SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1996Commission file #0-16108
JMB INCOME PROPERTIES, LTD. - XII
(Exact name of registrant as specified in its charter)
Illinois 36-3337796
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office)(Zip Code)
Registrant's telephone number, including area code 312/915-1987
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
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . 12
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K. . . . . . 14
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 23,519,916 21,456,552
Rents and other receivables, net of allowance for
doubtful accounts of $728,881 at March 31,
1996 and $784,652 at December 31, 1995 . . . . . . . . . . 2,550,077 2,542,548
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 633,075 260,164
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . 937,587 900,561
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . 27,640,655 25,159,825
------------ -----------
Investment properties, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,494,992 20,494,992
Buildings and improvements . . . . . . . . . . . . . . . . . 169,130,117 168,635,413
------------ -----------
189,625,109 189,130,405
Less accumulated depreciation. . . . . . . . . . . . . . . . 53,771,307 52,390,756
------------ -----------
Total investment properties, net of
accumulated depreciation . . . . . . . . . . . . . . 135,853,802 136,739,649
Investment in unconsolidated ventures, at equity . . . . . . . 6,263,459 6,412,066
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 7,405,353 7,639,146
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 2,427,491 2,558,056
------------ -----------
$179,590,760 178,508,742
============ ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . $ 793,637 746,306
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 1,650,205 2,038,017
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 592,782 510,622
Accrued real estate taxes. . . . . . . . . . . . . . . . . . 180,481 --
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . 23,455 23,320
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . 3,240,560 3,318,265
Tenant security deposits . . . . . . . . . . . . . . . . . . . 434,050 492,214
Long-term debt, less current portion . . . . . . . . . . . . . 88,464,694 88,670,160
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . 92,139,304 92,480,639
Venture partners' subordinated equity in ventures. . . . . . . 21,945,782 22,041,429
Partners' capital accounts:
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . 11,123 11,123
Cumulative net earnings (losses) . . . . . . . . . . . . . 806,640 769,195
------------ -----------
817,763 780,318
------------ -----------
Limited partners (189,684 interests):
Capital contributions, net of offering costs . . . . . . . 171,306,452 171,306,452
Cumulative net earnings (losses) . . . . . . . . . . . . . (28,124,613) (30,082,749)
Cumulative cash distributions. . . . . . . . . . . . . . . (78,493,928) (78,017,347)
------------ -----------
64,687,911 63,206,356
------------ -----------
Total partners' capital accounts . . . . . . . . . . . 65,505,674 63,986,674
------------ -----------
$179,590,760 178,508,742
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . $ 7,435,027 7,233,086
Interest income. . . . . . . . . . . . . . . . . . . . . . . 291,413 301,961
----------- ----------
7,726,440 7,535,047
----------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . 2,087,432 2,304,951
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . 1,380,551 1,410,183
Property operating expenses. . . . . . . . . . . . . . . . . 3,136,030 3,094,264
Professional services. . . . . . . . . . . . . . . . . . . . 93,703 96,138
Amortization of deferred expenses. . . . . . . . . . . . . . 298,688 339,816
General and administrative . . . . . . . . . . . . . . . . . 100,495 57,076
----------- ----------
7,096,899 7,302,428
----------- ----------
Operating earnings (loss). . . . . . . . . . . . . . . 629,541 232,619
Partnership's share of operations of unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . 151,783 309,871
Venture partners' share of ventures' operations. . . . . . . . (198,353) (11,247)
----------- ----------
Net operating earnings (loss). . . . . . . . . . . . . 582,971 531,243
Partnership's share of gain on sale of investment
properties of unconsolidated venture . . . . . . . . . . . . 1,412,610 --
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . $ 1,995,581 531,243
=========== ==========
Net earnings (loss) per limited partnership interest:
Net operating earnings (loss). . . . . . . . . . . . $ 2.95 2.69
Partnership's share of gain on sale of
investment properties of unconsolidated
venture. . . . . . . . . . . . . . . . . . . . . . 7.15 --
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . $ 10.10 2.69
=========== ==========
Cash distributions per limited partnership interest. . $ 2.50 2.50
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . .$ 1,995,581 531,243
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 1,380,551 1,410,183
Amortization of deferred expenses. . . . . . . . . . . . . . . 298,688 339,816
Partnership's share of operations of unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . (151,783) (309,871)
Partnership's share of gain on sale of investment
properties of unconsolidated venture . . . . . . . . . . . . (1,412,610) --
Venture partners' share of ventures' operations, . . . . . . . 198,353 11,247
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . (7,529) (111,237)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . (372,911) (370,649)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . (37,026) --
Casualty insurance receivable. . . . . . . . . . . . . . . . . -- 853,000
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 130,565 97,672
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (387,812) 284,449
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . 82,160 --
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . 180,481 188,975
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . 135 2,424
Tenant security deposits . . . . . . . . . . . . . . . . . . . (58,164) (2,168)
------------ -----------
Net cash provided by (used in) operating activities. . . . 1,838,679 2,925,084
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term
investments. . . . . . . . . . . . . . . . . . . . . . . . . . -- 12,645,234
Additions to investment properties,
net of related payables in 1995. . . . . . . . . . . . . . . . (494,704) (568,454)
Partnership's distributions from unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,713,000 --
Payment of deferred expenses . . . . . . . . . . . . . . . . . . (64,895) (258,592)
------------ -----------
Net cash provided by (used in) investing activities. . . . 1,153,401 11,818,188
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . (158,135) (153,060)
Advances from affiliate. . . . . . . . . . . . . . . . . . . . . -- (435,000)
Venture partners' contributions to venture . . . . . . . . . . . -- 41,236
Distributions to venture partners. . . . . . . . . . . . . . . . (294,000) (420,000)
Distributions to limited partners. . . . . . . . . . . . . . . . (476,581) (476,581)
------------ -----------
Net cash provided by (used in) financing activities. . . . (928,716) (1,443,405)
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . 2,063,364 13,299,867
Cash and cash equivalents, beginning of year . . . . . . . 21,456,552 8,222,359
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . .$ 23,519,916 21,522,226
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . .$ 2,005,272 2,277,118
============ ===========
Non-cash investing and financing activities. . . . . . . . . . .$ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of March 31,
1996 and for the three months ended March 31, 1996 and 1995 are as follows:
Unpaid at
March 31,
1996 1995 1996
------- ------ -------------
Property management
and leasing fees. . . . . $23,411 17,988 --
Insurance commissions. . . 9,399 17 --
Reimbursement
(at cost) for
out-of-pocket
expenses. . . . . . . . . 3,914 2,766 1,023
------- ------ -----
$36,724 20,771 1,023
======= ====== =====
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Managing General Partner and its affiliates relating to the
administration of the Partnership and the operation of the Partnership's
investment properties. The amount of such salaries and direct expenses
aggregated $22,243 and $192,801 for the three months ended March 31, 1996
and for the twelve months ended December 31, 1995, respectively, of which
$82,028 is unpaid as of March 31, 1996.
In accordance with the subordination requirements of the Partnership
Agreement, the General Partners have deferred payment of their distri-
butions of net cash flow and sales proceeds from the Partnership. The
amount of such deferred distributions was approximately $7,837,000 as of
March 31, 1996. All amounts deferred or currently payable do not bear
interest.
40 BROAD STREET
Occupancy at the 40 Broad Street property was approximately 75% as of
March 31, 1996. Tenant leases representing 12% of the property expire in
1996, not all of whom are expected to renew. In 1996, approximately
$1,300,000 in tenant improvements and lease commissions have been budgeted
as a result of continued leasing efforts at the property of which the
Partnership's share is approximately $891,000. The downtown New York City
market remains extremely competitive due to the significant amount of space
available.
SAN JOSE
During August 1994, San Jose received notification from the
Redevelopment Agency of the City of San Jose of its offer to purchase one
of the parking garage structures in the office building complex for an
approved Agency project for $4,090,000. The price offered was deemed by
the Agency to be just compensation in compliance with applicable State and
Federal laws. During 1995, the Agency filed a condemnation action in court
to secure their position in obtaining the garage pursuant to the laws of
eminent domain. In late 1995, San Jose and the Agency reached a mutually
acceptable agreement on the transfer of the garage. In March 1996, the
sale was consummated. Under the transfer agreement, San Jose received
replacement parking spaces for its tenants in a near-by city-owned parking
structure for a term of fifty-five years in addition to the aforementioned
purchase price of $4,090,000. San Jose will recognize a gain of
approximately $2,036,000 and $1,800,000, respectively, for financial
reporting and Federal income tax purposes in 1996, of which approximately
$1,018,000 and $900,000, respectively, will be allocable to the
Partnership. Any distribution of such sale proceeds will be based upon the
working capital needs of the Partnership and likely will include payments
to state taxing authorities representing withholding on the gains allocable
to the limited partners in the Partnership.
