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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
_____ OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from ___ to ___
Commission File Number 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in its charter)
FLORIDA 59-0483700
(State or other jurisdiction of (I.R.S. Employer
149 South Ridgewood Avenue incorporation or organization)
Daytona Beach, Florida Identification No.)
(Address of principal executive offices) 32114
(Zip Code)
Registrant's telephone Number, including area code
(904) 255-7558
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF
THE SECURITIES EXCHANGE ACT OF 1934:
Name of each exchange on
Title of each class which registered
COMMON STOCK, $1 PAR VALUE AMERICAN STOCK EXCHANGE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ___
----
1
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
___
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at March 10, 1999 was approximately $21,777,849.
The number of shares of the Registrant's Common Stock outstanding on
March 10, 1999 was 6,371,833.
Portions of the 1998 Annual Report to Stockholders of Registrant are
incorporated by reference in Part I, II, and IV of this report. Portions of
the Proxy Statement of Registrant dated March 22, 1999 are incorporated by
reference in Part III of this report.
2
PART I
Item 1. Business
_______ ________
The Company is primarily engaged through its
wholly owned subsidiaries, Indigo Group Inc.,
Indigo Development Inc., Indigo International Inc.and Indigo
Group Ltd., in the real estate industry. Real esate operations
include commercial real estate, real estate development,
golf operations, property leasing, leasing properties for
oil and mineral exploration and the sale of forest products.
From time to time, the Company sells unimproved real estate
considered surplus to its operating needs. This latter function
is not considered part of the Company's ordinary operations.
On December 28, 1998, the Company entered into an agreement for
the sale of its citrus operations. The transaction is expected
to close on or about April 8, 1999 at a price approximating
$30,945,000. The results of the citrus operations have been
reported separately as discontinued operations in the Consolidated
Statements of Income. Prior year consolidated financial
statements have been restated to present citrus operations as
discontinued operations. The assets and liabilities associated
with the citrus operations as of December 31, 1998 and 1997 have
been presented separately on the consolidated balance sheets as
"Net Assets of Discontinued Citrus Operations." Summary
financial information of the citrus operations is as follows:
Year Ended December 31
----------------------
1998 1997 1996
Revenues from Discontinued
Citrus Operations $11,726,251 $ 9,444,783 $13,862,864
========== ========== ==========
Income from Discontinued Citrus
Operations Before Tax $ 1,930,247 $ 1,092,217 $ 4,011,512
Income Tax Expense from Discontinued
Citrus Operations ( 726,352) ( 411,001) (1,509,532)
--------- --------- ---------
Net Income from Discontinued
Citrus Operations $ 1,203,895 $ 681,216 $ 2,501,980
========= ======== =========
3
Item 1. Business (continued)
- ------ --------
The Company also operated in the Resort industry until July
14, 1994 when the Resort complex at Indigo Lakes was sold.
Due to the pending sale of the citrus operations, the Company's
continuing operations include only one segment. Thus
segmental disclosures are not applicable.
CITRUS
- ------
Citrus groves. The Company, under the name Lake Placid Groves,
owns and operates approximately 3,900 acres of orange and grapefruit
groves located primarily in two large parcels in Highlands County,
Florida. The average age of grove trees is 16 years, well within
the average 45-year productive life. At December 31, 1998 all grove
acres were classified as fruit bearing. The groves require
expenditures chargeable to production expenses, such as fertilizer,
irrigation, and cultivation.
Citrus operations. The Company harvests and sells both fresh and
to-be-processed citrus from its groves. In connection
with the groves, the Company owns and operates an efficient fresh
fruit citrus packing plant, placed in service during the fall of
1969, in which the portion of the crop which is sold as fresh
fruit is packed. Fresh fruit sales are made by the Company to
wholesale produce distributors and retail grocery chains primarily
in the Eastern and Midwestern regions of the United States
and Canada. In an effort to achieve optimum utilization of the
packing facility, the Company also handles the fruit of other
growers in the area.
That portion of the Company's citrus crop which is not sold
as fresh fruit is processed by Citrus World Incorporated
("Citrus World"), an agricultural cooperative under a participating
marketing pool agreement. The agreement is a two year arrangement
which the Company may terminate on October 1 of any year by
giving written notice sixty days prior to such date with the
arrangement continuing for two additional years from the
notice of cancellation. Citrus World, one of the larger
processors of citrus products in the United States, pools its
own fruit with the fruit received from the Company and other
citrus growers, processes the pooled fruit, and sells the
products produced therefrom. Each participant in the pool,
including Citrus World, shares ratably in the proceeds from
the sales of these products, net of Citrus World's actual
processing and marketing costs, plus a per-unit handling fee.
Citrus World makes periodic payments to all participants
on their pro rata share of net sales proceeds and makes
final payment after all the products in the pool have
been sold. During the years 1998, 1997, and 1996, the Company's
sales under the above pooling agreement amounted to $4,321,531,
$3,107,919, and $5,203,787, respectively.
4
Item 1. Business (continued)
- ------ --------
The percentages of the Company's citrus which are sold as fresh
fruit and which are diverted to the processing plant can vary
considerably from year to year, depending upon fruit size, exterior
appearance, and the relative profitability of the markets. During
the crop year ended August 31, 1998 approximately 38% of the
Company's citrus crop was sold as fresh fruit and the balance
was diverted to the cannery, as compared with 47% in the crop year
ended August 31, 1997 and 35% the crop year ended August 31, 1996.
The citrus industry, which is seasonal in nature as are other
agricultural pursuits, is subject to wide fluctuations in income
because of changes in demand, weather conditions, and other economic
factors. Also affecting income are the continuing large amounts
of frozen concentrate orange juice from Brazil which maintains
high supply levels and tend to lower selling prices. The Company's
sales of fresh citrus fruit can be affected adversely by marketing
orders issued by the United States Department of Agriculture under
the Agricultural Marketing Agreement Act, which can result in
periodic proration, controlled by grade and size, of interstate
shipment of Florida oranges and grapefruit. Also, tariffs
established by the International Tariff Commission and approved
by Congress can impact the cost of importing citrus products and
thus affect the supply and selling prices of processed citrus.
RESORT OPERATIONS
- -----------------
During 1994, the Company sold its resort operation known as the
Indigo Lakes Holiday Inn Crowne Plaza Resort located on U. S.
Highway 92 in Daytona Beach, Florida. The Resort had been under
a management contract with Sandcastle Resorts since August 17,
1990. A group associated with Sandcastle Resorts formed a
partnership named Indigo Lakes Resort, Ltd. and purchased the
145-unit inn, 8 separate buildings housing 64 condominium-style
units, tennis courts and pro shop, a conference center, several
small meeting rooms, two swimming pools, and other properties
related to those facilities. The 18-hole championship golf course,
fully equipped golf pro shop, restaurant and cocktail lounge, and
a 500-seat banquet and meeting room facility, were sold to The
Fairways Group, L.P.
REAL ESTATE OPERATIONS
- ----------------------
Commercial Development. In August of 1989, the Company reached
an agreement in principle with the Ladies Professional Golf
Association ("LPGA") and the City of Daytona Beach, which calls
for the planning and development of the site for the national
headquarters of the LPGA along with two championship golf
courses. The mixed-use development will also include a clubhouse,
resort facilities, and residential communities along with other
commercial uses. This development is on approximately 3,600
5
Item 1. Business (continued
- ------ --------
acres of land owned by the Company's real estate development
subsidiary, Indigo Development Inc. ("IDI"), in Daytona Beach,
plus 730 acres owned by the City of Daytona Beach immediately
west of Interstate 95. The LPGA has successfully relocated its
headquarters to Daytona Beach and occupies their newly constructed
facilities within the development. The official opening of the
first LPGA International golf course occurred in July 1994 with
the second course opening in October 1998. In December 1994,
the first sale within the development was completed with the
closing of 60 acres of residential land located in the northern
section of the property. During 1995, the first residential units
within the community were completed. In early 1996,
the Interstate 95 interchange at LPGA Boulevard, which
is the north and main entrance to the project, was opened
for use. On September 1, 1997, responsibility for the
operations of the LPGA International golf courses was
transferred from the City of Daytona Beach to a wholly
owned subsidiary of the Company. The agreement with the City of
Daytona Beach provides for the second golf course and a clubhouse
to be constructed by the Company in return for a long-term lease
from the City on both golf courses. The design phase of the
clubhouse has begun and is projected to open by year-end 1999.
Indigo Commercial Realty, a commercial real estate brokerage
company formed in 1991, is the Company's agent in the marketing
and management of commercial properties. In addition to the LPGA
development, approximately 67 acres of fully developed sites,
owned by Indigo Group Inc. and Indigo Group Ltd. ("IG LTD") were
available for sale at December 31, 1998. All development and
improvement costs have been completed at these sites. All of
these commercial sites are located in the Daytona Beach area.
Residential. Until December 1993, the Company, through IG LTD,
operated in residential development, building and sales. At the
end of 1993 IG LTD closed down the development and building
functions. IG LTD continues to sell its remaining lot inventory
in the following communities:
Riverwood Plantation, a 180-acre community in Port Orange, Florida
with 61 lots remaining at December 31, 1998.
Indigo Lakes, a 200-acre development located in Daytona Beach
with 4 lots remaining at December 31, 1998. This community
also includes a 304 unit apartment complex constructed in 1989
by a joint venture between IG LTD and the Trammel Crow Company.
The apartment complex was sold to the mortgage holder in 1994.
Tomoka Heights, a 180-acre development adjacent to Lake Henry in
Highlands County, Florida. There are approximately 120 developable
lots remaining to be sold including 38 fully developed lots.
The sales and construction operations were assumed by third
third parties as of January 1994.
6
Item 1. Business (continued
- ------ --------
IG LTD also has an inventory of 26 fully developed non-contiguous
lots in Palm Coast at December 31, 1998, which the Company continues
to sell.
Income Properties. Rental property is limited to a 17,000 square-foot,
three-story office building in downtown Daytona Beach. The building
is under a lease/purchase agreement, and is considered a financing lease.
Other leasing activities of the Company include ground leases for
billboards, leases of communication tower sites, and a hunting
lease covering approximately 8,300 acres.
Over the past several year the Company has successfully implemented
a strategy of disposing of its income properties. During 1998 the
Company sold its 50% interest in the 70,000 square-foot shopping
center located in Marion County, Florida. At the end of 1997,
the Company sold the office building located in Daytona Beach,
known as Consolidated Center. The Company continues to use a
portion of the building as its headquarters, as terms of the sale
include a commitment to lease 6,000 square feet for a period of at
least three years. Also in 1997, the 24,000 square-foot office
building at Palm Coast, Florida was sold. During 1996, the
Company sold the 24,000 square foot office building in Daytona Beach,
which had been leased to the LPGA as the principal tenant, along
with the 70,000 square-foot Mariner Village shopping center located
in Spring Hills, Florida.Mariner Towne Square, an adjacent 18,000
square-foot shopping center was sold during 1995.
