OFFER TO PURCHASE FOR CASH ANY AND ALL
LIMITED PARTNERSHIP INTERESTS
OF
Carlyle Real Estate Limited Partnership - VII
An Illinois Limited Partnership
AT
$20 PER INTEREST
ACCELERATED HIGH YIELD INSTITUTIONAL FUND 1, L.P.;
MACKENZIE FUND VI, LTD
MACKENZIE SPECIFIED INCOME FUND, L.P.;
MP INCOME FUND 13, LLC;
JDF & ASSOCIATES, LLC
MORAGA GOLD, LLC AND
XXXXXX XXXX
(collectively the "Purchasers")
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC DAYLIGHT
TIME, ON JUNE 30, 1998, UNLESS THE OFFER IS EXTENDED.
Accelerated High Yield Institutional Fund I, L.P., MacKenzie Fund VI, LTD.;
MacKenzie Specified Income Fund, L.P.; MP Income Fund 13, LLC, Moraga Gold, LLC,
JDF & Associates, LLC and Xxxxxx Xxxx (collectively the "Purchasers") hereby
seek to acquire limited partnership interests (the "Units") in Carlyle Real
Estate Limited Partnership - VII, an Illinois limited partnership (the
"Partnership"). The Purchasers are not affiliated with the Partnership or its
general partners. The Purchasers hereby offer to purchase any and all Units at a
purchase price equal to $20 per Unit, less the amount of any distributions
declared or made with respect to the Units between June 5, 1998 (the "Offer
Date") and June 30, 1998, 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 Letter of Transmittal, as each may be supplemented or amended
from time to time (which together constitute the "Offer"). The Units sought
pursuant to the Offer represent 100% of the Units outstanding as of December 31,
1997.
Holders of Units ("Unitholders") are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any
1
future benefits from the ownership of Units, including
potential future distributions by the Partnership, and the
purchase price per Unit payable to a tendering Unitholder by
the Purchasers may be less than the total amount which might
otherwise be received by the Unitholder with respect to the
Unit over the remaining term of the Partnership. In this
regard, Unitholders should note that the Partnership has
announced the sale of its last remaining property and has
estimated that it may distribute an amount of from $40 to $80
per Unit in liquidation in December 1998, though it cannot
provide any assurance that the actual distribution may not
vary from its estimate.
- 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 $20 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
UNITS BEING TENDERED.
A UNITHOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH UNITHOLDER.
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, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders 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 Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
June 5, 1998
2
IMPORTANT
Any Unitholder desiring to tender any or all of such Unitholder's Units should
complete and sign the Letter of Transmittal (a copy of which is printed on light
blue paper and enclosed with this Offer to Purchase) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to XxxXxxxxx Xxxxxxxxx,
Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
XxxXxxxxx Xxxxxxxxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile Transmission: 000-000-0000
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal 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 LETTER OF TRANSMITTAL. 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 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 Room 0000, Xxxxxxxxx Xxxxx, 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and are available for inspection and
copying at the regional offices of the Commission located in Northwestern Atrium
Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 and at 7
World Trade Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 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 14D-1 (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.
3
TABLE OF CONTENTS
Page
INTRODUCTION..................................................................5
TENDER OFFER..................................................................8
Section 1. Terms of the Offer..........................................8
Section 2. Proration; Acceptance for Payment and Payment for Units.....9
Section 3. Procedures for Tendering Units.............................10
Section 4. Withdrawal Rights..........................................12
Section 5. Extension of Tender Period; Termination; Amendment.........12
Section 6. Certain Federal Income Tax Consequences....................13
Section 7. Effects of the Offer.......................................15
Section 8. Future Plans...............................................16
Section 9. The Business of the Partnership............................16
Section 10. Conflicts of Interest......................................18
Section 11. Certain Information Concerning the Purchasers..............18
Section 12. Source of Funds............................................19
Section 13. Conditions of the Offer....................................19
Section 14. Certain Legal Matters......................................21
Section 15. Fees and Expenses..........................................22
Section 16. Miscellaneous..............................................22
Schedule I - The Purchasers and Their Respective Principals
4
To the Unitholders of Carlyle Real Estate Limited Partnership - VII
INTRODUCTION
The Purchasers hereby offer to purchase any and all Units at a purchase
price of $20 per Unit, less the amount of any distributions declared or paid
with respect to the Units between the Offer Date and the Expiration Date ("Offer
Price"), in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer. Unitholders 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 nor the Depositary is affiliated with Carlyle
Real Estate Limited Partnership - VII, JMB Realty Corporation., the
Partnership's corporate general partner (the "General Partner"), or with any
affiliate of such persons.
