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
June 30, 1997 Commission file #0-16599
JMB MORTGAGE PARTNERS, LTD. - IV
(Exact name of registrant as specified in its charter)
Illinois 36-3426138
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive offices) (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
<PAGE>
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 . . . . . . . . 11
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 14
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 5,660,421 28,105,829
Interest and other receivables. . . . . . . . . . . . . . . . . . . . . 22,056 341,995
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 5,682,477 28,447,824
------------ ------------
Investment in unconsolidated venture, at equity . . . . . . . . . . . . . 3,398,382 3,813,205
------------ ------------
$ 9,080,859 32,261,029
============ ============
<PAGE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 199,879 226,215
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 97,373
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 199,879 323,588
------------ ------------
Commitments and contingencies
Partners' capital accounts:
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . . 1,928,454 1,904,412
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (1,874,260) (1,850,218)
------------ ------------
55,194 55,194
------------ ------------
Limited partners (43,276.25 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . . 37,619,348 37,619,348
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . . 21,707,579 21,394,865
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (50,501,141) (27,131,966)
------------ ------------
8,825,786 31,882,247
------------ ------------
Total partners' capital accounts. . . . . . . . . . . . . . . . 8,880,980 31,937,441
------------ ------------
$ 9,080,859 32,261,029
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Interest income . . . . . . . . . . . . . . . . . $ 68,549 659,928 311,025 1,385,512
----------- ---------- ---------- ----------
Expenses:
Mortgage investment servicing fees. . . . . . . . -- 14,023 -- 27,741
Professional services . . . . . . . . . . . . . . 19,159 16,074 40,677 39,346
Amortization of deferred expenses . . . . . . . . -- 9,111 -- 18,057
General and administrative. . . . . . . . . . . . 74,305 60,721 121,949 136,059
----------- ---------- ---------- ----------
93,464 99,929 162,626 221,203
----------- ---------- ---------- ----------
Operating earnings (loss) . . . . . . . . (24,915) 559,999 148,399 1,164,309
Partnership's share of operations
(loss) of unconsolidated ventures . . . . . . . . 94,738 188,609 188,357 388,178
----------- ---------- ---------- ----------
Net operating earnings (loss) . . . . . . 69,823 748,608 336,756 1,552,487
Gain on sale of property by
unconsolidated venture. . . . . . . . . . . . . . -- 980,379 -- 980,379
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . . . $ 69,823 1,728,987 336,756 2,532,866
=========== ========== ========== ==========
<PAGE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
Net earnings (loss) per
limited partnership
interest:
Net operating earnings (loss) . . . . $ 1.12 14.38 7.23 32.77
Gain on sale of property
by unconsolidated venture . . . . . -- 22.42 -- 22.42
----------- ---------- ---------- ----------
$ 1.12 36.80 7.23 55.19
=========== ========== ========== ==========
Cash distributions per
limited partnership
interest . . . . . . . . . . . . . . . . $ 5.00 27.00 540.00 27.00
=========== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 336,756 2,532,866
Items not requiring cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . . -- 18,057
Partnership's share of operations of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (188,357) (388,178)
Partnership's share of gain on sale of property by
unconsolidated venture. . . . . . . . . . . . . . . . . . . . . . . . . . -- (980,379)
Changes in:
Interest and other receivables. . . . . . . . . . . . . . . . . . . . . . . . 319,939 (6,469)
Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . -- (178,995)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,336) 22,395
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 3,298
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (97,373) 231
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . . 344,629 1,022,826
------------ -----------
Cash flows from investing activities:
Distributions from unconsolidated ventures. . . . . . . . . . . . . . . . . . 603,180 5,660,400
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . -- (2,888)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . . 603,180 5,657,512
------------ -----------
Cash flows from financing activities:
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . . . (23,369,175) (1,192,997)
Distributions to general partners . . . . . . . . . . . . . . . . . . . . . . (24,042) (134,637)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . . (23,393,217) (1,327,634)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . . (22,445,408) 5,352,704
Cash and cash equivalents, beginning of year. . . . . . . . . . . . . 28,105,829 5,205,597
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . . $ 5,660,421 10,558,301
============ ===========
<PAGE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996
------------ -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . . . $ -- --
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1996
which are included in the Partnership's 1996 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 may differ from such
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell such property and active marketing activity has commenced or is
expected to commence in the near term. In accordance with SFAS 121, any
properties identified as "held for sale or disposition" are no longer
depreciated. As of December 31, 1996, the Partnership has committed to a
plan to sell the North Rivers Market Shopping Center investment property.
