<PAGE>
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 CORPORATE LEASE PROGRAM IV 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:
1,632,510.487 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 ($12,489,100) which are the subject
of this Schedule 14A, the Registrant is paying a filing
fee of $2,497.82 (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:
$12,489,100
5) Total fee paid:
$2,497.82
[ ] 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
<PAGE>
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
150 South Wacker Drive
Suite 3200
Chicago, Illinois 60606
June 10, 1996
To the Limited Partners of
Brauvin Corporate Lease Program IV L.P.:
We are pleased to inform you that Brauvin Corporate Lease
Program IV L.P. has entered into an agreement through which the
partnership has agreed to sell substantially all of its assets for
a purchase price of $12,489,100 in cash. This price is the fair
market value of the assets as determined by an independent
appraiser and the Partnership has also received an opinion from
such entity that this transaction is fair to the Limited Partners
from a financial point of view. The sale is subject to your
approval. Limited partners holding a majority 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
sale is approved by the Limited Partners and certain other
conditions are met, the Partnership will be liquidated and
dissolved and the cash proceeds from the sale of the assets,
together with all remaining cash of the Partnership, after payment
of expenses and other Partnership liabilities, will be distributed
to you. We anticipate this cash distribution to be $____ to $____
per Unit for Class A Limited Partners and $____ to $____ per Unit
for Class B Limited Partners, based upon the time such Limited
Partners invested in the Partnership. The General Partners will
not receive any fees from the Partnership in connection with the
Transaction and will receive only a de minimis liquidating
distribution of less than $17,000 in the aggregate, in accordance
with the terms of the Partnership Agreement. The purchaser of the
assets 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.
The Partnership is soliciting your proxy in connection with
the sale, liquidation and dissolution. Included with this letter
is a Notice of Special Meeting of the Limited Partners to be held
July 10, 1996, at 9:00 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 sale, liquidation and
dissolution. Also enclosed herewith is a Proxy Statement dated
June 10, 1996, which contains information relating to the proposed
transaction, together with a proxy card which authorizes the
Managing General Partner to vote your Units with respect to the
sale, liquidation and dissolution at the special meeting of the
Limited Partners and any adjournment thereof. The Limited Partners
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 sale, liquidation and dissolution require the approval
of the Limited Partners holding a majority of the Units, failure to
return a proxy card in a timely manner or to vote at the special
meeting will have the same effect as a vote "AGAINST" the sale,
liquidation and dissolution. Any proxy cards which are returned
and on which a choice is not indicated will be voted "FOR" the
sale, liquidation and dissolution. 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 IV, INC.,
Corporate General Partner
By:________________________________
Title:_____________________________
___________________________________
Jerome J. Brault, Managing General
Partner
<PAGE>
NOTICE OF SPECIAL MEETING OF THE LIMITED PARTNERS OF
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
To be Held July 10, 1996
To the Limited Partners of
Brauvin Corporate Lease Program IV L.P.:
NOTICE IS HEREBY GIVEN, that a special meeting (the "Special
Meeting") of the Limited Partners of Brauvin Corporate Lease
Program IV 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 9:00 a.m. local time, for the following purposes:
1. To approve the sale for $12,489,100 in cash, which
is $7.65 per Unit, of substantially all of the
properties of the Partnership to Brauvin Net Realty
L.L.C., a Delaware limited liability company (the
"Purchaser") and the subsequent liquidation and
dissolution of the Partnership. The Purchaser is
affiliated with Mr. Jerome J. Brault, the Managing
General Partner of the Partnership, and Brauvin
Realty Advisors IV, Inc., the Corporate General
Partner of the Partnership. By approving the
transaction, the Limited Partners 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. Promptly upon approval and
consummation of the sale, liquidation and
dissolution, the Class A Limited Partners will
receive a liquidating distribution of approximately
$____ to $____ per Unit in cash and the Class B
Limited Partners will receive a liquidating
distribution of approximately $____ to $____ per
Unit in cash, based upon the time such Limited
Partners invested in the Partnership.
2. To transact such other business as may properly
come before the Special Meeting or any adjournment
or postponement thereof.
Information regarding 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 IV, 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 IS FAIR TO THE
LIMITED PARTNERS AND, THEREFORE, RECOMMEND THAT THE LIMITED
PARTNERS VOTE "FOR" THE TRANSACTION. HOWEVER, THE OPERATING
GENERAL PARTNERS ARE SUBJECT TO CERTAIN CONFLICTS OF INTEREST WITH
RESPECT TO THE TRANSACTION. CEZAR M. FROELICH, THE OTHER
INDIVIDUAL GENERAL PARTNER, IS NOT RECOMMENDING THE TRANSACTION FOR
THE REASONS STATED ELSEWHERE IN THIS PROXY STATEMENT.
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 Limited Partners entitled
to notice of and to vote at the Special Meeting.
BRAUVIN REALTY ADVISORS IV,
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. ANY PROXY CARDS ON WHICH A CHOICE IS NOT
INDICATED WILL BE VOTED "FOR" THE TRANSACTION.
<PAGE>
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
150 South Wacker Drive
Suite 3200
Chicago, Illinois 60606
PROXY STATEMENT
For the Special Meeting of the Limited Partners
To be Held July 10, 1996
This proxy statement (the "Proxy Statement") and the enclosed
proxy card are being first mailed to the limited partners (the
"Limited Partners") of Brauvin Corporate Lease Program IV 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 Limited Partners (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 9:00 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 sale (the "Sale"), for $12,489,100 in cash, which is $7.65 per
Unit (as hereinafter defined), of substantially all of the
Partnership's properties (the "Assets"). The purchase price is the
fair market value of the Assets as determined by an independent
appraiser. The purchaser of the Assets is Brauvin Net Realty
L.L.C., a Delaware limited liability company (the "Purchaser") that
is affiliated with the Operating General Partners, as hereinafter
defined. By approving the Sale, the Limited Partners 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 Sale shall be referred
to herein as the "Transaction"). The terms of the Sale are set
forth in an acquisition agreement dated May 23, 1996 by and between
the Purchaser and the Partnership (the "Acquisition Agreement").
If the Sale is approved and certain other conditions met, the
Partnership will be liquidated and dissolved (the "Liquidation")
and the Limited Partners who entered the Partnership as Class A
Investors (the "Class A Limited Partners") will receive a
liquidating distribution of approximately $____ to $____ per Unit
in cash based upon the time such Class A Limited Partners invested
in the Partnership and the Limited Partners who entered the
Partnership as Class B Investors (the "Class B Limited Partners")
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.
will receive a liquidating distribution of approximately $____ to
$____ per Unit in cash based upon the time such Class B Limited
Partners invested in the Partnership. The actual liquidating
distribution will be based upon the cash proceeds from the Sale,
plus all remaining cash of the Partnership (including earnings
through July 31, 1996) after paying or providing for payment of the
Partnership's actual costs incurred and accrued through the
effectiveness of the Transaction (the "Effective Time"), including
reasonable reserves in connection with: (i) the proxy
solicitation; (ii) the Sale (as detailed in the Acquisition
Agreement); and (iii) winding up of the Partnership, including
preparation of the final audit, tax return and K-1s (collectively,
the "Transaction Costs") and all other outstanding Partnership
liabilities. The general partners of the Partnership (the "General
Partners") will not receive any fees from the Partnership in
connection with the Transaction and will receive only a de minimis
liquidating distribution of less than $17,000 in the aggregate, in
accordance with the terms of the Partnership Agreement. 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 issued and
outstanding units of limited partnership interest of the
Partnership (each, a "Unit" and collectively, the "Units") is
necessary to approve the Transaction. The approval of the General
Partners is not required to approve the Transaction. Neither
Delaware law nor the Partnership's Restated Limited Partnership
Agreement, as amended (the "Partnership Agreement") provide the
Limited Partners 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 Limited Partners 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 1,632,510.487
Units, held of record by 888 Limited Partners. Each Unit entitles
the holder to one vote on each matter submitted to a vote of the
Limited Partners.
All duly executed proxy cards received from the Limited
Partners 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. A Limited Partner 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
August 7, 1991. The General Partners are the Corporate General
Partner, the Managing General Partner and Cezar M. Froelich. 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
Limited Partners. 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 Limited Partners are urged to read this Proxy
Statement in its entirety.
The Transaction
The Sale
Pursuant to the terms of the Acquisition Agreement, the
Partnership proposes to sell substantially all of the Assets to the
Purchaser for a purchase price of $12,489,100 in cash, which is
$7.65 per Unit. This price is the fair market value of the Assets
as determined by an independent appraiser and the Partnership has
also received an opinion from such entity that the transaction is
fair to the Limited Partners from a financial point of view. The
Sale is one of a series of related transactions whereby the
Purchaser seeks to acquire the Assets of the Partnership and the
assets, through merger, of the Affiliated Limited Partnerships (as
hereinafter defined). See "Terms of the Transaction - The
Acquisition Agreement" and "Terms of the Transaction - Related
Transactions."
Dissolution and Liquidation
If the Transaction is approved and the Sale consummated, the
Partnership will have sold the Assets and, pursuant to the terms of
the Partnership Agreement, will be liquidated and dissolved.
Promptly thereafter, each Class A Limited Partner will receive a
liquidating distribution of approximately $____ to $____ per Unit
in cash and each Class B Limited Partner will receive a liquidating
distribution of approximately $____ to $____ per Unit in cash,
based upon the time such Limited Partners invested in the
Partnership. The actual liquidating distribution will be based
upon cash proceeds from the Sale, plus all remaining cash of the
Partnership (including earnings through July 31, 1996) after paying
or providing for payment of the Transaction Costs and other
outstanding Partnership liabilities. See "Terms of the Transaction
- - Dissolution and Liquidation of the Partnership" and "Terms of the
Transaction - Determination of Cash Available for Distribution."
The General Partners will not receive any fees from the Partnership
in connection with the Transaction and will receive only a de
minimis liquidating distribution of less than $17,000 in the
aggregate, in accordance with the terms of the Partnership
Agreement. The Managing General Partner and his son, James L.
Brault (collectively, the "Braults") have a minority ownership
interest in the Purchaser. Mr. Froelich has no affiliation with
the Purchaser.
The Special Meeting; Vote Required
A Special Meeting of the Limited Partners will be held on
July 10, 1996, to consider and vote upon the Transaction. It is a
condition to the closing of the Sale that the Limited Partners
holding a majority of the Units approve the Transaction. The
Partnership is soliciting proxies from the Limited Partners to be
used at the Special Meeting and any adjournments thereof. The
approval of the General Partners is not required to approve the
Transaction. See "Special Meeting of the Limited Partners."
Purpose of and Reasons for the Transaction
The principal purpose of the Transaction is to cause the
transfer of the Assets to the Purchaser in return for cash proceeds
which, upon Liquidation will be distributed to the Limited
Partners. The sale of the Assets to the Purchaser will result in
the Partnership receiving the fair market value for the Assets from
a buyer that has the ability to quickly consummate the Transaction
and is willing to purchase all of the Assets on an all cash, "as
is" basis. This structure allows the Limited Partners to receive
a cash distribution of the fair market value of the Assets, that
can be invested in alternative investments. See "Special Factors
- - Purpose of and Reasons for the Transaction."
Effects of the Transaction
If the Transaction is approved and the remaining conditions to
the Sale met or waived, the Assets of the Partnership will be sold
to the Purchaser, the Partnership will receive the purchase price
of $12,489,100 for the Assets, the Partnership will pay the
Transaction Costs and will pay or make provisions for the payment
of all other Partnership liabilities and the Partnership will be
liquidated and dissolved. Promptly thereafter, each Class A
Limited Partner will receive a liquidating distribution of
approximately $____ to $____ per Unit in cash and each Class B
Limited Partner will receive a liquidating distribution of
approximately $____ to $____ per Unit in cash, based upon the time
such Limited Partners invested in the Partnership. See "Special
Factors - Effects of the Transaction." At the time of investing,
Class A Limited Partners acknowledged that they were subject to
certain risks, including receipt of smaller cash distributions on
the liquidation of the Partnership and/or the sale of the Assets if
there were a loss on the sale of the properties. See "Accounting
Issues and Income Tax Consequences of the Transaction -- Income Tax
Consequences of the Transaction -- Differing Tax Treatment of the
Limited Partners."
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 Limited Partners from a financial point of
view. Cushman & Wakefield preliminarily valued the Assets at
$11,851,220. The Operating General Partners reviewed the initial
valuation and concluded that the values of the Assets set forth
therein were lower than expected. As a result of subsequent
considerations presented by the Operating General Partners, the
valuation was increased to $12,489,100, which is the total cash
consideration to be paid by the Purchaser in connection with the
Sale. In addition, Cushman & Wakefield has advised the Partnership
that in its opinion, the Transaction is fair to the Limited
Partners 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 Limited Partners and, therefore,
recommend that the Limited Partners vote "FOR" the Transaction.
The recommendation of the Operating General Partners is, 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 to establish the purchase price; (ii) the structure of the
Sale as an all cash, "as is" sale of all of the Assets; (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 potential
transaction costs, such as investment banking fees or real estate
brokerage commissions, which could have approximated $375,000 to
$750,000 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.
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, have an
indirect economic interest in consummating the Transaction that is
in conflict with the economic interests of the Limited Partners.
See "Conflicts of Interest."