Unitholders are urged to consider the following factors:
- Unitholders 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, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership. In this regard, Unitholders should note that
the Partnership has announced the sale of its last remaining
property and has estimated that it may distribute an amount
between $40 and $80 per Unit in liquidation in December, 1998,
though it cannot provide any assurance that the actual
distribution may not vary from its estimate.
- 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 $20 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders.
The Offer will provide Unitholders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Unitholders may have a more immediate need to use the cash now tied up in
an investment in the Units and wish to sell them to the Purchasers.
5
Establishment of the Offer Price
The Purchasers have set the Offer Price at $20 per Unit, less the
amount of any distributions declared or made with respect to the Units between
the Offer Date and Expiration Date. In determining the Offer Price, the
Purchasers based their valuation of the Units on the General Partner's estimate
of the liquidating distribution which may occur in December 1998. The
Partnership made a distribution in May 1998, which will be retained by any Unit
holders who sell their Units to the Purchasers. As described below, the
Partnership estimates that it may distribute an additional $40 to $80 per Unit
in December 1998, subject to certain contingencies.
In a filing with the Securities and Exchange Commission on Schedule
14D-9 dated May 26, 1998, in response to the original Schedule 14D-1 filed by
the Purchasers, the Partnership disclosed the following:
"The Partnership will make a distribution in May 1998 from operating
cash flow and sale proceeds in the aggregate amount of $22,155,000.
Pursuant to the terms of the Partnership Agreement, Interest holders
will receive approximately $18,900,000 as their share of this
distribution ($1,050 per Interest) and the General Partners will
receive approximately $3,255,000 as their share of this distribution.
In addition, the Partnership expects to make a final liquidating
distribution in December 1998 of between $815,000 and $1,650,000, based
upon its estimate of the likely expense of winding down the
Partnership's affairs (which assumes that there are no claims made for
breach of the representations, warranties and covenants made by the
Partnership in connection with the sale of its sole remaining real
property interest). Based on this estimate, Interest holders would
receive between approximately $720,000 and $1,440,000 as their share of
the final liquidating distribution ($40 to $80 per Interest), and the
General Partners would receive between approximately $95,000 and
$211,000 as their share of the final liquidating distribution."