Accordingly, this property has been classified as held for sale or
disposition. The accompanying financial statements include $188,357 and
$388,178, respectively, of the Partnership's share of total property
operations of $562,092 and $1,081,414 for the six months ended June 30,
1997 and 1996 for unconsolidated properties held for sale or sold during
the past two years.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. As the Partnership's
capital structure only has general and limited partnership interests, the
Partnership does not expect any significant impact on its financial
statements upon adoption of these standards when required at the end of
1997.
Certain amounts in the 1996 financial statements have been
reclassified to conform with the 1997 presentation.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees and other expenses
required to be paid by the Partnership to the General Partners and their
affiliates as of June 30, 1997 and for the six months ended June 30, 1997
and 1996 were as follows:
<PAGE>
Unpaid at
June 30,
1997 1996 1997
------- ------ ---------
Mortgage investment
servicing fees. . . . . . . . $ -- 27,740 --
Reimbursement (at cost) for
salary and salary-related
expenses related to the
on-site and other costs
for the Partnership and
its investment properties . . 15,666 11,946 20,159
------- ------ ------
$15,666 39,686 20,159
======= ====== ======
The General Partners have deferred payment of approximately $442,000
of their distributions of prior net cash flow from the Partnership and
approximately $877,000 of their subordinated portion of sales and repayment
proceeds at June 30, 1997, in accordance with the subordination require-
ments of the Partnership Agreement. Such subordination requirements are
not expected to be attained over the remaining expected operating period of
the Partnership. All amounts deferred or currently payable do not bear
interest.
NORTH RIVERS MARKET SHOPPING CENTER
Occupancy remained at 87% at June 30, 1997. The property manager is
attempting to lease the vacant space in the center and in such regard has
recently reached tentative agreements with three additional tenants which,
if consummated, would increase occupancy to 92%. As the venture has
committed to a plan to sell the property, the property was classified as
held for sale or disposition as of December 31, 1996 and, therefore, is not
subject to continued depreciation. The venture's plan is to market this
property for sale in the third quarter of 1997. However, there can be no
assurance that a sale transaction on acceptable terms can be arranged
during 1997.
UNCONSOLIDATED VENTURE - SUMMARY INFORMATION
Pursuant to the requirements of the Securities and Exchange
Commission, the following is a summary of historical income statement
information for the North Rivers Market Shopping Center Venture for the six
months ended June 30, 1997 and 1996.
1997 1996
-------- -------
Total revenues . . . . . . . . . . . $814,048 869,127
======== =======
Operating income (loss). . . . . . . $562,092 498,754
======== =======
Net income to Partnership. . . . . . $188,357 167,133
======== =======
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1997
and for the three and six months ended June 30, 1997 and 1996.
<PAGE>
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 the Partnership's
investments.
During 1996, some of the Holders of Interests in the Partnership
received from unaffiliated third parties unsolicited tender offers to
purchase up to 4.9% of the Interests in the Partnership at $425 per
Interest. The Partnership recommended against acceptance of these offers
on the basis that, among other things, the offer prices were inadequate.
Such offers have expired. The Partnership had also received a request from
another unaffiliated third party for the list of Holders of Interests. It
is possible that other offers for Interests may be made by unaffiliated
third parties in the future, although there is no assurance that any other
third party will commence an offer for Interests, the terms of any such
offer or whether any such offer, if made, will be consummated, amended or
withdrawn. The board of directors of JMB Realty Corporation ("JMB"), the
corporate general partner of the Partnership, has established a special
committee (the "Special Committee") consisting of certain directors of JMB
to deal with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers. The
Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests.
