<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------
AMENDMENT NO. 17
to
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13-2(a)
IRVINE APARTMENT COMMUNITIES, INC.
-----------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
---------------------------
(Title of Class of Securities)
463606-10
(CUSIP Number)
Michael D. McKee, Esq.
The Irvine Company
550 Newport Center Drive
Newport Beach, CA 92660
(714) 720-2333
----------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 1, 1998
--------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
Page 1 of 16 Pages
Exhibit Index is on Page 15
<PAGE> 2
SCHEDULE 13D
- -------------------- ------------------
CUSIP NO. 463606-10 PAGE 2 OF 16 PAGES
- -------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
THE IRVINE COMPANY
13-3177751
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working
capital, bank loan, etc.)]
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 28,077,118
Stock
Beneficially ---------------------------------------------------------------
Owned By 8 SHARED VOTING POWER
Each -0- (SEE ITEM 5)
Reporting
Person ---------------------------------------------------------------
With 9 SOLE DISPOSITIVE POWER
28,077,118
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,077,118 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
62.7% (SEE ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
- -------------------- ------------------
CUSIP NO. 463606-10 PAGE 3 OF 16 PAGES
- -------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC INVESTMENT COMPANY A
33-0713216
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working
capital, bank loan, etc.)]
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of -0- (SEE ITEM 5)
Stock
Beneficially ---------------------------------------------------------------
Owned By 8 SHARED VOTING POWER
Each -0- (SEE ITEM 5)
Reporting
Person ---------------------------------------------------------------
With 9 SOLE DISPOSITIVE POWER
-0- (SEE ITEM 5)
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,502,105 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.9% (SEE ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
SCHEDULE 13D
- -------------------- ------------------
CUSIP NO. 463606-10 PAGE 4 OF 16 PAGES
- -------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC INVESTMENT COMPANY C
33-0713816
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working
capital, bank loan, etc.)]
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of -0- (SEE ITEM 5)
Stock
Beneficially ---------------------------------------------------------------
Owned By 8 SHARED VOTING POWER
Each -0- (SEE ITEM 5)
Reporting
Person ---------------------------------------------------------------
With 9 SOLE DISPOSITIVE POWER
-0- (SEE ITEM 5)
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,034,105 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.1% (SEE ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
SCHEDULE 13D
- -------------------- ------------------
CUSIP NO. 463606-10 PAGE 5 OF 16 PAGES
- -------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC INVESTMENT COMPANY D
33-0713817
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working
capital, bank loan, etc.)]
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of -0- (SEE ITEM 5)
Stock
Owned By ---------------------------------------------------------------
Each 8 SHARED VOTING POWER
Reporting -0- (SEE ITEM 5)
Person
With ---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0- (SEE ITEM 5)
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0- (SEE ITEM 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,185,333 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6% (SEE ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
SCHEDULE 13D
- -------------------- ------------------
CUSIP NO. 463606-10 PAGE 6 OF 16 PAGES
- -------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DONALD L. BREN
###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working
capital, bank loan, etc.)]
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 183,325
Stock
Owned By ---------------------------------------------------------------
Each 8 SHARED VOTING POWER
Reporting 0
Person
With ---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
183,325
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
183,325 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.9% (SEE ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 7
SCHEDULE 13D
- -------------------- ------------------
CUSIP NO. 463606-10 PAGE 7 OF 16 PAGES
- -------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TIC ACQUISITION LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
[what type of funds were used to purchase the securities (e.g., working
capital, bank loan, etc.)]
BK, AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 0 (SEE ITEM 5)
Stock
Owned By ---------------------------------------------------------------
Each 8 SHARED VOTING POWER
Reporting 0 (SEE ITEM 5)
Person
With ---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0 (SEE ITEM 5)
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 (SEE ITEM 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0 (SEE ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 8
This Amendment No. 17 to Schedule 13D amends the Schedule 13D
dated September 8, 1998, as previously amended (as so amended, the "Schedule
13D"). Unless otherwise indicated, all capitalized terms used herein shall have
the same meaning as provided in the Schedule 13D.
Item 2. Identity and Background.
(a) The first sentence of Item 2 is hereby amended and restated
in its entirety as follows:
"This Schedule 13D is being filed by: The Irvine Company, a
Delaware corporation ("TIC"); TIC Investment Company A, a California
general partnership ("TICICA"); TIC Investment Company C, a California
general partnership ("TICICC"); TIC Investment Company D, a California
general partnership ("TICICD"), Mr. Donald Bren and TIC Acquisition LLC,
a Delaware limited liability company ("TIC Acquisition")".
(b) Item 2 is further amended by inserting the following
paragraph after the third paragraph thereof:
"TIC is the managing member (holding the sole managing member
membership interest) of TIC Acquisition. Irvine Community Development
Company, a Delaware corporation and wholly-owned subsidiary of TIC
("ICDC"), holds the sole non-managing member membership interest in TIC
Acquisition. The principal business of TIC Acquisition is to acquire and
hold Shares. The address of the principal executive offices and
principal business of TIC Acquisition is 550 Newport Center Drive,
Newport Beach, CA 92660."
(c) Item 2 is further amended by inserting the following sentence
at the end of the antepenultimate paragraph thereof:
"TIC Acquisition has no directors or executive officers.
Information as to each executive officer and director of ICDC is set
forth in Schedule C attached hereto, which is incorporated herein by
reference."
(d) The last sentence of the penultimate paragraph of Item 2 is
hereby amended by replacing the words "and DBIAC" with the words ", DBIAC, TIC
Acquisition and ICDC."
(e) The last paragraph of item 2 is hereby amended and restated
in its entirety as follows:
"During the last five years, neither Mr. Bren, TIC, TICICA,
TICICC, TICICD, DBIAC, TIC Acquisition, ICDC nor any other person
controlling TIC, TICICA, TICICC, TICICD, DBIAC, TIC Acquisition, ICDC
nor, to the best of their knowledge, any of the persons listed on
Schedule A, Schedule B or
8
<PAGE> 9
Schedule C attached hereto, nor any person listed in Item 5 or the
footnotes thereto, has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating such activities subject to, federal or
state securities laws or finding any violation with respect to such
laws."
Item 3. Source and Amount of Funds or Other Consideration.
(a) The fifteenth paragraph of Item 3 is hereby amended by
substituting "December 2, 1998" for "September 8, 1998" in the second sentence
thereof.
