SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
____________________
Arvida/JMB Partners, L.P.
(Name of Subject Company)
Walton Street Capital Acquisition Co. III, L.L.C.
(Bidder)
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
____________________
Edward J. Schneidman
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee
$78,052,800 $15,610.56
* For purposes of calculating the filing fee only. This amount assumes the
purchase of 185,840 Limited Partnership Interests and Assignee Interests
therein ("Interests") of the subject company at $420 in cash per Interest.
[] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration Number:
Filing Party:
Date Filed:
<PAGE>
Item 1. Security and Subject Company.
(a) The name of the subject partnership is Arvida/JMB Partners, L.P., a
Delaware limited partnership (the "Partnership"), which has its principal
executive offices at 900 North Michigan Avenue, Chicago, Illinois 60611.
Capitalized terms used in this Schedule 14D-1 and not defined herein shall
have the meanings set forth in the Offer to Purchase dated June 27, 1996 (the
"Offer to Purchase"), a copy of which is filed as Exhibit (a)(1) to this
Schedule 14D-1.
(b) The information set forth in the "Introduction" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Purpose and Effects of the Offer -
Effect on Trading Market; Registration Under Section 12(g) of the Exchange
Act" of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) and (g) The information set forth in "Introduction" and "Certain
Information Concerning the Purchaser" of the Offer to Purchase is incorporated
herein by reference.
(e)-(f) During the last five years, none of the Purchaser, nor to the best
of their knowledge, any of the individuals listed in "Certain Information
Concerning the Purchaser" of the Offer to Purchase has (i) been
convicted in a criminal proceeding or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and, as a
result of such proceeding, was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) The information set forth in "Certain Information Concerning the
Purchaser," "Conflicts of Interest and Transactions with Affiliates" and
"Background of the Offer" of the Offer to Purchase is incorporated herein by
reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a) The information set forth in "Source and Amount of Funds" of the Offer
to Purchase is incorporated herein by reference.
(b)-(c) None.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(g) The information set forth in "Purpose and Effects of the Offer"
and "Future Plans" of the Offer to Purchase is incorporated herein by
reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the "Introduction" and in "Certain
Information Concerning the Purchaser" of the Offer to Purchase is incorporated
herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information contained in "Introduction," "Purpose and Effects of the
Offer," "Future Plans," "Background of the Offer" and "Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in "Certain Fees and Expenses" of the Offer to
Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in "Certain Information Concerning the Purchaser"
to the Offer to Purchase is incorporated herein by reference.
This incorporation by reference herein of the above referenced financial
information does not constitute an admission that such information is material
to a decision by a Holder whether to sell, tender or hold Interests
being sought in this tender offer.
Since the Purchaser is not subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, and since audited financial
statements for the Purchaser are not available or obtainable without
unreasonable cost or expense, the financial statements of the Purchaser
included in the Offer to Purchase are unaudited.
Item 10. Additional Information.
(a) The information set forth in "Conflicts of Interest and Transactions
with Affiliates" of the Offer to Purchase is incorporated herein by reference.
(b)-(d) The information set forth in "Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the related
Letter of Acceptance, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, and which are incorporated herein in their
entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated June 27, 1996.
(a)(2) Letter of Acceptance and related Instructions.
(a)(3) Form of Letter to Holders dated June 27, 1996.
(a)(4) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(5) Press Release dated June 27, 1996.
(a)(6) Form of Procedures for and Notice of Withdrawal of Interests
Previously Tendered to Raleigh Capital Associates L.P.
(b) None.
(c)(1) Financing Agreement Between and Among Walton Street Capital
Acquisition Co. III, L.L.C., Walton Street Capital, L.L.C. and Whitehall
Street Real Estate Limited Partnership VII dated as of June 27, 1996.
(c)(2) Confidentiality Agreement Between and Among Walton Street Capital,
L.L.C., Walton Street Real Estate Fund I, L.L.C. and Arvida/JMB Partners, Inc.
dated as of June 17, 1996.
(d) None.
(e)-(f) Not Applicable.
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this
statement is true, complete and correct.
Dated: June 27, 1996. WALTON STREET CAPITAL ACQUISITION
CO. III, L.L.C.
By:/s/ William J. Abrams
William J. Abrams
Manager
EXHIBIT INDEX
Exhibit Description
(a)(1) Offer to Purchase dated June 27, 1996
(a)(2) Letter of Acceptance and related Instructions
(a)(3) Form of Letter to Holders dated June 27, 1996
(a)(4) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(5) Press Release dated June 27, 1996
(a)(6) Form of Procedures for and Notice of Withdrawal of Interests
Previously Tendered to Raleigh
Capital Associates L.P.
(c)(1) Financing Agreement Between and Among Walton Street Capital
Acquisition Co. III, L.L.C.,
Walton Street Capital, L.L.C. and Whitehall Street Real Estate
Limited Partnership VII dated as of June 27, 1996.
(c)(2) Confidentiality Agreement Between and Among Walton Street Capital,
L.L.C., Walton Street
Real Estate Fund I, L.L.C. and Arvida/JMB Partners, Inc. dated as
of June 17, 1996.
EXHIBIT (a)(1)
Offer to Purchase for Cash
Up To 185,840 Limited Partnership Interests or Assignee Interests Therein
of
ARVIDA/JMB PARTNERS, L.P.
at
$420 Net Per Interest
by
Walton Street Capital Acquisition Co. III, L.L.C.
Walton Street Capital Acquisition Co. III, L.L.C., a Delaware limited
liability company (the Purchaser ), hereby offers to purchase up to 185,840
of the limited partnership interests and interests held by any assignee of
limited partnership interests (collectively, the Interests ) of Arvida/JMB
Partners, L.P., a Delaware limited partnership (the Partnership ), which are
outstanding as of the Expiration Date (defined herein), at a purchase price of
$420 per Interest, net to the seller in cash (the Purchase Price ), without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase (the Offer to Purchase ) and in the related Letter of Acceptance
(defined herein), as each may be supplemented, modified or amended from time
to time (which together constitute the Offer ). The Purchaser will pay any
transfer fees charged by the Partnership in connection with transferring
ownership of Interests pursuant to the Offer. The Purchase Price will be
adjusted for certain distributions by the Partnership (see Introduction ).
The 185,840 Interests sought pursuant to the Offer represent, to the best
knowledge of the Purchaser, approximately 46% of the Interests outstanding as
of the date of this Offer.
The Offer is not conditioned upon any minimum number of Interests being
tendered. If, as of the Expiration Date, more than 185,840 Interests are
validly tendered and not properly withdrawn, the Purchaser will accept for
purchase on a pro rata basis only 185,840 Interests, subject to the terms and
conditions herein. See The Offer 15. Conditions Of The Offer. A holder of
Interests ( Holder ) may tender any or all Interests owned by such Holder;
provided that if a Holder tenders less than all of the Interests held by such
Holder, such Holder may not hold less than five (5) Interests after giving
effect to the purchase of Interests held by such Holder pursuant to the Offer;
and provided further that tenders of fractional Interests will be accepted
only if all of the Interests held by such Holder are tendered.
Holders are urged to consider the following factors as well as all of the
additional factors set forth in the Introduction :
Although the Purchaser cannot predict the future value of the
Partnership's assets on a per Interest basis, the Purchase Price could
be substantially less than the net proceeds that may be realized upon a
future liquidation or dissolution of the Partnership. The Purchase
Price of $420 is approximately 75% of the Purchaser's estimate of the
net asset value of the Interests in the Partnership of $559 per
Interest, assuming that the Projects (defined herein) are developed and
sold in the ordinary course of business. See "The Offer-13.
Determination of Purchase Price."
By an offer to purchase dated June 12, 1996, Equity Resources Bay
Fund ( Equity ) began a tender offer for up to 12,000 Interests at a
price of $100 per Interest. On June 19, 1996, Raleigh Capital
Associates L.P. ( Raleigh ) commenced a tender offer for up to 185,000
limited partnership interests at a price of $411 per Interest. For the
period from February 1, 1996 through March 31, 1996 a total of 2,107
Interests traded (in a total of 22 trades) at per Interest prices of
between $235 and $279 with a weighted average price of $251.67 per
Interest.
Offer Price Per Interest Recent Trading Prices
Purchaser Raleigh Equity in Secondary Market
$ 420 $ 411 $ 100 $ 235 - $ 279
Mr. Neil G. Bluhm and Mr. Ira J. Schulman, two of the managing
members of the Purchaser, are also officers of Arvida/JMB Managers, Inc.
(the General Partner of the Partnership). Since a liquidation or sale of the
Partnership's assets other than in the ordinary course may result in a
decrease or elimination of certain payments payable to the General
Partner and its affiliates, the Purchaser will have conflicting interests in
deciding how to vote on future extraordinary transactions affecting the
Partnership. As a result of this Offer being made by the Purchaser, neither
of such managing members is currently involved in the General Partner's board
meetings and neither has any current involvement in decisions being made with
regard to the Partnership. The General Partner does not own any interests in
the Purchaser. See "The Offer 9. Certain Information Concerning the
Partnership Transactions with Affiliates", "The Offer 11. Conflicts
of Interest and Transactions with Affiliates" and "The Offer-12.
Background of the Offer."
The assets of the Partnership consist principally of interests in
land which is in the process of being developed into master-
planned residential communities ( Communities ) and, to a lesser
extent, commercial and recreational properties as well as home-building,
rather than the ownership and/or operation of commercial or residential
buildings. The future value of the Partnership's assets on a per Interest
basis and the amount and timing of the Partnership's cash flows are dependent
upon the risks inherent in the land development and home-building
businesses, including, but not limited to, the costs of
construction, the timing, pricing and quantity of home sales and
general economic conditions, and to a lesser extent, the amount and timing of
the development and sale of certain commercial properties. See "The Offer 10.
Certain Information Concerning the Partnership."
If the Purchaser is successful in acquiring a significant number of
Interests pursuant to the Offer, it will have the right to vote those
Interests in its best interest and thereby significantly influence decisions
with respect to the Partnership on which the Holders are entitled to vote,
including decisions concerning liquidation, amendments to the Partnership
Agreement (defined herein) and removal and replacement of the General Partner.
See "The Offer 11. Conflicts of Interest and Transactions with Affiliates-
Voting by the Purchaser."
In the event the Purchaser, Raleigh and/or Equity were to purchase
Interests pursuant to their respective tender offers, the number of Interests
that could be purchased by any of the other offerors pursuant to their offers
without triggering a termination of the Partnership for federal income tax
purposes may be significantly reduced and such offerors might not be able to
consummate their offers or might have to significantly reduce the number of
Interests purchased in such offers. See "The Offer 6. Federal Income Tax
Considerations Consequences to a Non-Tendering Holder." If such a reduction
were to occur in the number of Interests that could be purchased pursuant to
the Offer, the proration provisions discussed in The Offer 1. Terms of the
Offer; Number of Interests; Proration would apply to such reduced amount, as
necessary, in determining the number of Interests to accept from tendering
Holders.
The Purchaser is making the Offer with a view to making a profit.
Accordingly, there may be a conflict between the desire of the Purchaser to
purchase Interests at a low price and the desire of the Holders to sell their
Interests at a high price.
IMPORTANT
Any (I) Holder, (ii) beneficial owner, in the case of Interests owned by
Individual Retirement Accounts or qualified plans (a Beneficial Owner ), or
(iii) person who has purchased Interests but has not yet been reflected
as a Holder on the books and records of the Partnership (a Substituted Owner
), desiring to tender any or all of such person's Interests should either (1)
complete and sign the Letter of Acceptance, or a facsimile copy thereof,
in accordance with the instructions in the Letter of Acceptance, have such
person's signature guaranteed, if required, and mail or deliver the Letter of
Acceptance (or facsimile thereof) and any other required documents to the
Trust Company of America (the Information Agent/Depositary ), at the address
or facsimile number set forth on the back cover of this Offer to Purchase, or
(2) request his or her broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for him or her. Unless the context
requires otherwise, references to Holders in this Offer to Purchase shall be
deemed to also refer to Beneficial Owners and Substituted Owners. Questions
or requests for assistance may be directed to the Information Agent/Depositary
at the address and telephone number set forth on the back cover of this Offer
to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Acceptance and other related documents may be directed to the
Information Agent/Depositary.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION
OTHER THAN AS CONTAINED HEREIN OR IN THE LETTER OF ACCEPTANCE. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
EACH HOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE, THE
LETTER OF ACCEPTANCE AND RELATED DOCUMENTS.
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
THE OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1. Terms of the Offer; Number of Interests; Proration . . . . . . . . .5
2. Acceptance for Payment and Payment . . . . . . . . . . . . . . . . .7
3. Procedures for Tendering Interests . . . . . . . . . . . . . . . . .7
Valid Tender of Interests. . . . . . . . . . . . . . . . . . . . . .7
Signature Guarantees . . . . . . . . . . . . . . . . . . . . . . . .8
Back-up Federal Tax Withholding. . . . . . . . . . . . . . . . . . .8
FIRPTA Withholding . . . . . . . . . . . . . . . . . . . . . . . . .8
Appointment as Proxy; Power of Attorney. . . . . . . . . . . . . . .8
Assignment of Entire Interest in the Partnership . . . . . . . . . .9
Determination of Validity. . . . . . . . . . . . . . . . . . . . . .9
Substituted Owner Status . . . . . . . . . . . . . . . . . . . . . 10
4. Withdrawal Rights. . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Extension of Tender Period; Termination; Amendment . . . . . . . . 11
6. Federal Income Tax Considerations. . . . . . . . . . . . . . . . . 11
Consequences to a Tendering Holder . . . . . . . . . . . . . . . . 12
Consequences to a Non-Tendering Holder . . . . . . . . . . . . . . 14
7. Purpose and Effects of the Offer . . . . . . . . . . . . . . . . . 14
Purpose of the Offer . . . . . . . . . . . . . . . . . . . . . . . 14
Certain Restrictions on Transfer of Interests. . . . . . . . . . . 15
Effect on Trading Market; Registration Under Section 12(g) of the
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Potential Control of Holders' Voting Decisions by the Purchaser. . 16
8. Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. Certain Information Concerning the Partnership . . . . . . . . . . 17
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . 21
Additional Information . . . . . . . . . . . . . . . . . . . . . . 22
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 22
10. Certain Information Concerning the Purchaser.. . . . . . . . . . . 25
11. Conflicts of Interest and Transactions with Affiliates . . . . . . 27
Conflicts of Interest of the Purchaser . . . . . . . . . . . . . . 27
Voting by the Purchaser. . . . . . . . . . . . . . . . . . . . . . 27
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 27
12. Background of the Offer. . . . . . . . . . . . . . . . . . . . . . 27
13. Determination of Purchase Price. . . . . . . . . . . . . . . . . . 31
14. Source and Amount of Funds . . . . . . . . . . . . . . . . . . . . 32
Financing of the Offer . . . . . . . . . . . . . . . . . . . . . . 33
Conditions of the Financing Agreement. . . . . . . . . . . . . . . 33
Certain Covenants of the Parties . . . . . . . . . . . . . . . . . 33
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15. Conditions of the Offer. . . . . . . . . . . . . . . . . . . . . . 34
16. Certain Legal Matters. . . . . . . . . . . . . . . . . . . . . . . 36
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . 36
State Anti-takeover Laws . . . . . . . . . . . . . . . . . . . . . 37
Margin Requirements. . . . . . . . . . . . . . . . . . . . . . . . 37
Antitrust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
17. Certain Fees and Expenses. . . . . . . . . . . . . . . . . . . . . 37
18. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Annex I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I
<PAGE>
To the Holders of Interests of Arvida/JMB Partners, L.P.:
INTRODUCTION
The Purchaser hereby offers to purchase up to 185,840 of the Interests of
the Partnership issued pursuant to the Partnership Agreement, which are
outstanding as of the Expiration Date, at a purchase price of $420 per
Interest, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Acceptance, as each may be supplemented, modified or amended
from time to time.
The Purchase Price will automatically be reduced by the aggregate amount
of distributions made or declared by the Partnership after June 15, 1996 and
on or prior to the Expiration Date. In addition, if a distribution is made
or declared after the Expiration Date but prior to the date on which the
Purchaser pays for tendered Interests, the Purchaser will offset the amount
otherwise due to a Holder pursuant to the Offer in respect of tendered
Interests which have been accepted for payment but not yet paid for by the
amount of any such distribution. The Offer is not conditioned upon a minimum
number of Interests being tendered.
The Purchaser has entered into an agreement (the Financing Agreement )
with Whitehall Street Real Estate Limited Partnership VII ( Whitehall )
pursuant to which, among other things, Whitehall has agreed, subject
to the terms and conditions of such agreement, to finance a portion of the
Offer by purchasing approximately 80% of the Interests tendered pursuant to
the Offer at the Purchase Price. See "The Offer 10. Certain Information
Concerning the Purchaser "and "The Offer 14. Source and Amount of Funds."
The Purchaser is making this Offer to enable it to acquire a significant
interest in the Partnership for investment purposes based on its expectation
that there is value in the Interests in excess of the Purchase Price due
to the underlying value of the Communities and other real estate projects
owned by the Partnership (the Projects ). There can be no assurance, however,
that the Purchaser's judgment is correct, and, as a result, ownership of
Interests (either by the Purchaser or Holders who retain their Interests) will
remain a speculative investment. The Purchaser is acquiring the Interests for
investment purposes and does not intend to change current management or
the operations of the Partnership and has no current plans for any
extraordinary transaction involving the Partnership.
Factors to be considered by Holders. In considering the Offer, Holders
should consider the following factors:
* Purchase Price May not Equal Future Liquidation Proceeds. Although
the Purchaser cannot predict the future value of the Partnership's assets on a
per Interest basis, the Purchase Price could be substantially less than the
net proceeds that may be realized upon a future liquidation or dissolution of
the Partnership. The Purchase Price of $420 is approximately 75% of the
Purchaser's estimate of the net asset value of the Interests in the
Partnership of $559 per Interest, assuming that the Projects are developed and
sold in the ordinary course of business. See "The Offer 13. Determination of
Purchase Price."
* Other Current Prices. By an offer to purchase dated June 12, 1996,
Equity Resources Bay Fund began a tender offer for up to 12,000 Interests at a
price of $100 per Interest. On June 19, 1996, Raleigh Capital Associates L.P.
commenced a tender offer for up to 185,000 limited partnership interests at a
price of $411 per Interest. For the period from February 1, 1996 through
March 31, 1996 a total of 2,107 Interests traded (in a total of 22 trades)
at per Interest prices of between $235 and $279 with a weighted average price
of $251.67 per Interest.
Offer Price Per Interest Recent Trading Prices
Purchaser Raleigh Equity in Secondary Market
$ 420 $ 411 $ 100 $ 235 - $ 279
* Relationship between Certain Members of the Purchaser and the
General Partner. Mr. Bluhm and Mr. Schulman, two of the managing members of
the Purchaser, are also the President and a Vice President, respectively, of
the General Partner and as such, have an economic interest in the Partnership.
A liquidation or sale of the Partnership's assets may result in a decrease or
elimination of certain payments payable to the General Partner and its
affiliates. Therefore, the Purchaser will have conflicting interests in
deciding how to vote on future extraordinary transactions affecting the
Partnership. In addition, Mr. Bluhm beneficially owns 50% of Arvida Company
( Arvida ), an affiliate of the General Partner, which provides certain
development and management supervisory personnel to the Partnership for the
supervision of its projects and operations. As a result of this Offer being
made by the Purchaser, neither of such managing members is currently involved
in the General Partner's board meetings and neither has any current
involvement in decisions being made with regard to the Partnership.
Neither the General Partner nor Arvida has any ownership interest in the
Purchaser. See "The Offer 9. Certain Information Concerning the Partnership
- -Transactions with Affiliates", "{ The Offer 11. Conflicts of Interest
and Transactions with Affiliates" and "The Offer 12. Background of the
Offer."
* Risks of the Partnership's Business. The assets of the Partnership
consist principally of interests in land which is in the process of being
developed into Communities and, to a lesser extent, commercial and
recreational properties as well as home-building,rather than the ownership
and/or operation of commercial or residential buildings. The future value
of the Partnership's assets on a per Interest basis and the amount and timing
of the Partnership's cash flows are dependent upon the risks inherent in the
land development and home-building businesses, including, but not limited
to, the costs of construction, the timing, pricing and quantity of
home sales and general economic conditions and to a lesser extent, the amount
and timing of the development and sale of certain commercial properties. See
"The Offer 10. Certain Information Concerning the Purchaser."
* No Reliance on Independent Valuation of Interests. The Purchaser
has made its own independent analysis in establishing the Purchase Price. The
Purchaser, in determining the Purchase Price, did not seek to determine the
fair value of the Interests or the fair market value of the Partnership's
assets. See The Offer 13. Determination of Purchase Price. No independent
person has been retained by the Purchaser to evaluate or render any opinion
with respect to the fairness of the Purchase Price, and no appraisals
have been obtained by the Purchaser of any of the Projects.
* Alternative Proposals Under the Partnership Agreement. Pursuant to
the Amended and Restated Agreement of Limited Partnership dated as of
September 10, 1987, as amended (the Partnership Agreement ), the Partnership
may continue in existence until December 31, 2087; however, under the
Partnership Agreement, the General Partner is required to 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 ( NASDAQ ) at
any time on or prior to October 31, 1997; (ii) to purchase, or cause
JMB Realty Corporation ( JMB ) or its affiliates to purchase, on October 31,
1997 all of the Interests of the Holders 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 on October 31, 1997 in which all of the Partnership's
remaining assets will be sold or disposed of by October 31, 2002; provided,
however, that if the General Partner elects to pursue the course of action set
forth in clause (I) above, the General Partner shall have the authority to
cause the Interests 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. The Purchaser is
not aware of any determinations that the General Partner may have made in this
regard; however, actions by the General Partner pursuant to the foregoing
requirements could result in Holders receiving a higher amount for their
Interests than pursuant to the Offer.
* Potential Conflicts of Interest. The Purchaser is making the Offer
with a view to making a profit. Accordingly, there may be a conflict between
the desire of the Purchaser to purchase Interests at a low price and the
desire of the Holders to sell their Interests at a high price. Upon a
liquidation of the Partnership, the Purchaser and any assignee of the
Purchaser, including Whitehall through the Financing Agreement, will benefit
to the extent that the amount per Interest they receive in a liquidation
exceeds the Purchase Price. Therefore, Holders might receive more money if
they hold their Interests, rather than tender, and receive proceeds from
the liquidation of the Partnership. Alternatively, Holders may prefer to
receive the Purchase Price now rather than wait for uncertain future net
liquidation proceeds. See " 11. Conflicts of Interest and Transactions
with Affiliates."
* Potential Voting Power. Holders generally cannot participate in the
management or control of the Partnership's business and generally cannot
control either the timing or amount of cash distributions, or the timing or
terms of a sale of the Partnership's assets, except insofar as the Holders are
entitled to vote as permitted by the Partnership Agreement. If the maximum
number of Interests sought by the Purchaser are tendered and accepted for
payment pursuant to the Offer and the purchase of Interests pursuant to the
Financing Agreement is consummated, the Purchaser will own approximately 9.2%
of the outstanding Interests and Whitehall will own approximately 36.8% of the
outstanding Interests. As a result, the Purchaser and Whitehall, if in their
respective best interests they choose to act together, could be in a position
to influence significantly decisions of the Partnership on which Holders are
entitled to vote, although neither the Purchaser nor Whitehall, acting alone
or together, will have sufficient votes to approve the taking of any action
requiring a vote of a majority of Holders without the vote of other
Holders. If Raleigh is successful in acquiring 46% of the Interests pursuant
to its offer, it will be in a position to significantly influence all
decisions of the Partnership on which Holders are entitled to vote.
Under the Partnership Agreement, the Holder or Holders of 10% or more of the
Interests are entitled to call a meeting of Holders, and Holders holding a
majority of the Interests are entitled to take action with respect to a
variety of matters, including: removal of a general partner; dissolution of
the Partnership; and most types of amendments to the Partnership Agreement.
A sale of all or substantially all of the Partnership's assets other
than in the ordinary course of business, however, may be proposed only by the
General Partner and thereafter, must be approved by a vote of a majority of
the Holders. Although neither the Purchaser nor Whitehall has any current
intentions with regard to any of these matters, each will vote the Interests
acquired by it pursuant to the Offer and the Financing Agreement in their
respective best interests, which may, or may not, be in the best interests of
non-tendering Holders. Except as described elsewhere in this Offer to
Purchase, there is no agreement, arrangement or understanding, express or
implied, between the Purchaser and Whitehall or between the Purchaser and any
other person as to how the Interests purchased pursuant to the Offer will be
voted. See "The Offer 7. Purpose and Effects of the Offer", "The Offer 8.
Future Plans" and "The Offer 14. Sources and Amount of Funds- Certain
Covenants of the Parties".
* Tax Considerations. A Holder may recognize gain or loss on the sale
of Interests pursuant to the Offer depending on the specific circumstances of
the Holder. See "The Offer 6. Federal Income Tax Considerations". The Offer
may be attractive to Holders who wish in the future to avoid the expenses,
delays and complications in filing complex income tax returns and who wish to
avoid the potential for recognition of income in excess of cash distributions,
both of which could result from an ownership of Interests. In addition, a
Holder who sells 100% of its Interests pursuant to the Offer ,may no longer be
subject to the passive activity loss limitation with respect to suspended
losses attributable to those Interests and, therefore, may be able to utilize
fully any such losses.
* Tax Termination. In the event the Purchaser, Raleigh and/or Equity
were to purchase Interests pursuant to their respective tender offers, the
number of Interests that could be purchased by any of the other offerors
pursuant to their offers without triggering a termination of the Partnership
for federal income tax purposes may be significantly reduced and such other
offerors might not be able to consummate their offers or might have to
significantly reduce the number of Interests purchased in such offers. See
"The Offer 6. Federal Income Tax Considerations - Consequences to a
Non-Tendering Holder". If such a reduction were to occur in the number of
Interests that could be purchased pursuant to the Offer, the proration
provisions discussed in The Offer 1. Terms of the Offer; Number of
Interests; Proration would apply to such reduced amount, as necessary, in
determining the number of Interests to accept from tendering Holders.
* Lack of Trading Market and Liquidity. The Form 10-K (defined
herein) states: There is no public market for Interests, and it is not
anticipated that a public market for Interests will develop. Although there
are some limited resale mechanisms available to the Holders wishing to sell
their Interests, there is no formal trading market for the Interests. In the
event, however, that the General Partner were, pursuant to the terms of the
Partnership Agreement, to cause the Interests to be listed on a national
securities exchange or to be reported by NASDAQ, it is possible that a formal
trading market for the Interests could develop, although there are no
assurances in this regard. Accordingly, Holders who desire liquidity may wish
to consider the Offer. The Offer affords a significant number of Holders an
opportunity to liquidate their Interests without the usual transaction costs
or commissions associated with market sales and to reinvest cash proceeds in
other investments, which alternative otherwise might not be available to them
at this time or at this price level. The Purchase Price, however, is not
intended to represent either the fair market value of an Interest or the fair
market value of the Partnership's assets on a per Interest basis. See "-7.
Purpose and Effects of the Offer Effect on Trading Market; Registration
Under Section 12(g) of the Exchange Act".
* Speculative Nature of Interests. The Purchaser believes that the
Interests represent an attractive investment at the Purchase Price. There can
be no assurance, however, that this judgment is correct. Ownership of
Interests will remain a speculative investment in land development and
home-building, and to a lesser extent, commercial real estate development.
