SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1997 Commission file 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
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . 16
Item 3. Defaults Upon Senior Securities. . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 18
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 351,091 181,623
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,307,072 955,077
Trade and other accounts receivable (net of allowance
for doubtful accounts of $0 at June 30, 1997
and $76,289 at December 31, 1996) . . . . . . . . . . . . . . . . . 31,103 103,650
Real estate inventories . . . . . . . . . . . . . . . . . . . . . . . 39,683 57,598
Property and equipment held for sale or disposition . . . . . . . . . 2,776,878 2,701,441
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . 292,469 850,528
------------ ------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . $ 4,798,296 4,849,917
============ ============
<PAGE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' DEFICITS
----------------------------------
JUNE 30, DECEMBER 31,
1997 1996
------------- -----------
Liabilities:
Bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,535 10,222
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 114,256 129,281
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,700 33,700
Accrued expenses and other liabilities . . . . . . . . . . . . . . . 24,798,656 30,605,394
Amounts due to affiliates. . . . . . . . . . . . . . . . . . . . . . 7,622,949 7,621,046
Notes and mortgages payable (in default) . . . . . . . . . . . . . . 59,886,713 78,871,459
------------ ------------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 92,477,809 117,271,102
------------ ------------
Partners' deficits:
General Partner and Associate Limited Partner:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000
Cumulative net loss. . . . . . . . . . . . . . . . . . . . . . . . (6,597,044) (8,448,354)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . (246,771) (246,771)
------------ ------------
(6,841,815) (8,693,125)
------------ ------------
Limited partners:
Capital contributions, net of offering costs . . . . . . . . . . . 209,753,671 209,753,671
Cumulative net loss. . . . . . . . . . . . . . . . . . . . . . . . (281,370,195) (304,260,557)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . (9,221,174) (9,221,174)
------------ ------------
(80,837,698) (103,728,060)
------------ ------------
Total partners' deficits . . . . . . . . . . . . . . . . . . . (87,679,513) (112,421,185)
------------ ------------
Total liabilities and partners' deficits . . . . . . . . . . . $ 4,798,296 4,849,917
============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Housing . . . . . . . . . . . . . . . . . . . $ -- -- -- 140,810
Homesites . . . . . . . . . . . . . . . . . . 28,000 598,019 28,000 1,244,069
Land and property . . . . . . . . . . . . . . 31,215,000 20,060,819 31,215,000 20,060,819
Operating properties. . . . . . . . . . . . . 199,336 1,194,787 417,959 2,881,131
Brokerage and other operations. . . . . . . . -- 225,457 -- 561,628
----------- ---------- ---------- ----------
Total revenues. . . . . . . . . . . . 31,442,336 22,079,082 31,660,959 24,888,457
Cost of revenues:
Housing . . . . . . . . . . . . . . . . . . . -- 186,094 -- 333,373
Homesites . . . . . . . . . . . . . . . . . . 22,427 505,439 22,427 1,063,976
Land and property . . . . . . . . . . . . . . (1,143,523) 14,050,234 (1,143,523) 14,050,234
Operating properties. . . . . . . . . . . . . 122,586 1,280,352 230,974 2,559,036
Brokerage and other operations. . . . . . . . -- 241,530 -- 534,794
----------- ---------- ---------- ----------
Total cost of revenues. . . . . . . . (998,510) 16,263,649 (890,122) 18,541,413
Gross operating profit. . . . . . . . . . . . . 32,440,846 5,815,433 32,551,081 6,347,044
Selling, general and administrative expenses. . (375,614) (857,187) (571,340) (1,339,962)
----------- ---------- ---------- ----------
Net operating income. . . . . . . . . 32,065,232 4,958,246 31,979,741 5,007,082
Interest income . . . . . . . . . . . . . . . . -- 6,309 11,476 15,433
Interest and real estate taxes. . . . . . . . . (3,625,420) (4,700,270) (7,249,545) (9,773,030)
----------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . $28,439,812 264,285 24,741,672 (4,750,515)
=========== ========== ========== ==========
Net income (loss) per
Limited Partnership
Interest. . . . . . . . . . . . . . $ 112.40 4.71 97.77 (10.90)
=========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,741,672 (4,750,515)
Charges to net income (loss) not requiring cash:
Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,196 54,304
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . (17,379) 32,735
Loss on disposition of property and equipment . . . . . . . . . . . . . . 2,789 1,765,143
Write-off of obligation related to Talega Property. . . . . . . . . . . . (1,800,000) --
Changes in:
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (351,995) 1,341,307
Trade and other accounts receivable . . . . . . . . . . . . . . . . . . . 89,928 802,376
Real estate inventories:
Additions to real estate inventories. . . . . . . . . . . . . . . . . . -- (4,464,714)
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,915 15,180,693
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . 539,863 670,202
Accounts payable, accrued expenses and other liabilities. . . . . . . . . (4,021,765) 8,885,873
Deposits and unearned income. . . . . . . . . . . . . . . . . . . . . . . -- (835,232)
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . 1,903 196,955
------------ -----------
Net cash provided by operating activities . . . . . . . . . . . . 19,221,127 18,879,127
------------ -----------
Investing activities:
Proceeds from disposal of property and equipment. . . . . . . . . . . . . -- 1,835,911
Acquisition of property and equipment . . . . . . . . . . . . . . . . . . (78,226) --
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . (78,226) 1,835,911
------------ -----------
Financing activities:
Payments of notes and mortgages payable . . . . . . . . . . . . . . . . . (18,984,746) (21,068,292)
Proceeds from (repayments of) bank overdrafts . . . . . . . . . . . . . . 11,313 (550,666)
------------ -----------
Net cash used in financing activities . . . . . . . . . . . . . . (18,973,433) (21,618,958)
------------ -----------
<PAGE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
1997 1996
------------ -----------
Increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . 169,468 (903,920)
Cash and cash equivalents, beginning of year. . . . . . . . . . . . . . . . 181,623 1,387,313
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . . . $ 351,091 483,393
============ ===========
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>
<PAGE>
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1996,
which are included in the Partnership's 1996 Annual Report on Form 10-K
(File No. 0-19245) filed on March 31, 1997, as certain footnote disclosures
which would substantially duplicate those contained in such audited
financial statements have been omitted from this report. Capitalized terms
used but not defined in this quarterly report have the same meanings as in
the Partnership's 1996 Annual Report.
GENERAL
Capitalized Interest and Real Estate Taxes
Due to the prohibitions on construction and development imposed on the
Partnership by its lender, no amounts of interest or real estate taxes
qualified for capitalization in 1996 and 1997.
Interest of $4,410,150 and $5,657,189 was incurred for the six months
ended June 30, 1997 and 1996, respectively. Interest of $2,139,310 and
$2,742,832 was incurred for the three months ended June 30, 1997 and 1996,
respectively. The Partnership has not made the required monthly interest
payments on its credit facility since September 1994.
Real estate taxes of $2,839,395 and $4,115,841 were incurred for the
six months ended June 30, 1997 and 1996, respectively. Real estate tax
payments of $11,287,186 and $517,359 were made during the six months ended
June 30, 1997 and 1996, respectively. Real estate taxes of $1,486,110 and
$1,957,438 were incurred for the three months ended June 30, 1997 and 1996,
respectively. Real estate tax payments of $11,287,186 and $67,616 were
made during the three months ended June 30, 1997 and 1996, respectively.
The increase in real estate taxes paid during the three and six months
ended June 30, 1997 as compared to the same periods in 1996 is due to the
taxes paid in conjunction with the closing on the sale of the Talega
Property, as discussed below in Notes and mortgages payable (in default).
The preceding analysis of real estate taxes does not include real estate
taxes incurred or paid with respect to the Partnership's club facilities
(sold in June 1996) and other operating properties as these taxes are
included in cost of revenues for operating properties.
Property and Equipment and Other Assets
No depreciation expense was incurred for the three and six month
periods ended June 30, 1997 and 1996. Reference is made to the "Impact of
Recently Issued Accounting Standards" note for a discussion of the
Partnership's implementation of the Financial Accounting Standards Board's
Statement No. 121 ("FASB No. 121"). Amortization of other assets of
$18,196 and $54,304 was incurred for the six months ended June 30, 1997 and
1996, respectively. Amortization of other assets of $8,513 and $23,447 was
incurred for the three months ended June 30, 1997 and 1996, respectively.
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Restricted cash at June 30, 1997 and December 31, 1996 consists
primarily of the amount 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. Subject to the approval
<PAGE>
of the Partnership's lender, cash in the restricted collateral account is
utilized to fund the Partnership's expenses. Additional amounts were
deposited into the restricted collateral account pursuant to the sale of
the Partnership's remaining land, cable operation and country club in the
Heathrow community in 1996, and the sale of the Talega Property in May
1997.
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 letters of credit securing performance
obligations of the Partnership. At June 30, 1997, approximately $10.4
million, $38.0 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 six month period ended June 30, 1997, the effective interest
rate for the combined term loans and the revolving line of credit facility
was approximately 12.7% 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 June 30, 1997 totals
approximately $21.2 million.
In March 1995, the Partnership and its lender entered into Forbearance
Agreements pursuant to which, among other things, the Partnership proposed
a plan for the orderly disposition of its remaining assets. The
Forbearance Agreements were amended in October 1995 and again in September
1996 to provide for, among other things, extensions of the time frame for
the orderly disposition of the Partnership's assets. In conjunction with
the September 1996 amendment, the Partnership's lender agreed to forgive,
waive and cancel a portion of the unpaid interest on the Partnership's
credit facilities in the aggregate amount of $20 million, of which $2
million was allocated to interest on the revolving line of credit and $18
million was allocated to interest on one of the term loans. The
Partnership and its lender amended the March 1995 Forbearance Agreements to
include, among other things, an extension of the existing plan whereby the
Partnership would sell its remaining assets by no later than June 30, 1997.
