-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NBL/R4ncXAQsnwCnTtAoQ3+ZrbtusQJ0yQe4NcZKBT2FmewLkaHn6+arbplUZFPi qyp6zITbuQlgPkAQham5nw== 0000892626-96-000158.txt : 19960702 0000892626-96-000158.hdr.sgml : 19960702 ACCESSION NUMBER: 0000892626-96-000158 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARVIDA JMB PARTNERS L P II CENTRAL INDEX KEY: 0000852494 STANDARD INDUSTRIAL CLASSIFICATION: 6512 IRS NUMBER: 581809884 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19245 FILM NUMBER: 96563300 BUSINESS ADDRESS: STREET 1: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3129151987 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended March 31, 1996 Commission file number 0-19245 ARVIDA/JMB PARTNERS, L.P.-II (Exact name of registrant as specified in its charter) Delaware 58-1809884 (State of organization) (IRS Employer Identification No.) 900 N. Michigan Avenue., Chicago, IL 60611 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 312/440-4800 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Financial Statements . . . . . . . . . . . . . . . . 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . 14 PART II OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 16 Item 3. Defaults on Senior Securities. . . . . . . . . . . . 16 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 17 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ARVIDA/JMB PARTNERS, L.P.-II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 (UNAUDITED) ASSETS ------
MARCH 31, DECEMBER 31, 1996 1995 ------------- ----------- Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . $ 978,060 1,387,313 Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,610,395 2,552,834 Trade and other accounts receivable (net of allowance for doubtful accounts of $24,073 at March 31, 1996 and $18,431 at December 31, 1995). . . . . . . . . . . . . . . . . . . . . 1,194,377 1,218,015 Real estate inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,293,218 10,766,333 Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . 6,304,679 6,404,217 Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . 1,833,053 1,910,446 ------------ ------------ Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,213,782 24,239,158 ============ ============ ARVIDA/JMB PARTNERS, L.P.-II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS) ----------------------------------------------------- MARCH 31, DECEMBER 31, 1996 1995 ------------- ----------- Liabilities: Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 932,480 550,666 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,786 450,129 Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 964,377 1,121,423 Accrued expenses and other liabilities. . . . . . . . . . . . . . . . . . . 43,550,415 39,137,504 Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 7,619,020 7,591,889 Notes and mortgages payable (in default). . . . . . . . . . . . . . . . . . 98,710,703 100,175,208 ------------ ------------ Commitments and contingencies Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 152,115,781 149,026,819 ------------ ------------ Partners' capital accounts (deficits): General Partner and Associate Limited Partner: Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000 Cumulative net income (loss). . . . . . . . . . . . . . . . . . . . . . . (7,268,005) (5,809,930) Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . (246,771) (246,771) ------------ ------------ (7,512,776) (6,054,701) ------------ ------------ Limited partners: Capital contributions, net of offering costs. . . . . . . . . . . . . . . 209,753,671 209,753,671 Cumulative net income (loss). . . . . . . . . . . . . . . . . . . . . . . (322,921,720) (319,265,457) Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . (9,221,174) (9,221,174) ------------ ------------ (122,389,223) (118,732,960) ------------ ------------ Total partners' deficits. . . . . . . . . . . . . . . . . . . . . . . (129,901,999) (124,787,661) ------------ ------------ Total liabilities and partners' deficits. . . . . . . . . . . . . . . $ 22,213,782 24,239,158 ============ ============ The accompanying notes are an integral part of these consolidated financial statements.
ARVIDA/JMB PARTNERS, L.P.-II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
1996 1995 ------------ ----------- Revenues: Housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 140,810 2,636,976 Homesites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646,050 2,435,200 Operating properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,686,344 1,389,309 Brokerage and other operations . . . . . . . . . . . . . . . . . . . . . . 336,171 653,439 ------------ ---------- Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 2,809,375 7,114,924 Cost of revenues: Housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,279 2,286,900 Homesites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558,537 1,871,979 Operating properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,378,222 1,357,217 Brokerage and other operations . . . . . . . . . . . . . . . . . . . . . . 293,264 591,701 ------------ ---------- Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . 2,377,302 6,107,797 Gross operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,073 1,007,127 Selling, general and administrative expenses . . . . . . . . . . . . . . . . (482,775) (1,538,743) ----------- ---------- Net operating income (loss). . . . . . . . . . . . . . . . . . . . (50,702) (531,616) Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,124 82,611 Interest and real estate taxes, net. . . . . . . . . . . . . . . . . . . . . (5,072,760) (5,441,900) ----------- ---------- Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . $(5,114,338) (5,890,905) =========== ========== Net income (loss) per Limited Partnership Interest . . . . . . . . $ (15.61) (16.44) =========== ========== The accompanying notes are an integral part of these consolidated financial statements.
ARVIDA/JMB PARTNERS, L.P.-II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
1996 1995 ------------ ----------- Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,114,338) (5,890,905) Charges to net loss not requiring cash: Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . 130,395 141,626 Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . 5,642 10,005 Changes in: Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942,439 (3,016,587) Trade and other accounts receivable. . . . . . . . . . . . . . . . . . . . . . 17,996 (261,331) Real estate inventories: Additions to real estate inventories . . . . . . . . . . . . . . . . . . . . (232,701) (1,715,030) Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,816 4,158,879 Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (124,678) Capitalized real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . -- (55,747) Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . 46,536 1,288,039 Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . 4,301,568 2,862,992 Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . (157,046) (12,108) Amounts due to affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . 27,131 137,061 ------------ ----------- Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . 673,438 (2,477,784) ------------ ----------- Investing activities: Acquisitions of property and equipment . . . . . . . . . . . . . . . . . . . . -- (134,354) ------------ ----------- Net cash used in investing activities. . . . . . . . . . . . . . . . . -- (134,354) ------------ ----------- ARVIDA/JMB PARTNERS, L.P.-II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED 1996 1995 ------------ ----------- Financing activities: Proceeds from notes and mortgages payable. . . . . . . . . . . . . . . . . . . -- (2,646,850) Payments of notes and mortgages payable. . . . . . . . . . . . . . . . . . . . (1,464,505) -- Repayments of bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . 381,814 (336,902) ------------ ----------- Net cash used in financing activities. . . . . . . . . . . . . . . . . (1,082,691) (2,983,752) ------------ ----------- Decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . (409,253) (5,595,890) Cash and cash equivalents, beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,387,313 9,526,271 ------------ ----------- Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 978,060 3,930,381 ============ =========== Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest, net of amounts capitalized . . . . . . . . . . . . . . . . . . . . $ -- -- ============ =========== Non-cash investing and financing activities. . . . . . . . . . . . . . . . . . $ -- -- ============ =========== The accompanying notes are an integral part of these consolidated financial statements.
ARVIDA/JMB PARTNERS, L.P.-II (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 AND 1995 (UNAUDITED) Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 1995, which are included in the Partnership's 1995 Annual Report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report. GENERAL Capitalized Interest and Real Estate Taxes Interest, including the amortization of loan fees, of $2,914,357 and $3,523,784 was incurred for the three months ended March 31, 1996 and 1995, respectively, of which $0 and $124,678 was capitalized, respectively. There were no interest payments made during the three month periods ended March 31, 1996 and 1995. The Partnership has not made the required monthly interest payments on its credit facility since September 1994. Real estate taxes of $2,158,403 and $2,098,541 were incurred for the three months ended March 31, 1996 and 1995, respectively, of which $0 and $55,747 was capitalized, respectively. Real estate tax payments of $360,642 and $449,743 were made for the three months ended March 31, 1996 and 1995, respectively. The preceding analysis of real estate taxes does not include real estate taxes incurred or paid with respect to the Partnership's club facilities and other operating properties as these taxes are included in cost of revenues for operating properties. Property and Equipment and Other Assets Depreciation expense of $99,538 and $109,350 was incurred for the three month periods ended March 31, 1996 and 1995, respectively. Amortization of other assets, excluding loan fees, of $30,857 and $32,276 was incurred for the three months ended March 31, 1996 and 1995, respectively. CASH, CASH EQUIVALENTS AND RESTRICTED CASH There are no treasury bills or other short-term investments with original maturity dates of three months or less included in cash and cash equivalents at March 31, 1996 and December 31, 1995. Included in restricted cash are amounts restricted under various escrow agreements and approximately $1,581,200 remaining from the original $3 million which was deposited into a restricted collateral account in March 1995 pursuant to an agreement between the Partnership and its lender. NOTES AND MORTGAGES PAYABLE (IN DEFAULT) The Partnership's credit facilities consist of a $52.5 million term loan, a $67.5 million term loan, a revolving line of credit of approximately $14.3 million and approximately $4.3 million of outstanding letters of credit securing performance obligations of the Partnership. There is also a $5 million letter of credit facility which secures performance obligations of the Partnership. At March 31, 1996, approximately $20.3 million, $66.9 million and $11.5 million was outstanding under the $52.5 million term loan, the $67.5 million term loan and the revolving line of credit facility, respectively. For the three month period ended March 31, 1996, the effective interest rate for the combined term loans and the revolving line of credit facility was approximately 11.7% per annum. The Partnership has not made the required interest payments on its credit facilities since September 1994. The amount of interest which remains payable at March 31, 1996 totals approximately $29.4 million. The accrued interest on the Partnership's credit facilities is the primary cause for the increase in accrued expenses and other liabilities at March 31, 1996 as compared to December 31, 1995. Proceeds from the sales of housing units, homesites, land parcels and other collateral securing the credit facilities, net of brokerage commissions and certain other customary selling expenses are to be delivered to the lender to be applied against the outstanding principal balance on one of the term loans. Through March 31, 1996, the Partnership has remitted proceeds totalling approximately $20.2 million from sales made after becoming subject to this requirement in September 1994. On October 31, 1995, the Partnership and its lender reached an agreement to amend the March 1995 Forbearance Agreements agreeing to, among other things, a new plan whereby the Partnership would attempt to sell its remaining assets (other than Talega Property) in accordance with set minimum sales prices for each of the assets over the course of a six-month period with payment of certain operational, development and marketing costs to be made out of available funds in a restricted collateral account. The agreement was subject to the lender's continued forbearance from the exercise of its remedies under the credit facilities and its right to cease funding costs not yet then incurred. The Partnership and its lender are currently in the process of negotiating a new plan whereby the Partnership would sell its remaining assets by July 31, 1996. As of the date of this report, the lender has not initiated any actions as a result of the Partnership's failure to sell its remaining assets as specified per the terms of the originally agreed upon plan. During March 1996, the Heathrow joint venture, in which the Partnership is the managing general partner, reached an agreement with an unaffiliated third party for the sale of the remaining land and certain related assets within the Partnership's Heathrow Community. The Partnership's lender has consented to the terms of the sale. However, the closing of the sale is subject to the satisfaction of various other conditions, and there is no assurance that such conditions will be satisfied or that the sale will close. The net proceeds from such sale, if consummated, would be paid to the Partnership's lender and applied against the outstanding principal balance on one of the Partnership's term loans. The sale, if consummated, would result in a gain for financial reporting purposes and a loss for Federal income tax purposes. During March 1996, the Partnership reached an agreement with an unaffiliated third party for the sale of the Talega Property. The Partnership's lender has consented to the terms of the sale. However, the closing of the sale is subject to the satisfaction of various conditions, and there is no assurance that such conditions will be satisfied or that the sale will close. The net proceeds from such sale, if consummated, would be paid to the Partnership's lender and applied against the outstanding principal balance on one of the Partnership's term loans. The sale, if consummated, would result in a gain for financial reporting purposes and a loss for Federal income tax purposes. In addition, during April 1996, the Partnership entered into a non- binding letter of intent with an unaffiliated third party for the sale of the retail shopping plaza at its Heathrow Community. The net proceeds from such sale, if consummated, would be paid to the Partnership's lender and applied against the outstanding principal balance on one of the Partnership's term loans. The Partnership currently expects that it will be disposing of all of its remaining assets in accordance with the plan which is currently being negotiated with its lender. It is expected that any proceeds from the sale or other disposition of such assets, in excess of the costs of sale and general and administrative expenses attributable thereto, will be paid to the lender or other creditors of the Partnership. Accordingly, it is highly unlikely that the Limited Partners will receive any future distributions from the Partnership. Upon disposition of its remaining assets or if the Partnership determines the plan is no longer viable or lacks sufficient funds for maintaining the affairs of the Partnership, the Partnership would then proceed to terminate its affairs. The possibility still remains that the lender may pursue its remedies under the credit facilities, including realizing upon substantially all of the Partnership's remaining assets, which are collateral security for the credit facilities. These issues raise substantial doubt about the Partnership's ability to continue as a going concern. If the Partnership is unable to continue as a going concern, it may be forced to dispose of its Properties in a manner that would realize less than would be realized under its current plan for an orderly disposition. If this were to occur, any proceeds received could be less than the current carrying values of the Properties, resulting in the recognition of additional losses by the Partnership. The accompanying Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. TRANSACTIONS WITH AFFILIATES The General Partner of the Partnership or its affiliates may be reimbursed for their direct expenses or out-of-pocket expenses relating to the administration of the Partnership and its assets. For the three months ended March 31, 1996, the General Partner of the Partnership or its affiliates were due reimbursements for such direct or out-of-pocket expenditures in the amount of approximately $2,400, all of which was paid as of March 31, 1996. The total of such reimbursements for the three months ended March 31, 1995 was approximately $2,100. In addition, the General Partner and its affiliates are entitled to reimbursements for salaries and salary-related costs relating to the administration of the Partnership and the operation of the Partnership's Properties. Such costs were approximately $13,500 for the three months ended March 31, 1996 all of which was paid as of March 31, 1996. The Partnership also receives reimbursements from, or reimburses, affiliates of the General Partner for certain general and administrative costs including, and without limitation, salary and salary-related costs relating to work performed by employees of the Partnership and certain out- of-pocket expenditures incurred on behalf of such affiliates. The Partnership was entitled to receive approximately $0 and $3,800 for such costs for the three months ended March 31, 1996 and 1995, respectively. In addition, the Partnership was obligated to reimburse one of its affiliates approximately $5,800 and $19,500 for the three months ended March 31, 1996 and 1995, respectively, for costs incurred by the affiliate on behalf of the Partnership. At March 31, 1996, approximately $5,700 was unpaid, none of which was paid as of May 3, 1996. The Partnership and Arvida/JMB Partners, L.P. (a publicly-held limited partnership affiliated with the General Partner, "Arvida/JMB-I") each employ project related and administrative personnel who perform services on behalf of both partnerships. In addition, certain out-of-pocket expenditures related to such services and other general and administrative expenditures are incurred and charged to each partnership as appropriate. The Partnership reimburses or receives reimbursements from Arvida/JMB-I for such costs (including salary and salary-related costs). For the three month period ended March 31, 1996, the Partnership was obligated to reimburse Arvida/JMB-I approximately $589,200. At March 31, 1996, approximately $194,600 was unpaid, all of which was paid as of May 3, 1996. In addition, for the three month period ended March 31, 1996, the Partnership was entitled to receive approximately $68,300 from Arvida/JMB- I. At March 31, 1996, approximately $49,200 was outstanding, all of which was received as of May 3, 1996. For the three months ended March 31, 1995, the Partnership was obligated to reimburse Arvida/JMB-I approximately $822,200 and the Partnership was entitled to receive reimbursements from Arvida/JMB-I of approximately $88,400. Arvida Company ("Arvida"), pursuant to an agreement with the Partnership, provides development, construction, management and other personnel and services to the Partnership for all of its projects and operations. Pursuant to such agreement, the Partnership reimburses Arvida for all of its out-of-pocket expenditures (including salary and salary- related costs). The total of such costs for the three month periods ended March 31, 1996 and 1995 were approximately $105,500 and $367,700 respectively. At March 31, 1996 approximately $700 was unpaid, all of which was paid as of May 3, 1996. Pursuant to a requirement under the Partnership's credit facilities, a portion of the reimbursements paid to Arvida and Arvida/JMB-I as well as portions of the Partnership's insurance and loan refinancing costs incurred in 1992 and 1993, have been funded on the Partnership's behalf by advances from the General Partner. Such advances, which do not bear interest, totalled approximately $4,609,400 at March 31, 1996. The repayment of such advances is subordinated to the receipt by the Holders of Interests of certain levels of return, and therefore is not expected. In addition, the Partnership was entitled to receive approximately $12,900 from an affiliate of the General Partner for salary and salary-related costs incurred by the Partnership on behalf of such affiliate of the General Partner, all of which was outstanding as of March 31, 1996 and May 3, 1996. The Partnership incurs certain general and administrative expenses, including insurance premiums, which are paid by the Partnership on behalf of its affiliated homeowners associations. The Partnership receives reimbursements from the affiliates for such costs. For the three month period ended March 31, 1996, the Partnership was entitled to receive approximately $5,200 from such affiliates. At March 31, 1996, approximately $39,500 was owed to the Partnership (including amounts owed from prior periods), of which approximately $12,600 was received as of May 3, 1996. For the three months ended March 31, 1995, the Partnership was entitled to receive approximately $4,400 from such affiliates. Arvida provides development management services to the Heathrow partnership. For the three months ended March 31, 1996, management fees of approximately $117,200 had been incurred, the payment of which has been deferred. The cumulative amount of such deferred management fees as of March 31, 1996 was approximately $2,910,200. Such deferred fees do not bear interest and remain payable. The ultimate payment of these management fees is not expected to be made as it is subordinated to certain levels of return to the Holders of Interests. In accordance with the Partnership Agreement, the General Partner and Associate Limited Partner have deferred a portion of their distributions of net cash flow from the Partnership totalling approximately $247,000. This amount, which does not bear interest, is not expected to be paid. COMMITMENTS AND CONTINGENCIES As security for performance of certain development obligations, including the Partnership's obligations with respect to the Santa Margarita Water District, the Partnership is contingently liable under standby letters of credit and bonds at March 31, 1996 for approximately $2,600,400 and $546,800, respectively. The Partnership has been named a defendant in a lawsuit filed in the Circuit Court in and for the Eighteenth Judicial Circuit, Seminole County, Florida entitled Land Investment I, Ltd., Heathrow Land & Development Corporation, Heathrow Shopping Center Associates, and Paulucci Investments v. Arvida/JMB Managers-II, Inc., Arvida/JMB Partners, L.P.