(b) Item 3 is further amended by inserting the following
paragraph after the final paragraph thereof:
"The aggregate amount of funds required to complete the Proposed
Business Combination (as defined in Item 4) is expected to be
approximately $540 million (representing the amount required to acquire
the approximately 83% of the outstanding Shares not held by TIC and its
affiliates). The funds to complete the Proposed Business Combination are
being obtained by TIC Acquisition from capital contributions by TIC and
ICDC. TIC has obtained a commitment letter from Bank of America National
Trust and Savings Association for up to $350 million of its contribution
and TIC and ICDC are providing the balance of their contributions to TIC
Acquisition from cash on hand or existing financing sources. Bank of
America National Trust and Savings Association's commitment letter is
attached hereto as Exhibit 99.1. TIC may increase its ownership of
Shares to the 20% ownership limit contained in the Articles of
Incorporation through open market purchases or the exchange of L.P.
Units for Shares. Any open market purchases would be effected using cash
on hand of TIC and/or its subsidiaries."
Item 4. Purpose of Transaction.
(a) The first paragraph of Item 4 is hereby amended and restated
in its entirety as follows:
"The Reporting Persons initially acquired their Shares and the
L.P. Units that are exchangeable into Shares for investment purposes,
but now intend to acquire all of the outstanding equity of the Company.
The Proposed Business Combination (as defined below) is the proposal
whereby the Reporting Persons intend to consummate this acquisition. The
Reporting Persons currently intend to vote their Shares and any other
Shares they may acquire in favor of the Proposed Business Combination.
TIC may increase its ownership of Shares to the 20% ownership limit
contained in the Articles of Incorporation through open market purchases
or the exchange of L.P. Units for Shares."
9
<PAGE> 10
(b) The nineteenth paragraph of Item 4 is hereby deleted.
(c) The first four sentences of the twentieth paragraph of Item 4
are hereby deleted.
(d) The final paragraph of Item 4 is hereby amended by (i)
substituting "December 2, 1998" for "September 8, 1998" in the penultimate
sentence thereof and (ii) deleting the final sentence thereof.
(e) Item 4 is hereby further amended by inserting the following
paragraphs after the final paragraph thereof:
"On December 1, 1998, TIC Acquisition delivered a proposal to the
Company whereby TIC Acquisition proposed a business combination with the
Company (the "Proposed Business Combination"). A copy of the proposal is
attached hereto as Exhibit 99.2. If the Proposed Business Combination is
completed, each stockholder of the Company will receive cash in the
amount of $32.50 per Share, the Shares will be delisted from the New
York Stock Exchange and the registration of the Shares under the
Securities Exchange Act of 1934 will be terminated.
"Generally, any merger, sale of substantially all of the assets
or other business combination involving the Company would require the
approval of directors representing more than 75% of the entire Board of
Directors of the Company and the approval of at least 66 2/3% of the
outstanding Shares.
"A copy of the press release announcing the proposal for the
Proposed Business Combination is attached hereto as Exhibit 99.3.
"Except as set forth above, TIC has no plan or proposals which
relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D."
Item 5. Interest in Securities of the Company.
(a) Item 5 is hereby amended to insert the following paragraph
immediately prior to Section 5(a):
"As a result of their agreement to act together for the purpose
of acquiring the equity securities of the Company in accordance with the
terms of the Proposed Business Combination, each Reporting Person is
deemed to have acquired beneficial ownership, for purposes of Sections
13(d) and 13(g) of the Securities Exchange Act of 1934, as amended, as
of the date of hereof, of all equity securities of the Company
beneficially owned by each Reporting Person. Accordingly, each of the
Reporting Persons has filed this Schedule 13D to report the
"acquisition" of beneficial ownership of the equity securities of the
Company
10
<PAGE> 11
to which this Schedule 13D relates. However, each Reporting Person
disclaims beneficial ownership of the equity securities of every other
Reporting Person except to the extent that the Reporting Person has a
pecuniary interest therein. The tables in sections 5(a) and 5(b) below
exclude all Shares and L.P. Units that the Reporting Persons may be
deemed to beneficially own solely due to their status as a group."
(b) Item 5(a) is hereby amended to insert the following data at
the end of the table contained therein:
<TABLE>
<CAPTION>
Percent Percent of all
Number of of all Shares Shares of
Shares of Shares of Beneficially Common
Common Common Number of Owned (Rights Stock/L.P.
Person Stock Stock L.P. Units to Acquire)(2) Units
------ --------- --------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
TIC Acquisition LLC -- * -- -- *
ICDC -- * -- -- *
</TABLE>
(c) Item 5(b) is amended to insert the following two lines at the
end of the table contained therein:
<TABLE>
<CAPTION>
Sole Voting Shared Voting Sole Dispositive Shared Dispositive
Person Power Power Power Power
------ ----------- ------------- ---------------- ------------------
<S> <C> <C> <C> <C>
TIC Acquisition LLC 0 0 0 0
ICDC 0 0 0 0
</TABLE>
Item 7. Material to be Filed as Exhibits.
