UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): October 30, 1998
RAL Yield + Equities III Limited Partnership
(Exact name of registrant as specified in its
charter)
Wisconsin 0-15677 39-1546907
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
20875 Crossroads Circle, Suite 800, Waukesha, Wisconsin
53186 (Address of principal executive offices,
including zip code)
(414) 798-0900
(Registrant's telephone number)
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Item 2. Acquisition or Disposition of Assets.
Pursuant to an Asset Purchase Agreement (the "Purchase Agreement") dated
February 17, 1998, as amended as of June 26, 1998 and as of October 29, 1998,
between RAL Yield + Equities III Limited Partnership ("RAL III"), a Wisconsin
limited partnership, and Great Lakes Investors LLC ("Great Lakes"), a Wisconsin
limited liability company, RAL III sold substantially all of its business and
assets, consisting principally of its real estate holdings, to Great Lakes and
its affiliates, Great Lakes Investors III LLC ("Great Lakes III"), a Wisconsin
limited liability company, and Good Pizza LLC, a Wisconsin limited liability
company. The closing of the sale to Great Lakes of RAL III's multi-family
residential real estate occurred on October 30, 1998. The sale to Great Lakes
III of RAL III's commercial real estate, and the sale to Good Pizza LLC of the
business assets of a restaurant owned and operated by RAL III, occurred on
November 3, 1998. Pursuant to these sales, RAL III received an aggregate
purchase price of $4,229,000, before adjustments required by the Purchase
Agreement. Of the aggregate purchase price, before adjustments required by the
Purchase Agreement, $3,404,000 was paid in cash, $400,000 was paid in the form
of a land contract from Great Lakes III for the real property component of a
restaurant owned and operated by RAL III in Milwaukee, Wisconsin and $425,000
was paid in the form of a promissory note from Good Pizza LLC for the business
assets (other than real property) of such restaurant. A land contract and
promissory note were used instead of cash to purchase the Milwaukee restaurant
property because a conditional use permit for that property had expired and
efforts are currently being made to have it renewed. The land contract and the
promissory note are due and payable, with interest at 10% per annum, on December
15, 1998.
The description in this Current Report of the terms and provisions of
the Purchase Agreement is qualified in its entirety by reference to the text
thereof, which is attached as an exhibit to this Current Report and incorporated
by reference herein.
Douglas C. Heston is a member of Great Lakes Investment Management LLC,
a Wisconsin limited liability company that is the manager of Great Lakes, and a
member of Great Lakes III and Good Pizza LLC. He is also a shareholder, director
and officer of First Financial Realty Management, Inc. ("FFRM"). FFRM has
provided property management and partnership administration services for RAL
III.
Mr. Heston is also a shareholder, director and officer of First
Financial Realty Advisors, Inc. ("FFRA"). In 1995, FFRA purchased from Robert A.
Long, a General Partner of RAL III, certain economic benefits which would
otherwise accrue to Mr. Long, including the right to receive a portion of any
distributions of cash flow and sales or refinancing proceeds from RAL III to its
General Partners.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RAL YIELD + EQUITIES III LIMITED
PARTNERSHIP
Date: October 30, 1998 By: /s/Thomas R. Brophy
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Thomas R. Brophy
General Partner
S-1
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RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
EXHIBIT INDEX TO FORM 8-K
Dated October 30, 1998
Exhibit
No. Description
2 Asset Purchase Agreement, dated February 17, 1998, as amended as
of June 26, 1998 and as of October 29, 1998, between RAL Yield +
Equities III Limited Partnership and Great Lakes Investors LLC.
E-1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of February 17, 1998 between GREAT LAKES
INVESTORS LLC, a Wisconsin limited liability company, or assigns ("Buyer"), and
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP, a Wisconsin limited partnership
("Seller").
RECITALS
A. Seller owns the business described on the attached Exhibit A (the
"Business," consisting of the "Projects" listed on Exhibit A).
B. Buyer desires to purchase the Business and the assets of the
Business defined in Section 1 (the "Assets"), and Seller desires to sell the
Business and the Assets to Buyer, on the terms and conditions of this Agreement.
AGREEMENTS
In consideration of the foregoing recitals and the mutual agreements
that follow, the receipt and sufficiency of which Buyer and Seller acknowledge,
BUYER AND SELLER AGREE:
1. Purchase and Sale. Buyer shall purchase from Seller and Seller shall
sell to Buyer the Assets of the Business, comprised of the Property, the Name,
and the Business Interests, defined as follows:
(a) "Property" means:
(1) The real property described on the attached Exhibit
1(a)(1) and all easements, servitudes and other rights appurtenant to it,
including all rights, title and interest of Seller in and to the adjacent
streets, alleys and rights-of-way and all interests in contiguous property owned
by Seller, its general partners or its affiliates (collectively, the "Land").
(2) All buildings, improvements, and building fixtures
located on the Land collectively, the "Improvements"; together with the Land,
the "Real Property").
(3) All equipment and personal property owned by Seller and
located
on the Real Property (collectively, the "Personal Property").
(4) All warranties for construction protecting against
material defects in and to the Improvements that were received by Seller from
its contractors and material suppliers, to the extent assignable ("Warranties").
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(5) All contracts for maintenance, materials and service to
items (1) through (3) (collectively, the "Contracts").
(b) "Name" means all of Seller's right, title and interest in
and to the name of the Business set forth on Exhibit A, and all rights to
telephone numbers, telephone directory listings, existing advertising and media
and promotional materials, to the extent assignable.
(c) "Business Interests" means all of Seller's right, title
and interest in and to the contacts, reputation or good will of the Business,
all leases affecting the Property ("Leases"), any rights related to vacant land
adjacent to the Real Property, any dealership agreements for the sale or
distribution of manufactured housing related to the Business, any franchise
rights related to the Business, and such other rights, interests or intangibles
involved in the operation of the Business, including (without limitation) the
items described on the attached Exhibit 1(c).
