SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
[X ] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SS240.14a-11(c) or SS240.14a-12
BRAUVIN HIGH YIELD FUND L.P.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) of Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[X ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
Units of Limited Partnership Interests
2) Aggregate number of securities to which transactions
applies:
2,627,503.23 Units of Limited Partnership Interests
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
Based upon the aggregate cash to be paid for the
Registrant's assets ($23,193,450) which are the subject
of this Schedule 14A, the Registrant is paying a filing
fee of $4,639.69 (one-fiftieth of one percent of this
aggregate of the cash and the value of securities (other
than its own) and other property to be received by the
Registrant in the subject transaction.)
4) Proposed maximum aggregate value of transaction:
$23,198,450
5) Total fee paid:
$4,639.69
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offering fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
N/A
2) Form Schedule or Registration Statement No.:
N/A
3) Filing Party:
N/A
4) Date Filed:
N/A
BRAUVIN HIGH YIELD FUND L.P.
150 South Wacker Drive
Suite 3200
Chicago, Illinois 60606
June 10, 1996
To the Interest Holders of
Brauvin High Yield Fund L.P.:
We are pleased to inform you that Brauvin High Yield Fund L.P.
has entered into an agreement through which the Partnership has
agreed to merge with and into another entity, the effect of which
will be that each Limited Partner will receive approximately $9.18
in cash for each of their Units. Consummation of this transaction
is subject to your approval. Interest Holders holding a majority
in interest of the Units must approve the transaction by voting
"FOR" on the enclosed proxy card in order for the Partnership to
accept this all cash offer. If the transaction is approved by the
Interest Holders and certain other conditions are met, the
transaction will be consummated, the Partnership will cease to
exist and your Units will be redeemed entirely for approximately
$9.18 per Unit in cash. The redemption price is based on the fair
market value of the assets of the Partnership as determined by an
independent appraiser, plus all remaining cash of the Partnership,
less expenses incurred in connection with the transaction and other
Partnership obligations. An independent appraiser has determined
that the fair market value of the assets of the Partnership is
$23,198,450 and such entity has also delivered an opinion that this
transaction is fair to the Limited Partners from a financial point
of view. The General Partners will not receive any fees from the
Partnership in connection with the transaction. The entity into
which the Partnership will be merged is affiliated with Mr. Jerome
J. Brault, the Managing General Partner of the Partnership, and
Brauvin Realty Advisors, Inc., the Corporate General Partner of the
Partnership, two of the General Partners of the Partnership. Mr.
Brault and his son, James L. Brault, an executive officer of
Brauvin Realty Advisors, Inc., have a minority ownership interest
in the Purchaser.
In addition to the approval by the Interest Holders holding a
majority of the Units, Delaware law provides that a merger must
also be approved by the General Partners, unless the Partnership
Agreement provides otherwise. As described in the enclosed Proxy
Statement, not all of the General Partners have opined on the
proposed transaction. The Interest Holders are, therefore, being
asked to adopt an amendment to the Partnership Agreement which
eliminates the requirement that all of the General Partners approve
the merger.
The Partnership is soliciting your proxy in connection with
the transaction and the amendment. Included with this letter is a
Notice of Special Meeting of the Interest Holders to be held
July 10, 1996, at 10:00 a.m., local time, at the offices of the
Partnership, 150 South Wacker Drive, Chicago, Illinois 60606, for
the purpose of considering and voting on the transaction and the
amendment. Also enclosed herewith is a Proxy Statement dated
June 10, 1996, which contains information relating to the proposed
transaction and the amendment, together with a proxy card which
authorizes the Managing General Partner to vote your Units with
respect to the transaction and the amendment at the special meeting
of the Interest Holders and any adjournment thereof. The Interest
Holders who hold Units of record on the books of the Partnership at
the close of business on _________________, 1996, are entitled to
notice of, and to vote at, the special meeting or any adjournments
thereof.
Regardless of whether you expect to be present in person at
the special meeting, please complete and promptly return the
enclosed proxy card in the enclosed, postage-prepaid envelope so
that your Units may be represented and voted. A proxy may be
revoked at any time prior to its exercise by submitting a
revocation or a later-dated proxy or by attending the special
meeting and voting in person. Proxies properly executed and
returned, and not revoked, will be voted in accordance with
instructions as indicated thereon.
As the transaction and the amendment require the approval of
the Interest Holders holding a majority of the Units, failure to
return a proxy in a timely manner or to vote at the special meeting
will have the same effect as a vote "AGAINST" the transaction and
"AGAINST" the amendment. Any proxy cards which are returned and on
which a choice is not indicated will be voted "FOR" the transaction
and "FOR" the amendment. In view of the importance of the special
meeting, it is requested that you sign, mark and return the
enclosed proxy card in the enclosed, postage-prepaid envelope no
later than July , 1996.
Questions and requests for assistance may be directed to the
Partnership's Investor Services Department at (800) 272-8846 or to
the Partnership's proxy solicitors, The Herman Group, Inc. at (800)
___-____.
Very truly yours,
BRAUVIN REALTY ADVISORS, INC.,
Corporate General Partner
By:________________________________
Title: ____________________________
___________________________________
Jerome J. Brault, Managing General
Partner
NOTICE OF SPECIAL MEETING OF THE INTEREST HOLDERS OF
BRAUVIN HIGH YIELD FUND L.P.
To be Held July 10, 1996
To the Interest Holders
of Brauvin High Yield Fund L.P.:
NOTICE IS HEREBY GIVEN, that a special meeting (the "Special
Meeting") of the Interest Holders of Brauvin High Yield Fund
L.P., a Delaware limited partnership (the "Partnership") will be
held at the offices of the Partnership, 150 South Wacker Drive,
Suite 3200, Chicago, Illinois 60606 on Monday, July 10, 1996, at
10:00 a.m. local time, for the following purposes:
1. To approve the merger of the Partnership with and into
Brauvin Net Realty L.L.C., a Delaware limited liability
company (the "Purchaser"), the effect of which will be
that each Interest Holder will receive approximately
$9.18 per Unit in cash for their partnership interests.
The Purchaser is affiliated with Mr. Jerome J. Brault,
the Managing General Partner of the Partnership, and
Brauvin Realty Advisors, Inc., the Corporate General
Partner of the Partnership, two of the General Partners
of the Partnership. By approving the merger, the
Interest Holders are also approving an amendment of the
Partnership's Restated Limited Partnership Agreement,
as amended, allowing the Partnership to sell or lease
property to Affiliates.
2. To adopt an amendment to the Partnership's Restated
Limited Partnership Agreement, as amended, which
eliminates the requirement that all of the General
Partners approve a merger. Upon approval of the
amendment the vote of the Interest Holders holding a
majority of the Units will be the only vote necessary
to approve the transaction.
3. To transact such other business as may properly come
before the Special Meeting or any adjournment or
postponement thereof.
Information concerning the matters to be acted upon at the
special meeting is set forth in the accompanying Proxy Statement.
JEROME J. BRAULT, THE MANAGING GENERAL PARTNER OF THE
PARTNERSHIP (THE "MANAGING GENERAL PARTNER"), AND BRAUVIN REALTY
ADVISORS, INC., THE CORPORATE GENERAL PARTNER OF THE PARTNERSHIP
(THE "CORPORATE GENERAL PARTNER" AND WITH THE MANAGING GENERAL
PARTNER, THE "OPERATING GENERAL PARTNERS"), WHICH IS CONTROLLED
BY MR. BRAULT, HAVE DETERMINED THAT THE TRANSACTION AND THE
AMENDMENT ARE FAIR AND REASONABLE TO THE INTEREST HOLDERS AND,
THEREFORE, RECOMMEND THAT THE INTEREST HOLDERS VOTE "FOR" THE
TRANSACTION AND "FOR" THE AMENDMENT. HOWEVER, THE OPERATING
GENERAL PARTNERS ARE SUBJECT TO CERTAIN CONFLICTS OF INTEREST
WITH RESPECT TO THE TRANSACTION. CEZAR M. FROELICH, ONE OF THE
INDIVIDUAL GENERAL PARTNERS, IS NOT RECOMMENDING THE TRANSACTION
FOR THE REASONS STATED ELSEWHERE IN THIS PROXY STATEMENT. DAVID
M. STROSBERG, ONE OF THE INDIVIDUAL GENERAL PARTNERS, HAS
ABSTAINED FROM RECOMMENDING THE TRANSACTION AS HE IS CURRENTLY
REVIEWING ADDITIONAL DOCUMENTATION PERTAINING TO THE TRANSACTION.
You are invited to attend the Special Meeting. Even if you
intend to attend the Special Meeting, you are requested to sign
and date the accompanying proxy card and return it promptly in
the enclosed, postage-prepaid envelope. If you attend the
Special Meeting, you may, if you wish, vote in person regardless
of whether you have given your proxy. In any event, a proxy may
be revoked at any time before it is exercised.
The close of business on _________, 1996 has been fixed as
the record date for determination of the Interest Holders
entitled to notice of and to vote at the Special Meeting.
BRAUVIN REALTY ADVISORS, INC.,
Corporate General Partner
By:___________________________
Title:________________________
______________________________
Jerome J. Brault, Managing
General Partner
Chicago, Illinois
June 10, 1996
YOUR VOTE IS VERY IMPORTANT. IN ORDER TO ENSURE THAT YOUR
INTERESTS WILL BE REPRESENTED, WHETHER YOU INTEND TO BE PRESENT
AT THE SPECIAL MEETING OR NOT, PLEASE SIGN THE ENCLOSED PROXY
CARD AND MAIL IT PROMPTLY IN THE ENCLOSED, POSTAGE-PREPAID
ENVELOPE. FAILURE TO RETURN A PROXY CARD WILL BE THE SAME AS A
VOTE "AGAINST" THE TRANSACTION AND "AGAINST" THE AMENDMENT. ANY
PROXY CARDS ON WHICH A CHOICE IS NOT INDICATED WILL BE VOTED
"FOR" THE TRANSACTION AND "FOR" THE AMENDMENT.
BRAUVIN HIGH YIELD FUND L.P.
150 South Wacker Drive
Suite 3200
Chicago, Illinois 60606
PROXY STATEMENT
For the Special Meeting of the Interest Holders
To be Held July 10, 1996
This proxy statement (the "Proxy Statement") and the
enclosed proxy card are being first mailed to the beneficial
owners of the limited partnership interests (the "Interest
Holders") of Brauvin High Yield Fund L.P., a Delaware limited
partnership (the "Partnership") on or about June 10, 1996 by the
Partnership to solicit proxies for use at a special meeting of
the Interest Holders (the "Special Meeting") to be held at the
offices of the Partnership, 150 South Wacker Drive, Chicago,
Illinois 60606 on Monday, July 10, 1996 at 10:00 a.m., local
time, or at such other place and time to which the Special
Meeting may be adjourned.
The purpose of the Special Meeting is to consider the
approval of a merger (the "Merger") of the Partnership with and
into Brauvin Net Realty L.L.C., a Delaware limited liability
company (the "Purchaser") that is affiliated with Operating
General Partners, as hereinafter defined. By approving the
Merger, the Interest Holders are also approving an amendment of
the Partnership Agreement, as hereinafter defined, allowing the
Partnership to sell or lease property to Affiliates (this
amendment, along with the Merger shall be referred to herein as
the "Transaction"). The terms of the Transaction are set forth
in an agreement and plan of merger dated as of May 23, 1996 by
and between the Purchaser and the Partnership (the "Merger
Agreement"). Promptly upon consummation of the Transaction, the
Partnership will be merged with and into the Purchaser through a
merger of its partnership interests, the Partnership will cease
to exist and the Purchaser, as the surviving entity, will succeed
to all of the assets and liabilities of the Partnership. As a
result of the merger, all of the outstanding units of limited
partnership interest of the Partnership (each a "Unit" and
collectively, the "Units") will be redeemed by the Purchaser for
approximately $9.18 per Unit in cash. The actual redemption
price will be based on the fair market value of the properties of
the Partnership (the "Assets") as determined by
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
an independent appraiser at such time as is specified in the
certificate of merger (the "Effective Time"), plus all remaining
cash of the Partnership as of the Effective Time, less the
Partnership's actual costs incurred and accrued through the
Effective Time, including reasonable reserves in connection with:
(i) the proxy solicitation; (ii) the Transaction (as detailed in
the Merger Agreement); and (iii) winding up of the Partnership,
including preparation of the final audit, tax return and K-1s
(collectively, the "Transaction Costs") and less all other
Partnership obligations. An independent appraiser has determined
that the fair market value of the Assets of the Partnership is
$23,198,450, which is $8.85 per Unit. The general partners of
the Partnership (the "General Partners") will not receive any
payment in exchange for the redemption of their general
partnership interests nor will they receive any fees from the
Partnership in connection with the Transaction. Mr. Jerome J.
Brault, the Managing General Partner of the Partnership (the
"Managing General Partner") and his son, James L. Brault, an
executive officer of Brauvin Realty Advisors, Inc., the Corporate
General Partner of the Partnership (the "Corporate General
Partner"), have a minority ownership interest in the Purchaser.
The affirmative vote of a majority of the Units is necessary
to approve the Transaction. In addition, the Delaware Revised
Uniform Limited Partnership Act (the "Act") provides that a
merger must also be approved by the general partners of a
partnership, unless the limited partnership agreement provides
otherwise. Therefore, the Interest Holders are also being asked
to adopt an amendment (the "Amendment") to the Restated Limited
Partnership Agreement of the Partnership, as amended (the
"Partnership Agreement") which eliminates the requirement that
all of the General Partners approve the Transaction. Upon
approval of the Amendment, the vote of the Interest Holders
holding a majority of the Units will be the only vote necessary
to approve the Transaction. Neither the Act nor the Partnership
Agreement provide the Interest Holders not voting in favor of the
Transaction with dissenters' appraisal rights.
The close of business on ________________, 1996 has been
established as the record date (the "Record Date") for
determining the Interest Holders entitled to notice of, and to
direct the vote of the Units at the Special Meeting. As of the
Record Date, the Partnership had outstanding and entitled to vote
2,627,503.23 Units, held of record by 1,868 Interest Holders.
Each Unit entitles the holder to one vote on each matter
submitted to a vote of the Interest Holders.
All duly executed proxy cards received from the Interest
Holders prior to the Special Meeting will be voted in accordance
with the choices specified thereon. If a duly executed proxy
card does not specify a choice, the Units represented thereby
will be voted "FOR" the Transaction and "FOR" the Amendment. An
Interest Holder who gives a proxy may revoke it at any time
before it is voted at the Special Meeting, as described herein.
The accompanying proxy is solicited on behalf of the
Partnership to be voted at the Special Meeting. The
Partnership's principal executive offices are located at
150 South Wacker Drive, Suite 3200, Chicago, Illinois 60606 and
its telephone number is (312) 443-0922. The Partnership has
engaged The Herman Group, Inc. to assist in the proxy
solicitation process. In addition to the original solicitation
by mail, proxies may be solicited by telephone, telegraph or in
person. All expenses of this solicitation, including the cost of
preparing and mailing this Proxy Statement, will be borne by the
Partnership.
The Partnership is a Delaware limited partnership formed on
January 6, 1987. The General Partners are the Corporate General
Partner, the Managing General Partner, Cezar M. Froelich and
David M. Strosberg. Mr. Froelich gave notice of his intent to
resign as an Individual General Partner of the Partnership on May
23, 1996. Pursuant to the terms of the Partnership Agreement,
Mr. Froelich's resignation will become effective on the 90th day
following notice to the Interest Holders. The Corporate General
Partner and the Managing General Partner are collectively
referred to herein as the "Operating General Partners."
SUMMARY
Set forth below is a summary of certain information
contained elsewhere in this Proxy Statement. It is not intended
to be a complete description of those matters which it covers and
much of the information contained in this Proxy Statement is not
covered by this Summary. The information contained in this
Summary is qualified by the more complete information contained
elsewhere in this Proxy Statement or incorporated by reference
into this Proxy Statement. All Interest Holders are urged to
read this Proxy Statement in its entirety.
The Transaction
Pursuant to the terms of the Merger Agreement, the
Partnership proposes to merge with and into the Purchaser through
a merger of its partnership interests. Promptly upon
consummation of the Transaction, the Partnership will cease to
exist and the Purchaser, as the surviving entity, will succeed to
all of the Assets and liabilities of the Partnership. As a
result of the merger, the interests of the Interest Holders in
the Partnership will be redeemed for approximately $9.18 per Unit
in cash. The redemption price is based on the fair market value
of the Assets as of the Effective Time as determined by an
independent appraiser, plus all remaining cash of the Partnership
as of the Effective Time, less the Transaction Costs and less all
other Partnership obligations. Thus, the actual redemption price
will be subject to adjustment based upon changes in these amounts
prior to the Effective Time. An independent appraiser has
determined that the fair market value of the Assets of the
Partnership is $23,198,450, which is $8.85 per Unit and such
entity has also delivered an opinion that the Transaction is fair
to the Limited Partners from a financial point of view. The
General Partners will not receive any payment in exchange for the
redemption of their general partnership interests nor will they
receive any fees from the Partnership in connection with the
Transaction. The Managing General Partner and his son, James L.
Brault (collectively, the "Braults") have a minority ownership
interest in the Purchaser. Messrs. Froelich and Strosberg have
no affiliation with the Purchaser.
The Transaction is one of a series of related transactions
whereby the Purchaser seeks to acquire the Assets of the
Partnership and the assets, through purchase or merger, of the
Affiliated Limited Partnerships (as hereinafter defined). See
"Terms of the Transaction - The Merger Agreement," "Terms of the
Transaction - Determination of Redemption Price," "Terms of the
Transaction - Related Transactions" and "Income Tax Consequences
of the Transaction."
Amendment to the Partnership Agreement
Consummation of the Transaction is subject to approval by
the Interest Holders holding a majority of the Units. In
addition, the Act provides that a merger must also be approved by
the general partners of a partnership, unless the limited
partnership agreement provides otherwise. The Interest Holders
are, therefore, being asked to adopt the Amendment, which
eliminates the requirement that all of the General Partners
approve the Transaction. Upon approval of the Amendment the vote
of the Interest Holders holding a majority of the Units will be
the only vote necessary to approve the Transaction.
The Special Meeting; Votes Required
A Special Meeting of the Interest Holders will be held on
July 10, 1996, to consider and vote upon the Transaction and the
Amendment. It is a condition to the closing of the Transaction
that the Interest Holders holding a majority of the Units approve
both the Transaction and the Amendment. The Partnership is
soliciting proxies from the Interest Holders to be used at the
Special Meeting and any adjournments thereof. See "Special
Meeting of the Interest Holders."
Purpose of and Reasons for the Transaction
The principal purpose of the Transaction is to cause the
transfer of the Assets and the liabilities to the Purchaser in
return for cash proceeds which will be distributed to the
Interest Holders through the redemption of their Units. The
Transaction will result in the Interest Holders receiving the
fair market value for the Assets from a buyer that has the
ability to quickly consummate the Transaction and is willing to
assume all of the assets and liabilities of the Partnership with
limited representations and warranties. This structure allows
the Interest Holders to receive cash in exchange for their Units
based upon the current fair market value of the Assets, which
cash can be invested in alternative investments. See "Special
Factors - Purpose of and Reasons for the Transaction."
Effects of the Transaction
If the Transaction and the Amendment are approved and the
remaining conditions to the Transaction are met or waived, the
Assets and liabilities of the Partnership will be transferred to
the Purchaser as the surviving entity in the Transaction, the
Partnership will cease to exist and the Units of the Interest
Holders will be redeemed for approximately $9.18 per Unit in
cash. See "Special Factors - Effects of the Transaction."
Valuation of the Assets; Fairness Opinion
Cushman & Wakefield Valuation Advisory Services ("Cushman &
Wakefield"), the largest real estate valuation and consulting
organization in the United States, was engaged by the Partnership
to prepare an appraisal of the Assets. Cushman & Wakefield was
subsequently engaged to provide an opinion as to the fairness of
the Transaction to the Interest Holders from a financial point of
view. Cushman & Wakefield preliminarily valued the Assets at
$22,600,000. The Operating General Partners received the initial
valuation and concluded that the values of the Assets set forth
therein were lower than expected due to changes and/or clarifications
of certain property and/or financial information not previously provided
to or not considered by Cushman & Wakefield. As a result, the valuation
was increased to $23,198,450, which is the total cash consideration
to be paid by the Purchaser for the Assets in connection with the
Transaction. In addition, Cushman & Wakefield has advised the
Partnership that in its opinion, the Transaction is fair to the
Interest Holders from a financial point of view. See
"Special Factors - Valuation of the Assets; Fairness Opinion."
Recommendations of the General Partners
The Operating General Partners have determined that the
terms of the Transaction are fair to the Interest Holders and,
therefore, recommend that the Interest Holders vote "FOR" the
Transaction and "FOR" the Amendment. The recommendations of the
Operating General Partners are, however, subject to conflicts of
interest. The Operating General Partners' determination of
fairness was based in part on the following factors: (i) use of
an independent appraiser's valuation of the Assets as a basis for
the merger price; (ii) the structure of the transaction as a
merger, whereby all of the Assets and the liabilities of the
Partnership are transferred to the Purchaser with minimal
representations and warranties by the Partnership; (iii) the
independent fairness opinion rendered in connection with the
Transaction; (iv) the Operating General Partners' industry
knowledge regarding the marketability of properties with lease
terms similar to the Assets; and (v) avoidance of certain
potential transaction costs, such as investment banking fees or
real estate brokerage commissions, which could have approximated
$700,000 to $1,400,000 in the aggregate. Mr. Froelich is not
recommending the Transaction since he believes that the most
advantageous methodology for determining a fair price for the
Assets would be to seek third-party offers through an arm's-length
bidding process. Mr. Strosberg has abstained from
recommending the Transaction as he is currently reviewing
additional documentation pertaining to the Transaction. See
"Special Factors - Recommendations of the General Partners" and
"Conflicts of Interest."
Conflicts of Interest
The Transaction, as a result of the role of the Operating
General Partners, is subject to conflicts of interest. The
Braults are minority owners of the Purchaser and, therefore, the
Braults have an indirect economic interest in consummating the
Transaction that is in conflict with the economic interests of
the Interest Holders. See "Conflicts of Interest."
SPECIAL MEETING OF THE INTEREST HOLDERS
Special Meeting; Record Date
Pursuant to the terms of the Partnership Agreement, the
approval of the Interest Holders holding a majority of the Units
is required to approve the Transaction and to approve the
Amendment. A Special Meeting of the Interest Holders will be held
on July 10, 1996, at the offices of the Partnership, 150 South
Wacker Drive, Chicago, Illinois 60606, at 10:00 a.m., local time,
to consider and vote upon the Transaction and the Amendment. The
Partnership Agreement provides that the General Partners may call
a special meeting of the Interest Holders, which special meeting
shall have a record date, for the purpose of determining the
Interest Holders entitled to vote, of not more than 60 days nor
less than 20 days prior to the date when ballots are delivered to
the Interest Holders. In accordance therewith, the close of
business on ________________, 1996 has been established as the
Record Date. Under the terms of the Partnership Agreement, only
the Interest Holders holding Units of record on the Record Date
are eligible to vote those Units on the proposals set forth in
this Proxy Statement. An Interest Holder holding Units of record
as of the Record Date will retain the right to vote on the
proposals set forth herein even if such Interest Holder sells or
transfers such Units after such date. As of the Record Date, the
Partnership had 2,627,503.23 Units outstanding and entitled to
vote, held of record by 1,868 Interest Holders. A list of the
Interest Holders entitled to vote at the special meeting will be
available for inspection at the executive offices of the
Partnership at 150 South Wacker Drive, Suite 3200, Chicago,
Illinois 60606.
All Interest Holders are invited to attend the Special
Meeting. However, even those Interest Holders intending to
attend the Special Meeting are requested to complete and return
the enclosed proxy card promptly.
Procedures for Completing Proxies
Accompanying this Proxy Statement is a proxy card solicited
by and on behalf of the Partnership for use at the Special
Meeting. When a proxy card is returned, properly executed, the
Units represented thereby will be voted at the Special Meeting by
the Managing General Partner in the manner specified on the proxy
card. It is important that you mark, sign and date your proxy
card and return it in the enclosed, postage-prepaid envelope as
soon as possible. To be properly executed, the proxy card must
be signed by and bear the date of signature of the Interest
Holder voting the Units represented thereby. All questions as to
the form of documents and the validity of consents will be
determined by the Managing General Partner, which determinations
shall be final and binding. The Managing General Partner
reserves the right to waive any defects or irregularities in any
proxy.
Each Unit entitles the holder thereof to one vote with
respect to the proxies solicited hereby. Only holders of Units
of record on the record date may grant a proxy with respect to
those Units. IF UNITS STAND OF RECORD IN THE NAMES OF TWO OR
MORE PERSONS, ALL SUCH PERSONS MUST SIGN THE PROXY CARD. IF YOUR
UNITS ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, NOMINEE OR
OTHER INSTITUTION, ONLY SUCH INSTITUTION CAN SIGN A PROXY WITH
RESPECT TO YOUR UNITS AND CAN DO SO ONLY AT YOUR DIRECTION.
ACCORDINGLY, IF YOUR UNITS ARE SO HELD, PLEASE CONTACT YOUR
ACCOUNT REPRESENTATIVE AND GIVE INSTRUCTIONS FOR A PROXY TO BE
SIGNED WITH RESPECT TO YOUR UNITS.
An Interest Holder in favor of the Transaction and the
Amendment should mark the "FOR" boxes on the enclosed proxy card,
date and sign the proxy and mail it promptly in the enclosed
postage-prepaid envelope. If a proxy card is executed but no
indication is made as to what action is to be taken, it will be
deemed to constitute a vote "FOR" the Transaction and "FOR" the
Amendment. By consenting to the Transaction and the Amendment,
the Interest Holders irrevocably appoint the Managing General
Partner, or his designee, as their attorney-in-fact to execute
and deliver such documents as are necessary to effect the
Transaction.
AS THE CONSENT OF THE INTEREST HOLDERS HOLDING A MAJORITY IN
INTEREST OF THE OUTSTANDING UNITS IS NECESSARY TO CONSUMMATE THE
PROPOSED TRANSACTION AND TO ADOPT THE AMENDMENT, FAILURE TO
RETURN A PROXY IN A TIMELY MANNER OR TO VOTE AT THE SPECIAL
MEETING WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE
TRANSACTION AND "AGAINST" THE AMENDMENT.
