EXHIBIT 10.6
LIMITED LIABILITY COMPANY AGREEMENT
OF PALM COVE DEVELOPERS. LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "AGREEMENT") of PALM COVE
DEVELOPERS, LLC (the "Company") is made and entered into effective as of the
19th day of January, 2005 ("Effective Date"), by and between ASHTON TAMPA
RESIDENTIAL, LLC, a Nevada limited liability company ("Ashton") and M/I HOMES OF
TAMPA LLC, a Florida limited liability company ("M/I"). M/I and Ashton are
sometimes referred to herein collectively as "Members" and individually as a
"Member."
RECITALS
WHEREAS, Ashton and Pulte Home Corporation entered into that certain
Agreement for Sale of Land (the "Pulte Contract") for the purchase and sale of
certain real and other related property subject to the Pulte Contract (defined
therein as the "Property") (The Pulte Contract is attached hereto as Exhibit "A"
and incorporated by reference herein) and;
WHEREAS, as contemplated by that certain Letter Agreement ("Letter
Agreement") dated as of December 22, 2004, by and between Ashton and M/I, Ashton
assigned the Pulte Contract to Company and the Company acquired the Property
(the "Property Closing"); and
WHEREAS, as further contemplated by the Letter Agreement, Company, Ashton
and M/I are entering into this Agreement to consummate M/I's subscription for
one-half (i.e., 50%) of the total equity or membership interests in and to the
Company and to set forth certain terms and conditions applicable to the
development of the Property by Company, the distribution of finished lots to the
Members and other applicable terms and conditions related to the business
affairs of the Company and the development of the Property; and
NOW, THEREFORE, the Members, by the execution and delivery of this
Agreement, set forth the agreement for the Company under the laws of the State
of Florida upon the terms and subject to the conditions of this Agreement.
1. DEFINITIONS. All capitalized terms not defined in this Agreement shall
have the meaning ascribed to them in the Pulte Contract. When used in this
Agreement, the following terms shall have the meanings set forth below:
(a) "ACT" shall have the meaning ascribed to it in Section 2.1. All
references herein to sections of the Act shall include any corresponding
provisions of succeeding law.
(b) "AFFILIATE" shall mean, when used with reference to a specified
Person, any Person who controls, is controlled by or is under common control
with the specified Person.
(c) "AGREEMENT" shall mean this Limited Liability Company Agreement, as
originally executed and as amended from time to time.
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(d) "APPROVED BUSINESS PLAN" means collectively, after submission and
approval as described herein, the following: (i) a pro-forma budget and
development plan for the Property (the "Project") in accordance with the Pulte
Contract, the Development Agreement (defined in Section 1.(o) hereof,) and this
Agreement (the "Project Budget and Plan") and (ii) a Member capital contribution
plan for the capital contributions by the Membere for the construction of the
Project by the Company (the "Project Contribution Plan"), as each of the same
may be amended from time to time in accordance with this Agreement. The
Day-to-Day Manager shall endeavor to prepare and provide for M/I's approval the
applicable Project Budget and Plan and the Project Contribution Plan within
fifteen (15) days after the Effective Date. M/I shall endeavor to approve such
Project Budget and Plan and the Project Contribution Plan submitted by the
Day-to-Day Manager within fifteen (15) days of M/I's receipt of the submitted
Project Budget and Plan and Project Contribution Plan; provided, the parties
intend to work together as reasonably possible in preparing and reviewing all
matters applicable to the Approved Business Plan (as defined in the following
sentence). Upon each party's written approval of the Project Budget and Plan and
Project Contribution Plan, such plans shall be considered and referred to herein
as the "Approved Project Budget and Plan" and the "Approved Project Contribution
Plan," and collectively shall be considered and referred to herein as the
"Approved Business Plan." The Approved Business Plan is intended to be the
overall plan and budget for the planning, development, and construction of the
Project, including the distribution of finished lots to the Members, the
projection and timing of annual Project expenditures, including, without
limitation, development costs, construction costs, and maintenance costs, all of
which shall be set forth in detail with each category of expense listed as a
separate line item and a preliminary cost analysis for the Project. Such
expenses shall be further separately delineated into two major categories of
line item expenses as follows: (a) those line item expenses constituting
"Operating Costs" and (b) those line item expenses constituting "Development
Costs." The parties acknowledge that the Approved Business Plan will require
updating or modification during the term of the Project as a result of changes
to projected and actual costs, permitting conditions, etc. The Day-to-Day
Manager shall regularly consult with and seek the input of the other Member in
connection with the Day-to-Day Manager's updating of the Approved Business Plan.
The Day-to-Day Manager shall use its commercially reasonable efforts to cause
the Project to be developed, constructed, operated and disposed of substantially
in accordance with the Approved Business Plan as it is updated and approved from
time to time, including, without limitation, the line items contained therein.
Subject to the approval rights set forth in Section 5.2 (a), below, and the
obligation of the Day-to-Day Manager to maintain the originally Approved
Business Plan as a comparative measure of how well the Company actually
performed in comparison to the such originally Approved Business Plan, the
Day-to-Day Manager shall update the Approved Business Plan as follows; (1) the
Approved Project Budget and Plan shall be updated on not less than a semi-annual
basis and the (2) the Approved Project Contribution Plan shall be updated every
fiscal quarter. No update, modification or amendment of the Approved Business
Plan (or any component budget item or plan thereof) shall be effective unless
and until approved by all Members, subject to Section 5.5(c).
(e) "ARTICLES" shall mean the Articles of Organization of the Company
as filed with the Secretary of State of the State of Florida, as the same may be
amended from time to time by the approval of the Members.
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(f) "AVAILABLE CASH" shall mean all cash and cash equivalents of the
Company on hand and in financial institutions or depositories and cash
equivalents, on the date of any proposed distribution, after payment or
provision for payment of all debts and liabilities of the Company then due
(including, without limitation, debts and liabilities to Members who are
creditors of the Company and payments then due under third-party loans to the
Company), provision for reasonable working capital reserves and payment or
provision for payment of operating expenditures, all as reasonably determined by
the Day-to-Day Manager and approved by the Members, subject to Section 5.5(c).
Available Cash shall not include Capital Contributions of the Members.
(g) "BASE RATE" means the commercial loan rate of interest announced
publicly from time to time by Bank of America, N.A. (or any successor thereto)
in Tampa, Florida as such bank's "reference rate" or "prime rate" as from time
to time in effect.
(h) "CAPITAL ACCOUNT" shall mean a capital account established for each
Member to which such Member's respective Capital Contributions shall from time
to time be credited, which shall be maintained in accordance with the provisions
of Section 704(b) of the Code and the Treasury Regulations promulgated
thereunder.
(i) "CAPITAL CONTRIBUTIONS" shall mean the Initial Contributions and
any additional contributions contributed to the Company by each Member in
accordance with Section 3 of this Agreement.
(j) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(k) "COMPANY" shall mean the limited liability company. Palm Cove
Developers, LLC, created on December 22,2004 and governed by this Agreement.
(l) "DATE OF VALUE" shall have the meaning ascribed to it in
Section 12.
(m) "DAY-TO-DAY MANAGER" shall mean Ashton or any other Person(s) that
succeeds to it in that capacity with the consent of the other Member.
(n) "ENGINEERING AND PRE-DEVELOPMENT COSTS" shall mean those pre- and
post-formation engineering and pre-development costs incurred by or on behalf of
a Member to contract for the Property and conduct the engineering and
pre-development work for the Project, such as consulting fees and costs and
filing, investigatory and regulatory fees and costs, plus any additional similar
costs. To the extent the foregoing are paid by a Member in the ordinary course
of business on or prior to the Property Closing, they shall be referred to
herein as the "Paid Engineering and Pre-Development Costs," as more particularly
set forth on EXHIBIT "B" attached hereto. As provided herein, a Member shall
receive an initial contribution credit and Capital Account credit equal to the
amount paid by each respectively of the Paid Engineering and Pre-Development
Costs. The Company shall then assume and be responsible for paying
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those Engineering and Pre-Development Costs other than the Paid Engineering and
Pre-Development Costs.
(o) "FINISHED LOT(s)" shall mean a residential lot developed by the
Company in accordance with the Pulte Contract, that certain Development
Agreement by and between Pulte and Company executed as part of the Property
Closing (the "Development Agreement"), this Agreement and all applicable
restrictions, governmental requirements and Laws, and that has (i) a recorded
plat that is acceptable to both Members with a copy of such recorded plat
delivered to both Members, (ii) public sanitary sewer lines extended to a
boundary of the lot with taps installed, (iii) public potable water lines
extended to a boundary of the lot with taps installed, (iv) installed stormwater
drainage lines and related facilities required by applicable Laws to serve the
lot, with all stormwater ponds and related facilities serving such lines and
facilities completed, (v) installed curbs and paved streets serving the lot that
are within a publicly dedicated right-of-way, (vi) conduits to accommodate
underground electric lines sufficient to service the lot extended to a boundary
of the lot with the applicable electric company having extended service to the
lot, (vii) graded in accordance with lot grading and drainage plans previously
approved by both Members and graded materially in accordance with the elevations
required for each lot on such plans, (viii) not been determined to be within the
"100 Year Flood Plane" and (ix) been compacted to not less than ninety five
(95%) modified proctor, maximum density (AASHTO T-180) and otherwise to such
standards as are applicable for the types of construction contemplated by each
Member and (x) all other work necessary to allow development and the subsequent
use by homeowners of the intended residential improvements on the lot completed
in accordance with all Laws (including, but not limited to, the issuance of the
applicable building permit and certificate of occupancy for such lot) and any
recorded covenants.
(p) "LAWS" means all federal, state and local laws, moratoria,
initiatives, referenda, ordinances, rules, regulations, standards, orders,
judicial decisions, common law and other governmental, quasi-governmental and
utility company requirements (including those relating to the environment,
health and safety, or disabled persons).
(q) "LIQUIDATING DISTRIBUTION AMOUNT" shall have the meaning ascribed
to it in Section 12.
(r) "MAJOR DECISION" shall have the meaning ascribed to it in
Section 5.
(s) "MEMBER" shall mean each Person who (a) is an initial signatory to
this Agreement or has been admitted to the Company as a Member in accordance
with the express provisions set out in this Agreement and (b) has not resigned,
withdrawn, been expelled or, if other than an individual, dissolved.
(t) "MEMBER LOAN" shall mean any authorized loan made by a Member to
the Company during the term hereof.
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(u) "MEMBERSHIP INTEREST" shall mean a Member's entire right, title and
interest in, to and against the Company, the Project and the profits, losses,
capital and distributions of the Company, the right to vote on or participate in
the management and the right to receive information concerning the business and
affairs, of the Company.
(v) "OFFERING NOTICE" shall have the meaning ascribed to it in
Section 12.
(w) "PAID ENGINEERING AND PRE-DEVELOPMENT COSTS" shall have the meaning
provided above in the definition of Engineering and Pre-Development Costs.
(x) "PERCENTAGE INTEREST" shall mean fifty percent (50.0%) for M/I and
fifty percent (50.0%) for Ashton, as adjusted pursuant to this Agreement. Each
Member's Percentage Interest shall equal the ratio of such Member's Capital
Account relative to the aggregate amount of all Capital Accounts.
(y) "PERSON" shall mean an individual, general partnership, limited
partnership, limited liability company, corporation, trust, estate, real estate
investment trust association or any other entity or combination of Persons.
(z) "PURCHASE PRICE" shall have the meaning ascribed to it in
Section 12.
(aa) "REGULAR MEETING" shall have the meaning ascribed to it in
Section 4. (bb) "RESPONDING MEMBER" shall have the meaning ascribed to it in
Section 12.
(cc) "SPECIAL MEETING" shall have the meaning ascribed to it in
Section 4.
(dd) "TRANSFER" shall have the meaning ascribed to it in Section 9.
2. ORGANIZATIONAL MATTERS.
2.1 FORMATION OF COMPANY. The Company has been formed pursuant to the
provisions of the Florida Limited Liability Company Act, Florida Statutes
Chapter 608, as the same may be amended from time to time (the "Act"), and shall
be governed by the terms and conditions contained in this Agreement. The terms
"Member" and "Members" include the Members and their respective permitted
successors and assigns as members in the Company.
2.2 NAME. The business of the Company shall be conducted under the name of
"Palm Cove Developers, LLC" or any name mutually agreed upon by the Members.
2.3 TERM. The term of the Company commenced on December 22, 2004 (the
"Commencement Date") and shall continue until the Company is dissolved as
provided herein.
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2.4 CHARACTER OF BUSINESS. The express, limited and only purpose for which
the Company is formed is, and the business of the Company shall be, to acquire
the Property and to develop, improve, and distribute the Finished Lots to the
Company's Members as described herein. The Company shall have the power to do
and perform all things necessary for, connected with or arising out of such
activities and shall have the power to take such actions as may be necessary or
appropriate to accomplish such purposes and conduct such business. The Company
shall not engage in any other business without the prior written consent of the
Members. No Member shall have the authority to bind the other Member in any
capacity other than as a Member the of the Company, and nothing in this
Agreement shall create a relationship between the Members other than for the
purposes set forth in this Agreement.
2.5 NAMES AND ADDRESSES OF MEMBERS. The names of the Members are as shown
above. The addresses of the Members are set forth hereinafter.
2.6 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Company shall be located at 500 N. Westshore Boulevard, Suite 1020, Tampa,
Florida 33609, and may be relocated with the approval of all the Members to any
location within Florida.
2.7 REGISTERED OFFICE AND REGISTERED AGENT.
(a) For purposes of the Act, the registered office of the Company is
500 N. Westshore Boulevard, Suite 1020, Tampa, Florida 33609. The registered
office of the Company may be changed from time to time with the approval of the
Members; provided, any replacement of the Day-to-Day Manager shall automatically
be deemed the approval of a change in the registered office of the Company to
that of the address of the new Day-to-Day Manager.
(b) For purposes of the Act, the Company's registered agent for service
of process is Charles H. Carver, Esq., who, in addition to the Company, shall
provide a copy of each such notice to each Member. The registered agent of the
Company may be changed from time to time with the approval of the Members;
provided, any replacement of the Day-to-Day Manager shall automatically be
deemed the approval of a change in the registered agent of the Company to that
of the new Day-to-Day Manager.
2.8 TRADE NAME AFFIDAVITS. The Company will file such trade or fictitious
name affidavits as may be necessary or desirable in connection with the
formation, existence and operation of the Company (including those filings
required in any jurisdiction where the Company owns or operates property).
2.9 QUALIFICATION. The Company will promptly apply for authority to
transact business in those jurisdictions where it is required or elects to do
so. The Company will file such other certificates and instruments as may from
time-to-time be necessary or desirable in connection with its formation,
existence or operation.
2.10 MANAGER-MANAGED. The Company shall be manager-managed by the Day-to-
Day Manager.
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3. CAPITAL CONTRIBUTIONS, LOANS AND FUNDING OF PROJECT COSTS.
3.1 INITIAL CAPITAL CONTRIBUTION BY M/I. On or before the date that is
one (1) business day following the Members' execution and delivery of this
Agreement (or such other date as agreed to in writing by the Members), M/I shall
pay to Ashton in readily available federal funds Five Million Nine Hundred
Fifteen Thousand Five Hundred Sixty-six and 46/ 100 U.S. Dollars ($5,915,566.46)
(the "M/I Membership Interest Purchase Price") to acquire one-half (i.e., 50%)
of the total equity and Membership Interests in the Company, such that M/I's
Percentage Interest shall be 50%, and to reimburse Ashton for one half (i.e.,
50%) of the aggregate of the Paid Engineering and Pre-Development Costs, closing
costs, title and escrow fees and premiums and prorations paid by Ashton on or
before the Effective Date. The M/I Membership Interest Purchase Price, less the
amount to reimburse Ashton for one half (i.e., 50%) of the aggregate of the Paid
Engineering and Pre-Development Costs, closing costs, title and escrow fees and
premiums and prorations paid by Ashton on or before the Property Closing, is
intended to be 50.0% of the Purchase Price for the Property paid to Pulte to
acquire the Property. As part of M/I's payment of the M/I Membership Interest
Purchase Price, the M/I Deposit (as defined in the Letter Agreement) shall be
paid by the Escrow Agent (as defined in the Letter Agreement) to Ashton and
credited against the M/I Membership Interest Purchase Price. All amounts paid
under this Section 3.1 by M/I, including the M/I Membership Interest Purchase
Price, shall be credited to M/I's Capital Account upon the date of such payment
and the Members intend that on the date of such payments by M/I, Ashton's and
M/I's Capital Accounts shall be equal. As part of M/I's acquisition of its
Membership Interest, Ashton shall execute and deliver to M/I an assignment of
such Membership Interest in form and substance reasonably acceptable to Ashton
and M/I.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS. Except as otherwise provided below
in this Section 3.2, no Member shall be obligated to contribute additional
capital to the Company. Each Member, upon written call therefor (the "Capital
Call Notice") by the Day-to-Day Manager, shall promptly contribute to the
Company, in proportion to its respective Percentage Interest, additional Capital
Contributions (each, an "Additional Capital Contribution") in the event there
are insufficient funds to pay costs and expenses which are due and payable and
are in accordance with the Approved Project Budget and Plan. Capital Call
Notices shall only be made in accordance with the Approved Business Plan. In
addition to the foregoing, the Day-to-Day Manager shall reasonably consider and
consult with the non-managing Member on any request by the non-managing Member
to make a Capital Call Notice. Upon receipt of a Capital Call Notice delivered
pursuant to this Section 3.2, each Member shall have seven (7) business days to
make its share of the Additional Capital Contribution required thereby. If a
Member ("Non-Contributing Member") fails to fund to the Company its pro rata
share of any Additional Capital Contribution (a "Cash Deficit"), then the other
Member ("Contributing Member"), provided such Contributing Member has funded all
amounts required of such Contributing Member, shall have the right, but not the
obligation, to elect to do the following (which, except as provided in Section
5.5(c), shall be the sole and exclusive remedies of such Contributing Member
against such Non-Contributing Member):
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(a) DEFICIT LOAN. Fund the Cash Deficit to the Company, in which event the
amount so funded shall constitute a loan from the Contributing Member to the
Non-Contributing Member ("Deficit Loan"). The Non-Contributing Member shall
receive a credit to its Capital Account in the amount of such Deficit Loan. Each
Deficit Loan shall be an obligation with recourse and shall bear interest at the
per annum rate of four hundred (400) basis points over the Base Rate prevailing
on the date such loan is made, compounded monthly, and shall be due and payable
no later than upon demand (the "Due Date"). Until such Deficit Loan is paid in
full, all fees, payments and distributions otherwise payable to the
Non-Contributing Member shall be deemed to be paid or distributed to the
Non-Contributing Member for Company tax and accounting purposes, but such fees,
payments or distributions shall actually be paid or distributed directly to the
Contributing Member in repayment of such Deficit Loan, with such funds being
applied first to reduce any interest accrued on such Deficit Loan and then to
reduce the principal amount of such Deficit Loan. If such Deficit Loan and all
accrued interest thereon is not paid by the Due Date, the Contributing Member
may elect to (i) convert the outstanding principal amount of the Deficit Loan
and the accrued and unpaid interest thereon to capital of the Contributing
Member, thereby diluting the Non-Contributing Member's Percentage Interest as
detailed in Section 3.2(b) (the "Dilution Contribution"), (ii) exercise the
buy/sell provisions of Section 12 pursuant to Section 3.2(c), or (iii) extend
the Due Date of the Deficit Loan for an additional period of time.