In a current report on Form 8-K dated as of April 8, 1998, the Partnership
reported (in part) as follows:
"Carlyle Real Estate Limited Partnership - VII (the "Partnership") was
a partner in Oakridge Associates, a California general partnership (the
"Venture") with an unaffiliated venture partner, Trizechahn Centers
Inc. (the "Venture Partner"). The Venture owned a leasehold interest in
the land and improvements known as Oakridge Mall in San Jose,
California (the "Property"). The Partnership had been in discussions
with potential buyers for the Property (on behalf of the venture) or
the Partnership's interest in the Property. Per the Venture agreement,
the Venture Partner in Oakridge Associates held the right of first
opportunity to purchase the Partnership's interest in the Venture had
the Partnership pursued a sale of the Property. Pursuant to the Venture
agreement, if the Venture Partner elected to exercise its right of first
6
opportunity, the Venture Partner would then have 90 days after making
such an election to close such sale. The purchase price of the
Partnership's interest would be such as would produce for the
Partnership the same consideration as the sale of the property to an
unaffiliated third party. In March 1998, the Partnership and the
Venture Partner reached an agreement in principle to sell the
Partnership's interest in the Venture to the Venture Partner. On April
8, 1998, the Partnership sold its interest to the Venture Partner. At
the time of the sale, Oakridge Mall was 94% occupied. The purchase
price of the interest was $31,950,000 ($20,700,000 plus the assumption
of the Partnership's share of the mortgage loan of approximately
$11,250,000). The Partnership received approximately $20,900,000 in
cash at closing including a distribution of previously undistributed
cash flow from operations of approximately $494,000 and adjustments for
prorations and closing costs, but before consideration of certain costs
of sale incurred by the Partnership, including a sale commission, if
any, due to the General Partner. Pursuant to the sale agreement, a cash
reserve of $250,000 was established to pay for certain costs that may
be incurred related to certain maintenance items at the Property. Any
funds remaining in the cash reserve at December 1, 1998 will be
distributed one-half to the Partnership and one-half to the Venture
Partner. As a result of this transaction, the Partnership recognized a
gain of approximately $23,000,000 for financial reporting purposes and
expects to realize a gain of approximately $24,000,000 for Federal
income tax purposes in 1998. In addition, in connection with the sale
of the Partnership's interest in the Venture and as is customary in
such transactions, the Partnership agreed to certain representations,
warranties and covenants with a stipulated survival period which
expires December 1, 1998. Although it is not expected, the Partnership
may ultimately have some liability under such representations,
warranties and covenants which are limited to actual damages and shall
in no event exceed $1,000,000. Additionally, the Partnership provided a
representation regarding its title relating to its Partnership Interest
in the Venture. Such representation is for the full sale price of the
interest and also expires December 1, 1998. The Partnership Agreement
provides that the net sale proceeds be distributed 85% to the Limited
Partners and 15% to the General Partners. The Partnership's interest in
the Venture was its only remaining investment and due to its sale, the
Partnership intends to wind up its affairs and liquidate by year end.
The Partnership will distribute its remaining cash after payment of
expenses and liabilities. During 1998, it is currently expected that
the Partnership will distribute sale and final liquidating
distributions in the aggregate in excess of $1,000 per Limited
Partnership Interest. However, this is an estimate only and the sale
and final liquidating distribution to the Limited Partners, which will
depend on, among other things, amounts needed to pay or provide for the
Partnership's remaining expenses and liabilities, may vary from such
estimate."
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. 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
7
Unitholders. Unitholders are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
Based on the announced sale of the Partnership's remaining real estate
asset, the General Partner's intention to liquidate the Partnership in 1998, and
the limited secondary trading market for the Units, the Purchasers do not
believe prior historical secondary market sales information bears any
significant relationship to the current value of the Units.
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.
According to publicly available information, there were 18,005 Units
issued and outstanding at December 31, 1997, held by approximately 1,641
Unitholders. Certain affiliates of the Purchasers currently beneficially own an
aggregate of 313 Units or approximately 1.74% of the outstanding Units (see
"Certain Information Concerning the Purchasers" below).
Tendering Unitholders 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 all Units
tendered by each Unitholder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unitholders 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.
Unitholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal 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 12:00
midnight, Pacific Standard Time, on June 30, 1998, 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.
8
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 Unitholders, (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
Unitholders 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.
The Purchasers do not anticipate and has no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Units.
The Purchasers will purchase any and all Units tendered. Accordingly,
there will be no proration of tendered 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, as promptly as
practicable following the Expiration Date. 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 Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
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 Unitholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unitholders.
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 Letter of
Transmittal 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 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers,
9
retain tendered Units, subject to any limitations of applicable law, and such
Units may not be withdrawn except to the extent that the tendering Unitholders
are entitled to withdrawal rights as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unitholders 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 Letter of Transmittal (a copy of which is enclosed
and printed on light blue paper) with any other documents required by the Letter
of Transmittal 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
Unitholder may tender any or all Units owned by such Unitholder.