The amendment also provides for the forgiveness, by the Partnership's
lender, of any remaining outstanding principal balance and accrued interest
on the Partnership's credit facilities, upon the satisfaction of certain
specified conditions including, among other things, the sale of the
Partnership's remaining real estate assets at specified minimum prices, the
payment of the net proceeds from such sales to the Partnership's lender,
and the assignment of any other net assets of the Partnership to the
lender. Such forgiveness of principal and interest would result in an
extraordinary gain for financial reporting purposes. The Partnership and
its lender are currently negotiating the terms of a further extension of
the March 1995 Forbearance Agreements.
On May 30, 1997, the Partnership closed on the sale of its Talega
Property to an unaffiliated third party for $31.1 million. The terms of
the sale were generally in accordance with the agreement made in October
1996 with certain modifications. In conjunction with the sale of the
Talega Property, the Partnership paid all current and delinquent property
taxes (including penalties and interest thereon). In addition, the
Partnership reached an agreement with the Santa Margarita Water District
(the "District") resulting in an agreed upon amount due with respect to the
Partnership's tax exempt bond financing. This amount was paid at closing,
at which time the Partnership received a full and unconditional release
from the District. In addition, all contractual obligations of the
Partnership with respect to the Talega Property were assumed by the buyer.
The net proceeds from the sale, after prorations and closing costs, totaled
approximately $19.1 million. Of this amount, approximately $18.8 million
was applied against the outstanding principal balance on the Partnership's
term loans, and $0.3 million was deposited to fund the Partnership's
expenses. As previously reported, the Partnership had reduced its basis in
<PAGE>
the Talega Property for financial reporting purposes to zero through loss
provisions. Therefore, the sale of the Talega Property resulted in a gain
of approximately $32.2 million for financial reporting purposes. The gain
exceeds the gross sale price due to the write-off of an obligation related
to the Talega Property for which the Partnership is no longer liable. The
write-off of this obligation is the cause for the credit balance in Land
and property cost of sales on the accompanying consolidated statements of
operations for the three and six month periods ended June 30, 1997. This
closing is the primary cause for the decrease in Notes and mortgages
payable (in default) and Accrued expenses and other liabilities on the
accompanying consolidated balance sheets at June 30, 1997 as compared to
December 31, 1996.
Proceeds from the sales of the Partnership's assets and other
collateral securing the credit facilities, net of brokerage commissions and
certain other customary selling expenses, are delivered to the lender to be
applied against the outstanding principal balances on the term loans.
Through June 30, 1997, the Partnership has remitted proceeds totaling
approximately $59.2 million from sales made after becoming subject to this
requirement in September 1994.
On July 15, 1997, the Partnership closed on the sale of its retail
shopping plaza at the Heathrow community to an unaffiliated third party for
$5.1 million. The net proceeds from the sale, after prorations and closing
costs, totaled approximately $5.0 million. Of this amount, $4.9 million
was applied against the outstanding principal balance on the Partnership's
term loans, and $0.1 million was deposited to fund the Partnership's
expenses.
Although there can be no assurance, the Partnership is working to
dispose of the two remaining lots in Eagle Watch during 1997. It is
expected that any proceeds from the sale or other disposition of these
lots, 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. In addition, the Partnership is currently
involved in certain litigation, as discussed in Part II. Item 1. Legal
Proceedings in this report, to which reference is hereby made. Upon
completion of the sale of the Partnership's remaining assets, the
Partnership expects to terminate. However, the termination of the
Partnership could be delayed until resolution (or other acceptable
treatment) of the pending litigation. The Holders of Interests should not
expect to receive any future distributions from the Partnership.
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 six months
ended June 30, 1997, there were no reimbursements due the General Partner
of the Partnership or its affiliates for such direct or out-of-pocket
expenditures. The total of such reimbursements for the six months ended
June 30, 1996 was approximately $3,400, all of which has been paid.
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 $8,300 for the six months ended
June 30, 1997, all which was paid as of June 30, 1997. The total of such
costs for the six months ended June 30, 1996 was approximately $17,300, all
of which has been paid.
<PAGE>
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.
The Partnership was entitled to receive from one of its affiliates
approximately $0 and $11,700 for the six month periods ended June 30, 1997
and 1996, respectively, for costs incurred by the Partnership on behalf of
the affiliate, none of which was outstanding at June 30, 1997.
Prior to June 1996, the Partnership and Arvida/JMB Partners, L.P. (a
publicly-held limited partnership affiliated with the General Partner,
"Arvida/JMB-I") each employed project-related and administrative personnel
who performed services on behalf of both partnerships. In addition,
certain out-of-pocket expenditures related to such services and other
general and administrative expenditures were incurred and charged to each
partnership as appropriate. The Partnership reimbursed or received
reimbursements from Arvida/JMB-I for such costs (including salary and
salary-related costs). Subsequent to June 1996, the Partnership no longer
employed any project-related or administrative personnel and incurred no
costs on behalf of Arvida/JMB-I. For the six month period ended June 30,
1997, the Partnership was obligated to reimburse Arvida/JMB-I approximately
$56,000. At June 30, 1997, approximately $20,500 was unpaid, all of which
was paid as of August 8, 1997. The Partnership was not entitled to any
reimbursement from Arvida/JMB-I for the six month period ended June 30,
1997. For the six months ended June 30, 1996, the Partnership was
obligated to reimburse Arvida/JMB-I approximately $1,178,900 and the
Partnership was entitled to receive reimbursements from Arvida/JMB-I of
approximately $113,700. At June 30, 1997, approximately $1,800 remains
outstanding from the prior year, none of which was paid as of August 8,
1997.
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 salary and salary-related costs incurred in connection with
work performed on behalf of the Partnership. The total of such costs for
the six month periods ended June 30, 1997 and 1996 were approximately
$21,600 and $157,000, respectively. At June 30, 1997, approximately $3,500
was unpaid, all of which was paid as of August 8, 1997.
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,
totaled approximately $4,609,400 at June 30, 1997. 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 to be made. 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 at June 30, 1997 and none of
which was paid as of August 8, 1997.
Prior to the sale during June 1996 of the remaining land within the
Heathrow Community, the Partnership incurred certain general and
administrative expenses, including insurance premiums, which were paid by
the Partnership on behalf of its affiliated homeowners associations. The
Partnership receives reimbursements from the affiliates for such costs.
For the six months ended June 30, 1996, the Partnership was entitled to
receive approximately $5,200 from such affiliates, all of which was
received. The Partnership was entitled to receive approximately $400 for
the six month period ended June 30, 1997. At June 30, 1997, approximately
$1,000 was outstanding, which includes amounts owed from the prior year.
Prior to the sale during June 1996 of the remaining land within the
Heathrow Community, Arvida provided development management services to the
Heathrow joint venture. The payment of the management fees in connection
<PAGE>
with these services has been deferred. The cumulative amount of such
deferred management fees as of June 30, 1997 was approximately $3,005,200.
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 June 30, 1997 for approximately $2,491,000
and $558,000, respectively. In connection with the sale of the Talega
Property, the purchaser has agreed to indemnify the Partnership against any
losses in connection with these standby letters of credit and bonds.
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, fraud in the inducement and
conspiracy to commit fraud in the inducement, breach of the partnership
agreement and constructive trust in connection with the purchase and
management of the Heathrow development. Plaintiffs seek, among other
things, unspecified compensatory damages, punitive damages, 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, Pierce, Fenner &
Smith, Incorporated ("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 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
<PAGE>
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.
TAX-EXEMPT BOND FINANCING
In connection with the development of the Talega Property (which was
suspended during 1990), the Partnership had utilized bond financing to
construct certain on-site and off-site water and sewer infrastructure
improvements which the Partnership would have otherwise been obligated to
finance and construct as a condition to obtaining certain approvals for the
project. The principal amount of bonds issued was $62 million, and all of
the proceeds from the offering have been utilized. In conjunction with the
sale of the Talega Property, the Partnership reached an agreement with the
District resulting in an agreed upon amount due with respect to the
Partnership's tax exempt bond financing. This amount was paid at closing,
at which time the Partnership received a full and unconditional release
from the District.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
The Partnership adopted FASB No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
effective January 1, 1996. In accordance with FASB No. 121, the
Partnership discontinued recording depreciation as all of its assets are
held for disposal. In addition, in conjunction with the application of
this statement, the Partnership reversed the depreciation expense
previously recorded in 1996 during the fourth quarter of 1996. The
Partnership requires no impairment losses or other adjustments to be
recorded as of June 30, 1997 as a result of the application of this
statement. Operating results for properties held for sale or disposition
are reflected as operating properties revenues and cost of revenues on the
accompanying consolidated statements of operations for the three and six
month periods ended June 30, 1997 and 1996.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. As the Partnership's
capital structure consists of only general and limited partnership
interests, the Partnership does not expect any significant impact on its
consolidated financial statements upon adoption of these standards when
required at the end of 1997.
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 June 30,
1997 and December 31, 1996 and for the three and six month periods ended
June 30, 1997 and 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying consolidated
financial statements ("Notes") contained in this report for additional
information concerning certain of the Partnership's investments.
At June 30, 1997 and December 31, 1996, the Partnership had
unrestricted cash and cash equivalents of approximately $351,000 and
$181,600, respectively. Bank overdrafts representing checks in transit of
approximately $21,500 and $10,200 at June 30, 1997 and December 31, 1996,
respectively, were repaid from cash on hand in July 1997 and January 1997,
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. The source of the Partnership's 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 upon Senior Securities).
In March 1995, the Partnership and its lender entered into Forbearance
Agreements pursuant to which, among other things, the Partnership proposed
a plan for the orderly disposition of its remaining assets. The
Forbearance Agreements were amended in October 1995 and again in September
1996 to provide for, among other things, extensions of the time frame for
the orderly disposition of the Partnership's assets. In conjunction with
the September 1996 amendment, the Partnership's lender agreed to forgive,
waive and cancel a portion of the unpaid interest on the Partnership's
credit facilities in the aggregate amount of $20 million, of which $2
million was allocated to interest on the revolving line of credit and $18
million was allocated to interest on one of the term loans. The
Partnership and its lender amended the March 1995 Forbearance Agreements to
include, among other things, an extension of the existing plan whereby the
Partnership would sell its remaining assets by no later than June 30, 1997.