(b) DILUTION. If a Contributing Member elects to convert the principal
amount of the Deficit Loan and the accrued interest thereon into a Dilution
Contribution in accordance with Section 3.2(a), the Capital Account of the
Members shall be adjusted such that the Non-Contributing Member's Capital
Account shall be decreased by amount due on the Deficit Loan and the
Contributing Member's Percentage Interest shall be similarly increased, with the
Members' Percentage Interests properly adjusted.
(c) BUY/SELL. Rather than make or continue a Deficit Loan as provided in
Section 3.2(a), a Contributing Member shall have the right to invoke the
provisions of Section 12, and the Non-Contributing Member shall be considered,
for purposes of Section 12, to be in default hereunder.
3.3 MEMBER LOANS. Except with the prior consent of all Members, no Member
shall be obligated or authorized to lend or advance money to the Company. To the
extent a Member Loan is made by a Member to the Company pursuant to this
Agreement, it shall be made without personal liability to any of the Members and
shall be unsecured. The unpaid principal balance of the Member Loan shall bear
interest at the Base Rate announced at the time of the making of the Member
Loan, not to exceed the maximum rate permitted by law. The Company shall pay in
full (i) the accrued interest on any such Member Loan and then (ii) the
principal amount of any such Member Loan, prior to any cash distributions
otherwise required or permitted pursuant to this Agreement to any of the
Members.
3.4 THIRD-PARTY LOANS AND GUARANTEES. It is the intention of the Members
that the Company will not seek third-party financing for the development and
improvement of the Project. However, the Day-to-Day Manager and the non-managing
Member shall, pursuant to
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Section 5.1(c), regularly consult regarding the Approved Business Plan and the
need for and mutually satisfactory terms, if any, of third-party financing for
the second phase of the Project. If the Members do not agree on the need for, or
the terms or conditions of, third-party financing, then no such third-party
financing shall be obtained. The Members' failure to agree upon any third-party
financing shall not invoke the provisions of Section 14.10(b).
3.5 CAPITAL CONTRIBUTIONS IN GENERAL. Except as otherwise expressly
provided in this Agreement or as may otherwise be agreed to in writing by the
Members (a) no part of the Capital Contributions of any Member may be withdrawn
by such Member, (b) no Member shall be entitled to receive interest on its
Capital Contributions, (c) no Member shall have the right to demand or receive
property, other than Finished Lots and except as otherwise provided herein, in
return for its Capital Contributions and (d) no Capital Contributions or loan
made by any Member to the Company shall increase its Percentage Interest.
4. MEMBERS.
4.1 LIMITED LIABILITY. Except as otherwise specifically provided herein,
no Member shall be personally liable under any judgment of a court, or in any
other manner, for any debt, obligation, or liability of the Company, whether
that liability or obligation arises in contract, tort, or otherwise.
4.2 ADMISSION OF ADDITIONAL MEMBERS. No additional Members shall be
admitted to the Company unless approved by all of the Members.
4.3 WITHDRAWALS OR RESIGNATIONS. No Member may withdraw or resign from the
Company without the prior written approval of all other Members.
4.4 REMUNERATION TO MEMBERS. Except as otherwise authorized in, or
pursuant to, this Agreement, no Member is entitled to remuneration for acting in
the Company business, including, without limitation, the Day-to-Day Manager of
the Company.
4.5 MEMBERS ARE NOT AGENTS. Pursuant to Section 5.1, the day-to-day
management of the Company is vested in the Day-to-Day Manager. Except as
expressly provided in this Agreement, no Member, acting solely in the capacity
of a Member, is an agent of the Company, nor can any Member in such capacity
bind, or execute any instrument on behalf of, the Company.
4.6 VOTING RIGHTS. The Members shall have the voting, approval or consent
rights provided in this Agreement.
4.7 MEETING OF THE MEMBERS.
(a) MEETINGS. Unless otherwise agreed to by the Members, regular
meetings of the Members shall be held not less often than monthly at the office
of the Day-to-Day Manager or such other place in Hillsborough or Pasco County as
the Members shall mutually determine (in each case, the "Regular Meeting"). Such
Regular Meetings may be held
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telephonically. In addition to any Regular Meetings, any Member may call a
special meeting ("Special Meeting") by giving at least four (4) days (if the
meeting is to be held in person) or two (2) days (if the meeting is held
telephonically) oral or written notice to the other Member. The notice shall
specify the place, date and hour of the meeting and the general nature of the
business to be transacted. If the place of any scheduled meeting is inconvenient
to any Member, such Member may require by at least one (1) business day's oral
or written notice to the other Member that such meeting be held telephonically.
(b) PURPOSE AND EFFECT. The Day-to-Day Manager shall endeavor to
prepare a written agenda for all Regular Meetings and deliver the same to each
Member prior to such meeting; provided, however, each Member shall be entitled
to add any matter it elects to such agenda at or before such meeting. The Member
calling a Special Meeting shall prepare a written agenda for such meeting and
deliver the same to the other Member prior to such meeting; provided, however,
each Member shall be entitled to add any matter it elects to such agenda at or
before such meeting. The Day-to-Day Manager shall be responsible for having
written minutes taken at each meeting (including each telephone conference
meeting) of the Members, which shall be sent to each Member within seven (7)
business days following such meeting. Whenever in this Agreement the consent or
approval of a Member is required, such consent or approval may be given without
a meeting if a writing signed by such Member evidences the same. Furthermore,
the Members may reach decisions regarding any matter which requires the approval
of all Members without a meeting if the decision is approved in writing by all
of the Members.
5. MANAGEMENT AND CONTROL OF THE COMPANY.
5.1 MANAGEMENT OF THE COMPANY BY DAY-TO-DAY MANAGER.
(a) Subject to the restrictions set forth in this Agreement, the
Day-to-Day Manager shall be the manager of the Company and shall use its
commercially reasonable efforts consistent with customary practices in the
industry utilized by top-tier residential land developers on projects which are
similar in type and size to the Project (the "Standard of Care") to manage and
administer the day-to-day business and affairs of the Company and to implement
the Approved Business Plan, all on the terms set forth herein. Ashton shall be
the Day-to-Day Manager of the Company unless and until it is replaced pursuant
to Section 5.5. The Day-to-Day Manager shall at all times perform its duties and
responsibilities in compliance with all Laws and this Agreement (including,
without limitation, the restrictions on Major Decisions set forth in Section 5.2
below), and in an efficient, thorough, businesslike manner, devoting such time,
efforts and managerial resources to the business of the Company as is necessary
for the efficient operation of the day-to-day business and affairs of the
Company consistent with the Standard of Care. The Day-to-Day Manager shall not
retire, resign, dissolve, withdraw or cause or suffer any event which terminates
the continued status of the Day-to-Day Manager as a Member or as the Day-to-Day
Manager hereunder without the prior written consent of M/I or as otherwise
expressly permitted by Section 5.5 below. The Day-to-Day Manager shall
faithfully discharge the duties and obligations set forth in this Agreement
consistent with the Standard of Care.
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(b) Without limiting the generality of the foregoing, the Day-to-Day
Manager shall have the following duties with respect to the development and
improvement of the Project, all to be carried out in accordance with this
Agreement and the Approved Business Plan:
(i) Obtain and maintain in compliance with all Laws, all
governmental and agency approvals, permits and other entitlements necessary to
proceed with the development and improvement of the Project;
(ii) Coordinate, control and supervise the preparation of such maps,
plats, plans and specifications as are necessary for the design, development and
construction of the Project;
(iii) Negotiate and award contracts with appropriate firms, persons,
or entities to obtain all materials and services required in order to complete
the Project in accordance with the Approved Business Plan;
(iv) Retain or employ and coordinate the services of all employees,
supervisors, architects, engineers, accountants, attorneys, real estate brokers,
advertising personnel and other persons necessary or appropriate for the
development of the Project;
(v) Supervise the performance of all work in connection with the
planning, development, construction, and sale of the Project;
(vi) Cause the Company to improve the Project in accordance with the
Pulte Contract, the Development Agreement, the Approved Project Budget and Plan
and substantially in accordance with the approved plans and specifications;
(vii) Enforce all of the Company's rights and cause the Company to
perform all of the Company's obligations arising in connection with any contract
or agreement entered into in connection with the Project;
(viii) Deliver to the Members copies of any notices or other written
materials received by the Day-to-Day Manager in connection with any material
disputes or claims relating to the Project (said disputes and claims shall be
deemed "material" if they reasonably could be anticipated to exceed the sum of
$50,000); and
(ix) Otherwise diligently perform those duties and services in order
to plan, develop and improve the Project in accordance with the Approved
Business Plan.
(c) The parties acknowledge that the Approved Business Plan will
require updating during the term of the Project. The Day-to-Day Manager shall
use good faith and diligent efforts to regularly consult with and update the
non-managing Member and shall seek the input of the non-managing Member in
connection with any material updating of the Approved Business Plan. The
Day-to-Day Manager shall use its commercially reasonable efforts to cause the
Project to be developed substantially in accordance with the Approved Business
Plan as it is
11
updated and approved from time to time, including, without limitation, the line
items contained therein. Subject to the approval rights set forth in Section
5.2, the Day-to-Day Manager shall update the Approved Business Plan as set forth
below. Without limiting the generality of Sections 5.1(a) and 5.1(b), the
Day-to-Day Manager shall have the following additional rights and duties with
respect to the overall operation of the Company and ownership of the Project,
all to be carried out in accordance with this Agreement and the Approved
Business Plan:
(i) Update the Approved Project Budget and Plan on a not less often
than a semi-annual basis. In connection therewith, the Day-to-Day Manager shall
deliver on or before May 1 and November 1 of each year a draft of an updated
Approved Project Budget and Plan for approval by M/I, which approval shall not
be unreasonably withheld, delayed or denied. Unless and until approved by M/I,
the existing Approved Project Budget and Plan shall remain in effect subject to
modifications required by any increases in "Non-Discretionary Expenditures"
(defined below) in order to avoid a material adverse change to the financial
condition or assets of the Company. As used herein, "Non-Discretionary
Expenditures" shall mean expenditures which the Company is required to pay by
law or pursuant to existing contracts between the Company and any third party in
accordance with the Approved Business Plan and shall include unforeseen material
cost increases; change orders to the contractor contract required by the project
engineer, the soils engineer, the county, or because of unforeseen site
conditions confirmed by the appropriate engineer; repair costs necessary because
of engineer errors and omissions, repair costs beyond contractual obligation of
contractor; losses and replacements; costs of addressing emergencies; and costs
associated with weather or other matters of force majeure. At such time as the
draft updated Approved Project Budget and Plan has been approved by M/I, it
shall become the Approved Project Budget and Plan in effect until the same has
been updated and such update has been approved by M/I in accordance herewith. If
M/I has not approved a draft updated Approved Project Budget and Plan within
thirty (30) days following receipt thereof, it shall be deemed disapproved by
M/I; and
(ii) Update the Approved Project Contribution Plan (subject to the
limitations contained herein) on a not less than a quarterly basis. In
connection therewith, the Day-to-Day Manager shall deliver on or before February
1, May 1, August 1 and November 1 of each year a draft of the updated Project
Contribution Plan for approval by M/I, which approval shall not be unreasonably
withheld, delayed or denied. Unless and until approved by M/I and the Day-to-Day
Manager, the existing Approved Project Contribution Plan shall remain in effect;
provided, however, that if such existing Approved Project Contribution Plan is
insufficient to pay the costs and expenses of the Company in accordance with the
Approved Project Budget and Plan, then the Members shall fund such costs and
expenses through additional Capital Contributions pursuant to Section 3.2 above.
At such time as the draft updated Approved Project Contribution Plan has been
approved by M/I and the Day-to-Day Manager, it shall become the Approved Project
Contribution Plan in effect until the same has been updated and such update has
been approved by M/I and the Day-to-Day Manager in accordance herewith. If M/I
or the Day-to-Day Manager has not approved a draft updated Approved Project
Contribution Plan within thirty (30) days following receipt thereof, it shall be
deemed disapproved by M/I or the Day-to-Day Manager, as applicable.
12
(d) Notify the Members (i) in advance of public hearings and other
proceedings relating to entitlements and permits for the Project and (ii) of any
matter giving rise to a Major Decision pursuant to Section 5.2 below.
5.2 MAJOR DECISIONS. Except for actions taken by the Day-to-Day Manager
with respect to an Emergency Situation in accordance with Section 5.9 below, the
Day-to-Day Manager shall not take any of the following actions on behalf of the
Company (in each case the taking of which shall be hereinafter referred to as a
"Major Decision") without the prior written consent of each Member. Major
Decisions shall bind the Company and all Members upon such written consent.
(a) Update (or otherwise amend or modify) any component of the Approved
Business Plan in any manner;
(b) Sell, convey, exchange, lease, hypothecate, pledge, encumber or
otherwise transfer any portion of or any interest in the Project or the Company,
other than contemplated in the Approved Project Business Plan and this
Agreement;
(c) Sell, convey, exchange or otherwise transfer any portion of the
Property in either (i) a bulk sale, or (ii) any other transaction inconsistent
with this Agreement;
(d) Expend funds or enter into an obligation on behalf of the Company
if the amount of such expenditure or obligation would either (i) exceed 112% of
any line item of the Development Costs component of the Approved Project Budget
and Plan; (ii) exceed 110% of any line item of the Operating Costs component of
the Approved Project Budget and Plan, (iii) increase the cost per Finished Lot
by more than $500 in the aggregate or (iv) result in an increase in the Capital
Contributions previously approved by or required from any Member beyond the
amounts required or permitted by Section 3 of this Agreement;
(e) Incur any indebtedness on behalf of the Company, make or deliver on
behalf of the Company any indemnity bond or surety bond, lend funds belonging to
the Company to any Member or its Affiliate or to any third party, or extend
credit on behalf of the Company to any person, or obligate the Company or
another Member as a surety, guarantor, or accommodation party to any obligation,
or grant any lien or encumbrance on the Property, including, without limitation,
any modification of any of the foregoing, unless in accordance with the Approved
Business Plan;
(f) Submit proposals to, or enter into agreements with, government
officials relating to mapping, development, zoning, subdivision, environmental
or other land use or entitlement matters, unless in accordance with the Approved
Business Plan (provided, however, the foregoing only applies to governmental
approvals or agreements that are discretionary and not ministerial in nature,
such ministerial acts by themselves not being deemed to be a Major Decision so
long as such ministerial action is consistent with the Approved Business Plan
and current entitlements for the Property). Without limiting the above, the
Day-to-Day Manager shall
13
not cause any entitlements existing as of the Commencement Date to be modified
without the consent of M/I;
(g) The delegation by the Day-to-Day Manager of any of its duties set
forth herein (other than to its manager, directors, officers, employees and any
contractors, agents or consultants engaged by the Company in accordance with the
Approved Project Budget and Plan, including the site development contractor
approved by the Members); provided, however, that the Day-to-Day Manager shall
only delegate its duties to such individuals and entities with the appropriate
level of experience and seniority to perform such duties in accordance with this
Agreement and, provided further, the selection of a site development contractor,
and its contract with the Company, shall be a Major Decision;
(h) Except as otherwise expressly authorized by this Agreement, enter
into any transaction on behalf of the Company with a Member or an Affiliate or
related party of any Member;
(i) Take any other action or make any other decision that this
Agreement provides must be approved or consented to by each Member;
(j) Possess, assign, or use funds or other property of the Company for
other than a Company purpose;
(k) Make, execute or deliver on behalf of the Company an assignment for
the benefit of creditors; cause the Company, a Member's Membership Interest or
the Project or any part thereof or interest therein to be subject to the
authority of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, relief of debtors, dissolution or liquidation or similar proceedings;
(l) Partition all or any portion of the assets of the Company, or file
any complaint or institute any proceeding at law or in equity seeking such
partition;
(m) Confess a judgment against the Company; settle or adjust any claims
against the Company; or commence, negotiate or settle any legal actions or
proceedings brought by the Company against unaffiliated third parties in excess
of $25,000;
(n) Except as provided in this Agreement, dissolve, terminate or
liquidate the Company prior to the expiration of its term;
(o) Effectuate the recapitalization, equity splitting or any similar
transaction of or with respect to the Company, or the issuance of any equity
interest, debentures or other securities of or in the Company or the issuance of
any options, warrants or rights to purchase or acquire or effectuate any of the
foregoing; or
(p) Do any act that would make it impossible to carry on the business
of the Company.