In order for a tendering Unitholder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 12:00 midnight, Pacific Standard Time, on June 30, 1998, or such date to
which the Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unitholder 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 Unitholder must
provide the Depositary with such Unitholder's correct taxpayer identification
number and make certain certifications that such Unitholder is not subject to
backup federal income tax withholding. Each tendering Unitholder must insert in
the Letter of Transmittal the Unitholder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
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 Unitholder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such
Unitholder's taxpayer identification number and address and that the Unitholder
is not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unitholder irrevocably appoints the designees of the Purchasers as
such Unitholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent
10
of such Unitholder's rights with respect to the Units tendered by such
Unitholder 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
Unitholder 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 Unitholder as they in their sole
discretion may deem proper at any meeting of Unitholders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unitholder also
assigns to the Purchasers all of the Unitholder'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 Unitholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal 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 Unitholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
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 Unitholders 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 Transmittal Letter).
11
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 after July 8, 1998.
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 Letter of Transmittal. 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 Letter of
Transmittal in the same manner as the Letter of Transmittal 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 Unitholders 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, 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 delay the acceptance for payment of, or payment for, any Units not heretofore
accepted for payment or paid for, or to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, 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. 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 Standard Time, on the next business day after the previously
12
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 release to the
Dow Xxxxx News Service. The Purchasers may also be required by applicable law to
disseminate to Unitholders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
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 not be withdrawn except to the extent tendering Unitholders are entitled to
withdrawal rights as described in Section 4. 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.
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
(other than an increase of not more than 2% of the 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 12:00
midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNITHOLDER. 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 Unitholders (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 UNITHOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER, INCLUDING
THE APPLICATION OF THE ALTERNATIVE
13
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.
Gain or Loss. A taxable Unitholder will recognize a gain or loss on the sale of
such Unitholder's Units in an amount equal to the difference between (i) the
amount realized by such Unitholder on the sale and (ii) such Unitholder's
adjusted tax basis in the Units sold. The amount realized by a Unitholder will
include the Unitholder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the
Unitholder reports a loss on the sale, such loss generally could not be
currently deducted by such Unitholder except against such Unitholder'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 Unitholder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unitholder who plans to tender hereunder should consult with the
Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in the
Unitholder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unitholder is attributable
to such Unitholder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unitholder'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 Unitholder's recognizing ordinary income with respect to the portion
of the Unitholder'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 Unitholder (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 Unitholder 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 Unitholder will be
allocated the Unitholder'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 Unitholder 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 Unitholder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unitholder on the sale
of the Units.
14
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. If so, the
Partnership will be treated as having made a liquidating distribution of an
undivided interest in all of its assets to the Unitholders, the partners of the
Partnership after consummation of the Offer (i.e., the nontendering Unitholders
and the Purchasers) would be treated as having recontributed their interests in
Partnership assets to the Partnership, and the capital accounts of all partners
would be restated. A Unitholder would recognize gain on the liquidating
distribution only to the extent that the amount of cash deemed distributed to
the Unitholder exceeded the Unitholder's basis in the Units. Depending on the
Unitholders' bases in their Units and the Partnership's tax basis in its
property, a tax termination could affect, perhaps adversely, the amount of
depreciation deductions reported by the Partnership for the period following the
date of such termination. A tax termination of the Partnership also could have
the adverse effect on Unitholders whose tax year is not the calendar year, of
the inclusion of more than one year of Partnership tax items in one tax return
of such Unitholders, resulting in a "bunching" of income. In addition, a tax
termination could have the adverse effect on non-tendering Unitholders who
subsequently dispose of their Units at a gain of requiring them to treat a
greater portion of such gain as ordinary income (due to the application of Code
Section 735) than would otherwise be required absent a tax termination of the
Partnership.
Suspended "Passive Activity Losses". A Unitholder who sells all of the
Unitholder'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 Unitholder, 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 Unitholder's Units, such Unitholder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unitholder's Units and then against income from any other source.