Forest product sales. The timber lands encompass approximately
13,000 acres west of Daytona Beach. Geographic location of the
timber tract is excellent. In addition to access by major
highways (Interstate 95, State Road 40, and International
Speedway Boulevard), the internal road system for forestry
purposes is good. Income from sales of forest products varies
considerably from year-to-year depending on economic conditions
and rainfall, which sometimes limits access to portions of
the woodlands. In addition, drought conditions sharply increase
the potential of forest fires, as occurred during the summer
of 1998. The wildfires which ravaged central Florida burned
approximately 9,000 acres of the Company's timberland. This
and the sale of the approximately 11,000-acre parcel to St.
Johns River Water Management District in 1997 will reduce
the Company's potential for future income from sales of forest
products; although, sales should more than cover expenses
associated with the forestry operation. These expenses
consist primarily of real estate taxes, with additional
expenses including the costs of installing and maintaining
roads and drainage systems, reforestation, and wild fires
suppression.
7
Item 1. Business (continued)
- ------ --------------------
Subsurface Interests. The Company owns full or fractional subsurface
oil, gas, and mineral interests in approximately 537,000 "surface"
acres of land owned by others in various parts of Florida, equivalent
to approximately 300,000 acres in terms of full interest. The
Company leases its interests to mineral exploration firms whenever
possible.
At December 31, 1998 mineral leases were in effect covering a total
of 28,821 surface acres. Although the leases are for three- to five-year
terms, they are terminable annually by the lessees; and the lessees
have no obligation to conduct drilling operations. Leases on 2,080
acres have reached maturity but, in accordance with their terms,
are held by the oil companies without annual rental payments because
of producing oil wells, on which the Company receives royalties.
The purchasers of 82,543 surface acres in which the Company has a
one-half reserved mineral interest are entitled to releases of
the Company's rights if such releases are required for residential
or business development. Consideration for such releases on 73,117
of those acres would be at the rate of $2.50 per surface acre.
On other acres in Lee and Hendry Counties (where producing oil
wells exist), the Company's current policy is to grant no release
rights with respect to its reserved mineral rights. In rare instances,
a release of surface entry rights might be granted upon request of a
surface owner who requires such a release for special financing or
development purposes. In counties other than Lee and Hendry, releases are
granted for a percentage of the surface value of a parcel of land.
At December 31, 1998 there were three producing oil wells on the
Company's interests. Volume in 1998 was 138,664 barrels and volume in
1997 was 125,356 barrels. Production for prior recent years
was: 1996 - 131,231, 1995 - 117,831 barrels, and 1994 - 141,488
barrels.
Real estate held and land transactions. More than 90% of the
Company's lands have been owned by the Company or its affiliates
for more than fifty years. To date, the Company has not been in
the business of acquiring and holding real estate for sale.
Instead, portions of the Company's lands are put to what
management believes is their best economic use. Unsolicited sales
are made of parcels which do not appear to offer opportunities for
use in the foreseeable future.
8
Item 1. Business (continued)
- ------ --------
GENERAL, CORPORATE AND OTHER OPERATIONS
- ---------------------------------------
Land development beyond that discussed at "Business - Real Estate
Operations" will necessarily depend upon the long-range economic
and population growth of Florida and may be significantly affected
by fluctuations in economic conditions, prices of Florida real
estate, and the amount of resources available to the Company for
development.
Employees. The Company has approximately 145 employees, including
approximately 70 seasonal employees in citrus operations. During
the citrus harvesting season, these seasonal employees are hired
to pack and handle the citrus crop. No employees are represented
by unions. The Company considers its employee relations to be
satisfactory.
Item 2. Properties
- ------- ----------
Information concerning the Company's properties is included on
pages 2-3 of the Company's 1998 Annual Report to Shareholders
(the "Annual Report") under the captions "Land Holdings",
"Citrus", and "Real Estate Operations" and is incorporated
herein by reference. Except for parts of the Annual Report
expressly incorporated herein by reference, the annual report is
not to be deemed filed with the Securities and Exchange
Commission.
Item 3. Legal Proceedings
- ------ -----------------
There are no material pending legal proceedings to which
the Company or its subsidiaries are a party.
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of the year ended December 31, 1998.
9
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
- ------ ----------------------------------------------------
(a) Common Stock
Information concerning the Company's common stock and
dividends is included on page 28 of the Annual Report
under the caption "Common Stock Prices and Dividends"
and such discussion is incorporated herein by reference.
(b) Recent Sales of Unregistered Securities
None
Item 6. Selected Financial Data
- ------- -----------------------
Five-year financial statement data is included on page 4
of the Annual Report under the caption "Five-Year Financial
Highlights" and such information is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition
- ------- ------------------------------------------------------------
and Results of Operations.
--------------------------
Management's Discussion and Analysis of Financial Condition
and Results of Operations is included on pages 25 through 27
of the Annual Report, under the captions "Management's Discussion
and Analysis," and "Financial Position" and such discussion is
incorporated herein by reference.
Item 7A Quantitative and Qualitative Disclosures about Market Risk
- ------- ---------------------------------------------------------
Not Applicable.
Item 8. Financial Statements and Supplementary Data
Financial Statements
--------------------------------------------------------
Financial statements incorporated by reference in this report
are listed at Part IV, Item 14 (a), "Financial Statements."
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
- ------ -----------------------------------------------------
There were no disagreements with accountants on accounting and
financial disclosures.
10
PART III
The information required by Items 10, 11, 12, and 13 is
incorporated herein by reference to the registrant's 1998 annual
meeting proxy statement pursuant to Instruction G to Form 10-K.
On March 22, 1999, the registrant anticipates filing with the
Commission, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, its definitive proxy statement to be used in connection
with its 1999 annual meeting of shareholders at which directors will
be elected for the ensuing year.
Executive Officers of the Registrant
------------------------------------
The executive officers of the registrant, their ages at January 31,
1999, their business experience during the past five years, and the year
first elected as an executive officer of the Company are as follows:
Bob D. Allen, 64, president and chief executive officer, March 1990
to present.
Bruce W. Teeters, 53, senior vice president-finance and treasurer,
January 1988 to present.
Both of the above are elected annually as provided in the By-Laws.
11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- ------- ---------------------------------------------------------------
(a.) 1. Financial Statements
--------------------
The Company's 1998, 1997, and 1996 consolidated financial
statements, together with the report of Arthur Andersen LLP,
dated February 3, 1999, appearing on pages 5 to 23 of the
accompanying 1998 Annual Report to Shareholders are incorporated
by reference in this Form 10-K Annual Report. The following is
a list of such financial statements with references to the pages
of the 1998 Annual Report to Shareholders on which they may be found:
Annual Report
Page No.
--------------
Report of Independent Certified Public Accounts 5
Consolidated Statements of Income for the
three years ended December 31, 1998 6
Consolidated Balance Sheets as of December 31,
1998 and 1997 7
Consolidated Statements of Shareholders' Equity
for the three years ended December 31, 1998 8
Consolidated Statements of Cash Flows for the three
years ended December 31, 1998 9-10
Notes to Consolidated Financial Statements 11-23
With the exception of (i) the aforementioned financial
statements and (ii) the information incorporated under
Items 2, 5, 6, and 7, the 1998 Annual Report to Shareholders
is not to be deemed filed as part of this report.
2. Financial Statement Schedules
-----------------------------
Included in Part IV of this Annual Report on
Form 10-K:
Report of Independent Certified Public Accountants
on Financial Statement Schedules on Page 15 of this
Annual Report on Form 10-K.
Schedule III - Real Estate and Accumulated
Depreciation on page 16 of this
Annual Report on Form 10-K
Schedule IV - Mortgage Loans on Real Estate
on page 17 of this Annual Report on
Form 10-K
12
14. Exhibits, Financial Statements Schedules and
Reports on Form 8-K (continued)
--------------------------------------------
Other Schedules are omitted because of the absence of
conditions under which they are required, materially
or because the required information is given in the financial
statements or notes thereof.
3. Exhibits
See Index to Exhibits on page 19 of this
Annual Report on Form 10-K.
(b) Reports on Form 8-K
-------------------
A form 8-K under item 5 "Other Events," dated
December 28, 1998 was filed. The report dealt
with the signing of an agreement for the sale
of the citrus business.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED-TOMOKA LAND CO.
(Registrant)
3/22/99 By /s/ Bob D. Allen
Bob D. Allen, Chairman of the
Board, President, and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
3/22/99 Chairman of the Board, President,
and Chief Executive Officer
(Principal Executive
Officer), and Director /s/ Bob D. Allen
----------------
3/22/99 Senior Vice President-Finance
Treasurer (Principal Financial
and Accounting Officer), Director /s/ Bruce W. Teeters
--------------------
3/22/99 Director /s/ David D. Peterson
---------------------
3/22/99 Director /s/ John C. Adams, Jr.
----------------------
3/22/99 Director /s/ Robert F. Lloyd
-----------------------
14
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
TO CONSOLIDATED-TOMOKA LAND CO.:
We have audited in accordance with generally accepted auditing
standards, consolidated financial statements included in
Consolidated-Tomoka Land Co.'s 1998 Annual Report to Shareholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 3, 1999. Our audits were made
for the purpose of forming an opinion on these statements
taken as a whole. The schedules listed in item 14(a) 2 are
the responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic consolidated
financial statements. These schedules have been subjected to
the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Tampa, Florida
February 3, 1999
15
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 1998
COSTS CAPITALIZED
INITIAL COST TO COMPANY SUBSEQUENT TO ACQUISITION
------------------------- ------------------------------
DESCRIPTION ENCUMBRANCES LAND BUILDINGS &
- ----------- ----------- ---- IMPROVEMENTS IMPROVEMENTS CARRYING COSTS
------------ ------------ --------------
CITRUS FACILITY
AT:LAKE PLACID 8,911,124 1,485,974 1,335,426 9,939,808 -0-
MISCELLANEOUS -0- 735,433 26,956 841,543 -0-
--------------------------------------------------------------------------
8,911,124 2,221,407 1,362,382 10,781,351 -0-
==========================================================================
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
DATE OF
--------------------------------- ACCUMULATED COMPLETION OF DATE DEF
LAND BUILDINGS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE
-------------------------------- ------------ -------------- --------- ------
LAKE PLACID 1,485,974 11,275,234 12,761,208 3,225,844 VARIOUS N/A 5-30 Yrs.
MISCELLANEOUS 1,576,976 26,956 1,603,932 226,914 N/A VARIOUS 5-40 Yrs.
