SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year
Ended December 31, 1994 Commission file no. 0-16976
ARVIDA/JMB PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3507015
(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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each Class which registered
------------------- ------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Portions of the Prospectus of the registrant dated September 16, 1987 and
filed with the Commission pursuant to Rules 424(b) and 424(c) under the
Securities Act of 1933 as well as the Report on Form 8-K dated December 6,
1993 are incorporated by reference in Parts II and III of this Annual
Report on Form 10-K.
TABLE OF CONTENTS
Page
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PART I
Item 1. Business. . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . 9
PART II
Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters . . . . . . . . . . 9
Item 6. Selected Financial Data . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 12
Item 8. Financial Statements and Supplementary
Data. . . . . . . . . . . . . . . . . . . . 23
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . 62
PART III
Item 10. Director and Executive Officers of
the Registrant. . . . . . . . . . . . . . . 62
Item 11. Executive Compensation. . . . . . . . . . . 65
Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . 67
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . 68
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K. . . . . 68
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 72
i
PART I
ITEM 1. BUSINESS
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
The registrant, Arvida/JMB Partners, L.P. (the "Partnership"), is a
limited partnership formed in 1987 and currently governed under the Revised
Uniform Limited Partnership Act of the State of Delaware. The Partnership
was formed to own and develop substantially all of the assets of Arvida
Corporation (the "Seller"), a subsidiary of The Walt Disney Company, which
were acquired by the Partnership from the Seller on September 10, 1987. On
September 16, 1987, the Partnership commenced an offering to the public of
up to $400,000,000 in Limited Partnership Interests and assignee interests
therein ("Interests") pursuant to a Registration Statement on Form S-1
under the Securities Act of 1933 (No. 33-14091). A total of 400,000
Interests were sold to the public (at an offering price of $1,000 per
Interest before discounts) and the holders of 400,000 Interests were
admitted to the Partnership in October 1987. The offering terminated
October 31, 1987. In addition, a holder (an affiliate of the dealer-
manager of the public offering) of 4,000 Interests was admitted to the
Partnership in October 1987. Subsequent to admittance to the Partnership,
no holder of Interests (a "Limited Partner" or "Holder") has made any
additional capital contribution. The Limited Partners of the Partnership
generally share in their portion of the benefits of ownership of the
Partnership's real property investments and other assets according to the
number of Interests held.
Pursuant to the Partnership Agreement, the Partnership may continue in
existence until December 31, 2087; however, the General Partner shall elect
to pursue one of the following courses of action: (i) to cause the
Interests to be listed on a national exchange or to be reported by the
National Association of Securities Dealers Automated Quotation System at
any time on or prior to the date ten years from the termination date of the
offering of Interests; (ii) to purchase, or cause JMB Realty Corporation or
its affiliates to purchase, ten years from the termination of the offering
of Interests, all of the Interests at their then appraised fair market
value (as determined by an independent nationally recognized investment
banking firm or real estate advisory company); or (iii) to commence a
liquidation phase ten years from the termination of the offering of
Interests in which all of the Partnership's remaining assets will be sold
or disposed of by the end of the fifteenth year from the termination of the
offering.
The assets of the Partnership consist principally of interests in land
which is in the process of being developed into master-planned residential
communities (the "Communities") and, to a lesser extent, commercial and
industrial properties; mortgage notes and accounts receivable; certain
management and other service contracts; construction, brokerage and other
support businesses; real estate assets held for investment; certain club
and recreational facilities; and certain cable television businesses
serving certain of its Communities. The Partnership is principally engaged
in the development of comprehensively planned resort and primary home
Communities containing a diversified product mix designed for the middle
and upper income segments of the various markets in which the Partnership
operates.
The Partnership sells individual residential lots and parcels of
partially developed and undeveloped land. The third-party builders and
developers to whom the Partnership sells homesites and land parcels are
generally smaller local builders who require project specific financing for
their developments and whose operations are more susceptible to
fluctuations in the availability and terms of financing. In addition,
within the Communities, the Partnership constructs, or causes to be
constructed, a variety of products, including single-family homes, town-
houses and condominiums to be developed for sale, as well as related
commercial and recreational facilities. The Communities are located
primarily throughout the State of Florida, with Communities also located
near Atlanta, Georgia; Highlands, North Carolina and in Orange County,
California. Additional undeveloped properties owned by the Partnership in
or near its Communities are being considered for development as commercial,
office and industrial properties. The Partnership also owns or manages
certain club and recreational facilities within certain of its Communities.
Certain assets located in Florida were acquired by the Partnership from the
Seller by purchasing a 99.9% interest in a joint venture partnership in
which the General Partner acquired the remaining joint venture partnership
interest. In addition, other assets are owned by various partnerships, the
interests of which are held by certain indirect subsidiaries of the
Partnership and by the Partnership.
Arvida Company ("Arvida"), an affiliate of the General Partner,
provides certain development and management supervisory personnel to the
Partnership for the supervision of all of its projects and operations,
subject, in each case, to the overall control of the General Partner on
behalf of the Partnership. The Partnership, directly or through certain
subsidiaries, provides development and management services to the home
ownership associations within the Communities. At December 31, 1994, two
of the Partnership's Communities offered cable television systems to
certain of their residents, which systems are owned and operated by
entities owned by the Partnership.
The business of the Partnership is cyclical in nature and certain
aspects of the development of Community projects are to some degree
seasonal. The Partnership does not expect that such seasonality will have
a material impact on its business. A presentation of information about
industry segments, geographic regions or raw materials is not applicable
and would not be material to an understanding of the Partnership's business
taken as a whole.
The Communities are in various stages of development. The remaining
estimated build-out time for the Communities ranges from one year to 10
years. The Partnership generally follows the practice with respect to
Communities of (i) developing an overall master plan for the Community,
(ii) creating a unifying architectural theme that is consistent with the
Community's master plan, (iii) offering a variety of recreational
facilities, (iv) imposing architectural standards and other property
restrictions on residents and third-party developers, in order to enhance
the long-term value of the Community, (v) establishing property owners'
associations to maintain compliance with architectural, landscaping and
other requirements and to provide for ownership and maintenance of certain
facilities, and/or (vi) operating and controlling access to golf, tennis
and other recreational facilities.
The Partnership's development approach, individually or by joint
venture, is intended to enhance the value of real estate in successive
phases. The first step in the development of a property is to design a
Community master plan that addresses the appropriate land uses and product
mix, including residential, recreational and, where appropriate, commercial
and industrial uses. The Partnership then seeks to obtain the necessary
regulatory and environmental approvals for the development of the Community
in accordance with the master plan. This approval process is a major
factor in determining the viability and prospects for profitability of the
Partnership's development projects.
The first phase in the regulatory approval process will usually
consist of obtaining the proper zoning approvals for the intended
development. The Partnership must also comply with state and local laws
governing large planned developments which may vary from state to state and
community to community. In Florida, for example, land development is
subject to the Florida Local Government Comprehensive Planning and Land
Development Regulation Act, as administered by the State and implemented by
regional, county and municipal authorities. In addition, prior to or
contemporaneously with zoning approval, the Partnership, if subject to the
applicable filing requirements, must obtain "Development of Regional
Impact" ("DRI") approval from the applicable local governmental agency
after review and recommendations from the appropriate regional planning
agency, with oversight by the Florida State Department of Community
Affairs. With the exception of approximately 2,475 acres of Weston
(Weston's Increment III), the Partnership has received DRI approval on all
of its Florida Properties. Application with respect to Weston's Increment
III DRI approval has been filed. The Partnership is also currently seeking
a permit to develop 1,156 of the 2,475 gross acres contained in Weston's
Increment III, portions of which are environmentally sensitive areas and
subject to protection as wetlands. (Reference is made to Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations for further discussion of this issue). Receipt of the DRI
approval is contingent upon the receipt of this permit. Receipt of DRI
approval is also a prerequisite to obtaining zoning, platting, building
permits or other approvals required to begin development or construction.
Obtaining such approvals can involve substantial periods of time and
expense and may result in the loss of desired densities, and approvals may
need to be resubmitted if there is any subsequent deviation in current
approved plans. The process may also require committing land for public
use and payment of substantial impact fees. In addition, state laws
generally provide further that a parcel of land cannot be subdivided into
distinct segments without having a plat filed and finalized with the local
or municipal authority, which will, in general, require the approval of
various local agencies, such as environmental and public works departments.
In addition, the Partnership must secure the actual permits for development
from applicable Federal (e.g., the Army Corps of Engineers and/or the
Environmental Protection Agency with respect to coastal and wetlands
developments, including dredging of waterways) and state or local agencies,
including construction, dredging, grading, tree removal and water
management and drainage district permits. The Partnership may, in the
process of obtaining such permits or approvals for platting or construction
activities, incur delays or additional expenses; however, such permits and
approvals are customarily obtained to permit development. Failure to
obtain or maintain necessary approvals, or rejection of submitted plans,
would result in an inability to develop the Community as originally planned
and would cause the Partnership to reformulate development plans for
resubmission, which might result in a failure to increase, or a loss of,
market value of the property. The foregoing discussion and the discussion
which follows are also generally applicable to the Partnership's commercial
and industrial developments.
Upon receipt of all approvals and permits required to be obtained by
the Partnership for a specific Community, other than actual approvals or
permits for final platting and/or construction activities, the Partnership
applies for the permits and other approvals necessary to undertake the
construction of infrastructure, including roads, water and sewer lines and
amenities such as lakes, clubhouses, golf courses, tennis courts and
swimming pools. These expenditures for infrastructure and amenities are
generally significant and are usually required early in the development of
a Community project, although the Partnership will attempt, to the extent
feasible, to develop Communities in a phased manner. See Note 12 for
further discussion regarding Tax Increment Financing Entities and their
involvement with infrastructure improvements.
Certain of the Florida Communities described below have applied for
and have been designated as a Planned Unit Development ("PUD") by the local
zoning authority (usually the governing body of the municipality or the
county in which the Community is or will be located). Designation as a PUD
generally establishes permitted densities (i.e., the number of residential
units which may be constructed) with respect to the land covered thereby
and, upon receipt, enables the developer to proceed in an orderly, planned
fashion. Generally, such PUD approvals permit flexibility between single-
unit and multi-unit products since the developer can plan Communities in
either fashion as long as permitted densities are not exceeded. As a
consequence, developments with PUD status are able to meet changing demand
patterns in housing through such flexibility. It should be noted that some
of the Communities, while not having received PUD approval, have obtained
the necessary zoning approvals to create a planned community development
with many of the benefits of PUD approval such as density shifting.
In developing the infrastructure and amenities of its Communities and
building its own housing products, the Partnership may function as a
general contractor although it may also from time to time hire firms for
general contracting work. The Partnership generally follows the practice
of hiring subcontractors, architects, engineers and other professionals on
a project-by-project basis rather than maintaining in-house capabilities,
principally to be able to select the subcontractors and consultants it
believes are most suitable for a particular development project and to
control fixed overhead costs. Although the General Partner does not expect
the Partnership to be faced with any significant material or labor
shortages, the construction industry in general has from time to time
experienced serious difficulties in obtaining certain construction
materials and in having available a sufficiently large and adequately
trained work force.
The Partnership's strategy includes the ownership and development of
certain commercial and industrial property not located in a Partnership
Community. In addition, certain of the Partnership's Communities contain
acreage zoned for commercial use, although, except for the Weston
Community, such acreage is generally not substantial. On both of such
types of properties, the Partnership, individually or with a joint venture
partner, may build shopping centers, office buildings and other commercial
buildings and may sell land to be so developed.
Certain of the Communities and operations are owned by the Partnership
jointly with third parties. Such investments by the Partnership are
generally in partnerships or ventures which own and operate a particular
property in which the Partnership or an affiliate (either alone or with an
affiliate of the General Partner) has an interest.
The principal assets in which interests have been acquired by the
Partnership are described in more detail under Item 2 below to which
reference is hereby made for a description of such assets.
The Partnership's real properties are subject to competition from
similar types of properties in the vicinities in which they are located,
including properties owned, advised or managed by affiliates of the General
Partner. The Partnership has no real estate assets located outside of the
United States.
In the opinion of the General Partner of the Partnership, all of the
investment properties held at December 31, 1994 are adequately insured.
The Partnership currently owns no patents, trademarks, licenses or
franchises other than those trademarks and tradenames in respect of the
names of its Communities. The Arvida name and the service marks with
respect to the Arvida name are owned by Arvida, subject to the Partner-
ship's non-exclusive right to use the name and the service marks under its
supervisory and management agreement with Arvida and subject to the non-
exclusive right of certain third parties to the limited use of the name.
The Partnership has approximately 640 employees.
The terms of transactions between the Partnership and the General
Partner and its affiliates are set forth in Items 10, 11, 12 and 13 filed
with this annual report to which reference is hereby made for a description
of such terms and transactions.<PAGE>
ITEM 2. PROPERTIES
The principal assets being developed or managed by the Partnership are
described below. The acreage amounts set forth herein are approximations
of the gross acreage of the Communities or other properties referred to or
described and are not necessarily indicative of the net developable acreage
currently owned by the Partnership or its joint ventures. All of the
Partnership's properties are subject to mortgages to secure the repayment
of the Partnership's indebtedness as discussed in detail in Note 8.
(a) Palm Beach County, Florida
The Partnership owns property in Broken Sound, a 970-acre Community
located in Boca Raton. The Community offers a wide range of residential
products built by the Partnership or third-party builders and is in its
final stage of development.
(b) Broward County, Florida
The Partnership owns property in Weston, a 7,500-acre Community in its
mid stage of development. The Community offers a complete range of housing
products built by the Partnership or third-party builders, as well as
tennis, swim and fitness facilities, a golf course and an equestrian
center. In addition, the Partnership owns commercial properties, most of
which are currently undeveloped, located in the Weston Community.
Reference is made to Note 12 for a discussion of the Partnership's use of
certain tax-exempt financing in connection with the development of the
Weston Community.
(c) Sarasota / Tampa, Florida
The Partnership owns property on Longboat Key which is a barrier
island on Florida's west coast, approximately four miles from downtown
Sarasota and seven miles from Sarasota/Bradenton airport. The property is
in its late stage of development. The Partnership also owns property in a
Community in the Tampa area known as River Hills Country Club which is a
1,200-acre Community in its mid stage of development. The Partnership
owned an interest in The Oaks Community in Sarasota, Florida. The
Partnership sold its interest in The Oaks during 1993. Reference is made
to Note 8 for a discussion of the sale of the Partnership's interest in The
Oaks property and the repayment of the mortgage loan secured by such
property.
(d) Jacksonville, Florida
The Partnership owns property in two Communities in Ponte Vedra Beach,
Florida, twenty-five miles from downtown Jacksonville, known as Sawgrass
Country Club and The Players Club at Sawgrass. These Communities are in
their final stages of development. The Partnership also owns property in a
730-acre Community known as the Jacksonville Golf and Country Club which is
in its mid stage of development.
(e) Atlanta, Georgia
The Partnership owns properties in the Atlanta, Georgia area known as
Water's Edge and Dockside, which are in their mid and final stages of
development, respectively.
(f) Highlands, North Carolina
The Partnership owns a 600-acre Community near Highlands, North
Carolina known as The Cullasaja Club. The Community is in its mid stage of
development. The Partnership previously owned a 50% joint venture interest
in this Community; however, during 1992, the Partnership purchased its
joint venture partner's 50% interest in the Community. Reference is made
to Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations and Note 7 for further discussion of this joint
venture.<PAGE>
(g) Other
The Partnership also owns a 20% joint venture interest in a 4,000-acre
Community, known as Coto de Caza, located in Southern Orange County,
California. The Community is in its mid stage of development. Previously,
the Partnership was the managing partner and owned a 50% joint venture
interest in the Community; however, during 1992 the Partnership's joint
venture partner was reallocated an additional 30% interest in the venture
and assumed the role of managing partner in exchange for funding the
venture's future cash requirements. Reference is made to Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Note 7 for further discussion of this joint venture.
The Partnership also owns land zoned for commercial use in or near
its Communities in Jacksonville, Boca Raton, Atlanta, Georgia and in its
Weston Community. The Partnership also owns, either directly or through
joint venture interests, various commercial and industrial sites and
buildings in Sarasota, Tampa, Ocala, Pompano Beach and Palm Beach County,
Florida which are not located in its residential Communities. At
December 31, 1994, the joint venture with property in Pompano Beach was
encumbered by mortgages in the aggregate principal amount of approximately
$4.0 million. Reference is made to Note 11 for further discussion of this
venture and its related indebtedness.
ITEM 3. LEGAL PROCEEDINGS
The Partnership was named a defendant in a number of homeowner
lawsuits, certain of which purported to be class actions, that allegedly in
part arose out of or related to Hurricane Andrew, which on August 24, 1992
resulted in damage to a former community development known as Country Walk.
The homeowner lawsuits alleged, among other things, that the damage
suffered by the plaintiffs' homes and/or condominiums within Country Walk
was beyond what could have been reasonably expected from the hurricane
and/or was a result of the defendants' alleged defective design,
construction, inspection and/or other improper conduct in connection with
the development, construction and sales of such homes and condominiums,
including alleged building code violations. The various plaintiffs sought
varying and, in some cases, unspecified amounts of compensatory damages and
other relief. In certain of the lawsuits injunctive relief and/or punitive
damages were sought.
Several of these lawsuits alleged that the Partnership was liable,
among other reasons, as a result of its own alleged acts of misconduct or
as a result of the Partnership's assumption of Arvida Corporation's
liabilities in connection with the Partnership's purchase of Arvida
Corporation's assets from the Walt Disney Company ("Disney") in 1987, which
included certain assets related to the Country Walk development. Pursuant
to the agreement to purchase such assets, the Partnership obtained
indemnification by Disney for certain liabilities relating to facts or
circumstances arising or occurring prior to the closing of the
Partnership's purchase of the assets. Over 80% of the Arvida-built homes
in Country Walk were built prior to the Partnership's ownership of the
Community. Where appropriate, the Partnership has tendered or will tender
each of the above-described lawsuits to Disney for defense and
indemnification in whole or in part pursuant to the Partnership's
indemnification rights. Where appropriate, the Partnership has also
tendered these lawsuits to its various insurance carriers for defense and
coverage. The Partnership is unable to determine at this time to what
extent damages in these lawsuits, if any, against the Partnership, as well
as the Partnership's cost of investigating and defending the lawsuits, will
ultimately be recoverable by the Partnership either pursuant to its rights
of indemnification by Disney or under contracts of insurance.
On August 10, 1993, the Circuit Court of Dade County issued a final
order approving the terms of a class action settlement in one of the
pending homeowners' lawsuits, which resolved substantial portions of the
pending homeowners' lawsuits that had been filed. The settlement, which is
designed to resolve claims arising in connection with estate and patio
homes and condominiums sold by the Partnership after September 10, 1987, is
structured to compensate residents for losses not covered by insurance.
Homeowners of approximately 85% of the units in Country Walk have accepted
the settlement. The Partnership currently believes that the class action
settlement may cost approximately $2.5 million. The settlement is being
funded by one of the Partnership's insurers, subject to a reservation of
rights. The amount of money, if any, which the insurance company may
recover from the Partnership pursuant to its reservation of rights is
uncertain.
On February 24, 1994, the Partnership was dismissed from the pending
class action homeowner lawsuits pursuant to the class action settlement
discussed above. In addition, the Partnership has been informed that
Disney and an insurer have reached agreements to settle five of the
individual homeowner actions which were tendered by the Partnership to
Disney. These Disney settlements were funded without any contribution from
the Partnership.
Homeowners who affirmatively rejected the offer of settlement by
opting out were permitted to continue litigation against the Partnership.
The Partnership was and is party to a number of claims brought by
condominium and patio homeowners, all of whom have declined to accept the
terms of the class action settlement. Some of these actions by those
homeowners who have opted out of the settlement have been settled. The
aggregate amount of these settlements to date is approximately $414,000.
One of the Partnership's insurers has funded these settlements. The amount
of money that the insurance company may recover from the Partnership
pursuant to any reservation of rights, or otherwise, is uncertain.
Therefore, the accompanying Consolidated Financial Statements do not
reflect any accruals related to this matter. Currently, the Partnership is
involved in five lawsuits with homeowners who have opted out of the
original settlement which are pending in the Circuit Court of Dade County
and one claim that has not been filed as a lawsuit. The Partnership
intends to vigorously defend itself in these matters.
On April 19, 1993, a subrogation claim entitled Village Homes at
Country Walk Master Maintenance Association, Inc. v. Arvida Corporation, et
al., was filed in the 11th Judicial Circuit for Dade County. Plaintiffs
filed this suit for the use and benefit of American Reliance Insurance
Company ("American Reliance"). In this suit, as amended, plaintiffs seek
to recover damages and pre- and post-judgment interest in connection with
$10,873,000 American Reliance has allegedly paid, plus amounts it may have
to pay in the future, to the condominium association at Country Walk in the
wake of Hurricane Andrew. Disney is also a defendant in this suit. The
Partnership believes that the amount of this claim that allegedly relates
to units it sold is approximately $3,600,000. Plaintiffs also seek a
declaratory judgment seeking to hold the Partnership and other defendants
responsible for amounts American Reliance must pay in the future to its
insureds as additional damages beyond the $10,873,000 previously paid. The
Partnership has filed motions directed to the complaint, as amended, and
the litigation is in the discovery stage. The Partnership intends to
vigorously defend itself.
The Partnership has also been involved in subrogation lawsuits or
threatened subrogation actions with Prudential Property and Casualty
Company, Travelers Insurance Company ("Travelers"), Allstate Insurance
Company ("Allstate") and State Farm Insurance Company. These insurance
companies sought to recover damages, costs, and interest in connection with
amounts allegedly paid to their insureds living in Country Walk at the time
of Hurricane Andrew. The Partnership settled these claims and all
settlement proceeds were funded by one of the Partnership's insurance
carriers. The aggregate amount of these settlements is approximately $4.3
million. The Allstate and Travelers settlements were funded subject to a
reservation of rights by one of the Partnership's insurance carriers.
The amount of money the insurance carrier may seek to recover from the
Partnership for these and any other settlements it has funded is uncertain.
The Partnership is a defendant in and anticipates other subrogation claims by
insurance companies which have allegedly paid policy benefits to Country
Walk residents. The Partnership intends to defend itself vigorously in all
such matters.
The Partnership resolved a claim brought by the Villages of Country
Walk Homeowners' Association, Inc., and related entities, for damages to
the common elements of the condominium units at Country Walk. A settlement
in the amount of $2,740,000 was paid by the Partnership's insurance
carriers. A reservation of rights in connection with these claims of
approximately $740,000 was issued by one insurance carrier. The extent to
which the insurance company may ultimately recover any of these proceeds
from the Partnership is unknown. Therefore, the accompanying Consolidated
Financial Statements do not reflect any accruals related to this matter.
As noted above, one of the Partnership's insurance carriers has been
funding settlements of various litigation related to Hurricane Andrew. In
some, but not all, instances, the insurance carrier has provided the
Partnership with written reservation of rights letters. The aggregate
amount of the settlements funded to date by this carrier is approximately
$7.8 million. The extent to which the insurance carrier may recover any of
these proceeds from the Partnership is uncertain. Therefore, the
accompanying Consolidated Financial Statements do not reflect any accruals
related to this matter.
A second amended complaint captioned Berry v. Merrill Lynch, Pierce
Fenner & Smith; Arvida/JMB Partners, Limited Partnership; Arvida/JMB
Managers, Inc.; JMB Realty Corporation; and Does 1 through 100, was filed
in the Superior Court of the State of California in and for the County of
San Diego, Case No. 669709. The lawsuit was purportedly filed as a class
action on behalf of the named plaintiffs and all other persons or entities
in the State of California who bought or acquired, directly or indirectly,
limited partnership interests ("Interests") in the Partnership from
September 1, 1987 through the present. The second amended complaint in the
action alleges, among other things, that the defendants made
misrepresentations and concealed various facts, breached fiduciary duties,
and violated a contractual covenant of good faith in connection with the
sale of Interests in the Partnership. The second amended complaint further
alleges that such conduct violated California state law relating to fraud,
constructive fraud, breach of fiduciary duty, willful suppression of facts,
breach of the covenant of good faith, and conspiracy. Plaintiffs, on
behalf of themselves and the purported plaintiff class, seek unspecified
compensatory damages, consequential damages, punitive and exemplary
damages, recission, interest, costs of the suit, and such other relief as
the court may order. In October 1994, after the court denied defendants'
demurrers, the defendants answered the second amended complaint denying the
material allegations of the complaint and setting forth various affirmative
defenses. During March 1995, the court issued an order that it would not
entertain any motions for certification of a class. Subsequent thereto,
defendants have entered into a settlement in principle in order to put to
rest all controversy and to avoid further disruption to defendants'
ordinary business operations and the expense, burden and risk of protracted
litigation. The settlement is not an admission of liability, which the
defendants expressly deny. The amount of the proposed settlement is not
expected to be material. The Partnership cannot assume that this
settlement in principle will in fact be consummated.
Other than as described above, the Partnership is not subject to any
material pending legal proceedings, other than ordinary routine litigation
incidental to the business of the Partnership. Reference is made to Note 2
regarding certain other litigation involving the Partnership. Reference is
also made to Note 11 for a discussion of certain claims by Merrill Lynch
for indemnification by the Partnership and the General Partner against
losses and expenses that may be suffered by Merrill Lynch relating to
claims for arbitration asserted against it by certain investors in the
Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1993 and 1994.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 25,404 record Holders of Interests
of the Partnership. There is no public market for Interests, and it is not
anticipated that a public market for Interests will develop. Upon request,
the General Partner may provide information relating to a prospective
transfer of Interests to an investor desiring to transfer his Interests.
The price to be paid for the Interests, as well as any other economic
aspects of the transaction, will be subject to negotiation by the investor.
However, there are restrictions governing the transferability of these
Interests as described in "Transferability of Partnership Interests" on
pages A-31 to A-33 of the Partnership Agreement and limitations on the
rights of assignees of Holders of Interests as described in Sections 3 and
4 of the Assignment Agreement, which are hereby incorporated by reference
to Exhibits 3 and 4.0, respectively, of the Partnership's Report on Form
10-K dated March 29, 1993 (File No. 0-16976). Reference is made to Item 1.
Business for a discussion of the election to be made by the General Partner
with respect to causing Interests to be listed on a national exchange or to
be reported by the National Association of Securities Dealers Automated
Quotation System, purchasing or causing an affiliate or affiliates to
purchase all of the Interests at their then appraised fair market value, or
commencing a liquidation of all of the Partnership's assets.
Reference is made to Item 6. Selected Financial Data for a discussion
of cash distributions made to the Limited Partners. For a description of
the provisions of the Partnership Agreement relating to cash distributions,
see Note 14. Reference is made to Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations and Note 8 for a
discussion of the factors impacting the Partnership's ability to pay
distributions to its partners. As a result of certain restrictions on
distributions to partners contained in its credit facility agreement, the
Partnership made distributions to its partners in amounts substantially
less than the Partnership's income for financial reporting or Federal
income tax purposes for the years ended December 31, 1994 and 1993.<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990
(NOT COVERED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT)
<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total revenues . . . . . $315,058,058 247,651,192 174,710,779 155,699,871 275,705,089
============ ============ ============ ============ ============
Net operating income
(loss). . . . . . . . . $ 52,676,462 30,689,914 (23,337,245) (11,777,093) 12,023,818
============ ============ ============ ============ ============
Equity in earnings
(losses) of uncon-
solidated ventures. . . $ 524,520 1,134,947 (2,225,531) (769,300) (179,242)
============ ============ ============ ============ ============
Net income (loss). . . . $ 47,197,532 29,293,058 (43,974,366) (30,667,969) 757,335
============ ============ ============ ============ ============
Net income (loss) per
Limited Partnership
Interest (a). . . . . . $ 115.37 71.78 (160.42) (74.39) (13.51)
============ ============ ============ ============ ============
Total assets (b) . . . . $376,371,712 348,094,995 350,807,538 420,289,287 437,541,360
============ ============ ============ ============ ============
Total liabilities (b). . $179,791,958 196,004,818 228,010,419 253,517,802 240,101,906
============ ============ ============ ============ ============
Cash distributions
per Interest (c). . . . $ 6.35 -- -- -- 130
============ ============ ============ ============ ============
The above selected financial data should be read in conjunction with the financial statements and the related
notes appearing elsewhere in this annual report.
<FN>
(a) The net income (loss) per Limited Partnership Interest is based
upon the number of Interests outstanding at the end of each period.
(b) The Partnership does not present a classified balance sheet as a
matter of industry practice, and as such, does not distinguish between
current and non-current assets and liabilities.
(c) Cash distributions from the Partnership are generally not
equivalent to Partnership income as determined for Federal income tax
purposes or as determined under generally accepted accounting principles.
Cash distributions to the Limited Partners represent a return of capital
for Federal income tax purposes. During February 1994, the Partnership
made a distribution for 1993 of $2,565,433 to its Limited Partners ($6.35
per Interest). There were no cash distributions in 1991, 1992 and 1993.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994 and 1993, the Partnership had cash and cash
equivalents of approximately $22,024,000 and $20,567,000, respectively.
Bank overdrafts, which represent checks in transit, of approximately
$1,660,000 at December 31, 1993 were repaid from cash on hand during
January 1994. Remaining cash and cash equivalents were available for debt
service, working capital requirements and distributions to partners. The
source of both short-term and long-term future liquidity is expected to be
derived primarily from the sale of housing units, homesites and land
parcels and through the Partnership's credit facility, which is discussed
below.
As a result of management's efforts to broaden the appeal of the
Partnership's Communities through the introduction of new housing products,
the implementation of a series of cost reductions, and the upward trends in
housing activity that the nation, as well as the markets in which the
Partnership's properties are located, have been experiencing, the
Partnership was able to generate significant cash flow before debt service
during 1994 and 1993. The Partnership utilized this excess cash flow to
make scheduled and additional principal repayments on its outstanding debt,
as required under the terms of the credit facility agreement, and to
increase its cash reserves. Furthermore, in February 1995, the Partnership
made a distribution for 1994 of $5,421,680 to its Limited Partners ($13.42
per Interest) and $301,201 to the General Partner and Associate Limited
Partners, collectively. During February 1994, the Partnership made a
distribution for 1993 of $2,565,433 to its Limited Partners ($6.35 per
Interest) and $142,523 to the General Partner and Associate Limited
Partners, collectively. As a result of certain restrictions on
distributions to partners contained in its credit facility agreement, the
Partnership made distributions to its partners in amounts substantially
less than the Partnership's income for financial reporting or Federal
income tax purposes for the years ended December 31, 1994 and 1993.
Recent rises in interest rates have had and may continue to have an
adverse effect on the demand for housing units in 1995. The extent to
which this affects the Partnership will depend upon whether interest rates
continue to increase or remain relatively consistent with current rates.
At December 31, 1993, the Partnership's credit facility consisted of a
term loan in the original amount of $126,805,195, a revolving line of
credit facility up to $45 million, an income property term loan in the
original amount of $20 million and a $15 million letter of credit facility.
The income property term loan, revolving line of credit and letter of
credit facility matured in July, 1994. Although the Partnership's term
loan was not scheduled to mature until July 1997, the lender required the
Partnership to renew its entire credit facility as a condition of renewing
the income property term loan, the revolving line of credit and letter of
credit facility.
During November 1994, the Partnership and its lender signed an
agreement for a renewal of the entire credit facility agreement. In
connection with obtaining this renewal, the Partnership made principal
payments on its term loan of $3 million and $9.5 million in July 1994 and
December 1994, respectively. The new credit facility consists of a term
loan in the original amount of $85,252,520, a revolving line of credit
facility up to $20 million, an income property term loan in the original
amount of $18,233,326 and a $15 million letter of credit facility. The
term loan, the revolving line of credit and the letter of credit facility
are secured by recorded mortgages on all otherwise unencumbered real
property assets of the Partnership as well as an assignment of all
mortgages receivable, equity memberships, certain joint venture interests
or joint venture proceeds, and cash balances (with the exception of
deposits held in escrow). The income property term loan is secured by the
recorded first mortgages on a mixed-use center and an office building in
Boca Raton, Florida. All of the notes under the facility are cross-
collateralized and cross-defaulted.
The Partnership made scheduled principal payments of $10 million on
the term loan in March 1994 and February 1995. In addition, the term loan
agreement provides for additional principal payments based upon a specified
percentage of available cash flow and upon the sale of certain assets. For
the year ended December 31, 1994, the Partnership made such additional term
loan payments totalling approximately $12.3 million. Principal payments of
$5 million, $10 million and $5 million on the term loan are due in July
1995, February 1996 and July 1996, respectively. The remaining balance
outstanding is due in July 1997. Under the income property term loan,
principal payments of $0.1 million are required to be paid monthly until
March 1996 when the remaining outstanding principal balance will be due.
At December 31, 1994, all of the term loan proceeds had been borrowed with
a remaining outstanding balance of $73,452,970. The outstanding balances
on the revolving line of credit facility, the income property term loan and
the letter of credit facility at December 31, 1994 are $0, $17,933,326 and
$10,169,823, respectively.
At December 31, 1994, the Partnership has a contract for the sale of
its office building located in downtown Boca Raton, Florida known as
Mizner Place for approximately $4 million. The sale is expected to close
during the second quarter of 1995. The net sales proceeds from such sale
will be used to paydown the income property term loan.
The credit facility contains significant restrictions with respect to
the payment of distributions to partners, the maintenance of certain loan-
to-value ratios, the use of proceeds from the sale of the Partnership's
assets, and advances to the Partnership's joint ventures. Other than the
uncertainty surrounding the funding of any required joint venture advances,
which require the lenders' approval, the Partnership believes that the
current and expected future liquidity and capital resources of the
Partnership, including its credit facility, generally should be adequate to
fund currently expected short-term capital requirements for development and
other costs of operations. Although the Partnership's income property term
loan, revolving line of credit and letter of credit facility mature in 1996
and its term loan facility matures during 1997, the Partnership also
believes that its expected future liquidity and capital resources,
including its credit facility, generally should be adequate to fund
currently expected long-term capital requirements for development and other
costs of operations. At this time, the Partnership anticipates renewing
its credit facility with its lender at the time of its maturity. Although
there can be no assurance, the Partnership currently believes that it will
be able to obtain such a renewal from its lender.
The Partnership has a $28.9 million revolving construction line of
credit for the first two buildings and certain amenities within the
Partnership's condominium project on Longboat Key, Florida known as
Arvida's Grand Bay. This line of credit bears interest at the lender's
prime rate (8.0% at December 31, 1994) plus 3/4% per annum and matures in
January 1996. At December 31, 1994, approximately $8.8 million was
outstanding under this line of credit. The Partnership currently
anticipates that this amount will be repaid from the proceeds from the sale
of condominium units within the first two buildings.
During the third quarter of 1994, the Partnership commenced home
building activities in the Atlanta market with the introduction of housing
products in its Waters Edge and Dockside Communities. The Partnership
anticipates generating the initial revenues from the closings of these
homes in the first quarter of 1995.
Increased housing sales activity associated with management's decision
to place more emphasis on the Partnership's home building operations
resulted in a significant increase in construction expenditures during 1994
as compared to 1993. This increase in expenditures is the primary cause
for the increase in real estate inventories and accounts payable on the
accompanying consolidated balance sheets at December 31, 1994 as compared
to December 31, 1993.
Certain of the Partnership's property within the Cullasaja Community
was financed by a mortgage note which matured on March 1, 1994. The note
was collateralized by a first mortgage on certain real estate inventories
and 12.5% of the outstanding balance was guaranteed by the Partnership.
The Partnership was unable to obtain an extension of the loan, and
therefore, on June 29, 1994, purchased the note at par and paid the accrued
interest thereon and certain attorney and conveyance fees. The total
amount of such payment was approximately $5,278,000. The note and mortgage
were subsequently pledged as collateral to the Partnership's lenders under
its credit facility.
During 1992 and 1993, the Partnership funded all development and
construction costs, as well as certain overheads, incurred on behalf of the
two joint ventures in Weston which had been formed to construct homes in
that Community. Such amounts were funded in accordance with the
development management agreements the Partnership had entered into with
these joint ventures. All of these homes had been completed and had
virtually closed out by December 31, 1993. As a result, the majority of
the amounts previously funded were reimbursed to the Partnership in 1993
and the remaining amounts were reimbursed during 1994. The receipt of
these amounts is the primary cause for the increase in payments from joint
ventures on the accompanying consolidated statements of cash flows for 1993
as compared to 1992 and 1994. These receipts contributed to the overall
increase in cash provided by (used in) investing activities for 1993 as
compared to 1992 and 1994.
In addition, the Partnership received approximately $2.6 million in
distributions from the two joint ventures in Weston during 1993, as well as
$1.1 million and $0.4 million in distributions from its joint venture
interests in properties in the Boca Raton and Ocala, Florida areas,
respectively. The receipt of these distributions during 1993 contributed
to the increase in joint venture distributions (contributions), net, on the
accompanying consolidated statements of cash flows for 1993 as compared to
1992 and 1994. Joint venture distributions (contributions), net, for the
year ended December 31, 1992 included an approximate $3.1 million loan
guarantee payment made in relation to the Partnership's 50% joint venture
interest in 31 commercial/industrial acres in Pompano Beach, Florida, as
discussed in Note 11. The payment of this amount during 1992 also
contributed to the increase in joint venture distributions (contributions),
net, for 1993 as compared to 1992. These receipts also contributed to the
overall increase in cash provided by (used in) investing activities for
1993 as compared to 1992 and 1994.
The Partnership owned an 80% general partnership interest in The Oaks
Community located near Sarasota, Florida. During the fourth quarter of
1991, the Partnership's joint venture partner failed to make capital
contributions required to fund ongoing operations and pursuant to the joint
venture agreement, was in default of the agreement. The Partnership
executed an agreement in August 1993 with its joint venture partner, CIS
Oaks, Ltd., ("CIS"), whereby CIS assigned its 20% interest in The Oaks to
the Partnership, thereby vesting 100% control of the assets of the joint
venture to the Partnership.
The assets of the Oaks joint venture were encumbered by two mortgage
loans. A $12,492,200 loan was scheduled to mature in January 1997 and a
$3,260,000 loan was scheduled to mature in December 1993. The joint
venture had guaranteed $2.7 million of the loans, and the guaranteed amount
was with recourse to the Partnership. The joint venture was in default
under the terms of these loan agreements as a result of its failure to make
principal payments of approximately $1.3 million in January 1993 to release
the minimum number of homesite lots as required under these agreements and
its failure to pay interest commencing with a payment due in April 1993.
The Partnership was able to reach an agreement with its lenders to pay off
the existing mortgage loans at a substantial discount from face value. On
September 3, 1993, the Partnership paid the joint venture's lenders $6.7
million in full satisfaction of the outstanding mortgage loans, accrued
interest and guaranty. This transaction was the cause of the approximate
$9.5 million extraordinary gain on the early extinguishment of debt for the
year ended December 31, 1993.
Given the finite amount of available capital to the Partnership, the
Partnership determined that it was in its best long-term interest to
utilize that capital for the development of its other properties and sold
its remaining land holdings in The Oaks Community and its interest in The
Oaks Club to an unaffiliated third party purchaser for $5.8 million. This
sale transaction occurred simultaneously with the repayment of the loans
and satisfaction of the mortgages described above. In light of the
Partnership's guarantee under the loan agreement of $2.7 million of the
outstanding mortgage loans, as well as other factors, these transactions
were pursued as the least costly alternative available to the Partnership.
These transactions resulted in a minimal net gain for Federal income tax
purposes.
The Partnership is seeking a permit to develop 1,156 of the 2,475
gross acres contained in Increment III of the Weston Community, portions of
which are environmentally sensitive areas and are subject to protection as
wetlands. The Partnership's current application for a wetlands permit for
Increment III includes proposed wetlands mitigation of 1,319 acres together
with construction of schools, parks, roads, sewers and related
infrastructure, in addition to residential and commercial development.
However, in August 1994, the Environmental Protection Agency (the "EPA")
issued a letter to the United States Army Corps of Engineers (the "Corps"),
which is the governmental agency responsible for issuing permits involving
development of wetlands areas, setting forth the EPA's position that no
more than 120 gross acres in Increment III should be permitted to be
developed. In addition, the EPA recommended that adequate compensatory
mitigation be implemented in connection with such development.
The Partnership believes that the EPA's recommendation is flawed based
on scientific evidence, and it continues to pursue issuance of the permit
for development of Increment III under the terms and conditions previously
set forth in its application. The Corps has not accepted the
recommendation of the EPA and has advised the Partnership that it is
continuing to consider the Partnership's current application as presently
submitted. During October 1994, the Corps performed an independent
analysis of the wetlands impact and mitigation. To date, the Partnership
has not received a formal response from the Corps regarding the results of
this analysis. However, an informal response has been received requesting
additional and clarified information regarding certain characteristics of
the proposed mitigation plan, which the Partnership is providing.
If the Corps ultimately issues a permit generally on the same terms
and conditions as set forth in the Partnership's previously submitted
application, the EPA retains certain rights to veto or to seek to elevate
the determination to issue a permit to higher governmental officials.
Elevation would delay the effectiveness of the permit pending resolution of
a final decision on the application for the permit and could result in a
decision to uphold, modify or retract issuance of the permit. If the
Partnership does not ultimately receive its permit through the
administrative process, it may seek a judicial review in federal district
court of the denial of the permit. Additionally, the Partnership could
initiate an action in the United States Court of Federal Claims seeking a
determination that denial of the permit constitutes a "taking" of the
Partnership's property for which the Partnership is due just compensation.
The pursuit of these legal actions would likely be lengthy.
The Partnership continues to believe that it will ultimately obtain a
permit from the Corps to develop Increment III of the Weston Community on
substantially the same terms and conditions for which it has currently
applied. However, there is no assurance that such permit will in fact be
obtained or, if not obtained, that the Partnership would be successful in
pursuing the above-mentioned legal actions. In addition, if such a permit
were obtained, the Partnership would also need certain other approvals,
including state and local approvals, to develop Increment III in accordance
with the Partnership's current development plans. If such permits and
other approvals are not obtained, the Partnership would be required to
revise its development plans for the remaining portions of Increment I and
II of the Weston Community, as well as its development plans for Increment
III. Such revisions would have a material adverse impact on the timing and
amount of net income and net cash flow ultimately realized by the
Partnership from the development of the Weston Community.
In June 1993, the Partnership executed an agreement with Equitable
South Florida Venture ("Equitable"), the successor in interest to Tishman
Speyer/Equitable South Florida Venture, the original purchaser of
approximately 390 acres of land in Increment III of the Partnership's
Weston Community, whereby, in exchange for $5.0 million, the Partnership
repurchased approximately 330 acres of the land and Equitable agreed to
relieve the Partnership of the obligations under certain provisions of the
Sale and Purchase Agreement dated December 15, 1983, which were assumed by
the Partnership in connection with the purchase of the assets of Arvida
Corporation in September 1987. Of the agreed upon price of $5 million,
$2.5 million was paid at the execution of the agreement in 1993 and the
balance of $2.5 million is to be paid in equal annual installments of
$500,000 together with interest thereon at 8% per annum. The Partnership
made the first of these scheduled payments in May 1994. The unpaid
principal balance is secured by a mortgage on certain real estate located
in the Weston Community. As part of its efforts to obtain the appropriate
development permits discussed in the preceding paragraph, the Partnership
has included this land as part of its proposed mitigation plan for the
development of Increment III of its Weston Community.
During the first quarter of 1993, the Partnership reached a settlement
agreement with its joint venture partner in a property located in Ocala,
Florida, whereby in exchange for its partner's 50% interest in the venture,
the Partnership agreed to dismiss a lawsuit previously filed against its
venture partner for failure to perform in accordance with the terms of a
$1,600,000 note which had been issued to the Partnership by the joint
venture. This agreement was pursued as a more favorable remedy to other
alternatives available to the Partnership. As a result of this
transaction, the Partnership changed from the equity method of accounting
to the consolidated method of accounting for the joint venture effective
March 1, 1993.
The Partnership has been advised by Merrill Lynch that Merrill Lynch
has been named a defendant in actions pending in the Eleventh and
Seventeenth Judicial Circuit Courts in Dade and Broward Counties, Florida
to compel arbitration of claims brought by certain investors of the
Partnership representing approximately 5% of the total of 404,000 Interests
outstanding. In the actions to compel arbitration, the claimants have
advised Merrill Lynch that they, among other things, will seek to file
demands for arbitration and claims for unspecified damages based on Merrill
Lynch's alleged violations of applicable state and/or Federal securities
laws and alleged violations of the rules of the National Association of
Securities Dealers, Inc., together with pendent state law claims. Some of
these investors have begun the arbitration process. The Partnership
believes that Merrill Lynch has resolved some of these claims through
litigation and otherwise; and that Merrill Lynch is defending other claims.
Merrill Lynch has asked the Partnership and its General Partner to confirm
an obligation of the Partnership and its General Partner to indemnify
Merrill Lynch in these claims against all loss, liability, claim, damage
and expense, including without limitation attorney's fees and expenses,
under the terms of a certain Agency Agreement dated September 15, 1987
("Agency Agreement") with the Partnership relating to the sale of Interests
in the Partnership through Merrill Lynch on behalf of the Partnership. The
Agency Agreement generally provides that the Partnership and its General
Partner shall indemnify Merrill Lynch against losses occasioned by an
actual or alleged misstatement or omission of material fact in the
Partnership's offering material used in connection with the sale of
Interests and suffered by Merrill Lynch in performing its duties under the
Agency Agreement, under specified conditions. The Agency Agreement also
generally provides, under certain conditions, that Merrill Lynch shall
indemnify the Partnership and its General Partner for losses suffered by
the Partnership and occasioned by specified conduct by Merrill Lynch in the
course of Merrill Lynch's solicitation of subscriptions for, and sale of,
Interests. The Partnership is unable to determine at this time the
ultimate investment of investors who have filed arbitration claims as to
which Merrill Lynch might seek indemnification in the future. At this
time, and based upon the information presently available about the
arbitration statements of claims filed by some of these investors, the
Partnership and its General Partner believe that they have meritorious
defenses to demands for indemnification made by Merrill Lynch and intend to
vigorously pursue such defenses. In the event Merrill Lynch is entitled to
indemnification of its attorney's fees and expenses or other losses and
expenses, these amounts may prove to be material. However, no amounts have
been accrued at December 31, 1994.
Reference is made to Note 11 regarding the Partnership's financial
guarantees pursuant to the terms of a loan agreement for a
commercial/industrial joint venture in Pompano Beach, Florida in which the
Partnership owns a 50% interest. The Partnership also has certain
continuing obligations relative to this joint venture as referred to in
such Note.
Reference is made to Item 3. Legal Proceedings of this annual report
for a discussion of several lawsuits, in which the Partnership is a
defendant, allegedly arising out of or relating to Hurricane Andrew and
certain property damage allegedly suffered by the plaintiffs at a
previously developed community known as Country Walk.
RESULTS OF OPERATIONS
The results of operations for the years ended December 31, 1994, 1993
and 1992 are primarily attributable to the development and sale or
operation of the Partnership's assets. See Note 1 for a discussion
regarding the recognition of profit from sales of real estate.
For the year ended December 31, 1994, the Partnership (including its
consolidated ventures and its unconsolidated ventures accounted for under
the equity method) closed on the sale of 899 housing units, 608 homesite
lots and approximately 12 acres of developed and undeveloped residential or
commercial/industrial land tracts. This compares to sales closings in 1993
of 626 housing units, 752 homesite lots, approximately 91 acres of
developed and undeveloped residential or commercial/industrial land tracts
as well as the sales of the Oak Bridge Club and the remaining real estate
and equity memberships at The Oaks Community. Sales closings in 1992 were
for 320 housing units, 629 homesite lots and approximately 91 acres of
developed and undeveloped land tracts. Outstanding contracts ("backlog")
as of December 31, 1994 were for 897 housing units, 67 homesites,
approximately 36 acres of developed and undeveloped land tracts as well as
an office building located in downtown Boca Raton, Florida known as Mizner
Place. This compares to a backlog as of December 31, 1993 of 521 housing
units, 127 homesites and approximately 47 acres of developed and
undeveloped land tracts. The backlog as of December 31, 1992 was for 270
housing units, 86 homesites and approximately 6 acres of developed and
undeveloped land tracts. The increasing trend in backlog as compared to
prior years is indicative of the improvement in sales activity seen at many
of the Partnership's Communities.
The Partnership's Communities are in various stages of development,
with estimated remaining build-outs ranging from one to ten years. The
Partnership's condominium project on Longboat Key, Florida known as
Arvida's Grand Bay, is in its early stage of development. The Weston
Community, located in Broward County, Florida, is the Partnership's largest
Community and is in its mid stage of development. Also in their mid stages
of development are the River Hills Country Club in Tampa, Florida;
Jacksonville Golf and Country Club in Jacksonville, Florida; the Water's
Edge Community in Atlanta, Georgia and The Cullasaja Club, near Highlands,
North Carolina. The Partnership's remaining Communities known as Sawgrass
Country Club, in Jacksonville, Florida and Dockside in Atlanta, Georgia are
in their final stages of development with anticipated close-outs in 1996.
In addition, the Broken Sound Community, located in Boca Raton, Florida, is
nearing completion with an anticipated close-out in 1995. Future revenues
will be impacted to the extent that there are lower levels of inventories
available for sale as these Communities approach or undertake their final
phases. In addition, due to the anticipated close-out of the Partnership's
higher profit margin products within Broken Sound in 1995, future gross
operating profit margins from housing activities are not expected to be as
high as recent years' margins.
Revenues from housing and homesite activities are recognized upon the
closing of homes built by the Partnership and developed lots, respectively,
within the Partnership's Communities. Land and property revenues are
generated from the closing of developed and undeveloped residential and/or
commercial land tracts, the sale of operating properties as well as gross
revenues earned from the sale of equity memberships in the clubs within the
Partnership's Boca Raton and Jacksonville, Florida Communities, as well as
its Community near Highlands, North Carolina.
Cost of revenues pertaining to the Partnership's housing sales reflect
the cost of the acquired assets as well as development and construction
expenditures, certain capitalized overhead costs, capitalized interest,
real estate taxes and marketing, as well as disposition costs. The costs
related to the Partnership's homesite sales reflect the cost of the
acquired assets, related development expenditures, certain capitalized
overhead costs, capitalized interest and real estate taxes, as well as
disposition costs. Land and property costs reflect the cost of the
acquired assets, certain development costs and related disposition costs,
as well as the cost associated with the sale of equity memberships.
South Florida building code changes, which have been effective since
September 1, 1994, have impacted construction requirements in Dade and
Broward Counties. These building code changes have resulted in increased
construction costs, not all of which are able to be passed through to the
home purchasers at this time. As a result, the Partnership anticipates
some erosion in its gross operating profit margins from housing and
homesite sales during 1995 as compared to 1994.
Housing revenues have continued to increase significantly since 1992.
This favorable trend is largely the result of management's decision to
place more emphasis on the Partnership's home building operations. This
decision has resulted in more housing products offered which are built by
the Partnership, in lieu of the Partnership selling land parcels and
homesites to unaffiliated third-party builders.
Housing closings increased significantly in Weston during 1994 as
compared to 1993 due to the Partnership building more product lines within
this Community, as well as the introduction of several value-oriented
products in late 1992 and early 1993 which had their initial closings in
the third quarter of 1993. The continued success of these products, as
well as the success of several new product lines offered in late 1993 and
1994 contributed significantly to the overall increase in housing revenues.
Housing closings and revenues for 1994 also exceeded those for 1993 at the
Partnership's Communities in Tampa and Jacksonville, Florida due to the
introduction of products which had their initial closings in the fourth
quarter of 1993, as well as at the Partnership's Broken Sound Community in
Palm Beach County, Florida. Revenues increased at Broken Sound due to the
continued sale of products which had their initial closings in the second
quarter of 1993, as well as the introduction of a new product in 1993 which
had its initial closings in 1994. The favorable variances at Broken Sound
were partially offset by reduced revenues in 1994 for several products
within that Community due to the close out of those products, as Broken
Sound nears its completion.
Revenues at Arvida's Grand Bay on Longboat Key are recognized under
the percentage of completion method of accounting. Also contributing to
the overall increase in housing revenues for 1994 as compared to 1993 is
the initial recognition of revenues for the first building at Arvida's
Grand Bay on Longboat Key during 1994. Construction of the second building
at Arvida's Grand Bay commenced in August 1994 and is expected to generate
its initial closings and revenues in 1995. As of December 31, 1994,
approximately 55% of the units within these two buildings had been sold.
Sales at Arvida's Grand Bay and the resulting recognition of revenues under
the percentage of completion method are the primary cause for the increase
in trade and other accounts receivable at December 31, 1994 as compared to
December 31, 1993.
The increase in housing revenues for the year ended December 31, 1993
as compared to 1992 was due primarily to increased sales and closing
activity at the Partnership's Weston, Broken Sound and Jacksonville Golf &
Country Club Communities, as well as the completion and close-out of the
Partnership's Marina Bay condominium project on Longboat Key, Florida. The
gross operating profit margin from housing sales increased for the year
ended December 31, 1993 as compared to 1992 due primarily to the mix of
product sold at the Partnership's Weston and Broken Sound Communities. The
increase in the margin was also attributable to higher profit margins
recognized from the final phase of Marina Bay on Longboat Key, Florida.
These closings generated increased revenues due to the desirable location
of the final building.
Due to the implementation of the Partnership's decision to place more
emphasis on its home building operations, as discussed above, revenues from
homesite activities decreased for the year ended December 31, 1994 as
compared to 1993. The decrease in homesite revenues in 1994 as compared to
1993 was also due to reduced closings from the Partnership's product
offered on Longboat Key, Florida, due to the close out of these lots in
1993. Slow sales at Waters Edge and Dockside also contributed to the
unfavorable revenue variance for 1994 as compared to 1993. Sales continue
to be slow in these Communities due to weak market demand for the products
offered in this particular sub-market in Atlanta.
The increase in the gross operating profit margin from homesite
activities for the year ended December 31, 1994 as compared to 1993 was due
primarily to adjustments to cost of sales, recorded in the third quarter of
1994, to reflect changes in future development cost estimates for certain
of the Partnership's products, primarily in the Weston Community. Current
development estimates indicate lower costs to be incurred than were
previously anticipated, therefore contributing to this favorable variance.
Revenues from the sale of homesites increased for the year ended
December 31, 1993 as compared to the same period in 1992 due primarily to
the initial closing of lots in several homesite projects introduced early
in 1993 in the Weston Hills Country Club section of the Partnership's
Weston Community. Also contributing to the favorable variance was the
closing of the remaining lots held for sale by the Partnership on Longboat
Key, Florida during September 1993. This favorable variance was partially
offset by decreased revenues at the Partnership's Broken Sound Community
due to the close-out of the final homesites in that Community in 1992.
Land and property revenues for the year ended December 31, 1993
include approximately $5.8 million and $3.3 million in revenues generated
from the sale of the remaining real estate and equity memberships at the
Partnership's Oaks Community (see further discussion in Liquidity and
Capital Resources above) and the sale of the Oakbridge Club near
Jacksonville, Florida, respectively. The inclusion of revenues from these
sale closings in 1993 is the primary cause for the decrease in land and
property revenues for the year ended December 31, 1994 as compared to 1993,
as well as the cause for the increase in land and property revenues for
1993 as compared to 1992. The remaining unfavorable revenue variance for
1994 as compared to 1993 is due to a decrease in the amount of revenues
recognized for those land sales closed in previous years which had been
deferred for financial reporting purposes, as well as a lower volume of
other land sales in the Boca Raton and Jacksonville, Florida and Atlanta,
Georgia areas.
Despite the decrease in revenues, the gross operating profit margin
generated from land and property activities increased for 1994 due
primarily to 1993's margins being negatively impacted by the operating loss
incurred on the sale of the remaining real estate and equity memberships at
the Partnership's Oaks Community in 1993. The increase in the gross
operating profit margin from land and property activities for 1993 as
compared to 1992 was due primarily to the increase in the amount of
revenues and related profits recognized for sales which had previously been
deferred for financial reporting purposes, as well as the profit recognized
from the sale of the Oakbridge Club in 1993. These favorable variances
were partially offset by the sale of the remaining real estate and equity
memberships at the Partnership's Oaks Community in 1993.
Operating properties represents activity from the Partnership's club
and hotel operations, commercial properties and certain other operating
assets. Revenues generated by the Partnership's operating properties
increased for the year ended December 31, 1994 as compared to 1993
primarily due to increased revenues from the Partnership's club operations
in Weston and River Hills due to an increase in membership activity.
Revenues for 1994 also exceeded those for 1993 at the Partnership's cable
operations in Weston. This increase resulted primarily from an increase in
the number of cable subscribers within that Community. These favorable
revenue variances were partially offset, however, as 1994 revenues do not
include any activity from the Oakbridge Club which was sold to an
unaffiliated third party in October 1993. Revenues generated by the
Partnership's operating properties increased for the year ended December
31, 1993 as compared to 1992 primarily as a result of an increase in
membership activity at the Partnership's club facilities in Weston
resulting from the overall increase in home sales activity within that
Community. In addition, revenues from the Partnership's cable operations
in Broken Sound and Weston increased during the year ended December 31,
1993 as compared to 1992 resulting from an increase in the number of cable
subscribers within those Communities as well as a change in the cable rate
structure. The decrease in the negative net margins since 1992 is due
primarily to cost reductions implemented at the Partnership's club and
hotel operations coupled with an overall increase in revenues from these
operations. The Partnership continually evaluates the operations of its
club and hotel facilities and institutes additional cost controls as deemed
appropriate.
Brokerage and other operations represents activity from the sale of
unaffiliated third-party builders' homes within the Partnership's
Communities, activity from resale of real estate inside and outside the
Partnership's Communities, proceeds from the Partnership's property
management activities as well as fees earned from various management
agreements with joint ventures. The increase in revenues and the
corresponding increase in the gross operating profit from brokerage and
other operations for the year ended December 31, 1993 as compared to 1992
was attributable to an increase in the volume of resale activity, primarily
in the Sarasota, Broward County and Palm Beach County, Florida areas, as
well as a decrease in the related cost of revenues resulting from a
reduction in commissions paid due to a modification of the Partnership's
brokerage commission structure.
Selling, general and administrative expenses include all marketing
costs, with the exception of those costs capitalized in conjunction with
the construction of housing units, and project and general administrative
costs. These expenses are net of the marketing fee reimbursements received
from third-party builders. Selling, general and administrative expenses
increased for the year ended December 31, 1994 as compared to 1993 due to
increased project administrative costs at the Partnership's Weston
Community and at Arvida's Grand Bay on Longboat Key. These increased costs
resulted from increased activity related to these projects in 1994 as
compared to 1993. Selling, general and administrative expenses were
significantly lower for the year ended December 31, 1993 as compared to
1992. This significant reduction was attributable to the implementation of
a series of overhead reductions including the consolidation of certain
administrative functions, a reduction in the number of employees and other
employee-related expenditures, the implementation of more cost-effective
marketing programs, as well as an overall reduction of other administrative
expenses. Management continually evaluates the operations of the
Partnership and institutes additional cost controls as deemed necessary in
order to maximize the Partnership's profits.
Charges to the carrying value of real estate inventories and other
assets represent adjustments to the book values of the Partnership's
projects based upon the analysis of each projects' estimated selling price
in the ordinary course of business less estimated costs of completion,
holding and disposal as compared to its recorded carrying value.
The Partnership recorded charges to the carrying value of real estate
inventories and other assets for the year ended December 31, 1993 totalling
approximately $4.9 million resulting from the adverse impact of reductions
in housing prices on future anticipated lot values at the Partnership's
Water's Edge and Dockside Communities.
The Partnership recorded charges to the carrying value of real estate
inventories and other assets totalling approximately $27.2 million during
the year ended December 31, 1992. These charges included approximately
$7.4 million to reduce the carrying values of the Partnership's Water's
Edge and Dockside Communities and $1.8 million to reduce the carrying value
of its River Hills Community. These Communities had been experiencing
slower sales absorptions than anticipated due to the pricing of products
not being in line with the then current market demand. The charges to the
inventory carrying values resulted from the Partnership's plans to offer
lower-priced homesite and housing products in these Communities which were
more consistent with market demand. In addition, the value of the golf and
country club facility at River Hills had been adversely impacted by the
introduction of new lower-priced products within the Community, as well as
overall economic conditions and the competition from other club facilities
within the Tampa, Florida area. As a result, the Partnership recorded an
approximate $2.5 million charge to the net book value of the golf course
and country club at River Hills during 1992.
In light of the circumstances surrounding The Oaks joint venture as
discussed in Liquidity and Capital Resources above, the Partnership, as a
matter of prudent accounting practice, recorded a charge to the carrying
value of real estate inventories and equity memberships of approximately
$2.3 million and $1.0 million, respectively, in the fourth quarter of 1992
to properly reflect the estimated market value of The Oaks property in its
then current state of development assuming a bulk sale of the entire
property under the market conditions at that time.
The amenities within the Partnership's Jacksonville Golf and Country
Club and Broken Sound Communities are conveyed to homeowners through the
sale of equity memberships. During 1992, the value of the remaining
memberships in Jacksonville Golf and Country Club had been adversely
impacted by the introduction of lower-priced products within the Community
in response to market conditions as well as competition from other club
facilities located in the Jacksonville area. In addition, during 1992, the
higher-priced equity memberships at the Broken Sound Club had experienced a
slowdown in sales due primarily to the overall slowdown in the economy and
the low levels of consumer confidence. As a result of the above, during
1992 the Partnership recorded charges to the carrying values of its equity
memberships at Jacksonville Golf and Country Club and Broken Sound Club of
approximately $2.2 million and $1.0 million, respectively.
In the fourth quarter of 1992, the Partnership recorded an approximate
$0.9 million charge to the net book value of property and equipment to
reflect the reduction in the value of a 29,000 square foot office building
located in Palm Beach County, Florida. In addition, the Partnership owns
interests in a number of commercial joint ventures located throughout
Florida. Due to a significant decline in the demand for undeveloped
commercial real estate in the markets in which these properties are
located, in 1992 the respective joint ventures recorded charges to the
carrying values of their real estate inventories. These charges resulted
in the Partnership reducing its investments in these joint ventures by
approximately $7.4 million to reflect their estimated net realizable
values. The balance of the charges to real estate inventories and other
assets for the year ended December 31, 1992, which totalled approximately
$0.7 million, were recorded to reflect the then current market value of
several parcels of undeveloped commercial real estate.
Interest income increased for the year ended December 31, 1994 as
compared to 1993 due primarily to an increase in the average amounts
invested in 1994 in short-term financial instruments. Interest income
decreased for the year ended December 31, 1993 as compared to 1992
primarily due to an overall decrease in the average amounts invested in
short-term instruments during 1993 as compared to 1992.
The decrease in equity in earnings (losses) of unconsolidated ventures
for the year ended December 31, 1994 as compared to 1993 was due primarily
to the reduction in earnings from the two joint ventures in Weston which
had been formed during the second half of 1992 to construct homes within
that Community. Those homes had been completed and were virtually closed
out by December 31, 1993. The 1993 earnings from these joint ventures also
contributed to the increase in equity in earnings (losses) of
unconsolidated ventures for the year ended December 31, 1993 as compared to
1992. See Liquidity and Capital Resources above and Notes 1 and 7 for
further discussion regarding these joint venture interests. The increase
in equity in earnings (losses) of unconsolidated joint ventures for the
year ended December 31, 1993 as compared to 1992 was also due to the change
from the equity to the cost method of accounting for the Partnership's
investment in the Coto de Caza joint venture, which resulted in the
Partnership no longer recording its ownership share of the loss from the
Coto de Caza venture's operations. See Note 7 for further discussion of
the change in ownership of the Coto de Caza joint venture.
Interest and real estate taxes decreased for the year ended December
31, 1994 as compared to 1993 due primarily to an overall decrease in the
Partnership's average debt balance outstanding, as well as the maturity of
both of the Partnership's interest rate swap arrangements during 1994.
Interest and real estate taxes decreased for the year ended December 31,
1993 as compared to 1992 due to an overall decrease in the Partnership's
average debt balance outstanding and an increase in the amount of real
estate inventories which met the requirements for capitalization of these
costs.
INFLATION
Although the relatively low rates of inflation in recent years
generally have not had a material effect on the Community development
business, inflation in future periods can adversely affect the development
of Communities generally because of its impact on interest rates. High
interest rates not only increase the cost of borrowed funds to developers,
but also have a significant effect on the affordability of permanent
mortgage financing to prospective purchasers. In addition, any increased
costs of materials and labor resulting from high rates of inflation may, in
certain circumstances, be passed through to purchasers of real properties
through increases in sales prices, although such increases may reduce sales
volume. To the extent such cost increases are not passed through to
purchasers, there would be a negative impact on the ultimate margins
realized by the Partnership.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Reports of Independent Certified Public Accountants
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Partners' Capital Accounts
(Deficit) for the years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is
inapplicable or immaterial, or the information is presented in the
consolidated financial statements or related notes.<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Arvida/JMB Partners, L.P.
In our opinion, the consolidated statements of operations, changes in
partners' capital accounts (deficit) and cash flows for the year ended
December 31, 1992 (appearing on pages 28 through 33 of the Arvida/JMB
Partners, L.P. (a limited partnership) Form 10-K Annual Report) present
fairly, in all material respects, the results of operations and cash flows
of Arvida/JMB Partners, L.P. and its subsidiaries for the year ended
December 31, 1992, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on
these financial statements based on our audit. We conducted our audit of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion
expressed above. We have not audited the consolidated financial statements
of Arvida/JMB Partners, L.P. for any period subsequent to December 31,
1992.
Price Waterhouse LLP
Miami, Florida
March 23, 1993<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
ARVIDA/JMB PARTNERS, L.P.
We have audited the accompanying consolidated balance sheets of
Arvida/JMB Partners, L.P. and Consolidated Ventures as of December 31, 1994
and 1993, and the related consolidated statements of operations, changes in
partners' capital accounts (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Arvida/JMB Partners, L.P. and Consolidated Ventures at December
31, 1994 and 1993, and the consolidated results of their operations and
their cash flows for the years then ended, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Miami, Florida
February 20, 1995
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash and cash equivalents (note 3) . . . . . . . . . . . . . . . . $ 22,024,390 20,566,609
Restricted cash (note 3) . . . . . . . . . . . . . . . . . . . . . 14,232,540 12,645,678
Trade and other accounts receivable (net of allowance
for doubtful accounts of $229,542 and $381,151
at December 31, 1994 and 1993, respectively) . . . . . . . . . . 18,209,957 7,298,714
Mortgages receivable, net (note 4) . . . . . . . . . . . . . . . . 1,094,223 2,940,961
Real estate inventories (notes 5 and 8). . . . . . . . . . . . . . 207,874,438 188,679,152
Property and equipment, net (notes 6 and 8). . . . . . . . . . . . 69,114,559 66,989,577
Investments in and advances to joint ventures, net (note 7). . . . 23,178,951 24,731,852
Equity memberships (note 9). . . . . . . . . . . . . . . . . . . . 10,536,864 15,146,661
Amounts due from affiliates (note 10). . . . . . . . . . . . . . . 524,556 88,389
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . 9,581,234 9,007,402
------------ -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . $376,371,712 348,094,995
============ ===========
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ -----------
Liabilities:
Bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . $ -- 1,659,930
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 24,142,890 10,667,317
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,082,766 22,010,408
Accrued expenses and other liabilities . . . . . . . . . . . . . 13,418,777 13,896,171
Notes and mortgages payable, net (note 8). . . . . . . . . . . . 115,147,525 147,770,992
------------ -----------
Commitments and contingencies (notes 7, 8, 10, 11 and 12)
Total liabilities. . . . . . . . . . . . . . . . . . . . 179,791,958 196,004,818
------------ -----------
Partners' capital accounts (note 14)
General Partner and Associate Limited Partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net income . . . . . . . . . . . . . . . . . . . . 34,328,454 33,739,753
Cumulative cash distributions . . . . . . . . . . . . . . . . (33,609,346) (33,466,823)
------------ -----------
739,108 292,930
------------ -----------
Limited partners:
Initial Limited Partner:
Capital contributions, net of offering costs. . . . . . . . . 364,841,815 364,841,815
Cumulative net losses . . . . . . . . . . . . . . . . . . . . (32,354,861) (78,963,692)
Cumulative cash distributions . . . . . . . . . . . . . . . . (136,646,308) (134,080,876)
------------ -----------
195,840,646 151,797,247
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . 196,579,754 152,090,177
------------ -----------
Total liabilities and partners' capital. . . . . . . . . $376,371,712 348,094,995
============ ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Housing. . . . . . . . . . . . . . . . . . . . $195,077,922 105,135,532 53,579,787
Homesites. . . . . . . . . . . . . . . . . . . 49,775,550 59,171,109 50,431,467
Land and property. . . . . . . . . . . . . . . 11,050,339 25,646,960 18,708,924
Operating properties . . . . . . . . . . . . . 26,719,132 26,326,255 24,129,461
Brokerage and other operations . . . . . . . . 32,435,115 31,371,336 27,861,140
------------ ------------ ------------
Total revenues . . . . . . . . . . . . 315,058,058 247,651,192 174,710,779
------------ ------------ ------------
Cost of revenues:
Housing. . . . . . . . . . . . . . . . . . . . 152,838,691 84,598,055 47,240,372
Homesites. . . . . . . . . . . . . . . . . . . 28,980,971 37,025,954 32,445,059
Land and property. . . . . . . . . . . . . . . 6,488,326 18,431,543 15,501,055
Operating properties . . . . . . . . . . . . . 26,648,781 27,552,287 26,868,457
Brokerage and other operations . . . . . . . . 26,733,988 25,113,709 23,462,659
------------ ------------ ------------
Total cost of revenues . . . . . . . . 241,690,757 192,721,548 145,517,602
------------ ------------ ------------
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Gross operating profit . . . . . . . . . . . . . 73,367,301 54,929,644 29,193,177
Selling, general and administrative expenses . . 20,690,839 19,343,730 25,283,422
Charges to the carrying value of real estate
inventories and other assets
(notes 1, 5, 6, 7 and 9) . . . . . . . . . . . -- 4,896,000 27,247,000
------------ ------------ ------------
Net operating income (loss). . . . . . 52,676,462 30,689,914 (23,337,245)
Interest income. . . . . . . . . . . . . . . . . 1,068,011 672,000 1,616,309
Equity in earnings (losses) of unconsolidated
ventures (notes 1 and 7) . . . . . . . . . . . 524,520 1,134,947 (2,225,531)
Interest and real estate taxes, net (note 1) . . (7,071,461) (12,739,584) (20,027,899)
------------ ------------ ------------
Net income (loss) before
extraordinary item . . . . . . . . . 47,197,532 19,757,277 (43,974,366)
Extraordinary item:
Gain on early extinguishment
of debt (note 8) . . . . . . . . . -- 9,535,781 --
------------ ------------ ------------
Net income (loss). . . . . . . . . . . $ 47,197,532 29,293,058 (43,974,366)
============ ============ ============
Net income (loss) per Limited
Partnership Interest . . . . . . . . $ 115.37 71.78 (160.42)
============ ============ ============
Cash distribution per Limited
Partnership Interest . . . . . . . . $ 6.35 -- --
============ ============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
GENERAL PARTNER AND ASSOCIATE LIMITED PARTNERS LIMITED PARTNERS (404,005 INTERESTS)
----------------------------------------------------------------------------------------------------------
NET NET
CONTRIBU- INCOME CASH INCOME
TIONS (LOSS) DISTRIBUTIONS TOTAL CONTRIBUTIONS (LOSS) DISTRIBUTIONS TOTAL
--------- --------- ------------- ----------- ------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
Decem-
ber 31,
1991. . . 20,00012,611,253 (33,466,823)(20,835,570) 364,841,815 (43,153,884)(134,080,876) 187,607,055
Net income
(loss)
(note 14) -- 20,835,570 -- 20,835,570 -- (64,809,936) -- (64,809,936)
----------------- ----------- ----------- ----------- ----------- ------------ -----------
Balance
(deficit)
Decem-
ber 31,
1992. . . 20,00033,446,823 (33,466,823) -- 364,841,815(107,963,820)(134,080,876) 122,797,119
Net income
(note 14) -- 292,930 -- 292,930 -- 29,000,128 -- 29,000,128
----------------- ----------- ----------- ----------- ----------- ------------ -----------
Balance
Decem-
ber 31,
1993. . . 20,00033,739,753 (33,466,823) 292,930 364,841,815 (78,963,692)(134,080,876) 151,797,247
Net income
(note 14) -- 588,701 (142,523) 446,178 -- 46,608,831 (2,565,432) 44,043,399
----------------- ----------- ----------- ----------- ----------- ------------ -----------
Balance
Decem-
ber 31,
1994. . . $20,00034,328,454 (33,609,346) 739,108 364,841,815 (32,354,861)(136,646,308) 195,840,646
================= =========== =========== =========== =========== ============ ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Net income (loss). . . . . . . . . . . . . . . . $ 47,197,532 29,293,058 (43,974,366)
Charges (credits) to net income (loss) not
requiring (providing) cash:
Depreciation and amortization. . . . . . . . . 5,556,524 6,232,092 7,550,386
Equity in (earnings) losses of uncon-
solidated ventures . . . . . . . . . . . . . (524,520) (1,134,947) 2,225,531
Provision for doubtful accounts. . . . . . . . 136,395 269,400 42,423
(Gain) loss on sale of property and equipment. 32,888 34,827 (13,133)
Charge to carrying value of real estate
inventories and other assets
(notes 1, 5, 6, 7 and 9) . . . . . . . . . . -- 4,896,000 27,247,000
Extraordinary gain on early extinguishment
of debt (note 8) . . . . . . . . . . . . . . -- (9,535,781) --
Changes in:
Restricted cash. . . . . . . . . . . . . . . . (1,586,862) (4,690,427) (784,260)
Trade and other accounts receivable. . . . . . (11,047,638) (499,618) 2,161,155
Real estate inventories:
Additions to real estate inventories . . . . (195,200,305) (131,513,189) (67,133,642)
Cost of revenues . . . . . . . . . . . . . . 188,307,988 140,055,552 95,186,486
Capitalized interest . . . . . . . . . . . . (8,278,441) (7,738,179) (4,470,150)
Capitalized real estate taxes. . . . . . . . (4,024,528) (3,179,099) (2,026,309)
Equity memberships . . . . . . . . . . . . . . 5,572,166 6,091,919 5,723,093
Amounts due from affiliates. . . . . . . . . . (436,167) 268,408 (4,464,883)
Prepaid expenses and other assets. . . . . . . (1,177,376) (134,749) (2,539,319)
Accounts payable, accrued expenses and
other liabilities. . . . . . . . . . . . . . 12,225,653 1,484,062 1,840,679
Deposits . . . . . . . . . . . . . . . . . . . 5,072,358 (1,740,546) 5,345,420
------------ ------------ ------------
Total adjustments. . . . . . . . . . . . . (5,371,865) (834,275) 65,890,477
------------ ------------ ------------
Net cash provided by operations. . . . 41,825,667 28,458,783 21,916,111
------------ ------------ ------------
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Investing activities:
Mortgages receivable . . . . . . . . . . . . . 1,846,738 1,196,370 1,825,359
Acquisitions of property and equipment . . . . (7,116,040) (3,470,360) (4,000,910)
Proceeds from disposals of property and
equipment. . . . . . . . . . . . . . . . . . 5,190 1,121,253 83,071
Joint venture distributions (contributions),
net. . . . . . . . . . . . . . . . . . . . . 1,667,346 3,916,119 (2,245,226)
Payments from joint ventures . . . . . . . . . 220,232 3,956,980 916,114
Proceeds from acquisition of joint venture
interest . . . . . . . . . . . . . . . . . . -- 6,614 81,741
------------ ------------ ------------
Net cash provided by (used in)
investing activities . . . . . . . . (3,376,534) 6,726,976 (3,339,851)
------------ ------------ ------------
Financing activities:
Proceeds from notes and long-term borrowings . 20,132,159 28,095,548 22,102,094
Payments of notes and long-term borrowings . . (52,755,626) (52,008,948) (62,618,870)
Proceeds from (payments of) bank overdrafts. . (1,659,930) 1,659,930 (2,246,174)
Distributions to General Partner and
Associate Limited Partners . . . . . . . . . (142,522) -- --
Distributions to Limited Partners. . . . . . . (2,565,433) -- --
------------ ------------ ------------
Net cash used in financing
activities . . . . . . . . . . . . . (36,991,352) (22,253,470) (42,762,950)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 1,457,781 12,932,289 (24,186,690)
Cash and cash equivalents, beginning of year . . 20,566,609 7,634,320 31,821,010
------------ ------------ ------------
Cash and cash equivalents, end of year . . . . . $ 22,024,390 20,566,609 7,634,320
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest,
net of amounts capitalized . . . . . . . . . $ 3,838,458 7,387,204 10,945,116
============ ============ ============
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Non-cash investing and financing activities:
Land contributed in exchanges for joint
venture interests (note 7) . . . . . . . . $ -- -- 1,431,600
Acquisition of joint venture interests
(note 7) . . . . . . . . . . . . . . . . . -- 324,169 12,090,912
------------ ------------ ------------
$ -- 324,169 13,522,512
============ ============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF ACCOUNTING
Principles of Consolidation
The consolidated financial statements include the accounts of
Arvida/JMB Partners, L.P. (the "Partnership") and its consolidated ventures
(Note 7). All material intercompany balances and transactions have been
eliminated in consolidation. The equity method of accounting has been
applied in the accompanying consolidated financial statements with respect
to those investments where the Partnership's ownership interest is 50% or
less, with the exception of the Partnership's investment in the Coto de
Caza joint venture which is accounted for in accordance with the cost
method of accounting, effective September 15, 1992 (Note 7).