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5.3 EXECUTION OF COMPANY DOCUMENTS. The Day-to-Day Manager, acting alone,
shall have the authority to execute and deliver, on behalf of the Company,
agreements, instruments or other documents to which the Company will be a party
or be bound, so long as such agreements, instruments or other documents are
consistent with this Agreement and the Approved Business Plan.
5.4 INSURANCE.
(a) COMPANY POLICIES. In accordance with the Approved Business Plan,
the Day-to-Day Manager shall purchase and maintain, or shall cause to be
purchased and maintained, or shall retain existing coverage and maintain, for
and at the expense of the Company, policies of insurance standard for businesses
such as the Company (i) for the Company's operations, (ii) for the protection of
the Company's assets, and (iii) as may be reasonably required to comply with
third-party requirements, and shall provide the Members with the certificates or
other evidence of insurance coverage as provided therein.
(b) CONTRACTORS' INSURANCE OBLIGATIONS. The Day-to-Day Manager shall
require the Project's general contractors and all subcontractors to at all times
obtain and comply with the insurance requirements set forth on EXHIBIT "C"
attached and incorporated herein by reference.
(c) FUTURE COOPERATION. The Members recognize that the commercial
availability of insurance to cover the Company's and its contractors' and
agents' operations is subject to changing market conditions. In connection
therewith, the Members agree to cooperate and work together in good faith to
find alternative risk management strategies in the event that any of the
insurance required by this Agreement becomes commercially unavailable or is
financially prohibitive in cost.
5.5 ELECTION, RESIGNATION, REMOVAL OF DAY-TO-DAY MANAGER.
(a) NUMBER, TERM, AND QUALIFICATIONS. The Company shall have one Day-
to-Day Manager. Unless it is removed or resigns with the consent of the
non-managing Member, the Day-to-Day Manager shall hold office until a successor
shall have been elected and qualified. Unless the Day-to-Day Manager is removed
pursuant to Section 5.5(c), a new Day-to-Day Manager may not be appointed
without the unanimous affirmative vote of all Members. The Day-to-Day Manager
shall be a Member, but need not be an individual, a resident of the State of
Florida or a citizen of the United States.
(b) RESIGNATION. The Day-to-Day Manager may not resign without the
prior written approval of all the Members. The approved resignation of the
Day-to-Day Manager shall not affect the Day-to-Day Manager's rights as a Member,
and shall not constitute a withdrawal of the Day-to-Day Manager as a Member.
15
(c) REMOVAL. Ashton shall cease to be the Day-to-Day Manager if Ashton
(or its authorized successor) ceases to be a Member of the Company or ceases to
beneficially own its Membership Interest, and, in such event, M/I shall have the
sole right to remove Ashton and appoint a new Day-to-Day Manager. Otherwise, the
Day-to-Day Manager may be removed only for "cause." For purposes of this Section
5.5(c), "cause" shall mean (i) the fraud, gross negligence, willful misconduct,
embezzlement or bankruptcy of the Day-to-Day Manager or (ii) a breach of the
Day-to-Day Manager's obligations as (A) a Member or (B) Day-to-Day Manager.
Unless waived in writing by the non-managing Member, the Day-to-Day Manager
shall be removed immediately upon the occurrence of such for "cause" event;
provided, however, with respect to the for "cause" events under clause (ii)
above such removal shall only be effective where the Day-to-Day Manager has
failed to cure such breach within thirty (30) days following its receipt of
notice from the non-managing Member of such for "cause" event, except for
monetary breaches which must be cured within fifteen (15) days from receipt of
such notice.
Except as set forth above in this Section 5.5(c), the Day-to-Day
Manager may only be removed upon the decision of all Members, in which event the
Members shall, as a Major Decision, mutually agree upon a new Day-to-Day Manager
within thirty (30) days of the removal of the previous Day-to-Day Manager and,
if unable to do so, either party, as its sole remaining remedy, may exercise the
buy-sell provisions of Section 12 hereof. Upon the removal of the Day-to-Day
Manager, the Members shall account to each other with respect to all uncompleted
business, and shall otherwise cooperate in good faith to effect an orderly
transition of the management of the affairs of the Company. The party or parties
appointing the new Day-to-Day Manager may enter into a contract on behalf of the
Company with such new Day-to-Day Manager on such terms and conditions
(including, without limitation, compensation) as are determined in the
reasonable business judgment of the appointing party or parties. Upon its
removal, any former Day-to-Day Manager shall deliver to the Company all books,
records and other instruments in its possession or under its control relating to
the Project. The removal of Ashton (or its authorized successor) as the
Day-to-Day Manager shall not affect Ashton's (or such successor's) rights as a
Member, and shall not constitute a withdrawal of Ashton (or such successor) as a
Member; however, (a) such removed Day-to-Day Manager shall not receive any
further payments of the fee set forth in Section 6.2 below and (b) upon any such
removal, (i) M/I may appoint a new Day-to-Day Manager, and (ii) notwithstanding
anything herein to the contrary, neither Ashton nor its authorized successor
shall thereafter have any right to vote on Major Decisions or otherwise manage
or participate in the business, affairs or management of the Company if Ashton
is removed solely as a result of Ashton's fraud, willful misconduct,
embezzlement or bankruptcy.
5.6 MEMBERS HAVE NO DAY-TO-DAY MANAGERIAL AUTHORITY. The Members shall
have no power to participate in the management of the Company except as
expressly authorized by this Agreement.
5.7 COMPETING ACTIVITIES. The Members and their respective Affiliates may
engage or invest in, independently or with others, any business activity of any
type or description, including, without limitation, those that might be the same
as or similar to the Company's business and that might be in direct or indirect
competition with the Company. Neither the
16
Company nor any Member shall have any right in or to such other ventures or
activities or to the income or proceeds derived therefrom, and the fiduciary
duties of the Members to each other and the Company shall be limited solely to
those arising from the purposes of the Company described in Section 2.4 above.
The Members shall not be obligated to present any investment opportunity or
prospective economic advantage to the Company, even if the opportunity is of the
character that, if presented to the Company, could be taken by the Company. The
Members shall have the right to hold any investment opportunity or prospective
economic advantage for their own account or to recommend such opportunity to
persons other than the Company.
5.8 THIRD PARTY RELIANCE. Any person not a party to this Agreement who
shall deal with the Company shall be entitled to rely conclusively upon the
power and authority of the Day-to-Day Manager as set forth herein.
5.9 EMERGENCY SITUATIONS. Notwithstanding anything herein to the contrary,
if the Day-to-Day Manager, in its reasonable business judgment, concludes that
emergency repairs, replacements or other actions (including by way of example
and not limitation, the signing of documents) are immediately necessary for the
preservation or safety of persons or any portion of the Project (individually or
collectively, an "Emergency Situation") and the Day-to-Day Manager, after using
reasonably diligent efforts, is unable to consult with the non-managing Member
prior to taking any action in such Emergency Situation, then the Day-to-Day
Manager may take said action without the prior approval of the non-managing
Member. If the Day-to-Day Manager takes such action by reason of an Emergency
Situation, the Day-to-Day Manager shall notify the non-managing Member in
writing as quickly as possible after the taking of such action, the reasons
therefore and the cost thereof. The Members agree to cooperate to establish
appropriate emergency notification procedures under this Agreement.
6. COMPENSATION AND REIMBURSEMENTS TO MEMBERS.
6.1 NO RIGHT TO COMPENSATION FOR SERVICES. Except as provided in this
Agreement, no Member shall receive compensation for services rendered to the
Company or for overhead expenses of any kind whatsoever. The fees to the
Day-to-Day Manager set forth in this Section 6 are fees and not distributions
for the purposes of this Agreement.
6.2 MANAGER FEE. In consideration for the services to be performed
hereunder by the Day-to-Day Manager in connection with its obligations set out
in this Agreement, M/I shall pay the Day-to-Day Manager a fee (the "Manager
Fee") equal to Three Hundred Dollars ($300.00) per Finished Lot distributed to
M/I pursuant to this Agreement as and when such a Finished Lot is delivered. The
Company anticipates having approximately 364 Finished Lots.
6.3 EXPENSES. The Day-to-Day Manager shall be entitled to receive
reimbursement from the Company for only those reasonable third-party costs and
expenses actually incurred by the Day-to-Day Manager on behalf of the Company in
accordance with the Approved Project Budget and Plan; provided, however, the
Day-to-Day Manager shall not be entitled to any reimbursement or credit of any
kind whatsoever for the costs and expenses incurred by the Day-
17
to-Day Manager or any Affiliate of the Day-to-Day Manager in the performance of
its obligations hereunder which are covered by the Manager Fee.
6.4 COMMISSIONS, BROKER'S FEES, ETC. M/I and Ashton hereby represent
and warrant to the other that such Member has employed no broker or finder in
connection with the formation of the Company or acquisition of the Property. M/I
and Ashton each agree to indemnify and hold the other harmless from and against
any and all claims, liabilities, damages, losses and expenses (including,
without limitation, attorneys' fees) arising from or in connection with such
party's breach of the representation set forth in this Section 6.4.
7. ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS.
7.1 TAX AND ACCOUNTING. The Members intend that the Company shall be
treated as a "partnership" for Federal, state and local income and franchise tax
purposes. In furtherance of the foregoing intention, the Company and (at the
request of and at the direction of the Company) the Members shall take such
actions as may be required in order to give affect to such intent. Under no
circumstance shall the Company or any Member take any action that is
inconsistent with the foregoing intention.
7.2 ALLOCATIONS OF LOSSES. Except to the extent provided in Section
7.4, if there shall be taxable losses of the Company for a fiscal year of the
Company, such taxable losses shall be allocated between the Members in the
following order:
(i) first, to the Members (in proportion to the amounts of losses to
be allocated in accordance with this Section 7.2(i)) until there have been
allocated to each Member losses equal to the excess, if any, of (X) the
cumulative amount of income allocated to such Member pursuant to Section
7.3(iii) hereof through and including such fiscal year; and (Y) the cumulative
amount of losses allocated to such Member pursuant to this Section 7.2(i)
through and including such fiscal year;
(ii) next, to the Members to cause, to the extent possible, their
respective Capital Account balances to be in proportion to their then respective
Percentage Interests; and
(iii) next, to the Members, in accordance with their then respective
Percentage Interests.
7.3 ALLOCATIONS OF INCOME. Except to the extent provided in Section
7.4, if there shall be taxable income of the Company for a fiscal year of the
Company, such taxable income shall be allocated between the Members in the
following order:
(i) first, to the Members (in proportion to the amounts of income to
be allocated in accordance with this Section 7.3(i)) until there shall have been
allocated to each Member income equal to the excess, if any, of (X) the
cumulative amount of losses allocated to such Member pursuant to Section
7.2(iii) hereof through and including such fiscal year; and (Y)
18
the cumulative amount of income allocated to such Member pursuant to this
Section 7.3(i) through and including such fiscal year;
(ii) next, to the Members to cause, to the extent possible, their
respective Capital Account balances to be in proportion to their then respective
Percentage Interests; and
(iii) next, to the Members, in accordance with their then respective
Percentage Interests.
7.4 SPECIAL ALLOCATIONS.
(a) QUALIFIED INCOME OFFSET. If any Member unexpectedly receives an
adjustment, allocation or distribution described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) in any fiscal year or other period which
would cause such Member to have a deficit Capital Account balance as of the end
of such fiscal year or other period, items of Company income and gain
(consisting of a pro rata portion of each item of Company income, including
gross income and gain) shall be specially allocated to such Member in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
the deficit Capital Account balance of such Member as quickly as possible. This
Section 7.4(a) is intended to comply with the qualified income offset provision
in Regulations Section 1.704-1(b)(2)(ii)(d), and shall be interpreted
consistently therewith.
(b) COMPANY MINIMUM GAIN CHARGEBACK. If there is a net decrease in
"Partnership Minimum Gain" (as determined in accordance with the principles of
Regulation Section 1.704-2(d)) during a Company fiscal year or other period,
each Member shall be allocated items of Company income and gain for such fiscal
year or other period (and, if necessary, for subsequent fiscal years or periods)
in proportion to, and to the extent of, such Member's share of such net
decrease, except to the extent such allocation would not be required by
Regulations Section 1.704-2(f). The amounts referred to in this Section 7.4(b)
and the items to be so allocated shall be determined in accordance with
Regulations Section 1.704-2. This Section 7.4(b) is intended to constitute a
"minimum gain chargeback" provision as described in Regulations Section
1.704-2(f), and shall be interpreted consistently therewith and with Regulation
Section 1.704(e)(3).
(c) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. If there is a
net decrease in "Partner Nonrecourse Debt Minimum Gain" (as defined in
Regulation Section 1.704-2(i)(2)) during a Company fiscal year or other period,
each Member shall be allocated items of Company income and gain for such fiscal
year or other period (and, if necessary, for subsequent fiscal years or periods)
equal to such Member's share of such net decrease, except to the extent such
allocation would not be required by Regulations Section 1.704-2(i)(4). The
amounts referred to in this Section 7.4(c) and the items to be so allocated
shall be determined in accordance with Regulations Section 1.704-2. This Section
7.4(c) is intended to comply with the minimum gain chargeback requirement
contained in Regulations Section 1.704-2(i)(4), and shall be interpreted
consistently therewith.
19
(d) MEMBER NONRECOURSE DEDUCTIONS. "Partner Nonrecourse Deductions"
(as defined in Regulation Section 1.704-2(b)(1)) for any fiscal year or other
period shall be specially allocated to the Members who bear the economic risk of
loss for the Partner Nonrecourse Debt (as defined in Regulations Section
1.704-2(b)(4)) to which such Member Nonrecourse Deductions are attributable, as
provided in Regulations Section 1.704-2(i)(1).
(e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal
year shall be allocated to the Members in accordance with their respective
Percentage Interests.
(f) EXCESS NONRECOURSE LIABILITIES. Nonrecourse Debts of the Company
which constitute "Excess Nonrecourse Liabilities" (as defined in Regulations
Section 1.704-2(b)(3)) shall be allocated among the Members in accordance with
their respective Percentage Interests.
(g) ORDERING RULES. Anything contained in this Agreement to the
contrary notwithstanding, allocations for any fiscal year or other period of
Nonrecourse Deductions or Member Nonrecourse Deductions, or of items required to
be allocated pursuant to the minimum gain chargeback requirements contained in
Section 7.4(b) and Section 7.4(c) hereof, shall be made before any other
allocations hereunder.
(h) SECTION 704(C) ALLOCATIONS. Notwithstanding Section 7.2 and 7.3,
the gain or loss for federal income tax purposes from the sale or other
disposition of Finished Lots and parcels at the Project shall be allocated to
the Members in accordance with the requirements of Section 704(c) of the Code
and the Treasury Regulations promulgated thereunder, using the traditional
method of allocations contained in Section 1.704-3(b) of the Treasury
Regulations and based upon the fair market values set forth in Section 3.1. Any
gain or loss in excess of the amount allocated pursuant to the preceding
sentence shall be allocated between the Members as provided in Section 7.2 or
Section 7.3, as the case may be.
7.5 NO NEGATIVE CAPITAL ACCOUNT MAKEUP. No Member shall have any
obligation to contribute funds to bring any negative balance in its Capital
Account to zero.
7.6 ORDER OF DISTRIBUTION OF AVAILABLE CASH. Available Cash may be
distributed to the Members pro rata in accordance with their respective
Percentage Interests at such times, and in such amounts as reasonably determined
by the Day to Day Manager; provided, however, that Available Cash shall not be
distributed without the consent of the non-Managing Members), which consent
shall not be unreasonably withheld or delayed.
7.7 FORM OF DISTRIBUTION. A Member has no right to demand and receive
any distribution from the Company in any form other than the Finished Lots
except as otherwise provided herein.
7.8 RETURN OF DISTRIBUTIONS. Except for distributions made in violation
of the Act or this Agreement, no Member shall be obligated to return any
distribution to the Company or pay the amount of any distribution for the
account of the Company or to any creditor of the Company.
20
The amount of any distribution returned to the Company by a Member or paid by a
Member for the account of the Company or to a creditor of the Company pursuant
to the previous sentence shall be added to the account or accounts from which it
was subtracted when it was distributed to the Member.