--------------------------------------------------
3,062,950 11,302,190 14,365,140 3,452,758
==================================================
1998 1997 1996
----------- ---------- ----------
COST:
BALANCE AT BEGINNING OF YEAR 17,693,377 25,544,117 31,683,184
IMPROVEMENTS 172,322 657,688 182,985
COST OF REAL ESTATE SOLD (3,500,559) (8,508,428) (6,322,052)
----------- ----------- -----------
BALANCE AT END OF YEAR 14,365,140 17,693,377 25,544,117
===============================================
ACCUMULATED DEPRECIATION:
BALANCE AT BEGINNING OF YEAR 4,113,403 6,566,029 7,631,177
DEPRECIATION AND AMORTIZATION 423,570 731,962 833,994
DEPRECIATION ON REAL ESTATE
SOLD (1,084,215) (3,184,588) (1,899,142)
------------------------------------------------------
BALANCE AT END OF YEAR 3,452,758 4,113,403 6,566,029
======================================================
16
SCHEDULE IV
CONSOLIDATED-TOMOKA LAND CO.
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1998
PRINCIPAL
FINAL FINAL PERIODIC AMOUNT OF
DESCRIPTION INTEREST MATURITY PAYMENT PRIOR FACE CARRYING LOANS
RATE DATE TERMS LIENS AMT. AMOUNT (A) DELINQUENT
- ----------- -------- -------- -------- ----- ----- ---------- -----------
MORTGAGE N/R
SECURED BY
REAL ESTATE:
Volusia Co. 8.75% 03/99 Balloon of $304,293 -- 304,293 304,293 --
Volusia Co. 9.25% 09/03 Level, plus balloon of $224,737 -- 299,650 299,650 --
Volusia Co 9.25% 12/98 Balloon of $1,071,325 -- 1,969,541 1,071,325 --
Volusia Co 9.25% 12/00 Level, plus balloon of $611,200 -- 764,000 183,000 --
Volusia Co 9.25% 12/98 Balloon of $313,438 -- 356,250 313,438 --
Volusia Co 8.50% 12/01 Level, plus balloon of $974,083 -- 1,220,000 1,128,292 --
Hernando Co 9.00% 05/00 Leval, plus balloon of $888,516 -- 975,000 915,949 --
Other 6.25%-7.0% Various Balloon of $44,400 -- 44,400 44,400 --
-----------------------------------------
-- $ 5,933,134 $ 4,260,347 --
=========================================
(A) FOR FEDERAL INCOME TAX PURPOSES, THE AGGREGATE BASIS OF THE LISTED MORTGAGES WAS $4,260,347
(B) A RECONCILIATION OF THE CARRYING AMOUNT OF MORTGAGES FOR THE THREE YEARS ENDED DECEMBER 31, 1998 1997
AND 1996 IS AS FOLLOWS:
1998 1997 1996
------- ------- --------
BALANCE AT BEGINNING OF YEAR $5,146,017 $10,944,356 $7,097,776
NEW MORTGAGE LOANS 628,343 12,900 4,911,607
COLLECTIONS OF PRINCIPAL ( 1,514,013) (5,811,239) ( 1,065,027)
------------------------------------
BALANCE AT END OF YEAR $ 4,260,347 $ 5,146,017 $ 10,944,356
====================================
17
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File No. 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in the charter)
18
EXHIBIT INDEX
Page No.
(2.1) Agreement of Merger and Plan of Merger and Reorganization
dated April 28, 1993 between Consolidated-Tomoka Land Co.
and CTLC, Inc. filed with the registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
(2.2) Certificate of Merger dated April 28, 1993 filed with the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 and incorporated by this reference. *
(3.1) Articles of Incorporation of CTLC, Inc. dated February 26,
1993 and Amended Articles of Incorporation dated March 30,
1993 filed with the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993 and incorporated
by this reference. *
(3.2) By-laws of CTLC, Inc. filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
10 Material Contracts:
(10.1) 1998-1999 Citrus World Marketing Agreement dated
September 1, 1998 between Citrus World, Inc. and
and Consolidated-Tomoka Land Co. 20
(10.2) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1981
and incorporated by this reference. *
(10.3) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan executed on October 25, 1982 filed with
the registrant's annual report on Form 10-K for the year
ended December 31, 1982 and incorporated by this reference. *
(10.4) The Consolidated-Tomoka Land Co. Stock Option Plan
effective April 26, 1990 filed with the registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1990 and incorporated by this reference. *
(10.5) Lease Agreement dated August 28, 1997 between the City
of Daytona Beach, and Indigo International Inc., a wholly
owned subsidiary of Consolidated-Tomoka Land Co. filed
on form 10-K for the year December 31, 1997 and
incorporated by reference. *
(10.6) Development Agreement dated August 18, 1997 between the
City of Daytona Beach and Indigo International Inc., a
wholly owned subsidiary of Consolidated-Tomoka Land Co.
filed on Form 10-K for the year December 31, 1997 and
incorporated by reference. *
(10.7) Purchase and Sale Agreement dated December 28, 1998
between Alton D. Roger and Wade H. Walker and
Consolidated-Tomoka Land Co. 30
(11) Statement of Computation of Per Share Earnings is include
on Page 22 of the 1998 Annual Report to Shareholders and
incorporated by this Reference *
(13) 1998 Annual Report to Shareholders 67
(21) Subsidiaries of the Registrant 109
(23) Consent of Arthur Andersen LLP 110
* - Incorporated by Reference
19
EXHIBIT 10.1
MARKETING AGREEMENT
1998-1999
CITRUS WORLD, INC.
This Agreement, made as of the 1st day of September, 1998,
between CITRUS WORLD, INC., a cooperative association organized
under the laws of the State of Florida with its principal place
of business at Lake Wales, Florida (hereinafter referred to as
"Citrus World") and Consolidated-Tomoka Land Co. of Lake Placid,
Florida (hereinafter referred to as "Member").
WITNESSETH
WHEREAS, Citrus World owns and operates a citrus fruit
canning, packaging, and processing plant at Lake Wales, Florida,
as well as other facilities both within and without the State
of Florida for the extraction, canning, and/or processing,
warehousing, and marketing of processed citrus fruit products;
and
WHEREAS, Member is a member-stockholder of Citrus World
ad desires to arrange for the sale and delivery of citrus fruit
to Citrus world for processing and marketing of the products
derived therefrom.
NOW, THEREFORE, in consideration of the premises and other
valuable considerations, it is mutually agreed as follows:
1. Definitions. For the purpose of this Agreement:
(a) "Grower-Members" shall mean citrus fruit
growers who are members of Member where Member is a
cooperative association.
(b) "Non-Member Patrons" shall mean citrus fruit growers who
are not Grower-Members but who have agreed as of or prior to
October 1, 1992, to sell fruit to Member (if a cooperative) for
marketing; to allow pooling of such fruit on a cooperative basis;
and to accept the pool proceeds (after deduction of all costs and
expenses) as the total amount due for such fruit.
(c) "Growers" shall include both Grower-Members and Non-
Member Patrons.
(d) "Specified Acreage Fruit" shall mean all citrus fruit
from Member which is not packed as fresh fruit and which is either
produced by Member itself or which, where Member is a cooperative
association, is committed to Member by means of valid Grower
Marketing Agreements and is grown on Grove Property as hereinafter
defined. For the purposes of this definition and of this
20
agreement fruit "packed as fresh fruit" shall mean all fruit and
is harvested into pallet boxes, delivered to Member's designated
packinghouse, washed, waxed, graded packed in cartons, bags, or
bulk containers, marketed and shipped in fresh fruit form.
(e) "Grower Marketing Agreements" shall mean valid agreements
between Member if a cooperative and Member's Growers whereby each
Grower will have agreed (i) to sell and deliver citrus fruit to
Member for marketing; (ii) that such fruit will be grown on
specific groves the description of which has been furnished to
Member; and (iii) that such agreements shall not be terminable
except upon two years notice (subject, however, to the provisions
of paragraph 17 hereof).
(f) "Limited Fruit" shall mean all citrus fruit from Member
and quantity of which has been set, in terms of a specified number
of boxes, by Citrus World's Board of Directors less an allowance,
not to exceed five percent (5%) of each variety of fruit
included in said total quantity of fruit as fixed by the Board,
it being the intent that the said 5% allowance be applicable to
each variety of fruit separately. If any fruit comprising said
5% allowance is packed as fresh all eliminations derived from
such packing operation (or equivalent quantity and variety) shall
be delivered to Citrus World.
(g) "Grove Property" shall mean all planted grove properties
owned or leased as of October 1, 1992 by Member, or by a Grower,
or which Member has been specifically permitted to acquire or add
to its membership after such date, the fruit from which will be
Specified Acreage Fruit. Such properties may be comprised of
actual producing groves or young groves not producing fruit as of
October 1, 1992. Former groves destroyed by blight, disease or
freeze that are to be replanted but which may not have been
replanted as of October 1, 1992, may be included provided they
are, in fact, replanted by September 1, 1998. But such acreage
that is not planted shall not be eligible for replacement as provided in
Paragraph 11 hereof.
(h) Fruit Owned or Controlled by Member" shall include all
Specified Acreage Fruit and Limited Fruit, either or both.
(i) "Florida Citrus Season" means the period each year
commencing on September 1 and ending on the following August 31.
2. Delivery and Transfer of Title. Subject to the terms of this
Agreement, Member agrees to deliver to Citrus World all Fruit
Owned or Controlled by Member, and Member hereby assigns and
transfers to Citrus World upon such delivery absolute title and
21
ownership to all such fruit that is accepted by Citrus World.
Member agrees to deliver the same to such place as Citrus World
may direct and Member hereby warrants that Member will have good
and lawful authority to sell and transfer said fruit at the time
of such delivery and warrants title to said fruit against the
lawful claims of all persons whomsoever.
3. Estimate and Identity of Fruit. On or before October 1st of
each year this Agreement is in effect, Member agrees to furnish to
Citrus World the estimated quantity by varieties of Fruit Owned or
Controlled by Member. In addition, Member shall at the same time clearly
identify all Specified Acreage Fruit by delivering toCitrus World a list
specifying the Grove property (including the
information specified in paragraph 4 below) from whence the same
is to be harvested. And, except as provided in paragraph 10
hereof, Grove Property included in such list may not be removed
therefrom except upon 2 years written notice to Citrus World. If
applicable, Member will furnish at such time the varieties and
quantities of Limited Fruit to be delivered to Citrus World
pursuant to this Agreement, provided that any changes in the
varieties of fruit and quantities thereof from that delivered
during the previous Florida Citrus Season must be approved by
Citrus World's Board of Directors, unless management determines a
varietal change is beneficial to Citrus World.
4. Records. So as long as this agreement remains in effect,
Member will maintain adequate records, and will furnish copies thereof to
Citrus World, so as to be able to describe fully all
Grove Properties listed by Member pursuant to paragraph 3 above,
including acreage, block by variety, and the number and age of the
trees in each block. If Member is a cooperative, Member will also
furnish to Citrus World an up-to-date copy of Member's standard
Grower Marketing Agreement.
5. Certificate of Compliance. Each year, within 30 days
following the close of Member's fiscal year, Member will deliver
to Citrus World a certificate of compliance in the form of Exhibit "A" attached
hereto and made a part hereof signed by Member, and accompanied by an opinion
of Member's independent auditor to be based on Member's records and in the
form of Exhibit "B" also attached hereto and made a part hereof, attesting
to the fact (a) that all fruit delivered by Member to Citrus World during the
preceding Florida citrus season was in fact Fruit Owned or
Controlled by Member as herein defined; and (b) that the total
quantity of all such Fruit Owned or Controlled by member was in
fact delivered to Citrus World by Member.