Questions and requests for assistance or for additional
copies of the Proxy Statement and proxy card may be directed to
the Partnership's proxy solicitors, The Herman Group, Inc., 2121
San Jacinto Street, 26th Floor, Dallas, Texas 75201, (800) ___-____.
In addition to soliciting proxies by mail, proxies may be
solicited in person and by telephone or telegraph. You may also
contact your broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the proxy solicitation.
Votes Required
Pursuant to the terms of the Partnership Agreement and the
Act, the vote of the Interest Holders owning a majority of the
Units is necessary to approve the Transaction and it is a
condition to the effectiveness of the Amendment that the Interest
Holders owning a majority of the Units consent to the Amendment.
Each Unit entitles the holder to one vote on each matter
submitted to a vote of the Interest Holders. If a majority in
interest of the Interest Holders consent to the Transaction and
the Amendment and certain other conditions are met, the
Transaction will be consummated. The Operating General Partners
believe that if both the Transaction and the Amendment are not
approved by the Interest Holders owning a majority of the Units,
the Transaction will not be completed.
Solicitation Procedures
The Partnership has retained The Herman Group, Inc. for
solicitation and advisory services in connection with this proxy
solicitation. In connection therewith, The Herman Group, Inc.
will be paid reasonable and customary compensation and will be
reimbursed for its reasonable out-of-pocket expenses, as
described herein. See "Special Factors - Costs Associated with
the Transaction." The Partnership has also agreed to indemnify
The Herman Group, Inc. against certain liabilities and expenses
including, liabilities and expenses under federal securities
laws.
The Partnership will not pay any fees or commissions to any
broker or dealer or other person (other than to The Herman Group,
Inc.) for soliciting proxies pursuant to this solicitation.
Banks, brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward the solicitation
material to the customers for whom they hold Units, and the
Partnership will reimburse them for reasonable mailing and
handling expenses incurred by them in forwarding proxy materials
to their customers.
Revocation of Proxies
A proxy executed and delivered by an Interest Holder may
subsequently be revoked by submitting written notice of
revocation to the Partnership. A revocation may be in any
written form validly signed by an Interest Holder as long as it
clearly states that such Interest Holder's proxy previously given
is no longer effective. To prevent confusion, the notice of
revocation must be dated. Notices of revocation should be
delivered to The Herman Group, Inc., 2121 San Jacinto Street,
26th Floor, Dallas, Texas 75201, (800) ___-____. An Interest
Holder may also revoke its proxy by attending the Special Meeting
and voting in person. If an Interest Holder signs, dates and
delivers a proxy to the Partnership and, thereafter, on one or
more occasions dates, signs and delivers a later-dated proxy, the
latest-dated proxy card is controlling as to the instructions
indicated therein and supersedes such Interest Holder's prior
proxy as embodied in any previously submitted proxy card.
TERMS OF THE TRANSACTION
The Merger Agreement
The Partnership, Brauvin High Yield Fund L.P. II, a Delaware
limited partnership affiliated with the Partnership, and Brauvin
Income Plus L.P. III, a Delaware limited partnership affiliated
with the Partnership, and the Purchaser entered into the Merger
Agreement as of May 23, 1996, pursuant to which the Partnership
has agreed to merge (through a merger of its partnership
interests) with and into the Purchaser, subject to the conditions
set forth therein. The summary of the Merger Agreement which is
set forth below is qualified in its entirety by reference to the
complete form of Merger Agreement, which is available for
inspection and copying by any interested Interest Holder, or its
representative who has been so designated by the Interest Holder,
at the Partnership's principal executive offices during regular
business hours. A copy of the Merger Agreement shall also be
sent to any Interest Holder or duly designated representative
thereof, at such Interest Holder's expense, upon receipt of the
written request of such Interest Holder.
The Merger Agreement provides, and the Purchaser intends,
that as soon as practicable after satisfaction or waiver of the
conditions to the Transaction, including approval thereof by the
Interest Holders, the Purchaser shall file a certificate of
merger with the Secretary of State of Delaware and the
Partnership shall be merged with and into the Purchaser. The
Transaction shall become effective at such time as is specified
in the certificate of merger. Following the Transaction, the
Purchaser shall continue as the surviving entity and the
Partnership shall cease to exist. The Purchaser, as the
surviving entity, shall succeed to and possess all of the rights,
privileges and powers of the Partnership, whose Assets shall vest
in the Purchaser, who shall thereafter be liable for all of the
liabilities and obligations of or any claims or judgments against
the Partnership. The Articles of Organization of the Purchaser
shall thereafter be the Articles of Organization of the surviving
entity. As a result of the Transaction, all of the Units will be
converted into the right to receive approximately $9.18 per Unit
in cash. The redemption price is based on the fair market value
of the Assets as determined by an independent appraiser, plus
Available Cash, as hereinafter defined, of the Partnership as of
the Effective Time, plus earnings of the Partnership through July
31, 1996, less the Transaction Costs and less liabilities of the
Partnership not otherwise deducted in computing Available Cash.
For purposes of this computation, "Available Cash" means the
amount of cash equivalents held by or at the direction of the
Partnership after deducting any amounts then owned, accrued or
reserved by the Partnership for goods, services or liabilities of
any nature or description.
The Purchaser will select a person or entity to act as the
redemption agent (the "Redemption Agent"). At the Effective
Time, the Purchaser shall deposit with the Redemption Agent an
aggregate amount equal to the aggregate redemption price in the
Merger. The Redemption Agent shall deliver to the Partnership
all the funds held by it for purposes of the Merger. See "Terms
of the Transaction - Determination of Redemption Price" and
"Special Factors - Valuation of the Assets; Fairness Opinion."
If the Closing Conditions (as hereinafter defined) are met,
the Transaction is expected to be effected on or before August
31, 1996. Should the Transaction not be consummated by August
31, 1996, the financing to consummate the Transaction may not be
available. In order to meet certain other interim deadlines
established by the Purchaser, the Transaction must be approved by
the Interest Holders no later than July 15, 1996.
Representations and Warranties of the Parties
Pursuant to the Merger Agreement, the Purchaser has
represented and warranted to the Partnership that: (i) it is a
limited liability company duly formed and in good standing under
the laws of the State of Delaware with the requisite authority to
carry on the business it will conduct following the Merger; (ii)
it has the requisite power and authority to enter into the Merger
Agreement and perform its obligations thereunder; and (iii) all
government approvals and notices which are required for it to
effect the Merger have been obtained or been properly filed,
except those approvals or filings where the failure to make such
filing or obtain authorization, consent or approval will not have
a material adverse affect on the Purchaser.
Pursuant to the Merger Agreement, the Partnership has
represented and warranted to the Purchaser that: (i) it is a
limited partnership duly formed and validly existing and in good
standing under the laws of the State of Delaware; (ii) it has the
requisite power to carry on its business; (iii) it has
2,627,503.23 issued and outstanding Units; (iv) has the requisite
power and authority to enter into the Merger Agreement, subject
to the approval of the Interest Holders; (v) except as otherwise
disclosed, entering into the Merger Agreement will not violate,
conflict with, or result in a breach of any provision of, or
constitute a default under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien upon any of the Assets under any of the terms,
conditions or provisions of the Partnership's organizational
documents or limited partnership agreement, any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation which the Partnership is a party
to, or violate any statute, rule or regulation or preclude the
Partnership or any of its Assets, except as otherwise disclosed;
(vi) the Partnership has made all required filings with the
Securities and Exchange Commission; (vii) the Partnership has no
liabilities other than those disclosed on its balance sheet
provided pursuant to the Merger Agreement; (viii) there has been
no adverse changes in the Partnership's financial condition since
the preparation of the financial statements provided pursuant to
the Merger Agreement; (ix) to the knowledge of the Partnership
and the Operating General Partners, there is no action or
proceeding or investigation pending, threatened against or
involving the Partnership or any of its Assets or rights of any
of the Partnership and to the Partnership's knowledge, any
liabilities which have adversely determined would individually or
in the aggregate have a material adverse affect on the condition
of the Partnership; and (x) the Partnership will provide to the
Purchaser a true, correct and complete set of all files,
documents and other written materials relating to each parcel of
real property held directly or indirectly by the Partnership and
all buildings and improvements thereon including, without
limitation, copies of environmental reports, letters of credit or
other credit enhancement instruments, title insurance policies,
hazard insurance policies, flood insurance policies and other
insurance policies, all balance sheets, operating statements and
other financial statements, all existing engineering reports,
soil studies and reports, plans, specifications, architectural
and engineering drawings, completion agreements, arrangements,
warranties, commitments and other similar reports, studies and
items, leases and contracts, property management and leasing
brokerage agreements and other writings whatsoever.
Additional Agreements
The Partnership has agreed to file a proxy statement
soliciting approval of the Interest Holders for both the
Transaction and the Amendment and hold a meeting of the Interest
Holders as soon as practicable thereafter.
The General Partners have agreed that they will respond to
any unsolicited inquiry, contract or proposal made by a third
party to the Partnership (an "Alternative Proposal"), and nothing
in the Merger Agreement shall prohibit the General Partners from
responding to such Alternative Proposal, making any required
disclosures under Federal securities laws or providing
information regarding the Partnership to the party making such
Alternative Proposal, negotiating with such party in good faith,
terminating the Merger Agreement or taking any other action,
provided, however, that the Partnership agrees to give the
Purchaser reasonable notice of any such response, negotiations or
other matters, as well as a reasonable opportunity to respond,
taking into account in good faith that the facts and
circumstances were valid at the time of such response,
negotiation or other matters. In the event the Merger Agreement is
terminated due to the confirmation of an Alternate Proposal, Purchaser
shall be entitled to a fee equal to 1.0% of the merger consideration.
Conditions to Closing the Transaction
The respective obligations of each party to effect the
Transaction shall be subject to the fulfillment at or prior to
the Effective Time of each of the following conditions which may
be waived, in whole or in part, only by written agreement of the
Partnership and the Purchaser: (i) all approvals, notices,
filings, registrations and authorizations of any governmental
authority required for consummation of the Transaction shall have
been obtained or made; (ii) approval of the Transaction by
Interest Holders holding a majority of Units shall have been
obtained; (iii) no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, nor any statute, rule, regulation or
executive order promulgated or enacted by a governmental
authority shall be in effect which would prevent the consummation
of the Transaction.
The obligation of the Partnership to effect the Transaction
is also subject to the fulfillment at or prior to the Effective
Time of each of the following conditions which may be waived, in
whole or in part, by the Partnership: (i) the Purchaser shall in
all material respects have performed each obligation to be
performed by it under the Merger Agreement on or prior to the
Effective Time; (ii) the representations and warranties of the
Purchaser set forth in the Merger Agreement and described above
shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of such time, except to
the extent that any such representation or warranty is made as of
a specified date, in which case such representation or warranty
shall have been true and correct as of such date; (iii) the
Partnership shall have received a certificate of the Purchaser,
dated the Closing Date, signed by the manager of the Purchaser,
to the effect that the conditions specified in sections (i) and
(ii) above have been fulfilled; (iv) a favorable opinion of
Cushman & Wakefield as to the fairness of the redemption price to
the Interest Holders, from a financial point of view, shall have
been delivered to the Partnership; and (v) no later than the
earlier of: (A) June 30, 1996; or (B) the date of the mailing of
this Proxy Statement, the Purchaser shall have delivered to the
Partnership a commitment letter executed by a financial
institution or other financing source providing for debt
financing in an amount at least equal to $60,000,000 and on terms
commercially reasonable from the point of view of the Partnership
as the selling party in the Transaction.
The obligation of the Purchaser to effect the Transaction is
also subject to the fulfillment at or prior to the Effective
Time, or such earlier date as specified therein, of each of the
following conditions which may be waived in whole or in part by
the Purchaser: (i) the Partnership shall in all material respects
have performed each obligation to be performed by it hereunder on
or prior to the Effective Time; (ii) the Partnership shall have
cash available and not restricted equal to and replacement
reserves estimate to be $43,553, and $418,000, respectively;
(iii) the Purchaser shall have received certificates of the
Partnership, dated the Closing Date, signed by the Operating
General Partners to the effect that the conditions specified in
sections (i) and (ii) have been fulfilled; (iv) the Purchaser
shall have received evidence, in form and substance reasonably
satisfactory to its counsel, that such licenses, permits,
consents, approvals, waivers, authorizations, qualifications and
orders of domestic governmental authorities and parties to
contracts and leases with the Partnership as are necessary in
connection with the consummation of the transactions contemplated
in the Merger Agreement (excluding licenses, permits, consents,
approvals, authorizations, qualifications or orders, the failure
to obtain which after the consummation of the transactions
contemplated hereby, in the aggregate, will not have a material
adverse effect on the condition of the Partnership); (v) no
action, suit or proceeding before any court or governmental
authority shall have been commenced and be pending by any person
against the Partnership or the Purchaser or any of their
Affiliates, partners, officers or directors seeking to restrain,
prevent, change or delay in any material respect any of the terms
or provisions of the Transaction or seeking material damages in
connection therewith; (vi) the Purchaser, its manager and its
lenders shall have received the favorable legal opinion of Holleb
& Coff, counsel to the Partnership, and Prickett, Jones, Elliott,
Kristol & Schnee, special Delaware counsel to the Partnership
with respect to certain corporate and partnership matters; (vii)
receipt by the Purchaser of debt and equity financing which in
its sole judgement is satisfactory; (viii) the Partnership shall
not have undergone a material adverse change in its condition or
its ability to perform its obligations under the Merger
Agreement; (ix) the Purchaser shall have determined that the
legal, accounting and business due diligence investigation of the
Partnership to be conducted by or on behalf of the Purchaser,
including, without limitation, any information obtained from the
Disclosure Schedule to be attached as an exhibit to the Merger
Agreement, has not revealed that proceeding with the Transaction
would be inadvisable or contrary to the Purchaser's best
interests; (x) the Partnership shall not have made a distribution
of earnings with respect to any Units from the date hereof
through the Effective Time; (xi) the Purchaser shall have
received from the Partnership an environmental assessment of each
Asset, and the Purchaser shall have completed its review of such
Environmental Reports and the Purchaser shall be satisfied in its
sole discretion that: (A) the Purchaser will not be exposed to
unacceptable risk, liability or obligation as a consequence of
the Merger Agreement and the Transaction contemplated thereby;
and (B) the Purchaser will not be subject to any material
adverse, unusual or onerous agreements, conditions, liabilities
or obligations to which the Partnership is a party; (xii) the
Purchaser shall have completed its review of the assets and
business of the Partnership and found them to be satisfactory to
it in its discretion; (xiii) the Partnership, at its own expense,
shall have ordered and delivered to the Purchaser an owner's
title insurance policy (ALTA Owner's Policy Form B-1970 (rev.
10/17/70 and 10/17/84)) with respect to each Asset (or an
endorsement of existing policies in favor of the Purchaser),
insuring the Purchaser and its lenders and issued as of the
Closing Date by a title insurance company reasonably satisfactory
to the Purchaser, in such amount(s) as may be reasonably
satisfactory to Purchaser, showing fee simple title thereto to be
vested in the Purchaser, subject in each case only to permitted
liens acceptable to the Purchaser, with extended coverage over
all general exceptions, a zoning endorsement in the form of ALTA
endorsement Form 3.1 and such other endorsements as the Purchaser
shall reasonably request; (xiv) the Partnership, at its own
expense, shall have ordered and delivered to the Purchaser
surveys of each Asset for which title insurance is being
obtained, dated not earlier than March 31, 1996, prepared by a
licensed surveyor, and certified to the Purchaser, and the title
insurance company as having been prepared in accordance with
American Land Title Association land survey standards, and
showing all material improvements to be within lot, side lot,
rear lot and setback lines, and showing no encroachments onto
each Asset. Such surveys shall reveal no material encroachments
on each Asset and be sufficient to enable to title company
issuing the title policies described in section (xiii) above to
issue same with full extended coverage; and (xv) the Partnership
shall have delivered to the Purchaser such further information,
documents and instruments as the Purchaser shall reasonably
require.
Determination of Redemption Price
The fair market value of the Assets as determined by Cushman
& Wakefield, an independent appraiser, is $23,198,450. As of
[April 16, 1996], cash on hand was $1,305,236. The Operating
General Partners have estimated that earnings from [April 17,
1996] to the Effective Time will be approximately $43,553. The
Operating General Partners have also estimated that the
Transaction Costs will be approximately $310,000 and that other
Partnership liabilities will be approximately $108,000 as of the
Effective Time. Therefore, the Operating General Partners
believe the estimated redemption price per Unit to be as follows:
Appraised value of the Assets $23,198,450
Cash on hand as of [April 16, 1996] 1,305,236
Estimated earnings through the
Effective Time 43,553
Available cash 1,348,789
Estimated Transaction Costs (310,000)
Other estimated Partnership
liabilities (108,000)
Estimated cash available for
distribution $24,129,239
Number of Units 2,627,503.23
Estimated redemption price per Unit $ 9.18
The redemption price per Unit will be adjusted for changes
occurring prior to the Effective Time in the items set forth
above. The General Partners will not receive any payment in
exchange for the redemption of their general partnership
interests nor will they receive any fees from the Partnership in
connection with the Transaction. The Braults have a minority
ownership interest in the Purchaser.
Termination of the Merger Agreement
The Merger Agreement may be terminated and the Transaction
contemplated hereby may be abandoned, by written notice promptly
given to the other parties hereto, at any time prior to the
Effective Time, whether prior to or after Interest Holder
approval of the Transaction: (i) by mutual written consent of
the Purchaser and the Partnership; (ii) by either the Purchaser
or the Partnership, if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action, in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall
have become final and nonappealable; (iii) by either the
Purchaser or the Partnership, if the Effective Time shall not
have occurred on or before the Termination Date, unless the
absence of such occurrence shall be due to the failure of the
party seeking to terminate the Merger Agreement to perform in all
material respects each of its obligations under the Merger
Agreement required to be performed by it prior to the Effective
Time; (iv) by either the Purchaser or the Partnership, if
Interest Holder approval of the Transaction shall not be
obtained; (v) by the Purchaser, if the Partnership shall have
withdrawn, modified or amended in any respect its approval of the
Transaction; (vi) by the Purchaser, if the Partnership fails to
perform in all material respects its obligations under this
Agreement; (vii) by the Purchaser, if there shall have occurred a
material adverse change in the condition of the Partnership since
the date of the Merger Agreement; (viii) by the Partnership, if
the Purchaser fails to perform in all material respects its
obligations under the Merger Agreement; (ix) by the Purchaser, if
the Partnership shall have settled or compromised any law suit or
other designated action without the prior written consent of the
Purchaser, unless such settlement or compromise: (A) requires the
payment of money by the Partnership in an amount which, when
aggregated with the amount of money paid or payable in connection
with all other designated actions, does not exceed $15,000; and
(B) does not include any other material term or condition to
which the Purchaser shall reasonably object; (x) by the
Purchaser, if, prior to the Effective Time, the representations
and warranties of the Partnership, set forth in the Merger
Agreement shall not be true and correct in all material respects
at any time as if made as of such time, except to the extent that
any such representation or warranty is made as of a specific
date, in which case such representation or warranty shall have
been true and correct as of such date; or (xi) by the
Partnership, if there shall have been a failure of the Purchaser
to obtain the necessary commitment for financing as described
herein. In the event the Merger Agreement is terminated due to the
confirmation of an Alternate Proposal, Purchaser shall be entitled
to a fee equal to 1.0% of the merger consideration.
Amendment of the Merger Agreement
The Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after Interest Holder approval of
the Transaction has been obtained, no amendment may be made which
changes the amount of cash to be paid for the Units, or effects
any change which would adversely affect the Interest Holders
without Interest Holder approval.
Amendment of Partnership Agreement
Consummation of the Transaction is subject to approval by
the Interest Holders owning a majority of the Units. In
addition, the Act provides that a merger must also be approved by
the general partners of a partnership, unless the limited
partnership agreement provides otherwise. The Interest Holders
are, therefore, being asked to adopt the Amendment, which
eliminates the requirement that all of the General Partners
approve the Transaction. Upon approval of the Amendment, the
vote of the Interest Holders owning a majority of the Units will
be the only vote necessary to approve the Transaction.
Related Transactions
In addition to the Transaction, the Purchaser has proposed a
series of mergers and an asset purchase (the "Affiliated
Transactions") with Brauvin High Yield Fund L.P. II, Brauvin
Income Plus L.P. III and Brauvin Corporate Lease Program IV L.P.,
which partnerships are affiliates of the Partnership (the
"Affiliated Limited Partnerships"). Each of the Affiliated
Limited Partnerships has investment objectives substantially
identical to the Partnership and owns property similar to the
types of properties owned by the Partnership. The Partnership is
a joint venture partner with certain of the Affiliated Limited
Partnerships, which joint ventures own one or more properties.
See "Certain Information About the Partnership, Its General
Partners and Their Affiliates - Description of the Assets." The
approval of the limited partners of each of the Affiliated
Limited Partnerships to the Affiliated Transactions is being
solicited concurrently with the Partnership's solicitation
pursuant to this Proxy Statement. It is a condition to the
effectiveness of the Transaction that the limited partners of
each of the Affiliated Limited Partnerships approve the
Affiliated Transactions. This condition may be waived by the
Purchaser in its sole discretion.
INCOME TAX CONSEQUENCES OF THE TRANSACTION
Certain Federal Income Tax Consequences
The following summary, based upon current law, is a general
discussion of certain federal income tax consequences of the
conversion of a Unit into the right to receive cash pursuant to
the Merger. This summary is based on the Internal Revenue Code
of 1986, as amended (the "Code"), applicable Treasury regulations
thereunder and administrative rulings and judicial authority as
of the date of this Proxy Statement. All of the foregoing are
subject to change, and any such change could affect the
continuing accuracy of this summary. This summary does not
discuss all aspects of federal income taxation that may be
relevant to a particular Interest Holder in light of such
Interest Holder's specific circumstances or to certain types of
Interest Holders subject to special treatment under the federal
income tax laws (for example, foreign persons, dealers in
securities, banks, insurance companies and tax-exempt
organizations), and it does not discuss any aspect of state,
local, foreign or other tax laws. No ruling has been (or will
be) sought from the Internal Revenue Service, and no opinion of
legal counsel will be rendered, as to the anticipated federal
income tax consequences of the Merger. This summary is based on
the assumption that the Partnership is a partnership for federal
income tax purposes and that, although the Partnership is a
"publicly traded partnership" within he meaning of Section 7704
of the Code (i.e., subject to taxation as a corporation), it is
not currently subject to the operative provisions of Section 7704
of the Code under an effective date grandfathering provision.
The receipt of the right to receive cash pursuant to the
Merger will be a taxable transaction for federal income tax
purpose and may also be a taxable transaction under applicable
state, local, foreign and other tax laws. For federal income tax
purposes, Interest Holders generally will recognize gain or loss
equal to the difference between: (i) the "amount realized" in
respect of a Unit in the Partnership that is converted into a
right to receive cash pursuant to the Merger; and (ii) the
Interest Holder's adjusted tax basis in the Unit. The "amount
realized" with respect to a Unit will be equal to the sum of the
amount of cash to be received by the Interest Holder of the Unit
pursuant to the Merger plus the Interest Holder's allocable share
of liabilities of the Partnership attributable to the Unit as
determined under Section 752 of the Code and the Treasury
regulations promulgated thereunder. An Interest Holder's
adjusted tax basis in a Unit (whether acquired by purchase or
capital contribution), in general, will be the original cost of
the Unit adjusted to reflect the allocable share of the
Partnership's income and losses, minus distributions to the
Interest Holder with respect to the Unit, plus the Interest
Holder's allocable share of liabilities of the Partnership
attributable to the Unit as determined under Section 752 of the
Code. In addition, the adjusted tax basis in a Unit owned by an
Interest Holder that participated in the Partnership's
distribution reinvestment plan would in general be increased by
any amounts recontributed by such Interest Holder to the
Partnership pursuant to the distribution reinvestment plan. Any
Interest Holder that participated in the distribution
reinvestment plan should contact his or her own tax advisor to
determine the adjusted tax basis in his or her Units.
In general, the amount realized by an Interest Holder on a
disposition of a Unit pursuant to the Merger less such Interest
Holder's adjusted tax basis in the Unit will be treated as a
capital gain or loss if the Unit was held by the Interest Holder
as a capital asset. Any capital gain or loss will be treated as
long-term capital gain or loss if the Interest Holder's holding
period for the Unit exceeds one year. Under present law,
long-term capital gains will generally be taxed at a maximum federal
marginal tax rate of 28% (in the case of individuals) or 35% (in
the case of corporations), whereas the maximum federal marginal
tax rate for ordinary income is 39.5% (in the case of
individuals) or 35% (in the case of corporations). Certain
limitations apply to the deductibility of capital losses under
the Code. In the case of a corporation, capital losses are
deductible only to the extent of capital gains. An individual may
deduct up to $3,000 of capital losses in excess of the amount of
his or her capital gains against ordinary income. Excess capital
losses generally can be carried forward to succeeding years (a
corporation's carry forward period is five years and an
individual can carry forward such losses indefinitely); in
addition, corporations are allowed to carry back excess capital
losses to the third preceding taxable year.
However, under Section 751 of the Code, the difference
between the portion of the amount realized by an Interest Holder
that is attributable to "unrealized receivables" (which includes
recapture of depreciation) and "substantially appreciated
inventory" over the portion of the Interest Holder's adjusted tax
basis in the Unit that is allocable to such items will be taxed
as ordinary income or loss rather than capital gain or loss. An
Interest Holder's adjusted tax basis in a Unit allocable to
"unrealized receivables" and "substantially appreciated
inventory" will be determined by reference to the Partnership's
tax basis in these items, which amount could be less than the
Interest Holder's adjusted tax basis in the Unit otherwise
allocable to these items. Because an Interest Holder's adjusted
tax basis in his or her Unit will be allocated to "unrealized
receivables" and "substantially appreciated inventory" based on
the Partnership's tax basis in these items. An Interest Holder
may realize an overall loss on the disposition of his or her
Unit, but have to realize ordinary income on the Section 751
portion of the disposition, which will correspondingly increase
the capital loss on the remaining portion of the disposition.
Under Section 469 of the Code, a taxpayer that is an
individual, estate, trust, closely held corporation or personal
service corporation generally can deduct passive activity losses
from a passive activity against passive activity income received
from other passive activities, but cannot deduct such losses from
other types of income. In the case of a publicly traded
partnership (including a publicly traded partnership that is not
subject to the publicly traded partnership provisions of the
Code), the passive activity loss limitation is applied separately
to each publicly traded partnership. Accordingly, income or gain
realized by an Interest Holder from the Partnership cannot be
offset by passive losses generated by other passive activities of
the Interest Holder. However, upon a complete disposition by an
Interest Holder of its Units pursuant to the Merger, an Interest
Holder's allocable share of the net losses (if any) of the
Partnership that were suspended under the passive loss rules of
Section 469 of the Code generally would be currently deductible.