-II, Arvida Company and JMB Realty Corporation. The complaint, as amended, includes counts for breach of the management agreement, breach of fiduciary duty, fraud in the inducement and conspiracy to commit fraud in the inducement, breach of the partnership agreement and rescission in connection with the purchase and management of the Heathrow development. Plaintiffs seek, among other things, unspecified compensatory damages, the right to add a claim for punitive damages, rescission, attorneys fees, costs, and such other relief as the Court deems appropriate. The Partnership believes that the lawsuit is without merit and intends to vigorously defend itself in this matter. The Partnership has been advised by Merrill Lynch that various investors of the Partnership have sought to compel Merrill Lynch to arbitrate claims brought by certain investors of the Partnership, and has been named as a respondent in various arbitrations, representing approximately 11% of the total Interests outstanding. These claimants have sought and are seeking to arbitrate claims involving unspecified damages based on Merrill Lynch's alleged violations of applicable state and/or federal securities laws and alleged violations of the rules of the National Association of Securities Dealers, Inc., together with pendent state law claims. The Partnership believes that Merrill Lynch has resolved some of these claims through litigation and otherwise, and that Merrill Lynch is defending other claims. Merrill Lynch has asked the Partnership and its General Partner to confirm an obligation of the Partnership and its General Partner to indemnify Merrill Lynch in these claims against all loss, liability, claim, damage and expense, including without limitation attorney's fees and expenses, under the terms of a certain Agency Agreement dated October 23, 1989 ("Agency Agreement") with the Partnership relating to the sale of Interests through Merrill Lynch on behalf of the Partnership. The Agency Agreement generally provides that the Partnership and its General Partner shall indemnify Merrill Lynch against losses occasioned by an actual or alleged misstatement or omission of material facts in the Partnership's offering material used in connection with the sale of Interests and suffered by Merrill Lynch in performing its duties under the Agency Agreement, under certain specified conditions. The Agency Agreement also generally provides, under certain conditions, that Merrill Lynch shall indemnify the Partnership and its General Partner for losses suffered by the Partnership and occasioned by certain specified conduct by Merrill Lynch in the course of Merrill Lynch's solicitation of subscriptions for, and sale of, Interests. The Partnership is unable to determine at this time the ultimate investment of investors who have filed arbitration claims as to which Merrill Lynch might seek indemnification in the future. At this time, and based upon the information presently available about the arbitration statements of claims filed by some of these investors, the Partnership and its General Partner believe that they have meritorious defenses to demands for indemnification made by Merrill Lynch and intend to vigorously pursue such defenses. Although there can be no assurance regarding the outcome of the claims for indemnification, at this time, based on information presently available about such arbitration statements of claims, the Partnership and its General Partner do not believe that the demands for indemnification by Merrill Lynch will have a material adverse effect on the financial condition of the Partnership. In addition, the Partnership could potentially be liable for certain amounts incidental to other matters, the amount of which could be substantial. TAX-EXEMPT BOND FINANCING In connection with the development of Talega, the Partnership has utilized bond financing to construct certain on-site and off-site water and sewer infrastructure improvements which the Partnership would otherwise be obligated to finance and construct as a condition to obtain certain approvals for the project. As of March 31, 1996, $59,645,000 of the bonds were outstanding. Approximately $46.5 million of proceeds from the sale of bonds was expended by the District on infrastructure improvements through March 31, 1996. ADJUSTMENTS In the opinion of the General Partner, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been made to the accompanying consolidated financial statements as of March 31, 1996 and December 31, 1995 and for the three month periods ended March 31, 1996 and 1995 (assuming the Partnership continues as a going concern). PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reference is made to the notes to the accompanying consolidated financial statements ("Notes") contained in this report for additional information concerning certain of the Partnership's investments. As discussed below, there is substantial doubt about the Partnership's ability to continue as a going concern. At March 31, 1996 and December 31, 1995, the Partnership had cash and cash equivalents of approximately $978,100 and $1,387,000, respectively. Bank overdrafts, which represent checks in transit, of approximately $932,500 and $551,000 at March 31, 1996 and December 31, 1995, respectively, were repaid from cash on hand in April and January 1996, respectively. Remaining cash and cash equivalents were available for working capital requirements. The Partnership had suspended cash distributions to its Partners in late 1990 due to, among other things, deteriorating market conditions. The Partnership has been unable to reinstate distributions due to its financial condition and the operations of its Properties, which are also discussed more fully below. In addition, the Partnership is currently in default of the terms of its credit facilities and a default has been asserted concerning Tax-Exempt Bond Financing. The source of the Partnership's short and long-term future liquidity is dependent upon its lender continuing to forbear from exercising its remedies under the Partnership's credit facility agreements and permitting the Partnership to use funds in a restricted cash collateral account and certain sales proceeds to finance the Partnership's limited operations, as more fully discussed in Part II - Item 3. (Defaults on Senior Securities). During March 1996, the Heathrow joint venture, in which the Partnership is the managing general partner, reached an agreement with an unaffiliated third party for the sale of the remaining land and certain related assets within the Partnership's Heathrow Community. The Partnership's lender has consented to the terms of the sale. However, the closing of the sale is subject to the satisfaction of various other conditions, and there is no assurance that such conditions will be satisfied or that the sale will close. The net proceeds from such sale, if consummated, would be paid to the Partnership's lender and applied against the outstanding principal balance on one of the Partnership's term loans. The sale, if consummated, would result in a gain for financial reporting purposes and a loss for Federal income tax purposes in 1996. During March 1996, the Partnership reached an agreement with an unaffiliated third party for the sale of the Talega Property. The Partnership's lender has consented to the terms of the sale. However, the closing of the sale is subject to the satisfaction of various conditions, and there is no assurance that such conditions will be satisfied or that the sale will close. The net proceeds from such sale, if consummated, would be paid to the Partnership's lender and applied against the outstanding principal balance on one of the Partnership's term loans. The sale, if consummated, would result in a gain for financial reporting purposes and a loss for Federal income tax purposes in 1996. In addition, during April 1996, the Partnership entered into a non- binding letter of intent with an unaffiliated third party for the sale of the retail shopping plaza at its Heathrow Community. Although there can be no assurance, the Partnership currently expects that it will be disposing of its remaining assets during 1996. It is expected that any proceeds from the sale or other disposition of such assets, in excess of the costs of sale and general and administrative expenses attributable thereto, will be paid to the lender or other creditors of the Partnership. Upon completion of the sale of the Partnership's remaining assets, the Partnership expects to terminate. The Limited Partners should not expect to receive any future distributions from the Partnership. RESULTS OF OPERATIONS Due to the Partnership's financial condition, the results of operations for the quarter ended March 31, 1996 reflect the limited activity of its assets. For the period ended March 31, 1996, the Partnership (including its consolidated ventures) closed on the sale of one housing unit and 12 homesites. This compares to closings for the three months ended March 31, 1995 of 16 housing units and 46 homesites. Outstanding contracts ("backlog") at March 31, 1996 were for six homesites, the remaining land within the Partnership's Talega Community and the remaining land and certain related assets within the Partnership's Heathrow Community. This compares to a backlog at March 31, 1995 of 13 housing units and 18 homesites. Housing revenues for the three months ended March 31, 1996 have been negatively impacted by the prohibition placed on the Partnership by its lender regarding the construction of new homes within Heathrow. All construction of the homes for which the lender agreed to advance funds had been completed. In addition, sales of all of the units completed in Wesmere had closed as of December 31, 1995, and four units remain to be closed at Heathrow. The decrease in homesite revenues for the three months ended March 31, 1996 as compared to the same period in 1995 is due to a decrease in the availability of lots for sale at the Partnership's Heathrow and Atlanta Communities. The Partnership's Eagle Watch Community is nearing completion and is expected to close-out in 1996. The decline in the gross operating profit margin for the three months ended March 31, 1996 as compared to the same period in 1995 is due primarily to the reduction of higher margin product closed at the Partnership's Heathrow Community. Revenues from operating properties increased for the three months ended March 31, 1996 as compared to the same period in 1995 due to an increase in the number of members at Heathrow Golf and Country Club. Brokerage revenues decreased for the three months ended March 31, 1996 as compared to the same period in 1995 due primarily to the reduction in the number of closings of homes built by unaffiliated third-party builders within the Partnership's Heathrow and Atlanta Communities. Selling, general and administrative expenses continue to decrease due primarily to a reduction in marketing and administrative costs incurred, which is a direct result of the restrictions placed on future development and construction by the Partnership's lender. Interest and real estate taxes decreased for the three months ended March 31, 1996 as compared to the same period in 1995 due primarily to a decrease in the average amount of borrowings outstanding during the period. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Partnership has been named a defendant in a lawsuit filed in the Circuit Court in and for the Eighteenth Judicial Circuit, Seminole County, Florida entitled Land Investment I, Ltd., Heathrow Land & Development Corporation, Heathrow Shopping Center Associates, and Paulucci Investments v. Arvida/JMB Managers-II, Inc., Arvida/JMB Partners, L.P.-II, Arvida Company and JMB Realty Corporation. The complaint, as amended, includes counts for breach of the management agreement, breach of fiduciary duty, fraud in the inducement and conspiracy to commit fraud in the inducement, breach of the partnership agreement and rescission in connection with the purchase and management of the Heathrow development. Plaintiffs seek, among other things, unspecified compensatory damages, the right to add a claim for punitive damages, rescission, attorneys fees, costs, and such other relief as the Court deems appropriate. The Partnership believes that the lawsuit is without merit and intends to vigorously defend itself in this matter. The Partnership is not subject to any other material pending legal proceedings, other than ordinary litigation incidental to the business of the Partnership. However, reference is made to Notes for a discussion of certain claims asserted by Merrill Lynch for indemnification by the Partnership and the General Partner in connection with claims for arbitration filed by certain investors in the Partnership. ITEM 3. DEFAULTS ON SENIOR SECURITIES The Partnership's $67.5 million term loan has a certain loan-to-value covenant relative to the Partnership's Talega Property. Based upon an independent appraisal of Talega which was prepared on behalf of the Partnership's lender, the Partnership has not been in compliance with this covenant. On March 4, 1994, pursuant to the terms of this loan-to-value covenant, the Partnership received a notice of default from its lender. The Partnership was required to make a term loan payment, including accrued interest, of approximately $59 million in order to cure this default. The Partnership did not have the funds to make such payment. In addition, the Partnership's credit facilities matured on December 30, 1994. However, the Partnership did not have the funds to pay off the balances outstanding under the credit facilities. The Partnership has not made the required interest payments on its credit facilities since September 1994. The aggregate amount outstanding, including principal and all accrued and unpaid interest, on the Partnership's term loans and revolving line of credit at March 31, 1996 is approximately $128.1 million. In addition, as of March 31, 1996, the Partnership is liable under standby letters of credits for approximately $2,600,400. To date, the Partnership's lender has not pursued all of its remedies under the credit facility agreements relative to these defaults, which could include, among other things, the lender realizing upon its security interest in the Partnership's Properties. In March 1995, the Partnership and its lender entered into Forbearance Agreements pursuant to which, among other things, $3 million was deposited in a restricted collateral account to pay direct operational costs and general and administrative expenses of the Partnership's limited operations, subject to the approval of the lender of such costs and expenses and its continued forbearance from the exercise of its other remedies under the credit facility agreements. The Forbearance Agreement was modified on October 31, 1995 and the Partnership is currently operating under a plan to dispose of its assets. It is expected that any proceeds from the sale or other disposition of such assets, in excess of the costs and general and administrative expenses attributable thereto, will be paid to the lender or other creditors of the Partnership. Reference is made to Part I. Financial Information, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for a further discussion of the Partnership's liquidity and capital resources. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3. Amended and Restated Agreement of Limited Partnership incorporated herein by reference.* 4.1. Assignment Agreement by and among the Partnership, the General Partner, the Initial Limited Partner and the Holders of Interests incorporated herein by reference.* 4.2. $225 million Credit Agreement dated April 15, 1990 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. and Bank of America National Trust and Savings Association is incorporated herein by reference.** 4.3. Amended and Restated Credit Agreement dated June 23, 1992 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. and Bank of America National Trust and Savings Association is incorporated herein by reference.** 4.4. Various mortgages and other security interests dated April 30, 1992 related to Arvida/JMB Partners, L.P.-II's Heathrow, Talega, Wesmere, Wycliffe, Eagle Watch, Burnt Hickory Lakes, Rock Creek and SouthRidge Lakes properties which secure loans under the Amended and Restated Credit Agreement referred to in Exhibit 4.3 are incorporated herein by reference.** 4.5. Revolving Loan and Letter of Credit Facility Credit Agreement dated June 23, 1992 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. and Bank of America National Trust and Savings Association is incorporated herein by reference.** 4.6. Various mortgages and other security interests dated June 23, 1992 related to Arvida/JMB Partners, L.P.-II's Heathrow, Talega, Wesmere, Wycliffe, Eagle Watch, Burnt Hickory Lakes, Rock Creek and SouthRidge Lakes properties which secure loans under the Revolving Loan and Letter of Credit Facility Credit Agreement referred to in Exhibit 4.5 are incorporated herein by reference.** 4.7. Interim Bank Letter Agreement dated March 25, 1992 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A., Bank of America National Trust and Savings Association, and Unibank is incorporated herein by reference.** 4.8. Promissory Note effective July 1, 1992 between Arvida/JMB Partners, L.P.-II and Arvida/JMB Managers-II, Inc. is herein incorporated by reference. **** 4.9. Letter dated September 20, 1994 from the Partnership to Bank of America regarding the Partnership's acknowledgement that all proceeds from the sale of Collateral shall be delivered immediately to Co-Lenders is herein incorporated by reference to Exhibit 4.9 to the Partnership's Report on Form 10-Q (File No. 0-19245) filed on November 11, 1994. 4.10. Forbearance and Modification Agreement (Credit Agreement) dated March 21, 1995 by and among Arvida/JMB Partners, L.P.-II, Heathrow Development Associates, Ltd., Eagle Watch Partners, Bank of America Illinois and Bank of America National Trust and Savings Association is incorporated herein by reference. ***** 4.11. Forbearance and Modification Agreement (Amended and Restated Credit Agreement) dated March 21, 1995 by and among Arvida/JMB Partners, L.P.-II, Heathrow Development Associates, Ltd., Eagle Watch Partners, Bank of America Illinois and Bank of America National Trust and Savings Association is incorporated herein by reference. ***** 4.12. Letter Agreement dated October 31, 1995 supplementing Forbearance Agreements with Lenders is herein incorporated by reference.****** 10.1. Management, Advisory and Supervisory Agreement between the Partnership and Arvida Company is herein incorporated by reference.** 10.2. Revolving Credit Agreement dated September 27, 1989 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. is incorporated herein by reference.*** 10.3. First Amendment Credit Agreement dated December 21, 1989 to the Credit Agreement dated May 5, 1989 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. is incorporated herein by reference.*** 10.4. Second Amendment Credit Agreement dated January 31, 1990 to the Credit Agreement dated May 5, 1989 between Arvida/JMB Partners, L.P.-II and Continental N.A. is incorporated herein by reference.*** 10.5. Credit Agreement dated May 5, 1989 between Arvida Talega Limited Partnership and Continental Bank N.A. is incorporated herein by reference.*** 10.6. First Amendment Credit Agreement dated December 21, 1989 to the Revolving Credit Agreement dated September 27, 1989 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A. is incorporated herein by reference.