The Partnership had been made aware that in mid-July 1997 another
unaffiliated third party made an unsolicited tender offer to some of the
Holders of Interests. This offer sought to purchase up to 4.9% of the
Interests in the Partnership at $105 per Interest. This offer is currently
scheduled to expire in mid-August 1997. The Special Committee is in the
process of formulating their response regarding this latest offer. As of
the date of this report, the Partnership is aware that 2.04% of the
outstanding Interests have been purchased in 1996 and 1997 by such
unaffiliated third parties either pursuant to such tender offers or through
negotiated purchases.
The affairs of the Partnership are expected to be wound up in the
1997-1998 time frame, barring unforeseen economic developments. However,
the Partnership's goal of capital appreciation will not be achieved.
Although the Partnership expects to distribute sale proceeds from the
disposition of the Partnership's remaining investment (the North Rivers
Market), aggregate sale and repayment distributions received by Holders of
Interests over the entire term of the Partnership are expected to be less
than their original investment.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents at June 30, 1997 as compared
to December 31, 1996 is due primarily to distributions of approximately
$23,153,000 ($535 per Interest) made to the Limited Partners in February
1997 representing substantially all of the proceeds from the repayment of
the Franklin Farm Village Center and Riverpoint Shopping Center mortgage
loans in 1996. The Partnership also distributed approximately $240,000 of
operating cash flow in May 1997 ($24,042 of which was the General Partners'
share).
The decrease in interest and other receivables at June 30, 1997 as
compared to December 31, 1996 is due primarily to the 1997 receipt from the
affiliated venture partner (Mortgage Partners-III) of the final
distribution of cash from Calibre Point Apartments, which was sold in May
1996. An additional decrease in interest and other receivables is due to a
decrease in accrued interest as a result of a decrease in cash and cash
equivalents at June 30, 1997.
<PAGE>
The decrease in accounts payable at June 30, 1997 as compared to
December 31, 1996 is due primarily to the 1997 payment of accrued mortgage
investment servicing fees and recurring professional fees.
The decrease in other liabilities at June 30, 1997 as compared to
December 31, 1996 is due primarily to deposits held for real estate taxes
and insurance for the Riverpoint Shopping Center at December 31, 1996 which
were remitted to the borrower in 1997 in conjunction with the December 1996
loan payoff.
The decreases in interest income, mortgage investment servicing fees,
and amortization of deferred expenses for the three and six months ended
June 30, 1997 as compared to the same periods in 1996 are due primarily to
the repayment of the Riverpoint Center and Franklin Farm Village Center
mortgage loans in 1996.
The decrease in Partnership's share of operations of unconsolidated
ventures for the three and six months ended June 30, 1997 as compared to
the year-ago periods is due primarily to the sale of the Calibre Pointe
Apartments in May 1996.
Gain on sale of property by unconsolidated venture of approximately
$980,000 for the three and six months ended June 30, 1996 represents the
Partnership's share of gain from the sale of the Calibre Pointe Apartments
in May 1996.
<PAGE>
<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
property owned during 1997.
<CAPTION>
1996 1997
------------------------------- -------------------------------
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. North Rivers Market
Shopping Center
North Charleston,
South Carolina. . . . . . 85% 83% 83% 81% 87% 87%
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as
part of this report:
3-A. The Prospectus of the
Partnership dated September 18, 1986, as
supplemented January 22, 1987, April 23, 1987,
June 12, 1987, August 6, 1987, September 14,
1987, and September 28, 1987 as filed with the
commission pursuant to Rules 424 (b) and 424
(c), is hereby incorporated herein by reference
to the Partnership's Report on Form S-11 (File
No. 33-4036) dated September 18, 1986.
3-B. Amended and Restated
Agreement of Limited Partnership set forth as
Exhibit A to the Prospectus, which is hereby
incorporated herein by reference to the
Partnership's Registration Statement on Form S-
11 (File No. 33-4036) dated September 18, 1986.
3-C. Acknowledgement of rights
and duties of the General Partners of the
Partnership between AGPP Associates, L.P. (a
successor Associated General Partner of the
Partnership) and JMB Realty Corporation as of
December 31, 1995 is hereby incorporated herein
by reference to the Partnership's Report for
June 30, 1996 on Form 10-Q (File No. 0-16599)
dated August 9, 1996.