2. Earnest Money; Consideration.
(a) Contemporaneously with execution of this Agreement, Buyer
shall deliver $10,000.00 (the "Deposit") to Chicago Title Insurance Company (the
"Title Insurance Company") to be held as earnest money and either applied to the
cash payment set forth below at closing or disbursed to Buyer or Seller, as the
case may be, pursuant to the terms of this Agreement. The earnest money shall be
held in an interest-bearing account, with interest considered additional earnest
money. The parties agree that the earnest money is sufficient consideration for
Buyer's exclusive right to inspect and purchase the Assets pursuant to this
Agreement, and for Seller's execution and delivery of, and performance of its
obligations under, this Agreement. This consideration is in addition to and
independent of any other consideration or payment provided in the Agreement.
(b) Within 10 days after this Agreement becomes binding, Buyer
shall execute and deliver to Seller, as additional earnest money, Buyer's
$100,000 promissory note payable in full at Closing or upon Buyer's breach of
this Agreement (the "Buyer Note"). Within 3 business days after waiver or
satisfaction of the last of Seller's conditions precedent under Section 4A,
Buyer shall deliver to Seller a $100,000 letter of credit issued by a financial
institution reasonably acceptable to Seller securing Buyer's obligations under
the Buyer Note (the "Letter of Credit"). Buyer's payment of the Buyer Note shall
be credited against the Purchase Price at Closing. If the transactions
contemplated under this Agreement fail to close due to Seller's default (other
than default limited to a valid legal defect in title that Buyer is unwilling to
waive) or failure to satisfy or waive any of Seller's conditions precedent set
forth in Section 4A, the Buyer Note shall be void, and Seller shall immediately
return the original Buyer Note and the original Letter of Credit to Buyer, both
marked "Canceled."
3. Purchase Price. The purchase price for the Assets ("Purchase Price")
is set forth on the attached Exhibit 3. The allocation of the Purchase Price
among the Projects (the "Project Allocations") is set forth on Exhibit A.
Subject to the prorations and credits set forth in Section
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9 and elsewhere in this Agreement, Buyer shall pay the Purchase Price to Seller
at Closing by certified or cashier's check or wire transfer.
4. Buyer's Conditions Precedent. The matters set forth below are
conditions precedent to Buyer's obligation to conclude this transaction. If
Buyer does not deliver written notice to Seller by the date established on the
attached Exhibit 4 for each condition that the condition has not been satisfied
and that Buyer therefore elects to exercise such rights as Buyer may have under
this Section, Buyer shall be deemed to have waived the condition. If Buyer
timely elects to terminate Buyer's obligation to purchase a Project because of a
failure to satisfy any condition with respect to such Project, then the Purchase
Price shall be reduced by the Project Allocation for the affected Project, and
as to the affected Project, this Agreement shall terminate, and Buyer shall
promptly deliver to Seller (at no cost to Seller) copies of the reports it
obtains in connection with the Project.
(a) Buyer shall order a survey of each Project from a surveyor
or engineer reasonably acceptable to Seller. The parties shall share the survey
costs equally, subject to adjustment as provided below. Each survey must comply
with the minimum detail requirements to permit the Title Insurance Company to
issue owner's and lender's policies of title insurance free from exceptions for
matters that a current survey would disclose, showing the foundations of all
buildings constituting Improvements, the courses and dimensions of and the area
of the Land, all recorded or apparent easements or rights-of-way appurtenant to
or part of the Real Property or to which the Real Property is subject, the
location of all adjoining streets, any applicable flood hazard zone or notation
of the lack of any such zone, and the distances of any buildings to the
boundaries of the Real Property, and showing that the Real Property is free from
questions of encroachment. Buyer shall deliver each survey to the Title
Insurance Company. Buyer shall deliver written notice to Seller of any title
defects disclosed by the surveys that are not Permitted Encumbrances (defined
below) and to which Buyer objects. Seller shall use reasonable efforts to
eliminate such objections that are not Permitted Encumbrances. If Seller fails
to timely eliminate any objection that is not a Permitted Encumbrance, Buyer may
either accept such objections, which will then become Permitted Encumbrances, or
terminate this Agreement as to any or all affected Projects. If Buyer does not
timely notify Seller of any defects as required above, then this condition shall
be deemed satisfied.
(b) Seller, at Seller's expense, shall order a written
commitment from the Title Insurance Company to issue an ALTA owner's policy of
title insurance with general exceptions deleted, in the amount of the Purchase
Price allocated to the Real Property as shown in the Purchase Price allocation
on Exhibit 3, insuring that on recording the warranty deed from Seller to Buyer
the Real Property shall be free and clear of all liens, encumbrances and defects
except the matters listed on the attached Exhibit 4(b) ("Permitted
Encumbrances"). Buyer must either approve the form and content of this
commitment or give Seller written notice of its objections to the matters
disclosed in it. Seller shall use reasonable efforts to eliminate such
objections that are not Permitted Encumbrances. If Seller fails to timely
eliminate any objection that is not a Permitted Encumbrance, Buyer may either
accept such objections, which will then become Permitted Encumbrances, or
terminate this Agreement as to any or all affected Projects.
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(c) Buyer shall order a written environmental assessment of
the Property from a qualified environmental engineer and an engineering report
of the utility systems serving the Property from a qualified engineer. The
parties shall share the assessment costs equally, subject to adjustment as
provided below. Seller shall assist in the preparation of the environmental
assessment and engineering report, if reasonably required by Buyer, by providing
all information Seller may have and that is reasonably requested, permitting
soil samples to be taken from the Real Property, and complying in a timely
manner with any other reasonable requests of the persons preparing the
environmental assessment and engineering report. Buyer shall deliver written
notice to Seller of any defects disclosed by the environmental assessment and
engineering report (including the matters set forth in Section 7, the existence
of underground storage tanks, or objections of Buyer's lender, if any, to the
content or conclusion of the assessment and report) ("Defects"). Seller shall,
within 10 days after notice, obtain from one or more firms reasonably acceptable
to Buyer a quotation of the cost of remediating the Defects. If the quotation is
less than or equal to the lesser of $100,000 or 10% of the Project Allocation
for the affected Project, Seller shall, at its expense before closing, remediate
the Defects. If the quotation is more than such amount and Seller is unwilling
to pay the additional amount, Buyer shall have the following options:
(1) In the case of all Projects other than the Rocky Rococo
Restaurant in Milwaukee, Wisconsin (the "Rocky's"), Buyer may either (i)
terminate this Agreement as to the affected Project and have the Purchase
Price reduced by the Project Allocation; or (ii) close on the affected Project
and offset Seller's share of the quotation for remediating the Defects against
the Purchase Price. If Buyer chooses option (ii) above, Seller shall have no
further obligations with respect to remediating the affected Project's Defects.