(a) Item 7 is hereby amended to replace the first entry with the
following:
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
1 Amended and Restated Joint Filing Agreement dated as of
December 2, 1998 among TIC, TICICA, TICICC, TICICD, Donald Bren
and TIC Acquisition
</TABLE>
11
<PAGE> 12
(b) Item 7 is further amended by inserting the following:
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
99.1 Commitment Letter
99.2 Proposal Letter
99.3 Press Release
99.4 Amendment No. 5 dated January 20, 1998 to the Land Rights
Agreement (incorporated by reference to the Annual Report on Form
10-K of Irvine Apartment Communities, Inc. for the year ended
December 31, 1997)
99.5 Amendment No. 2 dated January 20, 1998 to the Miscellaneous
Rights Agreement (incorporated by reference to the Annual Report
on Form 10-K of Irvine Apartment Communities, Inc. for the year
ended December 31, 1997)
</TABLE>
12
<PAGE> 13
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of
the undersigned, the undersigned certifies that the information set forth in
this statement is true, complete and correct. Date: December 2, 1998
THE IRVINE COMPANY
By: /s/ MICHAEL D. MCKEE
---------------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY A
By: THE IRVINE COMPANY,
its managing general partner
By: /s/ MICHAEL D. MCKEE
--------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY C
By: THE IRVINE COMPANY,
its managing general partner
By: /s/ MICHAEL D. MCKEE
--------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY D
By: THE IRVINE COMPANY,
its managing general partner
By: /s/ MICHAEL D. MCKEE
--------------------------
Name: Michael D. McKee
Title: Executive Vice President
DONALD L. BREN
By: /s/ MICHAEL D. MCKEE
---------------------------------
Name: Michael D. McKee
as Attorney-in-fact for Mr. Bren
<PAGE> 14
TIC ACQUISITION LLC
By: THE IRVINE COMPANY,
its Managing Member
By: /s/ MICHAEL D. MCKEE
--------------------------
Name: Michael D. McKee
Title: Executive Vice President
<PAGE> 15
EXHIBIT INDEX
The Exhibit Index is hereby amended to insert the following
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
1 Amended and Restated Joint Filing Agreement dated as of
December 2, 1998 among TIC, TICICA, TICICC, TICICD, Donald Bren
and TIC Acquisition
99.1 Commitment Letter
99.2 Proposal Letter
99.3 Press Release
99.4 Amendment No. 5 dated January 20, 1998 to the Land Rights
Agreement (incorporated by reference to the Annual Report on Form
10-K of Irvine Apartment Communities, Inc. for the year ended
December 31, 1997)
99.5 Amendment No. 2 dated January 20, 1998 to the Miscellaneous
Rights Agreement (incorporated by reference to the Annual Report
on Form 10-K of Irvine Apartment Communities, Inc. for the year
ended December 31, 1997)
</TABLE>
15
<PAGE> 16
EXHIBIT C
DIRECTORS AND EXECUTIVE OFFICERS OF IRVINE COMMUNITY DEVELOPMENT COMPANY
The name, business address, title, present principal occupation
or employment of each of the directors and executive officers of IRVINE
COMMUNITY DEVELOPMENT COMPANY ("ICDC") are set forth below. If no business
address is given the director's or officer's business address is 550 Newport
Center Drive, Newport Beach, CA 92658-8904. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to ICDC. There are no
executive officers, other than Joseph D. Davis, who are not also directors. All
of the persons listed below are citizens of the United States of America.
<TABLE>
<CAPTION>
Present Principal Occupation Including
Name and Business Address Name and Address(1) of Employer
- ------------------------- --------------------------------------
<S> <C>
Donald Bren Chairman of the Board
Joseph D. Davis President and Chief Executive Officer
Michael D. McKee, Esq. Executive Vice President, Chief Financial Officer and
Corporate Secretary
Richard F. Alden Private Investor
11340 West Olympic Boulevard
Suite 280
Los Angeles, CA 90064
Gary H. Hunt Executive Vice President, Corporate Affairs,
The Irvine Company
Donn B. Miller, Esq. President and Chief Executive Officer,
136 El Camino, Suite 216 Pearson-Sibert Oil Company of Texas
Beverly Hills, CA 90212
Thomas H. Nielsen Consulting Director,
600 Anton Blvd. U.S. Trust of California
Suite 150
Costa Mesa, CA 92626-7147
Richard G. Sim Executive Vice President, Investment Properties,
The Irvine Company
Peter V. Ueberroth Managing Director,
500 Newport Center Drive Contrarian Group
Newport Beach, CA 92660
Raymond L. Watson Vice Chairman,
The Irvine Company
</TABLE>
(1) Same address as director's or officer's business address except where
indicated.
<PAGE> 1
EXHIBIT 1
AMENDED AND RESTATED JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the
Securities Exchange Act of 1934, as amended, the persons named below hereby
agree to the joint filing on behalf of each of them of a statement on Schedule
13D (including amendments thereto) with respect to the common stock, par value
$.01 per share, of IAC APARTMENT COMMUNITIES, INC., a Maryland corporation, and
further agree that this Amended and Restated Joint Filing Agreement may be
included as an Exhibit to such joint filing. This Agreement amends and restates
in its entirety the Amended and Restated Joint Filing Agreement dated as of
December 18, 1997. In evidence thereof, the undersigned, being duly authorized,
hereby execute this Agreement as of December 2, 1998. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this
Agreement as of the 2nd day of December, 1998.
THE IRVINE COMPANY
By: /S/ MICHAEL D. MCKEE
------------------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY A
By: THE IRVINE COMPANY, its managing
general partner
By: /S/ MICHAEL D. MCKEE
------------------------------------
Name: Michael D. McKee
Title: Executive Vice President
TIC INVESTMENT COMPANY C
By: THE IRVINE COMPANY, its managing
general partner
By: /S/ MICHAEL D. MCKEE
------------------------------------
Name: Michael D. McKee
Title: Executive Vice President
<PAGE> 2
TIC INVESTMENT COMPANY D
By: THE IRVINE COMPANY, its managing
general partner
By: /S/ MICHAEL D. MCKEE
------------------------------------
Name: Michael D. McKee
Title: Executive Vice President
DONALD L. BREN
By: /S/ MICHAEL D. MCKEE
------------------------------------
Michael D. McKee as Attorney-in-fact
for Mr. Bren
TIC ACQUISITION LLC
By: THE IRVINE COMPANY, its Managing
Member
By: /S/ MICHAEL D. MCKEE
------------------------------------
Name: Michael D. McKee
Title: Executive Vice President
2
<PAGE> 1
EXHIBIT 99.1
December 1, 1998
The Irvine Company
550 Newport Center Drive
Newport Beach, CA 92660
Attention: Mr. Michael McKee
Chief Financial Officer
Re: Proposed $350,000,000 Credit Facility
Ladies and Gentlemen:
You are hereby advised that Bank of America National Trust and Savings
Association ("Bank") has committed to provide a credit facility to The Irvine
Company ("Borrower") in the amount, on the terms, and subject to the conditions
set forth in the attached Summary of Terms and Conditions of even date herewith.
This commitment shall terminate upon the first to occur of the following:
a) Failure by Borrower to deliver a written acceptance of this commitment
and payment of the underwriting fee described below on or before
December 4, 1998; or
b) May 31, 1999 (if closing of the Facility does not occur prior to this
date).
By execution of this letter (the "Commitment Letter"), Borrower agrees to pay
all costs and expenses incurred by Bank in connection with the proposed credit
facility (including without limitation fees and costs of Bank's counsel),
irrespective of whether loan documents for the credit facility ("Loan
Documents") are executed or loan proceeds are advanced.
This Commitment Letter and the conditions set forth in the attached Summary of
Terms and Conditions are not meant to be, nor shall they be construed as an
attempt to define all of the terms and conditions of the credit facility
described herein. Rather, it is intended only to outline certain basic points of
understanding around which the legal documentation is to be structured. Further
negotiations will not be precluded by the issuance of this Commitment Letter and
its acceptance by Borrower.
<PAGE> 2
This Commitment Letter and the rights of Borrower hereunder may not be assigned
by Borrower. Bank shall have the right to assign or grant participating
interests in the credit facility provided pursuant to this commitment to the
extent provided in the Loan Documents.