During December 1995, San Jose entered into a non-binding letter of
intent for the sale of the 190 San Fernando Building to an independent
third party. In March 1996, the sale was consummated. The sale price of
the building was $1,753,000, paid in cash at closing. San Jose will
recognize a gain of approximately $789,000 for financial reporting purposes
in 1996, of which approximately $394,500 will be allocable to the
Partnership. San Jose will recognize a loss of approximately $12,000 for
Federal income tax purposes in 1996 of which approximately $6,000 will be
allocable to the Partnership. Any distribution of such sale proceeds will
be based upon the working capital needs of the Partnership.
The 190 Building and garage were classified as held for sale or
disposition as of January 1, 1996 and therefore have not been subject to
continued depreciation. The accompanying consolidated financial statements
include the Partnership's share of operations of unconsolidated ventures
which include approximately $20,000 and $56,000 of operations of such
properties for the three months ended March 31, 1996 and 1995. Such assets
had a net carrying value of approximately $3,006,000 at December 31, 1995.
San Jose is undergoing a voluntary upgrade to the 130 Park Center
Plaza building and the parking garage below the 100-130 buildings for
seismic purposes. San Jose estimates the cost of the structural upgrade to
be approximately $1,200,000 of which the Partnership's share is
approximately $600,000. Such work should be completed by mid-1996.
PLAZA HERMOSA SHOPPING CENTER
Occupancy at Plaza Hermosa at March 31, 1996 was approximately 95%.
However, included in the occupancy is a tenant whose lease had expired in
1995 (approximately 6,800 square feet or 7% of the property) but remains in
the center and pays rent pursuant to its original lease terms on a month-
to-month basis. In addition, new leases will likely require expenditures
for lease commissions and tenant improvements prior to tenant occupancy.
These anticipated costs upon re-leasing will result in a decrease in cash
flow from operations over the near-term.
FIRST FINANCIAL
From 1996 through 1998, leases at the First Financial office building
representing 55% of the rentable square footage are scheduled to expire,
not all of which are expected to renew. In addition, new leases will
likely require expenditures for lease commissions and tenant improvements
prior to tenant occupancy. Occupancy in the first quarter decreased 7%
primarily due to First Financial Group relocating to a smaller space.
Merrill Lynch (11,294 square feet) entered into a lease for the vacated
First Financial Group space and moved-in in April 1996.
In order to finalize the two year loan extension that occurred in
November 1995, the Partnership and its affiliated partner advanced in late
1995 approximately $4.1 million (approximately $2.5 million by the
Partnership) to the joint venture to fund the required principal paydown
and related loan fees. A capital call had been made on the unaffiliated
joint venture partner for its share of the total required amount; however,
the unaffiliated joint venture partner had indicated that it would not fund
its required share. The Partnership and its affiliated partner have
reached an agreement with the unaffiliated partner to settle this dispute
through a modification of the joint venture agreement. The unaffiliated
partner has become a limited partner as a result of this modification.
ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments (con-
sisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1996 and for the three months ended March 31, 1996 and 1995.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
As of March 31, 1996, the Partnership had consolidated cash and cash
equivalents of approximately $23,520,000, of which approximately
$18,331,000 is held by the Partnership. Of the remaining $5,189,000, held
by the Partnership's joint ventures, approximately $3,252,000 represents
the Partnership's share of undistributed cash. These funds and the
Partnership's cash are available for distributions to partners, tenant
improvements, leasing commissions, and other capital expenditures at the
Partnership's investment properties as described above. Additionally, the
Partnership expects to make an additional distribution of $15 per interest
on May 31, 1996 from sales proceeds which resulted from the sale of the 190
San Fernando building and one of the parking garages at the San Jose
investment property as discussed in the Notes to Consolidated Financial
Statements.
In an effort to reduce partnership operating expenses, the Partnership
will make semi-annual rather than quarterly distributions of available
operating cash flow commencing with the 1996 distributions. After
reviewing the remaining properties and the marketplaces in which they
operate, the General Partners of the Partnership expect to be able to
conduct an orderly liquidation of its remaining investment portfolio as
quickly as practicable. Therefore, the affairs of the Partnership are
expected to be wound up no later than December 31, 1999 (sooner if the
properties are sold in the near-term), barring unforeseen economic
developments.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents at March 31, 1996 as
compared to December 31, 1995 is primarily due to the receipt and temporary
investment of a distribution of $1,713,000 from the San Jose unconsolidated
venture a portion of which resulted from the sale of the 190 San Fernando
building at San Jose.
The increase in prepaid expenses at March 31, 1996 as compared to
December 31, 1995 is primarily due to the prepayment of real estate taxes
as required by the local taxing authorities, of approximately $416,000, at
40 Broad Street.
The decrease in accounts payable at March 31, 1996 as compared to
December 31, 1995 is primarily due to the payment in 1996 of certain
earthquake repair costs at Topanga Plaza.
The decrease in Partnership's share of operations of unconsolidated
ventures for the three months ended March 31, 1996 as compared to the three
months ended March 31, 1995 is primarily due to a refurbishment and
modernization in 1996 of the San Jose fire safety systems.
Mortgage and other interest decreased and venture partners' share of
consolidated ventures' operations increased for the three months ended
March 31, 1996 as compared to the three months ended March 31, 1995
primarily due to the $4,000,000 loan paydown at First Financial in 1995.
The Partnership's share of gain on sale of investment properties from
unconsolidated venture of $1,412,610 in 1996 is due to the gain recognized
on the sale of the 190 San Fernando building and one of the parking
structures at the San Jose investment property.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties.
<CAPTION>
1995 1996
-------------------------------------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Park Center Financial
Plaza (3)
San Jose, California . . . 74% 77% 76% 77% 85%
2. Topanga Plaza
Los Angeles, California. . 95% 96% 96% 98% 98%
3. 40 Broad Street
New York, New York . . . . 76% 77% 77% 77% 75%
4. Plaza Hermosa
Shopping Center (2) (2)
Hermosa Beach, California. 93% 93% 95% 93% 95%
5. First Financial Plaza
Encino (Los Angeles),
California (1) . . . . . . 89% 86% 88% 89% 82%
<FN>
(1) The percentage represents physical occupancy. Mitsubishi (8,109 square feet) vacated its space in
July 1993 prior to its lease expiration of January 1997 and continues to pay rent pursuant to its lease
obligation.
(2) The percentage represents physical occupancy. Approximately 14,000 square feet is occupied by
tenants whose leases expired during 1995 but continue to occupy their spaces pursuant to their original lease
terms.
(3) Occupancy is now based on 410,000 square feet rather than 432,000 square feet due to the sale of
the 190 San Fernando building in March 1996.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3-A. The Prospectus of the Partnership dated August
23, 1985 as supplemented December 9, 1985 and January 10, pursuant to Rules
424 (b) and 424 (c), as filed with the Commission is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's report on Form 10-K
for December 31, 1992 (File No. 0-16108) dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference to Exhibit 3-B to the Partnership's
report on Form 10-K for December 31, 1992 (File No. 0-16108) dated March
19, 1993.
4-A. Mortgage loan agreement between Topanga and
Connecticut General Life Insurance Company dated January 31, 1992 relating
to Topanga Plaza in Los Angeles, California is hereby incorporated herein
by reference to Exhibit 4-A to the Partnership's report for December 31,
1992 on Form 10-K (File No. 0-16108) dated March 19, 1993.
4-B. Mortgage loan agreement between First Financial
and The Prudential Insurance Company of America dated November 2, 1987
relating to First Financial Plaza in Encino, California is hereby
incorporated herein by reference to Exhibit 4-B to the Partnership's report
for December 31, 1992 on Form 10-K (File No. 0-16108) dated March 19, 1993.
4-C. Mortgage loan modification agreement between
Topanga and Connecticut General Life Insurance dated January 31, 1993
relating to Topanga Plaza in Los Angeles, California is hereby incorporated
herein by reference to Exhibit 4 of the Partnership's report on Form 10-Q
(File No. 0-16108) dated November 11, 1993.
4-D. Letter of credit agreement between JMB Income
Properties, Ltd-XII and Dresdner Bank AG dated November 15, 1994 relating
to the letter of credit extension at Plaza Hermosa is hereby incorporated
herein by reference to the Partnership's report on Form 10-K (File No. 0-
16108) dated March 27, 1995.
4-E. Mortgage loan agreement, Amended and Restated
Deed of Trust, Security Agreement with assignment of Rents and Fixture
Filing and Real Estate tax escrow and Security Agreement between San Jose
and Connecticut General Life Insurance Co. dated November 30, 1994 is
hereby incorporated herein by reference to the Partnership's report on Form
10-K (File No. 0-16108) dated March 27, 1995.
10-A. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of Topanga Plaza in
Los Angeles, California, are hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-16108) dated December 31,
1985.
10-B. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of First Financial
Plaza in Encino, California are hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-16108) dated June 3, 1987.
10-C. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of 40 Broad Street in
New York, New York, are hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-16108) dated December 31,
1985.
10-D. Third Amendment to amended and restated
partnership agreement of JMB Encino Partnership L.P. dated April 24, 1996
between JMB First Financial Associates and Encino Plaza is filed herewith.