6. Acceptance of Fruit by Citrus World. Subject to the
provisions of paragraph 13 hereof, Citrus World shall accept for
processing and marketing all Fruit Owned or Controlled by Member
22
which is (a) included in the estimate made pursuant to paragraph 3
above and derived from the Grove property designated pursuant to
said paragraph; or (b) consists of Limited Fruit. However,
subject to the provisions of paragraph 12 of this Agreement,
Citrus World shall not accept any fruit which does not comprise
fruit from the Grove Property specified or is in excess of the
number of boxes of Limited Fruit, and no waiver of the provisions
of this paragraph shall be valid unless approved by Citrus World's
Board of Directors, Executive Committee or Marketing Committee.
7. Purchase Price. Citrus World agrees to sell the product
manufactured from fruit delivered by member hereunder, pooled with
products manufactured from fruit delivered by other members or any
other source, and to pay over ratably as the agreed purchase price
due Member hereunder the net amount received from such sale, as
final settlement in full to Member, less any and all advances to
Member and less Citrus World's usual uniform and regular charges
and expenses for handling and processing the fruit and from marketing the
products therefrom including all commonly acceptedbusiness expenses and
conventional reserves. Member further agrees
to accept capital equity certificates or credits of the type and
in the form authorized by the By-Laws of Citrus World as payment
of that part of such purchase price which is equal to the retained
amounts for capital purchases fixed by the Board of Directors of
Citrus World.
8. Advances. Citrus World agrees to make advances to Member upon the delivery
of fruit to it as may from time to time be established by Citrus World's Board
of Directors; however, Citrus
World shall not be obligated to make any final settlement on
account of such deliveries until the end of its fiscal year, or
later at the discretion of its Board of Directors.
9. Excess Fruit. Any and all fruit acquired by Member but which
Member could not include in the estimate made pursuant to
paragraph 3 above, shall first be offered to Citrus World for
purchase on a cash or participation basis and Member agrees not to
sell such fruit to others at a price lower than that offered by
Citrus World, or on a participation basis upon terms less
favorable than those offered by Citrus world.
10. Diversion of Fruit. Member agrees it will not permit any
citrus fruit now or hereafter comprising Fruit Owned or Controlled
by Member to be delivered to any canning or processing plant other
than those Citrus World or designated by Citrus world during the
period covered by this Agreement, except:
(a) where a Grower or Member has made a bona fide sale of all
or part of a grove such that the fruit therefrom is no longer
available to Member. For the purposes of this paragraph 10 (a),
"bona fide sale" shall mean an actual arms length sale for fair
23
value and shall specifically exclude gifts, transfers to family
members, transfers among trustees, or among partners, or to
stockholders or any other transfer of whatsoever sort or nature
other than an arms length sale for fair value;
(b) Where a Grower dies and such deceased Grower's heirs,
administrators, or executors desire to withdraw the deceased
Grower's groves such that the fruit therefrom is no longer
available to Member;
(c) Where a Grower abandons all or part of a grove for
economic reasons such that the fruit therefrom is no longer
available to Member and such fact is certified by Citrus World.
(d) Where a Grower requests a transfer of membership from
Member to another member of Citrus World without complying with
the two year notice of termination requirement, provided (i) that
such transfer complies in all respects with all other provisions
of this agreement; and (ii) Member, the other member, and Citrus
World all consent in writing to such transfer thereby waiving said
two year notice requirement.
(e) Where the Board of Directors of Citrus World has
permitted Member to make specified deliveries to others.
(f) Member's obligation to deliver Limited Fruit hereunder,
if any, shall also be subject to the exceptions listed in
subparagraphs (a), (b), (c),(d), and (e) above, provided that
in the event any such instance occurs which affects the
quantity of Limited Fruit and Member is obligated to deliver
hereunder, such quantity may at Member's option be reduced:
(1) if Member is a cooperative, by the number of boxes actually
lost by Member; or (2) if Member is not a cooperative, then
by the number of boxes which is in the same proportion as the
sold or otherwise lost grove acres bears to the total number
of grove acres originally owned by Member."
11. Replacement of Grove Property. Whenever Member should
occasion a reduction in Member's designated Grove Property
pursuant to the provisions of paragraph 10(a) or (b) above, or
due to the withdrawal of a Grower or for any other reason, then
Member may replace such property, provided, however, that:
(a) Member has actually suffered a reduction in the amount
of Member's Grove Property;
(b) the property to be replaced consists only of planted
acreage;
24
(c) the replacement shall be completed within two (2) years
from the date of the loss;
(d) Member will immediately notify Citrus World upon the
making of any such replacement;
(e) the varieties of citrus fruit grown on the replacement
acreage shall be substantially the same as that grown on the lost
property unless otherwise approved by Citrus World's Board of
Directors; and
(f) no replacement shall be allowed where the reduction in
Member's designated Grove Property (i) consists of property
located within any of the three grove developments known as
Cooperative Producers Inc., Ranch One, Inc., and Cooperative Three
Inc., AND (ii) the restrictive covenants and/or contractual
arrangements remain in effect whereby the marketing of fruit grown
on such property is restricted.
All grove property added as replacement property pursuant to
this paragraph shall be deemed to be Grove Property as herein
defined and included in the properties identified pursuant to
paragraph 3 hereof, but nothing herein shall be deemed or
construed as modifying the two year notice requirement from the
addition or removal of the replacement property or any other
properties as set forth in said paragraph 3, nor the obligation of
Member to deliver to Citrus World the quantities of fruit
specified by Member in the then current estimate delivered by
Member to Citrus World pursuant to said paragraph 3. In addition,
in the event the replacement of property has not taken place
within the two year period specified in subparagraph (c) above
Member's right of replacement pursuant to this paragraph 11 shall
terminate to the extent of the difference between the amount of
Member's designated Grove Property actually existing as of the May
31 next following the expiration of said two year period and 97%
of the Grove Property that existed before the loss.
12. Fruit Exchange. If for pooling considerations, or in the
interest of Citrus World's plant efficiency, Fruit Owned or
Controlled by Member is, with the knowledge and consent of Citrus
World, exchange for other fruit of like type and quality, then
such exchange fruit shall nevertheless be deemed to be Fruit Owned
or Controlled by Member for the purposes of this Agreement,
provided, however, that the fruit used for such exchange shall
consist only of fruit produced and owned by Member, or, where
Member is a cooperative, by Member's Growers. Any such exchanges
will be noted in the Certificate and Opinion to be submitted by
Member pursuant to paragraph 5 hereof.
25
13. Origin and Rejection of Fruit. All fruit to be delivered by
Member under this agreement shall consist only of fruit grown upon
groves located within the State of Florida and such fruit,
together with the horticultural practices used in growing and
harvesting the same, shall conform in all respects to all
applicable laws and regulations of the United States and the State
of Florida. Citrus World may, at its option, reject any and all
fruit that fails to pass State and/or Federal inspection or to
conform with this Agreement, and any loss or additional cost
Citrus World may suffer thereby shall be charged against Member.
14. Increase or Decrease in Grove Property Acreage or Amount of
Fruit. The quantity of Member's Grove Property and/or the amount
of fruit may be increased or decreased but only in the following
manner:
(a) On or before June 1 of each year, Citrus World will
consider an increase in the amount of Grove Property acreage
and/or total quantity of fruit to be handled by it for the next
ensuing Florida Citrus Season. Beginning September 1, 1994,
should Citrus World determine to increase such acreage or fruit
quantity then such increase will be allocated to the then current
members of Citrus World in proportion to the total number of
shares of A, B, and C stock held by each such member as of the
preceding August 31.
(b) The quantity of Grove Property listed by Member pursuant
to paragraph 3 may be increased or decreased whenever such change
is to consist solely of grove properties located within any of the
three grove developments known as Cooperative Producers Inc.,
Ranch One Inc., and Cooperative Three Inc., provided that such
right shall terminate whenever the restrictive covenants and/or
contractual arrangements currently applicable to such properties
restricting the marketing of fruit grown thereon expire or
terminate.
(c) In the event an increase in acreage or fruit quantity is
allocated to the then current members of Citrus World as provided
in subparagraph (a) above, then each such member shall have until
the commencement of the next ensuing Florida Citrus Season
(September 1) after such allocation to utilize the same otherwise
the right to increase acreage or fruit quantity shall terminate.
With respect to Specified Acreage Fruit, Member's right to
increase acreage shall terminate to the extent the amount of Grove
Property actually designated by Member as of the commencement of
said Florida Citrus Season is less than 97% of the total amount of
Grove Property Member was at that time authorized to designate.
(d) Member's right to utilize any unused portion of the
allocation of acreage, or quantity of fruit, made to Member on or
about June 24, 1994 will terminate on May 31, 1997 but it is
26
Agreed that such termination shall, as to Specified Acreage Fruit,
only be to the extent the amount of Grove Property actually
designated by Member as of such date is less than 97% of the total
amount of Grove Property Member was authorized to designate for
the 1996-1997 Florida Citrus Season.
15. Liquidated Damages. Inasmuch as the remedy at law would be
inadequate and inasmuch as it would be impracticable and extremely
difficult to determine the actual damage resulting to Citrus World
should Member fail to deliver fruit hereunder, regardless of the
cause of such failure (except as provided in paragraph 18 hereof)
Member hereby agrees to pay to Citrus World as liquidated damages
for breach of this agreement for all fruit which Member has agreed
to deliver hereunder for each Florida Citrus Season but which
Member has failed to deliver (a) as to Specified Acreage Fruit,
the sum of One Thousand and Twenty Five Dollars ($1,025.00) per
acre for each acre the fruit from which was not delivered in its
entirety or (b) as to Limited Fruit, the sum of Three Dollars ($3.00) per
standard field box for all diverted or undelivered
fruit. Both parties agree that this Agreement is one of a series
dependent for its true value upon the adherence by each and all of
the contracting parties to each and all of the said agreements,
but the cancellation of any other similar agreement or the failure
of any of the parties thereto to comply with the same, shall not
affect the validity of this Agreement.
16. Attorney's Fees. If any action whatsoever by reason of
breach or threatened breach of this Agreement is brought, the
party that does not prevail shall pay all costs thereof, including
reasonable attorneys fees expended or incurred in such
proceedings.
17. Term and Termination. This Agreement shall commence upon its
execution by both parties and shall remain in effect until
terminated by Member which may be accomplished only as of
September 1st of any year and only by notifying Citrus World in
writing at least two (2) years prior to the September 1st upon
which such termination is to be effective. Provided, however,
that Citrus World shall not be obligated to release Member from this Agreement
as long as Member is indebted to Citrus World in any sum.
