SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1996 Commission file number 0-19245
ARVIDA/JMB PARTNERS, L.P.-II
(Exact name of registrant as specified in its charter)
Delaware 58-1809884
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Avenue., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/440-4800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such a shorter period that
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 16
Item 3. Defaults on Senior Securities. . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 17
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . $ 978,060 1,387,313
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,610,395 2,552,834
Trade and other accounts receivable (net of allowance
for doubtful accounts of $24,073 at March 31, 1996
and $18,431 at December 31, 1995). . . . . . . . . . . . . . . . . . . . . 1,194,377 1,218,015
Real estate inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,293,218 10,766,333
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . 6,304,679 6,404,217
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . 1,833,053 1,910,446
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,213,782 24,239,158
============ ============
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
Liabilities:
Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 932,480 550,666
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,786 450,129
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 964,377 1,121,423
Accrued expenses and other liabilities. . . . . . . . . . . . . . . . . . . 43,550,415 39,137,504
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 7,619,020 7,591,889
Notes and mortgages payable (in default). . . . . . . . . . . . . . . . . . 98,710,703 100,175,208
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 152,115,781 149,026,819
------------ ------------
Partners' capital accounts (deficits):
General Partner and Associate Limited Partner:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000
Cumulative net income (loss). . . . . . . . . . . . . . . . . . . . . . . (7,268,005) (5,809,930)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . (246,771) (246,771)
------------ ------------
(7,512,776) (6,054,701)
------------ ------------
Limited partners:
Capital contributions, net of offering costs. . . . . . . . . . . . . . . 209,753,671 209,753,671
Cumulative net income (loss). . . . . . . . . . . . . . . . . . . . . . . (322,921,720) (319,265,457)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . (9,221,174) (9,221,174)
------------ ------------
(122,389,223) (118,732,960)
------------ ------------
Total partners' deficits. . . . . . . . . . . . . . . . . . . . . . . (129,901,999) (124,787,661)
------------ ------------
Total liabilities and partners' deficits. . . . . . . . . . . . . . . $ 22,213,782 24,239,158
============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 140,810 2,636,976
Homesites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646,050 2,435,200
Operating properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,686,344 1,389,309
Brokerage and other operations . . . . . . . . . . . . . . . . . . . . . . 336,171 653,439
------------ ----------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 2,809,375 7,114,924
Cost of revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,279 2,286,900
Homesites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558,537 1,871,979
Operating properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,378,222 1,357,217
Brokerage and other operations . . . . . . . . . . . . . . . . . . . . . . 293,264 591,701
------------ ----------
Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . 2,377,302 6,107,797
Gross operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,073 1,007,127
Selling, general and administrative expenses . . . . . . . . . . . . . . . . (482,775) (1,538,743)
----------- ----------
Net operating income (loss). . . . . . . . . . . . . . . . . . . . (50,702) (531,616)
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,124 82,611
Interest and real estate taxes, net. . . . . . . . . . . . . . . . . . . . . (5,072,760) (5,441,900)
----------- ----------
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . $(5,114,338) (5,890,905)
=========== ==========
Net income (loss) per Limited Partnership Interest . . . . . . . . $ (15.61) (16.44)
=========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,114,338) (5,890,905)
Charges to net loss not requiring cash:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . 130,395 141,626
Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . 5,642 10,005
Changes in:
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942,439 (3,016,587)
Trade and other accounts receivable. . . . . . . . . . . . . . . . . . . . . . 17,996 (261,331)
Real estate inventories:
Additions to real estate inventories . . . . . . . . . . . . . . . . . . . . (232,701) (1,715,030)
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,816 4,158,879
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (124,678)
Capitalized real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . -- (55,747)
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . 46,536 1,288,039
Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . 4,301,568 2,862,992
Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . (157,046) (12,108)
Amounts due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . 27,131 137,061
------------ -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . . . . . . . . . . . . . 673,438 (2,477,784)
------------ -----------
Investing activities:
Acquisitions of property and equipment . . . . . . . . . . . . . . . . . . . . -- (134,354)
------------ -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . -- (134,354)
------------ -----------
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
1996 1995
------------ -----------
Financing activities:
Proceeds from notes and mortgages payable. . . . . . . . . . . . . . . . . . . -- (2,646,850)
Payments of notes and mortgages payable. . . . . . . . . . . . . . . . . . . . (1,464,505) --
Repayments of bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . 381,814 (336,902)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . (1,082,691) (2,983,752)
------------ -----------
Decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . (409,253) (5,595,890)
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,387,313 9,526,271
------------ -----------
Cash and cash equivalents,
end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 978,060 3,930,381
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other
interest, net of amounts capitalized . . . . . . . . . . . . . . . . . . . . $ -- --
============ ===========
Non-cash investing and financing activities. . . . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995,
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
GENERAL
Capitalized Interest and Real Estate Taxes
Interest, including the amortization of loan fees, of $2,914,357 and
$3,523,784 was incurred for the three months ended March 31, 1996 and 1995,
respectively, of which $0 and $124,678 was capitalized, respectively.
There were no interest payments made during the three month periods ended
March 31, 1996 and 1995. The Partnership has not made the required monthly
interest payments on its credit facility since September 1994.
Real estate taxes of $2,158,403 and $2,098,541 were incurred for the
three months ended March 31, 1996 and 1995, respectively, of which $0 and
$55,747 was capitalized, respectively. Real estate tax payments of
$360,642 and $449,743 were made for the three months ended March 31, 1996
and 1995, respectively. The preceding analysis of real estate taxes does
not include real estate taxes incurred or paid with respect to the
Partnership's club facilities and other operating properties as these taxes
are included in cost of revenues for operating properties.
Property and Equipment and Other Assets
Depreciation expense of $99,538 and $109,350 was incurred for the
three month periods ended March 31, 1996 and 1995, respectively.
Amortization of other assets, excluding loan fees, of $30,857 and $32,276
was incurred for the three months ended March 31, 1996 and 1995,
respectively.
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
There are no treasury bills or other short-term investments with
original maturity dates of three months or less included in cash and cash
equivalents at March 31, 1996 and December 31, 1995. Included in
restricted cash are amounts restricted under various escrow agreements and
approximately $1,581,200 remaining from the original $3 million which was
deposited into a restricted collateral account in March 1995 pursuant to an
agreement between the Partnership and its lender.
<PAGE>
NOTES AND MORTGAGES PAYABLE (IN DEFAULT)
The Partnership's credit facilities consist of a $52.5 million term
loan, a $67.5 million term loan, a revolving line of credit of
approximately $14.3 million and approximately $4.3 million of outstanding
letters of credit securing performance obligations of the Partnership.
There is also a $5 million letter of credit facility which secures
performance obligations of the Partnership. At March 31, 1996,
approximately $20.3 million, $66.9 million and $11.5 million was
outstanding under the $52.5 million term loan, the $67.5 million term loan
and the revolving line of credit facility, respectively.
For the three month period ended March 31, 1996, the effective
interest rate for the combined term loans and the revolving line of credit
facility was approximately 11.7% per annum. The Partnership has not made
the required interest payments on its credit facilities since September
1994. The amount of interest which remains payable at March 31, 1996
totals approximately $29.4 million. The accrued interest on the
Partnership's credit facilities is the primary cause for the increase in
accrued expenses and other liabilities at March 31, 1996 as compared to
December 31, 1995.
Proceeds from the sales of housing units, homesites, land parcels and
other collateral securing the credit facilities, net of brokerage
commissions and certain other customary selling expenses are to be
delivered to the lender to be applied against the outstanding principal
balance on one of the term loans. Through March 31, 1996, the Partnership
has remitted proceeds totalling approximately $20.2 million from sales made
after becoming subject to this requirement in September 1994.
On October 31, 1995, the Partnership and its lender reached an
agreement to amend the March 1995 Forbearance Agreements agreeing to, among
other things, a new plan whereby the Partnership would attempt to sell its
remaining assets (other than Talega Property) in accordance with set
minimum sales prices for each of the assets over the course of a six-month
period with payment of certain operational, development and marketing costs
to be made out of available funds in a restricted collateral account. The
agreement was subject to the lender's continued forbearance from the
exercise of its remedies under the credit facilities and its right to cease
funding costs not yet then incurred. The Partnership and its lender are
currently in the process of negotiating a new plan whereby the Partnership
would sell its remaining assets by July 31, 1996. As of the date of this
report, the lender has not initiated any actions as a result of the
Partnership's failure to sell its remaining assets as specified per the
terms of the originally agreed upon plan.
During March 1996, the Heathrow joint venture, in which the
Partnership is the managing general partner, reached an agreement with an
unaffiliated third party for the sale of the remaining land and certain
related assets within the Partnership's Heathrow Community. The
Partnership's lender has consented to the terms of the sale. However, the
closing of the sale is subject to the satisfaction of various other
conditions, and there is no assurance that such conditions will be
satisfied or that the sale will close. The net proceeds from such sale, if
consummated, would be paid to the Partnership's lender and applied against
the outstanding principal balance on one of the Partnership's term loans.
The sale, if consummated, would result in a gain for financial reporting
purposes and a loss for Federal income tax purposes.
During March 1996, the Partnership reached an agreement with an
unaffiliated third party for the sale of the Talega Property. The
Partnership's lender has consented to the terms of the sale. However, the
closing of the sale is subject to the satisfaction of various conditions,
and there is no assurance that such conditions will be satisfied or that
the sale will close. The net proceeds from such sale, if consummated,
would be paid to the Partnership's lender and applied against the
outstanding principal balance on one of the Partnership's term loans. The
sale, if consummated, would result in a gain for financial reporting
purposes and a loss for Federal income tax purposes.
In addition, during April 1996, the Partnership entered into a non-
binding letter of intent with an unaffiliated third party for the sale of
the retail shopping plaza at its Heathrow Community. The net proceeds from
such sale, if consummated, would be paid to the Partnership's lender and
applied against the outstanding principal balance on one of the
Partnership's term loans.
The Partnership currently expects that it will be disposing of all of
its remaining assets in accordance with the plan which is currently being
negotiated with its lender. It is expected that any proceeds from the sale
or other disposition of such assets, in excess of the costs of sale and
general and administrative expenses attributable thereto, will be paid to
the lender or other creditors of the Partnership. Accordingly, it is
highly unlikely that the Limited Partners will receive any future
distributions from the Partnership. Upon disposition of its remaining
assets or if the Partnership determines the plan is no longer viable or
lacks sufficient funds for maintaining the affairs of the Partnership, the
Partnership would then proceed to terminate its affairs.
The possibility still remains that the lender may pursue its remedies
under the credit facilities, including realizing upon substantially all of
the Partnership's remaining assets, which are collateral security for the
credit facilities. These issues raise substantial doubt about the
Partnership's ability to continue as a going concern. If the Partnership
is unable to continue as a going concern, it may be forced to dispose of
its Properties in a manner that would realize less than would be realized
under its current plan for an orderly disposition. If this were to occur,
any proceeds received could be less than the current carrying values of the
Properties, resulting in the recognition of additional losses by the
Partnership. The accompanying Consolidated Financial Statements do not
include any adjustments that might result from the outcome of this
uncertainty.
TRANSACTIONS WITH AFFILIATES
The General Partner of the Partnership or its affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses relating to
the administration of the Partnership and its assets. For the three months
ended March 31, 1996, the General Partner of the Partnership or its
affiliates were due reimbursements for such direct or out-of-pocket
expenditures in the amount of approximately $2,400, all of which was paid
as of March 31, 1996. The total of such reimbursements for the three
months ended March 31, 1995 was approximately $2,100.
In addition, the General Partner and its affiliates are entitled to
reimbursements for salaries and salary-related costs relating to the
administration of the Partnership and the operation of the Partnership's
Properties. Such costs were approximately $13,500 for the three months
ended March 31, 1996 all of which was paid as of March 31, 1996.
The Partnership also receives reimbursements from, or reimburses,
affiliates of the General Partner 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. The
Partnership was entitled to receive approximately $0 and $3,800 for such
costs for the three months ended March 31, 1996 and 1995, respectively. In
addition, the Partnership was obligated to reimburse one of its affiliates
approximately $5,800 and $19,500 for the three months ended March 31, 1996
and 1995, respectively, for costs incurred by the affiliate on behalf of
the Partnership. At March 31, 1996, approximately $5,700 was unpaid, none
of which was paid as of May 3, 1996.
The Partnership and Arvida/JMB Partners, L.P. (a publicly-held limited
partnership affiliated with the General Partner, "Arvida/JMB-I") 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
expenditures are incurred and charged to each partnership as appropriate.
The Partnership reimburses or receives reimbursements from Arvida/JMB-I for
such costs (including salary and salary-related costs). For the three
month period ended March 31, 1996, the Partnership was obligated to
reimburse Arvida/JMB-I approximately $589,200. At March 31, 1996,
approximately $194,600 was unpaid, all of which was paid as of May 3, 1996.
In addition, for the three month period ended March 31, 1996, the
Partnership was entitled to receive approximately $68,300 from Arvida/JMB-
I. At March 31, 1996, approximately $49,200 was outstanding, all of which
was received as of May 3, 1996. For the three months ended March 31, 1995,
the Partnership was obligated to reimburse Arvida/JMB-I approximately
$822,200 and the Partnership was entitled to receive reimbursements from
Arvida/JMB-I of approximately $88,400.
Arvida Company ("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). The total of such costs for the three month periods ended
March 31, 1996 and 1995 were approximately $105,500 and $367,700
respectively. At March 31, 1996 approximately $700 was unpaid, all of
which was paid as of May 3, 1996.
Pursuant to a requirement under the Partnership's credit facilities, a
portion of the reimbursements paid to Arvida and Arvida/JMB-I as well as
portions of the Partnership's insurance and loan refinancing costs incurred
in 1992 and 1993, have been funded on the Partnership's behalf by advances
from the General Partner. Such advances, which do not bear interest,
totalled approximately $4,609,400 at March 31, 1996. The repayment of such
advances is subordinated to the receipt by the Holders of Interests of
certain levels of return, and therefore is not expected. In addition, the
Partnership was entitled to receive approximately $12,900 from an affiliate
of the General Partner for salary and salary-related costs incurred by the
Partnership on behalf of such affiliate of the General Partner, all of
which was outstanding as of March 31, 1996 and May 3, 1996.
The Partnership incurs certain general and administrative expenses,
including insurance premiums, which are paid by the Partnership on behalf
of its affiliated homeowners associations. The Partnership receives
reimbursements from the affiliates for such costs. For the three month
period ended March 31, 1996, the Partnership was entitled to receive
approximately $5,200 from such affiliates. At March 31, 1996,
approximately $39,500 was owed to the Partnership (including amounts owed
from prior periods), of which approximately $12,600 was received as of May
3, 1996. For the three months ended March 31, 1995, the Partnership was
entitled to receive approximately $4,400 from such affiliates.
Arvida provides development management services to the Heathrow
partnership. For the three months ended March 31, 1996, management fees of
approximately $117,200 had been incurred, the payment of which has been
deferred. The cumulative amount of such deferred management fees as of
March 31, 1996 was approximately $2,910,200. Such deferred fees do not
bear interest and remain payable. The ultimate payment of these management
fees is not expected to be made as it is subordinated to certain levels of
return to the Holders of Interests.
In accordance with the Partnership Agreement, the General Partner and
Associate Limited Partner have deferred a portion of their distributions of
net cash flow from the Partnership totalling approximately $247,000. This
amount, which does not bear interest, is not expected to be paid.
COMMITMENTS AND CONTINGENCIES
As security for performance of certain development obligations,
including the Partnership's obligations with respect to the Santa Margarita
Water District, the Partnership is contingently liable under standby
letters of credit and bonds at March 31, 1996 for approximately $2,600,400
and $546,800, respectively.
The Partnership has been named a defendant in a lawsuit filed in the
Circuit Court in and for the Eighteenth Judicial Circuit, Seminole County,
Florida entitled Land Investment I, Ltd., Heathrow Land & Development
Corporation, Heathrow Shopping Center Associates, and Paulucci Investments
v. Arvida/JMB Managers-II, Inc., Arvida/JMB Partners, L.P.-II, Arvida
Company and JMB Realty Corporation. The complaint, as amended, includes
counts for breach of the management agreement, breach of fiduciary duty,
fraud in the inducement and conspiracy to commit fraud in the inducement,
breach of the partnership agreement and rescission in connection with the
purchase and management of the Heathrow development. Plaintiffs seek,
among other things, unspecified compensatory damages, the right to add a
claim for punitive damages, rescission, attorneys fees, costs, and such
other relief as the Court deems appropriate. The Partnership believes that
the lawsuit is without merit and intends to vigorously defend itself in
this matter.
The Partnership has been advised by Merrill Lynch that various
investors of the Partnership have sought to compel Merrill Lynch to
arbitrate claims brought by certain investors of the Partnership, and has
been named as a respondent in various arbitrations, representing
approximately 11% of the total Interests outstanding. These claimants have
sought and are seeking to arbitrate claims involving unspecified damages
based on Merrill Lynch's alleged violations of applicable state and/or
federal securities laws and alleged violations of the rules of the National
Association of Securities Dealers, Inc., together with pendent state law
claims. The Partnership believes that Merrill Lynch has resolved some of
these claims through litigation and otherwise, and that Merrill Lynch is
defending other claims. Merrill Lynch has asked the Partnership and its
General Partner to confirm an obligation of the Partnership and its General
Partner to indemnify Merrill Lynch in these claims against all loss,
liability, claim, damage and expense, including without limitation
attorney's fees and expenses, under the terms of a certain Agency Agreement
dated October 23, 1989 ("Agency Agreement") with the Partnership relating
to the sale of Interests through Merrill Lynch on behalf of the
Partnership. The Agency Agreement generally provides that the Partnership
and its General Partner shall indemnify Merrill Lynch against losses
occasioned by an actual or alleged misstatement or omission of material
facts in the Partnership's offering material used in connection with the
sale of Interests and suffered by Merrill Lynch in performing its duties
under the Agency Agreement, under certain specified conditions. The Agency
Agreement also generally provides, under certain conditions, that Merrill
Lynch shall indemnify the Partnership and its General Partner for losses
suffered by the Partnership and occasioned by certain specified conduct by
Merrill Lynch in the course of Merrill Lynch's solicitation of
subscriptions for, and sale of, Interests. The Partnership is unable to
determine at this time the ultimate investment of investors who have filed
arbitration claims as to which Merrill Lynch might seek indemnification in
the future. At this time, and based upon the information presently
available about the arbitration statements of claims filed by some of these
investors, the Partnership and its General Partner believe that they have
meritorious defenses to demands for indemnification made by Merrill Lynch
and intend to vigorously pursue such defenses. Although there can be no
assurance regarding the outcome of the claims for indemnification, at this
time, based on information presently available about such arbitration
statements of claims, the Partnership and its General Partner do not
believe that the demands for indemnification by Merrill Lynch will have a
material adverse effect on the financial condition of the Partnership.
