OFFER TO PURCHASE FOR CASH ALL UNITS OF LIMITED PARTNERSHIP INTEREST OF SECURED INCOME, LP AT $5 PER UNIT by: MACKENZIE PATTERSON SPECIAL FUND 5, LLC; MPF DEWAAY FUND 8, LLC; REAL ESTATE SECURITIES FUND 1983, LP; MPF BADGER ACQUISITION CO., LLC; MPF...
OFFER TO
PURCHASE FOR CASH ALL
UNITS OF
LIMITED PARTNERSHIP INTEREST OF SECURED INCOME, LP
AT
$5
PER UNIT
by:
XXXXXXXXX
XXXXXXXXX SPECIAL FUND 5, LLC; MPF DEWAAY FUND 8, LLC; REAL ESTATE SECURITIES
FUND 1983, LP; MPF BADGER ACQUISITION CO., LLC; MPF FLAGSHIP FUND 13, LLC; MPF
SENIOR NOTE PROGRAM II, LP; MPF BLUE RIDGE FUND I, LLC; MPF INCOME FUND 24, LLC;
MPF FLAGSHIP FUND 14, LLC; SCM SPECIAL FUND 2, LP;
(collectively
the “Purchasers”)
THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., PACIFIC TIME, ON JULY 30, 2010,
UNLESS THE OFFER IS EXTENDED.
The
Purchasers hereby seek to acquire ALL Units of limited partnership interest (the
“Units”) in SECURED INCOME, LP (the “Partnership”) not already held by
purchasers and their affiliates. The Purchasers are not affiliated
with the Partnership or its general partner. The general partner of
the Partnership is Xxxxxx Xxxxxxx Resources Corporation (the “General Partner”).
The Purchasers hereby offer to purchase 849,156 Units at a purchase price equal
to $5 per
Unit, less the amount of any distributions declared or made with respect
to the Units between June 23, 2010 and July 30, 2010, or such other date to
which this offer may be extended (the “Expiration Date”), in cash, without
interest, upon the terms and subject to the conditions set forth in this offer
to purchase (the “Offer to Purchase”) and in the related Assignment Form, as
each may be supplemented or amended from time to time (which together constitute
the “Offer”). As noted above, the Offer price would be subject to
reduction for distributions made or declared prior to the Expiration
Date. Any distributions made or declared after the Expiration Date
would, by the terms of the Offer and as set forth in the Assignment Form, be
assigned by tendering Unit holders to the Purchasers.
Tender of
Units will include the tender of any and all securities into which the Units may
be converted and any securities distributed with respect to the Units from and
after the Offer Date. The Partnership had 520 holders of record
owning an aggregate of 984,369 units as of December 31, 2009, according to its
Annual Report on Form 10-K for the fiscal year ending December 31,
2009. The Purchasers and their affiliates currently beneficially own
135,213 Units, or 13.74% of the outstanding Units. The 849,156 Units
subject to the Offer constitute 100% of the outstanding Units not already owned
by the Purchasers and their affiliates. Consummation of the Offer, if
all Units sought are tendered, would require payment by the Purchasers of up to
$4,245,780 in aggregate purchase price, which the Purchasers intend to fund out
of their current working capital.
Holders
of Units (“Unit holders”) are urged to consider the following
factors:
·
|
There
have been multiple offers for the Fieldpointe Apartments and none have
been accepted. The general partner is currently trying to
remarket the property. This may take quite some
time. The general partner has been trying to market the
property for at
least 3 years and has yet
to complete a sale. In fact, the general partner states:
“…likelihood that an acceptable offer might be received in the near term
is not
probable.”
|
·
|
As
quoted in the Partnership’s Form 10-K, for the year ended December 31,
2009, “In the event a sale of Fieldpointe does not take place, Registrant
is not expected to have access to additional sources of
financing. Accordingly, if unforeseen contingencies arise that
cause Fieldpointe to require capital in addition to that contributed by
Registrant and any equity of Carrollton’s general partners, potential
sources from which such capital needs will be able to be satisfied (other
than reserves) would be additional equity contributions or voluntary loans
of Carrollton’s general partners (which general partners are not required
to fund such amounts) or other reserves, if any, which could adversely
affect distributions from Carrollton to Registrant of operating cash flow
and any sale or refinancing
proceeds.”
|
·
|
The
tax year in which you sell your Units will be the final
year for which you will be obligated to file
a K-1 for the Partnership with your tax return. This may
represent a reduction in costs associated with filing complicated tax
returns. Your decision to sell may have other favorable or
unfavorable tax consequences and potential sellers should consult their
individual tax advisers.
|
·
|
Unit
holders who tender their Units will give up the opportunity to participate
in any future benefits from the ownership of Units, including potential
future distributions by the Partnership from property operations or
dispositions, and the purchase price per Unit payable to a tendering Unit
holder by the Purchasers may be less than the total amount which might
otherwise be received by the Unit holder with respect to the Unit over the
remaining term of the Partnership.
|
·
|
The
Purchasers are making the Offer for investment purposes and with the
intention of making a profit from the ownership of the
Units. In establishing the purchase price of $5 per Unit, the
Purchasers are motivated to establish the lowest price which might be
acceptable to Unit holders consistent with the Purchasers’
objectives. There is no public market for the Units, and
neither the Unit holders nor the Purchasers have any accurate means for
determining the actual present value of the Units. Although
there can be no certainty as to the actual present value of the Units, the
Purchasers have estimated, solely for the purposes of determining an
acceptable Offer price, that the Partnership could have an estimated
liquidation value of approximately $8.53 per Unit. It should be
noted, however, that the Purchasers have not made an independent appraisal
of the Units or the Partnership’s properties, and are not qualified to
appraise real estate. Furthermore, there can be no assurance as
to the timing or amount of any future Partnership distributions, and there
cannot be any assurance that the Purchasers’ estimate accurately reflects
an approximate value of the Units or that the actual amounts which may be
realized by holders for the Units may not vary substantially from this
estimate.
|
·
|
The
Depositary, XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, is an affiliate of certain of
the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because
there is no independent intermediary to hold the Purchasers’ funds and
tendered securities, the Purchasers may have access to the securities
before all conditions to the Offer have been satisfied and selling Unit
holders have been paid; however, neither the Depositary nor the Purchasers
has any rights with respect to the Units prior to the Expiration Date and
acceptance by the Purchasers for payment. Further, by tendering
your Units, you are agreeing to arbitrate any disputes that may arise
between you and the Purchasers or the Depositary, to subject yourself to
personal jurisdiction in California, and that the prevailing party in any
such action will be entitled to recover attorney fees and
costs.
|
·
|
The
Purchasers are offering to purchase ANY and ALL Units pursuant to the
terms of the Offer.
|
THE OFFER
TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. A UNIT HOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH
UNIT HOLDER.
The
Purchasers expressly reserve the right, in their sole discretion, at any time
and from time to time, (i) to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and the payment for, any
Units, subject to the restriction below, (ii) upon the occurrence of any of the
conditions specified in Section 13 of this Offer to Purchase prior to the
Expiration Date, to terminate the Offer and not accept for payment any Units,
and (iii) to amend the Offer in any respect prior to the Expiration
Date. Notice of any such extension, termination, or amendment will
promptly be disseminated to Unit holders in a manner reasonably designed to
inform Unit holders of such change in compliance with Rule 14d-4(c) under the
Securities Exchange Act of 1934 (the “Exchange Act”). In the case of
an extension of the Offer, such extension will be followed by a press release or
public announcement which will be issued no later than 9:00 a.m., Eastern Time,
on the next business day after the scheduled Expiration Date, in accordance with
Rule 14e-1(d) under the Exchange Act.
IMPORTANT
Any Unit
holder desiring to tender any or all of such Unit holder’s Units should complete
and sign the Assignment Form (a copy of which is enclosed with this Offer to
Purchase) in accordance with the instructions in the Assignment Form and mail,
deliver or telecopy the Assignment Form and any other required documents to
XxxXxxxxx Xxxxxxxxx Xxxxxx, XX (the “Depositary”), an affiliate of the
Purchasers, at the address or facsimile number set forth below.
XxxXxxxxx
Xxxxxxxxx Xxxxxx, XX
0000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
Telephone:
000-000-0000; Facsimile: 000-000-0000
E-Mail
Address: xxxxxx@xxxx.xxx
Questions
or requests for assistance or additional copies of this Offer to Purchase or the
Assignment Form may be directed to the Purchasers at 0-000-000-0000.
___________________________
NO PERSON
HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION ON BEHALF
OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS CONTAINED HEREIN
OR IN THE ASSIGNMENT FORM. NO SUCH RECOMMENDATION, INFORMATION OR REPRESENTATION
MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
___________________________
The
Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Securities and Exchange Commission (“Commission”) relating
to its business, financial condition and other matters. Such reports
and other information are available on the Commission’s electronic data
gathering and retrieval (XXXXX) system, at its internet web site at xxx.xxx.xxx, may be
inspected at the public reference facilities maintained by the Commission at 000
X Xxxxxx, XX, Xxxx 0000, Xxxxxxxxxx, X.X. 00000. Copies of such
material can also be obtained from the Public Reference Room of the Commission
in Washington, D.C. at prescribed rates.