The terms contained in this Commitment Letter and the Summary of Terms and
Conditions attached hereto are confidential and, except for disclosure to the
boards of directors, officers and employees of Borrower, Irvine Apartment
Communities, Inc. ("IAC") and the limited liability company ("Newco") which is
to be formed by Borrower and Irvine Community Development Company ("ICDC") to
acquire the assets of, or merge with, IAC, to professional advisors retained by
each of them in connection with this transaction, to the Securities and Exchange
Commission, or as may be required by law, may not be disclosed in whole or in
part to any other person or entity without the prior written consent of Bank.
In order to accept this commitment, please execute a copy of this letter and
return it to this office, together with payment in immediately available funds
of an underwriting fee as outlined in the separate fee letter ("Fee Letter") of
this date. All fees paid herewith will be non-refundable irrespective of whether
Loan Documents are executed or loan proceeds are advanced.
Very truly yours,
Bank of America National Trust and Savings Association
By: /S/ ELENA BENNETT
-----------------------
Elena Bennett
Vice President
Accepted on this 1st day of December, 1998
The Irvine Company
By: /S/ MICHAEL D. MCKEE
-----------------------
<PAGE> 3
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SUMMARY OF TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
THE IRVINE COMPANY
$350,000,000
ACQUISITION TERM LOAN
- --------------------------------------------------------------------------------
THIS SUMMARY OF TERMS AND CONDITIONS (THE "TERM SHEET") DOES NOT ATTEMPT TO
DESCRIBE ALL TERMS AND CONDITIONS THAT WOULD PERTAIN TO THIS FACILITY, NOR DO
ITS TERMS SUGGEST THE SPECIFIC PHRASING OF DOCUMENTATION CLAUSES. INSTEAD, IT IS
INTENDED TO OUTLINE CERTAIN BASIC POINTS OF BUSINESS UNDERSTANDING AROUND WHICH
THE FACILITY WILL BE STRUCTURED.
- --------------------------------------------------------------------------------
BORROWER: The Irvine Company ("TIC" or "BORROWER")
ARRANGER: Bank of America and/or its affiliate will
underwrite the $350,000,000 facility
("Facility"). The arranger would attempt
to syndicate Facility to financial
institutions reasonably acceptable to the
Borrower and to Administrative Agent
(defined below).
ADMINISTRATIVE AGENT: Bank of America NT & SA ("BANK OF AMERICA"
or "BANK") in its capacity as the
Administrative Agent and Arranger.
FACILITY: $350,000,000 secured term loan
SECURITY: Perfected security interest covering
approximately 27,624,000 partnership units
of Irvine Apartment Communities, LP
("Limited Partnership") as more fully
described below under Documentation
subparagraph (c).
PURPOSE: Proceeds of the loan will be used by
Borrower to contribute as equity to Newco
(as previously defined) funds to
facilitate the acquisition of outstanding
REIT shares of Irvine Apartment
Communities, Inc. ("IAC") which Borrower
does not presently own. This will be a
"Going Private" transaction.
MATURITY: The earlier of May 31, 2001 or two years
from transaction closing.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
<PAGE> 4
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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EXTENSION OPTION: One year extension option available at
Borrower's request upon payment of
extension fee and subject to a) written
request no later than 60 days prior to
the Maturity and b) the existence of no
defaults at time of extension.
REPAYMENT: Interest payable monthly, principal
amortization as scheduled below.
AMORTIZATION: $14,584,000 per quarter (including
extension period).
CONDITIONS PRECEDENT: Standard for facilities of this type.
PRICING : Year 1: LIBOR + .95
Year 2: LIBOR + 1.10
Extension option: LIBOR + 1.35
LIBOR fixings notifications and minimum
funding contract amounts will be included
in documentation. Formal funding requests
must be delivered to Bank of America's
Loan Administration offices in Irvine, CA.
Funding of Facility to occur no later than
5/31/99 and any unused commitment will be
collapsed 6/1/99. Up to three separate
fundings in minimum amounts of $50MM will
be permitted to occur no later than
5/31/99. If any fundings are to be made
prior to the delivery of security, such
fundings will be made into an escrow
account from which release of funds will
be conditioned upon Borrower's
satisfaction of terms and conditions
herein including, but not limited to
Borrower providing a security interest in
specified collateral.
OTHER FEES: FACILITY FEE:
- Paid at closing as specified in the
Fee Letter of this date.
EXTENSION FEE:
- Paid upon election of the extension
as specified in the Fee Letter of
this date.
AGENCY FEE:
- Payable to Bank of America only,
annually in advance (pro-rated) as
specified in Fee Letter of this date.
TIC FINANCIAL Required financial covenants and
COVENANTS AND DEFINITIONS: definitions are outlined in
Exhibit A.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
2
<PAGE> 5
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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COVENANTS PERTAINING TO LIMITED UNENCUMBERED ASSETS:
PARTNERSHIP: Borrower and related Irvine Company
entities, in their capacity as 99% owner
of Limited Partnership, agree that Limited
Partnership will maintain unencumbered
stabilized apartment properties equal to
1.50x coverage of the outstanding balance
of the Facility.
MAINTENANCE OF OWNERSHIP:
Borrower and related Irvine Company
entities will at all times own 99% of the
operating partnership units of Limited
Partnership.
NO ADDITIONAL UNSECURED DEBT:
Borrower and related Irvine Company
entities, in their capacity as 99% owner
of Limited Partnership agree that Limited
Partnership will not obtain additional
unsecured debt. Refinance and/or
replacement of existing debt is permitted.
UNCONSOLIDATED LEVERAGE RATIO:
(Measured Quarterly)
- Not to exceed: 1.50: 1
DEFINED AS Total Liabilities to Total
Partnership Capital
MINIMUM UNCONSOLIDATED FIXED CHARGE
COVERAGE RATIO: (Measured Quarterly)
- Not less than 1.75:1
DEFINED AS:
- Trailing 4 quarter EBITDA divided
by the sum of a) Interest Incurred
plus b) scheduled principal
amortization plus c) dividends on
preferred stock payable plus d) the
amount of recurring capital
expenditures during the period.
