<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
----------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________ to ____________________
Commission File Number: 0-18444
-----------------------------
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1560476
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1300 Altura Road Fort Mill, South Carolina 29715-9201
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip code)
(803) 547-9100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS (Unaudited) (Note)
CURRENT ASSETS
Cash and cash equivalents $ 36,748 $ 45,738
Accounts receivable, tenant 38,325 39,695
Prepaid expenses 641 --
Securities available for sale 115,742 118,779
----------- -----------
Total current assets 191,456 204,212
----------- -----------
INVESTMENTS AND NONCURRENT RECEIVABLES
Properties on operating leases and properties held
for lease, net of accumulated depreciation
1999 $705,480; 1998 $705,480 2,368,802 2,333,320
OTHER ASSETS
Deferred charges, net of accumulated amortization
1999 $12,190; 1998 $12,190 2,810 2,810
Deferred leasing commissions, net of accumulated
amortization 1999 $19,265; 1998 $19,265 33,122 29,670
----------- -----------
$ 2,596,190 $ 2,570,012
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $ 500,000 $ 500,000
Current maturities of long-term debt 1,130,451 1,145,441
Accounts payable 20,592 5,997
Accrued expenses 28,414 18,296
Deferred revenue 2,179 --
----------- -----------
Total current liabilities 1,681,636 1,669,734
----------- -----------
LONG-TERM DEBT, less current maturities -- --
----------- -----------
COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners (14,020) (14,202)
Limited partners 939,708 921,681
Unrealized gain on investment securities (11,134) (7,201)
----------- -----------
914,554 900,278
----------- -----------
$ 2,596,190 $ 2,570,012
=========== ===========
</TABLE>
Note: The Condensed Balance Sheet at December 31, 1998 has been taken from the
audited financial statements at that date. See Notes to Condensed
Financial Statements.
2
<PAGE> 3
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
(Unaudited)
Rental income $ 134,932 $ 296,660
Operating expenses:
Wages and contract labor 1,500 3,300
Depreciation and amortization -- 65,144
Repairs and maintenance 27,416 47,890
Management fees 4,155 8,634
Utilities 21,597 35,901
Professional fees 15,320 26,776
Property taxes 8,995 22,881
Miscellaneous 900 6,181
--------- ---------
79,883 216,707
--------- ---------
Operating income 55,049 79,953
--------- ---------
Nonoperating income (expense):
Interest and dividend income 2,654 5,083
Interest expense (39,494) (104,039)
Other -- 1,355
--------- ---------
(36,840) (97,601)
--------- ---------
Net income $ 18,209 $ (17,648)
========= =========
Net income per limited
partnership unit $ 2.86 $ (2.77)
========= =========
</TABLE>
See Notes to Condensed Financial Statements.
3
<PAGE> 4
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 18,209 $ (17,648)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization -- 65,144
Gain on sale of securities available for sale -- (1,355)
Change in assets and liabilities:
Decrease (Increase) in prepaids, deferrals and 729 (31,347)
other receivables
Increase (Decrease) in accounts payable and accrued expenses 26,892 (29,186)
--------- ---------
Net cash provided (used) by operating activities 45,830 (14,392)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale -- 148,866
Purchase of securities available for sale (896) (70,921)
Improvements in investment property (35,482) --
Disbursements for deferred leasing commissions (3,452) (19,777)
--------- ---------
Net cash (used) provided in investing activities (39,830) 58,168
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (14,990) (28,802)
--------- ---------
Net cash (used) in financing activities (14,990) (28,802)
Net (decrease) increase in cash and cash equivalents (8,990) 14,974
Cash and cash equivalents:
Beginning 45,738 92,544
--------- ---------
Ending $ 36,748 $ 107,518
========= =========
</TABLE>
See Notes to Condensed Financial Statements.
4
<PAGE> 5
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Business:
The Partnership was formed in July 1986 to acquire, operate, hold for
investment and sell real estate. The Partnership currently owns the
EastPark Executive Center in Charlotte, North Carolina. On April 24, 1998,
the Partnership sold the BB&T building facilities (formerly the UCB
building) in Greenville, South Carolina.
2. Opinion of Management:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (all which were normal
recurring accruals) necessary for a fair presentation. The results of
operations for the interim periods are not necessarily indicative of the
results which may be expected for an entire year.