Foreign Unitholders. Xxxx realized by a foreign Unitholder 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 Unitholder from the purchase price payment to be made to
such Unitholder unless the Unitholder properly completes and signs the FIRPTA
Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder'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.
15
Effect on Trading Market. There is no established public trading market for the
Units and, therefore, a reduction in the number of Unitholders should not
materially further restrict the Unitholders' ability to find purchasers for
their Units on any secondary market.
Voting Power of Purchasers. Depending on the number of Units acquired by the
Purchaser pursuant to the Offer, the Purchaser may have the ability to exert
certain influence on matters subject to the vote of Unitholders.
The Units are registered under the Exchange Act, which requires, among
other things that the Partnership furnish certain information to its Unitholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of, and solicitation of consents from, Unitholders. As the
Partnership intends to liquidate in 1998, the Purchasers do not believe that the
purchase of Units pursuant to the Offer will having any effect on possible
deregistration of the Units under the Exchange Act.
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 acquiring the Units pursuant to the Offer solely for
investment purposes. Although the Purchasers have no present intention to seek
control of the Partnership or to change the management or operations 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 a vote to cause the sale of the Partnership's
remaining property and the liquidation and dissolution of the Partnership.
Nevertheless, as the Partnership intends to liquidate by the end of 1998, the
Purchasers do not anticipate taking any action with respect to the Units they
acquire pursuant to this offer.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports. Additional information concerning the Partnership, its assets,
operations and management is contained in its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q and other filings with the Securities and
Exchange Commission. Such reports and filings are available on the Commission's
XXXXX system, at its internet website at xxx.xxx.xxx, and are available for
inspection at the Commission's principal office in Washington, D.C. and at its
regional offices in New York, New York and Chicago, Illinois. The Purchasers
expressly disclaim any responsibility for the information included in such
reports and extracted in this discussion.
The Partnership was organized in 1976 as an Illinois limited
partnership for the purpose of acquiring residential real properties and
commercial properties. The Partnership has announced the sale of its final real
estate asset and its intention to liquidate by the end of 1998. See the
discussion above under "Introduction - Establishment of the Offer Price."
16
Selected Financial Data. Set forth below is a summary of certain financial data
for the Partnership which has been excerpted from the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1997.
The following table sets forth in comparative tabular form a summary of
selected financial data for each of the Partnership's last five full years:
Years Ended December 31
1997 1996 1995 1994 1993
Total income $10,378,344 8,761,868 8,438,395 7,996,717 8,179,492
Earnings (loss) before
gain on sale of
investment property $ 1,651,012 656,212 954,353 1,003,409 726,111
Gain on sale of
investment property -- -- -- -- 2,667,071
Extraordinary item, net
of venture partner's
share -- -- (391,010) -- -
----------- --------- --------- --------- ---------
Net earnings (loss) $ 1,651,012 656,212 563,343 1,003,409 3,393,182
Net earnings (loss)
per Interest (b):
Earnings (loss)
before gain on
sale of invest-
ment property $ 88.03 34.99 50.88 53.50 38.72
Gain on sale of
investment
property -- -- -- - 146.65
Extraordinary item,
net of venture
partner's share -- - (21.50) - --
------------ --------- ----------- ----- --------
Net earnings (loss) $88.03 34.99 29.38 53.50 185.37
============ ========= ========== ====== ========
Total assets $25,211,227 24,881,744 28,723,368 16,393,988 15,729,136
Long-term debt $ -- 23,002,015 24,532,836 13,741,800 14,245,434
Cash distributions per
Interest (c) $ - 125.00 -- 5.00 20.00
=========== ========== ========== ========== ==========
(a) The above summary of financial data should be read in conjunction with the consolidated
17
financial statements and the related notes appearing elsewhere in this
annual report.
(b) The net earnings (loss) per Interest is based upon the number of
Interests outstanding at the end of each period (18,005).