In addition, the Partnership could potentially be liable for certain
amounts incidental to other matters, the amount of which could be
substantial.
<PAGE>
TAX-EXEMPT BOND FINANCING
In connection with the development of Talega, the Partnership has
utilized bond financing to construct certain on-site and off-site water and
sewer infrastructure improvements which the Partnership would otherwise be
obligated to finance and construct as a condition to obtain certain
approvals for the project. As of March 31, 1996, $59,645,000 of the bonds
were outstanding. Approximately $46.5 million of proceeds from the sale of
bonds was expended by the District on infrastructure improvements through
March 31, 1996.
ADJUSTMENTS
In the opinion of the General Partner, all adjustments (consisting of
normal recurring adjustments) necessary for a fair presentation have been
made to the accompanying consolidated financial statements as of March 31,
1996 and December 31, 1995 and for the three month periods ended March 31,
1996 and 1995 (assuming the Partnership continues as a going concern).
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying consolidated
financial statements ("Notes") contained in this report for additional
information concerning certain of the Partnership's investments.
As discussed below, there is substantial doubt about the Partnership's
ability to continue as a going concern.
At March 31, 1996 and December 31, 1995, the Partnership had cash and
cash equivalents of approximately $978,100 and $1,387,000, respectively.
Bank overdrafts, which represent checks in transit, of approximately
$932,500 and $551,000 at March 31, 1996 and December 31, 1995,
respectively, were repaid from cash on hand in April and January 1996,
respectively. Remaining cash and cash equivalents were available for
working capital requirements. The Partnership had suspended cash
distributions to its Partners in late 1990 due to, among other things,
deteriorating market conditions. The Partnership has been unable to
reinstate distributions due to its financial condition and the operations
of its Properties, which are also discussed more fully below. In addition,
the Partnership is currently in default of the terms of its credit
facilities and a default has been asserted concerning Tax-Exempt Bond
Financing. The source of the Partnership's short and long-term future
liquidity is dependent upon its lender continuing to forbear from
exercising its remedies under the Partnership's credit facility agreements
and permitting the Partnership to use funds in a restricted cash collateral
account and certain sales proceeds to finance the Partnership's limited
operations, as more fully discussed in Part II - Item 3. (Defaults on
Senior Securities).
During March 1996, the Heathrow joint venture, in which the
Partnership is the managing general partner, reached an agreement with an
unaffiliated third party for the sale of the remaining land and certain
related assets within the Partnership's Heathrow Community. The
Partnership's lender has consented to the terms of the sale. However, the
closing of the sale is subject to the satisfaction of various other
conditions, and there is no assurance that such conditions will be
satisfied or that the sale will close. The net proceeds from such sale, if
consummated, would be paid to the Partnership's lender and applied against
the outstanding principal balance on one of the Partnership's term loans.
The sale, if consummated, would result in a gain for financial reporting
purposes and a loss for Federal income tax purposes in 1996.
During March 1996, the Partnership reached an agreement with an
unaffiliated third party for the sale of the Talega Property. The
Partnership's lender has consented to the terms of the sale. However, the
closing of the sale is subject to the satisfaction of various conditions,
and there is no assurance that such conditions will be satisfied or that
the sale will close. The net proceeds from such sale, if consummated,
would be paid to the Partnership's lender and applied against the
outstanding principal balance on one of the Partnership's term loans. The
sale, if consummated, would result in a gain for financial reporting
purposes and a loss for Federal income tax purposes in 1996.
In addition, during April 1996, the Partnership entered into a non-
binding letter of intent with an unaffiliated third party for the sale of
the retail shopping plaza at its Heathrow Community.
Although there can be no assurance, the Partnership currently expects
that it will be disposing of its remaining assets during 1996. It is
expected that any proceeds from the sale or other disposition of such
assets, in excess of the costs of sale and general and administrative
expenses attributable thereto, will be paid to the lender or other
creditors of the Partnership. Upon completion of the sale of the
Partnership's remaining assets, the Partnership expects to terminate. The
Limited Partners should not expect to receive any future distributions from
the Partnership.
RESULTS OF OPERATIONS
Due to the Partnership's financial condition, the results of
operations for the quarter ended March 31, 1996 reflect the limited
activity of its assets.
For the period ended March 31, 1996, the Partnership (including its
consolidated ventures) closed on the sale of one housing unit and 12
homesites. This compares to closings for the three months ended March 31,
1995 of 16 housing units and 46 homesites. Outstanding contracts
("backlog") at March 31, 1996 were for six homesites, the remaining land
within the Partnership's Talega Community and the remaining land and
certain related assets within the Partnership's Heathrow Community. This
compares to a backlog at March 31, 1995 of 13 housing units and 18
homesites.
Housing revenues for the three months ended March 31, 1996 have been
negatively impacted by the prohibition placed on the Partnership by its
lender regarding the construction of new homes within Heathrow. All
construction of the homes for which the lender agreed to advance funds had
been completed. In addition, sales of all of the units completed in
Wesmere had closed as of December 31, 1995, and four units remain to be
closed at Heathrow.
The decrease in homesite revenues for the three months ended March 31,
1996 as compared to the same period in 1995 is due to a decrease in the
availability of lots for sale at the Partnership's Heathrow and Atlanta
Communities. The Partnership's Eagle Watch Community is nearing completion
and is expected to close-out in 1996. The decline in the gross operating
profit margin for the three months ended March 31, 1996 as compared to the
same period in 1995 is due primarily to the reduction of higher margin
product closed at the Partnership's Heathrow Community.
Revenues from operating properties increased for the three months
ended March 31, 1996 as compared to the same period in 1995 due to an
increase in the number of members at Heathrow Golf and Country Club.
Brokerage revenues decreased for the three months ended March 31, 1996
as compared to the same period in 1995 due primarily to the reduction in
the number of closings of homes built by unaffiliated third-party builders
within the Partnership's Heathrow and Atlanta Communities.
Selling, general and administrative expenses continue to decrease due
primarily to a reduction in marketing and administrative costs incurred,
which is a direct result of the restrictions placed on future development
and construction by the Partnership's lender.
Interest and real estate taxes decreased for the three months ended
March 31, 1996 as compared to the same period in 1995 due primarily to a
decrease in the average amount of borrowings outstanding during the period.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership has been named a defendant in a lawsuit filed in the
Circuit Court in and for the Eighteenth Judicial Circuit, Seminole County,
Florida entitled Land Investment I, Ltd., Heathrow Land & Development
Corporation, Heathrow Shopping Center Associates, and Paulucci Investments
v. Arvida/JMB Managers-II, Inc., Arvida/JMB Partners, L.P.-II, Arvida
Company and JMB Realty Corporation. The complaint, as amended, includes
counts for breach of the management agreement, breach of fiduciary duty,
fraud in the inducement and conspiracy to commit fraud in the inducement,
breach of the partnership agreement and rescission in connection with the
purchase and management of the Heathrow development. Plaintiffs seek,
among other things, unspecified compensatory damages, the right to add a
claim for punitive damages, rescission, attorneys fees, costs, and such
other relief as the Court deems appropriate. The Partnership believes that
the lawsuit is without merit and intends to vigorously defend itself in
this matter.
The Partnership is not subject to any other material pending legal
proceedings, other than ordinary litigation incidental to the business of
the Partnership. However, reference is made to Notes for a discussion of
certain claims asserted by Merrill Lynch for indemnification by the
Partnership and the General Partner in connection with claims for
arbitration filed by certain investors in the Partnership.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
The Partnership's $67.5 million term loan has a certain loan-to-value
covenant relative to the Partnership's Talega Property. Based upon an
independent appraisal of Talega which was prepared on behalf of the
Partnership's lender, the Partnership has not been in compliance with this
covenant. On March 4, 1994, pursuant to the terms of this loan-to-value
covenant, the Partnership received a notice of default from its lender.
The Partnership was required to make a term loan payment, including
accrued interest, of approximately $59 million in order to cure this
default. The Partnership did not have the funds to make such payment. In
addition, the Partnership's credit facilities matured on December 30, 1994.
However, the Partnership did not have the funds to pay off the balances
outstanding under the credit facilities. The Partnership has not made the
required interest payments on its credit facilities since September 1994.
The aggregate amount outstanding, including principal and all accrued and
unpaid interest, on the Partnership's term loans and revolving line of
credit at March 31, 1996 is approximately $128.1 million. In addition, as
of March 31, 1996, the Partnership is liable under standby letters of
credits for approximately $2,600,400. To date, the Partnership's lender
has not pursued all of its remedies under the credit facility agreements
relative to these defaults, which could include, among other things, the
lender realizing upon its security interest in the Partnership's
Properties. In March 1995, the Partnership and its lender entered into
Forbearance Agreements pursuant to which, among other things, $3 million
was deposited in a restricted collateral account to pay direct operational
costs and general and administrative expenses of the Partnership's limited
operations, subject to the approval of the lender of such costs and
expenses and its continued forbearance from the exercise of its other
remedies under the credit facility agreements. The Forbearance Agreement
was modified on October 31, 1995 and the Partnership is currently operating
under a plan to dispose of its assets. It is expected that any proceeds
from the sale or other disposition of such assets, in excess of the costs
and general and administrative expenses attributable thereto, will be paid
to the lender or other creditors of the Partnership. Reference is made to
Part I. Financial Information, Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations for a further discussion
of the Partnership's liquidity and capital resources.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Amended and Restated Agreement of Limited Partnership
incorporated herein by reference.*
4.1. Assignment Agreement by and among the Partnership, the General
Partner, the Initial Limited Partner and the Holders of Interests
incorporated herein by reference.*
4.2. $225 million Credit Agreement dated April 15, 1990 between
Arvida/JMB Partners, L.P.-II and Continental Bank N.A. and Bank of America
National Trust and Savings Association is incorporated herein by
reference.**
4.3. Amended and Restated Credit Agreement dated June 23, 1992
between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. and Bank of
America National Trust and Savings Association is incorporated herein by
reference.**
4.4. Various mortgages and other security interests dated April 30,
1992 related to Arvida/JMB Partners, L.P.-II's Heathrow, Talega, Wesmere,
Wycliffe, Eagle Watch, Burnt Hickory Lakes, Rock Creek and SouthRidge Lakes
properties which secure loans under the Amended and Restated Credit
Agreement referred to in Exhibit 4.3 are incorporated herein by
reference.**
4.5. Revolving Loan and Letter of Credit Facility Credit Agreement
dated June 23, 1992 between Arvida/JMB Partners, L.P.-II and Continental
Bank N.A. and Bank of America National Trust and Savings Association is
incorporated herein by reference.**
4.6. Various mortgages and other security interests dated June 23,
1992 related to Arvida/JMB Partners, L.P.-II's Heathrow, Talega, Wesmere,
Wycliffe, Eagle Watch, Burnt Hickory Lakes, Rock Creek and SouthRidge Lakes
properties which secure loans under the Revolving Loan and Letter of Credit
Facility Credit Agreement referred to in Exhibit 4.5 are incorporated
herein by reference.**
4.7. Interim Bank Letter Agreement dated March 25, 1992 between
Arvida/JMB Partners, L.P.-II and Continental Bank N.A., Bank of America
National Trust and Savings Association, and Unibank is incorporated herein
by reference.**
4.8. Promissory Note effective July 1, 1992 between Arvida/JMB
Partners, L.P.-II and Arvida/JMB Managers-II, Inc. is herein incorporated
by reference. ****
4.9. Letter dated September 20, 1994 from the Partnership to Bank
of America regarding the Partnership's acknowledgement that all proceeds
from the sale of Collateral shall be delivered immediately to Co-Lenders is
herein incorporated by reference to Exhibit 4.9 to the Partnership's Report
on Form 10-Q (File No. 0-19245) filed on November 11, 1994.
4.10. Forbearance and Modification Agreement (Credit Agreement)
dated March 21, 1995 by and among Arvida/JMB Partners, L.P.-II, Heathrow
Development Associates, Ltd., Eagle Watch Partners, Bank of America
Illinois and Bank of America National Trust and Savings Association is
incorporated herein by reference. *****
4.11. Forbearance and Modification Agreement (Amended and Restated
Credit Agreement) dated March 21, 1995 by and among Arvida/JMB Partners,
L.P.-II, Heathrow Development Associates, Ltd., Eagle Watch Partners, Bank
of America Illinois and Bank of America National Trust and Savings
Association is incorporated herein by reference. *****
4.12. Letter Agreement dated October 31, 1995 supplementing
Forbearance Agreements with Lenders is herein incorporated by
reference.******
10.1. Management, Advisory and Supervisory Agreement between the
Partnership and Arvida Company is herein incorporated by reference.**
10.2. Revolving Credit Agreement dated September 27, 1989 between
Arvida/JMB Partners, L.P.-II and Continental Bank N.A. is incorporated
herein by reference.***
10.3. First Amendment Credit Agreement dated December 21, 1989 to
the Credit Agreement dated May 5, 1989 between Arvida/JMB Partners, L.P.-II
and Continental Bank N.A. is incorporated herein by reference.***
10.4. Second Amendment Credit Agreement dated January 31, 1990 to
the Credit Agreement dated May 5, 1989 between Arvida/JMB Partners, L.P.-II
and Continental N.A. is incorporated herein by reference.***
10.5. Credit Agreement dated May 5, 1989 between Arvida Talega
Limited Partnership and Continental Bank N.A. is incorporated herein by
reference.***
10.6. First Amendment Credit Agreement dated December 21, 1989 to
the Revolving Credit Agreement dated September 27, 1989 between Arvida/JMB
Partners, L.P.-II and Continental Bank N.A. is incorporated herein by
reference.***
10.7. First Amended and Restated Limited Partnership Agreement of
Heathrow Development Associates, Ltd. and Assignment of Partnership
Interests dated January 17, 1990 are herein incorporated by reference.**
10.8. Amended and Restated Heathrow Management Agreement dated
January 17, 1990 is herein incorporated by reference.**
10.9. Eagle Watch Partners General Partnership Agreement dated
December 27, 1989 is herein incorporated by reference.**
10.10. Letter of Credit Agreement dated July 27, 1990 between
Arvida/JMB Partners, L.P.-II and Santa Margarita Water District regarding
collateral for Tax-Exempt Bond Financing is herein incorporated by
reference.**
10.11. Agreement for the Payment of the Diemer Intertie Sublease
Payments, Principal and Interest of Bonds of Improvement District No. 7 and
Annual Budget Deficits Between Arvida/JMB Partners, L.P.-II and Santa
Margarita Water District dated January 15, 1990 is herein incorporated by
reference.*
10.12. Sale and Purchase Agreement dated August 3, 1993 by and
between EW Golf Club, L.P., Eagle Watch Partners and Cloverleaf
Investments, Inc. for the sale of the club facilities and other assets of
the Eagle Watch Golf Club is herein incorporated by reference.****
10.13. Stipulation and Settlement dated October 19, 1993 and Final
Judgement and Order dated March 31, 1994 pertaining to the class action
lawsuit is incorporated herein by reference.****
10.14. Agreement for Purchase and Sale dated August 14, 1995 by and
between Arvida/JMB Partners, L.P.-II and Heritage Development South, Inc.
for the sale of certain real property within the Wesmere Community is
incorporated herein by reference.******
10.15. Agreement for Sale and Purchase of Real Property dated March
22, 1996 among Heathrow Development Associates, Ltd., Heathrow Cable
Limited Partnership and Associates and Country Club, L.P. and 4/46A
Corporation for the sale of the remaining land and certain related assets
within the Heathrow Community is filed herewith.
10.16. Agreement for Option to Purchase and Purchase and Sale of Real
Property and Escrow Instructions by and between Arvida/JMB Partners, L.P. -
II and Seagate at San Clemente for the sale of the remaining land within
Talega is filed herewith.
* Previously filed with the Securities and Exchange Commission as
Exhibit 3., 4.1 and 10.11 to the Partnership's Form 10-K (File No. 0-19245)
filed on April 12, 1993 and incorporated herein by reference.
** Previously filed with the Securities and Exchange Commission as
Exhibits 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 10.1, 10.7, 10.8, 10.9 and 10.10,
respectively, to the Partnership's Form 10-K Report (File No. 0-19245)
filed on April 13, 1992 and are herein incorporated by reference.
*** Previously filed with the Securities and Exchange Commission as
Exhibits 10.2, 10.3, 10.4, 10.5 and 10.6 to the Partnership's Form 10-K
Report (File No. 0-19245) under the Securities Act of 1934 filed on March
28, 1990 and incorporated herein by reference.
**** Previously filed with the Securities and Exchange Commission as
Exhibits 4.8, 10.12 and 10.13, respectively, to the Partnership's Form 10-K
(File No. 0-19245) filed on April 13, 1994 and incorporated herein by
reference.
***** Previously filed with the Securities and Exchange Commission as
Exhibits 4.9 and 4.10, respectively, to the Partnership's Form 10-Q (File
No. 0-19245) filed on November 9, 1995 and incorporated herein by
reference.
****** Previously filed with the Securities and Exchange Commission as
Exhibits 4.12, 10.14 and 10.15, respectively, to the Partnership's Form 10-
K Report (File No. 0-19245) under the Securities Act of 1934 filed on March
25, 1996 and incorporated herein by reference.
(b) No reports on Form 8-K have been filed since the beginning of
the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
ARVIDA/JMB PARTNERS, L.P.-II
BY: Arvida/JMB Managers-II, Inc.