3. Statement of Cash Flows:
For purposes of reporting the statements of cash flows, the Limited
Partnership includes all cash accounts, which are not subject to
withdrawal restrictions or penalties, and all highly liquid debt
instruments purchased with a maturity of three months or less as cash and
cash equivalents on the accompanying condensed balance sheets.
4. Priority Return:
At December 31, 1998, the cumulative unpaid priority return to the unit
holders was $2,409,617 compared to $2,166,833 one year prior. This
increase resulted from no distributions being made to partners during the
year. Based on the current and projected commercial real estate market
conditions, the General Partners believe that it is reasonably unlikely
that a sale of the remaining Partnership property would produce net sale
proceeds sufficient to pay any of such priority return. Furthermore, the
General Partners believe that it is reasonably unlikely that the
Partnership's operating income or any refinancing of Partnership debt
would generate sufficient funds to pay any portion of the priority return.
5
<PAGE> 6
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Changes in Financial Condition
There have not been any significant changes in financial condition from December
31, 1998 to March 31, 1999. The Partnership had approximately $30,000 in
additional upfit costs during the first quarter of 1999. These upfit costs were
for a new tenant that moved in February 1, 1999.
Liquidity and Capital Resources
During the quarter ended March 31, 1999, the Partnership continued to fund
working capital requirements, and the working capital deficit was increased by
approximately $25,000 from December 31, 1998. The working capital deficit at
March 31, 1999 was $1,490,180. The loans on the EastPark facility with First
Union and United of Omaha mature on June 30, 1999 and July 1, 1999,
respectively. The General Partners have received a verbal commitment from First
Union to refinance both of these loans if a sale does not occur before maturity.
(See "Status of EastPark Executive Center" below)
Results of Operations
Net income from operations for the three months ended March 31, 1999 is up
approximately $35,000 compared to the same period of the prior year. The main
factor for this increase is due to the fact that depreciation and amortization
expense was not taken during the first quarter. Generally accepted accounting
principles ("GAAP") does not allow for depreciation to be taken after the
building was written down to current market value in the prior year. Rental
income and other operating expenses decreased as compared to the same period of
the prior year. The disposition of the BB&T building in the prior year is the
main factor for this decrease. The occupancy rate at the EastPark facility is
currently 91%.
Status of EastPark Executive Center
The EastPark Executive Center is now under contract to be sold to Cap Care
Group, Inc., a North Carolina Corporation, for a sales price of $2,525,000. The
due diligence period is scheduled to end on May 18, 1999 with an anticipated
closing to incur in June 1999. The sale of the EastPark Executive Center is
contingent upon receiving the consent of Limited Partners holding a majority of
the Limited Partnership Units.
Risks Associated with Year 2000
The Partnership, in its day to day operations, relies upon various computer
software and hardware that may be adversely affected by the change in the
millennium, from 1999 to 2000. In general, information system experts have
predicted that a wide variety of problems, from systems failures to data entry
and transfer errors, will result from the turn of the century. Repeated systems
failures, data entry and transfer errors and similar computer problems would
result in a material adverse effect on the Partnership and its operations.
However, the Partnership has examined its commuter software and hardware and,
based on such examination, does not reasonably anticipate any significant
internal problems as a result of the change in the millennium. The Partnership
may, however, be materially and adversely affected by external systems problems,
problems over which the Partnership has minimal control. The costs associated
with bringing the Partnership's computer systems in compliance will be minimal
as the management company of the Partnership will be responsible for the
majority of these costs. In the worst case scenario, this single-property
company would be able to operate on a manual accounting system which would not
have an adverse affect on the day to day operations of the Partnership.
6
<PAGE> 7
Forward-Looking Statements
This report contains certain forward-looking statements with respect to the
financial condition, results of operations, plans, objectives, future
performance and business of the Partnership. These forward-looking statements
involve certain risks and uncertainties. Actual results may differ materially
from those contemplated by such forward-looking statements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not engaged in any legal
proceedings of a material nature at the present time.
