provided herein to the
contrary. The General Partners shall promptly file the certificate of limited
partnership and such other documents in such public offices in the State or
other appropriate jurisdiction as shall be required under the law of the State
or that of any other jurisdiction to give effect to the provisions of this
Agreement and to preserve the character of the Partnership as a limited
partnership.
2.2. EXPENSES OF FORMATION AND ACQUISITION.
2.2.1. Each Partner shall bear its personal expenses
incurred in connection with the acquisition of its partnership
interest, except as otherwise expressly provided herein. The
Partnership shall bear the expenses of its formation, including, but
not limited to, filing and registration expenses in the State.
2.2.2. In the event this Agreement is terminated prior to
the date that the initial contributions are made to the Partnership,
then Builder and Guarantor shall pay to BAV the Break-up Fee (if any)
within ten (10) days of the termination of the Partnership.
<PAGE>
2.2.3. Normal costs associated with acquiring the Property
and transferring title to the Project to the Partnership shall be paid
by the Partnership.
2.2.4. Normal costs associated with the Partnership's sale
of the Residences, including, without limitation, title costs,
recording fees and transfer fees shall be paid by the Partnership, or
such party dealing therewith, in accordance with the usual custom for
property located in Palm Beach County, Florida.
SECTION 3. NAME.
The business and affairs of the Partnership shall be conducted solely
under the name of "Brittany Bay at Andros Isle, Ltd." The Partnership shall
execute and file all assumed or fictitious name or similar certificates required
to be filed under applicable law.
SECTION 4. PURPOSE.
The purpose of the Partnership shall be to acquire and own the Property
subject to the Permitted Encumbrances and to construct, develop, market, sell
and dispose of ninety (90) Residences to be located in the Andros Isle
development in Palm Beach County, Florida, and to engage in all other activities
included within the scope of such acquisition, construction, development,
marketing, selling and disposition. The powers and purposes of the Partnership
shall be limited strictly to such acquisition, ownership, construction,
development, marketing, selling and disposition of the Property and warranty
work and other matters incidental to the foregoing for the production of income
and profits in accordance with the terms of this Agreement. Such powers and
Purposes shall not be extended by implication or otherwise except by the written
agreement of the Partners, The "development and marketing of the Property" shall
mean and include the payment of all ad valorem taxes, assessments and other
governmental impositions relating thereto, the preparation of plans for the
development of the Property, the obtaining of all zoning and other governmental
approvals and authorizations necessary or appropriate to develop the Property,
the obtaining of all tests and inspections necessary to develop the Property in
the manner contemplated hereby, the construction of the improvements, the
arranging and obtaining of financing for such development, the development of
Residences and related improvements, and thereafter the marketing, sale and
conveyance of such Residences to buyers.
SECTION 5. TERM.
The term of the Partnership shall commence on the date hereof and
shall, unless sooner terminated pursuant to the terms hereof, terminate twenty
(20) years therefrom.
SECTION 6. PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Partnership shall be c/o
Zuckerman Brothers, Inc., 6650 NW 41st Street, Coral Springs, Florida 33067, or
such other place as may from time to time be determined pursuant to the terms
hereof.
SECTION 7. CAPITAL.
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7.1. CAPITAL ACCOUNTS. The Partnership shall establish and maintain
for each Partner a capital account (a "Capital Account") in accordance with
Section 1.704-1(b) of the Regulations. The Capital Account of a Partner shall be
increased by:
(i) the amount of any cash and the net fair market value
of any property contributed to the Partnership by the Partner;
(ii) the amount of Profits allocated to the Partner; and
(iii) a Partner's pro rata share (determined in the same
manner as such Partner's share of Profits) of any other amount received
by the Partnership during such year which is exempt from federal income
tax.
The Capital Account of a Partner shall be reduced by:
(i) the amount of any cash and the net fair market value
of property distributed to the Partner by the Partnership;
(ii) the amount of Losses allocated to the Partner; and
(iii) a Partner's pro rata share (determined in the same
manner as such Partner's share of Losses) of any other expenditures of
the Partnership which are not deductible in computing the Partnership's
taxable income and not properly capitalized.
This Section 7.1 and all other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with the requirements
of Section 1.704-1(b) of the Regulations. Consequently, Capital Account
adjustments and any other adjustments which are required to cause Partner's
Capital Accounts to be maintained in accordance with Section 1.704-1(b) of the
Regulations, such as the rule of Section 1.704-1(b)(2)(d) of the Regulations
which controls the Capital Account adjustments for income, gains, losses and
deductions specially allocated pursuant to Section 704(c) of the Code, shall be
made from time to time as necessary. The Partners shall be given Notice of any
adjustments made pursuant to the preceding sentence.
7.2. CONTRIBUTIONS OF BUILDER. The Builder shall make the following
contributions to the capital of the partnership:
7.2.1. On of before the Initial Contribution Date, Builder
(i) shall be deemed to have contributed an amount equal to the expenses
previously incurred by Builder on behalf of the Partnership as of the
Initial Contribution Date to the extent such expenses have been
approved in writing by BAV ("Initial Approved Expenses"), and (ii)
shall contribute its rights and the rights of Zuckerman Brothers, Inc.
("Brothers") to acquire the Property pursuant to that certain Builder
Purchase and Sale Agreement between Andros Isle Limited Partnership and
The Zuckerman Group, Inc. ("Group") dated July 17, 1997 (as Group's
interest have been assigned to Brothers) ("Purchase Contract"),
whereupon as of the Initial Contribution Date, based on such
contributions set forth in this Section 7.2.1, the Builder shall be
deemed to have an initial capital contribution equal to the Initial
Approved Expenses.
<PAGE>
7.2.2. On or before the date that the Partnership is to
acquire the Balance of the Lots pursuant to the Purchase Contract, the
Builder will (i) be deemed to have contributed an amount equal to the
expenses previously incurred by Builder on behalf of the Partnership
from and after the Initial Contribution Date through the date that the
Partnership is to acquire the Balance of the Lots to the extent that
BAV has approved in writing such expenses ("Additional Approved
Expenses") and (ii) shall contribute to the capital of the Partnership
an amount equal to One Hundred Fifty Thousand Dollars ($150,000) less
the Initial Approved Expenses and Additional Approved Expenses..
7.2.3. Builder shall make additional contributions to the
capital of the Partnership in an aggregate amount not to exceed Two
Hundred Fifty Thousand Dollars ($250,000) to fund any Cash Flow
deficits of the Partnership plus any Additional Capital required to be
contributed by the Builder to the Partnership pursuant to this
Agreement. Such additional capital contributions shall be made at such
times and in such amounts so as to provide sufficient Cash Flow for the
Partnership to continue its operations.
7.3. CONTRIBUTIONS OF THE LIMITED PARTNER. The Limited Partner
shall make the following contributions to the Partnership:
7.3.1. On or before the Initial Contribution Date, provided
that the Additional Conditions, other than the additional condition
referred to in (ii) of the definition of the Additional Conditions have
been fulfilled and provided Builder shall have made its capital
contribution as required by Section 7.2.1 above, the Limited Partner
shall contribute Two Hundred Fifty Thousand Dollars ($250,000) to the
Partnership. The determination of whether the Additional Conditions,
other than the additional condition referred to in (ii) of the
definition of the Additional Conditions have been fulfilled shall be in
the sole determination of the Limited Partner.
7.3.2. On or before the date that the Balance of the Lots
are to be acquired by the Partnership and provided that the Additional
Conditions have been fulfilled and the Builder shall make its Capital
Contribution as required in Section 7.2.2, the Limited Partner shall
contribute One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
to the Partnership. The determination of whether the Additional
Conditions have been fulfilled shall be in the sole discretion of the
Limited Partner.
7.3.3. The Limited Partner shall make additional
contributions to the capital of the Partnership in an aggregate amount
not to exceed $250,000 to fund any Cash Flow deficits of the
Partnership; provided, however, that the Limited Partner shall not be
required to make any such additional contribution until such time as
Builder has made additional contributions to the capital of the
Partnership in an aggregate amount equal to $250,000 pursuant to 7.2.3
above. The additional capital contributions of the Limited Partner
shall be made at such times and in such amounts as is necessary so as
to provide sufficient Cash Flow for the Partnership to continue its
operations, but only after Builder has made additional contributions
equal to $250,000 as provided above.