8. DISSOLUTION AND WINDING UP.
8.1 DISSOLUTION. The Company shall be dissolved, its assets shall be
disposed of, and its affairs wound up on the first to occur of the following:
(a) upon the sale or distribution of all or substantially all of the
assets of the Company including the distribution of all Finished Lots to the
Members and conveyance of any common areas to the homeowners association, and
the collection by the Company of any and all cash and other assets derived
therefrom; or
(b) an election to dissolve the Company made in writing by all the
Members.
8.2 WINDING UP. Upon the occurrence of any event specified in Section
8.1, the Members shall determine the manner in which the affairs of the Company
shall be wound up (which may include the sale of any remaining portion of the
Property). The Company shall engage in no further business thereafter other than
that necessary to wind up the business and distribute the assets. The Company
shall continue to allocate profits and losses during the winding up period in
the same manner as such amounts were divided before dissolution.
8.3 ORDER OF PAYMENT OF LIABILITIES UPON DISSOLUTION. After determining
that all debts and liabilities of the Company in the process of winding-up,
debts and liabilities to Members and other parties who are creditors of the
Company, and the repayment of construction or other loans to the Company have
been paid or adequately provided for, the remaining assets shall be distributed
to the Members in accordance with Section 7.6 above.
8.4 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Each Member shall only
be entitled to look solely to the assets of the Company for the return of its
positive Capital Contribution, and shall have no recourse for the return of its
Capital Contribution and/or share of net profits (upon dissolution or otherwise)
against the Day-to-Day Manager or any Member.
9. TRANSFER OF INTEREST.
9.1 TRANSFER AND ASSIGNMENT OF INTERESTS. A Member shall not transfer,
assign, convey, sell, encumber or in any way alienate (collectively, "Transfer")
all or any part of its Membership Interest without the prior written consent of
the other Member(s), except as otherwise provided herein. Transfers in violation
of this Section 9.1 shall be null and void ab initio. After the consummation of
any Transfer of any part of a Membership Interest, the Membership Interest so
transferred shall continue to be subject to the terms and provisions of this
Agreement and any further Transfers shall be required to comply with all the
terms and provisions of this Agreement.
21
9.2 FURTHER RESTRICTIONS ON TRANSFER OF INTERESTS. In addition to other
restrictions found in this Agreement, no Member shall Transfer all or any part
of such Member's Membership Interest without compliance with all applicable
federal and state securities law.
9.3 SUBSTITUTION OF MEMBERS. An assignee of a Membership Interest shall
have the right to become a substitute Member only if (i) the requirements of
this Section 9 are satisfied, (ii) the assignee executes an instrument
satisfactory to all of the Members accepting and adopting the terms and
provisions of this Agreement, (iii) the Assignee pays any reasonable expenses
incurred by the Company in connection with its admission as a new Member, and
(iv) the other Member consents in writing to the substitution in its sole and
absolute discretion.
9.4 PERMITTED TRANSFERS. Notwithstanding the restrictions set forth in
Sections 9.1 or 9.3, a Member shall have the right without the consent of the
other Member to Transfer all or a portion of its Membership Interest to an
Affiliate; provided, however, that for so long as Ashton is the Day-to-Day
Manager, any such Transfer by Ashton must be to an Affiliate approved by M/I in
writing, which approval shall not be unreasonably withheld, delayed or denied.
The admission of a Member's Affiliate as a substitute Member in place of such
Member shall not result in the release of the Member who assigned the Membership
Interest from any liability or obligations that such Member may have to the
Company.
9.5 RIGHT OF FIRST REFUSAL. Notwithstanding the restrictions set forth
in Sections 9.1 or 9.3, M/I grants to Ashton and Ashton grants to M/I the right
of first refusal to purchase the other party's Membership Interest in the
Company on the following terms and conditions:
(a) Each party's right of first refusal shall be exclusive and
neither party shall grant similar or the same right to any other;
(b) If M/I or Ashton, directly or indirectly, enter into a bona
fide, arms length and binding agreement to sell its Membership Interest in the
Company (the "Notifying Party's Agreement"), such party shall notify ("Notifying
Party") the other party (the "Receiving Party") that the Notifying Party entered
into such Notifying Party's Agreement, which notice to be valid must include a
complete and legible copy of the Notifying Party's Agreement, including all
exhibits and any other terms and conditions applicable to the Notifying Party's
Agreement;
(c) The Receiving Party shall have thirty (30) days following the
Receiving Party's receipt of the Notifying Party's notice (which notice shall
not be deemed sufficient unless it complies with the terms and conditions of
this Agreement) to elect to accept the terms and conditions of the Notifying
Party's Agreement, except as set forth below, by delivering written notice
thereof to the Notifying Party on or before the end of such thirty (30) days;
notwithstanding the foregoing, however, if the Receiving Party elects to accept
the terms and conditions of the Notifying Party's Agreement, the Receiving Party
shall have the further right to purchase the Membership Interest of the
Notifying Party for a purchase equal to the lesser of (i) the purchase price for
the Notifying Member's Membership Interest as set forth in the Notifying Party's
Agreement and (ii) the amount allocated to such Notifying Party's Capital
Account.
22
(d) If the Receiving Party elects in its sole discretion not to (or
fails to) accept the terms of the Notifying Party's Agreement, the Notifying
Party shall be free to sell the Notifying Party's Membership Interest in the
Company under the terms and conditions of the Notifying Party's Agreement but
only so long as (i) the transaction contemplated by the Notifying Party's
Agreement closes within ninety (90) days from the date of the Notifying Party's
receipt of the Receiving Party's election not to accept the Notifying Party's
Agreement (regardless of any contrary terms of the Notifying Party's Agreement)
and (ii) such closing occurs on substantially the same terms and conditions
under the Notifying Party's Agreement (without limiting the generality of the
foregoing, a reduction of the purchase price under the Notifying Party's
Agreement of greater then two percent (2%) shall be deemed a substantial change
in the Notifying Party's Agreement);
(e) If the Receiving Party elects not to accept the Notifying
Party's Agreement and the transaction described in the Notifying Party's
Agreement fails to timely close or to close on the conditions herein required
for any reason, then the Receiving Party's right of first refusal shall be
deemed reinstated and the Notifying Party shall not be entitled to close under
the Notifying Party's Agreement or any other agreement without re-offering or
offering the Notifying Party's Agreement or such other to the Receiving Party;
(f) A Notifying Party shall not be entitled to sell less than one
hundred percent (100%) of its Membership Interest in the Company;
(g) Delivery of any notice required hereunder by the Notifying Party
or Receiving Party shall be made in writing under the terms required for
delivery of notice hereunder;
(h) A direct or indirect transfer of an interest in the Property
that does not strictly comply with the terms and conditions of this Agreement
shall not terminate the non-transferring party's right of first refusal; and
(i) If the Receiving Party accepts the terms of the Notifying
Party's Agreement but fails to close as required, then the Notifying Party's
sole and exclusive remedy shall be to either enforce an action for specific
enforcement and receive its costs of such action or to terminate the Receiving
Party's right of first refusal as agreed upon liquidated damages.
10. ACCOUNTING, RECORDS, REPORTING BY MEMBERS.
10.1 BOOKS AND RECORDS. The books and records of the Company shall be
kept, and the financial position and the results of its operations recorded, on
an accrual basis by the Day-to-Day Manager in accordance with generally accepted
accounting principles. The books and records of the Company shall reflect all
the Company transactions and shall be appropriate and adequate for the Company's
business. The Company shall maintain at its principal office in Florida all of
the following:
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(a) A current list of the full name and last known business or
residence address of each Member set forth in alphabetical order, together with
the Capital Contributions, Capital Account and Percentage Interest of each
Member;
(b) A copy of the Articles and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which the
Articles or any amendments thereto have been executed;
(c) A copy of this Agreement and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which this
Agreement or any amendments thereto have been executed;
(d) Copies of the Company's federal, state, and local income tax or
information returns and reports, if any, for the six (6) most recent taxable
years;
(e) Copies of the financial statements of the Company, if any, for
the six (6) most recent fiscal years; and
(f) The Company's books and records as they relate to the internal
affairs of the Company for at least the current and past four (4) fiscal years.
10.2 INSPECTION. Each Member has the right, upon reasonable written
request to the Day-to-Day Manager (made at least five (5) business days prior to
such Member's intent to exercise their rights under this Section 10.2) for
purposes reasonably related to the interest of the Person as Member, to inspect
and copy during normal business hours any of the Company records described in
Sections 10.1.
10.3 FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) ANNUAL FINANCIAL STATEMENTS. At the expense of the Company, the
Day-to-Day Manager shall provide each Member with financial statements of the
Company prepared by a certified public accounting firm selected by the Members,
within ninety (90) days after the completion of the Company's fiscal year. In
the event of a dispute between the Members regarding the Company's financial
statements, either Member has the right to require that the financial statements
of the Company be audited by a certified public accounting firm selected by the
Member desiring such audited financial statements (an "Audit"). The cost of any
such Audit shall be paid by the Company; provided, however, if any such Audit is
not, in the opinion of such accounting firm, materially different than the
unaudited financial statements of the Company, then the Audit shall be paid by
the Member which requested such Audit and such Member shall also pay to the
Day-to-Day Manager a liquidated amount equal to the cost of such audit to offset
the time and expense of the Day-to-Day Manager in connection with such audit.
(b) QUARTERLY FINANCIAL REPORTS. The Day-to-Day Manager shall, by
the 15th day of each calendar quarter during the term of the Company, prepare,
or cause to be prepared, and deliver to the Members a balance sheet showing the
assets and liabilities of the
24
Company as of the last day of the previous calendar quarter, an income statement
presenting the results of the operations of the Company for such quarter. On a
quarterly basis, Day-to-Day Manager shall prepare and deliver to the members a
job cost report for the Project which shall include all Project costs incurred
to the then current date, a variance schedule showing any deviations from the
cost line items provided for in the Approved Project Budget and Plan and a year
to date summary of such operations and, if requested by any Member, a statement
of sources and applications of funds.
(c) FILINGS. The Day-to-Day Manager, at Company expense, shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities. The Day-to-Day Manager, at Company expense,
shall also cause to be prepared and timely filed, with appropriate federal and
state regulatory and administrative bodies, amendments to, or restatements of
the Articles and all reports required to be filed by the Company with those
entities under the Act or other then current applicable laws, rales, and
regulations.
(d) ACCOUNTING DECISIONS. All decisions as to accounting
matters, except as otherwise specifically set forth herein, shall be made by
the Members jointly.
10.4 TAX MATTERS PARTNER. The Day-to-Day Manager shall be the "tax matters
partner" of the Company as such term is defined in Section 6231(a)(7) of Code
(the "Tax Matters Partner"), and it shall serve as such at the expense of the
Company with all powers granted to a tax matters partner under the Code. The Tax
Matters Partner shall use its commercially reasonable efforts to prepare and
file on a timely basis, with due regard to extensions, all tax and information
returns that the Company may be required to file, all at Company expense. No tax
or information return shall be filed unless approved by the Members, such
approval not to be unreasonably withheld or delayed. Each Member shall give
prompt notice to each other Member of any and all notices it receives from the
Internal Revenue Service concerning the Company, including any notice of audit,
any notice of action with respect to a revenue agent's report, any notice of a
30-day appeal letter and any notice of a deficiency in tax concerning the
Company's federal income tax return. The Tax Matters Partner shall, at Company
expense, furnish each Member with status reports regarding any negotiation
between the Internal Revenue Service and the Company, and each such Member, if
it so requests, may participate in such negotiation. The Tax Matters Partner
shall not enter into any settlement with any taxing authority (federal, state or
local) or extend the statute of limitations on behalf of the Company or the
Members without the approval of all Members.
11. INVESTMENT REPRESENTATIONS.
11.1 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member as follows:
(a) AUTHORIZATION. The Member is duly organized, validly existing,
and in good standing under the law of its state of organization and that it has
full power and authority to execute and agree to this Agreement and to perform
its obligations hereunder and that all actions
25
necessary for the due authorization, execution, delivery and performance by that
Member of this Agreement have been duly taken.
(b) COMPLIANCE WITH OTHER INSTRUMENTS. The Member's authorization,
execution, delivery, and performance of this Agreement do not conflict with any
other agreement or arrangement to which such Member is a party or by which it is
bound.
(c) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Member is acquiring its
Membership Interest in the Company for the Member's own account for investment
purposes only and not with a view to or for the resale, distribution,
subdivision or fractionalization thereof and has no contract, understanding,
undertaking, agreement or arrangement of any kind with any person to sell,
transfer or pledge to any person its interest or any part thereof nor does such
Member have any plan to enter into any such agreement.
(d) INVESTMENT EXPERIENCE. By reason of its business or financial
experience, the Member has the capacity to protect its own interest in
connection with the transactions contemplated hereunder, is able to bear the
risks of an investment in the Company, and at the present time could afford a
complete loss of such investment.
(e) DISCLOSURE OF INFORMATION. The Member is aware of the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire an
interest in the Company.
(f) FEDERAL AND STATE SECURITIES LAWS. The Member acknowledges that
the Membership Interests have not been registered under the Securities Act of
1933 or any state securities laws, inasmuch as they are being acquired in a
transaction not involving a public offering, and, under such laws and subject to
the transfer restrictions set forth in Article 9 may not be resold or
transferred by the Member without appropriate registration or the availability
of an exemption from such requirements. In this connection, the Member
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act of
1933.
11.2 REPRESENTATIONS AND WARRANTIES OF ASHTON. In addition to the
representations, warranties set forth in Section 11.1 above, and as an
inducement to M/I to enter into this Agreement, Ashton represents and warrants
to M/I that:
(a) The Pulte Contract has been duly and validly assigned to the Company
by Ashton and, to Ashton's knowledge, neither the seller nor the purchaser
therein is now or ever has been in default thereunder and all payments due to be
made thereunder have been paid in full;
(b) To Ashton's knowledge: no dispute currently exists between the seller
and purchaser or any other party with respect to the Pulte Contract; no
condition has been discovered upon the land or exists with respect thereto which
would result in a default or give either party the right to terminate the Pulte
Contract; and, to Ashton's actual knowledge, there are no title,
26
survey, soil, environmental, governmental or other condition exists which would
materially and adversely effect the development of the Property in accordance
with, and as contemplated, herein and in the Pulte Contract;
(c) To Ashton's actual knowledge, there are no actions, suits, proceedings
or investigations pending or threatened with respect to the Pulte Contract, the
Property or the Project;
(d) No notices have been received by Ashton from any governmental
authority that the Project or Property is in violation of any Laws and, to
Ashton's knowledge, the Property can be developed as contemplated herein and in
the Pulte Contract;
(e) To Ashton's knowledge, neither this Agreement or any related document,
exhibit or schedule attached hereto prepared or furnished by Ashton contains an
untrue statement in material fact or misstates a material fact relating to the
Property, the Project or the Pulte Contract.
(f) Prior to M/I acquiring the M/I Interest: no other party other than
Ashton owned or controlled any interest in and to the equity or Membership
Interests of the Company; and the Company has no employees or consultants and no
assets or liabilities other than those contemplated by the Pulte Contract and
this Agreement.
11.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties herein shall survive the execution and delivery of this Agreement,
the formation of the Company and the dissolution and final liquidation of the
Company.
12. BUY/SELL.
12.1 PUT/CALL OFFERING NOTICE. A Member (the "Initiating Member") shall
have the right to invoke the provisions of this Section 12 by giving written
notice (the "Offering Notice") to the other Member (the "Responding Member") of
its intent to rely on this Section 12 and to purchase all, but not less than
all, of the Responding Member's Membership Interest only under the following
circumstances: (i) By the non-defaulting Member, if at any time a Member is in
default hereunder and more than thirty (30) days have elapsed since such
non-defaulting Member has given written notice thereof to such defaulting Member
and such default has not been cured, or (ii) as otherwise provided in this
Agreement, including Sections 3.2(c), 5.5(c) and 14.10(b). In any such event,
the provisions set forth in this Section 12 shall apply. The Initiating Member
shall specify in its Offering Notice the all cash purchase price per percent of
Percentage Interest ("Purchase Price") at which the Initiating Member would be
willing to purchase all the Responding Member's Membership Interest.
12.2 EXERCISE OF PUT/CALL. Within 30 days after the delivery date of the
Offering Notice, the Responding Member shall then be obligated either to:
27
(a) Sell to the Initiating Member its Membership Interest for the
Purchase Price times its Percentage Interest; or
(b) Purchase the Membership Interest of the Initiating Member for
the Purchase Price times the Initiating Member's Percentage Interest.
The Responding Member shall notify the Initiating Member of its election
(the "Election Notice") within thirty (30) days after the date of its receipt of
the Offering Notice. In the event the Responding Member fails to give such
notice within the required time period, the Initiating Member shall purchase the
Responding Member's Membership Interest according to the terms of this Section
12. For purposes of this Section 12 the term "Purchasing Member" shall mean the
Member who is obligated to purchase the other Member's Membership Interest
(whether such Member is the Initiating Member or the Responding Member) and the
term "Selling Member" shall mean the Member who is obligated to sell its
Membership Interest to the Purchasing Member.
12.3 DESIGNEE; FINANCING. In the event that any Member purchases the other
Member's Membership Interest pursuant to this Section 12, such Purchasing Member
shall be entitled to designate any third party to be the transferee of such
interest or obtain financing from any third party with respect to such purchase,
provided that the foregoing shall not be a condition to or delay any transaction
described in this Section 12.