Recognition of Profit from Sales of Real Estate
For sales of real estate, profit is recognized in full when the
collectability of the sales price is reasonably assured and the earnings
process is virtually complete. When the sale does not meet the require-
ments for recognition of income, profit is deferred until such requirements
are met. For sales of residential units, profit is recognized at the time
of closing or if certain criteria are met, on the percentage-of-completion
method.
Real Estate Inventories and Cost of Real Estate Revenues
Real estate inventories are carried at cost, including capitalized
interest and property taxes, but not in excess of the net realizable value
determined by the evaluation of individual projects. Management's
evaluation of net realizable value is based on each projects' estimated
selling price in the ordinary course of business less estimated costs of
completion, holding and disposal. These estimates are reviewed
periodically and compared to each project's recorded book value.
Adjustments to book value, as they become necessary, are reported in the
period in which they become known. The total cost of land, land
development and common costs are apportioned among the projects on the
relative sales value method. Costs pertaining to the Partnership's
housing, homesite, and land and property revenues reflect the cost of the
acquired assets as well as development costs, construction costs,
capitalized interest, capitalized real estate taxes and capitalized
overheads. Certain marketing costs relating to housing projects, including
exhibits and displays, and certain planning and other predevelopment
activities, excluding normal period expenses, are capitalized and charged
to housing cost of revenues as related units are closed. A warranty
reserve is provided as residential units are closed. This reserve is
reduced by the cost of subsequent work performed.
Capitalized Interest and Real Estate Taxes
Interest and real estate taxes incurred are capitalized to qualifying
assets, principally real estate inventories. Such capitalized interest and
real estate taxes are charged to cost of revenues as sales of real estate
inventories are recognized. Interest, including the amortization of loan
fees, of $11,257,464, $14,786,169 and $17,424,850 was incurred for the
years ended December 31, 1994, 1993 and 1992, respectively, of which
$8,278,441, $7,738,179 and $4,470,150 was capitalized for the years ended
December 31, 1994, 1993 and 1992, respectively. Interest payments,
including amounts capitalized, of $12,116,899, $15,125,383 and $15,415,266
were made for the years ended December 31, 1994, 1993 and 1992,
respectively.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Real estate taxes of $8,116,966, $8,870,693 and $9,099,508 were
incurred for the years ended December 31, 1994, 1993 and 1992,
respectively, of which $4,024,528, $3,179,099 and $2,026,309 were
capitalized for the years ended December 31, 1994, 1993 and 1992,
respectively. Real estate tax payments of $8,212,002, $8,733,910 and
$10,301,400 were made for the years ended December 31, 1994, 1993 and 1992,
respectively. The preceding analysis of real estate taxes does not include
real estate taxes incurred or paid with respect to the Partnership's club
facilities and operating properties as these taxes are included in cost of
revenues for operating properties.
Property and Equipment and Other Assets
Property and equipment are carried at cost less accumulated
depreciation and are depreciated on the straight-line method over the
estimated useful lives of the assets, which range from two to forty years.
Provisions for value impairment are recorded with respect to such assets
whenever the estimated future cash flows from operations and projected
sales proceeds are less than the net carrying value. Expenditures for
maintenance and repairs are charged to expense as incurred. Costs of major
renewals and improvements which extend useful lives are capitalized.
Other assets are amortized on the straight-line method, which
approximates the interest method, over the useful lives of the assets which
range from one to five years. Amortization of debt discounts (1992 only)
and other assets, excluding loan fees, of approximately $216,000, $247,000
and $1,074,000 was incurred for the years ended December 31, 1994, 1993 and
1992, respectively. Amortization of loan fees, which is included in
interest expense, of approximately $388,000, $588,000 and $344,000 was
incurred for the years ended December 31, 1994, 1993 and 1992,
respectively.
Investments in and Advances to Joint Ventures, Net
In general, the equity method of accounting has been applied in the
accompanying consolidated financial statements with respect to those
investments for which the Partnership does not have majority control and
where the Partnership's ownership interest is 50% or less. The cost method
of accounting has been applied in the accompanying consolidated financial
statements with respect to the Coto de Caza joint venture, effective
September 15, 1992, as a result of the Partnership's decrease in its
ownership interest and its joint venture partner's control over the future
operations of the Community. The cost method of accounting is used when a
limited partner has virtually no influence over venture operations and
financial policies. Under the cost method, income is generally recorded
only to the extent of distributions received. Reference is made to Note 7
for further discussion of this joint venture.
Investments in the remaining joint ventures are carried at the
Partnership's proportionate share of the ventures' assets (not in excess of
their net realizable value determined by evaluation of individual
projects), net of their related liabilities and adjusted for any basis
differences. Basis differences result from the purchase of interests at
values which differ from the recorded cost of the Partnership's
proportionate share of the joint ventures' net assets.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership periodically advances funds to its joint ventures in
which it holds ownership interests when deemed necessary and economically
justifiable. Such advances are generally interest bearing and are
repayable to the Partnership from amounts earned through joint venture
operations.
Equity Memberships
The amenities within certain of the Partnership's Boca Raton and
Jacksonville, Florida Communities, as well as its Community near Highlands,
North Carolina are conveyed to the respective homeowners through the sale
of equity memberships. The amounts recorded as equity memberships in the
accompanying Consolidated Balance Sheets represent the accumulation of
costs incurred in constructing clubhouses, golf courses, tennis courts and
various other related assets, less amounts allocated to memberships sold
not in excess of their net realizable value determined by evaluations of
individual amenities. Equity membership revenues and related cost of
revenues are included in land and property in the accompanying Consolidated
Statements of Operations.
Partnership Records
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments where applicable to reflect
the Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to consolidate the accounts of the ventures as
described above. The net effect of these items is summarized as follows:
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1994 1993
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . $376,371,712 489,068,975 348,094,995 416,391,142
Partners' capital accounts
(deficit):
General Partner and
Associate Limited Partners. . 739,108 25,362 292,930 19,280
Limited Partners . . . . . . . 195,840,646 301,194,400 151,797,247 263,965,551
Net income (loss):
General Partner and
Associate Limited Partners. . 588,701 148,605 292,930 19,280
Limited Partners . . . . . . . 46,608,831 39,794,281 29,000,128 27,622,856
Net income (loss) per
Limited Partnership
Interest . . . . . . . . . . . . 115.37 98.50 71.78 68.37
============ ============ ============= =============
</TABLE>
Reference is made to Note 14 for further discussion of the allocation of
profits and losses to the General Partner, Associated Limited Partners and
Limited Partners.
The net income (loss) per Limited Partnership Interest is based upon the
number of Limited Partnership Interests outstanding at the end of each period.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Reclassifications
Certain reclassifications have been made to the 1993 and 1992
financial statements to conform to the 1994 presentation.
Income Taxes
No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable state law to remit directly to the state tax
authorities amounts representing withholding on applicable taxable income
allocated to partners.
(2) INVESTMENT PROPERTIES
The Partnership's assets consist principally of interests in land
which is in the process of being developed into master-planned residential
Communities (the "Communities") and, to a lesser extent, commercial
properties; mortgage notes and accounts receivable; management and other
service contracts; construction, brokerage and other support activities;
real estate assets held for investment; club and recreational facilities;
and cable television businesses serving certain of its Communities.
The Partnership's Communities are in various stages of development,
with estimated remaining build-outs ranging from one to ten years. The
Partnership's condominium project on Longboat Key, Florida known as
Arvida's Grand Bay, is in its early stage of development. The Weston
Community, located in Broward County, Florida is the Partnership's largest
Community and is in its mid stage of development. Also in their mid stages
of development are the River Hills Country Club in Tampa, Florida;
Jacksonville Golf and Country Club in Jacksonville, Florida; the Water's
Edge Community in Atlanta, Georgia and The Cullasaja Club, near Highlands,
North Carolina. The Partnership's remaining Communities known as Sawgrass
Country Club, in Jacksonville, Florida and Dockside in Atlanta, Georgia are
in their final stages of development with anticipated close-outs in 1996.
In addition, the Broken Sound Community, located in Boca Raton, Florida, is
nearing completion with an anticipated close-out in 1995. Future revenues
will be impacted to the extent that there are lower levels of inventories
available for sale as these Communities approach or undertake their final
phases.
On August 27, 1991, the General Partner, on behalf of the Partnership,
initiated a lawsuit in the Circuit Court of Cook County (County Department,
Chancery Division), Illinois against The Walt Disney Company ("Disney").
The litigation arises out of the Partnership's acquisition of substantially
all of the real estate and other assets of Arvida Corporation, a subsidiary
of Disney, in September 1987. In the complaint filed on its behalf, the
Partnership alleges that under the terms of the contract with Disney for
the acquisition, the purchase price of the assets was to be reduced by the
amount of certain payments made prior to the closing (the "Closing") of the
transaction out of funds of Arvida Corporation in order to satisfy certain
obligations that were not assumed by the Partnership. The complaint also
alleges that the contract entitles the Partnership to (i) reimbursement by
Disney for amounts advanced by the Partnership to pay certain other claimed
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
obligations of Arvida Corporation, including certain post-Closing
adjustments, in connection with the acquisition and (ii) indemnification by
Disney for additional costs and expenses incurred by the Partnership
subsequent to the Closing in order to remedy certain environmental
conditions that existed prior to the Closing. The complaint further
alleges that the Partnership has made various demands on Disney for payment
of these amounts and that Disney has refused to make such payments. The
Partnership seeks declaratory judgments that the Partnership is entitled to
a purchase price reduction from Disney and reimbursement or indemnification
by Disney for amounts advanced or costs and expenses incurred by the
Partnership for certain obligations of Arvida Corporation, together with
interest on all such amounts and costs. During the second quarter of 1992,
the Partnership received approximately $0.8 million in settlement of
portions of this claim. There is no assurance as to what amounts, if any,
the Partnership will recover as a result of the litigation with regard to
the remaining open issues under the initially filed complaint. During July
1993, Disney filed an answer denying the substantive allegations of the
Partnership's complaint and raising various affirmative defenses. The
Partnership believes Disney's defenses are without merit and will continue
to pursue its claims. In addition, Disney has filed a three count
counterclaim in which it seeks among other things: a complete accounting
of liabilities allegedly assumed but not discharged by the Partnership to
ascertain whether certain funds, not to exceed $2.9 million, are due Disney
in accordance with the purchase agreement; an unspecified amount of damages
exceeding $500,000 allegedly representing workers compensation and warranty
payments made by Disney, which Disney alleges are obligations of the
Partnership; an accounting for funds disbursed from a claims pool in the
amount of $3,000,000 established by the parties; and attorney fees and
costs. The Partnership believes it has meritorious defenses to these
counterclaims and will defend itself vigorously against them.
(3) CASH, CASH EQUIVALENTS AND RESTRICTED CASH
At December 31, 1994 and 1993, cash and cash equivalents primarily
consisted of U.S. Government obligations with original maturities of three
months or less, money market demand accounts and repurchase agreements, the
cost of which approximated market value. Cash and cash equivalents include
treasury bills generally being held to maturity with original maturities of
three months or less of approximately $1,777,000 and $3,900,000 at December
31, 1994 and 1993, respectively. Included in restricted cash are amounts
restricted under various escrow agreements. Credit risk associated with
cash, cash equivalents and restricted cash is considered low due to the
high quality of the financial institutions in which these assets are held.
(4) MORTGAGES RECEIVABLE
Mortgages receivable generally range in maturity from one to three
years, certain of which are collateralized by liens on the property sold
and bear interest with stated rates up to 10% per annum. All mortgages
receivable with below market rates are discounted at the market rate
prevailing at the date of issue or purchase. The resulting effective
interest rates on mortgages receivable range from approximately 9% to 15% -
per annum. The outstanding principal balances of mortgages receivable at
December 31, 1994 and 1993 are summarized as follows:
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
------------ ----------
Total gross mortgages receivable . . .$ 2,078,433 3,958,649
Unamortized discount and
valuation allowances . . . . . . . . (984,210) (1,017,688)
------------ ----------
Mortgages receivable, net . . . .$ 1,094,223 2,940,961
============ ==========
(5) REAL ESTATE INVENTORIES
Real estate inventories at December 31, 1994 and 1993 are summarized
as follows:
1994 1993
------------ ----------
Land held for future development or
sale . . . . . . . . . . . . . . . .$ 16,132,750 24,259,509
Community development inventory:
Work in progress and
land improvements. . . . . . . . . 155,287,977 137,048,514
Completed inventory. . . . . . . . . 36,453,711 27,371,129
------------ -----------
Real estate inventories . . . . .$207,874,438 188,679,152
============ ===========
The Partnership recorded charges to the carrying value of real estate
inventories and other assets for the year ended December 31, 1993 totalling
approximately $4.9 million resulting from the adverse impact of reductions
in housing prices on future anticipated lot values at the Partnership's
Water's Edge and Dockside Communities.
The Partnership recorded charges to the carrying value of real estate
inventories and other assets totalling approximately $27.2 million during
the year ended December 31, 1992. These charges included approximately
$7.4 million to reduce the carrying values of the Partnership's Water's
Edge and Dockside Communities and $1.8 million to reduce the carrying value
of its River Hills Community. These Communities had been experiencing
slower sales absorptions than anticipated due to the pricing of products
not being in line with the then current market demand. The charges to the
inventory carrying values resulted from the Partnership's plans to offer
lower-priced homesite and housing products in these Communities which were
more consistent with market demand.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In addition, in light of the circumstances surrounding The Oaks joint
venture as discussed in detail in Note 8, the Partnership, as a matter of
prudent accounting practice, recorded a charge to the carrying value of
real estate inventories of approximately $2.3 million in 1992 to properly
reflect the estimated market value of The Oaks Property in its then current
state of development assuming a bulk sale of the entire property under the
market conditions at that time. An additional $0.7 million charge to the
carrying value of real estate inventories was recorded during 1992 to
reflect the then current market value of several parcels of undeveloped
commercial real estate.
(6) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1994 and 1993 are summarized as
follows:
1994 1993
------------ ----------
Land . . . . . . . . . . . . . . . .$ 6,566,045 6,566,045
Land improvements. . . . . . . . . . 18,258,457 18,214,258
Buildings. . . . . . . . . . . . . . 52,101,080 51,166,841
Equipment and furniture. . . . . . . 21,765,981 19,024,112
Construction in progress . . . . . . 4,595,610 1,281,936
------------ ------------
Total . . . . . . . . . . . . . 103,287,173 96,253,192
Accumulated depreciation. . . . (34,172,614) (29,263,615)
------------ ------------
Property and equipment, net . .$ 69,114,559 66,989,577
============ ============
During 1992, the value of the golf and country club facility at River
Hills had been adversely impacted by the introduction of new lower-priced
products within the Community, as well as overall economic conditions and
the competition from other club facilities within the Tampa, Florida area.
As a result, the Partnership recorded an approximate $2.5 million charge to
the net book value of the golf course and country club at River Hills for
the year ended December 31, 1992. In addition, during 1992, the
Partnership recorded an approximate $0.9 million charge to the net book
value of property and equipment to reflect the reduction in the value of a
29,000 square foot office building located in Palm Beach County, Florida.
These charges are included in charges to the carrying value of real estate
inventories and other assets on the accompanying Consolidated Statements of
Operations for the year ended December 31, 1992.
Depreciation expense of approximately $4,953,000, $5,397,000 and
$6,133,000 was incurred for the years ended December 31, 1994, 1993 and
1992, respectively.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(7) INVESTMENTS IN AND ADVANCES TO JOINT VENTURES, NET
The Partnership has numerous investments in real estate joint ventures
with ownership interests ranging from 20% to 50%. The Partnership's joint
venture interests accounted for under the equity method are as follows:
LOCATION OF
NAME OF VENTURE % OF OWNERSHIP PROPERTY
--------------- -------------- ------------
Arvida Boose
Joint Venture 50 Florida
Arvida Corporate
Park Associates 50 Florida
Arvida Pompano Associates
Joint Venture 50 Florida
H.A.E. Joint Venture 33-1/3 Florida
Mizner Court Associates
Joint Venture 50 Florida
Mizner Tower Associates
Joint Venture 50 Florida
Ocala 202 Joint Ventures 50 Florida
Tampa 301 Associates
Joint Venture 50 Florida
Windmill Lake Estates
Associates
Joint Venture 50 Florida
Arvida/RBG I Joint Venture 40 Florida
Arvida/RBG II Joint Venture 40 Florida
The following is combined summary information of joint ventures
accounted for under the equity method. The 1993 summary information
presented is not comparable to the 1992 information due to the
consolidation of the AOK Group Joint Venture effective March 1, 1993. See
further discussion below regarding the Partnership's accounting for these
joint venture interests.
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
ASSETS
------
<S> <C> <C>
Real estate inventories. . . . . . . . . . . . . . . . . . . . . . . $11,776,133 11,170,628
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,324,472 6,209,918
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . $15,100,605 17,380,546
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Accounts payable, deposits and other liabilities . . . . . . . . . . $ 664,459 752,274
Notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . 4,067,506 4,109,656
----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . 4,731,965 4,861,930
Venture partners' capital. . . . . . . . . . . . . . . . . . . . . . 4,869,258 5,753,884
Partnership's capital. . . . . . . . . . . . . . . . . . . . . . . . 5,499,382 6,764,732
----------- -----------
Total liabilities and partners' capital. . . . . . . . . . $15,100,605 17,380,546
=========== ===========
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
COMBINED RESULTS OF OPERATIONS
------------------------------
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992
------------ ------------ -------------
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . $ 1,102,242 32,846,925 10,667,527
=========== ============ ============
Net income (loss). . . . . . . . . . . . . . . . . . $ (210,087) 2,409,483 (23,286,957)
=========== ============ ============
Partnership's proportionate share of
net income (loss). . . . . . . . . . . . . . . . . $ (126,207) 953,165 (11,706,781)
=========== ============ ============
Partnership's equity in earnings (losses) of
unconsolidated ventures. . . . . . . . . . . . . . $ 524,520 1,134,947 (2,225,531)
=========== ============ ============
The following is a reconciliation of the Partnership's Capital accounts within the joint ventures
to its investments in and advances to joint ventures as reflected on the accompanying Consolidated Balance
Sheets:
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992
------------ ------------ ------------
Partnership's Capital, equity method . . . . . . . . $ 5,746,626 7,263,586 9,769,568
Partnership's Capital, cost method . . . . . . . . . 5,836,000 5,836,000 8,763,000
Basis difference . . . . . . . . . . . . . . . . . . 7,479,134 7,294,843 4,566,543
----------- ------------ ------------
Investments in joint ventures. . . . . . . . . . . . 19,061,760 20,394,429 23,099,111
Advances to joint ventures, net. . . . . . . . . . . 4,117,191 4,337,423 8,199,613
----------- ------------ ------------
Investments in and advances to
joint ventures, net . . . . . . . . . . . . . $23,178,951 24,731,852 31,298,724
=========== ============ ============
</TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership owns interest in a number of commercial joint ventures
located throughout Florida. Due to a significant decline in the demand for
undeveloped commercial real estate in the markets in which these properties
are located, in 1992 the respective joint ventures recorded charges to the
carrying values of their real estate inventories. These charges resulted
in the Partnership reducing its investments in these joint ventures by
approximately $7.4 million to reflect their estimated net realizable
values. These charges are included in charges to the carrying value of
real estate inventories and other assets on the accompanying Consolidated
Statements of Operations for the year ended December 31, 1992.
The Partnership's share of net income (loss) is based upon its
ownership interest in numerous investments in joint ventures which are
accounted for in accordance with the equity method of accounting. Equity
in earnings (losses) of unconsolidated ventures represents the
Partnership's share of each venture's net income (loss), and may reflect a
component of purchase price adjustments included in the Partnership's
basis. Such adjustments are generally amortized to income in relation to
the cost of revenue of the underlying real estate assets. These factors
contribute to the differential in the Partnership's proportionate share of
the net income (loss) of the joint ventures and its equity in earnings
(losses) of unconsolidated ventures as well as to the basis differential
between the Partnership's investments in joint ventures and its equity in
underlying net assets, as shown above.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership. In addition, under
certain circumstances, either pursuant to the joint venture agreements or
due to the Partnership's obligations as a general partner, the Partnership
may be required to make additional cash advances or contributions to
certain of the ventures.
The Coto de Caza joint venture had utilized the maximum amount
available under its operating line of credit and had been seeking
alternative financing sources to fund the significant additional cash
necessary to continue development of the project and to fund the venture's
other operating costs. In the interim, the Partnership and its joint
venture partner had each advanced, net of reimbursements, approximately
$4.1 million to the venture through December 31, 1992. Interest earned on
such advances of approximately $1,212,000 was unpaid as of December 31,
1994. Due to the reallocation of the Partnership's interest in the Coto de
Caza joint venture effective September 15, 1992, the Partnership has
provided an allowance for doubtful accounts with regard to the interest
earned and unpaid at December 31, 1994 on advances previously made by the
Partnership. Given the weak market conditions in Orange County, California
and the continued lack of development financing available from traditional
lending sources, it was unlikely that the joint venture would be able to
secure additional financing in the near term. The joint venture partner
was willing to continue to advance funds to meet the venture's operating
needs. Given the finite amount of available capital, the Partnership
determined that it was in its best long-term interest to utilize that
capital for the development of its other properties rather than commit
additional funds for the development of the Coto de Caza Community. As a
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
result, the venture partner has funded the venture's cash deficits in their
entirety since June 1, 1992. As an alternative to funding future capital
requirements, the Partnership and its joint venture partner agreed to amend
the joint venture agreement and reallocate ownership interests. In
exchange for funding the venture's future operating needs, the venture
partner was reallocated an additional 30% interest in the venture, and
assumed the role of managing general partner. As such, the venture partner
has control over the future operations of the Community, including the
timing and extent of its development. The Partnership retains a 20%
limited partnership interest and is entitled to receive distributions from
net cash flow, after repayment of third party loans and advances made by
the venture partners, up to an amount agreed upon by the Partnership and
its joint venture partner. Certain specified costs and liabilities
incurred prior to the reallocation will continue to be shared equally by
the Partnership and its joint venture partner. This agreement was pursued
as a more favorable alternative to the provisions included in the
previously existing joint venture agreement for reallocation of partnership
interests should both partners not advance equal funds to the venture. As
a result of the Partnership's decrease in its ownership interest, and its
joint venture partner's control over the future operations of the
Community, commencing on September 15, 1992, the Partnership accounts for
its share of the operations of the Coto de Caza joint venture in accordance
with the cost method of accounting.
During 1992, the Partnership sold 60% of its interest in two land
parcels located in its Weston Community to unaffiliated third-party
purchasers. Subsequent to these transactions, the Partnership and the
purchasers each contributed their interests in these land parcels to joint
ventures established for the purpose of developing housing products within
Weston. The Partnership entered into development management agreements
with these joint ventures. Pursuant to the terms of these agreements, the
Partnership agreed to fund all development and construction costs, as well
as certain overheads, incurred on behalf of the joint venture projects.
Amounts funded are reimbursed by the joint ventures from sales revenues
generated by each joint venture. Amounts advanced by the Partnership to
each respective joint venture earned interest at 8.5% for the first year
and prime plus 2% per annum thereafter. During 1993, one of the joint
ventures obtained third-party, project specific financing to fund its
development and construction activities. In accordance with the provisions
of this financing agreement, the Partnership had been reimbursed the
majority of amounts previously advanced to the joint venture as of December
31, 1993 and the remaining amounts were reimbursed during 1994. Due to
significant sales activity, amounts previously advanced to the
Partnership's other joint venture were reimbursed in full during 1993. All
of the homes built by these joint ventures have been completed and closed
as of December 31, 1994.
During the first quarter of 1993, the Partnership reached a settlement
agreement with AOK Group, its joint venture partner in a property located
in Ocala, Florida, whereby in exchange for its joint venture partner's 50%
interest in the venture, the Partnership agreed to dismiss a lawsuit
previously filed against its joint venture partner for failure to perform
in accordance with the terms of a $1,600,000 note which had been issued to
the Partnership by the joint venture. This agreement was pursued as a more
favorable remedy to other alternatives available to the Partnership. As a
result of this transaction, the Partnership changed from the equity method
of accounting to the consolidated method of accounting for the joint
venture effective March 1, 1993. This transaction resulted in an increase
in the Partnership's total assets of approximately $324,000.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership incurs certain general and administrative expenses
which are paid by the Partnership on behalf of the joint ventures in which
it holds interests. The Partnership receives reimbursements from the joint
ventures for such costs. For the years ended December 31, 1994 and 1993,
the Partnership was entitled to receive approximately $378,000 and
$343,000, respectively, from certain of the joint ventures in which it
holds interests. At December 31, 1994, approximately $28,600 was owed to
the Partnership, of which approximately $5,000 was received as of March 15,
1995.
(8) NOTES AND MORTGAGES PAYABLE
Notes and mortgages payable at December 31, 1994 and 1993 are
summarized as follows:
1994 1993
------------ ------------
Term loan credit facility of
$85,252,250 and $126,805,195
bearing interest at approxi-
mately 8.7% and 5.6% per annum
at December 31, 1994 and
1993, respectively (A). . . . . . . . $ 73,452,970 108,262,248
Income property term loan of
$18,233,326 and $20,000,000,
bearing interest at approxi-
mately 8.6% and 5.6% per
annum at December 31, 1994 and
1993, respectively (A). . . . . . . . 17,933,326 18,933,328
Revolving line of credit of
$20,000,000 and $45,000,000
at December 31, 1994 and 1993,
respectively (A). . . . . . . . . . . -- --
Other notes and mortgages
payable (B). . . . . . . . . . . . . 23,761,229 20,575,416
------------ ------------
Total. . . . . . . . . . . . $115,147,525 147,770,992
============ ============
(A) At December 31, 1993, the Partnership's credit facility consisted
of a term loan in the original amount $126,805,195, a revolving line of
credit facility up to $45 million, an income property term loan in the
original amount of $20 million and a $15 million letter of credit facility.
The income property term loan, revolving line of credit and letter of
credit facility matured in July, 1994. Although the Partnership's term
loan was not scheduled to mature until July 1997, the lender required the
Partnership to renew its entire credit facility as a condition of renewing
the income property term loan, the revolving line of credit and letter of
credit facility.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
During November 1994, the Partnership and its lender signed an
agreement for a renewal of the entire credit facility agreement. In
connection with obtaining this renewal, the Partnership made principal
payments on its term loan of $3 million and $9.5 million in July 1994 and
December 1994, respectively. The new credit facility consists of a term
loan in the original amount of $85,252,520, a revolving line of credit
facility up to $20 million, an income property term loan in the original
amount of $18,233,326 and a $15 million letter of credit facility. The
term loan, the revolving line of credit and the letter of credit facility
are secured by recorded mortgages on all otherwise unencumbered real
property assets of the Partnership, as well an assignment of all mortgages
receivable, equity memberships, certain joint venture interests or joint
venture proceeds and cash balances (with the exception of deposits held in
escrow). The income property term loan is secured by the recorded first
mortgages on a mixed-use center and an office building in Boca Raton,
Florida. All of the notes under the facility are cross-collateralized and
cross-defaulted.
At December 31, 1994, the term loan, the revolving line of credit and
the income property term loan bear interest based, at the Partnership's
option, on one of the lenders' prime rate plus 1.25% per annum or the
relevant London Inter-Bank Offering Rate (LIBOR) plus 2.50% per annum. At
December 31, 1993, $75 million of the Partnership's outstanding credit
facility was under two interest rate swap arrangements. However, one of
the interest rate swap arrangements matured in February 1994 and the
remaining interest rate swap arrangement matured in October 1994. For the
year ended December 31, 1994, the effective interest rate for the combined
term loan, income property term loan and revolving line of credit facility
was approximately 8.5% per annum. This rate includes the effect of the
interest rate swap arrangements.
Under the term loan agreement, the Partnership made scheduled
principal payments of $10 million in March 1994 and February 1995. In
addition, the term loan agreement provides for additional principal
repayments based upon a specified percentage of available cash flow and
upon the sale of certain assets. For the year ended December 31, 1994, the
Partnership made such additional term loan payments totalling approximately
$12.3 million. Principal repayments of $5 million, $10 million and $5
million on the term loan are due in July 1995, February 1996 and July 1996,
respectively. The remaining balance outstanding is due in July 1997.
Under the income property term loan, principal payments of $0.1 million are
required to be paid monthly until March 1996 when the remaining outstanding
principal balance will be due. The revolving line of credit and letter of
credit facility mature in December 1995 and July 1995, respectively. At
March 15, 1995, all of the term loan proceeds had been borrowed with a
remaining balance of $51,046,932. The balances outstanding on the
revolving line of credit facility, the income property term loan and the
letter of credit facility at March 15, 1995 are $9,000,000, $17,633,326 and
$9,497,064, respectively.
At December 31, 1994, the Partnership has a contract for the sale of
its office building located in downtown Boca Raton, Florida known as Mizner
Place for approximately $4 million. The sale is expected to close during
the second quarter of 1995. The net sales proceeds from such sale will be
used to paydown the income property term loan.
The credit agreement contains significant restrictions with respect to
the payment of distributions to partners, the maintenance of certain loan-
to-value ratios, the use of proceeds from the sale of the Partnership's
assets and advances to the Partnership's joint ventures.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Loan fees incurred in connection with the restructuring of the
Partnership's credit facility have been capitalized and are being amortized
over the lives of the loans included in the credit facility using the
straight-line method, which approximates the interest method.
(B) Other notes and mortgages payable are collateralized by certain
real estate inventories, property and equipment and certain investments
with a net book value of approximately $25.6 million at December 31, 1994.
These notes and mortgage notes have a weighted average annual effective
interest rate of approximately 8.6% and 7.2% at December 31, 1994 and 1993,
respectively, and mature in varying amounts through 2017.
Certain of the Partnership's property within the Cullasaja Community
was financed by a mortgage note which matured on March 1, 1994. The note
was collateralized by a first mortgage on certain real estate inventories
and 12.5% of the outstanding balance was guaranteed by the Partnership.
The Partnership was unable to obtain an extension of the loan, and
therefore, on June 29, 1994, purchased the note at par and paid the accrued
interest thereon and certain attorney and conveyance fees. The total
amount of such payment was approximately $5,278,000. The note and mortgage
were subsequently pledged as collateral to the Partnership's lender under
its credit facility.
The Partnership owned an 80% general partnership interest in The Oaks
Community located near Sarasota, Florida. The Partnership's joint venture
partner was in default under the terms of the joint venture agreement due
to its failure to make capital contributions to fund ongoing operations.
In August 1993, the Partnership's joint venture partner assigned its 20%
interest in The Oaks to the Partnership thereby vesting 100% control of the
joint venture assets in the Partnership.
The assets of The Oaks joint venture were encumbered by two mortgage
loans. A $12,492,200 loan was scheduled to mature in January 1997 and a
$3,260,000 loan was scheduled to mature in December 1993. The joint
venture had guaranteed $2.7 million of the loans, and the guaranteed amount
was with recourse to the Partnership. The joint venture was in default
under the terms of these loan agreements as a result of its failure to make
principal payments of approximately $1.3 million in January 1993 to release
the minimum number of homesite lots as required under these agreements and
its failure to pay interest commencing with a payment due in April 1993.
The Partnership was able to reach an agreement with the lenders to pay off
the existing mortgage loans at a substantial discount from face value. On
September 3, 1993, the Partnership paid the joint venture's lenders $6.7
million in full satisfaction of the outstanding mortgage loans, accrued
interest and guaranty. This transaction was the cause of the approximate
$9.5 million extraordinary gain on the early extinguishment of debt as of
December 31, 1993.
Given the finite amount of available capital to the Partnership, the
Partnership determined that it was in its best long-term interest to
utilize that capital for the development of its other properties and sold
its remaining land holdings in The Oaks Community and its interest in The
Oaks Club to an unaffiliated third party purchaser for $5.8 million. This
transaction occurred simultaneously with the repayment of the loans and
satisfaction of the mortgages described above. In light of the
Partnership's guarantee under the loan agreement of $2.7 million of the
outstanding mortgage loans, as well as other factors, the above
transactions were pursued as the least costly alternative available to the
Partnership. These transactions resulted in a minimal net gain for Federal
income tax purposes.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Following is a schedule of the maturities of notes and mortgages
payable at December 31, 1994.
1995 . . . . . . . . . . . . . . . $ 19,545,010
1996 . . . . . . . . . . . . . . . 47,865,545
1997 . . . . . . . . . . . . . . . 43,952,970
1998 . . . . . . . . . . . . . . . 500,000
1999 . . . . . . . . . . . . . . . --
Thereafter . . . . . . . . . . . . 3,284,000
------------
Total notes and
mortgages payable. . . . . . $115,147,525
============
(9) EQUITY MEMBERSHIPS
Equity memberships represent the accumulation of costs incurred in
constructing club houses, golf courses, tennis courts and various other
related assets, less amounts allocated to memberships sold, not in excess
of their net realizable values determined by evaluation of individual
amenities. These amenities are conveyed to homeowners through the sale of
equity memberships.
During 1992, the value of the memberships remaining at Jacksonville
Golf & Country Club had been adversely impacted by the introduction of
lower-priced products within the Community in response to market conditions
as well as competition from other club facilities located in the
Jacksonville area. In addition, during 1992, the higher-priced equity
memberships at the Broken Sound Club had experienced a slowdown in sales
due primarily to an overall slowdown in the economy and the low levels of
consumer confidence at that time. As a result of the above, during 1992,
the Partnership recorded charges to the carrying values of its equity
memberships at Jacksonville Golf & Country Club and Broken Sound Club of
approximately $2.2 million and $1.0 million, respectively. In addition,
equity memberships for the year ended December 31, 1992 also include a $1.0
million reduction in the value of The Oaks Country Club's equity
memberships in light of the circumstances surrounding The Oaks Country Club
as discussed further in Note 8. These charges are included in charges to
the carrying value of real estate inventories and other assets on the
accompanying Consolidated Statement of Operations for the year ended
December 31, 1992.
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(10) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the Partnership to affiliates of the General
Partner as of December 31, 1994 and for the years ended December 31, 1994, 1993 and 1992 are as follows:
<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management fees . . . . . . $147,446 153,088 108,243 --
Insurance commissions. . . . . . . . 298,697 287,639 267,673 --
Reimbursement (at cost)
for accounting services . . . . . . 63,633 61,881 61,101 9,263
Reimbursement (at cost)
for legal services. . . . . . . . . 64,949 31,821 38,344 61,156
Reimbursement (at cost)
for out-of-pocket
expenses. . . . . . . . . . . . . . 15,345 20,534 24,562 --
-------- -------- -------- -------
$590,070 554,963 499,923 70,419
======== ======== ======== =======
</TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership receives reimbursements from or reimburses other
affiliates of the General Partner engaged in real estate activities for
certain general and administrative costs including, and without limitation,
salary and salary-related costs relating to work performed by employees of
the Partnership and certain out-of-pocket expenditures incurred on behalf
of such affiliates. For the year ended December 31, 1994, the total of
such costs incurred by the Partnership on behalf of these affiliates
totalled approximately $505,300. Approximately $29,000 was outstanding at
December 31, 1994, all of which was received as of March 15, 1995. For the
year ended December 31, 1993 and 1992, the Partnership was entitled to
receive reimbursements of approximately $171,000 and $129,000,
respectively.
In accordance with the Partnership Agreement, the General Partner and
Associate Limited Partners have deferred a portion of their distributions
of net cash flow from the Partnership totaling approximately $936,000 as of
December 31, 1994. This amount does not bear interest and is expected to
be paid in future periods subject to certain restrictions contained in the
Partnership's credit facility agreement.
Arvida Company ("Arvida"), pursuant to an agreement with the Partner-
ship, provides development, construction, management and other personnel
and services to the Partnership for all of its projects and operations.
Pursuant to such agreement, the Partnership shall reimburse Arvida for all
of its out-of-pocket expenditures (including salary and salary-related
costs), subject to certain limitations. The total of such costs for the
years ended December 31, 1994, 1993 and 1992 was approximately $6,802,300,
$6,686,100 and $6,622,800, respectively, of which approximately $52,800 was
unpaid as of December 31, 1994 and all of which was paid as of March 15,
1995.
The Partnership and Arvida/JMB Partners, L.P.-II (a publicly-held
limited partnership affiliated with the General Partner) each employ
project related and administrative personnel who perform services on behalf
of both partnerships. In addition, certain out-of-pocket expenditures
related to such services and other general and administrative costs are
incurred and charged to each partnership as appropriate. The Partnership
receives reimbursements from or reimburses Arvida/JMB Partners, L.P.-II for
such costs (including salary and salary-related costs). For the year ended
December 31, 1994, the Partnership was entitled to receive approximately
$1,338,900 from Arvida/JMB Partners, L.P.-II. At December 31, 1994,
approximately $120,800 was outstanding, all of which was received as of
March 15, 1995. In addition, for the year ended December 31, 1994, the
Partnership was obligated to reimburse Arvida/JMB Partners, L.P.-II
approximately $537,700. At December 31, 1994, approximately $72,000 was
unpaid, all of which was paid as of March 15, 1995. The net reimbursements
paid to the Partnership for the years ended December 31, 1993 and 1992 were
approximately $1,263,100 and $236,000, respectively.
The Partnership pays for certain general and administrative costs on
behalf of its clubs, homeowners associations and maintenance associations.
The Partnership receives reimbursements from the affiliates for such costs.
For the year ended December 31, 1994, the Partnership was entitled to
receive approximately $594,200 from its affiliates. At December 31, 1994,
approximately $381,000 was owed to the Partnership, of which approximately
$48,800 was received as of March 15, 1995. The net reimbursements paid to
the Partnership for the years ended December 31, 1993 and 1992 were
approximately $366,400 and $2,327,200, respectively.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership periodically incurs salary and salary-related costs on
behalf of an affiliate of the General Partner of the Partnership. The
Partnership was entitled to receive approximately $118,000 for such costs
for the year ended December 31, 1994, all of which was outstanding as of
December 31, 1994 and March 15, 1995.
(11) COMMITMENTS AND CONTINGENCIES
As security for performance of certain development obligations, the
Partnership is contingently liable under standby letters of credit and
bonds for approximately $10,169,800 and $7,589,000, respectively, at
December 31, 1994. As of December 31, 1993, the Partnership was
contingently liable under standby letters of credit and bonds for
approximately $11,651,000 and $11,146,000, respectively. In addition,
certain joint ventures in which the Partnership holds an interest are also
contingently liable under bonds for approximately $1,020,000 and $1,089,000
at December 31, 1994 and 1993, respectively.
The Partnership leases certain building space for its management
offices, sales offices and other facilities, as well as certain equipment.
The building and equipment leases expire over the next two to nine years.
Minimum future rental commitments under non-cancelable operating leases
having a remaining term in excess of one year as of December 31, 1994 are
as follows:
1995 . . . . . . . . . . . $1,468,954
1996 . . . . . . . . . . . 1,207,618
1997 . . . . . . . . . . . 582,522
1998 . . . . . . . . . . . 399,109
1999 . . . . . . . . . . . 180,579
Thereafter . . . . . . . . 261,626
----------
$4,100,408
==========
Rental expense of $2,001,171, $2,063,568 and $2,320,028 was incurred
for the years ended December 31, 1994, 1993 and 1992, respectively.
The Partnership is named a defendant in a number of homeowner
lawsuits, certain of which purported to be class actions, that allegedly in
part arose out of or related to Hurricane Andrew, which on August 24, 1992
resulted in damage to a former community development known as Country Walk.
The homeowner lawsuits alleged, among other things, that the damage
suffered by the plaintiffs' homes and/or condominiums within Country Walk
was beyond what could have been reasonably expected from the hurricane
and/or was a result of the defendants' alleged defective design,
construction, inspection and/or other improper conduct in connection with
the development, construction and sales of such homes and condominiums,
including alleged building code violations. The various plaintiffs sought
varying and, in some cases, unspecified amounts of compensatory damages and
other relief. In certain of the lawsuits injunctive relief and/or punitive
damages are sought.
Several of these lawsuits allege that the Partnership was liable,
among other reasons, as a result of its own alleged acts of misconduct or
as a result of the Partnership's assumption of Arvida Corporation's
liabilities in connection with the Partnership's purchase of Arvida
Corporation's assets from Disney in 1987, which included certain assets
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
related to the Country Walk development. Pursuant to the agreement to
purchase such assets, the Partnership obtained indemnification by Disney
for certain liabilities relating to facts or circumstances arising or
occurring prior to the closing of the Partnership's purchase of the assets.
Over 80% of the Arvida-built homes in Country Walk were built prior to the
Partnership's ownership of the Community. Where appropriate, the
Partnership has tendered or will tender each of the above-described
lawsuits to Disney for defense and indemnification in whole or in part
pursuant to the Partnership's indemnification rights. Where appropriate,
the Partnership has also tendered these lawsuits to its various insurance
carriers for defense and coverage. The Partnership is unable to determine
at this time to what extent damages in these lawsuits, if any, against the
Partnership, as well as the Partnership's cost of investigating and
defending the lawsuits, will ultimately be recoverable by the Partnership
either pursuant to its rights of indemnification by Disney or under
contracts of insurance.
On August 10, 1993, the Circuit Court of Dade County issued a final
order approving the terms of a class action settlement in one of the
pending homeowners' lawsuits which resolved substantial portions of the
pending homeowners' lawsuits that had been filed. The settlement, which is
designed to resolve claims arising in connection with estate and patio
homes and condominiums sold by the Partnership after September 10, 1987, is
structured to compensate residents for losses not covered by insurance.
Homeowners of approximately 85% of the units in Country Walk have accepted
the settlement. The Partnership currently believes that the class action
settlement may cost approximately $2.5 million. The settlement is being
funded by one of the Partnership's insurers, subject to a reservation of
rights. The amount of money, if any, which the insurance company may
recover from the Partnership pursuant to its reservation of rights is
uncertain. Due to this uncertainty, the accompanying Consolidated
Financial Statements do not reflect an accrual for such costs.
Homeowners who affirmatively rejected the offer of settlement by
opting out were permitted to continue litigation against the Partnership.
The Partnership was and is party to a number of claims brought by
condominium and patio homeowners, all of whom have declined to accept the
terms of the class action settlement. Some of these actions by those
homeowners who have opted out of the settlement have been settled. The
aggregate amount of these settlements to date is approximately $414,000.
One of the Partnership's insurers has funded these settlements. The amount
of money that the insurance company may recover from the Partnership
pursuant to any reservation of rights, or otherwise, is uncertain.
Therefore, the accompanying Consolidated Financial Statements do not
reflect any accruals related to this matter. Currently, the Partnership is
involved in five lawsuits with homeowners who have opted out of the
original settlement which are pending in the Circuit Court of Dade County
and one claim that has not been filed as a lawsuit. The Partnership
intends to vigorously defend itself in these matters.
On February 24, 1994, the Partnership was dismissed from the pending
class action homeowner lawsuits pursuant to the class action settlement
discussed above. In addition, the Partnership has been informed that
Disney and an insurer have reached agreements to settle five of the
individual homeowner actions which were tendered by the Partnership to
Disney. These Disney settlements were funded without any contribution from
the Partnership.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On April 19, 1993, a subrogation claim entitled Village Homes at
Country Walk Master Maintenance Association, Inc. v. Arvida Corporation et
al., was filed in the 11th Judicial Circuit for Dade County. Plaintiffs
filed this suit for the use and benefit of American Reliance Insurance
Company ("American Reliance"). In this suit, as amended, plaintiffs seek
to recover damages and pre- and post-judgment interest in connection with
$10,873,000 American Reliance has allegedly paid, plus amounts it may have
to pay in the future, to the condominium association at Country Walk in the
wake of Hurricane Andrew. Disney is also a defendant in this suit. The
Partnership believes that the amount of this claim that allegedly relates
to units it sold is approximately $3,600,000. Plaintiffs also seek a
declaratory judgement seeking to hold the Partnership and other defendants
responsible for amounts American Reliance must pay in the future to its
insureds as additional damages beyond the $10,873,000 previously paid. The
Partnership has filed motions directed to the complaint, as amended, and
the litigation is in the discovery stage. The Partnership intends to
vigorously defend itself.
The Partnership has also been involved in subrogation lawsuits or
threatened subrogation actions with Prudential Property and Casualty
Company, Travelers Insurance Company ("Travelers"), Allstate Insurance
Company ("Allstate") and State Farm Insurance Company. These insurance
companies sought to recover damages, costs and interest in connection with
amounts allegedly paid to their insureds living in Country Walk at the time
of Hurricane Andrew. The Partnership settled these claims and all
settlement proceeds were funded by one of the Partnership's insurance
carriers. The aggregate amount of these settlements is approximately $4.3
million. The Allstate and Travelers settlements were funded subject to a
reservation of rights by one of the Partnership's insurance carriers. The
amount of money the insurance carrier may seek to recover from the
Partnership for these and any other settlements it has funded is uncertain.
The Partnership is a defendant in and anticipates other subrogation claims
by insurance companies which have allegedly paid policy benefits to Country
Walk residents. The Partnership intends to defend itself vigorously in all
such matters.
The Partnership resolved a claim brought by the Villages of Country
Walk Homeowners' Association, Inc., and related entities, for damages to
the common elements of the condominium units at Country Walk. A settlement
in the amount of $2,740,000 was paid by the Partnership's insurance
carriers. A reservation of rights in connection with these claims of
approximately $740,000 was issued by one insurance carrier. The extent to
which the insurance company may ultimately recover any of these proceeds
from the Partnership is unknown. Therefore, the accompanying Consolidated
Financial Statements do not reflect any accruals related to this matter.
As noted above, one of the Partnership's insurance carriers has been
funding settlements of various litigation related to Hurricane Andrew. In
some, but not all, instances, the insurance carrier has provided the
Partnership with written reservation of rights letters. The aggregate
amount of the settlements funded to date by this carrier is approximately
$7.8 million. The extent to which the insurance carrier may recover any of
these proceeds from the Partnership is uncertain. Therefore, the
accompanying Consolidated Financial Statements do not reflect any accruals
related to this matter.
A second amended complaint captioned Berry v. Merrill Lynch, Pierce
Fenner & Smith; Arvida/JMB Partners, Limited Partnership; Arvida/JMB
Managers, Inc.; JMB Realty Corporation; and Does 1 through 100, was filed
in the Superior Court of the State of California in and for the County of
San Diego, Case No. 669709. The lawsuit was purportedly filed as a class
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
action on behalf of the named plaintiffs and all other persons or entities
in the State of California who bought or acquired, directly or indirectly,
limited partnership interests ("Interests") in the Partnership from
September 1, 1987 through the present. The second amended complaint in the
action alleges, among other things, that the defendants made
misrepresentations and concealed various facts, breached fiduciary duties,
and violated a contractual covenant of good faith in connection with the
sale of Interests in the Partnership. The second amended complaint further
alleges that such conduct violated California state law relating to fraud,
constructive fraud, breach of fiduciary duty, willful suppression of facts,
breach of the covenant of good faith, and conspiracy. Plaintiffs, on
behalf of themselves and the purported plaintiff class, seek unspecified
compensatory damages, consequential damages, punitive and exemplary
damages, recission, interest, costs of the suit, and such other relief as
the court may order. In October 1994, after the court denied defendants'
demurrers, defendants answered the second amended complaint denying the
material allegations of the complaint and setting forth various affirmative
defenses. During March 1995, the court issued an order that it would not
entertain any motions for certification of a class. Subsequent thereto,
defendants have entered into a settlement in principle in order to put to
rest all controversy and to avoid further disruption to defendants'
ordinary business operations and the expense, burden and risk of protracted
litigation. The settlement is not an admission of liability, which the
defendants expressly deny. The amount of the proposed settlement is not
expected to be material. The Partnership cannot assume that this
settlement in principle will in fact be consummated.
In addition, the Partnership has been advised by Merrill Lynch that
Merrill Lynch has been named a defendant in actions pending in the Eleventh
and Seventeenth Judicial Circuit Courts in Dade and Broward Counties,
Florida to compel arbitration of claims brought by certain investors of the
Partnership representing approximately 5% of the total 404,000 Interests
outstanding. Merrill Lynch has asked the Partnership and its General
Partner to confirm an obligation of the Partnership and its General Partner
to indemnify Merrill Lynch in these claims against all loss, liability,
claim, damage and expense, including without limitation attorneys' fees and
expenses, under the terms of a certain Agency Agreement dated September 15,
1987 ("Agency Agreement") with the Partnership relating to the sale of
Interests through Merrill Lynch on behalf of the Partnership. In the
actions to compel arbitration, the claimants have advised Merrill Lynch
that they will seek to file demands for arbitration and claims for
unspecified damages against Merrill Lynch based on Merrill Lynch's alleged
violation of applicable state and/or federal securities laws and alleged
violations of the rules of the National Association of Securities Dealers,
Inc., together with pendent state law claims. Some of these investors have
begun the arbitration process. The Partnership believes that Merrill Lynch
has resolved some of these claims through litigation and otherwise; and
that Merrill Lynch is defending other claims. The Agency Agreement
generally provides that the Partnership and its General Partner shall
indemnify Merrill Lynch against losses occasioned by an actual or alleged
misstatement or omission of material fact in the Partnership's offering
materials used in connection with the sale of Interests and suffered by
Merrill Lynch in performing its duties under the Agency Agreement, under
certain specified conditions. The Agency Agreement also generally
provides, under certain conditions, that Merrill Lynch shall indemnify the
Partnership and its General Partner for losses suffered by the Partnership
and occasioned by certain specified conduct by Merrill Lynch in the course
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
of Merrill Lynch's solicitation of subscriptions for Interests. The
Partnership is unable to determine at this time the ultimate investment of
investors who have filed arbitration claims as to which Merrill Lynch might
seek indemnification in the future. At this time, and based upon the
information presently available about the arbitration statements of claims
filed by some of these investors, the Partnership and its General Partner
believe that they have meritorious defenses to demands for indemnification
made by Merrill Lynch and intend to vigorously pursue such defenses. In
the event Merrill Lynch is entitled to indemnification of its attorney's
fees and expenses or other losses and expenses, these amounts may prove to
be material.
The Partnership is also a defendant in several actions brought against
it arising in the normal course of business. It is the belief of the
General Partner, based on knowledge of facts and advice of counsel, that
the claims made against the Partnership in such actions will not result in
any material adverse effect on the Partnership's consolidated financial
position or results of operations.
The Partnership owns a 50% joint venture interest in 31 commercial/
industrial acres in Pompano Beach, Florida, which is encumbered by a
mortgage loan in the principal amount of approximately $4 million at
December 31, 1994. As a result of the Partnership's previous determination
that the development of the land was no longer economically profitable,
during April 1992, the Partnership and its joint venture partner each
tendered payment in the amount of approximately $3.1 million to the lender
for their respective shares of the guarantee payment required under the
loan agreement and certain other holding costs, the majority of which
reduced the outstanding mortgage loan to its current balance. The venture
also intended at that time to convey title to the property to the lender;
however, such conveyance is pending until resolution of certain general
development obligations of the venture as well as certain environmental
issues. The Partnership had been negotiating with the lender regarding the
scope of the development work required to be done. Negotiations with the
lender were unsuccessful, and the lender has filed a lawsuit with the
Broward County Circuit Court in which the lender asserts, among other
things, that the mortgage loan is with recourse to the joint venture
partners as a result of the partners' failure to perform in accordance with
the terms of the loan agreement. The lender is demanding payment of the
outstanding loan balance plus interest thereon. The Partnership believes
this claim is without merit and is vigorously defending the lawsuit. With
respect to the environmental issues, the previous owner remains obligated
to undertake the clean up pursuant to, among other things, a surviving
obligation under the purchase and sale agreement. The clean-up began in
July 1994, and the first phase of the remedial action plan was completed in
October 1994. Further action plans are now underway. If the previous
owner is unable to fulfill all its obligations as they relate to this
environmental issue, the venture and ultimately the Partnership may be
obligated for such costs. Should this occur, the Partnership does not
anticipate the cost of this clean-up to be material to its operations.
The Partnership is seeking a permit to develop 1,156 of the 2,475
gross acres contained in Increment III of the Weston Community, portions of
which are environmentally sensitive areas and are subject to protection as
wetlands. The Partnership's current application for a wetlands permit for
Increment III includes proposed wetlands mitigation of 1,319 acres together
with construction of schools, parks, roads, sewers and related
infrastructure, in addition to residential and commercial development.
However, in August 1994, the Environmental Protection Agency (the "EPA")
issued a letter to the United States Army Corps of Engineers (the "Corps"),
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
which is the governmental agency responsible for issuing permits involving
development of wetlands areas, setting forth the EPA's position that no
more than 120 gross acres in Increment III should be permitted to be
developed. In addition, the EPA recommended that adequate compensatory
mitigation be implemented in connection with such development.
The Partnership believes that the EPA's recommendation is flawed based
on scientific evidence, and it continues to pursue issuance of the permit
for development of Increment III on the terms and conditions previously set
forth in its application. The Corps has not accepted the recommendation of
the EPA and has advised the Partnership that it is continuing to consider
the Partnership's current application as presently submitted. During
October 1994, the Corps performed an independent analysis of the wetlands
impact and mitigation. To date, the Partnership has not received a formal
response from the Corps regarding the results of this analysis. However,
an informal response has been received requesting additional and clarified
information regarding certain characteristics of the proposed mitigation
plan, which the Partnership is providing.
If the Corps ultimately issues a permit generally on the same terms
and conditions as set forth in the Partnership's previously submitted
application, the EPA retains certain rights to veto or to seek to elevate
the determination to issue a permit to higher governmental officials.
Elevation would delay the effectiveness of the permit pending resolution of
a final decision on the application for the permit and could result in a
decision to uphold, modify or retract issuance of the permit. If the
Partnership does not ultimately receive its permit through the
administrative process, it may seek a judicial review in federal district
court of the denial of the permit. Additionally, the Partnership could
initiate an action in the United States Court of Federal Claims seeking a
determination that denial of the permit constitutes a "taking" of the
Partnership's property for which the Partnership is due just compensation.
The pursuit of these legal actions would likely be lengthy.
The Partnership continues to believe that it will ultimately obtain a
permit from the Corps to develop Increment III of the Weston Community on
substantially the same terms and conditions for which it has currently
applied. However, there is no assurance that such permit will in fact be
obtained or, if not obtained, that the Partnership would be successful in
pursuing the above-mentioned legal actions. In addition, if such a permit
were obtained, the Partnership would also need certain other approvals,
including state and local approvals, to develop Increment III in accordance
with the Partnership's current development plans. If such permits and
other approvals are not obtained, the Partnership would be required to
revise its development plans for the remaining portions of Increment I and
II of the Weston Community, as well as its development plans for Increment
III. Such revisions would have a material adverse impact on the timing and
amount of net income and net cash flow ultimately realized by the
Partnership from the development of the Weston Community.
The Partnership may be responsible for funding certain other ancillary
activities for related entities in the ordinary course of business which
the Partnership does not currently believe will have any material adverse
effect on its consolidated financial position or results of operations.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(12) TAX INCREMENT FINANCING ENTITIES
In connection with the development of the Partnership's Weston
Community, bond financing is utilized to construct certain on-site and off-
site infrastructure improvements, including major roadways, lakes, other
waterways and pump stations, which the Partnership would otherwise be
obligated to finance and construct as a condition to obtain certain
approvals for the project. This bond financing is obtained by The Indian
Trace Community Development District ("District"), a local government
district operating in accordance with Chapter 190 of the Florida Statutes.
Under this program, the Partnership is not obligated directly to repay the
bonds. Rather, the bonds are expected to be fully serviced by special
assessment taxes levied on the property, which effectively collateralizes
the obligation to pay such assessments. While the owner of the property,
the Partnership is responsible to pay the special assessment taxes until
land parcels are sold. At such point, the liability for the assessments
related to parcels sold will be borne by the purchasers through a tax
assessment on their property. These special assessment taxes are designed
to cover debt service on the bonds, including principal and interest
payments, as well as the operating and maintenance budgets of the District.
The use of this type of bond financing is a common practice for major land
developers in South Florida.
The District issued $64,660,000 of variable rate bonds in November
1989 and $31,305,000 of variable rate bonds in July 1991. These bonds
mature in various years commencing in May 1991 through May 2011. At
December 31, 1994, the amount of bonds issued and outstanding totalled
$87,085,000. For the twelve months ended December 31, 1994, the
Partnership paid special assessments related to these bonds of
approximately $5.0 million.
In order to reduce the exposure of variable rate debt, the District
pursued a new bond issuance. During March 1995, the District issued
approximately $99 million of bonds. These bonds mature in various years
commencing May 1999 through May 2011. The proceeds from this offering were
used to refund the outstanding 1989 and 1991 bonds described above, as well
as to fund the issuance costs incurred in connection with this offering and
deposits to certain reserve accounts for future bond debt service
requirements.
(13) STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107
("SFAS 107") - DISCLOSURES ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS
SFAS 107 requires entities with total assets exceeding $150 million
for fiscal years ending after December 15, 1992 to disclose the SFAS 107
values of all financial assets and liabilities for which it is practicable
to estimate. Value is defined in SFAS 107 as the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership
believes the carrying amount of its financial instruments approximates SFAS
107 value at December 31, 1994 and 1993.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(14) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement (and subject to
Section 4.2F which allocates Profits, as defined, to the General Partner
and Associate Limited Partners), profits or losses of the Partnership will
be allocated as follows: (i) profits will be allocated such that the
General Partner and the Associate Limited Partners will be allocated
profits equal to the amount of cash flow distributed to them for such
fiscal period with the remainder allocated to the Limited Partners, except
that in all events, the General Partner shall be allocated at least 1% of
profits and (ii) losses will be allocated 1% to the General Partner, 1% to
the Associate Limited Partners and 98% to the Limited Partners.
In the event profits to be allocated in any given year do not equal or
exceed cash distributed to the General Partner and the Associate Limited
Partners for such year, the allocation of profits will be as follows: The
General Partner and the Associate Limited Partners will be allocated
profits equal to the amount of cash flow distributed to them for such year.
The Limited Partners will be allocated losses such that the sum of amounts
allocated to the General Partner, Associate Limited Partners, and Limited
Partners equals the profit for the given year.
Section 4.2F of the Partnership Agreement requires the allocation of
Profits (as defined) to the General Partner and Associate Limited Partners
in order to take account of a current or anticipated reduction in the
Partnership's indebtedness and certain other circumstances. In accordance
with Section 4.2F of the Partnership Agreement, for financial reporting and
Federal income tax purposes for the year ended December 31, 1992, the
General Partner and Associate Limited Partners received allocations of
Profits in addition to their respective allocations, pursuant to the other
allocation provisions of the Partnership Agreement, of the Partnership's
loss, as adjusted for such allocation of Profits. The amount of Profits,
net of such loss, allocated to the General Partner and Associate Limited
Partner, collectively, for tax and financial reporting purposes for 1992
was approximately $9,230,000 and $20,836,000, respectively. As the
Partnership had net income for financial reporting and Federal income tax
purposes for the years ended December 31, 1994 and 1993, an allocation of
Profits to the General Partner and Associate Limited Partners in accordance
with Section 4.2F of the Partnership Agreement was not required for these
years. In future periods in which the Partnership incurs a loss, the
General Partner and Associate Limited Partners may be allocated Profits
pursuant to Section 4.2F equivalent to the amount of loss (as adjusted for
such allocation of Profits), if any, allocable to them for financial
reporting and Federal income tax purposes.
For the years ended December 31, 1994 and 1993, the Partnership had
net income for financial reporting and Federal income tax purposes,
however, no cash distributions were made during 1993. In accordance with
Section 4.2A of the Partnership Agreement, the amount of net income
allocated, collectively, to the General and Associated Limited Partners for
financial reporting and tax purposes for the year ended December 31, 1994
was approximately $589,000 and $149,000, respectively. This allocation was
based on 1994 cash distributions made to the Associate Limited Partners and
an allocation of 1% of profits to the General Partners in accordance with
Section 4.2A of the Partnership Agreement. In accordance with Section 4.2A
of the Partnership Agreement, the amount of net income allocated,
collectively, to the General and Associate Limited Partners for tax and
financial reporting purposes for the year ended December 31, 1993 was
approximately $19,000 and $293,000, respectively.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
In general, and subject to certain limitations, the distribution of
Cash Flow (as defined) after the initial admission date is allocated 90% to
the Holders of Interests and 10% to the General Partner and the Associate
Limited Partners (collectively) until the Holders of Interests have
received cumulative distributions of Cash Flow equal to a 10% per annum
return (non-compounded) on their Adjusted Capital Investments (as defined)
plus the return of their Capital Investments; provided, however, that
4.7369% of the 10% amount otherwise distributable to the General Partner
and Associate Limited Partners (collectively) will be deferred, and such
amount will be paid to the Holders of Interests, until the Holders of
Interests receive Cash Flow distributions equal to a cumulative, non-
compounded amount of 12% per annum of their Capital Investments (as
defined). This deferral provision is in place until the Holders of
Interests receive total cash distributions equal to their Capital
Investments. Any deferred amounts owed to the General Partner and
Associate Limited Partners (collectively) will be distributable to them out
of Cash Flow otherwise distributable to the Holders of Interests at such
time as such Holders have received a 12% per annum cumulative, non-
compounded return on their Capital Investments (as defined) or in any
event, to the extent of one-half of Cash Flow otherwise distributable to
the Holders of Interests at such time as they have received total
distributions of Cash Flow equal to their Capital Investments (as defined).
Thereafter, all distributions of Cash Flow will be made 85% to the Holders
of Interests and 15% to the General Partner and the Associate Limited
Partners (collectively); provided, however, that the General Partner and
the Associate Limited Partners (collectively) shall be entitled to receive
an additional share of Cash Flow otherwise distributable to the Holders of
Interests equal to the lesser of an amount equal to 2% of the cumulative
gross selling prices of any interests in real property of the Partnership
(subject to certain limitations) or 13% of the aggregate distributions of
Cash Flow to all parties pursuant to this sentence.
(15) Management Agreements - Other Than Ventures
Certain of the Partnership's properties are managed by affiliates of
the General Partner or their assignees for fees computed as a percentage of
certain receipts of the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to the affiliated property manager's assets is acting as the
property manager of the Partnership's Mizner Place office building as well
as the office and retail components of the Partnership's mixed-use center
known as Arvida Parkway Center after the sale on the same terms that
existed prior to the sale.
(16) Subsequent Events
(a) During January 1995, the Partnership remitted each Limited
Partner's share of a North Carolina non-resident withholding tax on behalf
of each of the Limited Partners. Such payment was deemed a distribution to
the Limited Partners for 1995. The total of such payment made on behalf of
the Limited Partners was $26,784 (approximately $.07 per Interest). A
distribution of $1,488 was paid at that time to the General Partner and
Associate Limited Partners, collectively.
(b) During February 1995, the Partnership paid a distribution of
$5,421,680 to the Limited Partners ($13.42 per Interest) and $301,201 to
the General Partner and Associate Limited Partners, collectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes or disagreements with auditors during 1994.
On November 30, 1993, the General Partner of the Partnership approved
the engagement of Ernst & Young LLP as the Partnership's independent
auditors for the fiscal year ending December 31, 1993 to replace the firm
of Price Waterhouse who were dismissed as auditors of the Partnership
effective November 30, 1993. The reports of Price Waterhouse on the
Partnership's consolidated financial statements for the years ended
December 31, 1992 and 1991 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. In connection with the audits of
the Partnership's financial statements for the above-mentioned years and in
the subsequent interim period, there were no disagreements with Price
Waterhouse on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not
resolved to the satisfaction of Price Waterhouse would have caused Price
Waterhouse to make reference to the matter in their report. The change in
accountants was previously reported in the Partnership's Report on Form 8-K
dated December 8, 1993, which is incorporated by reference as Exhibit 99.2
to this report, describing the change in the Partnership's independent
auditors.
PART III
ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership is Arvida/JMB Managers, Inc., a
Delaware corporation, all of whose outstanding shares of stock are owned by
JMB Service Bureau, Inc., an Illinois corporation, 76% of the outstanding
shares of which are owned by JMB Realty Corporation ("JMB"), a Delaware
corporation, and the remaining 24% of which are owned by 900 Partners
Investments, an Illinois general partnership whose partners include certain
officers and directors of JMB and its affiliates. Arvida/JMB Managers,
Inc. was substituted as general partner of the Partnership as a result of a
merger on March 30, 1990 of an affiliated corporation that was the then
general partner of the Partnership into Arvida/JMB Managers, Inc., which,
as the surviving corporation of such merger, continues as General Partner.
All references herein to "General Partner" include Arvida/JMB Managers,
Inc. and its predecessor, as appropriate. The General Partner has
responsibility for all aspects of the Partnership's operations. Arvida/JMB
Associates, an Illinois general partnership, of which certain officers and
affiliates of JMB are partners and Arvida/JMB Limited Partnership, an
Illinois limited partnership, of which Arvida/JMB Associates is the general
partner, are the Associate Limited Partners of the Partnership. Various
relationships of the Partnership to the General Partner and its affiliates
are described under the caption "Conflicts of Interest" at pages 21-24 of
the Prospectus, which description is hereby incorporated herein by
reference to Exhibit 99.1 to this report.
The director, executive officers and certain other officers of the
General Partner of the Partnership are as follows:
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 04/08/87
Neil G. Bluhm President 04/08/87
Ernest M. Miller, Jr. Vice President 04/09/87
H. Rigel Barber Vice President 04/08/87
Ira J. Schulman Vice President 04/09/87
Gailen J. Hull Vice President 04/09/87
Howard Kogen Vice President
and Treasurer 04/08/87
Gary Nickele Vice President,
General Counsel 04/08/87
and Director 12/18/90
James D. Motta Vice President 04/09/87
John Grab Vice President 04/09/87
There is no family relationship among any of the foregoing director or
officers. The foregoing director has been elected to serve a one-year term
until the annual meeting of the General Partner to be held on August 8,
1995. All of the foregoing officers have been elected to serve one-year
terms until the first meeting of the Board of Directors held after the
annual meeting of the General Partner to be held on August 8, 1995. There
are no arrangements or understandings between or among any of said director
or officers and any other person pursuant to which any director or officer
was selected as such.
The foregoing director and certain of the officers are also officers
and/or directors of various affiliated companies, including JMB, which is
the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-
XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB
Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners,
Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB Income Properties,
Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X ("JMB Income-X"),
JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income Properties,
Ltd.-XII ("JMB Income-XII") and JMB Income Properties, Ltd.-XIII ("JMB-
XIII"). Most of the foregoing director and officers are also officers
and/or directors of various affiliated companies of JMB including
Arvida/JMB Managers-II, Inc. (the general partner of Arvida/JMB Partners,
L.P.-II ("Arvida-II")) and Income Growth Managers, Inc. (the corporate
general partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG")). The
director and most of such officers are also partners, directly or
indirectly, of certain partnerships (the "Associate Partnerships") which
are associate general partners in the following real estate limited
partnerships: Carlyle-VII, Carlyle-IX, Carlyle-X, Carlyle-XI, Carlyle-XII,
Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB
Income-VI, JMB-VII, JMB Income-VIII, JMB Income-IX, JMB Income-X, JMB
Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners, Mortgage
Partners-II, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income
Plus, Carlyle Income Plus-II and IDS/BIG. The foregoing director and
officers are partners, indirectly through other partnerships, of one of the
Associate Limited Partners of the Partnership and of the Associate Limited
Partner of Arvida-II.
The business experience during the past five years of the director and
such officers of the Corporate General Partner of the Partnership includes
the following:
Judd D. Malkin (age 57) is Chairman of the Board of JMB, an officer
and/or director of various JMB affiliates and a partner, directly or
indirectly, of the Associate Partnerships. He is also an individual
general partner of JMB Income Properties-IV and JMB Income Properties-V.
Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is
a director of Urban Shopping Centers, Inc., an affiliate of JMB that is a
real estate investment trust in the business of owning, managing and
developing shopping centers, and a director of Catellus Development
Corporation, a major diversified real estate development company. He is a
Certified Public Accountant.
Neil G. Bluhm (age 57) is President and a director of JMB and an
officer and/or director of various JMB affiliates and a partner, directly
or indirectly, of the Associate Partnerships. He is also an individual
general partner of JMB Income Properties-IV and JMB Income Properties-V.
Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is a
director of Urban Shopping Centers, Inc., an affiliate of JMB that is a
real estate investment trust in the business of owning, managing and
developing shopping centers. He is a member of the Bar of the State of
Illinois and a Certified Public Accountant.
Ernest M. Miller, Jr. (age 52) has been President and Chief Executive
Officer of Arvida since February 1989. Mr. Miller will resign as President
and Chief Executive Officer of Arvida effective March 31, 1995. Commencing
April 1, 1995, Mr. Miller will serve as Chairman of Arvida through December
31, 1995.
H. Rigel Barber (age 45) is Chief Executive Officer and Executive Vice
President of JMB, an officer of various JMB affiliates and a partner,
directly or indirectly, of various Associate Partnerships. Mr. Barber has
been associated with JMB since March, 1982. He received a J.D. Degree from
the Northwestern Law School and is a member of the Bar of the State of
Illinois.
Ira J. Schulman (age 43) is Executive Vice President of JMB, an
officer of various JMB affiliates and a partner, directly or indirectly, of
various Associate Partnerships. He holds a Masters Degree in Business
Administration from the University of Pittsburgh.
Gailen J. Hull (age 46) is a Senior Vice President of JMB, an officer
of various JMB affiliates and a partner, directly or indirectly, of various
Associate Partnerships. Mr. Hull has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 59) is Senior Vice President and Treasurer of JMB,
an officer of various JMB affiliates and a partner, directly or indirectly,
of various Associate Partnerships. Mr. Kogen has been associated with JMB
since March, 1973. He is a Certified Public Accountant.
Gary Nickele (age 42) is Executive Vice President, Secretary and
General Counsel of JMB, an officer of various JMB affiliates and a partner,
directly or indirectly, of various Associate Partnerships. Mr. Nickele has
been associated with JMB since February, 1984. He holds a J.D. degree from
the University of Michigan Law School and is a member of the Bar of the
State of Illinois.
James D. Motta (age 38) is Executive Vice President and Chief
Operating Officer of Arvida. Prior thereto, he was President-Community
Development Division of Arvida (August, 1993 - April, 1994), President-
Southeast Division of Arvida (July, 1992 to July, 1993) and President-South
Florida Division of Arvida (January, 1989 to July, 1992). Effective April
1, 1995, Mr. Motta will become President and Chief Executive Officer of
Arvida.
John R. Grab (age 38) is Vice President and General Manager -
Club/Hotel Operations of Arvida. Prior thereto, he was Vice President and
Project General Manager - Weston Hills of Arvida (October 1990 to October
1993) and Vice President and Project General Manager - Jacksonville Golf &
Country Club of Arvida (June 1988 to October 1990). He is a Certified
Public Accountant. He received his B.S. in Accounting from St. Leo
College.
ITEM 11. EXECUTIVE COMPENSATION
The officers and the director of the General Partner receive no
current or proposed direct remuneration in such capacities from the
Partnership. The General Partner and the Associate Limited Partners are
entitled to receive a share of cash distributions, when and as cash
distributions are made to the Limited Partners, and a share of profits or
losses as described under the caption "Cash Distributions and Allocations
of Profit and Losses" at pages 61 to 64 of the Prospectus and at pages A-9
to A-16 of the Partnership Agreement, which descriptions are incorporated
herein by reference to Exhibit 99.1, to this report. Reference is also
made to Notes 1 and 14 for a description of such distributions and
allocations. The General Partner and the Associate Limited Partners,
collectively, received a cash distribution in 1994 of $142,523. Under
certain circumstances they will be entitled to approximately $936,000 which
has been deferred through December 31, 1994. Such payment is subject to
certain restrictions contained in the Partnership Agreement and the
Partnership's credit facility. Pursuant to the Partnership Agreement, the
General Partner and Associate Limited Partners were allocated profits for
tax purposes for 1994 of approximately $149,000. Reference is made to Note
14 for further discussion of this allocation.
The Partnership is permitted to engage in various transactions
involving the General Partner and its affiliates, as described under the
captions "Management of the Partnership" at pages 56 to 59, "Conflicts of
Interest" at pages 21-24 of the Prospectus and "Rights, Powers and Duties
of the General Partner" at pages A-16 to A-28 of the Partnership Agreement,
which descriptions are hereby incorporated herein by reference to Exhibit
99.1 to this report. The relationships of the General Partner (and its
director and executive officers and certain other officers) and its
affiliates to the Partnership are set forth above in Item 10.
Arvida is reimbursed fully for all of its out-of-pocket expenditures
(including salary and salary-related expenses) incurred while supervising
the development and management of the Partnership's properties and other
operations, subject to the limitation that such reimbursement may not
exceed 5% of the aggregate gross revenues from the business of the
Partnership. In 1994, such expenses were approximately $6,802,300, of
which approximately $52,800 was unpaid as of December 31, 1994.
The Partnership and Arvida/JMB Partners, L.P.-II (a publicly-held
limited partnership affiliated with the General Partner) each employ
project related and administrative personnel who perform services on behalf
of both partnerships. In addition, certain out-of-pocket expenditures
related to such services and other general and administrative expenses,
including certain insurance premiums, are incurred and allocated to each
partnership as appropriate. The Partnership receives reimbursements from
or reimburses Arvida/JMB Partners, L.P.-II for such costs (including salary
and salary-related expenses). The Partnership was entitled to receive
approximately $1,338,900 from Arvida/JMB Partners, L.P.-II for such costs
and services incurred in 1994, approximately $120,800 of which was
outstanding as of December 31, 1994. In addition, the Partnership was
obligated to reimburse Arvida/JMB Partners, L.P.-II approximately $537,700
for the year ended December 31, 1994, of which approximately $72,000 was
unpaid at December 31, 1994.
The Partnership periodically incurs salary and salary-related costs on
behalf of an affiliate of the General Partner of the Partnership. The
Partnership was entitled to receive approximately $118,000 for such costs
for the year ended December 31, 1994, all of which was outstanding as of
December 31, 1994.
JMB Insurance Agency, Inc., an affiliate of the General Partner,
earned and received insurance brokerage commissions in 1994 of
approximately $299,000 in connection with providing insurance coverage for
certain of the properties of the Partnership, all of which were paid as of
December 31, 1994. Such commissions are at rates set by insurance
companies for the classes of coverage provided.
The General Partner of the Partnership or its affiliates are entitled
to property management fees and may be reimbursed for their direct expenses
or out-of-pocket expenses relating to the administration of the Partnership
and the acquisition, development, ownership, supervision, and operation of
the Partnership assets. In 1994, the General Partner of the Partnership or
its affiliates were due reimbursement for such direct or out-of-pocket
expenses and property management fees in the amount of approximately
$163,000, all of which was paid as of December 31, 1994. Additionally, the
General Partner and its affiliates are entitled to reimbursements for legal
and accounting services. Such costs for 1994 were approximately $128,600,
of which $58,200 was paid as of December 31, 1994.
The Partnership was also entitled to receive reimbursements from
affiliates of the General Partner for certain general and administrative
expenses including, and without limitation, salary and salary-related
expenses relating to work performed by employees of the Partnership and
certain out-of-pocket expenditures incurred on behalf of such affiliates.