7.4. CONTRIBUTIONS OF BAV. On or before the Initial Contribution
Date, and provided that the Limited Partner shall have made its contribution
pursuant to Section 7.3.1 above,
<PAGE>
BAV shall contribute $100 to the Partnership. BAV shall receive a credit to its
Capital Account equal to the aggregate amount of such capital contributions.
7.5. ADDITIONAL CONTRIBUTIONS. In the event that additional
contributions are necessary so as to provide sufficient Cash Flow for the
Partnership to continue operations and the capital contributions pursuant to
Sections 7.2 and 7.3 have previously been made by the respective Partners, then,
at the sole option of the Management Committee, the Management Committee may
notify Builder and the Limited Partner that additional contributions are
required to be made to the Partnership and such additional contributions shall
be made fifty percent (50%) by Builder and fifty percent (50%) by the Limited
Partner. The notice from the Management Committee that additional contributions
are necessary shall specify the amount due from each Partner and the date on
which such additional contribution is due, which date shall not be less than
fifteen (15) days from the date of such notice.
7.6. INTEREST ON CAPITAL. Except as otherwise set forth in this
Agreement, no Partner shall be paid interest on its Capital Account.
7.7. WITHDRAWALS OF CAPITAL. Except as otherwise provided herein,
no Partner may withdraw capital from the Partnership without the prior written
consent of the Management Committee. No Partner shall have the right to demand
or receive property other than cash in return for its capital contribution
without the prior written consent of the other Partner.
7.8. NEGATIVE CAPITAL ACCOUNTS. The obligations of the Partners to
make contributions to the Partnership shall be as herein above set forth. No
Partner shall have any additional obligation to make contributions to the
Partnership by reason of such Partner having a negative balance in its Capital
Account upon liquidation of the Partnership. Each Partner does hereby waive any
rights against the other on account of such Partner having a negative Capital
Account (but the foregoing shall not be deemed to limit the other contribution
obligations of a Partner specifically set forth in this Section 7).
7.9. INSTITUTIONAL LOANS. The Partnership has entered or shall
enter into a loan agreement for acquisition and development financing ("A and D
Loan") from BankAtlantic, a federal savings bank ("Lender") for part of the cost
of acquiring and developing the Property. The Partnership has also entered or
shall enter into an agreement for construction financing from Lender for the
cost of constructing the homes (the "Construction Loan"). The commitment letters
with respect to the A&D Loan and Construction Loan are attached hereto and made
a part hereof as Exhibit E. The Construction Loan, the A and D Loan and such
other loans as are approved in writing by the Management Committee (collectively
the "Property Loans". Builder, its Affiliates or Persons Controlling Builder
shall execute such guarantees as are required to obtain such Property Loans. The
Property Loans must be without recourse to the Limited Partner and their
officers, directors, agents, employees, shareholders and partners and shall have
such other terms and provisions which must be reasonably acceptable to BAV. The
Property Loans shall, however, be "with recourse" to the Partnership.
7.10. SEPARATE OBLIGATIONS. The parties specifically acknowledge and
agree that BAV and the Limited Partner are acting in their capacity as Partners
in this Partnership pursuant to the express terms and provisions set forth in
this Agreement. Notwithstanding anything contained herein to the contrary, the
parties hereby acknowledge and agree that the fact that BAV and the Limited
<PAGE>
Partner are involved in this transaction, shall not in any way affect their
right and/or the right of Lender or any other Permitted Transferee of BAV or the
Limited Partner to deal with the Partnership in their sole and absolute
discretion in connection with any loans or other transactions which are entered
into by the Partnership and Lender or any Permitted Transferee of BAV or the
Limited Partner, including, but not limited to, the Property Loans ("Other
Transactions"). The Property Loans are independent obligations of the
Partnership (which are guaranteed by Builder) to the Lender. It is specifically
acknowledged and agreed that in connection with the Other Transactions, (i) the
fact that BAV and/or the Limited Partner are involved in this Partnership shall
not in any way affect the obligations of the Partnership to Lender or any other
Permitted Transferee of BAV or the Limited Partner pursuant to the Other
Transactions, nor do the Partners or the Partnership expect to receive any
concessions as the result thereof; (ii) the acts of Lender or any other
Permitted Transferee of BAV or the Limited Partner pursuant to the Other
Transactions are independent and separate from any obligation of BAV and/or the
Limited Partner pursuant to the terms of this Agreement; and the Partners and
the Partnership do hereby release, remise, acquit and forever discharge Lender
and any other Permitted Transferee of BAV or the Limited Partner in connection
with any claims that it is a joint venturer with the Partnership in connection
with Other Transactions and that the only joint venture will be with respect to
the interests of BAV and the Limited Partner pursuant to the express terms and
provisions of this Agreement. Additionally, the Partners and the Partnership do
hereby remise and release Lender and any Permitted Transferee of BAV or the
Limited Partner in connection with any claim for lender liability or claims that
such Partners or the Partnership would be entitled to concessions, extensions or
otherwise be entitled to rights which are not expressly provided for as being
the obligation of Lender or any Permitted Transferee of BAV or the Limited
Partner pursuant to the express terms of such Other Transactions. The Partners
and the Partnership acknowledge and agree that Lender and any other Permitted
Transferee of BAV or the Limited Partner shall have the right, in their sole and
absolute discretion, to enforce the terms and provisions of all such Other
Transactions acting in its sole and best interest as it determines, in its sole
and absolute discretion, without regard to the fact that BAV and/or the Limited
Partner are partners in the Partnership.
7.11. FAILURE TO CONTRIBUTE. In the event that any Partner shall
fail to make all or any portion of such Partner's required capital contribution
to the capital of this Partnership as set forth in this Agreement within seven
(7) days after written notice by any General Partner that such capital
contribution is due, then such Partner shall be "in default" of this Agreement
("Defaulting Partner"). In the event of such default, the other Partners shall
have the right (but not the obligation) to elect to convert the capital
contribution which it made to a loan and to advance as a loan to the Partnership
the amount equal to the capital contribution that such Defaulting Partner failed
to make (collectively "Default Loan"). The Partners electing to make such
Default Loan hereunder are hereinafter referred to as "Lending Partners." The
Lending Partners shall determine amongst themselves the proportion in which the
Default Loan shall be made, or, if they fail to agree, then pro rata based on
their relative percentage Interests in the Partnership. In the event the Lending
Partners have advanced such monies as a Default Loan to the Partnership, then
and in such event, the following shall be applicable, (i) such Default Loan
shall be a demand loan which shall bear interest at eighteen percent (18%) per
annum ("Default Rate"); (ii) all monies paid as repayment of such Default Loan
shall first be applied to the costs and expenses of the Lending Partners,
including attorneys' fees and costs with respect to such Default Loan which
shall bear interest at the Default Rate from and after the date any such
expenses are incurred to and through the date such monies are repaid, secondly
toward accrued and unpaid interest and finally, toward the outstanding principal
balance; (iii) interest on the Default Loan shall be due and payable monthly and
all such interest shall be deemed an expense of the Partnership, which monthly
<PAGE>
interest payment to the Partners hereby agree shall be paid by the Partnership,
which monthly interest payment the Partners hereby agree shall be paid by the
Partnership and such monthly obligation shall be set forth on all budgets,
projections of the Partnership; and (iv) the Default Loan may be called in whole
or in part at any time.
The remedies heretofore set forth are in addition to and not
in lieu of any and all other legal and equitable remedies that may be available
to the Partnership and/or the Lending Partners in the event of a default by any
Defaulting Partner, including, but not limited to, the right of the Builder to
sue the Limited Partner for compensatory damages in the event that the Limited
Partner shall wrongfully fail to contribute the contributions required to be
contributed by the Limited Partner pursuant to Sections 7.3.1 and 7.3.2 to the
extent the Additional Conditions have been satisfied as provided in those
Sections. With respect to the foregoing remedies, the Lending Partners and the
Partnership shall have the right to pursue same on a cumulative basis, no action
seeking any single remedy constituting an election or in any way precluding the
Lending Partners or the Partnership from simultaneously or thereafter pursuing
any other remedies.
SECTION 8. ALLOCATION OF PROFITS AND LOSSES.
8.1. DETERMINATION. The Profits and Losses of the Partnership shall
be determined for each Fiscal Year in accordance with the method of accounting
selected by the Management Committee and otherwise in accordance with income tax
accounting principles and procedures as provided in the Code, applied in a
consistent manner.