12.4 CLOSING.
(a) The Members shall meet and exchange documents and pay any
amounts due, and otherwise do all things necessary to conclude the transaction
set forth herein at the closing of such purchase (the "Closing"). The Closing
shall occur in Florida at the office of the Selling Member's legal counsel at
1:00 p.m. on the date specified in the Responding Member's Election Notice,
which date shall not be more than thirty (30) days after the date of delivery of
the Election Notice (or the date such Election Notice was due if no Election
Notice was timely given). At the Closing, the Selling Member shall deliver to
the Purchasing Member a duly executed assignment of its Membership Interest and
shall also, upon the request of the Purchasing Member, concurrently therewith
(or at any time and from time to time thereafter) execute and deliver such other
customary documents and records as the Purchasing Member reasonably requests to
conclude the Closing and to transfer ownership, title and control of the
Membership Interest (including, but not limited to, execution, in recordable
form, of amended Articles). The Purchasing Member shall deliver to the Selling
Member cash in an amount determined pursuant to Section 12.2 (less the amount of
any outstanding debt owed by the Selling Member to the Purchasing Member (or an
Affiliate of the Purchasing Member)) for the full amount of the consideration,
if any, for such Membership Interest, and shall deliver any other documents
necessary from the Purchasing Member to conclude the Closing. The Selling Member
shall transfer its Membership Interest free of all liens or encumbrances.
Further, at the Closing, and as an express condition to the Selling Member's
obligation to transfer its Membership Interest pursuant to this Section 12, the
Selling Member and/or its Affiliates shall have been released from its liability
under any third-party loans to the Company and any guarantees made in connection
therewith. If a Company creditor refuses to so release the Selling
28
Member and/or its Affiliates, the Purchasing Member shall indemnify the Selling
Member and/or its Affiliates from liability to any Company creditor. In
furtherance thereof, the Purchasing Member shall provide or shall cause one of
its Affiliates to provide guarantees or such other security as reasonably
requested by Selling Member.
(b) If the Purchasing Member fails to close as aforesaid, in
addition to any other remedies available at law or in equity, the Selling Member
shall have the right, exercisable by written notice to the Purchasing Member
given within thirty (30) days of the date set for the Closing, to purchase under
this Section 12 the Membership Interest of the Purchasing Member. If the Selling
Member exercises such option, the Purchase Price used shall be seventy-five
percent (75%) of the Purchase Price the Purchasing Member was obligated to pay
at the originally scheduled Closing.
13. FINISHED LOT DISTRIBUTION. Subject to the terms and conditions of this
Agreement, each Member shall be allocated the Finished Lots owned by the Company
from time to time, which Finished Lots shall be allocated in accordance with the
Members' respective Percentage Interests and as set forth on EXHIBIT "D"
attached hereto (EXHIBIT "D" to be adjusted as necessary should the respective
Percentage Interests of the Members change). Each Member shall be responsible
for all its customary closing costs associated with such allocation and
distribution. The Finished Lots shall be distributed to the Members in two
phases, Phase I and Phase II. Should the Members agree to a disproportionate
distribution of Phase I Finished Lots, then the distribution of the Phase II
Finished Lots shall be adjusted accordingly such that the total number of
Finished Lots distributed to each Member were allocated in accordance with the
Members' respective Percentage Interests. Should such reallocation of Phase I
Finished Lots occur following the Company's distribution of such Phase I
Finished Lots to the Members, the Members shall divide all customary closing
costs associated with such transfer equally. The Members' failure to agree upon
any disproportionate distribution shall not invoke the provisions of Section
14.10(b). The Members agree that all Finished Lots shall have an equal value.
14. MISCELLANEOUS.
14.1 NOTICES. Any notice which a party is required or may desire to give
the other party shall be in writing and may be personally delivered, delivered
by telecopy or given by United States certified mail, return receipt requested,
addressed as follows (subject to the right of a party to designate a different
address for itself by notice similarly given):
TO ASHTON: Ashton Tampa Residential, LLC
500 N. Westshore Boulevard
Suite 1020
Tampa, Florida 33609
Attn: Mr. James D. Bowen
Facsimile No.: (813) 281-0242
And: Ashton Woods Homes
1080 Holcomb Bridge, Building 200,
29
Suite 350
Roswell, Georgia 30076
Attn.: Thomas Krobot
Facsimile No.: (770) 998-7494
And: Charles H. Carver, Esquire
Ward Rovell, Professional
Association
101 E. Kennedy Blvd, Suite 4100
Tampa, Florida 33602
Facsimile No.: (813) 222-8701
TO M/I: M/I Homes of Tampa, LLC
4904 Eisenhower Blvd., Suite 150
Tampa, Florida 33634
Attention: Fred Sikorski
Area President
Facsimile No. (813) 290-8203
And: M/I Homes of Tampa, LLC
c/o Tom Mason, Esq.
General Counsel
3 Easton Oval, Suite 500
Columbus, Ohio 43219
Telephone: (614)418-8000
Facsimile: (614)418-8622
And: Lee E. Nelson, Esquire
Williams Schifino Mangione &
Steady, P.A.
One Tampa City Center, Suite 2600
Tampa, Florida 33602
Facsimile No.: (813) 221-7335
Any notice so given by United States mail shall be deemed to have been given on
the third day after the same is deposited in the United States mail as a
certified matter, return receipt requested, addressed as above provided, with
postage thereon fully prepaid. Any notice not given by certified mail as
aforesaid shall be deemed to be given upon actual receipt of the same by the
party to whom the same is to be given, provided that the refusal by such party
to receive any such notice shall be deemed such party's receipt of the same.
14.2 ENTIRE AGREEMENT This Agreement, together with the exhibits attached
hereto, represents the entire agreement of the parties with respect to the
subject matter hereof and supersedes any and all prior agreements, writings or
understandings between the parties with
30
respect to the subject matter hereof. Except as otherwise expressly provided
herein, no amendment or modification to this Agreement shall be binding unless
it shall be in writing and signed by all Members.
14.3 BINDING EFFECT. Subject to the provisions of this Agreement relating
to transferability, this Agreement will be binding upon and inure to the benefit
of the Members and their respective successors and assigns This Agreement may be
executed by facsimile and in any number of counterparts, each of which when
executed and delivered shall be an original, but all such counterparts shall
constitute one and the same instrument. This Agreement, and any amendment
thereof, shall not be effective as against M/I unless executed and delivered by
at least one of the following officers on behalf of M/I (collectively, the
"Authorized Officers"): Robert H. Schottenstein, its Chief Executive Officer and
President; Steven Schottenstein, its Chief Operating Officer; Phillip G. Creek,
its Senior Vice President, Chief Financial Officer and Treasurer; J. Thomas
Mason, Senior Vice President, General Counsel, and Timothy C. Hall, Jr, its Vice
President, Assistant General Counsel and Assistant Secretary. Execution and
delivery by any one in addition to, or in lieu of, any of the Authorized
Officers may be for M/Ts convenience but is not to be relied upon or effective
as against M/I unless, as noted above, at least one of the Authorized Officers
also executes and delivers this Agreement or any amendment thereof; provided,
however, the foregoing shall not limit M/I's right, through a duly adopted
resolution of M/I, to add to, reduce or substitute the above named Authorized
Officers for any general or special purpose.
14.4 PARTIES IN INTEREST. Nothing in this Agreement shall confer any
rights or remedies under or by reason of this Agreement on any Persons other
than the Members and their respective successors and assigns nor shall anything
in this Agreement relieve or discharge the obligation or liability of any third
person to any party to this Agreement nor shall any provision give any third
person any right of subrogation or action over or against any party to this
Agreement.
14.5 PRONOUNS; STATUTORY REFERENCES. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine, or neuter, singular
or plural, as the context in which they are used may require. Any reference to
the Code, the Act, or other statutes or laws will include all amendments,
modifications, or replacements of the specific sections and provisions
concerned.
14.6 HEADINGS. All headings herein are inserted only for convenience and
case of reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.
14.7 INTERPRETATION, BUSINESS DAYS. In the event any claim is made by any
Member relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or its counsel. The term "Business Days" as used herein shall mean all
days other than Saturdays, Sundays and Federal or State of Florida holidays.
31
14.8 REFERENCES TO THIS AGREEMENT/APPROVALS. Numbered or lettered
articles, sections and subsections herein contained refer to articles, sections
and subsections of this Agreement unless otherwise expressly stated. Except as
otherwise expressly stated herein, all consents and approvals by any party
hereto shall be in the sole and absolute discretion of such party.
14.9 GOVERNING LAW/JURISDICTION. The laws of the State of Florida shall
govern the interpretation and effect of this Agreement. Each Member hereby
consents to the exclusive jurisdiction of the state courts sitting in Florida in
any action on a claim arising out of, under or in connection with this Agreement
or the transactions contemplated by this Agreement. Each Member further agrees
that personal jurisdiction over it may be effected by service of process by
certified mail addressed as provided in Section 14 of this Agreement, and that
when so made shall be as if served upon him or her personally within the State
of Florida.
14.10 DISPUTED MATTERS.
(a) In the event of a dispute ("Dispute") under this Agreement, the
parties (collectively, the "Parties") intend that, prior to the commencement of
any litigation proceedings, the Parties shall meet at the offices of a mutually
acceptable engineer or attorney, as appropriate, to attempt to resolve any
Dispute. The Parties shall have such a resolution meeting within ten (10)
business days of written notice to the other Party invoking any Dispute
provision, although there shall be no requirement that the meeting last for any
length of time or to have further meetings. Each Party must appoint a duly
authorized representative at each resolution meeting and the Parties must
negotiate with diligence and in good faith to avoid any further Dispute. The
Parties intend that M/I shall not delay or materially and adversely impact the
construction or timing of the construction of Ashton's intended projects in
connection with this Agreement. Likewise, the parties intend that Ashton shall
not delay or materially and adversely affect any of M/I's projects in connection
with this Agreement. Therefore, each Party has a mutual and identifiable
interest in the timely, good faith and diligent cooperation between each other
to ensure that each Party can pursue its projects in an orderly, cost-effective
and timely manner. Notwithstanding anything in this Agreement to the contrary,
if any Dispute remains unresolved, in whole or in part, after the initial
meeting described above, any such continuing Dispute shall be resolved by
binding arbitration, as hereinafter described. Within ten (10) days of written
demand by one Party to the other requiring binding arbitration, each Party shall
appoint a designated arbitrator with a minimum of seven (7) years of substantial
experience in the Tampa, Florida, single-family development market, including,
without limitation, an engineer, land planner, residential developer or
attorney, provided any such proposed arbitrator shall not be affiliated with any
party to this Agreement or involved in any transaction with the nominating
party. Each Party shall notify the other as to the name and address of the
nominated arbitrator within such ten (10) day period after any Party delivers
written notice to the other Party demanding binding arbitration. The two (2)
nominated arbitrators shall, during the following ten (10) days, meet and agree
upon a third (3rd) arbitrator that is acceptable to both of the arbitrators
appointed by M/I and Ashton, provided any such third arbitrator must also
satisfy the requirements set forth above as to experience, non-affiliation and
non-involvement. Within twenty (20) days of the selection of a third arbitrator,
the three (3) arbitrators (collectively, the
32
"Arbitrators") shall make a determination on the merits of the dispute (the
"Final Decision"), which Final Decision shall be made in writing. Each Party
shall cooperate with the Arbitrators as they require. The Final Decision will be
final and binding on M/I and Ashton for all purposes. When prepared to issue a
ruling, the Arbitrators shall first so inform the Parties, who will have ten
(10) business days to resolve the Dispute by a binding agreement between them.
If the Parties resolve the Dispute, the Arbitrators will not make any award. If
the Parties do not resolve the Dispute in such ten (10) business day period, the
Arbitrators shall issue a written ruling on the eleventh (11th) day following
the notification to the Parties that the Arbitrators were prepared to issue a
ruling. The Arbitrators' written decision will resolve the Dispute, will include
written statements of fact and conclusions of law, and will be final and
binding. The phrase "final and binding" shall mean that it is not subject to any
further controversy and may not be the subject of any lawsuit or other action
between the Parties, shall not be appealable and that the Parties shall fully
and timely implement the Final Decision. No Party may petition a court to
correct or vacate the Final Decision. Any Final Decision will not prohibit
either Party from later determining that a Dispute of the same or similar nature
has occurred. Each Party will bear its own costs in connection with the
arbitration until such time as a Final Decision is issued. Thereafter, the
prevailing Party, as determined by the Arbitrators, will be entitled to recover
all costs and reasonable attorneys' fees from the non-prevailing Party or such
portion thereof as determined by the Arbitrators. If the Arbitrators do not make
a determination of a prevailing Party pursuant to their Final Decision, then in
that event, the Parties shall equally divide the costs and fees of the
arbitration proceedings. A court of competent jurisdiction shall be directed to
give full effect to the Parties' desire that the Final Decision in fact be final
and binding.
(b) Should the Members be unable to agree upon any item requiring all
Members' approval such as, by way of example and not of limitation, Major
Decisions, but specifically excluding amendment of this Agreement or as
otherwise provided in this Agreement, the Members shall meet and confer for a
period of at least fifteen (15) days in an attempt to resolve such disagreement.
If after such 30-day period, the Members have still not come to an agreement on
the item in question, they shall enter into non-binding mediation for a period
not to exceed thirty (30) days (commencing from the expiration of such previous
15-day period) in an attempt to resolve the disagreement. If after such process,
the Members are still in disagreement, then either Member may invoke the
provisions of Section 12. During such periods of negotiation and mediation, the
Members shall continue to comply with their respective obligations.
14.11 EXHIBITS. All Exhibits attached to this Agreement are incorporated
and shall be treated as if set forth herein.
14.12 SEVERABILITY. If any provision of this Agreement or the application
of such provision to any person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid shall not be affected
thereby.
14.13 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and the transactions
contemplated hereby.
33
14.14 NO INTEREST IN COMPANY PROPERTY; WAIVER OF ACTION FOR PARTITION. No
Member has any interest in specific property of the Company. Without limiting
the foregoing, each Member irrevocably waives during the term of the Company any
right that it may have to maintain any action for partition with respect to the
property of the Company. This section is not intended, nor shall it serve, to
limit the Day-to-Day Manager's right to the Manager Fee.
14.15 MULTIPLE COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
14.16 TIME IS OF THE ESSENCE. All dates and times in this Agreement are of
the essence.
14.17 REMEDIES CUMULATIVE; WAIVER OF RIGHT TO JURY TRIAL. The remedies
under this Agreement are cumulative and shall not exclude any other remedies to
which any Person may be lawfully entitled. To the greatest extent allowed by
applicable law, each Member hereby knowingly, irrevocably and voluntarily waives
any right any such Member may have to the right to a jury trial under any
applicable law. The waiver was specifically bargained for and agreed to as part
of the basis of the transaction herein contemplated.
14.18 COMPANY INDEMNIFICATION. The Company shall (to the extent of the
Company's assets only) indemnify, defend and protect each Member and each
Member's respective partners, members, shareholders, officers, directors,
employees and agents from any losses, liabilities, damages, costs and expenses
(including, without limitation, reasonable attorney's fees and disbursements)
incurred by a Member or its respective officers, directors, employees and agents
by reason of its acts or omissions which are for or on behalf of the Company,
except for the failure of such Member or its respective partners, shareholders,
officers, directors, employees and agents to act in accordance with the terms of
this Agreement, or fraud, willful misconduct, gross negligence or any breach of
a fiduciary duty by such Member or its respective partners, shareholders,
officers, directors, employees and agents.
15. MEMBER'S RIGHT TO PURCHASE FINISHED LOTS. In the event either Member
desires to sell or transfer any Finished Lot distributed to it hereunder prior
to its construction of a residence thereon (a "Transferring Member"), and the
other Member is not in default hereunder beyond any applicable notice and cure
periods, then the other Member shall have a right to purchase such Finished Lot
from the transferring Member as set forth below. Transferring Member shall give
the other Member written notice of its intention to sell any Finished Lots to a
third party, together with a copy of Transferring Member's agreement to sell
such Finished Lots ("Sale Agreement"), and the other Member shall have twenty
(20) days to elect by written notification to Transferring Member whether to
purchase the Finished Lot(s) at the lower of the value of the Finished Lot(s)
when distributed to the Transferring Member or the purchase price set forth in
the Sale Agreement The "value of the Finished Lot" as used in the preceding
sentence shall mean the Capital Contributions of the Transferring Member divided
by the total number of Finished Lots allocated to the Transferring Member. The
other Member shall so notify the Transferring Member in writing within such
20-day period of its election to
34
purchase such Finished Lots at the selected price as set forth herein or be
deemed to have waived its right only as to such Finished Lot(s) specified in the
notice. If the other Member so exercises its purchase right, then such Member
shall specify in its notice a closing date within thirty (30) days of the date
of its notice. The purchase price shall be payable in cash at time of closing.
The Transferring Member shall pay the costs of title insurance and documentary
transfer taxes on the special warranty deed and the cost for recording the deed.
All other closing costs shall be equally divided and all other customary closing
procedures shall occur at such closing. Any violation of this paragraph shall
constitute a default of the Transferring Member's obligations under this
Agreement. The purchasing Member's obligations under this paragraph shall
survive each and every transfer of a Finished Lot and the recordation of any
deeds and the termination of this Agreement for any reason, and may be recorded
as a restrictive covenant running with the land upon distribution of each
Finished Lot. Notwithstanding anything in this Agreement to the contrary,
neither Member shall be restricted in the event that the Members desire to
assign amongst each other their right to any Finished Lots within the Project by
separate written agreement.