SPECIAL MEETING OF THE LIMITED PARTNERS
Special Meeting; Record Date
Pursuant to the terms of the Partnership Agreement, the
approval of the Limited Partners holding a majority of the Units is
required to approve the Transaction. A Special Meeting of the
Limited Partners will be held on July 10, 1996, at the offices of
the Partnership, 150 South Wacker Drive, Chicago, Illinois 60606,
at 9:00 a.m., local time, to consider and vote upon the
Transaction. The Partnership Agreement provides that the General
Partners may call a special meeting of the Limited Partners, which
special meeting shall have a record date, for the purpose of
determining the Limited Partners entitled to vote, of not more than
60 days nor less than 20 days prior to the date when ballots are
delivered to the Limited Partners. 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 Limited Partners holding Units of record on the Record
Date are eligible to vote those Units on the proposals set forth in
this Proxy Statement. A Limited Partner holding Units of record as
of the Record Date will retain the right to vote on the proposals
set forth herein even if such Limited Partner sells or transfers
such Units after such date. As of the Record Date, the Partnership
had 1,632,510.487 Units outstanding and entitled to vote, held of
record by 888 Limited Partners. A list of the Limited Partners
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 Limited Partners are invited to attend the Special
Meeting. However, even those Limited Partners 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 Limited Partner 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.
A Limited Partner in favor of the Transaction should mark the
"FOR" box 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 a vote "FOR" the Transaction. By
consenting to the Transaction, the Limited Partners 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 LIMITED PARTNERS HOLDING A MAJORITY IN
INTEREST OF THE OUTSTANDING UNITS IS NECESSARY TO CONSUMMATE THE
PROPOSED TRANSACTION, 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.
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.
Vote Required
Pursuant to the terms of the Partnership Agreement, the vote
of the Limited Partners owning a majority of the Units is necessary
to approve the Transaction. Each Unit entitles the holder to one
vote on each matter submitted to a vote of the Limited Partners.
If a majority in interest of the Limited Partners consent to the
Transaction and certain other conditions are met, the Sale will be
consummated, the Partnership will be liquidated and dissolved and
the proceeds of the Sale, together with all remaining cash of the
Partnership, after payment of the Transaction Costs and other
Partnership liabilities, will be distributed to the Limited
Partners in accordance with the Partnership Agreement. A consent
to the Transaction, therefore, includes a consent to both the Sale
and the Liquidation.
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 a Limited Partner may
subsequently be revoked by submitting written notice of revocation
to the Partnership. A revocation may be in any written form
validly signed by a Limited Partner as long as it clearly states
that such Limited Partner 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) ___-____. A Limited Partner may also revoke its proxy
by attending the Special Meeting and voting in person. If a
Limited Partner 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 Limited Partner's prior proxy as embodied in any previously
submitted proxy card.
TERMS OF THE TRANSACTION
The Acquisition Agreement
The Partnership and the Purchaser entered into the Acquisition
Agreement as of May 23, 1996, pursuant to which the Partnership has
agreed to sell and the Purchaser has agreed to purchase the Assets
on the terms and subject to the conditions set forth therein. The
summary of the Acquisition Agreement which is set forth below is
qualified in its entirety by reference to the complete form of
Acquisition Agreement, which is available for inspection and
copying by any interested Limited Partner, or its representative
who has been so designated by the Limited Partner, at the
Partnership's principal executive offices during regular business
hours. A copy of the Acquisition Agreement shall also be sent to
any Limited Partner or duly designated representative thereof, at
such Limited Partner's expense, upon request of such Limited
Partner.
Pursuant to the terms of the Acquisition Agreement, the
Purchaser proposes to purchase the Assets for $12,489,100 in cash,
which is equal to $7.65 per Unit. The purchase price is equal to
the fair market value of the Assets as determined by an independent
appraiser. See "Special Factors - Valuation of the Assets;
Fairness Opinion." The Acquisition Agreement also provides that
the Purchaser will acquire all earnings of the Partnership that
accrue after July 31, 1996. The Purchaser has not and is not
expected to pay any earnest money in connection with the Sale. If
the Closing Conditions (as hereinafter defined) are met, the Sale
is subject to close on or before August 31, 1996. Should the
Transaction not be consummated by August 31, 1996, the financing to
consummate the Sale may not be available. In order to meet certain
other interim deadlines established by the Purchaser, the
Transaction must be approved by the Limited Partners no later than
July 15, 1996.
Representations and Warranties of the Parties.
Pursuant to the Acquisition 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 Transaction;
(ii) it has the requisite power and authority to enter into the
Acquisition Agreement and perform its obligations thereunder; and
(iii) all government approvals and notices which are required for
it to effect the Transaction 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 Acquisition 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 1, 6, 31,
872.2 issued and outstanding Units; (iv) has the requisite power
and authority to enter into the Acquisition Agreement, subject to
the approval of the Limited Partners; (v) except as otherwise
disclosed, entering into the Acquisition 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 of the Partnership 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 Acquisition 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 Acquisition 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 Limited Partners for the Transaction and
to hold a meeting of the Limited Partners 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
Acquisition 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 Acquisition 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 Acquisition Agreement is terminated due to the
confirmation of an Alternate Proposal, Purchaser shall be entitled
to a fee equal to 1% of the fair market value of the Assets.
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, as such term is defined in the Acquisition
Agreement, 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 Limited
Partners 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 Acquisition Agreement on or prior to the Effective
Time; (ii) the representations and warranties of the Purchaser set
forth in the Acquisition 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 purchase price to the Limited Partners, 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 $___________ and $________ 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 Acquisition 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
Acquisition 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
Acquisition 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
Acquisition 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.
Dissolution and Liquidation of the Partnership
If the Transaction is approved and the Sale consummated, the
Partnership will have sold substantially all of its assets and,
pursuant to the terms of the Partnership Agreement, will be
liquidated and dissolved. Promptly thereafter each Class A Limited
Partner will receive a liquidating distribution of approximately
$____ to $____ per Unit in cash and each Class B Limited Partner
will receive a liquidating distribution of approximately $____ to
$____ per Unit in cash . Prior to payment of this liquidating
distribution, all Transaction Costs will be paid and all other
Partnership liabilities will be satisfied. The actual amount of
the liquidating distribution to be paid to the Limited Partners
will be calculated as set forth below under "Determination of Cash
Available for Distribution." The General Partners will not receive
any fees in connection with the Transaction and will receive only
a de minimis liquidating distribution of less than $17,000 in the
aggregate, in accordance with the terms of the Partnership
Agreement. In addition, it is estimated that, for income tax
purposes, each Class A Limited Partner will be allocated
approximately $____ to $____ of loss per Unit in 1996 and each
Class B Limited Partner will be allocated approximately $___ to
$___ of loss per Unit in 1996, based upon the time such Limited
Partner invested in the Partnership. These losses are subject to
special treatment which may vary according to each Limited
Partner's tax situation. Each Limited Partner will recognize
capital gains or losses upon the sale of the Assets. For a further
discussion of the assumptions underlying the estimated distribution
per Unit, see "Terms of the Transaction - Determination of Cash
Available for Distribution" and "Accounting Issues and Income Tax
Consequences of the Transaction."
Distributions of cash to the Limited Partners are anticipated
within 30 days of the consummation of the Transaction. There can
be no assurance that such distributions will take place on this
schedule as circumstances beyond the control of the Partnership
could affect the timing, as well as the amount, of distributions to
the Limited Partners. The Corporate General Partner intends to
complete the liquidation and winding up of the Partnership no later
than December 31, 1996.
Determination of Cash Available for Distribution
The purchase price to be paid by the Purchaser for the Assets
is $12,489,100, which is equal to the fair market value of the
Assets as determined by Cushman & Wakefield, an independent
appraiser. As of [April 16, 1996], 1996, cash on hand was
$[637,411]. The Operating General Partners have estimated that
earnings from [May 1, 1996] to July 31, 1996 will be approximately
$300,000. The Operating General Partners have also estimated that
the Transaction Costs will be $165,000 and estimated wind-up costs
will be $89,000 as of the consummation of the Transaction.
Therefore, the Operating General Partners believe the estimated
distribution per Unit to be as follows:
Appraised value of Assets $12,489,100
Cash on hand as of [April 16, 1996] 637,411
Estimated earnings through July 31,
1996 138,132
Available cash $13,264,643
Estimated Transaction Costs (165,000)
Estimated Partnership wind-up cost (89,000)
Rally's Reserve (10,000)
Estimated cash available for
distribution $13,000,643
Based on the number of issued Units, the estimated cash
available for distribution is the equivalent of $7.96 per Unit.
However, pursuant to Section V of the Partnership Agreement, cash
will be distributed to the Limited Partners in accordance with
their positive capital accounts, after allocation of gains and
losses from the operations of the Partnership and the sale of its
assets.
The cash available for distribution will be adjusted for
changes occurring subsequent to [April 16, 1996], in the items set
forth above. The General Partners will not receive any fees from
the Partnership in connection with the Transaction and will receive
only a de minimus liquidating distribution of less than $17,000 in
the aggregate, in accordance with the terms of the Partnership
Agreement. The Braults have a minority ownership interest in the
Purchaser.
Termination of the Acquisition Agreement
The Acquisition 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 Limited Partners'
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 Acquisition Agreement to
perform in all material respects each of its obligations under the
Acquisition Agreement required to be performed by it prior to the
Effective Time; (iv) by either the Purchaser or the Partnership,
if Limited Partners' 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 Acquisition Agreement; (viii) by the Partnership,
if the Purchaser fails to perform in all material respects its
obligations under the Acquisition 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 Acquisition 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 Acquisition
Agreement is terminated due to the confirmation of an Alternate
Proposal, Purchaser shall be entitled to a fee equal to 1% of the
fair market value of the Assets.
Amendment of the Acquisition Agreement
The Acquisition Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after Limited Partners' approval of
the Transaction has been obtained, no amendment may be made which
effects any change which would adversely affect the Limited
Partners without Limited Partners' approval.
Amendment of Partnership Agreement
The Partnership Agreement provides in Section P,
paragraph 2(e), that the Partnership shall not sell or lease
property to the General Partners or any "Affiliate" of the General
Partners. As used therein, the Purchaser would be considered an
"Affiliate" of the General Partners. Therefore, an approval of the
Transaction by the Limited Partners holding a majority of the Units
will result in the amendment of the Partnership Agreement to permit
a sale of the Assets to the Purchaser. Section Y, paragraph 8 of
the Partnership Agreement provides that the Limited Partners owning
a majority of the Units may amend the Partnership Agreement and
Section Q, paragraph 6 further provides that the Limited Partners
owning a majority of the Units may approve or disapprove the sale
of all or substantially all of the Partnership's assets without the
necessity for concurrence by the General Partners. As a result,
the vote of the General Partners is not required to approve the
Transaction or the amendment and the Transaction and therefore the
amendment will be approved upon receipt of approval of the Limited
Partners holding a majority of the Units.
Related Transactions
In addition to the offer to purchase the Assets of the
Partnership, the Purchaser has proposed a series of mergers (the
"Affiliated Transactions") with Brauvin High Yield Fund L.P.,
Brauvin High Yield Fund L.P. II and Brauvin Income Plus L.P. III,
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. In one instance, the
Partnership is a joint venture partner with certain of the
Affiliated Limited Partnerships, which joint venture owns one
property subject to a triple-net lease. 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.
ACCOUNTING ISSUES AND
INCOME TAX CONSEQUENCES OF THE TRANSACTION
Accounting Issues
If the Transaction is approved and the remaining conditions to
the Sale met or waived, the Partnership will: (i) receive from the
Purchaser the purchase price of $12,489,100 in exchange for the
Assets; (ii) pay all of the Transaction Costs; (iii) pay or make
provisions for the payment of all other Partnership liabilities,
including the Rally's litigation, as described below; and (iii)
distribute to the Limited Partners remaining cash from the sale of
the Assets, plus cash on hand (including earnings through July 31,
1996) by way of a liquidating distribution. In determining cash
available for distribution, the Partnership intends to take a
reserve in the amount of $10,000 in connection with the Rally's
litigation. See "Certain Information About the Partnership, Its
General Partners and Their Affiliates - Legal Proceedings."
The Partnership will prepare financial statements in
accordance with generally accepted accounting principles as of the
closing date of the Transaction and will engage its auditors to
audit the financial statements. The difference between the
carrying value of the Assets and the cash received therefor will be
recognized as a gain or loss, as applicable. A final distribution
is contemplated to occur within 30 days of the consummation of the
Transaction.
Income Tax Consequences of the Transaction
Upon the sale of each Asset, the Partnership will recognize a
loss for federal income tax purposes equal to the difference
between the consideration received for such Asset and the adjusted
tax basis thereof. The Partnership shall allocate such losses to
the Partners in accordance with the provisions of the Partnership
Agreement. The Partnership will allocate to each Partner Net
Profit or Net Loss from the Partnership's operations prior to any
sale authorized hereunder.
Method for Determining Amount of Net Loss
Based on the purchase price set forth above, a Limited Partner
who acquired its Units in the Partnership's initial offering will
be allocated Net Losses from the Sale based on the ratio of its
capital account in comparison to all capital accounts.
A transferee of Units (a "Transferee") will be allocated
losses from the Sale equal to the amount that the transferor
Limited Partner would have been allocated under the formula set
forth above, regardless of the amount the Transferee paid for its
Units. If the amount such Transferee is allocated differs from the
amount he or she would have received if it had acquired its Units
directly from the Partnership, such Transferee will recognize on
its income tax return the amount of such difference as: (i) a
capital gain, if the amount of loss allocated exceeds the amount it
would have been allocated; or (ii) a capital loss, if the amount of
loss allocated is less than the amount it would have been
allocated.
Character of Loss
Of the losses allocated to each Partner, a portion will be
characterized as long-term losses from the sale or exchange of
capital assets ("Capital Losses"), while the remainder will be
characterized as losses from the sale of property used in a trade
or business ("Section 1231 Losses"). Each Limited Partner will
include the amount of its Capital Losses on its income tax return
with all other capital gains and losses. Each Limited Partner may
use its share of the Capital Losses to offset long-term or
short-term capital gains from any source plus, in the case of
non-corporate taxpayers, ordinary income of up to $3,000 per year.
Any Capital Losses not used in the year of sale will carry forward
to future years to offset capital gains in such future years plus
up to $3,000 of ordinary income per year, until fully utilized.