(The General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Vice President
Date: May 10, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 10, 1996
AGREEMENT FOR SALE
AND PURCHASE OF REAL PROPERTY
between
HEATHROW DEVELOPMENT ASSOCIATES, LTD.,
HEATHROW GOLF AND COUNTRY CLUB LIMITED PARTNERSHIP,
HEATHROW CABLE LIMITED PARTNERSHIP
and
4/46A CORPORATION
March 22, 1996
TABLE OF CONTENTS
Page
Section 1. Definitions and References . . . . . . . . . . . .- 1 -
Section 2. Purchase Price and Terms of Payment . . . . . . . . .- 7 -
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . .- 7 -
2.2 Terms of Payment . . . . . . . . . . . . . . . . . . .- 7 -
Section 3. Title Evidence . . . . . . . . . . . . . . . . . .- 8 -
3.1 Title Insurance Commitment . . . . . . . . . . . . . .- 8 -
3.2 Closing Commitment . . . . . . . . . . . . . . . . . .- 9 -
3.3 Survey . . . . . . . . . . . . . . . . . . . . . . . .- 9 -
Section 4. Seller's Representations and Warranties. . . . . - 10 -
4.1 Organization and Standing of Seller. . . . . . . . . - 10 -
4.2 Due Execution and Performance. . . . . . . . . . . . - 10 -
4.3 Binding Agreements . . . . . . . . . . . . . . . . . - 11 -
4.4 Compliance . . . . . . . . . . . . . . . . . . . . . - 11 -
4.5 Hazardous Substances . . . . . . . . . . . . . . . . - 11 -
4.6 Litigation . . . . . . . . . . . . . . . . . . . . . - 11 -
4.7 Condemnation . . . . . . . . . . . . . . . . . . . . - 12 -
4.8 Seller's Records . . . . . . . . . . . . . . . . . . - 12 -
4.9 Accuracy of Representations. . . . . . . . . . . . . - 12 -
4.10 Limitation of Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
Section 5. Buyer's Representations and Warranties . . . . . - 14 -
5.1 Organization, Standing and Qualification of
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
5.2 Due Execution and Performance. . . . . . . . . . . . - 14 -
5.3 Binding Agreements . . . . . . . . . . . . . . . . . - 14 -
Section 6. Covenants. . . . . . . . . . . . . . . . . . . . - 15 -
6.1 Compliance . . . . . . . . . . . . . . . . . . . . . - 15 -
6.2 Notices of Violations. . . . . . . . . . . . . . . . - 15 -
6.3 Operation and Maintenance of the Property. . . . . . - 15 -
6.4 Status of Agreements . . . . . . . . . . . . . . . . - 16 -
6.5 Hart-Scott-Rodino Filing . . . . . . . . . . . . . . - 16 -
6.6 Liens. . . . . . . . . . . . . . . . . . . . . . . . - 17 -
Section 7. Inspection Period. . . . . . . . . . . . . . . . - 17 -
7.1 Inspection Period. . . . . . . . . . . . . . . . . . - 17 -
7.2 Termination by Buyer . . . . . . . . . . . . . . . . - 18 -
7.3 Cooperation. . . . . . . . . . . . . . . . . . . . . - 18 -
Section 8. Closing. . . . . . . . . . . . . . . . . . . . . - 18 -
8.1 Time and Place . . . . . . . . . . . . . . . . . . . - 18 -
8.2 Closing Expenses . . . . . . . . . . . . . . . . . . - 19 -
8.3 Delivery of Documents by Seller. . . . . . . . . . . - 19 -
8.4 Delivery by Buyer. . . . . . . . . . . . . . . . . . - 21 -
8.5 Credits and Prorations . . . . . . . . . . . . . . . - 22 -
Section 9. Agents, Brokers and Financial Advisors . . . . . - 24 -
Section 10. Survival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
10.1 Survival. . . . . . . . . . . . . . . . . . . . . . - 25 -
Section 11. Default. . . . . . . . . . . . . . . . . . . . . - 25 -
11.1 Buyer's Default . . . . . . . . . . . . . . . . . . - 25 -
11.2 Seller's Default. . . . . . . . . . . . . . . . . . - 25 -
Section 12. Risk of Loss . . . . . . . . . . . . . . . . . . - 26 -
12.1 Casualty. . . . . . . . . . . . . . . . . . . . . . - 26 -
12.2 Condemnation. . . . . . . . . . . . . . . . . . . . - 26 -
Section 13. Third Party Sales. . . . . . . . . . . . . . . . - 27 -
Section 14. Miscellaneous. . . . . . . . . . . . . . . . . . - 28 -
14.1 Litigation. . . . . . . . . . . . . . . . . . . . . - 28 -
14.2 Escrow Obligations of Title Agent . . . . . . . . . - 28 -
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . - 29 -
14.4 Integration and Severability. . . . . . . . . . . . - 31 -
14.5 Successors and Assigns. . . . . . . . . . . . . . . - 31 -
14.6 Construction. . . . . . . . . . . . . . . . . . . . - 32 -
14.7 Governing Law . . . . . . . . . . . . . . . . . . . - 32 -
14.8 Invalid Provisions. . . . . . . . . . . . . . . . . - 32 -
14.9 Counterparts. . . . . . . . . . . . . . . . . . . . - 32 -
14.10 Confidentiality. . . . . . . . . . . . . . . . . . - 32 -
14.11 No Waiver of Default . . . . . . . . . . . . . . . - 32 -
14.12 Radon Gas. . . . . . . . . . . . . . . . . . . . . - 33 -
14.13 Recourse Limited to Seller; Survival . . . . . . . - 33 -
EXHIBITS
E-1 - Description of Land
E-2 - Purchase Price Allocation
E-3 - Stated Values
SCHEDULES
S-1(ab) - Personalty
S-1(ab)(3) - Marketing Fees
S-1 (i) - Contracts
S-1 (x) - Membership Categories
S-4.2 - Required Consents
S-4.4 - Compliance
S-8.5(d) - Bonds and Letters of Credit
AGREEMENT FOR SALE
AND PURCHASE OF REAL PROPERTY
THIS AGREEMENT is made among HEATHROW
DEVELOPMENT ASSOCIATES, LTD. ("Associates"), a Florida
limited partnership, HEATHROW GOLF AND COUNTRY CLUB LIMITED
PARTNERSHIP ("Country Club LP"), a Delaware limited
partnership, and HEATHROW CABLE LIMITED PARTNERSHIP, ("Cable
LP," and jointly and severally with Associates and Country
Club LP, each as to the Property which it owns and herein
agrees to sell and convey, the "Seller"), and 4/46A
CORPORATION (the "Buyer"), a Florida corporation. Seller is
the owner/developer of substantially all of the undeveloped,
and the developed but unsold, land within the planned
community situated in Seminole County, Florida generally
known as "Heathrow", and owner and operator of the golf and
country club and cable television system within and serving
the Heathrow community. Pursuant to this Agreement, Seller
agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, the assets and rights related to the Heathrow
community herein described, on the following terms and
conditions:
Section 1. Definitions and References.
The following terms, as used in this Agreement,
have the following meanings and references unless the context
is inconsistent therewith:
(a) "Agreement Date" means the first
date upon which this Agreement has been executed by both
Seller and Buyer.
(b) "Affiliate" means a Person which
controls, is in common control with or is controlled by,
another Person. A Person will be deemed to control another
Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
(c) "Business Day" means any day when
commercial banks in Orlando, Florida are required to be open
for business.
(d) "Cable System" means the existing
cable television receiving and distribution system serving
Heathrow, including antennae, above-ground and underground
cable, distribution systems, earth satellite receiving
stations, headend, cable amplifier, line splitting devices,
feeders, conduit, drops and other equipment; and all
easements granted by plats of property in Heathrow for the
benefit of public utility companies or reserved for the use
of "Community Systems" (as defined in various neighborhood
declarations of covenants and restrictions affecting portions
of Heathrow), and the easements rights pursuant to instrument
dated January 17, 1990, filed for record January 18, 1990,
and recorded in Official Records Book 2144, at Page 1091, of
the Public Records of the County. However, the Cable System
excludes any assets of Southern Bell Telephone & Telegraph
Company, including the Transport System in accordance with
the terms of that certain Agreement dated July 6, 1987
between Southern Bell Telephone & Telegraph Co. and Telcom
International; any agreements, rights or obligations of
Seller with respect to Seller's or the Heathrow cable
system's employees or contractors, except Contracts with
contractors, if any; any insurance policies; cash or cash
equivalents on hand or in bank accounts; performance or other
bonds maintained by Seller, if any; and the names "Arvida";
"JMB"; "Arvida/JMB" and derivatives thereof.
(e) "Closing" means the consummation of
the sale and conveyance of the Property by Seller to Buyer
and payment of the Purchase Price by Buyer to Seller,
pursuant to Section 8 of this Agreement.
(f) "Closing Commitment" means the
modified or endorsed Title Commitment, or the Title Policy,
to be delivered to Buyer at Closing as set forth in Section
3.2 of this Agreement.
(g) "Closing Date" means the date upon
which the Closing occurs, as set forth in Section 8.1 of this
Agreement.
(h) "Club" means Heathrow Golf and
Country Club, a private membership club owned and operated by
Country Club LP.
(i) "Contracts" means all assignable or
transferable contracts, commitments, agreements, land and/or
equipment leases (including any golf cart lease) and other
obligations, written or oral (exclusive of this Agreement),
governing or relating to sale, maintenance, occupancy, use or
operation of the Property, including the agreements set forth
in Schedule S-1(i).
(j) "Country Club LP" means Heathrow
Golf and Country Club Limited Partnership, a Delaware limited
partnership, of which Seller is the sole limited partner and
Arvida/Heathrow Club, Inc., a Delaware corporation, is the
sole general partner.
(k) "County" means Seminole County, a
political subdivision of the State of Florida.
(l) "Declarant's Rights" means all
rights, powers, duties, obligations and responsibilities, if
any, pursuant to declarations of covenants, conditions and
restrictions encumbering all or portions of Heathrow,
including all rights to exercise dominion and control over
one or more property owner's associations.
(m) "Deposit" is defined in Section
2.2(a).
(n) "Hazardous Substances" means (i)
those substances included within the definitions of
"hazardous substances," "hazardous materials," "toxic
substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901
et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., or the Clean Water Act, 33
U.S.C. Section 1321 et seq., and in the regulations
promulgated pursuant thereto; (ii) those substances listed in
the United States Department of Transportation Table (49 CFR
Section 172.101) or by the Environmental Protection Agency as
"hazardous substances," (iii) such other substances,
materials and wastes which are regulated, or classified as
hazardous or toxic, under applicable local, state or federal
law or regulations, and (iv) any material, waste or substance
which is or contains petroleum, regulated amounts of
asbestos, polychlorinated biphenyls, flammable explosives or
radioactive materials. "Hazardous Materials" does not
include materials stored or used on the Land in the ordinary
course of the business conducted on the Land.
(o) "Heathrow" means the planned
community within which the Land is situated, generally known
and referred to as Heathrow.
(p) "Herein" or "hereof" means this
entire Agreement rather than just the sentence, paragraph or
section in which used.
(q) "Including," "include" or "includes"
mean including as an example, without limiting the generality
of the universe to which reference is made.
(r) "Inspection Indemnity" is defined in
Section 7.1.
(s) "Inspection Period" is defined in
Section 7.1.
(t) "Inspection Termination Date" is
defined in Section 7.1.
(u) "Knowledge" or "best knowledge" (i)
of Seller means the actual knowledge of Ed Hill, Stephen A.
Lovelette, Joseph Debosh and Peter Albe, and (ii) of Buyer
means the actual knowledge of George Apostolicas.
(v) "Land" means all real property of
Seller situated in Heathrow, including the real property
described on Exhibit E-1, together with all tenements,
hereditaments, easements, privileges, reversions, remainders
and other rights and appurtenances belonging or in any manner
appertaining thereto, including all reversionary interests in
and to any adjoining or abutting rights-of-way and all
riparian, littoral and other water rights, and all buildings
and improvements thereon.
(w) "Memberships" means all memberships
in the Club, including all classes and categories of
membership as set forth in Schedule S-1(x).
(x) "Permits" means all assignable or
transferable permits, approvals, orders, licenses,
entitlements and other authorizations held or procured by
and/or issued to Seller and governing or applicable or
relating to the design and/or planning, development,
construction upon, furnishing, equipping, use, operation or
maintenance of the Property, or any portion(s) thereof, and
the ownership and operation of the Club and the Cable System.
(y) "Permitted Exceptions" means the
title exceptions set forth in Schedule B, Section II of the
Title Commitment approved by Buyer, and to be included in the
Title Policy pursuant to Section 3.1 hereof.
(z) "Person" means any individual,
partnership, joint venture, firm, corporation, limited
liability company, association, trust or other enterprise, or
any government or political subdivision or any agency,
department or instrumentality thereof.
(aa) "Personalty" means all plans,
specifications, drawings, inventory and other tangible or
intangible (including impact fee credits) personal property
owned by Seller and used exclusively in connection with use,
development, construction, marketing and sale of the Land and
operation of the Club and Cable System, including the
Contracts, Permits, Proprietary Rights, nonresident Club
member notes receivable for deferred initiation fees and the
property described in Schedule S-1(ab), but excluding (1)
cash, (2) accounts receivable (including resident Club member
notes receivable for deferred initiation fees) and (3)
marketing fees payable to Seller by third parties pursuant to
contracts (including Third Party Contracts closed prior to
Closing hereunder) for sale of land in Heathrow payable to
Seller upon issuance of a building permit or closing of a
construction loan with respect to the applicable land, as set
forth in Schedule S-1(ab)(3).
(ab) "Presale Premium" defined in
Section 13.
(ac) "Property" means the Land and
Personalty.
(ad) "Proprietary Rights" means the
common law and registered rights in trade names, and all
existing stocks of sales brochures, promotional and marketing
materials other than those describing Heathrow as an "Arvida
Community", telephone numbers and addresses and other
intangibles, if any, owned and/or used by Seller in
connection with the Land and/or the business(es) conducted
with respect thereto, but excluding the names "Arvida",
"JMB," "Arvida/JMB" and derivatives thereof; and reserving to
Seller and its Affiliates the nonexclusive right to use the
name "Heathrow," and derivatives thereof heretofore used by
Seller with respect to the Property, to refer to and describe
Seller's association with and involvement in Heathrow.
(ae) "Purchase Price" is defined in
Section 2.1.
(af) "Readjustment Period" is defined in
Section 9.5.
(ag) "Stated Value(s)" is defined in
Section 13.
(ah) "Survey" means the ALTA survey of
the Land to be prepared by the Surveyor, as set forth in
Section 3.3.
(ai) "Surveyor" means such licensed
Florida land surveyor as to which Seller and Buyer mutually
agree.
(aj) "Third Party Contract" is defined
in Section 13.
(ak) "Title Agent" means White & Case,
as agent for the Underwriter by whom the Title Commitment and
Title Policy are to be issued.
(al) "Title Commitment" means the ALTA
Owner Marketability Title Insurance Commitment (1992 Form)
issued or to be issued to Buyer with respect to the Land, as
set forth in Section 3.1, which will include copies of all
matters for which exception is made in Schedule B, Section II
thereof.
(am) "Title Policy" means the ALTA Owner
Marketability Title Insurance Policy to be issued to Buyer
(and Buyer's institutional lender, if applicable) pursuant to
the Title Commitment.
(an) "Underwriter(s)" means an insurer
acceptable to Buyer, for and upon whom the Title Commitment
and Title Policy are to be written and issued.
Section 2. Purchase Price and Terms of Payment.
2.1 Purchase Price. The purchase price for the
Property (the "Purchase Price") will be a sum of Twenty
Million Three Hundred Thousand Dollars U.S. ($20,300,000.00),
allocated to the assets included in the Property as set forth
in Exhibit E-2 hereof.
2.2 Terms of Payment. The Purchase Price will
be paid as follows:
(a) Buyer will deliver to Title Agent a
deposit (the "Deposit") in the amount of $500,000.00, as
follows:
(i) One Hundred Thousand Dollars
($100,000.00) on the Agreement Date; and
(ii) Four Hundred Thousand Dollars
($400,000.00) on or before the Inspection Termination Date,
to be held in escrow by Title Agent as security for
performance by Buyer of its obligations pursuant to this
Agreement, and delivered by Title Agent to Seller at Closing
in partial payment of the Purchase Price or otherwise
disbursed in accordance with the terms of this Agreement; and
(b) the balance of the Purchase Price,
subject to the prorations and adjustments for which provision
is made elsewhere in this Agreement, will be paid by Buyer to
Seller at Closing by wire transfer of immediately available
federal funds.
The Deposit will be held by Title Agent in an
interest-bearing escrow account, or, pursuant to joint
instructions by Seller and Buyer, invested in securities of
the United States government, and all earnings thereon will
constitute a portion of the Deposit and will accrue to Buyer
unless Buyer defaults pursuant to the terms of this
Agreement.
Section 3. Title Evidence.
3.1 Title Insurance Commitment. Within 20 days
after the Agreement Date, Seller will cause the Title Agent
to issue the Title Commitment in an amount equal to the
Purchase Price of the Land (with such affirmative assurances
and endorsements as reasonably may be obtainable and
requested by Buyer) and having an effective date subsequent
to the Agreement Date. The Title Commitment will show that
Seller is vested with and can convey to Buyer good and
marketable and insurable fee simple title to the Land subject
only to the Permitted Exceptions. Buyer will have until the
Inspection Termination Date to cause the Title Commitment and
Survey to be examined and to notify Seller of any defects in
Seller's title reflected by the Title Commitment and/or
Survey, or to the form or amount thereof. Seller agrees to
make a reasonable good faith effort to cure or remove, at or
before Closing, any title defect, exclusive of the filing or
prosecution of suits or any expenditures in excess of Fifty
Thousand Dollars ($50,000.00) in the aggregate, and to pay or
transfer to security any lien(s) against the Land in a
liquidated amount of $50,000.00 or less in the aggregate. If
Seller fails or is unable to cure or remove any title defect
prior to the Closing Date, Seller may, at its option,
postpone Closing of this Agreement for a period of up to 120
days during which Seller may continue to endeavor to cure or
remove any title defect as aforesaid. If Seller fails or is
unable to cure or remove any defect in title as aforesaid,
Buyer, at Buyer's option, will either:
(a) accept title to the Land in its
then-existing condition without reduction in or credit
against the Purchase Price; or
(b) terminate this Agreement by written
notice to Seller, upon which the Deposit will be refunded to
Buyer and this Agreement will be null and void and the
parties hereto will have no further rights or obligations
hereunder except with respect to the Inspection Indemnity.