The amendment also provides for the forgiveness, by the Partnership's
lender, of any remaining outstanding principal balance and accrued interest
on the Partnership's credit facilities, upon the satisfaction of certain
specified conditions including, among other things, the sale of the
Partnership's remaining real estate assets at specified minimum prices, the
payment of the net proceeds from such sales to the Partnership's lender,
and the assignment of any other net assets of the Partnership to the
lender. Such forgiveness of principal and interest would result in an
extraordinary gain for financial reporting purposes. The Partnership and
its lender are currently negotiating the terms of a further extension of
the March 1995 Forbearance Agreements.
During June 1996, the Heathrow joint venture, in which the Partnership
is the managing general partner, closed on the sale of the remaining land,
the country club and certain related assets within the Partnership's
Heathrow Community. This sale is the cause for various significant changes
on the accompanying consolidated statements of operations for the three and
six month periods ended June 30, 1997 as compared to the same periods in
1996.
<PAGE>
On May 30, 1997, the Partnership closed on the sale of its Talega
Property to an unaffiliated third party for $31.1 million. The terms of
the sale were generally in accordance with the agreement made in October
1996 with certain modifications. In conjunction with the sale of the
Talega Property, the Partnership paid all current and delinquent property
taxes (including penalties and interest thereon). In addition, the
Partnership reached an agreement with the Santa Margarita Water District
(the "District") resulting in an agreed upon amount due with respect to the
Partnership's tax exempt bond financing. This amount was paid at closing,
at which time the Partnership received a full and unconditional release
from the District. In addition, all contractual obligations of the
Partnership with respect to the Talega Property were assumed by the buyer.
The net proceeds from the sale, after prorations and closing costs, totaled
approximately $19.1 million. Of this amount, approximately $18.8 million
was applied against the outstanding principal balance on the Partnership's
term loans, and $0.3 million was deposited to fund the Partnership's
expenses. This closing is the primary cause for the decrease in Notes and
mortgages payable (in default) and Accrued expenses and other liabilities
on the accompanying consolidated balance sheets at June 30, 1997 as
compared to December 31, 1996.
On July 15, 1997, the Partnership closed on the sale of its retail
shopping plaza at the Heathrow community to an unaffiliated third party for
$5.1 million. The net proceeds from the sale, after prorations and closing
costs, totaled approximately $5.0 million. Of this amount, $4.9 million
was applied against the outstanding principal balance on the Partnership's
term loans, and $0.1 million was deposited to fund the Partnership's
expenses.
Although there can be no assurance, the Partnership is working to
dispose of the two remaining lots in Eagle Watch during 1997. It is
expected that any proceeds from the sale or other disposition of these
lots, 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. In addition, the Partnership is currently
involved in certain litigation, as discussed in Part II. Item 1. Legal
Proceedings in this report, to which reference is hereby made. Upon
completion of the sale of the Partnership's remaining assets, the
Partnership expects to terminate. However, termination of the Partnership
could be delayed until resolution (or other acceptable treatment) of the
pending litigation. Holders of Interests should not expect to receive any
future distributions from the Partnership.
RESULTS OF OPERATIONS
The results of operations for the three and six months ended June 30,
1997 and June 30, 1996 reflect the reduced activity of the Partnership due
to its financial condition and the prohibition placed on the Partnership by
its lender regarding the construction of new homes and the development of
homesites within Heathrow.
The significant decrease in homesite, operating properties, and
brokerage and other operations revenues and cost of revenues generated by
the Partnership for the three and six month periods ended June 30, 1997 as
compared to the same periods in 1996 is due to the sale in June 1996 of the
Partnership's remaining land, cable operations and country club in its
Heathrow community. Operating revenues and cost of revenues for the three
and six month periods ended June 30, 1997 are attributable to the
operations of the retail shopping plaza in the Heathrow community.
Homesite revenues and cost of revenues for the three and six months
ended June 30, 1997 resulted from the closing of one of the lots in the
Eagle Watch Community. The Partnership is currently working to dispose of
the two remaining lots in Eagle Watch during 1997.
<PAGE>
Land and property revenues and cost of revenues for 1997 and 1996
reflect the sales of the Talega Property and the remaining land, cable
operations and country club in the Heathrow community, respectively. As
previously reported, the Partnership had reduced its basis in the Talega
Property for financial reporting purposes to zero through loss provisions.
Therefore, the sale of the Property resulted in a gain of approximately
$32.2 million for financial reporting purposes. The gain exceeds the gross
sale price of $31.1 million due to the write-off of an obligation related
to the Property for which the Partnership is no longer liable. The write-
off of this obligation is the cause for the credit balance in Land and
property cost of sales on the accompanying consolidated statements of
operations for the three and six month periods ended June 30, 1997. Land
and property revenues for the three and six months ended June 30, 1997 also
include proceeds of approximately $0.1 million from the closing on the
sales center used in the Partnership's Wesmere community prior to the sale
of the remaining land in that community in November 1995.
Selling, general and administrative expenses decreased during the
three and six month periods ended June 30, 1997 as compared to the same
periods in 1996 due to the limited activities of the Partnership.
Interest and real estate taxes declined due to a reduction in the debt
outstanding during the three and six month periods ended June 30, 1997 as
compared to the same periods in 1996. In addition, real estate taxes
declined due to the Heathrow sale discussed above, as well as a decline in
the taxes attributable to the Partnership's Talega Property as a result of
the sale of that Property in May 1997.
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, fraud in the inducement and
conspiracy to commit fraud in the inducement, breach of the partnership
agreement and constructive trust in connection with the purchase and
management of the Heathrow development. Plaintiffs seek, among other
things, unspecified compensatory damages, punitive damages, 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.
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Partnership's $67.5 million term loan had 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 June 30, 1997 is approximately $59.9 million. In addition, as of
June 30, 1997, the Partnership is liable under standby letters of credit
for approximately $2,491,000. In connection with the sale of the Talega
Property, the purchaser has agreed to indemnify the Partnership against any
losses in connection with these standby letters of credit. 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 which were subsequently modified on
October 31, 1995 and September 24, 1996. Upon the execution of the
September 24, 1996 amended agreements, the Partnership's lender agreed to
forgive, waive and cancel a portion of the unpaid interest on the
Partnership's credit facilities in the aggregate amount of $20 million, of
which $2 million was allocated to interest on the revolving line of credit
and $18 million was allocated to interest on one of the term loans. The
Partnership and its lender amended the March 1995 Forbearance Agreements to
include, among other things, an extension of the existing plan whereby the
Partnership would sell its remaining assets by no later than June 30, 1997.
The Partnership and its lender are currently negotiating the terms of a
further extension of the March 1995 Forbearance Agreements. The
Partnership closed on the sale of its Talega Property in May 1997. The net
proceeds from the sale, after prorations and closing costs, totaled
approximately $19.1 million, of which approximately $18.8 million was
applied against the outstanding principal balance on the Partnership's term
loans and $0.3 million was deposited to fund the Partnership's expenses.
In July 1997, the Partnership closed on the sale of its retail shopping
plaza in the Heathrow community. The net proceeds from this sale, after
prorations and closing costs, totaled approximately $5.0 million, of which
approximately $4.9 million was applied against the outstanding principal
balance on the Partnership's term loans and $0.1 million was deposited to
fund the Partnership's expenses. It is expected that any proceeds from the
sale or other disposition of the two remaining lots in the Partnership's
Eagle Watch community, 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 and 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.
<PAGE>
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. 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.**
4.3. 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 4.2 are incorporated herein by
reference.**
4.4. 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.**
4.5. 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 4.4 are incorporated
herein by reference.**
4.6. 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.**
4.7. Promissory Note effective July 1, 1992 between Arvida/JMB
Partners, L.P.-II and Arvida/JMB Managers-II, Inc. is herein incorporated
by reference. ****
4.8. 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. *****
4.9. 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. *****
4.10. 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.
<PAGE>
4.11. Letter Agreement dated October 31, 1995 supplementing
Forbearance Agreements with Lenders is herein incorporated by
reference.******
4.12. Amendment of Forbearance and Modification Agreement dated
September 24, 1996 is herein incorporated by reference to the Partnership's
Report for September 30, 1996 on Form 10-Q (File No. 0-19245) dated
November 9, 1996.
4.13. Amendment of Forbearance and Modification Agreement dated May
13, 1997 is filed herewith.
4.14. Letter of Credit Reimbursement Agreement among Bank of
American National Trust and Savings Association, Bank of America Illinois
and Arvida/JMB Partners, L.P.-II dated May 30, 1997 is filed herewith.
4.15. Indemnification Agreement dated May 30, 1997 between
Arvida/JMB Partners, L.P.-II and Catellus Residential Group, Standard
Pacific of Orange County, Inc. and Starwood Opportunity Fund IV, L.P. is
filed herewith.
10.1. Management, Advisory and Supervisory Agreement between the
Partnership and Arvida Company is herein incorporated by reference.**
10.2. 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.**
10.3. Amended and Restated Heathrow Management Agreement dated
January 17, 1990 is herein incorporated by reference.**
10.4. Eagle Watch Partners General Partnership Agreement dated
December 27, 1989 is herein incorporated by reference.**
10.5. 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.**
10.6. 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.*
10.7. 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.****
10.8. 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.******
10.9. 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 incorporated herein by reference to
Exhibit 10.15 to the Partnership's report for March 31, 1996 on Form 10-Q
(File No. 0-19245) filed with the Securities and Exchange Commission dated
May 10, 1996.