The
Purchasers have filed with the Commission a Tender Offer Statement on Schedule
TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto,
including exhibits, may be inspected and copies may be obtained from the offices
of the Commission in the manner specified above.
TABLE OF CONTENTS
Page
|
|
SUMMARY
TERM SHEET
|
4
|
INTRODUCTION
|
7
|
TENDER
OFFER
|
8
|
Section
1. Terms of the Offer
|
8
|
Section
2. Acceptance for Payment and Payment for Units;Proration.
|
9
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Section
3. Procedures for Tendering Units.
|
9
|
Section
4. Withdrawal Rights.
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10
|
Section
5. Extension of Tender Period; Termination; Amendment.
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11
|
Section
6. Material Federal Income Tax Consequences.
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11
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Section
7. Effects of the Offer.
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13
|
Section
8. Future Plans.
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13
|
Section
9. The Business of the Partnership.
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14
|
Section
10. Conflicts of Interest.
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14
|
Section
11. Certain Information Concerning the Purchasers.
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14
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Section
12. Source of Funds.
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15
|
Section
13. Conditions of the Offer.
|
15
|
Section
14. Certain Legal Matters.
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16
|
Section
15. Fees and Expenses.
|
16
|
Section
16. Miscellaneous.
|
16
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SCHEDULE
I
|
17
|
SUMMARY
TERM SHEET
The
Purchasers are offering to purchase all Units for $5 per Unit in cash. The
following are some of the questions that you, as a Unit holder of the
Partnership, may have and answers to those questions. The information in this
summary is not complete, and we urge you to carefully read the remainder of this
Offer to Purchase and the accompanying Assignment Form.
WHO IS
OFFERING TO BUY MY SECURITIES?
The offer
to purchase your Units is being made jointly by: XxxXxxxxx Xxxxxxxxx Special
Fund 5, LLC; MPF DeWaay Fund 8, LLC; REAL ESTATE SECURITIES FUND 1983, LP; MPF
BADGER ACQUISITION CO., LLC; MPF FLAGSHIP FUND 13, LLC; MPF SENIOR NOTE PROGRAM
II, LP; MPF BLUE RIDGE FUND I, LLC; MPF INCOME FUND 24, LLC; MPF FLAGSHIP FUND
14, LLC; SCM SPECIAL FUND 2, LP. Each of the entity Purchasers is a real estate
investment fund. XxxXxxxxx Xxxxxxxxx Xxxxxx, XX is the manager or general
partner of the following entities: XxxXxxxxx Xxxxxxxxx Special Fund 5, LLC; MPF
DeWaay Fund 8, LLC; REAL ESTATE SECURITIES FUND 1983, LP; MPF BADGER ACQUISITION
CO., LLC; MPF FLAGSHIP FUND 13, LLC; MPF SENIOR NOTE PROGRAM II, LP; MPF BLUE
RIDGE FUND I, LLC; MPF INCOME FUND 24, LLC; MPF FLAGSHIP FUND 14,
LLC. XXXXXX CAPITAL MANAGEMENT, LLC IS THE MANAGER OR GENERAL PARTNER
OF: SCM SPECIAL FUND 2, LP. None of these is affiliated
with the Partnership or its General Partner.
WHAT ARE
THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are
seeking to purchase all Units of limited partnership interest, which are the
“Units” issued to investors in the Partnership.
HOW MUCH
ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are
offering to pay $5 per Unit, net to you in cash, less the amount of any
distributions declared or made with respect to the Units between June 23, 2010
and the date the Offer expires. The Offer price would be reduced by
the amount of distributions made or declared prior to the Expiration
Date. Any distributions made or declared after the Expiration Date
would, by the terms of the Offer and as set forth in the Assignment Form, be
assigned by tendering Unit holders to the Purchasers. If you tender
your Units to us in the Offer, you will not have to pay brokerage fees or
similar expenses.
DO YOU
HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the
total amount of Units sought is purchased, the Purchasers’ capital commitment
will be approximately $4,245,780. The Purchasers have an aggregate of
approximately $36 million in total assets at their disposal to fund payment to
selling Unit holders. The Purchasers currently have sufficient funded
capital to fund all of their commitments under this Offer and all other tender
offers they may be presently making.
IS THE
FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO TENDER
IN THE OFFER?
Because
this is a cash offer that is not conditioned on financing being available, and
the Purchasers have more than adequate resources and no intention to take
control of the Partnership, other information concerning the Purchasers’
financial condition would seem to have little relevance to your
decision.
HOW LONG
DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will
have at least until 11:59 p.m., Pacific Time, on July 30, 2010, to decide
whether to tender your Units in the Offer.
WILL ALL
OF THE UNITS I TENDER BE ACCEPTED BY THE PURCHASERS?
The
Purchasers desire to purchase any and all of the outstanding Units.
CAN THE
OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not later than 9:00 a.m., Eastern Time, on the day after the day on which the Offer was scheduled to expire. You can check our website at xxx.xxxx.xxx (click on MPF Tenders) to see if it has been extended, or check the SEC’s XXXXX database.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are
no conditions to the offer based on a minimum number of Units tendered, the
availability of financing, or the success of the offer. However, we
may not be obligated to purchase any Units if certain conditions occur, such as
legal or government actions which would prohibit the
purchase. Furthermore, we are not obligated to purchase any Units
which are validly tendered if, among other things, there is a material adverse
change in the Partnership or its business. Please see the discussion
in Section 13, Conditions of the Offer, for a description of all
conditions. Further, by tendering your Units, you are agreeing to
arbitrate any disputes that may arise between you and the Purchasers or the
Depositary, to subject yourself to personal jurisdiction in California, and that
the prevailing party in any such action will be entitled to recover attorney
fees and costs.
WHEN WILL
YOU PAY ME FOR THE UNITS I TENDER?
Upon the
Expiration of the Offer and our acceptance of the Units you tender, we will pay
you upon confirmation that the general partner will either transfer the Units or
recognize the change of address for distributions and correspondence on the
Units.
HOW DO I
TENDER MY UNITS?
To tender
your Units, you must deliver a completed Assignment Form, to the Depositary at:
XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
(Telephone: 000-000-0000; Facsimile Transmission: 925-631-9119), no later than
the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered Units at any time until the Offer has expired and, if we have not agreed to accept your Units for payment by August 22, 2010, you can withdraw them at any time after such time until we do accept your Units for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To
withdraw Units, you must deliver a written notice of withdrawal, or a facsimile
of one, with the required information to the Depositary while you still have the
right to withdraw the Units.
WHAT DOES
THE PARTNERSHIP’S GENERAL PARTNER THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the General Partner. The General Partner may be expected to respond with the Partnership’s position on the offer in the next two weeks.
WILL THE
PARTNERSHIP CONTINUE AS A PUBLIC COMPANY?
The
Partnership reported 520 holders of its outstanding Units as of the date of its
most recent annual report. If the total number of Unit holders is
below 300, the Partnership can elect to discontinue its status as a public
reporting company. Accordingly, it is possible that the Offer could
result in the total number of Unit holders falling below the 300 holder
level. However, there has never been a public trading market for the
Units and none is expected to develop, so the Partnership’s status as a public
company will not affect a trading market in the Units. While the
Partnership’s Agreement of Limited Partnership requires that all Unit holders be
provided annual audited financial statements, quarterly interim financial
statements, and timely reports providing other information regarding the
operations and condition of the Partnership, a change in the Partnership’s
status as a public company could reduce the information available to Unit
holders about the Partnership in the event the information required by the
Partnership Agreement is not as extensive as that provided in reports required
to be filed by public companies under applicable rules of the Securities and
Exchange Commission. Further, such potential deregistration would
result in the loss of the other protections afforded by
registration.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY UNITS?
The Purchasers do not anticipate that Units held by non-tendering Unit holders will be affected by the completion of the offer.
WHAT ARE
THE PURCHASERS’ FUTURE INTENTIONS CONCERNING THE PARTNERSHIP?
The
Purchasers have no present intention to seek control of the Partnership or to
change the management or operations of the Partnership. The
Purchasers do not have any present intention to take action in connection with
the liquidation of the Partnership or with any extraordinary transaction
concerning the Partnership or its assets. Although the Purchasers do
not have any present intention to take any action with respect to management or
control of the Partnership, the Purchasers reserve the right, at an appropriate
time, to exercise their rights as limited partners to vote on matters subject to
a limited partner vote, including any vote affecting the sale of the
Partnership’s assets and the liquidation and dissolution of the
Partnership. Thus, if the Purchasers purchase over 50% of the
outstanding Units of the Partnership (pursuant to this and any other tender
offers and other purchases), they will be in a position to control the
Partnership by virtue of being able to remove and replace the General Partner,
to cause the Partnership to sell its assets, and to liquidate the
Partnership.
WHAT IS
THE MARKET VALUE OF MY UNITS?