The Partnership was owed approximately $505,300 for such costs and services
incurred in 1994, approximately $476,300 of which was received as of
December 31, 1994.
Amounts payable by the Partnership to the General Partner and its
affiliates do not bear interest.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
(a) No person or group is known by the Partnership to own bene-
ficially more than 5% of the outstanding Interests of the Partnership.
(b) The General Partner and its officers and director own the
following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
-------------- ---------- ----------------- --------
Limited Partnership General Partner 10 Interests Less
Interests and its officers than 1%
and director as
a group
---------------
No officer or director of the General Partner of the Partnership
possesses a right to acquire beneficial ownership of Interests of the
Partnership.
All of the outstanding shares of the General Partner of the
Partnership are owned by an affiliate of its officers and director as set
forth above in Item 10.
(c) There exists no arrangement, known to the Partnership, the
operation of which may at a subsequent date result in a change in control
of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the General Partner, affiliates or their management other than those
described in Items 10, 11 and 12 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements. (See Index to Financial
Statements filed with this annual report on Form 10-K).
2. Exhibits.
3. Amended and Restated Agreement of Limited
Partnership.**
4.0 Assignment Agreement by and among the General
Partner, the Initial Limited Partner and the Partnership.**
4.1 Amended and Restated Credit Agreement dated
October 7, 1992, among Arvida/JMB Partners, L.P., Arvida/JMB Partners,
Southeast Florida Holdings, Inc., Center Office Partners, Center Retail
Partners, Center Hotel Limited Partnership, Weston Hills Country Club
Limited Partnership and Chemical Bank and Nationsbank of Florida, N.A. is
herein incorporated by reference to Exhibit No. 4.4 to the Partnership's
Report on Form 10Q (File number 0-16976) dated November 11, 1992.
4.2 Security Agreement dated as of October 7, 1992
made by Arvida/JMB Partners, L.P., Arvida/JMB Partners, Southeast Florida
Holdings, Inc., Center Office Partners, Center Retail Partners, Center
Hotel Limited Partnership and Weston Hills Country Club Limited Partnership
(as "grantors") in favor of Chemical Bank and Nationsbank of Florida, N.A.
(as "lenders") is herein incorporated by reference to Exhibit No. 4.5 to
the Partnership's Report on Form 10Q (File number 0-16976) dated November
11, 1992.
4.3 Pledge Agreement dated as of October 7, 1992
among Arvida/JMB Partners, L.P., Arvida/JMB Partners, Southeast Florida
Holdings, Inc., Center Office Partners, Center Retail Partners, Center
Hotel Limited Partnership and Weston Hills Country Club Limited
Partnership (as "pledgors") and Chemical Bank and Nationsbank of Florida,
N.A. (as "lenders") is herein incorporated by reference to Exhibit No. 4.6
to the Partnership's Report on Form 10Q (File number 0-16976) dated
November 11, 1992.
4.4 Various mortgages and other security interests
dated October 7, 1992 related to the assets of Arvida/JMB Partners, Center
Office Partners, Center Retail Partners, Center Hotel Limited Partnership,
Weston Hills Country Club Limited Partnership which secure loans under the
Amended and Restated Credit Agreement referred to in Exhibit 4.1 are herein
incorporated by reference to Exhibit No. 4.7 the Partnership's Report on
Form 10Q (File number 0-16976) dated November 11, 1992.
4.7. $24,000,000 Consolidated Revolving Promissory
Note dated January 14, 1994 by and between Arvida Grand Bay Limited
Partnership-I, Arvida Grand Bay Limited Partnership-II, Arvida Grand Bay
Limited Partnership-III, Arvida Grand Bay Limited Partnership-IV, Arvida
Grand Bay Limited Partnership-V and Arvida Grand Bay Limited Partnership-VI
and Barnett Bank of Broward County, N.A. ***
4.8. Amended and Restated Mortgage and Security
Agreement dated January 14, 1994 by and between Arvida Grand Bay Limited
Partnership-I, Arvida Grand Bay Limited Partnership-II, Arvida Grand Bay
Limited Partnership-III, Arvida Grand Bay Limited Partnership-IV, Arvida
Grand Bay Limited Partnership-V, Arvida Grand Bay Limited Partnership-VI
and Arvida Grand Bay Properties, Inc. and Barnett Bank of Broward County,
N.A. ***
4.9. Construction Loan Agreement dated January 14,
1994 by and between Arvida Grand Bay Limited Partnership-I and Arvida Grand
Bay Properties, Inc. and Barnett Bank of Broward County, N.A. ***
4.10. Second Amended and Restated Credit Agreement
dated November 29, 1994, among Arvida/JMB Partners, L.P., Arvida/JMB
Partners, Southeast Florida Holdings, Inc., Center Office Partners, Center
Retail Partners, Center Hotel Limited Partnership, Weston Hills Country
Club Limited Partnership and Chemical Bank and Nationsbank of Florida, N.A.
is filed herewith.
4.11. Affirmation and Amendment of Security
Documents dated November 29, 1994, among Arvida/JMB Partners, Arvida/JMB
Partners, L.P., Southeast Florida Holdings, Inc., Center Office Partners,
Center Retail Partners, Center Hotel Limited Partnership, Weston Hills
Country Club Limited Partnership and Chemical Bank is filed herewith.
4.12. Modification of Mortgage and Security
Agreement and Other loan Documents dated November 29, 1994, among
Arvida/JMB Partners, Weston Hills Country Club Limited Partnership and
Chemical Bank is filed herewith.
4.13. Modification of First Mortgage and Security
Agreement and Other Loan Documents dated November 29, 1994, among
Arvida/JMB Partners, Center Office Partners, Center Retail Partners, Center
Hotel Limited Partnership and Chemical Bank is filed herewith.
10.1. Agreement between the Partnership and The Walt
Disney Company dated January 29, 1987 is
hereby incorporated by reference to Exhibit
10.2 to the Partnership's Registration Statement on Form S-1 (File No. 33-
14091) under the Securities Act of 1933 filed on May 7, 1987.
10.2. Management, Advisory and Supervisory Agreement
is hereby incorporated by reference to Exhibit 10.2 to the Partnership's
Form 10-K (File No. 0-16976) dated March 27, 1991.
10.3. Letter Agreement, dated as of September 10,
1987, between the Partnership and The Walt Disney Company, together with
exhibits and related documents.*
10.4. Joint Venture Agreement dated as of September
10, 1987, of Arvida/JMB Partners, a Florida general partnership. *
21. Subsidiaries of the Registrant.
99.1. Pages 21-24, 56-59, 61-64, A-9 to A-28, A-31
to A-33, and B-2 of the Partnership's Prospectus dated September 16, 1987
are filed herewith.
99.2. A copy of Registrant's Form 8-K report (File
No. 0-16976) dated December 6, 1993 is filed herewith.
* Previously filed with the Securities and Exchange
Commission as Exhibits 10.4 and 10.5, respectively, to the Partnership's
Registration Statement (as amended) on Form S-1 (File No. 33-14091) under
the Securities Act of 1933 filed on September 11, 1987 and incorporated
herein by reference.
** Previously filed with the Securities and Exchange
Commission as Exhibits 3 and 4, respectively, to the Partnership's Form 10-
K Report (File No. 0-16976) filed on March 27, 1990 and hereby incorporated
herein by reference.
*** Previously filed with the Securities and Exchange
Commission as Exhibits 4.7, 4.8 and 4.9, respectively, to the Partnership's
Form 10-K Report (File No. 0-16976) filed on March 24, 1994 and hereby
incorporated herein by reference.
The Partnership agrees to furnish to the Securities and
Exchange Commission upon request a copy of each instrument with respect to
long-term indebtedness of the Partnership and its consolidated
subsidiaries, the authorized principal amount of which is 10% or less than
the total assets of the Partnership and its subsidiaries on a consolidated
basis.
(b) Reports on Form 8-K
No Reports on Form 8-K were required or filed since the
beginning of the last quarter of the period covered by this report.
No annual report or proxy material for the fiscal year 1994 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ARVIDA/JMB PARTNERS, L.P.
BY: Arvida/JMB Managers, Inc.
(The General Partner)
GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
BY: Arvida/JMB Managers, Inc.
(The General Partner)
NEIL G. BLUHM
By: Neil G. Bluhm, President
(Principal Executive Officer)
Date: March 27, 1995
JUDD D. MALKIN
By: Judd D. Malkin, Chairman
(Principal Financial Officer)
Date: March 27, 1995
GARY NICKELE
By: Gary Nickele, Vice President,
General Counsel and Director
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Vice President
(Principal Accounting Officer)
Date: March 27, 1995
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
EXHIBIT INDEX
<CAPTION>
DOCUMENT
INCORPORATED SEQUENTIALLY
EXHIBIT NO. EXHIBIT BY REFERENCE NUMBERED PAGE
----------- ------- ------------ -------------
<S> <C> <C> <C>
3.** Amended and Restated Agree-
ment of Limited Partnership
of the Partnership. Yes
4.0.** Assignment Agreement by and
among the General Partner, the
Initial Limited Partner and the
Partnership Yes
4.1. Amended and Restated Credit
Agreement dated October 7, 1992,
among Arvida/JMB Partners, L.P.,
Arvida/JMB Partners, Southeast Florida
Holdings, Inc., Center Office Partners,
Center Retail Partners, Center Hotel
Limited Partnership, Weston Hills Country
Club Limited Partnership and Chemical
Bank and Nationsbank of Florida, N.A.
is herein incorporated by reference to
Exhibit No. 4.4 to the Partnership's
Report on Form 10Q (File No. 0-16976)
dated November 11, 1992. Yes
4.2. Security Agreement dated as of October 7,
1992 made by Arvida/JMB Partners, L.P.,
Arvida/JMB Partners, Southeast Florida Holdings,
Inc., Center Office Partners, Center Retail
Partners, Center Hotel Limited Partnership and
Weston Hills Country Club Limited Partnership
(as "grantors") in favor of Chemical Bank and
DOCUMENT
INCORPORATED SEQUENTIALLY
EXHIBIT NO. EXHIBIT BY REFERENCE NUMBERED PAGE
----------- ------- ------------ -------------
Nationsbank of Florida, N.A. (as "lenders")
is herein incorporated by reference to
Exhibit No. 4.5 to the Partnership's Report
on Form 10Q (File No. 0-16976) dated
November 11, 1992. Yes
4.3. Pledge Agreement dated as of October 7, 1992
among Arvida/JMB Partners, L.P., Arvida/JMB Partners,
Southeast Florida Holdings, Inc., Center Office
Partners, Center Retail Partners, Center Hotel
Limited Partnership and Weston Hills Country
Club Limited Partnership (as "pledgors") and
Chemical Bank and Nationsbank of Florida, N.A.
(as "lenders") is herein incorporated by
reference to Exhibit No. 4.6 to the
Partnership's Report on Form 10Q (File
No. 0-16976) dated November 11, 1992. Yes
4.4. Various mortgages and other security interests
dated October 7, 1992 related to the assets of
Arvida/JMB Partners, Center Office Partners,
Center Retail Partners, Center Hotel Limited
Partnership, Weston Hills Country Club Limited
Partnership which secure loans under the Amended
and Restated Credit Agreement referred to in
Exhibit 4.1 are herein incorporated by reference
to Exhibit No. 4.7 the Partnership's Report on
Form 10Q (File No. 0-16976) dated November 11, 1992. Yes
4.7. $24,000,000 Consolidated Revolving Promissory Note
dated January 14, 1994 by and between Arvida Grand
Bay Limited Partnership-I, Arvida Grand Bay Limited
Partnership-II, Arvida Grand Bay Limited Partner-
ship-III, Arvida Grand Bay Limited Partnership-IV,
Arvida Grand Bay Limited Partnership-V and Arvida
Grand Bay Limited Partnership-VI and Barnett
Bank of Broward County, N.A. *** Yes
DOCUMENT
INCORPORATED SEQUENTIALLY
EXHIBIT NO. EXHIBIT BY REFERENCE NUMBERED PAGE
----------- ------- ------------ -------------
4.8. Amended and Restated Mortgage and Security Agreement
dated January 14, 1994 by and between Arvida Grand Bay
Limited Partnership-I, Arvida Grand Bay Limited Partner-
ship-II, Arvida Grand Bay Limited Partnership-III,
Arvida Grand Bay Limited Partnership-IV, Arvida Grand
Bay Limited Partnership-V, Arvida Grand Bay Limited
Partnership-VI and Arvida Grand Bay Properties, Inc.
and Barnett Bank of Broward County, N.A. *** Yes
4.9. Construction Loan Agreement dated January 14, 1994 by
and between Arvida Grand Bay Limited Partnership-I and
Arvida Grand Bay Properties, Inc. and Barnett Bank of
Broward County, N.A. *** Yes
4.10. Second Amended and Restated Credit Agreement dated
November 29, 1994, among Arvida/JMB Partners, L.P.,
Arvida/JMB Partners, Southeast Florida Holdings, Inc.,
Center Office Partners, Center Retail Partners, Center
Hotel Limited Partnership, Weston Hills Country Club
Limited Partnership and Chemical Bank and Nationsbank
of Florida, N.A. is filed herewith. Yes
4.11. Affirmation and Amendment of Security Documents dated
November 29, 1994, among Arvida/JMB Partners,
Arvida/JMB Partners, L.P., Southeast Florida Holdings,
Inc., Center Office Partners, Center Retail Partners,
Center Hotel Limited Partnership, Weston Hills Country
Club Limited Partnership and Chemical Bank is filed herewith. Yes
4.12. Modification of Mortgage and Security Agreement and
Other loan Documents dated November 29, 1994, among
Arvida/JMB Partners, Weston Hills Country Club Limited
Partnership and Chemical Bank is filed herewith. Yes
4.13. Modification of First Mortgage and Security Agreement
and Other Loan Documents dated November 29, 1994,
among Arvida/JMB Partners, Center Office Partners,
Center Retail Partners, Center Hotel Limited
Partnership and Chemical Bank is filed herewith. Yes
10.1. Agreement between the Partnership and
The Walt Disney Company dated January 29, 1987,
is hereby incorporated by reference to
Exhibit 10.2 to the Partnership's Registration
Statement on Form S-1 (File No. 33-14091) under
the Securities Act of 1933 filed on May 7, 1987 Yes
DOCUMENT
INCORPORATED SEQUENTIALLY
EXHIBIT NO. EXHIBIT BY REFERENCE NUMBERED PAGE
----------- ------- ------------ -------------
10.2. Management, Advisory and
Supervisory Agreement. Yes
10.3. Letter Agreement, dated as of
September 10, 1987, between the
Partnership and The Walt Disney
Company, together with exhibits
and related documents.* Yes
10.4. Joint Venture Agreement
dated as of September 10, 1987,
of Arvida/JMB Partners, a
Florida general partnership.* Yes
21. Subsidiaries of the Registrant No
99.1. Pages 21-24, 56-59, 61-64 and
A-9 to A-28, A-31 to A-33, and B-2 of
the Partnership's Prospectus
dated September 16, 1987 filed
pursuant to Rules 424(b) and
424(c) are filed herewith. No
99.2. A copy of Registrant's Form 8-K report
(File No. 0-16976) dated December 6,
1993 is filed herewith. No
---------------
<FN>
* Previously filed as Exhibits 10.3 and 10.4, respectively, to the
Partnership's Registration Statement (as amended) on Form S-1 (File No. 33-
14091) to the Securities Exchange Act of 1933 and incorporated herein by
reference.
** Previously filed as Exhibits 3.0 and 4.1, respectively, to the
Partnership's Form 10-K Report (File No. 0-16976) filed on March 27, 1990
and incorporated by reference.
*** Previously filed as Exhibits 4.7, 4.8 and 4.9, respectively to the
Partnership's Form 10-K Report (File No. 0-16976) filed on March 25, 1994
and incorporated by reference.
</TABLE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November __, 1994
among
ARVIDA/JMB PARTNERS, L.P.,
ARVIDA/JMB PARTNERS,
SOUTHEAST FLORIDA HOLDINGS, INC.,
CENTER OFFICE PARTNERS,
CENTER RETAIL PARTNERS,
CENTER HOTEL LIMITED PARTNERSHIP,
WESTON HILLS COUNTRY CLUB LIMITED PARTNERSHIP,
as Borrowers,
THE BANKS NAMED HEREIN,
as Banks
and
CHEMICAL BANK,
as Agent and Bank
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
November __, 1994, among ARVIDA/JMB PARTNERS, L.P., a Delaware limited
partnership (the "Partnership") whose sole general partner is Arvida/JMB
Managers, Inc., a Delaware corporation (the "Manager"), ARVIDA/JMB
PARTNERS, a Florida general partnership ("A/JMB Partners") whose sole
partners are the Partnership and the Manager, SOUTHEAST FLORIDA
HOLDINGS, INC., an Illinois corporation ("Southeast"), CENTER OFFICE
PARTNERS, a Florida general partnership ("Office Partners") whose sole
partners are the Partnership and the Manager, CENTER RETAIL PARTNERS, a
Florida general partnership ("Retail Partners") whose sole partners are
the Partnership and the Manager, CENTER HOTEL LIMITED PARTNERSHIP, a
Delaware limited partnership ("Hotel Partnership") whose sole general
partner is JMB/PCH Corporation, a Delaware corporation, WESTON HILLS
COUNTRY CLUB LIMITED PARTNERSHIP, a Delaware limited partnership
("Weston") whose sole general partner is WHCC, Inc., an Illinois
corporation (the Partnership, A/JMB Partners, Southeast, Office
Partners, Retail Partners, Hotel Partnership and Weston are individually
a "Borrower" and collectively, the "Borrowers"), the lenders (the
"Banks") listed on the signature pages hereof, and CHEMICAL BANK, a New
York banking corporation having an office at 270 Park Avenue, New York,
New York 10019 ("Chemical"), as agent for the Banks hereunder
(Chemical, in such capacity, being "Agent").
W I T N E S S E T H :
WHEREAS, the Banks, the Borrowers and the Agent are parties
to the Amended and Restated Credit Agreement dated as of October 7, 1992
(as heretofore amended, the "Existing Agreement") pursuant to which the
Banks have extended credit to the Borrowers; and
WHEREAS, the Borrowers and the Banks have agreed to amend
and restate the Existing Agreement and restructure the obligations
thereunder, but only upon the terms, and subject to the conditions,
contained herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree that
the Existing Agreement is amended and restated in its entirety as
follows:
ARTICLE I DEFINITIONS
In addition to the defined terms appearing above,
capitalized terms used in this Agreement shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings
when used herein:
"Adjusted Capital Balance" shall mean, at any time, the
aggregate amount of capital theretofore contributed to the Partnership
by the partners therein (including capital contributed in respect of the
issuance of limited partnership interests in the Partnership), reduced
by the aggregate amount of distributions theretofore made by the
Partnership to its partners constituting a Return of Capital.
"Administration Fee" shall have the meaning assigned thereto
in Section 2.4(b).
"Affiliate" shall mean, when used with respect to a
specified Person, another Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of the
foregoing, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the legal power to direct or
cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall have the meaning assigned thereto in the
introductory paragraph of this Agreement.
"Agreement" shall mean this Second Amended and Restated
Credit Agreement, including all amendments, modifications and
supplements hereto and any appendices, exhibits or schedules to any of
the foregoing, and shall refer to this Agreement as the same may be in
effect at the time such reference becomes operative. All references to
this Agreement, the Existing Agreement, the "Loan Agreement" or the
"Credit Agreement" in any of the Collateral Documents shall be deemed to
refer (unless the context otherwise requires) to this Agreement.
"A/JMB Partners" shall mean Arvida/JMB Partners, a Florida
general partnership.
"Annual Financial Statement" shall have the meaning assigned
thereto in Section 5.4(a).
"AOK Joint Venture" shall mean the joint venture which owns
certain commercial real estate in Marion County, Florida.
"Applicable Percentage" shall mean, (a) with respect to the
Coto de Caza Property, 75%, (b) with respect to any real estate asset
(other than the Coto de Caza Property) subject to any Lien securing
Indebtedness (other than the Lien of any Collateral Document and the
Equitable Mortgage), 85% and (c) with respect to any other real estate
asset, 100%.
"Applicable Release Percentage" shall have the meaning
assigned thereto in Section 2.13(g).
"Appraisal" shall mean, with respect to any real estate
asset, an MAI appraisal of the Market Value of such real estate asset
made by an Appraiser in accordance with Section 2.19, subject to any
adjustments required by any Requirement of Law applicable to the Banks.
"Appraised Value" shall mean, with respect to any real
estate asset, the Market Value of such real estate asset as determined
by an Appraisal.
"Appraiser" shall mean, for any Appraisal, the appraiser
selected for such Appraisal in accordance with Section 2.19(d).
"Arvida-Boose Joint Venture" shall mean the joint venture
which owns certain commercial real estate in Palm Beach County, Florida.
"Arvida Corporate Park Joint Venture" shall mean the joint
venture which owns certain commercial real estate in Manatee County,
Florida.
"Arvida L.P. II" shall mean Arvida/JMB Partners, L.P. II, a
Delaware limited partnership.
"Arvida Parkway Center Property" shall mean the properties
comprising the mixed-use project in Boca Raton, Florida and commonly
referred to as the Arvida Parkway Center.
"Arvida Pompano Park Joint Venture" shall mean the joint
venture which owns certain commercial real estate in Broward County,
Florida.
"Arvida/RBG I Joint Venture" shall mean the joint venture
which owns certain residential real estate in Broward County, Florida.
"Arvida/RBG II Joint Venture" shall mean the joint venture
which owns certain residential real estate in Broward County, Florida.
"Assignment Agreements" shall mean the collective reference
to the Assignment of Contracts, the Assignment of Leases, the Assignment
of Warranties, the Assignment of Subscription Agreements and the
Assignment of Developer's Rights.
"Assignment of Contracts" shall mean, collectively, (i) that
certain Assignment of Contracts dated as of October 7, 1992 by A/JMB
Partners, Office Partners, Retail Partners, Hotel Partnership and Weston
in favor of the Agent and (ii) that certain Assignment of Contracts
dated as of October 7, 1992 by the Partnership in favor of the Agent,
including in each case all amendments, modifications and supplements
thereto.
"Assignment of Developer's Rights" shall mean, collectively,
(i) that certain Collateral Assignment of Developer's Rights dated as of
October 7, 1992 by A/JMB Partners and Weston in favor of the Agent, and
recorded in each of Broward, Palm Beach, Duval, Sarasota, Hillsborough
and St. Johns Counties, Florida as set forth on Schedule 1.9, (ii) that
certain Collateral Assignment of Developer's Rights dated as of October
7, 1992 by A/JMB Partners, Office Partners, Retail Partners and Hotel
Partnership in favor of the Agent, and recorded in Palm Beach County,
Florida as set forth on Schedule 1.9, and (iii) that certain Collateral
Assignment of Developer's Rights by the Partnership dated as of October
7, 1992 in favor of the Agent, recorded in DeKalb County, Georgia as set
forth on Schedule 1.9, including in each case all amendments,
modifications and supplements thereto.
"Assignment of Leases" shall mean, collectively, (i) that
certain Assignment of Leases, Subleases, Rents and Profits dated as of
October 7, 1992 by A/JMB Partners in favor of the Agent, and recorded in
each of Palm Beach, Duval, Sarasota, Hillsborough and St. Johns
Counties, Florida, (ii) that certain Assignment of Leases, Subleases,
Rents and Profits dated as of October 7, 1992 by A/JMB Partners, Center
Office Partners, Center Retail Partners and Hotel Partnership in favor
of the Agent, and recorded in Palm Beach County, Florida, (iii) that
certain Assignment of Leases, Subleases, Rents and Profits dated as of
October 7, 1992 by the Partnership in favor of the Agent, for recording
in DeKalb County, Georgia, and (iv) that certain Assignment of Leases,
Subleases, Rents and Profits dated as of May 27, 1993 by A/JMB Partners
and Weston in favor of the Agent and recorded as set forth in Schedule
1.9, including in each case all amendments, modifications and
supplements thereto.
"Assignment of Mortgages" shall mean, collectively, (i) that
certain Collateral Assignment of Mortgages dated as of October 7, 1992
by A/JMB Partners in favor of the Agent, and recorded in each of
Broward, St. Johns and Marion Counties, Florida, (ii) that certain
Collateral Assignment of Mortgages dated as of October 7, 1992 by the
Partnership in favor of the Agent, and recorded in Palm Beach County,
Florida, (iii) that certain Collateral Assignment of Mortgage dated as
of September 1, 1994 by the Partnership in favor of the Agent and
recorded in Jackson and Macon Counties, North Carolina, and (iv) with
respect to any existing or future Mortgage Receivable not referred to in
items (i) - (iii) above, a Collateral Assignment of Mortgage in
substantially the form of Exhibit Q, including in each case all
amendments, modifications and supplements thereto.
"Assignment of Subscription Agreements" shall mean, that
certain Assignment of Subscription Agreements, Club Memberships,
Membership Fees and Deposits dated as of October 7, 1992 by A/JMB
Partners in favor of the Agent, including all amendments, modifications
and supplements thereto.
"Assignment of Warranties" shall mean, collectively, (i)
that certain Assignment of Warranties, Permits, Licenses, Management
Agreements, Etc. dated as of October 7, 1992 by A/JMB Partners, Office
Partners, Retail Partners, Hotel Partnership and Weston in favor of the
Agent, and (ii) that certain Assignment of Warranties, Permits,
Licenses, Management Agreements, Etc. dated as of October 7, 1992 by the
Partnership in favor of the Agent, including in each case all
amendments, modifications and supplements thereto.
"Banks" shall have the meaning assigned thereto in the
introductory paragraph of this Agreement.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrowers" shall have the meaning assigned thereto in the
introductory paragraph of this Agreement.
"Borrowing Base" shall mean, at any time, the lesser of (a)
the sum of (i) the aggregate Equity Value of the Real Estate Portfolio
at such time, plus (ii) the aggregate principal amount of Mortgage
Receivables at such time that are subject to the Lien of the Pledge
Agreement but to no other Lien securing Indebtedness, plus (iii) the
amount of the Borrowers' Cash Balances on hand at such time (including
Cash Balances on deposit at the Banks) (up to $20,000,000 in the
aggregate, subject to compliance with Section 6.14), less (x) the amount
of any item entitled overdraft on the most recent Financial Statement,
and (y) the Borrowers' accounts payable which are more than thirty (30)
days past due, and (b) 167% of the sum of (i) the aggregate Equity Value
of the real estate included in the Real Estate Portfolio at such time
that is wholly owned directly by the Borrowers (i.e., not owned by a
Subsidiary of any Borrower or by any Joint Venture except for the
Cullasaja Joint Venture) and is not subject to any Lien securing
Indebtedness (other than the Lien of any Collateral Document and the
Equitable Mortgage), plus (ii) the amount referred to in clause (ii) of
clause (a) above, excluding the aggregate principal amount of Indirect
Mortgage Receivables included therein, plus (iii) the amount referred to
in clause (iii) of clause (a) above.
"Borrowing Base Reconciliation Certificate" shall mean a
certificate, in the form of Exhibit B, prepared by management of the
Borrowers and certified by a Financial Officer of the Partnership
setting forth as of the applicable Reconciliation Date (a) a list of
each development project the real estate assets of which are included in
the Real Estate Portfolio as of such date and the Fair Market Value
thereof then in effect, (b) the aggregate principal amount of Mortgage
Receivables as of such date that are subject to the Lien of the Pledge
Agreement but to no other Lien securing Indebtedness, (c) the aggregate
amount of all Indebtedness secured by a Lien (other than the Lien of any
Collateral Document) on any real estate asset in the Real Estate
Portfolio as of such date (separately identifying the amount of
Indebtedness applicable to each development project), (d) the percentage
ownership of the Borrowers as of such date in each development project
the real estate assets of which are included in the Real Estate
Portfolio that is not wholly owned directly by the Borrowers and (e) a
reasonably detailed calculation of the Borrowing Base as of such date
(which calculation shall be supported (i) on any Reconciliation Date
other than the last day of the fiscal year of the Partnership by the
discounted Cash Flow Projections for the ten-year period commencing on
the first day of the current fiscal year of the Partnership and (ii) on
the last day of such fiscal year of the Partnership by the new
discounted Cash Flow Projections for the ten-year period commencing on
the first day of the following fiscal year of the Partnership) and a
reasonably detailed estimated calculation of the prepayments due
pursuant to Sections 2.13(c), 2.13(d) and 2.13(e); provided, however,
that each calculation of the Borrowing Base shall be based on the Fair
Market Value of the assets in the Real Estate Portfolio; and, provided,
further, that discount rates utilized must reflect customary appraisal
requirements commensurate with each Property's development risk and
term.
"Broken Sound Property" shall mean the properties comprising
the residential community project in southern Palm Beach County, Florida
and commonly referred to as the Broken Sound Project.
"Bulk Sale" shall mean the Sale (whether simultaneously or
on an option or takedown basis) of one hundred (100) or more homesite
lots to a single buyer (including any Affiliates of such buyer) which
are not included on the schedule of Land and Property.
"Business Day" shall mean any day, other than a Saturday, a
Sunday or legal holiday in the State of New York or the State of
Florida, on which banks are not authorized or required to be closed in
New York, New York or Tampa, Florida; provided, however, that when used
in connection with a Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar
deposits in the London Interbank Market.
"Business Plan" shall mean the Partnership's business plan
for the immediately succeeding fiscal year delivered pursuant to Section
5.4(j), unless otherwise specified herein.
"Capital Expenditures" shall mean all payments for any fixed
assets or improvements or for replacements, substitutions or additions
thereto which are required to be capitalized under generally accepted
accounting principles (excluding capitalized interest during
construction).
"Capital Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real and/or
personal property which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
generally accepted accounting principles and, for the proposes of this
Agreement, the amount of such obligations shall be the capitalized
amount thereof determined in accordance with generally accepted
accounting principles.
"Cash Balances" shall mean Borrowers' cash and Cash
Equivalents excluding (x) any "restricted cash" (as "restricted cash" is
determined in accordance with generally accepted accounting principles)
and (y) any funds in the Restricted Account.
"Cash Equivalents" shall mean investments in certificates of
deposit and time deposits maturing within one year from the date of
acquisition thereof issued by or placed with, and money market accounts
issued or offered by, any domestic office of the Agent, and all
Permitted Investments.
"Cash Flow Projections" shall mean the Partnership's cash
flow projections for the Partnership for each Property.
"Center Park Property" shall mean the commercial property
located in Boca Raton, Florida and commonly referred to as Center Park.
"Chemical" shall have the meaning assigned thereto in the
introductory paragraph of this Agreement.
"Closing Date" shall mean November __, 1994.
"Collateral" shall have the meaning assigned thereto in each
Collateral Document and shall include, without limitation, a mortgage on
all real estate owned by the Borrowers, which mortgage shall be a first
mortgage on all unencumbered real estate (other than Excluded Assets) of
the Borrowers (except as to the Subordinate Property as to which
pursuant to the Subordination Agreement said mortgage shall constitute a
second lien subject to the Equitable Mortgage), a pledge of all Mortgage
Receivables of the Borrowers, a pledge of the Cullasaja Mortgage, an
assignment of all Equity Memberships of the Borrowers, a perfected
collateral assignment of the Deposit Accounts of the Borrowers
maintained with Chemical and NationsBank and all Permitted Investments,
and a collateral assignment of all Joint Venture interests and/or Joint
Venture proceeds as required hereby.
"Collateral Assignment of Partnership Interest" shall mean
the assignments of Joint Venture or partnership (general and limited)
interests or other similar security agreements dated as of October 7,
1992 and thereafter, made by the Borrowers in respect of each Joint
Venture existing on the date hereof, and the assignments of Joint
Venture or partnership (general and limited) interests or other similar
security agreements substantially in the form of Exhibit C to be made by
Borrowers in respect of any other Joint Venture which receives advances
pursuant to Section 6.4 or is otherwise permitted hereunder, creating a
first priority Lien in such Joint Venture or partnership interest in
favor of the Agent for the ratable benefit of the Banks, including in
each case all amendments, modifications and supplements thereto.
"Collateral Assignment of Partnership Proceeds" shall mean
the assignments of Joint Venture or partnership (general and limited)
proceeds or other similar security agreements dated as of October 7,
1992 made by the Borrowers in respect of certain of the Joint Ventures,
creating a first priority Lien on the proceeds of the Borrowers'
interest in such Joint Venture in favor of the Agent for the ratable
benefit of the Banks, including in each case all amendments,
modifications and supplements thereto.
"Collateral Documents" shall mean the collective reference
to the Mortgages, the Security Agreement, the Pledge Agreement, the
Collateral Assignments of Partnership Interest, the Collateral
Assignments of Partnership Proceeds, the Assignment Agreements, the
Deposit Account Letter Agreements, and the other Real Estate Documents.
"Commitment Fee" shall have the meaning assigned to such
term in Section 2.4(a).
"Contaminant" shall mean any substance, material or waste
which is regulated by any Governmental Authority, including, without
limitation, any material or substance which is defined as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of any Environmental
Law, including but not limited to, petroleum, petroleum products,
asbestos, and polychlorinated biphenyls.
"Contract" shall mean any contract, agreement, indenture,
note, bond, loan, instrument, lease, conditional sales contract,
mortgage, license, franchise, insurance policy, commitment or other
arrangement or agreement.
"Coto de Caza Joint Venture" shall mean the joint venture
which owns the Coto de Caza Property.
"Coto de Caza Property" shall mean the properties comprising
the residential community project in southeastern Orange County,
California and commonly referred to as the Coto de Caza Project.
"Country Isles Joint Venture" shall mean the joint venture
which owns certain commercial real estate in Broward County, Florida.
"Country Isles Loan" shall mean the loan to the Country
Isles Joint Venture in the original principal amount of approximately
$7,000,000 and secured by certain commercial development within the
Weston Property.
"Cullasaja Joint Venture" shall mean the joint venture which
owns the Cullasaja Property.
"Cullasaja Lot" shall mean a homesite Lot within the
Cullasaja Property and "Cullasaja Lots" means all such lots owned by
Cullasaja Joint Venture as of the date hereof.
"Cullasaja Note" shall mean that certain Promissory Note
dated June 30, 1987 in the original principal amount of $15,550,000 made
by Cullasaja Joint Venture to City Federal Savings Bank, including all
amendments, modifications and supplements thereto.
"Cullasaja Mortgage" shall mean that certain Deed of Trust,
Assignment of Rents and Security Agreement dated June 30, 1987 given by
Cullasaja Joint Venture to secure the Cullasaja Note and collaterally
assigned to the Agent for the benefit of the Banks, including all
amendments, modifications and supplements thereto.
"Cullasaja Property" shall mean the properties comprising
the Cullasaja Club in Jackson County, North Carolina and commonly
referred to as the Cullasaja Club.
"Deposit Account" shall mean each bank account listed on
Schedule 1.1 and each other bank account identified after the date
hereof by the Borrowers pursuant to Section 5.10.
"Deposit Account Letter Agreements" shall mean those certain
letter agreements dated October 7, 1992 among the Partnership, the Agent
and each of the Banks, including all amendments, modifications and
supplements thereto.
"Designated Bank or LC Bank" shall have the meaning assigned
to such term in Section 9.4(b).
"DOL" shall mean the United States Department of Labor, or
any successor thereto.
"dollars" or "$" shall mean lawful money of the United
States of America.
"Environmental Claim" shall mean any written allegation,
notice of violation, action, claim, Environmental Lien, demand,
abatement or other Order or direction (conditional or otherwise) by any
Governmental Authority or Person for personal injury (including
sickness, disease or death), tangible property damage, damage to the
environment, nuisance, pollution, contamination or other adverse effects
on the environment, or for fines, penalties or restriction resulting
from or based upon (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or non-
sudden accidental or non-accidental Releases) of, or exposure to, any
Contaminant or other substance, chemical, material, pollutant, odor,
audible noise, or other Release in, into or onto the environment
(including, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to any real property owned by
the Borrowers or their respective Subsidiaries or any activities
conducted thereon; (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Contaminants in connection with any
real property owned by the Borrowers or their respective Subsidiaries or
their operations or facilities; or (iii) the violation, or alleged
violation, of any Environmental Laws, Orders or Environmental Permits of
or from any Governmental Authority relating to environmental matters
directly connected with the real property owned by the Borrowers or
their respective Subsidiaries.
"Environmental Law" shall mean a federal, state, local or
foreign law (including common law), statute, code, ordinance, rule,
regulation or other requirement applicable to the Properties and
concerning Releases into any part of the natural environment, or
activities that might result in damage to the natural environment, or
any law relating to the environment and with protecting or improving the
quality of the natural environment and protecting public and employee
health and safety and includes, but is not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., as such
laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and all analogous state or local statutes.
"Environmental Lien" shall mean any Lien in favor of any
governmental entity for Environmental Claims and/or Remedial Actions.
"Environmental Permit" shall mean any permit, approval,
authorization, license, variance, registration, or permission required
under any applicable Environmental Law and all supporting documents
associated therewith.
"Equitable" shall mean The Equitable Life Assurance Society
of the United States and any successor holder of the Equitable Mortgage.
"Equitable Mortgage" shall mean that certain Florida
Mortgage dated as of May 27, 1993 made by A/JMB Partners in favor of
Equitable in the maximum principal amount of $2,500,000 encumbering the
Subordinate Property, including all amendments, modifications and
supplements thereto.
"Equity Club" shall have the meaning assigned thereto in
Section 3.21.
"Equity Membership" shall mean each membership listed on
Schedule 1.2, representing an unissued membership interest, or the right
to acquire or sell such an interest, in any Equity Club located on a
Property, together with all other rights of the Borrowers in connection
with such Equity Club and all such memberships and rights acquired after
the date hereof by the Borrowers and assigned to the Agent pursuant to
Section 5.11(b).
"Equity Value" shall mean, with respect to any real estate
asset included in the Real Estate Portfolio at any time, (a) the
Applicable Percentage with respect to such real estate asset multiplied
by the Fair Market Value with respect to such real estate asset at such
time, less (b) the aggregate amount of all Indebtedness secured by a
Lien on such real estate asset or on the Borrowers' interest therein at
such time (other than the Lien of any Collateral Document); provided,
however, (i) that the "Equity Value" of any real estate asset that is
not wholly owned directly by the Borrowers (i.e., is owned by a
Subsidiary of any Borrower or by any Joint Venture) shall mean the
product of the amount determined with respect to such real estate asset
as provided above multiplied by the percentage ownership interest of the
Borrowers in the owner of such real estate asset; and (ii) for purposes
of determining the Equity Value with respect to the Subordinate Property
(unless such property has been excluded from the Real Estate Portfolio
by operation of the proviso to the definition of such term), the
mortgage Indebtedness secured by the Equitable Mortgage shall be
disregarded.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974 (or any successor legislation thereto), as amended from time
to time.
"ERISA Affiliate" shall mean with respect to any Borrower,
any trade or business (whether or not incorporated) under common control
with such Borrower or any of its Subsidiaries within the meaning of
Section 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean with respect to any Borrower or any
ERISA Affiliate, (i) a Reportable Event with respect to a Title IV Plan
or a Multiemployer Plan; (ii) the withdrawal of such Borrower, any of
its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (iii) the complete
or partial withdrawal of such Borrower, any of its Subsidiaries or any
ERISA Affiliate from any Multiemployer Plan; (iv) the filing of a notice
of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (v) the
institution of proceedings to terminate a Title IV Plan or Multiemployer
Plan by the PBGC; (vi) the failure to make required contributions to a
Qualified Plan; or (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Title IV Plan or Multiemployer Plan or the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Escrow Agent" shall mean each of the escrow agents listed
on Schedule 1.3, and any other escrow agents appointed by the Agent.
"Escrow Agreement" shall mean the collective reference to
the Escrow Agreements listed on Schedule 1.3 among the Escrow Agents,
the Agent and the Borrowers, as amended, supplemented or otherwise
modified from time to time.
"Escrow Sale" shall mean a Sale of a single family residence
(attached or detached) and/or homesite lot, the release of which from
the Lien of the applicable Mortgage is governed by the Escrow Agreement.
"Eurodollar Loan" shall mean any Eurodollar Term Loan,
Eurodollar I/P Loan or Eurodollar Revolving Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Credit
Loan with respect to which the Borrowers shall have selected an interest
rate based on the LIBOR Rate in accordance with the provisions of
Article II.
"Eurodollar Term Loan" shall mean any Term Loan with respect
to which the Borrowers shall have selected an interest rate based on the
LIBOR Rate in accordance with the provisions of Article II.
"Eurodollar I/P Loan" shall mean any I/P Loan with respect
to which the Borrowers shall have selected an interest rate based on the
LIBOR Rate in accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to it in
Article VII.
"Excluded Assets" shall have the meaning assigned to it in
Section 3.23.
"Existing Collateral" and "Existing Collateral Documents"
shall have the respective meanings assigned to such terms in Section
2.1(i).
"Existing Agreement" shall have the meaning assigned thereto
in the first recital to this Agreement.
"Existing I/P Loan Credits" shall mean the outstanding I/P
Loans (as defined in the Existing Agreement) held by each Bank under the
Existing Agreement, as set forth on Schedule 2.1.
"Existing Revolving Loan Credits" shall mean the outstanding
Revolving Credit Loans (as defined in the Existing Agreement) held by
each Bank under the Existing Agreement, as set forth on Schedule 2.1.
"Existing Term Loan Credits" shall mean the outstanding Term
Loans (as defined in the Existing Agreement) held by each Bank under the
Existing Agreement, as set forth on Schedule 2.1.
"Extraordinary Asset Sale" shall mean any Sale of commercial
or residential raw land other than the Land and Property listed on
Schedule 1.4, and any Sale of a clubhouse, pool, golf course, other
amenity or any other income producing property constructed after the
date hereof. The term "Extraordinary Asset Sale" shall not include:
(i) Land and Property Sales, (ii) Escrow Sales, (iii) Bulk Sales, or
(iv) any Sale of the Mizner Place Property or the Arvida Parkway Center
Property.
"Fair Market Value" shall mean, with respect to any real
estate asset, the Market Value established with respect to such real
estate asset pursuant to Section 2.19, subject to any adjustment
required by any Requirement of Law applicable to the Banks.
"Fees" shall mean the collective reference to the
Administration Fee, the Commitment Fees, the Renewal Fees and the LC Fee
pursuant to Section 2.4.
"Financial Officer" of any corporation or partnership shall
mean the chief financial officer, principal accounting officer,
Treasurer or Controller (or any duly authorized Vice President with
similar responsibilities) of such corporation or of any corporate
general partner of such partnership, as the case may be.
"Financial Statement" shall mean either the Annual Financial
Statement or a Quarterly Financial Statement as the context may require.
"Financing" shall mean the incurrence of any Indebtedness
secured by (i) a mortgage, deed of trust, deed to secure debt or other
similar security instrument encumbering any real estate asset, (ii) an
assignment of the rents generated by any real estate asset, or (iii) a
pledge of the stock of any corporation or a partnership or joint venture
interest in a partnership or joint venture that is the owner of such
real estate asset, and shall include any permitted refinancings of
Indebtedness now or hereafter encumbering such real estate asset, rents
or ownership interest.
"Floating Rate" shall mean a rate per annum equal to 1.25%
plus the greater on a daily basis of (a) the Prime Rate, or (b) the
Alternate Base Rate. The term "Prime Rate" shall mean such rate of
interest as is publicly announced by the Agent at its principal office
from time to time as its prime rate. Any change in the Prime Rate shall
be effective on the date such change is announced by the Agent. The
term "Alternate Base Rate" shall mean a rate per annum equal to 1/2 of
1% plus the Federal Funds Effective Rate from time to time. The
"Federal Funds Effective Rate" shall to the extent necessary be
determined by the Agent separately for each day during the term of this
Agreement and shall for each such day be a rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for each such day (or if any such day is not a
Business Day, for the next immediately preceding Business Day) by the
Federal Reserve Bank of New York, or if the weighted average of such
rates is not so published for any such day which is a Business Day, the
average of the quotations for any such day on such transactions received
by the Agent from three Federal funds brokers of recognized standing
selected by the Agent. Any change in the Floating Rate as a result of a
change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of any such change in the Prime Rate or
the Federal Funds Effective Rate, as the case may be. If for any reason
the Agent shall have determined (which determination shall be conclusive
and binding on the Borrowers absent manifest error) that the Agent is
unable to ascertain the Federal Funds Effective Rate for any reason,
including, without limitation, the inability or failure of the Agent to
obtain sufficient bids for the purposes of determining the Federal Funds
Effective Rate in accordance with the provisions of this definition, the
Floating Rate shall be determined on the basis of the Prime Rate until
the circumstances giving rise to such inability no longer exist.
Notwithstanding anything to the contrary contained in this definition,
the Agent shall have the right in its sole and absolute discretion to
calculate interest on the portion of the Loans from time to time bearing
interest at the Floating Rate during any given period of time or for any
given day during the term of this Agreement at a rate per annum based
upon the Prime Rate notwithstanding the fact that a rate per annum based
upon the Alternate Base Rate may from time to time during such period of
time or for any such given day in fact be higher, it being agreed that
no such election by the Agent shall in any event or under any
circumstance constitute a waiver of the Agent's right at any time
thereafter and without prior notice to the Borrowers to charge interest
on the portion of the Loans bearing interest at the Floating Rate
strictly in accordance with the provisions of this definition. Each
determination of the Floating Rate shall be made by the Agent and shall
be conclusive and binding upon the Borrowers absent manifest error.
"Floating Rate I/P Loan" shall mean any I/P Loan with
respect to which the Borrowers shall have selected an interest rate
based on the Floating Rate in accordance with the provisions of Article
II, or which has been converted from a Eurodollar I/P Loan pursuant to
Section 2.8 or 2.15.
"Floating Rate Loan" shall mean any Floating Rate Term Loan,
Floating Rate I/P Loan or Floating Rate Revolving Loan.
"Floating Rate Revolving Loan" shall mean any Revolving
Credit Loan with respect to which the Borrowers shall have selected an
interest rate based on the Floating Rate in accordance with the
provisions of Article II, or which has been converted from a Eurodollar
Revolving Loan pursuant to Section 2.15.
"Floating Rate Term Loan" shall mean any Term Loan with
respect to which the Borrowers shall have selected an interest rate
based on the Floating Rate in accordance with the provisions of Article
II, or which has been converted from a Eurodollar Term Loan pursuant to
Section 2.8 or 2.15.
"Golfview Drive Property" shall mean the commercial and
residential properties located on Mizner Boulevard in Boca Raton,
Florida and commonly referred to as Golfview Drive.
"Governmental Authority" shall mean any government or
governmental or regulatory body thereof, or political subdivision
thereof, whether federal, state, local or foreign, or any agency,
instrumentality or authority thereof, or any court or public arbitrator.
"Grand Bay Entity" shall mean each of Arvida Grand Bay
Properties, Inc., a Delaware corporation, Arvida Grand Bay Limited
Partnership I, a Delaware limited partnership, and Arvida Grand Bay
Limited Partnership VI, a Delaware limited partnership, and "Grand Bay
Entities" shall mean all of them.
"Grand Bay Lender" shall mean Barnett Bank of Broward
County, N.A., its successors and assigns with respect to the Grand Bay
Loan.
"Grand Bay Loan" shall mean a revolving construction and
development loan made by the Grand Bay Lender to the Grand Bay Entities
and others in the maximum principal amount of $24,000,000 and secured by
the Grand Bay Property.
"Grand Bay Property" shall mean the real property in
Sarasota County, Florida which is being developed by the Grand Bay
Entities and which has been released from the lien of the Mortgage.
"Guarantee" shall mean any obligation, contingent or
otherwise, of any Person (a "Guarantor") guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person in
any manner, whether directly or indirectly, and including, without
limitation, any obligation of each Guarantor, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such Indebtedness, (b)
to purchase property, securities or services for the purpose of assuring
the owner of such Indebtedness of the payment of such Indebtedness, or
(c) to maintain working capital, equity capital or other financial
statement condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.
"HAE Joint Venture" shall mean the joint venture which owns
certain commercial real estate in Palm Beach, Florida.
"Hotel Limited Partners" shall mean the Partnership and the
Manager.
"Hotel Partnership" shall mean Center Hotel Limited
Partnership, a Delaware limited partnership.
"Indebtedness" shall mean, with respect to any Person,
without duplication, (a) all obligations of such Person for borrowed
money or otherwise evidenced by bonds, debentures, notes or similar
instruments upon which interest charges are customarily paid (including,
without limitation, zero coupon instruments), (b) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (c) all obligations of
such Person issued or assumed as the deferred purchase price of property
or services, (d) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by
such Person, whether or not the obligations secured thereby have been
assumed, (e) all Guarantees of such Person, (f) all Capital Lease
Obligations of such Person, (g) all Master Lease Obligations of such
Person, (h) all obligations of such Person in respect of interest rate
protection agreements, and (i) all obligations of such Person as an
account party in respect of letters of credit and bankers' acceptances.
The Indebtedness of any Person shall include the Indebtedness of any
partnership with respect to which such Person has general partner
liability but shall not include Non-Recourse Indebtedness of the type
described in clause (c) of the definition of the term Non-Recourse
Indebtedness.
"Indirect Mortgage Receivables" shall mean, at any time, the
outstanding principal balance of all receivables of the Borrowers at
such time in respect of notes which are fully secured by pledges of
equity interests in Joint Ventures (other than any Grand Bay Entity),
excluding any such notes on which any portion of the debt service
payable with respect thereto is past due by sixty (60) days or more at
such time; provided, however, that the outstanding principal balance of
any such receivable in excess of the value of the Joint Venture interest
pledged as security therefor shall be disregarded for purposes of
determining the amount of Indirect Mortgage Receivables hereunder at any
time. For purposes hereof, the value of any Joint Venture interest at
any time shall be an amount that would equal the Equity Value thereof at
such time if such Joint Venture interest were owned by the Borrowers.
"Interest Payment Date" shall mean, as to any Loan, the last
day of the Interest Period applicable to such Loan and, in addition, in
the case of a Eurodollar Loan with an Interest Period of more than three
(3) months, the days that would have been the Interest Payment Dates for
such Loan had successive Interest Periods of three (3) months or ninety
(90) days, as the case may be, been applicable to such Loan, and, in
addition, the date of any refinancing or conversion of such Loan with or
to a Loan of a different type.
"Interest Period" shall mean: (a) as to any Eurodollar
Loan, the period commencing on the date of such Loan and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2,
3, 6 or 12 months thereafter, as the Borrowers may elect, and (b) as to
any Floating Rate Loan, the period commencing on the date of such Loan
and ending on the earliest of (i) the next March 31, June 30, September
30 or December 31, (ii) the Revolving Credit Loan Maturity Date, the I/P
Loan Maturity Date or the Term Loan Maturity Date, as applicable, and
(iii) the date such Loan is to be repaid in full in accordance with
Section 2.6 or 2.13; provided, however, that if any Interest Period
would end on a day that shall not be a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in
the case of Eurodollar Loans, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day. Interest shall accrue
from and including the first day of an Interest Period to but excluding
the last day of such Interest Period.
"IOC Land Trust Agreement" shall mean the Land Trust
Agreement dated as of June 2, 1993 between Lewis F. Crippen, as Trustee,
and A/JMB Partners, as beneficiary, as such agreement may be amended,
supplemented or modified from time to time.
"IOC Land Trustee" shall mean the Trustee under the IOC Land
Trust Agreement.
"IOC Mortgage" shall mean the Mortgage and Security
Agreement made by the IOC Land Trustee in favor of Agent with respect to
the IOC Tract dated May 27, 1993 and recorded in the Public Records of
Broward County, Florida.
"IOC Tract" shall mean the 329.548 acre (approx.) parcel of
real property located within the Weston Property, more particularly
described on Schedule 1.7 hereto.
"I/P Loan Maturity Date" shall mean March 1, 1996.
"I/P Loan Repayment Date" shall have the meaning assigned
thereto in Section 2.6(b).
"I/P Loans" shall mean the term loans from the Banks to the
Borrowers evidenced by the I/P Notes as described in Section 2.1. Each
I/P Loan shall be either a Eurodollar I/P Loan or a Floating Rate I/P
Loan.
"I/P Notes" shall mean the amended and restated renewal
promissory notes of the Borrowers dated as of the Closing Date payable
to the order of each Bank evidencing the I/P Loans, in the form attached
hereto as Exhibit A-2, including all amendments, modifications and
supplements thereto.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"Jacksonville Golf and Country Club Property" shall mean the
country club located in southeast Jacksonville, Florida and commonly
referred to as the Jacksonville Golf and Country Club.
"Jacksonville Properties" shall mean the properties
comprising the residential community projects in Duval County and St.
John's County, Florida and commonly referred to as the Sawgrass Country
Club and the Players Club.
"JMB" shall mean JMB Realty Corporation, a Delaware
corporation.
"Joint Venture" shall mean any partnership, joint venture or
similar shared ownership arrangement that owns, directly or indirectly,
any real estate assets included in the Real Estate Portfolio or an
interest in which partnership, joint venture or arrangement is included
in the Real Estate Portfolio including, without limitation, the AOK
Joint Venture, the Arvida-Boose Joint Venture, the Arvida Corporate Park
Joint Venture, the Arvida Pompano Park Joint Venture, the Arvida/RBG I
Joint Venture, the Arvida/RBG II Joint Venture, the Coto de Caza Joint
Venture, the Country Isles Joint Venture, the Cullasaja Joint Venture,
the HAE Joint Venture, the Ocala 202 Joint Venture and the Tampa 301
Joint Venture.
"Joint Venture Net Cash Flow" shall mean all Operating Cash
Receipts of a Joint Venture attributable to the Borrowers less (i) the
aggregate amount of all operating expenses and capital expenditures of
such Joint Venture attributable to the Borrowers paid (but not prepaid)
during such period and (ii) all payments of Indebtedness of such Joint
Venture during such period.
"Land and Property" shall mean the real estate assets listed
on Schedule 1.4.
"Land and Property Sale" shall mean any Sale of the Land and
Property listed on Schedule 1.4.
"LC Bank" shall mean Chemical in its capacity as issuer of
the Letters of Credit.
"LC Commitment" shall mean the commitment of the LC Bank to
issue Letters of Credit hereunder as set forth in Section 2.20(a).
"LC Disbursement" shall mean any payment, advance or
disbursement made pursuant to the terms of a Letter of Credit by the LC
Bank.
"LC Fee" shall have the meaning assigned thereto in Section
2.4(d).
"LC Termination Date" shall mean July 1, 1995; provided,
however, that, if the LC Bank agrees to extend the LC Commitment, the LC
Termination Date shall mean the date to which the LC Commitment has been
extended. The LC Commitment may be extended for successive one-year
periods, upon the request of the Borrowers at the sole discretion of the
LC Bank, by notice from the LC Bank to the Borrowers.
"Legal Proceedings" shall mean any judicial, administrative
or arbitral actions, suits, proceedings (public or private), claims or
governmental proceedings.
"Letter of Credit Documents" shall mean any Letter of
Credit, any related depository agreement, reimbursement agreement or any
other agreement or document supporting the Letters of Credit or related
agreements, in each case approved by the LC Bank.
"Letters of Credit" shall mean the letters of credit issued
pursuant to the Existing Agreement and continued hereunder pursuant to
Section 2.1(b), the letters of credit issued pursuant to Section 2.20
and any related Letter of Credit Documents.
"LIBOR Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to 2.50% plus the Base LIBOR Rate
applicable to such Interest Period. The "Base LIBOR Rate" applicable to
a particular Interest Period shall mean a rate per annum equal to the
rate of interest at which dollar deposits in an amount approximately
equal to the portion of the Loans which will bear interest at a
particular LIBOR Rate during such Interest Period, and with maturities
comparable to the last day of such Interest Period, are offered in
immediately available funds in the London Interbank Market to the London
office of the Agent by leading banks in the Eurodollar market at 11:00
a.m., London time, two (2) Business Days prior to the commencement of
such Interest Period. Each determination of the LIBOR Rate and the Base
LIBOR Rate applicable to a particular Interest Period shall be made by
the Agent and shall be conclusive and binding upon the Borrowers absent
manifest error.
"Lien" shall mean, with respect to any asset, (i) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset and shall include any Uniform Commercial
Code financing statement filed with respect to such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset
and (iii) in the case of securities (other than interests in Joint
Ventures), any purchase option, call or similar right of a third party
with respect to such securities.
"Liquor License Liens" shall mean those certain security
documents entitled "Florida Statute 561.65 Mortgagee's Interest in
Spiritous Alcoholic Beverage License", recorded with the State of
Florida Department of Business Regulation effective November 4, 1992 as
heretofore or hereafter amended or supplemented.
"Loan" shall mean any Term Loan, I/P Loan or Revolving
Credit Loan.
"Loan Documents" shall mean this Agreement, the Notes, the
Escrow Agreement, the Additional Escrow Agreements, the Letter of Credit
Documents and the Collateral Documents.
"Longboat Key Properties" shall mean the properties
comprising the residential community project and commercial properties
on Longboat Key near Sarasota, Florida and commonly referred to as the
Longboat Key Project.
"Manager" shall mean Arvida/JMB Managers, Inc., a Delaware
corporation.
"Margin Stock" shall have the meaning given such term under
Regulation U.
"Market Value" shall mean the most probable price which a
property should bring in a competitive and open market under all
conditions requisite to a fair sale with the buyer and seller each
acting prudently and knowledgeably, and assuming the price is not
affected by undue stimuli. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title
from seller to buyer under conditions whereby: (a) buyer and seller are
typically motivated; (b) both parties are well informed or well advised,
and acting in what they consider their own best interests; (c) a
reasonable time is allowed for exposure in the open market; (d) payment
is made in terms of cash in dollars or in terms of financial
arrangements comparable thereto; and (e) the price represents the normal
consideration for the property sold unaffected by special or creative
financing or sales concessions granted by anyone associated with the
sale.
"Master Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real and/or
personal property leased by such Person or any Affiliate thereof,
entered into for the purpose of assuring the owner of any Indebtedness
of the lessor of the availability of such rents or other amounts. For
the purposes of this Agreement, the amount of such Master Lease
Obligations at any time shall be the reasonable net present value
thereof at such time; provided, however, that the discount rates
utilized must reflect customary appraisal requirements commensurate with
each Property's development risk and term.
"Material Adverse Change" shall mean a material adverse
change in any of (i) the condition (financial or otherwise), business,
performance, prospects, operations or properties of any Borrower and its
Subsidiaries taken as one enterprise, (ii) the legality, validity or
enforceability of any Loan Document due to actions of the Borrowers or
any of their Affiliates, (iii) the perfection or priority of any of the
Liens granted pursuant to the Collateral Documents, (iv) the ability of
the Borrowers to repay the Loans and other obligations hereunder as they
become due or of any Borrower to perform its obligations hereunder or
under any other Loan Document as such obligations become due, or (v) the
rights and remedies of the Banks or the Agent under the Loan Documents.
"Minimum Release Price" shall mean, for each Extraordinary
Asset or Land and Property parcel of real property listed on Schedule
1.5, the dollar amount set forth on such Schedule or, with respect to
Escrow Sales, the minimum dollar amount set forth in the Escrow
Agreement.
"Mizner Place Property" shall mean the office building
located in Boca Raton, Florida and commonly referred to as Mizner Place.
"Mortgage" shall mean (i) each mortgage, deed of trust or
similar security agreement (including the IOC Mortgage) made or to be
made by or on behalf of the Borrowers in favor of the Agent for the
ratable benefit of the Banks, as more particularly described on Schedule
1.9, and (ii) the Cullasaja Mortgage, as each of them may be amended,
supplemented or otherwise modified from time to time.
"Mortgage Amendment" shall have the meaning assigned to it
in Section 4.2(m).
"Mortgaged Properties" shall mean the collective reference
to the Arvida Parkway Center Property, the Broken Sound Property, the
Center Park Property, the Cullasaja Lots, the Golf View Drive Property,
the Jacksonville Golf and Country Club Property, the Jacksonville
Properties, the Longboat Key Properties, the Mizner Place Property, the
Okeechobee Property, the River Hills Property, the Royal Palm Road
Property, the Water's Edge Property, the Weston Property and the Yamato
Center Property.
"Mortgage Receivables" shall mean, at any time, the sum of
the amount of Indirect Mortgage Receivables plus the outstanding
principal balance of all receivables of the Borrowers at such time in
respect of mortgage notes which are fully secured by first mortgages or
second mortgages on fee simple interests in real estate, excluding the
Cullasaja Mortgage and any such mortgage notes on which any portion of
the debt service payable with respect thereto is past due by sixty (60)
days or more at such time; provided, however, that the sum of the
Indebtedness secured by any such second mortgage plus the Indebtedness
secured by the first mortgage does not exceed the Fair Market Value of
the underlying property subject to such mortgages; and, provided,
further, that the aggregate amount of Indebtedness secured by such
second mortgages shall not exceed ten percent (10%) of the Borrowing
Base then in effect.
"Multiemployer Plan" shall mean a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, and to which any Borrower, any
of its Subsidiaries or any ERISA Affiliate is making, is obligated to
make, has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"NationsBank" shall mean NationsBank of Florida, N.A., and
where appropriate shall include its predecessor, NCNB National Bank of
Florida.
"Net Cash Proceeds" shall mean cash payments received by the
Borrowers, any of their Subsidiaries or Cullasaja Joint Venture from any
Sale of any real estate asset, in each case net of the amount of (i)
brokers' commissions, title insurance and other customary costs of sale
payable in connection with such Sale, (ii) all transfer taxes payable as
a consequence of such Sale, and (iii) reasonable legal fees attributable
to such Sale; provided, however, that in the case of any such broker's
commission paid to an Affiliate of the Borrowers, such commission shall
be no less favorable to the Borrowers than the Borrowers could
reasonably obtain on an arm's-length basis in a transaction with an
unrelated third party.
"Net Cash Flow" shall mean, with respect to any period, the
"Cash Flow From Operations" for such period as such item appears on the
Partnership's cash flow statement in the form attached hereto as Exhibit
G, less (i) Term Loan and I/P Loan principal and interest payments for
such period (other than any prepayment made pursuant to Section 2.13(e)
during such period), (ii) interest payments in respect of Revolving
Credit Loans, (iii) principal and interest payments in respect of the
following other Indebtedness of the Partnership (determined on a consol-
idated basis): the Country Isles Loan, the Indebtedness secured by the
Equitable Mortgage, and the Grand Bay Loan, (iv) any contingent interest
paid by the Borrowers pursuant to Section 6.4, and (v) with respect to
the determination of Net Cash Flow for any fiscal year, the final
payment of principal in respect of Revolving Credit Loans made during
the last month of such fiscal year to reduce such Loans to zero (such
payment being referred to herein as a "Year End Payment"), provided that
(X) the sum of Cash Balances on the first day of such fiscal year plus
Net Cash Flow (after deducting the Year End Payment) for such year
equals or exceeds Cash Balances at the end of such fiscal year ("Year
End Cash"), or (Y) if not, the amount by which Year End Cash exceeds
such Net Cash Flow is added back to determine the amount of final amount
of Net Cash Flow for such fiscal year.
"Net Financing Proceeds" shall mean cash payments received
by the Borrowers or any of their Subsidiaries from any Financing of the
Arvida Parkway Center Property or the Mizner Place Property, in each
case net of the amount of (i) brokers' commissions, title insurance and
other customary costs of financing payable in connection with such
Financing, (ii) all transfer taxes payable as a consequence of such
Financing, and (iii) reasonable legal fees attributable to such
Financing; provided, however, that in the case of any such broker's
commission paid to an Affiliate of the Borrowers, such commission shall
be no less favorable to the Borrowers than the Borrowers could
reasonably obtain on an arm's-length basis in a transaction with an
unrelated third party.
"Non-Recourse Indebtedness" shall mean (a) any Indebtedness
of the Borrowers with respect to which no Borrower has personal
liability, (b) any Indebtedness of any Subsidiary of any Borrower or of
any Joint Venture with respect to which no Borrower has personal
liability, and (c) hazardous waste indemnification liabilities of the
Borrowers and liabilities of the Borrowers arising from any breach of a
representation or warranty.
"Notes" shall mean the collective reference to the Term
Notes, the I/P Notes and the Revolving Credit Notes.
"Ocala 202 Joint Venture" shall mean the joint venture which
owns certain commercial real estate in Marion County, Florida.
"Office Partners" shall mean Center Office Partners, a
Florida general partnership.
"Okeechobee Property" shall mean the commercial property
located in West Palm Beach, Florida and commonly referred to as
Okeechobee.
"Order" shall mean any order, injunction, judgment, decree,
ruling, assessment or arbitration award.
"Original I/P Notes" shall mean the I/P note of the
Borrowers in favor of each of the Banks issued pursuant to the Existing
Agreement, including all amendments, modifications and supplements
thereto.
"Original Notes" shall mean the Original I/P Notes, the
Original Revolving Credit Notes and the Original Term Notes.
"Original Revolving Notes" shall mean the revolving credit
note of the Borrowers in favor of each of the Banks issued pursuant to
the Existing Agreement, including all amendments, modifications and
supplements thereto.
"Original Term Notes" shall mean the term note of the
Borrowers in favor of each of the Banks issued pursuant to the Existing
Agreement, including all amendments, modifications and supplements
thereto.
"Partnership" shall mean Arvida/JMB Partners, L.P., a
Delaware limited partnership.
"Partnership Agreement" shall mean the amended and restated
agreement of limited partnership of the Partnership, as amended,
modified or supplemented from time to time in accordance with the terms
of this Agreement.
"Partnership Agreements" shall mean the collective reference
to the Partnership Agreement and the partnership agreements of each of
A/JMB Partners, Office Partners, Retail Partners, Hotel Partnership and
Weston, together with all amendments to such agreements heretofore
delivered to the Agent.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Pension Plan" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA (other than a Multiemployer Plan),
which is not an individual account plan, as defined in Section 3(34) of
ERISA, and which any Borrower, any of its Subsidiaries or, if a Title IV
Plan, any ERISA Affiliate maintains, contributes to or has an obligation
to contribute to on behalf of participants who are or were employed by
any of them.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United
States of America or any agency thereof, in each case maturing within
one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within one
year from the date of acquisition thereof and having, at such date of
acquisition, a rating of A-1 or better from Standard & Poor's
Corporation ("S&P") or P-1 or better from Moody's Investors Service,
Inc. ("Moody's"); provided, however, that any investment in commercial
paper of any Bank maturing within one year from the date of acquisition
thereof shall be a Permitted Investment;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof, issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of the
Agent or any other commercial bank organized under the laws of the
United States of America or any State thereof the long-term unsecured
debt obligations of which are at the date of acquisition rated in one of
the three highest generic rating categories by either S&P or Moody's;
(d) repurchase agreements with the Agent or any other
commercial bank referred to in clause (c) above with respect to any
obligations of the type referred to in clause (a) above, provided that
such obligations have a market value at the time of purchase not less
than the repurchase price to be paid under such repurchase agreement;
and
(e) other investment instruments approved in writing by the
Agent, which approval shall not be unreasonably withheld, and offered by
financial institutions which are members of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance
Corporation and which have a combined capital and surplus of not less
than $100,000,000.
"Person" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean with respect to any Borrower, at any time,
an employee benefit plan, as defined in Section 3(3) of ERISA, which
such Borrower or any of its Subsidiaries maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or
were employed by any of them.
"Pledge Agreement" shall mean the Pledge Agreement dated as
of October 7, 1992 between the Borrowers and the Agent, a copy of which
is attached hereto as Exhibit H, pursuant to which the Borrowers have
pledged to the Agent for the ratable benefit of the Banks certain of the
Borrowers' mortgage promissory notes, including all amendments,
modifications and supplements thereto.
"Post Default Rate" shall have the meaning as-
signed thereto in Section 2.11.
"Property" shall mean each of the Arvida Parkway Center
Property, the Broken Sound Property, the Center Park Property, the Coto
de Caza Property, the Cullasaja Property, the Golfview Drive Property,
the Jacksonville Golf and Country Club Property, the Jacksonville
Properties, the Longboat Key Properties, the Mizner Place Property, the
Okeechobee Property, the River Hills Property, the Royal Palm Road
Property, the Water's Edge Property, the Weston Property, and the Yamato
Center Property.
"Purpose Credit" shall have the meaning assigned such term
in Regulation U.
"Qualified Plan" shall mean an employee pension benefit
plan, as defined in Section 3(2) of ERISA, which is intended to be
tax-qualified under Section 401(a) of the IRC, and which any Borrower,
any of its Subsidiaries or with respect to any such plan subject to
Section 412 of the IRC, any ERISA Affiliate maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or
were employed by any of them.
"Quarterly Financial Statement" shall have the meaning
assigned thereto in Section 5.4(b).
"Real Estate Documents" shall mean the collective reference
to the Mortgages and the Liquor License Liens.
"Real Estate Portfolio" shall mean, at any time, all
developed and undeveloped real estate owned (directly or indirectly
through Subsidiaries of any Borrower or Joint Ventures) by the
Borrowers, other than the Arvida Parkway Center Property, the Mizner
Place Property and the Grand Bay Property, and (x) encumbered by a duly
recorded Mortgage, or (y) in the case of real estate owned by a Joint
Venture, the interest of the Borrowers in such Joint Venture is subject
to a duly perfected Collateral Assignment of Partnership Interest or
Collateral Assignment of Partnership Proceeds, as applicable hereunder;
provided, however, that the Real Estate Portfolio shall include the
Cullasaja Property but shall not include any such real estate that is
(i) subject to a Lien securing Indebtedness (other than the Lien of any
Collateral Document) if at such time any amount with respect to such
Indebtedness shall be due and payable and shall not have been paid, or
if at such time any term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing such Indebtedness
shall not have been observed or performed, and the effect thereof is to
cause or permit the holder or holders of such Indebtedness or a trustee
on its or their behalf to cause such Indebtedness to become due prior to
its stated maturity, (ii) owned directly or indirectly by or through any
Person if an event described in paragraph (h) or (i) of Article VII
shall have occurred with respect to such Person, (iii) owned directly or
indirectly by one or more of the Grand Bay Entities, or (iv) owned
directly or indirectly by or through a Subsidiary of any Borrower or of
any Joint Venture if (x) a final judgment, other than any such judgment
the amount of which is covered by insurance provided by third-party
insurers for the benefit of such Subsidiary or Joint Venture to an
extent satisfactory to the Agent in its sole discretion, for the payment
of money shall be rendered against such Subsidiary or Joint Venture and
the same shall remain undischarged for a period of forty-five (45)
consecutive days during which no appeal is pending or during which
execution shall not be effectively stayed, or (y) such Subsidiary or
Joint Venture shall fail to pay any amount with respect to any
Indebtedness (other than Non-Recourse Indebtedness existing on the
Closing Date and Non-Recourse Indebtedness permitted under Section 6.1,
trade payables of such Subsidiary or Joint Venture in an aggregate
amount not to exceed $250,000 and Indebtedness which is being contested
in good faith and for which the Borrowers have set aside adequate
reserves in accordance with generally accepted accounting principles in
effect in the United States from time to time) when and as the same
shall become due and payable (after any grace period applicable thereto
shall have elapsed), or shall fail to observe or perform any term,
covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness, and the effect
thereof is to cause or permit the holder or holders of such Indebtedness
or a trustee on its or their behalf to cause such Indebtedness to become
due prior to its stated maturity (it being understood that no real
estate asset of a Subsidiary of any Borrower or of any Joint Venture
shall be excluded from the Real Estate Portfolio by operation of this
subclause (iii)(y) if (A) such real estate asset is not subject to a
Lien securing the Indebtedness the payments in respect of which are
overdue as provided immediately above and (B) such Subsidiary or Joint
Venture has no personal liability with respect to such Indebtedness).
"Reconciliation Date" shall mean (a) the last day of each
fiscal quarter of the Partnership, (b) the date of any Sale or Financing
of any real estate asset (or Sales or Financings of real estate assets
within any development project) included in the Real Estate Portfolio
(whether such Sale or Financing is made directly or indirectly by Sale
or Financing of joint venture interests or otherwise) which asset has
(or assets have) an Equity Value equaling or exceeding the lesser of (i)
5% of the Borrowing Base at the time of such sale or (ii) $10,000,000,
(c) the date on which a recreational or club facility or amenity
available to all residents of a Property is contributed, sold or
otherwise transferred (other than any such contribution, sale or
transfer to any country club substantially all of the memberships of
which are owned by the Borrowers, any Subsidiaries of the Borrowers or
any Joint Venture), (d) the date of any change in the ownership of any
real estate asset included in the Borrowing Base other than: (i) sales
of homes and residential homesites and Land and Property Sales in the
ordinary course of business or (ii) transfers to Affiliates in the
ordinary course of business provided that the transferee is a Borrower,
and (e) the date of execution by a Borrower of any agreement with a
third party which would materially adversely affect the Banks' position
relative to any asset included in the Borrowing Base.
"Regulation G" shall mean Regulation G of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration on, into or out of any property owned, operated or leased
by the Borrowers or their respective Subsidiaries, including the
movement of any Contaminant through or in the air, soil, surface water,
groundwater, or property.
"Remedial Action" shall mean all actions, including, without
limitation, any capital expenditures, required or voluntarily undertaken
to (i) clean up, remove, treat, or in any other way address any
Contaminant in the indoor or outdoor environment; (ii) prevent the
Release or threat of Release, or minimize the further Release of any
Contaminant so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations or post-remedial
monitoring and care; or (iv) bring facilities on any real property owned
by the Borrowers or their respective Subsidiaries into compliance with
all Environmental Laws and Environmental Permits.
"Renewal Fees" shall have the meaning assigned thereto in
Section 2.4(c).
"Repayment Date" shall mean either a Term Loan Repayment
Date or an I/P Loan Repayment Date.
"Reportable Event" shall mean any of the events described in
Section 4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Required Banks" shall mean at any time (a) in respect of
the Banks, Banks holding Loans representing at least 81% of the
aggregate principal amount of the Loans outstanding hereunder or, if no
Loans shall be outstanding, of the Banks' Revolving Loan Commitments and
(b) in respect of the LC Commitment, the issuer in respect of at least
66-2/3% of the face amount of Letters of Credit outstanding pursuant to
the LC Commitment or, if no Letters of Credit shall be outstanding, of
the LC Commitment.
"Requirement of Law" shall mean, as to any Person, the
charter and bylaws, partnership agreement, or other organizational or
governing documents of such Person, and all federal, state and local
laws, rules and regulations, including, without limitation, ERISA and
Environmental Laws, and all orders, judgements, decrees or other
determinations of any Governmental Authority or arbitrator, applicable
to or binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"Residential Real Estate" shall mean (i) on the Closing
Date, the real estate assets set forth in Schedule 1.6 and (ii) on any
date after the Closing Date, the real estate assets set forth in
Schedule 1.6 less any real estate asset which has been the subject of a
Sale or a release from the lien of any Mortgage plus any other real
estate assets that may then be developed as, or held principally for
development of, residential or community development projects.
"Responsible Officer" of any corporation or partnership
shall mean any executive officer or Financial Officer of such
corporation or of any corporate general partner of such partnership, as
the case may be, and any other officer or similar official thereof
responsible for the administration of the obligations of such
corporation or partnership in respect of this Agreement.
"Restricted Account" shall have the meaning set forth on
Schedule 6.8.
"Retail Partners" shall mean Center Retail Partners, a
Florida general partnership.
"Return of Capital" shall mean any distribution by the
Partnership to its partners (in their capacities as such), other than a
quarterly distribution pursuant to clause (i) of Section 4.1 of the
Partnership Agreement.
"Revolving Credit Loan Commitment" shall mean, with respect
to each Bank, the commitment of such Bank to make Revolving Credit Loans
hereunder as set forth in Section 2.2. The Revolving Credit Loan
Commitments may be extended at the request of the Borrowers for
successive one year periods, at the sole discretion of the Banks.
"Revolving Credit Loan Maturity Date" shall mean December
31, 1995; provided, however, that if the Banks agree to extend their
Revolving Credit Loan Commitments, the Revolving Credit Loan Maturity
Date shall mean the date to which the Revolving Credit Loan Commitments
have been extended.
"Revolving Credit Loans" shall mean the revolving credit
loans from the Banks to the Borrowers pursuant to Section 2.2. Each
Revolving Loan shall be either a Eurodollar Revolving Loan or a Floating
Rate Revolving Loan.
"Revolving Credit Notes" shall mean the amended and restated
renewal promissory notes of the Borrowers dated the Closing Date payable
to the order of each Bank evidencing Revolving Credit Loans, in the form
attached hereto as Exhibit A, including all amendments, modifications
and supplements thereto.