COVENANTS PERTAINING TO NEWCO Newco shall have the following covenants
and restrictions:
- Bank to have approval over all
formation documents of Newco;
- Newco is prohibited from incurring any
indebtedness including any negative
pledges or further pledges of
ownership interests in the members;
- The sole assets of Newco shall be the
partnership units of Limited
Partnership, stock of IAC Capital
Trust and cash;
- TIC will be required to be the
managing member of Newco and retain
voting control;
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
3
<PAGE> 6
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
NEGATIVE COVENANTS: Standard for facilities of this type, to
include but not be limited to:
- Restrictions on Mergers, Consolidations,
and Transfers of Assets;
- Restrictions on Change in Nature of
Business.
AFFIRMATIVE COVENANTS: Standard for facilities of this type, to
include but not to be limited to:
- Compliance with Laws;
- Payment of Taxes;
- Maintenance of Insurance;
- Preservations of Corporate Existence;
- Reporting Requirements standard for
facilities of this type and other
requirements as may reasonably be
required by the Agent on behalf of the
Lenders;
- Maintenance of Books and Records;
- Compliance with ERISA, environmental
laws, and other regulations;
- Maintenance of Properties; and
- Performance of all Material Obligations.
OTHER The proceeds from any public or private
CONDITIONS debt issuances and securitizations will
be required to be applied against the
subject facility in the following order:
a) First to any balloon payment
b) Second to any amortization
requirements.
Proceeds from individual project financing
and secured construction financing will
not be required to prepay the subject
facility.
Subject Facility will be cross-defaulted
to all TIC and Limited Partnership
unsecured debt.
CONDITIONS PRECEDENT: The obligation of Bank to provide the
credit facility which is the subject of
this letter is subject to the
satisfaction, at Borrower's sole cost and
expense, of the following conditions
precedent:
CHANGE IN MARKET CONDITIONS: The terms and conditions contained herein
are subject to there being no material
adverse change in the financial condition
of the Borrower between the time this
offer is accepted by the Borrower and the
closing of the transactions contemplated
hereby.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
4
<PAGE> 7
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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CLEAR MARKET PROVISION: From the date of acceptance of an offer
through the later of 5/31/99, or the
completion of the general syndication (as
determined by the Arranger, but in no
event later than 9/30/99), the Borrower
agrees that no other similar credit
facilities or debts issued by the
Borrower would be syndicated or privately
placed which might, in the Arranger's
opinion, have a detrimental effect on the
successful completion of the transaction
described herein, and would advise the
Arranger immediately if any issue is
contemplated. Borrower has notified Bank
that syndications by Borrower of a $120MM
secured retail facility and a total of
$200MM of secured industrial facilities
are in process. Borrower will work
cooperatively with Bank to ensure
successful syndication of the Facility if
competing syndications occur.
DOCUMENTATION: The Borrower and Bank shall have executed
and delivered Loan Documents and related
documents in form and content
satisfactory to each of them, including
without limitation the following:
a) Loan Agreement;
b) Promissory note;
c) Pledge and security agreement
executed by Borrower granting a
security interest in favor of
Bank, as collateral security for
the obligations of Borrower under
the Loan Agreement, promissory
note and other Loan Documents, in
and to (i) the Borrower's
membership interest in Newco and
(ii) all of the partnership units
in Limited Partnership owned by
Borrower other than the
12,500,000 units required
pursuant to Borrower's unsecured
credit agreements to be held free
and clear of encumbrances;
d) Such documents as may be
necessary in order to perfect the
security interest granted
pursuant to the pledge and
security agreement described in
clause c) above as first priority
security interest in the subject
interests;
e) Such certified resolutions of
Borrower, Newco, IAC, Limited
Partnership and ICDC as Bank may
reasonably require in order to
evidence the authorization of, or
consent to, the execution and
performance of the Loan
Documents;
f) Opinion letter of counsel to
Borrower, addressing the due
formation and good standing of
Borrower, the due authorization
and execution by Borrower of the
Loan Documents and the
enforceability of the Loan
Documents;
g) Such additional agreements,
certificates, reports, approvals,
instruments, documents, consents
and opinions as Bank may
reasonably request.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
<PAGE> 8
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
OTHER DOCUMENTS: 1. Bank shall have received and
approved the form and content of the
formation organizational and
management documents for each of the
following entities:
a) Borrower
b) Newco
c) Limited Partnership.
2. Bank shall have established to its
satisfaction (either through
documents executed by Borrower, Newco
and/or Limited Partnership, or
otherwise) that:
a) Limited Partnership will not have
the right to alter the provisions of its
partnership documents relating to
distributions without the prior written
consent of Bank and will not issue
additional partnership units unless such
newly issued units are provided to Bank as
additional security for this Facility.
b) Newco will not have the right to
alter the provisions of its formation and
management documents relating to
distributions or management, or to admit
additional members, without the prior
written consent of Bank, and upon
foreclosure of the security interest of
Bank in the membership interest of
Borrower in Newco, the purchaser at
foreclosure will succeed to management of
Newco.
EVENTS OF DEFAULT: Standard for facilities of this type.
EXPENSES: Costs and expenses, including attorney's
fees (including costs and expenses of
outside counsel and the allocated cost of
internal legal services), incurred at any
time by the Agent and the Arranger in the
negotiation, syndication, documentation
and closing of this Facility as well as in
the ongoing administration of this
Facility, will be paid by Borrower,
regardless of whether the Facility closes.
Borrower would pay all costs and expenses,
including legal costs, incurred by the
Agent and any Bank in enforcing any loan
document.
ASSIGNMENTS & Minimum interest a) assigned to an
PARTICIPATIONS: assignee Bank and b) retained by the Bank
assigning such interest ("Assigning Bank")
must not be less than $25,000,000.
Assignments are allowed in minimum amounts
of $10,000,000 and integral multiples of
$5,000,000.
Eligible Assignees include commercial
banks with a minimum of $10 Billion in
assets and that have not been involved in
material litigation with Agent regarding
an assigned, participated or syndicated
credit.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
6
<PAGE> 9
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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SYNDICATION: The arranger would endeavor to syndicate
this Facility to the prospective banks
post close. The Borrower would provide
sufficient financial information as agreed
to by Arranger and Borrower. This
information may be distributed on a
confidential basis to the prospective
Banks. Additionally, Borrower's management
would be available upon reasonable notice
to participate in bank meetings and to
answer questions and actively be involved
in the syndication process.
In the event that such syndication cannot
be achieved in a manner satisfactory to
the Administrative Agent and Arranger
under the structure outlined in this
Summary of Terms and Conditions, and the
Administrative Agent and Arranger
determines that changes to pricing,
structure or other terms of the Facility
are necessary to ensure a successful
syndication, the Administrative Agent and
Arranger will provide information
supporting its determination of required
changes to Borrower. Borrower and
Administrative Agent will work
cooperatively to implement any changes
deemed necessary by Administrative Agent
and Arranger. A successful syndication
would be one in which the Administrative
Agent is able to achieve its targeted hold
level of $75MM for the Facility. The
agreement in this paragraph shall survive
closing of the Facility.