Item 6. Exhibit Index
(a) Exhibits:
<TABLE>
<CAPTION>
Designation
Number Under
Exhibit Item 601 of Page
Number Regulation S-K Exhibit Description Number
------- -------------- ------------------- ------
<C> <C> <S> <C>
1* 4 Instrument defining rights of security holders - set forth in the
Limited Partnership Agreement
2* 10 Limited Partnership Agreement
3** 10.1 Exclusive Leasing and Management Agreement dated October 1, 1994
(EastPark Executive Center)
4*** 10.2 Listing Agreement of Property For Lease and/or Sale
(EastPark Executive Center)
5 10.3 Offer to Purchase Contract by and between the Partnership and Cap
Care Group, Inc. dated April 16, 1999
27 Financial Data Schedule (For SEC use only)
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
three months ended March 31, 1999.
- --------------------------------------------------------------------------------
* Incorporated by reference to Exhibit A of the Partnership's
Prospectus dated December 1, 1987, Registration Number
33-07056-A.
** Incorporated by reference to Exhibit 3 of the
Partnership's Form 10-K for the year ended December 31, 1995.
*** Incorporated by reference to Exhibit 4 of the Partnership's
Form 10-Q for the quarter ended September 30, 1997.
7
<PAGE> 8
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.
YAGER/KUESTER PUBLIC FUND
LIMITED PARTNERSHIP
(Registrant)
By: DRY Limited Partnership,
General Partner of Registrant
Date 05/14/99 By: /s/ Dexter R. Yager, Sr.
-------------------------- ---------------------------------------
Dexter R. Yager, Sr.
General Partner
Date 05/14/99 By: /s/ Jerry R. Haynes
-------------------------- ---------------------------------------
Jerry R. Haynes
Chief Financial Officer
8
<PAGE> 1
OFFER TO PURCHASE CONTRACT
THIS OFFER TO PURCHASE CONTRACT, (the "Contract"), made as of the 16th
day of April 1999, by and between YAGER-KUESTER PUBLIC FUND LIMITED PARTNERSHIP
(hereinafter referred to as "Seller"), and CAP CARE GROUP, INCORPORATED, a North
Carolina Corporation having its principal place of business at 8700 Oak Spring
Lane, Colfax, North Carolina 27235 (hereinafter referred to as "Purchaser"), or
its assigns.
WITNESSETH:
In consideration of the mutual covenants and other considerations
herein contained, Seller does hereby agree to sell and Purchaser does hereby
agree to purchase those certain tracts or parcels of real property consisting of
two one-story office buildings of approximately 23,500 and 20,426 rentable
square feet of office space located on Albemarle Road in Charlotte, North
Carolina, and being more fully described on Exhibit "A" attached hereto and
incorporated herein (said real property, together with all improvements thereon
and with all easements and appurtenances thereunto belonging, are hereinafter
referred to collectively as the "Property"). Such sale and purchase shall be on
the following terms and conditions:
<PAGE> 2
1. Purchase Price. The following price of the Property shall be Two
Million Five Hundred Twenty Five Thousand Dollars ($2,525,000.00), said purchase
price to be payable as follows:
(a) The sum of One Hundred Thousand Dollars ($100,000.00) as earnest
money to be paid upon the acceptance of this contract. Said earnest money to be
held by a mutually agreed upon escrow agent, for the full and faithful
performance of the terms and conditions of this Contract; and
(b) The sum of Two Million Four Hundred Twenty Five Thousand Dollars
($2,425,000.00) in cash at closing.
2. Closing.
(a) The purchase and sale hereunder shall be closed on or before June
10, 1999, or, the date in which the Partnership approval as described in section
3(a) hereof has been obtained, but in no event later than June 18, 1999, at a
time and place mutually agreed upon between Purchaser and Seller. At closing,
Seller shall pay the cost of preparation of a deed. Purchaser shall pay the cost
of recording the general warranty deed, any settlement fees that may be charged
by the title company for closing, and any other expenses incurred by it in
connection with the closing such as survey, title examination, inspections,
recording, transfer taxes and fees, and title insurance premium. Seller and
Purchaser shall each pay their respective attorneys fees. All real estate taxes,
assessments and similar charges of
Page 2
<PAGE> 3
any kind, ad valorem taxes, rents, and all other items of income and expense
(including utilities) in connection with the operation of the Property shall be
prorated between Seller and Purchaser as of the day of closing.