8.2. ALLOCATION OF PROFITS AND LOSSES. Subject to Section 8.3,
Profits and Losses shall be allocated among the Partners at the end of each
Fiscal Year in the following manner:
8.2.1. Losses shall be allocated to the Partners on a pro
rata basis in accordance with respective positive Capital Account
balances of the Partners until capital Account balances are zero and
thereafter 60% to Builder, 39.9% to the Limited Partner and .1% to BAV.
8.2.2. Profits shall be allocated among the Partners in the
following order of priority:
8.2.2.1. First, Profits shall be allocated to each
Partner until the cumulative Profits allocated to each Partner
pursuant to this Section 8.2.2.1 equals the cumulative Losses
allocated to each Partner pursuant to Section 8.2.1, in the
order and amounts in which such losses were previously
allocated.
8.2.2.2. Second, Profits in an amount equal to the
cumulative amount of Net Cash Flow previously distributed to
the Limited Partner and BAV pursuant to Section 9.1.1, reduced
by the cumulative amount of Profits previously allocated to
the Limited Partner and BAV pursuant to this Section 8.2.2.2,
shall be allocated to the Limited Partner and BAV.
8.2.2.3. Third, all remaining Profits shall be
allocated to the Partners in amounts equal to distributions of
Net Cash Flow made pursuant to Section 9.1.4 hereof inclusive
of Net Cash Flow otherwise distributed to Builder but which
was retained by the Partnership to meet Working Capital
Reserves, reduced by the cumulative amount of Profits
previously allocated to Builder pursuant to this Section
8.2.2.3, shall be allocated to Builder.
<PAGE>
8.2.2.4. To the extent there are Profits to be
allocated in an amount greater than the allocations required
by Sections 8.2.2.1 through 8.2.2.3, such Profits shall be
allocated 60% to Builder, 39.9% to the Limited Partner and .1%
to BAV.
8.3. SPECIAL ALLOCATIONS.
8.3.1. Limitation on Loss Allocations. Losses allocated to
any Partner pursuant to Section 8.2 shall not exceed the maximum amount
of Losses that can be so allocated without causing the Capital Account
of such Partner to have a deficit Capital Account balance (after giving
effect to Regulation Section 1.704-1(b) (2) (ii) (d) (4), (5) and (6))
which exceeds the sum of (i) the amount of such deficit the Partner is
obligated to restore, and (ii) the amount of such deficit the Partner
is deemed to be obligated to restore pursuant to the penultimate
sentence of Regulation Section 1. 704-2(g)(1) and Regulation Section 1.
704-2(i) (5) Any special allocation made under this Section 8.3.1 shall
be taken into account for purposes of determining subsequent
allocations of Profits and Losses, so that the total allocations will,
to the extent possible, equal the allocations which would have been
made if this Section 8.3.1 was not included in this Agreement.
8.3.2. Qualified Income Offset. Notwithstanding any other
provision of this Agreement, except Section 8.3.3 hereof, in the event
any Partner unexpectedly receives an adjustment, allocation or
distribution described in Regulation Section 1.704-l(b)(2)(ii)(d)(4),
(5) or (6) which results in such Partner having a deficit Capital
Account balance (after giving effect to Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) or otherwise has a deficit
Capital Account balance which exceeds the sum of (i) the amount of such
deficit no Partner is obligated to restore, and (ii) the amount of such
deficit the Partner is deemed to be obligated to restore pursuant to
the penultimate sentence of Regulation Section 1.704-2(g)(1) and
Regulation Section 1.704-2(i)(5), such Partner shall be specially
allocated items of income or gain in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the deficit in
such Partner's Capital Account as quickly as possible. Any special
allocation made under this Section 8.3.2 shall be taken into account
for purposes of determining subsequent allocations of Profits and
Losses, so that the total allocations will, to the extent possible,
equal the allocations which would have been made if this Section 8.3.2
was not included in this Agreement.
8.3.3. Nonrecourse Deductions, Minimum Gain Chargeback.
Nonrecourse deductions shall be allocated 60% to Builder, 39.9% to the
Limited Partner and .1% to BAV. Notwithstanding any other provision of
this Agreement, if there is a net decrease in Partnership minimum gain
(as defined in Regulation Section 1.704-2 (d)), items of income or gain
shall be allocated to all Partners in an amount determined as provided
in Regulation Section 1.704-2(g)(2) and otherwise in accordance with
Regulation Section 1.704-2(f). This Section 8.3.3 is intended to comply
with the minimum gain chargeback requirements of Regulation Section
1.704-2(f) and shall be interpreted consistently therewith. Any special
allocations made under this Section 8.3.3 shall be taken into account
for purposes of determining subsequent allocations of Profits and
Losses so that the total allocations will, to the extent possible,
equal the allocations that would have been made if this Section 8.3.3
was not included in this Agreement, provided, however, that in making
such subsequent allocation of Profit and Loss,
<PAGE>
there shall be taken into account the likelihood that future
allocations pursuant to this Section 8.3.3 will affect allocations
previously made hereunder.
8.3.4. Risk of Loss Allocation. Any item of Partner
Nonrecourse Deductions (as hereinafter defined) with respect to a
Partner Nonrecourse Debt (as hereinafter defined) shall be allocated to
the Partner or Partners who bear the economic risk of loss for such
Partner Nonrecourse Debt in accordance with Regulation Section
1.704-2(i). The term "Partner Nonrecourse Deductions" has the meaning
provided in Regulation Section 1.704-2(i)(2). The term "Partner
Nonrecourse Debt" has the meaning provided in Regulation Section
1.704-2(b)(4). Subject to Section 8.3.3 hereto, but notwithstanding any
other provision of this Agreement, in the event that there is a net
decrease in minimum gain attributable to a Partner Nonrecourse Debt as
determined pursuant to Regulation Section 1.7042(i)(3) (such minimum
gain being hereinafter referred to as "Partner Nonrecourse minimum
Gain") for a taxable year of the Partnership, then, after taking into
account allocations pursuant to Section 8.3.3 hereof, but before any
other allocations are made for such taxable year, each Partner with a
share of Partner Nonrecourse Minimum Gain attributable to such Partner
Nonrecourse Debt at the beginning of such year shall be allocated items
of income and gain for such year (and, if necessary, for subsequent
years) in an amount equal to such Partner's share (determined in a
manner consistent with Regulation Section 1.704-2(g) (2)) of the net
decrease in Partner Nonrecourse Minimum Gain. Any special allocations
made under this Section 8.3.4 shall be taken into account for purposes
of determining subsequent allocations of Profits and Losses so that the
total allocations will, to the extent possible, equal the allocations
that would have been made if this Section 8.3.4 had not previously
applied.
8.4. ALLOCATION AND PROPORTION. All Profits and Losses of the
Partnership for any Fiscal Year allocable to any Partner who has transferred its
Interest which may have been transferred during such year shall be allocated
between the transferor and the transferee as directed by the transferor Partner
in writing prior to the transfer, provided such method is permitted under the
Code. Any additional cost of computing such allocation shall be paid by the
transferee Partner.
8.5. TAX STATUS. Notwithstanding any provision hereof to the
contrary, each Partner hereby recognizes that the Partnership shall be subject
to all provisions of Subchapter K of Chapter I of Subtitle A of the Code.
8.6. BASIS INFORMATION. Each Partner agrees to provide the
Partnership all information necessary to determine the tax basis for federal
income tax purposes of its interest in any property contributed to the
Partnership.
8.7. TAX MATTERS PARTNER. Builder shall serve as the Partnership's
"Tax Matters Partner" within the meaning of Section 6231(a)(7) of the Code.
Builder shall provide BAV and the Limited Partner with copies of all materials
received by it in such capacity within five (5) Business Days after receipt
thereof and shall consult with BAV with respect to the course of action which
will be taken as a result of the receipt of such materials.
SECTION 9. DISTRIBUTIONS, BOOKS AND RECORDS AND AUDITS.
9.1. DISTRIBUTIONS OF NET CASH FLOW. The Partnership shall
distribute Net Cash Flow in the following order of priority:
<PAGE>
9.1.1. First, on the fifteenth (15th) day of each month
following the date on which Builder, BAV, and the Limited Partner make
their respective initial capital contribution pursuant to Sections
7.2.1, 7.4 and 7.3.1, Builder, BAV and the Limited Partner shall
receive (pro rata) all Net Cash Flow until all Builder Preference
Amount, BAV Preference Amount and the Limited Partner Preference Amount
have been paid to Builder, BAV and the Limited Partner;
9.1.2. Second, pro rata, to the Limited Partner, BAV and
Builder Net Cash Flow in excess of the amounts required to be
distributed pursuant to Section 9.1.1 until the aggregate amount
distributed under this Section 9.1.2 to the Limited Partner equals the
Limited Partner Adjusted Capital Contribution, the aggregate amount
distributed under this Section 9.1.2 to BAV equals the BAV Adjusted
Capital Contribution and until the aggregate amount distributed under
this Section 9.1.2 to the Builder equals the Builder Capital
Contribution; provided, however, that the amount distributed to the
Partners pursuant to this Section 9.1.2 shall be reduced and retained
by Partnership as necessary to cause the cash reserves of the
Partnership to equal or exceed the Working Capital Reserve.