VOTING RIGHTS: To be determined.
GOVERNING LAW: State of California
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
7
<PAGE> 10
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
EXHIBIT A
FINANCIAL COVENANTS:
(a) Minimum Consolidated Tangible Net Worth. The Borrower will,
as of the last day of any Fiscal Quarter beginning with the
Fiscal Quarter ending December 30, 1998, keep and maintain
Consolidated Tangible Net Worth at an amount not less than the
sum of (i) $500,000,000, plus (ii) twenty-five percent (25%)
of its Consolidated Net Income (but only if a positive number)
determined on a cumulative basis for each Fiscal Year
commencing with the Fiscal Year ending June 30, 1996 (it being
agreed, for purposes of clause (ii), in the event Consolidated
Net Income is a deficit figure for any such Fiscal Year, the
minimum amount of Consolidated Tangible Net Worth required to
be maintained under this section (a) shall not be reduced and
it being further agreed that, as of June 30, 1997, the sum
of (i) plus (ii) was equal to $645,869,000).
(b) Fixed Charge Coverage. The Borrower will, beginning with the
Fiscal Quarter ending December 30, 1998, keep and maintain the
ratio of Consolidated EBITDA to Consolidated Fixed Charges for
the immediately preceding four consecutive Fiscal Quarters at
not less than 1.5 to 1.0.
(c) Cash Flow Debt Coverage. The Borrower will, as of the
last day of each Fiscal Quarter beginning with the Fiscal
Quarter ending December 30, 1998, keep and maintain the ratio
of Consolidated EBITDA to the sum of (i) Consolidated Fixed
Charges, plus (ii) Nondiscretionary Capital Expenditures
measured on a consolidated basis for the Borrower, plus (iii)
all scheduled principal amortization payments on Debt measured
on a consolidated basis for the Borrower, (including any
payment consisting of a "balloon" payment at maturity, except
for any such payment which is currently refinanced through the
incurrence of new Debt or which is covered by a binding
take-out credit commitment that will fund at the earlier of
(x) the date that is ninety (90) days after such balloon
payment or (y) the Maturity), for the immediately preceding
four consecutive Fiscal Quarters at not less than 1.05 to
1.00.
(d) Leverage. The Borrower will not permit, as of the last day of
any Fiscal Quarter, beginning with the Fiscal Quarter ending
December 30, 1998, the ratio of Consolidated Total Liabilities
to Consolidated Undepreciated Assets to be greater than 0.85
to 1.00.
(e) Limitation on Debt. The Borrower will not permit, as of the
last day of any Fiscal Quarter, beginning with the Fiscal
Quarter ending December 30, 1998: (i) the ratio of (A)
Consolidated Unsecured Debt to (B) Consolidated Unencumbered
Assets (other than assets which are properly classified as
"intangible assets" in accordance with GAAP and other than
Unencumbered Assets which are subject to Liens described in
clause (iii) of the second sentence of the definition of
"Debt") which are owned by the Borrower or by a Subsidiary
(provided that, for purposes of this section (e) (i), the
value of any Unencumbered Asset which is owned by a Subsidiary
shall be multiplied by the percentage of the Borrower's equity
interest in such Subsidiary) to exceed 0.45 to 1.00, or (ii)
the ratio of Consolidated Total Debt to Consolidated
Undepreciated Assets to exceed 0.60 to 1.00.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
8
<PAGE> 11
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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DEFINITIONS:
"Capitalized Lease" means any lease the obligations for Rentals with
respect to which is required to be capitalized on a consolidated
balance sheet of the lessee and its subsidiaries in accordance with
GAAP.
"Capitalized Rentals" of any Person means as of the date of any
determination thereof the amount at which the aggregate Rentals due and
to become due under all Capitalized Leases under which such Person is a
lessee would be reflected as a liability on a consolidated balance
sheet of such Person.
"Consolidated EBITDA" means, for any fiscal period, (a) the sum of (i)
Consolidated Net Income, (ii) Tax Expense, (iii) Consolidated Interest
Expense, (iv) depreciation and amortization expense, (v) certain
non-cash expenses (including the historical purchase price of land,
adjusted in accordance with GAAP), and (vi) cash distributions received
from Investment Entities, minus (b) the sum of (i) any equity in net
earnings or net losses of any Investment Entity and (ii) any
extraordinary gains (and plus extraordinary losses), all on a
consolidated basis as reported for the applicable period in the
financial statements of the Borrower. For purposes of determining
Consolidated EBITDA, the Borrower shall include in Consolidated Net
Income the amount of rental expense and rental income actually paid or
received by the Borrower and its Subsidiaries notwithstanding the
provisions and applications of FAS 13.
"Consolidated Fixed Charges" means, with respect to any period, the sum
of (a) all Rentals (other than Rentals on Capitalized Leases) under
leases payable during such period, and (b) all Consolidated Interest
Expense.
"Consolidated Interest Expense" for any period means on a consolidated
basis determined in accordance with GAAP all interest expense
(including the interest component of Rentals on Capitalized Leases) and
all amortization of debt discount and expense accrued in accordance
with GAAP on Debt during such period by the Borrower and its
Subsidiaries (including, without limitation, payment-in-kind, zero
coupon and other like Securities).
"Consolidated Net Income" for any period means the gross revenues of
the Borrower and its Subsidiaries for such period, less all expenses
and other proper charges determined on a consolidated basis in
accordance with GAAP.
"Consolidated Tangible Net Worth" means, as of the date of any
determination thereof, the arithmetic difference of:
(a) the amount of the capital stock accounts (net of treasury
stock, at cost), plus (or minus in the case of a deficit)
the surplus and retained earnings of the Borrower and its
Subsidiaries, in each case on a consolidated basis, minus
(B) THE NET BOOK VALUE, AFTER DEDUCTING ANY RESERVES APPLICABLE THERETO, OF ALL
ITEMS OF THE FOLLOWING CHARACTER WHICH ARE INCLUDED IN THE ASSETS OF THE
BORROWER AND ITS SUBSIDIARIES, TO WIT: GOODWILL, PATENTS, PATENT APPLICATIONS,
PERMITS, TRADEMARKS, TRADE NAMES, COPYRIGHTS, LICENSES, FRANCHISES,
ORGANIZATIONAL EXPENSE, AND SUCH OTHER ASSETS AS ARE PROPERLY CLASSIFIED AS
"INTANGIBLE ASSETS" IN ACCORDANCE WITH GAAP.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
9
<PAGE> 12
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
"Consolidated Total Assets" means, as of the date of any determination
thereof, the total amount of all assets of the Borrower and its
Subsidiaries as are properly classified as "assets" in accordance with
GAAP, determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Debt" means, as of any date of determination, all
Debt of the Borrower and its Subsidiaries, determined on a consolidated
basis eliminating intercompany items in accordance with GAAP.