The Units
do not have a readily ascertainable market value, and neither the Unit holders
nor the Purchasers have any accurate means for determining the actual present
value of the Units. According to the Partnership, “There is no developed public
market for the purchase and sale of Units and Registrant does not anticipate
that such a market will develop.” (Annual Report on Form 10-K for the fiscal
year ending December 31, 2009). The Purchasers’ review of independent
secondary market reporting publications such as The Xxxxxxx Report
and The Direct
Investments Spectrum (formerly The Partnership
Spectrum), reported no trading prices on secondary markets during the
Spring 2010 and sales of Units on secondary markets at $6.92 per Unit in Jan/Feb
2010, respectively. The information published by these independent sources is
believed to be the product of their private market research and does not
constitute the comprehensive transaction reporting of a securities
exchange. Accordingly, the Purchasers do not know whether the
foregoing information is accurate or complete. The Purchasers are
unaware of any other recent trading prices. Although
there can be no certainty as to the actual present value of the Units, the
Purchasers have estimated, solely for the purposes of determining an acceptable
Offer price, that the Partnership could have an estimated liquidation value of
approximately $8.53 per Unit, or higher. It should be noted, that the
Purchasers have not made an independent appraisal of the Units or the
Partnership’s properties, and are not qualified to appraise real
estate. Accordingly, there can be no assurance that this estimate
accurately reflects an approximate value of the Units or that the actual amounts
which may be realized by Unit holders for the Units may not vary substantially
from this estimate.
TO WHOM
CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, toll-free, at 000-000-0000.
To
the Unit holders of SECURED INCOME, LP:
INTRODUCTION
The Purchasers hereby offer to purchase
ALL Units at a purchase price of $5 per Unit (“Offer Price”), less the amount of
any distributions declared or paid with respect to the Units between June 23,
2010, and the Expiration Date, in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer. The Purchasers are
unaware of any distributions declared or paid since June 23,
2010. Unit holders who tender their Units will not be obligated to
pay any Partnership transfer fees, or any other fees, expenses or commissions in
connection with the tender of Units. The Purchasers will pay all such
costs and all charges and expenses of the Depositary, an affiliate of certain of
the Purchasers, as depositary in connection with the Offer.
For further information concerning the
Purchasers, see Section 11 below and Schedule I. None of the
Purchasers or the Depositary is affiliated with the Partnership or the
Partnership’s General Partner. The address of the Partnership’s
principal executive offices is 000 Xxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000, and its
phone number is (000) 000-0000
Establishment of the Offer
Price
The Purchasers have set the Offer Price
at $5 per Unit, less the amount of any distributions declared or made with
respect to the Units between June 23, 2010 and the Expiration
Date. In determining the Offer Price, the Purchasers analyzed a
number of quantitative and qualitative factors, including: (i) the lack of a
secondary market for resales of the Units and the resulting lack of liquidity of
an investment in the Partnership; (ii) the estimated value of the Partnership’s
real estate assets; and (iii) the costs to the Purchasers associated with
acquiring the Units.
The Partnership made the following
statements in its Annual Report on Form 10-K for the fiscal year ending December
31, 2009: “There is no developed public market for the purchase and sale of
Units and Registrant does not anticipate that such a market will develop..” The
lack of any public market for the sale of Units means that Unit holders have
limited alternatives if they seek to sell their Units. As a result of
such limited alternatives for Unit holders, the Purchasers may not need to offer
as high a price for the Units as they would otherwise. On the other
hand, the Purchasers take a greater risk in establishing a purchase price as
there is no prevailing market price to be used for reference and the Purchasers
themselves will have limited liquidity for the Units upon consummation of the
purchase. The Purchasers’ review of independent secondary market
reporting publications such as Xxxxxxx Report and
The Direct Investments
Spectrum (formerly The Partnership
Spectrum), reported no trading prices on secondary markets during the
Spring 2010 and sales of Units on secondary markets at $6.92 per Unit in Jan/Feb
2010, respectively. The information published by these independent
sources is believed to be the product of their private market research and does
not constitute the comprehensive transaction reporting of a securities
exchange. Accordingly, the Purchasers do not know whether the
foregoing information is accurate or complete.
The Purchasers are offering to purchase
Units which are an illiquid investment and are not offering to purchase the
Partnership’s underlying assets. The Partnership has disclosed in its
most recent filing on March 30, 2010 that “As of March 2010, approximately eight
non-binding written offers to purchase Fieldpointe have been received; a number
of such offers are in the range of, or exceeding,
$20,000,000. Management considered the offers to be inadequate and,
in one case, rejected the offer because it came from one of the prior potential
purchasers that previously did not consummate the transaction after an agreement
was reached. Fieldpointe remains on the market for sale; however,
given the current real estate market, the Carrollton general partners believe
the likelihood that an acceptable offer might be received in the near term is
not probable.” The Purchasers’ valuation is based upon the sale
of the assets of the Partnership, but such assets may not be liquidated for an
indefinite period of time. Accordingly, the underlying asset value of
the Partnership is only one factor used by the Purchasers in arriving at the
Offer Price. However, in the absence of trading price information,
the Purchasers’ estimate of the net asset value of the Partnership may be
relevant to Unit holders’ review of the Offer Price. Using publicly available
information concerning the Partnership contained in the Partnership’s Annual
Report on Form 10-K for the fiscal year ending December 31, 2009 and the
quarterly reports for the quarters ended March 31, 2009, June 30, 2009, and
September 30, 2009, the Purchasers derived an estimated net asset value for the
Units. The Purchasers are not qualified as real estate appraisers and
have relied solely on publicly available information in making their estimate of
the value of the Partnership’s assets. The Purchasers’ estimated
value of Partnership assets was calculated solely for purposes of formulating
their offer and cannot be relied upon as representing an amount which might
actually be realized upon a liquidation of the Partnership’s assets, whether now
or at any time in the future.
In determining their estimated value of
the Units, the Purchasers used the “Estimated Net Sales Value” of the
Partnership’s real property investments. The Estimated Net Sales
Value was determined by using the $20,000,000 figure cited by the Partnership;
the Purchaser’s believe that the best indication of current value is an offer,
even if that value might improve in the future if the market improves. To
determine the Estimated Liquidation Value of the Partnership’s assets, the
Purchaser added to the Estimated Net Sales Value of the Partnership’s properties
(less selling costs) the net current assets, as reported in the Partnership’s
most recent Form 10-Q for the quarter ended March 31, 2010, and calculated the
amount of the balance allocable to the Units. The resulting Estimated
Liquidation Value of the Partnership’s assets was approximately $8.53 per
Unit. The Purchasers emphasize that this value was calculated by them
solely for purposes of selecting an Offer Price. There can be no
assurance as to the actual liquidation value of Partnership assets or as to the
amount or timing of distributions of liquidation proceeds which may be received
by Unit holders. The Partnership has not announced any pending offer
to purchase its assets. Accordingly, there can be no assurance as to
the availability or timing of any liquidation proceeds. Details on
our analysis of the Estimated Valuation per Unit based upon this information is
given below:
Gross
valuation of partnership properties
|
$20,000,000
|
Less:
Selling Costs at 2%
|
($600,000)
|
Less:
Notes Payable
|
($7,958,000)
|
Plus:
Net Current Assets
|
$1,473,000
|
Estimated
net valuation of your partnership
|
$12,915,000
|
Percentage
of estimated net valuation allocated to holders of units based upon
subordinated general partner participation
|
65%
|
Estimated
net valuation of units
|
$8,395,000
|
Total
number of units
|
984,369
|
Estimated
valuation per unit
|
$8.53
|
The Offer Price represents the price at
which the Purchasers are willing to purchase Units. The Purchasers
arrived at the $5 Offer Price by applying a liquidity discount to their
calculations of Estimated Liquidation Value of the Partnership’s assets, after
deducting selling and liquidation costs. The Purchasers apply such a
discount with the intention of making a profit by holding on to the Units until
the Partnership is liquidated, hopefully at close to the full Estimated
Liquidation Value. No independent person has been retained to
evaluate or render any opinion with respect to the fairness of the Offer Price
and no representation is made by the Purchasers or any affiliate of the
Purchasers as to such fairness. Other measures of the value of the
Units may be relevant to Unit holders. Unit holders are urged to
consider carefully all of the information contained herein and consult with
their own advisers, tax, financial or otherwise, in evaluating the terms of the
Offer before deciding whether to tender Units.
The Offer is not made with any current
view toward or plan or purpose of acquiring Units in a series of successive and
periodic offers. Nevertheless, the Purchasers reserve the right to
gauge the response to this solicitation, and, if not successful in purchasing
984,369 Units pursuant to this Offer, may consider future
offers. Factors affecting the Purchasers’ future interest in
acquiring additional Units include, but are not limited to, the relative success
of the current Offer, any increase or decrease in the availability of capital
for investment by the Purchasers and their investment fund affiliates, the
current diversification and performance of each affiliated fund’s portfolio of
real estate interests, the development of any public market in the Units or
actions by unrelated parties to tender for or purchase Units, the status of and
changes and trends in the Partnership’s operations, announcement of pending
property sales and the proposed terms of sales, and local and national real
estate and financial market developments and trends.