3.2 Closing Commitment. At Closing, the Title
Agent will issue to Buyer the Closing Commitment consisting
of either (a) a Title Policy pursuant to the terms of the
Title Commitment with all standard printed exceptions
deleted, and any applicable endorsements thereto; or (b) an
endorsement to the Title Commitment, or a "marked up"
duplicate original of the Title Commitment, reflecting that
all requirements of the Title Commitment have been fulfilled
or waived and eliminating the "gap exception," the standard
ALTA exceptions and any other exceptions to which Buyer has
reasonably objected, and extending the effective date of
coverage through recording of the deed of conveyance to
Buyer.
3.3 Survey. As soon as practicable, but in any
event within five (5) days after the Agreement Date, Seller
will deliver to Buyer copies of any existing surveys of the
Land in Seller's possession, and Buyer, at Buyer's option and
expense, may thereafter cause the Surveyor to prepare and
deliver to Buyer a current survey of the Land (the "Survey")
conforming to the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" jointly established and adopted
by the ALTA and ACSM in 1988 and meeting the accuracy
requirements of a Class A Survey, as defined therein; and
showing and describing the exterior boundaries and corner
markers or monuments of the Land, the size and location of
any improvements, any encroachments, easements, rights-of-way
or other conditions to which the Land is subject, and the
legal description and area of the Land. If the Survey shows
any encroachment, hiatus or other condition which affects the
marketability of title to the Land, Buyer will have the right
during the Inspection Period to object to such condition as
a defect in title pursuant to provisions of Section 3.1
hereof. After approval of the Survey by Buyer, the legal
description of the Land will be as set forth in the Survey,
provided that it reasonably conforms to the descriptions in
the instruments pursuant to which Seller acquired and holds
title to the Land.
Section 4. Seller's Representations and
Warranties.
Seller hereby represents and warrants to Buyer
as follows:
4.1 Organization and Standing of Seller.
Associates is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of
Florida, and Country Club LP and Cable LP are limited
partnerships duly organized, validly existing and in good
standing under the laws of Delaware and duly qualified to
transact business in the State of Florida, and each Seller
has all requisite power and authority to own its properties
and assets and to carry on its business as now being
conducted and full power and authority to execute, deliver
and perform this Agreement and to consummate the transactions
contemplated hereby, including the execution, delivery and
performance of each of the documents required to be delivered
by Seller to Buyer pursuant to this Agreement, and any and
all other documents or instruments necessary or desirable to
the consummation hereof.
4.2 Due Execution and Performance. This
Agreement has been, and the deed of conveyance and all other
documents, instruments and agreements required to be
delivered by Seller pursuant to or in connection with this
Agreement will be when executed and delivered, duly
authorized, executed and delivered by Seller and constitute
the legal, valid and binding obligations of Seller
enforceable in accordance with their respective terms,
subject only to general principles of equity, bankruptcy,
insolvency or similar laws affecting enforcement of
creditors' rights generally as the same may be applicable to
any insolvency of Seller or Buyer. Except as shown in
Schedule S-4.2, neither the execution, delivery or
performance of this Agreement, or any document, instrument or
agreement required to be delivered by Seller pursuant hereto,
nor the consummation of the transactions contemplated hereby,
is prohibited by, or requires Seller to obtain the consent,
approval or authorization of, or notice to or filing or
registration with, any Person having jurisdiction over the
Land; and Seller has obtained the agreement of Bank of
America Illinois and/or its Affiliate to deliver its consent,
or declination to consent, within one (1) week after receipt
of a copy of this Agreement (which consent, if any, will be
in the form of a letter approving this Agreement and agreeing
to satisfy the existing first mortgage against the Property
upon Closing hereunder and payment to Bank of America
Illinois and/or its Affiliate, or their nominee(s), of the
net cash proceeds of such Closing).
4.3 Binding Agreements. The execution and
delivery by Seller of this Agreement and the performance by
Seller of its obligations hereunder do not and will not (a)
conflict with any provision of the certificate of limited
partnership or other governing documents of Seller; or (b) to
the best of Seller's knowledge conflict with, or result in a
breach of or a default or violation under, any contract,
agreement or arrangement to which Seller is a party or any
statute, decree, judgment, regulation, order or rule of any
governmental authority having jurisdiction over Seller or the
Property.
4.4 Compliance. Except as set forth in
Schedule 4.4, Seller has received no written notice and has
no actual knowledge of any material violation of existing
covenants, restrictions, permits, laws, ordinances or
regulations governing the development and use of the
Property.
4.5 Hazardous Substances. Except for matters,
if any, described in reports made available for inspection by
Buyer, Seller has received no written notice and has no
actual knowledge of (i) any Hazardous Substance illegally
present on or within the Land, (ii) any present or past
illegal generation, recycling, reuse, sale, storage,
handling, transport and/or disposal of any Hazardous
Substance on or within the Land other than in accordance with
applicable law, or (iii) any failure to comply with any
applicable local, state or federal environmental laws,
regulations, ordinances or administrative or judicial orders
relating to the generation, recycling, reuse, sale, storage,
handling, transport and/or disposal of any Hazardous
Substance.
4.6 Litigation. There is no legal action or
suit pending, or to the knowledge of Seller threatened,
against Seller affecting Seller's title to the Property.
Seller has advised Buyer of the pending action in [Palucci v.
Arvida] relating to Seller's prior acquisition and operation
of Heathrow.
4.7 Condemnation. Seller has not received
written notice of condemnation proceedings with respect to of
any portion of the Land.
4.8 Seller's Records. It is Seller's general
practice to maintain the originals or copies of books and
records directly related to the Heathrow at Seller's
development office in Heathrow, and Seller has not
intentionally removed any books or records directly related
to Heathrow with the express intention by such removal to
deprive Buyer of access thereto or to secrete such books and
records from Buyer.
4.9 Accuracy of Representations. Taking into
account the limitation to Seller's knowledge of any of the
foregoing representations and warranties, all statements and
information of Seller set forth in this Agreement are, and on
and as of the Closing Date will be, true and correct in all
material respects.
4.10 Limitation of Representations and
Warranties. Buyer acknowledges that except as specifically
set forth in this Section 4, Buyer acknowledges and agrees
that the Property is being sold and conveyed "as is", "where
is" and "with all faults", and Seller has not made, does not
make and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements
or guaranties of any kind or character whatsoever, whether
express or implied, oral or written, past, present or future,
of, as to, concerning or with respect to (i) the value,
nature, quality or condition of the Property, including,
without limitation, the water, soil and geology, (ii) the
income to be derived from the Property, (iii) the suitability
of the Property for any and all activities and uses which
Buyer may conduct thereon or with respect thereto, (iv) the
compliance of or by the Property of its operation with any
laws, rules, ordinances or regulations of any applicable
governmental authority or body, including, but not limited
to, compliance with any special use permits or developments
of regional impact, (v) the habitability, merchantability,
marketability, profitability or fitness for a particular
purpose of the Property, (vi) the manner or quality of the
construction of materials, if any, incorporated into the
Property, (vii) the manner, quality, state of repair or lack
of repair of the Property, (viii) the existence of hazardous
materials or governmental requirements at the Property, (ix)
the existence, quality, nature, adequacy or physical
condition of any utilities serving the Property, (x) the
value or development potential of the Property, or (xi) any
other matter with respect to the Property; and specifically,
that Seller has not made, does not make and specifically
disclaims any representations regarding concurrence, or
compliance with any special use permits, developments of
regional impact, environmental protection, pollution or land
use laws, rules, regulations, orders or requirements,
including the existence in or on the Property of hazardous
materials. Buyer further acknowledges and agrees that it has
been given an ample opportunity to inspect the Property, and
Buyer is relying solely on its own investigation of the
Property and not on any information provided or to be
provided by Seller; and at Closing Buyer will accept the
Property and waive all objections or claims against Seller
(including, but not limited to, any right or claim or
contribution) arising from or related to the Property and any
claim it has, might have had or may have against Seller with
respect to the condition of the Property, either patent or
latent. Buyer further acknowledges and agrees that any
information provided or to be provided with respect to the
Property was obtained from a variety of sources and that
Seller has not made any independent investigation or
verification of such information and makes no representations
as to the accuracy or completeness of such information.
Seller is not liable or bound in any manner by any verbal or
written statements, representations or information pertaining
to the Property, or the operation thereof, furnished by any
person. It is understood and agreed that the Purchase Price
has been adjusted by prior negotiation to reflect that all of
the Property is sold by Seller and purchased by Buyer subject
to the foregoing. The provisions of this paragraph will
survive the Closing.
Section 5. Buyer's Representations and
Warranties.
Buyer hereby represents and warrants to Seller
as follows:
5.1 Organization, Standing and Qualification of
Buyer. Buyer (i) is a corporation duly organized and validly
existing under the laws of the State of Florida; (ii) has all
requisite power and authority to own its properties and
assets and to carry on its business now being conducted; and
(iii) has full power and authority to execute, deliver and
perform this Agreement and consummate the transactions
contemplated hereby, including the execution, delivery and
performance of each of the documents required to be delivered
by Buyer to Seller pursuant to this Agreement, and any and
all other documents or instruments necessary or desirable to
the consummation hereof.
5.2 Due Execution and Performance. This
Agreement has been, and the documents, instruments and
agreements required to be delivered by Buyer pursuant to or
in connection with this Agreement will be when executed and
delivered, duly authorized, executed and delivered by Buyer
and constitute the legal, valid and binding obligations of
Buyer enforceable in accordance with their respective terms,
subject only to general principles of equity, bankruptcy,
insolvency or similar laws affecting enforcement of
creditors' rights generally as the same may be applicable to
any insolvency of Buyer or Seller. Neither the execution,
delivery or performance of this Agreement, or any document,
instrument or agreement required to be delivered by Buyer
pursuant hereto, nor the consummation of the transactions
contemplated hereby, is prohibited by, or requires Buyer to
obtain the consent, approval or authorization of, or notice
to or filing or registration with, any Person.
5.3 Binding Agreements. The execution and
delivery by Buyer of this Agreement and the performance by
Buyer of its obligations hereunder do not and will not (a)
conflict with any provision of the articles of incorporation,
bylaws or other governing documents of Buyer; or (b) to the
best of Buyer's knowledge conflict with, or result in a
breach of or a default or violation under, any contract,
agreement or arrangement to which Buyer is a party or any
statute, decree, judgment, regulation, order or rule of any
governmental authority having jurisdiction over Buyer.
Section 6. Covenants.
6.1 Compliance. Prior to the Closing, Seller
will make a reasonable good faith effort to comply with and
abide by all of the covenants, conditions and requirements
set forth or imposed by, related to or arising out of all
statutes, laws, ordinances, rules, regulations, plans,
Permits, authorizations or approvals related or applicable to
any portions of the Property. Neither Seller, nor any Person
claiming by, through or under Seller, will apply for or seek
to obtain any modification or amendment to, or release from,
any statute, law, ordinance, rule, regulation, plan, approval
or authorization applicable to the Property if the granting
of such modification, amendment or release would have a
material adverse effect upon the Property, unless Seller
first obtains the consent of Buyer.
6.2 Notices of Violations. Prior to Closing,
in the event that Seller receives any notice from the County,
or any other governmental or quasi-governmental authority
having jurisdiction over the Property, of a violation or
alleged violation of any statute, law, ordinance, rule or
regulation applicable to the Property or of any contemplated
or pending investigation with respect thereto, Seller will
deliver a copy of such notice to Buyer; and Buyer will have
the option (but will not be required) to participate with
Seller in responding to such notice.
6.3 Operation and Maintenance of the Property.
Except as permitted by Section 14 hereof, prior to Closing
Seller will cause the Property to be operated and maintained
in the usual and ordinary course of business and in
accordance with Seller's current practices, maintain
inventories and accounts payable at normal levels (taking
into account the currently limited operations of Seller), and
make a reasonable good faith effort to preserve the Property
in the same state of condition and repair as existing on the
Agreement Date.
6.4 Status of Agreements. From and after the
Agreement Date until the Closing Date, without Buyer's
approval (a) Seller may enter into new Contracts for normal
Property operation and/or maintenance with respect to any
such Contracts which expire between the Agreement Date and
the Closing Date, provided that such new Contract is on
substantially the same terms and conditions as the expiring
Contract except that it may provide for an increase in the
annual compensation to the service provider under such
Contract which is reasonably expected not to exceed seven and
one-half percent (7 1/2%) of the prior year's compensation; and
(b) with respect to any other existing Contract of Seller or
any other new Contract of Seller, Seller may make or permit
any amendment or modification to any such existing Contract,
or enter into any such new Contract, provided that such
Contract (as modified, if applicable) either is terminable
without penalty on not more than thirty (30) days notice, or
involves the expenditure of not more than One Hundred
Thousand Dollars ($100,000.00) over the term of such
Contract; and Seller agrees to deliver to Buyer a copy of any
such Contract, or amendment or modification thereto, within
three (3) business days after the execution thereof. Except
as specifically set forth in this Section 6.4, from and after
the date specified in the preceding sentence Seller will not
make any amendment or modification to any existing, or enter
into any new, Contract, Permit or other document materially
affecting the Property, and will not intentionally do any act
or omit to do any act that will cause a material breach of
any Contract or Permit without Buyer's express prior written
consent. Notwithstanding the foregoing, however, Seller will
amend or permit amendment of any Permits to the extent
necessary to keep such Permits in good standing, and may
amend or permit amendment to any Contract provided that such
Contract, as amended, expires without penalty or premium
within not more than 30 days after Closing, and that such
modification or amendment does not result in any expense or
liability to Buyer.
6.5 Hart-Scott-Rodino Filing. Buyer and Seller
acknowledge that the transactions contemplated by this
Agreement may be subject to pre-clearance under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended
("H-S-R"). In such event, Buyer and Seller each agrees to
furnish such information, and to make such filings, as may be
required under H-S-R or the rules and regulations thereunder
and to reasonably cooperate with each other to cause such
filings to be made as soon as reasonably practicable. It
shall be a condition to closing the transactions hereunder
that either all required approvals have been obtained or all
required waiting periods have expired or been terminated
under H-S-R, and the date of the Closing, to the extent
necessary, may be extended for a reasonable period in order
for such approvals to be received or for such required
waiting periods to expire or be terminated. Buyer will pay
all filing and other similar fees due in connection with such
filings at the time such filings are made. Buyer and Seller
will each pay its own attorneys' and accountants' fees and
expenses in connection with the preparation of such filings.
6.6 Liens. Seller will cause all bills for
labor, services or work performed or rendered upon the Land,
or for materials or supplies furnished or delivered to the
Land, prior to Closing to be paid promptly.
Section 7. Inspection Period.
7.1 Inspection Period. Buyer will have the
right, during the period (the "Inspection Period") from and
after the Agreement Date through 11:59 P.M. on April 26, 1996
(the "Inspection Termination Date"), to inspect and evaluate
the physical and other conditions of or with respect to the
Property, including the right to make such engineering and
soil tests, analyses and other investigations on or of the
Land as Buyer deems necessary and appropriate, to review, and
to make and retain copies of documents relating to the
Property and in Seller's possession or control, and to
investigate, evaluate and/or review any other facts,
circumstances or matters which Buyer deems relevant to its
proposed purchase of the Property; Seller agrees to cooperate
with Buyer at no material expense to Seller, in making
available to Buyer documents and materials in Seller's
possession or control (whether in Seller's Heathrow office or
Seller's other offices) which Buyer requests. Buyer hereby
agrees (a) to indemnify, protect and hold harmless Seller
from and against any and all claims, demands, losses, costs,
damages, expenses or liabilities for personal injury or
property damage, or for mechanics' or other liens, including
reasonable attorneys' fees, caused by Buyer's inspections of
the Property, and (b), if the Closing does not occur, to
repair and restore the Property to the condition existing
prior to any test or inspection by or for Buyer (the
foregoing (a) and (b), the "Inspection Indemnity").
7.2 Termination by Buyer. (a) Buyer will have
the right, which may be exercised by delivering written
notice to Seller any time during the Inspection Period, to
terminate this Agreement for any reason which Buyer, in its
sole and absolute discretion, deems appropriate, upon which
the Deposit will be returned to Buyer and this Agreement will
be null and void and the parties hereto will have no further
rights or obligations hereunder except with respect the
Inspection Indemnity.
(b) If Buyer elects to terminate this Agreement
pursuant to Section 7.2(a), Buyer will return to Seller all
documents and other materials provided by Seller to Buyer,
and copies of all studies, evaluations, test reports and
similar information which Buyer has produced or caused to be
produced regarding the Property, in connection with its
investigations pursuant to this Section 7.
(c) If Buyer fails to deliver to Seller written
notice of termination of this Agreement on or before the
Inspection Termination Date, Buyer conclusively will be
deemed to have waived its right to terminate as set forth in
this Section 7, time being of the essence with respect
thereto.
7.3 Cooperation. During the Inspection Period,
Seller agrees at Buyer's request and at no cost to Seller to
join in applications for permits, approvals and
authorizations related to Buyer's proposed future use and
development of the Land, provided that no such application
could result in any change in the legal status of the Land
that could be binding upon Seller or the Land if the
transaction which is the subject of this Agreement is not
closed.
Section 8. Closing.
8.1 Time and Place. Unless extended pursuant
to the provisions of this Agreement, the Closing will take
place commencing at 10:00 A.M. at the office of Underwriter
in Orlando, Florida, or such other location as to which
Seller and Buyer agree, on May 29, 1996, or earlier upon five
(5) days prior written notice by Buyer to Seller.
8.2 Closing Expenses. At or before Closing:
(a) Seller will pay, or Buyer will
receive a credit against the Purchase Price in an amount
equal to, the cost of recording any corrective instruments;
(b) Buyer will pay the cost of recording
the conveyancing documents from Seller to Buyer;
(c) Seller and Buyer will share equally
the cost of documentary taxes and surtaxes, if any, due on
the deed of conveyance, the cost of the Survey, if any, and
the premium (at minimum promulgated rates) for the Title
Policy; and
(d) each party will pay any fees due to
its attorneys or other consultants.