"Consolidated Total Liabilities" means, as of any date of
determination, the total liabilities of the Borrower and its
Subsidiaries on that date, as determined in accordance with GAAP on a
consolidated basis and as reported for the applicable date in the
financial statements of the Borrower; provided, however, that for
purposes of this definition deferred taxes shall be calculated at a
combined federal and state income tax rate of 41%.
"Consolidated Undepreciated Assets" means, as of any date of
determination, all Undepreciated Assets of the Borrower and its
Subsidiaries, determined on a consolidated basis eliminating
intercompany items in accordance with GAAP.
"Consolidated Unencumbered Assets" means, as of any date of
determination, all Unencumbered Assets of the Borrower and its
Subsidiaries, determined on a consolidated basis eliminating
intercompany items in accordance with GAAP.
"Consolidated Unsecured Debt" means, as of any date of determination,
all Unsecured Debt of the Borrower and its Subsidiaries, determined on
a consolidated basis eliminating intercompany items in accordance with
GAAP.
"Debt" means, with respect to any Person, without duplication, (a) its
liabilities for borrowed monies, (b) its liabilities for the deferred
purchase price of property acquired by such Person (excluding accounts
payable in the ordinary course of business, but including, without
limitation, all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any property),
(c) its Capitalized Lease obligations, (d) all liabilities for borrowed
money secured by a Lien with respect to any property owned by such
Person (whether or not it is assumed by such Person or such Person
otherwise becomes liable for such liabilities), (e) all liabilities
with respect to any unreimbursed draws on letters of credit and (f) any
Guaranty of such Person with respect to any of the foregoing. In no
event shall the term "Debt" include (i) any assessment, community
facilities or other improvement district obligation or other
governmental or quasi-governmental levies or (ii) any Uniform
Commercial Code filing made in connection with the financing of trade
fixtures of lessees of the Borrower's property or (iii) any amounts
secured by a Lien encumbering property of the Borrower which is subject
to an option to purchase to the extent such amounts secured by such
Lien (1) represent indebtedness for borrowed money of the optionee and
not of the Borrower, (2) were intended to be and are used by the
optionee to improve such property and (3) do not, at any time, secure
indebtedness for borrowed money in excess of $100,000,000.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, except as otherwise specifically provided in this
Agreement.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
10
<PAGE> 13
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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"Guaranty" by any Person means, all obligations (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing, or
in effect guaranteeing, any Debt, dividend or other obligation of any
other Person (the "Primary Obligor") in any matter, whether directly or
indirectly, including, without limitation, all obligations incurred
through an agreement, contingent or otherwise, by such Person: (a) to
purchase such Debt or obligation or any property or assets constituting
security therefor; (b) to advance or supply funds (i) for the purchase
or payment of such Debt or obligation, or (ii) to maintain working
capital or any balance sheet condition or any income statement
condition or otherwise to advance or make available funds for the
purchase or payment of such Debt or obligation; (c) to lease property
or to purchase Securities or other property or services primarily for
the purpose of assuring the owner of such Debt or obligation of the
ability of the Primary Obligor to make payment of the Debt or
obligation; or (d) otherwise to assure the owner of the Debt or
obligation of the Primary Obligor against loss in respect thereof. For
the purposes of all computations made pursuant to this definition, a
Guaranty in respect of any Debt for borrowed money shall be deemed to
be Debt equal to the principal amount of such Debt for borrowed money
which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a
balance sheet of such Person as liabilities of such Person, and in any
event shall include all (a) obligations of such Person for borrowed
money or which have been incurred in connection with the acquisition of
property or assets excluding any accounts payable incurred in the
ordinary course of business, (b) obligations secured by any Lien upon
property or assets owned by such Person, even though such Person has
not assumed or become liable for the payment of such obligations, (c)
obligations created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such
Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of property, (d) Capitalized
Rentals, (e) obligations with respect to any unreimbursed draws on
letters of credit and (f) Guaranties of obligations of others of the
character referred to in this definition.
"Investment Entity" means a Person in which the Company's investment is
shown on the Company's financial statement under the equity method of
accounting in accordance with GAAP.
"Lien" means any interest in property securing Debt owed to, or a claim
by, a Person, other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including
but not limited to the security interest lien arising from a mortgage,
lien, charge, encumbrance, pledge, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances (including, with respect to stock,
stockholder agreements, voting trust agreements, buy-back agreements
and all similar arrangements) affecting property to the extent such
instruments secure Debt. For the purposes of this definition, the
Company or Subsidiary shall be deemed to be the owner of any property
which it has acquired or holds
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BANKAMERICA DECEMBER 1, 1998
11
<PAGE> 14
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
- --------------------------------------------------------------------------------
subject to a conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been retained
by or vested in some other Person for security purposes and such
retention or vesting shall constitute a Lien.
"Nondiscretionary Capital Expenditures" means an amount equal to:
(a) The aggregate of all "capital expenditures" made with
respect to any of the Company's Investment Properties
which at any time have been at least 90% occupied and
which have been in operation for at least twelve months at
the beginning of the Fiscal Quarter in which such
expenditure is made (excluding, however, all "capital
expenditures" made with respect to any of the Company's
investment properties during any period of major expansion
or major renovation and during any period after the
completion of such expansion or renovation until such
investment property is at least 90% occupied, provided
that the costs of such expansion or renovation are
reimbursed from project-specific financing); plus
(b) The aggregate of all expenditures made to maintain
entitlements granted by a Governmental
Agency for the development of land; minus
(c) The proceeds of any loan obtained and used by the Company
for the specific purpose of financing or reimbursing the
Company for the cost of such "capital expenditures" or
expenditures.
For the purpose of this definition, the term "capital expenditures"
includes the cost of any routine capital replacement program, tenant
improvements, leasing commissions and extraordinary capital
expenditures (such as renovations, expansions and asbestos abatement
programs).