General Background
Information
Certain information contained in this
Offer to Purchase which relates to, or represents, statements made by the
Partnership or the General Partner, has been derived from information provided
in reports filed by the Partnership with the Securities and Exchange
Commission. Tendering Unit holders will not be obligated to pay
transfer fees, brokerage fees, or commissions on the sale of the Units to the
Purchasers pursuant to the Offer. The Purchasers will pay all charges
and expenses incurred in connection with the Offer. The Purchasers
desire to purchase any and all of the outstanding Units.
If, prior to the Expiration Date, the
Purchasers increase the consideration offered to Unit holders pursuant to the
Offer, such increased consideration will be paid with respect to all Units that
are purchased pursuant to the Offer, whether or not such Units were tendered
prior to such increase in consideration. Unit holders are urged to
read this Offer to Purchase and the accompanying Assignment Form carefully
before deciding whether to tender their Units.
TENDER
OFFER
Section 1. Terms of the
Offer. Upon the terms and subject to the conditions of the
Offer, the Purchasers will accept for payment and pay for Units validly tendered
on or prior to the Expiration Date and not withdrawn in accordance with Section
4 of this Offer to Purchase. The term “Expiration Date” shall mean
11:59 p.m., Pacific Time, on July 30, 2010, unless and until the Purchasers
shall have extended the period of time for which the Offer is open, in which
event the term “Expiration Date” shall mean the latest time and date on which
the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on
satisfaction of certain conditions. See Section 13, which sets forth
in full the conditions of the Offer. The Purchasers reserve the right
(but shall not be obligated), in their sole discretion and for any reason, to
waive any or all of such conditions. If, by the Expiration Date, any
or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit holders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer. Notwithstanding the foregoing, upon the
expiration of the Offer, if all conditions are either satisfied or waived, the
Purchasers will promptly pay for all validly tendered Units upon confirmation
that the general partner will either transfer the Units or recognize the change
of address for distributions and correspondence on the Units, and the Purchasers
do not intend to imply that the foregoing rights of the Purchasers would permit
the Purchasers to delay payment for validly tendered Units following
expiration.
The Purchasers do not anticipate and
have no reason to believe that any condition or event will occur that would
prevent the Purchasers from purchasing tendered Units as offered
herein. Further, by tendering your Units, you are agreeing to
arbitrate any disputes that may arise between you and the Purchasers or the
Depositary, to subject yourself to personal jurisdiction in California, and that
the prevailing party in any such action will be entitled to recover attorney
fees and costs. However, by so doing, you are not waiving any of your
rights under the federal securities laws or any rule or regulation
thereunder.
Section 2. Acceptance for Payment and
Payment for Units Acceptance for Payment and Payment for Units. Upon the
terms and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of any extension or amendment),
the Purchasers will accept for payment, and will pay for, Units validly tendered
and not withdrawn in accordance with Section 4, promptly following the
Expiration Date and upon confirmation that the general partner will either
transfer the Units or recognize the change of address for distributions and
correspondence on the Units. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Assignment Form (or
facsimile thereof) and any other documents required by the Assignment
Form.
For purposes of the Offer, the
Purchasers shall be deemed to have accepted for payment (and thereby purchased)
tendered Units when, as and if the Purchasers give oral or written notice to the
Depositary of the Purchasers’ acceptance for payment of such Units pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer,
payment for Units purchased pursuant to the Offer will in all cases be made by
deposit of the Offer Price with the Depositary, which will act as agent for the
tendering Unit holders for the purpose of receiving payment from the Purchasers
and transmitting payment to tendering Unit holders.
Under no circumstances will interest be
paid on the Offer Price by reason of any delay in making such
payment.
If any tendered Units are not purchased
for any reason, the Assignment Form with respect to such Units not purchased
will be of no force or effect. If, for any reason whatsoever,
acceptance for payment of, or payment for, any Units tendered pursuant to the
Offer is delayed or the Purchasers are unable to accept for payment, purchase or
pay for Units tendered pursuant to the Offer, then, without prejudice to the
Purchasers’ rights under Section 13, the Depositary may, nevertheless, on behalf
of the Purchasers, retain tendered Units and such Units may not be withdrawn
(but subject to compliance with Rule 14e-1(c) under the Exchange Act, which
requires that the Purchasers pay the consideration offered or return the Units
deposited by or on behalf of the Unit holder promptly after the termination or
withdrawal of a tender offer), except to the extent that the tendering Unit
holders are entitled to withdrawal rights as described in Section
4. If, prior to the Expiration Date, the Purchasers shall increase
the consideration offered to Unit holders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such
increase.
Section
3. Procedures for Tendering Units.
Valid Tender. For
Units to be validly tendered pursuant to the Offer, a properly completed and
duly executed Assignment Form (a copy of which is enclosed with this Offer to
Purchase with any other documents required by the Assignment Form must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date. A Unit holder
may tender any or all Units owned by such Unit holder.
In order for a tendering Unit holder
to participate in the Offer, Units must be validly tendered and not withdrawn
prior to the Expiration Date, which is 11:59 p.m., Pacific Time, on July 30,
2010, or such date to which the Offer may be extended. The method of delivery of the
Assignment Form and all other required documents is at the option and risk of
the tendering Unit holder and delivery will be deemed made only when actually
received by the Depositary.
Backup Federal Income Tax
Withholding. To prevent the possible application of 31% backup
federal income tax withholding with respect to payment of the Offer Price for
Units purchased pursuant to the Offer, a tendering Unit holder must provide the
Depositary with such Unit holder’s correct taxpayer identification number and
make certain certifications that such Unit holder is not subject to backup
federal income tax withholding. Each tendering Unit holder must
insert in the Assignment Form the Unit holder’s taxpayer identification number
or social security number in the space provided on the front of the Assignment
Form. The Assignment Form also includes a substitute Form W-9, which
contains the certifications referred to above. (See the Instructions
to the Assignment Form.)
FIRPTA
Withholding. To prevent the withholding of federal income tax
in an amount equal to 10% of the sum of the Offer Price plus the amount of
Partnership liabilities allocable to each Unit tendered, each Unit holder must
complete the FIRPTA Affidavit included in the Assignment Form certifying such
Unit holder’s taxpayer identification number and address and that the Unit
holder is not a foreign person. (See the Instructions to the
Assignment Form and “Section 6. Certain Federal Income Tax
Consequences.”)
Other
Requirements. By executing a Assignment Form as set forth
above, a tendering Unit holder irrevocably appoints the designees of the
Purchasers as such Unit holder’s proxies, in the manner set forth in the
Assignment Form, each with full power of substitution, to the full extent of
such Unit holder’s rights with respect to the Units tendered by such Unit holder
and accepted for payment by the Purchasers. Such appointment will be
effective when, and only to the extent that, the Purchasers accept such Units
for payment. Upon such acceptance for payment, all prior proxies
given by such Unit holder with respect to such Units will, without further
action, be revoked, and no subsequent proxies may be given (and if given will
not be effective). The designees of the Purchasers will, with respect
to such Units, be empowered to exercise all voting and other rights of such Unit
holder as they in their sole discretion may deem proper at any meeting of Unit
holders, by written consent or otherwise. In addition, by executing a
Assignment Form, a Unit holder also assigns to the Purchasers all of the Unit
holder’s rights to receive distributions from the Partnership with respect to
Units which are accepted for payment and purchased pursuant to the Offer, other
than those distributions declared or paid during the period commencing on the
Offer Date and terminating on the Expiration Date.
Determination of Validity; Rejection
of Units; Waiver of Defects; No Obligation to Give Notice of
Defects. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and
binding. The Purchasers reserve the absolute right to reject any or
all tenders if not in proper form or if the acceptance of, or payment for, the
absolute right to reject any or all tenders if not in proper form or if the
acceptance of, or payment for, the Units tendered may, in the opinion of the
Purchasers’ counsel, be unlawful. The Purchasers also reserve the right to waive
any defect or irregularity in any tender with respect to any particular Units of
any particular Unit holder, and the Purchasers’ interpretation of the terms and
conditions of the Offer (including the Assignment Form and the Instructions
thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender
of Units pursuant to any of the procedures described above will constitute a
binding agreement between the tendering Unit holder and the Purchasers upon the
terms and subject to the conditions of the Offer, including the tendering Unit
holder’s representation and warranty that (i) such Unit holder owns the Units
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (ii)
the tender of such Unit complies with Rule 14e-4. Rule 14e-4
requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unit holders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain “short” positions in the
Units (i.e.,
have borrowed the Units) or have loaned the Units to a short seller. Because of
the nature of limited partnership interests, the Purchasers believe it is
unlikely that any option trading or short selling activity exists with respect
to the Units. In any event, a Unit holder will be deemed to tender Units in
compliance with Rule 14e-4 and the Offer if the holder is the record owner of
the Units and the holder (i) delivers the Units pursuant to the terms of the
Offer, (ii) causes such delivery to be made, (iii) guarantees such delivery,
(iv) causes a guaranty of such delivery, or (v) uses any other method permitted
in the Offer (such as facsimile delivery of the Assignment Form).
Section 4. Withdrawal
Rights. Except as otherwise provided in this Section 4, all
tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after August 22,
2010. For withdrawal to be effective a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
the address or the facsimile number set forth in the attached Assignment
Form. Any such notice of withdrawal must specify the name of the
person who tendered the Units to be withdrawn and must be signed by the
person(s) who signed the Assignment Form in the same manner as the Assignment
Form was signed.