8.3 Delivery of Documents by Seller. At the
Closing, in addition to any other documents specifically
required to be delivered or acts required to be done pursuant
to this Agreement, Seller will deliver, or cause to be
delivered, to Buyer the following (all of which will be in
form reasonably acceptable to Buyer):
(a) a special warranty deed conveying
title to the Land, subject only to the Permitted Exceptions;
(b) a bill of sale conveying title to
the Personalty (other than the Contracts, Permits and
Proprietary Rights);
(c) an assignment, without recourse, and
assumption of the Contracts, Permits and Proprietary Rights;
(d) a recordable assignment, without
recourse, and assumption of the Declarant's Rights, if any;
(e) an assignment, without recourse, and
assumption of all of Country Club LP's rights, powers,
duties, obligations and responsibilities with respect to the
Memberships and the ownership and operation of the Club
(excluding accounts receivable and resident Club member notes
receivable for deferred initiation fees, but including
nonresident Club member notes receivable for deferred
initiation fees);
(f) an assignment, without recourse, and
assumption of all of Cable LP's rights, powers, duties,
obligations and responsibilities with respect to ownership
and operation of the Cable System;
(g) certified copies of resolutions of
the general partner of Seller (or of the general partner of
the general partner, with respect to Associates) authorizing
the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(h) a certificate of an authorized
officer of the general partner of Seller (or of the general
partner of the general partner, with respect to Associates),
dated as of the Closing Date, certifying that (i) the
representations and warranties of Seller contained in this
Agreement (except those deemed waived by Buyer) are true on
and as of the Closing Date in all material respects with the
same effect as if said representations and warranties were
made on and as of the Closing Date; and (ii) Seller is in
sole and exclusive possession of the Land and no other Person
has any right or claim to possession thereof;
(i) a certificate of the Secretary or an
Assistant Secretary of the general partner of Seller (or the
general partner of the general partner, with respect to
Associates), dated as of the Closing Date, certifying as to
the incumbency of the officers of the general partner of
Seller (or the general partner of the general partner of
Associates) executing the documents delivered by Seller
pursuant to this Agreement;
(j) a statement reflecting the true and
accurate results of searches of the Uniform Commercial Code
(UCC) records of the Secretary of the State of Florida and
the Clerk of the Circuit Court of the County, dated as close
to Closing as practicable under procedures of such offices
and showing that except as shown by the Title Commitment
there are no UCC financing statements filed of record
affecting Seller's interest in the Property;
(k) an affidavit complying with the
provisions of Section 1445(b)(2) of the Internal Revenue Code
of 1986, as amended, stating that Seller is not a foreign
person;
(l) the Closing Commitment; and
(m) the originals of all Permits, plans
and specifications and Contracts in the possession of Seller,
and copies in the possession of Seller where the originals
are not.
Each of the assignments for which provision is
made in Sections 8.3(c)-(f) will contain an indemnification
by Seller in favor of Buyer with respect to all claims
related to or arising out of events or circumstances
occurring or existing prior to the Closing Date, and an
indemnification by Buyer in favor of Seller with respect to
all claims related to or arising out of events or
circumstances occurring or existing on or after the Closing
Date. In addition to the foregoing, Seller will deliver to
the Underwriter such other affidavit(s) or certifications as
reasonably may be required to induce the Title Agent and/or
Underwriter to issue the Closing Commitment to Buyer at
Closing, provided that such affidavits or certifications do
not increase Seller's liability with respect to the title to
the Land beyond Seller's warranties in the special warranty
deed.
8.4 Delivery by Buyer. At Closing, in addition
to any documents or other items specifically required to be
delivered or required to be done pursuant to this Agreement,
Buyer will deliver, or cause to be delivered, to Seller:
(a) Certified copies of resolutions of
the Board of Directors of Buyer authorizing the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby, or an opinion of counsel
reasonably acceptable to Seller evidencing the same;
(b) a certificate of the President or
Chief Executive Officer of Buyer dated as of the Closing
Date, certifying that the representations and warranties of
Buyer contained in this Agreement are true on and as of the
Closing Date in all material respects with the same effect as
if said representations and warranties were made on and as of
the Closing Date;
(c) executed counterparts of the
instruments described in Sections 8.3(c)-(f); and
(d) the Purchase Price by wire transfer
of funds.
8.5 Credits and Prorations. Buyer will receive
a credit against the Purchase Price at Closing in an amount
equal to the aggregate contract sales price of all land in
Heathrow sold and conveyed by Seller after December 31, 1995
and prior to the Agreement Date, less Seller's costs for
title insurance, documentary tax stamps, recording charges
and brokerage fees in connection with such sales; and except
as otherwise specifically set forth in this Agreement, all
revenues and expenses of, and all impounds, prepayments or
deposits related to, the Property, including the following
items, will be prorated as of 12:01 A.M. on the Closing Date,
on the basis (if applicable) of the actual number of days of
ownership of the Property by Buyer and Seller relative to the
applicable period:
(a) Property Taxes. Ad valorem property
taxes assessed or levied against the Land will be prorated on
the basis of actual taxes, with maximum discount for early
payment, for the year of Closing, if known, or otherwise on
the basis of ad valorem property taxes for the immediately
preceding year.
(b) Utilities. Amounts, if any, due for
electric, gas, sewer, water, telephone, trash collection and
other utilities for the period prior to Closing will be
determined when the actual bills have been received, pending
which a reasonable reserve will be held by Title Agent until
final bills have been paid. All sums due will be paid by
debit or credit at Closing or remitted to the party to whom
due within ten (10) days after receipt of notice of the
amount due, including a copy of the applicable billing
statement. In addition, Buyer will reimburse Seller for all
deposits held by utility providers with respect to service to
the Property, or will replace existing deposits in order to
facilitate Seller obtaining a refund of its deposits.
(c) Assessments. Assessments or other
sums due to any property owners association, and unfunded
deficits of any property owners association as to which
Declarant's Rights are assigned to Buyer.
(d) Permits and Contracts. Fees or
other charges payable with respect to the Permits and any
Contracts assigned to and assumed by Buyer.
(e) Cable System. Subscriber fees, fees
or other charges payable with respect to network or
programming providers, and fees and other charges with
respect to distribution carriers.
(f) Club. Club member dues for the
calendar quarter in which the Closing occurs. In addition,
Buyer will receive a credit for, and Buyer will assume,
accounts payable with respect to Club inventory transferred
to Buyer; and Buyer will receive a credit, with respect to
each nonresident Club member, for the amount, if any, by
which (i) the amount of such nonresident Club member's
initiation fee refundable upon resignation of his or her
membership exceeds (ii) the balance of any note receivable
from such nonresident Club member evidencing the deferred
portion of his or her initiation fee.
(g) Bonds and Letters of Credit. Buyer
will replace or cause to be replaced all performance bonds or
letters of credit securing obligations related to the
Property, or will reimburse Seller at Closing for the amount
thereof, including the bonds and letters of credit described
in Schedule S-8.5(d) hereof.
If at any time within forty-five (45) days after
Closing (the "Readjustment Period") either party discovers
items which should have been prorated or adjusted but were
omitted, or any material error in the computation of any
proration or adjustment, such item(s) will be properly
prorated and adjusted as of Closing, without interest or
penalty, and the amount due as a result thereof will be
promptly remitted. At Closing, the sum of One Hundred
Thousand Dollars ($100,000.00) of the Purchase Price will be
deposited with Title Agent, and held in an interest-bearing
account and disbursed pursuant to the terms of Sections 2.2
and 15.2 hereof, to secure Seller's obligation to make such
readjustments and reprorations; and any sums remaining in
such account and not claimed in writing by Buyer as of
expiration of the Readjustment Period will be delivered by
Title Agent to Seller.
8.6 Execution and Delivery of Closing
Statement. At Closing, in addition to any other documents
required to be executed and delivered in counterparts by both
parties, Seller and Buyer will execute and deliver to each
other closing statements accounting for sums adjusted or
disbursed at Closing.
Section 9. Agents, Brokers and Financial
Advisors.
Each party represents and warrants to the other
that it has not consulted, dealt or negotiated with any real
estate broker, finder, salesman, agent or financial advisor
to whom a commission or other compensation is or could be due
in connection with the sale of the Property by Seller to
Buyer, or any other matter associated with this Agreement.
Each party hereby agrees to indemnify and hold harmless the
other from any losses, damages, costs, liabilities or
expenses, including reasonable costs and attorneys' and
paralegals' fees incurred in trial, appellate or postjudgment
proceedings, related to or arising out of any breach of the
representations, warranties and agreements set forth in this
Section 9. Anything to the contrary notwithstanding, the
representations, warranties and agreements of this Section 9
will survive Closing of the transactions which are the
subject of this Agreement and the delivery of the deed of
conveyance, or any earlier termination of this Agreement.
Section 10. Survival of Representations,
Warranties and Agreements.
10.1 Survival. All representations and
warranties set forth in this Agreement are continuing and
will be true and correct on and as of the Closing Date with
the same force and effect as if made at that time, and,
except as waived by Buyer or as otherwise specifically set
forth in this Agreement, will survive Closing for a period of
six (6) months, and thereafter terminate and be of no further
force or effect unless a legal action to enforce a claim has
been filed on or prior to the sixth (6th) month anniversary
of the Closing Date. Notwithstanding the foregoing, however,
if Buyer learns of any breach or nonperformance of any
representation, warranty, covenant or agreement prior to
Closing, Buyer will promptly notify Seller thereof, and such
representation, warranty, covenant or agreement will not
survive Closing (whether or not Buyer notifies Seller
thereof), but rather will merge into the deed to be given by
Seller, it being the intention of the parties that no breach
or nonperformance of which Buyer has knowledge prior to
Closing will survive Closing should Buyer elect to close
notwithstanding knowledge of such breach or nonperformance.
Section 11. Default.
11.1 Buyer's Default. If, prior to Closing,
Buyer fails or refuses to perform any of Buyer's obligations
under this Agreement in any material respect, Seller's sole
remedy will be to terminate this Agreement and retain the
Deposit, as agreed and liquidated damages, it being agreed
that in such event Seller's actual damages would be incapable
of precise ascertainment; and thereafter this Agreement will
be null and void and the parties hereto will have no further
rights or obligations hereunder except with respect to the
Inspection Indemnity.
11.2 Seller's Default. If, prior to Closing,
Seller fails or refuses to perform any of Seller's
obligations under this Agreement in any material respect,
Buyer will, at Buyer's sole option, either (a) terminate this
Agreement, in which event the Deposit will be refunded to
Buyer and this Agreement will be null and void and the
parties hereto will have no further rights or obligations
hereunder except with respect to the Inspection Indemnity, or
(b) maintain an action for specific performance of the terms
of this Agreement; but in no event will Buyer have the right
to bring or maintain an action for damages except in the case
of an intentional default in any material respect by Seller's
willful misconduct, in which event if, but only if, Buyer
elects to terminate this Agreement prior to Closing, Buyer
will be entitled to liquidated damages in the amount of
$75,000.00, it being agreed that in the event of such
intentional default Buyer would suffer damages incapable of
value ascertainment.
Section 12. Risk of Loss.
12.1 Casualty. Seller will bear all risk of
loss occurring to improvements upon any portion of the Land
prior to conveyance thereof by Seller to Buyer pursuant to
the terms of this Agreement. In the event that any material
portion of any improvements on the Land is damaged or
destroyed prior to Closing, Buyer may, at its option,
terminate this Agreement (except for the Inspection
Indemnity) by written notice to Seller prior to Closing and
within thirty (30) days after Buyer receives written notice
of such damage or destruction, upon which the Deposit will be
refunded to Buyer and thereafter the parties will have no
further rights or obligations hereunder except for the
Inspection Indemnity. If Buyer closes notwithstanding an
unrepaired or unrestored loss to the Land, Seller will
deliver and/or assign to Buyer all insurance proceeds with
respect to such damage or destruction, together with the
amount of any deductible.
12.2 Condemnation. In the event that any
portion of the Land is taken by eminent domain or
condemnation proceeding prior to sale and conveyance thereof
by Seller to Buyer and such taking materially and adversely
affects the use or utility of the Land, Buyer may within
thirty (30) days after Buyer receives written notice of such
taking either (a) proceed to close notwithstanding the
eminent domain or condemnation proceeding, in which event
Seller will assign to Buyer its entire right, title and
interest in and to any award, or (b) terminate this Agreement
(except for the Inspection Indemnity) by delivering written
notice of termination to Seller, upon which the Deposit will
be refunded to Buyer and thereafter this Agreement will be
null and void and the parties will have no further rights or
obligations hereunder except with respect to the Inspection
Indemnity. Seller agrees promptly to notify Buyer of any
eminent domain or condemnation proceeding, and Buyer will be
entitled at its own expense to join in such proceeding and to
defend Buyer's interest hereunder in the Land affected
thereby, unless Buyer elects to terminate this Agreement as
aforesaid.
Section 13. Third Party Sales.
Notwithstanding any provision of this Agreement
to the contrary, Seller will have the right to enter into
contracts (each, a "Third Party Contract") in the ordinary
course of business with third party purchasers for the sale
of platted lots within the Land at sale prices not less than
the amounts (the "Stated Values") set forth in Exhibit E-3
hereof, and in the event a Third Party Contract is closed
prior to Closing pursuant to this Agreement, this Agreement
will be deemed amended to exclude such platted lot(s) from
the Land and the Purchase Price hereunder will be reduced by
the Stated Value of the platted lot(s) sold and conveyed.
Seller will assign to Buyer at Closing, and Buyer will
assume, any Third Party Contracts (and deposits held
thereunder) which have not theretofore been closed, and in
the event that the sale price under any Third Party
Contract(s) (net of Seller's costs pursuant to such Third
Party Contract, if any, for title insurance, documentary tax
stamps, recording charges and brokerage fees) exceeds the
Stated Value of the platted lot subject thereto, the Purchase
Price hereunder will be increased by the aggregate amount of
such excess (the "Presale Premium"); provided, however, that
if and to the extent that the Presale Premium exceeds the
Third Party Contract deposit held by Seller and assigned and
transferred to Buyer, payment of the amount of such excess by
Buyer to Seller will be either (a) deferred until such Third
Party Contract is either closed or terminated as a result of
Buyer's default thereunder, or (b) forgiven if such Third
Party Contract is terminated as a result of the third party
purchaser's default thereunder.
Section 14. Miscellaneous.
14.1 Litigation. In the event of any
litigation between Seller and Buyer concerning the terms of
this Agreement, the prevailing party will be entitled to
reimbursement of its costs and expenses, including reasonable
attorneys' and paralegals' fees, incurred in trial, appellate
and postjudgment proceedings.
14.2 Escrow Obligations of Title Agent.
Seller and Buyer acknowledge that Title Agent undertakes
hereunder to perform only such duties as are expressly set
forth herein and no implied duties or obligations will be
read into this Agreement against Title Agent. The Deposit
will be held and disbursed by Title Agent as follows:
(a) Title Agent may (i) act in reliance upon
any writing or instrument or signature which it, in good
faith, believes to be genuine, (ii) assume the validity and
accuracy of any statement or assertion contained in such a
writing or instrument, and (iii) assume that any person
purporting to give any writing, notice, advice or instruction
in connection with the provisions hereof has been duly
authorized to do so.
(b) Seller and Buyer agree, jointly and
severally, to indemnify and hold harmless Title Agent from
and against any and all claims, liabilities, losses, actions,
suits or proceedings at law or in equity, or any other
expenses, fees or charges of any character or nature
whatsoever, which Title Agent may incur or with which it may
be threatened solely by reason of its acting as escrow agent
hereunder, except to the extent resulting from Title Agent's
gross negligence, fraud or intentional misconduct; and in
connection therewith, to indemnify Title Agent against any
and all expenses, including reasonable attorneys' fees and
the cost of defending any action, suit or proceedings or
resisting any claim (including, without limitation, fees for
services rendered by Title Agent's constituent attorneys and
paralegals); provided, however, that if such expenses are
incurred by Title Agent in connection with litigation between
Seller and Buyer, the responsibility for indemnifying Title
Agent for such expenses will belong solely to the non-
prevailing party.
(c) Title Agent will not make any disbursements
of the Deposit (except at Closing) without giving written
notice to the party which will not receive the disbursements
at least three (3) business days in advance of the
disbursement. The failure of the party not receiving the
disbursements to object to the disbursement by written notice
to the other party and to the Title Agent will constitute
binding acquiescence of such party to the disbursement. If
there is any disagreement about the interpretation of this
Agreement, or about the rights and obligations, or the
propriety, of any action contemplated by Title Agent
hereunder, Title Agent may file an action in interpleader to
resolve such disagreement. Title Agent shall be indemnified
(by Seller or Buyer, whichever is the non-prevailing party)
as set forth in the foregoing subsection (b) in connection
with such interpleader action, and will be fully protected in
suspending all or a part of its activities under this
Agreement until a final judgment in the interpleader action
is received.
(d) Title Agent may consult with counsel of its
own choice and will have full and complete authorization and
protection for any action taken or suffered by it hereunder
in good faith and in accordance with the opinion of such
counsel. Title Agent otherwise will not be liable for any
mistakes of fact or error of judgment, or for any acts or
omissions of any kind unless caused by its willful misconduct
or gross negligence. Buyer acknowledges that Title Agent is
also acting as counsel to Seller and agrees that Title
Agent's duties pursuant to this Section 14.2 will not be
deemed a conflict of interest affecting such representation
of Seller.
(e) Title Agent may resign upon 15 days'
written notice to Seller and Buyer, and if a successor escrow
agent is not appointed within such 15-day period, Title Agent
may petition a court of competent jurisdiction to name a
successor.
14.3 Notices. Notices required or permitted to
be given pursuant to the terms of this Agreement will be
delivered in person or sent by certified mail, return receipt
requested, postage prepaid, by recognized contract carrier
providing signed receipt for delivery, and will be deemed
delivered on the date of delivery or the date the delivering
agency deems such delivery impossible. Facsimile notices may
be sent as a courtesy, but will not be binding. Notices will
be delivered at the following addresses, subject to the right
of any party to change the address at which it is to receive
notice by written notice to the other party:
To Seller:
Arvida/JMB Partners, L.P. - II
1275 Lake Heathrow Lane
Heathrow, Florida 32746
Attention: Edward Hill
Telephone: (407) 333-1051
Facsimile: (407) 333-2945
Copies to:
Stephen S. Lovelette
Arvida/JMB Partners, L.P. - II
900 North Michigan Avenue
Chicago, Illinois 60611-1575
Telephone: (312) 915-2856
Facsimile: (312) 915-2310
Arvida/JMB Partners, L.P. - II
7900 Glades Road
Boca Raton, Florida 33434
Attention: John Baric, Esq.
General Counsel
Telephone: (407) 479-1160
Facsimile: (407) 499-1227
H. William Walker, Jr., Esq.
White & Case
First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2352
Telephone: (305) 371-2700
Facsimile: (305) 358-5744
To Buyer:
George Apostolicas, President
Apostolicas Properties
6605 Stonington Drive
Suite 1
Tampa, Florida 33647-1113
Telephone: (813) 978-9521
Facsimile: (813) 971-6497
Copy to:
Stephen D. Feinberg, Esq.