* Purchaser Will Pay Transfer Fees. The Purchaser will pay any
transfer fees charged by the Partnership in connection with transferring
ownership of Interests pursuant to the Offer. As a result, the Offer provides
Holders with an opportunity to sell their Interests at $420 per Interest
without the usual transaction costs or commissions associated with
market sales.
Following the completion of the Offer, the Purchaser and its affiliates
may acquire additional Interests. Any such acquisitions may be made through
private purchases, through one or more future tender offers or by any
other means deemed advisable, and may be at prices higher or lower than the
price to be paid for the Interests purchased pursuant to the Offer. See The
Offer 8. Future Plans.
The Offer is not conditioned upon any minimum number of Interests being
tendered. If more than 185,840 Interests are validly tendered and not
withdrawn, the Purchaser will accept up to only 185,840 Interests for
purchase, on a pro rata basis from each of the tendering Holders, subject to
the terms and conditions herein. The Purchaser expressly reserves the right,
in its sole discretion and for any reason, to terminate the Offer at any time
and to waive any or all of the conditions of the Offer, although the Purchaser
does not presently intend to waive any such conditions. See The Offer 15.
Conditions of the Offer for conditions of the Offer. A Holder may
tender any or all of his or her Interests; provided that if a Holder tenders
less than all of the Interests held by such Holder, such Holder may not hold
less than five (5) Interests after giving effect to the purchase of Interests
held by such Holder pursuant to the Offer; and provided further that tenders
of fractional Interests will be accepted only if all of the Interests held by
such Holder are tendered.
The aggregate number of Interests being sought pursuant to the Offer, the
Raleigh offer and the Equity offer equals approximately 95% of the Interests.
The Partnership Agreement restricts transfers of Interests if a transfer
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 federal income tax purposes (which
result will occur when 50% or more of the total Interests in Partnership
capital and profits are transferred within a twelve-month period). In the
event the Purchaser, Raleigh and/or Equity were to purchase Interests pursuant
to their respective tender offers, the number of Interests that could be
purchased by any of the other offerors pursuant to their offers without
triggering a termination of the Partnership for federal income tax purposes
may be significantly reduced and such other offerors might not be able to
consummate their offers or might have to significantly reduce the number of
Interests purchased in such offers. If such a reduction were to occur in the
number of Interests that could be purchased pursuant to the Offer, the
proration provisions discussed in The Offer 1. Terms of the Offer; Number of
Interests; Proration would apply to such reduced amount, as necessary, in
determining the number of Interests to accept from tendering Holders.
According to the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1995 (the Form 10-K ) filed with the Securities and
Exchange Commission (the Commission ), there were 404,000 Interests issued and
outstanding, held of record by 24,908 Holders. The Purchaser does not
directly or indirectly own any Interests.
Except as otherwise indicated, information contained in this Offer to
Purchase regarding the Partnership is based upon documents and reports
publicly filed by the Partnership with the Commission. Although the Purchaser
has no reason to believe that any statements contained in this Offer to
Purchase or those reports are untrue, the Purchaser does not take
responsibility for the accuracy or completeness of any information contained
in this Offer to Purchase which is derived from such public documents, or for
any failure by the Partnership to disclose events which may have occurred and
may affect the significance or accuracy of any such information but which are
unknown to the Purchaser.
Each Holder must make his or her own decision based on his or her
particular circumstances. Holders should consult with their respective
advisors about the financial, tax, legal and other implications to them of
accepting the Offer. Holders are urged to read this Offer to Purchase, the
related Letter of Acceptance and the other accompanying materials carefully
before deciding whether to tender their Interests.
THE OFFER
1. Terms of the Offer; Number of Interests; Proration.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept and purchase up to
185,840 Interests that are validly tendered on or prior to the Expiration Date
and not properly withdrawn in accordance with the procedures set forth in
4. Withdrawal Rights. Pursuant to the Financing Agreement, Whitehall has
agreed, subject to the terms and conditions of such agreement, to finance a
portion of the Offer by purchasing approximately 80% of the Interests tendered
pursuant to the Offer at the Purchase Price; however, such Financing Agreement
does not relieve the Purchaser of its obligations under the Offer or prejudice
the rights of tendering Holders to receive payment for Interests validly
tendered and accepted for payment pursuant to the Offer.
As used herein, the term Expiration Date shall mean 12:00 midnight,
Eastern Time, on July 26, 1996, unless the Purchaser, in its sole discretion,
shall have extended the period of time for which the Offer is open, in
which event the term Expiration Date shall mean the latest time and date at
which the Offer, as so extended by the Purchaser, shall expire. For a
discussion of the Purchaser's right to extend the period of time during which
the Offer is open and to amend, delay or terminate the Offer, see "- 5.
Extension of Tender Period; Termination; Amendment".
If, prior to the Expiration Date, the Purchaser increases or decreases
the consideration offered to Holders pursuant to the Offer, such increased or
decreased consideration will be paid for all Interests accepted for payment
pursuant to the Offer, whether or not the Interests were tendered prior to the
increase or decrease in consideration.
If more than 185,840 Interests are validly tendered on or prior to the
Expiration Date and not properly withdrawn on or prior to the Expiration Date,
the Purchaser will accept for payment, upon the terms and subject to the
conditions of the Offer, and pay for an aggregate of only 185,840 Interests so
tendered, pro rata from such tendering Holders according to the number of
Interests validly tendered and not properly withdrawn on or prior to the
Expiration Date, with appropriate adjustments to minimize purchases of
fractional Interests. If the number of Interests validly tendered and not
properly withdrawn on or prior to the Expiration Date is less than or equal to
185,840 Interests, the Purchaser will purchase all Interests so tendered and
not properly withdrawn, upon the terms and subject to the conditions of the
Offer. The number of Interests referred to in this proration discussion are
subject to reduction if the acceptance for purchase of such number of
Interests would cause a termination of the Partnership for federal income tax
purposes. In such event, the numbers referred to in this discussion shall be
such maximum number of Interests that the Purchaser decides it will accept for
purchase without causing a termination of the Partnership for federal income
tax purposes.
In the event that proration of tendered Interests is required, and
because of the difficulty of determining the proration results, the Purchaser
may not be able to announce the final results of such proration until at least
approximately seven business days after the Expiration Date. Subject to the
Purchaser's obligation under Rule 14e-1 under the Securities Exchange Act of
1934, as amended (the Exchange Act ), to pay Holders the Purchase
Price in respect of Interests tendered or return those Interests promptly
after the termination or withdrawal of the Offer, the Purchaser does not
intend to pay for any Interests accepted for payment pursuant to the Offer
until the final proration results are known. As used in this Offer to
Purchase, business day means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, Eastern Time, and any time period of business days will be computed
in accordance with Rule 14d-1(c)(6) under the Exchange Act.
The Offer is conditioned on satisfaction of certain conditions. See
15. Conditions of the Offer. The Purchaser reserves the right (but in no
event shall be obligated), in its sole discretion, to terminate the Offer at
any time and to waive in whole at any time or in part from time to time any or
all of those conditions. If, on or prior to the Expiration Date, any or all
of the conditions have not been satisfied or waived, the Purchaser reserves
the right to (I) decline to purchase any of the Interests tendered and
terminate the Offer, (ii) waive all the then unsatisfied conditions, subject
to complying with applicable rules and regulations of the Commission, and
purchase all Interests validly tendered and not properly withdrawn, (iii)
extend the Offer and, subject to the right of Holders to withdraw Interests
until the Expiration Date, retain the Interests that have been tendered during
the period or periods for which the Offer is extended or (iv) amend the Offer.
The General Partner has provided the Purchaser with a list of the Holders
and this Offer to Purchase, the related Letter of Acceptance and, if required,
any other relevant materials are being mailed to the Holders, Beneficial
Owners and Substituted Owners who hold Interests, to the extent their names
and addresses are on such list.
2. Acceptance for Payment and Payment.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will purchase, by accepting for
payment, and will pay for all Interests validly tendered and not properly
withdrawn on or prior to the Expiration Date as promptly as practicable after
the Expiration Date. In addition, subject to applicable rules of the
Commission, the Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Interests pending receipt of any regulatory or
governmental approvals specified in 16. Certain Legal Matters or pending
receipt of any additional documentation required by the Letter of Acceptance.
In all cases, payment for Interests accepted for payment pursuant to the
Offer will be made only after timely receipt by the Information
Agent/Depositary of (a) the Letter of Acceptance (or facsimile thereof)
properly completed and duly executed, with any required signature guarantees,
if applicable, and (b) any other documents required by the Letter of
Acceptance.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Interests validly tendered and not
withdrawn as, if and when the Purchaser gives oral or written notice
to the Information Agent/Depositary of the Purchaser's acceptance of such
Interests for payment pursuant to the Offer. No tender of Interests will be
deemed to have been validly made until all defects and irregularities with
respect to such tender have been cured or waived. In all cases, upon the
terms and subject to the conditions of the Offer, payment for Interests
purchased pursuant to the Offer will be made by deposit of the Purchase Price
therefor with the Information Agent/Depositary, which will act as agent for
tendering Holders for the purpose of receiving payments from the Purchaser and
transmitting such payments to validly tendering Holders.
The Purchase Price will automatically be reduced by the aggregate amount
of distributions per Interest, if any, made or declared by the Partnership
after June 15, 1996 and on or prior to the Expiration Date. In addition,
if a distribution is made or declared after the Expiration Date but prior to
the date on which the Purchaser pays for tendered Interests, the Purchaser
will offset the amount otherwise due to a Holder pursuant to the Offer in
respect of tendered Interests which have been accepted for payment but not yet
paid for by the amount of any such distribution. Under no circumstances will
the Purchaser pay interest on the Purchase Price for Interests.
If any tendered Interests are not purchased pursuant to the Offer for any
reason, the Letter of Acceptance with respect to such Interests will be
destroyed by the Information Agent/Depositary and the tendering Holder will
be so notified. If, for any reason whatsoever, acceptance for payment of or
payment for any Interests tendered pursuant to the Offer is delayed, or the
Purchaser is unable to accept for payment or pay for Interests tendered
pursuant to the Offer, then, without prejudice to the Purchaser's rights set
forth herein, the Information Agent/Depositary may, nevertheless, on behalf of
the Purchaser and subject to Rule 14e-1 under the Exchange Act,
retain tendered Interests, and such Interests may not be withdrawn except to
the extent that the tendering Holder is entitled to withdrawal rights and such
withdrawal rights are duly exercised as described in 4. Withdrawal
Rights.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more other parties, the right to purchase
Interests tendered pursuant to the Offer. Neither the Financing Agreement
nor any other transfer or assignment pursuant to the preceding sentence will
relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering Holders to receive payment for Interests validly tendered
and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Interests.
Valid Tender of Interests. Except as set forth below, for Interests to
be validly tendered pursuant to the Offer, the Letter of Acceptance (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, if applicable, and any other documents required
by the Letter of Acceptance, must be received by the Information
Agent/Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date. A Holder may tender any
or all Interests owned by such Holder; provided that if a Holder tenders less
than all of the Interests held by such Holder, such Holder may not hold less
than five (5) Interests after giving effect to the purchase of Interests held
be such Holder pursuant to the Offer; and provided further that tenders of
fractional interests will be accepted only if all of the Interests held by
such Holder are tendered. See Instruction 2 to the Letter of Acceptance.
The method of delivery of the Letter of Acceptance and any other required
documents is at the option and sole risk of the tendering Holder, and the
delivery will be deemed made only when actually received by the Information
Agent/Depositary. If delivery is by mail, registered mail with return receipt
requested is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery. See Instruction 1 to the Letter of Acceptance.
In order for a tendering Holder to participate in the Offer, Interests
must be validly tendered and not properly withdrawn prior to the Expiration
Date, which is 12:00 midnight, Eastern Time, on July 26, 1996, unless extended
by the Purchaser in its sole discretion.
Notwithstanding any other provision hereof, payment for Interests
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Information Agent/Depositary of a properly
completed and duly executed Letter of Acceptance (or a facsimile thereof),
together with any required signature guarantees, and any other documents
required by the Letter of Acceptance.
Signature Guarantees. If the Interests are registered in the name of the
signer of the Letter of Acceptance and payment is to be made directly to such
registered holder, then no signature guarantees are required. However,
if the Interests are registered in the name of a person other than the signer
of the Letter of Acceptance, or if payment is to be made or delivered to a
person other than the registered holder at its address appearing on the Letter
of Acceptance, then the signature on the Letter of Acceptance must be
guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. (the NASD ) or
a commercial bank, savings bank, credit union, savings and loan association or
trust company having an office, branch or agency in the United States as
provided in the Letter of Acceptance. See Instruction 2 of the Letter of
Acceptance.
Back-up Federal Tax Withholding. To prevent back-up federal income tax
withholding on payments made to certain Holders with respect to the Purchase
Price of Interests purchased pursuant to the Offer, each Holder tendering
Interests must provide the Information Agent/Depositary with such Holder's
correct taxpayer identification number or social security number and certify
that such Holder is not subject to back-up federal income tax withholding by
completing the Substitute Form W-9 on the reverse side of the Letter of
Acceptance. See Instruction 3 of the Letter of Acceptance.
FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount up to 10% of the Purchase Price plus Partnership liabilities
allocable to each Interest purchased, each Holder must complete the
FIRPTA Affidavit included in the Letter of Acceptance certifying the Holder's
taxpayer identification number and address and that the Holder is not a
foreign person. See Instruction 3 of the Letter of Acceptance and 6.
Federal Income Tax Considerations.
Appointment as Proxy; Power of Attorney. By executing and delivering the
Letter of Acceptance, a tendering Holder irrevocably appoints the Purchaser
and designees of the Purchaser and each of them as such Holder's proxies, with
full power of substitution, in the manner set forth in the Letter of
Acceptance, each with full power of substitution, to the full extent of such
Holder's rights with respect to the Interests tendered by such Holder
and accepted for payment by the Purchaser (and with respect to any and all
other Interests or other securities issued or issuable in respect of such
Interests on or after the date hereof). All such proxies shall be considered
irrevocable and coupled with an interest in the tendered Interests. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts such Interests for payment. Upon such acceptance for payment, all
prior proxies given by such Holder with respect to such Interests (and such
other Interests and securities) will be revoked without further action, and no
subsequent proxies may be given nor any subsequent written consent executed
(and, if given or executed, will not be effective). The Purchaser and its
designees will, with respect to the Interests (and such other Interests and
securities) for which such appointment is effective, be empowered to exercise
all voting and other rights of such Holder as they in their sole discretion
may deem proper at any meeting of Holders or any adjournment or postponement
thereof, by written consent in lieu of any such meeting or otherwise. The
Purchaser reserves the right to require that, in order for Interests to be
deemed validly tendered, immediately upon the Purchaser's payment for such
Interests, the Purchaser must be able to exercise full voting rights with
respect to such Interests and other securities, including voting at any
meeting of Holders. See 15. Conditions of the Offer.
By executing and delivering the Letter of Acceptance, a tendering Holder
also irrevocably constitutes and appoints the Purchaser and its designees as
the Holder's attorneys-in-fact, each with full power of substitution to
the full extent of the Holder's rights with respect to the Interests tendered
by the Holder and accepted for payment by the Purchaser. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts the
tendered Interests for payment. Upon such acceptance for payment, all prior
powers of attorney granted by the Holder with respect to such Interests will,
without further action, be revoked, and no subsequent powers of attorney
may be granted (and if granted will not be effective). Pursuant to such
appointment as attorneys-in-fact, the Purchaser and its designees each will
have the power, among other things, (I) to seek to transfer ownership of such
Interests on the Partnership books maintained by the transfer agent and
registrar for the Partnership (and execute and deliver any accompanying
evidences of transfer and authenticity any of them may deem necessary or
appropriate in connection therewith, including, without limitation, a
Transferor's (Seller's) Application for Transfer created by the NASD, if
required), (ii) upon receipt by the Information Agent/Depositary (as the
tendering Holder's agent) of the Purchase Price, to become a substitute
Holder, to receive any and all distributions made by the Partnership
after the Expiration Date, and to receive all benefits and otherwise exercise
all rights of beneficial ownership of such Interests in accordance with the
terms of the Offer, (iii) to execute and deliver to the General Partner a
change of address form instructing the General Partner to send any and all
future distributions to which the Purchaser is entitled pursuant to the terms
of the Offer in respect of tendered Interests to the address specified in such
form, and (iv) to endorse any check payable to or upon the order of such
Holder representing a distribution to which the Purchaser is entitled pursuant
to the terms of the Offer, in each case on behalf of the tendering Holder.
Assignment of Entire Interest in the Partnership. By executing and
delivering the Letter of Acceptance, a tendering Holder irrevocably assigns to
the Purchaser and its assigns all of the right, title and interest of such
Holder in the Partnership with respect to the Interests tendered and purchased
pursuant to the Offer, including, without limitation, such Holder's right,
title and interest in and to any and all distributions made by the Partnership
after the Expiration Date in respect of the Interests tendered by such Holder
and accepted for payment by the Purchaser, regardless of the fact that the
record date for any such distribution may be a date prior to the Expiration
Date. The Purchaser will seek to be admitted to the Partnership as a
substitute Holder upon consummation of the Offer.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Interests will be determined by the Purchaser, in its
sole discretion, whose determination shall be final and binding on all
parties. The Purchaser reserves the absolute right to reject any or all
tenders determined by it not to be in proper form, or the acceptance of or
payment for which may, in the opinion of the Purchaser's counsel, be unlawful.
The Purchaser also reserves the absolute right to waive any of the conditions
of the Offer or any defect or irregularity in any tender of Interests of any
particular Holder whether or not similar defects or irregularities are waived
in the case of other Holders.
Substituted Owner Status. Substituted Owners must provide documentation
to the Information Agent/Depositary which demonstrates, to the satisfaction of
the Purchaser, such person's status as a person who has purchased Interests
but not yet been reflected as a Holder on the books and records of the
Partnership.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Acceptance and the instructions thereto) will be
final and binding. No tender of Interests will be deemed to have been validly
made until all defects and irregularities with respect to such tender have
been cured or waived. None of the Purchaser, any of its affiliates or
assigns, if any, the Information Agent/Depositary or any other person will be
under any duty to give any notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
The Purchaser's acceptance for payment of Interests tendered pursuant to
the procedures described above will constitute a binding agreement between the
tendering Holder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. Withdrawal Rights.
Except as otherwise provided herein, tenders of Interests made pursuant
to the Offer are irrevocable. Interests tendered pursuant to the Offer may be
withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time after August 26, 1996. If, for any reason whatsoever, acceptance for
payment of any Interests tendered pursuant to the Offer is delayed, or the
Purchaser is unable to accept for payment or pay for Interests tendered
pursuant to the Offer, then, without prejudice to the Purchaser's rights set
forth herein, the Information Agent/Depositary may, nevertheless, on behalf
of the Purchaser, retain tendered Interests and such Interests may not be
withdrawn except to the extent that the tendering Holder is entitled to and
duly exercises withdrawal rights as described herein. Any such delay will be
by an extension of the Offer to the extent required by law.
The reservation by the Purchaser of the right to delay the acceptance or
purchase of or payment for Interests is subject to the provisions of Rule
14e-1 under the Exchange Act, which requires the Purchaser to pay
the consideration offered or return Interests tendered by or on behalf of
Holders' promptly after the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Information
Agent/Depositary at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name(s) of the
person(s) who tendered the Interests to be withdrawn, the number of Interests
to be withdrawn and the name(s) of the registered holder(s) of the Interests,
if different from that of the person(s) who tendered such Interests. Such
notice of withdrawal must also be signed by the same person(s) who signed the
Letter of Acceptance in the same manner as the Letter of Acceptance was
signed (including any signature guarantees, if applicable). If the Interests
are held in the name of two or more persons, all such persons must sign the
notice of withdrawal. Any Interests properly withdrawn will be deemed
not validly tendered for purposes of the Offer, but may be re-tendered at any
subsequent time prior to the Expiration Date by following the procedures
described in 3. Procedures for Tendering Interests.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, any of its affiliates or assigns, if any, the Information
Agent/Depositary or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. Extension of Tender Period; Termination; Amendment.
The Purchaser reserves the right, at any time or from time to time, in
its sole discretion and regardless of whether or not any of the conditions
specified under 15. Conditions of the Offer shall have been satisfied, (I)
to extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Interests by giving oral
or written notice of such extension to the Information Agent/Depositary
and by making a public announcement of such extension, (ii) to terminate the
Offer and not accept for payment any Interests not already accepted for
payment or paid for or (iii) to amend the Offer in any respect by making a
public announcement of such amendment. There can be no assurance that the
Purchaser will exercise its right to extend or amend the Offer.
If the Purchaser increases or decreases either the number of Interests
being sought or the consideration to be paid for any Interests pursuant to the
Offer and the Offer is scheduled to expire at any time before the expiration
of a period of 10 business days from, and including, the date that notice of
such increase or decrease is first published, sent or given in the manner
specified below, the Offer will be extended until, at a minimum, the
expiration of such period of 10 business days. If the Purchaser makes a
material change in the terms of the Offer (other than a change in price or
percentage of securities sought) or in the information concerning the Offer,
or waives a material condition of the Offer, the Purchaser will extend the
Offer, if required by applicable law, for a period sufficient to allow Holders
to consider the amended terms of the Offer.
The Purchaser also reserves the right, in its sole discretion, in the
event any of the conditions specified under 15. Condition of the Offer
shall not have been satisfied and so long as Interests have not theretofore
been accepted for payment, to delay (except as otherwise required by
applicable law) acceptance for payment of or payment for Interests or to
terminate the Offer and not accept for payment or pay for Interests.
If the Purchaser extends the period of time during which the Offer is
open, delays acceptance for payment of or payment for Interests or is unable
to accept for payment or pay for Interests pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Information Agent/Depositary may, on behalf of the Purchaser, retain all
Interests tendered, and such Interests may not be withdrawn except as
otherwise provided under 4. Withdrawal Rights. The reservation by the
Purchaser of the right to delay acceptance for payment of or payment for
Interests is subject to applicable law, which requires that the Purchaser
pay the consideration offered or return the Interests deposited by or on
behalf of Holders promptly after the termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting
the manner in which the Purchaser may choose to make any public
announcement, the Purchaser will have no obligation (except as otherwise
required by applicable law) to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones
News Service. In the case of an extension of the Offer, the Purchaser will
make a public announcement of such extension no later than 9:00 a.m., Eastern
Time, on the next business day after the previously scheduled Expiration
Date.
6. Federal Income Tax Considerations.
The following summary is a general discussion of certain federal income
tax considerations with respect to a sale of Interests pursuant to the Offer.
This summary is based on the Internal Revenue Code of 1986, as
amended (the Code ), final and proposed regulations promulgated thereunder (
Treasury Regulations ), court decisions and Internal Revenue Service ( IRS )
rulings and positions as of the date of the Offer. All of the
foregoing are subject to change, and any such change could affect the
continuing accuracy of this summary. The following discussion assumes that
the Partnership is treated as a partnership for federal income tax purposes
and is not treated as a publicly traded partnership within the meaning of
Section 7704 of the Code, and that the Interests constitute partnership
interests for federal income tax purposes. This summary does not discuss all
aspects of federal income taxation that may be relevant to a particular Holder
in light of such Holder's specific circumstances or to certain types of
Holders subject to special treatment under the federal income tax laws (for
example, foreign persons, dealers in securities, banks, insurance companies
and tax-exempt organizations), nor does it discuss any aspect of state, local,
foreign or other tax laws. Sales of Interests pursuant to the Offer will be
taxable transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
HOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH HOLDER OF SELLING OR NOT SELLING INTERESTS PURSUANT TO
THE OFFER.
Consequences to a Tendering Holder. The gain or loss recognized by a
Holder on the sale of an Interest should be equal to the amount realized on
the sale less the Holder's adjusted tax basis in the Interest. The
amount realized by such Holder with respect to the sale of an Interest
generally will be a sum equal to the amount of cash received by the Holder
pursuant to the Offer (i.e., the Purchase Price) plus the amount of the
Partnership's liabilities allocable to the Interest (as determined under Code
Section 752). As discussed more fully below, any gain realized by a Holder
may possibly be offset by any suspended passive activity losses (e.g.,
post-1986 suspended net taxable losses in excess of statutorily provided
phase-in amounts), if any, from the Partnership or from other passive
activities. In the event the Holder realizes a loss on the disposition, such
loss may be deductible only to the extent permitted under the passive activity
loss rules and other applicable limitations. If the Holder sells all of
his or her Interests (and such Interests have not been aggregated for purposes
of the passive loss rules with certain activities not currently being sold),
any passive activity loss recognized on the sale and any suspended passive
activity losses from the Partnership (to the extent not used to offset any
gain recognized on the sale) will no longer be subject to the passive activity
loss limitation, and therefore should be deductible by such Holder from his or
her other income, subject to any other applicable limitations (including
capital loss limitations, at-risk limitations and tax basis limitations). If
more than 185,840 Interests are validly tendered and not withdrawn, most
tendering Holders may not be able to sell all of their Interests pursuant to
the Offer because of proration of the number of Interests to be purchased by
the Purchaser. See 1. Terms of the Offer; Number of Interests; Proration.
Subject to the foregoing and the following, the gain or loss recognized
by a Holder on a sale of Interests pursuant to the Offer generally will be
treated as a capital gain or loss if such Interests were held by the Holder as
a capital asset and were not deemed held by such Holder as a dealer. Such
capital gain or loss will be treated as long-term capital gain or loss if the
tendering Holder's holding period for the Interest exceeds one year. Capital
losses are deductible only to the extent of capital gains, except that
non-corporate taxpayers may deduct up to $3,000 of capital losses in excess of
the amount of their capital gains against ordinary income. Excess capital
losses generally can be carried forward to succeeding years (a corporation's
carry forward period is five years and a non-corporate taxpayer can carry
forward such losses indefinitely); in addition, corporations are allowed to
carry back excess capital losses to the three preceding taxable years.
A portion of the amount realized by a Holder may be attributable to
unrealized receivables (which includes depreciation recapture) or
substantially appreciated inventory items as defined in Code Section 751. In
such case, a portion of the Holder's gain or loss may be treated as ordinary
income rather than as capital gain. It is possible that the basis allocation
rules of Code Section 751 may result in a Holder's recognizing ordinary income
with respect to such items while recognizing a larger capital loss with
respect to the remainder of the Interest, even though such Holder has an
overall loss on the sale.
In addition, Section 6050K of the Code requires each person who transfers
an interest in a partnership possessing unrealized receivables or
substantially appreciated inventory items (within the meaning of Code
Section 751) to report such transfer to the partnership. If so notified, the
partnership must report the identity of the transferor and transferee to the
IRS, together with other information required under applicable Treasury
regulations. Failure by a partner to report a transfer covered by this
provision may result in a penalty of $50 per occurrence. Holders are advised
to consult with their own tax advisors regarding the reporting requirements
under Section 6050K of the Code.
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent
of such person's passive activity income for such year which does not
include portfolio income (as described below), and closely held corporations
may not offset such losses against so-called portfolio income. Portfolio
income includes interest, dividends, annuities and royalties, unless such
income is derived in the ordinary course of a trade or businesses, less (a)
expenses (other than interest) clearly and directly allocable to such income
and (b) interest expenses properly allocable to such income. For this
purpose, portfolio income also includes any gain or loss from the disposition
of property that produces portfolio income or that is held
for investment. To the extent that such a taxpayer holds a partnership
interest in a limited partnership engaged in one or more activities that
produce passive activity income and one or more activities that produce
portfolio income, upon a sale or other disposition of such taxpayer's
partnership interest, a ratable portion of any gain or loss from
such sale or other disposition shall be treated as gain or loss from the sale
or disposition of an interest in each passive activity or portfolio income
activity in which such limited partnership holds an interest. Such allocation
is generally based on the fair market value of each such passive or portfolio
activity, and is made in accordance with applicable Treasury Regulations.