"River Hills Property" shall mean the properties comprising
the River Hills Country Club near Tampa, Florida and commonly referred
to as the River Hills Country Club.
"Royal Palm Road Property" shall mean the residential
property located in Boca Raton, Florida and commonly referred to as
Royal Palm Road.
"Sale" shall mean any sale, transfer, conveyance, assignment
or other disposition for consideration of all or any part of any real
estate asset, whether directly or indirectly, by operation of law, or
otherwise, or execution of a lease in respect of such asset with a term
of 50 years or more.
"Security Agreement" shall mean the Security Agreement
between the Borrowers and the Agent dated as of October 7, 1992, a copy
of which is attached hereto as Exhibit I, pursuant to which the
Borrowers have granted a security interest in favor of the Agent for the
ratable benefit of the Banks in certain of the Borrowers' general
intangibles, instruments and Deposit Accounts maintained with Chemical
and NationsBank, as the same may be amended, supplemented or otherwise
modified from time to time.
"Southeast" shall mean Southeast Florida Holdings, Inc., an
Illinois corporation.
"Spill" shall mean a discharge, spillage, uncontrolled loss,
seepage or filtration of any Contaminants other than a Release.
"Subordinate Property" shall mean the approximately 162 acre
parcel of real property located within the Weston Property, more
particularly described on Schedule 1.8 hereto.
"Subordinated Indebtedness" shall mean Indebtedness
subordinated in right of payment, both as to principal and interest, to
the Notes and all other amounts payable hereunder and under any other
Loan Document, on terms submitted to and approved in writing by the
Agent (it being understood that such terms shall permit payments of
principal and interest in respect of such Indebtedness unless an Event
of Default has occurred and is continuing).
"Subordination Agreement" shall mean the subordination
agreement between the Agent and Equitable dated as of May 27, 1993,
including all amendments, modifications and supplements thereto.
"Subsidiary" shall mean, with respect to any Person (herein
referred to as the "parent"), any corporation, association, joint
venture or other business entity of which more than 50% of the
securities or other ownership interests having ordinary voting power is,
or with respect to which rights to control management (pursuant to any
contract or other agreement or otherwise) are, at the time as of which
any determination is being made, owned, controlled or held by the parent
or one or more Subsidiaries of the parent.
"Tampa 301 Joint Venture" shall mean the joint venture which
owns certain real estate in Hillsborough County, Florida.
"Term Loans" shall mean the term loans from the Banks to the
Borrowers evidenced by the Term Notes as described in Section 2.1. Each
Term Loan shall be either a Eurodollar Term Loan or a Floating Rate Term
Loan.
"Term Loan Maturity Date" shall mean July 1, 1997.
"Term Loan Repayment Date" shall have the meaning assigned
thereto in Section 2.6(a).
"Term Notes" shall mean the amended and restated renewal
promissory notes of the Borrowers dated as of the Closing Date payable
to the order of each Bank, evidencing the Term Loans, in the form
attached hereto as Exhibit A-1, including all amendments, modifications
and supplements thereto.
"Title IV Plan" shall mean a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"Unfunded Pension Liability" shall mean, as of any
determination date, the aggregate amount, if any, of the amount by which
the present value of all accrued benefits under each Title IV Plan
exceeds the fair market value of all assets of such Title IV Plan
allocable to such benefits in accordance with Title IV of ERISA, all
determined as of the most recent valuation date for each such Title IV
Plan using the actuarial assumptions in effect under such Title IV Plan.
"Water's Edge Property" shall mean the properties comprising
Water's Edge and Dockside near Atlanta, Georgia and commonly referred to
as Water's Edge and Dockside.
"Welfare Benefit Plan" shall mean an employee welfare
benefit plan, as defined in Section 3(1) of ERISA, which any Borrower or
any of its Subsidiaries maintains, contributes to or has an obligation
to contribute to, and under which its former or active employees (or
their beneficiaries) are entitled to receive welfare benefits.
"Weston" shall mean Weston Hills Country Club Limited
Partnership, a Delaware limited partnership.
"Weston Property" shall mean the properties comprising a
community development project located in Broward County, Florida near
the intersection of U.S. Interstate 75, U.S. Interstate 595 and the
Arvida Parkway and commonly referred to as the Weston Project.
"WHCC" shall mean WHCC, Inc., an Illinois corporation.
"Withdrawal Liability" shall mean, at any time, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of
ERISA, and any increase in contributions pursuant to Section 4243 of
ERISA with respect to all Multiemployer Plans.
"Work in Process and Completed Inventory" shall mean, with
respect to any period, the "Work in Process" and "Completed Inventory"
at the end of such period presented in the format attached hereto as
Exhibit P and determined in accordance with generally accepted
accounting principles.
"Yamato Center Property" shall mean the commercial property
located in Boca Raton, Florida and commonly referred to as Yamato
Center.
The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole, including the
Exhibits and Schedules hereto, as the same may from time to time be
amended, modified or supplemented and not to any particular section,
subsection or clause contained in this Agreement. Article, Section,
Subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter.
ARTICLE II RESTRUCTURING OF EXISTING CREDITS;
THE LOANS AND LETTERS OF CREDIT
2.1. Restructuring of Existing Credits; Issuance of Renewal
Notes; Ratification of Security Interests.
(a) Each Bank severally confirms that as of the Closing
Date it holds the obligations under the Existing Agreement which are
listed opposite its name on Schedule 2.1.
(b) On the terms and conditions hereof, on the Closing Date
(i) the outstanding principal amount of the Existing Term Loan Credits
held by each Bank shall automatically become a Term Loan hereunder in
the respective amounts set forth on Schedule 2.1, (ii) the Existing
Revolving Loan Credits held by each Bank shall automatically become a
Revolving Credit Loan hereunder in the respective amounts set forth on
Schedule 2.1, (iii) the Existing I/P Loan Credits held by each Bank
shall automatically become an I/P Loan hereunder in the respective
amounts set forth on Schedule 2.1, and (iv) the outstanding Letters of
Credit (as defined in the Existing Agreement) issued by Chemical Bank
for the account of the Borrowers pursuant to the Existing Agreement
shall automatically become Letters of Credit hereunder in the amounts
set forth on Schedule 2.1.
(c) On the terms and conditions hereof, on the Closing Date
the Existing Agreement shall automatically be superseded hereby,
provided, however, that any obligations of the Borrowers or any of their
Subsidiaries under the Existing Agreement in respect of taxes,
indemnities or similar types of obligations, which under the Existing
Agreement are expressly stated to survive the termination of such
documentation, shall not be superseded hereby but shall continue in
effect as obligations of the Borrowers or such Subsidiary, except to the
extent the terms of this Agreement shall be expressly inconsistent
therewith.
(d) Upon and subject to the terms and conditions set forth
herein, the Agent shall accept from the Borrowers, and the Borrowers
shall deliver to the Agent on the Closing Date, (i) an amended and
restated renewal promissory note payable to the order of each Bank in
the form of Exhibit A-1 (collectively, the "Term Notes"), in renewal of
the Original Chemical Term Note and the Original NationsBank Term Note,
(ii) an amended and restated renewal promissory note payable to the
order of each Bank in the form of Exhibit A-2 (collectively, the "I/P
Notes"), in renewal of the Original Chemical I/P Note and the Original
NationsBank I/P Note, and (iii) an amended and restated renewal
promissory note payable to the order of each Bank in the form of Exhibit
A (collectively, the "Revolving Credit Notes"), in renewal of the
Original Chemical Revolving Credit Note and the Original NationsBank
Revolving Credit Note.
(e) Upon the terms and conditions set forth herein,
Chemical and NationsBank shall cause (i) upon acceptance of the Term
Notes, the Original Chemical Term Note and the Original NationsBank Term
Note to be marked "cancelled by renewal" and attached to their
respective Term Notes, (ii) upon acceptance of the I/P Notes, the
Original Chemical I/P Note and the Original NationsBank I/P Note to be
marked "cancelled by renewal" and attached to their respective I/P
Notes, and (iii) upon acceptance of the Revolving Credit Notes, the
Original Chemical Revolving Note and the Original NationsBank Revolving
Note to be marked "cancelled by renewal" and attached to their
respective Revolving Notes.
(f) The Term Notes, I/P Notes and Revolving Credit Notes
shall accrue interest and shall be repaid as herein and therein
provided.
(g) Chemical's pro rata share of the Term Loans shall be
80% and NationsBank's pro rata share of the Term Loans shall be 20%.
Chemical's pro rata share of the I/P Loans shall be 80% and
NationsBank's pro rata share of the I/P Loans shall be 20%.
(h) The I/P Loans, the Term Loans, the Revolving Credit
Loans, any LC Disbursements and all other obligations of the Borrowers
hereunder are secured by a first priority Lien (subject in the case of
the Subordinate Property to the Equitable Mortgage) in favor of the
Agent for the ratable benefit of the Banks against the Collateral. An
Event of Default in respect of the I/P Loans shall constitute an Event
of Default in respect of the Term Loans, the Revolving Credit Loans and
the LC Commitment and an Event of Default in respect of the Term Loans,
the Revolving Credit Loans or the Letters of Credit shall constitute an
Event of Default in respect of the I/P Loans.
(i) Borrowers have heretofore granted to the Agent for the
ratable benefit of the Banks security interests in certain Collateral
(collectively, the "Existing Collateral") pursuant to the Collateral
Documents as such documents existed immediately prior to the Closing
Date (collectively, the "Existing Collateral Documents"), as security
for the payment in full of the indebtedness and other obligations of
Borrowers incurred pursuant to the Original Notes and the Existing
Agreement. Borrower hereby reaffirms and continues such grant of
security interests in the Existing Collateral as security for payment in
full of the Loans and the other obligations of Borrowers incurred
pursuant to this Agreement and the Loan Documents. On the Closing Date
and thereafter throughout the term of this Agreement, subject to the
provisions hereof, the Lender shall retain and hold such security
interests upon the Existing Collateral as security for the payment in
full of all the obligations of Borrowers hereunder. From and after the
Closing Date, all references in the Collateral Documents to the "Credit
Agreement" or any similar term, or to the Existing Agreement, shall
(unless the context otherwise requires) be considered references to this
Agreement. In consideration of the modifications contained in this
Agreement, as of the Closing Date, Borrowers shall enter into
modifications of certain of the Existing Collateral Documents, and
ratify others, as set forth in Section 4.2.
2.2. Revolving Credit Loan Commitments.
(a) Subject to the terms and conditions and relying upon
the representations and warranties herein set forth and the covenants
contained in Section 5.5(c), each Bank agrees, severally and not
jointly, to make Revolving Credit Loans to the Borrowers, at any time
and from time to time on or after the Closing Date and until the earlier
of the Revolving Credit Loan Maturity Date and the termination of the
Revolving Credit Loan Commitment of such Bank in accordance with the
terms hereof, in an aggregate principal amount at any time outstanding
not to exceed the amount set forth opposite its name below, as the same
may be reduced from time to time pursuant to Section 2.7:
Percentage of
Name and AddressRevolvingCredit LoanRevolving Credit
of Bank Commitment Loan Commitments
Chemical Bank $16,000,000 80%
380 Madison Avenue
11th Floor
New York, New York 10017
Attention: Thomas S. Matesich
NationsBank
of Florida, N.A.
One Financial Plaza,
9th Floor
Ft. Lauderdale, FL 33394 4,000,000 20%
Attention: Lisa Crawford
Total . . . . $20,000,000 100%
; provided, however, that on the Closing Date the Revolving Credit Loan
Commitments shall be deemed to be utilized by an amount equal to the
amount of Existing Revolving Loan Credits outstanding under the Existing
Agreement on the Closing Date and continued hereunder as Revolving
Credit Loans pursuant to Section 2.1(b).
(b) Within the foregoing limits the Borrowers may borrow,
repay and reborrow, on or after the Closing Date and prior to the
Revolving Credit Loan Maturity Date, all or any portion of the aggregate
amount of Revolving Credit Loan Commitments, as such amount may be
reduced from time to time, subject to the terms, provisions and
limitations set forth herein; provided, however, that (i) proceeds from
borrowings of the Revolving Credit Loans shall be used solely (X) for
the purpose of completing single family housing development (including
land development and infrastructure improvements) at the Properties
which are owned by Borrowers, and (Y) for general working capital
purposes so long as the cost of land development and infrastructure Work
in Process and Completed Inventory with respect to the assets in the
Real Estate Portfolio equals or exceeds the aggregate amount of
Revolving Loans outstanding on the date of determination; and (ii)
notwithstanding any other provision of this Agreement, the Banks shall
not be required to make Revolving Credit Loans at any time that
Borrowers' aggregate amount of Cash Balances exceeds $7,000,000, and the
Borrowers shall certify that their Cash Balances do not exceed such
amount in each request for a Revolving Credit Loan made pursuant to
Section 2.5 hereof.
2.3. Revolving Credit Loans.
(a) The Revolving Credit Loans of any given type made by
the Banks on any date shall be in a minimum aggregate principal amount
of $500,000 and in an integral multiple of $500,000, or in an amount
equal to the remaining balance of the applicable Revolving Credit Loan
Commitments. Revolving Credit Loans shall be made ratably by the Banks
in accordance with their respective Revolving Credit Loan Commitments;
provided, however, that the failure of any Bank to make any Revolving
Credit Loan shall not in itself relieve any other Bank of its obligation
to lend hereunder, but no Bank shall be responsible for the failure of
any other Bank to make any Revolving Credit Loan to be made by such
other Bank.
(b) Each Revolving Credit Loan shall be either a Floating
Rate Loan or a Eurodollar Loan as the Borrowers may request pursuant to
Section 2.5. Each Bank may at its option fulfill its Revolving Credit
Loan Commitment with respect to any Eurodollar Loan by causing any
domestic or foreign branch or affiliate of such Bank to make such Loan;
provided, however, that any exercise of such option shall not affect the
obligations of the Borrowers to repay such Loan in accordance with the
terms of this Agreement. Revolving Credit Loans of more than one type
may be outstanding at the same time; provided, however, that the
Borrowers shall not be entitled to request any Revolving Credit Loan
which, if made, would result in an aggregate of more than three separate
Revolving Credit Loans of any Bank being outstanding hereunder at any
one time. For purposes of the foregoing, Revolving Credit Loans having
different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Loans.
(c) Subject to paragraph (e) below, each Bank shall make
its portion, as determined under Section 2.17, of each Revolving Credit
Loan hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Agent in New York, New York, not
later than 12:00 noon, New York City time, and the Agent shall by 3:00
p.m., New York City time, credit the amounts so received to the general
deposit account of the Borrowers with the Agent in same day funds or, if
Revolving Credit Loans are not made on such date because any condition
precedent to a borrowing herein specified shall not have been met,
return the amounts so received to the respective Banks.
(d) Notwithstanding any other provision of this Agreement,
the Borrowers shall not be entitled to request any Revolving Credit Loan
if the Interest Period requested with respect thereto would end after
the Revolving Credit Loan Maturity Date.
(e) The Borrowers may refinance all or any part of any
Revolving Credit Loan with a Revolving Credit Loan of the same or a
different type made pursuant to this Section 2.3, subject to the
conditions and limitations set forth herein and elsewhere in this
Agreement. Any Revolving Credit Loan or part thereof so refinanced
shall be deemed to be repaid in accordance with Section 2.13 with the
proceeds of a new Revolving Credit Loan hereunder, and the proceeds of
the new Revolving Credit Loan, to the extent they do not exceed the
principal amount of the Revolving Credit Loan being refinanced, shall
not be paid by the Banks to the Agent or by the Agent to the Borrowers
pursuant to paragraph (c) above.
2.4. Fees.
(a) The Borrowers agree to pay to each Bank, through the
Agent, on the last day of March, June, September and December in each
year, and on the Revolving Credit Loan Maturity Date, a commitment fee
(a "Commitment Fee") of 1/8 of 1% per annum on the average daily unused
amount of the Revolving Credit Loan Commitment of such Bank during the
preceding quarter (or such shorter period commencing with the most
recent quarterly payment date and ending with the Revolving Credit Loan
Maturity Date or the date on which the Revolving Credit Loan Commitment
of such Bank shall be terminated). All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as the case may be. The Commitment Fee due to each
Bank shall commence to accrue on the Closing Date and shall cease to
accrue on the earlier of the Revolving Credit Loan Maturity Date and the
termination of the Revolving Credit Loan Commitment of such Bank as
provided herein.
(b) The Borrowers agree to pay to the Agent an
administration fee (the "Administration Fee") equal to (i) .20% per
annum on the outstanding amount of Term Loans, (ii) .20% per annum on
the outstanding amount of Revolving Credit Loans, and (iii) .20% per
annum on the outstanding amount of I/P Loans. The Borrowers agree to
pay the Administration Fee to the Agent, for its own account, payable in
arrears on the last day of March, June, September and December in each
year.
(c) The Borrowers agree to pay the Agent on the Closing
Date the following renewal fees (the "Renewal Fees") for the pro rata
account of the Banks: (A) $129,452.05 reduced by $273.97 per diem for
each day after November 15, 1994 until the effective date of this
Agreement up to November 30, 1994 in respect of the Revolving Credit
Loans; and (B) $155,342.47 in respect of the I/P Loans.
(d) The Borrowers agree to pay to the LC Bank with respect
to each Letter of Credit issued by it, through the Agent unless
otherwise agreed pursuant to any applicable Letter of Credit Documents,
on the last day of March, June, September and December in each year a
fee (the "LC Fee") of 2.50% per annum on the average daily undrawn
portion of the stated dollar amount of such Letter of Credit during the
preceding quarter (or shorter period commencing with the date of
issuance of such Letter of Credit and ending with the date of expiration
of such Letter of Credit). The LC Fee shall be computed on the basis of
the actual number of days elapsed in a year of 365 or 366 days, as the
case may be. The LC Fee due to the LC Bank with respect to each Letter
of Credit shall commence to accrue on the date of issuance of such
Letter of Credit and shall cease to accrue on the date of final
expiration of such Letter of Credit.
(e) All Fees shall be paid on the dates due in same day
funds to the Agent for distribution, if and as appropriate, to the Banks
and the LC Bank.
(f) All Fees are wholly earned as of the due date thereof
and are non-refundable. No portion of any of Fees shall be applied to
reduce the principal balance of any Loan or LC Disbursement.
2.5. Notice of Revolving Credit Loans. The Borrowers shall
give the Agent irrevocable written notice (or irrevocable telephone
notice confirmed in writing) (i) in the case of a Eurodollar Revolving
Loan, not later than 10:00 a.m., New York City time, three Business Days
before a proposed borrowing, and (ii) in the case of a Floating Rate
Revolving Loan, not later than 10:00 a.m., New York City time, on the
date of a proposed borrowing. Such notice shall be irrevocable, shall
be in the form of Exhibit J and shall in each case refer to this
Agreement and specify (A) whether such Revolving Credit Loan is to be
made as a Eurodollar Revolving Loan or a Floating Rate Revolving Loan,
(B) the date of such Revolving Credit Loan (which shall be a Business
Day) and amount thereof, and (C) if such Revolving Credit Loan is to be
a Eurodollar Revolving Loan, the Interest Period with respect thereto.
If no election as to the type of Revolving Credit Loan is specified in
any such notice, then the requested Loan shall be a Floating Rate
Revolving Loan. If no Interest Period with respect to any Eurodollar
Revolving Loan is specified in any such notice, then the Borrowers shall
be deemed to have selected an Interest Period of one month's duration.
The Agent shall promptly advise the other Banks of any notice given
pursuant to this Section 2.5 and of each Bank's portion of the requested
Revolving Credit Loan. Each Bank agrees that in computing the Bank's
portion of any Revolving Credit Loan, the Agent may, in its discretion,
round each Bank's percentage of such Loan, computed in accordance with
Section 2.1 or 2.2, as the case may be, to the next higher or lower
whole dollar amount.
2.6. Term Loan Repayment; I/P Loan Repayment.
(a) The aggregate principal amount of the Term Loans shall
be payable on the dates (each a "Term Loan Repayment Date") and in the
amounts listed below, and such payments shall be distributed ratably
among the Banks in accordance with their pro rata share of the Term
Loans:
Date Amount
February 28, 1995 $10,000,000
July 28, 1995 5,000,000
February 28, 1996 10,000,000
July 28, 1996 5,000,000
February 28, 1997 10,000,000
July 1, 1997 Remaining principal
balance
Each voluntary prepayment of the principal amount of the Term Loans
pursuant to Section 2.13(a) shall be applied to reduce scheduled
payments of principal due under this Section 2.6 after the date of such
prepayment, in the order of maturity thereof. To the extent not
previously paid, all Term Loans shall be due and payable on the Term
Loan Maturity Date. Accrued interest on the principal amount of each
Term Loan repaid pursuant to this Section 2.6 shall be paid on the next
Interest Payment Date with respect to such Term Loan unless the date of
repayment is an Interest Payment Date, in which case such accrued
interest shall be paid on such date. No scheduled payment of principal
in respect of Term Loans shall be required to the extent that a lesser
principal payment would result in the payment in full of the outstanding
principal amount of all Term Loans, and such lesser amount is paid.
Prepayments made pursuant to Section 6.11 shall not be considered
voluntary prepayments for purposes of this subsection.
(b) The aggregate principal amount of the I/P Loans shall
be payable in monthly installments of $100,000 per month on the first
day of each calendar month (each an "I/P Loan Repayment Date") until the
I/P Loan Maturity Date on which date the entire outstanding principal
balance thereof shall be due and payable. Such payments shall be
distributed ratably among the Banks in accordance with their pro rata
share of the I/P Loans.
Each voluntary prepayment of the principal amount of the I/P
Loans pursuant to Section 2.13(a) shall be applied to reduce scheduled
payments of principal due under this Section 2.6(b) on the date of such
prepayment, in the order of maturity thereof. To the extent not
previously paid, all I/P Loans shall be due and payable on the I/P Loan
Maturity Date. Accrued interest on the principal amount of each I/P
Loan repaid pursuant to this Section 2.6(b) shall be paid on the next
Interest Payment Date with respect to such I/P Loan unless the date of
repayment is an Interest Payment Date, in which case such accrued
interest shall be paid on such date. No scheduled payment of principal
in respect of I/P Loans shall be required to the extent that a lesser
principal payment would result in the payment in full of the outstanding
principal amount of all I/P Loans, and such lesser amount is paid.
Prepayments made pursuant to Section 6.11 shall not be considered
voluntary prepayments for purposes of this subsection.
2.7. Termination and Reduction of Revolving Credit Loan
Commitments.
(a) Upon at least three Business Days' prior irrevocable
written notice to the Agent, the Borrowers may at any time in whole
permanently terminate, or from time to time in part permanently reduce,
the Revolving Credit Loan Commitments. Each partial reduction of the
Revolving Credit Loan Commitments shall be in an aggregate minimum
principal amount of $5,000,000 and an integral multiple of $1,000,000.
(b) Each reduction in the Revolving Credit Loan
Commitments hereunder shall be made ratably among the Banks in
accordance with their respective Revolving Credit Loan Commitments. The
Borrowers shall pay to the Agent for the account of the Banks whose
Revolving Credit Loan Commitments are terminated or reduced pursuant to
Section 2.7(a), on the next quarterly payment date following such
termination or reduction, the Commitment Fees on the amount of the
Revolving Credit Loan Commitments so terminated or reduced owed through
the date of such termination or reduction.
2.8. Conversion and Continuation of Term Loans and I/P
Loans.
The Borrowers shall, with respect to the Term Loans
and I/P Loans, have the right at any time upon prior irrevocable written
notice to the Agent (i) not later than 10:00 a.m., New York City time,
one (1) Business Day prior to conversion, to convert Eurodollar Term
Loans into Floating Rate Term Loans or Eurodollar I/P Loans into
Floating Rate I/P Loans, as the case may be, (ii) not later than 10:00
a.m., New York City time, three (3) Business Days prior to conversion to
convert Floating Rate Term Loans into Eurodollar Term Loans or Floating
Rate I/P Loans into Eurodollar I/P Loans, as the case may be, (iii) not
later than 10:00 a.m., New York City time, three (3) Business Days prior
to conversion, to convert the Interest Period with respect to any
Eurodollar Term Loans or Eurodollar I/P Loans, as the case may be, to
another permissible Interest Period, and (iv) not later than 10:00 a.m.,
New York City time, three (3) Business Days prior to the last day of the
Interest Period with respect to any Term Loan or I/P Loan, as the case
may be, to continue such Term Loan or I/P Loan after the last day of
such Interest Period as a Eurodollar Term Loan or Eurodollar I/P Loan,
as the case may be, subject to the following:
(A) each conversion or continuation shall be made
pro rata among the Banks in accordance with the respective principal
amounts of the Term Loans or I/P Loans, as the case may be, converted or
continued;
(B) if less than all the outstanding principal
amount of any Term Loan or I/P Loan shall be converted or continued, the
aggregate principal amount of such Term Loan or I/P Loan, as the case
may be, converted or continued shall not be less than $10,000,000
(unless the aggregate principal amount of such Term Loan or I/P Loan, as
the case may be, is less than $10,000,000) and shall be an integral
multiple of $1,000,000;
(C) each conversion shall be effected by each Bank
by applying the proceeds of the Term Loan or I/P Loan to the Term Loan
or I/P Loan (or portion thereof), as the case may be, being converted;
accrued interest on a Term Loan or I/P Loan (or portion thereof), as the
case may be, being converted shall be paid by the Borrowers at the time
of conversion;
(D) if any Eurodollar Term Loan or Eurodollar I/P
Loan, as the case may be, is converted at a time other than the end of
the Interest Period applicable thereto, the Borrowers shall pay any
amount due pursuant to Section 2.16;
(E) any portion of a Term Loan or I/P Loan maturing
or required to be repaid in less than one month may not be converted
into, or continued as, a Eurodollar Term Loan or Eurodollar I/P Loan, as
the case may be; and
(F) any portion of a Eurodollar Term Loan or
Eurodollar I/P Loan required to be paid on any Repayment Date occurring
in less than one month after the last day of the then current Interest
Period applicable to such Loan shall be automatically converted at the
end of such Interest Period into a Floating Rate Term Loan or Floating
Rate I/P Loan, as the case may be.
(b) Each notice pursuant to this Section 2.8 shall be in
the form of Exhibit K and shall be irrevocable and shall refer to this
Agreement and specify (i) the identity and amount of the Term Loan or
I/P Loan, as the case may be, that the Borrowers request to be converted
or continued, (ii) whether such Term Loan or I/P Loan is to be converted
to or continued as a Eurodollar Term Loan or Eurodollar I/P Loan or a
Floating Rate Term Loan or Floating Rate I/P Loan, as the case may be,
(iii) if such notice requests a conversion, the date of such conversion
(which shall be a Business Day) and (iv) if such Term Loan or I/P Loan
is to be converted to or continued as a Eurodollar Term Loan or
Eurodollar I/P Loan, the Interest Period with respect thereto. If no
Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Term Loan or Eurodollar
I/P Loan, as the case may be, then the Borrowers shall be deemed to have
selected an Interest Period of one month's duration, in the case of a
Eurodollar Term Loan or Eurodollar I/P Loan. The Agent shall advise the
other Banks of any notice given pursuant to this Section 2.8 and of each
Bank's portion of any converted or continued Term Loan or I/P Loan, as
the case may be. If the Borrowers shall not have given notice in
accordance with this Section 2.8 to continue any Term Loan or I/P Loan
into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this Section 2.8 to convert such Term Loan or
I/P Loan), such Term Loan or I/P Loan shall (unless repaid pursuant to
the terms hereof) automatically be continued into a new Interest Period
as a Floating Rate Term Loan or Floating Rate I/P Loan.
2.9. Notes. The Revolving Credit Loans, Term Loans and I/P
Loans made by each Bank are evidenced by a Revolving Credit Note, Term
Note or I/P Note, as the case may be, duly executed on behalf of the
Borrowers in the forms of Exhibits A, A-1 and A-3, respectively, dated
as of the Closing Date and payable to the order of such Bank. The
amounts of the Notes are as follows:
Note Payee Amount
Revolving Chemical $16,000,000.00
Revolving NationsBank 4,000,000.00
Term Chemical $59,255,582.95
Term NationsBank 14,813,895.74
I/P Chemical $14,426,660.80
I/P NationsBank 3,606,665.20
The outstanding principal balance of each Loan, as evidenced by a Note,
shall be payable (i) in the case of a Revolving Credit Loan, on the
Revolving Credit Loan Maturity Date, (ii) in the case of a Term Loan, on
the Term Loan Maturity Date, and (iii) in the case of a I/P Loan, on the
I/P Maturity Date. Each Note shall bear interest on the outstanding
principal balance thereof as set forth in Section 2.10. Each Bank
shall, and is hereby authorized by the Borrowers to, endorse on the
schedule attached to each Note delivered to such Bank (or on a
continuation of such schedule attached to such Note and made a part
thereof), or otherwise record in such Bank's internal records, an
appropriate notation evidencing the date and amount of each Loan from
such Bank, each payment and prepayment of principal of any Loan, each
payment of interest on any Loan and the other information provided for
on such schedule; provided, however, that the failure of any Bank to
make such a notation or any error in such a notation shall not affect
the rights or the obligations of the parties hereunder and under the
Notes including the obligations of the Borrowers to repay the Loans made
by such Bank in accordance with the terms of this Agreement and the
Notes.
2.10. Interest on Loans.
(a) Subject to the provisions of Section 2.11, Floating
Rate Term Loans and Floating Rate I/P Loans shall bear interest
(computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be) at a rate per annum equal to the
Floating Rate.
(b) Subject to the provisions of Section 2.11, each
Eurodollar Term Loan or Eurodollar I/P Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal to the LIBOR Rate for the
Interest Period in effect for such Loan.
(c) Subject to the provisions of Section 2.11, Floating
Rate Revolving Loans shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the
case may be) at a rate per annum equal to the Floating Rate.
(d) Subject to the provisions of Section 2.11, Eurodollar
Revolving Loans shall bear interest at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days)
equal to the LIBOR Rate for the Interest Period in effect for such Loan.
(e) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan unless otherwise provided in this
Agreement. The applicable Floating Rate or LIBOR Rate shall be
determined by the Agent, and such determination shall be conclusive
absent demonstrable error. All interest accrued but unpaid pursuant to
the Original Notes and the Existing Agreement shall be deemed accrued
and unpaid interest under the Notes and this Agreement.
2.11. Default Interest. If the Borrowers shall default in
the payment of the principal of or interest on any Loan, LC Disbursement
or any other amount becoming due hereunder, the Borrowers shall on
demand from time to time pay interest, to the extent permitted by law,
on such defaulted amount up to (but not including) the date of actual
payment (after as well as before judgment) at a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 365 or
366 days, as the case may be) equal to the Floating Rate plus 3% (the
"Post Default Rate").
2.12. Alternate Rate of Interest. In the event, and on
each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Loan, the Agent
shall have determined that dollar deposits in the amount of the
requested principal amount of such Eurodollar Loan are not generally
available in the London Interbank Market, or that the rate at which such
dollar deposits are being offered will not adequately and fairly reflect
the cost to the Banks of making or maintaining such Eurodollar Loan
during such Interest Period, or that reasonable means do not exist for
ascertaining the LIBOR Rate, the Agent shall, as soon as practicable
thereafter, give written notice of such determination to the Borrowers
and the Banks. In the event of any such determination, any request by
the Borrowers for a Eurodollar Loan pursuant to Section 2.5 or 2.8
shall, until the circumstances giving rise to such notice no longer
exist, be deemed to be a request for a Floating Rate Loan. Each
determination by the Agent hereunder shall be conclusive absent
demonstrable error.
2.13. Prepayment of Loans.
(a) Subject to the requirements of Section 2.16 hereof,
the Borrowers shall have the right at any time and from time to time to
prepay any Loan, in whole or in part, upon at least three Business Days'
prior written notice (or telephone notice, promptly confirmed by written
notice) to the Agent in the case of Term Loans or I/P Loans; provided,
however, that each such partial prepayment of principal shall be in a
minimum principal amount of $500,000 (unless the aggregate principal
amount of such Term Loan or I/P Loan, as the case may be, is less than
$500,000).
(b) On the date of any termination or reduction of the
Revolving Credit Loan Commitments pursuant to Section 2.7(b), the
Borrowers shall pay or prepay so much of the Revolving Credit Loans as
shall be necessary in order that the aggregate principal amount of the
Revolving Credit Loans outstanding will not exceed the aggregate
Revolving Credit Loan Commitments following such termination or
reduction.
(c) If on the last day of any fiscal quarter of the
Partnership the sum, calculated in accordance with Exhibit 5 to the
Borrowing Base Reconciliation Certificate, of (i) the aggregate
principal amount of the Term Loans and Revolving Credit Loans
outstanding, (ii) the aggregate principal amount of the Revolving Credit
Loan Commitments (net of outstandings), (iii) the aggregate stated
amount of letters of credit issued for the account of the Borrowers and
their Subsidiaries in excess of $15,000,000, (iv) the aggregate amount
of Indebtedness outstanding as of such date in respect of draws upon
letters of credit as to which any Borrower is an account party, (v) the
aggregate amount of any financial Guarantees outstanding as of such
date, (vi) Master Lease Obligations of any Borrower, (vii) the aggregate
amount of Capital Lease Obligations of the Borrowers, (viii)
Indebtedness secured by the Equitable Mortgage, and (ix) Indebtedness of
any Subsidiary or Joint Venture for which any Borrower is liable as the
general partner, shall exceed 75% of the Borrowing Base as of such date,
then within thirty (30) Business Days thereafter the Borrowers shall pay
or prepay an aggregate principal amount of Term Loans and/or Revolving
Credit Loans equal to such excess (the "Excess"); provided, however,
that there shall be excluded from clauses (i) through (ix) of this
paragraph (c), (A) Indebtedness in respect of completion Guarantees, (B)
Indebtedness evidenced by performance bonds, (C) Indebt-edness in
respect of operating leases, (D) Indebtedness in respect of real estate
sales agreements, (E) the aggregate stated amount of letters of credit
issued for the account of the Borrowers and their Subsidiaries up to
$15,000,000, and (F) Non-Recourse Indebtedness (other than Indebtedness
secured by the Equitable Mortgage); and provided, further, however, that
no payment shall be required hereunder if the amount of the Excess is
less than or equal to the amount included in respect of clause (ii) of
this Subsection 2.13(c).
(d) The Borrowers shall pay or prepay the Term Loans
and/or I/P Loans in the inverse order of maturity from time to time in
such amounts as shall be necessary in order that the aggregate principal
amount of the Term Loans and I/P Loans outstanding will not at any time
exceed the Adjusted Capital Balance. In any event, if the aggregate
principal amount of the Term Loans and I/P Loans outstanding at the time
of delivery to the Agent of the certificate regarding the Adjusted
Capital Balance pursuant to Section 5.4(c) shall exceed the Adjusted
Capital Balance reflected on such certificate, then the Borrowers shall
pay or prepay an aggregate principal amount of first the Term Loans and
then, if necessary, the I/P Loans in the inverse order of maturity equal
to such excess on the date of delivery of such certificate to the Agent.
(e) The Borrowers shall make a payment on or before
February 28 of each year during the term hereof in an amount equal to
50% of Net Cash Flow at the end of the immediately preceding fiscal year
of the Partnership which payment shall be applied to the Term Loans in
the inverse order of maturity.
(f) If on the last day of any fiscal quarter or on any
other Reconciliation Date the aggregate principal amount of the I/P
Loans outstanding shall exceed 75% of the aggregate Fair Market Value of
the Mizner Place Property and the Arvida Parkway Center Property as of
such date, then within thirty (30) Business Days of such date the
Borrowers shall pay or prepay in the inverse order of maturity an
aggregate principal amount of I/P Loans equal to such excess.
(g) With respect to each Land and Property Sale and each
Extraordinary Asset Sale (other than Sales of the Arvida Parkway Center
Property and the Mizner Place Property), the Borrowers shall pay to the
Banks the Applicable Release Percentage of the greater of (i) the Net
Cash Proceeds or (ii) the Minimum Release Price, and such payments shall
be applied to the scheduled payments of principal in respect of Term
Loans due under Section 2.6(a) in the inverse order of maturity, and
upon the satisfaction thereof to the scheduled payments of principal in
respect of I/P Loans due under Section 2.6(b) in the inverse order of
maturity. The "Applicable Release Percentage" shall be 50% with respect
to Extraordinary Asset Sales and Land and Property Sales occurring
during calendar year 1994, and 60% with respect to such Sales occurring
during calendar years 1995, 1996 and 1997. Such payment shall be made
upon the closing of each such Extraordinary Asset Sale and Land and
Property Sale and as a condition of the release of such asset from the
Lien of the applicable Mortgage.
(h) If the Borrowers elect to develop any portion or
portions of any Land and Property for sale as individual housing and
homesites, the Borrowers shall pay 100% of the land component,
determined in accordance with Section 5.4(s), of all individual housing
or homesite Net Cash Proceeds upon the closing of each such Sale and
such proceeds shall be applied to the scheduled payments of principal in
respect of Term Loans due under Section 2.6(a), in the inverse order of
maturity, and upon the satisfaction thereof, to the scheduled payments
of principal in respect of I/P Loans due under Section 2.6(b) in the
inverse order of maturity.
(i) With respect to each Sale of a Cullasaja Lot, the
Borrowers shall pay to the Banks the sum of $72,750 per lot and such
payments shall be applied to the scheduled payments of principal in
respect of Term Loans due under Section 2.6(a) in the inverse order of
maturity, and upon the satisfaction thereof, to the scheduled payments
of principal in respect of I/P Loans due under Section 2.6(b) in the
inverse order of maturity. With respect to Bulk Sales, the Borrowers
shall promptly upon entering into an agreement which constitutes a Bulk
Sale give written notice to Agent of the terms of such sale. Upon the
closing(s) of such Bulk Sale, Borrowers shall pay to the Banks (A) the
Applicable Release Percentage of the greater of (i) the Net Cash
Proceeds from such Bulk Sales or (ii) the Minimum Release Price for such
property as set forth in the applicable Escrow Agreement or (B) such
other amount as shall be agreed at the time Borrowers provide the notice
specified in the preceding sentence, and such payments shall be applied
to the scheduled payments of principal in respect of Term Loans due
under Section 2.6(a) in the inverse order of maturity, and upon the
satisfaction thereof, to the scheduled payments of principal in respect
of I/P Loans due under Section 2.6(b) in the inverse order of maturity.
(j) With respect to any Sale of the Mizner Place Property
or the Arvida Parkway Center Property, the Borrowers shall pay 100% of
the greater of (i) the Net Cash Proceeds from, or (ii) the applicable
Minimum Release Price with respect to, such Sale to the Banks upon the
closing of such Sale and as a condition of the release of such asset
from the Lien of the applicable Mortgage. Such payments shall be
applied to the scheduled payments of principal in respect of I/P Loans
due under Section 2.6(b) in the inverse order of maturity and upon full
satisfaction thereof 100% of the remainder shall be applied to the
scheduled payments of principal in respect of Term Loans due under
Section 2.6(a) in the inverse order of maturity; provided, however, that
if no Event of Default shall have occurred and be continuing 50% of such
remainder shall be paid to the Borrowers.
(k) Any Net Financing Proceeds received in connection with
a Financing permitted under Section 6.1(a) shall be applied to the
scheduled payments of principal in respect of I/P Loans due under
Section 2.6(b) in the inverse order of maturity, and upon the closing of
such Financing and as a condition to the release of the Lien covering
such Property and upon full satisfaction thereof 100% of the remainder
shall be applied to the scheduled payments of principal in respect of
Term Loans due under Section 2.6(a) in the inverse order of maturity;
provided, however, that if no Event of Default shall have occurred and
be continuing 50% of such remainder shall be paid to the Borrowers.
(l) If, after making the prepayment required pursuant to
clause (e) above and, if applicable, making a distribution to partners
of the Partnership (or a deposit to the Restricted Account) to the
extent permitted in Section 6.8, the aggregate amount of Borrowers' Cash
Balances on February 28th of any year exceeds $20,000,000, the Borrowers
shall make a payment to Banks on February 28th of such year equal to the
amount of such excess, and such payment shall be applied to the Term
Loans in the inverse order of maturity.
Each notice of prepayment shall specify the prepayment
date and the principal amount of each Loan (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay
such Loan by the amount stated therein on the date stated therein.
Payments and prepayments in respect of Term Loans or I/P Loans may not
be reborrowed. All prepayments under this Section 2.13 shall be subject
to Section 2.16 but otherwise without premium or penalty. Accrued
interest on the principal amount of any Loan prepaid pursuant to this
Section 2.13 shall be paid on the next Interest Payment Date with
respect to such Loan unless the date of such prepayment is an Interest
Payment Date, in which case such accrued interest shall be paid on such
date.
(n) Upon any noncompliance with this Section 2.13 by the
Borrowers, the Agent may, and at the request of the Required Banks,
shall deliver a Termination of Release Notice (as defined in the Escrow
Agreement) to the Escrow Agent.
2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after
the Closing Date any change in applicable Requirement of Law or in the
interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or
not having the force of law) shall change the basis of taxation of
payments to any Bank or the LC Bank of the principal of or interest on
any Eurodollar Loan made by such Bank or LC Disbursement made by the LC
Bank or any other fees or amounts payable hereunder (other than taxes
imposed on or measured by the overall net income of such Bank or the LC
Bank by the jurisdiction in which such Bank or the LC Bank has its
principal office or by any political subdivision or taxing authority
therein or by any jurisdiction, political subdivision or taxing
authority which would have imposed income taxes upon such Bank or the LC
Bank notwithstanding this Agreement and the transactions contemplated
hereby), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, such Bank or the LC Bank (except
any such reserve requirement which is reflected in the LIBOR Rate) or
shall impose on such Bank or the LC Bank or the London Interbank Market
any other condition affecting this Agreement or Eurodollar Loans made by
such Bank, and the result of any of the foregoing shall be to increase
the cost to such Bank of making or maintaining any Eurodollar Loan or to
reduce the amount of any sum received or receivable by such Bank or the
LC Bank hereunder (whether of principal, interest or otherwise) in
respect thereof by an amount deemed by such Bank or the LC Bank to be
material, then the Borrowers will pay to such Bank or the LC Bank upon
demand by such Bank or the LC Bank such additional amount or amounts as
will compensate such Bank or the LC Bank for such additional costs
incurred or reduction suffered.
(b) If, after the Closing Date, any Bank or the LC Bank
shall have determined that the adoption of any applicable Requirement of
Law or guideline regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank
or the LC Bank (or any lending office of such Bank or the LC Bank) with
any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on such Bank's or the LC Bank's capital or on the capital of such
Bank's or the LC Bank's holding company, if any, as a consequence of its
obligations hereunder to a level below that which such Bank or the LC
Bank or such Bank's or the LC Bank's holding company could have achieved
but for such adoption, change or compliance (taking into consideration
such Bank's or the LC Bank's policies or the policies of such Bank's or
the LC Bank's holding company, as the case may be, with respect to
capital adequacy), then from time to time the Borrowers shall pay to
such Bank or the LC Bank such additional amount or amounts as will
compensate such Bank or the LC Bank or such Bank's or the LC Bank's
holding company for any such reduction suffered.
(c) A certificate of each Bank or the LC Bank (i) setting
forth such amount or amounts as shall be necessary to compensate such
Bank or the LC Bank or its holding company as specified in paragraph (a)
or (b) above (including calculations in reasonable detail) as the case
may be, and (ii) identifying the event or circumstance that caused the
cost or reduction in respect of which such compensation is due, shall be
delivered to the Borrowers and shall be conclusive absent demonstrable
error. The Borrowers shall pay each Bank or the LC Bank the amount
shown as due on any such certificate within thirty (30) days after its
receipt of the same.
(d) Failure on the part of any Bank or the LC Bank to
demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to
any period shall not constitute a waiver of such Bank's or the LC Bank's
rights to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital in such
period or in any other period. The protection of this Section shall be
available to each Bank and the LC Bank regardless of any possible
contention of invalidity or inapplicability of the law, regulation or
condition which shall have been imposed.
2.15. Change in Legality.
(a) Notwithstanding anything to the contrary herein
contained, if any change in any Requirement of Law or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any
Bank to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby, then, by written notice to the
Borrowers and to the Agent, such Bank may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Bank hereunder, whereupon any request by the
Borrowers for a Eurodollar Loan shall be deemed a request for a
Floating Rate Loan from such Bank unless such declaration is
subsequently withdrawn; and/or
(ii) require that all outstanding Eurodollar Loans made by it
be converted to Floating Rate Loans, in which event all such
Eurodollar Loans of such Bank shall be automatically converted to
Floating Rate Loans as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or (ii) above,
all payments and prepayments of principal which would otherwise have
been applied to repay the Eurodollar Loans that would otherwise have
been made by such Bank or the converted Eurodollar Loans of such Bank
shall instead be applied to repay the Floating Rate Loans made by such
Bank in lieu of, or resulting from the conversion of, such Eurodollar
Loans.
(b) For purposes of this Section 2.15, a notice to the
Borrowers by any Bank shall be effective, if lawful, on the last day of
the then current Interest Period; in all other cases such notice shall
be effective on the date of receipt by the Borrowers.
(c) No payment shall be required under Section 2.16 in
respect of any conversion of any Eurodollar Loan pursuant to this
Section 2.15.
2.16. Indemnity. The Borrowers shall indemnify each Bank
and the LC Bank against any actual loss or out-of-pocket expense which
such Bank or the LC Bank may sustain or incur as a consequence of (a)
any failure by the Borrowers to fulfill on the date of any borrowing or
issuance of any Letter of Credit hereunder the applicable conditions set
forth in Article IV, (b) any failure by the Borrowers to borrow
hereunder or to refinance any Loan hereunder after irrevocable notice of
borrowing pursuant to Section 2.5 has been given, (c) except as provided
in Section 2.15(c), any payment, prepayment or conversion of a
Eurodollar Loan required by any other provision of this Agreement or
otherwise made on a date other than the last day of the applicable
Interest Period, (d) any default in payment or prepayment of the
principal amount of any Loan or LC Disbursement or any part thereof or
interest accrued thereon, as and when due and payable (at the due date
thereof, by irrevocable notice of prepayment or otherwise) or (e) the
occurrence of any Event of Default, including, but not limited to, any
loss or reasonable expense (except any such loss or expense directly
resulting from such Bank's gross negligence or willful failure to
mitigate damages) sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such Loan or
any part thereof as a Eurodollar Loan. Such loss or reasonable expense
shall include, without limitation, an amount equal to the excess, if
any, as reasonably determined by such Bank, of (i) its cost of obtaining
the funds for the Loan being paid, prepaid, converted or not borrowed
(based on the LIBOR Rate applicable thereto), for the period from the
date of such payment, prepayment, conversion or failure to borrow to the
last day of the Interest Period for such Loan (or, in the case of a
failure to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure to borrow) over (ii) the amount of
interest (as reasonably determined by such Bank) that would be realized
by such Bank in reemploying the funds so paid, prepaid, converted or not
borrowed (based upon reemployment by investment in short-term
obligations of the United States of America) for such period or Interest
Period, as the case may be. The losses for which the Banks and the LC
Bank are entitled to be indemnified pursuant to this Section 2.16 shall
be limited to actual losses and shall not include lost profits or
consequential damages (it being understood that any losses claimed
pursuant to the preceding sentence shall be considered to be actual
losses). A certificate of any Bank or the LC Bank setting forth any
amount or amounts which such Bank or the LC Bank is entitled to receive
pursuant to this Section shall be delivered to the Borrowers and shall
be conclusive absent demonstrable error.
2.17. Pro Rata Treatment. Except as required under
Sections 2.4, 2.14, 2.15, 9.4 and 9.5, each borrowing under each type of
Loan, each payment or prepayment of principal of the Loans, each payment
of interest on the Loans, each payment of the Commitment Fees and
Renewal Fees, each reduction of the Revolving Credit Loan Commitments
and each refinancing of Loans with new Loans of any type shall be
allocated pro rata among the Banks in accordance with their respective
Revolving Credit Loan Commitments or pro rata share of the Term Loans or
I/P Loans, as the case may be.
2.18. Sharing of Setoffs. Each Bank agrees that if it
shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrowers, including, but not limited to, a
secured claim under Section 506 of Title 11 of the United States Code or
other security or interest arising from, or in lieu of, such secured
claim, received by such Bank under any applicable bankruptcy, insolvency
or other similar law or otherwise, obtain payment (voluntary or
involuntary) in respect of its Loans as a result of which the unpaid
principal portion of its Loans shall be proportionately less than the
unpaid principal portion of the Loans of any other Bank, it shall be
deemed to have simultaneously purchased from such other Bank a
participation in the Loans of such other Bank, so that the aggregate
unpaid principal amount of the Loans and participation in Loans held by
each Bank shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount
of its Loans prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Loans outstanding prior
to such exercise of banker's lien, setoff or counterclaim; provided,
however, that if any such purchase or purchases or adjustments shall be
made pursuant to this Section and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall
be rescinded to the extent of such recovery and the purchase price or
prices or adjustment restored without interest. The Borrowers expressly
consent to the foregoing arrangements and agree that any Bank holding a
participation in a Loan deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect
to any and all moneys owing by the Borrowers to such Bank as fully as if
such Bank had made a Loan or extended credit directly to the Borrowers
in the amount of such participation.
2.19. Borrowing Base Determinations; Appraisal
Requirements.
(a) The Borrowing Base shall be established and adjusted
from time to time in accordance with this Agreement. The Borrowers
shall deliver a Borrowing Base Reconciliation Certificate to the Agent
on the Closing Date (for the fiscal quarter ended September 30, 1994)
and on each Reconciliation Date (or, in the case of a Reconciliation
Date described in clause (a) of the definition of the term
"Reconciliation Date", within thirty (30) days thereafter) setting forth
the information required therein as of such Reconciliation Date and time
shall be of the essence with respect to the delivery of each such
Borrowing Base Reconciliation Certificate. In addition, on each date
that any real estate asset included in the Real Estate Portfolio is
required to be excluded therefrom as a result of the proviso set forth
in the definition of the term "Real Estate Portfolio", the Borrowers
shall give the Agent notice of such event and the Borrowing Base shall
be adjusted, effective as of the date of such event, excluding such real
estate asset from the Real Estate Portfolio and otherwise based upon a
Fair Market Value for each real estate asset remaining in the Real
Estate Portfolio equal to the Fair Market Value therefor in effect at
the time of such event.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if at any time the Agent (at the direction
of either Bank after consultation between the Banks) shall notify the
Borrowers in writing of any disagreement with the Fair Market Value set
forth with respect to any real estate asset in any Borrowing Base
Reconciliation Certificate, the Agent shall order a new Appraisal.
Within ten (10) Business Days after receipt of a request from the Agent
for the information necessary to commission an Appraisal, the Borrowers
shall supply the Agent with all such information.
(c) Either Chemical or NationsBank may at any time require
an Appraisal of a real estate asset for the purposes of satisfying any
applicable Requirement of Law. Within ten (10) Business Days after
receipt of a notice from the Agent as to Chemical's or NationsBank's
request for a new Appraisal and the information necessary to commission
it, the Borrowers shall supply the Agent with such information.
(d) The Appraiser for purposes of the Appraisal of any
real estate asset shall be any independent appraiser selected by the
Agent, subject to the provisions of any Requirement of Law applicable to
the Banks.
(e) Each Appraisal shall be ordered by the Agent, shall be
addressed to the Agent and shall be subject to approval by Chemical and
NationsBank.
(f) The Borrowers shall pay, or reimburse the Agent for
payment of, all costs and expenses incurred in connection with each
Appraisal, including reasonable Appraiser fees and expenses.
(g) New Appraisals (or updated Appraisals in the case of
clause (ii) below in the Agent's sole discretion) shall be ordered by
the Agent such that they are received:
(i) on or before December [10], 1994 with respect to
the Weston, Broken Sound and Cullasaja Properties in order for the
Equity Value of such Properties to be included in the Borrowing Base as
of the last fiscal quarter of 1994;
(ii) within thirty (30) days after the end of the
twelfth month following the date of delivery of the last Appraisal for
the Weston Property provided that within fifteen days after the end of
the sixth month following the date of the last Appraisal for the Weston
Property such Appraisal shall be adjusted based on sales and releases
from the Mortgage since the date of such Appraisal;
(iii) within thirty (30) days after the end of the
twenty-fourth month following the date of delivery of the last Appraisal
for each of Jacksonville Golf and Country Club, Cullasaja, Broken Sound,
River Hills and Long Boat Key Properties; provided, however, that if the
value of any such property is less than or equal to $5,000,000 as shown
on the then most recent Appraisal, then no Appraisal with respect to
such property shall be required pursuant to this clause (iii); provided,
further, however, that an Appraisal of such property may be required
pursuant to clause (iv) below;
(iv) within thirty (30) days after the end of the
thirty-sixth month following the date of delivery of the last Appraisal
for each real estate asset not covered by clauses (i), (ii) or (iii)
above with an Appraised Value or Equity Value of $2,000,000 or more; and
(v) promptly after a determination by the Banks, that a
change in the value, strategy or marketing plan relating to any Property
has changed materially; provided, however, that there shall be no more
than one such Appraisal per Property commissioned each fiscal quarter of
the Partnership pursuant to this Section 2.19(g)(v). Within ten (10)
Business Days of the receipt of a request from the Agent for an
Appraisal pursuant to this paragraph (g) and the information necessary
to commission it, the Borrowers shall supply the Agent with such
information.
(h) In the event that an Appraisal is ordered for a
particular real estate asset pursuant to this Section 2.19, the last
value approved by the Banks, whether it be the estimate of the
Borrowers' management based on the most recent discounted Cash Flow
Projection or the value determined by a previous Appraisal, shall
control until a new Appraisal is received, reviewed and approved by
Chemical and NationsBank. If such Appraisal results in an Appraised
Value that is less than the Fair Market Value for that particular real
estate asset set forth in the then-current Borrowing Base Reconciliation
Certificate, the Borrowing Base shall be adjusted to reflect the new
Appraised Value of such real estate asset, it being understood that, at
all times, the Borrowing Base value of each real estate asset shall be
the lower of (i) the most recent discounted Cash Flow Projection for
such real estate asset and (ii) the Appraised Value set forth in the
most recent Appraisal for such real estate asset which has been
received, reviewed and accepted by Chemical and NationsBank.
2.20. Letters of Credit.
(a) Subject to the terms and conditions and relying upon
the representations and warranties herein set forth and the covenants
set forth in Section 5.5(c), the LC Bank agrees to make available for
the account of the Borrowers Letters of Credit at any time and from time
to time on or after Closing Date and until the termination of the LC
Commitment in accordance with the terms hereof, in an aggregate stated
dollar amount at any time outstanding not to exceed $15,000,000, as the
same may be reduced from time to time pursuant to this Section 2.20;
provided, however, that the obligations of the LC Bank to make available
any Letter of Credit shall be subject to the approval by the LC Bank of
the terms and conditions of such Letter of Credit and the execution and
delivery of any Letter of Credit Documents reasonably requested by the
LC Bank in connection therewith and a Letter of Credit application in
the form of Exhibit L; and, provided, further, that on the Closing Date
the LC Commitment shall be deemed to be utilized in an amount equal to
$10,029,237.19 (which is the stated amount on the Closing Date of
outstanding letters of credit issued for the account of the Borrowers by
Chemical pursuant to the Existing Agreement and continued hereunder as
Letters of Credit pursuant to Section 2.1(b)) plus all amounts
theretofore drawn under such existing letters of credit and not then
reimbursed.
(b) The Borrowers may request from time to time that the
LC Bank make available a Letter of Credit by written notice to the LC
Bank and the Agent in the form of Exhibit M not later than five (5)
Business days prior to the proposed date of issuance of such Letter of
Credit; provided, however, that if the LC Bank and the Borrowers shall
not have agreed upon the terms and conditions of the Letter of Credit
and any Letter of Credit Documents within such period, such period shall
be extended until such agreement is reached. Such notice shall refer to
this Agreement and specify: (i) the stated dollar amount of the
requested Letter of Credit, (ii) the expiration date of such Letter of
Credit and that such expiration date shall be no later than the date one
year after the date of issuance of such Letter of Credit, (iii) whether
such Letter of Credit shall be subject to extension as provided in
Section 2.20(d), (iv) the name and address of each beneficiary of such
Letter of Credit, (v) the purpose of such Letter of Credit, (vi) the
proposed form of such Letter of Credit and (vii) the date of the
proposed issuance of such Letter of Credit, which shall be no later than
the LC Termination Date. Each such notice to the LC Bank shall be
deemed a representation and warranty by the Borrowers that, immediately
following the issuance of such Letter of Credit, outstanding LC
Disbursements plus the undrawn amount of all outstanding Letters of
Credit shall not exceed the LC Commitment. The Borrowers acknowledge
and agree that the issuance of each Letter of Credit shall be deemed a
borrowing for purposes of Sections 4.1 and 4.2 and the obligations of
the LC Bank to issue any Letter of Credit shall be subject to the terms
and conditions set forth in Sections 4.1 and 4.2; provided, however, the
delivery of the notice required pursuant to this Section 2.20(b) shall
satisfy the requirement of notice of borrowing pursuant to Section
4.1(a). The terms and provisions of this Section 2.20 shall apply to
each Letter of Credit except to the extent the Borrowers and the LC Bank
shall agree to different terms and conditions with respect to any Letter
of Credit issued by the LC Bank pursuant to Letter of Credit Documents
relating thereto.
(c) The Borrowers agree to reimburse the LC Bank for each
LC Disbursement within forty-five (45) days after the date of such LC
Disbursement, together with accrued interest thereon. Subject to the
provisions of Section 2.11, each LC Disbursement shall bear interest
(computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as the case may be), from and including the date of
such LC Disbursement to but excluding the date of reimbursement, at a
rate per annum equal to the Floating Rate. The obligations of the
Borrowers to repay the LC Bank for LC Disbursements shall be absolute,
unconditional and irrevocable under any and all circumstances, including
but not limited to:
(i) any lack of validity or enforceability of any Letter of
Credit or any Letter of Credit Documents;
(ii) the existence of any claim, set off, defense or other
right which any Borrower or any other person may at any time have
against the beneficiary under any Letter of Credit, the LC Bank,
the Agent, any Bank or any other person, whether in connection
with this Agreement or any other agreement or transaction;
provided, however, that any payment by the LC Bank shall not have
constituted gross negligence or wilful misconduct by the LC Bank;
(iii) any draft or other statement or document presented under
a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever; provided, however, that
any payment by the LC Bank shall not have constituted gross
negligence or wilful misconduct by the LC Bank;
(iv) payment by the LC Bank under a Letter of Credit against
presentation of a draft or other statement or document which does
not comply with the terms of such Letter of Credit; provided,
however, that such payment shall not have constituted gross
negligence or wilful misconduct by the LC Bank; or
(v) the occurrence or continuance of any Event of Default
or any event or condition which with notice, lapse of time or both
would constitute an Event of Default.
(d) At the option of the Borrowers, exercisable by notice
prior to issuance of any Letter of Credit pursuant to Section 2.20(b),
and so long as no Event of Default shall have occurred and be
continuing, each Letter of Credit may be automatically extended for
successive periods, of up to one year each, unless the LC Bank gives
written notice at least forty-five (45) days (unless the LC Bank agrees
to provide such notice at an earlier date) prior to any expiration date
of such Letter of Credit to the Borrowers and the beneficiary of such
Letter of Credit that the LC Bank will not extend such Letter of Credit.
(e) No later than 12:00 noon, New York City time, on the
date occurring one (1) Business Day after the date a demand for payment
is made by a beneficiary under a Letter of Credit, which demand conforms
to the terms and conditions of such Letter of Credit, the LC Bank will
make available the LC Disbursement to be made on such date in dollars
and in same day funds, at the office of the LC Bank designated in its
Letter of Credit Documents relating to such Letter of Credit.
ARTICLE III REPRESENTATIONS AND WARRANTIES
Each of the Borrowers represents and warrants to the Banks
and the LC Bank that, unless the Agent shall otherwise consent in
writing:
3.1. Organization; Powers. Each of the Borrowers (a) is
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as
now conducted and as proposed to be conducted, (c) is qualified to do
business in every jurisdiction where such qualification is required,
except where the failure so to qualify would not have a materially
adverse effect on its business, properties, operations, prospects or
condition, financial or otherwise, and would not impair its ability to
perform its obligations under or in connection with the Loan Documents
and (d) has the power and authority to execute, deliver and perform each
of the Loan Documents and each agreement or instrument contemplated
thereby to which it is or will be a party.
3.2. Authorization. The execution, delivery and
performance of each of the Loan Documents (a) have been duly authorized
by all requisite action on the part of each of the Borrowers that is or
is to be party thereto and (b) will not (i) violate (A) any provision of
law, or of the certificate or articles of incorporation or By-laws, or
the partnership agreement or certificate of limited partnership, as
applicable, of any Borrower or any of their respective Subsidiaries or
Joint Ventures, (B) any applicable order of any court or other agency of
government or (C) any material indenture, agreement or other instrument
to which any Borrower or any of their respective Subsidiaries or Joint
Ventures is a party or by which any of them or any of their property is
bound, (ii) be in conflict with, result in a breach of or constitute
(alone or with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien (other than Liens created or imposed
by the Loan Documents) upon any property or assets of any Borrower or
any of their respective Subsidiaries or Joint Ventures.
3.3. Enforceability. This Agreement has been duly executed
and delivered by each Borrower and is a legal, valid and binding
obligation of the Borrowers enforceable against each of them in
accordance with its terms. Each of the Loan Documents has been duly
executed and delivered by each Borrower which is a party thereto and is
a legal, valid and binding obligation of each such Borrower enforceable
against each such Borrower in accordance with its respective terms.
3.4. Governmental Approval. No action, consent or approval
of, or registration or filing with, or any other action by, any Federal,
state or other governmental agency, authority or regulatory body is or
will be required in connection with the execution, delivery or
performance of any Loan Document by any of the Borrowers that is or is
to be party thereto or in connection with the borrowings hereunder by
the Borrowers, except (i) for the filing of any UCC financing statements
pursuant to, and any recording of, the Collateral Documents and (ii)
that the Partnership may be required to file this Agreement and other
Loan Documents with the Securities and Exchange Commission as a material
contract.
3.5. Financial Statements. The Partnership has heretofore
furnished to the Agent its Form 10-K (including its Annual Financial
Statement) for the fiscal year ended December 31, 1993 and its Quarterly
Financial Statement as of September 30, 1994, which Quarterly Financial
Statement has been certified by a Financial Officer of the Partnership.
Such Form 10-K and Quarterly Financial Statement present fairly in
accordance with generally accepted accounting principles the financial
condition of the Partnership on a consolidated basis as of the date
indicated. Such Quarterly and Annual Financial Statements and the notes
thereto and the notes to such Form 10-K disclose all material
liabilities, direct or contingent, of the Partnership as of the date
thereof to the extent required in accordance with generally accepted
accounting principles. Such Quarterly and Annual Financial Statements
were prepared in accordance with generally accepted accounting
principles.
3.6. No Material Adverse Change. There has been no
Material Adverse Change since September 30, 1994.
3.7. Title to Properties; Possession Under Leases.
(a) The Borrowers have (either directly or indirectly
through Subsidiaries and Joint Ventures) title to the Arvida Parkway
Center Property, the Mizner Place Property and each Property and asset
included in the Real Estate Portfolio which is good and marketable, and
subject to no Liens or encumbrances other than Permitted Encumbrances
(as defined in the Mortgages) and, after the date hereof, Liens of the
type described in clauses (c) through (f) of Section 6.2.
(b) Each of the Borrowers and their respective
Subsidiaries and Joint Ventures has complied with all obligations under
all leases to which it is a party the failure to comply with which would
cause a Material Adverse Change, and all such leases are in full force
and effect. Each of the Borrowers and their respective Subsidiaries and
Joint Ventures enjoys peaceful and undisturbed possession under all such
leases to which it is a tenant and under which it is in possession.
3.8. Identity of Subsidiaries and Joint Ventures. Schedule
3.8 sets forth as of the Closing Date a list of all Subsidiaries and
Joint Ventures of each of the Borrowers and the percentage ownership
interest of the Borrowers therein. The Borrowers and their respective
Subsidiaries have good title to the interests they own in each such
Joint Venture and Subsidiary, and such interests are not subject to any
Liens other than as set forth on Schedule 3.8.
3.9. Litigation; Compliance with Laws.
(a) Except as set forth on Schedule 3.9, there are not any
actions, suits or proceedings at law or in equity or by or before any
court or governmental instrumentality or other agency now pending or, to
the knowledge of the Borrowers, threatened against or affecting any
Borrower or any of their respective Subsidiaries or any business,
property or rights of any such person (i) which involve any Loan
Document or the transactions contemplated thereby, (ii) which are in the
nature of a class action or other action by any of the partners in the
Partnership against the Partnership or the Manager, or (iii) as to which
there is a reasonable probability of an adverse determination and which,
if adversely determined, could reasonably be anticipated to,
individually or in the aggregate, materially impair the ability of any
Borrower to perform under the terms of the Loan Documents to which it is
or is to be a party or the ability of the Borrowers and their respective
Subsidiaries and Joint Ventures taken as a whole, to carry on its or
their business substantially as now being conducted, or result in any
Material Adverse Change in the business, assets, operations, prospects
or condition (financial or otherwise) of the Borrowers, taken as a whole
with their Subsidiaries and Joint Ventures.
(b) Neither any Borrower nor any of their respective
Subsidiaries or Joint Ventures is in default with respect to any
judgment, writ, injunction or decree, or in violation of any Requirement
of Law, which such default or violation could reasonably be anticipated
to cause a Material Adverse Change.
3.10. Agreements. Neither any Borrower nor any of their
respective Subsidiaries or Joint Ventures is in default in any manner
under any provision of any indenture or other agreement or instrument
evidencing Indebtedness for borrowed money or other material
Indebtedness, or any other material agreement or instrument, to which it
is a party, or by which it or any of its properties or assets are or may
be bound, that could reasonably be anticipated to cause a Material
Adverse Change.
3.11. Federal Reserve Regulations.
(a) Neither any Borrower nor any of their respective
Subsidiaries or Joint Ventures is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation G, T, U or X.
3.12. Investment Company Act; Public Utility Holding
Company Act. Neither any Borrower nor any of their respective
Subsidiaries or Joint Ventures is (a) an "investment company" as
defined in, or otherwise subject to regulation under, the Investment
Company Act of 1940, as amended, or (b) a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.
3.13. Use of Proceeds. The Borrowers have used the
proceeds of the Loans under the Existing Agreement only for Borrowers'
working capital needs (including the repayment of any unpaid LC
Disbursements) and will use the proceeds of the Revolving Credit Loans
only in compliance with Section 2.2.
3.14. Tax Returns; Documentary Stamp and Intangibles Taxes.
Each of the Borrowers and their respective Subsidiaries and the Joint
Ventures has filed or caused to be filed all Federal, state and local
tax returns required to have been filed by it and has paid or caused to
be paid all taxes shown to be due and payable on such returns or on any
assessments received by it, except taxes that are being contested in
accordance with Section 5.3. The Borrowers have paid all documentary
stamp and intangibles taxes and mortgage taxes required to be paid (i)
under the laws of the State of Florida which were due at the time of the
recording of the Mortgages (including any amendments thereto) covering
real estate located in Florida and (ii) under the laws of the State of
Georgia which were due at the time of the recording of the Mortgages
(including any amendments thereto) covering real estate located in
Georgia.
3.15. No Material Misstatements. No information, report,
Financial Statement, exhibit or schedule furnished by any Responsible
Officer of the Borrowers or any of their respective Subsidiaries to the
Agent or the LC Bank in connection with the negotiation of any Loan
Document or included therein or delivered pursuant thereto, taken as a
whole including consideration of any additional information, corrections
and disclosures furnished to the Agent or the LC Bank prior to the date
hereof, contained or contains any material misstatement of fact or
omitted or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were or are made, not misleading.
3.16. Employee Benefit Plans.
(a) Schedule 3.16 separately identifies all Plans, all
Qualified Plans, all Title IV Plans, all Multiemployer Plans, all
unfunded Pension Plans and all Welfare Benefit Plans, which provide or
promise retiree benefits.
(b) Each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder
have been determined to be exempt from tax under the provisions of
Section 501 of the IRC, and to the best knowledge of the Borrowers
nothing has occurred which would cause the loss of such qualification or
tax-exempt status.
(c) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA and the IRC, including the
filing of reports required under the IRC or ERISA which are true and
correct in all material respects as of the date filed, and with respect
to each Plan, other than a Qualified Plan, all required contributions
and benefits have been paid in accordance with the provisions of each
such Plan.
(d) None of the Borrowers, their Subsidiaries or any ERISA
Affiliate, with respect to any Qualified Plan, has failed to make any
contribution or pay any amount due as required by Section 412 of the IRC
or Section 302 of ERISA or the terms of any such plan.
(e) Except as set forth on Schedule 3.16, no Title IV Plan
has any Unfunded Pension Liability.
(f) With respect to all Welfare Benefit Plans providing
retiree benefits, the present value of future anticipated expenses
pursuant to the latest actuarial projections of liabilities does not
exceed $1,000,000, and copies of such latest projections have been
provided to the Agent.
(g) With respect to Pension Plans, other than Qualified
Plans, the present value of the accrued liabilities for current
participants thereunder using PBGC interest assumptions does not exceed
$1,000,000.
(h) Except as set forth on Schedule 3.16, there has been
no and nor is there reasonably expected to occur any ERISA Event or
event described in Section 4068(e) of ERISA with respect to any Title IV
Plan.
(i) There are no pending, or to the knowledge of Borrowers
or any of their Subsidiaries, threatened claims, actions or lawsuits
(other than claims for benefits in the normal course), asserted or
instituted against (i) any Plan or its assets, (ii) any fiduciary with
respect to any Plan or (iii) the Borrowers, any of their Subsidiaries or
any ERISA Affiliate with respect to any Plan.
(j) Except as set forth on Schedule 3.16, none of the
Borrowers, any of their Subsidiaries or any ERISA Affiliate has incurred
or reasonably expects to incur any Withdrawal Liability (and no event
has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 of ERISA as a
result of a complete or partial withdrawal from a Multiemployer Plan.
(k) Except as set forth on Schedule 3.16, within the last
five years none of the Borrowers, any of their Subsidiaries or any ERISA
Affiliate has engaged in a transaction which resulted in a Title IV Plan
with Unfunded Liabilities being transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any such
entity.
(l) Except as set forth on Schedule 3.16, no Welfare
Benefit Plan provides for continuing benefits or coverage for any par-
ticipant or any beneficiary of a participant after such participant's
termination of employment (except as may be required by Section 4980B of
the IRC and at the sole expense of the participant or the beneficiary of
the participant) which would result in a liability in an amount which
would cause a Material Adverse Change. The Borrowers, their
Subsidiaries and each ERISA Affiliate have complied with the notice and
continuation coverage requirements of Section 4980B of the IRC and the
regulations thereunder, except where the failure to comply would not
result in any Material Adverse Change.
(m) Neither the Borrowers nor any of their Subsidiaries
has engaged in a prohibited transaction, as defined in Section 4975 of
the IRC or Section 406 of ERISA, in connection with any Plan, which
would subject the Borrowers or any of their Subsidiaries (after giving
effect to any exemption) to a material tax on prohibited transactions
imposed by Section 4975 of the IRC or any other material liability.
(n) None of Borrowers, any Subsidiary, or any ERISA
Affiliate has any liability under any terminated Plan of any related or
unrelated entity.
(o) Except as set forth on Schedule 3.16, none of the
assets of any Plan are invested in a guaranteed annuity contract with
any insurance company.
3.17. Environmental Protection. As of the date of this
Agreement, to the best knowledge of the Borrowers and except as
previously disclosed to the Agent in writing, (a) all real property
owned by the Borrowers, their Subsidiaries and the Joint Ventures and
described in the Mortgages is free of Contaminants except to the extent
that the existence of any such Contaminants is in compliance with all
applicable Requirements of Law in all material respects and neither the
Borrowers nor any of their respective Subsidiaries have liabilities with
respect to Contaminants, and no facts or circumstances are believed to
exist which reasonably could give rise to liabilities with respect to
Contaminants, in excess of $1,000,000; (b)(i) the Borrowers and their
respective Subsidiaries have obtained, currently maintain and have all
Environmental Permits necessary for their operations and are in
compliance with such Environmental Permits in all material respects,
(ii) there are no Legal Proceedings pending nor threatened to revoke
such Environmental Permits and (iii) neither the Borrowers nor any of
their respective Subsidiaries received any written notice from any
source to the effect that there is lacking any Environmental Permit
required in connection with the current use or operation of any real
property owned by the Borrowers or any of their respective Subsidiaries
and described in the Mortgages; (c) the Borrowers, their respective
Subsidiaries any tenant or occupant of the Properties and the operations
and facilities involving any Property comply in all material respects
with all Environmental Laws, other than such non-compliance the
liability for which would not be reasonably likely to exceed $1,000,000;
(d) except as set forth on Schedule 3.17, neither the Borrowers nor any
of their respective Subsidiaries nor any of their past or current
facilities and operations any tenants or occupants of premises owned by
the Borrowers and their respective Subsidiaries are subject to any
outstanding written Order or Contract, including Environmental Liens,
with any Governmental Authority or Person, or subject to any federal,
state or local investigation respecting (i) Environmental Laws, (ii)
Remedial Action or (iii) any Environmental Claim arising from the
Release or threatened Release of any Contaminant, the liability for
which is reasonably likely to exceed $1,000,000; (e) neither the
Borrowers nor any of their respective Subsidiaries are subject to any
Legal Proceeding alleging the violation of any Environmental Law or
Environmental Permit, the liability for which is reasonably likely to
exceed $1,000,000; (f) neither the Borrowers nor any of their respective
Subsidiaries have any contingent liability in connection with any
Release of any Contaminant into the environment, the liability for which
would reasonably be likely to exceed $1,000,000; (g) except as set forth
on Schedule 3.17, neither the Borrowers nor any of their respective
Subsidiaries nor any prior owner of any Property or any of their
respective Subsidiaries or any tenant or occupant of premises owned by
the Borrowers or any of their respective Subsidiaries have filed any
notice under federal, state or local law indicating past or present
treatment, storage, disposal of a hazardous waste or reporting a spill
or Release of Contaminants or hazardous waste into the environment with
respect to any Property, the liability for which would reasonably be
likely to exceed $1,000,000; (h) there are no debris piles located on
any of the Mortgaged Properties that can cause a Release of Contaminants
or hazardous waste into the environment; (i) none of the operations of
the Borrowers, any of their respective Subsidiaries or of any tenant or
occupant of premises owned by the Borrowers or any of their respective
Subsidiaries involve or previously involved the generation,
transportation, treatment, storage or disposal of hazardous waste
involving any Property, as defined under 40 C.F.R. Parts 260-270 (in
effect as of the date of this Agreement) or any state equivalent with
respect to any Property except to the extent that any such activities
were or are in material compliance with all applicable Requirements of
Law; and (j) there is not now, nor has there been in the past, on or in
any real property owned by the Borrowers or any of their respective
Subsidiaries and described in the Mortgages (A) any underground storage
tanks or surface tanks, dikes or impoundments; (B) any asbestos-
containing materials; (C) any polychlorinated biphenyls; (D) any
radioactive substance; (E) any industrial solvents; or (F) any methane
or volatile hydrocarbons, in each case which is not in material
compliance with all applicable Requirements of Law; provided, however,
that for purposes of this Section 3.17 "knowledge" shall be defined as
the actual knowledge of the Borrowers' Responsible Officers.
3.18. Deposit Accounts. The Deposit Accounts listed on
Schedule 1.1 are the only bank accounts maintained by the Borrowers.
3.19. Labor Matters. As of the date of this Agreement and
except as set forth on Schedule 3.19, there are no strikes or other
labor disputes against any Borrower or any of its Subsidiaries pending
or, to such Borrower's knowledge, threatened and no unfair labor
practice charges or grievances pending or in process or threatened by or
on behalf of any employee or group of employees of such Person and no
written complaints received by such Person or threatened, or, with
respect to unresolved complaints, on file with any federal, state or
local governmental agency, alleging employment discrimination by such
Person. Hours worked by and payment made to employees of each Borrower
and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters in
any material respect. All payments due from any Borrower or any of its
Subsidiaries on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of such Borrower or
such Subsidiary.