Salley, Feinberg & Haimes, P.A.
Suite 2500
390 North Orange Avenue
Orlando, Florida 33280
Telephone: (407) 426-2360
Facsimile: (407) 426-2361
14.4 Integration and Severability. This
Agreement and the attachments hereto set forth the entire
understanding of Buyer and Seller with the respect to the
matters which are the subject of this Agreement, superseding
and/or incorporating all prior or contemporaneous oral or
written agreements, and may be changed, modified, or amended
only by an instrument in writing executed by the party
against whom the enforcement of any such change, modification
or amendment is sought.
14.5 Successors and Assigns. This Agreement
will inure to the benefit of and be binding upon, and is
intended solely for the benefit of, the parties hereto, and
their respective heirs, personal representatives, successors,
and assigns; and no third party will have any rights,
privileges or other beneficial interests herein or hereunder.
Buyer may assign this Agreement to an Affiliate of Buyer,
and/or designate one or more Affiliates of Buyer to which
various components of the Property will be conveyed and/or
assigned at Closing, but otherwise this Agreement may not be
assigned by Buyer; provided, that such assignment or
designation will not relieve Buyer of any liability
hereunder.
14.6 Construction. Headings and similar
structural elements set forth in this Agreement are intended
for ease of reference only, and are not intended, and will
not be construed, to reflect the intention of the parties or
to affect the substance of this Agreement. This Agreement
has been negotiated at arm's length between Seller and Buyer,
each represented by legal counsel of its choice and having an
ample opportunity to negotiate the form and substance hereof,
and therefore in construing the provisions of this Agreement
the parties will be deemed to have had equal roles in
drafting.
14.7 Governing Law. This Agreement is governed
by and will be construed in accordance with the laws of the
State of Florida, and in the event of any litigation
concerning the terms of this Agreement, proper venue thereof
will be in Orange or Palm Beach County.
14.8 Invalid Provisions. In the event any term
or provision of this Agreement is held illegal, unenforceable
or inoperative as a matter of law, the remaining terms and
provisions will not be affected thereby, but will be valid
and remain in force and effect, provided that the inoperative
provisions are not essential to the interpretation or
performance of this Agreement in accordance with the clear
intent of the parties.
14.9 Counterparts. This Agreement may be
executed in two or more counterparts, each of which will be
deemed an original, but all of which will constitute the same
instrument.
14.10 Confidentiality. Prior to Closing, the
provisions, terms and conditions of this Agreement will not
be disclosed to any third party without the consent of the
nondisclosing party; provided, however, any party may
disclose the existence of this Agreement and the provisions,
terms and conditions hereof to such party's partners,
investors or lenders, or when required to do so in order to
comply with filing and/or reporting requirements of any
governmental regulatory agency or any lawful order thereof.
14.11 No Waiver of Default. No waiver by a
party of any breach of this Agreement or of any warranty or
representation hereunder by the other party will be deemed to
be a waiver of any other breach by such other party (whether
preceding or succeeding and whether or not of the same or
similar nature), and no acceptance of payment or performance
by a party after any breach by the other party will be deemed
to be a waiver of any breach of this Agreement or of any
representation or warranty hereunder by such other party,
whether or not the first party knows of such breach at the
time it accepts such payment or performance. No failure or
delay by a party to exercise any right it may have by reason
of the default of the other party will operate as a waiver of
default or modification of this Agreement or will prevent the
exercise of any right by the first party while the other
party continues so to be in default.
14.12 Radon Gas. Radon is a naturally
occurring radioactive gas that, when it has accumulated in a
building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of Radon
that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding Radon
and Radon testing may be obtained from your county public
health unit.
14.13 Recourse Limited to Seller; Survival.
Notwithstanding anything to the contrary in this Agreement or
any other agreement, instrument or certificate executed in
connection herewith, no present or future Constituent Partner
in or Affiliate of Seller, nor any shareholder, officer,
director, member, manager, employee, trustee, beneficiary or
agent of any Person that is or becomes a Constituent Partner
in Seller, will be personally liable, directly or indirectly,
(1) under or in connection with this Agreement, or any other
agreement, instrument or certificate executed in connection
with this Agreement, or any amendments or modifications to
any of the foregoing made at any time or times, heretofore or
hereafter, or (2) in respect of any matter, condition, injury
or loss related to this Agreement or the Property; and the
Buyer and each of its successors and assignees waives and
does hereby waive any such personal liability. For purposes
of this Agreement, and any such other agreements, instruments
and certificates, and any such amendments or modifications,
neither the negative capital account of any Constituent
Partner in Seller, nor any obligation of any Constituent
Partner in Seller to restore a negative capital account or to
contribute capital to Seller or to any other Constituent
Partner in Seller, will at any time be deemed to be the
property or an asset of Seller or any such other Constituent
Partner (and neither Buyer nor any of its successors or
assignees will have any right to collect, enforce or proceed
against or with respect to any such negative capital account
or a Constituent Partner's obligation to restore or
contribute). As used in this Section 14.13, a "Constituent
Partner" in Seller means any direct partner in Seller and any
Person that is a partner in any partnership that, directly or
indirectly through one or more other partnerships, is a
partner in Seller. Notwithstanding anything to the contrary
herein, the provisions of this Section 14.13 shall survive
Closing and delivery of the deed of conveyance or any
termination of this Agreement (and are not subject to the
provisions of Section 10 hereof).
[Signatures on Next Page]
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on the date(s) hereinafter set
forth.
WITNESSED BY:
Name:
Name: <PAGE>
SELLER:
HEATHROW DEVELOPMENT ASSOCIATES,
LTD., a Florida limited partnership
By: Arvida/JMB Partners, L.P.-II, a
Delaware limited partnership,
General Partner
By: Arvida/JMB Managers - II,
Inc., a Delaware corporation
By:
Name: Stephen A. Lovelette
Title: Vice President
Date: March 22, 1996
<PAGE>
<PAGE>
Name:
Name: <PAGE>
HEATHROW GOLF AND COUNTRY CLUB
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Arvida/Heathrow Club, Inc., a
Delaware corporation, General
Partner
By:
Name: Stephen A. Lovelette
Title: Vice President
Date: March 22, 1996
Name:
Name:
HEATHROW CABLE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Arvida/Heathrow Cable, Inc., a
Delaware corporation
By:
Name: Stephen A. Lovelette
Title: Vice President
Date: March 22, 1996
Name:
Name:
BUYER:
,
a ____________ corporation
By:
Name: George Apostolicas
Title: President
Date: March 22, 1996
EXHIBIT E-1
DESCRIPTION OF LAND
Parcel Lots Approximate Acreage
Waters Edge (T22b) 27 developed lots 2 furnished model homes
Lakeside (T22a) 67 developed lots 2 furnished model homes
Cherry Ridge (T26) 52 undeveloped lots
Wyntree (T25) 50 developed lots
Stonebridge Lot 19, developed lot
Lot 26, developed lot
Heathrow Woods,
Phase I Lot 16, developed lot
Lot 70, developed lot
Lot 80, developed lot
Heathrow Woods, Phase II
Tract 8 5.0
Tract 27 18.3
Tract 28 26.4
Tract 29 29.4
Tract 30 26.7
Tract 31 34.1
Tract 33 14.9
Tract 35 38.8
Tract A 27.2
Tract B 32.2
149 developed lots 4 furnished models
157 undeveloped lots 253.0 acres
EXHIBIT E-2
PURCHASE PRICE ALLOCATION
Land (including Club Land) $16,050,000.00
Club (excluding Club Land) $ 1,500,000.00
Cable System $ 1,000,000.00
Office Building $ 750,000.00
Personalty $ 1,000,000.00
TOTAL $20,300,000.00
EXHIBIT E-3
STATED VALUES
[TO BE AGREED DURING INSPECTION PERIOD]
SCHEDULE S-1(ab)
PERSONALTY
[TO BE AGREED DURING INSPECTION PERIOD]
SCHEDULE S-1(ab) (3)
MARKETING FEES
[TO BE AGREED DURING INSPECTION PERIOD]
SCHEDULE S-1(i)
CONTRACTS
[TO BE AGREED DURING INSPECTION PERIOD]
SCHEDULE S-1(x)
MEMBERSHIP CATEGORIES
[TO BE AGREED DURING INSPECTION PERIOD]
SCHEDULE 4.2
REQUIRED CONSENTS
1. Consent of Bank of America Illinois and/or its
Affiliates, as holder of an existing mortgage on the
Property; it being understood and agreed that this Agreement
is and will not be binding upon Seller, and Seller will have
no obligations to Buyer hereunder, without such consent.
[OTHER REQUIRED CONSENTS, IF ANY, TO BE AGREED DURING
INSPECTION PERIOD]
SCHEDULE 4.4
COMPLIANCE
[TO BE AGREED DURING INSPECTION PERIOD]
SCHEDULE 8.5(d)
BONDS AND LETTERS OF CREDIT
[TO BE AGREED DURING INSPECTION PERIOD]
-18-
AGREEMENT FOR OPTION TO PURCHASE
AND
PURCHASE AND SALE
OF
REAL PROPERTY
AND
ESCROW INSTRUCTIONS
THIS AGREEMENT FOR OPTION TO PURCHASE AND PURCHASE AND
SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS ("Agreement")
is made and entered into this _______ day of March, 1996, by
and between Arvida/JMB Partners, L.P.-II, a Delaware limited
partnership ("Arvida"), and Seagate at San Clemente, LLC, a
California limited liability company ("Seagate").
R E C I T A L S
WHEREAS, Arvida is the owner in fee of those certain
parcels of real property ("Property") located in southeast
Orange County, California, which are situated partially
within the incorporated limits of the City of San Clemente
and partially within the unincorporated territory of the
County of Orange, all of which are particularly described in
Exhibit "A," which is attached hereto and by this reference
made a part hereof; and
WHEREAS, Seagate desires to acquire the exclusive right
to purchase the Property, without becoming obligated to
purchase, at an agreed upon price and under specified terms
and conditions; and
WHEREAS, in the event Seagate elects to purchase the
Property, Seagate intends to develop thereon a mixed use
residential/commercial/industrial/recreational community;
and
WHEREAS, Phillips Development Company, a principal of
Seagate, is a partner of Arvida's predecessor in interest in
the Property and is familiar with the infrastructure
requirements necessary for and entitlements governing
development of the Property.
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Terms of Option
Section 1.01. Grant of Option. Arvida hereby grants
to Seagate the exclusive right to purchase the Property at a
price and under the terms and conditions set forth in this
Agreement. For purposes of this Agreement, the term
"Property" shall include the fee simple interest in and to
the real property described in Exhibit "A" hereto, subject
to current taxes and assessments and all covenants,
conditions, restrictions, rights-of-way, easements,
reservations and other matters of record, to the extent the
same are valid, existing and affect the Property; together
with all improvements under the ownership of Arvida
constructed thereon, any and all plans, development
entitlements, and related architectural and engineering
documents in Arvida's possession on the date the escrow
established pursuant to Section 3.01 of this Agreement
closes, all agreements related to development of the
Property that are in effect on the date escrow closes (to
the extent Arvida may assign its interests in such
agreements to Seagate), and any and all entitlements Arvida
may own, if any, to water and sewer capacity to serve the
Property that Arvida has the right and power to convey.
However, except as otherwise provided in Section 4.01 of
this Agreement, Arvida makes no representation or warranty
as to the condition of title to the Property, to the
validity or status of any entitlements to develop the
Property, to the accuracy or efficacy of any architectural
or engineering documents related to development of the
Property or to the availability, validity and sufficiency of
any water and sewer capacity to satisfy requirements to
develop the Property. It is the intention of the parties
hereto that following conveyance of the Property to Seagate
in accordance with the terms of the Agreement, Arvida shall
have no interest in the Property, with the exception of a
note secured by a deed of trust for the Cancellation Fee (as
that term is defined in Section 2.11 of this Agreement);
provided, however, that Seagate shall not receive any right,
title or interest in or to, or right to use the names
"Arvida," "JMB," "Arvida/JMB," or any derivatives thereof.
Section 1.02. Option Period and Automatic Termination.
The option granted hereunder shall commence on the date
first above written and shall remain in effect until 5:00
p.m., March 7, 1996 ("Option Period"). In the event Seagate
fails to exercise the option granted hereunder in accordance
with its terms and within the Option Period, the option and
all rights of Seagate under the Agreement shall immediately
and automatically terminate without notice. Thereafter, at
the request of Arvida, Seagate shall execute and promptly
deliver to Arvida a quitclaim deed in the form of Exhibit
"B," which is attached hereto and by this reference made a
part hereof.
Section 1.03. Option Consideration. The option
granted hereunder is made in consideration of payment of the
sum of twenty-five thousand dollars ($25,000.00) by Seagate
to Arvida, receipt of which is hereby acknowledged.
Section 1.04. Application of Option Consideration to
Purchase Price. In the event the option granted hereunder
is exercised in accordance with its terms, the option
consideration set forth in Section 1.03 of this Agreement
shall be applied to the Purchase Price (as that term is
defined in Section 2.03 of this Agreement).
Section 1.05. Retention of Option Consideration. In
the event the option granted hereunder is not exercised, the
option consideration set forth in Section 1.03 of this
Agreement shall be retained by Arvida in consideration of
granting the option.
Section 1.06. Exercise of Option. If Seagate is not
in breach of this Agreement, the option granted hereunder
may be exercised by execution and delivery to Arvida prior
to expiration of the Option Period of a Notice of Exercise
of Option in the form of Exhibit "C," which is attached
hereto and by this reference made a part hereof.
ARTICLE 2
Terms and Purchase and Sale
Section 2.01. Purchase and Sale of Property. In the
event of an election by Seagate to exercise the option
granted in Section 1.01 of this Agreement, Seagate shall
purchase from Arvida and Arvida shall sell to Seagate the
Property, together with the items of personal property
listed in Exhibit "D," which is attached hereto and by this
reference incorporated herein, as hereinafter provided.
Section 2.02. Contingent Sale.
(a) Seagate hereby acknowledges that the Property is
encumbered by a debt in favor of the Santa Margarita Water
District ("District") and/or Improvement District nos. 7 and
7A of the District in the amount of approximately sixty-two
million dollars ($62,000,000.00) ("Debt"). The Debt was
incurred as a result of a bond issue by the District, the
proceeds of which were used to finance certain water and
sewer infrastructure benefiting the Property. The annual
debt service required to repay the bonds is approximately
six million dollars ($6,000,000.00) per year, and is the
obligation of the owner of the Property. Seagate further
acknowledges that the District levies standby charges, ad
valorem taxes and assessments on the Property to pay the
debt service on the bonds and to finance other facilities
and operations of the District that benefit the Property.
Sale of the Property by Arvida to Seagate is contingent upon
(1) a full and unconditional release of Arvida by the
District from all liabilities or obligations connected with
the Debt and standby charges, ad valorem taxes and
assessments for payment of debt service on the Debt and
other facilities and operations of the District, including ,
but not limited to, liabilities or obligations arising out
of that certain Agreement for Payment of Diemer Intertie
Sublease Payments, Principal and Interest on Bonds of
Improvement District No. 7 and Annual Budget Deficits, by
and between Arvida and the District, dated as of January 15,
1990, and that certain Letter of Credit Agreement by and
between Arvida and the District, dated July 27, 1990, given
at or before conveyance of the Property to Seagate; (2)
agreement by the District to apply the proceeds of an eleven
million four hundred thousand dollar ($11,400,000.00) letter
of credit posted by Arvida with the District to the
outstanding bond debt service assessments owed by Arvida to
the District; (3) waiver by the District of all interest and
penalties, if any, applied by the District to the
outstanding standby charges, ad valorem taxes and
assessments for bond debt service and other facilities and
operations of the District allegedly owed by Arvida to the
District; and (4) agreement by the District that the
assessments for bond debt service and other facilities and
operations of the District for the District's 1995/96 fiscal
year shall be prorated as between Arvida and Seagate as of
the close of escrow established in accordance with Section
3.01 of this Agreement on the basis of a 365 day year.
(b) Seagate hereby acknowledges the deed of trust in
favor of Bank of America NT & SA ("Bank of America") that
encumbers the Property. Sale of the Property by Arvida to
Seagate is contingent upon approval of the sale in
accordance with the terms and conditions of this Agreement
by Bank of America, a full and unconditional release of
Arvida from any and all liability, including, but not
limited to, any deficiency resulting from the difference
between the amount of the encumbrance represented by the
deed of trust and the Purchase Price (as that term is
defined in Section 2.03 of this Agreement), and a full
reconveyance by Bank of America of said deed of trust as it
relates to the Property.
(c) Arvida has posted security with the City of San
Clemente, County of Orange, and other government entities in
compliance with California law, local ordinances and
development approval conditions. Sale of the Property by
Arvida to Seagate is contingent upon exoneration and/or
release of Arvida from any and all liability for the
subdivision improvement bonds, letters of credit and other
security instruments listed on Exhibit "E," which is
attached hereto and by this reference incorporated herein.
(d) Sale of the Property by Arvida to Seagate is
contingent upon assumption of Arvida's obligations by
Seagate and/or release of Arvida for any and all liability
under the contracts and agreements listed on Exhibit "F,"
which is attached hereto and by this reference incorporated
herein.
(e) Sale of the Property by Arvida to Seagate is
contingent upon a notification filing, if required, made
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the expiration or termination of any
applicable waiting period thereunder.
Arvida hereby agrees to use commercially reasonable
efforts to satisfy and/or resolve those contingencies set
forth in subsections (a)-(c) of this Section 2.02. As used
in this Section 2.02, "Arvida" shall mean Arvida/JMB
Partners, L.P.-II, any present or future Constituent Partner
(as that term is defined in Section 5.02 of this Agreement)
in or agent of Arvida, and shareholders, officers,
directors, members, managers, employees, trustees,
beneficiaries or agents of any corporation or other entity
that is or becomes a Constituent Partner in Arvida.
Section 2.03. Purchase Price. The purchase price to
be paid by Seagate for the Property shall be twenty-five
million dollars ($25,000,000.00) ("Purchase Price"), as
hereinafter provided.