(2) In the case of the Rocky's, Buyer may defer taking title
to the affected Project until the Defects have been remediated. If Buyer selects
this option, Buyer shall at Closing pay the Project Allocation to Seller to
purchase the restaurant operations at the Project (including the franchise
rights described in Exhibit 1(c)), and Buyer and Seller shall at Closing enter
into a groundlease of the affected Project at a net rent of $1 per year. Buyer
shall be entitled to all income from the Project during the groundlease term,
and shall be responsible for the payment of all real estate taxes, insurance,
cost of maintenance and repairs, and all other carrying costs and operating
expenses associated with the affected Project. Buyer shall have the Project's
Defects remediated, and Seller shall pay the lesser of $100,000 or 10% of the
Project Allocation toward the remediation costs, with Buyer paying the
balance. The groundlease shall expire when the Defects have been remediated,
at which time Buyer shall take title to the affected Project.
If Buyer acquires a Project affected by Defects and all or a portion of the cost
of remediating the Defects is reimbursable from the State of Wisconsin PECFA
Fund, the reimbursement shall first be paid to reimburse Buyer such costs that
were paid by Buyer (to the extent they are reimbursable), and the balance shall
be paid to Seller.
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(d) Buyer shall receive, at Seller's expense before closing,
the written consent of each party to the contracts listed on Exhibit 1(c) whose
consent is required for the transfer of Seller's contract rights to Buyer.
(e) At closing, the information contained in the Exhibits to
this Agreement must be materially accurate and complete with respect to all
material matters, and not contain any untrue statements of material fact or omit
material facts which would render any Exhibit misleading.
4A. Seller's Conditions Precedent. The matters set forth below are
conditions precedent to Seller's obligation to conclude this transaction. If
Seller delivers written notice to Buyer by Seller's Contingency Deadline
(defined below) that any such condition has not been satisfied or waived, Seller
may terminate this Agreement by written notice to Buyer. If Seller timely elects
to terminate this Agreement because of Seller's failure to satisfy or waive any
condition, this Agreement shall terminate, the Deposit, the Buyer Note (marked
"Canceled"), and the Letter of Credit (also marked "Canceled") shall be promptly
returned to Buyer, and neither party shall have any further obligation to the
other except as set forth in Sections 8(b) and 11. If Seller fails to timely
deliver such notice, these conditions shall be deemed waived. "Seller's
Contingency Deadline" shall be June 13, 1998, provided that as long as Seller is
diligently pursuing satisfaction of Seller's conditions precedent, this date may
be extended, at Seller's option, to August 13, 1998.
(a) Seller must obtain either (1) approval of the transaction
by the federal Securities and Exchange Commission and all state securities
commissioners with jurisdiction, or (2) an opinion of counsel reasonably
satisfactory to Seller that such approval is not required. Buyer shall cooperate
in Seller's efforts to obtain such approvals, including providing financial
information concerning Buyer if required.
(b) The Limited Partners of Seller must approve the
transactions contemplated in this Agreement by the consent or approval of the
holders of a majority of the outstanding limited partnership interests in
Seller.
(c) Seller must receive a so-called "fairness opinion,"
prepared at Seller's expense by an independent valuation company (e.g.,
Valuation Research Corporation or American Appraisal Associates, Inc.) of
Seller's choosing, which (1) states that this Purchase Price is fair and
adequate consideration for the Assets in language, and subject to assumptions
and qualifications, customary in the industry and (2) is reasonably satisfactory
to Seller's securities counsel, Foley & Lardner, and at least a majority of
Seller's general partners.
4B. Mutual Condition Precedent. The parties' obligations under this
Agreement are contingent on this transaction closing simultaneously with the
transactions contemplated under the agreements of the same date between Buyer
and the affiliates of Seller described on the attached Exhibit 4B, provided that
in the case of the agreement with RAL Income + Equity Growth V Limited
Partnership ("RAL V"), this condition shall be deemed satisfied if all of the
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transactions with RAL V are closed by January 31, 1999 in accordance with the
terms of the Asset Purchase Agreement between Buyer and RAL V of the same date
as this Agreement.
5. Matters Pending Closing. Until closing:
(a) Buyer's authorized representatives, including its
appraisers, architects and engineers, shall have access to the Property and to
all Seller's records and information regarding the Property (whether on the
Property or at Seller's offices) during normal business hours and after at least
24 hours prior written or oral notice. Any entry on the Property by Buyer's
authorized representatives shall not interfere with the rights of tenants in
possession, and shall be subject to the provisions of Section 11(b).
(b) Without Buyer's prior written consent, except as provided
in this paragraph, Seller shall not: (1) make any new lease affecting the
Business or the Property or permit the termination or modification of any Lease
except in the ordinary course of Seller's Business; (2) transfer all or any
portion of the Property; (3) create any liens, encumbrances, easements or
rights-of-way affecting the Property; or (4) settle any lawsuits related to the
Business or the Assets. The foregoing provision notwithstanding, Seller may
sell, or enter into one or more contracts to sell, the specific Projects
identified in the attached Exhibit 5(b). If Seller sells, or enters into a
contract to sell, any such Project, the Purchase Price shall be reduced by the
Project Allocation.