3.20. Management Agreements. Except as set forth on
Schedule 6.13, as of the date of this Agreement there are no management
agreements covering management of any Borrower or any of its Subsi-
diaries. A true and complete copy of each such agreement has been
furnished to the Agent.
3.21. Equity Memberships; Non-Equity Clubs. Schedule 1.2
lists all of the Equity Memberships owned or which may be issued by the
Borrowers or any of their Subsidiaries in all member-owned country clubs
located within the Properties (each, an "Equity Club") as of September
30, 1994. None of the Borrowers' Equity Memberships are evidenced by a
certificate or other instrument or, if so evidenced, have been issued to
any Borrower or any Affiliate of a Borrower. The Borrowers have
furnished to the Agent true and correct copies of all organizational
documents, offering plans and related documents with respect to all
Equity Clubs and all non-Equity Clubs.
3.22. Mortgage Receivables. Schedule 3.22 lists all
mortgage receivables owned by the Borrowers or any of their Subsidiaries
as of September 30, 1994.
3.23. Collateral. To the best of the Borrowers' knowledge,
the Borrowers have granted to the Agent for the ratable benefit of the
Banks pursuant to the Collateral Documents, Liens on all of the
Borrowers' real estate assets other than those assets listed on Schedule
3.23 ("Excluded Assets"). Neither the Borrowers, nor any Subsidiaries
of the Borrowers, own any real estate assets which are not either
subject to a Lien in favor of the Agent for the ratable benefit of the
Banks or listed on Schedule 3.23.
3.24. Intentionally Omitted.
3.25. Partnership Agreements. The Partnership Agreements
have not been modified or amended since October 7, 1992 other than any
such modifications or amendments which are not reasonably likely to
result in a Material Adverse Change.
3.26. No Public Offerings. The Borrowers have not
instituted, caused to be instituted or been a party to and, to the best
of the Borrowers' knowledge, there has not been any public offering with
respect to the Mortgaged Properties within the meaning of the Securities
Act of 1933, as amended, other than the public offerings with respect to
the Partnership.
3.27. Contracts of Sale. There are no unrecorded Contracts
of Sale or purchase options affecting any of the Mortgaged Properties,
except as disclosed on Schedule 3.27 and except those unrecorded
contracts of sale or purchase options with respect to Sales of single
family residential lots or homes (attached or detached), other than Bulk
Sales, entered into in the ordinary course of the Borrowers' business.
3.28. Equipment Financing. As of the date hereof, the
aggregate amount of rent or other payments due from the Borrowers under
existing equipment leases and/or purchase money financing affecting
Equipment (as defined in each of the Mortgages) is less than $4,200,000.
3.29. Management Fees. Notwithstanding anything contained
in the Management Advisory and Supervisory Agreement dated as of
September 10, 1987 (the "Management Agreement") between the Partnership
and Arvida Company ("Arvida Company") to the contrary, the
reimbursements payable by the Partnership to Arvida Company pursuant to
the Management Agreement shall be paid solely for actual out-of-pocket
costs and expenses incurred in connection with development, management,
advisory and supervisory services rendered by Arvida Company, its
employees and consultants with respect to properties owned by the
Borrowers, their Subsidiaries or the Joint Ventures and shall not be
distributed by Arvida Company to JMB, except for amounts paid to JMB for
actual out-of-pocket costs and expenses incurred by JMB in connection
with development, management or advisory and supervisory services
provided to the Borrowers, their Subsidiaries and the Joint Ventures at
market rates.
3.30. Fictitious Name Filings. Borrowers have complied in
all material respects with the Florida Fictitious Name Statute.
ARTICLE IVCONDITIONS OF LENDING AND OTHER EXTENSIONS
OF CREDIT AND TO EFFECTIVENESS
4.1. All Borrowings and Extensions of Credit. On the date
of each borrowing or extension of credit hereunder, including each
refinancing pursuant to Section 2.3(e), unless the Agent shall have
otherwise consented in writing:
(a) The representations and warranties set forth in
Article III (other than Section 3.6) and in each other Loan Document
shall be true and correct in all material respects on and as of the date
of such borrowing or extension of credit with the same effect as though
made on and as of such date except to the extent such representations
and warranties expressly relate to a prior date, in which case they
shall be true and correct in all material respects as of such earlier
date.
(b) Each Borrower shall be in compliance in all respects
with all the terms and provisions set forth herein on its part to be
observed or performed, and at the time of and immediately after such
borrowing no Event of Default or event which upon notice or lapse of
time or both would constitute an Event of Default shall have occurred
and be continuing.
(c) No material amendment modification or change to the
certificate or articles of incorporation or By-laws, or the partnership
agreement or certificate of limited partnership, as applicable, of any
Borrower shall have occurred without the consent of the Agent.
(d) After giving effect to such borrowing or extension of
credit, the aggregate principal amount of Term Loans, I/P Loans and
Revolving Credit Loans outstanding shall not be in an amount that would
result in a required payment or prepayment under Section 2.13(c) or (d)
(excluding any required payment or prepayment actually made), determined
as if the date of such borrowing or extension of credit were a
Reconciliation Effective Date and the Borrowing Base were recalculated
as of such date.
Each borrowing or extension of credit hereunder shall be deemed to
constitute a representation and warranty by the Borrowers on the date of
such borrowing or extension of credit as to the matters specified in
paragraphs (a), (b), (c) and (d) of this Section 4.1.
4.2. Effectiveness. The initial effectiveness of this
Agreement is subject to satisfaction of the following conditions
precedent:
(a) Each Bank shall have received a duly executed original
of this Agreement, a Term Note, an I/P Note and a Revolving Credit Note.
(b) Each Bank shall have received the favorable written
opinion of White & Case, counsel for the Borrowers dated the date hereof
and addressed to the Banks and the LC Bank, substantially in the form of
Exhibit N and such opinions of local counsel as the Banks shall request.
(c) Each Bank shall have received (i) a copy of the
certificate or articles of incorporation (in the case of a corporation)
or the certificate of limited partnership, certificate of existence or
other comparable certificate (in the case of a partnership), in each
case including all amendments thereto, of each Borrower (if available
under the laws of the state of its organization), certified as of a
recent date by the Secretary of State or another appropriate official of
the state of its organization, or a statement in the officer's
certificate described in clause (iii) below to the effect that there has
been no amendment thereto since the date of the certified copy thereof
provided in connection with the closing under the Existing Credit
Agreement; (ii) (if available under the laws of the state of its
organization) a certificate as to the good standing of each Borrower
from such Secretary of State or other official, as of a recent date;
(iii) a certificate of the Secretary or Assistant Secretary of each
Borrower (or of its general partner, in the case of a partnership) dated
the Closing Date hereof and certifying (A) in the case of a corporation,
that attached thereto is a true and complete copy of the By-laws of such
corporation as in effect on the date of such certificate, or that there
have been no amendments thereto since the date of the certificate
delivered in connection with the closing under the Existing Credit
Agreement, and that such By-laws have been in effect at all times since
a date prior to the date of the resolution of such corporation described
in clause (C) below, (B) in the case of a partnership, that attached
thereto is a true and complete copy of the partnership agreement of such
partnership as in effect on the date of such certificate, or that there
have been no amendments thereto since the date of the certificate
delivered in connection with the closing under the Existing Credit
Agreement, and that such partnership agreements has been in effect at
all times since a date prior to the date of the resolution or other
action of such partnership described in clause (C) below, (C) that
attached thereto is a true and complete copy of resolutions (or, in the
case of a partnership, other appropriate action on behalf of such
partnership) duly adopted by the Board of Directors of such corporation
(or, in the case of a partnership) its general partner or general
partners, as appropriate, authorizing the execution, delivery and
performance of this Agreement and the borrowings by such Borrower
hereunder, and that such resolutions (or other actions) have not been
modified, rescinded or amended and are in full force and effect, (D) in
the case of a corporation, that the certificate or articles of
incorporation of such corporation have not been amended since the date
of the last amendment thereto shown on the certificate of good standing
furnished pursuant to (i) above, and (E) as to the incumbency and
specimen signature of each officer executing this Agreement or any other
document delivered in connection herewith on behalf of such corporation
or partnership; (iv) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (iii) above; and (iv)
such other documents as the Agent or Weil, Gotshal & Manges, special
counsel for the Banks, may reasonably request.
(d) Each Bank shall have received a certificate, dated the
date hereof and signed by a Financial Officer of each of the Borrowers,
confirming compliance with the applicable conditions precedent set forth
in paragraphs (a), (b), (c) and (d) of Section 4.1 and paragraph (h) of
this Section 4.2.
(e) The Agent shall have received for the pro rata account
of the Banks a principal payment in the amount of $9,500,000 to be
applied to the Term Loan in the inverse order of maturity.
(f) The Agent shall have received, in connection with the
Pledge Agreement, all of (i) the promissory notes delivered pursuant
thereto, duly endorsed or re-endorsed in blank with, if the Agent so
requests, signature guaranteed and (ii) all other documents required to
be delivered under the Pledge Agreement which have not previously been
delivered.
(g) Each Bank shall have received, reviewed and approved
the Borrowing Base Reconciliation Certificate for the September 30, 1994
Reconciliation Date confirming the satisfaction of the condition
specified in clause (d) of Section 4.1, together with such supporting
documentation as the Banks shall reasonably request.
(h) No transaction, event or condition shall have occurred
since the Reconciliation Date referred to in clause (g) above, that
would materially and adversely affect the amount of the Borrowing Base
set forth in the Borrowing Base Reconciliation Certificate as of such
Reconciliation Date.
(i) Each Bank shall have received the following statements
and reports as of the dates indicated:
(i) a Quarterly Financial Statement as of September
30, 1994;
(ii) a certificate of a Financial Officer of the
Partnership as to the amount of the Adjusted Capital Balance as of
the Closing Date;
(iii) a certificate of a Financial Officer of the
Partnership as to the matters set forth in Section 5.4(d) as of
the Closing Date;
(iv) copies of all of the documents required by
Section 5.4(e) to the extent not previously delivered to the
Banks;
(v) the reports required by Subsections 5.4(g), (h),
(i), (n), (p), and (r) as of the same date as the Quarterly
Financial Statement described in clause (i) of this Section
4.2(i), and the report required by Subsection 5.4(t) for the
fiscal year ended December 31, 1993.
(j) The Agent shall have received endorsements to the
mortgage title insurance policy or policies issued in connection with
the Existing Agreement with reinsurance through direct access in such
amounts and issued by such companies as are acceptable to the Agent,
insuring that except as otherwise expressly provided herein, each
Mortgage as modified through the Closing Date is a valid first priority
Lien on the real estate described in such Mortgage, subject only to such
exceptions to title as shall be acceptable to the Agent in its sole
discretion and containing such endorsements and affirmative insurance as
the Agent may require, and true copies of each document, instrument or
certificate required by the Agent to be, or to have been, filed,
recorded, executed or delivered in connection therewith.
(k) The Agent shall have received evidence that the
insurance policies provided for in Section 5.2 are in full force and
effect, certified by the insurer thereof, together with appropriate
evidence showing a loss payable clause for each such policy in favor of
the Agent for the ratable benefit of the Banks.
(l) The Agent shall have received payment or satisfactory
evidence of payment by the Borrowers of all (i) reasonable fees and
expenses of (A) the Agent's outside counsel, Weil, Gotshal & Manges, (B)
all special local counsel retained in connection with any of the Loan
Documents and the transactions contemplated thereby, (C) all appraisers
or asset evaluators retained in connection with any of the Loan
Documents and the transactions contemplated thereby, (ii) environmental
audit costs, if any, (iii) title insurance premiums and/or search fees,
(iv) recording charges and mortgage and/or documentary stamp and
intangibles taxes, (v) escrow fees, and (vi) due diligence costs and
expenses.
(m) The Agent shall have received duly executed and
acknowledged copies of the amendment to each of the Mortgages
substantially in the form attached hereto as Exhibit E (each, a
"Mortgage Amendment"), together with evidence of the payment of all
recording charges and taxes and filing fees incurred in connection with
the recording of each of the Mortgage Amendments.
(n) The Banks shall have received evidence that all
actions necessary or, in the opinion of the Banks, desirable to perfect
and protect the security interests created by the Collateral Documents
have been taken, including without limitation the documents, filings and
deliveries described on Schedule 4.2.
(o) The Agent shall have received with respect to each
Joint Venture for which such delivery has not been made, a duly executed
Collateral Assignment of Partnership Interest or Collateral Assignment
of Partnership Proceeds, as may be required by the Banks, pursuant to
which Borrowers shall have assigned their interest in such Joint Venture
or the proceeds thereof, as the case may be, to the Agent for the
ratable benefit of the Banks.
(p) The Banks shall have received and approved an updated
Land and Property schedule which schedule shall be attached hereto as
Schedule 1.4.
(q) Intentionally omitted.
(r) The Agent shall have received duly executed
affirmations of the letter agreements dated October 7, 1992 from each of
Club Sports International and JMB Properties Company, or their permitted
successors and assigns, as managers of certain of the Properties.
(s) The Agent shall have received copies of proper
financing statements in form to be filed under the Uniform Commercial
Code of each jurisdiction as may be necessary or, in the opinion of the
Agent, desirable to perfect or maintain the perfection of the security
interests created by any of the Collateral Documents.
(t) The Agent shall have received certified copies of
Requests for Information or Copies (Form UCC-11), or equivalent reports,
listing effective financing statements which name the Borrowers, their
Subsidiaries and the Joint Ventures (under their present names and any
previous names) as debtor, together with copies of such financing
statements.
(u) The Agent shall have received the Renewal Fees.
(v) The Agent shall have received the following documents
relating to the Cullasaja Property:
(i) an allonge to the Cullasaja Note duly executed by
the Partnership in favor of the Agent;
(ii) evidence of the recording of the assignment of
the Cullasaja Mortgage to the Partnership and the Assignment of
Mortgage relating thereto in favor of Agent;
(iii) evidence, in the form of a title insurance
commitment or title insurance policy, that the Cullasaja Mortgage
is a first lien on the Cullasaja Property and that such Cullasaja
Mortgage has been collaterally assigned to the Agent;
(iv) an Escrow Agreement duly executed by the
Borrower and the applicable Escrow Agent with regard to the
release of Cullasaja Lots;
(v) an accounting of all Sales of homesite lots at
the Cullasaja Property since June 30, 1994 and the payment to
Agent for the ratable benefit of the Banks any release payments
which are due and owing pursuant to Section 2.13 and 6.11;
(vi) a duly executed pledge of all Equity Memberships
with respect to the Cullasaja Property; and
(vii) evidence that the Cullasaja Mortgage has been
amended and restated to conform to Exhibit F attached hereto.
(w) The Agent shall have received the following duly
executed documents relating to the Grand Bay Property:
a certification by a Financial Officer that none
of the events or conditions described in Section 5.16(ii) has
occurred and that the Grand Bay Loan is current and in good
standing;
(ii) a copy of the closing documents with respect to
the modification of the Grand Bay Loan to include Phase VI.
(x) The Banks shall have received such additional
information and materials as the Banks may reasonably request,
including, without limitation, copies of any debt agreements, security
agreements and other material contracts.
ARTICLE V AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Bank
and the LC Bank that, so long as this Agreement shall remain in effect
or the principal of or interest on any Note, any Fees or any other
expenses or amounts payable under any Loan Document shall be unpaid or
any Letter of Credit or LC Disbursement in respect thereof shall be
outstanding, unless the Agent shall otherwise consent in writing, it
will, and will cause its Subsidiaries to:
5.1. Existence; Businesses and Properties.
(a) In the case of each of the Borrowers, do or cause to
be done all things necessary to preserve, renew and keep in full force
and effect its legal existence.
(b) At all times do or cause to be done all things
necessary to preserve, renew and keep in full force and effect the
rights, licenses, permits, franchises, patents, copyrights, trademarks
and trade names material to the conduct of its business; maintain and
operate the business of the Borrowers and their respective Subsidiaries
taken as a whole in substantially the manner in which it is presently
conducted and operated; comply with all laws, rules, regulations and
governmental orders (whether Federal, state or local) applicable to the
operation of such business whether now in effect or hereafter enacted
and with any and all other applicable laws, rules, regulations and
governmental orders, including all Environmental Laws, the failure to
comply with which could reasonably be anticipated to materially and
adversely affect the business, assets, operations, prospects or
conditions (financial or otherwise) of the Borrowers, taken as a whole
with their Subsidiaries and Joint Ventures; take all action which may be
required to obtain, preserve, renew and extend all licenses, permits,
franchises and other authorizations which, if not so obtained,
preserved, renewed or extended could reasonably be anticipated to result
in a material and adverse effect on the business, assets, operations,
prospects or condition (financial or otherwise) of the Borrowers, taken
as a whole with their Subsidiaries and Joint Ventures; and at all times
maintain, preserve and protect all property material to the conduct of
such business and, with due consideration to the nature of such
property, keep such property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
5.2. Insurance.
(a) Keep its insurable properties adequately insured at
all times by financially sound and reputable insurers, (b) maintain such
other insurance, to such extent and against such risks, including fire
and other risks insured against by extended coverage, as is customary
with companies similarly situated and in the same or similar businesses,
(c) maintain in full force and effect public liability insurance against
claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned,
occupied or controlled by it, in such amount as it shall reasonably deem
necessary, and (d) maintain such other insurance as may be required by
law.
5.3. Obligations and Taxes. Pay its Indebtedness and
obligations promptly when due in accordance with their terms and pay and
discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in
respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies
or otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to any such Indebtedness,
obligation, tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by
appropriate proceedings and it shall, to the extent required by
generally accepted accounting principles applied on a consistent basis,
have set aside on its books adequate reserves with respect thereto.
5.4. Financial Statements, Reports, etc. In the case of
the Partnership, furnish to the Agent and the LC Bank:
(a) within 90 days after the end of each fiscal year, the
Partnership's consolidated balance sheet and related statements of
income and changes in financial position as of the close of such fiscal
year and the consolidated results of its operations during such year,
all audited by Ernst & Young or other independent certified public
accountants of recognized national standing and accompanied by an
opinion of such accountants (which shall not be qualified in any
material respect) to the effect that such financial statements fairly
present its financial condition and results of operations on a
consolidated basis in accordance with generally accepted accounting
principles consistently applied ("Annual Financial Statement");
(b) within sixty (60) days after the end of each of the
first three fiscal quarters of each fiscal year, the Partnership's
consolidated balance sheet and related statements of income and changes
in financial position showing its financial condition and results of
operations on a consolidated basis as of the end of each such quarter
and for such quarter and the then elapsed portion of the fiscal year,
all certified by one of its Financial Officers as fairly presenting its
financial condition and results of operations on a consolidated basis in
accordance with generally accepting accounting principles consistently
applied subject to normal year-end audit adjustments ("Quarterly
Financial Statement");
(c) concurrently with any delivery under clause (a) above,
a certificate of one of the Partnership's Financial Officers certifying
the amount of the Adjusted Capital Balance as of the most recent
practicable date;
(d) concurrently with any delivery under clause (a) or (b)
above, a certificate of one of the Partnership's Financial Officers
certifying that no Event of Default or event or condition which with
notice or lapse of time or both would constitute an Event of Default has
occurred or, if such an Event of Default or event or condition has
occurred, specifying the nature and extent thereof;
(e) promptly after the same become publicly available,
copies of all regular and periodic reports, proxy statements and other
materials filed by the Partnership with the Securities and Exchange
Commission, or any governmental authority succeeding to any of or all
the functions of said Commission, or with any national securities
exchange, or distributed to all of its shareholders or limited partners,
as the case may be, including, without limitation, all quarterly
management reports distributed to limited partners of the Borrowers;
(f) on each Reconciliation Date (or, in the case of a
Reconciliation Date described in clause (a) of the definition of the
term "Reconciliation Date", within thirty (30) days thereafter), a
Borrowing Base Reconciliation Certificate;
(g) concurrently with the delivery of each Borrowing Base
Reconciliation Certificate, (1) a sales/ inventory evaluation report in
the form of Schedule 5.4(g)(i) on a project-by-project basis which shall
include (i) a housing receipt analysis, (ii) a homesite receipt
analysis, (iii) a development disbursements analysis, (iv) a
construction disbursement analysis, (v) a Land and Property receipts
analysis and an Extraordinary Asset Sale receipts analysis, (vi) a
mortgage receivables analysis, and (vii) a Residential Real Estate
summary, (2) a report, substantially in the form of Schedule 5.4(g)(ii),
showing all adjustments required to be made to the Borrowers' real
estate inventory pursuant to generally accepted accounting principles in
effect in the United States from time to time, and (3) Project Activity
Statistic Summary reports regarding sales and inventory activities
affecting the Real Estate Portfolio since the date of the last such
report;
(h) within thirty (30) days after the end of each fiscal
quarter of the Partnership, a breakdown of the combined divisional
overhead and corporate overhead expenses of the Partnership and Arvida
L.P. II and the amount attributable to the Partnership for each Property
as of the end of such quarter;
(i) within thirty (30) days after the end of each fiscal
quarter of the Partnership, an operating statement and rent roll for (i)
the Arvida Parkway Center Property (including a breakdown by retail
space, office space and hotels), (ii) the Mizner Place Property, and
(iii) the Country Isles Joint Venture;
(j) not later than December 15th of each fiscal year of
the Partnership, the Business Plan for the immediately succeeding fiscal
year of the Partnership;
(k) within ninety (90) days after the end of each fiscal
year of the Partnership, the balance sheet and related statements of
income and changes in financial position as of the close of such fiscal
year and the results of operations for each of the Coto de Caza
Property, the Cullasaja Property, the Arvida Parkway Center Property and
the Mizner Place Property, audited by Kenneth Leventhal in the case of
the Coto de Caza Property and Ernst & Young or other independent
certified public accountants of recognized national standing and
accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such financial
statements fairly present such Property's financial condition and
results of operations in accordance with generally accepted accounting
principles consistently applied;
(l) within ninety (90) days after the end of each fiscal
year of such partnership, Arvida L.P. II's consolidated balance sheet
and related statements of income and changes in financial position as of
the close of such fiscal year and the consolidated results of its
operations during such year, all audited by KPMG Peat Marwick or other
independent certified public accountants of recognized national standing
and accompanied by an opinion of such accountants to the effect that
such financial statements fairly present its financial condition and
results of operations on a consolidated basis in accordance with
generally accepted accounting principles consistently applied;
(m) (i) thirty (30) days' prior written notice of all
Extraordinary Asset Sales, Land and Property Sales and Bulk Sales
permitted hereunder, showing pro forma computations of any Net Cash
Proceeds to be received or receivable by the Borrowers and the
application thereof, and the Minimum Release Price and Applicable
Release Percentage, as applicable, and (ii) written computations of
actual Net Cash Proceeds received by the Borrowers and the application
thereof, and the Minimum Release Price and Applicable Release
Percentage, as applicable, on or before the fifth Business Day after
each such Sale has closed, certified by a Financial Officer of the
Partnership;
(n) within thirty (30) days after the end of each fiscal
quarter of the Partnership, a cash flow statement for (i) each of the
Coto de Caza Property and the Cullasaja Property, (ii) each division of
the Partnership, and (iii) the Partnership, as of the end of such
quarter (showing both budgeted and actual cash flow);
(o) thirty (30) Business Days' prior written notice of the
incurrence of any Capital Expenditures or overhead expenditures in
excess of $500,000 in the aggregate for any fiscal year of the
Partnership that are not described in the Business Plan for the current
fiscal year of the Partnership, along with a detailed description and
explanation of any such expenditures;
(p) within thirty (30) days after the end of each fiscal
quarter of the Partnership, a statement for each Joint Venture showing
all loans, advances or cash contributions received from the Borrowers
during such fiscal quarter by such Joint Venture;
(q) within sixty (60) days after the end of each fiscal
year of the Partnership, the Borrowers' Cash Flow Projections for the
immediately succeeding ten-year period;
(r) within thirty (30) days after the end of each fiscal
quarter of the Partnership, a report showing any projected increases in
the anticipated inventory levels in excess of 25% above existing levels
contained in the Business Plan for the current fiscal year of the
Partnership;
(s) forty-five (45) days' prior written notice of the
implementation of any decision by the Borrowers to build individual
homesites or housing units within any development project or projects on
any particular Land and Property asset, along with a calculation of the
land component of any such homesite or housing unit in accordance with
Schedule 1.4, provided that the land component of each such homesite or
housing unit within any development project or projects shall be
calculated such that the aggregate land component of all such homesite
and housing units within such development project or projects shall
equal the total value of such Land and Property asset listed on Schedule
1.4;
(t) within thirty (30) days after the end of each fiscal
quarter of the Partnership, any contingent interest calculations
required to be made by the Borrowers pursuant to Section 6.4;
(u) on February 28 of each year, a certificate of one of
the Partnership's Financial Officers certifying the amount of the Cash
Balances of the Borrowers as of such date after giving effect to the
prepayment required pursuant to Section 2.13(e) and any distribution to
the partners of the Partnership permitted under Section 6.8; and
(v) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrowers, and their respective Subsidiaries and Joint Ventures,
including without limitation supporting documentation with respect to
any Borrowing Base Reconciliation Certificate, as the Agent or the LC
Bank may reasonably request.
5.5. Litigation and Other Notices. Give the Agent and the
LC Bank prompt written notice of the following:
(a) any Event of Default or event or condition which with
notice or lapse of time or both would constitute an Event of Default,
specifying the nature and extent thereof and the action (if any)
proposed to be taken with respect thereto;
(b) the filing or commencement of any action, suit or
proceeding whether at law or in equity or by or before any court or any
Federal, state, municipal or other governmental agency or authority
which (i) involves any Loan Document or the transactions contemplated
thereby, (ii) is in the nature of a class action or other action by any
of the partners in the Partnership against the Partnership or the
Manager, or (iii) if adversely determined, could reasonably be
anticipated to materially impair the right of the Borrowers, taken as a
whole with their Subsidiaries and Joint Ventures, to carry on business
substantially as then conducted or could materially and adversely affect
the business, assets, operations, prospects or condition (financial or
otherwise) of the Borrowers, taken as a whole with their Subsidiaries
and Joint Ventures; and
(c) any development in the business or affairs of any
Borrower or any of their respective Subsidiaries or Joint Ventures which
has resulted in, or which is reasonably anticipated to result in, a
Material Adverse Change; provided, however, that upon receipt by the
Agent of a notice of a Material Adverse Change from the Borrowers in the
form of Exhibit O, and until the Agent shall have received a new
Appraisal with respect to the Property to which such Material Adverse
Change relates, the Borrowers shall be required to submit bills and
invoices for disbursements of the Borrowers in the categories set forth
in Exhibit G consistent with the then current Business Plan (and such
supporting documentation as the Agent shall reasonably request) to the
Agent in connection with any request for a Revolving Credit Loan or
Letter of Credit and the Borrowers shall only be permitted to borrow
Revolving Credit Loans, or request that Letters of Credit be issued, in
an amount equal to the aggregate amount of such bills; and, provided,
further, that the Borrowers shall provide the Agent with satisfactory
evidence that such bills and invoices have been paid promptly after the
payment thereof.
5.6. ERISA.
(a) With respect to other than a Multiemployer Plan, for
each Qualified Plan hereafter adopted or maintained by any Borrower, any
of its Subsidiaries or any ERISA Affiliate, such Borrower shall (i)
seek, or cause its Subsidiaries or ERISA Affiliates to seek, and receive
determination letters from the IRS to the effect that such Qualified
Plan is qualified within the meaning of Section 401(a) of the IRC; and
(ii) from and after the adoption of any such Qualified Plan, cause such
plan to be qualified within the meaning of Section 401(a) of the IRC and
to be administered in all material respects in accordance with the
requirements of ERISA and Section 401(a) of the IRC.
(b) With respect to each Welfare Benefit Plan, hereafter
adopted or maintained by any Borrower, any of its Subsidiaries or any
ERISA Affiliate, such Borrower shall comply, or cause its Subsidiaries
or ERISA Affiliates to comply, with the notice and continuation coverage
requirements of Section 4980B of the IRC and the regulations thereunder.
(c) (i) Promptly and in any event within thirty (30) days
after any Borrower, any of its Subsidiaries or any ERISA Affiliate knows
or has reason to know that any ERISA Event has occurred, and (ii)
promptly and in any event within ten (10) days after such Borrower, any
of its Subsidiaries or any ERISA Affiliate knows or has reason to know
that a request for a minimum funding waiver under Section 412 of the IRC
has been filed with respect to any Qualified Plan, such Borrower shall
furnish to the Agent a written statement of the chief financial officer
or other appropriate officer of such Borrower describing such ERISA
Event or waiver request and the action, if any, which such Borrower, any
of its Subsidiaries or any ERISA Affiliate proposes to take with respect
thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto.
(d) Promptly and in any event within thirty (30) days
after the filing thereof by any Borrower, any of its Subsidiaries or any
ERISA Affiliate, such Borrower shall furnish to the Agent a copy of each
annual report (Form 5500 Series, including Schedule B thereto) with
respect to each Pension Plan, and upon request by such Borrower, with
respect to any other Plan.
(e) Promptly and in any event within ten (10) days after
receipt thereof, each Borrower shall furnish to the Agent a copy of any
adverse notice, determination letter, ruling or opinion such Borrower,
any of its Subsidiaries or any ERISA Affiliate receives from the PBGC,
DOL or IRS with respect to any Qualified Plan.
(f) Promptly and in any event within ten (10) Business
Days after receipt thereof, a copy of any correspondence any Borrower,
any of its Subsidiaries or any ERISA Affiliate receives from the plan
sponsor (as defined by Section 4001(a)(10) of ERISA) of any
Multiemployer Plan concerning potential withdrawal liability of such
Borrower, any of its Subsidiaries or any ERISA Affiliate, or notice of
any reorganization, with respect to any Multiemployer Plan, together
with a written statement of the chief financial officer or other
appropriate officer of such Borrower of the action which such Borrower,
any of its Subsidiaries or any ERISA Affiliate proposes to take with
respect thereto.
(g) Promptly and in any event within thirty (30) Business
Days after the adoption thereof, each Borrower shall furnish to the
Agent notice of (i) any amendment to a Title IV Plan which results in an
increase in "benefit liabilities" as defined in Title IV of ERISA or the
adoption of any new Title IV Plan, and (ii) any amendment to a, or
adoption of a new, Welfare Benefit Plan which such Borrower or any of
its Subsidiaries maintains, contributes to or has an obligation to
contribute to, and which results in an increase in benefits for retirees
or new benefits for retirees.
(h) Promptly and in any event within ten (10) days after
any Borrower, any of its Subsidiaries or any ERISA Affiliate has reason
to know of the commencement of any action, suit or proceeding before any
court or other Governmental Authority affecting such Borrower, any of
its Subsidiaries or any ERISA Affiliate with respect to any Plan, except
those which, in the aggregate, if adversely determined could not have a
Material Adverse Change, such Borrower shall furnish to the Agent notice
of such action, suit or proceeding.
(i) Promptly and in any event within thirty (30) days
after notice or knowledge thereof, each Borrower shall furnish to the
Agent notice that such Borrower or any of its Subsidiaries becomes
subject to the tax on prohibited transactions imposed by Section 4975 of
the IRC, together with a copy of Form 5330 filed by such Borrower or
such Subsidiary.
5.7. Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with
generally accepted accounting principles and, upon reasonable written
notice, at all reasonable times and as often as the Agent, NationsBank
or the LC Bank may reasonably request, permit any authorized
representative designated by the Agent, NationsBank or the LC Bank to
visit and inspect the financial records and the properties of any
Borrower and any of their respective Subsidiaries and (to the extent
within the control of the Borrowers and their Subsidiaries) Joint
Ventures, and to make extracts from such financial records, and permit
any authorized representative designated by the Agent, NationsBank or
the LC Bank to discuss the affairs, finances and financial condition of
any Borrower and its Subsidiaries and (to the extent within the control
of the Borrowers and their Subsidiaries) Joint Ventures with the
Financial Officers thereof; provided, however, that the exercise by
NationsBank or the LC Bank of the foregoing right to visit such
properties shall be coordinated through the Agent; and, provided,
further, (i) the Banks agree to keep any information delivered or made
available by the Borrowers to them confidential from anyone other than
the Banks' employees, officers, attorneys and other advisors who are or
are expected to become engaged in administering the Loans or rendering
legal advice in connection therewith, and to take reasonable steps to
cause such Persons to maintain such confidentiality, provided that
nothing herein shall prevent the Banks from disclosing such information
(a) upon the order or request of any court or administrative agency, (b)
upon the request or demand of any regulatory agency or authority, (c) to
the extent that such information has been publicly disclosed other than
as the result of a disclosure by the Banks, (d) to any actual or
potential syndicate participant, provided that each such actual or
potential participant has been notified of and agreed to the provisions
of this paragraph in a manner reasonably satisfactory to the Borrowers,
or (e) pursuant to any Requirement of Law, and (ii) in no event shall
the Banks be liable for any unintentional disclosure of such
information.
5.8. Environmental Notices. Notify the Agent, in writing,
promptly, and in any event within thirty (30) days after the Borrowers'
learning thereof, of any:
(a) written notice or claim reasonably supported by facts
asserting that the Borrowers or any of their respective Subsidiaries is
liable to any Person or Governmental Authority as a result of the
Release or threatened Release of any Contaminant into the environment;
(b) written notice that any real property owned by the Borrowers and
described in the Mortgages or by their respective Subsidiaries is under
investigation by any Governmental Authority evaluating whether any
Remedial Action is needed to respond to the Release or threatened
Release of any Contaminant into the environment; (c) written notice that
any real property owned by the Borrowers and described in the Mortgages
or by their respective Subsidiaries is or will be subject to a material
Environmental Lien; (d) written notice of a material violation to the
Borrowers or their respective Subsidiaries of any Environmental Law; (e)
commencement or threat of any judicial or administrative proceeding
against any Borrower or its Subsidiaries alleging a material violation
of any Environmental Law; or (f) proposed acquisition of stock, assets,
real estate or leasing of property, or any other action by the Borrowers
or their respective Subsidiaries that could subject the Borrowers or
their respective Subsidiaries to environmental costs or liabilities.
With respect to the foregoing, such notice shall be required only if the
Borrowers or their Subsidiaries reasonably believe the liability or
potential liability would exceed $1,000,000.
5.9. Compliance with Environmental Laws. Comply with, and
shall cause each of their respective Subsidiaries to comply with, and
shall exercise reasonable efforts consistent with customary commercial
leasing practices to cause any tenants or occupants of premises owned by
the Borrowers or any of their Subsidiaries to comply with, all
applicable Environmental Laws with respect to the Properties in all
material respects; provided, however, that throughout the term of this
Agreement, the Agent shall be satisfied that the real property owned by
the Borrowers or their respective Subsidiaries and facilities thereon
are in compliance with all applicable Environmental Laws and
Environmental Permits in all material respects and that there are no
outstanding or contingent material liabilities with respect thereto;
and, provided, further, that (i) as part of its review, the Agent has
the right, at any time throughout the term of this Agreement for
reasonable cause and upon reasonable prior notice, to retain an
independent environmental consultant to undertake site investigations
and to be satisfied with the findings of that consultant with respect to
known and potential contamination; (ii) the reasonable costs for such
investigations shall be borne by the Borrowers; and (iii) the Agent, in
its sole discretion, shall conclude that any environmental impairment
(x) shall not cause the Borrowers to incur immediately or at a future
date unreasonable additional costs, or costs in excess of $1,000,000,
(y) shall not unreasonably interfere with the continued operation of any
real property owned by the Borrowers or their respective Subsidiaries or
the operations or facilities thereon, and (z) shall not unreasonably
impair the fair saleable value of any thereof.
5.10. Bank Accounts. Concurrently with the delivery of
each of the Financial Statements referred to in Section 5.4(b), notify
the Agent in writing as to the location of any new bank account and the
related account number.
5.11. Further Assurances.
(a) (i) Execute and deliver to the Agent any and all
further documents, financing statements, schedules, agreements, reports
and instruments, and take all further action (including without
limitation filing Uniform Commercial Code financing statements,
mortgages and deeds of trust) which may be required under applicable
law, or which the Agent may reasonably request, in order to effectuate
the transactions contemplated by the Loan Documents and in order to
grant, preserve, protect and perfect the validity and priority of the
security interests created or intended to be created by the Collateral
Documents [including without limitation all items described as
"deferred" on Schedule 4.2,] and (ii) deliver such legal opinions of
local counsel as the Agent shall reasonably request. In addition, from
time to time, the Borrowers will, at the Borrowers' cost and expense,
promptly secure the obligations of each Borrower under each Loan
Document to which it is party by pledging or creating, or causing to be
pledged or created, perfected security interests with respect to such
assets and properties of such Borrower (other than the Excluded Assets)
as the Agent shall reasonably designate.
(b) To the extent any of the Borrowers' Equity Memberships
are or may become evidenced by a certificate or other instrument which
has been issued to a Borrower or any Affiliate of a Borrower, unless the
pledge of such Equity Memberships shall constitute a default under any
of the documents heretofore provided to the Banks pursuant to Section
3.21, promptly pledge such certificate or instrument to the Agent for
the ratable benefit of the Banks pursuant to a pledge agreement
satisfactory in form and substance to the Agent.
(c) To the extent the Banks identify any real estate asset
of the Borrowers or any of their respective Subsidiaries after the date
hereof which is not described on Schedule 3.23, the Borrowers shall
promptly grant the Agent, for the ratable benefit of the Banks, a
security interest in each such real estate asset pursuant to a Mortgage.
(d) To the extent that any homesites or housing units are
sold in accordance with the terms of this Agreement and the Borrowers
receive one or more promissory notes as part of the consideration for
such Sale, pledge such note or notes concurrently with such Sale to the
Agent for the ratable benefit of the Banks pursuant to a supplement to
the Pledge Agreement as security for the obligations of the Borrowers
hereunder and under the other Loan Documents.
5.12. Georgia Intangibles Tax. Pay an intangibles tax in
the amount required under the O.C.G.A. Section 48-6-69(b) upon the recording
of the Mortgage Amendment to be recorded in such State in addition to
the $5,510.54 paid upon the recording of the Mortgage in such State, and
if subsequent to the Closing Date the Georgia Department of Revenue
issues any ruling adverse to the apportionment request made by the
Borrowers in connection with either the Mortgage or the Mortgage
Amendment stating that either (1) the apportionment provisions do not
apply because any Bank is found not to qualify as a nonresident under
the terms of O.C.G.A. Section 48-6-69(b) and therefore apportionment is
unavailable; (2) the structure of the transactions contemplated by the
Loan Documents and form of deed to secure debt or mortgages places such
transactions outside the benefit of the apportionment statute; or (3)
for any other reason a payment of additional intangibles tax is
required, the Borrowers, immediately upon receipt of notice of such
adverse ruling (along with a copy of such ruling, if available), shall
pay (i) such additional amounts as required to pay the full amount of
intangibles tax due, including any and all penalties assessed as a
result of the payment of the improper amount, (ii) any and all fees and
expenses as required, to correct any deficiency in the payment of such
intangibles tax, and (iii) any other fees and expenses the Banks'
counsel determines to be necessary with respect to payment of Georgia
intangibles taxes for such transaction.
5.13. IOC Mortgage. Pay, observe and perform all
obligations and covenants of the "Mortgagor" under the IOC Mortgage as
though Borrowers were the Mortgagor named therein, it being understood
that Banks are accepting the IOC Mortgage from the IOC Land Trustee as
an accommodation to Borrowers. In connection with such IOC Mortgage,
Borrowers further covenant and agree to promptly (i) give notice to
Agent of the resignation, removal or other change in status of the IOC
Land Trustee, (ii) upon the determination of the Agent that the Fair
Market Value of the IOC Tract is greater than $5,000,000 (the "increased
value"), cause the IOC Land Trustee to enter into a notice of future
advance increasing the amount secured by the IOC Mortgage to such
increased value, (iii) cause such notice to be recorded in the
appropriate public records and an endorsement to the title insurance
policy insuring such mortgage to be issued with respect to such
increased amount, and (iv) pay all recording fees and taxes, including
documentary stamp and intangibles taxes, and premiums incurred in
connection therewith.
5.14. Equitable Mortgage. Promptly and faithfully observe,
perform and comply with all of the terms, covenants and provisions of
the Equitable Mortgage, on their part to be observed, performed and
complied with, at the applicable times set forth in the Equitable
Mortgage; refrain from doing anything, as a result of which there could
occur a default or breach of any of the terms of the Equitable Mortgage;
give Agent immediate notice of any default by any party under the
Equitable Mortgage and promptly deliver to Agent a copy of each notice
of default and all other notices, communications, plans, specifications
and other statements (including financial statements), responses and
similar instruments received or delivered by Borrowers in connection
with the Equitable Mortgage; and furnish to Agent copies of such
information and evidence as Agent may reasonably require concerning
Borrowers' due observance, performance and compliance with the terms,
covenants and provisions of the Equitable Mortgage. Upon the occurrence
of any default under the Equitable Mortgage or upon the occurrence of
any event which, with the passage of time and/or the giving of notice,
would constitute an event of default under the Equitable Mortgage, then,
in each and every such case, Banks, at their option (but with no
obligation to do so) and without notice, may cause the default or
defaults to be remedied and otherwise exercise any and all of the rights
of Borrowers thereunder in the name of and on behalf of Borrowers.
Borrowers shall, on demand, reimburse for all advances made and expenses
incurred by Banks in curing any such default (including, without
limitation, reasonable attorneys' fees and disbursements), together with
interest thereon computed at the Post-Default Rate from the date that
such advance is made, to and including the date the same is paid to
Lenders. Borrowers shall from time to time and at any time throughout
the term of the Equitable Mortgage use their reasonable efforts to
obtain and deliver to Agent, within fifteen (15) days after written
demand therefor by Agent, with respect to the Equitable Mortgage, an
estoppel certificate from the mortgagee under the Equitable Mortgage in
such form and content as Agent may, in its sole and absolute discretion,
from time to time designate.
5.15. Title Updates. Provide to Lenders on each
anniversary of the Closing Date, endorsements of the title insurance
policies insuring the Lien of the Mortgages which endorsements shall (i)
change the effective date thereof to a current date, (ii) identify all
properties released from the Lien of such Mortgage, and (iii) list, and
provide copies of, all matters appearing of record since the effective
date of such policy or the next prior endorsement thereto.
5.16. Grand Bay Mortgage. (i) Quarterly provide to Banks a
certificate from a Financial Officer to the effect that the Grand Bay
Loan is current and in full force and effect, and (ii) promptly provide
to Banks written notice of (A) the existence of any event or condition
which would require the contribution of additional equity under the
Grand Bay Mortgage and related loan documents, (B) any "Event of
Default" under the Grand Bay Mortgage and related loan documents, or (C)
any demand made by the Grand Bay Lender under the Limited Guaranty given
by the Partnership to such lender.
ARTICLE VI NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Bank
and the LC Bank that, so long as this Agreement shall remain in effect
or the principal of or interest on any Note, any Fees or any other
expenses or amounts payable under any Loan Document shall be unpaid or
any Letter of Credit or LC Disbursement in respect thereof shall be
outstanding, unless the Agent (and the Required Banks in the case of
Sections 6.1, 6.7, 6.8, 6.9 and 6.10) shall otherwise consent in
writing, it will not, and will not cause or permit its Subsidiaries to:
6.1. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the
Closing Date as set forth in Schedule 6.1 and any refinancings of the
Arvida Parkway Center Property or the Mizner Place Property, provided
that the interest rate in respect thereof is not increased above the
then prevailing market interest rate;
(b) Indebtedness represented by the Notes;
(c) Subordinated Indebtedness to JMB or any Subsidiary of
JMB;
(d) unsecured Indebtedness as an account party in respect
of letters of credit used in the ordinary course of business by any of
the Borrowers or their respective Subsidiaries or Joint Ventures
(including, without limitation, the Indebtedness of the Borrowers as
account parties in respect of the Letters of Credit) up to $15,000,000
(in the aggregate for all Borrowers); provided, however, that any
Indebtedness resulting from a draw upon any such letter of credit shall
be permitted under this clause (d) only for a period expiring forty-five
(45) days after such draw;
(e) performance guarantees with respect to completion of
construction of real estate development projects in which any Borrower
has an ownership or beneficial interest;
(f) Capital Lease Obligations of the Borrowers;
(g) trade payables of the Borrowers;
(h) Non-Recourse Indebtedness approved by the Banks in
connection with any Joint Venture approved by the Banks pursuant to
Section 6.4; and
(i) obligations in respect of interest rate protection
agreements relating solely and specifically to Indebtedness permitted
under any of the foregoing.
6.2. Liens, Etc. The Borrowers shall not create or suffer
to exist, and shall not permit any of their respective Subsidiaries to
create or suffer to exist, any Lien upon or with respect to any of its
or such Subsidiary's properties, whether now owned or hereafter
acquired, or assign, or permit any of their respective Subsidiaries to
assign, any right to receive income, except:
(a) Liens created pursuant to the Loan Documents;
(b) any Lien securing the renewal, extension or refunding
of any Indebtedness secured by any Lien permitted by subsection (g) of
this Section 6.2 without any increase in the amount secured thereby or
in the assets subject to such Liens;
(c) Liens arising by operation of law in favor of
materialmen, mechanics, warehousemen, carriers, lessors or other similar
Persons incurred by the Borrowers or any of their respective
Subsidiaries in the ordinary course of business which secure its
obligations to such Person; provided, however, that any Borrower or such
Subsidiary is not in default with respect to such payment obligation to
such Person or is in good faith and by appropriate proceedings
diligently contesting such obligation and adequate provision is made for
the payment thereof;
(d) Liens securing taxes, assessments or governmental
charges or levies; provided, however, that neither the Borrowers nor any
of their respective Subsidiaries is in default in respect of any payment
obligation with respect thereto unless any Borrower or such Subsidiary
is in good faith and by appropriate proceedings diligently contesting
such obligation and adequate provision is made for the payment thereof;
(e) Liens incurred or pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other social security benefits;
(f) zoning restrictions, easements, licenses,
reservations, restrictions on the use of real property or minor
irregularities incident thereto which do not in the aggregate materially
detract from the value or use of the property or assets of the Borrowers
and their respective Subsidiaries taken as a whole or impair, in any
material manner, the use of such property for the purposes for which
such property is held by the Borrowers or any such Subsidiary;
(g) Liens securing Indebtedness permitted under Section
6.1(a); and
(h) Liens existing on the date of this Agreement and
disclosed on Schedule 6.2.
6.3. Investments, Loans and Advances. Purchase, hold or
acquire beneficially any stock, other securities or evidences of
indebtedness of, make or permit to exist any loans or advances to, or
make or permit to exist any investment or acquire any interest
whatsoever in, any other Person, except:
(a) loans and advances to and investments in the
Subsidiaries and Joint Ventures of the Borrowers existing on the Closing
Date and identified on Schedule 3.8 and the other investments existing
on the Closing Date as set forth on Schedule 6.3;
(b) Permitted Investments and loans and advances permitted
under Section 6.4; and
(c) investments that do not involve the payment or the
commitment to pay cash, whether directly or indirectly, contingent or
otherwise.
6.4. Joint Ventures/Contingent Interest.
(a) Form any new Joint Venture without the prior written
consent of the Banks or, except as provided in clause (c) below with
respect to certain advances to be made to certain of the Grand Bay
Entities, fund, directly or indirectly, contributions, loans or advances
to any Joint Venture; provided, however, that (i) (A) the Borrowers may
make advances, loans or contributions to any Joint Venture approved by
the Banks on an annual basis for the succeeding calendar year and up to
an amount acceptable to the Banks for such year provided that an
executed Collateral Assignment of Partnership Interest, if permitted by
the underlying joint venture agreement or, if not so permitted, a
Collateral Assignment of Partnership Proceeds covering the Borrowers'
interest in such Joint Venture shall have been delivered to the Agent
prior to the making of any such advances, loans or contributions, and
(B) except as otherwise agreed by the Banks, the Banks shall earn a
contingent interest rate on such advances, loans or contributions
calculated and paid by the Borrowers on a quarterly basis in accordance
with Schedule 6.4; (ii) repayment to the Borrowers of any such advances,
loans or contributions to a Joint Venture and the payment of the related
contingent interest rate shall come solely from the Joint Venture Net
Cash Flow of such Joint Venture; (iii) any distribution to the Borrowers
of the Joint Venture Net Cash Flow shall be applied (x) up to 50% to the
payment to the Banks of accrued and unpaid contingent interest earned in
respect of such advances and (y) the balance to the Borrowers, which
amount shall reduce the capital balance, if any, outstanding as
calculated in accordance with Schedule 6.4; (iv) if either (x) at the
beginning of a calendar year the Banks elect not to permit the Borrowers
to make advances, loans or contributions to a Joint Venture or (y) a
fully liquidated Joint Venture does not generate sufficient Joint
Venture Net Cash Flow to repay the entire principal amount of advances,
loans or contributions previously made to it by the Borrowers and the
related contingent interest then due and payable, the unpaid amount of
any accrued contingent interest shall be deemed to be forgiven by the
Banks; (v) any advances, loans or contributions by the Borrowers to a
Joint Venture permitted under this Section 6.4 shall be subordinated in
right of payment, both as to principal and interest, to the Notes,
reimbursement obligations in respect of the LC Disbursements and all
other amounts payable hereunder and under any other Loan Document; and,
provided, further, that any such contingent interest shall only be
payable with respect to the Coto de Caza Joint Venture or any other
Joint Venture with existing Indebtedness which is senior in right of
payment, both as to principal and interest, to the Notes and all other
amounts payable hereunder and for which the Partnership's projected
share of capital requirements are in excess of $1,000,000 over the term
of such Joint Venture; provided, further, however, that any such
contingent interest shall only be payable with respect to the Arvida/RBG
II Joint Venture in the event that the Arvida/RBG II Joint Venture has
Indebtedness for which the Partnership's projected share of capital
requirements are in excess of $1,000,000 over the term of the Arvida/RBG
II Joint Venture.
(b) Lend to or fund the cash requirements of a new Joint
Venture not covered by Section 6.4(a) without the prior written consent
of the Banks and assigning to the Agent for the ratable benefit of the
Banks any mortgage, which mortgage shall be substantially in the form of
Exhibit F, made in favor of the Partnership by such Joint Venture,
pursuant to an assignment substantially in the form of the Assignment of
Mortgages.
(c) In lieu of the provisions of clauses (a) and (b) of
this Section 6.4, which shall not apply to any advances, loans or
contributions made by Borrowers or any Subsidiaries of Borrower to one
or more of the Grand Bay Entities for the purpose of (i) completing
construction of an aggregate of 80 condominium units and related
amenities on the Grand Bay Property (the "Grand Bay Project"), (ii)
completing construction of the Community Facilities (as defined in the
Grand Bay Loan documents) within the Grand Bay Project and (iii) for
paying interest on the Grand Bay Loan (collectively, "Grand Bay
Advances"), the following shall apply: no Grand Bay Advances shall be
made by Borrowers or any Subsidiaries of Borrowers during any time that
the Grand Bay Loan is in default. While the Grand Bay Loan is not in
default, Borrowers and their Subsidiaries may make loans, advances or
contributions to any Grand Bay Entity solely for the purposes set forth
in clauses (i), (ii) and (iii) above so long as (A) the aggregate amount
of any such loans, advances and contributions (including any payments
made to Banks for the release of any portion of the HR-A parcel
identified on Schedule 1.4, collectively "Release Payments")) made since
inception, when added to the total amount of the Grand Bay Loan which is
either used or available to be used to construct the Grand Bay Project
and the Community Facilities, does not exceed $34,150,000, and (ii) the
aggregate amount of any such loans, advances and contributions made
after February 8, 1994 (excluding the initial Release Payment of
$3,454,584) does not exceed $6,000,000.
6.5. Transactions with Affiliates. Sell or transfer any
assets to, or purchase or acquire any assets of, or otherwise engage in
any other material transactions with, any of its Affiliates, except at
prices not less favorable to such Borrower or Subsidiary than fair
market prices and on terms and conditions not less favorable to such
Borrower or Subsidiary than could be reasonably obtained on an arm's-
length basis from unrelated third parties; provided, however, that this
Section 6.5 shall not apply to the sale, transfer, purchase, or other
disposition of any asset by one Borrower to any other Borrower.
6.6. Business of Borrowers and Subsidiaries Taken as a
Whole. Significantly change the nature of their business as carried on
at the date hereof.
6.7. Mergers, Consolidations and Sales of All or
Substantially All Assets. Merge or consolidate with or into any other
Person, or sell, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all its
assets (whether now owned or hereafter acquired), except that any
Borrower may merge or consolidate with any Person if the surviving
Person is such Borrower or a Subsidiary of such Borrower and the
obligations hereunder of such Borrower are expressly assumed by such
Subsidiary and any Subsidiary may merge or consolidate with or into, or
sell, transfer, lease or otherwise dispose of assets to, any Borrower or
any wholly owned Subsidiary of any Borrower, or may merge or consolidate
with or into any Person if the surviving Person is a wholly owned
Subsidiary of any Borrower; provided, however, that, immediately after
giving effect to such proposed transaction, no Event of Default, and no
event or condition which with the giving of notice or lapse of time or
both would constitute an Event of Default, has occurred and is
continuing; and, provided, further, that this Section 6.7 shall not be
construed to prohibit sales of assets in the ordinary course of business
that are otherwise permitted under Section 6.11.
6.8. Partnership Distributions. In the case of the
Partnership:
(a) make any distribution if
(i) on the last day of any fiscal year of the
Partnership the sum of (A) the aggregate principal amount of
the Term Loans and Revolving Credit Loans outstanding, (B)
the unused portion of the Revolving Credit Loan Commitments,
(C) the aggregate face amount of letters of credit issued
for the account of the Borrowers in excess of $15,000,000,
(D) the aggregate amount of Indebtedness outstanding as of
such date in respect of draws upon letters of credit as to
which any Borrower is an account party, (E) the aggregate
amount of any financial Guarantees by the Borrowers
outstanding as of such date, (F) Master Lease Obligations of
the Borrowers, and (G) Indebtedness of any Subsidiary or
Joint Venture (other than Non-Recourse Indebtedness) with
respect to which any Borrower is not fully exculpated from
all of its general partner obligations, shall exceed 75% of
the Borrowing Base as of such date and the Borrowers shall
not have paid or prepaid an aggregate principal amount of
Term Loans and/or Revolving Credit Loans equal to such
excess; provided, however, that if (1) the Borrowing Base
Reconciliation Certificate as of the end of any fiscal year
of the Partnership (the "Reporting Year") is submitted to
the Banks on or before January 31 of the following year and
Banks shall not have notified Borrowers of any objection
thereto within ten (10) days after receipt, (2) such
Borrowing Base Reconciliation Certificate reflects that the
sum of the amounts referred to in clauses (A) through (G)
above is less than or equal to 75% of the Borrowing Base,
(3) Borrowers shall have timely made the prepayment required
pursuant to Section 2.13(e) with respect to such Reporting
Year, (4) there were no Revolving Loans outstanding at the
end of such Reporting Year, then either (x) if there are no
Revolving Loans outstanding on the date of the proposed
distribution, the Partnership may make an aggregate cash
distribution to the partners of the Partnership on February
28 (or if not a Business Day, the immediately succeeding
Business Day) of the year following the Reporting Year in
the Allowed Distribution Amount (as defined below), or (y)
if the Partnership follows the procedure for a "Conditional
Distribution" as described on Schedule 6.8, the Partnership
may make an aggregate cash distribution to the partners of
the Partnership in the Allowed Distribution Amount in the
manner set forth on Schedule 6.8. The "Allowed Distribution
Amount" is an amount not to exceed the lesser of: (x) fifty
percent (50%) of the Net Cash Flow for the Reporting Year,
(y) $5,000,000, provided that such maximum may be increased
to an amount (not to exceed $8,000,000) which Borrower
demonstrates is equal to the aggregate federal income tax
obligation of the partners in the Partnership in respect of
the income of the Partnership for the Reporting Year, and
(z) the amount of the prepayment pursuant to Section 2.13(e)
made to the Banks on or before February 28 of the year
following the Reporting Year.
(ii) the aggregate principal amount of the Term Loans
and I/P Loans outstanding shall exceed the Adjusted Capital
Balance and the Borrowers shall not have paid or prepaid an
aggregate principal amount of the Term Loans and I/P Loans
equal to such excess,
(iii) a default shall be made and shall be continuing
in the payment of any principal of any Note (other than an
amount referred to in clause (i) or (ii) above) or LC
Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or
otherwise, or
(iv) a default shall be made and shall be continuing
in the payment of any interest on any Note or LC
Disbursement or any Fee or any other amount (other than an
amount referred to in clause (i), (ii) or (iii) above) due
under any Loan Document, when and as the same shall become
due and payable; or
(b) make any distribution after the occurrence and during
the continuance of an Event of Default pursuant to Article VII with
respect to any of the circumstances described in clause (a) immediately
above;
provided, however, that the Borrowers shall not be permitted to use the
proceeds of any Revolving Credit Loan to fund a distribution by the
Partnership.
6.9. Residential Real Estate. At any time permit the
aggregate Equity Value of the Residential Real Estate included in the
Real Estate Portfolio that is wholly owned directly by the Borrowers
(i.e., not owned by a Subsidiary or Joint Venture and is not subject to
any Lien securing Indebtedness (other than the Lien of any Collateral
Document) to be less than 80% of the aggregate Equity Value of all of
the Residential Real Estate included in the Real Estate Portfolio at
such time.
6.10. Acquisitions. Purchase or otherwise acquire directly
or indirectly any real estate with a purchase price in excess of
$1,000,000 without the prior written consent of the Agent.
6.11. Sales of Assets; Release Prices. Sell, transfer,
convey, lease (except as provided in the applicable Mortgage) or
otherwise dispose of, or permit any Subsidiary of the Borrowers to sell,
transfer, convey, lease (except as provided in the applicable Mortgage)
or otherwise dispose of, any assets or properties; provided, however,
that (i) this Section 6.11 shall not apply to the sale, transfer,
conveyance, lease or other disposition of any asset or property by one
Borrower to any other Borrower, and (ii) the foregoing shall not
prohibit sales of obsolete equipment, Equity Memberships in existing
Equity Clubs or in the Equity Clubs described in Section 6.15 or Escrow
Sales provided that the Borrowers are in compliance with Sections 2.13
and 6.15 and the Escrow Agreement; and, provided, further, that (i) in
the event that the Borrowers are not in compliance with Section 2.13,
100% of the greater of (x) the Net Cash Proceeds received by the
Borrowers from any such Escrow Sale or (y) the Minimum Release Price for
such Property, shall be applied to the repayment of the Revolving Credit
Loans or if there are no Revolving Credit Loans then outstanding, to the
Term Loans, until the Borrowers are in compliance with such Section,
(ii) Extraordinary Asset Sales and Land and Property Sales provided for
in the current Business Plan shall not require the prior written consent
of the Banks so long as the required payments are made by the Borrowers
under Section 2.13(g), (h) or (i) as applicable, (iii) on a quarterly
basis, executed releases for single-family residential lots and homes
shall be transferred to the Escrow Agent in such number as shall be
acceptable to the Banks, and all such releases shall be released by the
Escrow Agent in accordance with the terms of the Escrow Agreement
provided that no Event of Default shall have occurred and be continuing,
the Borrowers are otherwise in compliance with Section 2.13, the Agent
shall not have given the Termination of Release Notice (as defined in
the Escrow Agreement) to the Escrow Agent, and no later than thirty (30)
days prior to the beginning of each Applicable Period (as defined in the
Escrow Agreement) the applicable Borrower or, in the case of the
Cullasaja Lots the Cullasaja Joint Venture, shall have delivered to the
Agent and the Escrow Agent current Price Lists certified by the Borrower
or Joint Venture owning such Release Lots with respect to all Release
Lots in all subdivisions located within the Development Projects (as
such terms are defined in the Escrow Agreement), and (iv) the release
price in connection with a Sale of any real estate asset (other than in
connection with Escrow Sales (except for Escrow Sales of Cullasaja Lots)
described above) shall be the payments required with respect thereto
under Section 2.13(g), (h) or (i) as applicable; and provided, further,
that this Section 6.11 shall not prohibit the transfer of the portion of
the IOC Tract located west of ditch 5 by the IOC Land Trustee to the
Indian Trace Community Development District, or to another Governmental
Authority (a "Permitted Grantee"), if the following conditions are
satisfied: (i) such transfer shall be for no cash consideration, (ii)
the IOC Tract shall be transferred to the Permitted Grantee solely for
wetlands mitigation purposes, (iii) Lenders shall have approved the
terms of the mitigation proposal, including any burdens which may be
placed on any other portion of the Weston Property which is encumbered
by a Mortgage, which approval shall not be unreasonably withheld, (iv)
Borrowers shall have contemporaneously received the permits necessary to
fill the property in Increment III of the Weston Property, including
specifically a Section 404 Permit, and (v) Agent shall have received
satisfactory evidence that the Permitted Grantee will undertake the
mitigation obligations as well as issue the necessary bonds and
construct the water management improvements which are essential to the
development of Increment III of the Weston Property in the ordinary
course of the Permitted Grantee's business.
6.12. ERISA. Directly or indirectly by reason of an
amendment or amendments to, or the adoption of, one or more Title IV
Plans, permit the present value of all benefit liabilities, as defined
in Title IV of ERISA (using the actuarial assumptions utilized by the
PBGC upon termination of a Plan), to increase by more than $1,000,000
except, and only to the extent, required by law including to maintain
the tax-qualification status of such Title IV Plans; provided, however,
that this limitation shall not be applicable to the extent that the fair
market value of assets allocable to such benefits, all determined as of
the most recent valuation date for each such Title IV Plan, is in excess
of the benefit liabilities; nor to increase benefits to the extent
security must be provided to any Title IV Plan under Section 401(a)(29)
of the IRC. Neither the Borrowers nor any of their Subsidiaries shall
establish or become obligated to any Welfare Benefit Plan or modify any
existing Welfare Benefit Plan for retirees, which would result in the
present value of future liabilities under all such Welfare Benefit Plans
for retiree benefits to increase by more than $1,000,000 (unless such
increases are to be paid 100% by the affected retirees). Neither the
Borrowers nor any of their Subsidiaries shall establish or become
obligated to any new unfunded Pension Plan, or modify any existing
unfunded Pension Plan, which would result in the present value of future
liabilities under all such Pension Plans to increase by more than
$1,000,000. Neither the Borrowers nor any Subsidiary of a Borrower with
respect to Qualified Plans (that are not Title IV Plans), and none of
the Borrowers, any Subsidiary or any Borrower or any ERISA Affiliate
with respect to Title IV Plans shall satisfy any liability in the event
of the termination of any such Plans by purchasing annuities from an
insurance company without the written consent of the Agent which consent
shall not be unreasonably withheld. Neither the Borrowers nor any
Subsidiary of any Borrower with respect to Qualified Plans (that are not
Title IV Plans), and none of the Borrowers, any Subsidiary of any
Borrower or any ERISA Affiliate with respect to Title IV Plans shall
satisfy any liability under any such Plans that are ongoing by
purchasing annuities from an insurance company that is not AAA rated by
Standard & Poor's Corporation or the equivalent by another rating agency
at the time of such purchase without the written consent of the Agent,
which consent shall not be unreasonably withheld. Neither the
Borrowers, any Subsidiary of a Borrower or any ERISA Affiliate shall
become obligated to contribute to any Multiemployer Plan without the
written consent of the Agent which consent shall not be unreasonably
withheld.
6.13. Management and Advisory Fees. Pay any management,
advisory, consulting or similar fee to JMB or any salary to any JMB
employee other than as described on Schedule 6.13, or (b) distribute to
JMB the $810,000 "deferred distribution" described in the 1991 Annual
Financial Statement of the Partnership unless the conditions set forth
in Section 6.8 shall have been satisfied.
6.14. Cash Balances. Permit the aggregate amount of Cash
Balances maintained by the Borrowers at any bank or other institution
(other than the Banks) to exceed $5,000,000; provided, however, that all
Cash Balances maintained at either Chemical or NationsBank shall be
pledged to the Banks pursuant to the Security Agreement; provided,
further, that the aggregate amount of the Borrowers' Cash Balances shall
not exceed $7,000,000 while any Revolving Credit Loans are outstanding;
and provided, further, that Cash Balances of the Borrowers in excess of
$5,000,000 at any time when there are no Revolving Credit Loans
outstanding shall be pledged to the Agent for the ratable benefit of the
Banks.
6.15. Equity Offerings. The Borrowers shall not institute,
cause to be instituted, or be a party to any equity offering with
respect to the Mortgaged Properties, other than with respect to existing
Equity Clubs and Equity Memberships in (i) the Weston Hills Golf and
Country Club located on the Weston Property, (ii) the River Hills Golf
and Country Club located on the River Hills Property, or (iii) the
Oakbridge Golf and Country Club located on the Jacksonville Properties
and (iv) the Cullasaja Club located on the Cullasaja Property; provided,
however, that the Applicable Release Percentage of the Net Cash Proceeds
of any such Equity Membership offering shall be applied to the
installments of principal in respect of Term Loans due under Section
2.6(a) in the inverse order of maturity and upon the satisfaction
thereof to the installments of principal in respect of I/P Loans due
under Section 2.6(b) in the inverse order of maturity.
6.16. IOC Land Trust and IOC Mortgage. Amend, modify or
supplement the IOC Land Trust in any material respect without the
consent of the Agent or enter into or record any notice limiting future
advances under the IOC Mortgage.
6.17. Equitable Mortgage. Amend, modify or in any way
alter or permit the alteration of any of the terms of the Equitable
Mortgage or grant any consents or waivers under the Equitable Mortgage
without the prior written consent of Agent, which consent may be
withheld or denied in Agent's sole and absolute discretion.
6.18. Grand Bay Loan. Amend, modify or in any way alter or
permit the alteration of any of the release provisions of the Grand Bay
Loan documents as they relate to the therein described "Community
Association Parcel" without the prior written consent of Banks.
ARTICLE VII EVENTS OF DEFAULT
In case of the happening of any of the following events
(herein called "Events of Default"):
(a) any representation or warranty made, or deemed made
pursuant to Section 4.1, other than any breach of the representations
and warranties contained in Section 3.23 which have been cured pursuant
to Section 5.11, in or in connection with any Loan Document or the
borrowings or extensions of credit hereunder or in any report,
certificate, financial statement or other instrument furnished in
connection with any Loan Document shall prove to have been false or
misleading in any material respect when made;
(b) default shall be made in the payment of any amount
required to be paid pursuant to Section 2.13 within the period such
payment is required pursuant to such Section, and such default shall
continue unremedied for a period of three Business Days;
(c) default shall be made in the payment of any principal
of any Note (other than an amount referred to in (b) above) or LC
Disbursement when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise, and such default shall continue
unremedied for a period of three Business Days;
(d) default shall be made in the payment of any interest
on any Note or LC Disbursement or any Fee or any other amount (other
than an amount referred to in (b) or (c) above) due under any Loan
Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of three Business Days;
(e) except as provided in clause (g) below, default shall
be made in the due observance or performance of any covenant, condition
or agreement contained in Section 5.4(f), 5.4(g), 5.4(j), 5.11, 6.1, 6.2
(other than Section 6.2(c)) or 6.4, and in the case of Section 5.11 such
default shall continue unremedied for a period of fifteen (15) days
after notice thereof from the Agent;
(f) default shall be made in the due observance or
performance of any other covenant, condition or agreement to be observed
or performed on the part of any Borrower under the terms of any Loan
Document (other than those specified in (b), (c), (d) or (e) above) and
such default shall continue unremedied for a period of forty-five (45)
days after notice thereof from the LC Bank or the Agent;
(g) any Borrower shall fail to pay any amount with respect
to any of its Indebtedness in excess of $1,000,000 (other than (i) Non-
Recourse Indebtedness and (ii) up to two Guarantees aggregating not in
excess of $15,000,000 for all Borrowers, and up to an aggregate of
$2,000,000 of other unsecured Indebtedness, provided that, in the case
of all such unsecured Indebtedness, the Borrowers shall be contesting in
accordance with Section 5.3 the obligations thereunder with respect to
which they have failed to comply) when and as the same shall become due
and payable, or shall fail to observe or perform any term, covenant,
condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness, and the effect thereof is
to cause or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf (with or without the giving of notice,
lapse of time or both) to cause such Indebtedness to become due prior to
its stated maturity;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Borrower or of a substantial part
of the property or assets of any Borrower, under Title 11 of the United
States Code or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
any Borrower or for a substantial part of the property or assets of any
Borrower, or (iii) the winding-up or liquidation of any Borrower; and
such proceeding or petition shall continue unstayed and undismissed for
sixty (60) days, or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for thirty (30) days;
(i) any Borrower shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any such proceeding or
the filing of any such petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for any Borrower or for a substantial part of its
property or assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(j) a final judgment, other than any such judgment the
amount of which is covered by insurance provided by third party insurers
for the benefit of such Borrower to an extent satisfactory to the Agent
in its sole discretion, for the payment of money (which alone or when
aggregated with all other unpaid judgments against the Borrowers at such
time, is in the amount of $1,000,000 or more) shall be rendered against
any Borrower and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be
effectively stayed;
(k) (i) With respect to any Plan, a prohibited
transaction within the meaning of Section 4975 of the IRC or Section 406
of ERISA shall occur which in the reasonable determination of the Agent
could result in direct or indirect liability to any Borrower or any of
its Subsidiaries, (ii) with respect to any Title IV Plan, the filing of
a notice to voluntarily terminate any such plan in a distress
termination, (iii) with respect to any Multiemployer Plan, any Borrower,
any of its Subsidiaries or any ERISA Affiliate shall incur any
Withdrawal Liability, (iv) with respect to any Qualified Plan, any
Borrower, any of its Subsidiaries or any ERISA Affiliate shall incur an
accumulated funding deficiency or request a funding waiver from the IRS,
or (v) with respect to any Title IV Plan or Multiemployer Plan which has
an ERISA Event not described in clauses (ii) -- (iv) hereof, in the
reasonable determination of the Agent there is a reasonable likelihood
for termination of any such plan by the PBGC; provided, however, that
the events listed in clauses (i) -- (v) hereof shall constitute Events
of Default only if the liability, deficiency or waiver request of such
Borrower, any of its Subsidiaries or any ERISA Affiliate, whether or not
assessed, exceeds $1,000,000 in any case set forth in (i) through (v)
above, or exceeds $1,000,000 in the aggregate for all such cases;
(l) (i) JMB shall cease at any time to control the
Manager or to own, either directly or indirectly, at least a 51%
interest in the Manager, (ii) the Manager shall cease to be the sole
managing general partner of the Partnership, or (iii) the Manager and
the Partnership shall cease to be the sole partners of A/JMB Partners,
(iv) so long as the I/P Loans remain outstanding hereunder, the
Partnership and the Manager shall cease to be the sole partners of
Office Partners or Retail Partners, (v) so long as the I/P Loans remain
outstanding hereunder, JMB/PCH Corporation shall cease to be the sole
general partner of Hotel Partnership, (vi) so long as the I/P Loans
remain outstanding hereunder, Hotel Limited Partners shall cease to be
the sole limited partner of Hotel Partnership, or (vii) WHCC shall cease
to be the sole general partner of Weston; provided, however, that for
purposes of clauses (iv) through (vii) above any Affiliate of the
Borrowers may also become a general partner or limited partner of Office
Partners, Retail Partners, Hotel Partnership or Weston, as the case may
be;
(m) any provision of any Collateral Document shall for any
reason other than being contrary to applicable law or public policy
cease to be valid or enforceable in accordance with its terms, or any
security interest created under any Collateral Document shall cease to
be a valid and perfected first priority security interest or Lien
(except as otherwise stated therein) in any Collateral purported to be
covered thereby; or
(n) the occurrence of an event of default under the
Equitable Mortgage or such Mortgage shall be modified, extended or
enlarged without the prior written consent of the Banks;
then, and in every such event (other than an event with respect to a
Borrower described in paragraph (h) or (i) above), and at any time
thereafter during the continuance of such event, the Agent may, and at
the request of the Banks, shall, by notice to the Borrowers, take either
or both of the following actions, at the same time or different times:
(i) terminate forthwith the Revolving Credit Loan Commitments of the
Banks and the LC Commitment of the LC Bank hereunder, (ii) declare the
Notes and credits in respect of any LC Disbursements then outstanding to
be forthwith due and payable and (iii) deliver a Termination of Release
Notice (as defined in the Escrow Agreement) to the Escrow Agent,
whereupon the principal of the Notes and credits in respect of any LC
Disbursements, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued
hereunder and under any other Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to a Borrower described
in paragraph (h) or (i) above, the Revolving Credit Loan Commitments of
the Banks and the LC Commitment of the LC Bank hereunder shall
automatically terminate and the principal of the Notes and credits in
respect of LC disbursements then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities
of the Borrowers accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrowers, anything contained herein or in any
other Loan Document to the contrary notwithstanding, and the Agent shall
deliver a Termination of Release Notice to the Escrow Agent.
ARTICLE VIII THE AGENT
In order to expedite the various transactions contemplated
by this Agreement, Chemical Bank is hereby appointed to act as Agent on
behalf of the Banks and the LC Bank. Each of the Banks and the LC Bank
hereby irrevocably authorizes and directs the Agent to take such action
on behalf of such Bank or the LC Bank under the terms and provisions of
this Agreement and to exercise such powers hereunder as are specifically
delegated to or required of the Agent by the terms and provisions
hereof, together with such powers as are reasonably incidental thereto.
The Agent is hereby expressly authorized on behalf of the Banks and the
LC Bank, without hereby limiting any implied authority, (a) to receive
on behalf of each of the Banks and the LC Bank any payment of principal
of or interest on the Notes or reimbursement in respect of LC
Disbursements outstanding hereunder and all other amounts accrued
hereunder paid to the Agent, and promptly to distribute to each Bank or
the LC Bank its proper share of all payments so received; (b) to give
notice within a reasonable time on behalf of each of the Banks and the
LC Bank to the Borrowers of any Event of Default specified in this
Agreement of which the Agent has actual knowledge acquired in connection
with its agency hereunder; and (c) to distribute to each Bank and the LC
Bank copies of all notices, agreements and other materials as provided
for in this Agreement as received by the Agent.
Neither the Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or
omitted by any of them hereunder except for its or his own gross
negligence or willful misconduct, or be responsible for any statement,
warranty or representation herein or the contents of any document
delivered in connection herewith or be required to ascertain or to make
any inquiry concerning the performance or observance by any Borrower of
any of the terms, conditions, covenants or agreements of this Agreement
or any other Loan Document. The Agent shall not be responsible to the
Banks or the LC Bank for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the Notes or any
other Loan Document or other instrument to which reference is made
herein or therein. The Agent may deem and treat the payee of any Note
as the owner thereof for all purposes hereof until it shall have
received from the payee of such Note notice, given as provided herein,
of the transfer thereof. The Agent shall in all cases be fully
protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Banks, and, except as
otherwise specifically provided herein, such instructions and any action
taken or failure to act pursuant thereto shall be binding on all the
Banks and the LC Bank. The Agent shall, in the absence of knowledge to
the contrary, be entitled to rely on any paper or document believed by
it in good faith to be genuine and correct and to have been signed or
sent by the proper Person or Persons. Neither the Agent nor any of its
directors, officers, employees or agents shall have any responsibility
to any Borrower on account of the failure or delay in performance or
breach by any Bank or the LC Bank of any of its obligations hereunder or
to any Bank or the LC Bank on account of the failure of or delay in
performance or breach by any other Bank or the LC Bank or any Borrower
of any of their respective obligations hereunder or under any other Loan
Document or in connection herewith or therewith. The Agent may execute
any and all duties hereunder by or through agents or employees and shall
be entitled to advice of legal counsel selected by it with respect to
all matters arising hereunder and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of
such counsel.
With respect to the Loans made and Letters of Credit issued
by it hereunder and the Notes issued to it, the Agent in its individual
capacity and not as an Agent shall have the same rights and powers
hereunder and under any other agreement executed in connection herewith
as any other Bank or the LC Bank and may exercise the same as though it
were not an Agent, and the Agent and its affiliates may accept deposits
from, lend money to and generally engage in any kind of business with
any Borrower or any of its Subsidiaries or other affiliate thereof as if
it were not the Agent.
Each Bank and the LC Bank agrees (i) to reimburse the Agent
in the amount of its pro rata share (based on its Revolving Credit Loan
Commitment hereunder) of any expenses incurred for the benefit of the
Banks or the LC Bank by the Agent, including counsel fees and
compensation of agents and employees paid for services rendered on
behalf of the Banks or the LC Bank, not reimbursed by any Borrower and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its pro rata
share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against it in its capacity as the Agent or any
of them in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by it or any of them
under this Agreement or any other Loan Document, to the extent not
reimbursed by any Borrower provided that no Bank or the LC Bank shall be
liable to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or
agents.