9.1.3. Fourth, Net Cash Flow shall be distributed 60% to
Builder, 39.9% to the Limited Partner and .1% to BAV; provided,
however, that the amount distributed to each Partner pursuant to this
Section 9.1.3 shall be reduced and retained by the Partnership as
necessary to cause the cash reserves of the Partnership to equal or
exceed the Working Capital Reserve.
9.2. GUARANTY. Andrew Zuckerman ("A. Zuckerman"), David Zuckerman
("D. Zuckerman"), Steven Zuckerman ("S. Zuckerman"), all being principals of
Builder and residing in the State of Florida, Builder and Zuckerman Brothers
Inc., a Florida corporation ("ZBI") (collectively the "Guarantors"), hereby,
jointly and severally, unconditionally, absolutely and irrevocably guarantee to
the Limited Partner and BAV the full and complete performance by Builder of all
of its obligations and duties under this Agreement and all obligations under the
Development and Marketing Agreement, including those Builder has as "Developer"
under such agreement (but shall not be deemed to include any guaranty of cash,
cash flows or return of capital to the Limited Partner anticipated to be made
hereby) and shall be liable to the Limited Partner for loss or damage resulting
therefrom (the"Guaranty"). The Guarantors hereby waive protest and/or notice of
default by the Partnership with respect to this Guaranty and agree that, in the
event of a default by Builder under this Agreement or the Guaranty set forth in
this Section 9.2, the Limited Partner may proceed against anyone or all of
Builder, ZBI, A. Zuckerman, D. Zuckerman and S. Zuckerman and may do so without
first proceeding against Builder. In addition, Builder, ZBI, D. Zuckerman, S.
Zuckerman and A. Zuckerman shall be deemed to be jointly and severally in
default under this Guaranty upon the occurrence of a Builder Event of Default
(as hereinafter defined). The Guaranty shall not be affected by any modification
or amendment of this Agreement, except if specifically agreed to by the Limited
Partner in writing; The Guaranty shall continue in full force and effect unless
and until the termination of the Partnership pursuant to Section 16 hereof (and
shall survive such termination to the extent the obligations being guaranteed
have not been satisfied as of such termination). As security for this Guaranty,
Builder hereby grants to the Limited Partner a collateral assignment of all of
Builder's right, title and interest in and to its Interest in the Partnership.
In the event of a default under the Guaranty as provided herein, the Limited
Partner shall have (i) the right to foreclose upon the Interest, in which case
the Limited Partner will hold the Builder's Interest directly and be entitled to
all of the rights of Builder with
<PAGE>
respect hereto; provided, however, that the Builder's Interest shall
automatically convert to a limited partnership interest and the Limited Partner
shall have no right to participate in the management of the Partnership and (ii)
the rights of a secured creditor under the Uniform Commercial Code.
Notwithstanding anything in this Agreement to the contrary, upon the occurrence
of a default under the Guaranty, the provisions of this Section 9.2 shall be
available at the option of the Limited Partner, in conjunction with the
provisions of Section 13. The Guarantors and Builders agree to execute such
reasonable documents as the Limited Partner may request from time to time to
evidence and perfect the security interests and guaranties set forth in this
paragraph.
9.3. LIQUIDATING DISTRIBUTIONS. Notwithstanding Section 9.1, upon
termination and dissolution of the Partnership under Section 16, all Partnership
assets remaining after payment of all Partnership debts and other obligations
shall be distributed to the Partners as a liquidating distribution in proportion
to, and to the extent of, their positive Capital Account balances after taking
into account all allocations of Profits and Losses and specifically allocated
items of income, gain, loss and deduction pursuant to Section 8 of this
Agreement, which would occur if all Partnership assets were sold at their fair
market value. For purposes of this Section 9.3 a "liquidating distribution"
shall be the distribution of the proceeds from the last sale of the Property or
the distribution in-kind of all of the Partnership's assets.
9.4. BOOKS AND RECORDS. The Management Committee shall maintain or
cause to be maintained, in accordance with generally accepted accounting
principles applied in a consistent manner, accurate books and records of account
in which shall be entered all matters relating to the Partnership, including all
income, expenditures, assets and liabilities. Such books and records shall be
maintained at the Partnership's principal place of business or at such other
location as may be designated by the Management Committee from time to time.
Each Partner shall, at all times, subject to reasonable notice, have the right
to inspect and copy the books and records of the Partnership.
9.5. AUDITS. In the event any Partner shall request an audit, the
Partnership shall have an audit of its books and records made each Fiscal Year
by a firm of certified public accountants selected by the Management Committee.
Each Partner shall be furnished with a copy of such accountant's audit report,
including a balance sheet, a statement of the Capital Accounts, a statement of
cash flows and a statement of income, together with a certificate of such
accountants covering the result of such audit, as soon as reasonably practical
after the close of such Fiscal Year. If no Partner requests an audit, no audit
shall be performed.
At the option of BAV, the financial statements of the
Partnership shall be audited in accordance with generally accepted accounting
principles and by an auditor reasonably acceptable to BAV; provided, however,
that if BAV requests that the financial statements be audited, then BAV and the
Limited Partner would be responsible for 75% of the fees and costs of such
auditors in preparing the audit while the Builder would be responsible for the
remaining 25% of the fees and costs of the auditor in preparing the audit. The
amount payable by the Partners pursuant to this section shall be deducted from
any distributions and payable to the Partners, or, if no distribution is payable
as of the date that the fees and costs are due and payable to the auditor, then
the Partners will contribute to the capital of the Partnership the amount so
payable by such Partner. The fees and costs of the auditor in preparing the
audit shall be specially allocated to the Partners in accordance with the
foregoing, which special allocation shall be made prior to any allocations
otherwise provided for in this Agreement.
9.6. REPORTS AND STATEMENTS.
<PAGE>
9.6.1. Within ninety (90) days after the end of each of the
Partnership's Fiscal Years, the General Partners shall, at the expense
of the Partnership, cause to be delivered to the Limited Partners the
following financial statements:
9.6.1.1. A balance sheet of the Partnership as of the
end of such Partnership's Fiscal Year; and
9.6.1.2. A profit and loss statement for such
Partnership accounting year.
The General Partners shall accompany such financial statements
with such other information as, in the judgment of the General Partners, may be
reasonably necessary for the Limited Partners to be advised of the financial
status and results of operations of the Partnership.
9.6.2. During the entire term of the Project, Developer
shall provide the Partnership and each of the Partners with the
following reports:
9.6.2.1. A weekly summary of sales and traffic at the
Project.
9.6.2.2. A monthly sales and marketing report
detailing a traffic report, list of Residences sold and
Residences under construction.
9.6.2.3. A monthly color-coded site plan showing all
of the Residences to be sold, all Residences sold and closed
in one color, Residences sold and under construction in
another color.
9.6.2.4. A monthly balance sheet for the Partnership.
9.6.2.5.A monthly and year to date income statement,
and operating cash flow statement for the Partnership.
9.6.2.6. A quarterly comparison of the original Full
Cost Development Budget to the combination of actual costs and
the costs to complete the Project.
9.6.2.7. A monthly production report detailing the
status of the construction of the Residences at the Project
which shall be provided to the Partners and the Lender.
9.6.2.8. A quarterly list of aged accounts payable.
9.6.2.9. Within ninety (90) days after the end of
each fiscal year of the Partnership, an income statement,
balance sheet, and operating cash flow statement for the
Partnership.
9.6.2.10. Within ninety (90) days after the end of
each fiscal year, an income statement, balance sheet, and
operating cash flow statement for the Developer.
9.6.2.11. A copy of the tax return for the
Partnership within ninety (90) days of the end of the
Partnership's Fiscal Year.
<PAGE>
9.6.2.12. Within ten (10) days from the annual
expiry, a copy of the Project's insurance policy as detailed
in Section 9.1.1.