10-A. Loan documents related to
the Partnership's participation in the funding
of a first mortgage loan secured by the North
Rivers Market Shopping Center located in North
Charleston, South Carolina, are hereby
incorporated herein by reference to the
Partnership's Registration Statement on Form S-
11 (File No. 33-4036) dated September 18, 1986,
as amended.
10-B. Agreement of Partnership of
North Rivers Market Associates between JMB
Mortgage Partners, Ltd. - III and the
Partnership, dated April 26, 1993 is filed
herewith.
27. Financial Data Schedule
(b) No reports on Form 8-K have been
filed during the last quarter of the period
covered by this report.
<PAGE>
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 MORTGAGE PARTNERS, LTD. -
IV
BY: JMB Realty Corporation
(Corporate General
Partner)
GAILEN J. HULL
By: Gailen J. Hull,
Senior Vice President
Date: August 8, 1997
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: August 8, 1997
EXHIBIT 10-B
- ------------
(MP-IV)
AGREEMENT OF PARTNERSHIP OF
NORTH RIVERS MARKET ASSOCIATES
This Agreement is made and entered into as of April 26, 1993, by and
between JMB MORTGAGE PARTNERS, LTD.-III, an Illinois limited partnership
and JMB MORTGAGE PARTNERS, LTD.-IV, an Illinois limited partnership (herein
the "General Partners", sometimes herein referred to as the "Partners").
WITNESSETH, THAT WHEREAS:
------------------------
THAT WHEREAS, the parties hereto desire to form a general partnership
pursuant to the provisions of the Uniform Partnership Act as in effect in
the State of Illinois, as amended (herein the "Act"), except as otherwise
provided herein, upon the terms and conditions as set forth herein.
NOW, THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, with the intention of being
legally bound, do hereby agree as follows:
1. NAME OF THE PARTNERSHIP. The name of the Partnership hereby formed
is "North Rivers Market Associates."
2. CHARACTER OF THE BUSINESS. The character of the business of the
Partnership shall be to own and operate the North Rivers Market Shopping
Center in North Charleston, South Carolina and to engage in any and all
activities related or incidental thereto. Whenever the term "Property"
appears in this Agreement, such term shall mean any property, real or
personal, tangible or intangible, at any time owned by the Partnership or
their respective successors.
3. LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The location of the
principal place of business of the Partnership is 900 North Michigan
Avenue, Suite 2000, Chicago, Illinois 60611, or such other location as
shall be designated by the Partners.
4. NAMES AND PLACES OF RESIDENCE OF PARTNERSHIP. The address of each
of the Partners is 900 North Michigan Avenue, Suite 2000, Chicago, Illinois
60611, or such other location as may be agreed upon by the Partners. As
used herein, "Partnership" means the general partnership formed pursuant to
the Partnership Agreement as such general partnership may be constituted
from time to time, and "Partner" shall mean JMB Mortgage Partners, Ltd.-III
and JMB Mortgage Partners, Ltd.-IV and their respective successors and
assigns as a partner of the Partnership.
5. TERM OF THE PARTNERSHIP. The term for which the Partnership shall
exist shall continue until December 31, 2043, unless sooner terminated as
hereinafter provided.
<PAGE>
6. CONTRIBUTIONS OF THE MEMBERS OF THE PARTNERSHIP.
A. CONTRIBUTION. The Partners have contributed or have agreed to
contribute the sums set forth in EXHIBIT "A" attached hereto and made a
part hereof. The Partners may make such additional contributions as may be
agreed to from time to time by the Partners, provided that any such
additional capital shall be contributed to the Partnership by the Partners
pro-rata in the proportion of their "Partnership Shares" (as hereinafter
defined). In the event that any Partner makes an additional contribution
to the Partnership or receives a return of all or part of its contributions
to the Partnership, such fact shall promptly be recorded in the books and
records of the Partnership, and Exhibit "A" shall be promptly and
appropriately amended to reflect the same.
B. WITHDRAWALS OF CAPITAL. Except as otherwise herein provided,
no Partner shall be entitled to withdraw capital or to receive
distributions of or against capital without the prior written consent of,
and upon the terms and conditions specified by, the other Partners.