18. Force Majeure. Neither party to this Agreement shall be
liable for damages for failure to perform hereunder to the extent
that performance by either of them is made impossible or delayed
by Act of God, war, fire, equipment breakdown, strike, embargo,
lockout inability to obtain materials, supplies or transportation
or any other cause beyond the control of either of said parties.
27
19. Bylaws and Rules. The By-Laws of Citrus World now in
existence and as hereafter amended, and all rules, regulations and
orders promulgated by Citrus World from time to time shall be
parts of this Agreement and binding upon the parties thereto.
20. Right of Offset. Citrus World shall have the right to offset
and deduct any sums that may become due to it from Member from
amounts accruing to Member under this Agreement whether such
indebtedness to Citrus World arises under this Agreement or
otherwise.
21. No Oral Agreement. The parties agree that there are no oral
or other conditions, promises, covenants, representations or
inducements in addition to or at variance with any of the terms
hereof, and that this contract represents the voluntary and clear
understanding of both parties fully and completely.
22. Successors and Assigns. This Agreement shall inure to and be
binding upon the successors, assigns and/or legal representatives
of both of the parties hereto.
IN WITNESS WHEREOF, both parties have executed this agreement as of the
day and year first above written by their dulyauthorized representatives.
MEMBER-Consolidated-Tomoka Land Co. Attest or Witness:
By: /s/ Hugh J. Veley, VP /s/ James V. Percy
----------------------- ------------------
CITRUS WORLD, INC.
By: /s/ F. M. Hunt, Pres. /s/ N. T. Mitchell
---------------------- -------------------
28
EXHIBIT A
CITRUS WORLD 1998-99 UNIFORM MARKETING AGREEMENT
CERTIFICATE OF COMPLIANCE
To the best of our knowledge and belief, the undersigned member of
Citrus World hereby certifies (a) that all fruit delivered to
Citrus World by the undersigned during the 1998-1999 Florida Citrus Season
consisted of Fruit Owned or Controlled by the undersigned as such terms are
defined in Paragraph 1 of the Citrus World Uniform Marketing Agreement; and
(b) that the total quantity of such fruit has been delivered to Citrus World
in accordance with paragraph 2 of said Agreement.
29
EXHIBIT 10.7
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") made as
of the 8th day of December, 1998 by and between ALTON D. ROGERS and
WADE H. WALKER ("Buyer"), having an address at 486 U.S. 27 South,
Lake Placid, lorida, and CONSOLIDATED-TOMOKA LAND CO., a
Florida corporation "Seller"), having an address of 149
S. Ridgewood Avenue, Daytona Beach, Florida 32114.
WITNESSETH:
In consideration of the mutual covenants herein contained
and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Buyer and Seller
hereby agree as follows:
1. AGREEMENTS TO SELL AND PURCHASE AND DESCRIPTION OF PROPERTY;
(a) Land. Seller agrees to sell and convey to Buyer and Buyer
agrees to buy from Seller that certain real property described in
Exhibit "A" attached hereto and made a part hereof ("Land"), together
with all easements benefitting the Land, all improvements including
but not limited to the citrus packing house, maintenance facilities,
storage tanks, wells, pumps, irrigation equipment, citrus trees,
citrus crop and other fixtures attached to the land ("Improvements"),
and all other rights, privileges, and appurtenances to the Land,
including, without limitation, any strips and gores of real property
adjoining or adjacent to the Land and any land lying in the bed of any
street; all oil, gas, mineral rights; all rights-of-way, and other
appurtenances used in connection with the beneficial use or enjoyment
of the Land; and all right, title and interest in and to all streets,
abutting or serving the Land ("Appurtenances"). The Land,
Improvements and Appurtenances are collectively referred to herein as
the "Real Property."
(b )Seller agrees to sell and convey to Buyer and Buyer agrees
to buy from Seller all personal property owned by Seller (as opposed
to leased by Seller or owned by employees of Seller), and used in
connection with the operation of the Real Property or of Seller's
fresh fruit packing business on the Real Property ("Citrus Business"),
including but not limited to, (A) all furniture, fixtures and
equipment; (B) cars, trucks and farm or grove maintenance or operating
equipment; (C) office equipment and supplies; (D) sprinkler systems,
plumbing systems, heating, air conditioning, electrical power and
lighting systems; (E) engines, motors, pipes, wiring, fire prevention
systems and apparatus; (F) chattels, machinery and signs; (G)
computers and computer software, excluding Quantel hardware and
software; (H) all inventory of supplies including fuels, fertilizers,
herbicides, pesticides, packing labels, pallets, bags, boxes, spare
vehicle and equipment parts, tires and the like used in connection
with the operation of the Real Property or the Citrus Business (under
Section 2(c) below, the "Operating Inventory" as defined therein, is
credited to Seller as an adjustment to the Purchase Price); and (I)
30
architectural renderings, drawings, plans and specifications, building
and site plans, engineering plans, studies, floor plans and other
plans or studies of any kind regarding the Real Property,
including, without limitation, all personal property listed
on the schedule attached hereto as Exhibit "B" (collectively,
the "Personal Property");
(c) Seller agrees to convey and assign to Buyer,
to the extent assignable, and Buyer agrees to accept an assignment
from Seller of all governmental permits, licenses and approvals,
issued in connection with the operation, of or related to, the
Real Property or the Citrus Business, including, but not limited to
all permits, licenses and approvals issued to the Seller by
Highlands County, Florida ("County"), the South Florida or
Southwest Florida Water Management Districts ("WMD"), the Department
of Environmental Protection ("DEP"), or any other state, federal or
local governmental entity or agency, to the extent of Seller's
interest therein, (collectively the "Permits"). The Permits are
listed on Exhibit "C" attached hereto.
(d) The Seller shall convey and assign to Buyer, to the extent
assignable, and Buyer agrees to accept an assignment of all the
existing leases, equipment leases, contracts, agreements, warranties
and guaranties affecting the maintenance, management and operation of
the Real Property or Citrus Business, all as listed on Exhibit "D"
attached hereto ("Leases and Contracts").
(e) The Seller shall convey and assign to Buyer, to the extent
assignable, and Buyer agrees to accept an assignment of all intangible
property used in connection with the Real Property or the Citrus
Business including but not limited to all accounts receivable existing
at the close of business on November 30, 1998, attributable to sales
of the 1998-1999 citrus crop grown on the Land, good will, customer
lists and trade names and fictitious names owned by Seller (the
"Intangible Personal Property"). The Land, Improvements,
Appurtenances, Personal Property, Permits, Leases and Contracts, and
Intangible Personal Property are collectively referred to herein as
the "Property".
(f) The Property being purchased under this Agreement does not
include Seller's interest in Citrus World Inc. ("Citrus World"),
except for accounts receivable which accrue on or after November 30,
1998, for the 1998-1999 citrus crop grown on the Land. Buyer
acknowledges that Seller's interest in Citrus World, which is related
to its Citrus Business, has been specifically excluded from this
Agreement at Buyer's request.
2. PURCHASE PRICE; DEPOSIT; ADJUSTMENTS; ESCROW.
(a) Purchase Price: The agreed purchase price of the Property
is Thirty Million Six Hundred Forty Five Thousand and 00/100ths
Dollars ($30,645,000.00) (the "Purchase Price"), and shall be paid as
follows:
(i) A non-refundable deposit in the amount of One Million
Dollars ($1,000,000.00) shall be paid by Buyer to Escrow Agent, as
defined below, to be held pursuant to the terms of this Agreement,
31
within two (2) days after the end of the Inspection Period
provided for in Section 5(b) below, and is to be delivered to Seller
by the Escrow Agent at the Closing on the Closing Date to Seller
the non-refundable deposit is referred to herein as the "Deposit"); and
(ii) The balance of the Purchase Price is to be paid by Buyer
to Seller at the time of Closing on the Closing Date together with
any adjustments and credits to the Purchase Price as provided in
Section 2(c). Payments at closing shall be made by wire transfer to
an account designated by Seller, which designation shall be made not
less than 48 hours prior to the Closing Date.
(iii) The Purchase Price of the Property shall be allocated as
follows:
(A) The allocation to the Real Property is $21,875,000.00.
(B) The allocation to the Personal Property is $6,325,000.00.
(c) The allocation to the Intangible Personal Property, Permits,
and Leases and Contracts is $2,445,000.00.
(b) Deposit.
(i) The Deposit shall be held in an interest bearing escrow
account as provided in Section 2(d) below, subject to the terms of
this Agreement, and shall be duly accounted for at the Closing (as
defined below). All interest on the Deposit is deemed to be included
in the term "Deposit"; is to delivered to Seller if Closing occurs
provided that Buyer shall receive a credit for the Deposit against the
Purchase Price; is to be paid to Buyer if the Deposit is returned to Buyer
under the terms of this Agreement; or if Seller shall be entitled to the
Deposit under the terms of the Agreement, then the Deposit shall be paid to
Seller.
(ii) If this Agreement is terminated by either party under
any provision granting such party a right to terminate this Agreement
after the Deposit is paid to Escrow Agent except for a termination in
the event of default under Section 7(b) of this Agreement, then the
Deposit shall be promptly refunded in full to Buyer, but in any event
not later than ten (10) calendar days after such notice of termination
is given.
(c) Adjustments. The Purchase Price at closing shall be adjusted
to reflect the following:
(i) Water and sewer use charges, charges for electricity,
gas and other utilities, operating expenses of the Real Property, any
operating expenses paid in advance and real property taxes including
any assessments on such tax bill on the Real Property for the then
current fiscal tax period and any personal property tax on the
Personal Property for the current fiscal tax period, shall be
apportioned as of the Closing Date, and the net amount shall be added
to or deducted from the Purchase Price, as the case may be. Any
deposits for utilities shall be paid by Buyer to the utility providers
and any utility deposits paid by Seller to any utility providers shall
be refunded to Seller.
(ii) If, on the Closing Date, the amount of real property
taxes including any assessments on such tax bill and personal property
taxes for the then current fiscal tax period is not known or is
estimated, the apportionment of real property taxes including any
32
assessments on the tax bill and personal property taxes called for
herein shall be made on the basis of the real property taxes including
any assessments on such tax bill and personal property taxes for the
preceding fiscal tax period, respectively, and an appropriate
reapportionment shall be made as soon as the new rate and valuation
can be ascertained for the fiscal tax period for the year in which
Closing occurs, for any increase or decrease in real estate taxes
including any assessments on the tax bill and personal property taxes
from the prior tax year.
(iii) At Closing, Buyer shall purchase from Seller as an
adjustment to the Purchase Price the entire operating inventory of
supplies including but not limited to fuels, spare vehicle and
equipment parts, tires, herbicides, fertilizers, pesticides, packing
materials, pallets, pallet boxes and the like, used in connection with
the Real Property or the Citrus Business or the operation thereof,
(collectively, the "Operating Inventory"). The Operating Inventory
purchased by Buyer shall be priced at Seller's actual cost and the
total amount thereof shall be added to the Purchase Price and paid to
the Seller at Closing notwithstanding any provision hereof to the
contrary.