Section 1231 Losses are aggregated with all long-term capital gains
and losses for any year, and if such Section 1231 Losses exceed the
capital gains, all losses are treated as ordinary losses, which are
not subject to the deductibility limits ordinarily imposed on
Capital Losses. A Limited Partner that recognizes Section 1231
Gains in the five tax years following the year of sale may be
required to treat such gain as ordinary income, rather than capital
gain, to the extent of the Section 1231 Losses from the Partnership
treated as an ordinary loss. Therefore, the deductibility of both
Capital Losses and Section 1231 Losses will depend on each Limited
Partner's particular income tax situation for the year of sale and
for future years.
Passive Loss Rules
Generally, the Class B Limited Partners have been allocated
losses in recent years which were subject to the "passive loss"
limitation rules, which, subject to various phase-in rules, allowed
these Limited Partners to deduct passive losses only against
passive income (if any) from the Partnership or other sources. Any
unused passive losses were suspended and carried forward for use in
future years or at the time of a complete disposition of a Class B
Limited Partner's entire interest in the passive activity. The
sale of the Partnership's assets and its liquidation constitutes a
complete disposition of each Class B Limited Partner's interest in
the Partnership and the Partnership's passive activities and,
therefore, each Class B Limited Partners' suspended loss (other
than Capital Losses) can be fully used at this time to offset all
forms of income. Although the Capital Losses and Section 1231
Losses constitute passive losses, they also can be used to offset
all forms of income or gain, subject to the Capital Loss limitation
rules discussed above.
Differing Tax Treatment of the Limited Partners
At the time of subscription, those Limited Partners not in
need of passive income elected to be classified as Class A Limited
Partners. Investors that were tax-exempt or seeking passive income
to offset passive losses from other investments elected to be
classified as Class B Limited Partners. The Partnership Agreement
contains a special allocation provision which allocates all of the
depreciation allocable to the Limited Partners to the Class A
Investors. In all other respects, the Class A Investors and the
Class B Investors have been and will be treated alike. Due to the
special allocation of depreciation, which resulted in the Class A
Investors 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 Class A Investors 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 properties,
which differ from those to which the Class B Investors will be
subject. As a result of the assets being sold at a loss, the Class
A Limited Partners will receive a lower amount of cash on the
liquidation of the Partnership. Limited Partners 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 A LIMITED PARTNER. THE TAX CONSEQUENCES
TO A PARTICULAR LIMITED PARTNER MAY BE DIFFERENT FROM THE TAX
CONSEQUENCES TO OTHER LIMITED PARTNERS, INCLUDING THE APPLICATION
AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS, AND THUS, LIMITED
PARTNERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
INCOME TAX CONSEQUENCES OF THE TRANSACTION.
SPECIAL FACTORS
Purpose of and Reasons for the Transaction
The principal purpose of the Transaction is to cause the
transfer of the Assets to the Purchaser in return for cash proceeds
which, upon Liquidation, will be distributed to the Limited
Partners. Promptly upon consummation of the Transaction, the Class
A Limited Partners will receive a liquidating distribution of
approximately $_____ to $____ per Unit in cash and the Class B
Limited Partners will receive a liquidating distribution of
approximately $____ to $____ per Unit in cash, based upon the time
such Limited Partners invested in the Partnership.
Background and Operational History of the Partnership
The Partnership is a Delaware limited partnership organized on
August 7, 1991 to raise funds from investors to acquire income-producing
retail and other commercial properties predominantly all
of which were subject to triple-net leases. The Partnership
completed its public offering on December 11, 1993 and raised a
total of $16,008,310. As of December 31, 1995, the Partnership had
also raised an additional $394,118 through its distribution
reinvestment plan. As of the date hereof, the Partnership has
acquired the land and buildings underlying ten properties as well
as a majority 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." Prior to January 1996, all of the
properties of the Partnership were under lease. In January 1996,
the property located in Joliet, Illinois, previously leased to
SoFro Fabrics, Inc. and guaranteed by its parent company, House of
Fabrics, Inc., was vacated in connection with House of Fabrics,
Inc.'s bankruptcy filing. Although the Partnership has engaged a
national brokerage firm to assist in re-leasing this property, the
property remains vacant to date.
Cash distributions to Limited Partners for 1995, 1994 and 1993
were $1,296,726, $1,244,736 and $495,847, respectively. As a
result of the termination of the lease on the Joliet, Illinois
property, the Partnership recently reduced the quarterly
distribution payment by one-half percent. In addition, because of
the decision to present the Transaction to the Limited Partners,
the Operating General Partners have determined that no further
distributions of operating cash flow will be made by the
Partnership to the Limited Partners prior to consummation or
termination of the Transaction. The Operating General Partners
have also determined that the Partnership will not repurchase Units
from Limited Partners during this period. See "Certain Information
About the Partnership, Its General Partners and their Affiliates -
Distributions."
The Partnership is the last of a series of affiliated limited
partnerships formed to acquire similar properties. Because the
Affiliated Limited Partnerships were formed prior to the
Partnership, the properties acquired by the Affiliated Limited
Partnerships are either at the beginning or end of their
anticipated holding periods. 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 Acquisition Agreement, the
Purchaser has agreed to pay $12,489,100 in cash for the Assets.
The purchase price is 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, the remaining
lease terms, and the non-performing nature of the Joliet, Illinois
property in particular, 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 arms-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 10.8 years.
The longer the Assets are held by the Partnership, the greater the
risk to the Partnership of lease rollover, renegotiation and non-renewal.
This risk is evidenced by the recent lease default by House of Fabrics, Inc.
in connection with its bankruptcy filing. 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 Limited Partners.
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
$146,480 and $164,081 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 Limited Partners.
There is no established trading market for the Units. As a
result, the Limited Partners 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
Limited Partners are essentially locked into their investment in
the Units.
Benefits of the Transaction
As a result of the Transaction, the Limited Partners 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 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 Limited Partners to
satisfy any post-closing liabilities. Finally, consummation of the
Transaction and receipt by the Limited Partners of the redemption
price will permit the Limited Partners to make alternative
investments which may generate favorable returns and greater
liquidity.
Alternatives to the Transaction
The Operating General Partners considered several alternatives
to selling the Assets to the Purchaser as contemplated by the
Acquisition Agreement 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 merger of the Partnership with and into 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 is currently 10.8 years on average), the costs of the
renegotiation of such lease and the related risk of default or non-renewal.
A sale of the Assets at this time will avoid such increasing risks, which
was recently evidenced by the lease default by House of Fabrics, Inc. with
respect to the Joliet, Illinois property.
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 Sale, 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 Limited Partners. 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 Limited
Partners. 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 likely
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 Acquisition Agreement. However,
the terms of the Acquisition Agreement, permit the General Partners
to terminate the Sale at any time should they receive an offer for
the Assets which they in good faith believe to be on terms
preferable to the Sale. 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 will continue 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 an
all cash basis. This is mainly the result of three factors: (i)
36% of the Assets have lease terms which provide the lessees with
rights of first refusal on any sale of the Assets, significantly
complicating negotiations of any possible offers from third
parties; (ii) the average remaining lease term of 10.8 years makes
the Assets less attractive to such purchasers; and (iii) the fact
that one of the Partnership's properties is not currently under
lease.
While the Partnership could have structured the Transaction as
a merger of the Partnership with and into the Purchaser, the
Partnership Agreement places additional voting requirements on such
a transaction that the Operating General Partners believe would
make such a transaction more difficult to consummate. Since the
Transaction includes many protections for the Limited Partners,
including an independent appraisal of the Assets, receipt of an
opinion that the transaction is fair to the Limited Partners from
a financial point of view and the receipt by the Limited Partners
of their pro rata share of the appraised value thereof, the Sale
does not result in a materially different transaction than a merger
from the Limited Partner's prospective.
Effects of the Transaction
If the Transaction is approved and the remaining conditions to
the Sale are met or waived, the Assets will be sold to the
Purchaser in exchange for the purchase price of $12,489,100. The
Partnership will then pay the Transaction Costs and pay or make
provisions for the payment of all other Partnership liabilities and
the Partnership will be liquidated and dissolved. 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, upon dissolution, 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 liquidation of the Partnership no later
than December 31, 1996.
Upon liquidation and dissolution of the Partnership, in
accordance with the Partnership Agreement, the resulting proceeds
of the Sale, together with all cash on hand (including earnings
through July 31, 1996), will be used to make distributions to the
Limited Partners after payment of or making provisions for the
payment of; (i) all Transaction Costs; and (ii) all other
Partnership liabilities, including the Rally's litigation. The
[Operating] General Partners currently anticipate that the Class A
Limited Partners will receive a liquidating distribution of
approximately $___ to $____ per Unit and the Class B Limited
Partners will receive a liquidating distribution of approximately
$____ to $____ per Unit, based upon the time such Limited Partners
invested in the Partnership. The General Partners will not receive
any fees from the Partnership in connection with the Transaction
and will receive only a de minimis liquidating distribution of less
than $17,000 in the aggregate, in accordance with the terms of the
Partnership Agreement. The Braults have a minority ownership
interest in the Purchaser. See "Terms of the Transaction -
Determination of Cash Available for Distribution."
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 $12,489,100 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 a specified holding
period,typically over a ten-year holding period, based on the estimated
highest and best use of the property. The highest and best use of a
property was 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 was estimated to be a continuation of the
existing use, the reversionary value of the property is based on
capitalizing the property's eleventh year's net operating income into
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 was estimated based on a cost approach methodology,
which incorporates land value only, or land value estimate plus 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 $12,489,100. 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
Aside from the Assumptions and Limiting Conditions contained
in Cushman & Wakefields evaluation and valuation reports, 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 Limited Partners and recommend
that the Limited Partners vote "FOR" the Transaction. The
Operating General Partners are, however, subject to conflicts of
interest. 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.
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 sales price of the Assets 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 Purchaser's willingness to purchase all of the Assets and
to assume all existing lease obligations on each of the
properties, thereby eliminating the need for the Partnership
to continue operations with the less valuable properties.
* The fact that the Sale is on an all cash, "as is" basis. As
an "as is" sale, the Partnership will not be required to make
any representations and warranties to the Purchaser as to the
condition of the Assets, thereby eliminating the need for hold
backs typically associated with the sale of assets.
* The avoidance of certain potential transaction costs, such as
investment banking fees or real estate brokerage commissions,
which could have approximated $375,000 to $750,000 in the
aggregate based on.
* The fact that the Partnership will not be required to finance
any part of the purchase price.
* The fact that an opinion was received from Cushman & Wakefield
stating that the Transaction is fair to the Limited Partners
from a financial point of view.
* The fact that the Acquisition Agreement permits the General
Partners to terminate the Sale at any time if they receive an
offer for the Assets which they in good faith believe to be on
terms preferable to the Sale. 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
Limited Partners 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 10.8 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
$146,480 and $164,081 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 Limited Partners 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 was $6.05, which represents
only one transaction for 5,000 Units from December 1, 1995
through February 29, 1996. Over the past 12 months, only
16,177 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 recent decrease in the percentage distribution resulting
from the default by House of Fabrics and the uncertainty
regarding the re-leasing prospects of this property.
* The expressed desire of certain Limited Partners 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 Limited Partners for the purpose of negotiating the
transaction.
Conclusion
If the Transaction is not approved, the Operating General
Partners are uncertain as to whether any offers on as favorable of
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 Limited Partners who dissent
from the vote of the majority in approving the Transaction. As a
result, if Limited Partners holding a majority of the Units approve
the Transaction and if the Transaction is consummated, the
Partnership will be liquidated and all Limited Partners, including
those who do not approve the Transaction will receive liquidating
distributions pursuant to the terms of the Partnership 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 75,000
Bank fees related to final distributions 3,000
Filing fees 2,497
Proxy solicitation fees 11,000
Other 40,000
Total $246,497
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 $30,600. 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
Limited Partners. No third-party was engaged to act as an agent or
additional fiduciary on behalf of the Limited Partners.
Notwithstanding the Braults minority ownership in the Purchases,
the General Partners remain accountable to the Partnership as
fiduciaries and consequently must exercise good faith and fair
dealing toward the Limited Partners.
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 Limited Partners 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, 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, a Limited Partner'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 Acquisition Agreement, the Purchaser 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 Acquisition 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 Acquisition Agreement, the
Partnership and, following the Transaction, the Purchaser and its
affiliates, jointly and severally release and discharge, subject to
termination as discussed below, Jerome J. Brault and Cezar M.
Froelich 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 Acquisition 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 Acquisition
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 Acquisition Agreement
provides that, if such Released Parties have fully performed their
respective obligations under the Acquisition 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 August 7, 1991 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 Limited Partners 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, on an all-cash basis,
existing, income-producing retail and other commercial properties
predominantly all of which were to be subject to triple-net leases.
The Partnership raised a total of $16,008,310 through its offering
to the public which commenced on December 12, 1991 and terminated
on December 11, 1993, as well as an additional $394,118 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 complete at such time. As of
December 31, 1995, Units valued at $83,706 had been purchased by
the Partnership from Limited Partners 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 ten properties,
as well as a 70.2% equity interest in a joint venture with two of
the Affiliated Limited Partnerships, which venture owns the land
and building underlying a CompUSA store. See the subsection
entitled "Description of the Assets," below.
The original objectives of the Partnership were the: (i)
preservation and protection of capital; (ii) distribution of the
Partnership's current cash flow attributable to rental income;
(iii) capital appreciation; (iv) the potential for increased income
through escalations in the base rent or participation in the growth
of the sales of the tenants of the Partnership's properties; (v)
the deferral of the taxation of cash distributions for investors
who are not exempt from federal taxation; and (vi) the production
of "passive" income to offset "passive" losses from other
investments.
The Partnership acquired ___ of its properties in 1993 and ___
of its properties in 1994. 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
Limited Partners will be suspended during the pendency of the
proposed Transaction, the Partnership will not be selling any
additional Units to the Limited Partners 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 IV,
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 N. 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.