C. CAPITAL ACCOUNTS. The Partnership shall maintain for each of
the Partners a capital account, which shall be the aggregate amount of the
contributions to the Partnership made by such Partner, reduced by the
aggregate amount of any losses allocated, and any distributions of cash or
the fair market value or other assets of the Partnership made, to such
Partner and increased by the aggregate amount of any net profits allocated
to such Partner.
D. LOANS. All advances or payments to the Partnership by any
Partner, other than the contributions required or made under Section 6.A
hereof, shall be deemed to be loans by such Partner to the Partnership, and
the Partner making such loan shall be entitled to interest thereon at such
rates per annum as the Partners may agree, and such loan together with
interest as aforesaid, shall be repaid before any distribution shall be
made hereunder to the other Partner. No such loan to the Partnership shall
be made without the prior written consent of the Partners and shall be
required to be made by all Partners in proportion to their respective
Partnership Shares (as hereinafter defined). With respect to any
borrowings by the Partnership for which there is recourse to the Partners
or any of their respective assets, the Partners shall be liable for such
borrowing in proportion to their respective Partnership Shares (as
hereinafter defined) as determined from time to time.
7. PARTNERSHIP SHARES.
A. As used herein, "profits" shall include, without limitation,
each item of Partnership income and gain, and "losses" shall include,
without limitation, each item of loss, and deductions as determined for
Federal income tax purposes, and "Partnership Share" shall be as set forth
on EXHIBIT A attached hereto. All profits or losses from the operations of
the Partnership (including the sale or refinancing of the Property) for a
fiscal year or part thereof shall be allocated to the Partners based upon
their respective Partnership Shares.
B. All profits or losses from the sale or other disposition of
all or any substantial portion of the Property shall be allocated to the
Partners in accordance with the respective
2
<PAGE>
Partnership Shares on the date on which the Partnership recognized such
profits or losses for Federal income tax purposes. Notwithstanding
anything to the contrary in this Agreement, upon the ultimate liquidation
of the Partnership, if any Partner has a deficit balance in his capital
account (after giving effect to the allocation set forth in this Agreement,
including without limitation, the allocations set forth in this Section
7.B) then any such Partner will make a capital contribution to the
Partnership in an amount equal to such deficit balance, any such capital
contribution shall be distributed as proceeds from the liquidation of the
Partnership to the other Partner with a positive balance in his capital
account to the extent of such positive balance. Notwithstanding any
adjustment of the allocation of profits or losses provided in this
Agreement by any judicial body or governmental agency (or any amendment
hereto as a result of a change or proposed change in any law or regulation
or any interpretation thereof), the allocation of profits or losses
provided in this Agreement shall control for purposes of the determination
of the Partners' capital accounts for all purposes of this Agreement.
C. Each distribution to the Partners of cash or other assets of the
Partnership made prior to the dissolution of the Partnership, including,
but not limited to, each distribution of net cash flow from the operations
of the Partnership and net proceeds received by the Partnership from the
sale or refinancing of all or any substantial portion of the Property,
shall be made to the Partners in accordance with their respective
Partnership Shares owned on the date of such distribution. Each
distribution of cash or other assets of the Partnership made after
dissolution of the Partnership shall be made in accordance with Section
11.C hereof. Distributions of the Partnership will be made in such amount
and at such times as shall be determined by all of the Partners, or in the
event of the dissolution and liquidation of the Partnership, by the
Winding-Up-Party (as hereinafter defined).
8. MANAGEMENT OF THE PARTNERS. The ultimate responsibility for the
affairs of the Partnership shall be vested equally in both of the Partners.
9. BOOKS AND RECORDS OF THE PARTNERSHIP; FISCAL YEAR. The Partners
shall keep and maintain the books and records of the Partnership at the
principal place of business of the Partnership. The fiscal year of the
Partnership shall end on the 31st day of December in each year. The books
of the Partnership shall be kept on the cash or accrual basis, and the
Partnership shall be on the cash or accrual basis for tax purposes, as
determined by the Partners. The books and records of the Partnership shall
be audited at such times and by such accountants as shall be determined
from time to time by the Partners. The funds of the Partnership shall be
deposited in such bank accounts or invested in such interest-bearing or
non-interest bearing investments, as shall be determined by the Partners.