(b) At the closing each party hereto shall execute and deliver all
documents necessary to effect and complete the closing, including, but not
limited to, the following documents to be executed and delivered by Seller to
Purchaser:
(i) A general warranty deed from, Seller conveying good and
marketable fee simple title to the Property, free and clear of all liens,
restrictions and encumbrances, other than (A) easements, restrictions, and
rights of way which do not materially affect the value of the Property, (B) the
tenant leases described in Exhibit "C" attached hereto and incorporated herein
(the "Tenant Leases"), (C) any new tenant leases entered into by Seller, (D) the
lien of ad valorem taxes for 1999, and (E) any exceptions to title which cannot
be satisfied by the payment of money.
(ii) An assignment of leases from Seller conveying all right,
title and interest of Seller in and to the Tenant Leases. Purchaser shall assume
the obligations of landlord under such leases arising from and after the date of
closing;
(iii) Seller agrees to pay any balance owing, as of the date
of this Contract, toward tenant up-fitting allowances,
Page 3
<PAGE> 4
required to be paid by Seller under the provisions of the Tenant Leases;
(iv) An owner's affidavit, together with such other evidence
as may be reasonably required by the title company insuring Purchaser's fee
simple title to the Property;
(v) A general assignment of (A) all right, title and interest,
if any, of Seller in and to all warranties and guaranties if any presently in
effect with respect to the Property and/or the Equipment (as defined below in
subparagraph (vii)) and (B) all rights of Seller, if any, in and to all data,
plans, and specifications related to the Property, without any warranty as to
the completeness, adequacy or accuracy of same;
(vi) An affidavit, stating Seller's U.S. taxpayer
identification number and that Seller and all persons holding beneficial
interests in the Property are "United States Persons," as defined by Internal
Revenue Code Section 1445 (f) (3) and Section 7701(g); and
(vii) A Bill of Sale for all personal property (the
"Equipment"), if any, located on the property and owned by Seller.
(c) In addition to the execution of the foregoing closing documents,
Seller shall also deliver to Purchaser the following items at closing;
(i) All original Tenant Leases pertaining to the
Page 4
<PAGE> 5
Property, together with all original related written modifications and
amendments thereto (such items to be provided on or before April 21, 1999) and
certified rent roll current as of the first day of the month in which the
closing occurs, to the extent Seller is in possession of such original
documents.
(ii) Estoppel Certificates from all tenants in substantially
the form set forth on Exhibit "E" attached hereto and incorporated herein by
reference, together with a certification from Seller as to the current status of
each Tenant Lease and, to the best of Seller's knowledge, any changes in the
status of each such lease from that stated in the aforesaid Estoppel
Certificates. The parties acknowledge that Seller shall use its best efforts to
obtain the Estoppel Certificates, and delivery of such Certificates is not a
condition to closing.
(iii) All keys to the Property and every lock thereon in the
possession of Seller.
(iv) A copy of Seller's most recent as-built survey of the
Property, if Seller has a survey of the Property in his possession.
(v) Instruments reasonably satisfactory to Purchaser
reflecting the proper authority of Seller to consummate the transaction
contemplated by this Contract.
(iv) All engineering and non-proprietary architectural data
and materials related to the improvements in
Page 5
<PAGE> 6
Seller's possession.
3. Seller Warranties and Representations. Seller does hereby warrant
and represent to Purchaser as follows:
(a) Title. Seller owns good fee simple title to the Property, free and
clear of all liens, restrictions and encumbrances, except for those matters
listed in paragraph 2(b) (i) above. The Property is presently served by sanitary
water supply, electricity and telephone adequate to serve the Property. To the
best of Seller's knowledge, there are no encroachments on the Property other
than those shown on the current survey, or as listed in the current title policy
exceptions. To the best of Seller's knowledge, there is no action, suit or
proceeding pending, threatened or, contemplated against the Property or
affecting the Property, or the operation thereof. To the best of Seller's
knowledge, there are no taxes, fees or assessments that are presently due, or
that will or may become due prior to the closing date, and that will not be paid
prior to their due date.
(b) Contracts. Except as specifically set forth on Exhibit "B", Seller
has not entered into any brokerage, service, supply, utility, maintenance,
management, or other agreements which in any manner affect or otherwise relate
to the Property, or which could entitle any broker or leasing agent to receive
any commissions, fees, a percentage of rents or any other sums in connection
with any lease encumbering the Property. Seller shall
Page 6
<PAGE> 7
at Purchaser's option either terminate any one or more of such contracts or
attend to the assignment of any one or more of such to Purchaser, at no expense
to Purchaser, if such agreements are terminable or assignable without payment of
any funds.