Accordingly, to the extent that the Partnership holds mortgage notes (or other
assets) producing portfolio income, a portion of any gain (or loss) from the
sale of an Interest in the Partnership would be considered as arising from a
portfolio income activity, and to the extent that portfolio gain arises
therefrom, such portfolio gain cannot be offset by current or suspended
passive activity losses (except to the extent such passive activity losses
arise from the complete disposition of a passive activity as described below).
Under passive loss rules, a loss attributable to a passive activity that
is recognized by a Holder upon a sale of an Interest pursuant to the Offer can
be currently deducted (subject to other applicable limitations) to the extent
of such Holder's taxable income from the Partnership for that year (except to
the extent such income arises from a portfolio income activity), and gain
recognized by a Holder upon such sale (except to the extent that such gain
arises from a portfolio income activity) can be offset by such Holder's
passive activity losses (if any) from the Partnership (subject to applicable
limitations). Subject to applicable limitations, if a Holder disposes of all
of his or her Interests pursuant to the Offer, such Holder generally will be
able to offset any portfolio income by passive activity losses and will be
able to deduct remaining passive activity losses (if any) from the Partnership
that could not previously be deducted by such Holder due to the passive loss
limitations. If a Holder has grouped together a portion of the investment in
his or her Interests and any other passive investment in a rental real estate
project under income tax regulations providing for the grouping of activities
under certain circumstances and disposes of less than substantially all of his
or her rental real estate activities, such Holder generally will not be able
to deduct previously nondeducted passive activity losses attributable to such
Interests, until disposing of substantially all of his or her rental real
estate activities.
A tendering Holder will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Interests sold in accordance with the provisions of the Partnership Agreement
concerning transfers of Interests. Such allocation and cash distributed, if
any, by the Partnership to such Holder for such year will affect the Holder's
adjusted tax basis in the Interests and, therefore, the amount of such
Holder's taxable gain or loss upon a sale of Interests pursuant to the Offer.
A taxable Holder (other than corporations and certain foreign
individuals) who tenders Interests may be subject to 31% backup withholding
unless the Holder provides its taxpayer identification number ( TIN ) and
certifies that the TIN is correct or properly certifies that such Holder is
awaiting a TIN. A Holder may avoid backup withholding by properly completing
and signing the Substitute Form W-9 included as part of the Letter of
Acceptance. If a Holder who is subject to backup withholding does not
properly complete and sign the Substitute Form W-9, the Purchaser will
withhold 31% from payments to such Holder. See Instruction 3 to the Letter of
Acceptance.
Gain realized by a foreign Holder on a sale of an Interest pursuant to
the Offer will be subject to federal income tax. Under Section 1445 of the
Code, the transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchaser will withhold 10% of the amount
realized by a tendering Holder unless the Holder properly completes
and signs the FIRPTA Affidavit included as part of the Letter of Acceptance
certifying the Holder's TIN, that such Holder is not a foreign person and the
Holder's address. Amounts withheld would be creditable against a foreign
Holder's federal income tax liability and, if in excess thereof, a refund may
be obtained from the IRS by filing a U.S. income tax return. Alternatively,
if the amount withheld is less than the Holder's U.S. tax liability, the
Holder may be required to make an additional tax payment. See Instruction 3
to the Letter of Acceptance.
Consequences to a Non-Tendering Holder. The Purchaser does not
anticipate that a Holder who does not tender his or her Interests will realize
any material tax consequences as a result of the election not to tender.
The Partnership Agreement restricts transfers of Interests if a transfer
would, in the opinion of counsel for the Partnership, result in the
termination of the Partnership (which result will occur when 50% or more of
the total Interests in Partnership capital and profits are transferred within
a twelve-month period) or the treatment of the Partnership as an association
taxable as a corporation for federal income tax purposes (which would occur if
the Interests were deemed to be publicly traded for purposes of Code Section
7704). However, if as a result of the Offer there is a sale or exchange of
50% or more of the total Interests in Partnership capital and profits within a
12 month period, a termination of the Partnership for federal income tax
purposes would occur, and the taxable year of the Partnership would close. In
the case of such a sale or exchange, under current Treasury regulations, the
properties (subject to related debt) of the Partnership would be treated as
distributed to the partners, and following the deemed distribution,
contribution of the same properties would be deemed to be made to a new
partnership or to an association taxable as a corporation. Proposed Treasury
regulations would modify this treatment. Under current Treasury regulations,
the consequences of a termination of the Partnership could include changes in
the methods of depreciation available to the Partnership for tax purposes,
changes in the tax basis of the Partnership's assets, possible recognition of
taxable gain resulting from any deemed cash distribution in excess of the non-
tendering Holder's tax basis in his or her Interests, and possibly other
consequences the extent of which cannot be determined by the Purchaser without
access to the books and records of the Partnership. In addition, under
current Treasury regulations, a termination of the Partnership could cause the
Partnership or its assets to become subject to unfavorable statutory or
regulatory changes enacted or issued prior to the termination but previously
not applicable to the Partnership or its assets because of protective
transitional rules. The Purchaser has reserved the right not to purchase
Interests to the extent such purchase would cause a termination of the
Partnership for federal income tax purposes.
7. Purpose and Effects of the Offer.
Purpose of the Offer. The purpose of the Offer is to enable the
Purchaser to acquire a significant interest in the Partnership for investment
purposes based on its expectation that there is value in the Interests in
excess of the Purchase Price due to the underlying value of the Projects. The
Purchaser does not intend to change current management or the operation of the
Partnership and has no current plans for any extraordinary transaction
involving the Partnership. If the Purchaser's plans with respect to the
Partnership change in the future, the ability of the Purchaser to influence
actions on which Holders have a right to vote will depend on the Holders'
response to the Offer (i.e., the number of Interests tendered). If the
Purchaser acquires only a few Interests pursuant to the Offer,
neither the Purchaser nor Whitehall would be in a position to influence
matters over which Holders have a right to vote. Conversely, if the maximum
number of Interests sought are tendered and accepted for payment pursuant to
the Offer and assuming the purchase of Interests pursuant to the Financing
Agreement is consummated, the Purchaser will own approximately 9.2% of the
outstanding Interests and Whitehall will own approximately 36.8%
of the outstanding Interests. As a result, Whitehall would be in a position
to call a meeting of Holders and the Purchaser and Whitehall, if in their
respective best interests they choose to act together, could be in a position
to exert significant influence over matters on which Holders have a right to
vote, although neither the Purchaser nor Whitehall, acting alone or together,
will have sufficient votes to approve the taking of any action requiring a
vote of the majority of Holders without the vote of the other Holders. Except
as described elsewhere in this Offer to Purchase, there is no agreement,
arrangement or understanding, express or implied, between the Purchaser and
Whitehall and the Purchaser and any other person as to how the Interests
purchased pursuant to the Offer will be voted. See Item 8. Future Plans
and 14. Sources and Amount of Funds - Certain Covenants of the
Parties.
The ownership of the Interests will allow the Purchaser and Whitehall,
and any other remaining Holder of Interests, to benefit from any of the
following: (a) any cash distributions from the operations in the ordinary
course of the Partnership; (b) any distributions of net proceeds from the sale
of any Projects; and (c) any distributions of net proceeds from the
liquidation of the Partnership.
Certain Restrictions on Transfer of Interests. Sales of Interests in the
secondary market and in private transactions during the twelve-month period
following completion of the Offer may be restricted (see 6. Federal
Income Tax Considerations Consequences to a Non-Tendering Holder ), and the
Partnership may not process any requests for recognition of transfers or
substitution of Holders upon a transfer of Interests during such twelve-
month period which the General Partner believes may cause a tax termination.
In the event the Purchaser, Raleigh and/or Equity were to purchase Interests
pursuant to their respective tender offers, the number of Interests that could
be purchased by any of the other offerors pursuant to their offers without
triggering a termination of the Partnership for federal income tax purposes
may be significantly reduced and such other offerors might not be able to
consummate their offers or might have to significantly reduce the number of
Interests purchased in such offers. See The Offer 6. Federal Income Tax
Considerations Consequences to a Non-Tendering Holder. If such a
reduction were to occur in the number of Interests that could be purchased
pursuant to the Offer, the proration provisions discussed in The Offer 1.
Terms of the Offer; Number of Interests; Proration would apply to such
reduced amount, as necessary, in determining the number of Interests to accept
from tendering Holders. Based on information provided by the General Partner,
for the period from July 2, 1995 to June 24, 1996, approximately
14,004 (3.47%) of the Interests were transferred. The Purchaser does not
intend to purchase Interests to the extent such purchase would cause a
termination of the Partnership. See 1. Terms of the Offer; Number of
Interests; Proration. Non-tendering Holders should consult their own tax
advisors regarding the tax consequences of the Partnership's termination in
their particular situations. See 6. Federal Income Tax Considerations
Consequences to a Non-Tendering Holder.
Effect on Trading Market; Registration Under Section 12(g) of the
Exchange Act. If a substantial number of Interests are purchased pursuant to
the Offer, the result will be a reduction in the number of Holders.
In the case of certain kinds of equity securities like the Interests, a
reduction in the number of securityholders might be expected to result in a
reduction in the liquidity and volume of activity in the trading market for
the security. There is no established trading market for the Interests. The
Form 10-K states: There is no public market for Interests, and it is not
anticipated that a public market for Interests will develop.
Partnership Profiles, Inc. tracks recent trades in certain limited
partnership interests. Recent issues of the Partnership Spectrum indicate
that 2,107 Interests traded (in a total of 22 trades) in the period February
1, 1996 through March 31, 1996 at per Interest prices of between $235 and $279
with a weighted average price of $251.67 per Interest and that 11,276
Interests traded (in a total of 119 trades) in the period August 1, 1995
through March 31, 1996 at per Interest prices between $175.00 and $284.80 per
Interest with a weighted average price of $254.69 per Interest. These prices
do not take into consideration any fees, costs or commissions associated with
effecting such trades.
The Interests currently are registered under Section 12(g) under the
Exchange Act, which means, among other things, that the Partnership is
required to file periodic reports with the Commission and to comply with the
Commission's proxy rules. The Purchaser does not expect or intend that
consummation of the Offer will cause the Interests to cease to be registered
under Section 12(g) of the Exchange Act. If the Interests were to be held by
fewer than 300 persons, the Partnership could apply to de-register the
Interests under the Exchange Act. Because the Interests are widely held,
however, the Purchaser expects that even if it purchases the maximum number of
Interests in the Offer, the Interests will continue to be held of record by
substantially more than 300 persons.
Potential Control of Holders' Voting Decisions by the Purchaser. The
Purchaser will, and the Purchaser has been informed that Whitehall will, seek
to be admitted to the Partnership as a substitute Holder upon
consummation of the Offer and the purchase of Interests by Whitehall pursuant
to the Financing Agreement and, if admitted, will have the right (subject to
certain limitations described below) to vote each Interest purchased
pursuant to the Offer and the Financing Agreement. Even if the Purchaser
and/or Whitehall are not admitted to the Partnership as substitute Holders,
however, the Purchaser and Whitehall (if it were to waive such condition)
nonetheless will have the right to vote each Interest purchased in the Offer
pursuant to the irrevocable appointment by tendering Holders of the Purchaser
and its designees as proxies with respect to the Interests tendered by such
Holders and accepted for payment by the Purchaser. If the maximum number of
Interests sought are tendered and accepted for payment pursuant to the Offer
and assuming the purchase by Whitehall of Interests pursuant to the
Financing Agreement is consummated, the Purchaser will own approximately 9.2%
of the outstanding Interests and Whitehall will own approximately 36.8% of the
outstanding Interests. As a result, Whitehall would be in a position
to call a meeting of the Limited Partners and the Purchaser and Whitehall, if
in their respective best interests they choose to act together, could be in a
position to exert significant influence over matters on which Holders have a
right to vote, although neither the Purchaser nor Whitehall, acting alone or
together, will have sufficient votes to approve the taking of any action
requiring a vote of a majority of Holders without the vote of other Holders.
Although Holders generally cannot participate in the management or control of
the Partnership's business, and generally cannot control either the timing or
amount of cash distributions, or the timing or terms of a sale of the
Partnership's assets, the Holder or Holders of 10% or more of the outstanding
Interests are entitled to call a meeting of Holders and Holders holding a
majority of the Interests are entitled under the Partnership Agreement to take
action with respect to a variety of matters, including: removal of a general
partner; dissolution of the Partnership; and most types of amendments to the
Partnership Agreement. A sale of all or substantially all of the
Partnership's assets other than in the ordinary course of business, however,
may be proposed only by the General Partner and thereafter, must be approved
by a vote of a majority of the Holders. When voting on those matters, the
Purchaser and Whitehall will each vote the Interests they acquire in the Offer
in their respective sole interests, which may, or may not, be in the best
interests of non-tendering Holders. Except as described elsewhere in this
Offer to Purchase, there is no agreement, arrangement or understanding,
express or implied, between the Purchaser and Whitehall or between the
Purchaser and any other person as to how the Interests purchased pursuant to
the Offer will be voted. See Item 8. Future Plans and Item 15. Source
and Amount of Funds - Certain Covenants of the Financing Agreement.
Mr. Bluhm and Mr. Schulman, two of the managing members of the Purchaser,
are also the President and a Vice President, respectively, of the General
Partner of the Partnership in addition to owning interests in the
General Partner. If the Purchaser is successful in acquiring the number of
Interests sought in the Offer, it will have significant influence with respect
to any future decisions by the Holders on matters on which they are entitled
to vote. For example, a liquidation or sale of the Partnership's assets other
than in the ordinary course of business may result in a decrease or
elimination of certain payments payable to the General Partner, therefore, the
Purchaser will have conflicting interests in deciding how to vote on future
extraordinary transactions affecting the Partnership.
Neither Mr. Bluhm nor Mr. Schulman is participating in the Partnership's
management and affairs or in the General Partner's consideration of any offers
during the time that the Purchaser is exploring an offer or until
such time as the Offer is completed. See 12. Background of the Offer.
8. Future Plans.
The Purchaser is acquiring the Interests pursuant to the Offer for
investment purposes on its own behalf. Although the Purchaser does not plan
or intend to change current management or the operations of the Partnership
and has no current plans for any extraordinary transaction (such as a merger,
liquidation, recapitalization or reorganization) involving the Partnership,
these plans could change in the future. In addition, the Purchaser has no
current plans to attempt to remove the General Partner by a vote of Holders or
otherwise. However, the plans and intentions in this regard could change at
any time in the future. See also -14. Source and Amount of Funds
Miscellaneous. The Purchaser or one of its affiliates may consider acquiring
additional interests in the General Partner or Arvida, although no
negotiations have occurred.
Following the completion of the Offer, the Purchaser and its respective
affiliates may acquire additional Interests. Any such acquisition may be made
through private purchases, through one or more future tender offers
or by any other means deemed advisable, and may be at prices higher or lower
than the price to be paid for the Interests purchased pursuant to the Offer.
9. Certain Information Concerning the Partnership.
Except as otherwise indicated, information contained in this Section 9 is
taken from the Form 10-K and the Form 10-Q for the quarter ended March 31,
1996 (the Form 10-Q ) publicly filed by the Partnership with the
Commission. Although the Purchaser has no information that any statements
contained in this Section 9 or such documents and reports are untrue, the
Purchaser does not take responsibility for the accuracy or completeness of
any information contained in this Section 9 which is derived from such public
documents, or for any failure by the Partnership to disclose events which may
have occurred and may affect the significance or accuracy of any such
information but which are unknown to the Purchaser.
General. The principal executive offices of the Partnership are located
at 900 North Michigan Avenue, Chicago, Illinois 60611, and its telephone
number at that address is (312) 915-1987.
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 Interests. The
offering terminated October 31, 1987 with all Interests having been sold.
Subsequent to admittance to the Partnership, no Holder has made any additional
capital contribution. The Holders 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 is required to
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 October 31, 1997; (ii) to purchase, or cause JMB or its
affiliates to purchase, on October 31, 1997, all of the Interests of the
Holders 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 on October 31,
1997 in which all of the Partnership's remaining assets will be sold or
disposed of by October 31, 2002.
The assets of the Partnership consist principally of interests in land
which is in the process of being developed into Communities and, to a lesser
extent, commercial and industrial properties; mortgage notes and
accounts receivable; construction, brokerage and other support businesses;
real estate assets held for investment; certain club and recreational
facilities; and a cable television business serving one 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, townhouses
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, until March 1996, 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 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, 1995, one of
the Partnership's Communities offered a cable television system to its
residents, which system is owned and operated by an entity 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 to nine 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.
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. Receipt of DRI approval is 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 in conjunction with the development
process. 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.
Certain of the Florida Communities described below have applied for and
have been designated as Planned Unit Development's ( 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 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
Properties are subject to mortgages to secure the repayment of the
Partnership's indebtedness.
(a) Palm Beach County, Florida
The Partnership owns property in Broken Sound, a 970-acre Community
located in Boca Raton. The Community offered a wide range of residential
products built by the Partnership or third-party builders, all of which were
sold and closed as of December 31, 1995.
(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, two 18-hole golf courses and an
equestrian center. In addition, the Partnership owns commercial land,
most of which is currently undeveloped, located in 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 mid 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 which was
sold during 1993.
(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 and were virtually sold out at December
31, 1995. The Partnership also owns property in a 730-acre Community known
as the Jacksonville Golf and Country Club which is in its mid- to late-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-stage 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.
(g) Other
As of December 31, 1995, the Partnership also owned 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. During March 1996, the Partnership sold its interest in the
Community to unaffiliated third parties for approximately $12 million.
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, 1995, the joint venture property in Pompano Beach was encumbered
by mortgages in the aggregate principal amount of approximately $4.0 million.
The 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, all of the investment properties
held at December 31, 1995 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 Partnership'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 690 employees.
Selected Financial Data. Set forth below is a summary of certain
financial and statistical information with respect to the Partnership, all of
which has been excerpted or derived from the Partnership's Form 10-K. More
comprehensive financial and other information is included in such reports and
other documents filed by the Partnership with the Commission, and the
following summary is qualified in its entirety by reference to such reports
and other documents and all the financial information and related notes
contained therein.
Selected Financial Data
<TABLE>
<CAPTION>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
March 31, DECEMBER 31
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Total revenues . . . . . . . $ 80,602,472 382,267,482 315,058,058 247,651,192 174,710,779 155,699,871
Net operating income (loss). $ 6,631,485 45,181,165 52,676,462 30,689,914 (23,337,245) (11,777,093)
Equity in earnings (losses)
of unconsolidated ventures. ($33,813) 1,050,994 524,520 1,134,947 (2,225,531) (769,300)
Net income (loss). . . . . $ 6,061,026 41,836,686 47,197,532 29,293,058 (43,974,366) (30,667,969)
Net income (loss) per Interest (a) 13.68 101.91 115.37 71.78 (160.42) (74.39)
Total assets (b) . . . . . . $ 353,476,688 366,439,241 376,371,712 348,094,995 350,807,538 420,289,287
Total liabilities (b). . . .$ 125,774,030 133,773,954 179,791,958 196,004,818 228,010,419 253,517,802
Cash distributions
per Interest (c) $ 25.85 13.49 6.35 - - -
</TABLE>
(a) The net income (loss) per Interest is based upon the average number of
Interests outstanding during 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 ( GAAP ). Cash
distributions to the
Holders represent a return of capital for Federal income tax
purposes. During February 1995, the Partnership made a distribution for
1994 of $5,421,680 to its Holders ($13.42 per Interest). In addition,
during the
first quarter of 1995, the Partnership remitted each Holder's share of a
North Carolina non-resident withholding tax on behalf of each of the
Holders. Such
payment, which totalled $26,784 ($.07 per Interest), was deemed a
distribution to the Holders. During February 1994, the Partnership made a
distribution for 1993 of $2,565,433
to its Holders ($6.35 per Interest). There were no cash distributions in
1991, 1992
and 1993.
For information concerning certain projections of the Partnership
provided to the Purchaser, see "- 12. Background of the Offer".
Additional Information. The Partnership is subject to the informational
filing requirements of the Exchange Act and is required to file reports and
other
information with the Commission relating to its business, financial condition
and other
matters. Certain information, as of particular dates, concerning the General
Partner,
its remuneration, the principal holders of the Partnership's securities and
any material interest of such persons in transactions with the Partnership is
required to
be described in proxy statements (if applicable) distributed to the
Holders and filed with the Commission. These reports, proxy statements and
other information should be available for inspection at the Commission's office
at 450
Fifth Street, N.W., Washington, D.C. 20549, and also should be
available for inspection and copying at the regional offices of the Commission
located at Seven World Trade Center, Thirteenth Floor, New York, New York 10048
and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material may
also be obtained by mail, upon payment of the Commission's customary fees, from
the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, this material can also be obtained from the Commission's
Web site at
http://www.sec.gov.
Transactions with Affiliates. As disclosed in the Form 10-K, fees,
commissions and other expenses required to be paid by the Partnership to
affiliates of the
General Partner as of December 31, 1995 and for the years ended December 31,
1995, 1994
and 1993 are as follows:
<TABLE>
<CAPTION>
Unpaid
at December 31,
1995 1994 1993 1995
<S> <C> <C> <C> <C>
Property management fees .$ 62,913 147,446 153,088 -
Insurance commissions. . $ 272,316 298,697 287,639 -
Reimbursement (at cost)
for accounting services.$ 73,326 63,633 61,881 -
Reimbursement (at cost)
for portfolio
management services . .$ 83,884 - - -
Reimbursement (at cost)
for legal services . . $ 41,470 64,949 31,821 -
Reimbursement (at cost)
for other administrative
and out-of-pocket expenses 78,960 15,345 20,534 55,936
$ 612,869 590,070 554,963 55,936
</TABLE>
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, 1995, the total of such
costs incurred by the Partnership on behalf of these affiliates totalled
approximately $509,000. Approximately $272,200 was outstanding at December
31, 1995, of which approximately $29,500 was received as of March 15, 1996.
For the year ended December 31, 1994 and 1993, the Partnership was entitled
to receive reimbursements of
approximately $505,300 and $171,000, respectively.
In accordance with the Partnership Agreement, the General Partner and
Associate Limited Partners (defined therein) have deferred a portion of their
distributions of net cash flow from the Partnership totaling approximately
$1,208,700 as of December 31, 1995. This amount does not bear interest and is
expected to be paid in future periods, subject to certain restrictions contained
in thePartnership's credit facility agreement.
Arvida, pursuant to an agreement with the Partnership, 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
reimburses 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, 1995, 1994 and 1993 was approximately
$6,233,600, $6,802,300 and $6,686,100, respectively, of which approximately
$50,900 was unpaid as of December 31, 1995 and all of which was paid as of
March 15, 1996.
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, 1995, the Partnership
was entitled to receive approximately $1,021,800 from Arvida/JMB Partners,
L.P.-II. At December 31, 1995, approximately $307,200 was outstanding, all
of which was received as of March 15, 1996. In addition, for the year ended
December 31, 1995, the Partnership was obligated to reimburse Arvida/JMB
Partners, L.P.-II approximately $245,100. At December 31, 1995, approximately
$83,100 was unpaid, all of which was paid as of March 15, 1996. The net
reimbursements paid to the Partnership for the years ended December 31, 1994 and
1993 were approximately $801,200 and $1,263,100, 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, 1995, the Partnership was entitled to receive
approximately $350,700 from its affiliates. At December 31, 1995,
approximately $167,000 was owed to the Partnership, of which approximately
$115,200 was received as of March 15, 1996. The reimbursements paid to the
Partnership for the years ended December 31, 1994 and 1993 were
approximately $594,200 and $366,400, respectively. In addition, the
Partnership owes its equity clubs for certain costs incurred by the clubs
which are obligations of the Partnership. For the year ended December 31,
1995, the Partnership was obligated to
reimburse its equity clubs approximately $56,300. At December 31, 1995,
approximately $51,100 was unpaid, of which approximately $3,200 was paid as of
March 15, 1996.
The Partnership also funds operating deficits of its equity clubs, as
deemed necessary. Such amounts are expensed by the Partnership, but may be
reimbursed by these clubs from future cash flow. At December 31, 1995, the
Partnership was owed approximately $539,100 for such reimbursements, none of
which was paid as of March 15, 1996.
The Partnership periodically incurs salary and salary-related costs on
behalf of an affiliate of the General Partner. The Partnership was entitled to
receive approximately $31,400 for such costs for the year ended December 31,
1995, all of which was outstanding as of December 31, 1995 and March 15, 1996.
For a description of conflicts of interest, see "- 11. Conflicts of
Interest and Transactions with Affiliates".
10. Certain Information Concerning the Purchaser.
The Purchaser is a Delaware limited liability company and was recently
formed for the purpose of acquiring Interests in the Partnership. The Managers
of the Purchaser are Neil G. Bluhm, Ira J. Schulman, Jeffrey S. Quicksilver and
William J. Abrams (each, a Manager ). In addition to the four Managers, the
other members (collectively, the Members ) of the Purchaser are WSC Tender
Investors III, L.P. ( WSCTI III ) and WSCREF -V, L.P. ( WSCREF V ). WSCTI III
and WSCREF V, each a recently formed Delaware limited partnership, are each
controlled by their respective general partner, Walton Street Managers I,
L.P. ( WS Managers, L.P. ), which is in turn controlled by WSC Managers I,
Inc. ( WSC Managers, Inc. ). WSC Managers, Inc. is owned and controlled by
Neil G. Bluhm, Ira J. Schulman, Jeffrey S.
Quicksilver and William J. Abrams.
The Purchaser may add additional members and the Members may add
additional partners in the future. The executive offices of the Purchaser,
Walton Street, WSCTI III, WSCREF V, WS Managers, L.P. and WSC Managers, Inc. and
for each person listed below is located at 900 North Michigan Avenue, Chicago,
Illinois 60611.
Set forth below is biographical information concerning the Managers and
Officers of the Purchaser. All persons identified below are United States
citizens.
Neil G. Bluhm .Manager, Walton Street Capital Acquisition Co. III, L.L.C.
Co-Founder and Managing Principal of Walton Street Capital,
L.L.C.(Walton Street) since its inception on January 1, 1995.
Walton Street's office is located at 900 North Michigan
Avenue, Suite 1900, Chicago, Illinois, 60611. Mr. Bluhm was
co-founder and President of JMB since its inception in 1968
and is also President of the General Partner. JMB's office
is located at 900 North Michigan Avenue,
Chicago, Illinois, 60611.
Ira J. Schulman Manager, Walton Street Capital Acquisition Co. III, L.L.C.
Co-Founder and Managing Principal of Walton Street since its
inception on January 1, 1995 and is also a Vice President of
the General Partner. Prior to starting Walton Street, Mr.
Schulman was an Executive Vice President of JMB. Mr.
Schulman joined JMB in 1983.
Jeffrey S.
Quicksilver . Manager, Walton Street Capital Acquisition Co. III, L.L.C.
Co-Founder and Managing Principal of Walton Street since
its inception on January 1, 1995. Prior to starting Walton
Street, Mr. Quicksilver was a Managing Director of JMB.
Mr. Quicksilver joined JMB in 1989.
William J. Abrams Manager, Walton Street Capital Acquisition Co. III, L.L.C.
Co-Founder and Managing Principal of Walton Street since its
inception
on January 1, 1995. Prior to starting Walton Street, Mr.
Abrams was a Managing Director of JMB. Mr. Abrams joined JMB
in 1990.
Eric C. Mogentale Officer, Walton Street Capital Acquisition Co. III, L.L.C.
Principal of Walton Street since its inception on January 1,
1995.