27. Financial Data Schedule
(b) Reports on Form 8-K
The following reports on Form 8-K were filed since
the beginning of the last quarter of the period covered by this report.
(i) None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XII
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:May 10, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date:May 10, 1996
THIRD AMENDMENT TO
AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF
JMB ENCINO PARTNERSHIP, L.P.
THIS AMENDMENT made and entered into as of April 24, 1996, by and
between JMB FIRST FINANCIAL ASSOCIATES, an Illinois general partnership
(sometimes herein referred to as "Investor" or "General Partner"), and
ENCINO PLAZA, a California general partnership (sometimes herein referred
to as "Venturer" or "Limited Partner").
WITNESSETH THAT WHEREAS:
A. Investor and Venturer are the sole partners of JMB Encino
Partnership, a California general partnership (the "Partnership"), governed
pursuant to that certain agreement (herein called the "Amended and Restated
Agreement") captioned, "Partnership Agreement of JMB Encino Partnership",
dated May 20, 1987, by and among Investor and Jack Shine, Joel Shine and
David Bock (said Jack Shine, Joel Shine and David Bock having thereafter
assigned their interest to Venturer), said Amended and Restated Agreement
amended by that certain agreement (herein called the "First Amendment to
Amended and Restated Agreement"), captioned, "Amendment to Partnership
Agreement", dated March 1, 1992, between Investor and Venturer, said
Amended and Restated Agreement further amended by that certain agreement
(herein called the "Second Amendment to Amended and Restated Agreement"),
captioned, "Second Amendment to Partnership Agreement", dated January 1,
1993, between Investor and Venturer. As used herein, "Partnership
Agreement" means the Amended and Restated Agreement, as amended by the
First Amendment to Amended and Restated Agreement, and as further amended
by the Second Amendment to Amended and Restated Agreement.
B. Investor and Venturer desire to convert the Partnership from a
general partnership to a limited partnership governed by California law,
and to make various amendments to the Partnership Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties do hereby convert the Partnership
into a limited partnership organized under California law and do hereby
amend the Partnership Agreement as follows:
1. Section 1.1 of the Partnership Agreement is amended by adding
the following sentence thereto:
"From and after the date of filing (the 'Conversion Date') by
Investor of a Certificate of Limited Partnership (the "Certificate of
Limited Partnership") for the Partnership in the Office of the California
Secretary of State in accordance with Section 15621 of the California
Revised Limited Partnership Act, the Partnership shall be and become a
limited partnership under the California Revised Limited Partnership Act,
as adopted in the State of California."
2. Section 1.2 of the Partnership Agreement is amended by adding
the following sentence thereto:
"From and after the Conversion Date, the name of the Partnership
shall be JMB Encino Partnership, L.P."
3. Section 1.8J of the Partnership Agreement (the definition of
"Investor Gross Return Calculation Account") is hereby amended by adding
the following language to the first sentence thereof, immediately prior to
the period ending such sentence:
"and (vi) the Investor Gross Return Calculation Account balance shall
be increased as of the date of each contribution by Investor under this
Agreement made on or after Conversion Date, by the amount of such
contribution."
4. Section 1.8K of the Partnership Agreement (the definition of
"Investor Net Contribution Account") is hereby amended by adding the
following language to the first sentence thereof, immediately prior to the
period ending such sentence:
"and (vii) the Investor Net Contribution Account balance shall be
increased as of the date of each contribution by Investor under this
Agreement made on or after Conversion Date, by the amount of such
contribution."
5. The following Section 1.10 is hereby added to the Partnership
Agreement:
"Section 1.10. General Partner and Limited Partner. From and
after the Conversion Date, Investor shall be the general partner (the
'General Partner') of the Partnership, and Venturer shall be the limited
partner (the 'Limited Partner') of the Partnership. Venturer is no longer
a general partner of the Partnership, and its sole and only interest in the
Partnership is as a limited partner."
6. The following Section 3.11 is hereby added to the Partnership
Agreement:
"Section 3.11. Contributions after Conversion Date.
Notwithstanding anything in this Agreement to the contrary, from and after
the Conversion Date, neither Venturer nor Investor shall have any
obligation to make contributions to the Partnership; without limitation on
the generality of the foregoing, from and after Conversion Date, neither
Venturer nor Investor shall have any obligation to make contributions under
Sections 3.4 or 3.5 hereof. However, Investor shall have the right (but
not the obligation) to make contributions to the Partnership after
Conversion Date, including, but not limited to, contributions in order to
reduce the amount of debt of the Partnership and contributions to pay
Negative Cash Flow. Venturer shall have no right to make contributions to
the Partnership after Conversion Date, except pursuant to Section 3.6
hereof and except pursuant to Article 'V' of Exhibit 'A' hereof."
7. The following Section 3.12 is hereby added to the Partnership
Agreement:
"Section 3.12. Loan by Investor. Without limitation of the
provisions of Section 3.8 hereof, Venturer and Investor acknowledge that on
October 31, 1995, Investor made a loan in the original principal amount of
$4,000,000 (the "Investor $4,000,000 Advance") to the Partnership, with
interest accruing at the Applicable Rate. Concurrently with the execution
hereof, the Partnership shall pay (or cause to be paid) to Investor all
accrued and unpaid interest with respect to the Investor $4,000,000
Advance. The remaining unpaid indebtedness with respect to the $4,000,000
Advance shall be deemed repaid upon delivery by the Partnership,
concurrently with the execution hereof, of a promissory note in the
original principal amount of $4,000,000, dated as of one calendar day after
the Conversion Date, duly executed on behalf of the Partnership, in the
form of Exhibit "C" attached hereto and made a part hereof (the 'Investor
$4,000,000 Note'). Without limitation of the provisions of Section 3.8
hereof, the loan (the 'Investor $4,000,000 Loan') evidenced by the Investor
$4,000,000 Note, together with interest thereon, shall be repaid before any
distribution of Net Cash Receipts, Net Sale Proceeds or Net Financing
Proceeds shall be made under Article IV hereof. The written notice to
Venturer dated October 18, 1995, with respect to the required additional
contribution in the amount of $2,000,000 to be made by Venturer to the
Partnership is hereby rescinded, and shall be of no force and effect."
8. The following Section 4.7 is hereby added to the Partnership
Agreement:
"Section 4.7. Status of Certain Accounts. The parties
acknowledge that, as of the Conversion Date, the Venturer Minimum Return is
zero, the balance of the Venturer Return Shortfall Account is zero, and the
balance of the Venturer Special Contribution Account is zero, and,
accordingly, there will be no distributions of any kind made after
Conversion Date under Sections 4.1A, 4.1C, 4.2A or 4.2B of this Agreement."
9. Section 5.2 of the Partnership Agreement (captioned, "Sale or
Financing of Business Property") is amended as follows:
A. Sections 5.2B and 5.2C of the Partnership Agreement are
hereby deleted.
B. The first sentence of Section 5.2A is hereby amended to
read in its entirety as follows:
"Without limitation on the provisions of Section 5.1 hereof, but
subject to the provisions contained in Section 5.2D hereof, Investor shall
have the sole and unrestricted right and discretion to determine all
matters in connection with any sale or financing (including any
refinancing) of the Business Property or any part thereof, including, but
not limited to, whether or not a sale or financing shall be made, whether,
when and to what extent any then existing loans or financing shall be
discharged, the sale price, the terms of such sale or financing and the
identity of the purchaser or lender. Notwithstanding the foregoing, in the
event that Investor causes the Business Property to become subject to any
refinancing or new financing after the date hereof, such refinancing or
financing shall be non-recourse as to the Partnership and its partners.
Any guaranty by Venturer of such financing (including any refinancing) of
the Business Property or any part thereof shall be at the sole and absolute
discretion of Venturer."
C. Section 5.2D of the Partnership Agreement is hereby
amended to read in its entirety as follows:
"D. (1) In no event shall Venturer have the right to
cause the Business Property to be sold (all rights as to sale and financing
being vested solely in Investor). Notwithstanding the provisions of
Section 5.2A above, Investor shall not cause the closing of any sale of the
Business Property to occur before January 1, 1997. Any sale shall be
subject to the right of first offer set forth in paragraph D(2) below,
unless there has been a 'False Start', in which event the provisions of
paragraph D(2) shall cease to apply and any sale thereafter shall not
require compliance with said paragraph D(2). As used herein, 'False Start'
means any of the following: (i) the failure by Venturer to deliver the
'Required Letter of Credit' (as defined below) to Investor within 45 days
after the Election Notice is given; (ii) the delivery by Venturer of a 'No
Financing Notice' (as defined below); or (iii) the execution by Venturer of
the 'Property Purchase Agreement' (as defined below) and the failure by
Venturer for any reason to consummate the purchase of the Business Property
on or before the 'Outside Sale Date' (as defined below), other than on
account of the failure by Investor to cause the Partnership to deliver to
'Title Company' under the Property Purchase Agreement the 'Deed' and
'Assignment and Assumption Agreement' prior to the Outside Sale Date. (The
terms 'Title Company', 'Deed' and 'Assignment and Assumption Agreement' are
defined in the Property Purchase Agreement.)