(c) Tenancies. The rent roll attached hereto as Exhibit "D" sets forth
all tenants presently in possession of the Property. True copies of the Tenant
Leases, together with any written modifications thereof, shall be furnished by
Seller to Buyer prior to April 21, 1999. To the best of Seller's knowledge, the
Tenant Leases are in full force and effect; and have not been amended or
modified except as shown on Exhibit "C". From the date hereof until the date of
closing, Seller shall take no action, by act or omission, that would result in a
default by Seller under, or a termination of any, of said tenant leases. To
Seller's best knowledge, there are no defaults under any of said leases. Seller
has not collected and will not collect any of the rents or other sums arising or
accruing under any of said tenant more than thirty (30) days prior to the time
when they shall become due. Each of such tenants has accepted possession of its
respective demised Premises without reservation, and has commenced payment of
rent in accordance with the terms of its respective lease. To the best of
Seller's knowledge, there are no defaults on the part of the landlord under any
of said tenant leases. To the best of Seller's knowledge, there are no defaults
Page 7
<PAGE> 8
of any nature on the part of the tenant under any of the leases affecting the
Property. To the best of Seller's knowledge, except for the tenancies described
on the attached Exhibit "C" the Property is not subject to any lease or claim of
tenant in possession. So long as this Contract remains in force, Seller will not
lease all or any portion of the Property, or enter into any agreement granting
to any person any right with respect to the Property, of any portion thereof, or
alter, amend or modify the terms of said existing tenant leases without the
prior written consent of Purchaser, which consent shall not be unreasonably
withheld. Except as otherwise provided in the Tenant Leases, the Tenant Leases
are assignable without the consent of any party other than the permanent lender
on the Property.
(d) Legal Compliance Insurance/Improvements. Seller has not received
any written notice that the Property, and the use of the Property does not
comply with any applicable codes, ordinances, laws, restrictions, restrictive
covenants, rules and regulations of all governmental authorities having
jurisdiction affecting the Property, including, but not limited to environmental
protection laws and hazardous waste and substance related laws. To the best of
Seller's knowledge, the Property is zoned and is in compliance with all
applicable zoning and use ordinances, regulations and laws. To the best of
Seller's
Page 8
<PAGE> 9
knowledge Seller has not done, and Seller will exert his best efforts not to do
or permit anything which would cancel, terminate, reduce or interfere with the
validity, effectiveness or good standing of any existing warranties or
guarantees on the structures, insurance, improvements and equipment constituting
the Property. Seller was, is, and has been continuously insured against public
liability, and casualty loss in amounts of coverage no less than $1,000,000
(liability) and $1,000,000 (casualty) during its ownership of the Property and
Seller will maintain such coverage to the date of closing. Seller has received
no notice from any insurance company or governmental agency of any material
defects or any material inadequacies in connection with the Property or the
operation of the same.
(e) Seller's Authority and Tax Status. Seller has full right, power and
authority to enter into this Contract and consummate the transactions
contemplated hereby. The person executing this Contract has full right, power
and authority on behalf of the Seller to execute this Contract and to consummate
the transaction contemplated hereby. This paragraph (e) is subject to the
Seller's obtaining the consent of the majority of its limited partners in
accordance with its limited partnership agreement.
(f) Seller has not placed, and to its best knowledge, there are not any
hazardous wastes, asbestos or other toxic
Page 9
<PAGE> 10
materials located on the Property.
4. Purchaser's Warranties and Representations. Purchaser does hereby
warrant and represent to Seller as follows:
(a) Purchaser has full right, power and authority to enter into this
Contract and consummate the transactions contemplated hereby. The person
executing this Contract on behalf of Purchaser has full right and authority on
Purchaser's behalf to execute this Contract and to consummate the transactions
contemplated hereby.
(b) There are no legal actions, suits or other legal or administrative
proceedings pending or, to Purchaser's best actual knowledge, threatened against
Purchaser which are reasonably likely to have a material adverse effect on
Purchaser's ability to consummate the transaction contemplated by this Contract.
5. Conduct Prior to Closing. At all times prior to closing, Seller
shall continue to conduct business with respect to the Property in the same
manner in which said business has been heretofore conducted and, except as
otherwise expressly provided in this Contract, shall not, without the prior
written consent of Purchaser, which consent shall note be unreasonably withheld,
enter into any new tenant leases, modify or extend any currently existing lease,
make capital improvements to the Property in excess of $2,000.00 per occurrence,
or enter into any contract which may obligate Purchaser in any way whatsoever.