Prior to joining Walton Street, Mr. Mogentale was a Vice
President
of JMB Institutional Realty Corporation, which he joined in
1986. Its office was located at 900 North Michigan
Avenue, Chicago, Illinois, 60611.
Andrew G. Bluhm Officer, Walton Street Capital Acquisition Co. III, L.L.C.
Principal of Walton Street since its inception on January
1, 1995.
Prior to joining Walton Street, Mr. Bluhm was a Vice
\ President of
JMB. Mr. Bluhm joined JMB in 1993. Prior thereto, Mr.
Bluhm was an Analyst at Goldman, Sachs & Co. ( GS ). GS's
office is located at 85
Broad Street, New York, New York, 10004. Mr. Bluhm
joined GS in 1988.
K. Jay Weaver . Officer, Walton Street Capital Acquisition Co. III, L.L.C.
Principal of Walton Street since June 1, 1995. Prior to
joining
Walton Street, Mr. Weaver was a Senior Vice President of
JMB. Mr. Weaver joined JMB in 1989.
Howard J. Brody . Officer, Walton Street Capital Acquisition Co. III, L.L.C.
Principal of Walton Street since its inception on January 1,
1995.
Prior to joining Walton Street, Mr. Brody was a Portfolio
Manager at
JMB. Mr. Brody joined JMB in 1984.
Perry M. Pinto . Officer, Walton Street Capital Acquisition Co. III, L.L.C.
Associate of Walton Street Capital, L.L.C. since its
inception on
January 1, 1995. Prior to joining Walton Street Capital,
Mr. Pinto was an Associate at JMB Institutional Realty
Corporation,
which he joined in 1992.
Set forth below is certain unaudited financial information with respect
to the
Purchaser. The Purchaser
has not prepared audited financial statements in the ordinary course of its
business (and
does not intend to do so
in the future); accordingly, audited financial statements of the Purchaser
were not
available or obtainable without
unreasonable expense.
WALTON STREET CAPITAL ACQUISITION CO. III, L.L.C.
BALANCE SHEET
June 27, 1996
(unaudited)
ASSETS
Marketable Securities $ 1,000,000
Total Assets $ 1,000,000
LIABILITIES AND MEMBERS' CAPITAL
Liabilities
Members' Capital:
Contributed Capital $ 1,000,000
Total Liabilities and Members' Capital $ 1,000,000
The Purchaser will obtain the funds necessary to acquire the maximum
number of Interests sought pursuant to the Offer and to pay related fees and
expenses from: (I) its liquid assets, (ii) equity contributions from its
Members, and (iii) subject to the terms and conditions of the Financing
Agreement, Whitehall. See "- 14. Source and Amount of Funds".
Except as otherwise set forth in this Offer to Purchase, none of the
Purchaser, or, to the best of the Purchaser's knowledge, any of the persons
listed above,
or any affiliate of the foregoing, (I) beneficially owns or has a right to
acquire any
Interests, (ii) has effected any transaction in the Interests in the past 60
days, or
(iii) has any contract, arrangement, understanding or relationship with any
other person
with respect to any securities of the Partnership, including, but not limited
to,contracts, arrangements, understandings or relationships concerning the
transfer or voting thereof, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies.
<PAGE>
11. Conflicts of Interest and Transactions with Affiliates.
The General Partner, the Purchaser and their respective affiliates have
conflicts of interest with respect to the Offer as set forth below.
Conflicts of Interest of the Purchaser. The Purchaser has a conflict of
interest with respect to the Offer, including as a result of certain managing
Members' affiliation with the General Partner and certain of its affiliates.
See "- 12. Background of the Offer".
Pursuant to the terms of the Partnership Agreement, the General Partner
and the Associate Limited Partners (affiliates of the General Partner) are
entitled to 10% of the distributions of cash flow by the Partnership,
approximately 5% of which
is currently being deferred. If and when the Holders have received certain
cumulative
distributions on their investments, the General Partner and the Associate
Limited Partners
will be entitled to receive such deferrals and, under certain circumstances, may
receive
an increased percentage of the distributions of the cash flow of the
Partnership. In
addition, if upon a completion of a liquidation and termination of the
Partnership and
final distribution of all Partnership funds, the aggregate capital contributions
with
respect to all limited partnership interests exceed the sum of distributions of
cash flows
to holders of such Interests over the life of the Partnership plus any
distributions
during the liquidation (such difference, the Excess Amount ), then the General
Partner,
the Associate Limited Partners and ML Real Estate Associates II must make
aggregate payments to Holders (other than ML Real Estate Associates II) in an
amount equal
to the lesser of the Excess Amount or the aggregate amount of certain cash flows
received
by the General Partner, the Associate Limited Partners and ML Real Estate
Associates
II (to be made in proportion to the cash flows received by each of them,
respectively)
over the life of the Partnership. For a complete description of these
provisions and the
defined terms used therein, please review Section 4.1 of the Partnership
Agreement which
is filed as an exhibit to the Partnership's Form 10-K.
Voting by the Purchaser. As a result of the Offer, the Purchaser may be
in a position to significantly influence all Partnership decisions on which
Holders may
vote. See 7. Purpose and Effects of the Offer; Potential Control of Holders'
Voting
Decisions by the Purchaser.
Transactions with Affiliates. See 9. Information Concerning the
Partnership Transactions with Affiliates for a discussion of the Partnership's
transactions with affiliates.
12. Background of the Offer.
Walton Street was formed in December 1994 to be the exclusive investment
vehicle through which Mr. Bluhm and the other Principals of Walton Street would
make
opportunistic purchases of equity and/or debt interests in real estate assets
and real
estate companies in the United States and Canada. Mr. Bluhm also serves as
President
of, and is a significant shareholder in, JMB and certain of its affiliates.
JMB and its affiliates are principally engaged, directly and indirectly, in real
estate
development and investment, including through the General Partner and Arvida.
Subsequent
to the formation of Walton Street, Mr. Bluhm has remained involved in the
operation of
JMB and certain of its affiliates, including the General Partner and Arvida
while Mr. Schulman has remained involved in the operation of the General
Partner and
Arvida. As such, Mr. Bluhm and Mr. Schulman received or had access to
confidential
information, including draft projections (the Preliminary Projections )
concerning the
Partnership's future operations. The Preliminary Projections differed from,
and have been
superseded by, the Partnership's projections described below.
In December 1994, the General Partner was contacted by an unaffiliated
third party investor group (which included Bankers Trust New York Corporation,
certain
prior employees of Arvida and Apollo Real Estate Advisors, L.P.( AREA ), an
affiliate of
Raleigh) to discuss a possible transaction involving the acquisition of the
Partnership
or the General Partner's interest in the Partnership. In March 1995, the
General Partner received a preliminary written unsolicited proposal from this
investor
group, which proposal did not identify AREA as being a member of the investor
group at
that time, seeking to acquire the business of the Partnership. Pursuant to the
proposal,
the investor group would acquire the business of the Partnership for an
aggregate
purchase price of $240,000,000 plus the assumption of certain liabilities,
excluding an
approximate aggregate amount of $102,000,000 with respect to certain of the
Partnership's
loans. In addition, the investor group would only assume, among other things,
certain
liabilities reflected on the balance sheet as of September 30, 1994. The
investor group
would not assume any liabilities relating to litigation, except litigation
covered by insurance and other litigation incurred in the ordinary course of
business and not, in the aggregate, material to the business. Finally, such
proposal was
very preliminary in nature and was subject to a number of contingencies and
conditions,
including the completion of satisfactory business and legal due diligence and
the negotiation and execution of an acquisition agreement. Representatives of
the General Partner and representatives of the third party held several phone
calls to clarify
certain aspects of the proposal. In response to this unsolicited
proposal, the General Partner retained Lehman Brothers Inc. ( Lehman Brothers)
to evaluate the adequacy of the unsolicited proposal. In April 1995, Lehman
Brothers
delivered its written and oral opinion to the General Partner that, from a
financial point
of view, the consideration offered by the third party was inadequate and the
General
Partner therefore rejected the proposal. No further correspondence was
received from this third party.
The General Partner received a letter dated May 1, 1996, from the
Nicollet Fund Limited Partnership ( Nicollet ), an unaffiliated third party,
notifying the
General Partner that it was interested in making a tender offer for up to 4.9%
of the
Interests and requesting certain information from the Partnership, including the
list of
Holders. As a result of this unsolicited letter, Walton Street decided to
explore its
alternatives with regard to the Partnership. On May 15, 1996, at a meeting of
the board
of directors of the General Partner, Mr. Bluhm informed the board that Walton
Street, or
one of its affiliates, was considering making an offer for some of the
Interests.
The board decided that it would be in the best interests of the Partnership if
Mr. Bluhm
and Mr. Schulman participated neither in the Partnership's management and
affairs nor in
the General Partner's consideration of any offers during such time as the
Purchaser is
exploring an offer or until such time as the Offer is completed. In addition,
the General
Partner created a special committee which retained independent counsel to advise
it in
connection with any potential offers from third parties, including any potential
offers
from Walton Street, involving the Interests. By a press release dated June 21,
1996, the
General Partner, among other things, also announced that it had hired Lehman
Brothers to
assist it in evaluating any offers from third parties that may be made for
Interests
in the Partnership. Since May 15, 1996, neither Mr. Bluhm nor Mr. Schulman
has been involved in any of the General Partner's board meetings nor have
they had any
involvement in decisions being made with regard to the
Partnership.
Beginning in early May 1996, Walton Street and Whitehall commenced
discussions regarding the possibility of the two parties purchasing a
significant
percentage of the outstanding Interests of the Partnership. On May 22, 1996,
Whitehall
entered into a confidentiality agreement with Walton Street. Thereafter, the
Purchaser
provided Whitehall with the Preliminary Projections. On June 27, 1996, the
Purchaser
entered into the Financing Agreement with Whitehall. See " 14. Source and
Amount of
Funds" for additional information concerning the Financing Agreement.
During May and June of 1996, certain Members of the Purchaser met with
representatives of the General Partner. The purpose of these meetings was to
(I) reiterate to the General Partner's representatives that the Purchaser was
considering
making an offer to Holders to purchase Interests in the Partnership, (ii) to
request
information on the Projects, (iii) to request a list of names and addresses of
all of the Holders and (iv) to discuss certain procedural issues in
connection with the
making of the Offer and the transferring of Interests pursuant to the Offer, as
well as to
negotiate the terms of the confidentiality agreement discussed below.
<PAGE>
By an offer to purchase dated June 12, 1996, Equity began a tender offer
for up to 12,000 Interests at a price of $100 per Interest. This offer is
scheduled to
expire on July 12, 1996. The Purchaser does not know whether Nicollet has begun
its
offer.
On June 17, 1996, the Purchaser (I) signed a confidentiality agreement
with the General Partner pursuant to which the Purchaser is entitled, among
other things,
to request and receive from the General Partner certain non- public information
concerning
the Partnership and, in return, the Purchaser agreed, among other things, to
treat such
information as confidential in accordance with the terms of such agreement and
to take or abstain from taking certain other actions all as set forth in that
agreement
and (ii) gave the General Partner prior notice of at least five business
days, as required by the confidentiality agreement, that it intended to
commence a tender offer in the near future. A copy of this confidentiality
agreement has
been filed as Exhibit (c)(2) to the Tender Offer Statement on Schedule 14D-1
(the
Schedule 14D-1 ) filed by the Purchaser with the Commission on June 27, 1996.
On June 19, 1996, Raleigh commenced a tender offer for up to 185,000
limited partnership interests at a price of $411 per Interest. This offer is
scheduled to
expire on July 17, 1996.
On June 20, 1996, the Purchaser and Whitehall met with senior management
of Arvida to discuss the business and Projects of the Partnership. As part of
these
meetings, the Purchaser and Whitehall received drafts of the Partnership's
projections for
the Projects through the year 2002 (the June 16 Draft Projections ).
A summary of the
June 16 Draft Projections is set forth in the table below.
None of the projected results of operations prepared by the Partnership
set forth below is to be regarded as fact and such projections should not be
relied upon
as accurate representations of future results. In addition, because the
estimates and
assumptions underlying the June 16 Draft Projections, as to future results, are
based upon
events and circumstances that have not taken place and are inherently subject to
significant financial, market, economic and competitive uncertainties and
contingencies
which are difficult or impossible to predict accurately and are beyond the
Purchaser's and
the Partnership's control, they are inherently imprecise and there can be no
assurance
that the projected results of operations can be realized. Therefore, there are
likely to be differences between the actual and projected results and the actual
results
may be materially higher or lower than those projected.
The inclusion of the June 16 Draft Projections set forth below should not
be regarded as a representation by the Purchaser, the Partnership, or any
transferee or
assignee of the Purchaser, including Whitehall, or any of their respective
affiliates or
representatives, that the projected results will be achieved or that the actual
distributions made by the Partnership will be equal to the Cash Flow from
Operations after
Net Incremental Financing.
The June 16 Draft Projections are forward-looking but were not prepared
with a view
towards public disclosure or compliance with published guidelines of the
Commission or
guidelines established by the American Institute of Certified Public Accountants
relating
to projections. Projected results of operations for a particular year may
differ
significantly in certain respects from the audited operating results for such
year.
Therefore, the consolidated projections presented below should not necessarily
be considered as indicative of what the audited operating results for such
periods will be.
None of the Purchaser, Whitehall or the Partnership, or any of their respective
affiliates, representatives, financial advisors, independent auditors or
directors or officers, assumes any responsibility for the accuracy of the
June 16 Draft
Projections set forth below. The June 16 Draft Projections have not been
examined,
reviewed or compiled by the Partnership's independent auditors, and accordingly
they have
not expressed an opinion or given any other assurance on such projections.
<TABLE>
<CAPTION>
ARVIDA/JMB PARTNERS,L.P.
Draft Cash Flow Statement- June 16, 1996 (1)
DOLLARS IN 000'S
1996 1997 1998 1999 2000 2001 2002 Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts
Total Housing
Receipts 244,275 189,900 214,916 254,753 229,693 208,850 367,697 1,710,084
Total Homesites
Receipts 21,036 20,300 23,368 22,377 21,248 17,102 26,840 152,271
Total Land &
Property
Receipts 25,251 40,413 38,111 11,582 6,111 68,929 54,147 244,544
Total Receipts 290,562 250,613 276,395 288,712 257,052 294,881 448,684 2,106,899
Total Other
Income 62,416 61,718 52,371 48,756 49,689 38,231 18,990 332,150
Total Income 352,978 312,331 328,766 337,467 306,721 333,112 457,674 2,439,049
Disbursements
Total Project
Expenses (227,761) (197,845) (208,535) (199,471) (185,013) (164,887) (227,656)(1,411,168)
Total Other
Expenses (66,230) (57,900) (62,050) (61,901) (46,071) (29,964) (13,546) (337,662)
Total
Disbursements (293,991) (255,745) (270,585) (261,372) (231,084) (194,851) (241,202)(1,748,830)
Cash Flow From
Operations 58,987 56,586 58,181 76,095 75,637 138,261 226,472 690,219
Net Incremental
Financing(2) ($35,094) 13,388 23,841 (3,648) 2,336 (37,583) (71,833) (108,593)
Cash Flow from
Operations after
Net Incremental
Financing 23,893 69,974 82,022 72,447 77,973 100,678 154,639 581,626
</TABLE>
(1) The June 16 Draft Projections do not take into consideration the costs of
Support
Services (which represent the administrative and overhead costs of
operating the Projects and the Partnership), reserves for contingencies
in the
ordinary course of business and expenses estimated by the Purchaser to be
incurred in connection with the current tender offers and distributions
of cash flow
to which the General Partner and Associate Limited Partners are entitled.
The June 16 Draft Projections were prepared by the Partnership on a
calendar year
basis. The Partnership's current distribution policy is to make
distributions in the first quarter of the year based upon cash flow
generated by the
operations of the Partnership for the prior calendar year.
(2) The General Partner assumed the availability of financing which, on an
annual basis,
includes drawdowns of existing and/or anticipated lines of credit,
annual interest on the average daily balance on such financing and annual
repayments
of existing and/or anticipated lines of credit.
The cash flows of the Partnership shown above are based upon various
assumptions related to, among other factors, continued land development and home
construction and other operations of the Partnership in the ordinary course of
business,
interest rates, absorption rates, tourism, population and employment growth,
demand for
primary and secondary homes, costs of material and labor, operating expenses,
rental
rates, occupancy levels, and timing, pricing and quantity of home sales, all of
which are
subject to various risks and contingencies. The June 16 Draft Projections
assume a
general inflation rate of between 2% and 3% per year. In addition, the June
16 Draft Projections include assumptions concerning the development,
construction, leasing
and sale of certain commercial Projects. The June 16 Draft Projections also
make
certain assumptions concerning the financing the Partnership believes it can
secure to
implement its projections. The realization of the cash flows contained in the
June 16
Draft Projections are dependent upon market conditions and responses to market
conditions
that are subject to uncertainties due to possible changes in, among other
things, the
actual level of sales of properties or changes in the costs of development or
construction, adverse changes in national or local economic conditions or
employment
rates, such as increased costs of, or shortages in, labor, materials and
production,
limited availability of financing, or a decline in the popularity of the
secondary home
market, the need for unanticipated improvements or expenditures in connection
with
environmental matters, changes in real estate or income tax rates and other
operating
expenditures, delays in obtaining permits or approvals for construction or
development and
adverse changes in laws, governmental rules and fiscal policies, and other
factors beyond
the control of the General Partner and the Partnership.
13. Determination of Purchase Price.
The Purchaser established the Purchase Price based on its own independent
analysis of the Partnership, the Projects, the other assets of the Partnership
and the
financial condition of the Partnership. No appraisal was obtained for any of
the
Projects, and no independent person was retained by the Purchaser to render any
valuation
or fairness opinion. The Purchaser derived the estimated net asset value per
Interest from its analysis of financial information from publicly-available
information in
the Form 10-K and the Form 10-Q, its review of the June 16 Draft Projections,
its
knowledge of the Projects and its expertise in the markets in which the Projects
are
located. Included in the Preliminary Projections received by Mr. Bluhm and Mr.
Schulman
were estimates for Support Services (which represent the administrative and
overhead costs
of operating the Projects and the Partnership) of $13,930,000 in 1996,
$10,960,000 in
1997, $10,541,000 in 1998, $8,716,000 in 1999, $7,535,000 in 2000, $5,880,000 in
2001 and
$5,144,000 in 2002. These projections of Support Services make certain
assumptions which
may or may not be realized. Because the Preliminary Projections are dated
and
for the most part have been superseded, there is no assurance that the Support
Services
numbers are valid. Accordingly, actual costs of Support Services may be higher
or lower.
The Purchaser derived its estimated net asset value per Interest by evaluating
the
expected future cash flows identified in the June 16 Draft Projections, making
certain adjustments thereto and discounting those cash flows on a risk-
adjusted basis to
reflect their present value. The principal adjustments to the June 16 Draft
Projections
included: (I) the expected Support Services costs of operating the Partnership
in the
ordinary course of business through the construction, development and sale of
the Projects, (ii) estimated cash flow attributable to the General Partner
and the
Associate Limited Partners of $314,000 for 1996, $3,011,000 for 1997,
$3,656,000 for 1998, $3,353,000 for 1999, $3,706,000 for 2000, $23,864,000 for
2001, and $15,435,000 for 2002 (these amounts exclude the distributions made by
the
Partnership in the first quarter of 1996 from 1995 cash flow),
each determined in accordance with the terms of the Partnership Agreement
based on the June 16 Draft Projections, as adjusted, and (iii) reserves for
contingencies
in the ordinary course of business and expenses estimated by the
Purchaser to be incurred by the Partnership in connection with the current
tender offers of $4,000,000 in 1996, $2,000,000 in 1997 and $2,000,000 in 1998.
The June
16 Draft Projections were prepared by the Partnership on
a calendar year basis. The Partnership's current distribution policy is to
make distributions in the first quarter of the year based upon cash flow
generated by the
operations of the Partnership for the prior calendar year. The
Purchaser believes that the net asset value of the assets is greater than the
net asset value of the Interests.
In determining the estimated net asset value of the Interests in the
Partnership, the Purchaser discounted the June 16 Draft Projections, as
adjusted, at a
rate of 17%, which the Purchaser believes is an appropriate rate of
return based on the risks inherent in the land development and home-building
business including, but not limited to, the costs of construction, the
timing, pricing and
quantity of home sales, risks inherent in the development,
leasing and sale of commercial properties, availability of financing with
respect to the Projects, the long-term nature and cyclicality of the business
and general
economic conditions. The estimated net asset value of the Interests in
the Partnership was derived by taking into account the other assets and
liabilities of the Partnership as set forth in the Form 10-K and the Form 10-Q,
and
certain other factors, resulting in an estimated net asset value of
$228,810,000 of all Interests. Dividing that amount by the number of
Interests outstanding, the Purchaser arrived at an estimate of net asset value
of the
Interests in the Partnership of $559 per Interest.
It is important for Holders to note that the Purchase Price is based on
the rate of return the Purchaser believes is appropriate for it to receive
based upon the
Purchaser's knowledge of the Projects, the general trends
in the markets where the Projects are located and the risks inherent in the
land development and home-building business, including, but not limited to, the
costs of
construction, the timing, pricing and quantity of home sales and general
economic
conditions, and to a lesser extent, the amount and timing of the development and
sale of
certain commercial properties. Furthermore, the Purchaser believes that the
Purchase
Price per Interest should be less than the estimate of net asset value on a per
Interest
basis, for reasons such as lack of liquidity, lack of operating control,
uncertainty as to future timing and amount of cash flow distributions and
other uncertainties inherent in the ownership of limited partnership interests.
As a
result of the foregoing, the Purchase Price is approximately 75%
of the Purchaser's estimate of net asset value of the Interests in the
Partnership on a per Interest basis.
The amount set forth above is based on the June 16 Draft Projections, as
adjusted, has not been reviewed or audited by any accountants and has not
been reviewed
by, and does not represent, an estimate of the General
Partner or Arvida. For purposes of determining its estimate of net asset
value of the Interests, the Purchaser assumed there would be no general or local
economic
recession, hyper-inflation, building moratoriums, materials
shortages, adverse changes in local, state or federal laws or regulations,
strikes or other materially adverse economic factors, none of which can be
predicted at
this time. If any of these factors were to occur, either individually or
in combination with others, it could have a significant adverse impact on the
June 16 Draft Projections, and therefore on the Purchaser's estimate of net
asset value of
the Interests.
The Purchaser, in determining the Purchase Price, did not seek to
determine the fair value of the Interests or the fair market value of the
Partnership's
assets. Therefore, the Purchaser is making no recommendation as to the fairness
of the
Purchase Price to be paid pursuant to the Offer. Another investor could
apply a different discount rate based upon its evaluation of the appropriate
rate of return for the risks inherent in the Partnership's business, which
could result in
a higher or lower net asset value of an Interest in the Partnership.
If the Purchaser is correct in believing that the Purchase Price is lower than
the net asset value of the Interests on a per Interest basis, and if the net
asset value
is maintained or increased, the proceeds that are distributed upon a
future liquidation of the Partnership should be greater than the Purchase
Price. Further, Holders should note that the amounts that might be realized
upon the sale
of the Projects now or in the future are necessarily speculative,
and as a result, might be higher or lower than the Purchase Price.
14. Source and Amount of Funds.
The Purchaser expects that approximately $81 million would be required to
acquire the maximum number of Interests sought pursuant to the Offer and to pay
related
fees and expenses. The Purchaser will obtain all of those funds from: (I) its
liquid
assets, (ii) equity contributions from its Members and (iii) Whitehall pursuant
to the
Financing Agreement. The Members have agreed to make such equity contributions.
Equity
contributions from the Members will be funded by marketable securities and other
liquid
assets and will be made prior to the closing of the Offer. An escrow of such
amounts is
not expected to be arranged in advance of the closing.
Financing of the Offer. The Purchaser, Walton and Whitehall have entered
into the Financing Agreement, dated as of June 27, 1996, pursuant to which
Whitehall has
committed, subject to the terms and conditions of the Financing Agreement, to
finance a
portion of the aggregate amount of the Purchase Price to be paid by Purchaser
pursuant to the Offer by purchasing, or by causing an affiliate of Whitehall
to purchase, from Purchaser, for a price in cash equal to the Purchase Price,
a number of
Interests equal to approximately 80% of the Interests purchased
by the Purchaser in the Offer. The Purchaser has been informed that Whitehall
expects that approximately $66 million will be required to purchase
approximately 80% of
the tendered Interests and to pay its share of related fees
and expenses. The Purchaser has been informed that Whitehall intends to use
its existing working capital to fund its purchases of Interests from the
Purchaser. A
copy of the Financing Agreement has been filed as Exhibit (c)(1)
to the Schedule 14D-1.
Conditions of the Financing Agreement. The conditions to the Purchaser
and Whitehall consummating the Financing Agreement, include, among others:
(i) that the conditions to the Offer described in this Offer to Purchase have
been
fulfilled and that the Purchaser shall have purchased Interests pursuant to the
Offer,
(ii) that the representations and warranties of each of the parties contained in
the
Financing Agreement are true and correct as of the closing, (iii) that Whitehall
shall be
satisfied it will be admitted as a substitute Holder with regard to the
Interests it will
purchase, (iv) that the purchase by Purchaser of Interests pursuant to the Offer
and the
purchase by Whitehall of Interests pursuant to the Financing Agreement shall not
result in
a termination of the Partnership for tax purposes and that the Interests are not
(and will
not, as a result of such purchases or other purchases that are made or
contemplated on
or prior to the purchase by Whitehall pursuant to the Financing Agreement,
become) treated
as publicly traded within the meaning of the Code and (v) other customary
conditions.
Certain Covenants of the Parties. Each of the Purchaser and Whitehall
has agreed that neither may sell or otherwise dispose of all or any portion of
the
Interests purchased by the Purchaser pursuant to the Offer unless the other
party is
given the opportunity to sell or dispose of all or a proportionate percentage
of the
purchased Interests then owned by it on terms identical to those applicable to
the
aforementioned sale or disposition. Each of the Purchaser and Whitehall has
agreed that
if, within six months of the closing of the Financing Agreement, either party
desires to
sell its purchased Interests, it will provide prior notice to the other of the
price at
which it desires to sell its Interests and the other party will have the right
to
purchase such Interests at that price in cash. In the event that the offered
party elects
not to purchase such Interests, the offering party will be allowed to sell the
offered Interests at a price at least equal to 95% of the offered price in cash.
After
the expiration of six months from the closing of the Financing Agreement, if
either
party decides to sell its purchased Interests, the offering party will provide
the other
party with notice of such decision five business days prior to accepting any
offer to
purchase such Interests and the other party shall have the right to seek to
purchase such
Interests by making a competitive bid. Each of the Purchaser and Whitehall has
agreed
that, if Interests are purchased pursuant to the Financing Agreement, it
will not,
without the consent of the other party, (i) participate in, directly or
indirectly, any
solicitation of proxies relating to the removal or replacement of the General
Partner,
unless it has been finally judicially determined that the General Partner
engaged in
conduct that constitutes gross negligence, willful misconduct or fraud with
respect to the
Partnership, or (ii) purchase or seek to purchase any of the assets of the
Partnership,
unless the Partnership offers such assets for sale in a public or competitive
bidding or
similar arrangement. If Interests are purchased pursuant to the Financing
Agreement,
each of the Purchaser and Whitehall has also agreed not to (a) purchase,
directly or
indirectly, any Interests in the Partnership, (b) acquire, directly or
indirectly, any
interests in the General Partner, the Partnership or Arvida, or (c) purchase
or seek to
purchase, directly or indirectly, the assets of the Partnership that the
Partnership
offers for sale in a public or competitive bidding or similar arrangement,
unless, in each
such case, prior to taking any action, such party offers the other party a
reasonable
opportunity to participate in such action in substantially the same proportion
as the
Interests purchased by Whitehall pursuant to the Financing Agreement bears to
the
Interests purchased by the Purchaser pursuant to the Offer and held by the
Purchaser after
giving effect to the purchase of Interests by Whitehall pursuant to the
Financing
Agreement.