<PAGE>
10.10 Agreement for Sale and Purchase of Real Property dated May 27,
1997 by and between Heathrow Development Associates, Ltd. and Roliho, Inc.
for the sale of the retail shopping plaza at the Heathrow community is
incorporated by reference to the Exhibit 2.1 to the Partnership's report on
Form 8-K (File No. 0-19245) dated July 15, 1997 filed with the Securities
and Exchange Commission.
10.11 Agreement for Sale and Purchase of Real Property dated October
25, 1996 by and between Arvida/JMB Partners, L.P.-II and Starwood/Talega
Associates, L.L.C. for the sale of certain real property within the Talega
Property is incorporated by reference to Exhibit 10.16 to the Partnership's
report for September 30, 1996 on Form 10-Q (File No. 0-19245) filed with
the Securities and Exchange Commission dated November 8, 1996.
10.12 Amendment dated March 18, 1997 to Agreement for Purchase and
Sale of Real Property by and between Arvida/JMB Partners, L.P.-II and
Starwood/Talega Associates, L.L.C. for the sale of certain real property
within the Talega Property is incorporated by reference to Exhibit 10.9 to
the Partnership's report for December 31, 1996 on Form 10-K (File No. 0-
19245) filed with the Securities and Exchange Commission dated March 21,
1997.
10.13 Amendment dated December 9, 1996 to Agreement for Purchase and
Sale of Real Property and Escrow Instructions by and between Arvida/JMB
Partners, L.P.-II and Starwood/Talega Associates, L.L.C. for the sale of
certain real property within the Talega Property is incorporated by
reference to Exhibit 2.3 to the Partnership's report on Form 8-K (File No.
0-19245) dated June 16, 1997 filed with the Securities and Exchange
Commission.
10.14 Amendment dated May 20, 1997 to Agreement for Purchase and
Sale of Real Property and Escrow Instructions by and between Arvida/JMB
Partners, L.P.-II and Starwood/Talega Associates, L.L.C. for the sale of
certain real property within the Talega Property is incorporated by
reference to Exhibit 2.4.
27. Financial Data Schedule
* 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 4.3, 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.
<PAGE>
(b) The following reports on Form 8-K have been filed since the
quarter ended March 31, 1997.
The Partnership's report dated June 16, 1997 describing the
sale of the Talega Property.
The Partnership's report dated July 15, 1997 describing the
sale of the retail shopping plaza at the Heathrow community.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned 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: August 8, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 8, 1997
EXHIBIT 4.13
- ------------
(Arvida-II)
SECOND AMENDMENT TO FORBEARANCE AGREEMENT
AND
THIRD AMENDMENT TO MODIFICATION AGREEMENTS
- ------------------------------------------------------------------------
THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND THIRD AMENDMENT
TO MODIFICATION AGREEMENTS (this "AMENDMENT") is made as of this 13th
day of May, 1997, by and among ARVIDA/JMB PARTNERS, L.P.-II, a Delaware
limited partnership ("BORROWER"), HEATHROW DEVELOPMENT ASSOCIATES, LTD.,
a Florida limited partnership ("HEATHROW PARTNERSHIP"), and EAGLE WATCH
PARTNERS, a Georgia general partnership ("EAGLE WATCH PARTNERSHIP"), on
the one hand, and BANK OF AMERICA ILLINOIS, an Illinois banking
corporation ("BAI"), formerly known as Continental Bank N.A. and
Continental Bank, in its capacitites as Managing Co-Agent and Lender
under the Co-Lenders. Agreement for the benefit of the Lenders and
under the Amended and Restated Credit Agreement (as defined herein) and
as Agent and Lender under the Credit Agreement (as defined herein), and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
banking association ("BA NT&SA") in its capacities as Co-Agent and
Lender under the Co-Lenders' Agreement for the benefit of the Lenders
and under the Amended and Restated Credit Agreement and as Lender under
the Credit Agreement, on the other hand, Borrower, Heathrow Partnership,
and Eagle Watch Partnership may be referred to herein collectively as
the "Borrower Parties". BAI and BA NT&SA may be referred to herein
collectively as the "CO-LENDERS".
RECITALS
A. The Co-Lenders and Borrower have entered into the certain
Amended and Restated Credit Agreement dated as of June 23, 1992 (the
"AMENDED AND RESTATED CREDIT AGREEMENT"), pursuant to which, among other
things, (i) Borrower has executed and delivered certain promissory notes
in the aggregate principal amount of $130,698,161.30, and (ii) the
Borrower Parties have executed and delivered the "SECURITY DOCUMENTS,"
including the "MORTGAGES" (all as defined in the Amended and Restated
Credit Agreement). The indebtedness and obligations of the Borrower
Parties under such notes and Security Documents are collectively
referred to as the "SENIOR OBLIGATIONS."
B. Co-Lenders and Borrower have entered into that certain
Credit Agreement dated as of June 23, 1992 (the "CREDIT AGREEMENT"),
pursuant to which, among other things, (i) Borrower has executed and
delivered certain promissory notes in the aggregate principal amount of
$14,301,838.70, and (ii) the Borrower parties have executed and
delivered certain mortgages, deeds of trust, and other security
instruments creating liens that are junior and subordinate in priority
to the liens of the Security Documents and Mortgages referred to in the
preceding paragraph. The indebtedness and obligations of the Borrower
Parties under such notes, mortgages, deeds of trust and other security
instruments are collectively referred to as the "SUBORDINATE
OBLIGATIONS." The Senior Obligations and the Subordinate Obligations
are sometimes hereinafter collectively called the "CREDIT FACILITIES."
C. The Co-Lenders and the Borrower Parties entered into that
certain Forbearance and Modification Agreement (Amended and Restated
Credit Agreement) dated March 21, 1995 (the "SENIOR FORBEARANCE AND
MODIFICATION AGREEMENT") modifying certain terms of the Amended and
Restated Credit Agreement and that certain Forbearance and Modification
Agreement (Credit Agreement) dated March 21, 1995 (the "SUBORDINATE
FORBEARANCE AND MODIFICATION AGREEMENT") modifying certain terms of the
Credit Agreement. The Senior Forbearance and Modification Agreement the
Subordinate Forbearance and Modification Agreement have been modified by
certain letter agreements between the Co-Lenders and the Borrower
Parties dated October 3, 1995, October 31, 1995, March 28, 1996, June 3,
1996 and June 6, 1996.
D. The Senior Forbearance and Modification Agreement and the
Subordinate Forbearance and Modification Agreement were further amended
by that certain AMENDMENT TO FORBEARANCE AND MODIFICATION AGREEMENTS
dated September 24, 1996 (the "Previous Amendment"), pursuant to which
the Co-Lenders agreed, among other things, to forbear from exercising
certain rights and remedies for Borrower's Defaults until March 31,
1997.
E. The Borrower Parties' obligations under the Credit Agreement
and the Amended and Restated Credit Agreement remain in default. The
agreement to forbear as set forth in the Previous Amendment has expired
and the Co-Lenders have no further obligation to continue to forbear.
The Borrower Parties have requested an extension of the forbearance
period under the Previous Amendment to June 30, 1997, and the Co-Lenders
desire to grant such an extension.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual covenants, agreements, representations and warranties set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows;
SECTION 1. AMENDMENT.
(a) TERMINATION DATE. Subsection (i) of SECTION 1 (c) of
the Previous Amendment is hereby amended in its entirety to read as
follows:
"(i) The close of business on June 30, 1997."
(b) NEW CASH FLOW PROJECTIONS. The Cash Flow Projections
set forth on Exhibit I attached hereto shall be substituted for the Cash
Flow Projections attached as Exhibit A to the Previous Amendment. All
references to "Cash Flow Projections" shall be deemed to refer to the
Cash Flow Projections attached hereto as Exhibit I.
(c) FORGIVENESS DATE. The first sentence of Section 7(c)
of the Previous Amendment shall be revised to refer to "June 30, 1997,"
rather than "March 31, 1997," so that such sentence shall read as
follows:
"(c) The Co-Lenders agree to forgive, waive and relinquish
all of the then unpaid principal balances of the Credit Facilities
together with all then accrued and unpaid interest thereon, all then
accrued and unpaid letter of credit fees and all other amounts then
owing and unpaid in respect of the Credit Facilities, upon the
Forgiveness Date (as defined below); provided, however, that if the
Forgiveness Date has not occurred by June 30, 1997, then the Co-Lenders'
obligations under this Section 7(c) shall terminate and the forgiveness,
waiver and relinquishment set forth in this Secion 7(c) shall be null
and void and of no force or effect; provided further, that the Co-
Lenders' agreement is made subject to the express condition subsequent
that Borrower shall fully and timely satisfy its obligations under
Section 7(d) below."
SECTION 2. PRIOR AGREEMENTS:
(a) Except as modified hereby, the Forbearance Agreements, the
Credit Agreement, the Amended and Restated Credit Agreement, the
Previous Amendment and all other agreements between the Co-Lenders and
the Borrower Parties relating to the Senior Obligations and the
Subordinate Obligations (collectively, the "AMENDED AGREEMENT") shall
remain in full force and effect.
(b) Notwithstanding any other provision hereof, Section 2.04 of
the Senior Forbearance and Modification Agreement shall remain in effect
and shall supersede any provision hereof. Specifically, this Amendment
shall not constitute a written agreement granting to the Borrower
Parties any rights to the forbearance of the Co-Lenders.
SECTION 3. MISCELLANEOUS.
(a) This Amendment is subject to the provisions of Section 9.29
of the Forbearance Agreements.
(b) This Amendment may be executed in counterparts, and all
counterparts shall constitute but one and the same document.
(c) If any court of competent jurisdiction determines any
provisions of this Amendment to be invalid, illegal or unenforceable,
that portion shall be deemed severed from the remainder of this
Amendment and the remainder of this Amendment shall remain in full force
and effect as though such invalid, illegal or unenforceable portion had
never been a part of this Amendment.
(d) Time is of the essence of this Amendment and each and every
provision hereof.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first written above.