10. TRANSFER OF PARTNERSHIP INTERESTS.
A. No Partner may sell, assign, transfer, encumber or hypothecate
the whole or any part of its Partnership interest (including, but not
limited to, its interest in the capital or profits of the Partnership)
without the written consent of the other Partners.
3
<PAGE>
B. Any party or person admitted to the Partnership as a
substituted Partner shall be subject to and bound by all of the provisions
of this Agreement as if originally a party to this Agreement. Any party or
person admitted to the Partnership as a substituted Partner shall have all
of the rights as a partner in the Partnership conferred upon a general
partner pursuant to the Act. The admittance of a party or person to the
Partnership as a substituted Partner and the withdrawal of a party or
person as a partner in the Partnership shall continue to exist with the
then remaining parties or persons as Partners as if all the then existing
Partners were originally all of the Partners in the Partnership.
C. A Partner shall have no liability hereunder (including, but not
limited to, any liability as a surety but excluding liability for the
repayment of any outstanding principal and interest on loans made by the
Partnership to such Partner) for any obligations accruing under or in
connection with the Partnership and relating to events occurring after such
Partner shall have sold, assigned or transferred its entire Partnership
interest.
11. DISSOLUTION OF THE PARTNERSHIP.
A. No act, thing, occurrence, event or circumstance shall cause or
result in the dissolution of the Partnership, except the matters specified
in subsection B below.
B. The happening of any one of the following events shall work a
dissolution of the Partnership:
(1) The bankruptcy, legal incapacity, dissolution, termination
or expulsion of any then existing Partner; provided, however, that in such
event the remaining Partner shall have the right to elect to continue the
Partnership's business by depositing at the office of the Partnership a
writing evidencing such election. No other act shall be required to effect
such continuation;
(2) The reduction to cash or cash equivalents of all of the
assets of the Partnership;
(3) The unanimous agreement in writing by all of the Partners
of the Partnership;
(4) The termination of the term of the Partnership pursuant
to Section 5 hereof. Without limitation on the other provisions hereof,
the admission of a new Partner shall not work a dissolution of the
Partnership. Except as otherwise provided in this Agreement, each Partner
agrees that, without the consent of the other Partner, a Partner may not
withdraw from or cause a voluntary dissolution of the Partnership.
C. Upon the occurrence of any of the events specified in subsection
B above causing a dissolution of the Partnership and except as otherwise
provided in subsection B above, the remaining Partner or Partners shall
commence to wind up the affairs of the Partnership and to liquidate its
investments (and in this connection shall have full right and unlimited
discretion to
4
<PAGE>
determine in good faith the time, manner and terms of any sale of sales of
Partnership Property). The Partner or Partners obligated to wind up the
affairs of the Partnership as aforesaid are herein called the "Winding-Up
Party." The Partners and their legal representatives, successors and
assignees shall continue to share profits and losses during the period of
liquidation in the same manner and proportion as immediately before the
dissolution. Following the payment of all debts and liabilities of the
Partnership and all expenses of liquidation and subject to the right of the
Winding-Up Party to set up such cash reserves as, and for so long as, it
may deem reasonably necessary, the proceeds of the liquidation and any
other funds and assets of the Partnership shall be distributed to the
Partners (after deducting from the distributive share of a Partner any sum
such Partner owes the Partnership) in accordance with Capital Account
balances and Partnership Shares as provided in Section 7.C hereof. No
Partner shall have any right to demand or receive property other than cash
upon dissolution or termination of the Partnership. Upon the completion of
the liquidation of the Partnership and of the distribution of all
Partnership assets, the Partnership shall terminate and the Winding-Up
Party shall have the authority to execute any and all documents required in
its judgment to effectuate the dissolution and termination of the
Partnership. Each Partner shall look solely to the assets of the
Partnership for all distributions with respect to the Partnership and its
capital contribution thereto and share of profits or losses therefrom, and
shall have no recourse therefor against any Partner; provided that nothing
herein contained shall relieve any Partner of such Partner's obligation to
pay any liability or indebtedness owing the Partnership by such Partner.