Section 2.04. Terms of Payment of Purchase Price. The
Purchase Price shall be paid by Seagate to Arvida, as
follows:
(a) The sum of two hundred thousand dollars
($200,000.00) shall be tendered by Seagate at such time as
the Notice of Exercise of Option required by Section 1.06 of
this Agreement is delivered to Arvida as a deposit to be
applied to the Purchase Price ("Deposit"), which Deposit
shall be payable to Escrow Holder (as defined in Section
3.01 of this Agreement) for deposit in the escrow
established pursuant to Section 3.01 of this Agreement. At
the direction of Seagate, Escrow Holder shall place the
Deposit in an interest bearing federally insured account
with a financial institution of Seagate's choice.
(b) The balance of the Purchase Price shall be paid to
Escrow Holder for deposit in escrow at least five (5)
business days prior to the Closing Date (as defined in
Section 3.04 of this Agreement) in accordance with Section
3.06 of this Agreement, unless payment is made by wire
transfer, in which case the balance of the Purchase Price
may be deposited with Escrow Holder on the Closing Date.
Section 2.05. Examination of Title to Property. From
and after the date of this Agreement until March 12, 1996
("Title Examination Period"), Seagate shall examine the
preliminary report of the Property ("Preliminary Report")
prepared by First American Title Insurance Company, dated
February 1, 1996, a copy of which is attached hereto as
Exhibit "G," and by this reference incorporated herein, and
raise reasonable objections, if any, to any of the
provisions thereof ("Title Objections"). In the event
Seagate raises reasonable objections to any provisions of
the Preliminary Report during the Title Examination Period
(but not otherwise), Arvida shall employ commercially
reasonable efforts to resolve Seagate's objections prior to
expiration of the Due Diligence Period (as defined in
Section 2.06 of this Agreement). If called upon by Arvida,
and to the extent it is reasonably able to do so, Seagate
shall cooperate in the resolution of Title Objections,
except that Seagate shall have no obligation hereunder to
contribute financially to the resolution of Title
Objections. Resolution of Seagate's objections, if any, may
include purchase of title indemnities or use of other
commercially reasonable devices, subject to the reasonable
approval of Seagate, and/or payment of liens or encumbrances
out of a portion of the Purchase Price. The encumbrance on
the Property imposed by the District on account of bonds
issued and sold by the District and its Improvement District
nos. 7 and 7A and current standby charges, ad valorem taxes
and assessments levied therefor and for other facilities and
operations of the District discussed in Section 2.02 of this
Agreement shall in no way constitute a Title Objection for
purposes of this Agreement.
Section 2.06. Due Diligence Period. From and after
delivery of the Notice of Exercise of Option required by
Section 1.06 of this Agreement until 5:00 p.m., March 21,
1996, Seagate shall undertake, perform and complete its due
diligence effort with regard to the transaction contemplated
by this Agreement ("Due Diligence Period"). In the event
Seagate reasonably determines during the Due Diligence
Period that an impediment (other than a Title Objection) to
acquisition of the Property ("Defect") exists, Seagate shall
notify Arvida in writing as soon as possible following such
determination, but in any event prior to expiration of the
Due Diligence Period. Arvida may elect to remedy a
Defect(s), if such Defect(s) may be remedied by Arvida, by
giving Seagate written notice of such election within five
(5) business days of receipt of timely written notice from
Seagate of the existence of a Defect(s). In such event,
Arvida shall employ commercially reasonable efforts to
remedy such Defect(s). Arvida's notice of election to
remedy a Defect(s) reasonably determined by Seagate to exist
shall specify the number of days (if any), up to a maximum
of ninety (90) days, that the Due Diligence Period shall be
extended and the Closing Date postponed to permit Arvida
sufficient time to remedy the Defect(s). The encumbrance on
the Property imposed by the District on account of bonds
issued and sold by the District and its Improvement District
nos. 7 and 7A and standby charges, ad valorem taxes and
assessments levied therefor and for facilities or operations
of the District discussed in Section 2.02 of this Agreement
shall in no way constitute a Defect for purposes of this
Agreement.
Section 2.07. Remedy for Failure to Resolve Title
Objections and Defects. In the event Seagate timely asserts
the existence of Title Objections, and/or Seagate timely
asserts the existence of a Defect(s), and Arvida fails to
provide timely written notice of an election to remedy such
Defect(s), or if timely written notice is given and Arvida
fails to remedy such Defect(s), or fails to remedy Title
Objections on or before the Closing Date, plus any extension
of the Closing Date pursuant to Section 3.04 of this
Agreement, then Seagate shall elect to:
(a) Terminate this Agreement; or
(b) Proceed to perform its obligations under this
Agreement.
The election shall be made in writing. The failure of
Seagate to make a written election shall be deemed an
election of option (a) above. In the event the election in
option (a) is made, Arvida and Seagate shall jointly
instruct Escrow Holder to immediately refund to Seagate the
Deposit, accrued interest thereon, if any, and instruments
deposited by Seagate in the escrow established by Section
3.01 of this Agreement. As a condition precedent to release
of said Deposit and instruments, Seagate shall execute and
deliver to Arvida a quitclaim deed in the form of Exhibit
"B" hereto. In the further event the election in option (a)
is made, so long as Arvida has employed commercially
reasonable efforts to remedy any Title Objections and
Defect(s) reasonably raised by Seagate, Arvida shall have no
liability for termination of this Agreement.
Section 2.08. Nonrefundable Deposit. The Deposit
shall become nonrefundable and shall be released to Arvida
without further instructions to Escrow Holder on the later
to occur of expiration of the Due Diligence Period or
resolution of Title Objections and Defect(s) reasonably
raised by Seagate.
Section 2.09. Brokerage Commission. Arvida hereby
acknowledges the employment by Seagate of Orange Coast
Realty and Investments as a real estate broker in
conjunction with this transaction. A brokerage commission
of one million dollars ($1,000,000.00) ("Brokerage
Commission") shall be paid to Orange Coast Realty and
Investments by Escrow Holder from proceeds due Arvida in
accordance with Section 3.07(c) and (d) of this Agreement.
No other Brokerage Commission or consultant's or finder's
fee shall be payable out of the proceeds payable to Arvida
to any person or entity claiming to have dealt with Seagate,
and Seagate shall indemnify, defend and hold Arvida free and
harmless from any such claims.
Section 2.10. Appeal of Real Property Tax Assessments.
Arvida has appealed the assessments of the Orange County Tax
Assessor on the various parcels comprising the Property for
the current and prior tax years. In the event Arvida
prevails in such appeal, Arvida shall be entitled to the
full and complete refund of real property taxes resulting
from the appeal. In the further event any such refund is
paid subsequent to the close of escrow, Seagate shall pay
Arvida all such sums within five (5) days of receipt
thereof. This Section 2.10 shall survive the closing and
delivery of documents specified in Section 3.07 of this
Agreement and any termination of this Agreement.
Section 2.11. Cancellation Fee. In connection with
finalizing the transaction contemplated by this Agreement
with the Bank of America, Seagate shall pay a cancellation
fee to Arvida in the amount of nine million five hundred
thousand dollars ($9,500,000.00) ("Cancellation Fee")
pursuant to the terms and provisions of a promissory note
secured by a deed of trust encumbering the Property in favor
of Arvida. Said note shall not bear interest. Arvida
hereby agrees to subordinate the aforementioned deed of
trust to encumbrances on the Property required to secure
financing for Seagate's acquisition of the Property, and for
financing of development and/or construction of improvements
on, or of benefit to, the Property. Said deed of trust
shall provide that partial reconveyances required to remove
the encumbrance of the deed of trust from portions of the
Property sold to third parties in the course of development
of the Property shall be given by Arvida or its successors
in and to the note and deed of trust without charge to
Seagate. The recourse of Arvida and each of its successors
and assigns under or in connection with this Agreement in
enforcement of the provisions, terms and conditions of said
note and deed of trust shall be limited to Seagate's
interest in the Property only.
ARTICLE 3
Escrow and Closing Procedures
Section 3.01. Escrow. This Agreement shall also
constitute escrow instructions of the parties hereto to
First American Title Insurance Company, 114 East Fifth
Street, Santa Ana, California 92701 ("Escrow Holder"). Upon
receipt of an original counterpart of this Agreement
executed by both parties hereto, together with a copy of a
Notice of Exercise of Option, Escrow Holder shall
immediately establish an escrow for the purpose of
consummating the transaction contemplated by this Agreement.
Supplementary escrow instructions may be prepared by Escrow
Holder and, if so prepared and agreed to by Arvida and
Seagate, shall be executed by both parties hereto.
Section 3.02. Title. On the Closing Date, title to
the Property is to be free of liens and encumbrances other
than (a) those included in the Preliminary Report approved
by Seagate in accordance with Section 2.05 of this
Agreement; (b) those that arise subsequent to publication of
the Preliminary Report which are reviewed and approved by
Seagate, which approval shall not be unreasonably withheld;
or (c) those that are or will be resolved with title
indemnities or other commercially reasonable devices
reasonably approved by Seagate. Arvida shall furnish
Seagate at Arvida's expense an owner's standard CLTA policy
of title insurance ("Title Policy") issued by the Title
Company. Alternatively, at Seagate's request, Arvida shall
furnish Seagate an owner's standard ALTA policy of title
insurance; however Seagate shall pay any additional cost in
excess of the premium that would have been charged for the
Title Policy for issuance of an owner's standard ALTA title
insurance policy, all costs of any endorsements or other
extended coverage in excess of the coverage in the Title
Policy to be provided by Arvida, and the cost of preparing a
survey of the Property, if required.
Section 3.03. Escrow Costs and Charges. The usual and
customary costs and charges of Escrow Holder incurred in
establishing, maintaining and closing the escrow established
pursuant to Section 3.01 of this Agreement ("Escrow Costs")
shall be borne in equal amounts by the parties hereto. The
cost of the Title Policy shall be paid to the Title Company
by Escrow Holder and, together with Arvida's share of the
Escrow Costs, which shall include payment of the documentary
transfer tax assessed by the County of Orange, debited from
funds deposited in escrow by Seagate that are due Arvida on
the Closing Date. Seagate may direct Escrow Holder to cause
payment of the documentary transfer tax to be evidenced by
an affidavit rather than placement of documentary transfer
tax stamps on the face of the grant deed conveying the
Property from Arvida to Seagate.
Section 3.04. Closing: Time and Place. The
consummation of the transaction contemplated by this
Agreement shall take place on or before May 3, 1996
("Closing Date"), at the offices of Escrow Holder, unless
the Closing Date has been postponed in accordance with
Section 2.06 of this Agreement or by mutual agreement of the
parties hereto. In the event the transaction contemplated
by this Agreement fails to close by the Closing Date, plus
any extension thereof authorized by this Agreement, and
provided Arvida is not in default in the performance of its
obligations under this Agreement, Arvida may, in its sole
and absolute discretion, terminate this Agreement, and
Seagate shall have no further rights hereunder.
Section 3.05. Deposits by Arvida. Not later than one
(1) day prior to the Closing Date, Arvida shall execute and
acknowledge, as necessary, and deliver to Escrow Holder the
following documents for the purpose of consummating the
transaction contemplated by this Agreement:
(a) A grant deed conveying the Property from Arvida to
Seagate in the form of Exhibit "H," which is attached hereto
and by this reference incorporated herein; and
(b) A bill of sale in the form of Exhibit "I," which
is attached hereto and by this reference incorporated
herein, evidencing sale of the personal property listed in
Exhibit "D" hereto; and
(c) An assignment and assumption agreement in the form
of Exhibit "J," which is attached hereto and by this
reference incorporated herein, memorializing assignment of
all of Arvida's right, title and interest in and to those
contracts and agreements listed on Exhibit "F" hereto, and
assumption of Arvida's obligations thereunder by Seagate;
and
(d) Such further documents and instruments as may be
reasonably necessary to carry out and effectuate the
purposes of this Agreement.
Section 3.06. Deposits by Seagate. Seagate shall
deposit the sum of two hundred thousand dollars
($200,000.00) with Escrow Holder in accordance with Section
2.04(a) of this Agreement. On or prior to the Closing Date,
Seagate shall deposit the balance of the Purchase Price in
accordance with Section 2.04(b) of this Agreement. No later
than one (1) day prior to the Closing Date, Seagate shall
deliver to Escrow Holder the following for the purpose of
consummating the transaction contemplated by this Agreement:
(a) Seagate's share of the Escrow Costs in readily
available funds; and
(b) Such documents and instruments as may be
reasonably necessary to carry out and effectuate the
purposes of this Agreement.
Section 3.07. Closing Procedures. Provided the
contingencies set forth in Section 2.02 of this Agreement
have been satisfied, and all other obligations of Arvida and
Seagate under this Agreement have been met, Escrow Holder
shall proceed to close the escrow established pursuant to
Section 2.01 of this Agreement by taking the following
actions in the order set forth:
(a) Date all undated documents as of the Closing Date;
(b) Complete all blanks in all documents deposited
with Escrow Holder which are intended to be completed by
Escrow Holder on the Closing Date;
(c) Deliver to Arvida by wire transfer or other
similarly expeditious means the Purchase Price less Arvida's
share of the Escrow Costs, the cost of the Title Policy,
Seagate's option consideration paid to Arvida in accordance
with Section 1.03 of this Agreement, Seagate's deposit
pursuant to Section 2.04(a) of this Agreement, if such
deposit was previously paid by Escrow Holder to Arvida, and
the Brokerage Commission;
(d) Deliver to Orange Coast Realty and Investments a
check in the amount of the Brokerage Commission;
(e) Cause to be recorded the grant deed in favor of
Seagate deposited with Escrow Holder by Arvida;
(f) Deliver to Seagate a conformed copy of the grant
deed deposited with Escrow Holder by Arvida and the bill of
sale evidencing sale of the personal property listed in
Exhibit "D," hereto; and
(g) Deliver to the respective counsel for the parties
listed in Section 5.03 hereof, copies of all documents and
supplementary escrow instructions required by, or made
pursuant to, this Agreement.
Section 3.08. Rights of Escrow Holder.
(a) If the escrow established pursuant to Section 3.01
of this Agreement shall be the subject of or in any way
involved in any litigation or controversy, the parties
hereto shall jointly and severally hold Escrow Holder free
and harmless from and against any loss or expense that may
be suffered by it by reason of such litigation or
controversy.
(b) In the event conflicting demands are made or
notices served upon Escrow Holder with respect to this
escrow, the parties hereto expressly agree that Escrow
Holder shall have the absolute right, at its election, to do
either or both of the following:
(1) Withhold and stop all further proceedings in,
and performance of, the escrow; or
(2) File a suit in interpleader and obtain an
order from the court requiring the parties to interplead and
litigate in such court their several claims and rights
amongst themselves. In the event such interpleader suit is
brought, Escrow Holder shall ipso facto be fully released
and discharged from all obligations to further perform any
and all duties or obligations imposed upon it by this
Agreement.
(c) Escrow Holder shall not be held liable for
sufficiency or correctness of the form, manner of execution
or validity of any instrument that may be deposited into the
escrow, nor as to the identity, authority or rights of any
person executing the same, or for failure to comply with any
provisions of any agreement, contract or other instrument
filed herein, and Escrow Holder's duties hereunder shall be
limited to the safekeeping of such money, instruments, or
other documents received by it as Escrow Holder, and for the
disposition of same in accordance with the written
instructions set forth herein and any supplementary escrow
instructions executed by both parties hereto, and as
accepted by Escrow Holder in the escrow.
(d) Prior to the Closing Date or termination of this
Agreement in accordance with the terms hereof, neither party
shall have the right to withdraw the instruments or monies
deposited by it with Escrow Holder, except as otherwise
provided in this Agreement or in supplementary escrow
instructions executed by both parties hereto.
(e) The escrow instructions contained in this
Agreement may be supplemented by any form instructions
customarily used by Escrow Holder that are signed by both
parties hereto, provided that in the event of conflict, this
Agreement shall in all events control.
Section 3.09. Closing Responsibilities of Escrow
Holder. The parties hereto hereby designate Escrow Holder
as the party responsible for closing the transaction
contemplated by this Agreement and filing all required forms
prepared by the parties hereto, if any, with the appropriate
governmental authorities.
ARTICLE 4
Representations, Warranties, Disclaimers and Disclosures
Section 4.01. Representations and Warranties of
Arvida. Except for the express representations of Arvida
set forth in this Section 4.01, Seagate shall acquire the
Property "As Is," and Arvida makes no representations or
warranties with respect to such Property. Arvida hereby
makes the following representations and warranties to
Seagate, which are true and correct as of the date hereof
and will remain so as of the Closing Date:
(a) Arvida is a limited partnership duly organized and
validly existing and in good standing in accordance with the
laws of the State of Delaware, is authorized to do business
in California and is possessed of all power and authority
necessary to enter into and perform its obligations under
this Agreement.
(b) The persons whose signatures are affixed to this
Agreement on behalf of Arvida have been duly authorized to
execute this Agreement by Arvida.
(c) The execution, delivery and performance of this
Agreement has been duly and validly authorized and approved
by all necessary corporate action on behalf of Arvida. This
Agreement has been fully and validly executed and delivered
by or on behalf of Arvida and, assuming this Agreement has
been duly authorized, executed and delivered by Seagate,
constitutes the legal, valid and binding obligation of
Arvida, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws
affecting the rights and remedies of creditors generally, as
well as principles of equity, regardless of whether the
application of such principles is considered in a proceeding
in equity or at law.
(d) Arvida is not a "foreign person" within the
meaning of Section 1445(f) of the Internal Revenue Code, and
Arvida is exempt from withholding under California law due
to the fact that Arvida resides or has a permanent place of
business in California.
(e) Except as otherwise set forth in Exhibit "F" of
this Agreement, to Arvida's actual knowledge, without
inquiry or investigation, and subject to any rights of ACI
General Engineering Constructors to store various pieces of
earthmoving equipment on the Property and Rancho Mission
Viejo Company and/or Santa Margarita Company to graze cattle
on the Property, which storage and grazing rights may
survive the closing of this transaction, there are no leases
or other occupancy agreements or options or rights of first
refusal to purchase with any party which would affect the
Property, or any portion thereof, subsequent to the Closing
Date;
(f) Except as otherwise set forth in Exhibits "E" and
"F" of this Agreement, to Arvida's actual knowledge, without
inquiry or investigation, there are no maintenance
agreements, service contracts, construction contracts,
repair orders or other similar agreements with any party
which would affect the Property, or any portion thereof,
subsequent to the Closing Date;
(g) Seagate hereby acknowledges that (a) a number of
persons have served as officers, directors, members,
managers, employees, trustees, beneficiaries, attorneys and
agents of Arvida, or of a Constituent Partner (as that term
is defined in Section 5.02 of this Agreement) in Arvida, who
may no longer serve in such capacity and who may or may no
longer have any relationship or connection with Arvida, or a
Constituent Partner in Arvida; (b) Arvida has reduced its
workforce with respect to the Property to one (1) person;
and (c) notices from insurance carriers of Arvida,
governmental entities and authorities, potential adverse
parties and others directed to Arvida may have been received
by such persons and not reported to the present management
of Arvida, in which case Arvida is unaware of such notices.