In the absence of a complete disposition of Units by an Interest
Holder, the deductibility of such suspended passive losses (if
any) may be limited.
An Interest Holder (other than certain exempt Interest
Holders including, among others, all corporations and certain
foreign individuals) who delivers a Unit pursuant to the Merger
may be subject to a 31% backup withholding unless the Interest
Holder provides a taxpayer identification number ("TIN") and
certifies that the TIN is correct or properly certifies that he
is awaiting a TIN. An Interest Holder who does not furnish a TIN
may be subject to a penalty imposed by the Internal Revenue
Service. An Interest Holder may avoid backup withholding by
properly completing and signing a Form W-9. If backup
withholding applies to an Interest Holder, the Partnership is
required to withhold 31% from payments to such Interest Holder.
Backup withholding is not an additional tax. Rather, the amount
of the backup withholding can be credited against the federal
income tax liability of the person subject to the backup
withholding. If backup withholding results in an overpayment of
tax, a refund can be obtained by the Interest Holder upon filing
an income tax return.
Pursuant to Section 897 of the Code, gain or loss realized
by a foreign person on the disposition of an interest in a
partnership is subjected to federal income tax to the extent the
amount realized on such sale is attributable to United States
real property interests. Under Section 1445 of the Code, the
transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of
the amount realized on the disposition. The Partnership,
however, will not be required to withhold 10% of the amount
realized by any Interest Holder if the Interest Holder furnishes
an affidavit stating, under penalty of perjury, the Interest
Holder's TIN, that such Interest Holder is not a foreign person
and the Interest Holder's address.
Differing Tax Treatment of the Interest Holders
At the time of subscription, those Interest Holders not in
need of passive income elected to be classified as "Taxable
Interest Holders." Investors that were tax-exempt or seeking
passive income to offset passive losses from other investments
elected to be classified as "Tax-Exempt Interest Holders." The
Partnership Agreement contains a special allocation provision
which allocates all of the depreciation allocable to the Interest
Holders to the Taxable Interest Holders. In all other respects,
the Taxable Interest Holders and the Tax-Exempt Interest Holders
have been and will be treated alike. Due to the special
allocation of depreciation, which resulted in the Taxable
Interest Holders receiving certain benefits, such as increased
amounts of depreciation deductions and "tax-sheltered cash flow"
(i.e., cash distributions in excess of taxable income), in the
early years of the Partnership's existence, the Taxable Interest
Holders were subject to certain risks, including: (i) allocation
of a greater amount of gain upon the sale of properties which, if
such depreciation deductions are used and not carried forward
under the "passive loss rules," will result in greater tax
liability without receiving greater cash distributions; and (ii)
receipt of smaller cash distributions on the liquidation of the
Partnership and/or the sale of the Assets if there is a loss on
the sale of the Assets, which differ from those to which the
Tax-Exempt Interest Holders will be subject. Interest Holders are
urged to consult with their tax advisors regarding this issue.
As a result of the allocation of these losses to Taxable
Interest Holders, their tax basis in their Units was reduced.
Therefore, these Interest Holders will likely recognize more
taxable income on the Transaction. However, a portion of such
additional income may be offset by prior losses which were
limited under the passive loss rules. The Tax-Exempt Interest
Holders may or may not be subject to tax on the Transaction.
Interest Holders are urged to consult with their tax advisors
regarding this issue.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE
BASED UPON PRESENT LAW, ARE FOR GENERAL INFORMATION ONLY AND DO
NOT PURPORT TO BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL
TAX EFFECTS WHICH MAY APPLY TO AN INTEREST HOLDER. THE TAX
CONSEQUENCES TO A PARTICULAR INTEREST HOLDER MAY BE DIFFERENT
FROM THE TAX CONSEQUENCES TO OTHER INTEREST HOLDERS, INCLUDING
THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS,
AND THUS, INTEREST HOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE INCOME TAX CONSEQUENCES OF THE MERGER.
SPECIAL FACTORS
Purpose of and Reasons for the Transaction
The principal purpose of the Transaction is to cause the
transfer of the Assets and the liabilities of the Partnership to
the Purchaser in return for cash proceeds which will be
distributed to the Interest Holders through the redemption of
their Units. Promptly upon consummation of the Transaction, the
Units of the Interest Holders will be redeemed for approximately
$9.18 per Unit in cash.
Background and Operational History of the Partnership
The Partnership is a Delaware limited partnership organized
on January 6, 1987 to raise funds from investors to acquire
debt-free ownership of existing, free-standing, income-producing
retail, office and industrial real properties subject to
predominantly triple-net leases. The Partnership completed its
public offering on May 19, 1988 and raised a total of
$25,000,000. As of December 31, 1995, the Partnership had also
raised an additional $2,816,104 through its distribution
reinvestment plan. As of the date hereof, the Partnership has
acquired the land and buildings underlying 33 properties as well
as a 49% interest in a Scandinavian Health Spa, a 1% interest in
a joint venture which owns the land and buildings underlying six
Ponderosa restaurants and a 23.4% interest in a joint venture
which owns the land and building underlying a CompUSA store. See
"Certain Information about the Partnership, Its General Partners
and their Affiliates - Description of the Assets." All of the
properties of the Partnership are under lease.
Cash distributions to Interest Holders for 1995, 1994 and
1993 were $2,600,149, $2,616,758 and $2,590,902, respectively.
In addition, because of the decision to present the Transaction
to the Interest Holders, the Operating General Partners have
determined that no further distributions of operating cash flow
will be made by the Partnership to the Interest Holders prior to
consummation or termination of the Transaction. The Operating
General Partners have also determined that the Partnership will
not repurchase Units from Interest Holders during this period.
See "Certain Information About the Partnership, Its General
Partners and their Affiliates - Distributions."
The Partnership is the first of a series of affiliated
limited partnerships formed to acquire similar properties.
Because the Partnership is the first of the Affiliated Limited
Partnerships to be formed, the properties acquired by the
Partnership are at the end of their anticipated holding periods.
The Partnership's Prospectus dated September 4, 1987 (the
"Prospectus") states that the anticipated holding period for the
Partnership's properties is no more than six to nine years. As a
result, the Braults, as executive officers of the corporate
general partners of the Partnership and the Affiliated Limited
Partnerships began investigating options for the liquidation of
the properties held by the Partnership and the Affiliated Limited
Partnerships.
Prospects of the Partnership
Pursuant to the terms of the Merger Agreement, the Purchaser
has agreed to pay $9.18 per Unit in cash in connection with the
Transaction, which is based upon the fair market value of the
Assets as determined by Cushman & Wakefield. Due to the
relatively fixed nature of the lease payments generated by the
Assets and the remaining lease terms, the fair market value may
not increase over the foreseeable future. To date, the
Partnership has not been presented with any firm offers for the
purchase of the Assets, although it has received and pursued a
few expressions of interest from third parties. Mr. Froelich
believes that the Partnership should actively seek third party
offers through an arm's-length bidding process to establish a
fair price for the Assets. In this regard, the Partnership has
made, and will continue during the pendency of the proxy
solicitation process to make, all pertinent information
pertaining to the Partnership and the Assets available to other
potential purchasers who have the financial ability to acquire
the Assets on an all cash basis. If the Transaction is not
approved, there can be no assurance as to whether any future
liquidation or disposition of the Assets will occur or on what
terms they might occur. Despite the Partnership obtaining both
the Valuation and the Fairness Opinion from Cushman & Wakefield,
there can be no assurances that a better offer for the
acquisition of the Assets may not be available.
Costs and Risks Associated with Ownership
The average remaining lease term for the Assets is 6.8
years. The longer the Assets are held by the Partnership, the
greater the risk to the Partnership of lease rollover,
renegotiation and non-renewal. Because many of the Partnership's
properties were designed for a particular type of operation,
lease default or non-renewal could result in the need for
substantial capital improvements or remodeling to attract new
tenants. Eventually the Partnership will be required to reserve
against such risks. Lease defaults and non-renewals, as well as
reserves against such risks will eventually result in lower
distributions to the Interest Holders.
The Partnership incurs general and administrative costs
related to its status as a public reporting entity under the
Federal securities laws. The costs of preparing reports such as
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
as well as the expenses of printing and mailing these materials
can be significant. The Partnership incurs significant legal and
accounting fees in complying with the Federal securities laws.
Over the past two years, the Partnership has spent approximately
$133,805 and $129,068, respectively on partnership administration
expense, and legal, accounting and tax advisory fees necessitated
by the on-going Federal securities law compliance. If the
Partnership were not a publicly-held entity, many of these costs
could be eliminated, although such cost savings would not be of
benefit to the Interest Holders.
There is no established trading market for the Units. As a
result, the Interest Holders and the Partnership incur all of the
costs associated with public-entity status, but have little of
the benefits. Since the Units are not readily transferable, the
Interest Holders are essentially locked into their investment in
the Units.
Benefits of the Transaction
As a result of the Transaction, the Interest Holders will
receive their proportionate share, on an all cash basis, of the
fair market value of the Assets, as valued by an independent
appraiser. The costs of the Transaction to the Partnership,
which are estimated to equal approximately 1 1/2% of the total
value of the Transaction, is believed to be below industry
standards for a transaction of this size. In addition, the
structure of the Transaction eliminates the need for the
Partnership to reserve or hold back any funds from distribution
to the Interest Holders to satisfy any post-closing liabilities.
Finally, consummation of the Transaction and receipt by the
Interest Holders of the redemption.
Alternatives to the Transaction
The Operating General Partners considered several
alternatives to the Transaction, including: (i) continuing to
hold the Assets; (ii) individual property sales; (iii) an auction
of any or all of the properties; (iv) solicitation of third-party
bids; and (v) a sale of the assets to the Purchaser.
Continuing to hold the Assets was rejected as the risk from
ownership increases the longer the properties are held and thus
the value of the Assets becomes less certain. This risk results
from the approaching maturity dates for each of the leases of the
Assets (which average remaining lease is 6.8 years), the costs of
the renegotiation of such lease and the related risk of default
or non-renewal. A merger of the Partnership with and into the
Purchaser will allow the Interest Holders to avoid such
increasing risks. Furthermore, the Partnership's investment in
the properties is approaching the outside of its initial
estimated holding periods and thus it is the General Partners
duty to look to the liquidation of the Assets.
Individual property sales were rejected as this option would
likely result in the Partnership's more valuable properties being
sold and the Partnership being forced to retain the less valuable
properties. Even if the more valuable properties were sold on an
all cash basis comparable to the Transaction, the Partnership
would likely be required to retain a substantial portion of the
proceeds of such sales to cover the expenses related to ongoing
administration of the Partnership. Because the Partnership's
administrative costs are relatively fixed, a sale of the more
valuable properties would ultimately result in proportionally
less cash being available for distribution to the Interest
Holders. Furthermore, costs associated with individual sales of
the properties would, in the aggregate, be significantly greater
than the costs associated with a sale of all of the Assets.
These increased costs would further result in less cash being
available for distribution to the Interest Holders. Finally,
because the more valuable properties will likely be sold first,
risks associated with lease defaults and non-renewals, as well as
risks associated with particular markets and industries will
increase. Therefore, the sale of the Assets in a single
transaction eliminates the need for the Partnership to remain in
existence with a smaller, less diverse and more risky portfolio.
An auction of all of the Assets was also rejected as real
estate auctions are generally viewed as a sale method of last
resort and the typical buyer at auction is seeking below market
price purchases. An auction of individual assets would result in
the same adverse effects as those resulting from sales of
individual properties.
A formal solicitation of third-party bids for the Assets was
not undertaken by the Operating General Partners prior to the
date the Partnership entered into the Merger Agreement. However,
the terms of the Merger Agreement permit the General Partners to
terminate the Transaction at any time should they receive an
offer for the Assets which they in good faith believe to be on
terms preferable to the Transaction. Although there have been a
few expressions of interest from potential third-party purchasers
generated by the Purchaser's effort to secure financing, no party
has made a firm offer for the Assets. In conjunction with Mr.
Froelich's belief that the solicitation of third-party offers
through an arm's-length bidding process was the most advantageous
method for determining a fair price for the Assets, the
Partnership continues to make available to prospective purchasers
all relevant materials necessary to conduct due diligence with
respect to the Assets. Until the Transaction is approved, the
General Partners will entertain any offers which can produce a
comparable overall return to the Limited Partners.
Notwithstanding the foregoing, the Operating General Partners
have surveyed the market and have been unable to identify a
strategic or financial buyer that would be interested in
purchasing the entire portfolio of the Assets, on all cash basis.
This is mainly the result of two factors: (i) 33% of the Assets
have lease terms which provide the lessees with rights of first
refusal on any sale of the Assets, thereby significantly
complicating the negotiations or possible offers from third
parties; and (ii) the average remaining lease term of 6.8 years
makes the Assets less attractive to such purchaser.
While the Partnership could have structured the transaction
as a sale of the Assets to the Purchaser, the costs that would be
incurred by the Purchaser in connection with such a sale (such as
real estate transfer taxes and other transfer related costs)
would have been greater, resulting in the Interest Holders
receiving less by way of a liquidating distribution than they
will receive in connection with the redemption of their Units.
Since the Transaction includes many protections for the Interest
Holders, including an independent appraisal of the Assets,
receipt of an opinion that the transaction is fair to the
Interest Holders from a financial point of view and the receipt
by the Interest Holders of their pro rata share of the appraised
value thereof, the Transaction does not result in a materially
different transaction than a sale of the Assets from the Interest
Holder's prospective.
Effects of the Transaction
If the Transaction is approved and the remaining conditions
to the Transaction are met or waived, the Assets and liabilities
of the Partnership will be transferred to the Purchaser as the
surviving entity in the Transaction and the Partnership will
cease to exist. The registration of the Units under Section
12(g)(4) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") will then be terminated. Further, following the
Transaction, the Partnership will no longer be subject to the
periodic reporting requirements of the Exchange Act and will
cease filing information with the Securities and Exchange
Commission (the "Commission"). The Corporate General Partner
intends to conclude the Transaction with and into the Purchaser
no later than December 31, 1996.
As a result of the Transaction, the Units will be redeemed
for approximately $9.18 per Unit in cash. The redemption price
is based on the fair market value of the Assets as of the
Effective Time as determined by Cushman & Wakefield, plus cash on
hand as of the Effective Time, less the Transaction Costs and
less all other Partnership obligations. Thus, the actual
redemption price will be subject to adjustment based upon changes
in these amounts prior to the Effective Time. Cushman &
Wakefield has determined that the fair market value of the Assets
is $23,198,450, which is $8.85 per Unit. The General Partners
will not receive any payment in exchange for the redemption of
their general partnership interests nor will they receive any
fees from the Partnership in connection with the Transaction.
The Braults have a minority ownership interest in the Purchaser.
Valuation of the Assets; Fairness Opinion
Cushman & Wakefield Valuation Advisory Services ("Cushman &
Wakefield") was engaged by the Partnership on March 15, 1996 to
value the Assets pursuant to its obligation to provide a
valuation of the Units within 120 days after the end of the
fiscal year to satisfy the requirements of the Employee
Retirement Income Security Act of 1974, as amended. The
Partnership subsequently engaged Cushman & Wakefield to provide
an opinion as to whether the Transaction is fair from a financial
point of view (the "Fairness Opinion"). Other than the
engagements described herein, and the engagement of Cushman &
Wakefield by the Affiliated Limited Partnerships in connection
with the Affiliated Transactions, there has been no material
relationship between Cushman & Wakefield or its affiliates and
the Partnership or its affiliates, nor is any such relationship
contemplated.
Copies of the Valuation and the Fairness Opinion are
attached hereto as Annex I and Annex II, respectively.
Experience of Cushman & Wakefield
Cushman & Wakefield is the largest real estate valuation and
consulting organization in the United States. In 1995, the
appraisal group of Cushman & Wakefield completed in excess of
2,300 appraisal and consulting assignments. Cushman &
Wakefield's clients include major commercial and investment
banks, Fortune 500 corporations, pension funds, advisory firms
and government agencies. Cushman & Wakefield has 19 branch
offices located in all geographic regions of the United States.
This large network of professionals provides local expertise in
key markets and sub-regions and enables Cushman & Wakefield to
effectively handle broad-based, multi-property assignments.
Furthermore, Cushman & Wakefield's appraisal network provides a
large national database of market information and ensures a
consistent methodology for each property valuation. The
Operating General Partners considered several appraisal firms but
ultimately chose Cushman & Wakefield based upon their expertise
and industry leadership.
Valuation
Pursuant to its engagement, Cushman & Wakefield advised the
Partnership that it valued the Assets at $23,198,450 as of
________, 1996 (the "Valuation"). On ____________, 1996, Cushman
& Wakefield advised the Partnership that it was not aware of any
information that would cause a change in its Valuation as of such
date. Certain of the material assumptions, qualifications and
limitations to the Valuation are described below. The summary
set forth below does not purport to be a complete description of
the analysis employed by Cushman & Wakefield in preparing the
Valuation. The Partnership imposed no conditions or limitations
on the scope of Cushman & Wakefield's investigation or the
methods and procedures to be followed in preparing the Valuation.
No other appraisals of the Assets were obtained by the
Partnership due to the significant cost involved and the
Operating General Partners' opinion that the Valuation was
prepared according to industry standards by a reliable and
independent appraisal firm.
Summary of Materials Considered
In preparing the Valuation, Cushman & Wakefield: (i)
conducted a physical inspection of each property; (ii)
considered the location and market area of each property, with
particular attention given to the submarket definition, demand
generators, competitive properties, trade area demographics and
outlook; (iii) reviewed property sales history where provided; (iv)
analyzed site and improvements with regard to quality, functionality and
condition of improvements toward existing use; and (v) considered
the highest and best use of each site. In addition, Cushman &
Wakefield conducted a review and analysis of each existing
individual leases affecting each of the properties. In conducing
their analysis, Cushman & Wakefield was provided with, among
other things: (i) the Partnership's Annual Reports on Forms 10-K
and related financial information for the three fiscal years
ended December 31, 1993, 1994 and 1995, the Partnership's
Quarterly Reports on Forms 10-Q and related unaudited financial
information for the three months ended March 31, 1996; (ii)
certain information relating to the business, earnings, operating
cash flow and assets of the Partnership, including sales
performance for 1993 through 1995 where provided and estimates for 1996;
(iii) surveys, legal descriptions, current property tax statements, and
detailed lease abstracts; and (iv) such other information as
Cushman & Wakefield deemed necessary or appropriate. In
addition, Cushman & Wakefield personnel questioned the Operating
General Partners about the markets in which the Assets operate
and the operating history of the Assets.
Summary of Cushman & Wakefield's Methodology and Approaches
to Value
Cushman & Wakefield's valuation of the Assets was based
primarily on a discounted cash flow analysis. Cushman &
Wakefield believes that the valuation resulting from the
discounted cash flow analysis is the best indication of value, as
an investor in the type of property owned by the Partnership
considers its income producing capabilities as most important. A
sales approach based on comparable sales was determined to have a
high margin of error because of the lack of comparable properties
and recent sales data for many of the Assets. Therefore, a sales
approach was not considered to be an effective approach to
valuation of the Assets.
Individual evaluation reports containing property specific
information such as location, competition, and market and trade
area analysis, were prepared by Cushman & Wakefield for each
Asset. These evaluation reports formed the foundation for
Cushman & Wakefield's valuation analysis. In conducing its cash
flow analysis, Cushman & Wakefield performed an individual
property-by-property analysis to establish an anticipated cash
flow to be received over a specified holding period for the
particular property. Analysis as to cash flows takes into account
the contractual rent and the terms and conditions of each lease, as
well as the credit associated therewith.
Cushman & Wakefield also conducted an analysis of the
reversionary component of the cash flow analysis for each
property, which values the property at the end of the specified holding
period, based on the estimated highest and best use of the property.
The highest and best use of a property is formulated based on a
decision matrix which takes into account specific property and
location characteristics, demographic profile and outlook, sales
history and market position of the property relative to its
competition. Where the highest and best use of a property at
reversion is estimated to be a continuation of the existing use,
the reversionary value of the property is based on is based on capitalizing
the property's eleventh year's net operating income into a value by means
of direct capitalization. Where the anticipated highest and best use of a
property differs from the existing use, the reversionary value of
the property is estimated based on a cost approach methodology,
which incorporates land value estimate and a depreciated
replacement cost estimate for the improvement contribution, if
any.
Pursuant to the discounted cash flow analysis, Cushman &
Wakefield preliminarily valued the Assets at $22,600,000. The
Operating General Partners reviewed the initial valuation and
concluded that the values of the Assets were lower than expected.
As a result of subsequent considerations presented by the
Operating General Partners the valuation was increased to
$23,198,450, which is the amount allocated by the Purchaser to
the Assets in connection with the Transaction. The Operating
General Partners have reviewed and accept the final Valuation and
believe that it was prepared in accordance with appropriate
professional standards.
Assumptions, Limitations and Qualifications of Cushman &
Wakefield's Valuation
In preparing the Valuation, Cushman & Wakefield relied,
without independent verification, on the accuracy and
completeness of all information supplied or otherwise made
available to it by or on behalf of the Partnership. In arriving
at the Valuation, Cushman & Wakefield assumed: (i) good and
marketable title; (ii) that each Asset was free and clear of all
liens, unless otherwise stated; (iii) responsible ownership and
competent management of each Asset; (iv) no hidden or unapparent
conditions; (v) full compliance with zoning laws; (vi) possession
of all necessary licenses, certificates of occupancy and other
governmental consents; (vii) that no potentially hazardous or
toxic materials were located at or about the Assets; and (viii)
compliance with the Americans with Disabilities Act of 1990.
Cushman & Wakefield did not conduct a legal survey of the Assets.
Fairness Opinion
Subsequent to its engagement in connection with the
Valuation, Cushman & Wakefield was engaged to provide an opinion
as to the fairness of the Transaction to the Interest Holders
from a financial point of view. Cushman & Wakefield was neither
asked to make, nor did it make, any recommendation as to the
redemption price, although it did provide the Valuation on which
the Transaction price was based. Cushman & Wakefield was not
asked to solicit offers from other interested parties nor was it
asked to opine on any aspects of the Transaction other than that
specifically mentioned above. Cushman & Wakefield directed its
opinion solely to the Partnership and was not engaged to act as
an agent or fiduciary of the Interest Holders or any other third
parties. Cushman & Wakefield advised the Partnership that, in
its opinion, the terms of the Transaction are fair to the
Interest Holders from a financial point of view.
In connection with rendering its opinion, Cushman &
Wakefield: (i) reviewed the form of the Merger Agreement; (ii)
analyzed the audited financial statements of the Partnership for
the periods ended December 31, 1995, 1994 and 1993 and the
unaudited financial statements of the Partnership for the periods
ended March 31, 1996 and 1995; (iii) reviewed the various
appraisals of and market studies for the Assets; (iv) examined
certain legal documents; (v) reviewed operating statements of
certain individual Assets; (vi) reviewed the historical market
price, distributions and trading volumes for the Units; (vii)
reviewed current stock market valuations of public companies
deemed similar to the Partnership, as well as data with respect
to the value of assets similar to those of the Partnership;
(viii) conducted discussions with the Operating General Partners
concerning the value of the Assets and the operations and
prospects of the Partnership; (ix) reviewed and analyzed other
potential offers for the Assets; and (x) performed such other
studies, analyses and investigations as were deemed appropriate.
The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant
quantitative and qualitative methods of financial analyses and
the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to
partial analysis or summary description. Furthermore, in
arriving at its Fairness Opinion, Cushman & Wakefield did not
attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis or factor.
Accordingly, Cushman & Wakefield believes that its analysis must
be considered as a whole and that considering any portion of such
analysis and of the factors considered, without considering all
analyses and factors, could create a misleading or incomplete
view of the process underlying its opinion. In its analyses,
Cushman & Wakefield made numerous assumptions with respect to
industry performance, general market, business and economic
conditions and other matters, any of which are beyond the control
of the Partnership. Any estimates contained in these analyses
are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less
favorable than as set forth therein, and neither Cushman &
Wakefield nor the Partnership assumes responsibility for the
accuracy of such estimates.
Compensation
Cushman & Wakefield was paid a fee of $2,500 for each Asset
valued in connection with the Valuation and will be paid $8,900
by the Partnership for the Fairness Opinion. In addition, the
Affiliated Limited Partnerships will pay Cushman & Wakefield on
the same basis for services rendered to each of them in
connection with the Affiliated Transactions. Cushman & Wakefield
is also entitled to reimbursements for certain costs incurred in
connection with providing their services to the Partnership. The
fees paid to Cushman & Wakefield in connection with the Valuation
and the Fairness Opinion were negotiated by the Operating General
Partners. The Partnership has agreed to indemnify Cushman &
Wakefield against certain liabilities arising out of its
engagement to prepare and deliver the Valuation and the Fairness
Opinion.
Recommendations of the General Partners
Factors Considered
The Operating General Partners have determined that the
terms of the Transaction are fair to the Interest Holders and,
therefore, recommend that the Interest Holders vote "FOR" the
Transaction and "FOR" the Amendment.
In determining the fairness of the Transaction, the
Operating General Partners considered each of the relevant
factors discussed below in their decision to recommend the
Transaction. Although the Operating General Partners were unable
to weigh each factor precisely, the factors are set forth below
in their approximate order of importance:
* The redemption price of the Transaction was based on the
Valuation, which was prepared by an expert, independent
third party appraiser. The Valuation considered the current
fair market value of each and every Asset. The Operating
General Partners reviewed a preliminary draft of the
valuation and concluded that the values of the properties
set forth therein were lower than expected. As a result of
subsequent considerations presented by the Operating General
Partners, the valuation was increased.
* The fact that in connection with the Transaction, the
Purchaser will acquire all of the Assets and liabilities of
the Partnership, thereby eliminating the need for the
Partnership to continue operations with the less valuable
properties.
* The fact that in connection with the Transaction, the
Partnership will only be required to make limited
representations and warranties to the Purchaser as to the
condition of the Assets, thereby eliminating the need
establish an escrow of funds as is typically required in
merger transactions or asset sales.
* The avoidance of certain potential transaction costs, such
as investment banking fees or real estate brokerage
commissions, which could have approximated $700,000 to
$1,400,000 in the aggregate.