Page 10
<PAGE> 11
6. Inspection. During the term of this contract, without interfering
with normal operation of the Property, and subject to Purchaser providing prior
notice of inspection visits, Purchaser and its agents, engineers, surveyors,
appraisers, auditors and other representatives shall have the right, to enter
upon the Property to inspect, examine, survey, obtain engineering inspections,
appraise and otherwise do that which, in the opinion of Purchaser, is necessary
to determine the boundaries, acreage and condition of the Property and the
equipment and to determine the suitability of the Property for the uses intended
by Purchaser. Purchaser shall leave the Property in the same condition as
existed prior to any such entry, and shall indemnify and hold Seller harmless
from any loss, cost, expense, damage, or injury arising out of, or related to
such entry, provided the obligation herein shall survive closing or any
termination of this Contract, notwithstanding any liquidated damage provisions.
7. Conditions to Closing. The obligations of Purchaser hereunder are
subject to the truth and accuracy as of the date of closing of each and every
warranty or representation made herein by Seller. The Purchaser shall have
thirty (30) days from the date of acceptance of this Contract by Seller, to
inspect the Property, review the Tenant leases, and perform its due diligence in
connection with this Contract. Purchaser may terminate this Contract, in its
sole discretion, at any time prior to the thirty
Page 11
<PAGE> 12
(30) days Seller has executed the Contract, with a full refund of all earnest
money previously placed with an Escrow agent.
8. Default and Remedies.
(a) Seller's Remedies. If Purchaser defaults under the terms of the
Contract, the earnest money together with interest earned thereon, if any, shall
be paid by the intermediary or escrow agent to Seller as liquidated damages as
Seller's sole remedy. The provisions herein contained for liquidated and
agreed-upon damages are bona fide provisions for such and are not a penalty, the
parties agreeing that by reason of Seller binding himself to the sale of the
Property and by reason of the withdrawal of the Property from sale at a time
when other parties would be interested in acquiring them, that Seller will have
sustained damages if Purchaser defaults, which damages will be substantial but
will not be capable of determination with mathematical precision. Therefore,
this provision for liquidated and agreed-upon damages has been incorporated in
this Contract as a provision beneficial to both parties, and upon such payment
by Escrow Agent to Seller, Seller and Purchaser release each other from any and
all claims, liabilities, damages, or causes of actions, known or unknown, it may
have against the other party, either in contract or tort, all for the purpose of
resolving any disputes which may exist between the parties.
(b) Purchaser's Remedies. In the event Seller should
Page 12
<PAGE> 13
default in the performance of any of its covenants contained herein, Purchaser
shall have the option to declare this Contract null and void, or to seek
specific performance. In the event the Purchaser exercises its option to declare
the Contract voided, then all earnest monies, together with accrued interest
thereon, deposited hereunder shall be promptly returned to the Purchaser by
escrow agent. Notwithstanding any provision herein to the contrary, in the event
Seller is unable to deliver the quality of title call for in the Contract, then
the sole remedy of Purchaser shall be to terminate the Contract and receive a
return of the earnest money, except for the following defects: (a) monetary
liens, or (b) changes in the status of title caused by Seller subsequent to the
date of the Contract; as to either of these defaults, specific performance is
also available.
9. Brokerage. Purchaser does hereby indemnify and agree to hold Seller
harmless from and against any and all claims, commissions, expenses and fees or
other charges, except for those agreed to in this paragraph, relating in any way
to this transaction, or the consummation thereof, which may be made by any
person, firm or entity as the result of any of Purchaser's acts or the acts of
Purchaser's representatives except as set out herein. Seller does hereby
indemnify and agree to hold Purchaser harmless from and against any and all
claims, commissions, expenses and fees or other charges, except for those agreed
to in
Page 13
<PAGE> 14
this paragraph, relating in any way to this transaction, or the consummation
thereof, which may be made by any person, firm or entity as the result of any of
Seller's acts or the acts of their representatives except as set out herein.
This mutual indemnity shall survive the closing or any termination of the
Contract, notwithstanding any limitation on remedies set forth in paragraph 8.