*** 10.7. First Amended and Restated Limited Partnership Agreement of Heathrow Development Associates, Ltd. and Assignment of Partnership Interests dated January 17, 1990 are herein incorporated by reference.** 10.8. Amended and Restated Heathrow Management Agreement dated January 17, 1990 is herein incorporated by reference.** 10.9. Eagle Watch Partners General Partnership Agreement dated December 27, 1989 is herein incorporated by reference.** 10.10. Letter of Credit Agreement dated July 27, 1990 between Arvida/JMB Partners, L.P.-II and Santa Margarita Water District regarding collateral for Tax-Exempt Bond Financing is herein incorporated by reference.** 10.11. Agreement for the Payment of the Diemer Intertie Sublease Payments, Principal and Interest of Bonds of Improvement District No. 7 and Annual Budget Deficits Between Arvida/JMB Partners, L.P.-II and Santa Margarita Water District dated January 15, 1990 is herein incorporated by reference.* 10.12. Sale and Purchase Agreement dated August 3, 1993 by and between EW Golf Club, L.P., Eagle Watch Partners and Cloverleaf Investments, Inc. for the sale of the club facilities and other assets of the Eagle Watch Golf Club is herein incorporated by reference.**** 10.13. Stipulation and Settlement dated October 19, 1993 and Final Judgement and Order dated March 31, 1994 pertaining to the class action lawsuit is incorporated herein by reference.**** 10.14. Agreement for Purchase and Sale dated August 14, 1995 by and between Arvida/JMB Partners, L.P.-II and Heritage Development South, Inc. for the sale of certain real property within the Wesmere Community is incorporated herein by reference.****** 10.15. Agreement for Sale and Purchase of Real Property dated March 22, 1996 among Heathrow Development Associates, Ltd., Heathrow Cable Limited Partnership and Associates and Country Club, L.P. and 4/46A Corporation for the sale of the remaining land and certain related assets within the Heathrow Community is filed herewith. 10.16. Agreement for Option to Purchase and Purchase and Sale of Real Property and Escrow Instructions by and between Arvida/JMB Partners, L.P. - II and Seagate at San Clemente for the sale of the remaining land within Talega is filed herewith. * Previously filed with the Securities and Exchange Commission as Exhibit 3., 4.1 and 10.11 to the Partnership's Form 10-K (File No. 0-19245) filed on April 12, 1993 and incorporated herein by reference. ** Previously filed with the Securities and Exchange Commission as Exhibits 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 10.1, 10.7, 10.8, 10.9 and 10.10, respectively, to the Partnership's Form 10-K Report (File No. 0-19245) filed on April 13, 1992 and are herein incorporated by reference. *** Previously filed with the Securities and Exchange Commission as Exhibits 10.2, 10.3, 10.4, 10.5 and 10.6 to the Partnership's Form 10-K Report (File No. 0-19245) under the Securities Act of 1934 filed on March 28, 1990 and incorporated herein by reference. **** Previously filed with the Securities and Exchange Commission as Exhibits 4.8, 10.12 and 10.13, respectively, to the Partnership's Form 10-K (File No. 0-19245) filed on April 13, 1994 and incorporated herein by reference. ***** Previously filed with the Securities and Exchange Commission as Exhibits 4.9 and 4.10, respectively, to the Partnership's Form 10-Q (File No. 0-19245) filed on November 9, 1995 and incorporated herein by reference. ****** Previously filed with the Securities and Exchange Commission as Exhibits 4.12, 10.14 and 10.15, respectively, to the Partnership's Form 10- K Report (File No. 0-19245) under the Securities Act of 1934 filed on March 25, 1996 and incorporated herein by reference. (b) No reports on Form 8-K have been filed since the beginning of the period covered by this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. ARVIDA/JMB PARTNERS, L.P.-II BY: Arvida/JMB Managers-II, Inc. (The General Partner) By: GAILEN J. HULL Gailen J. Hull, Vice President Date: May 10, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person in the capacity and on the date indicated. GAILEN J. HULL Gailen J. Hull, Principal Accounting Officer Date: May 10, 1996 EX-10 2 AGREEMENT FOR SALE AND PURCHASE OF REAL PROPERTY between HEATHROW DEVELOPMENT ASSOCIATES, LTD., HEATHROW GOLF AND COUNTRY CLUB LIMITED PARTNERSHIP, HEATHROW CABLE LIMITED PARTNERSHIP and 4/46A CORPORATION March 22, 1996 TABLE OF CONTENTS Page Section 1. Definitions and References . . . . . . . . . . . .- 1 - Section 2. Purchase Price and Terms of Payment . . . . . . . . .- 7 - 2.1 Purchase Price . . . . . . . . . . . . . . . . . . . .- 7 - 2.2 Terms of Payment . . . . . . . . . . . . . . . . . . .- 7 - Section 3. Title Evidence . . . . . . . . . . . . . . . . . .- 8 - 3.1 Title Insurance Commitment . . . . . . . . . . . . . .- 8 - 3.2 Closing Commitment . . . . . . . . . . . . . . . . . .- 9 - 3.3 Survey . . . . . . . . . . . . . . . . . . . . . . . .- 9 - Section 4. Seller's Representations and Warranties. . . . . - 10 - 4.1 Organization and Standing of Seller. . . . . . . . . - 10 - 4.2 Due Execution and Performance. . . . . . . . . . . . - 10 - 4.3 Binding Agreements . . . . . . . . . . . . . . . . . - 11 - 4.4 Compliance . . . . . . . . . . . . . . . . . . . . . - 11 - 4.5 Hazardous Substances . . . . . . . . . . . . . . . . - 11 - 4.6 Litigation . . . . . . . . . . . . . . . . . . . . . - 11 - 4.7 Condemnation . . . . . . . . . . . . . . . . . . . . - 12 - 4.8 Seller's Records . . . . . . . . . . . . . . . . . . - 12 - 4.9 Accuracy of Representations. . . . . . . . . . . . . - 12 - 4.10 Limitation of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 - Section 5. Buyer's Representations and Warranties . . . . . - 14 - 5.1 Organization, Standing and Qualification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 - 5.2 Due Execution and Performance. . . . . . . . . . . . - 14 - 5.3 Binding Agreements . . . . . . . . . . . . . . . . . - 14 - Section 6. Covenants. . . . . . . . . . . . . . . . . . . . - 15 - 6.1 Compliance . . . . . . . . . . . . . . . . . . . . . - 15 - 6.2 Notices of Violations. . . . . . . . . . . . . . . . - 15 - 6.3 Operation and Maintenance of the Property. . . . . . - 15 - 6.4 Status of Agreements . . . . . . . . . . . . . . . . - 16 - 6.5 Hart-Scott-Rodino Filing . . . . . . . . . . . . . . - 16 - 6.6 Liens. . . . . . . . . . . . . . . . . . . . . . . . - 17 - Section 7. Inspection Period. . . . . . . . . . . . . . . . - 17 - 7.1 Inspection Period. . . . . . . . . . . . . . . . . . - 17 - 7.2 Termination by Buyer . . . . . . . . . . . . . . . . - 18 - 7.3 Cooperation. . . . . . . . . . . . . . . . . . . . . - 18 - Section 8. Closing. . . . . . . . . . . . . . . . . . . . . - 18 - 8.1 Time and Place . . . . . . . . . . . . . . . . . . . - 18 - 8.2 Closing Expenses . . . . . . . . . . . . . . . . . . - 19 - 8.3 Delivery of Documents by Seller. . . . . . . . . . . - 19 - 8.4 Delivery by Buyer. . . . . . . . . . . . . . . . . . - 21 - 8.5 Credits and Prorations . . . . . . . . . . . . . . . - 22 - Section 9. Agents, Brokers and Financial Advisors . . . . . - 24 - Section 10. Survival of Representations, Warranties and Agreements. . . . . . . . . . . . . . . . . . . . . . . . . - 25 - 10.1 Survival. . . . . . . . . . . . . . . . . . . . . . - 25 - Section 11. Default. . . . . . . . . . . . . . . . . . . . . - 25 - 11.1 Buyer's Default . . . . . . . . . . . . . . . . . . - 25 - 11.2 Seller's Default. . . . . . . . . . . . . . . . . . - 25 - Section 12. Risk of Loss . . . . . . . . . . . . . . . . . . - 26 - 12.1 Casualty. . . . . . . . . . . . . . . . . . . . . . - 26 - 12.2 Condemnation. . . . . . . . . . . . . . . . . . . . - 26 - Section 13. Third Party Sales. . . . . . . . . . . . . . . . - 27 - Section 14. Miscellaneous. . . . . . . . . . . . . . . . . . - 28 - 14.1 Litigation. . . . . . . . . . . . . . . . . . . . . - 28 - 14.2 Escrow Obligations of Title Agent . . . . . . . . . - 28 - 14.3 Notices . . . . . . . . . . . . . . . . . . . . . . - 29 - 14.4 Integration and Severability. . . . . . . . . . . . - 31 - 14.5 Successors and Assigns. . . . . . . . . . . . . . . - 31 - 14.6 Construction. . . . . . . . . . . . . . . . . . . . - 32 - 14.7 Governing Law . . . . . . . . . . . . . . . . . . . - 32 - 14.8 Invalid Provisions. . . . . . . . . . . . . . . . . - 32 - 14.9 Counterparts. . . . . . . . . . . . . . . . . . . . - 32 - 14.10 Confidentiality. . . . . . . . . . . . . . . . . . - 32 - 14.11 No Waiver of Default . . . . . . . . . . . . . . . - 32 - 14.12 Radon Gas. . . . . . . . . . . . . . . . . . . . . - 33 - 14.13 Recourse Limited to Seller; Survival . . . . . . . - 33 - EXHIBITS E-1 - Description of Land E-2 - Purchase Price Allocation E-3 - Stated Values SCHEDULES S-1(ab) - Personalty S-1(ab)(3) - Marketing Fees S-1 (i) - Contracts S-1 (x) - Membership Categories S-4.2 - Required Consents S-4.4 - Compliance S-8.5(d) - Bonds and Letters of Credit AGREEMENT FOR SALE AND PURCHASE OF REAL PROPERTY THIS AGREEMENT is made among HEATHROW DEVELOPMENT ASSOCIATES, LTD. ("Associates"), a Florida limited partnership, HEATHROW GOLF AND COUNTRY CLUB LIMITED PARTNERSHIP ("Country Club LP"), a Delaware limited partnership, and HEATHROW CABLE LIMITED PARTNERSHIP, ("Cable LP," and jointly and severally with Associates and Country Club LP, each as to the Property which it owns and herein agrees to sell and convey, the "Seller"), and 4/46A CORPORATION (the "Buyer"), a Florida corporation. Seller is the owner/developer of substantially all of the undeveloped, and the developed but unsold, land within the planned community situated in Seminole County, Florida generally known as "Heathrow", and owner and operator of the golf and country club and cable television system within and serving the Heathrow community. Pursuant to this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the assets and rights related to the Heathrow community herein described, on the following terms and conditions: Section 1. Definitions and References. The following terms, as used in this Agreement, have the following meanings and references unless the context is inconsistent therewith: (a) "Agreement Date" means the first date upon which this Agreement has been executed by both Seller and Buyer. (b) "Affiliate" means a Person which controls, is in common control with or is controlled by, another Person. A Person will be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. (c) "Business Day" means any day when commercial banks in Orlando, Florida are required to be open for business. (d) "Cable System" means the existing cable television receiving and distribution system serving Heathrow, including antennae, above-ground and underground cable, distribution systems, earth satellite receiving stations, headend, cable amplifier, line splitting devices, feeders, conduit, drops and other equipment; and all easements granted by plats of property in Heathrow for the benefit of public utility companies or reserved for the use of "Community Systems" (as defined in various neighborhood declarations of covenants and restrictions affecting portions of Heathrow), and the easements rights pursuant to instrument dated January 17, 1990, filed for record January 18, 1990, and recorded in Official Records Book 2144, at Page 1091, of the Public Records of the County. However, the Cable System excludes any assets of Southern Bell Telephone & Telegraph Company, including the Transport System in accordance with the terms of that certain Agreement dated July 6, 1987 between Southern Bell Telephone & Telegraph Co. and Telcom International; any agreements, rights or obligations of Seller with respect to Seller's or the Heathrow cable system's employees or contractors, except Contracts with contractors, if any; any insurance policies; cash or cash equivalents on hand or in bank accounts; performance or other bonds maintained by Seller, if any; and the names "Arvida"; "JMB"; "Arvida/JMB" and derivatives thereof. (e) "Closing" means the consummation of the sale and conveyance of the Property by Seller to Buyer and payment of the Purchase Price by Buyer to Seller, pursuant to Section 8 of this Agreement. (f) "Closing Commitment" means the modified or endorsed Title Commitment, or the Title Policy, to be delivered to Buyer at Closing as set forth in Section 3.2 of this Agreement. (g) "Closing Date" means the date upon which the Closing occurs, as set forth in Section 8.1 of this Agreement. (h) "Club" means Heathrow Golf and Country Club, a private membership club owned and operated by Country Club LP. (i) "Contracts" means all assignable or transferable contracts, commitments, agreements, land and/or equipment leases (including any golf cart lease) and other obligations, written or oral (exclusive of this Agreement), governing or relating to sale, maintenance, occupancy, use or operation of the Property, including the agreements set forth in Schedule S-1(i). (j) "Country Club LP" means Heathrow Golf and Country Club Limited Partnership, a Delaware limited partnership, of which Seller is the sole limited partner and Arvida/Heathrow Club, Inc., a Delaware corporation, is the sole general partner. (k) "County" means Seminole County, a political subdivision of the State of Florida. (l) "Declarant's Rights" means all rights, powers, duties, obligations and responsibilities, if any, pursuant to declarations of covenants, conditions and restrictions encumbering all or portions of Heathrow, including all rights to exercise dominion and control over one or more property owner's associations. (m) "Deposit" is defined in Section 2.2(a). (n) "Hazardous Substances" means (i) those substances included within the definitions of "hazardous substances," "hazardous materials," "toxic substances" or "solid waste" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., or the Clean Water Act, 33 U.S.C. Section 1321 et seq., and in the regulations promulgated pursuant thereto; (ii) those substances listed in the United States Department of Transportation Table (49 CFR Section 172.101) or by the Environmental Protection Agency as "hazardous substances," (iii) such other substances, materials and wastes which are regulated, or classified as hazardous or toxic, under applicable local, state or federal law or regulations, and (iv) any material, waste or substance which is or contains petroleum, regulated amounts of asbestos, polychlorinated biphenyls, flammable explosives or radioactive materials. "Hazardous Materials" does not include materials stored or used on the Land in the ordinary course of the business conducted on the Land. (o) "Heathrow" means the planned community within which the Land is situated, generally known and referred to as Heathrow. (p) "Herein" or "hereof" means this entire Agreement rather than just the sentence, paragraph or section in which used. (q) "Including," "include" or "includes" mean including as an example, without limiting the generality of the universe to which reference is made. (r) "Inspection Indemnity" is defined in Section 7.1. (s) "Inspection Period" is defined in Section 7.1. (t) "Inspection Termination Date" is defined in Section 7.1. (u) "Knowledge" or "best knowledge" (i) of Seller means the actual knowledge of Ed Hill, Stephen A. Lovelette, Joseph Debosh and Peter Albe, and (ii) of Buyer means the actual knowledge of George Apostolicas. (v) "Land" means all real property of Seller situated in Heathrow, including the real property described on Exhibit E-1, together with all tenements, hereditaments, easements, privileges, reversions, remainders and other rights and appurtenances belonging or in any manner appertaining thereto, including all reversionary interests in and to any adjoining or abutting rights-of-way and all riparian, littoral and other water rights, and all buildings and improvements thereon. (w) "Memberships" means all memberships in the Club, including all classes and categories of membership as set forth in Schedule S-1(x). (x) "Permits" means all assignable or transferable permits, approvals, orders, licenses, entitlements and other authorizations held or procured by and/or issued to Seller and governing or applicable or relating to the design and/or planning, development, construction upon, furnishing, equipping, use, operation or maintenance of the Property, or any portion(s) thereof, and the ownership and operation of the Club and the Cable System. (y) "Permitted Exceptions" means the title exceptions set forth in Schedule B, Section II of the Title Commitment approved by Buyer, and to be included in the Title Policy pursuant to Section 3.1 hereof. (z) "Person" means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise, or any government or political subdivision or any agency, department or instrumentality thereof. (aa) "Personalty" means all plans, specifications, drawings, inventory and other tangible or intangible (including impact fee credits) personal property owned by Seller and used exclusively in connection with use, development, construction, marketing and sale of the Land and operation of the Club and Cable System, including the Contracts, Permits, Proprietary Rights, nonresident Club member notes receivable for deferred initiation fees and the property described in Schedule S-1(ab), but excluding (1) cash, (2) accounts receivable (including resident Club member notes receivable for deferred initiation fees) and (3) marketing fees payable to Seller by third parties pursuant to contracts (including Third Party Contracts closed prior to Closing hereunder) for sale of land in Heathrow payable to Seller upon issuance of a building permit or closing of a construction loan with respect to the applicable land, as set forth in Schedule S-1(ab)(3). (ab) "Presale Premium" defined in Section 13. (ac) "Property" means the Land and Personalty. (ad) "Proprietary Rights" means the common law and registered rights in trade names, and all existing stocks of sales brochures, promotional and marketing materials other than those describing Heathrow as an "Arvida Community", telephone numbers and addresses and other intangibles, if any, owned and/or used by Seller in connection with the Land and/or the business(es) conducted with respect thereto, but excluding the names "Arvida", "JMB," "Arvida/JMB" and derivatives thereof; and reserving to Seller and its Affiliates the nonexclusive right to use the name "Heathrow," and derivatives thereof heretofore used by Seller with respect to the Property, to refer to and describe Seller's association with and involvement in Heathrow. (ae) "Purchase Price" is defined in Section 2.1. (af) "Readjustment Period" is defined in Section 9.5. (ag) "Stated Value(s)" is defined in Section 13. (ah) "Survey" means the ALTA survey of the Land to be prepared by the Surveyor, as set forth in Section 3.3. (ai) "Surveyor" means such licensed Florida land surveyor as to which Seller and Buyer mutually agree. (aj) "Third Party Contract" is defined in Section 13. (ak) "Title Agent" means White & Case, as agent for the Underwriter by whom the Title Commitment and Title Policy are to be issued. (al) "Title Commitment" means the ALTA Owner Marketability Title Insurance Commitment (1992 Form) issued or to be issued to Buyer with respect to the Land, as set forth in Section 3.1, which will include copies of all matters for which exception is made in Schedule B, Section II thereof. (am) "Title Policy" means the ALTA Owner Marketability Title Insurance Policy to be issued to Buyer (and Buyer's institutional lender, if applicable) pursuant to the Title Commitment. (an) "Underwriter(s)" means an insurer acceptable to Buyer, for and upon whom the Title Commitment and Title Policy are to be written and issued. Section 2. Purchase Price and Terms of Payment. 2.1 Purchase Price. The purchase price for the Property (the "Purchase Price") will be a sum of Twenty Million Three Hundred Thousand Dollars U.S. ($20,300,000.00), allocated to the assets included in the Property as set forth in Exhibit E-2 hereof. 2.2 Terms of Payment. The Purchase Price will be paid as follows: (a) Buyer will deliver to Title Agent a deposit (the "Deposit") in the amount of $500,000.00, as follows: (i) One Hundred Thousand Dollars ($100,000.00) on the Agreement Date; and (ii) Four Hundred Thousand Dollars ($400,000.00) on or before the Inspection Termination Date, to be held in escrow by Title Agent as security for performance by Buyer of its obligations pursuant to this Agreement, and delivered by Title Agent to Seller at Closing in partial payment of the Purchase Price or otherwise disbursed in accordance with the terms of this Agreement; and (b) the balance of the Purchase Price, subject to the prorations and adjustments for which provision is made elsewhere in this Agreement, will be paid by Buyer to Seller at Closing by wire transfer of immediately available federal funds. The Deposit will be held by Title Agent in an interest-bearing escrow account, or, pursuant to joint instructions by Seller and Buyer, invested in securities of the United States government, and all earnings thereon will constitute a portion of the Deposit and will accrue to Buyer unless Buyer defaults pursuant to the terms of this Agreement. Section 3. Title Evidence. 