Each of the Purchaser, Walton and Whitehall have agreed to indemnify the
other parties to the Financing Agreement for certain matters, including matters
arising under the federal securities laws. Also, the Financing Agreement
provides that if
the purchase of Interests by Whitehall from the Purchaser is consummated,
Whitehall will
pay to the Purchaser: its pro rata share of third-party expenses incurred in
connection
with the Offer; an acquisition fee based on the Purchase Price of the Interests;
an annual payment based on the outstanding amount of Whitehall's investment;
and an exit
payment based on the internal rate of return realized by Whitehall
over the life of its investment in the Interests.
Miscellaneous.
In connection with determining to enter into the Financing Agreement, Whitehall
reviewed the financial and other information relating to the Partnership and
the
Projects provided to it by Walton and the Partnership, including the Preliminary
Projections and the June 16 Draft Projections, and the analysis
prepared by the Purchaser and described in 13. Determination of the Purchase
Price.
Based on such review, Whitehall determined that the Purchaser's estimate of the
net
asset value of the Interests was reasonable, subject to the substantial
uncertainties
inherent in any estimate of value. Whitehall is making no recommendation as to
the
fairness or adequacy of the Purchase Price to be paid in the Offer. The
Purchaser has
been informed by Whitehall that upon the purchase of Interests by Whitehall
pursuant to
the Financing Agreement, Whitehall will seek to be admitted to the Partnership
as a
substitute Holder and that Whitehall intends to vote such Interests in its own
best
interest.
The Purchaser has been advised by Whitehall that Whitehall intends to
acquire the Interests purchased by it pursuant to the Financing Agreement for in
vestment
purposes on its own behalf, that Whitehall does not intend to change current
management or
the operation of the Partnership and that Whitehall has no current plans for any
extraordinary transaction (such as a merger, reorganization or sale of a
material amount
of assets) involving the Partnership, although such plans could change in the
future.
Following the purchase by Whitehall of Interests pursuant to the
Financing Agreement, Whitehall and its affiliates may acquire additional
Interests. Any
such acquisition may be made through private purchases, through one or more
future tender
offers or by any other means deemed advisable, and may be at prices higher or
lower
than the price to be paid for the Interests purchased by the Purchaser pursuant
to the
Offer.
See Annex I for certain other information concerning Whitehall.
15. Conditions of the Offer.
Notwithstanding any other provisions of the Offer and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in
its sole discretion, the Purchaser shall not be required to accept for payment,
purchase
or pay for, subject to Rule 14e-1 under the Exchange Act, any tendered Interests
(whether
or not any Interests have theretofore been accepted for payment or paid for
pursuant to
the Offer), and may terminate the Offer as to any Interests not then paid for,
if (I) the
Purchaser shall not have confirmed to its reasonable satisfaction that, upon
purchase of
the Interests pursuant to the Offer, the Purchaser will have full rights of
ownership as
to all such Interests and that it will be admitted as a substitute Holder or
(ii) all
authorizations, consents, orders or approvals of, or declarations or filings
with, or
expirations of waiting periods imposed by, any court, administrative agency or
commission
or other governmental authority or instrumentality, domestic or foreign,
necessary for the
consummation of the transactions contemplated by the Offer shall not have
been filed, occurred or been obtained. Furthermore, notwithstanding any other
term of the Offer, the Purchaser will not be required to accept for payment
or pay for any
Interests not theretofore accepted for payment or paid for and may terminate or
amend the
Offer as to such Interests if, at any time on or after the date of the Offer and
before the acceptance of such Interests for payment or the payment therefor,
any of the following conditions exist:
(a) there shall have occurred (I) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or the
over-the-counter market in the United States, (ii) a declaration of a banking
moratorium
or any suspension of payments in respect of banks in the United States (whether
or not
mandatory), (iii) the commencement or escalation of a war, armed hostilities or
other
national or international crisis involving the United States, (iv) any
limitation (whether or not mandatory) imposed by any governmental authority on,
or any
other event that might have material adverse significance with respect to, the
nature or
extension of credit or further extension of credit by banks or other lending
institutions in the United States, or (v) in the case of any of the
foregoing, a material acceleration or worsening thereof; or
(b) any material adverse change (or any condition, event or development
involving a
prospective material adverse change) shall have occurred or be likely to occur
in the
business, prospects, financial condition, results of operations, properties,
assets,
liabilities, capitalization, partners' equity, licenses, franchises or
businesses of the
Partnership and its subsidiaries taken as a whole; or
(c) there shall have been threatened, instituted or pending any action,
proceeding,
application, audit, claim or counterclaim by any government or governmental
authority or
agency, domestic or foreign, or by or before any court or governmental,
regulatory or
administrative agency, authority or tribunal, domestic, foreign or
supranational, which
(I) challenges the acquisition by the Purchaser of the Interests or seeks to
obtain any
material damages as a result thereof, (ii) makes or seeks to make illegal, the
acceptance
for payment, purchase or payment for any Interests or the consummation of the
Offer, (iii)
imposes or seeks to impose limitations on the ability of the Purchaser or any
affiliate of
the Purchaser to acquire or hold or to exercise full rights of ownership of the
Interests,
including, but not limited to, the right to vote any Interests purchased by them
on all
matters properly presented to the Holders, (iv) may result in a material
diminution in the
benefits expected to be derived by the Purchaser or any of its affiliates as a
result of
the Offer, (v) requires divestiture by the Purchaser of any Interests, (vi)
might
materially adversely affect the business, properties, assets, liabilities,
financial
condition, operations, results of operations or prospects of the Partnership or
the
Purchaser or (vii) challenges or adversely affects the Offer; or
(d) there shall be any action taken, or any statute, rule, regulation, order or
injunction shall have been enacted, promulgated, entered, enforced or deemed
applicable to
the Offer, or any other action shall have been taken, by any government,
governmental
authority or court, domestic
or foreign, other than the routine application to the Offer of waiting periods
that has
resulted, or in the reasonable good faith judgment of the Purchaser could be
expected to
result, in any of the consequences referred to in clauses (I) through (vii) of
paragraph
above; or
(e) a tender or exchange offer for some or all of the Interests is made by
another person, other than the offers by Raleigh and Equity, both as such offers
are
existing on the date hereof, or amended or consummated or publicly proposed to
be made or
amended, by another person; or
(f) the Partnership or any of its subsidiaries shall have
authorized, recommended, proposed or announced an agreement or intention to
enter into an
agreement, with respect to any merger, consolidation, liquidation or business
combination,
any acquisition or disposition of a material amount of assets or securities, or
any
comparable event, not in the ordinary course of business consistent with past
practices;
or
(g) it shall have been publicly disclosed or the Purchaser shall have otherwise
learned that (I) more than ten percent of the outstanding Interests have been or
are
proposed to be acquired by another person, other than pursuant to the offer by
Raleigh, as
such offer is existing on the date hereof (including a group within the
meaning of
Section 13(d)(3) of the Exchange Act), or (ii) any person or group that prior to
such date
has filed a Statement with the Commission pursuant to Section 13(d) or (g) of
the
Exchange Act has increased or proposes to increase the number of Interests
beneficially
owned by such person as disclosed in such Statement by two percent or more of
the
outstanding Interests; or
(h) the failure to occur of any necessary approval or authorization by any
federal or
state authorities necessary to the consummation of the purchase of all or any
part of the Interests to be acquired hereby, which in the reasonable judgment of
the
Purchaser in any such case, and regardless of the circumstances (including any
action of
the Purchaser) giving rise thereto, makes it inadvisable to proceed with such
purchase or
payment; or
(I) the Purchaser shall become aware that any material right of the Partnership
or any of its subsidiaries under any governmental license, permit or
authorization
relating to any environmental law or regulation is reasonably likely to be
impaired or
otherwise adversely affected in a material manner as a result of, or in
connection with,
the Offer; or
(j) the Purchaser shall not be reasonably satisfied that it will be in a
position to
exercise full voting rights with respect to the Interests tendered pursuant to
the
Offer, including voting at any meeting of Holders, immediately upon the
Purchaser's
payment for such Interests; or
(k) the Purchaser shall not be reasonably satisfied that it will be admitted to
the Partnership as a substitute Holder; or
(l) the Purchaser shall not be reasonably satisfied that the purchase by it of
Interests pursuant to the Offer will not result in a termination of the
Partnership for
federal income tax purposes; or
(m) the Partnership or any of its subsidiaries shall have amended or proposed
or
authorized any amendment to its Partnership Agreement or similar organizational
documents or the Purchaser shall have learned that the Partnership has
recommended any
such amendment which has not previously been publicly disclosed by the
Partnership in
filings with the Commission.
The foregoing conditions are for the sole benefit of the Purchaser and
its affiliates and may be asserted by the Purchaser regardless of the
circumstances
(including, without limitation, any action or inaction by the Purchaser
or any of its affiliates) giving rise to such condition, or may be waived by
the Purchaser, in whole or in part, from time to time in its sole discretion.
The failure
by the Purchaser at any time to exercise the foregoing rights will not be deemed
a waiver
of such rights, which will be deemed to be ongoing and may be asserted at any
time and
from time to time. Any determination by the Purchaser concerning the events
described in this Section 15 will be final and binding upon all parties.
16. Certain Legal Matters.
Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Partnership with the Commission and other
publicly
available information regarding the Partnership, the Purchaser
is not aware of any licenses or regulatory permits that would be material to
the business of the Partnership, taken as a whole, and that might be adversely
affected by
the Purchaser's acquisition of Interests as contemplated herein, or any filings,
approvals
or other actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of Interests by the Purchaser pursuant to the Offer as contemplated
herein,
other than the filing of the Schedule 14D-1 (which has been filed) and any
required
amendments thereto. Should any such approval or other action be required, there
can be no
assurance that any such additional approval or action, if needed, would be
obtained
without substantial conditions or that adverse consequences might not result to
the
Partnership's business, or that certain parts of the Partnership's or the
Purchaser's
business might not have to be disposed of or held separate or other substantial
conditions
complied with in order to obtain such approval or action or in the event that
such
approvals were not obtained or such actions were not taken.
Appraisal Rights. Holders will not have appraisal rights as a result of
the Offer.
State Anti-takeover Laws. A number of states have adopted anti-takeover
laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of
corporations or other entities which are incorporated or organized in such
states or which
have substantial assets, securityholders, principal executive offices or
principal
places of business therein. Although the Purchaser has not attempted to comply
with any
state anti-takeover statutes in connection with the Offer, the Purchaser
reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to
the Offer and nothing in this Offer to Purchase nor any action taken in
connection
therewith is intended as a waiver of such right. If any state anti-takeover
statute is applicable to the Offer, the Purchaser might be unable to accept
for payment or
purchase Interests tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for
purchase or pay for any Interests tendered.
Margin Requirements. The Interests are not margin securities under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly,
those regulations generally are not applicable to the Offer.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as
amended (the HSR Act ), and the rules and regulations that have been
promulgated
thereunder by the Federal Trade Commission (the FTC ), certain acquisition
transactions
may not be consummated until certain information and documentary material has
been
furnished for review by the Antitrust Division of the Department of Justice and
the FTC
and certain waiting period requirements have been satisfied. The Purchaser does
not believe any filing is required under the HSR Act with respect to its
acquisition of
Interests contemplated by the Offer.
17. Certain Fees and Expenses.
Except as set forth in this Section 17, the Purchaser will not pay any fees
or
commissions to any broker, dealer or other person for soliciting tenders of
Interests
pursuant to the Offer. The Purchaser has retained the Trust Company of America
to act as
Information Agent/Depositary in connection with the Offer. The Purchaser will
pay
the Information Agent/Depositary reasonable and customary compensation for its
services, plus reimbursement for certain reasonable out-of-pocket expenses, and
has agreed
to indemnify the Information Agent/Depositary against certain liabilities and
expenses in
connection therewith, including certain liabilities under the federal securities
laws.
The Purchaser will also pay all costs and expenses of printing and mailing the
Offer and its legal fees and expenses.
18. Miscellaneous.
The Offer is being made to all Holders, Beneficial Owners and Substituted
Owners, all to the extent known by the Purchaser. The Purchaser is not aware of
any state
in which the making of the Offer is prohibited by administrative or judicial
action
pursuant to a state statute. If the Purchaser becomes aware of any state where
the
making of the Offer is so prohibited, the Purchaser will make a good faith
effort to comply with any such statute or seek to have such statute declared
inapplicable
to the Offer. If, after such good faith effort, the Purchaser cannot comply
with any
applicable statute, the Offer will not be made to (nor will tenders be accepted
from or on
behalf of) Holders in such state.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser has filed with the Commission the Schedule 14D-1,
together
with exhibits, furnishing certain additional information with respect to the
Offer. Such
Statement and any amendments thereto, including exhibits, may be inspected and
copies
may be obtained at the same places and in the same manner as set forth with
respect to
information concerning the Partnership in 9. Certain Information Concerning
the
Partnership (except that they will not be available at the regional offices of
the
Commission).
No person has been authorized to give any information or make any
representation on
behalf of the Purchaser not contained herein or in the Letter of Acceptance and,
if given
or made, such information or representation must not be relied upon as having
been
authorized.
Walton Street Capital Acquisition Co. III, L.L.C.
June 27, 1996
Annex I
Certain Information Concerning Whitehall
Whitehall is a Delaware limited partnership that engages in the business of
investing
in debt and equity interests in real estate assets and businesses. WH Advisors,
L.P.VII,
a Delaware limited partnership ( WH Advisors, L.P. ), acts as the sole general
partner of
Whitehall, and WH Advisors, Inc. VII, a Delaware corporation ( WH Advisors,
Inc. ), acts
as the sole general partner of WH Advisors, L.P. Neither WH Advisors, L.P. nor
WH Advisors, Inc. engages in any business other than in connection with its
role as a general partner. The Goldman Sachs Group, L.P., a Delaware limited
partnership
( GS Group ), is the direct beneficial owner of all of the capital stock of WH
Advisors,
Inc. GS Group is controlled by its general partners as a group, who have
delegated to its Executive Committee the power to act on their behalf with
respect to the management of GS Group. GS Group's principal asset is a 99%
partnership
interest in Goldman, Sachs & Co., a New York limited partnership ( Goldman
Sachs ), an
investment banking firm and member of The New York Stock Exchange and other
national
securities exchanges.
The business offices of Whitehall, WH Advisors, L.P., WH Advisors, Inc.
and GS Group are located at 85 Broad Street, New York, New York 10004. The
name,
residence or business address, present principal occupation or employment; and
the name,
principal business and address of any corporation or other organization
in which such employment is conducted and the citizenship of (I) each director
and executive officer of WH Advisors, Inc. and (ii) each member of the Executive
Committee
of GS Group that is a natural person are set forth below.
Directors and Executive Officers of WH Advisors, Inc.
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five
years of each director and executive officer of WH Advisors, Inc. The business
address of
each person listed below is Goldman, Sachs & Co., 85 Broad Street, New York,
New York
10004 and each natural person listed below is a citizen of the United States of
America.
Each of the following persons has been employed by Goldman, Sachs & Co. for the
past five years.
Name and Business Address Present Principal Occupation
at Goldman, Sachs & Co.
David T. Hamamoto General Partner
Daniel M. Neidich General Partner
Stuart M. Rothenberg Vice President
Executive Committee of
The Goldman Sachs Group, L.P.
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five
years of each member of the Executive Committee of The Goldman Sachs Group, L.P.
Each
such person is a United States citizen whose business address is Goldman, Sachs
& Co., 85
Broad Street, New York, New York 10004, and each occupation set forth opposite
such
person's name has been held by such person for at least the past five years.
Name
Present Principal Occupation and
Five-Year Employment History
Roy J. Zuckerberg. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Partner of Goldman Sachs.
Member of Executive Committee.
David M. Silfen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Partner of Goldman Sachs.
Member of Executive Committee.
Jon S. Corzine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Partner of Goldman Sachs.
Member of Executive Committee.
Robert J. Hurst. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Partner of Goldman Sachs.
Member of Executive Committee.
Henry M. Paulson, Jr.. . . . . . . . . . . . . . . . . . . . . . . . . . .
General Partner of Goldman Sachs.
Member of Executive Committee.
John A. Thain* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Partner of Goldman Sachs.
Member of Executive Committee.
* Business address is Peterborough Court, 133 Fleet Street, London, EC4A
2BJ, England.
Except as otherwise set forth in this Offer to Purchase, to the best of
Purchaser's knowledge, none of Whitehall or any of the persons listed above, or
any
affiliate of the foregoing, (I) beneficially owns or has a right to acquire any
Interests,
(ii) has effected any transaction in the Interests in the past 60 days, or
(iii) has any
contract, arrangement, understanding or relationship with any other person with
respect
to any securities of the Partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof,
joint ventures, loan or option agreements, puts or call, guarantees of loans,
guarantees
against loss or the giving or withholding of proxies.
Whitehall and certain of its affiliates, including Goldman, Sachs & Co.,
as part of their investment banking and financial advisory business, are
continually
engaged in the valuation of properties, businesses and their securities in
connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary
distributions of listed and unlisted securities, private placements, and
valuations for
estate, corporate and other purposes. In that capacity, Whitehall and certain of
its
affiliates, including Goldman, Sachs & Co., have provided financial advisory,
asset
management, investment banking, underwriting, financing and similar services to
certain
affiliates of the Purchaser and the Partnership, including JMB and are
anticipated to
continue to provide such services in the future to such parties.
Facsimile copies of the Letter of Acceptance, properly completed and duly
executed, will be accepted. Questions and requests for assistance may be
directed to the
Information Agent/Depositary at the address and telephone number listed below.
Additional
copies of this Offer to Purchase, the Letter of Acceptance and other tender
offer
materials may be obtained from the Information Agent/Depositary as set forth
below, and
will be furnished promptly at the Purchaser's expense. The Letter of Acceptance
and
any other required documents should be sent or delivered by each Holder to the
Information
Agent/Depositary at its address set forth below. To be effective, a duly
completed and
signed Letter of Acceptance (or facsimile thereof) must be received by the
Information
Agent/Depositary at the address (or facsimile number) set forth below before
12:00
midnight, Eastern Time, on Friday, July 26, 1996.
By Mail:
Trust Company of America
P.O. Box 3287
Englewood, CO 80155-9758
By Hand/Overnight Delivery:
Trust Company of America
7103 South Revere Parkway
Englewood, CO 80112
By Facsimile:
(303) 705-6171
For Additional Information Call:
Trust Company of America
(800) 797-6812
EXHIBIT (a)(2)
LETTER OF ACCEPTANCE
TO TENDER LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
OF
ARVIDA/JMB PARTNERS, L.P.
Pursuant to the Offer to Purchase dated June 27, 1996, as amended from time to
time
by
Walton Street Capital Acquisition Co. III, L.L.C.
Please indicate changes or corrections to the address printed above
The Offer, proration period and withdrawal rights will expire at Midnight
Eastern Time, on Friday, July 26, 1996, (the "Expiration Date")
unless the Offer is extended.
The undersigned hereby tender(s) to Walton Street Capital Acquisition Co.
III, L.L.C., a Delaware limited liability company (the "Purchaser"), the number
of the undersigned's Interests of the Partnership for the Purchase Price
indicated in the Offer to Purchase (defined herein), net to the seller and its
assigns in
cash, without interest, upon the terms and subject to the conditions set
forth in
the Offer to Purchase dated June 27, 1996 (the "Offer to Purchase") and this
Letter of
Acceptance (the "Letter of Acceptance"; which together with any supplements,
modifications or amendments, collectively constitute the "Offer"), all as
more fully
described in the Offer to Purchase. The Purchase Price will automatically be
reduced by the aggregate amount of distributions per Interest, if any, made
or declared
by the Partnership after June 15, 1996 and on or prior to the Expiration Date.
In addition, if a distribution is made or declared after the Expiration Date but
prior to the date on which the Purchaser or its assignee pays for tendered
Interests, the Purchaser will offset the amount otherwise due a Holder pursuant
to the
Offer in respect of tendered Interests which have been accepted for payment but
not yet
paid for by the amount of any such distribution. Receipt of the Offer to
Purchase is
hereby acknowledged. Capitalized terms used but not defined herein have the
respective meanings assigned in the Offer to Purchase.
By executing and delivering this Letter of Acceptance, a tendering Holder
irrevocably appoints the Purchaser and designees of the Purchaser and each of
them as such Holder's proxies, each with full power of substitution, to the
full extent of such Holder's rights with respect to the Interests tendered by
such Holder
and accepted for payment by the Purchaser (and with respect to any and all
other Interests or other securities issued or issuable in respect of such
Interests on or
after the date hereof). All such proxies shall be considered irrevocable and
coupled with an interest in the tendered Interests. Such appointment will be
effective
when, and only to the extent that, the Purchaser accepts such Interests for
payment.
Upon such acceptance for payment, all prior proxies given by such Holder with
respect
to such Interests (and such other Interests and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent
written consent executed (and, if given or executed, will not be effective).
The
Purchaser and its designees will, with respect to the Interests (and such other
Interests
and securities) for which such appointment is effective, be empowered to
exercise
all voting and other rights of such Holder as they in their sole discretion may
deem
proper at any meeting of Holders or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. The Purchaser
reserves the
right to require that, in order for the Interests to be deemed validly tendered,
immediately upon the Purchaser's payment for such Interests, the Purchaser must
be able to
exercise full voting rights with respect to such Interests and other
securities, including voting at any meeting of Holders.
By executing and delivering this Letter of Acceptance, a tendering Holder
also irrevocably constitutes and appoints the Purchaser and its designees as the
Holder's attorneys-in-fact, each with full power of substitution, to the full
extent of the Holder's rights with respect to the Interests tendered by the
Holder and
accepted for payment by the Purchaser. Such appointment will be effective when,
and
only to the extent that, the Purchaser accepts the tendered Interests for
payment. Upon
such acceptance for payment, all prior powers of attorney granted by the
Holder with respect to such Interests will, without further action, be revoked,
and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment at attorneys-in-fact, the Purchaser
and its
designees each will have the power, among other things, (i) to seek to transfer
ownership of such Interests on the Partnership books maintained by the transfer
agent and
registrar for the Partnership (and execute and deliver any accompanying
evidences of
transfer and authenticity any of them may deem necessary or appropriate in
connection
therewith, including, without limitation, a "Transferor's (Seller's)
Application for Transfer" created by the NASD, if required), (ii) upon receipt
by the
Information Agent/Depositary (as the tendering Holder's agent) of the
Purchase Price, to
become a substitute Holder, to receive any and all distributions made by the
Partnership after the Expiration Date, and to receive all benefits and otherwise
exercise
all rights of beneficial ownership of such Interests in accordance with the
terms of the
Offer, (iii) to execute and deliver to the General Partner a change of address
form
instructing the General Partner to send any and all future distributions to
which the
Purchaser is entitled pursuant to the terms of the Offer in respect of
tendered Interests to the address specified in such form, and (iv) to endorse
any check
payable to or upon the order of such Holder representing a distribution to which
the
Purchaser is entitled pursuant to the terms of the Offer, in each case on behalf
of the
tendering Holder.
By executing and delivering this Letter of Acceptance, a tendering Holder
irrevocably assigns to the Purchaser and its assigns all of the right, title and
interest of such Holder in the Partnership with respect to the Interests
tendered and purchased pursuant to the Offer, including, without limitation,
such Holder's
right, title and interest in and to any and all distributions made by the
Partnership
after the Expiration Date in respect of the Interests tendered by such Holder
and
accepted for payment by the Purchaser, regardless of the fact that the record
date for
any such distribution may be a date prior to the Expiration Date.
The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer, the Purchaser will accept for payment from among those
Interests
validly tendered on or prior to the Expiration Date and not properly
withdrawn, the maximum number of Interests permitted pursuant to the Offer on a
pro rata
basis from each of the tendering Holders, with adjustments to avoid purchases of
certain fractional Interests, based upon the number of Interests validly
tendered
prior to the Expiration Date and not properly withdrawn.
The undersigned understands that a tender of Interests to the Purchaser
constitutes a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the
Purchaser may not be required to accept for payment any of the Interests
tendered
hereby. In such event, the undersigned understands that any Letter of
Acceptance for
Interests not accepted for payment will be destroyed by the Purchaser. Except
as stated
in the Offer to Purchase, this tender is irrevocable, provided Interests
tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date.
Our records indicate the following with respect to your ownership of
Interests in the Partnership. If no indication is marked below, all Interests
listed
will be deemed to have been tendered pursuant to the Offer.
Number of Number of Purchase Price Total Purchase Price*
Interests Owned Interests Tendered Per Interest If all Interests Tendered
* To be reduced by the amount of any distribution made or declared by the
Partnership
subsequent to June 15, 1996.
SIGNATURE BOX
Please sign exactly as your name is printed (or corrected) above. For joint
owners, each joint owner must sign. If signed by the registered holder(s) of
the
Interests and payment is to be made directly to that holder(s) or Eligible
Institution,
then no signature guarantee is necessary. In all other cases, all signatures
must be
guaranteed by an Eligible Institution. (See Instruction 2.) The signatory
hereto hereby
certifies under penalties of perjury the Taxpayer I.D. No. printed (or
corrected) above
and the statements in Box A, Box B and, if applicable, Box C. The undersigned
hereby
represents and warrants for the benefit of the Partnership and the Purchaser
that the
undersigned owns the Interests tendered hereby and has full power and authority
to validly
tender, sell, assign, transfer, convey and deliver the Interests tendered hereby
and that
when the same are accepted for payment by the Purchaser, the Purchaser will
acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to
the sale or transfer thereof, and such Interests will not be subject to any
adverse claims
and that the transfer and assignment contemplated herein are in compliance with
all
applicable laws and regulations. All authority herein conferred or agreed to be
conferred
shall survive the death or incapacity of the undersigned and any obligations of
the
undersigned shall be binding upon the heirs, personal representatives,
successors and
assigns of the undersigned. Except as stated in the Offer to Purchase, this
tender is
irrevocable.
X (Signature of Owner) (Date)
X (Signature of Co-Owner) (Date)
Taxpayer Identification Number of Owner (other than IRA's)
(Title)
Telephone (Day) ( )
Telephone (Eve) ( )
Guarantee of Signature (If required. See Instruction 2)
Name of Firm:
Authorized Signature:
SI <PAGE>
INSTRUCTIONS FOR COMPLETING LETTER OF ACCEPTANCE
WALTON STREET CAPITAL ACQUISITION CO. III, L.L.C.
OFFER TO PURCHASE INTERESTS
OF ARVIDA/JMB PARTNERS, L.P.
For assistance in completing the Letter of Acceptance call:
Trust Company of America
AT 800-797-6812
1. Delivery of Letter of Acceptance. For convenience in responding to the
Offer, a pre-addressed, postage-paid envelope has been enclosed with the Offer
to
Purchase. However, to ensure receipt of the Letter of Acceptance, it is
suggested that
you use overnight courier delivery or, if the Letter of Acceptance is to be
delivered by United States mail, that you use certified or registered mail,
return receipt
requested. To be effective, a duly completed and signed Letter of Acceptance
(or
facsimile thereof) must be received by the Information Agent/Depositary at the
address
(or facsimile number) set forth below on or before the Expiration Date,
Midnight, Eastern
Time on Friday, July 26, 1996, unless extended. Letters of Acceptance
which have been duly executed, but where no indication is marked in the
"Interests
Tendered" column, shall be deemed to have tendered all Interests pursuant to the
Offer.