Purchaser and Seller agree that no party has acted as a Real Estate Broker in
this transaction except Tribek Properties, Inc. (as "Seller's Broker"), and
Southwind Properties, Inc. (as "Purchaser's Broker"). As "Purchaser's Broker",
Southwind Properties, Inc., shall be paid a commission out of the proceeds of
the sale, at the closing of this transaction and according to the agreement
between Tribek Properties, Inc. and Southwind Properties, Inc.
10. Section 1031 Exchange. The Parties understand and agree that this
purchase by Purchaser is part of a IRS Code Section 1031 tax-free exchange.
Seller hereby agrees to cooperate and assist Purchaser in executing any and all
documents required by Purchaser to effectuate its Section 1031 tax-free
exchange, so long as said actions do not impose any additional expense or
liability upon Seller.
11. Notices. Ail notices and elections permitted or required to be made
under this Contract shall be in writing, signed by the party giving such notice
or election, and shall be
Page 14
<PAGE> 15
delivered personally or sent by expedited delivery service (such as Federal
Express) or registered or certified mail to the other party hereto.
12. Indemnity. Seller indemnifies and holds the Purchaser harmless from
any liability arising out of incidents on the Property or involving any tenant
or contractor or materialman occurring prior to closing except where Purchaser,
its agents, or employees is responsible for, or contributes to such liability by
its or their action or inaction. Purchaser likewise indemnifies and holds Seller
harmless from any liability arising out of incidents on the Property or
involving any tenant or contractor or materialman occurring after closing except
where Seller is responsible, or contributes to such liability by its action or
inaction. This mutual indemnity shall survive the Closing, or any termination of
the Contract, notwithstanding any limitation or remedies set forth in paragraph
8.
13. Casualty and Condemnation.
(a) At the closing of the purchase and sale hereunder, Seller shall
deliver to Purchaser the improvements located on the Property in the same
condition as exists as of the date of this Contract, normal wear and tear
excepted. If said improvements or Equipment, or any material and substantial
portion thereof (i.e. 25% or more) is destroyed by fire or other casualty prior
to the closing hereunder, then, at the option of Purchaser
Page 15
<PAGE> 16
(i) this Contract shall terminate whereupon no party hereto
shall have any further right, liabilities or obligations hereunder, or
(ii) this Contract shall remain in full force and effect, and
Seller, at the time of closing hereunder, shall transfer and assign to Purchaser
all of Seller's right, title and interest in and to the insurance proceeds
received or to be received by reason of such damage or destruction, said option
to be exercisable by Purchaser by delivering to Seller written notice of such
exercise on or before the fifteenth (15th) day following the date on which
Purchaser receives from Seller written notice of such damage or destruction, but
in no event later than the date of closing hereunder.
(b) If, at any time prior to closing hereunder, any action or
proceeding is filed or threatened, under which the Property, or any material and
substantial portion thereof may be taken pursuant to any law, ordinance or
regulation or by condemnation or the right of eminent domain Purchaser may, at
its election, terminate this Contract and no party hereto shall have any further
rights, liabilities or obligations hereunder.
14. Term This Contract shall expire unless accepted by Seller, and
notice of acceptance is received by Purchaser at 5:00 o'clock p.m. Monday April
19, 1999.
15. Miscellaneous.
Page 16
<PAGE> 17
(a) This Contract shall be binding upon and shall inure to the
benefit of Seller and Purchaser, their respective successors,
successors-in-title, legal representatives, heirs and assigns. This Contract
shall be construed and enforced in accordance with the laws of the State of
North Carolina. If any provision hereof is held to be invalid or unenforceable,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision hereof. This Contract may not be modified
except by written modification, executed by all parties hereto. All titles or
captions of the paragraphs set forth in this Contract are inserted only as a
matter of convenience and for reference and in no way define, limit, extend or
describe the scope of this Contract, or the intent of any provision hereof. The
indemnities contained in this Contract shall survive the closing for a period of
one (1) year from the date of closing. The representations and warranties herein
set forth shall be true and correct and shall be deemed to be restated on the
date of closing unless specifically modified by written Contract or by other
documents delivered at closing, or waived by either Purchaser or Seller at
closing. Neither party shall make, without the prior written approval of the
other, any public announcement or advertisement referring in any manner
whatsoever to the purchase and sale of the Property by Seller to Purchaser until
after the date of the closing.