Description of the Assets
The Partnership currently owns ten, and has a majority
interest in an eleventh, income-producing properties predominantly
all of which are subject to triple-net leases. A description of
each of the properties owned by the Partnership follows.
Steak n Shake, Pearless Park, Missouri
The property is located on the southeast corner of Highway 141
and Interstate I-44, approximately 16 miles southwest of downtown
St. Louis. The single-story building is 3,860 square feet situated
on a 39,500 square foot parcel of land.
Children's World Learning Center, Arlington, Texas
The property is located at 1235 West Sublet. The building is
4,950 square feet built on 0.625 acres of land. The single-story,
wood-frame building has brick veneer exterior and has a pitched
roof with asphalt shingles. The building was constructed in 1984.
Chuck E. Cheese's Restaurants:
Ashwaubenon, Wisconsin
The property is located at 1273 Lombardi Access Road. The
building consists of 10,183 square feet situated on a 3.385 acre
parcel and was constructed in 1983 utilizing a steel frame with
birch and wood siding.
Springfield, Ohio
The property is located at 2345 Valley Loop Road. The
building consists of 10,183 square feet situated on a 2.769 acre
parcel and was constructed in 1983 utilizing a steel frame with
concrete block.
Mrs. Winner's Chicken & Biscuit Restaurant, Oakwood, Georgia
The property is located at 3465 Mundy Mill Road. The building
consists of 2,436 square feet situated on a 25,700 square foot
parcel and was constructed in 1983 utilizing concrete block
construction with vinyl siding.
House of Fabrics, Joliet, Illinois
The property is located at 2900 Colorado Avenue. The building
consists of 20,000 square feet situated on a 1.299 acre parcel and
was constructed in 1993 utilizing concrete block construction with
steel frame and metal deck roof.
In October 1994 House of Fabrics filed for protection under
Chapter 11 of the United States Bankruptcy Code. At the time of
the filing the tenant was over one month in arrears. From October
1994 until January 1996, House of Fabrics occupied the Joliet
property and paid all rents and occupancy expenses on a timely
basis. In August 1995, House of Fabrics notified the Partnership
that, under the provisions of the bankruptcy code, they had
rejected the lease and indicated that they would vacate the
property at the end of January 1996. House of Fabrics vacated the
property on January 31, 1996. The Partnership has engaged a
national brokerage firm to assist in re-leasing this property.
Volume ShoeSource, Blaine, Washington
The property is located at 439 Peace Portal Drive. The
building consists of 10,900 square feet situated on a .389 acre
parcel and was fully renovated in 1992.
CompUSA, Duluth, Georgia
The property is a 25,000 square foot single story building
located on a 105,919 square foot parcel in Duluth, a suburb of
Atlanta, in the Gwinnett Place Mall Shopping Area. The single
story building was completed in March 1993.
Blockbuster Video, Eagan, Minnesota
The property is located at 2075 Cliff Road and consists of a
7,028 square foot building situated on a 37,364 square foot parcel
of land. The building was constructed in 1993 of concrete block
and steel frame covered with stucco.
East Side Mario's, Copely, Ohio
The property is located at 85 W. Montrose Avenue and consists
of a 6,240 square foot building situated on 1.76 acres of land.
The building was constructed in 1993 of concrete block and steel
frame.
Walden Books Store, Miami, Florida
The property is located on the southeast corner of Kendall
Drive and S.W. 112th Street and consists of a 8,500 square foot
building situated on .743 acres of land. The building was
constructed in 1988 of masonry block with stucco and dryvit
parapet.
Distributions
Cash distributions to Limited Partners for 1995, 1994 and 1993
were $1,296,726, $1,244,736 and $495,347, respectively. Cash
distributions for the first quarter of 1996 were $327,397.
Distributions of operating cash flow, if available, were paid four
times per year, 45 days after the end of each calendar quarter.
The actual distribution for 1993 to each investor was calculated on
a per diem basis from the date of the investment at an annualized
rate of 5% to 6%. The distributions were generated from a
combination of property operations and interest income. 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 8.00% 8.00% 6.50% 6.00% ---
May 15 7.50 8.00 7.00 6.00 3.68%
August 15 8.00 8.00 5.00 7.00
November 15 8.00 10.00 5.50 6.00
The distribution percentage was decreased for May 15, 1996 as
a result of the lease default by House of Fabrics, Inc., which has
vacated the Joliet, Illinois property. Future changes in the
Partnership's distributions would largely depend on sales at the
Partnership's 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 Limited Partners. 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 no individual General Partner or director
or executive officer of the Corporate General Partner beneficially
owns any Units.
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 2,125.696 $10.00 $10.00
June 30, 1994 --- --- ---
September 30, 1994 2,700.000 $10.00 $10.00
December 31, 1994 1,009.873 $10.00 $10.00
March 31, 1995 1,548.473 $10.00 $10.00
June 30, 1995 968.101 $10.00 $10.00
September 30, 1995 --- --- ---
December 31, 1995 --- --- ---
March 31, 1996 3,500.000 $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
On October 14, 1993, Brauvin, Inc., an affiliate of the
Partnership, brought a lawsuit against an unaffiliated seller due
to the seller's alleged refusal to proceed under the terms of a
purchase and sale agreement pursuant to which Brauvin, Inc. was to
acquire three properties in Jacksonville, Florida. In this
lawsuit, Brauvin, Inc. sought specific performance of the purchase
and sale agreement to require the unaffiliated seller to sell the
subject properties to Brauvin, Inc. Brauvin, Inc. subsequently
amended its complaint to add the tenant of the properties, Rally's,
Inc., as an additional defendant seeking an unspecified amount of
damages. Rally's, Inc. was added because of its activities which
Brauvin, Inc. alleges have tortiously interfered with the business
relations between Brauvin, Inc. and the seller.
In response to the lawsuit, the seller made a counterclaim
against Brauvin, Inc. with counts for slander of title, tortious
interference with an advantageous business relationship, conspiracy
and to quiet title. The seller had also sued a former employee of
Brauvin, Inc. The counterclaim is seeking damages in an amount in
excess of $2,000,000, together with punitive damages. The
Partnership filed a motion to dismiss as the Partnership believes
the Florida court does not have jurisdiction over the Partnership.
During 1994, the motion to dismiss was denied. The Partnership and
the seller have held discussions in an attempt to resolve the
claims. Currently, the claims have not been resolved and if no
resolution occurs the Partnership intends to vigorously defend
itself with respect to this action. The Partnership intends to
take a reserve in the amount of $10,000 in connection with this
litigation.
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 Sale and the proposed
Affiliated Transactions. Upon completion of the Sale 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 interest in the
Purchaser. In addition, certain other members of the Corporate
General Partner's management may participate in the ownership of
the Purchaser. Mr. Froelich will not have any affiliation with the
Purchaser. The Purchaser is in the process of securing financing
to consummate the Sale 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 Limited Partners which was
distributed to the Limited Partners 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
Limited Partner 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 a Limited Partner'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.
<PAGE>
<TABLE>
SCHEDULE I
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
(a Delaware limited partnership)
(not covered by Independent Auditor's Report)
For Period August 7, 1991 (inception) to December 31, 1995
(In Dollars)
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Period Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
<C> <C> <C> <C> <C>
Selected Income Statement Data:
Rental Income 1,643,736 1,571,077 639,565 96,859 --
Interest Income 31,777 37,754 124,814 50,333 --
Net Income 1,203,510 1,030,281 492,617 47,090 --
Net Income Per
Unit (a) 0.74 0.64 0.42 0.14 --
Selected Balance Sheet Data:
Cash and Cash
Equivalents 711,167 569,244 4,803,350 2,411,424 1,000
Land, Buildings
and Improve-
ments 14,308,630 14,308,630 10,066,508 3,454,263 --
Total Assets 14,850,948 14,895,510 15,009,234 6,166,502 252,208
Cash Distribu-
tions to Limited
Partners 1,296,726 1,244,736 495,347 75,484 --
Cash Distribu-
tions to Limited
Partners Per Unit(a) 0.80 0.77 0.43 0.22 --
Book Value Per
Unit (a) 8.60 8.66 8.74 8.80 --
<FN>
<FN1>
(a) Net income per Unit, cash distributions per Unit and book value per Unit are based on
the average Units outstanding during the quarter since they were of varying dollar
amounts and percentages based upon the dates Limited Partners were admitted to the
Partnership and additional Units were purchased through the Partnership's distribution
reinvestment plan.
</FN>
</TABLE>
<PAGE>
SCHEDULE II
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
(a Delaware limited partnership)
(not covered by Independent Auditor's Report)
Three Three
Months Ended Months Ended
March 31, 1996 March 31,1995
Selected Income Statement Data:
Rental Income 388,593 401,447
Interest Income 8,272 4,757
Net Income 261,649 299,869
Net Income Per Unit(a) 0.16 0.19
Selected Balance Sheet Data:
Cash and Cash
Equivalents 698,052 569,486
Land, Buildings and
Improvements 14,308,630 14,308,630
Total Assets 14,796,123 14,866,210
Cash Distributions to
Limited Partners 327,397 324,567
Cash Distributions to
Limited Partners Per
Unit (a) 0.20 0.20
Book Value Per Unit(a) 8.55 8.64
____________________________________
(a) Net income per Unit, cash distributions 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 Limited Partners were
admitted to the Partnership and additional Units were
purchased through the Partnership's distribution reinvestment
plan.
YOUR VOTE IS EXTREMELY IMPORTANT
Regardless of the number of Units of Brauvin Corporate
Lease Program IV 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, which includes
a vote for the Sale and the Liquidation, 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 Corporate Lease Program IV 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.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Transaction . . . . . . . . . . . . . . . . . . . . . 3
The Special Meeting; Vote Required. . . . . . . . . . . . 4
Purpose of and Reasons for the Transaction. . . . . . . . 4
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 LIMITED PARTNERS. . . . . . . . . . . . 6
Special Meeting; Record Date. . . . . . . . . . . . . . . 6
Procedures for Completing Proxies . . . . . . . . . . . . 7
Vote Required . . . . . . . . . . . . . . . . . . . . . . 8
Solicitation Procedures . . . . . . . . . . . . . . . . . 8
Revocation of Proxies . . . . . . . . . . . . . . . . . . 8
TERMS OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . 9
The Acquisition Agreement . . . . . . . . . . . . . . . . 9
Representations and Warranties of the Parties . . . . . . 10
Additional Agreements . . . . . . . . . . . . . . . . . . 11
Conditions to Closing the Transaction . . . . . . . . . . 11
Dissolution and Liquidation of the Partnership . . . . . 14
Determination of Cash Available for Distribution. . . . . 15
Termination of the Acquisition Agreement. . . . . . . . . 15
Amendment of the Acquisition Agreement. . . . . . . . . . 16
Amendment of Partnership Agreement. . . . . . . . . . . . 17
Related Transactions. . . . . . . . . . . . . . . . . . . 17
ACCOUNTING ISSUES AND INCOME TAX CONSEQUENCES OF THE
TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Accounting Issues . . . . . . . . . . . . . . . . . . . . 18
Income Tax Consequences of the Transaction. . . . . . . . 18
SPECIAL FACTORS. . . . . . . . . . . . . . . . . . . . . . . . 20
Purpose of and Reasons for the Transaction. . . . . . . . 20
Alternatives to the Transaction . . . . . . . . . . . . . 23
Effects of the Transaction. . . . . . . . . . . . . . . . 25
Valuation of the Assets; Fairness Opinion . . . . . . . . 26
Recommendations of the General Partners . . . . . . . . . 30
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. . . . . . . . . . . . . 35
CERTAIN INFORMATION ABOUT THE PARTNERSHIP, ITS GENERAL PARTNERS
AND THEIR AFFILIATES . . . . . . . . . . . . . . . . . . . . . 36
The Partnership . . . . . . . . . . . . . . . . . . . . . 36
The General Partners. . . . . . . . . . . . . . . . . . . 37
Description of the Assets . . . . . . . . . . . . . . . . 38
Distributions . . . . . . . . . . . . . . . . . . . . . . 40
Ownership of Units. . . . . . . . . . . . . . . . . . . . 41
Market for the Units. . . . . . . . . . . . . . . . . . . 41
Legal Proceedings . . . . . . . . . . . . . . . . . . . . 42
Independent Certified Public Accountants. . . . . . . . . 43
Available Information . . . . . . . . . . . . . . . . . . 43
CERTAIN INFORMATION CONCERNING THE PURCHASER . . . . . . . . . 43
SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . 44
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SCHEDULE II. . . . . . . . . . . . . . . . . . . . . . . . . . 48
<PAGE>
APPENDIX ______
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
AMONG
BRAUVIN REAL ESTATE FUNDS, L.L.C.,
AND
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
AMONG
BRAUVIN REAL ESTATE FUNDS, L.L.C.
AND
BRAUVIN CORPORATE LEASE PROGRAM IV L.P.