* The fact that the Purchaser was willing to consummate the
Transaction on an all cash basis.
* The fact that an opinion was received from Cushman &
Wakefield stating that the Transaction is fair to the
Interest Holders from a financial point of view.
* The fact that the anticipated holding period for the Assets
is near the end of the six to nine year term originally
contemplated in the Prospectus.
* The fact that the Merger Agreement permits the General
Partners to terminate the Transaction at any time if they
receive an offer for the Assets which they in good faith
believe to be on terms preferable to the Transaction. Until
the Transaction is approved by the Limited Partners, the
General Partners will continue to entertain any and all
offers which can produce a comparable overall return to the
Limited Partners.
* The fact that the vote of a majority in interest of the
Interest Holders is required to approve the Transaction.
* The fact that the longer the Assets are held the greater the
risk to the Partnership of lease rollover, renegotiation and
non-renewal.
* Similarly, as a result of the average lease term for the
Assets being 6.8 years, the Assets may become more difficult
to sell.
* The high cost of operating the Partnership as a
publicly-held entity. Over the past two years, the
Partnership has spent $133,805 and $129,068 on partnership
administration expense and legal, accounting and tax
advisory fees necessitated by the on-going Federal
securities law compliance.
* The lack of an established exchange or market for the Units
which makes it extremely difficult for the Interest Holders
to liquidate their investment. Based on the May 1996 issue
of The Stanger Report, the transaction price per Unit for
sales of Units in the "secondary" market ranged between
$9.18 and $8.25, which represents transactions for 4,033
Units from December 1, 1995 through February 29, 1996. Over
the past 12 months, 95,378.4 Units were sold in private
transactions in the "secondary" market.
* Comparison of the per Unit price to be paid in connection
with the Transaction to current and historical market prices
of the Units.
* The expressed desire of certain Interest Holders to have
their investment in the Partnership liquidated.
The current value of the Assets as compared to their book
value (as reflected on the Partnership's financial statements)
was not a significant factor in the Operating General Partners'
determination of the fairness of the terms of the Transaction.
Going concern value was not deemed to be relevant to the
Partnership's business operations. Furthermore, the net book
value and liquidation value were not deemed to be relevant
measures of market value of the Assets.
Since the Operating General Partners are affiliates of the
Purchaser, their recommendation is subject to a conflict of
interest. See "Conflicts of Interest." Furthermore, no
unaffiliated representative was retained to act solely on behalf
of the Interest Holders for the purpose of negotiating the
Transaction. However, as noted above, the Purchaser has agreed
to an all cash transaction, with limited representations and
warranties.
Conclusion
If the Transaction and the Amendment are not approved, the
Operating General Partners are uncertain as to whether any offers
on as favorable terms will be available to the Partnership in the
near future. Despite the Partnership obtaining both the
Valuation and the Fairness Opinion from Cushman & Wakefield,
there can be no assurances that a better offer for the
acquisition of the Assets may not be available.
Appraisal Rights
Neither the Partnership Agreement nor the Act, provide
rights of appraisal or similar rights to the Interest Holders who
dissent from the vote of the majority in approving the
Transaction. As a result, if Interest Holders holding a majority
of the Units approve the Transaction and the Amendment and if the
Transaction is consummated, the Partnership will be merged with
and into the Purchaser and all Interest Holders, including those
who do not approve the Transaction, will receive the redemption
price for their Units pursuant to the terms of the Merger
Agreement.
Costs Associated with the Transaction
The following is an itemized statement of the approximate
amount of all expenses incurred or to be incurred by the
Partnership in connection with the Transaction:
Legal fees $ 50,000
Fairness Opinion and related expenses 8,900
Printing and mailing costs 12,000
Final audit, cost reports and tax return 45,000
Title, survey and environmental reports 150,000
Bank fees related to final distributions 6,000
Filing fees 4,640
Proxy solicitation fees 15,000
Other 80,000
Total $371,540
All of the foregoing fees and expenses will be paid by the
Partnership from cash from operations. No part of such funds is
expected to be borrowed. In addition, the Partnership will pay
the Valuation fees and related expenses of approximately $90,000.
The cost of the Valuation was a necessary Partnership expense in
accordance with the requirements of the Partnership Agreement
and, therefore, is not considered an expense of the Transaction.
The fees and expenses of the Purchaser in connection with
the Transaction will be paid by the Purchaser. Certain of these
fees and expenses to be paid by the Purchaser include $21,000
payable to Brauvin Management Company and $21,000 payable to
Brauvin Financial, Inc. for advisory services. Brauvin
Management Company and Brauvin Financial, Inc. are affiliates of
the Operating General Partners and Mr. Froelich. None of these
fees are being paid out of the proceeds of the Partnership.
CONFLICTS OF INTEREST
Interests in the Purchaser
The Transaction, as a result of the role of the Operating
General Partners, is subject to conflicts of interest. The
Braults have a minority ownership interest in the Purchaser and,
therefore, the Braults have an indirect economic interest in
consummating the Transaction that is in conflict with the
economic interests of the Interest Holders. No third-party was
engaged to act as an agent or additional fiduciary on behalf of
the Interest Holders. Notwithstanding the Braults minority
ownership interest in the Purchaser, the Operating General
Partners remain accountable to the Partnership as fiduciaries and
consequently must exercise good faith and fair dealing toward the
Interest Holders.
Indemnification under the Partnership Agreement
Pursuant to the terms of the Partnership Agreement, the
Partnership has agreed to indemnify the General Partners and any
of their affiliates, to the maximum extent allowed by law, and to
hold them harmless, and the Interest Holders have agreed to make
no claim against the General Partners and any affiliates of the
General Partners, for any loss suffered by the Partnership which
arises out of any action or inaction of the General Partners or
their affiliates if the General Partners, in good faith,
determine that such course of conduct was in the best interests
of the Partnership and such course of conduct did not constitute
negligence or misconduct of the General Partners. Furthermore,
the General Partners and their affiliates are to be indemnified
by the Partnership, to the maximum extent allowed by law and by
the Partnership Agreement, against any losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained by them in connection with the Partnership,
provided that the same were not the result of negligence or
misconduct on the part of the General Partners and their
affiliates, that the General Partners and their affiliates made a
good faith determination that their actions were in the best
interest of the Partnership and that the General Partners and
their affiliates were acting within the scope of the General
Partners' authority.
If a claim is made against the General Partners or their
affiliates in connection with their actions on behalf of the
Partnership with respect to the Transaction prior to the
consummation thereof, the General Partners expect that they and
such affiliates will seek to be indemnified by the Partnership
with respect to such claim. Any expenses (including legal fees)
incurred by the General Partners and such affiliates in defending
such claim shall be advanced by the Partnership prior to the
final disposition of such claim, subject to receipt by the
Partnership of an undertaking by the General Partners and such
affiliates to repay any amounts advanced if it is determined that
the indemnified person's actions constituted fraud, negligence,
breach of fiduciary duty or misconduct. As a result of these
indemnification rights, an Interest Holder's remedy with respect
to claims against the General Partners and their affiliates
relating to the General Partners' or such affiliates' involvement
in the Transaction could be more limited than the remedies which
would have been available absent the existence of these rights in
the Partnership Agreement. A successful claim for
indemnification, including the expenses of defending a claim
made, would reduce the Partnership's assets by the amount paid.
Notwithstanding the foregoing, the General Partners and
their affiliates shall not be indemnified by the Partnership for
liabilities arising under federal and state securities laws
unless: (i) there has been a successful adjudication on the
merits of each count involving alleged securities law violations
as to the particular indemnitee and the court approves
indemnification of litigation costs; (ii) such claims have been
dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee and the court
approves indemnification of litigation costs; or (iii) a court of
competent jurisdiction approves the settlement of the claims as
to the particular indemnitee and finds that indemnification of
settlement and related costs should be made.
Indemnification by the Purchaser
Pursuant to the Merger Agreement, the Purchaser, as the
surviving entity shall provide the General Partners for their
sole benefit, the indemnification set forth in the Partnership
Agreement as in effect on the date of the Merger Agreement, and
maintain unencumbered total cash and cash equivalents of not less
than $__ million for a period ending on the third anniversary of
the Effective Time, which provision shall survive consummation of
the Transaction (the "Closing") until extinguished by the
applicable statute of limitations. Pursuant to the Merger
Agreement, the Partnership and, following the Transaction, the
Purchaser, as the surviving entity and its affiliates, jointly
and severally release and discharge, subject to termination as
discussed below, Jerome J. Brault, Cezar M. Froelich and David M.
Strosberg and their respective heirs, executors, administrators
and personal representatives (collectively, the "Released
Parties"), jointly and severally, from and against any and all
claims arising out of or relating in any way to any acts,
omissions, transactions or occurrences which took place, in whole
or in part, prior to and including the date of the Merger
Agreement, whether known or unknown, suspected or unsuspected,
matured or unmatured, fixed or contingent, including, without
limitation, any which relate to or arise in any way out of the
Transaction, but not including the Released Parties' respective
obligations under the Merger Agreement or acts, omissions,
transactions or occurrences which involve fraud or criminal
conduct with respect to the financial affairs of the Partnership.
In addition, the Merger Agreement provides that, if such Released
Parties have fully performed their respective obligations under
the Merger Agreement to be performed on or prior to the Effective
Time, the release shall be extended to cover the period prior to
and including the Effective Time.
CERTAIN INFORMATION ABOUT THE PARTNERSHIP,
ITS GENERAL PARTNERS AND THEIR AFFILIATES
The Partnership
The Partnership was organized on January 6, 1987 as a
limited partnership under the Act. The Partnership is governed
by the Partnership Agreement, which vests exclusive management
control over the Partnership in the General Partners, subject to
the rights of the Interest Holders to vote on certain limited
matters. The address of the Partnership's principal executive
office is 150 South Wacker Drive, Suite 3200, Chicago, Illinois
60606, and the telephone number is (312) 443-0922.
The Partnership was formed to acquire debt-free ownership of
existing, free-standing, income-producing retail, office and
industrial real properties subject to predominantly triple-net
leases. The Partnership raised a total of $25,000,000 through
its offering to the public which commenced on September 4, 1987
and terminated on May 19, 1988, as well as an additional
$2,816,104 through its distribution reinvestment plan through
December 31, 1995. The reinvestment of distributions through the
distribution reinvestment plan was suspended for the May 15, 1996
distribution as the valuation of the Units was not completed at
such time. As of December 31, 1995, Units valued at $1,607,070
had been purchased by the Partnership from Interest Holders
liquidating their original investment and such Units have been
retired. The Partnership has utilized the proceeds of its
offering and the funds received through the sale of Units through
the distribution reinvestment plan to acquire the land and
buildings underlying 33 properties as well as a 49% interest in a
Scandinavian Health Spa, a 1% interest in a joint venture which
owns the land and buildings underlying six Ponderosa restaurants
and a 23.4% interest in a joint venture which owns the land and
building underlying a CompUSA store. See the subsection entitled
"Description of the Assets," below. All of the Assets are under
lease.
The original objectives of the Partnership were the: (i)
distribution of current cash flow from the Partnership's cash
flow attributable to rental income; (ii) capital appreciation;
(iii) preservation and protection of capital; (iv) the potential
for increased income and protection against inflation through
escalation in the base rent or participation and growth in the
sales of the lessees of the Partnership's properties; (v) the
production of "passive" income to offset "passive" losses from
other investments; and (vi) the partial shelter of cash
distributions for Taxable Interest Holders.
The Partnership acquired all of its properties prior to
1995. The Partnership did not acquire any properties in 1995 or
1996. The Partnership does not currently have sufficient funds
available for additional property acquisitions. The Partnership
has made quarterly distributions of operating cash flow as
described in the subsection below entitled "Distributions." As
distributions of operating cash flow to the Interest Holders will
be suspended during the pendency of the proposed Transaction, the
Partnership will not be selling any additional Units to the
Interest Holders pursuant to the terms of the Partnership's
distribution reinvestment plan and, therefore, no funds will be
raised for additional acquisitions.
The General Partners
The Corporate General Partner is Brauvin Realty Advisors,
Inc., an Illinois corporation, with its principal business
address at 150 South Wacker Drive, Suite 3200, Chicago, Illinois
60606. The principal business of the Corporate General Partner
is to act as a general partner of the Partnership. The directors
and executive officers of the Corporate General Partner are
Jerome J. Brault, Chairman of the Board, President and Chief
Executive Officer; James L. Brault, Executive Vice President and
Secretary; and Thomas J. Coorsh, Treasurer and Chief Financial
Officer. The business address of each of the directors and
executive officers of the Corporate General Partner is 150 South
Wacker Drive, Suite 3200, Chicago, Illinois 60606. Each of the
Individual General Partners and the directors and executive
officers of the Corporate General Partner is a citizen of the
United States.
Jerome J. Brault is the Managing General Partner of the
Partnership and a beneficial owner of the Corporate General
Partner. Mr. Brault is also a general partner of a series of
public limited partnerships affiliated with the Partnership,
including the Affiliated Limited Partnerships, and a director and
executive officer of various corporations affiliated with the
Partnership and said public limited partnerships. In addition,
Mr. Brault is an executive officer and a director of Brauvin Net
Lease V, Inc., a publicly-held real estate investment trust.
Prior to his affiliation with the Brauvin organization in 1979,
Mr. Brault was the Chief Operating Officer of Burton J. Vincent,
Chesley & Company, a New York Stock Exchange member firm. Jerome
J. Brault has a minority ownership interest in the Purchaser.
James L. Brault is an executive officer of various
corporations affiliated with the Partnership and a series of
other public limited partnerships affiliated with the
Partnership, including the Affiliated Limited Partnerships. In
addition, Mr. Brault is an executive officer and a director of
Brauvin Net Lease V, Inc., a publicly-held real estate investment
trust. Prior to joining the Brauvin organization in May 1989,
Mr. Brault was Vice President of the Commercial Loan Division of
The First National Bank of Chicago in Washington D.C., where he
had worked since 1983. While with The First National Bank of
Chicago, Mr. Brault was responsible for the origination and
management of commercial real estate loans, as well as the direct
management of a loan portfolio in excess of $150,000,000. Mr.
Brault is the son of Jerome J. Brault. James L. Brault has a
minority ownership interest in the Purchaser.
Thomas J. Coorsh is an executive officer of various
corporations affiliated with the Partnership and a series of
other public limited partnerships affiliated with the
Partnership, including the Affiliated Limited Partnerships. From
May 1992 until joining the Brauvin organization in November 1993,
Mr. Coorsh was self-employed as a business consultant. From 1990
to 1992, Mr. Coorsh was the senior vice president of finance and
chief accounting officer of Lexington Homes, an Illinois-based
home builder. From 1985 to 1990, Mr. Coorsh was employed by the
Balcor Company and in his most recent position served as the
first vice president of finance. At Balcor, Mr. Coorsh was
responsible for property management accounting and finance,
treasury and financial and strategic planning. Before joining
Balcor, Mr. Coorsh held financial positions with several large,
public corporations headquartered in the Chicago metropolitan
area. Mr. Coorsh is a Certified Public Accountant.
Cezar M. Froelich is a principal with the Chicago law firm
of Shefsky Froelich & Devine Ltd., 444 North Michigan Avenue,
Chicago, Illinois 60611, which in the past has acted as counsel
to the General Partners, the Partnership and certain of their
affiliates. Mr. Froelich is also a beneficial owner of the
Corporate General Partner. Mr. Froelich concentrates his
practice in the areas of securities and real estate and has acted
as legal counsel to various public and private real estate
limited partnerships, mortgage pools and real estate investment
trusts. Mr. Froelich is an individual general partner in seven
other affiliated public limited partnerships and a shareholder in
Brauvin Management Company and Brauvin Financial Inc.
David M. Strosberg is the President of the Morningside
Group, 223 West Erie, 5th Floor, Chicago, Illinois 60610, and is
an independent real estate investor and developer. Mr. Strosberg
is also a shareholder of the Corporate General Partner and
certain of its affiliates. Mr. Strosberg's organization
specializes in the development of for-sale, multi-family
properties. Mr. Strosberg is also an Individual General Partner
of Brauvin High Yield Fund L.P. II.
Description of the Assets
The Partnership currently owns 33 income-producing
properties as well as a 49% interest in a Scandinavian Health
Spa, a 1% interest in a joint venture which owns the land and
buildings underlying six Ponderosa restaurants and a 23.4%
interest in a joint venture which owns the land and building
underlying a CompUSA store, predominantly all of which are
subject to triple-net leases. The Partnership is a landlord only
and does not participate in the operations of any of the
properties discussed herein. All lease payments due the
Partnership are current. All properties are 100% occupied and
were paid for in cash, without any financing. A description of
each of the properties owned by the Partnership follows.
Taco Bells:
Warner Robins, Georgia
The property is located at 1998 Watson Boulevard. The
building consists of 1,288 square feet situated on a 25,000
square foot parcel and was constructed in 1977 utilizing jumbo
bricks.
Valdosta, Georgia
The property is located at 2918 North Ashley Street. The
building consists of 1,288 square feet situated on a 16,222
square foot parcel and was constructed in 1982 utilizing jumbo
bricks.
Albany, Georgia
The property is located at 1707 North Slappey Boulevard.
The building consists of 1,288 square feet situated on a 11,850
square foot parcel and was constructed in 1982 utilizing jumbo
bricks.
Alliance, Ohio
The property is located at 110 West State Street. The
building consists of 1,584 square feet situated on a 14,400
square foot parcel and was constructed in 1980 utilizing stucco
over concrete block with a clay tile roof.
Dunedin, Florida
The property is located at 2296 State Route 580. The
building consists of 1,584 square feet situated on a 21,021
square foot parcel and was constructed in 1980 utilizing jumbo
bricks.
In February 1995, Taco Bell closed and vacated this
restaurant. Taco Bell, in accordance with the lease, continued
to pay rent and certain occupancy costs for this property. In
March 1996, Taco Bell and the Partnership agreed to sub-lease
this property to a local tenant. Taco Bell continues to remain
responsible to the Partnership for all rents and certain
occupancy expenses through the original lease term.
Logansport, Indiana
The property is located at 3419 Highway 24 East. Highway 24
East is a two-lane east-west road. The building consists of
1,566 square feet situated on a 19,200 square foot parcel and was
constructed in 1980 utilizing stucco over concrete block.
Dover, Ohio
The property is located at 718 Boulevard Avenue. Boulevard
Avenue is a four-lane northwest-southwest highway. The building
consists of 1,584 square feet situated on a 20,500 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Greenville, North Carolina
The property is located at 319 East Greenville Boulevard.
The building consists of 1,584 square feet situated on a 22,788
square foot parcel and was constructed in 1980 utilizing stucco
over concrete block.
Palm Bay, Florida
The property is located at 176 North Harris Avenue. Harris
Avenue is a frontage street to Palm Bay Road. The building
consists of 1,584 square feet situated on a 15,250 square foot
parcel and was constructed in 1980 utilizing jumbo bricks.
Sandusky, Ohio
The property is located at 3306 Milan Road. The building
consists of 1,584 square feet situated on a 33,000 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Mesa, Arizona
The property is located at 531 East Southern Avenue. The
building consists of 1,584 square feet situated on a 28,000
square foot parcel and was constructed in 1980 utilizing stucco
over concrete block.
Zanesville, Ohio
The property is located at 2460 North Maple Street. The
building consists of 1,584 square feet situated on a 17,934
square foot parcel and was constructed in 1980 utilizing stucco
over concrete block.
Ashtabula, Ohio
The property is located at 1226 West Prospect Avenue. The
building consists of 1,584 square feet situated on a 21,049
square foot parcel and was constructed in 1980 utilizing stucco
over concrete block.
Dalton, Georgia
The property is located at 1509 Walnut Avenue. The building
consists of 1,584 square feet situated on a 18,275 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Ashland, Ohio
The property is located at 315 Claremont Avenue. The
building consists of 1,584 square feet situated on a 16,000
square foot parcel and was constructed in 1980 utilizing stucco
over concrete block.
Martinez, California
The property is located at 11 Muir Road. The building
consists of 1,584 square feet situated on a 13,940 square foot
parcel and was constructed in 1981 utilizing concrete block over
wood frame.
Phoenix, Arizona
The property is located at 1701 West Bell Street. The
building consists of 1,584 square feet situated on a 9,375 square
foot parcel and was constructed in 1981 utilizing stucco over
concrete block.
Noblesville, Indiana
The property is located at 610 West Route 32. The building
consists of 1,584 square feet situated on a 26,250 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
Spartanburg, South Carolina
The property is located at 800 North Pine Street. The
building consists of 1,584 square feet situated on a 24,750
square foot parcel and was constructed in 1982 utilizing stucco
over concrete block.
Winslow, Arizona
The property is located at 1605 North Park Drive. The
building consists of 2,808 square feet situated on a 37,651
square foot parcel and was constructed in 1982 utilizing stucco
over concrete block.
Ponderosas:
Brandon, Florida
The property is located at 1449 West Brandon Boulevard. The
building consists of 6,376 square feet situated on a 50,094
square foot parcel and was constructed in 1985 utilizing wood
siding over concrete block.
Johnstown, New York
The property is located at Route 30-A and North Comrie
Avenue. The building consists of 5,833 square feet situated on a
50,094 square foot parcel and was constructed in 1979 utilizing
wood siding over concrete block.
Indianapolis, Indiana
The property is located at 2915 South Madison Avenue. The
building consists of 7,040 square feet situated on a 79,645
square foot parcel and was constructed in 1969 utilizing wood
siding over concrete block.
Massena, New York
The property is located at St. Regis Boulevard and Main
Street. The building consists of 5,817 square feet situated on a
48,399 square foot parcel and was constructed in 1979 utilizing
wood siding over concrete block.
Chenango, New York
The property is located at 1261 Front Street. The building
consists of 5,402 square feet situated on a 32,712 square foot
parcel and was constructed in 1979 utilizing wood siding over
concrete block and facebrick.
New Windsor, New York
The property is located at 334 Windsor Highway. The
building consists of 5,402 square feet situated on a 47,685
square foot parcel and was constructed in 1980 utilizing wood
siding over concrete block.
Wadsworth, Ohio
The property is located at 135 Great Oaks Trail. The
building consists of 5,800 square feet situated on a 43,560
square foot parcel and was constructed in 1986 utilizing stucco
over concrete block.
Westerville, Ohio
The property is located at 728 South State Street. The
building consists of 4,528 square feet situated on a 46,478
square foot parcel and was constructed in 1984 utilizing
facebrick with wood siding frontage.
Grand Rapids, Michigan
The property is located at 308 North Drake Road. The
building consists of 5,088 square feet situated on a 95,383
square foot parcel and was constructed in 1970 utilizing wood
siding over concrete block.
Buffalo, New York
The property is located at 2060 Main Street. The building
consists of 5,440 square feet situated on a 192,656 square foot
parcel and was constructed in 1980 and remodeled in 1987
utilizing wood siding over concrete block with a sloped and
shingled roof.
Westbourne, Ohio
The property is located at 3328 Westbourne Drive. The
building consists of 5,400 square feet situated on a 48,000
square foot parcel and was constructed in 1974 using wood siding
over wood frame.
Children's World Learning Centers:
Troy, Michigan
The property is a 6,175 square foot facility located at 1064
East Wattles. The single-story building was constructed in 1985
utilizing a wood frame and a pitched roof with asphalt shingles.
Sterling Heights, Michigan
The property is a 5,005 square foot facility located at
35505 Schoenherr. The single-story building was constructed in
1983 utilizing a wood frame and a pitched roof with asphalt
shingles.
Joint Venture Ponderosas: The Partnership owns a 1% interest in
a joint venture which owns the land and buildings underlying the
following six Ponderosa restaurants.
Louisville, Kentucky
The property is located at 4801 Dixie Highway. The building
consists of 5,100 square feet situated on a 62,496 square foot
parcel and was constructed in 1969 utilizing wood siding over
concrete block with flagstone.
Cuyahoga Falls, Ohio
The property is located at 1641 State Road. The building
consists of 5,587 square feet situated on a 40,228 square foot
parcel and was constructed in 1973 utilizing wood siding over
concrete block.
Tipp City, Ohio
The property is located at 135 South Garber. The building
consists of 6,080 square feet situated on a 53,100 square foot
parcel and was constructed in 1980 utilizing wood siding over
concrete block.
Mansfield, Ohio
The property is located at 1075 Ashland Road. The building
consists of 5,600 square feet situated on a 104,500 square foot
parcel and was constructed in 1980 utilizing wood siding over
concrete block and flagstone.
Tampa, Florida
The property is located at 4420 West Gandy Boulevard. The
building consists of 5,777 square feet situated on a 50,094
square foot parcel and was constructed in 1986 utilizing wood
siding over concrete block.
Mooresville, Indiana
The property is located at 499 South Indiana Street. The
building consists of 6,770 square feet situated on a 63,525
square foot parcel and was constructed in 1981 utilizing wood
siding over concrete block.
Scandinavian Health Spa:
The Partnership owns a 49% interest in a joint venture with
affiliated public real estate limited partnerships that acquired
the land and building underlying a Scandinavian Health Spa. The
Health Spa is a 36,556 square foot health club located on a three
acre parcel in Glendale, Arizona, a suburb of Phoenix. The
property is a two-story health and fitness workout facility
located within the 195,000 square foot Glendale Galleria Shopping
Center.
CompUSA:
The Partnership owns a 23.4% interest in a joint venture
with affiliated public real estate limited partnerships that
acquired the land and building underlying a CompUSA store. The
CompUSA store is a 25,000 square foot single story building
located on a 105,919 square foot parcel in Duluth, Georgia, a
suburb of Atlanta, in the Gwinnett Place Mall Shopping Area. The
single story building was completed in March 1993 utilizing a
frame of steel and concrete block.
Distributions
Cash distributions to Interest Holders for 1995, 1994 and
1993 were $2,600,149, $2,616,758 and $2,590,902, respectively.
Cash distributions to Interest Holders for the first quarter of
1996 were $659,129. Distributions of operating cash flow, if
available, were paid four times per year, 45 days after the end
of each calendar quarter. No amount distributed in 1994, 1995 or
1996 was a return of capital.
Below is a table summarizing the historical data for the
Partnership's distribution rates per annum:
Distribution
Date 1996 1995 1994 1993 1992
February 15 10.0% 10.0% 10.0% 10.0% 9.5%
May 15 10.0 10.0 10.0 10.0 9.625
August 15 10.0 10.0 10.0 9.75
November 15 10.0 10.5 10.5 9.75
Future changes in the Partnership's distributions would
largely depend on sales at the Assets resulting in changes to
percentage rent and, to a lesser extent, on rental increases or
decreases which will occur due to changes in the Consumer Price
Index or scheduled changes in base rent and loss of rental
payments resulting from defaults and lease payment reductions due
to lease renegotiations. The Operating General Partners have
determined that during the pendency of the proxy solicitation no
future distributions of operating cash flow will be made to the
Interest Holders. As of the date hereof, the Partnership has no
preferred return deficiency.