(c) Seller shall maintain the Property in accordance with
standards previously followed by Seller and shall take no action affecting the
Property that is not in the ordinary course of Seller's Business without Buyer's
prior written consent. Seller shall maintain at customary levels all
inventories, building supplies and personal property used in the normal
maintenance, servicing, supplying and upkeep of the Property.
(d) Seller shall not remove any Improvements or Personal Property from
the Property unless removal is for the purpose of repair or maintenance, in
which case the property removed shall be promptly replaced.
(e) Seller shall maintain fire and extended coverage insurance
in the amount of the replacement cost of the Improvements and Personal Property,
together with rent loss insurance in an amount not less than the annual gross
rents payable by tenants under the Leases.
(f) Seller shall not enter into any new or modify any existing
service or employment contracts that shall not expire on or before closing
without Buyer's prior written consent, which shall not be unreasonably withheld.
6. Closing Date.
(a) The transaction contemplated under this Agreement shall be
closed at the offices of Mallery & Zimmerman, S.C., 111 East Wisconsin Avenue,
Suite 1790, Milwaukee,
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Wisconsin 53202, or Buyer's lender's attorneys, if any, within 45 days after
satisfaction or waiver of the conditions set forth in Section 4A (the "Closing
Date"), or at such other time and place as the parties may agree. Possession of
the Property shall be delivered to Buyer on the Closing Date, subject to the
rights of tenants under the Leases.
(b) At closing Seller shall deliver to Buyer the following
documents:
(1) A General Warranty Deed conveying to Buyer
the Real Property, subject only to Permitted Encumbrances;
(2) A Bill of Sale conveying to Buyer the
Personal Property free andclear of liens or encumbrances;
(3) Each Lease then in effect and an Assignment
conveying to Buyer the interest of Seller in and to each Lease, as amended;
(4) An Assignment conveying to Buyer the interest
of Seller in and to the Warranties and the Contracts and written verification
that any present property management agreement with an affiliate of Seller other
than Midwest Property Management I, Inc. or Midwest Property Management II, Inc.
has been terminated;
(5) The owner's policy of title insurance
required under Section 4(b);
(6) An Assignment conveying to Buyer the interest
of Seller in the Name and good will;
(7) The original Buyer Note, marked "Paid," and
the original Letter of Credit, marked "Canceled"; and
(8) Such other documents as Buyer may reasonably
request.
(c) At closing Buyer shall deliver to Seller payment of the
balance of the Purchase Price.
7. Seller's Warranties and Representations. This Agreement is entered
into by Buyer based on the representations and warranties of Seller contained in
it. These representations and warranties shall be true and correct as of the
date of this Agreement and as of the Closing Date and shall survive closing,
subject to the provisions of Section 13(d). Seller acknowledges that the
warranties and representations made by Seller are a material inducement to
Buyer's entering into this Agreement. No inspection, testing or mapping by Buyer
of the Property shall constitute a waiver by Buyer of its rights to rely on
Seller's representations and warranties, provided, however, that the
representations and warranties shall be deemed modified by any factual matters
disclosed by any inspection, testing or mapping that make Buyer or its agents
actually aware of inaccuracies in the representations and warranties. Seller's
representations and warranties shall
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also be deemed modified by any factual matters of which Buyer, Buyer's affiliate
First Financial Realty Management, Inc. ("FFRM"), or their respective employees
or agents have received or do receive actual or constructive notice in the
course of performing partnership administration services for Seller or managing
the Property and the Business, or otherwise. Seller represents and warrants to
Buyer that Seller owns the Assets free and clear of all liens and encumbrances
other than Permitted Encumbrances. Seller makes no representations or warranties
concerning the physical condition of the Assets, and is selling the Assets in
their physical condition as-is, where-is, and with all faults.
8. Closing Costs.
(a) If the transaction closes, Seller shall be responsible for
the title insurance premiums for the owner's policy (with no special
endorsements), survey charges, real estate transfer fees, and costs for the
engineering reports; and Buyer shall be responsible for the costs of the
environmental studies. To the extent either party has paid costs for which the
other is responsible, the responsible party shall reimburse the other party at
closing.
(b) If the transaction does not close due to Buyer default,
Buyer shall reimburse Seller for all costs previously paid by Seller for the
items set forth in paragraph (a). If the transaction does not close due to
Seller default, Seller shall reimburse Buyer for all costs previously paid by
Buyer for such items. If this transaction does not close for any other reason,
the parties shall share the costs of such items equally.
(c) In either case, each party shall pay its own attorneys'
fees and expenses.
9. Prorations and Credits.
(a) The following items shall be prorated and apportioned as
of the Closing Date: net general real estate taxes, utility charges, current and
prepaid rent, and any amounts payable under the Contracts. For the purposes of
prorating real estate and personal property taxes on the Closing Date, the taxes
for the year of closing shall be prorated based upon the prior year's net tax
amounts. Municipal parking fees shall be reflected, if necessary, to avoid Buyer
incurring any liability for parking fees collected or assessed prior to the
Closing Date. Special assessments, if any, for work on site actually commenced,
announced, or levied before the Closing Date, and all charges, tap fees,
paybacks, and other obligations for improvements affecting the Property and
imposed prior to the Closing Date, and the costs of restoring the Property as
nearly as possible to the condition that existed before such work or
improvements, shall be paid by Seller; provided, however, that the restoration
costs, if any, shall be included in the costs of remedying Defects under Section
4(c) and accordingly shall be subject to the limitations on Seller's liability
in Section 4(c). Income and expenses attributable to the Closing Date shall
accrue to Seller.
(b) Buyer shall receive credit for free rent and other rent
concessions made or granted by Seller with respect to any portion of the
Property. On the Closing Date, Seller
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shall pay to Buyer the amount of any rent security deposits then held by Seller
together with accrued interest, if any.