Dated: May ____, 1996
<PAGE>
TABLE OF CONTENTS
1. Purchase and Sale of Assets. . . . . . . . . . . . . 1
1.1 Agreement to Purchase and Sell . . . . . . . . . . . 1
1.2 Enumeration of Purchased Assets. . . . . . . . . . . 1
1.3 Dissolution Following Acquisition. . . . . . . . . . 3
2. Assumption of Liabilities . . . . . . . . . . . . . . . . 3
2.1 Agreement to Assume. . . . . . . . . . . . . . . . . 3
3. Consideration, Manner of Payment and Closing. . . . . . . 3
3.1 Consideration. . . . . . . . . . . . . . . . . . . . 3
3.2 Manner of Payment of the Consideration . . . . . . . 3
3.3 Closing Deliveries . . . . . . . . . . . . . . . . . 3
3.4 Allocation of Purchase Price . . . . . . . . . . . . 7
3.5 Best Efforts . . . . . . . . . . . . . . . . . . . . 8
3.6 Disclosure Schedules . . . . . . . . . . . . . . . . 8
4. Representations and Warranties of the Acquiring
Company . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Formation and Qualification. . . . . . . . . . . . . 8
4.2 Authority Relative to this Agreement . . . . . . . . 9
4.3 No Conflicts . . . . . . . . . . . . . . . . . . . . 9
4.4 Governmental Approvals . . . . . . . . . . . . . . . 9
4.5 No Prior Activities. . . . . . . . . . . . . . . . . 10
4.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . 10
5. Representations and Warranties of the Brauvin
Partnership . . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Formation and Qualification. . . . . . . . . . . . . 10
5.2 No Subsidiaries. . . . . . . . . . . . . . . . . . . 10
5.3 Capitalization . . . . . . . . . . . . . . . . . . . 11
5.4 Authority Relative to this Agreement . . . . . . . . 11
5.5 No Conflicts . . . . . . . . . . . . . . . . . . . . 11
5.6 Governmental Approvals . . . . . . . . . . . . . . . 12
5.7 Commission Filings; Financial Statements . . . . . . 12
5.8 No Undisclosed Liabilities . . . . . . . . . . . . . 13
5.9 Absence of Certain Changes or Events . . . . . . . . 13
5.10 Litigation . . . . . . . . . . . . . . . . . . . . . 14
5.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 14
5.12 Assets . . . . . . . . . . . . . . . . . . . . . . . 14
5.13 Transactions with Affiliates . . . . . . . . . . . . 14
5.14 Disclosure . . . . . . . . . . . . . . . . . . . . . 15
5.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . 15
5.16 General Partners . . . . . . . . . . . . . . . . . . 15
5.17 Compliance with Law. . . . . . . . . . . . . . . . . 15
5.18 Properties . . . . . . . . . . . . . . . . . . . . . 15
6. Conduct of Business Pending the Acquisition . . . . . . . 16
6.1 Conduct of Business by the Brauvin Partnership
Pending the Acquisition. . . . . . . . . . . . . . . 16
7. Additional Agreements . . . . . . . . . . . . . . . . . . 18
7.1 Proxy Statements; Other Filings. . . . . . . . . . . 18
7.2 Meetings of the Limited Partners . . . . . . . . . . 19
7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . 19
7.4 Further Agreements . . . . . . . . . . . . . . . . . 20
7.5 No Shop Limitation . . . . . . . . . . . . . . . . . 20
7.6 Additional Financial Statements. . . . . . . . . . . 21
7.7 Access to Information; Confidentiality . . . . . . . 21
7.8 Public Announcements . . . . . . . . . . . . . . . . 22
7.9 Agreement to Defend and Indemnify. . . . . . . . . . 22
7.10 Notification of Certain Matters. . . . . . . . . . . 22
7.11 Cooperation. . . . . . . . . . . . . . . . . . . . . 22
7.12 Tax Returns. . . . . . . . . . . . . . . . . . . . . 23
7.13 Notice of Failure to Satisfy Closing Conditions. . . 23
8. Conditions. . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Conditions to Obligation of Each Party to Effect
the Transaction. . . . . . . . . . . . . . . . . . . 23
8.2 Additional Conditions to the Obligation of the
Brauvin Partnership. . . . . . . . . . . . . . . . . 24
8.3 Additional Conditions to the Obligations of the
Acquiring Company. . . . . . . . . . . . . . . . . . 25
9. Termination, Amendment and Waiver . . . . . . . . . . . . 26
9.1 Termination. . . . . . . . . . . . . . . . . . . . . 26
9.2 Effect of Termination. . . . . . . . . . . . . . . . 28
9.3 Amendment. . . . . . . . . . . . . . . . . . . . . . 28
9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . 28
10. General Provisions. . . . . . . . . . . . . . . . . . . . 29
10.1 Notices. . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Certain Definitions. . . . . . . . . . . . . . . . . 29
10.3 Representations and Warranties; Etc. . . . . . . . . 33
10.4 Validity . . . . . . . . . . . . . . . . . . . . . . 33
10.5 Descriptive Headings . . . . . . . . . . . . . . . . 34
10.6 Parties in Interest. . . . . . . . . . . . . . . . . 34
10.7 Incorporation of Recitals. . . . . . . . . . . . . . 34
10.8 Miscellaneous. . . . . . . . . . . . . . . . . . . . 34
Schedule 1 Permitted Liens
Schedule 2 Allocation of Purchase Price
Exhibit A Form of Opinion of Brauvin Partnership's Counsel
Exhibit B Projected Cash at Closing
<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
AGREEMENT FOR PURCHASE AND SALE OF ASSETS, dated as of May
____, 1996, among BRAUVIN REAL ESTATE FUNDS, L.L.C., a Delaware
limited liability company (the "Acquiring Company"), and BRAUVIN
CORPORATE LEASE PROGRAM IV L.P., a Delaware limited partnership
(the "Brauvin Partnership").
RECITALS
The Acquiring Company was recently formed for, among other
things, the purpose of acquiring substantially all of the Brauvin
Partnership's assets 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 acquisition (the "Acquisition")
contemplated hereby. The manager of the Acquiring Company is
Brauvin Real Estate Funds, Inc. (the "Manager"), an Illinois
corporation, formed solely to act as manager.
The Brauvin Partnership and the managers of the Acquiring
Company have approved the Acquisition and the other transactions
contemplated hereby in accordance with the LLC Act and the
Partnership Act.
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
10.2 hereof.
1. Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and
subject to the conditions contained in this Agreement, Acquiring
Company agrees to purchase from the Brauvin Partnership, and the
Brauvin Partnership agrees to sell to Acquiring Company, all of the
Brauvin Partnership's assets, real and personal properties, rights
and businesses as a going concern of whatever kind and wherever
located (collectively, the "Purchased Assets") . The Purchased
Assets shall be sold to Acquiring Company free and clear of any
liens, title claims, encumbrances or security interests, except for
permitted liens as set forth on Schedule 1 (the "Permitted Liens").
1.2 Enumeration of Purchased Assets. The Purchased
Assets include, without limitation, the following items:
(a) all inventory, including, without limitation, raw
materials, fresh vegetables, work in process, finished goods,
packaging materials, parts and supplies (collectively, the
"Inventory");
(b) all furniture, fixtures, equipment (including office
equipment), machinery, parts, computer hardware, tools,
automobiles and all other tangible personal property (other
than the Inventory) (collectively, the "Equipment");
(c) all real property (collectively, the "Property")
directly or indirectly owned by the Brauvin Partnership and
all appurtenances thereto and improvements thereon;
(d) all leasehold interests in personal property leased
to the Brauvin Partnership (the "Leased Personalty");
(e) all trade accounts receivable, notes receivable,
negotiable instruments and chattel paper (collectively, the
"Accounts Receivable");
(f) all claims and rights (and benefits arising
therefrom) with or against all persons whomsoever;
(g) all (i) trademarks, service marks, slogans, trade
names and the like (collectively with the associated goodwill
of each, "Trademarks"), together with information regarding
all registrations and pending applications to register any
such rights; (ii) common law Trademarks; (iii) registrations
of and applications to register copyrights; and (iv) licenses
of rights in computer software, Trademarks, patents,
copyrights, unpatented formulations, manufacturing methods and
other know-how, whether to or by the Brauvin Partnership
(collectively, the "Intellectual Property";
(h) all sales orders and sales contracts, purchase
orders and purchase contracts, quotations and bids;
(i) all insurance policies, to the extent assignable by
the Brauvin Partnership;
(j) all contracts, license agreements, distribution
agreements, computer software agreements and technical service
agreements;
(k) all customer lists, customer records and
information, and all books and records;
(l) all rights in connection with deposits and prepaid
expenses;
(m) all letters of credit issued to the Brauvin
Partnership;
(n) all computer software, including all documentation
and source codes with respect to such software and licenses
and leases of software;
(o) all sales and promotional materials, catalogues and
advertising literature;
(p) all telephone numbers of the Brauvin Partnership and
all lock boxes to which the Brauvin Partnership's account
debtors remit payments; and
(q) all cash on hand, in banks, cash equivalents and
investments.
1.3 Dissolution Following Acquisition. Promptly
following the Acquisition, the Brauvin Partnership shall be
terminated and dissolved and the limited partners of the Brauvin
Partnership shall thereupon receive an amount per Brauvin Unit in
cash equal to the Brauvin Unit Valve.
2. Assumption of Liabilities
2.1 Agreement to Assume. At the Closing (as herein
defined), Acquiring Company shall assume and agree to discharge and
perform the following liabilities of the Brauvin Partnership
(collectively, the "Assumed Liabilities"):
(a) those liabilities of the Brauvin Partnership
existing as of the Closing Date; and
(b) liabilities of the Brauvin Partnership under any
written purchase order, sales order, lease, insurance policy,
agreement or commitment of any kind by which the Brauvin
Partnership is bound on the Closing Date, which was made in
the ordinary course of business, and which is assigned to
Acquiring Company pursuant to this Agreement, to the extent
such liabilities relate to performance on or after the Closing
Date.
3. Consideration, Manner of Payment and Closing
3.1 Consideration. In consideration for the Purchased
Assets, acquisition company shall assume the Assumed Liabilities
and pay an amount equal to the Brauvin Value.
3.2 Manner of Payment of the Consideration. At the
Closing, Acquiring Company shall assume the Assumed Liabilities and
shall pay the Brauvin Value in immediately available funds.
3.3 Closing Deliveries. The transactions contemplated
hereby shall be consummated (the "Closing") on _______, 1996 or
such other date as the parties shall mutually agree (the "Closing
Date") and shall be deemed effective as of 12:01 a.m. (Delaware
time) on such date (the "Effective Time"). At the Closing, the
parties shall execute and deliver the documents as set forth below,
which shall be in form and substance reasonably satisfactory to the
other party:
(a) Acquiring Company's Deliveries. Acquiring Company
shall execute and/or deliver to the Brauvin Partnership the
following:
(i) the cash consideration for the Purchased
Assets;
(ii) a certified copy of Acquiring Company's
Articles of Incorporation and By-laws;
(iii) a certificate of good standing of
Acquiring Company, issued not earlier than ten (10) days
prior to the Closing Date by the Secretary of State of
Delaware;
(iv) an incumbency and specimen signature
certificate with respect to the officers of Acquiring
Company executing this Agreement and on behalf of
Acquiring Company;
(v) a closing certificate executed by the manager
of Acquiring Company (or any other officer of Acquiring
Company specifically authorized to do so), on behalf of
Acquiring Company, pursuant to which Acquiring Company
represents and warrants to the Brauvin Partnership that
Acquiring Company's representations and warranties to the
Brauvin Partnership are true and correct as of the
Closing Date as if then originally made (or, if any such
representation or warranty is untrue in any respect,
specifying the respect in which the same is untrue), that
all covenants required by the terms hereof to be
performed by Acquiring Company on or before the Closing
Date, to the extent not waived by the Brauvin Partnership
in writing, have been so performed (or, if any such
covenant has not been performed, indicating that such
covenant has not been performed), and that all documents
to be executed and delivered by Acquiring Company at the
Closing have been executed by duly authorized officers
of Acquiring Company;
(vi) an assumption agreement, duly executed by
Acquiring Company, under which Acquiring Company assumes
the Assumed Liabilities; and
(vii) without limitation by the specific
enumeration of the foregoing, all other documents
required from Acquiring Company to consummate the
transactions contemplated hereby.
(b) The Brauvin Partnership's Deliveries. The Brauvin
Partnership shall deliver to Acquiring Company physical
possession of all tangible Purchased Assets, and shall execute
(where applicable in recordable form) and/or deliver or cause
to be executed and/or delivered to Acquiring Company all of
the following:
(i) certified copies of the Brauvin Partnership's
Partnership Agreement;
(ii) certificates of good standing of the Brauvin
Partnership, issued not earlier than ten (10) days prior
to the Closing Date by the Secretary of State of
Delaware, and each other jurisdiction where the Brauvin
Partnership is qualified to do business;
(iii) an incumbency and specimen signature
certificate with respect to the officers of the Brauvin
Partnership executing this Agreement on behalf of the
Brauvin Partnership;
(iv) a bill of sale, executed by the Brauvin
Partnership, conveying all of the Inventory, Equipment
and other tangible personal property included in the
Purchased Assets to Acquiring Company, free and clear of
all liens, claims, encumbrances and security interests
other than Permitted Liens and containing the warranties
of title set forth in this Agreement;
(v) an assignment to Acquiring Company, executed
by the Brauvin Partnership, of all of the Purchased
Assets (other than the Inventory, Equipment, and the Real
Estate), along with the original instruments (if any)
representing, evidencing or constituting such Purchased
Assets, free and clear of all liens, claims, encumbrances
and security interests other than Permitted Liens and
containing the warranties of title set forth in this
Agreement. If necessary, in the opinion of Acquiring
Company's counsel, the Brauvin Partnership shall also
execute and deliver (in recordable form where required)
separate assignments of any of the Purchased Assets, and
where applicable, in the form required by the applicable
governmental agencies, insurance companies, customers,
lessors, and other parties with whom the assignments must
be filed;
(vi) a closing certificate duly executed by an
officer of the Brauvin Partnership (or any other officer
of the Brauvin Partnership specifically authorized to do
so), on behalf of the Brauvin Partnership, pursuant to
which the Brauvin Partnership represents and warrants to
Acquiring Company that the Brauvin Partnership's
representations and warranties to Acquiring Company are
true and correct as of the Closing Date as if then
originally made (or, if any such representation or
warranty is untrue in any respect, specifying the respect
in which the same is untrue), that all covenants required
by the terms hereof to be performed by the Brauvin
Partnership and on or before the Closing Date, to the
extent not waived by Acquiring Company in writing, have
been so performed (or, if any such covenant has not been
so performed, indicating that such covenant has not been
performed), and that all documents to be executed and
delivered by the Brauvin Partnership at the Closing have
been executed by duly authorized officers of the Brauvin
Partnership;
(vii) UCC-1, UCC-2, Federal and State tax lien,
bankruptcy and seven (7) year judgment searches with
respect to the Brauvin Partnership, for the State of
Illinois, Delaware and in each state where the Brauvin
Partnership is qualified to conduct business and the
counties thereof in which a portion of the business is
conducted, all prepared by search companies reasonably
satisfactory to Acquiring Company, and dated not earlier
than fifteen (15) days prior to the Closing Date;
(viii)a general warranty deed (subject only to
Permitted Liens), an affidavit of title, a certificate
in compliance with the Foreign Investment in Real
Property Tax Act ("FIRPTA") certifying that the Brauvin
Partnership is not a person or entity subject to
withholding under FIRPTA, an ALTA statement and all other
documents required by the title insurance company issuing
the policies referred to in paragraph (ix) with respect
to each parcel of Property for which title insurance
policies are being obtained, executed by the Brauvin
Partnership, together with any necessary transfer
declarations;
(ix) The Brauvin Partnership, at its own expense,
shall have ordered and delivered to the Acquiring 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 Acquiring Company),
insuring the Acquiring Company and its lenders and issued
as of the Closing Date by a title insurance company
reasonably satisfactory to the Acquiring Company, in such
amount(s) as may be reasonably satisfactory to Acquiring
Company, showing fee simple title thereto to be vested
in the Acquiring Company, subject in each case only to
permitted liens acceptable to the Acquiring 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 Acquiring Company shall
reasonably request.