Ownership of Units
No person (including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act) is known to the Partnership
to be the beneficial owner of more than 5% of the outstanding
Units as of April 30, 1996, and David M. Strosberg is the only
General Partner or director or executive officer of the Corporate
General Partner that beneficially owns any Units. Mr. Strosberg
owns 500 Units or .02% of the Partnership.
Market for the Units
The Units are not traded on any established trading market,
nor has there been such a market during the past two years.
Thus, no information is available as to high and low bid
quotations or sales prices. It is not anticipated that there
will be a public market for the Units in the future.
Furthermore, no person has contacted the Partnership expressing
an interest in purchasing Units. Neither the General Partners
nor the Partnership are obligated to redeem or repurchase Units,
but the Partnership may purchase Units under certain very limited
circumstances. The Partnership will not purchase Units during
the pendency of the proposed Transaction.
Below is a table summarizing purchases of Units made by the
Partnership during the last two fiscal years and the current
fiscal year:
Units Range Average
For the Quarter ended: Purchased of Prices Price
March 31, 1994 6,363.454 $10.00 $10.00
June 30, 1994 7,588.244 $10.00 $10.00
September 30, 1994 --- --- ---
December 31, 1994 19,000.000 $10.00 $10.00
March 31, 1995 --- --- ---
June 30, 1995 1,200.000 $10.00 $10.00
September 30, 1995 --- --- ---
December 31, 1995 --- --- ---
March 31, 1996 4,000.000 $10.00 $10.00
Purchases of the Units by the Partnership prior to receipt
of the Valuation were made at the initial public offering price.
Should the Transaction not be completed, any future purchases of
Units by the Partnership will be at a price equal to the then
current valuation of the Units based on a third-party valuation.
Legal Proceedings
The Partnership is not a party to any legal proceedings.
Independent Certified Public Accountants
Deloitte & Touche LLP, whose report on the Partnership's
financial statements as of December 31, 1995 and 1994 and for the
three years in the period ended December 31, 1995 appear in the
Partnership's 1995 Annual Report on Form 10-K, are the current
independent auditors of the Partnership. No representative of
Deloitte & Touche LLP is expected to be present at the Special
Meeting.
Available Information
The Units are registered pursuant to Section 12(g) of the
Exchange Act. As such, the Partnership is subject to the
informational filing requirements of the Exchange Act, and in
accordance therewith, is obligated to file reports and other
information with the Commission relating to its business,
financial condition and other matters. Comprehensive financial
information is included in the Partnership's Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, and other documents
filed by the Partnership with the Commission, including the 1995
Annual Report on Form 10-K, excerpts from which are included on
Schedule I hereto, and the Quarterly Report on Form 10-Q for the
period ended March 31, 1996, excerpts from which are included on
Schedule II hereto. Such reports and other information should be
available for inspection and copying at the public reference
facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the
Commission's principal offices at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Corporate General Partner is a privately held company
and is not subject to the reporting requirements of the Exchange
Act.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser is a Delaware limited liability company that
was recently formed to acquire the Assets and the assets of the
Affiliated Limited Partnerships. The Purchaser has not engaged
in any business or activity of any kind, or entered into any
agreement or arrangement with any person or entity or incurred,
directly or indirectly, any material liabilities or obligations,
except in connection with its formation, the proposed Transaction
and the proposed Affiliated Transactions. Upon completion of the
Transaction and the Affiliated Transactions, the Purchaser will
own and operate the Assets and the assets owned by the Affiliated
Limited Partnerships.
The Braults have a minority ownership position in the
Purchaser. In addition, certain other members of the Corporate
General Partner's management may participate in the ownership of
the Purchaser. Neither Mr. Froelich nor Mr. Strosberg have any
affiliation with the Purchaser. The Purchaser is in the process
of securing financing to consummate the Transaction and the
Affiliated Transactions through a series of private placements of
debt and equity. Thus, the ultimate ownership of the Purchaser
will not be known until the completion of these offerings. It is
anticipated that the members of the Purchaser will be a number of
accredited investors.
The Purchaser's principal executive office and place of
business is 150 South Wacker Drive, Suite 3200, Chicago, Illinois
60606. Its telephone number is (312) 443-0922. All information
contained in this Proxy Statement concerning the Purchaser is
based upon statements and representations made by the Purchaser
or its representatives to the Partnership or its representatives.
SELECTED FINANCIAL DATA
The tables attached hereto as Schedules I and II provide a
summary of certain financial data for the Partnership. Such
selected financial data should be read in conjunction with the
detailed information and financial statements included in the
Partnership's Annual Report to Interest Holders which was
distributed to the Interest Holders on May 1, 1996 and are
included in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1995 and the Partnership's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996, which
are incorporated herein by reference. The 1995 Annual Report on
Form 10-K and the March 31, 1996 Quarterly Report on Form 10-Q
are available to any Interest Holder from the Partnership without
charge upon written or oral request made to the Managing General
Partner. The Partnership will forward such documents via first
class mail within one business day of receipt of an Interest
Holder's request therefor.
The Partnership's ratio of earnings to fixed charges for
each of March 31, 1996, December 31, 1995 and December 31, 1994
was 0.00%, as the Partnership has no fixed charges.
The foregoing information is derived from the audited
financial statements of the Partnership for 1994 and 1995 and the
unaudited financial statements of the Partnership for the first
quarter of 1996.
Pro forma data disclosing the effect of the Transaction is
not material. The Purchaser is a newly formed entity and thus
has no historical financial data.
<TABLE>
SCHEDULE I
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
(not covered by Independent Auditor's Report)
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Selected Income Statement Date:
Rental Income $ 2,502,755 $ 2,494,203 $ 2,432,331 $ 2,429,983 $ 2,347,599
Interest Income 63,650 27,682 26,909 32,278 53,044
Net Income 2,367,443 2,296,122 2,189,394 2,117,417 2,099,314
Net Income Per Unit (a) $ 0.91 $ 0.87 $ 0.84 $ 0.82 $ 0.82
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 1,363,085 $ 1,016,066 $ 857,383 $ 1,065,360 $ 924,437
Land, Buildings and Improvements 19,322,975 19,322,975 19,322,975 19,322,975 19,322,975
Investment in Brauvin High Yield Venture 33,746 34,179 36,494 37,644 38,621
Investment in Brauvin Funds Joint Venture 2,472,647 2,494,341 2,511,957 2,519,883 2,548,352
Investment in Brauvin Gwinnett County Venture 557,389 569,626 582,573 -------- -------
Total Assets 20,932,600 21,010,763 21,285,952 21,370,824 21,690,573
Cash Distributions to General Partners 52,869 53,233 52,853 39,264 -------
Cash Distributions to Interest Holders (b) 2,600,149 2,616,758 2,590,902 2,560,503 2,438,767
Cash Distributions to Interest Holders
Per Unit (a) $ 1.00 $ 1.01 $ 1.01 $ 1.01 $ 0.97
Book Value Per Unit (a) $ 7.90 $ 7.99 $ 8.15 $ 8.31 $ 8.51
<FN>
<FN1>
NOTES:
(a) Net income per Unit, cash distributions to Interest Holders per Unit and book value per Unit are based on the average
Units outstanding during the year since they were of varying dollar amounts and percentages based upon the dates Interest
Holders were admitted to the Partnership and additional Units were purchased through the Partnership's distribution
reinvestment plan.
(b) This includes $9,209, $8,342 and $6,873 paid to various states for income taxes on behalf of all Interest Holders for
the years 1995, 1994 and 1993, respectively.
</FN>
</TABLE>
SCHEDULE II
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
(not covered by Independent Auditor's Report)
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
Selected Income Statement Data:
Rental Income 584,877 600,423
Interest Income 19,453 8,666
Net Income 604,477 609,313
Net Income Per Unit (a) 0.19 0.21
Selected Balance Sheet Data:
Cash and Cash Equivalents 1,358,899 971,194
Land, Buildings and
Improvements 19,322,975 19,322,975
Investment in Brauvin High
Yield Venture 33,365 34,443
Investment in Brauvin Funds
Joint Venture 2,467,238 2,486,461
Investment in Brauvin
Gwinnett County Venture 555,789 562,439
Total Assets 20,823,756 20,837,167
Cash Distributions to General
Partners 13,455 11,330
Cash Distributions to
Interest Holders (b) 659,129 555,184
Cash Distributions to Interest
Holders Per Unit (a) 0.25 0.21
Book Value Per Unit (a) 7.84 7.96
____________________________________
(a) Net income per Unit, cash distributions to Interest
Holders per Unit and book value per Unit are based on the
average Units outstanding during the year since they were
of varying dollar amounts and percentages based upon the
dates Interest Holders were admitted to the Partnership
and additional Units were purchased through the
Partnership's distribution reinvestment plan.
(b) This includes $9,209, $8,342 and $6,873 paid to various
states for income taxes on behalf of all interest holders
for the years 1995, 1994 and 1993, respectively.
YOUR VOTE IS EXTREMELY IMPORTANT
Regardless of the number of Units of Brauvin High Yield Fund
L.P. you own, please vote by taking these simple steps:
1. Please SIGN, MARK, DATE and MAIL the enclosed proxy card
in the enclosed, postage-paid envelope as soon as
possible before the Special Meeting on July 10, 1996.
2. If you wish to vote "FOR" the Transaction and the
Amendment, you must submit the enclosed proxy card.
3. If your Units are held for you in "street name" by a
bank or broker, the bank or broker may not give your
proxy without your instruction. Please call your bank
or broker and instruct your representative to vote "FOR"
the Transaction.
4. If you have any questions or require any additional
information concerning this Proxy Statement please
contact either:
Investor Services Department
Brauvin High Yield Fund L.P.
150 South Wacker Drive
Chicago, Illinois 60606
(312) 443-0922
or
Call Toll-Free (800) 272-8846
or our solicitation agent who can also assist you in voting:
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
(____) ___ - ____
or
Call Toll-Free (800) ___-____
PLEASE SIGN, MARK, DATE AND RETURN YOUR PROXY CARD TODAY.
0171991.06
TABLE OF CONTENTS
Page
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Transaction . . . . . . . . . . . . . . . . . . . . . 3
Amendment to the Partnership Agreement. . . . . . . . . . 4
The Special Meeting; Votes Required . . . . . . . . . . . 4
Purpose of and Reasons for the Transaction. . . . . . . . 5
Effects of the Transaction. . . . . . . . . . . . . . . . 5
Valuation of the Assets; Fairness Opinion . . . . . . . . 5
Recommendations of the General Partners . . . . . . . . . 5
Conflicts of Interest . . . . . . . . . . . . . . . . . . 6
SPECIAL MEETING OF THE INTEREST HOLDERS. . . . . . . . . . . . 6
Special Meeting; Record Date. . . . . . . . . . . . . . . 6
Procedures for Completing Proxies . . . . . . . . . . . . 7
Votes Required. . . . . . . . . . . . . . . . . . . . . . 8
Solicitation Procedures . . . . . . . . . . . . . . . . . 8
Revocation of Proxies . . . . . . . . . . . . . . . . . . 9
TERMS OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . 9
The Merger Agreement. . . . . . . . . . . . . . . . . . . 9
Representations and Warranties of the Parties . . . . . . 10
Additional Agreements . . . . . . . . . . . . . . . . . . 12
Conditions to Closing the Transaction . . . . . . . . . . 12
Determination of Redemption Price . . . . . . . . . . . . 15
Termination of the Merger Agreement . . . . . . . . . . . 15
Amendment of the Merger Agreement . . . . . . . . . . . . 16
Amendment of Partnership Agreement. . . . . . . . . . . . 16
Related Transactions. . . . . . . . . . . . . . . . . . . 17
INCOME TAX CONSEQUENCES OF THE TRANSACTION . . . . . . . . . . 17
Certain Federal Income Tax Consequences . . . . . . . . . 17
Differing Tax Treatment of the Interest Holders . . . . . 20
SPECIAL FACTORS. . . . . . . . . . . . . . . . . . . . . . . . 21
Purpose of and Reasons for the Transaction. . . . . . . . 21
Alternatives to the Transaction . . . . . . . . . . . . . 24
Effects of the Transaction. . . . . . . . . . . . . . . . 25
Valuation of the Assets; Fairness Opinion . . . . . . . . 26
Recommendations of the General Partners . . . . . . . . . 31
Appraisal Rights. . . . . . . . . . . . . . . . . . . . . 33
Costs Associated with the Transaction . . . . . . . . . . 33
CONFLICTS OF INTEREST. . . . . . . . . . . . . . . . . . . . . 34
Interests in the Purchaser. . . . . . . . . . . . . . . . 34
Indemnification under the Partnership Agreement . . . . . 34
Indemnification by the Purchaser. . . . . . . . . . . . . 36
CERTAIN INFORMATION ABOUT THE PARTNERSHIP,
ITS GENERAL PARTNERS AND THEIR AFFILIATES. . . . . . . . . . . 36
The Partnership . . . . . . . . . . . . . . . . . . . . . 36
The General Partners. . . . . . . . . . . . . . . . . . . 37
Description of the Assets . . . . . . . . . . . . . . . . 39
Distributions . . . . . . . . . . . . . . . . . . . . . . 45
Ownership of Units. . . . . . . . . . . . . . . . . . . . 46
Market for the Units. . . . . . . . . . . . . . . . . . . 46
Legal Proceedings . . . . . . . . . . . . . . . . . . . . 47
Independent Certified Public Accountants. . . . . . . . . 47
Available Information . . . . . . . . . . . . . . . . . . 47
CERTAIN INFORMATION CONCERNING THE PURCHASER . . . . . . . . . 48
SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . 49
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SCHEDULE II. . . . . . . . . . . . . . . . . . . . . . . . . . 52
ANNEX I VALUATION
ANNEX II FAIRNESS OPINION
APPENDIX ______
AGREEMENT AND PLAN OF MERGER
AMONG
BRAUVIN REAL ESTATE FUNDS, L.L.C.,
BRAUVIN NET PROPERTIES, L.L.C.,
BRAUVIN HIGH YIELD FUND L.P.,
BRAUVIN HIGH YIELD FUND L.P. II,
AND
BRAUVIN INCOME PLUS L.P. III
AGREEMENT AND PLAN OF MERGER
AMONG
BRAUVIN REAL ESTATE FUNDS, L.L.C.,
BRAUVIN NET PROPERTIES L.L.C.,
BRAUVIN HIGH YIELD FUND L.P.,
BRAUVIN HIGH YIELD FUND L.P. II,
AND
BRAUVIN INCOME PLUS L.P. III
Dated: May ____, 1996
TABLE OF CONTENTS
1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 1
1.2 Surviving Entity . . . . . . . . . . . . . . . . . . 1
Effective Time of the Merger . . . . . . . . . . . . 2
Articles of Organization . . . . . . . . . . . . . . 2
1.5 Operating Agreement. . . . . . . . . . . . . . . . . 2
2. Conversion of Partnership Interests . . . . . . . . . . . 2
2.1 Conversion of Partnership Interests. . . . . . . . . 2
2.2 Redemption of Units. . . . . . . . . . . . . . . . 3
2.3 Additional Rights; Taking of Necessary Action;
Further Action . . . . . . . . . . . . . . . . . . . 4
2.4 Federal Income Tax Considerations. . . . . . . . . 4
2.5 Disclosure Schedules . . . . . . . . . . . . . . . . 4
2.6 Distribution of Ponderosa Properties . . . . . . . . 4
3. Representations and Warranties of the Merger Company. . . 5
3.1 Formation and Qualification. . . . . . . . . . . . . 5
3.2 Authority Relative to this Agreement . . . . . . . . 5
3.3 No Conflicts . . . . . . . . . . . . . . . . . . . . 5
3.4 Governmental Approvals . . . . . . . . . . . . . . . 5
3.5 No Prior Activities. . . . . . . . . . . . . . . . . 6
3.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . 6
4. Representations and Warranties of the Brauvin
Partnership . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Formation and Qualification. . . . . . . . . . . . . 6
4.2 No Subsidiaries. . . . . . . . . . . . . . . . . . . 6
4.3 Capitalization . . . . . . . . . . . . . . . . . . . 6
4.4 Authority Relative to this Agreement . . . . . . . . 7
4.5 No Conflicts . . . . . . . . . . . . . . . . . . . . 7
4.6 Governmental Approvals . . . . . . . . . . . . . . . 7
4.7 Commission Filings; Financial Statements . . . . . . 7
4.8 No Undisclosed Liabilities . . . . . . . . . . . . . 8
4.9 Absence of Certain Changes or Events . . . . . . . . 8
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . 9
4.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 9
4.12 Assets . . . . . . . . . . . . . . . . . . . . . . . 9
4.13 Transactions with Affiliates . . . . . . . . . . . . 9
4.14 Disclosure . . . . . . . . . . . . . . . . . . . . . 9
4.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . 9
4.16 General Partners . . . . . . . . . . . . . . . . . . 10
4.17 Compliance with Law. . . . . . . . . . . . . . . . . 10
4.18 Properties . . . . . . . . . . . . . . . . . . . . . 10
5. Conduct of Business Pending the Merger. . . . . . . . . . 10
5.1 Conduct of Business by Each of the Brauvin
Partnerships Pending the Merger. . . . . . . . . . . 10
6. Additional Agreements . . . . . . . . . . . . . . . . . . 12
6.1 Proxy Statements; Other Filings. . . . . . . . . . . 12
6.2 Meetings of the Limited Partners . . . . . . . . . . 12
6.3 Fees and Expenses. . . . . . . . . . . . . . . . . . 13
6.4 Further Agreements . . . . . . . . . . . . . . . . . 13
6.5 No Shop Limitation . . . . . . . . . . . . . . . . . 13
6.6 Additional Financial Statements. . . . . . . . . . . 14
6.7 Access to Information; Confidentiality . . . . . . . 14
6.8 Public Announcements . . . . . . . . . . . . . . . . 14
6.9 Agreement to Defend and Indemnify. . . . . . . . . . 14
6.10 Notification of Certain Matters. . . . . . . . . . . 15
6.11 Cooperation. . . . . . . . . . . . . . . . . . . . . 15
6.12 Tax Returns. . . . . . . . . . . . . . . . . . . . . 15
6.13 Notice of Failure to Satisfy Closing Conditions. . . 15
7. Conditions. . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Conditions to Obligation of Each Party to Effect
the Transaction. . . . . . . . . . . . . . . . . . . 15
7.2 Additional Conditions to the Obligation of the
Brauvin Partnerships . . . . . . . . . . . . . . . . 16
7.3 Additional Conditions to the Obligations of the
Merger Company . . . . . . . . . . . . . . . . . . . 17
8. Termination, Amendment and Waiver . . . . . . . . . . . . 19
8.1 Termination. . . . . . . . . . . . . . . . . . . . . 19
8.2 Effect of Termination. . . . . . . . . . . . . . . . 20
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . 20
8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . 20
9. General Provisions. . . . . . . . . . . . . . . . . . . . 20
9.1 Notices. . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Certain Definitions. . . . . . . . . . . . . . . . . 20
9.3 Representations and Warranties; Etc. . . . . . . . . 24
9.4 Validity . . . . . . . . . . . . . . . . . . . . . . 24
9.5 Descriptive Headings . . . . . . . . . . . . . . . . 24
9.6 Parties in Interest. . . . . . . . . . . . . . . . . 24
9.7 Incorporation of Recitals. . . . . . . . . . . . . . 24
9.8 Miscellaneous. . . . . . . . . . . . . . . . . . . . 24
Exhibit A Projected Cash at Closing
Exhibit B Form of Opinion of Brauvin Partnerships'
Counsel
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May ____, 1996,
among BRAUVIN REAL ESTATE FUNDS, L.L.C., a Delaware limited
liability company (the "Merger Company" or "Surviving Company"),
BRAUVIN NET PROPERTIES, L.L.C., a Delaware limited liability
company ("Brauvin L.L.C."), BRAUVIN HIGH YIELD FUND L.P., a
Delaware limited partnership ("Brauvin I"), BRAUVIN HIGH YIELD FUND
L.P. II, a Delaware limited partnership ("Brauvin II"), BRAUVIN
INCOME PLUS L.P. III, a Delaware limited partnership ("Brauvin
III;" and together with Brauvin I and Brauvin II, being sometimes
collectively referred to as the "Brauvin Partnerships") and the
other parties listed on the signature pages hereof.
RECITALS
The Merger Company was recently formed solely for the purpose
of being the surviving entity following the merger of each of the
Brauvin Partnerships with and into the Merger Company in accordance
with the Limited Liability Company Act of the State of Delaware
(the "LLC Act"), The Delaware Revised Uniform Limited Partnership
Act (the "Partnership Act") and the terms hereof in the merger (the
"Merger") contemplated hereby. The manager of the Merger Company
is Brauvin Real Estate Funds, Inc. (the "Manager"), an Illinois
corporation, formed solely to act as manager. In the Merger, all
partnership interests of the Brauvin partnerships will be redeemed
for cash as specified herein.
Brauvin L.L.C. was recently formed for the sole purpose of
acquiring and holding title, directly or indirectly, to
_____________ (___) Ponderosa Steak House properties (the
"Ponderosa Properties") acquired by the Merger Company in the
Merger. The Manager of Brauvin L.L.C. is Brauvin Net Properties,
Inc., an Illinois corporation ("Brauvin LLC Manager). The Merger
Company will distribute the Ponderosa Properties to Brauvin Net
Realty, L.L.C., an Illinois limited liability company ("BNR
L.L.C.") and holder of 99% of the membership interests in the
Merger Company . BNR L.L.C. will contribute the Ponderosa
Properties to Brauvin L.L.C.
The Brauvin Partnerships and the managers of the Merger
Company and Brauvin L.L.C. have approved the Merger in accordance
with the LLC Act and the Partnership Act and the other transactions
contemplated hereby.
Accordingly, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
Certain capitalized terms used herein are defined in Section
9.2 hereof.
1. The Merger
1.1 The Merger. At the Effective Time, and subject to
the terms and conditions of this Agreement, the LLC Act and the
Partnership Act, each of the Brauvin Partnerships shall be merged
with and into the Merger Company in the Merger, the separate
existence of the Brauvin Partnerships shall thereupon cease, and
the Merger Company shall be the surviving entity in the Merger.
1.2 Surviving Entity. At the Effective Time, the Merger
Company shall continue in existence under the laws of the State of
Delaware as the surviving entity and shall thereupon and
thereafter, without further act or deed, succeed to and possess all
the rights, privileges and powers of the Brauvin Partnerships, and
all property, real, personal and mixed, and all debts due to the
Brauvin Partnerships, as well as all other things and causes of
action belonging to the Brauvin Partnerships, shall be vested in
the Merger Company and shall thereafter be the property of the
Merger Company as they were of the Brauvin Partnerships, and the
title to any real property vested by deed or otherwise, under the
laws of the State of Delaware, in the Brauvin Partnerships shall
not revert or be in any way impaired by reason of the Merger, but
all rights of creditors and all liens upon any property of each of
the Brauvin Partnerships shall be preserved unimpaired, and all
debts, liabilities and duties of each of the Brauvin Partnerships
shall thenceforth attach to the Merger Company and may be enforced
against it to the same extent as if said debts, liabilities and
duties have been incurred or contracted by it.
1.3 Effective Time of the Merger. The Merger shall be
effected as of the date and time of filing of the certificates of
merger (the "Certificates of Merger") with the Secretary of State
of the State of Delaware in accordance with the Partnership Act (or
at such later time specified as the effective time in the
Certificates of Merger) (the "Effective Time"), which filing the
parties hereto shall cause to occur as soon as practicable after
the satisfaction or waiver of the conditions hereinafter set forth.
1.4 Articles of Organization. As a result of the
Merger, the Articles of Organization of the Merger Company shall
remain the Articles of Organization of the Surviving Company until
thereafter amended as provided therein and under the LLC Act.
1.5 Operating Agreement. The operating agreement of the
Merger Company shall remain the operating agreement of the
Surviving Company unless and until amended in accordance with its
terms and applicable law.
2. Conversion of Partnership Interests.
2.1 Conversion of Partnership Interests. At the
Effective Time, by virtue of the Merger and without any action on
the part of any of the Brauvin Partnerships or the Merger Company.
2.1.1 Merger Consideration. (a) Each depository
receipt representing a unit of limited partnership interest of
Brauvin I ("Brauvin I Units") shall be cancelled and extinguished
and converted into the right to receive an amount per Brauvin I
Unit in cash equal to the Brauvin I Unit Value.
(b) Each unit of limited partnership interest
of Brauvin II ("Brauvin II Units") shall be cancelled and
extinguished and converted into the right to receive an amount per
Brauvin II Unit in cash equal to the Brauvin II Unit Value.
(c) Each unit of limited partnership interest
of Brauvin III ("Brauvin III Units" and together with the Brauvin
I Units and Brauvin II Units, the "Units") shall be cancelled and
extinguished and converted into the right to receive an amount per
Brauvin III Unit in cash equal to the Brauvin III Unit Value.
(d) Each of the Brauvin Partnerships agree not
to incur any expenses, in connection with the Merger, which are not
reasonably necessary, customary and appropriate.
2.1.2 General Partner Interest. The general
partner interests held by: Brauvin Realty Advisors, Inc., Jerome
J. Brault, Cezar M. Froelich and David M. Strosberg (the "Brauvin
I GPs") in Brauvin I; Brauvin Realty Advisors II, Inc., Jerome J.
Brault, Cezar M. Froelich and David M. Strosberg (the "Brauvin II
GPs") in Brauvin II; and Brauvin Realty Advisors III, Inc., Cezar
M. Froelich and Jerome J. Brault (the "Brauvin III GPs" and
together with the Brauvin I GPs and Brauvin II GPs, the "Brauvin
GPs") in Brauvin III shall all be cancelled and extinguished and no
consideration shall be paid therefor.
2.1.3 Treatment of Units. Any and all Units
that are owned by a Brauvin Partnership shall be cancelled and
extinguished and no consideration shall be paid therefor.
2.1.4 Assignor Limited Partner Interest. The
limited partnership interest held by Brauvin Depository I, Inc.
(the "Assignor Limited Partner") in Brauvin I shall be cancelled
and extinguished and no consideration (other than the Merger
Consideration paid to the holders of Brauvin I Units pursuant to
Section 2.2.1(a) above) shall be paid therefor.