3.1 Title Insurance Commitment. Within 20 days after the Agreement Date, Seller will cause the Title Agent to issue the Title Commitment in an amount equal to the Purchase Price of the Land (with such affirmative assurances and endorsements as reasonably may be obtainable and requested by Buyer) and having an effective date subsequent to the Agreement Date. The Title Commitment will show that Seller is vested with and can convey to Buyer good and marketable and insurable fee simple title to the Land subject only to the Permitted Exceptions. Buyer will have until the Inspection Termination Date to cause the Title Commitment and Survey to be examined and to notify Seller of any defects in Seller's title reflected by the Title Commitment and/or Survey, or to the form or amount thereof. Seller agrees to make a reasonable good faith effort to cure or remove, at or before Closing, any title defect, exclusive of the filing or prosecution of suits or any expenditures in excess of Fifty Thousand Dollars ($50,000.00) in the aggregate, and to pay or transfer to security any lien(s) against the Land in a liquidated amount of $50,000.00 or less in the aggregate. If Seller fails or is unable to cure or remove any title defect prior to the Closing Date, Seller may, at its option, postpone Closing of this Agreement for a period of up to 120 days during which Seller may continue to endeavor to cure or remove any title defect as aforesaid. If Seller fails or is unable to cure or remove any defect in title as aforesaid, Buyer, at Buyer's option, will either: (a) accept title to the Land in its then-existing condition without reduction in or credit against the Purchase Price; or (b) terminate this Agreement by written notice to Seller, upon which the Deposit will be refunded to Buyer and this Agreement will be null and void and the parties hereto will have no further rights or obligations hereunder except with respect to the Inspection Indemnity. 3.2 Closing Commitment. At Closing, the Title Agent will issue to Buyer the Closing Commitment consisting of either (a) a Title Policy pursuant to the terms of the Title Commitment with all standard printed exceptions deleted, and any applicable endorsements thereto; or (b) an endorsement to the Title Commitment, or a "marked up" duplicate original of the Title Commitment, reflecting that all requirements of the Title Commitment have been fulfilled or waived and eliminating the "gap exception," the standard ALTA exceptions and any other exceptions to which Buyer has reasonably objected, and extending the effective date of coverage through recording of the deed of conveyance to Buyer. 3.3 Survey. As soon as practicable, but in any event within five (5) days after the Agreement Date, Seller will deliver to Buyer copies of any existing surveys of the Land in Seller's possession, and Buyer, at Buyer's option and expense, may thereafter cause the Surveyor to prepare and deliver to Buyer a current survey of the Land (the "Survey") conforming to the "Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys" jointly established and adopted by the ALTA and ACSM in 1988 and meeting the accuracy requirements of a Class A Survey, as defined therein; and showing and describing the exterior boundaries and corner markers or monuments of the Land, the size and location of any improvements, any encroachments, easements, rights-of-way or other conditions to which the Land is subject, and the legal description and area of the Land. If the Survey shows any encroachment, hiatus or other condition which affects the marketability of title to the Land, Buyer will have the right during the Inspection Period to object to such condition as a defect in title pursuant to provisions of Section 3.1 hereof. After approval of the Survey by Buyer, the legal description of the Land will be as set forth in the Survey, provided that it reasonably conforms to the descriptions in the instruments pursuant to which Seller acquired and holds title to the Land. Section 4. Seller's Representations and Warranties. Seller hereby represents and warrants to Buyer as follows: 4.1 Organization and Standing of Seller. Associates is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Florida, and Country Club LP and Cable LP are limited partnerships duly organized, validly existing and in good standing under the laws of Delaware and duly qualified to transact business in the State of Florida, and each Seller has all requisite power and authority to own its properties and assets and to carry on its business as now being conducted and full power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, including the execution, delivery and performance of each of the documents required to be delivered by Seller to Buyer pursuant to this Agreement, and any and all other documents or instruments necessary or desirable to the consummation hereof. 4.2 Due Execution and Performance. This Agreement has been, and the deed of conveyance and all other documents, instruments and agreements required to be delivered by Seller pursuant to or in connection with this Agreement will be when executed and delivered, duly authorized, executed and delivered by Seller and constitute the legal, valid and binding obligations of Seller enforceable in accordance with their respective terms, subject only to general principles of equity, bankruptcy, insolvency or similar laws affecting enforcement of creditors' rights generally as the same may be applicable to any insolvency of Seller or Buyer. Except as shown in Schedule S-4.2, neither the execution, delivery or performance of this Agreement, or any document, instrument or agreement required to be delivered by Seller pursuant hereto, nor the consummation of the transactions contemplated hereby, is prohibited by, or requires Seller to obtain the consent, approval or authorization of, or notice to or filing or registration with, any Person having jurisdiction over the Land; and Seller has obtained the agreement of Bank of America Illinois and/or its Affiliate to deliver its consent, or declination to consent, within one (1) week after receipt of a copy of this Agreement (which consent, if any, will be in the form of a letter approving this Agreement and agreeing to satisfy the existing first mortgage against the Property upon Closing hereunder and payment to Bank of America Illinois and/or its Affiliate, or their nominee(s), of the net cash proceeds of such Closing). 4.3 Binding Agreements. The execution and delivery by Seller of this Agreement and the performance by Seller of its obligations hereunder do not and will not (a) conflict with any provision of the certificate of limited partnership or other governing documents of Seller; or (b) to the best of Seller's knowledge conflict with, or result in a breach of or a default or violation under, any contract, agreement or arrangement to which Seller is a party or any statute, decree, judgment, regulation, order or rule of any governmental authority having jurisdiction over Seller or the Property. 4.4 Compliance. Except as set forth in Schedule 4.4, Seller has received no written notice and has no actual knowledge of any material violation of existing covenants, restrictions, permits, laws, ordinances or regulations governing the development and use of the Property. 4.5 Hazardous Substances. Except for matters, if any, described in reports made available for inspection by Buyer, Seller has received no written notice and has no actual knowledge of (i) any Hazardous Substance illegally present on or within the Land, (ii) any present or past illegal generation, recycling, reuse, sale, storage, handling, transport and/or disposal of any Hazardous Substance on or within the Land other than in accordance with applicable law, or (iii) any failure to comply with any applicable local, state or federal environmental laws, regulations, ordinances or administrative or judicial orders relating to the generation, recycling, reuse, sale, storage, handling, transport and/or disposal of any Hazardous Substance. 4.6 Litigation. There is no legal action or suit pending, or to the knowledge of Seller threatened, against Seller affecting Seller's title to the Property. Seller has advised Buyer of the pending action in [Palucci v. Arvida] relating to Seller's prior acquisition and operation of Heathrow. 4.7 Condemnation. Seller has not received written notice of condemnation proceedings with respect to of any portion of the Land. 4.8 Seller's Records. It is Seller's general practice to maintain the originals or copies of books and records directly related to the Heathrow at Seller's development office in Heathrow, and Seller has not intentionally removed any books or records directly related to Heathrow with the express intention by such removal to deprive Buyer of access thereto or to secrete such books and records from Buyer. 4.9 Accuracy of Representations. Taking into account the limitation to Seller's knowledge of any of the foregoing representations and warranties, all statements and information of Seller set forth in this Agreement are, and on and as of the Closing Date will be, true and correct in all material respects. 4.10 Limitation of Representations and Warranties. Buyer acknowledges that except as specifically set forth in this Section 4, Buyer acknowledges and agrees that the Property is being sold and conveyed "as is", "where is" and "with all faults", and Seller has not made, does not make and specifically negates and disclaims any representations, warranties, promises, covenants, agreements or guaranties of any kind or character whatsoever, whether express or implied, oral or written, past, present or future, of, as to, concerning or with respect to (i) the value, nature, quality or condition of the Property, including, without limitation, the water, soil and geology, (ii) the income to be derived from the Property, (iii) the suitability of the Property for any and all activities and uses which Buyer may conduct thereon or with respect thereto, (iv) the compliance of or by the Property of its operation with any laws, rules, ordinances or regulations of any applicable governmental authority or body, including, but not limited to, compliance with any special use permits or developments of regional impact, (v) the habitability, merchantability, marketability, profitability or fitness for a particular purpose of the Property, (vi) the manner or quality of the construction of materials, if any, incorporated into the Property, (vii) the manner, quality, state of repair or lack of repair of the Property, (viii) the existence of hazardous materials or governmental requirements at the Property, (ix) the existence, quality, nature, adequacy or physical condition of any utilities serving the Property, (x) the value or development potential of the Property, or (xi) any other matter with respect to the Property; and specifically, that Seller has not made, does not make and specifically disclaims any representations regarding concurrence, or compliance with any special use permits, developments of regional impact, environmental protection, pollution or land use laws, rules, regulations, orders or requirements, including the existence in or on the Property of hazardous materials. Buyer further acknowledges and agrees that it has been given an ample opportunity to inspect the Property, and Buyer is relying solely on its own investigation of the Property and not on any information provided or to be provided by Seller; and at Closing Buyer will accept the Property and waive all objections or claims against Seller (including, but not limited to, any right or claim or contribution) arising from or related to the Property and any claim it has, might have had or may have against Seller with respect to the condition of the Property, either patent or latent. Buyer further acknowledges and agrees that any information provided or to be provided with respect to the Property was obtained from a variety of sources and that Seller has not made any independent investigation or verification of such information and makes no representations as to the accuracy or completeness of such information. Seller is not liable or bound in any manner by any verbal or written statements, representations or information pertaining to the Property, or the operation thereof, furnished by any person. It is understood and agreed that the Purchase Price has been adjusted by prior negotiation to reflect that all of the Property is sold by Seller and purchased by Buyer subject to the foregoing. The provisions of this paragraph will survive the Closing. Section 5. Buyer's Representations and Warranties. Buyer hereby represents and warrants to Seller as follows: 5.1 Organization, Standing and Qualification of Buyer. Buyer (i) is a corporation duly organized and validly existing under the laws of the State of Florida; (ii) has all requisite power and authority to own its properties and assets and to carry on its business now being conducted; and (iii) has full power and authority to execute, deliver and perform this Agreement and consummate the transactions contemplated hereby, including the execution, delivery and performance of each of the documents required to be delivered by Buyer to Seller pursuant to this Agreement, and any and all other documents or instruments necessary or desirable to the consummation hereof. 5.2 Due Execution and Performance. This Agreement has been, and the documents, instruments and agreements required to be delivered by Buyer pursuant to or in connection with this Agreement will be when executed and delivered, duly authorized, executed and delivered by Buyer and constitute the legal, valid and binding obligations of Buyer enforceable in accordance with their respective terms, subject only to general principles of equity, bankruptcy, insolvency or similar laws affecting enforcement of creditors' rights generally as the same may be applicable to any insolvency of Buyer or Seller. Neither the execution, delivery or performance of this Agreement, or any document, instrument or agreement required to be delivered by Buyer pursuant hereto, nor the consummation of the transactions contemplated hereby, is prohibited by, or requires Buyer to obtain the consent, approval or authorization of, or notice to or filing or registration with, any Person. 5.3 Binding Agreements. The execution and delivery by Buyer of this Agreement and the performance by Buyer of its obligations hereunder do not and will not (a) conflict with any provision of the articles of incorporation, bylaws or other governing documents of Buyer; or (b) to the best of Buyer's knowledge conflict with, or result in a breach of or a default or violation under, any contract, agreement or arrangement to which Buyer is a party or any statute, decree, judgment, regulation, order or rule of any governmental authority having jurisdiction over Buyer. Section 6. Covenants. 6.1 Compliance. Prior to the Closing, Seller will make a reasonable good faith effort to comply with and abide by all of the covenants, conditions and requirements set forth or imposed by, related to or arising out of all statutes, laws, ordinances, rules, regulations, plans, Permits, authorizations or approvals related or applicable to any portions of the Property. Neither Seller, nor any Person claiming by, through or under Seller, will apply for or seek to obtain any modification or amendment to, or release from, any statute, law, ordinance, rule, regulation, plan, approval or authorization applicable to the Property if the granting of such modification, amendment or release would have a material adverse effect upon the Property, unless Seller first obtains the consent of Buyer. 6.2 Notices of Violations. Prior to Closing, in the event that Seller receives any notice from the County, or any other governmental or quasi-governmental authority having jurisdiction over the Property, of a violation or alleged violation of any statute, law, ordinance, rule or regulation applicable to the Property or of any contemplated or pending investigation with respect thereto, Seller will deliver a copy of such notice to Buyer; and Buyer will have the option (but will not be required) to participate with Seller in responding to such notice. 6.3 Operation and Maintenance of the Property. Except as permitted by Section 14 hereof, prior to Closing Seller will cause the Property to be operated and maintained in the usual and ordinary course of business and in accordance with Seller's current practices, maintain inventories and accounts payable at normal levels (taking into account the currently limited operations of Seller), and make a reasonable good faith effort to preserve the Property in the same state of condition and repair as existing on the Agreement Date. 6.4 Status of Agreements. From and after the Agreement Date until the Closing Date, without Buyer's approval (a) Seller may enter into new Contracts for normal Property operation and/or maintenance with respect to any such Contracts which expire between the Agreement Date and the Closing Date, provided that such new Contract is on substantially the same terms and conditions as the expiring Contract except that it may provide for an increase in the annual compensation to the service provider under such Contract which is reasonably expected not to exceed seven and one-half percent (7 1/2%) of the prior year's compensation; and (b) with respect to any other existing Contract of Seller or any other new Contract of Seller, Seller may make or permit any amendment or modification to any such existing Contract, or enter into any such new Contract, provided that such Contract (as modified, if applicable) either is terminable without penalty on not more than thirty (30) days notice, or involves the expenditure of not more than One Hundred Thousand Dollars ($100,000.00) over the term of such Contract; and Seller agrees to deliver to Buyer a copy of any such Contract, or amendment or modification thereto, within three (3) business days after the execution thereof. Except as specifically set forth in this Section 6.4, from and after the date specified in the preceding sentence Seller will not make any amendment or modification to any existing, or enter into any new, Contract, Permit or other document materially affecting the Property, and will not intentionally do any act or omit to do any act that will cause a material breach of any Contract or Permit without Buyer's express prior written consent. Notwithstanding the foregoing, however, Seller will amend or permit amendment of any Permits to the extent necessary to keep such Permits in good standing, and may amend or permit amendment to any Contract provided that such Contract, as amended, expires without penalty or premium within not more than 30 days after Closing, and that such modification or amendment does not result in any expense or liability to Buyer. 6.5 Hart-Scott-Rodino Filing. Buyer and Seller acknowledge that the transactions contemplated by this Agreement may be subject to pre-clearance under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended ("H-S-R"). In such event, Buyer and Seller each agrees to furnish such information, and to make such filings, as may be required under H-S-R or the rules and regulations thereunder and to reasonably cooperate with each other to cause such filings to be made as soon as reasonably practicable. It shall be a condition to closing the transactions hereunder that either all required approvals have been obtained or all required waiting periods have expired or been terminated under H-S-R, and the date of the Closing, to the extent necessary, may be extended for a reasonable period in order for such approvals to be received or for such required waiting periods to expire or be terminated. Buyer will pay all filing and other similar fees due in connection with such filings at the time such filings are made. Buyer and Seller will each pay its own attorneys' and accountants' fees and expenses in connection with the preparation of such filings. 6.6 Liens. Seller will cause all bills for labor, services or work performed or rendered upon the Land, or for materials or supplies furnished or delivered to the Land, prior to Closing to be paid promptly. Section 7. Inspection Period. 7.1 Inspection Period. Buyer will have the right, during the period (the "Inspection Period") from and after the Agreement Date through 11:59 P.M. on April 26, 1996 (the "Inspection Termination Date"), to inspect and evaluate the physical and other conditions of or with respect to the Property, including the right to make such engineering and soil tests, analyses and other investigations on or of the Land as Buyer deems necessary and appropriate, to review, and to make and retain copies of documents relating to the Property and in Seller's possession or control, and to investigate, evaluate and/or review any other facts, circumstances or matters which Buyer deems relevant to its proposed purchase of the Property; Seller agrees to cooperate with Buyer at no material expense to Seller, in making available to Buyer documents and materials in Seller's possession or control (whether in Seller's Heathrow office or Seller's other offices) which Buyer requests. Buyer hereby agrees (a) to indemnify, protect and hold harmless Seller from and against any and all claims, demands, losses, costs, damages, expenses or liabilities for personal injury or property damage, or for mechanics' or other liens, including reasonable attorneys' fees, caused by Buyer's inspections of the Property, and (b), if the Closing does not occur, to repair and restore the Property to the condition existing prior to any test or inspection by or for Buyer (the foregoing (a) and (b), the "Inspection Indemnity"). 