By Mail: Trust Company of America
P.O. Box 3287
Englewood, CO 80155-9758
By Hand Delivery: Trust Company of America
7103 South Revere Parkway
Englewood, CO 80112
By Facsimile: 303 - 705 - 6171
For Additional Information Call: 800 - 797 - 6812
The method of delivery of the letter of acceptance and all other required
documents is at the option and risk of the tendering holder and delivery will be
deemed
made only when actually received by the information agent/depositary. In all
cases,
sufficient time should be allowed to assure timely delivery.
2. Signatures. All Holders must sign in the Signature Box on the back of the
Letter of Acceptance. If the Interests are held in the names of two or more
persons, all
such persons must sign. When signing as a general partner, corporate officer,
attorney-
in-fact, executor, custodian, administrator or guardian, please give full title
and send
proper evidence of authority with this Letter of Acceptance. With respect to
most trusts,
the Partnership will generally require only the named trustee to sign. For
Interests held
in a custodial account for minors, only the signature of thecustodian will be
required.
For IRA custodial accounts, the beneficial owner should return the executed
Letter of Acceptance to the Information Agent/Depositary as specified in
Instruction 1
herein. Such Letter of Acceptance will then be forwarded by the Information
Agent/Depositary to the Custodian for additional execution. Such Letter of
Acceptance will not be considered duly completed until after it has been
executed by the
Custodian. If the Letter of Acceptance is signed by the registered Holder of
the
Interests and payment is to be made directly to that Holder at its address on
the front of
the Letter of Acceptance, then no signature guarantee is required on the Letter
of
Acceptance.
Similarly, if the Interests are tendered for the account of a member firm
of a registered national securities exchange, a member of the National
Association of
Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and
loan association or trust company having an office, branch or agency in the
United States (each an "Eligible Institution"), no signature guarantee is
required on the
Letter of Acceptance. However, in all other cases, all signatures on the Letter
of
Acceptance must be guaranteed by an Eligible Institution.
33. U.S. Persons. A Holder who or which is a United States citizen OR a
resident alien
individual, a domestic corporation, a domestic partnership, a domestic trust or
a domestic
estate (collectively,"United States Persons") as those terms are defined in the
Internal
Revenue Code and Income Tax Regulations, should follow the instructions below
with respect
to certifying Boxes A and B (on the reverse side of the Letter of Acceptance).
EXHIBIT (a)(3)
WALTON STREET CAPITAL ACQUISITION CO. III, L.L.C.
900 North Michigan Avenue
Chicago, IL 60611
June 27, 1996
To Holders of Interests in Arvida/JMB Partners, L.P.:
Walton Street Capital Acquisition Co. III, L.L.C., a Delaware limited
liability company (the Purchaser ),
is offering to purchase up to 185,840 of the outstanding Limited Partnership
Interests and Assignee Interests therein
(the Interests ) in Arvida/JMB Partners, L.P. (the Partnership ) for a cash
purchase price of $420 per Interest,
net to the seller, upon the terms and subject to the conditions set forth in
the attached Offer to Purchase dated June
27, 1996 and the Letter of Acceptance (which together constitute the Offer ).
Unless extended by the Purchaser,
the Offer will expire at midnight, Eastern Time, on July 26, 1996. The
Purchaser will pay any transfer fees
charged by the Partnership in connection with transferring ownership of
Interests pursuant to the Offer.
The Offer is not conditioned upon any minimum number of Interests being
tendered; provided, however,
that if a Holder tenders less than all of the Interests held by such Holder,
such Holder may not hold less than five
(5) Interests after giving effect to the purchase of Interests held by such
Holder pursuant to the Offer, and provided
further that tender offers of fractional Interests will only be accepted if
all of the Interests held by such Holder are
tendered.
The materials included in this package include important information
concerning the Purchaser, the terms of and conditions to the Offer, tax
implications and instructions
for tendering your Interests. It is
important that Holders take some time to read carefully the enclosed Offer to
Purchase, the Letter of Acceptance
and other accompanying materials in order to evaluate the Offer being made by
the Purchaser.
Each Holder must decide whether to tender based on his or her particular
circumstances. Holders should
consult with their respective advisors about the financial, tax, legal and
other implications to them of accepting the
Offer.
If you desire additional information regarding the Offer or need
assistance in tendering your Interests, you
may call Trust Company of America, which is acting as Information
Agent/Depositary for the Offer, at (800) 797-
6812. Informed and courteous agents are available to assist you.
WALTON STREET CAPITAL ACQUISITION CO. III, L.L.C.
EXHIBIT (a)(4)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
Give the
SOCIAL SECURITY
For this type of account: number of-
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individual on the
account)(1)
3. Custodian account of a minor
(Uniform Gift to Minors Act) The minor(2)
4.a.The usual revocable savings The grantor-trustee(1)
trust account (grantor is also
trustee)
b.So-called trust account that is The actual owner(1)
not a legal or valid trust under
State law
5. Sole proprietorship account The owner(3)
6. A valid trust, estate, The legal entity (Do
not furnish the
identifying number of
the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(4)
or pension trust
7. Corporate account The corporation
Give the EMPLOYER
IDENTIFICATION
For this type of account: number of
8.Assoc.,club,religious, The organization
charitable, or educa-
tional organization
account
9. Partnership account held The partnership
in the name of the
business
10. Association, club, or other The organization
tax-exempt organization
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the
first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you don't
know your number, obtain Form SS-5, Application for a Social
Security Number Card, or Form SS-4, Application for Employer
Identification Number, at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL
payments include the following:
A corporation.
A financial institution.
An organization exempt from tax under section 501(a), or
an individual retirement plan.
The United States or any agency or instrumentality
thereof.
A State, the District of Columbia, a possession of the
United States, or any subdivision or instrumentality
thereof.
A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
An international organization or any agency, or
instrumentality thereof.
A registered dealer in securities or commodities registered
in the U.S. or a possession of the U.S.
A real estate investment trust.
A common trust fund operated by a bank under section
584(a).
An entity registered at all times under the Investment
Advisors Act of 1940 who regularly acts as a broker.
A foreign central bank of issue.
Payments of dividends and patronage dividends not generally
subject to backup withholding include the following:
Payments to nonresident aliens subject to withholding
under section 1441.
Payments to partnerships not engaged in a trade or
business in the U.S. and which have at least one
nonresident partner.
Payments of patronage dividends where the amount
received is not paid in money.
Payments made by certain foreign organizations.
Payments of interest not generally subject to backup
withholding include the following:
Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this
interest is $600 or more and is paid in the course of the
payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
Payments of tax-exempt interest (including exempt-interest
dividends under section 852).
Payments described in section 6049(b)(5) to non-resident
aliens.
Payments on tax-free covenant bonds under section 1451.
Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM
WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE
FACE OF THE FORM, AND RETURN IT TO THE PAYER.
IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
Certain payments other than interest, dividends, and patronage
dividends, that are not subject to information reporting are also
not subject to backup withholding. For details, see the
regulations under sections 6041, 6041A(a), 6045, and 6050A.
Privacy Act Notice. Section 6109 requires most recipients of
dividend, interest, or other payments to give taxpayer
identification numbers to payers who must report the payments
to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers
must generally withhold 31% of taxable interest, dividend, and
certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may
also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification
Number. If you fail to furnish your taxpayer identification
number to a payer, you are subject to a penalty of $50 for each
such failure unless your failure is due to reasonable cause and
not to willful neglect.
(2) Civil Penalty for False Information With Respect to
Withholding. If you make a false statement with no
reasonable basis which results in no imposition of backup
withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Willfully
falsifying certifications or affirmations may subject you to
criminal penalties including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR
TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
EXHIBIT (a)(5)
CHICAGO, Illinois, June 27, 1996 - Walton Street Capital Acquisition Co.
III, L.L.C. ("Walton Street")
today announced that it intends to make a tender offer to purchase up to 46
percent of all of the outstanding
limited partnership interests and assignee interests therein of Arvida/JMB
Partners, L.P. (the "Partnership"), at
a price of $420 per Interest.
Walton Street, an affiliate of Walton Street Capital, L.L.C., reported
that it is acquiring the interests
for investment purposes and that it has no current intention of changing the
management or operations of the
Partnership.
Copies of any of the tender offer materials may be obtained from Trust
Company of America, the
Information Agent/Depositary for the tender offer, at (800) 797-6812.
CONTACT: Ira J. Schulman (312) 915-2800
INDUSTRY; FINANCIAL
EXHIBIT (a)(6)
PROCEDURES FOR WITHDRAWAL
of INTERESTS of
ARVIDA/JMB PARTNERS, L.P.
PREVIOUSLY TENDERED TO
RALEIGH CAPITAL ASSOCIATES L.P.
To Holders of Interests of
Arvida/JMB Partners, L.P.
Who Have Tendered Interests
Pursuant to the Offer of
Raleigh Capital Associates L.P.
Dear Holder:
In order for holders ("Holders") of Arvida/JMB Partners, L.P., a Delaware
limited partnership
(the "Partnership"), to tender limited partnership interests or assignee
interests therein (the "Interests")
of the Partnership to Walton Street Capital Acquisition Co. III, L.L.C.
("Walton Street III") that have
been tendered pursuant to the offer by Raleigh Capital Associates L.P.
("Raleigh") for up to 185,000
Interests, such Interests must be withdrawn in accordance with the applicable
procedures set forth in
Section 4 of the Raleigh Offer to Purchase and the related Letter of
Transmittal (which together
constitute the "Raleigh Offer").
HOLDERS OF INTERESTS WHO DESIRE ASSISTANCE IN WITHDRAWING THE
INTERESTS TENDERED PURSUANT TO THE RALEIGH OFFER MAY CALL THE TRUST
COMPANY OF AMERICA AT (800) 797-6812.
With respect to withdrawals of Interests, Section 4 of the Raleigh Offer
provides, in relevant
part:
"For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be
timely received by the Depositary at the address set forth on the back
cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the
person who tendered
the Units to be withdrawn and must be signed by the person(s) who signed
the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed."
In connection with the offer to purchase Interests by Walton Street III
described in the Offer to
Purchase of Walton Street Capital Acquisition Co. III, L.L.C., dated June 27,
1996 (the "Walton Street
III Offer to Purchase") and the related Letter of Acceptance (which together
constitute the "Walton
Street III Offer"), Walton Street III, for the convenience of the Holders, has
enclosed a form of "Notice
of Withdrawal" which, if properly completed and timely delivered to The Herman
Group, Inc. ("Herman
Group"), Depositary for the Raleigh Offer, should enable a Holder to withdraw
Interests tendered
pursuant to the Raleigh Offer. This form, or any other proper notice of
withdrawal which complies with
the withdrawal requirements of Section 4 of the Raleigh Offer, should be sent
by facsimile transmission
to the Herman Group.
Upon proper withdrawal of the Interests from the Raleigh Offer, Interests
may be tendered into
the Walton Street III Offer, which will expire at 12:00 midnight, Eastern
time, on July 26, 1996, unless
extended.
<PAGE>
INSTRUCTIONS
1. Delivery of Notice of Withdrawal. If withdrawing Interests
previously tendered pursuant
to the Raleigh Offer to Purchase, please complete, execute, detach and send
the attached "Notice of
Withdrawal of Interests of Arvida/JMB Partners, L.P. Previously Tendered to
Raleigh Capital
Associates L.P." ("Raleigh Notice of Withdrawal"), by facsimile transmission
to The Herman Group, Inc.
("Herman Group") at one of the facsimile numbers set forth on the Raleigh
Notice of Withdrawal, which
must be received by the Herman Group prior to 12:00 midnight, New York City
time, on July 17, 1996,
unless extended.
2. Inadequate Space. If any space provided in the Raleigh Notice of
Withdrawal is
inadequate, all such additional information should be listed on a separate
schedule and attached as
part of the Raleigh Notice of Withdrawal.
3. Signature on Notice of Withdrawal. The Raleigh Notice of Withdrawal
must be signed,
as applicable, by the person(s) who signed the Letter of Transmittal related
to the Raleigh Offer, in the
same manner as such Letter of Transmittal was signed. The signatures must
correspond exactly with
the name(s) as they appear on the Partnership records. If any Interests
tendered pursuant to the
Raleigh Offer are registered in the names of two or more joint Holders, all
such Holders must sign, as
applicable, the Raleigh Notice of Withdrawal. If the Raleigh Notice of
Withdrawal is signed by any
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or others acting in a
fiduciary capacity, such persons should so indicate when signing and must
submit proper evidence
satisfactory to the Herman Group of their authority to act.
4. Guarantee of Signatures. If the signature was guaranteed on the
Letter of Transmittal,
then it must be guaranteed on the Raleigh Notice of Withdrawal.
<PAGE>
NOTICE OF WITHDRAWAL
of INTERESTS of
ARVIDA/JMB PARTNERS, L.P.
Previously Tendered to
RALEIGH CAPITAL ASSOCIATES L.P.
TO: THE HERMAN GROUP, INC.
By Hand/Overnight Delivery
The Herman Group, Inc.
2121 San Jacinto Street, 26th Floor
Dallas, Texas 75201
By Facsimile 1 (214 )999-9348 or 1 (214) 999-9323
Ladies and Gentlemen:
The following limited partnership interests or assignee interests therein
(the "Interests") of
Arvida/JMB Partners, L.P. (the "Partnership") previously tendered to Raleigh
Capital Associates L.P.
are hereby withdrawn. Please return the tendered Interests and the related
Letter of Transmittal
and all rights with respect thereto promptly to the undersigned. A failure to
complete the Section
"Number of Interests Tendered" shall be deemed to indicate the intent of the
undersigned that all
Interests tendered to Raleigh Capital Associates L.P. are hereby withdrawn.
DESCRIPTION OF INTEREST(S) WITHDRAWN
AND
SIGNATURES OF HOLDERS
All registered Holder(s) must sign exactly as name(s) appear(s) on the
Partnership records. See
Instruction 3.
(Print Name(s))
(Signature(s))
Number of
Interests Tendered:
Dated:
If signing as a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
provide the following
information and see Instruction 3.
Name(s) and
Capacity:
Address:
City, State: Zip Code:
Area Code and Tel. No.
Execution Copy
EXHIBIT (c)(1)
FINANCING AGREEMENT
FINANCING AGREEMENT, dated as of June 26, 1996
(this "Agreement"), among Walton Street Capital Acquisition
Co. III, L.L.C., a Delaware limited liability company
("Bidder"), Walton Street Capital, L.L.C., a Delaware
limited liability company and an affiliate of Bidder
("Walton"), and Whitehall Street Real Estate Limited
Partnership VII, a Delaware limited partnership ("Whitehall",
and together with Bidder and Walton, the "Parties").
WHEREAS, Bidder is concurrently herewith commenc-
ing a tender offer for up to 185,840 of the outstanding
limited partnership interests and interests held by any
assignee of limited partnership interests (collectively, the
"Interests") in Arvida/JMB Partners, L.P., a Delaware
limited partnership (the "Target Partnership"), upon the
terms and subject to the conditions set forth in its Offer
to Purchase dated the date hereof and the related letter of
acceptance (which, as amended from time to time, together
constitute the "Offer"). The purpose of the Offer is for
Bidder to acquire the Interests for investment purposes.
WHEREAS, Bidder has requested Whitehall to finance
a portion of the purchase price for the Interests to be
purchased pursuant to the Offer (the "Aggregate Purchase
Price") by purchasing or causing a designated Affiliate (as
hereinafter defined) to purchase a portion of such Interests
from Bidder, and Whitehall is willing to do so upon the
terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, for good and valuable considera-
tion, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Article I
Financing the Offer
Section 1.1. Financing the Offer. In order to finance
a portion of the Aggregate Purchase Price, the parties
hereto agree, upon the terms and subject to the conditions
set forth in this Agreement, that the Bidder shall sell to
Whitehall or an Affiliate of Whitehall designated by
Whitehall, and Whitehall shall purchase or cause such a
designated Affiliate to purchase from Bidder, for a price in
cash equal to $420 per Interest (less the aggregate amount
of distributions per Interest, if any, made or declared by
the Target Partnership after the date hereof and on or prior
to the Closing Date (as hereinafter defined)), an aggregate
number of Interests equal to the lesser of (a) .80 times the
aggregate number of Interests purchased by Bidder in the
Offer or (b) 148,672 (the "Purchased Interests"). For pur-
poses of this Agreement, an "Affiliate" of any person or
entity means any person or entity controlling, controlled
by, or under common control with, such person or entity.
Section 1.2. Closing of Financing. (a) The closing
(the "Closing") of the purchase and sale of the Purchased
Interests described in Section 1.1 shall take place at the
offices of Mayer, Brown & Platt, 190 South LaSalle Street,
Chicago, Illinois 60603 (or at such other place as the
parties hereto may agree) at a time concurrent with the
payment by Bidder of the Aggregate Purchase Price (or at
such other time as the parties hereto may agree) (the date
on which the Closing occurs being referred to herein as the
"Closing Date").
(b) At the Closing, Bidder shall deliver (or
cause to be delivered) to Whitehall or its designated
Affiliate:
(i) all such instruments as may be necessary
to transfer and assign all rights, including voting
rights, acquired by Bidder with respect to the
Purchased Interests pursuant to the Offer;
(ii) the various documents, certificates and
instruments required by Section 4.2.; and
(iii) a certificate satisfying the
requirements of Treasury Regulation Section 1.1445-
2(b)(2) and certifying that neither Bidder nor Walton
(and, if applicable, a designated Affiliate of Bidder
that purchases Interests in the Offer) is not a foreign
person.
(c) At the Closing, Whitehall shall deliver or
cause to be delivered to Bidder:
(i) Cash in an amount equal to the purchase
price for the Purchased Interests (such cash to be paid
by wire transfer to an account with a bank in New York
City or Chicago, Illinois designated by Bidder by
written notice to Whitehall given not later than two
business days prior to the Closing Date); and
(ii) the various documents, certificates and
instruments required by Section 4.3.
Article II
Representations and Warranties
Section 2.1. Representations and Warranties of
Bidder and Walton. Each of Bidder and Walton, jointly and
severally, hereby represents and warrants to Whitehall, on
the date hereof and on the Closing Date, that:
(a) Each of Bidder and Walton has been duly
organized and is validly existing as a limited liability
company in good standing under the laws of the State of
Delaware.
(b) Each of Bidder and Walton has the requisite
power and authority and has duly taken all necessary action
to authorize the making and consummation of the Offer and
the execution, delivery and performance of this Agreement;
and this Agreement has been duly executed and delivered by,
and constitutes a valid and binding agreement of, each of
Bidder and Walton and, assuming due authorization, execution
and delivery hereof by Whitehall, is enforceable against
each of Bidder and Walton in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles (including any limitation on
the enforceability of indemnities under applicable law).
(c) To the best knowledge of Bidder and Walton,
except as disclosed in writing to Whitehall on or prior to
the date hereof, or with respect to matters arising after
the date hereof, except as disclosed in writing to Whitehall
on or prior to the Closing Date, there is no action, suit,
investigation or proceeding pending against or, to the
knowledge of Bidder or Walton, threatened against or
affecting, Bidder or Walton before any court or arbitrator
or any governmental body, agency or official which in any
manner challenges or seeks to prevent, enjoin, alter or
materially delay the Offer or the transactions contemplated
by this Agreement or which has a reasonable possibility of
being determined adversely to Bidder or Walton and, if so
adversely determined, would have a material adverse effect
on the financial condition, properties, business or results
of operations (a "Material Adverse Effect") of Bidder or
Walton or a material adverse effect on the ability of Bidder
or Walton to consummate the Offer or the transactions
contemplated hereby, or which could reasonably be expected
to allow Whitehall to refuse to consummate the sale of the
Purchased Interests as a result of the condition set forth
in Section 4.2(v).
(d) The Offering Documents (as amended or supple-
mented, if amended or supplemented) comply in all material
respects with all applicable requirements of the federal
securities laws, including, without limitation, Sections 10,
13 and 14 of the Securities Exchange Act of 1934 (the
"Exchange Act") and Rules 10b-5, 10b-13 and 14e-3
promulgated thereunder, and do not and (as amended or
supplemented, if amended or supplemented) will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements made, in the light of the
circumstances under which they were made, not misleading;
provided, however, that no representation or warranty is
given as to untrue statements or omissions that fall within
the scope of the exception to indemnity set forth in clause
(x), (y) or (z) of Section 5.1(a)(i). As used herein, the
term "Offering Document" means any document used in
connection with the solicitations of sales of Interests
pursuant to the Offer or filed with the Securities and
Exchange Commission (the "Commission") in connection
therewith, and any amendment or supplement thereto,
including, without limitation, any Tender Offer Statement on
Schedule 14D-1, Offer to Purchase, Letter of Acceptance,
newspaper advertisement or press release.
(e) The making and consummation of the Offer by
Bidder, including any related provisions for the payment for
Interests by Bidder, and the execution, delivery and
performance by each of Bidder and Walton of this Agreement,
including the provisions hereof relating to the sale by
Bidder of Purchased Interests, (i) do not and will not
conflict with, or result in the acceleration of any
obligation under or in a breach of, or constitute a default
under, any of the provisions of any indenture, agreement or
undertaking to which Bidder, Walton or any of their
respective Associates is a party or by which any of them is
bound or to which the property or assets of any of them is
subject, or of the limited liability company agreement or
similar governing document, as amended as of the date
hereof, of Bidder or Walton, and (ii) except as may arise by
reason of Whitehall's purchase of the Purchased Interests,
do not and will not contravene any federal, state or local
law, rule or regulation, or any order applicable to Bidder,
Walton or any of their Associates of any court or of any
other governmental agency or instrumentality having
jurisdiction over any of them or any property of any of
them, in each case in any respect that would be reasonably
likely to materially impair the making or consummation of
the Offer or the sale by Bidder of the Purchased Interests
contemplated hereby.
For purposes of this Agreement, the term
"Associates" shall mean, with respect to Walton and Bidder,
(i) any person who is currently a principal of Walton or
Bidder, or (ii) any person that, directly or indirectly
through one or more intermediaries, is controlled by any one
or more of such principals. For this purpose, the term
"controlled by" means (a) the ownership of more than 50% (by
voting or value) of the equity securities or other
beneficial equity ownership by any principal, individually
or collectively, or (b) the spouse or child of any such
principal.
(f) Each of Bidder and Walton has obtained, or is
in the process of obtaining and will obtain prior to the
time at which it is required to do so all consents,
approvals, authorizations and orders of, and has duly made
all registrations, qualifications and filings with, any
regulatory authority or other governmental agency or instru-
mentality required in connection with the making and consum-
mation of the Offer and the execution, delivery and
performance of this Agreement, including the provisions
hereof relating to the sale by Bidder of Purchased
Interests, except for any such consents, approvals,
authorizations, orders, registrations and filings, which
(i) are required to be obtained by Whitehall in connection
with the purchase by Whitehall of the Purchased Interests or
(ii) the failure to obtain or make would not be reasonably
likely to materially impair or delay the making or
consummation of the Offer or the sale by Bidder of the
Purchased Interests contemplated hereby.
(g) Bidder has or will have, after taking into
account the proceeds of the sale of Purchased Interests to
Whitehall or its designated Affiliate, available funds, and
is authorized to use such funds under applicable law, to pay
the full purchase price of the Interests that it may become
obligated to purchase pursuant to the Offer and all related
fees and expenses.
Section 2.2. Representations and Warranties of
Whitehall. Whitehall hereby represents and warrants to
Bidder and Walton, on the date hereof and on the Closing
Date, that:
(a) Whitehall has been duly organized and is
validly existing as a limited partnership in good standing
under the laws of the State of Delaware.
(b) Whitehall has the requisite power and
authority and has duly taken all necessary action to
authorize the execution, delivery and performance of this
Agreement; and this Agreement has been duly executed and
delivered by, and constitutes a valid and binding agreement
of, Whitehall and, assuming due authorization, execution and
delivery hereof by the other parties hereto is enforceable
against Whitehall in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general
equity principles (including any limitation on the
enforceability of indemnities under applicable law).
(c) To the best knowledge of Whitehall, except as
disclosed in writing to Walton on or prior to the date
hereof, or with respect to matters arising after the date
hereof, except as disclosed in writing to Walton on or prior
to the Closing Date, there is no action, suit, investigation
or proceeding pending against or, to the knowledge of White-
hall, threatened against or affecting, Whitehall before any
court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contem-
plated by this Agreement or which has a reasonable possibil-
ity of being determined adversely to Whitehall and, if so
adversely determined, would have a Material Adverse Effect
on Whitehall or a material adverse effect on the ability of
Bidder to consummate the purchase of Interests pursuant to
the Offer or of Whitehall or its designated Affiliate to
consummate the purchase of the Purchased Interests
contemplated hereby.
(d) The execution, delivery and performance by
Whitehall of this Agreement, including the provisions hereof
relating to the purchase by Whitehall or its designated
Affiliate of Purchased Interests, (i) do not and will not
conflict with, or result in the acceleration of any
obligation under or in a breach of, or constitute a default
under, any of the provisions of any indenture, agreement or
undertaking to which Whitehall or any of its Affiliates is a
party or by which any of them is bound or to which the
property or assets of any of them is subject, or of the
limited partnership agreement or similar governing document,
as amended as of the date hereof, of Whitehall and (ii) do
not and will not contravene any federal, state or local law,
rule or regulation, or any order applicable to Whitehall or
any of its Affiliates of any court or of any other
governmental agency or instrumentality having jurisdiction
over any of them or any property of any of them, in each
case in any respect that would be reasonably likely to
materially impair the making or consummation by Bidder of
the Offer or the consummation by Whitehall or its designated
Affiliate of the purchase of the Purchased Interests
contemplated hereby.
(e) Whitehall has obtained, or is in the process
of obtaining and will obtain prior to the time at which it
is required to do so, all consents, approvals, authoriza-
tions and orders of, and has duly made all registrations,
qualifications and filings with, any regulatory authority or
other governmental agency or instrumentality required in
connection with the execution, delivery and performance of
this Agreement, including the provisions hereof relating to
the purchase by Whitehall or its designated Affiliate of
Purchased Interests, except for any such consents,
approvals, authorizations, orders, registrations and
filings, which the failure to obtain or make would not be
reasonably likely to materially impair or delay the purchase
by Whitehall of the Purchased Interests under this
Agreement.
(f) Whitehall has or will have available funds,
and is authorized to use such funds under applicable law, to
pay the full purchase price of the Purchased Interests and
all related fees and expenses.
(g) The information set forth in the Offering
Documents describing or relating to Whitehall or its
Affiliates or their respective officers, partners, employees
or representatives or their background do not and (as
amended or supplemented, if amended or supplemented) will
not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading; provided, however, that no representation or
warranty is given as to untrue statements or omissions that
fall within the scope of the exception to the indemnity set
forth in clause (i) of Section 5.1(b).
Article III
Covenants of the Parties
Section 3.1. Certain Covenants Relating to the
Offer and the Parties.
(a) Each of Bidder and Walton agrees to advise
Whitehall promptly of (i) the occurrence of any event that
could cause Bidder to withdraw, rescind, terminate or amend
the Offer or would permit Bidder to exercise any right not
to purchase Interests tendered thereunder, (ii) any proposal
or requirement to prepare, file, distribute, amend or
supplement any Offering Document, (iii) the issuance of any
comment or order or the taking of any other action by the
Commission or any other agency or court of competent
jurisdiction concerning the Offer (and, if in writing,
Bidder and Walton agree to furnish a copy thereof to
Whitehall), and (iv) any other information relating to the
Offer which Whitehall may from time to time reasonably
request.