"(2) In the event that Investor desires to
consummate a sale of the Business Property, and there has not been a False
Start, Investor shall give written notice ('Proposed Sale Notice') to
Venturer setting forth the 'Basic Property Sale Terms' on which Investor
desires to cause the Partnership to sell the Business Property, accompanied
by a purchase agreement (the "Property Purchase Agreement") in the form of
Exhibit "D", hereunto annexed and made a part hereof, revised by Investor
to reflect the Basic Property Sale Terms and the Outside Sale Date. As
used herein, 'Basic Property Sale Terms' means the proposed purchase price,
and the maximum amount of, and the responsibility for, expenses (including
real estate commissions) to be paid by the Partnership in connection with
such transaction. Venturer shall have 30 days after the giving of the
Proposed Sale Notice to elect to acquire the Business Property on the terms
and conditions set forth in the Proposed Sale Notice (such election to be
made by giving written notice ['Election Notice'] of the same to Investor
within such 30-day period, which notice must be accompanied by the two
copies of the Property Purchase Agreement in the form sent to Venturer by
Investor, each duly executed by Venturer). Failure by Venturer to execute
and return the two copies of the Property Purchase Agreement together with
said Election Notice shall mean that no Election Notice was given.
'Outside Sale Date' means the date which is 120 days after the date on
which the Proposed Sale Notice is given, unless such 120th day is not a
business day, in which event the Outside Sale Date shall be the first
business day after such 120th day. Provided that Venturer shall not be in
material default in the performance of any term, covenant or provision of
the Property Purchase Agreement, Venturer shall have the right to extend
the Outside Sale Date to the next day which is 30 days after the originally
scheduled Outside Sale Date (or if such day is not a business day, then the
next succeeding business day thereafter) upon delivery to Investor on or
before the close of business on the originally scheduled Outside Sale Date
of (i) written notice of Venturer's election to so extend the Outside Sale
Date, and (ii) an additional letter of credit ('Additional Letter of
Credit') in an amount equal to 1% of the aggregate purchase price under the
Basic Property Sale Terms, and otherwise in compliance with all of the
requirements applicable to the 'Required Letter of Credit' (as defined
below).
"(a) If, in response to a Proposed Sale
Notice, Venturer shall timely exercise the option to acquire the Business
Property:
"(i) Investor shall, within 10
days after Investor's receipt of the Election Notice, execute on behalf of
the Partnership and deliver to Venturer one copy of the Property Purchase
Agreement.
"(ii) Venturer shall deliver to
Investor, within the 45 days after the date on which the Election Notice
was given, a letter of credit ('Required Letter of Credit') in an amount
equal to 2% of the aggregate purchase price under the Basic Property Sale
Terms, and complying with each and all of the following requirements: such
letter of credit must be a clean, irrevocable letter of credit, issued by
Bank of America or another major national bank reasonably satisfactory to
Investor, for the benefit of the Partnership, with an expiration date no
sooner than 180 days after the date on which the Election Notice is given,
providing, in substance, that the bank issuing such letter of credit shall
honor the same upon presentment of such letter of credit together with a
statement of Investor on behalf of the Partnership that the Partnership is
entitled to the sum so drawn; the form and substance of such letter of
credit shall be reasonably satisfactory to Investor. There shall be no
other conditions limiting the Partnership's right to draw upon the Required
Letter of Credit. Failure by Venturer to deliver to Investor the Required
Letter of Credit within 45 days after the date on which the Election Notice
was given shall constitute a False Start, and Venturer shall have no right
to purchase the Business Property (but Venturer shall not otherwise be
liable to the Partnership on account of Venturer's failure to have
delivered the Required Letter of Credit).
"(iii) As more particularly set
forth in the Property Purchase Agreement, Venturer shall have the right
within the first 60 days following the giving of the Proposed Sale Notice
to terminate its obligation to purchase the Business Property by giving
written notice ('No Financing Notice') to Investor stating that Venturer
has in good faith sought financing for its purchase of the Business
Property and has been unable to obtain a commitment for the same on terms
reasonable satisfactory to Venturer. As more particularly set forth in
Property Purchase Agreement, if a No Financing Notice is timely given by
Venturer, the Required Letter of Credit shall be returned to Venturer.
However, the giving of the No Financing Notice shall constitute a False
Start, and Venturer shall have no right to purchase the Business Property.
"(iv) As is more particularly
set forth in the Property Purchase Agreement, Venturer shall have the right
(in lieu of purchasing the Business Property) to purchase on or before the
Outside Sale Date the interest of Investor in the Partnership; the purchase
price of Investor's partnership interest and the terms of such purchase
will be such as will produce for Investor the same consideration at the
same time or times as Investor would have received if the Partnership had
sold the Business Property for the Basic Property Sale Terms and the
proceeds of such sale and the other assets of the Partnership had been
distributed to the Partners in accordance with the provisions of this
Agreement.
"(b) In the event that Investor has given a
Proposed Sale Notice and Venturer fails to give an Election Notice within
30 days after the giving of the Proposed Sale Notice, then, so long as a
False Start has not occurred, the following restriction will apply to
Investor's right to cause the Partnership to sell the Business Property:
Investor may cause the Business Property to be sold to a third party at any
time within a nine-month period that commences on the first day after the
giving of the Proposed Sale Notice for a purchase price which is
'reasonably comparable' to the Partnership as the Basic Property Sale Terms
set forth in the Proposed Sale Notice, but if a sale for such purchase
price and on such terms shall not be consummated within said nine-month
period, then Venturer's rights of notice and purchase hereunder shall
continue with respect to any new sale which Investor proposes to make.
However, if a False Start occurs, Venturer shall have no further rights of
notice or purchase. A sale shall be deemed 'reasonably comparable' to that
set forth in the Proposed Sale Notice if the net purchase price is not less
than 90% of the purchase price named in the Proposed Sale Notice. The
purchase contract between Investor and the third party need not be in the
form of the Property Purchase Agreement which accompanied the Proposed Sale
Notice, but may, without limitation, include additional representations and
warranties, closing conditions, inspection periods and covenants, and
provisions for portions of such purchase price to be paid on a deferred
basis (even though Venturer would have been required to pay all cash had it
given the Election Notice) all as determined by Investor on behalf of the
Partnership in Investor's sole discretion."
10. The following Section 5.7 is hereby added to the Partnership
Agreement:
"Section 5.7. Marketing of Investor's Interest.
"A. Exclusive Marketing Period. Venturer shall have the
exclusive right through and including June 21, 1996 (such date being
referred to hereinafter as the 'Outside Solicitation Date'), to solicit and
procure bona fide offers from third parties (individually, a 'Purchaser')
to purchase Investor's entire interest in the Partnership (but not less
than Investor's entire interest) (such interest being referred to
hereinafter as the 'Investor Interest'), in accordance with, and subject
to, the terms and conditions hereinafter set forth. Venturer shall have no
right after the Outside Solicitation Date to solicit or procure offers from
third parties to purchase the Investor Interest. Venturer may have a
financial interest in any entity that is a Purchaser, provided that
Venturer shall disclose such interest (and describe in sufficient detail
the relationship between Venturer and such entity) upon submission of the
name of such entity as a potential Purchaser to Investor."
"B. Terms of Offer. Notwithstanding anything contained
herein to the contrary, under no circumstances shall Investor be obligated
to accept, reject, negotiate or discuss the terms of sale of the Investor
Interest with any individual or entity at any time, except as expressly
provided in this Section 5.7. In the event that Venturer shall deliver (or
cause to be delivered) to Investor on or before the Outside Solicitation
Date a bona fide letter of intent with respect to the purchase of the
Investor Interest duly executed by a prospective Purchaser approved in
writing by Investor as provided herein, and setting forth each of the
'Investor Interest Basic Terms' (as defined below) (such letter of intent
being referred to hereinafter as an 'Acceptable Letter of Intent'), then
Investor shall in good faith undertake to enter into an 'Investor Interest
Purchase Agreement' (as defined below) with such Purchaser and to close the
transactions contemplated thereby in accordance with the terms thereof;
provided that, Investor shall not be liable or responsible to Venturer for
(i) any act or omission of any such Purchaser (including, without
limitation, any such Purchaser's failure to close the transactions
contemplated by any Acceptable Letter of Intent), or (ii) for the parties'
failure to agree upon the final terms, provisions and conditions of the
Investor Interest Purchase Agreement if the parties thereto have in good
faith attempted to reach agreement thereon in accordance with the
provisions of Section 5.7G below."