(c) Cash distributions from the Partnership are generally not equal to
Partnership income (loss) for financial reporting or Federal income tax
purposes. Each Partner's taxable income (or loss) from the Partnership
in each year is equal to his allocable share of the taxable income
(loss) of the Partnership, without regard to the cash generated or
distributed by the Partnership. Accordingly, cash distributions to the
Limited Partners since the inception of the Partnership have not
resulted in taxable income to such Limited Partners and have therefore
represented a return of capital.
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.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are
Accelerated High Yield Institutional Fund I, L.P., a Florida limited
partnership, MacKenzie Fund VI, LTD., a California limited partnership;
MacKenzie Specified Income Fund, L.P., a California limited partnership; MP
Income Fund 13, LLC, a California limited liability company; Moraga Gold, LLC, a
California limited liability company, JDF & Associates, LLC, a Texas limited
liability company, and Xxxxxx Xxxx. For information concerning the Purchasers
and their respective principals, please refer to Schedule I attached hereto. The
principal business of each of the entity Purchasers is investment in securities,
particularly real estate-based securities. The principal business address of the
Purchasers other than Xxxxxx Xxxx and JDF & Associates, LLC is 0000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000. The principal business address of Xxxxxx Xxxx
is Four Embarcadero, Suite3610, San Francisco, California 94111 and the
principal address of JDF & Associates, LLC is 000 Xxxxx Xxx, Xxxxxxx, Xxxxx
00000.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of liquid 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. The Purchasers, their general partner, owners and members have an
aggregate net worth in excess of $15 million, including net liquid assets of
more than $5 million.
Since May 1996, affiliates of certain of the Purchasers have acquired a
total of 50 Units in individual privately negotiated transactions with total
acquisition costs ranging from $472.50 to $660 per Unit. Affiliates of the
Purchasers hold a total of 313 Units, or approximately 1.74% of the total
outstanding Units.
18
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, and (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.
Section 12. Source of Funds. The Purchasers expect that approximately $360,100
would be required to purchase all 18,005 outstanding Units, if tendered, and an
additional $15,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing liquid capital reserves.
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 if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained on or before the Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for 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
19
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 Unitholders, (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 or
(v) might materially adversely affect the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospectus of the Purchasers or the Partnership;
(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 might,
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 may 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 may 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 regardless of the circumstances giving rise to
such conditions or may be
20
waived by the Purchasers in whole or in part at any time and from time to time
in their sole discretion. Any termination by the Purchasers concerning the
events described above will be final and binding upon all parties.
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.
21
Section 15. Fees and Expenses. The Purchasers have retained XxxXxxxxx Xxxxxxxxx,
Inc., 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) UNITHOLDERS 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 Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
June 5, 1998
ACCELERATED HIGH YIELD INSTITUTIONAL FUND 1, X.X.
XXXXXXXXX FUND VI, LTD.
XXXXXXXXX SPECIFIED INCOME FUND, L.P.
MP INCOME FUND 13, LLC
JDF & ASSOCIATES, LLC
XXXXXX XXXX
XXXXXX GOLD, LLC
22
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are Accelerated High Yield Institutional Fund I, L.P.,
MacKenzie Fund VI, LTD.; Mackenzie Specified Income Fund, L.P.; MP Income Fund
13, LLC, Moraga Gold, LLC, JDF & Associates, LLC and Xxxxxx Xxxx . The General
Partner of each of Accelerated High Yield Institutional Fund I, L.P., MacKenzie
Fund VI, LTD. and Mackenzie Specified Income Fund, L.P. is XxxXxxxxx Xxxxxxxxx,
Inc. The Managing Member of MP Income Fund 13, LLC, is XxxXxxxxx Xxxxxxxxx, Inc.
The names of the directors and executive officers of XxxXxxxxx Xxxxxxxxx, Inc.,
the principal officers and members of Moraga Gold, LLC and JDF & Associates, LLC
and the present principal occupations and five year employment histories of each
such person are set forth below. Each individual is a citizen of the United
States of America.