7.2 Termination by Buyer. (a) Buyer will have the right, which may be exercised by delivering written notice to Seller any time during the Inspection Period, to terminate this Agreement for any reason which Buyer, in its sole and absolute discretion, deems appropriate, upon which the Deposit will be returned to Buyer and this Agreement will be null and void and the parties hereto will have no further rights or obligations hereunder except with respect the Inspection Indemnity. (b) If Buyer elects to terminate this Agreement pursuant to Section 7.2(a), Buyer will return to Seller all documents and other materials provided by Seller to Buyer, and copies of all studies, evaluations, test reports and similar information which Buyer has produced or caused to be produced regarding the Property, in connection with its investigations pursuant to this Section 7. (c) If Buyer fails to deliver to Seller written notice of termination of this Agreement on or before the Inspection Termination Date, Buyer conclusively will be deemed to have waived its right to terminate as set forth in this Section 7, time being of the essence with respect thereto. 7.3 Cooperation. During the Inspection Period, Seller agrees at Buyer's request and at no cost to Seller to join in applications for permits, approvals and authorizations related to Buyer's proposed future use and development of the Land, provided that no such application could result in any change in the legal status of the Land that could be binding upon Seller or the Land if the transaction which is the subject of this Agreement is not closed. Section 8. Closing. 8.1 Time and Place. Unless extended pursuant to the provisions of this Agreement, the Closing will take place commencing at 10:00 A.M. at the office of Underwriter in Orlando, Florida, or such other location as to which Seller and Buyer agree, on May 29, 1996, or earlier upon five (5) days prior written notice by Buyer to Seller. 8.2 Closing Expenses. At or before Closing: (a) Seller will pay, or Buyer will receive a credit against the Purchase Price in an amount equal to, the cost of recording any corrective instruments; (b) Buyer will pay the cost of recording the conveyancing documents from Seller to Buyer; (c) Seller and Buyer will share equally the cost of documentary taxes and surtaxes, if any, due on the deed of conveyance, the cost of the Survey, if any, and the premium (at minimum promulgated rates) for the Title Policy; and (d) each party will pay any fees due to its attorneys or other consultants. 8.3 Delivery of Documents by Seller. At the Closing, in addition to any other documents specifically required to be delivered or acts required to be done pursuant to this Agreement, Seller will deliver, or cause to be delivered, to Buyer the following (all of which will be in form reasonably acceptable to Buyer): (a) a special warranty deed conveying title to the Land, subject only to the Permitted Exceptions; (b) a bill of sale conveying title to the Personalty (other than the Contracts, Permits and Proprietary Rights); (c) an assignment, without recourse, and assumption of the Contracts, Permits and Proprietary Rights; (d) a recordable assignment, without recourse, and assumption of the Declarant's Rights, if any; (e) an assignment, without recourse, and assumption of all of Country Club LP's rights, powers, duties, obligations and responsibilities with respect to the Memberships and the ownership and operation of the Club (excluding accounts receivable and resident Club member notes receivable for deferred initiation fees, but including nonresident Club member notes receivable for deferred initiation fees); (f) an assignment, without recourse, and assumption of all of Cable LP's rights, powers, duties, obligations and responsibilities with respect to ownership and operation of the Cable System; (g) certified copies of resolutions of the general partner of Seller (or of the general partner of the general partner, with respect to Associates) authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; (h) a certificate of an authorized officer of the general partner of Seller (or of the general partner of the general partner, with respect to Associates), dated as of the Closing Date, certifying that (i) the representations and warranties of Seller contained in this Agreement (except those deemed waived by Buyer) are true on and as of the Closing Date in all material respects with the same effect as if said representations and warranties were made on and as of the Closing Date; and (ii) Seller is in sole and exclusive possession of the Land and no other Person has any right or claim to possession thereof; (i) a certificate of the Secretary or an Assistant Secretary of the general partner of Seller (or the general partner of the general partner, with respect to Associates), dated as of the Closing Date, certifying as to the incumbency of the officers of the general partner of Seller (or the general partner of the general partner of Associates) executing the documents delivered by Seller pursuant to this Agreement; (j) a statement reflecting the true and accurate results of searches of the Uniform Commercial Code (UCC) records of the Secretary of the State of Florida and the Clerk of the Circuit Court of the County, dated as close to Closing as practicable under procedures of such offices and showing that except as shown by the Title Commitment there are no UCC financing statements filed of record affecting Seller's interest in the Property; (k) an affidavit complying with the provisions of Section 1445(b)(2) of the Internal Revenue Code of 1986, as amended, stating that Seller is not a foreign person; (l) the Closing Commitment; and (m) the originals of all Permits, plans and specifications and Contracts in the possession of Seller, and copies in the possession of Seller where the originals are not. Each of the assignments for which provision is made in Sections 8.3(c)-(f) will contain an indemnification by Seller in favor of Buyer with respect to all claims related to or arising out of events or circumstances occurring or existing prior to the Closing Date, and an indemnification by Buyer in favor of Seller with respect to all claims related to or arising out of events or circumstances occurring or existing on or after the Closing Date. In addition to the foregoing, Seller will deliver to the Underwriter such other affidavit(s) or certifications as reasonably may be required to induce the Title Agent and/or Underwriter to issue the Closing Commitment to Buyer at Closing, provided that such affidavits or certifications do not increase Seller's liability with respect to the title to the Land beyond Seller's warranties in the special warranty deed. 8.4 Delivery by Buyer. At Closing, in addition to any documents or other items specifically required to be delivered or required to be done pursuant to this Agreement, Buyer will deliver, or cause to be delivered, to Seller: (a) Certified copies of resolutions of the Board of Directors of Buyer authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, or an opinion of counsel reasonably acceptable to Seller evidencing the same; (b) a certificate of the President or Chief Executive Officer of Buyer dated as of the Closing Date, certifying that the representations and warranties of Buyer contained in this Agreement are true on and as of the Closing Date in all material respects with the same effect as if said representations and warranties were made on and as of the Closing Date; (c) executed counterparts of the instruments described in Sections 8.3(c)-(f); and (d) the Purchase Price by wire transfer of funds. 8.5 Credits and Prorations. Buyer will receive a credit against the Purchase Price at Closing in an amount equal to the aggregate contract sales price of all land in Heathrow sold and conveyed by Seller after December 31, 1995 and prior to the Agreement Date, less Seller's costs for title insurance, documentary tax stamps, recording charges and brokerage fees in connection with such sales; and except as otherwise specifically set forth in this Agreement, all revenues and expenses of, and all impounds, prepayments or deposits related to, the Property, including the following items, will be prorated as of 12:01 A.M. on the Closing Date, on the basis (if applicable) of the actual number of days of ownership of the Property by Buyer and Seller relative to the applicable period: (a) Property Taxes. Ad valorem property taxes assessed or levied against the Land will be prorated on the basis of actual taxes, with maximum discount for early payment, for the year of Closing, if known, or otherwise on the basis of ad valorem property taxes for the immediately preceding year. (b) Utilities. Amounts, if any, due for electric, gas, sewer, water, telephone, trash collection and other utilities for the period prior to Closing will be determined when the actual bills have been received, pending which a reasonable reserve will be held by Title Agent until final bills have been paid. All sums due will be paid by debit or credit at Closing or remitted to the party to whom due within ten (10) days after receipt of notice of the amount due, including a copy of the applicable billing statement. In addition, Buyer will reimburse Seller for all deposits held by utility providers with respect to service to the Property, or will replace existing deposits in order to facilitate Seller obtaining a refund of its deposits. (c) Assessments. Assessments or other sums due to any property owners association, and unfunded deficits of any property owners association as to which Declarant's Rights are assigned to Buyer. (d) Permits and Contracts. Fees or other charges payable with respect to the Permits and any Contracts assigned to and assumed by Buyer. (e) Cable System. Subscriber fees, fees or other charges payable with respect to network or programming providers, and fees and other charges with respect to distribution carriers. (f) Club. Club member dues for the calendar quarter in which the Closing occurs. In addition, Buyer will receive a credit for, and Buyer will assume, accounts payable with respect to Club inventory transferred to Buyer; and Buyer will receive a credit, with respect to each nonresident Club member, for the amount, if any, by which (i) the amount of such nonresident Club member's initiation fee refundable upon resignation of his or her membership exceeds (ii) the balance of any note receivable from such nonresident Club member evidencing the deferred portion of his or her initiation fee. (g) Bonds and Letters of Credit. Buyer will replace or cause to be replaced all performance bonds or letters of credit securing obligations related to the Property, or will reimburse Seller at Closing for the amount thereof, including the bonds and letters of credit described in Schedule S-8.5(d) hereof. If at any time within forty-five (45) days after Closing (the "Readjustment Period") either party discovers items which should have been prorated or adjusted but were omitted, or any material error in the computation of any proration or adjustment, such item(s) will be properly prorated and adjusted as of Closing, without interest or penalty, and the amount due as a result thereof will be promptly remitted. At Closing, the sum of One Hundred Thousand Dollars ($100,000.00) of the Purchase Price will be deposited with Title Agent, and held in an interest-bearing account and disbursed pursuant to the terms of Sections 2.2 and 15.2 hereof, to secure Seller's obligation to make such readjustments and reprorations; and any sums remaining in such account and not claimed in writing by Buyer as of expiration of the Readjustment Period will be delivered by Title Agent to Seller. 8.6 Execution and Delivery of Closing Statement. At Closing, in addition to any other documents required to be executed and delivered in counterparts by both parties, Seller and Buyer will execute and deliver to each other closing statements accounting for sums adjusted or disbursed at Closing. Section 9. Agents, Brokers and Financial Advisors. Each party represents and warrants to the other that it has not consulted, dealt or negotiated with any real estate broker, finder, salesman, agent or financial advisor to whom a commission or other compensation is or could be due in connection with the sale of the Property by Seller to Buyer, or any other matter associated with this Agreement. Each party hereby agrees to indemnify and hold harmless the other from any losses, damages, costs, liabilities or expenses, including reasonable costs and attorneys' and paralegals' fees incurred in trial, appellate or postjudgment proceedings, related to or arising out of any breach of the representations, warranties and agreements set forth in this Section 9. Anything to the contrary notwithstanding, the representations, warranties and agreements of this Section 9 will survive Closing of the transactions which are the subject of this Agreement and the delivery of the deed of conveyance, or any earlier termination of this Agreement. Section 10. Survival of Representations, Warranties and Agreements. 10.1 Survival. All representations and warranties set forth in this Agreement are continuing and will be true and correct on and as of the Closing Date with the same force and effect as if made at that time, and, except as waived by Buyer or as otherwise specifically set forth in this Agreement, will survive Closing for a period of six (6) months, and thereafter terminate and be of no further force or effect unless a legal action to enforce a claim has been filed on or prior to the sixth (6th) month anniversary of the Closing Date. Notwithstanding the foregoing, however, if Buyer learns of any breach or nonperformance of any representation, warranty, covenant or agreement prior to Closing, Buyer will promptly notify Seller thereof, and such representation, warranty, covenant or agreement will not survive Closing (whether or not Buyer notifies Seller thereof), but rather will merge into the deed to be given by Seller, it being the intention of the parties that no breach or nonperformance of which Buyer has knowledge prior to Closing will survive Closing should Buyer elect to close notwithstanding knowledge of such breach or nonperformance. Section 11. Default. 11.1 Buyer's Default. If, prior to Closing, Buyer fails or refuses to perform any of Buyer's obligations under this Agreement in any material respect, Seller's sole remedy will be to terminate this Agreement and retain the Deposit, as agreed and liquidated damages, it being agreed that in such event Seller's actual damages would be incapable of precise ascertainment; and thereafter this Agreement will be null and void and the parties hereto will have no further rights or obligations hereunder except with respect to the Inspection Indemnity. 11.2 Seller's Default. If, prior to Closing, Seller fails or refuses to perform any of Seller's obligations under this Agreement in any material respect, Buyer will, at Buyer's sole option, either (a) terminate this Agreement, in which event the Deposit will be refunded to Buyer and this Agreement will be null and void and the parties hereto will have no further rights or obligations hereunder except with respect to the Inspection Indemnity, or (b) maintain an action for specific performance of the terms of this Agreement; but in no event will Buyer have the right to bring or maintain an action for damages except in the case of an intentional default in any material respect by Seller's willful misconduct, in which event if, but only if, Buyer elects to terminate this Agreement prior to Closing, Buyer will be entitled to liquidated damages in the amount of $75,000.00, it being agreed that in the event of such intentional default Buyer would suffer damages incapable of value ascertainment. Section 12. Risk of Loss. 12.1 Casualty. Seller will bear all risk of loss occurring to improvements upon any portion of the Land prior to conveyance thereof by Seller to Buyer pursuant to the terms of this Agreement. In the event that any material portion of any improvements on the Land is damaged or destroyed prior to Closing, Buyer may, at its option, terminate this Agreement (except for the Inspection Indemnity) by written notice to Seller prior to Closing and within thirty (30) days after Buyer receives written notice of such damage or destruction, upon which the Deposit will be refunded to Buyer and thereafter the parties will have no further rights or obligations hereunder except for the Inspection Indemnity. If Buyer closes notwithstanding an unrepaired or unrestored loss to the Land, Seller will deliver and/or assign to Buyer all insurance proceeds with respect to such damage or destruction, together with the amount of any deductible. 12.2 Condemnation. In the event that any portion of the Land is taken by eminent domain or condemnation proceeding prior to sale and conveyance thereof by Seller to Buyer and such taking materially and adversely affects the use or utility of the Land, Buyer may within thirty (30) days after Buyer receives written notice of such taking either (a) proceed to close notwithstanding the eminent domain or condemnation proceeding, in which event Seller will assign to Buyer its entire right, title and interest in and to any award, or (b) terminate this Agreement (except for the Inspection Indemnity) by delivering written notice of termination to Seller, upon which the Deposit will be refunded to Buyer and thereafter this Agreement will be null and void and the parties will have no further rights or obligations hereunder except with respect to the Inspection Indemnity. Seller agrees promptly to notify Buyer of any eminent domain or condemnation proceeding, and Buyer will be entitled at its own expense to join in such proceeding and to defend Buyer's interest hereunder in the Land affected thereby, unless Buyer elects to terminate this Agreement as aforesaid. Section 13. Third Party Sales. Notwithstanding any provision of this Agreement to the contrary, Seller will have the right to enter into contracts (each, a "Third Party Contract") in the ordinary course of business with third party purchasers for the sale of platted lots within the Land at sale prices not less than the amounts (the "Stated Values") set forth in Exhibit E-3 hereof, and in the event a Third Party Contract is closed prior to Closing pursuant to this Agreement, this Agreement will be deemed amended to exclude such platted lot(s) from the Land and the Purchase Price hereunder will be reduced by the Stated Value of the platted lot(s) sold and conveyed. Seller will assign to Buyer at Closing, and Buyer will assume, any Third Party Contracts (and deposits held thereunder) which have not theretofore been closed, and in the event that the sale price under any Third Party Contract(s) (net of Seller's costs pursuant to such Third Party Contract, if any, for title insurance, documentary tax stamps, recording charges and brokerage fees) exceeds the Stated Value of the platted lot subject thereto, the Purchase Price hereunder will be increased by the aggregate amount of such excess (the "Presale Premium"); provided, however, that if and to the extent that the Presale Premium exceeds the Third Party Contract deposit held by Seller and assigned and transferred to Buyer, payment of the amount of such excess by Buyer to Seller will be either (a) deferred until such Third Party Contract is either closed or terminated as a result of Buyer's default thereunder, or (b) forgiven if such Third Party Contract is terminated as a result of the third party purchaser's default thereunder. Section 14. Miscellaneous. 14.1 Litigation. In the event of any litigation between Seller and Buyer concerning the terms of this Agreement, the prevailing party will be entitled to reimbursement of its costs and expenses, including reasonable attorneys' and paralegals' fees, incurred in trial, appellate and postjudgment proceedings. 14.2 Escrow Obligations of Title Agent. Seller and Buyer acknowledge that Title Agent undertakes hereunder to perform only such duties as are expressly set forth herein and no implied duties or obligations will be read into this Agreement against Title Agent. The Deposit will be held and disbursed by Title Agent as follows: (a) Title Agent may (i) act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, (ii) assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and (iii) assume that any person purporting to give any writing, notice, advice or instruction in connection with the provisions hereof has been duly authorized to do so. (b) Seller and Buyer agree, jointly and severally, to indemnify and hold harmless Title Agent from and against any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expenses, fees or charges of any character or nature whatsoever, which Title Agent may incur or with which it may be threatened solely by reason of its acting as escrow agent hereunder, except to the extent resulting from Title Agent's gross negligence, fraud or intentional misconduct; and in connection therewith, to indemnify Title Agent against any and all expenses, including reasonable attorneys' fees and the cost of defending any action, suit or proceedings or resisting any claim (including, without limitation, fees for services rendered by Title Agent's constituent attorneys and paralegals); provided, however, that if such expenses are incurred by Title Agent in connection with litigation between Seller and Buyer, the responsibility for indemnifying Title Agent for such expenses will belong solely to the non- prevailing party. (c) Title Agent will not make any disbursements of the Deposit (except at Closing) without giving written notice to the party which will not receive the disbursements at least three (3) business days in advance of the disbursement. The failure of the party not receiving the disbursements to object to the disbursement by written notice to the other party and to the Title Agent will constitute binding acquiescence of such party to the disbursement. If there is any disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety, of any action contemplated by Title Agent hereunder, Title Agent may file an action in interpleader to resolve such disagreement. Title Agent shall be indemnified (by Seller or Buyer, whichever is the non-prevailing party) as set forth in the foregoing subsection (b) in connection with such interpleader action, and will be fully protected in suspending all or a part of its activities under this Agreement until a final judgment in the interpleader action is received. (d) Title Agent may consult with counsel of its own choice and will have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. Title Agent otherwise will not be liable for any mistakes of fact or error of judgment, or for any acts or omissions of any kind unless caused by its willful misconduct or gross negligence. Buyer acknowledges that Title Agent is also acting as counsel to Seller and agrees that Title Agent's duties pursuant to this Section 14.2 will not be deemed a conflict of interest affecting such representation of Seller. (e) Title Agent may resign upon 15 days' written notice to Seller and Buyer, and if a successor escrow agent is not appointed within such 15-day period, Title Agent may petition a court of competent jurisdiction to name a successor. 