"C. Submission of Information. Venturer shall, prior to
delivery to any potential Purchaser, prepare and submit to Investor for
Investor's approval a marketing package (a 'Marketing Package') containing
all of the offering materials and other information to be submitted to such
potential Purchaser in connection with Venturer's marketing of the Investor
Interest, and the name of the proposed Purchaser, together with a
reasonably detailed statement identifying and describing in reasonable
detail its direct and indirect constituent investors, principals, members
and partners. In no event shall Venturer deliver or make available a
Marketing Package (or any other offering materials or other information in
connection with the Investor Interest) to any person or entity unless
Investor shall first have approved in writing (1) the form and content of
the Marketing Package (or other materials or information), and Investor
reserves the right to withhold its approval thereof in Investor's
reasonable discretion, and (2) the person or entity to whom Venturer
desires to submit such approved Marketing Package, and Investor reserves
the right to withhold its approval thereof in Investor's reasonable
discretion. Without limitation of the foregoing, in no event shall
Venturer deliver (or cause to be delivered) a Marketing Package to more
than six potential Purchasers. Investor shall approve or disapprove in
writing the contents of any Marketing Package and any persons to whom a
Marketing Package shall be submitted within five (5) business days after
Investor's receipt of such Marketing Package or the name and description of
the proposed Purchaser, as the case may be; provided that, in the event
that Venturer shall desire to substitute one proposed recipient of the
Marketing Package for a person or entity already approved by Investor,
Investor shall approve or disapprove in writing such substitute recipient
to whom a Marketing Package shall be submitted within two (2) business days
after Investor's receipt of the request therefor. Investor's failure to
disapprove in writing the contents of any Marketing Package or any persons
to whom a Marketing Package shall be submitted within five (5) business
days after Investor's receipt of such Marketing Package or the name and
description of the proposed Purchaser, as the case may be, shall be deemed
Investor's approval of the same. If Investor approves the contents of any
Marketing Package, Venturer may deliver such Marketing Package to any
Purchaser approved by Investor as provided herein. If Investor disapproves
the contents of any Marketing Package or any persons to whom a Marketing
Package shall be submitted, Investor shall provide a reasonably detailed
explanation of the reasons for such disapproval concurrently with its
delivery of the disapproval notice. Each Marketing Package shall contain a
clear and conspicuous disclaimer on the front thereof stating that: (1)
Venturer has no right or authority to act on behalf of or to bind Investor
in connection with the Investor Interest or any sale thereof, (2) that
Venturer's sole authority with respect to the Investor Interest is to
solicit offers for the purchase thereof, and (3) Venturer has no authority,
implied or expressed, to execute any document or agreement on Investor's
behalf, or to otherwise bind or commit Investor to any action or in any
other manner. Venturer may, in its good faith judgment, and subject to the
indemnification obligation set forth in subsection E below, omit one or
more approved materials or items from any Marketing Package in connection
with the delivery of such Marketing Package to any proposed Purchaser."
"D. Confidentiality Agreement. As a condition to Venturer's
right to deliver a Marketing Package to any person, Venturer shall require
each such person to execute, simultaneously with such delivery, a
confidentiality agreement (in form and substance reasonably acceptable to
Investor), and Venturer shall promptly following such delivery furnish to
Investor an original of the confidentiality agreement signed by each such
person. It is the intent of Investor and Venturer to limit disclosure of
the Marketing Package to seriously interested, financially responsible
parties capable of consummating a purchase of the Investor Interest, and to
Venturer's accountants, financial advisors, attorneys and similar
professionals, and Venturer shall act accordingly. Such confidentiality
agreement shall not preclude disclosure or dissemination of information
that is within the public domain. By way of example, and without
limitation of the foregoing, such confidentiality agreement shall not
preclude disclosure or dissemination of information that is of public
record or that can be gathered by the general public from observation of
the Business Property from locations open to the general public."
"E. Notice to Potential Purchasers. Prior to or concurrently
with delivery of any Marketing Package to any potential Purchaser, Venturer
shall inform each such Purchaser in writing that Venturer has no right or
authority to act on behalf of or to bind Investor in connection with the
Investor Interest or any sale thereof, and that Venturer's sole authority
with respect thereto is to solicit offers in connection therewith.
Venturer shall have no authority, implied or expressed, to execute any
document or agreement on Investor's behalf, or to otherwise bind or commit
Investor to any action or in any other manner. Venturer shall indemnify
and hold Investor (and all direct and indirect partners in Investor, and
their respective advisors, partners, trustees, officers, shareholders,
directors, agents, servants, attorneys, contractors, employees, parent and
subsidiary corporations and predecessors-in-interest, representatives,
successors and assigns) harmless from and against any and all claims,
costs, expenses, demands and liabilities incurred or suffered by Investor
(or its direct and indirect partners, and their respective advisors,
partners, trustees, officers, shareholders, directors, agents, servants,
attorneys, contractors, employees, parent and subsidiary corporations and
predecessors-in-interest, representatives, successors and assigns) arising
out of or in connection with Venturer's breach of its obligations under
this subparagraph F, or from any fraud, misrepresentation or nondisclosure
by Venturer in connection with the marketing of the Investor Interest. In
addition to the foregoing, Venturer shall notify each prospective Purchaser
(other than any Purchaser who is a party to an Acceptable Letter of Intent
with respect to which negotiations are continuing, or who is a party to an
'Investor Interest Purchase Agreement' (as defined below)) that has been
executed and is then in effect) that as of June 21, 1996 Investor will no
longer entertain offers with respect to, or further discuss, the sale of
the Investor Interest with any parties, and Venturer shall use its best
efforts to secure the return of each Marketing Package that has been
delivered to all such Purchasers. Venturer shall inform any and all
prospective Purchasers in writing of the existence of any prior letter of
intent or sale agreement with respect to the Investor Interest then in
effect; provided that, in no event shall Venturer shall disclose any of the
terms of any letter of intent or any sale agreement or any discussions or
negotiations relating thereto to any other prospective Purchaser or any
other third party)."
"F. Extension of Prohibition on Marketing. In the event that
Venturer shall deliver (or cause to be delivered) to Investor on or before
the Outside Solicitation Date an Acceptable Letter of Intent, then
notwithstanding expiration of the Outside Solicitation Date, Investor
shall, upon and subject to the posting of the '$300,000 Letter of Credit'
(as defined below) by Venturer prior to the expiration of the Outside
Solicitation Date continue to refrain from marketing, or soliciting offers
from third parties to purchase, the Investor Interest, until the earlier of
(1) the date which is 90 days after the Outside Solicitation Date, (2)
termination by any party to an Acceptable Letter of Intent of negotiations
with respect to the sale of the Investor Interest or termination by any
party of any Investor Interest Purchase Agreement, or (3) the closing of
any sale of the Investor Interest. The '$300,000 Letter of Credit' means a
letter of credit in an amount equal to $300,000, and otherwise in
compliance with all of the requirements applicable to the Required Letter
of Credit; provided that the $300,000 Letter of Credit shall have an
expiration date no sooner than October 21, 1996. In the event that
Venturer shall fail to deliver to Investor the $300,000 Letter of Credit on
or before the Outside Solicitation Date, then Investor shall be free to
market the Investor Interest after the Outside Solicitation Date (but
Venturer shall not otherwise be liable to the Partnership on account of
Venturer's failure to have delivered the $300,000 Letter of Credit)."
"G. Investor Interest Basic Terms. As used herein, 'Investor
Interest Basic Terms' means the following:
(1) A purchase price for the Investor Interest equal to or
greater than $13,000,000, plus all net Partnership receipts attributable to
that portion of the term of the Partnership prior to the closing date that
Investor has not theretofore received, but would have received had all such
Net Partnership Receipts been received by the Partnership and distributed
under the Partnership Agreement prior to the closing date, plus or minus
prorations (defined as the aggregate net debit or credit which would have
been paid or received by the Partnership in connection with a sale of the
Property as of the Closing Date to a hypothetical, third party purchaser as
a result of prorating the following items: (i) rentals (current and
delinquent) and other tenant charges and reimbursements, and payments by
other persons using or occupying the Property, except that Purchaser shall
not receive a credit on account of or by reason of delinquent rents and
other unpaid tenant charges; (ii) all real estate taxes and assessments on
the Property and with respect to the Partnership's personal property; (iii)
prepaid utility charges shall be credited to the Partnership; (iv) prepaid
charges in connection with any service contracts, licenses or permits shall
be credited to the Partnership; (v) any escrows for taxes or insurance, or
maintenance reserves funded by the Partnership, held by the holder of any
existing debt on the Property shall be credited to the Partnership; (vi)
accrued and unpaid interest on any debt of the Partnership shall be
credited to the Purchaser; (vii) all operating expenses (including all
charges under all service contracts and agreements) for the Property; and
(viii) prepaid premiums on insurance relating to the Property shall be
credited to the Partnership. The Purchaser shall receive a dollar-for-
dollar credit against the foregoing purchase price at closing of the sale
of the Investor Interest upon repayment to Investor of the principal
portion of the Investor $4,000,000 Loan.