9.6.2.13. An annual written report detailing the
status of bonds or letters of credit (if any) which may have
been pledged for the development of the Property or
construction of the Residences or other amenities.
9.7. LOAN TO THE PARTNERS. Provided that Partnership funds are
available as reasonably determined by BAV, the Partnership shall loan funds to
the Partners in an amount equal to the tax liabilities to be incurred by the
Partners as a result of their investment in the Partnership. Such loan shall be
made on or before the date payment of such tax liabilities by the Partners is
due and without interest and shall be repaid by the Partners on December 31 of
the year in which the Partners shall have received all distributions due them
pursuant to Sections 9.1.1, 9.1.2, 9.1.3 and 9.1.4 and the Overhead
Reimbursement Fee required to be paid pursuant to Section 10.4 below.
9.8. BANK ACCOUNTS. Unless otherwise agreed to by the Management
Committee, all bank accounts of the Partnership shall be maintained at
BankAtlantic, F.S.B. The bank accounts of the Partnership shall require the
co-signature of one representative of each General Partner with respect to any
disbursement (i) in excess of Twenty-Five Thousand Dollars ($25,000) for payment
of "soft costs" (i.e. any fees and related costs, architects, accountants,
attorneys, surveyors and similar costs); (ii) in excess of Seventy-Five Thousand
Dollars ($75,000) for the payment for hard costs unless the payment is to a
construction escrow and (iii) for any payment to a Partner or affiliate of any
Partner, including the payment of the fees to Developer and/or TAZ Construction,
Inc. pursuant to construction contract between the Developer and TAZ
Construction, Inc. Except as set forth in Paragraph 13.2(ii), and in this
Section 9.8, all bank accounts of the Partnership shall only require the
signature of any one of the Partner Representatives or Substitute Representative
for any disbursements. To the extent that the provisions of Section 13.2(ii) are
applicable, then all bank accounts of the Partnership shall require the
co-signature of one Partner Representative or Substitute Representative of BAV
and one Partner Representative or Substitute Representative of Builder before
any amount or expenditure can be paid out of the operating account.
SECTION 10. DEVELOPMENT OF THE PROPERTY.
10.1. FULL COST DEVELOPMENT BUDGET. The Full Cost Development Budget
shall be presented to the Management Committee in accordance with Section 11.1
and shall, upon approval, be attached hereto and made a part hereof as Exhibit
D. The Management Committee will implement the Full Cost Development Budget in
accordance with the terms thereof and the terms of this Agreement. The
Management Committee is authorized to revise the Full Cost Development Budget
from time to time to the extent the Management Committee, in its sole
discretion, deems necessary. The Builder shall be permitted to make expenditures
which vary from the Full Cost Development Budget, (as modified in writing by the
Management Committee) provided the aggregate of all variations from the Full
Cost Development Budget shall not exceed four percent (4%) of the entire Full
Cost Development Budget (the "Permitted Variances"), without such authorization
from the Management Committee.
<PAGE>
10.2. DEVELOPMENT AND MARKETING AGREEMENT. The Partnership shall,
concurrently with the execution of this Agreement, enter into a Development and
Marketing Agreement with Builder or an Affiliate in the form attached hereto as
Exhibit A.
10.3. BUILDER FEES.
10.3.1. Builder or an Affiliate shall be paid a GAO Fee in an
amount equal to three percent (3%) of the Gross Sales Price of each
Residence Closed payable simultaneous with disbursal of the closing
proceeds payable to the Partnership in connection with the sale of each
Residence Closed. Builder shall provide quarterly reports to the
Partnership with regard to such fees paid pursuant to this paragraph.
The GAO Fee shall be paid only in connection with Residences which have
been closed and the purchase price paid to the Partnership. Amounts of
the GAO Fee payable by the Partnership to Builder or an Affiliate, and
duties undertaken by Builder or an Affiliate in respect thereof, are
collectively referred to herein as "Builder Fees."
10.3.2. The GAO Fee shall not be paid to Builder or its
Affiliate (and payment thereof shall be deferred and subordinated) if,
at the time such payment would be due: (i) the amounts due BAV and the
Limited Partner pursuant to Section 9.1.1 and 9.1.2 hereof and the fee
payable to BAV pursuant to Section 10.4 have not been paid; (ii)
Builder is otherwise in default in any material respect under this
Agreement or the Development and Marketing Agreement and such default
is not cured within ten (10) days after written notice to Builder of
such default or (iii) there is an uncured default in any material
respect under any agreement pertaining to the Project including, but
not limited to, agreements with the applicable government unit or
agreements or instruments relating to the financing of the Project.
10.4. OVERHEAD REIMBURSEMENT FEES. BAV shall be paid an Overhead
Reimbursement Fee in an amount equal to one percent (1%) of the Gross Sales
Price of each Residence Closed payable simultaneous with disbursal of the
closing proceeds payable to the Partnership in connection with the sale of each
Residence Closed ("Overhead Reimbursement Fee").
10.5. SALES CONTRACTS. The form and content of the sales contracts
for the sale and purchase of individual Residences is subject to the prior
approval of BAV. All such contracts shall require deposits ("Escrow Deposits")
in the amount of ten percent (10%) of the purchase price from the prospective
purchaser of a Residence unless otherwise agreed by BAV or unless the
prospective Purchaser is qualified to receive a mortgage in excess of ninety
percent (90%) of the purchase price in which event the deposit shall be equal to
the purchase price less the approved mortgage amount. Such Escrow Deposits shall
be held in escrow by an escrow agent reasonably satisfactory to BAV. It is
expressly understood and agreed that the Escrow Deposits shall be held in escrow
and Builder shall not be permitted to use such Escrow Deposits in connection
with the construction of the Residences unless (i) the prospective purchaser has
waived in writing the requirement that the Deposit be held in escrow, (ii) he
waiver by the prospective purchaser and the use of the funds by Builder complies
with all applicable laws and with the terms of the Property Loans, and (iii)
Builder is in compliance with and not in default under any of the terms of the
Limited Partnership Agreement.
SECTION 11. MANAGEMENT.
11.1. MANAGEMENT CONCEPT. Subject to Sections 11.7 and 13, the
overall management and control of the business and affairs of the Partnership
shall be vested in the General
<PAGE>
Partners. The General Partners shall conduct the business and affairs of the
Partnership through the Management Committee and otherwise in accordance with
the terms of this Agreement.
11.2. GENERAL PARTNER REPRESENTATIVES. Each General Partner shall
appoint at all times and from time to time (i) two (2) representatives (a
"Partner Representative"), and (ii) one substitute representative (a "Substitute
Representative") who may, from time to time, replace or act for a Partner
Representative, for purposes of making any decision required of the Partnership
hereunder. Each Partner Representative and Substitute Representative shall be a
natural person and shall be reasonably available for discussions and
consultations relating to the business of the Partnership on Business Days
during normal business hours. Each General Partner represents and warrants that
its respective Partner Representatives and Substitute Representative shall have
full authority to act on its behalf at meetings of the Management Committee or
otherwise to bind such General Partner. Each General Partner may, upon Notice to
the other General Partner at any time and from time to time, appoint, substitute
and replace a Partner Representative or Substitute Representative. The Partner
Representatives (or Substitute Representative) of the Partners together shall
constitute the management committee of the Partnership (the "Management
Committee"). The initial Partner Representatives and Substitute Representative
of Builder shall be A. Zuckerman, S. Zuckerman and D. Zuckerman, respectively.
The initial Partner Representatives and Substitute Representative of BAV shall
be John E. Abdo, Frank Abdo and Seth M. Wise, respectively.
11.3. MANAGEMENT COMMITTEE MEETINGS. A Partner Representative or
Substitute Representative may convene a meeting of the Management Committee as
follows: (i) telephonic Management Committee meetings may be convened with three
(3) days Notice unless such notice is waived by all four Partner
Representatives, and (ii) other meetings may be convened either (x) in the
manner agreed upon in writing from time to time by the Management Committee, or
(y) in the absence of any such agreement, by giving each other Partner
Representative fourteen (14) days' Notice. The General Partner calling a meeting
of the Management Committee shall use reasonable efforts to provide the other
General Partner with an agenda for the meeting at the time Notice of the meeting
is given. Notice of a meeting may be waived in writing at any time or from time
to time by a Partner Representative or Substitute Representative, whether before
or after the time of such meeting. Attendance of a Partner Representative or
Substitute Representative at a meeting of the Management Committee shall
constitute a waiver of Notice of such meeting, except where the Partner
Representative or Substitute Representative attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not properly called or convened. Attendees shall
be deemed present at any meeting of the Management Committee held by conference
telephone or similar communication equipment by means of which all Persons
participating in the meeting can continuously hear and speak to each other. A
quorum of the Management Committee shall consist of one (1) Partner
Representative or one (1) Substitute Representative of each General Partner.