Each Bank and the LC Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank or
the LC Bank and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank and the LC Bank also acknowledges that it
will, independently and without reliance upon the Agent or any other
Bank or the LC Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own decisions
in taking or not taking action under or based upon this Agreement or any
other Loan Document, any related agreement or any document furnished
hereunder or thereunder.
ARTICLE IX MISCELLANEOUS
9.1. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered or mailed (or in
the case of telegraphic communication, delivered by telex, graphic
scanning or other telegraphic communications equipment of the sending
party), addressed:
(a) if to any Borrower, in care of Arvida/JMB Managers,
Inc., 900 North Michigan Avenue, Chicago, Illinois 60601, Attention of
Stephen A. Lovelette (Telecopy No.: 312-915-2310), with a copy to White
& Case, 200 South Biscayne Blvd., Miami, Florida 33131-2352, Attention
of H. William Walker, Esq. (Telecopy No.: 305-358-5744);
(b) if to the Agent or the LC Bank, to it at 380 Madison
Avenue (11th Floor), New York, New York 10017, Attention of Thomas S.
Matesich (Telecopy No.: 212-622-3580), with a copy to Weil, Gotshal &
Manges, 767 Fifth Avenue, New York, New York 10153, Attention of J.
Philip Rosen, Esq. (Telecopy No.: 212-310-8007); and
(c) if to a Bank, at its address set forth in Section 2.2.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if hand delivered or delivered by
telex or any other telegraphic communications equipment of the sender or
five Business Days after dispatch by certified or registered mail, in
each case addressed to such party as provided in this Section 9.1 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.1.
9.2. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrowers herein, in any
other Loan Document and in the certificates or other instruments
prepared or delivered in connection with this Agreement shall be
considered to have been relied upon by the Banks and the LC Bank and
shall survive the making by the Banks of the Loans, the execution and
delivery to the Banks of the Notes evidencing such Loans and the
issuance of the LC Bank of any Letter of Credit and shall continue in
full force and effect as long as the principal of or any accrued
interest on any Note or LC Disbursement or any Fee or any other amount
payable under the Notes or this Agreement is outstanding and unpaid and
so long as the Revolving Credit Loan Commitments have not been
terminated.
9.3. Binding Effect; No Borrower Assignment. This
Agreement shall become effective when it shall have been executed by the
Borrowers and the Agent and when the Agent shall have been notified by
each Bank and the LC Bank that such Bank or the LC Bank has executed it
and thereafter shall be binding upon and inure to the Benefit of the
Borrowers, the Agent and each Bank and the LC Bank and their respective
successors and assigns, except that no Borrower shall have the right to
assign its rights hereunder or any interest herein without the prior
written consent of all the Banks and the LC Bank.
9.4. Bank Assignment and Participation.
(a) Each Bank and the LC Bank shall be permitted to assign
all or any part of its rights hereunder, and with the consent of the
Borrowers so long as no Event of Default shall have occurred and be
continuing (which consent shall not be unreasonably withheld in the case
of assignments by the Banks), to assign and cause to be assumed by
another bank all or any part of its Revolving Credit Loan Commitment
(and such Bank or the LC Bank shall be relieved of such Revolving Credit
Loan Commitment to the extent of any such assumptions); provided,
however, that any assignment of rights or Revolving Credit Loan
Commitments shall be made expressly subject to the rights of the
Borrowers, the other Banks and the LC Bank set forth in Section 9.4(b);
and, provided, further, that the Borrowers shall not be required to
consent to any assignment that would result in Chemical holding less
than 20% of the Revolving Credit Loan Commitments or the LC Commitment.
(b) The Borrowers may at any time designate a particular
Bank or the LC Bank (other than the Agent) (a "Designated Bank" or "LC
Bank") for termination of its rights and obligations hereunder and under
its Notes or Letter of Credit Documents by notice to the Agent and such
Designated Bank or LC Bank. Upon receipt of such notice, the Agent will
notify all other Banks or the LC Bank, stating the amount of the
Revolving Credit Loan Commitments and the Loans or LC Disbursements in
respect of the Designated Bank or LC Bank. Each such other Bank or the
LC Bank shall be entitled to have assigned and delegated to it its pro
rata share of the amount of the Revolving Credit Loan Commitments and
the Loans or the LC Disbursements in respect of such Designated Bank or
LC Bank and, if any of such other Banks or the LC Bank declines to
exercise its entitlement to any extent, a pro rata share of such
unexercised entitlement (considering only the Banks or the LC Bank who
desire to obtain such unexercised entitlement). If the other Banks or
the LC Bank desire to take up less than all of the Revolving Credit Loan
Commitments and the Loans or LC Disbursements of the Designated Bank or
LC Bank, the Banks or the LC Bank (excluding the Designated Bank or LC
Bank) may (but shall not be obligated to) unanimously agree to permit a
new bank or letter of credit bank proposed by the Borrowers to become a
Bank or the LC Bank for the purpose of becoming the assignee and
delegatee of the rights and obligations of the Designated Bank or LC
Bank. Upon the consummation of such assignment and delegation, all
rights and obligations of the Designated Bank or LC Bank hereunder and
under its Notes or its Letter of Credit Documents (including, without
limitation, its Revolving Credit Loan Commitments and its Loans or LC
Disbursements) shall be terminated; provided, however, that no such
rights and obligations shall be terminated unless all of the rights and
obligations of such Designated Bank or LC Bank are so assigned and
delegated. All amounts of Loans and LC Disbursements to be so assigned
and delegated shall be purchased at par value plus accrued interest;
provided, however, that if any Eurodollar Loan is to be so assigned and
delegated on a day other than a day on which such Eurodollar Loan
matures, the Borrowers shall indemnify the Designated Bank or LC Bank
for any loss or expense incurred by such Designated Bank or LC Bank in
accordance with Section 2.16(c). Each Bank and the LC Bank, other than
the Agent, hereby consents to specific enforcement with respect to its
agreements under this Section 9.4(c) if it becomes a Designated Bank or
LC Bank.
(c) Each Bank and the LC Bank may without the consent of
any Borrower sell participation to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Revolving Credit
Loan Commitment and the Loans or LC Disbursements owing to it);
provided, however, that (i) such Bank's or the LC Bank's obligations
under this Agreement shall remain unchanged, (ii) such Bank or the LC
Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrowers, the Agent and
the other Banks and the LC Bank shall continue to deal solely and
directly with such Bank or the LC Bank in connection with such Banks's
or the LC Bank's rights and obligations under this Agreement; and,
provided, further, that any assignment of rights or commitments shall be
made expressly subject to the rights of the Borrowers, the other Banks
and the LC Bank set forth in Section 9.4(b).
(d) In the event of replacement of any Designated Bank or
LC Bank pursuant to Section 9.4(b), any participating bank or other
entity described under Section 9.4(c) may be replaced in the sole
discretion of the Banks or the LC Bank that replaced the Designated Bank
or LC Bank. The purchase price and the other terms and conditions with
respect to replacement of a Designated Bank or LC Bank, including
specific enforcement of this agreement, shall apply to replacement of
each such participating bank or other entity, except that
indemnification of losses or expenses incurred by a participating bank
or other entity in connection with termination of its participation in
any Eurodollar Loan shall be paid by the Designated Bank or LC Bank.
9.5. Expenses; Indemnity. (a) The Borrowers agree to pay
all out-of-pocket expenses reasonably incurred by the Agent in
connection with the preparation of this Agreement, the Notes and the
other Loan Documents or with any amendments, modifications or waivers of
the provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or reasonably incurred by the Agent,
the Banks or the LC Bank in connection with the enforcement or
protection of their rights in connection with this Agreement and the
other Loan Documents or in connection with the Loans made or the Notes
or Letters of Credit issued hereunder or thereunder, including, but not
limited to, the reasonable fees and disbursements of Weil, Gotshal &
Manges, special counsel for the Banks and the LC Bank, and of any
separate counsel retained by the LC Bank in connection with the
preparation of any Letter of Credit Documents, and, in connection with
such enforcement or protection, the reasonable fees and disbursements of
any other counsel for the Agent, the Banks or the LC Bank. The
Borrowers further agree that they shall indemnify the Banks and the LC
Bank from and hold them harmless against any documentary taxes,
assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement or any of the Notes or
other Loan Documents.
(b) The Borrowers agree to indemnify each Bank and the LC
Bank and its directors, officers, employees and agents (each such Person
being called an "Indemnitee") against, and to hold such Indemnitee
harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses,
incurred by or asserted against any Indemnitee arising out of, in any
way connected with, or as a result of (i) the use of any Letter of
Credit or any of the proceeds of the Loans, or (ii) any claim,
litigation, investigation or proceedings relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided,
however, that such indemnity shall not be available to either Chemical,
NationsBank or the LC Bank to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final judgment to have resulted from its gross
negligence or willful misconduct or that of its respective directors,
officers, employees or agents.
(c) The Borrowers hereby agree to indemnify and hold the
Agent and the Banks harmless from any and all losses, liabilities,
damages, penalties, judgments, actions, claims, costs and expenses
(including, without limitation, fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and
feasibility studies) based upon, attributable to or resulting from (i)
any misrepresentations or breach of warranty on the part of the
Borrowers under Section 3.17 or (ii) any Environmental Claim, any
Environmental Lien or any Remedial Action arising out of or based upon
anything relating to the real property owned by the Borrowers or their
respective Subsidiaries and their facilities or operations.
(d) Notwithstanding the foregoing, the Agent and the Banks
shall have the right, without prior consent of the Borrowers, to assign
their rights to indemnification hereunder in connection with any
assignment of their Loans or Commitment permitted hereunder. Any
assignee shall have a similar right to assign the rights to
indemnification hereunder upon any assignment and notice thereof to the
Borrowers. The Borrowers shall be liable to such assignee or successor
in all the same respects as if such assignee or successor were the
original Agent or Banks hereunder and each such assignee or successor
shall be entitled to enforce its indemnification rights hereunder
directly against the Borrowers. No such assignment shall relieve the
Borrowers of their obligations to the assignor hereunder and, without
limiting the generality of the foregoing, each such assignor shall be
entitled, despite such assignment, to its rights to indemnification by
the Borrowers hereunder.
(e) The provisions of this Section 9.5 shall remain
operative and in full force and effect regardless of the expiration of
the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the invalidity
or unenforceability of any term or provision of this Agreement or any
Note, or any investigation made by or on behalf of any Bank or the LC
Bank. All amounts due under this Section 9.5 shall be payable on
written demand therefor.
9.6. Right of Setoff. If an Event of Default shall have
occurred and be continuing and any Bank or the LC Bank shall have
requested the Agent to declare the Notes and credits in respect of the
LC Disbursements immediately due and payable pursuant to Article VII,
each Bank and the LC Bank is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such
Bank or the LC Bank to or for the credit or the account of any Borrower
against any of and all the obligations of such Borrower now or hereafter
existing under this Agreement and the Notes and the other Loan Documents
held by such Bank or the LC Bank, irrespective of whether or not such
Bank or the LC Bank shall have made any demand under this Agreement or
such Note or other Loan Document and although such obligations may be
unmatured. The rights of each Bank and the LC Bank under this Section
are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Bank or the LC Bank may
have.
9.7. Applicable Law. This Agreement and the Notes and
other Loan Documents shall (except as may be set forth therein) be
construed in accordance with and governed by the laws of the State of
New York.
9.8. Payments on Business Days. Should the principal of or
interest on the Notes or any credit in respect of LC Disbursements or
any Fee or any other amount payable hereunder become due and payable on
other than a Business Day, payment in respect thereof may be made on the
next succeeding Business Day, and such extension of time shall in such
case be included in computing interest, if any, in connection with such
payment.
9.9. Waivers; Amendment.
(a) No failure or delay of the Agent, any Bank or the LC
Bank in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of
the Banks and the LC Bank hereunder are cumulative and exclusive of any
rights or remedies which they would otherwise have. No waiver of any
provision of this Agreement or the Notes and other Loan Documents or
consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be authorized as provided in paragraph
(b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or
demand on any Borrower in any case shall entitle such Borrower to any
other or further notice or demand in similar or other circumstances.
Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether
or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrowers and the Agent, with
the written consent of the Required Banks; provided, however, that no
such agreement shall (i) change the principal amount of, or extend or
advance the maturity of or any date for the payment of any principal of
or interest on, any Note or any credit in respect of LC Disbursements,
or waive or excuse any such payment or any part thereof, or change the
rate of interest on any Note or any credit in respect of LC
Disbursements, without the written consent of each holder or the LC Bank
affected thereby, (ii) change the Revolving Credit Loan Commitment of
any Bank or the LC Bank without the written consent of such Bank or the
LC Bank, or change the Commitment Fees without the written consent of
each Bank or the LC Fee without the written consent of the LC Bank, or
(iii) amend or modify the provisions of this Section or the definition
of the "Required Banks", without the written consent of each Bank and
the LC Bank; and, provided, further, that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Agent hereunder
without the written consent of the Agent. Each Bank and holder of any
Note shall be bound by any modification or amendment authorized by this
Section regardless of whether its Notes shall be marked to make
reference thereto, and any consent by any Bank or holder of a Note
pursuant to this Section shall bind any Person subsequently acquiring a
Note from it, whether or not such Note shall be so marked.
9.10. Nature of Obligations.
(a) All obligations of the Borrowers under this Agreement,
the Notes and other Loan Documents shall, subject to Section 9.10(b), be
joint and several, including, without limitation, obligations in respect
of the payment of principal of or interest on the Notes and credits in
respect of LC Disbursements or any Fee or other amount payable hereunder
or thereunder. Anything in this Agreement or any other Loan Document to
the contrary notwithstanding it is expressly agreed that each Bank and
the LC Bank shall look solely to the assets of the Borrowers for the
payment and performance of the obligations of the Borrowers under, in
respect of or in connection with the Loan Documents and neither any Bank
or the LC Bank, nor its successors or assigns, shall have any recourse
of any kind whatsoever for or with regard to any indebtedness, liability
or obligation under, in respect of or in connection with the Loan
Documents, whether or not so provided herein or therein, against any of
the following Persons who are not themselves a Borrower: any partner,
officer or employee or agent of any Borrower that is a partnership; any
shareholder, officer, director, employee or agent of any Borrower that
is a corporation; any partner in or employee or officer or agent of any
partnership which is a constituent partner of any Borrower that is a
partnership; or any shareholder, officer, director, employee or agent of
any corporation which is a constituent partner of any Borrower that is a
partnership. For the purposes of this Agreement, neither the negative
capital account of a partner nor any obligation of any partner to
restore a negative capital account or to contribute capital to a
partnership shall be deemed to be the "property" or an "asset" of a
partnership (and neither any Bank or the LC Bank, nor any successors or
assigns of any Bank or the L/C Bank, shall have any right to collect,
enforce or proceed against or with respect to any such negative capital
account or partner's obligation to restore or contribute).
(b) To the extent that Office Partners, Retail Partners,
Hotel Partnership or Weston shall be required to repay a portion of the
Term Loans or I/P Loans which shall exceed the greater of (i) the amount
of such Loans actually received by such Borrower and (ii) the amount
which such Borrower would otherwise have paid if such Borrower had
repaid the aggregate amount of such Loans (excluding the amount thereof
repaid by the Borrowers) in the same proportion as each such Borrower's
net worth immediately after the Closing Date bears to the aggregate net
worth of all the Borrowers immediately after the Closing Date, then such
Borrower shall be reimbursed by the other Borrowers for the amount of
such excess, pro rata based on their respective net worths immediately
after the Closing Date. Any term or provision of this Agreement or any
other Loan Document to the contrary notwithstanding, the maximum,
aggregate amount of the Term Loans and I/P Loans for which such Borrower
shall be liable shall not exceed the maximum amount that such Borrower
can be liable for without rendering this Agreement or any other Loan
Document, as it relates to such Borrower, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer.
9.11. Publicity. Each of the Borrowers agrees to notify
the Agent prior to any regulatory filing (other than any reports of the
Borrowers filed with the Securities and Exchange Commission on Forms 10-
K and 10-Q and any amendments thereto), document distribution or other
disclosure or public announcement in which reference is to be made to
the Agent, any Bank or the LC Bank, this Agreement or the Loans or
Letters of Credit contemplated hereby.
9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes or any other Loan
Document should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected
or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
9.13. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all
of which when take together shall constitute but one contract, and shall
become effective as provided in Section 9.3.
9.14. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
9.15. Release.
(a) Borrowers acknowledge that they are executing this
Agreement as their own voluntary act and free from duress and undue
influence and upon and with the advice of counsel. Borrowers hereby
unconditionally and irrevocably release, acquit and discharge Chemical
Bank, NationsBank and their respective employees, officers, directors,
agents, servants and counsel (collectively, the "Released Parties") from
any and all claims, demands whatsoever, known or unknown, at law or in
equity, irrespective of whether such claims arise out of contract, tort,
violation of laws or regulations or otherwise, which Borrowers ever had,
now have or hereafter can, shall or may have against the Released
Parties or any of them for, upon, or by reason of any matter, cause or
thing whatsoever arising, from the beginning of the world to and
including the execution and delivery hereof, out of, in connection with,
or related in any manner to the Existing Agreement, the Loans, the
Collateral Documents or this Agreement (collectively, the "Claims").
Without limiting the generality of the foregoing, the term "Claims"
shall include, without limitation, any loss, liability, expense and/or
detriment, of any kind or character, in any way arising out of,
connected with, or resulting from the acts or omissions of the Released
Parties or any of them, including, without limitation, the contracting
for, charging, taking, reserving, collecting or receiving interest in
excess of the highest lawful rate, any breach of fiduciary duty, breach
of any duty of fair dealing, breach of confidence, cause of action based
on the negligence of the Banks or the Agent, any "lender liability"
theories, breach of funding commitment, undue influence, duress,
economic coercion, conflict of interest, negligence, bad faith,
malpractice, violations of the Racketeer Influenced and Corrupt
Organizations Act, intentional or negligent infliction of mental
distress, tortious interference with contractual relations, tortious
interference with corporate governance or prospective business
advantage, breach of contract, fraud, mistake, deceptive trade
practices, libel, slander, conspiracy, or any claim for wrongfully
taking any action in connection with the Loan. The foregoing release
shall not apply to any claims, demands, actions, causes of actions,
suits, debts, costs, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, expenses and liabilities arising out of
this Agreement, the Loans or the Collateral Documents after the
execution and delivery of this Agreement.
9.16. No Third Party Beneficiaries. This Agreement shall
not be deemed to confer in favor of any third parties any rights
whatsoever as third-party beneficiaries or otherwise.
9.17. JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL
OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO (INCLUDING WITHOUT
LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT AND ANY
CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY
INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL
INDUCEMENT FOR THE BANKS TO ENTER INTO THIS AGREEMENT AND SHALL SURVIVE
THE CLOSING OR ANY TERMINATION OF THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement has been duly executed in
New York, New York as of the date first written above.
ARVIDA/JMB PARTNERS, L.P.
By: ARVIDA/JMB MANAGERS,
INC., as General Partner
By:
Title:
ARVIDA/JMB PARTNERS
By: ARVIDA/JMB MANAGERS,
INC., as General Partner
By:
Title:
SOUTHEAST FLORIDA HOLDINGS,
INC.
By:
Title:
CENTER OFFICE PARTNERS
By: ARVIDA/JMB PARTNERS, L.P.,
as General Partner
By: ARVIDA/JMB MANAGERS, INC.,
as General Partner
By:_______________________
Title:
CENTER RETAIL PARTNERS
By: ARVIDA/JMB PARTNERS, L.P.,
as General Partner
By: ARVIDA/JMB MANAGERS, INC.
By:
Title:
CENTER HOTEL LIMITED PARTNERSHIP
By: JMB/PCH CORPORATION,
as General Partner
By:_____________________________
Title:
WESTON HILLS COUNTRY
CLUB LIMITED PARTNERSHIP
By: WHCC, INC. as
General Partner
By:
Title:
<PAGE>
CHEMICAL BANK,
as Agent, LC Bank and a Bank
By:
Title:
NATIONSBANK OF FLORIDA, N.A.
By:
Title:<PAGE>
TABLE OF CONTENTS
ARTICLE Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . 3
ARTICLE II RESTRUCTURING OF EXISTING CREDITS;
THE LOANS AND LETTERS OF CREDIT . . . . . 39
2.1. Restructuring of Existing Credits; Issuance of
Renewal Notes; Ratification of Security Interests 39
2.2. Revolving Credit Loan Commitments . . . . . . 42
2.3. Revolving Credit Loans. . . . . . . . . . . . 44
2.4. Fees. . . . . . . . . . . . . . . . . . . . . 45
2.5. Notice of Revolving Credit Loans. . . . . . . 46
2.6. Term Loan Repayment; I/P Loan Repayment . . . 47
2.7. Termination and Reduction of Revolving Credit Loan
Commitments . . . . . . . . . . . . . . . . . 48
2.8. Conversion and Continuation of Term Loans and I/P
Loans . . . . . . . . . . . . . . . . . . . . 49
2.9. Notes . . . . . . . . . . . . . . . . . . . . 51
2.10. Interest on Loans . . . . . . . . . . . . . . 52
2.11. Default Interest. . . . . . . . . . . . . . . 52
2.12. Alternate Rate of Interest. . . . . . . . . . 53
2.13. Prepayment of Loans . . . . . . . . . . . . . 53
2.14. Reserve Requirements; Change in Circumstances 58
2.15. Change in Legality. . . . . . . . . . . . . . 59
2.16. Indemnity . . . . . . . . . . . . . . . . . . 60
2.17. Pro Rata Treatment. . . . . . . . . . . . . . 61
2.18. Sharing of Setoffs. . . . . . . . . . . . . . 62
2.19. Borrowing Base Determinations; Appraisal
Requirements. . . . . . . . . . . . . . . . . 62
2.20. Letters of Credit . . . . . . . . . . . . . . 65
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . 68
3.1. Organization; Powers. . . . . . . . . . . . . 68
3.2. Authorization . . . . . . . . . . . . . . . . 68
3.3. Enforceability. . . . . . . . . . . . . . . . 69
3.4. Governmental Approval . . . . . . . . . . . . 69
3.5. Financial Statements. . . . . . . . . . . . . 69
3.6. No Material Adverse Change. . . . . . . . . . 70
3.7. Title to Properties; Possession Under Leases. 70
3.8. Identity of Subsidiaries and Joint Ventures . 70
3.9. Litigation; Compliance with Laws. . . . . . . 71
3.10. Agreements. . . . . . . . . . . . . . . . . . 71
3.11. Federal Reserve Regulations . . . . . . . . . 71
3.12. Investment Company Act; Public Utility Holding
Company Act . . . . . . . . . . . . . . . . . 72
3.13. Use of Proceeds . . . . . . . . . . . . . . . 72
3.14. Tax Returns; Documentary Stamp and Intangibles Taxes 72
3.15. No Material Misstatements . . . . . . . . . . 73
3.16. Employee Benefit Plans. . . . . . . . . . . . 73
3.17. Environmental Protection. . . . . . . . . . . 75
3.18. Deposit Accounts. . . . . . . . . . . . . . . 77
3.19. Labor Matters . . . . . . . . . . . . . . . . 77
3.20. Management Agreements . . . . . . . . . . . . 77
3.21. Equity Memberships; Non-Equity Clubs. . . . . 78
3.22. Mortgage Receivables. . . . . . . . . . . . . 78
3.23. Collateral. . . . . . . . . . . . . . . . . . 78
3.24. Intentionally Omitted . . . . . . . . . . . . 78
3.25. Partnership Agreements. . . . . . . . . . . . 78
3.26. No Public Offerings . . . . . . . . . . . . . 78
3.27. Contracts of Sale . . . . . . . . . . . . . . 79
3.28. Equipment Financing . . . . . . . . . . . . . 79
3.29. Management Fees . . . . . . . . . . . . . . . 79
3.30. Fictitious Name Filings . . . . . . . . . . . 79
ARTICLE IV CONDITIONS OF LENDING AND OTHER EXTENSIONS
OF CREDIT AND TO EFFECTIVENESS. . . . 79
4.1. All Borrowings and Extensions of Credit. . . . 79
4.2. Effectiveness. . . . . . . . . . . . . . . . . 80
ARTICLE V AFFIRMATIVE COVENANTS. . . . . . . . . . . . . 86
5.1. Existence; Businesses and Properties. . . . . 86
5.2. Insurance . . . . . . . . . . . . . . . . . . 87
5.3. Obligations and Taxes . . . . . . . . . . . . 88
5.4. Financial Statements, Reports, etc. . . . . . 88
5.5. Litigation and Other Notices. . . . . . . . . 92
5.6. ERISA . . . . . . . . . . . . . . . . . . . . 93
5.7. Maintaining Records; Access to Properties and
Inspections . . . . . . . . . . . . . . . . . 95
5.8. Environmental Notices . . . . . . . . . . . . 96
5.9. Compliance with Environmental Laws. . . . . . 97
5.10. Bank Accounts . . . . . . . . . . . . . . . . 97
5.11. Further Assurances. . . . . . . . . . . . . . 98
5.12. Georgia Intangibles Tax . . . . . . . . . . . 99
5.13. IOC Mortgage. . . . . . . . . . . . . . . . . 99
5.14. Equitable Mortgage. . . . . . . . . . . . . .100
5.15. Title Updates . . . . . . . . . . . . . . . .101
5.16. Grand Bay Mortgage. . . . . . . . . . . . . .101
ARTICLE VI NEGATIVE COVENANTS. . . . . . . . . . . . . .101
6.1. Indebtedness . . . . . . . . . . . . . . . . .101
6.2. Liens, Etc . . . . . . . . . . . . . . . . . .102
6.3. Investments, Loans and Advances. . . . . . . .103
6.4. Joint Ventures/Contingent Interest . . . . . .104
6.5. Transactions with Affiliates . . . . . . . . .106
6.6. Business of Borrowers and Subsidiaries Taken as a
Whole . . . . . . . . . . . . . . . . . . . .106
6.7. Mergers, Consolidations and Sales of All or
Substantially All Assets. . . . . . . . . . .106
6.8. Partnership Distributions. . . . . . . . . . .107
6.9. Residential Real Estate. . . . . . . . . . . .109
6.10. Acquisitions. . . . . . . . . . . . . . . . .109
6.11. Sales of Assets; Release Prices . . . . . . .109
6.12. ERISA . . . . . . . . . . . . . . . . . . . .111
6.13. Management and Advisory Fees. . . . . . . . .112
6.14. Cash Balances . . . . . . . . . . . . . . . .112
6.15. Equity Offerings. . . . . . . . . . . . . . .112
6.16. IOC Land Trust and IOC Mortgage . . . . . . .113
6.17. Equitable Mortgage. . . . . . . . . . . . . .113
6.18. Grand Bay Loan. . . . . . . . . . . . . . . .113
ARTICLE VII EVENTS OF DEFAULT. . . . . . . . . . . . . .113
ARTICLE VIII THE AGENT . . . . . . . . . . . . . . . . .118
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . .120
9.1. Notices . . . . . . . . . . . . . . . . . . .120
9.2. Survival of Agreement . . . . . . . . . . . .121
9.3. Binding Effect; No Borrower Assignment. . . .121
9.4. Bank Assignment and Participation . . . . . .122
9.5. Expenses; Indemnity . . . . . . . . . . . . .124
9.6. Right of Setoff . . . . . . . . . . . . . . .126
9.7. Applicable Law. . . . . . . . . . . . . . . .126
9.8. Payments on Business Days . . . . . . . . . .126
9.9. Waivers; Amendment. . . . . . . . . . . . . .126
9.10. Nature of Obligations . . . . . . . . . . . .127
9.11. Publicity . . . . . . . . . . . . . . . . . .129
9.12. Severability. . . . . . . . . . . . . . . . .129
9.13. Counterparts. . . . . . . . . . . . . . . . .129
9.14. Headings. . . . . . . . . . . . . . . . . . .129
9.15. Release . . . . . . . . . . . . . . . . . . .129
9.16. No Third Party Beneficiaries. . . . . . . . .131
9.17. JURY TRIAL. . . . . . . . . . . . . . . . . .131
Exhibit A - Form of Revolving Credit Note
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of I/P Note
Exhibit B - Form of Borrowing Base
Reconciliation Certificate
Exhibit C - Form of Collateral Assignment of
Partnership Interest
Exhibit D - Form of Escrow Agreement
Exhibit E - Form of Mortgage Amendment
Exhibit F - Form of Mortgage
Exhibit G - Form of Cash Flow Statement
Exhibit H - Form of Pledge Agreement
Exhibit I - Form of Security Agreement
Exhibit J - Form of Revolving Credit Loan Request
Exhibit K - Form of Conversion Notice
Exhibit L - Letter of Credit Application
Exhibit M - Letter of Credit Notice
Exhibit N - Form of Opinion of Counsel to
the Borrowers
Exhibit O - Form of Notice of Material Adverse Change
Exhibit P - Work in Process Calculation
Exhibit Q - Form of Assignment of Mortgage
Schedule 1.1 - Deposit Accounts
Schedule 1.2 - Equity Memberships
Schedule 1.3 - Escrow Agents
Schedule 1.4 - Land and Property
Schedule 1.5 - Minimum Release Prices
Schedule 1.6 - Residential Real Estate
Schedule 1.7 - IOC Tract
Schedule 1.8 - Subordinate Property
Schedule 1.9 - Mortgage Recording Information
Schedule 2.1 - Existing Credits
Schedule 3.8 - Subsidiaries and Joint Ventures
Schedule 3.9 - Litigation
Schedule 3.16 - ERISA
Schedule 3.17 - Environmental Matters
Schedule 3.19 - Labor Matters
Schedule 3.22 - Mortgage Receivables
Schedule 3.23 - Excluded Assets
Schedule 3.27 - Contracts of Sale
Schedule 4.2 - Closing Documents
Schedule 5.4(g)(i) - Sales/Inventory Valuation Report
Schedule 5.4(g)(ii) - GAAP Adjustments
Schedule 6.1 - Existing Indebtedness
Schedule 6.2 - Existing Liens
Schedule 6.3 - Existing Investments
Schedule 6.4 - Contingent Interest
Schedule 6.8 - Conditional Partnership Distribution
Schedule 6.13 - Management Fees and Salaries
AFFIRMATION AND AMENDMENT OF SECURITY DOCUMENTS
THIS AFFIRMATION AND AMENDMENT OF SECURITY DOCUMENTS ("Amendment") is
made as of the ___ day of November, 1994, by and among ARVIDA/JMB PARTNERS, a
Florida general partnership, having an address c/o Arvida/JMB Managers, Inc.,
900 N. Michigan Avenue, Chicago, Illinois 60601 ("Arvida GP"), ARVIDA/JMB
PARTNERS, L.P., a Delaware limited partnership, having an address c/o
Arvida/JMB Managers, Inc., 900 N. Michigan Avenue, Chicago, Illinois 60601
("Arvida LP"), SOUTHEAST FLORIDA HOLDINGS, INC., an Illinois corporation
("Southeast"), CENTER OFFICE PARTNERS, a Florida general partnership, having
an address c/o Arvida/JMB Managers, Inc., 900 N. Michigan Avenue, Chicago,
Illinois 60601 ("Office Partners"), CENTER RETAIL PARTNERS, a Florida general
partnership, having an address c/o Arvida/JMB Managers, Inc., 900 N. Michigan
Avenue, Chicago, Illinois 60601 ("Retail Partners"), CENTER HOTEL LIMITED
PARTNERSHIP, a Delaware limited partnership, having an address c/o Arvida/JMB
Managers, Inc., 900 N. Michigan Avenue, Chicago, Illinois 60601 ("Hotel
Partnership"), WESTON HILLS COUNTRY CLUB LIMITED PARTNERSHIP, a Delaware
limited partnership, having an address c/o Arvida/JMB Managers, Inc., 900 N.
Michigan Avenue, Chicago, Illinois 60601 ("Weston Partnership"; Arvida GP,
Arvida LP, Southeast, Office Partners, Retail Partners, Hotel Partnership and
Weston Partnership are sometimes hereinafter collectively referred to as
"Borrowers") and CHEMICAL BANK, a New York corporation ("Chemical"), having an
address at 380 Madison Avenue, 11th Floor, New York, New York 10017, as agent
(in that capacity, the "Agent"), on behalf and for the benefit of the Banks
(as defined herein).
W I T N E S S E T H:
WHEREAS, on October 7, 1992, NationsBank of Florida, N.A., a national
banking association ("NationsBank") and Chemical Bank (collectively, the
"Banks") made certain loans (collectively, the "Original Loans") to Borrowers
in the aggregate maximum principal amount of $191,805,195.42 pursuant to the
terms of that certain Amended and Restated Credit Agreement dated as of
October 7, 1992 by and among Borrowers and the Banks (the "Original Credit
Agreement");
WHEREAS, the Original Loans are evidenced by the following promissory
notes: (i) Term Note dated October 7, 1992 (the "Original Chemical Term
Note"), executed by Borrowers in favor of Chemical, in the original principal
amount of $101,444,156.34; (ii) Term Note dated October 7, 1992 (the "Original
NationsBank Term Note"), executed by Borrowers in favor of NationsBank, in the
original principal amount of $25,361,039.08; (iii) Revolving Credit Note dated
October 7, 1992 (the "Original Chemical Revolving Credit Note"), executed by
Borrowers in favor of Chemical, in the original principal amount of
$36,000,000.00; (iv) Revolving Credit Note dated October 7, 1992 (the
"Original NationsBank Revolving Credit Note"), executed by Borrowers in favor
of NationsBank, in the original principal amount of $9,000,000.00 (the
Original Chemical Term Note, the Original NationsBank Term Note, the Original
Chemical Revolving Credit Note and the Original NationsBank Revolving Credit
Note being hereinafter sometimes collectively referred to as the "Original
Non-I/P Notes"); (v) I/P Note dated October 7, 1992 (the "Original Chemical
I/P Note"), executed by Borrowers in favor of Chemical, in the original
principal amount of $16,000,000.00; and (vi) I/P Note dated October 7, 1992
(the "Original NationsBank I/P Note"), executed by Borrowers in favor of
NationsBank, in the original principal amount of $4,000,000.00 (the Original
Chemical I/P Note and the Original NationsBank I/P Note being hereinafter
sometimes collectively referred to as the "Original I/P Notes"; the Original
Non-I/P Notes and the Original I/P Notes being hereinafter sometimes
collectively referred to as the "Original Note");
WHEREAS, the Original Credit Agreement also defined Borrowers'
obligations with respect to a letter of credit facility in the maximum
principal amount of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00)
pursuant to the terms of the Original Credit Agreement and the Letter of
Credit Documents (as defined in the Original Credit Agreement);
WHEREAS, as a condition precedent to the Banks' entering into the
Original Credit Agreement and making the Original Loans, Borrowers executed
and delivered those certain documents more particularly described on Exhibit
"A" attached hereto and made a part hereof (hereinafter collectively referred
to as the "Original Security Documents");
WHEREAS, Borrowers have requested that the Banks modify and renew the
Original Loans pursuant to the terms of that certain Second Amended and
Restated Credit Agreement dated of even date herewith by and among Borrowers
and the Banks (the "Amended Credit Agreement");
WHEREAS, in connection with the modification and renewal of the Original
Loans, the following are occurring contemporaneously with the execution of
this Amendment:
i) (A) the Original Chemical Term Note is being amended, restated
and renewed pursuant to an Amended, Restated and Renewal Term Note dated of
even date herewith (the "Chemical Term Renewal Note"), executed by Borrowers
in favor of Chemical, in the original principal amount of $59,255,582.95; (B)
the Original NationsBank Term Note is being amended, restated and renewed
pursuant to an Amended, Restated and Renewal Term Note dated of even date
herewith (the "NationsBank Term Renewal Note"), executed by Borrowers in favor
of NationsBank, in the original principal amount of $14,813,895.74; (C) the
Original Chemical Revolving Credit Note is being amended, restated and renewed
pursuant to an Amended, Restated and Renewal Revolving Credit Note dated of
even date herewith (the "Chemical Revolving Credit Renewal Note"), executed by
Borrowers in favor of Chemical, in the original principal amount of
$16,000,000.00; and (D) the Original NationsBank Revolving Credit Note is
being amended, restated and renewed pursuant to an Amended, Restated and
Renewal Revolving Credit Note dated of even date herewith (the "Nations Bank
Revolving Credit Renewal Note"), executed by Borrowers in favor of
NationsBank, in the original principal amount of $4,000,000.00 (the Chemical
Term Renewal Note, the NationsBank Term Renewal Note, the Chemical Revolving
Credit Renewal Note and the NationsBank Revolving Credit Renewal Note being
hereinafter sometimes collectively referred to as the "Non-I/P Renewal
Notes"); and
ii) The Original Chemical I/P Note is being amended, restated and
renewed pursuant to an Amended, Restated and Renewal I/P Note dated of even
date herewith (the "Chemical I/P Renewal Note"), executed by Borrowers in
favor of Chemical, in the original principal amount of $14,426,660.80 and the
Original NationsBank I/P Note is being amended, restated and renewed pursuant
to an Amended, Restated and Renewal I/P Note dated of even date herewith (the
"NationsBank I/P Renewal Note"), executed by Borrowers in favor of
NationsBank, in the original principal amount of $3,606,665.20 (the Chemical
I/P Renewal Note and the NationsBank I/P Renewal Note being hereinafter
sometimes collectively referred to as the "I/P Renewal Notes") (the Non-I/P
Renewal Notes and the I/P Renewal Notes being hereinafter sometimes
collectively referred to as the "Renewal Note");
WHEREAS, pursuant to the Amended Credit Agreement, the Agent and
Borrowers have agreed to reduce the letter of credit facility to FIFTEEN
MILLION AND 00/100 DOLLARS ($15,000,000.00);
WHEREAS, it is a condition precedent to the Banks' entering into the
Amended Credit Agreement and modifying and renewing the Original Loans that
Borrowers shall enter into this Amendment;
NOW, THEREFORE, in consideration of the premises, the sum of $10.00 and
other good and valuable consideration, the receipt of which is hereby duly
acknowledged, and in order to be of material benefit and assistance to
Borrowers and in order to induce Banks to renew and modify the Original Loans
and enter into the Amended Credit Agreement, Borrowers hereby agree as
follows:
1. Recitations. Each and all of the foregoing recitals are true and
correct and are incorporated herein by reference. All capitalized terms
utilized herein, unless specifically otherwise defined herein, shall have the
meaning assigned to such terms in the Amended Credit Agreement.
2. References.
(a) The term "Security Documents", as used and defined herein,
shall mean and refer to the Original Security Documents, as modified hereby,
together with any further modifications or amendments thereto.
(b) The term "Credit Agreement", as used and defined herein and
in the Security Documents, shall hereafter mean and refer to the Original
Credit Agreement, as amended and restated by the Amended Credit Agreement,
together with any further modifications or amendments thereto.
(c) The term "Loan Documents", as used and defined herein and in
the Security Documents, shall hereafter have the meaning assigned to such term
in the Credit Agreement.
(d) The term "Loan", as used and defined herein and in the
Security Documents, shall hereafter have the meaning assigned to such term in
the Credit Agreement.
(e) The term "Letter of Credit Documents", as used and defined
herein and in the Security Documents, shall hereafter have the meaning
assigned to such term in the Credit Agreement.
(f) The term "Non-I/P Notes", as used and defined in the Security
Documents, shall include within its meaning and definition the Non-I/P Renewal
Notes and the Original Non-I/P Notes, as such Original Non-I/P Notes have been
amended and restated pursuant to the Non-I/P Renewal Notes.
(g) The term "I/P Notes", as used and defined in the Security
Documents, shall include within its meaning and definition the I/P Renewal
Notes and the Original I/P Notes, as such Original I/P Notes have been amended
and restated by the I/P Renewal Notes.
(h) The term "Note", as used and defined in the Security
Documents shall include within its meaning and definition the Original Note,
as such Original Note has been amended and restated by the Renewal Note.
3. Amendments.
(a) Definitions. The defined terms set forth in each Security
Document are hereby amended in accordance with Section 2 hereof.
(b) Address. The address of Chemical Bank set forth in each
Security Document is hereby deleted and the following address is hereby
inserted in its place and stead:
Chemical Bank
380 Madison Avenue
11th Floor
New York, New York 10017
Attention: Thomas S. Matesich
(c) Waiver of Jury Trial. The waiver of jury trial set forth in
the Assignment of Warranties, the Assignment of Subscription Agreements and
the Agreement of Contracts (as such terms are defined in Exhibit "A" attached
hereto) is hereby deleted and the following provision is hereby inserted in
its place and stead:
"WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND UNCONDITIONALLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED
IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE
RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE
COLLATERAL (INCLUDING, WITHOUT LIMITATION, ANY CLAIM TO RESCIND OR
CANCEL THE LOAN DOCUMENTS, OR ANY CLAIM OR DEFENSE ASSERTING THAT
THE LOAN DOCUMENTS WERE FRAUDULENTLY INDUCED OR ARE OTHERWISE VOID
OR VOIDABLE); THIS WAIVER BEING A MATERIAL INDUCEMENT FOR ASSIGNEE
TO MAKE THE LOAN AND ACCEPT THIS ASSIGNMENT."
(d) Pledge Agreement.
i) The definitions of "Pledged Mortgages" and "Pledged
Notes" set forth in Section 1 of the Pledge Agreement are hereby deleted and
the following definitions are hereby inserted in their respective place and
stead:
"Pledged Mortgages" shall mean the mortgages
securing the Pledged Notes described on Schedule III attached
hereto as supplemented from time to time by any Pledge Amendment,
together with all mortgages securing any Pledged Notes held by any
Escrow Agent pursuant to the terms of any Escrow Agreement.
"Pledged Notes" shall mean the promissory notes issued or
endorsed in favor of any Pledgor and secured by any Pledged
Mortgage, as described on Schedule II attached hereto as
supplemented from time to time by any Pledge Amendment, together
with all promissory notes issued or endorsed in favor of any
Pledgor and held by any Escrow Agent pursuant to the terms of any
Escrow Agreement.
ii) Section 2 of the Pledge Agreement is hereby deleted and the
following provision is hereby inserted in its place and stead:
"2. Pledge. Each Pledgor hereby pledges to Agent,
for its benefit and for the ratable benefit of Lenders, and
grants to Agent, for its benefit and for the ratable
benefit of Lenders, a first priority security
interest in, all of the following (the "Pledged Collateral"):
the Pledged Mortgage Loans of such Pledgor, whether now
owned or hereafter from time to time acquired by
such Pledgor in any manner, the Pledged Debt, and
all principal, interest or other income from the
foregoing, collections thereon or distributions from
time to time received, receivable or otherwise
distributed in respect of or in exchange for any or
all of the Pledged Notes of such Pledgor."
iii) Schedule I to the Pledge Agreement is hereby deleted and
Schedule I attached hereto is hereby substituted in place thereof.
4. Affirmation.
(a) Each of the Borrowers hereby (i) consents to the execution
and delivery by Borrowers of the Renewal Note and of all documents,
instruments, agreements and certificates executed in connection with the
modification and renewal of the Original Loans, (ii) ratifies and affirms its
respective obligations under each Security Document to which such Borrower is
a party, and (iii) ratifies and affirms all of the provisions of each Security
Agreement to which such Borrower is a party. Nothing herein shall be deemed
to waive, release or limit any of the obligations of Borrowers relating to or
otherwise connected with the Original Loans or the Loan.
(b) Each of the Borrowers hereby covenants and agrees that each
Security Document shall remain in full force and effect, except to the extent
modified hereby.
5. Does Not Supersede Original Security Documents. Each of the
Borrowers acknowledges that this Amendment shall not be or be deemed to be a
release or waiver of any such Borrower's obligations under any Security
Documents.
6. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to the Agent that each of the representations
contained in each Security Document, as modified hereby, are true and correct
in material respects as of the date hereof.
7. Miscellaneous.
(a) The obligations and promises set forth herein shall be joint
and several undertakings of each party executing this Amendment, and the Agent
may proceed hereunder against any one or more of said parties without waiving
its right to proceed against any of the others.
(b) Each of the Borrowers agrees to pay any present or future
stamp or documentary taxes, or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to this
Amendment.
(c) If any term, provision, covenant or condition hereof or any
application thereof should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all terms, provisions, covenants and
conditions hereof, and all applications thereof not held invalid, void or
unenforceable shall continue in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
(d) The use of the words "herein", "hereof", "hereunder" and any
other words of similar import refer to this Amendment as a whole and not to
any particular paragraph, subparagraph or other subdivision of this Amendment
unless specifically noted otherwise in this Amendment.
(e) The title of this Amendment and the headings of the
paragraphs of this Amendment are for convenience of reference only, and are
not to be considered a part hereof, and shall not limit or expand or otherwise
affect any of the terms hereof.
(f) In this Amendment, wherever the context so requires, the
neuter gender includes the masculine and/or feminine gender, the singular
numbers include the plural, and the plural numbers include the singular.
(g) This Amendment creates a continuing obligation and the
obligation of each of the Borrowers hereunder shall be binding upon such
Borrowers and its successors, heirs, representatives and assigns, and shall
inure to the benefit of and be enforceable by the Agent and its successors and
assigns, subject to the provisions of Section 9.10 of the Credit Agreement.
8. WAIVER OF JURY TRIAL. BORROWERS AND THE AGENT HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AMENDMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY OR
ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS
OR IN ANY WAY RELATING TO THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, ANY
CLAIM TO RESCIND OR CANCEL THE LOAN DOCUMENTS, OR ANY CLAIM OR DEFENSE
ASSERTING THAT THE LOAN DOCUMENTS WERE FRAUDULENTLY INDUCED OR ARE OTHERWISE
VOID OR VOIDABLE); THIS WAIVER BEING A MATERIAL INDUCEMENT FOR THE AGENT
TO ACCEPT THIS AMENDMENT.
IN WITNESS WHEREOF, Borrowers and the Agent have duly executed this
Amendment as of the day and year first above written.
BORROWERS:
Signed, sealed and delivered ARVIDA/JMB PARTNERS, a
delivered in the presence of: Florida general partnership
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
__________________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
__________________________
Print Name:
ARVIDA/JMB PARTNERS, L.P., a
Florida general partnership
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
__________________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
__________________________
Print Name:
SOUTHEAST FLORIDA HOLDINGS,
INC., an Illinois corporation
By:_________________________
Stephen A. Lovelette
Vice President<PAGE>
CENTER OFFICE PARTNERS, a
Florida general partnership
By: ARVIDA/JMB PARTNERS,
L.P., a Florida general
partnership, as general
partner
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
_______________________ By:______________________
Print Name: Stephen A. Lovelette
Vice President
_______________________
Print Name:
CENTER RETAIL PARTNERS, a
Florida general partnership
By: ARVIDA/JMB PARTNERS,
L.P., a Florida general
partnership, as general
partner
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
_______________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
_______________________
Print Name:
CENTER HOTEL LIMITED
PARTNERSHIP, Delaware limited
partnership
By: JMB/PCH CORPORATION, an Illinois
corporation, as general partner
_______________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
_______________________
Print Name:
WESTON HILLS COUNTRY CLUB
LIMITED PARTNERSHIP, Delaware
limited partnership
By: WHCC, INC., an Illinois corporation,
as general partner
_______________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
_______________________
Print Name:
AGENT:
CHEMICAL BANK, a New York banking
corporation, as agent
_______________________ By:
Print Name: Thomas S. Matesich
Vice President
_______________________
Print Name:
EXHIBIT "A"
Original Security Documents
1. Security Agreement dated as of October 7, 1992 by Borrowers in favor of
the Agent.
2. Pledge Agreement dated as of October 7, 1992 by Borrowers in favor of
the Agent.
3. Assignment of Warranties, Permits Licenses, Management Agreements, Etc.
made by Arvida GP, Office Partners, Retail Partners, Hotel Partnership
and Weston Partnership in favor of the Agent ("Florida Assignment of
Warranties").
4. Assignment of Warranties, Permits, licenses, Management Agreements, Etc.
made by Arvida LP in favor of the Agent
("Georgia Assignment of Warranties"; the Florida Assignment of
Warranties and the Georgia Assignment of Warranties are hereinafter
collectively referred to as the "Assignment of Warranties").
5. Assignment of Contracts dated as of October 7, 1992 made by Arvida GP,
Office Partners, Retail Partners, Hotel Partnership and Weston
Partnership in favor of the Agent (the "Florida Assignment of
Contracts").
6. Assignment of Contracts dated as of October 7, 1992 made by Arvida LP in
favor of the Agent (the "Georgia Assignment of Contracts"; the Florida
Assignment of Contracts and the Georgia Assignment of Contracts are
hereinafter collectively referred to as the "Assignment of Contracts").
7. Assignment of Subscription Agreements, Club Memberships, Membership Fees
and Deposits dated as of October 7, 1992 made by Arvida GP in favor of
the Agent (the "Assignment of Subscription Agreements").
8. Deposit Account Letter Agreement dated as of October 7, 1992 executed by
Arvida LP and the Agent (Chemical Bank Account No. 114-013-160).
9. Deposit Account Letter Agreement dated as of October 7, 1992 executed by
Arvida LP and the Agent (NationsBank of Florida, N.A. Account Nos.
3601544318 and 008-53960).
SCHEDULE I
PLEDGE AMENDMENT
This Pledge Amendment dated ________, 199__ is delivered pursuant to
Section 6(d) of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement dated as of October 7, 1992, by the undersigned and others, as
Pledgors, to Chemical Bank, as Agent for the Lenders, as same may be modified
or amended from time to time, and that the Pledged Debt listed on this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said Pledge Agreement and shall secure all Secured Obligations referred to in
said Pledge Agreement. All of the representations and warranties in the
Pledge Agreement relating to Pledged Collateral are hereby incorporated into
this Pledge Amendment and repeated and restated by the undersigned with
respect to the Pledged Debt and all other Pledged Collateral not heretofore
released by Lenders with the same force and effect as if originally made on
the date hereof.
[Name of Pledgor]
By:_______________________
Title:
Original Balance
Obligor(s) Balance as of
MODIFICATION OF MORTGAGE AND
SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS
THIS MODIFICATION OF MORTGAGE AND SECURITY AGREEMENT AND OTHER
LOAN DOCUMENTS (this "Agreement") is made as of the ___ day of November,
1994 by and among ARVIDA/JMB PARTNERS, a Florida general partnership,
having an address c/o Arvida/JMB Managers, Inc., 900 N. Michigan Avenue,
Chicago, Illinois 60601 ("Arvida GP"), WESTON HILLS COUNTRY CLUB
LIMITED PARTNERSHIP, a Delaware limited partnership, having an address
c/o Arvida/JMB Managers, Inc., 900 N. Michigan Avenue, Chicago, Illinois
60601 ("Weston Partnership"; Arvida GP and Weston Partnership are
hereinafter collectively referred to as "Mortgagor"), and CHEMICAL BANK,
a New York corporation ("Chemical"), having an address at 380 Madison
Avenue, 11th Floor, New York, New York 10017, as agent (in that
capacity, the "Mortgagee"), on behalf and for the benefit of the Secured
Parties (as defined herein).
R E C I T A L S :
A. On October 7, 1992, NationsBank of Florida, N.A., a national
banking association ("NationsBank") and Chemical Bank (collectively, the
"Secured Parties") made certain loans (collectively, the "Original
Loans") to Mortgagor, Arvida/JMB Partners, L.P., a Delaware limited
partnership, Southeast Florida Holdings, Inc., an Illinois corporation,
Center Office Partners, a Florida general partnership, Center Retail
Partners, a Florida general partnership, and Center Hotel Limited
Partnership, a Delaware limited partnership (collectively, the
"Borrowers") in the aggregate maximum principal amount of
$191,805,195.42.
B. The Original Loans are evidenced by the following promissory
notes: (i) Term Note dated October 7, 1992 (the "Original Chemical Term
Note"), executed by Borrowers in favor of Chemical, in the original
principal amount of $101,444,156.34; (ii) Term Note dated October 7,
1992 (the "Original NationsBank Term Note"), executed by Borrowers in
favor of NationsBank, in the original principal amount of
$25,361,039.08; (iii) Revolving Credit Note dated October 7, 1992 (the
"Original Chemical Revolving Credit Note"), executed by Borrowers in
favor of Chemical, in the original principal amount of $36,000,000.00;
(iv) Revolving Credit Note dated October 7, 1992 (the "Original
NationsBank Revolving Credit Note"), executed by Borrowers in favor of
NationsBank, in the original principal amount of $9,000,000.00 (the
Original Chemical Term Note, the Original NationsBank Term Note, the
Original Chemical Revolving Credit Note and the Original NationsBank
Revolving Credit Note being hereinafter sometimes collectively referred
to as the "Original Non-I/P Notes"); (v) I/P Note dated October 7, 1992
(the "Original Chemical I/P Note"), executed by Borrowers in favor of
Chemical, in the original principal amount of $16,000,000.00; and (vi)
I/P Note dated October 7, 1992 (the "Original NationsBank I/P Note"),
executed by Borrowers in favor of NationsBank, in the original principal
amount of $4,000,000.00 (the Original Chemical I/P Note and the Original
NationsBank I/P Note being hereinafter sometimes collectively referred
to as the "Original I/P Notes"; the Original Non-I/P Notes and the
Original I/P Notes being hereinafter sometimes collectively referred to
as the "Original Note").
C. The Original Loans are secured, in part, by the following
(collectively, the "Original Security Documents"):
(i) a Mortgage and Security Agreement dated as of
October 7, 1992 (the "Original Mortgage"), made by Mortgagor in favor of
Mortgagee, and recorded in counterparts as follows: in Official Records
Book 19976, at Page 841 of the Public Records of Broward County,
Florida; in Official Records Book 7436, at Page 1157 of the Public
Records of Palm Beach County, Florida; in Official Records Book 7438, at
Page 1064 of the Public Records of Duval County, Florida; in Official
Records Book 962, at Page 168 of the Public Records of St. Johns County,
Florida; in Official Records Book 2443, at Page 126, of the Public
Records of Sarasota County, Florida; and in Official Records Book 6773,
at Page 55 of the Public Records of Hillsborough County, Florida;
(ii) an Assignment of Leases, Subleases, Rents and Profits
dated as of October 7, 1992 (the "Original Arvida GP Lease Assignment"),
made by Arvida GP in favor of Mortgagee, and recorded in counterparts as
follows: in Official Records Book 7436 at Page 1436 of the Public
Records of Palm Beach County, Florida; in Official Records Book 7438, at
Page 1327 of the Public Records of Duval County, Florida; in Official
Records Book 962, at Page 431 of the Public Records of St. Johns County,
Florida; in Official Records Book 2443, at Page 389 of the Public
Records of Sarasota County, Florida; and in Official Records Book 6773,
at Page 318 of the Public Records of Hillsborough County, Florida;
(iii) an Assignment of Leases, Subleases, Rents and Profits
dated as of May 27, 1993 (the "Original Weston Lease Assignment"), made
by Arvida GP and Weston Partnership in favor of Mortgagee, and recorded
in Official Records Book 20787, Page 326, of the Public Records of
Broward County, Florida (the Original Arvida GP Lease Assignment and the
Original Weston Lease Assignment being hereinafter sometimes
collectively referred to as the "Original Lease Assignment");
(iv) a Collateral Assignment of Developer's Rights dated as
of October 7, 1992 (the "1992 Collateral Assignment"), made by Mortgagor
in favor of Mortgagee, and recorded in counterparts as follows: in
Official Records Book 19977, at Page 0001 of the Public Records of
Broward County, Florida; in Official Records Book 7436, at Page 1541 of
the Public Records of Palm Beach County, Florida; in Official Records
Book 7438, at Page 1421 of the Public Records of Duval County, Florida;
in Official Records Book 962, at Page 525 of the Public Records of St.
Johns County, Florida; in Official Records Book 2443, at Page 483, of
the Public Records of Sarasota County, Florida; and in Official Records
Book 6773, at Page 412 of the Public Records of Hillsborough County,
Florida; and
(v) an Amendment to Collateral Assignment of Developer's
Rights dated as of February 10, 1994 (the "Amendment to Collateral
Assignment"), made by Mortgagor in favor of Mortgagee, and recorded in
counterparts as follows: in Official Records Book 21844, at Page 813 of
the Public Records of Broward County, Florida; in Official Records Book
8162, at Page 822 of the Public Records of Palm Beach County, Florida;
in Official Records Book 7804, at Page 1653 of the Public Records of
Duval County, Florida; in Official Records Book 1041, at Page 1308 of
the Public Records of St. Johns County, Florida; in Official Records
Book 2602, at Page 2170 of the Public Records of Sarasota County,
Florida; and in Official Records Book 7314, at Page 1856, of the Public
Records of Hillsborough County, Florida (the 1992 Collateral Assignment,
as amended by the Amendment to Collateral Assignment, is hereinafter
collectively referred to as the "Original Collateral Assignment").
D. The Original Security Documents also secure Borrowers'
obligations with respect to a letter of credit facility in the maximum
principal amount of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00)
pursuant to the terms of the Amended and Restated Credit Agreement dated
as of October 7, 1992 among Borrowers, Mortgagee and the Secured Parties
(the "Original Credit Agreement") and the Letter of Credit Documents (as
defined in the Original Mortgage).
E. Mortgagor has requested that Mortgagee modify and renew the
Original Loans.
F. In connection with the modification and renewal of the
Original Loans, the following are occurring contemporaneously with the
execution of this Agreement:
(i) (A) the Original Chemical Term Note is being amended,
restated and renewed pursuant to an Amended, Restated and Renewal Term
Note dated of even date herewith (the "Chemical Term Renewal Note"),
executed by Borrowers in favor of Chemical, in the original principal
amount of $59,255,582.95; (B) the Original NationsBank Term Note is
being amended, restated and renewed pursuant to an Amended, Restated and
Renewal Term Note dated of even date herewith (the "NationsBank Term
Renewal Note"), executed by Borrowers in favor of NationsBank, in the
original principal amount of $14,813,895.74; (C) the Original Chemical
Revolving Credit Note is being amended, restated and renewed pursuant to
an Amended, Restated and Renewal Revolving Credit Note dated of even
date herewith (the "Chemical Revolving Credit Renewal Note"), executed
by Borrowers in favor of Chemical, in the original principal amount of
$16,000,000.00; and (D) the Original NationsBank Revolving Credit Note
is being amended, restated and renewed pursuant to an Amended, Restated
and Renewal Revolving Credit Note dated of even date herewith (the
"NationsBank Revolving Credit Renewal Note"), executed by Borrowers in
favor of NationsBank, in the original principal amount of $4,000,000.00
(the Chemical Term Renewal Note, the NationsBank Term Renewal Note, the
Chemical Revolving Credit Renewal Note and the NationsBank Revolving
Credit Renewal Note being hereinafter sometimes collectively referred to
as the "Non-I/P Renewal Notes"); and
(ii) The Original Chemical I/P Note is being amended,
restated and renewed pursuant to an Amended, Restated and Renewal I/P
Note dated of even date herewith (the "Chemical I/P Renewal Note"),
executed by Borrowers in favor of Chemical, in the original principal
amount of $14,426,660.80 and the Original NationsBank I/P Note is being
amended, restated and renewed pursuant to an Amended, Restated and
Renewal I/P Note dated of even date herewith (the "NationsBank I/P
Renewal Note"), executed by Borrowers in favor of NationsBank, in the
original principal amount of $3,606,665.20 (the Chemical I/P Renewal
Note and the NationsBank I/P Renewal Note being hereinafter sometimes
collectively referred to as the "I/P Renewal Notes") (the Non-I/P
Renewal Notes and the I/P Renewal Notes being hereinafter sometimes
collectively referred to as the "Renewal Note").
G. The Original Credit Agreement is being amended and restated
pursuant to a Second Amended and Restated Credit Agreement dated of even
date herewith (the "Amended Credit Agreement"), pursuant to which, inter
alia, Mortgagee and Mortgagor have agreed to reduce the letter of credit
facility to FIFTEEN MILLION AND 00/100 DOLLARS ($15,000,000.00).
H. Mortgagor has requested Mortgagee to modify and amend
certain terms and conditions of the Original Security Documents and
certain other Loan Documents delivered in connection with the Original
Loans to reflect the above-referenced transactions and Mortgagee is
willing to make such modifications and amendments, subject to the terms,
provisions and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto do hereby covenant and agree as
follows:
1. Recitals. Each and all of the foregoing recitations are
true and correct and are incorporated herein by reference and made a
part hereof.
2. Capitalized Terms. All initially capitalized terms used in
this Agreement, unless otherwise specifically defined herein, shall have
the respective meanings assigned to such terms in the Mortgage (as
hereinafter defined).
3. Definitions.
(a) The term "Loan Documents", as used and defined herein,
in the Original Mortgage and the other Original Security Documents,
shall hereafter mean the Note, the Mortgage (as hereinafter defined),
the Credit Agreement, the Letter of Credit Documents (as hereinafter
defined), the Lease Assignment, the Collateral Assignment, all other
mortgages given to secure the Indebtedness or any portion thereof, and
all other documents, agreements and instruments evidencing, securing or
on any way relating to the Loan, together with all modifications or
amendments thereto.
(b) The term "Mortgage", as used and defined herein, in
the Original Mortgage and in the other Loan Documents, shall hereafter
mean and refer to the Original Mortgage, as modified hereby, together
with any further modifications or amendments thereto.
(c) The term "Loan", as used and defined herein, in the
Mortgage and other Loan Documents, shall hereafter have the meaning
assigned to such term in the Amended Credit Agreement.
(d) The term "Letter of Credit Documents", as used and
defined in the Mortgage and the other Loan Documents, shall hereafter
have the meaning assigned to such term in the Amended Credit Agreement.
(e) The term "Non-I/P Notes", as used and defined in the
Mortgage and the other Loan Documents, shall include within its meaning
and definition the Non-I/P Renewal Notes and the Original Non-I/P Notes,
as such Original Non-I/P Notes have been amended and restated pursuant
to the Non-I/P Renewal Notes, with the effect that the Mortgage, as
modified hereby, shall henceforth secure, among other things, the
payment of the indebtedness under the Non-I/P Renewal Notes.
(f) The term "I/P Notes", as used and defined in the
Mortgage and other Loan Documents, shall include within its meaning and
definition the I/P Renewal Notes and the Original I/P Notes, as such
Original I/P Notes have been amended and restated by the I/P Renewal
Notes, with the effect that the Mortgage, as modified hereby, shall
henceforth secure, among other things, payment of the indebtedness under
the I/P Renewal Notes.
(g) The term "Note", as used and defined herein, in the
Mortgage and other Loan Documents, shall include within its meaning and
definition the Original Note, as such Original Note has been amended and
restated by the Renewal Note, with the effect that the Mortgage, as
modified hereby, shall henceforth secure, among other things, the
payment of the indebtedness under the Renewal Note.
(h) The term "Credit Agreement", as used and defined
herein, in the Mortgage and other Loan Documents, shall hereafter mean
and refer to the Original Credit Agreement, as amended and restated by
the Amended Credit Agreement, together with any further modifications or
amendments thereto.
(i) The term "Equitable Mortgage", as used and defined in
the Mortgage and the other Loan Documents, shall hereafter mean and
refer to that certain Florida Mortgage dated as of May 27, 1993, by
Arvida GP in favor of The Equitable Life Assurance Society of the United
States, recorded in Official Records Book 20787, Page 268, of the Public
Records of Broward County, Florida.
(j) The term "Lease Assignment", as used and defined
herein, in the Mortgage and the other Loan Documents, shall hereafter
mean and refer to the Original Lease Assignment, as modified hereby,
together with any further modifications or amendments thereto.
(k) The term "Collateral Assignment", as used and defined
herein and in the Mortgage, shall hereafter mean and refer to the
Original Collateral Assignment, as modified hereby, together with any
further modifications or amendments thereto.
4. Modifications to Mortgage, Lease Assignment and Collateral
Assignment.
(a) Section 5.16 of the Mortgage is hereby deleted and the
following provision is hereby inserted in its place and stead:
"5.16. WAIVER OF JURY TRIAL. MORTGAGOR AND MORTGAGEE
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS MORTGAGE OR ANY OTHER LOAN
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE
RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO
THE MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY
CLAIM TO RESCIND OR CANCEL THE LOAN DOCUMENTS, OR ANY CLAIM
OR DEFENSE ASSERTING THAT THE LOAN DOCUMENTS WERE
FRAUDULENTLY INDUCED OR ARE OTHERWISE VOID OR VOIDABLE);
THIS WAIVER BEING A MATERIAL INDUCEMENT FOR MORTGAGEE TO
ACCEPT THIS MORTGAGE AND MAKE THE LOAN."
(b) Section 23 of the Lease Assignment and Section 14 of
the Collateral Assignment are hereby deleted and the following provision
is hereby inserted as Section 23 of the Lease Assignment and Section 14
of the Collateral Assignment, respectively:
"WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND UNCONDITIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY OR ANY
EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE
LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE MORTGAGED
PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY CLAIM TO
RESCIND OR CANCEL THE LOAN DOCUMENTS, OR ANY CLAIM OR
DEFENSE ASSERTING THAT THE LOAN DOCUMENTS WERE FRAUDULENTLY
INDUCED OR ARE OTHERWISE VOID OR VOIDABLE); THIS WAIVER
BEING A MATERIAL INDUCEMENT FOR ASSIGNEE TO ACCEPT THIS
ASSIGNMENT AND MAKE THE LOAN."
(c) All notices to Mortgagee (and to Assignee under the
Lease Assignment) shall be sent to the address set forth in the
introductory paragraph of this Agreement, Attention: Thomas S. Matesich,
Telecopy No. (212) 622-3580, with copies to:
NationsBank of Florida, N.A.
One Financial Center, 9th Floor
Ft. Lauderdale, Florida 33394-0100
Attention: Lisa Crawford
Telecopy No.: (305) 765-2164
and
Weil, Gotshal & Manges
701 Brickell Avenue
Suite 2100
Miami, Florida 33131
Attn: Susan Werth, P.A.
Telecopy No.: (305) 374-7159
5. Disbursement. The indebtedness evidenced by the Term
Renewal Notes and the I/P Renewal Notes has been advanced by the Secured
Parties in accordance with the terms and provisions of the Term Renewal
Notes, the I/P Renewal Notes and the Credit Agreement. The indebtedness
evidenced by the Revolving Credit Renewal Notes shall be advanced by the
Secured Parties in accordance with the terms and provisions of the
Revolving Credit Renewal Notes and the Credit Agreement.
6. Security. Mortgagor agrees that the Note is secured by the
Mortgage to the same extent as if the Note was executed and delivered by
Mortgagor to Mortgagee on the date of the Original Mortgage, and that
the Mortgage secures the total Indebtedness.
7. Release; Defenses.
(a) Mortgagor acknowledges that Mortgagor is executing
this Agreement as Mortgagor's own voluntary act and free from duress and
undue influence and upon and with the advice of counsel. Mortgagor
hereby unconditionally and irrevocably releases, acquits and discharges
Mortgagee, the Secured Parties and their respective employees, officers,
directors, agents, servants and counsel (collectively, the "Related
Parties") from any and all claims, demands, actions, causes of actions,
suits, debts, costs, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, expenses and liabilities whatsoever,
known or unknown, at law or in equity, irrespective of whether such
claims arise out of contract, tort, violation of laws or regulations or
otherwise, which Mortgagor ever had, now has or hereafter can, shall or
may have against Mortgagee, the Secured Parties or any of the Related
Parties or any of them for, upon, or by reason of any matter, cause or
thing whatsoever arising from the beginning of the world to and
including the date hereof arising out of, in connection with, or related
in any manner to the Mortgaged Property, the Original Loans, the Loan,
the Original Note, the Note, the Original Security Documents, the
Mortgage, this Agreement, and/or the other Loan Documents.
(b) Mortgagor hereby acknowledges, confirms and warrants
to Mortgagee that as of the date of this Agreement Mortgagor has
absolutely no defenses, rights of set-off, claims or counterclaims
against Mortgagee or the Secured Parties under, arising out of, or in
any manner connected with the Original Loans, the Loan, the Mortgaged
Property, this Agreement, the Mortgage, the Original Note, the Note, the
Original Security Documents or any other Loan Document, or against any
of the indebtedness evidenced or secured thereby or under any other
documents executed in connection therewith or relating thereto, any and
all of which Mortgagor hereby expressly waives.
8. Representations and Warranties. Mortgagor hereby represents
and warrants to Mortgagee that each of the representations and
warranties contained in the Mortgage, the Lease Assignment and the
Collateral Assignment, as modified hereby, are true and correct in all
material respects as of the date hereof.
9. Confirmation of Mortgage and Lien Upon Property. Mortgagor
acknowledges and agrees that the Mortgage constitutes a valid first lien
upon the Mortgaged Property, other than the Mortgaged Property which is
also subject to the Equitable Mortgage (as to which property the
Mortgage constitutes a second lien) in favor of Mortgagee, that the Note
evidences an aggregate principal indebtedness of $112,102,803.60 and is
secured by the Mortgage, that the Credit Agreement and the Letter of
Credit Documents evidence the obligation to reimburse the L/C Bank (as
defined in the Credit Agreement) a maximum aggregate principal amount of
$15,000,000.00 and are secured by the Mortgage, and that the Lease
Assignment, Collateral Assignment and other Loan Documents executed in
connection with the Mortgage constitute valid and subsisting agreements
and obligations of the parties thereto with respect to the Loan. The
Mortgaged Property is and shall remain subject to and encumbered by the
lien, charge and encumbrance of the Mortgage, and nothing herein
contained shall affect or be construed to affect the lien or encumbrance
of the Mortgage or the priority thereof over other liens or
encumbrances.
10. Expenses of Transaction. Mortgagor shall promptly pay all
reasonable fees, costs, expenses and disbursements of Mortgagee and
Mortgagee's counsel in connection with the preparation, execution,
delivery and performance of this Agreement, the Note and in connection
with all negotiations relating to the Mortgaged Property, this
Agreement, and the Note.
11. No Oral Modification. This Agreement constitutes the entire
agreement between Mortgagor and Mortgagee with respect to the subject
matter hereof, and all understandings (oral or written) and agreements
heretofore had among the parties are merged in or contained in this
Agreement. This Agreement may not be amended except upon the written
agreement of all of the parties hereto.
12. Governing Law. Mortgagor and Mortgagee agree that the
Mortgage, the Lease Assignment, the Collateral Assignment and this
Agreement shall be governed by and construed in accordance with the laws
of the State of Florida without regard to the principles of conflicts of
laws.
13. Ratification of Loan. Except as expressly modified and
amended herein, Mortgagor covenants and agrees that all of the terms,
covenants, promises, warranties, representations and conditions of the
Mortgage, the Note and the other Loan Documents shall remain in full
force and effect.
14. Binding Upon Successors and Assigns. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto
and their respective successors and assigns subject to the terms and
conditions of the Loan Documents.
15. Headings. The headings of the articles, sections and
subsections of this Agreement are for convenience and reference only and
shall not be considered a part hereof nor shall they be deemed to limit
or otherwise affect any of the terms or provisions hereof.
16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of
which shall constitute one agreement. It shall not be necessary for the
same counterpart to be signed by all of the parties in order for this
instrument to be fully binding upon any party signing at least one
counterpart.
17. WAIVER OF JURY TRIAL: MORTGAGOR AND MORTGAGEE HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND UNCONDITIONALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF
THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING
TO THE MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO
RESCIND OR CANCEL THE LOAN DOCUMENTS, AND ANY CLAIM OR DEFENSE ASSERTING
THAT THE LOAN DOCUMENTS WERE FRAUDULENTLY INDUCED OR ARE OTHERWISE VOID
OR VOIDABLE); THIS WAIVER BEING A MATERIAL INDUCEMENT FOR MORTGAGEE TO
ACCEPT THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
MORTGAGOR:
Signed, sealed and ARVIDA/JMB PARTNERS, a
delivered in the Florida general partnership
presence of:
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
__________________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
__________________________ 900 N. Michigan Ave.
Print Name: Chicago, IL 60611
WESTON HILLS COUNTRY CLUB LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: WHCC, INC., an Illinois
corporation, as general
partner
_________________________ By:_____________________
Print Name: Stephen A. Lovelette
Vice President
_________________________ 900 N. Michigan Ave.
Print Name: Chicago, IL 60611
MORTGAGEE:
CHEMICAL BANK, a New York banking
corporation, as agent
_________________________By:
Print Name: Thomas S. Matesich
Vice President
_________________________ 380 Madison Avenue
Print Name: New York, NY 10017
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Stephen A. Lovelette, as Vice President of
Arvida/JMB Managers, Inc., a Delaware corporation, as general partner of
Arvida/JMB Partners, a Florida general partnership, on behalf of said
general partnership. He is personally known to me or has produced a
driver's license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Stephen A. Lovelette, as Vice President of WHCC,
Inc., an Illinois corporation, as general partner of Weston Hills
Country Club Limited Partnership, a Delaware limited partnership, on
behalf of said limited partnership. He is personally known to me or has
produced a driver's license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Thomas S. Matesich, as Vice President of Chemical
Bank, a New York banking corporation, as agent, on behalf of said
corporation. He is personally known to me or has produced a driver's
license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
MODIFICATION OF FIRST MORTGAGE AND
SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS
THIS MODIFICATION OF FIRST MORTGAGE AND SECURITY AGREEMENT AND
OTHER LOAN DOCUMENTS (this "Agreement") is made as of the ___ day of
November, 1994 by and among ARVIDA/JMB PARTNERS, a Florida general
partnership, having an address c/o Arvida/JMB Managers, Inc., 900 N.
Michigan Avenue, Chicago, Illinois 60601 ("Arvida GP"), CENTER OFFICE
PARTNERS, a Florida general partnership, having an address c/o
Arvida/JMB Managers, Inc., 900 N. Michigan Avenue, Chicago, Illinois
60601 ("Office Partners"), CENTER RETAIL PARTNERS, a Florida general
partnership, having an address c/o Arvida/JMB Managers, Inc., 900 N.
Michigan Avenue, Chicago, Illinois 60601 ("Retail Partners"), CENTER
HOTEL LIMITED PARTNERSHIP, a Delaware limited partnership, having an
address c/o Arvida/JMB Managers, Inc., 900 N. Michigan Avenue, Chicago,
Illinois 60601 ("Hotel Partnership"; Arvida GP, Office Partners, Retail
Partners and Hotel Partnership are hereinafter collectively referred to
as "Mortgagor"), and CHEMICAL BANK, a New York corporation ("Chemical"),
having an address at 380 Madison Avenue, 11th Floor, New York, New York
10017, as agent (in that capacity, the "Mortgagee"), on behalf and for
the benefit of the Secured Parties (as defined herein).
R E C I T A L S :
A. On October 7, 1992, NationsBank of Florida, N.A., a national
banking association ("NationsBank") and Chemical Bank (collectively, the
"Secured Parties") made certain loans (collectively, the "Original
Loans") to Mortgagor, Arvida/JMB Partners, L.P., a Delaware limited
partnership, Southeast Florida Holdings, Inc., an Illinois corporation;
and Weston Hills Country Club Limited, a Delaware limited partnership
(collectively, the "Borrowers") in the aggregate maximum principal
amount of $191,805,195.42.
B. The Original Loans are evidenced by the following promissory
notes: (i) Term Note dated October 7, 1992 (the "Original Chemical Term
Note"), executed by Borrowers in favor of Chemical, in the original
principal amount of $101,444,156.34; (ii) Term Note dated October 7,
1992 (the "Original NationsBank Term Note"), executed by Borrowers in
favor of NationsBank, in the original principal amount of
$25,361,039.08; (iii) Revolving Credit Note dated October 7, 1992 (the
"Original Chemical Revolving Credit Note"), executed by Borrowers in
favor of Chemical, in the original principal amount of $36,000,000.00;
(iv) Revolving Credit Note dated October 7, 1992 (the "Original
NationsBank Revolving Credit Note"), executed by Borrowers in favor of
NationsBank, in the original principal amount of $9,000,000.00 (the
Original Chemical Term Note, the Original NationsBank Term Note, the
Original Chemical Revolving Credit Note and the Original NationsBank
Revolving Credit Note being hereinafter sometimes collectively referred
to as the "Original Non-I/P Notes"); (v) I/P Note dated October 7, 1992
(the "Original Chemical I/P Note"), executed by Borrowers in favor of
Chemical, in the original principal amount of $16,000,000.00; and (vi)
I/P Note dated October 7, 1992 (the "Original NationsBank I/P Note"),
executed by Borrowers in favor of NationsBank, in the original principal
amount of $4,000,000.00 (the Original Chemical I/P Note and the Original
NationsBank I/P Note being hereinafter sometimes collectively referred
to as the "Original I/P Notes"; the Original Non-I/P Notes and the
Original I/P Notes being hereinafter sometimes collectively referred to
as the "Original Note").