2.2 Redemption of Units.
2.2.1 Redemption Agent. From and after the
Effective Time, a party designated by the Merger Company and the
Brauvin Partnerships (which may be an Affiliate of the Merger
Company) prior to the Effective Time (the "Redemption Agent") shall
act as redemption agent in effecting the redemption for cash of
Units entitled to payment pursuant to Section 2.1.1 hereof. Upon
the delivery of a fully completed and executed letter of
transmittal, each holder of a Unit shall be paid,without interest
thereon, the amount of cash to which such holder is entitled
hereunder (net of any required withholding) and such Unit shall
forthwith be cancelled. Until such delivery of a letter of
transmittal, each Unit shall represent, for all purposes, solely
the right to receive cash pursuant to Section 2.1.1 hereof. If any
cash to be paid in the Merger is to be paid to a Person other than
the holder in whose name the Units are registered, it shall be a
condition of such redemption that the Unit (or certificate
evidencing such Unit) so surrendered shall be properly endorsed or
otherwise in proper form for transfer as provided in the applicable
Partnership Agreement and that the Person requesting such
redemption shall pay to the Redemption Agent any transfer or other
taxes required by reason of the payment of such cash to a Person
other than the registered holder of the Unit (or certificate
evidencing such Unit) surrendered, or shall establish to the
satisfaction of the Redemption Agent that such tax has been paid or
is not applicable. Notwithstanding the foregoing, neither the
Redemption Agent nor any party hereto shall be liable to a holder
of Units for any cash delivered pursuant hereto to a public
official pursuant to applicable abandoned property laws. The
Merger Company reserves the right, in its sole discretion, to
deliver payment of the Merger Consideration to each holder of a
Unit without the requirement of the delivery of any letter of
transmittal or any Unit (or certificate representing such Unit).
2.2.2 Redemption Fund. At the Effective Time,
the Merger Company shall deposit in trust with the Redemption Agent
an aggregate amount equal to the aggregate Merger Consideration
(the "Redemption Fund"). The Redemption Fund shall be invested by
the Redemption Agent, as directed by the Merger Company, and any
net earnings with respect thereto shall be paid to the Merger
Company as and when requested by the Merger Company.
2.2.3 Payment of Redemption Fund. The
Redemption Agent shall, pursuant to irrevocable instructions, make
the payments referred to in Section 2.1.1 hereof out of the
Redemption Fund. The Redemption Fund shall not be used for any
other purpose, except as provided herein. Promptly following the
date which is six months after the Effective Time, the Redemption
Agent shall return to the Merger Company all cash, certificates and
other instruments in its possession relating to the transactions
described in this Agreement, and the Redemption Agent's duties
shall terminate. Thereafter, each holder of a Unit entitled to
receive at the Effective Time cash therefor may surrender such Unit
to the Merger Company and (subject to applicable abandoned
property, escheat and similar laws) receive in redemption therefor
the Merger Consideration, without interest, but shall have no
greater rights against the Merger Company than may be accorded to
general creditors of the Merger Company under applicable law.
2.2.4 Notice. Promptly after the Effective
Time, the Redemption Agent may mail to each record holder of Units
a form of letter of transmittal and instructions for use in
receiving payment for such Units.
2.2.5 Effect of Merger. After the Effective
Time, no Units shall be deemed to be outstanding and holders of
Units shall cease to have any rights except as provided in this
Agreement or by law.
2.3 Additional Rights; Taking of Necessary Action;
Further Action.
2.3.1 Purchase of Units. The Merger Company and
its Affiliates reserve the right prior to the Effective Time, and
in accordance with applicable law, from time to time to make open
market or privately negotiated purchases of Units. The Manager
shall promptly notify each of the Brauvin Partnerships of the
occurrence of any such purchase.
2.3.2 Best Efforts. The Merger Company and each
of the Brauvin Partnerships shall each use its best efforts to take
all such actions as may be necessary or appropriate in order to
effectuate the Merger under the Partnership Act and LLC Act as
promptly as possible, including, without limitation, the due
execution and filing under the Partnership Act of the Certificates
of Merger consistent with the terms of this Agreement. If at any
time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest
the Merger Company with full right, title and possession to all
assets, property, rights, privileges, powers, and franchises of
each of the Brauvin Partnerships, the Brauvin GPs and the Manager
are fully authorized in their names or otherwise to take, and shall
take, all such lawful and necessary action.
2.4 Federal Income Tax Considerations.
(a) Notwithstanding any provision of this
Agreement to the contrary, it is the intention of the parties
hereto that the payment of the Merger Consideration pursuant to
Section 2.1.1 hereof shall constitute, for all income tax purposes,
a redemption or liquidation of the Units in each of the Brauvin
Partnerships pursuant to Section 731(a) of the Code. Each of the
Brauvin Partnerships and the Brauvin GPs hereby agree not to take
any action inconsistent with the foregoing without the prior
written consent of the Manager.
(b) For state law purposes, the transaction
contemplated by this Agreement shall be treated as a merger.
2.5 Disclosure Schedules. The parties acknowledge that
this Agreement has been executed prior to delivery of the
Disclosure Schedules by each of the Brauvin Partnerships. Each of
the Brauvin Partnerships agree that they will (a) deliver a
preliminary draft of its Disclosure Schedule to the Merger Company
no later than thirty (30) days from the date hereof and (b) deliver
its final Disclosure Schedule no later than sixty (60) days from
the date hereof; and that failure to do so shall constitute a
material breach hereof. Subject to the right of the Merger Company
to invoke the conditions to Closing set forth in Section 7.3 below
with respect to any information obtained from the Disclosure
Schedule, any information set forth in the Disclosure Schedule
shall be deemed incorporated into the relevant representations and
warranties set forth in Sections 3 and 4 below, and there shall be
no independent liability therefor pursuant to this Section 2.5.
2.6 Distribution of Ponderosa Properties. The parties
hereto acknowledge that immediately after the Merger, the Merger
Company will distribute the Ponderosa Properties to BNR L.L.C.,
which will thereafter contribute the Ponderosa Properties to
Brauvin L.L.C.
3. Representations and Warranties of the Merger Company.
Subject to Section 9.3 below, the Merger Company represents and
warrants to each of the Brauvin Partnerships as follows:
3.1 Formation and Qualification. The Merger Company is
a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware, and has the
requisite power to carry on the business it will conduct following
the Merger. The Merger Company is or, prior to the Effective Time,
will be duly qualified, licensed and authorized as a foreign
limited liability company to do business, and is or, prior to the
Effective Time, will be in good standing, in each jurisdiction
where the character of its properties owned or leased or the nature
of its activities makes such qualification necessary, except for
failures to be so qualified which would not, in the aggregate, have
a material adverse effect on the Condition of the Merger Company.
Copies of the Articles of Organization of the Merger Company (the
"MC Articles") and the Operating Agreement of the Merger Company
(the "MC Agreement") heretofore delivered or will be delivered to
each of the Brauvin Partnerships are accurate and complete as of
the date hereof. The Merger Company is not in default under or in
violation of any provision of the MC Agreement.
3.2 Authority Relative to this Agreement. The Merger
Company has the requisite power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement by the Merger Company and the
consummation by the Merger Company of the transactions contemplated
hereby have been duly authorized by all necessary action on the
part of the Merger Company and the Manager, and no other action on
the part of the Merger Company or the Manager is necessary to
authorize this Agreement, the Merger and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Merger Company and constitutes a valid and binding
obligation of the Merger Company, enforceable against the Merger
Company in accordance with its terms.
3.3 No Conflicts. Neither the execution and delivery of
this Agreement by the Merger Company nor the consummation of the
transactions contemplated hereby nor compliance by the Merger
Company with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result
in the creation of any Lien upon any of the properties or assets of
the Merger Company under, any of the terms, conditions or
provisions of (x) the MC Articles or the MC Agreement or (y) any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Merger
Company is a party, or to which it, or any of its properties or
assets, may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in Section 3.4, violate any
Order, statute, rule or regulation applicable to the Merger Company
or any of its properties or assets, except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of
Liens which, in the aggregate, would not have any material adverse
effect on the Condition of the Merger Company.
3.4 Governmental Approvals. Other than in connection
with or in compliance with the provisions of the Partnership Act,
LLC Act, the Exchange Act, the Securities Act, the "takeover" laws
of various states, the Hart-Scott-Rodino Act, and except for any
notices, filings, authorizations, consents or approvals which are
required because of the regulatory status, if any, of the Merger
Company or facts specifically pertaining to it, no notice to,
filing with, or authorization, consent or approval of, any domestic
or foreign public body or authority is necessary for the
consummation by the Merger Company of the transactions contemplated
by this Agreement, except where the failure to give such notice,
make such filing or obtain such authorization, consent or approval
would not have any material adverse effect on the Condition of the
Merger Company.
3.5 No Prior Activities. The Merger Company has not
incurred, directly or through any Subsidiary, any liabilities or
obligations, except those incurred in connection with its
organization or with the negotiation of this Agreement, the
performance thereof and the consummation of the transactions
contemplated hereby, including the Merger and the financing
described in Section 7.2.5 hereof. Except as contemplated by the
foregoing sentence, the Merger Company has not engaged, directly or
through any Subsidiary, in any business activities of any type or
kind whatsoever, or entered into any agreements or arrangements
with any Person or is subject to or bound by any obligation or
undertaking.
3.6 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Transaction based upon arrangements made by or
on behalf of the Merger Company or the Manager.
4. Representations and Warranties of the Brauvin
Partnerships. All information within the Merger Company's
Knowledge shall be deemed to have been disclosed by the Brauvin
Partnerships in connection with the representations and warranties
set forth below. Subject to Section 9.3 below or as otherwise set
forth in the Disclosure Schedule, each of the Brauvin Partnerships
individually, and not jointly and severally, represents and
warrants to the Merger Company as follows:
4.1 Formation and Qualification. Each of the Brauvin
Partnerships is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware and
has the requisite power to carry on its business as now conducted.
Each of the Brauvin Partnerships is duly qualified, licensed and
authorized as a foreign limited partnership to do business, and is
in good standing, in each jurisdiction where the character of such
Brauvin Partnerships' properties owned or leased or the nature of
its activities makes such qualification or licensing necessary,
except for failures to be so qualified which would not, in the
aggregate, have a material adverse effect on the Condition of the
particular Brauvin Partnership, as the case may be. Copies of the
Partnership Certificates and the Partnership Agreements, heretofore
delivered or made available to the Merger Company, are accurate and
complete as of the date hereof. None of the Brauvin Partnerships
are in default under or in violation of any provision of their
respective Partnership Agreements, except, in each case, for such
defaults or violations which would not have any material adverse
effect on the Condition of such Brauvin Partnership.
4.2 No Subsidiaries. Other than Brauvin Funds Joint
Venture, Brauvin Chili's Limited Partnership, Brauvin Gwinnett
County Venture and Brauvin High Yield Venture, none of the Brauvin
Partnerships have any Subsidiaries and no equity or similar
interest, whether voting or non-voting, in any Person.
4.3 Capitalization. As of the date hereof, the
outstanding partnership interests of each Brauvin Partnership are
as follows: (a) Brauvin I: (i) general partners' interest and
(ii) ___________________ issued and outstanding Brauvin I Units;
(b) Brauvin II: (i) general partners' interest and (ii)
_________________________ issued and outstanding Brauvin II Units;
and (c) Brauvin III: (i) general partners' interest and (ii)
_____________ issued and outstanding Brauvin III Units. There are
no outstanding options, warrants, calls, subscriptions or other
rights or other agreements or commitments obligating any of the
Brauvin Partnerships or any of their Affiliates to issue, transfer
or sell (a) any additional partnership interests of the Brauvin
Partnerships or (b) any Units, except as contemplated herein. All
issued and outstanding Units and partnership interests in each of
the Brauvin Partnerships are validly issued, and the purchase price
therefor has been paid in full.
4.4 Authority Relative to this Agreement. Subject to
the receipt of the approval of this Agreement and the transactions
contemplated hereby by the limited partners of each of the Brauvin
Partnerships as provided in each Brauvin Partnership, Partnership
Agreement, Partnership Certificates and the Partnership Act, each
of the Brauvin Partnerships have the requisite power and authority
to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by each of
the Brauvin Partnerships and the consummation by each of the
Brauvin Partnerships of the transactions contemplated hereby have
been, or prior to the Effective time will be, duly authorized by
all necessary action on the part of each of the Brauvin
Partnerships and, except for the approval of holders of the Units
("Unitholders") as set forth in Section 6.2 hereof, no other
proceedings on the part of any of the Brauvin Partnerships or the
Brauvin GPs are necessary to authorize this Agreement, the Merger
and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of the Brauvin Partnerships and
constitutes a valid and binding obligation of each of the Brauvin
Partnerships enforceable against each of the Brauvin Partnerships
in accordance with its terms.
4.5 No Conflicts. Except as set forth in the Disclosure
Schedule, neither the execution and delivery of this Agreement by
each of the Brauvin Partnerships nor the consummation of the
transactions contemplated hereby nor compliance by any of the
Brauvin Partnerships and any of the Brauvin GPs with any of the
provisions hereof will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any
of the properties or assets of any of the Brauvin Partnerships or
any of the Brauvin GPs under, any of the terms, conditions or
provisions of (x) the Partnership Certificates or the Partnership
Agreements, as the case may be, or (y) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which any of the Brauvin Partnerships
or any of the Brauvin GPs are a party or to which either of them or
either of their properties or assets may be subject, or (ii)
subject to compliance with the statutes and regulations referred to
in Section 4.6, to each of the Brauvin Partnerships' Knowledge,
violate any Order, statute, rule or regulation applicable to any of
the Brauvin Partnerships or any of the Brauvin GPs or any of their
properties or assets, except, in the case of each of clauses (i)
and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of Liens which would not,
in the aggregate, have any material adverse effect on the Condition
of any of the Brauvin Partnerships or any of the Brauvin GPs.
4.6 Governmental Approvals. Except as set forth in the
Disclosure Schedule, other than in connection with or in compliance
with the provisions of the Partnership Act, the LLC Act, the
Exchange Act, the Securities Act, the "takeover" laws of various
states, and the Hart-Scott-Rodino Act, and except for any notices,
filings, authorizations, consents or approvals which are required
because of the regulatory status, if any, of the Merger Company or
facts specifically pertaining to it, to any of the Brauvin
Partnerships' Knowledge, no notice to, filing with, or
authorization, consent or approval of, any domestic or foreign
public body or authority is necessary for the consummation by each
of the Brauvin Partnerships and the Brauvin GPs of the transactions
contemplated by this Agreement (excluding the Financing) except
where the failure to give such notice, make such filing or obtain
such authorization, consent or approval would not have any material
adverse effect on the Condition of the Brauvin Partnerships or
Brauvin GPs.
4.7 Commission Filings; Financial Statements. Each of
the Brauvin Partnerships have heretofore delivered or made
available (or will make available when available) to the Merger
Company their (i) Annual Reports on Form 10-K for the fiscal years
ended December 31, 1995, 1994, 1993, 1992, and 1991, as filed with
the Commission, (ii) Quarterly Reports on Form 10-Q for the quarter
ended March 31, 1996, (iii) investor letters or similar documents
mailed to the holders of Units (whether annual or special) since
January 1, 1991, (iv) all other reports (including any Form 8-K's)
or registration statements filed by the Brauvin Partnerships with
the Commission since January 1, 1991 (the documents described in
clauses (i) through (iv) above, including any exhibits and
schedules thereto and documents incorporated by reference therein,
being the "SEC Filings"), and (v) the unaudited consolidated
interim financial statements of the Brauvin Partnerships for the
three months ended June 30, 1996 (the "Interim Financial
Statements"). As of their respective dates, each of the SEC
Filings complied in all material respects with the requirements of
the Exchange Act or the Securities Act, as applicable, and did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements
of each of the Brauvin Partnerships included or incorporated by
reference in such reports and the Interim Financial Statements
(collectively, the "Brauvin Partnerships' Financial Statements")
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto), and
fairly present the consolidated financial position of each of the
Brauvin Partnerships as of the dates thereof and the results of
their operations and changes in their financial position for the
periods then ended. The consolidated balance sheets of each of the
Brauvin Partnerships at _____________, including the notes thereto,
is referred to as the "Balance Sheets," and ___________, is
referred to as the "Balance Sheets Date."
4.8 No Undisclosed Liabilities. At the Balance Sheets
Date, none of the Brauvin Partnerships have any direct or indirect
liabilities, obligations, indebtedness, claims, losses, damages,
deficiencies or responsibilities, known or unknown, fixed or
unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute or contingent, including, without
limitation, by way of setoffs or counterclaims ("Liabilities"), not
reflected or disclosed in the Balance Sheets which were required to
be reflected or disclosed therein in accordance with generally
accepted accounting principles. Since the Balance Sheets Date,
except as disclosed in the Disclosure Schedule, none of the Brauvin
Partnerships have incurred any such Liabilities.
4.9 Absence of Certain Changes or Events. Except as and
to the extent set forth on the Balance Sheets, or as set forth on
the Disclosure Schedule, since the Balance Sheets Date, there has
not been (a) any material adverse change in the Condition of any of
the Brauvin Partnerships; (b) any entry by any of the Brauvin
Partnerships into any commitment or transaction material to such
Brauvin Partnership, which is not in the ordinary course of
business and consistent with past practices; (c) any material
change by any of the Brauvin Partnerships in accounting principles
or methods except insofar as may be required by a change in
generally accepted accounting principles; (d) any declaration,
payment or setting aside for payment of any distributions (whether
in cash or property) in respect to the partnership interests of any
of the Brauvin Partnerships, or direct or indirect redemption,
purchase or other acquisition of any Units or other securities of
any of the Brauvin Partnerships; (e) any revaluation by any of the
Brauvin Partnerships of any of its assets, including without
limitation, writing off of notes or accounts receivable, except any
revaluation required by generally accepted accounting principles
based on the value of the Merger Consideration; (f) any action
taken by the any of Brauvin Partnerships of the type referred to in
Sections 5.1.2 or 5.1.3 hereof; (g) any agreement by any of the
Brauvin Partnerships to take, whether in writing or otherwise, any
action which, if taken prior to the date of this Agreement, would
have made any representation or warranty in this Section 4 untrue
or incorrect; (h) any damage, destruction or loss, whether covered
by insurance or not, having a material adverse effect upon the
Condition of any of the Brauvin Partnerships; (i) any issuance,
grant, sale or pledge or agreement to issue, grant, sell or pledge
by any of the Brauvin Partnerships, with any Person other than an
Affiliate of the Merger Company, any Units or other partnership
interests or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, Units
or other partnership interests; (j) any acquisition of assets by
any of the Brauvin Partnerships, other than personal property not
material to such Brauvin Partnership acquired in the ordinary
course of business and consistent with past practices, or (k) any
disposition, encumbrance or mortgage of any assets or properties of
any of the Brauvin Partnerships, other than personal property not
material to such Brauvin Partnership disposed of in the ordinary
course of business and consistent with past practices.
4.10 Litigation. There is no action or proceeding or
investigation pending or, to the Brauvin Partnerships' Knowledge,
threatened against or involving each of the Brauvin Partnerships,
any properties or rights of any of the Brauvin Partnerships or, to
each of the Brauvin Partnerships' Knowledge, any liabilities which
if adversely determined would, individually or in the aggregate,
have a material adverse effect on the Condition of any of the
Brauvin Partnerships nor are any of the Brauvin Partnerships, their
assets or, to each of the Brauvin Partnerships' Knowledge, any
Property subject to any Order which would have such an effect.
4.11 Taxes. To each of the Brauvin Partnerships'
Knowledge, except as set forth on the Disclosure Schedule, each of
the Brauvin Partnerships have duly filed all tax returns that they
were required to file, all such tax returns were correct and
complete in all material respects and all taxes shown on such
returns as due, if any, have been paid. Each of the Brauvin
Partnerships constitutes a partnership for all income tax purposes
rather than a corporation or association taxable as a corporation.
None of the Brauvin Partnerships have in effect an election
pursuant to Section 754 of the Code.
4.12 Assets. Each of the Brauvin Partnerships has no
assets other than those listed on its respective Balance Sheet.
4.13 Transactions with Affiliates. Except as described
in the Disclosure Schedule or the SEC Filings, none of the Brauvin
Partnerships has entered into any of the following transactions
with any Affiliate or Individual Affiliate in connection with which
any of the Brauvin Partnerships have continuing obligations in
effect as of the date of this Agreement: the direct or indirect
purchase, acquisition or lease of any property from, or the sale,
transfer or lease of any property to, or the borrowing of any money
from, or the guarantee of any obligation of, or the acquisition of
any stock, obligations or securities of, or the entering into of
any merger or consolidation agreement, or any management,
consulting, employment or similar fee arrangement or the entering
into of any other transaction or arrangement with, or the making of
any payment to, an Individual Affiliate, in the ordinary course of
business or otherwise, which is not on terms at least as favorable
to such Brauvin Partnership as would have been applicable if such
transaction had been entered into on an arm's-length basis with an
unaffiliated third party.
4.14 Disclosure. To each of the Brauvin Partnerships'
Knowledge, no written statement, certificate, schedule, list or
other written information furnished by or on behalf of such Brauvin
Partnership to the Merger Company pursuant to this Agreement
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to
make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
4.15 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Transaction based upon arrangements made by or
on behalf of any of the Brauvin Partnerships or the Brauvin GPs.
4.16 General Partners. None of the Brauvin Partnerships
have any general partners or holders of general partnership
interests other than the Brauvin GPs.
4.17 Compliance with Law. Each of the Brauvin
Partnerships have conducted their business so as to comply with all
applicable Requirements of Law relating to or affecting the
operations, conduct or ownership of the property or business each
of the Brauvin Partnerships, the failure to comply with which
would, individually or in the aggregate, have a material adverse
effect on the Condition of any of the Brauvin Partnerships,
provided, for purposes of this Section 4.17, the existence of any
statute, law, treaty, rule, regulation or ordinance referred to in
clause (ii) of the definition of Requirements of Law shall be
subject to any of the Brauvin Partnerships' Knowledge.
4.18 Properties.
4.18.1 Each of the Brauvin Partnerships have
herewith or heretofore delivered or made available to the Merger
Company a true, correct and complete set of all of the files,
documents and other written materials relating to each parcel of
real property directly or indirectly owned by such Brauvin
Partnership and all buildings and improvements thereon (each, a
"Property"), that are in the possession or control of each of the
Brauvin Partnerships and all documents related thereto that were
executed by or on behalf of each of the Brauvin Partnerships,
including, without limitation, copies of the Environmental Reports,
any letters of credit or other credit enhancement instruments
currently in effect, title insurance policies, hazard insurance
policies, flood insurance policies and other insurance policies,
all balance sheets, operating statements and other financial
statements, all existing engineering reports, soil studies and
reports, plans, specifications, architectural and engineering
drawings, completion bonds, arrangements, warranties, commitments
and other similar reports, studies and items, leases and contracts,
property management and leasing brokerage agreements and other
writings whatsoever.
4.18.2 Each of the Brauvin Partnerships directly
is, or indirectly as a general or limited partner of a partnership
which is, the sole legal and beneficial owners and holders of the
Properties, and, at the Effective Time, the Merger Company will be
the sole legal and beneficial owner and holder of the Properties,
free and clear of any Lien (without taking into account the
Financing or any act of the Merger Company). None of the Brauvin
Partnerships have endorsed, granted, assigned, transferred or
otherwise pledged, encumbered or set over the Properties to any
Person other than as disclosed.
5. Conduct of Business Pending the Merger.
5.1 Conduct of Business by Each of the Brauvin
Partnerships Pending the Merger. Each of the Brauvin Partnerships
covenant and agree that, from the date of this Agreement until the
Effective Time, unless the Merger Company shall otherwise agree in
writing or as otherwise expressly contemplated by this Agreement:
5.1.1 The business of the Brauvin Partnerships
shall be conducted only in, and each of the Brauvin Partnerships
shall not take any action except in, the ordinary course of
business and consistent with past practices, and each of the
Brauvin Partnerships shall use all commercially reasonable efforts
to maintain and preserve their business organizations, assets,
prospects and advantageous business relationships.
5.1.2 Except as contemplated hereby and subject to
the Brauvin GPs fiduciary duty to the holders of Units, none of the
Brauvin Partnerships shall directly or indirectly do any of the
following: (i) sell, transfer, pledge, dispose of or encumber,
except in the ordinary course of business and consistent with past
practices, any properties or assets of any of the Brauvin
Partnerships; (ii) whether or not in the ordinary course of
business, sell, finance or dispose of any property or asset which
is material to any of the Brauvin Partnerships; (iii) whether or
not in the ordinary course of business, permit any property or
assets to become subject to any material Lien, other than Permitted
Statutory Liens or Lien disclosed on the Disclosure Statements;
(iv) amend or propose to amend the Partnership Agreements, the
Partnership Certificates or similar organizational documents, or
any tax returns; (v) declare, set aside or pay any distribution,
payable in cash, securities, property or otherwise, with respect to
any of their partnership interests or Units; (vi) redeem, purchase
or otherwise acquire or offer to redeem, purchase or otherwise
acquire any partnership interests or Units; or (vii) authorize or
propose any of the foregoing, or enter into any contract,
agreement, commitment, or arrangement to do any of the foregoing.
5.1.3 Except as contemplated hereby and subject to
the Brauvin GP's fiduciary duty to the holders of Units, none of
the Brauvin Partnerships shall, directly or indirectly, (i) issue,
sell, pledge or dispose of, or authorize, propose or agree to the
issuance, sale, pledge or disposition of, any Units or partnership
interests, or any options, warrants or rights of any kind to
acquire any shares of, or any securities convertible into or
exchangeable for any Units or partnership interests, or any other
securities in respect of, in lieu of, or in substitution for, Units
or partnership interests outstanding on the date hereof; (ii)
acquire (by merger, consolidation, or acquisition of stock or
assets) any other Person, or make any investment either by purchase
of stock or securities, contributions to capital, property
transfer, or, except in the ordinary course of business and
consistent with past practices, purchase of any property or assets
of any other Person; (iii) incur any indebtedness for money
borrowed or issue any debt securities or assume or guarantee any of
the foregoing, except short-term indebtedness incurred in the
ordinary course of business and consistent with past practices;
(iv) endorse, or otherwise as an accommodation become responsible
for, the obligations of any other Person, or make any loans or
advances other than in the ordinary course of business and
consistent with past practices; (v) voluntarily incur any other
liability or obligation (absolute, accrued, contingent or
otherwise), except in the ordinary course of business and
consistent with past practices; (vi) waive, release, grant or
transfer any rights of material value or modify or change in any
material respect any agreement with or arrangement relating to any
existing material license, lease, contract or other document, other
than in the ordinary course of business and consistent with past
practices; (vii) authorize or effect any material change in its
capitalization; or (viii) authorize or commit to any of the actions
prohibited in this Section 5.1.3, or enter into or modify any
contract, agreement, commitment or arrangement to do any of the
actions prohibited in this Section 5.1.3.