Approval of decisions by the Management Committee shall require the consent of
the Partner Representatives or Substitute Representatives of each General
Partner present at a meeting of the Management committee at which a quorum is
present. A Partner Representative of Builder shall act as Chairman of all
meetings of the Management Committee and a Partner Representative of BAV shall
serve as Secretary. The Secretary shall keep a book of minutes of all Management
Committee meetings in which shall be recorded the time and place of all
meetings, the names of those present and the proceedings. The Management
Committee shall also keep a formal record of all of its decisions and
determinations made without holding a Management Committee meeting. Each General
Partner represents that it will use its best efforts to have a Partner
Representative or Substitute Representative present at all regular and properly
noticed special meetings
<PAGE>
of the Management Committee. Notwithstanding the foregoing, any action of the
Management Committee requiring a vote of the Management Committee may be taken
by unanimous written consent of the Partner Representatives without a meeting.
In the event of a telephonic meeting, approval shall be confirmed in writing
within the time limits provided in Section 11.4.
11.4. TIME LIMITS FOR EXERCISE OF APPROVAL RIGHTS. Whenever in this
Agreement the consent or approval of either General Partner is required, unless
a different time limit is provided in this Agreement, such consent or approval
shall be promptly considered and acted upon and shall be deemed disapproved if
not given within ten (10) Business Days after Notice of the item to be approved
or disapproved.
11.5. STANDARDS OF APPROVAL. Except as otherwise provided herein,
consent or approval shall not be unreasonably withheld. However, whenever in
this Agreement any General Partner is given the right to consent or refuse to
consent or to approve or disapprove in its sole discretion, it may disapprove
arbitrarily and without reason or refuse to consent arbitrarily and without any
reason and need not specify in writing any reason therefor.
11.6. DOCUMENT EXECUTION. All documents required to be executed by
the Partnership shall be signed by a Builder Partner Representative or
Substitute Representative and a BAV Partner Representative or Substitute
Representative; provided, however, that the Management Committee may, in
writing, delegate the execution of a document to an authorized agent of the
Partnership.
11.7. CONTROL OF PARTNERSHIP. Notwithstanding any other provision of
this Agreement (except Section 13 which shall control upon the occurrence of a
Builder Event of Default), if:
(i) without the other General Partner's prior consent,
which may be withheld in a General Partner's sole discretion, a General
Partner's interest in the Partnership shall become subject to any lien,
pledge, security interest or other encumbrance without the prior
written consent of each General Partner and such lien, pledge, security
interest or encumbrance not discharged within thirty (30) days; or
(ii) any General Partner commits an Act of Insolvency; or
(iii) any General partner transfers its interest in the
Partnership without the prior written consent of the other General
Partner whenever such consent is required by the terms of this
Agreement.
then in any such event, the other General Partner (a "Controlling Partner") may,
at its option, designate itself a Controlling Partner, in which event from and
after the exercise of such option, all actions to be taken or decisions to be
made by the Partnership with respect to the conduct of the Partnership's
business may thereafter be taken or made without the approval of the other
General Partner which is not a Controlling Partner or the Partner Representative
or Substitute Representative thereof.
11.8. DESIGNATION OF PROJECT. The project as developed on the
Property shall be designated as "Brittany Bay at Andros Isle." The Limited
Partner may utilize the name of the project or the name of Builder in (a)
materials provided to prospective investors in the Limited Partner,
<PAGE>
provided such materials specify and are evidently clear to all such investors
that Builder is in no way responsible for the preparation or content of such
materials or any portion thereof or any exhibit thereto nor has Builder
guaranteed the accuracy of the forecasts or the achievement by the Partnership
of its objectives, or (b) in marketing materials utilized by the Limited
Partner.
SECTION 12. INSURANCE.
12.1. INSURANCE TO BE MAINTAINED. The Partnership shall procure and
maintain in force insurance acceptable in form and content and from insurers
acceptable to the Management Committee which shall, unless otherwise agreed,
include the coverages described on Exhibit F, the premium for which shall be an
expense of the Partnership.
12.2. FORM OF POLICIES.
12.2.1. All insurance policies shall be issued in the name of
the Partnership (and shall name the General Partners), as named
insured. BAV shall promptly be provided with copies of all issuance
policies.
12.2.2. Notwithstanding anything else herein to the contrary,
the Management Committee may, in its sole discretion, provide the
insurance coverage required pursuant to Section 12.1.1 by including the
Partnership under the insurance coverage of any Affiliate of a Partner.
If the Management Committee so elects, the Partnership shall pay to
such Affiliate its pro rata share of the cost of such coverage, the
proration to be made in the sole and absolute discretion of such
Affiliate, provided that in no event shall such prorated cost exceed
the cost that the Partnership would have paid for such coverage from a
comparable insurance company to the insurance company providing the
coverage.
SECTION 13. DEFAULT.
13.1. BUILDER EVENTS OF DEFAULT. The following acts or events shall
constitute "Builder Events of Default":
(i) Any default by the Partnership under the terms of the
Property Loans (described in Section 7.9) of the Partnership or any
other loan or indebtedness secured by the Property or an interest in
the Partnership;
(ii) The failure of the Partnership to make the
distributions to the Limited Partner and/or BAV pursuant to Sections
9.1.1, 9.1.2 and 9.1.4 hereof or to pay when due the Overhead
Reimbursement Fee pursuant to Section 10.4 above;
(iii) The failure of Builder or any Affiliate to make any
capital contribution required by Section 7.2 or 7.5; to satisfy the
Guaranty as required by Section 9.2; or to otherwise perform in
accordance with the terms of this Agreement after five (5) Business
Days notice of such breach to Builder given by BAV or the Limited
Partner;
(iv) The breach by Builder or any Affiliate thereof of any
of its obligations under this Agreement (other than the obligations
referenced in subsections 13.1(i), (ii), (iii), (v), (vi) or (vii)
hereof, which shall be governed by the cure periods, if any, contained
in such subsections)
<PAGE>
and such breach shall continue or remain uncured twenty (20) days after
written notice thereof by BAV or the Limited Partner or a breach by
Builder or any Affiliate thereof the terms of the Development and
Marketing Agreement attached as Exhibit A (subject to any cure periods
set forth therein) or the expenditure by the Partnership of amounts in
excess of that allowed under the Full Cost Development Budget, beyond
that allowed in Section 10.1 (unless Builder provides all funds or
other additional costs in excess of the Full Cost Development Budget at
no cost to BAV or the Limited Partner and without it being considered
an additional capital contribution;
(v) The occurrence of an event described in subparagraphs
(i), (ii) or (iii) of Section 11.7;
(vi) The inaccuracy of any of the Representations or
Warranties set forth in Section 17.1 hereof; or
(vii) The taking of any action by Builder which constitutes
bad faith, gross negligence or willful misconduct in connection with
the operation of the Partnership or the Project.
13.2. CONSEQUENCES OF BUILDER DEFAULT. Upon the happening of any
Builder Event of Default, BAV shall, in addition to any other rights available
at law or equity, have the right to:
(i) Immediately dissolve the Management Committee and
take sole control and management of the Partnership, with all rights
and authority previously granted to the Management Committee pursuant
to Section 11;
(ii) Require the co-signature of one representative of
both BAV and Builder before any amount or expenditure can be paid out
of the Operating Account, as defined in Section 2.12 of the Development
and Marketing Agreement and before any fees, including, but not limited
to, the GAO Fee can be paid to Builder pursuant to Section 10.3 hereof;
(iii) Provided Builder has not cured any Builder Event of
Default within thirty (30) days of the occurrence of such Builder Event
of Default, Builder's interest in the Partnership shall terminate and
all right, title and interest in Builder's Partnership Interest shall
be transferred, at the option of BAV, to BAV or the Limited Partner or
an Affiliate of either BAV or the Limited Partner. In connection
therewith, Builder shall be issued a limited partnership Interest in
the Partnership which shall entitle it to distributions equal to those
provided by Section 9.1. hereof; provided, however, such distributions
shall be limited to an amount equal to the Builder Adjusted Capital
Contribution; further provided, however, that the amount of any
additional costs incurred by the Partnership to complete the Project as
the result of, directly or indirectly, the Builder Event of Default
including without limitation, additional fees payable to any new
developer and legal fees incurred by the Partnership shall be deducted
from any such distributions. In addition, upon the occurrence of a
Builder Event of Default, no further Builder Fees shall be due or
payable to Builder. Builder shall execute and deliver to BAV any and
all documents required to execute the Transfer described above in this
subparagraph (iii). In the event Builder does not for any reason
execute such transfer documents, Builder hereby grants to BAV a Power
of Attorney authorizing and empowering BAV to make and execute for
<PAGE>
Builder and on Builder's behalf, as its attorney in fact, such
documents or instruments as may be required to effectuate the Transfer
of all of Builder's right, title and interest in and for its Interest
as contemplated by this subparagraph (iii). A copy of said Power of
Attorney is attached hereto as Exhibit G. Builder hereby acknowledges
that said Power of Attorney is given for valuable consideration coupled
with an interest and that said Power of Attorney is absolute and
irrevocable.