(b) Each of Bidder and Walton agrees that (i) it
will furnish or cause to be furnished to Whitehall copies of
all Offering Documents and (ii) no Offering Documents
containing any reference to Whitehall, The Goldman Sachs
Group L.P. or Goldman, Sachs & Co. or any of their
respective Affiliates, or amending or supplementing any
Offering Document containing such a reference, may be
disclosed to any third party, circulated or referred to
publicly or filed with any governmental body, agency or
official without Whitehall's prior written consent provided
that Whitehall, The Goldman Sachs Group L.P. and Goldman,
Sachs & Co. shall reasonably cooperate to provide all
information and disclosures in the Offering Documents that
are required by applicable securities laws or the
Commission.
Section 3.2. Tag-Along Rights. (a) None of
Bidder, Walton or any of their respective Affiliates may
sell or otherwise dispose of all or any portion of the
Interests purchased by Bidder pursuant to the Offer unless
Whitehall or its designated Affiliate is given the oppor-
tunity to sell or dispose of all or a proportionate
percentage of the Purchased Interests and then owned by it
or any of its Affiliates concurrently with the afore-
mentioned sale or disposition on terms (including, without
limitation, the form and amount of, and the time of receipt
of, consideration therefor) identical to those applicable to
such aforementioned sale or disposition.
(b) Neither Whitehall nor any of its Affiliates
may sell or otherwise dispose of all or any portion of the
Purchased Interests unless Bidder is given the opportunity
to sell or dispose of all or a proportionate percentage of
the Interests purchased by Bidder pursuant to the Offer and
then owned by it or any of its Affiliates concurrently with
the aforementioned sale or disposition on terms (including,
without limitation, the form and amount of, and the time of
receipt of, consideration therefor) identical to those
applicable to such aforementioned sale or disposition.
(c) No opportunity shall be deemed given to
Bidder or Walton or to Whitehall or its designated Affili-
ate, as the case may be, for purposes of the preceding para-
graphs of this Section 3.2 unless (i) the party seeking such
sale or disposition (the "Transferor") and the person or
entity proposing to purchase Interests from the Transferor
(the "Buyer") shall have given written notice to the other
party (the "Offeree") setting forth in detail the terms of
the applicable proposed sale or disposition, and shall have
allowed the Offeree at least 10 days after such notice is
given within which to elect to exercise its rights contained
in this Section 3.2 by written notice thereof given to the
Transferor and the Buyer, (ii) if the Offeree does not elect
to exercise such rights within such period, the Transferor
in fact sells or disposes of Interests on the terms
described in the notice given by the Transferor and the
Buyer pursuant to clause (i) above within 3 business days
after the 10 day period referred to in clause (i) ends and
(iii) if the Offeree elects to exercise such rights, the
Buyer in fact purchases the Offeree's Interests (or a pro
rata share of such Interests based on the proportion of the
Transferor's Interests being sold in the transaction) on the
terms described in the notice given by the Transferor and
the Buyer pursuant to clause (i) above.
Section 3.3. Certain Additional Covenants.
(a) In the event Whitehall or its designated Affiliate
purchases the Purchased Interests pursuant to this
Agreement, each of Bidder, Walton and Whitehall agrees that,
without the prior written consent of the other Party, it
will not (and Walton will cause its Associates not to and
Whitehall will cause each successor to Whitehall not to) (i)
participate in, directly or indirectly, any solicitation of
proxies relating to the removal or replacement of the
general partner (the "General Partner") of the Target
Partnership (provided that the restriction in this Section
3.3(a) shall be inapplicable if it has been finally
judicially determined that the General Partner engaged in
willful misconduct, fraud or gross negligence) or (ii)
purchase or seek to purchase, directly or indirectly, any of
the assets of the Target Partnership, unless, in the case of
this clause (ii), the Target Partnership offers such assets
for sale in a public or competitive bidding or similar
arrangement.
(b) In the event Whitehall or its designated
Affiliate purchases the Purchased Interests pursuant to this
Agreement, none of Bidder, Walton or Whitehall will (and
Bidder and Walton will cause their respective Associates not
to and Whitehall will cause each successor to Whitehall not
to): (i) purchase, directly or indirectly, any outstanding
limited partnership interests or interests held by assignees
in the Target Partnership, (ii) acquire, directly or
indirectly, any interests in the General Partner or Arvida
Company, or (iii) purchase or seek to purchase, directly or
indirectly, any of the assets of the Target Partnership,
that the Target Partnership offers for sale in a public or
competitive bidding or similar arrangement, unless prior to
taking one or more of the actions described in clauses (i),
(ii) and (iii) of this Section 3.3(b), the Party or such
Affiliate that is contemplating such action offers the other
Party a reasonable opportunity to participate in such action
in substantially the same proportion as the number of
Purchased Interests purchased by Whitehall pursuant to this
Agreement bears to the number of Interests acquired by
Bidder pursuant to the Offer and held by Bidder after giving
effect to the purchase by Whitehall or its designated
Affiliate of Purchased Interests pursuant to this Agreement.
For purposes of this Section 3.3(b), each of the Parties
agrees that any additional limited partnership interests or
interests held by assignees in the Target Partnership,
assets of the Target Partnership or any interests in the
General Partner subsequently acquired by Walton and
Whitehall pursuant to this Section 3.3(b) shall not be
subject to any of the compensation or fee arrangements set
forth in this Agreement.
Section 3.4. Right of First Offer; Notices of
Certain Transfers. (a) During the period commencing on the
Closing Date and ending on the date that is six months after
the Closing Date, Bidder, Walton and its Affiliates may sell
or otherwise dispose of ("Transfer") all or any portion of
the Interests acquired by it pursuant to the Offer, and
Whitehall and its Affiliates may Transfer all or any portion
of the Purchased Interests, to any Person that is not an
Affiliate of such Party if, and only if, the provisions of
this Section 3.4 have been satisfied. If either Bidder or
Walton, or one of their respective designated Affiliates, or
Whitehall or one of its designated Affiliates (a "Seller")
desires to Transfer all or a portion of the Interests
purchased pursuant to the Offer, or any Purchased Interests
purchased pursuant to this Agreement, respectively, to any
other Person (other than an Affiliate of the Seller), the
Seller shall first give written notice (a "Notice of Sale")
to whichever of Bidder or Walton or one of their respective
designated Affiliates, or Whitehall, or one of its
designated Affiliates, is not the Seller (for purposes of
this Section 3.4, the "Offeree"), which Notice of Sale shall
state Sellers's desire to make such Transfer, the portion of
the Seller's Interests to which this Section 3.4 applies
proposed to be Transferred (the "Offered Interests") and the
price at which the Seller proposes to Transfer its Offered
Interests (the "Offer Price"). Each Notice of Sale shall
constitute an irrevocable offer by the Seller to sell to the
Offeree the Offered Interests for an amount in cash equal to
the Offer Price, which amount in cash shall be payable in
full at the closing of any such sale of any such Offered
Interests (the "Offer Terms").
(b) The Offeree may elect to purchase (or cause
an Affiliate designated by the Offeree to purchase) the
Offered Interests on the Offer Terms by delivering to the
Seller, within five (5) business days following the date the
Notice of Sale is received by Offeree, notice (a "Notice of
Purchase") stating that the Offeree (or such designated
Affiliate) irrevocably commits to purchase all of the
Offered Interests on the Offer Terms. A Notice of Purchase
shall be deemed to be an irrevocable commitment by the
Offeree to purchase (or to cause such designated Affiliate
to purchase) from the Seller on the Offer Terms all of the
Offered Interests pursuant to its Notice of Purchase.
(c) If the Offeree does not commit to purchase
the entire Offered Interests on the Offer Terms within the
time period specified in Section 3.4(b), the Seller may not,
prior to the date that is six months after the Closing Date,
Transfer the entire Offered Interests to one or more Persons
that are not Affiliates of the Seller unless the price paid
for such Interests is at least equal to or higher than 95%
of the Purchase Price included in the Offer Terms. For the
purposes of this Section 3.4(c), the value of all or any
portion of a purchase price that is payable by a Person
other than the Offeree other than in cash (including equity
securities or indebtedness) shall be determined by the
Seller in its reasonable discretion.
(d) The closing of any purchase by the Offeree of
any Offered Interests pursuant to Section 3.4(b) shall take
place on a date not earlier than ten (10) days nor later
than thirty (30) days following the date of the Notice of
Purchase delivered in accordance with Section 3.4(b), or as
the Offeree and the Seller shall mutually agree. The
closing shall be held at 10:00 a.m., local time, at the
offices of Mayer, Brown & Platt, 190 South LaSalle Street,
Chicago, Illinois 60603 (or at such other place and time as
the parties hereto may agree). The Offeree shall give at
least five (5) days prior notice of such date to the Seller.
At such closing, (i) the Seller shall deliver to the Offeree
such instruments as may be necessary to transfer and assign
all rights, including voting rights, held by Seller with
respect to the Offered Interests, (ii) the Offeree shall
deliver to the Seller the consideration to be paid for the
Offered Interests in accordance with the Offer Terms, and
(iii) the Seller and the Offeree shall execute such other
documents and take such other action as shall be reasonably
necessary to consummate the purchase and sale of the
applicable Offered Interests on the terms contemplated by
the Offer Terms.
(e) Notwithstanding anything to contrary
contained herein, the provisions of this Section 3.4 shall
not apply to any Transfer by a Seller to any of its
Affiliates or to any Transfer by any Affiliate of such
Seller to such Seller or any Affiliate of such Seller.
(f) In the event that after the expiration of the
period specified in clause (a) of this Section 3.4, a Seller
or any Affiliate of such Seller determines to Transfer
(other than a Transfer of Interests that was the subject of
a Notice of Sale pursuant to Section 3.4(c)) all or any
portion of the Interests acquired pursuant to the Offer or
this Agreement, as applicable, to a Person that is not an
Affiliate of such Seller, the Seller or such Affiliate will
give the Offeree written notice of such decision and of the
number of Interests that the Seller or such Affiliate
desires to Transfer, which notice shall be delivered at
least five business days before the Seller accepts any offer
to purchase such Interests. Upon receipt of such notice,
the Offeree shall be entitled to offer to purchase all or
any portion of such Interests on such terms and conditions
as the Offeree may determine, but the Seller shall have no
obligation whatsoever to accept such offer, and the Seller
or such Affiliate may elect to sell such Interests to any
other Person on whatever terms and conditions it may choose
in its sole discretion.
Section 3.5. Conditions to Offer. Prior to the
Closing, Bidder and Walton will provide Whitehall written
notice of any condition set forth in the Offer that will not
(without giving effect to any amendment thereto or waiver
thereof) be satisfied in full. If Walton shall inform
Whitehall in writing by facsimile transmission (after
confirming receipt thereof by the intended recipients) at
least five days prior to the expiration of the Offer of its
intent to amend or waive any condition, Whitehall shall be
deemed to have consented thereto unless Whitehall shall
notify Walton or Bidder in writing at least two days prior
to the expiration of the Offer as to any amendments or
waivers to conditions of the Offer as to which it does not
consent.
Section 3.6. Settlements. Except as set forth in
the proviso hereto, under no circumstances, either prior to
the Closing Date or thereafter, may a Party agree to any
settlement of any Litigation (as defined in Section 4.2(v))
arising in connection with the Offer without the consent of
the other affected Party or Parties, which consent may be
given or withheld in the sole discretion of such affected
Party or Parties, unless as part of that settlement each
other Party and its respective Affiliates receive an
unconditional release of liability from the third party or
third parties to such Litigation and each other Party has no
monetary obligations in connection with such settlement
(including any monetary obligations arising in connection
with such settlement pursuant to the sharing of expenses
under Section 6.4); provided, however, this Section 3.6
shall not be applicable if the circumstances set forth in
Section 6.4(b) have occurred.
Section 3.7 Financial Advisors. Each of the
Parties hereto agrees that to the extent the Parties seek to
hire an investment bank for any financial or related
services with respect the Interests owned by such Parties,
or to the extent the Parties are aware that the Target
Partnership or any of its subsidiaries or Arvida Company is
seeking to hire any investment bank for any financial or
related services, the Parties will retain or use their
reasonable good faith efforts to cause the Target
Partnership (subject to any fiduciary duties exercised in
reasonable good faith judgment) to retain (including,
without limitation, the voting of Interests, if applicable),
as applicable, Goldman, Sachs & Co. or one or more of its
Affiliates to provide such services. If Goldman, Sachs &
Co. or such Affiliate agrees to accept any such engagement,
Goldman, Sachs & Co. and/ or such Affiliate shall be
entitled to receive its customary indemnification, and fees
and commissions at rates that are consistent with the then
prevailing rates for such services charged by other
providers of such services, for acting in such capacity.
Article IV
Conditions to Closing
Section 4.1. Conditions to Obligations of
Parties. The respective obligations of the parties to
consummate the purchase and sale of Purchased Interests
pursuant to this Agreement are subject to the fulfillment of
each of the following conditions:
(i) Purchase of Interests. All of the
conditions set forth in the Offer (without giving
effect to any amendment thereto to which Whitehall does
not consent either in writing or is not deemed to have
consented to pursuant to Section 3.4) shall have been
satisfied and Bidder or its designated Affiliate shall
have purchased Interests pursuant to the Offer.
(ii) Regulatory Consents. All filings to be
made as contemplated by Section 2.1(f) and 2.2(e) prior
to the Closing by Bidder or Walton or any of their
respective Associates, or by Whitehall or any of its
Affiliates, with, and all consents, approvals and
authorizations to be obtained as contemplated by
Section 2.1(f) and 2.2(e) prior to the Closing by
Bidder or Walton or any of their respective Associates,
or by Whitehall or any of its Affiliates, from, any
domestic or foreign governmental or regulatory
authority, agency, commission, body or other govern-
mental entity ("Governmental Entity") (collectively,
"Governmental Consents") in connection with the execu-
tion and delivery of this Agreement and the consumma-
tion of the transactions contemplated hereby by Bidder
or Walton or any of their respective Associates, and by
Whitehall or its Affiliates shall have been made or
obtained (as the case may be).
Section 4.2. Conditions to Obligations of
Whitehall. The obligations of Whitehall to consummate the
purchase of the Purchased Interests pursuant to this
Agreement are also subject to the satisfaction or waiver by
Whitehall prior to the Closing of the following conditions:
(i) Representations and Warranties. The
representations and warranties of Bidder and Walton set
forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of
the Closing Date, and Whitehall shall have received a
certificate signed on behalf of Bidder and Walton by a
Principal of Walton to such effect.
(ii) Performance of Obligations of Bidder
and Walton. Each of Bidder and Walton shall have
performed in all material respects all obligations
required to be performed by them under this Agreement
at or prior to the Closing, and Whitehall shall have
received a certificate signed on behalf of Bidder and
Walton by a Principal of Walton to such effect.
(iii) Substitute Holder. Whitehall shall
have received notification from the Target Partnership
(or its duly authorized transfer agent) that, upon
purchase of the Purchased Interests pursuant to
Article I, Whitehall or its designated Affiliate will
have full rights of ownership as to the Purchased
Interests and that it will be admitted as a substitute
holder of the Purchased Interests.
(iv) Tax Status. Whitehall shall have
confirmed to its reasonable satisfaction that the
purchase by Bidder of Interests pursuant to the Offer
and the purchase by Whitehall of Purchased Interests
pursuant to this Agreement shall not result in a
termination of the Target Partnership for tax purposes
and that Interests in the Target Partnership are not
(and will not, as a result of such purchases or any
other purchases that are made or contemplated at or
prior to the Closing Date, become) treated as "publicly
traded" within the meaning of Section 7704 of the
Internal Revenue Code of 1986, as amended (the "Code").
(v) Litigation. No action, suit,
investigation or proceeding (collectively "Litigation")
shall be pending or threatened that could result in any
loss, claim, expense, damage or liability (including
any such claims that would arise under Section 6.4 with
respect to the sharing of expenses) except for those
which present risks or potential costs that Whitehall,
in its sole discretion, determines it is willing to
bear.
Section 4.3. Conditions to Obligations of Bidder
and Walton. The obligations of Bidder and Walton to con-
summate the sale of the Purchased Interests pursuant to this
Agreement are also subject to the satisfaction or waiver by
Walton prior to the Closing of the following conditions:
(i) Representations and Warranties. The
representations and warranties of Whitehall set forth
in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, and Bidder
and Walton shall have received a certificate signed on
behalf of Whitehall by the general partner of Whitehall
to such effect.
(ii) Performance of Obligations of
Whitehall. Whitehall shall have performed in all
material respects all obligations required to be per-
formed by it under this Agreement at or prior to the
Closing, and Bidder and Walton shall have received a
certificate signed on behalf of Whitehall by the
general partner of Whitehall to such effect.
Article V
Indemnification and Contribution; Survival
Section 5.1. Indemnification and Contribution.
(a) Bidder and Walton (the "Walton Parties"), jointly and
severally, shall indemnify and hold harmless each of
Whitehall, The Goldman Sachs Group L.P., Goldman, Sachs &
Co. and each of their respective Affiliates, and each of the
present or former partners, directors, officers,
fiduciaries, agents, employees and controlling persons (if
any) of any of the foregoing (collectively, the "Whitehall
Indemnitees"), against any loss, claim, expense (including
any expense incurred pursuant to Section 6.4), damage or
liability (or any action in respect thereof) joint or
several, to which a Whitehall Indemnitee may become subject,
insofar as such loss, claim, expense, damage or liability or
action in respect thereof arises out of or is based upon
(i) any untrue statement of a material fact contained in any
Offering Document, or the omission to state in any Offering
Document a material fact required to be stated therein or
necessary in order to make the statements made, in the light
of the circumstances under which they were made, not
misleading, except to the extent that any such loss, claim,
expense, damage, liability or action arose out of or is
based upon an untrue statement or omission (x) for which
Whitehall has indemnified the Walton Parties as provided
below, (y) which is accurately derived from public documents
filed by the Target Partnership so long as the Walton
Parties did not know that such statement was untrue or that
such omission existed or (z) of which Whitehall or its
Affiliates had actual knowledge (without any duty of
investigation) at the time it approved the use of such
Offering Document pursuant to Section 3.1(b)), (ii) any
violation of law by a Walton Party, its Associates or the
respective officers, members, partners, employees or
representatives of the foregoing or (iii) any breach by
either or both of the Walton Parties of any of its or their
representations, warranties, covenants or agreements
contained herein; provided, however, that in the event
Whitehall or its designated Affiliate purchases Interests
from Bidder pursuant to this Agreement, Whitehall and the
Whitehall Indemnitees shall be deemed to have waived the
indemnification provided by this paragraph (A) with respect
to claims that have already been specifically asserted prior
to the Closing Date in Litigation that has been commenced
prior to the Closing Date or with respect to such claims if
reasserted after the Closing Date in any Litigation based
upon materially similar fact patterns and (B) with respect
to any untrue statement of a material fact contained in any
Offering Document, or the omission to state in any Offering
Document a material fact required to be stated therein or
necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading
("Misleading Statements"), if Whitehall had actual knowledge
(without any duty of investigation) of such untrue statement
or omission at or prior to the Closing.
(b) Whitehall shall indemnify and hold harmless
the Walton Parties and their respective Affiliates, and each
of the present or former partners, members, directors,
officers, fiduciaries, agents, employees and controlling
persons (if any) of the foregoing (collectively, the "Walton
Indemnitees"), against any loss, claim, expense, damage or
liability (or any action in respect thereof), joint or
several, to which a Walton Indemnitee may become subject,
insofar as such loss, claim, expense, damage or liability or
action in respect thereof arises out of or is based upon
(i) any untrue statement of a material fact contained in any
Offering Document, or the omission to state in any Offering
Document a material fact required to be stated therein or
necessary in order to make the statements made, in the light
of the circumstances under which they were made, not
misleading, but only to the extent that any such loss,
claim, expense, damage, liability or action arose out of or
is based upon an untrue statement or omission of Whitehall
or its Affiliates describing or relating to Whitehall, its
Affiliates or their respective officers, partners, employees
or representatives or their background and except to the
extent that any such loss, claim, expense, damage, liability
or action arose out of or is based upon an untrue statement
or omission of which Walton or its Associates had actual
knowledge (without any duty of investigation) at the time it
first used such Offering Document, (ii) any violation of law
by Whitehall, its Affiliates or the respective officers,
partners, employees or representatives of the foregoing or
(iii) any breach by Whitehall of any of its representations,
warranties, covenants and agreements contained herein;
provided, however, that in the event Whitehall or its
designated Affiliates purchases Interests from Walton
pursuant to this Agreement, Bidder, Walton and the Walton
Indemnitees shall be deemed to have waived the
indemnification provided by this paragraph (A) with respect
to claims that have already been specifically asserted prior
to the Closing Date in Litigation that has been commenced
prior to the Closing Date or with respect to such claims if
reasserted after the Closing Date in any Litigation based
upon materially similar fact patterns and (B) Misleading
Statements in the Offering Documents of Whitehall or its
Affiliates describing or relating to Whitehall, its
Affiliates or their respective officers, partners, employees
or representatives or their background if Bidder or Walton
had actual knowledge (without duty of investigation) of such
Misleading Statements at or prior to the Closing.
(c) Each party entitled to indemnification under
this Article V shall give notice as promptly as reasonably
practicable to each party from which such indemnification
may be sought of any claims asserted against or any action
commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any
liability which it may have otherwise than on account of
this indemnity agreement except to the extent the
indemnifying party has been prejudiced in any material
respect by such failure. An indemnifying party may
participate at its own expense in the defense of any such
action. If it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with
any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it
and reasonably approved by the indemnified parties defendant
in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be
legal defenses available to them which are different from or
in addition to those available to such indemnifying party.
If an indemnifying party assumes the defense of such action,
the indemnifying parties shall not be liable for any fees
and expenses of counsel for the indemnified parties retained
by an indemnified party which are incurred thereafter in
connection with such action. In no event shall the
indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in
connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances.
(d) If the indemnification provided for in this
Section 5.1 is held to be unenforceable by any court or
tribunal of competent jurisdiction (although otherwise
applicable by its terms in respect of any losses, damages,
expenses, liabilities or claims (or actions in respect
thereof) referred to in subsection (a) or (b)), then each
indemnifying person shall contribute to the amount paid or
payable by such indemnified person as a result of such
losses, damages, expenses, liabilities or claims (or actions
in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Walton Parties on the one
hand and Whitehall on the other in connection with any
statements or omissions or any other matters which resulted
in such losses, damages, expenses, liabilities or claims (or
actions in respect thereof) and any other relevant equitable
considerations. The relative fault of the Walton Parties on
the one hand and Whitehall on the other in connection with
any statements or omissions shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by, or relating to, the Walton Parties and/or their
Associates or Whitehall and/or its Affiliates and the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission. The Walton Parties and Whitehall agree that it
would not be just and equitable if contribution pursuant to
this subsection (d) were determined by pro rata allocation
or by any other method of allocation which does not take
account of the equitable considerations referred to in this
subsection (d).
(e) The rights to indemnification provided in
this Section 5.1 shall not be exclusive of any other right
which any party may have or hereafter acquire under this
Agreement or otherwise. The agreements contained in this
Section 5.1 shall survive any termination of this Agreement
or acquisition of Interests, whether pursuant to this
Agreement or otherwise. To the extent any action causes a
party to incur legal expenses, some of which are covered by
the indemnity provisions of this Article V and some of which
are not so covered, counsel for such party shall make a good
faith allocation of the indemnifiable and non-indemnifiable
expenses and such allocation shall be used for purposes of
this Article V so long as such counsel's allocation is not
unreasonable; it being understood that such counsel shall
not be required to record time in any manner different from
how such counsel would normally do so.
Article VI
Fees, Other Payments and Expenses
Section 6.1. Acquisition Fee. At Closing, White-
hall shall pay or cause to be paid to Walton a fee equal to
2.5% of the aggregate purchase price paid by Whitehall or its
designated Affiliate for the Purchased Interests plus the
portion of the Initial Expenses covered by Section 6.4 which
are borne by Whitehall and its Affiliates; provided, that
for purposes of this Section 6.1, the Initial Expenses
covered by Section 6.4 shall be deemed not to exceed
$700,000.
Section 6.2. Annual Payment. (a) Whitehall
shall, subject to Section 6.2(c), pay to Walton, on
March 31, June 30, September 30 and December 31 of each year
(each such date as well as the Return of Investment Date (as
defined herein) being referred to as a "Payment Date"),
commencing with the first Payment Date following the Closing
Date and ending on the earlier of the Return of Investment
Date and the date of a Triggering Sale (as defined in
Section 6.3), an amount equal to (x) .5 of 1% of the weighted
average Remaining Investment in effect from time to time
during the period from and including the preceding Payment
Date to but excluding the then current Payment Date (or, if
the then current Payment Date is the first Payment Date
following the Closing Date, the period from and including
the Closing Date to but excluding the then current Payment
Date) times (y) the fraction of a full year represented by
such period. For purposes hereof, the term "Remaining
Investment" as in effect on any day means the greater of (I)
the aggregate price paid by Whitehall or its designated
Affiliate to purchase Purchased Interests pursuant to
Article I plus the portion of the Initial Expenses covered
by Section 6.4 which are borne by Whitehall and its
Affiliates minus the aggregate of all amounts received from
third parties unaffiliated with Whitehall in respect of the
Purchased Interests (including distributions on and proceeds
from the sale of Purchased Interests) ("Returned Amounts")
prior to such date and (II) zero, and the term "Return of
Investment Date" means the date on which the Remaining
Investment becomes zero.
(b) Upon receipt by Whitehall and its Affiliates
of the first Returned Amounts which (after taking into
account all prior Returned Amounts received by Whitehall and
its Affiliates) is greater than the 15% Return Amount,
Whitehall shall, subject to Section 6.2(c), pay to Walton an
additional amount equal to the cumulative amount paid by
Whitehall or its Affiliates to Walton under Section 6.2(a).
(c) If, after giving effect to all Returned
Amounts received prior to and upon a Triggering Sale, the
15% Return Amount is greater than zero, Walton shall pay to
Whitehall the lesser of (i) the amount needed to cause the
15% Return Amount (after giving effect to the Returned
Amounts received upon such Triggering Sale) to equal zero
and (ii) the aggregate payments theretofore made by
Whitehall to Walton pursuant to Section 6.2(a) and (b).
Section 6.3. Exit Payment. The parties agree
that Whitehall will pay Walton or its designated Associate
fees from distributions of Returned Amounts, upon receipt of
Returned Amounts in amounts equal to 20% of the excess over
a 15% internal rate of return, compounded annually, and 25%
of the excess over a 20% internal rate of return, compounded
annually. To accomplish the foregoing, the parties agree as
follows:
(a) Upon receipt by Whitehall and its Affiliates
on any day of Returned Amounts which exceed the then
applicable 15% Return Amount, Whitehall shall pay to Walton
20% of the Applicable Band Amount for such day. As used
herein, "Applicable Band Amount" for any day means (i) the
lesser of the Returned Amounts received that day and the
then applicable 20% Return Amount minus (ii) the then
applicable 15% Return Amount.
(b) Upon receipt by Whitehall and its Affiliates
on any day of Returned Amounts which exceed the then
applicable 20% Return Amount, Whitehall shall pay to Walton
25% of the amount by which such Returned Amounts exceed such
20% Return Amount.
(c) Walton agrees that, if Whitehall or its
Affiliates shall, after making any payment required under
Section 6.2(b) or 6.3(a) or (b), be required to pay any
amounts of a type covered by clause (A)(y) of the definition
of "15% Return Amount" below, any amounts due under
Section 6.3(a) or (b) (and any amounts due under
Section 6.2(c)) shall be recalculated to take proper account
of such payments and Walton shall, if necessary, repay to
Whitehall any overpayments by Whitehall (or underpayments by
Walton) thereunder.