16. VERIFICATION OF NET WORTH. Ashton represents and warrants to M/I that
its current net worth is not less than $6,000,000.00 (such net worth to be
calculated to exclude intercompany accounts other than demand obligations) and
that it shall maintain a net worth of not less than 90% of such net worth, which
obligation shall also apply to any Affiliate of Ashton that becomes a Member or
the Day to Day Manager. Upon reasonable request, Ashton shall provide an annual
certificate to M/I verifying its satisfaction of such covenant. M/I hereby
represents and warrants that its current net worth is not less than
$10,000,000.00 (such net worth to be calculated to exclude intercompany accounts
other than demand obligations) and that it shall maintain a net worth of not
less than 90% of such net worth. Upon reasonable request, M/I shall provide an
annual certificate to Ashton verifying its satisfaction of such covenant.
35
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
M/I HOMES OF TAMPA LLC,
a Florida limited liability company
/s/ Stephen M. Bennett
- -------------------------------
Print Name: STEPHEN M. BENNETT
/s/ Colleen Minek By: /s/ Fred Sikopski
- ------------------------------ ----------------------------
Print Name: COLLEEN MINEK Name: FRED SIKOPSKI
Its: AREA PRESIDENT
AND
/s/ Timothy C.[ILLEGIBLE]
- ------------------------------
Print Name: TIMOTHY C.[ILLEGIBLE]
/s/ Barbara A. Lang By. /s/ Robert H. Schottenstein
- -------------------------- -----------------------------
Print Name: BARBARA A. LANG Name: ROBERT H. SCHOTTENSTEIN
Its: CEO & PRESIDENT
ASHTON TAMPA RESIDENTIAL, LLC,
a Nevada limited liability company
- -----------------------------------
Print Name:
------------------------
By:
------------------------------
- -----------------------------------
Print Name: James D. Bowen, Division President
------------------------
36
Print Name: Name:
------------------------ ----------------------------------
Its:
----------------------------------
ASHTON TAMPA RESIDENTIAL, LLC,
a Nevada limited liability company
/s/ [ILLEGIBLE]
- ------------------------------------
Print Name: [ILLEGIBLE]
------------------------
BY: /s/ James D. Bowen
-----------------------------------
- ------------------------------------ James D. Bowen, Division President
Print Name:
------------------------
/s/ Dovg Draper /s/ Dovg Draper
- ------------------------------------ ------------------------------------
DOVG DRAPER DOVG DRAPER
/s/ Thomas J. Collins /s/ Thomas J. Collins
- ------------------------------------ ------------------------------------
Thomas J. Collins Thomas J. Collins
36
EXHIBIT "A" - PULTE CONTRACT
37
AGREEMENT FOR SALE OF LAND
THIS AGREEMENT FOR SALE OF LAND ("AGREEMENT") is made and entered into to
be effective as of the Effective Date referenced in Section 22 hereof by and
between PULTE HOME CORPORATION, a Michigan corporation ("SELLER"), and ASHTON
TAMPA RESIDENTIAL, LLC, a Nevada limited liability company ("BUYER").
1. SALE AND PURCHASE. Seller hereby agrees to sell and convey to Buyer and
Buyer hereby agrees to purchase from Seller, subject to the terms and conditions
hereinafter set forth, all that certain parcel of land located in Pasco County,
Florida (the "COUNTY"), known as "PALM COVE PHASE II" and more particularly
described on EXHIBIT A attached hereto and incorporated herein, together with
the following:
(a) All and singular the rights and appurtenances pertaining
thereto, including any right, title and interest of Seller in
and to adjacent streets, roads, alleys and rights-of-way; and
(b) Such other rights, interests and properties as may be
specified in this Agreement to be sold, transferred, assigned,
or conveyed by Seller to Buyer.
The land described on EXHIBIT A and the rights, interests and other properties
described above, are collectively called the "PROPERTY." At Buyer's option,
title shall be conveyed by use of the metes and bounds description to be
obtained as a result of the survey provided for below.
2. PURCHASE PRICE. The purchase price ("PURCHASE PRICE") to be paid for
the Property shall be Eleven Million Eight Hundred Thirty Thousand and no/100ths
Dollars ($11,830,000.00). The Purchase Price shall be paid by Buyer to Seller as
follows:
$99,500.00 Ninety-Nine Thousand Five Hundred and no/100ths Dollars
earnest money deposit (the "NON-REFUNDABLE DEPOSIT") to
be delivered to and held by Hill, Ward & Henderson,
P.A., Bank of America Plaza, 101 East Kennedy Boulevard,
Suite 3700, Tampa, Florida 33602 ("ESCROW AGENT" or
"TITLE AGENT," as applicable), within two (2) business
days after the Effective Date. Notwithstanding any
provision of this Agreement to the contrary, the
Non-Refundable Deposit shall be non-refundable to Buyer
except in the event of the Seller's default as provided
in Section 10 below.
$500.00 Five Hundred and no/100ths Dollars earnest money deposit
(the "DEPOSIT") to be delivered to Escrow Agent within
two (2) business days after the Effective Date. At
Buyer's option, this deposit may be made in the form of
a Letter of Credit as referenced in Section 5 hereof.
$11,730,000.00 Eleven Million Seven Hundred Thirty Thousand and
no/100ths Dollars cash payable at Closing by wired
federal funds for immediately available credit, plus or
minus prorations and Closing costs as set forth
hereinafter.
$11,830,000.00 Total Purchase Price
In addition to the Purchase Price, Buyer shall pay Seller, so long as
Seller has transportation impact fee credits available for transfer and as a
condition precedent to the platting of lots on the Property, an amount equal to
the product of the number of lots to be platted and the single family
transportation impact fee otherwise payable to the County. Simultaneously with
such payment, Seller shall assign to Buyer the transportation impact fee credits
paid for by Buyer. Payment shall be made in the form of cash or wired federal
funds for immediately available credit. This obligation to purchase impact fees
shall be made a matter of public record by the recording of a memorandum thereof
at Closing. The memorandum shall be released as to the lots to be platted upon
receipt by Seller of payment for the transportation impact fee credits for the
lots submitted to plat. Notwithstanding the foregoing requirement that Buyer
purchase transportation impact fee credits from Seller, it is expressly
understood that, to the extent Buyer receives transportation impact fee credits
for that portion of Overpass Road which Buyer constructs, Buyer may first use
the transportation impact fee credits which it receives and that are directly
associated with its construction of Overpass Road before it is required to
purchase transportation impact fee credits from Seller.
3. CLOSING DATE. The consummation of the transaction contemplated by this
Agreement ("CLOSING") shall take place at 10:00 a.m. local time on December 22,
2004, or such earlier date as Buyer may select upon ten (10) days' written
notice to Seller. It is expressly acknowledged by Buyer that December 22, 2004,
is the absolute outside date by which the transaction contemplated by this
Agreement may close and that, if for any reason, the Closing fails to occur by
December 22, 2004, Buyer shall no longer have any contractual right to acquire
the Property unless such failure to close is a result of an event of default by
Seller.
4. PLACE OF CLOSING. The Closing shall take place at a location designated
by Seller in Hillsborough County, Florida.
5. DEPOSIT. All cash funds held in escrow shall be placed in an
interest-bearing account at Bank of America, N.A., in Tampa, Florida, and all
interest earned thereon shall be deemed to be a part of the Deposit. At Closing,
the Deposit shall be paid to Seller and shall be applied to the Purchase Price.
The Deposit shall constitute the earnest money securing Buyer's performance of
this Agreement and shall be non-refundable upon expiration of the Inspection
Period, unless Buyer earlier terminates this Agreement during the Inspection
Period or is otherwise entitled to a return of the Deposit pursuant to the terms
of this Agreement.
Seller and Buyer acknowledge and are aware that the Federal Deposit
Insurance Corporation ("FDIC") insurance coverage for deposited funds applies
only to a maximum amount for each individual depositor. Seller and Buyer further
acknowledge and agree that Escrow Agent assumes no responsibility or liability
whatsoever for, nor will they hold Escrow Agent responsible or liable for, any
loss which arises from the fact that the amount of the Deposit
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Funds in the special-interest bearing escrow account established by Escrow Agent
will exceed $100,000.00 and that such excess amount in the account will not be
insured by the FDIC.
In lieu of the Deposit being paid in cash, Buyer may deliver to Escrow
Agent an irrevocable, unconditional letter of credit in order to secure Buyer's
performance under this Agreement (the "LETTER OF CREDIT"). The Letter of Credit
shall: (i) be issued by a financial institution acceptable to Seller, (ii)
include an automatic pay provision in favor of Escrow Agent upon presentation of
the Letter of Credit (which presentation need not be in person but may be
delivered to the issuer by mail or other means of non-personal delivery from
Escrow Agent), (iii) be for an initial term extending at least through January
31, 2005, and (iv) be in a form and substance acceptable to Seller. In the event
Buyer fails to extend and/or replace the Letter of Credit at least thirty (30)
days prior to the expiration thereof, Buyer shall be deemed in default of this
Agreement and shall not have the benefit of any grace or curative periods that
may otherwise be afforded hereunder.
At the end of the Inspection Period, provided that Buyer has not otherwise
terminated this Agreement within the Inspection Period pursuant to the
provisions of paragraph 8, the Deposit shall be non-refundable to Buyer except
as may be otherwise expressly provided to the contrary by the terms of this
Agreement, and Escrow Agent shall continue to hold the Deposit until Closing,
at which time the Deposit shall be applied to the Purchase Price. In the event
the Closing does not occur, the Deposit shall be held and distributed in
accordance with the terms of this Agreement.
In the event Buyer and Seller are in agreement that Seller is entitled to
the Deposit, Buyer shall first have a period of five (5) days in which to
deliver the cash-equivalent to Seller, and Escrow Agent, upon being notified by
Seller that it has received the cash-equivalent Deposit, shall return the Letter
of Credit to Buyer. Otherwise, in the event there is a dispute as to who is
entitled to the Deposit and/or in the event the Letter of Credit has not been
renewed or replaced at least thirty (30) days prior to its expiration with a
renewal replacement Letter of Credit (or appropriate endorsement acceptable to
Seller), Escrow Agent, upon written demand by Seller and with simultaneous
written notice to Buyer, shall present the Letter of Credit for payment in which
event the Deposit shall revert to a cash Deposit and the same shall be held by
Escrow Agent pursuant to me terms and conditions of this Agreement Furthermore,
in the event Escrow Agent places the Deposit with the appropriate court pursuant
to the provisions to Section 35 hereof, the Letter of Credit shall be presented
for payment without the need for direction or approval of either Seller or Buyer
in which event the Deposit shall revert to a cash Deposit.
6. TITLE COMMITMENT AND POLICIES; SURVEY.
6.1. Title Commitment. Within seven (7) business days after the Effective
Date of this Agreement, but in no event later than December 10, 2004, Seller
shall, at Seller's expense, deliver to Buyer a title commitment for title
insurance (ALTA Owner's Policy Form 1992) through Chicago Title Insurance
Company ("TITLE COMPANY") covering the Property, issued by Title Agent, together
with legible copies of all recorded documents referenced therein and a special
tax search (the "COMMITMENT"), by which Commitment the title agent shall agree
to issue to Buyer, upon recording the special warranty deed, a standard owner's
ALTA policy in the amount of the full Purchase Price, without exception for any
matters other than (i) current taxes;
-3-
(ii) applicable zoning and governmental regulations; (iii) easements and
restrictions of record contemplated by the provisions of this Agreement or
otherwise expressly approved by Buyer as a "PERMITTED EXCEPTION" hereunder, if
any, and (iv) the standard survey exception unless Buyer provides a survey of
the Property acceptable to the Title Company. Buyer shall have five (5) days
after the date of actual receipt of the Commitment by Buyer and Buyer's attorney
in which to examine the Commitment and to give written notice to Seller, or
Seller's attorney, of its approval or disapproval in Buyer's sole discretion of
any matter contained therein. If Buyer fails to give such notice, Buyer shall be
deemed to have accepted the condition of title. Seller shall have five (5) days
from the actual receipt of such notice of disapproval to cure the objections or
defects so specified. If Seller is unable to correct such objections or defects
to the Buyer's satisfaction, in Buyer's sole discretion, within said period of
time, or if Seller elects not to correct such objections or defects and notifies
Buyer of its election within five (5) days of Buyer's notice, then Buyer shall
have the right within five (5) days after the end of either such said period, as
applicable, to give notice terminating this Agreement and to receive the return
of the Deposit, or to waive such objections or defects in writing. A failure to
provide such notice shall be deemed to be an election by Buyer that it has
waived any such objections or defects. Any such defect or objection waived as
aforesaid shall become a "PERMITTED EXCEPTION" to title. The Commitment shall be
updated by the Title Company at Seller's expense, prior to the Closing Date. Any
title exception, other than a prior Permitted Exception hereunder, shall be
treated as a title defect hereunder.
6.2. Current Survey. Within two (2) business days after the date
hereof, Seller shall provide Buyer with the most recent survey of the Property
in Seller's possession, custody, or control. Within fifteen (15) days after the
date hereof, Buyer, at Buyer's expense, may obtain a current survey of the
Property prepared by a duly licensed land surveyor ("SURVEY"). The Survey shall
be certified to Title Company, Buyer, Buyer's attorneys, Seller, Seller's
attorneys, and any lender. In the event the Survey, or any recertification
thereof, shows any encroachments of any improvements upon, from, or onto the
Property, any building set-back line or easement, or shows any evidence of use
which indicates that an unrecorded easement may exist, except as may be
acceptable to Buyer, in Buyer's reasonable judgment, the matter shall be treated
in the same manner as a title defect under the procedure set forth above, and
Buyer shall notify Seller of any such matters prior to the end of the Inspection
Period. In the event Buyer elects not to obtain a Survey, it is expressly
acknowledged that the Title Company will not remove the "standard" survey
exceptions from the Commitment at Closing.
6.3. Permitted Exceptions. The Property shall be conveyed to Buyer
subject to no liens, charges, encumbrances, exceptions or reservations of any
kind or character other than those acceptable to Buyer under paragraph 6.1
hereof ("PERMITTED EXCEPTIONS"). The items set forth in EXHIBIT B attached
hereto and incorporated herein are acknowledged by Buyer to be Permitted
Exceptions.
6.4. No Extension of Closing. Notwithstanding anything in this
Section 6 to the contrary, it is expressly acknowledged that any and all
curative opportunities provided herein shall in no event cause the Closing to be
extended beyond December 22, 2004, and that, if a curative period set forth in
this Section 6 would otherwise cause such extension, the curative and/or notice
period afforded by this Section shall be reduced accordingly.
-4-
7. CLOSING PROCEDURES.
7.1. Seller's Obligations at Closing. At Closing, Seller shall do the
following:
(a) Execute, acknowledge and deliver to Buyer a special warranty
deed conveying the Property to Buyer subject to all matters of
record, including the Permitted Exceptions, which deed shall
be in form for recording with all required documentary stamps
in the proper amount affixed thereto, or provided for by
Seller at Seller's expense. The legal description of the
Property contained in the deed shall be identical to the legal
description of the Property contained in the Survey and the
Title Commitment.
(b) Deliver to Title Company and Buyer a certificate evidencing
Seller's good standing in both Michigan and Florida.
(c) Deliver to Title Company and Buyer evidence satisfactory to it
of Seller's authority to execute and deliver the documents
necessary or advisable to consummate the transaction
contemplated hereby.
(d) Execute and deliver to Title Company and Buyer duplicate
original copies of an affidavit of no liens satisfactory to
Title Company so as to cause Title Company to remove the
"gap," construction lien, parties in possession and unrecorded
easements standard exceptions from the Title Commitment.
(e) Execute and deliver to Title Company and Buyer a "non-foreign
person" affidavit in compliance with regulations issued by the
Internal Revenue Service.
(f) Execute and deliver to Title Company a memorandum in
recordable form evidencing the parties' agreement regarding
the purchase of transportation impact fee credits.
(g) Execute and deliver to Buyer a closing statement.
(h) Execute and deliver to Buyer a counterpart of the Developer's
Agreement referenced in Section 8 hereof.
-5-
7.2. Buyer's Obligations at Closing. Subject to the terms,
conditions and provisions hereof and contemporaneously with the performance by
Seller of its obligations set forth in paragraph 7.1 above, Buyer shall deliver
to Seller:
(a) The Purchase Price to be paid at Closing, plus or minus
prorations and Closing costs as set forth herein.
(b) Execute and deliver to Title Company a memorandum in
recordable form evidencing the parties' agreement
regarding the purchase of transportation impact fee
credits.
(c) An executed closing statement.
(d) Execute and deliver to Seller a counterpart of the
Developer's Agreement referenced in Section 8 hereof.
7.3. Closing Costs.
(a) Seller shall pay the following costs and expenses in
connection with the Closing:
(i) The escrow fees of the Escrow Agent, if any, and
the cost of the preparation of the closing
documents;
(ii) All documentary stamps which are required to be
affixed to the special warranty deed; and
(iii) The premium payable for the Title Commitment and
Title Policy issued pursuant thereto.
(b) Buyer shall pay the cost of recording the special
warranty deed and the agreement regarding the purchase
of transportation impact fee credits.
7.4. Proration of Taxes, Rents etc. Taxes for the year of Closing
shall be prorated to the date of Closing. If the Closing shall occur before the
tax rate is fixed for the then current year, the apportionment of taxes shall be
upon the basis of the tax rate of the preceding year applied to the latest
assessed valuation, and the parties agree to reprorate taxes for the year of
Closing once such taxes become known. The provisions of this subparagraph shall
survive the Closing.