10. Fire or Other Casualty.
(a) If the Property or any part of it is damaged by fire or
other casualty prior to the Closing Date (as determined by Buyer in good faith),
and this casualty results in uninsured or unreimbursed loss or abatement of rent
or termination of Leases accounting for more than 5% of the rental income of the
Property, Buyer may terminate this Agreement by written notice to Seller within
20 days after the damage and this Agreement shall be of no further effect and
neither party will thereafter have any further obligation to the other except
that all earnest money paid, plus accrued interest, shall be returned promptly
to Buyer. Seller shall grant to Buyer full and free access to the Property for
the purpose of inspecting such damage and assessing the extent of it, but this
entry upon the Property by Buyer shall not interfere with Seller's
reconstruction or the rights of tenants in possession under the Leases, and
shall be subject to the provisions of Section 11(b).
(b) If this Agreement is not terminated pursuant to subsection
(a) above, closing shall occur without abatement of the Purchase Price and
Seller shall assign and transfer to Buyer at closing by written instrument all
of Seller's right, title and interest to all insurance proceeds paid or payable
to Seller on account of such fire or casualty, less the amount expended by
Seller for the cost of restoration prior to the Closing Date, and Seller shall
reimburse Buyer for the amount of any "deductible" under the insurance policy,
to the extent paid by Buyer.
11. Indemnification.
(a) Seller shall indemnify and hold Buyer harmless and shall
assume the defense of any liability or claim asserted on or after the Closing
Date against and in respect of any liabilities, obligations, costs and expenses
directly related to or connected with the Property, whether accrued, absolute or
contingent, or otherwise existing on the Closing Date or arising out of any
transaction entered into or any set of facts existing prior to the Closing Date,
except as expressly assumed in this Agreement by Buyer, or for any loss, cost,
expense or liability arising from any breach or default by Seller under this
Agreement, including breaches of Seller's warranties. Notwithstanding the
foregoing, Buyer's rights against Seller under Section 11(a) (except rights
resulting from fraud or intentional misrepresentation) shall expire unless Buyer
gives Seller written notice of a claim under this provision within one year
after closing. Further, Seller shall have no obligations under Section 11(a)
unless and until Buyer's damages exceed $50,000, and then only for the amount by
which the damages exceed that amount. Buyer agrees to look solely to the assets
of Seller (including any assets or proceeds distributed to its partners after
closing) to satisfy any claims under Section 11(a). In no event shall the
general partners of Seller be personally liable under Section 11(a), except to
the extent they have actually received assets or proceeds from Seller after
Closing.
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(b) Buyer shall indemnify and hold Seller harmless and shall
assume the defense of any liability or claim asserted on or after the Closing
Date against and in respect of any liabilities, obligations, costs and expenses
related to or connected with the Property, whether accrued, absolute or
contingent but only to the extent that such liability or claim arises out of any
transaction entered into or any set of facts coming into existence after the
Closing Date, or for any loss, cost, expense or liability arising from any
breach or default by Buyer under this Agreement, except as provided in Section
12(a). Buyer shall hold Seller harmless from and indemnify Seller against any
loss, liability, damages or expenses (including reasonable attorney fees and
disbursements) arising out of or resulting from any entry, inspection, mapping
or other investigations on the Property by Buyer, its agents, contractors or
consultants. In addition, Buyer acknowledges and is aware that Article VI(C) of
the Property Management Agreement dated as of June 1, 1993, between Seller and
Midwest Property Management II, Inc. (the "Management Agreement"), provides that
after the Projects have been transferred to Buyer pursuant to this Agreement,
the Management Agreement shall continue in full force and effect in respect of
the Projects and shall be jointly and severally binding upon Seller and Seller's
successors in title or assigns, unless terminated as provided in the Management
Agreement. Therefore, in addition to the foregoing indemnification obligations,
Buyer agrees to indemnify and hold Seller harmless from and against any loss,
costs, damages or expenses (including, without limitation, reasonable attorney's
fees and disbursements) suffered or incurred by Seller with respect to the
Management Agreement after the Closing Date.
(c) If as a result of any liability or claim either Buyer or
Seller is required to indemnify and hold the other harmless, the party to whom
the claim is made shall promptly notify the other in writing of such liability
or claim and both Buyer and Seller will cooperate with each other in the defense
of the liability or claim; the party responsible for the defense shall select
such defense counsel as it may deem necessary subject to the reasonable approval
of the other party.
12. Termination, Default and Remedies.
(a) If, after waiver or satisfaction of all contingencies
listed in Section 4, Buyer defaults under this Agreement, Buyer shall pay to
Seller, as liquidated damages, in lieu of all legal or equitable remedies which
may be available to Seller, (1) any earnest money paid or to be paid by Buyer
under this Agreement (including, without limitation, the Deposit, the Buyer
Note, and the Letter of Credit) plus accrued interest, plus (2) an additional
amount equal to Seller's actual out of pocket costs (including reasonable
attorneys' fees) incurred in connection with Seller's performance under this
Agreement.
(b) If Seller defaults under this Agreement, all earnest money
(including, without limitation, the Deposit, the Buyer Note, marked "Canceled,"
and the Letter of Credit, also marked "Canceled") and accrued interest shall be
returned to Buyer and, in addition, Buyer may pursue any legal or equitable
remedy that may be available to Buyer. In the alternative, Buyer may choose the
remedy set forth in Section 12(c) below, if applicable. However, if Seller is in
default under this Agreement solely by reason of a valid legal defect in title
that Buyer is
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<PAGE>
unwilling to waive, the earnest money paid and accrued interest shall be
returned to Buyer as Buyer's sole remedy and this Agreement shall be void.
(c) If this transaction does not close due to Seller's default
(other than default limited to a valid legal defect in title that Buyer is
unwilling to waive) or inability to satisfy the condition set forth in Section
4A(b), then if, within 12 months after Seller's default or termination of this
Agreement, Seller sells or enters into a contract to sell the Assets to another
buyer(the "Post-Termination Sale or Contract"), Seller shall pay Buyer a
termination fee equal to the lesser of the following: (1) 25% of the amount by
which the sale price under the Post- Termination Sale or Contract exceeds the
Purchase Price defined in this Agreement; or (2) 6% of the Purchase Price
defined in this Agreement. If Buyer chooses this remedy, such payment shall be
paid by Seller to Buyer as liquidated damages, in lieu of all legal or equitable
remedies that may be available to Buyer.