(x) The Brauvin Partnership, at its own expense,
shall have ordered and delivered to the Acquiring 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
Acquiring 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 3.3(b)(ix) to issue same with full
extended coverage.
(xi) to the extent obtained, all necessary consents
for the assignment of contracts, leases, purchase orders,
sales orders, permits which are to be assigned to
Acquiring Company or alternate arrangements with respect
thereto, all as reasonably acceptable to Acquiring
Company;
(xii) the written opinion of the Brauvin
Partnership's counsel, substantially in the form attached
hereto as Exhibit A; and
(xiii) without limitation by the specific
enumeration of the foregoing, all other documents
reasonably required from the Brauvin Partnership to
consummate the transaction contemplated hereby.
(c) Joint Deliveries. At the Closing, the parties shall
execute and deliver, or cause to be executed and delivered,
all of the following:
(i) an assignment and assumption of any leases in
a form reasonably acceptable to the Brauvin Partnership
and Acquiring Company;
(ii) an assignment and amendment with respect to any
welfare plans and employee benefit plans, in a form
satisfactory to the Brauvin Partnership and Acquiring
Company; and
(iii) all legally required transfer tax
declarations concerning the Purchased Assets.
3.4 Allocation of Purchase Price. The purchase price
for the Purchased Assets shall be allocated among the Purchased
Assets in the manner required by Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"), and in accordance
with Schedule 2 hereto.
3.5 Best Efforts. The Acquiring Company and the
Brauvin Partnership shall each use its best efforts to take all
such actions as may be necessary or appropriate in order to
effectuate the Acquisition under the Partnership Act and LLC Act as
promptly as possible. 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 Acquiring Company with full
right, title and possession to all assets, property, rights,
privileges, powers, and franchises of the Brauvin Partnership, the
Brauvin GP and the Manager are fully authorized in their names or
otherwise to take, and shall take, all such lawful and necessary
action.
3.6 Disclosure Schedules. The parties acknowledge that
this Agreement has been executed prior to delivery of the
Disclosure Schedules by the Brauvin Partnership. The Brauvin
Partnership agree that it will (a) deliver a preliminary draft of
its Disclosure Schedule to the Acquiring 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 Acquiring Company to
invoke the conditions to Closing set forth in Section 8.3 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 4 and 5 below, and there shall be
no independent liability therefor pursuant to this Section 3.6.
4. Representations and Warranties of the Acquiring Company.
Subject to Section 10.3 below, the Acquiring Company represents
and warrants to the Brauvin Partnership as follows:
4.1 Formation and Qualification. The Acquiring 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 Acquisition. The Acquiring Company is or, prior to the Closing
Date, 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 Acquiring
Company. Copies of the Articles of Organization of the Acquiring
Company (the "MC Articles") and the Operating Agreement of the
Acquiring Company (the "MC Agreement") heretofore delivered or to
be delivered to the Brauvin Partnership are accurate and complete
as of the date hereof. The Acquiring Company is not in default
under or in violation of any provision of the MC Agreement.
4.2 Authority Relative to this Agreement. The Acquiring
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 Acquiring Company and the
consummation by the Acquiring Company of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of the Acquiring Company and the Manager, and no
other action on the part of the Acquiring Company or the Manager is
necessary to authorize this Agreement, the Acquisition and the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Acquiring Company and constitutes a
valid and binding obligation of the Acquiring Company, enforceable
against the Acquiring Company in accordance with its terms.
4.3 No Conflicts. Neither the execution and delivery
of this Agreement by the Acquiring Company nor the consummation of
the transactions contemplated hereby nor compliance by the
Acquiring 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 Acquiring 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 Acquiring
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 4.4, violate any
Order, statute, rule or regulation applicable to the Acquiring
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 Acquiring Company.
4.4 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 Acquiring
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 Acquiring 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 Acquiring Company.
4.5 No Prior Activities. The Acquiring 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 Acquisition and the financing
described in Section 8.2.4 hereof. Except as contemplated by the
foregoing sentence, the Acquiring 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.
4.6 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 Acquiring Company or the Manager.
5. Representations and Warranties of the Brauvin
Partnership. All information within the Acquiring Company's
Knowledge shall be deemed to have been disclosed by the Brauvin
Partnership in connection with the representations and warranties
set forth below. Subject to Section 10.3 below or as otherwise set
forth in the Disclosure Schedule, the Brauvin Partnership
represents and warrants to the Acquiring Company as follows:
5.1 Formation and Qualification. The Brauvin
Partnership 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.
The Brauvin Partnership 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 the Brauvin
Partnership's 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 Brauvin
Partnership. Copies of the Partnership Certificate and the
Partnership Agreement, heretofore delivered or made available to
the Acquiring Company, are accurate and complete as of the date
hereof. The Brauvin Partnership is not in default under or in
violation of any provision of its Partnership Agreement, except, in
each case, for such defaults or violations which would not have any
material adverse effect on the Condition of Brauvin Partnership.
5.2 No Subsidiaries. Other than Brauvin Gwinnett County
Venture, the Brauvin Partnership does not have any Subsidiaries and
no equity or similar interest, whether voting or non-voting, in any
Person.
5.3 Capitalization. As of the date hereof, the
outstanding partnership interests of the Brauvin Partnership is as
follows: (a) general partners' interest and (b)
___________________ issued and outstanding Units. There are no
outstanding options, warrants, calls, subscriptions or other rights
or other agreements or commitments obligating the Brauvin
Partnership or its Affiliates to issue, transfer or sell (a) any
additional partnership interests of the Brauvin Partnership or (b)
any Units, except as contemplated herein. All issued and
outstanding Units are validly issued, and the purchase price
therefor has been paid in full.
5.4 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 the Brauvin
Partnership as provided in each Brauvin Partnership, Partnership
Agreement, Partnership Certificate and the Partnership Act, the
Brauvin Partnership 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 the Brauvin Partnership
and the consummation by the Brauvin Partnership 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 the
Brauvin Partnership and, except for the approval of holders of the
Units ("Unitholders") as set forth in Section 7.2 hereof, no other
proceedings on the part of the Brauvin Partnership or the Brauvin
GP are necessary to authorize this Agreement, the Acquisition and
the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Brauvin Partnership and constitutes
a valid and binding obligation of the Brauvin Partnership
enforceable against the Brauvin Partnership in accordance with its
terms.
5.5 No Conflicts. Except as set forth in the Disclosure
Schedule, neither the execution and delivery of this Agreement by
the Brauvin Partnership nor the consummation of the transactions
contemplated hereby nor compliance by the Brauvin Partnership and
the Brauvin GP with 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 Brauvin Partnership or the Brauvin GP under, any of the terms,
conditions or provisions of (x) the Partnership Certificate or the
Partnership Agreement, 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 the Brauvin Partnership or
the Brauvin GP 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
5.6, to the Brauvin Partnership's Knowledge, violate any Order,
statute, rule or regulation applicable to the Brauvin Partnership
or the Brauvin GP or any of their properties or assets, except, in
the case 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 the Brauvin Partnership
or the Brauvin GP.
5.6 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 Acquiring Company
or facts specifically pertaining to it, to the Brauvin
Partnership's 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 the
Brauvin Partnership and the Brauvin GP 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 Partnership or
Brauvin GP.
5.7 Commission Filings; Financial Statements. The
Brauvin Partnership has heretofore delivered or made available (or
will make available when available) to the Acquiring Company its
(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 Partnership 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 Partnership for the three months ended
June 30, 1996 (the "Interim Financial Statements"). As of their
respective dates, 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 the Brauvin
Partnership included or incorporated by reference in such reports
and the Interim Financial Statements (collectively, the "Brauvin
Partnership's 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 the Brauvin Partnership as of
the dates thereof and the results of its operations and changes in
its financial position for the periods then ended. The
consolidated balance sheets of the Brauvin Partnership at
_____________, including the notes thereto, is referred to as the
"Balance Sheet," and ___________, is referred to as the "Balance
Sheet Date."
5.8 No Undisclosed Liabilities. At the Balance Sheet
Date, the Brauvin Partnership does not 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 Sheet which were required to
be reflected or disclosed therein in accordance with generally
accepted accounting principles. Since the Balance Sheet Date,
except as disclosed in the Disclosure Schedule, the Brauvin
Partnership has not incurred any such Liabilities.
5.9 Absence of Certain Changes or Events. Except as and
to the extent set forth on the Balance Sheet, or as set forth on
the Disclosure Schedule, since the Balance Sheet Date, there has
not been (a) any material adverse change in the Condition of the
Brauvin Partnership; (b) any entry by the Brauvin Partnership into
any commitment or transaction material to the Brauvin Partnership,
which is not in the ordinary course of business and consistent with
past practices; (c) any material change by the Brauvin Partnership
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 the Brauvin Partnership, or direct or
indirect redemption, purchase or other acquisition of any Units or
other securities of the Brauvin Partnership; (e) any revaluation by
the Brauvin Partnership 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 Purchased Assets; (f) any action taken by
the Brauvin Partnership of the type referred to in Sections 6.1.2
or 6.1.3 hereof; (g) any agreement by the Brauvin Partnership 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 5 untrue or incorrect;
(h) any damage, destruction or loss, whether covered by insurance
or not, having a material adverse effect upon the Condition of the
Brauvin Partnership; (i) any issuance, grant, sale or pledge or
agreement to issue, grant, sell or pledge by the Brauvin
Partnership, with any Person other than an Affiliate of the
Acquiring 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 the Brauvin
Partnership, other than personal property not material to the
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 the Brauvin Partnership,
other than personal property not material to such Brauvin
Partnership disposed of in the ordinary course of business and
consistent with past practices.
5.10 Litigation. There is no action or proceeding or
investigation pending or, to the Brauvin Partnership's Knowledge,
threatened against or involving the Brauvin Partnership, any
properties or rights of the Brauvin Partnership or, to the Brauvin
Partnership's Knowledge, any liabilities which if adversely
determined would, individually or in the aggregate, have a material
adverse effect on the Condition of the Brauvin Partnership nor is
the Brauvin Partnership, its assets or, to the Brauvin
Partnership's Knowledge, any Property subject to any Order which
would have such an effect.
5.11 Taxes. To the Brauvin Partnership's Knowledge,
except as set forth on the Disclosure Schedule, the Brauvin
Partnership has 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. The Brauvin Partnership constitutes a
partnership for all income tax purposes rather than a corporation
or association taxable as a corporation. The Brauvin Partnership
does not have in effect an election pursuant to Section 754 of the
Code.
5.12 Assets. The Brauvin Partnership has no assets other
than those listed on its Balance Sheet. The Brauvin Partnership
has good and marketable title to the Purchased Assets, free and
clear of any lien, claims, encumbrances, and security interests
except for the Permitted Liens.
5.13 Transactions with Affiliates. Except as described
in the Disclosure Schedule or the SEC Filings, the Brauvin
Partnership has not entered into any of the following transactions
with any Affiliate or Individual Affiliate in connection with which
the Brauvin Partnership has 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 the
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.
5.14 Disclosure. To the Brauvin Partnership's Knowledge,
no written statement, certificate, schedule, list or other written
information furnished by or on behalf of the Brauvin Partnership to
the Acquiring 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.
5.15 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 the Brauvin Partnership or the Brauvin GP.
5.16 General Partners. The Brauvin Partnership does not
have any general partners or holders of general partnership
interests other than the Brauvin GP.
5.17 Compliance with Law. The Brauvin Partnership has
conducted its 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 of the Brauvin
Partnership, the failure to comply with which would, individually
or in the aggregate, have a material adverse effect on the
Condition of the Brauvin Partnership, provided, for purposes of
this Section 5.17, 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 the Brauvin
Partnership's Knowledge.
5.18 Properties.
5.18.1 The Brauvin Partnership has herewith or
heretofore delivered or made available to the Acquiring 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, that are in the possession or
control of the Brauvin Partnership and all documents related
thereto that were executed by or on behalf of the Brauvin
Partnership, 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.
5.18.2 The Brauvin Partnership 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 Acquiring 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 Acquiring Company). The Brauvin
Partnership has not endorsed, granted, assigned, transferred or
otherwise pledged, encumbered or set over the Properties to any
Person other than as disclosed.