(iv) At closing, the Purchase Price shall be adjusted by an
amount equal to the difference between the gross receipts from citrus
fruit harvested from the Land between (and including) December 1,
1998, and the day before Closing, and (A) the sum of Seller's field
expenses, packinghouse costs, packing costs, cannery expense,
administrative expense, selling expense, and overhead allocation for
that same fruit during that same period of time, and (B) those same
expenses for all 1998-1999 fruit grown on the Land which had been
harvested and sold as of November 30, 1998, but for which payment
had not been made as of December 1, 1998. For purposes of the
preceding sentence, the term "overhead allocation" shall be
$12,000.00 per month, and the expense items referred to above exclude
all reasonable and customary growing expenses of Seller capitalized in
calendar year 1998, and amortized over the 1998-1999 citrus crop.
Buyer recognizes that the adjustment provided by this subparagraph may
increase the Purchase Price because final cannery returns for the
1998-1999 crop year will not be determined or paid as of the
Closing Date. Buyer, however, is entitled to any and all payments
for fruit harvested between and including December 1, 1998, and the
day before Closing. Buyer shall have the right to verify all of
Seller's expenses (as referred to above), and all returns on the fruit.
If there is a dispute between Buyer and Seller on any such expenses
or returns that can not be resolved by Buyer and Seller, either party
may consider such dispute a default under this Agreement and seek
any remedy available hereunder for such default.
(v) At closing, Seller shall receive a credit to the Purchase
Price for Seller's 1999/2000 Growing Costs as hereinafter defined.
"Seller's 1999/2000 Growing Costs" shall mean the reasonable and
customary costs and expenses incurred by Seller after December 31,
1998, through the day prior to the Closing Date associated with or
33
related to production of the 1999/2000 citrus crop, including salaries
and any other benefits of Seller's employees related to producing its
1999/2000 citrus crop, cultivating, hoeing and herbiciding, material
and labor, pruning, irrigation, fertilizing material and labor,
spraying material and labor, tree removal and replacement material
and labor, depreciation, production costs (including labor, buildings
and equipment repairs and maintenance, insurance and other
miscellaneous costs), and any other normal and customary growing costs
and expenses of the citrus industry, but specifically excluding real
property taxes and personal property taxes considered as part of
growing costs (such taxes are to be prorated under other provisions of
this Agreement). Buyer shall have the right to verify Seller's
1999/2000 Growing Costs. If there is a dispute between Buyer and
Seller on the credit due Seller from Buyer for Seller's 1999/2000
Growing Costs that cannot be resolved by Buyer and Seller, either
party may consider such dispute a default under this Agreement and
seek any remedy available hereunder for such default. Buyer and
Seller acknowledge that Seller's 1999/2000 Growing Costs may be based
on an estimate at Closing to be subsequently adjusted when all
information is available which affects the final determination
thereof.
(vi) All accounts receivable, other than those which are part of
the Intangible Personal Property and other than those accounts
receivable dealt with in Section 2(c)(iv) above, received by Buyer in
connection with the operation of the Property after Closing shall be
prorated and Seller's prorated portion of such accounts receivable
through the day prior to Closing shall be promptly remitted upon
clearance of funds by Buyer to Seller post-closing. All accounts
payable related to the Property existing at the time of the Closing
which have accrued through the day prior to the Closing Date shall be
paid by Seller. Any payments made in advance by Seller of operating
expense for periods after closing which benefit Buyer shall be
prorated and credited to Seller at closing for the portion of such
advance payments applicable to periods after Closing.
(vii) Seller and Buyer acknowledge that it will not be possible
to make all necessary adjustments, prorations or credits at Closing,
including accounts receivable and payable, and Seller's 1999/2000
Growing Costs. As a result, all utility charges, accounts payable and
receivable, Seller's 1999/2000 Growing Costs, and other items of
income and expense as to which information is not readily available
prior to Closing shall be subject to a post-closing adjustment
procedure set forth in this Section 2(c)(vii). Accounts receivable
and payable, Seller's 1999/2000 Growing Costs, and other items of
income or expense shall be prorated, adjusted or credited as
applicable as to Seller for the period up to and including the day
prior to the Closing Date and as to Buyer for the period commencing on
the Closing Date and thereafter. Seller and Buyer agree that their
respective designated accounting personnel shall diligently proceed to
make such adjustments promptly following the Closing Date in order to
finalize all such adjustments within the later of (i) December 31,
1999, or (ii) ten (10) days from the date all information necessary to
make such adjustments is available to both parties. Each party
34
agrees, within ten (10) days of such final adjustment determination,
to promptly pay to the other party any amounts due and owing to such
party. Seller shall indemnify and hold the Buyer harmless from any
such expense accruing on or before the day prior to the Closing Date
and Buyer shall indemnify and hold Seller harmless from any such
expenses accruing on or after the Closing Date. If at any time
following the making of any of the adjustments to the Purchase Price,
the amount thereof shall prove to be incorrect, or it should be
discovered that some adjustment which should have been made was
inadvertently omitted altogether, the party in whose favor the error
was made shall pay the sum necessary to correct such error to the
other party promptly following receipt of notice of such error from
such other party. The provisions of this Section 2(c) or any other
provision of this Agreement regarding adjustments, shall survive the
Closing until all such adjustment amounts are properly accounted for
and paid.
(viii) Buyer agrees that it shall assist Seller in closing out
Seller's books and records as of the Closing Date after closing,
consistent with generally accepted accounting practices.
(d) Escrow Account.
(i) The Deposit shall be held by Indigo Commercial Realty
Inc., as escrow agent (the "Escrow Agent"), in an interest bearing
account using Buyer's tax identification number for such account.
Upon receipt of the Deposit by Escrow Agent, Escrow Agent shall
provide a written notice of such receipt of the Deposit to Seller and
Buyer. The account shall be maintained until the Deposit has been
delivered to Buyer, Seller or to a court of competent jurisdiction in
accordance with the provisions hereof.
(ii) The Escrow Agent shall account for the Deposit in
accordance with the terms of this Agreement, or in such other manner
as may be directed in a joint written notice from Seller and Buyer
directing some other disbursement of the Deposit. If the Escrow Agent
receives written notice from either Buyer or Seller that the other
party has defaulted in the performance of its obligations under this
Agreement or that any condition to the performance of obligations
under this Agreement has not been fulfilled within the time period
stipulated, which notice shall describe in reasonable detail such
default or nonperformance, then the Escrow Agent shall (A) promptly
give notice to the party alleged to have defaulted or to have failed
to fulfill its obligation on the Escrow Agent's receipt of such notice
from the other party and shall enclose a copy of such notice from the
other party, and (B) subject to the provisions of Section 2(d)(iii)
below which shall apply if a conflict arises, on the fourteenth (14th)
day after the giving of the notice referred to in clause (A) above,
deliver the Deposit to the party claiming the right to receive it.
(iii) If the Escrow Agent is uncertain as to its duties or
actions hereunder, or receives instructions or a notice from Buyer or
Seller which are in conflict with instructions or a notice from the
other party or which, in the reasonable opinion of the Escrow Agent,
35
are in conflict with any of the provisions of this Agreement, it shall
be entitled to deliver the Deposit to a court of competent
jurisdiction and commence an action for interpleader in such court,
whereupon the Escrow Agent shall have no further duty with respect to
the Deposit.
(iv) The Escrow Agent shall not be liable for any action
taken or omitted in good faith and may rely, and shall be protected in
acting or refraining from acting in reliance, upon an opinion of
counsel and upon any directions, instructions, notices, certificates,
instruments, requests, papers or other documents believed by Escrow
Agent to be genuine and to have been made, sent, signed or presented
by the proper party or parties.
(v) Notwithstanding any other provisions of this Agreement,
Buyer and Seller jointly indemnify and hold harmless the Escrow Agent
against any losses, costs, liabilities, claims and expenses incurred
by the Escrow Agent arising out of or in connection with its services
under the terms of this Agreement as Escrow Agent, including the costs
and expenses of any interpleader action involving the Deposit or of
defending itself against any claim or liability. The Escrow Agent
will not charge any fee for its services of holding and accounting for
the Deposit as Escrow Agent.
3. CLOSING, CLOSING EXPENSES AND PRE-CLOSING OPERATIONS.
(a) Closing Date and Place. The time for the delivery of the
deed and all other closing documents and for the performance of the
other terms and conditions of this Agreement (the "Closing"), shall be
10:00 A.M. on March 9, 1999, as the same may be extended pursuant to
any other provisions hereof or by mutual agreement of Buyer and Seller
(the "Closing Date") at the offices of the Seller, or at such other
place or time as shall be mutually agreed upon by Buyer and Seller.
(b) Closing Expenses. Seller shall pay the cost of all deed
stamps or transfer taxes assessed with respect to the portion of the
Purchase Price allocated to the sale of the Real Property, the premium
for the owner's title insurance policy on the portion of the Purchase
Price allocated to the Real Property, recording fees for releases,
other documents required to clear title or to comply with its
obligations hereunder and Seller's attorney's fees. Buyer shall pay
for recording costs of the deed, the costs of any survey, any lender's
title insurance policy, expenses related to Buyer's due diligence
during the Inspection Period, environmental site assessment or
appraisal which Buyer may elect to obtain in connection with its
acquisition of the Property, Buyer's attorney's fees, and any other
expenses not specifically enumerated herein to be paid by Seller.
(c) Management, Operation & Condition of the Property.
(i) As of the Closing Date, the Improvements and
Personal Property will be in as good a condition and state of repair
as existed on the Effective Date, ordinary wear and tear excepted, and
except for casualty and acts of God. Seller agrees to maintain the
Operating Inventory through the Closing Date at such levels as are
customary, normal and reasonable for the continued operation of the
36
Real Property and Citrus Business, consistent with the manner in which
Seller has operated the Real Property and Citrus Business prior to the
Effective Date. Between the Effective Date and the Closing Date,
Seller agrees to maintain the Real Property and Personal Property
consistent with customary citrus industry standards and practices and
consistent with the same standard of care that Seller has used prior
to the Effective Date.
(ii) Between the Effective Date and the end of the Buyer's
Inspection Period as hereinafter defined, Seller shall have the right
to enter into new agreements of any type and nature related to the
Real Property or Citrus Business, to acquire new or substitute
Personal Property, to make repairs and capital expenditures to the
Property, to renew, modify, extend or amend any existing Leases and
Contracts, and to continue its business operation consistent with the
manner that Seller has previously operated the Property. Seller shall
notify Buyer of any actions taken under the immediately preceding
sentence and provide copies of any documents or such appropriate
information related to any such actions. Any exhibit to this
Agreement shall be deemed amended to include any action taken as
contemplated by this Section 3(c)(ii). If this Agreement is not
terminated for any reason on or before the end of Buyer's Inspection
Period under Section 5 (b) below, thereafter Seller shall obtain
Buyer's prior consent, which consent shall not be unreasonably
withheld or delayed, before taking any of the actions contemplated by
this Section 3(c)(ii).
4. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties of Seller. Seller warrants
and represents to, and covenants and agrees with Buyer as of the date
hereof, and on the Closing Date Seller shall reaffirm all such
representations and warranties as of that date as follows:
(i) The Seller holds the entire ownership interest in the
Real Property, free and clear of all liens and encumbrances except
those listed on Exhibit "E" attached hereto. The matters shown on
Exhibit "E" and as otherwise authorized herein, are sometimes referred
to herein as Permitted Encumbrances. Any portion of the Property
encumbered by Seller's loan with Prudential Insurance Company of
America ("Prudential") shall be released at Closing provided that this
Agreement is not terminated pursuant to the contingency set forth in
Section 5(c).
(ii) Seller is a duly organized and validly existing
corporation, in good standing under the laws of Florida. Seller has
the legal right, power and authority to enter into this Agreement and
to perform all of its respective obligations hereunder, and this
Agreement constitutes a legal, valid and binding obligation of Seller,
enforceable in accordance with its terms, conditioned upon
satisfaction of the contingency contained in Section 5(c) below
regarding approval of this Agreement by the Board of Directors of
Seller. If approval of this Agreement is obtained from Seller's Board
of Directors as set forth in Section 5(c) below, the execution of the
37
Agreement by Seller, and the performance by Seller of its obligations
hereunder will have been duly authorized by all necessary actions by
and on behalf of Seller, and will not conflict with, or result in a
breach of, any of the terms, covenants and provisions of the articles
of incorporation or by-laws of Seller, as any of the same may have
been amended, or any agreement or instrument to which Seller is a
party or by which Seller is bound.
(iii) There are no uncured notices, suits, orders, decrees
or judgments relative to violations of, nor to the best of Seller's
knowledge and belief without any independent investigation thereof,
any material violations of, (A) any easement, restrictive covenant or
other matter of record affecting the Real Property or; (B) any laws,
statutes, ordinances, codes, regulations, rules, orders, or other
requirements of any local, state or federal authority or any other
governmental entity or agency having jurisdiction over the Real
Property or over the Citrus Business, including, without limitation,
any of the foregoing affecting zoning, subdivision, building, health,
traffic, environmental, hazardous waste or flood control matters (all
of the foregoing, collectively, "Governmental Regulations"), or (c)
the Permits.
(iv)There are no suits, actions or proceedings pending or, to
the best of Seller's knowledge and belief without any independent
investigation thereof, threatened, against or affecting the Property
or the transaction provided for herein before any court or
administrative agency or officer, and Seller is not in default with
respect to any judgment, order, writ, injunction, rule or regulation
of any court or governmental agency or office to which Seller is
subject in any way affecting the Property or the transaction provided
for herein.
(v) Other than assessments for an existing fire district on
part of the Land and assessments for a proposed fire district for part
of the Land, there are not presently pending or, to the best of
Seller's knowledge, threatened with respect to the Real Property (A)
any special assessments, or (B) any condemnation or eminent domain
proceedings.
(vi) Seller is not a "foreign person" as that term is defined
in Section 1445(f)(3) of the Internal Revenue Code.
(vii) Except as disclosed on Exhibit "D" and as listed as part
of the Leases and Contracts, there are no leases, subleases, licenses
or other rental agreements or occupancy agreements (written or oral)
which grant any possessory interest in and to the Real Property or
that otherwise give rights with regard to the use of the Real
Property. Seller shall pay and deliver to Buyer all security deposits
under any existing leases, if any, and any prepaid rents, if any, or
other sums held by the Seller and not applied against the tenant's
obligations thereunder.
(viii) The amount necessary to discharge the Prudential loan
and any other monetary liens currently affecting the Real Property do
not exceed the net amount of the Purchase Price to be received by
Seller at the Closing, after the adjustments described in Section 2(c)
above or elsewhere in this Agreement.
38
(ix) The Seller (except in material compliance with
Governmental Regulations) has never generated, stored, handled or
disposed of any hazardous substance, hazardous waste, hazardous
materials or oil (as any of such terms are defined under applicable
Governmental Regulations) except for pesticides, fertilizers,
herbicides, fuels, wax, chlorine and ammonia stored and used according
to the labeling instructions and in accordance with Governmental
Regulations in the normal maintenance and operation of the Real
Property, Personal Property and Seller's Citrus Business, and, to the
best of the Seller's knowledge and belief without any independent
investigation thereof, there has been no illegal release of any such
hazardous substance, hazardous waste, hazardous material or oil into
the environment from the Real Property or Personal Property, or in, on
or under the Real Property. If during the Inspection Period, Buyer
discovers any hazardous substances, hazardous wastes, hazardous
materials or oil on the Real Property, except as otherwise stated
above, Buyer may terminate the Agreement unless Seller agrees to
remediate or clean up the Real Property affected. If Seller agrees to
remediate or clean up the Real Property affected, it shall do so in a
diligent manner. Notwithstanding the foregoing, the Seller is under
no obligation to Buyer under this Agreement to remediate or clean up
the Real Property.
(x) No service, material or work has been supplied to the
Real Property for which payment has not been made in full and in a
timely manner.
(xi) Seller is not in default of any material obligations
under any of the Leases and Contracts and Permits.
(xii) Any State of Florida sales taxes levied on the
activities and operations conducted on the Property have been duly
collected and paid. Seller has applied for and received the
agricultural classification for Florida ad valorem tax purposes for
the tax year 1998 with respect to the Real Property except for two (2)
parcels which are wetlands. Seller agrees to use its best efforts to
preserve such agricultural classification on the Real Property through
the Closing Date.
(xiii) Seller will pay or cause to be paid in full, prior to
Closing, all due and payable bills and invoices for labor, goods,
material and services of any kind relating to the Property, utility
charges, and employee salary and other accrued benefits relating to
the period prior to Closing except as permitted otherwise under this
Agreement.
(xiv) All payroll taxes, sales taxes, license taxes, use
taxes and all other obligations arising from and as a result of the
operation of the Property which are the obligation of Seller are due
or to become due to any governmental or quasi-governmental authority,
whether municipal, state, county or federal, accruing prior to Closing
shall be paid in full by Seller and Seller shall not take or omit to
take any action with respect to said taxes which would prevent Buyer's
performance of its obligations hereunder or impose upon Buyer any
obligations not contemplated herein.
(xv) Seller shall pay and be responsible for accrued benefits,
accrued vacation time, accrued wages and accrued salaries of each
39
employee of Seller's working in Seller's Citrus Business or employed
at the Real Property to the Closing Date. Seller shall not be
responsible for the payment of wages, salaries, vacation pay or
benefits of any employees of Seller's Citrus Business or employed at
the Real Property on or after the Closing Date.
(b) Representations and Warranties of Buyer. Buyer warrants and
represents to, and covenants and agrees with, Seller as follows:
(i) Buyer has the legal right, power and authority to enter
into this Agreement and to perform all of Buyer's obligations
hereunder. Buyer's performance hereunder will not conflict with, or
result in a breach of, any of the terms, covenants and provisions of
any order, judgment, writ, injunction or decree of any court or any
agreement or instrument to which Buyer is a party or by which Buyer is
bound.
(ii) Buyer agrees to purchase and accept the Property and
each and every part and component thereof, in an AS IS, WHERE IS
condition as of the Closing Date with no covenants, warranties or
representations of any type or nature from Seller, either express or
implied, except for the covenants, warranties and representations
expressly made by Seller in this Agreement.
(iii) If Buyer, on the Effective Date, elects to hire all
employees of Seller's Citrus Business as provided in Section 8(k)
below, Buyer covenants and agrees that Buyer intends to hire all
employees of Seller's Citrus Business; that Buyer has no plans to
terminate any employees of Seller's Citrus Business; and that Buyer
has no plans or intentions to close a major portion of Seller's Citrus
Business. Buyer acknowledges Buyer's obligation under the Workers
Adjustment and Retraining Notification ("WARN") Act (29 USC S 2101-
2109), to provide notice to all affected employees of any business
closing or mass layoff after the Closing Date, if Buyer elects to hire
all of Seller's Citrus Business employees. Further, Buyer agrees to
indemnify and hold Seller harmless against, and in respect of all
claims related to, or arising from or associated with Buyer's breach
of the representations and warranties under this Section 4(b)(iii) or
Buyer's obligations under the WARN Act.
(iv) On or after the Closing Date Buyer shall be solely
responsible for the payment of and obligation for all wages,
salaries, vacation pay and benefits of any of Seller's former
employees that Buyer employs.
(c) Liability for Warranties and Representations. Seller as to
each of the covenants, representations and warranties hereunder,
agrees to indemnify and hold Buyer harmless from and against any and
all claims, losses, liabilities, damages, expenses and costs,
including without limitation, reasonable attorneys' fees and expenses,
incurred by Buyer as the result of the material breach of any of the
warranties and representations expressly contained in this Article 4
or elsewhere in this Agreement or made in connection with Closing on
this Agreement, and from any claim, demand or litigation by or from a
third party relative to the Property and arising from acts or
omissions occurring before the Closing Date. Buyer, as to each of the
covenants, representations and warranties hereunder, agrees to
indemnify and hold Seller harmless from and against any and all
40
claims, losses, liabilities, damages, expenses and costs, including
without limitation, reasonable attorneys' fees and expenses, incurred
by Seller as the result of the material breach of any of Buyer's
warranties and representations contained in this Article 4 or
elsewhere in this Agreement or made in connection with Closing on this
Agreement and from any claim, demand, loss, liability, or expense
arising out of, or in connection with the Property arising from acts
or omissions occurring on and after the Closing Date.
(d) The provisions of this Article 4 shall survive Closing
hereunder or the termination of this Agreement for a period of five
(5) years after the Closing Date.
5. RIGHTS AND OBLIGATIONS OF THE PARTIES PRIOR TO CLOSING;
CONDITIONS TO CLOSING.
(a) Seller's Covenants. Seller covenants that between the
Effective Date and the Closing Date:
(i) Buyer and its representatives, agents, contractors,
and engineers shall have access to the Property at any time and from
time to time, at Buyer's sole cost and expense: (A) to show the
Property to third parties (including, without limitation, contractors,
surveyors, engineers, attorneys, insurers, banks and other lenders or
investors), and (B) to perform any and all surveys, tests, borings,
inspections, environmental site assessments and measurements which
Buyer reasonably deems necessary or appropriate hereunder, including
without limitation, for purposes of making soil borings, performing
soil compaction tests, performing mechanical or structural
inspections, conducting any of the other tests described in Section
5(b) below, and making such surveys and other topographical and
engineering studies, and other tests, surveys and studies as Buyer or
Buyer's lender may deem necessary or appropriate. Promptly following
such tests and surveys, Buyer shall restore any disturbed Property as
nearly as possible to its condition that existed prior to such tests
and surveys. Buyer hereby indemnifies and holds Seller harmless from
any liability, claim, loss, damage, cost or expense suffered or
incurred by Seller caused by the entry upon the Property prior to the
Closing by Buyer, its agents, servants and employees, including but
not limited to death or any injury to any person arising therefrom or
damage to property arising therefrom, including environmental damage
to the Real Property.