If purchase of, or payment for, Units
is delayed for any reason or if the Purchasers are unable to purchase or pay for
Units for any reason, then, without prejudice to the Purchasers’ rights under
the Offer, tendered Units may be retained by the Depositary on behalf of the
Purchasers and may not be withdrawn except to the extent that tendering Unit
holders are entitled to withdrawal rights as set forth in this Section 4,
subject to Rule 14e-1(c) under the Exchange Act, which provides that no person
who makes a tender offer shall fail to pay the consideration offered or return
the securities deposited by or on behalf of security holders promptly after the
termination or withdrawal of the tender offer.
All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by the Purchasers, in their sole discretion, which determination shall be final
and binding. Neither the Purchasers, nor the Depositary, nor any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification.Any Units properly withdrawn will be
deemed not to be validly tendered for purposes of the
Offer. Withdrawn Units may be re-tendered, however, by following the
procedures described in Section 3 at any time prior to the Expiration
Date.
Section 5. Extension of Tender
Period; Termination; Amendment. The Purchasers expressly
reserve the right, in their sole discretion, at any time and from time to time,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Units by giving oral
or written notice of such extension to the Depositary,
(ii) upon
the occurrence or failure to occur of any of the conditions specified in Section
13, to terminate the Offer and not accept for payment any Units by giving oral
or written notice of such termination to the Depositary, and (iii) to amend the
Offer in any respect (including, without limitation, by increasing or decreasing
the consideration offered or the number of Units being sought in the Offer or
both or changing the type of consideration) by giving oral or written notice of
such amendment to the Depositary prior to the Expiration Date. Any
extension, termination, or amendment will be followed as promptly as practicable
by public announcement, the announcement in the case of an extension to be
issued no later than 9:00 a.m., Eastern Time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting
the manner in which the Purchasers may choose to make any public announcement,
except as provided by applicable law (including Rule 14d-4(c) under the Exchange
Act), the Purchasers will have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by issuing a press
release. The Purchasers may also be required by applicable law to
disseminate to Unit holders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer. The
Purchasers will not provide a subsequent offering period following the
Expiration Date.
If the Purchasers extend the Offer, or
if the Purchasers (whether before or after its acceptance for payment of Units)
are delayed in their payment for Units or are unable to pay for Units pursuant
to the Offer for any reason, then, without prejudice to the Purchasers’ rights
under the Offer, the Depositary may retain tendered Units on behalf of the
Purchasers, and such Units may be withdrawn to the extent tendering Unit holders
are entitled to withdrawal rights as described in Section 4 (generally, if
notice of withdrawal is given to the Depositary prior to the Expiration
Date). However, the ability of the Purchasers to delay payment for
Units that the Purchasers have accepted for payment is limited by Rule 14e-1
under the Exchange Act, which requires that the Purchasers pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of the Offer, except
that the Purchasers may delay payment until they receive confirmation that the
general partner will either transfer the Units or recognize the change of
address for distributions and correspondence on the Units.
If the Purchasers make a material
change in the terms of the Offer or the information concerning the Offer or
waive a material condition of the Offer, the Purchasers will extend the Offer to
the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act. The minimum period during which an offer must remain open
following a material change in the terms of the offer or information concerning
the offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the relative
materiality of the change in the terms or information. With respect
to a change in price or a change in percentage of securities sought, however, a
minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used
in this Offer to Purchase, “business day” means any day other than a Saturday,
Sunday or a federal holiday, and consists of the time period from 12:01 a.m.
through midnight, Pacific Time. Any material change in the terms of
the Offer will be published, sent, or given to you in a manner reasonably
designed to inform you of such change; in most cases we will mail you
supplemental materials.
Section 6. Material Federal Income
Tax Consequences. THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNIT HOLDER. For example, this discussion does not
address the effect of any applicable foreign, state, local or other tax laws
other than federal income tax laws. Certain Unit holders (including
trusts, foreign persons, tax-exempt organizations or corporations subject to
special rules, such as life insurance companies or S corporations) may be
subject to special rules not discussed below. This discussion is
based on the Internal Revenue Code of 1986, as amended (the “Code”), existing
regulations, court decisions and Internal Revenue Service (“IRS”) rulings and
other pronouncements. EACH UNIT HOLDER TENDERING UNITS
SHOULD CONSULT SUCH UNIT HOLDER’S OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH UNIT HOLDER OF ACCEPTING THE OFFER, INCLUDING THE
APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN, STATE, LOCAL
AND OTHER TAX LAWS.
The following discussion is based on
the assumption that the Partnership is treated as a partnership for federal
income tax purposes and is not a “publicly traded partnership” as that term is
defined in the Code. Certain partnerships are classified as “publicly
traded partnerships” and, subject to certain exceptions, are taxed as
corporations for federal income tax purposes. A partnership is a publicly traded
partnership if the partnership interests are traded on an established securities
market or readily tradable on a secondary market (or the substantial equivalent
of a secondary market). The Units are not traded on an established
securities market. In the unlikely event that the Partnership becomes
a “publicly traded partnership” and is not excepted from federal income tax,
there would be several adverse tax consequences to the Unit
holders. For instance, the Partnership would be regarded as having
transferred all of its assets (subject to all of its liabilities) to a
newly-formed corporation in exchange for stock which would be deemed distributed
to the Unit holders in liquidation of their interests in the
Partnership. In addition, if the Partnership is deemed to be a
“publicly traded partnership,” then special rules under Code Section 469 govern
the treatment of losses and income of the Partnership. We cannot
assure you that the Partnership will not be treated as a publicly traded
partnership because the IRS could determine that the Units are readily traded on
a secondary market by virtue of the fact that there have been some tender offers
and auction trades of Units, however unlikely and inconsistent with
the Code that would be.
Gain or Loss. A
taxable Unit holder will recognize a gain or loss on the sale of such Unit
holder’s Units in an amount equal to the difference between (i) the amount
realized by such Unit holder on the sale and (ii) such Unit holder’s adjusted
tax basis in the Units sold. The amount realized by a Unit holder
will include the Unit holder’s share of the Partnership’s liabilities, if any
(as determined under Code section 752 and the regulations
thereunder). If the Unit holder reports a loss on the sale, such loss
generally could not be currently deducted by such Unit holder except against
such Unit holder’s capital gains from other investments. In addition,
such loss would be treated as a passive activity loss. (See
“Suspended Passive Activity Losses” below.)
The adjusted tax basis in the Units of
a Unit holder will depend upon individual circumstances. (See also
“Partnership Allocations in Year of Sale” below.) Each Unit holder
who plans to tender hereunder should consult with the Unit holder’s own tax
advisor as to the Unit holder’s adjusted tax basis in the Unit holder’s Units
and the resulting tax consequences of a sale. If any portion of the
amount realized by a Unit holder is attributable to such Unit holder’s share of
“unrealized receivables” or “substantially appreciated inventory items” as
defined in Code section 751, a corresponding portion of such Unit holder’s gain
or loss will be treated as ordinary gain or loss. It is possible that
the basis allocation rules of Code Section 751 may result in a Unit holder’s
recognizing ordinary income with respect to the portion of the Unit holder’s
amount realized on the sale of a Unit that is attributable to such items while
recognizing a capital loss with respect to the remainder of the
Unit.
A tax-exempt Unit holder (other than an
organization described in Code Section 501(c)(7) (social club), 501(c)(9)
(voluntary employee benefit association), 501(c)(17) (supplementary unemployment
benefit trust), or 501(c)(20) (qualified group legal services plan)) should not
be required to recognize unrelated trade or business income upon the sale of its
Units pursuant to the Offer, assuming that such Unit holder does not hold its
Units as a “dealer” and has not acquired such Units with debt financed
proceeds.
Partnership Allocations in Year of
Sale. A tendering Unit holder will be allocated the Unit
holder’s pro rata share of the annual taxable income and losses from the
Partnership with respect to the Units sold for the period through the date of
sale, even though such Unit holder will assign to the Purchasers their rights to
receive certain cash distributions with respect to such Units. Such
allocations and any Partnership distributions for such period would affect a
Unit holder’s adjusted tax basis in the tendered Units and, therefore, the
amount of gain or loss recognized by the Unit holder on the sale of the
Units.
Possible Tax
Termination. The Code provides that if 50% or more of the
capital and profits interests in a partnership are sold or exchanged within a
single 12-month period, such partnership generally will terminate for federal
income tax purposes. It is possible that the Partnership could
terminate for federal income tax purposes as a result of consummation of the
Offer (although the Partnership Agreement prevents transfers of Units that would
cause such a termination). A tax termination of the Partnership could
have an effect on a corporate or other non-individual Unit holder whose tax year
is not the calendar year, as such a Unit holder might recognize more than one
year’s Partnership tax items in one tax return, thus accelerating by a fraction
of a year the effects from such items.