SECTION 14. LIMITED PARTNERS.
14.1. LIMITATION OF LIABILITIES OF LIMITED PARTNERS. The Limited
Partner shall not be bound by, or be personally liable for, the expenses,
liabilities or obligations of the Partnership or General Partners and the
liability of the Limited Partner shall be limited solely to the amount of its
contributions to the capital of the Partnership required under the provisions of
section 7.3.
14.2. NO CONTROL OF BUSINESS OR RIGHT TO ACT FOR PARTNERSHIP. The
Limited Partner shall take no part in the management, conduct or control of the
business of the Partnership and shall have no right or authority to act for or
on behalf of, or to bind the Partnership.
14.3. NO PRIORITY. Except as otherwise specifically set forth
herein, the Limited Partner shall not have the right to demand or receive
property other than cash as a return of his capital contribution or as a
distribution of income. No Limited Partner shall have priority over any other
Limited Partner which may be admitted hereunder either as to the return of his
original contribution of capital to the Partnership or as to distributions.
SECTION 15. SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION.
15.1. TRANSFER OF GENERAL PARTNER'S INTEREST.
15.1.1. Prohibited Transfer. Except as otherwise provided in
this Section 13 or in Section 15, no General Partner shall Transfer all
or any part of such Partner's Interest without the prior written
consent of the other General Partner (which consent may be withheld in
the sole discretion of a non-transferring General Partner), and any
such attempt to Transfer such interest shall be void.
15.1.2. Permitted Transfers. Notwithstanding the provisions
of Section 15.1 hereof, all or any portion of the Interest of a General
Partner in the Partnership may be Transferred to any Permitted
Transferee of such General Partner. Such transfer shall not release the
transferor of liabilities undertaken hereunder.
15.1.3. Admission of Transferee. If a General Partner sells
or transfers all or any portion of its Interest pursuant to the
foregoing provisions, the transferee (unless it is already a General
Partner or unless such transferee is, and then only for so long as it
continues to be, a Permitted Transferee of the assigning General
Partner) shall not become a General Partner, but shall merely be an
assignee of the General Partner's right to receive its share of
distributions from the Partnership; provided, however, that such
assignee may become a General Partner if the other General Partner
approves the admission of such transferee as a General Partner and such
assignee executes such documents and delivers such legal opinions and
certificates to the
<PAGE>
Partnership and the other General Partner as such other General Partner
deems reasonably necessary or appropriate. If the assigning General
Partner retains any Interest after the Transfer, it shall continue as a
General Partner. If so requested by the nontransferring General
Partner, the transferring General Partner shall obtain, at its expense,
an opinion of counsel that any transfer does not violate federal or
state securities laws.
15.1.4. Withdrawals. Each of the General Partners does hereby
covenant and agree that it will not Withdraw or retire from the
Partnership, except as a result of a Permitted Transfer of its entire
Interest pursuant to the terms of this Agreement, and that it will
carry out its duties and responsibilities hereunder until the
Partnership is terminated, liquidated and dissolved under Section 16.
Upon any change in the General Partners of the Partnership as provided
in this Agreement, the Partners will execute such documents as shall be
required to amend the Certificate of Limited Partnership to reflect
such change in the General Partners.
15.2. TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
15.2.1. Requirement for Transfer. The Limited Partner shall
have no right, without the prior written consent of the Management
Committee, which may be granted or withheld in its sole discretion and
which need not be exercised in a reasonable manner to Transfer its
Interest or to substitute a new person or entity as a limited partner
in its stead. Subject to any restrictions on transferability required
by law or contained in this Agreement, any Transfer or assignment to
which the Management Committee shall consent must be effected through a
written instrument, in a form acceptable to the Management Committee.
No consent to a Transfer given by the Management Committee shall be
deemed or considered a release or novation of the transfer or as to any
obligations of the transferor to the Partnership arising under this
Agreement otherwise.
15.2.2. Effectiveness of Assignment. The Transfer by a
Limited Partner of all or part of its Interest shall become effective
on the first day of the month during which satisfaction of the
requirements set forth in Section 15.2.1 hereof has occurred and the
Management Committee has received evidence of such Transfer in form and
substance reasonably satisfactory to the Management Committee and a
Transfer fee sufficient to cover all reasonable expenses of the
Partnership connected with such Transfer.
15.2.3. Requirements for Substitution. No transferee of the
whole or a portion of a Limited Partner's Interest shall have the right
to become a substituted Limited Partner in place of his assignor unless
and until all of the following conditions are satisfied:
(i) a duly executed and acknowledged written
instrument of Transfer approved by the Management Committee
has been filed with the Partnership setting forth the
intention of the transferor that the transferee become a
substituted Limited Partner in its place;
(ii) the transferor and transferee execute and
acknowledge, and cause such other persons to execute and
acknowledge, such other instruments as the Management
Committee reasonably deems necessary or desirable to effect
such substitution, including without limitation, the written
acceptance and adoption by the transferee of the provisions of
this Agreement;
<PAGE>
(iii) the written consent of the Management
Committee to such substitution shall. be obtained, the
granting or denial of which shall be within the sole and
absolute discretion of the Management Committee;
(iv) the transferor delivers to the Partnership
the written consent of any party whose consent to such
substitution is required;
(v) a Transfer fee has been paid to the
Partnership sufficient to cover all reasonable expenses in
connection with the Transfer and substitution; and
(vi) an appropriate amendment of the certificate
of limited partnership has been duly filed and recorded, if
necessary. The Management Committee agrees to file such
amendment and cause it to be recorded promptly after the
conditions specified above in clauses (i) through (v) above
have been satisfied.
15.2.4. Permitted Transfer. Notwithstanding anything to the
contrary contained elsewhere herein, the Limited Partner shall be
allowed to Transfer its Interest (i) by operation of law pursuant to a
default on the indebtedness of the Limited Partner secured by its
Interest, or (ii) with respect to a Transfer to a Permitted Transferee.
In the event of such default, the appointed representative of the
holders of such debt secured by the Limited Partner's Interest shall be
treated, for all purposes hereunder, as a substituted limited partner.
In the event of a transfer pursuant to Section 15.2.4(ii), the
Transferee shall be treated for all purposes hereunder, as a
substituted limited partner.
15.2.5. Blind Option.
15.2.5.1. Either BAV and/or the Limited Partner
(collectively the "BAV Group") or the Builder ("Builder
Group") (the Group initiating this procedure being referred to
as the "Initiating Group") shall have the right to invoke a
mandatory "blind option" by giving written notice thereof
("Blind Option Notice") to the other, non-initiating group
(hereinafter referred to as the "Electing Group"). The Blind
Option Notice shall contain (a) an offer to buy ("Offer to
Buy") all, but not less than all, the (i) Interests of the
Electing Group; (ii) any loans made by the Electing Group to
the Partnership ("Partnership Loans") from the Electing Group,
which Offer to Buy shall set forth the value of all the
Partnership assets as more fully provided in Section 15.2.5.4
hereof (referred to as the "Blind Option Price"); and (b) an
offer to sell ("Offer to Sell") all, but not less than all,
the Initiating Group's Interests and any Partnership Loans
made by the Initiating Group (collectively hereinafter
referred to as the "Interests") to the Electing Group at the
Blind Option Price. The Blind Option Price may not be
conditioned in any manner or established as a formula. For
purposes of this Article, the applicable Group's Interests
shall include the Interest of any Transferee of any Partner
of such Group.