(ii)Buyer may discuss the Property and the Citrus Business
of Seller with any federal, county, state or local officials or
authorities concerning variances, permits, certificates, consents,
approvals, and other Governmental Regulations for the use and
operation of the Property and of Seller's Citrus Business; provided
however, Buyer may not make any submittals for approvals of any nature
or type without Seller's prior written consent, to be given or denied
in Seller's sole discretion.
(iii) Promptly upon execution hereof by Seller, Seller will
furnish to Buyer for Buyer's review and approval complete and accurate
copies of all records and documentation and all information, in its
possession concerning the ownership and condition of the Property (for
41
informational purposes, without warranty or representation regarding
its accuracy), including, without limitation, any available plans and
surveys, survey data, engineering reports, recorded title documents,
soil tests, service contracts, environmental site assessments,
permits, approvals and building specifications, and such other
available items as requested by Buyer. Buyer will hold all such
documents, data and information obtained from Seller, in confidence.
(iv) Seller shall not execute any new mortgage on the
Property or modify the Prudential mortgage on the Property, or
otherwise encumber the Property in an amount which, together with the
amount of all other mortgages and monetary liens, will exceed the
amount of the Purchase Price to be received by Seller at the Closing,
after the adjustments described in Section 2(c) above or elsewhere
herein or create any other new encumbrance or restriction affecting
the Property except as may otherwise be authorized herein. Seller
shall perform when due all of its obligations under the instruments
securing all mortgage liens on the Property.
(v)Seller shall not substantially modify or alter the Real
Property or Personal Property in any material respect except as
expressly provided herein or as authorized in this Agreement.
(vi) At all times prior to closing, Seller shall (a)
operate, maintain and manage the Real Property and Personal Property
in a good manner, (b) maintain present services, (c) keep on hand
sufficient materials, supplies, equipment and other personal property
in quantities and quality substantially the same as maintained on the
Effective Date, and (d) perform when due all of Seller's obligations
under the Permits, including any renewals thereof, and Leases and
Contracts and other agreements relating to the Real Property and
otherwise in accordance with applicable laws, ordinances, rules and
regulations affecting the Real Property. None of the Personal
Property, except for the Operating Inventory used or disposed of in
the ordinary course of business, shall be removed from the Real
Property unless replaced in the ordinary course of business by
personal property of equal or greater utility and value.
(vii) If Buyer does not elect on the Effective Date to hire
all employees of Seller's Citrus Business, as provided in Section 8(k)
below, Seller, on or before January 6, 1999, shall satisfy any
requirements of the WARN Act regarding providing all notices of the
transaction contemplated by this Agreement to Seller's employees of
its Citrus Business and others. Seller agrees to indemnify and hold
Buyer harmless against, and in respect of all claims related to, or
arising from or associated with Seller's obligations under the WARN
Act. Representatives of Seller and Buyer, at a mutually acceptable
date close in time to the issuance of Seller's WARN Act notice, will
meet with all of Seller's Citrus Business employees to explain the
acquisition of the Property by Buyer to Seller's affected employees.
Seller and Buyer agree that on the Closing Date Seller shall terminate
all persons employed in its Citrus Business and employed by Seller on
the Real Property and Buyer will employ only such persons it chooses
to employ.
42
(b) Certain Conditions to Buyer's Obligations. Buyer's
obligations hereunder are expressly contingent upon fulfillment of all
of the following terms and conditions during the due diligence period
which shall commence on the Effective Date and terminate at 5:00 p.m.
on January 29, 1999, all of which shall be at Buyer's sole cost and
expense unless specifically provided otherwise herein:
(i) Buyer may make or cause to be made all site
assessments, tests, borings and inspections buyer deems necessary to
determine if there are any "hazardous wastes", "hazardous substances",
"oil" or "hazardous materials" (as all those terms are defined under
applicable Governmental Regulations), or any medical wastes,
radioactive materials, lead, asbestos, urea, formaldehyde or radon in,
on, about, or under the Real Property, and shall be satisfied in
Buyer's sole discretion with the results of all such site assessments,
tests, borings and inspections. If such hazardous wastes, oil,
hazardous substances or hazardous materials are found, Buyer may
terminate this Agreement. Seller is under no obligation to Buyer
under this Agreement to remediate or clean up the Real Property. If
such substances are found on the Real Property, Buyer's sole recourse
shall be termination of this Agreement.
(ii) Buyer may make or cause to be made an instrument
survey of the Real Property during the Inspection Period, and such
survey shall disclose no matters affecting the Real Property which are
reasonably determined by Buyer to adversely affect the title or value
of the Real Property, or the use of the Real Property.
(iii) Buyer shall have received from Seller a title
insurance commitment from a title insurance company licensed in
Florida, which commitment shall be acceptable to Buyer in form and
content, on or before ten (10) days prior to the end of the Inspection
Period, pursuant to which such company agrees to insure fee title to
the Real Property, at the promulgated rate, in ALTA form, which
commitment shall delete the printed exceptions for mechanics' and
materialman's liens, parties in possession except for those shown on
Exhibit "D" or Exhibit "E", and survey (if Buyer obtains a survey),
and shall (A) affirmatively insure that there will be no violation of
any applicable restrictions pertaining to the Real Property if used
and operated, as contemplated herein, and (B) insure that the Real
Property has legal access. Attached as Exhibit "E" are the Permitted
Encumbrances affecting the Real Property which will be exceptions to
Buyer's title. Other title exceptions may also be shown on the title
insurance commitment as the documents listed on Exhibit "E" may not
necessarily be all of the exceptions to title. If Buyer accepts the
title commitment or does not terminate this Agreement at the end of
the Inspection Period, such other title exceptions shown on the title
commitment not shown on Exhibit "E" shall be deemed to be included as
part of Exhibit "E". Further, Buyer agrees to take title subject to
the County's comprehensive land use plan, zoning, and any other
restrictions or prohibitions imposed by governmental authorities.
(iv) Buyer shall have obtained surveys, engineering
reports, physical inspection reports, percolation tests, tree counts,
production information, reports, information, studies, and other
evidence satisfactory to Buyer.
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(v) Buyer shall review and be satisfied with all zoning,
land use and environmental laws, permits affecting the Real Property,
including WMD permits, codes, ordinances, regulations affecting the
Real Property.
(vi) Buyer shall conduct such surveys, analyses,
inspections, and tests of the Land, Improvements and Personal Property
as reasonably deemed necessary by the Buyer and shall be satisfied
with the conditions of the Land, Improvements and Personal Property.
(vii) The Exhibits to this Agreement are preliminary.
Seller shall provide Buyer with any revised Exhibits on or before
January 15, 1999, and such revised Exhibits shall be deemed
substituted for any original Exhibit so revised.
If the foregoing conditions specified in subsections (i), (ii), (iii),
(iv), (v), (vi) and (vii) above are not fully satisfied in a manner
which is acceptable to Buyer in its sole discretion on or before
January 29, 1999, or if any records or documentation or information
obtained or provided are unsatisfactory to Buyer, Buyer shall have the
right to terminate this Agreement for any reason on or before 5:00
p.m. on January 29, 1999, by notice of termination delivered to
Seller, whereupon this Agreement shall be null, void and of no further
effect. If Buyer fails to terminate the Agreement in the manner and
by the time set forth herein, Buyer shall be deemed to have waived its
right to terminate this Agreement under this Section 5(b) and shall
pay the Deposit to Escrow Agent within two (2) days thereafter or
Buyer shall be in default hereunder. Upon termination under Section
5(b), Buyer shall return to Seller any surveys, tests, title
commitments, reports and the like, provided by Seller and Buyer shall deliver
to Seller copies of any tests, studies, reports, appraisals,
and the like related to the Property that Buyer or its agents,
contractors or engineers may have prepared or have obtained which
Seller may use at Seller's sole risk. Buyer shall notify all Buyer's
professionals and consultants of such termination and authorize them
to release their work product to Seller. Buyer shall obtain from such
professionals and consultants a statement that they have been paid in
full for all such work done by Buyer and authorize them to release
their work product to Seller for use at Seller's risk.
(c) Certain Conditions to Seller's Obligations. In addition
to the other conditions to be satisfied under this Agreement, Seller's
obligations are expressly contingent upon fulfillment of each of the
following conditions on or before 5:00 p.m. January 29, 1999:
(i)The Board of Directors of Seller shall have approved this Agreement
and the transaction contemplated by this Agreement. If Seller's Board
of Directors does not approve this Agreement on or before January 29,
1999, Seller shall notify Buyer of such failure to obtain the Board's
approval and upon such written notification, this Agreement shall
terminate, be null and void and of no further effect.
(ii) Seller shall have obtained any and all approvals,
waivers, or consents from Citrus World allowing all of the Real
Property and fruit to be withdrawn from any existing agreements with
Citrus World and allowing Seller to terminate or to transfer its
membership in Citrus World without any loss in the value of Seller's
44
interest in Citrus World. Seller agrees to commence action to obtain
and to diligently pursue obtaining such approval , waiver or consent
immediately after the Effective Date. Such approval, waiver or
consent must be acceptable to Seller in its sole and absolute
discretion. If Citrus World does not approve or authorize the same,
Seller shall notify Buyer of such failure to obtain Citrus World's
approval and upon such notification this Agreement shall terminate, be
null and void and of no further force and effect.
(iii) Seller shall have obtained a waiver of , or reduction
of, the prepayment penalty in Seller's Prudential loan provisions on
terms and conditions acceptable to Seller in Seller's sole and
absolute discretion or shall have received from Prudential
alternatives or accommodations with respect to the loan on the terms
and conditions acceptable to Seller in its sole and absolute
discretion provided that the Prudential loan is released from the
Property. Seller agrees to commence action to obtain and to
diligently pursue obtaining such accommodation from Prudential
immediately after the Effective Date. If Seller does not obtain or
receive any such accommodation from Prudential which is acceptable to
Seller, Seller shall notify Buyer of such failure to obtain an
acceptable accommodation from Prudential, and upon such notification,
this Agreement shall terminate and be null and void and of no further
force and effect.
(iv) Seller shall have obtained any required consents to assign
to Buyer all of the Leases and Contracts and Permits. In all such
consents to assignment, Seller shall be released from all liability
thereunder. If Seller does not receive such consents to assignment or
releases from liability, Seller shall notify Buyer of such failure and
upon such notification, this Agreement shall terminate and be null and
void and of no further force and effect.
(v) If Seller fails to terminate this Agreement in the manner
and by the time set forth herein, Seller shall be deemed to have
waived its right to terminate this Agreement under Section 5(c).
6. CLOSING OBLIGATIONS; ESCROW INSTRUCTIONS.
(a) Seller's Closing Obligations. On the Closing Date,
Seller shall:
(i) Deliver to Buyer full possession of the Real Property
in the same condition as it is as of the Effective Date except as
expressly authorized or permitted otherwise hereunder, subject to the
Permitted Encumbrances.
(ii) Deli