ARVIDA/JMB PARTNERS, L.P.-II
a Delaware limited partnership
By: Arvida/JMB Managers-II, Inc.,
General Partner
By: s/Stephen A. Lovelette
Name: STEPHEN A. LOVELETTE
Title:
HEATHROW DEVELOPMENT ASSOCIATES, LTD.,
a Florida limited partnership
By: Arvida/JMB Partners, L.P.-II,
General Partner
By: Arvida/JMB Managers-II, Inc.,
General Partner
By: s/Stephen A. Lovelette
Name: STEPHEN A. LOVELETTE
Title:
EAGLE WATCH PARTNERS,
a Georgia general partnership
By: Arvida/JMB Partners, L.P.-II,
General Partner
By: Arvida/JMB Managers-II, Inc.,
General Partner
By: s/Stephen A. Lovelette
Name: STEPHEN A. LOVELETTE
Title:
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in its capacity as Managing Co-Agent
By: s/Charles D. Graber
Name: CHARLES D. GRABER
Title: Vice President
BANK OF AMERICA ILLINOIS
an Illinois banking corporation
in all capacties hereunder other
than as Managing Co-Agent
By: s/
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
a national banking association
By: s/
Name:
Title:
By: s/
Name:
Title:
EXHIBIT I
===========
CASH FLOW PROJECTIONS
<TABLE>
<CAPTION>
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
REVENUE:(000's) JULY AUG SEPT OCT
- ---------------------- ------ ------ ------
<S> <C> <C> <C> <C>
1 Heathrow
Waters Edge
SFR's 0 0 0 0
2 Heathrow
Lakeside
SFR's 0 0 0 0
3 Heathrow
Water's
Edge Lots 0 0 0 0
4 Heathrow
Lakeside
Lots 0 0 0 0
5 Heathrow
Wyntree Lots-
Retail 0 0 0 0
6 Heathrow
Stonebridge
Lots-Retail 0 0 0 0
7 Heathrow
Woods I Lots-
Retail 0 0 0 0
8 Heathrow
Woods II-Raw
Land 0 0 0 0
9 Heathrow Tract
26-Raw Land 0 0 0 0
10 Heathrow Tract
5-Raw Land 0 0 0 0
11 Heathrow Raw
Land-All Other 0 50 0 0
------ ------ ------ ------
Subtotal
Heathrow
Land &
SFR's 0 50 0 0
------ ------ ------ ------
12 Heathrow
Market
Square 30 30 (120) 30
13 Heathrow
Golf Club 0 0 0 0
14 Heathrow
Sales
Center 0 0 0 0
15 Heathrow
Cable 0 0 0 0
------ ------ ------ ------
Subtotal
Heathrow
Operating
Property 30 30 (120) 30
------ ------ ------ ------
16 Wesmer SFR's 0 0 90 0
17 Wesmer Land 0 0 0 0
------ ------ ------ ------
Subtotal
Wesmore 0 0 90 0
------ ------ ------ ------
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
REVENUE:(000's) JULY AUG SEPT OCT
- ---------------------- ------ ------ ------
18 Eagle Watch
Lots-Retail
(Atlanta) 0 30 30 30
19 Rock Creek
Lots-Retail
(Atlanta) 0 0 0 0
------ ------ ------ ------
Subtotal
Atlanta
Projects 0 30 30 30
------ ------ ------ ------
20 Other Income 0 0 0 0
21 Talega 0 0 0 0
------ ------ ------ ------
Total Revenue 30 110 0 60
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
REVENUE:(000's) NOV DEC JAN FEB
- ---------------------- ------ ------ ------
1 Heathrow
Waters Edge
SFR's 0 0 0 0
2 Heathrow
Lakeside
SFR's 0 0 0 0
3 Heathrow
Water's
Edge Lots 0 0 0 0
4 Heathrow
Lakeside
Lots 0 0 0 0
5 Heathrow
Wyntree Lots-
Retail 0 0 0 0
6 Heathrow
Stonebridge
Lots-Retail 0 0 0 0
7 Heathrow
Woods I Lots-
Retail 0 0 0 0
8 Heathrow
Woods II-Raw
Land 0 0 0 0
9 Heathrow Tract
26-Raw Land 0 0 0 0
10 Heathrow Tract
5-Raw Land 0 0 0 0
11 Heathrow Raw
Land-All Other 0 0 0 0
------ ------ ------ ------
Subtotal
Heathrow
Land &
SFR's 0 0 0 0
------ ------ ------ ------
12 Heathrow
Market
Square 5,000 0 0 0
13 Heathrow
Golf Club 0 0 0 0
14 Heathrow
Sales
Center 0 0 0 0
15 Heathrow
Cable 0 0 0 0
------ ------ ------ ------
Subtotal
Heathrow
Operating
Property 5,000 0 0 0
------ ------ ------ ------
16 Wesmer SFR's 0 0 0 0
17 Wesmer Land 0 0 0 0
------ ------ ------ ------
Subtotal
Wesmore 0 0 0 0
------ ------ ------ ------
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
REVENUE:(000's) NOV DEC JAN FEB
- ---------------------- ------ ------ ------
18 Eagle Watch
Lots-Retail
(Atlanta) 0 0 0 0
19 Rock Creek
Lots-Retail
(Atlanta) 0 0 0 0
------ ------ ------ ------
Subtotal
Atlanta
Projects 0 0 0 0
------ ------ ------ ------
20 Other Income 0 0 0 0
21 Talega 0 0 0 11,000
------ ------ ------ ------
Total Revenue 5,000 0 0 11,000
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
SUBTOTAL ACTUALS
REVENUES:(000's) MAR BUDGET JUL-FEB MAR
- ---------------------- ------ ------ ------
1 Heathrow
Waters Edge
SFR's 0 0 0 0
2 Heathrow
Lakeside
SFR's 0 0 0 0
3 Heathrow
Water's
Edge Lots 0 0 0 0
4 Heathrow
Lakeside
Lots 0 0 0 0
5 Heathrow
Wyntree Lots-
Retail 0 0 0 0
6 Heathrow
Stonebridge
Lots-Retail 0 0 0 0
7 Heathrow
Woods I Lots-
Retail 0 0 0 0
8 Heathrow
Woods II-Raw
Land 0 0 0 0
9 Heathrow Tract
26-Raw Land 0 0 0 0
10 Heathrow Tract
5-Raw Land 0 0 0 0
11 Heathrow Raw
Land-All Other 0 50 0 0
------ ------ ------ ------
Subtotal
Heathrow
Land &
SFR's 0 50 0 0
------ ------ ------ ------
12 Heathrow
Market
Square 0 4,970 209 30
13 Heathrow
Golf Club 0 0 85 0
14 Heathrow
Sales
Center 0 0 0 0
15 Heathrow
Cable 0 0 0 0
------ ------ ------ ------
Subtotal
Heathrow
Operating
Property 0 4,970 294 30
------ ------ ------ ------
16 Wesmer SFR's 0 90 0 0
17 Wesmer Land 0 0 0 0
------ ------ ------ ------
Subtotal
Wesmore 0 90 0 0
------ ------ ------ ------
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
SUBTOTAL ACTUALS
REVENUES:(000's) MAR BUDGET JUL-FEB MAR
- ---------------------- ------ ------ ------
18 Eagle Watch
Lots-Retail
(Atlanta) 0 90 0 0
19 Rock Creek
Lots-Retail
(Atlanta) 0 0 0 0
------ ------ ------ ------
Subtotal
Atlanta
Projects 0 90 0 0
------ ------ ------ ------
20 Other Income 0 0 131 0
21 Talega 0 11,000 66 0
------ ------ ------ ------
Total Revenue 0 16,200 491 30
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
FORECAST BUDGET SUBTOTAL
REVENUES:(000's) APR MAY JUNE FORECAST
- ---------------------- ------ ------ ------
1 Heathrow
Waters Edge
SFR's 0 0 0 0
2 Heathrow
Lakeside
SFR's 0 0 0 0
3 Heathrow
Water's
Edge Lots 0 0 0 0
4 Heathrow
Lakeside
Lots 0 0 0 0
5 Heathrow
Wyntree Lots-
Retail 0 0 0 0
6 Heathrow
Stonebridge
Lots-Retail 0 0 0 0
7 Heathrow
Woods I Lots-
Retail 0 0 0 0
8 Heathrow
Woods II-Raw
Land 0 0 0 0
9 Heathrow Tract
26-Raw Land 0 0 0 0
10 Heathrow Tract
5-Raw Land 0 0 0 0
11 Heathrow Raw
Land-All Other 0 0 0 0
------ ------ ------ ------
Subtotal
Heathrow
Land &
SFR's 0 0 0 0
------ ------ ------ ------
12 Heathrow
Market
Square 30 30 5,000 5,090
13 Heathrow
Golf Club 0 0 0 0
14 Heathrow
Sales
Center 0 0 0 0
15 Heathrow
Cable 0 0 0 0
------ ------ ------ ------
Subtotal
Heathrow
Operating
Property 30 30 5,000 5,090
------ ------ ------ ------
16 Wesmer SFR's 0 100 0 100
17 Wesmer Land 0 0 0 0
------ ------ ------ ------
Subtotal
Wesmore 0 100 0 100
------ ------ ------ ------
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
FORECAST BUDGET SUBTOTAL
REVENUES:(000's) APR MAY JUNE FORECAST
- ---------------------- ------ ------ ------
18 Eagle Watch
Lots-Retail
(Atlanta) 0 60 0 60
19 Rock Creek
Lots-Retail
(Atlanta) 0 0 0 0
------ ------ ------ ------
Subtotal
Atlanta
Projects 0 60 0 60
------ ------ ------ ------
20 Other Income 0 0 0 0
21 Talega *20,600 0 0 20,600
------ ------ ------ ------
Total Revenue 20,630 190 5,000 25,850
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
EXPENSE:(000's) JULY AUG SEPT OCT
- ---------------------- ------ ------ ------
22 Lake 500A
Grading 160 5 0 0
23 Tract C-
Roadway 0 0 0 0
------ ------ ------ ------
Total
Development 160 5 0 0
====== ====== ====== ======
24 Real Estate
Taxes 0 0 0 0
25 Insurance 30 0 0 30
26 Marketing/
Sales Office
Expense 0 0 0 0
27 Homeowners
Assoc.