Suspended “Passive Activity
Losses”. A Unit holder who sells all of the Unit holder’s
Units would be able to deduct “suspended” passive activity losses from the
Partnership, if any, in the year of sale free of the passive activity loss
limitation. As a limited partner of the Partnership, which was
engaged in real estate activities, the ability of a Unit holder, who or which is
subject to the passive activity loss rules, to claim tax losses from the
Partnership was limited. Upon sale of all of the Unit holder’s Units,
such Unit holder would be able to use any “suspended” passive activity losses
first against gain, if any, on sale of the Unit holder’s Units and then against
income from any other source.
Foreign Unit
holders. Xxxx realized by a foreign Unit holder on a sale of a
Unit pursuant to the Offer will be subject to federal income
tax. Under Section 1445 of the Code, the transferee of a partnership
interest held by a foreign person is generally required to deduct and withhold a
tax equal to 10% of the amount realized on the disposition. The
Purchasers will withhold 10% of the amount realized by a tendering Unit holder
from the purchase price payment to be made to such Unit holder unless the Unit
holder properly completes and signs the FIRPTA Affidavit included as part of the
Assignment Form certifying the Unit holder’s TIN, that such Unit holder is not a
foreign person and the Unit holder’s address. Amounts withheld would
be creditable against a foreign Unit holder’s federal income tax liability and,
if in excess thereof, a refund could be obtained from the Internal Revenue
Service by filing a U.S. income tax return.
Section
7. Effects of the Offer.
Limitations on
Resales. The Purchasers do not believe the provisions of the
Partnership Agreement should restrict transfers of Units pursuant to the Offer,
although no more than 50% of the Units may be transferred in any 12-month
period. This limitation will not affect the tender of Units under
this Offer because, subject to the terms of the Offer, we will pay for the Units
upon confirmation that the general partner will either transfer the Units or
recognize the change of address for distributions and correspondence on the
Units, and, under the terms of the Assignment Form, we will take a power of
attorney over your Units that will permit us to change the address to which
distributions are sent. We will then wait to transfer the Units
tendered until the Partnership can effect the transfer of record title in
accordance with the Partnership Agreement.
Effect on Trading
Market. If a substantial number of Units are purchased
pursuant to the Offer the result would be a reduction in the number of Unit
holders. Reducing the number of security holders in certain kinds of
equity securities might be expected to result in a reduction in the liquidity
and volume of activity in the trading market for the security. However, there is
no established public trading market for the Units and none is expected to
develop. Therefore, the Purchasers do not believe a reduction in the
number of Unit holders will materially further restrict the Unit holders’
ability to find purchasers for their Units through secondary market
transactions.
Voting Power of
Purchasers. If the Purchasers acquire a significant number of
the Units sought hereunder could give the Purchasers a controlling voting
interest in matters subject to a limited partner vote. The Partnership does not
hold annual or regular meetings to elect directors, and does not have a
representative board of directors overseeing management. Votes of
Unit holders would only be solicited, if ever, for matters affecting the
fundamental structure of the Partnership, such as the sale of the properties and
termination of the Partnership, and the affirmative vote of more than 50% of the
outstanding Units (not a mere quorum) is required to effect
action. The Purchasers and their affiliates do not intend to call for
any such vote in the foreseeable future. A Unit holder who tenders
Units to the Purchasers grants a proxy to the Purchasers as of the date of
acceptance of the tender, granting the Purchasers the right to vote such Units
in their sole discretion as to any matters for which the Partnership has
established a record date prior to the time such. Units are
transferred by the Partnership to the Purchasers. The Purchasers
reserve the right to exercise any and all rights they might hold in the event
that any vote is called by the General Partner, or if, in the future, changes in
circumstances would dictate that they or other limited partners exercise their
right to call a vote. Thus, if the Purchasers purchase over 50% of the
outstanding Units of the Partnership (pursuant to this and any other tender
offers and other purchases), they will be in a position to control the
Partnership by virtue of being able to remove and replace the General Partner,
to cause the Partnership to sell its assets, and to liquidate the
Partnership.
Other Potential
Effects. The Units are registered under the Exchange Act,
which requires, among other things that the Partnership furnish certain
information to its Unit holders and to the Commission and comply with the
Commission’s proxy rules in connection with meetings of, and solicitation of
consents from, Unit holders. Registration and reporting requirements
could be terminated by the Partnership if the number of record holders falls
below 300, or below 500 if the Partnership’s total assets are below $10 million
for three consecutive preceding fiscal years. The Partnership
reported a total of 520 limited partners as of its most recent fiscal year end,
but the Purchasers are offering to purchase up to 984,369
Units. Accordingly, it is possible that the Offer could result in the
total number of Unit holders falling below the foregoing 300 holder
level. As disclosed by the Partnership in its public reports,
however, there has never been a public trading market for the Units and none is
expected to develop, so the Partnership’s status as a public company will not
affect a trading market in the Units. While the Partnership’s
Agreement of Limited Partnership requires that all Unit holders be provided
annual audited financial statements, quarterly interim financial statements and
timely reports providing other information regarding the operations and
condition of the Partnership, a change in the Partnership’s status as a public
company could reduce the information available to Unit holders about the
Partnership in the event the information required by the Partnership Agreement
is not as extensive as that provided in reports required to be filed by public
companies under applicable rules of the Securities and Exchange
Commission.
Section 8. Future
Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such
acquisitions may be made through private purchases, one or more future tender
offers or by any other means deemed advisable or appropriate. Any
such acquisitions may be at a consideration higher or lower than the
consideration to be paid for the Units purchased pursuant to the
Offer. The Purchasers are seeking to purchase a total of 984,369
Units. If the Purchasers acquire fewer than 984,369 Units pursuant to
the Offer, the Purchasers may seek to make further purchases on the open market
at prevailing prices, or solicit Units pursuant to one or more future tender
offers at the same price, a higher price or, if the Partnership’s circumstances
change, at a lower price. Alternatively, the Purchasers may
discontinue any further purchases of Units after termination of the Offer,
regardless of the number of Units purchased. The Offer is not made
with any current view toward or plan or purpose of acquiring Units in a series
of successive and periodic offers. Nevertheless, as noted above, the
Purchasers reserve the right to gauge the response to this solicitation, and, if
not successful in purchasing 984,369 Units in this Offer, may consider future
offers. Factors affecting the Purchasers’ future interest in
acquiring additional Units include, but are not limited to, the relative success
of the current Offer, any increase or decrease in the availability of capital
for investment by the Purchasers and their investment fund affiliates, the
current diversification and performance of each affiliated fund’s portfolio of
real estate interests, the development of any public market in the Units or
actions by unrelated parties to tender for or purchase Units, the status of and
changes and trends in the Partnership’s operations, announcement of pending
property sales and the proposed terms of sales, and local and national real
estate and financial market developments and trends.
The
Purchasers are acquiring the Units pursuant to the Offer solely for investment
purposes. The Purchasers have no present intention to seek control of the
Partnership or to change the management or operations of the
Partnership. The Purchasers do not have any present intention to take
any action in connection with the liquidation of the Partnership. The
Purchasers nevertheless reserve the right, at an appropriate time, to exercise
their rights as limited partners to vote on matters subject to a limited partner
vote, including, but not limited to, any vote to affecting the sale of the
Partnership’s properties and the liquidation and dissolution of the
Partnership. Except as expressly set forth herein, the Purchasers
have no present intention to seek control of the Partnership, to cause the
Partnership to engage in any extraordinary transaction, to cause any purchase,
sale or transfer of a material amount of the assets of any Partnership, to make
any change in the distribution policies, indebtedness or capitalization of any
Partnership or to change the structure, management or operations of the
Partnership, the listing status of the Units or the reporting requirements of
the Partnership. However, if the Purchasers purchase over 50% of the
outstanding Units of the Partnership (pursuant to this and any other tender
offers and other purchases), they will be in a position to control the
Partnership by virtue of being able to remove and replace the General Partner,
to cause the Partnership to sell its assets, and to liquidate the
Partnership.
Section 9. The Business of the
Partnership. For information about the Partnership, please
refer to the annual report prepared by the Partnership which was sent to you
earlier, particularly Item 2 of Form 10-K, the Quarterly Reports on Form
10-Q, Form 8-K, and any other materials sent to you by the
Partnership. These documents contain updated information concerning
the Partnership, including detailed information regarding the properties owned,
including mortgages, rental rates, operations, management, and taxes. In
addition, the Partnership is subject to the information and reporting
requirements of the Exchange Act and information about the Partnership can be
obtained on the Commission’s XXXXX system, at its internet web site at
xxx.xxx.xxx, and are available for inspection at the Commission’s principal
office in Washington, D.C.
Section 10. Conflicts of
Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the
Offer. The Depositary’s role is administrative only, however, and any
conflict of interest should not be deemed material to Unit holders.
Section 11. Certain Information
Concerning the Purchasers. The Purchasers are XxxXxxxxx
Xxxxxxxxx Special Fund 5, LLC; MPF DeWaay Fund 8, LLC; REAL ESTATE SECURITIES
FUND 1983, LP; MPF BADGER ACQUISITION CO., LLC; MPF FLAGSHIP FUND 13, LLC; MPF
SENIOR NOTE PROGRAM II, LP; MPF BLUE RIDGE FUND I, LLC; MPF INCOME FUND 24, LLC;
MPF FLAGSHIP FUND 14, LLC; SCM SPECIAL FUND 2, LP. For information
concerning the Purchasers and their respective principals, please refer to
Schedule I attached hereto. The principal business of each of the Purchasers is
investment in securities, particularly real estate-based
securities. The principal business address of each of the Purchasers
is 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000.