8. FEASIBILITY STUDIES AND LICENSE TO ENTER. Buyer or Buyer's agents, at
Buyer's expense, shall have the right to inspect the Property to determine
whether, in Buyer's sole discretion, the Property is suitable for Buyer's
intended use thereof. Such inspection may include, but shall not be limited to,
engineering, environmental, and feasibility studies. If the Property is
determined to be unsuitable, Buyer may terminate this Agreement by giving
written
-6-
notice to Seller of such termination no later than 5:00 PM E.S.T. on December
15, 2004 ("INSPECTION PERIOD"), upon receipt of which Escrow Agent shall return
to Buyer the Deposit and the parties hereto shall be relieved of all further
obligations hereunder, except as provided in this paragraph. If Seller has not
received such notice of termination within said time period, the Property shall
be deemed suitable for Buyer's intended use thereof. Buyer shall cause all
persons or entities furnishing materials or services in connection with the
inspection rights granted hereunder to be paid promptly and Buyer shall not
allow the filing of any construction liens against the Property in connection
with the inspection permitted hereunder. Buyer hereby holds Seller harmless from
any damages or liabilities arising from the acts or omissions of Buyer or its
agents in pursuing the activities permitted under this paragraph. Buyer shall
restore any damage to the Property caused by Buyer's inspection. The provisions
of this paragraph 8 shall survive Closing and any termination of this Agreement.
If Buyer terminates this Agreement, Buyer shall furnish Seller with copies of
all third-party non-proprietary reports, studies, analyses, surveys and other
documentation prepared by or for Buyer with respect to the Property.
From and after the Effective Date, Seller shall make available to Buyer
true and complete copies of the documents described on EXHIBIT "B" and all title
insurance policies; appraisals; environmental, soil, engineering, subsurface and
similar analyses; and other such third party studies and reports with respect to
the Property that are in Seller's possession or control, including, without
limitation, those received by Seller from Lennar Homes, Inc.
During the Inspection Period, Buyer and Seller agree to negotiate with
each other in good faith with respect to a "DEVELOPER'S AGREEMENT" pursuant to
which Seller will assign to Buyer at Closing certain rights and privileges under
the homeowner's association documents and the Declaration of Covenants,
Conditions and Restrictions, which are referenced in Section 36.1 hereof, and,
pursuant to which, Buyer will assume certain responsibilities and obligations as
they relate to the Property. The Developer's Agreement shall include Seller's
assignment to Buyer of (i) all permits, authorizations, approvals, entitlements,
impact fee credits and capacity reservations with respect to the Property,
including density entitlements sufficient to allow Buyer to develop the Property
in accordance with the Construction Drawings referenced in Section 24, but
excluding the transportation impact fee credits referenced in Paragraph 2, and
(ii) Seller's right, title and interest in the Construction Drawings. A copy of
the proposed Developer's Agreement shall be delivered by Seller to Buyer within
five (5) days after the Effective Date of this Agreement. In the event Seller
and Buyer cannot agree upon the Developer's Agreement during the Inspection
Period, either party may elect to terminate this Agreement in which event Escrow
Agent shall return the Deposit to Buyer and the parties hereto shall be relieved
of all further obligations hereunder except as otherwise provided in this
Section 8.
9. BUYER'S DEFAULT. Except as to a wrongful failure timely to close on the
acquisition of the Property, Buyer shall not be in breach or default hereunder
unless Seller is not in default hereunder, and within ten (10) business days
after the Buyer's receipt of notice of default. (i) Buyer fails to cure any
material breach of any obligation of Buyer under this Agreement which is set
forth in such notice or (ii) Buyer fails to complete its purchase of the
Property. If any such failure continues beyond such cure period, the sole and
exclusive remedy of Seller shall be to extinguish Buyer's right to purchase the
Property and Seller shall be entitled to retain the Deposit as the agreed upon
liquidated damages for Buyer's failure to perform. Seller
-7-
expressly waives any other remedy, at law or in equity, against Buyer. The
parties agree and stipulate that as of the Effective Date, the exact amount of
damages would be extremely difficult to ascertain and that the Deposit
constitutes a reasonable and fair approximation of such damages and is not a
penalty. Notwithstanding the foregoing, it is expressly acknowledged that the
10-day curative opportunity provided to Buyer shall in no event cause the
Closing to be extended beyond December 22, 2004, and that, if a 10-day curative
period would otherwise cause such extension, the curative period afforded to
Buyer by this Section shall be reduced accordingly.
With respect to any defaults which occur subsequent to Closing by Buyer
relating to matters which, by their nature, must be completed or arise
subsequent to Closing Seller shall have all rights and remedies afforded to it
by Florida law, whether in law or in equity, except to the extent specific
remedies may be set forth in an agreement which survives Closing, in which case
the remedies set forth in such agreement shall be binding upon the parties, and
the limitations with respect to remedies heretofore set forth in this paragraph
9 shall no longer be applicable.
10. SELLER'S DEFAULT.
10.1. Default by Seller. Except as to a wrongful failure timely to
close on the sale of the Property, Seller shall not be in default hereunder
unless within ten (10) business days after receipt of written notice from Buyer,
Seller fails to cure any of the following: (i) an any representation or warranty
made by Seller herein is or becomes false in any material respect; (ii) any
covenant or obligation made or undertaken by Seller hereunder is not
substantially performed in the time specified for such performance; (iii) there
is a failure of title not cured by Seller or waived by Buyer after the Title
Commitment is reviewed and Permitted Exceptions are established, except for any
subsequent matters authorized by paragraph 6.1 above; or (iv) Seller fails to
convey title to the Property in accordance herewith or otherwise breaches any
other provision of this Agreement when the Buyer is not in default hereunder.
This ten (10) business day notice provision shall not apply to any title or
survey matter as to which the notice and/or cure period already has expired
hereunder. Buyer's sole and exclusive remedies hereunder shall be (i) specific
performance, without any claim for delay damages or (ii) return of the Deposit
Notwithstanding the foregoing it is expressly acknowledged that the 10-day
curative opportunity provided to Seller shall in no event cause the Closing to
be extended beyond December 22, 2004, and that, if a 10-day curative period
would otherwise cause such extension, the curative period afforded to Seller by
this Section shall be reduced accordingly.
With respect to any defaults which occur subsequent to Closing by Seller
relating to matters which, by their nature, must be completed or arise
subsequent to Closing, Buyer shall have all rights and remedies afforded to it
by Florida law, whether in law or in equity, except to the extent specific
remedies may be set forth in an agreement which survives Closing, in which case
the remedies set forth in such agreement shall be binding upon the parties, and
the limitations with respect to remedies heretofore set forth in this paragraph
10 shall no longer be applicable.
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11. REPRESENTATIONS AND WARRANTIES OF BUYER.
11.1 Buyer's Organization. Buyer is duly organized, existing and in
good standing under the laws of the State of Nevada, is authorized to transact
business in the State of Florida, and has not filed, voluntarily or
involuntarily, for bankruptcy relief within the last six months under the laws
of the United States Bankruptcy Code, nor has any petition for bankruptcy or
receivership been filed against Buyer within the last six months.
11.2 Buyer's Capacity. Buyer represents that it has capacity to
enter into this Agreement and that the person signing below on behalf of Buyer
represents that he or she is duly authorized to execute this Agreement and to
bind the party for which he or she is signing.
12. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER WITH RESPECT TO
THE PROPERTY.
12.1 Seller's Representations, Etc. Seller expressly covenants,
warrants and represents to Buyer the following matters:
(a) In addition to the obligations required to be performed
hereunder by Seller at the Closing, Seller shall perform
such other acts, and shall execute, acknowledge and
deliver subsequent to Closing such other instruments,
documents and other materials as the other may
reasonably request in order to effectuate the
consummation of the transaction contemplated herein and
to vest title to the Property in Buyer.
(b) Seller has received no written notice of any change
contemplated in any applicable laws, ordinances, or
restrictions, or of any judicial or administrative
action or of any action by adjacent landowners, which
would prevent or adversely affect Buyer's intended use
of the Property for single-family residential
development.
(c) Seller has received no written notice of any violation
of any applicable laws, ordinances, regulations,
statutes, rules and restrictions pertaining to and
affecting the Property.
(d) No other person, firm, corporation or other entity has
any right or option to acquire the Property or any
portion thereof.
(e) To Seller's knowledge, there are no parties in
possession of any portion of the Property, whether as
lessees, tenants at sufferance, trespassers or
otherwise.
(f) During the period between the date hereof and the
Closing, Seller agrees that it shall:
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(i) Comply with the requirements of all state and
municipal laws, ordinances, regulations and orders
relating to the Property;
(ii) Comply with all the terms, conditions and
provisions of all contractual arrangements
relating to the Property, if any, and make all
payments due thereunder, and
(iii) Neither negotiate nor enter into any contract
affecting the use or operation of the Property
which cannot be terminated without charge, cost,
penalty or premium on or before Closing.
(g) Except as may be otherwise referenced in this Agreement,
including, by way of example but not limitation, the
agreements referenced in Sections 8 and 36 hereof, there
will be no contracts, leases, service contracts,
maintenance contracts, operating agreements or other
contracts or agreements of any kind in existence with
respect to the Property which would be binding on Buyer
subsequent to Closing.
(h) To Seller's knowledge, no portion of the Property has
ever been used as a sanitary landfill or as a garbage
dump.
(i) Without investigation, Seller has no knowledge of any
toxic substances, hazardous wastes, hazardous
substances, or any other pollutants or dangerous
substances regulated pursuant to any applicable
environmental laws including, without limitation,
polychlorinated biphenyls (PCB's), oil, petroleum
products and fractions, vinyl chloride, asbestos, heavy
metals, radon, underground storage tanks (whether empty,
filled or partially filled with any substance, regulated
or otherwise), any substance or materials the presence
of which on the Property is prohibited by any
environmental laws or any other substance or material
which requires special handling or notification of any
federal, state or local governmental entity regarding
collection, storage, treatment or disposal being present
on the Property. Seller further represents that, to
Seller's knowledge, without investigation, no person has
used, generated, manufactured, stored or disposed of on,
under or about the Property or transported to or from
the Property any of the aforementioned materials (the
"HAZARDOUS MATERIALS"). For the purpose of this
Paragraph 4.1(i), Hazardous Materials shall also include
but not be limited to substances defined as "hazardous
substances," "hazardous materials," or '"toxic
substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.;
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the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.; and in the
regulations adopted and publications promulgated
pursuant to said laws.
(j) Seller will not make any application to change the
zoning classification of the Property in a manner which
will prevent Buyer from developing the Property for
single-family lots and attendant single-family
residential units.
(k) To Seller's knowledge, there are no legal actions, suits
or other legal or administrative proceedings, including
zoning, land use, condemnation or similar cases or
proceedings, presently existing against the Property or
against Seller's interest therein or against any third
party known to Seller affecting the Property.
(l) To Seller's knowledge, there are no uncured violations
of Federal, state or municipal laws, ordinances, orders,
regulations or requirements affecting the Property.
(m) Seller has full authority to execute this Agreement, to
comply with its terms and to consummate the transaction
contemplated herein. The person signing below on behalf
of Seller represents that he or she is duly authorized
to execute this Agreement and to bind Seller. The
execution by Seller of this Agreement and the
consummation by Seller of the transaction contemplated
hereby do not, and will not, constitute a violation of
any order, rule or regulation of any court or any
federal, state or municipal regulatory body or
administrative agency or any other governmental body
having jurisdiction over Seller or any portion of the
Property.
12.2 No Other Representations. No representation or inducement,
whether oral or written, made prior hereto which is not included in this
Agreement shall have any force or effect.
12.3 Representations and Warranties as Condition Precedent. As a
condition precedent to Buyer's obligation to purchase the Property, the
covenants, representations and warranties set forth in this Paragraph and
elsewhere in this Agreement must be true and correct at the time of Closing,
and, unless Seller shall have otherwise expressly notified Buyer in writing to
the contrary, all representations, covenants and warranties of Seller contained
herein shall be deemed to have been affirmed in their entirety as of the time of
Closing.
12.4 Knowledge. As used in this paragraph 12, the term "knowledge"
means the actual present knowledge of Matt O'Brien, the Vice President of Land
Development of Seller, without independent investigation or review of files.
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12.5 Survival. Seller hereby agrees to defend, indemnify, save and
hold Buyer, its successors and assigns, harmless from and against any and all
losses, claims, damages, liabilities, costs and expenses, including, without
limitation, attorneys' fees and costs, related to, growing out of, or arising
from any intentional breach of any representation or warranty of Seller set
forth above. The foregoing indemnification shall survive the Closing for a
period of one (1) year.
13. PATRIOT ACT REPRESENTATION. Seller and Buyer represent and warrant to
each other that it is not acting, directly or indirectly, for or on behalf of
any person, group, entity or nation named by the United States Treasury
Department as a Specially Designated National and Blocked Person, or for or on
behalf of any person, group, entity or nation designated in Presidential
Executive Order 13224 as a person who commits, threatens to commit, or supports
terrorism; and that they are not engaged in this transaction directly or
indirectly on behalf of, or facilitating this transaction directly or indirectly
on behalf of, any such person, group, entity or nation.
14. CAPTIONS. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this Agreement
15. ENTIRE AGREEMENT. This Agreement embodies and constitutes the entire
understanding between the parties with respect to the transaction contemplated
herein. All prior or contemporaneous agreements, understandings, representations
and statements, oral or written, are merged into this Agreement. Neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged,
or terminated except by an instrument in writing signed by the party against
which the enforcement of such waiver, modification, amendment, discharge or
termination is sought, and then only to the extent set forth in such instrument.
16. ASSIGNMENT. Neither party hereto shall have the right to assign this
Agreement or any of its rights or obligations hereunder to any person,
corporation or other entity without the prior written approval of the other
party, which approval shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Buyer shall have the right to assign this
Agreement to an entity that is controlled by, controls, or is under common
control with, Buyer.
17. PARTIES BOUND. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their successors and assigns, provided
that no assignment shall be made except in accordance with the provisions of
paragraph 16 hereof.
18. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.
19. PARTIAL INAVALIDITY. In case any one or more of the provisions hereof
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
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20. CONSTRUCTION OF AGREEMENT. The parties acknowledge that each has
played an equal part in the negotiation and drafting of this Agreement, and in
the event any ambiguities should be realized in the construction or
interpretation of this Agreement, such ambiguities shall not be construed
against either party solely on account of authorship.
21. COUNTERPARTS. This Agreement may be executed in several counterparts,
each constituting a duplicate original, but all such counterparts constituting
one and the same Agreement.
22. EFFECTIVE DATE. For the purpose of determining "the date hereof" or
the Effective Date, as used in this Agreement, such date shall be the last date
the Seller or Buyer executes this Agreement.
23. PARTIES. Whenever the context hereof shall so require, the singular
shall include the plural, the male gender shall include the female gender and
the neuter, and vice versa, and the use of the terms "include," "includes" and
"including" shall be without limitation to the items which follow.
24. CONDITIONS PRECEDENT.
24.1. Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the Closing is subject to the satisfaction, as of Closing, of each of
the following conditions (any of which may be waived in whole or in part in
writing by Buyer at or prior to Closing):
(a) Buyer shall have been furnished with the Title
Commitment as required by paragraph 6.1 hereof, and such
commitment shall be (i) updated at Seller's expense at
Closing with such update showing no change in the status
of title as previously approved by Buyer, and (ii)
modified at Closing to delete the standard exceptions,
including those for taxes and assessments (other than
those that are not yet due and payable), matters of
survey (provided Buyer delivers to the Title Company a
current survey of the Properly that satisfies the
requirements of the Title Company), parties in
possession, construction liens, and matters appearing in
the "gap."
(b) Seller shall furnish to Buyer, at least three (3)
business days prior to Closing, copies of all deeds,
affidavits or other documents which will be executed and
delivered by Seller at Closing, which documents shall be
subject to the reasonable approval of Buyer's attorney.
(c) Seller shall have (i) obtained the approval of the
construction drawings relating to the Property and
prepared by Heidt & Associates, Inc. from Pasco County,
Florida (the "CONSTRUCTION DRAWINGS"), (ii) obtained
from SWFWMD the Status of Permit
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Application "completeness" letter for the Property and
(iii) completed the mass grading of the individual lots
as depicted on the Construction Drawings.
(d) Any environmental assessment of the Property obtained by
Buyer prior to the Closing shall not (i) disclose that
the Property contains any Hazardous Materials, or (ii)
recommend a Phase II assessment.
(e) There shall exist no governmental moratorium, delay or
hindrance that would impair Buyer's ability to timely
obtain the approved Construction Drawings or building
permits with respect to the Property.
With respect to subsection (c) above, Buyer acknowledges and agrees that
it will be responsible for obtaining the required Construction Drawings once
they are approved by Pasco County and Buyer is prepared to commence its
development of the Property with the understanding that any and all fees
necessary to be paid as a prerequisite for Pasco County to release the subject
plans will be paid by Buyer including, by way of example but not limitation, any
and all prepayments of water and sewer impact fees that may be charged by Pasco
County.
25. TIME. The parties acknowledge that time is of the essence for each
time and date specifically set forth in this Agreement. Without limiting the
generality of the foregoing, it is expressly understood that Seller shall have
no obligation to close the transaction contemplated by this Agreement and Buyer
shall have no right to acquire the Property subsequent to December 22, 2004.