Accordingly, the following representations and warranties of
Arvida are based upon Arvida's actual knowledge, without
inquiry or investigation, and Seagate hereby acknowledges
that Arvida has not undertaken any inquiry of any present or
former officer, director, member, manager, employee,
trustee, beneficiary, attorney or agent of Arvida or any
Constituent Partner in Arvida, or search of its mail logs,
files and records to determine whether such notices were
transmitted to or received by Arvida:
(1) Arvida has not received any written notice
from any of Arvida's insurance carriers of any material
defects in or inadequacies of the Property, or any portion
thereof;
(2) There are no pending insurance claims with
respect to the Property or any portion thereof;
(3) Arvida has not received any written notice
from any governmental authorities that eminent domain
proceedings for the condemnation of the Property are
pending;
(4) Arvida has not received any written notice of
any threatened or pending litigation against Arvida or the
Property which would materially and adversely affect the
Property;
(5) Arvida has not received any written notice
from any governmental authority that the improvements
located on the Property are presently in violation of any
applicable statute or ordinance;
(6) Arvida has not received any written notice
from any governmental authority that Arvida's use of the
Property is presently in violation of any applicable zoning,
land use or other law, order, ordinance, rule or regulation
affecting the Property;
(7) Except as disclosed in Section 4.04(b) of
this Agreement, Arvida has not (1) received any written
notice from any governmental authority that there has
occurred any release (as defined in California Health and
Safety Code sections 25320 and 25321) of Hazardous
Substances (as hereinafter defined) located on or beneath
the Property or that there has occurred any violation of any
law, order, ordinance, rule or regulation relating to
Hazardous Substances with respect to the Property; (2) been
required by any governmental agency to undertake any
remediation activity with respect to Hazardous Substances on
the Property; and (3) used, handled, released, generated,
produced, stored or transported upon the Property any
Hazardous Substances other than standard office, household,
pool, landscaping, other maintenance supplies, construction
supplies and other such substances used in the ordinary
course of business in usual and customary quantities. As
used herein the term "Hazardous Substances" shall mean and
include any and all toxic or hazardous substances, materials
or wastes listed in the United States Department of
Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances (40
CFR Part 302), or which is a "Hazardous Substance" under
California Health and Safety Code Section 25316, and in any
and all amendments to any of the foregoing in effect as of
the date hereof.
The representations and warranties of Arvida set forth
in this Section 4.01 shall survive the closing and delivery
of documents specified in Section 3.07 of this Agreement
until December 31, 1996, following which date they shall
expire and be of no further force or effect.
Section 4.02. Representations and Warranties of
Seagate. Seagate hereby makes the following representations
and warranties to Arvida, which are true and correct as of
the date hereof and will remain so as of the Closing Date:
(a) Seagate is a limited liability company duly
organized and validly existing and in good standing in
accordance with the laws of the State of California, is
authorized to do business in California and is possessed of
all power and authority necessary to enter into and perform
its obligations under this Agreement.
(b) The person whose signature is affixed to this
Agreement on behalf of Seagate has been duly authorized to
execute this Agreement by Seagate.
(c) The execution, delivery and performance of this
Agreement has been duly and validly authorized and approved
by all necessary corporate action on behalf of Seagate.
This Agreement has been fully and validly executed and
delivered by or on behalf of Seagate and, assuming this
Agreement has been duly authorized, executed and delivered
by Arvida, constitutes the legal, valid and binding
obligation of Seagate, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other
similar laws affecting the rights and remedies of creditors
generally, as well as principles of equity, regardless of
whether the application of such principles is considered in
a proceeding in equity or at law.
Section 4.03. Disclaimer by Arvida. Other than the
representations and warranties set forth in Section 4.01 of
this Agreement, Arvida makes no representations or
warranties regarding any aspect of the transaction
contemplated by this Agreement, the status of title to the
Property, or any liens and/or encumbrances thereon, the
validity and authenticity of any documents and instruments
inspected in contemplation of such transaction, whether
provided to Seagate by Arvida or obtained independently by
Seagate, the entitlements governing development of the
Property, any other matter affecting the business, legal
status and economic viability of the Property, the value of
the Property, or the suitability of the Property for
acquisition, investment or any other disposition by Seagate.
Seagate hereby agrees that it has not relied on any
representations or statements made by Arvida, its general
partner or any of their officers, directors, employees,
agents or attorneys regarding the Property or any aspect
thereof in determining whether to enter into this
transaction.
Section 4.04. Disclosure by Arvida. Arvida hereby
makes the following disclosures regarding the location and
condition of the Property:
(a) The property is, or may be, impacted by various
regional elements. These include, but are not necessarily
limited to: proximity to the Camp Pendleton Marine Corps
facility, the San Onofre Nuclear Generating Station, the TRW
Capistrano Test Facility, the Prima Deshecha Regional Park
and Landfill, overflight from military and/or civilian
aircraft from Tustin and El Toro Marine Corps Air Stations
and Camp Pendleton, proximity to high voltage electrical
transmission facilities, and the proposed Foothill
Transportation Corridor. In addition, most properties
throughout south Orange County, including the Property, are
subject to various road and public facility impact fees and
other conditions of development.
(b) On January 11, 1990, the contents of a canister
containing O-chlorobenzylidene malononitrile (Agent cs),
which is designated an extremely hazardous substance in
Title 22 California Code of Regulations of Section 66680,
was spilled on the Property, contaminating an area of
approximately 200 square feet at the location depicted on
Exhibit "K," which is attached hereto, and by this reference
incorporated herein. Such affected area was subjected to a
decontamination process under the supervision of the Orange
County Health Care Agency; however, no representation is
made by Arvida as to the effectiveness of such
decontamination process.
Arvida makes no representations a) with regard to the
severity of the impacts disclosed in the disclosures listed
above, nor the degree to which such impacts will inhibit or
prevent development of all or a portion of the Property or
interfere with the quiet use and enjoyment of the Property;
or b) whether such impacts are inclusive of all potential
adverse impacts that may inhibit or prevent development of
all or a portion of the Property or interfere with the quiet
use and enjoyment of the Property. There may be additional
adverse impacts as of the date of this Agreement. Seagate
hereby acknowledges the disclosures listed above, and agrees
that it is the duty of Seagate to thoroughly investigate the
Property, including, but not limited to, an investigation of
environmental/toxic contamination of the Property, the
environs of the Property, and plans for development of
surrounding properties, and determine what impacts, if any,
may exist or potentially exist that could inhibit or prevent
development of all or a portion of the Property or interfere
with the quiet use and enjoyment of the Property.
ARTICLE 5
Miscellaneous
SECTION 5.01. LIQUIDATED DAMAGES. IN THE EVENT
SEAGATE DEFAULTS IN THE PERFORMANCE OF THIS AGREEMENT, THE
PARTIES HERETO AGREE THAT ARVIDA SHALL BE RELEASED FROM ANY
OBLIGATION TO SELL THE PROPERTY TO SEAGATE AND ARVIDA'S SOLE
REMEDY SHALL BE TO RETAIN, AS LIQUIDATED DAMAGES, THE
DEPOSIT PAID TO ESCROW HOLDER PURSUANT TO SECTION 2.04(a) OF
THIS AGREEMENT. THE PARTIES HERETO FURTHER AGREE THAT THE
AMOUNT OF LIQUIDATED DAMAGES ESTABLISHED BY THIS SECTION
5.01 IS A REASONABLE ESTIMATE, UNDER THE CIRCUMSTANCES
EXISTING ON THE DATE OF EXECUTION OF THIS AGREEMENT, OF WHAT
ARVIDA'S DAMAGES WOULD BE IN THE EVENT OF DEFAULT BY
SEAGATE.
INITIALED BY ARVIDA: _________
INITIALED BY SEAGATE: ________
Section 5.02. Non-Recourse. Notwithstanding anything
to the contrary in this Agreement or in any other agreement,
instrument or certificate delivered in connection herewith,
neither Arvida, any present or future Constituent Partner in
or agent of Arvida, nor any shareholder, officer, director,
member, manager, employee, trustee, beneficiary or agent of
any corporation or other entity that is or becomes a
Constituent Partner in Arvida, shall be personally liable,
directly or indirectly, under or in connection with this
Agreement or any other agreement, instrument or certificate
delivered in connection herewith, or any amendments or
modifications to any of the foregoing made at any time or
times; the recourse of Seagate and each of its successors
and assigns under or in connection with this Agreement and
such other agreements, instruments and certificates, and any
such amendments or modifications, shall be limited to
Arvida's interest in the Property only, and Seagate and each
of its successors and assigns waive any such personal
liability. As used in this Section 5.02, a "Constituent
Partner" in Arvida means any direct partner in Arvida and
any person or entity that is a partner in any partnership
that, directly or indirectly through one or more other
partnerships, is a partner in Arvida. This Section 5.02
shall survive the closing and delivery of documents
specified in Section 3.07 of this Agreement and any
termination of this Agreement.
Section 5.03. Notices. Any notice, demand or document
any party is required or may desire to give or deliver to or
make upon any other party shall be in writing and delivered
in person, given or made by commercial delivery service
(such as Federal Express) or given or made by United States
registered or certified mail, postage prepaid, return
receipt requested, addressed to such party at its address
set forth below, subject to the right of any party to
designate a different address by notice similarly given.
Any notice, demand or document served personally shall be
deemed delivered upon receipt, and if served by mail or
commercial delivery service shall be deemed delivered on the
date of receipt as shown by the addressee's registry or
certification receipt or on the date receipt at the
appropriate address is refused, as shown on the records or
manifest of the U.S. Postal Service or commercial delivery
service. The addresses for Arvida and Seagate are:
For Arvida: Arvida/JMB Partners, L.P.-
II
26461 Crown Valley Pkwy.
Suite 100
Mission Viejo, CA 92691
Attention: Mr. Glen Allen
(714) 367-8660
With a copy to: James Motta, President
and
Chief Executive Officer
Arvida Company
7900 Glades Road
Boca Raton, FL 33434
(407) 479-1100
Arvida Company
7900 Glades Road
Boca Raton, FL 33434
Attention: General Counsel
(407) 479-1100
Stephen A. Lovelette,
Treasurer
Arvida Company
c/o JMB Realty
900 North Michigan Avenue
Chicago, IL 60611-1575
(312) 440-4800
AND
Nossaman, Guthner, Knox &
Elliott, LLP
18101 Von Karman Avenue
Suite 1800
Irvine, CA 92715
Attention: Gregory W.
Sanders, Esq.
(714) 833-7800
For Seagate: Seagate at San Clemente,
LLC
c/o Phillips Development
Company
18012 Skypark Circle
Irvine, CA 92714
Attention: Bill Phillips
(714) 261-8820
With a copy to: Allen, Matkins, Leck,
Gamble & Mallory
18400 Von Karman Avenue
Irvine, CA 92715
Attention: John Gamble, Esq.
(714) 553-1313
Section 5.04. Other Documents. The parties hereto
shall cooperate in good faith to accomplish the objectives
of this Agreement and to that end shall execute and deliver
from time to time such other and further instruments and
documents as may be necessary and convenient to the
fulfillment of those purposes.
Section 5.05. Effect of Invalidation. If any one or
more of the provisions of this Agreement is for any reason
held to be invalid, illegal or unenforceable in any respect
by any court of competent jurisdiction, such invalidity,
illegality and unenforceability shall not affect the
validity and enforceability of the other provisions hereof,
and this Agreement shall be construed as though such
invalid, illegal or unenforceable provision had never been
contained herein.
Section 5.06. Entire Agreement. This Agreement
contains the entire agreement between the parties hereto
with respect to the matters set forth herein, supersedes all
prior agreements, understandings and representations by or
between the parties with respect thereto, and may not be
modified, amended or terminated except by written agreement
signed by the party against whom enforcement is sought.
Section 5.07 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall
for all purposes be deemed to be an original and all of
which together shall constitute one and the same agreement
of the parties. Any signature page to any counterpart may
be detached from such counterpart without impairing the
legal effect of the signatures thereon and thereafter
attached to another counterpart identical thereto, except
having attached to it any such additional signature pages.
Section 5.08. Captions. Captions of the Articles and
Sections of this Agreement are for convenience only and
shall not be considered or referred to in resolving
questions of interpretation or construction.
Section 5.09. Attorney's Fees. Should either or both
of the parties hereto institute any action or proceeding in
any court to enforce any provision(s) of this Agreement, the
prevailing party shall be entitled to receive from the
losing party reasonable attorneys' and expert witness fees
and costs incurred in such action or proceeding, whether or
not such action or proceeding is prosecuted to judgment, and
in any appeals, in such amount as the court determines is
reasonable.
Section 5.10. Governing Law. This Agreement and the
transaction contemplated herein shall be governed by and
construed under the laws of the State of California.
Section 5.11. Time of the Essence. Time is of the
essence of all matters set forth in this Agreement.
Section 5.12. No Waiver. No waiver by any party of
any breach by any other party of any provisions of this
Agreement shall be effective unless in writing signed by the
waiving party. No such waiver shall be deemed or construed
to be a waiver of any subsequent or continuing breach of the
same or any other provisions of this Agreement; nor shall
any forbearance by any party from the exercise of a remedy
for any such breach be deemed or construed to be a waiver by
such party of any of its rights or remedies with respect to
such breach.
Section 5.13. Number and Gender. Masculine terms used
in this Agreement shall include the feminine and vice versa;
neuter terms shall include both masculine and feminine; and
the singular shall include the plural and vice versa,
whenever the context shall require it.
Section 5.14. Assignment. No party shall have the
right to assign this Agreement without the prior written
consent of the other party, and any purported assignment
without such consent shall be void and, at the option of any
other party, shall constitute a material default; however,
notwithstanding the foregoing, either party hereto may (a)
assign its interest in this Agreement, including its rights,
duties and obligations with respect thereto, subject only to
the right of the nonassigning party to reasonably approve
the creditworthiness and financial ability of the assignee
and/or assignee's principals to perform the assigning
party's obligations under this Agreement; or (b) assign its
interest in this Agreement to an affiliated, subordinate or
related entity, without regard to the creditworthiness or
financial ability of such entity, so long as the assigning
party remains principally liable for performance of the
assignee's obligations under this Agreement. This Agreement
shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, representatives,
successors and assigns.
Section 5.15. Calculation of Time. The time in which
any act required or permitted by this Agreement is to be
performed shall be determined by excluding the day upon
which the event occurs from whence the time commences. If
the last day upon which performance would otherwise be
required or permitted is a Saturday, Sunday or holiday, then
the time for performance shall be extended to the next day
which is not a Saturday, Sunday or holiday.
Section 5.16. Relationship. Nothing contained in this
Agreement shall be deemed or construed by the parties or by
any third person to create a relationship of principal and
agent or partnership or a joint venture between Arvida and
Seagate or between either or both of them and any third
party.
Section 5.17. Escrow Cancellation Charges. If the
Escrow established pursuant to Section 3.01 of this
Agreement fails to close by reason of Arvida's default
hereunder, Arvida shall pay all escrow cancellation charges.
If the escrow fails to close by reason of Seagate's default
hereunder, Seagate shall pay for all escrow cancellation
charges. If the escrow fails to close for any reason other
than the foregoing, Arvida, on the one hand, and Seagate, on
the other hand, shall each pay one-half of the escrow
cancellation charges.
Section 5.18. Representation by Attorney. Each party
acknowledges that he or it has been represented by
experienced and knowledgeable legal counsel in negotiating
the form and contents of this Agreement.
Section 5.19. Recitals Incorporated by Reference. The
Recitals of this Agreement are incorporated herein by this
reference and made a part of this Agreement.
Section 5.20. Confidentiality. Prior to closing, this
Agreement, and the provisions, terms and conditions hereof,
shall not be disclosed to any third party without the
consent of the nondisclosing party; provided, however, any
party may disclose the existence of this Agreement and the
provisions, terms and conditions hereof to such party's
partners or investors, or when required to do so in order to
comply with filing and/or reporting requirements of any
governmental regulatory agency or any lawful order thereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
ARVIDA
Arvida/JMB Partners, L.P.-II
a Delaware limited partnership
By: Arvida/JMB Managers-II, Inc.,
a Delaware corporation, its
General Partner
By:
____________________________
Its:
______________________
SEAGATE
Seagate at San Clemente, LLC
a California limited liability company
By: _________________________
Its: ___________________
OC/960370014
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
FORM OF QUITCLAIM DEED
EXHIBIT C
FORM OF NOTICE OF EXERCISE OF OPTION
EXHIBIT D
SCHEDULE OF PERSONAL PROPERTY
EXHIBIT E
SCHEDULE OF SUBDIVISION IMPROVEMENT BONDS,
LETTERS OF CREDIT AND OTHER SECURITY INSTRUMENTS
EXHIBIT F
CONTRACTS AND AGREEMENTS
EXHIBIT G
PRELIMINARY REPORT
EXHIBIT H
FORM OF GRANT DEED
EXHIBIT I
FORM OF BILL OF SALE
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT K
MAP OF CONTAMINATED AREA
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000852494
<NAME> ARVIDA/JMB PARTNERS, L.P.-II
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,588,455
<SECURITIES> 0
<RECEIVABLES> 1,634,468
<ALLOWANCES> 24,073
<INVENTORY> 10,293,218
<CURRENT-ASSETS> 0
<PP&E> 6,304,679
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,213,782
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (129,901,999)
<TOTAL-LIABILITY-AND-EQUITY> 22,213,782
<SALES> 2,809,375
<TOTAL-REVENUES> 2,809,375
<CGS> 2,377,302
<TOTAL-COSTS> 2,377,302
<OTHER-EXPENSES> 5,546,411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,114,338)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,114,338)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,114,338)
<EPS-PRIMARY> (15.61)
<EPS-DILUTED> (15.61)
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