(d) As used herein, the following terms have the
meanings specified below:
(i) "15% Return Amount" means on any day the
greater of (I) the amount which, if received as
Returned Amounts on such day, would result in
(A)(x) the aggregate of all Returned Amounts received
by Whitehall and its Affiliates, in each case
discounted from the respective dates of receipt to the
Closing Date at a 15% per annum discount rate, minus
(y) the aggregate of all amounts paid or payable by
Whitehall and its Affiliates to third parties
unaffiliated with Whitehall as a result of owning or
selling the Purchased Interests (including fees paid or
payable pursuant to Section 6.2 and any litigation or
other liabilities or expenses resulting from
Whitehall's entering into this Agreement and
transactions contemplated hereby, but excluding fees
and other amounts paid or payable pursuant to
Section 6.1 or 6.3 and the portion of the Initial
Expenses covered by Section 6.4 which are borne by
Whitehall and its Affiliates), in each case discounted
from the respective dates of payment to the Closing
Date at a 15% per annum discount rate, exactly
equalling (B) the Initial Investment and (II) zero.
For purposes of this definition, discounting an amount
from the date of receipt or payment to the Closing Date
at a 15% per annum discount rate means dividing such
amount by 1.15 raised to a power equal to the number of
years (expressed as a fraction if not a whole number of
years) elapsed during the period from and including the
Closing Date to but excluding such date of receipt or
payment.
(ii) "20% Return Amount" has a meaning
identical to that set forth in the definition of 15%
Return Amount, except that for purposes of determining
the 20% Return Amount (x) the references in such
definition to "15%" and "1.15" shall be deemed instead
to be references to "20%" and "1.2", respectively, and
(y) any amounts paid or payable by Whitehall pursuant
to Section 6.3(a)(i) on or prior to the day in question
shall be included as expenses for purposes of the
calculation contemplated by clause (y) in this
definition.
(iii) "Initial Investment" means the aggregate
price paid for the Purchased Interests pursuant to
Article I plus the fee paid at Closing pursuant to
Section 6.1 plus the portion of the expenses covered by
Section 6.4 which were borne by Whitehall and its
Affiliates.
(iv) "Triggering Sale" means a sale or other
disposition of Purchased Interests to a third party, or
a distribution in respect of Purchased Interests
(including, without limitation, by means of a
liquidation or dissolution, merger, consolidation or
sale of all of the assets of the Target Partnership),
that results in Whitehall and its Affiliates owning
either no Purchased Interests, or Purchased Interests
which in the aggregate have no more than an immaterial
value (as reasonably determined by Whitehall and agreed
to by Walton).
Section 6.4. Expenses.
(a) Within 15 days after the Closing or after
termination of the Offer without the purchase of any
Interests pursuant thereto, Whitehall and Walton shall
determine the total of the out-of-pocket expenses paid by
each of them and each of their respective Affiliates to
unaffiliated third parties in connection with the Offer and,
if applicable, the purchase and sale of Purchased Interests
pursuant to this Agreement, including without limitation,
those incurred in the preparation and negotiation of this
Agreement and the preparation of the Offering Documents
(including legal, solicitation, mailing and printing
expenses, but excluding any litigation-related expenses,
damages, settlement costs, accords or other liabilities
(collectively the "Initial Expenses")) and litigation-
related expenses, damages, settlement costs, accords or
other liabilities arising in connection therewith
(collectively, "Litigation Costs"), provided that the
Initial Expenses and Litigation Costs shall not include
(i) those matters covered by the indemnification and
reimbursement provisions of Article V hereof and (ii) the
purchase price for any Interests purchased pursuant to the
Offer or this Agreement. Promptly thereafter, Whitehall
shall pay or cause to be paid to Walton, or Walton shall pay
or cause to be paid to Whitehall, the amount necessary so
that, after giving effect thereto, Whitehall and its
Affiliates shall have borne 80% and Walton and its
Affiliates shall have borne 20% of the Initial Expenses and
Litigation Costs incurred through the Closing Date. At the
end of each month following the Closing Date, Whitehall and
Walton shall determine, and agree to pay or cause to be
paid, to the other Party, as appropriate any Litigation
Costs and Initial Expenses incurred subsequent to the
Closing Date so that, subject to the indemnification
provisions of Article V such Litigation Costs and Initial
Expenses are borne by Walton and Whitehall in the foregoing
respective percentages. Notwithstanding anything in the
foregoing to the contrary, it is understood and agreed that
no Party shall refuse to share expenses in the manner set
forth in the preceding two sentences on the basis that the
matter is covered by the indemnification and reimbursement
provisions of Article V hereof, and no obligations to
reimburse a Party for sharing in such expenses shall arise,
until such time as the Parties shall otherwise agree or a
court of competent jurisdiction shall have issued a
judgment, ruling or order that would make the
indemnification and reimbursement provisions applicable to
such expenses.
(b) In the event that Whitehall elects not to
purchase Interests pursuant to this Agreement and Bidder or
its designated Affiliate purchases Interests pursuant to the
Offer, the sharing arrangements referred to in paragraph (a)
above shall not be applicable, and each of the Parties shall
be responsible for their own expenses, subject only to the
provisions of Article V hereof; it being further understood
that if any Party has made payments on behalf of any other
Party, such other Party shall promptly reimburse the other
therefor.
Section 6.5 Tax Treatment of Certain Matters.
(a) The parties do not intend that the
relationship created by this Agreement constitute a
partnership, joint venture or other association, except that
the parties acknowledge that, solely for purposes of
Section 761 of the Internal Revenue Code of 1986, as amended
(the "Code"), the relationship arising after the Closing
created by Sections 6.2, 6.3 and 6.4 of the Agreement
between Walton and Whitehall constitutes a partnership
between them for Federal, state and local income tax
purposes. Whitehall is the tax matters partner of the
partnership created for tax purposes, and Whitehall and
Walton agree that for tax purposes capital accounts shall be
maintained in accordance with the Treasury Regulations
promulgated under Section 704(b) of the Code and income and
loss shall be allocated in a manner which properly reflects
the payments required hereby. Whitehall as the tax matters
partner of the partnership created for tax purposes between
Whitehall and Walton shall afford Walton a reasonable
opportunity to review and comment upon such partnership's
tax returns (or such information as Whitehall provides to
its accountants in connection with the preparation of the
partnership's tax returns), provided that Walton shall
provide any comments it has in writing to Whitehall within
five (5) business days of receipt of the draft return or
such other information.
(b) The tax partnership shall be dissolved upon
the Bankruptcy or Insolvency of Walton or Whitehall. For
purposes of this Section 6.5, "Bankruptcy or Insolvency"
shall be deemed to have occurred with respect to Walton or
Whitehall (each, a "tax partner") if either tax partner
shall file in any court pursuant to any statute of the
Untied States or of any state a petition in bankruptcy or
insolvency, or shall file for reorganization or for the
appointment of a receiver or a trustee of all or a material
portion of such tax partner's property, or if any such tax
partner shall make an assignment for the benefit of
creditors, admit in writing its inability to pay its debts
as they fall due or seek, consent to or acquiesce in the
appointment of a trustee, receiver or liquidator of any
material portion of its property. If there shall be filed
against any tax partner in any court pursuant to any statute
of the United States or of any state, a petition in
bankruptcy or insolvency, or for reorganization, or for the
appointment of a receiver or trustee of all or a substantial
portion of such tax partner's property, and within sixty
days after the commencement of any such proceeding, such
petition shall not have been dismissed, then such tax
partner against whom such petition has been filed shall be
bankrupt or insolvent for purposes of this Agreement.
Notwithstanding the foregoing, the dissolution of the tax
partnership pursuant to this Section 6.5 shall not release
any party hereto of any payment obligation pursuant to this
Article 6.
Article VII
Termination
Section 7.1. Termination by Mutual Consent. This
Agreement may be terminated and the purchase contemplated
hereby may be abandoned at any time prior to the Closing by
mutual written consent of Bidder, Walton and Whitehall.
Section 7.2. Termination by either Bidder and
Walton or Whitehall. This Agreement may be terminated and
the purchase contemplated hereby may be abandoned at any
time prior to the Closing by either Bidder and Walton or by
Whitehall if (i) the Offer shall be terminated by Bidder; or
(ii) the Closing shall not have been consummated by
September 30, 1996 (the "Termination Date"), provided,
however, that if either party determines that additional
time is necessary in order to forestall any action to
restrain, enjoin or prohibit the consummation of the trans-
actions contemplated hereby by any Governmental Entity, the
Termination Date may be extended by such party to a date not
beyond December 31, 1996, or (iii) any order permanently
restraining, enjoining or otherwise prohibiting the Closing
shall become final and non-appealable.
Section 7.3. Termination by Whitehall. This
Agreement may be terminated and the purchase contemplated
hereby may be abandoned at any time prior to the Closing by
Whitehall if (i) there has been a material breach by Bidder
or Walton of any material representation, warranty, covenant
or agreement contained in this Agreement that is not curable
or, if curable, is not cured within 30 days after written
notice of such breach is given by Whitehall to Bidder or
Walton or (ii) a condition to Whitehall's obligation to
consummate the purchase of the Purchased Interests
contemplated hereby cannot, by its nature, be satisfied
prior to the Termination Date.
Section 7.4. Termination by Bidder and Walton.
This Agreement may be terminated and the purchase contem-
plated hereby may be abandoned at any time prior to the
Closing by Bidder and Walton if (i) there has been a
material breach by Whitehall of any material representation,
warranty, covenant or agreement contained in this Agreement
that is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by Bidder
or Walton to Whitehall or (ii) a condition to the obligation
of the Bidder and Walton to consummate the sale of the
Purchased Interests contemplated hereby cannot, by its
nature, be satisfied prior to the Termination Date.
Section 7.5. Effect of Termination and
Abandonment. In the event of termination of this Agreement
and the abandonment of the purchase contemplated hereby
pursuant to this Article VII, this Agreement (other than
Section 3.6, Article V, Section 6.4 and this Section 7.5)
shall be of no further force or effect with no liability of
any party hereto (or any of its members, directors,
partners, officers, employees, agents, legal and financial
advisors or other representatives); provided, however,
except as otherwise provided herein, no such termination
shall relieve any party hereto of any liability or damages
resulting from any breach of any representation, warranty,
covenant or agreement contained in this Agreement; provided,
further, that Sections 3.6, 6.4, this Section 7.5 and the
provisions contained in Article V of this Agreement shall
survive until the expiration of the longest applicable
statute of limitations (including extensions and waivers)
with respect to the matter for which an indemnified party
would be entitled to be indemnified.
Article VIII
Miscellaneous
Section 8.1. Modification or Amendment. Subject
to the provisions of applicable law, at any time prior to
the Closing, the parties hereto may modify or amend this
Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
Section 8.2. Waiver of Conditions. The condi-
tions to each of the parties' obligations to consummate the
transactions contemplated by this Agreement are for the sole
benefit of such party and may be waived by such party in
whole or in part to the extent permitted by applicable law.
No failure by any party to insist upon the strict perfor-
mance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon
a breach thereof shall constitute a waiver of any such
breach or of any other covenant, duty, agreement or
condition.
Section 8.3. Counterparts. This Agreement may be
executed in any number of counterparts, each such counter-
part being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
Section 8.4. GOVERNING LAW AND VENUE; WAIVER OF
JURY TRIAL. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN
AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereto agree that any litigation
relating to this Agreement may be brought in a federal court
in the Eastern Division of the Northern District of Illinois
or the Southern District of New York. The parties hereby
consent to and grant any such court jurisdiction over the
person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner
provided in Section 8.5, or in such other manner as may be
permitted by law, shall be valid and sufficient service
thereof.
Section 8.5. Notices. Any notice, request,
instruction or other document to be given hereunder by any
party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage
prepaid, or by facsimile:
If to Bidder or to Walton:
William J. Abrams
Walton Street Capital, L.L.C.
900 North Michigan Avenue, 19th Floor
Chicago, Illinois 60611
Facsimile Number: (312) 915-2881
With a copy to:
Edward J. Schneidman
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Facsimile Number: (312) 701-7711
If to Whitehall:
Ralph Rosenberg
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Facsimile Number: (212) 357-5505
With a copy to:
Alan J. Sinsheimer
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile Number: (212) 558-3588
or to such other persons or addresses as may be designated
in writing by the party to receive such notice as provided
above.
Such notice will be effective when delivered, if
in person, or when received, if delivery is made other than
in person.
Section 8.6. Entire Agreement. This Agreement
constitutes the entire agreement, and supersedes all other
prior agreements, understandings, representations and
warranties both written and oral, among the parties, with
respect to the subject matter hereof; provided, however,
that the Confidentiality Agreement dated as of May 22, 1996
by and between Whitehall and Walton shall continue in effect
in accordance with its terms except to the extent of any
inconsistency between any of the provisions of such
Confidentiality Agreement and this Agreement, in which case
the provisions of this Agreement shall govern.
Section 8.7. No Third Party Beneficiaries.
Except as provided in Article V (Indemnification and
Contribution; Survival), this Agreement is not intended to
confer upon any person or entity other than the parties
hereto any rights or remedies hereunder.
Section 8.8. Severability. The provisions of
this Agreement shall be deemed severable and the invalidity
or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and
purpose of such invalid or unenforceable provision and
(b) the remainder of this Agreement and the application of
such provision to other persons or entities or circumstances
shall not be affected by such invalidity or unenforceabil-
ity, nor shall such invalidity or unenforceability affect
the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 8.9. Interpretation. The headings herein
are for convenience of reference only, do not constitute
part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a
reference in this Agreement is made to a Section or Article,
such reference shall be to a Section or Article of this
Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation."
Section 8.10. Successors; Assignment. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administra-
tors, successors, legal representatives and permitted
assigns. This Agreement shall not be assignable by opera-
tion of law or otherwise; provided, however, that Whitehall
may designate, by written notice to Bidder, an Affiliate of
Whitehall to make the purchase of the Purchased Interests
contemplated hereby, in the event of which, all references
herein to Whitehall shall be deemed references to such
Affiliate except that all representations and warranties
made herein with respect to Whitehall as of the date of this
Agreement shall be deemed representations and warranties
made with respect to such Affiliate as of the date of such
designation. Any such designation shall not relieve White-
hall of its obligation under this Agreement.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of
the parties hereto as of the date first written above.
WALTON STREET CAPITAL ACQUISITION
CO. III, L.L.C
By: /s/ Jeff Quicksilver
Manager
WALTON STREET CAPITAL, L.L.C.
By: /s/ Jeff Quicksilver
Manager
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VII
By: WH Advisors, L.P. VII
Its General Partner
By: WH Advisors, Inc. VII
Its General Partner
By: /s/ David Hamamoto
Name: David Hamamoto
Title: Vice President
EXHIBIT (c)(2)
CONFIDENTIALITY AGREEMENT
June 17,
1996
Walton Street Real Estate Fund I, L.L.C.
Walton Street Capital, L.L.C.
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
Gentlemen:
In connection with the consideration of a public cash tender offer (the
"Offer") by
Walton Street Real Estate Fund I, L.L.C. or by Walton Street Capital, L.L.C.
(an entity in which Neil Bluhm is a Principal), or by any entity controlled by
either such party or any of their Principals, to acquire limited partnership
interests (the "Interests") in Arvida/JMB Partners, L.P. (the "Partnership")
for which
Arvida/JMB Managers, Inc. ("Managers") acts as general partner, you have
requested information concerning the Partnership. As a condition to, and in
consideration of, your being furnished such information, you agree (1) to
treat any information (the "Confidential Information") concerning the
Partnership
(whether prepared by any of the directors, partners, affiliates, officers,
employees, representatives or advisors (collectively, "Representatives") of
the Partnership
or its general partner or any of its affiliates, or otherwise and irrespective
of the form of communication) that is furnished to you or any of your
Representatives
by or on behalf of the Partnership in accordance with the provisions of this
letter agreement and (2) to take or abstain from taking certain other actions
herein set
forth. The term "Confidential Information" shall be deemed to include notes,
analyses, compilations, studies, interpretations, memoranda or other documents
(whether in paper or electronic format) prepared by you or any of your
Representatives that contain, reflect or are based upon, in whole or in part,
the
Confidential Information. The term "Confidential Information" does not
include information that (i) is or becomes generally available to the public
other than as
a result of a disclosure by you or any of your Representatives or (ii) becomes
available to you on a non-confidential basis from a source other than the
Partnership or any of the Representatives of the Partnership, provided that
such source is not bound by a confidentiality agreement with, or other legal
or
fiduciary obligation of secrecy to, the Partnership or another party. You
agree that all requests by you for Confidential Information and all questions
and other
communications regarding any Confidential Information or any other matter
pertaining to the Partnership shall be directed only to the individuals
identified on
Annex I hereto (the "Designated Parties"); such designated parties will allow
you reasonable access to such other employees responsible for maintaining such
Confidential Information.
You hereby agree that the Confidential Information will be used solely
for the
purpose of evaluating the possible Offer by you and that such information will
be kept confidential by you, provided, however, that (i) any of such
information
may be disclosed to any of your Representatives who need to know such
information for the sole purpose of evaluating any such possible transaction,
(ii) any of
such information may be disclosed to a potential direct or indirect investor
in the entity making the Offer who uses such information only in his capacity
as an
investor in such entity (an "Investor"), provided such Investor executes a
confidentiality agreement (which shall provide that the Partnership is a third
party bene-
ficiary thereof) substantially identical to this Agreement with you, you
remain responsible for any breach of this Agreement by such party and you
obtain our
prior written consent to such disclosure (which consent will not be
unreasonably withheld) (provided, however, that, as to any Investor,
"Confidential
Information" shall not include information which is already in the possession
of such Investor so long as such information was not obtained from you or any
of
your Representatives and is not subject to another confidentiality agreement
or other legal or fiduciary obligation of secrecy to the Partnership or
another party)
and (iii) any disclosure of such information may be made by you to which the
undersigned on behalf of the Partnership consents in writing prior to such
disclosure. You further agree that you will inform your Representatives of
the confidential nature of the Confidential Information and that you will
obtain the
agreement of your Representatives that they will be bound by the terms of this
letter agreement and will not disclose the Confidential Information to any
other
person. In any event, you agree to be responsible for any breach of this
letter agreement by any of your Representatives. Notwithstanding the
foregoing, you
may make such disclosure regarding the Confidential Information as is required
by law in connection with the Offer (including, without limitation, such
matters as
are requested to be disclosed by the Securities and Exchange Commission) which
are commenced and maintained in compliance with Sections 14(d) and 14(e) of
the Securities Exchange Act of 1934, as amended, and you may make such
disclosures as are otherwise required by the rules of any securities exchange
or market
by which you are bound in connection with the Offer.
You understand that none of the Partnership, Managers or any of their
Representatives has made or makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Confidential Information.
You
agree that none of the Partnership, Managers or any of their Representatives
will have any liability to you or any of your Representatives or Investors
resulting
from the use of the Confidential Information.
If you decide that you do not wish to proceed with the Offer regarding
the
Partnership, you will promptly inform the Partnership of that decision. In
that case, or at such time as you are requested to do so by the Partnership,
you shall
promptly redeliver to the Partnership all written Confidential Information in
your possession or in the possession of any of your Representatives (except as
set
forth in the next sentence) and neither you nor any of your Representatives
shall retain any copies, extracts or other reproductions in whole or in part
of such
written material; provided, however, you (and any Investor) shall be entitled
to retain (in accordance with this Agreement) one copy of any such material
for
litigation purposes. All Confidential Information consisting of analyses,
compilations, computer files, studies, memoranda, notes and other documents or
writings
whatsoever prepared by you or your Representatives or Investors that are based
upon, in whole or in part, the information in the Confidential Information
shall be
destroyed, and such destruction shall, upon the written request of the
Partnership, be confirmed by you in writing. Notwithstanding the return or
destruction of
the Confidential Information, you and your Representatives and Investors will
continue to be bound by the obligations of confidentiality and other
obligations
hereunder.
In the event that you or any of your Representatives or Investors are
requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar
process) to disclose any of the Confidential Information, you shall provide
the Partnership with prompt written notice of any such request or requirement
so that
the Partnership may seek a protective order or other appropriate remedy
and/or, at the option of the Partnership, waive compliance with the provisions
of this
letter agreement. If, in the absence of a protective order or other remedy or
the receipt of a waiver by the Partnership, you or any of your Representatives
or
Investors are nonetheless, in the opinion of counsel, legally compelled to
disclose any of the Confidential Information to any tribunal or else stand
liable for
contempt or suffer other censure or significant penalty, you or such
Representative or Investor, as the case may be, may, without liability
hereunder, disclose to
such tribunal only that portion of the Confidential Information that such
counsel has advised you is legally required to be disclosed, provided that you
will cooper-
ate with any action by the Partnership to obtain (at its expense) an
appropriate protective order or other reliable assurance that confidential
treatment will be ac-
corded the Confidential Information by such tribunal.
Except as otherwise provided in this paragraph, for a period of two years
after the date hereof, without the prior written consent of the Partnership,
you will not, and
will cause each of your affiliates (as such term is defined under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) and
Investors not to,
singly or as part of a group, in any manner, directly or indirectly, acquire
or propose to acquire, by purchase or otherwise, any Interests in the
Partnership or any
rights to acquire any such Interests. Notwithstanding the foregoing, you may
make the Offer to acquire Interests and may acquire Interests pursuant to such
Offer
if (i) you provide Managers with written notice of your intent to commence
such Offer no less than five business days prior to its commencing, (ii)
subject to the
requirements of clause (iii) below, such Offer remains open until the earliest
of the expiration of (a) 45 calendar days after commencement, (b) any
concurrent
offer for such Interests by any third party (which third party is not
affiliated with you and with whom you have no agreement or understanding
relating to such
offer) with respect to which a Schedule 14D-1 has been filed with the
Securities and Exchange Commission and (c) 50 calendar days after any public
announcement by Managers or the Partnership that we have entered into this
Agreement or made available Confidential Information regarding the Partnership
in
connection with a possible offer for Interests therein, (iii) such Offer
complies with the requirements of Section 14(d) and 14(e) of the Exchange Act
and the rules
thereunder (including the requirements of Schedule 14D-1) regardless of
whether such section or rules are otherwise applicable to such Offer and (iv)
you do not
take any action that would result in a termination of the Partnership under
Section 708(b)(1) of the Internal Revenue Code of 1986, as amended, and you
hereby
acknowledge and agree that the Partnership may refuse to recognize any
transfer of Interests in connection with such Offer in the event that the
Partnership
reasonably believes that such transfer, together with other transfers of
Interests during the preceding 12 months, could result in such termination.
Notwithstanding the foregoing, clauses (i) and (ii) of this paragraph shall be
inapplicable as to (a) an Offer for Interests that is a follow-up offer to the
completion
of the Offer that is subject to Rule l4d-1 under the Exchange Act in which
Interests were purchased by you and that is made in accordance with this
Agreement,
or (b) an Offer for Interests in the Partnership commenced after the
commencement of another tender offer for Interests in the Partnership that is
(x) subject to
Rule 14d-1 under the Exchange Act, (y) scheduled to expire prior to the date
the Offer would otherwise expire pursuant to clauses (i) and (ii) of this
paragraph
and (z) made by a party unaffiliated with you or any Investor and with whom
you have no agreement or understanding relating to such offer. In addition,
notwithstanding clause (ii) above, in the event the Partnership is conducting
a proxy solicitation or consent solicitation incident to a vote on dissolution
or
liquidation or a sale of all or substantially all of the assets of the
Partnership, the Offer relating to the Partnership may expire as early as five
business days prior
to the meeting of limited partners called to vote on such matter or the
termination of any such consent solicitation. In the event, following the
receipt of a notice
pursuant to clause (i) above, the Partnership distributes a notice to its
partners or otherwise makes a public announcement, the Partnership shall
provide a copy of
such notice or announcement at the time of its distribution to you.
You hereby agree to reimburse the Partnership and Managers for their
reasonable
direct expenses (including a reasonable allocation of salary and
salary-related expenses) incurred in connection with making the Confidential
Information available
to you.
You acknowledge and agree that (i) we and our Representatives are free to
conduct any process relating to any Offers to acquire any Interests as we and
our Representatives, in our sole discretion, determine and (ii) none of
Managers, the
Partnership or any of their Representatives will have any liability or
obligation to you, your Representatives or Investors, whether by virtue of
this letter
agreement or any other written or oral expression, with respect to any
business arrangement or otherwise.
It is understood and agreed that no failure or delay by the Partnership
in
exercising any right, power or privilege hereunder shall operate as a waiver
hereof, nor shall any single or partial exercise thereof preclude any other or
further
exercise thereof or the exercise of any other right, power or privilege
hereunder. The provisions of this letter agreement may not be waived or
amended except
by the written agreement of the Partnership. For purposes of this Agreement,
the written agreement of, or notification to, the undersigned on behalf of the
Partnership shall serve as the written agreement or notification of the
Partnership.
During the course of evaluating the possibility of the Offer, you may
make
available to the Partnership or its Representatives certain information
regarding your business, financial condition, operations, assets and
liabilities and/or your
subsidiaries or affiliates. In such event, all of the terms and conditions of
this letter agreement shall be enforceable against the Partnership and its
Representatives
by you as if you were the Partnership hereunder and this letter were addressed
to the Partnership.
You also hereby irrevocably and unconditionally consent to submit to the
jurisdiction of the courts of the State of Illinois and of the United States
of America located in the City of Chicago, Illinois for any actions, suits or
proceedings
arising out of or relating to this letter agreement. You hereby irrevocably
and unconditionally waive any objection to the laying of venue of any action,
suit or
proceeding arising out of or relating to this letter agreement in the courts
of the State of Illinois and of the United States of America located in the
City of
Chicago, Illinois, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such action, suit
or
proceeding brought in any such court has been brought in an inconvenient
forum.
This letter agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois and may be executed in
counterparts, each of
which shall, when executed, be deemed to be an original and all of which shall
be deemed to be one and the same agreement.
You acknowledge that, in the event of any breach of this letter agreement
by you,
the Partnership would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the
Partnership,
in addition to any other remedy to which they may be entitled, shall be
entitled to an injunction to prevent breaches of, and to compel specific
performance of,
this letter agreement. In the event of litigation between the parties hereto
relating to this letter agreement, upon a final determination of such matter
by a court of
competent jurisdiction, the prevailing party in such litigation shall be
reimbursed by the other party or parties for the prevailing party's reasonable
costs and
expenses (including, without limitation, reasonable legal fees and expenses)
incurred in connection with such litigation.
Your obligations and the obligations of your Representatives and
Investors
hereunder shall expire two years from the date hereof.
<PAGE>
Please confirm your agreement with the foregoing by signing and returning one
copy of this letter agreement to the undersigned, whereupon this letter
agreement shall
become a binding agreement between us.
Very truly yours,
ARVIDA/JMB MANAGERS, INC.
(as general partner of the Partnership)
By: /s/ Gary Nickele
Its: Vice President
Confirmed and agreed to as of
the date first above written:
WALTON STREET REAL ESTATE FUND I, L.L.C.
By:Walton Street Managers I, L.P.,
its general partner
By:WSC Managers I, Inc.,
its general partner
By: /s/ Jeff Quicksilver
Name: Jeff Quicksilver
Title: Vice President
WALTON STREET CAPITAL, L.L.C.
By: /s/ Jeff Quicksilver
Name: Jeff Quicksilver
Title: Vice President
<PAGE>
Annex I
Gailen Hull
Stephen Lovelette