5.1.4 None of the Brauvin Partnerships shall make
any tax election which may have a material adverse effect on the
Condition of any of the Brauvin Partnerships or the Merger Company,
change any material tax accounting method or settle or compromise
any material federal, state, local or foreign income tax liability.
The Brauvin GPs shall halt, suspend or limit trading of Units to
the extent necessary to prevent a termination of any of the Brauvin
Partnerships for income tax purposes as a result of such trading or
such trading in combination with the consummation of the
Transaction.
5.1.5 None of the Brauvin Partnerships shall take
any action or agree, in writing or otherwise, to take any of the
actions prohibited by this Section 5.1 or any action which would
make any representation or warranty in Section 4 hereof untrue or
incorrect in any material respect.
6. Additional Agreements.
6.1 Proxy Statements; Other Filings. As promptly as
practicable after the date hereof, each of Brauvin Partnerships
shall prepare and file with the Commission under the Exchange Act,
and shall use all commercially reasonable efforts to have cleared
by the Commission, and promptly thereafter each of the Brauvin
Partnerships shall mail to its respective limited partners and
holders of Units, proxy statements and forms of proxy with respect
to the meeting of the partners of the Brauvin Partnerships referred
to in Section 6.2 hereof. The term "Proxy Statements" shall mean
such proxy statements at the time they initially are mailed to the
limited partners of each of the Brauvin Partnerships and the
holders of Units and all amendments or supplements thereto, if any,
similarly filed and mailed. As soon as practicable after the date
of this Agreement, each of the Brauvin Partnerships and the Merger
Company shall promptly prepare and file any other filings required
under the Exchange Act, or any other federal or state securities
laws relating to the Merger and the transactions contemplated
herein ("Other Filings"). Each of the Brauvin Partnerships shall
notify the Merger Company promptly of the receipt of any comments
of the Commission and of any request by the Commission for
amendments or supplements to the Proxy Statements or by any other
governmental official with respect to any Other Filing or for
additional information and will supply the Merger Company with
copies of all correspondence between any of the Brauvin
Partnerships and their representatives, on the one hand, and the
Commission or the members of its staff or any other appropriate
government official, on the other hand, with respect to the Proxy
Statements and any Other Filings. Each of the Brauvin Partnerships
and the Merger Company each shall use all commercially reasonable
efforts to obtain and furnish the information required to be
included in the Proxy Statements and any Other Filings; and each of
the Brauvin Partnerships, after consultation with the Merger
Company, shall use all commercially reasonable efforts to respond
promptly to any comments made by the Commission with respect to the
Proxy Statements and any Other Filings and any preliminary version
thereof and cause the Proxy Statements and related form of proxy to
be mailed to the limited partners of each of the Brauvin
Partnerships and holders of Units at the earliest practicable time.
Each of the Brauvin Partnerships shall notify the Merger Company of
its intention to mail the Proxy Statements to the limited partners
of each of the Brauvin Partnerships and the holders of Units, both
orally and in writing, at least 48 hours prior to the intended time
of such mailing. The information provided and to be provided by
the Merger Company and each of the Brauvin Partnerships,
respectively, for use in the Proxy Statements and any Other Filings
shall, on the date the Proxy Statements are first mailed to the
limited partners of each of the Brauvin Partnerships and the
holders of Units or any Other Filing are filed with the appropriate
governmental official and in each case on the date of the meeting
of the limited partners of each of the Brauvin Partnerships and the
holders of Units referred to in Section 6.2 hereof, be true and
correct in all material respects and shall not omit to state any
material fact required to be stated therein or necessary in order
to make such information not false or misleading, and each of the
Brauvin Partnerships agree to correct any such information provided
by them for use in the Proxy Statements or any Other Filings which
shall have become false or misleading. The Proxy Statements and
any Other Filings, when filed with the Commission or other
governmental agency, shall comply as to form in all material
respects with all applicable requirements of law.
6.2 Meetings of the Limited Partners and Unitholders.
Each of the Brauvin Partnerships shall take all action necessary,
in accordance with the Partnership Act, the Partnership
Certificates and the Partnership Agreements to duly call, give
notice of, convene and hold meetings of each of the limited
partners and Unitholders of each of the Brauvin Partnerships as
promptly as practicable to consider and vote upon and obtain
Unitholder Approval of the Transaction, including, without
limitation, the Merger and this Agreement (the "Meetings"). The
Proxy Statements shall contain the determinations and
recommendations, if any, of the Brauvin GPs as to the Transaction.
The Brauvin Partnerships shall use all commercially reasonable
efforts to solicit from holders of Units proxies in favor of
adoption and approval of the Transaction and to take all other
action necessary or, in the reasonable judgment of the Merger
Company, helpful to secure the Unitholder Approval of the
Transaction.
6.3 Fees and Expenses. (a) Each of the Brauvin
Partnerships shall be liable for, and shall pay, the fees and
expenses associated with preparing, filing, printing and
distributing the Proxy Statements, legal fees and expenses of
counsel, fees and expenses of outside accountants, fees and
expenses associated with appraisals of the Properties and the
issuance of the Fairness Opinions and all expenses associated with
the transfer of title of the Properties to the Merger Company,
including, but not limited to, title insurance policies,
Environmental Reports, engineering reports, surveys and all other
items customarily involved in the transfer of real property.
(a)(b) The Merger Company shall be liable for,
and shall pay, the fees and expenses associated with due diligence
performed by or on its behalf, fees and expenses of its counsel and
accountants' fees to lenders or brokers in connection with
obtaining any financing in connection with the Transaction.
6.4 Further Agreements.
6.4.1 Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement and to cooperate with
each other in connection with the foregoing, including (i) using
all commercially reasonable efforts to obtain all necessary
waivers, consents and approvals from other parties to loan
agreements, leases and other contracts and instruments; (ii) using
all commercially reasonable efforts (a) to obtain all necessary
consents, approvals and authorizations as are required to be
obtained under any federal, state or foreign law or regulations,
(b) to defend all lawsuits or other legal proceedings challenging
this Agreement or the consummation of the transactions contemplated
hereby (collectively, "Designated Actions"), (c) to lift or rescind
any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby, and (d) to effect all necessary registrations
and filings, including, but not limited to, filings under the
Hart-Scott-Rodino Act, if any, and submissions of information
requested by governmental authorities. For purposes of the
foregoing sentence, the obligations of each of the Brauvin
Partnerships and the Merger Company to use "all commercially
reasonable efforts" to obtain waivers, consents and approvals to
loan agreements, leases and other contracts shall not include any
obligation to agree to an adverse modification of the terms of such
documents or to pay or incur additional obligations to such other
parties.
6.4.2 In connection with any Designated Action,
each of the Brauvin Partnerships hereby agrees to: (i) promptly
deliver to the Merger Company copies of all complaints, pleadings
and other filings relating to any Designated Action; (ii) provide
drafts of its reply, motions and other pleadings to the Merger
Company for review and comment prior to filing or serving any such
reply, motion or pleading and not to file any such reply, motion or
pleading until the earlier of (x) receipt of consent from the
Merger Company or (y) the day of the deadline for such motion,
reply or pleading; and (iii) consult with the Merger Company in a
timely manner prior to taking any other action.
6.5 No Shop Limitation. If any of the Brauvin GPs are
required because of their fiduciary obligations to the holders of
Units, or otherwise believe it is in the best interests of the
holders of Units, to respond to an unsolicited inquiry, contact or
proposal related to a Business Combination made by a third party to
a Brauvin Partnership (an "Alternative Proposal"), nothing in this
Agreement shall prohibit any of the Brauvin GPs or the respective
Brauvin Partnerships from responding to such Alternative Proposal,
making any required disclosures under federal securities laws,
providing information regarding such Brauvin Partnership to the
party making such Alternative Proposal, negotiating with such party
in good faith, terminating this Agreement or taking any other
action; provided, however, that (a) each of the Brauvin Partnerships
agrees to give the Merger Company reasonable notice of any such
response, negotiations or other matters, as well as a reasonable
opportunity to respond, taking into account in good faith the facts
and circumstances prevailing at the time of such response,
negotiation or other matters and (b) if any of the Brauvin Partnerships
terminate this Agreement as a result of its acceptance of an Alternative
Proposal, the terminating Brauvin Partnerships shall pay the Merging Company
a termination fee aggregating one percent (1%) of the aggregate Merger
Consideration payable only upon the actual consummation of such Alternative
Proposal.
6.6 Additional Financial Statements. As soon as
reasonably practicable after they become publicly available, each
of the Brauvin Partnerships shall furnish the Merger Company with
(i) a consolidated balance sheet of such Brauvin Partnership and
related consolidated statements of operations and cash flows for
all quarterly periods subsequent to the Balance Sheets Date and
prior to the Effective Time, accompanied by statements by each of
the Brauvin GPs that, in the opinion of such Brauvin GPs, such
financial statements of such Brauvin Partnership has been prepared
pursuant to the rules and regulations of the Commission and fairly
present (subject, in the case of unaudited financial statements, to
changes resulting from year-end audit adjustments and other
adjustments of a normal and recurring nature) the consolidated
financial condition and results of operations of each the Brauvin
Partnerships, as of the dates and for the periods covered by such
statements and (ii) any other financial statements that each of the
Brauvin Partnerships shall prepare for any interim period
subsequent to the Balance Sheets Date and prior to the Effective
Time.
6.7 Access to Information; Confidentiality.
6.7.1 Each of the Brauvin Partnerships shall, and
shall cause its employees, consultants, accountants, counsel and
agents to, afford to the Merger Company and its representatives and
to the banks, lenders, financial institutions and others providing
financing for the Transaction and others, complete access at all
reasonable times to, from the date of this Agreement until the
Effective Time, their offices, facilities,personnel, properties,
books, records and contracts, and shall furnish the Merger Company
and its representatives and such banks, lenders, financial
institutions and others all financial, operating and other data and
information as the Merger Company and its representatives and such
banks, lenders, financial institutions and others, through their
respective officers, employees or agents,may reasonably request.
6.7.2 No investigation pursuant to this Section 6.7
shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
6.8 Public Announcements. No press release or
announcement concerning this Agreement or the Transaction shall be
issued without advance approval of the form and substance thereof
by each of the Brauvin Partnerships and the Merger Company.
Notwithstanding the foregoing, each of the Brauvin Partnerships and
the Merger Company will use all commercially reasonable efforts to
consult with each other before issuing any press release or
otherwise making any public statements with respect hereto,
provided, such obligation to use all commercially reasonable
efforts shall be deemed satisfied if a draft of a press release or
announcement is delivered for comment at least 24 hours prior to
public release.
6.9 Agreement to Defend and Indemnify. From and after
the Effective Time, the Merger Company will continue in full force
and effect, for the benefit of each of the Brauvin GPs, the
provisions of the Partnership Agreements, as currently in effect,
related to indemnification of the Brauvin GPs, as if each of the
Brauvin GPs continued to serve such Brauvin Partnerships as general
partner, after the Effective Time. For purposes of this Section
6.9 only, the term "Affiliates" shall have the meaning ascribed to
such term in the Partnership Agreements.
6.10 Notification of Certain Matters. Each of the
Brauvin Partnerships shall give prompt notice to the Merger
Company, and the Merger Company and its Affiliates shall give
prompt notice to each of the Brauvin Partnerships, as the case may
be, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation
or warranty contained in this Agreement and made by it to be untrue
or inaccurate in any material respect at any time from the date
hereof to the Effective Time, and (ii) any material failure of any
of Brauvin Partnerships or the Merger Company, as the case may be,
or of any general partner, officer, director, employee or agent of
any thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder,
provided, however, that no such notifications shall affect the
representations or warranties of the parties or the conditions to
the obligations of the parties hereunder.
6.11 Cooperation. Each of the Brauvin Partnerships and
the Brauvin GPs shall use all commercially reasonable efforts to
assist, and cooperate with the Merger Company and their respective
Affiliates in consummating all financing and related transactions.
6.12 Tax Returns. (a) Neither the Merger Company nor
Manager shall cause the Merger Company to, and the Merger Company
shall not, amend any portion of any tax returns for years ending
prior to the Effective Time without the prior consent of the
Brauvin GPs or their designee, which consent shall not be
unreasonably withheld.
(b) The Merger Company, Manager and the
Brauvin GPs shall use all commercially reasonable efforts to
cooperate with and assist each other so that, after the Closing
Date, all tax returns of each of the Brauvin Partnerships for the
period ending on the Closing Date shall be timely filed and that
Schedules K-1 shall be timely delivered to those Persons who were
holders of Units prior to the Closing Date. The cost of such
filing and delivery shall be borne by the Surviving Company.
6.13 Notice of Failure to Satisfy Closing Conditions.
(a) In the event that the Merger Company
determines, on or after the date that any of the Brauvin
Partnerships shall deliver a final Disclosure Schedule pursuant to
Section 2.5 above and on or prior to the Closing Date, that any
condition to the Merger Company's or any of the Brauvin
Partnerships' obligation to close pursuant to Section 7 will not be
satisfied on or prior to the Closing Date, the Merger Company shall
give prompt notice to each of the Brauvin Partnerships and, in the
case of Sections 7.1 and 7.3, shall provide the Brauvin
Partnerships a period of ten business days for a violating Brauvin
Partnership to satisfy all such conditions.
(b) In the event that any of the Brauvin
Partnerships determine on or prior to the Closing Date that any
condition to any of the Brauvin Partnerships' or the Merger
Company's obligation to close pursuant to Section 7 will not be
satisfied on or prior to the Closing Date, such Brauvin Partnership
shall give prompt notice to the Merger Company and, in the case of
Sections 7.1 and 7.2, shall provide the Merger Company a period of
ten business days for the Merger Company to satisfy all such
conditions.
7. Conditions.
7.1 Conditions to Obligation of Each Party to Effect the
Transaction. The respective obligations of each party to effect
the Transaction shall be subject to the fulfillment at or prior to
the Effective Time of each of the following conditions which may be
waived in whole or in part only by written agreement of each of the
Brauvin Partnerships and the Merger Company.
7.1.1 All approvals, notices, filings,
registrations and authorizations of any governmental authority
required for consummation of the Transaction, including, without
limitation, under the Hart-Scott-Rodino Act, shall have been
obtained or made.
7.1.2 Unitholder Approval for the Transaction shall
have been obtained in accordance with the Partnership Act and each
of the Partnership Agreements.
7.1.3 No preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, nor any statute, rule, regulation or
executive order promulgated or enacted by a governmental authority
shall be in effect which would prevent the consummation of the
Transaction.
7.2 Additional Conditions to the Obligation of the
Brauvin Partnerships. The obligation of the Brauvin Partnerships
to effect the Transaction is also subject to the fulfillment at or
prior to the Effective Time of each of the following conditions
which may be waived in whole or in part by any of the Brauvin
Partnerships.
7.2.1 The Merger Company shall in all material
respects have performed each obligation to be performed by it
hereunder on or prior to the Effective Time.
7.2.2 The representations and warranties of the
Merger Company set forth in this Agreement shall be true and
correct in all material respects at and as of the Effective Time as
if made at and as of such time, except to the extent that any such
representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and
correct as of such date.
7.2.3 Each of the Brauvin Partnerships shall have
received a certificate of the Merger Company, dated the Closing
Date, signed by the Manager, to the effect that the conditions
specified in Sections 7.2.1 and 7.2.2 have been fulfilled.
7.2.4 A favorable opinion (the "Fairness Opinion")
of an investment banking firm reasonably acceptable to each of the
Brauvin Partnerships as to the fairness of the Merger Consideration
to the holders of the Units, from a financial point of view, shall
have been delivered to each Brauvin Partnership.
7.2.5 No later than the earlier of (x) June 30,
1996 or (y) the Mailing Date (the earlier of (x) or (y) being, the
"Commitment Date"), the Merger Company shall have delivered to the
Brauvin Partnerships a Commitment Letter executed by a financial
institution or other financing source providing for debt financing
in an amount at least equal to $60,000,000 and on terms
commercially reasonable from the point of view of each of the
Brauvin Partnerships as the selling party in the Transaction;
provided, that unless any of the Brauvin Partnerships give notice
to the Merger Company (x) within ten days after the delivery of a
copy of the Commitment Letter to each of the Brauvin Partnerships,
that the Commitment Letter does not satisfy the condition set forth
in this Section 7.2.5 or (y) if the Commitment Letter shall not be
delivered prior to the Commitment Date, within two business days
after the Commitment Date that none of the Brauvin Partnerships
have any obligation to effect the Transaction because of the
failure of the condition set forth in this Section 7.2.5, such
condition shall be deemed to be waived.
7.3 Additional Conditions to the Obligations of the
Merger Company. The obligation of the Merger Company to effect the
Transaction is also subject to the fulfillment at or prior to the
Effective Time, or such earlier date as specified therein, of each
of the following conditions which may be waived in whole or in part
by the Merger Company:
7.3.1 Each of the Brauvin Partnerships shall in all
material respects have performed each obligation to be performed by
it hereunder on or prior to the Effective Time.
7.3.2 The Brauvin Partnerships shall have cash
available and not restricted equal to and replacement reserves
estimate to be: (a) for Brauvin I, $___________ and $________
respectively; (b) for Brauvin II, $____________ and
$_______________ respectively; (c) for Brauvin III $____________
and $___________ respectively, each as set forth in Exhibit A
hereto, which Exhibit reflects projected balances as of July 31,
1996. If the Closing Date does not occur on or before July 31,
1996, each of the Brauvin Partnerships shall prepare new
projections of cash available and not restricted and replacement
reserves by calendar quarter, subject to the approval of the Merger
Company in its reasonable business judgment.
7.3.3 The Merger Company shall have received
certificates of each of the Brauvin Partnerships, dated the Closing
Date, signed by the Brauvin GPs to the effect that the conditions
specified in Sections 7.3.1 and 7.3.2 have been fulfilled.
7.3.4 The Merger Company shall have received
evidence, inform and substance reasonably satisfactory to its
counsel, that such licenses, permits, consents, approvals, waivers,
authorizations, qualifications and orders of domestic governmental
authorities and parties to contracts and leases with each of the
Brauvin Partnerships as are necessary in connection with the
consummation of the transactions contemplated hereby (excluding (a)
licenses, permits, consents, approvals, authorizations,
qualifications or orders, the failure to obtain which after the
consummation of the transactions contemplated hereby, in the
aggregate, will not have a material adverse effect on the Condition
of any of the Brauvin Partnerships), provided, that unless the
Merger Company gives notice to each of the Brauvin Partnerships
prior to the Mailing Date that the Merger Company has no obligation
to effect the Transaction because of the failure of the condition
set forth in this Section 7.3.4, such condition shall be deemed
waived.
7.3.5 No action, suit or proceeding before any
court or governmental authority shall have been commenced and be
pending by any Person against the Brauvin Partnerships or the
Merger Company or any of their Affiliates, partners, officers or
directors seeking to restrain, prevent, change or delay in any
material respect any of the terms or provisions of the Transaction
or seeking material damages in connection therewith.
7.3.6 The Merger Company, Manager and its lenders
shall have received the favorable legal opinion of Holleb & Coff,
counsel to each of the Brauvin Partnerships, and
_____________________________________, special Delaware counsel to
each of the Brauvin Partnerships, taken together, substantially to
the effect set forth in Exhibit B.
7.3.7 Receipt by the Merger Company of debt and
equity financing which in its sole judgment is satisfactory.
7.3.8 None of the Brauvin Partnerships shall have
undergone a material adverse change in its Condition or its ability
to perform its obligations under this Agreement. For purposes of
this Section 7.3.8, the discovery after the Mailing Date of a fact
which fact is materially adverse to the Condition of any Brauvin
Partnership and which could not have been reasonably discovered by
the Merger Company or its Affiliates on or prior to the Mailing
Date shall be deemed to be a material adverse change to the
Condition of such the Brauvin Partnership.
7.3.9 The Merger Company shall have determined that
the legal, accounting and business due diligence investigation of
each of the Brauvin Partnerships to be conducted by or on behalf of
the Merger Company, including, without limitation, any information
obtained from the Disclosure Schedule, has not revealed that
proceeding with the Transaction would be inadvisable or contrary to
the Merger Company's best interests, provided, that, unless the
Merger Company gives notice to the Brauvin Partnerships prior to
the Mailing Date that the Merger Company has no obligation to
effect the Transaction because of the failure of the condition set
forth in this Section 7.3.9, such condition shall be deemed to be
waived.
7.3.10 None of the Brauvin Partnerships shall have
made a distribution of earnings with respect to any Units from the
date hereof through the Effective Time.
7.3.11 The Merger Company shall have received from
the Brauvin Partnerships an environmental assessment of each
Property, and the Merger Company shall have completed its review of
such Environmental Reports and the Merger Company shall be
satisfied in its sole discretion that (i) the Surviving Company
will not be exposed to unacceptable risk, liability or obligation
as a consequence of this Agreement and the transaction contemplated
hereby and (ii) the Surviving Company will not be subject to any
material adverse, unusual or onerous agreements, conditions,
liabilities or obligations to which the Brauvin Partnerships are a
party.
7.3.12 The Merger Company shall have completed its
review of the assets and business of the Brauvin Partnerships and
found them to be satisfactory to it in its discretion.
7.3.13 The Brauvin Partnerships, at their own
expense, shall have ordered and delivered to the Merger Company an
owner's title insurance policy (ALTA Owner's Policy Form B-1970
(rev. 10/17/70 and 10/17/84)) with respect to each parcel of the
Property (or an endorsement of existing policies in favor of the
Surviving Company), insuring the Surviving Company and its lenders
and issued as of the Closing Date by a title insurance company
reasonably satisfactory to the Merger Company, in such amount(s) as
may be reasonably satisfactory to Merger Company, showing fee
simple title thereto to be vested in the Surviving Company, subject
in each case only to permitted liens acceptable to the Surviving
Company, with extended coverage over all general exceptions, a
zoning endorsement in the form of ALTA endorsement Form 3.1 and
such other endorsements as the Merger Company shall reasonably
request.
7.3.14 The Brauvin Partnerships, at their own
expense, shall have ordered and delivered to the Merger Company
surveys of each Property for which title insurance is being
obtained, dated not earlier than March 31, 1996, prepared by a
licensed surveyor, and certified to the Merger Company, and the
title insurance company as having been prepared in accordance with
American Land Title Association land survey standards, and showing
all material improvements to be within lot, side lot, rear lot and
setback lines, and showing no encroachments onto each Property.
Such surveys shall reveal no material encroachments on each
Property and be sufficient to enable to title company issuing the
title policies described in Section 7.3.13 to issue same with full
extended coverage.
7.3.15 The Brauvin Partnerships shall have
delivered to the Merger Company such further information, documents
and instruments as the Merger Company shall reasonably require.
8. Termination, Amendment and Waiver.
8.1 Termination. This Agreement may be terminated and
the Transaction contemplated hereby may be abandoned, by written
notice promptly given to the other parties hereto, at any time
prior to the Effective Time, whether prior to or after Unitholder
Approval of the Transaction:
8.1.1 By mutual written consent of the Merger
Company and each of the Brauvin Partnerships;
8.1.2 By either the Merger Company or any of the
Brauvin Partnerships, if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action, in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have
become final and nonappealable;
8.1.3 By either the Merger Company or any of the
Brauvin Partnerships, if the Effective Time shall not have occurred
on or before the Termination Date, unless the absence of such
occurrence shall be due to the failure of the party seeking to
terminate this Agreement to perform in all material respects each
of its obligations under this Agreement required to be performed by
it prior to the Effective Time;
8.1.4 By either the Merger Company or any of the
Brauvin Partnerships, if at the Meeting (including any adjournment
thereof) Unitholder Approval of the Transaction shall not be
obtained;
8.1.5 By the Merger Company, if any of the Brauvin
Partnerships shall have withdrawn, modified or amended in any
respect their approval of the Transaction;
8.1.6 By the Merger Company, if any of the Brauvin
Partnerships fail to perform in all material respects its
obligations under this Agreement;
8.1.7 By the Merger Company, if there shall have
occurred a material adverse change in the Condition of any of the
Brauvin Partnerships since the date of this Agreement;
8.1.8 By any of the Brauvin Partnerships, if the
Merger Company fails to perform in all material respects its
obligations under this Agreement;
8.1.9 By the Merger Company, if any of the Brauvin
Partnerships shall have settled or compromised any Designated
Action without the prior written consent of the Merger Company,
unless such settlement or compromise (i) requires the payment of
money by such Brauvin Partnership in an amount which, when
aggregated with the amount of money paid or payable in connection
with all other Designated Actions, does not exceed $15,000 and (ii)
does not include any other material term or condition to which the
Merger Company shall reasonably object;
8.1.10 By the Merger Company, if, prior to the
Effective Time, the representations and warranties of each Brauvin
Partnership set forth in this Agreement shall not be true and
correct in all material respects at any time as if made as of such
time, except to the extent that any such representation or warranty
is made as of a specific date, in which case such representation or
warranty shall have been true and correct as of such date,
provided, that for purposes of this Section 8.1.10 the
representations and warranties set forth in Section 4.14 shall be
deemed to have been made irrespective of the qualification
contained therein as to the Knowledge of each of the Brauvin
Partnerships; or
8.1.11 By any of the Brauvin Partnerships, in
accordance with Section 7.2.5, if there shall have been a failure
of the condition set forth therein or any of the Brauvin
Partnerships elect to pursue an Alternative Proposal pursuant to
Section 6.5 hereof.
8.2 Effect of Termination. In the event of the
termination of this Agreement and abandonment of the Transaction as
provided in Section 8.1 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of the
Merger Company or any of the Brauvin Partnerships except (a) to the
extent that such termination results from the wilful breach of a
party hereto of any of its covenants or agreements set forth in
this Agreement and (b) in the case of termination of pursuant to
Section 6.5 hereof, the payment by the terminating Brauvin Partnerships
of the termination fee provided therin.
8.3 Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after the Unitholder Approval of
the Transaction has been obtained, no amendment may be made which
changes the amount of cash to be paid for the Units, or effects any
change which would adversely affect the holders of Units without
the further Unitholder Approval.