Deficit 0 0 0 0
28 Eagle Watch
Maintenance 3 3 3 3
29 Talega
Maintenance 30 30 30 30
30 Audit & Tax 0 0 0 0
31 Warranty 10 10 10 0
------ ------ ------ ------
Total
Indirects 233 48 43 63
------ ------ ------ ------
32 Litigation 0 175 50 50
33 Overhead 75 40 90 40
------ ------ ------ ------
Total Expenses 488 93 133 103
====== ====== ====== ======
Net Cash Flow (438) 17 (133) (43)
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
EXPENSE:(000's) NOV DEC JAN FEB
- ---------------------- ------ ------ ------
22 Lake 500A
Grading 0 0 0 0
23 Tract C-
Roadway 0 0 0 0
------ ------ ------ ------
Total
Development 0 0 0 0
====== ====== ====== ======
24 Real Estate
Taxes 0 0 0 0
25 Insurance 0 0 30 0
26 Marketing/
Sales Office
Expense 0 0 0 0
27 Homeowners
Assoc.
Deficit 0 0 0 0
28 Eagle Watch
Maintenance 0 0 0 0
29 Talega
Maintenance 30 30 30 0
30 Audit & Tax 0 15 15 45
31 Warranty 0 0 0 0
------ ------ ------ ------
Total
Indirects 30 45 75 45
------ ------ ------ ------
32 Litigation 50 50 50 50
33 Overhead 40 90 40 40
------ ------ ------ ------
Total Expenses 70 136 115 86
====== ====== ====== ======
Net Cash Flow 4,930 (136) (115) 10,915
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
SUBTOTAL ACTUALS
REVENUES:(000's) MAR BUDGET JUL-FEB MAR
- ---------------------- ------ ------ ------
22 Lake 500A
Grading 0 165 150 0
23 Tract C-
Roadway 0 0 (24) 0
------ ------ ------ ------
Total
Development 0 165 128 0
====== ====== ====== ======
24 Real Estate
Taxes 0 0 (57) 81
25 Insurance 0 90 43 0
26 Marketing/
Sales Office
Expense 0 0 (1) 0
27 Homeowners
Assoc.
Deficit 0 0 0 5
28 Eagle Watch
Maintenance 0 12 7 0
29 Talega
Maintenance 0 210 224 30
30 Audit & Tax 50 125 42 10
31 Warranty 0 30 19 5
------ ------ ------ ------
Total
Indirects 50 832 403 141
------ ------ ------ ------
32 Litigation 50 525 81 0
33 Overhead 285 720 343 50
------ ------ ------ ------
Total Expenses 316 1,877 827 191
====== ====== ====== ======
Net Cash Flow (316) 14,321 (336) (191)
====== ====== ====== ======
ARVIDA/JMB PARTNERS II CASH FLOW PROJECTIONS
FORECAST BUDGET SUBTOTAL
REVENUES:(000's) APR MAY JUNE FORECAST
- ---------------------- ------ ------ ------
22 Lake 500A
Grading 0 0 0 0
23 Tract C-
Roadway 0 0 0 0
------ ------ ------ ------
Total
Development 0 0 0 0
====== ====== ====== ======
24 Real Estate
Taxes 0 0 0 81
25 Insurance 20 0 10 30
26 Marketing/
Sales Office
Expense 0 0 0 0
27 Homeowners
Assoc.
Deficit 0 0 0 15
28 Eagle Watch
Maintenance 1 0 0 1
29 Talega
Maintenance 30 0 0 60
30 Audit & Tax 0 15 0 25
31 Warranty 5 5 5 20
------ ------ ------ ------
Total
Indirects 58 20 15 232
------ ------ ------ ------
32 Litigation 180 85 135 400
33 Overhead 16 16 56 138
------ ------ ------ ------
Total Expenses 262 121 206 770
====== ====== ====== ======
Net Cash Flow 20,378 69 4,794 25,080
====== ====== ====== ======
<FN>
- --------------------
*Sale did not occur in April; It is anticipated to occur on or about May
30, 1997 with $19,000 in Revenues.
</TABLE>
EXHIBIT 4.14
- ------------
(Arvida-II)
LETTER OF CREDIT
REIMBURSEMENT AGREEMENT
Among
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
BANK OF AMERICA ILLINOIS
and
ARVIDA/JMB PARTNERS, L.P.-II
relating to the
Talega Project
Orange County, California
Dated as of May 30, 1997
LETTER OF CREDIT
REIMBURSEMENT AGREEMENT
=======================
THIS LETTER OF CREDIT REIMBURSEMENT AGREEMENT (this "Reimbursement
Agreement"), dated as of May 30, 1997, is made by and between ARVIDA/JMB
PARTNERS, L.P. II, a Delaware limited partnership ("Borrower") on the
one hand, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, and BANK OF AMERICA ILLINOIS, an Illinois
banking corporation, formerly known as Continental Bank N.A. and
Continental Bank (collectively, the "Bank"). In consideration of the
mutual agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower and Bank hereby covenant and agree as follows:
1. DEFINITIONS.
1.1 DEFINED TERMS. For purposes of this Reimbursement
Agreement, the following capitalized terms shall have the following
respective defined meanings:
"BANK" means collectively Bank of America Illinois, an
Illinois banking corporation, formerly known as Continental Bank N.A.
and Continental Bank, and Bank of America National Trust and Savings
Association, a national banking association, in their capacities as
Managing Co-Agents.
"BANKING DAY" means any day other than Saturday,
Sunday, or other day on which banking institutions in Los Angeles,
California are obligated by law to close or on which banking
institutions in Los Angeles, California are authorized to close by law
and Bank is closed.
"BORROWER" means Arvida/JMB Partners, L.P. II, a
Delaware limited partnership.
"CASH COLLATERALIZE" means to pledge and deposit with
Bank, as additional collateral for the Letter of Credit Obligations,
cash or deposit account balances pursuant to documentation in a form and
substance acceptable to Bank.
"DEFAULT RATE" means three (3) percentage points over
the Reference Rate.
"EVENT OF DEFAULT" means any of the events described
in SECTION 4.1 below.
"INDEMNIFICATION AGREEMENT" means that certain
Indemnification Agreement dated as of May 30, 1997, by Catellus
Residential Group, Standard Pacific of Orange County, Inc., and Starwood
Opportunity Fund IV, L.P., in favor of Borrower.
"LC PAYMENT DATE" shall have the meaning set forth in
SECTION 2 below.
"LETTER OF CREDIT OBLIGATIONS" means the sum of (a)
the aggregate undrawn amount of the Letters of Credit, PLUS (b) the
amount of all unreimbursed drawings under any of the Letters of Credit.
"LETTERS OF CREDIT" means those certain letters of
credit set forth on the schedule attached hereto as EXHIBIT "A."
"MATURITY DATE" means June 30, 1997.
"REFERENCE DATE" means the rate of interest publicly
announced from time to time by Bank as its "reference rate," which is
based upon various factors including the Bank's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above,
or below the announced rate. Any change in the Reference Rate announced
by Bank shall take effect at the opening of business on the day
specified in the public announcement of such change.
"REIMBURSEMENT AGREEMENT" means this Letter of Credit
Reimbursement Agreement, as originally executed or as supplemented,
modified or amended from time to time.
1.2 ACCOUNTING TERMS. All accounting terms not
specifically defined in this Reimbursement Agreement shall be construed
in conformity with generally acceptable accounting principles.
2. DRAWINGS AND REIMBURSEMENTS. In the event that Bank honors
a drawing under any of the Letters of Credit, Borrower shall reimburse
Bank for the full amount of such drawing by 9:00 a.m. Los Angeles time
on the same date (the "LC Payment Date") such drawing is honored by Bank
under such Letter of Credit. In the event Borrower fails to reimburse
Bank for any such drawing by 9:00 a.m. Los Angeles time on the LC
Payment Date, then such drawing shall be payable by Borrower on demand
by Bank and shall bear interest at the Default Rate until paid in full
as provided further in SECTION 4.3(a) below. The obligations of
Borrower to reimburse Bank under this Reimbursement Agreement and any
other agreement or instrument relating to any of the Letters of Credit
shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Reimbursement Agreement.
3. CANCELLATION OF LETTERS OF CREDIT. On or before the
Maturity Date, Borrower shall cause the beneficiaries of the Letters of
Credit to return the Letters of Credit to Bank marked "cancelled." In
the event that Borrower is unable to cause the beneficiaries of the
Letters of Credit to return the Letters of Credit to Bank by the
Maturity Date, then Borrower shall Cash Collateralize the Letters of
Credit not so returned by not later that 5:00 p.m. Los Angeles time on
the Maturity Date.
4. DEFAULT; REMEDIES.
4.1 EVENT OF DEFAULT. An "Event of Default" shall occur
hereunder (a) upon the failure of Borrower to reimburse Bank for
drawings under any of the Letters of Credit pursuant to the terms of
SECTION 2 above, and (b) upon the failure of Borrower to Cash
Collateralize the Letters of Credit to the extent required pursuant to
SECTION 3 above.
4.2 REMEDIES. Upon the occurrence of any Event of
Default, Bank shall have such rights or remedies as Bank may have under
this Reimbursement Agreement or otherwise at law or in equity, including
but not limited to the right to institute an action against Borrower for
specific performance of the terms and provisions of this Reimbursement
Agreement. Notwithstanding the foregoing, Bank agrees that, prior to
enforcing any remedy against Borrower, Bank shall seek to satisfy the
obligations of Borrower hereunder by enforcing the rights of Bank under
any Guaranty of even date herewith made by Catellus Residential Group,
Standard Pacific Corporation and Starwood Opportunity Fund IV, LP in
favor of Bank.