13. Miscellaneous Provisions.
(a) Interpretation. This Agreement is governed by and shall be
construed in accordance with the laws of the State of Wisconsin. Time is of the
essence of this Agreement. This Agreement supersedes all prior agreements and
communications, written or verbal, between Buyer and Seller relating to the
purchase and sale of the Assets.
(b) Assignment. Buyer may assign this Agreement, provided the
assignee assumes the obligations of Buyer, but Buyer shall remain liable for
Buyer's obligations. The representations, warranties, covenants and agreements
contained in this Agreement and all other rights of Buyer arising under this
Agreement shall inure to the benefit of any such assignee.
(c) Effect of Acceptance. Upon execution of this Agreement by
Buyer, FFRM, and at least three out of four of the individuals signing on behalf
of Seller, this Agreement shall be binding upon and inure to the benefit of
Buyer and Seller and their respective heirs, legal representatives, successors
and assigns. There are no conditions, representations, warranties, covenants, or
agreements relating to this transaction not contained in this Agreement or in
the Exhibits to it. Any subsequent conditions, representations, warranties,
covenants or agreements shall not be valid and binding upon the parties unless
in writing and signed by both parties.
(d) Survival. All representations, warranties, covenants and
agreements in this Agreement shall survive the Closing Date and shall not merge
in the General Warranty Deed or any other document executed and delivered in
performance of this Agreement. However, Buyer's rights against Seller for any
breach of a representation or warranty (except a breach resulting from fraud or
intentional misrepresentation) shall expire unless Buyer gives Seller written
notice of an alleged breach within one year after Closing. Buyer agrees to look
solely to the assets of Seller (including any assets or proceeds distributed to
its partners after Closing) to satisfy any claims under such provision.
Notwithstanding anything to the contrary provided in this Agreement, in no event
shall the general partners of Seller be personally liable under any
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<PAGE>
provision(s) of this Agreement or with respect to any of Seller's obligations
hereunder, except to the extent they have actually received assets or proceeds
from Seller after Closing.
(e) Notices. Any notice required to be given herein will be in
writing and either delivered personally or sent postage prepaid by certified
United States Mail, return receipt requested, addressed, if to Buyer, at 20875
Crossroads Circle, Waukesha, Wisconsin 53186 and if to Seller c/o Martin W.
Meyer, Esq., Domnitz, Mawicke, Goisman & Rosenberg, S.C., 1509 North Prospect
Avenue, Milwaukee, Wisconsin 53202. Either party may, by written notice,
designate a different address for notices. Notice shall be deemed given when
personally delivered to the office of either party during normal business hours
or when deposited in the mail.
(f) Disclosure. Certain of Buyer's affiliates are licensed
real estate brokers who intend to realize a profit from this transaction.
(g) Post-Closing Management. Buyer shall cause FFRM to
continue to provide partnership administration services (preparation of Seller's
tax returns and reports and attendant income tax schedules for partners of
Seller and the like) to Seller at no cost to Seller until Seller has been
dissolved and finally liquidated. If FFRM fails to perform such partnership
administration services for any reason, Buyer shall be obligated to perform, or
cause to be performed, such partnership administration services.
(The rest of this page is intentionally left blank.)
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<PAGE>
GREAT LAKES INVESTORS LLC
By: /s/ Douglas C. Heston
Douglas C. Heston, Manager
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
By: /s/ Thomas R. Brophy
Thomas R. Brophy,
General Partner
By: /s/ John A. Hanson
John A. Hanson,
General Partner
By: /s/ Robert A. Long
Robert A. Long,
General Partner
By: /s/ Bart Starr
Bart Starr,
General Partner
CONSENT OF MANAGER
First Financial Realty Management, Inc. agrees to the provisions
of Section 13(g) of this Agreement.
FIRST FINANCIAL REALTY MANAGEMENT,
INC.
By: /s/ Douglas C. Heston
Douglas C. Heston, President
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<PAGE>
EXHIBITS:
A - Description of Business
1(a)(1) - Legal Description of Land
1(c) - Specific Business Interests
3 - Purchase Price and Allocation
4 - Contingency Deadlines
4(b) - Permitted Encumbrances
4B - Agreements with Seller's Affiliates
5(b) - Assets Seller May Sell
14
<PAGE>
EXHIBIT A
Description of Business
Project Allocation
Shamrock Mobile Home Park TBD
Albany, Minnesota
Forest Junction Mobile Home Park TBD
Forest Junction, Wisconsin
Cloverleaf Mobile Home Park TBD
St. Cloud, Minnesota
Wendy's Restaurant TBD
Waukesha, Wisconsin
Pizza Hut Restaurant TBD
Normal, Illinois
Pizza Hut Restaurant TBD
Minnetonka, Minnesota
Rocky Rococo Pan Style Pizza Restaurant TBD
Milwaukee, Wisconsin
<PAGE>
EXHIBIT 1(a)(1)
Legal Description
To be provided in title insurance commitment
<PAGE>
EXHIBIT 1(c)
Specific Business
Rights under the franchise agreement with Rocky Rococo Corporation with respect
to the Rocky Rococo Pan Style Pizza restaurant in Milwaukee, Wisconsin, which
agreement must by Closing be extended through the year 2008 on terms
substantially identical to its present terms. If necessary to obtain the
franchisor's approval of the assignment of such franchise agreement or to extend
the term of such franchise agreement, Douglas C. Heston, by his execution of
this Agreement on behalf of Buyer, agrees to personally guarantee all of Buyer's
obligations under such franchise agreement. If the parties are unable to obtain
an assignment or an extension of the franchise agreement, Buyer shall have the
option to either (1) waive the requirement that the agreement be assigned or
extended, or (2) terminate this Agreement as to the affected Project and have
the Purchase Price reduced by the Project Allocation.
<PAGE>
EXHIBIT 3
Purchase Price
The Purchase Price is $4,229,000.