8.4 Waiver. At any time prior to the Effective Time,
whether before or after the Meeting, any party hereto, by a writing
executed by its general partner, may (i) extend the time for the
performance of any of the obligations or other acts of any other
party hereto or (ii) subject to the proviso contained in Section
8.3 hereof, waive compliance with any of the agreements of any
other party or with any conditions to its own obligations.
9. General Provisions.
9.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telegram, telecopier or
three business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid,to the parties at
the following addresses or at such other addresses as shall be
specified by the parties by like notice:
(a) if to the Merger Company or Manager:
c/o Brauvin Real Estate Funds
150 South Wacker Drive, Suite 3200
Chicago, Illinois 60606
Attention: James L. Brault
(b) if to the Brauvin Partnerships, or the
Brauvin GPs:
c/o Brauvin Real Estate Funds
150 South Wacker Drive, Suite 3200
Chicago, Illinois 60606
Attention: Jerome J. Brault
9.2 Certain Definitions. As used in this Agreement, the
following terms shall have the meanings indicated below:
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with, or
the parents, spouse, lineal descendants or beneficiaries of, such
Person, provided, that, in any case, (i) the following Persons
shall be deemed to be Affiliates of the Brauvin Partnerships:
_________________________________, and (ii) the following Persons
shall be deemed Affiliates of the Merger Company:
_____________________.
"Assignor Limited Partner" means Brauvin Depository I,
Inc., an Illinois corporation, the sole limited partner of the
Brauvin I.
"Available Cash" means the amount of cash and cash
equivalents held by or at the direction of the specified Brauvin
Partnership after deducting any amounts then owed, accrued or
reserved by the specified Brauvin Partnership for goods, services
or liabilities of any nature or description.
"Brauvin I Unit Value" means an amount which is equal to
the quotient obtained by dividing (i) the difference between (A)
the sum of (1) the fair market value of substantially of Brauvin
I's real estate related assets (as determined by Cushman &
Wakefield or other independent appraiser), (2) Brauvin I's
Available Cash and (3) earning of Brauvin I through July 31, 1996
and (B) the sum of (1) the costs of the Transaction to Brauvin I
and (2) other liabilities of Brauvin I not otherwise deducted in
computing Available Cash by (ii) the number of Brauvin I Units.
"Brauvin II Unit Value" means an amount which is equal to
the quotient obtained by dividing (i) the difference between (A)
the sum of (1) the fair market value of substantially of Brauvin
II's real estate related assets (as determined by Cushman &
Wakefield or other independent appraiser), (2) Brauvin II's
Available Cash and (3) earning of Brauvin II through July 31, 1996
and (B) the sum of (1) the costs of the Transaction to Brauvin II
and (2) other liabilities of Brauvin II not otherwise deducted in
computing Available Cash by (ii) the number of Brauvin II Units.
"Brauvin III Unit Value" means an amount which is equal
to the quotient obtained by dividing (i) the difference between (A)
the sum of (1) the fair market value of substantially of Brauvin
III's real estate related assets (as determined by Cushman &
Wakefield or other independent appraiser), (2) Brauvin III's
Available Cash and (3) earning of Brauvin III through July 31, 1996
and (B) the sum of (1) the costs of the Transaction to Brauvin III
and (2) other liabilities of Brauvin III not otherwise deducted in
computing Available Cash by (ii) the number of Brauvin III Units.
"Business Combination" means any acquisition or purchase
of assets of, or any equity interest in, any of the Brauvin
Partnerships or any tender offer (including a self tender offer),
exchange offer, merger, consolidation, business combination, sale
of substantial assets or of a substantial amount of assets, sale of
securities, recapitalization, reorganization, refinancing,
refunding, liquidation, dissolution or similar transactions
involving any of the Brauvin Partnerships or other transactions
involving any vote or consent of the holders of any class of Units.
"Closing Date" means the date upon which the Merger
occurs.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and, unless the context otherwise
requires, the rules and regulations promulgated thereunder, from
time to time.
"Commission" means the Securities and Exchange Commission
or any successor agency.
"Commitment Letter" means one or more commitment letters
or loan, securities purchase, financing or similar agreements
providing a financial commitment or obligation to provide debt
financing for the Transaction.
"Condition" means, with respect to any Person, the
business, assets, properties, results of operations, financial or
other condition or prospects of such Person and its Subsidiaries,
taken as a whole.
"Disclosure Schedules" means the Disclosure Schedules
setting forth certain information concerning each of the Brauvin
Partnerships and its assets required to be delivered by each of the
Brauvin Partnerships to the Merger Company pursuant to Section 2.5
above.
"Environmental Laws" means all federal, state and local
statutes, regulations, ordinances, rules, regulations and policies,
all court orders and decrees and arbitration awards, and the common
law, which pertain to environmental matters or contamination of any
type whatsoever. Environmental Laws include, without limitation,
those relating to: manufacture, processing, use, distribution,
treatment, storage, disposal, generation or transportation of
Hazardous Materials; air, surface or ground water or noise
pollution; protection of wildlife, endangered species, wetlands or
natural resources; health and safety of employees and other
persons; and notification requirements relating to the foregoing
and includes the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., as amended;
the Resource Conservation and Recovery Act ("RCRA), 42 U.S.C. 6901
et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et
seq., as amended; and the Occupational Safety and Health Act
("OSHA"), 29 U.S.C. 655 et seq.
"Environmental Reports" means all environmental site
assessments, remedial investigations/feasibility studies, reports,
studies, tests or other documents relating to environmental
compliance or the presence of Hazardous Materials at any of
properties presently or formerly owned or operated by each of the
Brauvin Partnerships or any predecessor in interest or any
Property, at any facility which may have received Hazardous
Materials generated by any property currently or formerly owned or
operated by the Brauvin Partnerships or at any Property.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder.
"Hazardous Materials" means (i) pollutants, contaminants,
pesticides, radioactive substances, solid wastes or hazardous or
extremely hazardous, special, dangerous or toxic wastes,
substances, chemicals or materials within the meaning of any
Environmental Law, including without limitation any (i) "hazardous
substance" as defined in CERCLA, and "hazardous waste" as defined
in the RCRA and all amendments thereto and reauthorizations
thereof; and (ii) even if not prohibited, limited or regulated by
Environmental Laws, all pollutants, contaminants, hazardous,
dangerous or toxic chemical materials, wastes or any other
substances, including without limitation, any industrial process of
pollution control waste (whether or not hazardous within the
meaning of RCRA) which could pose a hazard to the environment or
the health and safety of any person, or impair the use or value of
any portion of the Properties
"Individual Affiliate" means any Person who is now, or at
any time since _________________________, 199 ___ has been, (i) a
Partner of any of the Brauvin Partnerships, (ii) a director or
officer of the corporate general partner of any of the Brauvin GPs,
(iii) a director, officer or shareholder of the Assignor Limited
Partner or (iv) any "associate" (as defined in the rules pursuant
to the Exchange Act) of any of the above.
"Knowledge" means (i) with respect to each of the Brauvin
Partnerships, the knowledge of (a) the particular Brauvin GPs, and
(b) with respect to the entities referred to in the preceding
clause (a) any of such entities current officers and directors; and
(ii) with respect to the Merger Company, the knowledge of Manager
and its Affiliates and their current officers and directors.
"Lien" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right of first refusal,
easement, servitude, encumbrance, participation interest,
assignment, or other restriction or limitation.
"Mailing Date" means the first day on which the Proxy
Statements are mailed to the holders of Units pursuant to Section
6.1 above.
"Merger Consideration" means the Brauvin I Unit Value,
Brauvin II Unit Value and Brauvin III Unit Value received by
holders of Units in connection with the Merger.
"Order" means any judgement, ruling, order, writ,
injunction, decree, determination or requirement of any arbitrator
or court or of any governmental or regulatory body, authority or
agency, whether federal, state or local, domestic or foreign.
"Partnership Agreements" means the partnership agreements
of each of the Brauvin Partnerships, as amended.
"Partnership Certificates" means the certificate or
articles of limited partnership of each of the Brauvin
Partnerships, as amended, as filed with the Delaware Secretary of
State.
"Permitted Statutory Liens" means statutory Liens of
landlords, carriers, warehousemen, mechanics and materialmen and
other similar Liens imposed by law and incurred in the ordinary
course of business for sums not yet delinquent.
"Person" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association,
joint-stock company, trust, unincorporated organization,
governmental body or other entity.
"Requirements of Law" means (i) the certificate of
limited partnership of the Brauvin Partnerships, the agreements of
limited partnership or other organizational or governing documents
of each of the Brauvin Partnerships, (ii) any statute, law, treaty,
rule, regulation or ordinance applicable to each of the Brauvin
Partnerships, the irrespective assets (including, without
limitation, Environmental Laws and occupational health and safety
and food and drug regulations) or (iii) any judgment, decree,
injunction, order or determination of any arbitrator or of any
court or other governmental or regulatory authority or agency,
whether federal, state or local, domestic or foreign, applicable to
each of the Brauvin Partnerships and their respective assets.
"Securities Act" means the Securities Act of 1933, as
amended.
"Subsidiary" means, with respect to any Person, any
corporation at least a majority of whose outstanding voting
securities, or any other Person at least a majority of whose total
equity interest, is owned by such Person.
"Termination Date" means July 31, 1996, which date may be
extended by either the Merger Company or the Brauvin Partnerships
to no later than August 31, 1996 if the Transaction is proceeding
in good faith.
"Transaction" means (i) the Merger, (ii) certain
amendments to the Partnership Agreements necessary to consummate
the Merger (including, without limitation, providing for the
redemption of partnership interests) and (iii) the transfer of the
Ponderosa Properties as provided herein.
"Unitholder Approval" means the approval of the limited
partners of each of the Brauvin Partnerships, with the Assignor
Limited Partner, pursuant to the Brauvin I Partnership Agreement,
voting as instructed by the holders of the Brauvin I Units.
The following terms are defined in the corresponding
Sections listed below:
Term Section
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . .4.7
Balance Sheets Date. . . . . . . . . . . . . . . . . . . . . .4.7
Brauvin GPs. . . . . . . . . . . . . . . . . . . . . . . . .2.1.2
Certificates of Merger . . . . . . . . . . . . . . . . . . . .1.3
Commitment Date. . . . . . . . . . . . . . . . . . . . . . .7.2.5
Designated Actions . . . . . . . . . . . . . . . . . . . . 6.4.1
Effective Time . . . . . . . . . . . . . . . . . . . . . . . .1.3
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . .7.2.4
Interim Financial Statements . . . . . . . . . . . . . . . . .4.7
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .6.2
Term Section
Merger . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Company . . . . . . . . . . . . . . . . . . . . . Recitals
MC Agreement . . . . . . . . . . . . . . . . . . . . . . . . .3.1
MC Certificate . . . . . . . . . . . . . . . . . . . . . . . .3.1
Other Filings. . . . . . . . . . . . . . . . . . . . . . . . .6.1
Partnership Act. . . . . . . . . . . . . . . . . . . . . Recitals
Ponderosa Properties . . . . . . . . . . . . . . . . . . Recitals
Proxy Statements . . . . . . . . . . . . . . . . . . . . . . .6.1
Redemption Agent . . . . . . . . . . . . . . . . . . . . . .2.2.1
Redemption Fund. . . . . . . . . . . . . . . . . . . . . . .2.2.2
SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . .4.7
Units. . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1.1
9.3 Representations and Warranties; Etc. The respective
representations and warranties of each of the Brauvin Partnerships
and the Merger Company contained herein shall expire with, and be
terminated and extinguished upon, consummation of the Merger, and
thereafter none of the Brauvin Partnerships or the Merger Company,
or any general partner or principal of any thereof, shall be under
any liability whatsoever with respect to any such representation or
warranty. This Section 9.3 shall have no effect upon any other
obligation of the parties hereto, whether to be performed before or
after the consummation of the Merger.
9.4 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
9.5 Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation
of this Agreement.
9.6 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto,
and nothing in this Agreement,express or implied, is intended to
confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement except the right of
the holders of Units to receive cash as provided in Section 2.1.1
hereof (subject in each case to the consummation of the Transaction
pursuant to this Agreement).
9.7 Incorporation of Recitals. The Recitals hereto are
incorporated into this Agreement as if fully restated herein.
9.8 Miscellaneous. This Agreement (i) constitutes the
entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, between the parties with
respect to the subject matter hereof;(ii) may not be assigned,
except that the Merger Company may assign its rights hereunder in
whole or in part to one or more of its direct or indirect
Subsidiaries or Affiliates, each of which, in written instruments
reasonably satisfactory to each of the Brauvin Partnerships, shall
agree to assume all of the Merger Company's obligations hereunder
so assigned to it and be bound by all of the terms and conditions
of this Agreement; and (iii) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the
State of Illinois applicable to agreements made and to be performed
entirely within such State. This Agreement may be executed in one
or more counterparts which together shall constitute a single
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
BRAUVIN REAL ESTATE FUNDS, L.L.C., a
Delaware limited liability company
By: Brauvin Real Estate Funds, Inc., an
Illinois corporation
Its: Manager
By: ____________________________________
Its: ___________________________________
BRAUVIN NET PROPERTIES, L.L.C., a
Delaware limited liability company
By: Brauvin Net Properties, Inc., an
Illinois corporation
Its: Manager
By: ____________________________________
Its: ___________________________________
BRAUVIN HIGH YIELD FUND L.P., a Delaware
limited partnership
By: ____________________________________
Jerome J. Brault
Its: Managing General Partner
BRAUVIN HIGH YIELD FUND L.P. II, a
Delaware limited partnership
By:
________________________________________
Its: Manager
By:
________________________________________
Its:
________________________________________
BRAUVIN INCOME PLUS L.P. III, a Delaware
limited partnership
By:
________________________________________
Jerome J. Brault
Its: Managing General Partner
EXHIBIT A
PROJECTED CASH AT CLOSING
EXHIBIT B
FORM OF OPINION OF BRAUVIN PARTNERSHIPS' COUNSEL
1. Each Brauvin Partnership is duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has the corporate power and
authority to carry on its business as now being
conducted.
2. The execution, delivery and performance of the
Agreement by each Brauvin Partnership, has been duly
authorized and approved by all requisite partnership
action. The Agreement has been duly executed and
delivered by each Brauvin Partnership and constitutes a
valid and binding obligation of each Brauvin
Partnership and is enforceable against each of them in
accordance with its terms except as such terms may be
affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, rehabilitation, moratorium,
marshalling and similar laws affecting the enforcement
generally of creditors rights and by the availability
of general equitable remedies.
3. The consummation by each Brauvin Partnership of the
transactions contemplated by the Agreement will not
result in breach or violation of, or default under, any
judgment, decree, mortgage, agreement, indenture or
other instrument applicable to each Brauvin
Partnership.
4. All approvals, consents, authorizations or
modifications which are required by each Brauvin
Partnership to permit the performance by each Brauvin
Partnership of their respective obligations under the
Agreement and the transactions contemplated therein
have been obtained.
5. There is no (a) litigation, proceeding or governmental
investigation pending or, to the best of our knowledge,
threatened against each Brauvin Partnership or their
respective properties, assets or businesses, or the
transaction contemplated by the Agreement which, if
adversely determined, in our judgment, could reasonably
be anticipated to result in any material adverse effect
on each Brauvin Partnership (b) decree (other than
decrees of general applicability to banks generally) or
judgment of any court or any governmental agency to
which each of the Brauvin Partnerships is subject and
which, in our judgment, could reasonably be anticipated
to have a material adverse effect on the financial
condition, results or operations, assets, business or
prospects of any of the Brauvin Partnerships.
We have participated in the preparation and filing of
the Proxy Statement and, in the course of such preparation,
in conferences with certain officers and employees of the
Brauvin Partnerships and their respective partners and
officers with respect thereto. Although we are not passing
upon or assuming any responsibility for the accuracy,
completeness or fairness of the statements contained or
incorporated in the Proxy Statement, during the course of
such participation no facts have come to our attention which
would lead us to believe that the Proxy Statement at the
time it was first mailed to partners of the Brauvin
Partnership, at the time of the Meeting and at the Effective
Time, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading (except that we do not comment with respect to
the financial statements and other financial and statistical
information included therein or omitted therefrom).
<PAGE>
<TABLE>
Brauvin High Yield Fund I
<CAPTION>
UNIT % PROPERTY PROPETY FOOT STREET
NO. OWNED TYPE NAME NOTES CITY ADDRESS STATE
<S> <C> <C> <C> <C> <C> <C>
2200 100.00% FAST-FOOD TACO BELL SPARTANBURG 800 NORTH PINE STREET SC
726 100.00% DAY-CARE CHILDREN'S WORLD (3) STERLING HTS 35505 SCHOENHERR ROAD MI
667 100.00% SIT-DOWN PONDEROSA BUFFALO 3060 MAIN STREET NY
673 100.00% SIT-DOWN PONDEROSA BINGHAMPTON 1261 FRONT STREET NY
819 100.00% DAY-CARE CHILDREN'S WORLD (3) TROY 1064 EAST WATTLES ROAD MI
815 100.00% SIT-DOWN PONDEROSA WESTERVILLE 728 SOUTH STATE STREET OH
109 100.00% SIT-DOWN PONDEROSA INDIANAPOLIS 2915 SOUTH MADISON AVE. IN
782 100.00% SIT-DOWN PONDEROSA NEW WINDSOR 334 WINDSOR HIGHWAY NY
752 100.00% SIT-DOWN PONDEROSA MASSENA ST. REGIS BLVD. AND MAIN ST. NY
778 100.00% SIT-DOWN PONDEROSA JOHNSTOWN ROUTE 30A/N. COMRIE AVE. NY
194 100.00% SIT-DOWN PONDEROSA KALAMAZOO 308 NORTH DRAKE ROAD MI
775 100.00% SIT-DOWN PONDEROSA WADSWORTH 135 GREAT OAKS TRAIL OH
1653 100.00% FAST-FOOD TACO BELL ALLIANCE 110 WEST STATE STREET OH
1915 100.00% FAST-FOOD TACO BELL SANDUSKY 3306 MILAN ROAD OH
2132 100.00% FAST-FOOD TACO BELL NOBLESVILLE 610 WEST ROUTE 32 IN
1994 100.00% FAST-FOOD TACO BELL ASHLAND 315 CLAREMONT AVENUE OH
1937 100.00% FAST-FOOD TACO BELL ASHTABULA 1226 WEST PROSPECT AVENUE OH
1929 100.00% FAST-FOOD TACO BELL ZANESVILLE 2460 NORTH MAPLE STREET OH
1871 100.00% FAST-FOOD TACO BELL GREENVILLE 319 EAST GREENVILLE BOULEVARD NC
1856 100.00% FAST-FOOD TACO BELL DOVER 718 BOULEVARD AVENUE OH
409 100.00% SIT-DOWN PONDEROSA CINNCINATI 3328 WESTBOURNE DRIVE OH
1845 100.00% FAST-FOOD TACO BELL (8) LOGANSPORT 3419 U.S. ROUTE 24 EAST IN
2030 100.00% FAST-FOOD TACO BELL MARTINEZ 11 MUIR ROAD CA
1392 100.00% FAST-FOOD TACO BELL VALDOSTA 2918 NORTH ASHLEY STREET GA
2091 100.00% FAST-FOOD TACO BELL WINSLOW 1605 NORTH PARK DRIVE AZ
2069 100.00% FAST-FOOD TACO BELL PHOENIX 1702 WEST BELL ROAD AZ
1061 100.00% SIT-DOWN PONDEROSA BRANDON 1449 WEST BRANDON BLVD. FL
1450 100.00% FAST-FOOD TACO BELL ALBANY 1707 NORTH SLAPPEY DRIVE GA
1966 100.00% FAST-FOOD TACO BELL DALTON 1509 WEST WALNUT AVENUE GA
1835 100.00% FAST-FOOD TACO BELL (1) (8) DUNEDIN 2296 STATE ROUTE 580 FL
1925 100.00% FAST-FOOD TACO BELL MESA 531 EAST SOUTHERN AVENUE AZ
1389 100.00% FAST-FOOD TACO BELL WARNER ROBBINS 1998 WATSON BLVD. GA
1912 100.00% FAST-FOOD TACO BELL PALM BAY 2150 NORTH HARRIS AVENUE FL
</TABLE>
<PAGE>
<TABLE>
Brauvin High Yield Fund I
<CAPTION>
UNIT % PROPERTY PROPERTY BUILD LAND YEAR CUSHMAN AND WAKEFIELD VALUATION INDICATORS
NO. OWNED TYPE NAME SF SF BUILT C&W VALUE YR 1 $NOI OAR IRR OUT-OAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2200 100.00% FAST-FOOD TACO BELL 1,584 24,750 1982 $480,000 $55,182 11.50% 12.50% 11.50%
726 100.00% DAY-CARE CHILDREN'S WORLD (3) 5,005 47,045 1983 $470,000 $50,278 10.70% 11.50% 11.50%
667 100.00% SIT-DOWN PONDEROSA 5,440 192,656 1977 $930,000 $121,449 13.06% 12.50% 11.50%
673 100.00% SIT-DOWN PONDEROSA 5,402 32,712 1979 $960,000 $121,455 12.65% 12.50% 11.50%
819 100.00% DAY-CARE CHILDREN'S WORLD (3) 6,193 65,776 1984 $760,000 $92,536 12.18% 11.50% 11.50%
815 100.00% SIT-DOWN PONDEROSA 4,528 46,478 1984 $730,000 $86,161 11.80% 12.50% 11.50%
109 100.00% SIT-DOWN PONDEROSA 5,606 79,382 1969 $880,000 $114,392 13.00% 12.50% 11.50%
782 100.00% SIT-DOWN PONDEROSA 5,402 47,685 1980 $770,000 $93,567 12.15% 12.50% 11.50%
752 100.00% SIT-DOWN PONDEROSA 5,817 48,399 1979 $730,000 $81,449 11.16% 12.50% 11.50%
778 100.00% SIT-DOWN PONDEROSA 5,833 50,094 1979 $940,000 $107,585 11.45% 12.50% 11.50%
194 100.00% SIT-DOWN PONDEROSA 5,058 50,965 1969 $790,000 $104,834 13.27% 12.50% 11.50%
775 100.00% SIT-DOWN PONDEROSA 5,800 43,560 1986 $840,000 $101,293 12.06% 12.50% 11.50%
1653 100.00% FAST-FOOD TACO BELL 1,584 14,400 1980 $570,000 $77,142 13.53% 12.50% 11.50%
1915 100.00% FAST-FOOD TACO BELL 1,584 33,000 1980 $690,000 $77,801 11.28% 11.00% 11.50%
2132 100.00% FAST-FOOD TACO BELL 1,584 26,250 1982 $510,000 $61,303 12.02% 12.50% 11.50%
1994 100.00% FAST-FOOD TACO BELL 1,584 16,000 1980 $470,000 $52,263 11.12% 11.00% 11.50%
1937 100.00% FAST-FOOD TACO BELL 1,584 21,049 1980 $710,000 $89,564 12.61% 11.00% 11.50%
1929 100.00% FAST-FOOD TACO BELL 1,586 17,934 1980 $400,000 $42,973 10.74% 12.50% 11.50%
1871 100.00% FAST-FOOD TACO BELL 1,584 22,788 1984 $470,000 $48,506 10.32% 12.50% 11.50%
1856 100.00% FAST-FOOD TACO BELL 1,584 20,500 1980 $620,000 $69,493 11.21% 11.00% 11.50%
409 100.00% SIT-DOWN PONDEROSA 5,250 48,119 1973 $870,000 $99,247 11.41% 12.50% 11.50%
1845 100.00% FAST-FOOD TACO BELL (8) 1,566 19,200 1980 $470,000 $55,334 11.77% 12.50% 11.50%
2030 100.00% FAST-FOOD TACO BELL 1,584 13,940 1981 $350,000 $44,623 12.75% 12.50% 11.50%
1392 100.00% FAST-FOOD TACO BELL 1,288 16,222 1982 $450,000 $52,687 11.71% 12.50% 11.50%
2091 100.00% FAST-FOOD TACO BELL 2,471 37,651 1982 $430,000 $48,723 11.33% 12.50% 11.50%
2069 100.00% FAST-FOOD TACO BELL 1,584 12,768 1981 $360,000 $39,181 10.88% 12.50% 11.50%
1061 100.00% SIT-DOWN PONDEROSA 6,376 55,363 1985 $950,000 $120,886 12.72% 12.50% 11.50%
1450 100.00% FAST-FOOD TACO BELL 1,775 11,850 1982 $430,000 $45,838 10.66% 12.50% 11.50%
1966 100.00% FAST-FOOD TACO BELL 1,584 18,275 1980 $340,000 $36,594 10.76% 12.50% 11.50%
1835 100.00% FAST-FOOD TACO BELL (1) (8) 1,584 21,021 1980 $280,000 $37,128 13.26% 11.00% 11.50%
1925 100.00% FAST-FOOD TACO BELL 1,584 2,831 1981 $520,000 $58,524 11.25% 12.50% 11.50%
1389 100.00% FAST-FOOD TACO BELL 1,288 25,000 1977 $320,000 $34,871 10.90% 12.50% 11.50%
1912 100.00% FAST-FOOD TACO BELL 1,584 15,120 1980 $360,000 $38,159 10.60% 11.00% 11.50%
<FN>
<FN1>
FOOTNOTES:
(1) CURRENTLY BEING REMODLED FOR A CHINESE RESTURANT. ALSO, NO PHOTOS OF CHILDREN.
(4) ON HOLD UNTIL FURTHER NOTICE.
(5) WAS A PONDEROSA. CURRENTLY CLOSED.
(6) SUBLEASED BY PONDEROSA.
(7) SUBLEASED BY PONDEROSA.
(8) SUBLEASED
(9) BRAUVIN HIGH-YIELD FUND L.P. OWNS 49% BRAUVIN HIGH-YIELD FUND II OWNS 51%.
(10) BRAUVIN HIGH-YIELD FUND L.P. OWNS 1% BRAUVIN HIGH-YIELD FUND II OWNS 99%.
(11) BRAUVIN HIGH-YIELD FUND L.P. OWNS 23.5%, BRAUVIN INCOME PLUS III L.P. OWNS 6.3%
AND BRAUVIN CORPORATE LEASE PROGRAM IV L..P. OWNS 70.2%.
(12) BRAUVIN HIGH-YIELD FUND L.P. OWNS 1% BRAUVIN HIGH-YIELD FUND II OWNS 99%.
</FN>
</TABLE>