(2) Purchaser shall pay, to the extent applicable: (1) 50% of all
city and county documentary transfer taxes payable in connection with the
sale of the Investor Interest; (2) 50% of all costs and expenses of any
escrow arrangements; (3) all costs and expenses, including premiums, of any
title work or coverage beyond that contemplated by a standard form C.L.T.A.
owner's title insurance policy ("Owner's Policy"), including the issuance
of A.L.T.A. coverage, any extended coverage and any endorsements required
by Purchaser, if any, to supplement or modify the Owner's Policy; (4) all
costs associated with any financing to be obtained by Purchaser; (5) all
payments, charges, financing, prepayment penalties or assumption fees
payable to any holder of indebtedness owed by the Partnership; and (6) all
payments or sums due or owing to the lessee under the Pepperdine lease with
respect to a portion of the Property relating to such lease or the profit
participation agreement involving such lessee, which may be or become due
or owing to the lessee under the Pepperdine lease or other agreement in
connection with the sale of the Investor Interest to Purchaser. Seller
shall pay (a) 50% all city and county documentary transfer taxes payable in
connection with the sale of the Investor Interest; (b) the cost of
obtaining an updated survey for the Property; and (c) the premium
applicable to the Owner's Policy (excluding the costs paid by Purchaser
pursuant to clause (3) above). All other closing costs not specifically
allocated herein shall be paid by Purchaser. Seller and Purchaser shall
each pay their respective (i) legal fees and expenses, (ii) share of
prorations, and (iii) cost of all opinions, certificates, instruments,
documents and papers required to be delivered, or caused to be delivered,
by it hereunder and the cost of all its performances under the Investor
Interest Purchase Agreement. Except as specifically set forth above, the
purchase price is intended to be a net price to Investor and accordingly
all other closing and related costs not described in the foregoing shall be
borne by the Purchaser;
(3) an outside closing date not later than the Outside
Solicitation Date (provided that, such outside closing date may be extended
by such Purchaser to a date not later than September 21, 1996 upon and
subject to Venturer's delivery to Investor on or before the Outside
Solicitation Date of the $300,000 Letter of Credit);
(4) The Partnership Agreement shall be amended in connection
with such sale effective as of the closing date to reflect that, from and
after the closing date, Investor is no longer a partner of the Partnership
and the Purchaser is admitted to the Partnership as a substituted partner
in the place and stead of Investor;
(5) Not later than 24 hours after opening of the escrow,
Purchaser shall deposit the sum of $300,000 in cash or other immediately
available funds into the escrow as an earnest money deposit (the "Earnest
Money Deposit"); provided that, if at any time after the Outside
Solicitation Date the Earnest Money Deposit is contingent or refundable to
Purchaser under the terms of the Investor Interest Purchase Agreement
(except as such contingency may exist in connection with a termination of
the Investor Interest Purchase Agreement by reason of a material default by
Investor thereunder), then Venturer shall promptly (but in no event later
than June 21, 1996) deliver to Investor (if not previously delivered) the
$300,000 Letter of Credit (which $300,000 Letter of Credit shall remain in
the possession of Investor until such time as the Earnest Money Deposit
becomes noncontingent and nonrefundable to Purchaser). Venturer's failure
to promptly deliver the $300,000 Letter of Credit as required under this
clause (5) shall entitle Investor, at its option, to terminate the Investor
Interest Purchase Agreement by written notice to Purchaser;
(6) In the event that the sale of the Investor Interest is
not consummated for any reason other than failure of satisfaction of a
condition to Purchaser's obligations (including, without limitation, the
material default of Investor), then recovery of either the (i) Earnest
Money Deposit or (ii) if the $300,000 Letter of Credit has theretofore been
delivered to and remains in the possession of Investor (in accordance with
clause (16)(b) below), the full proceeds of the $300,000 Letter of Credit,
shall be Investor's sole remedy under the Investor Interest Purchase
Agreement;
(7) Investor shall represent that the Investor Interest will
be free and clear of any liens or claims created by, through or under
Investor, except as created by or under the Partnership Agreement, and that
(except as may otherwise be disclosed in writing to Purchaser) the
Partnership is a California limited partnership, duly formed, validly
existing and in good standing under the laws of the State of California.
Additionally, each of Investor and Purchaser shall represent and warrant to
the other that, except as may be disclosed in writing to the other party
prior to or concurrently with the execution of the Investor Interest
Purchase Agreement: it has all requisite power and authority to execute
and deliver, and to perform all of its obligations under, the Investor
Interest Purchase Agreement and all documents and agreements to be executed
by such party in connection therewith: the execution, delivery and
performance of all obligations under the Investor Interest Purchase
Agreement and all documents and agreements to be executed in connection
therewith have been duly authorized by all necessary action on the part of
such party; and that neither the execution, delivery nor performance of all
obligations under the Investor Interest Purchase Agreement nor any
documents and agreements to be executed by such party in connection
therewith will conflict with or result in a material breach by such party
of or constitute an event of default under any contract, indenture,
instrument, or other agreement (i) by which such party is bound or to which
it is now a party, or (ii) which creates a lien on or security interest in
the assets of such party. Without limitation of the foregoing, Investor
shall deliver to the Purchaser at closing a certificate duly executed by
Investor respecting the "non-foreign" status of Investor. [**INVESTOR SHALL
GIVE THE FOLLOWING REPRESENTATIONS AND WARRANTIES TO THE PURCHASER (BUT
SOLELY TO THE JOINT VENTURE PARTNER OF VENTURER IF VENTURER IS A PRINCIPAL
IN THE PURCHASER); PROVIDED THAT, IF FINANCIAL MANAGEMENT GROUP OR AN
AFFILIATE OF ENCINO PLAZA OR ANY OF ITS PARTNERS REMAINS THE MANAGER AT THE
TIME OF EXECUTION OF THE INVESTOR INTEREST PURCHASE AGREEMENT, THEN
INVESTOR SHALL BE REQUIRED TO GIVE THE FOLLOWING REPRESENTATIONS ONLY IF
EACH OF MANAGER AND ENCINO PLAZA PROVIDES THE "SALE CERTIFICATE" TO
INVESTOR (AS PROVIDED IN THE APRIL 24, 1996 FIRST AMENDMENT TO THE
MANAGEMENT AGREEMENT) CONCURRENTLY WITH INVESTOR'S EXECUTION OF THE
INVESTOR INTEREST PURCHASE AGREEMENT: In addition, Investor shall make the
following representations and warranties to the Purchaser (which
representations and warranties shall be made to the present actual
knowledge of Andrea Backman [or her replacement as successor portfolio
manager for the Property at JMB Realty Corporation], without any duty of
inquiry or investigation, and without the imputation of the knowledge of
any other person or entity) that, except as may otherwise be disclosed to
Purchaser in writing by Investor, the manager for the Business Property or
any third party:
(a) Investor has received no written notice of any soil
conditions materially and adversely affecting the Business Property.
(b) Investor has received no written notice of any
material default by any tenant or by the landlord under any tenant lease
that remains uncured.
(c) Investor has received no written notice of any
pending or threatened claim, action, litigation, suit, condemnation or
other proceeding against the Business Property or against Investor with
respect to the Investor Interest, at law or in equity, or before or by any
foreign, federal, state, municipal or other governmental department, court,
commission, board, bureau, agency or instrumentality, and no written notice
of any court order, judgment or court decree of any foreign, federal, state
or local court or governmental authority or agency which specifically
applies to Investor and which affects the ownership or operation of the
Business Property.
(d) Investor has received no written notice from any
governmental authority having jurisdiction over the Business Property or
from any insurer providing insurance coverage with respect to the Business
Property to the effect that the Business Property is not in compliance with
applicable laws and ordinances.
(e) Investor has received no written notice that there
are "Hazardous Materials" in or on the Business Property (other than
Hazardous Materials used in the ordinary course of the business of a tenant
under a written tenant lease [such as gasoline in automobiles or the
storage or warehousing of household or normal business items, such as
aerosol cans or other common products]). As used herein, a "Hazardous
Material" means any hazardous, toxic or dangerous waste, substance or
material, pollutant or contaminant, as defined for purposes of the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.), as amended, or the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as amended,
or any other similar federal, state or local law, ordinance, rule or
regulation applicable to the Business Property.