<PAGE>
EXHIBIT 4
Contingency Deadlines
Section Contingency Deadline*
4(a) Notice of survey defects 60 days
Remedy of survey defects 90 days
4(b) Notice of title objections 60 days
Remedy of title objections 90 days
4(c) Notice of environmental defects 75 days
Remedy of environmental defects 105 days
* Expressed as the number of days after the date of this Agreement. Deadlines
falling on a non-business day shall be extended to the next business day.
<PAGE>
EXHIBIT 4(b)
Permitted Encumbrances
Each encumbrance specifically listed in the Title Insurance Commitment shall be
a "Permitted Encumbrance" under this Agreement, provided it does not (a)
materially interfere with the access to and from or the use or occupancy of the
Real Property; or (b) result in the violation of any building or zoning code; or
(c) create or result in a material encroachment that materially interferes with
the access to and from or the use or occupancy of the Real Property or any
properties adjacent to the Real Property or materially reduces the value of the
Real Property or any properties adjacent to the Real Property; (d) constitute a
monetary lien that will not be discharged at or prior to the Closing Date; or
(e) materially interfere with Buyer's ability to continue to lease at their fair
rental values those mobile home sites at the Property (assuming the Property is
a mobile home park) that have been under lease during any part of the year
preceding the Closing Date.
<PAGE>
EXHIBIT 4B
Agreements With Seller's Affiliates
Asset Purchase Agreement with RAL - Yield Equities II Limited Partnership
Asset Purchase Agreement with RAL Yield + Equities IV Limited Partnership
Asset Purchase Agreement with RAL Income + Equity Growth V Limited Partnership
Asset Purchase Agreement with RAL Germantown/Monroe Income Limited Partnership
(The simultaneous closing of this transaction with Buyer, as required under
Section 4B, shall only be required if the transaction with Buyer is approved by
the holders of a majority of the outstanding limited partnership interests in
RAL Germantown/Monroe Income Limited Partnership)
Purchase Agreement with Thomas R. Brophy, John A. Hanson, and Robert A. Long
(and possibly Bart Starr)
<PAGE>
EXHIBIT 5(b)
Assets Seller May Sell
None
<PAGE>
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement ("First
Amendment") is made as of June 26, 1998 by and between GREAT LAKES INVESTORS
LLC, a Wisconsin limited liability company ("Buyer"), and RAL YIELD + EQUITIES
III LIMITED PARTNERSHIP, a Wisconsin limited partnership ("Seller").
RECITALS
A. Buyer and Seller entered into that certain Asset Purchase
Agreement dated February 17, 1998 (the "Original Agreement"), pursuant to which
Seller agreed to sell and Buyer agreed to purchase the Assets, as defined in
Section 1 of the Original Agreement.
B. Purchaser and Seller desire to amend certain provisions of
the Original Agreement as set forth in this First Amendment.
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Original Agreement and in this First Amendment, it is agreed as
follows:
1. Contingency Deadlines. The deadlines contained in Sections
4 and 4A of the Original Agreement regarding notices, remedies and the
satisfaction or waiver of the contingencies contained therein shall be changed
as follows:
a. Exhibit 4 of the Original Agreement shall be deleted in
its entirety and replaced with the form of Exhibit 4 attached to this First
Amendment. If Buyer is diligently attempting to satisfy the contingencies set
forth in Sections 4(a), 4(b) and 4(c) of the Original Agreement, Buyer shall
have the right to further extend to September 15, 1998 any or all of the
deadlines set forth on the amended Exhibit 4 that relate to notice of defects or
objections, in which case the related deadline for the remedy of such defects or
objections shall be extended to October 15, 1998. If Buyer desires to exercise
its right to extend any or all of such deadlines, it must so notify Seller on or
before July 15, 1998.
b. "Seller's Contingency Deadline", as defined in Section 4A
of the Original Agreement, shall be changed from June 13, 1998 (which was
previously extended by Seller to August 13, 1998) to July 15, 1998. If Seller is
diligently attempting to satisfy the contingencies set forth in Section 4A of
the Original Agreement, Seller shall have the right to further extend the date
of Seller's Contingency Deadline to September 15, 1998. If Seller desires to
exercise its right to extend Seller's Contingency Deadline, it must so notify
Buyer on or before July 15, 1998.
2. Closing Date. The "Closing Date" as defined in Section 6(a)
of the Original Agreement shall be changed to July 31, 1998, provided that if
Buyer exercises its right to extend one or more contingency deadlines pursuant
to Section 1(a) of this First Amendment and/or if Seller exercises its right to
extend Seller's Contingency Deadline pursuant to Section 1(b) of this First
Amendment, then the "Closing Date" shall be extended to the date that is
<PAGE>
fifteen (15) days after all of the conditions set forth in Sections 4 and 4A
have been satisfied or waived.
3. Purchase of Inventory. At the closing of the transaction
contemplated herein, Seller shall convey to Buyer all of Seller's right, title
and interest in and to any and all food and beverage inventory on hand at the
Rocky's (as defined in the Original Agreement) at the close of business on the
day preceding the Closing Date. The price to be paid by Buyer to Seller for such
food and beverage inventory shall be equal to the amount paid by Seller to
purchase such items, and shall be in addition to the Purchase Price.
4. Effect of Amendment. Except as amended or modified as set
forth herein, the Original Agreement shall remain unchanged, in full force and
effect and binding upon the parties.
5. Counterparts. This First Amendment may be executed in one
or more counterparts, each of which will be deemed an original of this First
Amendment.
IN WITNESS WHEREOF, Buyer and Seller have executed this First
Amendment as of the date first written above.
GREAT LAKES INVESTORS LLC
By: /s/ Douglas C. Heston
Douglas C. Heston, Manager
RAL YIELD + EQUITIES III LIMITED
PARTNERSHIP
By: /s/ Thomas R. Brophy
Thomas R. Brophy, General Partner
By: /s/ John A. Hanson
John A. Hanson, General Partner
By: /s/ Robert A. Long
Robert A. Long, General Partner
By: /s/ Bart Starr
Bart Starr, General Partner
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<PAGE>
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
This Second Amendment to Asset Purchase Agreement ("Second Amendment")
is made as of October 29, 1998 by and between GREAT LAKES INVESTORS LLC, a
Wisconsin limited liability company ("Buyer"), and RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP, a Wisconsin limited partnership ("Seller").