4.3 LATE CHARGE; DEFAULT INTEREST RATE.
(a) Upon the occurrence and during the continuation of an
Event of Default hereunder, the Letter of Credit Obligations shall bear
interest at the Default Rate.
(b) Borrower acknowledges and agrees that (i) Bank's
actual damages resulting from any default or delinquency of Borrower as
set forth in SECTION 4.3(a) above and that relate to lost use of funds
or costs of internal administration of delinquent payments hereunder or
relating to such default would be extremely difficult to ascertain, and
(ii) under the circumstances in existence as of the date hereof, the
accrual of interest hereunder at the Default Rate constitutes a
reasonable liquidation of such damages. The provisions of the SECTION
4.3 are in addition to the other rights and remedies conferred upon Bank
under this Reimbursement Agreement and shall not limit Bank's right to
compel prompt performance hereunder or be deemed to conflict with the
provisions of SECTION 5.11 of this Reimbursement Agreement.
5. MISCELLANEOUS.
5.1 PAYMENT IN U.S. CURRENCY. All sums due hereunder
shall be payable in lawful money of the United States of America.
5.2 COSTS OF COLLECTION. Borrower promises to pay all cost
and expenses of collection, including without limitation (a) reasonable
attorneys' fees, in the event of collection under this reimbursement
Agreement; (b) reasonable attorneys' fees, as determined by the judge of
the court, or any arbitrator or judicial referee, and all other costs,
expenses and fees incurred by Bank in the event suit or proceeding is
instituted to collect any sums due and payable under this Reimbursement
Agreement; and (c) reasonable attorneys' fees, incurred by Bank in
connection with any bankruptcy, insolvency or reorganization proceeding
or receivership involving Borrower or any affiliate of Borrower,
including without limitation attorneys' fees incurred in making any
appearance in any such proceeding or in seeking relief from any stay or
injunction issued in or arising out of any such proceeding.
5.3 WAIVER OF NOTICE, ETC. Borrower consents to offsets of any
sums owed to it by Bank at any time. No single or partial exercise of,
or forbearance from exercising, any power hereunder or under any
guaranty, or other agreement or instrument securing or pertaining to
this Reimbursement Agreement shall preclude other or further exercises
thereof or the exercise of any other power.
5.4 NO WAIVER BY BANK. Delay or failure by Bank to exercise any
option or election herein given to Bank shall not constitute a waiver of
the right to subsequently exercise such option or any other option or
election herein given to Bank.
5.5 SUCCESSORS AND ASSIGNS; NUMBER; GENDER. The use of the term
"Borrower" shall be deemed to include the successors and assigns of the
undersigned. The use of terms in any gender or number shall include, in
all instances, the masculine, feminine, and neuter gender and the plural
and single number.
5.6 NOTICES. Except as otherwise provided herein, all notices
or communications between Bank and Borrower required or permitted
hereunder shall be in writing and personally delivered or sent by
certified mail, return receipt requested, postage prepaid, or
transmitted by electronic facsimile transmission (with electronic
confirmation of receipt), or sent by reputable overnight courier (such
as Federal Express, UPS or DHL), to the following addresses:
If to Bank:
Bank of America National Trust and Savings Association
600 Wilshire Boulevard, Suite 500
Los Angeles, California
Telefacsimile No.: (213) 228-6318
Attention:Jeannette Jordan
Vice President
with a copy to:
Morrison & Foerster LLP
19900 MacArthur Boulevard, Twelfth Floor
Irvine, California 92612
Telefacsimile No.: (714) 251-0900
Attention: Ronald J. Defelice, Esq.
If to Borrower:
ARVIDA/JMB Partners, L.P. II
c/o JMB Realty
900 North Michigan Avenue
Chicago, Illinois 60611-1575
Telefacsimile No.: (312) 915-2310
Attention: Stephen A. Lovelette
with a copy to:
Nossaman, Gunther, Knox & Elloit, LLP
18101 Von Karman Avenue, Suite 1800
Irvine, California 92612
Telefacsimile No.: (714) 833-7878
Attention: Gregory W. Sanders, Esq.
A notice shall be effective on the date of personal delivery if
personally delivered before 5:00 p.m., otherwise on the day following
personal delivery, or when received, if transmitted by electronic
facsimile transmission (with electronic confirmation of receipt), or two
(2) business days following the date the notice is postmarked, if
mailed, or on the day following delivery to the applicable overnight
courier, if sent by overnight courier. Either party may change the
address to which notices are to be given to it by giving notice of such
change of address in the manner set forth above for giving notice.
5.7 GOVERNING LAW. The Reimbursement Agreement shall be
governed by and construed under the laws of the State of California and
the laws of the Untied States of America prevailing in California
including, but not limited to, the "Uniform Custom and Practice for
Documentary Credits (1993 Revision) International Chamber of commerce
Publication No. 500."
5.8 JOINT AND SEVERAL OBLIGATIONS. If Borrower consists of more
than one (1) person or entity, each shall be jointly and severally
liable to Bank hereunder.
5.9 PERFORMANCE OF ACTS ON BUSINESS DAYS. In the event that the
final date for payment of any amount hereunto falls on a Saturday,
Sunday or state or federal holiday, such payment may be made on the next
succeeding Bank Day.
5.10 COMPUTATION OF INTEREST. The computation of interest
hereunder shall be based on a year of three hundred sixty (360) days and
a thirty (30) day month.
5.11 TIME OF ESSENCE. Time is of the essence of the performance
of each provision hereof.
5.12 PLACE OF PAYMENT. All payments due hereunder shall be sent
to Bank c/o Loan Accounting Department CLASS Unit 1503, 333 South
Broadway, 26th Floor, Los Angeles, California 90017, Attention MaSe
Lorenzo, or to such other place as Bank may designate in writing from
time to time.
5.13 COUNTERPARTS. This Agreement may be executed in
counterparts, which of which shall be deemed an original and all of
which, together, shall constitute but one and the same agreement.
5.14 EXCULPATION. Notwithstanding anything herein contained to
the contrary, the Bank agrees that (a) all liability of any person with
respect to this agreement shall be satisfied only out of any assets of
the Borrower and that no constituent partner of the Borrower shall have
any personal liability with respect to this Agreement, all such personal
liability being expressly waived by the Bank, and (2) in no event shall
a negative capital account or any other funding obligations of any
constituent partner of Borrower be deemed to an asset or the property of
the Borrower.
IN WITNESS WHEREOF, Borrower and Bank have has executed this
Reimbursement Agreement on the year and date first hereinabove set
forth.
BORROWER:
ARVIDA/JMB PARTNERS, L.P. II, a
Delaware limited partnership
By: Arvida/JMB Managers II, Inc., a
Delaware corporation, its
General Partner
By: s/STEPHEN A. LOVELETTE
Name:
Title:
BANK:
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in its capacity as Managing Co-Agent
By:
Name:
Title:
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in all capacities hereunder other than
as Managing Co-Agent
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
a national banking association
By:
Name:
Title:
IN WITNESS WHEREOF, Borrower and Bank have has executed this
Reimbursement Agreement on the year and date first hereinabove set
forth.
BORROWER:
ARVIDA/JMB PARTNERS, L.P. II, a
Delaware limited partnership
By: Arvida/JMB Managers II, Inc., a
Delaware corporation, its
General Partner
By:
Name:
Title:
BANK:
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in its capacity as Managing Co-Agent
By: s/CHARLES D. GRABER
Name: Charles D. Graber
Title: Vice President
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in all capacities hereunder other than
as Managing Co-Agent
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
a national banking association
By:
Name:
Title:
IN WITNESS WHEREOF, Borrower and Bank have has executed this
Reimbursement Agreement on the year and date first hereinabove set
forth.
BORROWER:
ARVIDA/JMB PARTNERS, L.P. II, a
Delaware limited partnership
By: Arvida/JMB Managers II, Inc., a
Delaware corporation, its
General Partner
By:
Name:
Title:
BANK:
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in its capacity as Managing Co-Agent
By:
Name:
Title:
BANK OF AMERICA ILLINOIS,
an Illinois banking corporation
in all capacities hereunder other than
as Managing Co-Agent
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
a national banking association
By: s/JEANNETTE JORDAN
Name: Jeannette Jordan
Title: Vice President
EXHIBIT "A"
LETTERS OF CREDIT
=================
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214312
Instrument type:Letter of Credit
Amount: $21,030.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214313
Instrument type:Letter of Credit
Amount: $101,520.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214314
Instrument type:Letter of Credit
Amount: $101,520.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214315
Instrument type:Letter of Credit
Amount: $271,800.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214316
Instrument type:Letter of Credit
Amount: $537,480.00
Reason: Grading performance
Obligee: City of San Clemente
Agreement #: LASB214677
Instrument type:Letter of Credit
Amount: $1,500,000.00
Reason: Grading Erosion control & Landscaping-311401
Avenida Pico
Obligee: Amwest Surety
Agreement #: 220668
Instrument type:Letter of Credit
Amount: $100,000
Exhibit "A"
EXHIBIT 4.15
- ------------
(Arvida-II)
INDEMNIFICATION AGREEMENT
=========================
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into
on this 30th day of May, 1997 (the "Effective Date"), by and among
Arvida/JMB Partners, L.P. II, a Delaware limited partnership
("Indemnitee'), on the one hand, and Catellus Residential Group, a
California corporation, Standard Pacific of Orange County, Inc., a
Nevada Corporation, and Starwood Opportunity Fund IV, L.P., a Delaware
limited partnership (collectively, the "Indemnitor"), on the other hand.
RECITALS
========
A. Indemnitee is currently the obligor under those certain letters of
credit set forth on the schedule attached hereto as Exhibit "A" (the
"Letters of Credit"), and those certain performance bonds set forth on
the schedule attached hereto as Exhibit "B" attached hereto (the
"Bonds"). The Letters of Credit and Bonds were issued for the benefit
of the County of Orange and the City of San Clemente, respectively, to
secure the performance by Indemnitee of certain obligations and
conditions relating the proposed development of certain real property
located in Orange County, California (the "Property").