C. The Original Loans are secured, in part, by the following
(collectively, the "Original Security Documents"):
(i) a First Mortgage and Security Agreement dated as of
October 7, 1992 (the "Original Mortgage"), made by Mortgagor in favor of
Mortgagee, and recorded in Official Records Book 7436, at Page 1102 of
the Public Records of Palm Beach County, Florida;
(ii) an Assignment of Leases, Subleases, Rents and Profits
dated as of October 7, 1992 (the "Original Lease Assignment"), made by
Mortgagor in favor of Mortgagee, and recorded in Official Records Book
7436, at Page 1420 of the Public Records of Palm Beach County, Florida;
and
(iii) a Collateral Assignment of Developer's Rights dated
as of October 7, 1992 (the "Original Collateral Assignment"), made by
Mortgagor in favor of Mortgagee, and recorded in Official Records Book
7436, at Page 1530 of the Public Records of Palm Beach County, Florida.
D. The Original Security Documents also secure Borrowers'
obligations with respect to a letter of credit facility in the maximum
principal amount of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00)
pursuant to the terms of the Amended and Restated Credit Agreement dated
as of October 7, 1992 among Borrowers, Mortgagee and the Secured Parties
(the "Original Credit Agreement") and the Letter of Credit Documents (as
defined in the Original Mortgage).
E. Mortgagor has requested that Mortgagee modify and renew the
Original Loans.
F. In connection with the modification and renewal of the
Original Loans, the following are occurring contemporaneously with the
execution of this Agreement:
(i) (A) the Original Chemical Term Note is being amended,
restated and renewed pursuant to an Amended, Restated and Renewal Term
Note dated of even date herewith (the "Chemical Term Renewal Note"),
executed by Borrowers in favor of Chemical, in the original principal
amount of $59,255,582.95; (B) the Original NationsBank Term Note is
being amended, restated and renewed pursuant to an Amended, Restated and
Renewal Term Note dated of even date herewith (the "NationsBank Term
Renewal Note"), executed by Borrowers in favor of NationsBank, in the
original principal amount of $14,813,895.74; (C) the Original Chemical
Revolving Credit Note is being amended, restated and renewed pursuant to
an Amended, Restated and Renewal Revolving Credit Note dated of even
date herewith (the "Chemical Revolving Credit Renewal Note"), executed
by Borrowers in favor of Chemical, in the original principal amount of
$16,000,000.00; and (D) the Original NationsBank Revolving Credit Note
is being amended, restated and renewed pursuant to an Amended, Restated
and Renewal Revolving Credit Note dated of even date herewith (the
"NationsBank Revolving Credit Renewal Note"), executed by Borrowers in
favor of NationsBank, in the original principal amount of $4,000,000.00
(the Chemical Term Renewal Note, the NationsBank Term Renewal Note, the
Chemical Revolving Credit Renewal Note and the NationsBank Revolving
Credit Renewal Note being hereinafter sometimes collectively referred to
as the "Non-I/P Renewal Notes"); and
(ii) The Original Chemical I/P Note is being amended,
restated and renewed pursuant to an Amended, Restated and Renewal I/P
Note dated of even date herewith (the "Chemical I/P Renewal Note"),
executed by Borrowers in favor of Chemical, in the original principal
amount of $14,426,660.80 and the Original NationsBank I/P Note is being
amended, restated and renewed pursuant to an Amended, Restated and
Renewal I/P Note dated of even date herewith (the "NationsBank I/P
Renewal Note"), executed by Borrowers in favor of NationsBank, in the
original principal amount of $3,606,665.20 (the Chemical I/P Renewal
Note and the NationsBank I/P Renewal Note being hereinafter sometimes
collectively referred to as the "I/P Renewal Notes") (the Non-I/P
Renewal Notes and the I/P Renewal Notes being hereinafter sometimes
collectively referred to as the "Renewal Note").
G. The Original Credit Agreement is being amended and restated
pursuant to a Second Amended and Restated Credit Agreement dated of even
date herewith (the "Amended Credit Agreement"), pursuant to which, inter
alia, Mortgagee and Mortgagor have agreed to reduce the letter of credit
facility to FIFTEEN MILLION AND 00/100 DOLLARS ($15,000,000.00).
H. Mortgagor has requested Mortgagee to modify and amend
certain terms and conditions of the Original Security Documents and
certain other Loan Documents delivered in connection with the Original
Loans to reflect the above-referenced transactions and Mortgagee is
willing to make such modifications and amendments, subject to the terms,
provisions and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto do hereby covenant and agree as
follows:
1. Recitals. Each and all of the foregoing recitations are
true and correct and are incorporated herein by reference and made a
part hereof.
2. Capitalized Terms. All initially capitalized terms used in
this Agreement, unless otherwise specifically defined herein, shall have
the respective meanings assigned to such terms in the Mortgage (as
hereinafter defined).
3. Definitions.
(a) The term "Loan Documents", as used and defined herein,
in the Original Mortgage and the other Original Security Documents,
shall hereafter mean the Note, the Mortgage (as hereinafter defined),
the Credit Agreement, the Letter of Credit Documents (as hereinafter
defined), the Lease Assignment, the Collateral Assignment, all other
mortgages given to secure the Indebtedness or any portion thereof, and
all other documents, agreements and instruments evidencing, securing or
on any way relating to the Loan (as hereinafter defined), together with
all modifications or amendments thereto.
(b) The term "Mortgage", as used and defined herein, in
the Original Mortgage and in the other Loan Documents, shall hereafter
mean and refer to the Original Mortgage, as modified hereby, together
with any further modifications or amendments thereto.
(c) The term "Loan", as used and defined herein, in the
Mortgage and the other Loan Documents, shall hereafter have the meaning
assigned to such term in the Amended Credit Agreement.
(d) The term "Letter of Credit Documents", as used and
defined in the Mortgage and the other Loan Documents, shall hereafter
have the meaning assigned to such term in the Amended Credit Agreement.
(e) The term "Non-I/P Notes", as used and defined in the
Mortgage and the other Loan Documents, shall include within its meaning
and definition the Non-I/P Renewal Notes and the Original Non-I/P Notes,
as such Original Non-I/P Notes have been amended and restated pursuant
to the Non-I/P Renewal Notes, with the effect that the Mortgage, as
modified hereby, shall henceforth secure, among other things, the
payment of the indebtedness under the Non-I/P Renewal Notes.
(f) The term "I/P Notes", as used and defined in the
Mortgage and other Loan Documents, shall include within its meaning and
definition the I/P Renewal Notes and the Original I/P Notes, as such
Original I/P Notes have been amended and restated by the I/P Renewal
Notes, with the effect that the Mortgage, as modified hereby, shall
henceforth secure, among other things, payment of the indebtedness under
the I/P Renewal Notes.
(g) The term "Note", as used and defined herein, in the
Mortgage and other Loan Documents, shall include within its meaning and
definition the Original Note, as such Original Note has been amended and
restated by the Renewal Note, with the effect that the Mortgage, as
modified hereby, shall henceforth secure, among other things, the
payment of the indebtedness under the Renewal Note.
(h) The term "Credit Agreement", as used and defined
herein, in the Mortgage and other Loan Documents, shall hereafter mean
and refer to the Original Credit Agreement, as amended and restated by
the Amended Credit Agreement, together with any further modifications or
amendments thereto.
(i) The term "Lease Assignment", as used and defined
herein, in the Mortgage and the other Loan Documents, shall hereafter
mean and refer to the Original Lease Assignment, as modified hereby,
together with any further modifications or amendments thereto.
(j) The term "Collateral Assignment", as used and defined
herein and in the Mortgage, shall hereafter mean and refer to the
Original Collateral Assignment, as modified hereby, together with any
further modifications or amendments thereto.
4. Modifications to Mortgage, Lease Assignment and Collateral
Assignment.
(a) Section 5.16 of the Mortgage is hereby deleted and the
following provision is hereby inserted in its place and stead:
"5.16. WAIVER OF JURY TRIAL. MORTGAGOR AND MORTGAGEE
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS MORTGAGE OR ANY OTHER LOAN
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE
RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO
THE MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY
CLAIM TO RESCIND OR CANCEL THE LOAN DOCUMENTS, OR ANY CLAIM
OR DEFENSE ASSERTING THAT THE LOAN DOCUMENTS WERE
FRAUDULENTLY INDUCED OR ARE OTHERWISE VOID OR VOIDABLE);
THIS WAIVER BEING A MATERIAL INDUCEMENT FOR MORTGAGEE TO
ACCEPT THIS MORTGAGE AND MAKE THE LOAN."
(b) Section 23 of the Lease Assignment and Section 14 of
the Collateral Assignment are hereby deleted and the following provision
is hereby inserted as Section 23 of the Lease Assignment and Section 14
of the Collateral Assignment, respectively:
"WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND UNCONDITIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY OR ANY
EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE
LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE MORTGAGED
PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY CLAIM TO
RESCIND OR CANCEL THE LOAN DOCUMENTS, OR ANY CLAIM OR
DEFENSE ASSERTING THAT THE LOAN DOCUMENTS WERE FRAUDULENTLY
INDUCED OR ARE OTHERWISE VOID OR VOIDABLE); THIS WAIVER
BEING A MATERIAL INDUCEMENT FOR ASSIGNEE TO ACCEPT THIS
ASSIGNMENT AND MAKE THE LOAN."
(c) All notices to Mortgagee (and to Assignee under the
Lease Assignment) shall be sent to the address set forth in the
introductory paragraph of this Agreement, Attention: Thomas S. Matesich,
Telecopy No. (212) 622-3580, with copies to:
NationsBank of Florida, N.A.
One Financial Center, 9th Floor
Ft. Lauderdale, Florida 33394-0100
Attention: Lisa Crawford
Telecopy No.: (305) 765-2164
and
Weil, Gotshal & Manges
701 Brickell Avenue
Suite 2100
Miami, Florida 33131
Attn: Susan Werth, P.A.
Telecopy No.: (305) 374-7159
5. Disbursement. The indebtedness evidenced by the Term
Renewal Notes and the I/P Renewal Notes has been advanced by the Secured
Parties in accordance with the terms and provisions of the Term Renewal
Notes, the I/P Renewal Notes and the Credit Agreement. The indebtedness
evidenced by the Revolving Credit Renewal Notes shall be advanced by the
Secured Parties in accordance with the terms and provisions of the
Revolving Credit Renewal Notes and the Credit Agreement.
6. Security. Mortgagor agrees that the Note is secured by the
Mortgage to the same extent as if the Note was executed and delivered by
Mortgagor to Mortgagee on the date of the Original Mortgage, and that
the Mortgage secures the total Indebtedness.
7. Release; Defenses.
(a) Mortgagor acknowledges that Mortgagor is executing
this Agreement as Mortgagor's own voluntary act and free from duress and
undue influence and upon and with the advice of counsel. Mortgagor
hereby unconditionally and irrevocably releases, acquits and discharges
Mortgagee, the Secured Parties and their respective employees, officers,
directors, agents, servants and counsel (collectively, the "Related
Parties") from any and all claims, demands, actions, causes of actions,
suits, debts, costs, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, expenses and liabilities whatsoever,
known or unknown, at law or in equity, irrespective of whether such
claims arise out of contract, tort, violation of laws or regulations or
otherwise, which Mortgagor ever had, now has or hereafter can, shall or
may have against Mortgagee, the Secured Parties or any of the Related
Parties or any of them for, upon, or by reason of any matter, cause or
thing whatsoever arising from the beginning of the world to and
including the date hereof arising out of, in connection with, or related
in any manner to the Mortgaged Property, the Original Loans, the Loan,
the Original Note, the Note, the Original Security Documents, the
Mortgage, this Agreement, and/or the other Loan Documents.
(b) Mortgagor hereby acknowledges, confirms and warrants
to Mortgagee that as of the date of this Agreement Mortgagor has
absolutely no defenses, rights of set-off, claims or counterclaims
against Mortgagee or the Secured Parties under, arising out of, or in
any manner connected with the Original Loans, the Loan, the Mortgaged
Property, this Agreement, the Mortgage, the Original Note, the Note, the
Original Security Documents or any other Loan Document, or against any
of the indebtedness evidenced or secured thereby or under any other
documents executed in connection therewith or relating thereto, any and
all of which Mortgagor hereby expressly waives.
8. Representations and Warranties. Mortgagor hereby represents
and warrants to Mortgagee that each of the representations and
warranties contained in the Mortgage, the Lease Assignment and the
Collateral Assignment, as modified hereby, are true and correct in all
material respects as of the date hereof.
9. Confirmation of Mortgage and Lien Upon Property. Mortgagor
acknowledges and agrees that the Mortgage constitutes a valid first lien
upon the Mortgaged Property in favor of Mortgagee, that the Note
evidences an aggregate principal indebtedness of $112,102,803.60 and is
secured by the Mortgage, that the Credit Agreement and the Letter of
Credit Documents evidence the obligation to reimburse the L/C Bank (as
defined in the Credit Agreement) a maximum aggregate principal amount of
$15,000,000.00 and are secured by the Mortgage, and that the Lease
Assignment, Collateral Assignment and other Loan Documents executed in
connection with the Mortgage constitute valid and subsisting agreements
and obligations of the parties thereto with respect to the Loan. The
Mortgaged Property is and shall remain subject to and encumbered by the
lien, charge and encumbrance of the Mortgage, and nothing herein
contained shall affect or be construed to affect the lien or encumbrance
of the Mortgage or the priority thereof over other liens or
encumbrances.
10. Expenses of Transaction. Mortgagor shall promptly pay all
reasonable fees, costs, expenses and disbursements of Mortgagee and
Mortgagee's counsel in connection with the preparation, execution,
delivery and performance of this Agreement, the Note and in connection
with all negotiations relating to the Mortgaged Property, this
Agreement, and the Note.
11. No Oral Modification. This Agreement constitutes the entire
agreement between Mortgagor and Mortgagee with respect to the subject
matter hereof, and all understandings (oral or written) and agreements
heretofore had among the parties are merged in or contained in this
Agreement. This Agreement may not be amended except upon the written
agreement of all of the parties hereto.
12. Governing Law. Mortgagor and Mortgagee agree that the
Mortgage, the Lease Assignment, the Collateral Assignment and this
Agreement shall be governed by and construed in accordance with the laws
of the State of Florida without regard to the principles of conflicts of
laws.
13. Ratification of Loan. Except as expressly modified and
amended herein, Mortgagor covenants and agrees that all of the terms,
covenants, promises, warranties, representations and conditions of the
Mortgage, the Note and the other Loan Documents shall remain in full
force and effect.
14. Binding Upon Successors and Assigns. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto
and their respective successors and assigns subject to the terms and
conditions of the Loan Documents.
15. Headings. The headings of the articles, sections and
subsections of this Agreement are for convenience and reference only and
shall not be considered a part hereof nor shall they be deemed to limit
or otherwise affect any of the terms or provisions hereof.
16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of
which shall constitute one agreement. It shall not be necessary for the
same counterpart to be signed by all of the parties in order for this
instrument to be fully binding upon any party signing at least one
counterpart.
17. WAIVER OF JURY TRIAL: MORTGAGOR AND MORTGAGEE HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND UNCONDITIONALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF
THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING
TO THE MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO
RESCIND OR CANCEL THE LOAN DOCUMENTS, AND ANY CLAIM OR DEFENSE ASSERTING
THAT THE LOAN DOCUMENTS WERE FRAUDULENTLY INDUCED OR ARE OTHERWISE VOID
OR VOIDABLE); THIS WAIVER BEING A MATERIAL INDUCEMENT FOR MORTGAGEE TO
ACCEPT THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
MORTGAGOR:
Signed, sealed and ARVIDA/JMB PARTNERS, a
delivered in the Florida general partnership
presence of:
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as general
partner
________________________ By:
Print Name: Stephen A. Lovelette
Vice President
________________________ 900 N. Michigan Ave.
Print Name: Chicago, IL 60611
CENTER OFFICE PARTNERS, a Florida general
partnership
By: ARVIDA/JMB PARTNERS, L.P., a
Delaware limited partnership, as
general partner
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
________________________ By:
Print Name: Stephen A. Lovelette
Vice President
________________________
Print Name:
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
CENTER RETAIL PARTNERS, a Florida general
partnership
By: ARVIDA/JMB PARTNERS, L.P., a
Delaware limited partnership, as
general partner
By: ARVIDA/JMB MANAGERS, INC., a
Delaware corporation, as
general partner
________________________ By:
Print Name: Stephen A. Lovelette
Vice President
_______________________
Print Name:
CENTER HOTEL LIMITED PARTNERSHIP, a
Delaware limited partnership
By: JMB/PCH CORPORATION, an
Illinois corporation, as
as general partner
_______________________ By:
Print Name: Stephen A. Lovelette
Vice President
_______________________
Print Name:
MORTGAGEE:
CHEMICAL BANK, a New York banking
corporation, as agent
_______________________By:
Print Name: Thomas S. Matesich
Vice President
_______________________ 380 Madison Avenue
Print Name: New York, NY 10017
[ACKNOWLEDGEMENTS CONTINUE ON FOLLOWING PAGE]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Stephen A. Lovelette, as Vice President of
Arvida/JMB Managers, Inc., a Delaware corporation, as general partner of
Arvida/JMB Partners, a Florida general partnership, on behalf of said
general partnership. He is personally known to me or has produced a
driver's license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Stephen A. Lovelette, as Vice President of
Arvida/JMB Managers, Inc., a Delaware corporation, as general partner of
Arvida/JMB Partners, L.P., a Delaware limited partnership, as general
partner of Center Office Partners, a Florida general partnership, on
behalf of said general partnership. He is personally known to me or has
produced a driver's license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Stephen A. Lovelette, as Vice President of
Arvida/JMB Managers, Inc., a Delaware corporation, as general partner of
Arvida/JMB Partners, L.P., a Delaware limited partnership, as general
partner of Center Retail Partners, a Florida general partnership, on
behalf of said general partnership. He is personally known to me or has
produced a driver's license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Stephen A. Lovelette, as Vice President of JMB/PCH
Corporation, an Illinois corporation, as general partner of Center Hotel
Limited Partnership, a Delaware limited partnership, on behalf of said
limited partnership. He is personally known to me or has produced a
driver's license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day
of November, 1994, by Thomas S. Matesich, as Vice President of Chemical
Bank, a New York banking corporation, as agent, on behalf of said
corporation. He is personally known to me or has produced a driver's
license as identification.
___________________________________
Signature of Notary Public
___________________________________
Printed Name of Notary Public
My Commission Expires: [SEAL]
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a general partner in Arvida/JMB Partners,
Center Office Partners and Center Retail Partners, all of which
are Florida general partnerships. The Partnership is the owner of
Southeast Florida Holdings, Inc., an Illinois Corporation. The
Partnership is a limited partner in Arvida Management Limited
Partnership, Arvida Contractors Limited Partnership, Gulf and
Pacific Communications Limited Partnership, Boca Raton
Communications Limited Partnership and Jax Cable Limited
Partnership, Center Hotel Limited Partnership, Weston Athletic
Club Limited Partnership, Arvida Realty Sales Limited Partnership,
Arvida/Weston Retail Sales Limited Partnership and Arvida Grand
Bay Limited Partnership-I, each of which is a Delaware limited
partnership. The Partnership is also a partner in the following
partnerships with third party developers: Addison Joint Venture,
Arvida Boose Joint Venture, Arvida Corporate Park Associates,
Arvida Pompano Associates Joint Venture, Coto De Caza, Ltd.,
Cullasaja Joint Venture, H.A.E. Joint Venture, Mizner Court
Associates Joint Venture, Mizner Tower Associates Joint Venture,
Ocala 202 Joint Venture, Tampa 301 Associates Joint Venture,
Windmill Lake Estate Associates Joint Venture, Arvida/RBG I Joint
Venture and Arvida/RBG II Joint Venture.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000814046
<NAME> ARVIDA/JMB PARTNERS, L.P.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 22,024,390
<SECURITIES> 0
<RECEIVABLES> 19,533,722
<ALLOWANCES> 229,542
<INVENTORY> 207,874,438
<CURRENT-ASSETS> 0
<PP&E> 103,287,173
<DEPRECIATION> (34,172,614)
<TOTAL-ASSETS> 376,371,712
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 196,579,754
<TOTAL-LIABILITY-AND-EQUITY> 376,371,712
<SALES> 315,058,058
<TOTAL-REVENUES> 315,058,058
<CGS> 241,690,757
<TOTAL-COSTS> 241,690,757
<OTHER-EXPENSES> 27,762,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 47,197,532
<INCOME-TAX> 0
<INCOME-CONTINUING> 47,197,532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,197,532
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Further, although the Partnership is intended to be an
operating company producing taxable income rather than net losses
for Federal income tax purposes, prospective investors should note
that if such net losses were to arise, certain considerations
which typically arise in a so-called "tax shelter" may become
relevant, including considerations involving the profit motives of
the Partnership and the Holders and the ability to utilize such
net losses.
IN VIEW OF THE COMPLEXITY OF THE INCOME TAX CONSIDERATIONS
RELATING TO INVESTMENT IN THE PARTNERSHIP, PARTICULARLY IN LIGHT
OF RECENT CHANGES IN THE LAW AND THE FACT THAT THE INCOME TAX
CONSIDERATIONS WILL NOT BE THE SAME FOR ALL INVESTORS, PROSPECTIVE
INVESTORS ARE STRONGLY ADVISED TO CONSULT THEIR TAX ADVISORS WITH
SPECIFIC REFERENCE TO THEIR OWN TAX SITUATIONS PRIOR TO INVESTMENT
IN THE PARTNERSHIP.
_________________________________________________________________
CONFLICTS OF INTEREST
_________________________________________________________________
The Partnership is and will be subject to various conflicts
of interest arising out of its relationships with the General
Partner and its affiliates (including Arvida) as well as the fact
that the General Partner and its affiliates are engaged in a wide
range of real estate activities. Where conflicts arise from
anticipated transactions with affiliates of the General Partner,
certain provisions and limitations described below have been
adopted to protect the interests of the Holders of Interests.
Where no such provisions and limitations are described, none has
been adopted and these conflicts may be resolved only through the
exercise of the General Partner's judgement consistent with its
fiduciary obligations to the Partnership and the Holders as set
forth in the Partnership Agreement. See "Fiduciary Responsibility
of the General Partner" below. The conflicts of interest to which
the Partnership is and will be subject include those described
below.
DETERMINATIONS BY THE GENERAL PARTNER
The General Partner and the Associate Limited Partners have
certain interests in the Cash Flow and Profits or Losses of the
Partnership (see "Cash Distributions and Allocations of Profits or
Losses"). Because the timing and amount of Cash Flow and Profits
or Losses of the Partnership received by, or allocated to, the
General Partner and the Associate Limited Partners may be affected
by various determinations by the General Partner under the
Partnership Agreement, including whether or not to refinance or
sell any property and the timing of any such sale or refinancing,
the establishment and maintenance of reasonable reserves, the
allocation of certain tax items under the Partnership Agreement,
the timing of expenditures, the level of amortization of
indebtedness and other matters, the General Partner may have a
conflict of interest with respect to such determinations.
The Partnership Agreement provides that the General Partner
shall elect, in its sole discretion, to cause a Listing of the
Interests, or, on the date ten years from the termination of this
offering, to purchase (or to cause JMB or its affiliates to
purchase) the interests at their appraised fair market value, or
commence liquidation of the Partnership on the date ten years from
the termination of this offering and sell all properties within
fifteen years from the termination of this offering. In the event
the General Partner elects to commence a liquidations phase, JMB
and its affiliates will be permitted to purchase at appraised fair
market value any of the joint interests held by the Partnership in
Communities and Future Communities in which JMB or any of its
affiliates (other than the Partnership) has an interest. In the
event the General Partner elects, in accordance with the
foregoing, to purchase, or to cause the purchase of, the
Interests, or to commence a liquidation phase of the Partnership
and to purchase any affiliated joint venture interests, the
Partnership shall select an independent appraiser in the manner
described under "Summary of Partnership Agreement--Ability of
General Partner to Cause Liquidation, Listing or Sale". It should
be noted that appraisals are only estimates of value and should
not be relied on as measures of realizable value. The General
Partner will be subject to a conflict of interest in choosing one
of the options described above.
POSSIBLE JOINT INVESTMENTS WITH AFFILIATES IN COMMUNITY PROJECTS
In the event that the proceeds of this offering plus maximum
initial aggregate indebtedness are not sufficient to permit the
payment of the cost of acquiring the assets from the Seller, the
General Partner expects to cause the Partnership to enter into a
joint venture or joint participation with affiliates of the
General Partner under which the assets acquired from the Seller
would be owned and developed. Any joint investment made by the
Partnership in any Community with an affiliate of the General
Partner will be on a strictly pro rata basis with the investment
made by another JMB affiliate. In addition, each party will pay
only its allocable share of Arvida's expenses in developing and
managing the project. However, at any particular time, it is
possible that the Partnership, the other investing JMB affiliate
and Arvida may have differing interests with respect to certain
decisions affecting such joint investments, including the timing
of expenditures, sale of certain assets and other matters. Thus,
there exists the possibility of an impasse in the event the joint
venture partners disagree. See "Risks of Joint Ventures".
However, in the event of a disagreement regarding a proposed sale
or other disposition of the property, the party desiring not to
sell or otherwise dispose would have a right of first refusal to
purchase the affiliated joint venture partner's interest in the
property. Such right of first refusal would be exercisable at the
pro rata share of the proposed sale price or other disposition
price to any unaffiliated third party; however, there can be no
assurance that the Partnership would have the financial resources
to exercise its right of first refusal at any such time.
The Partnership may permit an affiliate of the General
Partner and JMB to invest jointly with the Partnership and its
joint venturer in a portion of an approximately 200-acre parcel of
land located near Sarasota which may be suitable for development
as a regional shopping mall. See "Business of the Partnership--
Description of Current Developments--Commercial and Industrial".
This affiliate has expertise in the development and operation of
regional shopping malls. Neither the Partnership nor Arvida
currently has expertise in these matters. In the event of such a
joint venture investment, the Partnership and the Partnership's
unaffiliated joint venturer would contribute the land at appraised
value and the JMB affiliate would contribute a pro rata share of
capital. It should be noted that appraisals are only estimates of
value and should not be relied upon as measures of realizable
value. The JMB affiliate would be entitled to earn certain
development fees from the joint venture for its services, subject
to certain limitations. See "Management of the Partnership--
Management Compensation".
PARTNERSHIP'S PARTICIPATION IN NET CASH FLOW OF FUTURE COMMUNITIES
While Arvida has no current intent to move its principal
business away from Community development, it is under no
obligation to maintain Community development as its principal
business. Arvida's only obligation in respect of future
developments to the Partnership is to permit the Partnership to
receive a 10% interest in net cash flow (in excess of certain base
amounts) from Future Communities, subject to the limitations set
forth under "Description of Business-Future Developments". The
Partnership will not participate in any other future developments.
Arvida is not restricted to development of Community properties
and may participate or assist in the development and management of
other types of real property investments developed by affiliates
of JMB and Arvida. Different parcels of the same tract of land
may be developed by various JMB affiliates, including Arvida. In
certain cases, the most significant portions of such properties,
principally office or other commercial buildings, may be developed
by JMB and affiliates other than Arvida, and the Partnership will
not participate in the net cash flow in respect of those
developments.
POSSIBLE COMPETITION BY THE PARTNERSHIP WITH AFFILIATES
A substantial number of real estate investment partnerships
and other entities are presently managed or advised by or through
affiliates of JMB (see "Management of the Partnership--JMB Realty
Corporation"). JMB and its affiliates also invest in real estate
for their own accounts. JMB is presently planning to form and to
manage or advise, directly or through affiliates, additional real
estate investment partnerships and other investment entities in
the future, and expects to continue to invest in real estate for
its own account. JMB and certain of these affiliates engage in
the development of retail, commercial and office projects,
although none (either individually or in the aggregate) presently
engage in the business of Community development to the extent that
the Partnership and Arvida do. See "Business of the Partnership"
and "Management of the Partnership--Affiliate Supervisory
Agreement". The Partnership Agreement expressly provides that
neither the General Partner nor any affiliate of the General
Partner (including JMB and Arvida) will be obligated to present to
the Partnership any particular investment or development
opportunity that comes to its attention; provided, however, that
the Partnership shall be entitled to receive a 10% interest in net
cash flow (in excess of certain base amounts) with respect to each
Future Community, subject to the limitations set forth under
"Business of the Partnership--Future Community Developments". See
"Fiduciary Responsibility of the General Partner".
JMB and existing or future real estate investment entities
advised or managed by JMB or its affiliates may be in competition
under some circumstances with Arvida, and thereby the Partnership,
for real property investments. Such conflicts could arise, for
example, if the purchase of a particular undeveloped property
should appear to be suitable for development for more than one
purpose including as an Arvida-sponsored Community development.
In addition, JMB or its affiliates may acquire and develop
properties located nearby or adjacent to Communities or proposes
Arvida Community developments, and the Partnership shall have no
right to receive an interest in such developments. As a result of
its relationship with its affiliates and the nature of such
affiliates' development business, Arvida may be unable to develop
certain properties in the manner, and to the extent, which it
otherwise would, and, as a result, the Partnership may not be able
to receive an interest in certain development projects. Arvida
and its staff may supply certain development and management
services to other JMB affiliates and may develop properties for
such affiliates independent of Future Communities.
Affiliates of the General Partner may also be in competition
with the Partnership in connection with the sale or operation of
properties under some circumstances. For example, the Partnership
may own certain interest in Community properties adjacent to
properties owned by JMB or other affiliated entities. As a
result, the Partnership and one or more affiliated entities may be
competing in particular geographical markets for residents or for
tenants in commercial or office projects. There may also be
similar sorts of competition in connection with the sales of
property in certain markets. Any adjacent commercial properties
owned by the Partnership and an affiliated entity will offer
economic terms for tenant leases in such adjacent properties which
are comparable considering all relevant factors including, but not
limited to, age and quality of construction.
RELATIONSHIP OF AFFILIATES TO PARTNERSHIP
JMB or its affiliates are not prohibited from providing
services to, and otherwise dealing or doing business with, persons
who deal with the Partnership. However, no rebates or "giveups"
may be received by the General Partner or any affiliate of the
General Partner, nor may the General Partner or any such affiliate
participate in any reciprocal business arrangements which would
have the effect of circumventing any of the provisions of the
Partnership Agreement. JMB and its affiliates may provide certain
services to the Partnership as described under "Management of the
Partnership". If any other transactions between the Partnership
and JMB or its affiliates occur, they must also be negotiated on a
basis not less favorable to the Partnership than that available
from third parties providing comparable services and shall be
terminable on 60 days' notice.
REMUNERATION OF JMB, ARVIDA AND AFFILIATES
JMB and its affiliates, including Arvida, will receive
substantial compensation and other amounts from the Partnership,
regardless of whether the Partnership achieves its investment
objectives. See "Management of the Partnership--Management
Compensation" and" --Affiliate Supervisory Agreement".
PARTICIPATION OF AN AFFILIATE AS A SELECTED DEALER
JMB Securities Corporation, a broker-dealer affiliated with
JMB, is expected to participate as a Selected Dealer in the
offering of Interests and will be entitled to the same selling
commission as other dealers. See "Plan of Distribution". JMB
Securities Corporation may be subject to a conflict of interest in
performing any "due diligence" obligations that may arise out of
its participation in the offering because of its affiliation with
the General Partner.
RELATIONSHIP OF MERRILL LYNCH TO AFFILIATE
An affiliate of Merrill Lynch, the Selling Agent for this
offering, is purchasing Interests to 1% of the total Interests
sold to the public pursuant to this offering at a cost of $1 per
Interest and is a limited partner in one of the Associate Limited
Partners. As a result, Merrill Lynch as selling agent may be
subject to a conflict of interest in performing any "due
diligence" obligations that may arise out of its participation in
the offering because of such relationship with its affiliate. In
addition, the issuance of such Interests at $1 per Interest to the
Merrill Affiliate effectively dilutes the Interests purchased by
other Holders of Interests.
LEGAL REPRESENTATION
As noted under "Legal Matters", counsel for the Partnership
in connection with the offering ia also counsel to JMB and various
affiliates, including the General Partner of the Partnership, on
various matters. No counsel has been independently retained to
represent the Holders of Interests. In the event any controversy
arises following the termination of the offering in which the
interests of the Partnership appear to be in conflict with those
of JMB or its affiliates, other counsel would be retained for one
or both of the parties.
FIDUCIARY RESPONSIBILITY OF THE GENERAL PARTNER
The General Partner is accountable to the Partnership as a
fiduciary and consequently must exercise good faith and integrity
in handling Partnership affairs. This is an uncertain area of the
law, and Holders of Interests who have questions concerning the
fiduciary duties of the General Partner should consult with their
counsel.
The Partnership Agreement provides that neither the General
Partner nor any affiliate thereof engaged in the performance of
services on behalf of the Partnership (the "Indemnified Parties")
will be liable to the Partnership or the Holders of Interests for
any loss or liability resulting from any act or omission performed
or omitted by them if the General Partner or its affiliates have
determined, in good faith, that the act or omission which caused
the loss or liability, was in the best interests of the
Partnership and such loss or liability was not the result of
misconduct or negligence and that, subject to certain limitations,
the Indemnified Parties will be indemnified by the Partnership
against any loss or liability suffered by them if the General
Partner or its affiliates have determined, in good faith, that the
act or omission which caused the loss or liability was in the best
interests of the Partnership and such loss or liability was not
the result of misconduct or negligence. See "Summary of the
Partnership Agreement--Indemnification of the General Partner".
Thus, the Limited Partners or Holders of Interests, as the case
may be, may have a more limited right of action than would
otherwise be the case absent such provisions. In the opinion of
the Securities and Exchange Commission, indemnification for
liabilities arising under the Securities Act of 1933, as amended,
is contrary to public policy and therefore unenforceable.
The Partnership Agreement expressly provides that neither
the General Partner nor any affiliate of the General Partner will
be obligated to present to the Partnership any particular
investment opportunity that comes to its attention. See "Business
of the Partnership" and "Conflicts of Interest--Possible
Competition by Partnership with Affiliates".
OWNERSHIP OF GENERAL PARTNER
All of the outstanding shares of the General Partner are
owned by JMB Holdings Corporation, an Illinois corporation, 75% of
the outstanding shares of which are owned by JMB Realty
Corporation and the remaining 25% of which is owned by certain
officers and directors of JMB. The General Partner is not
prohibited from paying dividends to its stockholder. The
Partnership Agreement provides that the purchasers of Interests
will acquire no interest in the stock or assets of the General
Partner, or in any proceeds of any sales thereof by virtue of
acquiring or owning Interests and becoming Holders.
MANAGEMENT COMPENSATION
The following describes the types and estimated amounts of
fees, compensation, and other payments, and distributions that the
General Partner and its affiliates (including the Associate
Limited Partners) will or may receive in connection with the
business of the Partnership and/or the acquisition of its assets.
These amounts were not determined by arm's-length bargaining.
Acquisition and Financing Guaranty Fee. The Partnership is
obligated to pay JMB or its affiliates an Acquisition and
Financing Guaranty Fee equal to $20,000,000 (subject to reduction
as set forth below and in the Partnership Agreement) for services
of JMB and such affiliates in negotiating and arranging, and
guaranteeing repayment of the Acquisition Notes and certain other
obligations incurred in connection with, the acquisition of the
assets by the Partnership from the Seller. Such fee will be
payable upon the date of the admission of Holders of Interests to
the Partnership ("Admission Date"), or, in the event of multiple
Admission Dates, pro rata upon each Admission Date based upon the
percentage of the maximum offering sold (without giving effect to
the right to increase the size of the offering to 400,000
Interests); to the extent that less than all of the Interests are
sold, therefore, the Acquisition and Financing Guaranty Fee will
be proportionately less than $20,000,000.
Fees for Property Management and Other Services. The
Partnership may engage affiliates of the General Partner for
property management, insurance brokerage, or other services to be
performed, if necessary, in connection with the properties of the
Partnership. Property management fees may be charged at rates
prevailing for comparable services in the localities where
properties are located, in the event such services are provided,
but not to exceed 6% of the gross receipts from a commercial or
industrial property (if leasing and re-leasing services are
performed by such affiliate; otherwise the maximum fee is 3% of
the gross receipts) and 3% of the gross receipts (reduced to 1%
after the first five years) from a commercial or industrial
property leased for ten years or more on a net basis. Subject to
certain limitations in the Partnership Agreement, insurance
brokerage services may be performed and commissions may be
received at rates prevailing for comparable classes of coverage in
the localities where the properties are located. If affiliates of
the General Partner perform other services for the Partnership,
the fee for such services must be not less favorable to the
Partnership than that available from third parties providing
comparable services and the arrangement in respect of such
services shall be terminable, without penalty, on 60 days' notice.
As described under "Business of the Partnership--Description
of Current Developments", an affiliate of JMB which develops malls
and shopping centers nationally may participate as a joint venture
partner with a joint venture between the Partnership and an
unaffiliated third party in the development of a regional shopping
mall at Sarasota, Florida on property owned (including under an
option) by a joint venture in which the Partnership is a 50%
partner; in such event, the affiliate would be entitled to receive
development fees equal to the lesser of 5% of the cost of
development or the amount which would be charged by an independent
third party rendering comparable services, together with allocable
reimbursements of allocable expenses. In the event of a joint
venture between the Partnership and its joint venture partner and
an affiliate of JMB, the joint venture shall obtain a report of
the appraised value of the mall or shopping center upon completion
of the property. To the extent that the actual costs of
development, including the development fees paid to such
affiliate, exceed the appraised value of the project, the
development fees will be remitted by such affiliate to the extent
of the excess, if any, of such development costs over such
appraised value.
Distributive Share of Cash Flow. Following admission of
Limited Partners, the General Partner and the Associate Limited
Partners (collectively) will be entitled to receive (i) until the
Holders of Interests have received cumulative distributions of
Cash Flow equal to a cumulative 10% per annum return (on a non-
compounded basis) on their adjusted capital Investments (which
shall be deemed return (on a non-compound basis) on their Adjusted
Capital Investments), 5% of the distibutions of Cash Flow
remaining after Cash Flow distributions to the General Partner and
the Associate Limited Partners (collectively) equal to 1% per
annum of the Gross Asset Value of the Partnership (subject to
certain limitations set forth in the Partnership Agreement);
provided, however, that until such time as the Holders of
Interests have received total distributions of Cash Flow equal to
their Capital Investments, receipt by the General Partner and the
Associate Limited Partners (collectively) of their 5% share of
Cash Flow shall be deferred (the "Deferred Amount") until receipt
by the Holders of Interests of Cash Flow distributions equal to a
12% per annum cumulative, non-compounded return on their initial
Capital Investments; any Deferred Amount shall be distributable to
the General Partner and the Associate Limited Partners
(collectively), (x) out of any Cash Flow otherwise distributable
to the Holders of Interests at such time as the Holders of
Interests have received a 12% per annum cumulative, non-compounded
return on their Capital Investments, or (y) in any event, to the
extent of one-half of Cash Flow otherwise distributable to the
Holders of Interests at such time as the Holders of Interests have
received total distributions of Cash Flow equal to their Capital
Investments; and (ii) thereafter, 15% of all distributions of Cash
Flow shall be made to the General Partner and the Associate
Limited Partners (collectively) and 85% to the Holders of
Interests; provided, however, that the General Partner and the
Associate Limited Partners (collectively) shall be entitled to
receive an additional share of Cash Flow otherwise distributable
to the Holders of Interests under clause (ii) equal to the lesser
of (a) 13% of the aggregate distributions of Cash Flow under
clause (ii) to all parties or (b) an amount equal to 2% of the
gross selling prices of all interests in real property of the
Partnership (subject to certain limitations). See "Cash
Distributions and Allocations of Profits or Losses".
The General Partner and Arvida/JMB Associates (collectively)
will be entitled to receive a distribution of Cash Flow of the
Partnership in an amount equal to $20,000,000 on September 30,
1987. The definition of Cash Flow includes, and this distribution
may be paid from, the proceeds of sales or other dispositions of
assets in the ordinary course of business and the proceeds of
borrowings of the Partnership. See "Acquisition of Assets".
Reimbursable Expenses. The Partnership will reimburse the
General Partner and its affiliates (including Arvida) for their
direct expenses relating to this offering and relating to the
administration of the Partnership and the acquisition,
development, ownership, supervision and operation of the
Partnership assets (subject to certain limitations contained in
Section 5.1D of the Partnership agreement). In addition, certain
other expenses of JMB and its affiliates will be reimbursed as
described below. JMB and its affiliates will be reimbursed by the
Partnership and all expenses of the offering, sale and
distribution of Interests, and the cost of goods, materials and
services used for or by the Partnership and obtained from entities
which are not affiliated with the General Partner.
Except for organizational expenses incurred in the creation
of the Partnership and offering, selling and distribution expenses
incurred in selling and distribution expenses incurred in the sale
of Interests, JMB and the General Partner will not be reimbursed
by the Partnership for the salaries and related salary expenses of
any of the Director, the Chairman, President or any Executive Vice
President of JMB or the General Partner or any individual who
holds 5% or more of an equity interest in JMB or the General
Partner or has the power to direct or cause the direction of JMB
or the General Partner, whether through ownership of voting
securities, by contract or otherwise, or for any indirect, general
or administrative overhead expenses incurred in performing
services for the Partnership which are not directly attributable
to such services. The Partnership, however, will subject to
certain limitations in 5.1D of the Partnership Agreement,
reimburse JMB and its affiliates for salaries (and related salary
expenses) for services which could be performed directly for the
Partnership by independent parties, such as legal, accounting,
transfer agent, data processing, duplicating and other services.
The amounts charged to the Partnership for such services will not
exceed the lesser of the actual cost of such services, or 90% of
the amount which the Partnership would be required to pay to
independent parties for comparable services. It is estimated that
such reimbursements for such services will be approximately
$175,000 in 1987. In the Partnership's annual report to Holders
of Interests, there will be provided an itemized breakdown of
reimbursements made to JMB and its affiliates in the categories of
legal, accounting, transfer agent, data processing and duplicating
services. Such reimbursement of expenses will be made regardless
of whether any distributions are made to the Holders of Interests.
Pursuant to the Supervisory Agreement, the Partnership shall
reimburse Arvida fully for all of its out-of-pocket expenses
(including salary and salary-related expenses) incurred while
supervising the development and management of the Partnership's
properties and other operations; provided, however, such
reimbursements shall not exceed 5% of the gross revenues from the
business of the Partnership. Such reimbursements will be made
regardless of whether any distributions are made to the Holders of
Interests.
CAPITAL CONTRIBUTIONS OF THE GENERAL PARTNER AND THE ASSOCIATE
LIMITED PARTNERS
The General Partner and the Associate Limited Partners have
made capital contributions to the Partnership aggregating $1,000
and will make additional capital contributions so that total
capital contributions of the General Partner and the Associate
Limited Partners will aggregate at least $20,000. Except under
certain limited circumstances upon liquidation of the Partnership
or its Partnership interest (see "Summary of the Partnership
Agreement--Dissolution and Liquidation"), the General Partner, in
its capacity as such, will make no additional capital
contributions to the Partnership. JMB Investor Services
Corporation made a capital contribution to the Partnership of
$5,000 when it purchased five Interests as the Initial Limited
Partner of the Partnership.
AFFILIATE SUPERVISORY AGREEMENT
Arvida, an affiliate of JMB and the General Partner, will
provide development and management supervisory personnel for the
Partnership for all of its projects and operations in accordance
with the objectives and criteria set forth under "Business of the
Partnership". Pursuant to the Supervisory Agreement, Arvida will
provide such supervisory management personnel at cost for the
duration of the Partnership; provided, however, that the
Supervisory Agreement may be terminated without cause by the
Partnership without penalty upon sixty days' written notice.
Arvida may terminate the Supervisory Agreement if the General
Partner ceases to be an affiliate of JMB or if the Partnership is
in material breach of the Supervisory Agreement which breach
continues for a period of sixty days. See "Management of the
Partnership--Management Compensation--Reimbursable Expenses".
While these personnel will function primarily in an advisory and
supervisory role with respect the Partnership's own operating
employees, Arvida personnel will also assist Partnership personnel
in the Partnership's management, development and sale of
properties. These personnel will supervise the identification of
Partnership-owned land for development, the design of a Community
master plan, the obtaining of regulatory and governmental
approvals, and assist with the installation of infrastructure and
amenities, the sale of developed parcels and homesites to third-
party developers and the construction of residential units and
commercial and industrial properties. Arvida intends to follow
the Seller's practice of hiring subcontractors and consulting
firms on a project-by-project basis rather than maintaining in-
house capabilities, in order to be able to select suitable
professionals for a particular project. Arvida has granted the
Partnership a non-exclusive license to the "Arvida" name for its
use pursuant to, and for the term of, the Supervisory Agreement.
Arvida intends, but has no obligation, to continue to seek
to develop, among other real estate projects, additional Future
Communities. The Partnership will be entitled to receive a 10%
interest in net cash flow (above certain base amounts) from Future
Communities. See "Business of the Partnership--Future Community
Developments".
Arvida will be reimbursed directly by the Partnership for
all of its out-of-pocket expenses (including an allocable share of
its salary and salary-related expenses) incurred while supervising
the development and management of the Partnership's properties.
Arvida will not be entitled to receive any fees or other payments,
direct or indirect, from the Partnership. Arvida will reimburse
the Partnership for any goods, services or facilities of the
Partnership which it may use in connection with projects unrelated
to the Partnership's business.
Pursuant to the Supervisory Agreement, Arvida and each of
its directors, officers and employees shall be indemnified for any
liability arising out of their activities under the Supervisory
Agreement, except for fraud, bad faith or negligence by them.
Arvida may develop new commercial and industrial projects,
which will be wholly separate and distinct from any future
Communities developed under the name "Arvida"; the Partnership
will not be entitled to participate in the net cash flow of any
such projects. Arvida may participate in the development of
Community projects for others without use of the name "Arvida" in
which case the Partnership would have no right to participate.
_________________________________________________________________
DESCRIPTION OF ASSIGNEE INTERESTS
__________________________________________________________________
ASSIGNMENT OF INTERESTS
An investor in the Partnership will hold all of his interest
in the Partnership by virtue of an assignment to the investor of
Interests held by the Initial Limited Partner which have been
acquired with the subscription proceeds of such investor. The
Initial Limited Partner will be the Limited Partner of record for
the Interests purchased and held by the Assignee Holders, but all
of the economic benefits of the Interests (including cash
distributions or allocations of Profits or Losses) will be
distributed or allocated to the Assignee Holders. The discussion
in this Prospectus with respect to receipt of such Partnership
distributions and allocations refers to Holders of Interests,
rather than Limited Partners. Purchasers of such assigned
Interests will not themselves become Limited Partners, unless they
elect or are required to do so, as explained below.
Attached to this Prospectus as part of Exhibit C is a form
of Subscription Agreement Signature Page. Investors may subscribe
to the Partnership through Merrill Lynch or Selected Dealers
without executing the Subscription Agreement Signature Page
(except where required by state law). By the payment of his
subscription proceeds and acceptance by the General partner as an
Assignee Holder, each investor will be recognized by the
Partnership as an Assignee Holder of Interests and each investor
will be bound by all the terms of the Subscription Agreement, as
well as the Partnership Agreement and Assignment Agreement. Under
the Assignment Agreement, included as Exhibit B to this
Prospectus, among the Partnership, the Initial Limited Partner,
the General Partner and each investor becoming an Assignee Holder
pursuant to this offering, all of the ownership attributes of the
Interests are granted to such Assignee Holders, including voting
rights and rights to their proportionate percentage interest in
the Partnership's income, gains, losses, deductions, credits and
distributions, and Assignee Holders are bound by the terms of the
Partnership Agreement.
An Assignee Holder who wishes to become a Substituted
Limited Partner may do so upon complying with the provisions
pertaining to transfer of Interests under the Partnership
Agreement. See "Transferability of Interests" below. An Assignee
Holder who effects such a transfer and becomes a Substituted
Limited Partner will not be permitted subsequently to reassign its
Limited Partnership Interests to the Initial Limited Partner and
once more become an Assignee Holder. The Initial Limited Partner
holds five Interests for its own account and has all rights
attributable to such Interests under the Partnership Agreement.
An assignee Holder who wishes to become a Substituted
Limited Partner may do so upon complying with the provisions
pertaining to transfer of Interests under the Partnership
Agreement. See "Transferability of Interests" below. An Assignee
Holder who effects such a transfer and becomes a Substituted
Limited Partner will not be permitted subsequently to reassign its
Limited Partnership Interests to the Initial Limited Partner and
once more become an Assignee Holder. The Initial Limited Partner
holds five Interests for its own account and has all rights
attributable to such Interests under the Partnership Agreement.
No transfer (except for intra-family and certain other
transfers, including transfers by gift or inheritance) will be
recognized if following the transfer either the transferor or the
transferee would hold fewer than five Interests. Additional
restrictions on transfer of Interests are imposed in some states
by their respective securities laws.
No transfer may be made to any person that is a non-resident
alien individual or foreign corporation or other entity or that
may be subject to tax under Section 511 of the Code or to any
"tax-exempt entity" (within the meaning of Section 168(h) of the
Code for purposes of Section 168(h)(2) of the Code for purposes of
Section 168(h)(6)(A) of the Code), except in the sole discretion
of the General Partner.
In the case of any transfer of Interests, the General
Partner will impose upon the transferee the suitability
requirements of state blue sky laws. Any member of the National
Association of Securities Dealers ("NASD") assisting in such
transfer will impose upon the transferee the suitability
requirements imposed by the NASD.
The rights of any transferee of an Interest who does not
become a Substituted Limited Partner will be limited to his share
of Partnership Profits or Losses and cash distributions as
described above. The voting rights of a transferor (other than
the Initial Limited Partner) who transfers an Interest will
terminate with respect to such Interest upon such transfer,
whether or not the transferee thereof is admitted as a Substituted
Limited Partner with respect thereto.
MERRILL LYNCH INVESTOR SERVICE
It is not anticipated that a public market for the Interests
will develop. However, Merrill Lynch may provide certain investor
services which may assist investors desiring to sell their
Interests. Merrill Lynch, acting as an agent of persons who
desire to buy or sell Interests, will use its best efforts to
match any buy order it receives with any sell order it receives,
at specified prices (or price ranges) only, but will not solicit
any sell orders for Interests. Any solicitation in respect of buy
orders will be done in accordance with Federal securities laws.
This service will be made available only after the Final Admission
Date and only to investors who are not Substituted Limited
Partners and who maintain or establish an account with Merrill
Lynch. Any transactions effected through this service are subject
to any restrictions on transfer imposed by applicable state
securities laws. This service will not be available to residents
of the State of California unless and until the Department of
Corporations of the State of California modifies or waives its
policy with respect to such service.
To facilitate such transactions, Merrill Lynch will make
available upon request, information as to the prices at which
Interests have recently been sold. However, Merrill Lynch will
not set the price at which Interests will be sold. Since this
arrangement will not constitute a market for the Interests, no
"market orders" or "stop orders" can be accepted by Merrill Lynch.
Accordingly, it is possible that no buy orders will be received by
Merrill Lynch at the prices specified in the sell orders which
Merrill Lynch receives, and in that case it will not be possible
for Merrill Lynch to arrange any sales. For its services in
acting as agent for the buyer and seller in such transactions,
Merrill Lynch will charge an appropriate fee or commission.
Further information about this service can be obtained from
Merrill Lynch. Merrill Lynch is under no obligation to provide
this service to Holders of Interests, and this service may be
discontinued or suspended at any time without notice.
_________________________________________________________________
CASH DISTRIBUTIONS AND ALLOCATIONS OF PROFITS OR LOSSES
_________________________________________________________________
In the event the minimum number of Interests is subscribed
for, a Holder of Interests will be entitled to receive from the
Partnership a distribution of Cash Flow (without regard to the
distribution to the General Partner and Arvida/JMB Associates of
Cash Flow (including the proceeds of any financings) on September
30, 1987, as described under "Management of the Partnership--
Management Compensation") in an amount equal to such Holder's
Capital Investment from the day after his subscription proceeds
are received in the Partnership escrow account through the end of
the fiscal quarter in which the Final Admission Date occurs
multiplied by an initial rate of 5% per annum. This rate,
however, may be increased prospectively (in the sole discretion of
the General Partner) at the end of any week or weeks, commencing
with the following week. Such Cash Flow will be distributed
within 60 days following the end of such fiscal quarter in which
the First Admission Date occurs and each fiscal quarter thereafter
through the fiscal quarter in which the Final Admission Date
occurs. See "Plan of Distribution--Allocations of Benefits During
the Offering Period".
Beginning with the first fiscal quarter following the
termination of the offering of Interests to the public, Cash Flow
shall be distributed on a quarterly basis, within 60 days
following the end of each fiscal quarter, as follows:
(i) until the Holders of Interests have received
cumulative distributions of Cash Flow equal to a 10% per annum
return (on a non-compounded basis) on their Adjusted Capital
Investments (as defined below) plus the return of their Capital
Investments (which shall be deemed returned to the Holders of
Interests only to the extent of cumulative distributions of Cash
Flow to Holders of Interests in excess of 10% per annum (on a non-
compounded basis) of their Adjusted Capital Investments), (a)95%
to the Holders of Interests and 5% to the General Partner and
Associate Limited Partners (collectively) remaining after (b) Cash
Flow distributions to the General Partner and the Associate
Limited Partners (collectively) equal to 1% per annum of the Gross
Asset Value (as defined below) of the Partnership (subject to
certain limitations set forth in the Partnership Agreement);
provided, however, that until such time as the Holders of
Interests have received total distributions of Cash Flow equal to
their Capital Investments, receipt by the General Partner and the
Associate Limited Partners (collectively) of their 5% share of
Cash Flow under clause (a) above shall be deferred (the "Deferred
Amount") to receipt by the Holders of Interests of Cash Flow
distributions equal to a 12% per annum cumulative, non-compounded
return on their Capital Investments; and Deferred Amount shall be
distributable to the General Partner and the Associate Limited
Partner (collectively), (x) out of any Cash Flow otherwise
distributable to the Holders of Interests under clause (a) above
at such time as the Holders of Interests have received a 12% per
annum cumulative, non-compounded return on their Capital
Investments, or (y) in any event, to the extent of one-half of
Cash Flow otherwise distributable to the Holders of Interests
under clause (a) above at such time as the Holders of Interests
have received total distributions of Cash Flow equal to their
Capital Investments; and
(ii) thereafter, all distribution of Cash Flow shall
be made 85% to the Holders of Interests and 15% to the General
Partner and the Associate Limited Partners (Collectively);
provided, however, that the General Partner and the Associate
Limited Partners (collectively) shall be entitled to receive an
additional share of Cash Flow otherwise distributable to the
Holders of Interests under this clause (ii) equal to the lesser of
(x) an amount equal to 2% of the gross selling prices of any
interests in real property of the Partnership (subject to certain
limitations) or (y) 13% of the aggregate distributions of Cash
Flow under this clause (ii) to all parties.
"Gross Asset Value" shall mean the dollar amount reflected
on the books and records maintained by the Partnership, at the
Final Admission Date, of the gross assets (including all of the
Partnership's interests in joint venture assets) acquired by the
Partnership, directly or indirectly, or, if sold or otherwise
disposed, of the proceeds of such assets, increased by the dollar
amount reflected on the books and records maintained by the
Partnership, at the time of their respective acquisition, of any
gross assets (including all of the Partnership's interests in
joint venture assets) which the Partnership subsequently acquires,
directly or indirectly, from the Seller or as otherwise
contemplated by the Acquisition Agreement or this Prospectus.
Distributions will be made on or before the last day of May,
August, November and February of each year in respect of
operations for the preceding fiscal quarter.
"Adjusted Capital Investments", with respect to any fiscal
quarter, shall mean the Capital Investments of the Holders of
Interests reduced, as of the first day of any fiscal quarter
following the fiscal quarter with respect to which a distribution
is made, by cumulative, non-compounded distributions of Cash Flow
to the Holders in excess of 10% per annum of their Adjusted
Capital Investments for all prior fiscal quarters.
The amount equal to 2% of the aggregate selling price of
Partnership properties, which shall determine the amount of Cash
Flow distributable to the General Partner under clause (ii) above,
is subject to limitations as set forth in section 4.1 of the
Partnership Agreement. These limitations include, but are not
limited to, the following: such amount with respect to any
Partnership property shall not exceed 50% of the compensation
customarily changes in connection with sales of similar properties
in arm's length transactions by non-affiliates of JMB rendering
similar services as an ongoing public activity in the same
geographical location and for comparable property, and the amount
of such distribution plus the real estate commission paid to
anyone (other than the Partnership) in connection with the sale of
a Partnership property will not exceed the lesser of (i) 6% of the
gross purchase price for the property or (ii) the amount
customarily charged in connection with sales of properties in
arm's-length transactions by non-affiliates of JMB rendering
similar services as an ongoing public activity in the same
geographical location and for comparable properly.
If in any fiscal quarter the General Partner should
determine that reserves of the Partnership exceed the amount
deemed sufficient in connection with the Partnership's operations,
such reserves might be reduced and, if so, the amount of such
reduction for a particular quarter would be included in and
distributed as a portion of Cash Flow.
As described under "Plan of Distribution", the Merrill
Affiliate, in consideration of consulting services rendered to the
Partnership and the payment of $1 per Interest, will acquire
Interests (which are subject to certain limitations) equal to 1%
of the total Interests sold to the public hereby. In the event
the General Partner causes a Listing of the Interests and the
Merrill Affiliate's Interests are so listed, the Partnership
Agreement provides for an allocation of Profits (in the form of
gross income) in order to cause the capital account for each of
the Merrill Affiliate's Interests to equal the capital accounts of
other Holders for their Interests. As a result of such
allocation, in the event of a liquidation of the Partnership after
such allocation and such a listing, the Merrill Affiliate might be
entitled, in some circumstances, to a larger share of the
liquidation proceeds which share corresponds to such capital
account increase.
Except as set forth under "Plan of Distribution--Allocation
of Benefits During the Offering Period", the portion of Cash Flow
distributed to the Holders of Interests will be made pro rata to
the persons recognized on the books of record of the Partnership
as the Holders of Interests. See "Description of Assignee
Interests--Transferability of Interests".
As more fully described under "Business of the Partnership",
the Partnership intends to invest amounts in additional
development of its Communities, which amounts would otherwise be
available for distribution as Cash Flow, subject to the limitation
described in the following sentence. Under the Partnership
Agreement, the General Partner must use its best efforts to
distribute Cash Flow in amounts at least equal to Federal taxable
income (or components thereof) allocable to the Holders,
multiplied by the maximum individual Federal income tax rate for
the year in which such taxable income (or component thereof) is
realized.
All Profits or Losses of the Partnership for each fiscal
year (or portion thereof) beginning on or after the first date
designated by the General Partner on which Assignee Holders are
recognized as such generally will be allocated as follows: (i)
Profits will be allocated such that the General Partner and the
Associate Limited Partners will be allocated Profits equal to the
amount of Cash Flow distributed to them and the Holders will be
allocated the remaining Profits, and (ii) Losses will be allocated
2% to the General Partner and the Associate Limited Partners
(collectively) and 98% to the Holders. Except as set forth under
"Description of Assignee Interests--Transferability of Interests",
all such allocations of Profits or Losses to the Holders of
Interests generally will be made in proportion to the number of
Interests owned by each Holder at the end of the fiscal year in
which such Profits or Losses are incurred.
_________________________________________________________________
SUMMARY OF THE PARTNERSHIP AGREEMENT
_________________________________________________________________
The Partnership Agreement to be executed by the General
Partner and each Limited Partner is included as Exhibit A to this
Prospectus and each prospective purchaser should read it in full.
Certain provisions of the Partnership Agreement have been
described elsewhere in this Prospectus. With regard to fees,
payments and distributions to be made to the General Partner and
affiliates, the distribution of cash from the Partnership and the
allocation of Partnership Profits or Losses, see "Management of
the Partnership" and "Cash Distributions and Allocations of
Profits or Losses"; with regard to various transactions and
relationships of the Partnership with the General Partner and
affiliates, see "Conflicts of Interest"; with regard to the
Partnership's business objectives and policies, see "Business of
the Partnership"; with regard to the management of the
Partnership, see "Management of the Partnership"; with regard to
the voting rights and certain other rights of Assignee Holders and
as to the possibility of investors being admitted as Limited
Partners of the Partnership, see "Description of Assignee
Interests--Assignment of Interests"; and with regard to the
transfer of interests, see "Description of Assignee Interests--
Transferability of Interests".
The following briefly summarizes certain provisions of the
Partnership Agreement which are not described elsewhere in this
Prospectus. All statements made below and elsewhere in this
Prospectus relating to the Partnership Agreement are hereby
qualified in their entirety by reference to the Partnership
Agreement attached hereto as Exhibit A.
ALL ASSIGNEE HOLDERS WILL BE BOUND BY THE PROVISIONS OF THE
PARTNERSHIP AGREEMENT, THE ASSIGNMENT AGREEMENT AND THE
SUBSCRIPTION AGREEMENT ATTACHED TO THIS PROSPECTUS AS EXHIBIT C
UPON PAYMENT OF THE SUBSCRIPTION AMOUNT AND ACCEPTANCE BY THE
PARTNERSHIP.
LIABILITY OF PARTNERS TO THIRD PARTIES
The General Partner will be liable for all general
obligations of the Partnership to the extent not paid by the
Partnership. JMB Realty Corporation and JMB Holdings Corporation,
affiliates of the General Partner, will not be liable for any such
obligations (except to the extent of any note issued by JMB
Holdings Corporation to the General Partner).
The Partnership Agreement provides that Limited Partners
will not be personally liable for the debts of the Partnership
beyond the amount committed by them to the capital of the
Partnership.
Assuming that a Holder of Interests does not take part in
the control of the business of the Partnership and otherwise acts
in conformity with the provisions of the Partnership Agreement,
the liability of such Holder will, under the Delaware Revised
Uniform Limited Partnership Act (the "Delaware Act"), be limited,
subject to certain possible exceptions, generally to the amount
contributed by such Holder or such Holder's predecessor in
interest to the capital of the Partnership. Under the Delaware
Act, (i) a Holder would be liable, for a period of one year after
the date of the return to the Holder of any part of such Holder's
capital contribution returned without violation of the Partnership
Agreement or the Delaware Act, for the amount of the returned
contribution to the extent necessary to discharge liabilities of
the Partnership to creditors who extended credit while the
returned contribution was held by the Partnership, and (ii) a
Holder would be liable, for a period of six years after the date
of the return to the Holder of any part of the Holder's capital
contribution returned in violation of the Partnership Agreement or
the Delaware Act, for the amount of the returned contribution.
Under the Delaware Act, a Holder may not receive a distribution
from the Partnership if, at the time of the distribution and after
giving effect thereto, the<PAGE>
all things which it deems to be necessary, convenient, appropriate
or advisable in connection therewith, including, but not limited
to, the preparation and filing on behalf of the Partnership of a
registration statement with the Securities and Exchange Commission
and the securities commissions (or similar agencies or offices) of
such jurisdictions as the General Partner shall determine and the
execution or performance of agreements with underwriters and
others concerning the marketing of Additional Limited Partnership
Interests on such basis and upon such terms as the General Partner
shall determine.
G. Notwithstanding any other provision of this Section 3.3
(i) within ten days after the commencement of the public offering
contemplated by Section 3.3A, ML Real Estate Associates II may
acquire an interest in the Partnership as provided herein upon its
payment of $100.00 and (ii) to evidence such interest in the
Partnership, as of the First Admission Date and any Later
Admission Dates, the General Partner may issue Additional Limited
Partnership Interests to the Initial Limited Partner for
assignment to ML Real Estate Associates II (which shall be an
Assignee Holder thereof for purposes of this Agreement) in an
amount equal to 1% of the Additional Limited Partnership Limited
Partnership Interest. It is hereby understood that such
Additional Limited Partnership Interests shall be registered with
the Securities and Exchange Commission contemporaneously with
those described in Section 3.3A.
SECTION 3.4 Partnership Capital
A. No Partner shall be paid interest on any Capital
Investment.
B. No Partner shall have the right to withdraw, or receive
any return of, his Capital Investment, except as may be
specifically provided herein.
C. Under circumstances requiring a return of any Capital
Investment, no Partner shall have the right to receive property
other than cash, except as may be specifically provided herein.
SECTION 3.5 Liability of Partners
No Limited Partner shall be liable for the debts,
liabilities, contracts or any other obligations of the
Partnership. Except as specifically provided herein with respect
to the Associate Limited Partners, a Limited Partner shall be
liable only to make the Capital Investment with respect to the
Limited Partnership Interests which he holds and shall not be
required to lend any funds to the Partnership or, after the
Capital Investments with respect to such Interests shall have been
paid, to make any further capital contribution to the Partnership.
Subject to the provisions of Section 5.8, no General Partner shall
have any personal liability for the repayment of the Capital
Investments with respect to Limited Partnership Interests. No
Limited Partner shall be entitled to the withdrawal or return of
his capital contributions, except to the extent, if any, that
distributions made pursuant to this Agreement or upon termination
of the Partnership may be considered as such by law and then only
to the extent provided for therein.
ARTICLE FOUR
CASH DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES
SECTION 4.1 Distributions of Cash Flow
Beginning with the first fiscal quarter following the fiscal
quarter in which the offering of Additional Limited Partnership
Interests to the public terminates as contemplated by Section 3.3,
all Cash Flow of the Partnership shall be distributed quarterly
within sixty (60) days after the close of each fiscal quarter as
follows:
(i) 90% to the Holders of Interests and 10% to the General
Partner and Associate Limited Partners (collectively) until the
Holders of Interests have received a cumulative, non-compounded,
10% per annum return on their Adjusted Capital Investments plus
the return of their Capital Investments; and
(ii) thereafter, all Cash Flow shall be distributed 85% to
the Holders of Interests and 15% to the General Partner and the
Associate Limited Partners (collectively); provided, however, that
the General Partner and the Associate Limited Partners
(collectively) shall be entitled to receive distributions of
amounts otherwise distributable to the Holders of Interests under
this clause (ii) to the extent such additional amounts do not
exceed the lesser of (A) 2% of the total cumulative selling price
of all interests in real property of the Partnership which have
been sold or otherwise disposed of subsequent to the First
Admission Date and (B) 13% of the cumulative amount distributed
under this clause (ii) to all Persons.
Notwithstanding the foregoing clause (i), the 10% of Cash Flow
distributable to the General Partner and Associate Limited
Partners (collectively) under such clause (i) shall be limited as
follows:
(A) to the extent, if any, that one percent (1%) of the
Gross Asset Value (as defined below) is less than 5.2631% of Cash
Flow, the amount, distributed to the General Partner and Associate
Limited Partners (collectively) shall be reduced by the amount of
any such deficiency and the Holders of Interests shall receive
additional Cash Flow in the amount of such reduction;
(B) the receipt by the General Partner and the Associate
Limited Partners (collectively) of 4.7369% of total Cash Flow
under said clause (i) (the "Remainder") shall be deferred (and
such deferred amount shall be distributed to the Holders of
Interests) unless the Holders of Interests have received Cash Flow
distributions equal to a 12% per annum cumulative, non-compounded
return on their Capital Investments; provided, however, that such
deferral shall terminate at such time as the Holders of Interest
have received total distributions of Cash Flow equal to their
Capital Investments; any deferred amount of the Remainder shall be
distributable to the General Partner and the Associate Limited
Partners (collectively), (x) out of any Cash Flow otherwise
distributable to the Holders of Interests under the foregoing
clause (i) at such time as the Holders of Interests have received
a 12% per annum cumulative, non-compounded return on their Capital
Investments, or (y) in any event, to the extent of one-half of
Cash Flow otherwise distributable to the Holders of Interests at
such time as the Holders of Interests have received total
distributions of Cash Flow equal to their Capital Investments.
"Gross Asset Value" shall mean the dollar amount reflected on the
books and records maintained by the Partnership, at the Final
Admission Date, of the gross assets (including all of the
Partnership's interests in joint venture assets) acquired by the
Partnership, directly or indirectly, or, if sold or otherwise
disposed of, the proceeds of such assets, increased by the dollar
amount reflected on the books and records maintained by the
Partnership, at the time of their respective acquisition, of any
gross assets (including all of the Partnership's interests in
joint venture assets) which the Partnership subsequently acquires,
directly or indirectly, from the Seller or otherwise as
contemplated by the Acquisition Agreement or the Prospectus.
No amounts computed as 2% of the selling price of any real
property in connection with sale of a Property under (ii) above
shall exceed 50% of the amount customarily charged in connection
with sales of real properties in arm's-length transactions by non-
affiliates of JMB rendering services as an ongoing public activity
in the same geographical location and for comparable real
property; provided, however, that the amount computed as 2% of the
selling price of any Property plus the real estate commission paid
to anyone (other than commissions which inure to the benefit of
the (Partnership) in connection with the sale of a Property shall
in no event exceed the lesser of (i) 6% of the gross purchase
price of the Property or (ii) the amount customarily charged in
connection with sales or real properties in arm's-length
transactions by non-affiliates of JMB rendering real estate
brokerage services as an on-going public activity in the same
geographical location and for comparable real property.
The General Partner shall use its best efforts to operate
the Partnership so that such operation will provide sufficient
Cash Flow (including distributions under Section 3.3B) in order
that the aggregate Cash Flow distributions for each year
distributable to the Holders (other than ML Real Estate Associates
II) are at least equal to Federal taxable income (or components
thereof) allocable to the Holders (other than ML Real Estate
Associates II), multiplied by the maximum individual Federal
income tax rate for the year in which such taxable income (or
component thereof) is realized. Except as otherwise provided in
this Agreement, this Section 4.1 shall apply in determining Cash
Flow distributions upon dissolution.
If, upon the completion of the liquidation and termination
of the Partnership and final distribution of all Partnership
funds, the aggregate capital contributions with respect to Limited
Partnership Interests issued under Section 3.3A exceed the sum of
the distributions of Cash Flow with respect to such number of such
Limited Partnership Interests under clause (i) of Section 4.1,
distributions with respect to such number of such Limited
Partnership Interests under Section 8.3C of Liquidation proceeds
and distributions, if any, with respect to such number of such
Limited Partnership Interests made with the proceeds of any
capital contributions made by the General Partner and Arvida/JMB
Associates (said excess is hereinafter referred to as the "Excess
Amount"), then the General Partner, the Associate Limited Partners
and ML Real Estate Associates II (excluding its successors and
assigns and except as provided in the succeeding paragraph) shall
make aggregate payments to the Holders (other than ML Real Estate
Associates II but including any unaffiliated successor or assign
thereof) in an amount equal to the lesser of the Excess Amount or
the amounts of Cash Flow received by the General Partner, the
Associate Limited Partners and ML Real Estate Associates II
pursuant to Section 4.1(i), such payments to be made by the
General Partner, the Associated Limited Partners and ML Real
Estate Associates II based upon the relative cumulative
distributions of Cash Flow received by each of them pursuant to
Section 4.1(i) up to the time of such payments.
In the event that the General Partner shall elect under
Section 5.5(i)(a) to cause Interests to be listed and quoted on a
United States national exchange or to be reported by the National
Association of Securities Dealers Automated Quotation System and
the Interests issued to ML Real Estate Associates II under Section
3.3G are to be so listed and quoted or reported, the obligation of
ML Real Estate Associates II to make payments pursuant to the
preceding paragraph shall terminate on the date on which such
Interests are first listed and quoted or reported pursuant to such
election; provided that ML Real Estate Associates II, by prompt
notification to the General Partner, may elect to cause all (but
not less than all) of the Interests issue to ML Real Estate
Associates II under Section 3.3G not to be so listed and quoted or
reported. In the event of such an election by ML Real Estate
Associates II, ML Real Estate Associates II may subsequently
notify the general Partner that such Interests issued to ML Real
Estate Associates II under Section 3.3G shall be so listed and
quoted or reported and the General Partner shall cause such
Interests to be so listed and quoted or reported, provided that ML
Real Estate Associates II shall have agreed to pay all costs and
expenses of such listing and quotation or reporting. Any such
subsequent listing and quotation or reporting of such Interests of
ML Real Estate Associates II shall be treated for purposes of this
Section 4.1 and Section 4.3G as made pursuant to the election of
the General Partner under Section 5.5(i)(a). Except as aforesaid,
the obligation of ML Real Estate Associates II to make payments
under the preceding paragraph shall constitute the personal
obligation of ML Real Estate Associates II, and such obligation
shall continue to exist whether or not ML Real Estate Associates
II owns or holds any additional Limited Partnership Interests at
the time payments are required to be made pursuant to the
preceding paragraph.
Notwithstanding anything to the contrary in the foregoing
provisions of this Section 4.1, on September 30, 1987, subject to
the making by the General Partner of the determination provided
below, a distribution of Cash Flow of the Partnership in an amount
equal to $20,000,000 shall be made to the General Partner and
Arvida/JMB Associates. Such distribution shall be made whether or
not the Partnership receives any Capital Investments with respect
to Additional Limited Partnership Interests in connection with the
public offering contemplated by Section 3.3A. Prior to making
such distribution, the General Partner shall determine that there
is sufficient working capital available or sufficient funds
available from debt financing to permit such distribution to be
made.
SECTION 4.2 Allocation of Profits or Losses
A. The Profits or Losses for each fiscal year of the
Partnership (or portion thereof) during the term of this Agreement
for any period beginning on or after the First Admission Date
shall, except as provided in Sections 4.2F and 4.3G, be allocated
as follows: (i) Profits shall be allocated, with respect to any
such fiscal period, such that the General Partner, each of the
Associate Limited Partners and ML Real Estate Associates II shall
be allocated Profits equal to the amount of Cash Flow actually
distributed to each of them, respectively, for such fiscal period
(without taking into account any distribution made pursuant to
the last paragraph of Section 4.1), except that in all events the
General Partner shall be allocated at least 1% of Profits, and the
Holders (other than ML Real Estate Associates II) shall be
allocated the remaining Profits and (ii) Losses shall be
allocated, with respect to any such fiscal period, 1% to the
General Partners 1% to the Associate Limited Partners
(collectively) and 98% to the Holders, except that, if ML
fungibility is achieved as provided in Section 4.3G, then with
respect to any fiscal period which commences on or after the date
on which Interests are first listed and quoted or reported
pursuant to an election made by the General Partner under Section
5.5J(i)(a), for the purpose of allocating Profits under clause (i)
above. ML Real Estate Associates II shall not be allocated
Profits equal to the amount of Cash Flow actually distributed to
it but instead shall be treated for such purpose as a Holder
(other than ML Real Estate Associates II).
The Profits of the Partnership for each fiscal year of the
Partnership (or portion thereof) during the term of this Agreement
for any period ending prior to the First Admission Date shall,
except as provided in Section 4.2F, be allocated 1% to the General
Partner, 98% to the Associate Limited Partners (collectively), and
1% to the Initial Limited Partner and (commencing on its
acquisition of a Partnership interest under Section 3.3G) ML Real
Estate Associates II, and the Losses of the Partnership for each
such fiscal year (or portion thereof) shall be allocated 70% to
the General Partner, 29% to the Associate Limited Partners
(collectively), and 1% to the Initial Limited Partner and
(commencing on its acquisition of a Partnership interest under
Section 3.3G) ML Real Estate Associates II. Such Profits or
Losses shall be determined on the basis of an interim closing of
the Partnership's books on the First Admission Date.
B. Syndication commissions for any fiscal year of the
Partnership shall be allocated to the Holders of Interests in an
amount equal to the syndication commission actually paid by the
Partnership in connection with the acquisition of the Interest of
such Holder. Such allocation shall take into account the
existence of any discount applicable to the syndication commission
of a particular Holder.
C. No allocation of Losses (which include items thereof)
under Section 4.2A shall be made to any Holder to the extent that
such allocation (a) would create a deficit balance in such
Holder's Capital Account which in absolute amount exceeds the
Minimum Gain allocable to such Holder as of the end of the fiscal
year for which such allocation would be made or (b) in the good
faith judgment of the General Partner and upon advice by the
Partnership's independent certified public accountants or legal
counsel, would otherwise likely not be respected under Section
704(b) of the Code. In any such event, the allocation of such
Losses thereof to such Holder shall be reduced to that extent.