(8) Any cause of action with respect to a breach of the
representations and warranties by Investor set forth above shall survive
for a period of one (1) year from the closing date, at which time such
representations and warranties (and any cause of action not then in
litigation resulting from a breach thereof) shall terminate. Investor
shall have no liability with respect to a breach of the representations and
warranties to the extent that Purchaser proceeds with the closing of the
transaction contemplated hereby with actual knowledge of such breach. **]
There shall be no other representations or warranties by Investor, and the
transaction shall otherwise be on an "as-is" basis. [** IF FINANCIAL
MANAGEMENT GROUP OR ANOTHER AFFILIATE OF VENTURER OR ANY OF ITS PARTNERS IS
NOT THE MANAGER AT THE TIME OF EXECUTION OF THE INVESTOR INTEREST PURCHASE
AGREEMENT, THEN INVESTOR SHALL USE GOOD FAITH EFFORTS (AT NO COST TO
INVESTOR) TO CAUSE THE THEN-EXISTING THIRD PARTY MANAGER TO GIVE
REPRESENTATIONS SUBSTANTIALLY SIMILAR TO THOSE CONTAINED IN THE MANAGER'S
SALE CERTIFICATE (AS SET FORTH IN THE APRIL 24, 1996 FIRST AMENDMENT TO THE
MANAGEMENT AGREEMENT) FOLLOWING EXECUTION OF THE INVESTOR INTEREST PURCHASE
AGREEMENT **]
(9) As a condition (among others) to Investor's obligations,
Investor shall have received at or prior to the closing a written release
of Investor's personal liability executed by (i) each lender under a loan
relating to secured or unsecured indebtedness of the Partnership, and (ii)
the Department of Water & Power;
(10) Profits and losses of the Partnership for the period from
January 1, 1996 through the closing date shall be allocated pursuant to
provisions of the Partnership Agreement. Each of Venturer and Purchaser
shall ensure that Investor's prior written approval is obtained with
respect to any and all tax elections, tax returns and tax audits with
respect to any period during which Investor was a partner in the
Partnership.
[** VENTURER RESERVES THE RIGHT TO RESTRUCTURE, IN GOOD FAITH, THE INVESTOR
INTEREST PURCHASE TRANSACTION TO AVOID PARTNERSHIP TAX TERMINATION, SUCH
RESTRUCTURING TO BE AT VENTURER'S SOLE COST AND EXPENSE; PROVIDED THAT SUCH
RESTRUCTURING SHALL NOT MATERIALLY INCREASE INVESTOR'S BURDENS, LIABILITIES
OR OBLIGATIONS, OR MATERIALLY REDUCE INVESTOR'S RIGHTS AND BENEFITS.
VENTURER SHALL PAY ALL OF INVESTOR'S FEES, COSTS AND EXPENSES IN CONNECTION
WITH ANY SUCH RESTRUCTURING, INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEY'S FEES AND EXPENSES. **]
(11) No present or future advisor, trustee, director, officer,
partner, employee, beneficiary, shareholder, participant or agent of or in
Investor or any entity now or hereafter having a direct or indirect
ownership interest in Investor shall have any personal liability, directly
or indirectly, under or in connection with the sale of the Investor
Interest or any agreement made or entered into in connection therewith.
(12) The sale of the Investor Interest shall be governed by
the laws of the State of California (without regard to conflicts of law).
(13) Neither Investor nor Purchaser may assign or transfer its
rights or obligations under the Investor Interest Purchase Agreement
without the prior written consent of the other party, which consent may be
withheld in such party's sole and absolute discretion.
(14) Venturer shall execute and deliver to Investor as a
condition to the effectiveness of the agreement a Consent and Joinder to
evidence its consent and agreement to the agreement for sale of the
Investor Interest.
(15) Investor shall represent and warrant to Purchaser, and
Purchaser shall represent and warrant to Investor, that (except as may be
expressly set forth in a writing delivered to the other party) no broker or
finder has been engaged by it, respectively, in connection with any of the
transactions contemplated by the Investor Interest Purchase Agreement or to
its knowledge is in any way connected with such transaction. In the event
of a claim for broker's or finder's fee or commissions in connection with
such transaction, then Investor shall indemnify and defend Purchaser from
the same if it shall be based upon any statement or agreement alleged to
have been made by Investor, and Purchaser shall indemnify and defend
Investor from the same if it shall be based upon any statement or agreement
alleged to have been made by Purchaser. The indemnification obligations
hereunder shall survive the closing of the transactions thereunder or the
earlier termination of the Investor Interest Purchase Agreement.
Notwithstanding the foregoing, nothing contained herein shall prohibit
collection of a broker's or finder's fee or commission from Purchaser in
connection with the sale of the Investor Interest by Joel Shine, Jack Shine
or Encino Plaza or any third party; provided that Purchaser shall indemnify
and defend Investor from the same, and that Joel Shine, Jack Shine, Encino
Plaza or the third party, as the case may be, execute a waiver of all
claims against Investor in connection with any such broker's or finder's
fee or commission.
(16) A provision stating that the form of sale agreement to be
used in connection with the sale of the Investor Interest shall contain
such other material terms and provisions (collectively, the "Additional
Terms") as Investor or Purchaser shall reasonably require (such sale
agreement being referred to herein as the 'Investor Interest Purchase
Agreement'). In the event that Purchaser reasonably and in good faith
determines that any of such Additional Terms proposed by Investor are
unreasonable or Investor reasonably and in good faith determines that any
of such Additional Terms proposed by Purchaser are unreasonable and the
parties are therefore unable to agree upon the Additional Terms of the
Investor Interest Purchase Agreement, Investor and such Purchaser will in
good faith attempt to resolve any such dispute over the reasonableness of
the disputed Additional Terms (a "Dispute") pursuant to the procedures
described below:
(a) If a Dispute over the reasonableness of the
disputed Additional Terms cannot be resolved by good faith negotiations,
the parties agree to promptly seek to resolve in good faith any such
Dispute through mediation, and the parties shall appoint a mutually
acceptable member of Judicial Arbitration and Mediation Services or its
successor ("JAMS") to mediate the Dispute.
(b) If a Dispute over the reasonableness of the
disputed Additional Terms has not been resolved pursuant to such mediation
within 15 days after the initiation of such mediation, then the mediation
shall become a binding arbitration, to be conducted in accordance with the
following. The JAMS arbitrator (who shall be the same individual as the
mediator appointed under subparagraph (a) above) shall investigate the
facts and shall hold hearings at which the parties hereto may present
evidence and arguments, be represented by counsel and conduct cross
examination. The sole issue for the arbitrator hereunder shall be whether
any remaining disputed Additional Terms proposed by Investor or Purchaser
are unreasonable under the circumstances. Purchaser shall have the burden
of proving that any disputed Additional Terms proposed by Investor are
unreasonable and that any disputed Additional Terms proposed by Purchaser
are reasonable. The decision of such arbitrator shall be final and binding
on the parties hereto, and judgment upon the decision may be entered in any
court having jurisdiction thereof. Under no circumstances shall any
decision or award by the arbitrator result in an award of monetary damages
or other non-monetary relief other than inclusion of the appropriate
Additional Terms in the Investor Interest Purchase Agreement as determined
by the arbitrator. Notwithstanding the foregoing, the prevailing party
shall be awarded reasonable attorneys' fees, expert and nonexpert witness
costs and expenses, and other costs and expenses incurred in connection
with the arbitration, and the fees and costs of the arbitrator shall be
borne by the nonprevailing party unless, in either case, the arbitrator for
good cause determines otherwise (which may take into consideration the
number and materiality of the Additional Terms resolved in favor of each
party). In resolving any dispute, the arbitrator shall apply the
provisions hereof, without varying therefrom in any respect. The parties
hereto shall have the right to take discovery pursuant to Section 1283.05
of the California Code of Civil Procedure, subject to the discretion of the
arbitrator. The procedures specified herein are the sole and exclusive
procedures for the resolution of Disputes between the Purchaser and
Investor with respect to the Additional Terms prior to executing the
Investor Interest Purchase Agreement. Notwithstanding the foregoing, in no
event shall any Dispute or mediation thereof cause the outside closing date
under the Investor Interest Purchase Agreement to be extended beyond
September 21, 1996; provided that, Investor shall use good faith efforts to
resolve promptly any issues subject to mediation or arbitration as provided
above.
Investor shall be entitled to retain the Earnest Money Deposit after the
removal of all due diligence contingencies to Purchaser's obligations to
close under the Investor Interest Purchase Agreement in the event that the
transactions contemplated by the Acceptable Letter of Intent or the
Investor Interest Purchase Agreement shall fail to close for any reason
other than the material default of Investor; provided that, if the
transactions contemplated by the Acceptable Letter of Intent or the
Investor Interest Purchase Agreement shall fail to close for any reason
other than the material default of Investor and an Earnest Money Deposit is
refundable or contingent (i.e., not "hard" money) at the time of
termination of the Investor Interest Purchase Agreement, then Investor may
draw (or cause to be drawn) on the $300,000 Letter of Credit. In the event
that the transactions contemplated by the Acceptable Letter of Intent or
the Investor Interest Purchase Agreement shall close, then Investor shall
apply the Earnest Money Deposit as a credit against the purchase price at
closing, and shall (if the same has theretofore been delivered to Investor)
promptly return the $300,000 Letter of Credit to Venturer."
11. Section 6.2 of the Partnership Agreement is amended by adding
the following thereto:
"Venturer may assign all (but not less than all) of its interest in
the Partnership to a "Venturer Entity" (as defined below), with the written
consent of Investor, which consent shall not be unreasonably withheld;
provided that, (1) no such assignment shall release Venturer from liability
to the Partnership or Investor for Venturer's obligations hereunder
(including, without limitation, Venturer's deficit funding obligations
described in Article V of Exhibit "A" to the Partnership Agreement) whether
arising before or after such assignment, and (2) no such assignment shall
be permitted hereunder if such assignment would result in a termination or
dissolution of the Partnership for state or federal tax purposes. Upon any
such permitted assignment by Venturer to a Venturer Entity, the assignee
shall be substituted as a Partner hereunder, and shall assume all
obligations of Venturer hereunder, whether arising before or after such
assignment. "Venturer Entity" means any of the following: (i) Jack, Joel
or David; and (ii) partnerships, limited liability companies or
corporations controlled by Jack, Joel or David and as to which one or more
of Jack, Joel and David own (and thereafter retain) more than 50% of all
legal and beneficial interests."