Page 17
<PAGE> 18
(b) This document constitutes the Contract between the parties in
respect to the transaction contemplated hereby and supersedes all prior
agreements, arrangements and undertakings relating to the subject matter hereof.
No covenant or condition not expressed in this Contract or the related closing
documents shall affect or be effective to interpret, change or restrict this
Contract or such documents.
IN WITNESS WHEREOF, the Buyer have caused this Contract to be executed under
seal as of the day and year first above written.
ACCEPTED BY SELLER, this the 19th day of April, 1999.
SELLER: YAGER-KUESTER PUBLIC FUND
By: /s/ Faison S. Kuester
------------------------------
Title: Managing General Partner
WITNESS:
By: /s/Jackson M. Smith
--------------------
PURCHASER: CAP CARE GROUP, INC.
By: /s/ Robert S. Parker
------------------------------
President
ATTEST:
BY:/s/ Glenda Slaughter
--------------------
Secretary
Page 18
<PAGE> 19
EXHIBIT A
Real Property Description
To be supplied by Seller on or before April 21, 1999.
Page 19
<PAGE> 20
EXHIBIT B
CONTRACTS AND AGREEMENTS
To be provided by Seller by April 21, 1999.
Page 20
<PAGE> 21
EXHIBIT C
TENANT LEASES
To be provided by Seller by April 21, 1999.
Page 21
<PAGE> 22
EXHIBIT D
CERTIFIED RENT ROLL
To be provided by Seller by April 21, 1999.
Page 22
<PAGE> 23
EXHIBIT E
STANDARD ESTOPPEL CERTIFICATE
Cap Care Group, Inc.
c/o Mr. T. Paul Hendrick
Attorney at Law
723 Coliseum Drive, Suite 101
Winston Salem, North Carolina 27106
The undersigned Tenant has been advised that Cap Care Group, Inc. is about to
purchase Landlord's fee interest in the property know as Eastpark Executive
Center located in Charlotte, North Carolina (the "Project"), in which tenant
leases approximately _____ square feet of space. As the present owner and holder
of the Tenant's interest under the Lease described in Exhibit B attached hereto
(the "Lease"), the undersigned hereby represents to you that as of the date
hereof:
(i) the Lease has not been modified or amended, except as
specifically set forth in Exhibit A,
(ii) the Lease is in full force and effect and the term thereof
commenced on _________ pursuant to the provision thereof,
(iii) the premises demised under the Lease have been completed and
the undersigned has accepted and taken possession of the same
on a rent- paying basis,
(iv) neither the undersigned nor the Landlord under the Lease is in
default under any of the terms, covenants or provisions of the
Lease and the undersigned knows of no event which, but for the
passage of time or the giving of notice, or both, would
constitute an event of default under the Lease by undersigned
Landlord thereunder,
(v) neither the undersigned nor the Landlord under the Lease has
commenced any action or given or received any notice for the
purpose of terminating the Lease,
(vi) all rents, additional rents and other sums due and payable
under the Lease have been paid in full and no rents,
additional rents or other sums payable under the Lease have
been paid for more than one (1) month in advance of the due
dates thereof,
Page 23
<PAGE> 24
(vii) there are not offsets and claims or defenses to the payment of
the rents, additional rents, or other sums payable under the
Lease, or to the enforcement of any other terms of the Lease,
(viii) the undersigned has no option or right of first refusal to
purchase the premises demised under the Lease or any portion
thereof,
(ix) tenant has no cause of action and knows of no cause of action
which involves or may involve the Landlord.
The Tenant hereby acknowledges and agrees that Cap Care Group, Inc., or its
assigns, and Landlord shall be entitled to rely on this Certificate in
purchasing and selling the Project, and such purchase and sale shall be deemed
good and valuable consideration of the Tenant for the certifications made
herein.
Very truly yours,
_______________________ (Tenant Name)
_______________________ (Signature Line)
_______________________ (Name and Title of Authorized
Person Signing)
_______________________ (Date Signed)
Page 24
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 36,748
<SECURITIES> 115,742
<RECEIVABLES> 38,325
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 191,456
<PP&E> 3,074,282
<DEPRECIATION> 705,480
<TOTAL-ASSETS> 2,596,190
<CURRENT-LIABILITIES> 1,681,636
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,596,190
<SALES> 0
<TOTAL-REVENUES> 137,586
<CGS> 0
<TOTAL-COSTS> 79,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,494
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,209
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