14.3 Notices. Notices required or permitted to be given pursuant to the terms of this Agreement will be delivered in person or sent by certified mail, return receipt requested, postage prepaid, by recognized contract carrier providing signed receipt for delivery, and will be deemed delivered on the date of delivery or the date the delivering agency deems such delivery impossible. Facsimile notices may be sent as a courtesy, but will not be binding. Notices will be delivered at the following addresses, subject to the right of any party to change the address at which it is to receive notice by written notice to the other party: To Seller: Arvida/JMB Partners, L.P. - II 1275 Lake Heathrow Lane Heathrow, Florida 32746 Attention: Edward Hill Telephone: (407) 333-1051 Facsimile: (407) 333-2945 Copies to: Stephen S. Lovelette Arvida/JMB Partners, L.P. - II 900 North Michigan Avenue Chicago, Illinois 60611-1575 Telephone: (312) 915-2856 Facsimile: (312) 915-2310 Arvida/JMB Partners, L.P. - II 7900 Glades Road Boca Raton, Florida 33434 Attention: John Baric, Esq. General Counsel Telephone: (407) 479-1160 Facsimile: (407) 499-1227 H. William Walker, Jr., Esq. White & Case First Union Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2352 Telephone: (305) 371-2700 Facsimile: (305) 358-5744 To Buyer: George Apostolicas, President Apostolicas Properties 6605 Stonington Drive Suite 1 Tampa, Florida 33647-1113 Telephone: (813) 978-9521 Facsimile: (813) 971-6497 Copy to: Stephen D. Feinberg, Esq. Salley, Feinberg & Haimes, P.A. Suite 2500 390 North Orange Avenue Orlando, Florida 33280 Telephone: (407) 426-2360 Facsimile: (407) 426-2361 14.4 Integration and Severability. This Agreement and the attachments hereto set forth the entire understanding of Buyer and Seller with the respect to the matters which are the subject of this Agreement, superseding and/or incorporating all prior or contemporaneous oral or written agreements, and may be changed, modified, or amended only by an instrument in writing executed by the party against whom the enforcement of any such change, modification or amendment is sought. 14.5 Successors and Assigns. This Agreement will inure to the benefit of and be binding upon, and is intended solely for the benefit of, the parties hereto, and their respective heirs, personal representatives, successors, and assigns; and no third party will have any rights, privileges or other beneficial interests herein or hereunder. Buyer may assign this Agreement to an Affiliate of Buyer, and/or designate one or more Affiliates of Buyer to which various components of the Property will be conveyed and/or assigned at Closing, but otherwise this Agreement may not be assigned by Buyer; provided, that such assignment or designation will not relieve Buyer of any liability hereunder. 14.6 Construction. Headings and similar structural elements set forth in this Agreement are intended for ease of reference only, and are not intended, and will not be construed, to reflect the intention of the parties or to affect the substance of this Agreement. This Agreement has been negotiated at arm's length between Seller and Buyer, each represented by legal counsel of its choice and having an ample opportunity to negotiate the form and substance hereof, and therefore in construing the provisions of this Agreement the parties will be deemed to have had equal roles in drafting. 14.7 Governing Law. This Agreement is governed by and will be construed in accordance with the laws of the State of Florida, and in the event of any litigation concerning the terms of this Agreement, proper venue thereof will be in Orange or Palm Beach County. 14.8 Invalid Provisions. In the event any term or provision of this Agreement is held illegal, unenforceable or inoperative as a matter of law, the remaining terms and provisions will not be affected thereby, but will be valid and remain in force and effect, provided that the inoperative provisions are not essential to the interpretation or performance of this Agreement in accordance with the clear intent of the parties. 14.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which will constitute the same instrument. 14.10 Confidentiality. Prior to Closing, the provisions, terms and conditions of this Agreement will not be disclosed to any third party without the consent of the nondisclosing party; provided, however, any party may disclose the existence of this Agreement and the provisions, terms and conditions hereof to such party's partners, investors or lenders, or when required to do so in order to comply with filing and/or reporting requirements of any governmental regulatory agency or any lawful order thereof. 14.11 No Waiver of Default. No waiver by a party of any breach of this Agreement or of any warranty or representation hereunder by the other party will be deemed to be a waiver of any other breach by such other party (whether preceding or succeeding and whether or not of the same or similar nature), and no acceptance of payment or performance by a party after any breach by the other party will be deemed to be a waiver of any breach of this Agreement or of any representation or warranty hereunder by such other party, whether or not the first party knows of such breach at the time it accepts such payment or performance. No failure or delay by a party to exercise any right it may have by reason of the default of the other party will operate as a waiver of default or modification of this Agreement or will prevent the exercise of any right by the first party while the other party continues so to be in default. 14.12 Radon Gas. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of Radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding Radon and Radon testing may be obtained from your county public health unit. 14.13 Recourse Limited to Seller; Survival. Notwithstanding anything to the contrary in this Agreement or any other agreement, instrument or certificate executed in connection herewith, no present or future Constituent Partner in or Affiliate of Seller, nor any shareholder, officer, director, member, manager, employee, trustee, beneficiary or agent of any Person that is or becomes a Constituent Partner in Seller, will be personally liable, directly or indirectly, (1) under or in connection with this Agreement, or any other agreement, instrument or certificate executed in connection with this Agreement, or any amendments or modifications to any of the foregoing made at any time or times, heretofore or hereafter, or (2) in respect of any matter, condition, injury or loss related to this Agreement or the Property; and the Buyer and each of its successors and assignees waives and does hereby waive any such personal liability. For purposes of this Agreement, and any such other agreements, instruments and certificates, and any such amendments or modifications, neither the negative capital account of any Constituent Partner in Seller, nor any obligation of any Constituent Partner in Seller to restore a negative capital account or to contribute capital to Seller or to any other Constituent Partner in Seller, will at any time be deemed to be the property or an asset of Seller or any such other Constituent Partner (and neither Buyer nor any of its successors or assignees will have any right to collect, enforce or proceed against or with respect to any such negative capital account or a Constituent Partner's obligation to restore or contribute). As used in this Section 14.13, a "Constituent Partner" in Seller means any direct partner in Seller and any Person that is a partner in any partnership that, directly or indirectly through one or more other partnerships, is a partner in Seller. Notwithstanding anything to the contrary herein, the provisions of this Section 14.13 shall survive Closing and delivery of the deed of conveyance or any termination of this Agreement (and are not subject to the provisions of Section 10 hereof). [Signatures on Next Page] IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date(s) hereinafter set forth. WITNESSED BY: Name: Name: SELLER: HEATHROW DEVELOPMENT ASSOCIATES, LTD., a Florida limited partnership By: Arvida/JMB Partners, L.P.-II, a Delaware limited partnership, General Partner By: Arvida/JMB Managers - II, Inc., a Delaware corporation By: Name: Stephen A. Lovelette Title: Vice President Date: March 22, 1996 Name: Name: HEATHROW GOLF AND COUNTRY CLUB LIMITED PARTNERSHIP, a Delaware limited partnership By: Arvida/Heathrow Club, Inc., a Delaware corporation, General Partner By: Name: Stephen A. Lovelette Title: Vice President Date: March 22, 1996 Name: Name: HEATHROW CABLE LIMITED PARTNERSHIP, a Delaware limited partnership By: Arvida/Heathrow Cable, Inc., a Delaware corporation By: Name: Stephen A. Lovelette Title: Vice President Date: March 22, 1996 Name: Name: BUYER: , a ____________ corporation By: Name: George Apostolicas Title: President Date: March 22, 1996 EXHIBIT E-1 DESCRIPTION OF LAND Parcel Lots Approximate Acreage Waters Edge (T22b) 27 developed lots 2 furnished model homes Lakeside (T22a) 67 developed lots 2 furnished model homes Cherry Ridge (T26) 52 undeveloped lots Wyntree (T25) 50 developed lots Stonebridge Lot 19, developed lot Lot 26, developed lot Heathrow Woods, Phase I Lot 16, developed lot Lot 70, developed lot Lot 80, developed lot Heathrow Woods, Phase II Tract 8 5.0 Tract 27 18.3 Tract 28 26.4 Tract 29 29.4 Tract 30 26.7 Tract 31 34.1 Tract 33 14.9 Tract 35 38.8 Tract A 27.2 Tract B 32.2 149 developed lots 4 furnished models 157 undeveloped lots 253.0 acres EXHIBIT E-2 PURCHASE PRICE ALLOCATION Land (including Club Land) $16,050,000.00 Club (excluding Club Land) $ 1,500,000.00 Cable System $ 1,000,000.00 Office Building $ 750,000.00 Personalty $ 1,000,000.00 TOTAL $20,300,000.00 EXHIBIT E-3 STATED VALUES [TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE S-1(ab) PERSONALTY [TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE S-1(ab) (3) MARKETING FEES [TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE S-1(i) CONTRACTS [TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE S-1(x) MEMBERSHIP CATEGORIES [TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE 4.2 REQUIRED CONSENTS 1. Consent of Bank of America Illinois and/or its Affiliates, as holder of an existing mortgage on the Property; it being understood and agreed that this Agreement is and will not be binding upon Seller, and Seller will have no obligations to Buyer hereunder, without such consent. [OTHER REQUIRED CONSENTS, IF ANY, TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE 4.4 COMPLIANCE [TO BE AGREED DURING INSPECTION PERIOD] SCHEDULE 8.5(d) BONDS AND LETTERS OF CREDIT [TO BE AGREED DURING INSPECTION PERIOD] EX-10 3 -18- AGREEMENT FOR OPTION TO PURCHASE AND PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS THIS AGREEMENT FOR OPTION TO PURCHASE AND PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS ("Agreement") is made and entered into this _______ day of March, 1996, by and between Arvida/JMB Partners, L.P.-II, a Delaware limited partnership ("Arvida"), and Seagate at San Clemente, LLC, a California limited liability company ("Seagate"). R E C I T A L S WHEREAS, Arvida is the owner in fee of those certain parcels of real property ("Property") located in southeast Orange County, California, which are situated partially within the incorporated limits of the City of San Clemente and partially within the unincorporated territory of the County of Orange, all of which are particularly described in Exhibit "A," which is attached hereto and by this reference made a part hereof; and WHEREAS, Seagate desires to acquire the exclusive right to purchase the Property, without becoming obligated to purchase, at an agreed upon price and under specified terms and conditions; and WHEREAS, in the event Seagate elects to purchase the Property, Seagate intends to develop thereon a mixed use residential/commercial/industrial/recreational community; and WHEREAS, Phillips Development Company, a principal of Seagate, is a partner of Arvida's predecessor in interest in the Property and is familiar with the infrastructure requirements necessary for and entitlements governing development of the Property. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 Terms of Option Section 1.01. Grant of Option. Arvida hereby grants to Seagate the exclusive right to purchase the Property at a price and under the terms and conditions set forth in this Agreement. For purposes of this Agreement, the term "Property" shall include the fee simple interest in and to the real property described in Exhibit "A" hereto, subject to current taxes and assessments and all covenants, conditions, restrictions, rights-of-way, easements, reservations and other matters of record, to the extent the same are valid, existing and affect the Property; together with all improvements under the ownership of Arvida constructed thereon, any and all plans, development entitlements, and related architectural and engineering documents in Arvida's possession on the date the escrow established pursuant to Section 3.01 of this Agreement closes, all agreements related to development of the Property that are in effect on the date escrow closes (to the extent Arvida may assign its interests in such agreements to Seagate), and any and all entitlements Arvida may own, if any, to water and sewer capacity to serve the Property that Arvida has the right and power to convey. However, except as otherwise provided in Section 4.01 of this Agreement, Arvida makes no representation or warranty as to the condition of title to the Property, to the validity or status of any entitlements to develop the Property, to the accuracy or efficacy of any architectural or engineering documents related to development of the Property or to the availability, validity and sufficiency of any water and sewer capacity to satisfy requirements to develop the Property. It is the intention of the parties hereto that following conveyance of the Property to Seagate in accordance with the terms of the Agreement, Arvida shall have no interest in the Property, with the exception of a note secured by a deed of trust for the Cancellation Fee (as that term is defined in Section 2.11 of this Agreement); provided, however, that Seagate shall not receive any right, title or interest in or to, or right to use the names "Arvida," "JMB," "Arvida/JMB," or any derivatives thereof. Section 1.02. Option Period and Automatic Termination. The option granted hereunder shall commence on the date first above written and shall remain in effect until 5:00 p.m., March 7, 1996 ("Option Period"). In the event Seagate fails to exercise the option granted hereunder in accordance with its terms and within the Option Period, the option and all rights of Seagate under the Agreement shall immediately and automatically terminate without notice. Thereafter, at the request of Arvida, Seagate shall execute and promptly deliver to Arvida a quitclaim deed in the form of Exhibit "B," which is attached hereto and by this reference made a part hereof. Section 1.03. Option Consideration. The option granted hereunder is made in consideration of payment of the sum of twenty-five thousand dollars ($25,000.00) by Seagate to Arvida, receipt of which is hereby acknowledged. Section 1.04. Application of Option Consideration to Purchase Price. In the event the option granted hereunder is exercised in accordance with its terms, the option consideration set forth in Section 1.03 of this Agreement shall be applied to the Purchase Price (as that term is defined in Section 2.03 of this Agreement). Section 1.05. Retention of Option Consideration. In the event the option granted hereunder is not exercised, the option consideration set forth in Section 1.03 of this Agreement shall be retained by Arvida in consideration of granting the option. Section 1.06. Exercise of Option. If Seagate is not in breach of this Agreement, the option granted hereunder may be exercised by execution and delivery to Arvida prior to expiration of the Option Period of a Notice of Exercise of Option in the form of Exhibit "C," which is attached hereto and by this reference made a part hereof. ARTICLE 2 Terms and Purchase and Sale Section 2.01. Purchase and Sale of Property. In the event of an election by Seagate to exercise the option granted in Section 1.01 of this Agreement, Seagate shall purchase from Arvida and Arvida shall sell to Seagate the Property, together with the items of personal property listed in Exhibit "D," which is attached hereto and by this reference incorporated herein, as hereinafter provided. Section 2.02. Contingent Sale. (a) Seagate hereby acknowledges that the Property is encumbered by a debt in favor of the Santa Margarita Water District ("District") and/or Improvement District nos. 7 and 7A of the District in the amount of approximately sixty-two million dollars ($62,000,000.00) ("Debt"). The Debt was incurred as a result of a bond issue by the District, the proceeds of which were used to finance certain water and sewer infrastructure benefiting the Property. The annual debt service required to repay the bonds is approximately six million dollars ($6,000,000.00) per year, and is the obligation of the owner of the Property. Seagate further acknowledges that the District levies standby charges, ad valorem taxes and assessments on the Property to pay the debt service on the bonds and to finance other facilities and operations of the District that benefit the Property. Sale of the Property by Arvida to Seagate is contingent upon (1) a full and unconditional release of Arvida by the District from all liabilities or obligations connected with the Debt and standby charges, ad valorem taxes and assessments for payment of debt service on the Debt and other facilities and operations of the District, including , but not limited to, liabilities or obligations arising out of that certain Agreement for Payment of Diemer Intertie Sublease Payments, Principal and Interest on Bonds of Improvement District No. 7 and Annual Budget Deficits, by and between Arvida and the District, dated as of January 15, 1990, and that certain Letter of Credit Agreement by and between Arvida and the District, dated July 27, 1990, given at or before conveyance of the Property to Seagate; (2) agreement by the District to apply the proceeds of an eleven million four hundred thousand dollar ($11,400,000.00) letter of credit posted by Arvida with the District to the outstanding bond debt service assessments owed by Arvida to the District; (3) waiver by the District of all interest and penalties, if any, applied by the District to the outstanding standby charges, ad valorem taxes and assessments for bond debt service and other facilities and operations of the District allegedly owed by Arvida to the District; and (4) agreement by the District that the assessments for bond debt service and other facilities and operations of the District for the District's 1995/96 fiscal year shall be prorated as between Arvida and Seagate as of the close of escrow established in accordance with Section 3.01 of this Agreement on the basis of a 365 day year. (b) Seagate hereby acknowledges the deed of trust in favor of Bank of America NT & SA ("Bank of America") that encumbers the Property. Sale of the Property by Arvida to Seagate is contingent upon approval of the sale in accordance with the terms and conditions of this Agreement by Bank of America, a full and unconditional release of Arvida from any and all liability, including, but not limited to, any deficiency resulting from the difference between the amount of the encumbrance represented by the deed of trust and the Purchase Price (as that term is defined in Section 2.03 of this Agreement), and a full reconveyance by Bank of America of said deed of trust as it relates to the Property. (c) Arvida has posted security with the City of San Clemente, County of Orange, and other government entities in compliance with California law, local ordinances and development approval conditions. Sale of the Property by Arvida to Seagate is contingent upon exoneration and/or release of Arvida from any and all liability for the subdivision improvement bonds, letters of credit and other security instruments listed on Exhibit "E," which is attached hereto and by this reference incorporated herein. (d) Sale of the Property by Arvida to Seagate is contingent upon assumption of Arvida's obligations by Seagate and/or release of Arvida for any and all liability under the contracts and agreements listed on Exhibit "F," which is attached hereto and by this reference incorporated herein. (e) Sale of the Property by Arvida to Seagate is contingent upon a notification filing, if required, made under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the expiration or termination of any applicable waiting period thereunder. Arvida hereby agrees to use commercially reasonable efforts to satisfy and/or resolve those contingencies set forth in subsections (a)-(c) of this Section 2.02. As used in this Section 2.02, "Arvida" shall mean Arvida/JMB Partners, L.P.