12. Section 8.1A of the Partnership Agreement is amended by
inserting the word "General" in front of the word "Partner".
13. Section 8.2 of the Partnership Agreement is deleted in its
entirety.
14. Section 8.4 of the Partnership Agreement is amended by deleting
the parenthetical phrase (i.e, the phrase, "or Venturer, if Investor is
bankrupt or dissolved") from the first sentence of said Section 8.4.
15. Section 9.1 of the Partnership Agreement is amended to change
the addresses for Investor and Venturer to the following:
"TO INVESTOR: JMB First Financial Associates
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, Illinois 60611
Attention: Gary Nickele
with copy to: JMB First Financial Associates
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, Illinois 60611
Attention: Glenn Emig
and with copy to:Pircher, Nichols & Meeks
1999 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (PGN)
"TO VENTURER: Encino Plaza
c/o Financial Management Group, Inc.
16830 Ventura Boulevard, Suite 340
Encino, California 91436
Attention: Joel Shine
with copy to: Mr. Jack Shine
c/o Financial Management Group, Inc.
16830 Ventura Boulevard, Suite 340
Encino, California 91436
and with copy to:Donald Krentzman, Esq.
2049 Century Park East, Suite 1200
Los Angeles, California 90067
and with copy to:Howard Schweitzer, Esq.
1265 Willis Street
Redding, California 96001"
16. The following Section 9.11 is hereby added to the Partnership
Agreement:
"Section 9.11. Status of Limited Partner.
"A. No Participation in Management. Limited Partner shall
not participate in the management or control of the Partnership's business,
nor shall it transact any business for the Partnership, nor shall it have
the power to act for or bind the Partnership, such power being vested
solely and exclusively in General Partner.
"B. Liability of Limited Partner. It is the intent of the
parties that the Limited Partner shall have no personal liability
whatsoever to the creditors of the Partnership for the debts of the
Partnership first incurred after the Conversion Date. However, the
foregoing shall not limit the personal liability of Limited Partner for its
obligations to the Partnership or to the General Partner under this
Agreement or to the Partnership, General Partner or the creditors of the
Partnership under any other agreement to which Limited Partner may be a
party. In addition, Limited Partner has heretofore been a general partner
of the Partnership, and nothing herein shall constitute a representation,
warranty, covenant or agreement by General Partner that conversion of this
partnership to a limited partnership will insulate Limited Partner or the
partners therein from personal liability. General Partner shall have no
duty or obligation to indemnify or hold Limited Partner harmless from or
against any loss or liability on account of Limited Partner being a partner
in the Partnership, or otherwise.
"C. Dissolution of Limited Partner. The bankruptcy or
dissolution of Limited Partner (and, if Limited Partner shall be a natural
person, the death or incapacity of Limited Partner) shall not cause a
dissolution of the Partnership, but the rights of Limited Partner to share
in the profits and losses of the Partnership and to receive distributions
of Partnership funds shall, on the happening of such an event, devolve upon
its personal representative or successor, subject to the terms and
conditions of this Agreement, and the Partnership shall continue as a
limited partnership. The successor of Limited Partner shall be liable for
all the obligations of Limited Partner. However, in no event shall such
personal representative or successor become a substituted Limited Partner,
except with the prior written consent of General Partner."
16. Exhibit "A" to the Partnership Agreement (i.e., the Tax Matters
exhibit") is amended as follows:
A. Section 4.2A of said Exhibit "A" is modified by changing
the date "November 1st" to "December 1st".
B. Section 4.2B of said Exhibit "A" is modified by changing
the date, "November 20th" to "December 20th".
C. Section 4.2C of said Exhibit "A" is modified to delete
all of the provisions of said 4.2C, and to provide instead, "Intentionally
Omitted."
D. Section 4.2D of said Exhibit "A" is modified to delete
all of the provisions of said 4.2D, and to provide instead the following:
"D. On or before February 28th, Investor will provide
Venturer with a first draft of the entire federal and California state
income tax returns for the Partnership. Venturer will have five (5)
business days after Investor's delivery thereof to Venturer in which to
review the same and to raise objections. Venturer's failure to provide
specific objections to the federal and California state income tax returns
for the Partnership within such five (5) business days period shall
constitute Venturer's approval of the same."
E. Section 4.2F of said Exhibit "A" is hereby deleted in its
entirety.
17. At the election of Venturer or Investor, Investor shall cause
the Partnership to make an election under Section 754 of the Internal
Revenue Code of 1986, as amended ("Section 754"), provided that the fair
market value of the Property at the time of such election under Section 754
exceeds the Partnership's tax basis in the Property.
18. As further consideration for Investor's execution of this
Agreement, each of Venturer and the general partners of Venturer, for
itself and its successors and assigns (collectively, the 'Venturer
Parties'), as of the date hereof, hereby absolutely and irrevocably waives,
releases, and forever discharges Investor, all direct and indirect partners
in Investor, and their respective advisors, partners, trustees, officers,
shareholders, directors, agents, servants, attorneys, contractors,
employees, parent and subsidiary corporations and predecessors-in-interest
(collectively the 'Released Parties') from any and all claims, rights,
demands, actions, suits, causes of actions, damages, counterclaims,
defenses, losses, costs, obligations, liabilities and expenses of every
kind or nature (collectively, "Claims"), known or unknown, suspected or
unsuspected, fixed or contingent, foreseen or unforeseen, arising out of or
relating directly or indirectly to any circumstances or state of facts
pertaining or relating to the Partnership, the Business Property, the
Partnership Agreement or any loan made to or indebtedness incurred by the
Partnership, including, without limitation, claims related to the actions
of Investor or its predecessors in connection with the Partnership, the
Business Property, the Partnership Agreement or any loan made to or
indebtedness incurred by the Partnership, including, without limitation,
claims concerning any nonperformance of any agreement or obligation related
thereto, or any statements, representations, acts or omissions,
intentional, willful, negligent or innocent, by any of the Released Parties
in any way connected with, relating to or affecting, directly or
indirectly, the Partnership, the Business Property, the Partnership
Agreement or any loan made to or indebtedness incurred by the Partnership;
provided, however, that the foregoing shall not constitute a release of any
of Investor's unaccrued obligations under the Partnership Agreement, as
amended hereby.
Each of the Venturer Parties is aware of the provisions of
Section 1542 of the California Civil Code, which Section reads as follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
Each of the Venturer Parties hereby waives the provisions of said Section
1542 of the California Civil Code and the provisions of any similar laws.
Each of the Venturer Parties realizes and acknowledges that factual matters
now unknown to it may have given or hereafter give rise to Claims which are
presently unknown, unanticipated and unsuspected, and the release provided
hereunder has been negotiated and agreed upon in light of that realization.
Each of the Venturer Parties represents and warrants that it has not
heretofore assigned, or transferred, or purported to assign or to transfer,
to any person or entity, any Claim released hereunder or any portion
thereof or interest therein, and each of the Venturer Parties agrees to
indemnify, defend and hold the Released Parties harmless from and against
any and all such Claims based on or arising out of any such assignment or
transfer or purported assignment or transfer.
As amended hereby, the Partnership Agreement is in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
"Investor"
ENCINO PLAZA,
a California general partnership
By ________________________________
Jack Shine, Partner
By ________________________________
Joel Shine, Partner
By ________________________________
David Bock, Partner
"Venturer"
EXHIBIT "C"
FORM OF INVESTOR $4,000,000 PROMISSORY NOTE
EXHIBIT "D"
FORM OF PROPERTY PURCHASE AGREEMENT
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 23,519,916
<SECURITIES> 0
<RECEIVABLES> 4,120,739
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,640,655
<PP&E> 189,625,109
<DEPRECIATION> 53,771,307
<TOTAL-ASSETS> 179,590,760
<CURRENT-LIABILITIES> 3,240,560
<BONDS> 88,464,694
<COMMON> 0
0
0
<OTHER-SE> 65,505,674
<TOTAL-LIABILITY-AND-EQUITY>179,590,760
<SALES> 7,435,027
<TOTAL-REVENUES> 7,726,440
<CGS> 0
<TOTAL-COSTS> 4,815,269
<OTHER-EXPENSES> 194,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,087,432
<INCOME-PRETAX> 629,541
<INCOME-TAX> 0
<INCOME-CONTINUING> 582,971
<DISCONTINUED> 1,412,610
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,995,581
<EPS-PRIMARY> 10.10
<EPS-DILUTED> 10.10
</TABLE>