The Purchasers have made binding
commitments to contribute and have available sufficient amounts of capital
necessary to fund the acquisition of all Units subject to the Offer, the
expenses to be incurred in connection with the Offer, and all other anticipated
costs of the Purchasers. The Purchasers are not public companies and
have not prepared audited financial statements or financial statements prepared
in accordance with generally accepted accounting
principles. XxxXxxxxx Xxxxxxxxx Xxxxxx, XX and its affiliates have
been in the business of purchasing illiquid real estate securities, both in open
market transactions and by means of tender offers, since 1982 and have acquired
more than $170 million in such securities for affiliated portfolios during the
last ten years. The Purchasers have aggregate assets that are more
than sufficient to fund their collective obligation to purchase Units in this
Offer and any other outstanding tender offers.
Except as
otherwise set forth herein, (i) neither the Purchasers nor, to the best
knowledge of the Purchasers, the persons listed on Schedule I nor any affiliate
of the Purchasers beneficially owns or has a right to acquire any Units, (ii)
neither the Purchasers nor, to the best knowledge of the Purchasers, the persons
listed on Schedule I nor any affiliate of the Purchasers, or any director,
executive officer or subsidiary of any of the foregoing has effected any
transaction in the Units within the past 60 days, (iii) neither the Purchasers
nor, to the best knowledge of the Purchasers, the persons listed on Schedule I
nor any affiliate of the Purchasers has any contract, arrangement, understanding
or relationship with any other person with respect to any securities of the
Partnership, including but not limited to, contracts, arrangements,
understandings or relationships concerning the transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies, consents or
authorizations, (iv) there have been no transactions or business relationships
which would be required to be disclosed under the rules and regulations of the
Commission between any of the Purchasers or, to the best knowledge of the
Purchasers, the persons listed on Schedule I, or any affiliate of the Purchasers
on the one hand, and the Partnership or its affiliates, on the other hand, (v)
there have been no contracts, negotiations or transactions between the
Purchasers, or to the best knowledge of the Purchasers any affiliate of the
Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets, (vi) no person listed on Schedule I has been convicted in a criminal
proceeding during the past five years (excluding traffic violations or similar
misdemeanors), and (vii) no person listed on Schedule I has been a party to any
judicial or administrative proceeding during the past five years (except for
matters dismissed without sanction or settlement) that resulted in a judgment,
decree, or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. .
Section 12. Source of
Funds. The Purchasers expect that approximately $4,245,780
would be required to purchase 849,156 Units, if tendered, and an additional
$20,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing capital and assets. The cash and liquid
securities necessary to complete the entire purchase are readily available and
are committed to that purpose. Accordingly, there are no financing
arrangements to fall through and no alternative financing plans.
Section 13. Conditions of the
Offer. Notwithstanding any other term of the Offer, the
Purchasers shall not be required to accept for payment or to pay for any Units
tendered unless all authorizations or approvals of, or expirations of waiting
periods imposed by, any court, administrative agency or other governmental
authority necessary for the consummation of the transactions contemplated by the
Offer shall have been obtained or occurred on or before the Expiration
Date. As of the Offer Date, the Purchasers are unaware of any such
required authorizations, approvals, or waiting periods relating to this
Offer.
The Purchasers shall not be required to
accept for payment or pay for any Units and may terminate or amend the Offer as
to such Units if, at any time on or after the date of the Offer and before the
Expiration Date, any of the following conditions exists:
(a) a preliminary or
permanent injunction or other order of any federal or state court, government or
governmental authority or agency shall have been issued and shall remain in
effect which (i) makes illegal, delays or otherwise directly or indirectly
restrains or prohibits the making of the Offer or the acceptance for payment of
or payment for any Units by the Purchasers, (ii) imposes or confirms limitations
on the ability of the Purchasers effectively to exercise full rights of
ownership of any Units, including, without limitation, the right to vote any
Units acquired by the Purchasers pursuant to the Offer or otherwise on all
matters properly presented to the Partnership’s Unit holders, (iii) requires
divestiture by the Purchasers of any Units, (iv) causes any material diminution
of the benefits to be derived by the Purchasers as a result of the transactions
contemplated by the Offer (see the discussion of such benefits in the Summary
Term Sheet and Introduction sections of the Offer to Purchase) or (v) materially
adversely affect the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the Purchasers or
the Partnership, in the reasonable judgment of the Purchasers;
(b) there shall be any
action taken, or any statute, rule, regulation or order proposed, enacted,
enforced, promulgated, issued or deemed applicable to the Offer by any federal
or state court, government or governmental authority or agency, other than the
application of the waiting period provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, which will, directly or indirectly, result
in any of the consequences referred to in clauses (i) through (v) of paragraph
(a) above;
(c) any change or
development shall have occurred or been threatened since the date hereof, in the
business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Partnership, which, in the reasonable
judgment of the Purchasers, is or will be materially adverse to the Partnership,
or the Purchasers shall have become aware of any fact that, in the reasonable
judgment of the Purchasers, does or will have a material adverse effect on the
value of the Units;
(d) there shall have
occurred (i) any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-counter market
in the United States, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) any
limitation by any governmental authority on, or other event which might affect,
the extension of credit by lending institutions or result in any imposition of
currency controls in the United States, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States, (v) a material change in United States or other
currency exchange rates or a suspension of a limitation on the markets thereof,
or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
or
(e) it shall have been
publicly disclosed or the Purchasers shall have otherwise learned that (i) more
than fifty percent of the outstanding Units have been or are proposed to be
acquired by another person (including a “group” within the meaning of Section
13(d)(3) of the Exchange Act), or (ii) any person or group that prior to such
date had filed a Statement with the Commission pursuant to Sections 13(d) or (g)
of the Exchange Act has increased or proposes to increase the number of Units
beneficially owned by such person or group as disclosed in such Statement by two
percent or more of the outstanding Units.
The foregoing conditions are for the
sole benefit of the Purchasers and may be asserted by the Purchasers or may be
waived by the Purchasers in whole or in part at any time and from time to time
prior to the Expiration Date in their sole exercise of reasonable discretion,
and the Offer will remain open for a period of at least five business days
following any such waiver of a material condition. However, if we
waive a certain condition for one tendering Unitholder, we will waive that
condition for all Unitholders tendering Units. Any determination by
the Purchasers concerning the events described above will be final and binding
upon all parties, subject, of course, to the parties’ ability to seek review of
any contested determination by an arbitrator pursuant to Section
16.
Section
14. Certain Legal Matters.
General. Except as
set forth in this Section 14, the Purchasers are not aware of any filings,
approvals or other actions by any domestic or foreign governmental or
administrative agency that would be required prior to the acquisition of Units
by the Purchasers pursuant to the Offer. Should any such approval or
other action be required, it is the Purchasers’ present intention that such
additional approval or action would be sought. While there is no
present intent to delay the purchase of Units tendered pursuant to the Offer
pending receipt of any such additional approval or the taking of any such
action, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Partnership’s business, or that certain
parts of the Partnership’s business might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action, any of which could cause the Purchasers to elect to
terminate the Offer without purchasing Units thereunder. The
Purchasers’ obligation to purchase and pay for Units is subject to certain
conditions, including conditions related to the legal matters discussed in this
Section 14.
Antitrust. The
Purchasers do not believe that the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, is applicable to the acquisition of Units pursuant to the
Offer.
Margin
Requirements. The Units are not “margin securities” under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, such regulations are not applicable to the Offer.
State Takeover
Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of
corporations and not partnerships. The Purchasers, therefore, do not
believe that any anti-takeover laws apply to the transactions contemplated by
the Offer. Although the Purchasers have not attempted to comply with
any state anti-takeover statutes in connection with the Offer, the Purchasers
reserve the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer nor any action taken
in connection herewith is intended as a waiver of such right. If any
state anti-takeover statute is applicable to the Offer, the Purchasers might be
unable to accept for payment or purchase Units tendered pursuant to the Offer or
be delayed in continuing or consummating the Offer. In such case, the
Purchasers may not be obligated to accept for purchase or pay for any Units
tendered.
Section 15. Fees and
Expenses. The Purchasers have retained XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX, an affiliate of certain Purchasers, to act as Depositary in
connection with the Offer. The Purchasers will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including liabilities under the federal securities laws. The
Purchasers will also pay all costs and expenses of printing, publication and
mailing of the Offer and all costs of transfer.
Section 16.
Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS IN ANY JURISDICTION IN
WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT
AWARE OF ANY JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE
OFFER OR THE ACCEPTANCE THEREOF WOULD BE ILLEGAL.
No person
has been authorized to give any information or to make any representation on
behalf of the Purchasers not contained herein or in the Assignment Form and, if
given or made, such information or representation must not be relied upon as
having been authorized.
Further,
by tendering your Units, you are agreeing to arbitrate any disputes that may
arise between you and the Purchasers or the Depositary, to subject yourself to
personal jurisdiction in California, and that the prevailing party in any such
action will be entitled to recover attorney fees and costs.