-II, any present or future Constituent Partner (as that term is defined in Section 5.02 of this Agreement) in or agent of Arvida, and shareholders, officers, directors, members, managers, employees, trustees, beneficiaries or agents of any corporation or other entity that is or becomes a Constituent Partner in Arvida. Section 2.03. Purchase Price. The purchase price to be paid by Seagate for the Property shall be twenty-five million dollars ($25,000,000.00) ("Purchase Price"), as hereinafter provided. Section 2.04. Terms of Payment of Purchase Price. The Purchase Price shall be paid by Seagate to Arvida, as follows: (a) The sum of two hundred thousand dollars ($200,000.00) shall be tendered by Seagate at such time as the Notice of Exercise of Option required by Section 1.06 of this Agreement is delivered to Arvida as a deposit to be applied to the Purchase Price ("Deposit"), which Deposit shall be payable to Escrow Holder (as defined in Section 3.01 of this Agreement) for deposit in the escrow established pursuant to Section 3.01 of this Agreement. At the direction of Seagate, Escrow Holder shall place the Deposit in an interest bearing federally insured account with a financial institution of Seagate's choice. (b) The balance of the Purchase Price shall be paid to Escrow Holder for deposit in escrow at least five (5) business days prior to the Closing Date (as defined in Section 3.04 of this Agreement) in accordance with Section 3.06 of this Agreement, unless payment is made by wire transfer, in which case the balance of the Purchase Price may be deposited with Escrow Holder on the Closing Date. Section 2.05. Examination of Title to Property. From and after the date of this Agreement until March 12, 1996 ("Title Examination Period"), Seagate shall examine the preliminary report of the Property ("Preliminary Report") prepared by First American Title Insurance Company, dated February 1, 1996, a copy of which is attached hereto as Exhibit "G," and by this reference incorporated herein, and raise reasonable objections, if any, to any of the provisions thereof ("Title Objections"). In the event Seagate raises reasonable objections to any provisions of the Preliminary Report during the Title Examination Period (but not otherwise), Arvida shall employ commercially reasonable efforts to resolve Seagate's objections prior to expiration of the Due Diligence Period (as defined in Section 2.06 of this Agreement). If called upon by Arvida, and to the extent it is reasonably able to do so, Seagate shall cooperate in the resolution of Title Objections, except that Seagate shall have no obligation hereunder to contribute financially to the resolution of Title Objections. Resolution of Seagate's objections, if any, may include purchase of title indemnities or use of other commercially reasonable devices, subject to the reasonable approval of Seagate, and/or payment of liens or encumbrances out of a portion of the Purchase Price. The encumbrance on the Property imposed by the District on account of bonds issued and sold by the District and its Improvement District nos. 7 and 7A and current standby charges, ad valorem taxes and assessments levied therefor and for other facilities and operations of the District discussed in Section 2.02 of this Agreement shall in no way constitute a Title Objection for purposes of this Agreement. Section 2.06. Due Diligence Period. From and after delivery of the Notice of Exercise of Option required by Section 1.06 of this Agreement until 5:00 p.m., March 21, 1996, Seagate shall undertake, perform and complete its due diligence effort with regard to the transaction contemplated by this Agreement ("Due Diligence Period"). In the event Seagate reasonably determines during the Due Diligence Period that an impediment (other than a Title Objection) to acquisition of the Property ("Defect") exists, Seagate shall notify Arvida in writing as soon as possible following such determination, but in any event prior to expiration of the Due Diligence Period. Arvida may elect to remedy a Defect(s), if such Defect(s) may be remedied by Arvida, by giving Seagate written notice of such election within five (5) business days of receipt of timely written notice from Seagate of the existence of a Defect(s). In such event, Arvida shall employ commercially reasonable efforts to remedy such Defect(s). Arvida's notice of election to remedy a Defect(s) reasonably determined by Seagate to exist shall specify the number of days (if any), up to a maximum of ninety (90) days, that the Due Diligence Period shall be extended and the Closing Date postponed to permit Arvida sufficient time to remedy the Defect(s). The encumbrance on the Property imposed by the District on account of bonds issued and sold by the District and its Improvement District nos. 7 and 7A and standby charges, ad valorem taxes and assessments levied therefor and for facilities or operations of the District discussed in Section 2.02 of this Agreement shall in no way constitute a Defect for purposes of this Agreement. Section 2.07. Remedy for Failure to Resolve Title Objections and Defects. In the event Seagate timely asserts the existence of Title Objections, and/or Seagate timely asserts the existence of a Defect(s), and Arvida fails to provide timely written notice of an election to remedy such Defect(s), or if timely written notice is given and Arvida fails to remedy such Defect(s), or fails to remedy Title Objections on or before the Closing Date, plus any extension of the Closing Date pursuant to Section 3.04 of this Agreement, then Seagate shall elect to: (a) Terminate this Agreement; or (b) Proceed to perform its obligations under this Agreement. The election shall be made in writing. The failure of Seagate to make a written election shall be deemed an election of option (a) above. In the event the election in option (a) is made, Arvida and Seagate shall jointly instruct Escrow Holder to immediately refund to Seagate the Deposit, accrued interest thereon, if any, and instruments deposited by Seagate in the escrow established by Section 3.01 of this Agreement. As a condition precedent to release of said Deposit and instruments, Seagate shall execute and deliver to Arvida a quitclaim deed in the form of Exhibit "B" hereto. In the further event the election in option (a) is made, so long as Arvida has employed commercially reasonable efforts to remedy any Title Objections and Defect(s) reasonably raised by Seagate, Arvida shall have no liability for termination of this Agreement. Section 2.08. Nonrefundable Deposit. The Deposit shall become nonrefundable and shall be released to Arvida without further instructions to Escrow Holder on the later to occur of expiration of the Due Diligence Period or resolution of Title Objections and Defect(s) reasonably raised by Seagate. Section 2.09. Brokerage Commission. Arvida hereby acknowledges the employment by Seagate of Orange Coast Realty and Investments as a real estate broker in conjunction with this transaction. A brokerage commission of one million dollars ($1,000,000.00) ("Brokerage Commission") shall be paid to Orange Coast Realty and Investments by Escrow Holder from proceeds due Arvida in accordance with Section 3.07(c) and (d) of this Agreement. No other Brokerage Commission or consultant's or finder's fee shall be payable out of the proceeds payable to Arvida to any person or entity claiming to have dealt with Seagate, and Seagate shall indemnify, defend and hold Arvida free and harmless from any such claims. Section 2.10. Appeal of Real Property Tax Assessments. Arvida has appealed the assessments of the Orange County Tax Assessor on the various parcels comprising the Property for the current and prior tax years. In the event Arvida prevails in such appeal, Arvida shall be entitled to the full and complete refund of real property taxes resulting from the appeal. In the further event any such refund is paid subsequent to the close of escrow, Seagate shall pay Arvida all such sums within five (5) days of receipt thereof. This Section 2.10 shall survive the closing and delivery of documents specified in Section 3.07 of this Agreement and any termination of this Agreement. Section 2.11. Cancellation Fee. In connection with finalizing the transaction contemplated by this Agreement with the Bank of America, Seagate shall pay a cancellation fee to Arvida in the amount of nine million five hundred thousand dollars ($9,500,000.00) ("Cancellation Fee") pursuant to the terms and provisions of a promissory note secured by a deed of trust encumbering the Property in favor of Arvida. Said note shall not bear interest. Arvida hereby agrees to subordinate the aforementioned deed of trust to encumbrances on the Property required to secure financing for Seagate's acquisition of the Property, and for financing of development and/or construction of improvements on, or of benefit to, the Property. Said deed of trust shall provide that partial reconveyances required to remove the encumbrance of the deed of trust from portions of the Property sold to third parties in the course of development of the Property shall be given by Arvida or its successors in and to the note and deed of trust without charge to Seagate. The recourse of Arvida and each of its successors and assigns under or in connection with this Agreement in enforcement of the provisions, terms and conditions of said note and deed of trust shall be limited to Seagate's interest in the Property only. ARTICLE 3 Escrow and Closing Procedures Section 3.01. Escrow. This Agreement shall also constitute escrow instructions of the parties hereto to First American Title Insurance Company, 114 East Fifth Street, Santa Ana, California 92701 ("Escrow Holder"). Upon receipt of an original counterpart of this Agreement executed by both parties hereto, together with a copy of a Notice of Exercise of Option, Escrow Holder shall immediately establish an escrow for the purpose of consummating the transaction contemplated by this Agreement. Supplementary escrow instructions may be prepared by Escrow Holder and, if so prepared and agreed to by Arvida and Seagate, shall be executed by both parties hereto. Section 3.02. Title. On the Closing Date, title to the Property is to be free of liens and encumbrances other than (a) those included in the Preliminary Report approved by Seagate in accordance with Section 2.05 of this Agreement; (b) those that arise subsequent to publication of the Preliminary Report which are reviewed and approved by Seagate, which approval shall not be unreasonably withheld; or (c) those that are or will be resolved with title indemnities or other commercially reasonable devices reasonably approved by Seagate. Arvida shall furnish Seagate at Arvida's expense an owner's standard CLTA policy of title insurance ("Title Policy") issued by the Title Company. Alternatively, at Seagate's request, Arvida shall furnish Seagate an owner's standard ALTA policy of title insurance; however Seagate shall pay any additional cost in excess of the premium that would have been charged for the Title Policy for issuance of an owner's standard ALTA title insurance policy, all costs of any endorsements or other extended coverage in excess of the coverage in the Title Policy to be provided by Arvida, and the cost of preparing a survey of the Property, if required. Section 3.03. Escrow Costs and Charges. The usual and customary costs and charges of Escrow Holder incurred in establishing, maintaining and closing the escrow established pursuant to Section 3.01 of this Agreement ("Escrow Costs") shall be borne in equal amounts by the parties hereto. The cost of the Title Policy shall be paid to the Title Company by Escrow Holder and, together with Arvida's share of the Escrow Costs, which shall include payment of the documentary transfer tax assessed by the County of Orange, debited from funds deposited in escrow by Seagate that are due Arvida on the Closing Date. Seagate may direct Escrow Holder to cause payment of the documentary transfer tax to be evidenced by an affidavit rather than placement of documentary transfer tax stamps on the face of the grant deed conveying the Property from Arvida to Seagate. Section 3.04. Closing: Time and Place. The consummation of the transaction contemplated by this Agreement shall take place on or before May 3, 1996 ("Closing Date"), at the offices of Escrow Holder, unless the Closing Date has been postponed in accordance with Section 2.06 of this Agreement or by mutual agreement of the parties hereto. In the event the transaction contemplated by this Agreement fails to close by the Closing Date, plus any extension thereof authorized by this Agreement, and provided Arvida is not in default in the performance of its obligations under this Agreement, Arvida may, in its sole and absolute discretion, terminate this Agreement, and Seagate shall have no further rights hereunder. Section 3.05. Deposits by Arvida. Not later than one (1) day prior to the Closing Date, Arvida shall execute and acknowledge, as necessary, and deliver to Escrow Holder the following documents for the purpose of consummating the transaction contemplated by this Agreement: (a) A grant deed conveying the Property from Arvida to Seagate in the form of Exhibit "H," which is attached hereto and by this reference incorporated herein; and (b) A bill of sale in the form of Exhibit "I," which is attached hereto and by this reference incorporated herein, evidencing sale of the personal property listed in Exhibit "D" hereto; and (c) An assignment and assumption agreement in the form of Exhibit "J," which is attached hereto and by this reference incorporated herein, memorializing assignment of all of Arvida's right, title and interest in and to those contracts and agreements listed on Exhibit "F" hereto, and assumption of Arvida's obligations thereunder by Seagate; and (d) Such further documents and instruments as may be reasonably necessary to carry out and effectuate the purposes of this Agreement. Section 3.06. Deposits by Seagate. Seagate shall deposit the sum of two hundred thousand dollars ($200,000.00) with Escrow Holder in accordance with Section 2.04(a) of this Agreement. On or prior to the Closing Date, Seagate shall deposit the balance of the Purchase Price in accordance with Section 2.04(b) of this Agreement. No later than one (1) day prior to the Closing Date, Seagate shall deliver to Escrow Holder the following for the purpose of consummating the transaction contemplated by this Agreement: (a) Seagate's share of the Escrow Costs in readily available funds; and (b) Such documents and instruments as may be reasonably necessary to carry out and effectuate the purposes of this Agreement. Section 3.07. Closing Procedures. Provided the contingencies set forth in Section 2.02 of this Agreement have been satisfied, and all other obligations of Arvida and Seagate under this Agreement have been met, Escrow Holder shall proceed to close the escrow established pursuant to Section 2.01 of this Agreement by taking the following actions in the order set forth: (a) Date all undated documents as of the Closing Date; (b) Complete all blanks in all documents deposited with Escrow Holder which are intended to be completed by Escrow Holder on the Closing Date; (c) Deliver to Arvida by wire transfer or other similarly expeditious means the Purchase Price less Arvida's share of the Escrow Costs, the cost of the Title Policy, Seagate's option consideration paid to Arvida in accordance with Section 1.03 of this Agreement, Seagate's deposit pursuant to Section 2.04(a) of this Agreement, if such deposit was previously paid by Escrow Holder to Arvida, and the Brokerage Commission; (d) Deliver to Orange Coast Realty and Investments a check in the amount of the Brokerage Commission; (e) Cause to be recorded the grant deed in favor of Seagate deposited with Escrow Holder by Arvida; (f) Deliver to Seagate a conformed copy of the grant deed deposited with Escrow Holder by Arvida and the bill of sale evidencing sale of the personal property listed in Exhibit "D," hereto; and (g) Deliver to the respective counsel for the parties listed in Section 5.03 hereof, copies of all documents and supplementary escrow instructions required by, or made pursuant to, this Agreement. Section 3.08. Rights of Escrow Holder. (a) If the escrow established pursuant to Section 3.01 of this Agreement shall be the subject of or in any way involved in any litigation or controversy, the parties hereto shall jointly and severally hold Escrow Holder free and harmless from and against any loss or expense that may be suffered by it by reason of such litigation or controversy. (b) In the event conflicting demands are made or notices served upon Escrow Holder with respect to this escrow, the parties hereto expressly agree that Escrow Holder shall have the absolute right, at its election, to do either or both of the following: (1) Withhold and stop all further proceedings in, and performance of, the escrow; or (2) File a suit in interpleader and obtain an order from the court requiring the parties to interplead and litigate in such court their several claims and rights amongst themselves. In the event such interpleader suit is brought, Escrow Holder shall ipso facto be fully released and discharged from all obligations to further perform any and all duties or obligations imposed upon it by this Agreement. (c) Escrow Holder shall not be held liable for sufficiency or correctness of the form, manner of execution or validity of any instrument that may be deposited into the escrow, nor as to the identity, authority or rights of any person executing the same, or for failure to comply with any provisions of any agreement, contract or other instrument filed herein, and Escrow Holder's duties hereunder shall be limited to the safekeeping of such money, instruments, or other documents received by it as Escrow Holder, and for the disposition of same in accordance with the written instructions set forth herein and any supplementary escrow instructions executed by both parties hereto, and as accepted by Escrow Holder in the escrow. (d) Prior to the Closing Date or termination of this Agreement in accordance with the terms hereof, neither party shall have the right to withdraw the instruments or monies deposited by it with Escrow Holder, except as otherwise provided in this Agreement or in supplementary escrow instructions executed by both parties hereto. (e) The escrow instructions contained in this Agreement may be supplemented by any form instructions customarily used by Escrow Holder that are signed by both parties hereto, provided that in the event of conflict, this Agreement shall in all events control. Section 3.09. Closing Responsibilities of Escrow Holder. The parties hereto hereby designate Escrow Holder as the party responsible for closing the transaction contemplated by this Agreement and filing all required forms prepared by the parties hereto, if any, with the appropriate governmental authorities. ARTICLE 4 Representations, Warranties, Disclaimers and Disclosures Section 4.01. Representations and Warranties of Arvida. Except for the express representations of Arvida set forth in this Section 4.01, Seagate shall acquire the Property "As Is," and Arvida makes no representations or warranties with respect to such Property. Arvida hereby makes the following representations and warranties to Seagate, which are true and correct as of the date hereof and will remain so as of the Closing Date: (a) Arvida is a limited partnership duly organized and validly existing and in good standing in accordance with the laws of the State of Delaware, is authorized to do business in California and is possessed of all power and authority necessary to enter into and perform its obligations under this Agreement. (b) The persons whose signatures are affixed to this Agreement on behalf of Arvida have been duly authorized to execute this Agreement by Arvida. (c) The execution, delivery and performance of this Agreement has been duly and validly authorized and approved by all necessary corporate action on behalf of Arvida. This Agreement has been fully and validly executed and delivered by or on behalf of Arvida and, assuming this Agreement has been duly authorized, executed and delivered by Seagate, constitutes the legal, valid and binding obligation of Arvida, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting the rights and remedies of creditors generally, as well as principles of equity, regardless of whether the application of such principles is considered in a proceeding in equity or at law. (d) Arvida is not a "foreign person" within the meaning of Section 1445(f) of the Internal Revenue Code, and Arvida is exempt from withholding