D. Any credits of the Partnership as determined for Federal
income tax purposes for a fiscal year shall be allocated as
Profits of the Partnership in accordance with Section 4.2A. In
the event the adjusted tax basis of any "Section 38 property"
(within the meaning of Section 48 of the Code) of the Partnership
is increased pursuant to Section 48(q)(2) of the Code, such
increase shall be allocated among the Partners (as if such item
were in the nature of income or gain) in the same proportions as
the investment tax credit that is recaptured with respect to such
property is shared among the Partners. Any reduction in the
adjusted tax basis or cost of (or the qualified investment in)
such Section 38 property made pursuant to Section 48(q)(1) of the
Code shall be allocated among the Partners (as if such item were
in the nature of an expense or loss) in the same proportions as
the credit for such Section 38 property is allocated under this
Section 4.2D.
E. Notwithstanding anything to the contrary that may be
expressed or implied in this Agreement, the interest of the
General Partner, in each material item of Partnership income,
gain, loss, deduction or credit will be equal to at least 1% of
each such item at all times during the existence of the
Partnership. In determining the General Partner's interest in
such items, Limited Partnership interests owned by the General
Partner shall not be taken into account.
F. Beginning on and after September 30, 1987, any gain
which is realized by the Partnership (or any partnership or joint
venture through which the Partnership holds Property) on the sale
or other disposition of Property which constitutes Distributed
Gain (as defined below) allocable to such Property shall be
allocated to the General Partner and Arvida/JMB Associates.
"Distributed Gain" with respect to all Properties shall be equal
to an amount equal to (i) the product of the Built-In Gain (as
defined below) multiplied by a fraction, the numerator of which is
the amount of Cash Flow distributed to the General Partner and
Arvida/JMB Associates under the last paragraph of Section 4.1 and
the denominator of which is the Built-In Gain, minus (ii) the
amount of any Profit allocated to the General Partner and
Arvida/JMB Associates pursuant to the third succeeding sentence of
this Section 4.2F. "Built-In Gain" shall be equal to the amount
of net gain which would be realized in the aggregate by the
Partnership for Federal income tax purposes if, on September 30,
1987, all Properties were sold for their fair market value as
determined by the General Partner. The General Partner shall
determine the portion of Built-In Gain attributable to each
Property and shall allocate at such time or times as may be
required under this Agreement Distributed Gain among Properties to
which Built-In Gain is attributable on a proportionate basis based
upon the ratio that the portion of Built-In Gain attributable to
each Property bears to the aggregate Built-In Gain.
Notwithstanding any allocation contained in this Agreement (but
subject to Section 4.2E and the succeeding sentences of this
Section 4.2F), if at any time Profit is realized by the
Partnership, any current or anticipated reduction of the share of
the Partnership's indebtedness (including the Partnership's share
of partnership or joint venture indebtedness) of any, some or all
of the General Partner, Arvida/JMB Associates, Arvida/JMB
Partners or ML Real Estate Associates II or any anticipated cash
distribution to the General Partner, Arvida/JMB Associates,
Arvida/JMB Partners or ML Real Estate Associates II would cause
the deficit balances in absolute amount in the Capital Accounts of
any, some or all of the General Partner, Arvida/JMB Associates,
Arvida/JMB Partners or ML Real Estate Associates II to be greater
than its or their share of the Partnership's indebtedness
(including the Partnership's share of partnership or joint venture
indebtedness) after such reduction or distribution, then the
allocation of Profit under this Article Four to the General
Partner, Arvida/JMB Associates/ Arvida/JMB Partners and ML Real
Estate Associates II shall be increased (to be shared by them in
proportion to the deficit balances in their respective Capital
Accounts) to the extent necessary to cause the deficit balance in
the Capital Account of each of the General Partner, Arvida/JMB
Associates, Arvida/JMB Partners and ML Real Estate Associates II
to be no less than their respective shares of the Partnership's
indebtedness (including the Partnership's share of partnership or
joint venture indebtedness) after such reduction or distribution;
provided, however, that the allocation of Profit contained in this
sentence shall not apply to ML Real Estate Associates II if at the
times as of which such allocation is made ML Fungibility has been
achieved as provided in Section 4.3G, and further provided that to
the extent the amount of Profit allocated under this sentence is
insufficient to cause the deficit balance in the Capital Account
of each of the General Partner, Arvida/JMB Associates, Arvida/JMB
Partners and ML Real Estate Associates II to be no less than their
respective shares of the Partnership's indebtedness (including the
Partnership's share of partnership or joint venture indebtedness)
after such reduction or distribution, such Profit shall be
allocated, until Profit in an aggregate amount equal to
$20,000,000 has been allocated under this Section 4.2F to the
General Partner and Arvida/JMB Associates for the current and
prior Partnership years, first to the General Partner and
Arvida/JMB Associates (in proportion to the respective deficit
balances in their Capital Accounts), in preference and priority to
Arvida/JMB Partners and ML Real Estate Associates II, to the
extent necessary to cause the deficit balance in the Capital
Account of each of the General Partner and Arvida/JMB Associates
to be no less than their respective shares of the Partnership's
indebtedness (including the Partnership's share of partnership or
joint venture indebtedness) after such reduction or distribution.
Not withstanding anything to the contrary in this Agreement (but
after giving effect to Section 8.2 and subject to the last
sentence of this Section 4.2F), if the General Partner or
Arvida/JMB Associates has a deficit balance in its Capital Account
following the Liquidation of its interest in the Partnership, as
determined after taking into account all Capital Account
adjustments for the Partnership taxable year during which such
Liquidation occurs (other than any adjustment for a capital
contribution made pursuant to this sentence) and after adjusting
Capital Accounts for actual or anticipated Profits or Losses
allocable among the Partners in accordance with, or as if there
had been (in accordance with adjustments under the first sentence
of Section 11.4), an actual disposition of the Partnership
properties at their fair market value, the General Partner and
Arvida/JMB Associates will make capital contributions in an
aggregate amount (to be shared by them in proportion to the
deficit balances in their respective Capital Accounts) which is
equal to the smaller of (i) such deficit balances or (ii)
$20,000,000; provided, however, that neither the $20,000,000
amount specified in (ii) nor the General Partner's share of such
amount shall limit any contribution which the General Partner is
required to make under Section 8.2. Such capital contributions
shall be made on or before the end of the Partnership taxable year
during which such Liquidation occurs (or, if later, within 90 days
after the date of such Liquidation). Notwithstanding the
foregoing, if the distributions to the General Partner and
Arvida/JMB Associates under the last paragraph of Section 4.1 were
determined not to cause (without taking into account any Profit or
Loss which might arise from such distribution), in the fiscal year
in which such distribution occurs, an aggregate reduction in their
capital accounts (as determined under Section 704(b) of the Code)
equal to the amount of such distribution, then the first four
sentences of this Section 4.2F shall not apply for any period.
SECTION 4.3 Determination of Allocations and Distributions Among
Partners
A. Any Assignee Holder of an Additional Limited Partnership
Interest who is recognized as such pursuant to Section 7.2 shall
be allocated all Profits or Losses of the Partnership allocable,
and shall be entitled to all Cash Flow distributable, with respect
to such Additional Limited Partnership Interest as herein
provided; provided, however, that without limitation the share of
Profits allocable with respect to Additional Limited Partnership
Interests held by ML Real Estate Associates II shall be as
provided in Sections 4.2A, 4.2F and 4.3G. Except as otherwise
provided in Sections 4.2C, 4.3D, 4.3E, 4.3F and 4.3G and subject
to the proviso in the preceding sentence, all Profits or Losses
allocable with respect to Limited Partnership Interests and,
except as provided in Section 3.3B, all Cash Flow distributable
with respect to Limited Partnership Interests, shall be allocated
or distributed, as the case may be, to each of the Holders of
Interests entitled to such allocation or distribution in the ratio
which the Capital Investments with respect to such Limited
Partnership Interests bear to the aggregate Capital Investments
with respect to all Limited Partnership Interests entitled to such
allocation or distribution.
B. Except as provided in Sections 4.3C, 4.3E and 4.3G, all
Profits or Losses allocable with respect to Limited Partnership
Interests shall be allocated, and all Cash Flow distributable with
respect to Limited Partnership Interests shall be distributed, as
the case may be, to the Holders of Interests recognized as such as
of the last day of the fiscal period for which such allocation or
distribution is to be made.
C. Except in the case of Limited Partnership Interests held
by ML Real Estate Associates II during any fiscal quarter before
or which is the fiscal quarter in which ML Fungibility is achieved
as provided in Section 4.3G, to the extent permitted by law, all
Profits or Losses of the Partnership for a fiscal year allocable
with respect to any Limited Partnership Interest which may have
been transferred during such year shall be allocated between the
transferor and the transferee based upon the number of quarterly
periods that each was the recognized Holder of Interests, without
regard to the results of Partnership operations during particular
quarterly periods of such fiscal year and without regard to
whether cash distributions were made to the transferor or
transferee.
D. Except as provided in the last paragraph of Section 4.1
and subject to the second paragraph of Section 4.1, the General
Partner's and Associate Limited Partners' distributive share of
Cash Flow shall be distributed 10.1% to Arvida/JMB Partners, to
the General Partner in an amount equal to 1% of the total Cash
Flow being distributed at such time under Section 4.1 (i) on 4.1
(ii), as the case may be, and the remainder to Arvida/JMB
Associates. Profits or Losses allocable to the Associate Limited
Partners (collectively) under the second paragraph of Section 4.2A
and Losses allocable to the Associate Limited Partners under the
first<PAGE>
paragraph of Section 4.2A shall be allocated 89.0% to Arvida/JMB
Associates and 11.0% to Arvida/JMB Partners. Except as otherwise
provided in Section 4.2F, distributive shares of Cash Flow and
Distributed Gain allocable to the General Partner and Arvida/JMB
Associates under the last paragraph of Section 4.1 and under
Section 4.2F shall be distributed or allocated, respectively, 1%
to the General Partner and 99% to Arvida/JMB Associates. Profits
or Losses allocable to the Initial Limited Partner and ML Real
Estate Associates II under the second paragraph of Section 4.2A
shall be allocated between them in the ratio of the respective
amounts paid by them for their Partnership Interests at that time.
Notwithstanding anything to the contrary in Section 4.2A and this
Section 4.3D, any Partnership deduction directly resulting from
the receipt of a Partnership Interest by any Partner or Holder
(other than a Holder which is not ML Real Estate Associates II)
shall be allocated entirely to such Partner or Holder.
E. In the event that there are Later Admission Dates, all
Profits or Losses allocable to the Holders of Interests for the
period from the First Admission Date or any such Later Admission
Date through the next succeeding Later Admission Date will be
allocated in accordance with Section 4.3A solely to the Holders of
Interests as of or prior to such preceding First Admission Date or
Later Admission Date. For purposes of this Section 4.3E, Holders
of Interests will be deemed to have acquired their Limited
Partnership Interests on the first day or such other day as the
General Partner may determine of the month in which such
Additional Limited Partnership Interests have been assigned to
such Persons. Profits or Losses incurred for the period from any
such First Admission Date or Later Admission Date through the next
succeeding Later Admission date will be allocated on the basis of
an interim closing of the Partnership's books on such Later
Admission Date. The General Partner may, in its sole and absolute
discretion and at any time, adopt any other convention or
conventions (including without limitation a daily, semi-monthly or
full-month convention) regarding the distribution of Cash Flow or
the allocation of Profits or Losses with respect to any Limited
Partnership Interest that may be or may have been transferred
during any year.
F. Subject to Section 4.2C, if at the time of an allocation
pursuant to Section 42.A of Profits or Losses for a fiscal year of
the Partnership (or portion thereof) during the term of this
Agreement for a period beginning on or after the Final Admission
Date the Capital Accounts with respect to each Limited Partnership
Interest (other than any Limited Partnership Interest held by ML
Real Estate Associates II) are not then equal:
(i) Profits allocated to the Holders (other than ML Real
Estate Associates II) pursuant to Section 4.2A shall be allocated
to the Holder (other than ML Real Estate Associates II) of a
Limited Partnership Interest with a Capital Account which is
smaller in amount (or greater in deficit) than the Capital Account
for any other such Interest (other than any Limited Partnership
Interest held by ML Real Estate Associates II) until the balance
in such Capital Account equals the balance of the Capital Account
of such Limited Partnership Interest (other than any Limited
Partnership Interest held by ML Real Estate Associates II) which
was next smallest in amount (or next greatest in deficit) before
such allocation, and thereafter such Profits shall continue to be
allocated to each successive Holder or groups of Holders of
Interests (other than ML Real Estate Associates II) with Capital
Accounts which are smallest in amount (or greatest in deficit),
until either the balances of all Capital Accounts with respect to
Limited Partnership Interests (other than any Limited Partnership
Interest held by ML Real Estate Associates II) are equal or all
such Profits have been allocated; and
(ii) Losses allocated to the Holders pursuant to Section
4.2A shall be allocated to the Holder (other than ML Real Estate
Associates II) of a Limited Partnership Interest with a Capital
Account which is greater in amount (or smaller in deficit) than
the Capital Account for any other such Interest (other than any
Limited Partnership Interest held by ML Real Estate Associates II)
until the balance in such Capital Account equals the balance of
the Capital Account of such Limited Partnership Interest (other
than any Limited Partnership Interest held by ML Real Estate
Associates II) which was next greatest in amount (or next smallest
in deficit) before such allocation, and thereafter such Losses
shall continue to be allocated to each successive Holder or groups
of Holders of Interests (other than ML Real Estate Associates II)
with Capital Accounts which are greatest in amount (or smallest in
deficit), until either the balances of all Capital Accounts with
respect to Limited Partnership Interests (other than any Limited
Partnership Interest held by ML Real Estate Associates II) are
equal or all such Losses have been allocated.
The foregoing subparagraphs (i) and (ii) shall not apply to,
or with reference to, any Limited Partnership Interest held by ML
Real Estate Associates II.
G. In the event that the General Partner shall elect under
Section 5.5(i)(a) to cause Interests to be listed and quoted on a
United States national exchange or to be reported by the National
Association of Securities Dealers Automated Quotation System and
Interests of ML Real Estate Associates II are so listed and quoted
or reported, to the extent permitted by law and subject to Section
4.2F, for the fiscal year of the Partnership during the term of
this Agreement in which such Interests are first listed and quoted
or reported pursuant to such election, Profits (in the form of
gross income) realized by the Partnership during the portion of
such fiscal year ending on the day immediately preceding the date
on which such Interests are first so listed and quoted or reported
shall be allocated to ML Real Estate Associates II in such amount
as is necessary to cause the Capital Account for each Limited
Partnership Interest held by ML Real Estate Associates II and
issued to it under Section 3.3G to equal the largest balance in
the Capital Account for any Limited Partnership Interest held by a
Holder (other than ML Real Estate Associates II (the completion of
such equalization pursuant to this Section 4.3G or another
provision of this Agreement and such listing and quotation or
reporting is herein referred to as "ML Fungibility"). Such
allocation of Profits (in the form of gross income) to ML Real
Estate Associates II shall be made as of the end of the day
immediately preceding the date on which such Interests are first
listed and quoted or reported pursuant to the aforementioned
election.
ARTICLE FIVE
RIGHTS, POWERS AND DUTIES OF GENERAL PARTNER
SECTION 5.1 Management and Control of the Partnership
A. Subject to the Consent of the Limited Partners where
required by this Agreement, the General Partner, within the
authority granted to it under this Agreement, shall have the
exclusive right to manage the business of the Partnership and is
hereby authorized to take any action of any kind and to do
anything and everything it deems necessary in accordance with the
provisions of this Agreement.
B. No Limited Partner (except one who may also be a General
Partner, and then only in its capacity as General Partner within
the scope of its authority hereunder) shall participate in or have
any control over the Partnership business or shall have any
authority or right to act for or bind the Partnership. The
Limited Partners hereby Consent to the exercise by the General
Partner of the powers conferred on it by this Agreement.
C. The General Partner shall initially, upon completion of
the offering contemplated by the Prospectus, establish Reserves
for working capital and to pay taxes, insurance, Debt Service,
repairs, replacements or renewals, or other costs and expenses
incident to the ownership or operation of the Properties and for
such other purposes, as the General Partner may determine, in an
amount equal to not less than 2% of the Gross Proceeds of the
Offering and thereafter shall maintain such Reserves in such
amounts as the General Partner deems appropriate under the
circumstances from time to time.
D. All of the Partnership's expenses shall be billed
directly to and paid by the Partnership. Reimbursements to the
General Partner or any Affiliates shall not be allowed (other than
for Organization and Offering Expenses, which shall be allowed),
except for (i) the actual cost to the General Partner or such
Affiliates of goods, materials and services used for or by the
Partnership and obtained from entities which are not affiliated
with the General Partner; (ii) salaries and related salary
expenses for administrative services which could be performed
directly for the Partnership by independent parties, such as
legal, accounting, transfer agent, data processing, duplicating
and other such services; (iii) Partnership reports and
communications to investors; (iv) other administrative services,
provided that such services are necessary to the prudent operation
of the Partnership; and (v) reimbursements to Arvida in connection
with its carrying out the duties described in the Management and
Supervisory Agreement authorized in Section 5.2 a (ix) hereof. No
reimbursement under clause (ii) through (v) above shall be
permitted for services for which the General Partner or its
Affiliates receive a separate fee. No reimbursement under clause
(ii) through (iv) above shall be permitted for (a) the salaries of
and related salary expenses incurred by any Controlling Person (as
defined hereinafter) and (b) any indirect general or
administrative overhead expenses, such as rent, travel expenses
and other items generally falling under the category of overhead,
incurred in performing services for the Partnership which are not
directly attributable to such services. "Controlling Person" for
purposes of this Section 5.1D shall mean any Person, regardless of
title, who performs executive or senior management functions for
the Sponsor or the General Partner similar to those of directors,
executive management and senior management, or any Person who
either holds a 5% or more equity interest in the Sponsor or the
General Partner or has the power to direct or cause the direction
of the Sponsor or the General Partner, whether through the
ownership of voting securities, by contract, or otherwise, or, in
the absence of a specific role or title, any Person having the
power to direct or cause the direction of the management level
employees and policies of the Sponsor or the General Partner. It
is not intended that every Person who carries a title such as vice
president, senior vice president, secretary or treasurer be
included in the definition of Controlling Person. In no event
shall any amount charged to the actual cost of such services or
(b) in the case of reimbursements under clause (ii) through (iv)
above 90% of the amount which the Partnership would be required to
pay to independent parties for comparable services. In the
Partnership's annual report to Limited Partners, there shall be
provided an itemized breakdown of reimbursements made pursuant to
this Section 5.1D. The reimbursement for expenses provided for in
this Section 5.1D shall be made regardless of whether any
distributions are made to the Limited Partners under the
provisions of Section 4.1. The provision of any goods, material
or services for which reimbursements are authorized under Section
5.1D(i) shall be set forth in a written contract which precisely
describes the goods, materials or services to be provided and all
compensation therefor. Such contract shall provide that it may be
modified only with the consent of Limited Partners holding a
majority of the then outstanding Limited Partnership Interests
(except as to immaterial or conforming modifications, which shall
require only the consent of the General Partner) and that it shall
be terminable by either party, without penalty, upon sixty (60)
days' prior written notice.
E. In the event the General Partner deems the approximately
200-acre site near Sarasota which is owned by an existing joint
venture in which the Partnership owns an interest to be suitable
for development as a regional shopping mall or other shopping
center, development of such Property may be done jointly with
Affiliates of JMB. In the event of such a development through a
joint venture with Affiliates of JMB, the existing joint venture's
interest in the land would be valued at its appraised fair market
value, and the Affiliate would make a pro rata cash contribution.
All other contributions would be strictly pro rata. Such joint
venture development shall not be entered into by the Partnership
unless (x) there are no duplicate property management or other
fees, and (y) the Partnership and such Affiliate each enjoy a
right of first refusal as regards the sale of the equity interest
of the other.
SECTION 5.2 Authority of the General Partner
A. Except to the extent otherwise provided herein, the
General Partner, for, and in the name and on behalf of, the
Partnership is hereby authorized:
(i) to acquire, either directly or indirectly through
any joint venture, joint participation, partnership (other than
any public or privately offered limited partnership) or otherwise,
by purchase, lease, exchange or otherwise any real or personal
property (including the Properties) which may be necessary,
convenient or incidental to the accomplishment of the purposes of
the Partnership; provided, however, that real properties shall not
be acquired at an aggregate purchase price in excess of their
aggregate appraised value as determined by appraisals prepared by
competent independent appraisers, and further provided that
investments by the Partnership in other partnerships or ventures
shall be limited to partnerships or ventures which own and operate
(directly or through an interest in another partnership or joint
venture) a particular Property in which the Partnership (either
alone or with an Affiliate of the General Partner) acquires a
controlling interest and which do not involve duplicate property
management or other fees;
(ii) to operate, maintain, finance, improve, own,
grant options with respect to, sell, convey, assign, mortgage,
exchange or lease and to cause to have constructed any real estate
and any personal property necessary, convenient or incidental to
the accomplishment of the purposes of the Partnership and to
perform construction work or hire contractors to perform
construction work in connection with any of the foregoing:
(iii) to execute any and all agreements, contracts,
documents, certifications and instruments necessary or convenient
in connection with the development, management, maintenance and
operation of the Properties;
(iv) to borrow money and issue evidences of
indebtedness necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership, and to secure
the same by mortgage, pledge or other lien on any Properties or
other assets of the Partnership; provided, however, that in
connection with the borrowing of money, recourse for the repayment
of which is limited solely to property of the Partnership, no
lender shall be granted or acquire, at any time as a result of
making such a loan, any direct or indirect interest in the
profits, capital or property of the Partnership other than as a
secured creditor;
(v) to execute, in furtherance of any or all of the
purposes of the Partnership, any deed, lease, mortgage, mortgage
note, bill of sale, contract or other instrument purporting to
convey, exchange or encumber the real or personal property of the
Partnership;
(vi) to prepay in whole or in part, refinance, recast,
increase, modify or extend any mortgages affecting the Properties
and in connection therewith to execute any extensions or renewals
of mortgages on any of the Properties;
(vii) to execute an agency agreement with Merrill
Lynch, Pierce, Fenner & Smith Incorporated pursuant to which said
firm would assist the Partnership in the sale of Interests and
pursuant to which the Partnership would agree, subject to the
final four sentences of Section 5.8, to indemnify and hold
harmless said firm or any selected dealer from any liability
incurred by it in so acting as agent for the Partnership;
(viii) to deal with, or otherwise engage in business
with, or provide service to and receive compensation therefor
from, any Person who has provided or may in the future provide any
services to, lend money to, sell property to, or purchase property
from, any Affiliate of the General Partner; provided, however,
that no such dealing, engaging in business or providing services
may involve any direct or indirect payment by the Partnership of
any rebate or any reciprocal arrangement which would have the
effect of circumventing any restriction set forth herein upon
dealings with Affiliates of the General Partner;
(ix) to execute the Management and Supervisory
Agreement with Arvida;
(x) to, in its sole discretion, make or revoke (and in
the case of any partnership or joint venture through which the
Partnership holds an interest in property, cause to be made or
revoked) the election referred to in Section 754 of the Code;
(xi) to request such information from any Holder as
may be reasonably required (as determined by the General Partner)
to comply with any Federal, state or local tax laws;
(xii) to, in its sole discretion, designate itself or
any other General Partner as the Tax Matters Partner within the
meaning of Section 6231(a)(7) of the Code;
(xiii) to engage in any kind of activity and to
perform and carry out contracts of any kind necessary to, or in
connection with, or incidental to the accomplishment of the
purposes of the Partnership, as may be lawfully carried on or
performed by a partnership under the laws of each state in which
the Partnership is then formed or qualified; and
(xiv) to obtain consulting services from ML Real
Estate Associates II or its Affiliates.
In the case of the making or revocation of any election under (x)
above or any designation under (xii) above, each of the Partners
will, upon request, supply such information and execute such
documents as are necessary to effectuate such election or
revocation, or such designation. In the case of any request for
information under (xi), any Holder to which any such request is
sent shall comply with such request.
B. Any Person dealing with the Partnership or the General
Partner may rely upon a certificate signed by the General Partner,
thereunto duly authorized, as to:
(i) the identity of any General Partner or Limited
Partner hereof;
(ii) the existence or non-existence of any fact or
facts which constitute a condition precedent to acts by a General
Partner or which are in any other manner germane to the affairs of
the Partnership;
(iii) the Persons who are authorized to execute and
deliver any instrument or document of the Partnership; or
(iv) any act or failure to act by the Partnership or
as to any other matter whatsoever involving the Partnership or any
Partner.
C. The General Partner shall maintain in its records for
at least five years any appraisal required to be obtained under
the provisions of clause (i) of section 5.2A.
SECTION 5.3 Authority of Partners to Deal with Partnership
A. Without limitation upon the other powers set forth
herein, the General Partner is expressly authorized (and where
indicated, directed), in the name of and on behalf of the
Partnership, to do the following:
(i) The General Partner shall commit a percentage of
Gross Proceeds of the Offering to Investment in Properties which,
at a minimum, is equal to the greater of: (i) 80% of the Gross
Proceeds of the Offering reduced by .1625% for each 1% of the
aggregate indebtedness of the Partnership; or (ii) 67% of Gross
Proceeds of the Offering. For purposes of this calculation,
"aggregate indebtedness" is the percentage resulting when such
aggregate indebtedness is divided by the aggregate purchase price
of all Properties, excluding Front-End Fees. If the Front-End
Fees must be reduced for the Partnership to commit the minimum
percentage of Gross Proceeds of the Offering to Investment in
Properties as set forth above, the General Partner shall cause JMB
or its Affiliates to reimburse the Partnership for the amount of
any such excess Acquisition Fees and Acquisition and Financing
Guaranty Fee received by them.
(ii) The General Partner may enter into an agency
agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated
providing for the payment of commissions to JMB Securities
Corporation for participating as a selected dealer in the offering
of Additional Limited Partnership Interests to the public pursuant
to Section 3.3; provided, however, that there shall be no selling
commissions paid or received by any Person in connection with the
sale of Additional Limited Partnership Interests to (and for the
account of) any Assignee Holder who is the General Partner, an
Affiliated Person of the General Partner or an officer, director,
shareholder, employee or partner thereof.
(iii) The General Partner may, subject to the
conditions of this Agreement, enter into agreements with and pay
fees to JMB or other Affiliated Persons of the General Partner in
consideration of property management and leasing services
respecting commercial and industrial Properties which are
necessary to the prudent operation of the Partnership (it being
understood and agreed that the provision of such property
management and leasing services does not constitute a part of the
duties or obligations of the General Partner as a general partner
of the Partnership); provided, however, that the General Partner
shall not enter into any agreement for property management with an
Affiliate on terms less favorable to the Partnership than those
customarily charged for similar services in the relevant
geographical area and in no event shall fees to an Affiliate of
the General Partner for property management and leasing services
exceed the following schedule:
(a) in the case of industrial or commercial
Property other than that described in the following subparagraph
(b), the maximum fee from such Property shall be 6% of the gross
receipts from the Property being managed where the Affiliate of
the General Partner performs leasing, re-leasing and leasing-
related services, and the maximum fee shall be 3% of gross
receipts from the Property being managed if the Affiliate of the
General Partner does not perform leasing, re-leasing and leasing-
related services with respect to the Property; and
(b) in the case of industrial or commercial
Properties which are leased for ten or more years on a net (or a
similar) basis, the maximum fee shall be 1% of the gross receipts
from the Property being managed, except for a one-time initial
leasing fee of 3% of the gross receipts on each lease payable over
the first five full years of the original term of the lease.
Where a property management agreement with an
Affiliate has been entered into with respect to a Property, no
fees in addition to those payable to such Affiliate under such
agreement shall be paid by the Partnership to any Persons in
consideration of their performance of property management,
bookkeeping services or other property management services with
respect to the same Property. Any property management agreements
with Affiliates shall be terminable by either party, without
penalty, upon sixty (60) days' prior written notice and may be
modified only with the consent of the Holders of the majority of
the Interests (except as to immaterial or conforming amendments
which shall require only the consent of the General Partner).
(iv) The General Partner may pay or cause to be paid
brokerage commissions to JMB Insurance Agency, Inc. or other
Affiliated Persons of the General Partner in connection with
insurance covering the Properties subject to the conditions that:
(a) before any such brokerage services are provided, there will
have been received quotations from two independent insurance
brokers or carriers or underwriters relating to the proposed
coverage, which quotations shall be upon coverage and terms
comparable to those proposed to be provided by JMB Insurance
Agency, Inc., and such agency shall not provide such insurance
brokerage services unless it can obtain such insurance at a cost
which is no greater than the lower of the two unaffiliated
entities; (b) if at any time JMB Insurance Agency, Inc. ceases to
derive at least 75% of its income from its business with entities
which are not sponsored by JMB and its Affiliates, JMB Insurance
Agency, Inc. shall not earn income from any additional insurance
placements on behalf of the Partnership or any Property then owned
by it; and (c) any agreement with Affiliates to provide insurance
brokerage services to the Partnership shall be terminable by
either party, without penalty, upon sixty (60) days' prior written
notice.
(v) The General Partner may, in the event that Gross
Proceeds of the Offering are less than $325,000,000, in its
discretion, (a) obtain additional financing to pay the costs of
owning the Properties; (b) if the additional financing under the
immediately preceding clause (a) is insufficient, to enter into a
joint venture or joint participation with an Affiliate or
Affiliates of the General Partner which would provide for the
ownership of such Properties on a pro rata basis; provided,
however, that with respect to such investment with an Affiliate,
(s) the Partnership and such Affiliate, considered together, have
or acquire a controlling interest in any ventures or partnerships
which own the Properties, (t) there are no duplicate property
management or other fees, (u) the Partnership's investment is on
substantially the same terms and conditions as the investment of
such Affiliate, (v) the purchase price of the Partnership's
investment has been confirmed by independent appraisal as not
greater than the appraised value of such investment, (w) such
investment shall not result in the breach, abrogation or
circumvention of any of the terms, conditions or provisions of
this Agreement, (x) the investments are not in publicly or
privately offered limited partnerships or other publicly offered
real estate investment entities, (y) the compensation to the
General Partner, JMB and their Affiliates received attributable to
such investment is substantially identical to the compensation
received by the general partners and sponsors of such Affiliate
and by the Affiliates of such general partners and sponsors
attributable to such investment, and (z) the Partnership and such
Affiliate must each enjoy a right of first refusal as regards the
sale of the equity interest of the other.
(vi) The General Partner may, notwithstanding any
other provision of this Agreement, pay or cause to be paid to an
Affiliate allocable reimbursements of overhead expenses with
respect to any Partnership Property being developed pursuant to
Section 5.1E as a mall or shopping center through a joint venture
with one or more Affiliates of JMB, together with development fees
in connection therewith in an amount equal to the lesser of 5% of
the cost of development or the amount which would be charged by an
independent third party rendering comparable services; provided,
however, that such joint venture shall obtain a report from an
independent appraiser of the appraised value of the mall or
shopping center upon completion of the Property; provided,
further, that to the extent that the actual costs of development,
including the development fees paid to such Affiliate, exceed such
appraised value of the project, the development fees will be
remitted by such Affiliate to the Partnership to the extent of the
excess, if any, of such development costs over such appraised
value. Development services provided by such Affiliate shall be
embodied in a written contract which describes the terms thereof
and the compensation to be paid therefor. Such contract shall be
terminable by either party, without penalty, upon sixty (60) days'
written notice, and may be modified only with the consent of the
Holders of the majority of the Interests (except as to immaterial
or conforming amendments which shall only require the consent of
the General Partner). Such contract shall be disclosed to all
Partners in the reports provided pursuant to Sections 9.4A and
9.4C (stating the compensation paid to such Affiliate). Such
Affiliate must be independently engaged in performing development
services rendered for the development of shopping malls or
shopping centers.
(vii) The validity of any transaction, agreement or
payment involving the Partnership and the General Partner or any
Affiliate thereof not otherwise prohibited by the terms of this
Agreement shall not be affected by reason of the relationship
between the Partnership and the General Partner or such Affiliate.
All transactions, agreements or payments involving the Partnership
and the General Partner or any Affiliate thereof shall be on terms
no less favorable to the Partnership than those available to the
Partnership in similar dealings with unaffiliated third parties.
B. The General Partner shall be subject to the following
prohibitions: (i) except to the extent that related commissions
inure to the benefit of the Partnership neither the General
Partner nor any Affiliate of the General Partner shall be given
the exclusive right to sell or exclusive employment to sell any
Community Property of the Partnership and no amounts shall be
computed under Section 4.1 as 2% of the selling price of a
Community Property under Section 4.1(ii) unless the General
Partner or Affiliates of the General Partner perform substantial
services in connection with the sale of a Community Property; (ii)
neither any General Partner nor any Affiliated Person of the
General Partner shall receive directly or indirectly a commission
or fee in connection with the reinvestment of the proceeds of the
sale, exchange or refinancing of any Property; (iii) neither any
General Partner nor any Affiliated Person of the General Partner
shall loan money to the Partnership unless (a) the principal
amount of such financing shall be scheduled to be paid over a
period of less than 48 months, and more than 50% of the principal
amount of such financing shall be scheduled to be paid during the
first 24 months and (b) the interest rates and other finance
charges and fees shall not be in excess of the lessor of (x) if
the loan was made in connection with a particular Property, the
amounts that are charged by unrelated banks on comparable loans
for the same purpose in the locality of the Property in connection
with which the loan was made or (y) the rate per annum equal to 2%
plus the reference rate of Continental Illinois National Bank and
Trust Company of Chicago, or provide permanent financing to the
Partnership on a Property owned by the Partnership or make loans
with a prepayment charge or penalty which are evidenced or secured
by either a first or junior or all-inclusive note or mortgage
except to the extent that such prepayment charge or penalty is
attributable to an underlying encumbrance. In the event the
Partnership utilizes any all-inclusive note, said note shall
provide that (a) the Partnership shall receive credit on its
obligation under said note for payments made by the Partnership
directly on the underlying encumbrance; (b) that a bank, escrow
company or other paying agent shall collect payments (other than
amounts not to be applied to the underlying encumbrance) on the
all inclusive note and make disbursements therefrom to the holder
of the underlying encumbrance prior to making any disbursement to
the holder of the all-inclusive note or, in the alternative, all
payments on the all-inclusive note and underlying notes shall be
made directly by the Partnership; and (c) the rate of any interest
charged by the General Partner or an Affiliated Person on such
all-inclusive note will not exceed the rate of interest payable to
the holder on the underlying encumbrance.
C. Any agreements, contracts and arrangements with the
General Partner or Affiliated Person of the General Partner
permitted by Section 5.3(iii) and Section 5.3A(vii) (with respect
to both such sections to the extent not otherwise specifically
authorized in this Agreement) shall be subject to the following
conditions:
(i) any such agreements, contracts or arrangements
shall be embodied in a written contract which describes the
subject matter thereof and all compensation to be paid therefor;
(ii) no rebates or "give-ups" may be received by the
General Partner or any such Affiliated Person, nor may the General
Partner or any such Affiliated Person participate in any
reciprocal business arrangements which would have the effect of
circumventing any of the provisions of this Agreement;
(iii) neither the General Partner (in any capacity
other than a General Partner) nor any such Affiliated Person may
act as paying or purchasing agent for the Partnership and no funds
of the Partnership may be paid to the General Partner or any such
Affiliated Person by way of reimbursement for Partnership expenses
other than Organization and Offering Expenses or expenses as
permitted by Section 5.1D and the amount of compensation paid to
the General Partner or any such Affiliated Person may not exceed
90% of the amount which the Partnership would be required to pay
to independent parties;
(iv) any such agreements, contracts or arrangements
shall be fully and promptly disclosed to all Partners in the
reports provided in Sections 9.4A and 9.4C (stating the
compensation to be paid by the Partnership);
(v) any such agreements, contracts or arrangements
shall be terminable by either party, without penalty, upon sixty
(60 days' prior written notice and may be modified only with the
Consent of the Holders of a majority of the Interests (except as
to immaterial or conforming amendments which shall only require
the consent of the General Partner); and
(vi) the General Partner or the Affiliated Person
performing the services for the Partnership previously shall have
been independently engaged in performing services of the type to
be performed for the Partnership for a period of at least two
years.
SECTION 5.4 Restrictions on Authority of General Partner
A. Without the Consent of all the Limited Partners, the
General Partner shall not have the authority to:
(i) do any act in contravention of this Agreement;
(ii) do any act which would make it impossible to
carry on the ordinary business of the Partnership;
(iii) confess a judgment against the Partnership;
(iv) possess Partnership Property, or assign its
rights in specific Partnership Property, for other than a
Partnership purpose;
(v) admit a Person as a General Partner, except as
provided in this Agreement;
(vi) admit a Person as a Limited Partner, except as
provided in this agreement;
(vii) knowingly perform any act that would subject any
Limited Partner to liability as a general partner in any
jurisdiction; or
(viii) invest in junior trust deeds or similar
obligations, except that the Partnership may advance a portion of
the purchase price of a Property to the seller in the form of a
loan, the except that junior trust deeds or similar obligations
may be taken back from purchasers of Properties in connection with
the sale thereof by the Partnership.
B. Except as provided in Section 5.5J and subject to
Section 10.3, without the Consent of a majority in interest of the
Limited Partners, the General Partner shall not have the authority
to:
(i) sell or otherwise dispose of all or substantially
all of the Partnership's real property developments and
investments in real property (except for the sale or other
disposition of real property developments or investments in real
property (or portions thereof) in the ordinary course of business
as contemplated by the Prospectus, including the sale or other
disposition of the final real property development or investment
in real property remaining as a result of such sales or
dispositions); or
(ii) elect to dissolve the Partnership.
C. The General Partner on behalf of the Partnership shall
not purchase, lease or acquire any Property from any General
Partner or any Affiliated Person of any General Partner or from
any Person in which any General Partner or any Affiliated Person
of any General Partner has a material interest. Notwithstanding
the foregoing, the General Partner or an Affiliate may purchase
Property in its own name, and assume loans in connection therewith
and temporarily hold title thereto for the purpose of facilitating
the acquisition of such Property or the borrowing of money or
obtaining of financing for the Partnership, or completion of
construction of the Property, provided that such Property is
purchased by the Partnership for an investment no greater than the
cost of such Property to the General Partner (or such Affiliate),
that there is no amendment to the stated interest rate of any note
secured by such Property between the time it is acquired by the
General Partner (or such Affiliate) and the time it is acquired by
the Partnership and that no other benefit directly or indirectly
arising out of such transaction (other than those incidental to
the ownership of the property during the time it was held by the
General Partner or such Affiliate) is received by any General
Partner or Affiliated Person thereof apart from compensation
otherwise permitted by this Agreement. Except as otherwise
provided herein, the Partnership shall not sell Property to any
General Partner or any Affiliated Person of a General Partner.
The General Partner or its Affiliates may lease office space in
Properties; provided, however, that any such lease (a) shall be
for rentals and on terms not less favorable to the Partnership
than those available to the Partnership from unaffiliated tenants,
(b) shall be terminable on 60 days' prior written notice by the
Partnership without penalty and (c) shall provide that any rentals
from subleases relating thereto which are in excess of the rentals
from such lease shall be paid to the Partnership and, provided
further, that no more than 3% of the office space of the
Properties shall be leased to JMB or its Affiliates (other than
the Partnership and Arvida). The Partnership shall not make any
loans to any General Partner or any Affiliate of the General
Partner nor to any other Person except as provided in Section
5.4A(viii). The foregoing provision shall not, however, prohibit
(i) transfers incident to the formation of joint ventures with
Affiliates of the General Partner permitted by Sections 5.1E and
5.3A(v), (ii) the making of loans or advances by the Partnership
to a joint venture partnership which owns a particular property as
provided for in Section 5.2A(i) or (iii) advancing a portion of
the purchase price of a Property to a seller which is not an
Affiliated Person of the General Partner in the form of a loan.
D. The General Partner shall not on behalf of the
Partnership acquire any Property (other than cash) in exchange for
Interests in the Partnership.
E. The General Partner, in its capacity as such, or in its
capacity as a general partner in any partnership or joint venture
which may hold title to any Property under Section 5.3A(v), shall
not do or cause the Partnership to do, any act which would not be
permitted under this Agreement to be done by it as the General
Partner if title to such Property were held directly by the
Partnership, and shall, in general, act, and cause the Partnership
to act, in such capacity in the same manner as if title to such
Property were held directly by the Partnership.
SECTION 5.5 Duties and Obligations of the General Partner
A. The General Partner shall take action which may be
necessary or appropriate (i) for the continuation of the
Partnership's valid existence as a limited partnership under the
laws of the State of Delaware (and of each other jurisdiction in
which such existence is necessary to the limited liability of the
Limited partners or to enable the Partnership to conduct the
business in which it is engaged) and (ii) for the acquisition,
development, maintenance, preservation and operation of the
Properties as contemplated by the Prospectus in accordance with
the provisions of this Agreement and applicable laws and
regulations (it being understood and agreed, however, that the
performance of day-to-day development and property management
services for specific Properties is not the obligation of the
General Partner of the Partnership).
B. The General Partner shall devote to the Partnership such
time as may be necessary for the proper performance of its duties
hereunder, but neither the officers nor the directors of the
General Partner shall be expected to devote their full time to the
performance of such duties.
C. The General Partner shall at all times use its best
efforts to maintain its net worth at a sufficient level to meet
all requirements of the Code, under currently applicable rulings,
regulations and policies of the Internal Revenue Service and as
hereafter interpreted by the Internal Revenue Service, any agency
of the Federal government or the courts, to assure that the
Partnership will be classified for Federal income tax purposes as
a partnership and not as an association taxable as a corporation,
and shall, irrespective of such requirements, maintain its net
worth at an amount at least equal to the lessor of 10% of the
aggregate capital contributions to the Partnership or $25,000,000.
The General Partner shall use its best efforts to cause JMB
Holdings Corporation to comply in all respects with the terms of
its obligation which shall be comparable to the General Partner's
obligation and which shall be set forth in a written commitment of
JMB Holdings Corporation to be received by the Partnership prior
to the issuance of Additional Limited Partnership Interests under
Section 3.3A.
D. The General Partner shall take such action as may be
necessary or appropriate in order to form or qualify the
Partnership under the laws of any jurisdiction in which the
Partnership is doing business or in which such formation or
qualification is necessary in order to protect the limited
liability of the Limited Partners or in order to continue in
effect such formation or qualification. The General Partner shall
file or cause to be filed for recordation in the office of the
appropriate authorities of the State of Delaware, and in the
proper office or offices in each other jurisdiction in which the
Partnership is formed or qualified, such certificates (including
limited partnership and assumed name certificates) and other
documents as are required by the applicable statutes, rules or
regulations of any such jurisdiction or are required to reflect
the identity of the Partners and the amounts of the Capital
Investments with respect to the Interests.
E. The General Partner shall prepare or cause to be
prepared and shall file on or before the due date (or any
extension thereof) any Federal state or local information or tax
returns required to be filed by the Partnership. The General
Partner shall cause the Partnership to pay any taxes payable by
the Partnership unless the General Partner determines in its sole
discretion to contest the payment of such taxes.
F. The General Partner shall obtain and keep in force
during the term hereof fire and extended coverage, workmen's
compensation and public liability insurance in favor of the
Partnership with such insurers and in such amounts as the General
Partner shall deem advisable, but in amounts not less ( and with
deductible amounts not greater) than those customarily maintained
with respect to properties comparable to the Properties.
G. The General Partner shall be under a fiduciary duty to
conduct the affairs of the Partnership in the best interests of
the Partnership and of the Limited Partners, including the
safekeeping and use of all Partnership funds and assets for the
exclusive benefit of the Partnership, whether or not in its
immediate possession or control.
H. In the case of any vote, Consent or other action by the
Limited Partners pursuant to the terms of this Agreement which
shall become binding upon the General Partner, the General
Partner, in acting on behalf of the Partnership in the
Partnership's capacity as a partner in any partnership or joint
venture which may hold title to any Property, shall, to the extent
permitted by the partnership agreement relating to such
partnership or joint venture, take corresponding or identical
action or cause an Affiliate of the General Partner in its
capacity as a general partner of such partnership or joint venture
to take such action pursuant to the terms of the partnership
agreement relating to such partnership or joint venture and, in
general, shall not act on behalf of the Partnership in such
capacity in a manner inconsistent with any such vote, Consent or
other action pursuant to this Agreement.
I. The General Partner shall use its best efforts to
assure that the Partnership shall not be deemed an investment
company as such term is defined in the Investment Company Act of
1940.
J. (i) The General Partner shall elect to pursue one of the
following courses of action: (a) to cause the Interests of the
Holders to be listed and quoted on a United States national
exchange or to be reported by the National Association of
Securities Dealers Automated Quotation System (which may be done
at any time on or prior to the date ten years from the Offering
Termination Date); (b) to purchase, or to cause JMB or its
Affiliates to purchase, on the date ten years from the offering
Termination date all of the Interests of the Holders at their ten
appraised fair market value in accordance with the procedure set
forth in subparagraph (ii) below; or (c) to commence a liquidation
phase on the date ten years from the Offering Termination date
which liquidation shall be completed within fifteen years after
the Offering Termination Date; provided, however, that if the
General Partner elects to pursue the course of action set forth in
clause (a) above, the General Partner shall have the authority to
cause the Interests of the Holders to be delisted or otherwise not
so listed and quoted if the General Partner determines that such
listing or quoting may result in adverse tax consequences to the
Partnership or any Holder.
(ii) In the event that the General Partner elects to
purchase, or to cause JMB or its Affiliates to purchase, all of
the Interests of the Holders on the date ten years from the
Offering Termination Date, an independent appraiser shall be
selected by ML Real Estate Associates II and proposed by the
General Partner for approval by the Limited Partners. Such
appraiser shall be deemed approved by the Limited Partners unless
objected to in writing by the Holders of a majority of the then
outstanding Limited Partnership Interests within 45 days after
Notification thereof is sent by the General Partner. The
appraisal shall be requested by the General Partner sufficiently
in advance to be received by the date ten years from the Offering
Termination Date. The appraisal shall value the Interests as
limited partnership interests in the Partnership with all of the
rights and obligations pertinent thereto. The cost of obtaining
the appraisal shall be borne equally by the Partnership and the
purchaser of the Interests. The General Partner shall then submit
the appraisal of the value of the Interests to an independent
nationally-recognized investment banking firm or real estate
advisory company, which shall be retained by the General Partner
specifically with respect to the determination of such value. The
purchase of the Interests shall not be consummated unless the
General Partner has obtained from such investment banking firm or
real estate advisory company a letter of opinion, addressed to the
Partnership, concluding that the appraised fair market value and
the terms of the purchase are fair to the Holders of Interests.
The General Partner shall have 120 days from receipt of a
favorable letter of opinion to purchase, or to cause JMB or its
Affiliates to purchase, the Interests from the Holders at their
appraised fair market value.
(iii) In the event the General Partner elects to commence a
liquidation phase of the Partnership on the date ten years from
the Offering Termination Date as provided in subparagraph (i)
above, JMB and its Affiliates will be permitted to purchase at
appraised fair market value any of the interests held by the
Partnership in Properties in which JMB or any of its Affiliates
(other than the Partnership) has an interest. The purchase price
for the interest of the Partnership shall be determined by
independent appraisal in the same manner as set forth in
subparagraph (ii) above; provided, however, that the General
Partner may not permit the sale of such interest of Partnership to
JMB or any Affiliate unless and until the Partnership has received
a letter of opinion from an independent nationally recognized
investment banking firm or real estate advisory company, addressed
to the Partnership, to the effect that the appraised sales price
and the other terms of the purchase are fair to the Partnership.
K. In the event Arvida uses any goods, services or
facilities of the Partnership in connection with any developments
or activities in which the Partnership does not own an interest,
then the General Partner shall require Arvida to reimburse the
Partnership for its allocable cost of such services or assets to
the extent the Partnership does not own an interest in such
development or activity.
SECTION 5.6 Compensation of General Partner
The General Partner shall not in its capacity as General
Partner receive any salary, fees, profits or distributions except
profits, distributions, fees and allocations to which it may be
entitled under Articles Four, Five, Eight and Eleven, it being
understood, however that the Partnership is obligated to pay JMB
or its Affiliates an Acquisition and Financing Guaranty Fee equal
to $20,000,000 (subject to reduction as provided below) for
services of JMB and such Affiliates in negotiating and arranging,
and guaranteeing repayment of certain indebtedness and certain
other obligations incurred in connection with, the acquisition of
the assets by the Partnership under the Acquisition Agreement.
The obligation to pay such fee in the event at least the minimum
offering amount under Section 3.3A is obtained will be required to
be satisfied as follows: on or about each Admission Date, the
Partnership shall pay to JMB or its Affiliates a portion of the
maximum amount of such Acquisition and Financing Guaranty Fee
based upon the ration that the number of Additional Limited
Partnership Interests being issued under Section 3.3A on such
Admission Date bears to 325,000; to the extent that less than an
aggregate of 325,000 Additional Limited Partnership Interests are
issued under Section 3.3A for all Admission dates, the
corresponding proportion of the Acquisition and Financing
Guaranty Fee will not be paid by the Partnership. In no event
shall the total of the Acquisition and Financing Guaranty Fee paid
to JMB or its Affiliates plus any Acquisition Fees paid to all
parties exceed the lesser of (a) the compensation customarily
charged in arm's-length transactions by others rendering similar
services as an ongoing public activity in the same geographical
location and for comparable property or (b) an amount equal to 18%
of the Capital Investments in the Partnership.
SECTION 5.7 Other Business of Partners
Any Partner may engage independently or with others in
business venturers of every nature and description, including,
without limitation, the rendering of advice or services of any
kind to other investors and the making or management of other
investments. Nothing in this Agreement shall be deemed to
prohibit the General Partner or any Affiliate of the General
Partner or any officer, director, employee, shareholder or partner
of the General Partner or any such Affiliate from dealing, or
otherwise engaging in business with, Persons transacting business
with the Partnership or from providing service relating to the
purchase, sale, management, development or operation of real
property and receiving compensation therefor, not involving any
rebate or reciprocal arrangement which would have the effect of
circumventing any restriction set forth herein upon dealing with
Affiliates of the General Partner. Neither the Partnership nor
any Partner shall have any right by virtue of this Agreement or
the partnership relationship created hereby in or to such other
ventures or activities or to the income or proceeds derived
therefrom, and the pursuit of such ventures shall not be deemed
wrongful or improper. Except as provided in the Management and
Supervisory Agreement referred to in Section 5.2 a (ix), neither
the General Partner nor any Affiliate of any General Partner shall
be obligated to present any particular investment opportunity to
the Partnership. The General Partner and Limited Partners agree
that the Partners have no right to expect that the Partnership's
Properties will consist of anything other than the assets acquired
in connection with the Acquisition Agreement and the interest of
the Partnership in future communities as described in and subject
to the terms and limitations set forth in the Management and
Supervisory Agreement.
SECTION 5.8 Limitation on Liability of General Partner;
Indemnification
Neither the General Partner nor any affiliate (for purposes
of this Section 5.8 hereof "affiliate" shall mean any person
performing services on behalf of the Partnership who (1) directly
controls, is controlled by, or is under common control with, the
General Partner or the Associate Limited Partners; or (2) owns or
controls 10% or more of the outstanding voting securities of the
General Partner or the Associate Limited Partners; or (3) is an
officer, director, partner or trustee of the General Partner or
the Associate Limited Partners; or (4) if the General Partner is
an officer, director, partner or trustee, any company for which
the General Partner acts in any such capacity) thereof engaged in
the performance of services on behalf of the Partnership (the
"Indemnified Parties") shall be liable, responsible or accountable
in damages or otherwise to any Holder for any act or omission
performed or omitted by such Indemnified Party pursuant to the
authority granted to such Indemnified Party by this Agreement or
by law if the General Partner or its affiliates have determined,
in good faith, that the act or omission which caused the loss or
liability was in the best interests of the Partnership and such
liability was not the result of misconduct or negligence. The
Partnership shall indemnify and hold harmless each Indemnified
Party from and against any loss or liability suffered or sustained
by him by reason of any acts, omissions or alleged acts or
omissions arising out of his activities on behalf of the
Partnership or in furtherance of the interests of the Partnership,
including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any pending or threatened action,
proceeding or claim and including any payments made by the General
Partner to any of its officers or directors who are affiliates
pursuant to an indemnification agreement no broader than this
Section 5.8; provided that the General Partner or its affiliates
have determined, in good faith, that the act or omission which
caused the loss or liability was in the best interests of the
Partnership and such loss or liability was not the result of
misconduct or negligence by such Indemnified Party. The
satisfaction of any indemnification and any saving harmless shall
be from thereof. Notwithstanding the foregoing, the Indemnified
Parties and any person acting as a broker-dealer shall not be
indemnified for any loss or damage incurred by them in connection
with any claim involving allegations that Federal or state
securities laws were violated, unless: (1) there has been a
successful adjudication on the merits of each count involving
alleged securities law violations and a court approves
indemnification of litigation costs; (2) such claim has been
dismissed, with prejudice on the merits, by a court of competent
jurisdiction and a court approves indemnification of litigation
costs; or (3) such claim has been settled, and a court of
competent jurisdiction approves indemnification of litigation
costs (specifically, the settlement of any claim against the
Indemnified Parties and finds that indemnification of the
settlement and related costs should be made). Additionally, such
a court shall have been advised by the party seeking
indemnification as to the current position of the Securities and
Exchange Commission, the California Commissioner of Corporations,
the Securities Division of the Office of the Secretary of the
Commonwealth of Massachusetts, the Tennessee Securities Division,
the Texas State Securities Board and the securities commissioners
of the states which subscribe to the provisions of the North
American Securities Administrators, Association, Inc. Statement of
Policy Regarding Real Estate Programs effective on January 1, 1987
regarding indemnification for violations of securities laws.
Notwithstanding the foregoing, the Indemnified Parties shall not
be indemnified for any liability, loss, expense or damage incurred
by them in connection with any judgment entered arising from or
out of a violation of Federal or state securities laws which were
violated by any Indemnified Party in connection with the offer or
sale of the Interests. In addition, the Partnership may not incur
the cost of that portion of liability insurance which insures the
Indemnified Parties for any liability as to which the Indemnified
Parties are prohibited from being indemnified as described above.
ARTICLE SIX
ADMISSION OF SUCCESSOR AND ADDITIONAL GENERAL PARTNERS
SECTION 6.1 Admission of Successor and Additional General
Partners
A. With the Consent of the General Partner and of such
number of the Limited Partners as are then required under the
Revised Uniform Limited Partnership Act of the State of Delaware,
and under the applicable laws of such other jurisdictions in which
the Partnership is formed or qualified, to Consent to or ratify
the admission of a General Partner, but in no event with the
Consent of less than a majority of all the outstanding Limited
Partnership Interests, the General Partner may at any time
designate one or more Persons to be successors to such General
Partner or to be additional General Partners, in each case with
such participation in such General Partner's Interest as such
General Partner and such successor or additional General Partners
may agree upon, provided that the Interests of the Limited
Partners shall not be adversely affected thereby. Each such
designee shall become a successor or additional General Partner
upon satisfying the conditions of Section 11.2.
B. Except in connection with a transfer to a successor or
additional General Partner pursuant to Section 6.1A, the General
Partner shall not have any right to retire or withdraw voluntarily
from the Partnership or to sell, transfer or assign its Interest,
except that (i) it may substitute in its stead as General Partner
any entity which has, by merger, consolidation or otherwise,
acquired substantially all of its assets or stock and continued
its business or (ii) it may cause to be admitted to the
Partnership an additional General Partner or Partners to enable
the aggregate net worth of the General Partners to comply with the
provisions of Section 5.5C. Each such successor or additional
General Partner shall be admitted as such to the Partnership upon
satisfying the conditions of Section 11.2. Each Limited Partner
hereby Consents to the admission of any additional or successor
General Partner pursuant to this Section 6.1B, and no further
Consent or approval shall be required.
C. Any voluntary withdrawal by the General Partner from the
Partnership or any sale, transfer or assignment by such General
Partner of its Interest shall be effective only upon the admission
in accordance with Section 6.1A or Section 6.1B, whichever is
applicable, of a successor or additional General Partner, as the
case may be,and full discharge for all amounts owing to the General Partner
and the Associate Limited Partners on account of their respective
Interests in the Partnership. For purposes of this Section 6.6
the independent appraiser selected by the Limited Partners shall
be selected by ML Real Estate Associates II (excluding for this
purpose its assigns) and proposed by the General Partner for
selection by the Limited Partners. Such appraiser shall be deemed
selected by the Limited Partners unless objected to in writing by
the Holders of a majority of the then outstanding Limited
Partnership Interests within 45 days after Notification thereof is
sent by the General Partner.
B. In the event that a replacement General Partner is
elected by the Limited Partners under Section 10.2 such
replacement or successor General Partner (the "Acquiring Partner")
shall purchase from the Partnership, within 60 days of the date on
which it becomes a General Partner, the Interests in the
Partnership which the Partnership purchased from the Person
ceasing to be a General Partner as provided in Section 6.6A above
and from the Associate Limited Partners. For such Interests, the
Acquiring Partner shall pay the amounts determined pursuant to
Section 6.6A to be the fair market values of such Interests.
Payment for the Interests shall be made by promissory notes
bearing simple interest at a rate per annum equal to the lesser of
the reference rate from time to time announced by Continental
Illinois National Bank and Trust Company of Chicago plus 2% per
annum or 10% interest per annum on the unpaid principal amount of
such promissory notes and shall be secured, on a pro rata basis
according to the face amount of each promissory note, by
assignment by the Acquiring Partner to the Partnership of all its
future distributions of Cash Flow from the Partnership to the
Acquiring Partner.
ARTICLE SEVEN
TRANSFERABILITY OF PARTNERS' INTERESTS
SECTION 7.1 Restrictions on Transfers of Interests
A. No transfer or assignment with respect to any Limited
Partnership Interest or any Additional Limited Partnership
Interest, or any fraction thereof, shall be effective if such
transfer or assignment would, in the opinion of counsel for the
Partnership, result in the termination of the Partnership or the
treatment of the Partnership as an association taxable as a
corporation, for purposes of the then applicable provisions of the
Code.
B. No transfer or assignment with respect to any Limited
Partnership Interest, or any fraction thereof, shall be effective
if counsel for the Partnership shall be of the opinion that such
transfer or assignment would be in violation of any state
securities or "Blue Sky" laws (including any investment
suitability standards) applicable to the Partnership.
C. No purported transfer or assignment with respect to a
Limited Partnership Interest, or any fraction thereof, after which
the transferor or the transferee would hold an Interest
representing a Capital Investment of less than $5,000 will be
permitted or recognized or be valid for any purpose (except for
transfers by gift, inheritance or family dissolution, transfers to
Affiliates or intra-family transfers). Prior to the first date on
which an Additional Limited Partnership Interest is issued to an
Assignee Holder (other than ML Real Estate Associates II), no
purported transfer or assignment with respect to any Interest, or
any fraction thereof, shall be permitted or recognized or be valid
for any purpose.
D. No transfer or assignment with respect to any Limited
Partnership Interest or any Additional Limited Partnership
Interest, or any fraction thereof, shall be effective if as a
result of such transfer or assignment such limited partnership
Interest or Additional Limited Partnership Interest (or fraction
thereof) would be held by any person that is a non-resident alien
individual or foreign corporation or other entity or that may be
subject to tax under Section 511 of the Code, or by any "tax-
exempt entity" (within the meaning of Section 168(h)(2) of the
Code for purposes of Section 168(h)(6)(A) of the Code), except
that the foregoing restriction shall not apply to any transfer or
assignment permitted in the sole discretion of the General
Partner.
SECTION 7.2 Assignees and Substituted Limited Partners
A. If a Limited Partner dies, his executor, administrator
or trustee or, if he is adjudicated incompetent (including by
reason of insanity), his committee, guardian or conservator, or,
if he becomes bankrupt, the receiver or trustee of his estate,
shall have all the rights of a Limited Partner for the purpose of
settling or managing his estate and such power as the decedent or
incompetent or bankrupt Person possessed to assign all or any part
of his Interest and to join with the assignee thereof in
satisfying conditions precedent to such assignee becoming a
Substituted Limited Partner. The death, dissolution, adjudication
of incompetence or bankruptcy of a Limited Partner shall not
dissolve the Partnership.
B. The Partnership shall recognize as the Assignee Holder
of Additional Limited Partnership Interests each Person to whom
the Initial Limited Partner assigns Additional Limited Partnership
Interest which are purchased in the public offering pursuant to
section 3.3 (including pursuant to Section 3.3G) as of such dates
from time to time during the offering period as the General
Partner shall determine (which in no event shall be later than the
date on which the funds of such Assignee Holder are released from
the escrow deposit account) provided that (a) the Partnership has
received the capital set forth on Schedule A with respect to the
Additional Limited Partnership Interests of such Assignee Holder
and (b) the Initial Limited Partner has executed an instrument of
assignment, in form and substance satisfactory to the General
Partner, setting forth the name and address of such Assignee
Holder to whom such Additional Limited Partnership Interests are
being assigned.
C. Except as provided in Section 7.2B above, the
Partnership shall not recognize for any purpose any assignment
with respect to all or any fraction of a Limited Partnership
Interest unless there shall have been filed with the Partnership a
duly executed and acknowledged counterpart of the instrument
making such assignment and such instrument evidences the written
acceptance by the assignee of all of the terms and provisions of
this Agreement and represents that such assignment was made in
accordance with all applicable laws and regulations (including
investment suitability requirements). Such instrument shall be
accompanied by a transfer fee not in excess of $100 that shall be
paid to the Partnership or an Affiliate of the General Partner to
cover all actual, necessary and reasonable expenses, fees and
filing costs in connection with such transfer. Any assignee of a
Limited Partnership Interest shall, for the purposes of Section
4.3C, be recognized as a Holder of Interests as of the first day
of the fiscal quarter next succeeding the fiscal quarter in which
the General Partner actually receives the instrument of assignment
that complies with the requirements of this Section 7.2C;
provided, however, that except as provided in Section 7.2B above,
no assignee of a Limited Partnership Interest shall be recognized
as a Holder of Interests prior to the first fiscal quarter
following the fiscal quarter during which the final issuance of
Additional Limited Partnership Interests pursuant to Section 3.3
occurs.
D. Any Person who is an Assignee Holder of all or any
fraction of a Limited Partnership Interest may become a
Substituted Limited Partner only when such Person shall have
satisfied the conditions of Section 7.2C and Section 11.2. The
General Partner agrees to inform such Assignee Holder, within 60
days of receipt by the Partnership of the items set forth in
Sections 7.2C and 11.2A herein, if he has been rejected a s
Substituted Limited Partner. Assignee Holders (and any assignees
with respect to any Limited Partnership Interests of such Assignee
Holders) who effect such a transfer and become Substituted Limited
Partners will not be permitted subsequently to reassign their
Limited Partnership Interests to the Initial Limited Partner and
once more become Assignee Holders. The right of an assignee to
become a Substituted Limited Partner shall be subject to the
written Consent of the General Partner, which Consent may be
granted or denied in the sole and absolute discretion of the
General Partner and prior to the giving of such Consent, such
substitution shall not be effective. The written Consent or a
notice of denial of Consent shall be given to the assignee not
later than the last day of the calendar month following the month
the General Partner actually receives the executed Signature Page
and Power of Attorney and such other document or documents as may
reasonably be requested by the General Partner and payment of an
amount (not in excess of $100) required to cover all actual,
necessary and reasonable expenses, fees and filing costs in
connection with such substitution. The voting rights of a
Substituted Limited Partner who transfers his entire economic
interest in any Additional Limited Partnership Interests will
terminate with respect to such Additional Limited Partnership
Interests upon such transfer.
SECTION 7.3 Indemnification and Terms of Admission
A. Each Holder of Interests shall indemnify and hold
harmless the Partnership, the General Partner and every Holder who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of or arising from any actual misrepresentation or
misstatement of facts or omission to state facts made (or omitted
to be made) by such Holder in connection with any facts or
omission to state facts made (or omitted to be made) by such
Holder in connection with any assignment, transfer, other
disposition or encumbrance of all or any part of any Interest in
the Partnership, or the admission of an Assignee Holder as a
Substituted Limited Partner to the Partnership, against expenses
for which the Partnership or such other Person has not otherwise
been reimbursed (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by it
or him in connection with such action, suit or proceeding.
B. Any Person who acquires an Interest as an Assignee
Holder (whether or not such Person becomes a Substituted Limited
Partner) or who is admitted to the Partnership as a Substituted
Limited Partner or as a successor or additional General Partner
shall be subject to and bound by all the provisions of this
Agreement as if originally a party to this Agreement.
ARTICLE EIGHT
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
SECTION 8.1 Events Causing Dissolution
The Partnership shall terminate upon the happening of any of
the following events:
(i) the bankruptcy, death, dissolution, adjudication
of incompetence or withdrawal of a sole General Partner;
(ii) the reduction to cash or cash equivalents of all
the assets of the Partnership;
(iii) the election by the General Partner pursuant to
Section 5.5), Section 5.4B, or the vote by the Limited Partners
pursuant to Section 10.2(ii), to dissolve the Partnership; or
(iv) the happening of any other event causing the
dissolution of the Partnership under the laws of the State of
Delaware.
Dissolution of the Partnership shall be effective on the day on
which the event occurs giving rise to the dissolution, but the
Partnership shall not terminate until the Partnership's
certificate of limited partnership shall have been canceled and
the assets of the Partnership shall have been distributed as
provided in Section 8.3. Notwithstanding the dissolution of the
partnership, prior to the termination of the Partnership, as
aforesaid, the business of the Partnership and the affairs of the
Partners, as such, shall continue to be governed by this
Agreement.
In the event of the bankruptcy, dissolution or withdrawal of
a General Partner which is not then the sole General Partner at
any time during the life of the Partnership, the remaining General
Partner or General Partners shall promptly give the Limited
Partners notice of the occurrence of any event constituting such
bankruptcy, dissolution or withdrawal. The General Partner shall
give the Limited Partners sixty (60) days' notice of its intent to
withdraw voluntarily as a General Partner of the Partnership
unless, prior to such withdrawal, written notice has been given to
the Limited Partners as provided in the preceding sentence, and
the Limited Partners have (or have not) elected to exercise their
right pursuant to Section 10.2 (and subject to the conditions set
forth in Section 10.3 to elect a new General Partner.
Notwithstanding anything to the contrary in this Agreement, if any
event specified in clauses (i) through (iii) of Section 8.1 occurs
prior to the first date on which an Additional Limited Partnership
Interest is issued to an Assignee Holder (other than ML Real
Estate Associates II), no Partner or Partners shall have any right
to cause the Partnership to be continued, and if any event
specified in clause (iv) of Section 8.1 occurs prior to such date,
no Partner or Partners shall have any right to cause the
Partnership to be continued unless all Partners (including ML Real
Estate Associates II and Arvida/JMB Partners, which shall consent
for this purpose only with the affirmative approval of ML Real
Estate Associates II as a partner therein) Consent to continue the
Partnership.
SECTION 8.2 Capital Contribution upon Dissolution
Subject to Section 5.8 each Limited Partner shall look
solely to the assets of the Partnership for all distributions with
respect to the Partnership and his capital contribution thereto
and share of Profits or Losses thereof, and, except as provided in
Section 4.1 shall have no recourse therefor however, that upon
dissolution and termination of the Partnership, the General
Partner shall contribute to the Partnership an amount equal to the
amount which is determined to be the smaller of (i) the deficit
balance in its Capital Account or (ii) the excess of 1.01% of the
Capital Investments with respect to Limited Partnership Interests
held by Holders over the aggregate capital contributions made by
the General Partner as provided in Schedule A and otherwise under
this Agreement. If Arvida/JMB Associates shall in writing assume
or otherwise agree to be personally liable on Partnership
indebtedness owed to a third party, during the period that such
assumption or other personal liability exists, Arvida/JMB
Associates shall be obligated to contribute to the Partnership an
amount equal to the amount of such indebtedness which it has
assumed or on which it has otherwise agreed to be personally
liable if needed to satisfy such Partnership indebtedness.
No Limited Partner shall have any right to demand or receive
property, other than cash, upon dissolution and termination of the
Partnership.
SECTION 8.3 Liquidation
A. Upon dissolution of the Partnership, the General Partner
shall dispose of the assets of the Partnership, apply and
distribute the proceeds thereof as contemplated by this Agreement
and cause the cancellation of the Partnership's certificate of
limited partnership.
B. Notwithstanding the foregoing, in the event the General
Partner shall determine that an immediate sale of part or all of
the Partnership assets would cause undue loss to the Partners, the
General Partner, in order to avoid such loss, may (after having
given Notification to all the Limited Partners), subject to
Section 8.3C and to the extent not then prohibited by the Limited
Partnership Act of any jurisdiction in which the Partnership is
then formed or qualified and applicable in the circumstances,
defer disposition of and withhold from distribution for a
reasonable time any assets of the Partnership except those
necessary to satisfy the Partnership's debts and obligations.
C. Notwithstanding anything to the contrary in Articles
Four and Six, upon Liquidation of the Partnership the proceeds of
such Liquidation shall be distributed in the ratios of the
positive Capital Account balances of the Partners, and upon
Liquidation of any Partner's Interest in the Partnership the
proceeds of such Liquidation shall be distributed in accordance
with the positive Capital Account balance of such Partner, in each
case as determined after taking into account all Capital Account
adjustments for the Partnership taxable year during which such
Liquidation occurs (other than those adjustments made pursuant to
this sentence), by the end of such taxable year (or, if later,
within 90 days after the date of such Liquidation), except that in
the case of a Liquidation of the Partnership the proceeds of such
Liquidation shall not be required to be distributed by the end of
such taxable year (or, if later, within 90 days after the date of
such Liquidation) to the extent such proceeds constitute (i)
reserves reasonably required to provide for liabilities
(contingent or otherwise) of the Partnership or (ii) installment
obligations owed to the Partnership, so long as such withheld
amounts are distributed as soon as practicable and in the ratios
of the Partner's positive Capital Account balances.
2. Instrument of Assignment. Effective upon the transfer
to the Partnership of the required capital contributions in
respect of Additional Limited Partnership Interests from time to
time during the Public Offering, and upon the amendment of the
Certificate of Limited Partnership of the Partnership to reflect
the issuance of Additional Limited Partnership Interests to the
Initial Limited Partner, the Initial Limited Partner shall execute
an Instrument of Assignment transferring and assigning all of its
rights and interests in and to such Additional Limited Partnership
Interests to the Assignee Holders. The names and addresses of the
Assignee Holders who have purchased the Additional Limited
Partnership Interests shall be set forth on such Instrument and,
upon its receipt and acknowledgement by the General Partner, such
instrument of Assignment shall be binding in all respects upon the
Partnership, the General Partner, the Initial Limited Partner and
the Assignee Holders name therein; provided that any such
Instrument of Assignment may be amended by written instrument
executed by the Initial Limited Partner and the General Partner
for the purpose of correcting any error or omission contained
therein. Notification of the name and address of an Assignee
Holder set forth on any such Instrument of Assignment shall be
mailed, postage prepaid, to such Assignee Holder named therein;
and thereafter any address contained therein shall be subject to
change only upon the receipt by the Initial Limited Partner of
written notification of a change of an Assignee Holder's address
signed by such Assignee Holder.
3. Subsequent Assignments. Any subsequent transfer or
assignment or reassignment of Additional Limited Partnership
Interests by any Assignee Holder to any other Person must conform
in all respects with the requirements of Section 7.2 of the
Partnership Agreement and shall be subject to all restrictions on
transfer provided in Section 7.1 of the Partnership Agreement.
4. Voting. The Initial Limited Partner hereby agrees that,
with respect to any matter on which a vote of Limited Partners is
taken in accordance with the Partnership Agreement or as to which
any Consent is requested, it will vote the Additional Limited
Partnership Interests transferred to Assignee Holders pursuant to
this Agreement or grant or withhold such Consent solely for the
benefit of, and in accordance with the written instructions of,
the respective Assignee Holders with respect to their respective
Interests; provided, however, that the voting rights of an
Assignee Holder who transfers Additional Limited Partnership
Interests will terminate with respect to such Interests upon such
transfer, whether or not the transferee thereof is admitted as a
Substituted Limited partner with respect thereto. Additional
Limited Partnership Interests assigned to Assignee Holders who do
not provide such written instructions to the Initial Limited
Partner will not be voted nor any Consent granted on any such
matter. The Initial Limited partner will provide notice to the
Assignee Holders containing information regarding any matters to
be voted upon or as to which any Consent is requested sufficiently
in advance of the date of the vote for which such Consent is
requested to permit sufficiently in advance of the date of the
vote for which such Consent is requested to permit such Assignee
Holders to provide such written instructions and shall otherwise
establish reasonable procedures for any such voting or the
granting of such Consent. The Partnership and the General Partner
hereby agree to permit Assignee Holders to attend any meetings of
Limited Partners and the Initial Limited Partner shall, upon
written request of Assignee Holders owning Additional Limited
Partnership Interests which represent in the aggregate 10% or more
of all of the outstanding Limited Partnership Interest, request
the General Partner to call a meeting of Limited Partners or to
submit a matter to the Limited Partners without a meeting pursuant
to the Partnership Agreement.
5. Reports. The Initial Limited Partner will mail to any
Assignee Holder (at the address provided under paragraph 2 above)
any report, financial statement or other communication received
from the Partnership or the General Partner with respect to the
Additional Limited Partnership Interests transferred to such
Assignee Holder. In lieu of the mailing of any such document by
the Initial Limited Partner, the Initial Limited Partner may, at
its option, request the Partnership to mail any such
communications directly to the Assignee Holders, and the Initial
Limited Partner shall be deemed to have satisfied its obligations
under this paragraph 5.
December 6, 1993
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
RE: ARVIDA/JMB PARTNERS, L.P.
Commission File No. 0-16976
Form 8-K
Gentlemen:
Enclosed, for the above-captioned registrant, are eight copies,
one of which is manually executed of registrant's current report
on Form 8-K dated November 30, 1993.
Please acknowledge receipt of the Form 8-K by signing and
returning the enclosed self-addressed post card.
Thank you.
Very truly yours,
ARVIDA/JMB PARTNERS, L.P.
By: Arvida/JMB Managers, Inc.
(The General Partner)
By: GAILEN J. HULL
------------------------------
Gailen J. Hull, Vice President
Principal Accounting Officer
GH/tm
Enclosures
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): November 30, 1993
ARVIDA/JMB PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 0-16976 36-3507015
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
organization)
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 915-1987
ARVIDA/JMB PARTNERS, L.P.
Item 4. - Changes in Registrant's Certifying Accountant
On November 30, 1993, the General Partner of the Partnership
approved the engagement of Ernst & Young as the Partnership's
independent auditors for the fiscal year ending December 31, 1993
to replace the firm of Price Waterhouse who were dismissed as
auditors of the Partnership effective November 30, 1993.
The reports of Price Waterhouse on the Partnership's
consolidated financial statements for the years ended December 31,
1992 and 1991 did not contain an adverse opinion or a disclaimer
of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles.
In connection with the audits of the Partnership's financial
statements mentioned in the preceding paragraph and in the
subsequent interim period, there were no disagreements with Price
Waterhouse on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Price Waterhouse
would have caused Price Waterhouse to make reference to the matter
in their report.
The Partnership has requested Price Waterhouse to furnish it
a letter addressed to the Commission stating whether it agrees
with the above statements. A copy of that letter, dated December
1, 1993 is filed as an Exhibit to this report.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits
Letter dated December 1, 1993 from Price Waterhouse to
the Securities and Exchange Commission regarding review of Form 8-
K concerning a change in registrant's certifying accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ARVIDA/JMB PARTNERS, L.P.
By: Arvida/JMB Managers, Inc.
(The General Partner)
By: GAILEN J. HULL
---------------------
Gailen J. Hull, Vice President
Principal Accounting Officer
Dated: December 6, 1993
December , 1993
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Gentlemen:
We have read the statements made by Arvida/JMB Partners,
L.P. (copy attached), which we understand will be filed with the
Commission, pursuant to Item 4 of Form 8-K, as part of the
Partnership's Form 8-K report dated December , 1993. We agree
with the statements concerning our Firm in such Form 8-K.
Very truly yours,