26. NOTICES. All notices which are required or permitted hereunder must be
in writing and shall be deemed to have been given, delivered or made, as the
case may be (notwithstanding lack of actual receipt by the addressee) (i) upon
hand delivery, (ii) three (3) business days after having been deposited in the
United States mail, certified or registered, return receipt requested,
sufficient postage affixed and prepaid, (iii) one (1) business day after having
been deposited with an expedited, overnight courier service (such as by way of
example but not limitation, U.S. Express Mail, Federal Express or Airborne), or
(iv) upon delivery of a facsimile transmission which is confirmed on the
sender's facsimile machine as having been sent to the recipient at the proper
telecopy number, addressed to the party to whom notice is intended to be given
at the address set forth below:
Seller: Pulte Home Corporation
Northdale Executive Center
3810 Northdale Boulevard
Suite 100
Tampa, Florida 33624
Attn: Mr. Matt O'Brien
Telephone No. (813)265-3343
Facsimile No. (813) 265-3367
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with a courtesy Hill, Ward & Henderson, P.A.
copy to: Bank of America Plaza, Suite 3700
101 East Kennedy Boulevard
Tampa, Florida 33602
Attn: Thomas N. Henderson, III, Esq.
Telephone No. (813) 221-3900
Facsimile No. (813) 221-2900
Buyer: Ashton Tampa Residential, LLC
500 N. Westshore Drive, Suite 1020
Tampa, Florida 33609
Attn: Mr. James D.Bowen
Telephone No. (813) 281-0232
Facsimile No. (813) 281-0242
and
Ashton Woods Homes
1080 Holcomb Bridge, Building 200
Suite 350
Roswell, Georgia 30076
Attn. Mr. Thomas Krobot
Telephone No. (770) 998-9663
Facsimile No. [ILLEGIBLE]
with a courtesy Ward Rovell, Professional Association
copy to: Bank of America Plaza, Suite 4100
101 East Kennedy Boulevard
Tampa, Florida 33602
Attn: Charles H. Carver, Esq.
Telephone No. (813) 222-8700
Facsimile No. (813)222-8701
Escrow Agent: Hill, Ward & Henderson, P.A.
Bank of America Plaza, Suite 3700
101 East Kennedy Boulevard
Tampa, Florida 33602
Attn: Thomas N. Henderson, III, Esq.
Telephone No. (813)221-3900
Facsimile No. (813) 221-2900
The failure by any party to deliver a courtesy copy as referenced above
shall not constitute a default under the terms of this Agreement nor shall it
create a defect in any notice which is otherwise properly given. Furthermore, it
is agreed that, if any party hereto is
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represented by legal counsel, such legal counsel is authorized to deliver
written notice directly to the other party on behalf of his or her client, and
the same shall be deemed proper notice hereunder if delivered in the manner
hereinabove specified.
Any party hereto may, at any time by giving ten (10) days written notice to the
other party hereto, designate any other address in substitution of the foregoing
address to which such notice shall be given and other parties to whom copies of
all notices hereunder shall be sent.
27. ATTORNEY'S FEES, ETC. Should either party employ an attorney or
attorneys to enforce any of the provisions hereof, or to protect its interest in
any matter arising hereunder, or to recover damages for the breach hereof, the
party prevailing shall be entitled to recover from the other party all
reasonable costs, charges and expenses, including attorneys' fees, the value of
time charged by paralegals and/or other staff members operating under the
supervision of an attorney, and other legal costs, expended or incurred in
connection therewith, before, during and subsequent to any litigation, including
arbitration and appellate proceedings, bankruptcy or similar debtor/creditor
proceedings, and proceedings to enforce any indemnity agreement herein
contained.
28. [Intentionally Omitted].
29. CONDEMNATION. If, after the date hereof and prior to Closing, all or a
part of the Property is subjected to a bona fide threat of condemnation by a
body having the power of eminent domain or is taken by eminent domain or
condemnation (or sale in lieu thereof), Buyer may, by written notice to Seller,
elect to cancel this Agreement no later than ten (10) days after notice of such
occurrence, in which event both parties shall be relieved and released of and
from any further liability hereunder, and the Deposit made by Buyer hereunder
shall forthwith be returned to Buyer, whereupon this Agreement shall become null
and void and be considered canceled. If no such election is made within said
10-day period, this Agreement shall remain in full force and effect and the
purchase contemplated herein, less any interest taken by eminent domain or
condemnation, shall be effected with no further adjustment, and upon Closing
Seller shall assign, transfer, and set over to Buyer all of the right, title and
interest of Seller in and to any awards that have been or that may thereafter be
made for such taking.
30. WAIVER OF BREACH. The waiver of one or more defaults by any party to
this Agreement shall not be deemed a waiver of any subsequent default of the
same or any other provision of this Agreement under the same or other
circumstances.
31. BROKERAGE COMMISSIONS. Seller and Buyer warrant each to the other that
they have not dealt with any real estate broker or salesperson with regards to
this transaction. Seller agrees to indemnify and hold Buyer harmless from any
and all commissions claimed by any broker or third party arising by virtue of
this transaction whose commissions might legally arise from acts of Seller.
Buyer agrees to hold Seller harmless from any and all commissions claimed by any
broker or third party arising by virtue of this transaction whose commissions
might legally arise from acts of Buyer.
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32. DISCLAIMER OF WARRANTIES. Except as specifically set forth in this
Agreement, Seller has not made and does not make any warranty or representation,
express or implied as to the merchantability, quantity, quality, physical
condition or operation of the Property, zoning, the suitability or fitness of
the Property or any improvements thereon, if any, for any specific or general
use or purpose, the availability of water, sewer or other utility service, or
any other matter affecting or relating to the Property, its development or use
including but not limited to, the Property's compliance with any environmental
laws. Neither party is relying on any statement or representations made by the
other not embodied herein. Buyer hereby expressly acknowledges that no such
warranties and representations have been made, except as expressly set forth in
the Agreement; that it shall be Buyer's obligation to obtain and pay for all
commitments for water, sewer and other utilities and to pay the commitment,
impact, tap in or other fees and charges for such utilities (no such fees have
been paid by Seller). Buyer acknowledges that the provisions of this Agreement
for inspection and investigation of the Property are adequate to enable Buyer to
make Buyer's own determination with respect to merchantability, quantity,
quality, physical condition or operation of the Property, zoning, suitability or
fitness of the Property or any improvements thereon, if any, for any specific or
general use or purpose, the availability of water, sewer or other utility
service or any other matter affecting or relating to the Property, its
development or use, including without limitation, the Property's compliance with
any environmental laws. Buyer further acknowledges it has inspected the Property
or has caused such inspection to be made and is thoroughly familiar and
satisfied therewith, and agrees to take the Property in its physical condition,
"AS IS, WHERE IS, WITH ALL FAULTS" as of the date of Closing, subject to the
express conditions of this Agreement. Seller shall not be liable or bound in any
manner by any verbal or written statement, representation or information made or
given by anyone pertaining to the Property, unless specifically set forth in
this Agreement.
In particular, but without in any way limiting the foregoing, Buyer hereby
releases Seller from any and all responsibility, liability and claims for or
arising out of the presence on or about the Property (including in the soil,
air, structures and surface and subsurface water) of materials, wastes or
substances that are or become regulated under or that are or become classified
as toxic or hazardous, under any Environmental Law, including without
limitations, petroleum, oil, gasoline or other petroleum products, byproducts or
waste. The foregoing release shall not apply, however, if the presence on or
about the Property of such materials, wastes or substances was caused by Seller,
nor shall the foregoing release be construed as limiting Seller's
indemnification obligations in Section 12.5. As used herein, "ENVIRONMENTAL LAW"
shall mean, as amended and in effect from time to time, any federal, state or
local statute, ordinance, rule, regulation, judicial decision, or the judgment
or decree of a governmental authority, arbitrator or other private adjudicator
by which Buyer or the Property is bound, pertaining to the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Clean Air Act, as amended and in the statutes together with the
rules adopted and guidelines promulgated pursuant thereto, and all similar
statutes together with rules adopted and guidelines promulgated pursuant to the
foregoing.
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33. MEMORANDUM OF AGREEMENT. Neither this Agreement nor a Memorandum of
this Agreement shall be filed of record by either party.
34. RADON GAS DISCLOSURE. The following language is required by law in any
contract involving the sale or lease of any building within the State of
Florida:
"RADON GAS: Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been
found in buildings in floridal. Additional information regarding
radon and radon testing may be obtained from your county public
health unit."
35. ESCROW AGENT.
35.1. Duties. It is agreed that the duties of Escrow Agent are only
such as are herein specifically provided, being purely ministerial in nature,
and that Escrow Agent shall incur no liability whatever except for willful
misconduct or gross negligence so long as Escrow Agent has acted in good faith.
The Seller and Buyer release Escrow Agent from any act done or omitted to be
done by Escrow Agent in good faith in the performance of Escrow Agent's duties
hereunder.
35.2. Responsibilities. Escrow Agent shall be under no
responsibility with respect to any Deposit placed with it other than faithfully
to follow the instructions herein contained. Escrow Agent may consult with
counsel and shall be fully protected in any actions taken in good faith, in
accordance with counsel's advice. Escrow Agent shall not be required to defend
any legal proceedings which may be instituted against. Escrow Agent in respect
to the subject matter of these instructions unless requested to do so by Seller
and Buyer and indemnified to the satisfaction of Escrow Agent against the cost
and expense of such defense. Escrow Agent shall not be required to institute
legal proceedings of any kind. Escrow Agent shall have no responsibility for the
genuineness or validity of any document or other item deposited with Escrow
Agent, and shall be fully protected in acting in accordance with any written
instructions given to Escrow Agent hereunder and believed by Escrow Agent to
have been signed by the proper parties.
35.3. Sole Liability, Escrow Agent assumes no liability hereunder
except that of a stakeholder. If there is any dispute as to whether Escrow Agent
is obligated to deliver the Deposit, or as to whom the Deposit is to be
delivered, Escrow Agent will not be obligated to make any delivery of the
Deposit, but in such event may hold the Deposit until receipt by Escrow Agent of
an authorization in writing signed by all of the persons having an interest in
such dispute, directing the disposition of the sum, or in the absence of such
authorization, Escrow Agent may hold the Deposit until the final determination
of the rights of the parties in an appropriate proceeding. If such written
authorization is not given, or proceedings for such determination are not begun
and diligently continued, Escrow Agent may, but is not required, to bring an
appropriate action or proceeding for leave to place the Deposit with the court,
pending
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such determination. Once Escrow Agent has tendered into the registry or custody
of any court of competent jurisdiction all money and/or property in its
possession under this Agreement, or has made delivery of the Deposit in any
other manner provided for herein, Escrow Agent shall be discharged from all
duties and shall have no further liability hereunder as Escrow Agent.
It is expressly understood that Hill, Ward & Henderson, P.A., represents
Seller in connection with this transaction. In the event of any disputes as to
which party is entitled to the Deposit or in the event any disagreement shall
arise as a result of this Agreement or the transaction contemplated hereby,
Escrow Agent shall not be excluded from representing Seller by virtue of its
serving as Escrow Agent pursuant to this Agreement. Buyer shall not object to,
or request a disqualification of, Escrow Agent, as counsel for Seller.
36. OTHER CONTRACTUAL MATTERS.
36.1. Homeowner's Association/Restrictive Covenants. Seller owns and
is developing contiguous real property for a residential project known as "Palm
Cove". As part of the overall Palm Cove project, which will comprise both the
Property and Seller's additional land, Seller has created or will create a
homeowner's association and has recorded a Declaration of Covenants, Conditions
and Restrictions of Palm Cove of Wesley Chapel, both of which will encumber the
Property as Permitted Exceptions and as covenants running with the land. In this
regard, pursuant to the laws of the State of Florida, the homeowner's
association/community disclosure statement required by Section 689.26, Florida
Statutes is hereby deemed to have been provided.
36.2. Overpass Road. In conjunction with the development of the
Property, Buyer covenants and agrees that it will construct the remaining
extension to Overpass Road, which is included in the approved Construction
Drawings, as well as entry monumentation and landscaping pursuant to the
monument and landscaping conceptual plan provided by and approved by Seller.
36.3. Development Requirements. In conjunction with the development
of the Property, Buyer covenants and agrees that it will limit its horizontal
development and construction to what is depicted on the approved Construction
Drawings for the Property and that all platting(s) of the Property shall be
restricted to only what is shown on the approved Construction Drawings. No
modification of the Construction Drawings shall be made by Buyer without the
prior written consent of Seller, which consent may be withheld by Seller in the
exercise of its sole discretion. An appropriate reference to the aforesaid
development requirements shall be incorporated into the deed referenced in
paragraph 7.1(a) of this Agreement.
36.4. Section 1445.
(a) The parties shall comply with the provisions of Code
Section 1445 and applicable Treasury Regulations issued thereunder. If the
Seller is a U.S. person for Code Section 1445 purposes, then on demand of the
Buyer and prior to dosing the Seller shall provide the Buyer with a certificate
of non-foreign status in the manner provided in Treasury Regulations
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Section 1.1445-2. If the Seller provides the Buyer with such certificate, and if
the Buyer is otherwise permitted to rely on such certificate under those
Regulations, the Buyer shall not withhold under Code Section 1445.
(b) If the Seller is a 'foreign person' as defined by the
Code, the Buyer generally is required to withhold 10% of the gross sales price
from the Seller at closing and to pay the withheld amount over to the Internal
Revenue Service (IRS) unless an applicable exemption from withholding or a
limitation on the amount to be withheld is available. To the extent that the
cash to be paid over to the Seller at closing is insufficient to cover the
Buyer's withholding obligation, the Seller shall provide to the Buyer at closing
cash equal to such excess for purposes of making such withholding payment. If
the Seller's federal income tax on the gain is less than the applicable
withholding amount, the Seller may make advance application to the IRS for
reduced withholding and, if granted, the Buyer shall withhold only the
authorized reduced amount. If such ruling has not been received by closing, the
parties at closing shall enter into an escrow agreement reasonably satisfactory
to the Buyer and Seller pending receipt of the ruling, provided that at closing
the Seller shall have the obligation to provide to the escrow agent from the
closing proceeds (or from the Seller's other resources if necessary) cash equal
to the maximum required withholding, with any excess withholding being
refundable to the Seller upon receipt of a favorable ruling from the IRS.
(c) Buyer and Seller understand that the IRS requires the
Buyer and the Seller to have a U.S. federal taxpayer identification number and
to supply that number on the foregoing forms. A foreign individual may acquire
an International Taxpayer Identification Number for this purpose. Since it may
take several weeks to receive the number after application and the IRS will not
process these forms without the actual number, a party lacking a TIN is advised
to apply immediately. The Seller's TIN is 38-154-5089. The Buyer's TIN is 90-
0193359.
37. [Intentionally Omitted].
38. FACSIMILE COPIES. Facsimile copies of this Agreement and the
signatures thereon shall have the same force and effect as if the same were
original documents. Facsimile signatures are acceptable and shall be deemed to
be original signatures.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
THE SIGNATURE PAGE FOLLOWS ON THE NEXT SUCCEEDING PAGE.]
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[SIGNATURE PAGE TO
AGREEMENT FOR SALE OF LAND]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the dates set forth below.
WITNESSES: SELLER:
PULTE HOME CORPORATION, a
Michigan corporation
/s/ [ILLEGIBLE] By: /s/[ILLEGIBLE]
- ----------------- -----------------------
Name: [ILLEGIBLE] Name: [ILLEGIBLE]
(Print or Type Name) Title: [ILLEGIBLE]
Date: December 3, 2004
/s/ Roy J. McCraw III
- -------------------------
Name: Roy J. McCraw III
(Print or Type Name)
BUYER:
ASHTON TAMPA RESIDENTIAL, LLC,
a Nevada limited liability company
___________________________ By: ____________________________
Name: _____________________ Name: ______________________
(Print or Type Name) Title: _____________________
___________________________ Date: December ___, 2004
Name: _____________________
(Print or Type Name) AND
___________________________ By: ____________________________
Name: _____________________ Name: ______________________
(Print or Type Name) Title: _____________________
___________________________ Date: December ___, 2004
Name: _____________________
(Print or Type Name)
-21-
[SIGNATURE PAGE TO
AGREEMENT FOR SALE OF LAND]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the dates set forth below.
WITNESSES: SELLER:
PULTE HOME CORPORATION, a
Michigan corporation
/s/ [ILLEGIBLE] By: _____________________________
- ----------------- Name: ______________________
Name: [ILLEGIBLE] Title: ______________________
(Print or Type Name)
Date: December ______, 2004
___________________________
Name: _____________________
(Print or Type Name)
BUYER:
ASHTON TAMPA RESIDENTIAL, LLC,
a Nevada limited liability company
/s/ Stacey M. Cook By: /s/ [ILLEGIBLE]
- -------------------- --------------------------
Name: Stacey M. Cook Name: [ILLEGIBLE]
(Print or Type Name) Title: [ILLEGIBLE]
Date: December 3, 2004
/s/ Dawn Carey
- ---------------------
Name: Dawn Carey
(Print or Type Name) AND
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
- -------------------------- ------------------------------
Name: [ILLEGIBLE] Name: [ILLEGIBLE]
(Print or Type Name) Title: [ILLEGIBLE]
Date: December 6, 2004
/s/ [ILLEGIBLE]
- --------------------------
Name: [ILLEGIBLE]
(Print or Type Name)
-22-