12. NOTICES; AMENDMENT.
A. Any notice which a Partner is required or may desire to give any
other Partner shall be in writing, and may be given personal delivery or by
mailing same by United States registered or certified mail, return receipt
requested, to the Partner to whom such notice is directed at the address of
such Partner as hereinabove set forth, subject to the right of a Partner to
designate a different address for itself by notice similarly given. Any
notice so given by United States mail shall be deemed to have been given of
the second day after it is deposited in the United States mail as
registered or certified mail, addressed as above provided, with postage
thereon fully prepaid. Any such notice not given by registered or
certified mail as aforesaid shall be deemed to be given upon receipt by the
party to whom it is to be given.
B. This Agreement may be amended by written agreement of amendment
executed by all the Partners, but not otherwise.
13. MISCELLANEOUS. Each Partner hereby irrevocably waives any and
all rights that it may have to maintain any action for partition of any of
the Partnership Property. This Agreement constitutes the entire agreement
between the parties. This Agreement supersedes any prior agreement or
understanding between the parties. This Agreement and the rights of the
parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of Illinois. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of
the parties and their legal representatives, successors and
5
<PAGE>
assignees. Captions contained in the Agreement in no way define, limit or
extend the scope or intent of this Agreement. If any provision of this
Agreement, or the application of such provision to any person or
circumstance, shall be held invalid, the remainder of this Agreement, or
application of such provision to other persons or circumstances, shall not
be affected thereby. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. The opinion of the
independent certified public accountants retained by the Partnership from
time to time shall be final and binding with respect to all computations
and determinations required to be made under Section 7 hereof (including
computations and determinations in connection with any distribution
following or in connection with the dissolution of the Partnership). If
the Partnership or any Partner obtains a judgment against any other party
by reason of breach of this Agreement or failure to comply with the
provisions hereof, a reasonable attorneys' fee as fixed by the court shall
be included in such judgment. Any Partner shall be entitled to maintain,
on its own behalf or on behalf of the Partnership, any action or proceeding
against any other Partner or the Partnership (including, without
limitation, any action for damages, specific performance or declaratory
relief) for or by reason of breach by such party of this Agreement,
notwithstanding the fact that any or all of the parties to such proceeding
may then be a partner in the Partnership, and without dissolving the
Partnership as a partnership. No remedy conferred upon the Partnership or
any Partner in this Agreement is intended to be exclusive or any other
remedy herein or by law provided or permitted, but each shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute (subject, however, to
the limitations expressly herein set forth). No waiver by a Partner or the
Partnership of any breach of this Agreement shall be deemed to be a waiver
of any other breach of any kind or nature and no acceptance of payment or
performance by a Partner or the Partnership after any such breach shall be
deemed to be a waiver of any breach of this Agreement whether or not such
Partner or the Partnership knows of such breach at the time it accepts such
payment or performance. No failure or delay on the part of a Partner or
the Partnership to exercise any right it may have shall prevent the
exercise thereof by such Partner or the Partnership at any time such other
Partner may continue to be in default hereunder, and no such failure or
delay shall operate as a waiver of any breach or default.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
JMB MORTGAGE PARTNERS, LTD.-III
By: JMB Realty Corporation
By: /S/ NEIL G. BLUHM
Neil G. Bluhm
President
JMB MORTGAGE PARTNERS, LTD.-IV
By: JMB Mortgage Managers-IV, Inc.
By: /S/ NEIL G. BLUHM
Neil G. Bluhm
President
7
<PAGE>
EXHIBIT "A"
-----------
PARTNER CAPITAL CONTRIBUTIONS
- ------- ----------------------
JMB MORTGAGE PARTNERS, LTD.-III $ 664.90
JMB MORTGAGE PARTNERSHIP, LTD.-IV 335.10
---------
$1,000.00
==========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,660,421
<SECURITIES> 0
<RECEIVABLES> 22,056
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,682,477
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,080,859
<CURRENT-LIABILITIES> 199,879
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,888,980
<TOTAL-LIABILITY-AND-EQUITY> 9,080,859
<SALES> 0
<TOTAL-REVENUES> 311,025
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 162,626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 148,399
<INCOME-TAX> 0
<INCOME-CONTINUING> 336,756
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 336,756
<EPS-PRIMARY> 7.23
<EPS-DILUTED> 7.23
</TABLE>