SCHEDULE
I
THE
PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are XxxXxxxxx
Xxxxxxxxx Special Fund 5, LLC; MPF DeWaay Fund 8, LLC; REAL ESTATE SECURITIES
FUND 1983, LP; MPF BADGER ACQUISITION CO., LLC; MPF FLAGSHIP FUND 13, LLC; MPF
SENIOR NOTE PROGRAM II, LP; MPF BLUE RIDGE FUND I, LLC; MPF INCOME FUND 24, LLC;
MPF FLAGSHIP FUND 14, LLC; SCM SPECIAL FUND 2, LP. Each of the entity
Purchasers is organized as a limited liability company or limited
partnership. XxxXxxxxx Xxxxxxxxx Xxxxxx, XX is the manager or general
partner of the following entities: XxxXxxxxx Xxxxxxxxx Special Fund 5, LLC; MPF
DeWaay Fund 8, LLC; REAL ESTATE SECURITIES FUND 1983, LP; MPF BADGER ACQUISITION
CO., LLC; MPF FLAGSHIP FUND 13, LLC; MPF SENIOR NOTE PROGRAM II, LP; MPF BLUE
RIDGE FUND I, LLC; MPF INCOME FUND 24, LLC; MPF FLAGSHIP FUND 14,
LLC. XXXXXX CAPITAL MANAGEMENT, LLC IS THE MANAGER OR GENERAL PARTNER
OF: SCM SPECIAL FUND 2, LP. BC-GP, Inc. is the general partner
of XxxXxxxxx Xxxxxxxxx Xxxxxx, XX. The names of the controlling
persons and executive officers of XxxXxxxxx Xxxxxxxxx Xxxxxx, XX and Xxxxxx
Capital Management, LLC are set forth below. Xxxxxx Capital
Management, LLC is wholly owned by MPF Advisers, LP, an affiliate of XxxXxxxxx
Xxxxxxxxx Xxxxxx, XX. The Purchasers have jointly made the offer and
are jointly and severally liable for satisfying its terms. Other than
the foregoing, the Purchasers’ relationship consists of an informal agreement to
share the costs associated with making the offer and to allocate any resulting
purchases of Units among them in such manner and proportions as they may
determine in the future. Each of the entities is organized in
California. The Purchasers intend, if the Offer is fully subscribed,
to allocate the Units among themselves as follows: 1.0%, 4.1%, 5.1%,
1.0%, 1.0%, 3.1%, 4.1%, 2.0%, 53.3%, 20.3%, and 5.0%. We will
determine modifications to this allocation based upon the number of Units
tendered. Priority is given to Purchasers which already hold Units,
then to Purchasers which raised capital first, then to the remaining Purchasers
in equal shares. Units will be allocated according to this priority
until the maximum number of Units listed above are allocated to Purchasers
within a given priority, then Units will be allocated similarly among Purchasers
in the next level of priority, until all Units are allocated.
XxxXxxxxx Xxxxxxxxx Xxxxxx,
XX
The names
of the controlling persons and executive officers of XxxXxxxxx Xxxxxxxxx Xxxxxx,
XX are set forth below. Each individual is a citizen of the United
States of America. The principal business address of XxxXxxxxx
Xxxxxxxxx Xxxxxx, XX, each Purchaser, and each individual is 0000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx 00000, and the business telephone number for each is
000-000-0000. The general partner is BC-GP, Inc., a California
corporation owned by the limited partners.
X.X. Xxxxxxxxx is
President and controlling person of XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, which acts
as manager and general partner of a number of real estate investment vehicles,
and has served in those positions since January 1989. In 1981, Xx.
Xxxxxxxxx founded Xxxxxxxxx Financial Services, Inc. (now MPF Advisers, LP), a
registered investment adviser (“MPFA”), with Xxxxxxxx X. Xxxxxxxxx, as a
financial planning firm, and he has served as its President since that
date. Xx. Xxxxxxxxx founded Xxxxxxxxx Real Estate Services, a
licensed California Real Estate Broker, in 1982. As President of
MPFA, Xx. Xxxxxxxxx is responsible for all investment counseling
activities. He supervises the analysis of investment opportunities
for the clients of the firm. Xx. Xxxxxxxxx previously served as
president of Host Funding, Inc., an owner of lodging properties, from December
1999 through 2003. Xx. Xxxxxxxxx is also an officer and controlling
shareholder of Cal-Kan, Inc., a closely held real estate investment
company. Xx. Xxxxxxxxx, through his affiliates, manages a number of
investment and real estate companies.
Xxxxxxxx X. Xxxxxxxxx
is a controlling person of XxxXxxxxx Xxxxxxxxx Xxxxxx, XX and has served in that
capacity since its formation in 1988. In 1981, Xx. Xxxxxxxxx and X.X.
Xxxxxxxxx established MPFA. She has served as controlling person and
Secretary of MPFA since that date. Her responsibilities with MPFA
include oversight of administrative matters and monitoring of past projects
underwritten by MPFA. Since October 1990, Xx. Xxxxxxxxx has been
responsible for the day-to-day operations of two nursing homes and over 200
employees.
Xxxx X. Xxxxxx became
senior vice president and a controlling person of XxxXxxxxx Xxxxxxxxx Xxxxxx, XX
in May 2000. Since 2004 he has been a controlling person and vice
president of MPFA, and is a senior vice president and controlling person of
Xxxxxx Capital Management, LLC. Prior to becoming senior vice
president, from August 1998 to April 2000, he was with XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX as a portfolio manager and research analyst. From December
1999 to 2003, Xx. Xxxxxx served as an officer and director of Host Funding,
Inc. Prior to joining XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, from May 1996
to July 1998, Xx. Xxxxxx ran the over-the-counter trading desk for North Coast
Securities Corp. (previously Xxxxxx Xxxxxx Capital Group) with responsibility
for both the proprietary and retail trading desks. Xx. Xxxxxx was
also the registered options principal and registered municipal bond principal
for North Coast Securities, a registered broker dealer. Xx. Xxxxxx
was formerly a NASD-registered options principal and registered bond principal,
and he held his NASD Series 7, general securities license (now
inactive). Xx. Xxxxxx has also spent time working on the floor of the
New York Stock Exchange as a trading clerk and on the floor of the Pacific Stock
Exchange in San Francisco as an assistant specialist for LIT
America.
Xxxx Xxxxxxxxx is
senior vice president, general counsel, and a controlling person of the
XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, MPFA, and Xxxxxx Capital Management,
LLC. Prior to joining XxxXxxxxx Xxxxxxxxx Xxxxxx, XX in July 2003, he
was a securities and corporate finance attorney with the national law firm of
Xxxxx Xxxxxx Xxxxxxxx LLP from August 2000 to January 2003. From
August 1997 to May 2000 he attended the University of Michigan Law School, where
he graduated magna cum
laude with a Juris Doctor Degree. Prior to law school, Xxxx Xxxxxxxxx
taught physics, chemistry, and math at the high school level for three years,
from June 1994 to June 1997. He graduated with high distinction and Phi Beta Kappa from the
University of California at Berkeley with a Bachelor of Arts Degree in Political
Science. He also has prior experience in sales, retail, and
banking.
Xxxxxxxxx Xxxxxxx is
senior vice president of XxxXxxxxx Xxxxxxxxx Xxxxxx, XX, MPFA, and Xxxxxx
Capital Management, LLC, and is responsible for the day-to-day management of
research and securities purchases and sales on behalf of the entities managed by
XxxXxxxxx Xxxxxxxxx Xxxxxx, XX Xx. Xxxxxxx has served in that
position since January 1997; from January 1994 until her promotion to vice
president, she was a research analyst with XxxXxxxxx Xxxxxxxxx Xxxxxx,
XX She joined XxxXxxxxx Xxxxxxxxx Xxxxxx, XX as an administrative
assistant in July 1990. Xx. Xxxxxxx received her Bachelor of Arts degree in
Management from Saint Mary’s College of California in May 2005, her Master of
Science in Financial Analysis and Investment Management from Saint Mary’s
College of California in October 2006, and her Master of Business Administration
degree from Saint Mary’s College of California in June 2008.
Xxxxxx X. Xxxxx is
senior vice president and a controlling person of MPFA and XxxXxxxxx Xxxxxxxxx
Xxxxxx, XX, is the president of Xxxxxx Capital Management, LLC, and served as an
officer and director of Sutter Holding Company, Inc. from March 2002 to October
2006. Xx. Xxxxx received his Bachelor’s degree in economics from the
University of California at Los Angeles in 1992. He worked for Xxxxxx
Brothers, Inc. in equity sales and trading during 1993 and 1994. From
October 1994 to June, 1996 he worked for XxxXxxxxx Xxxxxxxxx, Inc. as a
securities research analyst. Xx. Xxxxx became a Chartered Financial
Analyst in 1996, and received his Master of Business Administration degree from
Cornell University in 1998. In July of 1998 he began buying and
selling securities for his own account and those of the entities he controlled,
and he was principally engaged in that activity until May 2005, when he rejoined
MPFA. Xx. Xxxxx was a registered representative of North Coast
Securities from 1994 through 1997.