under California law due to the fact that Arvida resides or has a permanent place of business in California. (e) Except as otherwise set forth in Exhibit "F" of this Agreement, to Arvida's actual knowledge, without inquiry or investigation, and subject to any rights of ACI General Engineering Constructors to store various pieces of earthmoving equipment on the Property and Rancho Mission Viejo Company and/or Santa Margarita Company to graze cattle on the Property, which storage and grazing rights may survive the closing of this transaction, there are no leases or other occupancy agreements or options or rights of first refusal to purchase with any party which would affect the Property, or any portion thereof, subsequent to the Closing Date; (f) Except as otherwise set forth in Exhibits "E" and "F" of this Agreement, to Arvida's actual knowledge, without inquiry or investigation, there are no maintenance agreements, service contracts, construction contracts, repair orders or other similar agreements with any party which would affect the Property, or any portion thereof, subsequent to the Closing Date; (g) Seagate hereby acknowledges that (a) a number of persons have served as officers, directors, members, managers, employees, trustees, beneficiaries, attorneys and agents of Arvida, or of a Constituent Partner (as that term is defined in Section 5.02 of this Agreement) in Arvida, who may no longer serve in such capacity and who may or may no longer have any relationship or connection with Arvida, or a Constituent Partner in Arvida; (b) Arvida has reduced its workforce with respect to the Property to one (1) person; and (c) notices from insurance carriers of Arvida, governmental entities and authorities, potential adverse parties and others directed to Arvida may have been received by such persons and not reported to the present management of Arvida, in which case Arvida is unaware of such notices. Accordingly, the following representations and warranties of Arvida are based upon Arvida's actual knowledge, without inquiry or investigation, and Seagate hereby acknowledges that Arvida has not undertaken any inquiry of any present or former officer, director, member, manager, employee, trustee, beneficiary, attorney or agent of Arvida or any Constituent Partner in Arvida, or search of its mail logs, files and records to determine whether such notices were transmitted to or received by Arvida: (1) Arvida has not received any written notice from any of Arvida's insurance carriers of any material defects in or inadequacies of the Property, or any portion thereof; (2) There are no pending insurance claims with respect to the Property or any portion thereof; (3) Arvida has not received any written notice from any governmental authorities that eminent domain proceedings for the condemnation of the Property are pending; (4) Arvida has not received any written notice of any threatened or pending litigation against Arvida or the Property which would materially and adversely affect the Property; (5) Arvida has not received any written notice from any governmental authority that the improvements located on the Property are presently in violation of any applicable statute or ordinance; (6) Arvida has not received any written notice from any governmental authority that Arvida's use of the Property is presently in violation of any applicable zoning, land use or other law, order, ordinance, rule or regulation affecting the Property; (7) Except as disclosed in Section 4.04(b) of this Agreement, Arvida has not (1) received any written notice from any governmental authority that there has occurred any release (as defined in California Health and Safety Code sections 25320 and 25321) of Hazardous Substances (as hereinafter defined) located on or beneath the Property or that there has occurred any violation of any law, order, ordinance, rule or regulation relating to Hazardous Substances with respect to the Property; (2) been required by any governmental agency to undertake any remediation activity with respect to Hazardous Substances on the Property; and (3) used, handled, released, generated, produced, stored or transported upon the Property any Hazardous Substances other than standard office, household, pool, landscaping, other maintenance supplies, construction supplies and other such substances used in the ordinary course of business in usual and customary quantities. As used herein the term "Hazardous Substances" shall mean and include any and all toxic or hazardous substances, materials or wastes listed in the United States Department of Transportation Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302), or which is a "Hazardous Substance" under California Health and Safety Code Section 25316, and in any and all amendments to any of the foregoing in effect as of the date hereof. The representations and warranties of Arvida set forth in this Section 4.01 shall survive the closing and delivery of documents specified in Section 3.07 of this Agreement until December 31, 1996, following which date they shall expire and be of no further force or effect. Section 4.02. Representations and Warranties of Seagate. Seagate hereby makes the following representations and warranties to Arvida, which are true and correct as of the date hereof and will remain so as of the Closing Date: (a) Seagate is a limited liability company duly organized and validly existing and in good standing in accordance with the laws of the State of California, is authorized to do business in California and is possessed of all power and authority necessary to enter into and perform its obligations under this Agreement. (b) The person whose signature is affixed to this Agreement on behalf of Seagate has been duly authorized to execute this Agreement by Seagate. (c) The execution, delivery and performance of this Agreement has been duly and validly authorized and approved by all necessary corporate action on behalf of Seagate. This Agreement has been fully and validly executed and delivered by or on behalf of Seagate and, assuming this Agreement has been duly authorized, executed and delivered by Arvida, constitutes the legal, valid and binding obligation of Seagate, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting the rights and remedies of creditors generally, as well as principles of equity, regardless of whether the application of such principles is considered in a proceeding in equity or at law. Section 4.03. Disclaimer by Arvida. Other than the representations and warranties set forth in Section 4.01 of this Agreement, Arvida makes no representations or warranties regarding any aspect of the transaction contemplated by this Agreement, the status of title to the Property, or any liens and/or encumbrances thereon, the validity and authenticity of any documents and instruments inspected in contemplation of such transaction, whether provided to Seagate by Arvida or obtained independently by Seagate, the entitlements governing development of the Property, any other matter affecting the business, legal status and economic viability of the Property, the value of the Property, or the suitability of the Property for acquisition, investment or any other disposition by Seagate. Seagate hereby agrees that it has not relied on any representations or statements made by Arvida, its general partner or any of their officers, directors, employees, agents or attorneys regarding the Property or any aspect thereof in determining whether to enter into this transaction. Section 4.04. Disclosure by Arvida. Arvida hereby makes the following disclosures regarding the location and condition of the Property: (a) The property is, or may be, impacted by various regional elements. These include, but are not necessarily limited to: proximity to the Camp Pendleton Marine Corps facility, the San Onofre Nuclear Generating Station, the TRW Capistrano Test Facility, the Prima Deshecha Regional Park and Landfill, overflight from military and/or civilian aircraft from Tustin and El Toro Marine Corps Air Stations and Camp Pendleton, proximity to high voltage electrical transmission facilities, and the proposed Foothill Transportation Corridor. In addition, most properties throughout south Orange County, including the Property, are subject to various road and public facility impact fees and other conditions of development. (b) On January 11, 1990, the contents of a canister containing O-chlorobenzylidene malononitrile (Agent cs), which is designated an extremely hazardous substance in Title 22 California Code of Regulations of Section 66680, was spilled on the Property, contaminating an area of approximately 200 square feet at the location depicted on Exhibit "K," which is attached hereto, and by this reference incorporated herein. Such affected area was subjected to a decontamination process under the supervision of the Orange County Health Care Agency; however, no representation is made by Arvida as to the effectiveness of such decontamination process. Arvida makes no representations a) with regard to the severity of the impacts disclosed in the disclosures listed above, nor the degree to which such impacts will inhibit or prevent development of all or a portion of the Property or interfere with the quiet use and enjoyment of the Property; or b) whether such impacts are inclusive of all potential adverse impacts that may inhibit or prevent development of all or a portion of the Property or interfere with the quiet use and enjoyment of the Property. There may be additional adverse impacts as of the date of this Agreement. Seagate hereby acknowledges the disclosures listed above, and agrees that it is the duty of Seagate to thoroughly investigate the Property, including, but not limited to, an investigation of environmental/toxic contamination of the Property, the environs of the Property, and plans for development of surrounding properties, and determine what impacts, if any, may exist or potentially exist that could inhibit or prevent development of all or a portion of the Property or interfere with the quiet use and enjoyment of the Property. ARTICLE 5 Miscellaneous SECTION 5.01. LIQUIDATED DAMAGES. IN THE EVENT SEAGATE DEFAULTS IN THE PERFORMANCE OF THIS AGREEMENT, THE PARTIES HERETO AGREE THAT ARVIDA SHALL BE RELEASED FROM ANY OBLIGATION TO SELL THE PROPERTY TO SEAGATE AND ARVIDA'S SOLE REMEDY SHALL BE TO RETAIN, AS LIQUIDATED DAMAGES, THE DEPOSIT PAID TO ESCROW HOLDER PURSUANT TO SECTION 2.04(a) OF THIS AGREEMENT. THE PARTIES HERETO FURTHER AGREE THAT THE AMOUNT OF LIQUIDATED DAMAGES ESTABLISHED BY THIS SECTION 5.01 IS A REASONABLE ESTIMATE, UNDER THE CIRCUMSTANCES EXISTING ON THE DATE OF EXECUTION OF THIS AGREEMENT, OF WHAT ARVIDA'S DAMAGES WOULD BE IN THE EVENT OF DEFAULT BY SEAGATE. INITIALED BY ARVIDA: _________ INITIALED BY SEAGATE: ________ Section 5.02. Non-Recourse. Notwithstanding anything to the contrary in this Agreement or in any other agreement, instrument or certificate delivered in connection herewith, neither Arvida, any present or future Constituent Partner in or agent of Arvida, nor any shareholder, officer, director, member, manager, employee, trustee, beneficiary or agent of any corporation or other entity that is or becomes a Constituent Partner in Arvida, shall be personally liable, directly or indirectly, under or in connection with this Agreement or any other agreement, instrument or certificate delivered in connection herewith, or any amendments or modifications to any of the foregoing made at any time or times; the recourse of Seagate and each of its successors and assigns under or in connection with this Agreement and such other agreements, instruments and certificates, and any such amendments or modifications, shall be limited to Arvida's interest in the Property only, and Seagate and each of its successors and assigns waive any such personal liability. As used in this Section 5.02, a "Constituent Partner" in Arvida means any direct partner in Arvida and any person or entity that is a partner in any partnership that, directly or indirectly through one or more other partnerships, is a partner in Arvida. This Section 5.02 shall survive the closing and delivery of documents specified in Section 3.07 of this Agreement and any termination of this Agreement. Section 5.03. Notices. Any notice, demand or document any party is required or may desire to give or deliver to or make upon any other party shall be in writing and delivered in person, given or made by commercial delivery service (such as Federal Express) or given or made by United States registered or certified mail, postage prepaid, return receipt requested, addressed to such party at its address set forth below, subject to the right of any party to designate a different address by notice similarly given. Any notice, demand or document served personally shall be deemed delivered upon receipt, and if served by mail or commercial delivery service shall be deemed delivered on the date of receipt as shown by the addressee's registry or certification receipt or on the date receipt at the appropriate address is refused, as shown on the records or manifest of the U.S. Postal Service or commercial delivery service. The addresses for Arvida and Seagate are: For Arvida: Arvida/JMB Partners, L.P.- II 26461 Crown Valley Pkwy. Suite 100 Mission Viejo, CA 92691 Attention: Mr. Glen Allen (714) 367-8660 With a copy to: James Motta, President and Chief Executive Officer Arvida Company 7900 Glades Road Boca Raton, FL 33434 (407) 479-1100 Arvida Company 7900 Glades Road Boca Raton, FL 33434 Attention: General Counsel (407) 479-1100 Stephen A. Lovelette, Treasurer Arvida Company c/o JMB Realty 900 North Michigan Avenue Chicago, IL 60611-1575 (312) 440-4800 AND Nossaman, Guthner, Knox & Elliott, LLP 18101 Von Karman Avenue Suite 1800 Irvine, CA 92715 Attention: Gregory W. Sanders, Esq. (714) 833-7800 For Seagate: Seagate at San Clemente, LLC c/o Phillips Development Company 18012 Skypark Circle Irvine, CA 92714 Attention: Bill Phillips (714) 261-8820 With a copy to: Allen, Matkins, Leck, Gamble & Mallory 18400 Von Karman Avenue Irvine, CA 92715 Attention: John Gamble, Esq. (714) 553-1313 Section 5.04. Other Documents. The parties hereto shall cooperate in good faith to accomplish the objectives of this Agreement and to that end shall execute and deliver from time to time such other and further instruments and documents as may be necessary and convenient to the fulfillment of those purposes. Section 5.05. Effect of Invalidation. If any one or more of the provisions of this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect by any court of competent jurisdiction, such invalidity, illegality and unenforceability shall not affect the validity and enforceability of the other provisions hereof, and this Agreement shall be construed as though such invalid, illegal or unenforceable provision had never been contained herein. Section 5.06. Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the matters set forth herein, supersedes all prior agreements, understandings and representations by or between the parties with respect thereto, and may not be modified, amended or terminated except by written agreement signed by the party against whom enforcement is sought. Section 5.07 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which together shall constitute one and the same agreement of the parties. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto, except having attached to it any such additional signature pages. Section 5.08. Captions. Captions of the Articles and Sections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions of interpretation or construction. Section 5.09. Attorney's Fees. Should either or both of the parties hereto institute any action or proceeding in any court to enforce any provision(s) of this Agreement, the prevailing party shall be entitled to receive from the losing party reasonable attorneys' and expert witness fees and costs incurred in such action or proceeding, whether or not such action or proceeding is prosecuted to judgment, and in any appeals, in such amount as the court determines is reasonable. Section 5.10. Governing Law. This Agreement and the transaction contemplated herein shall be governed by and construed under the laws of the State of California. Section 5.11. Time of the Essence. Time is of the essence of all matters set forth in this Agreement. Section 5.12. No Waiver. No waiver by any party of any breach by any other party of any provisions of this Agreement shall be effective unless in writing signed by the waiving party. No such waiver shall be deemed or construed to be a waiver of any subsequent or continuing breach of the same or any other provisions of this Agreement; nor shall any forbearance by any party from the exercise of a remedy for any such breach be deemed or construed to be a waiver by such party of any of its rights or remedies with respect to such breach. Section 5.13. Number and Gender. Masculine terms used in this Agreement shall include the feminine and vice versa; neuter terms shall include both masculine and feminine; and the singular shall include the plural and vice versa, whenever the context shall require it. Section 5.14. Assignment. No party shall have the right to assign this Agreement without the prior written consent of the other party, and any purported assignment without such consent shall be void and, at the option of any other party, shall constitute a material default; however, notwithstanding the foregoing, either party hereto may (a) assign its interest in this Agreement, including its rights, duties and obligations with respect thereto, subject only to the right of the nonassigning party to reasonably approve the creditworthiness and financial ability of the assignee and/or assignee's principals to perform the assigning party's obligations under this Agreement; or (b) assign its interest in this Agreement to an affiliated, subordinate or related entity, without regard to the creditworthiness or financial ability of such entity, so long as the assigning party remains principally liable for performance of the assignee's obligations under this Agreement. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective heirs, representatives, successors and assigns. Section 5.15. Calculation of Time. The time in which any act required or permitted by this Agreement is to be performed shall be determined by excluding the day upon which the event occurs from whence the time commences. If the last day upon which performance would otherwise be required or permitted is a Saturday, Sunday or holiday, then the time for performance shall be extended to the next day which is not a Saturday, Sunday or holiday. Section 5.16. Relationship. Nothing contained in this Agreement shall be deemed or construed by the parties or by any third person to create a relationship of principal and agent or partnership or a joint venture between Arvida and Seagate or between either or both of them and any third party. Section 5.17. Escrow Cancellation Charges. If the Escrow established pursuant to Section 3.01 of this Agreement fails to close by reason of Arvida's default hereunder, Arvida shall pay all escrow cancellation charges. If the escrow fails to close by reason of Seagate's default hereunder, Seagate shall pay for all escrow cancellation charges. If the escrow fails to close for any reason other than the foregoing, Arvida, on the one hand, and Seagate, on the other hand, shall each pay one-half of the escrow cancellation charges. Section 5.18. Representation by Attorney. Each party acknowledges that he or it has been represented by experienced and knowledgeable legal counsel in negotiating the form and contents of this Agreement. Section 5.19. Recitals Incorporated by Reference. The Recitals of this Agreement are incorporated herein by this reference and made a part of this Agreement. Section 5.20. Confidentiality. Prior to closing, this Agreement, and the provisions, terms and conditions hereof, shall not be disclosed to any third party without the consent of the nondisclosing party; provided, however, any party may disclose the existence of this Agreement and the provisions, terms and conditions hereof to such party's partners or investors, or when required to do so in order to comply with filing and/or reporting requirements of any governmental regulatory agency or any lawful order thereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ARVIDA Arvida/JMB Partners, L.P.-II a Delaware limited partnership By: Arvida/JMB Managers-II, Inc., a Delaware corporation, its General Partner By: ____________________________ Its: ______________________ SEAGATE Seagate at San Clemente, LLC a California limited liability company By: _________________________ Its: ___________________ OC/960370014 EXHIBIT A LEGAL DESCRIPTION EXHIBIT B FORM OF QUITCLAIM DEED EXHIBIT C FORM OF NOTICE OF EXERCISE OF OPTION EXHIBIT D SCHEDULE OF PERSONAL PROPERTY EXHIBIT E SCHEDULE OF SUBDIVISION IMPROVEMENT BONDS, LETTERS OF CREDIT AND OTHER SECURITY INSTRUMENTS EXHIBIT F CONTRACTS AND AGREEMENTS EXHIBIT G PRELIMINARY REPORT EXHIBIT H FORM OF GRANT DEED EXHIBIT I FORM OF BILL OF SALE EXHIBIT J FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT K MAP OF CONTAMINATED AREA EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 0000852494 ARVIDA/JMB PARTNERS, L.P.-II 3-MOS DEC-31-1996 MAR-31-1996 2,588,455 0 1,634,468 24,073 10,293,218 0 6,304,679 0 22,213,782 0 0 0 0 0 (129,901,999) 22,213,782 2,809,375 2,809,375 2,377,302 2,377,302 5,546,411 0 0 (5,114,338) 0 (5,114,338) 0 0 0 (5,114,338) (15.61) (15.61)
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