15.2.5.2. With sixty (60) days from the date in which
the Blind Option Notice is given, the Electing Group shall
elect either to accept the Offer to Buy or accept the Offer to
Sell by giving written notice of such election to the
Initiating Group ("Blind Option Election Notice"). The failure
of the Electing Group to give the Blind
<PAGE>
Option Election Notice within such sixty (60) day period shall
be deemed an affirmative election by the Electing Group to
accept the Offer to Buy, and a Blind Option Election Notice to
that effect shall be deemed given as of the sixtieth (60th)
day.
15.2.5.3. The Group ultimately purchasing the
Interests pursuant to these provisions shall hereinafter be
referred to as the "Blind Option Purchaser" and the Group
ultimately selling its Interests pursuant to these provisions
shall hereinafter be referred to as the "Blind Option Seller."
The members of the Group that is the Blind Option Purchaser
shall be jointly and severally liable to the purchaser of the
Interests of the Blind Option Seller, and the Blind Option
Seller may proceed against any one or more of the members of
the Group that is the Blind Option Purchaser without any
obligation to pursue other members of the Blind Option
Purchaser.
15.2.5.4. The Blind Option Price to be paid by the
Blind Option Purchaser hereunder shall be an amount equal to
that which the Blind Option Seller would receive as a
distribution pursuant to Section 9.3 hereof if the Partnership
assets were sold at the value specified in the Blind Option
Notice and the Partnership was terminated and liquidated as of
the date of the Blind Option Notice. The Blind Option Price
shall be paid by cashier's check or wire transfer at the Blind
Option Closing.
15.2.5.5. The closing ("Blind Option Closing") under
this Article shall be held on a date as agreed upon by the
parties, but in no event shall be earlier than the thirtieth
(30th) day following the date in which the Blind Option
Election Notice is given or deemed given, nor later than the
ninetieth (90th) day following the date of the Blind Option
Notice. At the Blind Option Closing, each member of the Group
that is the Blind Option Seller shall (i) represent and
warrant in writing to the Blind Option Purchaser that it is
the sole owner of the Interests that it is selling, that such
Interests are free and clear of any and all pledges, claims,
liens and claims of others (other than the effect of this
Agreement) and that it has the full, power, right and
authority to consummate the sale of its Interests; and (ii)
assign and deliver to the Blind Option Purchaser the Interests
so sold, together with all other documents necessary to
transfer such interests.
15.2.5.6. In the event that a Blind Option Purchaser,
through no fault of the Blind Option Seller, breaches its
obligations to purchase a Blind Option Seller's Interest in
the manner and in the within the time period provided in
Section 10.2.5 ("Blind Option Purchaser Default"), such Blind
Option Seller, in addition to any other rights and remedies
which it may have at law or in equity, may purchase all of the
Blind Option Purchaser's interests at an amount per share
equal to seventy-five percent (75%) of the Blind Option Price,
which sale may be enforced by such Blind Option Seller in
equity by a suit for specific performance.
15.2.5.7. During the period commencing on the date in
which the Blind Option Election Notice is given or deemed
given and ending on the date of the Blind Option Closing, the
Blind Option Purchaser (i.e., the Builder, if the Builder is
the Blind Option Purchaser or BAV, if the BAV Group is the
Blind Option Purchaser) shall have the right to exercise all
rights of the General Partners hereunder and the consent of
the Blind Option Seller shall not be required with respect to
any actions. The Partners
<PAGE>
hereby agree that the Blind Option Seller shall execute any
and all documents reasonably requested by counsel to the
Partnership in order to effectuate the foregoing.
15.2.5.8. In connection with the Blind Option
Closing, the Blind Option Purchaser shall use good faith
efforts to obtain the release of the Blind Option Seller (and
its principals, if applicable) of any and all agreements
(including but not limited to the Property Loans) as to which
such Blind Option Seller would have continuing personal
liability; provided, however, in the event that the Blind
Option Purchaser is not able to obtain such release, then the
Blind Option Purchaser shall indemnify and hold the Blind
Option Seller (and its principals, if applicable) harmless
with respect to all loss, cost and expense, including, but not
limited to, attorneys' fees and court costs through all trial
and appellate levels that the Blind Option Seller (and its
principals, if applicable) would have in connection with such
agreements, whereby such Blind Option Seller (and its
principals, if applicable) incurred such liability in
accordance with the terms and provisions of this Agreement.
SECTION 16. TERMINATION AND DISSOLUTION.
16.1. EVENTS RESULTING IN TERMINATION AND DISSOLUTION. The
Partnership shall be terminated and dissolved upon the happening of any of the
following events:
(i) expiration of the term of the Partnership;
(ii) the Partnership becomes insolvent or bankrupt;
(iii) the written consent of both General Partners;
(iv) the Withdrawal or removal of the last remaining
General Partner unless the business of the Partnership shall be
continued in a reconstituted form and another person selected as a
successor general partner pursuant to Section 16.4 hereof;
(v) the sale or other disposition (including foreclosure)
of all or substantially all of the Property and the distribution of all
Partnership assets to the Partners; or
(vi) the failure of the General Partners to extend the
Initial Contribution Date and the required capital contributions
required pursuant to Section 7 shall have not occurred.
16.2. MANAGEMENT DURING LIQUIDATION. Unless a General Partner shall
have taken control of the Partnership pursuant to Sections 11 and/or 13 hereof,
the Management Committee shall continue to manage the Partnership during the
period of winding up. The Property shall be liquidated as promptly as is
consistent with obtaining at least the fair market value of the assets, and the
liquidation shall be conducted in compliance with law and sound business
practice. The Partners shall be entitled to reimbursement for out-of-pocket
expenses incurred in connection with the winding up and liquidation of the
Partnership. Such reimbursement shall be paid as an expense of the Partnership
after all debts to non Partners have been repaid but before any repayment of
loans or advances to the Partners.
<PAGE>
16.3. PARTNER'S RIGHT TO BID FOR ASSETS. Upon the dissolution and
liquidation of the Partnership, any Partner may make a bid or tender an offer on
any of the assets of the Partnership. Those assets bid upon by a Partner shall
not be sold to an outsider unless the bid made by such outsider is upon more
favorable terms and conditions than the highest and best bid of a Partner.
16.4. RECONSTITUTION OF PARTNERSHIP AFTER WITHDRAWAL OF THE LAST
REMAINING GENERAL PARTNER. Upon the Withdrawal of the last remaining General
Partner, the Limited Partner shall have the right, by unanimous vote, to elect
to continue the business of the Partnership, in a reconstituted form if
necessary, such right exercisable upon notice to all Partners (including the
last remaining General Partner) within sixty (60) days after the Withdrawal of
the last remaining General Partner, and for this purpose, such Partners owning
more than 50% of the Partnership Interests may vote to elect another person as
successor general partner, such election to be effective at the end of said
60-day period. The Withdrawal of the last remaining General Partner shall not be
effective until the successor general partner shall have taken all steps
necessary to be substituted as a general partner under the laws of the State.
16.5. DEATH, INCOMPETENCE, BANKRUPTCY OR DISSOLUTION OF A LIMITED
PARTNER. Upon the death or legal incompetency of an individual Limited Partner,
the liquidation, dissolution or other cessation to exist as a legal entity of a
Limited Partner not an individual, or the insolvency or bankruptcy of any
Limited Partner, the Partnership shall not dissolve or terminate and the
personal representative of such Limited Partner shall have such rights of a
Limited Partner as are necessary for the purpose of settling or managing his
estate or his affairs and the same power as said Limited Partner had to
constitute a transferee of such Limited Partner, but said representative shall
not become a substituted Limited Partner without complying with the requirements
of section 15.
SECTION 17. REPRESENTATIONS AND WARRANTIES.
17.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUILDER. Builder
hereby warrants, covenants and represents the following to BAV and the Limited
Partner with full knowledge that BAV and the Limited Partner are acting in
reliance upon same in executing the Agreement and commencing performance
hereunder:
17.1.1. Builder is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida.
Builder has all requisite corporate power and authority to enter into
and perform this Agreement.
17.1.2. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of
Builder and the Persons Controlling Builder. This Agreement has been
duly executed and delivered by Builder and this Agreement and all
exhibits and documents executed and delivered by it in connection with
the consummation of the transactions contemplated hereby constitute
valid and legally binding and enforceable obligations of Builder.
Except with respect to the fulfillment of and/or compliance with any |