6. Conduct of Business Pending the Acquisition.
6.1 Conduct of Business by the Brauvin Partnership
Pending the Acquisition. The Brauvin Partnership covenants and
agrees that, from the date of this Agreement until the Effective
Time, unless the Acquiring Company shall otherwise agree in writing
or as otherwise expressly contemplated by this Agreement:
6.1.1 The business of the Brauvin Partnership shall
be conducted only in, and the Brauvin Partnership shall not take
any action except in, the ordinary course of business and
consistent with past practices, and the Brauvin Partnership shall
use all commercially reasonable efforts to maintain and preserve
its business organizations, assets, prospects and advantageous
business relationships.
6.1.2 Except as contemplated hereby and subject to
the Brauvin GP's fiduciary duty to the holders of Units, none of
the Brauvin Partnership shall not 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 the Brauvin Partnership;
(ii) whether or not in the ordinary course of business, sell,
finance or dispose of any property or asset which is material to
the Brauvin Partnership; (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 Liens; (iv) declare, set
aside or pay any distribution, payable in cash, securities,
property or otherwise, with respect to its partnership interests or
Units; (v) redeem, purchase or otherwise acquire or offer to
redeem, purchase or otherwise acquire any partnership interests or
Units; or (vi) authorize or propose any of the foregoing, or enter
into any contract, agreement, commitment, or arrangement to do any
of the foregoing.
6.1.3 Except as contemplated hereby and subject to
the Brauvin GP's fiduciary duty to the holders of Units, the
Brauvin Partnership shall not, 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 6.1.3, or enter into or modify any
contract, agreement, commitment or arrangement to do any of the
actions prohibited in this Section 6.1.3.
6.1.4 The Brauvin Partnership shall not make any
tax election which may have a material adverse effect on the
Condition of the Brauvin Partnership or the Acquiring Company,
change any material tax accounting method or settle or compromise
any material federal, state, local or foreign income tax liability.
The Brauvin GP shall halt, suspend or limit trading of Units to the
extent necessary to prevent a termination of the Brauvin
Partnership for income tax purposes as a result of such trading or
such trading in combination with the consummation of the
Transaction.
6.1.5 The Brauvin Partnership shall not take any
action or agree, in writing or otherwise, to take any of the
actions prohibited by this Section 6.1 or any action which would
make any representation or warranty in Section 5 hereof untrue or
incorrect in any material respect.
7. Additional Agreements.
7.1 Proxy Statements; Other Filings. As promptly as
practicable after the date hereof, the Brauvin Partnership 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 the Brauvin Partnership
shall mail to its respective limited partners and holders of Units,
a proxy statement and form of proxy with respect to the meeting of
the partners of the Brauvin Partnership referred to in Section 7.2
hereof. The term "Proxy Statement" shall mean such proxy statement
at the time it is initially mailed to the limited partners of the
Brauvin Partnership 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, the Brauvin
Partnership and the Acquiring 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 Acquisition
and the transactions contemplated herein ("Other Filings"). The
Brauvin Partnership shall notify the Acquiring 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 Statement
or by any other governmental official with respect to any Other
Filing or for additional information and will supply the Acquiring
Company with copies of all correspondence between the Brauvin
Partnership and its 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
Statement and any Other Filings. The Brauvin Partnership and the
Acquiring Company each shall use all commercially reasonable
efforts to obtain and furnish the information required to be
included in the Proxy Statement and any Other Filings; and the
Brauvin Partnership, after consultation with the Acquiring Company,
shall use all commercially reasonable efforts to respond promptly
to any comments made by the Commission with respect to the Proxy
Statement and any Other Filings and any preliminary version thereof
and cause the Proxy Statement and related form of proxy to be
mailed to the limited partners of the Brauvin Partnership and
holders of Units at the earliest practicable time. The Brauvin
Partnership shall notify the Acquiring Company of its intention to
mail the Proxy Statement to the limited partners of the Brauvin
Partnership 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 Acquiring Company
and the Brauvin Partnership, respectively, for use in the Proxy
Statement and any Other Filings shall, on the date the Proxy
Statement are first mailed to the limited partners of the Brauvin
Partnership 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 the Brauvin
Partnership and the holders of Units referred to in Section 7.2
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 the Brauvin Partnership agrees to correct any such
information provided by it for use in the Proxy Statement or any
Other Filings which shall have become false or misleading. The
Proxy Statement 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.
7.2 Meetings of the Limited Partners and Unitholders.
The Brauvin Partnership shall take all action necessary, in
accordance with the Partnership Act, the Partnership Certificate
and the Partnership Agreement to duly call, give notice of, convene
and hold meetings of each of the limited partners and Unitholders
of the Brauvin Partnership as promptly as practicable to consider
and vote upon and obtain Unitholder Approval of the Transaction,
including, without limitation, the Acquisition and this Agreement
(the "Meetings"). The Proxy Statement shall contain the
determinations and recommendations, if any, of the Brauvin GP as to
the Transaction. The Brauvin Partnership 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 Acquiring Company, helpful to secure the Unitholder Approval of
the Transaction.
7.3 Fees and Expenses. (a) The Brauvin Partnership
shall be liable for, and shall pay, the fees and expenses
associated with preparing, filing, printing and distributing the
Proxy Statement, 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
Opinion and all expenses associated with the transfer of title of
the Properties to the Acquiring 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.
(b) The Acquiring 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.
7.4 Further Agreements.
7.4.1 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 the Brauvin Partnership and
the Acquiring 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.
7.4.2 In connection with any Designated Action, the
Brauvin Partnership hereby agrees to: (i) promptly deliver to the
Acquiring 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 Acquiring 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
Acquiring Company or (y) the day of the deadline for such motion,
reply or pleading; and (iii) consult with the Acquiring Company in
a timely manner prior to taking any other action.
7.5 No Shop Limitation. If the Brauvin GP is required
because of its 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 the
Brauvin Partnership (an "Alternative Proposal"), nothing in this
Agreement shall prohibit the Brauvin GP or the Brauvin Partnership
from responding to such Alternative Proposal, making any required
disclosures under federal securities laws, providing information
regarding the 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) the Brauvin Partnership agrees to give the
Acquiring 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 the Brauvin Partnership terminates this
Agreement as a result of its acceptance of an Alternative Proposal,
the Brauvin Partnership shall pay Acquiring Company a termination
fee equal to one percent (1%) of the consideration otherwise
payable for the Purchased Assets as provided in Section 3.1 hereof,
payable only upon the actual consummation of such Alternative
Proposal.
7.6 Additional Financial Statements. As soon as
reasonably practicable after they become publicly available, the
Brauvin Partnership shall furnish the Acquiring 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 Sheet Date and prior to
the Effective Time, accompanied by statements by the Brauvin GP
that, in the opinion of such Brauvin GP, 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 the Brauvin Partnership, as of the dates
and for the periods covered by such statements and (ii) any other
financial statements that the Brauvin Partnership shall prepare for
any interim period subsequent to the Balance Sheet Date and prior
to the Effective Time.
7.7 Access to Information; Confidentiality.
7.7.1 The Brauvin Partnership shall, and shall
cause its employees, consultants, accountants, counsel and agents
to, afford to the Acquiring 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 Acquiring
Company and its representatives and such banks, lenders, financial
institutions and others all financial, operating and other data and
information as the Acquiring Company and its representatives and
such banks, lenders, financial institutions and others, through
their respective officers, employees or agents, may reasonably
request.
7.7.2 No investigation pursuant to this Section 7.7
shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
7.8 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 the Brauvin Partnership and the Acquiring Company.
Notwithstanding the foregoing, the Brauvin Partnership and the
Acquiring 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.
7.9 Agreement to Defend and Indemnify. From and after
the Effective Time, the Acquiring Company will indemnify the
Brauvin GP and the officers, agents and employees of the Brauvin
Partnership to the fullest extent provided in the Partnership
Agreement as currently in effect as if such indemnified Persons
continued to serve the Brauvin Partnership after the Effective Time
and shall assume the Brauvin Partnership's obligations to provide
such indemnification for all matters occurring prior to the
Effective Time. For purposes of this Section 7.9 only, the term
"Affiliates" shall have the meaning ascribed to such term in the
Partnership Agreements.
7.10 Notification of Certain Matters. The Brauvin
Partnership shall give prompt notice to the Acquiring Company, and
the Acquiring Company and its Affiliates shall give prompt notice
to the Brauvin Partnership, 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 Brauvin
Partnership or the Acquiring 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.
7.11 Cooperation. The Brauvin Partnership and the
Brauvin GP shall use all commercially reasonable efforts to assist,
and cooperate with the Acquiring Company and their respective
Affiliates in consummating all financing and related transactions.
7.12 Tax Returns. (a) Neither the Acquiring Company nor
Manager shall cause the Acquiring Company to, and the Acquiring
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 GP or its designee, which consent shall not be unreasonably
withheld.
(b) The Acquiring Company, Manager and the
Brauvin GP shall use all commercially reasonable efforts to
cooperate with and assist each other so that, after the Closing
Date, all tax returns of the Brauvin Partnership 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 Acquiring Company.
7.13 Notice of Failure to Satisfy Closing Conditions.
(a) In the event that the Acquiring Company
determines, on or after the date that the Brauvin Partnership shall
deliver a final Disclosure Schedule pursuant to Section 3.6 above
and on or prior to the Closing Date, that any condition to the
Acquiring Company's or the Brauvin Partnership's obligation to
close pursuant to Section 8 will not be satisfied on or prior to
the Closing Date, the Acquiring Company shall give prompt notice to
the Brauvin Partnership and, in the case of Sections 8.1 and 8.3,
shall provide the Brauvin Partnership a period of ten business days
for the Brauvin Partnership to satisfy all such conditions.
(b) In the event that the Brauvin Partnership
determines on or prior to the Closing Date that any condition to
the Brauvin Partnership's or the Acquiring Company's obligation to
close pursuant to Section 8 will not be satisfied on or prior to
the Closing Date, the Brauvin Partnership shall give prompt notice
to the Acquiring Company and, in the case of Sections 8.1 and 8.2,
shall provide the Acquiring Company a period of ten business days
for the Acquiring Company to satisfy all such conditions.
8. Conditions.
8.1 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 the following conditions which may be waived
in whole or in part only by written agreement of the Brauvin
Partnership and the Acquiring Company.
8.1.1 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.
8.1.2 Unitholder Approval for the Transaction shall
have been obtained in accordance with the Partnership Act and the
Partnership Agreement.
8.1.3 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.
8.2 Additional Conditions to the Obligation of the
Brauvin Partnership. The obligation of the Brauvin 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 Brauvin Partnership.
8.2.1 The Acquiring Company shall in all material
respects have performed each obligation to be performed by it
hereunder on or prior to the Effective Time.
8.2.2 The representations and warranties of the
Acquiring 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.
8.2.3 A favorable opinion (the "Fairness Opinion")
of an investment banking firm reasonably acceptable to the Brauvin
Partnership as to the fairness of the Acquisition consideration to
the holders of the Units, from a financial point of view, shall
have been delivered to each Brauvin Partnership.
8.2.4 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 Acquiring Company shall have delivered to
the Brauvin 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 Brauvin
Partnership as the selling party in the Transaction; provided, that
unless the Brauvin Partnership give notice to the Acquiring Company
(x) within ten days after the delivery of a copy of the Commitment
Letter to the Brauvin Partnership, that the Commitment Letter does
not satisfy the condition set forth in this Section 8.2.4 or (y) if
the Commitment Letter shall not be delivered prior to the
Commitment Date, within two business days after the Commitment Date
that the Brauvin Partnership does not have any obligation to effect
the Transaction because of the failure of the condition set forth
in this Section 8.2.4 such condition shall be deemed to be waived.
8.3 Additional Conditions to the Obligations of the
Acquiring Company. The obligation of the Acquiring 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 Acquiring Company:
8.3.1 The Brauvin Partnership shall in all material
respects have performed each obligation to be performed by it
hereunder on or prior to the Effective Time.
8.3.2 The Brauvin Partnership shall have cash
available and not restricted equal to and replacement reserves
estimate to be $___________ and $________ respectively, each as set
forth in Exhibit B hereto, which Exhibit reflects projected
balances as of July 31, 1996. If the Closing Date does not occur
on or before July 31, 1996, the Brauvin Partnership shall prepare
new projections of cash available and not restricted and
replacement reserves by calendar quarter, subject to the approval
of the Acquiring Company in its reasonable business judgment.
8.3.3 The Acquiring 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 the Brauvin
Partnership 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 the Brauvin
Partnership), provided, that unless the Acquiring Company gives
notice to the Brauvin Partnership prior to the Mailing Date that
the Acquiring Company has no obligation to effect the Transaction
because of the failure of the condition set forth in this Section
8.3.3, such condition shall be deemed waived.
8.3.4 No action, suit or proceeding before any
court or governmental authority shall have been commenced and be
pending by any Person against the Brauvin Partnership or the
Acquiring 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.
8.3.5 Receipt by the Acquiring Company of debt and
equity financing which in its sole judgment is satisfactory.
8.3.6 The Brauvin Partnership shall not have
undergone a material adverse change in its Condition or its ability
to perform its obligations under this Agreement. For purposes of
this Section 8.3.6, the discovery after the Mailing Date of a fact
which fact is materially adverse to the Condition of the Brauvin
Partnership and which could not have been reasonably discovered by
the Acquiring Company or its Affiliates on or prior to the Mailing
Date shall be deemed to be a material adverse change to the
Condition of the Brauvin Partnership.
8.3.7 The Acquiring Company shall have determined
that the legal, accounting and business due diligence investigation
of the Brauvin Partnership to be conducted by or on behalf of the
Acquiring 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 Acquiring Company's best interests, provided, that, unless the
Acquiring Company gives notice to the Brauvin Partnership prior to
the Mailing Date that the Acquiring Company has no obligation to
effect the Transaction because of the failure of the condition set
forth in this Section 8.3.7, such condition shall be deemed to be
waived.