"Non-Recourse Debt" means any Debt: (a) under the terms of which the
payee's remedies upon the occurrence of an event of default are limited
to specific, identified assets of the payor which secure such Debt and
(b) for the repayment of which the payor has no personal liability
beyond the loss of such specified assets, except for liability for
fraud, material misrepresentation or misuse or misapplication of
insurance proceeds, condemnation awards or rents, existence of
hazardous wastes or other customary exceptions to nonrecourse
provisions.
"Rentals" means, and includes as of any date of any determination, all
fixed payments (including all such payments which the lessee is
obligated to make to the lessor on termination of the lease or
surrender of the property) payable by the Company or a Subsidiary as
lessee or sublessee under a lease of real or personal property, but
shall be exclusive of any amounts required to be paid by the Company or
a Subsidiary (whether or not designated as rents or additional rents)
on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall be
computed on the basis of minimum sales volume or gross revenues.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
12
<PAGE> 15
THE IRVINE COMPANY SUMMARY OF TERMS AND CONDITIONS
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"subsidiary" means, as to any particular parent corporation, any
corporation of which more than 50% (by number of votes) of the Voting
Stock shall be beneficially owned, directly or indirectly, by such
parent corporation.
"Subsidiary" means a subsidiary of the Company; provided that, in no
event shall the term "Subsidiary" include a corporation (1) which is a
general partner of a partnership in which the Company is a limited
partner, (2) more than 50% (by number of votes) of the Voting Stock of
which the Company is deemed, for any purpose, to beneficially own,
directly or indirectly, by reason of the fact that the Company has the
right to convert (but has not converted) all or a portion of its
limited partnership interest into more than 50% of such Voting Stock,
and (3) which the Company is not required to consolidate under GAAP.
"Undepreciated Asset" means, as of any date of determination and with
respect to any Person, the value of an asset owned by such Person plus
the allowance for accumulated depreciation for such asset on that date,
as determined in accordance with GAAP and as such value and
depreciation are reported for that date in the financial statements of
the Person.
"Unencumbered Asset" means, with respect to any Person, an
Undepreciated Asset of such Person, which is not subject to a Lien
securing any Debt of such Person.
"Unsecured Debt" means Debt of the Company or its Subsidiaries which is
not secured by a Lien on any asset of the Company or any of its
Subsidiaries.
"Voting Stock" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing
similar functions).
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[LOGO] CONFIDENTIAL
BANKAMERICA DECEMBER 1, 1998
13
<PAGE> 1
EXHIBIT 99.2
TIC ACQUISITION LLC
550 Newport Center Drive
Newport Beach, CA 92660
December 1, 1998
Board of Directors
Irvine Apartment Communities, Inc.
550 Newport Center Drive
Newport Beach, CA 92660
Gentlemen:
This letter is a proposal from TIC Acquisition LLC, a wholly
owned subsidiary of The Irvine Company, to acquire all of the outstanding common
shares of Irvine Apartment Communities, Inc. in a business combination for
$32.50 per share in cash. This represents a 21% premium to yesterday's closing
price and one of the highest cash premiums ever paid for a REIT. We are
prepared, at the earliest possible time, to enter into a binding agreement which
would contain standard terms and conditions for transactions of this nature.
There will be no financing contingency.
We believe that our proposal presents an excellent opportunity
for shareholders of Irvine Apartment Communities to achieve liquidity for their
shares at an significant premium to current market value. We are confident that
you will conclude that our proposal is fair and in the best interests of the
public shareholders.
Attached is a press release to be issued immediately which
briefly describes our reasons for making this proposal.
We look forward to your response at your earliest convenience
but in any event no later than December 31, 1998.
We look forward to your careful consideration of this
important proposal and are prepared to work closely with you over the coming
weeks.
Very truly yours,
TIC Acquisition LLC
By: /S/ MICHAEL D. MCKEE
--------------------
Michael D. McKee
Authorized Officer
Attachment
<PAGE> 1
EXHIBIT 99.3
NEWS RELEASE
FOR IMMEDIATE RELEASE
DECEMBER 1, 1998
FOR FURTHER INFORMATION:
CONTACT: LARRY THOMAS
(949) 720-3232
(949) 759-9328 (FAX)
TIC ACQUISITION LLC PROPOSES TO ACQUIRE
OUTSTANDING COMMON SHARES OF
IRVINE APARTMENT COMMUNITIES (NYSE:IAC)
NEWPORT BEACH, CA -- (December 1, 1998) TIC Acquisition LLC, a wholly
owned subsidiary of The Irvine Company, today announced a proposal to the Board
of Directors of Irvine Apartment Communities, Inc. (NYSE:IAC) to acquire all of
the outstanding common shares of IAC in a business combination for $32.50 per
share in cash (approximately $654 million for all approximately 20 million
outstanding shares). This represents a 21% premium to yesterday's closing price.
"Conditions affecting real estate investment trusts have become
increasingly difficult in recent months," said Michael D. McKee, chief financial
officer of The Irvine Company. "Accretive acquisitions of Class A multi-family
properties in California are difficult to find. Access to public market
financing for new development has become limited and expensive. In this
environment, we believe that a private company is better suited to undertake the
risks associated with real estate development and to retain capital to apply to
future projects.
"We are proud that all shareholders have received a substantial return
on their investment since the initial public offering in December 1993," McKee
said. "Based upon the proposal price, the compounded annual return through
November 30, 1998 is 19.8%, including dividends, for shareholders who purchased
their shares in the December 1993 initial public offering."
McKee said the proposal is not subject to a financing contingency. In
addition, the existing debt and preferred stock of Irvine Apartment Communities,
L.P., IAC's operating partnership, will remain outstanding and are not expected
to be affected by the proposed transaction.
<PAGE> 2
The Irvine Company is the largest current stockholder of IAC, currently
holding approximately 17% of the outstanding common shares. The Irvine Company
also owns approximately 55% of the partnership interests of Irvine Apartment
Communities, L.P. of which IAC is a 45% general partner. In all, The Irvine
Company owns an approximate 63% economic interest in IAC.
IAC, a Southern California-based real estate investment trust, is the
dominant owner and operator of apartment properties on the Irvine Ranch, the
nation's largest master-planned community. IAC also is active in the Silicon
Valley, San Diego County and Los Angeles. At September 30, 1998, IAC owned or
had under development 62 apartment communities with 18,758 units.
The Irvine Company is a century old, privately held real estate
investment firm primarily engaged in the long-term development of its land in
Orange County, California, and elsewhere in California. Following a
comprehensive master plan created in the 1960s, The Irvine Company is building a
series of large-scale communities on the Irvine Ranch in Orange County.
2