RECITALS
A. Buyer and Seller entered into that certain Asset Purchase Agreement
dated February 17, 1998 and amended June 26, 1998 (as amended, the "Original
Agreement"), pursuant to which Seller agreed to sell and Buyer agreed to
purchase the Assets, as defined in Section 1 of the Original Agreement.
B. Buyer and Seller desire to amend certain provisions of the Original
Agreement as set forth in this Second Amendment.
NOW, THEREFORE, in consideration of the mutual agreements contained in
the Original Agreement and in this Second Amendment, it is agreed as follows:
1. Closing Date. The "Closing Date" as defined in Section 6(a) of the
Original Agreement is changed to November 2, 1998 or such other date as the
parties may agree to in writing.
2. Project Allocations. The second sentence in Section 3 of the Original
Agreement shall be amended to read as follows: "The allocation of the Purchase
price among the Projects (the `Project Allocations') shall be mutually agreeable
to Buyer and Seller and shall be set forth on the Closing Statement(s) to be
executed by Seller and Buyer at closing." The column with the heading
"Allocation" on Exhibit A of the Original Agreement shall be deleted in its
entirety. The following new provision shall be added at the end of Section 3 of
the Original Agreement:
For each Project Allocation, Buyer and Seller shall mutually agree on an
allocation among various categories such as land, improvements,
goodwill, favorable leases, business interests, personal property and
non-competition agreements. Such allocation shall be set forth on the
Closing Statement(s) to be executed by Seller and Buyer at closing, and
shall be used by Seller and Buyer for income tax reporting purposes and
to determine the amount of transfer fees or taxes to be paid upon the
sale of each Project. If the taxing authority that imposes such transfer
fees or taxes upon the sale of each Project requires adjustments in such
allocations to be made, thereby resulting in an increase in the transfer
fees or taxes payable with respect to such sale, Buyer shall be
responsible for the payment of such additional transfer fees or taxes.
Buyer shall indemnify and holder Seller harmless from and against such
additional transfer fees and taxes and any interest or penalties related
thereto, and any costs or expenses (including, without limitation,
reasonable attorney's fees and
<PAGE>
legal costs and disbursements) incurred by Seller in connection with the
imposition of such additional transfer fees or taxes.
3. Rocky's Remediation Costs. Section 4(c)(2) of the Original Agreement
is amended to read as follows:
In the case of the Rocky's, Buyer shall take title to the Project at
closing pursuant to the Land Contract described in Section 4 of the
Second Amendment, even though Buyer has not completed its Phase II
environmental assessment (the "Phase II") of that property. Buyer shall
act with due diligence to cause the Phase II to be completed as soon as
practicable. If any Defects are disclosed by the Phase II, Buyer shall
promptly choose an environmental consulting firm (the "Consultant")
acceptable to Seller to remediate the Defects. The Consultant shall
prepare an estimate of the cost of remediating the Defects. If the
estimated cost of remediation is less than or equal to $50,000, then
Seller shall pay to Buyer an amount equal to the estimated cost of
remediation. If the estimated cost of remediation is greater than
$50,000, then Seller shall pay to Buyer the sum of $50,000. The
foregoing payments to Buyer shall be in full satisfaction of Seller's
obligation with respect to remediating the Defects. If the Defects hae
been remediated prior to Seller's dissolution and liquidation and the
actual cost of such remediation is less than the amount paid by Seller
to Buyer pursuant hereto, then Seller shall be reimbursed promptly by
Buyer in an amount equal to the excess of the amount paid by Seller over
the actual cost of such remediation. Time shall be of the essence with
respect to all actions to be taken pursuant to the foregoing provision.
4. Sale and Purchase of the Rocky's. The Rocky's shall be sold to Buyer
as follows:
a. The real property shall be sold on a land contract (the "Land
Contract") in the amount of $400,000. The Land Contract shall bear interest at
the rate of ten percent (10%) per annum. The principal amount of the Land
Contract and all interest accrued thereon shall be due and payable in full on
December 15, 1998.
b. The personal property, goodwill and franchise rights associated
with the Rocky's shall be sold for the sum of $425,000. In consideration
therefor, at closing Buyer shall execute and deliver to Seller a promissory note
in the amount of $425,000 (the "Note"), and such other documents as may be
necessary to grant Seller a security interest in such personal property,
goodwill and franchise rights. The Note shall bear interest at the rate of ten
percent (10%) per annum.
c. The Land Contract and the Note shall contain cross-default and
cross -collateral provisions. Buyer's obligations under the Land Contract and
the Note shall be personally guaranteed by Douglas C. Heston and Dean Larkin.
2
<PAGE>
5. Sales and Use Taxes. Seller and Buyer agree that any sales or use
taxes that may be imposed or payable with respect to the sale by Seller to Buyer
of the personal property located on or about the Wauwatosa Rocky's shall be the
responsibility of Buyer. Buyer shall indemnify and holder Seller harmless from
and against such taxes and any interest or penalties related thereto, and any
costs or expenses (including, without limitation, reasonable attorney's fees and
legal costs and disbursements) incurred by Seller in connection with the
imposition of such taxes.
6. Effect of Amendment. Except as amended or modified as set forth
herein, the Original Agreement shall remain unchanged, in full force and effect
and binding upon the parties.
IN WITNESS WHEREOF, Buyer and Seller have executed this Second Amendment
as of the date first written above.
GREAT LAKES INVESTORS LLC
BY: GREAT LAKES INVESTMENT
MANAGEMENT LLC, Its Manager
By: /s/ Douglas C. Heston
Douglas C. Heston, Member
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
By: /s/ Thomas R. Brophy
Thomas R. Brophy
General Partner
3