8.3.8 The Brauvin Partnership shall not have made
a distribution of earnings with respect to any Units from the date
hereof through the Effective Time.
8.3.9 The Acquiring Company shall have received
from the Brauvin Partnership an environmental assessment of each
Property, and the Acquiring Company shall have completed its review
of such Environmental Reports and the Acquiring Company shall be
satisfied in its sole discretion that (i) the Acquiring 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 Acquiring Company will not be subject to any
material adverse, unusual or onerous agreements, conditions,
liabilities or obligations to which the Brauvin Partnership is a
party.
8.3.10 The Acquiring Company shall have completed
its review of the assets and business of the Brauvin Partnership
and found them to be satisfactory to it in its discretion.
8.3.11 The Brauvin Partnership shall have delivered
to the Acquiring Company such further information, documents and
instruments as the Acquiring Company shall reasonably require.
9. Termination, Amendment and Waiver.
9.1 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:
9.1.1 By mutual written consent of the Acquiring
Company and the Brauvin Partnership;
9.1.2 By either the Acquiring Company or the
Brauvin 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;
9.1.3 By either the Acquiring Company or the
Brauvin 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 this Agreement to perform in all material respects its
obligations under this Agreement required to be performed by it
prior to the Effective Time;
9.1.4 By either the Acquiring Company or the
Brauvin Partnership, if at the Meeting (including any adjournment
thereof) Unitholder Approval of the Transaction shall not be
obtained;
9.1.5 By the Acquiring Company, if the Brauvin
Partnership shall have withdrawn, modified or amended in any
respect its approval of the Transaction;
9.1.6 By the Acquiring Company, if the Brauvin
Partnership fail to perform in all material respects its
obligations under this Agreement;
9.1.7 By the Acquiring Company, if there shall have
occurred a material adverse change in the Condition of the Brauvin
Partnership since the date of this Agreement;
9.1.8 By the Brauvin Partnership, if the Acquiring
Company fails to perform in all material respects its obligations
under this Agreement;
9.1.9 By the Acquiring Company, if the Brauvin
Partnership shall have settled or compromised any Designated Action
without the prior written consent of the Acquiring Company, unless
such settlement or compromise (i) requires the payment of money by
the 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 Acquiring
Company shall reasonably object;
9.1.10 By the Acquiring Company, if, prior to the
Effective Time, the representations and warranties of the 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 9.1.10 the
representations and warranties set forth in Section 5.14 shall be
deemed to have been made irrespective of the qualification
contained therein as to the Knowledge of the Brauvin Partnership;
9.1.11 By the Brauvin Partnership, in accordance
with Section 8.2.4., if there shall have been a failure of the
condition set forth therein or the Brauvin Partnership elects to
pursue an Alternative Proposal pursuant to Section 7.5 hereof; or
9.1.12 By the Acquiring Company, if any of Brauvin
High Yield Fund L.P., Brauvin High Yield Fund L.P. II or Brauvin
Income Plus L.P. III are unable to consummate a merger with and
into Acquiring Company on terms acceptable to the Acquiring
Company.
9.2 Effect of Termination. In the event of the
termination of this Agreement and abandonment of the Transaction as
provided in Section 9.1 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of the
Acquiring Company or the Brauvin Partnership 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 pursuant to
Section 7.5 hereof, the payment by the Brauvin Partnership of the
termination fee provided therein.
9.3 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
effects any change which would adversely affect the holders of
Units without the further Unitholder Approval.
9.4 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
9.3 hereof, waive compliance with any of the agreements of any
other party or with any conditions to its own obligations.
10. General Provisions.
10.1 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 Acquiring 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 Partnership or the
Brauvin GP:
c/o Brauvin Real Estate Funds
150 South Wacker Drive, Suite 3200
Chicago, Illinois 60606
Attention: Jerome J. Brault
10.2 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 Partnership:
_________________________________, and (ii) the following Persons
shall be deemed Affiliates of the Acquiring Company:
_____________________.
"Available Cash" means the amount of cash and cash
equivalents held by or at the direction of the Brauvin Partnership
after deducting any amounts then owed, accrued or reserved by the
Brauvin Partnership for goods, services or liabilities of any
nature or description.
"Brauvin GP" means, collectively, Brauvin Realty Advisors
IV, Inc, an Illinois corporation, Jerome J. Brault and Cezar M.
Froelich.
"Brauvin Value" means an amount which is equal to the
difference between (i) the sum of (A) the fair market value of the
Brauvin Partnership's real estate related assets (as determined by
Cushman & Wakefield or other independent appraiser), (B) Brauvin
Partnership's Available Cash and (C) earning of Brauvin Partnership
through July 31, 1996 and (ii) the liabilities of the Brauvin
Partnership existing as of the Closing Date to the extent assumed
by the Acquiring Company.
"Brauvin Unit Value" means an amount which is equal to
the quotient obtained by dividing (i) the difference between (A)
the Brauvin Value and (B) the costs of the Transaction to the
Brauvin Partnership, by (ii) the number of Brauvin Partnership
Units.
"Business Combination" means any acquisition or purchase
of assets of, or any equity interest in, the Brauvin Partnership 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 the
Brauvin Partnership or other transactions involving any vote or
consent of the holders of any class of Units.
"Closing Date" means the date upon which the Acquisition
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 the Brauvin
Partnership and its assets required to be delivered by the Brauvin
Partnership to the Acquiring Company pursuant to Section 3.6 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 the Brauvin
Partnership 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
Partnership or at any Purchased Assets.
"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 Purchased Assets.
"Individual Affiliate" means any Person who is now, or
at any time since _________________________, 199 ___ has been, (i)
a Partner of the Brauvin Partnership, (ii) a director or officer of
the corporate general partner of the Brauvin GP, or (iii) any
"associate" (as defined in the rules pursuant to the Exchange Act)
of any of the above.
"Knowledge" means (i) with respect to the Brauvin
Partnership, the knowledge of (a) the particular Brauvin GP, 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 Acquiring 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
Statement are mailed to the holders of Units pursuant to Section
7.1 above.
"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 Agreement" means the partnership agreement
of the Brauvin Partnership, as amended.
"Partnership Certificate" means the certificate or
articles of limited partnership of the Brauvin Partnership, 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 Partnership, the agreement of
limited partnership or other organizational or governing documents
of the Brauvin Partnership, (ii) any statute, law, treaty, rule,
regulation or ordinance applicable to the Brauvin Partnership, 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 the Brauvin
Partnership and its 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 Acquiring Company or the Brauvin
Partnership to no later than August 31, 1996 if the Transaction is
proceeding in good faith.
"Transaction" means (i) the Acquisition, (ii) certain
amendments to the Partnership Agreements necessary to consummate
the Acquisition and (iii) the dissolution and termination of the
Brauvin Partnership.
"Units" means units of limited partnership interest in
the Brauvin Partnership.
"Unitholder Approval" means the approval of the limited
partners of the Brauvin Partnership.
The following terms are defined in the corresponding
Sections listed below:
Term Section
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . .5.7
Balance Sheets Date. . . . . . . . . . . . . . . . . . . . . .5.7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . .3.3
Commitment Date. . . . . . . . . . . . . . . . . . . . . . .8.2.4
Designated Actions . . . . . . . . . . . . . . . . . . . . 7.4.1
Effective Time . . . . . . . . . . . . . . . . . . . . . . . .3.3
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . .8.2.3
Interim Financial Statements . . . . . . . . . . . . . . . . .4.7
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2
<PAGE>
Term Section
Acquisition. . . . . . . . . . . . . . . . . . . . . . . Recitals
Acquiring Company. . . . . . . . . . . . . . . . . . . . Recitals
MC Agreement . . . . . . . . . . . . . . . . . . . . . . . . .4.1
MC Certificate . . . . . . . . . . . . . . . . . . . . . . . .3.1
Other Filings. . . . . . . . . . . . . . . . . . . . . . . . .7.1
Partnership Act. . . . . . . . . . . . . . . . . . . . . Recitals
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . .7.1
Purchased Assets . . . . . . . . . . . . . . . . . . . . . . .1.1
SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . .5.7
<PAGE>
10.3 Representations and Warranties; Etc. The
respective representations and warranties of the Brauvin Partnership
and the Acquiring Company contained herein shall expire with, and be
terminated and extinguished upon, consummation of the Acquisition,
and thereafter none of the Brauvin Partnership or the Acquiring
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 10.3 shall have no effect
upon any other obligation of the parties hereto, whether to be
performed before or after the consummation of the Acquisition.
10.4 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.
10.5 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.
10.6 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.
10.7 Incorporation of Recitals. The Recitals hereto are
incorporated into this Agreement as if fully restated herein.
10.8 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 Acquiring 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 the Brauvin Partnership, shall agree to
assume all of the Acquiring 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.
<PAGE>
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 CORPORATE LEASE PROGRAM IV L.P.,
a Delaware limited partnership
By: Brauvin Realty Advisors IV, Inc., an
Illinois corporation
Its: Manager
By: _________________________________
Its: ________________________________
<PAGE>
EXHIBIT A
FORM OF OPINION OF BRAUVIN PARTNERSHIP'S COUNSEL
1. The 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 the Brauvin Partnership has been duly authorized and
approved by all requisite partnership action. The
Agreement has been duly executed and delivered by the
Brauvin Partnership and constitutes a valid and binding
obligation of the Brauvin Partnership and is enforceable
against it 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 the 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 the Brauvin Partnership.
4. All approvals, consents, authorizations or modifications
which are required by the Brauvin Partnership to permit
the performance by the Brauvin Partnership of its
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 the Brauvin Partnership or its
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
the Brauvin Partnership (b) decree (other than decrees
of general applicability to banks generally) or judgment
of any court or any governmental agency to which the
Brauvin Partnership 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
the Brauvin Partnership.
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
Partnership and its 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>
EXHIBIT B
PROJECTED CASH AT CLOSING
<PAGE>
SCHEDULE 1
PERMITTED LIENS
<PAGE>
SCHEDULE 2
ALLOCATION OF PURCHASE PRICE
<PAGE>
<TABLE>
Brauvin Corporate Lease Program IV
<CAPTION>
UNIT PROPERTY PROPERTY FOOT STREET
NO. TYPE NAME NOTES CITY ADDRESS ST.
<S> <C> <C> <C> <C> <C>
21 RETAIL PAYLESS SHOESOURCE BLAINE 439 PEACE PORTAL DRIVE WA
7 RETAIL COMPUSA (11) DULUTH 3825 VENTURE DRIVE GA
18 SIT-DOWN EAST SIDE MARIO'S COPLEY 85 WEST MONTROSE AVENUE OH
14 SIT-DOWN STEAK 'N SHAKE PEERLESS PARK 76 SOUTH HIGHWAY DRIVE MO
13 RETAIL BLOCKBUSTER VIDEO EAGAN 2075 CLIFF ROAD MN
5 RETAIL WALDEN BOOKS MIAMI 11190 KENDAL DRIVE FL
6 SIT-DOWN MRS WINNER'S OAKWOOD 3465 MUNDY MILL ROAD GA
710 DAY-CARE CHILDREN'S WORLD (3) ARLINGTON 1235 WEST SUBLETT ROAD TX
22 SIT-DOWN SHOWBIZ ASHWAUBENSON 1273 LOMBARDI ACCESS ROAD WI
10 RETAIL SOFRO FABRICS JOLIET 2900 COLORADO AVENUE IL
17 SIT-DOWN SHOWBIZ SPRINGFIELD 2345 VALLEY LOOP ROAD OH
</TABLE>
<PAGE>
<TABLE>
Brauvin Corporate Lease Program IV
<CAPTION>
UNIT PROPERTY PROPERTY FOOT BLG. LAND YEAR CUSHMAN AND WAKEFIELD VALUATION INDICATORS
NO. TYPE NAME NOTES SF SF BUILT C&W VALUE YR 1 $NOI OAR IRR OUT-OAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21 RETAIL PAYLESS SHOESOURCE 10,900 16,950 1955 $1,280,000 $162,161 12.67% 11.00% 11.00%
7 RETAIL COMPUSA (11) 26,150 105,919 1992 $2,050,000 $228,603 11.15% 12.00% 11.00%
18 SIT-DOWN EAST SIDE MARIO'S 6,240 76,783 1993 $1,480,000 $150,170 10.15% 12.25% 11.50%
14 SIT-DOWN STEAK 'N SHAKE 3,722 39,900 1990 $1,150,000 $122,479 10.65% 12.25% 11.50%
13 RETAIL BLOCKBUSTER VIDEO 7,028 37,364 1993 $ 940,000 $100,908 10.73% 12.00% 11.00%
5 RETAIL WALDEN BOOKS 8,477 32,344 1987 $1,380,000 $157,848 11.44% 12.00% 11.00%
6 SIT-DOWN MRS WINNER'S 2,436 25,700 1983 $ 780,000 $79,726 10.22% 12.25% 11.50%
710 DAY-CARE CHILDREN'S WORLD (3) 4,950 27,207 1984 $ 470,000 $46,800 9.96% 11.25% 11.50%
22 SIT-DOWN SHOWBIZ 10,172 85,063 1983 $1,080,000 $130,932 12.12% 12.50% 11.50%
10 RETAIL SOFRO FABRICS 20,000 79,192 1993 $1,570,000 ($ 38,800) (2.47%) 12.50% 11.50%
17 SIT-DOWN SHOWBIZ 10,183 120,618 1983 $ 920,000 $112,534 12.23% 12.50% 11.50%
<FN>
<FN1>
FOOTNOTES:
(1) CURRENTLY BEING REMODELED FOR A CHINESE RESTURANT.
(4) ON HOLD UNTIL FURTHER NOTICE.
(5) WAS A PONDEROSA. CURRENTLY CLOSED.
(6) SUBLEASED BY PONDEROSA.
(7) SUBLEASED BY PONDEROSA.
(8) SUBLEASED
(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%.
</FN>
</TABLE>