Each of the entity Purchasers is managed or advised by affiliates of
XxxXxxxxx Xxxxxxxxx, Inc. 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.
XxxXxxxxx Xxxxxxxxx, Inc.
X.X. Xxxxxxxxx is President of XxxXxxxxx Xxxxxxxxx, Inc. He is the
co-founder and President of Xxxxxxxxx Financial Services, Inc. In 1981, Xx.
Xxxxxxxxx founded PFS with Xxxxxxxx X. Xxxxxxxxx, as a financial planning firm.
Xx. Xxxxxxxxx founded Xxxxxxxxx Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of PFS, Xx. Xxxxxxxxx is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. He is a trustee of Consolidated
Capital Properties Trust, a liquidating trust formed out of the bankruptcy court
proceedings involving Consolidated Capital Properties, Ltd. Xx. Xxxxxxxxx is
also an officer and controlling shareholder of Cal-Kan, Inc., an executive
officer and controlling shareholder of Moraga Partners, Inc., and trustee of the
Xxx Xxxxxxxxx Western Securities, Inc. Profit Sharing Plan. Xx. Xxxxxxxxx,
through his affiliates, manages a number of investment and real estate
partnerships.
Xxxxxxxx X. Xxxxxxxxx is a director of XxxXxxxxx Xxxxxxxxx, Inc. In 1981,
Xx. Xxxxxxxxx and X.X. Xxxxxxxxx established Xxxxxxxxx Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Xx. Xxxxxxxxx is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 300 employees.
Xxxxxxxxxxx Xxxxxxxx is senior vice president of XxxXxxxxx Xxxxxxxxx, Inc.,
which she joined in 1988. Xx. Xxxxxxxx has eleven years of experience with the
NASD broker/dealer business and is experienced in all phases of broker/dealer
operations. She is licensed with the NASD as a General
23
Securities Principal. She is president and owner of North Coast Securities
Corporation. Xx. Xxxxxxxx has been certified by the College of Financial
Planning in Denver, Colorado, as a Financial ParaPlanner.
Moraga Gold, LLC
The members of Moraga Gold, LLC are Moraga Partners, Inc. and the Xxxxx X.
Xxxx Trust. Information concerning Moraga Partners, Inc. is set forth below.
The Xxxxx X. Xxxx Trust is a private trust of which Xxxxxxx Xxxxx is
the trustee and Xxxxxx Xxxx is responsible for certain investments. The sole
beneficiary of the trust is a nonprofit charitable foundation. The business
address of the trust is Xxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000. Xxxxxxx Xxxxx has been employed for the last five years as a physician by
the University of California, San Francisco and the University of Minnesota.
Xxxxxx Xxxx, a California attorney, has been self-employed during the last five
years analyzing investments for his own account and for that of the trust. In
addition, he has participated in starting a number of business ventures,
including T/O devices, an import/export company.
Moraga Partners, Inc.
Moraga Partners, Inc. is a California corporation owned by X. X. Xxxxxxxxx.
Xx. Xxxxxxxxx is also an executive officer and director of Moraga Partners, Inc.
Information regarding Xx. Xxxxxxxxx is set forth above.
JDF & Associates, LLC
JDF & Associates is a Texas limited liability company engaged in real
estate investment activities. X. Xxxxx Xxxxxx is the general manager of JDF &
Associates LLC. Xx. Xxxxxx has been an active investor in commercial real
estate, oil and gas investments and equity securities for the past 35 years. He
is currently chairman of Mexicali Borders Cafes, Inc., president of Xxxxxx, Inc.
and eastern regional sales manager for a computer services firm. Xx. Xxxxxx is a
graduate of the Xxxxxxx School of Finance. Xxxxxxxxx Financial Services, Inc.,
an affiliate of XxxXxxxxx Xxxxxxxxx, Inc., has been engaged by Xx. Xxxxxx to
provide certain real estate securities investment advice.
24
Exhibit (a)(2)