B. Indemnitee intends to sell the Property to Talega Associates,
L.L.C., a Delaware limited liability company ("Talega"). In connection
with the purchase and sale of the Property, and as an accommodation to
Talega, Indemnitee will keep the Letters of Credit and the Bonds
outstanding by no later than June 30, 1997, at which time Talega will
replace the Letters of Credit and the Bonds with new performance bonds.
C. Although Indemnitee will remain obligated to the issuer of the
Letters of Credit and the Bonds, the parties intend that such
obligations will actually by the sole responsibility of Indemnitor.
Accordingly, Indemnitor desires to assume any and all obligations of
Indemnitee under the Letters of Credit and the Bonds, and to indemnify
Indemnitee as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and other good
and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, Indemnitor and Indemnitee hereby agree as follows:
AGREEMENTS
==========
1. ASSUMPTION. Indemnitor hereby assumes, from and after the
Effective Date, all obligations of Indemnitee with respect to the
Letters of Credit and the Bonds, and agrees to be obligated under each
of them, all as though the Indemnitor had been the original obligor
under the Letters of Credit and the Bonds.
2. INDEMNITY. Indemnitor hereby agrees to indemnify, defend
and hold harmless Indemnitee and its past, present and future employees,
officers, directors, attorneys, affiliates, representatives,
subsidiaries and agents (each and "Indemnified Party," collectively, the
"Indemnified Parties"), from and against any and all demands, losses,
claims, costs, suits, damages, liabilities and expenses (each a
"Liability," collectively, the "Liabilities") arising out of, relating
to, or in any manner connected with any draws on the Letters of Credit,
or claims made under the Bonds, from and after the Effective Date.
3. DEFENSE OF INDEMNIFIED PARTIES. In the event that any suit
or other proceeding is brought against any of the Indemnified Parties at
any time on account of any of the Liabilities, Indemnitor shall, upon
the request of an Indemnified Party against whom any suit or proceeding
is brought (each a "Defending Indemnitee"), (i) assume the defense of
the Defending Indemnitee, (ii) defend the Defending Indemnitee, at
Indemnitor's expense, with counsel selected by Indemnitor and approved
by Indemnitee in its reasonable discretion and (iii) pay all judgments,
fines, penalties, and other fees and expenses in connection therewith.
4. RELEASE OF INDEMNITEE'S OBLIGATIONS. On or before June 30,
1997 the Indemnitor shall cause the beneficiaries under the Letters of
Credit to return the Letters of Credit to the issuer thereof marked
"canceled," and shall either substitute the Bonds with new performance
bonds acceptable to the beneficiaries thereof or release the Indemnitee
from any and all obligations under the Bonds. From and after the
Effective Date, Indemnitor and Indemnitee shall cooperate with each
other, without compensation, and shall execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, any and all such
further assignments, approvals, consents, and any and all other
documents and do any and all other acts as may be necessary to carry out
the intent and purpose of this Section 4. In the event that the
Indemnitor is not able to cause the beneficiaries to return the Letters
of Credit and to either replace the Bonds or release the Indemnitee from
all obligations under the Bonds by June 30, 1997, then prior to 5:00
p.m. on June 30, 1997, the Indemnitor shall deposit with the Indemnitee,
or at the option of the Indemnitor, deposit directly with the issuer of
the Letters of Credit, as additional collateral for the obligations
under the Letters of Credit and Bonds, pursuant to documentation in a
form and substance acceptable to Indemnitee or the issuers of the
Letters of Credit, as applicable a cash deposit in an amount equal to
the aggregate face amount of the Letters of Credit and the Bonds.
5. MISCELLANEOUS.
(a) Interpretation; Governing Law. This Agreement shall
be construed as if prepared by both parties and interpreted and governed
by the laws of the State of California.
(b) Severability. In the event that any phrase, clause,
sentence, paragraph, section or other portion of this Agreement shall
become illegal, null or void, or against public policy, for any reason,
or shall be held by any court of competent jurisdiction to be illegal,
null or void, or against public policy, the remaining portions of this
Agreement shall not be affected.
(c) Attorneys' Fees. In the event of any legal action or
other proceeding between the parties (including any appellate
proceedings arising therefrom or relating thereto), arising out of,
relating to or in any manner connected with this Agreement, the
prevailing party shall be entitled to the payment by the losing party of
its reasonable attorneys' fees, court costs and litigation expenses.
(d) Entire Agreement; Amendments. This Agreement is
intended by the parties to be the final expression of their agreement
with respect to the subject matter hereof, and is intended as the
complete and exclusive statement of the terms of the agreement between
the parties. As such, this Agreement supersedes any prior understanding
between the parties, whether oral or written. Any amendments to this
Agreement shall be in writing and shall be signed by all parties hereto.
(e) Joint and Several Liability. To the extent that the
Indemnitor consists of more than one person or entity, each shall be
joint and severally liable to Indemnitee hereunder.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed on original and all of
which, together, shall constitute but one and the same agreement.
(g) Assignment. The Indemnitor hereby acknowledges and
agrees that the rights of Indemnitee pursuant to this Agreement may be
assigned to Bank of America National Trust and Savings Association
without the prior approval of the Indemnitor.
IN WITNESS WHEREOF, the parties hereto have delivered and executed
this Agreement as of the date first written above.
INDEMNITEE:
ARVIDA/JMB PARTNERS, L.P. II, a Delaware
limited partnership
By: Arvida/JMB Managers II, Inc. a Delaware
corporation, its General Partner
By:
Name:
Title:
By:
Name:
Title:
INDEMNITOR:
CATELLUS RESIDENTIAL GROUP, a
California corporation
By: s/
Name:
Title:
By: s/PATRICK B. PATTERSON
Name: Patrick B. Patterson
Title: Chief Financial Officer
STANDARD PACIFIC OF ORANGE COUNTY, INC.,
a Nevada corporation
By:
Name:
Title:
By:
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have delivered and executed
this Agreement as of the date first written above.
INDEMNITEE:
ARVIDA/JMB PARTNERS, L.P. II, a Delaware
limited partnership
By: Arvida/JMB Managers II, Inc. a Delaware
corporation, its General Partner
By:
Name:
Title:
By:
Name:
Title:
INDEMNITOR:
CATELLUS RESIDENTIAL GROUP, a
California corporation
By:
Name:
Title:
By:
Name:
Title:
STANDARD PACIFIC OF ORANGE COUNTY, INC.,
a Nevada corporation
By: s/SCOTT D. STOWELL
Name: Scott D. Stowell
Title: President
By:
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have delivered and executed
this Agreement as of the date first written above.
INDEMNITEE:
ARVIDA/JMB PARTNERS, L.P. II, a Delaware
limited partnership
By: Arvida/JMB Managers II, Inc. a Delaware
corporation, its General Partner
By: s/STEPHEN A. LOVELETTE
Name: Stephen A. Lovelette
Title:
By:
Name:
Title:
INDEMNITOR:
CATELLUS RESIDENTIAL GROUP, a
California corporation
By:
Name:
Title:
By:
Name:
Title:
STANDARD PACIFIC OF ORANGE COUNTY, INC.,
a Nevada corporation
By:
Name:
Title:
By:
Name:
Title:
STARWOOD OPPORTUNITY FUND IV, L.P.,
a Delaware limited partnership
By: SOFIIY Management, L.L.C., its
general partner
By: Starwood Capital Group, L.L.C.
Name:
Title: General Manager
By: s/J.R. ROSENTHAL
Name: J.R. Rosenthal
Title: Chief Operating Officer
EXHIBIT "A"
LETTERS OF CREDIT
=================
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214312
Instrument type: Letter of Credit
Amount: $21,030.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214313
Instrument type: Letter of Credit
Amount: $101,520.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214314
Instrument type: Letter of Credit
Amount: $140,640.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214315
Instrument type: Letter of Credit
Amount: $271,800.00
Reason: Grading performance
Obligee: County of Orange, EMA/Regulation/Grading Section
Agreement #: LASB214316
Instrument type: Letter of Credit
Amount: $537,480.00
Reason: Grading performance
Obligee: City of San Clemente
Agreement #: LASB214677
Instrument type: Letter of Credit
Amount: $1,500,000.00
Reason: Grading erosion control & Landscaping-311401
Avenida Pico
Obligee: Amwest Surety
Agreement #: 220668
Instrument type: Letter of Credit
Amount: $100,000
Exhibit "A"
EXHIBIT "B"
Bonds
=====
Obligee: County of Orange
Agreement #: 4454
Instrument type: Pacific States Bond
Amount: $350,000.00
Reason: Public property encroachment permit-Avenida Pico
Obligee: County of Orange
Agreement #: 5677825-0001
Instrument type: Safeco Bond
Amount: $38,000.00
Reason: USGS monumentation to record Talega finance map
Obligee: County of Orange Flood Control District
Agreement #: 018001093
Instrument type: Amwest surety bond
Amount: $100,000.00
Reason: Performance, labor and maintenance bond for storm
drain facilities
Exhibit "B"
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,658,163
<SECURITIES> 0
<RECEIVABLES> 31,103
<ALLOWANCES> 0
<INVENTORY> 39,683
<CURRENT-ASSETS> 0
<PP&E> 2,776,878
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,798,296
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (87,679,513)
<TOTAL-LIABILITY-AND-EQUITY> 4,798,296
<SALES> 31,660,959
<TOTAL-REVENUES> 31,660,959
<CGS> (890,122)
<TOTAL-COSTS> (890,122)
<OTHER-EXPENSES> 7,809,409
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,741,672
<INCOME-TAX> 0
<INCOME-CONTINUING> 24,741,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,741,672
<EPS-PRIMARY> 97.77
<EPS-DILUTED> 97.77
</TABLE>
